[House Report 105-164]
[From the U.S. Government Publishing Office]



105th Congress                                            Rept. 105-164
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     Part 1
_______________________________________________________________________



 
              FINANCIAL SERVICES COMPETITION ACT OF 1997

                               __________

                              R E P O R T

                                 of the

                              COMMITTEE ON

                     BANKING AND FINANCIAL SERVICES

                        HOUSE OF REPRESENTATIVES

                                   on

                                H.R. 10

                             together with

             ADDITIONAL, SUPPLEMENTAL, AND DISSENTING VIEWS

      [Including cost estimate of the Congressional Budget Office]





                  July 3, 1997--Ordered to be printed



               FINANCIAL SERVICES COMPETITION ACT OF 1997



105th Congress                                            Rept. 105-164
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     Part 1
_______________________________________________________________________


              FINANCIAL SERVICES COMPETITION ACT OF 1997

                               ----------                              

                              R E P O R T

                                 of the

                              COMMITTEE ON
                     BANKING AND FINANCIAL SERVICES
                        HOUSE OF REPRESENTATIVES

                                   on

                                H.R. 10

                             together with

             ADDITIONAL, SUPPLEMENTAL, AND DISSENTING VIEWS

      [Including cost estimate of the Congressional Budget Office]





                  July 3, 1997--Ordered to be printed


105th Congress                                            Rept. 105-164
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     Part 1
_______________________________________________________________________


               FINANCIAL SERVICES COMPETITION ACT OF 1997

_______________________________________________________________________


                  July 3, 1997.--Ordered to be printed

                                _______
                                

   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

             ADDITIONAL, SUPPLEMENTAL, AND DISSENTING VIEWS

                         [To accompany H.R. 10]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 10) to enhance competition in the 
financial services industry by providing a prudential framework 
for the affiliation of banks, securities firms, and other 
financial service providers, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Financial Services 
Competition Act of 1997''.
  (b) Purposes.--The purposes of this Act are as follows:
          (1) To ensure the continued safety and soundness of 
        depository institutions.
          (2) To reduce and, to the maximum extent practicable, to 
        eliminate the legal barriers preventing affiliation among 
        depository institutions, securities firms, insurance companies, 
        and other financial service providers and to provide a 
        prudential framework for achieving that result.
          (3) To enhance competition in the financial services 
        industry.
          (4) To enhance the availability of financial services to 
        citizens of all economic circumstances and in all geographic 
        areas.
          (5) To enhance the competitiveness of United States financial 
        service providers internationally.
          (6) To ensure compliance by depository institutions with the 
        provisions of the Community Reinvestment Act of 1977 and 
        enhance the ability of depository institutions to meet the 
        capital and credit needs of all citizens and communities, 
        including underserved communities and populations.
  (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; purposes; table of contents.

  TITLE I--POWERS AND AFFILIATIONS OF INSURED DEPOSITORY INSTITUTIONS

     Subtitle A--Removing Barriers to Affiliations Between Insured 
        Depository Institutions and Other Financial Institutions

Sec. 101. Anti-affiliation provisions of ``Glass-Steagall Act'' 
repealed.
Sec. 102. Repeal of activity restrictions of Bank Holding Company Act 
of 1956.
Sec. 103. Qualifying bank holding companies.
Sec. 104. Certain State laws preempted.
Sec. 105. Mutual bank holding companies authorized.
Sec. 106.  Companies not engaged in activities financial in nature.
Sec. 107. Amendment to ensure that banks acquired by other entities do 
not become deposit production offices.
Sec. 108. Clarification of applicability of branch closure requirements 
in interstate banking operations.

                   Subtitle B--Additional Safeguards

Sec. 111. Firewall safeguards.
Sec. 112. Consumer protection.
Sec. 113. Obligations of subsidiaries and affiliates cannot be extended 
to insured depository institutions.

           Subtitle C--National Council on Financial Services

Sec. 121. Establishment and operation of the council.
Sec. 122. Functions of the council
Sec. 123. Advisory council on community revitalization.

              Subtitle D--Bank Holding Company Supervision

Sec. 131. Streamlining bank holding company supervision.
Sec. 132. Administration of the Bank Holding Company Act of 1956.
Sec. 133. Bank holding company capital.
Sec. 134. Authority of State insurance regulator.

      Subtitle E--Subsidiaries of Insured Depository Institutions

Sec. 141. Subsidiaries of national banks authorized to engage in 
financial activities.
Sec. 142. Activities of subsidiaries of insured State banks.
Sec. 143. Rules applicable to financial subsidiaries.

                 Subtitle F--Direct Activities of Banks

Sec. 151. Powers of national banks.
Sec. 152. Banking products defined.
Sec. 153. Repeal of stock loan limit in Federal Reserve Act.

             Subtitle G--Noninsured Depository Institutions

Sec. 161. Wholesale financial institutions.
Sec. 162. Holding company control of uninsured depository institutions.

               Subtitle H--Federal Home Loan Bank System

Sec. 171. Federal home loan banks-
Sec. 172. Membership and collateral.
Sec. 172A. The Office of Finance.
Sec. 172B. Management of banks.
Sec. 173. Advances to nonmember borrowers.
Sec. 174. Powers and duties of banks.
Sec. 174A. Mergers and consolidations of Federal home loan banks.
Sec. 174B. Technical amendments.
Sec. 175. Definitions.
Sec. 176. Resolution funding corporation
Sec. 177. Capital structure of the Federal home loan banks.
Sec. 178. Investments.
Sec. 179. Federal Housing Finance Board.

  Subtitle I--Streamlining Antitrust Review of Bank Acquisitions and 
                                Mergers

Sec. 181. Amendments to the Bank Holding Company Act of 1956.
Sec. 182. Amendments to the Federal Deposit Insurance Act to vest in 
the Attorney General sole responsibility for antitrust review of 
depository institution mergers.
Sec. 183. Information filed by depository institutions; interagency 
data sharing.
Sec. 184. Annual GAO report.
Sec. 185. Applicability of antitrust laws.
Sec. 186. Effective date.

             Subtitle J--Redomestication of Mutual Insurers

Sec. 191. Redomestication of mutual insurers.
Sec. 192. Effect on State laws restricting redomestication.
Sec. 193. Definitions.
Sec. 194. Effective date.

Subtitle K--Applying the Principles of National Treatment and Equality 
   of Competitive Opportunity to Foreign Banks and Foreign Financial 
                              Institutions

Sec. 195. Applying the principles of national treatment and equality of 
competitive opportunity to foreign banks and foreign financial 
institutions.
Sec. 196. Applying the principles of national treatment and equality of 
competitive opportunity to foreign banks that are qualifying bank 
holding companies.
Sec. 197. Applying the principles of national treatment and equality of 
competitive opportunity to foreign banks and foreign financial 
institutions that are wholesale financial institutions.

                  Subtitle L--Effective Date of Title

Sec. 199. Effective date.

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Bank broker and dealer activities.
Sec. 204. Application of this title to banks registered as brokers or 
dealers.
Sec. 205. Exclusion from SIPC membership of banks registered as brokers 
or dealers.
Sec. 206. Effective date.

             Subtitle B--Bank Investment Company Activities

Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company Act of 
1940.
Sec. 216. Definition of dealer under the Investment Company Act of 
1940.
Sec. 217. Removal of the exclusion from the definition of investment 
adviser for banks that advise investment companies.
Sec. 218. Definition of broker under the Investment Advisers Act of 
1940.
Sec. 219. Definition of dealer under the Investment Advisers Act of 
1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Investment advisers prohibited from having controlling 
interest in registered investment company.
Sec. 223. Conforming change in definition.
Sec. 224. Effective date.

    TITLE III--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND 
                            INSURANCE FUNDS

Sec. 301. Short title; definitions.

  Subtitle A--Facilitating Conversion of Savings Associations to Banks

Sec. 311. Conversion to State or national banks.
Sec. 312. Mutual national banks and Federal mutual bank holding 
companies authorized.
Sec. 313. Grandfathered activities of savings associations.
Sec. 314. Branches of former savings associations.
Sec. 315. Programs for promoting housing finance.
Sec. 316. Savings and loan holding companies.
Sec. 317. Treatment of references in adjustable rate mortgages.
Sec. 318. Cost of funds indexes.

Subtitle B--Ending Separate Federal Regulation of Savings Associations 
                 and Savings and Loan Holding Companies

Sec. 321. State savings associations treated as State banks under 
Federal banking law.
Sec. 322. Powers of Federal savings associations accorded to national 
banks.
Sec. 323. Home Owners' Loan Act repealed.
Sec. 324. Conforming amendment reflecting elimination of the Federal 
thrift charter and the separate system of thrift regulation.
Sec. 325. Conforming amendments to the Federal Home Loan Bank Act.
Sec. 326. Amendments to title 11, United States Code.

                   Subtitle C--Combining OTS and OCC

Sec. 331. Prohibition of merger or consolidation repealed.
Sec. 332. Secretary of the Treasury required to formulate plans for 
combining Office of Thrift Supervision with Office of the Comptroller 
of the Currency.
Sec. 333. Office of Thrift Supervision and position of Director of the 
Office of Thrift Supervision abolished.
Sec. 334. Reconfiguration of board of directors of FDIC as a result of 
removal of Director of the Office of Thrift Supervision.
Sec. 335. Continuation provisions.

   Subtitle D--Technical and Conforming Amendments to the Depository 
                          Institution Statutes

Sec. 341. Amendments to the Federal Deposit Insurance Act.
Sec. 342. Amendment to the Bank Holding Company Act of 1956.
Sec. 343. Amendments to the Federal Reserve Act.
Sec. 344. Amendments to Alternative Mortgage Transaction Parity Act of 
1982.
Sec. 345. Amendments to the Bank Protection Act of 1968.
Sec. 346. Amendments to the Community Reinvestment Act of 1977.
Sec. 347. Amendments to the Depository Institutions Deregulation and 
Monetary Control Act of 1980.
Sec. 348. Amendments to the Depository Institution Management 
Interlocks Act.
Sec. 349. Amendment to the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996.
Sec. 350. Amendment to the Emergency Home Finance Act of 1970.
Sec. 351. Amendments to the Expedited Funds Availability Act.
Sec. 352. Amendments to the Federal Credit Union Act.
Sec. 353. Amendments to the Federal Financial Institutions Examination 
Council Act of 1978.
Sec. 354. Amendments to the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989.
Sec. 355. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 356. Amendments to the Housing and Community Development Act of 
1992.
Sec. 357. Amendment to the International Banking Act of 1978.
Sec. 358. Amendments to the National Housing Act.
Sec. 359. Amendment to Public Law 93-495.
Sec. 360. Amendment to the Real Estate Settlement Procedures Act of 
1974.
Sec. 361. Amendment to the Revised Statutes of the United States.
Sec. 362. Amendments to the Riegle Community Development and Regulatory 
Improvement Act of 1994.
Sec. 363. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 364. Amendments to the Truth in Savings Act.
Sec. 365. Effective date.

   Subtitle E--Technical and Conforming Amendments to Other Statutes

Sec. 371. Amendments to the Balanced Budget and Emergency Deficit 
Control Act of 1985.
Sec. 372. Amendments to the Consumer Credit Protection Act.
Sec. 373. Amendments to the Flood Disaster Protection Act of 1973.
Sec. 374. Amendments to the Securities Exchange Act of 1934.
Sec. 375. Amendments to title 5, United States Code.
Sec. 376. Amendments to title 18, United States Code.
Sec. 377. Amendment to title 31, United States Code.
Sec. 378. Effective date.

  TITLE IV--UNIFORM MULTISTATE LICENSING OF STATE-LICENSED INSURANCE 
                           AGENTS AND BROKERS

Sec. 401. State flexibility in multistate licensing reforms.
Sec. 402. National Association of Registered Agents and Brokers.
Sec. 403. Purpose.
Sec. 404. Relationship to the Federal government.
Sec. 405. Membership.
Sec. 406. Corporate powers.
Sec. 407. Board of directors.
Sec. 408. Officers.
Sec. 409. Meetings of board of directors.
Sec. 410. Bylaws, rules, and disciplinary action.
Sec. 411. Borrowing authority.
Sec. 412. Assessments.
Sec. 413. Functions of the council.
Sec. 414. Liability of the association and the directors, officers, and 
employees of the association.
Sec. 415. Relationship to State law.
Sec. 416. Coordination with other regulators.
Sec. 417. Judicial review.
Sec. 418. Definitions.

  TITLE I--POWERS AND AFFILIATIONS OF INSURED DEPOSITORY INSTITUTIONS

     Subtitle A--Removing Barriers to Affiliations Between Insured 
        Depository Institutions and Other Financial Institutions

SEC. 101. ANTI-AFFILIATION PROVISIONS OF ``GLASS-STEAGALL ACT'' 
                    REPEALED.

  (a) Section 20 Repealed.--Section 20 of the Banking Act of 1933 (12 
U.S.C. 377) is repealed.
  (b) Section 32 Repealed.--Section 32 of the Banking Act of 1933 (12 
U.S.C. 78) is repealed.

SEC. 102. REPEAL OF ACTIVITY RESTRICTIONS OF BANK HOLDING COMPANY ACT 
                    OF 1956.

  (a) In General.--Section 4 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1843) is amended by striking subsections (a), (b), (c), (e), 
(h), (i), and (j).
  (b) Conforming Amendment to the Bank Holding Company Act of 1956 to 
Reflect Expansion of Insurance Authority.--Section 3 of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1842(f)) is amended--
          (1) by striking subsection (f); and
          (2) by redesignating subsection (g) as subsection (f).
  (c) Technical and Conforming Amendment to the Bank Holding Company 
Act of 1956.--Section 2(h)(2) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(h)(2)) is amended by striking the 1st sentence and 
inserting the following new sentence: ``A bank holding company 
organized under the laws of a foreign country which is principally 
engaged in the banking business outside of the United States may 
acquire and hold shares of any company organized under the laws of a 
foreign country (or shares held by such company in any company engaged 
in the same general line of business as the investor company or in a 
business related to the business of the investor company) that is 
principally engaged in business outside the United States.''.
  (d) Conforming Changes to Other Statutes.--
          (1) Amendments to the federal reserve act to preserve 
        exemption from section 23a.--Section 23A(d)(5) of the Federal 
        Reserve Act (12 U.S.C. 371c(d)(5)) is amended by striking ``of 
        the kinds described in section 4(c)(1) of the Bank Holding 
        Company Act of 1956;'' and inserting ``engaged or to be engaged 
        solely in--
                  ``(A) holding or operating properties used wholly or 
                substantially by any bank subsidiary of a bank holding 
                company in the operations of such bank subsidiary or 
                acquired for such future use;
                  ``(B) conducting a safe deposit business;
                  ``(C) furnishing services to or performing services 
                for a bank holding company or its bank subsidiaries; or
                  ``(D) liquidating assets acquired from a bank holding 
                company or its bank subsidiaries;''.
          (2) Amendments to the bank export services act of 1982.--
        Section 206 of the Bank Export Services Act of 1982 (12 U.S.C. 
        635a-4) is amended--
                  (A) by striking ``as defined in section 
                4(c)(14)(F)(i) of the Bank Holding Company Act of 
                1956''; and
                  (B) by inserting at the end of the section the 
                following: ``For purposes of this section, the term 
                `export trading company' means a company that does 
                business under the laws of the United States or any 
                State, that is exclusively engaged in activities 
                related to international trade, and that is organized 
                and operated principally for purposes of exporting 
                goods or services produced in the United States or for 
                purposes of facilitating the exportation of goods or 
                services produced in the United States by unaffiliated 
                persons by providing one or more export trade services. 
                For purposes of this section, the term `export trade 
                services' includes consulting, international market 
                research, advertising, marketing, insurance (other than 
                acting as principal, agent or broker in the sale of 
                insurance on risks resident or located, or activities 
                performed, in the United States, except for insurance 
                covering the transportation of cargo from any point of 
                origin in the United States to a point of final 
                destination outside the United States), product 
                research and design, legal assistance, transportation, 
                including trade and data processing of foreign orders 
                to and for exporters and foreign purchasers, 
                warehousing, foreign exchange, financing, and taking 
                title to goods, when provided in order to facilitate 
                the export of goods or services produced in the United 
                States.''.
          (3) Amendment to the federal deposit insurance act to 
        preserve definition of commonly-controlled.--Section 5(e)(9)(A) 
        of the Federal Deposit Insurance Act (12 U.S.C. 1815(e)(9)(A)) 
        is amended by striking ``section 4(f)(6)'' and inserting 
        ``section 6(g)(6)''.
          (4) Amendment to the bank holding company act amendments of 
        1970.--Section 105 of the Bank Holding Company Act Amendments 
        of 1970 (12 U.S.C. 1850) is amended by striking ``, to engage 
        directly or indirectly in a nonbanking activity pursuant to 
        section 4 of such Act,''.
          (5) Amendment to the bank service company act.--Section 4(f) 
        of the Bank Service Company Act (12 U.S.C. 1864(f)) is amended 
        by striking the period and adding at the end the following: 
        ``(as in effect on the day before the date of enactment of the 
        Financial Services Competition Act of 1997).''.
          (6) Amendment to the international banking act of 1978.--
        Section 8(d) of the International Banking Act of 1978 (12 
        U.S.C. 3106(d)) is amended by striking ``and the exemptions 
        provided in sections 4(c)(1), 4(c)(2), 4(c)(3), and 4(c)(4) of 
        the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c)(1), 
        (2), (3), and (4))''.
          (7) Amendment to the right to financial privacy act of 
        1978.--Section 1101(6)(B) of the Right to Financial Privacy Act 
        of 1978 (12 U.S.C. 3401(6)) is amended by striking 
        ``4(f)(1)''and inserting ``6(f)(1)''.
          (8) Conforming amendment to the clayton act.--Section 
        7A(c)(8) of the Clayton Act (15 U.S.C. 18a(c)(8)) is repealed.

SEC. 103. QUALIFYING BANK HOLDING COMPANIES.

  (a) In General.--The Bank Holding Company Act of 1956 is amended by 
inserting after section 5 (12 U.S.C. 1844) the following new section:

``SEC. 6. QUALIFYING BANK HOLDING COMPANIES.

  ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Qualifying bank holding company.--The term `qualifying 
        bank holding company' means any bank holding company--
                  ``(A) all of the subsidiary depository institutions 
                of which are well capitalized;
                  ``(B) all of the subsidiary depository institutions 
                of which are well managed (as defined in section 
                5136A(a)(5)(D) of the Revised Statutes of the United 
                States);
                  ``(C) all of the subsidiary depository institutions 
                of which have achieved a rating of `satisfactory record 
                of meeting community credit needs', or better, at the 
                most recent examination of each such institution;
                  ``(D) all of the subsidiary depository institutions 
                of which have a demonstrable record of performance in 
                the provision of low-cost lifeline bank accounts;
                  ``(E) in the case of any bank holding company which 
                underwrites or sells, or any affiliate of which 
                underwrites or sells, annuities contracts or contracts 
                insuring, guaranteeing, or indemnifying against loss, 
                harm, damage, illness, disability, or death, which--
                          ``(i) has not been adjudicated in any Federal 
                        court, or has not entered into a consent decree 
                        filed in a Federal court or into a settlement 
                        agreement, premised upon a violation of the 
                        Fair Housing Act for the activities described 
                        in this subparagraph and is not in violation of 
                        any such decree or settlement agreement as 
                        determined by a court of competent jurisdiction 
                        or the agency with which the decree or 
                        agreement was entered into; or
                          ``(ii) has been exempted from the 
                        requirements of clause (i) by the Board under 
                        subsection (f)(3).
                  ``(F) that is deemed under paragraph (2) to be 
                engaged in activities in the United States that are 
                financial in nature or is engaged in activities that 
                are otherwise permissible under this Act (other than 
                activities engaged in pursuant to subsection (k));
                  ``(G) which, with respect to any activities engaged 
                in outside of the United States, engages in such 
                activities in conformance with subsection (f) and 
                section 2(h)(2); and
                  ``(H) that has filed with the Board a declaration 
                that it is a qualifying bank holding company.
          ``(2) Activities financial in nature.--A bank holding company 
        shall be deemed to be engaged in activities that are financial 
        in nature if not less than 85 percent of the gross revenues of 
        such company from activities conducted in the United States are 
        derived from financial activities in which such company or any 
        of its subsidiaries engages.
          ``(3) Financial activity.--The term `financial activity' 
        means any 1 or more of the following:
                  ``(A) Receiving money subject to a deposit or other 
                repayment obligation.
                  ``(B) Lending, exchanging, transferring, investing, 
                or safeguarding money or other financial assets.
                  ``(C) Providing any device or other instrumentality 
                for transferring money or other financial assets;
                  ``(D) Insuring, guaranteeing, or indemnifying against 
                loss, harm, damage, illness, disability, or death, or 
                providing and issuing annuities, and acting as 
                principal, agent, or broker for purposes of the 
                foregoing.
                  ``(E) Providing financial, investment, or economic 
                advisory or information services, including advising an 
                investment company (as defined in section 3 of the 
                Investment Company Act of 1940).
                  ``(F) Issuing or selling instruments representing 
                interests in pools of assets permissible for a bank to 
                hold directly.
                  ``(G) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 1 or 
                more entities (including entities other than depository 
                institutions or subsidiaries of depository institutions 
                that the bank holding company controls), or otherwise, 
                shares, assets, or ownership interests (including 
                without limitation debt or equity securities, 
                partnership interests, trust certificates, or other 
                instruments representing ownership) of a company or 
                other entity, whether or not constituting control of 
                such company or entity, engaged in any activity if--
                          ``(i) the shares, assets, or ownership 
                        interests are not acquired or held directly by 
                        a depository institution or a subsidiary of a 
                        depository institution;
                          ``(ii) such shares, assets, or ownership 
                        interests are acquired and held as part of a 
                        bona fide underwriting, or investment banking 
                        activity (including investment activities 
                        engaged in for the purpose of appreciation and 
                        ultimate sale or other disposition of the 
                        investment);
                          ``(iii) such shares, assets, or ownership 
                        interests are held for such a period as will 
                        permit the sale or disposition thereof on a 
                        reasonable basis consistent with the nature of 
                        the activities described in clause (ii); and
                          ``(iv) during the period such shares, assets, 
                        or ownership interests are held, the bank 
                        holding company does not actively manage or 
                        operate the company or entity, except insofar 
                        as necessary to achieve the objectives of 
                        clause (ii).
                  ``(H) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 1 or 
                more entities (including any subsidiary of the holding 
                company which is not a depository institution or a 
                subsidiary of a depository institution), or otherwise, 
                shares, assets, or ownership interests (including debt 
                or equity securities, partnership interests, trust 
                certificates, or other instruments representing 
                ownership) of a company or other entity, whether or not 
                constituting control of such company or entity, engaged 
                in activities not authorized pursuant to this section 
                if--
                          ``(i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution or a subsidiary of a 
                        depository institution;
                          ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by an insurance 
                        company that is predominantly engaged in 
                        underwriting life, accident and health, or 
                        property and casualty insurance (other than 
                        credit-related insurance);
                          ``(iii) such shares, assets, or ownership 
                        interests represent an investment made in the 
                        ordinary course of business of such insurance 
                        affiliate in accordance with relevant State law 
                        governing such investments; and
                          ``(iv) during the period such shares, assets, 
                        or ownership interests are held, the bank 
                        holding company does not directly or indirectly 
                        participate in the day-to-day management or 
                        operation of the company or entity except 
                        insofar as necessary to achieve the objectives 
                        of clauses (ii) and (iii).
                  ``(I) Arranging, effecting or facilitating financial 
                transactions for the account of third parties.
                  ``(J) Underwriting, dealing in, or making a market in 
                securities.
                  ``(K) Engaging in any activity that was, by 
                regulation or order, permissible for a bank holding 
                company pursuant to section 4(c)(8) of this Act, as in 
                effect on the day before the date of enactment of the 
                Financial Services Competition Act of 1997.
                  ``(L) Engaging, in the United States, in any activity 
                that--
                          ``(i) a bank holding company may engage in 
                        outside the United States; and
                          ``(ii) the Board determined, under 
                        regulations issued pursuant to section 4(c)(13) 
                        of this Act (as in effect on the day before the 
                        date of enactment of the Financial Services 
                        Competition Act of 1997) to be usual in 
                        connection with the transaction of banking or 
                        other financial operations abroad.
                  ``(M) Owning shares of any company to the extent 
                permissible under paragraph (6) or (7) of section 4(c) 
                of this Act, as in effect on the day before the date of 
                enactment of the Financial Services Competition Act of 
                1997.
                  ``(N) Engaging in any activity that the National 
                Council on Financial Services determines, by regulation 
                or order, to be the functional equivalent of any 
                activity described in 1 or more of subparagraphs (A) 
                through (M).
                  ``(O) Engaging in any activity that the National 
                Council on Financial Services determines by regulation 
                or order to be financial, or related to a financial 
                activity, having taken into account--
                          ``(i) the purposes of this Act and the 
                        Financial Services Competition Act of 1997;
                          ``(ii) changes or reasonably expected changes 
                        in the market in which bank holding companies 
                        compete;
                          ``(iii) changes or reasonably expected 
                        changes in the technology for delivering 
                        financial services; and
                          ``(iv) whether such activity is necessary or 
                        appropriate to allow a bank holding company and 
                        its affiliates to--
                                  ``(I) compete effectively with any 
                                company seeking to provide financial 
                                services in the United States;
                                  ``(II) use any available or emerging 
                                technological means, including any 
                                application necessary to protect the 
                                security or efficacy of systems for the 
                                transmission of data or financial 
                                transactions, in providing financial 
                                services; and
                                  ``(III) offer customers any available 
                                or emerging technological means for 
                                using financial services.
          ``(4) Well capitalized.--The term `well capitalized' has the 
        same meaning as in section 38 of the Federal Deposit Insurance 
        Act. For purposes of this section, the appropriate Federal 
        banking agency shall have exclusive jurisdiction to determine 
        whether an insured depository institution is well capitalized.
          ``(5) Foreign banks and companies.--For purposes of paragraph 
        (1), the Board shall establish and apply comparable capital 
        standards to a foreign bank that operates a branch or agency or 
        owns or controls a bank or commercial lending company in the 
        United States, and any company that owns or controls such 
        foreign bank, giving due regard to the principle of national 
        treatment and equality of competitive opportunity.
          ``(6) Limited exclusions from community needs requirements 
        for newly acquired depository institutions.--Any depository 
        institution acquired by a bank holding company during the 12-
        month period preceding the submission of a notice under 
        paragraph (1)(F) and any depository institution acquired after 
        the submission of such notice may be excluded for purposes of 
        paragraph (1)(C) during the 12-month period beginning on the 
        date of such acquisition if--
                  ``(A) the bank holding company has submitted an 
                affirmative plan to the appropriate Federal banking 
                agency to take such action as may be necessary in order 
                for such institution to achieve a rating of 
                `satisfactory record of meeting community credit 
                needs', or better, at the next examination of the 
                institution; and
                  ``(B) the plan has been accepted by such agency.
  ``(b) Authority to Engage in Activities Without Notice.--
          ``(1) In general.--A qualifying bank holding company may 
        engage, directly or through a subsidiary that is not an insured 
        depository institution (or a subsidiary thereof), in any 
        activity to the extent permissible under the Financial Services 
        Competition Act of 1997 without approval from or notice to the 
        Board.
          ``(2) Rule of construction.--No provision of this section 
        shall be construed as authorizing the acquisition of an 
        depository institution other than in accordance with section 3.
  ``(c) Restrictions Applicable to Nonqualifying Bank Holding 
Companies.--A bank holding company that is not a qualifying bank 
holding company may engage, directly or indirectly through a subsidiary 
that is not an insured depository institution (or a subsidiary of an 
insured depository institution), only in managing and controlling 
depository institutions and in any activity that was permissible under 
section 4(c) (as in effect on the day before the date of the enactment 
of the Financial Services Competition Act of 1997) other than 
underwriting securities which a national bank is not authorized to 
underwrite, except as otherwise provided by law.
  ``(d) Provisions Applicable to Qualifying Bank Holding Companies That 
Fail to Meet Requirements.--
          ``(1) In general.--If the Board finds that--
                  ``(A) a qualifying bank holding company is engaged, 
                directly or indirectly, in any activity other than 
                activities described in subsection (c); and
                  ``(B) such company is not in compliance with the 
                requirements of subsection (a)(1),
        the Board shall give notice to the company to that effect, 
        describing the conditions giving rise to the notice.
          ``(2) Agreement to correct conditions required.--Within 45 
        days of receipt by a qualifying bank holding company of a 
        notice given under paragraph (1) (or such additional period as 
        the Board may permit), the company shall execute an agreement 
        with the Board to comply with the requirements applicable to a 
        qualifying bank holding company.
          ``(3) Board may impose limitations.--Until the conditions 
        described in a notice to a qualifying bank holding company 
        under paragraph (1) are corrected, the Board may impose such 
        limitations on the conduct or activities of the company or any 
        affiliate of the company as the Board determines to be 
        appropriate under the circumstances.
          ``(4) Failure to correct.--If the conditions described in a 
        notice to a qualifying bank holding company under paragraph (1) 
        are not corrected within 180 days after receipt by the company 
        of notice under paragraph (1), the Board may require such 
        company, under such terms and conditions as may be imposed by 
        the Board and subject to such extension of time as may be 
        granted in the Board's discretion, either--
                  ``(A) to divest control of any subsidiary depository 
                institutions; or
                  ``(B) to cease to engage in any activity conducted by 
                such company or its subsidiaries (other than a 
                depository institution or a subsidiary of a depository 
                institution) that is not an activity that is 
                permissible under subsection (c).
  ``(e) Safeguards for Bank Subsidiaries.--A qualifying bank holding 
company shall assure that--
          ``(1) the procedures of the holding company for identifying 
        and managing financial and operational risks within the company 
        and the subsidiaries of such company which are not insured 
        depository institutions (or subsidiaries of such subsidiaries) 
        adequately protect the subsidiaries of such company which are 
        insured depository institutions from such risks;
          ``(2) the holding company has reasonable policies and 
        procedures to preserve the separate corporate identity and 
        limited liability of such company and the subsidiaries of such 
        company, for the protection of the company's subsidiary insured 
        depository institutions; and
          ``(3) the holding company complies with this section.
  ``(f) Exemptive Authority.--
          ``(1) Foreign banks and foreign investments.--The Board may 
        grant exemptions from any restriction on activities or 
        investments which is otherwise applicable to a bank holding 
        company, including a qualifying bank holding company--
                  ``(A) for shares held or activities conducted by a 
                company organized under the laws of a foreign country 
                the greater part of whose business is conducted outside 
                the United States; or
                  ``(B) for shares held of, or activities conducted by, 
                any company which does no business in the United States 
                except as an incident to such company's international 
                or foreign business,
        if the Board, by regulation or order, determines that, under 
        the circumstances and subject to any condition set forth in the 
        regulation or order, the exemption would not be substantially 
        at variance with the purposes of this Act or the Financial 
        Services Competition Act of 1997 and would be in the public 
        interest.
          ``(2) Continuation of prior exemption.--To the extent that 
        such action would not be substantially at variance with the 
        purposes of this Act and subject to such conditions as the 
        Board considers necessary to protect the public interest, the 
        Board by order, after opportunity for hearing, may grant 
        exemptions from the provisions of subsection (c) to any bank 
        holding company which controlled 1 bank prior to July 1, 1968, 
        and has not thereafter acquired the control of any other bank 
        in order--
                  ``(A) to avoid disrupting business relationships that 
                have existed over a long period of years without 
                adversely affecting the banks or communities involved;
                  ``(B) to avoid forced sales of small locally owned 
                banks to purchasers not similarly representative of 
                community interests; or
                  ``(C) to allow retention of banks that are so small 
                in relation to the holding company's total interests 
                and so small in relation to the banking market to be 
                served as to minimize the likelihood that the bank's 
                powers to grant or deny credit may be influenced by a 
                desire to further the holding company's other 
                interests.
          ``(3) Violations of the fair housing act.--The Board may, on 
        a case-by-case basis, exempt a bank holding company from 
        meeting the terms of subsection (a)(1)(E)(i) in satisfying the 
        definition of qualified bank holding company.
  ``(g) Certain Companies Not Treated as Bank Holding Companies.--
          ``(1) In general.--Except as provided in paragraph (9), any 
        company which--
                  ``(A) on March 5, 1987, controlled an institution 
                which became a bank as a result of the enactment of the 
                Competitive Equality Amendments of 1987; and
                  ``(B) was not a bank holding company on the day 
                before the date of the enactment of the Competitive 
                Equality Amendments of 1987,
        shall not be treated as a bank holding company for purposes of 
        this Act solely by virtue of such company's control of such 
        institution.
          ``(2) Loss of exemption.--Subject to paragraph (3), a company 
        described in paragraph (1) shall no longer qualify for the 
        exemption provided under such paragraph if--
                  ``(A) such company directly or indirectly--
                          ``(i) acquires control of an additional bank 
                        or an insured institution (other than an 
                        insured institution described in paragraph (10) 
                        or (12) of this subsection) after March 5, 
                        1987; or
                          ``(ii) acquires control of more than 5 
                        percent of the shares or assets of an 
                        additional bank or a savings association other 
                        than--
                                  ``(I) shares held as a bona fide 
                                fiduciary (whether with or without the 
                                sole discretion to vote such shares);
                                  ``(II) shares held by any person as a 
                                bona fide fiduciary solely for the 
                                benefit of employees of either the 
                                company described in paragraph (1) or 
                                any subsidiary of that company and the 
                                beneficiaries of those employees;
                                  ``(III) shares held temporarily 
                                pursuant to an underwriting commitment 
                                in the normal course of an underwriting 
                                business;
                                  ``(IV) shares held in an account 
                                solely for trading purposes;
                                  ``(V) shares over which no control is 
                                held other than control of voting 
                                rights acquired in the normal course of 
                                a proxy solicitation;
                                  ``(VI) loans or other accounts 
                                receivable acquired in the normal 
                                course of business;
                                  ``(VII) shares or assets acquired in 
                                securing or collecting a debt 
                                previously contracted in good faith, 
                                during the 2-year period beginning on 
                                the date of such acquisition or for 
                                such additional time (not exceeding 3 
                                years) as the Board may permit if the 
                                Board determines that such an extension 
                                will not be detrimental to the public 
                                interest;
                                  ``(VIII) shares or assets of a 
                                savings association described in 
                                paragraph (10) or (12) of this 
                                subsection;
                                  ``(IX) shares of a savings 
                                association held by any insurance 
                                company, as defined in section 2(a)(17) 
                                of the Investment Company Act of 1940, 
                                except as provided in paragraph (11);
                                  ``(X) shares issued in a qualified 
                                stock issuance under section 10(q) of 
                                the Home Owners' Loan Act; and
                                  ``(XI) assets that are derived from, 
                                or are incidental to, activities in 
                                which institutions described in section 
                                2(c)(2)(F) are permitted to engage,
                        except that the aggregate amount of shares held 
                        under this clause (other than under subclauses 
                        (I), (II), (III), (IV), (V), and (VIII)) may 
                        not exceed 15 percent of all outstanding shares 
                        or of the voting power of a savings 
                        association;
                  ``(B) any bank subsidiary of such company engages in 
                any activity in which the bank was not lawfully engaged 
                as of March 5, 1987, unless the bank is well managed 
                and well capitalized;
                  ``(C) any bank subsidiary of such company both--
                          ``(i) accepts demand deposits or deposits 
                        that the depositor may withdraw by check or 
                        similar means for payment to 3d parties; and
                          ``(ii) engages in the business of making 
                        commercial loans (and, for purposes of this 
                        clause, loans made in the ordinary course of a 
                        credit card operation shall not be treated as 
                        commercial loans); or
                  ``(D) after the date of the enactment of the 
                Competitive Equality Amendments of 1987, any bank 
                subsidiary of such company permits any overdraft 
                (including any intraday overdraft), or incurs any such 
                overdraft in such bank's account at a Federal reserve 
                bank, on behalf of an affiliate, other than an 
                overdraft described in paragraph (3).
          ``(3) Permissible overdrafts described.--For purposes of 
        paragraph (2)(C), an overdraft is described in this paragraph 
        if--
                  ``(A) such overdraft results from an inadvertent 
                computer or accounting error that is beyond the control 
                of both the bank and the affiliate; or
                  ``(B) such overdraft--
                          ``(i) is permitted or incurred on behalf of 
                        an affiliate which is monitored by, reports to, 
                        and is recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                          ``(ii) is fully secured, as required by the 
                        Board, by bonds, notes, or other obligations 
                        which are direct obligations of the United 
                        States or on which the principal and interest 
                        are fully guaranteed by the United States or by 
                        securities and obligations eligible for 
                        settlement on the Federal Reserve book entry 
                        system.
          ``(4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for the 
        exemption provided under such paragraph by operation of 
        paragraph (2), such exemption shall cease to apply to such 
        company and such company shall divest control of each bank it 
        controls before the end of the 180-day period beginning on the 
        date that the company receives notice from the Board that the 
        company has failed to continue to qualify for such exemption, 
        unless before the end of such 180-day period, the company has--
                  ``(A) corrected the condition or ceased the activity 
                that caused the company to fail to continue to qualify 
                for the exemption; and
                  ``(B) implemented procedures that are reasonably 
                adapted to avoid the reoccurrence of such condition or 
                activity.
          ``(5) Subsection ceases to apply under certain 
        circumstances.--This subsection shall cease to apply to any 
        company described in paragraph (1) if such company--
                  ``(A) registers as a bank holding company under 
                section 5(a) of this Act;
                  ``(B) immediately upon such registration, complies 
                with all of the requirements of this Act, and 
                regulations prescribed by the Board pursuant to this 
                Act, including the nonbanking restrictions of this 
                section; and
                  ``(C) does not, at the time of such registration, 
                control banks in more than one State, the acquisition 
                of which would be prohibited by section 3(d) of this 
                Act if an application for such acquisition by such 
                company were filed under section 3(a) of this Act.
          ``(6) Information requirement.--Each company described in 
        paragraph (1) shall, within 60 days after the date of enactment 
        of the Competitive Equality Amendments of 1987, provide the 
        Board with the name and address of such company, the name and 
        address of each bank such company controls, and a description 
        of each such bank's activities.
          ``(7) Examination.--The Board may, from time to time, examine 
        a company described in paragraph (1), or a bank controlled by 
        such company, or require reports under oath from appropriate 
        officers or directors of such company or bank solely for 
        purposes of assuring compliance with the provisions of this 
        subsection and enforcing such compliance.
          ``(8) Enforcement.--
                  ``(A) In general.--In addition to any other power of 
                the Board, the Board may enforce compliance with the 
                provisions of this Act which are applicable to any 
                company described in paragraph (1), and any bank 
                controlled by such company, under section 8 of the 
                Federal Deposit Insurance Act and such company or bank 
                shall be subject to such section (for such purposes) in 
                the same manner and to the same extent as if such 
                company or bank were a State member insured bank.
                  ``(B) Application of other act.--Any violation of 
                this Act by any company described in paragraph (1), and 
                any bank controlled by such company, may also be 
                treated as a violation of the Federal Deposit Insurance 
                Act for purposes of subparagraph (A).
                  ``(C) No effect on other authority.--No provision of 
                this paragraph shall be construed as limiting any 
                authority of the Comptroller of the Currency or the 
                Federal Deposit Insurance Corporation.
          ``(9) Tying provisions.--A company described in paragraph (1) 
        shall be--
                  ``(A) treated as a bank holding company for purposes 
                of section 106 of the Bank Holding Company Act 
                Amendments of 1970 and section 22(h) of the Federal 
                Reserve Act and any regulation prescribed under any 
                such section; and
                  ``(B) subject to the restrictions of section 106 of 
                the Bank Holding Company Act Amendments of 1970, in 
                connection with any transaction involving the products 
                or services of such company or affiliate and those of a 
                bank affiliate, as if such company or affiliate were a 
                bank and such bank were a subsidiary of a bank holding 
                company.
          ``(10) Exemption unaffected by certain emergency 
        acquisitions.--For purposes of clauses (i) and (ii)(VIII) of 
        paragraph (2)(A), an insured institution is described in this 
        paragraph if--
                  ``(A) the insured institution was acquired (or any 
                shares or assets of such institution were acquired) by 
                a company described in paragraph (1) in an acquisition 
                under section 408(m) of the National Housing Act or 
                section 13(k) of the Federal Deposit Insurance Act; and
                  ``(B) either--
                          ``(i) the insured institution is located in a 
                        State in which such company controlled a bank 
                        on March 5, 1987; or
                          ``(ii) the insured institution has total 
                        assets of $500,000,000 or more at the time of 
                        such acquisition.
          ``(11) Shares held by insurance affiliates.--Shares described 
        in clause (ii)(IX) of paragraph (2)(A) shall not be excluded 
        for purposes of clause (ii) of such paragraph if--
                  ``(A) all shares held under such clause (ii)(IX) by 
                all insurance company affiliates of such savings 
                association in the aggregate exceed 5 percent of all 
                outstanding shares or of the voting power of the 
                savings association; or
                  ``(B) such shares are acquired or retained with a 
                view to acquiring, exercising, or transferring control 
                of the savings association.
          ``(12) Exemption unaffected by certain other acquisitions.--
        For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A), 
        an insured institution is described in this paragraph if the 
        insured institution was acquired (or any shares or assets of 
        such institution were acquired) by a company described in 
        paragraph (1)--
                  ``(A) from the Resolution Trust Corporation, the 
                Federal Deposit Insurance Corporation, or the Director 
                of the Office of Thrift Supervision, in any capacity; 
                or
                  ``(B) in an acquisition in which the insured 
                institution has been found to be in danger of default 
                (as defined in section 3 of the Federal Deposit 
                Insurance Act) by the appropriate Federal or State 
                authority.
          ``(13) Special rule relating to shares acquired in a 
        qualified stock issuance.--A company described in paragraph (1) 
        that holds shares issued in a qualified stock issuance pursuant 
        to section 10(q) of the Home Owners' Loan Act by any savings 
        association or savings and loan holding company (neither of 
        which is a subsidiary) shall not be deemed to control such 
        savings association or savings and loan holding company solely 
        because such company holds such shares unless--
                  ``(A) the company fails to comply with any 
                requirement or condition imposed by paragraph 
                (2)(A)(ii)(X) or section 10(q) of the Home Owners' Loan 
                Act with respect to such shares; or
                  ``(B) the shares are acquired or retained with a view 
                to acquiring, exercising, or transferring control of 
                the savings association or savings and loan holding 
                company.
  ``(h) Limitations on Certain Banks.--
          ``(1) In general.--Notwithstanding any other provision of 
        this section (other than the last sentence of subsection 
        (a)(2)), a bank holding company which controls an institution 
        that became a bank as a result of the enactment of the 
        Competitive Equality Amendments of 1987 may retain control of 
        such institution if such institution does not--
                  ``(A) engage in any activity after the date of the 
                enactment of such Amendments which would have caused 
                such institution to be a bank (as defined in section 
                2(c), as in effect before such date) if such activities 
                had been engaged in before such date; or
                  ``(B) increase the number of locations from which 
                such institution conducts business after March 5, 1987.
          ``(2) Limitations cease to apply under certain 
        circumstances.--The limitations contained in paragraph (1) 
        shall cease to apply to a bank described in such paragraph at 
        such time as the acquisition of such bank, by the bank holding 
        company referred to in such paragraph, would not be prohibited 
        under section 3(d) of this Act if--
                  ``(A) an application for such acquisition were filed 
                under section 3(a) of this Act; and
                  ``(B) such bank were treated as an additional bank 
                (under section 3(d)).
  ``(i) Limitation on Bank Holding Company Affiliations.--
          ``(1) In general.--Except as otherwise provided in this Act, 
        a bank holding company may not become affiliated with any 
        company--
                  ``(A) less than 85 percent of the gross revenues of 
                which from activities conducted in the United States 
                are derived from financial activities in which such 
                company or any subsidiary of such company engages; and
                  ``(B) which has consolidated assets, at the time such 
                affiliation first occurs, of more than $750,000,000.
          ``(2) Mirror image.--Except as otherwise provided in this 
        Act, no company that is, or is affiliated with, a company 
        described in subparagraphs (A) and (B) of paragraph (1) may 
        become a bank holding company.
  ``(j) Transactions with Nonfinancial Affiliates.--A subsidiary 
insured depository institution of a bank holding company may not engage 
in a covered transaction (as defined by section 23A(b)(7) of the 
Federal Reserve Act) with any affiliate unless the affiliate is engaged 
only in activities that are financial in nature (as defined in 
subsection (a)(2)).''.
  (b) Grandfather Shares Held Under Prior Exception.--A company that, 
on the date of the enactment of this Act, holds shares on the basis of 
an exception provided under section 4 of the Bank Holding Company Act 
of 1956, as in effect on the day before such date of enactment, may 
continue to retain such shares after such date subject to the same 
terms and conditions as were applicable, in accordance with such 
section 4 (as in effect on such day), to the retention of the shares by 
the company before such date of enactment.
  (c) Technical and Conforming Amendments.--
          (1) Section 4 of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1843) is amended by striking subsections (d), (f), and 
        (g).
          (2) The heading and section designation for section 4 of the 
        Bank Holding Company Act of 1956 is amended to read as follows:

``SEC. 4. [REPEALED].''.

          (3) Section 2(n) of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1841(n)) is amended by inserting `` `depository 
        institution','' after ``insured depository institution',''.

SEC. 104. CERTAIN STATE LAWS PREEMPTED.

  (a) In General.--No State may by law, regulation, order, 
interpretation, or otherwise, prevent or restrict an insured depository 
institution or a wholesale financial institution (as authorized 
pursuant to section 161 of this Act) from--
          (1) being affiliated with an entity (including an entity 
        engaged in insurance activities) as authorized by this Act or 
        any other provision of law; or
          (2) engaging, directly or indirectly or in conjunction with 
        such affiliate, in any activity (including the sale of 
        insurance underwritten by an affiliate or any other insurance 
        activity) authorized under this Act or any other provision of 
        law.
  (b) Rule of Construction.--No provision of subsection (a) shall be 
construed so as to prohibit a State regulator (after giving notice to 
the appropriate Federal banking agency to the extent practicable) from 
exercising, with respect to an affiliate of an insured depository 
institution, such authority as such State regulator may have under 
State law relating to the rehabilitation, conservatorship, 
receivership, or liquidation of the affiliate.

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

  (a) In General.--Section 3(f)(2) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1842(f)(2)) (as redesignated by section 102(b) of this 
Act) is amended to read as follows:
          ``(2) Regulations.--A bank holding company organized as a 
        mutual holding company shall be regulated on terms, and shall 
        be subject to limitations, comparable to those applicable to 
        any other bank holding company.''.

SEC. 106. COMPANIES NOT ENGAGED IN ACTIVITIES FINANCIAL IN NATURE.

  Section 6 of the Bank Holding Company Act of 1956 (as added by 
section 103 of this Act) is amended by adding at the end the following 
new subsection:
  ``(k) Control of a Qualifying Bank Holding Company by a Company Not 
Engaged in Activities Financial in Nature.--
          ``(1) In general.--
                  ``(A) Control of 1 bank authorized.--Notwithstanding 
                subsection (i), a company that is engaged predominantly 
                in nonfinancial activities on a consolidated basis may 
                only control a qualifying bank holding company and not 
                more than 1 bank subject to the provisions of this 
                subsection.
                  ``(B) Exclusion from treatment as holding company.--
                Any company that is engaged predominantly in 
                nonfinancial activities and controls a qualifying bank 
                holding company and not more than 1 bank in accordance 
                with this subsection, shall not become a bank holding 
                company for purposes of this Act solely by virtue of 
                such company's control of such qualifying bank holding 
                company and bank.
                  ``(C) Financial activities required to be conducted 
                in holding company subsidiary.--Any financial activity 
                engaged in by a company that controls a qualifying bank 
                holding company pursuant to paragraph (1) must conduct 
                such activity through a subsidiary of the qualifying 
                bank holding company.
          ``(2) Control of 1 bank.--The provisions of subparagraphs (A) 
        and (B) of paragraph (1) shall not apply to any company if--
                  ``(A) such company directly or indirectly acquires 
                control of a bank other than--
                          ``(i) an institution described in section 
                        2(c)(2) or section 6(g)(1) controlled by such 
                        company before the date of enactment of the 
                        Financial Services Competition Act of 1997 that 
                        becomes a bank; or
                          ``(ii) a bank with total consolidated assets 
                        not in excess of $500,000,000 that has been 
                        chartered for at least 5 years prior to its 
                        date of acquisition by such company; and such 
                        bank is and remains at all times a subsidiary 
                        of a qualifying bank holding company controlled 
                        by such company;
                  ``(B) such company directly or indirectly acquires 
                control of all or substantially all of the assets of an 
                additional bank; or
                  ``(C) the gross revenues of the bank controlled by 
                such company exceed 15 percent of the consolidated 
                gross revenues of such company derived from activities 
                conducted in the United States.
          ``(3) Enforcement of violations.--If the Board finds that a 
        company is not in compliance with the provisions of this 
        subsection, the Board shall enforce the provisions of this 
        subsection in the same manner as that described in subsection 
        (d) for a qualifying bank holding company.
          ``(4) Antitying and insider transactions.--A company 
        described in paragraph (1) shall be treated as a bank holding 
        company for purposes of section 106 of the Bank Holding Company 
        Act Amendments of 1970 and section 22(h) of the Federal Reserve 
        Act and any regulation prescribed under any such section.''.

SEC. 107. AMENDMENT TO ENSURE THAT BANKS ACQUIRED BY OTHER ENTITIES DO 
                    NOT BECOME DEPOSIT PRODUCTION OFFICES.

  (a) In General.--Section 109(d) of the Riegle-Neal Interstate Banking 
and Branching Efficiency Act of 1994 (12 U.S.C. 1835a(d)) is amended--
          (1) by inserting ``, the Financial Services Competition Act 
        of 1997,'' after ``pursuant to this title''; and
          (2) by inserting ``or such Act'' after ``made by this 
        title''.
  (b) Technical and Conforming Amendment.--Section 109(e)(4) of the 
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (12 
U.S.C. 1835a(e)(4)) is amended by inserting ``and any branch of a bank 
controlled by an out-of-State bank holding company (as defined in 
section 2(o)(7) of the Bank Holding Company Act of 1956)'' before the 
period.

SEC. 108. CLARIFICATION OF APPLICABILITY OF BRANCH CLOSURE REQUIREMENTS 
                    IN INTERSTATE BANKING OPERATIONS.

  Section 42(d)(4)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
1831r-1(d)(4)(A)) is amended by inserting ``and any bank controlled by 
an out-of-State bank holding company (as defined in section 2(o)(7) of 
the Bank Holding Company Act of 1956)'' before the period.

                   Subtitle B--Additional Safeguards

SEC. 111. FIREWALL SAFEGUARDS.

  (a) Comptroller of the Currency.--
          (1) In general.--The Comptroller of the Currency may, by 
        regulation or order, impose restrictions or requirements on 
        relationships or transactions between a national bank and a 
        subsidiary of the national bank which the Comptroller finds is 
        consistent with the public interest, the purposes of this Act, 
        title LXII of the Revised Statutes of the United States, and 
        other Federal law applicable to national banks, and the 
        standards in paragraph (2).
          (2) Standards.--The Comptroller of the Currency may exercise 
        authority under paragraph (1) if the Comptroller finds that 
        such action will have any of the following effects:
                  (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                  (B) Enhance the financial stability of bank holding 
                companies.
                  (C) Avoid conflicts of interest or other abuses.
                  (D) Enhance the privacy of customers of the national 
                bank or any subsidiary of the bank.
                  (E) Promote the application of national treatment and 
                equality of competitive opportunity between nonbank 
                affiliates owned or controlled by domestic bank holding 
                companies and nonbank affiliates owned or controlled by 
                foreign banks operating in the United States.
          (3) Review.--The Comptroller of the Currency shall 
        regularly--
                  (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                  (B) modify or eliminate any restriction or 
                requirement the Comptroller finds is no longer required 
                for such purposes.
  (b) Board of Governors of the Federal Reserve System.--
          (1) In general.--The Board of Governors of the Federal 
        Reserve System may, by regulation or order, impose restrictions 
        or requirements on relationships or transactions--
                  (A) between a depository institution subsidiary of a 
                bank holding company and any affiliate of such 
                depository institution (other than a subsidiary of such 
                institution); or
                  (B) between a State member bank and a subsidiary of 
                such bank,
        which the Board finds is consistent with the public interest, 
        the purposes of this Act, the Bank Holding Company Act of 1956, 
        the Federal Reserve Act and other Federal law applicable to 
        depository institution subsidiaries of bank holding companies 
        or State banks (as the case may be), and the standards in 
        paragraph (2).
          (2) Standards.--The Board of Governors of the Federal Reserve 
        System may exercise authority under paragraph (1) if the Board 
        finds that such action will have any of the following effects:
                  (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                  (B) Enhance the financial stability of bank holding 
                companies.
                  (C) Avoid conflicts of interest or other abuses.
                  (D) Enhance the privacy of customers of the State 
                member bank or any subsidiary of the bank.
                  (E) Promote the application of national treatment and 
                equality of competitive opportunity between nonbank 
                affiliates owned or controlled by domestic bank holding 
                companies and nonbank affiliates owned or controlled by 
                foreign banks operating in the United States.
          (3) Review.--The Board of Governors of the Federal Reserve 
        System shall regularly--
                  (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                  (B) modify or eliminate any restriction or 
                requirement the Board finds is no longer required for 
                such purposes.
  (c) Federal Deposit Insurance Corporation.--
          (1) In general.--The Federal Deposit Insurance Corporation 
        may, by regulation or order, impose restrictions or 
        requirements on relationships or transactions between a State 
        nonmember bank (as defined in section 3 of the Federal Deposit 
        Insurance Act) and a subsidiary of the State nonmember bank 
        which the Corporation finds is consistent with the public 
        interest, the purposes of this Act, the Federal Deposit 
        Insurance Act, or other Federal law applicable to State 
        nonmember banks and the standards in paragraph (2).
          (2) Standards.--The Federal Deposit Insurance Corporation may 
        exercise authority under paragraph (1) if the Corporation finds 
        that such action will have any of the following effects:
                  (A) Avoid any significant risk to the safety and 
                soundness of depository institutions or any Federal 
                deposit insurance fund.
                  (B) Enhance the financial stability of bank holding 
                companies.
                  (C) Avoid conflicts of interest or other abuses.
                  (D) Enhance the privacy of customers of the State 
                nonmember bank or any subsidiary of the bank.
                  (E) Promote the application of national treatment and 
                equality of competitive opportunity between nonbank 
                affiliates owned or controlled by domestic bank holding 
                companies and nonbank affiliates owned or controlled by 
                foreign banks operating in the United States.
          (3) Review.--The Federal Deposit Insurance Corporation shall 
        regularly--
                  (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to determine 
                whether there is a continuing need for any such 
                restriction or requirement to carry out the purposes of 
                the Act, including any purpose described in paragraph 
                (2); and
                  (B) modify or eliminate any restriction or 
                requirement the Corporation finds is no longer required 
                for such purposes.

SEC. 112. CONSUMER PROTECTION.

  (a) In General.--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. CONSUMER PROTECTION REGULATIONS.

  ``(a) Regulations Required.--
          ``(1) In general.--Each Federal banking agency shall 
        prescribe and publish in final form, not later than 3 months 
        after the effective date of the Financial Services Competition 
        Act of 1997, consumer protection regulations which--
                  ``(A) apply to retail sales, solicitations, 
                advertising, or offers of any nondeposit product by any 
                insured depository institution or any person who is 
                engaged in such activities at an office of the 
                institution or on behalf of the institution; and
                  ``(B) meet the requirements of this section and 
                provide such additional protections for consumers to 
                whom such sales, solicitations, advertising, or offers 
                are directed as the agency determines to be 
                appropriate.
          ``(2) Applicability to subsidiaries.--The regulations 
        prescribed pursuant to paragraph (1) shall extend such 
        protections to any subsidiaries of an insured depository 
        institution, as deemed appropriate by the regulators referred 
        to in paragraph (3), where such extension is necessary to 
        ensure the consumer protections provided by this section.
          ``(3) Consultation and joint regulations.--The Federal 
        banking agencies shall consult with each other and prescribe 
        joint regulations pursuant to paragraph (1), after consultation 
        with the Securities and Exchange Commission and the National 
        Association of Insurance Commissioners, as appropriate.
          ``(4) Nondeposit product defined.--For purposes of this 
        section, the term `nondeposit product'--
                  ``(A) means any investment and insurance product 
                which is not a deposit;
                  ``(B) includes shares issued by a registered 
                investment company; and
                  ``(C) does not include--
                          ``(i) any loan or any other extension of 
                        credit by an insured depository institution;
                          ``(ii) any letter of credit;
                          ``(iii) any trust services;
                          ``(iv) any discount; or
                          ``(v) any other instrument or insurance or 
                        investment product specifically excluded from 
                        the definition of such term by regulations 
                        prescribed jointly by the Federal banking 
                        agencies, to the extent necessary to carry out 
                        the purpose of this Act.
  ``(b) Sales Practices.--The regulations prescribed pursuant to 
subsection (a) shall include the following provisions relating to sales 
practices in connection with the sale of nondeposit products:
          ``(1) Anticoercion rules.--
                  ``(A) In general.--Anticoercion rules prohibiting an 
                insured depository institution from engaging in any 
                practice that would lead a consumer to believe an 
                extension of credit, in violation of section 106(b) of 
                the Bank Holding Company Act Amendments of 1970, is 
                conditional upon--
                          ``(i) the purchase of a nondeposit product 
                        from the institution or any of its affiliates 
                        or subsidiaries; or
                          ``(ii) an agreement by the consumer not to 
                        obtain, or a prohibition on the consumer from 
                        obtaining, a nondeposit product from an 
                        unaffiliated entity.
                  ``(B) Applicability to subsidiaries.--Regulations 
                prescribed under subparagraph (A) shall apply to 
                subsidiaries of insured depository institutions if the 
                regulators determine such application is necessary to 
                prevent coercive activities.
          ``(2) Suitability of product.--
                  ``(A) In general.--Standards to ensure that an 
                investment product sold to a consumer is suitable and 
                any other nondeposit product is appropriate for the 
                consumer based on financial information disclosed by 
                the consumer.
                  ``(B) Rules of fair practice.--In prescribing the 
                standards under subparagraph (A) with respect to the 
                sale of investments, the Federal banking agencies shall 
                take into account the Rules of Fair Practice of the 
                National Association of Securities Dealers.
  ``(c) Disclosures and Advertising.--The regulations prescribed 
pursuant to subsection (a) shall include the following provisions 
relating to disclosures and advertising at the time the consumer opens 
an account for the purchase of any nondeposit product or in connection 
with the initial purchase of a nondeposit product:
          ``(1) Disclosures.--
                  ``(A) In general.--Requirements that the following 
                disclosures be made orally and in writing before the 
                completion of the initial sale and, in the case of 
                clause (iv), at the time of application for an 
                extension of credit:
                          ``(i) Uninsured status.--The product is not 
                        insured by the Federal Deposit Insurance 
                        Corporation, or the United States Government as 
                        appropriate.
                          ``(ii) Insurance product.--In the case of an 
                        insurance product, the product is not 
                        guaranteed by an insured depository 
                        institution.
                          ``(iii) Investment risk.--In the case of an 
                        investment product, there is an investment risk 
                        associated with the product, including possible 
                        loss of principal.
                          ``(iv) Coercion.--The approval of an 
                        extension of credit may not be conditioned on--
                                  ``(I) the purchase of a nondeposit 
                                product from the institution in which 
                                the application for credit is pending 
                                or any of its affiliates or 
                                subsidiaries; or
                                  ``(II) an agreement by the consumer 
                                not to obtain, or a prohibition on the 
                                consumer from obtaining, a nondeposit 
                                product from an unaffiliated entity.
                  ``(B) Making disclosure readily understandable.--
                Regulations prescribed under subparagraph (A) shall 
                encourage the use of disclosure that is conspicuous, 
                simple, direct, and readily understandable such as the 
                following:
                          ``(i) `NOT FDIC-INSURED'.
                          ``(ii) `NOT GUARANTEED BY THE BANK'.
                          ``(iii) `MAY GO DOWN IN VALUE'.
                  ``(C) Adjustments for alternative methods of 
                purchase.--In prescribing the requirements under 
                subparagraphs (A) and (D), necessary adjustments shall 
                be made for purchase in person, by telephone or by 
                electronic media to provide for the most appropriate 
                and complete form of disclosure and acknowledgements.
                  ``(D) Consumer acknowledgement.--
                          ``(i) In general.--A requirement that an 
                        insured depository institution shall require 
                        any person selling a nondeposit product at any 
                        office of, or on behalf of, the institution to 
                        obtain, at the time a consumer receives the 
                        disclosures required under subsection (c)(1) or 
                        at the time of the initial purchase by the 
                        consumer of such product, a separate statement, 
                        signed and dated by the consumer, which 
                        contains the declaration that the purchaser has 
                        received the disclosure required under this 
                        subsection with respect to such product.
                          ``(ii) Application to subsidiaries.--If the 
                        regulations require subsidiaries of insured 
                        depository institutions to make the disclosures 
                        under this section, the regulations shall 
                        require that these subsidiaries obtain the 
                        consumer acknowledgement provided for in this 
                        subparagraph.
          ``(2) Prohibition on misrepresentations.--
                  ``(A) Insurance.--A prohibition on any practice, or 
                any advertising, at any office of, or on behalf of, the 
                insured depository institution, or any subsidiary as 
                appropriate, which could mislead any person or 
                otherwise cause a reasonable person to reach an 
                erroneous belief with respect to--
                          ``(i) the uninsured nature of any nondeposit 
                        insurance product sold, or offered for sale by 
                        the institution or any subsidiary of the 
                        institution; or
                          ``(ii) the investment risk associated with 
                        any such product.
                  ``(B) Securities.--With regard to securities, a 
                prohibition on any practice, or any advertising, at any 
                office of the insured depository institution, or any 
                subsidiary as appropriate, which could violate section 
                10(b) of the Securities Exchange Act of 1934.
  ``(d) Separation of Banking and Nonbanking Activities.--
          ``(1) Regulations required.--The regulations prescribed 
        pursuant to subsection (a) shall include such provisions as the 
        Federal banking agencies consider appropriate to ensure that 
        the routine acceptance of deposits is kept, to the extent 
        practicable, physically segregated from nondeposit product 
        activity.
          ``(2) Minimum requirements.--Regulations prescribed pursuant 
        to paragraph (1) shall include, at a minimum, the following 
        requirements:
                  ``(A) Separate setting.--A clear delineation of the 
                setting in which, and the circumstances under which, 
                transactions involving nondeposit products may be 
                effected to ensure that such activity is conducted in a 
                location physically segregated from the area where 
                retail deposits are routinely accepted.
                  ``(B) Certain persons prohibited from selling 
                nondeposit products.--Standards prohibiting any person 
                accepting deposits from the public in an area where 
                deposits are routinely taken in an insured depository 
                institution from selling or offering to sell, or 
                offering an opinion or investment advice on, any 
                nondeposit product.
                  ``(C) Referrals.--The regulations shall include 
                standards which permit any such person to refer a 
                customer who seeks to purchase, or seeks an opinion or 
                investment advice on, any nondeposit product to a 
                qualified person who sells or provides opinions or 
                investment advice on such product, only if the person 
                making the referral receives no more than a one-time 
                nominal fee of a fixed dollar amount for each referral 
                that does not depend on whether the referral results in 
                a transaction.
                  ``(D) Qualification requirements and training.--
                Standards prohibiting any insured depository 
                institution from permitting any person to sell or offer 
                for sale, or provide an opinion or investment advice 
                about, any nondeposit product in any part of any office 
                of the institution, or on behalf of the institution, 
                unless such person--
                          ``(i) is registered with a self-regulatory 
                        organization or the Securities and Exchange 
                        Commission, as appropriate, as a broker or 
                        dealer, as a representative of a broker or 
                        dealer, or as an investment adviser; or
                          ``(ii) meets qualification and training 
                        requirements which the Federal banking agencies 
                        jointly determine are equivalent to the 
                        training and qualification requirements 
                        applicable to a person who is registered with a 
                        self-regulatory organization or the Commission 
                        as a broker or dealer, as a representative of a 
                        broker or dealer, or as an investment adviser, 
                        as the case may be; or
                          ``(iii) in the case of insurance sales, is 
                        appropriately qualified.
                  ``(E) Compensation programs.--Standards to ensure 
                that compensation programs are not structured in such a 
                way as to provide incentives for the sales of 
                nondeposit products that are not suitable or 
                appropriate for the consumer.
  ``(e) Consumer Grievance Process.--The Federal banking agencies shall 
jointly establish a consumer complaint mechanism, for receiving and 
addressing expeditiously meritorious consumer complaints alleging a 
violation of regulations issued under the section, which shall--
          ``(1) establish a group within each regulatory agency to 
        receive such complaints;
          ``(2) develop procedures for investigating such complaints;
          ``(3) develop procedures for informing consumers of rights 
        they may have in connection with such complaints; and
          ``(4) develop procedures for addressing concerns raised by 
        such complaints, as appropriate.
  ``(f) No Effect on Other Authority.--
          ``(1) In general.--No provision of this section shall be 
        construed as granting, limiting, or otherwise affecting--
                  ``(A) any authority of the Securities and Exchange 
                Commission, any self-regulatory organization, the 
                Municipal Securities Rulemaking Board, or the Secretary 
                of the Treasury under any Federal securities law;
                  ``(B) any authority of any State insurance 
                commissioner or other State authority under any State 
                insurance law; or
                  ``(C) the applicability of any Federal securities law 
                or any State securities or insurance law, or any 
                regulation prescribed by the Commission, any self-
                regulatory organization, the Municipal Securities 
                Rulemaking Board, the Secretary of the Treasury, or any 
                State insurance commissioner or other State authority 
                pursuant to any such law, to any person.
          ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                  ``(A) Federal securities law.--The term `Federal 
                securities law' has the meaning given to the term 
                `securities laws' in section 3(a)(47) of the Securities 
                Exchange Act of 1934.
                  ``(B) Self-regulatory organization.--The term `self-
                regulatory organization' has the meaning given to such 
                term in section 3(a)(26) of the Securities Exchange Act 
                of 1934.''.
  (b) Safeguards Applicable to Brokers and Dealers That Are, or Are 
Affiliated With, Insured Depository Institutions.--
          (1) In general.--The Securities and Exchange Commission, in 
        consultation with the appropriate Federal banking agencies, 
        shall carry out the purposes of this section by prescribing 
        rules regarding sales of securities by--
                  (A) any insured depository institution registered as 
                a broker under the Securities Exchange Act of 1934; or
                  (B) any registered broker or dealer that is a 
                subsidiary or affiliate of an insured depository 
                institution.
          (2) Scope of regulations.--Regulations prescribed under 
        paragraph (1) shall, at a minimum, establish requirements with 
        respect to--
                  (A) disclosures of information concerning coverage 
                under the Securities Investor Protection Act of 1970 
                and the Federal Deposit Insurance Act; and
                  (B) disclosures of the financial interest of the 
                depository institution or any securities subsidiary or 
                securities affiliate with respect to referrals or 
                transactions.
          (3) Making disclosure readily understandable.--
                  (A) Written disclosure.--Regulations prescribed under 
                this subsection shall encourage the use of disclosure 
                that is simple, direct, and readily understandable, 
                such as the following:
                          (i) ``NOT FDIC-INSURED OR SIPC-INSURED''.
                          (ii) ``NOT GUARANTEED BY THE BANK''.
                          (iii) ``MAY GO DOWN IN VALUE''.
                  (B) Oral disclosure.--Regulations prescribed under 
                this subsection shall encourage the use of oral 
                disclosure as a supplement to written disclosure.
  (c) Authority of National Council on Financial Services.--To carry 
out the purposes of this section, the National Council on Financial 
Services may--
          (1) prescribe regulations under section 45 of the Federal 
        Deposit Insurance Act that are more stringent than those 
        prescribed by the appropriate Federal banking agencies; and
          (2) prescribe regulations under subsection (b) that are more 
        stringent than those prescribed by the Securities and Exchange 
        Commission.
  (d) Biennial Review of Regulations.--Beginning on June 30, 2001, the 
National Council on Financial Services shall biennially review the 
regulations prescribed under this section to determine whether they 
adequately carry out the purposes of this section.
  (e) Definitions.--For purposes of this section, the terms 
``appropriate Federal banking agency'' and ``insured depository 
institution'' have the same meanings as in section 3 of the Federal 
Deposit Insurance Act.

SEC. 113. OBLIGATIONS OF SUBSIDIARIES AND AFFILIATES CANNOT BE EXTENDED 
                    TO INSURED DEPOSITORY INSTITUTIONS.

  The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended 
by inserting after section 45 (as added by section 112(a) of this 
subtitle) the following new section:

``SEC. 46. OBLIGATIONS OF SUBSIDIARIES AND AFFILIATES CANNOT BE 
                    EXTENDED TO INSURED DEPOSITORY INSTITUTIONS.

  ``(a) In General.--Notwithstanding any other law (including any law 
relating to insurance), no obligation of an affiliate or subsidiary of 
an insured depository institution arising more than 270 days after the 
date of enactment of the Financial Services Competition Act of 1997 may 
be charged against such insured depository institution by reason of any 
ruling, determination, or judgment disregarding the separate corporate 
identity or limited liability of the insured depository institution or 
the affiliate or subsidiary.
  ``(b) Maintenance of Separate Corporate Identity and Separate Legal 
Status.--
          ``(1) In general.--The appropriate Federal banking agency 
        shall take steps, including conducting the review required by 
        paragraph (2), to assure that each insured depository 
        institution observes the separate corporate identity and 
        separate legal status of each of the institutions' subsidiaries 
        and affiliates.
          ``(2) Examinations.--Each appropriate Federal banking agency, 
        when examining an insured depository institution, shall review 
        whether the institution is observing the separate corporate 
        identity and separate legal status of the institution's 
        subsidiaries and affiliates.
  ``(c) Misrepresentations Regarding Depository Institution Liability 
Prohibited.--
          ``(1) In general.--No institution-affiliated party of an 
        insured depository institution or institution-affiliated party 
        of a subsidiary or affiliate of an insured depository 
        institution shall fraudulently represent that the institution 
        is or will be liable for any obligation of a subsidiary or 
        other affiliate of the institution.
          ``(2) Criminal penalty.--Whoever violates paragraph (1) shall 
        be fined not more than $100,000, imprisoned for not more than 1 
        year, or both.
          ``(3) Institution-affiliated party defined.--For purposes of 
        this subsection, the term `institution-affiliated party' with 
        respect to a subsidiary or affiliate has the same meaning as in 
        section 3 except references to an insured depository 
        institution shall be deemed to be references to a subsidiary or 
        affiliate of an insured depository institution.
  ``(d) Rule of Construction.--This section shall not be construed as--
          ``(1) excusing an insured depository institution from--
                  ``(A) any liability that it has expressly and 
                lawfully assumed; or
                  ``(B) any liability to which it would be otherwise 
                subject for engaging or participating in any violation 
                of law or any breach of contract;
          ``(2) limiting the authority of the Corporation under section 
        5(e);
          ``(3) permitting any obligation to be charged against an 
        insured depository institution that would not otherwise be 
        charged against the institution; or
          ``(4) prohibiting joint or cooperative marketing, information 
        sharing, or the purchase or sale of services among 
        affiliates.''.

           Subtitle C--National Council on Financial Services

SEC. 121. ESTABLISHMENT AND OPERATION OF THE COUNCIL.

  (a) Establishment and Purposes.--As of the date of enactment of this 
Act, there is established a National Council on Financial Services 
(hereafter in this subtitle referred to as the ``Council''), which, 
among other functions specified in this Act, shall seek generally to 
improve the efficiency and competitiveness of the United States 
financial services system by increasing coordination among regulators 
of financial services providers and monitoring innovations in the 
delivery of financial services for the benefit of the United States 
economy and consumers.
  (b) Membership.--The Council shall consist of the following members:
          (1) The Secretary of the Treasury.
          (2) The Chairman of the Board of Governors of the Federal 
        Reserve System.
          (3) The Chairperson of the Federal Deposit Insurance 
        Corporation.
          (4) The Comptroller of the Currency.
          (5) The Chairman of the Securities and Exchange Commission.
          (6) The Chairman of the Commodity Futures Trading Commission.
          (7) 1 individual with current or prior experience in 
        securities regulation at the State level who shall be appointed 
        by the President, by and with the advice and consent of the 
        Senate, for a term of 3 years.
          (8) 2 individuals with current or prior experience in 
        insurance regulation at the State level who shall be appointed 
        by the President (after soliciting the views of the National 
        Association of Insurance Commissioners with regard to any such 
        appointment), by and with the advice and consent of the Senate, 
        for a term of 3 years.
          (9) 1 individual with current or prior experience in State 
        banking supervision who shall be appointed by the President, by 
        and with the advice and consent of the Senate, for a term of 3 
        years.
  (c) Chairperson.--The Secretary of the Treasury shall be the 
Chairperson of the Council.
  (d) Vice Chairperson.--The Chairman of the Board of Governors of the 
Federal Reserve System shall be the Vice-Chairperson of the Council.
  (e) Compensation.--
          (1) Agency members.--Each member of the Council specified in 
        paragraphs (1) through (6) of subsection (b) (hereafter in this 
        section referred to as ``agency members'') shall serve without 
        additional compensation.
          (2) Individual member.--The members of the Council described 
        in paragraph (7), (8), or (9) of subsection (b) shall serve 
        without compensation, but shall be entitled, per diem, to 
        reasonable expenses directly related to duties carried out as a 
        member of the Council.
  (f) Expenses of the Council.--
          (1) Agency member expenses.--The agency of each agency member 
        of the Council shall be responsible for expenses associated 
        with the agency member's participation in the functions of the 
        Council.
          (2) Other expenses.--Any other expenses of the Council, 
        including expenses described in subsection (e)(2), shall be 
        shared pro rata among the agencies of the agency members.
  (g) Action by the Council.--
          (1) Quorum.--A majority of members of the Council shall 
        constitute a quorum.
          (2) Final Action by the council.--On matters determined by 
        the Council to require an affirmative vote to constitute final 
        action by the Council, such vote shall require a majority of a 
        quorum of Council members.
          (3) Direct voting.--Members of the Council shall not vote 
        through any designee.

SEC. 122. FUNCTIONS OF THE COUNCIL.

  (a) In General.--In addition to the authority conferred on the 
Council by other provisions of this Act, the Council shall have the 
authority specified in this section.
  (b) Authority to Issue Regulations.--
          (1) Calculation of gross revenues test.--Before the end of 
        the 1-year period beginning on the date of enactment of this 
        Act, the Council shall issue final regulations prescribing the 
        method for calculating compliance with the gross revenues test 
        for purposes of section 6(a)(2) of the Bank Holding Company Act 
        of 1956.
          (2) Resolution of disputes involving the definition of 
        insurance.--The Council shall determine whether an activity or 
        product is an insurance activity or product or a banking 
        activity or product as provided in section 5136(b)(2) of the 
        Revised Statutes of the United States.
          (3) Definition of financial activity and activity related to 
        a financial activity.--The Council may issue regulations or 
        orders finding an activity to be financial or related to a 
        financial activity, or nonfinancial or not related to a 
        financial activity, for purposes of section 6(a)(3) of the Bank 
        Holding Company Act of 1956 or section 5136A of the Revised 
        Statutes.
          (4) Additional safeguards.--The Council may, by regulation or 
        order, impose restrictions or requirements on relationships or 
        transactions involving a depository institution and any 
        affiliate or subsidiary of any such institution engaged in any 
        activity that is not permissible for a national bank to engage 
        in directly, if the Council finds that such restrictions or 
        requirements will promote safety and soundness in the financial 
        services system or will enhance consumer protection.
  (c) Enforcement of Council Actions.--Actions taken by the Council 
shall be binding on the agencies represented on the Council and 
enforced by the agency responsible for supervising an entity to which 
an action of the Council applies.
  (d) Privacy Study.--The members of the National Council on Financial 
Services, or the designees of any such members, in consultation with 
the Federal Trade Commission, shall--
          (1) report to the Congress before the end of the 1-year 
        period beginning on the date of the enactment of this Act on 
        the implications of broader affiliations between companies and 
        the increasing use of technology in the provision of financial 
        services for the ability of consumers to control and safeguard 
        the use of their financial information; and
          (2) make recommendations for appropriate legislative or 
        administrative action, if necessary, to better safeguard 
        consumer privacy.

SEC. 123. ADVISORY COUNCIL ON COMMUNITY REVITALIZATION.

  (a) Establishment and Purposes.--Upon the enactment of this Act, the 
Council shall establish an advisory council to be known as the Advisory 
Council on Community Revitalization (hereafter in this section referred 
to as the ``Advisory Council'') to examine the impact of new insurance 
and securities activities of qualifying bank holding companies and to 
make recommendations and reports to the Congress and the Council in 
accordance with this section.
  (b) Membership.--
          (1) In general.--The Advisory Council shall consist of 10 
        members as follows:
                  (A) 6 members, 1 appointed by each agency member (as 
                defined in section 121(e)(1)) from among officers and 
                employees of the department, agency or independent 
                establishment of which such member is the head.
                  (B) 1 member appointed by the Secretary of Commerce 
                from among individuals who, by virtue of their 
                education, training, or experience, are well-qualified 
                to represent the views of the insurance industry on the 
                Advisory Council.
                  (C) 1 member appointed by the Chairman of the 
                Securities and Exchange Commission from among 
                individuals who, by virtue of their education, 
                training, or experience, are well-qualified to 
                represent the views of the securities industry on the 
                Advisory Council.
                  (D) 2 members appointed by the Secretary of the 
                Treasury from among representatives of well-
                established, nationally recognized consumer 
                organizations.
          (2) Chairperson.--The member appointed by the Secretary of 
        the Treasury under paragraph (1)(A) shall serve as the 
        chairperson of the Advisory Council.
          (3) Compensation.--
                  (A) Agency members.--Each member of the Advisory 
                Council who is appointed under paragraph (1)(A) shall 
                serve without additional compensation.
                  (B) Individual member.--Each member of the Advisory 
                Council who is appointed under subparagraph (B), (C), 
                or (D) of paragraph (1) shall serve without 
                compensation, but shall receive travel expenses, 
                including per diem in lieu of subsistence, in 
                accordance with sections 5702 and 5703 of title 5, 
                United States Code.
          (4) Term.--Each member shall be appointed for the life of the 
        Advisory Council.
          (5) Vacancy.--A vacancy in the Advisory Council shall be 
        filled in the manner in which the original appointment was 
        made.
          (6) Meetings.--The Advisory Council shall meet, not less 
        frequently than quarterly, subject to the call of the 
        chairperson or a majority of the members.
          (7) Quorum.--A majority of the members appointed under 
        paragraph (1)(A) and a majority of the members appointed under 
        subparagraphs (B), (C), and (D) of paragraph (1) shall 
        constitute a quorum for purposes of agreeing to the contents of 
        any report submitted under this section but a lesser number may 
        meet to conduct routine business.
  (c) Recommendations and Reports.--
          (1) Recommendations for meeting credit and insurance needs.--
        Before the end of the 1-year period beginning on the date of 
        the enactment of this Act, the Advisory Council shall submit 
        recommendations to the Congress and the Council for enhancing 
        insurance and securities activities of qualifying bank holding 
        companies to meet the credit and insurance needs of all 
        citizens and communities, including underserved communities and 
        populations.
          (2) Periodic reports on impact of act for limited period.--
        Before the end of the 18-month period beginning on the date of 
        the enactment of this Act and annually thereafter for a 5-year 
        period, the Advisory Council shall submit a report to the 
        Congress and the Council on the impact this Act (and the 
        amendments made by this Act to other provisions of law) on the 
        capital and credit needs of all citizens and communities, 
        including underserved communities and populations.
  (d) Expenses and Administrative Support.--
          (1) Expenses.--The expenses of the Advisory Council shall be 
        paid by the Council in the manner described in section 
        121(f)(2), except that, for purposes of this paragraph, the 
        Commodity Futures Trading Commission shall not be included in 
        the distribution of expenses among member agencies under such 
        section.
          (2) Administrative support.--The agencies represented by 
        members appointed under subsection (b)(1)(A) shall provide to 
        the Advisory Council the administrative support services 
        necessary for the Advisory Council to carry out its 
        responsibilities under this section.
  (e) Federal Advisory Committee Act Does Not Apply.--The Federal 
Advisory Committee Act shall not apply with respect to the Advisory 
Council.

              Subtitle D--Bank Holding Company Supervision

SEC. 131. STREAMLINING BANK HOLDING COMPANY SUPERVISION.

  Section 5(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1844(c)) is amended to read as follows:
  ``(c) Reports and Examinations.--
          ``(1) Reports.--
                  ``(A) In general.--The Board from time to time may 
                require any bank holding company to submit reports, 
                under oath or otherwise, to enable the Board to 
                determine compliance with the provisions of this Act 
                and regulations and orders issued thereunder.
                  ``(B) Use of existing reports.--
                          ``(i) In general.--The Board shall not 
                        require any report pursuant to subparagraph (A) 
                        if information sufficient for the Board to make 
                        the determinations required under subparagraph 
                        (A) is reasonably available from any other 
                        source.
                          ``(ii) Use.--The Board shall, as far as 
                        possible, use the reports of examination or 
                        comparable reports prepared by any Federal or 
                        State regulatory agency, or any self-regulatory 
                        organization for purposes of subparagraph (A).
                          ``(iii) Availability.--Each Federal and State 
                        regulatory agency and self-regulatory 
                        organization referred to in clause (ii) shall 
                        make the reports referred to in such clause 
                        available to the Board upon request.
                  ``(C) Exemptions from reporting requirements.--
                          ``(i) In general.--The Board may, by 
                        regulation or order, exempt any company or 
                        class of companies, under such terms and 
                        conditions and for such periods as the Board 
                        shall provide, from this paragraph and any 
                        regulations prescribed under this paragraph.
                          ``(ii) Criteria for exemption.--In granting 
                        an exemption under clause (i), the Board shall 
                        consider, among other factors--
                                  ``(I) whether information of the type 
                                required under this paragraph is 
                                available from a supervisory agency (as 
                                defined in section 1101(7) of the Right 
                                to Financial Privacy Act of 1978), the 
                                Commodity Futures Trading Commission, 
                                or a foreign regulatory body of a 
                                similar type;
                                  ``(II) the primary business of the 
                                company;
                                  ``(III) the nature and extent of 
                                domestic or foreign regulation of the 
                                activities of such company; and
                                  ``(IV) the absolute and relative size 
                                within the company of the subsidiary 
                                depository institutions of the company.
          ``(2) Examinations.--
                  ``(A) Examination authority.--The Board may make 
                examinations of each bank holding company and each 
                subsidiary thereof, the cost of which shall be assessed 
                against, and made payable by such holding company.
                  ``(B) Limitations on examination authority for bank 
                holding companies and nonbank subsidiaries.--The Board 
                may make examinations of each bank holding company and 
                each nonbank subsidiary (other than a subsidiary of a 
                depository institution) in order to--
                          ``(i) inform the Board of the nature of the 
                        operations and financial condition of the 
                        holding company and such subsidiaries;
                          ``(ii) inform the Board of--
                                  ``(I) the financial and operational 
                                risks within the holding company system 
                                that may pose a threat to the safety 
                                and soundness of any subsidiary 
                                depository institution of such holding 
                                company; and
                                  ``(II) the systems of the holding 
                                company; and
                          ``(iii) monitor compliance with the 
                        provisions of this Act and those governing 
                        transactions and relationships between any 
                        subsidiary depository institution and such 
                        subsidiaries.
                  ``(C) Restricted focus of examinations.--The Board 
                shall, to the fullest extent possible, limit the focus 
                and scope of any examination of a bank holding company 
                to--
                          ``(i) the bank holding company; and
                          ``(ii) any nonbank subsidiary of the holding 
                        company (other than a subsidiary of a 
                        depository institution) that, because of--
                                  ``(I) the size, condition, or 
                                activities of the subsidiary;
                                  ``(II) the nature or size of 
                                transactions between such subsidiary 
                                and any depository institution which is 
                                also a subsidiary of such holding 
                                company; or
                                  ``(III) the centralization of 
                                functions within the holding company 
                                system,
                        could have a materially adverse effect on the 
                        safety and soundness of any depository 
                        institution affiliate of the holding company.
                  ``(D) Deference to bank examinations.--The Board 
                shall, to the fullest extent possible, use, for the 
                purposes of this section, the reports of examinations 
                of depository institutions made by the appropriate 
                Federal and State depository institution supervisory 
                authority.
                  ``(E) Deference to other examinations.--The Board 
                shall, to the fullest extent possible, use the reports 
                of examination made of--
                          ``(i) any registered broker or dealer by or 
                        on behalf of the Securities and Exchange 
                        Commission;
                          ``(ii) any licensed insurance company by or 
                        on behalf of any state regulatory authority 
                        responsible for the supervision of insurance 
                        companies; and
                          ``(iii) any other subsidiary that the Board 
                        finds to be comprehensively supervised by a 
                        Federal or State authority.
          ``(3) Notice to banking agencies of financial and operational 
        concerns.--Any agency represented on the National Council on 
        Financial Services or any State supervisory authority shall 
        notify the Board and the appropriate Federal banking agency or 
        State bank supervisor of significant financial or operational 
        risks to any depository institution resulting from the 
        activities of any affiliate of a depository institution.
          ``(4) Transfer of board authority to appropriate federal 
        banking agency.--
                  ``(A) In general.--In the case of any bank holding 
                company which is not significantly engaged in 
                nonbanking activities, the Board, in consultation with 
                the appropriate Federal banking agency, may designate 
                the appropriate Federal banking agency of the lead 
                insured depository institution subsidiary of such 
                holding company as the appropriate Federal banking 
                agency for the bank holding company.
                  ``(B) Authority transferred.--An agency designated by 
                the Board under subparagraph (A) shall have the same 
                authority as the Board under this Act to--
                          ``(i) examine and require reports from the 
                        bank holding company and any affiliate of such 
                        company (other than a bank) under section 5;
                          ``(ii) approve or disapprove applications or 
                        transactions under section 3, 6, or 11;
                          ``(iii) take actions and impose penalties 
                        under subsections (e) and (f) of section 5 and 
                        section 8; and
                          ``(iv) take actions regarding the holding 
                        company, any affiliate of the holding company 
                        (other than a bank), or any institution-
                        affiliated party of such company or affiliate 
                        under the Federal Deposit Insurance Act and any 
                        other statute which the Board may designate.
                  ``(C) Agency orders.--Section 9 (of this Act) and 
                section 105 of the Bank Holding Company Act Amendments 
                of 1970 shall apply to orders issued by an agency 
                designated under subparagraph (A) in the same manner 
                such sections apply to orders issued by the Board.
          ``(5) Functional regulation of securities and insurance 
        activities.--The Board shall defer to--
                  ``(A) the Securities and Exchange Commission with 
                regard to all interpretations of, and the enforcement 
                of, applicable Federal securities laws relating to the 
                activities, conduct, and operations of registered 
                brokers, dealers, investment advisers, and investment 
                companies; and
                  ``(B) the relevant State insurance authorities with 
                regard to all interpretations of, and the enforcement 
                of, applicable State insurance laws relating to the 
                activities, conduct, and operations of insurance 
                companies and insurance agents.''.

SEC. 132. ADMINISTRATION OF THE BANK HOLDING COMPANY ACT OF 1956.

  (a) Prevention of Duplicative Filings.--Section 5(a) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1844(a)) is amended by adding 
the following new sentence at the end: ``A declaration filed pursuant 
to section 6(a)(1)(F) shall satisfy the requirements of this subsection 
with regard to the registration of a bank holding company but not any 
requirement to file an application to acquire a bank pursuant to 
section 3.''.
  (b) Divestiture Procedures.--Section 5(e)(1) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1844(e)(1)) is amended--
          (1) by striking ``Financial Institutions Supervisory Act of 
        1966, order'' and inserting ``Financial Institutions 
        Supervisory Act of 1966, at the election of the bank holding 
        company--
          ``(A) order''; and
          (2) by striking ``shareholders of the bank holding company. 
        Such distribution'' and inserting ``shareholders of the bank 
        holding company; or
          ``(B) order the bank holding company, after due notice and 
        opportunity for hearing, and after consultation with the bank's 
        primary supervisor, which shall be the Comptroller of the 
        Currency in the case of a national bank, and the Federal 
        Deposit Insurance Corporation and the appropriate State 
        supervisor in the case of an insured nonmember bank, to 
        terminate (within 120 days or such longer period as the Board 
        may direct) the ownership or control of any such bank by such 
        company.
``The distribution referred to in subparagraph (A)''.

SEC. 133. BANK HOLDING COMPANY CAPITAL.

  Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) is 
amended by adding at the end the following new subsections:
  ``(g) [Reserved]
  ``(h) Capital Adequacy Guidelines.--
          ``(1) Capital adequacy provisions.--The Board may adopt 
        capital adequacy rules or guidelines for bank holding 
        companies.
          ``(2) Methods of calculation.--In developing rules or 
        guidelines under paragraph (1)--
                  ``(A) Focus on double leverage.--The Board shall 
                address the use by bank holding companies of debt and 
                other liabilities to fund capital investments in 
                subsidiary depository institutions.
                  ``(B) No unweighted capital ratio.--The Board shall 
                not, by rule, regulation, guideline, order, or 
                otherwise, impose a capital ratio that is not based on 
                appropriate risk-weighting considerations.
                  ``(C) No capital requirement on regulated entities.--
                The Board shall not, by rule, regulation, guideline, 
                order, or otherwise, impose any capital adequacy 
                provision on a nondepository institution subsidiary 
                that is in compliance with applicable capital 
                requirements of another Federal or State regulatory 
                authority.
                  ``(D) Appropriate exclusions.--The Board shall take 
                full account of--
                          ``(i) the capital requirements made 
                        applicable to any nondepository institution 
                        subsidiary by another Federal or State 
                        regulatory authority; and
                          ``(ii) industry norms for capitalization of a 
                        company's unregulated subsidiaries and 
                        activities.
                  ``(E) Consultation with other supervisors.--The Board 
                shall consult with the appropriate Federal or State 
                regulatory authority in developing capital adequacy 
                guidelines for bank holding companies that are 
                predominantly engaged, either directly or through 
                nondepository institution subsidiaries, in activities 
                that are supervised by that authority.
                  ``(F) Appropriate differentiation of holding 
                companies.--The Board may differentiate between 
                different classes or categories of bank holding 
                companies, in particular between bank holding companies 
                that are predominantly engaged in owning and operating 
                insured depository institutions, bank holding companies 
                which do not own or control insured depository 
                institutions, and bank holding companies which are 
                predominantly engaged in activities that are supervised 
                by another Federal or State regulatory authority.
                  ``(G) Internal risk management models.--The Board may 
                incorporate internal risk management models into its 
                capital adequacy guidelines or rules.''.

SEC. 134. AUTHORITY OF STATE INSURANCE REGULATOR.

  Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844) is 
amended by inserting after subsection (h) (as added by section 133 of 
this subtitle) the following new subsection:
  ``(i) Authority of State Insurance Regulator.--
          ``(1) In general.--Notwithstanding any other provision of 
        law, any regulation, order, or other action of the Board which 
        requires a bank holding company to provide funds or other 
        assets to a subsidiary insured depository institution shall not 
        be effective nor enforceable if--
                  ``(A) such funds or assets are to be provided by--
                          ``(i) a bank holding company which is an 
                        insurance company; or
                          ``(ii) an affiliate of the insured depository 
                        institution which is an insurance company; and
                  ``(B) the State insurance authority for the insurance 
                company determines in writing sent to the insurance 
                company and the Board that the insurance company shall 
                not provide such funds or assets because such action 
                would have a material adverse effect on the financial 
                condition of the insurance company.
          ``(2) Divestiture in lieu of other action.--If the Board 
        receives a notice described in paragraph (1)(B) from a State 
        insurance authority with regard to a bank holding company 
        referred to in such paragraph, the Board may order the bank 
        holding company to divest the insured depository institution 
        within 180 days of receiving notice from the State insurance 
        authority or such longer period as the Board determines 
        consistent with the safe and sound operation of the insured 
        depository institution.
          ``(3) Conditions before divestiture.--During the period 
        beginning on the date an order to divest is issued by the Board 
        under paragraph (2) to a bank holding company and ending on the 
        date the divestiture is completed, the Board may impose any 
        conditions or restrictions on the holding company's ownership 
        or operation of the insured depository institution, including 
        restricting or prohibiting transactions between the insured 
        depository institution and any affiliate of the institution, as 
        are appropriate under the circumstances.''.

      Subtitle E--Subsidiaries of Insured Depository Institutions

SEC. 141. SUBSIDIARIES OF NATIONAL BANKS AUTHORIZED TO ENGAGE IN 
                    FINANCIAL ACTIVITIES.

  (a) Financial Subsidiaries of National Banks.--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 as section 5136C; and
          (2) by inserting after section 5136 (12 U.S.C. 24) the 
        following new section:

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

  ``(a) Subsidiaries of National Banks Authorized to Engage in 
Financial Activities.--
          ``(1) In general.--A subsidiary of a national bank may engage 
        in an activity that is not permissible for a national bank to 
        engage in directly, but only if--
                  ``(A) the activity is a financial activity (as 
                defined in paragraph (4));
                  ``(B) the national bank is well capitalized, well 
                managed, and achieved a rating of `satisfactory record 
                of meeting community credit needs', or better, at the 
                most recent examination of the bank;
                  ``(C) all depository institution affiliates of such 
                national bank are well capitalized, well managed, and 
                have achieved a rating of `satisfactory record of 
                meeting community credit needs', or better, at the most 
                recent examination of each such institution; and
                  ``(D) the bank has received the approval of the 
                Comptroller of the Currency.
          ``(2) No effect on edge act or agreement corporations.--
        Paragraph (1) shall not apply with respect to any subsidiary 
        which is a corporation organized under section 25A of the 
        Federal Reserve Act or a corporation operating under section 25 
        of such Act.
          ``(3) Other subsidiaries prohibited.--A national bank may not 
        control any subsidiary other than a subsidiary--
                  ``(A) which engages solely in activities that are 
                permissible for a national bank to engage in directly 
                or are authorized under paragraph (1); or
                  ``(B) which a national bank may control pursuant to 
                section 25 or 25A of the Federal Reserve Act, the Bank 
                Service Company Act, or any other Act that expressly by 
                its terms authorizes national banks to control 
                subsidiaries.
          ``(4) Financial activity defined.--For purposes of this 
        section and subject to paragraph (5), the term `financial 
        activity' means any 1 or more of the following:
                  ``(A) Receiving money subject to a deposit or other 
                repayment obligation.
                  ``(B) Lending, exchanging, transferring, investing, 
                or safeguarding money or other financial assets.
                  ``(C) Providing any device or other instrumentality 
                for transferring money or other financial assets.
                  ``(D) Acting as agent or broker in the placement of 
                annuities contracts or contracts insuring, 
                guaranteeing, or indemnifying against loss, harm, 
                damage, illness, disability, or death.
                  ``(E) Providing financial, investment, or economic 
                advisory or information services, including advising an 
                investment company (as defined in section 3 of the 
                Investment Company Act of 1940).
                  ``(F) Issuing or selling instruments representing 
                interests in pools of assets permissible for a bank to 
                hold directly.
                  ``(G) Arranging, effecting, or facilitating financial 
                transactions for the account of third parties.
                  ``(H) Underwriting, dealing in, or making a market in 
                securities.
                  ``(I) Engaging in any activity that was, by 
                regulation or order, permissible for a bank holding 
                company pursuant to section 4(c)(8) of the Bank Holding 
                Company Act of 1956 (as in effect on the day before the 
                date of enactment of the Financial Services Competition 
                Act of 1997).
                  ``(J) Engaging, in the United States, in any activity 
                that--
                          ``(i) a bank holding company may engage in 
                        outside the United States; and
                          ``(ii) the Board of Governors of the Federal 
                        Reserve System determined, under regulations 
                        issued pursuant to section 4(c)(13) of the Bank 
                        Holding Company Act of 1956 (as in effect on 
                        the day before the date of enactment of the 
                        Financial Services Competition Act of 1997) to 
                        be usual in connection with the transaction of 
                        banking or other financial operations abroad;
                  ``(K) Owning shares of a company to the extent 
                permissible under section 4(c)(7) of the Bank Holding 
                Company Act of 1956 (as in effect on the day before the 
                date of enactment of the Financial Services Competition 
                Act of 1997).
                  ``(L) Engaging in any activity that the National 
                Council on Financial Services determines by regulation 
                or order is the functional equivalent of any activity 
                described in 1 or more of subparagraphs (A) through 
                (K).
                  ``(M) Engaging in any activity that the National 
                Council on Financial Services determines by regulation 
                or order to be financial, or related to a financial 
                activity, having taken into account--
                          ``(i) the purposes of this title and the 
                        Financial Services Competition Act of 1997;
                          ``(ii) changes or reasonably expected changes 
                        in the market in which bank subsidiaries 
                        compete;
                          ``(iii) changes or reasonable expected 
                        changes in the technology delivering financial 
                        services; and
                          ``(iv) whether such activity is necessary or 
                        appropriate to allow a bank and the 
                        subsidiaries of a bank to--
                                  ``(I) compete effectively with any 
                                company seeking to provide financial 
                                services in the United States;
                                  ``(II) use any available or emerging 
                                technological means, including any 
                                application necessary to protect the 
                                security or efficacy of systems for the 
                                transmission of data or financial 
                                transactions, in providing financial 
                                services; and
                                  ``(III) offer customers any available 
                                or emerging technological means for 
                                using financial services.
          ``(5) Other definitions.--For purposes of this section, the 
        following definitions shall apply:
                  ``(A) Financial subsidiary.--The term `financial 
                subsidiary' means a company which--
                          ``(i) is a subsidiary of a national bank 
                        (other than a corporation organized under 
                        section 25A of the Federal Reserve Act or a 
                        corporation operating under section 25 of such 
                        Act); and
                          ``(ii) is engaged in a financial activity 
                        pursuant to paragraph (1) that is not a 
                        permissible activity for a national bank to 
                        engage in directly.
                  ``(B) Subsidiary.--The term `subsidiary' has the 
                meaning given to such term in section 2 of the Bank 
                Holding Company Act of 1956.
                  ``(C) Well capitalized.--The term `well capitalized' 
                has the same meaning as in section 38 of the Federal 
                Deposit Insurance Act and, for purposes of this 
                section, the Comptroller shall have exclusive 
                jurisdiction to determine whether a national bank is 
                well capitalized.
                  ``(D) Well managed.--The term `well managed' means--
                          ``(i) in the case of a bank that has been 
                        examined, unless otherwise determined in 
                        writing by the Comptroller, the achievement 
                        of--
                                  ``(I) a composite rating of 1 or 2 
                                under the Uniform Financial 
                                Institutions Rating System (or an 
                                equivalent rating under an equivalent 
                                rating system) in connection with the 
                                most recent examination or subsequent 
                                review of the bank; and
                                  ``(II) at least a rating of 2 for 
                                management, if that rating is given; or
                          ``(ii) in the case of any national bank that 
                        has not been examined, the existence and use of 
                        managerial resources that the Comptroller 
                        determines are satisfactory.
          ``(6) Insurance underwriting, merchant banking, and direct 
        investment.--Except as provided in section 5136(b)(1)(B) of the 
        Revised Statutes of the United States, no subsidiary of a 
        national bank (other than a corporation organized under section 
        25A of the Federal Reserve Act or a corporation operating under 
        section 25 of such Act) may underwrite noncredit-related 
        insurance, engage in real estate investment or development 
        activities (except to the extent a national bank is 
        specifically authorized by statute to engage in any such 
        activity directly), or engage in merchant banking (as described 
        in section 6(a)(3)(G) of the Bank Holding Company Act of 1956).
          ``(7) Limited exclusions from community needs requirements 
        for newly acquired depository institutions.--Any depository 
        institution which becomes affiliated with a national bank 
        during the 12-month period preceding the submission of an 
        application to acquire a financial subsidiary and any 
        depository institution which becomes so affiliated after the 
        approval of such application may be excluded for purposes of 
        paragraph (1)(C) during the 12-month period beginning on the 
        date of such acquisition if--
                  ``(A) the national bank has submitted an affirmative 
                plan to the Comptroller of the Currency to take such 
                action as may be necessary in order for such 
                institution to achieve a `satisfactory record of 
                meeting community credit needs', or better, during the 
                most recent examination of the institution; and
                  ``(B) the plan has been accepted by the Comptroller.
  ``(b) Capital Deduction Required.--
          ``(1) In general.--In determining compliance with applicable 
        capital standards--
                  ``(A) the amount of a national bank's equity 
                investment in a financial subsidiary shall be deducted 
                from the national bank's assets and tangible equity; 
                and
                  ``(B) the financial subsidiary's assets and 
                liabilities shall not be consolidated with those of the 
                national bank.
          ``(2) Regulations required.--The Comptroller shall prescribe 
        regulations implementing this subsection.
  ``(c) Safeguards for the Bank.--A national bank that establishes or 
maintains a financial subsidiary shall assure that--
          ``(1) the bank's procedures for identifying and managing 
        financial and operational risks within the bank and financial 
        subsidiaries of the bank adequately protect the bank from such 
        risks;
          ``(2) the bank has, for the protection of the bank, 
        reasonable policies and procedures to preserve the separate 
        corporate identity and limited liability of the bank and 
        subsidiaries of the bank; and
          ``(3) the bank complies with this section.
  ``(d) National Banks Which Do Not Comply With Requirements of This 
Section.--
          ``(1) In general.--If the Comptroller determines that a 
        national bank which controls a financial subsidiary, or a 
        depository institution affiliate of such national bank, does 
        not continue to meet the requirements of subsection (a), the 
        Comptroller shall give notice to the bank to that effect, 
        describing the conditions giving rise to the notice.
          ``(2) Agreement to correct conditions required.--
                  ``(A) Content of agreement.--Within 45 days of the 
                receipt by a depository institution of a notice given 
                under paragraph (1) (or such additional period as the 
                Comptroller may permit), the depository institution 
                failing to meet the requirements of subsection (a) 
                shall execute an agreement with the appropriate Federal 
                banking agency for such institution to correct the 
                conditions described in the notice.
                  ``(B) Comptroller may impose limitations.--Until the 
                conditions giving rise to the notice are corrected, the 
                Comptroller may impose such limitations on the conduct 
                of the business of the national bank or subsidiary of 
                such bank as the Comptroller determines to be 
                appropriate under the circumstances.
          ``(3) Failure to correct.--If the conditions described in the 
        notice are not corrected within 180 days after the bank 
        receives the notice, the Comptroller may require, under such 
        terms and conditions as may be imposed by the Comptroller and 
        subject to such extensions of time as may be granted in the 
        discretion of the Comptroller--
                  (A) the national bank to divest control of each 
                subsidiary engaged in an activity that is not 
                permissible for the bank to engage in directly; or
                  ``(B) each subsidiary of the national bank to cease 
                any activity that is not permissible for the bank to 
                engage in directly.''.
  (b) Clerical Amendment.--The table of sections for chapter one of 
title LXII of the Revised Statutes of the United States is amended--
           (1) by redesignating the item relating to section 5136A as 
        section 5136C; and
           (2) by inserting after the item relating to section 5136 the 
        following new item:

``5136A. Financial subsidiaries of national banks.''.

SEC. 142. ACTIVITIES OF SUBSIDIARIES OF INSURED STATE BANKS.

  Section 24(d) of the Federal Deposit Insurance Act (12 U.S.C. 
1831a(d)) is amended--
          (1) by adding at the end the following new paragraphs:
          ``(3) Conditions on certain activities.--
                  ``(A) In general.--Subject to the approval of the 
                appropriate Federal banking agency, a subsidiary of a 
                State bank may engage in an activity in which a 
                subsidiary of a national bank may engage as principal 
                pursuant to subsection (a)(1) of section 5136A of the 
                Revised Statutes of the United States but only if the 
                State bank meets the same requirements which are 
                applicable to national banks under subparagraphs (B) 
                and (C) of such subsection and subsections (b) and (c) 
                of such section.
                  ``(B) Application of section 5136a of revised 
                statutes.--For purposes of applying section 5136A of 
                the Revised Statutes of the United States with regard 
                to the activities of a subsidiary of a State bank, all 
                references in such section to the Comptroller of the 
                Currency, or regulations and orders of the Comptroller, 
                shall be deemed to be references to the appropriate 
                Federal banking agency with respect to such State bank, 
                and regulations and orders of such agency.
          ``(4) State banks which fail to comply with paragraph (3) 
        conditions.--
                  ``(A) In general.--If the appropriate Federal banking 
                agency determines that a State bank that controls a 
                subsidiary which is engaged as principal in financial 
                activities pursuant to paragraph (3) does not meet the 
                requirements of subparagraph (A) of such paragraph, the 
                appropriate Federal banking agency shall give notice to 
                the bank to that effect, describing the conditions 
                giving rise to the notice.
                  ``(A) Agreement to correct conditions required.--
                          ``(i) Content of agreement.--Within 45 days 
                        of the receipt by a bank of a notice given 
                        under paragraph (1) (or such additional period 
                        as the appropriate Federal banking agency for 
                        such bank may permit), the bank failing to meet 
                        the requirements of paragraph (3)(A) shall 
                        execute an agreement with the appropriate 
                        Federal banking agency for such bank to correct 
                        the conditions described in the notice.
                  ``(B) Agency may impose limitations.--Until the 
                conditions giving rise to the notice are corrected, the 
                appropriate Federal banking agency for the State bank 
                may impose such limitations on the conduct of the 
                business of the bank or a subsidiary of the bank as the 
                agency determines to be appropriate under the 
                circumstances.
                  ``(C) Failure to correct.--If the conditions 
                described in the notice are not corrected within 180 
                days after the bank receives the notice, the 
                appropriate Federal banking agency for the State may 
                require, under such terms and conditions as may be 
                imposed by such agency and subject to such extensions 
                of time as may be granted in the discretion of the 
                agency--
                          ``(i) the bank to divest control of each 
                        subsidiary engaged in an activity as principal 
                        that is not permissible for the bank to engage 
                        in directly; or
                          ``(ii) each subsidiary of the bank to cease 
                        any activity as principal that is not 
                        permissible for the bank to engage in 
                        directly.''.

SEC. 143. RULES APPLICABLE TO FINANCIAL SUBSIDIARIES.

  (a) Transactions Between Financial Subsidiaries and Other 
Affiliates.--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' means 
        a company which--
                  ``(A) is a subsidiary of a bank (other than a 
                corporation organized under section 25A of the Federal 
                Reserve Act or a corporation operating under section 25 
                of such Act); and
                  ``(B) is engaged in a financial activity (as defined 
                in section 5136A(a)(4)) that is not a permissible 
                activity for a national bank to engage in directly.
          ``(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 which 
        is not a financial subsidiary) and notwithstanding subsection 
        (b)(2) and section 23B(d)(1), the financial subsidiary of the 
        bank--
                  ``(A) shall be an affiliate of the bank and any other 
                subsidiary of the bank which is not a financial 
                subsidiary; and
                  ``(B) shall not be treated as a subsidiary of the 
                bank.
          ``(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 
                shall not be deemed to be a transaction between a 
                subsidiary of a national bank and an affiliate of the 
                bank for purposes of section 23A or section 23B of the 
                Federal Reserve Act.
                  ``(B) Certain affiliates excluded.--For purposes of 
                subparagraph (A) and notwithstanding paragraph (4), the 
                term `affiliate' shall not include a bank, or a 
                subsidiary of a bank, which is engaged exclusively in 
                activities permissible for a national bank to engage in 
                directly.
          ``(4) Equity investments excluded subject to the approval of 
        the banking agency.--Subsection (a)(1) shall not apply so as to 
        limit the equity investment of a bank in a financial subsidiary 
        of such bank, except that any investment that exceeds the 
        amount of a dividend that the bank could pay at the time of the 
        investment without obtaining prior approval of the appropriate 
        Federal banking agency and is in excess of the limitation which 
        would apply under subsection (a)(1), but for this paragraph, 
        may be made only with the approval of the appropriate Federal 
        banking agency (as defined in section 3(q) of the Federal 
        Deposit Insurance Act) with respect to such bank.''.
  (b) Treatment of Financial Subsidiaries Under Other Provisions of 
Law.--
          (1) Bank holding company act amendments of 1970.--Section 
        106(a) of the Bank Holding Company Act Amendments of 1970 is 
        amended by adding at the end the following new sentence: ``For 
        purposes of this section, a financial subsidiary (as defined in 
        section 5136A(a)(5)(A) of the Revised Statutes of the United 
        States or referenced in the 20th undesignated paragraph of 
        section 9 of the Federal Reserve Act or section 24(d)(3)(A) of 
        the Federal Deposit Insurance Act) shall be deemed to be a 
        subsidiary of a bank holding company, and not a subsidiary of a 
        bank.''; and
          (2) Federal reserve act.--The 20th undesignated paragraph of 
        section 9 of the Federal Reserve Act (12 U.S.C. 335) is amended 
        by adding at the end the following new sentence: ``To the 
        extent permitted under State law, a State member bank may 
        acquire or establish and retain a financial subsidiary (as 
        defined in section 5136A(a)(3)(A) of the Revised Statutes of 
        the United States, except that all references in that section 
        to the Comptroller of the Currency, the Comptroller, or 
        regulations or orders of the Comptroller shall be deemed to be 
        references to the Board or regulations or orders of the 
        Board.''.

                 Subtitle F--Direct Activities of Banks

SEC. 151. POWERS OF NATIONAL BANKS.

  (a) National Bank Insurance Activities.--Section 5136 of the Revised 
Statutes of the United States (12 U.S.C. 24) is amended--
          (1) by striking ``Upon duly making and filing articles of 
        association'' and inserting ``(a) In General.--Upon duly making 
        and filing articles of association''; and
          (2) by adding at the end of the following new subsections:
  ``(b) Scope of Principal Activities.--
          ``(1) Existing products.--
                  ``(A) In general.--Subject to subparagraph (B), a 
                national bank may not provide insurance in a State as 
                principal.
                  ``(B) Exception.--Except for title insurance and 
                annuity contracts as described in paragraph (3)(A), 
                subparagraph (A) shall not apply to--
                          ``(i) insurance that national banks or 
                        subsidiaries of national banks had authority to 
                        provide as principal pursuant to subsection (a) 
                        as of January 1, 1997; or
                          ``(ii) a product that was regulated as 
                        insurance as of January 1, 1997, by the 
                        appropriate insurance regulatory authority of 
                        the State in which the product is to be 
                        provided but ceases to be so regulated after 
                        the date of enactment of the Financial Services 
                        Competition Act of 1997.
          ``(2) New products.--
                  ``(A) In general.--This paragraph shall apply with 
                regard to any product which--
                          ``(i) is not described in paragraph (1); and
                          ``(ii) the Comptroller of the Currency has 
                        determined a national bank may provide as 
                        principal.
                  ``(B) Petition for definition of other products.--
                          ``(i) In general.--Any State insurance 
                        supervisory agency may petition the National 
                        Council of Financial Services (hereafter in 
                        this paragraph referred to as the `Council') 
                        objecting to a determination of the Comptroller 
                        of the Currency referred to in subparagraph 
                        (A)(ii) and requesting a determination under 
                        122(b)(2) of the Financial Services Competition 
                        Act of 1997 whether a product described in 
                        subparagraph (A) constitutes an insurance 
                        product or a banking product.
                          ``(ii) Statements and arguments.--A petition 
                        submitted under clause (i) shall include a 
                        concise statement of the questions presented 
                        for review, a concise statement of any facts 
                        material to the consideration of the questions, 
                        and a statement of the arguments of the 
                        petitioner on the merits.
                          ``(iii) Statute of limitation.--No petition 
                        may be filed with the Council under clause (i) 
                        after the end of the 2-year period beginning on 
                        the date on which the first public notice is 
                        made of the determination by the Comptroller to 
                        which the petition relates.
                          ``(iv) Filing with comptroller of the 
                        currency.--A copy of any petition filed with 
                        the Council under clause (i) shall be filed 
                        with the Comptroller of the Currency at the 
                        same time as such filing.
                  ``(C) Expedited review of petition by federal reserve 
                board.--
                          ``(i) Referral to board.--Upon receipt of a 
                        petition filed with the Council under 
                        subparagraph (B)(i), the Council shall refer 
                        the petition, together with the statements and 
                        arguments accompanying the petition, to the 
                        Board of Governors of the Federal Reserve 
                        System for review.
                          ``(ii) Review.--The Board shall review the 
                        material referred pursuant to clause (i) to 
                        determine whether the petition raises a 
                        substantial question for review, taking into 
                        account the nature of the product and the 
                        history of its regulation, and report the 
                        findings and conclusions of the Board in 
                        connection with such review to the Council 
                        before the end of the 15-day period beginning 
                        on the date of the referral.
                          ``(iii) Dismissal upon finding of lack of a 
                        substantial question.--If the Board reports to 
                        the Council that the petition failed to raise a 
                        substantial question for review of the decision 
                        of the Comptroller of the Currency on the 
                        merits, the Council shall dismiss the petition 
                        and the determination of the Comptroller of the 
                        Currency shall constitute final agency action, 
                        subject to judicial review. The Council shall 
                        promptly notify the Comptroller and any 
                        affected party of any such dismissal.
                          ``(iv) Determination by council upon finding 
                        of a substantial question.--If the Board 
                        reports to the Council that the petition raises 
                        a substantial question for review of the 
                        decision of the Comptroller of the Currency on 
                        the merits, the Council shall proceed to 
                        consider such petition under section 122(b)(2) 
                        of the Financial Services Competition Act of 
                        1997 and in accordance with the subsequent 
                        subparagraphs of this paragraph.
                  ``(D) Participation of comptroller of the currency 
                and any affected party.--
                          ``(i) Response.--Unless notified by the 
                        Council of the dismissal of the petition under 
                        subparagraph (C)(iii), the Comptroller of the 
                        Currency and any affected party supporting the 
                        Comptroller may file, before the end of the 60-
                        day period beginning on the date of the filing 
                        of any petition with the Council under 
                        subparagraph (B)(i), a response to such 
                        petition with the Council.
                          ``(ii) Participation in hearing.--The 
                        Comptroller of the Currency or any affected 
                        party may participate, as a party, in any 
                        hearing under subparagraph (E).
                  ``(E) Hearing.--
                          ``(i) Request.--The State insurance 
                        supervisory agency, the Comptroller of the 
                        Currency, or any affected party may request a 
                        hearing by the Council on any petition filed 
                        with the Council in accordance with 
                        subparagraph (B) which was not dismissed under 
                        subparagraph (C)(iii).
                          ``(ii) Notice and selection of hearing 
                        officer.--If a hearing is requested pursuant to 
                        clause (i), the Council shall promptly--
                                  ``(I) notify the State insurance 
                                supervisory agency, the Comptroller of 
                                the Currency, or any affected party of 
                                such request and the time and place for 
                                such hearing; and
                                  ``(II) select a hearing officer from 
                                among administrative law judges who are 
                                employed by agencies that are not 
                                represented on the Council.
                          ``(iii) Time.--Any hearing under this 
                        subparagraph shall commence before the end of 
                        the 60-day period beginning on the date a 
                        request for such hearing is filed with the 
                        Council under clause (i) and shall be conducted 
                        and concluded expeditiously.
                          ``(iv) Hearing on a record.--In any hearing 
                        under this subparagraph, all issues shall be 
                        determined on a record in accordance with 
                        section 554 of title 5, United States Code.
                          ``(v) Recommended opinion.--Upon the 
                        conclusion of any hearing under this 
                        subparagraph, the administrative law judge 
                        shall promptly submit a recommended opinion on 
                        all issues considered in such hearing to the 
                        Council.
                  ``(F) Final decision by council.--
                          ``(i) Determination after hearing.--If a 
                        hearing was requested under this paragraph, the 
                        Council shall, before the end of the 60-day 
                        period beginning on the date the recommended 
                        opinion of the administrative law judge is 
                        filed with the Council, make a final 
                        determination regarding the matter on the basis 
                        of the record of the hearing.
                          ``(ii) Determination if no hearing is 
                        requested.--If a hearing was not requested with 
                        regard to a petition filed with the Council 
                        under subparagraph (B)(i), the Council shall, 
                        before the end of the 60-day period beginning 
                        on the date by which the Council received such 
                        petition and any response to such petition 
                        pursuant to subparagraph (D)(i), make a final 
                        determination regarding the matter.
                  ``(G) Appeal of final decision.--
                          ``(i) In general.--Any State insurance 
                        supervisory agency which filed a petition under 
                        subparagraph (B)(i), the Comptroller of the 
                        Currency (if the Comptroller filed a response 
                        to such petition or participated as a party in 
                        a hearing with regard to such petition), or an 
                        affected party (if the party filed a response 
                        to the petition or participated as a party in a 
                        hearing with regard to the petition) may obtain 
                        judicial review of the final decision of the 
                        Council with regard to such petition by the 
                        United States court of appeals for the circuit 
                        in which the State insurance supervisory agency 
                        is located or the United States Circuit Court 
                        of Appeals for the District of Columbia 
                        Circuit, in accordance with section 706 of 
                        title 5, United States Code, and title 28 of 
                        such Code, by filing a notice of appeal in such 
                        court within 10 days after the date of the 
                        final determination of the Council.
                          ``(ii) Notice to council and other parties.--
                        Any party who petitions for judicial review of 
                        any final decision of the Council under this 
                        paragraph shall simultaneously send a copy of 
                        such petition to the Council and the 
                        Comptroller of the Currency, the State 
                        insurance supervisory agency, and any affected 
                        party, as the case may be, by registered or 
                        certified mail.
                          ``(iii) Submission of record.--The Council 
                        shall promptly certify and file in the 
                        appropriate court of appeal the record on which 
                        a final decision was based.
          ``(3) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                  ``(A) Insurance.--The term `insurance' shall include 
                any product regulated as insurance as of January 1, 
                1997, in accordance with the relevant State insurance 
                law in the State in which the product is to be 
                provided, any new form of such product that is 
                developed after January 1, 1997, and any annuity 
                contract the income on which is tax deferred under 
                section 72 of the Internal Revenue Code of 1986.
                  ``(B) Affected party.--The term `affected party' 
                means any party that sought or otherwise was a party to 
                the determination that is the subject of the petition 
                filed with the Council under paragraph (2)(B)(i).
          ``(4) Authority.--
                  ``(A) In general.--For purposes of this subsection, 
                national banks had authority to provide a product in 
                any State as of January 1, 1997, if on or before such 
                date--
                          ``(i) the Comptroller of the Currency had 
                        determined, in writing, that national banks may 
                        provide the product; or
                          ``(ii) national banks were providing the 
                        product.
                  ``(B) Exception.--Notwithstanding subparagraph (A), 
                national banks did not have authority to provide a 
                product in a State as of January 1, 1997, if on or 
                before such date a court of relevant jurisdiction for 
                such State had, by final judgment, overturned a 
                determination of the Comptroller of the Currency that 
                national banks may provide such product.''.
  (b) Authority to Underwrite Certain Municipal Bonds.--The paragraph 
designated the Seventh of section 5136(a) of the Revised Statutes of 
the United States (12 U.S.C. 24(7)) (as amended by subsection (a) of 
this section) is amended by adding at the end the following new 
sentence: ``In addition to the provisions in this paragraph for dealing 
in, underwriting or purchasing securities, the limitations and 
restrictions contained in this paragraph as to dealing in, 
underwriting, and purchasing investment securities for the national 
bank's own account shall not apply to obligations (including limited 
obligation bonds, revenue bonds, and obligations that satisfy the 
requirements of section 142(b)(1) of the Internal Revenue Code of 1986) 
issued by or on behalf of any state or political subdivision of a 
state, including any municipal corporate instrumentality of 1 or more 
states, or any public agency or authority of any state or political 
subdivision of a state, if the national banking association is well 
capitalized (as defined in section 38 of the Federal Deposit Insurance 
Act).''.
  (c)  Authority to Sell and Underwrite Title Insurance.--
          (1) In general.--Notwithstanding any other provision of this 
        Act or any other law, no national bank, and no subsidiary of a 
        national bank, may engage in any activity involving the 
        underwriting or sale of title insurance other than title 
        insurance sales activities in which such national bank or 
        subsidiary was actively and lawfully engaged before the date of 
        the enactment of this Act.
          (2) Prohibition on banking activities by title insurance 
        underwriter.--No company engaged in the provision of title 
        insurance may own a subsidiary engaged in banking.

SEC. 152. BANKING PRODUCTS DEFINED.

  Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is 
amended by adding at the end the following new subsection:
  ``(t) Banking Products Definition.--
          ``(1) Definition.--The term `banking product', as used in 
        paragraphs (4) and (5) of section 3(a) of the Securities 
        Exchange Act of 1934, means--
                  ``(A) a deposit account, savings account, certificate 
                of deposit, or other deposit instrument issued by a 
                bank;
                  ``(B) a banker's acceptance;
                  ``(C) a letter of credit issued by a bank;
                  ``(D) a debit account at a bank arising from a credit 
                card or similar arrangement;
                  ``(E) a loan or loan participation issued in the 
                ordinary course of bank business, including any debt 
                security issued in connection with sovereign debt 
                restructuring which a bank purchases and sells pursuant 
                to such bank's lending authority;
                  ``(F) a qualified financial contract (as defined in 
                or determined pursuant to section 11(e)(8)(D)(i)), 
                except that such term does not include--
                          ``(i) any securities contract (as defined in 
                        section 11(e)(8)(D)(ii)) that is based on or 
                        directly relates to a security that section 
                        5136 of the Revised Statutes of the United 
                        States does not expressly authorize a national 
                        bank to underwrite or deal in, unless the 
                        appropriate Federal banking agency determines 
                        that such securities contract is appropriate 
                        for a bank to underwrite or deal in, taking 
                        into account other qualified financial 
                        contracts which a bank is permitted to 
                        underwrite or deal in; and
                          ``(ii) any agreement, contract, or 
                        transaction that the Corporation determines (in 
                        a regulation prescribed after the date of the 
                        enactment of the Financial Services Competition 
                        Act of 1997) to be a qualified financial 
                        contract, unless the appropriate Federal 
                        banking agency determines that such agreement, 
                        contract, or transaction shall be treated as a 
                        qualified financial contract for purposes of 
                        this subsection;
                  ``(G) notwithstanding subparagraph (F), swap 
                agreements (as defined in or pursuant to section 
                11(e)(8)(D)(vi) of the Federal Deposit Insurance Act) 
                including credit swaps and equity swaps, unless the 
                appropriate Federal banking agency determines that 
                crdit swaps and equity swaps shall not be included in 
                the definition of such term; and
                  ``(H) any other product that is available in the 
                course of a banking business if the Board of Governors 
                of the Federal Reserve System, after consultation with 
                the Securities and Exchange Commission, determines by 
                order or regulation--
                          ``(i) that the product is more appropriately 
                        regulated as a banking product; and
                          ``(ii) that regulation of the product as a 
                        banking product is consistent with the 
                        maintenance of fair and orderly markets and the 
                        protection of investors.
          ``(2) Securitization.--Paragraph (1) does not authorize any 
        agency to exempt from the requirements of paragraphs (4) and 
        (5) of section 3(a) of the Securities Exchange Act of 1934 
        securities backed by or representing an interest in notes, 
        drafts, acceptances, loans, leases, receivables, other 
        obligations, or pools of any such obligations.
          ``(3) Exemption limited.--Exemption of a particular product 
        as a banking product pursuant to this subsection shall not be 
        construed as finding or implying that such product is or is not 
        a security for any purpose other than defining the term 
        `banking product' in paragraphs (4) and (5) of section 3(a) of 
        the Securities Exchange Act of 1934.''.

SEC. 153. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RESERVE ACT.

  Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by 
striking subsection (m).

             Subtitle G--Noninsured Depository Institutions

SEC. 161. WHOLESALE FINANCIAL INSTITUTIONS.

  (a) National Wholesale Financial Institutions.--
          (1) In general.--Chapter one of title LXII of the Revised 
        Statutes of the United States (12 U.S.C. 21 et seq.) is amended 
        by inserting after section 5136A the following new section:

``SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITUTIONS.

  ``(a) Authorization of the Comptroller Required.--A national bank may 
apply to the Comptroller, on such forms and in accordance with such 
regulations as the Comptroller may prescribe, for permission to operate 
as a national wholesale financial institution.
  ``(b) Regulation.--A national wholesale financial institution may 
exercise, in accordance with such institution's articles of 
incorporation and regulations issued by the Comptroller, all the powers 
and privileges of a national bank formed in accordance with section 
5133 of the Revised Statutes of the United States, subject to the same 
limitations and restrictions imposed under section 9B of the Federal 
Reserve Act.
  ``(c) Community Reinvestment Act of 1977.--A national wholesale 
financial institution shall be subject to the Community Reinvestment 
Act of 1977.''.
          (2) Clerical amendment.--The table of sections for chapter 
        one of title LXII of the Revised Statutes of the United States 
        is amended by inserting after the item relating to section 
        5136A (as added by section 141(b) of this title) the following 
        new item:

``5136B. National wholesale financial institutions.''.

  (b) State Wholesale Financial Institutions.--The Federal Reserve Act 
(12 U.S.C. 221 et seq.) is amended by inserting after section 9A the 
following new section:

``SEC. 9B. STATE WHOLESALE FINANCIAL INSTITUTIONS.

  ``(a) Application for Membership as Wholesale Financial 
Institution.--
          ``(1) Application required.--
                  ``(A) In general.--Any State bank may apply to the 
                Board of Governors of the Federal Reserve System to 
                become a wholesale financial institution and as a 
                wholesale financial institution, to subscribe to the 
                stock of the Federal reserve bank organized within the 
                district where the applying bank is located.
                  ``(B) Treatment as member bank.--Any application 
                under subparagraph (A) shall be treated as an 
                application under, and shall be subject to the 
                provisions of, section 9.
          ``(2) Insurance termination.--No bank that is insured under 
        the Federal Deposit Insurance Act may become a wholesale 
        financial institution unless it has met all requirements under 
        that Act for voluntary termination of deposit insurance.
  ``(b) General Requirements Applicable to Wholesale Financial 
Institutions.--
          ``(1) Federal reserve act.--Except as otherwise provided in 
        this section, wholesale financial institutions shall be member 
        banks and shall be subject to the provisions of this Act that 
        apply to member banks to the same extent and in the same manner 
        as State member insured banks, except that a wholesale 
        financial institution may terminate membership under this Act 
        only with the prior written approval of the Board and on terms 
        and conditions that the Board determines are appropriate to 
        carry out the purposes of this Act.
          ``(2) Prompt corrective action.--A wholesale financial 
        institution shall be deemed to be an insured depository 
        institution for purposes of section 38 of the Federal Deposit 
        Insurance Act except that--
                  ``(A) the relevant capital levels and capital 
                measures for each capital category shall be the levels 
                specified by the Board for wholesale financial 
                institutions; and
                  ``(B) all references to the appropriate Federal 
                banking agency or to the Corporation in that section 
                shall be deemed to be references to the Board.
          ``(3) Enforcement authority.--Subsections (j) and (k) of 
        section 7, subsections (b) through (n), (s), (u), and (v) of 
        section 8, and section 19 of the Federal Deposit Insurance Act 
        shall apply to a wholesale financial institution in the same 
        manner and to the same extent as such provisions apply to State 
        member insured banks and any reference in such sections to an 
        insured depository institution shall be deemed to include a 
        reference to a wholesale financial institution.
          ``(4) Certain other statutes applicable.--A wholesale 
        financial institution shall be deemed to be a banking 
        institution, and the Board shall be the appropriate Federal 
        banking agency for such bank and all such bank's affiliates, 
        for purposes of the International Lending Supervision Act.
          ``(5) Bank merger act.--A wholesale financial institution 
        shall be subject to provisions of sections 18(c) and 44 of the 
        Federal Deposit Insurance Act in the same manner and to the 
        same extent the wholesale financial institution would be 
        subject to such sections if the institution were a State member 
        insured bank.
          ``(6) Community reinvestment act of 1977.--A State wholesale 
        financial institution shall be subject to the Community 
        Reinvestment Act of 1977.
  ``(c) Specific Requirements Applicable to Wholesale Financial 
Institutions.--
          ``(1) Limitations on deposits.--
                  ``(A) Minimum amount.--
                          ``(i) In general.--No wholesale financial 
                        institution may receive initial deposits of 
                        $100,000 or less, other than on an incidental 
                        and occasional basis.
                          ``(ii) Limitation on deposits of less than 
                        $100,000.--No bank may be treated as a 
                        wholesale financial institution if the total 
                        amount of the initial deposits of $100,000 or 
                        less at such bank constitute more than 5 
                        percent of the bank's total deposits.
                  ``(B) No deposit insurance.--No deposits held by a 
                wholesale financial institution shall be insured 
                deposits under the Federal Deposit Insurance Act.
                  ``(C) Advertising and disclosure.--The Board shall 
                prescribe regulations pertaining to advertising and 
                disclosure by wholesale financial institutions to 
                ensure that each depositor is notified that deposits at 
                the wholesale financial institution are not federally 
                insured or otherwise guaranteed by the United States 
                Government.
          ``(2) Special capital requirements applicable to wholesale 
        financial institutions.--
                  ``(A) In general.--The Board shall, by regulation, 
                adopt capital requirements for wholesale financial 
                institutions--
                          ``(i) to account for the status of wholesale 
                        financial institutions as institutions that 
                        accept deposits that are not insured under the 
                        Federal Deposit Insurance Act; and
                          ``(ii) to provide for the safe and sound 
                        operation of the wholesale financial 
                        institution without undue risk to creditors or 
                        other persons, including Federal reserve banks, 
                        engaged in transactions with the bank.
                  ``(B) Minimum tier 1 capital ratio.--The minimum 
                ratio of tier 1 capital to total risk-weighted assets 
                of wholesale financial institutions shall be not less 
                than the level required for a State member insured bank 
                to be well capitalized unless the Board determines 
                otherwise, consistent with safety and soundness.
          ``(3) Additional requirements applicable to wholesale 
        financial institutions.--In addition to any requirement 
        otherwise applicable to State member banks or applicable, under 
        this section, to wholesale financial institutions, the Board 
        may prescribe, by regulation or order, for wholesale financial 
        institutions--
                  ``(A) limitations on transactions with affiliates to 
                prevent--
                          ``(i) the transfer of risk to the deposit 
                        insurance funds; or
                          ``(ii) an affiliate from gaining access to, 
                        or the benefits of, credit from a Federal 
                        reserve bank, including overdrafts at a Federal 
                        reserve bank;
                  ``(B) special clearing balance requirements;
                  ``(C) any additional requirements that the Board 
                determines to be appropriate or necessary to--
                          ``(i) promote the safety and soundness of the 
                        wholesale financial institution or any insured 
                        depository institution affiliate of the 
                        wholesale financial institution;
                          ``(ii) prevent the transfer of risk to the 
                        deposit insurance funds; or
                          ``(iii) protect creditors and other persons, 
                        including Federal reserve banks, engaged in 
                        transactions with the wholesale financial 
                        institution; and
                  ``(D) any additional requirements that the Board 
                determines to be appropriate or necessary to assure 
                compliance with the Community Reinvestment Act of 1977.
          ``(4) Exemptions for wholesale financial institutions.--The 
        Board may, by regulation or order, exempt any wholesale 
        financial institution from any provision applicable to a member 
        bank that is not a wholesale financial institution (other than 
        the provisions of this section), if the Board finds that such 
        exemption is not inconsistent with--
                  ``(A) the promotion of the safety and soundness of 
                the wholesale financial institution or any insured 
                depository institution affiliate of the wholesale 
                financial institution;
                  ``(B) the protection of the deposit insurance funds; 
                and
                  ``(C) the protection of creditors and other persons, 
                including Federal reserve banks, engaged in 
                transactions with the wholesale financial institution.
          ``(5) Limitation on transactions between a wholesale 
        financial institution and an insured bank.--For purposes of 
        section 23A(d)(1) of the Federal Reserve Act, a wholesale 
        financial institution that is affiliated with an insured bank 
        shall not be a bank.
          ``(6) No effect on other provisions.--This section shall not 
        be construed as limiting the Board's authority over member 
        banks under any other provision of law, or to create any 
        obligation for any Federal reserve bank to make, increase, 
        renew, or extend any advance or discount under this Act to any 
        member bank or other depository institution.
  ``(d) Conservatorship Authority.--
          ``(1) In general.--The Board may appoint a conservator to 
        take possession and control of a wholesale financial 
        institution to the same extent and in the same manner as the 
        Comptroller of the Currency may appoint a conservator for a 
        national bank under section 203 of the Bank Conservation Act, 
        and the conservator shall exercise the same powers, functions, 
        and duties, subject to the same limitations, as are provided 
        under such Act for conservators of national banks.
          ``(2) Board authority.--The Board shall have the same 
        authority with respect to any conservator appointed under 
        paragraph (1) and the wholesale financial institution for which 
        such conservator has been appointed as the Comptroller of the 
        Currency has under the Bank Conservation Act with respect to a 
        conservator appointed under such Act and a national bank for 
        which the conservator has been appointed.
  ``(e) Exclusive Jurisdiction.--Subsections (c) and (e) of section 43 
of the Federal Deposit Insurance Act shall not apply to any wholesale 
financial institution.''.
  (c) Technical and Conforming Amendments to the Bank Holding Company 
Act of 1956.--
          (1) Definition of bank.--Section 2(c)(1) of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841(c)(1)) is amended by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                  ``(C) A wholesale financial institution chartered 
                under section 5136B of the Revised Statutes of the 
                United States or section 9B of the Federal Reserve Act 
                the deposits of which are not insured by the Federal 
                Deposit Insurance Corporation.''.
          (2) Exception to insured bank requirement.--Section 3(e) of 
        the Bank Holding Company Act of 1956 (12 U.S.C. 1842(e)) is 
        amended by striking ``Every bank'' and inserting ``Except with 
        regard to a wholesale financial institution described in 
        section 2(c)(1)(C), every bank''.
  (d) Voluntary Termination of Insured Status by Certain 
Institutions.--
          (1) Section 8 designations.--Section 8(a) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1818(a)) is amended--
                  (A) by striking paragraph (1); and
                  (B) by redesignating paragraphs (2) through (10) as 
                paragraphs (1) through (9), respectively.
          (2) Voluntary termination of insured status.--The Federal 
        Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
        inserting after section 8 the following new section:

``SEC. 8A. VOLUNTARY TERMINATION OF STATUS AS INSURED DEPOSITORY 
                    INSTITUTION.

  ``(a) In General.--Except as provided in subsection (b), an insured 
State bank or a national bank may voluntarily terminate such bank's 
status as an insured depository institution in accordance with 
regulations of the Corporation if--
          ``(1) the bank provides written notice of the bank's intent 
        to terminate such insured status--
                  ``(A) to the Corporation and the Board of Governors 
                of the Federal Reserve System not less than 6 months 
                before the effective date of such termination; and
                  ``(B) to all depositors at such bank, not less than 6 
                months before the effective date of the termination of 
                such status; and
          ``(2) either--
                  ``(A) the deposit insurance fund of which such bank 
                is a member equals or exceeds the fund's designated 
                reserve ratio as of the date the bank provides a 
                written notice under paragraph (1) and the Corporation 
                determines that the fund will equal or exceed the 
                applicable designated reserve ratio for the 2 
                semiannual assessment periods immediately following 
                such date; or
                  ``(B) the Corporation and the Board of Governors of 
                the Federal Reserve System approve the termination of 
                the bank's insured status and the bank pays an exit fee 
                in accordance with subsection (e).
  ``(b) Exception.--Subsection (a) shall not apply with respect to--
          ``(1) an insured savings association;
          ``(2) an insured branch that is required to be insured under 
        subsection (a) or (b) of section 6 of the International Banking 
        Act of 1978; or
          ``(3) any institution described in section 2(c)(2) of the 
        Bank Holding Company Act of 1956.
  ``(c) Eligibility for Insurance Terminated.--Any bank that 
voluntarily elects to terminate the bank's insured status under 
subsection (a) shall not be eligible for insurance on any deposits or 
any assistance authorized under this Act after the period specified in 
subsection (f)(1).
  ``(d) Institution Must Become Wholesale Financial Institution or 
Terminate Deposit-Taking Activities.--Any depository institution which 
voluntarily terminates such institution's status as an insured 
depository institution under this section may not, upon termination of 
insurance, accept any deposits unless the institution is a wholesale 
financial institution under section 9B of the Federal Reserve Act.
  ``(e) Exit Fees.--
          ``(1) In general.--Any bank that voluntarily terminates such 
        bank's status as an insured depository institution under this 
        section shall pay an exit fee in an amount that the Corporation 
        determines is sufficient to account for the institution's pro 
        rata share of the amount (if any) which would be required to 
        restore the relevant deposit insurance fund to the fund's 
        designated reserve ratio as of the date the bank provides a 
        written notice under subsection (a)(1).
          ``(2) Procedures.--The Corporation shall prescribe, by 
        regulation, procedures for assessing any exit fee under this 
        subsection.
  ``(f) Temporary Insurance of Deposits Insured as of Termination.--
          ``(1) Transition period.--The insured deposits of each 
        depositor in a State bank or a national bank on the effective 
        date of the voluntary termination of the bank's insured status, 
        less all subsequent withdrawals from any deposits of such 
        depositor, shall continue to be insured for a period of not 
        less than 6 months and not more than 2 years, as determined by 
        the Corporation. During such period, no additions to any such 
        deposits, and no new deposits in the depository institution 
        made after the effective date of such termination shall be 
        insured by the Corporation.
          ``(2) Temporary assessments; obligations and duties.--During 
        the period specified in paragraph (1) with respect to any bank, 
        the bank shall continue to pay assessments under section 7 as 
        if the bank were an insured depository institution. The bank 
        shall, in all other respects, be subject to the authority of 
        the Corporation and the duties and obligations of an insured 
        depository institution under this Act during such period, and 
        in the event that the bank is closed due to an inability to 
        meet the demands of the bank's depositors during such period, 
        the Corporation shall have the same powers and rights with 
        respect to such bank as in the case of an insured depository 
        institution.
  ``(g) Advertisements.--
          ``(1) In general.--A bank that voluntarily terminates the 
        bank's insured status under this section shall not advertise or 
        hold itself out as having insured deposits, except that the 
        bank may advertise the temporary insurance of deposits under 
        subsection (f) if, in connection with any such advertisement, 
        the advertisement also states with equal prominence that 
        additions to deposits and new deposits made after the effective 
        date of the termination are not insured.
          ``(2) Certificates of deposit, obligations, and securities.--
        Any certificate of deposit or other obligation or security 
        issued by a State bank or a national bank after the effective 
        date of the voluntary termination of the bank's insured status 
        under this section shall be accompanied by a conspicuous, 
        prominently displayed notice that such certificate of deposit 
        or other obligation or security is not insured under this Act.
  ``(h) Notice Requirements.--
          ``(1) Notice to the corporation.--The notice required under 
        subsection (a)(1)(A) shall be in such form as the Corporation 
        may require.
          ``(2) Notice to depositors.--The notice required under 
        subsection (a)(1)(B) shall be--
                  ``(A) sent to each depositor's last address of record 
                with the bank; and
                  ``(B) in such manner and form as the Corporation 
                finds to be necessary and appropriate for the 
                protection of depositors.''.
          (3) Definition.--Section 19(b)(1)(A)(i) of the Federal 
        Reserve Act (12 U.S.C. 461(b)(1)(A)(i)) is amended--
                  (A) by striking ``Act or any bank'' and inserting 
                ``Act, any bank''; and
                  (B) by inserting ``, or any wholesale financial 
                institution as defined in section 9B'' before the 
                semicolon at the end.
  (e) Reports on Discounts and Advances to Wholesale Financial 
Institutions.--Section 10B of the Federal Reserve Act (12 U.S.C. 
347(b)) is amended by adding at the end the following new subsection:
  ``(c) Reports on Discounts and Advances to Wholesale Financial 
Institutions.--
          ``(1) In general.--The Board shall submit a report to the 
        Congress at the end of any year in which any wholesale 
        financial institution has obtained a discount, advance, or 
        other extension of credit from a Federal reserve bank.
          ``(2) Contents.--Any report submitted under paragraph (1) 
        shall explain the circumstances and need for any discount, 
        advance, or other extension of credit to a wholesale financial 
        institution during the period covered by the report, including 
        the type and amount of credit extended and the amount of credit 
        remaining outstanding as of the date of the report.''.

SEC. 162. HOLDING COMPANY CONTROL OF UNINSURED DEPOSITORY INSTITUTIONS.

  (a) In General.--Section 6 of the Bank Holding Company Act of 1956 
(as added by section 103 of this title) is amended by inserting after 
subsection (k) (as added by section 106 of this title) the following 
new subsection:
  ``(l) Control of Uninsured Depository Institutions.--
          ``(1) Scope of application.--This subsection shall apply to 
        bank holding companies which control only wholesale financial 
        institutions and control no insured depository institution 
        (other than an institution described in subparagraph (C) or (G) 
        of section 2(c)(2)).
          ``(2) Findings and Purposes.--
                  ``(A) Findings.--The Congress finds as follows:
                          ``(i) Some investment banking, insurance, and 
                        other financial companies invest in 
                        nonfinancial companies--
                                  ``(I) as an incident to their core 
                                business; or
                                  ``(II) in recognition of an unusual 
                                investment opportunity.
                          ``(ii) Such ownership, which would not 
                        otherwise be permitted under this Act if the 
                        investment banking, insurance, or other 
                        financial company were a bank holding company--
                                  ``(I) is in most cases small in 
                                relation to the overall size of the 
                                company, generally no more than 5 
                                percent of the total consolidated 
                                revenue of such company's revenues and, 
                                in the case of a foreign bank, such 
                                ownership in the United States is 
                                generally no more than 5 percent of the 
                                total consolidated revenue of such 
                                foreign bank in the United States; and
                                  ``(II) in no way detracts from the 
                                financial focus of the company's 
                                planning, operations, resource 
                                allocation, and risk management.
                          ``(iii) Investments of this type should not 
                        disqualify an investment banking, insurance, or 
                        other financial company from an affiliation 
                        with an uninsured depository institution.
                  ``(B) Purpose.--It is the purpose of this subsection 
                to provide the flexibility necessary to accommodate 
                limited investments in nonfinancial firms that wish to 
                control an uninsured depository institution (and do not 
                otherwise control any insured depository institution) 
                while maintaining the separation of banking and 
                commerce intended by this Act.
          ``(3) Limited investments allowed by financial companies 
        controlling only uninsured depository institutions.--Consistent 
        with the purposes of this subsection, the Board shall, by 
        regulation or order, allow bank holding companies to control 
        the shares of nonfinancial companies so long as--
                  ``(A) the nonfinancial firm is sufficiently small 
                such that the financial nature of the bank holding 
                company is unaffected by the control of such shares;
                  ``(B) the bank holding company does not control any 
                depository institution (other than a wholesale 
                financial institution or an institution described in 
                subparagraph (C) or (G) of section 2(c)(2); and
                  ``(C) the purposes of this Act, including the 
                separation of banking and commerce and the preservation 
                of the safety and soundness of depository institutions, 
                are fulfilled.
          ``(4) Provisions applicable to holding companies with 
        investments under this subsection.--
                  ``(A) Cross marketing restrictions.--A wholesale 
                financial institution or other depository institution 
                controlled by a bank holding company which also 
                controls a company pursuant to this subsection shall 
                not--
                          ``(i) offer or market, directly or through 
                        any arrangement, any product or service of an 
                        affiliate whose shares are owned or controlled 
                        by the bank holding company pursuant to this 
                        subsection; or
                          ``(ii) permit any product or service of such 
                        wholesale financial institution or other 
                        institution to be offered or marketed, directly 
                        or through any arrangement, by or through any 
                        such affiliate.
                  ``(B) Use of common name.--A bank holding company 
                shall not permit a wholesale financial institution or 
                other depository institution subsidiary to adopt a name 
                which is the same as or similar to, or a variation of, 
                the name or title of an affiliate engaged in activities 
                pursuant to this subsection.
                  ``(C) Commodities.--
                          ``(i) In general.--A bank holding company 
                        which controls a company pursuant to this 
                        subsection and was predominately engaged as of 
                        January 1, 1995, in securities activities in 
                        the United States (or any successor to any such 
                        company) may engage in, or directly or 
                        indirectly own or control shares of a company 
                        engaged in, activities related to the trading, 
                        sale, or investment in commodities and 
                        underlying physical properties that were not 
                        permissible for bank holding companies to 
                        conduct in the United States as of January 1, 
                        1995, if such bank holding company, or any 
                        subsidiary of such holding company, was engaged 
                        directly, indirectly, or through any such 
                        company in any of such activities as of January 
                        1, 1995, in the United States.
                          ``(ii) Limitation.--Notwithstanding any other 
                        provision of this subsection, the aggregate 
                        investment by a bank holding company in 
                        activities under this subparagraph (other than 
                        those otherwise permitted for all bank holding 
                        companies under this Act) shall not at any time 
                        exceed 5 percent of the total consolidated 
                        assets of such bank holding company.
                          ``(iii) Successor defined.--For purposes of 
                        clause (i), the term `successor' means, with 
                        respect to any bank holding company described 
                        in clause (i), any company that merges with, or 
                        acquires control of, such bank holding company.
                  ``(D) Qualified investor in a bank holding company 
                which controls a company under this subsection.--
                          ``(i) In general.--Notwithstanding any other 
                        provision of Federal or State law, a qualified 
                        investor--
                                  ``(I) shall not be, or be deemed to 
                                be, a bank holding company or any 
                                similar organization; and
                                  ``(II) shall not be deemed to control 
                                or be affiliated with any such company 
                                or organization or any subsidiary of 
                                any such company or organization (other 
                                than for purposes of section 23A and 
                                23B of the Federal Reserve Act),
                        by virtue of the investor's ownership or 
                        control of shares of a bank holding company 
                        which controls a company pursuant to this 
                        subsection.
                          ``(ii) Qualified investor defined.--For 
                        purposes of this subparagraph, the term 
                        `qualified investor' means any United States 
                        company (including a parent company and all 
                        subsidiaries of which the parent company holds 
                        at least 80 percent of the total voting equity 
                        securities) which since February 27, 1995, has 
                        directly or indirectly owned or controlled 
                        shares of capital stock representing at least 
                        10 percent, and not more than 45 percent, of 
                        the outstanding voting shares or voting power 
                        of a company that--
                                  ``(I) becomes a bank holding company 
                                which controls a company pursuant to 
                                this subsection or a subsidiary of any 
                                such bank holding company; and
                                  ``(II) before the company became a 
                                bank holding company which controls a 
                                company pursuant to this subsection, or 
                                a subsidiary of any such bank holding 
                                company, had more than 50 percent of 
                                the company's assets employed directly 
                                or indirectly in securities activities.
                          ``(iii) Cross-marketing and common name.--A 
                        wholesale financial institution or other 
                        uninsured depository institution which is 
                        controlled by a bank holding company which 
                        controls a company pursuant to this subsection 
                        shall not--
                                  ``(I) offer or market products or 
                                services of a qualified investor in the 
                                bank holding company of which the 
                                wholesale financial institution is an 
                                affiliate;
                                  ``(II) permit the products or 
                                services of such wholesale financial 
                                institution or uninsured depository 
                                institution to be offered or marketed 
                                in connection with products or services 
                                of such qualified investor; or
                                  ``(III) adopt a name which is the 
                                same as or similar to, or a variation 
                                of, the name or title of such qualified 
                                investor.
                          ``(iv) Examination and reporting.--
                        Notwithstanding any other provision of law, the 
                        Board may conduct examinations of, or require 
                        reports from, a qualified investor only to the 
                        extent that the Board reasonably determines 
                        that such examinations or reports are 
                        necessary--
                                  ``(I) to ensure compliance with this 
                                subparagraph; or
                                  ``(II) to the extent that the 
                                qualified investor is an affiliate of a 
                                wholesale financial institution for 
                                purposes of section 23A of the Federal 
                                Reserve Act, to ensure compliance with 
                                restrictions imposed by law or 
                                regulation on transactions between the 
                                qualified investor and such wholesale 
                                financial institution.
          ``(5) No deposit insurance fund liability.--No Federal 
        deposit insurance funds may be used in connection with the 
        failure of, or any proposed assistance to, a wholesale 
        financial institution or other uninsured depository institution 
        controlled by a bank holding company which controls a company 
        pursuant to this subsection.
          ``(6) Qualification of foreign bank as bank holding company 
        with investments pursuant to this subsection.--
                  ``(A) In general.--Any foreign bank that operates a 
                branch, agency or commercial lending company in the 
                United States (and any company that owns or controls 
                such foreign bank), including a foreign bank that does 
                not own or control a wholesale financial institution, 
                may request a determination from the Board that such 
                bank or company be treated as a bank holding company 
                which controls a company pursuant to this subsection.
                  ``(B) Conditions for treatment as a bank holding 
                company subject to this subsection.--A foreign bank and 
                a company that owns or controls a foreign bank may not 
                be treated, under this paragraph, as a bank holding 
                company which controls a company pursuant to this 
                subsection, unless the bank and company meet and 
                continue to meet the following criteria:
                          ``(i) No insured deposits.--No deposits which 
                        are held directly by a foreign bank or through 
                        an affiliate are insured under the Federal 
                        Deposit Insurance Act.
                          ``(ii) Capital standards.--The foreign bank 
                        meets risk-based capital standards comparable 
                        to the capital standards required for a 
                        wholesale financial institution, giving due 
                        regard to the principle of national treatment 
                        and equality of competitive opportunity.
                          ``(iii) Transactions with affiliates.--
                        Transactions between a branch, agency, or 
                        commercial lending company subsidiary of the 
                        foreign bank in the United States, and any 
                        affiliate or company in which the foreign bank 
                        (or any company that owns or controls such 
                        foreign bank) has invested in accordance with 
                        this subsection, shall comply with the 
                        provisions of sections 23A and 23B of the 
                        Federal Reserve Act in the same manner and to 
                        the same extent as such transactions would be 
                        required to comply with such sections if the 
                        bank were a member bank.
                  ``(C) Treatment as a wholesale financial 
                institution.--
                          ``(i) In general.--Any foreign bank which is, 
                        or is affiliated with a company which is, 
                        treated as a bank holding company which 
                        controls a company pursuant to this subsection 
                        shall be treated as a wholesale financial 
                        institution for purposes of subparagraphs (A) 
                        and (B) of paragraph (3) and section 111 of the 
                        Financial Services Competition Act of 1997, 
                        except that the Board may adopt such 
                        modifications, conditions, or exemptions as the 
                        Board deems appropriate, giving due regard to 
                        the principle of national treatment and 
                        equality of competitive opportunity.
                          ``(ii) Applicability of community 
                        reinvestment act of 1977.--The branches in the 
                        United States of any foreign bank that is, or 
                        is affiliated with a company which is, treated 
                        as a bank holding company which controls a 
                        company pursuant to this subsection shall be 
                        subject to section 9B(b)(6) of the Federal 
                        Reserve Act as if the foreign bank were a 
                        wholesale financial institution under such 
                        section. The Board and the Comptroller of the 
                        Currency shall apply the provisions of sections 
                        803(2), 804, and 807(1) of the Community 
                        Reinvestment Act of 1977 to branches of foreign 
                        banks which receive only such deposits as are 
                        permissible for receipt by a corporation 
                        organized under section 25A of the Federal 
                        Reserve Act, in the same manner and to the same 
                        extent such sections apply to such a 
                        corporation.
                  ``(D) Nonapplicability of other exemption.--Any 
                foreign bank or company which is treated as a bank 
                holding company which controls a company pursuant to 
                this subsection shall not be eligible for any exemption 
                described in section 2(h).
                  ``(E) Supervision assessment.--The Board shall assess 
                the extent to which any foreign bank which is, or is 
                affiliated with a company which is, treated as a bank 
                holding company which controls a company pursuant to 
                this subsection is subject to supervision by 
                authorities in the home country of such foreign bank.
                  ``(F) Authority to impose additional restrictions and 
                requirements.--The Board may impose additional 
                requirements on any foreign bank which is, or is 
                affiliated with a company which is, treated as a bank 
                holding company which controls a company pursuant to 
                this subsection that are determined to be appropriate 
                or necessary to protect taxpayers and the financial 
                system from risks associated with access to the 
                payments system and availability of discounts, 
                advances, and other extensions of credit from a Federal 
                reserve bank, giving due regard to the principles of 
                national treatment and equality of competitive 
                opportunity.''.

