[House Report 106-434]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-434

======================================================================



 
                         GRAMM-LEACH-BLILEY ACT

                                _______
                                

                November 2, 1999.--Ordered to be printed

                                _______


  Mr. Leach, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                         [To accompany S. 900]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendments of the House to the bill (S. 
900), to enhance competition in the financial services industry 
by providing a prudential framework for the affiliation of 
banks, securities firms, insurance companies, and other 
financial service providers, and for other purposes, having 
met, after full and free conference, have agreed to recommend 
and do recommend to their respective Houses as follows:
      That the Senate recede from its disagreement to the 
amendment of the House to the text of the bill and agree to the 
same with an amendment as follows:
      In lieu of the matter proposed to be inserted by the 
House amendment, insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Gramm-
Leach-Bliley Act''.
    (b) Table of Contents.--The table of contents for this Act 
is as follows:
Sec. 1. Short title; table of contents.

  TITLE I--FACILITATING AFFILIATION AMONG BANKS, SECURITIES FIRMS, AND 
                           INSURANCE COMPANIES

                        Subtitle A--Affiliations

Sec. 101. Glass-Steagall Act repeals.
Sec. 102. Activity restrictions applicable to bank holding companies 
          that are not financial holding companies.
Sec. 103. Financial activities.
Sec. 104. Operation of State law.
Sec. 105. Mutual bank holding companies authorized.
Sec. 106. Prohibition on deposit production offices.
Sec. 107. Cross marketing restriction; limited purpose bank relief; 
          divestiture.
Sec. 108. Use of subordinated debt to protect financial system and 
          deposit funds from ``too big to fail'' institutions.
Sec. 109. Study of financial modernization's effect on the accessibility 
          of small business and farm loans.

     Subtitle B--Streamlining Supervision of Bank Holding Companies

Sec. 111. Streamlining bank holding company supervision.
Sec. 112. Authority of State insurance regulator and Securities and 
          Exchange Commission.
Sec. 113. Role of the Board of Governors of the Federal Reserve System.
Sec. 114. Prudential safeguards.
Sec. 115. Examination of investment companies.
Sec. 116. Elimination of application requirement for financial holding 
          companies.
Sec. 117. Preserving the integrity of FDIC resources.
Sec. 118. Repeal of savings bank provisions in the Bank Holding Company 
          Act of 1956.
Sec. 119. Technical amendment.

               Subtitle C--Subsidiaries of National Banks

Sec. 121. Subsidiaries of national banks.
Sec. 122. Consideration of merchant banking activities by financial 
          subsidiaries.

                Subtitle D--Preservation of FTC Authority

Sec. 131. Amendment to the Bank Holding Company Act of 1956 to modify 
          notification and post-approval waiting period for section 3 
          transactions.
Sec. 132. Interagency data sharing.
Sec. 133. Clarification of status of subsidiaries and affiliates.

                     Subtitle E--National Treatment

Sec. 141. Foreign banks that are financial holding companies.
Sec. 142. Representative offices.

                 Subtitle F--Direct Activities of Banks

Sec. 151. Authority of national banks to underwrite certain municipal 
          bonds.

                       Subtitle G--Effective Date

Sec. 161. Effective date.

                     TITLE II--FUNCTIONAL REGULATION

                     Subtitle A--Brokers and Dealers

Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Registration for sales of private securities offerings.
Sec. 204. Information sharing.
Sec. 205. Treatment of new hybrid products.
Sec. 206. Definition of identified banking product.
Sec. 207. Additional definitions.
Sec. 208. Government securities defined.
Sec. 209. Effective date.
Sec. 210. Rule of construction.

             Subtitle B--Bank Investment Company Activities

Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Lending to an affiliated investment company.
Sec. 213. Independent directors.
Sec. 214. Additional SEC disclosure authority.
Sec. 215. Definition of broker under the Investment Company Act of 1940.
Sec. 216. Definition of dealer under the Investment Company Act of 1940.
Sec. 217. Removal of the exclusion from the definition of investment 
          adviser for banks that advise investment companies.
Sec. 218. Definition of broker under the Investment Advisers Act of 
          1940.
Sec. 219. Definition of dealer under the Investment Advisers Act of 
          1940.
Sec. 220. Interagency consultation.
Sec. 221. Treatment of bank common trust funds.
Sec. 222. Statutory disqualification for bank wrongdoing.
Sec. 223. Conforming change in definition.
Sec. 224. Conforming amendment.
Sec. 225. Effective date.

Subtitle C--Securities and Exchange Commission Supervision of Investment 
                         Bank Holding Companies

Sec. 231. Supervision of investment bank holding companies by the 
          Securities and Exchange Commission.

              Subtitle D--Banks and Bank Holding Companies

Sec. 241. Consultation.

                          TITLE III--INSURANCE

                Subtitle A--State Regulation of Insurance

Sec. 301. Functional regulation of insurance.
Sec. 302. Insurance underwriting in national banks.
Sec. 303. Title insurance activities of national banks and their 
          affiliates.
Sec. 304. Expedited and equalized dispute resolution for Federal 
          regulators.
Sec. 305. Insurance customer protections.
Sec. 306. Certain State affiliation laws preempted for insurance 
          companies and affiliates.
Sec. 307. Interagency consultation.
Sec. 308. Definition of State.