               Subtitle H--Federal Home Loan Bank System

SEC. 171. FEDERAL HOME LOAN BANKS.

  The 1st sentence of section 3 of the Federal Home Loan Bank Act (12 
U.S.C. 1423) is amended--
          (1) by striking ``the continental United States'' and all 
        that follows through ``eight''; and
          (2) by inserting ``the States into not less than 1'' before 
        ``nor''.

SEC. 172. MEMBERSHIP AND COLLATERAL.

  (a) Subsection (f) of section 5 of the Home Owners' Loan Act (12 
U.S.C. 1464) is amended to read as follows:
  ``(f) Federal Home Loan Bank Membership.--A Federal savings 
association may become a member, of the Federal Home Loan Bank System, 
and shall qualify for such membership in the manner provided by the 
Federal Home Loan Bank Act, beginning January 1, 1999.''.
  (b) Section 10(a)(5) of the Federal Home Loan Bank Act (12 U.S.C. 
1430(a)(5)) is amended--
          (1) in the 2d sentence, by striking ``and the Board''; and
          (2) in the 3d sentence, by striking ``Board'' and inserting 
        ``Bank''.
  (c) Section 10(a) of the Federal Home Loan Bank Act (12 U.S.C. 
1430(a)) is amended--
          (1) in the 2d sentence, by striking ``All long-term 
        advances'' and inserting ``Except as provided in the succeeding 
        sentence, all long-term advances'';
          (2) by inserting after the 2d sentence, the following 
        sentence: ``Notwithstanding the preceding sentence, long-term 
        advances may be made to FDIC-insured members which have less 
        than $500,000,000 in total assets for the purpose of funding 
        small businesses, agriculture, rural development, or low-income 
        community development (as defined by the Board).''; and
          (3) by redesignating paragraph (5) as paragraph (6) and 
        inserting after paragraph (4) the following new paragraph:
          ``(5) In the case of any FDIC-insured member which has total 
        assets of less than $500,000,000, secured loans for small 
        business, agriculture, rural development, or low-income 
        community development, or securities representing a whole 
        interest in such secured loans.''.
  (d) Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 
1424(a)) is amended by adding at the end the following new paragraph:
          ``(3) Eligibility requirements for community financial 
        institutions.--The requirements of paragraph (2) (other than 
        subparagraph (B) of such paragraph) shall not apply to any 
        FDIC-insured depository institution which has total assets of 
        less than $500,000,000.
  (e) Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) is 
amended by striking the 1st of the 2 subsections designated as 
subsection (e) (relating to qualified thrift lender status).

SEC. 172A. THE OFFICE OF FINANCE.

  The Federal Home Loan Bank Act (12 U.S.C. 1421) is amended by 
inserting after section 4 the following new section:

``SEC. 5. THE OFFICE OF FINANCE.

  ``(a) Operation.--The Federal home loan banks shall operate jointly 
an office of finance (hereafter in this section referred to as the 
`Office') to issue the notes, bonds, and debentures of the Federal home 
loan banks in accordance with this Act.
  ``(b) Powers.--Subject to the other provisions of this Act and such 
safety and soundness regulations as the Finance Board may prescribe, 
the Office shall be authorized by the Federal home loan banks to act as 
the agent of such banks to issue Federal home loan bank notes, bonds 
and debentures pursuant to section 11 of this Act on behalf of the 
banks.
  ``(c) Central Board of Directors.--
          ``(1) Establishment.--The Federal home loan banks shall 
        establish a central board of directors of the Office to 
        administer the affairs of the Office in accordance with the 
        provisions of this Act.
          ``(2) Composition of Board.--Each Federal home loan bank 
        shall annually select 1 individual who, as of the time of the 
        election, is an officer or director of such bank to serve as a 
        member of the central board of directors of the Office.
  ``(d) Status.--Except to the extent expressly provided in this Act, 
the Office shall be treated as a Federal home loan bank for purposes of 
any law.''.

SEC. 172B. MANAGEMENT OF BANKS.

  (a) Subsections (a) and (b) of section 7 of the Federal Home Loan 
Bank Act (12 U.S.C. 1427(a) and (b)) are amended to read as follows:
  ``(a) The management of each Federal home loan bank shall be vested 
in a board of 15 directors, 9 of whom shall be elected by the members 
in accordance with this section, 6 of whom shall be appointed by the 
Board referred to in section 2A, and all of whom shall be citizens of 
the United States and bona fide residents of the district in which such 
bank is located. At least 2 of the Federal home loan bank directors who 
are appointed by the Board shall be representatives chosen from 
organizations with more than a 2-year history of representing consumer 
or community interests on banking services, credit needs, housing, or 
financial consumer protections. No Federal home loan bank director who 
is appointed pursuant to this subsection may, during such bank 
director's term of office, serve as an officer of any Federal home loan 
bank or a director or officer of any member of a bank, or hold shares, 
or any other financial interest in, any member of a bank.
  ``(b) The elective directors shall be divided into three classes, 
designated as classes A, B, and C, as nearly equal in number as 
possible. Each directorship shall be filled by a person who is an 
officer or director of a member located in that bank's district. Each 
class shall represent members of similar asset size, and the Board 
shall, to the maximum extent possible, seek to achieve geographic 
diversity. The Finance Board shall establish the minimum and maximum 
asset size for each class. Any member shall be entitled to nominate and 
elect eligible persons for its class of directorship; such offices 
shall be filled from such nominees by a plurality of the votes which 
members of each class may cast for nominees in their corresponding 
class of directors in an election held for the purpose of filling such 
offices. Each member shall be permitted to cast one vote for each share 
of Federal home loan bank stock owned by that member. No person who is 
an officer or director of a member that fails to meet any applicable 
capital requirement is eligible to hold the office of Federal Home Loan 
Bank director. As used in this subsection, the term ``member'' means a 
member of a Federal home loan bank which was a member of such Bank as 
of a record date established by the Bank.''.
  (b) Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) is 
amended--
          (1) by striking subsections (c) and (h); and
          (2) by redesignating subsections (d), (e), (f), (g), (i), 
        (j), and (k) as subsections (c), (d), (e), (f), (g), (h), and 
        (i), respectively.
  (c) Subsection (c) of section 7 of the Federal Home Loan Bank Act (12 
U.S.C. 1427(d)) (as so redesignated by subsection (b) of this section) 
is amended by striking the 1st and 2d sentences and inserting the 
following 2 new sentences: ``The term of each elective directorship and 
each appointive directorship shall be 3 years. No director serving for 
3 consecutive terms, nor any other officer, director or that member or 
any affiliated depository institution, shall be eligible for another 
term earlier than 3 years after the expiration of the last expiring of 
said 3-year terms. 3 elected directors of different classes as 
specified by the Finance Board shall be elected by ballot annually.''.
  (d) Subsection (d) of section 7 of the Federal Home Loan Bank Act (12 
U.S.C. 1427(e)) (as so redesignated by subsection (b) of this section) 
is amended to read as follows:
  ``(d) Transition Provision.--In the 1st election after the date of 
the enactment of the Financial Services Competition Act of 1997, 3 
directors shall be elected in each of the 3 classes of elective 
directorship. The Finance Board may, in the 1st election after such 
date of enactment, designate the terms of each elected director in each 
class, not to exceed 3 years, to assure that, in each subsequent 
election, 3 directors from different classes of elective directorships 
are elected each year.''.
  (e) Subsection (g) of section 7 of the Federal Home Loan Bank Act (12 
U.S.C. 1427(i)) (as so redesignated by subsection (b) of this section) 
is amended by striking ``subject to the approval of the board''.

SEC. 173. ADVANCES TO NONMEMBER BORROWERS.

  Section 10b of the Federal Home Loan Bank Act (12 U.S.C. 1430b) is 
amended--
          (1) in subsection (a), by striking ``(a) In General.--'';
          (2) by striking the 4th sentence of subsection (a), and 
        inserting ``Notwithstanding the preceding sentence, if an 
        advance is made for the purpose of facilitating mortgage 
        lending that benefits individuals and families that meet the 
        income requirements set forth in section 142(d) or 143(f) of 
        the Internal Revenue Code of 1986, the advance may be 
        collateralized as provided in section 10(a) of this Act.''; and
          (3) by striking subsection (b).

SEC. 174. POWERS AND DUTIES OF BANKS.

  (a) Subsection (a) of section 11 of the Federal Home Loan Bank Act 
(12 U.S.C. 1431(a)) is amended--
          (1) by inserting ``through the Office of Finance'' after ``to 
        issue'';
          (2) by striking ``Board'' after ``upon such terms and 
        conditions as the'' and inserting ``board of directors of the 
        bank''.
  (b) Subsection (b) of section 11 of the Federal Home Loan Bank Act 
(12 U.S.C. 1431(b)) is amended to read as follows:
  ``(b) Issuance of Federal Home Loan Bank Consolidated Bonds.--
          ``(1) In general.-- The Office of Finance may issue 
        consolidated Federal home loan bank bonds and other 
        consolidated obligations on behalf of the banks.
          ``(2) Joint and several obligation; terms and conditions.--
        Consolidated obligations issued by the Office of Finance under 
        paragraph (1) shall--
                  ``(A) be the joint and several obligations of all the 
                Federal home loan banks; and
                  ``(B) shall be issued upon such terms and conditions 
                as shall be established by the Office of Finance 
                subject to such rules and regulations as the Finance 
                Board may prescribe.''.
  (c) Section 11(f) of the Federal Home Loan Bank Act (12 U.S.C. 
1430(f) (as designated before the redesignation by subsection (e) of 
this section) is amended by striking both commas immediately following 
``permit'' and inserting ``or''.
  (d) Subsection (i) of section 11 of the Federal Home Loan Bank Act 
(12 U.S.C. 1431(i)) is amended by striking the 2d undesignated 
paragraph.
  (e) Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is 
amended--
          (1) by striking subsection (c); and
          (2) by redesignating subsections (d) through (k) as 
        subsections (c) through (j), respectively.

SEC. 174A. MERGERS AND CONSOLIDATIONS OF FEDERAL HOME LOAN BANKS.

  Section 26 of the Federal Home Loan Bank Act (12 U.S.C. 1446) is 
amended by designating the current paragraph as ``(a)'' and adding the 
following new sections:
  ``(b) Nothing in this section shall preclude voluntary mergers, 
combinations or consolidation by or among the Federal home loan banks 
pursuant to such regulations as the Finance Board may prescribe.
  ``(c) Number of Elected Directors of Resulting Bank.-- Subject to 
section 7 of this Act, any bank resulting from a merger, combination, 
or consolidation pursuant to this section may have a number of elected 
directors equal to or less than the total number of elected directors 
of all the banks which participated in such transaction (as determined 
immediately before such transaction).
  ``(d) Number of Appointed Directors of Resulting Bank.--The number of 
appointed directors of any bank resulting from a merger, combination, 
or consolidation pursuant to this section shall be a number that is 
three less than the number of elected directors.
  ``(e) Adjustment of District Boundaries.--After consummation of any 
merger, combination, or consolidation of 2 or more Federal home loan 
banks, the Finance Board shall adjust the districts established in 
section 3 of this Act to reflect such merger, combination, or 
consolidation.''.

SEC. 174B. TECHNICAL AMENDMENTS.

  (a) Repeal of Sections 22A and 27.--The Federal Home Loan Bank Act 
(12 U.S.C. 1421 et seq.) is amended by striking sections 22A (12 U.S.C. 
1442a) and 27 (12 U.S.C. 1447).
  (b) Section 12.--
          (1) Section 12(a) of the Federal Home Loan Bank Act (12 
        U.S.C. 1432(a)) is amended--
                  (A) by striking ``subject to the approval of the 
                Board'' immediately following ``transaction of its 
                business''; and
                  (B) by striking ``and, by its Board of directors, to 
                prescribe, amend, and repeal by-laws, rules, and 
                regulations governing the manner in which its affairs 
                may be administered; and the powers granted to it by 
                law may be exercised and enjoyed subject to the 
                approval of the Board. The president of a Federal Home 
                Loan Bank may also be a member of the Board of 
                directors thereof, but no other officer, employee, 
                attorney, or agent of such bank,'' and inserting ``and, 
                by the board of directors of the bank, to prescribe, 
                amend, and repeal by-laws governing the manner in which 
                its affairs may be administered, consistent with 
                applicable statute and regulation, as administered by 
                the Finance Board. No officer, employee, attorney, or 
                agent of a Federal home loan bank''.
          (2) Section 12 of the Federal Home Loan Bank Act (12 U.S.C. 
        1432) is amended by inserting after subsection (b) the 
        following new subsection:
  ``(c) Prohibition on Excessive Compensation.--
          ``(1) In general.--The Finance Board shall prohibit the 
        Federal home loan banks from providing compensation to any 
        officer, director, or employee that is not reasonable and 
        comparable with the compensation for employment in other 
        similar businesses involving similar duties and 
        responsibilities. However, the Finance Board may not prescribe 
        or set a specific level or range of compensation for any 
        officer, director, or employee.
          ``(2) Regulations.--The Finance Board, by regulation, may 
        provide for the requirements of paragraph (1) to be phased-in 
        over a period not to exceed 3 years.
          ``(3) Exception for existing contracts.--Paragraph (1) shall 
        not apply to any contract entered into before June 1, 1997.''.
  (c) Powers and Duties of Federal Housing Finance Board.--
          (1) Subsection (a)(1) of section 2B of the Federal Home Loan 
        Bank Act (12 U.S.C. 1422b(a)(1)) is amended by striking the 
        period at the end of the sentence and inserting ``; and to have 
        the same powers, rights, and duties to enforce this Act with 
        respect to the Federal home loan banks and the senior officers 
        and directors of such banks as the Office of Federal Housing 
        Enterprise Oversight has over the Federal housing enterprises 
        and the senior officers and directors of such enterprises under 
        the Federal Housing Enterprises Financial Safety and Soundness 
        Act of 1992.''.
          (2) Subsection (b) of section 2B of the Federal Home Loan 
        Bank Act (12 U.S.C. 1422b(b)) is amended--
                  (A) by striking ``(1) Board staff.--'';
                  (B) by striking ``function to any employee, 
                administrative unit'' and inserting ``function to any 
                employee or administrative unit'';
                  (C) by striking the 2d sentence in paragraph (1); and
                  (D) by striking paragraph (2).
          (3) Section 111 of Public Law 93-495 (12 U.S.C. 250) is 
        amended by striking ``Federal Home Loan Bank Board'' and 
        inserting ``Federal Housing Finance Board''.
  (d) Eligibility to Secure Advances.--
          (1) Section 9.--Section 9 of the Federal Home Loan Bank Act 
        (12 U.S.C. 1429) is amended--
                  (A) in the second sentence, by striking ``with the 
                approval of the Board''; and
                  (B) in the third sentence, by striking ``, subject to 
                the approval of the Board,''.
          (2) Section 10.--
                  (A) Subsection (a) of section 10 of the Federal Home 
                Loan Bank Act (12 U.S.C. 1430(a)) is amended in 
                paragraph (3), by striking ``Deposits'' and inserting 
                ``Cash or deposits''.
                  (B) Subsection (c) of section 10 of the Federal Home 
                Loan Bank Act (12 U.S.C. 1430(c)) is amended--
                          (i) in the 1st sentence by striking ``Board'' 
                        and inserting ``Federal home loan bank''; and
                          (ii) by striking the 2d sentence.
                  (C) Subsection (d) of section 10 of the Federal Home 
                Loan Bank Act (12 U.S.C. 1430(d)) is amended--
                          (i) in the 1st sentence, by striking ``and 
                        the approval of the Board'';
                          (ii) in the last sentence, by striking 
                        ``Subject to the approval of the Board, any'' 
                        and inserting ``Any''.
                  (D) Section 10(j) of the Federal Home Loan Bank Act 
                (12 U.S.C. 1430(j)) is amended--
                          (i) in the 1st sentence of paragraph (1) by 
                        striking ``to subsidize the interest rate on 
                        advances'' and inserting ``to provide 
                        subsidies, including subsidized interest rates 
                        on advances'';
                          (ii) in paragraphs (2), (3), (4), (5), (9), 
                        (11), and (12) by striking ``advances'' and 
                        ``subsidized advances'' each place such terms 
                        appear and inserting ``subsidies, including 
                        subsidized advances'';
                          (iii) in paragraph (1), by inserting ``(A)'' 
                        before the 1st sentence, and inserting the 
                        following at the end of the paragraph:
                  ``(B) Subject to such regulations as the Finance 
                Board may prescribe, the board of directors of each 
                Federal home loan bank may approve or disapprove 
                requests from members for Affordable Housing Program 
                subsidies, and may not delegate such authority.'';
                          (iv) in paragraph (2), by striking 
                        subparagraph (B) and inserting the following 
                        new subparagraph:
                  ``(B) finance the purchase, construction or 
                rehabilitation of rental housing if, for a period of at 
                least 15 years, either 20 percent or more of the units 
                in such housing are occupied by and affordable for 
                households whose income is 50 percent or less of area 
                median income (as determined by the Secretary of 
                Housing and Urban Development, and as adjusted for 
                family size); or 40 percent or more of the units in 
                such housing are occupied by and affordable for 
                households whose income is 60 percent or less of area 
                median income (as determined by the Secretary of 
                Housing and Urban Development, and as adjusted for 
                family size).'';
                          (v) in paragraph (5)--
                                  (I) by striking the colon after 
                                ``Affordable Housing Program'';
                                  (II) by striking subparagraphs (A) 
                                and (B); and
                                  (III) by striking ``(C) In 1995, and 
                                subsequent years,'';
                          (vi) in paragraph (11)--
                                  (I) by inserting ``, pursuant to a 
                                nomination process that is as broad and 
                                as participatory as possible, and 
                                giving consideration to the size of the 
                                District and the diversity of low- and 
                                moderate-income housing needs and 
                                activities within the District,'' after 
                                ``Advisory Council of 7 to 15 
                                persons'';
                                  (II) by inserting ``a diverse range 
                                of'' before ``community and nonprofit 
                                organizations''; and
                                  (III) by inserting after the 1st 
                                sentence, the following new sentence: 
                                ``Representatives of no one group shall 
                                constitute an undue proportion of the 
                                membership of the Advisory Council.''; 
                                and
                          (vii) in paragraph (13), by striking 
                        subparagraph (D) and inserting the following 
                        new subparagraph:
                  ``(D) Affordable.--For purposes of paragraph (2)(B), 
                the term ``affordable'' means that the rent with 
                respect to a unit shall not exceed 30 percent of the 
                income limitation under paragraph (2)(B) applicable to 
                occupants of such unit.''.
  (e) Section 16.--Subsection (a) of section 16 of the Federal Home 
Loan Bank Act (12 U.S.C. 1436) is amended in the 3d sentence by 
striking ``net earnings'' and inserting ``previously retained earnings 
or current net earnings''; by striking ``, and then only with the 
approval of the Federal Housing Finance Board''; and by striking the 
4th sentence.
  (f) Section 18.--Subsection (b) of section 18 of the Federal Home 
Loan Bank Act (12 U.S.C. 1438) is amended by striking paragraph (4).
  (g) Section 11.--Section 11 of the Federal Home Loan Bank Act (12 
U.S.C. 1431) is amended by inserting after subsection (j) (as so 
redesignated by section 174(e) of this subtitle) the following 
subsection:
  ``(k) Prohibition on Other Activities.--
          ``(1) A Federal home loan bank may not engage in any activity 
        other than the activities authorized under this Act and 
        activities incidental to such authorized activities.
          ``(2) All activities specified in paragraph (1) are subject 
        to Finance Board approval.''.

SEC. 175. DEFINITIONS.

  Paragraph (3) of section 2 of the Federal Home Loan Bank Act (12 
U.S.C. 1422(3)) is amended to read as follows:
          ``(3) The term ``State'' in addition to the states of the 
        United States, includes the District of Columbia, Guam, Puerto 
        Rico, the United States Virgin Islands, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.''

SEC. 176. RESOLUTION FUNDING CORPORATION

  (a) In General.--Section 21B(f)(2)(C) of the Federal Home Loan Bank 
Act (12 U.S.C. 1441b(f)(2)(C)) is amended to read as follows:
                  ``(C) Payments by federal home loan banks.--To the 
                extent the amounts available pursuant to subparagraphs 
                (A) and (B) are insufficient to cover the amount of 
                interest payments, each Federal home loan bank shall 
                pay to the Funding Corporation each calendar year 20.75 
                percent of the net earnings of such bank (after 
                deducting expenses relating to subsection (j) of 
                section 10 and operating expenses).''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on January 1, 1999.

SEC. 177. CAPITAL STRUCTURE OF THE FEDERAL HOME LOAN BANKS.

  (a) In General.--Section 6 of the Federal Home Loan Bank Act (12 
U.S.C. 1426) is amended to read as follows:

``SEC. 6. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

  ``(a) Capital Structure Plan.--On or before January 1, 1999, the 
board of directors of each Federal home loan bank shall submit for 
Finance Board approval a plan establishing and implementing a capital 
structure for such bank which--
          ``(1) the board of directors determines is the best suited 
        for the condition and operation of the bank and the interests 
        of the shareholders of the bank;
          ``(2) meets the requirements of subsection (b); and
          ``(3) meets the minimum capital standards and requirements 
        established under subsection (c) and any regulations prescribed 
        by the Finance Board pursuant to such subsection.
  ``(b) Contents of Plan.--The capital structure plan of each Federal 
home loan bank shall meet the following requirements:
          ``(1) Stock purchase requirements.--
                  ``(A) In general.--Each capital structure plan of a 
                Federal home loan bank shall require the shareholders 
                of the bank to maintain an investment in the stock of 
                the bank in amount not less than--
                          ``(i) a minimum percentage of the total 
                        assets of the shareholder; and
                          ``(ii) a minimum percentage of the 
                        outstanding advances from the bank to the 
                        shareholder.
                  ``(B) Minimum percentage levels.--The minimum 
                percentages established pursuant to subparagraph (A) 
                shall be set at levels sufficient to meet the bank's 
                minimum capital requirements established by the Finance 
                Board under subsection (c).
                  ``(C) Maximum asset based capital requirement.--The 
                asset-based capital requirement applicable to any 
                shareholder of a Federal home loan bank in any year 
                shall not exceed the lesser of--
                          ``(i) 0.6 percent of a shareholder's total 
                        assets at the close of the preceding year; or
                          ``(ii) $300,000,000.
                  ``(D) Maximum advance-based requirement.--The 
                advance-based capital requirement applicable to any 
                shareholder of a Federal home loan bank shall not 
                exceed 6 percent of the total outstanding advances from 
                the bank to the shareholder.
                  ``(E) Minimum stock purchase requirement 
                authorized.--A capital structure plan may establish a 
                minimum dollar amount of stock of a Federal home loan 
                bank in which a shareholder shall be required to 
                invest.
          ``(2) Adjustments to stock purchase requirements.--The 
        capital structure plan adopted by each Federal home loan bank 
        shall impose a continuing obligation on the board of directors 
        of the bank to review and adjust as necessary member stock 
        purchase requirements in order to ensure that the bank remains 
        in compliance with applicable minimum capital levels 
        established by the Finance Board.
          ``(3) Transition rule for stock purchase requirements.--
                  ``(A) In general.--A capital structure plan may allow 
                shareholders who were members of a Federal home loan 
                bank on the date of the enactment of the Financial 
                Services Competition Act of 1997 to come into 
                compliance with the asset-based stock purchase 
                requirement established under paragraph (1) during a 
                transition period established under the plan of not 
                more than 3 years, if such requirement exceeds the 
                asset-based stock purchase requirement in effect on 
                such date of enactment.
                  ``(B) Interim purchase requirements.--A capital 
                structure plan may establish interim asset-based stock 
                purchase requirements applicable to members referred to 
                in subparagraph (A) during a transition period 
                established under subparagraph (A).
          ``(4) Classes of stock.--
                  ``(A) In general.--Each capital structure plan shall 
                afford each shareholder of a Federal home loan bank the 
                option of meeting the shareholder's stock purchase 
                requirements through the purchase of any combination of 
                Class A or Class B stock.
                  ``(B) Class a stock.--Class A stock shall be stock of 
                a Federal home loan bank that shall be redeemed in cash 
                and at par by the bank no later than 12 months 
                following submission of a written notice by a 
                shareholder of the shareholder's intention to divest 
                all shares of stock in the bank.
                  ``(C) Class b stock.--Class B stock shall be stock of 
                a Federal home loan bank that shall be redeemed in cash 
                and at par by the bank no later than 5 years following 
                submission of a written notice by a shareholder of the 
                shareholder's intention to divest all shares of stock 
                in the bank.
                  ``(D) Rights requirement.--The Class B stock of a 
                Federal home loan bank may receive a dividend premium 
                over that paid on Class A stock, and may have 
                preferential voting rights in the election of Federal 
                home loan bank directors.
                  ``(E) Lower stock purchase requirements for class b 
                stock.--A capital structure plan may provide for lower 
                stock purchase requirements with respect to those 
                shareholder's that elect to purchase Class B stock in a 
                manner that is consistent with meeting the bank's own 
                minimum capital requirements as established by the 
                Finance Board.
                  ``(F) No other classes of stock permitted.--No class 
                of stock other than the Class A and Class B stock 
                described in subparagraphs (B) and (C) may be issued by 
                a Federal home loan bank.
          ``(5) Limited transferability of stock.--Each capital 
        structure plan shall provide that any equity securities issued 
        by the bank shall be available only to, held only by, and 
        tradable only among shareholders of the bank.
  ``(c) Capital Standards.--
          ``(1) In general.--The Finance Board shall prescribe, by 
        regulation, uniform capital standards applicable to each 
        Federal home loan bank which shall include--
                  ``(A) a leverage limit in accordance with paragraph 
                (2); and
                  ``(B) a risk-based capital requirement in accordance 
                with paragraph (3).
          ``(2) Minimum leverage limit.--The leverage limit established 
        by the Finance Board shall require each Federal home loan bank 
        to maintain total capital in an amount not less than 5 percent 
        of the total assets of the bank. In determining compliance with 
        the minimum leverage ratio, the amount of retained earnings and 
        the paid-in value of Class B stock, if any, shall be multiplied 
        by 1.5 and such higher amount shall be deemed to be capital for 
        purposes of meeting the 5 percent minimum leverage ratio.
          ``(3) Risk-based capital standard.--The risk-based capital 
        requirement shall be composed of the following components:
                  ``(A) Capital sufficient to meet the credit risk to 
                which a Federal home loan bank is subject, based on an 
                amount which is not less than the amount of tier 1, 
                risk-based capital required by regulations prescribed, 
                or guidelines issued under section 38 of the Federal 
                Deposit Insurance Act for a well capitalized insured 
                depository institution.
                  ``(B) Capital sufficient to meet the interest rate 
                risk to which a Federal home loan bank is subject, 
                based on an interest rate stress test applied by the 
                Finance Board that rigorously tests for changes in 
                interest rates, rate volatility, and changes in the 
                shape of the yield curve.
  ``(d) Redemption of Capital.--
          ``(1) In general.--Any shareholder of a Federal home loan 
        bank shall have the right to withdraw the shareholder's 
        membership from a Federal home loan bank and to redeem the 
        shareholder's stock in accordance with the redemption rights 
        associated with the class of stock the shareholder holds, if--
                  ``(A) such shareholder has filed a written notice of 
                an intention to redeem all such shares; and
                  ``(B) the shareholder has no outstanding advances 
                from any Federal home loan bank at the time of such 
                redemption.
          ``(2) Partial redemption.--A shareholder who files notice of 
        intention to redeem all shares of stock in a Federal home loan 
        bank may redeem not more than 1/2 of all such shares, in cash 
        and at par, 6 months before the date by which the bank is 
        required to redeem such stock pursuant to subparagraph (B) or 
        (C) of subsection (b)(4).
          ``(3) Divestiture.--The board of directors of any Federal 
        home loan bank may, after a hearing, order the divestiture by 
        any shareholder of all ownership interests of such shareholder 
        in the bank, if--
                  ``(A) in the opinion of the board of directors, such 
                shareholder has failed to comply with a provision of 
                this Act or any regulation prescribed under this Act; 
                or
                  ``(B) the shareholder has been determined to be 
                insolvent, or otherwise subject to the appointment of a 
                conservator, receiver, or other legal custodian, by a 
                State or Federal authority with regulatory and 
                supervisory responsibility for such shareholder.
          ``(4) Retirement of excess stock.--Any shareholder may--
                  ``(A) retire shares of Class A stock or, at the 
                option of the shareholder, shares of Class B stock, or 
                any combination of Class A and Class B stock, that are 
                excess to the minimum stock purchase requirements 
                applicable to the shareholder; and
                  ``(B) receive from the Federal home loan bank a 
                prompt payment in cash equal to the par value of such 
                stock.
          ``(5) Impairment of capital.--If the Finance Board or the 
        board of directors of a Federal home loan bank determines that 
        the paid-in capital of the bank is, or is likely to be, 
        impaired as a result of losses in or depreciation of the assets 
        of the bank, the Federal home loan bank shall withhold that 
        portion of the amount due any shareholder with respect to any 
        redemption or retirement of any class of stock which bears the 
        same ratio to the total of such amount as the amount of the 
        impaired capital bears to the total amount of capital allocable 
        to such class of stock.
          ``(6) Policies.--Subject to the requirements of this section, 
        the board of directors of each Federal home loan bank shall 
        promptly establish policies, consistent with this Act, 
        governing the capital stock of such bank and other provisions 
        of this section.''.

SEC. 178. INVESTMENTS.

  Subsection (j) of section 11 of the Federal Home Loan Bank Act (12 
U.S.C. 1431) (as so redesignated by section 174(e) of this subtitle) is 
amended to read as follows:
  ``(j) Investments.--Each bank shall reduce its investments to those 
necessary for liquidity purposes, for safe and sound operation of the 
banks, or for housing finance, as administered by the Finance Board.''.

SEC. 179. FEDERAL HOUSING FINANCE BOARD.

  Section 2A(b)(1) of the Federal Home Loan Bank Act (12 U.S.C. 
1422(b)(1)) is amended--
          (1) by redesignating subparagraphs (A) and (B) as 
        subparagraphs (B) and (C), respectively;
          (2) by inserting before subparagraph (B) (as so redesignated 
        by paragraph (1) of this section) the following new 
        subparagraph:
                  ``(A) The Secretary of the Treasury (or the Secretary 
                of the Treasury's designee), who shall serve without 
                additional compensation.''; and
          (3) in subparagraph (C) (as so redesignated by paragraph (1) 
        of this section) by striking ``Four'' and inserting ``3''.

  Subtitle I--Streamlining Antitrust Review of Bank Acquisitions and 
                                Mergers

SEC. 181. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956.

  (a) Amendments to Section 3 to Require Filing of Application Copies 
with Attorney General.--Section 3 of the Bank Holding Company Act of 
1956 (12 U.S.C. 1842) is amended--
          (1) in subsection (b) by inserting after paragraph (2) the 
        following new paragraph:
          ``(3) Requirement to file information with attorney 
        general.--Any applicant seeking prior approval of the Board to 
        engage in an acquisition transaction under this section must 
        file simultaneously with the Attorney General copies of any 
        documents regarding the proposed transaction required by the 
        Board.''; and
          (2) in subsection (c)--
                  (A) by striking paragraph (1); and
                  (B) by redesignating paragraphs (2) through (5) as 
                paragraphs (1) through (4), respectively.
  (b) Amendments to Section 11 to Modify Justice Department 
Notification and Post-Approval Waiting Period for Section 3 
Transactions.--Section 11 of the Bank Holding Company Act of 1956 (12 
U.S.C. 1849) is amended--
          (1) in subsection (b)(1)--
                  (A) by striking ``, if the Board has not received any 
                adverse comment from the Attorney General of the United 
                States relating to competitive factors,'';
                  (B) by striking ``as may be prescribed by the Board 
                with the concurrence of the Attorney General, but in no 
                event less than 15 calendar days after the date of 
                approval.'' and inserting ``as may be prescribed by the 
                Attorney General.''; and
                  (C) by striking the 3d to last sentence and the 
                penultimate sentence; and
          (2) by striking subsections (c) and (e) and redesignating 
        subsections (d) and (f) as subsections (c) and (d), 
        respectively.

SEC. 182. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT TO VEST IN 
                    THE ATTORNEY GENERAL SOLE RESPONSIBILITY FOR 
                    ANTITRUST REVIEW OF DEPOSITORY INSTITUTION MERGERS.

  Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828) 
is amended--
          (1) in paragraph (3)(C) by striking ``during a period at 
        least as long as the period allowed for furnishing reports 
        under paragraph (4) of this subsection'';
          (2) by striking paragraph (4) and inserting the following new 
        paragraph:
          ``(4) Factors to be considered.--In determining whether to 
        approve a transaction, the responsible agency shall in every 
        case take into consideration the financial and managerial 
        resources and future prospects of the existing and proposed 
        institutions, and the convenience and needs of the community to 
        be served.'';
          (3) by striking paragraph (5) and inserting the following new 
        paragraph:
          ``(5) Notice to attorney general.--The responsible agency 
        shall immediately notify the Attorney General of any approval 
        by it pursuant to this subsection of a proposed merger 
        transaction. If the responsible agency has found that it must 
        act immediately in order to prevent the probable failure of one 
        of the banks involved, the transaction may be consummated 
        immediately upon approval by the agency. If the responsible 
        agency has notified the other Federal banking agencies referred 
        to in this section of the existence of an emergency requiring 
        expeditious action and has required the submission of views and 
        recommendations within 10 days, the transaction may not be 
        consummated before the 5th calendar day after the date of 
        approval of the responsible agency. In all other cases, the 
        transaction may not be consummated before the 30th calendar day 
        after the date of approval by the agency, or such shorter 
        period of time as may be prescribed by the Attorney General.'';
          (4) by striking paragraph (6) and redesignating paragraphs 
        (7) through (11) as paragraphs (6) through (10), respectively;
          (5) in subparagraph (A) of paragraph (6) (as so redesignated 
        by paragraph (4) of this section))--
                  (A) by striking ``(5)'' and inserting ``(4)''; and
                  (B) by striking ``(6)'' and inserting ``(5)'';
                  (C) by striking ``In any such action, the court shall 
                review de novo the issues presented.'';
          (6) in paragraph (6) (as so redesignated by paragraph (4) of 
        this section)--
                  (A) by striking subparagraphs (B) and (D); and
                  (B) by redesignating subparagraph (C) as subparagraph 
                (B);
          (7) in paragraph (8) (as so redesignated by paragraph (4) of 
        this section)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (A):
                  (B) by striking subparagraph (B); and
                  (C) by redesignating subparagraph (C) as subparagraph 
                (B); and
          (8) by inserting after paragraph (10) (as so redesignated by 
        paragraph (4) of this section) the following new paragraph:
          ``(11) Requirement to file information with attorney 
        general.--Any applicant seeking prior written approval of the 
        responsible Federal banking agency to engage in a merger 
        transaction under this subsection shall file simultaneously 
        with the Attorney General copies of any documents regarding the 
        proposed transaction required by the Federal banking agency.''.

SEC. 183. INFORMATION FILED BY DEPOSITORY INSTITUTIONS; INTERAGENCY 
                    DATA SHARING.

  (a) Format of Notice.--
          (1) In general.--Notice of any proposed transaction for which 
        approval is required under section 3 of the Bank Holding 
        Company Act of 1956 or section 18(c) of the Federal Deposit 
        Insurance Act shall be in a format designated and required by 
        the appropriate Federal banking agency (as defined in section 3 
        of the Federal Deposit Insurance Act) and shall contain a 
        section on the likely competitive effects of the proposed 
        transaction.
          (2) Designation by agency.--The appropriate Federal banking 
        agency, with the concurrence of the Attorney General, shall 
        designate and require the form and content of the competitive 
        effects section.
          (3) Notice of suspension.--Upon notification by the Attorney 
        General that the competitive effects section of an application 
        is incomplete, the appropriate Federal banking agency shall 
        notify the applicant that the agency will suspend processing of 
        the application until the Attorney General notifies the agency 
        that the application is complete.
          (4) Emergency action.--This provision shall not affect the 
        appropriate Federal banking agency's authority to act 
        immediately--
                  (A) to prevent the probable failure of 1 of the banks 
                involved; or
                  (B) to reduce or eliminate a post approval waiting 
                period in case of an emergency requiring expeditious 
                action.
          (5) Exemption for certain filings.--With the concurrence of 
        the Attorney General, the appropriate Federal banking agency 
        may exempt classes of persons, acquisitions, or transactions 
        that are not likely to violate the antitrust laws from the 
        requirement that applicants file a competitive effects section.
  (b) Interagency Data Sharing Requirement.--
          (1) In general.--To the extent not prohibited by other law, 
        the Federal banking agencies shall make available to the 
        Attorney General any data in their possession that the Attorney 
        General deems necessary for antitrust reviews of transactions 
        requiring approval under section 3 of the Bank Holding Company 
        Act of 1956 or section 18(c) of the Federal Deposit Insurance 
        Act.
          (2) Continuation of data collection and analysis.--The 
        Federal banking agencies shall continue to provide market 
        analysis, deposit share information, and other relevant 
        information for determining market competition as needed by the 
        Attorney General in the same manner such agencies provided 
        analysis and information under section 18(c) of the Federal 
        Deposit Insurance Act and 3(c) of the Bank Holding Company Act 
        of 1956 (as such sections were in effect on the day before the 
        date of the enactment of this Act) and shall continue to 
        collect information necessary or useful for such analysis.

SEC. 184. ANNUAL GAO REPORT.

  (a) In General.--By the end of the 1-year period beginning on the 
date of the enactment of this Act and annually thereafter the 
Comptroller General of the United States shall submit a report to the 
Congress on market concentration in the financial services industry.
  (b) Analysis.--Each report submitted under subsection (a) shall 
contain an analysis of--
          (1) the positive and negative effects of affiliations between 
        various types of financial companies, and of acquisitions 
        pursuant to this Act and the amendments made by this Act to 
        other provisions of law, including any positive or negative 
        effects on registered securities brokers and dealers which have 
        been purchased by depository institutions or depository 
        institution holding companies;
          (2) the changes in business practices and the effects of any 
        such changes on the availability of venture capital and the 
        availability of capital and credit for small businesses; and
          (3) the acquisition patterns among depository institutions, 
        depository institution holding companies, securities firms, and 
        insurance companies including acquisitions among the largest 20 
        percent of firms and acquisitions within a limited geographical 
        area.

SEC. 185. APPLICABILITY OF ANTITRUST LAWS.

  No provision of this subtitle shall be construed as affecting--
          (1) the applicability of antitrust laws (as defined in 
        section 11(d) of the Bank Holding Company Act of 1956; as so 
        redesignated pursuant to this subtitle); or
          (2) the applicability, if any, of any State law which is 
        similar to the antitrust laws.

SEC. 186. EFFECTIVE DATE.

  This subtitle shall become effective 6 months after the date of 
enactment of this Act.

             Subtitle J--Redomestication of Mutual Insurers

SEC. 191. REDOMESTICATION OF MUTUAL INSURERS.

  (a) Redomestication.--A mutual insurer organized under the laws of 
any State may transfer its domicile to a transferee domicile as a step 
in a reorganization in which, pursuant to the laws of the transferee 
domicile, the mutual insurer becomes a stock insurer (whether as a 
direct or indirect subsidiary of a mutual holding company or 
otherwise).
  (b) Resulting Domicile.--Upon complying with the applicable law of 
the transferee domicile governing transfers of domicile and completion 
of a transfer pursuant to this section, the mutual insurer shall cease 
to be a domestic insurer in the transferor domicile and, as a 
continuation of its corporate existence, shall be a domestic insurer of 
the transferee domicile.
  (c) Licenses Preserved.--The certificate of authority, agents' 
appointments and licenses, rates, approvals and other items that a 
licensed State allows and that are in existence immediately prior to 
the date that a redomesticating insurer transfers its domicile pursuant 
to this subtitle shall continue in full force and effect upon transfer, 
if the insurer remains duly qualified to transact the business of 
insurance in such licensed State.
  (d) Effectiveness of Outstanding Policies and Contracts.--
          (1) In general.--All outstanding insurance policies and 
        annuities contracts of a redomesticating insurer shall remain 
        in full force and effect and need not be endorsed as to the new 
        domicile of the insurer, unless so ordered by the State 
        insurance regulator of a licensed State, and then only in the 
        case of outstanding policies and contracts whose owners reside 
        in such licensed State.
          (2) Forms.--
                  (A) Applicable State law may require a 
                redomesticating insurer to file new policy forms with 
                the State insurance regulator of a licensed State on or 
                before the effective date of the transfer.
                  (B) Notwithstanding subparagraph (A), a 
                redomesticating insurer may use existing policy forms 
                with appropriate endorsements to reflect the new 
                domicile of the redomesticating insurer until the new 
                policy forms are approved for use by the State 
                insurance regulator of such licensed State.
  (e) Notice.--A redomesticating insurer shall give notice of the 
proposed transfer to the State insurance regulator of each licensed 
State and shall file promptly any resulting amendments to corporate 
documents required to be filed by a foreign licensed mutual insurer 
with the insurance regulator of each such licensed State.
  (f) Rule of Construction.--No provision of this subtitle shall be 
construed so as to preempt any provision of a State law relating to the 
establishment of a mutual insurance holding company which protects the 
rights of policy holders.

SEC. 192. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.

  (a) In General.--Unless otherwise permitted by this subtitle, State 
laws that conflict with the purposes and intent of this subtitle are 
preempted, including but not limited to--
          (1) any law that has the purpose or effect of impeding the 
        activities of, taking any action against, or applying any 
        provision of law or regulation to, any insurer or an affiliate 
        of such insurer because that insurer or any affiliate plans to 
        redomesticate or has redomesticated pursuant to this subtitle;
          (2) any law that has the purpose or effect of impeding the 
        activities of, taking action against, or applying any provision 
        of law or regulation to, any insured or any insurance licensee 
        or other intermediary because such person or entity has 
        procured insurance from or placed insurance with any insurer or 
        affiliate of such insurer that plans to redomesticate or has 
        redomesticated pursuant to this subtitle;
          (3) any law that has the purpose or effect of terminating, 
        because of the redomestication of a mutual insurer pursuant to 
        this subtitle, any certificate of authority, agent appointment 
        or license, rate approval or other approval, of any State 
        insurance regulator or other State authority in existence 
        immediately prior to the redomestication in any State other 
        than the transferee domicile.
  (b) Differential Treatment Prohibited.--No State law, regulation, 
interpretation, or functional equivalent thereof, may treat a 
redomesticating or redomesticated insurer or any affiliate thereof any 
differently than an insurer operating in that State that is not a 
redomesticating or redomesticated insurer.
  (c) Laws Prohibiting Operations.--If any licensed State fails to 
issue, delays the issuance of, or seeks to revoke an original or 
renewal certificate of authority of a redomesticated insurer 
immediately following redomestication, except on grounds and in a 
manner consistent with its past practices regarding the issuance of 
certificates of authority to foreign insurers that are not 
redomesticating, then the redomesticating insurer shall be exempt from 
any State law of the licensed State to the extent that such State law 
or the operation of such State law would make unlawful, or regulate, 
directly or indirectly, the operation of the redomesticated insurer, 
except that such licensed State may require the redomesticated insurer 
to--
          (1) comply with the unfair claim settlement practices law of 
        the licensed State;
          (2) pay, on a nondiscriminatory basis, applicable premium and 
        other taxes which are levied on licensed insurers or 
        policyholders under the laws of the licensed State;
          (3) register with and designate the State insurance regulator 
        as its agent solely for the purpose of receiving service of 
        legal documents or process;
          (4) submit to an examination by the State insurance regulator 
        in any licensed state in which the redomesticated insurer is 
        doing business to determine the insurer's financial condition, 
        if--
                  (A) the State insurance regulator of the transferee 
                domicile has not begun and has refused to initiate an 
                examination of the redomesticated insurer; and
                  (B) any such examination is coordinated to avoid 
                unjustified duplication and repetition;
          (5) comply with a lawful order issued in--
                  (A) a delinquency proceeding commenced by the State 
                insurance regulator of any licensed State if there has 
                been a judicial finding of financial impairment under 
                paragraph (7); or
                  (B) a voluntary dissolution proceeding;
          (6) comply with any State law regarding deceptive, false, or 
        fraudulent acts or practices, except that if the licensed State 
        seeks an injunction regarding the conduct described in this 
        paragraph, such injunction must be obtained from a court of 
        competent jurisdiction as provided in subsection (d);
          (7) comply with an injunction issued by a court of competent 
        jurisdiction, upon a petition by the State insurance regulator 
        alleging that the redomesticating insurer is in hazardous 
        financial condition or is financially impaired;
          (8) participate in any insurance insolvency guaranty 
        association on the same basis as any other insurer licensed in 
        the licensed State; and
          (9) require a person acting, or offering to act, as an 
        insurance licensee for a redomesticated insurer in the licensed 
        State to obtain a license from that State, except that such 
        State may not impose any qualification or requirement that 
        discriminates against a nonresident insurance licensee.
  (d) Judicial Review.--The appropriate United States district court 
shall have exclusive jurisdiction over litigation arising under this 
section involving any redomesticating or redomesticated insurer.
  (e) Severability.--If any provision of this section, or the 
application thereof to any person or circumstances, is held invalid, 
the remainder of the section, and the application of such provision to 
other persons or circumstances, shall not be affected thereby.

SEC. 193. DEFINITIONS.

  For purposes of this subtitle, the following definitions shall apply:
          (1) Court of competent jurisdiction.--The term ``court of 
        competent jurisdiction'' means a court authorized pursuant to 
        section 192(d) to adjudicate litigation arising under this 
        subtitle.
          (2) Domicile.--The term ``domicile'' means the State in which 
        an insurer is incorporated, chartered, or organized.
          (3) Insurance licensee.--The term ``insurance licensee'' 
        means any person holding a license under State law to act as 
        insurance agent, subagent, broker, or consultant.
          (4) Institution.--The term ``institution'' means a 
        corporation, joint stock company, limited liability company, 
        limited liability partnership, association, trust, partnership, 
        or any similar entity.
          (5) Licensed state.--The term ``licensed State'' means any 
        State, Puerto Rico, or the U.S. Virgin Islands in which the 
        redomesticating insurer has a certificate of authority in 
        effect immediately prior to the redomestication.
          (6) Mutual insurer.--The term ``mutual insurer'' means a 
        mutual insurer organized under the laws of any State.
          (7) Person.--The term ``person'' means an individual, 
        institution, government or governmental agency, State or 
        political subdivision of a State, public corporation, board, 
        association, estate, trustee, or fiduciary, or other similar 
        entity.
          (8) Redomesticated insurer.--The term ``redomesticated 
        insurer'' means a mutual insurer that has redomesticated 
        pursuant to this subtitle.
          (9) Redomesticating insurer.--The term ``redomesticating 
        insurer'' means a mutual insurer that is redomesticating 
        pursuant to this subtitle.
          (10) Redomestication or transfer.--The terms 
        ``redomestication'' and ``transfer'' mean the transfer of the 
        domicile of a mutual insurer from one State to another State 
        pursuant to this subtitle.
          (11) State insurance regulator.--The term ``State insurance 
        regulator'' means the principal insurance regulatory authority 
        of a State or of Puerto Rico, or the United States Virgin 
        Islands.
          (12) State law.--The term ``State law'' means the statutes of 
        any State or of Puerto Rico, or the U.S. Virgin Islands and any 
        regulation, order, or requirement prescribed pursuant to any 
        such statute.
          (13) Transferee domicile.--The term ``transferee domicile'' 
        means the State to which a mutual insurer is redomesticating 
        pursuant to this subtitle.
          (14) Transferor domicile.--The term ``transferor domicile'' 
        means the State from which a mutual insurer is redomesticating 
        pursuant to this subtitle.

 SEC. 194. EFFECTIVE DATE.

  This subtitle shall become effective on the date of enactment of this 
Act.

Subtitle K--Applying the Principles of National Treatment and Equality 
   of Competitive Opportunity to Foreign Banks and Foreign Financial 
                              Institutions

 SEC. 195. APPLYING THE PRINCIPLES OF NATIONAL TREATMENT AND EQUALITY 
                    OF COMPETITIVE OPPORTUNITY TO FOREIGN BANKS AND 
                    FOREIGN FINANCIAL INSTITUTIONS.

  The purpose of this subtitle is to apply the reforms of this Act to 
foreign banks and other foreign financial institutions in a manner 
consistent with the principles of national treatment and equality of 
competitive opportunity, without disadvantaging either foreign or 
domestic banks or other financial institutions in relation to each 
other.

 SEC. 196. APPLYING THE PRINCIPLES OF NATIONAL TREATMENT AND EQUALITY 
                    OF COMPETITIVE OPPORTUNITY TO FOREIGN BANKS THAT 
                    ARE QUALIFYING BANK HOLDING COMPANIES.

  Section 8(c) of the International Banking Act of 1978 (12 U.S.C. 
3106(c)) is amended by adding at the end the following new paragraph:
          ``(3) Termination of grandfathered rights.--
                  ``(A) In general.--If any foreign bank or foreign 
                company files a declaration under section 6(a)(1)(F) of 
                the Bank Holding Company Act of 1956 or receives a 
                determination from the Board under section 6(l)(6) of 
                such Act, any authority conferred by this subsection on 
                any foreign bank or company to engage in any financial 
                activity (as defined in section 6(a)(3) of such Act) 
                shall terminate immediately.
                  ``(B) Restrictions and requirements authorized.--If a 
                foreign bank or company that engages, directly or 
                through an affiliate pursuant to paragraph (1), in a 
                financial activity (as defined in section 6(a)(3) of 
                the Bank Holding Company Act of 1956) has not filed a 
                declaration with the Board of its status as a 
                qualifying bank holding company under section 6(a) of 
                the Bank Holding Company Act of 1956 by the end of the 
                second year after the date of enactment of the 
                Financial Services Competition Act of 1997, the Board, 
                giving due regard to the principle of national 
                treatment and equality of competitive opportunity, may 
                impose such restrictions and requirements on the 
                conduct of such activities by such foreign bank or 
                company as are comparable to those imposed on a 
                qualifying bank holding company organized under the 
                laws of the United States, including a requirement to 
                conduct such activities in compliance with the 
                safeguards of section 6 of the Bank Holding Company Act 
                of 1956 and any additional safeguards imposed by the 
                National Council on Financial Services.''.

SEC. 197. APPLYING THE PRINCIPLES OF NATIONAL TREATMENT AND EQUALITY OF 
                    COMPETITIVE OPPORTUNITY TO FOREIGN BANKS AND 
                    FOREIGN FINANCIAL INSTITUTIONS THAT ARE WHOLESALE 
                    FINANCIAL INSTITUTIONS.

  Section 8A of the Federal Deposit Insurance Act (as added by section 
161 of this Act) is amended by adding at the end the following new 
subsection:
  ``(i) Voluntary Termination of Deposit Insurance.--The provisions on 
voluntary termination of insurance in this section apply to an insured 
branch of a foreign bank (including a Federal branch) in the same 
manner and to the same extent as they apply to an insured State bank or 
a national bank.''.

                  Subtitle L--Effective Date of Title

SEC. 199. EFFECTIVE DATE.

  Except with regard to any subtitle or other provision of this title 
for which a specific effective date is provided, this title and the 
amendments made by this title shall take effect at the end of the 270-
day period beginning on the date of the enactment of this Act.

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

SEC. 201. DEFINITION OF BROKER.

  Section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(4)) is amended to read as follows:
          ``(4) Broker.--
                  ``(A) In general.--The term `broker' means any person 
                engaged in the business of effecting transactions in 
                securities for the account of others.
                  ``(B) Exclusion of banks.--The term `broker' does not 
                include a bank unless such bank--
                          ``(i) publicly solicits the business of 
                        effecting securities transactions for the 
                        account of others; or
                          ``(ii) is compensated for such business by 
                        the payment of commissions or similar 
                        remuneration based on effecting transactions in 
                        securities (other than fees calculated as a 
                        percentage of assets under management) in 
                        excess of the bank's incremental costs directly 
                        attributable to effecting such transactions 
                        (hereafter referred to as `incentive 
                        compensation').
                  ``(C) Exemption for certain bank activities.--A bank 
                shall not be considered to be a broker because the bank 
                engages in any of the following activities under the 
                conditions described:
                          ``(i) Third party brokerage arrangements.--
                        The bank enters into a contractual or other 
                        arrangement with a broker or dealer registered 
                        under this title under which the broker or 
                        dealer offers brokerage services on or off the 
                        premises of the bank if--
                                  ``(I) such broker or dealer is 
                                clearly identified as the person 
                                performing the brokerage services;
                                  ``(II) the broker or dealer performs 
                                brokerage services in an area that is 
                                clearly marked and, unless made 
                                impossible by space or personnel 
                                considerations, physically separate 
                                from the routine deposit-taking 
                                activities of the bank;
                                  ``(III) any materials used by the 
                                bank to advertise or promote generally 
                                the availability of brokerage services 
                                under the contractual or other 
                                arrangement clearly indicate that the 
                                brokerage services are being provided 
                                by the broker or dealer and not by the 
                                bank;
                                  ``(IV) any materials used by the bank 
                                to advertise or promote generally the 
                                availability of brokerage services 
                                under the contractual or other 
                                arrangement are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                  ``(V) bank employees perform only 
                                clerical or ministerial functions in 
                                connection with brokerage transactions, 
                                including scheduling appointments with 
                                the associated persons of a broker or 
                                dealer and, on behalf of a broker or 
                                dealer, transmitting orders or handling 
                                customers funds or securities, except 
                                that bank employees who are not so 
                                qualified may describe in general terms 
                                investment vehicles under the 
                                contractual or other arrangement and 
                                accept customer orders on behalf of the 
                                broker or dealer if such employees have 
                                received training that is substantially 
                                equivalent to the training required for 
                                personnel qualified to sell securities 
                                pursuant to the requirements of a self-
                                regulatory organization;
                                  ``(VI) bank employees do not directly 
                                receive incentive compensation for any 
                                brokerage transaction unless such 
                                employees are associated persons of a 
                                broker or dealer and are qualified 
                                pursuant to the requirements of a self-
                                regulatory organization (as so defined) 
                                except that the bank employees may 
                                receive nominal cash and noncash 
                                compensation for customer referrals if 
                                the cash compensation is a one-time fee 
                                of a fixed dollar amount and the 
                                payment of the fee is not contingent on 
                                whether the referral results in a 
                                transaction;
                                  ``(VII) such services are provided by 
                                the broker or dealer on a basis in 
                                which all customers which receive any 
                                services are fully disclosed to the 
                                broker or dealer; and
                                  ``(VIII) the broker or dealer informs 
                                each customer that the brokerage 
                                services are provided by the broker or 
                                dealer and not by the bank and that the 
                                securities are not deposits or other 
                                obligations of the bank, are not 
                                guaranteed by the bank, and are not 
                                insured by the Federal Deposit 
                                Insurance Corporation.
                          ``(ii) Trust activities.--The bank engages in 
                        trust activities (including effecting 
                        transactions in the course of such trust 
                        activities) permissible for national banks 
                        under the first section of the Act of September 
                        28, 1962, or for State banks under relevant 
                        State trust statutes or law (including 
                        securities safekeeping, self-directed 
                        individual retirement accounts, or managed 
                        agency accounts or other functionally 
                        equivalent accounts of a bank) unless the 
                        bank--
                                  ``(I) publicly solicits brokerage 
                                business, other than by advertising 
                                that it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust activities; 
                                or
                                  ``(II) receives incentive 
                                compensation for such brokerage 
                                activities.
                          ``(iii) Permissible securities 
                        transactions.--The bank effects transactions in 
                        exempted securities, commercial paper, bankers 
                        acceptances, commercial bills, qualified 
                        Canadian government obligations as defined in 
                        section 5136 of the Revised Statutes, 
                        obligations of the Washington Metropolitan Area 
                        Transit Authority which are guaranteed by the 
                        Secretary of Transportation under section 9 of 
                        the National Capital Transportation Act of 
                        1969, obligations of the North American 
                        Development Bank, and obligations of any local 
                        public agency (as defined in section 110(h) of 
                        the Housing Act of 1949) or any public housing 
                        agency (as defined in the United States Housing 
                        Act of 1937) that are expressly authorized by 
                        section 5136 of the Revised Statutes of the 
                        United States as permissible for a national 
                        bank to underwrite or deal in.
                          ``(iv) Employee and shareholder benefit 
                        plans.--The bank effects transactions as part 
                        of any bonus, profit-sharing, pension, 
                        retirement, thrift, savings, incentive, stock 
                        purchase, stock ownership, stock appreciation, 
                        stock option, dividend reinvestment, or similar 
                        plan for employees or shareholders of an issuer 
                        or its subsidiaries.
                          ``(v) Sweep accounts.--The bank effects 
                        transactions as part of a program for the 
                        investment or reinvestment of bank deposit 
                        funds into any no-load, open-end management 
                        investment company registered under the 
                        Investment Company Act of 1940 that holds 
                        itself out as a money market fund.
                          ``(vi) Affiliate transactions.--The bank 
                        effects transactions for the account of any 
                        affiliate of the bank (as defined in section 2 
                        of the Bank Holding Company Act of 1956).
                          ``(vii) Private securities offerings.--The 
                        bank--
                                  ``(I) effects sales as part of a 
                                primary offering of securities by an 
                                issuer, not involving a public 
                                offering, pursuant to section 3(b), 
                                4(2), or 4(6) of the Securities Act of 
                                1933 and the rules and regulations 
                                issued thereunder; and
                                  ``(II) effects such sales exclusively 
                                to an accredited investor, as defined 
                                in section 2 of the Securities Act of 
                                1933.
                          ``(viii) De minimus exemption.--If the bank 
                        does not have a subsidiary or affiliate 
                        registered as a broker or dealer under section 
                        15, the bank effects, other than in 
                        transactions referred to in clauses (i) through 
                        (vii), not more than--
                                  ``(I) 800 transactions in any 
                                calendar year in securities for which a 
                                ready market exists, and
                                  ``(II) 200 other transactions in 
                                securities in any calendar year.
                          ``(ix) Safekeeping and custody services.--The 
                        bank, as part of customary banking activities--
                                  ``(I) provides safekeeping or custody 
                                services with respect to securities, 
                                including the exercise of warrants or 
                                other rights on behalf of customers;
                                  ``(II) clears or settles transactions 
                                in securities;
                                  ``(III) effects securities lending or 
                                borrowing transactions with or on 
                                behalf of customers as part of services 
                                provided to customers pursuant to 
                                subclauses (I) and (II) or invests cash 
                                collateral pledged in connection with 
                                such transactions; or
                                  ``(IV) holds securities pledged by 
                                one customer to another customer or 
                                securities subject to resale agreements 
                                between customers or facilitates the 
                                pledging or transfer of such securities 
                                by book entry.
                          ``(x) Contracts of insurance.--The bank 
                        effects transactions in contracts of insurance.
                          ``(xi) Banking products.--The bank effects 
                        transactions in banking products, as defined in 
                        section 18 of the Federal Deposit Insurance 
                        Act.
                  ``(D) Exemption for entities subject to section 
                15(e).--The term `broker' does not include a bank 
                that--
                          ``(i) was, immediately prior to the enactment 
                        of the Financial Services Competition Act of 
                        1997, subject to section 15(e); and
                          ``(ii) is subject to such restrictions and 
                        requirements as the Commission considers 
                        appropriate.''.

SEC. 202. DEFINITION OF DEALER.

  Section 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(5)) is amended to read as follows:
          ``(5) Dealer.--
                  ``(A) In general.--The term `dealer' means any person 
                engaged in the business of buying and selling 
                securities for such person's own account through a 
                broker or otherwise.
                  ``(B) Exception for person not engaged in the 
                business of dealing.--The term `dealer' does not 
                include a person that buys or sells securities for such 
                person's own account, either individually or in a 
                fiduciary capacity, but not as a part of a regular 
                business.
                  ``(C) Exemption for certain bank activities.--A bank 
                shall not be considered to be a dealer because the bank 
                engages in any of the following activities under the 
                conditions described:
                          ``(i) The bank buys and sells commercial 
                        paper, bankers acceptances, exempted 
                        securities, qualified Canadian Government 
                        obligations as defined in section 5136 of the 
                        Revised Statutes, obligations of the Washington 
                        Metropolitan Area Transit Authority which are 
                        guaranteed by the Secretary of Transportation 
                        under section 9 of the National Capital 
                        Transportation Act of 1969, obligations of the 
                        North American Development Bank, and 
                        obligations of any local public agency (as 
                        defined in section 110(h) of the Housing Act of 
                        1949) or any public housing agency (as defined 
                        in the United States Housing Act of 1937) that 
                        are expressly authorized by section 5136 of the 
                        Revised Statutes of the United States as 
                        permissible for a national bank to underwrite 
                        or deal in.
                          ``(ii) The bank buys and sells securities for 
                        investment purposes for the bank or for 
                        accounts for which the bank acts as a trustee 
                        or fiduciary.
                          ``(iii) The bank effects transactions in 
                        contracts of insurance.
                          ``(iv) The bank offers or sells, solely to 
                        any accredited investor (as defined in section 
                        2 of the Securities Act of 1933) securities 
                        backed by or representing an interest in notes, 
                        drafts, acceptances, loans, leases, 
                        receivables, other obligations, or pools of any 
                        such obligations originated or purchased by the 
                        bank or any affiliate of the bank.
                          ``(v) The bank buys and sells banking 
                        products, as defined in section 18 of the 
                        Federal Deposit Insurance Act.''.

SEC. 203. BANK BROKER AND DEALER ACTIVITIES.

  Section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) is 
amended by adding at the end the following:
  ``(h) Exemption From Definition of Broker or Dealer.--With respect to 
the employees of a bank that engages in the offer and sale of 
securities to the retail public, such employees shall be subject to the 
same rules and regulations of a self-regulatory organization applicable 
under authority of section 15A to employees of securities and other 
nonbank firms.''.

SEC. 204. APPLICATION OF THIS TITLE TO BANKS REGISTERED AS BROKERS OR 
                    DEALERS.

  Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is 
amended by adding at the end the following new subsection:
  ``(i) Application of This Title to Banks Registered as Brokers or 
Dealers.--
          ``(1) Nondiscrimination.--In administering and enforcing this 
        title with respect to banks that are registered brokers or 
        dealers, the Commission shall not treat banks more 
        restrictively than any other entities that are registered as 
        brokers or dealers pursuant to this section.
          ``(2) Capital requirements.--
                  ``(A) Well-capitalized banks.--Capital requirements 
                for brokers or dealers shall not apply to a bank that 
                is well-capitalized (as defined in section 38 of the 
                Federal Deposit Insurance Act) and determined by the 
                appropriate Federal banking agency (as defined in 
                section 3 of such Act), if the bank's brokerage and 
                dealer activities requiring registration do not 
                represent the predominant portion of the gross revenues 
                of the bank.
                  ``(B) Other banks.--The Commission, in consultation 
                with the appropriate Federal regulatory agencies for 
                banks, shall provide appropriate transitional relief to 
                banks that are registered brokers or dealers, and that 
                cease to be well-capitalized but are adequately 
                capitalized (as defined in section 38 of the Federal 
                Deposit Insurance Act). Such rules shall take account 
                of the purposes of this section and the extent to which 
                bank capital requirements further those purposes.
          ``(3) Scope of application.--The regulation, under this Act, 
        of any bank registered under this Act as a broker or dealer 
        shall apply only with respect to activities of the bank for 
        which the bank is required under this Act to be registered as a 
        broker or dealer.''.

SEC. 205. EXCLUSION FROM SIPC MEMBERSHIP OF BANKS REGISTERED AS BROKERS 
                    OR DEALERS.

  Section 3(a)(2)(A) of the Securities Investor Protection Act of 1970 
(15 U.S.C. 78ccc(a)(2)(A)) is amended--
          (1) in clause (i), by striking ``and'' after the semicolon;
          (2) in clause (ii), by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following new clause:
                          ``(iii) banks.''.

SEC. 206. EFFECTIVE DATE.

  This subtitle shall take effect at the end of the 270-day period 
beginning on the date of the enactment of this Act.

             Subtitle B--Bank Investment Company Activities

SEC. 211. CUSTODY OF INVESTMENT COMPANY ASSETS BY AFFILIATED BANK.

  (a) Management Companies.--Section 17(f) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-17(f)) is amended--
          (1) by redesignating paragraphs (1), (2), and (3) as 
        subparagraphs (A), (B), and (C), respectively;
          (2) by striking ``(f) Every registered'' and inserting the 
        following:
  ``(f) Custody of Securities.--
          ``(1) Every registered'';
          (3) by redesignating the 2d, 3d, 4th, and 5th sentences of 
        such subsection as paragraphs (2) through (5), respectively, 
        and indenting the left margin of such paragraphs appropriately; 
        and
          (4) by adding at the end the following new paragraph:
          ``(6) Notwithstanding any provision of this subsection, if a 
        bank described in paragraph (1) or an affiliated person of such 
        bank is an affiliated person, promoter, organizer, or sponsor 
        of, or principal underwriter for the registered company, such 
        bank may serve as custodian under this subsection in accordance 
        with such rules, regulations, or orders as the Commission may 
        prescribe, consistent with the protection of investors, after 
        consulting in writing with the appropriate Federal banking 
        agency, as defined in section 3 of the Federal Deposit 
        Insurance Act.''.
  (b) Unit Investment Trusts.--Section 26(a)(1) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-6(a)(1)) is amended by inserting 
before the semicolon at the end the following: ``, except that, if the 
trustee or custodian described in this subsection is an affiliated 
person of such underwriter or depositor, the Commission may adopt rules 
and regulations or issue orders, consistent with the protection of 
investors, prescribing the conditions under which such trustee or 
custodian may serve, after consulting in writing with the appropriate 
Federal banking agency (as defined in section 3 of the Federal Deposit 
Insurance Act)''.
  (c) Fiduciary Duty of Custodian.--Section 36(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
          (1) in paragraph (1), by striking ``or'' at the end;
          (2) in paragraph (2), by striking the period at the end and 
        inserting ``; or''; and
          (3) by inserting after paragraph (2) the following:
          ``(3) as custodian.''.

SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

  Section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a-18) 
is amended by adding at the end the following:
``Notwithstanding any provision of this section, it shall be unlawful 
for any affiliated person of a registered investment company or any 
affiliated person of such a person to loan money to such investment 
company in contravention of such rules, regulations, or orders as the 
Commission may prescribe in the public interest and consistent with the 
protection of investors.''.

SEC. 213. INDEPENDENT DIRECTORS.

  (a) In General.--Section 2(a)(19)(A) of the Investment Company Act of 
1940 (15 U.S.C. 80a-2(a)(19)(A)) is amended--
          (1) by striking clause (v) and inserting the following new 
        clause:
                          ``(v) any person (other than a registered 
                        investment company) that, at any time during 
                        the preceding 6 months, has executed any 
                        portfolio transactions for, engaged in any 
                        principal transactions with, or distributed 
                        shares for--
                                  ``(I) the investment company,
                                  ``(II) any other investment company 
                                having the same investment adviser as 
                                such investment company or holding 
                                itself out to investors as a related 
                                company for purposes of investment or 
                                investor services, or
                                  ``(III) any account over which the 
                                investment company's investment adviser 
                                has brokerage placement discretion, or 
                                any affiliated person of such a 
                                person,'';
          (2) by redesignating clause (vi) as clause (vii); and
          (3) by inserting after clause (v) the following new clause:
                          ``(vi) any person (other than a registered 
                        investment company) that, at any time during 
                        the preceding 6 months, has loaned money to--
                                  ``(I) the investment company,
                                  ``(II) any other investment company 
                                having the same investment adviser as 
                                such investmentcompany or holding 
itself out to investors as a related company for purposes of investment 
or investor services, or
                                  ``(III) any account for which the 
                                investment company's investment adviser 
                                has borrowing authority,
                        or any affiliated person of such a person, 
                        or''.
  (b) Conforming Amendment.--Section 2(a)(19)(B) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2(a)(19)(B)) is amended--
          (1) by striking clause (v) and inserting the following new 
        clause:
                          ``(v) any person (other than a registered 
                        investment company) that, at any time during 
                        the preceding 6 months, has executed any 
                        portfolio transactions for, engaged in any 
                        principal transactions with, or distributed 
                        shares for--
                                  ``(I) any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as such,
                                  ``(II) any investment company holding 
                                itself out to investors, for purposes 
                                of investment or investor services, as 
                                a company related to any investment 
                                company for which the investment 
                                adviser or principal underwriter serves 
                                as such, or
                                  ``(III) any account over which the 
                                investment adviser has brokerage 
                                placement discretion, or any affiliated 
                                person of such a person,'';
          (2) by redesignating clause (vi) as clause (vii); and
          (3) by inserting after clause (v) the following new clause:
                          ``(vi) any person (other than a registered 
                        investment company) that, at any time during 
                        the preceding 6 months, has loaned money to--
                                  ``(I) any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as such,
                                  ``(II) any investment company holding 
                                itself out to investors, for purposes 
                                of investment or investor services, as 
                                a company related to any investment 
                                company for which the investment 
                                adviser or principal underwriter serves 
                                as such, or
                                  ``(III) any account for which the 
                                investment adviser has borrowing 
                                authority,
                        or any affiliated person of such a person, 
                        or''.
  (c) Affiliation of Directors.--Section 10(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-10(c)) is amended by striking 
``bank, except'' and inserting ``bank (and its subsidiaries) or any 
single bank holding company (and the affiliates and subsidiaries of 
such holding company) (as such terms are defined in the Bank Holding 
Company Act of 1956), except''.
  (d) Effective Date.--The provisions of subsection (a) of this section 
shall take effect at the end of the 1-year period beginning on the date 
of enactment of this subtitle.

SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.

  (a) Misrepresentation.--Section 35(a) of the Investment Company Act 
of 1940 (15 U.S.C. 80a-34(a)) is amended to read as follows:
  ``(a) Misrepresentation of Guarantees.--
          ``(1) In general.--It shall be unlawful for any person, 
        issuing or selling any security of which a registered 
        investment company is the issuer, to represent or imply in any 
        manner whatsoever that such security or company--
                  ``(A) has been guaranteed, sponsored, recommended, or 
                approved by the United States, or any agency, 
                instrumentality or officer of the United States;
                  ``(B) has been insured by the Federal Deposit 
                Insurance Corporation; or
                  ``(C) is guaranteed by or is otherwise an obligation 
                of any bank or insured depository institution.
          ``(2) Disclosures.--Any person issuing or selling the 
        securities of a registered investment company shall prominently 
        disclose that the investment company or any security issued by 
        the investment company--
                  ``(A) is not insured by the Federal Deposit Insurance 
                Corporation;
                  ``(B) is not guaranteed by an affiliated insured 
                depository institution; and
                  ``(C) is not otherwise an obligation of any bank or 
                insured depository institution,
        in accordance with such rules, regulations, or orders as the 
        Commission may prescribe as reasonably necessary or appropriate 
        in the public interest for the protection of investors, after 
        consulting in writing with the appropriate Federal banking 
        agencies.
          ``(3) Definitions.--The terms `insured depository 
        institution' and `appropriate Federal banking agency' have the 
        meaning given to such terms in section 3 of the Federal Deposit 
        Insurance Act.''.
  (b) Deceptive Use of Names.--Section 35(d) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-34(d)) is amended to read as follows:
  ``(d) It shall be unlawful for any registered investment company to 
adopt as part of the name or title of such company, or of any 
securities of which it is the issuer, any word or words that the 
Commission finds are materially deceptive or misleading. The Commission 
may adopt such rules or regulations or issue such orders as are 
necessary or appropriate to prevent the use of deceptive or misleading 
names or titles by investment companies.''.

SEC. 215. DEFINITION OF BROKER UNDER THE INVESTMENT COMPANY ACT OF 
                    1940.

  Section 2(a)(6) of the Investment Company Act of 1940 (15 U.S.C. 80a-
2(a)(6)) is amended to read as follows:
          ``(6) The term `broker' has the same meaning as in the 
        Securities Exchange Act of 1934, except that such term does not 
        include any person solely by reason of the fact that such 
        person is an underwriter for one or more investment 
        companies.''.

SEC. 216. DEFINITION OF DEALER UNDER THE INVESTMENT COMPANY ACT OF 
                    1940.

  Section 2(a)(11) of the Investment Company Act of 1940 (15 U.S.C. 
80a-2(a)(11)) is amended to read as follows:
          ``(11) The term `dealer' has the same meaning as in the 
        Securities Exchange Act of 1934, but does not include an 
        insurance company or investment company.''.

SEC. 217. REMOVAL OF THE EXCLUSION FROM THE DEFINITION OF INVESTMENT 
                    ADVISER FOR BANKS THAT ADVISE INVESTMENT COMPANIES.

  (a) Investment Adviser.--Section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended in 
subparagraph (A), by striking ``investment company'' and inserting 
``investment company, except that the term `investment adviser' 
includes any bank or bank holding company to the extent that such bank 
or bank holding company acts as an investment adviser to a registered 
investment company, or if, in the case of a bank, such services are 
performed through aseparately identifiable department or division, the 
department or division, and not the bank itself, shall be deemed to be 
the investment adviser''.
  (b) Separately Identifiable Department or Division.--Section 202(a) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended 
by adding at the end the following:
          ``(26) The term `separately identifiable department or 
        division' of a bank means a unit--
                  ``(A) that is under the direct supervision of an 
                officer or officers designated by the board of 
                directors of the bank as responsible for the day-to-day 
                conduct of the bank's investment adviser activities for 
                one or more investment companies, including the 
                supervision of all bank employees engaged in the 
                performance of such activities; and
                  ``(B) for which all of the records relating to its 
                investment adviser activities are separately maintained 
                in or extractable from such unit's own facilities or 
                the facilities of the bank, and such records are so 
                maintained or otherwise accessible as to permit 
                independent examination and enforcement of this Act or 
                the Investment Company Act of 1940 and rules and 
                regulations promulgated under this Act or the 
                Investment Company Act of 1940.''.

SEC. 218. DEFINITION OF BROKER UNDER THE INVESTMENT ADVISERS ACT OF 
                    1940.

  Section 202(a)(3) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(3)) is amended to read as follows:
          ``(3) The term `broker' has the same meaning as in the 
        Securities Exchange Act of 1934.''.

SEC. 219. DEFINITION OF DEALER UNDER THE INVESTMENT ADVISERS ACT OF 
                    1940.

  Section 202(a)(7) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-2(a)(7)) is amended to read as follows:
          ``(7) The term `dealer' has the same meaning as in the 
        Securities Exchange Act of 1934, but does not include an 
        insurance company or investment company.''.

SEC. 220. INTERAGENCY CONSULTATION.

  The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is 
amended by inserting after section 210 the following new section:

``SEC. 210A. CONSULTATION.

  ``(a) Examination Results and Other Information.--
          ``(1) The appropriate Federal banking agency shall provide 
        the Commission upon request the results of any examination, 
        reports, records, or other information as each may have access 
        to with respect to the investment advisory activities of any 
        bank holding company, bank, or separately identifiable 
        department or division of a bank, that is registered under 
        section 203 of this title, or, in the case of a bank holding 
        company or bank, that has a subsidiary or a separately 
        identifiable department or division registered under that 
        section, to the extent necessary for the Commission to carry 
        out its statutory responsibilities.
          ``(2) The Commission shall provide to the appropriate Federal 
        banking agency upon request the results of any examination, 
        reports, records, or other information with respect to the 
        investment advisory activities of any bank holding company, 
        bank, or separately identifiable department or division of a 
        bank, any of which is registered under section 203 of this 
        title, to the extent necessary for the agency to carry out its 
        statutory responsibilities.
  ``(b) Effect on Other Authority.--Nothing herein shall limit in any 
respect the authority of the appropriate Federal banking agency 
withrespect to such bank holding company, bank, or department or 
division under any provision of law.
  ``(c) Definition.--For purposes of this section, the term 
`appropriate Federal banking agency' shall have the same meaning as in 
section 3 of the Federal Deposit Insurance Act.''.

SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.

  (a) Securities Act of  1933.--Section 3(a)(2) of the Securities Act 
of 1933 (15 U.S.C. 77c(a)(2)) is amended by striking ``or any interest 
or participation in any common trust fund or similar fund maintained by 
a bank exclusively for the collective investment and reinvestment of 
assets contributed thereto by such bank in its capacity as trustee, 
executor, administrator, or guardian'' and inserting ``or any interest 
or participation in any common trust fund or similar fund that is 
excluded from the definition of the term `investment company' under 
section 3(c)(3) of the Investment Company Act of 1940''.
  (b) Securities Exchange Act of 1934.--Section 3(a)(12)(A)(iii) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(12)(A)(iii)) is 
amended to read as follows:
                          ``(iii) any interest or participation in any 
                        common trust fund or similar fund that is 
                        excluded from the definition of the term 
                        `investment company' under section 3(c)(3) of 
                        the Investment Company Act of 1940;''.
  (c) Investment Company Act of 1940.--Section 3(c)(3) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(3)) is amended by 
inserting before the period the following: ``, if--
                  ``(A) such fund is employed by the bank solely as an 
                aid to the administration of trusts, estates, or other 
                accounts created and maintained for a fiduciary 
                purpose;
                  ``(B) except in connection with the ordinary 
                advertising of the bank's fiduciary services, interests 
                in such fund are not--
                          ``(i) advertised; or
                          ``(ii) offered for sale to the general 
                        public; and
                  ``(C) fees and expenses charged by such fund are not 
                in contravention of fiduciary principles established 
                under applicable Federal or State law''.

SEC. 222. INVESTMENT ADVISERS PROHIBITED FROM HAVING CONTROLLING 
                    INTEREST IN REGISTERED INVESTMENT COMPANY.

  Section 15 of the Investment Company Act of 1940 (15 U.S.C. 80a-15) 
is amended by adding at the end the following new subsection:
  ``(g) Controlling Interest in Investment Company Prohibited.--
          ``(1) In general.--If any investment adviser to a registered 
        investment company, or an affiliated person of that investment 
        adviser, holds a controlling interest in that registered 
        investment company in a trustee or fiduciary capacity, such 
        person shall--
                  ``(A) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any employee benefit 
                plan subject to the Employee Retirement Income Security 
                Act of 1974, transfer the power to vote the shares of 
                the investment company through to another person acting 
                in a fiduciary capacity with respect to the plan who is 
                not an affiliated person of that investment adviser or 
                any affiliated person thereof; or
                  ``(B) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any other person or 
                entity other than an employee benefit plan subject to 
                the Employee Retirement Income Security Act of 1974--
                          ``(i) transfer the power to vote the shares 
                        of the investment company through to--
                                  ``(I) the beneficial owners of the 
                                shares;
                                  ``(II) another person acting in a 
                                fiduciary capacity who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof; or
                                  ``(III) any person authorized to 
                                receive statements and information with 
                                respect to the trust who is not an 
                                affiliated person of that investment 
                                adviser or any affiliated person 
                                thereof;
                          ``(ii) vote the shares of the investment 
                        company held by it in the same proportion as 
                        shares held by all other shareholders of the 
                        investment company; or
                          ``(iii) vote the shares of the investment 
                        company as otherwise permitted under such 
                        rules, regulations, or orders as the Commission 
                        may prescribe for the protection of investors.
          ``(2) Exemption.--Paragraph (1) shall not apply to any 
        investment adviser to a registered investment company, or an 
        affiliated person of that investment adviser, holding shares of 
        the investment company in a trustee or fiduciary capacity if 
        that registered investment company consists solely of assets 
        held in such capacities.
          ``(3) Safe harbor.--No investment adviser to a registered 
        investment company or any affiliated person of such investment 
        adviser shall be deemed to have acted unlawfully or to have 
        breached a fiduciary duty under State or Federal law solely by 
        reason of acting in accordance with clause (i), (ii), or (iii) 
        of paragraph (1)(B).
          ``(4) Church plan exemption.--Paragraph (1) shall not apply 
        to any investment adviser to a registered investment company, 
        or an affiliated person of that investment adviser, holding 
        shares in such a capacity, if such investment adviser or such 
        affiliated person is an organization described in section 
        414(e)(3)(A) of the Internal Revenue Code of 1986.''.

SEC. 223. CONFORMING CHANGE IN DEFINITION.

  Section 2(a)(5) of the Investment Company Act of 1940 (15 U.S.C. 80a-
2(a)(5)) is amended by striking ``(A) a banking institution organized 
under the laws of the United States'' and inserting ``(A) a depository 
institution (as defined in section 3 of the Federal Deposit Insurance 
Act) or a branch or agency of a foreign bank (as such terms are defined 
in section 1(b) of the International Banking Act of 1978)''.

SEC. 224. EFFECTIVE DATE.

  This subtitle shall take effect 90 days after the date of the 
enactment of this Act.

    TITLE III--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND 
                            INSURANCE FUNDS

SEC. 301. SHORT TITLE; DEFINITIONS.

  (a) Short Title.--This title may be cited as the ``Thrift Charter 
Transition Act of 1997''.
  (b) Definitions.--Unless otherwise defined in this Act, the terms 
``bank holding company'', ``depository institution'', ``Federal savings 
association'', ``insured depository institution'', ``savings 
association'', ``State bank'', and ``State savings association'' (as 
used in the uncodified provisions of this Act) have the same meanings 
as in section 3 of the Federal Deposit Insurance Act, as in effect on 
the day before the date of enactment of this Act.

  Subtitle A--Facilitating Conversion of Savings Associations to Banks

SEC. 311. CONVERSION TO STATE OR NATIONAL BANKS.

  (a) Automatic Conversion of Federal Savings Associations to National 
Banks.--
          (1) In general.--Effective 2 years after the date of 
        enactment of this Act, each Federal savings association then in 
        existence shall be converted to a national bank by operation of 
        law.
          (2) Preservation of rights, powers, and privileges.--Unless 
        otherwise provided in this Act, a Federal savings association 
        that is converted to a State bank or a national bank under this 
        section shall continue to have all of the rights, powers, 
        privileges, and immunities that such bank had as a Federal 
        savings association on the day before the date of the 
        conversion to a bank.
          (3) Retention of ``federal'' in name of converted federal 
        savings association.--Section 2 of the Act entitled ``An Act to 
        enable national banking associations to increase their capital 
        stock and to change their names or locations.'' and approved 
        May 1, 1886 (12 U.S.C. 30) is amended by adding at the end the 
        following new subsection:
  ``(d) Retention of `Federal' in Name of Converted Federal Savings 
Association.--
          ``(1) In general.--Notwithstanding subsection (a) or any 
        other provision of law, any depository institution the charter 
        of which is converted from that of a Federal savings 
        association to a national bank or a State bank after the date 
        of the enactment of the Financial Services Competition Act of 
        1997 may retain the term `Federal' in the name of such 
        institution so long as such depository institution remains an 
        insured depository institution.
          ``(2) Definitions.--For purposes of this subsection, the 
        terms `depository institution', `insured depository 
        institution', `national bank', and `State bank' have the same 
        meanings given to such terms in section 3 of the Federal 
        Deposit Insurance Act.''.
  (b) Earlier Conversions to National Bank .--The following paragraphs 
shall apply during the 22-month period beginning 60 days after the date 
of enactment of this Act:
          (1) Accelerated conversion of federal savings associations.--
        Any Federal savings association may file with the Comptroller 
        of the Currency a notice of its election to accelerate its 
        conversion to a national bank to a specified date that is not 
        earlier than 30 days after the date on which the notice is 
        filed, and the association shall be converted to a national 
        bank on the date specified in the notice.
          (2) Streamlined conversion of state savings associations.--
        Any State savings association may (to the extent consistent 
        with State law) convert to a national bank by filing with the 
        Comptroller of the Currency a notice of its election to convert 
        on a specified date that is not earlier than 30 days after the 
        date on which the notice is filed, and the association shall be 
        converted to a national bank on the date specified in the 
        notice.
  (c) Conversion to Mutual National Bank.--A savings association that 
is operating in mutual form on the date it is converted to a national 
bank under this section shall be converted to a mutual national bank as 
defined in section 5133A of the Revised Statutes of the United States.
  (d) Other Authority Not Affected.--The authority to convert to a 
national bank under this section shall be in addition to any other 
authority of a savings association to convert to a national bank, State 
bank, or State savings association.
  (e) Effective Date.--This section shall take effect 60 days after the 
date of enactment of this Act.

SEC. 312. MUTUAL NATIONAL BANKS AND FEDERAL MUTUAL BANK HOLDING 
                    COMPANIES AUTHORIZED.

  (a) In General.--Chapter one of title LXII of the Revised Statutes of 
the United States (12 U.S.C. 21 et seq.) is amended by inserting after 
section 5133 the following new sections:

``SEC. 5133A. MUTUAL NATIONAL BANKS.

  ``(a) In General.--The Comptroller of the Currency may charter 
national banking associations as mutual national banks, either de novo 
or through the conversion of an insured depository institution, in 
accordance with this section and such regulations as the Comptroller 
may prescribe.
  ``(b) Applicable Law.--Unless otherwise provided by this section or 
by the Comptroller of the Currency because of the mutual form of the 
institution, a mutual national bank--
          ``(1) shall be subject to the same laws, requirements, 
        duties, and obligations that apply to a national banking 
        association operating in stock form;
          ``(2) shall have the same powers and privileges as, and may 
        engage in the same activities subject to the same restrictions 
        and limitations that apply to, a national banking association 
        operating in stock form; and
          ``(3) shall be supervised and examined by the Comptroller in 
        the same manner and to the same extent as a national banking 
        association operating in stock form.
  ``(c) Conversions.--Subject to any requirements imposed by the 
Comptroller--
          ``(1) a mutual national bank may convert to, or acquire and 
        retain all or substantially all of the assets and liabilities 
        of, a national banking association operating in stock form; and
          ``(2) a national banking association operating in stock form 
        may convert to a mutual national bank.
  ``(d) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Insured depository institution.--The term `insured 
        depository institution' has the same meaning as in section 3 of 
        the Federal Deposit Insurance Act.
          ``(2) Mutual national bank.--The term `mutual national bank' 
        means a national banking association that operates in mutual 
        form and is chartered by the Comptroller under this section.
  ``(e) Conforming References.--Unless otherwise provided by the 
Comptroller--
          ``(1) any reference in any Federal law to a national bank, 
        including a reference to the term `national banking 
        association', `member bank', `national bank', `national 
        association', `bank', `insured bank', `insured depository 
        institution', or `depository institution', shall be deemed to 
        refer also to a `mutual national bank';
          ``(2) any reference in any Federal law to the term 
        `shareholder', `shareholders', `stockholder', or `stockholders' 
        of a national bank shall be deemed to refer also to any member 
        or members of a mutual national bank;
          ``(3) any reference in any Federal law to the term `board of 
        directors', `director', or `directors' of a national bank shall 
        be deemed to refer also to the board of trustees, trustee, or 
        trustees, respectively, of a mutual national bank; and
          ``(4) any terms in Federal law that may apply only to a 
        national bank operating in stock form, including the terms 
        `stock', `shares', `shares of stock', `capital stock', `common 
        stock', `stock certificate', `stock certificates', `certificate 
        representing shares of stock', `stock dividend', `transferable 
        stock', `each class of stock', `cumulate such shares', `par 
        value', `preferred stock', `body corporate', `corporation', 
        `corporate powers', `incorporated', `articles of association', 
        and `corporate existence', shall not apply to a mutual national 
        bank, unless the Comptroller determines that the context 
        requires otherwise.

``SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.

  ``(a) Reorganization of Mutual National Bank as a Holding Company.--
          ``(1) In general.--Subject to approval under the Bank Holding 
        Company Act of 1956, a mutual national bank may reorganize so 
        as to become a Federal mutual bank holding company by 
        submitting a reorganization plan to the Comptroller of the 
        Currency for the Comptroller's approval.
          ``(2) Plan approval.--Upon the approval of the reorganization 
        plan by the Comptroller of the Currency and the issuance of the 
        appropriate charters--
                  ``(A) the substantial part of the mutual national 
                bank's assets and liabilities, including all of the 
                bank's insured liabilities, shall be transferred to a 
                national banking association, the stock of which is 
                owned (except as otherwise provided by this section) by 
                the mutual national bank; and
                  ``(B) the mutual national bank shall become a Federal 
                mutual bank holding company.
  ``(b) Directors and Certain Account Holders' Approval of Plan 
Required.--This subsection does not authorize a reorganization unless--
          ``(1) a majority of the mutual national bank's board of 
        directors has approved the plan providing for such 
        reorganization; and
          ``(2) in the case of a mutual national bank in which holders 
        of accounts and obligors exercise voting rights, a majority of 
        such individuals has approved the plan at a meeting held at the 
        call of the directors under the procedures prescribed by the 
        bank's charter and bylaws.
  ``(c) Retention of Capital.--In connection with a transaction 
described in subsection (a), a mutual national bank may, subject to the 
Comptroller's approval, retain capital at the holding company level to 
the extent that the capital retained at the holding company level 
exceeds the amount of capital required for the national banking 
association chartered as a part of a transaction described in 
subsection (a) to meet all relevant capital standards established by 
the Comptroller for national banking associations.
  ``(d) Ownership.--
          ``(1) In general.--Persons having ownership rights in the 
        mutual national bank under Federal or State law shall have the 
        same ownership rights with respect to the Federal mutual bank 
        holding company.
          ``(2) Holders of certain accounts.--Holders of savings, 
        demand, or other accounts in the following institutions shall 
        have the same ownership rights with respect to the Federal 
        mutual bank holding company as persons described in paragraph 
        (1):
                  ``(A) A national bank chartered as part of a 
                transaction described in subsection (a).
                  ``(B) A mutual bank acquired through the merger of 
                the mutual bank into a national bank subsidiary of the 
                holding company or an interim national bank subsidiary 
                of the holding company.
  ``(e) Regulation.--A Federal mutual bank holding company shall be--
          ``(1) chartered by the Comptroller of the Currency and shall 
        be subject to such regulations as the Comptroller shall 
        prescribe; and
          ``(2) regulated under the Bank Holding Company Act of 1956 on 
        the same terms and subject to the same limitations as any other 
        company that controls a bank.
  ``(f) Capital Improvement.--
          ``(1) Pledge of stock of national bank subsidiary.--This 
        section shall not prohibit a Federal mutual bank holding 
        company from pledging all or a portion of the stock of a 
        national banking association chartered as part of a transaction 
        described in subsection (a) to raise capital for such bank.
          ``(2) Issuance of nonvoting shares.--This section shall not 
        prohibit a national banking association chartered as part of a 
        transaction described in subsection (a) from issuing any 
        nonvoting shares, or less than 50 percent of the voting shares 
        of such bank, to any person other than the Federal mutual bank 
        holding company.
  ``(g) Insolvency and Liquidation.--
          ``(1) In general.--Notwithstanding any other provision of 
        law, the Comptroller of the Currency may file a petition under 
        chapter 7 of title 11, United States Code, with respect to a 
        Federal mutual bank holding company upon--
                  ``(A) the default of any national bank--
                          ``(i) the stock of which is owned by the 
                        Federal mutual bank holding company; and
                          ``(ii) that was chartered in a transaction 
                        described in subsection (a); or
                  ``(B) a foreclosure on a pledge by the Federal mutual 
                bank holding company described in subsection (f)(1).
          ``(2) Distribution of net proceeds.--Except as provided in 
        paragraph (3), the net proceeds of any liquidation of any 
        Federal mutual bank holding company under paragraph (1) shall 
        be transferred to persons who hold ownership interests in such 
        Federal mutual bank holding company.
          ``(3) Recovery by fdic.--If the Federal Deposit Insurance 
        Corporation incurs a loss as a result of the default of any 
        insured bank subsidiary of a Federal mutual bank holding 
        company that is liquidated under paragraph (1), the Federal 
        Deposit Insurance Corporation shall succeed to the ownership 
        interests of the depositors of the bank in the Federal mutual 
        bank holding company, to the extent of the Federal Deposit 
        Insurance Corporation's loss.
  ``(h) Definitions.--
          ``(1) Federal mutual bank holding company.--The term `Federal 
        mutual bank holding company' means a corporation chartered 
        under this section.
          ``(2) Default.--With respect to a national bank, the term 
        `default' means an adjudication or other official determination 
        by any court of competent jurisdiction, the Comptroller, or 
        other public authority pursuant to which a conservator, 
        receiver, or other legal custodian is appointed for the 
        national bank.''.
  (b) Technical Amendment.--The table of sections for chapter one of 
title LXII of the Revised Statutes of the United States (12 U.S.C. 21 
et seq) is amended by inserting after the item relating to section 5133 
the following new items:

``5133A. Mutual national banks.
``5133B. Federal mutual bank holding companies.''.

  (c) Appropriate Federal Banking Agency for Federal Mutual Bank 
Holding Companies.--Section 3(q)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(q)(1)) is amended to read as follows:
          ``(1) The Comptroller of the Currency in the case of--
                  ``(A) any national banking association, any District 
                bank, or any Federal branch or agency of a foreign 
                bank; and
                  ``(B) supervisory or regulatory proceedings arising 
                from the authority given to the Comptroller under 
                section 5133B of the Revised Statutes of the United 
                States.''.
  (d) Mutual Holding Company Conversion.--
          (1) In general.--Any mutual holding company may convert to a 
        Federal mutual bank holding company by filing with the 
        Comptroller of the Currency a notice of its election to convert 
        on a specified date that is not earlier than 30 days after the 
        date on which the notice is filed, and the mutual holding 
        company shall be converted to a Federal mutual holding company 
        charter on the date specified in the notice.
          (2) Automatic conversion.--On the date 2 years after the date 
        of enactment of this Act, each mutual holding company shall 
        become a Federal mutual bank holding company by operation of 
        law.
          (3) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                  (A) Federal mutual bank holding company.--The term 
                ``Federal mutual bank holding company'' has the same 
                meaning as in section 5133B of the Revised Statutes of 
                the United States (as added by this section).
                  (B) Mutual holding company.--The term ``mutual 
                holding company'' has the same meaning as in section 
                10(o)(10)(A) of the Home Owners' Loan Act as in effect 
                on the day before the date of enactment of this Act.
  (e) Limitation on Federal Regulation of Mutual State Banks.--Except 
as otherwise provided in Federal law, the Comptroller of the Currency, 
Board of Governors of the Federal Reserve System, and Federal Deposit 
Insurance Corporation may not adopt or enforce any regulation which 
contravenes the corporation governance rules prescribed by State law or 
regulation for mutual State banks unless the Comptroller, Board, or 
Corporation finds that such Federal regulation is necessary to assure 
the safety and soundness of such State banks.
  (f) Effective Date.--This section shall take effect 60 days after the 
date of enactment of this Act.

SEC. 313. GRANDFATHERED ACTIVITIES OF SAVINGS ASSOCIATIONS.

  (a) Savings Associations That Convert to National Banks.--Except as 
provided in subsection (b), any Federal savings association that 
converted to a national bank under section 311 may continue to engage 
in any activity, including the holding of any asset, in which it was 
lawfully engaged prior to conversion pursuant to section 311.
  (b) Investments Not Authorized for National Banks To Hold Directly.--
          (1) In general.--Notwithstanding section 5136 of the Revised 
        Statutes of the United States or any other provision of law, a 
        national bank resulting from the conversion of a savings 
        association to a national bank under section 311 may retain an 
        equity investment that is not permissible for a national bank 
        to hold directly only if the bank complies with section 5(t)(5) 
        of the Home Owners' Loan Act (as in effect on the day before 
        the date of the enactment of the Thrift Charter Transition Act 
        of 1997) to the same extent as if the institution were a 
        savings association subject to the Home Owners' Loan Act.
          (2) Regulations of existing activities.--Investments held by 
        a national bank resulting from the conversion of a savings 
        association referred to in paragraph (1) held on the date of 
        the enactment of the Thrift Charter Transition Act of 1997 
        shall be subject to the same regulations and supervision as if 
        the institution were a savings association subject to the Home 
        Owners' Loan Act as in effect on the day before the date of the 
        enactment of the Thrift Charter Transition Act of 1997.
          (3) Investments acquired after enactment.--For investments 
        acquired after the date of enactment of the Thrift Charter 
        Transition Act of 1997 but before the conversion of a savings 
        association to a national bank under section 311, such national 
        bank--
                  (A) may, if a subsidiary of the bank is engaged in an 
                activity that is not permissible for a national bank to 
                engage in directly, retain an equity investment in the 
                subsidiary only if the bank and the subsidiary comply 
                with section 5136A of the Revised Statutes of the 
                United States; and
                  (B) shall, in determining compliance with applicable 
                capital standards, deduct from the bank's assets and 
                tangible equity capital the amount of any equity 
                investment (other than investment subject to 
                subparagraph (A)) that is not a permissible investment 
                for a national bank to hold directly.
  (c) Permissible Activities of State Savings Associations That Convert 
to State Banks.--For purposes of section 24 of the Federal Deposit 
Insurance Act, a State savings association that converts to a State 
bank may, to the extent permitted by applicable State law, continue to 
engage (in the same manner) in any activity, including the holding of 
any asset, permitted under section 28 of the Federal Deposit Insurance 
Act (as in effect on the day before the date of enactment of this Act) 
in which the savings association was lawfully engaged on the day before 
the date of enactment of this Act.
  (d) Transition Provision.--Notwithstanding any other provision of 
this Act, in the case of any insured savings association described in 
this section securities offerings and other financing transactions 
completed by such an institution on or before the date of its 
conversion pursuant to section 311 shall continue to be governed by the 
capital and accounting rules of the Office of Thrift Supervision as in 
effect on the date that such institution converts to a bank or becomes 
treated as a State bank.

SEC. 314. BRANCHES OF FORMER SAVINGS ASSOCIATIONS.

  (a) Branches.--
          (1) Existing branches retained.--Notwithstanding any other 
        provision of law, any depository institution that qualifies 
        under paragraph (2), and any successor to such an institution, 
        may continue, after the depository institution becomes a bank, 
        to operate any branch or agency that the institution operated 
        as a branch or agency, or was in the process of establishing as 
        a branch or agency, respectively, as of the date of enactment 
        of the Thrift Charter Transition Act of 1997.
          (2) Depository institution defined.--A depository institution 
        qualifies under this paragraph for purposes of paragraph (1) if 
        it--
                  (A)(i) is a savings association on the date of 
                enactment of the Thrift Charter Transition Act of 1997; 
                or
                  (ii) has filed an application to become a savings 
                association by the date of enactment of the Thrift 
                Charter Transition Act of 1997; and
                  (B) on or before the date 2 years after the date of 
                enactment of this Act, becomes a State or national 
                bank.
  (b) Branching Rights Obtained in Assisted Acquisitions.--
Notwithstanding any other provision of law, if a depository institution 
has branching rights under a contract entered into with the Federal 
Home Loan Bank Board or the Federal Savings and Loan Insurance 
Corporation or pursuant to a resolution of the Federal Home Loan Bank 
Board or action of the Office of Thrift Supervision or Resolution Trust 
Corporation as part of a transaction in which the depository 
institution acquired or merged with a failed or failing savings 
association (prior to 1992), the depository institution may continue to 
branch in a manner consistent with that contract, resolution, or 
action.
  (c) Branching Rights of State Chartered Institutions Not Affected.--
Except as provided in subsection (b), applicable State law and Federal 
law shall govern the authority of a savings association that converts 
to a State savings association charter or a State bank charter to 
continue to operate any branch or agency that the institution operated 
prior to conversion and the future branching rights of the converted 
institution.
  (d) Intrastate Branches.--Any branch operated under subsection (a)(1) 
in a State other than the depository institution's home State may 
acquire, establish or operate additional branches in the host State to 
the same extent as permitted for a national bank with its main office 
located in the host State.

SEC. 315. PROGRAMS FOR PROMOTING HOUSING FINANCE.

  Section 22 of the Federal Deposit Insurance Act (12 U.S.C. 1830) is 
amended by--
          (1) striking ``It is not'' and inserting ``(a) In General.--
        It is not''; and
          (2) adding at the end the following new subsection:
  ``(b) Programs for Promoting Housing Finance.--
          ``(1) Findings.--The Congress finds that it is in the 
        national interest to protect and promote housing finance in the 
        process of converting savings associations to banks and 
        eliminating the separate Federal regulation of savings 
        associations.
          ``(2) Programs required.--In furtherance of paragraph (1), 
        each appropriate Federal banking agency shall--
                  ``(A) develop and implement a program designed to--
                          ``(i) facilitate the conversion of savings 
                        associations to banks and the treatment of 
                        State savings associations as State banks; and
                          ``(ii) promote housing finance by assuring 
                        that insured depository institutions may, at 
                        their own election, specialize in acquisition, 
                        development, residential mortgage finance, and 
                        residential mortgage and housing production 
                        lending; and
                  ``(B) develop guidelines and procedures for assuring 
                that insured depository institutions are not subject to 
                supervisory criticism or sanction for prudently 
                concentrating in acquisition, development, residential 
                mortgage finance, and residential mortgage and housing 
                production lending.''.

SEC. 316. SAVINGS AND LOAN HOLDING COMPANIES.

  Section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842) is 
amended by inserting after subsection (f) (as so redesignated by 
section 102(b)(2) of this Act) the following new subsection:
  ``(g) Savings and Loan Holding Company Powers Grandfathered.--
          ``(1) In general.--A company that qualifies under paragraph 
        (2) may--
                  ``(A) maintain or enter into any nonbank affiliation 
                that the company was permitted pursuant to section 10 
                of the Home Owners' Loan Act to maintain or enter into 
                prior to becoming a bank holding company pursuant to 
                paragraph (2)(C); and
                  ``(B) engage in any activity, including holding any 
                asset, in which the company or any affiliate described 
                in subparagraph (A) was permitted pursuant to section 
                10 of the Home Owners' Loan Act to engage prior to 
                becoming a bank holding company pursuant to paragraph 
                (2)(C).
          ``(2) Qualified grandfathered companies.--
                  ``(A) Grandfathered companies defined.--A company 
                qualifies under this paragraph for purposes of 
                paragraph (1) if--
                          ``(i) as of the date of enactment of the 
                        Thrift Charter Transition Act of 1997, the 
                        company--
                                  ``(I) was a savings and loan holding 
                                company (as defined in section 10 of 
                                the Home Owners' Loan Act, as in effect 
                                on that date); or
                                  ``(II) had filed an application to 
                                become a savings and loan holding 
                                company; and
                          ``(ii) the company--
                                  ``(I) becomes a bank holding company 
                                by operation of law; or
                                  ``(II) was exempt from section 4 (as 
                                in effect on the date of enactment of 
                                the Thrift Charter Transition Act of 
                                1997) under an order issued by the 
                                Board under section 4(d) (as in effect 
                                on the date of enactment of the Thrift 
                                Charter Transition Act of 1997).
                  ``(B) Holding companies with identical 
                shareholders.--A company also qualifies under this 
                paragraph for purposes of paragraph (1) if the 
                company--
                          ``(i) is formed by a company qualified under 
                        subparagraph (A); and
                          ``(ii) the shareholders of such company are 
                        identical to the shareholders of the company 
                        referred to in (i).
                  ``(C) Operation of law defined.--For purposes of this 
                subsection, a savings and loan holding company becomes 
                a bank holding company by operation of law if a savings 
                association controlled by the company is converted to a 
                bank or is treated as a bank under an amendment made by 
                the Thrift Charter Transition Act of 1997.
          ``(3) Requirements to retain grandfathered powers.--
                  ``(A) In general.--Paragraph (1) shall cease to apply 
                to a company if the company does not comply with this 
                paragraph.
                  ``(B) Acquisition of banks .--
                          ``(i) In general.--The company may not 
                        acquire (by any form of business combination) 
                        control of a bank after the date of enactment 
                        of the Thrift Charter Transition Act of 1997.
                          ``(ii) Exceptions to prohibition.--Clause (i) 
                        shall not apply to the acquisition of--
                                  ``(I) a bank, during the period 
                                ending on the date 2 years after the 
                                date of enactment of the Thrift Charter 
                                Transition Act of 1997, if the 
                                acquisition results from the conversion 
                                of a savings association or the 
                                treatment of a savings association as a 
                                bank under amendments made by the 
                                Thrift Charter Transition Act of 1997;
                                  ``(II) a bank, if the assets of such 
                                bank are merged with an insured 
                                depository institution which was 
                                controlled by such company before the 
                                date of enactment of the Thrift Charter 
                                Transition Act of 1997, and if the 
                                resulting institution continues to 
                                comply with the requirements of Section 
                                10(m) of the Home Owners' Loan Act as 
                                in effect on the day prior to enactment 
                                of the Thrift Charter Transition Act of 
                                1997;
                                  ``(III) shares held as a bona fide 
                                fiduciary (whether with or without the 
                                sole discretion to vote such shares);
                                  ``(IV) shares held by any person as a 
                                bona fide fiduciary solely for the 
                                benefit of employees of either the 
                                company or any subsidiary of the 
                                company and the beneficiaries of those 
                                employees;
                                  ``(V) an entity described in section 
                                2(c)(2);
                                  ``(VI) shares held temporarily 
                                pursuant to an underwriting commitment 
                                in the normal course of an underwriting 
                                business;
                                  ``(VII) shares held in an account 
                                solely for trading purposes;
                                  ``(VIII) shares over which no control 
                                is held other than control of voting 
                                rights acquired in the normal course of 
                                a proxy solicitation;
                                  ``(IX) shares or assets acquired in 
                                securing or collecting a debt 
                                previously contracted in good faith, 
                                during the 2-year period beginning on 
                                the date of such acquisition or for 
                                such additional time (not exceeding 3 
                                years) as the Board may permit if the 
                                Board determines that such an extension 
                                will not be detrimental to the public 
                                interest;
                                  ``(X) a bank from the Federal Deposit 
                                Insurance Corporation, in any capacity; 
                                and
                                  ``(XI) a bank in an acquisition in 
                                which the bank has been found to be in 
                                danger of default by the appropriate 
                                Federal or State authority.
                  ``(C) The company may not control a savings 
                association or a national bank resulting from the 
                conversion of a savings association to a national bank 
                pursuant to section 311 if such savings association or 
                national bank fails to comply with the requirements of 
                section 5(c)(2) and section 10(m) of the Home Owners' 
                Loan Act as in effect on the day before the date of the 
                enactment of the Thrift Charter Transition Act of 1997.
          ``(4) Grandfathered powers nontransferable.--
                  ``(A) In general.--Paragraph (1) shall not apply with 
                respect to any company if after the date of the 
                enactment of the Thrift Charter Transition Act of 
                1997--
                          ``(i) any company (other than a company 
                        qualified under paragraph (2)) not under common 
                        control with such company as of that date 
                        acquires, directly, or indirectly, control of 
                        the company; or
                          ``(ii) the company is the subject of any 
                        merger, consolidation, or other type of 
                        business combination as a result of which a 
                        company (other than a company qualified under 
                        paragraph (2)) not under common control with 
                        such company acquires, directly or indirectly, 
                        control of such company.
                  ``(B) Anti-evasion.--The appropriate Federal banking 
                agency may issue interpretations, regulations, or 
                orders that it deems necessary to administer and carry 
                out the purpose, and prevent evasions, of this 
                paragraph, including determining that (notwithstanding 
                the form of a transaction) the transaction would in 
                substance effect a change in control.
          ``(5) Savings and loan holding companies that become bank 
        holding companies.--
                  ``(A) Exclusion from application requirement.--A 
                company that qualifies under subparagraph (B) shall not 
                be required to obtain the approval of the Board under 
                subsection (a) to become a bank holding company if such 
                company becomes a bank holding company after the date 
                of enactment of the Thrift Charter Transition Act of 
                1997 as a result of the conversion of a savings 
                association subsidiary to a bank or by virtue of the 
                treatment of a savings association subsidiary as a bank 
                under an amendment made by this Act.
                  ``(B) Companies excluded from application 
                requirement.--A company qualifies for purposes of 
                subparagraph (A) if the company, as of the date of the 
                enactment of the Thrift Charter Transition Act of 1997, 
                was a savings and loan holding company (as defined in 
                section 10(a) of the Home Owners' Loan Act as in effect 
                on that date) or has filed an application to become a 
                savings and loan holding company.
                  ``(C) Supervision and regulation of companies that 
                were previously savings and loan holding companies.--
                          ``(i) In general.--Any company that qualifies 
                        under paragraph (2) and complies with paragraph 
                        (3) and was registered and regulated under 
                        section 10 of the Home Owners' Loan Act on the 
                        day before becoming a bank holding company 
                        described in paragraphs (2) and (3) shall 
                        continue to be regulated, for a period of 3 
                        years after becoming such holding company, 
                        under the terms of section 10 of the Home 
                        Owners' Loan Act in the same manner and to the 
                        same extent and subject to the same 
                        requirements as by the Office of Thrift 
                        Supervision before the date of the enactment of 
                        the Thrift Charter Transition Act of 1997.
                          ``(ii) Holding company capital exception.--
                        With regard to holding company capital, any 
                        company that qualifies under paragraph (2) and 
                        complies with paragraph (3) and was registered 
                        and regulated under section 10 of the Home 
                        Owners' Loan Act before June 19, 1997, or had 
                        an application pending to do so on such date, 
                        shall continue to be regulated under the terms 
                        of section 10 of the Home Owners' Loan Act in 
                        the same manner and to the same extent and 
                        subject to the same requirements as by the 
                        Office of Thrift Supervision before the date of 
                        the enactment of the Thrift Charter Transition 
                        Act of 1997.
                          ``(iii) Submissions to regulators.--A company 
                        shall provide for a period of 3 years after 
                        becoming a bank holding company described in 
                        paragraphs (2) and (3) the appropriate Federal 
                        banking agency with--
                                  ``(I) notice of acquisition of any 
                                company not controlled or affiliated on 
                                the date of enactment of the Thrift 
                                Charter Transition Act of 1997 that is 
                                engaged in nonbanking activities within 
                                15 days after completion of any such 
                                transaction; and
                                  ``(II) copies of such quarterly and 
                                annual reports as it is otherwise 
                                required to file with any other 
                                governmental agency.
                          ``(iv) Reporting requirements.--The 
                        appropriate Federal banking agency may adopt, 
                        for a period of 3 years after a company becomes 
                        a bank holding company described in paragraphs 
                        (2) and (3), reporting requirements 
                        substantially similar to and no more burdensome 
                        than required by the Office of Thrift 
                        Supervision as of January 1, 1997.
                          ``(v) Regulatory authority.--The appropriate 
                        Federal banking agency shall, for a period of 3 
                        years after a company becomes a bank holding 
                        company described in paragraphs (2) and (3)--
                                  ``(I) have the same authority to 
                                examine a company or any subsidiary or 
                                affiliate thereof only to the same 
                                extent as the Office of Thrift 
                                Supervision had as of January 1, 1997; 
                                and
                                  ``(II) conduct only the same type of 
                                examination and with the same frequency 
                                as the Office of Thrift Supervision 
                                prior to January 1, 1997, unless 
                                required to prevent an unsafe or 
                                unsound activity or course of conduct 
                                of the savings institution converted to 
                                a bank pursuant to the Thrift Charter 
                                Transition Act of 1997.''.

SEC. 317. TREATMENT OF REFERENCES IN ADJUSTABLE RATE MORTGAGES.

  (a) Treatment of References in Adjustable Rate Mortgages Issued 
Before FIRREA.--For purposes of section 402(e) of Financial 
Institutions Reform, Recovery, and Enactment Act of 1989 (12 U.S.C. 
1437 note), any reference in such section to--
          (1) the Director of the Office of Thrift Supervision shall be 
        deemed to be a reference to the Secretary of the Treasury; and
          (2) a Savings Association Insurance Fund member shall be 
        deemed to be a reference to an insured depository institution 
        (as defined in section 3 of the Federal Deposit Insurance Act).
  (b) Treatment of References in Adjustable Rate Mortgages Instruments 
Issued After FIRREA.--
          (1) In general.--For purposes of adjustable rate mortgage 
        instruments that are in effect as of the date of enactment of 
        this Act, any reference in the instrument to the Director of 
        the Office of Thrift Supervision or Savings Association 
        Insurance Fund members shall be treated as a reference to the 
        Secretary of the Treasury or insured depository institutions 
        (as defined in section 3 of the Federal Deposit Insurance Act), 
        as appropriate.
          (2) Substitution for indexes.--If any index used to calculate 
        the applicable interest rate on any adjustable rate mortgage 
        instrument is no longer calculated and made available as a 
        direct or indirect result of the enactment of this title, any 
        index--
                  (A) made available by the Secretary of the Treasury; 
                or
                  (B) determined by the Secretary of the Treasury, 
                pursuant to paragraph (4), to be substantially similar 
                to the index which is no longer calculated or made 
                available,
        may be substituted by the holder of any such adjustable rate 
        mortgage instrument upon notice to the borrower.
          (3) Agency action required to provide continued availability 
        of indexes.--Promptly after the enactment of this subsection, 
        the Secretary of the Treasury, the Chairperson of the Federal 
        Deposit Insurance Corporation, and the Comptroller of the 
        Currency shall take such action as may be necessary to assure 
        that the indexes prepared by the Director of the Office of 
        Thrift Supervision immediately before the enactment of this 
        subsection and used to calculate the interest rate on 
        adjustable rate mortgage instruments continue to be available.
          (4) Requirements relating to substitute indexes.--If any 
        agency can no longer make available an index pursuant to 
        paragraph (3), an index that is substantially similar to such 
        index may be substituted for such index for purposes of 
        paragraph (2) if the Secretary of the Treasury determines, 
        after notice and opportunity for comment, that--
                  (A) the new index is based upon data substantially 
                similar to that of the original index; and
                  (B) the substitution of the new index will result in 
                an interest rate substantially similar to the rate in 
                effect at the time the original index became 
                unavailable.

SEC. 318. COST OF FUNDS INDEXES.

  (a) Cost of Funds Index Defined.--The term ``cost of funds indexed'' 
means any index that is published by a Federal home loan bank and is 
based, in whole or in part, upon the cost of funds of such bank's 
members.
  (b) Calculations Based on Type of Charter and Insurance Fund 
Membership of Members.-- If any cost of funds index includes data based 
on charter type, insurance fund membership, or other similar 
characteristics of members of a Federal home loan ban, such index shall 
be calculated after the date of the enactment of this Act using data 
only from insured depository institutions which were bank members and 
whose data was included in such index on or before such date of 
enactment.
  (c) Acquisition of Data.--
          (1) In general.--Each insured depository institution the data 
        from which is required to compile a cost of funds index in 
        accordance with subsection (b) shall provide to the Federal 
        home loan bank which maintains the index such information as 
        may be necessary, and in such form as may be appropriate, for 
        the bank to calculate and publish the index.
          (2) Enforcement by banking agencies.--Each appropriate 
        Federal banking agency shall take such action as may be 
        necessary to ensure that insured depository institutions which 
        are required to provide information to any Federal home loan 
        bank under paragraph (1) furnish such information on a timely 
        basis and in the form required by the bank.
          (3) Treatment of institutions.--Notwithstanding any other 
        provision of law, an insured depository institution which 
        furnishes information to a Federal home loan bank pursuant to 
        this section for use in compiling a cost of funds index shall 
        not be deemed to control, directly, or indirectly, such index.
  (d) Certain Data Excluded.--Notwithstanding subsections (b) and (c), 
no cost of funds index shall include any data from any insured 
depository institution which results from the merger, consolidation, or 
other combination of a member of a Federal home loan bank with a 
nonmember of any such bank if--
          (1) the total assets of the nonmember exceed the total assets 
        of the bank member at the time of such merger, consolidation, 
        or other combination; or
          (2) in the case of a merger, consolidation, or other merger 
        in which a member of a Federal home loan bank is the resulting 
        insured depository institution, combined ration of the average 
        amount of single-family loan balances to average total assets 
        of all insured depository institutions involved in such merger, 
        consolidation, or other combination for the 12-months period 
        ending on the date of such transaction is less than 70 percent.
  (e) Other Definitions.--For purposes of this section, the terms 
``appropriate Federal banking agency'' and ``insured depository 
institution'' shall have the same meanings as in section 3 of the 
Federal Deposit Insurance Act.

Subtitle B--Ending Separate Federal Regulation of Savings Associations 
                 and Savings and Loan Holding Companies

SEC. 321. STATE SAVINGS ASSOCIATIONS TREATED AS STATE BANKS UNDER 
                    FEDERAL BANKING LAW.

  (a) Amendments to the Federal Deposit Insurance Act.--Section 3 of 
the Federal Deposit Insurance Act (12 U.S.C. 1813) is amended--
          (1) by striking paragraph (2) of subsection (a) and inserting 
        the following new paragraph:
          ``(2) State bank.--
                  ``(A) In general.--The term `State bank' means any 
                bank, banking association, trust company, savings bank, 
                industrial bank (or similar depository institution 
                which the Board of Directors finds to be operating in 
                substantially the same manner as an industrial bank), 
                building and loan association, savings and loan 
                association, homestead association, cooperative bank, 
                or other banking institution--
                          ``(i) which is engaged in the business of 
                        receiving deposits, other than trust funds (as 
                        defined in this section); and
                          ``(ii) which--
                                  ``(I) is incorporated under the laws 
                                of any State;
                                  ``(II) is organized and operating 
                                according to the laws of the State in 
                                which such institution is chartered or 
                                organized; or
                                  ``(III) is operating under the Code 
                                of Law for the District of Columbia 
                                (except a national bank).
                  ``(B) Certain insured banks included.--The term 
                `State bank' includes any cooperative bank or other 
                unincorporated bank the deposits of which were insured 
                by the Corporation on the day before the date of 
                enactment of the Financial Institutions Reform, 
                Recovery, and Enforcement Act of 1989.
                  ``(C) Certain uninsured banks excluded.--The term 
                `State bank' shall not include any cooperative bank or 
                other unincorporated bank the deposits of which were 
                not insured by the Corporation on the day before the 
                date of enactment of the Financial Institutions Reform, 
                Recovery, and Enforcement Act of 1989.''; and
          (2) in subsection (q), by--
                  (A) inserting ``and'' after the semicolon at the end 
                of paragraph (2);
                  (B) striking ``; and'' at the end of paragraph (3) 
                and inserting a period; and
                  (C) striking paragraph (4).
  (b) Amendment to the Bank Holding Company Act of 1956.--Section 
2(a)(5) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(5)) 
is amended by striking subparagraph (E).
  (c) Amendments to the Federal Reserve Act.--Section 1 of the Federal 
Reserve Act (12 U.S.C. 221) is amended by inserting ``(as defined in 
section 3 of the Federal Deposit Insurance Act)'' after ``State bank'' 
each place such term appears.
  (d) Effective Date.--This section shall take effect 2 years after the 
date of the enactment of this Act.

SEC. 322. POWERS OF FEDERAL SAVINGS ASSOCIATIONS ACCORDED TO NATIONAL 
                    BANKS.

  (a) Additional Powers for National Banks To Accommodate Federal 
Savings Association Conversions.--Subsection (a) of section 5136 of the 
Revised Statutes of the United States (12 U.S.C. 24) (as so designated 
by section 151(a) of this Act) is amended by adding at the end the 
following new paragraph:
          ``(12) To exercise all the powers and privileges authorized 
        by the Director of the Office of Thrift Supervision for a 
        Federal savings association on the day before the date of 
        enactment of the Financial Services Competition Act of 1997, 
        subject to the requirements otherwise applicable to national 
        banks, including sections 5136A and 5155, except this paragraph 
        shall not confer on a national bank the power granted to a 
        Federal savings association under section 5(c)(4)(B) of the 
        Home Owners' Loan Act to invest in a corporation engaged in 
        real estate development and the power granted to a Federal 
        savings association under section 5(c)(4)(B) of the Home 
        Owners' Loan Act to invest in a corporation may be exercised by 
        a national bank only if the investment is made in a corporation 
        that is a subsidiary of the bank.''.
  (b) Effective Date.--This section shall take effect 2 years after the 
date of the enactment of this Act.

SEC. 323. HOME OWNERS' LOAN ACT REPEALED.

  Effective 2 years after the date of enactment of this Act, the Home 
Owners' Loan Act (12 U.S.C. 1461-1468c) is repealed.

SEC. 324. CONFORMING AMENDMENT REFLECTING ELIMINATION OF THE FEDERAL 
                    THRIFT CHARTER AND THE SEPARATE SYSTEM OF THRIFT 
                    REGULATION.

  Section 2704(c) of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 is amended to read as follows:
  ``(c) Effective Date.--This section and the amendments made by this 
section shall take effect on the earlier of--
          ``(1) January 1, 2000; or
          ``(2) the end of the 2-year period beginning on the date of 
        the enactment of the Thrift Charter Transition Act of 1997.''.

SEC. 325. CONFORMING AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT.

  (a) Amendment to Section 2.--Section 2 of the Federal Home Loan Bank 
Act (12 U.S.C. 1422) is amended by striking paragraph (9) and 
redesignating paragraphs (10) through (12) as paragraphs (9) through 
(11), respectively.
  (b) Amendments to Section 10.--Subsection (h) of section 10 of the 
Federal Home Loan Bank Act (12 U.S.C. 1430) is amended to read as 
follows:
  ``(h) [Repealed]''.
  (c) Amendments to Section 11.--Section 11(d)(2)(C) of the Federal 
Home Loan Bank Act (12 U.S.C. 1431(e)(2)(C)) (as so redesignated by 
section 174(e) of this Act) is amended by--
          (1) striking ``, and with respect to the collection and 
        settlement (including payment by the payor institution) of 
        items payable by Federal savings and loan associations and 
        Federal mutual savings banks,''; and
          (2) striking ``, associations, or banks''.
  (d) Amendment to Section 18.--Section 18(c) of the Federal Home Loan 
Bank Act (12 U.S.C. 1438(c)) is repealed.
  (e) Amendment to Section 22.--Section 22(a) of the Federal Home Loan 
Bank Act (12 U.S.C. 1442(a)) is amended by striking ``, and the 
Director of the Office of Thrift Supervision'' each place such appears 
and inserting ``and'' before ``the Chairperson of the National Credit 
Union Administration''.
  (f) Amendment to Section 24.--Section 24 of the Federal Home Loan 
Bank Act (12 U.S.C. 1444) is repealed.
  (g) Effective Date.--This section shall become effective 2 years 
after the date of enactment of this Act.

SEC. 326. AMENDMENTS TO TITLE 11, UNITED STATES CODE.

  (a) Definition of Federal Mutual Bank Holding Company.--Section 101 
of title 11, United States Code, is amended by inserting after 
paragraph (21B) the following new paragraph:
          ``(21C) `Federal mutual bank holding company' has the same 
        meaning as in section 5133B(h)(1) of the Revised Statutes of 
        the United States.''.
  (b) Conservator or Receiver May Petition.--Section 303(b) of title 
11, United States Code, is amended--
          (1) in paragraph (3)(B) by striking ``or'' at the end;
          (2) in paragraph (4) by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(5) in a proceeding concerning a Federal mutual bank 
        holding company, the Comptroller of the Currency.''
  (c) Effect of Involuntary Petition by Comptroller.--
          (1) Exemption from indemnification.--Section 303(e) of title 
        11, United States Code, is amended by inserting ``, other than 
        a petitioner specified in subsection (b)(5),'' after 
        ``petitioners under this section''.
          (2) Restriction on operation pending court order of relief.--
        Section 303(f) of title 11, United States Code, is amended by 
        inserting ``or a petition was filed by a petitioner specified 
        in subsection (b)(5)'' after ``otherwise''.
          (3) Interim trustee to be appointed.--Section 303(g) of title 
        11, United States Code, is amended by inserting after the 1st 
        sentence the following new sentence: ``Upon the filing of a 
        petition by a petitioner specified in subsection (b)(5), and 
        without requiring notice or hearing, the United States Trustee 
        shall appoint an interim trustee from a list submitted by the 
        Comptroller of the Currency of 5 disinterested persons that are 
        qualified and willing to serve.''

                   Subtitle C--Combining OTS and OCC

SEC. 331. PROHIBITION OF MERGER OR CONSOLIDATION REPEALED.

  Section 321 of title 31, United States Code, is amended by striking 
subsection (e).

SEC. 332. SECRETARY OF THE TREASURY REQUIRED TO FORMULATE PLANS FOR 
                    COMBINING OFFICE OF THRIFT SUPERVISION WITH OFFICE 
                    OF THE COMPTROLLER OF THE CURRENCY.

  Not later than 9 months after the date of the enactment of this Act, 
the Secretary of the Treasury, in consultation with the Director of the 
Office of Thrift Supervision and the Comptroller of the Currency, shall 
formulate a plan for consolidating the Office of Thrift Supervision 
with the Office of the Comptroller of the Currency by the end of the 2-
year period beginning on the date of enactment of this Act. The 
Director of the Office of Thrift Supervision and the Comptroller of the 
Currency shall implement that plan, notwithstanding any other provision 
of Federal banking laws.

SEC. 333. OFFICE OF THRIFT SUPERVISION AND POSITION OF DIRECTOR OF THE 
                    OFFICE OF THRIFT SUPERVISION ABOLISHED.

  Effective 2 years after the date of enactment of this Act, the Office 
of Thrift Supervision and the position of Director of the Office of 
Thrift Supervision are abolished.

SEC. 334. RECONFIGURATION OF BOARD OF DIRECTORS OF FDIC AS A RESULT OF 
                    REMOVAL OF DIRECTOR OF THE OFFICE OF THRIFT 
                    SUPERVISION.

  (a) In General.--Section 2(a)(1) of the Federal Deposit Insurance Act 
(12 U.S.C. 1812(a)(1)) is amended to read as follows:
          ``(1) In general.--The management of the Corporation shall be 
        vested in a Board of Directors consisting of 5 members--
                  ``(A) 1 of whom shall be the Comptroller of the 
                Currency; and
                  ``(B) 4 of whom shall be appointed by the President, 
                and with the advice and consent of the Senate, from 
                among individuals who are citizens of the United 
                States, 1 of whom shall have State bank supervisory 
                experience.''.
  (b) Technical and Conforming Amendments.--
          (1) Section 2(d)(2) of the Federal Deposit Insurance Act (12 
        U.S.C. 1812(d)(2)) is amended--
                  (A) by striking ``or the office of Director of the 
                Office of Thrift Supervision'';
                  (B) by striking ``or such Director'';
                  (C) by striking ``or the acting Director of the 
                Office of Thrift Supervision, as the case may be''; and
                  (D) by striking ``or Director''.
          (2) Section 2(f)(2) of the Federal Deposit Insurance Act (12 
        U.S.C. 1812(f)(2)) is amended by striking ``or of the Office of 
        Thrift Supervision''.
  (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect at the end of the 2-year period beginning on the date 
of the enactment of this Act.

SEC. 335. CONTINUATION PROVISIONS.

  (a) Continuation of Orders, Resolutions, Determinations and 
Regulations.--All orders, resolutions, determinations and regulations 
of the Office of Thrift Supervision that have been issued, made, 
prescribed or allowed to become effective by the Office of Thrift 
Supervision (including orders, resolutions, determinations and 
regulations that relate to the conduct of conservatorship and 
receiverships), or by a court of competent jurisdiction, and are in 
effect on the day before the date of enactment, shall continue in 
effect according to the terms of such orders, resolutions, 
determinations, and regulations and shall be enforceable by or against 
the appropriate successor agency until modified, terminated, set aside 
or superseded in accordance with applicable law by the appropriate 
successor agency or by a court of competent jurisdiction or by 
operation of law.
  (b) Continuation of Suits.--No action or other proceeding commenced 
by or against the Office of Thrift Supervision shall abate because of 
the enactment of this Act, except that the appropriate successor agency 
to the Office of Thrift Supervision shall be substituted for the Office 
of Thrift Supervision as a party to any such action or proceeding.
  (c) Continuation of Agency Services.--Any agency, department, or 
other instrumentality of the United States, and any successor to such 
agency, department, or instrumentality, that was providing supporting 
services to the Office of Thrift Supervision shall--
          (1) continue to provide such services, on a reimbursable 
        basis or as otherwise agreed before the date of enactment, to 
        the Office of Thrift Supervision; and
          (2) consult with the Office of Thrift Supervision to 
        coordinate and facilitate a prompt and reasonable completion or 
        termination of such services.
  (d) Transfer of Property.--Not later than two years of the date of 
enactment, all property of the Office of Thrift Supervision shall be 
transferred to the Office of the Comptroller of the Currency, or 
another appropriate successor agency, in accordance with the division 
of responsibilities and activities effected by this Act. For purposes 
of this subsection, the term ``property'' includes, but is not limited 
to, all interests in real property and all personal property, including 
financial assets, computer hardware and software, furniture, fixtures, 
books, accounts, records, reports of examination, work papers and 
correspondence related to such reports of examination, and any 
information, materials, property, and assets not specifically listed. 
The Secretary of the Treasury shall resolve any disagreement between 
successor agencies.

   Subtitle D--Technical and Conforming Amendments to the Depository 
                          Institution Statutes

SEC. 341. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.

  (a) Amendment to Section 1.--Section 1(a) of the Federal Deposit 
Insurance Act (12 U.S.C. 1811(a)) is amended by striking ``and savings 
associations''.
  (b) Amendments to Section 3.--Section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813) is amended--
          (1) in subsection (b)--
                  (A) by striking subparagraph (A) of paragraph (1);
                  (B) by striking ``and the Director of the Office of 
                Thrift Supervision jointly determine'' in paragraph 
                (1)(C) and inserting ``determines'';
                  (C) by redesignating subparagraphs (B) and (C) of 
                paragraph (1) (as amended by subparagraph (B) of this 
                paragraph) as subparagraphs (A) and (B), respectively;
                  (D) by striking paragraph (2); and
                  (E) by redesignating paragraph (3) as paragraph (2);
          (2) in subsection (l)(5)--
                  (A) by striking ``or savings association'' each place 
                such term appears; and
                  (B) by striking ``Director of the Office of Thrift 
                Supervision''; and
          (3) in subsection (z), by striking ``the Director of the 
        Office of Thrift Supervision,''.
  (c) Amendment to Section 4.--Section 4(a) of the Federal Deposit 
Insurance Act (12 U.S.C. 1814(a)) is amended--
          (1) by striking ``(1) Banks.--''; and
          (2) by striking paragraph (2).
  (d) Amendments to Section 7.--Section 7 of the Federal Deposit 
Insurance Act (12 U.S.C. 1817) is amended--
          (1) in subsection (a)(2)(A), by striking ``the Director of 
        the Office of Thrift Supervision,'';
          (2) in subsection (a)(2)(B)--
                  (A) by inserting ``and'' after ``Comptroller of the 
                Currency,''; and
                  (B) by striking ``and the Director of the Office of 
                Thrift Supervision'';
          (3) in subsection (a)(3)--
                  (A) by inserting ``and'' after ``Comptroller of the 
                Currency,''; and
                  (B) by striking ``, and the Director of the Office of 
                Thrift Supervision'';
          (4) in subsection (a)(7), by striking ``the Director of the 
        Office of Thrift Supervision,'' ; and
          (5) by striking subsection (n).
  (e) Amendments to Section 8.--Section 8 of the Federal Deposit 
Insurance Act (12 U.S.C. 1818) is amended--
          (1) in paragraph (7) (as so redesignated by section 161(d)(1) 
        of this Act) of subsection (a)--
                  (A) by striking subparagraph (B); and
                  (B) by redesignating subparagraphs (C) through (H) as 
                subparagraphs (B) through (G), respectively;
          (2) in subsection (b)--
                  (A) by striking paragraph (9); and
                  (B) by redesignating paragraph (10) as paragraph (9);
          (3) in subsection (o), by striking the last sentence; and
          (4) in subsection (w)(3)(A), by striking ``and the Office of 
        Thrift Supervision, where appropriate''.
  (f) Amendment to Section 10.--Section 10(c) of the Federal Deposit 
Insurance Act (12 U.S.C. 1820(c)) is amended by striking ``savings 
association,''.
  (g) Amendments to Section 11.--Section 11 of the Federal Deposit 
Insurance Act (12 U.S.C. 1821) is amended--
          (1) in subsection (c)--
                  (A) by striking paragraph (6); and
                  (B) by redesignating paragraphs (7) through (13) as 
                paragraphs (6) through (12), respectively;
          (2) in subsection (d)(2)(F), by striking ``receiver--'' and 
        all that follows through ``(ii) with'' and inserting ``receiver 
        with'';
          (3) in subsection (d)(17)(A), by striking ``or the Director 
        of the Office of Thrift Supervision''; and
          (4) in subsection (d)(18)(B), by striking ``or the Director 
        of the Office of Thrift Supervision''.
  (h) Amendment to Section 13.--Section 13 of the Federal Deposit 
Insurance Act (12 U.S.C. 1823) is amended by striking subsection (k).
  (i) Amendments to Section 18.--Section 18 of the Federal Deposit 
Insurance Act (12 U.S.C. 1828) is amended--
          (1) in subsection (c)(2)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (B);
                  (B) in subparagraph (C), by striking ``(except a 
                District bank or a savings bank supervised by the 
                Director of the Office of Thrift Supervision); and'' 
                and inserting ``(except a District bank).''; and
                  (C) by striking subparagraph (D);
          (2) in subsection (g)(1), by striking ``and the Director of 
        the Office of Thrift Supervision'';
          (3) in subsection (i)(2)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (B);
                  (B) by striking ``; and'' in subparagraph (C) and 
                inserting a period; and
                  (C) by striking subparagraph (D); and
          (4) by striking subsection (m).
  (j) Amendments to Section 22.--Section 22 of the Federal Deposit 
Insurance Act (12 U.S.C. 1830) is amended--
          (1) by striking ``or State savings associations and in favor 
        of national or member banks or Federal savings associations, 
        respectively'' and inserting ``and in favor of national or 
        member banks''; and
          (2) by striking ``and savings associations''.
  (k) Amendment to Section 28.--Section 28 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831e) is repealed.
  (l) Amendment to Section 33.--Section 33(e) of the Federal Deposit 
Insurance Act (12 U.S.C. 1831j(e)) is amended by striking ``, and the 
Director of the Office of Thrift Supervision'' and inserting ``and'' 
before ``the Comptroller of the Currency''.
  (m) Amendment to Section 38.--Section 38(o) of the Federal Deposit 
Insurance Act (12 U.S.C. 1831o(o)) is repealed.

SEC. 342. AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956.

  Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841) is 
amended by striking subsections (i) and (j) and inserting the following 
new subsections:
  ``(i) [Repealed]
  ``(ii) [Repealed]''.

SEC. 343. AMENDMENTS TO THE FEDERAL RESERVE ACT.

  (a) Amendments to Section 11.--Section 11(a)(2)(B) of the Federal 
Reserve Act (12 U.S.C. 248(a)(2)(B)) is amended--
          (1) by inserting ``and'' after the comma at the end of clause 
        (ii);
          (2) by striking clause (iii); and
          (3) by redesignating clause (iv) as clause (iii).
  (b) Amendments to Section 19.--Section 19(b) of the Federal Reserve 
Act (12 U.S.C. 461(b)) is amended--
          (1) in paragraph (1)(A)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of clause (v);
                  (B) by striking clause (vi); and
                  (C) by redesignating clause (vii) as clause (vi); and
          (2) by striking ``the Director of the Office of Thrift 
        Supervision,'' each place it appears.

SEC. 344. AMENDMENTS TO ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 
                    1982.

  Section 804(a) of the Alternative Mortgage Transaction Parity Act of 
1982 (12 U.S.C. 3803) is amended--
          (1) in paragraph (1)--
                  (A) by inserting ``(as such term is defined in 
                section 3 of the Federal Deposit Insurance Act) and all 
                other housing creditors'' after ``with respect to 
                banks''; and
                  (B) by inserting ``and'' after the semicolon at the 
                end of the paragraph;
          (2) by deleting ``; and'' at the end of paragraph (2) and 
        inserting a period; and
          (3) by striking paragraph (3).

SEC. 345. AMENDMENTS TO THE BANK PROTECTION ACT OF 1968.

  Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is 
amended--
          (1) by striking the comma at the end of paragraph (2) and 
        inserting ``; and'';
          (2) by striking ``, and'' at the end of paragraph (3) and 
        inserting a period; and
          (3) by striking paragraph (4).

SEC. 346. AMENDMENTS TO THE COMMUNITY REINVESTMENT ACT OF 1977.

  Section 803 of the Community Reinvestment Act of 1977 (12 U.S.C. 
2902) is amended--
          (1) in paragraph (1)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (B); and
                  (B) by striking ``; and'' in subparagraph (C) and 
                inserting a period;
          (2) by striking the first paragraph (2); and
          (3) in paragraph (3)(A), by striking ``or Federal savings and 
        loan association''.

SEC. 347. AMENDMENTS TO THE DEPOSITORY INSTITUTIONS DEREGULATION AND 
                    MONETARY CONTROL ACT OF 1980.

  Section 208(a) of the Depository Institutions Deregulation and 
Monetary Control Act of 1980 (12 U.S.C. 3507(a)) is amended--
          (1) by striking ``; and'' at the end of paragraph (1)(C) and 
        inserting a period; and
          (2) by striking paragraph (2).

SEC. 348. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGEMENT 
                    INTERLOCKS ACT.

  (a) Amendment to Section 202.--Section 202(2) of the Depository 
Institution Management Interlocks Act (12 U.S.C. 3201(2)) is amended by 
inserting ``or'' before ``a company which would be'' and striking ``, 
or a savings and loan holding company'' and all that follows through 
``Housing Act''.
  (b) Amendment to Section 205.--Section 205 of the Depository 
Institution Management Interlocks Act (12 U.S.C. 3204) is amended--
          (1) in the portion of paragraph (8)(A) which precedes clause 
        (i), by striking ``diversified savings'' and all that follows 
        through ``with respect to'' and inserting ``company which is, 
        or has filed an application to become, a depository institution 
        holding company and which satisfies the consolidated net worth 
        and consolidated net earnings requirements for a diversified 
        savings and loan holding company (as set forth in section 
        10(1)(F) of the Home Owners' Loan Act, as such section is in 
        effect and interpreted on such date, which shall be applicable 
        for purposes of this paragraph without regard to the fact that 
        a depository institution subsidiary of such holding company has 
        ceased to be a savings association after January 1, 1997) with 
        respect to''; and
          (2) by striking paragraph (9).
  (c) Amendments to Section 207.--Section 207 of the Depository 
Institution Management Interlocks Act (12 U.S.C. 3206) is amended--
          (1) by striking paragraph (4); and
          (2) by redesignating paragraphs (5) and (6) as paragraphs (4) 
        and (5), respectively.
  (d) Amendment to Section 209.--Section 209 of the Depository 
Institution Management Interlocks Act (12 U.S.C. 3207) is amended--
          (1) by inserting ``and'' after the comma at the end of 
        paragraph (3);
          (2) by striking paragraph (4); and
          (3) by redesignating paragraph (5) as paragraph (4).

SEC. 349. AMENDMENT TO THE ECONOMIC GROWTH AND REGULATORY PAPERWORK 
                    REDUCTION ACT OF 1996.

  Section 2227 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (Public Law 104-208) is amended by striking ``the 
Director of the Office of Thrift Supervision,''.

SEC. 350. AMENDMENT TO THE EMERGENCY HOME FINANCE ACT OF 1970.

  Section 305(b) of the Emergency Home Finance Act of 1970 (12 U.S.C. 
1454(b)) is amended by striking ``any Federal savings and loan 
association,''.

SEC. 351. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.

  Section 610(a) of the Expedited Funds Availability Act (12 U.S.C. 
4009(a)) is amended--
          (1) by inserting ``and'' after the semicolon at the end of 
        paragraph (1)(C);
          (2) by striking paragraph (2); and
          (3) by redesignating paragraph (3) as paragraph (2).

SEC. 352. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT.

  (a) Amendment to Section 107.--Section 107(7)(D) of the Federal 
Credit Union Act (12 U.S.C. 1757(7)(D)) is amended by striking ``the 
Federal Savings and Loan Insurance Corporation or''.
  (b) Amendment to Section 206.--Section 206(g)(7)(A)(ii) of the 
Federal Credit Union Act (12 U.S.C. 1786(g)(7)(A)(ii)) is amended by 
striking ``, or as a savings association under section 8(b)(8) of such 
Act''.

SEC. 353. AMENDMENTS TO THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION 
                    COUNCIL ACT OF 1978.

  (a) Amendment to Section 1003(1).--Section 1003(1) of the Federal 
Financial Institutions Examination Council Act of 1978 (12 U.S.C. 
3302(1)) is amended by striking ``the Office of Thrift Supervision,''.
  (b) Amendment to Section 1004.--Section 1004(a) of the Federal 
Financial Institutions Examination Council Act of 1978 (12 U.S.C. 
3303(a)) is amended--
          (1) by inserting ``and'' after the comma at the end of 
        paragraph (3);
          (2) by striking paragraph (4); and
          (3) by redesignating paragraph (5) as paragraph (4).

SEC. 354. AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, 
                    AND ENFORCEMENT ACT OF 1989.

  (a) Amendment to Section 1121.--Section 1121(6) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3350(6)) is amended by striking ``the Office of Thrift Supervision,''.
  (b) Amendment to Section 1206.--Section 1206 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
1833b) is amended by striking ``and the Office of Thrift Supervision,'' 
and inserting ``and'' before ``the Farm Credit Administration''.
  (c) Amendment to Section 1216.--Section 1216 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
1833e) is amended--
          (1) in subsection (a), by striking paragraph (2) and 
        redesignating paragraphs (3) through (6) as paragraphs (2) 
        through (5), respectively; and
          (2) in subsection (c), by striking ``the Director of the 
        Office of Thrift Supervision,''.

SEC. 355. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 1975.

  (a) Amendments to Section 304.--Section 304(h) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2803(h)) is amended--
          (1) by striking paragraph (2);
          (2) in paragraph (5), by striking ``(4)'' and inserting 
        ``(3)''; and
          (3) by redesignating paragraphs (3) through (5) as paragraphs 
        (2) through (4), respectively.
  (b) Amendments to Section 305.--Section 305(b) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2804(b)) is amended--
          (1) by striking paragraph (2); and
          (2) by redesignating paragraphs (3) and (4) as paragraphs (2) 
        and (3), respectively.
  (c) Amendments to Section 306.--Section 306(b) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2805(b)) is amended by striking 
``shall be enforced under--'' and all that follows through ``Federal 
Deposit Insurance Corporation'' and inserting ``under section 8 of the 
Federal Deposit Insurance Act (12 U.S.C. 1818) in the case of national 
banks, by the Comptroller of the Currency''.

SEC. 356. AMENDMENTS TO THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 
                    1992.

  (a) Amendment to Section 1315.--Section 1315(b) of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4515(b)) is amended by 
striking ``, and the Office of Thrift Supervision'' and inserting 
``and'' before ``the Federal Deposit Insurance Corporation''.
  (b) Amendment to Section 1317(c).--Section 1317(c) of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4517(c)) is amended by 
striking ``, or the Director of the Office of Thrift Supervision'' and 
inserting ``or'' before ``the Federal Deposit Insurance Corporation''.

SEC. 357. AMENDMENT TO THE INTERNATIONAL BANKING ACT OF 1978.

  Section 15 of the International Banking Act of 1978 (12 U.S.C. 3109) 
is amended by striking ``Federal Deposit Insurance Corporation, and 
Director of the Office of Thrift Supervision'' each place that it 
appears and inserting ``and Federal Deposit Insurance Corporation''.

SEC. 358. AMENDMENTS TO THE NATIONAL HOUSING ACT.

  (a) Amendments to Section 203.--The 1st of the 2 subsections 
designated as subsection (s) of section 203 of the National Housing Act 
(12 U.S.C. 1709(s)) is amended--
          (1) by inserting ``and'' after the semicolon at the end of 
        paragraph (6);
          (2) in paragraph (7)--
                  (A) by inserting ``(as defined in section 3 of the 
                Federal Deposit Insurance Act)'' after ``State bank''; 
                and
                  (B) striking ``; and'' and inserting a period; and
          (3) by striking paragraph (8).
  (b) Amendment to Section 502.--Section 502 of the National Housing 
Act (12 U.S.C. 1701c(c)) is amended by striking ``and the Director of 
the Office of Thrift Supervision, respectively''.

SEC. 359. AMENDMENT TO PUBLIC LAW 93-495.

  Section 202(a)(12) of Public Law 93-495 (12 U.S.C. 2402(a)(12)) is 
amended by striking ``thrift, or other business entities, including one 
representative each of commercial banks, mutual savings banks, savings 
and loan associations,'' and inserting ``or other business entities, 
including 3 representatives from different types of insured depository 
institutions (as defined in section 3 of the Federal Deposit Insurance 
Act) and 1 representative each of''.

SEC. 360. AMENDMENT TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 
                    1974.

  The first sentence of section 4(a) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2603(a)) is amended--
          (1) by striking the comma after ``Affairs'';
          (2) by inserting ``and'' before ``the Federal Deposit 
        Insurance Corporation''; and
          (3) by striking ``, and the Director of the Office of Thrift 
        Supervision''.

SEC. 361. AMENDMENT TO THE REVISED STATUTES OF THE UNITED STATES.

  Section 324 of the Revised Statutes of the United States (12 U.S.C. 
1) is amended by striking ``The Comptroller of the Currency shall have 
the same authority over matters within the jurisdiction of the 
Comptroller as the Director of the Office of Thrift Supervision has 
over matters within the Director's jurisdiction under section 3(b)(3) 
of the Home Owners' Loan Act'' and inserting ``The Secretary of the 
Treasury may not intervene in any matter or proceeding before the 
Comptroller of the Currency (including agency enforcement actions) 
unless otherwise specifically provided by law''.

SEC. 362. AMENDMENTS TO THE RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY 
                    IMPROVEMENT ACT OF 1994.

  (a) Amendment to Section 307.--Section 307(a) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4805(a)) 
is amended by striking ``savings association financial reports,''.
  (b) Amendment to Section 117.--Section 117(e) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4716(e)) 
is amended by striking ``the Director of the Office of Thrift 
Supervision,''.

SEC. 363. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.

  Section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 
3401) is amended--
          (1) in paragraph (6)--
                  (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (A), ;
                  (B) by striking ``; and'' at the end of subparagraph 
                (B) and inserting a period; and
                  (C) by striking subparagraph (C); and
          (2) in paragraph (7)--
                  (A) by striking subparagraph (B); and
                  (B) by redesignating subparagraphs (C) through (H) as 
                subparagraphs (B) through (G), respectively.

SEC. 364. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.

  Section 270(a)(1) of the Truth in Savings Act (12 U.S.C. 4309(a)(1)) 
is amended--
          (1) by inserting ``and'' after the semicolon at the end of 
        subparagraph (A);
          (2) in subparagraph (B)--
                  (A) by striking ``or (iii)'' and inserting ``(iii) or 
                (v)''; and
                  (B) by striking ``; and'' and inserting a period; and
          (3) by striking subparagraph (C).

SEC. 365. EFFECTIVE DATE.

  This subtitle shall become effective 2 years after the date of 
enactment of this Act.

   Subtitle E--Technical and Conforming Amendments to Other Statutes

SEC. 371. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT 
                    CONTROL ACT OF 1985.

  (a) Amendment to Section 250.--Section 250(c)(19) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900(c)(19)) 
is amended by striking ``the Office of Thrift Supervision,''.
  (b) Amendment to Section 256.--Section 256(h)(4) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 906(h)(4)) 
is amended--
          (1) by striking subparagraphs (C) and (D); and
          (2) by redesignating subparagraphs (E) through (I) as 
        subparagraphs (C) through (G), respectively.

SEC. 372. AMENDMENTS TO THE CONSUMER CREDIT PROTECTION ACT.

  (a) Amendments to Section 108.--Section 108(a) of the Consumer Credit 
Protection Act (15 U.S.C. 1607(a)) is amended--
          (1) in paragraph (1)(C), by inserting ``(as defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813))'' before ``insured by'';
          (2) by striking paragraph (2); and
          (3) by redesignating paragraphs (3) through (6) as paragraphs 
        (2) through (5), respectively.
  (b) Amendments to Section 621.--Section 621(b) of the Consumer Credit 
Protection Act (15 U.S.C. 1681s(b)) is amended--
          (1) in paragraph (1)(C), by inserting ``(as defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813))'' before ``insured by'';
          (2) by striking paragraph (2); and
          (3) by redesignating paragraphs (3) through (6) as paragraphs 
        (2) through (5), respectively.
  (c) Amendments to Section 704.--Section 704(a) of the Consumer Credit 
Protection Act (15 U.S.C. 1691c(a)) is amended--
          (1) in paragraph (1)(C), by inserting ``(as defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813))'' before ``insured by'';
          (2) by striking paragraph (2); and
          (3) by redesignating paragraphs (3) through (9) as paragraphs 
        (2) through (8), respectively.
  (d) Amendments to Section 814.--Section 814(b) of the Consumer Credit 
Protection Act (15 U.S.C. 1692l(b)) is amended--
          (1) in paragraph (1)(C), by inserting ``(as defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813))'' before ``insured by'';
          (2) by striking paragraph (2); and
          (3) by redesignating paragraphs (3) through (6) as paragraphs 
        (2) through (5), respectively.
  (e) Amendments to Section 917.--Section 917(a) of the Consumer Credit 
Protection Act (15 U.S.C. 1693o(a)) is amended--
          (1) in paragraph (1)(C), by inserting ``(as defined in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813))'' before ``insured by'';
          (2) by striking paragraph (2); and
          (3) by redesignating paragraphs (3) through (5) as paragraphs 
        (2) through (4), respectively.

SEC. 373. AMENDMENTS TO THE FLOOD DISASTER PROTECTION ACT OF 1973.

  (a) Amendment to Section 3.--Section 3(a)(5) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4003(a)(5)) is amended by striking 
``the Office of Thrift Supervision,''.
  (b) Amendment to Section 1370.--Section 1370(a)(9) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4121(a)(9)) is amended by 
striking ``the Office of Thrift Supervision,''.

SEC. 374. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

  (a) Amendments to Section 3.--Section 3(a)(34)(G) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(34)(G)) is amended--
          (1) in clause (iii)--
                  (A) by inserting ``(as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813))'' 
                before ``insured by''; and
                  (B) by striking ``or a Federal savings bank'';
          (2) by striking clause (iv) and redesignating clause (v) as 
        clause (iv); and
          (3) by striking ``, and the term `District of Columbia 
        savings and loan association' means any association subject to 
        examination and supervision by the Office of Thrift Supervision 
        under section 8 of Home Owners' Loan Act of 1933''.
  (b) Amendment to Section 15C.--Section 15C(g)(1) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78o-5(g)(1)) is amended by striking 
``the Director of the Office of Thrift Supervision,''.

SEC. 375. AMENDMENTS TO TITLE 5, UNITED STATES CODE.

  (a) Amendment to Section 3132.--Section 3132(a)(1)(D) of title 5, 
United States Code, is amended by striking ``the Office of Thrift 
Supervision,''.
  (b) Amendment to Section 5314.--Section 5314 of title 5, United 
States Code, is amended by striking ``Director of the Office of Thrift 
Supervision''.

SEC. 376. AMENDMENTS TO TITLE 18, UNITED STATES CODE.

  (a) Amendment to Section 212.--Section 212 of title 18, United States 
Code, is amended by striking ``, by the Office of Thrift Supervision''.
  (b) Amendment to Section 1006.--Section 1006 of title 18, United 
States Code, is amended by striking ``, Office of Thrift Supervision''.
  (c) Amendment to Section 1014.--Section 1014 of title 18, United 
States Code, is amended by striking ``, the Office of Thrift 
Supervision''.
  (d) Amendment to Section 1032.--Section 1032 of title 18, United 
States Code, is amended by striking ``or the Director of the Office of 
Thrift Supervision''.

SEC. 377. AMENDMENT TO TITLE 31, UNITED STATES CODE.

  Section 714(a) of title 31, United States Code, is amended by 
striking ``, and the Office of Thrift Supervision'' and inserting 
``and'' before ``the Office of the Comptroller''.

SEC. 378. EFFECTIVE DATE.

  This subtitle shall take effect at the end of the 2-year period 
beginning on the date of the enactment of this Act.

  TITLE IV--UNIFORM MULTISTATE LICENSING OF STATE-LICENSED INSURANCE 
                           AGENTS AND BROKERS

SEC. 401. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

  (a) In General.--The provisions of this title shall take effect if, 
and only if, by the end of the 3-year period beginning on the date of 
the enactment of this Act, a majority of the States have not enacted 
uniform laws and regulations governing the licensure of individuals and 
entities authorized to sell and solicit the purchase of insurance 
within the State.
  (b) Uniformity Required.--States shall be deemed to have established 
the uniformity necessary to satisfy subsection (a) if they--
          (1) establish uniform criteria regarding the integrity, 
        personal qualifications, education, training, and experience, 
        of licensed insurance producers, including the qualification 
        and training of sales personnel in ascertaining the 
        appropriateness of a particular insurance product for a 
        prospective customer;
          (2) establish uniform continuing education requirements for 
        licensed insurance producers;
          (3) establish uniform ethics course requirements for licensed 
        insurance producers in conjunction with the continuing 
        education requirements under paragraph (2);
          (4) establish uniform criteria to ensure that an insurance 
        product, including any annuity contract, sold to a consumer is 
        suitable and appropriate for the consumer based on financial 
        information disclosed by the consumer; and
          (5) do not impose any requirement upon any licensed insurance 
        producer that has the effect of limiting or conditioning that 
        producer's activities because of its residence or place of 
        operations.
  (c) Determination.--At the end of the 3-year period beginning on the 
date of the enactment of this Act, the National Association of 
Insurance Commissioners shall determine, in consultation with the 
insurance commissioners or chief insurance regulatory officials of the 
States, whether the uniformity required by subsections (a) and (b) has 
been achieved.
  (d) Continued Application.--If at any time after the end of the 3-
year period referred to in subsection (c), the uniformity required by 
subsections (a) and (b) no longer exists, the provisions of this title 
shall take effect.

SEC. 402. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.

  (a) Establishment.--There is established a body corporate to be known 
as the ``National Association of Registered Agents and Brokers'' 
(hereafter in this title referred to as the ``Association'').
  (b) Status.--The Association shall--
          (1) be a nonprofit corporation;
          (2) have succession until dissolved by an Act of Congress;
          (3) not be an agency or establishment of the United States 
        Government; and
          (4) except as otherwise provided in this Act, be subject to, 
        and have all the powers conferred upon a nonprofit corporation 
        by the District of Columbia Nonprofit Corporation Act (D.C. 
        Code, sec. 29-1001 et seq.).

SEC. 403. PURPOSE.

  The purpose of the Association shall be to provide a mechanism 
through which uniform licensing, continuing education, and other 
insurance producer sales qualification requirements and conditions can 
be adopted and applied on a multistate basis, while preserving the 
right of States to license, supervise, and discipline insurance 
producers and to prescribe and enforce laws and regulations with regard 
to insurance-related consumer protection and unfair trade practices.

SEC. 404. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

  (a) In General.--The Association shall be subject to the supervision 
and oversight of the National Financial Services Council (hereafter in 
this title referred to as the ``Council'').
  (b) Receipts and Disbursements of Association Not Included in 
Budget.--Section 406 of the Congressional Budget Act of 1974 (2 U.S.C. 
655) is amended by adding at the end the following new subsection:
  ``(c) Notwithstanding any other provision of law, the receipts and 
disbursements of the National Association of Registered Agents and 
Brokers shall not be included for the purposes of--
          ``(1) the budget of the United States Government as submitted 
        by the President;
          ``(2) the congressional budget and the Congressional Budget 
        and Impoundment Control Act of 1974; or
          ``(3) the Balanced Budget and Emergency Deficit Control Act 
        of 1985.''.
  (c) Funds Not Available to the United States Government.--The United 
States Government may not borrow or pledge funds held by or due to the 
Association.

SEC. 405. MEMBERSHIP.

  (a) In General.--Any State-licensed producer shall be eligible for 
membership in the Association.
  (b) Authority To Establish Membership Criteria.--The Association 
shall have the authority to establish membership criteria that--
          (1) bear a reasonable relationship to the purposes for which 
        the Association was established; and
          (2) do not unfairly limit the access of smaller agencies to 
        the Association membership.
  (c) Establishment of Classes and Categories.--
          (1) Classes of membership.--The Association may establish 
        separate classes of membership, with separate criteria, if the 
        Association reasonably determines that performance of different 
        duties requires different levels of education, training, or 
        experience.
          (2) Categories.--The Association may establish separate 
        categories of membership for individuals and for other persons.
  (d) Membership Criteria.--
          (1) In general.--The Association may establish membership 
        criteria to establish the integrity, personal qualifications, 
        education, training, and experience of members, and any 
        criteria reasonably incidental to any such criteria.
          (2) Standard.--In establishing criteria under paragraph (1), 
        the Association shall be guided by the highest levels set by 
        the States with regard to their comparable licensing laws.
  (e) Effect of Membership.--Membership in the Association shall 
operate as licensure in each State in which the member of the 
Association pays the licensing fee set by such State, subject to 
section 415.
  (f) Annual Renewal.--Membership in the Association shall be renewed 
on an annual basis and shall be subject to reasonable continuing 
education requirements.
  (g) Suspension and Revocation.--The Association may--
          (1) inspect and examine the members of the Association to 
        determine compliance with the criteria for membership 
        established by the Association; and
          (2) suspend or revoke membership upon showing that--
                  (A) applicable membership criteria are no longer 
                being met; or
                  (B) a member has been subject to disciplinary 
                proceedings under the jurisdiction of a State insurance 
                regulator, and the Association concludes that retention 
                of membership in the Association would not be in the 
                public interest.
  (h) Office of Consumer Complaints.--The Association shall establish 
and publicize an office with a toll-free telephone number that shall--
          (1) receive and investigate complaints from both consumers 
        and State insurance regulators related to members of the 
        Association; and
          (2) take any disciplinary actions the Association considers 
        appropriate to the extent that any such action is not 
        inconsistent with State law.

SEC. 406. CORPORATE POWERS.

  The Association shall have the following powers:
          (1) To sue and be sued, in the corporate name of the 
        Association and through its own counsel in any Federal court of 
        competent jurisdiction.
          (2) To adopt, alter, and use a corporate seal, which shall be 
        judicially noticed.
          (3) To adopt, amend, and repeal, by the Board of Directors of 
        the Association, such bylaws and rules as may be necessary or 
        appropriate to carry out the purposes of this title, including 
        bylaws relating to--
                  (A) the conduct of business; and
                  (B) the indemnity of the directors, officers, and 
                employees of the Association for liabilities and 
                expenses actually and reasonably incurred by any such 
                person in connection with the defense or settlement of 
                an action or suit if such person acted in good faith 
                and in a manner reasonably believed to be consistent 
                with the purposes of this title.
          (4) To adopt, amend, and repeal, by the Board of Directors of 
        the Association, such rules as may be necessary or appropriate 
        to carry out the purposes of this title, including rules 
        relating to--
                  (A) the definition of terms used in this title, other 
                than those terms for which a definition is provided in 
                this title;
                  (B) the procedures for payment of the assessments 
                imposed by the Association; and
                  (C) the exercise of all other rights and powers 
                granted to the Association by this title.
          (5) To conduct the business of the Association (including the 
        carrying on of operations and the maintenance of offices) and 
        to exercise all other rights and powers granted to the 
        Association by this title in any State or other jurisdiction 
        without regard to any qualification, licensing, or other 
        statutory requirement in such State or other jurisdiction.
          (6) To lease, purchase, accept gifts or donations or 
        otherwise acquire, to own, hold, improve, use, or otherwise 
        deal in or with, and to sell, convey, mortgage, pledge, lease, 
        exchange, or otherwise dispose of any property, real, personal 
        or mixed, or any interest in any such property, wherever 
        situated.
          (7) To elect or appoint such officers, attorneys, employees, 
        and agents as may be required, to determine their 
        qualifications, to define their duties, to fix their salaries, 
        require bonds for them, and fix the penalty thereof.
          (8) To enter into contracts, to execute instruments, to incur 
        liabilities, and to do any and all other acts and things as may 
        be necessary or incidental to the conduct of the business of 
        the Association and the exercise of all other rights and powers 
        granted to the Association by this title.
          (9) To suspend or revoke the membership in the Association of 
        any member in the manner provided in this title.
          (10) To impose and collect assessments, in the manner and to 
        the extent provided under this title, upon the members of the 
        Association to cover the administrative expenses of the 
        Association in a manner that does not unfairly discriminate 
        against smaller insurance producers.
          (11) To submit advice and recommendations to the Congress, 
        the courts, the National Association of Insurance 
        Commissioners, State insurance regulators, and the Council on 
        matters pertaining to the regulation and practices of insurance 
        producers.

SEC. 407. BOARD OF DIRECTORS.

  (a) Establishment.--The management of the Association shall be vested 
in a board of directors.
  (b) Powers.--
          (1) In general.--The board of directors shall be vested with 
        all powers necessary for the management and administration of 
        the affairs of the Association and the promotion of the 
        purposes of the Association as authorized by this title.
          (2) Specified in by-laws.--The authority of the board of 
        directors shall be specified in the bylaws of the Association.
  (c) Composition.--
          (1) Members.--The Board shall be composed of 7 members 
        appointed by the Chairperson of the Council from a list of 
        candidates recommended to the Chairperson by the National 
        Association of Insurance Commissioners.
          (2) Representation of commissioners.--At least 50 percent of 
        the members of the board of directors shall be composed of 
        members of the National Association of Insurance Commissioners.
  (d) Terms.--
          (1) In general.--The term of each director shall, after the 
        initial appointment of the members of the board of directors, 
        be for 3 years, with \1/3\ of the directors to be appointed 
        each year.
          (2) No term limits.--Directors may be appointed to serve for 
        any number of terms.
  (e) Vacancies.--A vacancy in the Board shall be filled in the same 
manner as the original appointment.
  (f) Compensation.--All matters relating to compensation of directors 
shall be as provided in the bylaws of the Association.

SEC. 408. OFFICERS.

  (a) In General.--The officers of the Association shall consist of a 
chairperson and a vice chairperson of the board of directors and a 
president, secretary, and treasurer of the Association and may include 
1 or more vice presidents and such other officers and assistant 
officers as may be deemed necessary.
  (b) Manner of Selection.--
          (1) Described in bylaws.--Each officer of the board of 
        directors and the Association shall be elected or appointed at 
        such time and in such manner and for such terms not exceeding 3 
        years as may be prescribed in the bylaws of the Association.
          (2) Default provision.--In the absence of any provision in 
        the bylaws of the Association for the election or appointment 
        of the officers of the board of directors and the Association, 
        all officers shall be elected or appointed annually by the 
        board of directors.
          (3) Criteria for chairperson.--Only individuals who are 
        members of the National Association of Insurance Commissioners 
        shall be eligible to serve as the chairperson of the board of 
        directors.

SEC. 409. MEETINGS OF BOARD OF DIRECTORS.

  The board of directors shall meet at the call of the chairperson, or 
as otherwise provided by the bylaws of the Association.

SEC. 410. BYLAWS, RULES, AND DISCIPLINARY ACTION.

  (a) Adoption and Amendment of Bylaws.--
          (1) Copy required to be filed with council.--The board of 
        directors of the Association shall file with the Council a copy 
        of the proposed bylaws and any proposed amendment to the 
        bylaws, accompanied by a concise general statement of the basis 
        and purpose of such proposal.
          (2) Effective date.--Except as provided in paragraph (3), any 
        proposed bylaw or proposed amendment shall take effect--
                  (A) 30 days after the date of the filing of a copy 
                with the Council;
                  (B) upon such later date as the Association may 
                designate; or
                  (C) such earlier date as the Council may determine.
          (3) Disapproval by the council.--Notwithstanding paragraph 
        (2), a proposed bylaw or amendment shall not take effect if--
                  (A) the Council disapproves such proposal as being 
                contrary to the public interest or contrary to the 
                purposes of this title and provides notice to the 
                Association setting forth the reasons for such 
                disapproval; or
                  (B) the Council finds that such proposal involves a 
                matter of such significant public interest that public 
                comment should be obtained, in which case it may, after 
                notifying the Association in writing of such finding, 
                require that the procedures set forth in subsection (b) 
                be followed with respect to such proposal, in the same 
                manner as if such proposed bylaw change were a proposed 
                rule change within the meaning of such paragraph.
  (b) Adoption and Amendment of Rules.--
          (1) Filing proposed regulations with council.--
                  (A) In general.--The board of directors of the 
                Association shall file with the Council a copy of any 
                proposed rule or any proposed amendment to a rule of 
                the Association which shall be accompanied by a concise 
                general statement of the basis and purpose of such 
                proposal.
                  (B) Publication of notice.--The Council shall, upon 
                the filing of any proposal, publish notice thereof, 
                together with the terms of substance of such proposal 
                or a description of the subjects and issues involved.
                  (C) Opportunity for comment.--The Council shall give 
                interested persons an opportunity to submit written 
                views and arguments with respect to such proposal.
                  (D) Other regulations ineffective.--No proposed rule 
                or amendment shall take effect unless approved by the 
                Council or otherwise permitted in accordance with this 
                paragraph.
          (2) Initial consideration by council.--Within 35 days after 
        the date of publication of notice of filing of a proposal, or 
        before the end of such longer period not to exceed 90 days as 
        the Council may designate after such date if the Council finds 
        such longer period to be appropriate and publishes the reasons 
        for so finding, or as to which the Association consents, the 
        Council shall--
                  (A) by order approve such proposed rule or amendment; 
                or
                  (B) institute proceedings to determine whether such 
                proposed rule or amendment should be modified or 
                disapproved.
          (3) Council proceedings.--
                  (A) In general.--Proceedings instituted by the 
                Council with respect to a proposed rule or amendment 
                pursuant to paragraph (2) shall--
                          (i) include notice of the grounds for 
                        disapproval under consideration;
                          (ii) provide opportunity for hearing; and
                          (iii) be concluded within 180 days after the 
                        date of publication of notice of the filing of 
                        such proposed rule or amendment.
                  (B) Disposition of proposal.--At the conclusion of 
                any proceeding under subparagraph (A), the Council 
                shall, by order, approve or disapprove the proposed 
                rule or amendment.
                  (C) Extension of time for consideration.--The Council 
                may extend the time for concluding any proceeding under 
                subparagraph (A) for--
                          (i) not more than 60 days if the Council 
                        finds good cause for such extension and 
                        publishes the reasons for so finding; or
                          (ii) for such longer period as to which the 
                        Association consents.
          (4) Standards for review.--
                  (A) Grounds for approval.--The Council shall approve 
                a proposed rule or amendment if the Council finds that 
                the rule or amendment is in the public interest and is 
                consistent with the purposes of this Act.
                  (B) Grounds for disapproval.--The Council shall 
                disapprove a proposed rule or amendment if the Council 
                finds that the proposed rule or amendment does not meet 
                the standards for approval in subparagraph (A).
                  (C) Effect of approval.--Any proposed rule or 
                amendment approved by the Council under this subsection 
                shall have the force and effect of a regulation 
                prescribed by the Council under subtitle C of title I 
                of this Act.
                  (D) Approval before end of notice period.--The 
                Council shall not approve any proposed rule change 
                before the end of the 30-day period beginning on the 
                date of publication of notice in accordance with 
                paragraph (1)(B) unless the Council finds good cause 
                for so doing and publishes the reasons for so finding.
          (5) Alternate procedure.--
                  (A) In general.--Notwithstanding any provision of 
                this subsection other than subparagraph (B), a proposed 
                rule or amendment may take effect--
                          (i) upon the date of filing with the Council, 
                        if such proposed rule or amendment is 
                        designated by the Association as relating 
                        solely to matters which the Council, consistent 
                        with the public interest and the purposes of 
                        this subsection, determines by rule do not 
                        require the procedures set forth in this 
                        paragraph; or
                          (ii) upon such date as the Council shall for 
                        good cause determine.
                  (B) Filing after effective date.--Any proposed rule 
                or amendment which takes effect under subparagraph 
                (A)(ii) before the proposed rule or amendment is filed 
                with the Council shall be filed promptly with the 
                Council after the effective date of the rule or 
                amendment and reviewed in accordance with paragraph 
                (2).
                  (C) Abrogation by council.--
                          (i) In general.--At any time within 60 days 
                        after the date of filing of any proposed rule 
                        or amendment under subparagraph (A)(i) or 
                        (B)(ii), the Council may summarily abrogate 
                        such rule or amendment and require that the 
                        rule or amendment be refiled and reviewed in 
                        accordance with this paragraph, if the Council 
                        finds that such action is necessary or 
                        appropriate in the public interest, for the 
                        protection of insurance producers or 
                        policyholders, or otherwise in furtherance of 
                        the purposes of this title.
                          (ii) Effect of reconsideration by council.--
                        Any action of the Council pursuant to clause 
                        (i) shall--
                                  (I) not affect the validity or force 
                                of a rule change during the period such 
                                rule or amendment was in effect;
                                  (II) not be subject to judicial 
                                review; and
                                  (III) not be considered to be final 
                                agency action.
  (c) Action Required by the Council.--The Council may, in accordance 
with such regulations as the Council determines to be necessary or 
appropriate to the public interest or to carry out the purposes of this 
title, require the Association to adopt, amend, or repeal any bylaw or 
regulation of the Association, whenever adopted.
  (d) Legal Effect of Bylaws and Rules.--The bylaws and rules adopted 
pursuant to this section shall be subject to judicial review in the 
same manner as the regulations of the Council.
  (e) Disciplinary Action by the Association.--
          (1) Specification of charges.--In any proceeding to determine 
        whether membership shall be denied, suspended, revoked, and not 
        renewed (hereafter in this section referred to as a 
        ``disciplinary action''), the Association shall bring specific 
        charges, notify such member of such charges and give the member 
        an opportunity to defend against the charges, and keep a 
        record.
          (2) Supporting statement.--A determination to take 
        disciplinary action shall be supported by a statement setting 
        forth--
                  (A) any act or practice in which such member has been 
                found to have been engaged;
                  (B) the specific provision of this title, the rules 
                or regulations under this title, or the rules of the 
                Association which any such act or practice is deemed to 
                violate; and
                  (C) the sanction imposed and the reason for such 
                sanction.
  (f) Council Review of Disciplinary Action.--
          (1) Notice to council.--If the Association orders any 
        disciplinary action, the Association shall promptly notify the 
        Council of such action.
          (2) Review by council.--Any disciplinary action taken by the 
        Association shall be subject to review by the Council--
                  (A) on the Council's own motion; or
                  (B) upon application by any person aggrieved by such 
                action if such application is filed with the Council 
                not more than 30 days after the later of--
                          (i) the date the notice by the Association 
                        was filed with the Council pursuant to 
                        paragraph (1); or
                          (ii) the date the notice of the disciplinary 
                        action was received by such aggrieved person.
          (3) Effect of review.--The filing of an application to the 
        Council for review of a disciplinary action, or the institution 
        of review by the Council on the Council's own motion, shall not 
        operate as a stay of disciplinary action unless the Council 
        otherwise orders.
          (4) Scope of review.--
                  (A) In general.--In any proceeding to review such 
                action, after notice and the opportunity for hearing, 
                the Council shall--
                          (i) determine whether the action should be 
                        taken;
                          (ii) affirm, modify, or rescind the 
                        disciplinary sanction; or
                          (iii) remand the case to the Association for 
                        further proceedings.
                  (B) Dismissal of review.--The Council may dismiss a 
                proceeding to review disciplinary action if the Council 
                finds that--
                          (i) the specific grounds on which the action 
                        is based exist in fact;
                          (ii) the action is in accordance with 
                        applicable rules and regulations; and
                          (iii) such rules and regulations are, and 
                        were, applied in a manner consistent with the 
                        purposes of this Act.

SEC. 411. BORROWING AUTHORITY.

  (a) In General.--
          (1) Approval of board of directors.--The Association shall 
        have the authority to borrow as necessary and upon prior 
        approval of the board of directors.
          (2) Terms and conditions.--Any borrowing by the Association 
        shall be made upon such terms and conditions as the board of 
        directors determines, except that any funds so borrowed shall 
        be repaid out of the assessments as collected.
          (3) Pledge of future assessments.--To secure the payment of 
        principal and interest on any borrowing by the Association, the 
        board of directors may pledge future assessments.
  (b) Nonliability of Federal Government.--No provision of this title 
may be construed as--
          (1) obligating the United States Government, directly or 
        indirectly, to provide any funds to any person or entity to 
        honor, reimburse, or otherwise guarantee any obligation or 
        liability of the Association; or
          (2) implying that any obligations or securities of the 
        Association are backed by the full faith and credit of the 
        United States.

SEC. 412. ASSESSMENTS.

  (a) Insurance Producers Subject to Assessment.--Each insurance 
producer that is a member of the Association shall be subject to 
assessments for the costs of considering the application by producer, 
on acceptance as a member, and annually thereafter.
  (b) Amounts Determined by Association.--The amount of any assessment 
under subsection (a) shall be set by the Association by rule and shall 
cover the costs of operation of the Association.

SEC. 413. FUNCTIONS OF THE COUNCIL.

  (a) Administrative Procedure.--Determinations of the Council, for 
purposes of making rules pursuant to section 410, shall be made after 
appropriate notice and opportunity for a hearing and for submission of 
views of interested persons, in accordance with section 553 of title 5, 
United States Code.
  (b) Examinations and Reports.--
          (1) The Council may make such examinations and inspections of 
        the Association and require the Association to furnish it with 
        such reports and records or copies thereof as the Council may 
        consider necessary or appropriate in the public interest or to 
        effectuate the purposes of this title.
          (2) As soon as practicable after the close of each fiscal 
        year, the Association shall submit to the Council a written 
        report relative to the conduct of its business, and the 
        exercise of the other rights and powers granted by this title, 
        during such fiscal year. Such report shall include financial 
        statements setting forth the financial position of the 
        Association at the end of such fiscal year and the results of 
        its operations (including the source and application of its 
        funds) for such fiscal year. The financial statements so 
        included shall be examined by an independent accountant in the 
        same manner as for the financial reports of federally certified 
        insurers under this Act, and shall be accompanied by the report 
        thereon by such accountant. The Council shall transmit such 
        report to the President and the Congress with such comment 
        thereon as the Council determines to be appropriate.
  (c) Delegation of Powers.--
          (1) In general.--The Council may delegate the responsibility 
        for exercising any of the powers under subsection (b) or 
        section 410(f) to any member agency of the Council.
          (2) Oversight of council.--The Council shall have, at all 
        times--
                  (A) the responsibility to supervise and regulate the 
                exercise of any authority delegated under paragraph 
                (1); and
                  (B) the final responsibility for the proper exercise 
                of any such authority.

SEC. 414. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, AND 
                    EMPLOYEES OF THE ASSOCIATION.

  (a) In General.--The Association shall not be deemed to be an insurer 
or insurance producer within the meaning of any State law, rule, 
regulation, or order regulating or taxing insurers, insurance 
producers, or other entities engaged in the business of insurance, 
including provisions imposing premium taxes, regulating insurer 
solvency or financial condition, establishing guaranty funds and 
levying assessments, or requiring claims settlement practices. The 
Association additionally shall be exempt from all taxes, assessments, 
or other levies imposed by any State, municipal, county, or local 
government.
  (b) Liability of the Association, Its Directors, Officers, and 
Employees.--Neither the Association nor any of its directors, officers, 
or employees shall have any liability to any person for any action 
taken or omitted in good faith under or in connection with any matter 
subject to this title.

SEC. 415. RELATIONSHIP TO STATE LAW.

  (a) Preemption of State Laws.--State laws, regulations, provisions, 
or actions purporting to regulate insurance producers shall be 
preempted in the following instances:
          (1) No State shall impede the activities of, take any action 
        against, or apply any provision of law or regulation to, any 
        insurance producer because that insurance producer or any 
        affiliate plans to become, has applied to become, or is, a 
        member of the Association.
          (2) No State shall impose any requirement upon a member of 
        the Association that has the effect of limiting or conditioning 
        that member's activities because of its residence or place of 
        operations including, but not limited to, any requirement that 
        a licensed insurance producer be a resident of a particular 
        State, any requirement that it comply with the conditions of a 
        countersignature law, or any requirement that it pay a 
        different licensing fee based on its residency.
          (3) No State shall impose any licensing, integrity, personal 
        qualification, education, training, experience, or continuing 
        education requirement upon a member of the Association that is 
        different from the criteria for membership in the Association 
        or renewal of such membership.
          (4) No State shall implement the procedures of such State's 
        system of licensing or renewing the licenses of insurance 
        producers in a manner different from authority of the 
        Association under section 405.
  (b) Savings Provision.--Except as provided in subsection (a), no 
provision of this section shall be construed as altering or affecting 
the continuing effectiveness of any law, regulation, provision, or 
action of any State which purports to regulate insurance producers, 
including any such law, regulation, provision, or action which purports 
to regulate unfair trade practices or establish consumer protections.
  (c) Preemption Authority.--If it is unclear whether State laws or 
regulations fall into the categories enumerated in subsection (a), the 
Council shall have the authority, by regulation, to define those State 
laws and regulations that have been preempted by this Act. The Council 
shall also have the authority to issue, after the opportunity for a 
hearing on the record, an order that stays the effect of any State law 
or regulation which is preempted until the Council can complete the 
issuance of a regulation defining such preemption.

SEC. 416. COORDINATION WITH OTHER REGULATORS.

  (a) Coordination With State Insurance Regulators.--The Association 
shall have the authority to--
          (1) issue uniform insurance producer applications and renewal 
        applications that may be used to apply for the issuance or 
        removal of State licenses, while preserving the ability of each 
        State to impose such conditions on the issuance or renewal of a 
        license as are consistent with section 415;
          (2) establish a central clearinghouse through which the 
        members of the Association may apply for the issuance or 
        renewal of licenses in multiple States; and
          (3) establish or utilize a national database for the 
        collection of regulatory information concerning the activities 
        of insurance producers.
  (b) Coordination With the National Association of Securities 
Dealers.--The Association shall coordinate with the National 
Association of Securities Dealers in order to ease any administrative 
burdens that fall on persons that are members of both associations, 
consistent with the purposes of this title and the Federal securities 
laws.

SEC. 417. JUDICIAL REVIEW.

  (a) Jurisdiction.--The appropriate United States district court shall 
have exclusive jurisdiction over litigation involving the Association, 
including disputes between the Association and its members that arise 
under this title. Suits brought in State court involving the 
Association shall be deemed to have arisen under Federal law and 
therefore be subject to jurisdiction in the appropriate United States 
district court.
  (b) Exhaustion of Remedies.--An aggrieved person must exhaust the 
administrative remedies before the Association before it may seek 
judicial review of the Association decision.

SEC. 418. DEFINITIONS.

  For purposes of this title, the following definitions shall apply:
          (1) Insurance.--The term ``insurance'' means any product 
        defined or regulated as insurance by the appropriate State 
        insurance regulatory authority.
          (2) Insurance producer.--The term ``insurance producer'' 
        means any insurance agent or broker, surplus lines broker, 
        insurance consultant, limited insurance representative, and any 
        other person that solicits, negotiates, effects, procures, 
        delivers, renews, continues, or binds policies of insurance or 
        offers advice, counsel, opinions, or services related to 
        insurance.
          (3) State law.--The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action having the 
        effect of law, of any State. A law of the United States 
        applicable only to the District of Columbia shall be treated as 
        a State law rather than a law of the United States.
          (4) State.--The term ``State'' includes any State, the 
        District of Columbia, territory of the United States, and any 
        political subdivision, agency, or instrumentality thereof.

                          Purpose and Summary

    The purpose of H.R. of H.R. 10, the Financial Services 
Competition Act of 1997 (the Act), as reported out of the 
Committee on Banking and Financial Services with an amendment, 
is to establish a comprehensive framework to permit 
affiliations between commercial banks, securities firms, 
insurance companies and, subject to certain limitations, other 
commercial enterprises. In that regard, Title I of the Act 
modernizes and reforms the laws governing our nation's 
financial system. The primary objective of allowing such 
affiliations is to enhance consumer choice in the financial 
services marketplace, level the playing field among providers 
of financial services, and increase competition. The Act 
provides for a number of prudential safeguards designed to 
avoid risk to the Federal deposit insurance funds, protect the 
safety and soundness of insured depository institutions and the 
Federal payments system, and protect consumers. The Act is 
intended to enhance the ability of financial institutions to 
meet the capital and credit needs of the communities in which 
they operate, including underserved communities and 
populations, as well as to make U.S. financial firms more 
competitive both domestically and internationally.
    In recent years, significant developments have occurred 
within the financial services industry, including technological 
advancements and other market innovations, that have replaced 
traditional bank services with those offered by non-insured 
financial institutions, such as securities and insurance firms. 
For example, corporate borrowers are relying less on 
traditional bank loans for their funding needs and more on 
securities issued directly in the marketplace. Additionally, 
Federal bank regulators have taken a piecemeal approach to 
allowing banks to enter into certain areas of insurance and 
securities, resulting in numerous court battles to define 
permissible lines of activities among financial industry 
groupings. In this regard, the evolution in the financial 
services marketplace and regulatory interpretations have 
generated support among various financial industry sectors for 
enacting a financial modernization bill that creates a level 
playing field while maintaining the safety and soundness of the 
U.S. financial system.

                                Title I

    Title I of the bill would remove the antiquated and 
artificial restrictions contained in the Glass-Steagall Act of 
1933 and the Bank Holding Company Act of 1956, allowing 
qualified financial holding companies to control banks, 
securities firms, insurance companies, and other financial 
firms. Securities firms, insurance companies, and financial 
firms would be permitted to own or affiliate with a commercial 
bank. An important aspect of this new framework is that it 
would incorporate functional regulation with the Federal 
Reserve serving as an umbrella regulator to oversee the new 
financial holding company structure. Securities affiliates 
would be required to comply with all applicable Federal 
securities laws, including registration and other requirements 
applicable to brokers-dealers. The Act would also provide that 
insurance affiliates be subject to applicable State insurance 
regulation and supervision. A National Council on Financial 
Services would be created under the Act to monitor innovations 
in the financial services industry, coordinate the activities 
of banking regulators, resolve disputes that may arise between 
Federal and State regulators, issue regulations or orders which 
define ``financial activities,'' and impose restrictions or 
requirements on transactions involving depository institutions, 
affiliates and subsidiaries. From the perspective of small 
community banks, the Act will enable them to offer a full range 
of financial products thereby enhancing their continued 
viability.
    Title I also includes needed reforms to the Federal Home 
Loan Bank System (the System). Specifically, Title I would: 
provide small community banks with greater access to the System 
for advances related to small business, agriculture, and rural 
and low-income community development lending; make System 
membership voluntary; provide a permanent capital structure for 
the System; convert the System's Resolution Funding Corporation 
obligation from a stated dollar amount to a fixed percentage of 
each Federal Home Loan Bank's earnings; and, refocus the 
System's investment mission.

                                Title II

    Title II of the Act amends the securities laws in order to 
provide functional regulation of bank securities activities. 
Under the Act, bank affiliates and subsidiaries will continue 
to be subject to the same regulation as other providers of 
securities products. In addition, banks engaging in securities 
activities, with certain exceptions (primarily related to 
traditional banking activities), are required to register with 
the Securities and Exchange Commission and are subject to the 
registration requirements and regulation if they act as 
investment advisers to registered investment companies under 
the Investment Adviser Act of 1940.

                               Title III

    In reforming the financial services industry, the Committee 
also sought to achieve uniformity among the charters of insured 
depository institutions. In that regard, Title III of the Act 
would require that all Federally-chartered savings associations 
convert to a national bank or State charter within two years 
after the date of enactment, and treat State-chartered savings 
associations as commercial banks for purposes of federal 
banking law. To facilitate the conversion of Federal savings 
associations the Act allows institutions to retain their 
existing investments, affiliations and branches. In addition, 
the Act would merge the Office of Thrift Supervision (OTS) with 
the Office of the Comptroller of the Currency (OCC), and merge 
the Savings Association Insurance Fund (SAIF) and the Bank 
Insurance Fund (BIF).

                                Title IV

    Finally, the Act creates a self regulatory organization, 
the National Association of Registered Agents and Brokers 
(NARAB), with the responsibility of establishing uniform 
licensing requirements for insurance agents and brokers who 
operate on a multistate level. The NARAB board would consist of 
state insurance regulators and other individuals from the 
insurance industry and would be overseen by the National 
Council on Financial Services.

                  Legislative Background and Hearings

    During the last ten years, the Committee has made a number 
of attempts to modernize the nation's banking laws. In 1988, 
the Senate passed S. 1886, the ``Financial Modernization Act of 
1988,'' which would have repealed the provisions of the Glass-
Steagall Act that prohibit affiliations between commercial 
banks and investment banks. That same year the House Banking 
Committee reported out H.R. 5094, the ``Depository Institutions 
Act of 1988.'' This legislation never reached the House floor. 
In 1991, in response to the Bush Administration's call for 
financial services reform, the Senate passed S. 534, the 
``Comprehensive Deposit Insurance Reform and Taxpayer 
Protection Act of 1991.'' On the House side, the Committee 
voted to favorably report H.R. 6, the ``Financial Institutions 
Safety and Consumer Choice Act of 1991,'' which allowed banks 
to affiliate with securities firms, insurance companies, and 
commercial entities under a diversified holding company 
structure. H.R. 6, however, was defeated on the House floor on 
November 11, 1991 by a vote of 89-324. In 1995, the Committee 
reported out H.R. 1062, the ``Financial Services 
Competitiveness Act of 1995'' which allowed banks to affiliate 
with securities firms and engage in activities that are 
financial in nature. Later that year, as part of H.R. 1858, the 
``Financial Institutions Regulatory Relief Act of 1995,'' the 
Committee approved an amendment to the Bank Holding Company Act 
allowing banks to affiliate with insurance companies. Neither 
H.R. 1062 nor the Bank Holding Company Act amendment was 
considered by the full House in the 104th Congress.
    On January 7, 1997, Chairman Leach introduced H.R. 10, the 
Financial Services Competitiveness Act of 1997, which provides 
a framework for major bank modernization legislation to 
increase consumer choice and competition in the nation's 
financial services industry. Building on the progress made 
during Congressional and intra- and inter-industry discussions 
in the 104th Congress, this bill provides expanded powers for 
the banking, securities and insurance industries. On January 7, 
1997, Congresswoman Marge Roukema reintroduced H.R. 268, the 
Depository Institution Affiliation and Thrift Charter 
Conversion Act, which included a new structure for financial 
services holding companies, permissible affiliations, holding 
company oversight, securities activities, and the elimination 
of the savings association charter. On February 11, 1997, 
Congressman Richard Baker introduced H.R. 669, the Depository 
Institution Affiliation Act of 1997, which addresses more 
broadly the issue of mixing banking and commerce and the scope 
of holding company regulations. Eleven hearings were held at 
the full Committee and subcommittee levels.
    The full Committee held five days of hearings on H.R. 10 
and the other legislative proposals to modernize the financial 
services industry. Testifying before the Committee on May 7, 
1997, were James L. Bothwell, Chief Economist, General 
Accounting Office; William T. McConnell, Chairman and CEO, Park 
National Corporation and President-elect of American Bankers 
Association; Bill Sones, President and CEO, State Bank and 
Trust Company and President of Independent Bankers Association 
of America; Paul Schosberg, President, America's Community 
Bankers; and Lawrence R. Uhlick, Executive Director and General 
Counsel, Institute of International Bankers.
    On May 14, 1997, the following testified before the 
Committee: Paul Volcker, Chairman, James D. Wofesohn, Inc.; 
John G. Heimann, Chairman of Global Financial Institutions, 
Merrill Lynch & Co., Inc.; Marc E. Lackritz, President, 
Securities Industry Association; Matthew P. Fink, President, 
Investment Company Institute; Christine Edwards, Executive Vice 
President and General Counsel, Dean Witter, Discover Co., on 
behalf of the Financial Services Council; Jeffrey A. Tassey, 
Senior Vice President of Government and Legal Affairs, American 
Financial Services Association; Gary Hughes, Vice President and 
Chief Counsel of Banking and Securities, American Council of 
Life Insurance; Craig Berrington, Senior Vice President and 
General Counsel, American Insurance Association; William V. 
Irons, Chartered Life Underwriter, Irons & Associates, on 
behalf of the National Association of Life Underwriters and the 
Independent Insurance Agents; Robert A. Gleason, Jr., 
President, Gleason Agency, on behalf of Council of Agents and 
Brokers; Dan R. Wentzel, Chairman and CEO of North American 
Title Insurance Company, Inc., on behalf of American Land Title 
Association; Brent Larsen, Director of Government Affairs, 
Grinnell Mutual Reinsurance Company, on behalf of the National 
Association of Mutual Insurance Companies; Michael P. Grace, 
Agent, Wright & Percy Insurance, on behalf of the National 
Association of Professional Insurance Agents; and Russell A. 
Booth, President, National Association of Realtors.
    Testifying before the Committee on May 21, 1997, were: 
Martin Mayer, Guest Scholar, The Brookings Institute; Peter 
Wallison, Partner of Gibson, Dunn and Crutcher; Allen Fishbein, 
General Counsel, Center for Community Change; John Taylor, 
President and CEO, National Community Reinvestment Coalition; 
and Mary Griffin, Insurance Counsel, Consumers Union.
    Testifying before the Committee on May 22, 1997, were: Alan 
Greenspan, Chairman, Federal Reserve Board; Ricki Helfer, 
Chairman, Federal Deposit Insurance Corporation; Eugene Ludwig, 
Comptroller, Office of the Comptroller of the Currency; Nicolas 
Retsinas, Director, Office of Thrift Supervision; Arthur 
Levitt, Chairman, Securities and Exchange Commission; G. Edward 
Leary, Utah Commissioner of Financial Institutions, on behalf 
of the Conference of State Bank Supervisors; George Nichols, 
III, Kentucky Commissioner of Insurance, on behalf of the 
National Association of Insurance Commissioners; Denise Voight 
Crawford, Texas Commissioner of Securities and President-elect 
of North American Securities Administrators Association; James 
L. Pledger, Texas Commissioner of Savings and Loans and 
Chairman of American Council of State Savings Supervisors; and 
J. Kenneth Blackwell, Ohio State Treasurer, on behalf of the 
National Association of State Auditors, Comptrollers and 
Treasurers.
    On June 3, 1997, the Honorable Robert E. Rubin, Secretary, 
Department of the Treasury along with the Honorable John D. 
Hawke, Jr., Under Secretary of the Department of the Treasury, 
testified before the Committee. On this same day, the 
Department of the Treasury unveiled a proposal on financial 
modernization before the full committee. The Department also 
submitted a report to Congress pursuant to section 2709 of the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996 
on its legislative recommendations to merge the thrift charter 
with the bank charter. The report was to be submitted by March 
31, 1997. Generally, the Treasury's proposal would eliminate 
barriers to affiliations between banks and other financial services 
firms, and broaden the ability of banking organizations to offer 
financial products and services. The Treasury Department's proposal 
provided two alternatives concerning the permissibility of bank holding 
companies engaging in nonfinancial activities. One alternative would 
retain the present restrictions on banking and commerce. Under this 
proposal, the thrift charter would not be abolished. Another 
alternative would allow a fixed percentage of a company's revenues to 
come from nonfinancial activities. The Treasury Department made no 
recommendation on what the appropriate percentage should be. The thrift 
charter would be merged with the bank charters under this alternative.
    The Financial Institutions and Consumer Credit Subcommittee 
held three days of hearings on financial services 
modernization.
    Testifying before the Subcommittee on February 11, 1997, 
were: William T. McConnell, Chairman and CEO, Park National 
Corporation and President-elect of American Bankers 
Association; Weller Meyer, President and CEO, Acacia Federal 
Savings Bank, on behalf of America's Community Bankers; Craig 
Kelly, Senior Vice President, Banc One Corporation, on behalf 
of the Consumer Bankers Association; Alfred Pollard, Senior 
Director of Legislative Affairs, Bankers Roundtable; Jeffrey A. 
Tassey, Senior Vice President of Government and Legal Affairs, 
American Financial Services Association; Joseph C. Bracewell, 
Chairman and CEO, Century National Bank, on behalf of the 
Independent Bankers Association of America; Matthew P. Fink, 
President, Investment Company Institute; Samuel J. Baptista, 
President, Financial Services Council; Marc E. Lackritz, 
President, Securities Industry Association; Roy C. Albertalli, 
Vice President and Associate General Counsel, Metropolitan Life 
Insurance Company, on behalf of the American Council of Life 
Insurance; and James R. Klagholz, Co-owner, C.N. Sterling 
Associates, Inc., on behalf of the Independent Insurance Agents 
of America.
    Testifying before the Subcommittee on February 13, 1997, 
were: Alan Greenspan, Chairman, Federal Reserve Board; Eugene 
Ludwig, Comptroller, Office of the Comptroller of the Currency; 
Ricki Helfer, Chairman, Federal Deposit Insurance Corporation; 
Arthur Levitt, Chairman, Securities and Exchange Commission; 
and Nicolas Retsinas, Interim Director, Office of Thrift 
Supervision.
    On February 25, 1997, the Subcommittee received testimony 
for the record from Denise Voigt Crawford, Texas Securities 
Commissioner, President-Elect, North American Securities 
Administrators Association.
    Testifying before the Subcommittee on February 25, 1997, 
were: Paul Volcker, Chairman, James D. Wolfesohn, Inc.; Edmund 
Mierzwinski, Consumer Program Director, U.S. PIRG; Mary 
Griffin, Insurance Counsel, Consumers Union; Allen Fishbein, 
General Counsel, Center for Community Change; John Taylor, 
President and CEO, National Community Reinvestment Coalition; 
Michael Fink, National Association of Home Builders; and James 
L. Pledger, Chairman, American Council of State Savings 
Supervisors.
    The Capital Markets, Securities and Government Sponsored 
Enterprises Subcommittee held three days of hearings on 
financial services modernization.
    Testifying before the Subcommittee on March 5, 1997, were: 
Euguene Ludwig, Comptroller, Office of the Comptroller of the 
Currency; and Ricki Helfer, Chairman, Federal Deposit Insurance 
Corporation.
    Testifying before the Subcommittee on March 12, 1997, were: 
The Honorable James A. Leach, Chairman, Committee on Banking 
and Financial Services; Peter Wallison, Partner of Gibson Dunn 
& Crutcher and former General Counsel of the Treasury; and Dr. 
George G. Kaufman, John Smith Professor of Finance and 
Economics at the College of Business, Loyola University, 
Chicago, Illinois.
    Testifying before the Subcommittee on March 19, 1997, was 
Alan Greenspan, Chairman, Federal Reserve Board.

                   Committee Consideration and Votes

                      [rule xi, clause 2(l)(2)(b)]

    On June 17, 1997, the Committee met in open session to mark 
up financial modernization legislation. The Committee 
considered as original text for purposes of amendment a 
Committee Print which incorporated provisions of H.R. 10, H.R. 
268, H.R. 669, and Treasury's legislative proposal entitled 
``The Financial Services Competition Act of 1997.'' The 
Committee considered a number of amendments to the print, 
accepting many of them by voice vote. Roll call votes were 
taken on the following amendments.
    The Committee adopted by recorded vote an amendment offered 
by Reps. Roukema, Baker, Vento, and LaFalce to permit a bank 
holding company to affiliate with a nonfinancial company in an 
amount that is no greater than 15 percent of the bank holding 
company's domestic gross revenues and prohibits the commercial 
firm from having more than $750,000,000 in assets at the time 
of the affiliation. The amendment passed 35 to 19.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mrs. Roukema                        Mr. Bereuter
Mr. Baker                           Mr. Campbell
Mr. Lazio                           Mr. Lucas
Mr. Bachus                          Mr. Metcalf
Mr. Castle                          Mr. Riley
Mr. King                            Mr. Gonzalez
Mr. Royce                           Mr. Kanjorski
Mr. Ney                             Mr. Kennedy
Mr. Ehrlich                         Ms. Waters
Mr. Barr                            Mr. Sanders
Mr. Fox                             Mrs. Maloney
Mrs. Kelly                          Mr. Gutierrez
Dr. Paul                            Ms. Roybal-Allard
Dr. Weldon                          Mr. Barrett
Mr. Ryun                            Ms. Velazquez
Mr. Cook                            Mr. Watt
Mr. Snowbarger                      Mr. Jackson
Mr. Hill                            Ms. Carson
Mr. Sessions
Mr. LaTourette
Mr. Foley
Mr. Jones
Mr. LaFalce
Mr. Vento
Mr. Schumer
Mr. Frank
Mr. Flake
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
Ms. McKinney
Ms. Kilpatrick
Mr. Maloney
Ms. Hooley

    On June 18, 1997, the Committee approved, by recorded vote, 
an amendment offered by Mr. McCollum to allow commercial firms 
to control a bank provided that not more than 15% of the firm's 
gross domestic revenues are derived from the bank and that the 
bank must be under $500 million in assets. The amendment passed 
25 to 23.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mr. Baker                           Mrs. Roukema
Mr. Bachus                          Mr. Bereuter
Mr. King                            Mr. Lazio
Mr. Royce                           Mr. Campbell
Mr. Ney                             Mr. Lucas
Mr. Ehrlich                         Mr. Metcalf
Mr. Barr                            Mrs. Kelly
Mr. Fox                             Mr. Riley
Dr. Paul                            Mr. Vento
Dr. Weldon                          Mr. Kennedy
Mr. Cook                            Ms. Waters
Mr. Snowbarger                      Mr. Sanders
Mr. Hill                            Mr. Gutierrez
Mr. Sessions                        Ms. Roybal-Allard
Mr. LaTourette                      Mr. Barrett
Mr. Manzullo                        Ms. Velazquez
Mr. Foley                           Mr. Watt
Mr. LaFalce                         Mr. Hinchey
Mr. Frank                           Mr. Bentsen
Mr. Kanjorski                       Mr. Jackson
Mr. Flake                           Ms. Hooley
Mr. Ackerman                        Ms. Carson
Ms. Kilpatrick
Mr. Maloney

    The Committee also approved, by recorded vote, an amendment 
offered by Mr. Kennedy requiring qualified bank holding 
companies to be in compliance with the Fair Housing Act with 
regard to its insurance activities. The amendment passed 20 to 
19.
        YEAS                          NAYS
Mr. Leach                           Mr. McCollum
Mr. Campbell                        Mrs. Roukema
Mr. LaTourette                      Mr. Bereuter
Mr. LaFalce                         Mr. Baker
Mr. Vento                           Mr. Castle
Mr. Frank                           Mr. Royce
Mr. Kanjorski                       Mr. Lucas
Mr. Kennedy                         Mr. Metcalf
Mr. Waters                          Mr. Ney
Mr. Sanders                         Mr. Barr
Mr. Maloney                         Mrs. Kelly
Mr. Gutierrez                       Dr. Weldon
Ms. Roybal-Allard                   Mr. Ryun
Mr. Barrett                         Mr. Cook
Mr. Watt                            Mr. Snowbarger
Mr. Hinchey                         Mr. Riley
Mr. Bentsen                         Mr. Sessions
Ms. Kilpatrick                      Mr. Manzullo
Mr. Maloney                         Mr. Jones
Ms. Hooley

    An amendment offered by Mr. Kennedy to require the National 
Council on Financial Services to collect information regarding 
race, gender and ethnicity of bank holding company affiliate 
sales and underwriting of auto, homeowners and small business 
insurance policies was defeated by roll call vote of 16 to 18.
        YEAS                          NAYS
Mr. LaFalce                         Mr. Leach
Mr. Vento                           Mr. McCollum
Mr. Frank                           Mrs. Roukema
Mr. Kennedy                         Mr. Bereuter
Mr. Sanders                         Mr. Baker
Mrs. Maloney                        Mr. Lazio
Mr. Gutierrez                       Mr. Bachus
Ms. Roybal-Allard                   Mr. Castle
Mr. Barrett                         Mr. Campbell
Mr. Watt                            Mr. Barr
Mr. Hinchey                         Mrs. Kelly
Mr. Bentsen                         Dr. Weldon
Ms. Kilpatrick                      Mr. Ryun
Mr. Maloney                         Mr. Cook
Ms. Hooley                          Mr. Snowbarger
Ms. Carson                          Mr. Riley
                                    Mr. LaTourette
                                    Mr. Manzullo

    On June 19, 1997, the Committee approved an amendment by 
Mr. Bentsen requiring persons selling securities products 
within a bank to register with the National Association of 
Securities Dealers and to comply with NASD regulations. This 
amendment was later substituted by a Watt amendment limiting 
the applications of the amendment to a bank employees 
securities sales. The Bentsen amendment passed 18 to 14.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mr. Baker                           Mrs. Roukema
Mr. Lazio                           Mr. Bereuter
Mr. Bachus                          Mr. Castle
Mr. Campbell                        Mr. Royce
Mr. Ehrlich                         Mr. Lucas
Dr. Weldon                          Mr. Metcalf
Mr. Hill                            Mr. Barr
Mr. Sessions                        Mrs. Kelly
Mr. LaFalce                         Mr. Ryun
Mr. Vento                           Mr. Cook
Mr. Sanders                         Mr. LaTourette
Mr. Barrett                         Mr. Manzullo
Mr. Watt                            Mr. Frank
Mr. Bentsen
Ms. Kilpatrick
Mr. Maloney
Ms. Hooley

    The Committee approved an amendment offered by Mr. LaFalce 
to strengthen the consumer protection provisions of the bill 
with regard to disclosure requirements, prohibition of 
misrepresentation, anti-coercion, physical segregation of 
banking from non-banking activities, suitability standards, a 
consumer complaint mechanism and privacy issues. The amendment 
passed 33 to 7.
        YEAS                          NAYS
Mr. Leach                           Mr. McCollum
Mrs. Roukema                        Mr. Baker
Mr. Bereuter                        Mr. Royce
Mr. Lazio                           Mr. Barr
Mr. King                            Dr. Paul
Mr. Campbell                        Dr. Weldon
Mr. Metcalf                         Mr. Ryun
Mr. Ney
Mr. Ehrlich
Mrs. Kelly
Mr. Cook
Mr. Snowbarger
Mr. Hill
Mr. LaTourette
Mr. Manzullo
Mr. Foley
Mr. Jones
Mr. LaFalce
Mr. Vento
Mr. Kanjorski
Mr. Kennedy
Ms. Waters
Mrs. Maloney
Ms. Roybal-Allard
Mr. Barrett
Mr. Watt
Mr. Hinchey
Mr. Bentsen
Mr. Jackson
Ms. Kilpatrick
Mr. Maloney
Ms. Hooley
Ms. Carson

    An amendment in the nature of a substitute to Title III 
(Thrift Charter Conversion) by Reps. McCollum, Roukema, 
Schumer, and Ehrlich to broaden the grandfathered rights of 
converted thrifts was adopted by a vote of 42 to 4.
        YEAS                          NAYS
Mr. Leach                           Mr. Campbell
Mr. McCollum                        Dr. Paul
Mrs. Roukema                        Mr. Barrett
Mr. Bereuter                        Mr. Hinchey
Mr. Baker
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Lucas
Mr. Metcalf
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Fox
Mrs. Kelly
Mr. Ryun
Mr. Cook
Mr. Snowbarger
Mr. Hill
Mr. Sessions
Mr. LaTourette
Mr. Manzullo
Mr. Foley
Mr. Jones
Mr. Gonzalez
Mr. LaFalce
Mr. Vento
Mr. Schumer
Mr. Kanjorski
Mr. Kennedy
Mr. Flake
Ms. Waters
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Watt
Mr. Bentsen
Mr. Jackson
Ms. Kilpatrick
Ms. Holley

    An amendment offered by Ms. Waters to extend the Community 
Reinvestment Act to non-bank subsidiaries was defeated by a 
vote of 18 to 25.
        YEAS                          NAYS
Mr. LaFalce                         Mr. Leach
Mr. Vento                           Mr. McCollum
Mr. Frank                           Mrs. Roukema
Mr. Kanjorski                       Mr. Bereuter
Mr. Kennedy                         Mr. Baker
Ms. Waters                          Mr. Lazio
Mr. Sanders                         Mr. Bachus
Mr. Gutierrez                       Mr. Castle
Ms. Roybal-Allard                   Mr. Campbell
Mr. Barrett                         Mr. Royce
Ms. Velazquez                       Mr. Metcalf
Mr. Watt                            Mr. Ehrlich
Mr. Hinchey                         Mr. Barr
Mr. Bentsen                         Mr. Fox
Mr. Jackson                         Mrs. Kelly
Ms. Kilpatrick                      Dr. Weldon
Ms. Hooley                          Mr. Ryun
Ms. Carson                          Mr. Cook
                                    Mr. Snowbarger
                                    Mr. Hill
                                    Mr. Sessions
                                    Mr. LaTourette
                                    Mr. Manzullo
                                    Mr. Foley
                                    Mr. Jones

    An amendment offered by Ms. Waters to require that 
subsidiary depository institutions and non-bank affiliates of 
eligible bank holding companies meet community credit and 
consumer needs was defeated by a vote of 13 to 27 with 1 
present.

                                                                        
         YEAS                    NAYS                   PRESENT         
                                                                        
Mr. Frank               Mr. Leach              Mr. Vento                
Mr. Kanjorski           Mr. McCollum           .........................
Mr. Kennedy             Mrs. Roukema           .........................
Ms. Waters              Mr. Bereuter           .........................
Mr. Sanders             Mr. Baker              .........................
Mr. Gutierrez           Mr. Lazio              .........................
Mr. Barrett             Mr. Castle             .........................
Ms. Velazquez           Mr. King               .........................
Mr. Watt                Mr. Campbell           .........................
Mr. Hinchey             Mr. Royce              .........................
Mr. Jackson             Mr. Lucas              .........................
Ms. Kilpatrick          Mr. Metcalf            .........................
Ms. Carson              Mr. Ney                .........................
                        Mr. Barr               .........................
                        Mr. Fox                .........................
                        Mrs. Kelly             .........................
                        Dr. Paul               .........................
                        Dr. Weldon             .........................
                        Mr. Cook               .........................
                        Mr. Snowbarger         .........................
                        Mr. Hill               .........................
                        Mr. Sessions           .........................
                        Mr. LaTourette         .........................
                        Mr. Manzullo           .........................
                        Mr. Bentsen            .........................
                        Mr. Maloney            .........................
                        Ms. Hooley             .........................
                                                                        

    An amendment by Mr. LaFalce to Mr. McCollum's Title III 
substitute to delete the thrift charter conversion provisions 
of the bill was defeated by a vote of 23 to 26.
        YEAS                          NAYS
Mr. King                            Mr. Leach
Mr. Royce                           Mr. McCollum
Mr. Metcalf                         Mrs. Roukema
Mr. Fox                             Mr. Bereuter
Dr. Paul                            Mr. Baker
Mr. Ryun                            Mr. Lazio
Mr. Snowbarger                      Mr. Bachus
Mr. Sessions                        Mr. Castle
Mr. Jones                           Mr. Campbell
Mr. Gonzalez                        Mr. Lucas
Mr. LaFalce                         Mr. Ney
Mr. Schumer                         Mr. Ehrlich
Mr. Kennedy                         Mr. Barr
Mr. Flake                           Mrs. Kelly
Ms. Waters                          Dr. Weldon
Mrs. Maloney                        Mr. Cook
Mr. Gutierrez                       Mr. Hill
Ms. Roybal-Allard                   Mr. LaTourette
Mr. Hinchey                         Mr. Manzullo
Mr. Bentsen                         Mr. Foley
Mr. Jackson                         Mr. Vento
Ms. Kilpatrick                      Mr. Kanjorski
Ms. Carson                          Mr. Barrett
                                    Mr. Watt
                                    Mr. Maloney
                                    Ms. Hooley

    A recorded vote also occurred on a motion by Mr. McCollum 
to table a motion challenging the germaneness ruling of the 
chair in regards to an amendment offered by Dr. Paul. The 
motion to table was approved by a vote of 35 to 12.
        YEAS                          NAYS
Mr. Leach                           Mr. Royce
Mr. McCollum                        Mr. Ney
Mrs. Roukema                        Mr. Barr
Mr. Bereuter                        Dr. Paul
Mr. Baker                           Mr. Ryun
Mr. Lazio                           Mr. Cook
Mr. Castle                          Mr. Snowbarger
Mr. King                            Mr. Hill
Mr. Campbell                        Mr. Sessions
Mr. Lucas                           Mr. Manzullo
Mr. Metcalf                         Mr. Jones
Mr. Ehrlich                         Mrs. Maloney
Mr. Fox
Mrs. Kelly
Dr. Weldon
Mr. LaTourette
Mr. Gonzalez
Mr. LaFalce
Mr. Vento
Mr. Schumer
Mr. Kanjorski
Mr. Kennedy
Mr. Flake
Ms. Waters
Mr. Sanders
Mr. Gutierrez
Mr. Barrett
Mr. Watt
Mr. Hinchey
Mr. Bentsen
Mr. Jackson
Ms. Kilpatrick
Mr. Maloney
Ms. Hooley
Ms. Carson

    On June 20, 1997 the Committee defeated an amendment by Dr. 
Paul authorizing a study and disclosure of the cost of 
regulation of the consumer disclosure provisions of the Act was 
defeated by a vote of 9 to 20.
        YEAS                          NAYS
Mr. Leach                           Mrs. Roukema
Mr. Baker                           Mr. Castle
Mr. Ney                             Mr. Campbell
Dr. Paul                            Mrs. Kelly
Mr. Cook                            Mr. LaTourette
Mr. Snowbarger                      Mr. Manzullo
Mr. Hill                            Mr. LaFalce
Mr. Sessions                        Mr. Vento
Mrs. Maloney                        Mr. Kanjorski
                                    Mr. Flake
                                    Ms. Waters
                                    Mr. Sanders
                                    Mr. Barrett
                                    Mr. Watt
                                    Mr. Hinchey
                                    Mr. Bentsen
                                    Mr. Jackson
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson

    An amendment offered by Ms. Waters to ensure that state 
consumer protection laws are not preempted was defeated by a 
vote of 25 to 25.
        YEAS                          NAYS
Mr. Bachus                          Mr. Leach
Mr. Campbell                        Mr. McCollum
Mr. Snowbarger                      Mrs. Roukema
Mr. Gonzalez                        Mr. Bereuter
Mr. LaFalce                         Mr. Baker
Mr. Frank                           Mr. Lazio
Mr. Kanjorski                       Mr. Castle
Mr. Kennedy                         Mr. King
Mr. Flake                           Mr. Royce
Ms. Waters                          Mr. Lucas
Mr. Sanders                         Mr. Metcalf
Mrs. Maloney                        Mr. Ney
Mr. Gutierrez                       Mr. Ehrlich
Ms. Roybal-Allard                   Mr. Barr
Mr. Barrett                         Mrs. Kelly
Ms. Velazquez                       Dr. Paul
Mr. Watt                            Dr. Weldon
Mr. Hinchey                         Mr. Ryun
Mr. Bentsen                         Mr. Cook
Mr. Jackson                         Mr. Riley
Ms. McKinney                        Mr. Hill
Ms. Kilpatrick                      Mr. Sessions
Mr. Maloney                         Mr. LaTourette
Ms. Hooley                          Mr. Manzullo
Ms. Carson                          Mr. Jones

    The Committee brought up H.R. 10 and struck everything 
after the enacting clause and inserted in lieu thereof the 
Committee Print, as amended. The motion passed by voice vote.
    The Committee favorably reported H.R. 10 as amended to the 
full House by a vote of 28 to 26.
        YEAS                          NAYS
Mr. Leach                           Mr. Bereuter
Mr. McCollum                        Mr. Campbell
Mrs. Roukema                        Mr. Royce
Mr. Baker                           Mr. Lucas
Mr. Lazio                           Mr. Metcalf
Mr. Bachus                          Mr. Ney
Mr. Castle                          Mr. Fox
Mr. King                            Dr. Paul
Mr. Ehrlich                         Mr. Ryun
Mr. Barr                            Mr. Riley
Mrs. Kelly                          Mr. Hill
Dr. Weldon                          Mr. Jones
Mr. Cook                            Mr. Gonzalez
Mr. Snowbarger                      Mr. Frank
Mr. Sessions                        Mr. Kanjorski
Mr. LaTourette                      Ms. Waters
Mr. Manzullo                        Mr. Sanders
Mr. Foley                           Mrs. Maloney
Mr. LaFalce                         Mr. Gutierrez
Mr. Vento                           Ms. Roybal-Allard
Mr. Schumer                         Mr. Barrett
Mr. Kennedy                         Ms. Velazquez
Mr. Flake                           Mr. Hinchey
Mr. Watt                            Mr. Jackson
Mr. Bentsen                         Ms. Kilpatrick
Ms. McKinney                        Ms. Carson
Mr. Maloney
Ms. Hooley

                      Committee Oversight Findings

    In compliance with clause 1(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings and recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(d) of rule of the Rules of the House of 
Representatives.

                        Constitutional Authority

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the constitutional authority 
for Congress to enact this legislation is derived from the 
interstate commerce clause (Clause 3, Article I). In addition, 
the power ``to coin money'' and ``regulate the value thereof'' 
provided for in Clause 5, Article I, has been broadly construed 
to allow for the Federal regulation of the provision of credit 
via the financial services industry.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (P.L. 104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

    Congressional Budget Office Cost Estimate and Unfunded Mandates 
                                Analysis

    The CBO cost estimates and unfunded mandates analysis for 
the bill were not available at the time the report was filed, 
but will be provided in a subsequent addendum to the report.

                      Section-by-Section Analysis

Section 1. Short title; purposes

    Section 1 designates the Bill as the ``Financial Services 
Competition Act of 1997'' (the Act). Further, the section 
states that the purposes of the Act are: (1) to ensure 
continued safety and soundness of depository institutions; (2) 
to eliminate the legal barriers to affiliations between 
depository institutions, securities firms, insurance companies, 
and other financial services providers through a prudential 
framework; (3) to enhance competition in the financial services 
industry; (4) to enhance the availability of financial services 
to all citizens and all geographic areas; (5) to enhance the 
competitiveness of United States financial service providers 
internationally; and (6) to ensure compliance by depository 
institutions with the provisions of the Community Reinvestment 
Act.

  Title I--Powers and Affiliations of Insured Depository Institutions

     subtitle a--removing barriers to affiliations between insured 
        depository institutions and other financial institutions

Section 101. Anti-affiliation provisions of Glass-Steagall Act repealed

    Section 101 repeals section 20 and amends section 32 of the 
Banking Act of 1933. (Sections 16, 20, 21, and 32 of the 
Banking Act of 1933 are known as the ``Glass-Steagall Act.'')
    Section 20 currently prohibits any bank that is a member of 
the Federal Reserve System from affiliating with any company 
that is ``engaged principally in the issue, flotation, 
underwriting, public sale or distribution'' of securities. 12 
U.S.C. Sec. 377. The effect of repealing section 20 is to 
permit affiliations between banks and securities firms 
regardless of the type or volume of securities activities 
conducted by the firm. These affiliations can occur either 
through a nonbank subsidiary of a holding company or through an 
operating subsidiary of a bank. However, operating subsidiaries 
may not engage in merchant banking activities.
    Section 32 currently prohibits any officer, director, or 
employee of a company ``primarily engaged in the issue, 
flotation, underwriting, public sale, or distribution'' of 
securities from serving simultaneously as an officer, director, 
or employee of any member bank, except as allowed by the Board. 
12 U.S.C. Sec. 78. Repealing section 32 will permit banks and 
securities firms to have interlocking officers, directors, and 
employees.

Section 102. Repeal of activity restrictions of Bank Holding Company 
        Act of 1956

    Section 102 repeals subsections (a), (b), (c), (e), (h), 
(i), and (j) of section 4 of the Bank Holding Company Act of 
1956 (BHCA), which generally restrict the activities that a 
bank holding company can conduct directly or through its 
nonbank subsidiaries. Section 102 makes a number of other 
technical and conforming amendments made necessary by the 
repeal of section 4.

Section 103. Qualifying bank holding companies

    Section 103 creates a new section 6 of the BHCA, entitled 
``Qualifying Bank Holding Companies.'' Section 6 establishes 
the framework for affiliations between banks and securities 
firms, insurance companies, and other financial entities. The 
framework adopted in section 6 is significantly different than 
that currently found in section 4 of the BHCA. Recognizing that 
banks, securities firms, insurance companies, and other 
financial services providers are frequently offering the same 
or functionally similar products and services, section 6 
greatly expands permissible affiliations for bank holding 
companies from the current requirement that affiliations must 
be ``closely related to banking'' to those that are ``financial 
in nature.'' Section 6 contains a broad list of activities that 
are deemed by statute to be ``financial in nature.'' In 
addition, certain limited affiliations also are permitted with 
nonfinancial firms. These expanded financial and nonfinancial 
affiliations are permissible for holding companies that meet 
the criteria set forth for qualifying bank holding companies. 
Holding companies that wish to limit their activities to those 
that are permissible under section 4 of the BHCA as of the date 
of enactment (other than engaging in underwriting securities 
that a national bank may not underwrite) may do so without 
meeting the requirements for being a qualifying bank holding 
company.
            a. Qualifying bank holding companies
    As set forth in section 6(a), a qualifying bank holding 
company must meet the following criteria. All of the holding 
company's subsidiary depository institutions must be well 
capitalized, well managed, have a satisfactory or better rating 
under the Community Reinvestment Act (CRA) as of the most 
recent examination of the depository institution, and have a 
demonstrable record of providing low-cost lifeline bank 
accounts. In addition, a holding company and any of its 
affiliates that underwrite or sell annuities or insurance must 
be in compliance with any applicable consent decree filed in 
Federal court or any settlement agreement relating to a 
violation of the Fair Housing Act. This section grants the 
Board of Governors of the Federal Reserve System (the Board) 
the authority to exempt, on a case-by-case basis, bank holding 
companies from meeting the condition relating to the Fair 
Housing Act.
    In order to be a qualifying bank holding company, not less 
than 85% of the bank holding company's domestic gross revenues 
must be derived from activities that are ``financial in 
nature.'' Thus, a bank holding company is permitted to engage 
in nonfinancial activities provided that such activities do not 
comprise more than 15% of the company's domestic gross 
revenues. A qualifying bank holding company may not become 
affiliated with a nonfinancial company that has consolidated 
assets in excess of $750 million. a subsidiary depository 
institution of a qualifying bank holding company may not engage 
in a covered transactions (as defined in section 23A of the 
Federal Reserve Act) with any affiliate engaged in nonfinancial 
activities.
    A bank holding company that meets the requirements set 
forth above must file a declaration with the Board that it 
meets the criteria for being a qualifying bank holding company.
            b. Financial activities
    Section 6(a)(3) contains a list of activities that are 
deemed to be ``financial.'' In addition, the National Council 
on Financial Services (created by section 121 of the Act) may 
determine that additional activities are ``financial 
activities'' or ``related to a financial activity'' by taking 
into account the purposes of the Act, changes in the market in 
which bank holding companies compete, changes in technology for 
delivering financial services, and whether such activity is 
necessary to allow bank holding companies and their affiliates 
to: (1) compete effectively with any company seeking to provide 
financial services in the U.S.; (2) use any available or 
emerging technological means including any application 
necessary to protect the security or efficacy of systems for 
the transmission of data or financial transactions; and (3) 
offer customers any available or emerging technological means 
for using financial services.
            c. Authority to engage in financial activities
    Section 6(b) provides that a qualifying bank holding 
company can engage, directly or through a subsidiary that is 
not an insured depository institution (or subsidiary thereof), 
in any activity to the extent permissible under this Act 
without giving notice to or receiving approval from the Board. 
However, acquisitions of depository institutions remain subject 
to the approval requirements under section 3 of the BHCA.
            d. Nonqualifying bank holding companies
    A bank holding company that is not a qualifying bank 
holding company may engage, directly or through a subsidiary 
that is not an insured depository institution (or subsidiary 
thereof), only in managing and controlling depository 
institutions and in any activity that was permissible under 
section 4(c) of the BHCA before the enactment of the Act other 
than in underwriting securities that a national bank may not 
underwrite, except as otherwise provided by law.
            e. Noncompliance with the criteria for qualifying bank 
                    holding companies
    Section 6(d) sets out the procedures to be followed if a 
qualifying bank holding company fails to meet the requirements 
set out in section 6(a) for such companies. If the Board finds 
that a qualifying bank holding company is not in compliance 
with the requirements contained in section 6(a), the Board must 
provide notice to the company. The company must, within 45 days 
of receipt of such notice (or such additional period as the 
Board must permit) execute an agreement with the Board to 
comply with the requirements. If a company has not met the 
conditions within 180 days of receipt of the notice, the Board 
can require a company to either divest control of any 
subsidiary depository institution or cease activities (other 
than through a depository institution or subsidiary thereof) 
that are broader than the activities that were permissible 
under section 4(c) of the BHCA. During this period, a bank 
holding company may continue to engage in financial activities 
authorized for qualifying bank holding companies unless ordered 
by the Board to restrict or to case engaging in such 
activities.
            f. Internal controls
    Section 6(c) requires a qualifying bank holding company to 
have appropriate internal controls to assure that its 
procedures for identifying financial and operational risks 
within the company and its subsidiaries that are not insured 
depository institutions (or subsidiaries thereof) adequately 
protect the company's subsidiary insured depository 
institutions from such risks and that it has reasonable 
policies and procedures to preserve the separate corporate 
identity and limited liability of the company and its 
subsidiaries for the protection of the subsidiary insured 
depository institutions.
            g. Grandfather rights
    Existing grandfather rights under section 4(c) (9) and 
(13), and (4)(d) of the BHCA are transferred to section 6 of 
the BHCA. Moreover, section 103(b) provides a grandfather 
provision to permit companies to continue to hold shares of an 
affiliate that the company held pursuant to an exception under 
section 4 of the BHCA.
            h. Limited purpose banks
    Sections 6(g) and (h) apply to limited purpose banks. 
Limited purpose banks are banks that do not accept demand 
deposits and make commercial loans. Prior to 1987, limited 
purpose banks were not subject to the BHCA. The Competitive 
Equality Amendments of 1987 grandfathered the exemption for 
limited purpose banks in existence at the time. In order to 
retain their exemption, grandfathered banks are required to 
comply with certain activities restrictions.
    Specifically, limited purpose banks currently are now 
allowed to engage in any activity in which it was not engaged 
in as of March 5, 1987. Section 6(g) permits well capitalized 
and well managed limited purpose banks to engage in any banking 
activity, but maintains the restriction whereby limited purpose 
banks are permitted to either accept demand deposits or make 
commercial loans, but not both. Limited purpose banks that 
accept demand deposits would continue to be restricted in their 
ability to engage in making traditional commercial loans, but 
the section would permit them to issue corporate credit cards 
(e.g., cards used by business employees for travel and 
entertainment expenses). This section also amends current law 
to permit limited purpose banks to cross market affiliate 
products.
    Current law required divestiture of a limited purpose bank 
that violates the established activities restrictions. Section 
6(g) amends current law to permit limited purpose banks to 
avoid divestiture by correcting violations within six months 
upon receiving notice from the Board.

Section 104. Certain State laws preempted

    Section 104 prohibits States from preventing or restricting 
an insured depository institution or wholesale financial 
institution (as authorized in section 161 of the Act) from 
being affiliated with any entity as authorized by the Act or 
any other provision of law or from engaging, directly or 
indirectly or in conjunction with such affiliate, in any 
activity authorized by the Act or any provision of law.

Section 105. Mutual bank holding companies authorized

    Section 105 amends the BHCA to expand the types of bank 
holding companies in mutual form to which the BHCA applies. 
Such mutual bank holding companies will be regulated similarly 
to other bank holding companies.

Section 106. Companies not engaged in activities financial in nature

    Section 106 adds a new section 6(k) to the BHCA which 
permits a company that is engaged predominantly in nonfinancial 
activities to control a qualifying bank holding company. Such 
company that chooses to control a qualifying bank holding 
company shall not become considered as a bank holding company 
for the purposes of this Act provided that: (1) the company 
does not control more than one bank (with certain limited 
exception), (2) the total consolidated assets of the bank at 
the time it is acquired by the company do not exceed $500 
million, (3) the bank has been chartered for at least five 
years prior to the date of acquisition by the company, and (4) 
the gross revenue of the bank do not exceed 15% of the 
consolidated domestic gross revenues of the company. The 
company can only control the bank through a qualifying bank 
holding company. Therefore, the bank must be a subsidiary of a 
qualifying bank holding company for so long as the company 
controls the bank. In addition, the bank is not permitted to 
engage in covered transactions (as defined in section 23A of 
the Federal Reserve Act) with any affiliate engaged in 
nonfinancial activities.
    If the Board finds that a company is not in compliance with 
the provisions of this subsection, the Board may apply the same 
enforcement authority it is granted under section 103 of the 
Act with respect to qualifying bank holding companies that are 
in noncompliance with the established requirements.

Section 107. Amendment to ensure that banks acquired by other entities 
        do not become deposit production offices

    Section 107 applies the provisions of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act regarding 
deposit production offices and out-of-state lending to any 
interest branch established or acquired under this Act. In 
addition, this section expands the definition of interstate 
branch for purposes of the deposit production provisions to 
include all branches of a bank owned by an out-of-state bank 
holding company.

Section 108. Clarification of applicability of branch closure 
        requirements in interstate banking operations

    Section 108 applies the provisions of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act regarding 
branch closures by an interstate bank to any branch of a bank 
that is controlled by an out-of-state bank holding company.

                   SUBTITLE B--ADDITIONAL SAFEGUARDS

Section 111. Firewall safeguards

    Section 111 permits the Office of the Comptroller of the 
Currency (OCC), the Board, and the Federal Deposit Insurance 
Corporation (FDIC) to impose restrictions on transactions 
between a bank and a subsidiary and the Board to impose 
restrictions on transactions between a bank and an affiliate. 
Such restrictions may be imposed if the effect would be to 
avoid significant risk to the safety and soundness of a bank or 
to the Federal deposit insurance fund. Restrictions also may be 
imposed for the purpose of enhancing the financial stability of 
bank holding companies, avoiding conflicts of interest, 
enhancing the privacy of customers, and promoting the 
application of national treatment and equality of competitive 
opportunity between domestic and foreign bank holding 
companies.
    Each agency is required to regularly review the continuing 
need for any such restrictions that have been imposed.

Section 112. Consumer protection

    Section 112 requires the Federal banking agencies to issue 
joint regulations, within three months after the effective date 
of the Act, regarding bank retail sales of nondeposit products. 
The regulations to be issued under section 112 are to apply to 
retail sales, solicitations, advertising, and offers of 
nondeposit products by any insured depository institution or 
any person who is engaged in such activities at an office of 
the institution. The agencies also are directed to apply the 
regulations to subsidiaries of insured depository institutions 
as appropriate. The regulations are required to cover sales 
practices, including anti-coercion and suitability rules, 
disclosure and advertising requirements, consumer grievance 
procedures, and standards for the separation of banking and 
nonbanking activities. Many of the provisions of this section 
are based on the Interagency Statement on Retail Sales of 
Nondeposit Investment Products and as such the agencies should 
use that Statement as a guideline, where appropriate, in 
implementing the regulations required by this section.
    Nondeposit products are defined to include investment and 
insurance products that are not deposit products as well as 
shares of registered investment companies. Specifically 
excluded from the category of nondeposit products are loans, 
other extensions of credit, letters of credit, discount and 
trust services, and other instruments, insurance, or investment 
products specifically excluded by joint agency rulemaking.
    Section 112(b) addresses the anticoercion and suitability 
rules. This subsection requires the Federal banking agencies to 
promulgate regulations that address practices which could 
coerce or mislead consumers regarding the sale of a nondeposit 
product when they agree to purchase a credit product from an 
insured depository. The agencies are directed to adopt rules 
prohibiting an insured depository institution from engaging in 
any practices that would lead a consumer to believe that an 
extension of credit is conditional on the purchase of a 
nondeposit product from the institution (or its affiliates or 
subsidiaries), or an agreement by the consumer not to obtain a 
nondeposit product from an unaffiliated entity, in violation of 
the anti-tying rules contained in section 106(b) of the Bank 
Holding Company Act Amendments of 1970. The anticoercion sales 
practice rules required under section 112(b) are intended to be 
consistent with section 106(b) and the interpretations 
thereunder. This section is not intended to prohibit the 
offering of products and services permitted under section 
106(b). Rather, it is intended that the agencies address sales 
practices that would lead a customer to believe that products 
are tied in violation of section 106(b).
    The Committee believes that depository institutions should 
take reasonable steps to minimize the possibility of consumer 
confusion regarding the nondeposit products that they sell. As 
such, section 112(c) directs the agencies to adopt disclosure 
and advertising rules which require that banks provide 
disclosure at the time the consumer opens an account for the 
purchase of any nondeposit product or in connection with the 
initial purchase of a nondeposit product. In addition, banks 
are required to obtain a written acknowledgment, signed and 
dated by the consumer, that the consumer has received the 
disclosures. Moreover, given the rapid growth of technology in 
consumer banking, section 112(c) directs the agencies to make 
necessary adjustments in the disclosure and acknowledgment 
requirements for sales made in person, by telephone, or by 
electronic media in order to provide for the most appropriate 
and complete form of disclosure and acknowledgment.
    Section 112(d) requires that the agencies adopt standards 
for the separation of banking and nonbanking activities. This 
subsection requires that the nondeposit product sales area be 
located in a physically segregated area, to the extent 
practicable, from the area where retail deposits are routinely 
taken. The Committee understands that it may be appropriate to 
use signs or other means to distinguish the nondeposit product 
area from the area where retail deposits are routinely 
accepted. The agencies are also required to adopt standards 
prohibiting any person accepting deposits in a routine deposit 
taking area from selling, offering to sell, or offering an 
opinion or advice on, any nondeposit product. In addition, the 
agencies must adopt regulations pertaining to the receipt by 
bank employees of a one-time nominal and fixed dollar fee for 
each customer referral. While this provision allows for 
referral fees, it does not affect, and is not intended to 
affect, any provision of the Real Estate Settlement Procedures 
Act.
    Section 112(e) requires the Federal banking agencies to 
jointly establish a consumer complaint mechanism for 
expeditiously addressing meritorious consumer complaints by 
developing procedures for investigating such complaints and for 
informing consumers of their rights.
    While section 112 requires the Federal banking agencies to 
consult with the Securities and Exchange Commission (SEC) and 
the National Association of Insurance Commissioners (NAIC), as 
appropriate, it does not limit nor affect the authority of the 
SEC under Federal securities law, the State insurance 
commissioners under State insurance law, and the applicability 
of these laws and state securities laws to any person.
    Additionally, the section grants the SEC, in consultation 
with the Federal banking agencies, the authority to prescribe 
regulations regarding the sale of securities by affiliates of 
insured depository institutions that are registered brokers or 
dealers or by insured depository institutions that are 
registered brokers or dealers. These regulations shall 
establish disclosure requirements with respect to coverage 
under the Securities Investor Protection Corporation Act of 
1970 and the Federal Deposit Insurance Act and--with respect to 
any referrals or transactions--disclosure of any financial 
interest of the depository institution or any securities 
subsidiary or securities affiliate.
    The National Council on Financial Services has authority to 
prescribe regulations more stringent than those of the Federal 
banking regulators and those of the SEC. Further, the National 
Council on Financial Services is required to review biennially 
regulations under section 112 to determine whether the purposes 
of the Act are being achieved.

Section 113. Obligations of subsidiaries and affiliates cannot be 
        extended to insured depository institutions

    Section 113 prohibits an obligation of an affiliate or 
subsidiary of an insured depository institution from being 
charged against the insured depository by reason of any ruling, 
determination or judgment disregarding the separate corporate 
identity or limited liability of the affiliate, subsidiary or 
insured depository institution. The intent of this provision is 
to protect insured depository institutions from being charged 
with obligations for which they would not otherwise be liable 
except for a ruling that would ``pierce the corporate veil'' of 
such institutions. Each appropriate Federal banking agency is 
required to take steps to assure that each insured depository 
institution observes the separate corporate identity and 
separate legal status of each of its subsidiaries and 
affiliates.
    This section also makes it a criminal offense for any 
institution-affiliated party of an insured depository 
institution, or subsidiary or affiliate of an insured 
depository institution to fraudulently represent that an 
insured depository institution is liable for an obligation of 
its subsidiary or affiliate.

           subtitle c--national council on financial services

Section 121. Establishment and operation of the Council

    Section 121 creates the National Council on Financial 
Services (the Council) for the general purposes of improving 
the efficiency and competitiveness of the U.S. financial 
services system and monitoring innovations in the delivery of 
financial services for the benefit of the U.S. economy and 
consumers. There shall be 10 members on the Council: the 
Secretary of the Treasury (Chairperson of the Council); the 
Chairman of the Board of Governors of the Federal Reserve 
System (Vice-Chairperson of the Council); the Chairperson of 
the Federal Deposit Insurance Corporation; the Comptroller of 
the Currency (Comptroller); the Chairperson of the Securities 
and Exchange Commission; the Chairman of the Commodity Futures 
Trading Commission; an individual with current or prior 
experience in securities regulation at the State level who 
shall be appointed by the President; two individuals with 
current or prior experience in State insurance regulation who 
shall be appointed by the President; and one individual with 
current or prior experience in State banking supervision who 
shall be appointed by the President. With respect to the two 
individuals representing the insurance industry, the President 
is required to solicit the views of the NAIC before making the 
appointments.
    Members of the Council shall serve without compensation. 
The non-Federal government members appointed based on their 
state experience will be reimbursed for reasonable expenses. 
Each agency represented on the Council bears the expenses 
associated with participation in the Council. Any other 
expenses of the Council (including those of the individual 
member) are to be shared pro rata among the Federal agencies 
represented on the Council.
    A majority of the members of the Council constitutes a 
quorum and an affirmative vote of the Council requires a vote 
of the majority of a quorum. Council members cannot vote 
through designees.

Section 122. Functions of the Council

    Section 122 grants the Council the authority to issue 
regulations prescribing the method for calculating the gross 
revenues test mandated by section 6(a)(2) of the BHCA and to 
determine whether an activity or product is insurance or 
banking for purposes of the limitations on insurance 
underwriting by national banks provided for in section 141. In 
addition, the Council may (1) issue regulations or orders 
finding whether an activity is financial or related to a 
financial activity or non-financial or not related to a 
financial activity, and (2) impose additional safeguards on 
relationships or transactions involving an insured depository 
institution and its affiliates and subsidiaries engaged in 
activities that are not permissible for a national bank to 
engage in directly, if the Council finds that such restrictions 
will promote safety and soundness or will enhance consumer 
protections. Further, the section provides that the Council's 
actions shall be binding on it members' agencies and enforced 
by the respective agency. With respect to the Council's 
authority to determine an activity as financial or financial in 
nature, the intent of the Act is that the Council will take 
into consideration emerging areas in the industry, such as 
information technology, that could facilitate synergies in the 
holding company and its affiliates.
    Finally, section 122 directs the Council, in consultation 
with the Federal Trade Commission to report to Congress, within 
one year, on the implications of broader affiliations between 
companies and the increasing use of technology in the provision 
of financial services on the ability of consumers to control 
and safeguard the use of their financial information. The 
Council also is directed to make legislative recommendations if 
necessary to better safeguard consumer privacy.

Section 123. Advisory Council on Community Revitalization

    Section 123 requires the Council to establish the Advisory 
Council on Community Revitalization (the Advisory Council) to 
examine the impact of new insurance and securities activities 
of qualifying bank holding companies and to make 
recommendations and reports to the Congress and the Council. 
Members of the Advisory Council shall include a person 
appointed by each of the six agency members of the Council, one 
person appointed by the Secretary of Commerce to represent the 
views of the insurance industry, one person appointed by the 
Chairman of the Securities and Exchange Commission to represent 
the securities industry, and two people appointed by the 
Secretary of Treasury from among representatives of well-
established, nationally recognized consumer organizations. The 
Advisory Council has two enumerated responsibilities: first, 
the Advisory Council is required to submit, within one year, 
recommendations to Congress and the Council on ways to enhance 
insurance and securities activities of qualifying bank holding 
companies to meet the credit and insurance needs of all 
citizens and communities, including underserved communities and 
populations; and second, the Advisory Council is required to 
submit annually a report for a five-year period to the Congress 
and the Council on the impact of the Act on the capital and 
credit needs of all citizens.
    Each member of the Advisory Council shall serve without 
compensation, except that the individual members shall receive 
expenses in the same manner as the individual members of the 
Council. The Advisory Council's expenses shall be paid by the 
Council.

              subtitle d--bank holding company supervision

Section 131. Streamlining bank holding company supervision

    Section 131 amends the reporting and examination 
requirements currently applicable to bank holding companies 
under section 5(c) of the BHCA. As under current law, the Board 
may require any bank holding company to submit reports that 
will enable the Board to determine compliance with the BHCA and 
regulations or orders issued thereunder. But the Board may not 
require such reports if information sufficient to make the 
required determinations is reasonably available from any other 
source. The Board shall, to the fullest extent possible, use 
the examination reports prepared by any Federal or State 
regulatory agency or any self-regulatory organization for 
purposes of making the required determinations. No other 
provision of this Act is intended to limit the Board's 
authority to require reports for the purpose of determining 
compliance with the provisions of this Act.
    The Board may exempt any company or class of companies from 
the reporting requirements. In granting an exemption, the Board 
must consider whether the type of information required is 
available from other specified sources, the primary business of 
the company to be exempted, the nature and extent of domestic 
or foreign regulation of such company's activities, and the 
absolute and relative size within the company of any subsidiary 
insured depository institution.
    Section 131 focuses the Board's examination authority on 
the holding company and its affiliates that may pose a material 
risk to the reporting institution affiliate. As such, the Board 
may examine a bank holding company and its nonbank subsidiaries 
(other than subsidiaries of insured depository institutions) to 
inform the Board of: (1) the nature of the operations and the 
financial conditions of the holding company and such 
subsidiaries; (2) the financial and operational risks within 
the holding company system that may pose a threat to the safety 
and soundness of any subsidiary insured depository institution; 
(3) the systems of the holding company; and (4) compliance with 
the BHCA and laws governing transactions between a depository 
institution and its affiliates. The Board must, to the fullest 
extent possible, limit the focus and scope of any holding 
company examination to the holding company itself and any 
nonbank subsidiary (other than a subsidiary of a depository 
institution) that for specified reasons could have a materially 
adverse effect on a subsidiary depository institution of the 
company. The Board must, to the fullest extent possible, use 
reports or examinations made by other agencies, including bank 
examination reports.
    This section requires any agency represented on the Council 
and any State supervisory authority to notify the Board and the 
appropriate Federal banking agency or State bank supervisor of 
any significant financial or operational risks to any depository 
institution resulting from the activities of an affiliate. It also 
provides that the Board shall defer to the SEC regarding all 
interpretations and enforcement of applicable Federal securities laws 
relating to the activities of registered brokers, dealers, investment 
advisers and investment companies. Further, the Board shall defer to 
the relevant state insurance authorities regarding all interpretations 
and enforcement of applicable state insurance laws relating to the 
activities of insurance companies and agents.
    For bank holding companies not significantly involved in 
nonbanking activities, the Board may designate the appropriate 
Federal banking agency for the bank holding company's lead 
depository institution as the appropriate Federal banking 
agency for the bank holding company as well.
    The standards established in section 131 for the 
supervision of holding companies are consistent with standards 
adopted internationally and by some major trading partners of 
the U.S. For example, in 1992, the Basle Supervisors Committee 
adopted Minimum Standards for Consolidated Supervision 
(Standards) of international banks and banking groups in 
recognition of the fact that banking groups are increasingly 
complex organizations that pose particular supervisory 
challenges. The Standards state that home country supervisory 
authorities should receive consolidated financial and 
prudential information on the group's global operations and 
have the ability to test the reliability of the information 
through on-site examination or other means. Similarly, the 
European Union has established rules concerning the supervision 
of conglomerates that own banks. Moreover, if a commercial 
company owns a bank or financial holding company, the 
commercial company is also subject to information and 
inspection requirements.

Section 132. Administration of the Bank Holding Company Act of 1956

    Section 5(a) of the BHCA is amended to provide that a 
declaration filed under section 6 by a company seeking to be a 
qualifying bank holding company satisfies the bank holding 
company registration requirement but not any requirement to 
file an application to acquire a bank under section 3. The 
divestiture provisions of section 5(e) are amended to allow a 
bank holding company to make a choice between divesting a 
nonbanking subsidiary and divesting an insured depository 
institution.

Section 133. Bank Holding Company Capital

    Section 133 addresses capital standards for bank holding 
companies. The bank holding capital standards applied today 
were developed for companies whose activities focused on 
managing and controlling insured banks and on activities 
``closely-related'' to banking. Given the breadth of the new 
financial affiliations permitted by this Act, section 133 was 
designed to ensure that the Board has sufficient flexibility to 
deal with a wide variety of holding companies under its 
jurisdiction, including holding companies that may not control 
an insured depository subsidiary. It is expected that the Board 
would reexamine its current holding company capital guidelines 
to include approaches that focus on excessive use of double 
leverage by holding companies to fund investments in stock of 
its subsidiaries and on situations that pose a threat to the 
safety and soundness of depository institution subsidiaries. It 
is also expected that the Board will take full and appropriate 
account of the different classes of holding companies that may 
exist, such as those that do not control insured depository 
institutions or are predominantly engaged in activities other 
than controlling insured banks. The Board also must take 
account of capital maintained by regulated nondepository 
subsidiaries in accordance with the capital requirements of 
another supervisory authority and of capital maintained by 
unregulated nondepository subsidiaries in accordance with 
industry norms.
    In establishing capital adequacy guidelines or 
requirements, it is expected that the Board will make every 
effort to ensure equality of competitive opportunity and take 
account of the international competitive position of United 
States financial institutions. In addition, as it currently 
does, the Board should take steps to ensure that capital 
adequacy requirements or guidelines do not unnecessarily impair 
the transfer of small institutions. The Board should further 
take into account that certain holding companies predominantly 
engaged in nonbanking financial activities have been organized 
in non-corporate structures, and should treat as common equity 
such interests as limited company memberships and partnership 
interests where such interests are accepted in the marketplace 
as equity available to absorb losses.
    Section 133 does not, nor is it intended to, alter current 
law to authorize the Board to set capital standards for banks. 
Under this Act, the Board is authorized to set capital for 
holding companies (and, of course, state member banks which it 
directly regulates). Section 133 contains a provision that 
prohibits the Board from imposing capital requirements on 
nondepository holding company subsidiaries such as broker-
dealers and insurance companies. Such subsidiaries are already 
subject to regulatory capital or solvency requirements. This 
provision only relates to nondepository subsidiaries of holding 
companies and to no other subsidiaries, by implication or 
otherwise.

Section 134. Authority of State insurance regulator

    Section 134 limits the Board's ability to require that an 
insurance company provide funds to an affiliated bank if the 
State insurance authority determines in writing to the 
insurance company and the Board that the insurance company 
cannot provide such funds because it would have a materially 
adverse impact on the financial condition of the insurance 
company. However, the section allows the Board to require the 
bank holding company to divest the bank within 180 days of 
receiving such notice from the State insurance authority.

      subtitle e--subsidiaries of insured depository institutions

Section 141. Subsidiaries of national banks authorized to engage in 
        financial activities

    Section 141 permits a domestic subsidiary (financial 
subsidiary) of a national bank to engage in an activity that is 
not permissible for a national bank to conduct directly if the 
activity is a ``financial activity'' (as defined in the 
section). In order to engage in these expanded activities, the 
national bank and all of its depository institution affiliates 
must be well capitalized and well managed and have achieved a 
``satisfactory'' or better rating under CRA during the bank's 
most recent examination. This section also prohibits a 
subsidiary of a national bank from engaging in insurance 
underwriting, merchant banking, and real estate investment or 
development activities. This section also defines the types of 
subsidiaries a national bank may have. A national bank only 
own: (1) a subsidiary engaged in activities that the bank can 
engage in directly; (2) a financial subsidiary engaged in 
activities in activities under this section; or (3) a 
subsidiary pursuant to the Edge Act, the Bank Service Company 
Act, or other acts that expressly authorize national banks to 
control a subsidiary.
    In calculating the national bank's compliance with 
applicable capital standards, all of the bank's equity 
investment in a financial subsidiary (i.e., a subsidiary 
engaged in financial activities that are not permissible for a 
national bank to engage in directly) must be deducted from the 
bank's assets and tangible equity capital, and the financial 
subsidiary's assets and liabilities are not consolidated with 
those of the bank.
    If the Comptroller determines that a national bank that 
controls a financial subsidiary is not well capitalized nor 
well managed, the Comptroller must notify the bank and may 
impose terms and conditions as the Comptroller deems 
appropriate. The bank must, within 45 days, execute an 
agreement with the Comptroller to correct the problem. If the 
bank fail to correct the problem within 180 days, the 
Comptroller may require the bank to divest control of each 
subsidiary engaged in activities not permissible for the 
national bank to engage in directly or may require each 
subsidiary to cease such activities.

Section 142. Activities of subsidiaries of insured State banks

    Under section 142, a subsidiary of State bank may engage in 
an activity as principal in which a financial subsidiary of a 
national bank may engage in as principal, if the bank is well 
capitalized, well managed and has achieved a ``satisfactory'' 
or better rating under CRA as a result of its most recent 
examination. All of the bank's equity investment in the 
subsidiary must be deducted from the bank's assets and tangible 
equity capital for purposes of determining compliance with 
applicable capital standards and the subsidiary assets and 
liabilities cannot be consolidated with those of the bank.
    If the appropriate Federal banking agency determines that a 
state bank that controls a subsidiary engaged in activities 
that are not permissible for a national bank subsidiary to 
engage in a principal is not well capitalized nor well managed 
or has not achieved a ``satisfactory'' or better rating under 
CRA, the appropriate Federal banking agency is required to 
notify the bank to that effect. The bank is required to execute 
an agreement with the FDIC to correct, within 45 days of 
receiving the notice, the conditions described in the notice. 
If the conditions described in the notice are not corrected 
within 180 days of receiving the notice, the appropriate 
Federal banking agencies may require the bank to divest control 
of each subsidiary that is engaged in an activity that is not 
permissible for the bank to engage in directly or each 
subsidiary to cease any activity that is not permissible for 
the bank to engage in directly.

Section 143. Rules applicable to financial subsidiaries

    Section 143 applies Sections 23A and 23B of the Federal 
Reserve Act to transactions between the bank and the financial 
subsidiary with certain exceptions relating to equity 
investments. Financial subsidiaries do not include a 
corporation organized under section 25A of the Federal Reserve 
Act or a corporation operating under section 25 of such Act.

                 subtitle f--direct activities of banks

Section 151. Powers of national banks

    Section 151(a) clarifies that national banks may not 
underwrite an insurance product which was regulated under State 
law as insurance as of January 1, 1997. However, national banks 
and their subsidiaries may continue to provide and underwrite 
such products if either national banks or their subsidiaries 
either were offering the products or the Comptroller had 
authorized the products in writing before January 1, 1997. For 
example, products such as letters of credits that national 
banks were offering on January 1, 1997, would be protected. In 
addition, with respect to title insurance, the section provides 
that national banks and their subsidiaries may not engage in 
the sale or underwriting of title insurance and any company 
engaging in title insurance may not own a bank subsidiary, 
other than the sales activities in which the national banks and 
subsidiaries were actively and lawfully engaged in before the 
enactment of the Act.
    With respect to emerging new products which the Comptroller 
has determined to be permissible for national banks, the 
section allows the State insurance supervisory agency to 
petition the Council to review the Comptroller's determination. 
The State insurance supervisory agency has two years from the 
date on which the first public notice is made of the 
determination by the Comptroller to file the petition with the 
Council.
    In addition to any authority currently provided by 12 
U.S.C. 24(7), section 151(b) authorizes national banks to 
underwrite municipal revenue bonds if the national bank is well 
capitalized.

Section 152. Banking products defined

    Section 152 defines ``banking product'' for purposes of 
determining whether a bank has to register as a broker-dealer 
under the Securities Exchange Act of 1934 (the Exchange Act). 
Under the amendments made to the Exchange Act in sections 201 
and 202, banks that offer or sell banking products do not have 
to register as broker-dealers. A banking product includes: (1) 
deposit account, savings account, certificate of deposit or 
other deposit instrument issued by a bank; (2) banker's 
acceptances; (3) letter of credit issued by a bank; (4) a debit 
account at a bank arising from a credit card or other similar 
arrangement; (5) a loan or loan participation issued in the 
ordinary course of bank business; (6) a qualified financial 
contract; (7) swap agreements, including credit swaps and 
equity swaps (unless the appropriate Federal banking agency 
determines that credit swaps and equity swaps should not be 
included); and (8) any other products that are available in the 
course of a banking business, as determined by the Board, after 
consultation with the SEC.

Section 153. Repeal of stock loan limit in Federal Reserve Act

    Section 153 repeals the restriction in section 11(m) of the 
Federal Reserve Act on loans by Federal Reserve member banks 
secured by stock or bond collateral. Limitations on loans to 
one borrower imposed pursuant to other statutory authority are 
not affected.

             subtitle g--noninsured depository institutions

Section 161. Wholesale financial institutions

    Section 161 authorizes the establishment of wholesale 
financial institutions (WFIs). A WFI can be either a national 
bank or a State member bank. A national bank is required to 
apply to the Comptroller for permission to operate as a WFI in 
accordance with regulations issued by the Comptroller for 
permission to operate as a WFI in accordance with regulations 
issued by the Comptroller. The approval of the Board is 
required for a State bank to operate as a WFI.
    Section 161(b) amends the Federal Reserve Act by adding a 
new section 9B which requires WFIs to become members of the 
Federal Reserve System. Section 9B provides that WFIs will be 
subject to the Federal Reserve Act to the same extent and in 
the same manner as a State member insured bank, except that a 
WFI may only terminate membership on the terms and conditions 
set by the Board and with prior written approval from the 
Board.
    Section 9B also contains special capital requirements 
applicable to wholesale financial institutions including the 
requirement that the Board adopt capital requirements that are 
sufficiently higher than the capital levels applicable to State 
member insured banks to take into account that wholesale 
financial institutions accept uninsured deposits and to provide 
for the safe and sound operation of such institutions without 
undue risk to creditors or other persons, including Federal 
Reserve Banks, engaged in transactions with the institution. It 
is expected that wholesale financial institutions should 
generally meet the requirements for well capitalized insured 
banks. The Board may adjust capital standards for WFIs 
consistent with safety and soundness concerns and international 
risk-based capital standards taking into account global 
competitiveness to permit WFIs to effectively compete in 
markets, such as the government securities market.
    Section 9B also provides that WFIs will be subject to the 
prompt corrective action provisions contained in section 38 of 
the FDIA with certain changes to reflect the status of WFIs as 
uninsured institutions. In addition, WFIs will be subject to 
the enforcement provisions contained in the FDIA and the Bank 
Merger Act as if they were state member insured banks. WFIs 
will also be considered banking institutions for purposes of 
the International Lending Supervision Act. Further, WFIs shall 
comply with the requirements of CRA.
    A WFI is subject to limitations on the deposits it may 
receive. Subject to regulations issued by the Board, a WFI may 
not receive initial deposits of $100,000 or less other than on 
an incidental and occasional basis. Deposits of that amount 
received on a incidental basis may not represent more than 5% 
of the institution's total deposits. In addition, deposits of a 
WFI may not be insured by the FDIC.
    In order to permit existing insured banks to become WFIs, 
section 161(d) adds a new section 8A to the FDIA. Section 8A 
permits a State-chartered or national bank to terminate its 
status as an insured institution after providing 6 months prior 
notice. An insured bank may terminate its insurance if the 
deposit insurance fund of which the bank is a member has met or 
exceeds its designated reserve ratio and the bank pays an exit 
fee to the FDIC, or the bank receives regulatory approval and 
pays the appropriate exit fee.
    Section 161(e) requires the Board to submit a detailed 
report to the Congress at the end of any year in which a WFI 
borrows funds from the Board.

Section 162. Holding company control of uninsured depository 
        institutions

    Section 162 provides that a holding company that owns a 
WFI, but does not own any insured depository institutions, 
would be allowed greater flexibility for nonfinancial 
investments.
    Under this section, WFIs that have nonfinancial affiliates 
are subject to cross-marketing restrictions and are prohibited 
from adopting a name that is the same as or similar to an 
affiliate engaging in nonfinacial activities.

               subtitle h--federal home loan bank system

Section 171. Federal home loan banks

    Section 171 amends the Federal Home Loan Bank Act (FHLBA) 
to allow the Federal Housing Finance Board (Finance Board) to 
divide the states into not less than one and not more than 
twelve districts.

Section 172. Membership and collateral

    Section 172 amends the Home Owners Loan Act (HOLA) to allow 
Federal savings associations to become voluntary members in the 
Federal Home Loan Bank System (System) after January 1, 1999, 
as prescribed under the FHLBA. In addition, title III of the 
Act repeals HOLA two years after enactment of the Act, thereby 
repealing the mandate that Federal savings associations be 
members of the System. The section exempts FDIC-insured 
institutions under $500 million in assets from the eligibility 
requirement that at least 10% of their total assets be in 
residential mortgage loans. The section also repeals a section 
of the FHLBA that distinguishes between qualified thrift lender 
(QTL) and non-QTL members as to their ability to obtain 
advances and the capital required to support such advances. In 
addition, the section allows FDIC-insured institutions under 
$500 million in assets to (1) use advances for the purpose of 
funding small business, agriculture, rural development, and 
low-income community development; and (2) use secured loans for 
small business, agriculture, rural development, and low-income 
community development as collateral for Federal Home Loan Bank 
advances.

Section 172A. The Office of Finance

    Section 172A makes the Office of Finance (Office) a joint 
office of the Federal Home Loan Banks (Banks). The Office shall 
also have the authority to issue notes, bonds, and debentures 
of the Banks. Further, the section provides that the Office 
shall be treated as a Bank for purposes of any law, except 
otherwise expressly provided in the Act.

Section 172B. Management of banks

    Section 172B changes the management of each Bank from 14 to 
15 directors, consisting of 9 elected members and 6 appointed 
members. This provision provides more elective representation 
and avoids the possibility of tie votes. Also, this section 
limits the terms for both elected and appointed officials to 
three three-year terms with a three-year waiting period 
thereafter. Moreover, the section divides elected directors 
into three classes according to size of financial institutions 
and geographical locations.

Section 173. Advances to nonmember borrowers

    Section 173 amends the FHLBA to facilitate advances to 
nonmember borrowers such as state housing finance agencies.

Section 174. Powers and duties of banks

    Section 174 transfers the authority to determine the terms 
and conditions for Banks' debt securities, other than 
consolidated obligations, from the Finance Board to the Banks. 
Also, the section transfers authority to issue consolidated 
Banks' obligations from the Finance Board to the Office.

Section 174A. Mergers and consolidations of Federal home loan banks

    Section 174A allows for voluntary mergers between Banks and 
specifies the number of elected and appointed directors that 
must result from the process. The section also provides for an 
adjustment of district boundaries after a merger or 
consolidation takes place.

Sectin 174B. Technical amendments

    Section 174B makes technical amendments. First, the section 
states that a Bank may not engage in any activity other than 
the activities already authorized under this Act, and that the 
Finance Board must approve all such activities. Second, the 
section strikes certain provisions regarding informal review of 
supervisory decisions, as well as the provision requiring the 
Banks to establish a ``Housing Opportunity Hotline'' program. 
Third, the section directs the Finance Board to prohibit the 
Banks from providing compensation to any executive officer of a 
Bank that is not reasonable and comparable with the 
compensation for employment in other similar institutions 
involving similar duties. With respect to compensation, it is 
intended that the Finance Board considers the Federal Reserve 
Banks as a point of reference. Fourth, the section adds the 
Finance Board to the existing list of independent Federal 
financial supervisory agencies which are exempt from having 
testimony, legislative recommendations, or comments on 
legislation to the Congress reviewed and approved by any other 
officer or agency of the United States. Finally, the section 
grants the Finance Board similar enforcement authorities that 
the Office of Federal Housing Enterprise Oversight possesses 
over the federal housing government-sponsored enterprises 
(GSE's).
    Further, the section adds a new section 11(k) to the FHLBA 
in order to emphasize the limited nature of the incidental 
powers available to the Banks which continue to be limited to 
those specified by section 11(a) and 11(e)(2)(A).

Section 175. Definitions

    Section 175 adds American Samoa and the Commonwealth of the 
Northern Mariana Islands to the definition of the term 
``State.''

Section 176. Resolution Funding Corporation

    Section 176 modifies the shortfall allocation provision 
under the FHLBA to require that each Bank shall pay to the 
Resolution Funding Corporation (REFCORP) each calendar year 
20.75% of its earnings (after deducting affordable housing 
program and operating expenses).

Section 177. Capital structure of the Federal Home Loan Banks

    Section 177 requires all Banks to submit capital plans for 
approval to the Finance Board. These plans must meet a number 
of criteria, including the following: First, each plan must set 
a minimum leverage limit for each Bank at 5%, which could be 
reduced to as low as 3.5%, depending upon the mix of 
shareholders stocks; Second,the plans must set up two classes 
of stock, one which can be redeemed in one year or less, and 
the other (permanent capital) can be redeemed in five years, 
with the permanent capital having a 50% greater weight; Third, 
the plans must authorize preferential dividends and voting 
rights for the permanent class of stock; Fourth, each plan must 
require members to have an advanced-based capital requirements 
(as determined by the Bank) of up to 6% of either advances; 
Fifth, the plans must require members to have an asset-based 
capital requirement, as determined by the Bank, not to exceed 
0.6% of assets, or $300 million, whichever is less; Sixth, the 
plans have to set a minimum risk-based capital ratio of 10%; 
and, Seventh, the plans must establish an interest rate risk 
capital standard for a Bank based on a stress test similar to 
those tests applied to other GSE and depository institutions.

Section 178. Investments

    Section 178 requires the Banks to reduce the level of their 
investments in assets that are not necessary to achieve the 
Banks' fundamental purpose of making credit available to their 
members and, through their members, to the public.

Section 179. Federal Housing Finance Board

    Section 179 adds the Secretary of the Treasury, or the 
Secretary's designee, to be a member of the Finance Board and 
limits the number of citizens appointed to three.

 Subtitle I--Streamlining Antitrusting Review of Bank Acquisitions and 
                                Mergers

Section 181. Amendments to the Bank Holding Company Act of 1956

    Section 181 requires a copy of an application and other 
materials submitted to the Board under section 3 of the BHCA to 
be filed by the applicant with the Justice Department. It 
removes ``competitive factors'' from the list of factors for 
the Board to consider when reviewing a proposed acquisition to 
merger under section 3. The Board will continue to consider the 
financial and managerial resources of the companies and banks 
involved in the transaction as well as the convenience and 
needs of the community to be served. However, the Justice 
Department will have the sole responsibility for reviewing the 
transaction for competitive effects under the antitrust laws.
    Section 181 retains the requirement of notification by the 
Board to the Justice Department of approval of acquisitions and 
mergers. While the 30-day post-approval waiting period is also 
retained, the Justice Department is given authority to 
prescribe a shorter waiting period. The automatic stay and 
immunity provisions remain in place. Section 181 also deletes 
the provisions requiring a court to (1) conduct a de novo 
review of the issues presented, and (2) to apply the same 
standards applied by the Board in approving a transaction if 
any acquisition, merger or consolidation is challenged on 
competitive grounds. The same standards that apply under the 
antitrust laws will now apply to transactions approved under 
section 3 of the BHCA. In addition, the statutory authority of 
the Board and the appropriate State bank authority to appear in 
cases where the Justice Department challenges a bank 
acquisition or merger is eliminated.

Section 182. Amendments to the Federal Deposit Insurance Act to Vest in 
        the Attorney General Sole Responsibility for Antitrust Review 
        of Depository Institution Mergers

    Section 182 removes the authority of the Federal banking 
agencies to review competitive factors from the approval 
process contained in the Bank Merger Act. The Federal banking 
agencies will continue to consider the financial and managerial 
resources of the institutions involved in the transaction as 
well as the convenience and needs of the community to be 
served. The Justice Department will have the sole 
responsibility for reviewing the competitive effects of the 
transaction under the antitrust laws. As in the proposed 
amendments to the BHCA, section 182 leaves in place the 30-day 
post approval waiting period for proposed mergers but allows 
the Justice Department to prescribe a shorter period. The 
Federal banking agencies can permit immediate consummation upon 
a determination that such action is necessary to prevent a 
probable bank failure. The automatic stay and immunity 
provisions are maintained.
    Section 182 also deletes the provisions of the Bank Merger 
Act requiring a court to (1) conduct a de novo review of the 
issues presented, and (2) apply the same standards the 
appropriate Federal banking agency applied in approving a transaction 
if any acquisition, merger or consolidation is challenged under the 
antitrust laws. In addition, the statutory authority of the appropriate 
Federal banking agency and the appropriate State bank authority to 
appear in cases where the Justice Department challenges a bank 
acquisition or merger is eliminated. Applicants are required to file 
copies of any application materials submitted to an appropriate Federal 
banking agency with the Justice Department.

Section 183. Information filed by depository institutions; interagency 
        data sharing

    Section 183 requires notices of a transaction under section 
3 of the BHCA or section 18(c) of the FDIA to be on an 
application form designated by the appropriate Federal banking 
agency. The application form must include a competitive effects 
section developed with the concurrence of the Attorney General. 
If the Attorney General notifies the appropriate Federal 
banking agency that the competitive effects section is 
incomplete, the applicant will be notified that the transaction 
is suspended until the Attorney General deems the application 
complete. This provision does not affect the appropriate 
Federal banking agency's authority to act immediately to 
prevent the probable failure of one of the banks involved or to 
reduce or eliminate a post approval waiting period in emergency 
situations. The section allows the appropriate Federal banking 
agency, with the Attorney General's concurrence, to exempt 
classes of transactions that are unlikely to violate the 
antitrust laws from the above requirements. Section 183 
requires, where permissible under law, interagency data 
sharing.

Section 184. Annual GAO report

    Section 184 requires the Comptroller General to submit an 
annual report to Congress that analyzes: (1) the effects of 
affiliations between various types of financial companies and 
of acquisitions pursuant to this Act: (2) the effects of any 
changes in business practices on the availability of venture 
capital and the availability of capital and credit for small 
businesses; and (3) the acquisition patterns of banks, bank 
holding companies, securities firms, and insurance companies, 
including acquisitions among the largest 20% of firms and 
acquisitions within a limited geographical area.

Section 185. Applicability of antitrust laws

    Section 185 affirms the applicability of State antitrust 
laws.

Section 186. Effective date

    The effective date for the subtitle is six months after the 
date of enactment of the Act.

             subtitle j--redomestication of mutual insurers

Section 191. Redomestication of mutual insurers

    Section 191 permits a mutual insurer organized under the 
laws of any State to transfer its domicile as a step in a 
reorganization plan in which the mutual insurer becomes a stock 
insurer, whether as a direct or indirect subsidiary of a mutual 
holding company. The mutual insurer must comply with the 
applicable law of the transferee's domicile. Upon completion of 
the transfer, the mutual insurer ceases to be a domestic 
insurer in the transferor domicile and becomes a domestic 
insurer of the transferee domicile. All licenses granted by the 
transferor state in existence immediately prior to the transfer 
remain in effect following the transfer, provided the insurer 
remains duly qualified to transact the business of insurance in 
such licensed State. All outstanding insurance policies and 
annuities contracts of a redomesticated insurer will remain in 
full force and effect and need not be endorsed as to the new 
domicile of the insurer, except that a State insurance 
regulator of a licensed State may require the outstanding 
policies and contracts of owners that reside in the licensed 
State to be endorsed.
    State law may require a redomesticating insurer to file new 
policy forms with the State insurance regulator of a licensed 
State on or before the effective date of the transfer. A 
redomesticating insurer must notify the State insurance 
regulator of any State in which the redomesticating insurer has 
a certificate of authority in effect of the proposed transfer 
and promptly file any resulting amendments to corporate 
documents required to be filed by a foreign licensed mutual 
insurer with the insurance regulator of each licensed State.
    Furthermore, the section provides that nothing in this 
subtitle shall be construed to preempt any provision of a State 
law relating to the establishment of a mutual insurance holding 
company which protects the rights of policyholders.

Section 192. Effect on State laws restricting redomestication

    Section 192 preempts State laws that conflict with the 
purposes and intent of subtitle J. State laws, regulations, 
interpretations or functional equivalents thereof, that treat a 
redomesticating or redomesticated insurer or any affiliate 
differently than an insurer operating in that State that is not 
a redomesticating or redomesticated insurer, are prohibited. If 
any licensed State fails to issue, delays the issuance of, or 
seeks to revoke an original or renewal certificate of authority 
of a redomesticated insurer immediately following 
redomestication, except on grounds and in a manner consistent 
with its past practices regarding the issuance of certificates 
of authority to foreign insurers that are not redomesticating, 
then the redomesticating insurer is exempt from the State laws 
of the licensed State affecting the operation of the 
redomesticated insurer. Despite the foregoing exemption from 
State law, the licensed State may require the redomesticated 
insurer to comply with the unfair claim settlement practices 
laws of the State, pay applicable premiums and other taxes 
levied on licensed insurers or policyholders, register with and 
designate the State insurance regulator as its agent for 
service of process, submit to an examination by the State 
insurance regulator to determine the insurer's financial 
condition in certain circumstances, comply with State fraud and 
deceptive practices laws, comply with court injunctions, 
participate in any insurance insolvency guaranty association, 
and require a person acting as an agent or as an insurance 
licensee for a redomesticated insurer to obtain a license from 
that State.
    Litigation arising under this section involving any 
redomestication or redomesticated insurer must be brought in 
the appropriate United States district court. If any provision 
of this section or application of a provision to any person or 
circumstance is held invalid, the remainder of the section or 
application of such provision remains in effect.

Section 193. Definitions

    Section 193 defines the following terms for purposes of 
subtitle J: ``court of competent jurisdiction,'' ``domicile,'' 
``insurance licensee,'' ``institution,'' ``licensed State,'' 
``mutual life insurer,'' ``person,'' ``redomesticated 
insurer,'' ``redomesticating insurer,'' ``redomestication or 
transfer,'' ``State insurance regulator,'' ``State law,'' 
``transferee domicile,'' and ``transferor domicile''.

Section 194. Effective date

    The effective date of subtitle J is the date of enactment 
of the Act.

subtitle k--applying the principles of national treatment and equality 
   of competitive opportunity to foreign banks and foreign financial 
                              institutions

Section 195. Applying the principles of national treatment and equality 
        of competitive opportunity to foreign banks and foreign 
        financial institutions

    Section 195 states the purpose of this subtitle which is to 
apply the reforms of this Act to foreign banks and other 
foreign financial institutions in a manner consistent with the 
principles of national treatment and equality of competitive 
opportunity, without disadvantaging either foreign or domestic 
banks or other financial institutions in relation to each 
other.

Section 196. Applying the principles of national treatment and equality 
        of competitive opportunity to foreign banks that are qualifying 
        bank holding companies

    Section 196 amends section 8(c) of the International 
Banking Act of 1978 (IBA) by adding a new paragraph (3) to 
permit termination of the financial grandfathering authority 
granted by the IBA and other statutes to foreign banks to 
engage in certain financial companies. This grandfathering was 
necessary because of current law restrictions. With the repeal 
of these restrictions, foreign banks with grandfathered 
affiliates would be permitted to retain these grandfathered 
companies on the same terms that domestic banking organizations 
are permitted to establish.
    The legislation provides that foreign banks should no 
longer be entitled to grandfathered rights after the bank has 
filed a declaration under section 6(a) of the BHCA or receives 
a Board determination under section 6(l)(6) of BHCA. In order 
to provide both competitive equality between domestic and 
foreign banks and fairness to the foreign banks that have 
relied for many years on their grandfathering rights, the 
foreign bank is granted two years in which to have an 
application approved under section 6. Failing such approval 
within this time period, the Board may impose restrictions and 
requirements comparable to those on a qualified bank holding 
company, including those to conduct activities in compliance 
with the safeguards of section 6 of the BHCA and any additional 
safeguards imposed by the Council.

Section 197. Applying the principles of national treatment and equality 
        of competitive opportunity to foreign banks and foreign 
        financial institutions that are wholesale financial 
        institutions

    Section 197 amends section 8A of the FDIA by adding a new 
subsection (h) which allows an insured branch of a foreign bank 
to voluntarily terminate its deposit insurance under the same 
conditions and extent as insured State and national banks. This 
section is needed so that foreign banks that want to convert to 
WFI's would be able to convert to non-insured institutions.
    Second, section 197 amends section 7(d)(5) of the IBA to 
allow the Board and the Comptroller the ability, by joint 
regulation, to impose additional restrictions and requirements 
on foreign banks that are deemed to be WFI's. These 
restrictions and requirements are to be appropriate and 
necessary to protect taxpayers and the financial system from 
risks associated with access to the payments system and 
availability of discounts, advances, and other extensions of 
credit from a Federal Reserve bank. In imposing any 
restrictions under this section, the Board must give due regard 
to the principles of national treatment and equality of 
competitive opportunity.

                subtitle L--effective date of the title

Section 199. Effective date

    Section 199 establishes the effective date for this title 
at 270 days after the date of enactment, unless a subtitle or 
provision provides a specific effective date.

                    Title II--Functional Regulation

                  subtitle A--bank brokers and dealers

Section 201. Definition of broker

    Section 3(a)(4) of the Exchange Act currently excludes 
banks from its definition of ``broker.'' 15 U.S.C. 
Sec. 78(a)(4). As a result, banks that directly conduct 
brokerage activities are exempt from the registration as 
brokers under the Exchange Act. Section 201 amends the Exchange 
Act's definition of ``broker'' to include banks subject to 
certain exemptions.
    The exemptions are provided to ensure that banking products 
offered as agent do not trigger broker-dealer regulation. For 
example, private placements, trust activities, U.S. government 
securities transactions, and qualified financial contracts are 
exempt. Networking arrangements and an exclusion for de minimis 
transactions are provided to avoid eliminating small banks as 
beneficial providers of investment products in underserved 
communities.
     Specifically, a bank is not a ``broker'' and subject to 
regulation by the SEC if it engages in third party 
arrangements, providing that the bank complies with certain 
requirements to separate its activities from that of a broker, 
to provide disclosure to customers, and to limit incentive 
compensation. In addition, a bank is not a ``broker'' if it 
engages in trust activities currently permissible for national 
banks or State banks unless the bank publicly solicits 
brokerage business, other than by advertising that it effects 
transactions in securities in conjunction with advertising its 
other trust activities, or if it receives incentive 
compensation for brokerage activities. A bank is not a 
``broker'' if it effects transactions for an affiliate. A bank 
is also not a ``broker'' if it effects transactions for an 
affiliate. A bank is also not a ``broker'' if it effects 
transactions in banking products, as defined in section 18 of 
FDIA, contracts of insurance, or exempted securities, 
commercial paper, banker's acceptances, commercial bills, and 
other types of securities that section 5136 of the Revised 
Statutes expressly authorizes for national bank to underwrite 
or deal in. A bank likewise is not a ``broker'' if it effects 
transactions as part of an employ and shareholder benefit plan, 
a sweep account into registered money market mutual funds or a 
private securities offering. Furthermore, the exemption also 
extends to safekeeping, custody clearing and settlement and 
securities lending and de minimis securities transactions 
(defined to mean, in any calendar year, no more than 800 
transactions in marketable securities and 200 transactions in 
other securities).

Section 202. Definition of dealer

    A bank that engages in the business of buying and selling 
securities for its own account will be considered a ``dealer'' 
for purposes of section 3(a)(5) of the Exchange Act, unless the 
bank's activities fall within the exceptions of the Act. A bank 
is not a dealer if it buys and sells securities for investment 
purposes for the bank or for accounts for which the bank acts 
as a trustee or fiduciary. A bank is not a dealer if it offers 
or sells asset-backed securities solely to accredited 
investors. Likewise, a bank is not a dealer if it buys and 
sells contracts of insurance or if it buys and sells banking 
products, as defined in section 18 of the FDIA. The section 
also provides that a bank is not a dealer if it buys and sells 
commercial paper, banker's acceptances, exempted securities, 
and other securities that section 5136 of the Revised Statutes 
expressly authorizes for a national bank or underwrite or deal 
in.

Section 203. Bank broker and dealer activities

    Section 203 amends the Exchange Act to require employees of 
a bank that engage in the retail sale of securities to be 
subject to the same rules and regulations applicable to 
employees of securities and other nonbank firms. This 
amendment, offered by Mr. Watt, was adopted as a substitute to 
an amendment offered by Mr. Bentsen. The Bentsen amendment 
would have required a bank to register with the National 
Association of Securities Dealers (NASD) and become fully 
subject to NASD regulation and examination if a bank employee 
engaged in the sale of virtually any security, including U.S. 
government and municipal securities. Since banks have long been 
permitted to engage in such ``bank eligible'' securities 
activities, and since virtually every bank in the United States 
engages in some form of these activities, the effect of the 
Bentsen amendment would have been to subject nearly every bank 
to full NASD regulation, examination, and supervision.
    The Watt amendment clarified that the Committee did not 
intend to require an entire bank to become subject to full NASD 
regulation whenever a bank employee sold securities to anyone. 
Instead, the Committee intended to limit its focus to (1) a 
bank employee's securities sales activities, not the entire 
bank's activities; and (2) sales of securities to the retail 
public, not sales to institutional or sophisticated investors.
    Accordingly, the section provides that a bank employee's 
retail sales of securities are subject to the same type of NASD 
rules and regulations as employees of securities and other 
nonbank firms. But the section does not authorize the SEC to 
require banks to register with the NASD or become subject to 
full NASD regulation, such as inspection of a bank's books and 
records.

Section 204. Application of this title to banks registered as brokers 
        or dealers

    Section 204 adds a subsection to section 15 of the Exchange 
Act which provides that banks that register as a broker will 
not be treated more restrictively than other entities that are 
registered as brokers or dealers. This section also provides 
that the net capital requirements for brokers or dealers do not 
apply to a bank that is well-capitalized, as defined by the 
appropriate Federal banking agency for the bank, provided that 
the bank's brokerage and dealer activities that would otherwise 
require a bank to be registered as a broker-dealer do not 
represent the predominant portion of the bank's activities, 
measured by gross revenues. In addition, this section provides 
that regulation of a bank that registers as a broker must be 
limited to only these activities which require the bank to 
register. The section also provides that the SEC, in 
consultation with the appropriate Federal bank agencies, shall 
provide appropriate transitional relief to banks that are 
registered brokers or dealers and that cease to be well-
capitalized but are adequately capitalized.

Section 205. Exclusion from SIPC membership of banks registered as 
        brokers or dealers

    Section 205 amends section 3(a)(2)(A) of the Securities 
Investor Protection Act of 1970 to provide that a bank 
registered as a broker or dealer under the Exchange Act is not 
required to be a member of the Securities Investor Protection 
Corporation (SIPC). SIPC insurance would apply to such 
activities in a bank subsidiary.

Section 206. Effective date

    This subtitle becomes effective 270 days after the date of 
enactment of this Act.

             subtitle b--bank investment company activities

Section 211. Custody of investment company assets by affiliated bank

    Section 211(a) amends section 17(f) of the Investment 
Company Act (15 U.S.C. Sec. 80a-17(f)) to clarify and 
strengthen the SEC's authority to adopt regulations governing 
how banks may serve as custodians of affiliated management 
investment companies. A registered investment company is 
permitted to place its assets with a bank that is an affiliated 
person, promoter, organizer, sponsor, or principal underwriter 
for such a company only in accordance with regulations or 
orders that the SEC may adopt after written consultation with 
the appropriate Federal banking agency.
    Section 26(a) of the Investment Company Act currently 
prohibits a principal underwriter or depositor of a unit 
investment trust from selling securities issued by the trust 
unless the trust, by appropriate agreement, designates as 
trustee a bank meeting certain qualifications. 15 U.S.C. 
Sec. 80a-26(a)(1). Section 211(b) amends section 26(a)(1) to 
allow a unit investment trust to designate an affiliated bank 
as trustee only in accordance with regulations or orders that 
the SEC may adopt after written consultation with the 
appropriate Federal banking agency.
    This section also amends section 36(a) of the Investment 
Company Act to permit the SEC to bring a civil action alleging 
breach of fiduciary duty involving personal misconduct against 
a person who acts as custodian for a registered investment 
company. The SEC may already bring such actions against persons 
acting as investment advisers, officers, directors, or 
depositors of an investment company and against principal 
underwriters of an open-end company or unit investment trust.
    Banks currently engaged in custodial activities may 
continue to do so until the SEC adopts rules. At that time, 
banks will have to conform such activities to the SEC's rules.

Section 212. Lending to an affiliated investment company

    Section 18(f) of the Investment Company Act currently 
limits the ability of a registered open-end investment company 
(mutual fund) to issue a class of ``senior security'' and to 
borrow from a bank. 15 U.S.C. Sec. 80a-18(f). Section 212 adds 
a new section 18(l) to make it unlawful for any affiliated 
person of a registered investment company or any affiliated 
person of such a person from making a loan (including both 
open-end and closed-end funds) to an investment company in 
contravention of rules promulgated by the SEC.

Section 213. Independent directors

    Section 2(a)(19)(A)(v) of the Investment Company Act 
currently defines ``interested person'' of an investment 
company to include any registered broker or dealer and any 
affiliated person of such broker or dealer. 15 U.S.C. Sec. 80a-
(a)(19)(A)(v). Section 213 amends section 2(a)(19)(A)(v) to 
include in the definition of ``interested person'' as any 
person or any affiliate of a person who during the preceding 
six-month period has executed any portfolio transactions for, 
engaged in any principal transactions with, or loaned money to 
the mutual fund. A conforming amendment is also made to section 
2(a)(19)(B) of the Investment Company Act to make similar 
changes in the definition of ``interested persons.''
    Section 10(c) of the Investment Company Act currently 
prohibits a registered investment company from having a 
majority of its board of directors consist of individuals who 
are officers, directors, or employees of any one bank. 15 
U.S.C. Sec. 80a-10(c). Section 213(c) amends section 10(c) to 
extend this prohibition to any one bank and its subsidiaries, 
any one bank holding company and its affiliates and 
subsidiaries.

Section 214. Additional SEC disclosure authority

    Section 214 amends section 35(a) of the Investment Company 
Act to prohibit a registered investment company or a person 
selling any security issued by a registered investment company 
from: representing or implying that the company or its security 
is guaranteed, sponsored, recommended or approved by the United 
States or its agencies or instrumentalities; being insured by 
the FDIC; or, being guaranteed by or otherwise an obligation of 
any depository institution. Such a person is required to 
disclose that the security is not insured by the FDIC, is not 
guaranteed by an affiliated depository institution, and is not 
otherwise an obligation of such a bank or institution. This 
provision is similar to the requirement placed on securities 
affiliates under section 10(f)(6) of the BHCA.
    This section is designed to address the potential for 
investor confusion concerning the applicability of Federal 
deposit insurance to mutual funds affiliated with banks. It is 
expected that the SEC will not adopt rules where the potential 
for such confusion does not exist.
    Section 35(d) of the Investment Company Act currently 
prohibits a registered investment company from adopting as part 
of its name any words that the SEC determines to be deceptive 
or misleading. Section 214(b) amends section 35 to give the SEC 
rulemaking authority.

Section 215. Definition of broker under the Investment Company Act of 
        1940

    Section 215 amends the definition of ``broker'' in section 
2(a)(6) of the Investment Company Act to reflect section 201's 
amended definition of that term in the Exchange Act. The 
amended definition continues to exclude any person, including a 
bank, that would be deemed a ``broker'' solely because such a 
person is an underwriter for one or more investment companies.

Section 216. Definition of dealer under the Investment Company Act of 
        1940

    Section 216 similarly amends the definition of ``dealer'' 
in section 2(a)(11) of the Investment Company Act to reflect 
section 202's amended definition of that term in the Exchange 
Act. The amended definition continues to exclude insurance 
companies and investment companies.

Section 217. Removal of the exclusion from the definition of investment 
        adviser for banks that advise investment companies

    Section 202(a)(11) of the Investment Advisers Act currently 
excludes a bank or a bank holding company that serves as an 
investment adviser to a registered investment company from the 
Act's definition of ``investment adviser.'' 15 U.S.C. Sec. 80b-
2(a)(11). Section 217(a) amends section 202(a)(11) to remove 
this exclusion. A bank may establish a separate subsidiary or 
affiliate in order to register as an investment adviser. A bank 
is also permitted to establish a ``separately identifiable 
department or division'' to act as an investment adviser, in 
which case only the department or division and not the bank or 
bank holding company would be required to register. The SEC 
would have the same regulatory authority over such a bank 
department or division as it has over other investment 
advisers.
    Section 217(b) amends section 202(a) to add a definition of 
``separately identifiable department or division'' of a bank.

Section 218. Definition of broker under the Investment Advisers Act of 
        1940

    Section 218 amends the definition of ``broker'' in section 
202(a)(3) of the Investment Advisers Act (15 U.S.C. Sec. 80b-
s(a)(3)) to reflect section 201's amended definition of that 
term in the Securities Exchange Act. The amended definition 
continues to exclude any person, including a bank, that would 
be deemed a ``broker'' solely because such a person is an 
underwriter for one or more investment companies.

Section 219. Definition of dealer under the Investment Advisers Act of 
        1940

    Section 219 similarly amends the definition of ``dealer'' 
in section 2(a)(7) of the Investment Adviser Act (15 U.S.C. 
Sec. 80b-2(a)(7)) to reflect section 202's amended definition 
of that term in the Securities Exchange Act. The amended 
definition continues to exclude insurance companies and 
investment companies.

Section 220. Interagency consultation

    Section 220 adds a new section 210A to the Investment 
Advisers Act which requires the appropriate Federal banking 
agency to share with the SEC the results of any examination, 
reports, records or other information with respect to the 
investment advisory activities of any registered bank holding 
company, bank, or department or division of a bank to the 
extent necessary for the SEC to carry out its responsibilities 
under the Investment Advisers Act of 1940. Similarly, the SEC 
must provide all such information to the appropriate Federal 
banking agency to permit that agency to carry out its statutory 
responsibilities.

Section 221. Treatment of bank common trust funds

    Section 3(c)(3) of the Investment Company Act currently 
exempts bank common trust funds from the definition of 
investment companies under the Investment Company Act. 15 
U.S.C. Sec. 80b-3(c)(3). In order to qualify for the exemption, 
common trust funds must be maintained by a bank exclusively for 
the collective investment and reinvestment of monies 
contributed thereto by the bank as trustee, executor, 
administrator, or guardian. Section 221(c) amends section 
3(c)(3) to clarify that the common trust fund exemption is only 
available for a fund that is employed by abank solely as an aid 
to the administration of trusts, estates or other accounts maintained 
for a fiduciary purpose. Shares in the fund may not be advertised or 
offered for sale to the public except in connection with the ordinary 
advertising of the bank's fiduciary services. In addition, the fees 
charged by the fund must not be in contravention of fiduciary 
principles established under applicable Federal or State law.
    Section 3(a)(2) of the Securities Exchange Act currently 
exempts any interest or participation in a bank common trust 
fund from the Securities Exchange Act. 15 U.S.C. 
Sec. 78c(a)(2). Section 221(a) amends section 3(a)(2) to 
provide that the common trust fund must be excluded from the 
amended definition of ``investment company'' under section 
3(c)(3) of the Investment Company Act. Similarly, section 
3(a)(12)(A)(iii) of the Securities Exchange Act currently 
includes any interest or participation in a bank account trust 
fund in the definition of ``exempted security'' under the 
Securities Exchange Act. Id. Sec. 78c(a)(12)(A)(iii). Section 
221(b) amends section 3(a)(12)(A)(iii) to require that the 
common trust fund must be excluded from the amended definition 
of ``investment company'' under section 3(c)(3).

Section 222. Investment advisers prohibited from having controlling 
        interest in registered investment company

    Section 222 amends section 15 of the Investment Company Act 
to add a new subsection (g) which permits an investment adviser 
of an investment company, or an affiliated person of the 
adviser, that holds shares of the investment company in a 
trustee or fiduciary capacity to own a controlling interest in 
that investment company if certain conditions are met.
    Subsection (g) is intended to address certain conflicts 
that may arise when an investment adviser to a mutual fund also 
holds voting control over the fund through shares held in a 
trustee or fiduciary capacity. To ensure that the investment 
adviser does not use its fiduciary authority to further its own 
interests, such as perpetuating its status as an investment 
adviser, paragraph (g) would require that, in those situations 
where the investment adviser holds a controlling interest in 
the mutual fund, voting authority is to be transferred to 
another unaffiliated person; and that shares held in a 
fiduciary capacity be voted pro rata to those shares held in a 
non-fiduciary capacity, or alternatively, in some other manner 
permitted by SEC rules or regulations. Because, under well-
established principles of fiduciary law, a fiduciary has an 
obligation to vote the shares in the best interests of its 
fiduciary clients and without regard to the fiduciary's own 
needs, transferring the power to vote to another might be 
deemed to be an improper delegation or abdication of the 
fiduciary's responsibilities. Similar concerns are presented by 
voting fiduciary shares pro rata.
    Consequently, subsection (g)(1)(A) provides that for 
employee benefit plans subject to the Employee Retirement 
Income Security Act of 1974 (ERISA) the investment adviser 
fiduciary should transfer the power to vote the shares of the 
mutual fund to another person acting in a fiduciary capacity 
with respect to that plan. In this way, the investment adviser 
fiduciary will merely transfer the power to vote to another 
fiduciary, such as the plan administrator or plan sponsor, who 
will exercise voting authority in accordance with ERISA 
requirements. Transferring the power to vote is neither an 
improper delegation of voting authority nor an improper 
exercise of voting responsibilities by the investment adviser 
fiduciary in violation of ERISA.
    Subsection (g)(1)(B) provides that for all non-ERISA plans 
and other fiduciary accounts an investment adviser fiduciary 
may transfer the power to vote in accordance with the 
requirements of clause (i), vote the shares pro rata in 
accordance with clause (ii), or, in accordance with clause 
(iii), vote the shares in accordance with SEC rules and 
regulations. In any event, a safe harbor is provided by 
subparagraph (g)(3) stating that an investment adviser 
fiduciary will not be deemed to have acted unlawfully or to 
have breached a fiduciary duty under State or Federal law 
solely by reason of having acted in accordance with the 
requirements of clauses (i), (ii), or (iii). An investment 
adviser fiduciary can, thus, be assured that if it complies 
with this paragraph or SEC rules and regulations promulgated 
thereunder, it will not later be found liable for breach of its 
fiduciary duties.
    As a result of the fact that fiduciary customers have 
adequate protection under applicable State and Federal 
fiduciary precedent, subsection (g) will not apply in those 
situations where shares of the advised mutual fund consist 
solely of assets held in a trustee or fiduciary capacity. 
Instead, the protections offered by subsection (g) are only 
meant to protect those investors who are not fiduciary 
customers of the bank and are minority holders of the advised 
mutual fund. Consequently, subparagraph (2) makes this point 
clear by providing an exemption to the requirement to transfer 
the vote or vote the shares pro rata in those situations where 
the shares of the advised mutual fund consist solely of assets 
held in a trustee or fiduciary capacity,
    Finally, church pension boards are primarily responsible 
for holding and investing the assets of their respective 
denominational employee benefit plans and programs. However, in 
some cases these pension boards may also hold and invest other 
church assets (such as church agency funds or church 
endowments). These other church assets could be held in other 
than a trustee or fiduciary capacity. The exemption provided in 
paragraph (2) of the Act is only available if the assets of the 
registered investment company in question consists solely of 
assets held in a trustee or other fiduciary capacity. The 
special rule provided in paragraph (4) of the Act would permit 
a church pension board which may register its investment funds 
and which may hold some assets in other than a trustee of 
fiduciary capacity to nonetheless be entitled to the exemption.

Section 223. Conforming changes in definition

    Section 223 amends the definition of ``bank'' in section 
2(a)(5) of the Investment Company Act by replacing the 
reference to ``a banking institution organized under the laws 
of the United States'' with a reference to ``a depository 
institution'' as defined in the FDIA.

Section 224. Effective date

    This subtitle shall become effective 90 days after the date 
of enactment of this Act.

    TITLE III--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND 
                            INSURANCE FUNDS

Section 301. Short title; definitions

    Section 301 designates title III as the ``Thrift Charter 
Transition Act of 1997.'' It also specifies that, unless 
otherwise defined, the terms ``bank holding company,'' 
``depository institution,'' ``Federal savings association,'' 
``insured depository institution,'' ``savings association,'' 
``State bank,'' and ``State savings association''--as used in 
the uncodified provisions of the Act--have the same meanings as 
in section 3 of the Federal Deposit Insurance Act.

 subtitle A--facilitating conversions of savings associations to banks

Setion 311. Conversion to State or national banks

    Under section 311, all Federal savings associations in 
existence two years after the date of enactment will, by 
operation of law, become national banks at that time. A Federal 
savings association can accelerate its conversion to a national 
bank by filing a notice with the Comptroller of the Currency. 
The notice must specify a date for the association's 
conversion, and that date must be at least 30 days after the 
date the notice is filed. The Federal savings association will 
become a national bank on the date specified.
    A State savings association can become a national bank 
during the two year period beginning on the date of enactment 
by filing a notice with the Comptroller. Like the notice filed 
by a Federal savings association, the State association's 
notice must contain a specified date for its conversion. The 
date must be at least 30 days after the date the notice is 
filed, and the association will become a national bank on the 
date specified.
    Any mutual savings association becoming a national bank 
under this section will become a mutual national bank. The 
conversion authority provided by this section does not effect 
any other authority or a savings association to become a 
national bank, State bank, or State savings association.
    Finally, a Federal savings association that has its charter 
converted to a national bank charter or a State depository 
institution charter, is permitted to retain the word 
``Federal'' in its name. The provision would apply to 
institutions whether the charter is converted voluntarily or by 
operation of law. In order to maintain its Federal nexus, such 
institution must remain a member of the FDIC.

Section 312. Mutual national banks and Federal mutual bank holding 
        companies authorized

    This section authorizes the Comptroller to charter national 
banking associations as mutual national banks, either de novo 
or through conversions. Unless otherwise provided by this 
section or by the Comptroller, a mutual national bank will be 
subject to the same laws and requirements and will have the 
same powers and privileges as a national banking association 
operating in stock form. The Comptroller must supervise and 
examine mutual national banks in the same manner and to the 
same extent as stock national banks. Subject to conditions 
imposed by the Comptroller, a mutual national bank may become a 
stock national bank, and a stock national bank may become a 
mutual national bank.
    This section also authorizes the Comptroller to charter 
Federal mutual bank holding companies. Subject to approval 
under the BHCA, a mutual national bank may reorganize into a 
Federal mutual bank holding company. The reorganization plan 
requires the Comptroller's approval. The plan also requires 
approval by a majority of the mutual national bank's board of 
directors. If account holders and obligors have voting rights 
in the mutual national bank, the plan also requires approval by 
a majority of such individuals. In addition, the section also 
governs when capital can be retained at the holding company 
level, the ownership rights in the holding company, and the 
liquidation of Federal mutual bank holding companies. The BHCA 
applies to Federal mutual bank holding companies.
    A mutual savings and loan holding company may become a 
Federal mutual bank holding company by filing a notice with the 
Comptroller specifying the date for its conversion. A mutual 
savings and loan holding company in existence two years after 
the date of enactment automatically becomes a Federal mutual 
bank holding company.

Section 313. Grandfathered activities of savings associations

    Section 313 permits a national bank that results from the 
conversion of a savings association under section 311 to 
continue to engage in any activity, including holding assets, 
in which it was lawfully engaged on the day before the date of 
enactment.
    These grandfather rights are subject to several safeguards. 
During the two-year period following the date of enactment, the 
national bank must comply with section 5(t)(5) of the Home 
Owners' Loan Act to the same extent as if the bank was still a 
savings association. After the two-year period, the national 
bank may retain an equity investment in a subsidiary that is 
engaged in an activity impermissible for a national bank to 
engage in directly only if the converted institution and the 
subsidiary comply with section 5136A of the Revised Statutes 
(added by section 141).

Section 314. Branches of former savings associations

    Section 314 authorizes a savings association that becomes a 
national bank to retain branches and agencies that it operated 
on the day before the date of enactment. Further branching by 
savings associations that become national banks will be 
governed by the same laws that apply to all national banks. 
Savings associations that become State banks will be subject to 
applicable State and Federal branching laws. This section also 
protects branching rights obtained in assisted acquisitions.

Section 315. Programs for promoting housing finance

    Section 315 requires each appropriate Federal banking 
agency to establish a program designed to facilitate the 
conversion of savings associations to banks, and the treatment 
of State savings associations as banks, and to assure that 
insured depository institutions may specialize in residential 
mortgage lending. The agencies also must develop guidelines and 
procedures for assuring that insured depository institutions 
are not subject to supervisory criticism or sanction for 
prudently concentrating in residential mortgage lending.

Section 316. Savings and loan holding companies

    Section 316 grandfathers the powers of certain savings and 
loan holding companies. A company's powers are grandfathered if 
the company is a savings and loan holding company as of the 
date of enactment or had on file an application to become a 
savings & loan holding company, and becomes a bank holding 
company because a savings association subsidiary becomes a bank 
or is treated as a bank under an amendment made by this Act. 
Also grandfathered are savings and loan holding companies that, 
as of the date of enactment, were exempt under section 4(d) of 
the BHCA.
    To retain its grandfather rights, a savings and loan 
holding company may not acquire control of a bank. One 
exception to this prohibition is that a holding company may 
acquire a bank if the bank is merged with an existing 
depository institution. A savings and loan holding company's 
grandfathered rights cannot be transferred. A grandfathered 
company cannot engage in any activity or enter into any 
affiliation that was not authorized for the company as a 
savings and loan holding company on the date of enactment.
    A savings and loan holding company that becomes a bank 
holding company only because its subsidiary savings association 
becomes a bank or is treated as a bank under amendments made by 
this Act, need not file an application under the BHCA. 
Moreover, the grandfathered savings and loan holding company is 
only subject to holding company capital requirements to the 
same extent such capital requirements were imposed under 
section 10 of the HOLA by the Office of Thrift Supervision 
(OTS).

Sections 317 and 318. Treatment of references in adjustable rate 
        mortgages and cost of funds indexes, respectively

    These sections provide alternative formulas for determining 
cost of funds indexes used for adjustable interest rate 
mortgages. These new formulas are needed because current ones 
include data based on charter type, insurance fund membership, 
or characteristics of members of Federal Home Loan Banks which 
are changed under the Act.

subtitle b--ending separate federal regulation of savings associations 
                 and savings and loan holding companies

Section 321. State savings associations treated as State banks under 
        Federal banking law

    Section 321 amends the definition of ``State bank'' under 
the Federal Deposit Insurance Act to include State chartered 
savings associations. It also amends the exceptions to the 
definition of ``bank holding company'' in the BHCA. It repeals 
the exemption for companies that own or control a State-
chartered bank or trust company that is wholly owned by thrift 
institutions or savings banks. It also amends the Federal 
Reserve Act's definition of ``State bank'' to incorporate the 
definition of a State bank in section 3 of the FDIA. These 
amendments become effective two years after the date of 
enactment.

Section 322. Powers of Federal savings associations accorded to 
        national banks

    Section 322 expands the powers of national banks so that 
they generally include the activities authorized by the 
Director of the Office of Thrift Supervision for a Federal 
savings association on the day before the date of enactment. 
These expanded powers are subject to the requirements otherwise 
applicable to national banks, such as the Comptroller's safety 
and soundness requirements and the requirements applicable to 
financial subsidiaries under section 5136A of the Revised 
Statutes.

Section 323. Home Owners' Loan Act repealed

    Section 323 repeals the Home Owners' Loan Act effective two 
years after the date of enactment.