             Subtitle B--Redomestication of Mutual Insurers

Sec. 311. General application.
Sec. 312. Redomestication of mutual insurers.
Sec. 313. Effect on State laws restricting redomestication.
Sec. 314. Other provisions.
Sec. 315. Definitions.
Sec. 316. Effective date.

    Subtitle C--National Association of Registered Agents and Brokers

Sec. 321. State flexibility in multistate licensing reforms.
Sec. 322. National Association of Registered Agents and Brokers.
Sec. 323. Purpose.
Sec. 324. Relationship to the Federal Government.
Sec. 325. Membership.
Sec. 326. Board of directors.
Sec. 327. Officers.
Sec. 328. Bylaws, rules, and disciplinary action.
Sec. 329. Assessments.
Sec. 330. Functions of the NAIC.
Sec. 331. Liability of the association and the directors, officers, and 
          employees of the association.
Sec. 332. Elimination of NAIC oversight.
Sec. 333. Relationship to State law.
Sec. 334. Coordination with other regulators.
Sec. 335. Judicial review.
Sec. 336. Definitions.

           Subtitle D--Rental Car Agency Insurance Activities

Sec. 341. Standard of regulation for motor vehicle rentals.

          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

Sec. 401. Prevention of creation of new S&L holding companies with 
          commercial affiliates.

                            TITLE V--PRIVACY

        Subtitle A--Disclosure of Nonpublic Personal Information

Sec. 501. Protection of nonpublic personal information.
Sec. 502. Obligations with respect to disclosures of personal 
          information.
Sec. 503. Disclosure of institution privacy policy.
Sec. 504. Rulemaking.
Sec. 505. Enforcement.
Sec. 506. Protection of Fair Credit Reporting Act.
Sec. 507. Relation to State laws.
Sec. 508. Study of information sharing among financial affiliates.
Sec. 509. Definitions.
Sec. 510. Effective date.

         Subtitle B--Fraudulent Access to Financial Information

Sec. 521. Privacy protection for customer information of financial 
          institutions.
Sec. 522. Administrative enforcement.
Sec. 523. Criminal penalty.
Sec. 524. Relation to State laws.
Sec. 525. Agency guidance.
Sec. 526. Reports.
Sec. 527. Definitions.

          TITLE VI--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

Sec. 601. Short title.
Sec. 602. Definitions.
Sec. 603. Savings association membership.
Sec. 604. Advances to members; collateral.
Sec. 605. Eligibility criteria.
Sec. 606. Management of banks.
Sec. 607. Resolution Funding Corporation.
Sec. 608. Capital structure of Federal home loan banks.

                       TITLE VII--OTHER PROVISIONS

                       Subtitle A--ATM Fee Reform

Sec. 701. Short title.
Sec. 702. Electronic fund transfer fee disclosures at any host ATM.
Sec. 703. Disclosure of possible fees to consumers when ATM card is 
          issued.
Sec. 704. Feasibility study.
Sec. 705. No liability if posted notices are damaged.

                   Subtitle B--Community Reinvestment

Sec. 711. CRA sunshine requirements.
Sec. 712. Small bank regulatory relief.
Sec. 713. Federal Reserve Board study of CRA lending.
Sec. 714. Preserving the Community Reinvestment Act of 1977.
Sec. 715. Responsiveness to community needs for financial services.

                Subtitle C--Other Regulatory Improvements

Sec. 721. Expanded small bank access to S corporation treatment.
Sec. 722. ``Plain language'' requirement for Federal banking agency 
          rules.
Sec. 723. Retention of ``Federal'' in name of converted Federal savings 
          association.
Sec. 724. Control of bankers' banks.
Sec. 725. Provision of technical assistance to microenterprises.
Sec. 726. Federal Reserve audits.
Sec. 727. Authorization to release reports.
Sec. 728. General Accounting Office study of conflicts of interest.
Sec. 729. Study and report on adapting existing legislative requirements 
          to online banking and lending.
Sec. 730. Clarification of source of strength doctrine.
Sec. 731. Interest rates and other charges at interstate branches.
Sec. 732. Interstate branches and agencies of foreign banks.
Sec. 733. Fair treatment of women by financial advisers.
Sec. 734. Membership of loan guarantee boards.
Sec. 735. Repeal of stock loan limit in Federal Reserve Act.
Sec. 736. Elimination of SAIF and DIF special reserves.
Sec. 737. Bank officers and directors as officers and directors of 
          public utilities.
Sec. 738. Approval for purchases of securities.
Sec. 739. Optional conversion of Federal savings associations.
Sec. 740. Grand jury proceedings.

 TITLE I--FACILITATING AFFILIATION AMONG BANKS, SECURITIES FIRMS, AND 
                          INSURANCE COMPANIES

                        Subtitle A--Affiliations

SEC. 101. GLASS-STEAGALL ACT REPEALS.

    (a) Section 20 Repealed.--Section 20 of the Banking Act of 
1933 (12 U.S.C. 377) (commonly referred to as the ``Glass-
Steagall Act'') is repealed.
    (b) Section 32 Repealed.--Section 32 of the Banking Act of 
1933 (12 U.S.C. 78) is repealed.

SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK HOLDING COMPANIES 
                    THAT ARE NOT FINANCIAL HOLDING COMPANIES.