Section 324. Conforming amendment reflecting elimination of the Federal 
        Thrift Charter and the separate system of thrift regulation

    Section 324 makes the merger of the Bank Insurance Fund and 
the Savings Association Insurance Fund effective two years 
after the date of enactment or January 1, 2000, whichever is 
earlier.

Section 325. Conforming amendments to the Federal Home Loan Bank Act

    Section 325 makes a series of conforming amendments to the 
FHLBA. The amendments to the FHLBA become effective two years 
after the date of enactment.

Section 326. Amendments to Title 11, United States Code

    Section 326 provides that a Federal mutual holding company 
will be treated under Federal bankruptcy law in a similar 
manner to a bank holding company that owns a national bank. It 
would also provide Federal mutual bank holding companies with 
the same conservatorship, receivership, indemnification and 
trustee appointment rights given to other institutions.

                   subtitle C--combining ots and occ

Section 331. Prohibition of merger or consolidation repealed

    Effective on the date of enactment of the Act, section 331 
repeals the prohibition against the Secretary of the Treasury 
merging or consolidating functions of the Office of Thrift 
Supervision and the Office of the Comptroller of the Currency. 
With this repeal, the Secretary may combine functions or 
otherwise reorganize those offices as appropriate to manage 
their responsibilities and resources, consistent with other 
provisions of law.

Section 332. Secretary of Treasury required to formulate plans for 
        combining Office of Thrift Supervision with Office of the 
        Comptroller of the Currency

    Section 232 requires the Secretary of Treasury, no later 
than nine months after the enactment of the Act, to develop a 
plan for merging the OTS with the OCC, and requires the OTS and 
OCC to carry out the plan. This authority is necessary to 
ensure that examination resources are appropriately allocated 
to maintain the safety and soundness of regulated institutions 
and that personnel and administrative matters are resolved in a 
coordinated manner.

Section 333. Office of Thrift Supervision and position of Director of 
        Office of Thrift Supervision abolished

    Section 333, effective two years after the date of 
enactment of the Act, abolishes the Office of Thrift 
Supervision and the position of Director of Office of Thrift 
Supervision.

Section 334. Reconfiguration of Board of Directors of FDIC as a result 
        of removal of Director of Office of Thrift Supervision

    Section 334 makes conforming changes in the Board of 
Directors of the FDIC to reflect the abolition of the OTS. It 
provides that the management of the Corporation will be vested 
in a five-member Board comprised of the OCC, and four 
Presidential appointees that are confirmed by the Senate. One 
of these four appointees shall have had state bank supervisory 
experience.

Section 335. Continuation provisions

    Section 335 continues all the orders, regulations and other 
regulatory actions of the OTS through the conversion period; 
ensures that the merge does not unintentionally effect the 
rights of parties in litigation; permits the continuation, if 
needed, of arrangements between the OTS and other agencies 
until those arrangements can be concluded in an orderly 
fashion; and transfers OTS property to the OCC or another 
appropriate successor agency.

   subtitle d--technical and conforming amendments to the depository 
                          institution statutes

    Subtitle D contains technical and conforming amendments to 
statutes governing depository institutions. These amendments 
become effective two years after the date of enactment.

   subtitle e--technical and conforming amendments to other statutes

    Subtitle E contains technical and conforming amendments to 
statutes other than those governing depository institutions. 
These amendments made by this subtitle become effective two 
years after the date of enactment of the Act.

  Title IV--Uniform Multistate Licensing of State-Licensed Insurance 
                           Agents and Brokers

Section 401. State Flexibility in multistate licensing reforms

    Section 401 provides that there shall be a system of 
uniform licensing, continuing education and other insurance 
producer sales qualification requirements, if, three years 
after the enactment of the Act, states have not enacted such 
uniform laws and regulations to be applied on a multi-state 
basis. The section requires the NAIC, in consultation with 
State insurance commissioners or chief insurance regulatory 
officials to achieve uniformity of (1) criteria regarding the 
integrity, personal qualifications, education, training, and 
experience of licensed insurance producers; (2) continuing 
education requirements for licensed producers; and (3) other 
requirements so that there is not a effect of limiting or 
conditioning a producer's activities because of its residence 
or place of operations.

Section 402. National Association of Registered Agents and Brokers

    Section 402 establishes a nonprofit corporation known as 
the National Association of Registered Agents and Brokers (the 
Association) which shall not be an agency or extension of the 
U.S. Government.

Section 403. Purpose

    Section 403 states that the Association's purpose is to 
provide a mechanism by which the multi-state services of State-
licensed insurance producers may be more efficiently provided 
to policyholders while preserving States' rights to promulgate 
and enforce insurance-related consumer protection and unfair 
trade practices laws and regulations.

Section 404. Relationship to the Federal Government

    Section 404 requires the Association to be subject to the 
jurisdiction of the National Council on Financial Services 
which is established by section 121 of the Act. However, the 
Association's financial liability and assets shall not be 
included in the United States budget nor be borrowed or pledged 
by the United States.

Section 405. Membership

    Section 405 allows for state-licensed insurance producers 
to be eligible for membership in the Association. Membership in 
the Association shall be on an annual basis and may be subject 
to continuing education requirements. The section further 
authorizes the Association to establish membership criteria as 
to integrity, personal qualifications, education, training, and 
experience of its members and separate classes of membership, 
with separate criteria, based on different duties. The section 
provides that membership may be suspended or revoked by the 
Association if the applicable criteria are not longer met or if 
the member has been subjected to disciplinary proceeding in the 
state. Moreover, the section requires the Association to 
establish an office with a toll-free telephone number which can 
be used by consumers and State insurance regulators to file 
complaints and have disciplinary actions taken as the 
Association deems appropriate pursuant to State laws.

Section 406. Corporate powers

    Section 406 grants the Association the following corporate 
powers: (1) to sue and be sued; (2) to adopt, after and use a 
corporate seal; (3) to adopt, amend and repeal by its Board of 
Directors their bylaws and rules relating to the conduct of 
their business and the indemnity of its directors, officers, 
and employees for liabilities and expenses incurred in 
connection with the defense or settlement of an action or suit; 
(4) to adopt, amend, repeal by its Board of Directors their 
bylaws and rules relating to the terms used in this title, the 
procedures for payment of the Association's assessments and the 
exercise of all other rights and powers under this title; (5) 
to conduct its business and to exercise all other rights and 
powers granted herein; (6) to lease, purchase, accept gifts or 
donation, acquire, own, improve, sell, convey, mortgage or 
otherwise dispose of any property or interest therein; (7) to 
elect or appoint officers, attorneys, employees, and agents as 
may be required; (8) to enter into contracts, to execute 
instruments, to incure liabilities, and to do such other acts 
as may be necessary or incidental to the conduct of its 
business and the exercise of rights and powers granted herein; 
(9) to suspend or revoke the Association membership; (10) to 
levy and collect assessments upon its members and to cover the 
administrative expenses of the Association; and (11) to provide 
advice and recommendations to Congress, courts, the NAIC, State 
insurance regulators, and the Council on matters pertaining to 
the regulation and practices of insurance producers.

Section 407. Board of Directors

    Section 407 grants the Board of Directors of the 
Association with all powers necessary for its management and 
administration, as prescribed in the bylaws. The Board of 
Directors, consisting of 7 members, or otherwise determined by 
the board and approved by the Council, shall be composed of at 
least 50% of the members of NAIC. Each director may serve an 
unlimited number of terms each of which shall be three years. 
One third of the directors shall stand for re-election each 
year.

Section 408. Officers

    Section 408 prescribes that officers of the Association 
consist of a chairperson, vice-chairperson, president, 
secretary, treasury, and such other officers and assistant 
officers as may be deemed necessary. These officers shall be 
elected or appointed for terms not exceeding 3 years and the 
Chairperson shall always be a member of the NAIC.

Section 409. Meeting of Board of Directors

    Section 409 prescribes that meetings may be called by the 
chairperson or otherwise provided by the bylaws.

Section 410. Bylaws, Rules and Disciplinary Action

    Section 410 prescribes that the Board of Directors shall 
file the Association's bylaws with the Council which shall take 
effect 30 days after the date of filing unless the Council 
disapproves or otherwise provides notice of such disapproval. 
The section also requires the Board of Directors to file copies 
of any proposed rule or any proposed amendment to a rule with 
the Council which shall publish public notice thereof and 
provide a forum for a hearing. Further, the section grants the 
Council the authority to approve or disapprove the proposed 
rules.

Section 411. Borrowing authority

    Section 411 grants the Association borrowing authority with 
prior approval and under the terms and conditions determined by 
the Board of Directors. However, the section does not require 
the Federal government to provide funds to any person or to 
guarantee any obligation of the Association.

Section 412. Assessments

    Section 412 holds all insurance producers who are members 
of the Association subject to the assessment for costs in 
connection with applications.

Section 413. Functions of the Council

    Section 413 requires the Council to give appropriate 
notice, opportunity for a hearing, and submission of views from 
interested persons. Further, the section allows the Council to 
make examinations and inspections of the Association, to 
request reports and records from the Association, to receive a 
written report relating to the conduct of its business, and the 
exercise of its rights and powers. In addition, the Council may 
delegate its authority to provide notice, and to conduct 
hearings, examinations, and inspections to one of its member 
agencies. However, at all times, the Council retains the 
ability to supervise and approve the manner in which these 
powers are exercised.

Section 414. Liability of the Association and the directors, officers, 
        and employees of the association

    Section 414 provides that the Association is not deemed to 
be an insurer or insurance producer under State law, rule or 
regulation. Also, the section exempts the Association from all 
taxes, assessments or other levies imposed by any State, 
municipal, county, or local government. Further, the section 
excludes the Association and its directors, others, or 
employees from any liability to any persons for action taken or 
omitted in good faith.

Section 415. Relationship to State law

    Section 415 provides for the preemption of both existing 
and future State laws that impede the activities of an 
insurance producer because of membership with the Association, 
that impose requirements on the Association member's activities 
because of the residence or place of operations, that impose 
different membership and renewal requirements on the 
Association's members, and that implement a system of licensing 
or renewing the licenses in a manner that is different from the 
Association's authority. The section grants the Council the 
authority to make interpretations of State laws that are 
preempted.

Section 416. Coordination with other regulations

    Section 416 grants the Association regulatory authority to 
prescribe uniform applications, to establish a clearinghouse 
through which the Association members may apply for licenses, 
and to establish a national database for the collection of 
regulatory information concerning the activities of insurance 
producers. The section also requires the Association to 
coordinate with the NASD in order to ease any administrative 
burdens.

Section 417. Judicial review

    Section 417 provides the appropriate United States district 
court with exclusive jurisdiction for judicial review for 
disputes between the Association and its members.

Section 418. Definitions

    Section 418 defines the following terms: ``insurance,'' 
``insurance producer,'' ``State law,'' and ``State.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                          BANKING ACT OF 1933

          * * * * * * *
    [Sec. 20. After one year from the date of the enactment of 
this Act, no member bank shall be affiliated in any manner 
described in section 2 (b) hereof with any corporation, 
association, business trust, or other similar organization 
engaged principally in the issue, flotation, underwriting, 
public sale, or distribution at wholesale or retail or through 
syndicate participation of stocks, bonds, debentures, notes, or 
other securities: Provided, That nothing in this paragraph 
shall apply to any such organization which shall have been 
placed in formal liquidation and which shall transact no 
business except such as may be incidental to the liquidation of 
its affairs.
    [For every violation of this section the member bank 
involved shall be subject to a penalty not exceeding $1,000 per 
day for each day during which such violation continues. Such 
penalty may be assessed by the Federal Reserve Board, in its 
discretion, and, when so assessed, may be collected by the 
Federal reserve bank by suit or otherwise.
    [If any such violation shall continue for six calendar 
months after the member bank shall have been warned by the 
Federal Reserve Board to discontinue the same, (a) in the case 
of a national bank, all the rights, privileges, and franchises 
granted to it under the National Bank Act may be forfeited in 
the manner prescribed in section 2 of the Federal Reserve Act, 
as amended (U.S.C., title 12, secs. 141, 222-225, 281-286, and 
502) or, (b) in the case of a State member bank, all of its 
rights and privileges of membership in the Federal Reserve 
System may be forfeited in the manner prescribed in section 9 
of the Federal Reserve Act, as amended (U.S.C., title 12, secs. 
321-332).]
          * * * * * * *
    [Sec. 32. No officer, director, or employee of any 
corporation or unincorporated association, no partner or 
employee of any partnership, and no individual, primarily 
engaged in the issue, flotation, underwriting, public sale, or 
distribution, at wholesale or retail, or through syndicate 
participation, of stocks, bonds, or other similar securities, 
shall serve the same time as an officer, director, or employee 
of any member bank except in limited classes of cases in which 
the Board of Governors of the Federal Reserve System may allow 
such service by general regulations when in the judgment of the 
said Board it would not unduly influence the investment 
policies of such member bank or the advice it gives its 
customers regarding investments.]
          * * * * * * *
                              ----------                              


                    BANK HOLDING COMPANY ACT OF 1956

          * * * * * * *

                              definitions

  Sec. 2. (a)(1) * * *
          * * * * * * *
  (5) Notwithstanding any other provision of this subsection--
          (A) * * *
          * * * * * * *
          [(E) No company is a bank holding company by virtue 
        of its ownership or control of any State-chartered bank 
        or trust company which--
                  [(i) is wholly owned by thrift institutions 
                or savings banks; and
                  [(ii) is restricted to accepting--
                          [(I) deposits from thrift 
                        institutions or savings banks;
                          [(II) deposits arising out of the 
                        corporate business of the thrift 
                        institutions or savings banks that own 
                        the bank or trust company; or
                          [(III) deposits of public moneys.]
          * * * * * * *
  (c) Bank Defined.--For purposes of this Act--
          (1) In general.--Except as provided in paragraph (2), 
        the term ``bank'' means any of the following:
                  (A) * * *
          * * * * * * *
                  (C) A wholesale financial institution 
                chartered under section 5136B of the Revised 
                Statutes of the United States or section 9B of 
                the Federal Reserve Act the deposits of which 
                are not insured by the Federal Deposit 
                Insurance Corporation.
          * * * * * * *
  (h)(1) Except as provided by paragraph (2), the application 
of this Act and of section 23A of the Federal Reserve Act (12 
U.S.C. 371), as amended, shall not be affected by the fact that 
a transaction takes place wholly or partly outside the United 
States or that a company is organized or operates outside the 
United States.
  (2) [Except as provided in paragraph (3), the prohibitions of 
section 4 of this Act shall not apply to shares of any company 
organized under the laws of a foreign country (or to shares 
held by such company in any company engaged in the same general 
line of business as the investor company or in a business 
related to the business of the investor company) that is 
principally engaged in business outside the United States if 
such shares are held or acquired by a bank holding company 
organized under the laws of a foreign country that is 
principally engaged in the banking business outside the United 
States.] A bank holding company organized under the laws of a 
foreign country which is principally engaged in the banking 
business outside of the United States may acquire and hold 
shares of any company organized under the laws of a foreign 
country (or shares held by such company in any company engaged 
in the same general line of business as the investor company or 
in a business related to the business of the investor company) 
that is principally engaged in business outside the United 
States. For the purpose of this subsection, the term ``section 
2(h)(2) company'' means any company whose shares are held 
pursuant to this paragraph.
          * * * * * * *
  [(i) Thrift Institution.--For purposes of this Act, the term 
``thrift institution'' means--
          [(1) any domestic building and loan or savings and 
        loan association;
          [(2) any cooperative bank without capital stock 
        organized and operated for mutual purposes and without 
        profit;
          [(3) any Federal savings bank; and
          [(4) any State-chartered savings bank the holding 
        company of which is registered pursuant to section 408 
        of the National Housing Act.
  [(j) Definition of Savings Associations and Related Term.--
The term ``savings association'' or ``insured institution'' 
means--
          [(1) any Federal savings association or Federal 
        savings bank;
          [(2) any building and loan association, savings and 
        loan association, homestead association, or cooperative 
        bank if such association or cooperative bank is a 
        member of the Savings Association Insurance Fund; and
          [(3) any savings bank or cooperative bank which is 
        deemed by the Director of the Office of Thrift 
        Supervision to be a savings association under section 
        10(l) of the Home Owners' Loan Act.]
  (i) [Repealed.]
  (j) [Repealed.]
          * * * * * * *
  (n) Incorporated Definitions.--For purposes of this Act, the 
terms ``insured depository institution'', ``depository 
institution'', ``appropriate Federal banking agency'', 
``default'', ``in danger of default'', and ``State bank 
supervisor'' have the same meanings as in section 3 of the 
Federal Deposit Insurance Act.
          * * * * * * *

                  acquisition of bank shares or assets
  Sec. 3. (a) * * *
  (b)(1) * * *
          * * * * * * *
  (3) Requirement to file information with attorney general.--
Any applicant seeking prior approval of the Board to engage in 
an acquisition transaction under this section must file 
simultaneously with the Attorney General copies of any 
documents regarding the proposed transaction required by the 
Board.
  (c) Factors for Consideration by Board.--
          [(1) Competitive factors.--The Board shall not 
        approve--
          [(A) any acquisition or merger or consolidation under 
        this section which would result in a monopoly, or which 
        would be in furtherance of any combination or 
        conspiracy to monopolize or to attempt to monopolize 
        the business of banking in any part of the United 
        States, or
          [(B) any other proposed acquisition or merger or 
        consolidation under this section whose effect in any 
        section of the country may be substantially to lessen 
        competition, of to tend to create a monopoly, or which 
        in any other manner would be in restraint of trade, 
        unless it finds that the anticompetitive effects of the 
        proposed transaction are clearly outweighed in the 
        public interest by the probable effect of the 
        transaction in meeting the convenience and needs of the 
        community to be served.]
          [(2)] (1) Banking and community factors.--In every 
        case, the Board shall take into consideration the 
        financial and managerial resources and future prospects 
        of the company or companies and the banks concerned, 
        and the convenience and needs of the community to be 
        served.
          [(3)] (2) Supervisory factors.--The Board shall 
        disapprove any application under this section by any 
        company if--
                  (A) the company fails to provide the Board 
                with adequate assurances that the company will 
                make available to the Board such information on 
                the operations or activities of the company, 
                and any affiliate of the company, as the Board 
                determines to be appropriate to determine and 
                enforce compliance with this Act; or
                  (B) in the case of an application involving a 
                foreign bank, the foreign bank is not subject 
                to comprehensive supervision or regulation on a 
                consolidated basis by the appropriate 
                authorities in the bank's home country.
          [(4)] (3) Treatment of certain bank stock loans.--
        Notwithstanding any other provision of law, the Board 
        shall not follow any practice or policy in the 
        consideration of any application for the formation of a 
        one-bank holding company if following such practice or 
        policy would result in the rejection of such 
        application solely because the transaction to form such 
        one-bank holding company involves a bank stock loan 
        which is for a period of not more than twenty-five 
        years. The previous sentence shall not be construed to 
        prohibit the Board from rejecting any application 
        solely because the other financial arrangements are 
        considered unsatisfactory. The Board shall consider 
        transactions involving bank stock loans for the 
        formation of a one-bank holding company having a 
        maturity of twelve years or more on a case by case 
        basis and no such transaction shall be approved if the 
        Board believes the safety or soundness of the bank may 
        be jeopardized.
          [(5)] (4) Managerial resources.--Consideration of the 
        managerial resources of a company or bank under 
        paragraph (2) shall include consideration of the 
        competence, experience, and integrity of the officers, 
        directors, and principal shareholders of the company or 
        bank.
          * * * * * * *
  (e) [Every bank] Except with regard to a wholesale financial 
institution described in section 2(c)(1)(C), every bank that is 
a holding company and every bank that is a subsidiary of such 
company shall become and remain an insured depository 
institution as such term is defined in section 3 of the Federal 
Deposit Insurance Act.
  [(f) Savings Bank Subsidiaries of Bank Holding Companies.--
          [(1) In general.--Notwithstanding any other provision 
        of this Act (other than paragraphs (2) and (3)), any 
        qualified savings bank which is a subsidiary of a bank 
        holding company may engage, directly or through a 
        subsidiary, in any activity in which such savings bank 
        may engage (as a State chartered savings bank) pursuant 
        to express, incidental, or implied powers under any 
        statute or regulation, or under any judicial 
        interpretation of any law, of the State in which such 
        savings bank is located.
          [(2) Insurance activities.--Except as provided in 
        paragraph (3), any insurance activities of any 
        qualified savings bank which is a subsidiary of a bank 
        holding company shall be limited to insurance 
        activities allowed under section 4(c)(8).
          [(3) Savings bank life insurance.--Any qualified 
        savings bank permitted, as of March 5, 1987, to engage 
        in the sale or underwriting of savings bank life 
        insurance may sell or underwrite such insurance after 
        such savings bank is a subsidiary of a bank holding 
        company if--
                  [(A) the savings bank is located in the State 
                of Connecticut, Massachusetts, or New York;
                  [(B) such activity is expressly authorized by 
                the law of the State in which such savings bank 
                is located;
                  [(C) the savings bank retains its character 
                as a savings bank;
                  [(D) such activity is carried out by the 
                savings bank directly and not by--
                          [(i) any subsidiary or affiliate of 
                        the savings bank; or
                          [(ii) the bank holding company which 
                        controls such savings bank;
                  [(E) such activity is carried out by the 
                savings bank in accordance with any residency 
                or employment limitations set forth in the 
                savings bank life insurance statute in effect 
                on March 5, 1987, in the State in which such 
                bank is located; and
                  [(F) such activity is otherwise carried out 
                in the same manner as savings bank life 
                insurance activity is carried out in the State 
                in which such bank is located by savings banks 
                which are not subsidiaries of any bank holding 
                company registered under this Act.
          [(4) Subsection shall cease to apply under certain 
        circumstances.--If any company which is not a savings 
        bank or a savings bank holding company acquires control 
        of a qualified savings bank, such savings bank shall 
        cease to engage in any activity authorized under 
        paragraph (1) or (3) before the end of the 2-year 
        period beginning on the date such company acquires 
        control, unless such activity is otherwise authorized 
        pursuant to this Act.
          [(5) Special asset aggregation rule for purposes of 
        paragraph (3).--For the sole purpose of determining 
        whether a qualified savings bank may continue to sell 
        and underwrite savings bank life insurance in 
        accordance with this subsection after control of such 
        savings bank is acquired by a bank holding company, the 
        assets of any other bank affiliated with, or under 
        contract to affiliate with, such savings bank as of 
        March 5, 1987, shall be treated as assets of the 
        savings bank in determining whether such bank holding 
        company is a savings bank holding company.]
  [(g)] (f) Mutual Bank Holding Company.--
          (1) Establishment.--Notwithstanding any provision of 
        Federal law other than this Act, a savings bank or 
        cooperative bank operating in mutual form may 
        reorganize so as to form a holding company.
          [(2) Regulation.--A corporation organized as a 
        holding company under this subsection shall be 
        regulated on the same terms and be subject to the same 
        limitations as any other holding company which controls 
        a savings bank.]
          (2) Regulations.--A bank holding company organized as 
        a mutual holding company shall be regulated on terms, 
        and shall be subject to limitations, comparable to 
        those applicable to any other bank holding company.
  (g) Savings and Loan Holding Company Powers Grandfathered.--
          (1) In general.--A company that qualifies under 
        paragraph (2) may--
                  (A) maintain or enter into any nonbank 
                affiliation that the company was permitted 
                pursuant to section 10 of the Home Owners' Loan 
                Act to maintain or enter into prior to becoming 
                a bank holding company pursuant to paragraph 
                (2)(C); and
                  (B) engage in any activity, including holding 
                any asset, in which the company or any 
                affiliate described in subparagraph (A) was 
                permitted pursuant to section 10 of the Home 
                Owners' Loan Act to engage prior to becoming a 
                bank holding company pursuant to paragraph 
                (2)(C).
          (2) Qualified grandfathered companies.--
                  (A) Grandfathered companies defined.--A 
                company qualifies under this paragraph for 
                purposes of paragraph (1) if--
                          (i) as of the date of enactment of 
                        the Thrift Charter Transition Act of 
                        1997, the company--
                                  (I) was a savings and loan 
                                holding company (as defined in 
                                section 10 of the Home Owners' 
                                Loan Act, as in effect on that 
                                date); or
                                  (II) had filed an application 
                                to become a savings and loan 
                                holding company; and
                          (ii) the company--
                                  (I) becomes a bank holding 
                                company by operation of law; or
                                  (II) was exempt from section 
                                4 (as in effect on the date of 
                                enactment of the Thrift Charter 
                                Transition Act of 1997) under 
                                an order issued by the Board 
                                under section 4(d) (as in 
                                effect on the date of enactment 
                                of the Thrift Charter 
                                Transition Act of 1997).
                  (B) Holding companies with identical 
                shareholders.--A company also qualifies under 
                this paragraph for purposes of paragraph (1) if 
                the company--
                          (i) is formed by a company qualified 
                        under subparagraph (A); and
                          (ii) the shareholders of such company 
                        are identical to the shareholders of 
                        the company referred to in (i).
                  (C) Operation of law defined.--For purposes 
                of this subsection, a savings and loan holding 
                company becomes a bank holding company by 
                operation of law if a savings association 
                controlled by the company is converted to a 
                bank or is treated as a bank under an amendment 
                made by the Thrift Charter Transition Act of 
                1997.
          (3) Requirements to retain grandfathered powers.--
                  (A) In general.--Paragraph (1) shall cease to 
                apply to a company if the company does not 
                comply with this paragraph.
                  (B) Acquisition of banks.--
                          (i) In general.--The company may not 
                        acquire (by any form of business 
                        combination) control of a bank after 
                        the date of enactment of the Thrift 
                        Charter Transition Act of 1997.
                          (ii) Exceptions to prohibition.--
                        Clause (i) shall not apply to the 
                        acquisition of--
                                  (I) a bank, during the period 
                                ending on the date 2 years 
                                after the date of enactment of 
                                the Thrift Charter Transition 
                                Act of 1997, if the acquisition 
                                results from the conversion of 
                                a savings association or the 
                                treatment of a savings 
                                association as a bank under 
                                amendments made by the Thrift 
                                Charter Transition Act of 1997;
                                  (II) a bank, if the assets of 
                                such bank are merged with an 
                                insured depository institution 
                                which was controlled by such 
                                company before the date of 
                                enactment of the Thrift Charter 
                                Transition Act of 1997, and if 
                                the resulting institution 
                                continues to comply with the 
                                requirements of Section 10(m) 
                                of the Home Owners' Loan Act as 
                                in effect on the day prior to 
                                enactment of the Thrift Charter 
                                Transition Act of 1997;
                                  (III) shares held as a bona 
                                fide fiduciary (whether with or 
                                without the sole discretion to 
                                vote such shares);
                                  (IV) shares held by any 
                                person as a bona fide fiduciary 
                                solely for the benefit of 
                                employees of either the company 
                                or any subsidiary of the 
                                company and the beneficiaries 
                                of those employees;
                                  (V) an entity described in 
                                section 2(c)(2);
                                  (VI) shares held temporarily 
                                pursuant to an underwriting 
                                commitment in the normal course 
                                of an underwriting business;
                                  (VII) shares held in an 
                                account solely for trading 
                                purposes;
                                  (VIII) shares over which no 
                                control is held other than 
                                control of voting rights 
                                acquired in the normal course 
                                of a proxy solicitation;
                                  (IX) shares or assets 
                                acquired in securing or 
                                collecting a debt previously 
                                contracted in good faith, 
                                during the 2-year period 
                                beginning on the date of such 
                                acquisition or for such 
                                additional time (not exceeding 
                                3 years) as the Board may 
                                permit if the Board determines 
                                that such an extension will not 
                                be detrimental to the public 
                                interest;
                                  (X) a bank from the Federal 
                                Deposit Insurance Corporation, 
                                in any capacity; and
                                  (XI) a bank in an acquisition 
                                in which the bank has been 
                                found to be in danger of 
                                default by the appropriate 
                                Federal or State authority.
                  (C) The company may not control a savings 
                association or a national bank resulting from 
                the conversion of a savings association to a 
                national bank pursuant to section 311 if such 
                savings association or national bank fails to 
                comply with the requirements of section 5(c)(2) 
                and section 10(m) of the Home Owners' Loan Act 
                as in effect on the day before the date of the 
                enactment of the Thrift Charter Transition Act 
                of 1997.
          (4) Grandfathered powers nontransferable.--
                  (A) In general.--Paragraph (1) shall not 
                apply with respect to any company if after the 
                date of the enactment of the Thrift Charter 
                Transition Act of 1997--
                          (i) any company (other than a company 
                        qualified under paragraph (2)) not 
                        under common control with such company 
                        as of that date acquires, directly, or 
                        indirectly, control of the company; or
                          (ii) the company is the subject of 
                        any merger, consolidation, or other 
                        type of business combination as a 
                        result of which a company (other than a 
                        company qualified under paragraph (2)) 
                        not under common control with such 
                        company acquires, directly or 
                        indirectly, control of such company.
                  (B) Anti-evasion.--The appropriate Federal 
                banking agency may issue interpretations, 
                regulations, or orders that it deems necessary 
                to administer and carry out the purpose, and 
                prevent evasions, of this paragraph, including 
                determining that (notwithstanding the form of a 
                transaction) the transaction would in substance 
                effect a change in control.
          (5) Savings and loan holding companies that become 
        bank holding companies.--
                  (A) Exclusion from application requirement.--
                A company that qualifies under subparagraph (B) 
                shall not be required to obtain the approval of 
                the Board under subsection (a) to become a bank 
                holding company if it becomes a bank holding 
                company after the date of enactment of the 
                Thrift Charter Transition Act of 1997 as a 
                result of the conversion of a savings 
                association subsidiary to a bank or by virtue 
                of the treatment of a savings association 
                subsidiary as a bank under an amendment made by 
                this Act.
                  (B) Companies excluded from application 
                requirement.--A company qualifies for purposes 
                of subparagraph (A) if the company, as of the 
                date of the enactment of the Thrift Charter 
                Transition Act of 1997, was a savings and loan 
                holding company (as defined in section 10(a) of 
                the Home Owners' Loan Act as in effect on that 
                date) or has filed an application to become a 
                savings and loan holding company.
                  (C) Supervision and regulation of companies 
                that were previously savings and loan holding 
                companies.--
                          (i) In general.--Any company that 
                        qualifies under paragraph (2) and 
                        complies with paragraph (3) and was 
                        registered and regulated under section 
                        10 of the Home Owners' Loan Act on the 
                        day prior to becoming a bank holding 
                        company described in paragraphs (2) and 
                        (3) shall continue to be regulated, for 
                        a period of 3 years after becoming such 
                        holding company, under the terms of 
                        section 10 of the Home Owners' Loan Act 
                        in the same manner and to the same 
                        extent and subject to the same 
                        requirements as by the Office of Thrift 
                        Supervision before the date of the 
                        enactment of the Thrift Charter 
                        Transition Act of 1997.
                          (ii) Holding company capital 
                        exception.--With regard to holding 
                        company capital, any company that 
                        qualifies under paragraph (2) and 
                        complies with paragraph (3) and was 
                        registered and regulated under section 
                        10 of the Home Owners' Loan Act prior 
                        to June 19, 1997, or had an application 
                        pending to do so on such date, shall 
                        continue to be regulated under the 
                        terms of section 10 of the Home Owners' 
                        Loan Act in the same manner and to the 
                        same extent and subject to the same 
                        requirements as by the Office of Thrift 
                        Supervision before the date of the 
                        enactment of the Thrift Charter 
                        Transition Act of 1997.
                          (iii) Submissions to regulators.--A 
                        company shall provide for a period of 3 
                        years after becoming a bank holding 
                        company described in paragraphs (2) and 
                        (3) the appropriate Federal banking 
                        agency with--
                                  (I) notice of acquisition of 
                                any company not controlled or 
                                affiliated on the date of 
                                enactment of the Thrift Charter 
                                Transition Act of 1997 that is 
                                engaged in nonbanking 
                                activities within 15 days after 
                                completion of any such 
                                transaction; and
                                  (II) copies of such quarterly 
                                and annual reports as it is 
                                otherwise required to file with 
                                any other governmental agency.
                          (iv) Reporting requirements.--The 
                        appropriate Federal banking agency may 
                        adopt, for a period of 3 years after a 
                        company becomes a bank holding company 
                        described in paragraphs (2) and (3), 
                        reporting requirements substantially 
                        similar to and no more burdensome than 
                        required by the Office of Thrift 
                        Supervision as of January 1, 1997.
                          (v) Regulatory authority.--The 
                        appropriate Federal banking agency 
                        shall for a period of 3 years after a 
                        company becomes a bank holding company 
                        described in paragraphs (2) and (3)--
                                  (I) have the same authority 
                                to examine a company or any 
                                subsidiary or affiliate thereof 
                                only to the same extent as the 
                                Office of Thrift Supervision 
                                had as of January 1, 1997; and
                                  (II) conduct only the same 
                                type of examination and with 
                                the same frequency as the 
                                Office of Thrift Supervision 
                                prior to January 1, 1997, 
                                unless required to prevent an 
                                unsafe or unsound activity or 
                                course of conduct of the 
                                savings institution converted 
                                to a bank pursuant to the 
                                Thrift Charter Transition Act 
                                of 1997.

                 [interests in nonbanking organizations

  [Sec. 4. (a) Except as otherwise provided in this Act, no 
bank holding company shall--
          [(1) after the date of enactment of this Act acquire 
        direct or indirect ownership or control of any voting 
        shares of any company which is not a bank, or
          [(2) after two years from the date as of which it 
        becomes a bank holding company, or in the case of a 
        company which has been continuously affiliated since 
        May 15, 1955, with a company which was registered under 
        the Investment Company Act of 1940, prior to May 15, 
        1955, in such a manner as to constitute an affiliated 
        company within the meaning of that Act, after December 
        31, 1978, or, in the case of any company which becomes, 
        as a result of the enactment of the Bank Holding 
        Company Act Amendments of 1970, a bank holding company 
        on the date of such enactment, after December 31, 1980, 
        retain direct or indirect ownership or control of any 
        voting shares of any company which is not a bank or 
        bank holding company or engage in any activities other 
        than (A) those of banking or of managing or controlling 
        banks and other subsidiaries authorized under this Act 
        or of furnishing services to or performing services for 
        its subsidiaries, and (B) those permitted under 
        paragraph (8) of subsection (c) of this section subject 
        to all the conditions specified in such paragraph or in 
        any order or regulation issued by the Board under such 
        paragraph: Provided, That a company covered in 1970 may 
        also engage in those activities in which directly or 
        through a subsidiary (i) it was lawfully engaged on 
        June 30, 1968 (or on a date subsequent to June 30, 1968 
        in the case of activities carried on as the result of 
        the acquisition by such company or subsidiary, pursuant 
        to a binding written contract entered into on or before 
        June 30, 1968, of another company engaged in such 
        activities at the time of the acquisition), and (ii) it 
        has been continuously engaged since June 30, 1968 (or 
        such subsequent date). The Board by order, after 
        opportunity for hearing, may terminate the authority 
        conferred by the preceding proviso on any company to 
        engage directly or through a subsidiary in any activity 
        otherwise permitted by that proviso if it determines, 
        having due regard to the purposes of this Act, that 
        such action is necessary to prevent undue concentration 
        of resources, decreased or unfair competition, 
        conflicts of interest, or unsound banking practices; 
        and in the case of any such company controlling a bank 
        having bank assets in excess of $60,000,000 on or after 
        the date of enactment of the Bank Holding Company Act 
        Amendments of 1970 the Board shall determine, within 
        two years after such date (or, if later, within two 
        years after the date on which the bank assets first 
        exceed $60,000,000), whether the authority conferred by 
        the preceding proviso with respect to such company 
        should be terminated as provided in this sentence. 
        Nothing in this paragraph shall be construed to 
        authorize any bank holding company referred to in the 
        preceding proviso, or any subsidiary thereof, to engage 
        in activities authorized by that proviso through the 
        acquisition, pursuant to a contract entered into after 
        June 30, 1968, of any interest in or the assets of a 
        going concern engaged in such activities. Any company 
        which is authorized to engage in any activity pursuant 
        to the preceding proviso or subsection (d) of this 
        section but, as a result of action of the Board, is 
        required to terminate such activity may 
        (notwithstanding any otherwise applicable time limit 
        prescribed in this paragraph) retain the ownership or 
        control of shares in any company carrying on such 
        activity for a period of ten years from the date on 
        which its authority was so terminated by the Board. 
        Notwithstanding any other provision of this paragraph, 
        if any company that became a bank holding company as a 
        result of the enactment of the Competitive Equality 
        Amendments of 1987 acquired, between March 5, 1987, and 
        the date of the enactment of such Amendments, an 
        institution that became a bank as a result of the 
        enactment of such Amendments, that company shall, upon 
        the enactment of such Amendments, immediately come into 
        compliance with the requirements of this Act.
The Board is authorized, upon application by a bank holding 
company, to extend the two-year period referred to in paragraph 
(2) above from time to time as to such bank holding company for 
not more than one year at a time, if, in its judgment, such an 
extension would not be detrimental to the public interest, but 
no such extensions shall in the aggregate exceed three years. 
Notwithstanding any other provision of this Act, the period 
ending December 31, 1980, referred to in paragraph (2) above, 
may be extended by the Board of Governors to December 31, 1984, 
but only for the divestiture by a bank holding company of real 
estate or interests in real estate lawfully acquired for 
investment or development. In making its decision whether to 
grant such extension, the Board shall consider whether the 
company has made a good faith effort to divest such interests 
and whether such extension is necessary to avert substantial 
loss to the company.
  [(b) After two years from the date of enactment of this Act, 
no certificate evidencing shares of any bank holding company 
shall bear any statement purporting to represent shares of any 
other company except a bank or a bank holding company, nor 
shall the ownership, sale, or transfer of shares of any bank 
holding company be conditioned in any manner whatsoever upon 
the ownership, sale, or transfer of shares of any other company 
except a bank or a bank holding company.
  [(c) The prohibitions in this section shall not apply to (i) 
any company that was on January 4, 1977, both a bank holding 
company and a labor, agricultural, or horticultural 
organization exempt from taxation under section 501 of the 
Internal Revenue Code of 1954, or to any labor, agricultural, 
or horticultural organization to which all or substantially all 
of the assets of such company are hereafter transferred, or 
(ii) a company covered in 1970 more than 85 per centum of the 
voting stock of which was collectively owned on June 30, 1968, 
and continuously thereafter, directly or indirectly, by or for 
members of the same family, or their spouses, who are lineal 
descendants of common ancestors; and such prohibitions shall 
not, with respect to any other bank holding company, apply to--
          [(1) shares of any company engaged or to be engaged 
        solely in one or more of the following activities: (A) 
        holding or operating properties used wholly or 
        substantially by any banking subsidiary of such bank 
        holding company in the operations of such banking 
        subsidiary or acquired for such future use; or (B) 
        conducting a safe deposit business; or (C) furnishing 
        services to or performing services for such bank 
        holding company or its banking subsidiaries; or (D) 
        liquidating assets acquired from such bank holding 
        company or its banking subsidiaries or acquired from 
        any other source prior to May 9, 1956, or the date on 
        which such company became a bank holding company, 
        whichever is later;
          [(2) shares acquired by a bank holding company or any 
        of its subsidiaries in satisfaction of a debt 
        previously contracted in good faith, but such shares 
        shall be disposed of within a period of two years from 
        the date on which they were acquired, except that the 
        Board is authorized upon application by such bank 
        holding company to extend such period of two years from 
        time to time as to such holding company if, in its 
        judgment, such an extension would not be detrimental to 
        the public interest, and, in the case of a bank holding 
        company which has not disposed of such shares within 5 
        years after the date on which such shares were 
        acquired, the Board may, upon the application of such 
        company, grant additional exemptions if, in the 
        judgment of the Board, such extension would not be 
        detrimental to the public interest and, either the bank 
        holding company has made a good faith attempt to 
        dispose of such shares during such 5-year period, or 
        the disposal of such shares during such 5-year period 
        would have been detrimental to the company, except that 
        the aggregate duration of such extensions shall not 
        extend beyond 10 years after the date on which such 
        shares were acquired;
          [(3) shares acquired by such bank holding company 
        from any of its subsidiaries which subsidiary has been 
        requested to dispose of such shares by any Federal or 
        State authority having statutory power to examine such 
        subsidiary, but such bank holding company shall dispose 
        of such shares within a period of two years from the 
        date on which they were acquired;
          [(4) shares held or acquired by a bank in good faith 
        in a fiduciary capacity, except where such shares are 
        held under a trust that constitutes a company as 
        defined in section 2(b) and except as provided in 
        paragraphs (2) and (3) of section 2(g);
          [(5) shares which are of the kinds and amounts 
        eligible for investment by national banking 
        associations under the provisions of section 5136 of 
        the Revised Statutes;
          [(6) shares of any company which do not include more 
        than 5 per centum of the outstanding voting shares of 
        such company;
          [(7) shares of an investment company which is not a 
        bank holding company and which is not engaged in any 
        business other than investing in securities, which 
        securities do not include more than 5 per centum of the 
        outstanding voting shares of any company;
          [(8) shares of any company the activities of which 
        the Board after due notice (and opportunity for hearing 
        in the case of an acquisition of a savings association) 
        has determined (by order or regulation) to be so 
        closely related to banking or managing or controlling 
        banks as to be a proper incident thereto, but for 
        purposes of this subsection it is not closely related 
        to banking or managing or controlling banks for a bank 
        holding company to provide insurance as a principal, 
        agent, or broker except (A) where the insurance is 
        limited to assuring repayment of the outstanding 
        balance due on a specific extension of credit by a bank 
        holding company or its subsidiary in the event of the 
        death, disability, or involuntary unemployment of the 
        debtor; (B) in the case of a finance company which is a 
        subsidiary of a bank holding company, where the 
        insurance is also limited to assuring repayment of the 
        outstanding balance on an extension of credit in the 
        event of loss or damage to any property used as 
        collateral on such extension of credit and, during the 
        period beginning on the date of the enactment of this 
        subparagraph and ending on December 31, 1982, such 
        extension of credit is not more than $10,000 ($25,000 
        in the case of an extension of credit which is made to 
        finance the purchase of a residential manufactured home 
        and which is secured by such residential manufactured 
        home) and for any given year after 1982, such extension 
        of credit is not more than an amount equal to $10,000 
        ($25,000 in the case of an extension of credit which is 
        made to finance the purchase of a residential 
        manufactured home and which is secured by such 
        residential manufactured home) increased by the 
        percentage increase in the Consumer Price Index for 
        Urban Wage Earners and Clerical Workers published 
        monthly by the Bureau of Labor Statistics for the 
        period beginning on January 1, 1982, and ending on 
        December 31 of the year preceding the year in which 
        such extension of credit is made; (C) any insurance 
        agency activity in a place that (i) has a population 
        not exceeding five thousand (as shown by the last 
        preceding decennial census), or (ii) the bank holding 
        company, after notice and opportunity for a hearing, 
        demonstrates has inadequate insurance agency 
        facilities; (D) any insurance agency activity which was 
        engaged in by the bank holding company or any of its 
        subsidiaries on May 1, 1982, or which the Board 
        approved for such company or any of its subsidiaries on 
        or before May 1, 1982, including (i) sales of insurance 
        at new locations of the same bank holding company or 
        the same subsidiary or subsidiaries with respect to 
        which insurance was sold on May 1, 1982, or approved to 
        be sold on or before May 1, 1982, if such new locations 
        are confined to the State in which the principal place 
        of business of the bank holding company is located, any 
        State or States immediately adjacent to such State, and 
        any State or States in which insurance activities were 
        conducted by the bank holding company or any of its 
        subsidiaries on May 1, 1982, or were approved to be 
        conducted by the bank holding company or any of its 
        subsidiaries on or before May 1, 1982, and (ii) sales 
        of insurance coverages which may become available after 
        May 1, 1982, so long as those coverages insure against 
        the same types of risks as, or are otherwise 
        functionally equivalent to, coverages sold on May 1, 
        1982, or approved to be sold on or before May 1, 1982 
        (for purposes of this subparagraph, activities engaged 
        in or approved by the Board on May 1, 1982, shall 
        include activities carried on subsequent to that date 
        as the result of an application to engage in such 
        activities pending on May 1, 1982, and approved 
        subsequent to that date or of the acquisition by such 
        company pursuant to a binding written contract entered 
        into on or before May 1, 1982, of another company 
        engaged in such activities at the time of the 
        acquisition); (E) any insurance activity where the 
        activity is limited solely to supervising on behalf of 
        insurance underwriters the activities of retail 
        insurance agents who sell (i) fidelity insurance and 
        property and casualty insurance on the real and 
        personal property used in the operations of the bank 
        holding company or any of its subsidiaries, and (ii) 
        group insurance that protects the employees of the bank 
        holding company or any of its subsidiaries; (F) any 
        insurance agency activity engaged in by a bank holding 
        company, or any of its subsidiaries, which bank holding 
        company has total assets of $50,000,000 or less: 
        Provided, however, That such a bank holding company and 
        its subsidiaries may not engage in the sale of life 
        insurance or annuities except as provided in 
        subparagraph (A), (B), or (C); or (G) where the 
        activity is performed, or shares of the company 
        involved are owned, directly or indirectly, by a bank 
        holding company which is registered with the Board of 
        Governors of the Federal Reserve System and which, 
        prior to January 1, 1971, was engaged, directly or 
        indirectly, in insurance agency activities as a 
        consequence of approval by the Board prior to January 
        1, 1971. In determining whether a particular activity 
        is a proper incident to banking or managing or 
        controlling banks the Board shall consider whether its 
        performance by an affiliate of a holding company can 
        reasonably be expected to produce benefits to the 
        public, such as greater convenience, increased 
        competition, or gains in efficiency, that outweigh 
        possible adverse effects, such as undue concentration 
        of resources, decreased or unfair competition, 
        conflicts of interests, or unsound banking practices. 
        In orders and regulation under this subsection, the 
        Board may differentiate between activities commenced de 
        novo and activities commenced by the acquisition, in 
        whole or in part, of a going concern. Notwithstanding 
        any other provision of this Act, if the Board finds 
        that an emergency exists which requires the Board to 
        act immediately on any application under this 
        subsection involving a thrift institution, and the 
        primary Federal regulator of such institution concurs 
        in such finding, the Board may dispense with the notice 
        and hearing requirement of this subsection and the 
        Board may approve or deny any such application without 
        notice or hearing. If an application is filed under 
        this paragraph in connection with an application to 
        make an acquisition pursuant to section 13(f) of the 
        Federal Deposit Insurance Act, the Board may dispense 
        with the notice and hearing requirement of this 
        paragraph and the Board may approve or deny the 
        application under this paragraph without notice or 
        hearing. If an application described in the preceding 
        sentence is approved, the Board shall publish in the 
        Federal Register, not later than 7 days after such 
        approval is granted, the order approving the 
        application and a description of the nonbanking 
        activities involved in the acquisition;
          [(9) shares held or activities conducted by any 
        company organized under the laws of a foreign country 
        the greater part of whose business is conducted outside 
        the United States, if the Board by regulation or order 
        determines that, under the circumstances and subject to 
        the conditions set forth in the regulation or order, 
        the exemption would not be substantially at variance 
        with the purposes of this Act and would be in the 
        public interest;
          [(10) shares lawfully acquired and owned prior to May 
        9, 1956, by a bank which is a bank holding company, or 
        by any of its wholly owned subsidiaries;
          [(11) shares owned directly or indirectly by a 
        company covered in 1970 in a company which does not 
        engage in any activities other than those in which the 
        bank holding company, or its subsidiaries, may engage 
        by virtue of this section, but nothing in this 
        paragraph authorizes any bank holding company, or 
        subsidiary thereof, to acquire any interest in or the 
        assets of any going concern (except pursuant to a 
        binding written contract entered into before June 30, 
        1968, or pursuant to another provision of this Act) 
        other than one which was a subsidiary on June 30, 1968;
          [(12) shares retained or acquired, or activities 
        engaged in, by any company which becomes, as a result 
        of the enactment of the Bank Holding Company Act 
        Amendments of 1970, a bank holding company on the date 
        of such enactment, or by any subsidiary thereof, if 
        such company--
                  [(A) within the applicable time limits 
                prescribed in subsection (a)(2) of this section 
                (i) ceases to be a bank holding company, or 
                (ii) ceases to retain direct or indirect 
                ownership or control of those shares and to 
                engage in those activities not authorized under 
                this section; and
                  [(B) complies with such other conditions as 
                the Board may by regulation or order prescribe;
          [(13) shares of, or activities conducted by, any 
        company which does no business in the United States 
        except as an incident to its international or foreign 
        business, if the Board by regulation or order 
        determines that, under the circumstances and subject to 
        the conditions set forth in the regulation or order, 
        the exemption would not be substantially at variance 
        with the purposes of this Act and would be in the 
        public interest; or
          [(14) shares of any company which is an export 
        trading company whose acquisition (including each 
        acquisition of shares) or formation by a bank holding 
        company has not been disapproved by the Board pursuant 
        to this paragraph, except that such investments, 
        whether direct or indirect, in such shares shall not 
        exceed 5 per centum of the bank holding company's 
        consolidated capital and surplus.
                  [(A)(i) No bank holding company shall invest 
                in an export trading company under this 
                paragraph unless the Board has been given sixty 
                days' prior written notice of such proposed 
                investment and within such period has not 
                issued a notice disapproving the proposed 
                investment or extending for up to another 
                thirty days the period during which such 
                disapproval may be issued.
                  [(ii) The period for disapproval may be 
                extended for such additional thirty-day period 
                only if the Board determines that a bank 
                holding company proposing to invest in an 
                export trading company has not furnished all 
                the information required to be submitted or 
                that in the Board's judgment any material 
                information submitted is substantially 
                inaccurate.
                  [(iii) The notice required to be filed by a 
                bank holding company shall contain such 
                relevant information as the Board shall require 
                by regulation or by specific request in 
                connection with any particular notice.
                  [(iv) The Board may disapprove any proposed 
                investment only if--
                          [(I) such disapproval is necessary to 
                        prevent unsafe or unsound banking 
                        practices, undue concentration of 
                        resources, decreased or unfair 
                        competition, or conflicts of interest;
                          [(II) the Board finds that such 
                        investment would affect the financial 
                        or managerial resources of a bank 
                        holding company to an extent which is 
                        likely to have a materially adverse 
                        effect on the safety and soundness of 
                        any subsidiary bank of such bank 
                        holding company, or
                          [(III) the bank holding company fails 
                        to furnish the information required 
                        under clause (iii).
                  [(v) Leverage.--The Board may not disapprove 
                any proposed investment solely on the basis of 
                the anticipated or proposed asset-to-equity 
                ratio of the export trading company with 
                respect to which such investment is proposed, 
                unless the anticipated or proposed annual 
                average asset-to-equity ratio is greater than 
                20-to-1.
                  [(vi) Within three days after a decision to 
                disapprove an investment, the Board shall 
                notify the bank holding company in writing of 
                the disapproval and shall provide a written 
                statement of the basis for the disapproval.
                  [(vii) A proposed investment may be made 
                prior to the expiration of the disapproval 
                period if the Board issues written notice of 
                its intent not to disapprove the investment.
                  [(B)(i) The total amount of extensions of 
                credit by a bank holding company which invests 
                in an export trading company, when combined 
                with all such extensions of credit by all the 
                subsidiaries of such bank holding company, to 
                an export trading company shall not exceed at 
                any one time 10 per centum of the bank holding 
                company's consolidated capital and surplus. For 
                purposes of the preceding sentence, an 
                extension of credit shall not be deemed to 
                include any amount invested by a bank holding 
                company in the shares of an export trading 
                company.
                  [(ii) No provision of any other Federal law 
                in effect on October 1, 1982, relating 
                specifically to collateral requirements shall 
                apply with respect to any such extension of 
                credit.
                  [(iii) No bank holding company or subsidiary 
                of such company which invests in an export 
                trading company may extend credit to such 
                export trading company or to customers of such 
                export trading company on terms more favorable 
                than those afforded similar borrowers in 
                similar circumstances, and such extension of 
                credit shall not involve more than the normal 
                risk of repayment or present other unfavorable 
                features.
                  [(C) For purposes of this paragraph, an 
                export trading company--
                          [(i) may engage in or hold shares of 
                        a company engaged in the business of 
                        underwriting, selling, or distributing 
                        securities in the United States only to 
                        the extent that any bank holding 
                        company which invests in such export 
                        trading company may do so under 
                        applicable Federal and State banking 
                        laws and regulations; and
                          [(ii) may not engage in agricultural 
                        production activities or in 
                        manufacturing, except for such 
                        incidental product modification 
                        including repackaging, reassembling or 
                        extracting byproducts, as is necessary 
                        to enable United States goods or 
                        services to conform with requirements 
                        of a foreign country and to facilitate 
                        their sale in foreign countries.
                  [(D) A bank holding company which invests in 
                an export trading company may be required, by 
                the Board, to terminate its investment or may 
                be made subject to such limitations or 
                conditions as may be imposed by the Board, if 
                the Board determines that the export trading 
                company has taken positions in commodities or 
                commodity contracts, in securities, or in 
                foreign exchange, other than as may be 
                necessary in the course of the export trading 
                company's business operations.
                  [(E) Notwithstanding any other provision of 
                law, an Edge Act corporation, organized under 
                section 25(a) of the Federal Reserve Act (12 
                U.S.C. 611-631), which is a subsidiary of a 
                bank holding company, or an agreement 
                corporation, operating subject to section 25 of 
                the Federal Reserve Act (12 U.S.C. 601-604(a)), 
                which is a subsidiary of a bank holding 
                company, may invest directly and indirectly in 
                the aggregate up to 5 per centum of its 
                consolidated capital and surplus (25 per centum 
                in the case of a corporation not engaged in 
                banking) in the voting stock of other evidences 
                of ownership in one or more export trading 
                companies.
                          [(i) the term ``export trading 
                        company'' means a company which does 
                        business under the laws of the United 
                        States or any State, which is 
                        exclusively engaged in activities 
                        related to international trade, and 
                        which is organized and operated 
                        principally for purposes of exporting 
                        goods or services produced in the 
                        United States or for purposes of 
                        facilitating the exportation of goods 
                        or services produced in the United 
                        States by unaffiliated persons by 
                        providing one or more export trade 
                        services.
                                  [(II) shares held by any 
                                person as a bona fide fiduciary 
                                solely for the benefit of 
                                employees of either the company 
                                described in paragraph (1) or 
                                any subsidiary of that company 
                                and the beneficiaries of those 
                                employees;
                                  [(III) shares held 
                                temporarily pursuant to an 
                                underwriting commitment in the 
                                normal course of an 
                                underwriting business;
                                  [(IV) shares held in an 
                                account solely for trading 
                                purposes;
                                  [(V) shares over which no 
                                control is held other than 
                                control of voting rights 
                                acquired in the normal course 
                                of a proxy solicitation;
                                  [(VI) loans or other accounts 
                                receivable acquired in the 
                                normal course of business;
                                  [(VII) shares or assets 
                                acquired in securing or 
                                collecting a debt previously 
                                contracted in good faith, 
                                during the 2-year period 
                                beginning on the date of such 
                                acquisition or for such 
                                additional time (not exceeding 
                                3 years) as the Board may 
                                permit if the Board determines 
                                that such an extension will not 
                                be detrimental to the public 
                                interest;
                                  [(VIII) shares or assets of a 
                                savings association described 
                                in paragraph (10) or (12) of 
                                this subsection;
                                  [(IX) shares of a savings 
                                association held by any 
                                insurance company, as defined 
                                in section 2(a)(17) of the 
                                Investment Company Act of 1940, 
                                except as provided in paragraph 
                                (11); and
                                  [(X) shares issued in a 
                                qualified stock insuance under 
                                section 10(q) of the Home 
                                Owners' Loan Act;
except that the aggregate amount of shares held under this 
clause (other than under subclauses (I), (II), (III), (IV), 
(V), and (VIII)) may not exceed 15 percent of all outstanding 
shares or of the voting power of a savings association; or
                  [(B) any bank subsidiary of such company 
                fails to comply with the restrictions contained 
                in paragraph (3)(B).
          [(3) Limitation on banks controlled by paragraph (1) 
        companies.--
                  [(A) Findings.--The Congress finds that banks 
                controlled by companies referred to in 
                paragraph (1) may, because of relationships 
                with affiliates, be involved in conflicts of 
                interest, concentration of resources, or other 
                effects adverse to bank safety and soundness, 
                and may also be able to compete unfairly 
                against banks controlled by bank holding 
                companies by combining banking services with 
                financial services not permissible for bank 
                holding companies. The purpose of this 
                paragraph is to minimize any such potential 
                adverse effects or inequities by temporarily 
                restricting the activities of banks controlled 
                by companies referred to in paragraph (1) until 
                such time as the Congress has enacted proposals 
                to allow, with appropriate safeguards, all 
                banks or bank holding companies to compete on a 
                more equal basis with banks controlled by 
                companies referred to in paragraph (1) or, 
                alternatively, proposals to permanently 
                restrict the activities of banks controlled by 
                companies referred to in paragraph (1).
                  [(B) Limitations.--Until such time as the 
                Congress has taken action pursuant to 
                subparagraph (A), a bank controlled by a 
                company described in paragraph (1) shall not--
                          [(i) engage in any activity in which 
                        such bank was not lawfully engaged as 
                        of March 5, 1987;
                          [(ii) offer or market products or 
                        services of an affiliate that are not 
                        permissible for bank holding companies 
                        to provide under subsection (c)(8), or 
                        permit its products or services to be 
                        offered or marketed in connection with 
                        products and services of an affiliate, 
                        unless--
                                  [(I) the Board, by 
                                regulation, has determined such 
                                products and services are 
                                permissible for bank holding 
                                companies to provide under 
                                subsection (c)(8);
                                  [(II) such products and 
                                services are described in 
                                section 20 of the Banking Act 
                                of 1933 and the Board, by 
                                regulation, has permitted bank 
                                holding companies to offer or 
                                market such products or 
                                services, but has prohibited 
                                bank holding companies and 
                                their affiliates from 
                                principally engaging in the 
                                offering or marketing of such 
                                products or services; or
                                  [(III) such products or 
                                services were being so offered 
                                or marketed as of March 5, 
                                1987, and then only in the same 
                                manner in which they were being 
                                offered or marketed as of that 
                                date; or
                          [(iii) after the date of the 
                        enactment of the Competitive Equality 
                        Amendments of 1987, permit any 
                        overdraft (including an intraday 
                        overdraft), or incur any such overdraft 
                        in such bank's account at a Federal 
                        Reserve bank, on behalf of an 
                        affiliate, other than an overdraft 
                        described in subparagraph (C).
                  [(C) Permissible overdrafts described.--For 
                purposes of subparagraph (B)(iii), an overdraft 
                is described in this subparagraph if--
                          [(i) such overdraft results from an 
                        inadvertent computer or accounting 
                        error that is beyond the control of 
                        both the bank and the affiliate; or
                          [(ii) such overdraft--
                                  [(I) is permitted or incurred 
                                on behalf of an affiliate which 
                                is monitored by, reports to, 
                                and is recognized as a primary 
                                dealer by the Federal Reserve 
                                Bank of New York; and
                                  [(II) is fully secured, as 
                                required by the Board, by 
                                bonds, notes, or other 
                                obligations which are direct 
                                obligations of the United 
                                States or on which the 
                                principal and interest are 
                                fully guaranteed by the United 
                                States or by securities and 
                                obligations eligible for 
                                settlement on the Federal 
                                Reserve book entry system.
          [(4) Divestiture in case of loss of exemption.--If 
        any company described in paragraph (1) loses the 
        exemption provided under such paragraph by operation of 
        paragraph (2), such company shall divest control of 
        each bank it controls within 180 days after such 
        company becomes a bank holding company due to the loss 
        of such exemption.
          [(5) Subsection ceases to apply under certain 
        circumstances.--This subsection shall cease to apply to 
        any company described in paragraph (1) if such 
        company--
                  [(A) registers as a bank holding company 
                under section 5(a) of this Act;
                  [(B) immediately upon such registration, 
                complies with all of the requirements of this 
                Act, and regulations prescribed by the Board 
                pursuant to this Act, including the nonbanking 
                restrictions of this section; and
                  [(C) does not, at the time of such 
                registration, control banks in more than one 
                State, the acquisition of which would be 
                prohibited by section 3(d) of this Act if an 
                application for such acquisition by such 
                company were filed under section 3(a) of this 
                Act.
          [(6) Information requirement.--Each company described 
        in paragraph (1) shall, within 60 days after the date 
        of enactment of the Competitive Equality Amendments of 
        1987, provide the Board with the name and address of 
        such company, the name and address of each bank such 
        company controls, and a description of each such bank's 
        activities.
          [(7) Examination.--The Board may, from time to time, 
        examine a company described in paragraph (1), or a bank 
        controlled by such company, or require reports under 
        oath from appropriate officers or directors of such 
        company or bank solely for purposes of assuring 
        compliance with the provisions of this subsection and 
        enforcing such compliance.
          [(8) Enforcement.--
                  [(A) In general.--In addition to any other 
                power of the Board, the Board may enforce 
                compliance with the provisions of this Act 
                which are applicable to any company described 
                in paragraph (1), and any bank controlled by 
                such company, under section 8 of the Federal 
                Deposit Insurance Act and such company or bank 
                shall be subject to such section (for such 
                purposes) in the same manner and to the same 
                extent as if such company or bank were a State 
                member insured bank.
                  [(B) Application of other act.--Any violation 
                of this Act by any company described in 
                paragraph (1), and any bank controlled by such 
                company, may also be treated as a violation of 
                the Federal Deposit Insurance Act for purposes 
                of subparagraph (A).
                  [(C) No effect on other authority.--No 
                provision of this paragraph shall be construed 
                as limiting any authority of the Comptroller of 
                the Currency or the Federal Deposit Insurance 
                Corporation.
          [(9) Tying provisions.--A company described in 
        paragraph (1) shall be--
                  [(A) treated as a bank holding company for 
                purposes of section 106 of the Bank Holding 
                Company Act Amendments of 1970 and section 
                22(h) of the Federal Reserve Act and any 
                regulation prescribed under any such section; 
                and
                  [(B) subject to the restrictions of section 
                106 of the Bank Holding Company Act Amendments 
                of 1970, in connection with any transaction 
                involving the products or services of such 
                company or affiliate and those of a bank 
                affiliate, as if such company or affiliate were 
                a bank and such bank were a subsidiary of a 
                bank holding company.
          [(10) Exemption unaffected by certain emergency 
        acquisitions.--For purposes of clauses (i) and 
        (ii)(VIII) of paragraph (2)(A), an insured institution 
        is described in this paragraph if--
                  [(A) the insured institution was acquired (or 
                any shares or assets of such institution were 
                acquired) by a company described in paragraph 
                (1) in an acquisition under section 408(m) of 
                the National Housing Act or section 13(k) of 
                the Federal Deposit Insurance Act; and
                  [(B) either--
                          [(i) the insured institution is 
                        located in a State in which such 
                        company controlled a bank on March 5, 
                        1987; or
                          [(ii) the insured institution has 
                        total assets of $500,000,000 or more at 
                        the time of such acquisition.
          [(11) Shares held by insurance affiliates.--Shares 
        described in clause (ii)(IX) of paragraph (2)(A) shall 
        not be excluded for purposes of clause (ii) of such 
        paragraph if--
                  [(A) all shares held under such clause 
                (ii)(IX) by all insurance company affiliates of 
                such savings association in the aggregate 
                exceed 5 percent of all outstanding shares or 
                of the voting power of the savings association; 
                or
                  [(B) such shares are acquired or retained 
                with a view to acquiring, exercising, or 
                transferring control of the savings 
                association.
          [(12) Exemption unaffected by certain other 
        acquisitions.--For purposes of clauses (i) and 
        (ii)(VIII) of paragraph (2)(A), an insured institution 
        is described in this paragraph if the insured 
        institution was acquired (or any shares or assets of 
        such institution were acquired) by a company described 
        in paragraph (1)--
                  [(A) from the Resolution Trust Corporation, 
                the Federal Deposit Insurance Corporation, or 
                the Director of the Office of Thrift 
                Supervision, in any capacity; or
                  [(B) in an acquisition in which the insured 
                institution has been found to be in danger of 
                default (as defined in section 3 of the Federal 
                Deposit Insurance Act) by the appropriate 
                Federal or State authority.
          [(13) Special rule relating to shares acquired in a 
        qualified stock issuance.--A company described in 
        paragraph (1) that holds shares issued in a qualified 
        stock issuance pursuant to section 10(q) of the Home 
        Owners' Loan Act by any savings association or savings 
        and loan holding company (neither of which is a 
        subsidiary) shall not be deemed to control such savings 
        association or savings and loan holding company solely 
        because such company holds such shares unless--
                  [(A) the company fails to comply with any 
                requirement or condition imposed by paragraph 
                (2)(A)(ii)(X) or section 10(q) of the Home 
                Owners' Loan Act with respect to such shares; 
                or
                  [(B) the shares are acquired or retained with 
                a view to acquiring, exercising, or 
                transferring control of the savings association 
                or savings and loan holding company.
  [(g) Limitations on Certain Banks.--
          [(1) In general.--Notwithstanding any other provision 
        of this section (other than the last sentence of 
        subsection (a)(2)), a bank holding company which 
        controls an institution that became a bank as a result 
        of the enactment of the Competitive Equality Amendments 
        of 1987 may retain control of such institution if such 
        institution does not--
                  [(A) engage in any activity after the date of 
                the enactment of such Amendments which would 
                have caused such institution to be a bank (as 
                defined in section 2(c), as in effect before 
                such date) if such activities had been engaged 
                in before such date; or
                  [(B) increase the number of locations from 
                which such institution conducts business after 
                March 5, 1987.
          [(2) Limitations cease to apply under certain 
        circumstances.--The limitations contained in paragraph 
        (1) shall cease to apply to a bank described in such 
        paragraph at such time as the acquisition of such bank, 
        by the bank holding company referred to in such 
        paragraph, would not be prohibited under section 3(d) 
        of this Act if--
                  [(A) an application for such acquisition were 
                filed under section 3(a) of this Act; and
                  [(B) such bank were treated as an additional 
                bank (under section 3(d)).
  [(h) Tying Provisions.--
          [(1) Applicable to certain exempt institutions and 
        parent companies.--An institution described in 
        subparagraph (D), (F), (G), (H), (I), or (J) of section 
        2(c)(2) shall be treated as a bank, and a company that 
        controls such an institution shall be treated as a bank 
        holding company, for purposes of section 106 of the 
        Bank Holding Company Act Amendments of 1970 and section 
        22(h) of the Federal Reserve Act and any regulation 
        prescribed under any such section.
          [(2) Applicable with respect to certain 
        transactions.--A company that controls an institution 
        described in subparagraph (D), (F), (G), (H), (I), or 
        (J) of section 2(c)(2) and any of such company's other 
        affiliates, shall be subject to the tying restrictions 
        of section 106 of the Bank Holding Company Act 
        Amendments of 1970 in connection with any transaction 
        involving the products or services of such company or 
        affiliate and those of such institution, as if such 
        company or affiliate were a bank and such institution 
        were a subsidiary of a bank holding company.
  [(i) Acquisition of Savings Associations.--
          [(1) In general.--The Board may approve an 
        application by any bank holding company under 
        subsection (c)(8) to acquire any savings association in 
        accordance with the requirements and limitations of 
        this section.
          [(2) Prohibition on tandem restrictions.--In 
        approving an application by a bank holding company to 
        acquire a savings association, the Board shall not 
        impose any restriction on transactions between the 
        savings association and its holding company affiliates, 
        except as required under sections 23A and 23B of the 
        Federal Reserve Act or any other applicable law.
          [(3) Acquisition of insolvent savings associations.--
                  [(A) In general.--Notwithstanding any other 
                provision of this Act, any qualified savings 
                association which became a federally chartered 
                stock company in December of 1986 and which is 
                acquired by any bank holding company without 
                Federal financial assistance after June 1, 
                1991, and before March 1, 1992, and any 
                subsidiary of any such association, may after 
                such acquisition continue to engage within the 
                home State of the qualified savings association 
                in insurance agency activities in which any 
                Federal savings association (or any subsidiary 
                thereof) may engage in accordance with the Home 
                Owners' Loan Act and regulations pursuant to 
                such Act if the qualified savings association 
                or subsidiary thereof was continuously engaged 
                in such activity from June 1, 1991, to the date 
                of the acquisition.
                  [(B) Definition of qualified savings 
                association.--For purposes of this paragraph, 
                the term ``qualified savings association'' 
                means any savings association that--
                          [(i) was chartered or organized as a 
                        savings association before June 1, 
                        1991;
                          [(ii) had, immediately before the 
                        acquisition of such association by the 
                        bank holding company referred to in 
                        subparagraph (A), negative tangible 
                        capital and total insured deposits in 
                        excess of $3,000,000,000; and
                          [(iii) will meet all applicable 
                        regulatory capital requirements as a 
                        result of such acquisition.
          [(4) Solicitation of views.--
                  [(A) Notice to director.--Upon receiving any 
                application or notice by a bank holding company 
                to acquire, directly or indirectly, a savings 
                association under subsection (c)(8), the Board 
                shall solicit comments and recommendations from 
                the Director with respect to such acquisition.
                  [(B) Comment period.--The comments and 
                recommendations of the Director under 
                subparagraph (A) with respect to any 
                acquisition subject to such subparagraph shall 
                be transmitted to the Board not later than 30 
                days after the receipt by the Director of the 
                notice relating to such acquisition (or such 
                shorter period as the Board may specify if the 
                Board advises the Director that an emergency 
                exists that requires expeditious action).
          [(5) Examination.--
                  [(A) Scope.--The Board shall consult with the 
                Director, as appropriate, in establishing the 
                scope of an examination by the Board of a bank 
                holding company that directly or indirectly 
                controls a savings association.
                  [(B) Access to inspection reports.--Upon the 
                request of the Director, the Board shall 
                furnish the Director with a copy of any 
                inspection report, additional examination 
                materials, or supervisory information relating 
                to any bank holding company that directly or 
                indirectly controls a savings association.
          [(6)  Coordination of enforcement efforts.--The Board 
        and the Director shall cooperate in any enforcement 
        action against any bank holding company that controls a 
        savings association, if the relevant conduct involves 
        such association.
          [(7) Director defined.--For purposes of this section, 
        the term ``Director'' means the Director of the Office 
        of Thrift Supervision.
  [(j) Notice Procedures for Nonbanking Activities.--
          [(1) General notice procedure.--
                  [(A) Notice requirement.--Except as provided 
                in paragraph (3), no bank holding company may 
                engage in any nonbanking activity or acquire or 
                retain ownership or control of the shares of a 
                company engaged in activities based on 
                subsection (c)(8) or (a)(2) without providing 
                the Board with written notice of the proposed 
                transaction or activity at least 60 days before 
                the transaction or activity is proposed to 
                occur or commence.
                  [(B) Contents of notice.--The notice 
                submitted to the Board shall contain such 
                information as the Board shall prescribe by 
                regulation or by specific request in connection 
                with a particular notice.
                  [(C) Procedure for agency action.--
                          [(i) Notice of disapproval.--Any 
                        notice filed under this subsection 
                        shall be deemed to be approved by the 
                        Board unless, before the end of the 60-
                        day period beginning on the date the 
                        Board receives a complete notice under 
                        subparagraph (A), the Board issues an 
                        order disapproving the transaction or 
                        activity and setting forth the reasons 
                        for disapproval.
                          [(ii) Extension of period.--The Board 
                        may extend the 60-day period referred 
                        to in clause (i) for an additional 30 
                        days. The Board may further extend the 
                        period with the agreement of the bank 
                        holding company submitting the notice 
                        pursuant to this subsection.
                          [(iii) Determination of period in 
                        case of public hearing.--In the event a 
                        hearing is requested or the Board 
                        determines that a hearing is warranted, 
                        the Board may extend the notice period 
                        provided in this subsection for such 
                        time as is reasonably necessary to 
                        conduct a hearing and to evaluate the 
                        hearing record. Such extension shall 
                        not exceed the 91-day period beginning 
                        on the date that the hearing record is 
                        complete.
                  [(D) Approval before end of period.--
                          [(i) In general.--Any transaction or 
                        activity may commence before the 
                        expiration of any period for 
                        disapproval established under this 
                        paragraph if the Board issues a written 
                        notice of approval.
                          [(ii) Shorter periods by 
                        regulation.--The Board may prescribe 
                        regulations which provide for a shorter 
                        notice period with respect to 
                        particular activities or transactions.
                  [(E) Extension of period.--In the case of any 
                notice to engage in, or to acquire or retain 
                ownership or control of shares of any company 
                engaged in, any activity pursuant to subsection 
                (c)(8) or (a)(2) that has not been previously 
                approved by regulation, the Board may extend 
                the notice period under this subsection for an 
                additional 90 days. The Board may further 
                extend the period with the agreement of the 
                bank holding company submitting the notice 
                pursuant to this subsection.
          [(2) General standards for review.--
                  [(A) Criteria.--In connection with a notice 
                under this subsection, the Board shall consider 
                whether performance of the activity by a bank 
                holding company or a subsidiary of such company 
                can reasonably be expected to produce benefits 
                to the public, such as greater convenience, 
                increased competition, or gains in efficiency, 
                that outweigh possible adverse effects, such as 
                undue concentration of resources, decreased or 
                unfair competition, conflicts of interests, or 
                unsound banking practices.
                  [(B) Grounds for disapproval.--The Board may 
                deny any proposed transaction or activity for 
                which notice has been submitted pursuant to 
                this subsection if the bank holding company 
                submitting such notice neglects, fails, or 
                refuses to furnish the Board all the 
                information required by the Board.
                  [(C) Conditional action.--Nothing in this 
                subsection limits the authority of the Board to 
                impose conditions in connection with an action 
                under this section.
          [(3) No notice required for certain transactions.--No 
        notice under paragraph (1) of this subsection or under 
        subsection (c)(8) or (a)(2)(B) is required for a 
        proposal by a bank holding company to engage in any 
        activity or acquire the shares or assets of any 
        company, other than an insured depository institution, 
        if the proposal qualifies under paragraph (4).
          [(4) Criteria for statutory approval.--A proposal 
        qualifies under this paragraph if all of the following 
        criteria are met:
                  [(A) Financial criteria.--Both before and 
                immediately after the proposed transaction--
                          [(i) the acquiring bank holding 
                        company is well capitalized;
                          [(ii) the lead insured depository 
                        institution of such holding company is 
                        well capitalized;
                          [(iii) well capitalized insured 
                        depository institutions control at 
                        least 80 percent of the aggregate total 
                        risk-weighted assets of insured 
                        depository institutions controlled by 
                        such holding company; and
                          [(iv) no insured depository 
                        institution controlled by such holding 
                        company is undercapitalized.
                  [(B) Managerial criteria.--
                          [(i) Well managed.--At the time of 
                        the transaction, the acquiring bank 
                        holding company, its lead insured 
                        depository institution, and insured 
                        depository institutions that control at 
                        least 90 percent of the aggregate total 
                        risk-weighted assets of insured 
                        depository institutions controlled by 
                        such holding company are well managed.
                          [(ii) Limitation on poorly managed 
                        institutions.--Except as provided in 
                        paragraph (6), no insured depository 
                        institution controlled by the acquiring 
                        bank holding company has received 1 of 
                        the 2 lowest composite ratings at the 
                        later of the institution's most recent 
                        examination or subsequent review.
                  [(C) Activities permissible.--Following 
                consummation of the proposal, the bank holding 
                company engages directly or through a 
                subsidiary solely in--
                          [(i) activities that are permissible 
                        under subsection (c)(8), as determined 
                        by the Board by regulation or order 
                        thereunder, subject to all of the 
                        restrictions, terms, and conditions of 
                        such subsection and such regulation or 
                        order; and
                          [(ii) such other activities as are 
                        otherwise permissible under this 
                        section, subject to the restrictions, 
                        terms and conditions, including any 
                        prior notice or approval requirements, 
                        provided in this section.
                  [(D) Size of acquisition.--
                          [(i) Asset size.--The book value of 
                        the total assets to be acquired does 
                        not exceed 10 percent of the 
                        consolidated total risk-weighted assets 
                        of the acquiring bank holding company.
                          [(ii) Consideration.--The gross 
                        consideration to be paid for the 
                        securities or assets does not exceed 15 
                        percent of the consolidated Tier 1 
                        capital of the acquiring bank holding 
                        company.
                  [(E) Notice not otherwise warranted.--For 
                proposals described in paragraph (5)(B), the 
                Board has not, before the conclusion of the 
                period provided in paragraph (5)(B), advised 
                the bank holding company that a notice under 
                paragraph (1) is required.
                  [(F) Compliance criterion.--During the 12-
                month period ending on the date on which the 
                bank holding company proposes to commence an 
                activity or acquisition, no administrative 
                enforcement action has been commenced, and no 
                cease and desist order has been issued pursuant 
                to section 8 of the Federal Deposit Insurance 
                Act, against the bank holding company or any 
                depository institution subsidiary of the 
                holding company, and no such enforcement 
                action, order, or other administrative 
                enforcement proceeding is pending as of such 
                date.
          [(5) Notification.--
                  [(A) Commencement of activities approved by 
                rule.--A bank holding company that qualifies 
                under paragraph (4) and that proposes to engage 
                de novo, directly or through a subsidiary, in 
                any activity that is permissible under 
                subsection (c)(8), as determined by the Board 
                by regulation, may commence that activity 
                without prior notice to the Board and must 
                provide written notification to the Board not 
                later than 10 business days after commencing 
                the activity.
                  [(B) Activities permitted by order and 
                acquisitions.--
                          [(i) In general.--At least 12 
                        business days before commencing any 
                        activity pursuant to paragraph (3) 
                        (other than an activity described in 
                        subparagraph (A) of this paragraph) or 
                        acquiring shares or assets of any 
                        company pursuant to paragraph (3), the 
                        bank holding company shall provide 
                        written notice of the proposal to the 
                        Board, unless the Board determines that 
                        no notice or a shorter notice period is 
                        appropriate.
                          [(ii) Description of activities and 
                        terms.--A notification under this 
                        subparagraph shall include a 
                        description of the proposed activities 
                        and the terms of any proposed 
                        acquisition.
          [(6) Recently acquired institutions.--Any insured 
        depository institution which has been acquired by a 
        bank holding company during the 12-month period 
        preceding the date on which the company proposes to 
        commence an activity or acquisition pursuant to 
        paragraph (3) may be excluded for purposes of paragraph 
        (4)(B)(ii) if--
                  [(A) the bank holding company has developed a 
                plan for the institution to restore the capital 
                and management of the institution which is 
                acceptable to the appropriate Federal banking 
                agency; and
                  [(B) all such insured depository institutions 
                represent, in the aggregate, less than 10 
                percent of the aggregate total risk-weighted 
                assets of all insured depository institutions 
                controlled by the bank holding company.
          [(7) Adjustment of percentages.--The Board may, by 
        regulation, adjust the percentages and the manner in 
        which the percentages of insured depository 
        institutions are calculated under paragraph (4)(B)(i), 
        (4)(D), or (6)(B) if the Board determines that any such 
        adjustment is consistent with safety and soundness and 
        the purposes of this Act.]

SEC. 4 [REPEALED].

                             administration

  Sec. 5. (a) Within one hundred and eighty days after the date 
of enactment of this Act, or within one hundred and eighty days 
after becoming a bank holding company, whichever is later, each 
bank holding company shall register with the Board on forms 
prescribed by the Board, which shall include such information 
with respect to the financial condition and operations, 
management, and intercompany relationships of the bank holding 
company and its subsidiaries, and related matters, as the Board 
may deem necessary or appropriate to carry about the purposes 
of this Act. The Board may, in its discretion, extend the time 
within which a bank holding company shall register and file the 
requisite information. A declaration filed pursuant to section 
6(a)(1)(F) shall satisfy the requirements of this subsection 
with regard to the registration of a bank holding company but 
not any requirement to file an application to acquire a bank 
pursuant to section 3.
          * * * * * * *
  [(c) The Board from time to time may require reports under 
oath to keep it informed as to whether the provisions of this 
Act and such regulations and orders issued thereunder have been 
complied with; and the Board may make examinations of each bank 
holding company and each subsidiary thereof, the cost of which 
shall be assessed against, and paid by, such holding company. 
The Board shall, as far as possible, use the reports of 
examinations made by the Comptroller of the Currency, the 
Federal Deposit Insurance Corporation, or the appropriate State 
bank supervisory authority for the purposes of this section.]
  (c) Reports and Examinations.--
          (1) Reports.--
                  (A) In general.--The Board from time to time 
                may require any bank holding company to submit 
                reports, under oath or otherwise, to enable the 
                Board to determine compliance with the 
                provisions of this Act and regulations and 
                orders issued thereunder.
                  (B) Use of existing reports.--
                          (i) In general.--The Board shall not 
                        require any report pursuant to 
                        subparagraph (A) if information 
                        sufficient for the Board to make the 
                        determinations required under 
                        subparagraph (A) is reasonably 
                        available from any other source.
                          (ii) Use.--The Board shall, as far as 
                        possible, use the reports of 
                        examination or comparable reports 
                        prepared by any Federal or State 
                        regulatory agency, or any self-
                        regulatory organization for purposes of 
                        subparagraph (A).
                          (iii) Availability.--Each Federal and 
                        State regulatory agency and self-
                        regulatory organization referred to in 
                        clause (ii) shall make the reports 
                        referred to in such clause available to 
                        the Board upon request.
                  (C) Exemptions from reporting requirements.--
                          (i) In general.--The Board may, by 
                        regulation or order, exempt any company 
                        or class of companies, under such terms 
                        and conditions and for such periods as 
                        the Board shall provide, from this 
                        paragraph and any regulations 
                        prescribed under this paragraph.
                          (ii) Criteria for exemption.--In 
                        granting an exemption under clause (i), 
                        the Board shall consider, among other 
                        factors--
                                  (I) whether information of 
                                the type required under this 
                                paragraph is available from a 
                                supervisory agency (as defined 
                                in section 1101(7) of the Right 
                                to Financial Privacy Act of 
                                1978), the Commodity Futures 
                                Trading Commission, or a 
                                foreign regulatory body of a 
                                similar type;
                                  (II) the primary business of 
                                the company;
                                  (III) the nature and extent 
                                of domestic or foreign 
                                regulation of the activities of 
                                such company; and
                                  (IV) the absolute and 
                                relative size within the 
                                company of the subsidiary 
                                depository institutions of the 
                                company.
          (2) Examinations.--
                  (A) Examination authority.--The Board may 
                make examinations of each bank holding company 
                and each subsidiary thereof, the cost of which 
                shall be assessed against, and made payable by 
                such holding company.
                  (B) Limitations on examination authority for 
                bank holding companies and nonbank 
                subsidiaries.--The Board may make examinations 
                of each bank holding company and each nonbank 
                subsidiary (other than a subsidiary of a 
                depository institution) in order to--
                          (i) inform the Board of the nature of 
                        the operations and financial condition 
                        of the holding company and such 
                        subsidiaries;
                          (ii) inform the Board of--
                                  (I) the financial and 
                                operational risks within the 
                                holding company system that may 
                                pose a threat to the safety and 
                                soundness of any subsidiary 
                                depository institution of such 
                                holding company; and
                                  (II) the systems of the 
                                holding company; and
                          (iii) monitor compliance with the 
                        provisions of this Act and those 
                        governing transactions and 
                        relationships between any subsidiary 
                        depository institution and such 
                        subsidiaries.
                  (C) Restricted focus of examinations.--The 
                Board shall, to the fullest extent possible, 
                limit the focus and scope of any examination of 
                a bank holding company to--
                          (i) the bank holding company; and
                          (ii) any nonbank subsidiary of the 
                        holding company (other than a 
                        subsidiary of a depository institution) 
                        that, because of--
                                  (I) the size, condition, or 
                                activities of the subsidiary;
                                  (II) the nature or size of 
                                transactions between such 
                                subsidiary and any depository 
                                institution which is also a 
                                subsidiary of such holding 
                                company; or
                                  (III) the centralization of 
                                functions within the holding 
                                company system,
                        could have a materially adverse effect 
                        on the safety and soundness of any 
                        depository institution affiliate of the 
                        holding company.
                  (D) Deference to bank examinations.--The 
                Board shall, to the fullest extent possible, 
                use, for the purposes of this section, the 
                reports of examinations of depository 
                institutions made by the appropriate Federal 
                and State depository institution supervisory 
                authority.
                  (E) Deference to other examinations.--The 
                Board shall, to the fullest extent possible, 
                use the reports of examination made of--
                          (i) any registered broker or dealer 
                        by or on behalf of the Securities and 
                        Exchange Commission;
                          (ii) any licensed insurance company 
                        by or on behalf of any state regulatory 
                        authority responsible for the 
                        supervision of insurance companies; and
                          (iii) any other subsidiary that the 
                        Board finds to be comprehensively 
                        supervised by a Federal or State 
                        authority.
          (3) Notice to banking agencies of financial and 
        operational concerns.--Any agency represented on the 
        National Council on Financial Services or any State 
        supervisory authority shall notify the Board and the 
        appropriate Federal banking agency or State bank 
        supervisor of significant financial or operational 
        risks to any depository institution resulting from the 
        activities of any affiliate of a depository 
        institution.
          (4) Transfer of board authority to appropriate 
        federal banking agency.--
                  (A) In general.--In the case of any bank 
                holding company which is not significantly 
                engaged in nonbanking activities, the Board, in 
                consultation with the appropriate Federal 
                banking agency, may designate the appropriate 
                Federal banking agency of the lead insured 
                depository institution subsidiary of such 
                holding company as the appropriate Federal 
                banking agency for the bank holding company.
                  (B) Authority transferred.--An agency 
                designated by the Board under subparagraph (A) 
                shall have the same authority as the Board 
                under this Act to--
                          (i) examine and require reports from 
                        the bank holding company and any 
                        affiliate of such company (other than a 
                        bank) under section 5;
                          (ii) approve or disapprove 
                        applications or transactions under 
                        section 3, 6, or 11;
                          (iii) take actions and impose 
                        penalties under subsections (e) and (f) 
                        of section 5 and section 8; and
                          (iv) take actions regarding the 
                        holding company, any affiliate of the 
                        holding company (other than a bank), or 
                        any institution-affiliated party of 
                        such company or affiliate under the 
                        Federal Deposit Insurance Act and any 
                        other statute which the Board may 
                        designate.
                  (C) Agency orders.--Section 9 (of this Act) 
                and section 105 of the Bank Holding Company Act 
                Amendments of 1970 shall apply to orders issued 
                by an agency designated under subparagraph (A) 
                in the same manner such sections apply to 
                orders issued by the Board.
          (5) Functional regulation of securities and insurance 
        activities.--The Board shall defer to--
                  (A) the Securities and Exchange Commission 
                with regard to all interpretations of, and the 
                enforcement of, applicable Federal securities 
                laws relating to the activities, conduct, and 
                operations of registered brokers, dealers, 
                investment advisers, and investment companies; 
                and
                  (B) the relevant State insurance authorities 
                with regard to all interpretations of, and the 
                enforcement of, applicable State insurance laws 
                relating to the activities, conduct, and 
                operations of insurance companies and insurance 
                agents.
          * * * * * * *
  (e)(1) Notwithstanding any other provision of this Act, the 
Board may, whenever it has reasonable cause to believe that the 
continuation by a bank holding company of any activity or of 
ownership or control of any of its nonbank subsidiaries, other 
than a nonbank subsidiary of a bank, constitutes a serious risk 
to the financial safety, soundness, or stability of a bank 
holding company subsidiary bank and is inconsistent with sound 
banking principles or with the purposes of this Act or with the 
[Financial Institutions Supervisory Act of 1966, order] 
Financial Institutions Supervisory Act of 1966, at the election 
of the bank holding company--
          (A) order the bank holding company or any such 
        nonbank subsidiaries, after due notice and opportunity 
        for hearing, and after considering the views of the 
        bank's primary supervisor, which shall be the 
        Comptroller of the Currency in the case of a national 
        bank or the Federal Deposit Insurance Corporation and 
        the appropriate State supervisory authority in the case 
        of an insured nonmember bank, to terminate such 
        activities or to terminate (within one hundred and 
        twenty days or such longer period as the Board may 
        direct in unusual circumstances) its ownership or 
        control of any such subsidiary either by sale or by 
        distribution of the shares of the subsidiary to the 
        [shareholders of the bank holding company. Such 
        distribution] shareholders of the bank holding company; 
        or
          (B) order the bank holding company, after due notice 
        and opportunity for hearing, and after consultation 
        with the bank's primary supervisor, which shall be the 
        Comptroller of the Currency in the case of a national 
        bank, and the Federal Deposit Insurance Corporation and 
        the appropriate State supervisor in the case of an 
        insured nonmember bank, to terminate (within 120 days 
        or such longer period as the Board may direct) the 
        ownership or control of any such bank by such company.
The distribution referred to in subparagraph (A) shall be pro 
rata with respect to all of the shareholders of the 
distributing bank holding company, and the holding company 
shall not make any charge to its shareholders arising out of 
such a distribution.
          * * * * * * *
  (g) [Reserved].
  (h) Capital Adequacy Guidelines.--
          (1) Capital adequacy provisions.--The Board may adopt 
        capital adequacy rules or guidelines for bank holding 
        companies.
          (2) Methods of calculation.--In developing rules or 
        guidelines under paragraph (1)--
                  (A) Focus on double leverage.--The Board 
                shall address the use by bank holding companies 
                of debt and other liabilities to fund capital 
                investments in subsidiary depository 
                institutions.
                  (B) No unweighted capital ratio.--The Board 
                shall not, by rule, regulation, guideline, 
                order, or otherwise, impose a capital ratio 
                that is not based on appropriate risk-weighting 
                considerations.
                  (C) No capital requirement on regulated 
                entities.--The Board shall not, by rule, 
                regulation, guideline, order, or otherwise, 
                impose any capital adequacy provision on a 
                nondepository institution subsidiary that is in 
                compliance with applicable capital requirements 
                of another Federal or State regulatory 
                authority.
                  (D) Appropriate exclusions.--The Board shall 
                take full account of--
                          (i) the capital requirements made 
                        applicable to any nondepository 
                        institution subsidiary by another 
                        Federal or State regulatory authority; 
                        and
                          (ii) industry norms for 
                        capitalization of a company's 
                        unregulated subsidiaries and 
                        activities.
                  (E) Consultation with other supervisors.--The 
                Board shall consult with the appropriate 
                Federal or State regulatory authority in 
                developing capital adequacy guidelines for bank 
                holding companies that are predominantly 
                engaged, either directly or through 
                nondepository institution subsidiaries, in 
                activities that are supervised by that 
                authority.
                  (F) Appropriate differentiation of holding 
                companies.--The Board may differentiate between 
                different classes or categories of bank holding 
                companies, in particular between bank holding 
                companies that are predominantly engaged in 
                owning and operating insured depository 
                institutions, bank holding companies which do 
                not own or control insured depository 
                institutions, and bank holding companies which 
                are predominantly engaged in activities that 
                are supervised by another Federal or State 
                regulatory authority.
                  (G) Internal risk management models.--The 
                Board may incorporate internal risk management 
                models into its capital adequacy guidelines or 
                rules.
  (i) Authority of State Insurance Regulator.--
          (1) In general.--Notwithstanding any other provision 
        of law, any regulation, order, or other action of the 
        Board which requires a bank holding company to provide 
        funds or other assets to a subsidiary insured 
        depository institution shall not be effective nor 
        enforceable if--
                  (A) such funds or assets are to be provided 
                by--
                          (i) a bank holding company which is 
                        an insurance company; or
                          (ii) an affiliate of the insured 
                        depository institution which is an 
                        insurance company; and
                  (B) the State insurance authority for the 
                insurance company determines in writing sent to 
                the insurance company and the Board that the 
                insurance company shall not provide such funds 
                or assets because such action would have a 
                material adverse effect on the financial 
                condition of the insurance company.
          (2) Divestiture in lieu of other action.--If the 
        Board receives a notice described in paragraph (1)(B) 
        from a State insurance authority with regard to a bank 
        holding company referred to in such paragraph, the 
        Board may order the bank holding company to divest the 
        insured depository institution within 180 days of 
        receiving notice from the State insurance authority or 
        such longer period as the Board determines consistent 
        with the safe and sound operation of the insured 
        depository institution.
          (3) Conditions before divestiture.--During the period 
        beginning on the date an order to divest is issued by 
        the Board under paragraph (2) to a bank holding company 
        and ending on the date the divestiture is completed, 
        the Board may impose any conditions or restrictions on 
        the holding company's ownership or operation of the 
        insured depository institution, including restricting 
        or prohibiting transactions between the insured 
        depository institution and any affiliate of the 
        institution, as are appropriate under the 
        circumstances.

SEC. 6. QUALIFYING BANK HOLDING COMPANIES.

  (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Qualifying bank holding company.--The term 
        ``qualifying bank holding company'' means any bank 
        holding company--
                  (A) all of the subsidiary depository 
                institutions of which are well capitalized;
                  (B) all of the subsidiary depository 
                institutions of which are well managed (as 
                defined in section 5136A(a)(5)(D) of the 
                Revised Statutes of the United States);
                  (C) all of the subsidiary depository 
                institutions of which have achieved a rating of 
                ``satisfactory record of meeting community 
                credit needs'', or better, at the most recent 
                examination of each such institution;
                  (D) all of the subsidiary depository 
                institutions of which have a demonstrable 
                record of performance in the provision of low-
                cost lifeline bank accounts;
                  (E) in the case of any bank holding company 
                which underwrites or sells, or any affiliate of 
                which underwrites or sells, annuities contracts 
                or contracts insuring, guaranteeing, or 
                indemnifying against loss, harm, damage, 
                illness, disability, or death, which--
                          (i) has not been adjudicated in any 
                        Federal court, or has not entered into 
                        a consent decree filed in a Federal 
                        court or into a settlement agreement, 
                        premised upon a violation of the Fair 
                        Housing Act for the activities 
                        described in this subparagraph and is 
                        not in violation of any such decree or 
                        settlement agreement as determined by a 
                        court of competent jurisdiction or the 
                        agency with which the decree or 
                        agreement was entered into; or
                          (ii) has been exempted from the 
                        requirements of clause (i) by the Board 
                        under subsection (f)(3).
                  (F) that is deemed under paragraph (2) to be 
                engaged in activities in the United States that 
                are financial in nature or is engaged in 
                activities that are otherwise permissible under 
                this Act (other than activities engaged in 
                pursuant to subsection (k));
                  (G) which, with respect to any activities 
                engaged in outside of the United States, 
                engages in such activities in conformance with 
                subsection (f) and section 2(h)(2); and
                  (H) that has filed with the Board a 
                declaration that it is a qualifying bank 
                holding company.
          (2) Activities financial in nature.--A bank holding 
        company shall be deemed to be engaged in activities 
        that are financial in nature if not less than 85 
        percent of the gross revenues of such company from 
        activities conducted in the United States are derived 
        from financial activities in which such company or any 
        of its subsidiaries engages.
          (3) Financial activity.--The term ``financial 
        activity'' means any 1 or more of the following:
                  (A) Receiving money subject to a deposit or 
                other repayment obligation.
                  (B) Lending, exchanging, transferring, 
                investing, or safeguarding money or other 
                financial assets.
                  (C) Providing any device or other 
                instrumentality for transferring money or other 
                financial assets;
                  (D) Insuring, guaranteeing, or indemnifying 
                against loss, harm, damage, illness, 
                disability, or death, or providing and issuing 
                annuities, and acting as principal, agent, or 
                broker for purposes of the foregoing.
                  (E) Providing financial, investment, or 
                economic advisory or information services, 
                including advising an investment company (as 
                defined in section 3 of the Investment Company 
                Act of 1940).
                  (F) Issuing or selling instruments 
                representing interests in pools of assets 
                permissible for a bank to hold directly.
                  (G) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 
                1 or more entities (including entities other 
                than depository institutions or subsidiaries of 
                depository institutions that the bank holding 
                company controls), or otherwise, shares, 
                assets, or ownership interests (including 
                without limitation debt or equity securities, 
                partnership interests, trust certificates, or 
                other instruments representing ownership) of a 
                company or other entity, whether or not 
                constituting control of such company or entity, 
                engaged in any activity if--
                          (i) the shares, assets, or ownership 
                        interests are not acquired or held 
                        directly by a depository institution or 
                        a subsidiary of a depository 
                        institution;
                          (ii) such shares, assets, or 
                        ownership interests are acquired and 
                        held as part of a bona fide 
                        underwriting, or investment banking 
                        activity (including investment 
                        activities engaged in for the purpose 
                        of appreciation and ultimate sale or 
                        other disposition of the investment);
                          (iii) such shares, assets, or 
                        ownership interests are held for such a 
                        period as will permit the sale or 
                        disposition thereof on a reasonable 
                        basis consistent with the nature of the 
                        activities described in clause (ii); 
                        and
                          (iv) during the period such shares, 
                        assets, or ownership interests are 
                        held, the bank holding company does not 
                        actively manage or operate the company 
                        or entity, except insofar as necessary 
                        to achieve the objectives of clause 
                        (ii).
                  (H) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 
                1 or more entities (including any subsidiary of 
                the holding company which is not a depository 
                institution or a subsidiary of a depository 
                institution), or otherwise, shares, assets, or 
                ownership interests (including debt or equity 
                securities, partnership interests, trust 
                certificates, or other instruments representing 
                ownership) of a company or other entity, 
                whether or not constituting control of such 
                company or entity, engaged in activities not 
                authorized pursuant to this section if--
                          (i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution or a subsidiary 
                        of a depository institution;
                          (ii) such shares, assets, or 
                        ownership interests are acquired and 
                        held by an insurance company that is 
                        predominantly engaged in underwriting 
                        life, accident and health, or property 
                        and casualty insurance (other than 
                        credit-related insurance);
                          (iii) such shares, assets, or 
                        ownership interests represent an 
                        investment made in the ordinary course 
                        of business of such insurance affiliate 
                        in accordance with relevant State law 
                        governing such investments; and
                          (iv) during the period such shares, 
                        assets, or ownership interests are 
                        held, the bank holding company does not 
                        directly or indirectly participate in 
                        the day-to-day management or operation 
                        of the company or entity except insofar 
                        as necessary to achieve the objectives 
                        of clauses (ii) and (iii).
                  (I) Arranging, effecting or facilitating 
                financial transactions for the account of third 
                parties.
                  (J) Underwriting, dealing in, or making a 
                market in securities.
                  (K) Engaging in any activity that was, by 
                regulation or order, permissible for a bank 
                holding company pursuant to section 4(c)(8) of 
                this Act, as in effect on the day before the 
                date of enactment of the Financial Services 
                Competition Act of 1997.
                  (L) Engaging, in the United States, in any 
                activity that--
                          (i) a bank holding company may engage 
                        in outside the United States; and
                          (ii) the Board determined, under 
                        regulations issued pursuant to section 
                        4(c)(13) of this Act (as in effect on 
                        the day before the date of enactment of 
                        the Financial Services Competition Act 
                        of 1997) to be usual in connection with 
                        the transaction of banking or other 
                        financial operations abroad.
                  (M) Owning shares of any company to the 
                extent permissible under paragraph (6) or (7) 
                of section 4(c) of this Act, as in effect on 
                the day before the date of enactment of the 
                Financial Services Competition Act of 1997.
                  (N) Engaging in any activity that the 
                National Council on Financial Services 
                determines, by regulation or order, to be the 
                functional equivalent of any activity described 
                in 1 or more of subparagraphs (A) through (M).
                  (O) Engaging in any activity that the 
                National Council on Financial Services 
                determines by regulation or order to be 
                financial, or related to a financial activity, 
                having taken into account--
                          (i) the purposes of this Act and the 
                        Financial Services Competition Act of 
                        1997;
                          (ii) changes or reasonably expected 
                        changes in the market in which bank 
                        holding companies compete;
                          (iii) changes or reasonably expected 
                        changes in the technology for 
                        delivering financial services; and
                          (iv) whether such activity is 
                        necessary or appropriate to allow a 
                        bank holding company and its affiliates 
                        to--
                                  (I) compete effectively with 
                                any company seeking to provide 
                                financial services in the 
                                United States;
                                  (II) use any available or 
                                emerging technological means, 
                                including any application 
                                necessary to protect the 
                                security or efficacy of systems 
                                for the transmission of data or 
                                financial transactions, in 
                                providing financial services; 
                                and
                                  (III) offer customers any 
                                available or emerging 
                                technological means for using 
                                financial services.
          (4) Well capitalized.--The term ``well capitalized'' 
        has the same meaning as in section 38 of the Federal 
        Deposit Insurance Act. For purposes of this section, 
        the appropriate Federal banking agency shall have 
        exclusive jurisdiction to determine whether an insured 
        depository institution is well capitalized.
          (5) Foreign banks and companies.--For purposes of 
        paragraph (1), the Board shall establish and apply 
        comparable capital standards to a foreign bank that 
        operates a branch or agency or owns or controls a bank 
        or commercial lending company in the United States, and 
        any company that owns or controls such foreign bank, 
        giving due regard to the principle of national 
        treatment and equality of competitive opportunity.
          (6) Limited exclusions from community needs 
        requirements for newly acquired depository 
        institutions.--Any depository institution acquired by a 
        bank holding company during the 12-month period 
        preceding the submission of a notice under paragraph 
        (1)(F) and any depository institution acquired after 
        the submission of such notice may be excluded for 
        purposes of paragraph (1)(C) during the 12-month period 
        beginning on the date of such acquisition if--
                  (A) the bank holding company has submitted an 
                affirmative plan to the appropriate Federal 
                banking agency to take such action as may be 
                necessary in order for such institution to 
                achieve a rating of ``satisfactory record of 
                meeting community credit needs'', or better, at 
                the next examination of the institution; and
                  (B) the plan has been accepted by such 
                agency.
  (b) Authority to Engage in Activities Without Notice.--
          (1) In general.--A qualifying bank holding company 
        may engage, directly or through a subsidiary that is 
        not an insured depository institution (or a subsidiary 
        thereof), in any activity to the extent permissible 
        under the Financial Services Competition Act of 1997 
        without approval from or notice to the Board.
          (2) Rule of construction.--No provision of this 
        section shall be construed as authorizing the 
        acquisition of an depository institution other than in 
        accordance with section 3.
  (c) Restrictions Applicable to Nonqualifying Bank Holding 
Companies.--A bank holding company that is not a qualifying 
bank holding company may engage, directly or indirectly through 
a subsidiary that is not an insured depository institution (or 
a subsidiary of an insured depository institution), only in 
managing and controlling depository institutions and in any 
activity that was permissible under section 4(c) (as in effect 
on the day before the date of the enactment of the Financial 
Services Competition Act of 1997) other than underwriting 
securities which a national bank is not authorized to 
underwrite, except as otherwise provided by law.
  (d) Provisions Applicable to Qualifying Bank Holding 
Companies That Fail to Meet Requirements.--
          (1) In general.--If the Board finds that--
                  (A) a qualifying bank holding company is 
                engaged, directly or indirectly, in any 
                activity other than activities described in 
                subsection (c); and
                  (B) such company is not in compliance with 
                the requirements of subsection (a)(1),
        the Board shall give notice to the company to that 
        effect, describing the conditions giving rise to the 
        notice.
          (2) Agreement to correct conditions required.--Within 
        45 days of receipt by a qualifying bank holding company 
        of a notice given under paragraph (1) (or such 
        additional period as the Board may permit), the company 
        shall execute an agreement with the Board to comply 
        with the requirements applicable to a qualifying bank 
        holding company.
          (3) Board may impose limitations.--Until the 
        conditions described in a notice to a qualifying bank 
        holding company under paragraph (1) are corrected, the 
        Board may impose such limitations on the conduct or 
        activities of the company or any affiliate of the 
        company as the Board determines to be appropriate under 
        the circumstances.
          (4) Failure to correct.--If the conditions described 
        in a notice to a qualifying bank holding company under 
        paragraph (1) are not corrected within 180 days after 
        receipt by the company of notice under paragraph (1), 
        the Board may require such company, under such terms 
        and conditions as may be imposed by the Board and 
        subject to such extension of time as may be granted in 
        the Board's discretion, either--
                  (A) to divest control of any subsidiary 
                depository institutions; or
                  (B) to cease to engage in any activity 
                conducted by such company or its subsidiaries 
                (other than a depository institution or a 
                subsidiary of a depository institution) that is 
                not an activity that is permissible under 
                subsection (c).
  (e) Safeguards for Bank Subsidiaries.--A qualifying bank 
holding company shall assure that--
          (1) the procedures of the holding company for 
        identifying and managing financial and operational 
        risks within the company and the subsidiaries of such 
        company which are not insured depository institutions 
        (or subsidiaries of such subsidiaries) adequately 
        protect the subsidiaries of such company which are 
        insured depository institutions from such risks;
          (2) the holding company has reasonable policies and 
        procedures to preserve the separate corporate identity 
        and limited liability of such company and the 
        subsidiaries of such company, for the protection of the 
        company's subsidiary insured depository institutions; 
        and
          (3) the holding company complies with this section.
  (f) Exemptive Authority.--
          (1) Foreign banks and foreign investments.--The Board 
        may grant exemptions from any restriction on activities 
        or investments which is otherwise applicable to a bank 
        holding company, including a qualifying bank holding 
        company--
                  (A) for shares held or activities conducted 
                by a company organized under the laws of a 
                foreign country the greater part of whose 
                business is conducted outside the United 
                States; or
                  (B) for shares held of, or activities 
                conducted by, any company which does no 
                business in the United States except as an 
                incident to such company's international or 
                foreign business,
        if the Board, by regulation or order, determines that, 
        under the circumstances and subject to any condition 
        set forth in the regulation or order, the exemption 
        would not be substantially at variance with the 
        purposes of this Act or the Financial Services 
        Competition Act of 1997 and would be in the public 
        interest.
          (2) Continuation of prior exemption.--To the extent 
        that such action would not be substantially at variance 
        with the purposes of this Act and subject to such 
        conditions as the Board considers necessary to protect 
        the public interest, the Board by order, after 
        opportunity for hearing, may grant exemptions from the 
        provisions of subsection (c) to any bank holding 
        company which controlled 1 bank prior to July 1, 1968, 
        and has not thereafter acquired the control of any 
        other bank in order--
                  (A) to avoid disrupting business 
                relationships that have existed over a long 
                period of years without adversely affecting the 
                banks or communities involved;
                  (B) to avoid forced sales of small locally 
                owned banks to purchasers not similarly 
                representative of community interests; or
                  (C) to allow retention of banks that are so 
                small in relation to the holding company's 
                total interests and so small in relation to the 
                banking market to be served as to minimize the 
                likelihood that the bank's powers to grant or 
                deny credit may be influenced by a desire to 
                further the holding company's other interests.
          (3) Violations of the fair housing act.--The Board 
        may, on a case-by-case basis, exempt a bank holding 
        company from meeting the terms of subsection 
        (a)(1)(E)(i) in satisfying the definition of qualified 
        bank holding company.
  (g) Certain Companies Not Treated as Bank Holding 
Companies.--
          (1) In general.--Except as provided in paragraph (9), 
        any company which--
                  (A) on March 5, 1987, controlled an 
                institution which became a bank as a result of 
                the enactment of the Competitive Equality 
                Amendments of 1987; and
                  (B) was not a bank holding company on the day 
                before the date of the enactment of the 
                Competitive Equality Amendments of 1987,
        shall not be treated as a bank holding company for 
        purposes of this Act solely by virtue of such company's 
        control of such institution.
          (2) Loss of exemption.--Subject to paragraph (3), a 
        company described in paragraph (1) shall no longer 
        qualify for the exemption provided under such paragraph 
        if--
                  (A) such company directly or indirectly--
                          (i) acquires control of an additional 
                        bank or an insured institution (other 
                        than an insured institution described 
                        in paragraph (10) or (12) of this 
                        subsection) after March 5, 1987; or
                          (ii) acquires control of more than 5 
                        percent of the shares or assets of an 
                        additional bank or a savings 
                        association other than--
                                  (I) shares held as a bona 
                                fide fiduciary (whether with or 
                                without the sole discretion to 
                                vote such shares);
                                  (II) shares held by any 
                                person as a bona fide fiduciary 
                                solely for the benefit of 
                                employees of either the company 
                                described in paragraph (1) or 
                                any subsidiary of that company 
                                and the beneficiaries of those 
                                employees;
                                  (III) shares held temporarily 
                                pursuant to an underwriting 
                                commitment in the normal course 
                                of an underwriting business;
                                  (IV) shares held in an 
                                account solely for trading 
                                purposes;
                                  (V) shares over which no 
                                control is held other than 
                                control of voting rights 
                                acquired in the normal course 
                                of a proxy solicitation;
                                  (VI) loans or other accounts 
                                receivable acquired in the 
                                normal course of business;
                                  (VII) shares or assets 
                                acquired in securing or 
                                collecting a debt previously 
                                contracted in good faith, 
                                during the 2-year period 
                                beginning on the date of such 
                                acquisition or for such 
                                additional time (not exceeding 
                                3 years) as the Board may 
                                permit if the Board determines 
                                that such an extension will not 
                                be detrimental to the public 
                                interest;
                                  (VIII) shares or assets of a 
                                savings association described 
                                in paragraph (10) or (12) of 
                                this subsection;
                                  (IX) shares of a savings 
                                association held by any 
                                insurance company, as defined 
                                in section 2(a)(17) of the 
                                Investment Company Act of 1940, 
                                except as provided in paragraph 
                                (11);
                                  (X) shares issued in a 
                                qualified stock issuance under 
                                section 10(q) of the Home 
                                Owners' Loan Act; and
                                  (XI) assets that are derived 
                                from, or are incidental to, 
                                activities in which 
                                institutions described in 
                                section 2(c)(2)(F) are 
                                permitted to engage,
                        except that the aggregate amount of 
                        shares held under this clause (other 
                        than under subclauses (I), (II), (III), 
                        (IV), (V), and (VIII)) may not exceed 
                        15 percent of all outstanding shares or 
                        of the voting power of a savings 
                        association;
                  (B) any bank subsidiary of such company 
                engages in any activity in which the bank was 
                not lawfully engaged as of March 5, 1987, 
                unless the bank is well managed and well 
                capitalized;
                  (C) any bank subsidiary of such company 
                both--
                          (i) accepts demand deposits or 
                        deposits that the depositor may 
                        withdraw by check or similar means for 
                        payment to 3d parties; and
                          (ii) engages in the business of 
                        making commercial loans (and, for 
                        purposes of this clause, loans made in 
                        the ordinary course of a credit card 
                        operation shall not be treated as 
                        commercial loans); or
                  (D) after the date of the enactment of the 
                Competitive Equality Amendments of 1987, any 
                bank subsidiary of such company permits any 
                overdraft (including any intraday overdraft), 
                or incurs any such overdraft in such bank's 
                account at a Federal reserve bank, on behalf of 
                an affiliate, other than an overdraft described 
                in paragraph (3).
          (3) Permissible overdrafts described.--For purposes 
        of paragraph (2)(C), an overdraft is described in this 
        paragraph if--
                  (A) such overdraft results from an 
                inadvertent computer or accounting error that 
                is beyond the control of both the bank and the 
                affiliate; or
                  (B) such overdraft--
                          (i) is permitted or incurred on 
                        behalf of an affiliate which is 
                        monitored by, reports to, and is 
                        recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                          (ii) is fully secured, as required by 
                        the Board, by bonds, notes, or other 
                        obligations which are direct 
                        obligations of the United States or on 
                        which the principal and interest are 
                        fully guaranteed by the United States 
                        or by securities and obligations 
                        eligible for settlement on the Federal 
                        Reserve book entry system.
          (4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for 
        the exemption provided under such paragraph by 
        operation of paragraph (2), such exemption shall cease 
        to apply to such company and such company shall divest 
        control of each bank it controls before the end of the 
        180-day period beginning on the date that the company 
        receives notice from the Board that the company has 
        failed to continue to qualify for such exemption, 
        unless before the end of such 180-day period, the 
        company has--
                  (A) corrected the condition or ceased the 
                activity that caused the company to fail to 
                continue to qualify for the exemption; and
                  (B) implemented procedures that are 
                reasonably adapted to avoid the reoccurrence of 
                such condition or activity.
          (5) Subsection ceases to apply under certain 
        circumstances.--This subsection shall cease to apply to 
        any company described in paragraph (1) if such 
        company--
                  (A) registers as a bank holding company under 
                section 5(a) of this Act;
                  (B) immediately upon such registration, 
                complies with all of the requirements of this 
                Act, and regulations prescribed by the Board 
                pursuant to this Act, including the nonbanking 
                restrictions of this section; and
                  (C) does not, at the time of such 
                registration, control banks in more than one 
                State, the acquisition of which would be 
                prohibited by section 3(d) of this Act if an 
                application for such acquisition by such 
                company were filed under section 3(a) of this 
                Act.
          (6) Information requirement.--Each company described 
        in paragraph (1) shall, within 60 days after the date 
        of enactment of the Competitive Equality Amendments of 
        1987, provide the Board with the name and address of 
        such company, the name and address of each bank such 
        company controls, and a description of each such bank's 
        activities.
          (7) Examination.--The Board may, from time to time, 
        examine a company described in paragraph (1), or a bank 
        controlled by such company, or require reports under 
        oath from appropriate officers or directors of such 
        company or bank solely for purposes of assuring 
        compliance with the provisions of this subsection and 
        enforcing such compliance.
          (8) Enforcement.--
                  (A) In general.--In addition to any other 
                power of the Board, the Board may enforce 
                compliance with the provisions of this Act 
                which are applicable to any company described 
                in paragraph (1), and any bank controlled by 
                such company, under section 8 of the Federal 
                Deposit Insurance Act and such company or bank 
                shall be subject to such section (for such 
                purposes) in the same manner and to the same 
                extent as if such company or bank were a State 
                member insured bank.
                  (B) Application of other act.--Any violation 
                of this Act by any company described in 
                paragraph (1), and any bank controlled by such 
                company, may also be treated as a violation of 
                the Federal Deposit Insurance Act for purposes 
                of subparagraph (A).
                  (C) No effect on other authority.--No 
                provision of this paragraph shall be construed 
                as limiting any authority of the Comptroller of 
                the Currency or the Federal Deposit Insurance 
                Corporation.
          (9) Tying provisions.--A company described in 
        paragraph (1) shall be--
                  (A) treated as a bank holding company for 
                purposes of section 106 of the Bank Holding 
                Company Act Amendments of 1970 and section 
                22(h) of the Federal Reserve Act and any 
                regulation prescribed under any such section; 
                and
                  (B) subject to the restrictions of section 
                106 of the Bank Holding Company Act Amendments 
                of 1970, in connection with any transaction 
                involving the products or services of such 
                company or affiliate and those of a bank 
                affiliate, as if such company or affiliate were 
                a bank and such bank were a subsidiary of a 
                bank holding company.
          (10) Exemption unaffected by certain emergency 
        acquisitions.--For purposes of clauses (i) and 
        (ii)(VIII) of paragraph (2)(A), an insured institution 
        is described in this paragraph if--
                  (A) the insured institution was acquired (or 
                any shares or assets of such institution were 
                acquired) by a company described in paragraph 
                (1) in an acquisition under section 408(m) of 
                the National Housing Act or section 13(k) of 
                the Federal Deposit Insurance Act; and
                  (B) either--
                          (i) the insured institution is 
                        located in a State in which such 
                        company controlled a bank on March 5, 
                        1987; or
                          (ii) the insured institution has 
                        total assets of $500,000,000 or more at 
                        the time of such acquisition.
          (11) Shares held by insurance affiliates.--Shares 
        described in clause (ii)(IX) of paragraph (2)(A) shall 
        not be excluded for purposes of clause (ii) of such 
        paragraph if--
                  (A) all shares held under such clause 
                (ii)(IX) by all insurance company affiliates of 
                such savings association in the aggregate 
                exceed 5 percent of all outstanding shares or 
                of the voting power of the savings association; 
                or
                  (B) such shares are acquired or retained with 
                a view to acquiring, exercising, or 
                transferring control of the savings 
                association.
          (12) Exemption unaffected by certain other 
        acquisitions.--For purposes of clauses (i) and 
        (ii)(VIII) of paragraph (2)(A), an insured institution 
        is described in this paragraph if the insured 
        institution was acquired (or any shares or assets of 
        such institution were acquired) by a company described 
        in paragraph (1)--
                  (A) from the Resolution Trust Corporation, 
                the Federal Deposit Insurance Corporation, or 
                the Director of the Office of Thrift 
                Supervision, in any capacity; or
                  (B) in an acquisition in which the insured 
                institution has been found to be in danger of 
                default (as defined in section 3 of the Federal 
                Deposit Insurance Act) by the appropriate 
                Federal or State authority.
          (13) Special rule relating to shares acquired in a 
        qualified stock issuance.--A company described in 
        paragraph (1) that holds shares issued in a qualified 
        stock issuance pursuant to section 10(q) of the Home 
        Owners' Loan Act by any savings association or savings 
        and loan holding company (neither of which is a 
        subsidiary) shall not be deemed to control such savings 
        association or savings and loan holding company solely 
        because such company holds such shares unless--
                  (A) the company fails to comply with any 
                requirement or condition imposed by paragraph 
                (2)(A)(ii)(X) or section 10(q) of the Home 
                Owners' Loan Act with respect to such shares; 
                or
                  (B) the shares are acquired or retained with 
                a view to acquiring, exercising, or 
                transferring control of the savings association 
                or savings and loan holding company.
  (h) Limitations on Certain Banks.--
          (1) In general.--Notwithstanding any other provision 
        of this section (other than the last sentence of 
        subsection (a)(2)), a bank holding company which 
        controls an institution that became a bank as a result 
        of the enactment of the Competitive Equality Amendments 
        of 1987 may retain control of such institution if such 
        institution does not--
                  (A) engage in any activity after the date of 
                the enactment of such Amendments which would 
                have caused such institution to be a bank (as 
                defined in section 2(c), as in effect before 
                such date) if such activities had been engaged 
                in before such date; or
                  (B) increase the number of locations from 
                which such institution conducts business after 
                March 5, 1987.
          (2) Limitations cease to apply under certain 
        circumstances.--The limitations contained in paragraph 
        (1) shall cease to apply to a bank described in such 
        paragraph at such time as the acquisition of such bank, 
        by the bank holding company referred to in such 
        paragraph, would not be prohibited under section 3(d) 
        of this Act if--
                  (A) an application for such acquisition were 
                filed under section 3(a) of this Act; and
                  (B) such bank were treated as an additional 
                bank (under section 3(d)).
  (i) Limitation on Bank Holding Company Affiliations.--
          (1) In general.--Except as otherwise provided in this 
        Act, a bank holding company may not become affiliated 
        with any company--
                  (A) less than 85 percent of the gross 
                revenues of which from activities conducted in 
                the United States are derived from financial 
                activities in which such company or any 
                subsidiary of such company engages; and
                  (B) which has consolidated assets, at the 
                time such affiliation first occurs, of more 
                than $750,000,000.
          (2) Mirror image.--Except as otherwise provided in 
        this Act, no company that is, or is affiliated with, a 
        company described in subparagraphs (A) and (B) of 
        paragraph (1) may become a bank holding company.
  (j) Transactions with Nonfinancial Affiliates.--A subsidiary 
insured depository institution of a bank holding company may 
not engage in a covered transaction (as defined by section 
23A(b)(7) of the Federal Reserve Act) with any affiliate unless 
the affiliate is engaged only in activities that are financial 
in nature (as defined in subsection (a)(2)).
  (k) Control of a Qualifying Bank Holding Company by a Company 
Not Engaged in Activities Financial in Nature.--
          (1) In general.--
                  (A) Control of 1 bank authorized.--
                Notwithstanding subsection (i), a company that 
                is engaged predominantly in nonfinancial 
                activities on a consolidated basis may only 
                control a qualifying bank holding company and 
                not more than 1 bank subject to the provisions 
                of this subsection.
                  (B) Exclusion from treatment as holding 
                company.--Any company that is engaged 
                predominantly in nonfinancial activities and 
                controls a qualifying bank holding company and 
                not more than 1 bank in accordance with this 
                subsection, shall not become a bank holding 
                company for purposes of this Act solely by 
                virtue of such company's control of such 
                qualifying bank holding company and bank.
                  (C) Financial activities required to be 
                conducted in holding company subsidiary.--Any 
                financial activity engaged in by a company that 
                controls a qualifying bank holding company 
                pursuant to paragraph (1) must conduct such 
                activity through a subsidiary of the qualifying 
                bank holding company.
          (2) Control of 1 bank.--The provisions of 
        subparagraphs (A) and (B) of paragraph (1) shall not 
        apply to any company if--
                  (A) such company directly or indirectly 
                acquires control of a bank other than--
                          (i) an institution described in 
                        section 2(c)(2) or section 6(g)(1) 
                        controlled by such company before the 
                        date of enactment of the Financial 
                        Services Competition Act of 1997 that 
                        becomes a bank; or
                          (ii) a bank with total consolidated 
                        assets not in excess of $500,000,000 
                        that has been chartered for at least 5 
                        years prior to its date of acquisition 
                        by such company; and such bank is and 
                        remains at all times a subsidiary of a 
                        qualifying bank holding company 
                        controlled by such company;
                  (B) such company directly or indirectly 
                acquires control of all or substantially all of 
                the assets of an additional bank; or
                  (C) the gross revenues of the bank controlled 
                by such company exceed 15 percent of the 
                consolidated gross revenues of such company 
                derived from activities conducted in the United 
                States.
          (3) Enforcement of violations.--If the Board finds 
        that a company is not in compliance with the provisions 
        of this subsection, the Board shall enforce the 
        provisions of this subsection in the same manner as 
        that described in subsection (d) for a qualifying bank 
        holding company.
          (4) Antitying and insider transactions.--A company 
        described in paragraph (1) shall be treated as a bank 
        holding company for purposes of section 106 of the Bank 
        Holding Company Act Amendments of 1970 and section 
        22(h) of the Federal Reserve Act and any regulation 
        prescribed under any such section.
  (l) Control of Uninsured Depository Institutions.--
          (1) Scope of application.--This subsection shall 
        apply to bank holding companies which control only 
        wholesale financial institutions and control no insured 
        depository institution (other than an institution 
        described in subparagraph (C) or (G) of section 
        2(c)(2)).
          (2) Findings and Purposes.--
                  (A) Findings.--The Congress finds as follows:
                          (i) Some investment banking, 
                        insurance, and other financial 
                        companies invest in nonfinancial 
                        companies--
                                  (I) as an incident to their 
                                core business; or
                                  (II) in recognition of an 
                                unusual investment opportunity.
                          (ii) Such ownership, which would not 
                        otherwise be permitted under this Act 
                        if the investment banking, insurance, 
                        or other financial company were a bank 
                        holding company--
                                  (I) is in most cases small in 
                                relation to the overall size of 
                                the company, generally no more 
                                than 5 percent of the total 
                                consolidated revenue of such 
                                company's revenues and, in the 
                                case of a foreign bank, such 
                                ownership in the United States 
                                is generally no more than 5 
                                percent of the total 
                                consolidated revenue of such 
                                foreign bank in the United 
                                States; and
                                  (II) in no way detracts from 
                                the financial focus of the 
                                company's planning, operations, 
                                resource allocation, and risk 
                                management.
                          (iii) Investments of this type should 
                        not disqualify an investment banking, 
                        insurance, or other financial company 
                        from an affiliation with an uninsured 
                        depository institution.
                  (B) Purpose.--It is the purpose of this 
                subsection to provide the flexibility necessary 
                to accommodate limited investments in 
                nonfinancial firms that wish to control an 
                uninsured depository institution (and do not 
                otherwise control any insured depository 
                institution) while maintaining the separation 
                of banking and commerce intended by this Act.
          (3) Limited investments allowed by financial 
        companies controlling only uninsured depository 
        institutions.--Consistent with the purposes of this 
        subsection, the Board shall, by regulation or order, 
        allow bank holding companies to control the shares of 
        nonfinancial companies so long as--
                  (A) the nonfinancial firm is sufficiently 
                small such that the financial nature of the 
                bank holding company is unaffected by the 
                control of such shares;
                  (B) the bank holding company does not control 
                any depository institution (other than a 
                wholesale financial institution or an 
                institution described in subparagraph (C) or 
                (G) of section 2(c)(2); and
                  (C) the purposes of this Act, including the 
                separation of banking and commerce and the 
                preservation of the safety and soundness of 
                depository institutions, are fulfilled.
          (4) Provisions applicable to holding companies with 
        investments under this subsection.--
                  (A) Cross marketing restrictions.--A 
                wholesale financial institution or other 
                depository institution controlled by a bank 
                holding company which also controls a company 
                pursuant to this subsection shall not--
                          (i) offer or market, directly or 
                        through any arrangement, any product or 
                        service of an affiliate whose shares 
                        are owned or controlled by the bank 
                        holding company pursuant to this 
                        subsection; or
                          (ii) permit any product or service of 
                        such wholesale financial institution or 
                        other institution to be offered or 
                        marketed, directly or through any 
                        arrangement, by or through any such 
                        affiliate.
                  (B) Use of common name.--A bank holding 
                company shall not permit a wholesale financial 
                institution or other depository institution 
                subsidiary to adopt a name which is the same as 
                or similar to, or a variation of, the name or 
                title of an affiliate engaged in activities 
                pursuant to this subsection.
                  (C) Commodities.--
                          (i) In general.--A bank holding 
                        company which controls a company 
                        pursuant to this subsection and was 
                        predominately engaged as of January 1, 
                        1995, in securities activities in the 
                        United States (or any successor to any 
                        such company) may engage in, or 
                        directly or indirectly own or control 
                        shares of a company engaged in, 
                        activities related to the trading, 
                        sale, or investment in commodities and 
                        underlying physical properties that 
                        were not permissible for bank holding 
                        companies to conduct in the United 
                        States as of January 1, 1995, if such 
                        bank holding company, or any subsidiary 
                        of such holding company, was engaged 
                        directly, indirectly, or through any 
                        such company in any of such activities 
                        as of January 1, 1995, in the United 
                        States.
                          (ii) Limitation.--Notwithstanding any 
                        other provision of this subsection, the 
                        aggregate investment by a bank holding 
                        company in activities under this 
                        subparagraph (other than those 
                        otherwise permitted for all bank 
                        holding companies under this Act) shall 
                        not at any time exceed 5 percent of the 
                        total consolidated assets of such bank 
                        holding company.
                          (iii) Successor defined.--For 
                        purposes of clause (i), the term 
                        ``successor'' means, with respect to 
                        any bank holding company described in 
                        clause (i), any company that merges 
                        with, or acquires control of, such bank 
                        holding company.
                  (D) Qualified investor in a bank holding 
                company which controls a company under this 
                subsection.--
                          (i) In general.--Notwithstanding any 
                        other provision of Federal or State 
                        law, a qualified investor--
                                  (I) shall not be, or be 
                                deemed to be, a bank holding 
                                company or any similar 
                                organization; and
                                  (II) shall not be deemed to 
                                control or be affiliated with 
                                any such company or 
                                organization or any subsidiary 
                                of any such company or 
                                organization (other than for 
                                purposes of section 23A and 23B 
                                of the Federal Reserve Act),
                        by virtue of the investor's ownership 
                        or control of shares of a bank holding 
                        company which controls a company 
                        pursuant to this subsection.
                          (ii) Qualified investor defined.--For 
                        purposes of this subparagraph, the term 
                        ``qualified investor'' means any United 
                        States company (including a parent 
                        company and all subsidiaries of which 
                        the parent company holds at least 80 
                        percent of the total voting equity 
                        securities) which since February 27, 
                        1995, has directly or indirectly owned 
                        or controlled shares of capital stock 
                        representing at least 10 percent, and 
                        not more than 45 percent, of the 
                        outstanding voting shares or voting 
                        power of a company that--
                                  (I) becomes a bank holding 
                                company which controls a 
                                company pursuant to this 
                                subsection or a subsidiary of 
                                any such bank holding company; 
                                and
                                  (II) before the company 
                                became a bank holding company 
                                which controls a company 
                                pursuant to this subsection, or 
                                a subsidiary of any such bank 
                                holding company, had more than 
                                50 percent of the company's 
                                assets employed directly or 
                                indirectly in securities 
                                activities.
                          (iii) Cross-marketing and common 
                        name.--A wholesale financial 
                        institution or other uninsured 
                        depository institution which is 
                        controlled by a bank holding company 
                        which controls a company pursuant to 
                        this subsection shall not--
                                  (I) offer or market products 
                                or services of a qualified 
                                investor in the bank holding 
                                company of which the wholesale 
                                financial institution is an 
                                affiliate;
                                  (II) permit the products or 
                                services of such wholesale 
                                financial institution or 
                                uninsured depository 
                                institution to be offered or 
                                marketed in connection with 
                                products or services of such 
                                qualified investor; or
                                  (III) adopt a name which is 
                                the same as or similar to, or a 
                                variation of, the name or title 
                                of such qualified investor.
                          (iv) Examination and reporting.--
                        Notwithstanding any other provision of 
                        law, the Board may conduct examinations 
                        of, or require reports from, a 
                        qualified investor only to the extent 
                        that the Board reasonably determines 
                        that such examinations or reports are 
                        necessary--
                                  (I) to ensure compliance with 
                                this subparagraph; or
                                  (II) to the extent that the 
                                qualified investor is an 
                                affiliate of a wholesale 
                                financial institution for 
                                purposes of section 23A of the 
                                Federal Reserve Act, to ensure 
                                compliance with restrictions 
                                imposed by law or regulation on 
                                transactions between the 
                                qualified investor and such 
                                wholesale financial 
                                institution.
          (5) No deposit insurance fund liability.--No Federal 
        deposit insurance funds may be used in connection with 
        the failure of, or any proposed assistance to, a 
        wholesale financial institution or other uninsured 
        depository institution controlled by a bank holding 
        company which controls a company pursuant to this 
        subsection.
          (6) Qualification of foreign bank as bank holding 
        company with investments pursuant to this subsection.--
                  (A) In general.--Any foreign bank that 
                operates a branch, agency or commercial lending 
                company in the United States (and any company 
                that owns or controls such foreign bank), 
                including a foreign bank that does not own or 
                control a wholesale financial institution, may 
                request a determination from the Board that 
                such bank or company be treated as a bank 
                holding company which controls a company 
                pursuant to this subsection.
                  (B) Conditions for treatment as a bank 
                holding company subject to this subsection.--A 
                foreign bank and a company that owns or 
                controls a foreign bank may not be treated, 
                under this paragraph, as a bank holding company 
                which controls a company pursuant to this 
                subsection, unless the bank and company meet 
                and continue to meet the following criteria:
                          (i) No insured deposits.--No deposits 
                        which are held directly by a foreign 
                        bank or through an affiliate are 
                        insured under the Federal Deposit 
                        Insurance Act.
                          (ii) Capital standards.--The foreign 
                        bank meets risk-based capital standards 
                        comparable to the capital standards 
                        required for a wholesale financial 
                        institution, giving due regard to the 
                        principle of national treatment and 
                        equality of competitive opportunity.
                          (iii) Transactions with affiliates.--
                        Transactions between a branch, agency, 
                        or commercial lending company 
                        subsidiary of the foreign bank in the 
                        United States, and any affiliate or 
                        company in which the foreign bank (or 
                        any company that owns or controls such 
                        foreign bank) has invested in 
                        accordance with this subsection, shall 
                        comply with the provisions of sections 
                        23A and 23B of the Federal Reserve Act 
                        in the same manner and to the same 
                        extent as such transactions would be 
                        required to comply with such sections 
                        if the bank were a member bank.
                  (C) Treatment as a wholesale financial 
                institution.--
                          (i) In general.--Any foreign bank 
                        which is, or is affiliated with a 
                        company which is, treated as a bank 
                        holding company which controls a 
                        company pursuant to this subsection 
                        shall be treated as a wholesale 
                        financial institution for purposes of 
                        subparagraphs (A) and (B) of paragraph 
                        (3) and section 111 of the Financial 
                        Services Competition Act of 1997, 
                        except that the Board may adopt such 
                        modifications, conditions, or 
                        exemptions as the Board deems 
                        appropriate, giving due regard to the 
                        principle of national treatment and 
                        equality of competitive opportunity.
                          (ii) Applicability of community 
                        reinvestment act of 1977.--The branches 
                        in the United States of any foreign 
                        bank that is, or is affiliated with a 
                        company which is, treated as a bank 
                        holding company which controls a 
                        company pursuant to this subsection 
                        shall be subject to section 9B(b)(6) of 
                        the Federal Reserve Act as if the 
                        foreign bank were a wholesale financial 
                        institution under such section. The 
                        Board and the Comptroller of the 
                        Currency shall apply the provisions of 
                        sections 803(2), 804, and 807(1) of the 
                        Community Reinvestment Act of 1977 to 
                        branches of foreign banks which receive 
                        only such deposits as are permissible 
                        for receipt by a corporation organized 
                        under section 25A of the Federal 
                        Reserve Act, in the same manner and to 
                        the same extent such sections apply to 
                        such a corporation.
                  (D) Nonapplicability of other exemption.--Any 
                foreign bank or company which is treated as a 
                bank holding company which controls a company 
                pursuant to this subsection shall not be 
                eligible for any exemption described in section 
                2(h).
                  (E) Supervision assessment.--The Board shall 
                assess the extent to which any foreign bank 
                which is, or is affiliated with a company which 
                is, treated as a bank holding company which 
                controls a company pursuant to this subsection 
                is subject to supervision by authorities in the 
                home country of such foreign bank.
                  (F) Authority to impose additional 
                restrictions and requirements.--The Board may 
                impose additional requirements on any foreign 
                bank which is, or is affiliated with a company 
                which is, treated as a bank holding company 
                which controls a company pursuant to this 
                subsection that are determined to be 
                appropriate or necessary to protect taxpayers 
                and the financial system from risks associated 
                with access to the payments system and 
                availability of discounts, advances, and other 
                extensions of credit from a Federal reserve 
                bank, giving due regard to the principles of 
                national treatment and equality of competitive 
                opportunity.
          * * * * * * *

                            saving provision

  Sec. 11. (a) * * *
  (b) Antitrust Review.--
          (1) In general.--The Board shall immediately notify 
        the Attorney General of any approval by it pursuant to 
        section 3 of a proposed acquisition, merger, or 
        consolidation transaction. If the Board has found that 
        it must act immediately in order to prevent the 
        probable failure of a bank or bank holding company 
        involved in any such transaction, the transaction may 
        be consummated immediately upon approval by the Board. 
        If the Board has advised the Comptroller of the 
        Currency or the State supervisory authority, as the 
        case may be, of the existence of an emergency requiring 
        expeditious action and has required the submission of 
        views and recommendations within ten days, the 
        transaction may not be consummated before the fifth 
        calendar day after the date of approval by the Board. 
        In all other cases, the transaction may not be 
        consummated before the thirtieth calendar day after the 
        date of approval by the Board or[, if the Board has not 
        received any adverse comment from the Attorney General 
        of the United States relating to competitive factors,] 
        such shorter period of time [as may be prescribed by 
        the Board with the concurrence of the Attorney General, 
        but in no event less than 15 calendar days after the 
        date of approval.] as may be prescribed by the Attorney 
        General. Any action brought under the antitrust laws 
        arising out of an acquisition, merger, or consolidation 
        transaction approved under section 3 shall be commenced 
        prior to the earliest time under this subsection at 
        which the transaction approval under section 3 might be 
        consummated. The commencement of such an action shall 
        stay the effectiveness of the Board's approval unless 
        the court shall otherwise specifically order. [In any 
        such action, the court shall review de novo the issues 
        presented. In any judicial proceeding attacking any 
        acquisition, merger, or consolidation transaction 
        approved pursuant to section 3 on the ground that such 
        transaction alone and of itself constituted a violation 
        of any antitrust laws other than section 2 of the Act 
        of July 2, 1890 (section 2 of the Sherman Antitrust 
        Act, 15 U.S.C. 2), the standards applied by the court 
        shall be identical with those that the Board is 
        directed to apply under section 3 of this Act.] Upon 
        the consummation of an acquisition, merger, or 
        consolidation transaction approved under section 3 in 
        compliance with this Act and after the termination of 
        any antitrust litigation commenced within the period 
        prescribed in this section, or upon the termination of 
        such period if no such litigation is commenced therein, 
        the transaction may not thereafter be attacked in any 
        judicial proceeding on the ground that it alone and of 
        itself constituted a violation of any antitrust laws 
        other than section 2 of the Act of July 2, 1890 
        (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), 
        but nothing in this Act shall exempt any bank holding 
        company involved in such a transaction from complying 
        with the antitrust laws after the consummation of such 
        transaction.
          * * * * * * *
  [(c) In any action brought under the antitrust laws arising 
out of any acquisition, merger, or consolidation transaction 
approved by the Board under section 3 of this Act, the Board 
and any State banking supervisory agency having jurisdiction 
within the State involved, may appear as a party of its own 
motion and as of right, and be represented by its counsel.]
  [(d)] (c) Any acquisition, merger, or consolidation of the 
kind described in section 3(a) of this Act which was 
consummated at any time prior or subsequent to May 9, 1956, and 
as to which no litigation was initiated by the Attorney General 
prior to the date of enactment of this amendment, shall be 
conclusively presumed not to have been in violation of any 
antitrust laws other than section 2 of the Act of July 2, 1890 
(section 2 of the Sherman Antitrust Act, 15 U.S.C. 2).
  [(e) Any court having pending before it on or after the date 
of enactment of this amendment any litigation initiated under 
the antitrust laws by the Attorney General with respect to any 
acquisition, merger, or consolidation of the kind described in 
section 3(a) of this Act shall apply the substantive rule of 
law set forth in section 3 of this Act.]
  [(f)] (d) For the purposes of this section, the term 
``antitrust laws'' means the Act of July 2, 1890 (the Sherman 
Antitrust Act, 15 U.S.C. 1-7), the Act of October 15, 1914 (the 
Clayton Act, 15 U.S.C. 12-27), and any other Acts in pari 
materia.
          * * * * * * *
                              ----------                              


                          FEDERAL RESERVE ACT

  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That the 
short title of this Act shall be the ``Federal Reserve Act.''
  Wherever the word ``bank'' is used in this Act, the word 
shall be held to include State bank (as defined in section 3 of 
the Federal Deposit Insurance Act), banking association, and 
trust company, except where national banks or Federal reserve 
banks are specifically referred to. (12 U.S.C. 221)
  The terms ``national bank'' and ``national banking 
association'' used in this Act shall be held to be synonymous 
and interchangeable. The term ``member bank'' shall be held to 
mean any national bank, State bank (as defined in section 3 of 
the Federal Deposit Insurance Act), or bank or trust company 
which has become a member of one of the reserve banks created 
by this Act. The term ``board'' shall be held to mean Board of 
Governors of the Federal Reserve System; the term ``district'' 
shall be held to mean Federal reserve district; the term 
``reserve bank'' shall be held to mean Federal reserve bank; 
the term ``the continental United States'' means the States of 
the United States and the District of Columbia.
  The terms ``bonds and notes of the United States'', ``bonds 
and notes of the Government of the United States'', and ``bonds 
or notes of the United States'' used in this Act shall be held 
to include certificates of indebtedness and Treasury bills 
issued under section 3104 of title 31.
          * * * * * * *

                         state banks as members

  Sec. 9. Any bank incorporated by special law of any State, or 
organized under the general laws of any State or of the United 
States, including Morris Plan banks and other incorporated 
banking institutions engaged in similar business, desiring to 
become a member of the Federal Reserve System, may make 
application to the Board of Governors of the Federal Reserve 
System, under such rules and regulations as it may prescribe, 
for the right to subscribe to the stock of the Federal reserve 
bank organized within the district in which the applying bank 
is located. Such application shall be for the same amount of 
stock that the applying bank would be required to subscribe to 
as a national bank. For the purposes of membership of any such 
bank the terms ``capital'' and ``capital stock'' shall include 
the amount of outstanding capital notes and debentures legally 
issued by the applying bank and purchased by the Reconstruction 
Finance Corporation. The Board of Governors of the Federal 
Reserve System, subject to the provisions of this Act and to 
such conditions as it may prescribe pursuant thereto may permit 
the applying bank to become a stockholder of such Federal 
reserve bank.
          * * * * * * *
  State member banks shall be subject to the same limitations 
and conditions with respect to the purchasing, selling, 
underwriting, and holding of investment securities and stock as 
are applicable in the case of national banks under paragraph 
``Seventh'' of section 5136 of the Revised Statutes, as 
amended. To the extent permitted under State law, a State 
member bank may acquire or establish and retain a financial 
subsidiary (as defined in section 5136A(a)(3)(A) of the Revised 
Statutes of the United States, except that all references in 
that section to the Comptroller of the Currency, the 
Comptroller, or regulations or orders of the Comptroller shall 
be deemed to be references to the Board or regulations or 
orders of the Board.
          * * * * * * *

SEC. 9B. STATE WHOLESALE FINANCIAL INSTITUTIONS.

  (a) Application for Membership as Wholesale Financial 
Institution.--
          (1) Application required.--
                  (A) In general.--Any State bank may apply to 
                the Board of Governors of the Federal Reserve 
                System to become a wholesale financial 
                institution and as a wholesale financial 
                institution, to subscribe to the stock of the 
                Federal reserve bank organized within the 
                district where the applying bank is located.
                  (B) Treatment as member bank.--Any 
                application under subparagraph (A) shall be 
                treated as an application under, and shall be 
                subject to the provisions of, section 9.
          (2) Insurance termination.--No bank that is insured 
        under the Federal Deposit Insurance Act may become a 
        wholesale financial institution unless it has met all 
        requirements under that Act for voluntary termination 
        of deposit insurance.
  (b) General Requirements Applicable to Wholesale Financial 
Institutions.--
          (1) Federal reserve act.--Except as otherwise 
        provided in this section, wholesale financial 
        institutions shall be member banks and shall be subject 
        to the provisions of this Act that apply to member 
        banks to the same extent and in the same manner as 
        State member insured banks, except that a wholesale 
        financial institution may terminate membership under 
        this Act only with the prior written approval of the 
        Board and on terms and conditions that the Board 
        determines are appropriate to carry out the purposes of 
        this Act.
          (2) Prompt corrective action.--A wholesale financial 
        institution shall be deemed to be an insured depository 
        institution for purposes of section 38 of the Federal 
        Deposit Insurance Act except that--
                  (A) the relevant capital levels and capital 
                measures for each capital category shall be the 
                levels specified by the Board for wholesale 
                financial institutions; and
                  (B) all references to the appropriate Federal 
                banking agency or to the Corporation in that 
                section shall be deemed to be references to the 
                Board.
          (3) Enforcement authority.--Subsections (j) and (k) 
        of section 7, subsections (b) through (n), (s), (u), 
        and (v) of section 8, and section 19 of the Federal 
        Deposit Insurance Act shall apply to a wholesale 
        financial institution in the same manner and to the 
        same extent as such provisions apply to State member 
        insured banks and any reference in such sections to an 
        insured depository institution shall be deemed to 
        include a reference to a wholesale financial 
        institution.
          (4) Certain other statutes applicable.--A wholesale 
        financial institution shall be deemed to be a banking 
        institution, and the Board shall be the appropriate 
        Federal banking agency for such bank and all such 
        bank's affiliates, for purposes of the International 
        Lending Supervision Act.
          (5) Bank merger act.--A wholesale financial 
        institution shall be subject to provisions of sections 
        18(c) and 44 of the Federal Deposit Insurance Act in 
        the same manner and to the same extent the wholesale 
        financial institution would be subject to such sections 
        if the institution were a State member insured bank.
          (6) Community reinvestment act of 1977.--A State 
        wholesale financial institution shall be subject to the 
        Community Reinvestment Act of 1977.
  (c) Specific Requirements Applicable to Wholesale Financial 
Institutions.--
          (1) Limitations on deposits.--
                  (A) Minimum amount.--
                          (i) In general.--No wholesale 
                        financial institution may receive 
                        initial deposits of $100,000 or less, 
                        other than on an incidental and 
                        occasional basis.
                          (ii) Limitation on deposits of less 
                        than $100,000.--No bank may be treated 
                        as a wholesale financial institution if 
                        the total amount of the initial 
                        deposits of $100,000 or less at such 
                        bank constitute more than 5 percent of 
                        the bank's total deposits.
                  (B) No deposit insurance.--No deposits held 
                by a wholesale financial institution shall be 
                insured deposits under the Federal Deposit 
                Insurance Act.
                  (C) Advertising and disclosure.--The Board 
                shall prescribe regulations pertaining to 
                advertising and disclosure by wholesale 
                financial institutions to ensure that each 
                depositor is notified that deposits at the 
                wholesale financial institution are not 
                federally insured or otherwise guaranteed by 
                the United States Government.
          (2) Special capital requirements applicable to 
        wholesale financial institutions.--
                  (A) In general.--The Board shall, by 
                regulation, adopt capital requirements for 
                wholesale financial institutions--
                          (i) to account for the status of 
                        wholesale financial institutions as 
                        institutions that accept deposits that 
                        are not insured under the Federal 
                        Deposit Insurance Act; and
                          (ii) to provide for the safe and 
                        sound operation of the wholesale 
                        financial institution without undue 
                        risk to creditors or other persons, 
                        including Federal reserve banks, 
                        engaged in transactions with the bank.
                  (B) Minimum tier 1 capital ratio.--The 
                minimum ratio of tier 1 capital to total risk-
                weighted assets of wholesale financial 
                institutions shall be not less than the level 
                required for a State member insured bank to be 
                well capitalized unless the Board determines 
                otherwise, consistent with safety and 
                soundness.
          (3) Additional requirements applicable to wholesale 
        financial institutions.--In addition to any requirement 
        otherwise applicable to State member banks or 
        applicable, under this section, to wholesale financial 
        institutions, the Board may prescribe, by regulation or 
        order, for wholesale financial institutions--
                  (A) limitations on transactions with 
                affiliates to prevent--
                          (i) the transfer of risk to the 
                        deposit insurance funds; or
                          (ii) an affiliate from gaining access 
                        to, or the benefits of, credit from a 
                        Federal reserve bank, including 
                        overdrafts at a Federal reserve bank;
                  (B) special clearing balance requirements;
                  (C) any additional requirements that the 
                Board determines to be appropriate or necessary 
                to--
                          (i) promote the safety and soundness 
                        of the wholesale financial institution 
                        or any insured depository institution 
                        affiliate of the wholesale financial 
                        institution;
                          (ii) prevent the transfer of risk to 
                        the deposit insurance funds; or
                          (iii) protect creditors and other 
                        persons, including Federal reserve 
                        banks, engaged in transactions with the 
                        wholesale financial institution; and
                  (D) any additional requirements that the 
                Board determines to be appropriate or necessary 
                to assure compliance with the Community 
                Reinvestment Act of 1977.
          (4) Exemptions for wholesale financial 
        institutions.--The Board may, by regulation or order, 
        exempt any wholesale financial institution from any 
        provision applicable to a member bank that is not a 
        wholesale financial institution (other than the 
        provisions of this section), if the Board finds that 
        such exemption is not inconsistent with--
                  (A) the promotion of the safety and soundness 
                of the wholesale financial institution or any 
                insured depository institution affiliate of the 
                wholesale financial institution;
                  (B) the protection of the deposit insurance 
                funds; and
                  (C) the protection of creditors and other 
                persons, including Federal reserve banks, 
                engaged in transactions with the wholesale 
                financial institution.
          (5) Limitation on transactions between a wholesale 
        financial institution and an insured bank.--For 
        purposes of section 23A(d)(1) of the Federal Reserve 
        Act, a wholesale financial institution that is 
        affiliated with an insured bank shall not be a bank.
          (6) No effect on other provisions.--This section 
        shall not be construed as limiting the Board's 
        authority over member banks under any other provision 
        of law, or to create any obligation for any Federal 
        reserve bank to make, increase, renew, or extend any 
        advance or discount under this Act to any member bank 
        or other depository institution.
  (d) Conservatorship Authority.--
          (1) In general.--The Board may appoint a conservator 
        to take possession and control of a wholesale financial 
        institution to the same extent and in the same manner 
        as the Comptroller of the Currency may appoint a 
        conservator for a national bank under section 203 of 
        the Bank Conservation Act, and the conservator shall 
        exercise the same powers, functions, and duties, 
        subject to the same limitations, as are provided under 
        such Act for conservators of national banks.
          (2) Board authority.--The Board shall have the same 
        authority with respect to any conservator appointed 
        under paragraph (1) and the wholesale financial 
        institution for which such conservator has been 
        appointed as the Comptroller of the Currency has under 
        the Bank Conservation Act with respect to a conservator 
        appointed under such Act and a national bank for which 
        the conservator has been appointed.
  (e) Exclusive Jurisdiction.--Subsections (c) and (e) of 
section 43 of the Federal Deposit Insurance Act shall not apply 
to any wholesale financial institution.
          * * * * * * *
  Sec. 10B. (a) * * *
          * * * * * * *
  (c) Reports on Discounts and Advances to Wholesale Financial 
Institutions.--
          (1) In general.--The Board shall submit a report to 
        the Congress at the end of any year in which any 
        wholesale financial institution has obtained a 
        discount, advance, or other extension of credit from a 
        Federal reserve bank.
          (2) Contents.--Any report submitted under paragraph 
        (1) shall explain the circumstances and need for any 
        discount, advance, or other extension of credit to a 
        wholesale financial institution during the period 
        covered by the report, including the type and amount of 
        credit extended and the amount of credit remaining 
        outstanding as of the date of the report.
  Sec. 11. The Board of Governors of the Federal Reserve System 
shall be authorized and empowered:
  (a)(1) * * *
  (2) To require any depository institution specified in this 
paragraph to make, at such intervals as the Board may 
prescribe, such reports of its liabilities and assets as the 
Board may determine to be necessary or desirable to enable the 
Board to discharge its responsibility to monitor and control 
monetary and credit aggregates. Such reports shall be made (A) 
directly to the Board in the case of member banks and in the 
case of other depository institutions whose reserve 
requirements under section 19 of this Act exceed zero, and (B) 
for all other reports to the Board through the (i) Federal 
Deposit Insurance Corporation in the case of insured State 
nonmember banks, savings banks, and mutual savings banks, (ii) 
National Credit Union Administration Board in the case of 
insured credit unions, [(iii) the Director of the Office of 
Thrift Supervision in the case of any savings association which 
is an insured depository institution (as defined in section 3 
of the Federal Deposit Insurance Act) or which is a member as 
defined in section 2 of the Federal Home Loan Bank Act, and] 
and [(iv)] (iii) such State officer or agency as the Board may 
designate in the case of any other type of bank, savings and 
loan association, or credit union. The Board shall endeavor to 
avoid the imposition of unnecessary burdens on reporting 
institutions and the duplication of other reporting 
requirements. Except as otherwise required by law, any data 
provided to any department, agency, or instrumentality of the 
United States pursuant to other reporting requirements shall be 
made available to the Board. The Board may classify depository 
institutions for the purposes of this paragraph and may impose 
different requirements on each such class.
          * * * * * * *
  [(m) Upon the affirmative vote of not less than six of its 
members the Board of Governors of the Federal Reserve System 
shall have power to fix from time to time for each Federal 
reserve district the percentage of individual bank capital and 
surplus which may be represented by loans secured by stock or 
bond collateral made by member banks within such district, but 
no such loan shall be made by any such bank to any person in an 
amount in excess of 15 percent of the unimpaired capital and 
surplus of such bank: Provided, That with respect to loans 
represented by obligations secured by not less than a like 
amount of bonds or notes of the United States issued since 
April 24, 1917, certificates of indebtedness of the United 
States, Treasury bills of the United States, or obligations 
fully guaranteed both as to principal and interest by the 
United States, such limitation of 15 percent on loans to any 
person shall not apply, but State member banks shall be subject 
to the same limitations and conditions as are applicable in the 
case of national banks under section 5200(c)(4) of the Revised 
Statutes. Any percentage so fixed by the Board of Governors of 
the Federal Reserve System shall be subject to change from time 
to time upon ten days' notice, and it shall be the duty of the 
Board to establish such percentages with a view to preventing 
the undue use of bank loans for the speculative carrying of 
securities. The Board of Governors of the Federal Reserve 
System shall have power to direct any member bank to refrain 
from further increase of its loans secured by stock or bond 
collateral for any period up to one year under penalty of 
suspension of all rediscount privileges at Federal reserve 
banks.]
          * * * * * * *
  Sec. 19. (a) * * *
  (b) Reserve Requirements.--
          (1) Definitions.--The following definitions and rules 
        apply to this subsection, subsection (c), section 11A, 
        the first paragraph of section 13, and the second, 
        thirteenth, and fourteenth paragraphs of section 16:
                  (A) The term ``depository institution'' 
                means--
                          (i) any insured bank as defined in 
                        section 3 of the Federal Deposit 
                        Insurance Act [or], any bank which is 
                        eligible to make application to become 
                        an insured bank under section 5 of such 
                        Act, or any wholesale financial 
                        institution as defined in section 9B of 
                        this Act;
          * * * * * * *
                          (v) any member as defined in section 
                        2 of the Federal Home Loan Bank Act; 
                        and
                          [(vi) any savings association (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act) which is an 
                        insured depository institution (as 
                        defined in such Act) or is eligible to 
                        apply to become an insured depository 
                        institution under the Federal Deposit 
                        Insurance Act; and]
                          [(vii)] (vi) for the purpose of 
                        section 13 and the fourteenth paragraph 
                        of section 16, any association or 
                        entity which is wholly owned by or 
                        which consists only of institutions 
                        referred to in clauses (i) through 
                        (vi).
          * * * * * * *
                  (F) In order to prevent evasions of the 
                reserve requirements imposed by this 
                subsection, after consultation with the Board 
                of Directors of the Federal Deposit Insurance 
                Corporation, [the Director of the Office of 
                Thrift Supervision,] and the National Credit 
                Union Administration Board, the Board of 
                Governors of the Federal Reserve System is 
                authorized to determine, by regulation or 
                order, that an account or deposit is a 
                transaction account if such account or deposit 
                may be used to provide funds directly or 
                indirectly for the purpose of making payments 
                or transfers to third persons or others.
          * * * * * * *
          (4) Supplemental reserves.--(A) * * *
          (B) The Board may require the supplemental reserve 
        authorized under subparagraph (A) only after 
        consultation with the Board of Directors of the Federal 
        Deposit Insurance Corporation, [the Director of the 
        Office of Thrift Supervision,] and the National Credit 
        Union Administration Board. The Board shall promptly 
        transmit to the Congress a report with respect to any 
        exercise of its authority to require supplemental 
        reserves under subparagraph (A) and such report shall 
        state the basis for the determination to exercise such 
        authority.
          * * * * * * *
  Sec. 23A. (a) * * *
          * * * * * * *
  (d) Exemptions.--The provisions of this section, except 
paragraph (a)(4), shall not be applicable to--
          (1) * * *
          * * * * * * *
          (5) purchasing securities issued by any company [of 
        the kinds described in section 4(c)(1) of the Bank 
        Holding Company Act of 1956;] engaged or to be engaged 
        solely in--
                  (A) holding or operating properties used 
                wholly or substantially by any bank subsidiary 
                of a bank holding company in the operations of 
                such bank subsidiary or acquired for such 
                future use;
                  (B) conducting a safe deposit business;
                  (C) furnishing services to or performing 
                services for a bank holding company or its bank 
                subsidiaries; and
                  (D) liquidating assets acquired from a bank 
                holding company or its bank subsidiaries.
          * * * * * * *
  (e) Rules Relating to Banks With Financial Subsidiaries.--
          (1) Financial subsidiary defined.--For purposes of 
        this section and section 23B, the term ``financial 
        subsidiary'' means a company which--
                  (A) is a subsidiary of a bank (other than a 
                corporation organized under section 25A of the 
                Federal Reserve Act or a corporation operating 
                under section 25 of such Act); and
                  (B) is engaged in a financial activity (as 
                defined in section 5136A(a)(4)) that is not a 
                permissible activity for a national bank to 
                engage in directly.
          (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 which is not a financial 
        subsidiary) and notwithstanding subsection (b)(2) and 
        section 23B(d)(1), the financial subsidiary of the 
        bank--
                  (A) shall be an affiliate of the bank and any 
                other subsidiary of the bank which is not a 
                financial subsidiary; and
                  (B) shall not be treated as a subsidiary of 
                the bank.
          (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 shall not be deemed to be 
                a transaction between a subsidiary of a 
                national bank and an affiliate of the bank for 
                purposes of section 23A or section 23B of the 
                Federal Reserve Act.
                  (B) Certain affiliates excluded.--For 
                purposes of subparagraph (A) and 
                notwithstanding paragraph (4), the term 
                ``affiliate'' shall not include a bank, or a 
                subsidiary of a bank, which is engaged 
                exclusively in activities permissible for a 
                national bank to engage in directly.
          (4) Equity investments excluded subject to the 
        approval of the banking agency.--Subsection (a)(1) 
        shall not apply so as to limit the equity investment of 
        a bank in a financial subsidiary of such bank, except 
        that any investment that exceeds the amount of a 
        dividend that the bank could pay at the time of the 
        investment without obtaining prior approval of the 
        appropriate Federal banking agency and is in excess of 
        the limitation which would apply under subsection 
        (a)(1), but for this paragraph, may be made only with 
        the approval of the appropriate Federal banking agency 
        (as defined in section 3(q) of the Federal Deposit 
        Insurance Act) with respect to such bank.
  [(e)] (f) Rulemaking and Additional Exemptions.--
          (1) The Board may issue such further regulations and 
        orders, including definitions consistent with this 
        section, as may be necessary to administer and carry 
        out the purposes of this section and to prevent 
        evasions thereof.
          (2) The Board may, at its discretion, by regulation 
        or order exempt transactions or relationships from the 
        requirements of this section if it finds such 
        exemptions to be in the public interest and consistent 
        with the purposes of this section.
          * * * * * * *
                              ----------                              


              SECTION 206 OF THE BANK EXPORT SERVICES ACT

        guarantees for export accounts receivable and inventory

  Sec. 206. The Export Import Bank of the United States is 
authorized and directed to establish a program to provide 
guarantees for loans extended by financial institutions or 
other public or private creditors to export trading companies 
[as defined in section 4(c)(14)(F)(i) of the Bank Holding 
Company Act of 1956], or to other exporters, when such loans 
are secured by export accounts receivable, inventories of 
exportable goods, accounts receivable from leases, performance 
contracts, grant commitments, participation fees, member dues, 
revenue from publications, or such other collateral as the 
Board of Directors may deem appropriate, and when in the 
judgment of the Board of Directors--
          (1) the private credit market is not providing 
        adequate financing to enable otherwise creditworthy 
        export trading companies or exporters to consummate 
        export transactions; and
          (2) such guarantees would facilitate expansion of 
        exports which would not otherwise occur.
The Board of Directors shall attempt to insure that a major 
share of any loan guarantees ultimately serves to promote 
exports from small, medium-size, and minority businesses or 
agricultural concerns. Guarantees provided under the authority 
of this section shall to limitations contained in annual 
appropriations Acts. For purposes of this section, the term 
``export trading company'' means a company that does business 
under the laws of the United States or any State, that is 
exclusively engaged in activities related to international 
trade, and that is organized and operated principally for 
purposes of exporting goods or services produced in the United 
States or for purposes of facilitating the exportation of goods 
or services produced in the United States by unaffiliated 
persons by providing one or more export trade services. For 
purposes of this section, the term ``export trade services'' 
includes consulting, international market research, 
advertising, marketing, insurance (other than acting as 
principal, agent or broker in the sale of insurance on risks 
resident or located, or activities performed, in the United 
States, except for insurance covering the transportation of 
cargo from any point of origin in the United States to a point 
of final destination outside the United States), product 
research and design, legal assistance, transportation, 
including trade and data processing of foreign orders to and 
for exporters and foreign purchasers, warehousing, foreign 
exchange, financing, and taking title to goods, when provided 
in order to facilitate the export of goods or services produced 
in the United States.
                              ----------                              


                     FEDERAL DEPOSIT INSURANCE ACT

SECTION 1. FEDERAL DEPOSIT INSURANCE CORPORATION.

  (a) Establishment of Corporation.--There is hereby 
established a Federal Deposit Insurance Corporation 
(hereinafter referred to as the ``Corporation'') which shall 
insure, as hereinafter provided, the deposits of all banks [and 
savings associations] which are entitled to the benefits of 
insurance under this Act, and which shall have the powers 
hereinafter granted.
          * * * * * * *

SEC. 2. MANAGEMENT.

  (a) Board of Directors.--
          [(1) In general.--The management of the Corporation 
        shall be vested in a Board of Directors consisting of 5 
        members--
                  [(A) 1 of whom shall be the Comptroller of 
                the Currency;
                  [(B) 1 of whom shall be the Director of the 
                Office of Thrift Supervision; and
                  [(C) 3 of whom shall be appointed by the 
                President, by and with the advice and consent 
                of the Senate, from among individuals who are 
                citizens of the United States, 1 of whom shall 
                have State bank supervisory experience.]
          (1) In general.--The management of the Corporation 
        shall be vested in a Board of Directors consisting of 5 
        members--
                  (A) 1 of whom shall be the Comptroller of the 
                Currency; and
                  (B) 4 of whom shall be appointed by the 
                President, and with the advice and consent of 
                the Senate, from among individuals who are 
                citizens of the United States, 1 of whom shall 
                have State bank supervisory experience.
          * * * * * * *
  (d) Vacancy.--
          (1) In general.--Any vacancy on the Board of 
        Directors shall be filled in the manner in which the 
        original appointment was made.
          (2) Acting officials may serve.--In the event of a 
        vacancy in the office of the Comptroller of the 
        Currency [or the office of Director of the Office of 
        Thrift Supervision] and pending the appointment of a 
        successor, or during the absence or disability of the 
        Comptroller [or such Director], the acting Comptroller 
        of the Currency [or the acting Director of the Office 
        of Thrift Supervision, as the case may be], shall be a 
        member of the Board of Directors in the place of the 
        Comptroller [or Director].
          * * * * * * *
  (f) Status of Employees.--
          (1) * * *
          (2) Definition.--For purposes of this subsection, the 
        term ``employee of the Corporation'' includes any 
        employee of the Office of the Comptroller of the 
        Currency [or of the Office of Thrift Supervision] who 
        serves as a deputy or assistant to a member of the 
        Board of Directors of the Corporation in connection 
        with activities of the Corporation.
          * * * * * * *
  Sec. 3. As used in this Act--
  (a) Definitions of Bank and Related Terms.--
          (1) * * *
          [(2) State bank.--The term ``State bank'' means any 
        bank, banking association, trust company, savings bank, 
        industrial bank (or similar depository institution 
        which the Board of Directors finds to be operating 
        substantially in the same manner as an industrial 
        bank), or other banking institution which--
                  [(A) is engaged in the business of receiving 
                deposits, other than trust funds (as defined in 
                this section); and
                  [(B) is incorporated under the laws of any 
                State or which is operating under the Code of 
                Law for the District of Columbia (except a 
                national bank),
        including any cooperative bank or other unincorporated 
        bank the deposits of which were insured by the 
        Corporation on the day before the date of the enactment 
        of the Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989.]
          (2) State bank.--
                  (A) In general.--The term ``State bank'' 
                means any bank, banking association, trust 
                company, savings bank, industrial bank (or 
                similar depository institution which the Board 
                of Directors finds to be operating in 
                substantially the same manner as an industrial 
                bank), building and loan association, savings 
                and loan association, homestead association, 
                cooperative bank, or other banking 
                institution--
                          (i) which is engaged in the business 
                        of receiving deposits, other than trust 
                        funds (as defined in this section); and
                          (ii) which--
                                  (I) is incorporated under the 
                                laws of any State;
                                  (II) is organized and 
                                operating according to the laws 
                                of the State in which such 
                                institution is chartered or 
                                organized; or
                                  (III) is operating under the 
                                Code of Law for the District of 
                                Columbia (except a national 
                                bank).
                  (B) Certain insured banks included.--The term 
                ``State bank'' includes any cooperative bank or 
                other unincorporated bank the deposits of which 
                were insured by the Corporation on the day 
                before the date of enactment of the Financial 
                Institutions Reform, Recovery, and Enforcement 
                Act of 1989.
                  (C) Certain uninsured banks excluded.--The 
                term ``State bank'' shall not include any 
                cooperative bank or other unincorporated bank 
                the deposits of which were not insured by the 
                Corporation on the day before the date of 
                enactment of the Financial Institutions Reform, 
                Recovery, and Enforcement Act of 1989.
          * * * * * * *
  (b) Definition of Savings Associations and Related Terms.--
          (1) Savings association.--The term ``savings 
        association'' means--
                  [(A) any Federal savings association;]
                  [(B)] (A) any State savings association; and
                  [(C)] (B) any corporation (other than a bank) 
                that the Board of Directors [and the Director 
                of the Office of Thrift Supervision jointly 
                determine] determines to be operating in 
                substantially the same manner as a savings 
                association.
          [(2) Federal savings association.--The term ``Federal 
        savings association'' means any Federal savings 
        association or Federal savings bank which is chartered 
        under section 5 of the Home Owners' Loan Act.]
          [(3)] (2) State savings association.--The term 
        ``State savings association'' means--
                  (A) any building and loan association, 
                savings and loan association, or homestead 
                association; or
                  (B) any cooperative bank (other than a 
                cooperative bank which is a State bank as 
                defined in subsection (a)(2)),
        which is organized and operating according to the laws 
        of the State (as defined in subsection (a)(3)) in which 
        it is chartered or organized.
          * * * * * * *
  (l) The term ``deposit'' means--
          (1) * * *
          * * * * * * *
          (5) such other obligations of a bank [or savings 
        association] as the Board of Directors, after 
        consultation with the Comptroller of the Currency, 
        [Director of the Office of Thrift Supervision], and the 
        Board of Governors of the Federal Reserve System, shall 
        find and prescribe by regulation to be deposit 
        liabilities by general usage, except that the following 
        shall not be a deposit for any of the purposes of this 
        Act or be included as part of the total deposits or of 
        an insured deposit:
                  (A) any obligation of a depository 
                institution which is carried on the books and 
                records of an office of such bank [or savings 
                association] located outside of any State, 
                unless--
                          (i) * * *
          * * * * * * *
  (q) Appropriate Federal Banking Agency.--The term 
``appropriate Federal banking agency'' means--
          [(1) the Comptroller of the Currency, in the case of 
        any national banking association, any District bank, or 
        any Federal branch or agency of a foreign bank;]
          (1) The Comptroller of the Currency in the case of--
                  (A) any national banking association, any 
                District bank, or any Federal branch or agency 
                of a foreign bank; and
                  (B) supervisory or regulatory proceedings 
                arising from the authority given to the 
                Comptroller under section 5133B of the Revised 
                Statutes of the United States.
          (2) the Board of Governors of the Federal Reserve 
        System, in the case of--
                  (A) * * *
          * * * * * * *
                  (F) any bank holding company and any 
                subsidiary of a bank holding company (other 
                than a bank); and
          (3) the Federal Deposit Insurance Corporation in the 
        case of a State nonmember insured bank (except a 
        District bank), or a foreign bank having an insured 
        branch[; and].
          [(4) the Director of the Office of Thrift Supervision 
        in the case of any savings association or any savings 
        and loan holding company.]
Under the rule set forth in this subsection, more than one 
agency may be an appropriate Federal banking agency with 
respect to any given institution.
          * * * * * * *
  (z) Federal Banking Agency.--The term ``Federal banking 
agency'' means the Comptroller of the Currency, [the Director 
of the Office of Thrift Supervision,] the Board of Governors of 
the Federal Reserve System, or the Federal Deposit Insurance 
Corporation.
  Sec. 4. (a) Continuation of Insurance.--
          [(1) Banks.--]Each bank, which is an insured 
        depository institution on the effective date of this 
        amendment, shall be and continue to be, without 
        application or approval, an insured depository 
        institution and shall be subject to the provisions of 
        this Act.
          [(2) Savings associations.--Each savings association 
        the accounts of which were insured by the Federal 
        Savings and Loan Insurance Corporation on the day 
        before the date of the enactment of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 
        1989, shall be, without application or approval, an 
        insured depository institution.]
          * * * * * * *

SEC. 5. DEPOSIT INSURANCE.

  (a) * * *
          * * * * * * *
  (e) Liability of Commonly Controlled Depository 
Institutions.--
          (1) * * *
          * * * * * * *
          (9) Commonly controlled defined.--For purposes of 
        this subsection, depository institutions are commonly 
        controlled if--
                  (A) such institutions are controlled by the 
                same depository institution holding company 
                (including any company required to file reports 
                pursuant to section [4(f)(6)] 6(g)(6) of the 
                Bank Holding Company Act of 1956); or
                  (B) 1 depository institution is controlled by 
                another depository institution.
          * * * * * * *
  Sec. 7. (a)(1) * * *
  (2)(A) The Corporation and, with respect to any State 
depository institution, any appropriate State bank supervisor 
for such institution, shall have access to reports of 
examination made by, and reports of condition made to, the 
Comptroller of the Currency, [the Director of the Office of 
Thrift Supervision,] the Federal Housing Finance Board, any 
Federal home loan bank, or any Federal Reserve bank and to all 
revisions of reports of condition made to any of them, and they 
shall promptly advise the Corporation of any revisons or 
changes in respect to deposit liabilities made or required to 
be made in any report of condition. The Corporation may accept 
any report made by or to any commission, board, or authority 
having supervision of a depository institution, and may furnish 
to the Comptroller of the Currency, the Director of the Office 
of Thrift Supervision, the Federal Housing Finance Board, any 
Federal home loan bank, to any Federal Reserve bank, and to any 
such commission, board, or authority, reports of examinations 
made on behalf of, and reports of condition made to, the 
Corporation.
          (B) Additional reports.--The Board of Directors may 
        from time to time require any insured depository 
        institution to file such additional reports as the 
        Corporation, after agreement with the Comptroller of 
        the Currency, and the Board of Governors of the Federal 
        Reserve System, [and the Director of the Office of 
        Thrift Supervision], as appropriate, may deem advisable 
        for insurance purposes.
  (3) Each insured depository institution shall make to the 
appropriate Federal banking agency 4 reports of condition 
annually upon dates which shall be selected by the Chairman of 
the Board of Directors, the Comptroller of the Currency, the 
Chairman of and the Board of Governors of the Federal Reserve 
System[, and the Director of the Office of Thrift Supervision]. 
The dates selected shall be the same for all insured depository 
institutions, except that when any of said reporting dates is a 
nonbusiness day for any depository institution, the preceding 
business day shall be its reporting date. Two dates shall be 
selected within the semiannual period of January to June 
inclusive, and the reports on such dates shall be the basis for 
the certified statement to be filed in July pursuant to 
subsection (c) of this section, and two dates shall be selected 
within the semiannual period of July to December inclusive, and 
the reports on such dates shall be the basis for the certified 
statement to be filed in January pursuant to subsection (c) of 
this section. The deposit liabilities shall be reported in said 
reports of condition in accordance with and pursuant to 
paragraphs (4) and (5) of this subsection, and such other 
information shall be reported therein as may be required by the 
respective agencies. Each said report of condition shall 
contain a declaration by the president, a vice president, the 
cashier or the treasurer, or by any other officer designated by 
the board of directors or trustees of the reporting depository 
institution to make such declaration, that the report is true 
and correct to the best of his knowledge and belief. The 
correctness of said report of conditions shall be attested by 
the signatures of at least two directors or trustees of the 
reporting depository institution other than the officer making 
such declaration, with a declaration that the report has been 
examined by them and to be the best of their knowledge and 
belief is true and correct. At the time of making said reports 
of condition each insured depository institution shall furnish 
to the Corporation a copy thereof containing such signed 
declaration and attestations. Nothing herein shall preclude any 
of the foregoing agencies from requiring the banks or savings 
associations under its jurisdiction to make additional reports 
of condition at any time.
          * * * * * * *
  (7) The Board of Directors, after consultation with the 
Comptroller of the Currency, [the Director of the Office of 
Thrift Supervision,] and the Board of Governors of the Federal 
Reserve System, may by regulation define the terms ``cash 
items'' and ``process of collection'', and shall classify 
deposits as ``time,'' ``savings,'' and ``demand'' deposits, for 
the purposes of this section.
          * * * * * * *
  [(n) Collections on Behalf of the Director of the Office of 
Thrift Supervision.--When requested by the Director of the 
Office of Thrift Supervision, the Corporation shall collect on 
behalf of the Director assessments on savings associations 
levied by the Director under section 9 of the Home Owners' Loan 
Act. The Corporation shall be reimbursed for its actual costs 
for the collection of such assessments. Any such assessments by 
the Director shall be in addition to any amounts assessed by 
the Corporation, the Financing Corporation, and the Resolution 
Funding Corporation.]
  Sec. 8. (a) Termination of Insurance.--
          [(1) Voluntary termination.--Any insured depository 
        institution which is not--
                  [(A) a national member bank;
                  [(B) a State member bank;
                  [(C) a Federal branch;
                  [(D) a Federal savings association; or
                  [(E) an insured branch which is required to 
                be insured under subsection (a) or (b) of 
                section 6 of the International Banking Act of 
                1978,
        may terminate such depository institution's status as 
        an insured depository institution if such insured 
        institution provides written notice to the Corporation 
        of the institution's intent to terminate such status 
        not less than 90 days before the effective date of such 
        termination.]
          [(2)] (1) Involuntary termination.--
                  (A) Notice to primary regulator.--If the 
                Board of Directors determines that--
                          (i) * * *
          * * * * * * *
          [(3)] (2) Hearing; termination.--If, on the basis of 
        the evidence presented at a hearing before the Board of 
        Directors (or any person designated by the Board for 
        such purpose), in which all issues shall be determined 
        on the record pursuant to section 554 of title 5, 
        United States Code, and the written findings of the 
        Board of Directors (or such person) with respect to 
        such evidence (which shall be conclusive), the Board of 
        Directors finds that any unsafe or unsound practice or 
        condition or any violation specified in the notice to 
        an insured depository institution under paragraph 
        (2)(B) or subsection (w) has been established, the 
        Board of Directors may issue an order terminating the 
        insured status of such depository institution effective 
        as of a date subsequent to such finding.
          [(4)] (3) Appearance; consent to termination.--Unless 
        the depository institution shall appear at the hearing 
        by a duly authorized representative, it shall be deemed 
        to have consented to the termination of its status as 
        an insured depository institution and termination of 
        such status thereupon may be ordered.
          [(5)] (4) Judicial review.--Any insured depository 
        institution whose insured status has been terminated by 
        order of the Board of Directors under this subsection 
        shall have the right of judicial review of such order 
        only to the same extent as provided for the review of 
        orders under subsection (h) of this section.
          [(6)] (5) Publication of notice of termination.--The 
        Corporation may publish notice of such termination and 
        the depository institution shall give notice of such 
        termination to each of its depositors at his last 
        address of record on the books of the depository 
        institution, in such manner and at such time as the 
        Board of Directors may find to be necessary and may 
        order for the protection of depositors.
          [(7)] (6) Temporary insurance of deposits insured as 
        of termination.--After the termination of the insured 
        status of any depository institution under the 
        provisions of this subsection, the insured deposits of 
        each depositor in the depository institution on the 
        date of such termination, less all subsequent 
        withdrawals from any deposits of such depositor, shall 
        continue for a period of at least 6 months or up to 2 
        years, within the discretion of the Board of Directors, 
        to be insured, and the depository institution shall 
        continue to pay to the Corporation assessments as in 
        the case of an insured depository institution during 
        such period. No additions to any such deposits and no 
        new deposits in such depository institution made after 
        the date of such termination shall be insured by the 
        Corporation, and the depository institution shall not 
        advertise or hold itself out as having insured deposits 
        unless in the same connection it shall also state with 
        equal prominence that such additions to deposits and 
        new deposits made after such date are not so insured. 
        Such depository institution shall, in all other 
        respects, be subject to the duties and obligations of 
        an insured depository institution for the period 
        referred to in the first sentence from the date of such 
        termination, and in the event that such depository 
        institution shall be closed on account of inability to 
        meet the demands of its depositors within such period, 
        the Corporation shall have the same powers and rights 
        with respect to such depository institution as in case 
        of an insured depository institution.
          [(8)] (7) Temporary suspension of insurance.--
                  (A) In general.--If the Board of Directors 
                initiates a termination proceeding under 
                paragraph (2), and the Board of Directors, 
                after consultation with the appropriate Federal 
                banking agency, finds that an insured 
                depository institution (other than a savings 
                association to which subparagraph (B) applies) 
                has no tangible capital under the capital 
                guidelines or regulations of the appropriate 
                Federal banking agency, the Corporation may 
                issue a temporary order suspending deposit 
                insurance on all deposits received by the 
                institution.
                  [(B) Special rule for certain savings 
                institutions.--
                          [(i) Certain goodwill included in 
                        tangible capital.--In determining the 
                        tangible capital of a savings 
                        association for purposes of this 
                        paragraph, the Board of Directors shall 
                        include goodwill to the extent it is 
                        considered a component of capital under 
                        section 5(t) of the Home Owners' Loan 
                        Act. Any savings association which 
                        would be subject to a suspension order 
                        under subparagraph (A) but for the 
                        operation of this subparagraph, shall 
                        be considered by the Corporation to be 
                        a ``special supervisory association''.
                          [(ii) Suspension order.--The 
                        Corporation may issue a temporary order 
                        suspending deposit insurance on all 
                        deposits received by a special 
                        supervisory association whenever the 
                        Board of Directors determines that--
                                  [(I) the capital of such 
                                association, as computed 
                                utilizing applicable accounting 
                                standards, has suffered a 
                                material decline;
                                  [(II) that such association 
                                (or its directors or officers) 
                                is engaging in an unsafe or 
                                unsound practice in conducting 
                                the business of the 
                                association;
                                  [(III) that such association 
                                is in an unsafe or unsound 
                                condition to continue operating 
                                as an insured association; or
                                  [(IV) that such association 
                                (or its directors or officers) 
                                has violated any applicable 
                                law, rule, regulation, or 
                                order, or any condition imposed 
                                in writing by a Federal banking 
                                agency, or any written 
                                agreement including a capital 
                                improvement plan entered into 
                                with any Federal banking 
                                agency, or that the association 
                                has failed to enter into a 
                                capital improvement plan which 
                                is acceptable to the 
                                Corporation within the time 
                                period set forth in section 
                                5(t) of the Home Owners' Loan 
                                Act.
                        Nothing in this paragraph limits the 
                        right of the Corporation or the 
                        Director of the Office of Thrift 
                        Supervision to enforce a contractual 
                        provision which authorizes the 
                        Corporation or the Director of the 
                        Office of Thrift Supervision, as a 
                        successor to the Federal Savings and 
                        Loan Insurance Corporation or the 
                        Federal Home Loan Bank Board, to 
                        require a savings association to write 
                        down or amortize goodwill at a faster 
                        rate than otherwise required under this 
                        Act or under applicable accounting 
                        standards.]
                  [(C)] (B) Effective period of temporary 
                order.--Any order issued under subparagraph (A) 
                shall become effective not earlier than 10 days 
                from the date of service upon the institution 
                and, unless set aside, limited, or suspended by 
                a court in proceedings authorized hereunder, 
                such temporary order shall remain effective and 
                enforceable until an order of the Board under 
                paragraph (3) becomes final or until the 
                Corporation dismisses the proceedings under 
                paragraph (3).
                  [(D)] (C) Judicial review.--Before the close 
                of the 10-day period beginning on the date any 
                temporary order has been served upon an insured 
                depository institution under subparagraph (A), 
                such institution may apply to the United States 
                District Court for the District of Columbia, or 
                the United States district court for the 
                judicial district in which the home office of 
                the institution is located, for an injunction 
                setting aside, limiting, or suspending the 
                enforcement, operation, or effectiveness of 
                such order, and such court shall have 
                jurisdiction to issue such injunction.
                  [(E)] (D) Continuation of insurance for prior 
                deposits.--The insured deposits of each 
                depositor in such depository institution on the 
                effective date of the order issued under this 
                paragraph, minus all subsequent withdrawals 
                from any deposits of such depositor, shall 
                continue to be insured, subject to the 
                administrative proceedings as provided in this 
                Act.
                  [(F)] (E) Publication of order.--The 
                depository institution shall give notice of 
                such order to each of its depositors in such 
                manner and at such times as the Board of 
                Directors may find to be necessary and may 
                order for the protection of depositors.
                  [(G)] (F) Notice by corporation.--If the 
                Corporation determines that the depository 
                institution has not substantially complied with 
                the notice to depositors required by the Board 
                of Directors, the Corporation may provide such 
                notice in such manner as the Board of Directors 
                may find to be necessary and appropriate.
                  [(H)] (G) Lack of notice.--Notwithstanding 
                subparagraph (A), any deposit made after the 
                effective date of a suspension order issued 
                under this paragraph shall remain insured to 
                the extent that the depositor establishes 
                that--
                          (i) such deposit consists of 
                        additions made by automatic deposit the 
                        depositor was unable to prevent; or
                          (ii) such depositor did not have 
                        actual knowledge of the suspension of 
                        insurance.
          [(9)] (8) Final decisions to terminate insurance.--
        Any decision by the Board of Directors to--
                  (A) issue a temporary order terminating 
                deposit insurance; or
                  (B) issue a final order terminating deposit 
                insurance (other than under subsection (p) or 
                (q));
        shall be made by the Board of Directors and may not be 
        delegated.
          [(10)] (9) Low- to moderate-income housing lender.--
        In making any determination regarding the termination 
        of insurance of a solvent savings association, the 
        Corporation may consider the extent of the 
        association's low- to moderate-income housing loans.
  (b)(1) * * *
          * * * * * * *
  [(9) Expansion of authority to savings and loan affiliates 
and entities.--Subsections (a) through (s) and subsection (u) 
shall apply to any savings and loan holding company and to any 
subsidiary (other than a bank or subsidiary of that bank) of a 
savings and loan holding company, to any service corporation of 
a savings association and to any subsidiary of such service 
corporation, whether wholly or partly owned, in the same manner 
as such subsections apply to a savings association.]
  [(10)] (9) Standard for certain orders.--No authority under 
this subsection or subsection (c) to prohibit any institution-
affiliated party from withdrawing, transferring, removing, 
dissipating, or disposing of any funds, assets, or other 
property may be exercised unless the appropriate Federal 
banking agency meets the standards of Rule 65 of the Federal 
Rules of Civil Procedure, without regard to the requirement of 
such rule that the applicant show that the injury, loss, or 
damage is irreparable and immediate.
          * * * * * * *
  (o) Whenever the insured status of a State member bank shall 
be terminated by action of the Board of Directors, the Board of 
Governors of the Federal Reserve System shall terminate its 
membership in the Federal Reserve System in accordance with the 
provisions of section 9 of the Federal Reserve Act, and 
whenever the insured status of a national member bank shall be 
so terminated the Comptroller of the Currency shall appoint a 
receiver for the bank, which shall be the Corporation. Except 
as provided in subsection (d) of section 4, whenever a member 
bank shall cease to be a member of the Federal Reserve System, 
its status as an insured depository institution shall, without 
notice or other action by the Board of Directors, terminate on 
the date the bank shall cease to be a member of the Federal 
Reserve System, with like effect as if its insured status had 
been terminated on said date by the Board of Directors after 
proceedings under subsection (a) of this section. [Whenever the 
insured status of an insured Federal savings bank shall be 
terminated by action of the Board of Directors, the Director of 
the Office of Thrift Supervision shall appoint a receiver for 
the bank, which shall be the Corporation.]
          * * * * * * *
  (w) Termination of Insurance for Money Laundering or Cash 
Transaction Reporting Offenses.--
          (1) * * *
          * * * * * * *
          (3) Notice to state banking supervisor and public.--
        When the order to terminate insured status initiated 
        pursuant to this subsection is final, the Board of 
        Directors shall--
                  (A) notify the State banking supervisor of 
                any State depository institution described in 
                paragraph (1) [and the Office of Thrift 
                Supervision, where appropriate], at least 10 
                days prior to the effective date of the order 
                of termination of the insured status of such 
                depository institution, including a State 
                branch of a foreign bank; and
          * * * * * * *

SEC. 8A. VOLUNTARY TERMINATION OF STATUS AS INSURED DEPOSITORY 
                    INSTITUTION.

  (a) In General.--Except as provided in subsection (b), an 
insured State bank or a national bank may voluntarily terminate 
such bank's status as an insured depository institution in 
accordance with regulations of the Corporation if--
          (1) the bank provides written notice of the bank's 
        intent to terminate such insured status--
                  (A) to the Corporation and the Board of 
                Governors of the Federal Reserve System not 
                less than 6 months before the effective date of 
                such termination; and
                  (B) to all depositors at such bank, not less 
                than 6 months before the effective date of the 
                termination of such status; and
          (2) either--
                  (A) the deposit insurance fund of which such 
                bank is a member equals or exceeds the fund's 
                designated reserve ratio as of the date the 
                bank provides a written notice under paragraph 
                (1) and the Corporation determines that the 
                fund will equal or exceed the applicable 
                designated reserve ratio for the 2 semiannual 
                assessment periods immediately following such 
                date; or
                  (B) the Corporation and the Board of 
                Governors of the Federal Reserve System approve 
                the termination of the bank's insured status 
                and the bank pays an exit fee in accordance 
                with subsection (e).
  (b) Exception.--Subsection (a) shall not apply with respect 
to--
          (1) an insured savings association;
          (2) an insured branch that is required to be insured 
        under subsection (a) or (b) of section 6 of the 
        International Banking Act of 1978; or
          (3) any institution described in section 2(c)(2) of 
        the Bank Holding Company Act of 1956.
  (c) Eligibility for Insurance Terminated.--Any bank that 
voluntarily elects to terminate the bank's insured status under 
subsection (a) shall not be eligible for insurance on any 
deposits or any assistance authorized under this Act after the 
period specified in subsection (f)(1).
  (d) Institution Must Become Wholesale Financial Institution 
or Terminate Deposit-Taking Activities.--Any depository 
institution which voluntarily terminates such institution's 
status as an insured depository institution under this section 
may not, upon termination of insurance, accept any deposits 
unless the institution is a wholesale financial institution 
under section 9B of the Federal Reserve Act.
  (e) Exit Fees.--
          (1) In general.--Any bank that voluntarily terminates 
        such bank's status as an insured depository institution 
        under this section shall pay an exit fee in an amount 
        that the Corporation determines is sufficient to 
        account for the institution's pro rata share of the 
        amount (if any) which would be required to restore the 
        relevant deposit insurance fund to the fund's 
        designated reserve ratio as of the date the bank 
        provides a written notice under subsection (a)(1).
          (2) Procedures.--The Corporation shall prescribe, by 
        regulation, procedures for assessing any exit fee under 
        this subsection.
  (f) Temporary Insurance of Deposits Insured as of 
Termination.--
          (1) Transition period.--The insured deposits of each 
        depositor in a State bank or a national bank on the 
        effective date of the voluntary termination of the 
        bank's insured status, less all subsequent withdrawals 
        from any deposits of such depositor, shall continue to 
        be insured for a period of not less than 6 months and 
        not more than 2 years, as determined by the 
        Corporation. During such period, no additions to any 
        such deposits, and no new deposits in the depository 
        institution made after the effective date of such 
        termination shall be insured by the Corporation.
          (2) Temporary assessments; obligations and duties.--
        During the period specified in paragraph (1) with 
        respect to any bank, the bank shall continue to pay 
        assessments under section 7 as if the bank were an 
        insured depository institution. The bank shall, in all 
        other respects, be subject to the authority of the 
        Corporation and the duties and obligations of an 
        insured depository institution under this Act during 
        such period, and in the event that the bank is closed 
        due to an inability to meet the demands of the bank's 
        depositors during such period, the Corporation shall 
        have the same powers and rights with respect to such 
        bank as in the case of an insured depository 
        institution.
  (g) Advertisements.--
          (1) In general.--A bank that voluntarily terminates 
        the bank's insured status under this section shall not 
        advertise or hold itself out as having insured 
        deposits, except that the bank may advertise the 
        temporary insurance of deposits under subsection (f) 
        if, in connection with any such advertisement, the 
        advertisement also states with equal prominence that 
        additions to deposits and new deposits made after the 
        effective date of the termination are not insured.
          (2) Certificates of deposit, obligations, and 
        securities.--Any certificate of deposit or other 
        obligation or security issued by a State bank or a 
        national bank after the effective date of the voluntary 
        termination of the bank's insured status under this 
        section shall be accompanied by a conspicuous, 
        prominently displayed notice that such certificate of 
        deposit or other obligation or security is not insured 
        under this Act.
  (h) Notice Requirements.--
          (1) Notice to the corporation.--The notice required 
        under subsection (a)(1)(A) shall be in such form as the 
        Corporation may require.
          (2) Notice to depositors.--The notice required under 
        subsection (a)(1)(B) shall be--
                  (A) sent to each depositor's last address of 
                record with the bank; and
                  (B) in such manner and form as the 
                Corporation finds to be necessary and 
                appropriate for the protection of depositors.
  (i) Voluntary Termination of Deposit Insurance.--The 
provisions on voluntary termination of insurance in this 
section apply to an insured branch of a foreign bank (including 
a Federal branch) in the same manner and to the same extent as 
they apply to an insured State bank or a national bank.
          * * * * * * *
  Sec. 10. (a) * * *
          * * * * * * *
  (c) In connection with examinations of insured depository 
institutions and any State nonmember bank, [savings 
association,] or other institution making application to become 
insured depository institutions, and affiliates thereof, or 
with other types of investigations to determine compliance with 
applicable law and regulations, the appropriate Federal banking 
agency, or its designated representatives, are authorized to 
administer oaths and affirmations, and to examine and to take 
and preserve testimony under oath as to any matter in respect 
to the affairs or ownership of any such bank or institution or 
affiliate thereof, and to exercise such other powers as are set 
forth in section 8(n) of this Act.
          * * * * * * *
  Sec. 11. (a) * * *
          * * * * * * *
  (c) Appointment of Corporation as Conservator or Receiver.--
          (1) * * *
          * * * * * * *
          [(6) Appointment by director of the office of thrift 
        supervision.--
                  [(A) Conservator.--The Corporation or the 
                Resolution Trust Corporation may, at the 
                discretion of the Director of the Office of 
                Thrift Supervision, be appointed conservator 
                and the Corporation may accept any such 
                appointment.
                  [(B) Receiver.--Whenever the Director of the 
                Office of Thrift Supervision appoints a 
                receiver under the provisions of subparagraph 
                (A) or (C) of section 5(d)(2) of the Home 
                Owners' Loan Act for the purpose of liquidation 
                or winding up any savings association's 
                affairs--
                          [(i) before such date as is 
                        determined by the Chairperson of the 
                        Thrift Depositor Protection Oversight 
                        Board under section 21A(b)(3)(A)(ii) of 
                        the Federal Home Loan Bank Act, the 
                        Resolution Trust Corporation shall be 
                        appointed;
                          [(ii) on or after the date determined 
                        by the Chairperson of the Thrift 
                        Depositor Protection Oversight Board 
                        under section 21A(b)(3)(A)(ii) of the 
                        Federal Home Loan Bank Act, the 
                        Resolution Trust Corporation shall be 
                        appointed if the Resolution Trust 
                        Corporation had been placed in control 
                        of the depository institution at any 
                        time before such date; and
                          [(iii) on or after the date 
                        determined by the Chairperson of the 
                        Thrift Depositor Protection Oversight 
                        Board under section 21A(b)(3)(A)(ii) of 
                        the Federal Home Loan Bank Act, the 
                        Corporation shall be appointed unless 
                        the Resolution Trust Corporation is 
                        required to be appointed under clause 
                        (ii).]
          [(7)] (6) Judicial review.--If the Corporation 
        appoints itself as conservator or receiver under 
        paragraph (4), the insured State depository institution 
        may, within 30 days thereafter, bring an action in the 
        United States district court for the judicial district 
        in which the home office of such institution is 
        located, or in the United States District Court for the 
        District of Columbia, for an order requiring the 
        Corporation to remove itself as such conservator or 
        receiver, and the court shall, upon the merits, dismiss 
        such action or direct the Corporation to remove itself 
        as such conservator or receiver.
          [(8)] (7) Replacement of conservator of state 
        depository institution.--
                  (A) In general.--In the case of any insured 
                State depository institution for which the 
                Corporation appointed itself as conservator 
                pursuant to paragraph (4), the Corporation may, 
                without any requirement of notice, hearing, or 
                other action, replace itself as conservator 
                with itself as receiver of such institution.
                  (B) Replacement treated as removal of 
                incumbent.--The replacement of a conservator 
                with a receiver under subparagraph (A) shall be 
                treated as the removal of the Corporation as 
                conservator.
                  (C) Right of review of original appointment 
                not affected.--The replacement of a conservator 
                with a receiver under subparagraph (A) shall 
                not affect any right of the insured State 
                depository institution to obtain review, 
                pursuant to paragraph (7), of the original 
                appointment of the conservator.
          [(9)] (8)  Appropriate federal banking agency may 
        appoint corporation as conservator or receiver for 
        insured state depository institution to carry out 
        section 38.--
                  (A) In general.--The appropriate Federal 
                banking agency may appoint the Corporation as 
                sole receiver (or, subject to paragraph (11), 
                sole conservator) of any insured State 
                depository institution, after consultation with 
                the appropriate State supervisor, if the 
                appropriate Federal banking agency determines 
                that--
                          (i) 1 or more of the grounds 
                        specified in subparagraphs (K) and (L) 
                        of paragraph (5) exist with respect to 
                        that institution; and
                          (ii) the appointment is necessary to 
                        carry out the purpose of section 38.
                  (B) Nondelegation.--The appropriate Federal 
                banking agency shall not delegate any action 
                under subparagraph (A).
          [(10)] (9)  Corporation may appoint itself as 
        conservator or receiver for insured depository 
        institution to prevent loss to deposit insurance 
        fund.--The Board of Directors may appoint the 
        Corporation as sole conservator or receiver of an 
        insured depository institution, after consultation with 
        the appropriate Federal banking agency and the 
        appropriate State supervisor (if any), if the Board of 
        Directors determines that--
                  (A) 1 or more of the grounds specified in any 
                subparagraph of paragraph (5) exist with 
                respect to the institution; and
                  (B) the appointment is necessary to reduce--
                          (i) the risk that the deposit 
                        insurance fund would incur a loss with 
                        respect to the insured depository 
                        institution, or
                          (ii) any loss that the deposit 
                        insurance fund is expected to incur 
                        with respect to that institution.
          [(11) ] (10)  Appropriate federal banking agency 
        shall not appoint conservator under certain provisions 
        without giving corporation opportunity to appoint 
        receiver.--The appropriate Federal banking agency shall 
        not appoint a conservator for an insured depository 
        institution under subparagraph (K) or (L) of paragraph 
        (5) without the Corporation's consent unless the agency 
        has given the Corporation 48 hours notice of the 
        agency's intention to appoint the conservator and the 
        grounds for the appointment.
          [(12)] (11)  Directors not liable for acquiescing in 
        appointment of conservator or receiver.--The members of 
        the board of directors of an insured depository 
        institution shall not be liable to the institution's 
        shareholders or creditors for acquiescing in or 
        consenting in good faith to--
                  (A) the appointment of the Corporation or the 
                Resolution Trust Corporation as conservator or 
                receiver for that institution; or
                  (B) an acquisition or combination under 
                section 38(f)(2)(A)(iii).
          [(13)] (12) Additional powers.--In any case in which 
        the Corporation is appointed conservator or receiver 
        under paragraph (4), (6), (9), or (10) for any insured 
        State depository institution--
                  (A) this section shall apply to the 
                Corporation as conservator or receiver in the 
                same manner and to the same extent as if that 
                institution were a Federal depository 
                institution for which the Corporation had been 
                appointed conservator or receiver; and
                  (B) the Corporation as receiver of the 
                institution may--
                          (i) liquidate the institution in an 
                        orderly manner; and
                          (ii) make any other disposition of 
                        any matter concerning the institution, 
                        as the Corporation determines is in the 
                        best interests of the institution, the 
                        depositors of the institution, and the 
                        Corporation.
  (d) Powers and Duties of Corporation as Conservator or 
Receiver.--
          (1) Rulemaking authority of corporation.--The 
        Corporation may prescribe such regulations as the 
        Corporation determines to be appropriate regarding the 
        conduct of conservatorships or receiverships.
          (2) General powers.--
                  (A) * * *
          * * * * * * *
                  (F) Organization of new institutions.--The 
                Corporation may, as [receiver--
                          [(i) with respect to savings 
                        associations and by application to the 
                        Director of the Office of Thrift 
                        Supervision, organize a new Federal 
                        savings association to take over such 
                        assets or such liabilities as the 
                        Corporation may determine to be 
                        appropriate; and
                          [(ii) with] receiver with respect to 
                        any insured bank, organize a new 
                        national bank under subsection (m) or a 
                        bridge bank under subsection (n).
          * * * * * * *
          (17) Fraudulent transfers.--
                  (A) In general.--The Corporation, as 
                conservator or receiver for any insured 
                depository institution, and any conservator 
                appointed by the Comptroller of the Currency 
                [or the Director of the Office of Thrift 
                Supervision] may avoid a transfer of any 
                interest of an institution-affiliated party, or 
                any person who the Corporation or conservator 
                determines is a debtor of the institution, in 
                property, or any obligation incurred by such 
                party or person, that was made within 5 years 
                of the date on which the Corporation or 
                conservator was appointed conservator or 
                receiver if such party or person voluntarily or 
                involuntarily made such transfer or incurred 
                such liability with the intent to hinder, 
                delay, or defraud the insured depository 
                institution, the Corporation or other 
                conservator, or any other appropriate Federal 
                banking agency.
          * * * * * * *
          (18) Attachment of assets and other injunctive 
        relief.--Subject to paragraph (19), any court of 
        competent jurisdiction may, at the request of--
                  (A) the Corporation (in the Corporation's 
                capacity as conservator or receiver for any 
                insured depository institution or in the 
                Corporation's corporate capacity with respect 
                to any asset acquired or liability assumed by 
                the Corporation under section 11, 12, or 13); 
                or
                  (B) any conservator appointed by the 
                Comptroller of the Currency [or the Director of 
                the Office of Thrift Supervision],
        issue an order in accordance with Rule 65 of the 
        Federal Rules of Civil Procedure, including an order 
        placing the assets of any person designated by the 
        Corporation or such conservator under the control of 
        the court and appointing a trustee to hold such assets.
          * * * * * * *
  Sec. 13. (a) * * *
          * * * * * * *
  [(k) Emergency Acquisitions.--
          [(1) In general.--
                  [(A) Acquisitions authorized.--
                          [(i) Transactions described.--
                        Notwithstanding any provision of State 
                        law, upon determining that severe 
                        financial conditions threaten the 
                        stability of a significant number of 
                        savings associations, or of savings 
                        associations possessing significant 
                        financial resources, the Corporation, 
                        in its discretion and if it determines 
                        such authorization would lessen the 
                        risk to the Corporation, may 
                        authorize--
                                  [(I) a savings association 
                                that is eligible for assistance 
                                pursuant to subsection (c) to 
                                merge or consolidate with, or 
                                to transfer its assets and 
                                liabilities to, any other 
                                savings association or any 
                                insured bank,
                                  [(II) any other savings 
                                association to acquire control 
                                of such savings association, or
                                  [(III) any company to acquire 
                                control of such savings 
                                association or to acquire the 
                                assets or assume the 
                                liabilities thereof.
                        The Corporation may not authorize any 
                        transaction under this subsection 
                        unless the Corporation determines that 
                        the authorization will not present a 
                        substantial risk to the safety or 
                        soundness of the savings association to 
                        be acquired or any acquiring entity.
                          [(ii) Terms of transactions.--
                        Mergers, consolidations, transfers, and 
                        acquisitions under this subsection 
                        shall be on such terms as the 
                        Corporation shall provide.
                          [(iii) Approval by appropriate 
                        agency.--Where otherwise required by 
                        law, transactions under this subsection 
                        must be approved by the appropriate 
                        Federal banking agency of every party 
                        thereto.
                          [(iv) Acquisitions by savings 
                        associations.--Any Federal savings 
                        association that acquires another 
                        savings association pursuant to clause 
                        (i) may, with the concurrence of the 
                        Director of the Office of Thrift 
                        Supervision, hold that savings 
                        association as a subsidiary 
                        notwithstanding the percentage 
                        limitations of section 5(c)(4)(B) of 
                        the Home Owners' Loan Act.
                          [(v) Dual service.--Dual service by a 
                        management official that would 
                        otherwise be prohibited under the 
                        Depository Institution Management 
                        Interlocks Act may, with the approval 
                        of the Corporation, continue for up to 
                        10 years.
                          [(vi) Continued applicability of 
                        certain state restrictions.--Nothing in 
                        this subsection overrides or supersedes 
                        State laws restricting or limiting the 
                        activities of a savings association on 
                        behalf of another entity.
                  [(B) Consultation with state official.--
                          [(i) Consultation required.--Before 
                        making a determination to take any 
                        action under subparagraph (A), the 
                        Corporation shall consult the State 
                        official having jurisdiction of the 
                        acquired institution.
                          [(ii) Period for state response.--The 
                        official shall be given a reasonable 
                        opportunity, and in no event less than 
                        48 hours, to object to the use of the 
                        provisions of this paragraph. Such 
                        notice may be provided by the 
                        Corporation prior to its appointment as 
                        receiver, but in anticipation of an 
                        impending appointment.
                          [(iii) Approval over objection of 
                        state official.--If the official 
                        objects during such period, the 
                        Corporation may use the authority of 
                        this paragraph only by a vote of 75 
                        percent or more of the voting members 
                        of the Board of Directors. The 
                        Corporation shall provide to the 
                        official, as soon as practicable, a 
                        written certification of its 
                        determination.
          [(2) Solicitation of offers.--
                  [(A) In general.--In considering 
                authorizations under this subsection, the 
                Corporation may solicit such offers or 
                proposals as are practicable from any 
                prospective purchasers or merger partners it 
                determines, in its sole discretion, are both 
                qualified and capable of acquiring the assets 
                and liabilities of the savings association.
                  [(B) Minority-controlled institutions.--In 
                the case of a minority-controlled depository 
                institution, the Corporation shall seek an 
                offer from other minority-controlled depository 
                institutions before seeking an offer from other 
                persons or entities.
          [(3) Determination of costs.--In determining the cost 
        of offers under this subsection, the Corporation's 
        calculations and estimations shall be determinative. 
        The Corporation may set reasonable time limits on 
        offers.
          [(4) Branching provisions.--
                  [(A) In general.--If a merger, consolidation, 
                transfer, or acquisition under this subsection 
                involves a savings association eligible for 
                assistance and a bank or bank holding company, 
                a savings association may retain and operate 
                any existing branch or branches or any other 
                existing facilities. If the savings association 
                continues to exist as a separate entity, it may 
                establish and operate new branches to the same 
                extent as any savings association that is not 
                affiliated with a bank holding company and the 
                home office of which is located in the same 
                State.
                  [(B) Restrictions.--
                          [(i) In general.--Notwithstanding 
                        subparagraph (A), if--
                                  [(I) a savings association 
                                described in such subparagraph 
                                does not have its home office 
                                in the State of the bank 
                                holding company bank 
                                subsidiary, and
                                  [(II) such association does 
                                not qualify as a domestic 
                                building and loan association 
                                under section 7701(a)(19) of 
                                the Internal Revenue Code of 
                                1986, or does not meet the 
                                asset composition test imposed 
                                by subparagraph (C) of that 
                                section on institutions seeking 
                                so to qualify,
                        such savings association shall be 
                        subject to the conditions upon which a 
                        bank may retain, operate, and establish 
                        branches in the State in which the 
                        Savings Association Insurance Fund 
                        member is located.
                          [(ii) Transition period.--The 
                        Corporation, for good cause shown, may 
                        allow a savings association up to 2 
                        years to comply with the requirements 
                        of clause (i).
          [(5) Assistance before appointment of conservator or 
        receiver.--
                  [(A) Assistance proposals.--The Corporation 
                shall consider proposals by Savings Association 
                Insurance Fund members for assistance pursuant 
                to subsection (c) before grounds exist for 
                appointment of a conservator or receiver for 
                such member under the following circumstances:
                          [(i) Troubled condition criteria.--
                        The Corporation determines--
                                  [(I) that grounds for 
                                appointment of a conservator or 
                                receiver exist or likely will 
                                exist in the future unless the 
                                member's tangible capital is 
                                increased;
                                  [(II) that it is unlikely 
                                that the member can achieve 
                                positive tangible capital 
                                without assistance; and
                                  [(III) that providing 
                                assistance pursuant to the 
                                member's proposal would be 
                                likely to lessen the risk to 
                                the Corporation.
                          [(ii) Other criteria.--The member 
                        meets the following criteria:
                                  [(I) Before enactment of the 
                                Financial Institutions Reform, 
                                Recovery, and Enforcement Act 
                                of 1989, the member was solvent 
                                under applicable regulatory 
                                accounting principles but had 
                                negative tangible capital.
                                  [(II) The member's negative 
                                tangible capital position is 
                                substantially attributable to 
                                its participation in 
                                acquisition and merger 
                                transactions that were 
                                instituted by the Federal Home 
                                Loan Bank Board or the Federal 
                                Savings and Loan Insurance 
                                Corporation for supervisory 
                                reasons.
                                  [(III) The member is a 
                                qualified thrift lender (as 
                                defined in section 10(m) of the 
                                Home Owners' Loan Act) or would 
                                be a qualified thrift lender if 
                                commercial real estate owned 
                                and nonperforming commercial 
                                loans acquired in acquisition 
                                and merger transactions that 
                                were instituted by the Federal 
                                Home Loan Bank Board or the 
                                Federal Savings and Loan 
                                Insurance Corporation for 
                                supervisory reasons were 
                                excluded from the member's 
                                total assets.
                                  [(IV) The appropriate Federal 
                                banking agency has determined 
                                that the member's management is 
                                competent and has complied with 
                                applicable laws, rules, and 
                                supervisory directives and 
                                orders.
                                  [(V) The member's management 
                                did not engage in insider 
                                dealing or speculative 
                                practices orother activities 
that jeopardized the member's safety and soundness or contributed to 
its impaired capital position.
                                  [(VI) The member's offices 
                                are located in an economically 
                                depressed region.
                  [(B) Corporation consideration of assistance 
                proposal.--If a member meets the requirements 
                of clauses (i) and (ii) of subparagraph (A), 
                the Corporation shall consider providing direct 
                financial assistance.
                  [(C) Economically depressed region defined.--
                For purposes of this paragraph, the term 
                ``economically depressed region'' means any 
                geographical region which the Corporation 
                determines by regulation to be a region within 
                which real estate values have suffered serious 
                decline due to severe economic conditions, such 
                as a decline in energy or agricultural values 
                or prices.]
          * * * * * * *
  Sec. 18. (a) * * *
          * * * * * * *
  (c)(1) * * *
  (2) No insured depository institution shall merge or 
consolidate with any other insured depository institution or, 
either directly or indirectly, acquire the assets of, or assume 
liability to pay any deposits made in, any other insured 
depository institution except with the prior written approval 
of the responsible agency, which shall be--
          (A) the Comptroller of the Currency if the acquiring, 
        assuming, or resulting bank is to be a national bank or 
        a District bank;
          (B) the Board of Governors of the Federal Reserve 
        System if the acquiring, assuming, or resulting bank is 
        to be a State member bank (except a District bank); and
          (C) the Corporation if the acquiring, assuming, or 
        resulting bank is to be a State nonmember insured bank 
        [(except a District bank or a savings bank supervised 
        by the Director of the Office of Thrift Supervision); 
        and] (except a District bank).
          [(D) the Director of the Office of Thrift Supervision 
        if the acquiring, assuming, or resulting institution is 
        to be a savings association.]
  (3) Notice of any proposed transaction for which approval is 
required under paragraph (1) or (2) (referred to hereafter in 
this subsection as a ``merger transaction'') shall, unless the 
responsible agency finds that it must act immediately in order 
to prevent the probable default of one of the banks or savings 
associations involved, be published--
          (A) prior to the granting of approval of such 
        transaction,
          (B) in a form approved by the responsible agency,
          (C) at appropriate intervals [during a period at 
        least as long as the period allowed for furnishing 
        reports under paragraph (4) of this subsection], and
          (D) in a newspaper of general circulation in the 
        community or communities where the main offices of the 
        banks or savings associations involved are located, or, 
        if there is no such newspaper in any such community, 
        then in the newspaper of general circulation published 
        nearest thereto.
  [(4) In the interests of uniform standards, before acting on 
any application for approval of a merger transaction, the 
responsible agency, unless it finds that it must act 
immediately in order to prevent the probable failure of one of 
the banks or savings associations involved, shall request 
reports on the competitive factors involved from the Attorney 
General and the other Federal banking agencies referred to in 
this subsection. The reports shall be furnished within thirty 
calendar days of the date on which they are requested, or 
within ten calendar days of such date if the requesting agency 
advises the Attorney General and the other Federal banking 
agencies that an emergency exists requiring expeditious action. 
Notwithstanding the preceding sentence, a banking agency shall 
not be required to file a report requested by the responsible 
agency under this paragraph if such banking agency advises the 
responsible agency by the applicable date under the preceding 
sentence that the report is not necessary because none of the 
effects described in paragraph (5) are likely to occur as a 
result of the transaction.
  [(5) The responsible agency shall not approve--
          [(A) any proposed merger transaction which would 
        result in a monopoly, or which would be in furtherance 
        of any combination or conspiracy to monopolize or to 
        attempt to monopolize the business of banking in any 
        part of the United States, or
          [(B) any other proposed merger transaction whose 
        effect in any section of the country may be 
        substantially to lessen competition, or to tend to 
        create a monopoly, or which in any other manner would 
        be in restraint of trade, unless it finds that the 
        anticompetitive effects of the proposed transaction are 
        clearly outweighed in the public interest by the 
        probable effect of the transaction in meeting the 
        convenience and needs of the community to be served.
In every case, the responsible agency shall take into 
consideration the financial and managerial resources and future 
prospects of the existing and proposed institutions, and the 
convenience and needs of the community to be served.
  [(6) The responsible agency shall immediately notify the 
Attorney General of any approval by it pursuant to this 
subsection of a proposed merger transaction. If the agency has 
found that it must act immediately to prevent the probable 
failure of one of the banks or savings associations involved 
and reports on the competitive factors have been dispensed 
with, the transaction may be consummated immediately upon 
approval by the agency. If the agency has advised the Attorney 
General and the other Federal banking agencies of the existence 
of an emergency requiring expeditious action and has requested 
reports on the competitive factors within ten days, the 
transaction may not be consummated before the fifth calendar 
day after the date of approval by the agency. In all other 
cases, the transaction may not be consummated before the 
thirtieth calendar day after the date of approval by the agency 
or, if the agency has not received any adverse comment from the 
Attorney General of the United States relating to competitive 
factors, such shorter period of time as may be prescribed by 
the agency with theconcurrence of the Attorney General, but in 
no event less than 15 calendar days after the date of approval.]
  (4) Factors to be considered.--In determining whether to 
approve a transaction, the responsible agency shall in every 
case take into consideration the financial and managerial 
resources and future prospects of the existing and proposed 
institutions, and the convenience and needs of the community to 
be served.
  (5) Notice to attorney general.--The responsible agency shall 
immediately notify the Attorney General of any approval by it 
pursuant to this subsection of a proposed merger transaction. 
If the responsible agency has found that it must act 
immediately in order to prevent the probable failure of one of 
the banks involved, the transaction may be consummated 
immediately upon approval by the agency. If the responsible 
agency has notified the other Federal banking agencies referred 
to in this section of the existence of an emergency requiring 
expeditious action and has required the submission of views and 
recommendations within 10 days, the transaction may not be 
consummated before the 5th calendar day after the date of 
approval of the responsible agency. In all other cases, the 
transaction may not be consummated before the 30th calendar day 
after the date of approval by the agency, or such shorter 
period of time as may be prescribed by the Attorney General.
  [(7)] (6)(A) Any action brought under the antitrust laws 
arising out of a merger transaction shall be commenced prior to 
the earliest time under paragraph [(6)] (5) at which a merger 
transaction approved under paragraph [(5)] (4) might be 
consummated. The commencement of such an action shall stay the 
effectiveness of the agency's approval unless the court shall 
otherwise specifically order. [In any such action, the court 
shall review de novo the issues presented.]
  [(B) In any judicial proceeding attacking a merger 
transaction approved under paragraph (5) on the ground that the 
merger transaction alone and of itself constituted a violation 
of any antitrust laws other than section 2 of the Act of July 
2, 1890 (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), 
the standards applied by the court shall be identical with 
those that the banking agencies are directed to apply under 
paragraph (5).]
  [(C)] (B) Upon the consummation of a merger transaction in 
compliance with this subsection and after the termination of 
any antitrust litigation commenced within the period prescribed 
in this paragraph, or upon the termination of such period if no 
such litigation is commenced therein, the transaction may not 
thereafter be attacked in any judicial proceeding on the ground 
that it alone and of itself constituted a violation of any 
antitrust laws other than section 2 of the Act of July 2, 1890 
(section 2 of the Sherman Antitrust Act, 15 U.S.C. 2), but 
nothing in this subsection shall exempt any bank or savings 
association resulting from a merger transaction from complying 
with the antitrust laws after the consummation of such 
transaction.
  [(D) In any action brought under the antitrust laws arising 
out of a merger transaction approved by a Federal supervisory 
agency pursuant to this subsection, such agency, and any State 
bankingsupervisory agency having jurisdiction within the State 
involved, may appear as a party of its own motion and as of right, and 
be represented by its counsel.]
  [(8)] (7) For the purposes of this subsection, the term 
``antitrust laws'' means the Act of July 2, 1890 (the Sherman 
Antitrust Act, 
15 U.S.C. 1-7), the Act of October 15, 1914 (the Clayton Act, 
15 U.S.C. 12-27), and any other Acts in pari materia.
  [(9)] (8) Each of the responsible agencies shall include in 
its annual report to the Congress a description of each merger 
transaction approved by it during the period covered by the 
report, along with--
          (A) the name and total resources of each bank or 
        savings association involved; and
          [(B) whether a report was submitted by the Attorney 
        General under paragraph (4), and, if so, a summary by 
        the Attorney General of the substance of such report; 
        and]
          [(C)] (B) a statement by the responsible agency of 
        the basis for its approval.
  [(10)] (9) Until June 30, 1976, the responsible agency shall 
not grant any approval required by law which has the practical 
effect of permitting a conversion from the mutual to the stock 
form of organization, including approval of any application 
pending on the date of enactment of this subsection, except 
that this sentence shall not be deemed to limit now or 
hereafter the authority of the responsible agency to grant 
approvals in cases where the responsible agency finds that it 
must act in order to maintain the safety, soundness, and 
stability of an insured depository institution. The responsible 
agency may by rule, regulation, or otherwise and under such 
civil penalties (which shall be cumulative to any other 
remedies) as it may prescribe take whatever action it deems 
necessary or appropriate to implement or enforce this 
subsection.
  [(11)] (10) The provisions of this subsection do not apply to 
any merger transaction involving a foreign bank if no party to 
the transaction is principally engaged in business in the 
United States.
          (11) Requirement to file information with attorney 
        general.--Any applicant seeking prior written approval 
        of the responsible Federal banking agency to engage in 
        a merger transaction under this subsection shall file 
        simultaneously with the Attorney General copies of any 
        documents regarding the proposed transaction required 
        by the Federal banking agency.
          * * * * * * *
  (g)(1) The Board of Directors shall by regulation prohibit 
the payment of interest or dividends on demand deposits in 
insured nonmember banks and in insured branches of foreign 
banks and for such purpose it may define the term ``demand 
deposits''; but such exceptions from this prohibition shall be 
made as are now or may hereafter be prescribed with respect to 
deposits payable on demand in member banks by section 19 of the 
Federal Reserve Act, as amended, or by regulation of the Board 
of Governors of the Federal Reserve System. The Board of 
Directors may from time to time, after consulting with the 
Board of Governors of the Federal Reserve System [and the 
Director of the Office of Thrift Supervision], prescribe rules 
governing the advertisement of interest or dividends on 
deposits, including limitations on the rates of interestor 
dividends that may be paid by insured nonmember banks (including 
insured mutual savings banks) on time and savings deposits. The Board 
of Directors is authorized for the purposes of this subsection to 
define the terms ``time deposits'' and ``savings deposits'', to 
determine what shall be deemed a payment of interest, and to prescribe 
such regulations as it may deem necessary to effectuate the purposes of 
this subsection and to prevent evasions thereof. The provisions of this 
subsection and of regulations issued thereunder shall also apply, in 
the discretion of the Board of Directors, to obligations other than 
deposits that are undertaken by insured nonmember banks or their 
affiliates. As used in this subsection, the term ``affiliate'' has the 
same meaning as when used in section 2(b) of the Banking Act of 1933, 
as amended (12 U.S.C. 221a(b)), except that the term ``member bank'', 
as used in such section 2(b), shall be deemed to refer to an insured 
nonmember bank. For each violation of any provision of this subsection 
or any lawful provision of such regulations relating to the payment of 
interest or dividends on deposits or to withdrawal of deposits, the 
offending bank shall be subject to a penalty of not more than $100, 
which the Corporation may recover for its use. During the period 
commencing on October 15, 1962, and ending on October 15, 1968, the 
provisions of this subsection shall not apply to the rate of interest 
which may be paid by insured nonmember banks on time deposits of 
foreign governments, monetary and financial authorities of foreign 
governments when acting as such, or international financial 
institutions of which the United States is a member. The authority 
conferred by this subsection shall also apply to noninsured banks in 
any State if the total amount of time and savings deposits held in all 
such banks in the State, plus the total amount of deposits, shares, and 
withdrawable accounts held in all building and loan, savings and loan, 
and homestead associations (including cooperative banks) in the State 
which are not members of a Federal home loan bank, is more than 20 per 
centum of the total amount of such deposits, shares, and withdrawable 
accounts held in all banks, and building and loan, savings and loan, 
and homestead associations (including cooperative banks) in the State. 
Such authority shall only be exercised by the Board of Directors with 
respect to such noninsured banks prior to July 31, 1970, to limit the 
rates of interest or dividends which such banks may pay on time and 
savings deposits to maximum rates not lower than 5\1/2\ per centum per 
annum. Whenever it shall appear to the Board of Directors that any 
noninsured bank or any affiliate thereof is engaged or has engaged or 
is about to engage in any acts or practices which constitute or will 
constitute a violation of the provisions of this subsection or of any 
regulations thereunder, the Board of Directors may, in its discretion, 
bring an action in the United States district court for the judicial 
district in which the principal office of the noninsured bank or 
affiliate thereof is located to enjoin such acts or practices, to 
enforce compliance with this subsection or any regulations thereunder, 
or for a combination of the foregoing, and such courts shall have 
jurisdiction of such actions, and, upon a proper showing, an 
injunction, restraining order, or other appropriate order may be 
granted without bond.
          * * * * * * *
  (i)(1) No insured State nonmember bank (except a District 
bank) shall, without the prior consent of the Corporation, 
reduce the amount or retire any part of its common or preferred 
capital stock, or retire any part of its capital notes or 
debentures.
  (2) No insured Federal depository institution shall convert 
into an insured State depository institution if its capital 
stock or its surplus will be less than the capital stock or 
surplus, respectively, of the converting bank at the time of 
the shareholder's meeting approving such conversion, without 
the prior written consent of--
          (A) the Comptroller of the Currency if the resulting 
        bank is to be a District bank;
          (B) the Board of Governors of the Federal Reserve 
        System if the resulting bank is to be a State member 
        bank (except a District bank); and
          (C) the Corporation if the resulting bank is to be a 
        State nonmember insured bank (except a District bank)[; 
        and].
                  [(D) the Director of the Office of Thrift 
                Supervision if the resulting institution is to 
                be an insured State savings association.]
          * * * * * * *
  [(m) Activities of Savings Associations and Their 
Subsidiaries.--
          [(1) Procedures.--When an insured savings association 
        establishes or acquires a subsidiary or when an insured 
        savings association elects to conduct any new activity 
        through a subsidiary that the insured savings 
        association controls, the insured savings association--
                  [(A) shall notify the Corporation and the 
                Director of the Office of Thrift Supervision 
                not less than 30 days prior to the 
                establishment, or acquisition, of any such 
                subsidiary, and not less than 30 days prior to 
                the commencement of any such activity, and in 
                either case shall provide at that time such 
                information as each such agency may, by 
                regulation, require; and
                  [(B) shall conduct the activities of the 
                subsidiary in accordance with regulations and 
                orders of the Director of the Office of Thrift 
                Supervision.
          [(2) Enforcement powers.--With respect to any 
        subsidiary of an insured savings association:
                  [(A) the Corporation and the Director of the 
                Office of Thrift Supervision shall each have, 
                with respect to such subsidiary, the respective 
                powers that each has with respect to the 
                insured savings association pursuant to this 
                section or section 8; and
                  [(B) the Director of the Office of Thrift 
                Supervision may determine, after notice and 
                opportunity for hearing, that the continuation 
                by the insured savings association of its 
                ownership or control of, or its relationship 
                to, the subsidiary--
                          [(i) constitutes a serious risk to 
                        the safety, soundness, or stability of 
                        the insured savings association, or
                          [(ii) is inconsistent with sound 
                        banking principles or with the purposes 
                        of this Act.
                Upon making any such determination, the 
                Corporation or the Director of the Office of 
                Thrift Supervision shall have authority to 
                order the insured savings association to divest 
                itself of control of the subsidiary. The 
                Director of the Office of Thrift Supervision 
                may take any other corrective measures with 
                respect to the subsidiary, including the 
                authority to require the subsidiary to 
                terminate the activities or operations posing 
                such risks, as the Director may deem 
                appropriate.
          [(3) Activities incompatible with deposit 
        insurance.--
                  [(A) In general.--The Corporation may 
                determine by regulation or order that any 
                specific activity poses a serious threat to the 
                Savings Association Insurance Fund. Prior to 
                adopting any such regulation, the Corporation 
                shall consult with the Director of the Office 
                of Thrift Supervision and shall provide 
                appropriate State supervisors the opportunity 
                to comment thereon, and the Corporation shall 
                specifically take such comments into 
                consideration. Any such regulation shall be 
                issued in accordance with section 553 of title 
                5, United States Code. If the Board of 
                Directors makes such a determination with 
                respect to an activity, the Corporation shall 
                have authority to order that no Savings 
                Association Insurance Fund member may engage in 
                the activity directly.
                  [(B) Authority of director.--This section 
                does not limit the authority of the Office of 
                Thrift Supervision to issue regulations to 
                promote safety and soundness or to enforce 
                compliance with other applicable laws.
                  [(C) Additional authority of fdic to prevent 
                serious risks to insurance fund.--
                Notwithstanding subparagraph (A), the 
                Corporation may prescribe and enforce such 
                regulations and issue such orders as the 
                Corporation determines to be necessary to 
                prevent actions or practices of savings 
                associations that pose a serious threat to the 
                Savings Association Insurance Fund or the Bank 
                Insurance Fund.
          [(4) ``Subsidiary'' defined.--As used in this 
        subsection, the term ``subsidiary'' does not include an 
        insured depository institution.
          [(5) Applicability to certain savings banks.--
        Subparagraphs (A) and (B) of paragraph (1) of this 
        subsection do not apply to--
                  [(A) any Federal savings bank that was 
                chartered prior to October 15, 1982, as a 
                savings bank under State law, or
                  [(B) a savings association that acquired its 
                principal assets from an institution that was 
                chartered prior to October 15, 1982, as a 
                savings bank under State law.]
          * * * * * * *
  (t) Banking Products Definition.--
          (1) Definition.--The term ``banking product'', as 
        used in paragraphs (4) and (5) of section 3(a) of the 
        Securities Exchange Act of 1934, means--
                  (A) a deposit account, savings account, 
                certificate of deposit, or other deposit 
                instrument issued by a bank;
                  (B) a banker's acceptance;
                  (C) a letter of credit issued by a bank;
                  (D) a debit account at a bank arising from a 
                credit card or similar arrangement;
                  (E) a loan or loan participation issued in 
                the ordinary course of bank business, including 
                any debt security issued in connection with 
                sovereign debt restructuring which a bank 
                purchases and sells pursuant to such bank's 
                lending authority;
                  (F) a qualified financial contract (as 
                defined in or determined pursuant to section 
                11(e)(8)(D)(i)), except that such term does not 
                include--
                          (i) any securities contract (as 
                        defined in section 11(e)(8)(D)(ii)) 
                        that is based on or directly relates to 
                        a security that section 5136 of the 
                        Revised Statutes of the United States 
                        does not expressly authorize a national 
                        bank to underwrite or deal in, unless 
                        the appropriate Federal banking agency 
                        determines that such securities 
                        contract is appropriate for a bank to 
                        underwrite or deal in, taking into 
                        account other qualified financial 
                        contracts which a bank is permitted to 
                        underwrite or deal in; and
                          (ii) any agreement, contract, or 
                        transaction that the Corporation 
                        determines (in a regulation prescribed 
                        after the date of the enactment of the 
                        Financial Services Competition Act of 
                        1997) to be a qualified financial 
                        contract, unless the appropriate 
                        Federal banking agency determines that 
                        such agreement, contract, or 
                        transaction shall be treated as a 
                        qualified financial contract for 
                        purposes of this subsection;
                  (G) notwithstanding subparagraph (F), swap 
                agreements (as defined in or pursuant to 
                section 11(e)(8)(D)(vi) of the Federal Deposit 
                Insurance Act) including credit swaps and 
                equity swaps, unless the appropriate Federal 
                banking agency determines that credit swaps and 
                equity swaps shall not be included in the 
                definition of such term; and
                  (H) any other product that is available in 
                the course of a banking business if the Board 
                of Governors of the Federal Reserve System, 
                after consultation with the Securities and 
                Exchange Commission, determines by order or 
                regulation--
                          (i) that the product is more 
                        appropriately regulated as a banking 
                        product; and
                          (ii) that regulation of the product 
                        as a banking product is consistent with 
                        the maintenance of fair and orderly 
                        markets and the protection of 
                        investors.
          (2) Securitization.--Paragraph (1) does not authorize 
        any agency to exempt from the requirements of 
        paragraphs (4) and (5) of section 3(a) of the 
        Securities Exchange Act of 1934 securities backed by or 
        representing an interest in notes, drafts, acceptances, 
        loans, leases, receivables, other obligations, or pools 
        of any such obligations.
          (3) Exemption limited.--Exemption of a particular 
        product as a banking product pursuant to this 
        subsection shall not be construed as finding or 
        implying that such product is or is not a security for 
        any purpose other than defining the term ``banking 
        product'' in paragraphs (4) and (5) of section 3(a) of 
        the Securities Exchange Act of 1934.
          * * * * * * *

SEC. 22.  NONDISCRIMINATION.

  [It is not] (a) In General.--It is not the purpose of this 
Act to discriminate in any manner against State nonmember banks 
[or State savings associations and in favor of national or 
member banks or Federal savings associations, respectively] and 
in favor of national or member banks. It is the purpose of this 
Act to provide all banks [and savings associations] with the 
same opportunity to obtain and enjoy the benefits of this Act.
  (b) Programs for Promoting Housing Finance.--
          (1) Findings.--The Congress finds that it is in the 
        national interest to protect and promote housing 
        finance in the process of converting savings 
        associations to banks and eliminating the separate 
        Federal regulation of savings associations.
          (2) Programs required.--In furtherance of paragraph 
        (1), each appropriate Federal banking agency shall--
                  (A) develop and implement a program designed 
                to--
                          (i) facilitate the conversion of 
                        savings associations to banks and the 
                        treatment of State savings associations 
                        as State banks; and
                          (ii) promote housing finance by 
                        assuring that insured depository 
                        institutions may, at their own 
                        election, specialize in acquisition, 
                        development, residential mortgage 
                        finance, and residential mortgage and 
                        housing production lending; and
                  (B) develop guidelines and procedures for 
                assuring that insured depository institutions 
                are not subject to supervisory criticism or 
                sanction for prudently concentrating in 
                acquisition, development, residential mortgage 
                finance, and residential mortgage and housing 
                production lending.
          * * * * * * *

SEC. 24.  ACTIVITIES OF INSURED STATE BANKS.

  (a) * * *
          * * * * * * *
  (d) Subsidiaries of Insured State Banks.--
          (1) * * *
          * * * * * * *
          (3) Conditions on certain activities.--
                  (A) In general.--Subject to the approval of 
                the appropriate Federal banking agency, a 
                subsidiary of a State bank may engage in an 
                activity in which a subsidiary of a national 
                bank may engage as principal pursuant to 
                subsection (a)(1) of section 5136A of the 
                Revised Statutes of the United States but only 
                if the State bank meets the same requirements 
                which are applicable to national banks 
undersubparagraphs (B) and (C) of such subsection and subsections (b) 
and (c) of such section.
                  (B) Application of section 5136a of revised 
                statutes.--For purposes of applying section 
                5136A of the Revised Statutes of the United 
                States with regard to the activities of a 
                subsidiary of a State bank, all references in 
                such section to the Comptroller of the 
                Currency, or regulations and orders of the 
                Comptroller, shall be deemed to be references 
                to the appropriate Federal banking agency with 
                respect to such State bank, and regulations and 
                orders of such agency.
          (4) State banks which fail to comply with paragraph 
        (3) conditions.--
                  (A) In general.--If the appropriate Federal 
                banking agency determines that a State bank 
                that controls a subsidiary which is engaged as 
                principal in financial activities pursuant to 
                paragraph (3) does not meet the requirements of 
                subparagraph (A) of such paragraph, the 
                appropriate Federal banking agency shall give 
                notice to the bank to that effect, describing 
                the conditions giving rise to the notice.
                  (A) Agreement to correct conditions 
                required.--
                          (i) Content of agreement.--Within 45 
                        days of the receipt by a bank of a 
                        notice given under paragraph (1) (or 
                        such additional period as the 
                        appropriate Federal banking agency for 
                        such bank may permit), the bank failing 
                        to meet the requirements of paragraph 
                        (3)(A) shall execute an agreement with 
                        the appropriate Federal banking agency 
                        for such bank to correct the conditions 
                        described in the notice.
                  (B) Agency may impose limitations.--Until the 
                conditions giving rise to the notice are 
                corrected, the appropriate Federal banking 
                agency for the State bank may impose such 
                limitations on the conduct of the business of 
                the bank or a subsidiary of the bank as the 
                agency determines to be appropriate under the 
                circumstances.
                  (C) Failure to correct.--If the conditions 
                described in the notice are not corrected 
                within 180 days after the bank receives the 
                notice, the appropriate Federal banking agency 
                for the State may require, under such terms and 
                conditions as may be imposed by such agency and 
                subject to such extensions of time as may be 
                granted in the discretion of the agency--
                          (i) the bank to divest control of 
                        each subsidiary engaged in an activity 
                        as principal that is not permissible 
                        for the bank to engage in directly; or
                          (ii) each subsidiary of the bank to 
                        cease any activity as principal that is 
                        not permissible for the bank to engage 
                        in directly.
          * * * * * * *

[SEC. 28. ACTIVITIES OF SAVINGS ASSOCIATIONS.

  [(a) In General.--On and after January 1, 1990, a savings 
association chartered under State law may not engage as 
principal inany type of activity, or in any activity in an 
amount, that is not permissible for a Federal savings association 
unless--
          [(1) the Corporation has determined that the activity 
        would pose no significant risk to the affected deposit 
        insurance fund; and
          [(2) the savings association is and continues to be 
        in compliance with the fully phased-in capital 
        standards prescribed under section 5(t) of the Home 
        Owners' Loan Act.
  [(b) Differences of Magnitude Between State and Federal 
Powers.--Notwithstanding subsection (a)(1), if an activity 
(other than an activity described in section 5(c)(2)(B) of the 
Home Owners' Loan Act) is permissible for a Federal savings 
association, a savings association chartered under State law 
may engage as principal in that activity in an amount greater 
than the amount permissible for a Federal savings association 
if--
          [(1) the Corporation has not determined that engaging 
        in that amount of the activity poses any significant 
        risk to the affected deposit insurance fund; and
          [(2) the savings association chartered under State 
        law is and continues to be in compliance with the fully 
        phased-in capital standards prescribed under section 
        5(t) of the Home Owners' Loan Act.
  [(c) Equity Investments by State Savings Associations.--
          [(1) In general.--Notwithstanding subsections (a) and 
        (b), a savings association chartered under State law 
        may not directly acquire or retain any equity 
        investment of a type or in an amount that is not 
        permissible for a Federal savings association.
          [(2) Exception for service corporations.--Paragraph 
        (1) does not prohibit a savings association from 
        acquiring or retaining shares of one or more service 
        corporations if--
                  [(A) the Corporation has determined that no 
                significant risk to the affected deposit 
                insurance fund is posed by--
                          [(i) the amount that the association 
                        proposes to acquire or retain; or
                          [(ii) the activities in which the 
                        service corporation engages; and
                  [(B) the savings association is and continues 
                to be in compliance with the fully phased-in 
                capital standards prescribed under section 5(t) 
                of the Home Owners' Loan Act.
          [(3) Transition rule.--
                  [(A) In general.--The Corporation shall 
                require any savings association to divest any 
                equity investment the retention of which is not 
                permissible under paragraph (1) or (2) as 
                quickly as can be prudently done, and in any 
                event not later than July 1, 1994.
                  [(B) Treatment of noncompliance during 
                divestment.--With respect to any equity 
                investment held by any savings association on 
                May 1, 1989, the savings association shall be 
                deemed not to be in violation of the 
                prohibition in paragraph (1) or (2) on 
                retaining such investment so long as the 
                savings association complies with any 
                applicable requirement established by the 
                Corporation pursuant to subparagraph (A) for 
                divesting such investments.
  [(d) Corporate Debt Securities Not of Investment Grade.--
          [(1) In general.--No savings association may, 
        directly or through a subsidiary, acquire or retain any 
        corporate debt security not of investment grade.
          [(2) Exception for securities held by qualified 
        affiliate.--Paragraph (1) shall not apply with respect 
        to any corporate debt security not of investment grade 
        which is acquired and retained by any qualified 
        affiliate of a savings association.
          [(3) Transition rule.--
                  [(A) In general.--The Corporation shall 
                require any savings association or any 
                subsidiary of any savings association to divest 
                any corporate debt security not of investment 
                grade the retention of which is not permissible 
                under paragraph (1) as quickly as can be 
                prudently done, and in any event not later than 
                July 1, 1994.
                  [(B) Treatment of noncompliance during 
                divestment.--With respect to any corporate debt 
                security not of investment grade held by any 
                savings association or subsidiary on the date 
                of enactment of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989, 
                the savings association or subsidiary shall be 
                deemed not to be in violation of the 
                prohibition in paragraph (1) on retaining such 
                investment so long as the association or 
                subsidiary complies with any applicable 
                requirement established by the Corporation 
                pursuant to subparagraph (A) for divesting such 
                securities.
          [(4) Definitions.--For purposes of this section--
                  [(A) Investment grade.--Any corporate debt 
                security is not of ``investment grade'' unless 
                that security, when acquired by the savings 
                association or subsidiary, was rated in one of 
                the 4 highest rating categories by at least one 
                nationally recognized statistical rating 
                organization.
                  [(B) Qualified affiliate.--The term 
                ``qualified affiliate'' means--
                          [(i) in the case of a stock savings 
                        association, an affiliate other than a 
                        subsidiary or an insured depository 
                        institution; and
                          [(ii) in the case of a mutual savings 
                        association, a subsidiary other than an 
                        insured depository institution, so long 
                        as all of the savings association's 
                        investments in and extensions of credit 
                        to the subsidiary are deducted from the 
                        savings association's capital.
                  [(C) Certain securities not included.--The 
                term ``corporate debt security not of 
                investment grade'' does not include any 
                obligation issued or guaranteed by a 
                corporation that may be held by a Federal 
                savings association without limitation as to 
                percentage of assets under subparagraph (D), 
                (E), or (F) of section 5(c)(1) of the Home 
                Owners' Loan Act.
  [(e) Transfer of Corporate Debt Security not of Investment 
Grade in Exchange for a Qualified Note.--
          [(1) Acquisition of note.--Notwithstanding 
        subsections (a), (b), and (c) of section 5 of the Home 
        Owners' Loan Act and any other provision of Federal or 
        State law governing extensions of credit by savings 
        associations, any insured savings association, and any 
        subsidiary of any insured savings association, that, on 
        the date of the enactment of the Financial Institutions 
        Reform, Recovery, and Enforcement Act of 1989, holds 
        any corporate debt security not of investment grade may 
        acquire a qualified note in exchange for the transfer 
        of such security to--
                  [(A) any holding company which controls 80 
                percent or more of the shares of such insured 
                savings association; or
                  [(B) any company other than an insured 
                savings association, or any subsidiary of any 
                insured savings association, 80 percent or more 
                of the shares of which are controlled by such 
                holding company,
        if the conditions of paragraph (2) are met.
          [(2) Conditions for exchange of security for 
        qualified note.--The conditions of this paragraph are 
        met if--
                  [(A) the insured savings association was in 
                compliance with applicable capital requirements 
                on December 31, 1988, and the insured savings 
                association after such date--
                          [(i) remains in compliance with 
                        applicable capital requirements; or
                          [(ii) adopts and complies with a 
                        capital plan acceptable to the Director 
                        of the Office of Thrift Supervision;
                  [(B) the company to which the corporate debt 
                security not of investment grade is transferred 
                is not a bank holding company, an insured 
                savings association, or a direct or indirect 
                subsidiary of such holding company or insured 
                savings association;
                  [(C) before the end of the 90-day period 
                beginning on the date of the enactment of the 
                Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989, the insured savings 
                association notifies the Director of the Office 
                of Thrift Supervision of such association's 
                intention to transfer the corporate debt 
                security not of investment grade to the savings 
                and loan holding company or the subsidiary of 
                such holding company;
                  [(D) the transfer of the corporate debt 
                security not of investment grade is completed--
                          [(i) before the end of the 1-year 
                        period beginning on the date of the 
                        enactment of the Financial Institutions 
                        Reform, Recovery, and Enforcement Act 
                        of 1989, in the case of an insured 
                        savings association that, as of such 
                        date, is controlled by a savings and 
                        loan holding company; or
                          [(ii) before the end of the 2-year 
                        period beginning on such date, in the 
                        case of a savings association that is 
                        not, as of such date, a subsidiary of a 
                        savings and loan holding company;
                  [(E) the insured savings association receives 
                in exchange for the corporate debt security not 
                of investment grade the fair market value of 
                such security;
                  [(F) the Director of the Office of Thrift 
                Supervision has--
                          [(i) approved the transaction; and
                          [(ii) determined that the transfer 
                        represents a complete and effective 
                        divestiture of the corporate debt 
                        security not of investment grade and is 
                        in compliance with the provisions of 
                        this subsection; and
                  [(G) any gain on the sale of the corporate 
                debt security not of investment grade is 
                recognized, and included for applicable 
                regulatory capital requirements, by the insured 
                savings association only at such time and to 
                the extent that the insured savings association 
                receives payment of principal on the note in 
                cash in excess of the fair market value of the 
                transferred corporate debt security not of 
                investment grade as carried on the accounts of 
                the insured savings association immediately 
                prior to the transfer.
          [(3) Qualified note defined.--The term ``qualified 
        note'' means any note that--
                  [(A) is at all times fully secured by the 
                corporate debt security note of investment 
                grade transferred in exchange for the note, or 
                by other collateral of at least equivalent 
                value that is acceptable to the Director of the 
                Office of Thrift Supervision;
                  [(B) contains provisions acceptable to the 
                Director of the Office of Thrift Supervision 
                that would--
                          [(i) prevent any action to encumber 
                        or impair the value of the collateral 
                        referred to in subparagraph (A); and
                          [(ii) allow the sale of the corporate 
                        debt security not of investment grade 
                        if the proceeds of the sale are 
                        reinvested in assets of equivalent 
                        value;
                  [(C) is on market terms, including interest 
                rate, which must in all cases be above the 
                insured savings association's borrowing rate 
                for similar term funds;
                  [(D) is fully repayable over a period of time 
                not to exceed 5 years from the date of 
                transfer;
                  [(E) is repaid with annual principal payments 
                at least as large as would be necessary to 
                repay the note within 5 years if it were on a 
                level payment amortization schedule and the 
                interest rate for the first year of repayment 
                were fixed throughout the amortization period;
                  [(F) is fully guaranteed by each holding 
                company of the insured savings association that 
                acquires such note; and
                  [(G) is repaid in full in cash in accordance 
                with its terms and this subsection.
          [(4) Failure to repay on schedule.--The exemption 
        provided by this subsection from subsections (a), (b), 
        and (c) of section 11 of the Home Owners' Loan Act and 
        any other applicable provision of Federal or State law 
        shall terminate immediately if the insured savings 
        association or any affiliate ofsuch association fails 
to comply with the terms of the qualified note or this subsection.
  [(f) Determinations.--The Corporation shall make 
determinations under this section by regulation or order.
  [(g) Activity Defined.--For purposes of subsections (a) and 
(b)--
          [(1) In general.--The term ``activity'' includes 
        acquiring or retaining any investment.
          [(2) Divestiture of certain assets.--Notwithstanding 
        paragraph (1), subsections (a) and (b) shall not be 
        construed to require a savings association to divest 
        itself of any assets acquired before the date of 
        enactment of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989.
  [(h) Other Authority Not Affected.--This section may not be 
construed as limiting--
          [(1) any other authority of the Corporation; or
          [(2) any authority of the Director of the Office of 
        Thrift Supervision or of a State to impose more 
        stringent restrictions.]
          * * * * * * *

SEC. 33. DEPOSITORY INSTITUTION EMPLOYEE PROTECTION REMEDY.

  (a) * * *
          * * * * * * *
  (e) Federal Banking Agency Defined.--For purposes of 
subsections (a) and (c), the term ``Federal banking agency'' 
means the Corporation, the Board of Governors of the Federal 
Reserve System, the Federal Housing Finance Board, and the 
Comptroller of the Currency[, and the Director of the Office of 
Thrift Supervision].
          * * * * * * *

SEC. 38.  PROMPT CORRECTIVE ACTION.

  (a) * * *
          * * * * * * *
  [(o) Transition Rules for Savings Associations.--
          [(1) RTC's role does not diminish care required of 
        ots.--
                  [(A) In general.--In implementing this 
                section, the appropriate Federal banking agency 
                (and, to the extent applicable, the 
                Corporation) shall exercise the same care as if 
                the Savings Association Insurance Fund (rather 
                than the Resolution Trust Corporation) bore the 
                cost of resolving the problems of insured 
                savings associations described in clauses (i) 
                and (ii)(II) of section 21A(b)(3)(A) of the 
                Federal Home Loan Bank Act.
                  [(B) Reports.--Subparagraph (A) does not 
                require reports under subsection (k).
          [(2) Additional flexibility for certain savings 
        associations.--Subsections (e)(2), (f), and (h) shall 
        not apply before July 1, 1994, to any insured savings 
        association if--
                  [(A) before the date of enactment of the 
                Federal Deposit Insurance Corporation 
                Improvement Act of 1991--
                          [(i) the savings association had 
                        submitted a plan meeting the 
                        requirements of section 5(t)(6)(A)(ii) 
                        of the Home Owners' Loan Act; and
                          [(ii) the Director of the Office of 
                        Thrift Supervision had accepted the 
                        plan;
                  [(B) the plan remains in effect; and
                  [(C) the savings association remains in 
                compliance with the plan or is operating under 
                a written agreement with the appropriate 
                Federal banking agency.]
          * * * * * * *

SEC. 42.  NOTICE OF BRANCH CLOSURE.

  (a) * * *
          * * * * * * *
  (d) Branch Closures in Interstate Banking or Branching 
Operations.--
          (1) * * *
          * * * * * * *
          (4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Interstate bank defined.--The term 
                ``interstate bank'' means a bank which 
                maintains branches in more than 1 State and any 
                bank controlled by an out-of-State bank holding 
                company (as defined in section 2(o)(7) of the 
                Bank Holding Company Act of 1956).
          * * * * * * *

SEC. 45. CONSUMER PROTECTION REGULATIONS.

  (a) Regulations Required.--
          (1) In general.--Each Federal banking agency shall 
        prescribe and publish in final form, not later than 3 
        months after the effective date of the Financial 
        Services Competition Act of 1997, consumer protection 
        regulations which--
                  (A) apply to retail sales, solicitations, 
                advertising, or offers of any nondeposit 
                product by any insured depository institution 
                or any person who is engaged in such activities 
                at an office of the institution or on behalf of 
                the institution; and
                  (B) meet the requirements of this section and 
                provide such additional protections for 
                consumers to whom such sales, solicitations, 
                advertising, or offers are directed as the 
                agency determines to be appropriate.
          (2) Applicability to subsidiaries.--The regulations 
        prescribed pursuant to paragraph (1) shall extend such 
        protections to any subsidiaries of an insured 
        depository institution, as deemed appropriate by the 
        regulators referred to in paragraph (3), where such 
        extension is necessary to ensure the consumer 
        protections provided by this section.
          (3) Consultation and joint regulations.--The Federal 
        banking agencies shall consult with each other and 
        prescribe joint regulations pursuant to paragraph (1), 
        after consultation with the Securities and Exchange 
        Commission and the National Association of Insurance 
        Commissioners, as appropriate.
          (4) Nondeposit product defined.--For purposes of this 
        section, the term ``nondeposit product''--
                  (A) means any investment and insurance 
                product which is not a deposit;
                  (B) includes shares issued by a registered 
                investment company; and
                  (C) does not include--
                          (i) any loan or any other extension 
                        of credit by an insured depository 
                        institution;
                          (ii) any letter of credit;
                          (iii) trust services;
                          (iv) discount; or
                          (v) any other instrument or insurance 
                        or investment product specifically 
                        excluded from the definition of such 
                        term by regulations prescribed jointly 
                        by the Federal banking agencies, to the 
                        extent necessary to carry out the 
                        purpose of this Act.
  (b) Sales Practices.--The regulations prescribed pursuant to 
subsection (a) shall include the following provisions relating 
to sales practices in connection with the sale of nondeposit 
products:
          (1) Anticoercion rules.--
                  (A) In general.--Anticoercion rules 
                prohibiting an insured depository institution 
                from engaging in any practice that would lead a 
                consumer to believe an extension of credit, in 
                violation of section 106(b) of the Bank Holding 
                Company Act Amendments of 1970, is conditional 
                upon--
                          (i) the purchase of a nondeposit 
                        product from the institution or any of 
                        its affiliates or subsidiaries; or
                          (ii) an agreement by the consumer not 
                        to obtain, or a prohibition on the 
                        consumer from obtaining, a nondeposit 
                        product from an unaffiliated entity.
                  (B) Applicability to subsidiaries.--
                Regulations prescribed under subparagraph (A) 
                shall apply to subsidiaries of insured 
                depository institutions if the regulators 
                determine such application is necessary to 
                prevent coercive activities.
          (2) Suitability of product.--
                  (A) In general.--Standards to ensure that an 
                investment product sold to a consumer is 
                suitable and any other nondeposit product is 
                appropriate for the consumer based on financial 
                information disclosed by the consumer.
                  (B) Rules of fair practice.--In prescribing 
                the standards under subparagraph (A) with 
                respect to the sale of investments, the Federal 
                banking agencies shall take into account the 
                Rules of Fair Practice of the National 
                Association of Securities Dealers.
  (c) Disclosures and Advertising.--The regulations prescribed 
pursuant to subsection (a) shall include the following 
provisions relating to disclosures and advertising at the time 
the consumer opens an account for the purchase of any 
nondeposit product or in connection with the initial purchase 
of a nondeposit product:
          (1) Disclosures.--
                  (A) In general.--Requirements that the 
                following disclosures be made orally and in 
                writing before the completion of the initial 
                sale and, in the case of clause (iv), at the 
                time of application for an extension of credit:
                          (i) Uninsured status.--The product is 
                        not insured by the Federal Deposit 
                        Insurance Corporation, or the United 
                        States Government as appropriate.
                          (ii) Insurance product.--In the case 
                        of an insurance product, the product is 
                        not guaranteed by an insured depository 
                        institution.
                          (iii) Investment risk.--In the case 
                        of an investment product, there is an 
                        investment risk associated with the 
                        product, including possible loss of 
                        principal.
                          (iv) Coercion.--The approval of an 
                        extension of credit may not be 
                        conditioned on--
                                  (I) the purchase of a 
                                nondeposit product from the 
                                institution in which the 
                                application for credit is 
                                pending or any of its 
                                affiliates or subsidiaries; or
                                  (II) an agreement by the 
                                consumer not to obtain, or a 
                                prohibition on the consumer 
                                from obtaining, a nondeposit 
                                product from an unaffiliated 
                                entity.
                  (B) Making disclosure readily 
                understandable.--Regulations prescribed under 
                subparagraph (A) shall encourage the use of 
                disclosure that is conspicuous, simple, direct, 
                and readily understandable such as the 
                following:
                          (i) ``NOT FDIC-INSURED''.
                          (ii) ``NOT GUARANTEED BY THE BANK''.
                          (iii) ``MAY GO DOWN IN VALUE''.
                  (C) Adjustments for alternative methods of 
                purchase.--In prescribing the requirements 
                under subparagraphs (A) and (D), necessary 
                adjustments shall be made for purchase in 
                person, by telephone or by electronic media to 
                provide for the most appropriate and complete 
                form of disclosure and acknowledgements.
                  (D) Consumer acknowledgement.--
                          (i) In general.--A requirement that 
                        an insured depository institution shall 
                        require any person selling a nondeposit 
                        product at any office of, or on behalf 
                        of, the institution to obtain, at the 
                        time a consumer receives the 
                        disclosures required under subsection 
                        (c)(1) or at the time of the initial 
                        purchase by the consumer of such 
                        product, a separate statement, signed 
                        and dated by the consumer, which 
                        contains the declaration that the 
                        purchaser has received the disclosure 
                        required under this subsection with 
                        respect to such product.
                          (ii) Application to subsidiaries.--If 
                        the regulations require subsidiaries of 
                        insured depository institutions to make 
                        the disclosures under this section, the 
                        regulations shall require that these 
                        subsidiaries obtain the consumer 
                        acknowledgement provided for in this 
                        subparagraph.
          (2) Prohibition on misrepresentations.--
                  (A) Insurance.--A prohibition on any 
                practice, or any advertising, at any office of, 
                or on behalf of, the insured depository 
                institution, or any subsidiary as appropriate, 
                which could mislead any person or otherwise 
                cause a reasonable person to reach an erroneous 
                belief with respect to--
                          (i) the uninsured nature of any 
                        nondeposit product sold, or offered for 
                        sale by the institution or any 
                        subsidiary of the institution; or
                          (ii) the investment risk associated 
                        with any such product.
                  (B) Securities.--With regard to securities, a 
                prohibition on any practice, or any 
                advertising, at any office of the insured 
                depository institution, or any subsidiary as 
                appropriate, which could violate section 10(b) 
                of the Securities Exchange Act of 1934.
  (d) Separation of Banking and Nonbanking Activities.--
          (1) Regulations required.--The regulations prescribed 
        pursuant to subsection (a) shall include such 
        provisions as the Federal banking agencies consider 
        appropriate to ensure that the routine acceptance of 
        deposits is kept, to the extent practicable, physically 
        segregated from nondeposit product activity.
          (2) Minimum requirements.--Regulations prescribed 
        pursuant to paragraph (1) shall include, at a minimum, 
        the following requirements:
                  (A) Separate setting.--A clear delineation of 
                the setting in which, and the circumstances 
                under which, transactions involving nondeposit 
                products may be effected to ensure that such 
                activity is conducted in a location physically 
                segregated from the area where retail deposits 
                are routinely accepted.
                  (B) Certain persons prohibited from selling 
                nondeposit products.--Standards prohibiting any 
                person accepting deposits from the public in an 
                area where deposits are routinely taken in an 
                insured depository institution from selling or 
                offering to sell, or offering an opinion or 
                investment advice on, any nondeposit product.
                  (C) Referrals.--The regulations shall include 
                standards which permit any such person to refer 
                a customer who seeks to purchase, or seeks an 
                opinion or investment advice on, any nondeposit 
                product to a qualified person who sells or 
                provides opinions or investment advice on such 
                product, only if the person making the referral 
                receives no more than a one-time nominal fee of 
                a fixed dollar amount for each referral that 
                does not depend on whether the referral results 
                in a transaction.
                  (D) Qualification requirements and 
                training.--Standards prohibiting any insured 
                depository institution from permitting any 
                person to sell or offer for sale, or provide an 
                opinion or investment advice about, any 
                nondeposit product in any part of any office of 
                the institution, or on behalf of the 
                institution, unless such person--
                          (i) is registered with a self-
                        regulatory organization or the 
                        Securities and Exchange Commission, as 
                        appropriate, as a broker or dealer, as 
                        a representative of a broker or dealer, 
                        or as an investment adviser; or
                          (ii) meets qualification and training 
                        requirements which the Federal banking 
                        agencies jointly determine are 
                        equivalent to the training and 
                        qualification requirements applicable 
                        to a person who is registered with a 
                        self-regulatory organization or the 
                        Commission as a broker or dealer, as a 
                        representative of a broker or dealer, 
                        or as an investment adviser, as the 
                        case may be; or
                          (iii) in the case of insurance sales, 
                        is appropriately qualified.
                  (E) Compensation programs.--Standards to 
                ensure that compensation programs are not 
                structured in such a way as to provide 
                incentives for the sales of nondeposit products 
                that are not suitable or appropriate for the 
                consumer.
  (e) Consumer Grievance Process.--The Federal banking agencies 
shall jointly establish a consumer complaint mechanism, for 
receiving and addressing expeditiously meritorious consumer 
complaints alleging a violation of regulations issued under the 
section, which shall--
          (1) establish a group within each regulatory agency 
        to receive such complaints;
          (2) develop procedures for investigating such 
        complaints;
          (3) develop procedures for informing consumers of 
        rights they may have in connection with such 
        complaints; and
          (4) develop procedures for addressing concerns raised 
        by such complaints, as appropriate.
  (f) No Effect on Other Authority.--
          (1) In general.--No provision of this section shall 
        be construed as granting, limiting, or otherwise 
        affecting--
                  (A) any authority of the Securities and 
                Exchange Commission, any self-regulatory 
                organization, the Municipal Securities 
                Rulemaking Board, or the Secretary of the 
                Treasury under any Federal securities law;
                  (B) any authority of any State insurance 
                commissioner or other State authority under any 
                State insurance law; or
                  (C) the applicability of any Federal 
                securities law or any State securities or 
                insurance law, or any regulation prescribed by 
                the Commission, any self-regulatory 
                organization, the Municipal Securities 
                Rulemaking Board, the Secretary of the 
                Treasury, or any State insurance commissioner 
                or other State authority pursuant to any such 
                law, to any person.
          (2) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Federal securities law.--The term 
                ``Federal securities law'' has the meaning 
                given to the term ``securities laws'' in 
                section 3(a)(47) of the Securities Exchange Act 
                of 1934.
                  (B) Self-regulatory organization.--The term 
                ``self-regulatory organization'' has the 
                meaning given to suchterm in section 3(a)(26) 
of the Securities Exchange Act of 1934.

SEC. 46. OBLIGATIONS OF SUBSIDIARIES AND AFFILIATES CANNOT BE EXTENDED 
                    TO INSURED DEPOSITORY INSTITUTIONS.

  (a) In General.--Notwithstanding any other law (including any 
law relating to insurance), no obligation of an affiliate or 
subsidiary of an insured depository institution arising more 
than 270 days after the date of enactment of the Financial 
Services Competition Act of 1997 may be charged against such 
insured depository institution by reason of any ruling, 
determination, or judgment disregarding the separate corporate 
identity or limited liability of the insured depository 
institution or the affiliate or subsidiary.
  (b) Maintenance of Separate Corporate Identity and Separate 
Legal Status.--
          (1) In general.--The appropriate Federal banking 
        agency shall take steps, including conducting the 
        review required by paragraph (2), to assure that each 
        insured depository institution observes the separate 
        corporate identity and separate legal status of each of 
        the institutions' subsidiaries and affiliates.
          (2) Examinations.--Each appropriate Federal banking 
        agency, when examining an insured depository 
        institution, shall review whether the institution is 
        observing the separate corporate identity and separate 
        legal status of the institution's subsidiaries and 
        affiliates.
  (c) Misrepresentations Regarding Depository Institution 
Liability Prohibited.--
          (1) In general.--No institution-affiliated party of 
        an insured depository institution or institution-
        affiliated party of a subsidiary or affiliate of an 
        insured institution shall fraudulently represent that 
        the institution is or will be liable for any obligation 
        of a subsidiary or other affiliate of the institution.
          (2) Criminal penalty.--Whoever violates paragraph (1) 
        shall be fined not more than $100,000, imprisoned for 
        not more than 1 year, or both.
          (3) Institution-affiliated party defined.--For 
        purposes of this subsection, the term ``institution-
        affiliated party'' with respect to a subsidiary or 
        affiliate has the same meaning as in section 3 except 
        references to an insured depository institution shall 
        be deemed to be references to a subsidiary or affiliate 
        of an insured depository institution.
  (d) Rule of Construction.--This section shall not be 
construed as--
          (1) excusing an insured depository institution from--
                  (A) any liability that it has expressly and 
                lawfully assumed; or
                  (B) any liability to which it would be 
                otherwise subject for engaging or participating 
                in any violation of law or any breach of 
                contract;
          (2) limiting the authority of the Corporation under 
        section 5(e);
          (3) permitting any obligation to be charged against 
        an insured depository institution that would not 
        otherwise be charged against the institution; or
          (4) prohibiting joint or cooperative marketing, 
        information sharing, or the purchase or sale of 
        services among affiliates.
                              ----------                              


              BANK HOLDING COMPANY ACT AMENDMENTS OF 1970

          * * * * * * *

                    TITLE I--BANK HOLDING COMPANIES

          * * * * * * *
  Sec. 105. With respect to any proceeding before the Federal 
Reserve Board wherein an applicant seeks authority to acquire a 
subsidiary which is a bank under section 3 of the Bank Holding 
Company Act of 1956[, to engage directly or indirectly in a 
nonbanking activity pursuant to section 4 of such Act,] or to 
engage in an activity otherwise prohibited under section 106 of 
this Act, a party who would become a competitor of the 
applicant or subsidiary thereof by virtue of the applicant's or 
its subsidiary's acquisition, entry into the business involved, 
or activity, shall have the right to be a party in interest in 
the proceeding and, in the event of an adverse order of the 
Board, shall have the right as an aggrieved party to obtain 
judicial review thereof as provided in section 9 of such Act of 
1956 or as otherwise provided by law.
  Sec. 106. (a) As used in this section, the terms ``bank'', 
``bank holding company'', ``subsidiary'', and ``Board'' have 
the meaning ascribed to such terms in section 2 of the Bank 
Holding Company Act of 1956. For purposes of this section only, 
the term ``company'', as used in section 2 of the Bank Holding 
Company Act of 1956, means any person, estate, trust, 
partnership, corporation, association, or similar organization, 
but does not include any corporation the majority of the shares 
of which are owned by the United States or by any State. The 
term ``trust service'' means any service customarily performed 
by a bank trust department. For purposes of this section, a 
financial subsidiary (as defined in section 5136A(a)(4)(A) of 
the Revised Statutes of the United States or referenced in the 
20th undesignated paragraph of section 9 of the Federal Reserve 
Act or section 24(d)(3)(A) of the Federal Deposit Insurance 
Act) shall be deemed to be a subsidiary of a bank holding 
company, and not a subsidiary of a bank.
          * * * * * * *
                              ----------                              


               SECTION 4 OF THE BANK SERVICE COMPANY ACT

          * * * * * * *

     permissible bank service company activities for other persons

  Sec. 4. (a) * * *
          * * * * * * *
  (f) Notwithstanding the other provisions of this section or 
any other provision of law, other than the provisions of 
Federal and State branching law regulating the geographic 
location of banks to the extent that those laws are applicable 
to an activity authorizedby this subsection, a bank service 
company may perform at any geographic location any service, other than 
deposit taking, that the Board has determined, by regulation, to be 
permissible for a bank holding company under section 4(c)(8) of the 
Bank Holding Company Act[.] (as in effect on the day before the date of 
enactment of the Financial Services Competition Act of 1997).
                              ----------                              


                   INTERNATIONAL BANKING ACT OF 1978

          * * * * * * *

                         nonbanking activities

  Sec. 8. (a) * * *
          * * * * * * *
  (c)(1) * * *
          * * * * * * *
    (3) Termination of grandfathered rights.--
          (A) In general.--If any foreign bank or foreign 
        company files a declaration under section 6(a)(1)(F) of 
        the Bank Holding Company Act of 1956 or receives a 
        determination from the Board under section 6(l)(6) of 
        such Act, any authority conferred by this subsection on 
        any foreign bank or company to engage in any financial 
        activity (as defined in section 6(a)(3) of such Act) 
        shall terminate immediately.
          (B) Restrictions and requirements authorized.--If a 
        foreign bank or company that engages, directly or 
        through an affiliate pursuant to paragraph (1), in a 
        financial activity (as defined in section 6(a)(3) of 
        the Bank Holding Company Act of 1956) has not filed a 
        declaration with the Board of its status as a 
        qualifying bank holding company under section 6(a) of 
        the Bank Holding Company Act of 1956 by the end of the 
        second year after the date of enactment of the 
        Financial Services Competition Act of 1997, the Board, 
        giving due regard to the principle of national 
        treatment and equality of competitive opportunity, may 
        impose such restrictions and requirements on the 
        conduct of such activities by such foreign bank or 
        company as are comparable to those imposed on a 
        qualifying bank holding company organized under the 
        laws of the United States, including a requirement to 
        conduct such activities in compliance with the 
        safeguards of section 6 of the Bank Holding Company Act 
        of 1956 and any additional safeguards imposed by the 
        National Council on Financial Services.
  (d) Nothing in this section shall be construed to define a 
branch or agency of a foreign bank or a commercial lending 
company controlled by a foreign bank or foreign company that 
controls a foreign bank as a ``bank'' for the purposes of any 
provisions of the Bank Holding Company Act of 1956, or section 
105 of the Bank Holding Company Act Amendments of 1970, except 
that any such branch, agency or commercial lending company 
subsidiary shall be deemed a ``bank'' or ``banking 
subsidiary'', as the case may be, forthe purposes of applying 
the prohibitions of section 106 of the Bank Holding Company Act 
Amendments of 1970 [and the exemptions provided in sections 4(c)(1), 
4(c)(2), 4(c)(3), and 4(c)(4) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1843(c) (1), (2), (3), and (4))] to any foreign bank or 
other company to which subsection (a) applies.
          * * * * * * *

SEC. 15. COOPERATION WITH FOREIGN SUPERVISORS.

  (a) Disclosure of Supervisory Information to Foreign 
Supervisors.--Notwithstanding any other provision of law, the 
Board, Comptroller of the Currency, [Federal Deposit Insurance 
Corporation, and Director of the Office of Thrift Supervision] 
and Federal Deposit Insurance Corporation may disclose 
information obtained in the course of exercising supervisory or 
examination authority to any foreign bank regulatory or 
supervisory authority if the Board, Comptroller, Corporation, 
or Director determines that such disclosure is appropriate and 
will not prejudice the interests of the United States.
  (b) Requirement of Confidentiality.--Before making any 
disclosure of any information to a foreign authority, the 
Board, Comptroller of the Currency, [Federal Deposit Insurance 
Corporation, and Director of the Office of Thrift Supervision] 
and Federal Deposit Insurance Corporation shall obtain, to the 
extent necessary, the agreement of such foreign authority to 
maintain the confidentiality of such information to the extent 
possible under applicable law.
          * * * * * * *
                              ----------                              


       SECTION 1101 OF THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978

                              definitions

    Sec. 1101. For the purpose of this title, the term--
          (1) * * *
          * * * * * * *
          (6) ``holding company'' means--
                  (A) any bank holding company (as defined in 
                section 2 of the Bank Holding Company Act of 
                1956); and
                  (B) any company described in section 
                [4(f)(1)] 6(f)(1) of the Bank Holding Company 
                Act of 1956[; and].
                  [(C) any savings and loan holding company (as 
                defined in the Home Owners' Loan Act);]
          (7) ``supervisory agency'' means with respect to any 
        particular financial institution, holding company, or 
        any subsidiary of a financial institution or holding 
        company, any of the following which has statutory 
        authority to examine the financial condition, business 
        operations, or records or transactions of that 
        institution, holding company, or subsidiary--
                  (A) the Federal Deposit Insurance 
                Corporation;
                  [(B) Director, Office of Thrift Supervision;]
                  [(C)] (B) the National Credit Union 
                Administration;
                  [(D)] (C) the Board of Governors of the 
                Federal Reserve System;
                  [(E)] (D) the Comptroller of the Currency;
                  [(F)] (E) the Securities and Exchange 
                Commission;
                  [(G)] (F) the Secretary of the Treasury, with 
                respect to the Bank Secrecy Act and the 
                Currency and Foreign Transactions Reporting Act 
                (Public Law 91-508, title I and II); or
                  [(H)] (G) any State banking or securities 
                department or agency: and
          * * * * * * *
                              ----------                              


                     SECTION 7A OF THE CLAYTON ACT

  Sec. 7A. (a) * * *
          * * * * * * *
  (c) The following classes of transactions are exempt from the 
requirements of this section--
          (1) * * *
          * * * * * * *
          [(8) transactions which require agency approval under 
        section 4 of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1843) or section 5 of the Home Owners' Loan Act 
        of 1933 (12 U.S.C. 1464), if copies of all information 
        and documentary material filed with any such agency are 
        contemporaneously filed with the Federal Trade 
        Commission and the Assistant Attorney General at least 
        30 days prior to consummation of the proposed 
        transaction;]
          * * * * * * *
                              ----------                              


    SECTION 109 OF THE RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING 
                         EFFICIENCY ACT OF 1994

SEC. 109. PROHIBITION AGAINST DEPOSIT PRODUCTION OFFICES.

  (a) * * *
          * * * * * * *
  (d) Application.--This section shall apply with respect to 
any interstate branch established or acquired in a host State 
pursuant to this title, the Financial Services Competition Act 
of 1997, or any amendment made by this title or such Act to any 
other provision of law.
  (e) Definitions.--For the purposes of this section, the 
following definitions shall apply:
          (1) * * *
          * * * * * * *
          (4) Interstate branch.--The term ``interstate 
        branch'' means a branch established pursuant to this 
        title or anyamendment made by this title to any other 
provision of law and any branch of a bank controlled by an out-of-State 
bank holding company (as defined in section 2(o)(7) of the Bank Holding 
Company Act of 1956).
          * * * * * * *
                              ----------                              


                 REVISED STATUTES OF THE UNITED STATES

          * * * * * * *

                               TITLE VII

                     THE DEPARTMENT OF THE TREASURY

          * * * * * * *

                              CHAPTER NINE

                    THE COMPTROLLER OF THE CURRENCY

          * * * * * * *

  Sec. 324. There shall be in the Department of the Treasury a 
bureau charged with the execution of all laws passed by 
Congress relating to the issue and regulation of national 
currency secured by United States bonds and, under the general 
supervision of the Federal Reserve Board, of all Federal 
Reserve notes, except for the cancellation and destruction, and 
accounting with respect to such cancellation and destruction, 
of Federal reserve notes unfit for circulation, of notes the 
chief officer of which bureau shall be called the Comptroller 
of the Currency and shall perform his duties under the general 
directions of the Secretary of the Treasury. [The Comptroller 
of the Currency shall have the same authority over matters 
within the jurisdiction of the Comptroller as the Director of 
the Office of Thrift Supervision has over matters within the 
Director's jurisdiction under section 3(b)(3) of the Home 
Owners' Loan Act] The Secretary of the Treasury may not 
intervene in any matter or proceeding before the Comptroller of 
the Currency (including agency enforcement actions) unless 
otherwise specifically provided by law. The Secretary of the 
Treasury may not delay or prevent the issuance of any rule or 
the promulgation of any regulation by the Comptroller of the 
Currency.
          * * * * * * *

                               TITLE LXII

                             NATIONAL BANKS

                              ----------                              


                              CHAPTER ONE

                        ORGANIZATION AND POWERS

Sec.
5133.  Formation of national banking associations.
5133A. Mutual national banks.
5133B. Federal mutual bank holding companies.
5134.  Requisites of organization certificate.
5135.  How certificate shall be acknowledged and filed.
5136.  Corporate powers of associations.
5136A. Financial subsidiaries of national banks.
5136B. National wholesale financial institutions.
[5136A.] 5136C. Participation in lotteries prohibited.
5137.  Power to hold real property.
          * * * * * * *

SEC. 5133A. MUTUAL NATIONAL BANKS.

  (a) In General.--The Comptroller of the Currency may charter 
national banking associations as mutual national banks, either 
de novo or through the conversion of an insured depository 
institution, in accordance with this section and such 
regulations as the Comptroller may prescribe.
  (b) Applicable Law.--Unless otherwise provided by this 
section or by the Comptroller of the Currency because of the 
mutual form of the institution, a mutual national bank--
          (1) shall be subject to the same laws, requirements, 
        duties, and obligations that apply to a national 
        banking association operating in stock form;
          (2) shall have the same powers and privileges as, and 
        may engage in the same activities subject to the same 
        restrictions and limitations that apply to, a national 
        banking association operating in stock form; and
          (3) shall be supervised and examined by the 
        Comptroller in the same manner and to the same extent 
        as a national banking association operating in stock 
        form.
  (c) Conversions.--Subject to any requirements imposed by the 
Comptroller--
          (1) a mutual national bank may convert to, or acquire 
        and retain all or substantially all of the assets and 
        liabilities of, a national banking association 
        operating in stock form; and
          (2) a national banking association operating in stock 
        form may convert to a mutual national bank.
  (d) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Insured depository institution.--The term 
        ``insured depository institution'' has the same meaning 
        as in section 3 of the Federal Deposit Insurance Act.
          (2) Mutual national bank.--The term ``mutual national 
        bank'' means a national banking association that 
        operates in mutual form and is chartered by the 
        Comptroller under this section.
  (e) Conforming References.--Unless otherwise provided by the 
Comptroller--
          (1) any reference in any Federal law to a national 
        bank, including a reference to the term ``national 
        banking association'', ``member bank'', ``national 
        bank'', ``national association'', ``bank'', ``insured 
        bank'', ``insured depository institution'', or 
        ``depository institution'', shall be deemed to refer 
        also to a ``mutual national bank'';
          (2) any reference in any Federal law to the term 
        ``shareholder'', ``shareholders'', ``stockholder'', or 
        ``stockholders'' of a national bank shall be deemed to 
        refer also to any member or members of a mutual 
        national bank;
          (3) any reference in any Federal law to the term 
        ``board of directors'', ``director'', or ``directors'' 
        of a national bank shall be deemed to refer also to the 
        board of trustees, trustee, or trustees, respectively, 
        of a mutual national bank; and
          (4) any terms in Federal law that may apply only to a 
        national bank operating in stock form, including the 
        terms ``stock'', ``shares'', ``shares of stock'', 
        ``capital stock'', ``common stock'', ``stock 
        certificate'', ``stock certificates'', ``certificate 
        representing shares of stock'', ``stock dividend'', 
        ``transferable stock'', ``each class of stock'', 
        ``cumulate such shares'', ``par value'', ``preferred 
        stock'', ``body corporate'', ``corporation'', 
        ``corporate powers'', ``incorporated'', ``articles of 
        association'', and ``corporate existence'', shall not 
        apply to a mutual national bank, unless the Comptroller 
        determines that the context requires otherwise.

SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.

  (a) Reorganization of Mutual National Bank as a Holding 
Company.--
          (1) In general.--Subject to approval under the Bank 
        Holding Company Act of 1956, a mutual national bank may 
        reorganize so as to become a Federal mutual bank 
        holding company by submitting a reorganization plan to 
        the Comptroller of the Currency for the Comptroller's 
        approval.
          (2) Plan approval.--Upon the approval of the 
        reorganization plan by the Comptroller of the Currency 
        and the issuance of the appropriate charters--
                  (A) the substantial part of the mutual 
                national bank's assets and liabilities, 
                including all of the bank's insured 
                liabilities, shall be transferred to a national 
                banking association, the stock of which is 
                owned (except as otherwise provided by this 
                section) by the mutual national bank; and
                  (B) the mutual national bank shall become a 
                Federal mutual bank holding company.
  (b) Directors and Certain Account Holders' Approval of Plan 
Required.--This subsection does not authorize a reorganization 
unless--
          (1) a majority of the mutual national bank's board of 
        directors has approved the plan providing for such 
        reorganization; and
          (2) in the case of a mutual national bank in which 
        holders of accounts and obligors exercise voting 
        rights, a majority of such individuals has approved the 
        plan at a meeting held at the call of the directors 
        under the procedures prescribed by the bank's charter 
        and bylaws.
  (c) Retention of Capital.--In connection with a transaction 
described in subsection (a), a mutual national bank may, 
subject to the Comptroller's approval, retain capital at the 
holding company level to the extent that the capital retained 
at the holding company level exceeds the amount of capital 
required for the national banking association chartered as a 
part of a transaction described in subsection (a) to meet all 
relevant capital standards established by the Comptroller for 
national banking associations.
  (d) Ownership.--
          (1) In general.--Persons having ownership rights in 
        the mutual national bank under Federal or State law 
        shall have the same ownership rights with respect to 
        the Federal mutual bank holding company.
          (2) Holders of certain accounts.--Holders of savings, 
        demand, or other accounts in the following institutions 
        shall have the same ownership rights with respect to 
        the Federal mutual bank holding company as persons 
        described in paragraph (1):
                  (A) A national bank chartered as part of a 
                transaction described in subsection (a).
                  (B) A mutual bank acquired through the merger 
                of the mutual bank into a national bank 
                subsidiary of the holding company or an interim 
                national bank subsidiary of the holding 
                company.
  (e) Regulation.--A Federal mutual bank holding company shall 
be--
          (1) chartered by the Comptroller of the Currency and 
        shall be subject to such regulations as the Comptroller 
        shall prescribe; and
          (2) regulated under the Bank Holding Company Act of 
        1956 on the same terms and subject to the same 
        limitations as any other company that controls a bank.
  (f) Capital Improvement.--
          (1) Pledge of stock of national bank subsidiary.--
        This section shall not prohibit a Federal mutual bank 
        holding company from pledging all or a portion of the 
        stock of a national banking association chartered as 
        part of a transaction described in subsection (a) to 
        raise capital for such bank.
          (2) Issuance of nonvoting shares.--This section shall 
        not prohibit a national banking association chartered 
        as part of a transaction described in subsection (a) 
        from issuing any nonvoting shares, or less than 50 
        percent of the voting shares of such bank, to any 
        person other than the Federal mutual bank holding 
        company.
  (g) Insolvency and Liquidation.--
          (1) In general.--Notwithstanding any other provision 
        of law, the Comptroller of the Currency may file a 
        petition under chapter 7 of title 11, United States 
        Code, with respect to a Federal mutual bank holding 
        company upon--
                  (A) the default of any national bank--
                          (i) the stock of which is owned by 
                        the Federal mutual bank holding 
                        company; and
                          (ii) that was chartered in a 
                        transaction described in subsection 
                        (a); or
                  (B) a foreclosure on a pledge by the Federal 
                mutual bank holding company described in 
                subsection (f)(1).
          (2) Distribution of net proceeds.--Except as provided 
        in paragraph (3), the net proceeds of any liquidation 
        of any Federal mutual bank holding company under 
        paragraph (1) shall be transferred to persons who hold 
        ownership interests in such Federal mutual bank holding 
        company.
          (3) Recovery by fdic.--If the Federal Deposit 
        Insurance Corporation incurs a loss as a result of the 
        default of any insured bank subsidiary of a Federal 
        mutual bank holding company that is liquidated under 
        paragraph (1), the Federal Deposit Insurance 
        Corporation shall succeed to the ownership interests of 
        the depositors of the bank in the Federal mutual bank 
        holding company, to the extent of the Federal Deposit 
        Insurance Corporation's loss.
  (h) Definitions.--
          (1) Federal mutual bank holding company.--The term 
        ``Federal mutual bank holding company'' means a 
        corporation chartered under this section.
          (2) Default.--With respect to a national bank, the 
        term ``default'' means an adjudication or other 
        official determination by any court of competent 
        jurisdiction, the Comptroller, or other public 
        authority pursuant to which a conservator, receiver, or 
        other legal custodian is appointed for the national 
        bank.
          * * * * * * *
  Sec. 5136. (a) In General.--Upon duly making and filing 
articles of association and an organization certificate, the 
association shall become, as from the date of the execution of 
its organization certificate, a body corporate, and as such, 
and in the name designated in the organization certificate, it 
shall have power--
  First. To adopt and use a corporate seal.
          * * * * * * *
  Seventh. To exercise by its board of directors or duly 
authorized officers or agents, subject to law, all such 
incidental powers as shall be necessary to carry on the 
business of banking; by discounting and negotiating promissory 
notes, drafts, bills of exchange, and other evidences of debt; 
by receiving deposits; by buying and selling exchange, coin, 
and bullion; by loaning money on personal security; and by 
obtaining, issuing, and circulating notes according to the 
provisions of this title. The business of dealing in securities 
and stock by the association shall be limited to purchasing and 
selling such securities and stock without recourse, solely upon 
the order, and for the account of, customers, and in no case 
for its own account, and the association shall not underwrite 
any issue of securities or stock: Provided, That the 
association may purchase for its own account investment 
securities under such limitations and restrictions as the 
Comptroller of the Currency may by regulation prescribe. In no 
event shall the total amount of the investment securities of 
any one obligor or maker, held by the association for its own 
account, exceed at any time 10 per centum of its capital stock 
actually paid in and unimpaired and 10 per centum of its 
unimpaired surplus fund, except that this limitation shall not 
require any association to dispose of any securities lawfully 
held by it on the date of enactment of the Banking Act of 1935. 
As used in this section the term ``investment securities'' 
shall mean marketable obligations evidencing indebtedness of 
any person, copartnership, association, or corporation in the 
form of bonds, notes and/or debentures commonly known as 
investment securities under such further definition of the term 
``investment securities'' as may by regulation be prescribed by 
the Comptroller of the Currency. Except as hereinafter provided 
or otherwise permitted by law, nothing herein contained shall 
authorize the purchase by the association for its own account 
of any shares of stock of any corporation. The limitations and 
restrictions herein contained as to dealing in, underwriting 
and purchasing for its own account, investment securities shall 
not apply to obligations of the United States, or general 
obligations of any State or of any political subdivision 
thereof, or obligations of the Washington Metropolitan Area 
Transit Authority which are guaranteed by the Secretary of 
Transportation under section 9 of the National Capital 
Transportation Act of 1969, or obligations issued under 
authority of the Federal Farm Loan Act, as amended, or issued 
by the thirteen banks for cooperatives or any of them or the 
Federal Home Loan Banks, or obligations which are insured by 
the Secretary of Housing and Urban Development under title XI 
of the National Housing Act, or obligations which are insured 
by the Secretary of Housing and Urban Development (hereafter in 
this sentence referred to as the ``Secretary'' pursuant to 
section 207 of the National Housing Act, if the debentures to 
be issued in payment of such insured obligations are guaranteed 
as to principal and interest by the United States, or 
obligations, participations, or other instruments of or issued 
by the Federal National Mortgage Association or the Government 
National Mortgage Association, or mortgages, obligations, or 
other securities which are or ever have been sold by the 
Federal Home Loan Mortgage Corporation pursuant to section 305 
or section 306 of the Federal Home Loan Mortgage Corporation 
Act or obligations of the Federal Financing Bank or obligations 
of the Environmental Financing Authority or obligations or 
other instruments or securities of the Student Loan Marketing 
Association, or such obligations of any local public agency (as 
defined in section 110(h) of the Housing Act of 1949) as are 
secured by an agreement between the local public agency and the 
Secretary in which the local public agency agrees to borrow 
from said Secretary and said Secretary agrees to lend to said 
local public agency, monies in an aggregate amount which 
(together with any other monies irrevocably committed to the 
payment of interest on such obligations) will suffice to pay, 
when due, the interest on and all installments (including the 
final installment) of the principal of such obligations, which 
monies under theterms of said agreement are required to be used 
for such payments, or such obligations of a public housing agency (as 
defined in the United States Housing Act of 1937, as amended) as are 
secured (1) by an agreement between the public housing agency and the 
Secretary in which the public housing agency agrees to borrow from the 
Secretary and the Secretary agrees to lend to the public housing 
agency, prior to the maturity of such obligations, monies in an amount 
which (together with any other monies irrevocably committed to the 
payment of interest on such obligations) will suffice to pay the 
principal of such obligations with interest to maturity thereon, which 
monies under the terms of said agreement are required to be used for 
the purpose of paying the principal of and the interest on such 
obligations at their maturity, (2) by a pledge of annual contributions 
under an annual contributions contract between such public housing 
agency and the Secretary if such contract shall contain the covenant by 
the Secretary which is authorized by subsection (b) of section 22 of 
the United States Housing Act of 1937, as amended, and if the maximum 
sum and the maximum period specified in such contract pursuant to said 
subsection 22(b) shall not be less than the annual amount and the 
period for payment which are requisite to provide for the payment when 
due of all installments of principal and interest on such obligations, 
or (3) by a pledge or both annual contributions under an annual 
contributions contract containing the covenant by the Secretary which 
is authorized by section 6(g) of the United States Housing Act of 1937, 
and a loan under an agreement between the local public housing agency 
and the Secretary in which the public housing agency agrees to borrow 
from the Secretary, and the Secretary agrees to lend to the public 
housing agency, prior to the maturity of the obligations involved, 
moneys in an amount which (together with any other moneys irrevocably 
committed under the annual contributions contract to the payment of 
principal and interest on such obligations) will suffice to provide for 
the payment when due of all installments of principal and interest on 
such obligations, which moneys under the terms of the agreement are 
required to be used for the purpose of paying the principal and 
interest on such obligations at their maturity: Provided, That in 
carrying on the business commonly known as the safe-deposit business 
the association shall not invest in the capital stock of a corporation 
organized under the law of any State to conduct a safe-deposit business 
in an amount in excess of 15 per centum of the capital stock of the 
association actually paid in and unimpaired and 15 per centum of its 
unimpaired surplus. The limitations and restrictions herein contained 
as to dealing in and underwriting investment securities shall not apply 
to obligations issued by the International Bank for Reconstruction and 
Development, the European Bank for Reconstruction and Development, the 
Inter-American Development Bank, Bank for Economic Cooperation and 
Development in the Middle East and North Africa, the Asian Development 
Bank, the African Development Bank, the Inter-American Investment 
Corporation, or the International Finance Corporation, or obligations 
issued by any State or political subdivision or any agency of a State 
or political subdivision for housing, university, or dormitory 
purposes, which are at the time eligible for purchase by a national 
bank for its ownaccount, nor to bonds, notes and other obligations 
issued by the Tennessee Valley Authority or by the United States Postal 
Service,: Provided, That no association shall hold obligations issued 
by any of said organizations as a result of underwriting, dealing, or 
purchasing for its own account (and for this purpose obligations as to 
which it is under commitment shall be deemed to be held by it) in a 
total amount exceeding at any one time 10 per centum of its capital 
stock actually paid in and unimpaired and 10 per centum of its 
unimpaired surplus fund. Notwithstanding any other provision in this 
paragraph, the association may purchase for its own account shares of 
stock issued by a corporation authorized to be created pursuant to 
title IX of the Housing and Urban Development Act of 1968, and may make 
investments in a partnership, limited partnership, or joint venture 
formed pursuant to section 907(a) or 907(c) of that Act. 
Notwithstanding any other provision of this paragraph, the association 
may purchase for its own account shares of stock issued by any State 
housing corporation incorporated in the State in which the association 
is located and may make investments in loans and commitments for loans 
to any such corporation: Provided, That in no event shall the total 
amount of such stock held for its own account and such investments in 
loans and commitments made by the association exceed at any time 5 per 
centum of its capital stock actually paid in and unimpaired plus 5 per 
centum of its unimpaired surplus fund. Notwithstanding any other 
provision in this paragraph, the association may purchase for its own 
account shares of stock issued by a corporation organized solely for 
the purpose of making loans to farmers and ranchers for agricultural 
purposes, including the breeding, raising, fattening, or marketing of 
livestock. However, unless the association owns at least 80 per centum 
of the stock of such agricultural credit corporation the amount 
invested by the association at any one time in the stock of such 
corporation shall not exceed 20 per centum of the unimpaired capital 
and surplus of the association: Provided further, That notwithstanding 
any other provision of this paragraph, the association may purchase for 
its own account shares of stock of a bank insured by the Federal 
Deposit Insurance Corporation or a holding company which owns or 
controls such an insured bank if the stock of such bank or company is 
owned exclusively (except to the extent directors' qualifying shares 
are required by law) by depository institutions or depository 
institution holding companies (as defined in section 3 of the Federal 
Deposit Insurance Act) and such bank or company and all subsidiaries 
thereof are engaged exclusively in providing services to or for other 
depository institutions, their holding companies, and the officers, 
directors, and employees of such institutions and companies, and in 
providing correspondent banking services at the request of other 
depository institutions or their holding companies (also referred to as 
a ``banker's bank''), but in no event shall the total amount of such 
stock held by the association in any bank or holding company exceed at 
any time 10 per centum of the associations capital stock and paid in 
and unimpaired surplus and in no event shall the purchase of such stock 
result in an association's acquiring more than 5 per centum of any 
class of voting securities of such bank or company. The limitations and 
restrictions contained in this paragraph as to an association 
purchasing for its own account investment securities shall not apply to 
securities that (A) are offered and sold pursuant to section 4(5) of 
the Securities Act of 1933 (15 U.S.C. 77d(5)); (B) are small business 
related securities (as defined in section 3(a)(53) of the Securities 
Exchange Act of 1934); or (C) are mortgage related securities (as that 
term is defined in section 3(a)(41) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(41)). The exception provided for the securities 
described in subparagraphs (A), (B), and (C) shall be subject to such 
regulations as the Comptroller of the Currency may prescribe, including 
regulations prescribing minimum size of the issue (at the time of 
initial distribution) or minimum aggregate sales prices, or both. A 
national banking association may deal in, underwrite, and purchase for 
such association's own account qualified Canadian government 
obligations to the same extent that such association may deal in, 
underwrite, and purchase for such association's own account obligations 
of the United States or general obligations of any State or of any 
political subdivision thereof. For purposes of this paragraph--
          (1) the term ``qualified Canadian government 
        obligations'' means any debt obligation which is backed 
        by Canada, any Province of Canada, or any political 
        subdivision of any such Province to a degree which is 
        comparable to the liability of the United States, any 
        State, or any political subdivision thereof for any 
        obligation which is backed by the full faith and credit 
        of the United States, such State, or such political 
        subdivision, and such term includes any debt obligation 
        of any agent of Canada or any such Province or any 
        political subdivision of such Province if--
                  (A) the obligation of the agent is assumed in 
                such agent's capacity as agent for Canada or 
                such Province or such political subdivision; 
                and
                  (B) Canada, such Province, or such political 
                subdivision on whose behalf such agent is 
                acting with respect to such obligation is 
                ultimately and unconditionally liable for such 
                obligation; and
          (2) the term ``Province of Canada'' means a Province 
        of Canada and includes the Yukon Territory and the 
        Northwest Territories and their successors.
In addition to the provisions in this paragraph for dealing in, 
underwriting or purchasing securities, the limitations and 
restrictions contained in this paragraph as to dealing in, 
underwriting, and purchasing investment securities for the 
national bank's own account shall not apply to obligations 
(including limited obligation bonds, revenue bonds, and 
obligations that satisfy the requirements of section 142(b)(1) 
of the Internal Revenue Code of 1986) issued by or on behalf of 
any state or political subdivision of a state, including any 
municipal corporate instrumentality of 1 or more states, or any 
public agency or authority of any state or political 
subdivision of a state, if the national banking association is 
well capitalized (as defined in section 38 of the Federal 
Deposit Insurance Act).
          * * * * * * *
          (12) To exercise all the powers and privileges 
        authorized by the Director of the Office of Thrift 
        Supervision for a Federal savings association on the 
        day before the date of enactment ofthe Financial 
Services Competition Act of 1997, subject to the requirements otherwise 
applicable to national banks, including sections 5136A and 5155, except 
this paragraph shall not confer on a national bank the power granted to 
a Federal savings association under section 5(c)(4)(B) of the Home 
Owners' Loan Act to invest in a corporation engaged in real estate 
development and the power granted to a Federal savings association 
under section 5(c)(4)(B) of the Home Owners' Loan Act to invest in a 
corporation may be exercised by a national bank only if the investment 
is made in a corporation that is a subsidiary of the bank.
  (b) Scope of Principal Activities.--
          (1) Existing products.--
                  (A) In general.--Subject to subparagraph (B), 
                a national bank may not provide insurance in a 
                State as principal.
                  (B) Exception.--Except for title insurance 
                and annuity contracts as described in paragraph 
                (3)(A), subparagraph (A) shall not apply to--
                          (i) insurance that national banks or 
                        subsidiaries of national banks had 
                        authority to provide as principal 
                        pursuant to subsection (a) as of 
                        January 1, 1997; or
                          (ii) a product that was regulated as 
                        insurance as of January 1, 1997, by the 
                        appropriate insurance regulatory 
                        authority of the State in which the 
                        product is to be provided but ceases to 
                        be so regulated after the date of 
                        enactment of the Financial Services 
                        Competition Act of 1997.
          (2) New products.--
                  (A) In general.--This paragraph shall apply 
                with regard to any product which--
                          (i) is not described in paragraph 
                        (1); and
                          (ii) the Comptroller of the Currency 
                        has determined a national bank may 
                        provide as principal.
                  (B) Petition for definition of other 
                products.--
                          (i) In general.--Any State insurance 
                        supervisory agency may petition the 
                        National Council of Financial Services 
                        (hereafter in this paragraph referred 
                        to as the `Council') objecting to a 
                        determination of the Comptroller of the 
                        Currency referred to in subparagraph 
                        (A)(ii) and requesting a determination 
                        under 122(b)(2) of the Financial 
                        Services Competition Act of 1997 
                        whether a product described in 
                        subparagraph (A) constitutes an 
                        insurance product or a banking product.
                          (ii) Statements and arguments.--A 
                        petition submitted under clause (i) 
                        shall include a concise statement of 
                        the questions presented for review, a 
                        concise statement of any facts material 
                        to the consideration of the questions, 
                        and a statement of the arguments of the 
                        petitioner on the merits.
                          (iii) Statute of limitation.--No 
                        petition may be filed with the Council 
                        under clause (i) after the end of the 
                        2-year period beginning on the date on 
                        which thefirst public notice is made of 
the determination by the Comptroller to which the petition relates.
                          (iii) Filing with comptroller of the 
                        currency.--A copy of any petition filed 
                        with the Council under clause (i) shall 
                        be filed with the Comptroller of the 
                        Currency at the same time as such 
                        filing.
                  (C) Expedited review of petition by federal 
                reserve board.--
                          (i) Referral to board.--Upon receipt 
                        of a petition filed with the Council 
                        under subparagraph (B)(i), the Council 
                        shall refer the petition, together with 
                        the statements and arguments 
                        accompanying the petition, to the Board 
                        of Governors of the Federal Reserve 
                        System for review.
                          (ii) Review.--The Board shall review 
                        the material referred pursuant to 
                        clause (i) to determine whether the 
                        petition raises a substantial question 
                        for review, taking into account the 
                        nature of the product and the history 
                        of its regulation, and report the 
                        findings and conclusions of the Board 
                        in connection with such review to the 
                        Council before the end of the 15-day 
                        period beginning on the date of the 
                        referral.
                          (iii) Dismissal upon finding of lack 
                        of a substantial question.--If the 
                        Board reports to the Council that the 
                        petition failed to raise a substantial 
                        question for review of the decision of 
                        the Comptroller of the Currency on the 
                        merits, the Council shall dismiss the 
                        petition and the determination of the 
                        Comptroller of the Currency shall 
                        constitute final agency action, subject 
                        to judicial review. The Council shall 
                        promptly notify the Comptroller and any 
                        affected party of any such dismissal.
                          (iv) Determination by council upon 
                        finding of a substantial question.--If 
                        the Board reports to the Council that 
                        the petition raises a substantial 
                        question for review of the decision of 
                        the Comptroller of the Currency on the 
                        merits, the Council shall proceed to 
                        consider such petition under section 
                        122(b)(2) of the Financial Services 
                        Competition Act of 1997 and in 
                        accordance with the subsequent 
                        subparagraphs of this paragraph.
                  (D) Participation of comptroller of the 
                currency and any affected party.--
                          (i) Response.--Unless notified by the 
                        Council of the dismissal of the 
                        petition under subparagraph (C)(iii), 
                        the Comptroller of the Currency and any 
                        affected party supporting the 
                        Comptroller may file, before the end of 
                        the 60-day period beginning on the date 
                        of the filing of any petition with the 
                        Council under subparagraph (B)(i), a 
                        response to such petition with the 
                        Council.
                          (ii) Participation in hearing.--The 
                        Comptroller of the Currency or any 
                        affected party may participate, as a 
                        party, in any hearing under 
                        subparagraph (E).
                  (E) Hearing.--
                          (i) Request.--The State insurance 
                        supervisory agency, the Comptroller of 
                        the Currency, or any affected party may 
                        request a hearing by the Council on any 
                        petition filed with the Council in 
                        accordance with subparagraph (B) which 
                        was not dismissed under subparagraph 
                        (C)(iii).
                          (ii) Notice and selection of hearing 
                        officer.--If a hearing is requested 
                        pursuant to clause (i), the Council 
                        shall promptly--
                                  (I) notify the State 
                                insurance supervisory agency, 
                                the Comptroller of the 
                                Currency, or any affected party 
                                of such request and the time 
                                and place for such hearing; and
                                  (II) select a hearing officer 
                                from among administrative law 
                                judges who are employed by 
                                agencies that are not 
                                represented on the Council.
                          (iii) Time.--Any hearing under this 
                        subparagraph shall commence before the 
                        end of the 60-day period beginning on 
                        the date a request for such hearing is 
                        filed with the Council under clause (i) 
                        and shall be conducted and concluded 
                        expeditiously.
                          (iv) Hearing on a record.--In any 
                        hearing under this subparagraph, all 
                        issues shall be determined on a record 
                        in accordance with section 554 of title 
                        5, United States Code.
                          (v) Recommended opinion.--Upon the 
                        conclusion of any hearing under this 
                        subparagraph, the administrative law 
                        judge shall promptly submit a 
                        recommended opinion on all issues 
                        considered in such hearing to the 
                        Council.
                  (F) Final decision by council.--
                          (i) Determination after hearing.--If 
                        a hearing was requested under this 
                        paragraph, the Council shall, before 
                        the end of the 60-day period beginning 
                        on the date the recommended opinion of 
                        the administrative law judge is filed 
                        with the Council, make a final 
                        determination regarding the matter on 
                        the basis of the record of the hearing.
                          (ii) Determination if no hearing is 
                        requested.--If a hearing was not 
                        requested with regard to a petition 
                        filed with the Council under 
                        subparagraph (B)(i), the Council shall, 
                        before the end of the 60-day period 
                        beginning on the date by which the 
                        Council received such petition and any 
                        response to such petition pursuant to 
                        subparagraph (D)(i), make a final 
                        determination regarding the matter.
                  (G) Appeal of final decision.--
                          (i) In general.--Any State insurance 
                        supervisory agency which filed a 
                        petition under subparagraph (B)(i), the 
                        Comptroller of the Currency (if the 
                        Comptroller filed a response to such 
                        petition or participated as a party in 
                        a hearing with regard to such 
                        petition), or an affected party (if the 
                        party filed a response to the petition 
                        or participated as a party in a hearing 
                        with regard to the petition) may obtain 
                        judicial review of the final decision 
                        of the Council with regard to such 
                        petition by the United States court of 
                        appeals for the circuit in which the 
                        State insurance supervisory agency is 
                        located or the United States Circuit 
                        Court of Appeals for the District of 
                        Columbia Circuit, in accordance with 
                        section 706 of title 5, United States 
                        Code, and title 28 of such Code, by 
                        filing a notice of appeal in such court 
                        within 10 days after the date of the 
                        final determination of the Council.
                          (ii) Notice to council and other 
                        parties.--Any party who petitions for 
                        judicial review of any final decision 
                        of the Council under this paragraph 
                        shall simultaneously send a copy of 
                        such petition to the Council and the 
                        Comptroller of the Currency, the State 
                        insurance supervisory agency, and any 
                        affected party, as the case may be, by 
                        registered or certified mail.
                          (iii) Submission of record.--The 
                        Council shall promptly certify and file 
                        in the appropriate court of appeal the 
                        record on which a final decision was 
                        based.
          (3) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Insurance.--The term ``insurance'' shall 
                include any product regulated as insurance as 
                of January 1, 1997, in accordance with the 
                relevant State insurance law in the State in 
                which the product is to be provided, any new 
                form of such product that is developed after 
                January 1, 1997, and any annuity contract the 
                income on which is tax deferred under section 
                72 of the Internal Revenue Code of 1986.
                  (B) Affected party.--The term ``affected 
                party'' means any party that sought or 
                otherwise was a party to the determination that 
                is the subject of the petition filed with the 
                Council under paragraph (2)(B)(i).
          (4) Authority.--
                  (A) In general.--For purposes of this 
                subsection, national banks had authority to 
                provide a product in any State as of January 1, 
                1997, if on or before such date--
                          (i) the Comptroller of the Currency 
                        had determined, in writing, that 
                        national banks may provide the product; 
                        or
                          (ii) national banks were providing 
                        the product.
                  (B) Exception.--Notwithstanding subparagraph 
                (A), national banks did not have authority to 
                provide a product in a State as of January 1, 
                1997, if on or before such date a court of 
                relevant jurisdiction for such State had, by 
                final judgment, overturned a determination of 
                the Comptroller of the Currency that national 
                banks may provide such product.
          * * * * * * *

SEC. 5136A. FINANCIAL SUBSIDIARIES OF NATIONAL BANKS.