    (a) In General.--Section 4(c)(8) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(c)(8)) is amended to read 
as follows:
            ``(8) shares of any company the activities of which 
        had been determined by the Board by regulation or order 
        under this paragraph as of the day before the date of 
        the enactment of the Gramm-Leach-Bliley Act, to be so 
        closely related to banking as to be a proper incident 
        thereto (subject to such terms and conditions contained 
        in such regulation or order, unless modified by the 
        Board);''.
    (b) Conforming Changes to Other Statutes.--
            (1) Amendment to the bank holding company act 
        amendments of 1970.--Section 105 of the Bank Holding 
        Company Act Amendments of 1970 (12 U.S.C. 1850) is 
        amended by striking ``, to engage directly or 
        indirectly in a nonbanking activity pursuant to section 
        4 of such Act,''.
            (2) Amendment to the bank service company act.--
        Section 4(f) of the Bank Service Company Act (12 U.S.C. 
        1864(f)) is amended by inserting before the period at 
        the end the following: ``as of the day before the date 
        of the enactment of the Gramm-Leach-Bliley Act''.

SEC. 103. FINANCIAL ACTIVITIES.

    (a) In General.--Section 4 of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1843) is amended by adding at the end the 
following new subsections:
    ``(k) Engaging in Activities That Are Financial in 
Nature.--
            ``(1) In general.--Notwithstanding subsection (a), 
        a financial holding company may engage in any activity, 
        and may acquire and retain the shares of any company 
        engaged in any activity, that the Board, in accordance 
        with paragraph (2), determines (by regulation or 
        order)--
                    ``(A) to be financial in nature or 
                incidental to such financial activity; or
                    ``(B) is complementary to a financial 
                activity and does not pose a substantial risk 
                to the safety or soundness of depository 
                institutions or the financial system generally.
            ``(2) Coordination between the board and the 
        secretary of the treasury.--
                    ``(A) Proposals raised before the board.--
                            ``(i) Consultation.--The Board 
                        shall notify the Secretary of the 
                        Treasury of, and consult with the 
                        Secretary of the Treasury concerning, 
                        any request, proposal, or application 
                        under this subsection for a 
                        determination of whether an activity is 
                        financial in nature or incidental to a 
                        financial activity.
                            ``(ii) Treasury view.--The Board 
                        shall not determine that any activity 
                        is financial in nature or incidental to 
                        a financial activity under this 
                        subsection if the Secretary of the 
                        Treasury notifies the Board in writing, 
                        not later than 30 days after the date 
                        of receipt of the notice described in 
                        clause (i) (or such longer period as 
                        the Board determines to be appropriate 
                        under the circumstances) that the 
                        Secretary of the Treasury believes that 
                        the activity is not financial in nature 
                        or incidental to a financial activity 
                        or is not otherwise permissible under 
                        this section.
                    ``(B) Proposals raised by the treasury.--
                            ``(i) Treasury recommendation.--The 
                        Secretary of the Treasury may, at any 
                        time, recommend in writing that the 
                        Board find an activity to be financial 
                        in nature or incidental to a financial 
                        activity.
                            ``(ii) Time period for board 
                        action.--Not later than 30 days after 
                        the date of receipt of a written 
                        recommendation from the Secretary of 
                        the Treasury under clause (i) (or such 
                        longer period as the Secretary of the 
                        Treasury and the Board determine to be 
                        appropriate under the circumstances), 
                        the Board shall determine whether to 
                        initiate a public rulemaking proposing 
                        that the recommended activity be found 
                        to be financial in nature or incidental 
                        to a financial activity under this subsection, 
                        and shall notify the Secretary of the Treasury 
                        in writing of the determination of the Board 
                        and, if the Board determines not to seek public 
                        comment on the proposal, the reasons for that 
                        determination.
            ``(3) Factors to be considered.--In determining 
        whether an activity is financial in nature or 
        incidental to a financial activity, the Board shall 
        take into account--
                    ``(A) the purposes of this Act and the 
                Gramm-Leach-Bliley Act;
                    ``(B) changes or reasonably expected 
                changes in the marketplace in which financial 
                holding companies compete;
                    ``(C) changes or reasonably expected 
                changes in the technology for delivering 
                financial services; and
                    ``(D) whether such activity is necessary or 
                appropriate to allow a financial holding 
                company and the affiliates of a financial 
                holding company to--
                            ``(i) compete effectively with any 
                        company seeking to provide financial 
                        services in the United States;
                            ``(ii) efficiently deliver 
                        information and services that are 
                        financial in nature through the use of 
                        technological means, including any 
                        application necessary to protect the 
                        security or efficacy of systems for the 
                        transmission of data or financial 
                        transactions; and
                            ``(iii) offer customers any 
                        available or emerging technological 
                        means for using financial services or 
                        for the document imaging of data.
            ``(4) Activities that are financial in nature.--For 
        purposes of this subsection, the following activities 
        shall be considered to be financial in nature:
                    ``(A) Lending, exchanging, transferring, 
                investing for others, or safeguarding money or 
                securities.
                    ``(B) Insuring, guaranteeing, or 
                indemnifying against loss, harm, damage, 
                illness, disability, or death, or providing and 
                issuing annuities, and acting as principal, 
                agent, or broker for purposes of the foregoing, 
                in any State.
                    ``(C) Providing financial, investment, or 
                economic advisory services, including advising 
                an investment company (as defined in section 3 
                of the Investment Company Act of 1940).
                    ``(D) Issuing or selling instruments 
                representing interests in pools of assets 
                permissible for a bank to hold directly.
                    ``(E) Underwriting, dealing in, or making a 
                market in securities.
                    ``(F) Engaging in any activity that the 
                Board has determined, by order or regulation 
                that is in effect on the date of the enactment 
                of the Gramm-Leach-Bliley Act, to be so closely 
                related to banking or managing or controlling 
                banks as to be a proper incident thereto 
                (subject to the same terms and conditions 
                contained in such order or regulation, unless 
                modified by the Board).
                    ``(G) Engaging, in the United States, in 
                any activity that--
                            ``(i) a bank holding company may 
                        engage in outside of the United States; 
                        and
                            ``(ii) the Board has determined, 
                        under regulations prescribed or 
                        interpretations issued pursuant to 
                        subsection (c)(13) (as in effect on the 
                        day before the date of the enactment of 
                        the Gramm-Leach-Bliley Act) to be usual 
                        in connection with the transaction of 
                        banking or other financial operations 
                        abroad.
                    ``(H) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 
                1 or more entities (including entities, other 
                than a depository institution or subsidiary of 
                a depository institution, that the bank holding 
                company controls), or otherwise, shares, 
                assets, or ownership interests (including debt 
                or equity securities, partnership interests, 
                trust certificates, or other instruments 
                representing ownership) of a company or other 
                entity, whether or not constituting control of 
                such company or entity, engaged in any activity 
                not authorized pursuant to this section if--
                            ``(i) the shares, assets, or 
                        ownership interests are not acquired or 
                        held by a depository institution or 
                        subsidiary of a depository institution;
                            ``(ii) such shares, assets, or 
                        ownership interests are acquired and 
                        held by--
                                    (I) a securities affiliate 
                                or an affiliate thereof; or
                                    (II) an affiliate of an 
                                insurance company described in 
                                subparagraph (I)(ii) that 
                                provides investment advice to 
                                an insurance company and is 
                                registered pursuant to the 
                                Investment Advisers Act of 
                                1940, or an affiliate of such 
                                investment adviser;
                        as part of a bona fide underwriting or 
                        merchant or investment banking 
                        activity, including investment 
                        activities engaged in for the purpose 
                        of appreciation and ultimate resale or 
                        disposition of the investment;
                            ``(iii) such shares, assets, or 
                        ownership interests are held for a 
                        period of time to enable the sale or 
                        disposition thereof on a reasonable 
                        basis consistent with the financial 
                        viability of the activities described 
                        in clause (ii); and
                            ``(iv) during the period such 
                        shares, assets, or ownership interests 
                        are held, the bank holding company does 
                        not routinely manage or operate such 
                        company or entity except as may be 
                        necessary or required to obtain a 
                        reasonable return on investment upon 
                        resale or disposition.
                    ``(I) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 
                1 or more entities (including entities, other 
                than a depository institution or subsidiary of 
                a depository institution, that the bank holding 
                company controls) or otherwise, shares, assets, 
                or ownership interests (including debt or 
                equity securities, partnership interests, trust 
                certificates or other instruments representing 
                ownership) of a company or other entity, 
                whether or not constituting control of such 
                company or entity, engaged in any activity not 
                authorized pursuant to this section if--
                            ``(i) the shares, assets, or 
                        ownership interests are not acquired or 
                        held by a depository institution or a 
                        subsidiary of a depository institution;
                            ``(ii) such shares, assets, or 
                        ownership interests are acquired and 
                        held by an insurance company that is 
                        predominantly engaged in underwriting 
                        life, accident and health, or property 
                        and casualty insurance (other than 
                        credit-related insurance) or providing 
                        and issuing annuities;
                            ``(iii) such shares, assets, or 
                        ownership interests represent an 
                        investment made in the ordinary course 
                        of business of such insurance company 
                        in accordance with relevant State law 
                        governing such investments; and
                            ``(iv) during the period such 
                        shares, assets, or ownership interests 
                        are held, the bank holding company does 
                        not routinely manage or operate such 
                        company except as may be necessary or 
                        required to obtain a reasonable return 
                        on investment.
            ``(5) Actions required.--
                    ``(A) In general.--The Board shall, by 
                regulation or order, define, consistent with 
                the purposes of this Act, the activities 
                described in subparagraph (B) as financial in 
                nature, and the extent to which such activities 
                are financial in nature or incidental to a 
                financial activity.
                    ``(B) Activities.--The activities described 
                in this subparagraph are as follows:
                            ``(i) Lending, exchanging, 
                        transferring, investing for others, or 
                        safeguarding financial assets other 
                        than money or securities.
                            ``(ii) Providing any device or 
                        other instrumentality for transferring 
                        money or other financial assets.
                            ``(iii) Arranging, effecting, or 
                        facilitating financial transactions for 
                        the account of third parties.
            ``(6) Required notification.--
                    ``(A) In general.--A financial holding 
                company that acquires any company or commences 
                any activity pursuant to this subsection shall 