  (a) Subsidiaries of National Banks Authorized to Engage in 
Financial Activities.--
          (1) In general.--A subsidiary of a national bank may 
        engage in an activity that is not permissible for a 
        national bank to engage in directly, but only if--
                  (A) the activity is a financial activity (as 
                defined in paragraph (4));
                  (B) the national bank is well capitalized, 
                well managed, and achieved a rating of 
                ``satisfactory record of meeting community 
                credit needs'', or better, at the most recent 
                examination of the bank;
                  (C) all depository institution affiliates of 
                such national bank are well capitalized, well 
                managed, and have achieved a rating of 
                ``satisfactory record of meeting community 
                credit needs'', or better, at the most recent 
                examination of each such institution; and
                  (D) the bank has received the approval of the 
                Comptroller of the Currency.
          (2) No effect on edge act or agreement 
        corporations.--Paragraph (1) shall not apply with 
        respect to any subsidiary which is a corporation 
        organized under section 25A of the Federal Reserve Act 
        or a corporation operating under section 25 of such 
        Act.
          (3) Other subsidiaries prohibited.--A national bank 
        may not control any subsidiary other than a 
        subsidiary--
                  (A) which engages solely in activities that 
                are permissible for a national bank to engage 
                in directly or are authorized under paragraph 
                (1); or
                  (B) which a national bank may control 
                pursuant to section 25 or 25A of the Federal 
                Reserve Act, the Bank Service Company Act, or 
                any other Act that expressly by its terms 
                authorizes national banks to control 
                subsidiaries.
          (4) Financial activity defined.--For purposes of this 
        section and subject to paragraph (5), the term 
        ``financial activity'' means any 1 or more of the 
        following:
                  (A) Receiving money subject to a deposit or 
                other repayment obligation.
                  (B) Lending, exchanging, transferring, 
                investing, or safeguarding money or other 
                financial assets.
                  (C) Providing any device or other 
                instrumentality for transferring money or other 
                financial assets.
                  (D) Acting as agent or broker in the 
                placement of annuities contracts or contracts 
                insuring, guaranteeing, or indemnifying against 
                loss, harm, damage, illness, disability, or 
                death.
                  (E) Providing financial, investment, or 
                economic advisory or information services, 
                including advising an investment company (as 
                defined in section 3 of the Investment Company 
                Act of 1940).
                  (F) Issuing or selling instruments 
                representing interests in pools of assets 
                permissible for a bank to hold directly.
                  (G) Arranging, effecting, or facilitating 
                financial transactions for the account of third 
                parties.
                  (H) Underwriting, dealing in, or making a 
                market in securities.
                  (I) Engaging in any activity that was, by 
                regulation or order, permissible for a bank 
                holding company pursuant to section 4(c)(8) of 
                the Bank Holding Company Act of 1956 (as in 
                effect on the day before the date of enactment 
                of the Financial Services Competition Act of 
                1997).
                  (J) Engaging, in the United States, in any 
                activity that--
                          (i) a bank holding company may engage 
                        in outside the United States; and
                          (ii) the Board of Governors of the 
                        Federal Reserve System determined, 
                        under regulations issued pursuant to 
                        section 4(c)(13) of the Bank Holding 
                        Company Act of 1956 (as in effect on 
                        the day before the date of enactment of 
                        the Financial Services Competition Act 
                        of 1997) to be usual in connection with 
                        the transaction of banking or other 
                        financial operations abroad;
                  (K) Owning shares of a company to the extent 
                permissible under section 4(c)(7) of the Bank 
                Holding Company Act of 1956 (as in effect on 
                the day before the date of enactment of the 
                Financial Services Competition Act of 1997).
                  (L) Engaging in any activity that the 
                National Council on Financial Services 
                determines by regulation or order is the 
                functional equivalent of any activity described 
                in 1 or more of subparagraphs (A) through (K).
                  (M) Engaging in any activity that the 
                National Council on Financial Services 
                determines by regulation or order to be 
                financial, or related to a financial activity, 
                having taken into account--
                          (i) the purposes of this title and 
                        the Financial Services Competition Act 
                        of 1997;
                          (ii) changes or reasonably expected 
                        changes in the market in which bank 
                        subsidiaries compete;
                          (iii) changes or reasonable expected 
                        changes in the technology delivering 
                        financial services; and
                          (iv) whether such activity is 
                        necessary or appropriate to allow a 
                        bank and the subsidiaries of a bank 
                        to--
                                  (I) compete effectively with 
                                any company seeking to provide 
                                financial services in the 
                                United States;
                                  (II) use any available or 
                                emerging technological means, 
                                including any application 
                                necessary to protect the 
                                security or efficacy of systems 
                                for the transmission of data or 
                                financial transactions, in 
                                providing financial services; 
                                and
                                  (III) offer customers any 
                                available or emerging 
                                technological means for using 
                                financial services.
          (5) Other definitions.--For purposes of this section, 
        the following definitions shall apply:
                  (A) Financial subsidiary.--The term 
                ``financial subsidiary'' means a company 
                which--
                          (i) is a subsidiary of a national 
                        bank (other than a corporation 
                        organized under section 25A of the 
                        Federal Reserve Act or a corporation 
                        operating under section 25 of such 
                        Act); and
                          (ii) is engaged in a financial 
                        activity pursuant to paragraph (1) that 
                        is not a permissible activity for a 
                        national bank to engage in directly.
                  (B) Subsidiary.--The term ``subsidiary'' has 
                the meaning given to such term in section 2 of 
                the Bank Holding Company Act of 1956.
                  (C) Well capitalized.--The term ``well 
                capitalized'' has the same meaning as in 
                section 38 of the Federal Deposit Insurance Act 
                and, for purposes of this section, the 
                Comptroller shall have exclusive jurisdiction 
                to determine whether a national bank is well 
                capitalized.
                  (D) Well managed.--The term ``well managed'' 
                means--
                          (i) in the case of a bank that has 
                        been examined, unless otherwise 
                        determined in writing by the 
                        Comptroller, the achievement of--
                                  (I) a composite rating of 1 
                                or 2 under the Uniform 
                                Financial Institutions Rating 
                                System (or an equivalent rating 
                                under an equivalent rating 
                                system) in connection with the 
                                most recent examination or 
                                subsequent review of the bank; 
                                and
                                  (II) at least a rating of 2 
                                for management, if that rating 
                                is given; or
                          (ii) in the case of any national bank 
                        that has not been examined, the 
                        existence and use of managerial 
                        resources that the Comptroller 
                        determines are satisfactory.
          (6) Insurance underwriting, merchant banking, and 
        direct investment.--Except as provided in section 
        5136(b)(1)(B) of the Revised Statutes of the United 
        States, no subsidiary of a national bank (other than a 
        corporation organized under section 25A of the Federal 
        Reserve Act or a corporation operating under section 25 
        of such Act) may underwrite noncredit-related 
        insurance, engage in real estate investment or 
        development activities (except to the extent a national 
        bank is specifically authorized by statute to engage in 
        any such activity directly), or engage in merchant 
        banking (as described in section 6(a)(3)(G) of the Bank 
        Holding Company Act of 1956).
          (7) Limited exclusions from community needs 
        requirements for newly acquired depository 
        institutions.--Any depository institution which becomes 
        affiliated with a national bank during the 12-month 
        period preceding the submission of an application to 
        acquire a financial subsidiary and any depository 
        institution which becomes so affiliated after the 
        approval of such application may be excluded for 
        purposes of paragraph (1)(C) during the 12-month period 
        beginning on the date of such acquisition if--
                  (A) the national bank has submitted an 
                affirmative plan to the Comptroller of the 
                Currency to take such actionas may be necessary 
in order for such institution to achieve a ``satisfactory record of 
meeting community credit needs'', or better, during the most next 
examination of the institution; and
                  (B) the plan has been accepted by the 
                Comptroller.
  (b) Capital Deduction Required.--
          (1) In general.--In determining compliance with 
        applicable capital standards--
                  (A) the amount of a national bank's equity 
                investment in a financial subsidiary shall be 
                deducted from the national bank's assets and 
                tangible equity; and
                  (B) the financial subsidiary's assets and 
                liabilities shall not be consolidated with 
                those of the national bank.
          (2) Regulations required.--The Comptroller shall 
        prescribe regulations implementing this subsection.
  (c) Safeguards for the Bank.--A national bank that 
establishes or maintains a financial subsidiary shall assure 
that--
          (1) the bank's procedures for identifying and 
        managing financial and operational risks within the 
        bank and financial subsidiaries of the bank adequately 
        protect the bank from such risks;
          (2) the bank has, for the protection of the bank, 
        reasonable policies and procedures to preserve the 
        separate corporate identity and limited liability of 
        the bank and subsidiaries of the bank; and
          (3) the bank complies with this section.
  (d) National Banks Which Do Not Comply With Requirements of 
This Section.--
          (1) In general.--If the Comptroller determines that a 
        national bank which controls a financial subsidiary, or 
        a depository institution affiliate of such national 
        bank, does not continue to meet the requirements of 
        subsection (a), the Comptroller shall give notice to 
        the bank to that effect, describing the conditions 
        giving rise to the notice.
          (2) Agreement to correct conditions required.--
                  (A) Content of agreement.--Within 45 days of 
                the receipt by a depository institution of a 
                notice given under paragraph (1) (or such 
                additional period as the Comptroller may 
                permit), the depository institution failing to 
                meet the requirements of subsection (a) shall 
                execute an agreement with the appropriate 
                Federal banking agency for such institution to 
                correct the conditions described in the notice.
                  (B) Comptroller may impose limitations.--
                Until the conditions giving rise to the notice 
                are corrected, the Comptroller may impose such 
                limitations on the conduct of the business of 
                the national bank or subsidiary of such bank as 
                the Comptroller determines to be appropriate 
                under the circumstances.
          (3) Failure to correct.--If the conditions described 
        in the notice are not corrected within 180 days after 
        the bank receives the notice, the Comptroller may 
        require, under such terms and conditions as may be 
        imposed by the Comptroller and subject to such 
        extensions of time as may be granted in the discretion 
        of the Comptroller--
                  (A) the national bank to divest control of 
                each subsidiary engaged in an activity that is 
                not permissible for the bank to engage in 
                directly; or
                  (B) each subsidiary of the national bank to 
                cease any activity that is not permissible for 
                the bank to engage in directly.

SEC. 5136B. NATIONAL WHOLESALE FINANCIAL INSTITUTIONS.

  (a) Authorization of the Comptroller Required.--A national 
bank may apply to the Comptroller, on such forms and in 
accordance with such regulations as the Comptroller may 
prescribe, for permission to operate as a national wholesale 
financial institution.
  (b) Regulation.--A national wholesale financial institution 
may exercise, in accordance with such institution's articles of 
incorporation and regulations issued by the Comptroller, all 
the powers and privileges of a national bank formed in 
accordance with section 5133 of the Revised Statutes of the 
United States, subject to the same limitations and restrictions 
imposed under section 9B of the Federal Reserve Act.
  (c) Community Reinvestment Act of 1977.--A national wholesale 
financial institution shall be subject to the Community 
Reinvestment Act of 1977.
  Sec. [5136A.] 5136C. (a) A national bank may not--
          (1) deal in lottery tickets;
          (2) deal in bets used as a means or substitute for 
        participation in a lottery;
          (3) announce, advertise, or publicize the existence 
        of any lottery;
          (4) announce, advertise, or publicize the existence 
        or identity of any participant or winner, as such, in a 
        lottery.
  (b) A national bank may not permit--
          (1) the use of any part of any of its banking offices 
        by any person for any purpose forbidden to the bank 
        under subsection (a), or
          (2) direct access by the public from any of its 
        banking offices to any premises used by any person for 
        any purpose forbidden to the bank under subsection (a).
  (c) As used in this section--
          (1) The term ``deal in'' includes making, taking, 
        buying, selling, redeeming, or collecting.
          (2) The term ``lottery'' includes any arrangement 
        whereby three or more persons (the ``participants'') 
        advance money or credit to another in exchange for the 
        possibility or expectation that one or more but not all 
        of the participants (the ``winners'') will receive by 
        reason of their advances more than the amounts they 
        have advanced, the identity of the winners being 
        determined by any means which includes--
                  (A) a random selection;
                  (B) a game, race, or contest; or
                  (C) any record or tabulation of the result of 
                one or more events in which any participant has 
                no interest except for its bearing upon the 
                possibility that he may become a winner.
          (3) The term ``lottery ticket'' includes any right, 
        privilege, or possibility (and any ticket, receipt, 
        record, or other evidence of any such right, privilege, 
        or possibility) of becoming a winner in a lottery.
  (d) Nothing contained in this section prohibits a national 
bank from accepting deposits or cashing or otherwise handling 
checks or other negotiable instruments, or performing other 
lawful banking services for a State operating a lottery, or for 
an officer or employee of that State who is charged with the 
administration of the lottery.
  (e) The Comptroller of the Currency shall issue such 
regulations as may be necessary to the strict enforcement of 
this section and the prevention of evasions thereof.
          * * * * * * *
                              ----------                              


                       FEDERAL HOME LOAN BANK ACT

          * * * * * * *

                              definitions

  Sec. 2. As used in this Act--
          (1) * * *
          * * * * * * *
          [(3) The term ``State'' includes the District of 
        Columbia, Guam, Puerto Rico, and the Virgin Islands of 
        the United States.]
          (3) The term ``State'' in addition to the states of 
        the United States, includes the District of Columbia, 
        Guam, Puerto Rico, the United States Virgin Islands, 
        American Samoa, and the Commonwealth of the Northern 
        Mariana Islands.
          * * * * * * *
          [(9) Savings association.--The term ``savings 
        association'' has the meaning given to such term in 
        section 3 of the Federal Deposit Insurance Act.]
          [(10)] (9) Chairperson.--The term ``Chairperson'' 
        means the Chairperson of the Board.
          [(11)] (10) Secretary.--The term ``Secretary'' means 
        the Secretary of Housing and Urban Development.
          [(12)] (11) Insured depository institution.--The term 
        ``insured depository institution'' means--
                  (A) an insured depository institution (as 
                defined in section 3 of the Federal Deposit 
                Insurance Act), and
                  (B) except as used in sections 21A and 21B, 
                an insured credit union (as defined in section 
                101 of the Federal Credit Union Act).
          * * * * * * *

SEC. 2A. FEDERAL HOUSING FINANCE BOARD.

  (a) * * *
  (b) Management.--
          (1) In general.--The management of the Board shall be 
        vested in a Board of Directors consisting of 5 
        directors as follows:
                  (A) The Secretary of the Treasury (or the 
                Secretary of the Treasury's designee), who 
                shall serve without additional compensation.
                  [(A)] (B) The Secretary who shall serve 
                without additional compensation.
                  [(B) Four] (C) 3 citizens of the United 
                States, appointed by the President, by and with 
                the advice and consent of the Senate, each of 
                whom shall hold office for a term of 7 years.
          * * * * * * *

SEC. 2B. POWERS AND DUTIES.

  (a) General Powers.--The Board shall have the following 
powers:
          (1) To supervise the Federal Home Loan Banks and to 
        promulgate and enforce such regulations and orders as 
        are necessary from time to time to carry out the 
        provisions of this Act[.]; and to have the same powers, 
        rights, and duties to enforce this Act with respect to 
        the Federal home loan banks and the senior officers and 
        directors of such banks as the Office of Federal 
        Housing Enterprise Oversight has over the Federal 
        housing enterprises and the senior officers and 
        directors of such enterprises under the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992.
          * * * * * * *
  (b) Staff.--
          [(1) Board staff.--]Subject to title IV of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989, the Board may employ, direct, 
        and fix the compensation and number of employees, 
        attorneys, and agents of the Federal Housing Finance 
        Board, except that in no event shall the Board delegate 
        any [function to any employee, administrative unit] 
        function to any employee or administrative unit of any 
        Bank, or joint office of the Federal Home Loan Bank 
        System. [The prohibition contained in the preceding 
        sentence shall not apply to the delegation of 
        ministerial functions including issuing consolidated 
        obligations pursuant to section 11(b).] In directing 
        and fixing such compensation, the Board shall consult 
        with and maintain comparability with the compensation 
        at the Federal bank regulatory agencies. Such 
        compensation shall be paid without regard to the 
        provisions of other laws applicable to officers or 
        employees of the United States, except the Chairperson 
        and other Directors shall be compensated as prescribed 
        in sections 5314 and 5315 of title 5, United States 
        Code, respectively.
          [(2) Abolition of joint offices.--The joint or 
        collective offices of the Federal Home Loan Bank 
        System, except for the Office of Finance, are hereby 
        abolished.]
          * * * * * * *

                        federal home loan banks

  Sec. 3. As soon as practicable the Board shall divide [the 
continental United States, Puerto Rico, the Virgin Islands, 
Guam, andthe Territories of Alaska and Hawaii into not less 
than eight] the States into not less than 1 nor more than twelve 
districts. Such districts shall be apportioned with due regard to the 
convenience and customary course of business of the institutions 
eligible to and likely to subscribe for stock of a Federal Home Loan 
Bank to be formed under this Act, but no such district shall contain a 
fractional part of any State. The districts thus created may be 
readjusted and new districts may from time to time be created by the 
Board, not to exceed twelve in all. Such districts shall be known as 
Federal Home Loan Bank districts and may be designated by number. As 
soon as practicable the Board shall establish, in each district, a 
Federal Home Loan Bank at such city as may be designated by the Board. 
Its title shall include the name of the city at which it is 
established.

             eligibility of members and nonmember borrowers

  Sec. 4. (a) Criteria for Eligibility.--
          (1) * * *
          * * * * * * *
          (3) Eligibility requirements for community financial 
        institutions.--The requirements of paragraph (2) (other 
        than subparagraph (B) of such paragraph) shall not 
        apply to any FDIC-insured depository institution which 
        has total assets of less than $500,000,000.
          * * * * * * *

SEC. 5. THE OFFICE OF FINANCE.

  (a) Operation.--The Federal home loan banks shall operate 
jointly an office of finance (hereafter in this section 
referred to as the ``Office'') to issue the notes, bonds, and 
debentures of the Federal home loan banks in accordance with 
this Act.
  (b) Powers.--Subject to the other provisions of this Act and 
such safety and soundness regulations as the Finance Board may 
prescribe, the Office shall be authorized by the Federal home 
loan banks to act as the agent of such banks to issue Federal 
home loan bank notes, bonds and debentures pursuant to section 
11 of this Act on behalf of the banks.
  (c) Central Board of Directors.--
          (1) Establishment.--The Federal home loan banks shall 
        establish a central board of directors of the Office to 
        administer the affairs of the Office in accordance with 
        the provisions of this Act.
          (2) Composition of Board.--Each Federal home loan 
        bank shall annually select 1 individual who, as of the 
        time of the election, is an officer or director of such 
        bank to serve as a member of the central board of 
        directors of the Office.
  (d) Status.--Except to the extent expressly provided in this 
Act, the Office shall be treated as a Federal home loan bank 
for purposes of any law.

     [capital of federal home loan banks and subscriptions thereto

  [Sec. 6. (a) The capital stock of each Federal Home Loan Bank 
shall be divided into shares of a par value of $100 each. The 
minimum capital stock shall be issued at par. Stock issued 
thereafter shall be issued at such price not less than par as 
may be fixed by the Board.
  [(b)(1) The original stock subscription of each institution 
eligible to become a member under section 4 shall be an amount 
equal to 1 per centum of the subscriber's aggregate unpaid loan 
principal, but not less than $500. The bank shall annually, as 
of the close of the calendar year, adjust, at such time and in 
such manner and upon such terms and conditions as the Board may 
by regulations or otherwise prescribe, the amount of stock held 
by each member so that such member shall have invested in the 
stock of the Federal Home Loan Bank at least an amount 
calculated in the manner provided in the next preceding 
sentence (but not less than $500). If the bank finds that the 
investment of any member in stock is greater than that required 
under this subsection it may, unless prohibited by said Board 
or by the provisions of paragraph (2) of this subsection, in 
its discretion and upon application of such member retire the 
stock of such member in excess of the amount so required. Said 
Board, in its discretion, may, by regulations or otherwise, 
provide for adjustments in amounts of stock to be issued or 
retired in order that stock may be issued or retired only in 
entire shares.
  [(2) Notwithstanding any other provision of this subsection, 
no action shall be taken by any bank with respect to any member 
pursuant to any of the foregoing provisions of this subsection 
if the effect of such action would be to cause the aggregate 
outstanding advances, within the meaning of the last sentence 
of subsection (c) of section 10 of this Act or within the 
meaning of regulations of the Board defining such term for the 
purposes of this sentence, made by such bank to such member to 
exceed twenty times the amounts paid in by such member for 
outstanding capital stock held by such member.
  [(3) Except as provided in subsection (i), upon retirement of 
stock of any member the bank shall pay such member for the 
stock retired an amount equal to the par value of such stock, 
or, at the election of the bank, the whole or any part of the 
payment which would otherwise be so made shall be credited upon 
the indebtedness of the member to the bank. In either such 
event, stock equal in par value to the amount of the payment or 
credit, or both, as the case may be, shall be canceled.
  [(4) For the purposes of this subsection, the term 
``aggregate unpaid loan principal'' means the aggregate unpaid 
principal of a subscriber's or member's home mortgage loans, 
home-purchase contracts, and similar obligations.
  [(5) The Board, by regulations or otherwise, may require each 
member to submit such reports and information as said Board, in 
its discretion, may determine to be necessary or appropriate 
for the purposes of this subsection.
  [(c) Stock subscriptions other than by the United States 
shall be paid for in cash, and shall be paid for at the time of 
application therefor, or, at the election of the subscriber, in 
installments, but not less than one-fourth of the total amount 
payable shall be paid at the time of filing application, and a 
further sum of not less than one-fourth of such total shall 
have been paid at the end of each succeeding period of four 
months.
  [(d) Stock subscribed for otherwise than by the United 
States, and the right to the proceeds thereof, shall not be 
transferred or hypothecated except as hereinafter provided and 
the certificates therefor shall so state.
  [(e) Any member other than a Federal savings and loan 
association may withdraw from membership in a Federal Home Loan 
Bank six months after filing with the Board written notice of 
intention so to do, and the Board may, after hearing, remove 
any member from membership, if, in the opinion of the Board, 
such member (i) has failed to comply with any provision of this 
Act or regulation of the Board made pursuant thereto; (ii) is 
insolvent: Provided, That any member of a bank which is a 
building and loan association, savings and loan association, 
cooperative bank, or homestead association shall be deemed 
insolvent if the assets of such member are less than its 
obligations to its creditors and others, including the holders 
of its withdrawable accounts; or (iii) has a management or 
home-financing policy of a character inconsistent with sound 
and economical home financing or with the purposes of this Act. 
If any member's membership in a Federal Home Loan Bank is 
terminated, the indebtedness of such member to the Federal Home 
Loan Bank shall be liquidated in an orderly manner (as 
determined by the Federal Home Loan Bank), and upon completion 
of such liquidation, the capital stock in the Federal Home Loan 
Bank owned by such member shall be surrendered and canceled. 
Any such liquidation shall be deemed a prepayment of any such 
indebtedness, and shall be subject to any penalties or other 
fees applicable to such prepayment. Upon the liquidation of 
such indebtedness such member shall be entitled to the return 
of its collateral, and, upon surrender and cancellation of such 
capital stock, the member shall receive a sum equal to its cash 
paid subscriptions for the capital stock surrendered, except 
that if at any time the Board finds that the paid-in capital of 
a Federal Home Loan Bank is or is likely to be impaired as a 
result of losses in or depreciation of the assets held, the 
Federal Home Loan Bank shall on the order of the Board withhold 
from the amount to be paid in retirement of the stock a pro 
rata share of the amount of such impairment as determined by 
the Board.
  [(f) A Federal Home Loan Bank may, with the approval of the 
Board, permit the disposal of stock to another member, or to an 
institution eligible to become a member, but only to enable 
such an institution to become a member.
  [(g) All stock of any Federal Home Loan Bank shall share in 
dividend distributions without preference.
  [(h) Notwithstanding any other provision of this Act, an 
institution which withdraws from membership may acquire 
membership in any Federal Home Loan Bank only after the 
expiration of a period of 10 years thereafter, except where 
such withdrawal is aconsequence of a transfer of membership on 
a non-interrupted basis between banks or in connection with obtaining a 
charter as a Federal savings association (as defined in section 3 of 
the Federal Deposit Insurance Act).]

SEC. 6. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

  (a) Capital Structure Plan.--On or before January 1, 1999, 
the board of directors of each Federal home loan bank shall 
submit for Finance Board approval a plan establishing and 
implementing a capital structure for such bank which--
          (1) the board of directors determines is the best 
        suited for the condition and operation of the bank and 
        the interests of the shareholders of the bank;
          (2) meets the requirements of subsection (b); and
          (3) meets the minimum capital standards and 
        requirements established under subsection (c) and any 
        regulations prescribed by the Finance Board pursuant to 
        such subsection.
  (b) Contents of Plan.--The capital structure plan of each 
Federal Home Loan Bank shall meet the following requirements:
          (1) Stock purchase requirements.--
                  (A) In general.--Each capital structure plan 
                of a Federal home loan bank shall require the 
                shareholders of the bank to maintain an 
                investment in the stock of the bank in amount 
                not less than--
                          (i) a minimum percentage of the total 
                        assets of the shareholder; and
                          (ii) a minimum percentage of the 
                        outstanding advances from the bank to 
                        the shareholder.
                  (B) Minimum percentage levels.--The minimum 
                percentages established pursuant to 
                subparagraph (A) shall be set at levels 
                sufficient to meet the bank's minimum capital 
                requirements established by the Finance Board 
                under subsection (c).
                  (C) Maximum asset based capital 
                requirement.--The asset-based capital 
                requirement applicable to any shareholder of a 
                Federal home loan bank in any year shall not 
                exceed the lesser of--
                          (i) 0.6 percent of a shareholder's 
                        total assets at the close of the 
                        preceding year; or
                          (ii) $300,000,000.
                  (D) Maximum advance-based requirement.--The 
                advance-based capital requirement applicable to 
                any shareholder of a Federal home loan bank 
                shall not exceed 6 percent of the total 
                outstanding advances from the bank to the 
                shareholder.
                  (E) Minimum stock purchase requirement 
                authorized.--A capital structure plan may 
                establish a minimum dollar amount of stock of a 
                Federal home loan bank in which a shareholder 
                shall be required to invest.
          (2) Adjustments to stock purchase requirements.--The 
        capital structure plan adopted by each Federal home 
        loan bank shall impose a continuing obligation on the 
        board of directors of the bank to review and adjust as 
        necessary member stock purchase requirements in order 
        to ensure that the bankremains in compliance with 
applicable minimum capital levels established by the Finance Board.
          (3) Transition rule for stock purchase 
        requirements.--
                  (A) In general.--A capital structure plan may 
                allow shareholders who were members of a 
                Federal home loan bank on the date of the 
                enactment of the Financial Services Competition 
                Act of 1997 to come into compliance with the 
                asset-based stock purchase requirement 
                established under paragraph (1) during a 
                transition period established under the plan of 
                not more than 3 years, if such requirement 
                exceeds the asset-based stock purchase 
                requirement in effect on such date of 
                enactment.
                  (B) Interim purchase requirements.--A capital 
                structure plan may establish interim asset-
                based stock purchase requirements applicable to 
                members referred to in subparagraph (A) during 
                a transition period established under 
                subparagraph (A).
          (4) Classes of stock.--
                  (A) In general.--Each capital structure plan 
                shall afford each shareholder of a Federal home 
                loan bank the option of meeting the 
                shareholder's stock purchase requirements 
                through the purchase of any combination of 
                Class A or Class B stock.
                  (B) Class a stock.--Class A stock shall be 
                stock of a Federal home loan bank that shall be 
                redeemed in cash and at par by the bank no 
                later than 12 months following submission of a 
                written notice by a shareholder of the 
                shareholder's intention to divest all shares of 
                stock in the bank.
                  (C) Class b stock.--Class B stock shall be 
                stock of a Federal home loan bank that shall be 
                redeemed in cash and at par by the bank no 
                later than 5 years following submission of a 
                written notice by a shareholder of the 
                shareholder's intention to divest all shares of 
                stock in the bank.
                  (D) Rights requirement.--The Class B stock of 
                a Federal home loan bank may receive a dividend 
                premium over that paid on Class A stock, and 
                may have preferential voting rights in the 
                election of Federal home loan bank directors.
                  (E) Lower stock purchase requirements for 
                class b stock.--A capital structure plan may 
                provide for lower stock purchase requirements 
                with respect to those shareholder's that elect 
                to purchase Class B stock in a manner that is 
                consistent with meeting the bank's own minimum 
                capital requirements as established by the 
                Finance Board.
                  (F) No other classes of stock permitted.--No 
                class of stock other than the Class A and Class 
                B stock described in subparagraphs (B) and (C) 
                may be issued by a Federal home loan bank.
          (5) Limited transferability of stock.--Each capital 
        structure plan shall provide that any equity securities 
        issued by the bank shall be available only to, held 
        only by, and tradable only among shareholders of the 
        bank.
  (c) Capital Standards.--
          (1) In general.--The Finance Board shall prescribe, 
        by regulation, uniform capital standards applicable to 
        each Federal home loan bank which shall include--
                  (A) a leverage limit in accordance with 
                paragraph (2); and
                  (B) a risk-based capital requirement in 
                accordance with paragraph (3).
          (2) Minimum leverage limit.--The leverage limit 
        established by the Finance Board shall require each 
        Federal home loan bank to maintain total capital in an 
        amount not less than 5 percent of the total assets of 
        the bank. In determining compliance with the minimum 
        leverage ratio, the amount of retained earnings and the 
        paid-in value of Class B stock, if any, shall be 
        multiplied by 1.5 and such higher amount shall be 
        deemed to be capital for purposes of meeting the 5 
        percent minimum leverage ratio.
          (3) Risk-based capital standard.--The risk-based 
        capital requirement shall be composed of the following 
        components:
                  (A) Capital sufficient to meet the credit 
                risk to which a Federal home loan bank is 
                subject, based on an amount which is not less 
                than the amount of tier 1, risk-based capital 
                required by regulations prescribed, or 
                guidelines issued under section 38 of the 
                Federal Deposit Insurance Act for a well 
                capitalized insured depository institution.
                  (B) Capital sufficient to meet the interest 
                rate risk to which a Federal home loan bank is 
                subject, based on an interest rate stress test 
                applied by the Finance Board that rigorously 
                tests for changes in interest rates, rate 
                volatility, and changes in the shape of the 
                yield curve.
  (d) Redemption of Capital.--
          (1) In general.--Any shareholder of a Federal home 
        loan bank shall have the right to withdraw the 
        shareholder's membership from a Federal home loan bank 
        and to redeem the shareholder's stock in accordance 
        with the redemption rights associated with the class of 
        stock the shareholder holds, if--
                  (A) such shareholder has filed a written 
                notice of an intention to redeem all such 
                shares; and
                  (B) the shareholder has no outstanding 
                advances from any Federal home loan bank at the 
                time of such redemption.
          (2) Partial redemption.--A shareholder who files 
        notice of intention to redeem all shares of stock in a 
        Federal home loan bank may redeem not more than 1/2 of 
        all such shares, in cash and at par, 6 months before 
        the date by which the bank is required to redeem such 
        stock pursuant to subparagraph (B) or (C) of subsection 
        (b)(4).
          (3) Divestiture.--The board of directors of any 
        Federal home loan bank may, after a hearing, order the 
        divestiture by any shareholder of all ownership 
        interests of such shareholder in the bank, if--
                  (A) in the opinion of the board of directors, 
                such shareholder has failed to comply with a 
                provision of this Act or any regulation 
                prescribed under this Act; or
                  (B) the shareholder has been determined to be 
                insolvent, or otherwise subject to the 
                appointment of a conservator, receiver, or 
                other legal custodian, by a State or Federal 
                authority with regulatory and supervisory 
                responsibility for such shareholder.
          (4) Retirement of excess stock.--Any shareholder 
        may--
                  (A) retire shares of Class A stock or, at the 
                option of the shareholder, shares of Class B 
                stock, or any combination of Class A and Class 
                B stock, that are excess to the minimum stock 
                purchase requirements applicable to the 
                shareholder; and
                  (B) receive from the Federal home loan bank a 
                prompt payment in cash equal to the par value 
                of such stock.
          (5) Impairment of capital.--If the Finance Board or 
        the board of directors of a Federal home loan bank 
        determines that the paid-in capital of the bank is, or 
        is likely to be, impaired as a result of losses in or 
        depreciation of the assets of the bank, the Federal 
        home loan bank shall withhold that portion of the 
        amount due any shareholder with respect to any 
        redemption or retirement of any class of stock which 
        bears the same ratio to the total of such amount as the 
        amount of the impaired capital bears to the total 
        amount of capital allocable to such class of stock.
          (6) Policies.--Subject to the requirements of this 
        section, the board of directors of each Federal home 
        loan bank shall promptly establish policies, consistent 
        with this Act, governing the capital stock of such bank 
        and other provisions of this section.

                          management of banks

  Sec. 7. [(a) The management of each Federal Home Loan Bank 
shall be vested in a board of fourteen directors, eight of whom 
shall be elected by the members as hereinafter provided in this 
section and six of whom shall be appointed by the Board 
referred to in section 2A, all of whom shall be citizens of the 
United States and bona fide residents of the district in which 
such bank is located: Provided, That in any district which 
includes five or more States the Board may by regulation 
increase the elective directors to a number not exceeding 
thirteen and may increase the appointive directors to a number 
not exceeding three-fourths the number of elective directors: 
Provided further, That, if at any time the number of elective 
directors in the case of any district is not at least equal to 
the number of States in such district the Board shall exercise 
the authority conferred by the next preceding proviso so as to 
increase such elective directors to a number at least equal to 
the number of States in such district. At least 2 of the 
Federal Home Loan Bank directors who are appointed by the Board 
shall be representatives chosen from organizations with more 
than a 2-year history of representing consumer or community 
interests on banking services, credit needs, housing, or 
financial consumer protections. No Federal Home Loan Bank 
director who is appointed pursuant to this subsection may, 
during such Bank director's term of office, serve as an officer 
of any Federal Home Loan Bank or adirector or officer of any 
member of a Bank, or hold shares, or any other financial interest in, 
any member of a Bank.
  [(b) Each elective directorship shall be designated by the 
Board as representing the members located in a particular 
State, and shall be filled by a person who is an officer or 
director of a member located in that State, each of which 
members shall be entitled to nominate an eligible person for 
such directorship, and such office shall be filled from such 
nominees by a plurality of the votes which such members may 
cast in an election held for the purpose of filling such 
office, in which election each such member may cast for such 
office a number of votes equal to the number of shares of stock 
in such bank required by this Act to be held by such member at 
the end of the calendar year next preceding the election, as 
determined pursuant to regulation of the Board, but not in 
excess of the average number of shares of stock in such bank 
required by this Act to be held at the end of such calendar 
year by the respective members of such bank located in such 
State, as so determined. No person who is an officer or 
director of a member that fails to meet any applicable capital 
requirement is eligible to hold the office of Federal Home Loan 
Bank director. As used in this subsection and in subsection (c) 
of this section, the term ``member'' means a member of a 
Federal home loan bank which was a member of such bank at the 
end of such calendar year.
  [(c) The number of elective directorships designated as 
representing the members located in each separate State in a 
bank district shall be determined by the Board in the 
approximate ratio of the percentage of the required stock, as 
determined pursuant to regulation of the Board, of the members 
located in that State at the end of the calendar year next 
preceding the date of the election to the total required stock, 
as so detemined, of all members of such bank at the end of such 
year, except that in the case of each State such number shall 
not be less than one and shall not be more than six. 
Notwithstanding any other provision of this section, if at any 
time the number of elective directorships so designated as 
representing the members located in any State would not be at 
least equal to the total number of elective directorships 
which, on December 31, 1960, were filled by officers or 
directors of members whose principal places of business were 
located in such State, the Board shall add to the board of 
directors of the bank of the district in which such State is 
located such number of elective directorships, and shall so 
designate the directorship or directorships thus added, that 
the number of elective directorships designated as representing 
the members located in such State will equal said total number. 
Any elective directorship so added shall exist only until the 
expiration of its first term. The Board shall, with respect to 
each member of a Federal home loan bank, designate the State in 
the district of such bank in which such member shall, for the 
purposes of this subsection and subsection (b) of this section, 
be deemed to be located, and may from time to time change any 
such designation, but if the principal place of business of any 
such member is located in a State of such district it shall be 
the duty of the Board to designate such State as the State in 
which such member shall, for said purposes, be deemed to be 
located. As used in the second sentence of this subsection, the 
term ``total number of elective directorships'' means the total 
number of elective directorships on the board of directors of 
the bank of the district in which such State was located on 
December 31, 1960, and the term ``members'' where used for the 
second time in such sentence means members of such bank.]
  (a) The management of each Federal home loan bank shall be 
vested in a board of 15 directors, 9 of whom shall be elected 
by the members in accordance with this section, 6 of whom shall 
be appointed by the Board referred to in section 2A, and all of 
whom shall be citizens of the United States and bona fide 
residents of the district in which such bank is located. At 
least 2 of the Federal home loan bank directors who are 
appointed by the Board shall be representatives chosen from 
organizations with more than a 2-year history of representing 
consumer or community interests on banking services, credit 
needs, housing, or financial consumer protections. No Federal 
home loan bank director who is appointed pursuant to this 
subsection may, during such bank director's term of office, 
serve as an officer of any Federal home loan bank or a director 
or officer of any member of a bank, or hold shares, or any 
other financial interest in, any member of a bank.
  (b) The elective directors shall be divided into three 
classes, designated as classes A, B, and C, as nearly equal in 
number as possible. Each directorship shall be filled by a 
person who is an officer or director of a member located in 
that bank's district. Each class shall represent members of 
similar asset size, and the Board shall, to the maximum extent 
possible, seek to achieve geographic diversity. The Finance 
Board shall establish the minimum and maximum asset size for 
each class. Any member shall be entitled to nominate and elect 
eligible persons for its class of directorship; such offices 
shall be filled from such nominees by a plurality of the votes 
which members of each class may cast for nominees in their 
corresponding class of directors in an election held for the 
purpose of filling such offices. Each member shall be permitted 
to cast one vote for each share of Federal home loan bank stock 
owned by that member. No person who is an officer or director 
of a member that fails to meet any applicable capital 
requirement is eligible to hold the office of Federal Home Loan 
Bank director. As used in this subsection, the term ``member'' 
means a member of a Federal home loan bank which was a member 
of such Bank as of a record date established by the Bank.
  [(d) The term of each elective directorship shall be two 
years and the term of each appointive directorship shall be 
four years. If any person, before or after, or partly before 
and partly after, the date of the enactment of this sentence, 
has been elected to each of three consecutive full terms as an 
elective director of a Federal home loan bank in any elective 
directorship or elective directorships and has served for all 
or part of each of said terms, such person shall not be 
eligible for election to an elective directorship of such bank 
for a term which begins earlier than two years after the 
expiration of the last expiring of said three terms.] (c) The 
term of each elective directorship and each appointive 
directorship shall be 3 years. No director serving for three 
consecutive terms, nor any other officer, director or that 
member or any affiliated depository institution, shall be 
eligible for another term earlier than 3 years afterthe 
expiration of the last expiring of said three year terms. 3 elected 
directors of different classes as specified by the Finance Board shall 
be elected by ballot annually. The Board is hereby authorized to 
prescribe such rules and regulations as it may deem necessary or 
appropriate for the nomination and election of directors of Federal 
home loan banks, including, without limitation on the generality of the 
foregoing, rules and regulations with respect to the breaking of ties 
and with respect to the inclusion of more than one directorship on a 
single ballot and the methods of voting and of determining the results 
of voting in such cases.
  [(e) Each term, outstanding on the effective date of the 
amendment to this section abolishing the division of elective 
directors into classes, of an elective or appointive 
directorship then existing shall continue until its original 
date of expiration, and any elective or appointive directorship 
in existence on said date shall continue to exist to the same 
extent as if it had been established by or under this section 
on or after said date. The Board in its discretion may shorten 
the next succeeding term of any such elective directorship to 
one year, and may fill such term by appointment. The term 
``States'' or ``State'' as used in this section shall mean the 
States of the Union, the District of Columbia, and the 
Commonwealth of Puerto Rico. The Board, by regulation or 
otherwise, may add an additional elective directorship to the 
board of directors of the bank of any district in which the 
Commonwealth of Puerto Rico is included at the time such 
directorship is added and which does not then include five or 
more States, may fix the commencement and the duration, which 
shall not exceed two years, of the initial term of any 
directorship so added, and may fill any such initial term by 
appointment: Provided, That (1) any directorship added pursuant 
to the foregoing provisions of this sentence shall be 
designated by the Board, pursuant to subsection (b) of this 
section, as representing the members located in the 
Commonwealth of Puerto Rico, (2) such designation of such 
directorship shall not be changed, and (3) such directorship 
shall automatically cease to exist if and when the Commonwealth 
of Puerto Rico ceases to be included in such district.]
  (d) Transition Provision.--In the 1st election after the date 
of the enactment of the Financial Services Competition Act of 
1997, 3 directors shall be elected in each of the 3 classes of 
elective directorship. The Finance Board may, in the 1st 
election after such date of enactment, designate the terms of 
each elected director in each class, not to exceed 3 years, to 
assure that, in each subsequent election, 3 directors from 
different classes of elective directorships are elected each 
year.
  [(f)] (e) Vacancies.--
          (1) * * *
          * * * * * * *
  [(g)] (f) The Board shall designate one of the directors of 
each bank to be chairperson, and one to be vice chairperson, of 
the board of directors of such bank.
  [(h) If at any time when nominations are required members 
shall hold less than $1,000,000 of the capital stock of the 
Federal home loan bank, the Board shall appoint a director or 
directors to fill the place or places for which such 
nominations are required,and the Board may, prior to the filing 
of the certificate mentioned in section 12, appoint directors who shall 
be respectively designated by it as appointive directors and as 
elective directors, in accordance with the provisions of this section.]
  [(i)] (g) Each bank may pay its directors reasonable 
compensation for the time required of them, and their necessary 
expenses, in the performance of their duties, in accordance 
with the resolutions adopted by the such directors[, subject to 
the approval of the board].
  [(j)] (h) Such board of directors shall administer the 
affairs of the bank fairly and impartially and without 
discrimination in favor of or against any member, and shall, 
subject to the provisions hereof, extend to each institution 
authorized to secure advances such advances as may be made 
safely and reasonably with due regard for the claims and 
demands of other institutions, and with due regard to the 
maintenance of adequate credit standing for the Federal Home 
Loan Bank and its obligations.
  [(k)] (i) Indemnification of Directors, Officers, and 
Employees.--The board of directors of each Bank shall determine 
the terms and conditions under which such Bank may indemnify 
its directors, officers, employees or agents.
          * * * * * * *

                     eligibility to secure advances

  Sec. 9. Any member of a Federal Home Loan Bank shall be 
entitled to apply in writing for advances. Such application 
shall be in such form as shall be required by the Federal Home 
Loan Bank [with the approval of the Board]. Such Federal Home 
Loan Bank may at its discretion deny any such application, or[, 
subject to the approval of the Board,] may grant it on such 
conditions as the Federal Home Loan Bank may prescribe.

                          advances to members

  Sec. 10. (a) Each Federal Home Loan Bank is authorized to 
make secured advances to its members upon collateral 
sufficient, in the judgment of the Bank, to fully secure 
advances obtained from the Bank under this section or section 
11(g) of this Act. [All long-term advances] Except as provided 
in the succeeding sentence, all long-term advances shall only 
be made for the purpose of providing funds for residential 
housing finance. Notwithstanding the preceding sentence, long-
term advances may be made to FDIC-insured members which have 
less than $500,000,000 in total assets for the purpose of 
funding small businesses, agriculture, rural development, or 
low-income community development (as defined by the Board). A 
Bank, at the time of origination or renewal of a loan or 
advance, shall obtain and maintain a security interest in 
collateral eligible pursuant to one or more of the following 
categories:
          (1) * * *
          * * * * * * *
          (3) [Deposits] Cash or deposits of a Federal Home 
        Loan Bank.
          * * * * * * *
          (5) In the case of any FDIC-insured member which has 
        total assets of less than $500,000,000, secured loans 
        for small business, agriculture, rural development, or 
        low-income community development, or securities 
        representing a whole interest in such secured loans.
          [(5)] (6) Paragraphs (1) through (4) shall not affect 
        the ability of any Federal Home Loan Bank to take such 
        steps as it deems necessary to protect its security 
        position with respect to outstanding advances, 
        including requiring deposits of additional collateral 
        security, whether or not such additional security would 
        be eligible to originate an advance. If an advance 
        existing on the date of enactment of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 
        1989 matures and the member does not have sufficient 
        eligible collateral to fully secure a renewal of such 
        advance, a Bank may renew such advance secured by such 
        collateral as the Bank [and the Board] determines is 
        appropriate. A member that has an advance secured by 
        such insufficient eligible collateral must reduce its 
        level of outstanding advances promptly and prudently in 
        accordance with a schedule determined by the [Board] 
        Bank.
          * * * * * * *
  (c) Such advances shall be made upon the note or obligation 
of the member secured as provided in this section, bearing such 
rate of interest as the [Board] Federal home loan bank may 
approve or determine, and the Federal Home Loan Bank shall have 
a lien upon and shall hold the stock of such member as further 
collateral security for all indebtedness of the member to the 
Federal Home Loan Bank. [At no time shall the aggregate 
outstanding advances made by any Federal Home Loan Bank to any 
member exceed twenty times the amounts paid in by such member 
for outstanding capital stock held by it exceed twenty times 
the value of the security required to be deposited under 
section 6(e).]
  (d) The institution applying for an advance shall enter into 
a primary and unconditional obligation to pay off all advances, 
together with interest and any unpaid costs and expenses in 
connection therewith according to the terms under which they 
were made, in such form as shall meet the requirements of the 
bank [and the approval of the Board]. The bank shall reserve 
the right to require at any time, when deemed necessary for its 
protection, deposits of additional collateral security or 
substitutions of security by the borrowing institution, and 
each borrowing institution shall assign additional or 
substituted security when and as so required. [Subject to the 
approval of the Board, any] Any Federal Home Loan Bank shall 
have power to sell to any other Federal Home Loan Bank, with or 
without recourse, any advance made under the provisions of this 
Act, or to allow to such bank a participation therein, and any 
other Federal Home Loan Bank shall have power to purchase such 
advance or to accept a participation therein, together with an 
appropriate assignment of security therefor.
  [(e) Qualified Thrift Lender Status.--
          [(1) In general.--A member that is not a qualified 
        thrift lender may only receive an advance if it holds 
        stock in its Federal Home Loan Bank at the time it 
        receives that advance in an amount equal to at least--
                  [(A) 5 percent of that member's total 
                advances, divided by
                  [(B) such member's actual thrift investment 
                percentage.
        Such members that are not qualified thrift lenders may 
        only apply for advances under this section for the 
        purpose of obtaining funds for housing finance.
          [(2) Priority.--The Board, by regulation, shall 
        establish a priority for advances to members that are 
        qualified thrift lenders. The aggregate amount of the 
        advances by the Federal Home Loan Bank System to 
        members that are not qualified thrift lenders shall not 
        exceed 30 percent of the total advances of the Federal 
        Home Loan Bank System.
          [(3) Minimum stock purchase requirement for 
        membership.--Each member of a Federal Home Loan Bank 
        shall, at a minimum, purchase and maintain stock in its 
        Federal Home Loan Bank in the amount that would be 
        required under section 6(b) if at least 30 percent of 
        such member's assets were home mortgage loans.
          [(4) Exceptions.--Paragraphs (1) and (2) of this 
        subsection do not apply to--
                  [(A) a savings bank as defined in section 3 
                of the Federal Deposit Insurance Act; or
                  [(B) a Federal savings association in 
                existence as a Federal savings association on 
                the date of enactment of the Financial 
                Institutions Reform, Recovery, and Enforcement 
                Act of 1989--
                          [(i) that was chartered as a savings 
                        bank or cooperative bank prior to 
                        October 15, 1982; or
                          [(ii) that acquired its principal 
                        assets from an institution which was 
                        chartered prior to October 15, 1982, as 
                        a savings bank or cooperative bank 
                        under State law.
          [(5) Definitions.--As used in this subsection--
                  [(A) Savings association.--The term ``savings 
                association'' has the same meaning as in 
                section 10(a)(1)(A) of the Home Owners' Loan 
                Act.
                  [(B) Qualified thrift lender.--The term 
                ``qualified thrift lender'' has the same 
                meaning as in section 10(m) of the Home Owners' 
                Loan Act.
                  [(C) Actual thrift investment percentage.--
                The term ``actual thrift investment 
                percentage'' has the same meaning as in section 
                10(m) of the Home Owners' Loan Act.]
          * * * * * * *
  [(h) Special Liquidity Advances.--
          [(1) In general.--Subject to paragraph (2), the 
        Federal Home Loan Banks may, upon the request of the 
        Director of the Office of Thrift Supervision, make 
        short-term liquidity advances to a savings association 
        that--
                  [(A) is solvent but presents a supervisory 
                concern because of such association's poor 
                financial condition; and
                  [(B) has reasonable and demonstrable 
                prospects of returning to a satisfactory 
                financial condition.
          [(2) Interest on and security for special liquidity 
        advances.--Any loan by a Federal Home Loan Bank 
        pursuant to paragraph (1) shall be subject to all 
        applicable collateral requirements, including the 
        requirements of section 10(a) of this Act, and shall be 
        at an interest rate no less favorable than those made 
        available for similar short-term liquidity advances to 
        savings associations that do not present such 
        supervisory concern.]
  (h) [Repealed].
  (i) Community Investment Program.--
          (1) * * *
          * * * * * * *
  (j) Affordable Housing Program.--
          (1) In general.--(A) Pursuant to regulations 
        promulgated by the Board, each Bank shall establish an 
        Affordable Housing Program [to subsidize the interest 
        rate on advances] to provide subsidies, including 
        subsidized interest rates on advances to members 
        engaged in lending for long term, low- and moderate-
        income, owner-occupied and affordable rental housing at 
        subsidized interest rates.
                  (B) Subject to such regulations as the 
                Finance Board may prescribe, the board of 
                directors of each Federal home loan bank may 
                approve or disapprove requests from members for 
                Affordable Housing Program subsidies, and may 
                not delegate such authority.
          (2) Standards.--The Board's regulations shall permit 
        Bank members to use [subsidized advances] subsidies, 
        including subsidized advances received from the Banks 
        to--
                  (A) finance homeownership by families with 
                incomes at or below 80 percent of the median 
                income for the area; or
                  [(B) finance the purchase, construction, or 
                rehabilitation of rental housing, at least 20 
                percent of the units of which will be occupied 
                by and affordable for very low-income 
                households for the remaining useful life of 
                such housing or the mortgage term.]
                  (B) finance the purchase, construction or 
                rehabilitation of rental housing if, for a 
                period of at least 15 years, either 20 percent 
                or more of the units in such housing are 
                occupied by and affordable for households whose 
                income is 50 percent or less of area median 
                income (as determined by the Secretary of 
                Housing and Urban Development, and as adjusted 
                for family size); or 40 percent or more of the 
                units in such housing are occupied by and 
                affordable for households whose income is 60 
                percent or less of area median income (as 
                determined by the Secretary of Housing and 
                Urban Development, and as adjusted for family 
                size).
          (3) Priorities for making advances.--In using 
        [advances] subsidies, including subsidized advances 
        authorized under paragraph (1), each Bank member shall 
        give priority to qualified projects such as the 
        following:
                  (A) purchase of homes by families whose 
                income is 80 percent or less of the median 
                income for the area,
                  (B) purchase or rehabilitation of housing 
                owned or held by the United States Government 
                or any agency or instrumentality of the United 
                States; and
                  (C) purchase or rehabilitation of housing 
                sponsored by any nonprofit organization, any 
                State or political subdivision of any State, 
                any local housing authority or State housing 
                finance agency.
          (4) Report.--Each member receiving [advances] 
        subsidies, including subsidized advances under this 
        program shall report annually to the Bank making such 
        [advances] subsidies, including subsidized advances 
        concerning the member's use of [advances] subsidies, 
        including subsidized advances received under this 
        program.
          (5) Contribution to program.--Each Bank shall 
        annually contribute the percentage of its annual net 
        earnings prescribed in the following subparagraphs to 
        support [subsidized advances] subsidies, including 
        subsidized advances through the Affordable Housing 
        Program[:]
                  [(A) In 1990, 1991, 1992, and 1993, 5 percent 
                of the preceding year's net income, or such 
                prorated sums as may be required to assure that 
                the aggregate contribution of all the Banks 
                shall not be less than $50,000,000 for each 
                such year.
                  [(B) In 1994, 6 percent of the preceding 
                year's net income, or such prorated sum as may 
                be required to assure that the aggregate 
                contribution of the Banks shall not be less 
                than $75,000,000 for such year.]
                  [(C) In 1995, and subsequent years,] 10 
                percent of the preceding year's net income, or 
                such prorated sums as may be required to assure 
                that the aggregate contribution of the Banks 
                shall not be less than $100,000,000 for each 
                such year.
          * * * * * * *
          (9) Regulations.--The Federal Housing Finance Board 
        shall promulgate regulations to implement this 
        subsection. Such regulations shall, at a minimum--
                  (A) specify activities eligible to receive 
                [subsidized advances] subsidies, including 
                subsidized advances from the Banks under this 
                program;
                  (B) specify priorities for the use of such 
                [advances] subsidies, including subsidized 
                advances;
                  (C) ensure that [advances] subsidies, 
                including subsidized advances made under this 
                program will be used only to assist projects 
                for which adequate long-term monitoring is 
                available to guarantee that affordability 
                standards and other requirements of this 
                subsection are satisfied;
                  (D) ensure that a preponderance of assistance 
                provided under this subsection is ultimately 
                received by low- and moderate-income 
                households;
                  (E) ensure that subsidies provided by Banks 
                to member institutions under this program are 
                passed on to the ultimate borrower;
                  (F) establish uniform standards for 
                [subsidized advances] subsidies, including 
                subsidized advances under this program and 
                subsidized lending by member institutions 
                supported by such [advances] subsidies, 
                including subsidized advances, including 
                maximum subsidy and risk limitations for 
                different categories of loans made under this 
                subsection; and
                  (G) coordinate activities under this 
                subsection with other Federal or federally-
                subsidized affordable housing activities to the 
                maximum extent possible.
          (10) Other programs.--No provision of this subsection 
        or subsection (i) shall preclude any Bank from 
        establishing additional community investment cash 
        advance programs or contributing additional sums to the 
        Affordable Housing Reserve Fund.
          (11) Advisory council.--Each Bank shall appoint an 
        Advisory Council of 7 to 15 persons, pursuant to a 
        nomination process that is as broad and as 
        participatory as possible, and giving consideration to 
        the size of the District and the diversity of low- and 
        moderate-income housing needs and activities within the 
        District, drawn from a diverse range of community and 
        nonprofit organizations actively involved in providing 
        or promoting low- and moderate-income housing in its 
        district. Representatives of no one group shall 
        constitute an undue proportion of the membership of the 
        Advisory Council. The Advisory Council shall meet with 
        representatives of the board of directors of the Bank 
        quarterly to advise the Bank on low- and moderate-
        income housing programs and needs in the district and 
        on the utilization of the [advances] subsidies, 
        including subsidized advances for these purposes. Each 
        Advisory Council established under this paragraph shall 
        submit to the Board at least annually its analysis of 
        the low-income housing activity of the Bank by which it 
        is appointed.
          (12) Reports to congress.--
                  (A) The Board shall monitor and report 
                annually to the Congress and the Advisory 
                Council for each Bank the support of low-income 
                housing and community development by the Banks 
                and the utilization of [advances] subsidies, 
                including subsidized advances for these 
                purposes.
                  (B) The analyses submitted by the Advisory 
                Councils to the Board under paragraph (11) 
                shall be included as part of the report 
                required by this paragraph.
                  (C) The Comptroller General of the United 
                States shall audit and evaluate the Affordable 
                Housing Program established by this subsection 
                after such program has been operating for 2 
                years. The Comptroller General shall report to 
                Congress on the conclusions of the audit and 
                recommend improvements or modifications to the 
                program.
          (13) Definitions.--For purposes of this subsection--
                  (A) Low- or moderate-income household.--The 
                term ``low- or moderate-income household'' 
                means any household which has an income of 80 
                percent or less of the area median.
                  (B) Very low-income household.--The term 
                ``very low-income household'' means any 
                household that has an income of 50 percent or 
                less of the area median.
                  (C) Low- or moderate-income neighborhood.--
                The term ``low- or moderate-income 
                neighborhood'' means any neighborhood in which 
                51 percent or more of the households are low- 
                or moderate-income households.
                  [(D) Affordable for very-low income 
                households.--For purposes of paragraph (2)(B) 
                the term ``affordable for very-low income 
                households'' means that rents charged to 
                tenants for units made available for occupancy 
                by low-income families shall not exceed 30 
                percent of the adjusted income of a family 
                whose income equals 50 percent of the income 
                for the area (as determined by the Secretary of 
                Housing and Urban Development) with adjustment 
                for family size.]
                  (D) Affordable.--For purposes of paragraph 
                (2)(B), the term ``affordable'' means that the 
                rent with respect to a unit shall not exceed 30 
                percent of the income limitation under 
                paragraph (2)(B) applicable to occupants of 
                such unit.
          * * * * * * *
  Sec. 10b. [(a) In General.--]Each Federal Home Loan Bank is 
authorized to make advances to nonmember mortgagees approved 
under title II of the National Housing Act. Such mortgagees 
must be chartered institutions having succession and subject to 
the inspection and supervision of some governmental agency, and 
whose principal activity in the mortgage field must consist of 
lending their own funds. Such advances shall not be subject to 
the other provisions and restrictions of this Act, but shall be 
made upon the security of insured mortgages, insured under 
title II of the National Housing Act. [Advances made under the 
terms of this section shall be at such rates of interest and 
upon such terms and conditions as shall be determined by the 
Board, but no advance may be for an amount in excess of 90 per 
centum of the unpaid principal of the mortgage loan given as 
security.] Notwithstanding the preceding sentence, if an 
advance is made for the purpose of facilitating mortgage 
lending that benefits individuals and families that meet the 
income requirements set forth in section 142(d) or 143(f) of 
the Internal Revenue Code of 1986, the advance may be 
collateralized as provided in section 10(a) of this Act.
  [(b) Exception.--An advance made to a State housing finance 
agency for the purpose of facilitating mortgage lending that 
benefits individuals and families that meet the income 
requirements set forth in section 142(d) or 143(f) of the 
Internal Revenue Code of 1986, need not be collateralized by a 
mortgage insured under title II of the National Housing Act or 
otherwise, if--
          [(1) such advance otherwise meets the requirements of 
        this subsection; and
          [(2) such advance meets the requirements of section 
        10(a) of this Act, and any real estate collateral for 
        such loan comprises single family or multifamily 
        residential mortgages.]

                   general powers and duties of banks

  Sec. 11. (a) Each Federal Home Loan Bank shall have power, 
subject to rules and regulations prescribed by the Board to 
borrow and give security therefor and to pay interest thereon, 
to issue through the Office of Finance debentures, bonds, or 
other obligations upon such terms and conditions as the [Board] 
board of directors of the bank may approve, and to do all 
things necessary for carrying out the provisions of this Act 
and all things incident thereto.
  [(b) The Board may issue consolidated Federal Home Loan Bank 
debentures which shall be the joint and several obligations of 
all Federal Home Loan Banks organized and existing under this 
Act, in order to provide funds for any such bank or banks, and 
such debentures shall be issued upon such terms and conditions 
as the Board may prescribe. No such debentures shall be issued 
at any time if any of the assets of any Federal Home Loan Bank 
are pledged to secure any debts or subject to any lien, and 
neither the Board nor any Federal Home Loan Bank shall have 
power to pledge any of the assets of any Federal Home Loan 
Bank, or voluntarily to permit any lien to attach to the same 
while any of such debentures so issued are outstanding. The 
debentures issued under this section and outstanding shall at 
no time exceed five times the total paid-in capital of all the 
Federal Home Loan Banks as of the time of the issue of such 
debentures. It shall be the duty of the Board not to issue 
debentures under this section in excess of the notes or 
obligations of member institutions held and secured under 
section 10(a) of this Act by all the Federal Home Loan Banks.
  [(c) At any time that no debentures are outstanding under 
this Act, or in order to refund all outstanding consolidated 
debentures issued under this section, the Board may issue 
consolidated Federal Home Loan Bank bonds which shall be the 
joint and several obligations of all the Federal Home Loan 
Banks, and shall be secured and be issued upon such terms and 
conditions as the Board may prescribe.]
  (b) Issuance of Federal Home Loan Bank Consolidated Bonds.--
          (1) In general.--The Office of Finance may issue 
        consolidated Federal home loan bank bonds and other 
        consolidated obligations on behalf of the banks.
          (2) Joint and several obligation; terms and 
        conditions.--Consolidated obligations issued by the 
        Office of Finance under paragraph (1) shall--
                  (A) be the joint and several obligations of 
                all the Federal home loan banks; and
                  (B) shall be issued upon such terms and 
                conditions as shall be established by the 
                Office of Finance subject to such rules and 
                regulations as the Finance Board may prescribe.
  [(d)] (c) The Board shall have full power to require any 
Federal Home Loan Bank to deposit additional collateral or to 
make substitutions of collateral or to adjust equities between 
the Federal Home Loan Banks.
  [(e)] (d)(1) Each Federal Home Loan Bank shall have power to 
accept deposits made by members of such bank or by any 
otherFederal Home Loan Bank or other instrumentality of the United 
States, upon such terms and conditions as the Board may prescribe, but 
no Federal Home Loan Bank shall transact any banking or other business 
not incidental to activities authorized by this Act.
  (2)(A) * * *
          * * * * * * *
  (C) The Board is authorized, with respect to participation in 
the collection and settlement of any items by Federal Home Loan 
Banks[, and with respect to the collection and settlement 
(including payment by the payor institution) of items payable 
by Federal savings and loan associations and Federal mutual 
savings banks,] to prescribe rules and regulations regarding 
the rights, powers, responsibilities, duties, and liabilities, 
including standards relating thereto, of such Federal Home Loan 
Banks[, associations, or banks] and other parties to any such 
items or their collection and settlement. In prescribing such 
rules and regulations, the Board may adopt or apply, in whole 
or in part, general banking usage and practices, and, in 
instances or respects in which they would otherwise not be 
applicable, Federal Reserve regulations and operating letters, 
the Uniform Commercial Code, and clearinghouse rules.
  [(f)] (e) The Board is authorized and empowered to permit[,,] 
or to require, Federal Home Loan Banks, upon such terms and 
conditions as the Board may prescribe, to rediscount the 
discounted notes of members held by other Federal Home Loan 
Banks, or to make loans to, or make deposits with, such other 
Federal Home Loan Banks, or to purchase any bonds or debentures 
issued under this section.
  [(g)] (f) Each Federal Home Loan Bank shall at all times have 
at least an amount equal to the current deposits received from 
its members invested in (1) obligations of the United States, 
(2) deposits in banks or trust companies, (3) advances with a 
maturity of not to exceed five years which are made to members, 
upon such terms and conditions as the Board may prescribe, and 
(4) advances with a maturity of not to exceed five years which 
are made to members whose creditor liabilities (not including 
advances from the Federal Home Loan Bank) do not exceed 5 per 
centum of their net assets, and which may be made without the 
security of home mortgages or other security, upon such terms 
and conditions as the Board may prescribe.
  [(h)] (g) Such part of the assets of each Federal Home Loan 
Bank (except reserves and amounts provided for in subsection 
(g)) as are not required for advances to members, may be 
invested, to such extent as the bank may deem desirable and 
subject to such regulations, restrictions, and limitations as 
may be prescribed by the Board, in obligations of the United 
States, in obligations, participations, or other instruments of 
or issued by the Federal National Mortgage Association, or the 
Government National Mortgage Association, in mortgages, 
obligations, or other securities which are or ever have been 
sold by the Federal Home Loan Mortgage Corporation pursuant to 
section 305 or section 306 of the Federal Home Loan Mortgage 
Corporation Act, in the stock of the Federal National Mortgage 
Association in stock, obligations, or other securities of any 
small business investment company formed pursuant to section 
301 of the Small Business Investment Act of 1958, forthe 
purpose of aiding members of the Federal Home Loan Bank System, and in 
such securities as fiduciary and trust funds may be invested in under 
the laws of the State in which the Federal Home Loan Bank is located.
  [(i)] (h) The Secretary of the Treasury is authorized in his 
discretion to purchase any obligations issued pursuant to this 
section, as heretofore, now, or hereafter in force and for such 
purpose the Secretary of the Treasury is authorized to use as a 
public-debt transaction the proceeds of the sale of any 
securities hereafter issued under the Second Liberty Bond Act, 
as now or hereafter in force, and the purposes for which 
securities may be issued under the Second Liberty Bond Act, as 
now or hereafter in force, are extended to include such 
purchases. The Secretary of the Treasury may, at any time, 
sell, upon such terms and conditions and at such price or 
prices as he shall determine, any of the obligations acquired 
by him under this subsection. All redemptions, purchases, and 
sales by the Secretary of the Treasury of such obligations 
under this subsection shall be treated as public-debt 
transactions of the United States. The Secretary of the 
Treasury shall not at any time purchase any obligations under 
this paragraph if such purchase would increase the aggregate 
principal amount of his then outstanding holdings of such 
obligations under this paragraph to an amount greater than 
$4,000,000,000. Each purchase of obligations by the Secretary 
of the Treasury under this subsection shall be upon terms and 
conditions as shall be determined by the Secretary of the 
Treasury and shall bear such rate of interest as may be 
determined by the Secretary of the Treasury taking into 
consideration the current average market yield for the month 
preceding the month of such purchase on outstanding marketable 
obligations of the United States.
  [In addition to obligations authorized to be purchased by the 
preceding paragraph, the Secretary of the Treasury is 
authorized to purchase any obligations issued pursuant to this 
section in amounts not to exceed $2,000,000,000. The authority 
provided in this paragraph shall expire August 10, 1975.]
          * * * * * * *
  [(j)] (i) Notwithstanding the provisions of the first 
sentence of section 202 of the Government Corporation Control 
Act, audits by the General Accounting Office of the financial 
transactions of a Federal Home Loan Bank shall not be limited 
to periods during which Government capital has been invested 
therein. The provisions of the first sentence of subsection (d) 
of section 303 of the Government Corporation Control Act shall 
not apply to any Federal Home Loan Bank.
    [(k) Bank Loans to SAIF.--
          [(1) Loans authorized.--Subject to paragraph (3), the 
        Federal Home Loan Banks may, upon the request of the 
        Federal Deposit Insurance Corporation, make loans to 
        such Corporation for the use of the Savings Association 
        Insurance Fund.
          [(2) Liability of the fund.--Any loan by a Federal 
        Home Loan Bank pursuant to paragraph (1) shall be a 
        direct liability of the Savings Association Insurance 
        Fund.
          [(3) Interest on and security for such loans.--Any 
        loan by a Federal Home Loan Bank pursuant to paragraph 
        (1) shall--
                  [(A) bear a rate of interest not less than 
                such Bank's current marginal cost of funds, 
                taking into account the maturities involved; 
                and
                  [(B) be adequately secured.]
  (j) Investments.--Each bank shall reduce its investments to 
those necessary for liquidity purposes, for safe and sound 
operation of the banks, or for housing finance, as administered 
by the Finance Board.
  (k) Prohibition on Other Activities.--
          (1) A Federal home loan bank may not engage in any 
        activity other than the activities authorized under 
        this Act and activities incidental to such authorized 
        activities.
          (2) All activities specified in paragraph (1) are 
        subject to Finance Board approval.

              incorporation of banks, and corporate powers

  Sec. 12. (a) The directors of each Federal Home Loan Bank 
shall, in accordance with such rules and regulations as the 
Board may prescribe, make and file with the Board at the 
earliest practicable date after the establishment of such bank, 
an organization certificate which shall contain such 
information as the Board may require. Upon the making and 
filing of such organization certificate with the Board, such 
bank shall become, as of the date of the execution of its 
organization certificate, a body corporate, and as such and in 
its name as designated by the Board it shall have power to 
adopt, alter, and use a corporate seal; to make contracts; to 
purchase or lease and hold or dispose of such real estate as 
may be necessary or convenient for the transaction of its 
business, but, except with the prior approval of the Board, no 
bank building shall be bought or erected to house any such 
bank, or leased by such bank under any lease for such purpose 
which has a term of more than ten years; to sue and be sued, to 
complain, and to defend, in any court of competent 
jurisdiction, State or Federal; to select, employ, and fix the 
compensation of such officers, employees, attorneys, and agents 
as shall be necessary for the transaction of its business 
[subject to the approval of the Board]; to define their duties, 
require bonds of them and fix the penalties thereof, and to 
dismiss at pleasure such officers, employees, attorneys, and 
agents; [and, by its Board of directors, to prescribe, amend, 
and repeal by-laws, rules, and regulations governing the manner 
in which its affairs may be administered; and the powers 
granted to it by law may be exercised and enjoyed subject to 
the approval of the Board. The president of a Federal Home Loan 
Bank may also be a member of the Board of directors thereof, 
but no other officer, employee, attorney, or agent of such 
bank,] and, by the board of directors of the bank, to 
prescribe, amend, and repeal by-laws governing the manner in 
which its affairs may be administered, consistent with 
applicable statute and regulation, as administered by the 
Finance Board. No officer, employee, attorney or agent of a 
Federal home loan bank who receives compensation, may be a 
member of the Board of directors. Each such bank shall have all 
such incidental powers, not inconsistent with the provisions of 
this Act, as are customary and usual in corporations generally.
          * * * * * * *
  (c) Prohibition on Excessive Compensation.--
          (1) In general.--The Finance Board shall prohibit the 
        Federal home loan banks from providing compensation to 
        any officer, director, or employee that is not 
        reasonable and comparable with the compensation for 
        employment in other similar businesses involving 
        similar duties and responsibilities. However the 
        Finance Board may not prescribe or set a specific level 
        or range of compensation for any officer, director, or 
        employee.
          (2) Regulations.--The Finance Board, by regulation, 
        may provide for the requirements of paragraph (1) to be 
        phased-in over a period not to exceed 3 years.
          (3) Exception for existing contracts.--Paragraph (1) 
        shall not apply to any contract entered into before 
        June 1, 1997.
          * * * * * * *

                         reserves and dividends

  Sec. 16. (a) Each Federal Home Loan Bank may carry to a 
reserve account from time-to-time such portion of its net 
earnings as may be determined by its board of directors. Each 
Federal Home Loan Bank shall establish such additional reserves 
and/or make such charge-offs on account of depreciation or 
impairment of its assets as the Board shall require from time 
to time. No dividends shall be paid except out of [net 
earnings] previously retained earnings or current net earnings 
remaining after reductions for all reserves, chargeoffs, 
purchases of capital certificates of the Financing Corporation, 
and payments relating to the Funding Corporation required under 
this Act have been provided for, other than chargeoffs or 
expenses incurred by a Bank in connection with the purchase of 
capital stock of the Financing Corporation under section 21 or 
payments relating to the Funding Corporation Principal Fund 
under section 21B(e)[, and then only with the approval of the 
Federal Housing Finance Board. Beginning on January 1, 1992, 
the preceding sentence shall be applied by substituting 
``previously retained earnings or current net earnings'' for 
``net earnings''.]. The reserves of each Federal Home Loan Bank 
shall be invested, subject to such regulations, restrictions, 
and limitations as may be prescribed by the Board, in direct 
obligations of the United States, in obligations, 
participations, or other instruments of or issued by the 
Federal National Mortgage Association or the Government 
National Mortgage Association, in mortgages, obligations, or 
other securities which are or ever have been sold by the 
Federal Home Loan Mortgage Corporation pursuant to section 305 
or section 306 of the Federal Home Loan Mortgage Corporation 
Act, and in such securities as fiduciary and trust funds may be 
invested in under the laws of the State in which the Federal 
Home Loan Bank is located.
          * * * * * * *

                        administrative expenses

  Sec. 18. (a) * * *
  (b) Assessments for Administrative Expenses.--
          (1) * * *
          * * * * * * *
          [(4) Transition provision.--On or after the effective 
        date of the Financial Institutions Reform, Recovery, 
        and Enforcement Act of 1989, the Board may levy a one-
        time special assessment on the Banks pursuant to this 
        subsection for the Board's estimated expenses for the 
        transitional period following enactment of such Act, if 
        such assessment is made before the Board's first 
        semiannual assessment under paragraph (1).
  [(c)(1) The Director of the Office of Thrift Supervision, 
utilizing the services of the Administrator of General Services 
(hereinafter referred to as the ``Administrator''), and subject 
to any limitation hereon which may hereafter be imposed in 
appropriation Acts, is hereby authorized--
          [(A) to acquire, in the name of the United States, 
        real property in the District of Columbia, for the 
        purposes set forth in this subsection;
          [(B) to construct, develop, furnish, and equip such 
        buildings thereon and such facilities as in its 
        judgment may be appropriate to provide, to such extent 
        as the Director of the Office of Thrift Supervision may 
        deem advisable, suitable and adequate quarters and 
        facilities for the Director of the Office of Thrift 
        Supervision and the agencies under its administration 
        or supervision;
          [(C) to enlarge, remodel, or reconstruct any of the 
        same; and
          [(D) to make or enter into contracts for any of the 
        foregoing.
  [(2) The Director of the Office of Thrift Supervision may 
require of the respective banks, and they shall make to the 
Director of the Office of Thrift Supervision, such advances of 
funds for the purposes set out in paragraph (1) as in the sole 
judgment of the Director of the Office of Thrift Supervision 
may from time to time be advisable. Such advances shall be in 
addition to the assessments authorized in subsection (b) and 
shall be apportioned by the Director of the Office of Thrift 
Supervision among the banks in proportion to the total assets 
of the respective banks, determined in such manner and as of 
such times as the Director of the Office of Thrift Supervision 
may prescribe. Each such advance shall bear interest at the 
rate of 4 1/2 per centum per annum from the date of the advance 
and shall be repaid by the Director of the Office of Thrift 
Supervision in such installments and over such period, not 
longer than twenty-five years from the making of the advance, 
as the Director of the Office of Thrift Supervision may 
determine. Payments of interest and principal upon such 
advances shall be made from receipts of the Director of the 
Office of Thrift Supervision or from other sources which may 
from time to time be available to the Director of the Office of 
Thrift Supervision. The obligation of the Director of the 
Office of Thrift Supervision to make any such payment shall not 
be regarded as an obligation of the United States. To such 
extent as the Director of the Office of Thrift Supervision may 
prescribe any such obligation shall be regarded as a legal 
investmentfor the purposes of subsections (g) and (h) of 
section 11 and for the purposes of section 16.
  [(3) The plans and designs for such buildings and facilities 
and for any such enlargement, remodeling, or reconstruction 
shall, to such extent as the chairperson of the Director of the 
Office of Thrift Supervision may request, be subject to his 
approval.
  [(4) Upon the making of arrangements mutually agreeable to 
the Director of the Office of Thrift Supervision and the 
Administrator, which arrangements may be modified from time to 
time by mutual agreement between them and may include but shall 
not be limited to the making of payments by the Director of the 
Office of Thrift Supervision and such agencies to the 
Administrator and by the Administrator to the Director of the 
Office of Thrift Supervision, the custody, management, and 
control of such buildings and facilities and of such real 
property shall be vested in the Administrator in accordance 
therewith. Until the making of such arrangements such custody, 
management, and control including the assignment and allotment 
and the reassignment and reallotment of building and other 
space, shall be vested in the Director of the Office of Thrift 
Supervision.
  [(5) Any proceeds (including advances) received by the 
Director of the Office of Thrift Supervision in connection with 
this subsection, and any proceeds from the sale or other 
disposition of real or other property acquired by the Director 
of the Office of Thrift Supervision under this subsection, 
shall be considered as receipts of the Director of the Office 
of Thrift Supervision, and obligations and expenditures of the 
Director of the Office of Thrift Supervision and such agencies 
in connection with this subsection shall not be considered as 
administrative expenses. As used in this subsection, the term 
``property'' shall include interests in property.
  [(6) With respect to its functions under this subsection the 
Director of the Office of Thrift Supervision shall (A) annually 
prepare and submit a budget program as provided in title I of 
the Government Corporation Control Act with regard to wholly 
owned Government corporations, and for purposes of this 
sentence, the terms ``wholly owned Government corporations'' 
and ``Government corporations'', wherever used in such title, 
shall include the Director of the Office of Thrift Supervision, 
and (B) maintain an integral set of accounts which shall be 
audited by the General Accounting Office in accordance with the 
principles and procedures applicable to commercial corporate 
transactions as provided in such title, and no other settlement 
or adjustment shall be required with respect to transactions 
under this subsection or with respect to claims, demands, or 
accounts by or against any person arising thereunder. The first 
budget program shall be for the first full fiscal year 
beginning on or after the date of the enactment of this 
subsection. Except as otherwise provided in this subsection or 
by the Director of the Office of Thrift Supervision, the 
provisions of this subsection and the functions thereby or 
thereunder subsisting shall be applicable and exercisable 
notwithstanding and without regard to the Act of June 20, 1938 
(D.C. Code, secs. 5-413--5-428), except that the proviso of 
section 16 thereof shall apply to any building constructed 
under this subsection, and section 306 of the Act of July 30, 
1947 (61 Stat. 584), or any other provison of law relating to 
theconstruction, alteration, repair, or furnishing of public or 
other buildings or structures or the obtaining of sites therefor, but 
any person or body in whom any such function is vested may provide for 
delegation or redelegation of the exercise of such function.
  [(7) No obligation shall be incurred and no expenditure, 
except in liquidation of obligation, shall be made pursuant to 
the first two subparagraphs of paragraph (1) of this subsection 
if the total amount of all obligations incurred pursuant 
thereto would thereupon exceed $13,200,000, or such greater 
amount as may be provided in an appropriation Act or other 
law.]
          * * * * * * *

SEC. 21B. RESOLUTION FUNDING CORPORATION ESTABLISHED.

  (a) * * *
          * * * * * * *
  (f) Obligations of Funding Corporation.--
          (1) * * *
          * * * * * * *
          (2) Interest payments.--The Funding Corporation shall 
        pay the interest due on such obligations from funds 
        obtained for such interest payments from the following 
        sources:
                  (A) * * *
          * * * * * * *
                  [(C) Payments by federal home loan banks.--To 
                the extent the amounts available pursuant to 
                subparagraphs (A) and (B) are insufficient to 
                cover the amount of interest payments, the 
                Federal Home Loan Banks shall pay to the 
                Funding Corporation each calendar year the 
                aggregate amount of $300,000,000 minus the 
                amounts required in such year for Financing 
                Corporation principal payments (pursuant to 
                section 21) and the amounts required in such 
                year by the Funding Corporation pursuant to 
                subsection (e). Each Bank's individual share of 
                any amounts required to be paid by the Banks 
                under this subparagraph shall be determined as 
                follows:
                          [(i) Amounts up to 20 percent of net 
                        earnings.--Each Federal Home Loan Bank 
                        shall pay an equal percentage of its 
                        net earnings for the year for which 
                        such amount is required to be paid, up 
                        to a maximum of 20 percent of net 
                        earnings.
                          [(ii) Amounts in excess of 20 percent 
                        of net earnings.--If the aggregate 
                        amount required to be paid by the 
                        Federal Home Loan Banks under this 
                        subparagraph for any year exceeds 20 
                        percent of the aggregate net earnings 
                        of the Banks for such year, each Bank 
                        shall pay 20 percent of its net 
                        earnings for such year as provided in 
                        clause (i), and each Bank's individual 
                        share of the excess of the required 
                        amount over 20 percent of the aggregate 
                        net earnings of the Banks for such year 
                        shall be determined by dividing--
                                  [(I) the average month-end 
                                level in the prior year of 
                                advances outstanding by such 
                                Bank to Savings Associations 
                                Insurance Fund members; by
                                  [(II) the average month-end 
                                level in the prior year of 
                                advances outstanding by all 
                                such Banks to Savings 
                                Associations Insurance Fund 
                                members.]
                  (C) Payments by federal home loan banks.--To 
                the extent the amounts available pursuant to 
                subparagraphs (A) and (B) are insufficient to 
                cover the amount of interest payments, each 
                Federal home loan bank shall pay to the Funding 
                Corporation each calendar year 20.75 percent of 
                the net earnings of such bank (after deducting 
                expenses relating to subsection (j) of section 
                10 and operating expenses).
          * * * * * * *

SEC. 22. MEMBER FINANCIAL INFORMATION.

  (a) In General.--In order to enable the Federal Home Loan 
Banks to carry out the provisions of this Act, the Secretary of 
the Treasury, the Comptroller of the Currency, the Chairman of 
the Board of Governors of the Federal Reserve System, the 
Chairperson of the Federal Deposit Insurance Corporation, and 
the Chairperson of the National Credit Union Administration[, 
and the Director of the Office of Thrift Supervision], upon 
request by any Federal Home Loan Bank--
          (1) shall make available in confidence to any Federal 
        Home Loan Bank, such reports, records, or other 
        information as may be available, relating to the 
        condition of any member of any Federal Home Loan Bank 
        or any institution with respect to which any such Bank 
        has had or contemplates having transactions under this 
        Act; and
          (2) may perform through their examiners or other 
        employees or agents, for the confidential use of the 
        Federal Home Loan Bank, examinations of institutions 
        for which such agency is the appropriate Federal 
        banking regulatory agency.
In addition, the Comptroller of the Currency, the Chairman of 
the Board of Governors of the Federal Reserve System, and the 
Chairperson of the National Credit Union Administration[, and 
the Director of the Office of Thrift Supervision] shall make 
available to the Board or any Federal Home Loan Bank the 
financial reports filed by members of any Bank to enable the 
Board or a Bank to compile and publish cost of funds indices or 
other financial or statistical reports.
          * * * * * * *

[SEC. 22A. INFORMAL REVIEW OF CERTAIN SUPERVISORY DECISIONS.

  [(a) Review of Certain Supervisory Decisions.--The Board 
shall establish an informal review procedure under which any 
association, insured institution, or member may obtain a 
review, by the principal supervisory agent for the Federal home 
loan bank district in which such association, institution, or 
member is located, of any decision by any examiner or 
supervisory agent of the Federal home loan bank for such 
district with respect to--
          [(1) the appraisal value of--
                  [(A) any loan held by the association, 
                insured institution, or member; or
                  [(B) any property serving as collateral to 
                secure the repayment of any loan (held by the 
                association, institution, or member);
          [(2) the classification of any loan held by the 
        association, institution, or member; or
          [(3) any requirement imposed on the association, 
        institution, or member to establish or to add to a 
        reserve or allowance for a possible loss on any loan 
        held by such institution.
  [(b) Standards for Review.--The review procedure established 
pursuant to subsection (a) shall provide that the principal 
supervisory agent for the appropriate Federal home loan bank 
district, after taking into account the report described in 
subsection (c)(2) by the arbiter (or panel of arbiters), shall 
approve, modify, or set aside any decision for which a review 
has been requested on the basis of the supervisory agent's 
review of all the facts and the regulations applicable to such 
decision and shall take such action as such agent may determine 
to be necessary or appropriate in light of such review.
  [(c) Appointment of Independent Arbiter.--The review 
procedure established pursuant to subsection (a) shall provide 
for the appointment (by the principal supervisory agent for the 
appropriate Federal home loan bank district, upon the filing of 
a request for a review under this section by an association, 
insured institution, or member) of an independent arbiter (or, 
upon the request of such association, institution, or member, a 
panel of independent arbiters) who shall--
          [(1) review the decision which is the subject of the 
        review in light of all the facts of the case and the 
        regulations applicable to such determination; and
          [(2) report the conclusions and recommendations of 
        the independent arbiter (or the panel) with respect to 
        the decision under review to the principal supervisory 
        agent for the appropriate Federal home loan bank 
        district and the association, insured institution, or 
        member.
  [(d) Consolidation of Reviews of Related Decisions.--The 
principal supervisory agent may consolidate requests for review 
under this section of related decisions and conduct a single 
review of all such related decisions.
  [(e) 25-Day Arbiter Review Period; 20-Day PSA Review 
Period.--
          [(1) Arbiter review.--The review procedure 
        established pursuant to subsection (a) shall provide 
        that any review described in subsection (c) by an 
        arbiter (or panel of arbiters) shall be completed 
        before the end of the 25-day period beginning on the 
        date the request for the review was filed with the 
        principal supervisory agent.
          [(2) Review by psa.--The review procedure established 
        pursuant to subsection (a) shall provide that any 
        review by the principal supervisory agent of an 
        arbiter's report described in subsection (c)(2) (or the 
        report of a panel of arbiters) shall be completed 
        before the end of the 20-day period beginning on the 
        date the agent receives such report.
          [(3) Only business days included.--Saturdays, 
        Sundays, and holidays shall not be taken into account 
        in determining the periods described in paragraphs (1) 
        and (2).
  [(f) Clarification of Relationship Between Informal Review 
and Other Available Review.--
          [(1) Informal review not exclusive.--The informal 
        review procedure established pursuant to subsection (a) 
        for reviewing any decision referred to in such 
        subsection shall be in addition to, and not in lieu of, 
        any other procedure established by law, or any 
        regulation of the Board, which provides for formal 
        administrative or judicial review of such decision.
          [(2) Only the original decision is within scope of 
        administrative and judicial review.--If any 
        association, insured institution, or member seeks 
        administrative or judicial review of any examiner or 
        supervisory agent decision for which such association, 
        insured institution, or member obtained an informal 
        review under the procedure established pursuant to 
        subsection (a), such administrative or judicial review 
        shall be carried out--
                  [(A) without regard to the fact that such 
                informal review was made; and
                  [(B) without admitting into evidence, or 
                otherwise taking into account, the findings, 
                recommendations, or conclusions of the 
                principal supervisory agent and the independent 
                arbiter (or the panel of independent arbiters) 
                which conducted the informal review.
          [(3) Informal review not subject to formal review.--
        The findings, recommendations, or conclusions of any 
        principal supervisory agent who conducted a review 
        under the procedure established pursuant to subsection 
        (a) are not decisions which may be subject to review by 
        the Board or any court under any regulation of the 
        Board or any law.
  [(g) Expenses of Review Borne by Association, Institution, or 
Member.--All reasonable expenses incurred as a direct or 
indirect result of any review under the procedure established 
pursuant to subsection (a) shall be paid by the association, 
insured institution, or member which requested the review.]
          * * * * * * *
  [Sec. 24. (a) Any organization organized under the laws of 
any State and subject to inspection and regulation under the 
banking or similar laws of such State shall be eligible to 
become a member under this Act if--
          [(1) it is organized solely for the purpose of 
        supplying credit to its members;
          [(2) its membership (A) is confined exclusively to 
        building and loan associations, savings and loan 
        associations, cooperative banks, and homestead 
        associations; or (B) is confined exclusively to savings 
        banks; and
          [(3) of the institutions to which its membership is 
        confined which are organized within the State, its 
        membership includes a majority of such institutions.
  [(b) In all respects, but subject to such additional rules 
and regulations as the Board may provide, any such organization 
shall be a member for the purposes of this Act.]
          * * * * * * *
  Sec. 26. (a) Whenever the Board finds that the efficient and 
economical accomplishment of the purposes of this Act will be 
aided by such action, and in accordance with such rules, 
regulations, and orders as the Board may prescribe, any Federal 
Home Loan Bank may be liquidated or reorganized, and its stock 
paid off and retired in whole or in part in connection 
therewith after paying or making provision for the payment of 
its liabilities. In the case of any such liquidation or 
reorganization, any other Federal Home Loan Bank may, with the 
approval of the Board, acquire assets of any such liquidated or 
reorganized bank and assume liabilities thereof, in whole or in 
part.
  (b) Nothing in this section shall preclude voluntary mergers, 
combinations or consolidation by or among the Federal home loan 
banks pursuant to such regulations as the Finance Board may 
prescribe.
  (c) Number of Elected Directors of Resulting Bank.--Subject 
to section 7 of this Act, any bank resulting from a merger, 
combination, or consolidation pursuant to this section may have 
a number of elected directors equal to or less than the total 
number of elected directors of all the banks which participated 
in such transaction (as determined immediately before such 
transaction).
  (d) Number of Appointed Directors of Resulting Bank.--The 
number of appointed directors of any bank resulting from a 
merger, combination, or consolidation pursuant to this section 
shall be a number that is three less than the number of elected 
directors.
  (e) Adjustment of District Boundaries.--After consummation of 
any merger, combination, or consolidation of 2 or more Federal 
home loan banks, the Finance Board shall adjust the districts 
established in section 3 of this Act to reflect such merger, 
combination, or consolidation.

[SEC. 27. HOUSING OPPORTUNITY HOTLINE PROGRAM.

  [(a) Establishment.--The Federal Home Loan Banks shall, 
individually or (at the discretion of the Federal Housing 
Finance Board) on a consolidated basis, establish and provide a 
service substantially similar (in the determination of the 
Board) to the ``Housing Opportunity Hotline'' program 
established in October 1992, by the Federal Home Loan Bank of 
Dallas.
  [(b) Purpose.--The service or services established under this 
section shall provide information regarding the availability 
for purchase of single family properties that are owned or held 
by Federal agencies and are located in the Federal Home Loan 
Bank district for such Bank. Such agencies shall provide to the 
Federal Home Loan Banks the information necessary to provide 
such service or services.
  [(c) Required Information.--The service or services 
established under this section shall use the information 
obtained from Federal agencies to provide information regarding 
the size, location, price, and other characteristics of such 
single family properties, the eligibility requirements for 
purchasers of such properties, the terms for such sales, and 
the terms of any available seller financing, and shall identify 
properties that are affordable to low- and moderate-income 
families.
  [(d) Toll-Free Telephone Number.--The service or services 
established under this section shall establish and maintain a 
toll-free telephone line for providing the information made 
available under the service or services.
  [(e) Definitions.--For purposes of this section, the 
following definitions shall apply:
          [(1) Federal agencies.--The term ``Federal agencies'' 
        means--
                  [(A) the Farmers Home Administration, the 
                Federal National Mortgage Association, the 
                Federal Home Loan Mortgage Corporation, the 
                General Services Administration, the Department 
                of Housing and Urban Development, and the 
                Department of Veterans Affairs;
                  [(B) the Resolution Trust Corporation, 
                subject to the discretion of such Corporation; 
                and
                  [(C) the Federal Deposit Insurance 
                Corporation, subject to the discretion of such 
                Corporation.
          [(2) Single family property.--The term ``single 
        family property'' means a 1- to 4-family residence, 
        including a manufactured home.]
          * * * * * * *
                              ----------                              


                         HOME OWNERS' LOAN ACT

   AN ACT To provide emergency relief with respect to home mortgage 
  indebtedness, to refinance home mortgages, to extend relief to the 
 owners of homes occupied by them and who are unable to amortize their 
 debt elsewhere, to amend the Federal Home Loan Bank Act, to increase 
the market for obligations of the United States and for other purposes.

  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

[SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  [This Act may be cited as the ``Home Owners' Loan Act''.

                           [TABLE OF CONTENTS

[Sec. 1. Short title and table of contents.
[Sec. 2. Definitions.
[Sec. 3. Director of the Office of Thrift Supervision.
[Sec. 4. Supervision of savings associations.
[Sec. 5. Federal savings associations.
[Sec. 6. Liquid asset requirements.
[Sec. 7. Applicability.
[Sec. 8. District associations.
[Sec. 9. Examination fees.
[Sec. 10. Regulation of holding companies.
[Sec. 11. Transactions with affiliates; extensions of credit to 
          executive officers, directors, and principal shareholders.
[Sec. 12. Advertising.
[Sec. 13. Powers of examiners.
[Sec. 14. Separability provision.

[SEC. 2. DEFINITIONS.

  [For purposes of this Act--
          [(1) Director.--The term ``Director'' means the 
        Director of the Office of Thrift Supervision.
          [(2) Corporation.--The term ``Corporation'' means the 
        Federal Deposit Insurance Corporation.
          [(3) Office.--The term ``Office'' means the Office of 
        Thrift Supervision.
          [(4) Savings association.--The term ``savings 
        association'' means a savings association, as defined 
        in section 3 of the Federal Deposit Insurance Act, the 
        deposits of which are insured by the Corporation.
          [(5) Federal savings association.--The term ``Federal 
        savings association'' means a Federal savings 
        association or a Federal savings bank chartered under 
        section 5 of this Act.
          [(6) National bank.--The term ``national bank'' has 
        the same meaning as in section 3 of the Federal Deposit 
        Insurance Act.
          [(7) Federal banking agencies.--The term ``Federal 
        banking agencies'' means the Office of the Comptroller 
        of the Currency, the Board of Governors of the Federal 
        Reserve System, and the Federal Deposit Insurance 
        Corporation.
          [(8) State.--The term ``State'' has the same meaning 
        as in section 3 of the Federal Deposit Insurance Act.
          [(9) Affiliate.--The term ``affiliate'' means any 
        person that controls, is controlled by, or is under 
        common control with, a savings association, except as 
        provided in section 10.

[SEC. 3. DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.

  [(a) Establishment of Office.--There is established the 
Office of Thrift Supervision, which shall be an office in the 
Department of the Treasury.
  [(b) Establishment of Position of Director.--
          [(1) In general.--There is established the position 
        of the Director of the Office of Thrift Supervision, 
        who shall be the head of the Office of Thrift 
        Supervision and shall be subject to the general 
        oversight of the Secretary of the Treasury.
          [(2) Authority to prescribe regulations.--The 
        Director may prescribe such regulations and issue such 
        orders as the Director may determine to be necessary 
        for carrying out this Act and all other laws within the 
        Director's jurisdiction.
          [(3) Autonomy of director.--The Secretary of the 
        Treasury may not intervene in any matter or proceeding 
        before the Director (including agency enforcement 
        actions) unless otherwise specifically provided by law.
          [(4) Banking agency rulemaking.--The Secretary of the 
        Treasury may not delay or prevent the issuance of any 
        rule or the promulgation of any regulation by the 
        Director.
  [(c) Appointment; Term.--
          [(1) Appointment.--The Director shall be appointed by 
        the President, by and with the advice and consent of 
        the Senate, from among individuals who are citizens of 
        the United States.
          [(2) Term.--The Director shall be appointed for a 
        term of 5 years.
          [(3) Vacancy.--A vacancy in the position of Director 
        which occurs before the expiration of the term for 
        which a Director was appointed shall be filled in the 
        manner established in paragraph (1) and the Director 
        appointed to fill such vacancy shall be appointed only 
        for the remainder of such term.
          [(4) Service after end of term.--An individual may 
        serve as Director after the expiration of the term for 
        which appointed until a successor Director has been 
        appointed.
          [(5) Transitional provision.--Notwithstanding 
        paragraphs (1) and (2), the Chairman of the Federal 
        Home Loan Bank Board on the date of enactment of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989, shall be the Director until 
        the date on which that individual's term as Chairman of 
        the Federal Home Loan Bank Board would have expired.
  [(d) Prohibition on Financial Interests.--The Director shall 
not have a direct or indirect financial interest in any insured 
depository institution, as defined in section 3 of the Federal 
Deposit Insurance Act.
  [(e) Powers of the Director.--The Director shall have all 
powers which--
          [(1) were vested in the Federal Home Loan Bank Board 
        (in the Board's capacity as such) or the Chairman of 
        such Board on the day before the date of the enactment 
        of the Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989; and
          [(2) were not--
                  [(A) transferred to the Federal Deposit 
                Insurance Corporation, the Federal Housing 
                Finance Board, the Resolution Trust 
                Corporation, or the Federal Home Loan Mortgage 
                Corporation pursuant to any amendment made by 
                such Act; or
                  [(B) established under any provision of law 
                repealed by such Act.
  [(f) State Homestead Provisions.--No provision of this Act or 
any other provision of law administered by the Director shall 
be construed as superseding any homestead provision of any 
State constitution, including any implementing State statute, 
in effect on the date of enactment of the Riegle-Neal 
Interstate Banking and Branching Efficiency Act of 1994, or any 
subsequent amendment to such a State constitutional or 
statutory provision in effect on such date, that exempts the 
homestead of any person from foreclosure, or forced sale, for 
the payment of all debts, other than a purchase money 
obligation relating to the homestead, taxes due on the 
homestead, or an obligation arising from work and material used 
in constructing improvements on the homestead.
  [(g) Annual Report Required.--The Director shall make an 
annual report to the Congress. Such report shall include--
          [(1) a description of any changes the Director has 
        made or is considering making in the district offices 
        of the Office, including a description of the 
        geographic allocation of the Office's resources and 
        personnel used to carry out examination and supervision 
        functions; and
          [(2) a description of actions taken to carry out 
        section 308 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989.
  [(h) Staff.--
          [(1) Appointment and compensation.--The Director 
        shall fix the compensation and number of, and appoint 
        and direct, all employees of the Office of Thrift 
        Supervision notwithstanding section 301(f)(1) of title 
        31, United States Code. Such compensation shall be paid 
        without regard to the provisions of other laws 
        applicable to officers or employees of the United 
        States.
          [(2) Rates of basic pay.--Rates of basic pay for 
        employees of the Office may be set and adjusted by the 
        Director without regard to the provisions of chapter 51 
        or subchapter III of chapter 53 of title 5, United 
        States Code.
          [(3) Additional compensation and benefits.--The 
        Director may provide additional compensation and 
        benefits to employees of the Office if the same type of 
        compensation or benefits are then being provided by any 
        Federal banking agency or, if not then being provided, 
        could be provided by such an agency under applicable 
        provisions of law, rule, or regulation. In setting and 
        adjusting the total amount of compensation and benefits 
        for employees of the Office, the Director shall 
        consult, and seek to maintain comparability with, the 
        Federal banking agencies.
          [(4) Delegation authority.--
                  [(A) In general.--The Director may--
                          [(i) designate who shall act as 
                        Director in the Director's absence; and
                          [(ii) delegate to any employee, 
                        representative, or agent any power of 
                        the Director.
                  [(B) Limitations.--Notwithstanding 
                subparagraph (A)(ii), the Director shall not, 
                directly or indirectly--
                          [(i) after October 10, 1989, delegate 
                        to any Federal home loan bank or to any 
                        officer, director, or employee of a 
                        Federal home loan bank, any power 
                        involving examining, supervising, 
                        taking enforcement action with respect 
                        to, or otherwise regulating any savings 
                        association, savings and loan holding 
                        company, or other person subject to 
                        regulation by the Director; or
                          [(ii) delegate the Director's 
                        authority to serve as a member of the 
                        Corporation's Board of Directors.
  [(i) Funding Through Assessments.--The compensation of the 
Director and other employees of the Office and all other 
expenses thereof may be paid from assessments levied under this 
Act.
  [(j) GAO Audit.--The Director shall make available to the 
Comptroller General of the United States all books and records 
necessary to audit all of the activities of the Office of 
Thrift Supervision.

[SEC. 4. SUPERVISION OF SAVINGS ASSOCIATIONS.

  [(a) Federal Savings Associations.--
          [(1) In general.--The Director shall provide for the 
        examination, safe and sound operation, and regulation 
        of savings associations.
          [(2) Regulations.--The Director may issue such 
        regulations as the Director determines to be 
        appropriate to carry out the responsibilities of the 
        Director or the Office.
          [(3) Safe and sound housing credit to be 
        encouraged.--The Director shall exercise all powers 
        granted to the Director under this Act so as to 
        encourage savings associations to provide credit for 
        housing safely and soundly.
  [(b) Accounting and Disclosure.--
          [(1) In general.--The Director shall, by regulation, 
        prescribe uniform accounting and disclosure standards 
        for savings associations, to be used in determining 
        savings associations' compliance with all applicable 
        regulations.
          [(2) Specific requirements for accounting 
        standards.--Subject to section 5(t), the uniform 
        accounting standards prescribed under paragraph (1) 
        shall--
                  [(A) incorporate generally accepted 
                accounting principles to the same degree that 
                such principles are used to determine 
                compliance with regulations prescribed by the 
                Federal banking agencies;
                  [(B) allow for no deviation from full 
                compliance with such standards as are in effect 
                after December 31, 1993; and
                  [(C) prior to January 1, 1994, require full 
                compliance by savings associations with 
                accounting standards in effect at any time 
                before such date not later than provided under 
                the schedule in section 563.23-3 of title 12, 
                Code of Federal Regulations (as in effect on 
                May 1, 1989).
          [(3) Authority to prescribe more stringent accounting 
        standards.--The Director may at any time prescribe 
        accounting standards more stringent than required under 
        paragraph (2) if the Director determines that the more 
        stringent standards are necessary to ensure the safe 
        and sound operation of savings associations.
  [(c) Stringency of Standards.--All regulations and policies 
of the Director governing the safe and sound operation of 
savings associations, including regulations and policies 
governing asset classification and appraisals, shall be no less 
stringent than those established by the Comptroller of the 
Currency for national banks.
  [(d) Investment of Certain Funds in Accounts of Savings 
Associations.--The savings accounts and share accounts of 
savings associations insured by the Corporation shall be lawful 
investments and may be accepted as security for all public 
funds of the United States, fiduciary and trust funds under the 
authority or control of the United States or any officer 
thereof, and for the funds of all corporations organized under 
the laws of the United States (subject to any regulatory 
authority otherwise applicable), regardless of any limitation 
of law upon the investment of any such funds or upon the 
acceptance of security for the investment or deposit of any of 
such funds.
  [(e) Participation by Savings Associations in Lotteries and 
Related Activities.--
          [(1) Participation prohibited.--No savings 
        association may--
                  [(A) deal in lottery tickets;
                  [(B) deal in bets used as a means or 
                substitute for participation in a lottery;
                  [(C) announce, advertise, or publicize the 
                existence of any lottery; or
                  [(D) announce, advertise, or publicize the 
                existence or identity of any participant or 
                winner, as such, in a lottery.
          [(2) Use of facilities prohibited.--No savings 
        association may permit--
                  [(A) the use of any part of any of its own 
                offices by any person for any purpose forbidden 
                to the institution under paragraph (1); or
                  [(B) direct access by the public from any of 
                its own offices to any premises used by any 
                person for any purpose forbidden to the 
                institution under paragraph (1).
          [(3) Definitions.--For purposes of this subsection--
                  [(A) Deal in.--The term ``deal in'' includes 
                making, taking, buying, selling, redeeming, or 
                collecting.
                  [(B) Lottery.--The term ``lottery'' includes 
                any arrangement under which--
                          [(i) 3 or more persons (hereafter in 
                        this subparagraph referred to as the 
                        ``participants'') advance money or 
                        credit to another in exchange for the 
                        possibility or expectation that 1 or 
                        more but not all of the participants 
                        (hereafter in this paragraph referred 
                        to as the ``winners'') will receive by 
                        reason of those participants' advances 
                        more than the amounts those 
                        participants have advanced; and
                          [(ii) the identity of the winners is 
                        determined by any means which 
                        includes--
                                  [(I) a random selection;
                                  [(II) a game, race, or 
                                contest; or
                                  [(III) any record or 
                                tabulation of the result of 1 
                                or more events in which any 
                                participant has no interest 
                                except for the bearing that 
                                event has on the possibility 
                                that the participant may become 
                                a winner.
                  [(C) Lottery ticket.--The term ``lottery 
                ticket'' includes any right, privilege, or 
                possibility (and any ticket, receipt, record, 
                or other evidence of any such right, privilege, 
                or possibility) of becoming a winner in a 
                lottery.
          [(4) Exception for state lotteries.--Paragraphs (1) 
        and (2) shall not apply with respect to any savings 
        association accepting funds from, or performing any 
        lawful services for, any State operating a lottery, or 
        any officer or employee of such a State who is charged 
        with administering the lottery.
          [(5) Regulations.--The Director shall prescribe such 
        regulations as may be necessary to provide for 
        enforcement of this subsection and to prevent any 
        evasion of any provision of this subsection.
  [(f) Federally Related Mortgage Loan Disclosures.--A savings 
association may not make a federally related mortgage loan to 
an agent, trustee, nominee, or other person acting in a 
fiduciary capacity without requiring that the identity of the 
person receiving the beneficial interest of such loan shall at 
all times be revealed to the savings association. At the 
request of the Director,the savings association shall report to 
the Director the identity of such person and the nature and amount of 
the loan.
  [(g) Preemption of State Usury Laws.--(1) Notwithstanding any 
State law, a savings association may charge interest on any 
extension of credit at a rate of not more than 1 percent in 
excess of the discount rate on 90-day commercial paper in 
effect at the Federal Reserve bank in the Federal Reserve 
district in which such savings association is located or at the 
rate allowed by the laws of the State in which such savings 
association is located, whichever is greater.
  [(2) If the rate prescribed in paragraph (1) exceeds the rate 
such savings association would be permitted to charge in the 
absence of this subsection, the receiving or charging a greater 
rate of interest than that prescribed by paragraph (1), when 
knowingly done, shall be deemed a forfeiture of the entire 
interest which the extension of credit carries with it, or 
which has been agreed to be paid thereon. If such greater rate 
of interest has been paid, the person who paid it may recover, 
in a civil action commenced in a court of appropriate 
jurisdiction not later than 2 years after the date of such 
payment, an amount equal to twice the amount of the interest 
paid from the savings association taking or receiving such 
interest.
  [(h) Form and Maturity of Securities.--No savings association 
shall--
          [(1) issue securities which guarantee a definite 
        maturity except with the specific approval of the 
        Director, or
          [(2) issue any securities the form of which has not 
        been approved by the Director.

[SEC. 5. FEDERAL SAVINGS ASSOCIATIONS.

  [(a) In General.--In order to provide thrift institutions for 
the deposit of funds and for the extension of credit for homes 
and other goods and services, the Director is authorized, under 
such regulations as the Director may prescribe--
          [(1) to provide for the organization, incorporation, 
        examination, operation, and regulation of associations 
        to be known as Federal savings associations (including 
        Federal savings banks), and
          [(2) to issue charters therefor,
giving primary consideration of the best practices of thrift 
institutions in the United States. The lending and investment 
powers conferred by this section are intended to encourage such 
institutions to provide credit for housing safely and soundly.
  [(b) Deposits and Related Powers.--
          [(1) Deposit accounts.--
                  [(A) Subject to the terms of its charter and 
                regulations of the Director, a Federal savings 
                association may--
                          [(i) raise funds through such 
                        deposit, share, or other accounts, 
                        including demand deposit accounts 
                        (hereafter in this section referred to 
                        as ``accounts''); and
                          [(ii) issue passbooks, certificates, 
                        or other evidence of accounts.
                  [(B) A Federal savings association may not--
                          [(i) pay interest on a demand 
                        account; or
                          [(ii) permit any overdraft (including 
                        an intraday overdraft) on behalf of an 
                        affiliate, or incur any such overdraft 
                        in such savings association's account 
                        at a Federal reserve bank or Federal 
                        home loan bank on behalf of an 
                        affiliate.
                All savings accounts and demand accounts shall 
                have the same priority upon liquidation. 
                Holders of accounts and obligors of a Federal 
                savings association shall, to such extent as 
                may be provided by its charter or by 
                regulations of the Director, be members of the 
                savings association, and shall have such voting 
                rights and such other rights as are thereby 
                provided.
                  [(C) A Federal savings association may 
                require not less than 14 days notice prior to 
                payment of savings accounts if the charter of 
                the savings association or the regulations of 
                the Director so provide.
                  [(D) If a Federal savings association does 
                not pay all withdrawals in full (subject to the 
                right of the association, where applicable, to 
                require notice), the payment of withdrawals 
                from accounts shall be subject to such rules 
                and procedures as may be prescribed by the 
                savings association's charter or by regulation 
                of the Director. Except as authorized in 
                writing by the Director, any Federal savings 
                association that fails to make full payment of 
                any withdrawal when due shall be deemed to be 
                in an unsafe or unsound condition.
                  [(E) Accounts may be subject to check or to 
                withdrawal or transfer on negotiable or 
                transferable or other order or authorization to 
                the Federal savings association, as the 
                Director may by regulation provide.
                  [(F) A Federal savings association may 
                establish remote service units for the purpose 
                of crediting savings or demand accounts, 
                debiting such accounts, crediting payments on 
                loans, and the disposition of related financial 
                transactions, as provided in regulations 
                prescribed by the Director.
          [(2) Other liabilities.--To such extent as the 
        Director may authorize in writing, a Federal savings 
        association may borrow, may give security, may be 
        surety as defined by the Director and may issue such 
        notes, bonds, debentures, or other obligations, or 
        other securities, including capital stock.
          [(3) Loans from state housing finance agencies.--
                  [(A) In general.--Subject to regulation by 
                the Director but without regard to any other 
                provision of this subsection, any Federal 
                savings association that is in compliance with 
                the capital standards in effect under 
                subsection (t) may borrow funds from a State 
                mortgage finance agency of the State in which 
                the head office of such savings association is 
                situated to the same extent as State law 
                authorizes a savings association organized 
                under the laws of such State to borrow from the 
                State mortgage finance agency.
                  [(B) Interest rate.--A Federal savings 
                association may not make any loan of funds 
                borrowed under subparagraph (A) at an interest 
                rate which exceeds by more than 1\3/4\ percent 
                per annum the interest rate paid to the State 
                mortgage finance agency on the obligations 
                issued to obtain the funds so borrowed.
          [(4) Mutual capital certificates.--In accordance with 
        regulations issued by the Director, mutual capital 
        certificates may be issued and sold directly to 
        subscribers or through underwriters. Such certificates 
        may be included in calculating capital for the purpose 
        of subsection (t) to the extent permitted by the 
        Director. The issuance of certificates under this 
        paragraph does not constitute a change of control or 
        ownership under this Act or any other law unless there 
        is in fact a change in control or reorganization. 
        Regulations relating to the issuance and sale of mutual 
        capital certificates shall provide that such 
        certificates--
                  [(A) are subordinate to all savings accounts, 
                savings certificates, and debt obligations;
                  [(B) constitute a claim in liquidation on the 
                general reserves, surplus, and undivided 
                profits of the Federal savings association 
                remaining after the payment in full of all 
                savings accounts, savings certificates, and 
                debt obligations;
                  [(C) are entitled to the payment of 
                dividends; and
                  [(D) may have a fixed or variable dividend 
                rate.
  [(c) Loans and Investments.--To the extent specified in 
regulations of the Director, a Federal savings association may 
invest in, sell, or otherwise deal in the following loans and 
other investments:
          [(1) Loans or investments without percentage of 
        assets limitation.--Without limitation as a percentage 
        of assets, the following are permitted:
                  [(A) Account loans.--Loans on the security of 
                its savings accounts and loans specifically 
                related to transaction accounts.
                  [(B) Residential real property loans.--Loans 
                on the security of liens upon residential real 
                property.
                  [(C) United states government securities.--
                Investments in obligations of, or fully 
                guaranteed as to principal and interest by, the 
                United States.
                  [(D) Federal home loan bank and federal 
                national mortgage association securities.--
                Investments in the stock or bonds of a Federal 
                home loan bank or in the stock of the Federal 
                National Mortgage Association.
                  [(E) Federal home loan mortgage corporation 
                instruments.--Investments in mortgages, 
                obligations, or other securities which are or 
                have been sold by the Federal Home Loan 
                Mortgage Corporation pursuant to section 305 or 
                306 of the Federal Home Loan Mortgage 
                Corporation Act.
                  [(F) Other government securities.--
                Investments in obligations, participations, 
                securities, or other instruments issued by, or 
                fully guaranteed as to principal and interest 
                by, the Federal National Mortgage Association, 
                the Student Loan Marketing Association, the 
                Government National Mortgage Association, or 
                any agency of the United States. A savings 
                association may issue and sell securitieswhich 
are guaranteed pursuant to section 306(g) of the National Housing Act.
                  [(G) Deposits.--Investments in accounts of 
                any insured depository institution, as defined 
                in section 3 of the Federal Deposit Insurance 
                Act.
                  [(H) State securities.--Investments in 
                obligations issued by any State or political 
                subdivision thereof (including any agency, 
                corporation, or instrumentality of a State or 
                political subdivision). A Federal savings 
                association may not invest more than 10 percent 
                of its capital in obligations of any one 
                issuer, exclusive of investments in general 
                obligations of any issuer.
                  [(I) Purchase of insured loans.--Purchase of 
                loans secured by liens on improved real estate 
                which are insured or guaranteed under the 
                National Housing Act, the Servicemen's 
                Readjustment Act of 1944, or chapter 37 of 
                title 38, United States Code.
                  [(J) Home improvement and manufactured home 
                loans.--Loans made to repair, equip, alter, or 
                improve any residential real property, and 
                loans made for manufactured home financing.
                  [(K) Insured loans to finance the purchase of 
                fee simple.--Loans insured under section 240 of 
                the National Housing Act.
                  [(L) Loans to financial institutions, 
                brokers, and dealers.--Loans to--
                          [(i) financial institutions with 
                        respect to which the United States or 
                        an agency or instrumentality thereof 
                        has any function of examination or 
                        supervision, or
                          [(ii) any broker or dealer registered 
                        with the Securities and Exchange 
                        Commission,
                which are secured by loans, obligations, or 
                investments in which the Federal savings 
                association has the statutory authority to 
                invest directly.
                  [(M) Liquidity investments.--Investments 
                which, when made, are of a type that may be 
                used to satisfy any liquidity requirement 
                imposed by the Director pursuant to section 6.
                  [(N) Investment in the national housing 
                partnership corporation, partnerships, and 
                joint ventures.--Investments in shares of stock 
                issued by a corporation authorized to be 
                created pursuant to title IX of the Housing and 
                Urban Development Act of 1968, and investments 
                in any partnership, limited partnership, or 
                joint venture formed pursuant to section 907(a) 
                or 907(c) of such Act.
                  [(O) Certain hud insured or guaranteed 
                investments.--Loans that are secured by 
                mortgages--
                          [(i) insured under title X of the 
                        National Housing Act, or
                          [(ii) guaranteed under title IV of 
                        the Housing and Urban Development Act 
                        of 1968, under part B of the National 
                        Urban Policy and New Community 
                        Development Act of 1970, or under 
                        section 802 of the Housing and 
                        Community Development Act of 1974.
                  [(P) State housing corporation investments.--
                Obligations of and loans to any State housing 
                corporation, if--
                          [(i) such obligations or loans are 
                        secured directly, or indirectly through 
                        an agent or fiduciary, by a first lien 
                        on improved real estate which is 
                        insured under the provisions of the 
                        National Housing Act, and
                          [(ii) in the event of default, the 
                        holder of the obligations or loans has 
                        the right directly, or indirectly 
                        through an agent or fiduciary, to cause 
                        to be subject to the satisfaction of 
                        such obligations or loans the real 
                        estate described in the first lien or 
                        the insurance proceeds under the 
                        National Housing Act.
                  [(Q) Investment companies.--A Federal savings 
                association may invest in, redeem, or hold 
                shares or certificates issued by any open-end 
                management investment company which--
                          [(i) is registered with the 
                        Securities and Exchange Commission 
                        under the Investment Company Act of 
                        1940, and
                          [(ii) the portfolio of which is 
                        restricted by such management company's 
                        investment policy (changeable only if 
                        authorized by shareholder vote) solely 
                        to investments that a Federal savings 
                        association by law or regulation may, 
                        without limitation as to percentage of 
                        assets, invest in, sell, redeem, hold, 
                        or otherwise deal in.
                  [(R) Mortgage-backed securities.--Investments 
                in securities that--
                          [(i) are offered and sold pursuant to 
                        section 4(5) of the Securities Act of 
                        1933; or
                          [(ii) are mortgage related securities 
                        (as defined in section 3(a)(41) of the 
                        Securities Exchange Act of 1934),
                subject to such regulations as the Director may 
                prescribe, including regulations prescribing 
                minimum size of the issue (at the time of 
                initial distribution) or minimum aggregate 
                sales price, or both.
                  [(S) Small business related securities.--
                Investments in small business related 
                securities (as defined in section 3(a)(53) of 
                the Securities Exchange Act of 1934), subject 
                to such regulations as the Director may 
                prescribe, including regulations concerning the 
                minimum size of the issue (at the time of the 
                initial distribution), the minimum aggregate 
                sales price, or both.
                  [(T) Credit card loans.--Loans made through 
                credit cards or credit card accounts.
                  [(U) Educational loans.--Loans made for the 
                payment of educational expenses.
          [(2) Loans or investments limited to a percentage of 
        assets or capital.--The following loans or investments 
        are permitted, but only to the extent specified:
                  [(A) Commercial and other loans.--Secured or 
                unsecured loans for commercial, corporate, 
                business, or agricultural purposes. The 
                aggregate amount of loans made under this 
                subparagraph may not exceed 20 percent of the 
                total assets of the Federal savings 
                association, and amounts in excess of 10 
                percent of such total assets may be used under 
                this subparagraph only for small business 
                loans, as that term is defined by the Director.
                  [(B) Nonresidential real property loans.--
                          [(i) In general.--Loans on the 
                        security of liens upon nonresidential 
                        real property. Except as provided in 
                        clause (ii), the aggregate amount of 
                        such loans shall not exceed 400 percent 
                        of the Federal savings association's 
                        capital, as determined under subsection 
                        (t).
                          [(ii) Exception.--The Director may 
                        permit a savings association to exceed 
                        the limitation set forth in clause (i) 
                        if the Director determines that the 
                        increased authority--
                                  [(I) poses no significant 
                                risk to the safe and sound 
                                operation of the association, 
                                and
                                  [(II) is consistent with 
                                prudent operating practices.
                          [(iii) Monitoring.--If the Director 
                        permits any increased authority 
                        pursuant to clause (ii), the Director 
                        shall closely monitor the Federal 
                        savings association's condition and 
                        lending activities to ensure that the 
                        savings association carries out all 
                        authority under this paragraph in a 
                        safe and sound manner and complies with 
                        this subparagraph and all relevant laws 
                        and regulations.
                  [(C) Investments in personal property.--
                Investments in tangible personal property, 
                including vehicles, manufactured homes, 
                machinery, equipment, or furniture, for rental 
                or sale. Investments under this subparagraph 
                may not exceed 10 percent of the assets of the 
                Federal savings association.
                  [(D) Consumer loans and certain securities.--
                A Federal savings association may make loans 
                for personal, family, or household purposes, 
                including loans reasonably incident to 
                providing such credit, and may invest in, sell, 
                or hold commercial paper and corporate debt 
                securities, as defined and approved by the 
                Director. Loans and other investments under 
                this subparagraph may not exceed 35 percent of 
                the assets of the Federal savings association, 
                except that amounts in excess of 30 percent of 
                the assets may be invested only in loans which 
                are made by the association directly to the 
                original obligor and with respect to which the 
                association does not pay any finder, referral, 
                or other fee, directly or indirectly, to any 
                third party.
          [(3) Loans or investments limited to 5 percent of 
        assets.--The following loans or investments are 
        permitted, but not to exceed 5 percent of assets of a 
        Federal savings association for each subparagraph:
                  [(A) Community development investments.--
                Investments in real property and obligations 
                secured by liens on real property located 
                within a geographic area or neighborhood 
                receiving concentrated development assistance 
                by a local government under title I of the 
                Housing and Community Development Act of 1974. 
                No investment under this subparagraph in such 
                real property may exceed an aggregate of 2 
                percent of the assets of the Federal savings 
                association.
                  [(B) Nonconforming loans.--Loans upon the 
                security of or respecting real property or 
                interests therein used for primarily 
                residential or farm purposes that do not comply 
                with the limitations of this subsection.
                  [(C) Construction loans without security.--
                Loans--
                          [(i) the principal purpose of which 
                        is to provide financing with respect to 
                        what is or is expected to become 
                        primarily residential real estate; and
                          [(ii) with respect to which the 
                        association--
                                  [(I) relies substantially on 
                                the borrower's general credit 
                                standing and projected future 
                                income for repayment, without 
                                other security; or
                                  [(II) relies on other 
                                assurances for repayment, 
                                including a guarantee or 
                                similar obligation of a third 
                                party.
                The aggregate amount of such investments shall 
                not exceed the greater of the Federal savings 
                association's capital or 5 percent of its 
                assets.
          [(4) Other loans and investments.--The following 
        additional loans and other investments to the extent 
        authorized below:
                  [(A) Business development credit 
                corporations.--A Federal savings association 
                that is in compliance with the capital 
                standards prescribed under subsection (t) may 
                invest in, lend to, or to commit itself to lend 
                to, any business development credit corporation 
                incorporated in the State in which the home 
                office of the association is located in the 
                same manner and to the same extent as savings 
                associations chartered by such State are 
                authorized. The aggregate amount of such 
                investments, loans, and commitments of any such 
                Federal savings association shall not exceed 
                one-half of 1 percent of the association's 
                total outstanding loans or $250,000, whichever 
                is less.
                  [(B) Service corporations.--Investments in 
                the capital stock, obligations, or other 
                securities of any corporation organized under 
                the laws of the State in which the Federal 
                savings association's home office is located, 
                if such corporation's entire capital stock is 
                available for purchase only by savings 
                associations of such State and by Federal 
                associations having their home offices in such 
                State. No Federal savings association may make 
                any investment under this subparagraph if the 
                association's aggregate outstanding investment 
                under this subparagraph would exceed 3 percent 
                of the association's assets. Not less thanone-
half of the investment permitted under this subparagraph which exceeds 
1 percent of the association's assets shall be used primarily for 
community, inner-city, and community development purposes.
                  [(C) Foreign assistance investments.--
                Investments in housing project loans having the 
                benefit of any guaranty under section 221 of 
                the Foreign Assistance Act of 1961 or loans 
                having the benefit of any guarantee under 
                section 224 of such Act, or any commitment or 
                agreement with respect to such loans made 
                pursuant to either of such sections and in the 
                share capital and capital reserve of the Inter-
                American Savings and Loan Bank. This authority 
                extends to the acquisition, holding, and 
                disposition of loans guaranteed under section 
                221 or 222 of such Act. Investments under this 
                subparagraph shall not exceed 1 percent of the 
                Federal savings association's assets.
                  [(D) Small business investment companies.--A 
                Federal savings association may invest in 
                stock, obligations, or other securities of any 
                small business investment company formed 
                pursuant to section 301(d) of the Small 
                Business Investment Act of 1958 for the purpose 
                of aiding members of a Federal home loan bank. 
                A Federal savings association may not make any 
                investment under this subparagraph if its 
                aggregate outstanding investment under this 
                subparagraph would exceed 1 percent of the 
                assets of such savings association.
                  [(E) Bankers' banks.--A Federal savings 
                association may purchase for its own account 
                shares of stock of a bankers' bank, described 
                in Paragraph Seventh of section 5136 of the 
                Revised Statutes or in section 5169(b) of the 
                Revised Statutes, on the same terms and 
                conditions as a national bank may purchase such 
                shares.
          [(5) Transition rule for savings associations 
        acquiring banks.--
                  [(A) In general.--If, under section 5(d)(3) 
                of the Federal Deposit Insurance Act, a savings 
                association acquires all or substantially all 
                of the assets of a bank that is a member of the 
                Bank Insurance Fund, the Director may permit 
                the savings association to retain any such 
                asset during the 2-year period beginning on the 
                date of the acquisition.
                  [(B) Extension.--The Director may extend the 
                2-year period described in subparagraph (A) for 
                not more than 1 year at a time and not more 
                than 2 years in the aggregate, if the Director 
                determines that the extension is consistent 
                with the purposes of this Act.
          [(6) Definitions.--As used in this subsection--
                  [(A) Residential property.--The terms 
                ``residential real property'' or ``residential 
                real estate'' mean leaseholds, homes (including 
                condominiums and cooperatives, except that in 
                connection with loans on individual cooperative 
                units, such loans shall be adequately secured 
                as defined by the Director) and, combinations 
                of homes or dwelling units and business 
                property, involving only minor or 
incidentalbusiness use, or property to be improved by construction of 
such structures.
                  [(B) Loans.--The term ``loans'' includes 
                obligations and extensions or advances of 
                credit; and any reference to a loan or 
                investment includes an interest in such a loan 
                or investment.
  [(d) Regulatory Authority.--
          [(1) In general.--
                  [(A) Enforcement.--The Director shall have 
                power to enforce this section, section 8 of the 
                Federal Deposit Insurance Act, and regulations 
                prescribed hereunder. In enforcing any 
                provision of this section, regulations 
                prescribed under this section, or any other law 
                or regulation, or in any other action, suit, or 
                proceeding to which the Director is a party or 
                in which the Director is interested, and in the 
                administration of conservatorships and 
                receiverships, the Director may act in the 
                Director's own name and through the Director's 
                own attorneys. Except as otherwise provided, 
                the Director shall be subject to suit (other 
                than suits on claims for money damages) by any 
                Federal savings association or director or 
                officer thereof with respect to any matter 
                under this section or any other applicable law, 
                or regulation thereunder, in the United States 
                district court for the judicial district in 
                which the savings association's home office is 
                located, or in the United States District Court 
                for the District of Columbia, and the Director 
                may be served with process in the manner 
                prescribed by the Federal Rules of Civil 
                Procedure.
                  [(B) Ancillary provisions.--(i) In making 
                examinations of savings associations, examiners 
                appointed by the Director shall have power to 
                make such examinations of the affairs of all 
                affiliates of such savings associations as 
                shall be necessary to disclose fully the 
                relations between such savings associations and 
                their affiliates and the effect of such 
                relations upon such savings associations. For 
                purposes of this subsection, the term 
                ``affiliate'' has the same meaning as in 
                section 2(b) of the Banking Act of 1933, except 
                that the term ``member bank'' in section 2(b) 
                shall be deemed to refer to a savings 
                association.
                  [(ii) In the course of any examination of any 
                savings association, upon request by the 
                Director, prompt and complete access shall be 
                given to all savings association officers, 
                directors, employees, and agents, and to all 
                relevant books, records, or documents of any 
                type.
                  [(iii) Upon request made in the course of 
                supervision or oversight of any savings 
                association, for the purpose of acting on any 
                application or determining the condition of any 
                savings association, including whether 
                operations are being conducted safely, soundly, 
                or in compliance with charters, laws, 
                regulations, directives, written agreements, or 
                conditions imposed in writing in connection 
                with the granting of an application or other 
                request, the Director shall be given prompt and 
                complete access to all savingsassociation 
officers, directors, employees, and agents, and to all relevant books, 
records, or documents of any type.
                  [(iv) If prompt and complete access upon 
                request is not given as required in this 
                subsection, the Director may apply to the 
                United States district court for the judicial 
                district (or the United States court in any 
                territory) in which the principal office of the 
                institution is located, or in which the person 
                denying such access resides or carries on 
                business, for an order requiring that such 
                information be promptly provided.
                  [(v) In connection with examinations of 
                savings associations and affiliates thereof, 
                the Director may--
                          [(I) administer oaths and 
                        affirmations and examine and to take 
                        and preserve testimony under oath as to 
                        any matter in respect of the affairs or 
                        ownership of any such savings 
                        association or affiliate, and
                          [(II) issue subpenas and, for the 
                        enforcement thereof, apply to the 
                        United States district court for the 
                        judicial district (or the United States 
                        court in any territory) in which the 
                        principal office of the savings 
                        association or affiliate is located, or 
                        in which the witness resides or carries 
                        on business.
                Such courts shall have jurisdiction and power 
                to order and require compliance with any such 
                subpena.
                  [(vi) In any proceeding under this section, 
                the Director may administer oaths and 
                affirmations, take depositions, and issue 
                subpenas. The Director may prescribe 
                regulations with respect to any such 
                proceedings. The attendance of witnesses and 
                the production of documents provided for in 
                this subsection may be required from any place 
                in any State or in any territory at any 
                designated place where such proceeding is being 
                conducted.
                  [(vii) Any party to a proceeding under this 
                section may apply to the United States District 
                Court for the District of Columbia, or the 
                United States district court for the judicial 
                district (or the United States court in any 
                territory) in which such proceeding is being 
                conducted, or where the witness resides or 
                carries on business, for enforcement of any 
                subpena issued pursuant to this subsection or 
                section 10(c) of the Federal Deposit Insurance 
                Act, and such courts shall have jurisdiction 
                and power to order and require compliance 
                therewith. Witnesses subpenaed under this 
                section shall be paid the same fees and mileage 
                that are paid witnesses in the district courts 
                of the United States. All expenses of the 
                Director in connection with this section shall 
                be considered as nonadministrative expenses. 
                Any court having jurisdiction of any proceeding 
                instituted under this section by a savings 
                association, or a director or officer thereof, 
                may allow to any such party reasonable expenses 
                and attorneys' fees. Such expenses and fees 
                shall be paid by the savings association.
          [(2) Conservatorships and receiverships.--
                  [(A) Grounds for appointing conservator or 
                receiver for insured savings association.--The 
                Directorof the Office of Thrift Supervision may 
appoint a conservator or receiver for any insured savings association 
if the Director determines, in the Director's discretion, that 1 or 
more of the grounds specified in section 11(c)(5) of the Federal 
Deposit Insurance Act exists.
                  [(B) Power of appointment; judicial review.--
                The Director shall have exclusive power and 
                jurisdiction to appoint a conservator or 
                receiver for a Federal savings association. If, 
                in the opinion of the Director, a ground for 
                the appointment of a conservator or receiver 
                for a savings association exists, the Director 
                is authorized to appoint ex parte and without 
                notice a conservator or receiver for the 
                savings association. In the event of such 
                appointment, the association may, within 30 
                days thereafter, bring an action in the United 
                States district court for the judicial district 
                in which the home office of such association is 
                located, or in the United States District Court 
                for the District of Columbia, for an order 
                requiring the Director to remove such 
                conservator or receiver, and the court shall 
                upon the merits dismiss such action or direct 
                the Director to remove such conservator or 
                receiver. Upon the commencement of such an 
                action, the court having jurisdiction of any 
                other action or proceeding authorized under 
                this subsection to which the association is a 
                party shall stay such action or proceeding 
                during the pendency of the action for removal 
                of the conservator or receiver.
                  [(C) Replacement.--The Director may, without 
                any prior notice, hearing, or other action, 
                replace a conservator with another conservator 
                or with a receiver, but such replacement shall 
                not affect any right which the association may 
                have to obtain judicial review of the original 
                appointment, except that any removal under this 
                subparagraph shall be removal of the 
                conservator or receiver in office at the time 
                of such removal.
                  [(D) Court action.--Except as otherwise 
                provided in this subsection, no court may take 
                any action for or toward the removal of any 
                conservator or receiver or, except at the 
                request of the Director, to restrain or affect 
                the exercise of powers or functions of a 
                conservator or receiver.
                  [(E) Powers.--
                          [(i) In general.--A conservator shall 
                        have all the powers of the members, the 
                        stockholders, the directors, and the 
                        officers of the association and shall 
                        be authorized to operate the 
                        association in its own name or to 
                        conserve its assets in the manner and 
                        to the extent authorized by the 
                        Director.
                          [(ii) FDIC or rtc as conservator or 
                        receiver.--Except as provided in 
                        section 21A of the Federal Home Loan 
                        Bank Act, the Director, at the 
                        Director's discretion, may appoint the 
                        Federal Deposit Insurance Corporation 
                        or the Resolution Trust Corporation, as 
                        appropriate, as conservator for a 
                        savings association. The Director shall 
                        appoint only the Federal Deposit 
                        Insurance Corporation or the Resolution 
                        TrustCorporation, as appropriate, as 
receiver for a savings association for the purpose of liquidation or 
winding up the affairs of such savings association. The conservator or 
receiver so appointed shall, as such, have power to buy at its own 
sale. The Federal Deposit Insurance Corporation, as such conservator or 
receiver, shall have all the powers of a conservator or receiver, as 
appropriate, granted under the Federal Deposit Insurance Act, and (when 
not inconsistent therewith) any other rights, powers, and privileges 
possessed by conservators or receivers, as appropriate, of savings 
associations under this Act and any other provisions of law.
                  [(F) Disclosure requirement for those acting 
                on behalf of conservator.--A conservator shall 
                require that any independent contractor, 
                consultant, or counsel employed by the 
                conservator in connection with the 
                conservatorship of a savings association 
                pursuant to this section shall fully disclose 
                to all parties with which such contractor, 
                consultant, or counsel is negotiating, any 
                limitation on the authority of such contractor, 
                consultant, or counsel to make legally binding 
                representations on behalf of the conservator.
          [(3) Regulations.--
                  [(A) In general.--The Director may prescribe 
                regulations for the reorganization, 
                consolidation, liquidation, and dissolution of 
                savings associations, for the merger of insured 
                savings associations with insured savings 
                associations, for savings associations in 
                conservatorship and receivership, and for the 
                conduct of conservatorships and receiverships. 
                The Director may, by regulation or otherwise, 
                provide for the exercise of functions by 
                members, stockholders, directors, or officers 
                of a savings association during conservatorship 
                and receivership.
                  [(B) FDIC or rtc as conservator or 
                receiver.--In any case where the Federal 
                Deposit Insurance Corporation or the Resolution 
                Trust Corporation is the conservator or 
                receiver, any regulations prescribed by the 
                Director shall be consistent with any 
                regulations prescribed by the Federal Deposit 
                Insurance Corporation pursuant to the Federal 
                Deposit Insurance Act.
          [(4) Refusal to comply with demand.--Whenever a 
        conservator or receiver appointed by the Director 
        demands possession of the property, business, and 
        assets of any savings association, or of any part 
        thereof, the refusal by any director, officer, 
        employee, or agent of such association to comply with 
        the demand shall be punishable by a fine of not more 
        than $5,000 or imprisonment for not more than one year, 
        or both.
          [(5) Definitions.--As used in this subsection, the 
        term ``savings association'' includes any savings 
        association or former savings association that retains 
        deposits insured by the Corporation, notwithstanding 
        termination of its status as an institution insured by 
        the Corporation.
          [(6) Compliance with monetary transaction 
        recordkeeping and report requirements.--
                  [(A) Compliance procedures required.--The 
                Director shall prescribe regulations requiring 
                savings associations to establish and maintain 
                procedures reasonably designed to assure and 
                monitor the compliance of such associations 
                with the requirements of subchapter II of 
                chapter 53 of title 31, United States Code.
                  [(B) Examinations of savings associations to 
                include review of compliance procedures.--
                          [(i) In general.--Each examination of 
                        a savings association by the Director 
                        shall include a review of the 
                        procedures required to be established 
                        and maintained under subparagraph (A).
                          [(ii) Exam report requirement.--The 
                        report of examination shall describe 
                        any problem with the procedures 
                        maintained by the association.
                  [(C) Order to comply with requirements.--If 
                the Director determines that a savings 
                association--
                          [(i) has failed to establish and 
                        maintain the procedures described in 
                        subparagraph (A); or
                          [(ii) has failed to correct any 
                        problem with the procedures maintained 
                        by such association which was 
                        previously reported to the association 
                        by the Director,
                the Director shall issue an order under section 
                8 of the Federal Deposit Insurance Act 
                requiring such association to cease and desist 
                from its violation of this paragraph or 
                regulations prescribed under this paragraph.
  [(e) Character and Responsibility.--A charter may be granted 
only--
          [(1) to persons of good character and responsibility,
          [(2) if in the judgment of the Director a necessity 
        exists for such an institution in the community to be 
        served,
          [(3) if there is a reasonable probability of its 
        usefulness and success, and
          [(4) if the association can be established without 
        undue injury to properly conducted existing local 
        thrift and home financing institutions.
  [(f) Federal Home Loan Bank Membership.--Each Federal savings 
association, upon receiving its charter, shall become 
automatically a member of the Federal home loan bank of the 
district in which it is located, or if convenience requires and 
the Director approves, shall become a member of a Federal home 
loan bank of an adjoining district. Such associations shall 
qualify for such membership in the manner provided in the 
Federal Home Loan Bank Act with respect to other members.]
  (f) \1\ Federal Home Loan Bank Membership.--A Federal savings 
association may become a member, of the Federal Home Loan Bank 
System, and shall qualify for such membership in the manner 
provided by the Federal Home Loan Bank Act, beginning January 
1, 1999.
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    \1\ Subsection (f) (as amended by section 172(a)) and the entire 
Act is repealed effective 2 years after the date of enactment of the 
Financial Services Competition Act of 1997, pursuant to section 323.
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  [(h) Discriminatory State and Local Taxation Prohibited.--No 
State, county, municipal, or local taxing authority may impose 
any tax on Federal savings associations or their franchise, 
capital, reserves, surplus, loans, or income greater than that 
imposed by such authority on other similar local mutual or 
cooperative thrift and home financing institutions.
  [(i) Conversions.--
          [(1) In general.--Any savings association which is, 
        or is eligible to become, a member of a Federal home 
        loan bank may convert into a Federal savings 
        association (and in so doing may change directly from 
        the mutual form to the stock form, or from the stock 
        form to the mutual form). Such conversion shall be 
        subject to such regulations as the Director shall 
        prescribe. Thereafter such Federal savings association 
        shall be entitled to all the benefits of this section 
        and shall be subject to examination and regulation to 
        the same extent as other associations incorporated 
        pursuant to this Act.
          [(2) Authority of director.--(A) No savings 
        association may convert from the mutual to the stock 
        form, or from the stock form to the mutual form, except 
        in accordance with the regulations of the Director.
          [(B) Any aggrieved person may obtain review of a 
        final action of the Director which approves or 
        disapproves a plan of conversion pursuant to this 
        subsection only by complying with the provisions of 
        section 10(j) of this Act within the time limit and in 
        the manner therein prescribed, which provisions shall 
        apply in all respects as if such final action were an 
        order the review of which is therein provided for, 
        except that such time limit shall commence upon 
        publication of notice of such final action in the 
        Federal Register or upon the giving of such general 
        notice of such final action as is required by or 
        approved under regulations of the Director, whichever 
        is later.
          [(C) Any Federal savings association may change its 
        designation from a Federal savings association to a 
        Federal savings bank, or the reverse.
          [(3) Conversion to state association.--(A) Any 
        Federal savings association may convert itself into a 
        savings association or savings bank organized pursuant 
        to the laws of the State in which the principal office 
        of such Federal savings association is located if--
                  [(i) the State permits the conversion of any 
                savings association or savings bank of such 
                State into a Federal savings association;
                  [(ii) such conversion of a Federal savings 
                association into such a State savings 
                association is determined--
                          [(I) upon the vote in favor of such 
                        conversion cast in person or by proxy 
                        at a special meeting of members or 
                        stockholders called to consider such 
                        action, specified by the law of the 
                        State in which the home office of the 
                        Federal savings association is located, 
                        as required by such law for a State-
                        chartered institution to convert itself 
                        into a Federal savings association, but 
                        in no eventupon a vote of less than 51 
percent of all the votes cast at such meeting, and
                          [(II) upon compliance with other 
                        requirements reciprocally equivalent to 
                        the requirements of such State law for 
                        the conversion of a State-chartered 
                        institution into a Federal savings 
                        association;
                  [(iii) notice of the meeting to vote on 
                conversion shall be given as herein provided 
                and no other notice thereof shall be necessary; 
                the notice shall expressly state that such 
                meeting is called to vote thereon, as well as 
                the time and place thereof; and such notice 
                shall be mailed, postage prepaid, at least 30 
                and not more than 60 days prior to the date of 
                the meeting, to the Director and to each member 
                or stockholder of record of the Federal savings 
                association at the member's or stockholder's 
                last address as shown on the books of the 
                Federal savings association;
                  [(iv) when a mutual savings association is 
                dissolved after conversion, the members or 
                shareholders of the savings association will 
                share on a mutual basis in the assets of the 
                association in exact proportion to their 
                relative share or account credits;
                  [(v) when a stock savings association is 
                dissolved after conversion, the stockholders 
                will share on an equitable basis in the assets 
                of the association; and
                  [(vi) such conversion shall be effective upon 
                the date that all the provisions of this Act 
                shall have been fully complied with and upon 
                the issuance of a new charter by the State 
                wherein the savings association is located.
          [(B)(i) The act of conversion constitutes consent by 
        the institution to be bound by all the requirements 
        that the Director may impose under this Act.
          [(ii) The savings association shall upon conversion 
        and thereafter be authorized to issue securities in any 
        form currently approved at the time of issue by the 
        Director for issuance by similar savings associations 
        in such State.
          [(iii) If the insurance of accounts is terminated in 
        connection with such conversion, the notice and other 
        action shall be taken as provided by law and 
        regulations for the termination of insurance of 
        accounts.
          [(4) Savings bank activities.--(A) To the extent 
        authorized by the Director, but subject to section 
        18(m)(3) of the Federal Deposit Insurance Act--
                  [(i) any Federal savings bank chartered as 
                such prior to October 15, 1982, may continue to 
                make any investment or engage in any activity 
                not otherwise authorized under this section, to 
                the degree it was permitted to do so as a 
                Federal savings bank prior to October 15, 1982; 
                and
                  [(ii) any Federal savings bank in existence 
                on the date of the enactment of the Financial 
                Institutions Reform, Recovery, and Enforcement 
                Act of 1989 and formerly organized as a mutual 
                savings bank under State law may continue to 
                make any investment or engage in any activity 
                not otherwise authorized under this section, to 
                the degree it was authorized to do so as a 
                mutual savings bank under State law.
          [(B) The authority conferred by this paragraph may be 
        utilized by any Federal savings association that 
        acquires, by merger or consolidation, a Federal savings 
        bank enjoying grandfather rights hereunder.
  [(k) Depository of Public Money.--When designated for that 
purpose by the Secretary of the Treasury, a savings association 
the deposits of which are insured by the Corporation shall be a 
depository of public money and may be employed as fiscal agent 
of the Government under such regulations as may be prescribed 
by the Secretary and shall perform all such reasonable duties 
as fiscal agent of the Government as may be required of it. A 
savings association the deposits of which are insured by the 
Corporation may act as agent for any other instrumentality of 
the United States when designated for that purpose by such 
instrumentality, including services in connection with the 
collection of taxes and other obligations owed the United 
States, and the Secretary of the Treasury may deposit public 
money in any such savings association, and shall prescribe such 
regulations as may be necessary to carry out the purposes of 
this subsection.
  [(l) Retirement Accounts.--A Federal savings association is 
authorized to act as trustee of any trust created or organized 
in the United States and forming part of a stock bonus, 
pension, or profit-sharing plan which qualifies or qualified 
for specific tax treatment under section 401(d) of the Internal 
Revenue Code of 1986 and to act as trustee or custodian of an 
individual retirement account within the meaning of section 408 
of such Code if the funds of such trust or account are invested 
only in savings accounts or deposits in such Federal savings 
association or in obligations or securities issued by such 
Federal savings association. All funds held in such fiduciary 
capacity by any Federal savings association may be commingled 
for appropriate purposes of investment, but individual records 
shall be kept by the fiduciary for each participant and shall 
show in proper detail all transactions engaged in under this 
paragraph.
  [(m) Branching.--
          [(1) In general.--
                  [(A) No savings association incorporated 
                under the laws of the District of Columbia or 
                organized in the District or doing business in 
                the District shall establish any branch or move 
                its principal office or any branch without the 
                Director's prior written approval.
                  [(B) No savings association shall establish 
                any branch in the District of Columbia or move 
                its principal office or any branch in the 
                District without the Director's prior written 
                approval.
          [(2) Definition.--For purposes of this subsection the 
        term ``branch'' means any office, place of business, or 
        facility, other than the principal office as defined by 
        the Director, of a savings association at which 
        accounts are opened or payments are received or 
        withdrawals are made, or any other office, place of 
        business, or facility of a savings association defined 
        by the Director as a branch within the meaning of such 
        sentence.
  [(n) Trusts.--
          [(1) Permits.--The Director may grant by special 
        permit to a Federal savings association applying 
        therefor the right to act as trustee, executor, 
        administrator, guardian, or in any other fiduciary 
        capacity in which State banks, trust companies, or 
        other corporations which compete with Federal savings 
        associations are permitted to act under the laws of the 
        State in which the Federal savings association is 
        located. Subject to the regulations of the Director, 
        service corporations may invest in State or federally 
        chartered corporations which are located in the State 
        in which the home office of the Federal savings 
        association is located and which are engaged in trust 
        activities.
          [(2) Segregation of assets.--A Federal savings 
        association exercising any or all of the powers 
        enumerated in this section shall segregate all assets 
        held in any fiduciary capacity from the general assets 
        of the association and shall keep a separate set of 
        books and records showing in proper detail all 
        transactions engaged in under this subsection. The 
        State banking authority involved may have access to 
        reports of examination made by the Director insofar as 
        such reports relate to the trust department of such 
        association but nothing in this subsection shall be 
        construed as authorizing such State banking authority 
        to examine the books, records, and assets of such 
        associations.
          [(3) Prohibitions.--No Federal savings association 
        shall receive in its trust department deposits of 
        current funds subject to check or the deposit of 
        checks, drafts, bills of exchange, or other items for 
        collection or exchange purposes. Funds deposited or 
        held in trust by the association awaiting investment 
        shall be carried in a separate account and shall not be 
        used by the association in the conduct of its business 
        unless it shall first set aside in the trust department 
        United States bonds or other securities approved by the 
        Director.
          [(4) Separate lien.--In the event of the failure of a 
        Federal savings association, the owners of the funds 
        held in trust for investment shall have a lien on the 
        bonds or other securities so set apart in addition to 
        their claim against the estate of the association.
          [(5) Deposits.--Whenever the laws of a State require 
        corporations acting in a fiduciary capacity to deposit 
        securities with the State authorities for the 
        protection of private or court trusts, Federal savings 
        associations so acting shall be required to make 
        similar deposits. Securities so deposited shall be held 
        for the protection of private or court trusts, as 
        provided by the State law. Federal savings associations 
        in such cases shall not be required to execute the bond 
        usually required of individuals if State corporations 
        under similar circumstances are exempt from this 
        requirement. Federal savings associations shall have 
        power to execute such bond when so required by the laws 
        of the State involved.
          [(6) Oaths and affidavits.--In any case in which the 
        laws of a State require that a corporation acting as 
        trustee, executor, administrator, or in any capacity 
        specified in this section, shall take an oath or make 
        an affidavit, the president,vice president, cashier, or 
trust officer of such association may take the necessary oath or 
execute the necessary affidavit.
          [(7) Certain loans prohibited.--It shall be unlawful 
        for any Federal savings association to lend any 
        officer, director, or employee any funds held in trust 
        under the powers conferred by this section. Any 
        officer, director, or employee making such loan, or to 
        whom such loan is made, may be fined not more than 
        $50,000 or twice the amount of that person's gain from 
        the loan, whichever is greater, or may be imprisoned 
        not more than 5 years, or may be both fined and 
        imprisoned, in the discretion of the court.
          [(8) Factors to be considered.--In reviewing 
        applications for permission to exercise the powers 
        enumerated in this section, the Director may consider--
                  [(A) the amount of capital of the applying 
                Federal savings association,
                  [(B) whether or not such capital is 
                sufficient under the circumstances of the case,
                  [(C) the needs of the community to be served, 
                and
                  [(D) any other facts and circumstances that 
                seem to it proper.
        The Director may grant or refuse the application 
        accordingly, except that no permit shall be issued to 
        any association having capital less than the capital 
        required by State law of State banks, trust companies, 
        and corporations exercising such powers.
          [(9) Surrender of charter.--(A) Any Federal savings 
        association may surrender its right to exercise the 
        powers granted under this subsection, and have returned 
        to it any securities which it may have deposited with 
        the State authorities, by filing with the Director a 
        certified copy of a resolution of its board of 
        directors indicating its intention to surrender its 
        right.
          [(B) Upon receipt of such resolution, the Director, 
        if satisfied that such Federal savings association has 
        been relieved in accordance with State law of all 
        duties as trustee, executor, administrator, guardian or 
        other fiduciary, may in the Director's discretion, 
        issue to such association a certificate that such 
        association is no longer authorized to exercise the 
        powers granted by this subsection.
          [(C) Upon the issuance of such a certificate by the 
        Director, such Federal savings association (i) shall no 
        longer be subject to the provisions of this section or 
        the regulations of the Director made pursuant thereto, 
        (ii) shall be entitled to have returned to it any 
        securities which it may have deposited with State 
        authorities, and (iii) shall not exercise thereafter 
        any of the powers granted by this section without first 
        applying for and obtaining a new permit to exercise 
        such powers pursuant to the provisions of this section.
          [(D) The Director may prescribe regulations necessary 
        to enforce compliance with the provisions of this 
        subsection.
          [(10) Revocation.--(A) In addition to the authority 
        conferred by other law, if, in the opinion of the 
        Director, a Federal savings association is unlawfully 
        or unsoundly exercising, or has unlawfully or unsoundly 
        exercised, or has failed for a period of 5 consecutive 
        years to exercise, the powers granted by this 
        subsection or otherwise fails or has failed to comply 
        with the requirements of this subsection, the Director 
        may issue and serve upon the association a notice of 
        intent to revoke the authority of the association to 
        exercise the powers granted by this subsection. The 
        notice shall contain a statement of the facts 
        constituting the alleged unlawful or unsound exercise 
        of powers, or failure to exercise powers, or failure to 
        comply, and shall fix a time and place at which a 
        hearing will be held to determine whether an order 
        revoking authority to exercise such powers should issue 
        against the association.
          [(B) Such hearing shall be conducted in accordance 
        with the provisions of subsection (d)(1)(B), and 
        subject to judicial review as therein provided, and 
        shall be fixed for a date not earlier than 30 days and 
        not later than 60 days after service of such notice 
        unless the Director sets an earlier or later date at 
        the request of any Federal savings association so 
        served.
          [(C) Unless the Federal savings association so served 
        shall appear at the hearing by a duly authorized 
        representative, it shall be deemed to have consented to 
        the issuance of the revocation order. In the event of 
        such consent, or if upon the record made at any such 
        hearing, the Director shall find that any allegation 
        specified in the notice of charges has been 
        established, the Director may issue and serve upon the 
        association an order prohibiting it from accepting any 
        new or additional trust accounts and revoking authority 
        to exercise any and all powers granted by this 
        subsection, except that such order shall permit the 
        association to continue to service all previously 
        accepted trust accounts pending their expeditious 
        divestiture or termination.
          [(D) A revocation order shall become effective not 
        earlier than the expiration of 30 days after service of 
        such order upon the association so served (except in 
        the case of a revocation order issued upon consent, 
        which shall become effective at the time specified 
        therein), and shall remain effective and enforceable, 
        except to such extent as it is stayed, modified, 
        terminated, or set aside by action of the Director or a 
        reviewing court.
  [(o) Conversion of State Savings Banks.--(1) Subject to the 
provisions of this subsection and under regulations of the 
Director, the Director may authorize the conversion of a State-
chartered savings bank that is a Bank Insurance Fund member 
into a Federal savings bank, if such conversion is not in 
contravention of State law, and provide for the organization, 
incorporation, operation, examination, and regulation of such 
institution.
  [(2)(A) Any Federal savings bank chartered pursuant to this 
subsection shall continue to be a Bank Insurance Fund member 
until such time as it changes its status to a Savings 
Association Insurance Fund member.
  [(B) The Director shall notify the Corporation of any 
application under this Act for conversion to a Federal charter 
by an institution insured by the Corporation, shall consult 
with the Corporation before disposing of the application, and 
shall notify the Corporation of the Director's determination 
with respect to such application.
  [(C) Notwithstanding any other provision of law, if the 
Corporation determines that conversion into a Federal stock 
savings bank or the chartering of a Federal stock savings bank 
is necessary to prevent the default of a savings bank it 
insures or to reopen a savings bank in default that it insured, 
or if the Corporation determines, with the concurrence of the 
Director, that severe financial conditions exist that threaten 
the stability of a savings bank insured by the Corporation and 
that such a conversion or charter is likely to improve the 
financial condition of such savings bank, the Corporation shall 
provide the Director with a certificate of such determination, 
the reasons therefor in conformance with the requirements of 
this Act, and the bank shall be converted or chartered by the 
Director, pursuant to the regulations thereof, from the time 
the Corporation issues the certificate.
  [(D) A bank may be converted under subparagraph (C) only if 
the board of trustees of the bank--
          [(i) has specified in writing that the bank is in 
        danger of closing or is closed, or that severe 
        financial conditions exist that threaten the stability 
        of the bank and a conversion is likely to improve the 
        financial condition of the bank; and
          [(ii) has requested in writing that the Corporation 
        use the authority of subparagraph (C).
  [(E)(i) Before making a determination under subparagraph (D), 
the Corporation shall consult the State bank supervisor of the 
State in which the bank in danger of closing is chartered. The 
State bank supervisor shall be given a reasonable opportunity, 
and in no event less than 48 hours, to object to the use of the 
provisions of subparagraph (D).
  [(ii) If the State supervisor objects during such period, the 
Corporation may use the authority of subparagraph (D) only by 
an affirmative vote of three-fourths of the Board of Directors. 
The Board of Directors shall provide the State supervisor, as 
soon as practicable, with a written certification of its 
determination.
  [(3) A Federal savings bank chartered under this subsection 
shall have the same authority with respect to investments, 
operations, and activities, and shall be subject to the same 
restrictions, including those applicable to branching and 
discrimination, as would apply to it if it were chartered as a 
Federal savings bank under any other provision of this Act.
  [(p) Conversions.--(1) Notwithstanding any other provision of 
law, and consistent with the purposes of this Act, the Director 
may authorize (or in the case of a Federal savings association, 
require) the conversion of any mutual savings association or 
Federal mutual savings bank that is insured by the Corporation 
into a Federal stock savings association or Federal stock 
savings bank, or charter a Federal stock savings association or 
Federal stock savings bank to acquire the assets of, or merge 
with such a mutual institution under the regulations of the 
Director.
  [(2) Authorizations under this subsection may be made only--
          [(A) if the Director has determined that severe 
        financial conditions exist which threaten the stability 
        of an associationand that such authorization is likely 
to improve the financial condition of the association,
          [(B) when the Corporation has contracted to provide 
        assistance to such association under section 13 of the 
        Federal Deposit Insurance Act, or
          [(C) to assist an institution in receivership.
  [(3) A Federal savings bank chartered under this subsection 
shall have the same authority with respect to investments, 
operations and activities, and shall be subject to the same 
restrictions, including those applicable to branching and 
discrimination, as would apply to it if it were chartered as a 
Federal savings bank under any other provision of this Act, and 
may engage in any investment, activity, or operation that the 
institution it acquired was engaged in if that institution was 
a Federal savings bank, or would have been authorized to engage 
in had that institution converted to a Federal charter.
  [(q) Tying Arrangements.--(1) A savings association may not 
in any manner extend credit, lease, or sell property of any 
kind, or furnish any service, or fix or vary the consideration 
for any of the foregoing, on the condition or requirement--
          [(A) that the customer shall obtain additional 
        credit, property, or service from such savings 
        association, or from any service corporation or 
        affiliate of such association, other than a loan, 
        discount, deposit, or trust service;
          [(B) that the customer provide additional credit, 
        property, or service to such association, or to any 
        service corporation or affiliate of such association, 
        other than those related to and usually provided in 
        connection with a similar loan, discount, deposit, or 
        trust service; and
          [(C) that the customer shall not obtain some other 
        credit, property, or service from a competitor of such 
        association, or from a competitor of any service 
        corporation or affiliate of such association, other 
        than a condition or requirement that such association 
        shall reasonably impose in connection with credit 
        transactions to assure the soundness of credit.
  [(2)(A) Any person may sue for and have injunctive relief, in 
any court of the United States having jurisdiction over the 
parties, against threatened loss or damage by reason of a 
violation of paragraph (1), under the same conditions and 
principles as injunctive relief against threatened conduct that 
will cause loss or damage is granted by courts of equity and 
under the rules governing such proceedings.
  [(B) Upon the execution of proper bond against damages for an 
injunction improvidently granted and a showing that the danger 
of irreparable loss or damage is immediate, a preliminary 
injunction may issue.
  [(3) Any person injured by a violation of paragraph (1) may 
bring an action in any district court of the United States in 
which the defendant resides or is found or has an agent, 
without regard to the amount in controversy, or in any other 
court of competent jurisdiction, and shall be entitled to 
recover three times the amount of the damages sustained, and 
the cost of suit, including a reasonable attorney's fee. Any 
such action shall be brought within 4 years from the date of 
the occurrence of the violation.
  [(4) Nothing contained in this subsection affects in any 
manner the right of the United States or any other party to 
bring an action under any other law of the United States or of 
any State, including any right which may exist in addition to 
specific statutory authority, challenging the legality of any 
act or practice which may be proscribed by this subsection. No 
regulation or order issued by the Director under this 
subsection shall in any manner constitute a defense to such 
action.
  [(5) For purposes of this subsection, the term ``loan'' 
includes obligations and extensions or advances of credit.
  [(6) Exceptions.--The Director may, by regulation or order, 
permit such exceptions to the prohibitions of this subsection 
as the Director considers will not be contrary to the purposes 
of this subsection and which conform to exceptions granted by 
the Board of Governors of the Federal Reserve System pursuant 
to section 106(b) of the Bank Holding Company Act Amendments of 
1970.
  [(r) Out-of-State Branches.--(1) No Federal savings 
association may establish, retain, or operate a branch outside 
the State in which the Federal savings association has its home 
office, unless the association qualifies as a domestic building 
and loan association under section 7701(a)(19) of the Internal 
Revenue Code of 1986 or meets the asset composition test 
imposed by subparagraph (C) of that section on institutions 
seeking so to qualify, or qualifies as a qualified thrift 
lender, as determined under section 10(m) of this Act. No out-
of-State branch so established shall be retained or operated 
unless the total assets of the Federal savings association 
attributable to all branches of the Federal savings association 
in that State would qualify the branches as a whole, were they 
otherwise eligible, for treatment as a domestic building and 
loan association under section 7701(a)(19) or as a qualified 
thrift lender, as determined under section 10(m) of this Act, 
as applicable.
  [(2) The limitations of paragraph (1) shall not apply if--
          [(A) the branch results from a transaction authorized 
        under section 13(k) of the Federal Deposit Insurance 
        Act;
          [(B) the branch was authorized for the Federal 
        savings association prior to October 15, 1982;
          [(C) the law of the State where the branch is 
        located, or is to be located, would permit 
        establishment of the branch if the association was a 
        savings association or savings bank chartered by the 
        State in which its home office is located; or
          [(D) the branch was operated lawfully as a branch 
        under State law prior to the association's conversion 
        to a Federal charter.
  [(3) The Director, for good cause shown, may allow Federal 
savings associations up to 2 years to comply with the 
requirements of this subsection.
  [(s) Minimum Capital Requirements.--
          [(1) In general.--Consistent with the purposes of 
        section 908 of the International Lending Supervision 
        Act of 1983 and the capital requirements established 
        pursuant to such section by the appropriate Federal 
        banking agencies (as defined in section 903(1) of such 
        Act), the Director shall require all savings 
        associations to achieve and maintain adequate capital 
        by--
                  [(A) establishing minimum levels of capital 
                for savings associations; and
                  [(B) using such other methods as the Director 
                determines to be appropriate.
          [(2) Minimum capital levels may be determined by 
        director case-by-case.--The Director may, consistent 
        with subsection (t), establish the minimum level of 
        capital for a savings association at such amount or at 
        such ratio of capital-to-assets as the Director 
        determines to be necessary or appropriate for such 
        association in light of the particular circumstances of 
        the association.
          [(3) Unsafe or unsound practice.--In the Director's 
        discretion, the Director may treat the failure of any 
        savings association to maintain capital at or above the 
        minimum level required by the Director under this 
        subsection or subsection (t) as an unsafe or unsound 
        practice.
          [(4) Directive to increase capital.--
                  [(A) Plan may be required.--In addition to 
                any other action authorized by law, including 
                paragraph (3), the Director may issue a 
                directive requiring any savings association 
                which fails to maintain capital at or above the 
                minimum level required by the Director to 
                submit and adhere to a plan for increasing 
                capital which is acceptable to the Director.
                  [(B) Enforcement of plan.--Any directive 
                issued and plan approved under subparagraph (A) 
                shall be enforceable under section 8 of the 
                Federal Deposit Insurance Act to the same 
                extent and in the same manner as an outstanding 
                order which was issued under section 8 of the 
                Federal Deposit Insurance Act and has become 
                final.
          [(5) Plan taken into account in other proceedings.--
        The Director may--
                  [(A) consider a savings association's 
                progress in adhering to any plan required under 
                paragraph (4) whenever such association or any 
                affiliate of such association (including any 
                company which controls such association) seeks 
                the Director's approval for any proposal which 
                would have the effect of diverting earnings, 
                diminishing capital, or otherwise impeding such 
                association's progress in meeting the minimum 
                level of capital required by the Director; and
                  [(B) disapprove any proposal referred to in 
                subparagraph (A) if the Director determines 
                that the proposal would adversely affect the 
                ability of the association to comply with such 
                plan.
  [(t) Capital Standards.--
          [(1) In general.--
                  [(A) Requirement for standards to be 
                prescribed.--The Director shall, by regulation, 
                prescribe and maintain uniformly applicable 
                capital standards for savings associations. 
                Those standards shall include--
                          [(i) a leverage limit;
                          [(ii) a tangible capital requirement; 
                        and
                          [(iii) a risk-based capital 
                        requirement.
                  [(B) Compliance.--A savings association is 
                not in compliance with capital standards for 
                purposes of this subsection unless it complies 
                with all capital standards prescribed under 
                this paragraph.
                  [(C) Stringency.--The standards prescribed 
                under this paragraph shall be no less stringent 
                than the capital standards applicable to 
                national banks.
                  [(D) Deadline for regulations.--The Director 
                shall promulgate final regulations under this 
                paragraph not later than 90 days after the date 
                of enactment of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989, 
                and those regulations shall become effective 
                not later than 120 days after the date of 
                enactment.
          [(2) Content of standards.--
                  [(A) Leverage limit.--The leverage limit 
                prescribed under paragraph (1) shall require a 
                savings association to maintain core capital in 
                an amount not less than 3 percent of the 
                savings association's total assets.
                  [(B) Tangible capital requirement.--The 
                tangible capital requirement prescribed under 
                paragraph (1) shall require a savings 
                association to maintain tangible capital in an 
                amount not less than 1.5 percent of the savings 
                association's total assets.
                  [(C) Risk-based capital requirement.--
                Notwithstanding paragraph (1)(C), the risk-
                based capital requirement prescribed under 
                paragraph (1) may deviate from the risk-based 
                capital standards applicable to national banks 
                to reflect interest-rate risk or other risks, 
                but such deviations shall not, in the 
                aggregate, result in materially lower levels of 
                capital being required of savings associations 
                under the risk-based capital requirement than 
                would be required under the risk-based capital 
                standards applicable to national banks.
          [(3) Transition rule.--
                  [(A) Certain qualifying supervisory goodwill 
                included in calculating core capital.--
                Notwithstanding paragraph (9)(A), an eligible 
                savings association may include qualifying 
                supervisory goodwill in calculating core 
                capital. The amount of qualifying supervisory 
                goodwill that may be included may not exceed 
                the applicable percentage of total assets set 
                forth in the following table:

          [For the following                              The applicable
          period:                                         percentage is:
          Prior to January 1, 1992......................   1.500 percent
          January 1, 1992-December 31, 1992.............   1.000 percent
          January 1, 1993-December 31, 1993.............   0.750 percent
          January 1, 1994-December 31, 1994.............   0.375 percent
          Thereafter....................................       0 percent

                  [(B) Eligible savings associations.--For 
                purposes of subparagraph (A), a savings 
                association is an eligible savings association 
                so long as the Director determines that--
                          [(i) the savings association's 
                        management is competent;
                          [(ii) the savings association is in 
                        substantial compliance with all 
                        applicable statutes, regulations, 
                        orders, and supervisory agreements and 
                        directives; and
                          [(iii) the savings association's 
                        management has not engaged in insider 
                        dealing, speculative practices, or any 
                        other activities that have jeopardized 
                        the association's safety and soundness 
                        or contributed to impairing the 
                        association's capital.
          [(4) Special rules for purchased mortgage servicing 
        rights.--
                  [(A) In general.--Notwithstanding paragraphs 
                (1)(C) and (9), the standards prescribed under 
                paragraph (1) may permit a savings association 
                to include in calculating capital for the 
                purpose of the leverage limit and risk-based 
                capital requirement prescribed under paragraph 
                (1), on terms no less stringent than under both 
                the capital standards applicable to State 
                nonmember banks and (except as to the amount 
                that may be included in calculating capital) 
                the capital standards applicable to national 
                banks, 90 percent of the fair market value of 
                readily marketable purchased mortgage servicing 
                rights.
                  [(B) Tangible capital requirement.--
                Notwithstanding paragraphs (1)(C) and (9)(C), 
                the standards prescribed under paragraph (1) 
                may permit a savings association to include in 
                calculating capital for the purpose of the 
                tangible capital requirement prescribed under 
                paragraph (1), on terms no less stringent than 
                under both the capital standards applicable to 
                State nonmember banks and (except as to the 
                amount that may be included in calculating 
                capital) the capital standards applicable to 
                national banks, 90 percent of the fair market 
                value of readily marketable purchased mortgage 
                servicing rights.
                  [(C) Percentage limitation prescribed by 
                fdic.--Notwithstanding paragraph (1)(C) and 
                subparagraphs (A) and (B) of this paragraph--
                          [(i) for the purpose of subparagraph 
                        (A), the maximum amount of purchased 
                        mortgage servicing rights that may be 
                        included in calculating capital under 
                        the leverage limit and the risk-based 
                        capital requirement prescribed under 
                        paragraph (1) may not exceed the amount 
                        that could be included if the savings 
                        association were an insured State 
                        nonmember bank; and
                          [(ii) for the purpose of subparagraph 
                        (B), the Corporation shall prescribe a 
                        maximum percentage of the tangible 
                        capital requirement that savings 
                        associations may satisfy by including 
                        purchased mortgage servicing rights in 
                        calculating such capital.
                  [(D) Quarterly valuation.--The fair market 
                value of purchased mortgage servicing rights 
                shall be determined not less often than 
                quarterly.
          [(5) Separate capitalization required for certain 
        subsidiaries.--
                  [(A) In general.--In determining compliance 
                with capital standards prescribed under 
                paragraph (1), all of asavings association's 
investments in and extensions of credit to any subsidiary engaged in 
activities not permissible for a national bank shall be deducted from 
the savings association's capital.
                  [(B) Exception for agency activities.--
                Subparagraph (A) shall not apply with respect 
                to a subsidiary engaged, solely as agent for 
                its customers, in activities not permissible 
                for a national bank unless the Corporation, in 
                its sole discretion, determines that, in the 
                interests of safety and soundness, this 
                subparagraph should cease to apply to that 
                subsidiary.
                  [(C) Other exceptions.--Subparagraph (A) 
                shall not apply with respect to any of the 
                following:
                          [(i) Mortgage banking subsidiaries.--
                        A savings association's investments in 
                        and extensions of credit to a 
                        subsidiary engaged solely in mortgage-
                        banking activities.
                          [(ii) Subsidiary insured depository 
                        institutions.--A savings association's 
                        investments in and extensions of credit 
                        to a subsidiary--
                                  [(I) that is itself an 
                                insured depository institution 
                                or a company the sole 
                                investment of which is an 
                                insured depository institution, 
                                and
                                  [(II) that was acquired by 
                                the parent insured depository 
                                institution prior to May 1, 
                                1989.
                          [(iii) Certain federal savings 
                        banks.--Any Federal savings association 
                        existing as a Federal savings 
                        association on the date of enactment of 
                        the Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989--
                                  [(I) that was chartered prior 
                                to October 15, 1982, as a 
                                savings bank or a cooperative 
                                bank under State law; or
                                  [(II) that acquired its 
                                principal assets from an 
                                association that was chartered 
                                prior to October 15, 1982, as a 
                                savings bank or a cooperative 
                                bank under State law.
                  [(D) Transition rule.--
                          [(i) Inclusion in capital.--
                        Notwithstanding subparagraph (A), if a 
                        savings association's subsidiary was, 
                        as of April 12, 1989, engaged in 
                        activities not permissible for a 
                        national bank, the savings association 
                        may include in calculating capital the 
                        applicable percentage (set forth in 
                        clause (ii)) of the lesser of--
                                  [(I) the savings 
                                association's investments in 
                                and extensions of credit to the 
                                subsidiary on April 12, 1989; 
                                or
                                  [(II) the savings 
                                association's investments in 
                                and extensions of credit to the 
                                subsidiary on the date as of 
                                which the savings association's 
                                capital is being determined.
                          [(ii) Applicable percentage.--For 
                        purposes of clause (i), the applicable 
                        percentage is as follows:

          [For the following                              The applicable
          period:                                         percentage is:
          Prior to July 1, 1990.........................     100 percent
          July 1, 1990-June 30, 1991....................      90 percent
          July 1, 1991-October 31, 1992.................      75 percent
          November 1, 1992-June 30, 1993................      60 percent
          July 1, 1993-June 30, 1994....................      40 percent
          Thereafter....................................       0 percent

                          [(iii) Agency discretion to prescribe 
                        greater percentage.--Subject to clauses 
                        (iv), (v), and (vi), the Director may 
                        prescribe by order, with respect to a 
                        particular qualified savings 
                        association, an applicable percentage 
                        greater than that provided in clause 
                        (ii) if the Director determines, in the 
                        Director's sole discretion, that the 
                        use of the greater percentage, under 
                        the circumstances--
                                  [(I) would not constitute an 
                                unsafe or unsound practice;
                                  [(II) would not increase the 
                                risk to the affected deposit 
                                insurance fund; and
                                  [(III) would not be likely to 
                                result in the association's 
                                being in an unsafe or unsound 
                                condition.
                          [(iv) Substantial compliance with 
                        approved capital plan.--In the case of 
                        a savings association which is subject 
                        to a plan submitted under paragraph 
                        (7)(D) of this subsection or an order 
                        issued under this subsection, a 
                        directive issued or plan approved under 
                        subsection (s), or a capital 
                        restoration plan approved or order 
                        issued under section 38 or 39 of the 
                        Federal Deposit Insurance Act, an order 
                        issued under clause (iii) with respect 
                        to the association shall be effective 
                        only so long as the association is in 
                        substantial compliance with such plan, 
                        directive, or order.
                          [(v) Limitation on investments taken 
                        into account.--In prescribing the 
                        amount by which an applicable 
                        percentage under clause (iii) may 
                        exceed the applicable percentage under 
                        clause (ii) with respect to a 
                        particular qualified savings 
                        association, the Director may take into 
                        account only the sum of--
                                  [(I) the association's 
                                investments in, and extensions 
                                of credit to, the subsidiary 
                                that were made on or before 
                                April 12, 1989; and
                                  [(II) the association's 
                                investments in, and extensions 
                                of credit to, the subsidiary 
                                that were made after April 12, 
                                1989, and were necessary to 
                                complete projects initiated 
                                before April 12, 1989.
                          [(vi) Limit.--The applicable 
                        percentage limit allowed by the 
                        Director in an order under clause (iii) 
                        shall not exceed the following limits:
          
[For the following period:                                 The limit is:
    Prior to July 1, 1994.....................................75 percent
    July 1, 1994 through June 30, 1995........................60 percent
    July 1, 1995 through June 30, 1996........................40 percent
    After June 30, 1996....................................... 0 percent

                          [(vii) Critically undercapitalized 
                        institution.--In the case of a savings 
                        association that becomes critically 
                        undercapitalized (as defined in section 
                        38 of the Federal Deposit Insurance 
                        Act) as determined under this 
                        subparagraph without applying clause 
                        (iii), clauses (iii) through (v) shall 
                        be applied by substituting 
                        ``Corporation'' for ``Director'' each 
                        place such term appears.
                          [(viii) Qualified savings association 
                        defined.--For purposes of clause (iii), 
                        the term ``qualified savings 
                        association'' means an eligible savings 
                        association (as defined in paragraph 
                        (3)(B)) which is subject to this 
                        paragraph solely because of the real 
                        estate investments or other real estate 
                        activities of the association's 
                        subsidiary, and--
                                  [(I) is adequately 
                                capitalized (as defined in 
                                section 38 of the Federal 
                                Deposit Insurance Act); or
                                  [(II) is in compliance with 
                                an approved capital restoration 
                                plan meeting the requirements 
                                of section 38 of the Federal 
                                Deposit Insurance Act, and is 
                                not critically undercapitalized 
                                (as defined in such section).
                          [(ix) FDIC's discretion to prescribe 
                        lesser percentage.--The Corporation may 
                        prescribe by order, with respect to a 
                        particular savings association, an 
                        applicable percentage less than that 
                        provided in clause (ii) or prescribed 
                        under clause (iii) if the Corporation 
                        determines, in its sole discretion, 
                        that the use of a greater percentage 
                        would, under the circumstances, 
                        constitute an unsafe or unsound 
                        practice or be likely to result in the 
                        association's being in an unsafe or 
                        unsound condition.
                  [(E) Consolidation of subsidiaries not 
                separately capitalized.--In determining 
                compliance with capital standards prescribed 
                under paragraph (1), the assets and liabilities 
                of each of a savings association's subsidiaries 
                (other than any subsidiary described in 
                subparagraph (C)(ii)) shall be consolidated 
                with the savings association's assets and 
                liabilities, unless all of the savings 
                association's investments in and extensions of 
                credit to the subsidiary are deducted from the 
                savings association's capital pursuant to 
                subparagraph (A).
          [(6) Consequences of failing to comply with capital 
        standards.--
                  [(A) Prior to january 1, 1991.--Prior to 
                January 1, 1991, the Director--
                          [(i) may restrict the asset growth of 
                        any savings association not in 
                        compliance with capital standards; and
                          [(ii) shall, beginning 60 days 
                        following the promulgation of final 
                        regulations under this subsection, 
                        require any savings association not in 
                        compliance with capital standards to 
                        submit a plan under subsection 
                        (s)(4)(A) that--
                                  [(I) addresses the savings 
                                association's need for 
                                increased capital;
                                  [(II) describes the manner in 
                                which the savings association 
                                will increase its capital so as 
                                to achieve compliance with 
                                capital standards;
                                  [(III) specifies the types 
                                and levels of activities in 
                                which the savings association 
                                will engage;
                                  [(IV) requires any increase 
                                in assets to be accompanied by 
                                an increase in tangible capital 
                                not less in percentage amount 
                                than the leverage limit then 
                                applicable;
                                  [(V) requires any increase in 
                                assets to be accompanied by an 
                                increase in capital not less in 
                                percentage amount than required 
                                under the risk-based capital 
                                standard then applicable; and
                                  [(VI) is acceptable to the 
                                Director.
                  [(B) On or after january 1, 1991.--On or 
                after January 1, 1991, the Director--
                          [(i) shall prohibit any asset growth 
                        by any savings association not in 
                        compliance with capital standards, 
                        except as provided in subparagraph (C); 
                        and
                          [(ii) shall require any savings 
                        association not in compliance with 
                        capital standards to comply with a 
                        capital directive issued by the 
                        Director (which may include such 
                        restrictions, including restrictions on 
                        the payment of dividends and on 
                        compensation, as the Director 
                        determines to be appropriate).
                  [(C) Limited growth exception.--The Director 
                may permit any savings association that is 
                subject to subparagraph (B) to increase its 
                assets in an amount not exceeding the amount of 
                net interest credited to the savings 
                association's deposit liabilities if--
                          [(i) the savings association obtains 
                        the Director's prior approval;
                          [(ii) any increase in assets is 
                        accompanied by an increase in tangible 
                        capital in an amount not less than 6 
                        percent of the increase in assets (or, 
                        in the Director's discretion if the 
                        leverage limit then applicable is less 
                        than 6 percent, in an amount equal to 
                        the increase in assets multiplied by 
                        the percentage amount of the leverage 
                        limit);
                          [(iii) any increase in assets is 
                        accompanied by an increase in capital 
                        not less in percentage amount than 
                        required under the risk-based capital 
                        standard then applicable;
                          [(iv) any increase in assets is 
                        invested in low-risk assets, such as 
                        first mortgage loans secured by 1- to 
                        4-family residences and fully secured 
                        consumer loans; and
                          [(v) the savings association's ratio 
                        of core capital to total assets is not 
                        less than the ratio existing on January 
                        1, 1991.
                  [(D) Additional restrictions in case of 
                excessive risks or rates.--The Director may 
                restrict the asset growth of any savings 
                association that the Director determines is 
                taking excessive risks or paying excessive 
                rates for deposits.
                  [(E) Failure to comply with plan, regulation, 
                or order.--The Director shall treat as an 
                unsafe and unsound practice any material 
                failure by a savings association to comply with 
                any plan, regulation, or order under this 
                paragraph.
                  [(F) Effect on other regulatory authority.--
                This paragraph does not limit any authority of 
                the Director under other provisions of law.
          [(7) Exemption from certain sanctions.--
                  [(A) Application for exemption.--Any savings 
                association not in compliance with the capital 
                standards prescribed under paragraph (1) may 
                apply to the Director for an exemption from any 
                applicable sanction or penalty for 
                noncompliance which the Director may impose 
                under this Act.
                  [(B) Effect of grant of exemption.--If the 
                Director approves any savings association's 
                application under subparagraph (A), the only 
                sanction or penalty to be imposed by the 
                Director under this Act for the savings 
                association's failure to comply with the 
                capital standards prescribed under paragraph 
                (1) is the growth limitation contained in 
                paragraph (6)(B) or paragraph (6)(C), whichever 
                is applicable.
                  [(C) Standards for approval or disapproval.--
                          [(i) Approval.--The Director may 
                        approve an application for an exemption 
                        if the Director determines that--
                                  [(I) such exemption would 
                                pose no significant risk to the 
                                affected deposit insurance 
                                fund;
                                  [(II) the savings 
                                association's management is 
                                competent;
                                  [(III) the savings 
                                association is in substantial 
                                compliance with all applicable 
                                statutes, regulations, orders, 
                                and supervisory agreements and 
                                directives; and
                                  [(IV) the savings 
                                association's management has 
                                not engaged in insider dealing, 
                                speculative practices, or any 
                                other activities that have 
                                jeopardized the association's 
                                safety and soundness or 
                                contributed to impairing the 
                                association's capital.
                          [(ii) Denial or revocation of 
                        approval.--The Director shall deny any 
                        application submitted under clause (i) 
                        and revoke any prior approval granted 
                        with respect to any such application if 
                        the Director determines that the 
                        association's failure to meet any 
                        capital standards prescribed under 
                        paragraph (1) is accompanied by--
                                  [(I) a pattern of consistent 
                                losses;
                                  [(II) substantial dissipation 
                                of assets;
                                  [(III) evidence of imprudent 
                                management or business 
                                behavior;
                                  [(IV) a material violation of 
                                any Federal law, any law of any 
                                State to which such association 
                                is subject, or any applicable 
                                regulation; or
                                  [(V) any other unsafe or 
                                unsound condition or activity, 
                                other than the failure to meet 
                                such capital standards.
                  [(D) Submission of plan required.--Any 
                application submitted under subparagraph (A) 
                shall be accompanied by a plan which--
                          [(i) meets the requirements of 
                        paragraph (6)(A)(ii); and
                          [(ii) is acceptable to the Director.
                  [(E) Failure to comply with plan.--The 
                Director shall treat as an unsafe and unsound 
                practice any material failure by any savings 
                association which has been granted an exemption 
                under this paragraph to comply with the 
                provisions of any plan submitted by such 
                association under subparagraph (D).
                  [(F) Exemption not available with respect to 
                unsafe or unsound practices.--This paragraph 
                does not limit any authority of the Director 
                under any other provision of law, including 
                section 8 of the Federal Deposit Insurance Act, 
                to take any appropriate action with respect to 
                any unsafe or unsound practice or condition of 
                any savings association, other than the failure 
                of such savings association to comply with the 
                capital standards prescribed under paragraph 
                (1).
          [(8) Temporary authority to make exceptions for 
        eligible savings associations.--
                  [(A) In general.--Notwithstanding paragraph 
                (1)(C), the Director may, by order, make 
                exceptions to the capital standards prescribed 
                under paragraph (1) for eligible savings 
                associations. No exception under this paragraph 
                shall be effective after January 1, 1991.
                  [(B) Standards for approval or disapproval.--
                In determining whether to grant an exception 
                under subparagraph (A), the Director shall 
                apply the same standards as apply to 
                determinations under paragraph (7)(C).
          [(9) Definitions.--For purposes of this subsection--
                  [(A) Core capital.--Unless the Director 
                prescribes a more stringent definition, the 
                term ``core capital'' means core capital as 
                defined by the Comptroller of the Currency for 
                national banks, less any unidentifiable 
                intangible assets, plus any purchased mortgage 
                servicing rights excluded from the 
                Comptroller's definition of capital but 
                included in calculating the core capital of 
                savings associations pursuant to paragraph (4).
                  [(B) Qualifying supervisory goodwill.--The 
                term ``qualifying supervisory goodwill'' means 
                supervisory goodwill existing on April 12, 
                1989, amortized on a straightline basis over 
                the shorter of--
                          [(i) 20 years, or
                          [(ii) the remaining period for 
                        amortization in effect on April 12, 
                        1989.
                  [(C) Tangible capital.--The term ``tangible 
                capital'' means core capital minus any 
                intangible assets (as intangible assets are 
                defined by the Comptroller of the Currency for 
                national banks).
                  [(D) Total assets.--The term ``total assets'' 
                means total assets (as total assets are defined 
                by the Comptroller of the Currency for national 
                banks) adjusted in the same manner as total 
                assets would be adjusted in determining 
                compliance with the leverage limit applicable 
                to national banks if the savings association 
                were a national bank.
          [(10) Use of comptroller's definitions.--
                  [(A) In general.--The standards prescribed 
                under paragraph (1) shall include all relevant 
                substantive definitions established by the 
                Comptroller of the Currency for national banks.
                  [(B) Special rule.--If the Comptroller of the 
                Currency has not made effective regulations 
                defining core capital or establishing a risk-
                based capital standard, the Director shall use 
                the definition and standard contained in the 
                Comptroller's most recently published final 
                regulations.
  [(u) Limits on Loans to One Borrower.--
          [(1) In general.--Section 5200 of the Revised 
        Statutes shall apply to savings associations in the 
        same manner and to the same extent as it applies to 
        national banks.
          [(2) Special rules.--
                  [(A) Notwithstanding paragraph (1), a savings 
                association may make loans to one borrower 
                under one of the following clauses:
                          [(i) for any purpose, not to exceed 
                        $500,000; or
                          [(ii) to develop domestic residential 
                        housing units, not to exceed the lesser 
                        of $30,000,000 or 30 percent of the 
                        savings association's unimpaired 
                        capital and unimpaired surplus, if--
                                  [(I) the purchase price of 
                                each single family dwelling 
                                unit the development of which 
                                is financed under this clause 
                                does not exceed $500,000;
                                  [(II) the savings association 
                                is and continues to be in 
                                compliance with the fully 
                                phased-in capital standards 
                                prescribed under subsection 
                                (t);
                                  [(III) the Director, by 
                                order, permits the savings 
                                association to avail itself of 
                                the higher limit provided by 
                                this clause;
                                  [(IV) loans made under this 
                                clause to all borrowers do not, 
                                in aggregate, exceed 150 
                                percent of the savings 
                                association's unimpaired 
                                capital and unimpaired surplus; 
                                and
                                  [(V) such loans comply with 
                                all applicable loan-to-value 
                                requirements.
                  [(B) A savings association's loans to one 
                borrower to finance the sale of real property 
                acquired in satisfaction of debts previously 
                contracted in good faith shall not exceed 50 
                percent of the savings association's unimpaired 
                capital and unimpaired surplus.
          [(3) Authority to impose more stringent 
        restrictions.--The Director may impose more stringent 
        restrictions on a savings association's loans to one 
        borrower if the Director determines that such 
        restrictions are necessary to protect the safety and 
        soundness of the savings association.
  [(v) Reports of Condition.--
          [(1) In general.--Each association shall make reports 
        of conditions to the Director which shall be in a form 
        prescribed by the Director and shall contain--
                  [(A) information sufficient to allow the 
                identification of potential interest rate and 
                credit risk;
                  [(B) a description of any assistance being 
                received by the association, including the type 
                and monetary value of such assistance;
                  [(C) the identity of all subsidiaries and 
                affiliates of the association;
                  [(D) the identity, value, type, and sector of 
                investment of all equity investments of the 
                associations and subsidiaries; and
                  [(E) other information that the Director may 
                prescribe.
          [(2) Public disclosure.--
                  [(A) Reports required under paragraph (1) and 
                all information contained therein shall be 
                available to the public upon request, unless 
                the Director determines--
                          [(i) that a particular item or 
                        classification of information should 
                        not be made public in order to protect 
                        the safety or soundness of the 
                        institution concerned or institutions 
                        concerned, the Savings Association 
                        Insurance Fund; or
                          [(ii) that public disclosure would 
                        not otherwise be in the public 
                        interest.
                  [(B) Any determination made by the Director 
                under subparagraph (A) not to permit the public 
                disclosure of information shall be made in 
                writing, and if the Director restricts any item 
                of information for savings institutions 
                generally, the Director shall disclose the 
                reason in detail in the Federal Register.
                  [(C) The Director's determinations under 
                subparagraph (A) shall not be subject to 
                judicial review.
          [(3) Access by certain parties.--
                  [(A) Notwithstanding paragraph (2), the 
                persons described in subparagraph (B) shall not 
                be denied access to any information contained 
                in a report of condition, subject to reasonable 
                requirements of confidentiality. Those 
                requirements shall not prevent such information 
                from being transmitted to the Comptroller 
                General of the United States for analysis.
                  [(B) The following persons are described in 
                this subparagraph for purposes of subparagraph 
                (A):
                          [(i) the Chairman and ranking 
                        minority member of the Committee on 
                        Banking, Housing, and Urban Affairs of 
                        the Senate and their designees; and
                          [(ii) the Chairman and ranking 
                        minority member of the Committee on 
                        Banking, Finance and Urban Affairs of 
                        the House of Representatives and their 
                        designees.
          [(4) First tier penalties.--Any savings association 
        which--
                  [(A) maintains procedures reasonably adapted 
                to avoid any inadvertent and unintentional 
                error and, as a result of such an error--
                          [(i) fails to submit or publish any 
                        report or information required by the 
                        Director under paragraph (1) or (2), 
                        within the period of time specified by 
                        the Director; or
                          [(ii) submits or publishes any false 
                        or misleading report or information; or
                  [(B) inadvertently transmits or publishes any 
                report which is minimally late,
        shall be subject to a penalty of not more than $2,000 
        for each day during which such failure continues or 
        such false or misleading information is not corrected. 
        The savings association shall have the burden of 
        proving by a preponderence of the evidence that an 
        error was inadvertent and unintentional and that a 
        report was inadvertently transmitted or published late.
          [(5) Second tier penalties.--Any savings association 
        which--
                  [(A) fails to submit or publish any report or 
                information required by the Director under 
                paragraph (1) or (2), within the period of time 
                specified by the Director; or
                  [(B) submits or publishes any false or 
                misleading report or information,
        in a manner not described in paragraph (4) shall be 
        subject to a penalty of not more than $20,000 for each 
        day during which such failure continues or such false 
        or misleading information is not corrected.
          [(6) Third tier penalties.--If any savings 
        association knowingly or with reckless disregard for 
        the accuracy of any information or report described in 
        paragraph (5) submits or publishes any false or 
        misleading report or information, the Director may 
        assess a penalty of not more than $1,000,000 or 1 
        percent of total assets, whichever is less, per day for 
        each day during which such failure continues or such 
        false or misleading information is not corrected.
          [(7) Assessment.--Any penalty imposed under paragraph 
        (4), (5), or (6) shall be assessed and collected by the 
        Director in the manner provided in subparagraphs (E), 
        (F), (G), and (I) of section 8(i)(2) of the Federal 
        Deposit Insurance Act (for penalties imposed under such 
        section), and any such assessment (including the 
        determination of the amount of the penalty) shall be 
        subject to the provisions of such subsection.
          [(8) Hearing.--Any savings association against which 
        any penalty is assessed under this subsection shall be 
        afforded ahearing if such savings association submits a 
request for such hearing within 20 days after the issuance of the 
notice of assessment. Section 8(h) of the Federal Deposit Insurance Act 
shall apply to any proceeding under this subsection.
  [(w) Forfeiture of Franchise for Money Laundering or Cash 
Transaction Reporting Offenses.--
          [(1) In general.--
                  [(A) Conviction of title 18 offense.--
                          [(I) Duty to notify.--If a Federal 
                        savings association has been convicted 
                        of any criminal offense under section 
                        1956 or 1957 of title 18, United States 
                        Code, the Attorney General shall 
                        provide to the Director a written 
                        notification of the conviction and 
                        shall include a certified copy of the 
                        order of conviction from the court 
                        rendering the decision.
                          [(II) Notice of termination; 
                        pretermination hearing.--After 
                        receiving written notification from the 
                        Attorney General of such a conviction, 
                        the Director shall issue to the savings 
                        association a notice of the Director's 
                        intention to terminate all rights, 
                        privileges, and franchises of the 
                        savings association and schedule a 
                        pretermination hearing.
                  [(B) Conviction of title 31 offenses.--If a 
                Federal savings association is convicted of any 
                criminal offense under section 5322 or 5324 of 
                title 31, United States Code, after receiving 
                written notification from the Attorney General, 
                the Director may issue to the savings 
                association a notice of the Director's 
                intention to terminate all rights, privileges, 
                and franchises of the savings association and 
                schedule a pretermination hearing.
                  [(C) Judicial review.--Subsection 
                (d)(1)(B)(vii) shall apply to any proceeding 
                under this subsection.
          [(2) Factors to be considered.--In determining 
        whether a franchise shall be forfeited under paragraph 
        (1), the Director shall take into account the following 
        factors:
                  [(A) The extent to which directors or senior 
                executive officers of the savings association 
                knew of, were involved in, the commission of 
                the money laundering offense of which the 
                association was found guilty.
                  [(B) The extent to which the offense occurred 
                despite the existence of policies and 
                procedures within the savings association which 
                were designed to prevent the occurrence of any 
                such offense.
                  [(C) The extent to which the savings 
                association has fully cooperated with law 
                enforcement authorities with respect to the 
                investigation of the money laundering offense 
                of which the association was found guilty.
                  [(D) The extent to which the savings 
                association has implemented additional internal 
                controls (since the commission of the offense 
                of which the savings association was found 
                guilty) to prevent the occurrence of any other 
                money laundering offense.
                  [(E) The extent to which the interest of the 
                local community in having adequate deposit and 
                credit servicesavailable would be threatened by 
the forfeiture of the franchise.
          [(3) Successor liability.--This subsection shall not 
        apply to a successor to the interests of, or a person 
        who acquires, a savings association that violated a 
        provision of law described in paragraph (1), if the 
        successor succeeds to the interests of the violator, or 
        the acquisition is made, in good faith and not for 
        purposes of evading this subsection or regulations 
        prescribed under this subsection.
          [(4) Definition.--The term ``senior executive 
        officer'' has the same meaning as in regulations 
        prescribed under section 32(f) of the Federal Deposit 
        Insurance Act.

[SEC. 6. LIQUID ASSET REQUIREMENTS.

  [(a) In General.--The purpose of this section is to provide a 
means for creating effective and flexible liquidity in savings 
associations which can be increased when mortgage money is 
plentiful, maintained in easily liquidated instruments, and 
reduced to add to the flow of funds to the mortgage market in 
periods of credit stringency. More flexible liquidity will help 
support sound mortgage credit and a more stable supply of such 
credit.
  [(b) Maintenance of Account.--
          [(1) In general.--Every savings association shall 
        maintain the aggregate amount of its assets of the 
        following types at not less than such amount as, in the 
        opinion of the Director, is appropriate:
          [(A cash;
          [(B) balances maintained in a Federal reserve bank or 
        passed through a Federal home loan bank or another 
        depository institution to a Federal reserve bank 
        pursuant to the Federal Reserve Act; and
          [(C) to such extent as the Director may approve for 
        the purposes of this section--
                  [(i) time and savings deposits in Federal 
                home loan banks, institutions which are, or are 
                eligible to become, members thereof, and 
                commercial banks;
                  [(ii) such obligations, including such 
                special obligations, of the United States, a 
                State, any territory or possession of the 
                United States, or a political subdivision, 
                agency, or instrumentality of any one or more 
                of the foregoing, and bankers' acceptances, as 
                the Director may approve;
                  [(iii) shares or certificates of any open-end 
                management investment company which is 
                registered with the Securities and Exchange 
                Commission under the Investment Company Act of 
                1940 and the portfolio of which is restricted 
                by such investment company's investment policy, 
                changeable only if authorized by shareholder 
                vote, solely to any of the obligations or other 
                investments enumerated in subparagraph (A) and 
                in clauses (i), (ii), (iv), (v), (vi), and 
                (vii) of this subparagraph;
                  [(iv) liquid, highly rated corporate debt 
                obligations with 3 years or less remaining 
                until maturity;
                  [(v) highly rated commercial paper with 270 
                days or less remaining until maturity;
                  [(vi) mortgage related securities (as that 
                term is defined in section 3(a)(41) of the 
                Securities Exchange Act of 1934)--
                          [(I) that have one year or less 
                        remaining until maturity; or
                          [(II) that are subject to an 
                        agreement (including a repurchase 
                        agreement, put option, right of 
                        redemption, or takeout commitment) that 
                        requires another person to purchase the 
                        securities within a period that does 
                        not exceed one year, and that person is 
                        an insured depository institution (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act) that is in 
                        compliance with applicable capital 
                        standards, a primary dealer in United 
                        States Government securities, or a 
                        broker or dealer registered under the 
                        Securities Exchange Act of 1934; and
                  [(vii) mortgage loans on the security of a 
                first lien on residential real property, if the 
                mortgage loans qualify as backing for mortgage-
                backed securities issued by the Federal 
                National Mortgage Association or the Federal 
                Home Loan Mortgage Association or guaranteed by 
                the Government National Mortgage Association, 
                and either--
                          [(I) the mortgage loans have one year 
                        or less remaining until maturity, or
                          [(II) the mortgage loans are subject 
                        to an agreement (including a repurchase 
                        agreement, put option, right of 
                        redemption, or takeout commitment) that 
                        requires another person to purchase the 
                        loans within a period that does not 
                        exceed one year, and that person is an 
                        insured depository institution (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act) that is in 
                        compliance with applicable capital 
                        standards, a primary dealer in United 
                        States Government securities, or a 
                        broker or dealer registered under the 
                        Securities Exchange Act of 1934.
          [(2) Limitation.--The requirement prescribed by the 
        Director pursuant to this subsection (hereafter in this 
        section referred to as the ``liquidity requirement'') 
        may not be less than 4 percent or more than 10 percent 
        of the obligation of the institution on withdrawable 
        accounts and borrowings payable on demand or with 
        unexpired maturities of one year or less. The Director 
        shall prescribe regulations to implement the provisions 
        of this subsection.
  [(c) Calculation.--The amount of any savings association's 
liquidity requirement, and any deficiency in compliance 
therewith, shall be calculated as the Director shall prescribe. 
The Director may prescribe different liquidity requirements, 
within the limitations specified herein, for different classes 
of savings associations, and for such purposes the Director is 
authorized to classify savings associations according to type, 
size, location, rate of withdrawals, or on such other basis or 
bases of differentiation as the Director may deem to be 
reasonably necessary or appropriate for the purposes of this 
section.
  [(d) Deficiency Assessments.--For any deficiency in 
compliance with the liquidity requirements, the Director may, 
in the Director's discretion, assess a penalty consisting of 
the payment by the institution of such sum as may be assessed 
by the Director but not in excess of a rate equal to the 
highest rate on Federal home loan bank advances of one year or 
less, plus 2 percent per year, on the amount of the deficiency 
for the period with respect to which the deficiency existed. 
Any penalty assessed under this subsection against a savings 
association shall be paid to the Director. The Director may 
authorize or require that, at any time before collection 
thereof, and whether before or after the bringing of any action 
or other legal proceeding, the obtaining of any judgment or 
other recovery, or the issuance or levy of any execution or 
other legal process therefor, and with or without 
consideration, any such penalty or recovery be compromised, 
remitted, or mitigated in whole or part. The penalties 
authorized under this subsection are in addition to all 
remedies and sanctions otherwise available.
  [(e) Reduction or Suspension.--Whenever the Director deems it 
advisable in order to enable a savings association to meet 
withdrawals or to pay obligations, the Director may, to such 
extent and subject to such conditions as the Director may 
prescribe, permit the savings association to reduce its 
liquidity below the minimum amount. Whenever the Director 
determines that conditions of national emergency or unusual 
economic stress exist, the Director may suspend any part or all 
of the liquidity requirements hereunder for such period as the 
Director may prescribe. Any such suspension, unless sooner 
terminated by its terms or by the Director, shall terminate at 
the expiration of 90 days next after its commencement. The 
preceding sentence does not prevent the Director from again 
exercising, before, at, or after any such termination, the 
authority conferred by this subsection.
  [(f) Regulating Authority.--The Director is authorized to 
issue such regulations, including definitions of terms used in 
this section, to make such examinations, and to conduct such 
investigations as the Director deems necessary or appropriate 
to effectuate the purposes of this section. The reasonable cost 
of any such examination or investigation, as determined by the 
Director, shall be paid by the association.

[SEC. 7. APPLICABILITY.

  [The provisions of this Act shall apply to the United States 
and to Puerto Rico, Guam, and the Virgin Islands.

[SEC. 8. DISTRICT ASSOCIATIONS.

  [(a) In General.--The Director shall, with respect to all 
incorporated or unincorporated building, building or loan, 
building and loan, or homestead associations, and similar 
institutions, of or transacting or doing business in the 
District of Columbia, or maintaining any office in the District 
of Columbia (other than Federal savings associations), have the 
same powers and functions as to examination, operation, and 
regulation as the Director has with respect to Federal savings 
associations.
  [(b) Additional Powers.--Any such association or institution 
incorporated under the laws of, or organized in, the District 
of Columbia shall have in addition to any existing statutory 
authority such statutory authority as is vested in Federal 
savings associations.
  [(c) Charter Amendments.--Charters, certificates of 
incorporation, articles of incorporation, constitutions, 
bylaws, or other organic documents of associations or 
institutions referred to in subsection (b) of this section may, 
without regard to anything contained therein or otherwise, be 
amended in such manner and to such extent and upon such votes 
if any as the Director may by regulation or otherwise provide.
  [(d) Limitation.--Nothing in this section shall cause, or 
permit the Director to cause, District of Columbia associations 
to be or become Federal savings associations, or require the 
Director to impose on District of Columbia associations the 
same regulations as are imposed on Federal savings 
associations.

[SEC. 9. EXAMINATION FEES.

  [(a) Examination of Savings Associations.--The cost of 
conducting examinations of savings associations pursuant to 
section 5(d) shall be assessed by the Director against each 
such savings association as the Director deems necessary or 
appropriate.
  [(b) Examination of Affiliates.--The cost of conducting 
examinations of affiliates of savings associations pursuant to 
this Act may be assessed by the Director against each affiliate 
that is examined as the Director deems necessary or 
appropriate.
  [(c) Assessment Against Association in Case of Affiliate's 
Refusal To Pay.--
          [(1) In general.--Subject to paragraph (2), if any 
        affiliate of any savings association--
                  [(A) refuses to pay any assessment under 
                subsection (b); or
                  [(B) fails to pay any such assessment before 
                the end of the 60-day period beginning on the 
                date of the assessment,
        the Director may assess such cost against, and collect 
        such cost from, such savings association.
          [(2) Affiliate of more than 1 savings association.--
        If any affiliate referred to in paragraph (1) is an 
        affiliate of more than 1 savings association, the 
        assessment with respect to the affiliate against, and 
        collected from, any affiliated savings association in 
        such proportions as the Director may prescribe.
  [(d) Civil Money Penalty for Affiliate's Refusal To 
Cooperate.--
          [(1) Penalty imposed.--If any affiliate of any 
        savings association--
                  [(A) refuses to permit any examiner appointed 
                by the Director to make an examination; or
                  [(B) refuses to provide any information 
                required to be disclosed in the course of any 
                examination,
        the savings association shall forfeit and pay a civil 
        penalty of not more than $5,000 for each day that any 
        such refusal continues.
          [(2) Assessment and collection.--Any penalty imposed 
        under paragraph (1) shall be assessed and collected by 
        the Director, in the manner provided in section 8(i)(2) 
        of the Federal Deposit Insurance Act.
  [(e) Regulations.--Only the Director may prescribe 
regulations with respect to--
          [(1) the computation of, and the assessment for, the 
        cost of conducting examinations pursuant to this 
        section; and
          [(2) the collection and use of such assessments and 
        any fees under this section.
Such regulations may establish formulas to determine a fee or 
schedule of fees to cover the costs of examinations and also to 
cover the cost of processing applications, filings, notices, 
and requests for approvals by the Director or the Director's 
designee.
  [(f) Collection Through FDIC or Federal Home Loan Banks.--The 
Corporation or the Federal home loan banks shall, upon request 
of and by agreement with the Director, collect fees and 
assessments on behalf of the Director and be reimbursed for the 
actual cost of collection.
  [(g) Costs of Other Examinations.--
          [(1) Examination of fiduciary activities.--In 
        addition to any assessment imposed pursuant to 
        subsection (a), the cost of conducting examinations of 
        fiduciary activities of savings associations which 
        exercise fiduciary powers (including savings 
        associations or similar institutions in the District of 
        Columbia) shall be assessed by the Director against 
        such savings associations (or similar institutions).
          [(2) Examinations in excess of 2 per calendar year.--
        If any savings association or affiliate of a savings 
        association is examined by the Director, or the 
        Corporation, as the case may be, more than 2 times in 
        any calendar year, the cost of conducting such 
        additional examinations shall be assessed, in addition 
        to any assessment imposed pursuant to subsection (a), 
        by the Director or the Corporation, as the case may be, 
        against such savings association or affiliate.
  [(h) Additional Information.--Any savings association and any 
affiliate of any savings association shall provide the Director 
with access to any information or report with respect to any 
examination made by any public regulatory authority and furnish 
any additional information with respect thereto as the Director 
may require.
  [(i) Treatment of Examination Assessments.--
          [(1) Deposits.--Amounts received by the Director from 
        assessments under this section (other than an 
        assessment under subsection (d)(2)) or section 10(b)(4) 
        may be deposited in the manner provided in section 5234 
        of the Revised Statutes with respect to assessments by 
        the Comptroller of the Currency.
          [(2) Assessments are not government funds.--The 
        amounts received by the Director from any assessment 
        under this section shall not be construed to be 
        Government or public funds or appropriated money.
          [(3) Assessments are not subject to apportionment of 
        funds.--Notwithstanding any other provision of law, the 
        amounts received by the Director from any assessment 
        under this section shall not be subject to 
        apportionment for the purpose of chapter 15 of title 
        31, United States Code, or under any other authority.
  [(j) Processing Fee.--The Director may, in the Director's 
sole discretion, assess against any person that submits to the 
Director an application, filing, notice, or request a fee to 
cover the cost of processing such submission.
  [(k) Fees for Examinations and Supervisory Activities.--The 
Director may assess against institutions for which the Director 
is the appropriate Federal banking agency, as defined in 
section 3 of the Federal Deposit Insurance Act, fees to fund 
the direct and indirect expenses of the Office as the Director 
deems necessary or appropriate. The fees may be imposed more 
frequently than annually at the discretion of the Director.
  [(l) Working Capital.--The Director is authorized to impose 
fees and assessments pursuant to subsections (a), (b), (e), and 
(k) of this section, in excess of actual expenses for any given 
year, to permit the Director to maintain a working capital 
fund. The Director shall remit to the payors of such fees and 
assessments any funds collected in excess of what he deems 
necessary to maintain such working capital fund.
  [(m) Use of Funds.--The Director is authorized to use the 
combined resources retained through fees and assessments 
imposed pursuant to this section to pay all direct and indirect 
salary and administrative expenses of the Office, including 
contracts and purchases of property and services, and the 
direct and indirect expenses of the examinations and 
supervisory activities of the Office.

[SEC. 10. REGULATION OF HOLDING COMPANIES.

  [(a) Definitions.--
          [(1) In general.--As used in this section, unless the 
        context otherwise requires--
                  [(A) Savings association.--The term ``savings 
                association'' includes a savings bank or 
                cooperative bank which is deemed by the 
                Director to be a savings association under 
                subsection (l).
                  [(B) Uninsured institution.--The term 
                ``uninsured institution'' means any depository 
                institution the deposits of which are not 
                insured by the Federal Deposit Insurance 
                Corporation.
                  [(C) Company.--The term ``company'' means any 
                corporation, partnership, trust, joint-stock 
                company, or similar organization, but does not 
                include the Federal Deposit Insurance 
                Corporation, the Resolution Trust Corporation, 
                any Federal home loan bank, or any company the 
                majority of the shares of which is owned by the 
                United States or any State, or by an 
                instrumentality of the United States or any 
                State.
                  [(D) Savings and loan holding company.--
                          [(i) In general.--Except as provided 
                        in clause (ii), the term ``savings and 
                        loan holding company'' means any 
                        company that directly or indirectly 
                        controls a savings association or that 
                        controls any other company that is a 
                        savings and loan holding company.
                          [(ii) Exclusion.--The term ``savings 
                        and loan holding company'' does not 
                        include a bank holding company that is 
                        registered under, and subject to, the 
                        Bank Holding Company Act of 1956, or to 
                        any company directly or indirectly 
                        controlled by such company (other than 
                        a savings association).
                  [(E) Multiple savings and loan holding 
                company.--The term ``multiple savings and loan 
                holding company'' means any savings and loan 
                holding company which directly or indirectly 
                controls 2 or more savings associations.
                  [(F) Diversified savings and loan holding 
                company.--The term ``diversified savings and 
                loan holding company'' means any savings and 
                loan holding company whose subsidiary savings 
                association and related activities as permitted 
                under paragraph (2) of subsection (c) of this 
                section represented, on either an actual or a 
                pro forma basis, less than 50 percent of its 
                consolidated net worth at the close of its 
                preceding fiscal year and of its consolidated 
                net earnings for such fiscal year, as 
                determined in accordance with regulations 
                issued by the Director.
                  [(G) Subsidiary.--The term ``subsidiary'' has 
                the same meaning as in section 3 of the Federal 
                Deposit Insurance Act.
                  [(H) Affiliate.--The term ``affiliate'' of a 
                savings association means any person which 
                controls, is controlled by, or is under common 
                control with, such savings association.
                  [(I) Bank holding company.--The terms ``bank 
                holding company'' and ``bank'' have the 
                meanings given to such terms in section 2 of 
                the Bank Holding Company Act of 1956.
                  [(J) Acquire.--The term ``acquire'' has the 
                meaning given to such term in section 13(f)(8) 
                of the Federal Deposit Insurance Act.
          [(2) Control.--For purposes of this section, a person 
        shall be deemed to have control of--
                  [(A) a savings association if the person 
                directly or indirectly or acting in concert 
                with one or more other persons, or through one 
                or more subsidiaries, owns, controls, or holds 
                with power to vote, or holds proxies 
                representing, more than 25 percent of the 
                voting shares of such savings association, or 
                controls in any manner the election of a 
                majority of the directors of such association;
                  [(B) any other company if the person directly 
                or indirectly or acting in concert with one or 
                more other persons, or through one or more 
                subsidiaries, owns, controls, or holds with 
                power to vote, or holds proxies representing, 
                more than 25 percent of the voting shares or 
                rights of such other company, or controls in 
                any manner the election or appointment of a 
                majority of the directors or trustees of such 
                other company, or is a general partner in or 
                has contributed more than 25 percent of the 
                capital of such other company;
                  [(C) a trust if the person is a trustee 
                thereof; or
                  [(D) a savings association or any other 
                company if the Director determines, after 
                reasonable notice and opportunity for hearing, 
                that such person directly or 
indirectlyexercises a controlling influence over the management or 
policies of such association or other company.
          [(3) Exclusions.--Notwithstanding any other provision 
        of this subsection, the term ``savings and loan holding 
        company'' does not include--
                  [(A) any company by virtue of its ownership 
                or control of voting shares of a savings 
                association or a savings and loan holding 
                company acquired in connection with the 
                underwriting of securities if such shares are 
                held only for such period of time (not 
                exceeding 120 days unless extended by the 
                Director) as will permit the sale thereof on a 
                reasonable basis; and
                  [(B) any trust (other than a pension, profit-
                sharing, shareholders', voting, or business 
                trust) which controls a savings association or 
                a savings and loan holding company if such 
                trust by its terms must terminate within 25 
                years or not later than 21 years and 10 months 
                after the death of individuals living on the 
                effective date of the trust, and is (i) in 
                existence on June 26, 1967, or (ii) a 
                testamentary trust created on or after June 26, 
                1967.
          [(4) Special rule relating to qualified stock 
        issuance.--No savings and loan holding company shall be 
        deemed to control a savings association solely by 
        reason of the purchase by such savings and loan holding 
        company of shares issued by such savings association, 
        or issued by any savings and loan holding company 
        (other than a bank holding company) which controls such 
        savings association, in connection with a qualified 
        stock issuance if such purchase is approved by the 
        Director under subsection (q)(1)(D), unless the 
        acquiring savings and loan holding company, directly or 
        indirectly, or acting in concert with 1 or more other 
        persons, or through 1 or more subsidiaries, owns, 
        controls, or holds with power to vote, or holds proxies 
        representing, more than 15 percent of the voting shares 
        of such savings association or holding company.
  [(b) Registration and Examination.--
          [(1) In general.--Within 90 days after becoming a 
        savings and loan holding company, each savings and loan 
        holding company shall register with the Director on 
        forms prescribed by the Director, which shall include 
        such information, under oath or otherwise, with respect 
        to the financial condition, ownership, operations, 
        management, and intercompany relationships of such 
        holding company and its subsidiaries, and related 
        matters, as the Director may deem necessary or 
        appropriate to carry out the purposes of this section. 
        Upon application, the Director may extend the time 
        within which a savings and loan holding company shall 
        register and file the requisite information.
          [(2) Reports.--Each savings and loan holding company 
        and each subsidiary thereof, other than a savings 
        association, shall file with the Director, and the 
        regional office of the Director of the district in 
        which its principal office is located, such reports as 
        may be required by the Director. Such reports shall be 
        made under oath or otherwise, and shall be in such form 
        and for such periods, as the Director may prescribe. 
        Each report shall contain such information concerning 
        the operations of such savings and loan holding company 
        and its subsidiaries as the Director may require.
          [(3) Books and records.--Each savings and loan 
        holding company shall maintain such books and records 
        as may be prescribed by the Director.
          [(4) Examinations.--Each savings and loan holding 
        company and each subsidiary thereof (other than a bank) 
        shall be subject to such examinations as the Director 
        may prescribe. The cost of such examinations shall be 
        assessed against and paid by such holding company. 
        Examination and other reports may be furnished by the 
        Director to the appropriate State supervisory 
        authority. The Director shall, to the extent deemed 
        feasible, use for the purposes of this subsection 
        reports filed with or examinations made by other 
        Federal agencies or the appropriate State supervisory 
        authority.
          [(5) Agent for service of process.--The Director may 
        require any savings and loan holding company, or 
        persons connected therewith if it is not a corporation, 
        to execute and file a prescribed form of irrevocable 
        appointment of agent for service of process.
          [(6) Release from registration.--The Director may at 
        any time, upon the Director's own motion or upon 
        application, release a registered savings and loan 
        holding company from any registration theretofore made 
        by such company, if the Director determines that such 
        company no longer has control of any savings 
        association.
  [(c) Holding Company Activities.--
          [(1) Prohibited activities.--Except as otherwise 
        provided in this subsection, no savings and loan 
        holding company and no subsidiary which is not a 
        savings association shall--
                  [(A) engage in any activity or render any 
                service for or on behalf of a savings 
                association subsidiary for the purpose or with 
                the effect of evading any law or regulation 
                applicable to such savings association;
                  [(B) commence any business activity, other 
                than the activities described in paragraph (2); 
                or
                  [(C) continue any business activity, other 
                than the activities described in paragraph (2), 
                after the end of the 2-year period beginning on 
                the date on which such company received 
                approval under subsection (e) of this section 
                to become a savings and loan holding company 
                subject to the limitations contained in this 
                subparagraph.
          [(2) Exempt activities.--The prohibitions of 
        subparagraphs (B) and (C) of paragraph (1) shall not 
        apply to the following business activities of any 
        savings and loan holding company or any subsidiary (of 
        such company) which is not a savings association:
                  [(A) Furnishing or performing management 
                services for a savings association subsidiary 
                of such company.
                  [(B) Conducting an insurance agency or escrow 
                business.
                  [(C) Holding, managing, or liquidating assets 
                owned or acquired from a savings association 
                subsidiary of such company.
                  [(D) Holding or managing properties used or 
                occupied by a savings association subsidiary of 
                such company.
                  [(E) Acting as trustee under deed of trust.
                  [(F) Any other activity--
                          [(i) which the Board of Governors of 
                        the Federal Reserve System, by 
                        regulation, has determined to be 
                        permissible for bank holding companies 
                        under section 4(c) of the Bank Holding 
                        Company Act of 1956, unless the 
                        Director, by regulation, prohibits or 
                        limits any such activity for savings 
                        and loan holding companies; or
                          [(ii) in which multiple savings and 
                        loan holding companies were authorized 
                        (by regulation) to directly engage on 
                        March 5, 1987.
                  [(G) In the case of a savings and loan 
                holding company, purchasing, holding, or 
                disposing of stock acquired in connection with 
                a qualified stock issuance if the purchase of 
                such stock by such savings and loan holding 
                company is approved by the Director pursuant to 
                subsection (q)(1)(D).
          [(3) Certain limitations on activities not applicable 
        to certain holding companies.--Notwithstanding 
        paragraphs (4) and (6) of this subsection, the 
        limitations contained in subparagraphs (B) and (C) of 
        paragraph (1) shall not apply to any savings and loan 
        holding company (or any subsidiary of such company) 
        which controls--
                  [(A) only 1 savings association, if the 
                savings association subsidiary of such company 
                is a qualified thrift lender (as determined 
                under subsection (m)); or
                  [(B) more than 1 savings association, if--
                          [(i) all, or all but 1, of the 
                        savings association subsidiaries of 
                        such company were initially acquired by 
                        the company or by an individual who 
                        would be deemed to control such company 
                        if such individual were a company--
                                  [(I) pursuant to an 
                                acquisition under section 13(c) 
                                or 13(k) of the Federal Deposit 
                                Insurance Act or section 408(m) 
                                of the National Housing Act; or
                                  [(II) pursuant to an 
                                acquisition in which assistance 
                                was continued to a savings 
                                association under section 13(i) 
                                of the Federal Deposit 
                                Insurance Act; and
                          [(ii) all of the savings association 
                        subsidiaries of such company are 
                        qualified thrift lenders (as determined 
                        under subsection (m)).
          [(4) Prior approval of certain new activities 
        required.--
                  [(A) In general.--No savings and loan holding 
                company and no subsidiary which is not a 
                savings association shall commence, either de 
                novo or by an acquisition (in whole or in part) 
                of a going concern, any activity describedin 
paragraph (2)(F)(i) of this subsection without the prior approval of 
the Director.
                  [(B) Factors to be considered by director.--
                In considering any application under 
                subparagraph (A) by any savings and loan 
                holding company or any subsidiary of any such 
                company which is not a savings association, the 
                Director shall consider--
                          [(i) whether the performance of the 
                        activity described in such application 
                        by the company or the subsidiary can 
                        reasonably be expected to produce 
                        benefits to the public (such as greater 
                        convenience, increased competition, or 
                        gains in efficiency) that outweigh 
                        possible adverse effects of such 
                        activity (such as undue concentration 
                        of resources, decreased or unfair 
                        competition, conflicts of interest, or 
                        unsound financial practices);
                          [(ii) the managerial resources of the 
                        companies involved; and
                          [(iii) the adequacy of the financial 
                        resources, including capital, of the 
                        companies involved.
                  [(C) Director may differentiate between new 
                and ongoing activities.--In prescribing any 
                regulation or considering any application under 
                this paragraph, the Director may differentiate 
                between activities commenced de novo and 
                activities commenced by the acquisition, in 
                whole or in part, of a going concern.
                  [(D) Approval or disapproval by order.--The 
                approval or disapproval of any application 
                under this paragraph by the Director shall be 
                made in an order issued by the Director 
                containing the reasons for such approval or 
                disapproval.
          [(5) Grace period to achieve compliance.--If any 
        savings association referred to in paragraph (3) fails 
        to maintain the status of such association as a 
        qualified thrift lender, the Director may allow, for 
        good cause shown, any company that controls such 
        association (or any subsidiary of such company which is 
        not a savings association) up to 3 years to comply with 
        the limitations contained in paragraph (1)(C).
          [(6) Special provisions relating to certain companies 
        affected by 1987 amendments.--
                  [(A) Exception to 2-year grace period for 
                achieving compliance.--Notwithstanding 
                paragraph (1)(C), any company which received 
                approval under subsection (e) of this section 
                to acquire control of a savings association 
                between March 5, 1987, and August 10, 1987, 
                shall not continue any business activity other 
                than an activity described in paragraph (2) 
                after August 10, 1987.
                  [(B) Exemption for activities lawfully 
                engaged in before march 5, 1987.--
                Notwithstanding paragraph (1)(C) and subject to 
                subparagraphs (C) and (D), any savings and loan 
                holding company which received approval, before 
                March 5, 1987, under subsection (e) of this 
                section to acquire control of a savings 
                association may engage, directly or through any 
                subsidiary (other than a savings association 
                subsidiary of such company), in any activity in 
                which such company or such subsidiary was 
                lawfully engaged on such date.
                  [(C) Termination of subparagraph (b) 
                exemption.--The exemption provided under 
                subparagraph (B) for activities engaged in by 
                any savings and loan holding company or a 
                subsidiary of such company (which is not a 
                savings association) which would otherwise be 
                prohibited under paragraph (1)(C) shall 
                terminate with respect to such activities of 
                such company or subsidiary upon the occurrence 
                (after August 10, 1987) of any of the 
                following:
                          [(i) The savings and loan holding 
                        company acquires control of a bank or 
                        an additional savings association 
                        (other than a savings association 
                        acquired pursuant to section 13(c) or 
                        13(k) of the Federal Deposit Insurance 
                        Act or section 406(f) or 408(m) of the 
                        National Housing Act).
                          [(ii) Any savings association 
                        subsidiary of the savings and loan 
                        holding company fails to qualify as a 
                        domestic building and loan association 
                        under section 7701(a)(19) of the 
                        Internal Revenue Code of 1986.
                          [(iii) The savings and loan holding 
                        company engages in any business 
                        activity--
                                  [(I) which is not described 
                                in paragraph (2); and
                                  [(II) in which it was not 
                                engaged on March 5, 1987.
                          [(iv) Any savings association 
                        subsidiary of the savings and loan 
                        holding company increases the number of 
                        locations from which such savings 
                        association conducts business after 
                        March 5, 1987 (other than an increase 
                        which occurs in connection with a 
                        transaction under section 13(c) or (k) 
                        of the Federal Deposit Insurance Act or 
                        section 408(m) of the National Housing 
                        Act.
                          [(v) Any savings association 
                        subsidiary of the savings and loan 
                        holding company permits any overdraft 
                        (including an intraday overdraft), or 
                        incurs any such overdraft in its 
                        account at a Federal Reserve bank, on 
                        behalf of an affiliate, unless such 
                        overdraft is the result of an 
                        inadvertent computer or accounting 
                        error that is beyond the control of 
                        both the savings association subsidiary 
                        and the affiliate.
                  [(D) Order by director to terminate 
                subparagraph (b) activity.--Any activity 
                described in subparagraph (B) may also be 
                terminated by the Director, after opportunity 
                for hearing, if the Director determines, having 
                due regard for the purposes of this title, that 
                such action is necessary to prevent conflicts 
                of interest or unsound practices or is in the 
                public interest.
          [(7) Foreign savings and loan holding company.--
        Notwithstanding any other provision of this section, 
        any savings and loan holding company organized under 
        the laws of a foreign country as of June 1, 1984 
        (including any subsidiarythereof which is not a savings 
association), which controls a single savings association on August 10, 
1987, shall not be subject to this subsection with respect to any 
activities of such holding company which are conducted exclusively in a 
foreign country.
          [(8) Exemption for bank holding companies.--Except 
        for paragraph (1)(A), this subsection shall not apply 
        to any company that is treated as a bank holding 
        company for purposes of section 4 of the Bank Holding 
        Company Act of 1956, or any of its subsidiaries.
  [(d) Transactions With Affiliates.--Transactions between any 
subsidiary savings association of a savings and loan holding 
company and any affiliate (of such savings association 
subsidiary) shall be subject to the limitations and 
prohibitions specified in section 11 of this Act.
  [(e) Acquisitions.--
          [(1) In general.--It shall be unlawful for--
                  [(A) any savings and loan holding company 
                directly or indirectly, or through one or more 
                subsidiaries or through one or more 
                transactions--
                          [(i) to acquire, except with the 
                        prior written approval of the Director, 
                        the control of a savings association or 
                        a savings and loan holding company, or 
                        to retain the control of such an 
                        association or holding company acquired 
                        or retained in violation of this 
                        section as heretofore or hereafter in 
                        effect;
                          [(ii) to acquire, except with the 
                        prior written approval of the Director, 
                        by the process of merger, 
                        consolidation, or purchase of assets, 
                        another savings association or a 
                        savings and loan holding company, or 
                        all or substantially all of the assets 
                        of any such association or holding 
                        company;
                          [(iii) to acquire, by purchase or 
                        otherwise, or to retain more than 5 
                        percent of the voting shares of a 
                        savings association not a subsidiary, 
                        or of a savings and loan holding 
                        company not a subsidiary, or in the 
                        case of a multiple savings and loan 
                        holding company (other than a company 
                        described in subsection (c)(8)), to so 
                        acquire or retain more than 5 percent 
                        of the voting shares of any company not 
                        a subsidiary which is engaged in any 
                        business activity other than the 
                        activities specified in subsection 
                        (c)(2). This clause shall not apply to 
                        shares of a savings association or of a 
                        savings and loan holding company--
                                  [(I) held as a bona fide 
                                fiduciary (whether with or 
                                without the sole discretion to 
                                vote such shares);
                                  [(II) held temporarily 
                                pursuant to an underwriting 
                                commitment in the normal course 
                                of an underwriting business;
                                  [(III) held in an account 
                                solely for trading purposes;
                                  [(IV) over which no control 
                                is held other than control of 
                                voting rights acquired in the 
                                normal course of a proxy 
                                solicitation;
                                  [(V) acquired in securing or 
                                collecting a debt previously 
                                contracted in good faith, 
                                during the 2-year period 
                                beginning on the date of such 
                                acquisition or for such 
                                additional time (not exceeding 
                                3 years) as the Director may 
                                permit if the Director 
                                determines that such an 
                                extension will not be 
                                detrimental to the public 
                                interest;
                                  [(VI) acquired under section 
                                408(m) of the National Housing 
                                Act or section 13(k) of the 
                                Federal Deposit Insurance Act;
                                  [(VII) held by any insurance 
                                company, as defined in section 
                                2(a)(17) of the Investment 
                                Company Act of 1940, except as 
                                provided in paragraph (6); or
                                  [(VIII) acquired pursuant to 
                                a qualified stock issuance if 
                                such purchase is approved by 
                                the Director under subsection 
                                (q)(1)(D);
                        except that the aggregate amount of 
                        shares held under this clause (other 
                        than under subclauses (I), (II), (III), 
                        (IV), and (VI)) may not exceed 15 
                        percent of all outstanding shares or of 
                        the voting power of a savings 
                        association or savings and loan holding 
                        company; or
                          [(iv) to acquire the control of an 
                        uninsured institution, or to retain for 
                        more than one year after February 14, 
                        1968, or from the date on which such 
                        control was acquired, whichever is 
                        later, except that the Director may 
                        upon application by such company extend 
                        such one-year period from year to year, 
                        for an additional period not exceeding 
                        3 years, if the Director finds such 
                        extension is warranted and is not 
                        detrimental to the public interest; and
                  [(B) any other company, without the prior 
                written approval of the Director, directly or 
                indirectly, or through one or more subsidiaries 
                or through one or more transactions, to acquire 
                the control of one or more savings 
                associations, except that such approval shall 
                not be required in connection with the control 
                of a savings association, (i) acquired by 
                devise under the terms of a will creating a 
                trust which is excluded from the definition of 
                ``savings and loan holding company'' under 
                subsection (a) of this section, (ii) acquired 
                in connection with a reorganization in which a 
                person or group of persons, having had control 
                of a savings association for more than 3 years, 
                vests control of that association in a newly 
                formed holding company subject to the control 
                of the same person or group of persons, or 
                (iii) acquired by a bank holding company that 
                is registered under, and subject to, the Bank 
                Holding Company Act of 1956, or any company 
                controlled by such bank holding company. The 
                Director shall approve an acquisition of a 
                savings association under this subparagraph 
                unless the Director finds the financial and 
                managerial resources and future prospects of 
                the company and association involved to be such 
                that the acquisition would be detrimental to 
                the association or the insurance risk of the 
                Savings Association Insurance Fund or Bank 
                Insurance Fund, and shall render a decision 
                within 90 days after submission to the Director 
                of the complete record on the application.
        Consideration of the managerial resources of a company 
        or savings association under subparagraph (B) shall 
        include consideration of the competence, experience, 
        and integrity of the officers, directors, and principal 
        shareholders of the company or association.
          [(2) Factors to be considered.--The Director shall 
        not approve any acquisition under subparagraph (A)(i) 
        or (A)(ii), or of more than one savings association 
        under subparagraph (B) of paragraph (1) of this 
        subsection, any acquisition of stock in connection with 
        a qualified stock issuance, any acquisition under 
        paragraph (4)(A), or any transaction under section 
        13(k) of the Federal Deposit Insurance Act, except in 
        accordance with this paragraph. In every case, the 
        Director shall take into consideration the financial 
        and managerial resources and future prospects of the 
        company and association involved, the effect of the 
        acquisition on the association, the insurance risk to 
        the Savings Association Insurance Fund or the Bank 
        Insurance Fund \1\, and the convenience and needs of 
        the community to be served, and shall render a decision 
        within 90 days after submission to the Director of the 
        complete record on the application. Consideration of 
        the managerial resources of a company or savings 
        association shall include consideration of the 
        competence, experience, and integrity of the officers, 
        directors, and principal shareholders of the company or 
        association. Before approving any such acquisition, 
        except a transaction under section 13(k) of the Federal 
        Deposit Insurance Act, the Director shall request from 
        the Attorney General and consider any report rendered 
        within 30 days on the competitive factors involved. The 
        Director shall not approve any proposed acquisition--
                  [(A) which would result in a monopoly, or 
                which would be in furtherance of any 
                combination or conspiracy to monopolize or to 
                attempt to monopolize the savings and loan 
                business in any part of the United States,
                  [(B) the effect of which in any section of 
                the country may be substantially to lessen 
                competition, or tend to create a monopoly, or 
                which in any other manner would be in restraint 
                of trade, unless it finds that the 
                anticompetitive effects of the proposed 
                acquisition are clearly outweighed in the 
                public interest by the probable effect of the 
                acquisition in meeting the convenience and 
                needs of the community to be served,
                  [(C) if the company fails to provide adequate 
                assurances to the Director that the company 
                will make available to the Director such 
                information on the operations or activities of 
                the company, and any affiliate of the company, 
                as the Director determines to be appropriate to 
                determine and enforce compliance with this Act, 
                or
                  [(D) in the case of an application involving 
                a foreign bank, if the foreign bank is not 
                subject to comprehensive supervision or 
                regulation on a consolidated basis by the 
                appropriate authorities in the bank's home 
                country.
          [(3) Interstate Acquisitions.--No acquisition shall 
        be approved by the Director under this subsection which 
        will result in the formation by any company, through 
        one or more subsidiaries or through one or more 
        transactions, of a multiple savings and loan holding 
        company controlling savings associations in more than 
        one State, unless--
                  [(A) such company, or a savings association 
                subsidiary of such company, is authorized to 
                acquire control of a savings association 
                subsidiary, or to operate a home or branch 
                office, in the additional State or States 
                pursuant to section 13(k) of the Federal 
                Deposit Insurance Act;
                  [(B) such company controls a savings 
                association subsidiary which operated a home or 
                branch office in the additional State or States 
                as of March 5, 1987; or
                  [(C) the statutes of the State in which the 
                savings association to be acquired is located 
                permit a savings association chartered by such 
                State to be acquired by a savings association 
                chartered by the State where the acquiring 
                savings association or savings and loan holding 
                company is located or by a holding company that 
                controls such a State chartered savings 
                association, and such statutes specifically 
                authorize such an acquisition by language to 
                that effect and not merely by implication.
          [(4) Acquisitions by certain individuals.--
                  [(A) In general.--Notwithstanding subsection 
                (h)(2), any director or officer of a savings 
                and loan holding company, or any individual who 
                owns, controls, or holds with power to vote (or 
                holds proxies representing) more than 25 
                percent of the voting shares of such holding 
                company, may acquire control of any savings 
                association not a subsidiary of such savings 
                and loan holding company with the prior written 
                approval of the Director.
                  [(B) Treatment of certain holding 
                companies.--If any individual referred to in 
                subparagraph (A) controls more than 1 savings 
                and loan holding company or more than 1 savings 
                association, any savings and loan holding 
                company controlled by such individual shall be 
                subject to the activities limitations contained 
                in subsection (c) to the same extent such 
                limitations apply to multiple savings and loan 
                holding companies, unless all or all but 1 of 
                the savings associations (including any 
                institution deemed to be a savings association 
                under subsection (1) of this section) 
                controlled directly or indirectly by such 
                individual was acquired pursuant to an 
                acquisition described in subclause (I) or (II) 
                of subsection (c)(3)(B)(i).
          [(5) Acquisitions pursuant to certain security 
        interests.--This subsection and subsection (c)(2) of 
        this section do not apply to any savings and loan 
        holding company which acquired the control of a savings 
        association or of a savings and loan holding company 
        pursuant to a pledge or hypothecation to secure a loan, 
        or in connection with the liquidation of a loan, made 
        in the ordinary course of business. It shall be 
        unlawful for any such company to retain such control 
        for more than one year after February 14, 1968, or from 
        the date on which such control was acquired, whichever 
        is later, except that the Director may upon application 
        by such company extend such one-year period from year 
        to year, for an additional period not exceeding 3 
        years, if the Director finds such extension is 
        warranted and would not be detrimental to the public 
        interest.
          [(6) Shares held by insurance affiliates.--Shares 
        described in clause (iii)(VII) of paragraph (1)(A) 
        shall not be excluded for purposes of clause (iii) of 
        such paragraph if--
                  [(A) all shares held under such clause 
                (iii)(VII) by all insurance company affiliates 
                of such savings association or savings and loan 
                holding company in the aggregate exceed 5 
                percent of all outstanding shares or of the 
                voting power of the savings association or 
                savings and loan holding company; or
                  [(B) such shares are acquired or retained 
                with a view to acquiring, exercising, or 
                transferring control of the savings association 
                or savings and loan holding company.
  [(f) Declaration of Dividend.--Every subsidiary savings 
association of a savings and loan holding company shall give 
the Director not less than 30 days' advance notice of the 
proposed declaration by its directors of any dividend on its 
guaranty, permanent, or other nonwithdrawable stock. Such 
notice period shall commence to run from the date of receipt of 
such notice by the Director. Any such dividend declared within 
such period, or without the giving of such notice to the 
Director, shall be invalid and shall confer no rights or 
benefits upon the holder of any such stock.
  [(g) Administration and Enforcement.--
          [(1) In general.--The Director is authorized to issue 
        such regulations and orders as the Director deems 
        necessary or appropriate to enable the Director to 
        administer and carry out the purposes of this section, 
        and to require compliance therewith and prevent 
        evasions thereof.
          [(2) Investigations.--The Director may make such 
        investigations as the Director deems necessary or 
        appropriate to determine whether the provisions of this 
        section, and regulations and orders thereunder, are 
        being and have been complied with by savings and loan 
        holding companies and subsidiaries and affiliates 
        thereof. For the purpose of any investigation under 
        this section, the Director may administer oaths and 
        affirmations, issue subpenas, take evidence, and 
        require the production of any books, papers, 
        correspondence, memorandums, or other records which may 
        be relevant or material to the inquiry. The attendance 
        of witnesses and the production of any such records may 
        be required from any place in any State. The Director 
        may apply to the United States district court for the 
        judicial district (or the United States court in any 
        territory) in which any witness or company subpenaed 
        resides or carries on business, for enforcement of any 
        subpena issued pursuant to this paragraph, and such 
        courts shall have jurisdiction and power to order and 
        require compliance.
          [(3) Proceedings.--(A) In any proceeding under 
        subsection (a)(2)(D) or under paragraph (5) of this 
        section, the Director may administer oaths and 
        affirmations, take or cause to be taken depositions, 
        and issue subpenas. The Director may make regulations 
        with respect to any such proceedings. The attendance of 
        witnesses and the production of documents provided for 
        in this paragraph may be required from any place in any 
        State or in any territory at any designated place where 
        such proceeding is being conducted. Any party to such 
        proceedings may apply to the United States District 
        Court for the District of Columbia, or the United 
        States district court for the judicial district or the 
        United States court in any territory in which such 
        proceeding is being conducted, or where the witness 
        resides or carries on business, for enforcement of any 
        subpena issued pursuant to this paragraph, and such 
        courts shall have jurisdiction and power to order and 
        require compliance therewith. Witnesses subpenaed under 
        this section shall be paid the same fees and mileage 
        that are paid witnesses in the district courts of the 
        United States.
          [(B) Any hearing provided for in subsection (a)(2)(D) 
        or under paragraph (5) of this section shall be held in 
        the Federal judicial district or in the territory in 
        which the principal office of the association or other 
        company is located unless the party afforded the 
        hearing consents to another place, and shall be 
        conducted in accordance with the provisions of chapter 
        5 of title 5, United States Code.
          [(4) Injunctions.--Whenever it appears to the 
        Director that any person is engaged or has engaged or 
        is about to engage in any acts or practices which 
        constitute or will constitute a violation of the 
        provisions of this section or of any regulation or 
        order thereunder, the Director may bring an action in 
        the proper United States district court, or the United 
        States court of any territory or other place subject to 
        the jurisdiction of the United States, to enjoin such 
        acts or practices, to enforce compliance with this 
        section or any regulation or order, or to require the 
        divestiture of any acquisition in violation of this 
        section, or for any combination of the foregoing, and 
        such courts shall have jurisdiction of such actions. 
        Upon a proper showing an injunction, decree, 
        restraining order, order of divestiture, or other 
        appropriate order shall be granted without bond.
          [(5) Cease and desist orders.--(A) Notwithstanding 
        any other provision of this section, the Director may, 
        whenever the Director has reasonable cause to believe 
        that the continuation by a savings and loan holding 
        company of any activity or of ownership or control of 
        any of its noninsured subsidiaries constitutes a 
        serious risk to the financial safety, soundness, or 
        stability of a savings and loan holding company's 
        subsidiary savings association and is inconsistent with 
        the sound operation of a savings association or with 
        the purposes of this section or section 8 of the 
        Federal Deposit Insurance Act, order the savings and 
        loan holding company or any of its subsidiaries, after 
        due notice and opportunity for hearing, to terminate 
        such activities or to terminate (within 120 days or 
        such longer period as the Director directs in unusual 
        circumstances) its ownershipor control of any such 
noninsured subsidiary either by sale or by distribution of the shares 
of the subsidiary to the shareholders of the savings and loan holding 
company. Such distribution shall be pro rata with respect to all of the 
shareholders of the distributing savings and loan holding company, and 
the holding company shall not make any charge to its shareholders 
arising out of such a distribution.
          [(B) The Director may in the Director's discretion 
        apply to the United States district court within the 
        jurisdiction of which the principal office of the 
        company is located, for the enforcement of any 
        effective and outstanding order issued under this 
        section, and such court shall have jurisdiction and 
        power to order and require compliance therewith. Except 
        as provided in subsection (j), no court shall have 
        jurisdiction to affect by injunction or otherwise the 
        issuance or enforcement of any notice or order under 
        this section, or to review, modify, suspend, terminate, 
        or set aside any such notice or order.
  [(h) Prohibited Acts.--It shall be unlawful for--
          [(1) any savings and loan holding company or 
        subsidiary thereof, or any director, officer, employee, 
        or person owning, controlling, or holding with power to 
        vote, or holding proxies representing, more than 25 
        percent of the voting shares, of such holding company 
        or subsidiary, to hold, solicit, or exercise any 
        proxies in respect of any voting rights in a savings 
        association which is a mutual association;
          [(2) any director or officer of a savings and loan 
        holding company, or any individual who owns, controls, 
        or holds with power to vote (or holds proxies 
        representing) more than 25 percent of the voting shares 
        of such holding company, to acquire control of any 
        savings association not a subsidiary of such savings 
        and loan holding company, unless such acquisition is 
        approved by the Director pursuant to subsection (e)(4); 
        or
          [(3) any individual, except with the prior approval 
        of the Director, to serve or act as a director, 
        officer, or trustee of, or become a partner in, any 
        savings and loan holding company after having been 
        convicted of any criminal offense involving dishonesty 
        or breach of trust.
  [(i) Penalties.--
          [(1) Criminal penalty.--(A) Whoever knowingly 
        violates any provision of this section or being a 
        company, violates any regulation or order issued by the 
        Director under this section, shall be imprisoned not 
        more than 1 year, fined not more than $100,000 per day 
        for each day during which the violation continues, or 
        both.
          [(B) Whoever, with the intent to deceive, defraud, or 
        profit significantly, knowingly violates any provision 
        of this section shall be fined not more than $1,000,000 
        per day for each day during which the violation 
        continues, imprisoned not more than 5 years, or both.
          [(2) Civil money penalty.--
                  [(A) Penalty.--Any company which violates, 
                and any person who participates in a violation 
                of, any provision of this section, or any 
                regulation or order issued pursuant thereto, 
                shall forfeit and pay a civil penalty of not 
                morethan $25,000 for each day during which such 
violation continues.
                  [(B) Assessment.--Any penalty imposed under 
                subparagraph (A) may be assessed and collected 
                by the Director in the manner provided in 
                subparagraphs (E), (F), (G), and (I) of section 
                8(i)(2) of the Federal Deposit Insurance Act 
                for penalties imposed (under such section) and 
                any such assessment shall be subject to the 
                provisions of such section.
                  [(C) Hearing.--The company or other person 
                against whom any civil penalty is assessed 
                under this paragraph shall be afforded a 
                hearing if such company or person submits a 
                request for such hearing within 20 days after 
                the issuance of the notice of assessment. 
                Section 8(h) of the Federal Deposit Insurance 
                Act shall apply to any proceeding under this 
                paragraph.
                  [(D) Disbursement.--All penalties collected 
                under authority of this paragraph shall be 
                deposited into the Treasury.
                  [(E) Violate defined.--For purposes of this 
                section, the term ``violate'' includes any 
                action (alone or with another or others) for or 
                toward causing, bringing about, participating 
                in, counseling, or aiding or abetting a 
                violation.
                  [(F) Regulations.--The Director shall 
                prescribe regulations establishing such 
                procedures as may be necessary to carry out 
                this paragraph.
          [(3) Civil money penalty.--
                  [(A) Penalty.--Any company which violates, 
                and any person who participates in a violation 
                of, any provision of this section, or any 
                regulation or order issued pursuant thereto, 
                shall forfeit and pay a civil penalty of not 
                more than $25,000 for each day during which 
                such violation continues.
                  [(B) Assessment; etc.--Any penalty imposed 
                under subparagraph (A) may be assessed and 
                collected by the Director in the manner 
                provided in subparagraphs (E), (F), (G), and 
                (I) of section 8(i)(2) of the Federal Deposit 
                Insurance Act for penalties imposed (under such 
                section) and any such assessment shall be 
                subject to the provisions of such section.
                  [(C) Hearing.--The company or other person 
                against whom any penalty is assessed under this 
                paragraph shall be afforded an agency hearing 
                if such company or person submits a request for 
                such hearing within 20 days after the issuance 
                of the notice of assessment. Section 8(h) of 
                the Federal Deposit Insurance Act shall apply 
                to any proceeding under this paragraph.
                  [(D) Disbursement.--All penalties collected 
                under authority of this paragraph shall be 
                deposited into the Treasury.
                  [(E) Violate defined.--For purposes of this 
                section, the term ``violate'' includes any 
                action (alone or with another or others) for or 
                toward causing, bringing about, participating 
                in, counseling, or aiding or abetting a 
                violation.
                  [(F) Regulations.--The Director shall 
                prescribe regulations establishing such 
                procedures as may be necessary to carry out 
                this paragraph.
          [(5) Notice under this section after separation from 
        service.--The resignation, termination of employment or 
        participation, or separation of an institution-
        affiliated party (within the meaning of section 3(u) of 
        the Federal Deposit Insurance Act) with respect to a 
        savings and loan holding company or subsidiary thereof 
        (including a separation caused by the deregistration of 
        such a company or such a subsidiary) shall not affect 
        the jurisdiction and authority of the Director to issue 
        any notice and proceed under this section against any 
        such party, if such notice is served before the end of 
        the 6-year period beginning on the date such party 
        ceased to be such a party with respect to such holding 
        company or its subsidiary (whether such date occurs 
        before, on, or after the date of the enactment of this 
        paragraph).
  [(j) Judicial Review.--Any party aggrieved by an order of the 
Director under this section may obtain a review of such order 
by filing in the court of appeals of the United States for the 
circuit in which the principal office of such party is located, 
or in the United States Court of Appeals for the District of 
Columbia Circuit, within 30 days after the date of service of 
such order, a written petition praying that the order of the 
Director be modified, terminated, or set aside. A copy of the 
petition shall be forthwith transmitted by the clerk of the 
court to the Director, and thereupon the Director shall file in 
the court the record in the proceeding, as provided in section 
2112 of title 28, United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the 
filing of the record shall be exclusive, to affirm, modify, 
terminate, or set aside, in whole or in part, the order of the 
Director. Review of such proceedings shall be had as provided 
in chapter 7 of title 5, United States Code. The judgment and 
decree of the court shall be final, except that the same shall 
be subject to review by the Supreme Court upon certiorari as 
provided in section 1254 of title 28, United States Code.
  [(k) Savings Clause.--Nothing contained in this section, 
other than any transaction approved under subsection (e)(2) of 
this section or section 13 of the Federal Deposit Insurance 
Act, shall be interpreted or construed as approving any act, 
action, or conduct which is or has been or may be in violation 
of existing law, nor shall anything herein contained constitute 
a defense to any action, suit, or proceeding pending or 
hereafter instituted on account of any act, action, or conduct 
in violation of the antitrust laws.
  [(l) Treatment of FDIC Insured State Savings Banks and 
Cooperative Banks as Savings Associations.--
          [(1) In general.--Notwithstanding any other provision 
        of law, a savings bank (as defined in section 3(g) of 
        the Federal Deposit Insurance Act) and a cooperative 
        bank that is an insured bank (as defined in section 
        3(h) of the Federal Deposit Insurance Act) upon 
        application shall be deemed to be a savings association 
        for the purpose of this section, if the Director 
        determines that such bank is a qualified thrift lender 
        (as determined under subsection (m)).
          [(2) Failure to maintain qualified thrift lender 
        status.--If any savings bank which is deemed to be a 
        savings association under paragraph (1) subsequently 
        fails to maintain its status as a qualified thrift 
        lender, as determined by the Director, such bank may 
        not thereafter be a qualified thrift lender for a 
        period of 5 years.
  [(m) Qualified Thrift Lender Test.--
          [(1) In general.--Except as provided in paragraphs 
        (2) and (7), any savings association is a qualified 
        thrift lender if--
                  [(A) the savings association qualifies as a 
                domestic building and loan association, as such 
                term is defined in section 7701(a)(19) of the 
                Internal Revenue Code of 1986; or
                  [(B)(i) the savings association's qualified 
                thrift investments equal or exceed 65 percent 
                of the savings association's portfolio assets; 
                and
                  [(ii) the savings association's qualified 
                thrift investments continue to equal or exceed 
                65 percent of the savings association's 
                portfolio assets on a monthly average basis in 
                9 out of every 12 months.
          [(2) Exceptions granted by director.--Notwithstanding 
        paragraph (1), the Director may grant such temporary 
        and limited exceptions from the minimum actual thrift 
        investment percentage requirement contained in such 
        paragraph as the Director deems necessary if--
                  [(A) the Director determines that 
                extraordinary circumstances exist, such as when 
                the effects of high interest rates reduce 
                mortgage demand to such a degree that an 
                insufficient opportunity exists for a savings 
                association to meet such investment 
                requirements; or
                  [(B) the Director determines that--
                          [(i) the grant of any such exception 
                        will significantly facilitate an 
                        acquisition under section 13(c) or 
                        13(k) of the Federal Deposit Insurance 
                        Act;
                          [(ii) the acquired association will 
                        comply with the transition requirements 
                        of paragraph (7)(B), as if the date of 
                        the exemption were the starting date 
                        for the transition period described in 
                        that paragraph; and
                          [(iii) the Director determines that 
                        the exemption will not have an undue 
                        adverse effect on competing savings 
                        associations in the relevant market and 
                        will further the purposes of this 
                        subsection.
          [(3) Failure to become and remain a qualified thrift 
        lender.--
                  [(A) In general.--A savings association that 
                fails to become or remain a qualified thrift 
                lender shall either become one or more banks 
                (other than a savings bank) or be subject to 
                subparagraph (B), except as provided in 
                subparagraph (D).
                  [(B) Restrictions applicable to savings 
                associations that are not qualified thrift 
                lenders.--
                          [(i) Restrictions effective 
                        immediately.--The following 
                        restrictions shall apply to a savings 
                        association beginning on the date on 
                        which the savings association should 
                        have become or ceases to be a qualified 
                        thrift lender:
                                  [(I) Activities.--The savings 
                                association shall not make any 
                                new investment (including an 
                                investment in a subsidiary) or 
                                engage, directly or indirectly, 
                                in any other new activity 
                                unless that investment or 
                                activity would be permissible 
                                for the savings association if 
                                it were a national bank, and is 
                                also permissible for the 
                                savings association as a 
                                savings association.
                                  [(II) Branching.--The savings 
                                association shall not establish 
                                any new branch office at any 
                                location at which a national 
                                bank located in the savings 
                                association's home State may 
                                not establish a branch office. 
                                For purposes of this subclause, 
                                a savings association's home 
                                State is the State in which the 
                                savings association's total 
                                deposits were largest on the 
                                date on which the savings 
                                association should have become 
                                or ceased to be a qualified 
                                thrift lender.
                                  [(III) Advances.--The savings 
                                association shall not be 
                                eligible to obtain new advances 
                                from any Federal home loan 
                                bank.
                                  [(IV) Dividends.--The savings 
                                association shall be subject to 
                                all statutes and regulations 
                                governing the payment of 
                                dividends by a national bank in 
                                the same manner and to the same 
                                extent as if the savings 
                                association were a national 
                                bank.
                          [(ii) Additional restrictions 
                        effective after three years.--The 
                        following additional restrictions shall 
                        apply to a savings association 
                        beginning 3 years after the date on 
                        which the savings association should 
                        have become or ceases to be a qualified 
                        thrift lender:
                                  [(I) Activities.--The savings 
                                association shall not retain 
                                any investment (including an 
                                investment in any subsidiary) 
                                or engage, directly or 
                                indirectly, in any activity 
                                unless that investment or 
                                activity would be permissible 
                                for the savings association if 
                                it were a national bank, and is 
                                also permissible for the 
                                savings association as a 
                                savings association.
                                  [(II) Advances.--The savings 
                                association shall repay any 
                                outstanding advances from any 
                                Federal home loan bank as 
                                promptly as can be prudently 
                                done consistent with the safe 
                                and sound operation of the 
                                savings association.
                  [(C) Holding company regulation.--Any company 
                that controls a savings association that is 
                subject to any provision of subparagraph (B) 
                shall, within one year after the date on which 
                the savings association should have become or 
                ceases to be a qualified thrift lender, 
                register as and be deemed to be a bank holding 
                company subject to all of the provisions of the 
                Bank Holding Company Act of 1956, section 8 of 
                the Federal Deposit Insurance Act, andother 
statutes applicable to bank holding companies, in the same manner and 
to the same extent as if the company were a bank holding company and 
the savings association were a bank, as those terms are defined in the 
Bank Holding Company Act of 1956.
                  [(D) Requalification.--A savings association 
                that should have become or ceases to be a 
                qualified thrift lender shall not be subject to 
                subparagraph (B) or (C) if the savings 
                association becomes a qualified thrift lender 
                by meeting the qualified thrift lender 
                requirement in paragraph (1) on a monthly 
                average basis in 9 out of the preceding 12 
                months and remains a qualified thrift lender. 
                If the savings association (or any savings 
                association that acquired all or substantially 
                all of its assets from that savings 
                association) at any time thereafter ceases to 
                be a qualified thrift lender, it shall 
                immediately be subject to all provisions of 
                subparagraphs (B) and (C) as if all the periods 
                described in subparagraphs (B)(ii) and (C) had 
                expired.
                  [(E) Deposit insurance assessments.--Any bank 
                chartered as a result of the requirements of 
                this section shall be obligated until December 
                31, 1993, to pay to the Savings Association 
                Insurance Fund the assessments assessed on 
                savings associations under the Federal Deposit 
                Insurance Act. Such association shall also be 
                assessed, on the date of its change of status 
                from a Savings Association Insurance Fund 
                member, the exit fee and entrance fee provided 
                in section 5(d) of the Federal Deposit 
                Insurance Act. Such institution shall not be 
                obligated to pay the assessments assessed on 
                banks under the Federal Deposit Insurance Act 
                until--
                          [(i) December 31, 1993, or
                          [(ii) the institution's change of 
                        status from a Savings Association 
                        Insurance Fund member to a Bank 
                        Insurance Fund member,
                whichever is later.
                  [(F) Exemption for specialized savings 
                associations serving certain military 
                personnel.--Subparagraph (A) shall not apply to 
                a savings association subsidiary of a savings 
                and loan holding company if at least 90 percent 
                of the customers of the savings and loan 
                holding company and its subsidiaries and 
                affiliates are active or former members in the 
                United States military services or the widows, 
                widowers, divorced spouses, or current or 
                former dependents of such members.
                  [(G) Exemption for certain federal savings 
                associations.--This paragraph shall not apply 
                to any Federal savings association in existence 
                as a Federal savings association on the date of 
                enactment of the Financial Institutions Reform, 
                Recovery, and Enforcement Act of 1989--
                          [(i) that was chartered before 
                        October 15, 1982, as a savings bank or 
                        a cooperative bank under State law; or
                          [(ii) that acquired its principal 
                        assets from an association that was 
                        chartered before October 15, 1982, as a 
                        savings bank or a cooperative bank 
                        under State law.
                  [(H) No circumvention of exit moratorium.--
                Subparagraph (A) of this paragraph shall not be 
                construed as permitting any insured depository 
                institution to engage in any conversion 
                transaction prohibited under section 5(d) of 
                the Federal Deposit Insurance Act.
          [(4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  [(A) Actual thrift investment percentage.--
                The term ``actual thrift investment 
                percentage'' means the percentage determined by 
                dividing--
                          [(i) the amount of a savings 
                        association's qualified thrift 
                        investments, by
                          [(ii) the amount of the savings 
                        association's portfolio assets.
                  [(B) Portfolio assets.--The term ``portfolio 
                assets'' means, with respect to any savings 
                association, the total assets of the savings 
                association, minus the sum of--
                          [(i) goodwill and other intangible 
                        assets;
                          [(ii) the value of property used by 
                        the savings association to conduct its 
                        business; and
                          [(iii) liquid assets of the type 
                        required to be maintained under section 
                        6 of the Home Owners' Loan Act, in an 
                        amount not exceeding the amount equal 
                        to 20 percent of the savings 
                        association's total assets.
                  [(C) Qualified thrift investments.--
                          [(i) In general.--The term 
                        ``qualified thrift investments'' means, 
                        with respect to any savings 
                        association, the assets of the savings 
                        association that are described in 
                        clauses (ii) and (iii).
                          [(ii) Assets includible without 
                        limit.--The following assets are 
                        described in this clause for purposes 
                        of clause (i):
                                  [(I) The aggregate amount of 
                                loans held by the savings 
                                association that were made to 
                                purchase, refinance, construct, 
                                improve, or repair domestic 
                                residential housing or 
                                manufactured housing.
                                  [(II) Home-equity loans.
                                  [(III) Securities backed by 
                                or representing an interest in 
                                mortgages on domestic 
                                residential housing or 
                                manufactured housing.
                                  [(IV) Existing obligations of 
                                deposit insurance agencies.--
                                Direct or indirect obligations 
                                of the Federal Deposit 
                                Insurance Corporation or the 
                                Federal Savings and Loan 
                                Insurance Corporation issued in 
                                accordance with the terms of 
                                agreements entered into prior 
                                to July 1, 1989, for the 10-
                                year period beginning on the 
                                date of issuance of such 
                                obligations.
                                  [(V) New obligations of 
                                deposit insurance agencies.--
                                Obligations of the Federal 
                                Deposit Insurance Corporation, 
                                the Federal Savings and Loan 
                                Insurance Corporation, the 
                                FSLIC Resolution Fund, and the 
                                Resolution Trust Corporation 
                                issued in accordance with the 
                                terms of agreements entered 
                                into on or after July 1, 1989, 
                                for the 5-year period beginning 
                                on the date of issuance of such 
                                obligations.
                                  [(VI) Shares of stock issued 
                                by any Federal home loan bank.
                                  [(VII) Loans for educational 
                                purposes, loans to small 
                                businesses, and loans made 
                                through credit cards or credit 
                                card accounts.
                          [(iii) Assets includible subject to 
                        percentage restriction.--The following 
                        assets are described in this clause for 
                        purposes of clause (i):
                                  [(I) 50 percent of the dollar 
                                amount of the residential 
                                mortgage loans originated by 
                                such savings association and 
                                sold within 90 days of 
                                origination.
                                  [(II) Investments in the 
                                capital stock or obligations 
                                of, and any other security 
                                issued by, any service 
                                corporation if such service 
                                corporation derives at least 80 
                                percent of its annual gross 
                                revenues from activities 
                                directly related to purchasing, 
                                refinancing, constructing, 
                                improving, or repairing 
                                domestic residential real 
                                estate or manufactured housing.
                                  [(III) 200 percent of the 
                                dollar amount of loans and 
                                investments made to acquire, 
                                develop, and construct 1- to 4-
                                family residences the purchase 
                                price of which is or is 
                                guaranteed to be not greater 
                                than 60 percent of the median 
                                value of comparable newly 
                                constructed 1- to 4-family 
                                residences within the local 
                                community in which such real 
                                estate is located, except that 
                                not more than 25 percent of the 
                                amount included under this 
                                subclause may consist of 
                                commercial properties related 
                                to the development if those 
                                properties are directly related 
                                to providing services to 
                                residents of the development.
                                  [(IV) 200 percent of the 
                                dollar amount of loans for the 
                                acquisition or improvement of 
                                residential real property, 
                                churches, schools, and nursing 
                                homes located within, and loans 
                                for any other purpose to any 
                                small businesses located within 
                                any area which has been 
                                identified by the Director, in 
                                connection with any review or 
                                examination of community 
                                reinvestment practices, as a 
                                geographic area or neighborhood 
                                in which the credit needs of 
                                the low- and moderate-income 
                                residents of such area or 
                                neighborhood are not being 
                                adequately met.
                                  [(V) Loans for the purchase 
                                or construction of churches, 
                                schools, nursing homes, and 
                                hospitals, other than those 
                                qualifying under clause (IV), 
                                and loans for the improvement 
                                and upkeep of such properties.
                                  [(VI) Loans for personal, 
                                family, or household purposes 
                                (other than loans for personal, 
                                family, or household purposes 
                                described in clause (ii)(VII)).
                                  [(VII) Shares of stock issued 
                                by the Federal Home Loan 
                                Mortgage Corporation or the 
                                Federal National Mortgage 
                                Association.
                          [(iv) Percentage restriction 
                        applicable to certain assets.--The 
                        aggregate amount of the assets 
                        described in clause (iii) which may be 
                        taken into account in determining the 
                        amount of the qualified thrift 
                        investments of any savings association 
                        shall not exceed the amount which is 
                        equal to 20 percent of a savings 
                        association's portfolio assets.
                          [(v) The term ``qualified thrift 
                        investments'' excludes--
                                  [(I) except for home equity 
                                loans, that portion of any loan 
                                or investment that is used for 
                                any purpose other than those 
                                expressly qualifying under any 
                                subparagraph of clause (ii) or 
                                (iii); or
                                  [(II) goodwill or any other 
                                intangible asset.
                  [(D) Credit card.--The Director shall issue 
                such regulations as may be necessary to define 
                the term ``credit card''.
                  [(E) Small business.--The Director shall 
                issue such regulations as may be necessary to 
                define the term ``small business''.
          [(5) Consistent accounting required.--
                  [(A) In determining the amount of a savings 
                association's portfolio assets, the assets of 
                any subsidiary of the savings association shall 
                be consolidated with the assets of the savings 
                association if--
                          [(i) Assets of the subsidiary are 
                        consolidated with the assets of the 
                        savings association in determining the 
                        savings association's qualified thrift 
                        investments; or
                          [(ii) Residential mortgage loans 
                        originated by the subsidiary are 
                        included pursuant to paragraph 
                        (4)(C)(iii)(I) in determining the 
                        savings association's qualified thrift 
                        investments.
                  [(B) In determining the amount of a savings 
                association's portfolio assets and qualified 
                thrift investments, consistent accounting 
                principles shall be applied.
          [(6) Special rules for puerto rico and virgin islands 
        savings associations.--
                  [(A) Puerto rico savings associations.--With 
                respect to any savings association 
                headquartered and operating primarily in Puerto 
                Rico--
                          [(i) the term ``qualified thrift 
                        investments'' includes, in addition to 
                        the items specified in paragraph (4)--
                                  [(I) the aggregate amount of 
                                loans for personal, family, 
                                educational, or household 
                                purposes made to persons 
                                residing or domiciled in the 
                                Commonwealth of Puerto Rico; 
                                and
                                  [(II) the aggregate amount of 
                                loans for the acquisition or 
                                improvement of churches, 
                                schools, or nursing homes, and 
                                of loans to small businesses, 
                                located within the Commonwealth 
                                of Puerto Rico; and
                          [(ii) the aggregate amount of loans 
                        related to the purchase, acquisition, 
                        development and construction of 1- to 
                        4-family residential real estate--
                                  [(I) which is located within 
                                the Commonwealth of Puerto 
                                Rico; and
                                  [(II) the value of which (at 
                                the time of acquisition or upon 
                                completion of the development 
                                and construction) is below the 
                                median value of newly 
                                constructed 1- to 4-family 
                                residences in the Commonwealth 
                                of Puerto Rico, which may be 
                                taken into account in 
                                determining the amount of the 
                                qualified thrift investments 
                                and of such savings association 
                                shall be doubled.
                  [(B) Virgin islands savings associations.--
                With respect to any savings association 
                headquartered and operating primarily in the 
                Virgin Islands--
                          [(i) the term ``qualified thrift 
                        investments'' includes, in addition to 
                        the items specified in paragraph (4)--
                                  [(I) the aggregate amount of 
                                loans for personal, family, 
                                educational, or household 
                                purposes made to persons 
                                residing or domiciled in the 
                                Virgin Islands; and
                                  [(II) the aggregate amount of 
                                loans for the acquisition or 
                                improvement of churches, 
                                schools, or nursing homes, and 
                                of loans to small businesses, 
                                located within the Virgin 
                                Islands; and
                          [(ii) the aggregate amount of loans 
                        related to the purchase, acquisition, 
                        development and construction of 1- to 
                        4-family residential real estate--
                                  [(I) which is located within 
                                the Virgin Islands; and
                                  [(II) the value of which (at 
                                the time of acquisition or upon 
                                completion of the development 
                                and construction) is below the 
                                median value of newly 
                                constructed 1- to 4-family 
                                residences in the Virgin 
                                Islands, which may be taken 
                                into account in determining the 
                                amount of the qualified thrift 
                                investments and of such savings 
                                association shall be doubled.
          [(7) Transitional rule for certain savings 
        associations.--
                  [(A) In general.--If any Federal savings 
                association in existence as a Federal savings 
                association on the date of enactment of the 
                Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989--
                          [(i) that was chartered as a savings 
                        bank or a cooperative bank under State 
                        law before October 15, 1982; or
                          [(ii) that acquired its principal 
                        assets from an association that was 
                        chartered before October 15, 1982, as a 
                        savings bank or a cooperative bank 
                        under State law,
                meets the requirements of subparagraph (B), 
                such savings association shall be treated as a 
                qualified thrift lender during period ending on 
                September 30, 1995.
                  [(B) Subparagraph (b) requirements.--A 
                savings association meets the requirements of 
                this subparagraph if, in the determination of 
                the Director--
                          [(i) the actual thrift investment 
                        percentage of such association does 
                        not, after the date of enactment of the 
                        Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989, 
                        decrease below the actual thrift 
                        investment percentage of such 
                        association on July 15, 1989; and
                          [(ii) the amount by which--
                                  [(I) the actual thrift 
                                investment percentage of such 
                                association at the end of each 
                                period described in the 
                                following table, exceeds
                                  [(II) the actual thrift 
                                investment percentage of such 
                                association on July 15, 1989,
                        is equal to or greater than the 
                        applicable percentage (as determined 
                        under the following table) of the 
                        amount by which 70 percent exceeds the 
                        actual thrift investment percentage of 
                        such association on such date of 
                        enactment:

          [For the following                              The applicable
          period:                                         percentage is:
          July 1, 1991-September 30, 1992...............      25 percent
          October 1, 1992-March 31, 1994................      50 percent
          April 1, 1994-September 30, 1995..............      75 percent
          Thereafter....................................     100 percent

                  [(C) For purposes of this paragraph, the 
                actual thrift investment percentage of an 
                association on July 15, 1989, shall be 
                determined by applying the definition of 
                ``actual thrift investment percentage'' that 
                takes effect on July 1, 1991.
  [(n) Tying Restrictions.--A savings and loan holding company 
and any of its affiliates shall be subject to section 5(q) and 
regulations prescribed under such section, in connection with 
transactions involving the products or services of such company 
or affiliate and those of an affiliated savings association as 
if such company or affiliate were a savings association.
  [(o) Mutual Holding Companies.--
          [(1) In general.--A savings association operating in 
        mutual form may reorganize so as to become a holding 
        company by--
                  [(A) chartering an interim savings 
                association, the stock of which is to be wholly 
                owned, except as otherwise provided in this 
                section, by the mutual association; and
                  [(B) transferring the substantial part of its 
                assets and liabilities, including all of its 
                insured liabilities, to the interim savings 
                association.
          [(2) Directors and certain account holders' approval 
        of plan required.--A reorganization is not authorized 
        under this subsection unless--
                  [(A) a plan providing for such reorganization 
                has been approved by a majority of the board of 
                directors of the mutual savings association; 
                and
                  [(B) in the case of an association in which 
                holders of accounts and obligors exercise 
                voting rights, such plan has been submitted to 
                and approved by a majority of such individuals 
                at a meeting held at the call of the directors 
                in accordance with the procedures prescribed by 
                the association's charter and bylaws.
          [(3) Notice to the director; disapproval period.--
                  [(A) Notice required.--At least 60 days prior 
                to taking any action described in paragraph 
                (1), a savings association seeking to establish 
                a mutual holding company shall provide written 
                notice to the Director. The notice shall 
                contain such relevant information as the 
                Director shall require by regulation or by 
                specific request in connection with any 
                particular notice.
                  [(B) Transaction allowed if not 
                disapproved.--Unless the Director within such 
                60-day notice period disapproves the proposed 
                holding company formation, or extends for 
                another 30 days the period during which such 
                disapproval may be issued, the savings 
                association providing such notice may proceed 
                with the transaction, if the requirements of 
                paragraph (2) have been met.
                  [(C) Grounds for disapproval.--The Director 
                may disapprove any proposed holding company 
                formation only if--
                          [(i) such disapproval is necessary to 
                        prevent unsafe or unsound practices;
                          [(ii) the financial or management 
                        resources of the savings association 
                        involved warrant disapproval;
                          [(iii) the savings association fails 
                        to furnish the information required 
                        under subparagraph (A); or
                          [(iv) the savings association fails 
                        to comply with the requirement of 
                        paragraph (2).
                  [(D) Retention of capital assets.--In 
                connection with the transaction described in 
                paragraph (1), a savings association may, 
                subject to the approval of the Director, retain 
                capital assets at the holding company level to 
                the extent that such capital exceeds the 
                association's capital requirement established 
                by the Director pursuant to sections 5 (s) and 
                (t) of this Act.
          [(4) Ownership.--
                  [(A) In general.--Persons having ownership 
                rights in the mutual association pursuant to 
                section 5(b)(1)(B) of this Act or State law 
                shall have the same ownership rights with 
                respect to the mutual holding company.
                  [(B) Holders of certain accounts.--Holders of 
                savings, demand or other accounts of--
                          [(i) a savings association chartered 
                        as part of a transaction described in 
                        paragraph (1); or
                          [(ii) a mutual savings association 
                        acquired pursuant to paragraph (5)(B),
                shall have the same ownership rights with 
                respect to the mutual holding company as 
                persons described in subparagraph (A) of this 
                paragraph.
          [(5) Permitted activities.--A mutual holding company 
        may engage only in the following activities:
                  [(A) Investing in the stock of a savings 
                association.
                  [(B) Acquiring a mutual association through 
                the merger of such association into a savings 
                association subsidiary of such holding company 
                or an interim savings association subsidiary of 
                such holding company.
                  [(C) Subject to paragraph (6), merging with 
                or acquiring another holding company, one of 
                whose subsidiaries is a savings association.
                  [(D) Investing in a corporation the capital 
                stock of which is available for purchase by a 
                savings association under Federal law or under 
                the law of any State where the subsidiary 
                savings association or associations have their 
                home offices.
                  [(E) Engaging in the activities described in 
                subsection (c)(2), except subparagraph (B).
          [(6) Limitations on certain activities of acquired 
        holding companies.--
                  [(A) New activities.--If a mutual holding 
                company acquires or merges with another holding 
                company under paragraph (5)(C), the holding 
                company acquired or the holding company 
                resulting from such merger or acquisition may 
                only invest in assets and engage in activities 
                which are authorized under paragraph (5).
                  [(B) Grace period for divesting prohibited 
                assets or discontinuing prohibited 
                activities.--Not later than 2 years following a 
                merger or acquisition described in paragraph 
                (5)(C), the acquired holding company or the 
                holding company resulting from such merger or 
                acquisition shall--
                          [(i) dispose of any asset which is an 
                        asset in which a mutual holding company 
                        may not invest under paragraph (5); and
                          [(ii) cease any activity which is an 
                        activity in which a mutual holding 
                        company may not engage under paragraph 
                        (5).
          [(7) Regulation.--A mutual holding company shall be 
        chartered by the Director and shall be subject to such 
        regulations as the Director may prescribe. Unless the 
        context otherwise requires, a mutual holding company 
        shall be subject to the other requirements of this 
        section regarding regulation of holding companies.
          [(8) Capital improvement.--
                  [(A) Pledge of stock of savings association 
                subsidiary.--This section shall not prohibit a 
                mutual holding company from pledging all or a 
                portion of the stock of a savings association 
                chartered as part of a transaction described in 
                paragraph (1) to raise capital for such savings 
                association.
                  [(B) Issuance of nonvoting shares.--This 
                section shall not prohibit a savings 
                association chartered as part of a transaction 
                described in paragraph (1) from issuing any 
                nonvoting shares or less than 50 percent of the 
                voting shares of such association to any person 
                other than the mutual holding company.
          [(9) Insolvency and liquidation.--
                  [(A) In general.--Notwithstanding any 
                provision of law, upon--
                          [(i) the default of any savings 
                        association--
                                  [(I) the stock of which is 
                                owned by any mutual holding 
                                company; and
                                  [(II) which was chartered in 
                                a transaction described in 
                                paragraph (1);
                          [(ii) the default of a mutual holding 
                        company; or
                          [(iii) a foreclosure on a pledge by a 
                        mutual holding company described in 
                        paragraph (8)(A),
                a trustee shall be appointed receiver of such 
                mutual holding company and such trustee shall 
                have the authority to liquidate the assets of, 
                and satisfy the liabilities of, such mutual 
                holding company pursuant to title 11, United 
                States Code.
                  [(B) Distribution of net proceeds.--Except as 
                provided in subparagraph (C), the net proceeds 
                of any liquidation of any mutual holding 
                company pursuant to subparagraph (A) shall be 
                transferred to persons who hold ownership 
                interests in such mutual holding company.
                  [(C) Recovery by corporation.--If the 
                Corporation incurs a loss as a result of the 
                default of any savings association subsidiary 
                of a mutual holding company which is liquidated 
                pursuant to subparagraph (A), the Corporation 
                shall succeed to the ownership interests of the 
                depositors of such savings association in the 
                mutual holding company, to the extent of the 
                Corporation's loss.
          [(10) Definitions.--For purposes of this subsection--
                  [(A) Mutual holding company.--The term 
                ``mutual holding company'' means a corporation 
                organized as a holding company under this 
                subsection.
                  [(B) Mutual association.--The term ``mutual 
                association'' means a savings association which 
                is operating in mutual form.
                  [(C) Default.--The term ``default'' means an 
                adjudication or other official determination of 
                a court of competent jurisdiction or other 
                public authority pursuant towhich a 
conservator, receiver, or other legal custodian is appointed.
  [(p) Holding Company Activities Constituting Serious Risk to 
Subsidiary Savings Association.--
          [(1) Determination and imposition of restrictions.--
        If the Director determines that there is reasonable 
        cause to believe that the continuation by a savings and 
        loan holding company of any activity constitutes a 
        serious risk to the financial safety, soundness, or 
        stability of a savings and loan holding company's 
        subsidiary savings association, the Director may impose 
        such restrictions as the Director determines to be 
        necessary to address such risk. Such restrictions shall 
        be issued in the form of a directive to the holding 
        company and any of its subsidiaries, limiting--
                  [(A) the payment of dividends by the savings 
                association;
                  [(B) transactions between the savings 
                association, the holding company, and the 
                subsidiaries or affiliates of either; and
                  [(C) any activities of the savings 
                association that might create a serious risk 
                that the liabilities of the holding company and 
                its other affiliates may be imposed on the 
                savings association.
        Such directive shall be effective as a cease and desist 
        order that has become final.
          [(2) Review of directive.--
                  [(A) Administrative review.--After a 
                directive referred to in paragraph (1) is 
                issued, the savings and loan holding company, 
                or any subsidiary of such holding company 
                subject to the directive, may object and 
                present in writing its reasons why the 
                directive should be modified or rescinded. 
                Unless within 10 days after receipt of such 
                response the Director affirms, modifies, or 
                rescinds the directive, such directive shall 
                automatically lapse.
                  [(B) Judicial review.--If the Director 
                affirms or modifies a directive pursuant to 
                subparagraph (A), any affected party may 
                immediately thereafter petition the United 
                States district court for the district in which 
                the savings and loan holding company has its 
                main office or in the United States District 
                Court for the District of Columbia to stay, 
                modify, terminate or set aside the directive. 
                Upon a showing of extraordinary cause, the 
                savings and loan holding company, or any 
                subsidiary of such holding company subject to a 
                directive, may petition a United States 
                district court for relief without first 
                pursuing or exhausting the administrative 
                remedies set forth in this paragraph.
  [(q) Qualified Stock Issuance by Undercapitalized Savings 
Associations or Holding Companies.--
          [(1) In general.--For purposes of this section, any 
        issue of shares of stock shall be treated as a 
        qualified stock issuance if the following conditions 
        are met:
                  [(A) The shares of stock are issued by--
                          [(i) an undercapitalized savings 
                        association; or
                          [(ii) a savings and loan holding 
                        company which is not a bank holding 
                        company but which controls an 
                        undercapitalized savings association 
                        if, at the time of issuance, the 
                        savings and loan holding company is 
                        legally obligated to contribute the net 
                        proceeds from the issuance of such 
                        stock to the capital of an 
                        undercapitalized savings association 
                        subsidiary of such holding company.
                  [(B) All shares of stock issued consist of 
                previously unissued stock or treasury shares.
                  [(C) All shares of stock issued are purchased 
                by a savings and loan holding company that is 
                registered, as of the date of purchase, with 
                the Director in accordance with the provisions 
                of subsection (b)(1) of this section.
                  [(D) Subject to paragraph (2), the Director 
                approved the purchase of the shares of stock by 
                the acquiring savings and loan holding company.
                  [(E) The entire consideration for the stock 
                issued is paid in cash by the acquiring savings 
                and loan holding company.
                  [(F) At the time of the stock issuance, each 
                savings association subsidiary of the acquiring 
                savings and loan holding company (other than an 
                association acquired in a transaction pursuant 
                to subsection (c) or (k) of section 13 of the 
                Federal Deposit Insurance Act or section 408(m) 
                of the National Housing Act) has capital (after 
                deducting any subordinated debt, intangible 
                assets, and deferred, unamortized gains or 
                losses) of not less than 6\1/2\ percent of the 
                total assets of such savings association.
                  [(G) Immediately after the stock issuance, 
                the acquiring savings and loan holding company 
                holds not more than 15 percent of the 
                outstanding voting stock of the issuing 
                undercapitalized savings association or savings 
                and loan holding company.
                  [(H) Not more than one of the directors of 
                the issuing association or company is an 
                officer, director, employee, or other 
                representative of the acquiring company or any 
                of its affiliates.
                  [(I) Transactions between the savings 
                association or savings and loan holding company 
                that issues the shares pursuant to this section 
                and the acquiring company and any of its 
                affiliates shall be subject to the provisions 
                of section 11.
          [(2) Approval of acquisitions.--
                  [(A) Additional capital commitments not 
                required.--The Director shall not disapprove 
                any application for the purchase of stock in 
                connection with a qualified stock issuance on 
                the grounds that the acquiring savings and loan 
                holding company has failed to undertake to make 
                subsequent additional capital contributions to 
                maintain the capital of the undercapitalized 
                savings association at or above the minimum 
                level required by the Director or any other 
                Federal agency having jurisdiction.
                  [(B) Other conditions.--Notwithstanding 
                subsection (a)(4), the Director may impose such 
                conditions on any approval of an application 
                for the purchase of stock in connection with a 
                qualified stock issuance as the Director 
                determines to be appropriate, including--
                          [(i) a requirement that any savings 
                        association subsidiary of the acquiring 
                        savings and loan holding company limit 
                        dividends paid to such holding company 
                        for such period of time as the Director 
                        may require; and
                          [(ii) such other conditions as the 
                        Director deems necessary or appropriate 
                        to prevent evasions of this section.
                  [(C) Application deemed approved if not 
                disapproved within 90 days.--An application for 
                approval of a purchase of stock in connection 
                with a qualified stock issuance shall be deemed 
                to have been approved by the Director if such 
                application has not been disapproved by the 
                Director before the end of the 90-day period 
                beginning on the date such application has been 
                deemed sufficient under regulations issued by 
                the Director.
          [(3) No limitation on class of stock issued.--The 
        shares of stock issued in connection with a qualified 
        stock issuance may be shares of any class.
          [(4) Undercapitalized savings association defined.--
        For purposes of this subsection, the term 
        ``undercapitalized savings association'' means any 
        savings association--
                  [(A) the assets of which exceed the 
                liabilities of such association; and
                  [(B) which does not comply with one or more 
                of the capital standards in effect under 
                section 5(t).
  [(r) Penalty for Failure To Provide Timely and Accurate 
Reports.--
          [(1) First tier.--Any savings and loan holding 
        company, and any subsidiary of such holding company, 
        which--
                  [(A) maintains procedures reasonably adapted 
                to avoid any inadvertent and unintentional 
                error and, as a result of such an error--
                          [(i) fails to submit or publish any 
                        report or information required under 
                        this section or regulations prescribed 
                        by the Director, within the period of 
                        time specified by the Director; or
                          [(ii) submits or publishes any false 
                        or misleading report or information; or
                  [(B) inadvertently transmits or publishes any 
                report which is minimally late,
        shall be subject to a penalty of not more than $2,000 
        for each day during which such failure continues or 
        such false or misleading information is not corrected. 
        Such holding company or subsidiary shall have the 
        burden of proving by a preponderence of the evidence 
        that an error was inadvertent and unintentional and 
        that a report was inadvertently transmitted or 
        published late.
          [(2) Second tier.--Any savings and loan holding 
        company, and any subsidiary of such holding company, 
        which--
                  [(A) fails to submit or publish any report or 
                information required under this section or 
                under regulations prescribed by the Director, 
                within the period of time specified by the 
                Director; or
                  [(B) submits or publishes any false or 
                misleading report or information,
        in a manner not described in paragraph (1) shall be 
        subject to a penalty of not more than $20,000 for each 
        day during which such failure continues or such false 
        or misleading information is not corrected.
          [(3) Third tier.--If any savings and loan holding 
        company or any subsidiary of such a holding company 
        knowingly or with reckless disregard for the accuracy 
        of any information or report described in paragraph (2) 
        submits or publishes any false or misleading report or 
        information, the Director may assess a penalty of not 
        more than $1,000,000 or 1 percent of total assets of 
        such company or subsidiary, whichever is less, per day 
        for each day during which such failure continues or 
        such false or misleading information is not corrected.
          [(4) Assessment.--Any penalty imposed under paragraph 
        (1), (2), or (3) shall be assessed and collected by the 
        Director in the manner provided in subparagraphs (E), 
        (F), (G), and (I) of section 8(i)(2) of the Federal 
        Deposit Insurance Act (for penalties imposed under such 
        section) and any such assessment (including the 
        determination of the amount of the penalty) shall be 
        subject to the provisions of such subsection.
          [(5) Hearing.--Any savings and loan holding company 
        or any subsidiary of such a holding company against 
        which any penalty is assessed under this subsection 
        shall be afforded a hearing if such savings and loan 
        holding company or such subsidiary, as the case may be, 
        submits a request for such hearing within 20 days after 
        the issuance of the notice of assessment. Section 8(h) 
        of the Federal Deposit Insurance Act shall apply to any 
        proceeding under this subsection.
  [(s) Mergers, Consolidations, and Other Acquisitions 
Authorized.--
          [(1) In general.--Subject to sections 5(d)(3) and 
        18(c) of the Federal Deposit Insurance Act and all 
        other applicable laws, any Federal savings association 
        may acquire or be acquired by any insured depository 
        institution.
          [(2) Expedited approval of acquisitions.--
                  [(A) In general.--Any application by a 
                savings association to acquire or be acquired 
                by another insured depository institution which 
                is required to be filed with the Director under 
                any applicable law or regulation shall be 
                approved or disapproved in writing by the 
                Director before the end of the 60-day period 
                beginning on the date such application is filed 
                with the agency.
                  [(B) Extension of period.--The period for 
                approval or disapproval referred to in 
                subparagraph (A) may be extended for an 
                additional 30-day period if the Director 
                determines that--
                          [(i) an applicant has not furnished 
                        all of the information required to be 
                        submitted; or
                          [(ii) in the Director's judgment, any 
                        material information submitted is 
                        substantially inaccurate or incomplete.
          [(3) Acquire defined.--For purposes of this 
        subsection, the term ``acquire'' means to acquire, 
        directly or indirectly, ownership or control through a 
        merger or consolidation or an acquisition of assets or 
        assumption of liabilities, provided that following such 
        merger, consolidation, or acquisition, an acquiring 
        insured depository institution may not own the shares 
        of the acquired insured depository institution.
          [(4) Regulations.--
                  [(A) Required.--The Director shall prescribe 
                such regulations as may be necessary to carry 
                out paragraph (1).
                  [(B) Effective date.--The regulations 
                required under subparagraph (A) shall--
                          [(i) be prescribed in final form 
                        before the end of the 90-day period 
                        beginning on the date of the enactment 
                        of this subsection; and
                          [(ii) take effect before the end of 
                        the 120-day period beginning on such 
                        date.
          [(5) Limitation.--No provision of this section shall 
        be construed to authorize a national bank or any 
        subsidiary thereof to engage in any activity not 
        otherwise authorized under the National Bank Act or any 
        other law governing the powers of a national bank.
  [(t) Exemption for Bank Holding Companies.--This section 
shall not apply to a bank holding company that is subject to 
the Bank Holding Company Act of 1956, or any company controlled 
by such bank holding company.

[SEC. 11. TRANSACTIONS WITH AFFILIATES; EXTENSIONS OF CREDIT TO 
                    EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL 
                    SHAREHOLDERS.

  [(a) Affiliate Transactions.--
          [(1) In general.--Sections 23A and 23B of the Federal 
        Reserve Act shall apply to every savings association in 
        the same manner and to the same extent as if the 
        savings association were a member bank (as defined in 
        such Act), except that--
                  [(A) no loan or other extension of credit may 
                be made to any affiliate unless that affiliate 
                is engaged only in activities described in 
                section 10(c)(2)(F)(i); and
                  [(B) no savings association may enter into 
                any transaction described in section 
                23A(b)(7)(B) of the Federal Reserve Act with 
                any affiliate other than with respect to shares 
                of a subsidiary.
          [(2) Sister bank exemption made available to savings 
        associations.--
                  [(A) Savings associations controlled by bank 
                holding companies.--Every savings association 
                more than 80 percent of the voting stock of 
                which is owned by a company described in 
                section 10(c)(8) shall be treated asa bank for 
purposes of section 23A(d)(1) and section 23B of the Federal Reserve 
Act, if every savings association and bank controlled by such company 
complies with all applicable capital requirements on a fully phased-in 
basis and without reliance on goodwill.
                  [(B) Savings associations generally.--
                Effective on and after January 1, 1995, every 
                savings association shall be treated as a bank 
                for purposes of section 23A(d)(1) and section 
                23B of the Federal Reserve Act.
          [(3) Affiliates described.--Any company that would be 
        an affiliate (as defined in sections 23A and 23B of the 
        Federal Reserve Act) of any savings association if such 
        savings association were a member bank (as such term is 
        defined in such Act) shall be deemed to be an affiliate 
        of such savings association for purposes of paragraph 
        (1).
          [(4) Additional restrictions authorized.--The 
        Director may impose such additional restrictions on any 
        transaction between any savings association and any 
        affiliate of such savings association as the Director 
        determines to be necessary to protect the safety and 
        soundness of the savings association.
  [(b) Extensions of Credit to Executive Officers, Directors, 
and Principal Shareholders.--
          [(1) In general.--Subsections (g) and (h) of section 
        22 of the Federal Reserve Act shall apply to every 
        savings association in the same manner and to the same 
        extent as if the savings association were a member bank 
        (as defined in such Act).
          [(2) Additional restrictions authorized.--The 
        Director may impose such additional restrictions on 
        loans or extensions of credit to any director or 
        executive officer of any savings association, or any 
        person who directly or indirectly owns, controls, or 
        has the power to vote more than 10 percent of any class 
        of voting securities of a savings association, as the 
        Director determines to be necessary to protect the 
        safety and soundness of the savings association.
  [(c) Administrative Enforcement.--The Director may take 
enforcement action with respect to violations of this section 
pursuant to section 8 or 18(j) of the Federal Deposit Insurance 
Act, as appropriate.

[SEC. 12. ADVERTISING.

  [No savings association shall carry on any sale, plan, or 
practices, or any advertising, in violation of regulations 
promulgated by the Director.

[SEC. 13. POWERS OF EXAMINERS.

  [For the purposes of this Act, examiners appointed by the 
Director shall--
          [(1) be subject to the same requirements, 
        responsibilities, and penalties as are applicable to 
        examiners under the Federal Reserve Act and title LXII 
        of the Revised Statutes; and
          [(2) have, in the exercise of functions under this 
        Act, the same powers and privileges as are vested in 
        such examiners by law.

[SEC. 14. SEPARABILITY PROVISION.

  [If any provision of this Act, or the application thereof to 
any person or circumstances, is held invalid, the remainder of 
the Act, and the application of such provision to other persons 
or circumstances, shall not be affected thereby.]
                              ----------                              


                        ACT OF OCTOBER 28, 1974

   AN ACT To increase deposit insurance from $20,000 to $40,000, to 
    provide full insurance for public unit deposits of $100,000 per 
    account, to establish a National Commission on Electronic Fund 
                   Transfers, and for other purposes.

  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

TITLE I--AMENDMENTS TO AND EXTENSIONS OF PROVISIONS OF LAW RELATING TO 
             FEDERAL REGULATION OF DEPOSITORY INSTITUTIONS

           * * * * * * *

             independence of financial regulatory agencies

  Sec. 111. No officer or agency of the United States shall 
have any authority to require the Securities and Exchange 
Commission, the Board of Governors of the Federal Reserve 
System, the Federal Deposit Insurance Corporation, the 
Comptroller of the Currency, the [Federal Home Loan Bank Board] 
Federal Housing Finance Board, or the National Credit Union 
Administration to submit legislative recommendations, or 
testimony, or comments on legislation, to any officer or agency 
of the United States for approval, comments, or review, prior 
to the submission of such recommendations, testimony, or 
comments to the Congress if such recommendations, testimony, or 
comments to the Congress include a statement indicating that 
the views expressed therein are those of the agency submitting 
them and do not necessarily represent the views of the 
President.
          * * * * * * *

       TITLE II--NATIONAL COMMISSION ON ELECTRONIC FUND TRANSFERS

          * * * * * * *

                               membership

  Sec. 202. (a) The Commission shall be composed of twenty-six 
members as follows:
          (1) * * *
          * * * * * * *
          (12) seven individuals, appointed by the President, 
        who are officers or employees of, or who otherwise 
        represent banking, [thrift, or other business entities, 
        including one representative each of commercial banks, 
        mutual savings banks, savings and loan associations,] 
        or other business entities, including 3 representatives 
        from different types of insured depository institutions 
        (as defined in section 3 of the Federal Deposit 
        Insurance Act) and 1 representative each of credit 
        unions, retailers, nonbanking institutions offering 
        credit card services, and organizations providing 
        interchange services, for credit cards issued by banks;
          * * * * * * *
                              ----------                              


                    SECURITIES EXCHANGE ACT OF 1934

              TITLE I--REGULATION OF SECURITIES EXCHANGES

          * * * * * * *

                  definitions and application of title

  Sec. 3. (a) When used in this title, unless the context 
otherwise requires--
          (1) * * *
          * * * * * * *
          [(4) The term ``broker'' means any person engaged in 
        the business of effecting transactions in securities 
        for the account of others, but does not include a bank.
          [(5) The term ``dealer'' means any person engaged in 
        the business of buying and selling securities for his 
        own account, through a broker or otherwise, but does 
        not include a bank, or any person insofar as he buys or 
        sells securities for his own account, either 
        individually or in some fiduciary capacity, but not as 
        a part of a regular business.]
          (4) Broker.--
                  (A) In general.--The term ``broker'' means 
                any person engaged in the business of effecting 
                transactions in securities for the account of 
                others.
                  (B) Exclusion of banks.--The term ``broker'' 
                does not include a bank unless such bank--
                          (i) publicly solicits the business of 
                        effecting securities transactions for 
                        the account of others; or
                          (ii) is compensated for such business 
                        by the payment of commissions or 
                        similar remuneration based on effecting 
                        transactions in securities (other than 
                        fees calculated as a percentage of 
                        assets under management) in excess of 
                        the bank's incremental costs directly 
                        attributable to effecting such 
                        transactions (hereafter referred to as 
                        ``incentive compensation'').
                  (C) Exemption for certain bank activities.--A 
                bank shall not be considered to be a broker 
                because the bank engages in any of the 
                following activities under the conditions 
                described:
                          (i) Third party brokerage 
                        arrangements.--The bank enters into a 
                        contractual or other arrangement with a 
                        broker or dealer registered under this 
                        title under which the broker or dealer 
                        offers brokerage services on or off the 
                        premises of the bank if--
                                  (I) such broker or dealer is 
                                clearly identified as the 
                                person performing the brokerage 
                                services;
                                  (II) the broker or dealer 
                                performs brokerage services in 
                                an area that is clearly marked 
                                and, unless made impossible by 
                                space or personnel 
                                considerations, physically 
                                separate from the routine 
                                deposit-taking activities of 
                                the bank;
                                  (III) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the contractual 
                                or other arrangement clearly 
                                indicate that the brokerage 
                                services are being provided by 
                                the broker or dealer and not by 
                                the bank;
                                  (IV) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the contractual 
                                or other arrangement are in 
                                compliance with the Federal 
                                securities laws before 
                                distribution;
                                  (V) bank employees perform 
                                only clerical or ministerial 
                                functions in connection with 
                                brokerage transactions, 
                                including scheduling 
                                appointments with the 
                                associated persons of a broker 
                                or dealer and, on behalf of a 
                                broker or dealer, transmitting 
                                orders or handling customers 
                                funds or securities, except 
                                that bank employees who are not 
                                so qualified may describe in 
                                general terms investment 
                                vehicles under the contractual 
                                or other arrangement and accept 
                                customer orders on behalf of 
                                the broker or dealer if such 
                                employees have received 
                                training that is substantially 
                                equivalent to the training 
                                required for personnel 
                                qualified to sell securities 
                                pursuant to the requirements of 
                                a self-regulatory organization;
                                  (VI) bank employees do not 
                                directly receive incentive 
                                compensation for any brokerage 
                                transaction unless such 
                                employees are associated 
                                persons of a broker or dealer 
                                and are qualified pursuant to 
                                the requirements of a self-
                                regulatory organization (as so 
                                defined) except that the bank 
                                employees may receive nominal 
                                cash and noncash compensation 
                                for customer referrals if the 
                                cash compensation is a one-time 
                                fee of a fixed dollar amount 
                                and the payment of the fee is 
                                not contingent on whether the 
                                referral results in a 
                                transaction;
                                  (VII) such services are 
                                provided by the broker or 
                                dealer on a basis in which all 
                                customers which receive any 
                                services are fully disclosed to 
                                the broker or dealer; and
                                  (VIII) the broker or dealer 
                                informs each customer that the 
                                brokerage services are provided 
                                by the broker or dealer and not 
                                by the bank and that the 
                                securities are not deposits or 
                                other obligations of the bank, 
                                are not guaranteed by the bank, 
                                andare not insured by the 
Federal Deposit Insurance Corporation.
                          (ii) Trust activities.--The bank 
                        engages in trust activities (including 
                        effecting transactions in the course of 
                        such trust activities) permissible for 
                        national banks under the first section 
                        of the Act of September 28, 1962, or 
                        for State banks under relevant State 
                        trust statutes or law (including 
                        securities safekeeping, self-directed 
                        individual retirement accounts, or 
                        managed agency accounts or other 
                        functionally equivalent accounts of a 
                        bank) unless the bank--
                                  (I) publicly solicits 
                                brokerage business, other than 
                                by advertising that it effects 
                                transactions in securities in 
                                conjunction with advertising 
                                its other trust activities; or
                                  (II) receives incentive 
                                compensation for such brokerage 
                                activities.
                          (iii) Permissible securities 
                        transactions.--The bank effects 
                        transactions in exempted securities, 
                        commercial paper, bankers acceptances, 
                        commercial bills, qualified Canadian 
                        government obligations as defined in 
                        section 5136 of the Revised Statutes, 
                        obligations of the Washington 
                        Metropolitan Area Transit Authority 
                        which are guaranteed by the Secretary 
                        of Transportation under section 9 of 
                        the National Capital Transportation Act 
                        of 1969, obligations of the North 
                        American Development Bank, and 
                        obligations of any local public agency 
                        (as defined in section 110(h) of the 
                        Housing Act of 1949) or any public 
                        housing agency (as defined in the 
                        United States Housing Act of 1937) that 
                        are expressly authorized by section 
                        5136 of the Revised Statutes of the 
                        United States as permissible for a 
                        national bank to underwrite or deal in.
                          (iv) Employee and shareholder benefit 
                        plans.--The bank effects transactions 
                        as part of any bonus, profit-sharing, 
                        pension, retirement, thrift, savings, 
                        incentive, stock purchase, stock 
                        ownership, stock appreciation, stock 
                        option, dividend reinvestment, or 
                        similar plan for employees or 
                        shareholders of an issuer or its 
                        subsidiaries.
                          (v) Sweep accounts.--The bank effects 
                        transactions as part of a program for 
                        the investment or reinvestment of bank 
                        deposit funds into any no-load, open-
                        end management investment company 
                        registered under the Investment Company 
                        Act of 1940 that holds itself out as a 
                        money market fund.
                          (vi) Affiliate transactions.--The 
                        bank effects transactions for the 
                        account of any affiliate of the bank 
                        (as defined in section 2 of the Bank 
                        Holding Company Act of 1956).
                          (vii) Private securities offerings.--
                        The bank--
                                  (I) effects sales as part of 
                                a primary offering of 
                                securities by an issuer, not 
                                involving a public offering, 
                                pursuant to section 3(b), 4(2), 
                                or 4(6) of the Securities Act 
                                of 1933 and the rules and 
                                regulations issued thereunder; 
                                and
                                  (II) effects such sales 
                                exclusively to an accredited 
                                investor, as defined in section 
                                2 of the Securities Act of 
                                1933.
                          (viii) De minimus exemption.--If the 
                        bank does not have a subsidiary or 
                        affiliate registered as a broker or 
                        dealer under section 15, the bank 
                        effects, other than in transactions 
                        referred to in clauses (i) through 
                        (vii), not more than--
                                  (I) 800 transactions in any 
                                calendar year in securities for 
                                which a ready market exists, 
                                and
                                  (II) 200 other transactions 
                                in securities in any calendar 
                                year.
                          (ix) Safekeeping and custody 
                        services.--The bank, as part of 
                        customary banking activities--
                                  (I) provides safekeeping or 
                                custody services with respect 
                                to securities, including the 
                                exercise of warrants or other 
                                rights on behalf of customers;
                                  (II) clears or settles 
                                transactions in securities;
                                  (III) effects securities 
                                lending or borrowing 
                                transactions with or on behalf 
                                of customers as part of 
                                services provided to customers 
                                pursuant to subclauses (I) and 
                                (II) or invests cash collateral 
                                pledged in connection with such 
                                transactions; or
                                  (IV) holds securities pledged 
                                by one customer to another 
                                customer or securities subject 
                                to resale agreements between 
                                customers or facilitates the 
                                pledging or transfer of such 
                                securities by book entry.
                          (x) Contracts of insurance.--The bank 
                        effects transactions in contracts of 
                        insurance.
                          (xi) Banking products.--The bank 
                        effects transactions in banking 
                        products, as defined in section 18 of 
                        the Federal Deposit Insurance Act.
                  (D) Exemption for entities subject to section 
                15(e).--The term ``broker'' does not include a 
                bank that--
                          (i) was, immediately prior to the 
                        enactment of the Financial Services 
                        Competition Act of 1997, subject to 
                        section 15(e); and
                          (ii) is subject to such restrictions 
                        and requirements as the Commission 
                        considers appropriate.
          (5) Dealer.--
                  (A) In general.--The term ``dealer'' means 
                any person engaged in the business of buying 
                and selling securities for such person's own 
                account through a broker or otherwise.
                  (B) Exception for person not engaged in the 
                business of dealing.--The term ``dealer'' does 
                not include a person that buys or sells 
                securities for such person's own account, 
                either individually or in a fiduciary capacity, 
                but not as a part of a regular business.
                  (C) Exemption for certain bank activities.--A 
                bank shall not be considered to be a dealer 
                because thebank engages in any of the following 
activities under the conditions described:
                          (i) The bank buys and sells 
                        commercial paper, bankers acceptances, 
                        exempted securities, qualified Canadian 
                        Government obligations as defined in 
                        section 5136 of the Revised Statutes, 
                        obligations of the Washington 
                        Metropolitan Area Transit Authority 
                        which are guaranteed by the Secretary 
                        of Transportation under section 9 of 
                        the National Capital Transportation Act 
                        of 1969, obligations of the North 
                        American Development Bank, and 
                        obligations of any local public agency 
                        (as defined in section 110(h) of the 
                        Housing Act of 1949) or any public 
                        housing agency (as defined in the 
                        United States Housing Act of 1937) that 
                        are expressly authorized by section 
                        5136 of the Revised Statutes of the 
                        United States as permissible for a 
                        national bank to underwrite or deal in.
                          (ii) The bank buys and sells 
                        securities for investment purposes for 
                        the bank or for accounts for which the 
                        bank acts as a trustee or fiduciary.
                          (iii) The bank effects transactions 
                        in contracts of insurance.
                          (iv) The bank offers or sells, solely 
                        to any accredited investor (as defined 
                        in section 2 of the Securities Act of 
                        1933) securities backed by or 
                        representing an interest in notes, 
                        drafts, acceptances, loans, leases, 
                        receivables, other obligations, or 
                        pools of any such obligations 
                        originated or purchased by the bank or 
                        any affiliate of the bank.
                          (v) The bank buys and sells banking 
                        products, as defined in section 18 of 
                        the Federal Deposit Insurance Act.
          * * * * * * *
          (12)(A) The term ``exempted security'' or ``exempted 
        securities'' includes--
                  (i) government securities, as defined in 
                paragraph (42) of this subsection;
                  (ii) municipal securities, as defined in 
                paragraph (29) of this subsection;
                  [(iii) any interest or participation in any 
                common trust fund or similar fund maintained by 
                a bank exclusively for the collective 
                investment and reinvestment of assets 
                contributed thereto by such bank in its 
                capacity as trustee, executor, administrator, 
                or guardian;]
                  (iii) any interest or participation in any 
                common trust fund or similar fund that is 
                excluded from the definition of the term 
                ``investment company'' under section 3(c)(3) of 
                the Investment Company Act of 1940;
          * * * * * * *
          (34) The term ``appropriate regulatory agency'' 
        means--
                  (A) * * *
          * * * * * * *
                  (G) When used with respect to a government 
                securities broker or government securities 
                dealer, or person associated with a government 
                securities broker or government securities 
                dealer:
                          (i) * * *
          * * * * * * *
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813)) 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System 
                        [or a Federal savings bank]) or an 
                        insured State branch of a foreign bank 
                        (as such terms are used in the 
                        International Banking Act of 1978);
                          [(iv) the Director of the Office of 
                        Thrift Supervision, in the case of a 
                        savings association (as defined in 
                        section 3(b) of the Federal Deposit 
                        Insurance Act) the deposits of which 
                        are insured by the Federal Deposit 
                        Insurance Corporation;]
                          [(v)] (iv) the Commission, in the 
                        case of all other government securities 
                        brokers and government securities 
                        dealers.
        As used in this paragraph, the terms ``bank holding 
        company'' and ``subsidiary of a bank holding company'' 
        have the meanings given them in section 2 of the Bank 
        Holding Company Act of 1956[, and the term ``District 
        of Columbia savings and loan association'' means any 
        association subject to examination and supervision by 
        the Office of Thrift Supervision under section 8 of the 
        Home Owners' Loan Act of 1933].
          * * * * * * *
  (h) Exemption From Definition of Broker or Dealer.--With 
respect to the employees of a bank that engages in the offer 
and sale of securities to the retail public, such employees 
shall be subject to the same rules and regulations of a self-
regulatory organization applicable under authority of section 
15A to employees of securities and other nonbank firms.
          * * * * * * *

           registration and regulation of brokers and dealers

  Sec. 15. (a) * * *
          * * * * * * *
  (i) Application of This Title to Banks Registered as Brokers 
or Dealers.--
          (1) Nondiscrimination.--In administering and 
        enforcing this title with respect to banks that are 
        registered brokers or dealers, the Commission shall not 
        treat banks more restrictively than any other entities 
        that are registered as brokers or dealers pursuant to 
        this section.
          (2) Capital requirements.--
                  (A) Well-capitalized banks.--Capital 
                requirements for brokers or dealers shall not 
                apply to a bank that is well-capitalized (as 
                defined in section 38 of the Federal Deposit 
                Insurance Act) and determined by the 
                appropriate Federal banking agency (as defined 
                in section 3 of such Act), if the bank's 
                brokerage and dealer activities requiring 
                registration do not represent the predominant 
                portion of the gross revenues of the bank.
                  (B) Other banks.--The Commission, in 
                consultation with the appropriate Federal 
                regulatory agencies for banks, shall provide 
                appropriate transitional relief to banks that 
                are registered brokers or dealers, and that 
                cease to be well-capitalized but are adequately 
                capitalized (as defined in section 38 of the 
                Federal Deposit Insurance Act). Such rules 
                shall take account of the purposes of this 
                section and the extent to which bank capital 
                requirements further those purposes.
          (3) Scope of application.--The regulation, under this 
        Act, of any bank registered under this Act as a broker 
        or dealer shall apply only with respect to activities 
        of the bank for which the bank is required under this 
        Act to be registered as a broker or dealer.
          * * * * * * *

               government securities brokers and dealers

      Sec. 15C. (a) * * *
          * * * * * * *
  (g)(1) Nothing in this section except paragraph (2) of this 
subsection shall be construed to impair or limit the authority 
under any other provision of law of the Commission, the 
Secretary of the Treasury, the Board of Governors of the 
Federal Reserve System, the Comptroller of the Currency, the 
Federal Deposit Insurance Corporation, [the Director of the 
Office of Thrift Supervision,] the Federal Savings and Loan 
Insurance Corporation, the Secretary of Housing and Urban 
Development, and the Government National Mortgage Association.
          * * * * * * *
                              ----------                              


      SECTION 3 OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970

SEC. 3. SECURITIES INVESTOR PROTECTION CORPORATION.