                provide written notice to the Board describing 
                the activity commenced or conducted by the 
                company acquired not later than 30 calendar 
                days after commencing the activity or 
                consummating the acquisition, as the case may 
                be.
                    ``(B) Approval not required for certain 
                financial activities.--Except as provided in 
                subsection (j) with regard to the acquisition 
                of a savings association, a financial holding 
                company may commence any activity, or acquire 
                any company, pursuant to paragraph (4) or any 
                regulation prescribed or order issued under 
                paragraph (5), without prior approval of the 
                Board.
            ``(7) Merchant banking activities.--
                    ``(A) Joint regulations.--The Board and the 
                Secretary of the Treasury may issue such 
                regulations implementing paragraph (4)(H), 
                including limitations on transactions between 
                depository institutions and companies 
                controlled pursuant to such paragraph, as the 
                Board and the Secretary jointly deem 
                appropriate to assure compliance with the 
                purposes and prevent evasions of this Act and 
                the Gramm-Leach-Bliley Act and to protect 
                depository institutions.
                    ``(B) Sunset of restrictions on merchant 
                banking activities of financial subsidiaries.--
                The restrictions contained in paragraph (4)(H) 
                on the ownership and control of shares, assets, 
                or ownership interests by or on behalf of a 
                subsidiary of a depository institution shall 
                not apply to a financial subsidiary (as defined 
                in section 5136A of the Revised Statutes of the 
                United States) of a bank, if the Board and the 
                Secretary of the Treasury jointly authorize 
                financial subsidiaries of banks to engage in 
                merchant banking activities pursuant to section 
                122 of the Gramm-Leach-Bliley Act.
    ``(l) Conditions for Engaging in Expanded Financial 
Activities.--
            ``(1) In general.--Notwithstanding subsection (k), 
        (n), or (o), a bank holding company may not engage in 
        any activity, or directly or indirectly acquire or 
        retain shares of any company engaged in any activity, 
        under subsection (k), (n), or (o), other than 
        activities permissible for any bank holding company 
        under subsection (c)(8), unless--
                    ``(A) all of the depository institution 
                subsidiaries of the bank holding company are 
                well capitalized;
                    ``(B) all of the depository institution 
                subsidiaries of the bank holding company are 
                well managed; and
                    ``(C) the bank holding company has filed 
                with the Board--
                            ``(i) a declaration that the 
                        company elects to be a financial 
                        holding company to engage in activities 
                        or acquire and retain shares of a 
                        company that were not permissible for a 
                        bank holding company to engage in or 
                        acquire before the enactment of the 
                        Gramm-Leach-Bliley Act; and
                            ``(ii) a certification that the 
                        company meets the requirements of 
                        subparagraphs (A) and (B).
            ``(2) CRA requirement.--Notwithstanding subsection 
        (k) or (n) of this section, section 5136A(a) of the 
        Revised Statutes of the United States, or section 46(a) 
        of the Federal Deposit Insurance Act, the appropriate 
        Federal banking agency shall prohibit a financial 
        holding company or any insured depository institution 
        from--
                    ``(A) commencing any new activity under 
                subsection (k) or (n) of this section, section 
                5136A(a) of the Revised Statutes of the United 
                States, or section 46(a) of the Federal Deposit 
                Insurance Act; or
                    ``(B) directly or indirectly acquiring 
                control of a company engaged in any activity 
                under subsection (k) or (n) of this section, 
                section 5136A(a) of the Revised Statutes of the 
                United States, or section 46(a) of the Federal 
                Deposit Insurance Act (other than an investment 
                made pursuant to subparagraph (H) or (I) of 
                subsection (k)(4), or section 122 of the Gramm-
                Leach-Bliley Act, or under section 46(a) of the 
                Federal Deposit Insurance Act by reason of such 
                section 122, by an affiliate already engaged in 
                activities under any such provision);
        if any insured depository institution subsidiary of 
        such financial holding company, or the insured 
        depository institution or any of its insured depository 
        institution affiliates, has received in its most recent 
        examination under the Community Reinvestment Act of 
        1977, a rating of less than `satisfactory record of 
        meeting community credit needs'.
            ``(3) Foreign banks.--For purposes of paragraph 
        (1), the Board shall apply comparable capital and 
        management standards to a foreign bank that operates a 
        branch or agency or owns or controls a commercial 
        lending company in the United States, giving due regard 
        to the principle of national treatment and equality of 
        competitive opportunity.
    ``(m) Provisions Applicable to Financial Holding Companies 
That Fail To Meet Certain Requirements.--
            ``(1) In general.--If the Board finds that--
                    ``(A) a financial holding company is 
                engaged, directly or indirectly, in any 
                activity under subsection (k), (n), or (o), 
                other than activities that are permissible 
                for a bank holding company under subsection 
                (c)(8); and
                    ``(B) such financial holding company is not 
                in compliance with the requirements of 
                subsection (l)(1);
        the Board shall give notice to the financial holding 
        company to that effect, describing the conditions 
        giving rise to the notice.
            ``(2) Agreement to correct conditions required.--
        Not later than 45 days after the date of receipt by a 
        financial holding company of a notice given under 
        paragraph (1) (or such additional period as the Board 
        may permit), the financial holding company shall 
        execute an agreement with the Board to comply with the 
        requirements applicable to a financial holding company 
        under subsection (l)(1).
            ``(3) Board may impose limitations.--Until the 
        conditions described in a notice to a financial holding 
        company under paragraph (1) are corrected, the Board 
        may impose such limitations on the conduct or 
        activities of that financial holding company or any 
        affiliate of that company as the Board determines to be 
        appropriate under the circumstances and consistent with 
        the purposes of this Act.
            ``(4) Failure to correct.--If the conditions 
        described in a notice to a financial holding company 
        under paragraph (1) are not corrected within 180 days 
        after the date of receipt by the financial holding 
        company of a notice under paragraph (1), the Board may 
        require such financial holding company, under such 
        terms and conditions as may be imposed by the Board and 
        subject to such extension of time as may be granted in 
        the discretion of the Board, either--
                    ``(A) to divest control of any subsidiary 
                depository institution; or
                    ``(B) at the election of the financial 
                holding company instead to cease to engage in 
                any activity conducted by such financial 
                holding company or its subsidiaries (other than 
                a depository institution or a subsidiary of a 
                depository institution) that is not an activity 
                that is permissible for a bank holding company 
                under subsection (c)(8).
            ``(5) Consultation.--In taking any action under 
        this subsection, the Board shall consult with all 
        relevant Federal and State regulatory agencies and 
        authorities.
    ``(n) Authority To Retain Limited Nonfinancial Activities 
and Affiliations.--
            ``(1) In general.--Notwithstanding subsection (a), 
        a company that is not a bank holding company or a 
        foreign bank (as defined in section 1(b)(7) of the 
        International Banking Act of 1978) and becomes a 
        financial holding company after the date of the 
        enactment of the Gramm-Leach-Bliley Act may continue to 
        engage in any activity and retain direct or indirect 
        ownership or control of shares of a company engaged in 
        any activity if--
                    ``(A) the holding company lawfully was 
                engaged in the activity or held the shares of 
                such company on September 30, 1999;
                    ``(B) the holding company is predominantly 
                engaged in financial activities as defined in 
                paragraph (2); and
                    ``(C) the company engaged in such activity 
                continues to engage only in the same activities 
                that such company conducted on September 30, 
                1999, and other activities permissible under 
                this Act.
            ``(2) Predominantly financial.--For purposes of 
        this subsection, a company is predominantly engaged in 
        financial activities if the annual grossrevenues 
        derived by the holding company and all subsidiaries of 
        the holding company (excluding revenues derived from 
        subsidiary depository institutions), on a consolidated 
        basis, from engaging in activities that are financial 
        in nature or are incidental to a financial activity 
        under subsection (k) represent at least 85 percent of 
        the consolidated annual gross revenues of the company.
            ``(3) No expansion of grandfathered commercial 
        activities through merger or consolidation.--A 
        financial holding company that engages in activities or 
        holds shares pursuant to this subsection, or a 
        subsidiary of such financial holding company, may not 
        acquire, in any merger, consolidation, or other type of 
        business combination, assets of any other company that 
        is engaged in any activity that the Board has not 
        determined to be financial in nature or incidental to a 
        financial activity under subsection (k), except this 
        paragraph shall not apply with respect to a company 
        that owns a broadcasting station licensed under title 
        III of the Communications Act of 1934 and the shares of 
        which are under common control with an insurance 
        company since January 1, 1998, unless such company is 
        acquired by, or otherwise becomes an affiliate of, a 
        bank holding company that, at the time such acquisition 
        or affiliation is consummated, is 1 of the 5 largest 
        domestic bank holding companies (as determined on the 
        basis of the consolidated total assets of such 
        companies).
            ``(4) Continuing revenue limitation on 
        grandfathered commercial activities.--Notwithstanding 
        any other provision of this subsection, a financial 
        holding company may continue to engage in activities or 
        hold shares in companies pursuant to this subsection 
        only to the extent that the aggregate annual gross 
        revenues derived from all such activities and all such 
        companies does not exceed 15 percent of the 
        consolidated annual gross revenues of the financial 
        holding company (excluding revenues derived from 
        subsidiary depository institutions).
            ``(5) Cross marketing restrictions applicable to 
        commercial activities.--
                    ``(A) In general.--A depository institution 
                controlled by a financial holding company shall 
                not--
                            ``(i) offer or market, directly or 
                        through any arrangement, any product or 
                        service of a company whose activities 
                        are conducted or whose shares are owned 
                        or controlled by the financial holding 
                        company pursuant to this subsection or 
                        subparagraph (H) or (I) of subsection 
                        (k)(4); or
                            ``(ii) permit any of its products 
                        or services to be offered or marketed, 
                        directly or through any arrangement, by 
                        or through any company described in 
                        clause (i).
                    ``(B) Rule of construction.--Subparagraph 
                (A) shall not be construed as prohibiting an 
                arrangement between a depository institution 
                and a company owned or controlled pursuant to 
                subsection (k)(4)(I) for the marketing of 
                products or services through statement inserts 
                or Internet websites if--
                            ``(i) such arrangement does not 
                        violate section 106 of the Bank Holding 
                        Company Act Amendments of 1970; and
                            ``(ii) the Board determines that 
                        the arrangement is in the public 
                        interest, does not undermine the 
                        separation of banking and commerce, and 
                        is consistent with the safety and 
                        soundness of depository institutions.
            ``(6) Transactions with nonfinancial affiliates.--A 
        depository institution controlled by a financial 
        holding company may not engage in a covered transaction 
        (as defined in section 23A(b)(7) of the Federal Reserve 
        Act) with any affiliate controlled by the company 
        pursuant to this subsection.
            ``(7) Sunset of grandfather.--A financial holding 
        company engaged in any activity, or retaining direct or 
        indirect ownership or control of shares of a company, 
        pursuant to this subsection, shall terminate such 
        activity and divest ownership or control of the shares 
        of such company before the end of the 10-year period 
        beginning on the date of the enactment of the Gramm-
        Leach-Bliley Act. The Board may, upon application by a 
        financial holding company, extend such 10-year period 
        by a period not to exceed an additional 5 years if such 
        extension would not be detrimental to the public 
        interest.
    ``(o) Regulation of Certain Financial Holding Companies.--
Notwithstanding subsection (a), a company that is not a bank 
holding company or a foreign bank (as defined in section 
1(b)(7) of the International Banking Act of 1978) and becomes a 
financial holding company after the date of enactment of the 
Gramm-Leach-Bliley Act, may continue to engage in, or directly 
or indirectly own or control shares of a company engaged in, 