  (a) Creation and Membership.--
          (1) * * *
          (2) Membership.--
                  (A) Members of sipc.--SIPC shall be a 
                membership corporation the members of which 
                shall be all persons registered as brokers or 
                dealers under section 15(b) of the 1934 Act, 
                other than--
                          (i) persons whose principal business, 
                        in the determination of SIPC, taking 
                        into account business of affiliated 
                        entities, is conducted outside the 
                        United States and its territories and 
                        possessions; [and]
                          (ii) persons whose business as a 
                        broker or dealer consists exclusively 
                        of (I) the distribution of shares of 
                        registered open end investment 
                        companies or unit investment trusts, 
                        (II) the sale of variable annuities, 
                        (III) the business of insurance, or 
                        (IV) the business of rendering 
                        investment advisory services to one or 
                        more registered investment companies or 
                        insurance company separate accounts[.]; 
                        and
                          (iii) banks.
          * * * * * * *
                              ----------                              


                     INVESTMENT COMPANY ACT OF 1940

          * * * * * * *

                     TITLE I--INVESTMENT COMPANIES

          * * * * * * *

                          general definitions

  Sec. 2. (a) When used in this title, unless the context 
otherwise requires--
          (1) * * *
          * * * * * * *
          (5) ``Bank'' means [(A) a banking institution 
        organized under the laws of the United States] (A) a 
        depository institution (as defined in section 3 of the 
        Federal Deposit Insurance Act) or a branch or agency of 
        a foreign bank (as such terms are defined in section 
        1(b) of the International Banking Act of 1978), (B) a 
        member bank of the Federal Reserve System, (C) any 
        other banking institution or trust company, whether 
        incorporated or not, doing business under the laws of 
        any State or of the United States, a substantial 
        portion of the business of which consists of receiving 
        deposits or exercising fiduciary powers similar to 
        those permitted to national banks under the authority 
        of the Comptroller of the Currency, and which is 
        supervised and examined by State or Federal authority 
        having supervision over banks, and which is not 
        operated for the purpose of evading the provisions of 
        this title, and (D) a receiver, conservator, or other 
        liquidating agent of any institution or firm included 
        in clause (A), (B), or (C) of this paragraph.
          [(6) ``Broker'' means any person engaged in the 
        business of effecting transactions in securities for 
        the account of others, but does not include a bank or 
        any person solely by reason of the fact that such 
        person is an underwriter for one or more investment 
        companies.]
          (6) The term ``broker'' has the same meaning as in 
        the Securities Exchange Act of 1934, except that such 
        term does not include any person solely by reason of 
        the fact that such person is an underwriter for one or 
        more investment companies.
          * * * * * * *
          [(11) ``Dealer'' means any person regularly engaged 
        in the business of buying and selling securities for 
        his own account, through a broker or otherwise, but 
        does not include a bank, insurance company, or 
        investment company, or any person insofar as he is 
        engaged in investing, reinvesting, or trading in 
        securities, or in owning or holding securities, for his 
        own account, either individually or in some fiduciary 
        capacity, but not as a part of a regular business.]
          (11) The term ``dealer'' has the same meaning as in 
        the Securities Exchange Act of 1934, but does not 
        include an insurance company or investment company.
          * * * * * * *
          (19) ``Interested person'' of another person means--
                  (A) when used with respect to an investment 
                company--
                          (i) any affiliated person of such 
                        company,
                          (ii) any member of the immediate 
                        family of any natural person who is an 
                        affiliated person of such company,
                          (iii) any interested person of any 
                        investment adviser of or principal 
                        underwriter for such company,
                          (iv) any person or partner or 
                        employee of any person who at any time 
                        since the beginning of the last two 
                        completed fiscal years of such company 
                        has acted as legal counsel for such 
                        company,
                          [(v) any broker or dealer registered 
                        under the Securities Exchange Act of 
                        1934 or any affiliated person of such a 
                        broker or dealer, and]
                          (v) any person (other than a 
                        registered investment company) that, at 
                        any time during the preceding 6 months, 
                        has executed any portfolio transactions 
                        for, engaged in any principal 
                        transactions with, or distributed 
                        shares for--
                                  (I) the investment company,
                                  (II) any other investment 
                                company having the same 
                                investment adviser as such 
                                investment company or holding 
                                itself out to investors as a 
                                related company for purposes of 
                                investment or investor 
                                services, or
                                  (III) any account over which 
                                the investment company's 
                                investment adviser has 
                                brokerage placement discretion, 
                                or any affiliated person of 
                                such a person,
                          (vi) any person (other than a 
                        registered investment company) that, at 
                        any time during the preceding 6 months, 
                        has loaned money to--
                                  (I) the investment company,
                                  (II) any other investment 
                                company having the same 
                                investment adviser as such 
                                investmentcompany or holding 
itself out to investors as a related company for purposes of investment 
or investor services, or
                                  (III) any account for which 
                                the investment company's 
                                investment adviser has 
                                borrowing authority,
                        or any affiliated person of such a 
                        person, or
                          [(vi)] (vii) any natural person whom 
                        the Commission by order shall have 
                        determined to be an interested person 
                        by reason of having had, at any time 
                        since the beginning of the last two 
                        completed fiscal years of such company, 
                        a material business or professional 
                        relationship with such company or with 
                        the principal executive officer of such 
                        company or with any other investment 
                        company having the same investment 
                        adviser or principal underwriter or 
                        with the principal executive officer of 
                        such other investment company:
                Provided, That no person shall be deemed to be 
                an interested person of an investment company 
                solely by reason of (aa) his being a member of 
                its board of directors or advisory board or an 
                owner of its securities, or (bb) his membership 
                in the immediate family of any person specified 
                in clause (aa) of this proviso; and
                  (B) when used with respect to an investment 
                adviser of or principal underwriter for any 
                investment company--
                          (i) any affiliated person of such 
                        investment adviser or principal 
                        underwriter,
                          (ii) any member of the immediate 
                        family of any natural person who is an 
                        affiliated person of such investment 
                        advisor or principal underwiter,
                          (iii) any person who knowingly has 
                        any direct or indirect beneficial 
                        interest in, or who is designated as 
                        trustee, executor, or guardian of any 
                        legal interest in, any security issued 
                        either by such investment adviser or 
                        principal underwriter or by a 
                        controlling person of such investment 
                        adviser or principal underwriter,
                          (iv) any person or partner or 
                        employee of any person who at any time 
                        since the beginning of the last two 
                        completed fiscal years of such 
                        investment company has acted as legal 
                        counsel for such investment adviser or 
                        principal underwriter,
                          [(v) any broker or dealer registered 
                        under the Securities Exchange Act of 
                        1934 or any affiliated person of such a 
                        broker or dealer, and]
                          (v) any person (other than a 
                        registered investment company) that, at 
                        any time during the preceding 6 months, 
                        has executed any portfolio transactions 
                        for, engaged in any principal 
                        transactions with, or distributed 
                        shares for--
                                  (I) any investment company 
                                for which the investment 
                                adviser or principal 
                                underwriter serves as such,
                                  (II) any investment company 
                                holding itself out to 
                                investors, for purposes of 
                                investment or investor 
                                services, as a company related 
                                to any investmentcompany for 
which the investment adviser or principal underwriter serves as such, 
or
                                  (III) any account over which 
                                the investment adviser has 
                                brokerage placement discretion, 
                                or any affiliated person of 
                                such a person,
                          (vi) any person (other than a 
                        registered investment company) that, at 
                        any time during the preceding 6 months, 
                        has loaned money to--
                                  (I) any investment company 
                                for which the investment 
                                adviser or principal 
                                underwriter serves as such,
                                  (II) any investment company 
                                holding itself out to 
                                investors, for purposes of 
                                investment or investor 
                                services, as a company related 
                                to any investment company for 
                                which the investment adviser or 
                                principal underwriter serves as 
                                such, or
                                  (III) any account for which 
                                the investment adviser has 
                                borrowing authority,
                        or any affiliated person of such a 
                        person, or
                          [(vi)] (vii) any natural person whom 
                        the Commission by order shall have 
                        determined to be an interested person 
                        by reason of having had at any time 
                        since the beginning of the last two 
                        completed fiscal years of such 
                        investment company a material business 
                        or professional relationship with such 
                        investment adviser or principal 
                        underwriter or with the principal 
                        executive officer or any controlling 
                        person of such investment adviser or 
                        principal underwriter.
                For the purposes of this paragraph (19), 
                ``member of the immediate family'' means any 
                parent, spouse of a parent, child, spouse of a 
                child, spouse, brother, or sister, and includes 
                step and adoptive relationships. The Commission 
                may modify or revoke any order issued under 
                clause (vi) of subparagaph (A) or (B) of this 
                paragraph whenever it finds that such order is 
                no longer consistent with the facts. No order 
                issued pursuant to clause (vi) of subparagraph 
                (A) or (B) of this paragraph shall become 
                effective until at least sixty days after the 
                entry thereof, and no such order shall affect 
                the status of any person for the purposes of 
                this title or for any other purpose for any 
                period prior to the effective date of such 
                order.
          * * * * * * *

                    definition of investment company

  Sec. 3. (a)(1) * * *
          * * * * * * *
  (c) Notwithstanding subsection (a), none of the following 
persons is an investment company within the meaning of this 
title:
          (1) * * *
          * * * * * * *
          (3) Any bank or insurance company; any savings and 
        loan association, building and loan association, 
        cooperative bank,homestead association, or similar 
institution, or any receiver, conservator, liquidator, liquidating 
agent, or similar official or person thereof or therefor; or any common 
trust fund or similar fund maintained by a bank exclusively for the 
collective investment and reinvestment of moneys contributed thereto by 
the bank in its capacity as a trustee, executor, administrator, or 
guardian, if--
                  (A) such fund is employed by the bank solely 
                as an aid to the administration of trusts, 
                estates, or other accounts created and 
                maintained for a fiduciary purpose;
                  (B) except in connection with the ordinary 
                advertising of the bank's fiduciary services, 
                interests in such fund are not--
                          (i) advertised; or
                          (ii) offered for sale to the general 
                        public; and
                  (C) fees and expenses charged by such fund 
                are not in contravention of fiduciary 
                principles established under applicable Federal 
                or State law.
          * * * * * * *

                       affiliations of directors

  Sec. 10. (a) * * *
          * * * * * * *
  (c) No registered investment company shall have a majority of 
its board of directors consisting of persons who are officers, 
directors, or employees of any one [bank, except] bank (and its 
subsidiaries) or any single bank holding company (and the 
affiliates and subsidiaries of such holding company) (as such 
terms are defined in the Bank Holding Company Act of 1956), 
except that, if on March 15, 1940, any registered investment 
company had a majority of its directors consisting of persons 
who are directors, officers, or employees of any one bank, such 
company may continue to have the same percentage of its board 
of directors consisting of persons who are directors, officers, 
or employees of such bank.
          * * * * * * *

             investment advisory and underwriting contracts

  Sec. 15. (a) * * *
          * * * * * * *
  (g) Controlling Interest in Investment Company Prohibited.--
          (1) In general.--If any investment adviser to a 
        registered investment company, or an affiliated person 
        of that investment adviser, holds a controlling 
        interest in that registered investment company in a 
        trustee or fiduciary capacity, such person shall--
                  (A) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any employee 
                benefit plan subject to the Employee Retirement 
                Income Security Act of 1974, transfer the power 
                to vote the shares of the investment company 
                through to another person acting in a fiduciary 
                capacity with respect to the plan who is not an 
                affiliated person of that investment adviser or 
                any affiliated person thereof; or
                  (B) if it holds the shares in a trustee or 
                fiduciary capacity with respect to any other 
                person or entity other than an employee benefit 
                plan subject to the Employee Retirement Income 
                Security Act of 1974--
                          (i) transfer the power to vote the 
                        shares of the investment company 
                        through to--
                                  (I) the beneficial owners of 
                                the shares;
                                  (II) another person acting in 
                                a fiduciary capacity who is not 
                                an affiliated person of that 
                                investment adviser or any 
                                affiliated person thereof; or
                                  (III) any person authorized 
                                to receive statements and 
                                information with respect to the 
                                trust who is not an affiliated 
                                person of that investment 
                                adviser or any affiliated 
                                person thereof;
                          (ii) vote the shares of the 
                        investment company held by it in the 
                        same proportion as shares held by all 
                        other shareholders of the investment 
                        company; or
                          (iii) vote the shares of the 
                        investment company as otherwise 
                        permitted under such rules, 
                        regulations, or orders as the 
                        Commission may prescribe for the 
                        protection of investors.
          (2) Exemption.--Paragraph (1) shall not apply to any 
        investment adviser to a registered investment company, 
        or an affiliated person of that investment adviser, 
        holding shares of the investment company in a trustee 
        or fiduciary capacity if that registered investment 
        company consists solely of assets held in such 
        capacities.
          (3) Safe harbor.--No investment adviser to a 
        registered investment company or any affiliated person 
        of such investment adviser shall be deemed to have 
        acted unlawfully or to have breached a fiduciary duty 
        under State or Federal law solely by reason of acting 
        in accordance with clause (i), (ii), or (iii) of 
        paragraph (1)(B).
          (4) Church plan exemption.--Paragraph (1) shall not 
        apply to any investment adviser to a registered 
        investment company, or an affiliated person of that 
        investment adviser, holding shares in such a capacity, 
        if such investment adviser or such affiliated person is 
        an organization described in section 414(e)(3)(A) of 
        the Internal Revenue Code of 1986.
          * * * * * * *

      transactions of certain affiliated persons and underwriters

  Sec. 17. (a) * * *
          * * * * * * *
  [(f) Every registered] (f) Custody of Securities.--
          (1) Every registered management company shall place 
        and maintain its securities and similar investments in 
        the custody of [(1)] (A) a bank or banks having the 
        qualifications prescribed in paragraph (1) of section 
        26(a) of this title for thetrustees of unit investment 
trusts; or [(2)] (B) a company which is a member of a national 
securities exchange as defined in the Securities Exchange Act of 1934, 
subject to such rules and regulations as the Commission may from time 
to time prescribe for the protection of investors; or [(3)] (C) such 
registered company, but only in accordance with such rules and 
regulations or orders as the Commission may from time to time prescribe 
for the protection of investors.
          (2) Subject to such rules, regulations, and orders as 
        the Commission may adopt as necessary or appropriate 
        for the protection of investors, a registered 
        management company or any such custodian, with the 
        consent of the registered management company for which 
        it acts as custodian, may deposit all or any part of 
        the securities owned by such registered management 
        company in a system for the central handling of 
        securities established by a national securities 
        exchange or national securities association registered 
        with the Commission under the Securities Exchange Act 
        of 1934, or such other person as may be permitted by 
        the Commission, pursuant to which system all securities 
        of any particular class or series of any issuer 
        deposited within the system are treated as fungible and 
        may be transferred or pledged by bookkeeping entry 
        without physical delivery of such securities.
          (3) Rules, regulations, and orders of the Commission 
        under this subsection, among other things, may make 
        appropriate provision with respect to such matters as 
        the earmarking, segregation, and hypothecation of such 
        securities and investments, and may provide for or 
        require periodic or other inspections by any or all of 
        the following: Independent public accountants, 
        employees and agents of the Commission, and such other 
        persons as the Commission may designate.
          (4) No such member which trades in securities for its 
        own account may act as custodian except in accordance 
        with rules and regulations prescribed by the Commission 
        for the protection of investors.
          (5) If a registered company maintains its securities 
        and similar investments in the custody of a qualified 
        bank or banks, the cash proceeds from the sale of such 
        securities and similar investments and other cash 
        assets of the company shall likewise be kept in the 
        custody of such a bank or banks, or in accordance with 
        such rules and regulations or orders as the Commission 
        may from time to time prescribe for the protection of 
        investors, except that such a registered company may 
        maintain a checking account in a bank or banks having 
        the qualifications prescribed in paragraph (1) of 
        section 26(a) of this title for the trustees of unit 
        investment trusts with the balance of such account or 
        the aggregate balances of such accounts at no time in 
        excess of the amount of the fidelity bond, maintained 
        pursuant to section 17(g) of this title, covering the 
        officers or employees authorized to draw on such 
        account or accounts.
          (6) Notwithstanding any provision of this subsection, 
        if a bank described in paragraph (1) or an affiliated 
        person of such bank is an affiliated person, promoter, 
        organizer, or sponsor of,or principal underwriter for 
the registered company, such bank may serve as custodian under this 
subsection in accordance with such rules, regulations, or orders as the 
Commission may prescribe, consistent with the protection of investors, 
after consulting in writing with the appropriate Federal banking 
agency, as defined in section 3 of the Federal Deposit Insurance Act.
          * * * * * * *

                           capital structure

  Sec. 18. (a) * * *
          * * * * * * *
Notwithstanding any provision of this section, it shall be 
unlawful for any affiliated person of a registered investment 
company or any affiliated person of such a person to loan money 
to such investment company in contravention of such rules, 
regulations, or orders as the Commission may prescribe in the 
public interest and consistent with the protection of 
investors.
          * * * * * * *

                         unit investment trusts

  Sec. 26. (a) No principal underwriter for or depositor of a 
registered unit investment trust shall sell, except by 
surrender to the trustee for redemption, any security of which 
such trust is the issuer (other than short-term paper), unless 
the trust indenture, agreement of custodianship, or other 
instrument pursuant to which such security is issued--
          (1) designates one or more trustees or custodians, 
        each of which is a bank, and provides that each such 
        trustee or custodian shall have at all times an 
        aggregate capital, surplus, and undivided profits of a 
        specified minimum amount, which shall not be less than 
        $500,000 (but may also provide, if such trustee or 
        custodian publishes reports of condition at least 
        annually, pursuant to law or to the requirements of its 
        supervising or examining authority, that for the 
        purposes of this paragraph the aggregate capital, 
        surplus, and undivided profits of such trustee or 
        custodian shall be deemed to be its aggregate capital, 
        surplus, and undivided profits as set forth in its most 
        recent report of condition so published), except that, 
        if the trustee or custodian described in this 
        subsection is an affiliated person of such underwriter 
        or depositor, the Commission may adopt rules and 
        regulations or issue orders, consistent with the 
        protection of investors, prescribing the conditions 
        under which such trustee or custodian may serve, after 
        consulting in writing with the appropriate Federal 
        banking agency (as defined in section 3 of the Federal 
        Deposit Insurance Act);
          * * * * * * *

                   unlawful representations and names

  Sec. 35. [(a) It shall be unlawful for any person, in issuing 
or selling any security of which a registered investment 
company is the issuer, to represent or imply in any manner 
whatsoever thatsuch security or company has been guaranteed, 
sponsored, recommended, or approved by the United States or any agency 
or officer thereof.]
  (a) Misrepresentation of Guarantees.--
          (1) In general.--It shall be unlawful for any person, 
        issuing or selling any security of which a registered 
        investment company is the issuer, to represent or imply 
        in any manner whatsoever that such security or 
        company--
                  (A) has been guaranteed, sponsored, 
                recommended, or approved by the United States, 
                or any agency, instrumentality or officer of 
                the United States;
                  (B) has been insured by the Federal Deposit 
                Insurance Corporation; or
                  (C) is guaranteed by or is otherwise an 
                obligation of any bank or insured depository 
                institution.
          (2) Disclosures.--Any person issuing or selling the 
        securities of a registered investment company shall 
        prominently disclose that the investment company or any 
        security issued by the investment company--
                  (A) is not insured by the Federal Deposit 
                Insurance Corporation;
                  (B) is not guaranteed by an affiliated 
                insured depository institution; and
                  (C) is not otherwise an obligation of any 
                bank or insured depository institution,
        in accordance with such rules, regulations, or orders 
        as the Commission may prescribe as reasonably necessary 
        or appropriate in the public interest for the 
        protection of investors, after consulting in writing 
        with the appropriate Federal banking agencies.
          (3) Definitions.--The terms ``insured depository 
        institution'' and ``appropriate Federal banking 
        agency'' have the meaning given to such terms in 
        section 3 of the Federal Deposit Insurance Act.
          * * * * * * *
  [(d) Deceptive or Misleading Names.--It shall be unlawful for 
any registered investment company to adopt as a part of the 
name or title of such company, or of any securities of which it 
is the issuer, any word or words that the Commission finds are 
materially deceptive or misleading. The Commission is 
authorized, by rule, regulation, or order, to define such names 
or titles as are materially deceptive or misleading.]
  (d) It shall be unlawful for any registered investment 
company to adopt as part of the name or title of such company, 
or of any securities of which it is the issuer, any word or 
words that the Commission finds are materially deceptive or 
misleading. The Commission may adopt such rules or regulations 
or issue such orders as are necessary or appropriate to prevent 
the use of deceptive or misleading names or titles by 
investment companies.

                        breach of fiduciary duty

  Sec. 36. (a) The Commission is authorized to bring an action 
in the proper district court of the United States, or in the 
UnitedStates court of any territory or other place subject to 
the jurisdiction of the United States, alleging that a person serving 
or acting in one or more of the following capacities has engaged within 
five years of the commencement of the action or is about to engage in 
any act or practice constituting a breach of fiduciary duty involving 
personal misconduct in respect of any registered investment company for 
which such person so serves or acts--
          (1) as officer, director, member of any advisory 
        board, investment adviser, or depositor; [or]
          (2) as principal underwriter, if such registered 
        company is an open-end company, unit investment trust, 
        or face-amount certificate company[.]; or
          (3) as custodian.
If such allegations are established, the court may enjoin such 
persons from acting in any or all such capacities either 
permanently or temporarily and award such injunctive or other 
relief against such person as may be reasonable and appropriate 
in the circumstances, having due regard to the protection of 
investors and to the effectuation of the policies declared in 
section 1(b) of this title.
          * * * * * * *
                              ----------                              


                    INVESTMENT ADVISERS ACT OF 1940

          * * * * * * *

                     TITLE II--INVESTMENT ADVISERS

          * * * * * * *

                              definitions

  Sec. 202. (a) When used in this title, unless the context 
otherwise requires, the following definitions shall apply:
          (1) * * *
          * * * * * * *
          [(3) ``Broker'' means any person engaged in the 
        business of effecting transactions in securities for 
        the account of others, but does not include a bank.]
          (3) The term ``broker'' has the same meaning as in 
        the Securities Exchange Act of 1934.
          * * * * * * *
          [(7) ``Dealer'' means any person regularly engaged in 
        the business of buying and selling securities for his 
        own account, through a broker or otherwise, but does 
        not include a bank, insurance company, or investment 
        company, or any person insofar as he is engaged in 
        investing, reinvesting or trading in securities, or in 
        owning or holding securities, for his own account, 
        either individually or in some fiduciary capacity, but 
        not as a part of a regular business.]
          (7) The term ``dealer'' has the same meaning as in 
        the Securities Exchange Act of 1934, but does not 
        include an insurance company or investment company.
          * * * * * * *
          (11) ``Investment adviser'' means any person who, for 
        compensation, engages in the business of advising 
        others, either directly or through publications or 
        writings, as to the value of securities or as to the 
        advisability of investing in, purchasing, or selling 
        securities, or who, for compensation and as part of a 
        regular business, issues or promulgates analyses or 
        reports concerning securities; but does not include (A) 
        a bank, or any bank holding company as defined in the 
        Bank Holding Company Act of 1956, which is not an 
        [investment company] investment company, except that 
        the term `investment adviser' includes any bank or bank 
        holding company to the extent that such bank or bank 
        holding company acts as an investment adviser to a 
        registered investment company, or if, in the case of a 
        bank, such services are performed through a separately 
        identifiable department or division, the department or 
        division, and not the bank itself, shall be deemed to 
        be the investment adviser; (B) any lawyer, accountant, 
        engineer, or teacher whose performance of such services 
        is solely incidental to the practice of his profession; 
        (C) any broker or dealer whose performance of such 
        services is solely incidental to the conduct of his 
        business as a broker or dealer and who receives no 
        special compensation therefor; (D) the publisher of any 
        bona fide newspaper, news magazine or business or 
        financial publication of general and regular 
        circulation; (E) any person whose advice, analyses, or 
        reports relate to no securities other than securities 
        which are direct obligations of or obligations 
        guaranteed as to principal or interest by the United 
        States, or securities issued or guaranteed by 
        corporations in which the United States has a direct or 
        indirect interest which shall have been designated by 
        the Secretary of the Treasury, pursuant to section 
        3(a)(12) of the Securities Exchange Act of 1934, as 
        exempted securities for the purposes of that Act; or 
        (F) such other persons not within the intent of this 
        paragraph, as the Commission may designate by rules and 
        regulations or order.
          * * * * * * *
          (26) The term ``separately identifiable department or 
        division'' of a bank means a unit--
                  (A) that is under the direct supervision of 
                an officer or officers designated by the board 
                of directors of the bank as responsible for the 
                day-to-day conduct of the bank's investment 
                adviser activities for one or more investment 
                companies, including the supervision of all 
                bank employees engaged in the performance of 
                such activities; and
                  (B) for which all of the records relating to 
                its investment adviser activities are 
                separately maintained in or extractable from 
                such unit's own facilities or the facilities of 
                the bank, and such records are so maintained or 
                otherwise accessible as to permit independent 
                examination and enforcement of this Act or the 
                Investment Company Act of1940 and rules and 
regulations promulgated under this Act or the Investment Company Act of 
1940.
          * * * * * * *

SEC. 210A. CONSULTATION.

  (a) Examination Results and Other Information.--
          (1) The appropriate Federal banking agency shall 
        provide the Commission upon request the results of any 
        examination, reports, records, or other information as 
        each may have access to with respect to the investment 
        advisory activities of any bank holding company, bank, 
        or separately identifiable department or division of a 
        bank, that is registered under section 203 of this 
        title, or, in the case of a bank holding company or 
        bank, that has a subsidiary or a separately 
        identifiable department or division registered under 
        that section, to the extent necessary for the 
        Commission to carry out its statutory responsibilities.
          (2) The Commission shall provide to the appropriate 
        Federal banking agency upon request the results of any 
        examination, reports, records, or other information 
        with respect to the investment advisory activities of 
        any bank holding company, bank, or separately 
        identifiable department or division of a bank, any of 
        which is registered under section 203 of this title, to 
        the extent necessary for the agency to carry out its 
        statutory responsibilities.
  (b) Effect on Other Authority.--Nothing herein shall limit in 
any respect the authority of the appropriate Federal banking 
agency with respect to such bank holding company, bank, or 
department or division under any provision of law.
  (c) Definition.--For purposes of this section, the term 
``appropriate Federal banking agency'' shall have the same 
meaning as in section 3 of the Federal Deposit Insurance Act.
          * * * * * * *
                              ----------                              


                SECTION 3 OF THE SECURITIES ACT OF 1933

                          exempted securities

  Sec. 3. (a) Except as hereinafter expressly provided, the 
provisions of this title shall not apply to any of the 
following classes of securities:
          (1) Reserved.
          (2) Any security issued or guaranteed by the United 
        States or any Territory thereof, or by the District of 
        Columbia, or by any State of the United States, or by 
        any political subdivision of a State or Territory, or 
        by any public instrumentality of one or more States or 
        Territories, or by any person controlled or supervised 
        by and acting as an instrumentality of the Government 
        of the United States pursuant to authority granted by 
        the Congress of the United States; or any certificate 
        of deposit for any of the foregoing; or any security 
        issued or guaranteed by any bank; or any security 
        issued by or representing an interest in or a direct 
        obligation of a Federal Reserve bank; [or any interest 
        or participation in any common trust fund or similar 
        fund maintained by a bank exclusively for the 
        collective investment and reinvestment of assets 
        contributed thereto by such bank in its capacity as 
        trustee, executor, administrator, or guardian] or any 
        interest or participation in any common trust fund or 
        similar fund that is excluded from the definition of 
        the term ``investment company'' under section 3(c)(3) 
        of the Investment Company Act of 1940; or any security 
        which is an industrial development bond (as defined in 
        section 103(c)(2) of the Internal Revenue Code of 1954) 
        the interest on which is excludable from gross income 
        under section 103(a)(1) of such Code if, by reason of 
        the application of paragraph (4) or (6) of section 
        103(c) of such Code (determined as if paragraphs 
        (4)(A), (5), and (7) were not included in such section 
        103(c)), paragraph (1) of such section 103(c) does not 
        apply to such security; or any interest or 
        participation in a single trust fund, or in a 
        collective trust fund maintained by a bank, or any 
        security arising out of a contract issued by an 
        insurance company, which interest, participation, or 
        security is issued in connection with (A) a stock 
        bonus, pension, or profit-sharing plan which meets the 
        requirements for qualification under section 401 of the 
        Internal Revenue Code of 1954, (B) an annuity plan 
        which meets the requirements for the deduction of the 
        employer's contributions under section 404(a)(2) of 
        such Code, or (C) a governmental plan as defined in 
        section 414(d) of such Code which has been established 
        by an employer for the exclusive benefit of its 
        employees or their beneficiaries for the purpose of 
        distributing to such employees or their beneficiaries 
        the corpus and income of the funds accumulated under 
        such plan, if under such plan it is impossible, prior 
        to the satisfaction of all liabilities with respect to 
        such employees and their beneficiaries, for any part of 
        the corpus or income to be used for, or diverted to, 
        purposes other than the exclusive benefit of such 
        employees or their beneficiaries, other than any plan 
        described in clause (A), (B), or (C) of this paragraph 
        (i) the contributions under which are held in a single 
        trust fund or in a separate account maintained by an 
        insurance company for a single employer and under which 
        an amount in excess of the employer's contribution is 
        allocated to the purchase of securities (other than 
        interests or participations in the trust or separate 
        account itself) issued by the employer or any company 
        directly or indirectly controlling, controlled by, or 
        under common control with the employer, (ii) which 
        covers employees some or all of whom are employees 
        within the meaning of section 401(c)(1) of such Code, 
        or (iii) which is a plan funded by an annuity contract 
        described in section 403(b) of such Code. The 
        Commission, by rules and regulations or order, shall 
        exempt from the provisions of section 5 of this title 
        any interest or participation issued in connection with 
        a stock bonus, pension, profit-sharing, or annuity plan 
        which covers employees some or all of whom are 
        employees within the meaning of section 401(c)(1) of 
        the Internal Revenue Code of 1954, if and to the extent 
        that the Commission determines this to be necessary or 
        appropriate in the public interest and consistent with 
        the protection of investors and the purposes fairly 
        intended by the policy and provisions of this title. 
        For purposes of this paragraph, a security issued or 
        guaranteed by a bank shall not include any interest or 
        participation in any collective trust fund maintained 
        by a bank; and the term ``bank'' means any national 
        bank, or any banking institution organized under the 
        laws of any State, territory, or the District of 
        Columbia, the business of which is substantially 
        confined to banking and is supervised by the State or 
        territorial banking commission or similar official; 
        except that in the case of a common trust fund or 
        similar fund, or a collective trust fund, the term 
        ``bank'' has the same meaning as in the Investment 
        Company Act of 1940;
          * * * * * * *
                              ----------                              


                           ACT OF MAY 1, 1886

 CHAP. 73.--An Act to enable national banking associations to increase 
      their capital stock and to change their names or locations.

  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,
          * * * * * * *
  Sec. 2. (a) * * *
          * * * * * * *
  (d) Retention of ``Federal'' in Name of Converted Federal 
Savings Association.--
          (1) In general.--Notwithstanding subsection (a) or 
        any other provision of law, any depository institution 
        the charter of which is converted from that of a 
        Federal savings association to a national bank or a 
        State bank after the date of the enactment of the 
        Financial Services Competition Act of 1997 may retain 
        the term ``Federal'' in the name of such institution so 
        long as such depository institution remains an insured 
        depository institution.
          (2) Definitions.--For purposes of this subsection, 
        the terms ``depository institution'', ``insured 
        depository institution'', ``national bank'', and 
        ``State bank'' have the same meanings given to such 
        terms in section 3 of the Federal Deposit Insurance 
        Act.
          * * * * * * *
                              ----------                              


   THE ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION ACT OF 1996

      TITLE II--ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION

SEC. 2001. SHORT TITLE; TABLE OF CONTENTS; DEFINITIONS.

  (a) Short Title.--This title may be cited as the ``Economic 
Growth and Regulatory Paperwork Reduction Act of 1996''.
          * * * * * * *

             Subtitle B--Streamlining Government Regulation

          * * * * * * *

         CHAPTER 2--ELIMINATING UNNECESSARY REGULATORY BURDENS

          * * * * * * *

SEC. 2227. CREDIT AVAILABILITY ASSESSMENT.

  (a) Study.--
          (1) In general.--Not later than 12 months after the 
        date of enactment of this Act, and once every 60 months 
        thereafter, the Board, in consultation with [the 
        Director of the Office of Thrift Supervision,] the 
        Comptroller of the Currency, the Board of Directors of 
        the Corporation, the Administrator of the National 
        Credit Union Administration, the Administrator of the 
        Small Business Administration, and the Secretary of 
        Commerce, shall conduct a study and submit a report to 
        the Congress detailing the extent of small business 
        lending by all creditors.
          * * * * * * *

                  Subtitle G--Deposit Insurance Funds

          * * * * * * *

SEC. 2704. MERGER OF BIF AND SAIF.

  (a) * * *
          * * * * * * *
  [(c) Effective Date.--This section and the amendments made by 
this section shall become effective on January 1, 1999, if no 
insured depository institution is a savings association on that 
date.]
  (c) Effective Date.--This section and the amendments made by 
this section shall take effect on the earlier of--
          (1) January 1, 2000; or
          (2) the end of the 2-year period beginning on the 
        date of the enactment of the Thrift Charter Transition 
        Act of 1997.
          * * * * * * *
                              ----------                              


                      TITLE 11, UNITED STATES CODE

          * * * * * * *

                     CHAPTER 1--GENERAL PROVISIONS

Sec. 101. Definitions

  In this title--
          (1) * * *
          * * * * * * *
          (21C) ``Federal mutual bank holding company'' has the 
        same meaning as in section 5133B(h)(1) of the Revised 
        Statutes of the United States.
          * * * * * * *

                     CHAPTER 3--CASE ADMINISTRATION

          * * * * * * *

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec. 303. Involuntary cases

  (a) * * *
  (b) An involuntary case against a person is commenced by the 
filing with the bankruptcy court of a petition under chapter 7 
or 11 of this title--
          (1) * * *
          * * * * * * *
          (3) if such person is a partnership--
                  (A) by fewer than all of the general partners 
                in such partnership; or
                  (B) if relief has been ordered under this 
                title with respect to all of the general 
                partners in such partnership, by a general 
                partner in such partnership, the trustee of 
                such a general partner, or a holder of a claim 
                against such partnership; [or]
          (4) by a foreign representative of the estate in a 
        foreign proceeding concerning such person[.]; or
          (5) in a proceeding concerning a Federal mutual bank 
        holding company, the Comptroller of the Currency.
          * * * * * * *
  (e) After notice and a hearing, and for cause, the court may 
require the petitioners under this section, other than a 
petitioner specified in subsection (b)(5), to file a bond to 
indemnify the debtor for such amounts as the court may later 
allow under subsection (i) of this section.
  (f) Notwithstanding section 363 of this title, except to the 
extent that the court orders otherwise or a petition was filed 
by a petitioner specified in subsection (b)(5), and until an 
order for relief in the case, any business of the debtor may 
continue to operate, and the debtor may continue to use, 
acquire, or dispose of property as if an involuntary case 
concerning the debtor had not been commenced.
  (g) At any time after the commencement of an involuntary case 
under chapter 7 of this title but before an order for relief in 
the case, the court, on request of a party in interest, after 
notice to the debtor and a hearing, and if necessary to 
preserve the property of the estate or to prevent loss to the 
estate, may order the United States trustee to appoint an 
interim trustee under section 701 of this title to take 
possession of the property of the estate and to operate any 
business of the debtor. Upon the filing of a petition by a 
petitioner specified in subsection (b)(5), and without 
requiring notice or hearing, the United States Trustee shall 
appoint an interim trustee from a list submitted by the 
Comptroller of the Currency of 5 disinterested persons that are 
qualified and willing to serve. Before an order for relief, the 
debtor may regain possession of property in the possession of a 
trustee ordered appointed under this subsection if the debtor 
files such bond as the court requires, conditioned on the 
debtor's accounting for and delivering to the trustee, if there 
is an order for relief in the case, such property, or the 
value, as of the date the debtor regains possession, of such 
property.
          * * * * * * *
                              ----------                              


                      TITLE 31, UNITED STATES CODE

          * * * * * * *

                          SUBTITLE I--GENERAL

          * * * * * * *

                 CHAPTER 3--DEPARTMENT OF THE TREASURY

          * * * * * * *

                     SUBCHAPTER II--ADMINISTRATIVE

Sec. 321. General authority of the Secretary

  (a) * * *
          * * * * * * *
  [(e) Certain Reorganization Prohibited.--The Secretary of the 
Treasury may not merge or consolidate the Office of Thrift 
Supervision, or any of the functions or responsibilities of the 
Office or the Director of such office, with the Office of the 
Comptroller of the Currency or the Comptroller of the 
Currency.]
          * * * * * * *

                  CHAPTER 7--GENERAL ACCOUNTING OFFICE

          * * * * * * *

                SUBCHAPTER II--GENERAL DUTIES AND POWERS

          * * * * * * *

Sec. 714. Audit of Financial Institutions Examination Council, Federal 
                    Reserve Board, Federal reserve banks, Federal 
                    Deposit Insurance Corporation, and Office of 
                    Comptroller of the Currency

  (a) In this section, ``agency'' means the Financial 
Institutions Examination Council, the Federal Reserve Board, 
Federal reserve banks, the Federal Deposit Insurance 
Corporation, and the Office of the Comptroller of the 
Currency[, and the Office of Thrift Supervision].
          * * * * * * *
                              ----------                              


 SECTION 804 OF THE ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT OF 1982

                     alternative mortgage authority

  Sec. 804. (a) In order to prevent discrimination against 
State-chartered depository institutions, and other nonfederally 
chartered housing creditors, with respect to making, 
purchasing, and enforcing alternative mortgage transactions, 
housing creditors may make, purchase, and enforce alternative 
mortgage transactions, except that this section shall apply--
          (1) with respect to banks (as such term is defined in 
        section 3 of the Federal Deposit Insurance Act) and all 
        other housing creditors, only to transactions made in 
        accordance with regulations governing alternative 
        mortgage transactions as issued by the Comptroller of 
        the Currency for national banks, to the extent that 
        such regulations are authorized by rulemaking authority 
        granted to the Comptroller of the Currency with regard 
        to national banks under laws other than this section; 
        and
          (2) with respect to credit unions, only to 
        transactions made in accordance with regulations 
        governing alternative mortgage transactions as issued 
        by the National Credit Union Administration Board for 
        Federal credit unions, to the extent that such 
        regulations are authorized by rulemaking authority 
        granted to the National Credit Union Administration 
        with regard to Federal credit unions under laws other 
        than this section[; and].
          [(3) with respect to all other housing creditors, 
        including without limitation, savings and loan 
        associations, mutual savings banks, and savings banks, 
        only to transactions made in accordance with 
        regulations governing alternative mortgage transactions 
        as issued by the Director of the Office of Thrift 
        Supervision for federally charter savings and loan 
        associations, to the extent that such regulations are 
        authorized by rulemaking authority granted to the 
        Director of the Office of ThriftSupervision with regard 
to federally chartered savings and loan associations under laws other 
than this section.]
          * * * * * * *
                              ----------                              


              SECTION 2 OF THE BANK PROTECTION ACT OF 1968

  Sec. 2. As used in this Act the term ``Federal supervisory 
agency'' means--
          (1) The Comptroller of the Currency with respect to 
        national banks and district banks,
          (2) The Board of Governors of the Federal Reserve 
        System with respect to Federal Reserve banks and State 
        banks which are members of the Federal Reserve System, 
        and
          (3) The Federal Deposit Insurance Corporation with 
        respect to State banks which are not members of the 
        Federal Reserve System but the deposits of which are 
        insured by the Federal Deposit Insurance Corporation 
        and State savings associations[, and].
          [(4) The Director of the Office of Thrift Supervision 
        with respect to Federal savings.]
                              ----------                              


         SECTION 803 OF THE COMMUNITY REINVESTMENT ACT OF 1977

    Sec. 803. For the purposes of this title--
          (1) the term ``appropriate Federal financial 
        supervisory agency'' means--
                  (A) the Comptroller of the Currency with 
                respect to national banks;
                  (B) the Board of Governors of the Federal 
                Reserve System with respect to State chartered 
                banks which are members of the Federal Reserve 
                System and bank holding companies; and
                  (C) the Federal Deposit Insurance Corporation 
                with respect to State chartered banks and 
                savings banks which are not members of the 
                Federal Reserve System and the deposits of 
                which are insured by the Corporation[; and].
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association (the deposits of 
        which are insured by the Federal Deposit Insurance 
        Corporation) and a savings and loan holding company;]
          * * * * * * *
          (3) the term ``application for a deposit facility'' 
        means an application to the appropriate Federal 
        financial supervisory agency otherwise required under 
        Federal law or regulations thereunder for--
                  (A) a charter for a national bank [or Federal 
                savings and loan association];
          * * * * * * *
                              ----------                              


 SECTION 208 OF THE DEPOSITORY INSTITUTIONS DEREGULATION AND MONETARY 
                          CONTROL ACT OF 1980

                              enforcement

  Sec. 208. (a) Compliance with the regulations issued by the 
Deregulation Committee under this title shall be enforced 
under--
          (1) section 8 of the Federal Deposit Insurance Act 
        (12 U.S.C. 1818), in the case of--
                  (A) national banks, by the Comptroller of the 
                Currency;
                  (B) member banks of the Federal Reserve 
                System (other than national banks), by the 
                Board of Governors of the Federal Reserve 
                System;
                  (C) banks insured by the Federal Deposit 
                Insurance Corporation (other than members of 
                the Federal Reserve System), by the Board of 
                Directors of the Federal Deposit Insurance 
                Corporation[; and] .
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation.]
  (b) For the purpose of the exercise by any agency referred to 
in subsection (a) of its powers under any Act referred to in 
that subsection, a violation of any regulation prescribed under 
this title shall be deemed to be a violation of a regulation 
prescribed under the Act involved. In addition to its powers 
under any provision of law specifically referred to in 
subsection (a), each of the agencies referred to in such 
subsection may exercise, for the purpose of enforcing 
compliance with any regulation prescribed under this title, any 
other authority conferred on it by law.
                              ----------                              


            DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT

          * * * * * * *
  Sec. 202. As used in this title--
          (1) * * *
          (2) the term ``depository holding company'' means a 
        bank holding company as defined in section 2(a) of the 
        Bank Holding Company Act of 1956, a company which would 
        be or a bank holding company as defined in section 2(a) 
        of the Bank Holding Company Act of 1956 but for the 
        exemption contained in section 2(a)(5)(F) thereof[, or 
        a savings and loan holding company as defined in 
        section 408(a)(1)(I) of the National Housing Act];
          * * * * * * *
  Sec. 205. The prohibitions contained in sections 203 and 204 
shall not apply in the case of any one or more of the following 
or subsidiary thereof:
          (1) * * *
          * * * * * * *
          (8)(A) A [diversified savings and loan holding 
        company (as defined in section 408(a)(1)(F) of the 
        National Housing Act) with respect to] company which 
        is, or has filed an application to become, a depository 
        institution holding company and which satisfies the 
        consolidated net worth and consolidated net earnings 
        requirements for a diversified savings and loan holding 
        company (as set forth in section 10(1)(F) of the Home 
        Owners' Loan Act, as such section is in effect and 
        interpreted on such date, which shall be applicable for 
        purposes of this paragraph without regard to the fact 
        that a depository institution subsidiary of such 
        holding company has ceased to be a savings association 
        after January 1, 1997) with respect to the service of a 
        director of such company who is also a director of any 
        nonaffiliated depository institution or depository 
        holding company (including a savings and loan holding 
        company) if--
                  (i) notice of the proposed dual service is 
                given by such diversified savings and loan 
                holding company to--
          * * * * * * *
          [(9) Any savings association (as defined in section 
        10(a)(1)(A) of the Home Owners' Loan Act or any savings 
        and loan holding company (as defined in section 
        10(a)(1)(D) of such Act) which has issued stock in 
        connection with a qualified stock issuance pursuant to 
        section 10(q) of such Act, except that this paragraph 
        shall apply only with respect to service as a single 
        management official of such savings association or 
        holding company, or any subsidiary of such savings 
        association or holding company, by a single management 
        official of the savings and loan holding company which 
        purchased the stock issued in connection with such 
        qualified stock issuance, and shall apply only when the 
        Director of the Office of Thrift Supervision has 
        determined that such service is consistent with the 
        purposes of this Act and the Home Owners' Loan Act.]
          * * * * * * *
  Sec. 207. This title shall be administered and enforced by--
          (1) * * *
          * * * * * * *
          [(4) the Director of the Office of Thrift Supervision 
        with respect to a savings association (the deposits of 
        which are insured by the Federal Deposit Insurance 
        Corporation) and savings and loan holding companies,]
          [(5)] (4) the National Credit Union Administration 
        with respect to credit unions the accounts of which are 
        insured by the National Credit Union Administration, 
        and
          [(6)] (5) Upon referral by the agencies named in the 
        foregoing paragraphs (1) through (5), the Attorney 
        General shallhave the authority to enforce compliance 
by any person with this title.
          * * * * * * *
  Sec. 209. Regulations to carry out this title, including 
regulations that permit service by a management official that 
would otherwise be prohibited by section 203 or section 204, if 
such service would not result in a monopoly or substantial 
lessening of competition, may be prescribed by--
          (1) the Comptroller of the Currency with respect to 
        national banks and banks located in the District of 
        Columbia,
          (2) the Board of Governors of the Federal Reserve 
        System with respect to State banks which are members of 
        the Federal Reserve System, and bank holding companies,
          (3) the Board of Directors of the Federal Deposit 
        Insurance Corporation with respect to State banks which 
        are not members of the Federal Reserve System but the 
        deposits of which are insured by the Federal Deposit 
        Insurance Corporation, and
          [(4) the Director of the Office of Thrift Supervision 
        with respect to institutions the accounts of which are 
        insured by the Federal Deposit Insurance Corporation, 
        and savings and loan holding companies, and]
          [(5)] (4) the National Credit Union Administration 
        with respect to credit unions the accounts of which are 
        insured by the National Credit Union Administration.
                              ----------                              


         SECTION 305 OF THE EMERGENCY HOME FINANCE ACT OF 1970

                          mortgage operations

    Sec. 305. (a) * * *
          * * * * * * *
    (b) Notwithstanding any other law, authority to enter into 
and to perform and carry out any transactions or matter 
referred to in this section is conferred on any Federal home 
loan bank, Resolution Trust Corporation, the Federal Deposit 
Insurance Corporation, the National Credit Union 
Administration, [any Federal savings and loan association,] any 
Federal home loan bank member, and any other financial 
institution the deposits or accounts of which are insured by 
any agency of the United States to the extent that Congress has 
the power to confer such authority.
          * * * * * * *
                              ----------                              


          SECTION 610 OF THE EXPEDITED FUNDS AVAILABILITY ACT

SEC. 610. ADMINISTRATIVE ENFORCEMENT.

  (a) Administrative Enforcement.--Compliance with the 
requirements imposed under this title, including regulations 
prescribed by and orders issued by the Board of Governors of 
the Federal Reserve System under this title, shall be enforced 
under--
          (1) section 8 of the Federal Deposit Insurance Act in 
        the case of--
                  (A) national banks, and Federal branches and 
                Federal agencies of foreign banks, by the 
                Office of the Comptroller of the Currency;
                  (B) member banks of the Federal Reserve 
                System (other than national banks), and 
                offices, branches, and agencies of foreign 
                banks located in the United States (other than 
                Federal branches, Federal agencies, and insured 
                State branches of foreign banks), by the Board 
                of Governors of the Federal Reserve System; and
                  (C) banks insured by the Federal Deposit 
                Insurance Corporation (other than members of 
                the Federal Reserve System) and insured State 
                branches of foreign banks, by the Board of 
                Directors of the Federal Deposit Insurance 
                Corporation; and
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision in 
        the case of savings associations the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation; and]
          [(3)] (2) the Federal Credit Union Act, by the 
        National Credit Union Administration Board with respect 
        to any Federal credit union or insured credit union.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *
                              ----------                              


                        FEDERAL CREDIT UNION ACT

                     TITLE I--FEDERAL CREDIT UNIONS

          * * * * * * *

                                 powers

  Sec. 107. A Federal credit union shall have succession in its 
corporate name during its existence and shall have power--
          (1) * * *
          * * * * * * *
          (7) to invest its funds (A) in loans exclusively to 
        members; (B) in obligations of the United States of 
        America, or securities fully guaranteed as to principal 
        and interest thereby; (C) in accordance with rules and 
        regulations prescribed by the Board, in loans to other 
        credit unions in the total amount not exceeding 25 per 
        centum of its paid-in and unimpaired capital and 
        surplus; (D) in shares or accounts of savings and loan 
        associations or mutual savings banks, the accounts of 
        which are insured by [the Federal Savings and Loan 
        Insurance Corporation or] the Federal Deposit Insurance 
        Corporation; (E) in obligations issued by banks for 
        cooperatives, Federal land banks, Federal intermediate 
        credit banks, Federal home loan banks, the Federal Home 
        Loan Bank Board, or any corporation designated in 
        section 101 of the Government Corporation Control Act 
        as a wholly owned Government corporation; or in 
        obligations, participations, or other instruments of or 
        issued by, or fully guaranteed as to principal and 
        interest by, the Federal National Mortgage Association 
        or the Government National Mortgage Association; or in 
        mortgages, obligations, or other securities which are 
        or ever have been sold by the Federal Home Loan 
        Mortgage Corporation pursuant to section 305 or section 
        306 of the Federal Home Loan Mortgage Corporation Act; 
        or in obligations, participations, securities, or other 
        instruments of, or issued by, or fully guaranteed as to 
        principal and interest by any other agency of the 
        United States and a Federal credit union may issue and 
        sell securities which are guaranteed pursuant to 
        section 306(g) of the National Housing Act; (F) in 
        participation certificates evidencing beneficial 
        interests in obligations, or in the right to receive 
        interest and principal collections therefrom, which 
        obligations have been subjected by one or more 
        Government agencies to a trust or trusts for which any 
        executive department, agency, or instrumentality of the 
        United States (or the head thereof) has been named to 
        act as trustee; (G) in shares or deposits of any 
        central credit union in which such investments are 
        specifically authorized by the board of directors of 
        the Federal credit union making the investment; (H) in 
        shares, share certificates, or share deposits of 
        federally insured credit unions; (I) in the shares, 
        stocks, or obligations of any other organization, 
        providing services which are associated with the 
        routine operations of credit unions, up to 1 per centum 
        of the total paid in and unimpaired capital and surplus 
        of the credit union with the approval of the Board: 
        Provided, however, That such authority does not include 
        the power to acquire control directly or indirectly, of 
        another financial institution, nor invest in shares, 
        stocks or obligations of an insurance company, trade 
        association, liquidity facility or any other similar 
        organization, corporation, or association, except as 
        otherwise expressly provided by this Act; (J) in the 
        capital stock of the National Credit Union Central 
        Liquidity Facility (K) investments in obligations of, 
        or issued by, any State or political subdivision 
        thereof (including any agency, corporation, or 
        instrumentality of a State or political subdivision), 
        except that no credit union may invest more than 10 per 
        centum of its unimpaired capital and surplus in the 
        obligations of any one issuer (exclusive of general 
        obligations of the issuer).
          * * * * * * *

                       TITLE II--SHARE INSURANCE

          * * * * * * *

termination of insurance; cease-and-desist proceedings; suspension and/
   or removal of directors, officers, and committee members; taking 
                    possession of committee members

  Sec. 206. (a) * * *
          * * * * * * *
  (g) Removal and Prohibition Authority.--
          (1) * * *
          * * * * * * *
  (7) Industrywide Prohibition.--
          (A) In general.--Except as provided in subparagraph 
        (B), any person who, pursuant to an order issued under 
        this subsection or subsection (i), has been removed or 
        suspended from office in an insured credit union or 
        prohibited from participating in the conduct of the 
        affairs of an insured credit union may not, while such 
        order is in effect, continue or commence to hold any 
        office in, or participate in any manner in the conduct 
        of the affairs of--
                  (i) any insured depository institution;
                  (ii) any institution treated as an insured 
                bank under paragraph (3) or (4) of section 8(b) 
                of the Federal Deposit Insurance Act[, or as a 
                savings association under section 8(b)(8) of 
                such Act];
          * * * * * * *
                              ----------                              


     FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978

      TITLE X--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

          * * * * * * *
  Sec. 1001. This title may be cited as the ``Federal Financial 
Institutions Examination Council Act of 1978''.
          * * * * * * *

                              definitions

  Sec. 1003. As used in this title--
          (1) the term ``Federal financial institutions 
        regulatory agencies'' means the Office of the 
        Comptroller of the Currency, the Board of Governors of 
        the Federal Reserve System, the Federal Deposit 
        Insurance Corporation[, the Office of Thrift 
        Supervision,] and the National Credit Union 
        Administration;
          * * * * * * *

                      establishment of the council

  Sec. 1004. (a) There is established the Financial 
Institutions Examination Council which shall consist of--
          (1) * * *
          * * * * * * *
          (3) a Governor of the Board of Governors of the 
        Federal Reserve System designated by the Chairman of 
        the Board, and
          [(4) the Director, Office of Thrift Supervision.]
          [(5)] (4) the Chairman of the National Credit Union 
        Administration Board.
          * * * * * * *
                              ----------                              


  FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989

          * * * * * * *

           TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

          * * * * * * *

SEC. 1121. DEFINITIONS.

  For purposes of this title:
          (1) * * *
          * * * * * * *
          (6) Federal financial institutions regulatory 
        agencies.--The term ``Federal financial institutions 
        regulatory agencies'' means the Board of Governors of 
        the Federal Reserve System, the Federal Deposit 
        Insurance Corporations, the Office of the Comptroller 
        of the Currency, [the Office of Thrift Supervision,] 
        and the National Credit Union Administration.
          * * * * * * *

                  TITLE XII--MISCELLANEOUS PROVISIONS

           * * * * * * *

SEC. 1206. COMPARABILITY IN COMPENSATION SCHEDULES.

  The Federal Deposit Insurance Corporation, the Comptroller of 
the Currency, the National Credit Union Administration Board, 
the Federal Housing Finance Board, the Oversight Board of the 
Resolution Trust Corporation, and the Farm Credit 
Administration, [and the Office of Thrift Supervision,] in 
establishing and adjusting schedules of compensation and 
benefits which are to be determined solely by each agency under 
applicable provisions of law, shall inform the heads of the 
other agencies and the Congress of such compensation and 
benefits and shall seek to maintain comparability regarding 
compensation and benefits.
          * * * * * * *

SEC. 1216. EQUAL OPPORTUNITY.

  (a) In General.--For purposes of this Act, Executive Order 
Numbered 11478, providing for equal employment opportunity in 
the Federal Government, shall apply to--
          (1) the Comptroller of the Currency;
          [(2) the Director of the Office of Thrift 
        Supervision;]
          [(3)] (2) the Federal home loan banks;
          [(4)] (3) the Federal Deposit Insurance Corporation;
          [(5)] (4) the Oversight Board of the Resolution Trust 
        Corporation; and
          [(6)] (5) the Resolution Trust Corporation.
          * * * * * * *
  (c) Solicitation of Contracts.--The Federal Deposit Insurance 
Corporation, the Comptroller of the Currency, [the Director of 
the Office of Thrift Supervision,] the Federal Housing Finance 
Board, the Oversight Board of the Resolution Trust Corporation, 
and the Resolution Trust Corporation shall each prescribe 
regulations to establish and oversee a minority outreach 
program within each such agency to ensure inclusion, to the 
maximum extent possible, of minorities and women, and entities 
owned by minorities and women, including financial 
institutions, investment banking firms, underwriters, 
accountants, and providers of legal services, in all contracts 
entered into by the agency with such persons or entities, 
public and private, in order to manage the institutions and 
their assets for which the agency is responsible or to perform 
such other functions authorized under any law applicable to 
such agency.
          * * * * * * *
                              ----------                              


                  HOME MORTGAGE DISCLOSURE ACT OF 1975

                  TITLE III--HOME MORTGAGE DISCLOSURE

                              short title

    Sec. 301. This title may be cited as the ``Home Mortgage 
Disclosure Act of 1975''.
          * * * * * * *

              maintenance of records and public disclosure

    Sec. 304. (a) * * *
          * * * * * * *
    (h) Submission to Agencies.--The data required to be 
disclosed under susbsection (b)(4) shall be submitted to the 
appropriate agency for each institution reporting under this 
title. Notwithstanding the requirement of section 304(a)(2)(A) 
for disclosure by census tract, the Board, in cooperation with 
other appropriate regulators, including--
          (1) the Office of the Comptroller of the Currency for 
        national banks and Federal branches and Federal 
        agencies of foreign banks;
          [(2) the Director of the Office of Thrift Supervision 
        for savings associations;]
          [(3)] (2) the Federal Deposit Insurance Corporation 
        for banks insured by the Federal Deposit Insurance 
        Corporation (other than members of the Federal Reserve 
        System), mutual savings banks, insured State branches 
        of foreign banks, and any other depository institution 
        described in section 303(2)(A) which is not otherwise 
        referred to in this paragraph;
          [(4)] (3) the National Credit Union Administration 
        Board for credit unions; and
          [(5)] (4) the Secretary of Housing and Urban 
        Development for other lending institutions not 
        regulated by the agencies referred to in paragraphs (1) 
        through [(4)] (3),
shall develop regulations prescribing the format for such 
disclosures, the method for submission of the data to the 
appropriate regulatory agency, and the procedures for 
disclosing the information to the public. These regulations 
shall also require the collection of data required to be 
disclosed under subsection (b)(4) with respect to loans sold by 
each institution reporting under this title, and, in addition, 
shall require disclosure of the class of the purchaser of such 
loans. Any reporting institution may submit in writing to the 
appropriate agency such additional data or explanations as it 
deems relevant to the decision to originate or purchase 
mortgage loans.
          * * * * * * *

                              enforcement

    Sec. 305. (a) * * *
    (b) Compliance with the requirements imposed under this 
title shall be enforced under--
          (1) * * *
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation;]
          [(3)] (2) the Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any credit union; and
          [(4)] (3) other lending institutions, by the 
        Secretary of Housing and Urban Development.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *

                         relation to state laws

    Sec. 306. (a) * * *
    (b) The Board may by regulation exempt from the 
requirements of this title any State chartered depository 
institution within any State or subdivision thereof if it 
determines that, under the law of such State or subdivision, 
that instititution is subject to requirements substantially 
similar to those imposed under this title, and that such law 
contains adequate provisions for enforcement. Notwithstanding 
any other provision of this subsection, compliance with the 
requirements imposed under this subsection [shall be enforced 
under--
          [(1) section 8 of the Federal Deposit Insurance Act 
        in the case of national banks, by the Comptroller of 
        the Currency; and
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation] under section 8 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1818) in the case of national 
        banks, by the Comptroller of the Currency.
          * * * * * * *
                              ----------                              


             HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992

          * * * * * * *

              TITLE XIII--GOVERNMENT SPONSORED ENTERPRISES

          * * * * * * *

         Subtitle A--Supervision and Regulation of Enterprises

            PART 1--FINANCIAL SAFETY AND SOUNDNESS REGULATOR

          * * * * * * *

SEC. 1315. PERSONNEL.

  (a) * * *
  (b) Comparability of Compensation With Federal Banking 
Agencies.--In fixing and directing compensation under 
subsection (a), the Director shall consult with, and maintain 
comparability with compensation of officers and employees of 
the Office of the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, and the Federal 
Deposit Insurance Corporation[, and the Office of Thrift 
Supervision].
          * * * * * * *

SEC. 1317. EXAMINATIONS.

  (a) * * *
          * * * * * * *
  (c) Examiners.--The Director shall appoint examiners to 
conduct examinations under this section. The Director may 
contract with the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System, or the Federal Deposit 
Insurance Corporation[, or the Director of the Office of Thrift 
Supervision] for the services of examiners. The Director shall 
reimburse such agencies for any costs of providing examiners 
from amounts available in the Federal Housing Enterprises 
Oversight Fund.
          * * * * * * *
                              ----------                              


                          NATIONAL HOUSING ACT

          * * * * * * *

                      TITLE II--MORTGAGE INSURANCE

          * * * * * * *
    Sec. 203. (a)  * * *
          * * * * * * *
    (s) Whenever the Secretary has taken any discretionary 
action to suspend or revoke the approval of any mortgagee to 
participate in any mortgage insurance program under this title, 
the Secretary shall provide prompt notice of the action and a 
statement of the reasons for the action to--
          (1) * * *
          * * * * * * *
          (6) if the mortgagee is a State bank that is a member 
        of the Federal Reserve System or a subsidiary or 
        affiliate of such a bank, or a bank holding company or 
        a subsidiary or affiliate of such a company, the Board 
        of Governors of the Federal Reserve System; and
          (7) if the mortgagee is a State bank (as defined in 
        section 3 of the Federal Deposit Insurance Act) that is 
        not a member of the Federal Reserve System or is a 
        subsidiary or affiliate of such a bank, the Board of 
        Directors of the Federal Deposit Insurance 
        Corporation[; and].
          [(8) if the mortgagee is a Federal or State savings 
        association or a subsidiary or affiliate of a savings 
        association, the Director of the Office of Thrift 
        Supervision.]
          * * * * * * *

          TITLE V--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

          * * * * * * *
  Sec. 502. In carrying out their respective functions, powers, 
and duties--
  (a) * * *
          * * * * * * *
  (c) The Secretary of Housing and Urban Development [and the 
Director of the Office of Thrift Supervision, respectively], 
may, in addition to and not in derogation of any powers and 
authorities conferred elsewhere in this Act--
          (1) * * *
          * * * * * * *

     SECTION 4 OF THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

                      uniform settlement statement

    Sec. 4. (a) The Secretary, in consultation with the 
Administrator of Veterans' Affairs[,] and the Federal Deposit 
Insurance Corporation[, and the Director of the Office of 
Thrift Supervision], shall develop and prescribe a standard 
form for the statement of settlement costs which shall be used 
(with such variations as may be necessary to reflect 
differences in legal and administrative requirements or 
practices in different areas of the country) as the standard 
real estate settlement form in all transactions in the United 
States which involve federally related mortgage loans. Such 
form shall conspicuously and clearly itemize all charges 
imposed upon the borrower and all charges imposed upon the 
seller in connection with the settlement and shall indicate 
whether any title insurance premium included in such charges 
covers or insures the lender's interest in the property, the 
borrower's interest, or both. The Secretary may, by regulation, 
permit the deletion from the form prescribed under this section 
of items which are not, under local laws or customs, applicable 
in any locality, except that such regulation shall require that 
the numerical code prescribed by the Secretary be retained in 
forms to be used in all localities. Nothing in this section may 
be construed to require that that part of the standard form 
which relates to the borrower's transaction to be furnished to 
the seller, or to require that that part of the standard form 
which relates to the seller be furnished to the borrower.
          * * * * * * *
                              ----------                              


  RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT ACT OF 1994

          * * * * * * *

         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

 Subtitle A--Community Development Banking and Financial Institutions 
                                  Act

          * * * * * * *

SEC. 117. STUDIES AND REPORTS; EXAMINATION AND AUDIT.

  (a) * * *
          * * * * * * *
  (e) Consultation.--In the conduct of the studies required 
under this section, the Fund shall consult, as appropriate, 
with the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, the Board of Governors of the Federal 
Reserve System, the Federal Housing Finance Board, the Farm 
Credit Administration, [the Director of the Office of Thrift 
Supervision,] the National Credit Union Administration Board, 
Indian tribal governments, community reinvestment 
organizations, civil rights organizations, consumer 
organizations, financial organizations, and such 
representatives of agencies or other persons, at the discretion 
of the Fund.
          * * * * * * *

       TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

          * * * * * * *

SEC. 307. CALL REPORT SIMPLIFICATION.

  (a) Modernization of Call Report Filing and Disclosure 
System.--In order to reduce the administrative requirements 
pertaining to bank reports of condition, [savings association 
financial reports,] and bank holding company consolidated and 
parent-only financial statements, and to improve the timeliness 
of such reports and statements, the Federal banking agencies 
shall--
          (1) * * *
          * * * * * * *
                              ----------                              


                 SECTION 270 OF THE TRUTH IN SAVINGS ACT

SEC. 270. ADMINISTRATIVE ENFORCEMENT.

  (a) In General.--Compliance with the requirements imposed 
under this Act shall be enforced under--
          (1) section 8 of the Federal Deposit Insurance Act--
                  (A) by the appropriate Federal banking agency 
                (as defined in section 3(q) of the Federal 
                Deposit Insurance Act) in the case of insured 
                depository institutions (as defined in section 
                3(c)(2) of such Act); and
                  (B) by the Federal Deposit Insurance 
                Corporation in the case of depository 
                institutions described in clause (i), (ii), [or 
                (iii)] (iii) or (v) of section 19(b)(1)(A) of 
                the Federal Reserve Act which are not insured 
                depository institutions (as defined in section 
                3(c)(2) of the Federal Deposit Insurance Act)[; 
                and].
                  [(C) by the Director of the Office of Thrift 
                Supervision in the case of depository 
                institutions described in clause (v) and or 
                (vi) of section 19(b)(1)(A) of the Federal 
                Reserve Act which are not insured depository 
                institutions (as defined in section 3(c)(2) of 
                the Federal Deposit Insurance Act); and]
          * * * * * * *
                              ----------                              


       BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985

          * * * * * * *

                 TITLE II--DEFICIT REDUCTION PROCEDURES

          * * * * * * *

  PART C--EMERGENCY POWERS TO ELIMINATE DEFICITS IN EXCESS OF MAXIMUM 
                             DEFICIT AMOUNT

          * * * * * * *

SEC. 250. TABLE OF CONTENTS; STATEMENT OF BUDGET ENFORCEMENT THROUGH 
                    SEQUESTRATION; DEFINITIONS.

  (a) * * *
          * * * * * * *
  (c) Definitions.--
  As used in this part:
          (1) * * *
          * * * * * * *
          (19) The term ``deposit insurance'' refers to the 
        expenses of the Federal Deposit Insurance Corporation 
        and the funds it incorporates, the Resolution Trust 
        Corporation, the National Credit Union Administration 
        and the funds it incorporates, [the Office of Thrift 
        Supervision,] the Comptroller of the Currency 
        Assessment Fund, and the RTC Office of Inspector 
        General.
          * * * * * * *

SEC. 256. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.

  (a) * * *
          * * * * * * *
  (h) Treatment of Federal Administrative Expenses.--
          (1) * * *
          * * * * * * *
          (4) Notwithstanding any other provision of law, this 
        subsection shall not apply with respect to the 
        following:
                  (A) Comptroller of the Currency.
                  (B) Federal Deposit Insurance Corporation.
                  [(C) Office of Thrift Supervision.
                  [(D) Office of Thrift Supervision.]
                  [(E)] (C) National Credit Union 
                Administration.
                  [(F)] (D) National Credit Union 
                Administration, central liquidity facility.
                  [(G)](E) Federal Retirement Thrift Investment 
                Board.
                  [(H)](F) Resolution Funding Corporation.
                  [(I)] (G) Resolution Trust Corporation.
          * * * * * * *
                              ----------                              


                     CONSUMER CREDIT PROTECTION ACT

          * * * * * * *

                     TITLE I--CONSUMER CREDIT COST

          * * * * * * *

                     CHAPTER 1--GENERAL PROVISIONS

Sec. 108. Administrative enforcement

  (a) Compliance with the requirements imposed under this title 
shall be enforced under
          (1) section 8 of the Federal Deposit Insurance Act, 
        in the case of--
                  (A) national banks, and Federal branches and 
                Federal agencies of foreign banks, by the 
                Office of the Comptroller of the Currency;
                  (B) member banks of the Federal Reserve 
                System (other than national banks), branches 
                and agencies of foreign banks (other than 
                Federal branches, Federal agencies, and insured 
                State branches of foreign banks), commercial 
                lending companies owned or controlled by 
                foreign banks, and organizations operating 
                under section 25 or 25(a) of the Federal 
                Reserve Act, by the Board; and
                  (C) banks (as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal 
                Reserve System) and insured State branches of 
                foreign banks, by the Board of Directors of the 
                Federal Deposit Insurance Corporation;
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation.]
          [(3)] (2) the Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any Federal credit 
        union.
          [(4)] (3) the Federal Aviation Act of 1958, by the 
        Secretary of Transportation with respect to any air 
        carrier or foreign air carrier subject to that Act.
          [(5)] (4) the Packers and Stockyards Act, 1921 
        (except as provided in section 406 of that Act), by the 
        Secretary of Agriculture with respect to any activities 
        subject to that Act.
          [(6)] (5) the Farm Credit Act of 1971, by the Farm 
        Credit Administration with respect to any Federal land 
        bank, Federal land bank association, Federal 
        intermediate credit bank, or production credit 
        association.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *

                  TITLE VI--CONSUMER CREDIT REPORTING

          * * * * * * *

Sec. 621. Administrative enforcement

  (a) * * *
  (b) Compliance with the requirements imposed under this title 
with respect to consumer reporting agencies and persons who use 
consumer reports from such agencies shall be enforced under--
          (1) section 8 of the Federal Deposit Insurance Act, 
        in the case of--
          * * * * * * *
                  (C) banks (as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal 
                Reserve System) and insured State branches of 
                foreign banks, by the Board of Directors of the 
                Federal Deposit Insurance Corporation;
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation;]
          [(3) (2) the Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any Federal credit 
        union;
          [(4) (3) the Acts to regulate commerce, by the 
        Secretary of Transportation, with respect to all 
        carriers subject to the jurisdiction of the Surface 
        Transportation Board;
          [(5) (4) the Federal Aviation Act of 1958, by the 
        Secretary of Transportation with respect to any air 
        carrier or foreign air carrier subject to that Act; and
          [(6)] (5) the Packers and Stockyards Act, 1921 
        (except as provided in section 406 of that Act), by the 
        Secretary of Agriculture with respect to any activities 
        subject to that Act.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *

                  TITLE VII--EQUAL CREDIT OPPORTUNITY

          * * * * * * *

Sec. 704. Administrative enforcement

  (a) Compliance with the requirements imposed under this title 
shall be enforced under:
          (1) section 8 of the Federal Deposit Insurance Act, 
        in the case of--
          * * * * * * *
                  (C) banks (as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal 
                Reserve System) and insured State branches of 
                foreign banks, by the Board of Directors of the 
                Federal Deposit Insurance Corporation;
          [(2) Section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation.]
          [(3)] (2) The Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any Federal Credit 
        Union.
          [(4)] (3) The Acts to regulate commerce, by the 
        Secretary of Transportation, with respect to all 
        carriers subject to the jurisdiction of the Surface 
        Transportation Board.
          [(5)] (4) The Federal Aviation Act of 1958, by the 
        Secretary of Transportation with respect to any air 
        carrier or foreign air carrier subject to that Act.
          [(6)] (5) The Packers and Stockyards Act, 1921 
        (except as provided in section 406 of that Act), by the 
        Secretary of Agriculture with respect to any activities 
        subject to that Act.
          [(7)] (6) The Farm Credit Act of 1971, by the Farm 
        Credit Administration with respect to any Federal land 
        bank, Federal land bank association, Federal 
        intermediate credit bank, and production credit 
        association;
          [(8)] (7) The Securities Exchange Act of 1934, by the 
        Securities and Exchange Commission with respect to 
        brokers and dealers; and
          [(9)] (8) The Small Business Investment Act of 1958, 
        by the Small Business Administration, with respect to 
        small business investment companies.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *

                 TITLE VIII--DEBT COLLECTION PRACTICES

          * * * * * * *

Sec. 814. Administrative enforcement

  (a) * * *
  (b) Compliance with any requirements imposed under this title 
shall be enforced under--
          (1) section 8 of the Federal Deposit Insurance Act, 
        in the case of--
          * * * * * * *
                  (C) banks (as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                insured by the Federal Deposit Insurance 
                Corporation (other than membersof the Federal 
Reserve System) and insured State branches of foreign banks, by the 
Board of Directors of the Federal Deposit Insurance Corporation;
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation;]
          [(3)] (2) the Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any Federal credit 
        union;
          [(4)] (3) the Acts to regulate commerce, by the 
        Secretary of Transportation, with respect to all 
        carriers subject to the jurisdiction of the Surface 
        Transportation Board;
          [(5)] (4) the Federal Aviation Act of 1958, by the 
        Secretary of Transportation with respect to any air 
        carrier or any foreign air carrier subject to that Act; 
        and
          [(6)] (5) the Packers and Stockyards Act, 1921 
        (except as provided in section 406 of that Act), by the 
        Secretary of Agriculture with respect to any activities 
        subject to that Act.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *

                  TITLE IX--ELECTRONIC FUND TRANSFERS

          * * * * * * *

Sec. 917. Administrative enforcement

  (a) Compliance with the requirements imposed under this title 
shall be enforced under--
          (1) section 8 of the Federal Deposit Insurance Act, 
        in the case of--
          * * * * * * *
                  (C) banks (as defined in section 3 of the 
                Federal Deposit Insurance Act (12 U.S.C. 1813)) 
                insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal 
                Reserve System) and insured State branches of 
                foreign banks, by the Board of Directors of the 
                Federal Deposit Insurance Corporation;
          [(2) section 8 of the Federal Deposit Insurance Act, 
        by the Director of the Office of Thrift Supervision, in 
        the case of a savings association the deposits of which 
        are insured by the Federal Deposit Insurance 
        Corporation;]
          [(3)] (2) the Federal Credit Union Act, by the 
        Administrator of the National Credit Union 
        Administration with respect to any Federal credit 
        union.
          [(4)] (3) the Federal Aviation Act of 1958, by the 
        Secretary of Transportation, with respect to any air 
        carrier or foreign air carrier subject to that Act; and
          [(5)] (4) the Securities Exchange Act of 1934, by the 
        Securities and Exchange Commission, with respect to any 
        broker or dealer subject to that Act.
The terms used in paragraph (1) that are not defined in this 
title or otherwise defined in section 3(s) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the 
meaning given to them in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101).
          * * * * * * *
                              ----------                              


               THE FLOOD DISASTER PROTECTION ACT OF 1973

          * * * * * * *

                              definitions

  Sec. 3. (a) As used in this Act, unless the context otherwise 
requires, the term--
          (1) * * *
          * * * * * * *
          (5) ``Federal entity for lending regulation'' means 
        the Board of Governors of the Federal Reserve System, 
        the Federal Deposit Insurance Corporation, the 
        Comptroller of the Currency, [the Office of Thrift 
        Supervision,] the National Credit Union Administration, 
        and the Farm Credit Administration, and with respect to 
        a particular regulated lending institution means the 
        entity primarily responsible for the supervision of the 
        institution;
          * * * * * * *

                  TITLE XIII--NATIONAL FLOOD INSURANCE

          * * * * * * *

              Part C--Provisions of General Applicability

          * * * * * * *

        CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS

                              definitions

  Sec. 1370. (a) As used in this title--
          (1) * * *
          (9) the term ``Federal entity for lending 
        regulation'' means the Board of Governors of the 
        Federal Reserve System, the Federal Deposit Insurance 
        Corporation, the Comptroller of the Currency, [the 
        Office of Thrift Supervision,] the National Credit 
        Union Administration, and the Farm Credit 
        Administration, and with respect to a particular 
        regulated lending institution means the entity 
        primarily responsible for the supervision of the 
        institution;
          * * * * * * *
                              ----------                              


                      TITLE 5, UNITED STATES CODE

          * * * * * * *

                          PART III--EMPLOYEES

          * * * * * * *

                  Subpart B--Employment and Retention

          * * * * * * *

                  CHAPTER 31--AUTHORITY FOR EMPLOYMENT

          * * * * * * *

              SUBCHAPTER II--THE SENIOR SERVICE EXECUTIVE

          * * * * * * *

Sec. 3132. Definitions and exclusions

  (a) For the purpose of this subchapter--
          (1) ``agency'' means an Executive agency, except a 
        Government corporation and the General Accounting 
        Office, but does not include--
                  (A) * * *
          * * * * * * *
                  (D) the Office of the Comptroller of the 
                Currency, [the Office of Thrift Supervision,] 
                the Federal Housing Finance Board, the 
                Resolution Trust Corporation, the Farm Credit 
                Administration, the Office of Federal Housing 
                Enterprise Oversight of the Department of 
                Housing and Urban Development, and the National 
                Credit Union Administration;
          * * * * * * *

                   CHAPTER 53--PAY RATES AND SYSTEMS

          * * * * * * *

              SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES

          * * * * * * *

Sec. 5314. Positions at level III

  Level III of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Solicitor General of the United States.
          Under Secretary of Commerce, Under Secretary of 
        Commerce for Economic Affairs, Under Secretary of 
        Commerce for Export Administration and Under Secretary 
        of Commerce for Travel and Tourism.
          Under Secretaries of State (5).
          Under Secretaries of the Treasury (3).
          Administrator of General Services.
          * * * * * * *
          Deputy Director for Supply Reduction, Office of 
        National Drug Control Policy.
          [Director of the Office of Thrift Supervision].
          Chairperson of the Federal Housing Finance Board.
          Executive Secretary, National Space Council.
          Controller, Office of Federal Financial Management, 
        Office of Management and Budget.
          * * * * * * *
                              ----------                              


                      TITLE 18, UNITED STATES CODE

          * * * * * * *

         CHAPTER 11--BRIBERY, GRAFT, AND CONFLICTS OF INTEREST

          * * * * * * *

Sec. 212. Offer of loan or gratuity to bank examiner

          * * * * * * *
  The provisions of this section and section 213 of this title 
shall apply to all public examiners and assistant examiners who 
examine member banks of the Federal Reserve System, insured 
financial institutions, branches or agencies of foreign banks 
(as such terms are defined in paragraphs (1) and (3) of section 
1(b) of the International Banking Act of 1978), organizations 
operating under section 25 or section 25(a) \1\ of the Federal 
Reserve Act, whether appointed by the Comptroller of the 
Currency, by the Board of Governors of the Federal Reserve 
System, by a Federal Reserve Agent, by a Federal Reserve bank, 
by the Federal Deposit Insurance Corporation[, by the Office of 
Thrift Supervision], or by the Federal Housing Finance Board, 
or appointed or elected under the laws of any state; but shall 
not apply to private examiners or assistant examiners employed 
only by a clearinghouse association or by the directors of a 
bank.
          * * * * * * *

                 CHAPTER 47--FRAUD AND FALSE STATEMENTS

          * * * * * * *

Sec. 1006. Federal credit institution entries, reports and transactions

  Whoever, being an officer, agent or employee of or connected 
in any capacity with the Federal Deposit Insurance Corporation, 
National Credit Union Administration[, Office of Thrift 
Supervision], any Federal home loan bank, the Federal Housing 
Finance Board, the Resolution Trust Corporation, Farm Credit 
Administration, Department of Housing and Urban Development, 
Federal Crop Insurance Corporation, the Secretary of 
Agriculture actingthrough the Farmers Home Administration, the 
Rural Development Administration, or the Farm Credit System Insurance 
Corporation, a Farm Credit Bank, a bank for cooperatives or any 
lending, mortgage, insurance, credit or savings and loan corporation or 
association authorized or acting under the laws of the United States or 
any institution, other than an insured bank (as defined in section 
656), the accounts of which are insured by the Federal Deposit 
Insurance Corporation, or by the National Credit Union Administration 
Board or any small business investment company, with intent to defraud 
any such institution or any other company, body politic or corporate, 
or any individual, or to deceive any officer, auditor, examiner or 
agent of any such institution or of department or agency of the United 
States, makes any false entry in any book, report or statement of or to 
any such institution, or without being duly authorized, draws any order 
or bill of exchange, makes any acceptance, or issues, puts forth or 
assigns any note, debenture, bond or other obligation, or draft, bill 
of exchange, mortgage, judgment, or decree, or, with intent to defraud 
the United States or any agency thereof, or any corporation, 
institution, or association referred to in this section, participates 
or shares in or receives directly or indirectly any money, profit, 
property, or benefits through any transaction, loan, commission, 
contract, or any other act of any such corporation, institution, or 
association, shall be fined not more than $1,000,000 or imprisoned not 
more than 30 years, or both.
          * * * * * * *

Sec. 1014. Loan and credit applications generally; renewals and 
                    discounts; crop insurance

  Whoever knowingly makes any false statement or report, or 
willfully overvalues any land, property or security, for the 
purpose of influencing in any way the action of the Farm Credit 
Administration, Federal Crop Insurance Corporation or a company 
the Corporation reinsures, the Secretary of Agriculture acting 
through the Farmers Home Administration, the Rural Development 
Administration, any Farm Credit Bank, production credit 
association, agricultural credit association, bank for 
cooperatives, or any division, officer, or employee thereof, or 
of any regional agricultural credit corporation established 
pursuant to law, or a Federal land bank, a Federal land bank 
association, a Federal Reserve bank, a small business 
investment company, a Federal credit union, an insured State-
chartered credit union, any institution the accounts of which 
are insured by the Federal Deposit Insurance Corporation[, the 
Office of Thrift Supervision], any Federal home loan bank, the 
Federal Housing Finance Board, the Federal Deposit Insurance 
Corporation, the Resolution Trust Corporation, the Farm Credit 
System Insurance Corporation, or the National Credit Union 
Administration Board, a branch or agency of a foreign bank (as 
such terms are defined in paragraphs (1) and (3) of section 
1(b) of the International Banking Act of 1978), or an 
organization operating under section 25 or section 25(a) of the 
Federal Reserve Act, upon any application, advance, discount, 
purchase, purchase agreement, repurchase agreement, commitment, 
or loan, or any change or extension of any of the same, by 
renewal, deferment of action or otherwise,or the acceptance, 
release, or substitution of security therefor, shall be fined not more 
than $1,000,000 or imprisoned not more than 30 years, or both. The term 
``State-chartered credit union'' includes a credit union chartered 
under the laws of a State of the United States, the District of 
Columbia, or any commonwealth, territory, or possession of the United 
States.
          * * * * * * *

Sec. 1032. Concealment of assets from conservator, receiver, or 
                    liquidating agent of financial institution

  Whoever--
          (1) knowingly conceals or endeavors to conceal an 
        asset or property from the Federal Deposit Insurance 
        Corporation, acting as conservator or receiver or in 
        the Corporation's corporate capacity with respect to 
        any asset acquired or liability assumed by the 
        Corporation under section 11, 12, or 13, of the Federal 
        Deposit Insurance Act, the Resolution Trust 
        Corporation, any conservator appointed by the 
        Comptroller of the Currency [or the Director of the 
        Office of Thrift Supervision], or the National Credit 
        Union Administration Board, acting as conservator or 
        liquidating agent;
          (2) corruptly impedes or endeavors to impede the 
        functions of such Corporation, Board, or conservator; 
        or
          (3) corruptly places or endeavors to place an asset 
        or property beyond the reach of such Corporation, 
        Board, or conservator,
shall be fined under this title or imprisoned not more than 5 
years, or both.
          * * * * * * *
                              ----------                              


          SECTION 406 OF THE CONGRESSIONAL BUDGET ACT OF 1974

             off-budget agencies, programs, and activities

  Sec. 406. (a) * * *
          * * * * * * *
  (c) Notwithstanding any other provision of law, the receipts 
and disbursements of the National Association of Registered 
Agents and Brokers shall not be included for the purposes of--
          (1) the budget of the United States Government as 
        submitted by the President;
          (2) the congressional budget and the Congressional 
        Budget and Impoundment Control Act of 1974; or
          (3) the Balanced Budget and Emergency Deficit Control 
        Act of 1985.
             ADDITIONAL VIEWS OF CONGRESSMAN BRUCE F. VENTO

    When the Banking Committee approved H.R. 10 as amended, we 
took the first step of moving to the reality of today's 
marketplace. As the bill continues down the long and deliberate 
path toward enactment, it is important to note that the measure 
reported it a bipartisan effort and that the initiative does 
not carry the cause of one sector, group or industry over 
another. This legislation in 1997 is critical to maintaining 
U.S. financial competitiveness and efficiency in moving forward 
with predictable service to the diverse U.S. and global economy 
within the context of safe and sound financial institutions. 
Our nation needs this professional industry-balanced 
rationalization of U.S. financial services laws for the 21st 
Century for today's and tomorrow's global marketplace. This 
proposal will protect the deposit insurance funds and will 
maintain the responsibilities accorded financial institutions 
which best serve our people and the dynamic U.S. economy.
    Financial modernization and rationalization is necessary 
because the convergence of banking securities and some 
insurance activities has led to instruments and products in the 
marketplace that are nearly indistinguishable. Additionally, 
the record is replete with entities and activities that are 
notable exceptions to long-held prohibitions embodied in the 
historic Glass-Steagall law. Such exceptions abound: commerce 
and banking activities take place in the unitary thrifts, 
thrifts bank holding companies and thrifts, both federal and 
state chartered have the ability to involve themselves in 
activities such as real estate development that are taboo for 
banks. Commercial activities are allowed for non-bank banks, 
grandfathered banks, and foreign banks in the United States and 
U.S. banks abroad. Other laws provide exceptions for 
grandfathered banks and grandfathered activities as the 
Congress saw fit to accommodate over the past 60 years.
    The commerce and banking roles are already so mixed in many 
ways and with so many exceptions that clarification in the form 
of a recognized allowable ``basket'' of commercial activities 
will facilitate the establishment of a rational federal law and 
a regulatory framework for all involved.
    The inclusion of a bipartisan Roukema/Vento/Baker/LaFalce 
amendment providing a 15% of gross domestic revenues basket in 
H.R. 10 will set in place the opportunity for a uniform 
regulatory framework. This modest and incremental 15% basket 
will provide an avenue for qualified bank holding companies to 
maintain an affiliated status with firms with limited interest 
in commercial activities. The commerce basket will serve as a 
modest and necessary two-way street for all the financial 
services industries--banking, securities, and insurance--to 
participate in the new qualified bank holding company structure 
without either divestiture or dramatically changing their 
current business activities or niches. This key basket 
amendment that was passed included prohibitions on transactions 
between commercial and financial affiliates in sucha qualified 
bank holding company and in order to address concerns about giant 
mergers and conglomerates, a prohibition on affiliation with the top 
1000 firms.
    I have concerns and questions regarding the so-called 
``reverse'' basket, the concept and construct of which was not 
adequately considered in the many hearings held by the 
subcommittees and the full committee. One of the more important 
concerns is the actual regulation of the (85%) commercial 
entity that will affiliate with the smaller bank (under $500 
million in assets). A qualified bank holding company, including 
firms qualifying under the 15% commercial basket, would be 
subject to a degree to Federal Reserve Board regulation. 
Whereas, it appears the 85% commercial affiliate would not be 
subject to Federal Reserve Board/umbrella regulator oversight 
at all under the adopted amendment. While I may have my own 
concerns regarding the role of the FRB as the umbrella 
regulator, it is certainly a competitive disadvantage, at the 
very least, for qualified bank holding companies if this 
reverse basket were to exist. The reverse basket also opens up 
questions of potential risk to safety and soundness because of 
its differential and arguably weaker regulation under the 
reverse basket structure. Hearings before further action on 
this subject should fully explore and clarify the ramifications 
of the reverse basket structure.
    I am highly supportive of the creation of the Financial 
Services Council which will serve as the coordinating 
regulatory committee for the activities of qualified bank 
holding companies and other financial services industry 
entities. I remain concerned that the provisions of H.R. 10 
represent less than functional regulation because of the 
overreaching role envisioned for the Federal Reserve Board as 
the umbrella regulator. No doubt, refinements will be made to 
better balance not only the FRB but all regulators and 
regulations that interface in the bill's proposed regulatory 
structure. Some duplication or overlap is necessary in order 
that we not create inadvertent regulatory gap and instead 
assure ourselves and the American taxpayer that strong 
firewalls will function and be maintained. Further, important 
protections such as capital requirements at the bank holding 
company, independent outside audit provisions and anti-tying 
provisions need to be maintained.
    H.R. 10 does make strides forward for consumers and 
communities with the satisfactory CRA and compliance with Fair 
Housing requirements for affiliation; added statutory consumer 
protections for sales of non-deposit insured products; 
application of the CRA to Wholesale Financial Institutions 
(WFIs) and the prohibition of deposit production activities; 
effective application of antitrust laws; and the addition of 
amendments modernizing the Federal Home Loan Bank system--
especially the provisions which allow small business and 
agricultural loans to be used as collateral for advances from 
the FHLB system. Credit enhancement and assurances to 
facilitate the ideals of credit worthy loans and disseminated 
geographic services with proactive consumer provisions insure 
that the objections for modernization in serving families and 
businesses of all sizes is grounded in the marketplace role of 
the banking modernization policy.
    The thrift charter merger provisions of H.R. 10 now provide 
a liberal, even generous, grandfathering for existing thrifts 
and savings and loan holding companies. This truly is a ``do no 
harm'' title for existing thrifts and for all entities that 
wish to apply for a thrift or for allowable activities in their 
thrift prior to date of enactment. Significantly, the 
successful inclusion of the McCollum/Roukema/Vento/Ehrlich 
Title III substitute amendment puts in place a cap on the 
number of thrifts and unitaries and an end to unlimited banking 
and commerce as an option for financial services entities. It 
is clear that opposition to grandfathering, coupled with 
merging charters by enlarging allowable bank affiliate 
activities, will continue in great part due to the open-ended 
nature of the unitary thrift holding company's activities and 
the relatively hands-off nature of current OTS regulation.
    Closure to the issue of national thrift-bank charter merger 
will also assure that the deposit insurance funds will be 
merged, thereby eliminating the last vestiges of the thrift 
crisis and the inherent risk to the taxpayer represented by the 
smaller, less diversified SAIF. This policy action was fully 
contemplated base upon the recapitalization of the SAIF deposit 
insurance fund and the sharing by banks of the FICO obligation. 
The downward spiral of thrift deposits has been arrested but 
the geographically concentrated deposit base demands the merger 
of the deposit insurance funds and the development of a common 
national financial institutions charter for banks, thrifts, 
insurance and securities financial entities. The enhanced 
qualified financial holding company charter with options for 
retaining existing powers and the limited commerce, with full 
insurance, securities and banking activities, affords a full 
range of activities with a certain and predictable policy path 
to serve the American market place.
    The Banking Committee has fully engaged the major issues 
related to Glass-Steagall repeal with the broad definition of 
financial activity, the limited integration of a commerce role, 
a sound regulatory structure, and the positive effect of 
extending credit, services and investment within the context of 
consumer rights and responsibility. As a supporter of this 
legislation I am confident that federal laws can be carefully 
crafted and successfully structured to set in place parameters 
that will allow reasonable and even-handed flexibility to 
financial services and other marketplace entities going forward 
into the 21st Century. This can be done, as the reported bill 
has shown, with an appropriate level of safety and soundness 
protections and with an eye to the needs of the consumer and 
responsibility to the communities in which financial entities 
exist.

                                                    Bruce F. Vento.
            ADDITIONAL VIEWS OF CONGRESSWOMAN MAXINE WATERS

                preemption of state consumer protections

    During the markup of H.R. 10 I offered an amendment to the 
bill to ensure that the consumer protections provisions 
included in section 112 of the bill do not preempt stronger 
state consumer protection laws. This amendment makes it clear 
that the consumer protection provisions included in the bill 
are intended to act as a protective floor, and not a ceiling, 
on state consumer protection laws.
    This important amendment was narrowly defeated by a vote of 
25-24. The large number of votes in favor of the amendment 
should send a strong message that many members of the committee 
do not want to see the hard work done by states to protect 
consumers needlessly preempted.
    This amendment was drafted in consultation with the Office 
of the Comptroller and the Department of Treasury. This 
amendment does not change the traditional federal preemption 
standard. If a state law is inconsistent with a clear 
requirement of federal law, it is preempted.
    What this amendment would do is help to preserve a wide 
variety of state consumer banking laws that may be at risk of 
federal preemption. This amendment is especially important 
given the trend toward ignoring a wide variety of state 
consumer protection laws through federal preemption.
    This amendment was offered in the spirit of supporting 
local control and in recognition of the important work done at 
the state level to fashion consumer protection laws appropriate 
to the needs of the resident of their states.

                            lifeline banking

    As the author of the lifeline banking amendment that was 
adopted by the Committee for inclusion in section 103 of H.R. 
10, I would like to offer a brief explanation of this 
amendment.
    This amendment requires that subsidiary depository 
institutions of qualified bank holding companies have a 
demonstrable record of performance in the provision of low-cost 
lifeline bank accounts. According to the Office of the 
Comptroller of the Currency it is estimated that twelve million 
American households do not have deposit accounts with a 
financial institution.
    With this amendment, banks would be required to make basic 
no-frills bank accounts available to low-income consumers at 
all offices where regular checking accounts are offered or 
available. Banks would not be required to offer this account to 
the consumer at a cost below the actual cost to the bank of 
providing such account. Banks may also limit the number of 
transactions that can be made by the consumer per month.
    As a Congress we have already recognized the necessity of 
lifeline banking. The Bank Enterprise Act was enacted by 
Congress as part of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 to provide federally insured banks with 
an incentive to offer lifeline accounts. My lifeline banking 
amendment builds upon the work of the Committee and uses the 
definition of lifeline banking set out in Section 232 of this 
Act.
    We are faced with a number of new realities that make it 
imperative that we take additional steps to ensure that low-
income persons have access to basic, no frills accounts--the 
passage of the welfare reform law and the Electronic Balance 
Transfer Act.
    Under the welfare reform law, by 2002 all recipients will 
be required to receive their benefits via an electronic balance 
transfer system. The Electronic Funds Transfer Act that we 
passed in 1996, requires that by 1999 all recipients must 
receive their benefits electronically.
    These new Congressionally imposed requirements make it 
essential that we take legislative action to do what is long 
overdue--ensure that all consumers have access to basic banking 
services.

                                                     Maxine Waters.
         ADDITIONAL VIEWS OF CONGRESSWOMAN CYNTHIA A. McKINNEY

    As the Committee considers financial modernization, we are 
presented with the dilemma that financial regulators and the 
Courts have done more to keep the United States financial 
system moving into the next century than Congress. I find this 
unacceptable. Clearly the bus is moving, and Congress has a 
responsibility to the American public to at least pull out a 
road map.
    Speaking as an advocate for people who have been left 
behind or at least seated in the bank of the bus, financial 
modernization means more opportunity for more of America. Some 
of my colleagues whom I consider to be my allies in this 
struggle will look at this legislation with suspicion, 
particularly in a Republican Congress. They may even join with 
various forces to form a road block for this legislation, 
leaving modernization to die in one more Congress. To these 
friends, I say I want to see financial modernization deliver as 
much for the little people as we know it will for the big guys.
    During the five years of the Clinton Administration, the 
American economy has been robust: unemployment low, inflation 
kept in check, and a Dow Jones breaking records with each new 
day. For individual Americans who have invested in the market, 
they will reap much more than the 4-6 percent earnings of the 
average savings account. Over the long term, this investment 
offers even greater benefit by protecting these savings from 
the erosion of inflation. Mutual funds have played an 
increasingly greater role in this continuing prosperity. A 
recent Federal Reserve bulletin reported that ownership of 
mutual funds has expanded, and the median value of holdings has 
increased. However, ownership rates moved up for non-Hispanic 
whites but remained unchanged for others. Moreover, ownership 
rates rose most strikingly at the top of the income 
distribution. Aside from the issues of education and privilege 
which afford these individuals the choice and benefit of such 
financial products, these disturbing trends are aggravated by 
the legal framework of financial services which 
compartmentalize banking, insurance and securities into 
distinct institutions. As banks are allowed to operate as full 
service firms, financial modernization will bring new products 
and new opportunities for more of America.
    Through their branch networks and existing relationships 
with a large number of households, banks can reach out to a 
broader spectrum of consumers, making financial products 
accessible to more people. Currently banking institutions serve 
almost 87 million U.S. households. The inability of banks to 
offer a complete menu of financial services, including 
securities and insurance products, along with traditional 
banking products, has meant that consumers have been forced to 
obtain these services from different service providers at 
different locations. They have not benefited from the 
convenience and potential cost savings of ``one-stop shopping'' 
at a single banking institution. When banks offer securities, 
insurance and other financial services directly and through 
affiliates, they will bring a new level of convenience and 
choice to customers in every economic bracket from Decatur, 
Georgia to Watts, Los Angeles.
    While I support the increased ability of banks to offer 
financial service products, I am equally concerned that these 
new consumers have the benefit of traditional providers' 
experience and their regulators. I applaud the Chairman in his 
efforts to find a fair solution to the certain future disputes 
of products being characterized as banking or insurance. The 
committee made a further contribution to the Chairman's efforts 
by adopting the Castle amendment. On the other end I remain 
concerned about the availability and increased activities of 
securities within a bank. If a bank is going to sell 
securities, then it should provide customers with the same 
quality of broker-dealers that customers would receive outside 
the bank. As a self-regulatory body the NASD sets standards for 
securities market participants above and beyond those required 
by Congress and the SEC. The NASD requires tasting of 
securities sales persons and their supervisors. Its regulations 
governing sales practices, suitability of investments, fair 
dealing and market practices are essential to maintaining 
public confidence in the system. I am troubled by the 
Committee's decision to expand the powers of the OCC to police 
securities sales within the bank. The Bentsen amendment would 
have made more sense to assure one standard for the industry 
among all provides.
    Finally, like most things produced in this Congress, this 
is not a perfect bill, but it will reestablish Congress as an 
authority over laws governing the financial services. As we 
enter into what the Committee referred to as a ``brave, new 
world,'' it is important to reflect the changes in America's 
political landscape. The Republicans control Congress, 
California voters supported Proposition 209, and the Rainbow 
Coalition has opened an office on Wall Street. Embracing these 
changes doesn't mean welcoming them, but preparing for them. 
Similarly, I support financial modernization as an opportunity 
for all Americans to equally take advantage of this new 
frontier.

                                               Cynthia A. McKinney.
           ADDITIONAL VIEWS OF CONGRESSMAN MICHAEL N. CASTLE

    I support the Banking Committee's approval of H.R. 10, the 
Financial Services Competitiveness Act of 1997. It is in the 
best interests of all Americans who utilize financial services 
for Congress to act to modernize our outdated laws governing 
banking and financial services. Permitting the integration of 
banking, insurance, securities and other financial services in 
a more uniform and rational manner will provide more choices 
for consumers and improved competition in the offering of these 
services. The Committee bill provides for this modernization 
with adequate safeguards to protect the safety, soundness and 
stability of the banking and financial services system. It is 
not a perfect piece of legislation, no bill with such a far-
reaching impact could be, but it attempts to balance the 
interests of all the industries affected by the legislation 
with the best interests of all the American people. I think the 
bill accomplishes this.
    I am particularly pleased that the Committee has approved a 
provision I authored to permit well-managed and well-
capitalized limited-purpose banks to expand their activities 
and cross-market their products. The 1987 CEBA restrictions on 
these institutions are outdated and this legislation will allow 
these institutions to provide more services to consumers. 
Lifting the CEBA restrictions on limited-purpose banks is 
consistent with financial modernization and it will benefit 
consumers without disadvantaging any other provider of 
services.
    In addition, I support the ability of financial companies 
to derive 15% of their gross revenues from nonfinancial 
business. This 15% basket is a reasonable and workable 
recognition of the complexity of the modern marketplace.
    One issue that has been at the center of controversy in 
financial services modernization is how to best fairly regulate 
the sale and underwriting of insurance by banks. The committee 
has attempted to strike a balance on this issue. There is some 
legitimate concern among the banking community regarding the 
possibility of unfounded challenges to new forms of existing 
bank products. The Committee has attempted to address this 
concern by adopting an amendment I offered to provide for an 
expedited review by the Federal Reserve Board to determine if 
state challenges to new banking products are based on merit. 
This review process should deter unfounded challenges to 
legitimate new variations on banking products.
    Finally, the issue of thrift charter conversion was one of 
the most difficult ones facing the committee. I have no desire 
to end the business of well-run thrifts. However, if we are to 
move toward a more uniform financial system, the gradual shift 
to a banking charter makes sense. I believe that the McCollum 
amendment adopted by the Committee permits a very flexible 
grandfather provision for thrifts and a fair transition to a 
banking charter. It will allow thrifts to keep existing aspects 
of their business and continue to promote mortgage lending. It 
is not a perfect solution, but a fair and workable one.
    In sum, this is sound legislation that deserves timely 
consideration by the full House. While some additional 
adjustments may be needed, the framework of this bill is sound 
and it should become law.

                                                 Michael N. Castle.
            ADDITIONAL VIEWS OF CONGRESSMAN RICHARD A. BAKER

    I have long been an advocate for the broadest possible 
reform of the financial services industry. In my view, any 
reform should aim to expand consumers' choice of financial 
services, reduce costs of providing those services, and limit 
risk to our monetary and financial system.
    To that aim, I have sponsored the Depository Institution 
Affiliations Act for several years now. My legislation provides 
for the broadest affiliation among financial and non-financial 
companies--a model appropriate for a free-market economy.
    From my perspective as Chairman of the Subcommittee on 
Capital Markets, Securities and Government Sponsored 
Enterprises, it is clear that many banks no longer look or 
behave like traditional banks. Technology has emboldened banks 
to harness the capital markets as a critical tool for credit 
intermediation. In the last fifteen years, many businesses and 
consumers have rushed to the capital markets to serve their 
credit needs. The rise of commercial paper and the mutual fund 
industry are two examples.
    Moreover, the risk profiles and activities of banks have 
changed. For many banks, the explosion of the derivatives 
markets has enhanced banks ability to manage risk and generate 
income. In addition, banks' securities trading and underwriting 
activities have pushed banks outside of the traditional banking 
model (taking deposits and making loans) as banks pursue other 
market opportunities. I believe that Congress should not 
inhibit, but rather encourage these changes.
    Recently, the House Banking and Financial Services 
Committee has reported out a bill to modernize our financial 
services industry. In my opinion, this bill goes a long way to 
that goal of broad affiliation. Fortunately, the legislation is 
not drafted to simply describe current market realities; the 
legislation prescribes an economic model which will guide the 
evolution of a more rational delivery system of financial 
services.
    The legislation reflects the following two critical policy 
objectives: (1) it allows financial institutions to adapt to 
contemporary market conditions in order the anticipate consumer 
demand; and (2) maintains adequate supervision and regulations 
to safeguard the taxpayer and the nation's monetary and 
financial systems.
    First, with this legislation, Congress has decided to allow 
financial institutions to serve contemporary consumer demand in 
a broader manner. The bill allows for affiliation among 
financial service providers as a first premise. Second, the 
bill allows for limited affiliations with financial services 
providers and non-financial interests. Lastly, the bill 
promotes parity as non-financial services companies can 
affiliate with banks.
    The Banking Committee opened its markup with a vote to 
allow bank holding companies to own a ``basket'' of interests 
in non-financial, commercial firms. Sponsored by a coalition of 
senior members--Reps. McCollum, Roukema, LaFalce, Vento and 
myself--the amendment passed with a strong 35-19 vote. While I 
do not believe the amendment goes far enough to allow the 
broadest affiliation, as my previous legislation advocates, I 
accept it as a first step.
    The following day, the committee voted to extend the same 
powers to non-financial entities. The ``reverse basket''--
supported by Reps. McCollum, LaFalce, and muyself--would allow 
a non-financial firm to acquire in a holding company one bank 
with assets of less than #$500 million. In addition, several 
restrictions apply to the affiliated entities. The revenues 
from the bank cannot be greater than 15 percent of the firm's 
U.S. gross revenues. All financial activities would have to be 
conducted in a qualified bank holding company. Qualified bank 
holding companies would have to be well managed and well 
capitalized. Further, firewalls, including Sections 23A and 23B 
of the Federal Reserve Act, would prevent the commercial firm 
from inappropriate activity with the bank.
    To be sure, much of the criticism of these two amendments 
centered on two arguments. The amendments would encourage a 
biased allocation of credit between an affiliate and the bank 
and promote a concentration of economic power. I reject both 
arguments outright. We have provided for appropriate firewalls 
between the bank and its affiliates and have excluded 
affiliations with the largest institutions in the country. In 
fact, these provisions will allow smaller institutions to have 
more opportunities, resulting in stronger, more diversified 
home-town banks.
    Late in the markup, I offered a provision to limit the 
deposit insurance of qualified bank holding companies to 
$100,000 per depositor social security number. I firmly believe 
that as we expand affiliations and activities for these new 
qualified bank holding companies, we should reduce taxpayer 
exposure to the banks who choose to expand their powers. In 
sum, the provisions the FDIC to calculate insurance coverage 
for depositors by summing all accounts at a bank that is part 
of a qualified bank holding company with the same social 
security number (taxpayer identification number). Moreover, the 
amendment included a provision which would shift depositor 
preference to an insured depositor preference in resolutions of 
failed banks.
    Both deposit insurance reform amendments would increase the 
safety and soundness of our banking system because it would 
reduce moral hazard and instill greater market discipline. In 
addition, it would reduce the number of banks whose failure 
would result in a loss to the FDIC and taxpayers.
    Unfortunately, the amendment was not understood correctly, 
and opposition was expressed. I withdrew the amendment with the 
assurance that the Subcommittee on Financial Institutions would 
hold hearings on this proposal. However, I firmly believe that 
as we expand market opportunities for banks, we should curtail 
taxpayer exposure to new and unforeseen risk.
    The last critical component of this bill centers on the 
credit needs of rural areas, inner-cities, and small 
communities throughout our country. In most small towns, a 
community bank is the chief repository of the community's 
wealth and the chief source of credit. Through hearings in my 
Subcommittee on Capital Markets, I have learned that frequently 
community banks have a difficult time accessing capital markets 
and adequately funding intermediate- and long-term assets held 
by the bank. This is particularly acute for community banks 
located in rural areas where nonfarm businesses tend to rely 
heavily on community banks as their primary lender.
    Since community banks in rural areas, like savings 
associations in the 1930s, tend to draw most of their funds 
from local deposits, credit for borrowers in rural areas may be 
difficult to obtain. In other words, the economy of rural 
America could benefit from increased competition if community 
banks in rural areas were provided with enhanced access to 
capital markets.
    I have long advocated that access to liquidity through 
Federal home loan banks greatly benefits well-managed, 
adequately capitalized community banks because term advances 
reduce interest rate risk and the ability of a community bank 
to obtain advances to offset deposit decreases or to 
temporarily fund portfolios during an increase in loan demands 
reduces the bank's overall cost of operation and allows the 
community bank to better its community and market. I have 
sponsored legislation to modernize the Federal Home Loan Bank 
System for many years.
    In sum, I believe the FHLBank System is an integral tool to 
assist well-capitalized community banks, especially community 
banks in rural areas and underserved neighborhoods, to obtain a 
more stable funding source for intermediate- and long-term 
assets. My amendment, which reflects my previous efforts to 
modernize the System, does just that. As new affiliations 
develop among financial services firms and between commercial 
affiliates, the support provided by the Home Loan Bank System 
will greatly benefit small banks and their communities.
    This legislation, taken as a whole, is good. It articulates 
a legislative framework that frees financial institutions to 
serve America's financial appetite--from businesses to 
governments to consumers--while closely monitoring business 
risk. The bill ensures that the consumer will be the winner, 
with the development of new products in a more price 
competitive economy. After the dust settles, Congress will have 
created a free market where consumers have greater access to 
more products at cheaper prices and the financial system is 
more secure.

                                                  Richard A. Baker.
    SUPPLEMENTAL VIEW IN STRONG SUPPORT OF FINANCIAL MODERNIZATION 
                              LEGISLATION

    I voted in support of this financial modernization 
legislation because I believe there is a real need to reform 
our banking laws. The Glass-Steagall Act was written more than 
60 years ago. Today's financial marketplace is very different. 
Consumers can now purchase financial products from many 
companies, including banks, securities firms, and insurance 
companies. The current regulatory scheme is too cumbersome, 
resulting in a convoluted financial system.
    In addition, through regulatory and judicial actions, our 
banking laws are being rewritten without Congressional approval 
and input. For example, the Office of the Comptroller of the 
Currency recently published an operating subsidiary regulation 
that allows banks to underwrite and sell securities products in 
an operating subsidiary in direct contradiction to the intent 
of the Glass-Steagall Act and the Bank Holding Company Act. One 
pending application by Zion Bank would allow the sale of 
municipal revenue bonds in an operating subsidiary of the Bank 
as opposed to a Section 20 Affiliate of the holding company. 
While I support the operating subsidiary structure, I believe 
Congress and not the Comptroller should establish its existence 
for the sale of securities and other non-bank financial 
products, as this bill provides. Additionally, the Federal 
Reserve recently increased the limit from 10 to 25 percent for 
non-financial activities permitted within a Section 20 
securities affiliate. This ad hoc regulating is the result of 
market forces taking precedent because of Congressional 
inaction. The Congress should be making these decisions. I 
believe that this comprehensive financial modernization 
legislation will provide clarity and set the framework for our 
banking system as we enter the 21st Century.
    I offered an amendment that would prohibit the sale of 
municipal revenue bonds within a bank. I fundamentally believe 
that the sale of municipal revenue bonds carries more risk than 
general obligation bonds and should not be conducted in a bank. 
In addition, this new authority is contradictory to current 
law. Municipal revenue bonds can be either secured or 
unsecured. An unsecured municipal revenue bond does not 
guarantee that it will be repaid. I am concerned that banks 
also operate under different capital and regulatory rules than 
broker-dealers do. Furthermore, the bill expands securities 
powers to banks and therefore should not expand the list of 
bank-eligible or exempt securities. Regrettably, this amendment 
failed, but I will work to ensure that we drop this provision 
as the bill moves forward.
    I supported the 15 percent basket amendment for commercial 
affiliation by a bank because I believe it is necessary to 
ensure a true two-way street between banks and other financial 
companies. However, I opposed the McCollum Amendment providing 
for a reverse basket because I believe this amendment far 
expands the two-way street and allows access to the federal 
payment system by non-financial entities. This section should 
be dropped.
    I also supported the inclusion of an operating subsidiary 
structure in this legislation. After careful review, I have 
concluded that there is no safety and soundness reason that we 
should not allow for this type of structure. At a recent 
hearing with the bank regulators, I asked Federal Reserve 
Chairman Alan Greenspan about whether there is any safety and 
soundness concern about this type of structure. His response 
clearly indicated that safety and soundness is not a concern, 
assuming appropriate firewalls are in place, as provided in the 
bill. Rather,Chairman Greenspan argued that a subsidy is 
provided to the operating subsidiary through its parent bank. However, 
Chairman Greenspan further acknowledged that such a subsidy exists 
through the holding company--affiliate model as well. I believe that 
our capital markets are very efficient and transparent and will 
discount such subsidies. In addition, this legislation imposed strict 
firewalls and a requirement for the bank to be well-capitalized before 
it can opt to set up an operating subsidiary. Banks will benefit from 
this added flexibility by choosing whichever structure is better for 
their individual company. Finally, I would argue that the operating 
subsidiary structure will ensure that all assets of banks, including 
its operating subsidiary, are subject to CRA regulations.
    I would like to highlight two amendments I offered that 
were included in this comprehensive reform legislation. The 
first amendment would change the composition of the National 
Council on Financial Services. The second amendment, which was 
initially approved by a vote of 18 to 14 and subsequently 
amended by voice vote, would subject all securities and 
personnel within banks to the rules and regulations of the 
self-regulatory organization, the National Association of 
Securities Dealers (NASD).
    The first amendment eliminates the Secretary of Commerce 
from the National Council on Financial Services and adds a 
state securities regulator to the Council. This State 
Securities Regulator would be nominated by the President and 
approved by the Senate to serve a three-year term. I strongly 
believe that a state securities regulator who has current or 
prior experience in securities regulation should be included in 
the Council because they are the primary regulators of 
securities brokers who sell directly to the public. My 
amendment was supported by the National Association of 
Securities Administrators. In addition, my amendment would 
provide for a better balance on the Council by adding another 
securities representative in comparison to the insurance and 
banking representatives.
    The second amendment would ensure that sales of securities 
should be subject to the self-regulatory organization 
regulatory scheme. Currently, approximately 15 percent of 
securities sales are conducted by salespeople who are not 
subject to these regulations, and I strongly believe that this 
does not provide proper protections for consumers. Nor is it 
appropriate for some securities salespeople to be under the 
NASD and others not. My amendment would require these 
salespeople to become registered representatives and complete 
the appropriate tests and be subject to fraud and enforcement 
actions by the NASD. I firmly believe that these requirements 
are reasonable and fair and would ensure that all securities 
sales are subject to the same rules and regulations. The 
current system is difficult for consumers to understand and 
does not provide parity. In addition, the current system is 
anti-competitive. For some firms, the rules are easier to 
comply with, while others must live with stricter enforcement 
and disciplinary actions. This is simply a matter of fairness 
and will improve our consumer protection laws.
    After the adoption of the Bentsen Amendment, I worked 
cooperatively with Committee members to address some of the 
concerns raised by Chairman Leach and other Committee members 
following the adoption of the Bentsen Amendment. I drafted a 
compromise amendment that would have limited the types of 
securities sales that would have been subject to NASD 
regulation. When I offered this compromise amendment, Rep. 
Lazio offered a substitute amendment which would have 
eliminated registration of salespeople and enforcement. 
Subsequently, Rep. Watt offered a substitute amendment to the 
Lazio Amendment. The Watt Amendment was adopted by voice vote 
and became the underlying text on Section 203 of Title II. I 
supported the Watt Amendment because I believe it would ensure 
that the same rules and regulations are applicable to both bank 
and securities personnel. In addition, I believe the Watt 
Amendment has the added benefit of subjecting bank personnel to 
both NASD and Securities and Exchange Commission regulations.
    I also offered an amendment to eliminate a provision in 
Section 152 of Title I of the bill that would permit the 
Federal Reserve to determine what is a banking product, in 
consultation with the Securities and Exchange Commission (SEC). 
I believe that this provision is not balanced and should be 
rewritten. Under current law, banking and securities regulators 
have equal standing in determining what is a banking and what 
is a securities product. If there is any disagreement between 
regulators, their decisions are subject to judicial review. In 
many cases, these disagreements have been decided in the 
courts. The legislation would give preference to views of the 
Federal Reserve and would add an extra layer of determination 
prior to judicial review. While I ultimately withdrew this 
amendment, I believe this provision will have to be addressed 
prior to final passage of this comprehensive legislation. 
Regrettably my effort to address this issue was not successful, 
but I am convinced that we must provide parity between banking 
and securities products in order to secure passage of this 
bill.
    Overall, I believe this is a good start on a bill which 
should be enacted to ensure that our banking system and 
financial marketplace remain competitive and world leaders.

                                                       Ken Bentsen.
          SUPPLEMENTAL VIEWS ON THE HOME LOAN BANK PROVISIONS

    The Financial Services Competition Act of 1997 makes a 
number of substantial changes to the Federal Home Loan Bank 
System (``the System''). As the Chairman and Ranking member of 
the subcommittee with primary jurisdiction over the System, and 
as the original sponsors of the amendment that broadened the 
Act's changes to the System, our intent in offering Subtitle H 
focuses on the reasons Congress established the Federal Home 
Loan Bank System. The System began in 1932 primarily for the 
purpose of providing a source of intermediate- and long-term 
credit for state savings institutions to finance long-term 
residential mortgages, and to provide a source of liquidity for 
such institutions. Neither was available at the time. In 1989, 
Congress expanded on these basic elements to allow the System's 
membership to include other depository institutions, as well as 
credit unions.
    For many depository institutions, residential mortgage 
lending has now been incorporated into a product mix of 
community banking that typically provides a range of mortgage, 
consumer, and commercial loans in their communities. Smaller 
community banks tend to have a more difficult time accessing 
intermediate- and long-term funding. They, like savings 
associations in the 1930s, typically draw most of their funding 
from local deposits.
    It is our view that if smaller community banks are granted 
enhanced access to longer-term funding with a broader base of 
collateral for advances, they will be able to increase the 
level of financial competition in rural and inner-city markets. 
We believe that if the System is used prudently it can be a 
valuable resource to assist properly regulated, well-
capitalized banks (especially smaller community banks in rural 
areas and underserved neighborhoods), to provide a more stable 
funding source for customers who require intermediate- and 
longer-term funding.
    Subtitle H creates a System where all members will belong 
on a voluntary basis, and all will be treated equally. The 
capital required to support membership will be equalized for 
large and small members. Larger banks, which could not belong 
under the old System because of their asset size and the 
related capital requirements, will now find reduced barriers to 
membership, and increased incentives to join.
    The Act will, for example, reward the development of 
permanent capital. Members acquiring ``Class B'' stock (which 
carries a five year redemption), for instance, may receive 
dividend premiums over those paid for ``Class A'' stock, and 
may have preferential voting rights. Moreover, a member's 
capital structure plan may allow for lower stock purchase 
requirements with respect to shareholders that elect to 
purchase Class B stock.
    Subtitle H makes a number of fundamental changes to the 
advance program that are clear on their face. As a matter of 
practice, the Banks routinely require that advances be 
overcollateralized. It is our intent that, regarding the 
expanded collateral options that the Act presents, the Banks 
will continue to follow their normal procedures to assure that 
the System remains as risk averse as possible.
    The Act also transfers certain powers from the Federal 
Housing Finance Board to the Boards of the Federal Home Loan 
Banks themselves. The Banks will be empowered, for example, to 
make a number of supervisory decisions that were formerly 
within the discretion of the Finance Board. Likewise, the Act 
will clarify the role of the Office of Finance, as well as 
granting it more power regarding the consolidated debts of the 
System.
    With the REFCORP section, our intent was to equalize the 
proportion of each FHLBank's net income that is assessed to 
meet the REFCORP obligation. The assessment will be changed to 
a fixed, predictable percentage which complies with the 
requirements of the Budget Act.
    Regarding the investments section, we consider the primary 
function of the Federal Home Loan Bank System to be the 
provision of intermediate- and long-term funding for direct 
lending institutions, not substantial investment in the debt of 
other issuers.

                                   Richard A. Baker.
                                   Paul E. Kanjorski.
              SUPPLEMENTAL VIEW ON THE ``REVERSE BASKET''

    I strongly oppose the reverse basket that was adopted by a 
vote of 25-23 during the Banking Committee's markup of H.R. 10. 
The reverse basket would allow commercial firms to acquire a 
small, insured depository institution, and greatly expand the 
commercial control over small banks.
    It is imperative that financial modernization legislation 
recognize the need for creating a two-way street for those 
within the financial services industry. Current law prohibits 
insurance and securities firms from owning a bank despite the 
fact that their business is predominantly financial. However, 
recent actions taken by the federal banking agencies have 
opened the door for banks to enter the businesses of both the 
insurance and securities industries. As a result, we are now 
witnessing serious inequities among these competing industries.
    My modest, incremental basket was designed to create a 
level playing field for banking, securities and insurance firms 
to better compete in the global, financial markets. It achieves 
this by permitting a bank holding company to derive no more 
than 15% of its domestic gross revenues from non-financial 
activities. Since insurance and securities firms are currently 
allowed to affiliate with commercial firms, we developed the 
15% basket approach to allow banking and commercial 
organizations to affiliate within the holding company structure 
created by this legislation.
    The reverse basket does not constitute the ``incremental 
approach'' to banking and commerce. It goes too far, too fast. 
While there may come a time when such a basket is appropriate, 
in my judgement, now is not the time. This legislation makes 
wholesale changes to our financial services industry. We must 
take a reasoned and incremental approach. There are simply too 
many questions yet unanswered relating to the reverse basket.
    It has been said that the reverse basket is the mirror 
image of the small, incremental 15% basket envisioned in my 
proposal. However, it is unclear under what regulatory 
structure the commercial firm would operate. Although the bank 
would be subject to supervision, the commercial firm would not 
come under the Federal Reserve's umbrella oversight.
    Under my basket approach, banks could affiliate with 
commercial firms only in a bank holding company structure. 
Under the reverse basket, it is my understanding that the 
commercial firm would not have to operate under the Bank 
Holding Company Act. Under those circumstances, it is unclear 
what kind of enforcement, examination, supervision and capital 
standards would apply to the commercial firm. For example, how 
will we insure that risks and weaknesses at the commercial 
company are not passed onto the bank?
    Under our proposal, no more than 15% of the holding 
company's gross domestic revenues could be invested in a 
commercial company; consequently, the predominant activities of 
the Bank Holding Company would be financial in nature. Under 
the reverse basket, the bank could only constitute 15% of a 
commercial companies gross domestic revenues, meaning that the 
investments of the company owning a bank would be predominantly 
commercial. Therefore, will commercial ownership of banks lead 
to concentrations of credit or limited access to credit by 
competing commercial firms. If so, how do we prevent that?
    This proposal raises too many unanswered questions. 
Moreover, this is a key step that is likely to be unalterable. 
My 15% basket allows experimentation with banking and commerce 
and the opportunity to learn how to address any potential risks 
that may arise from the affiliation of banks with commercial 
firms on a limited scale. For these reasons, the most 
responsible course of action is to only permit those companies 
that are predominantly financial to have a modest commercial 
component.
    This legislation represents a giant step forward toward 
modernizing our financial system. However, given the 
implications of such a wholesale reform, we need to take it one 
step at a time. The 15% basket is the first and only step we 
should take at this time.

                                                     Marge Roukema.
                SUPPLEMENTAL VIEWS ON THE TWO-WAY BASKET

    The House Committee on Banking and Financial Services 
reported out legislation that will ensure that the American 
financial system is in a position to compete in the year 2000 
and beyond.
    The two so-called ``basket'' amendments adopted by the 
Committee are vital components of the effort to provide a legal 
playing field for all financial services providers. The first 
basket is designed to permit a qualifying bank holding company 
to invest 15% of its assets (based on gross domestic revenues) 
in a non-financial firm with assets that do not exceed $750 
million. This allows bank holding companies to take an equity 
position in a commercial firm and permits banks that affiliate 
with securities or insurance firms to continue with, or to 
establish, commercial affiliations.
    This basket approach does not address the situation of 
commercial firms which may have an interest in affiliating with 
an insured depository institution. Recognizing that 
commercially-owned, market funded lenders, and commercially-
owned, limited or special purpose banks are important providers 
of credit that deserve to participate in a modern financial 
services industry, the Committee adopted a second basket, the 
so-called ``two-way'' basket. This basket permits a commercial 
firm to own a qualifying bank holding company with one 
subsidiary bank whose assets may not exceed 15 percent of the 
consolidated gross domestic revenues of the non-financial 
activities of the parent. The qualifying bank holding company 
is limited to ownership of one bank which it may acquire either 
by converting an existing charter or by making a one-time 
acquisition of a bank that has under $500 million in assets and 
has been in existence for at least five years. Acquisitions of 
additional banks, with intent of merging them into the existing 
subsidiary bank are not permitted.
    The two-way basket provision adopted by the Committee 
permits companies which would otherwise be excluded from the 
bill to participate in a modernized financial system. True 
financial modernization must permit consumers and markets to 
determine what financial services products are offered, by 
whom, and in what manner. By giving all of the current 
participants in the financial services industry the ability to 
compete on at least a limited basis, the two-way basket takes 
another step towards rationalizing the financial services 
industry and improving market function.
    It must be stated that the United States has a long, 
successful tradition of mixing banking and commerce. The 
American experience has demonstrated that these affiliations 
can occur in a manner that is consistent with safety and 
soundness. In fact, those entities that have mixed banking and 
commerce have an unparalleled record of safety and soundness, 
have served their customers well, and have done so in a way 
that protects depositors, the FDIC, and ultimately the 
taxpayer. For example, diversified banks in the Great 
Depression survived at a greater rate than their counterparts, 
and Unitary Thrift Holding Companies were a source of strength 
during the thrift crisis. In fact, despite the controversy over 
the amendment, there is much greater experience in this country 
withcommercial ownership of insured institutions than there is 
with insured institutions owning commercial firms, yet that arrangement 
received the larger vote.
    Today, many commercial companies own or otherwise affiliate 
with financial companies, whether they are market funded 
finance companies, insurance companies, securities companies, 
credit card banks, limited purpose banks or savings 
associations. These companies do not create consumer needs, 
they simply respond to them. Commercially-owned financial 
companies, like banks, spend a lot of capital to acquire 
customers and want to be able to provide the services that 
their customers demand. The cost of delivering additional 
products to the consumer once a relationship is established is 
minimal.
    Additionally, the two-way basket permits non-financial 
companies to keep pace with technological progress. Technology 
is dramatically altering the way financial services are 
delivered, by whom, and even the nature of the product itself. 
It is likely that in order to participate in this exciting 
future financial services marketplace, a company will either 
have to be a bank or affiliate with a bank. In other words, 
many commercial companies that currently participate in the 
financial services arena will be effectively barred from 
offering many new products, such as smart cards. The effect of 
limited competition keeps prices at artificially high levels.
    Opposition has centered around arguments that commercial 
affiliations could lead to conglomeration which could cause 
bias in certain decisions relating to the extension of credit. 
Concerns were also raised about the Japanese and German 
experiences with banking and commerce. Other criticism centered 
on issues of risks to the depositors, the FDIC, and ultimately 
to the taxpayer. For the most part, these arguments represent 
the most extreme possibilities that might conceivably happen if 
there were no antitrust laws, no holding company requirements, 
a complete failure of regulation by the markets, rating 
agencies and government regulators combined with social, 
economic and regulatory traditions that feature the worst of 
Japan and Germany. To the extent there are real issues, they 
are addressed by current law, the Committee reported bill and 
the economic, social, and cultural realities of the United 
States. There are fundamental differences between Japan, 
Germany and the U.S. financial systems. The U.S. system of 
holding company regulation is unique--separately capitalized, 
functionally regulated affiliates combined with antitrust law 
and criminal provisions as well as fundamental cultural 
traditions render comparisons of little more than superficial 
value. Japan, in particular, does not offer even a semblance of 
U.S. style antitrust or shareholder protections and features 
``cross-shareholding'' and other cultural/economic arrangements 
which not only would never be tolerated in the United States 
but would in many cases be criminally actionable. Banking and 
commerce does not determine the economic, cultural, and social 
systems of a particular country, but is at most a reflection of 
them.
    The two-way basket was crafted with the concerns--both real 
and fallacious--about the mixing of banking and commerce in 
mind. Although we believe that these fears are unfounded, it 
was politically necessary to address them. The ``Depositor 
ProtectionRatio'', established by the two-way basket 
provisions, offers highly redundant protection for depositors, 
taxpayers and the financial system overall. Under this amendment, the 
insured depository institution could only account for up to 15% of the 
commercial parent's gross domestic revenue in any year. The effect of 
this limitation ensures that plenty of assets will always be available 
to keep the depository institution from becoming undercapitalized. 
Experience with commercially-owned, market funded institutions has 
shown that this type of feature alone is an outstanding safety and 
soundness device. Since the advent of the modern commercial paper 
market in the 1970s, there have been two arguable ``failures'' of 
market funded lenders. In the case of the one that was commercially-
owned, the losses were borne by the parent and its shareholders with no 
systemic or other impact. Commercially-owned insured institutions have 
a similar record. Contrast this experience with the performance of 
noncommercially-owned insured depositories over the same period.
    The bill approved by the Committee also contains other 
enhancements to current regulatory protections. First, in order 
to become a subsidiary of the qualifying financial services 
holding owned by a commercial enterprise, the insured bank must 
be well capitalized. Second, the bank must be well managed. 
Third, the bank must comply with all consumer protections, 
including the Community Reinvestment Act (CRA). Finally, the 
bill contains strong divestiture provisions which would require 
that the bank be sold if it was determined that any of the 
bank's affiliates posed any risk to the insured institution. In 
addition, nothing in the amendment would impair the authority 
of the Federal Reserve to prevent the acquisition of an insured 
institution by a qualifying bank holding company where there 
are demonstrable safety and soundness concerns over the 
suitability of the acquiring holding company, or to prevent the 
highly speculative possibility that the qualifying bank holding 
company is somehow a ``shell'', although we have received no 
clear explanation of how that circumstance would occur in 
reality.
    More specifically, before a commercial company can even 
affiliate with a bank under this provision, the commercial 
parent must apply and receive approval from the Federal Reserve 
Board. Once a bank affiliates with a commercial company as a 
subsidiary of a qualifying bank holding company, that bank will 
be subject to all of the same laws, firewalls, and safeguards 
applicable to any other full service insured bank. These 
safeguards include Federal Reserve Act (FRA) affiliate 
transaction restrictions, Prompt Corrective Action regulatory 
authority, capital requirements, and the strong divestiture 
provisions included in the bill approved by the Committee, to 
name a few.
    In terms of the alleged dangers arising from the 
speculative possibility of biased credit, the depositor 
protection ratio discussed above also ensures that the bank 
indirectly owned by a commercial enterprise will not result in 
an undue concentration of banking assets or resources. Due to 
the inherent size limitations based on the percentage of gross 
domestic revenue, a bank owned by a commercial firm could never 
attain the size level necessary to concentrate enough resources 
so that credit would no longer be widely available from other 
sources. Even today, if a bank would not lend to a qualified 
borrower based on some bias, there are many other lenders that 
are willing to make credit available. Thereality is that a 
lender unwilling to make loans to qualified borrowers is not only 
missing a business opportunity, but providing its competitors with an 
advantage.
    In regard to the concerns raised by the possibility that a 
commercially-owned bank will lend preferentially to its parent, 
existing law and provisions in the bill passed by the Committee 
adequately address this scenario. Under Sections 23A and 23B of 
the FRA, banks are limited to a total of no more than 20% of 
its net worth to all of its affiliates and no more than 10% of 
its net worth to any one affiliate. Furthermore, a bank is 
required to make any transactions with its affiliates at arms 
length. In other words, a bank cannot give an affiliate better 
terms and conditions than it gives any of its other customers 
in a similar transaction. A bank's management faces enormous 
personal liability if they violate the law or regulations 
concerning transactions with affiliates. Civil fines can be as 
high $1 million per day per violation. As stated earlier, these 
are not fines paid by the bank or commercial parent, but the 
individual involved in those transactions.
    Another criticism raised is that a bank's resources will be 
used to bail out its commercial parent. This argument also 
seems unsound. As mentioned above, any transactions with 
affiliates are closely regulated by the FRA. Even if such a 
transaction was not illegal, this scenario is unlikely. The 
reason this is unlikely to occur is because if the affiliated 
bank makes a loan at below market rates to a non-bank affiliate 
nothing is gained. The parent's profit is the bank's loss, and 
the net result to the bottom line is no gain. At the same time 
the company had a non-performing asset, the company could have 
made a profit by using that capital more effectively by lending 
elsewhere.
    In addition to its other benefits, the depositor protection 
ratio effectively guards against fears that foreign commercial 
companies would be allowed to buy up American banks. Since the 
15% test is based on gross domestic revenues, the foreign 
company would have to have substantially large U.S. operations 
in order to participate. It is also worth noting that nothing 
in H.R. 10 would prohibit a foreign bank, insurance company, or 
securities company from purchasing American banks. Today, 
foreign companies can purchase any American insurance company 
or securities company.
    For these reasons and many others, the Committee made the 
correct policy decision in permitting these highly constrained 
affiliations between commercial firms and insured institutions. 
As with interstate branching and many other modernization 
issues, nothing is as good or bad as the debate would lead the 
casual observer to believe, but these progressive steps are 
always worth taking.

                                   Richard A. Baker.
                                   John J. LaFalce.
                                   Bill McCollum.
         SUPPLEMENTAL VIEWS ON THE 15 PERCENT COMMERCIAL BASKET

    The House Committee on Banking and Financial Services 
reported out landmark legislation that will take meaningful 
steps toward rationalizing and modernizing the U.S. financial 
services system. This legislation is a challenge to changes in 
both the financial marketplace and regulatory structure; 
especially for agencies that have been given the chore of 
interpreting 60-year-old laws that are grossly impractical. In 
the absence of congressional action, the federal banking 
agencies and the industry have been forced to interpret 
outdated laws in a way that is responsive to today's market 
realities. Unfortunately, this has resulted in piecemeal 
regulatory reform that may not be in the best interest of the 
U.S. financial system as a whole. That is why we need to 
exercise our authority and get this legislation enacted into 
law.
    One of the most important provisions that was adopted by 
the Committee would permit a limited affiliation of banking and 
commerce. Under the provision, a bank holding company could 
derive 15% of its income based on domestic gross revenues in a 
non-financial firm with assets no greater than $750 million. 
Opposition to the basket was based on arguments that any such 
affiliation could lead to conglomeration that would hurt 
consumers and put small banks at a competitive disadvantage. 
These assertions are incorrect.
    This modest commercial ``basket'' would provide new sources 
of capital. Small and midsized companies--which create the 
majority of jobs and are the lifeblood in developing new 
products and services--often have difficulty accessing the 
capital markets or receiving credit from traditional lenders. 
Allowing financial services holding companies to make modest 
equity investments would provide these new, innovative, 
growing, or financially-troubled companies with a vital source 
of capital. Community reinvestment could also be enhanced 
because urban areas across America have a need for such capital 
investments.
    In addition, small banks would be given a greater 
opportunity to compete in this area. Recent data show that the 
majority of small banking organizations maintain an enormous 
amount of capital at the holding company level, yet current law 
prohibits them from investing in non-financial business. With a 
15% basket approach, these financial holding companies could 
make equity investments in their own community's businesses, 
thus contributing to a vibrant, healthy local economy and 
providing customers with a greater variety of services to 
choose from.
    Despite all this, the question was repeatedly raised during 
debate as to why we even need at 15% commercial basket for 
purposes of this legislation. The reason is simple. The stated 
purpose of the legislation is to ``eliminate the legal barriers 
to affiliation between depository institutions, securities 
firms, insurance companies'' and to ``enhance competition in 
the financial services industry.'' Insurance, securities and 
other diversified firms have never been prohibited from 
affiliating with commercial enterprises. So as a matter of 
equity, for any financial servicesmodernization legislation to 
accommodate the competitive needs of all financial services providers, 
it must recognize the status quo and permit some modest level of 
commercial affiliation.
    A 15% commercial basket provides a cushion to accommodate 
both normal growth of income from a non-financial enterprise as 
well as the potential decrease of revenues from the financial 
activities within the holding company structure. For example, 
securities firms' revenues are subject to normal business cycle 
fluctuations. In a market downturn, the revenues a holding 
company receives from its financial business may decrease, 
causing a shift in the relative mixture of a holding company's 
gross revenues. Therefore, the basket must be large enough to 
account for these normal fluctuations in the holding company's 
financial business.
    Furthermore, today's financial services marketplace simply 
changes too rapidly to legislate every time a new product is 
developed, a new service is offered, or a better delivery 
system is implemented. Therefore, this legislation must be 
flexible enough to ensure that financial services providers can 
continue to innovate and evolve without facing statutory and 
regulatory barriers.
    It must be emphasized that the commercial affiliation 
basket was crafted with safety and soundness in mind. Banking 
organizations already are, and would remain, subject to 
significant safeguards. They would remain subject to strict 
supervision and examination by the appropriate federal and 
state regulators. They would be subject to the Federal 
Reserve's affiliate transaction restrictions, which require 
institutions to over-collateralize loans to affiliates, and to 
enter into transactions with affiliates only on an arms-lengths 
basis. In addition, bank holding companies would be subject to 
the Federal Reserve's anti-tying provisions, which prevent 
banks and their affiliates from tying the pricing or 
availability of certain products or services to the granting of 
credit. Non-compliance with these regulations mandates stiff 
penalties.
    If institutions fall below their required capital levels or 
become financially troubled, they will be subject to prompt 
corrective action procedures that authorize the federal banking 
regulators to issue cease and desist orders or even close a 
bank.
    To further insure safety and soundness, banking 
organizations would be subject to even tougher safeguards under 
the Act. Affiliations with commercial firms are only permitted 
within a regulated bank holding company structure. This ensures 
that banks and commercial firms retain separate corporate 
identities, and demonstrates that a bank would neither own nor 
be owned by a commercial firm. In order for such affiliation to 
occur, each of the banks owned by the bank holding company 
would be required to be well-capitalized, to be well-managed, 
and have received an overall minimum ``satisfactory'' rating as 
a result of its most recent safety and soundness examination. 
Furthermore, the amendment includes an additional safeguard 
that would prohibit transactions with non-financial affiliates 
covered under section 23A of the Federal Reserve Act, such as 
loan transactions and asset purchases. Finally, if the Federal 
Reserve determines that there are financial or managerial 
problems impeding the safe and soundoperation of the 
organization, the agency has the authority to take enforcement action 
and even force the holding company to divest itself of its banks.
    Finally, the strict regulatory complement to the commercial 
basket is even further strengthened, because both the Federal 
Reserve and the National Council on Financial Services are 
given the authority to impose additional firewalls on these new 
banking organizations if they determine it is necessary.
    The 15% commercial basket is a modest, incremental step 
which creates a truly level playing field for banking 
organizations, securities firms, and insurance companies that 
falls squarely within the purposes of H.R. 10. It accomplishes 
this under the authority of a strict supervisory and regulatory 
structure that not only protects the consumers' interests, 
guards against conflicts of interest and economic 
concentrations of power, but also preserves the safety and 
soundness of our financial system as a whole.

                                   Marge Roukema.
                                   Spencer Bachus.
                                   Vince Snowbarger.
                                   Cynthia McKinney.
                                   Ken Bentsen.
                                   Carolyn Kilpatrick.
                                   Floyd H. Flake.
                                   Peter King.
                                   Richard H. Baker.
                                   Rick Hill.
                                   Steven C. LaTourette.
                                   Bruce F. Vento.
                                   Mike Castle.
                                   John J. LaFalce.
                                   Bill McCollum.
                                   Pete Sessions.
                           SUPPLEMENTAL VIEWS

    We support H.R. 10, the Financial Services Competition Act 
of 1997, as reported by the Committee. While the focus of the 
public debate of this legislation has been the opening of the 
financial services marketplace to new competition and the 
impact on the various sectors of the financial services 
industry, equally important to us is the impact of this 
legislation on our constituents, the consumer in this new 
financial landscape.
    The purposes of this legislation, crafted in large part by 
Congressman Watt, state that this bill is designed to ``enhance 
the availability of financial services to citizens of all 
economic circumstances and in all geographic areas'' and 
``enhance the ability of depository institutions to meet the 
capital and credit needs of all citizens and communities, 
including underserved communities and populations.'' The final 
version of this bill includes crucial provisions to make these 
important goals a reality.
    We commend Chairman Leach, working on a bipartisan basis, 
for the inclusion of important consumer and community 
protection provisions in the Chairman's mark-up substitute. 
These provisions laid a solid framework upon which the 
Committee was able to build.
    The requirement that all of the holding company's 
subsidiary depository institutions have at least a 
``satisfactory'' Community Reinvestment Act (CRA) rating in 
order to be a ``qualifying bank holding company'' appropriately 
recognizes that the benefits of this legislation require a 
solid commitment to meeting local credit needs.
    The extension of the CRA to the new Wholesale Financial 
Institutions (WFIs) is appropriate. While deposits to a WFI 
will not be insured, these new institutions will be members of 
the Federal Reserve System with the same rights and privileges 
as a State member insured bank. This extension of rights and 
privileges must be accompanied by the same responsibilities 
including meeting community credit needs.
    As Congress moves forward with this broad financial 
services modernization legislation, safeguards must be in place 
to insure that consumers are not confused about new products 
and their status regarding deposit insurance coverage or the 
lack thereof, the improper disclosure of confidential consumer 
information and potential conflicts of interest.
    These provisions, included in the Chairman's mark, are 
important safeguards. However, the Committee properly added 
additional consumer and community protections. These new 
provisions are a key component of any financial modernization 
legislation, insuring an adequate level of consumer protections 
and credit availability.
    Specifically we support.
    Kennedy amendment--The Kennedy amendment would reinforce 
federal laws designed to combat insurance redlining. A benefit 
of this legislation is increased competition and the expanded 
availability of products and services. Further safeguards 
against redlining will ensure that neighborhoods are not denied 
the availability of insurance. As a condition of the 
affiliation authority and powers in H.R. 10, the Kennedy 
amendment would require a bank holding company affiliate 
engaging in insurance sales or underwriting to comply with the 
terms of a Fair Housing Act court order or settlement.
    LaFalce amendments--The LaFalce amendment substantially 
expands upon the consumer safeguards originally included in the 
legislation. As a financial modernization law is implemented, 
banks will increasingly offer a myriad of products and 
services. Some products will carry FDIC insurance, others will 
be uninsured. It is crucial that the consumer be fully informed 
about the nature of the product and be aware of any potential 
risks associated with it. The LaFalce amendment establishes 
clear disclosure requirements and other consumer protections. 
This amendment requires banks to disclose the fact that a 
product is not insured; imposes physical segregation 
requirements on deposit-taking activities and non-deposit 
product sales activities; establishes suitability standards to 
ensure products are suitable for the consumer; creates a 
consumer grievance mechanism; and requires a study on privacy 
issues related to financial modernization.
    Vento amendments--The Vento amendments on meeting community 
credit needs and branch closings incorporate existing 
provisions of the Riegle Neal Interstate Banking and Branching 
Law into this legislation. The Vento amendment puts in place 
protections to assure that banks acquired under this bill would 
not drain deposits out of a state. The amendment requires that 
an out-of-state controlled bank continues to make loans in the 
host state, with strong sanctions available to the regulator 
for enforcement. In cases of branch closings, the amendment 
requires federal regulators to work with local communities to 
obtain adequate alternative services for the affected 
community.
    H.R. 10 will result in a consolidation of the financial 
services industry. The Vento amendment requiring the 
appropriate banking regulators to maintain market related data 
and the annual report on concentration of financial resources 
will provide Congress with the needed information to ensure 
that community credit needs are being met.
    Waters amendment--The Waters amendment adds an important 
protection to ensure that the benefits of financial 
modernization are available to consumers of all economic means. 
The Waters amendment conditions the ability of bank holding 
companies to affiliate and engage in the new powers under this 
bill on the record of the bank providing low-cost, lifeline 
services. These lifeline accounts are crucial if H.R. 10 is to 
meet its stated goal of insuring the availability of financial 
services to all citizens. Certainly, these types of lifeline 
accounts interface well with the existing mandates in federal 
law regarding the electronic payment of benefits and retirement 
compensation programs.
    H.R. 10 was approved on a bi-partisan basis--all ten 
Democratic votes were needed to favorably report this 
legislation. Further action on financial modernization will be 
successful only if that bipartisan spirit of cooperation 
remains. We remain committed to achieving comprehensive 
financial modernization legislation. Our financial services 
network must modernize and rationalize to compete in the global 
marketplace. However, as this legislation moves our financial 
industries forward into the 21st Century, Congress cannot push 
the interests of consumers and local communities back into the 
19th Century. It is our strong view that consumer and community 
lending protections must remain an integral component of any 
modernization legislation considered by the full House.

                                   Bruce F. Vento.
                                   Charles E. Schumer.
                                   Floyd H. Flake.
                                   Cynthia McKinney.
                                   Darlene Hooley.
                                   John J. LaFalce.
                                   Joseph Kennedy.
                                   Melvin L. Watt.
                                   Jim Maloney.
                                   Ken Bentsen.
                       VIEWS OF HENRY B. GONZALEZ

    This Financial Services Competition Act of 1997, H.R. 10, 
as reported by the Committee, is a seriously flawed bill which 
will endanger the safety and soundness of our financial system 
and expose the taxpayer-guaranteed deposit insurance funds to 
excessive risks. This bill will encourage large scale 
conglomeration in the financial and nonfinancial industries, 
resulting in no benefit and considerable harm to consumers and 
working families. It creases risks that regulators fear, do not 
fully understand, and may be unable to control.
    I have previously stated that any responsible approach to 
financial services modernization legislation must include the 
following elements: Deposit insurance reform to protect 
taxpayers from another bailout; regulatory restructuring to 
ensure that supervisory capabilities are adequate; consumer 
protections to prevent fraud and abuse; community reinvestment 
enhancements to ensure that local communities are not neglected 
by the huge conglomerates; and strong affiliation safeguards 
like enhanced firewalls, to guard against conflicts of interest 
and protect insured deposits. The Committee's product either 
ignores or falls short on all points.
    In addition, the bill will allow commercial enterprises to 
own and control banks. In particular, the Committee adopted a 
so-called ``reverse basket'' amendment which exempts certain 
unitary bank holding companies from the Bank Holding Company 
Act. This is a very risky and dangerous step to take. Even 
unitary thrift holding companies, while able to have commercial 
affiliations, have always been subject to the Home Owners Loan 
Act and full regulation by the Office of Thrift Supervision. 
Under this bill, an exempted unitary bank holding company could 
own and control an insured depository institution without any 
regulatory supervision. This is a catastrophe waiting to 
happen, and it is the taxpayers who will be forced to pay for 
the clean-up.
    In sum, the bill is wholly an attempt to serve all the 
competing private interests, and in so doing, it does great 
harm to the public interest. The Garn-St Germain Act of 1982 
also took that approach--with disastrous and expensive results. 
Like that and other special interest legislation, H.R. 10 is 
likely to destabilize our only recently rehabilitated financial 
system and put deposit insurance at grave risk. Modest and 
carefully thought out reforms are needed, but this bill is 
radical and reckless.

                                                    Henry Gonzalez.
                         OTHER DISSENTING VIEW

    While I support financial modernization and many of the 
features of this bill, there remain certain fundamental flaws 
with this approach. In order to allow for the markets to 
function properly--and to internalize properly the risk that 
businesses choose to take--governmental regulations should be 
relaxed not increased. Federal banking regulations and other 
restrictions stifle the dynamic growth of new financial 
products and services that are fundamental to enhance the 
success of the U.S. financial services sector.
    Genuine financial modernizations would allow and encourage 
the introduction and development of new financial service 
products and structures not restrict financial providers' 
current activities and eliminate present structures. As new 
hybrid financial service products are developed in response to 
market demand, government should not thwart the consumer's 
ability to enjoy these new products.
    However, the proposed new National Council on Financial 
Services adds a new layer not only of regulations but of 
regulators. Instead of relying more on private market 
regulation and deferring to state regulation of insurance, this 
bill would enhance the power of Federal regulators over the 
market. By mixing banking and commerce and increasing the scope 
of Federal banking regulators, including the Federal Reserve, 
commercial enterprises will come under Fed supervision. The 
overreach of the government into the lives and activities of 
individuals and businesses will grow as surely as the power and 
scope of the new Council will grow. The result will serve to 
stifle the innovation that is the intended purpose of this 
bill.
    While the bill does allow for greater flexibility of some 
structures and activities, it does so in an arbitrary fashion. 
Companies should not have to worry about limiting their growth 
and service offerings based on an ad hoc determination using a 
so-called ``basket'' approach. The reforms that this bill makes 
do not sufficiently address the safety and soundness of deposit 
insurance and the payments system and, ultimately, taxpayer 
liability.

                                                          Ron Paul.

                                
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