activities related to the trading, sale, or investment in 
commodities and underlying physical properties that were not 
permissible for bank holding companies to conduct in the United 
States as of September 30, 1997, if--
            ``(1) the holding company, or any subsidiary of the 
        holding company, lawfully was engaged, directly or 
        indirectly, in any of such activities as of September 
        30, 1997, in the United States;
            ``(2) the attributed aggregate consolidated assets 
        of the company held by the holding company pursuant to 
        this subsection, and not otherwise permitted to be held 
        by a financial holding company, are equal to not more 
        than 5 percent of the total consolidated assets of the 
        bank holding company, except that the Board may 
        increase that percentage by such amounts and under such 
        circumstances as the Board considers appropriate, 
        consistent with the purposes of this Act; and
            ``(3) the holding company does not permit--
                    ``(A) any company, the shares of which it 
                owns or controls pursuant to this subsection, 
                to offer or market any product or service of an 
                affiliated depository institution; or
                    ``(B) any affiliated depository institution 
                to offer or market any product or service of 
                any company, the shares of which are owned or 
                controlled by such holding company pursuant to 
                this subsection.''.
    (b) Community Reinvestment Requirement.--Section 804 of the 
Community Reinvestment Act of 1977 (12 U.S.C. 2903) is amended 
by adding at the end the following new subsection:
    ``(c) Financial Holding Company Requirement.--
            ``(1) In general.--An election by a bank holding 
        company to become a financial holding company under 
        section 4 of the Bank Holding Company Act of 1956 shall 
        not be effective if--
                    ``(A) the Board finds that, as of the date 
                the declaration of such election and the 
                certification is filed by such holding company 
                under section 4(l)(1)(C) of the Bank Holding 
                Company Act of 1956, not all of the subsidiary 
                insured depository institutions of the bank 
                holding company had achieved a rating of 
                `satisfactory record of meeting community 
                credit needs', or better, at the most recent 
                examination of each such institution; and
                    ``(B) the Board notifies the company of 
                such finding before the end of the 30-day 
                period beginning on such date.
            ``(2) Limited exclusions for newly acquired insured 
        depository institutions.--Any insured depository 
        institution acquired by a bank holding company during 
        the 12-month period preceding the date of the 
        submission to the Board of the declaration and 
        certification under section 4(l)(1)(C) of the Bank 
        Holding Company Act of 1956 may be excluded for 
        purposes of paragraph (1) during the 12-month period 
        beginning on the date of such acquisition if--
                    ``(A) the bank holding company has 
                submitted an affirmative plan to the 
                appropriate Federal financial supervisory 
                agency to take such action as may be necessary 
                in order for such institution to achieve a 
                rating of `satisfactory record of meeting 
                community credit needs', or better, at the next 
                examination of the institution; and
                    ``(B) the plan has been accepted by such 
                agency.
            ``(3) Definitions.--For purposes of this 
        subsection, the following definitions shall apply:
                    ``(A) Bank holding company; financial 
                holding company.--The terms `bank holding 
                company' and `financial holding company' have 
                the meanings given those terms in section 2 of 
                the Bank Holding Company Act of 1956.
                    ``(B) Board.--The term `Board' means the 
                Board of Governors of the Federal Reserve 
                System.
                    ``(C) Insured depository institution.--The 
                term `insured depository institution' has the 
                meaning given the term in section 3(c) of the 
                Federal Deposit Insurance Act.''.
    (c) Technical and Conforming Amendments.--
            (1) Definitions.--Section 2 of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841) is amended--
                    (A) in subsection (n), by inserting `` 
                `depository institution','' after ``the 
                terms''; and
                    (B) by adding at the end the following new 
                subsections:
    ``(p) Financial Holding Company.--For purposes of this Act, 
the term `financial holding company' means a bank holding 
company that meets the requirements of section 4(l)(1).
    ``(q) Insurance Company.--For purposes of sections 4 and 5, 
the term `insurance company' includes any person engaged in the 
business of insurance to the extent of such activities.''.
            (2) Notice procedures.--Section 4(j) of the Bank 
        Holding Company Act of 1956 (12 U.S.C. 1843(j)) is 
        amended--
                    (A) in each of subparagraphs (A) and (E) of 
                paragraph (1), by inserting ``or in any 
                complementary activity under subsection 
                (k)(1)(B)'' after ``subsection (c)(8) or 
                (a)(2)''; and
                    (B) in paragraph (3)--
                            (i) by inserting ``, other than any 
                        complementary activity under subsection 
                        (k)(1)(B),'' after ``to engage in any 
                        activity''; and
                            (ii) by inserting ``or a company 
                        engaged in any complementary activity 
                        under subsection (k)(1)(B)'' after 
                        ``insured depository institution''.
    (d) Report.--
            (1) In general.--By the end of the 4-year period 
        beginning on the date of the enactment of this Act, the 
        Board of Governors of the Federal Reserve System and 
        the Secretary of the Treasury shall submit a joint 
        report to the Congress containing a summary of new 
        activities, including grandfathered commercial 
        activities, in which any financial holding company is 
        engaged pursuant to subsection (k)(1) or (n) of section 
        4 of the Bank Holding Company Act of 1956 (as added by 
        subsection (a)).
            (2) Other contents.--The report submitted to the 
        Congress pursuant to paragraph (1) shall also contain 
        the following:
                    (A) A discussion of actions by the Board of 
                Governors of the Federal Reserve System and the 
                Secretary of the Treasury, whether by 
                regulation, order, interpretation, or guideline 
                or by approval or disapproval of an 
                application, with regard to activities of 
                financial holding companies that are incidental 
                to activities that are financial in nature or 
                complementary to such financial activities.
                    (B) An analysis and discussion of the risks 
                posed by commercial activities of financial 
                holding companies to the safety and soundness 
                of affiliate depository institutions.
                    (C) An analysis and discussion of the 
                effect of mergers and acquisitions under 
                section 4(k) of the Bank Holding Company Act of 
                1956 on market concentration in the financial 
                services industry.

SEC. 104. OPERATION OF STATE LAW.

    (a) State Regulation of the Business of Insurance.--The Act 
entitled ``An Act to express the intent of Congress with 
reference to the regulation of the business of insurance'' and 
approved March 9, 1945 (15 U.S.C. 1011 et seq.) (commonly 
referred to as the ``McCarran-Ferguson Act'') remains the law 
of the United States.
    (b) Mandatory Insurance Licensing Requirements.--No person 
shall engage in the business of insurance in a State as 
principal or agent unless such person is licensed as required 
by the appropriate insurance regulator of such State in 
accordance with the relevant State insurance law, subject to 
subsections (c), (d), and (e).
    (c) Affiliations.--
            (1) In general.--Except as provided in paragraph 
        (2), no State may, by statute, regulation, order, 
        interpretation, or other action, prevent or restrict a 
        depository institution, or an affiliate thereof, from 
        being affiliated directly or indirectly or associated 
        with any person, as authorized or permitted by this Act 
        or any other provision of Federal law.
            (2) Insurance.--With respect to affiliations 
        between depository institutions, or any affiliate 
        thereof, and any insurer, paragraph (1) does not 
        prohibit--
                    (A) any State from--
                            (i) collecting, reviewing, and 
                        taking actions (including approval and 
                        disapproval) on applications and other 
                        documents or reports concerning any 
                        proposed acquisition of, or a change or 
                        continuation of control of, an insurer 
                        domiciled in that State; and
                            (ii) exercising authority granted 
                        under applicable State law to collect 
                        information concerning any proposed 
                        acquisition of, or a change or 
                        continuation of control of, an insurer 
                        engaged in the business of insurance 
                        in, and regulated as an insurer by, 
                        such State;
                during the 60-day period preceding the 
                effective date of the acquisition or change or 
                continuation of control, so long as the 
                collecting, reviewing, taking actions, or 
                exercising authority by the State does not have 
                the effect of discriminating, intentionally or 
                unintentionally, against a depository 
                institution or an affiliate thereof, or against 
                any other person based upon an association of 
                such person with a depository institution;
                    (B) any State from requiring any person 
                that is acquiring control of an insurer 
                domiciled in that State to maintain or restore 
                the capital requirements of that insurer to the 
                level required under the capital regulations of 
                general applicability in that State to avoid 
                the requirement of preparing and filing with 
                the insurance regulatory authority of that 
                State a plan to increase the capital of the 
                insurer, except that any determination by the 
                State insurance regulatory authority with 
                respect to such requirement shall be made not 
                later than 60 days after the date of 
                notification under subparagraph (A); or
                    (C) any State from restricting a change in 
                the ownership of stock in an insurer, or a 
                company formed for the purpose of controlling 
                such insurer, after the conversion of the 
                insurer from mutual to stock form so long as 
                such restriction does not have the effect of 
                discriminating, intentionally or 
                unintentionally, against a depository 
                institution or an affiliate thereof, or against 
                any other person based upon an association of 
                such person with a depository institution.
    (d) Activities.--
            (1) In general.--Except as provided in paragraph 
        (3), and except with respect to insurance sales, 
        solicitation, and cross marketing activities, which 
        shall be governed by paragraph (2), no State may, by 
        statute, regulation, order, interpretation, or other 
        action, prevent or restrict a depository institution or 
        an affiliate thereof from engaging directly or 
        indirectly, either by itself or in conjunction with an 
        affiliate, or any other person, in any activity 
        authorized or permitted under this Act and the 
        amendments made by this Act.
            (2) Insurance sales.--
                    (A) In general.--In accordance with the 
                legal standards for preemption set forth in the 
                decision of the Supreme Court of the United 
                States in Barnett Bank of Marion County N.A. v. 
                Nelson, 517 U.S. 25 (1996), no State may, by 
                statute, regulation, order, interpretation, or 
                other action, prevent or significantly 
                interfere with the ability of a depository 
                institution, or an affiliate thereof, to 
                engage, directly or indirectly, either by 
                itself or in conjunction with an affiliate or 
                any other person, in any insurance sales, 
                solicitation, or cross-marketing activity.
                    (B) Certain state laws preserved.--
                Notwithstanding subparagraph (A), a State may 
                impose any of the following restrictions, or 
                restrictions that are substantially the same as 
                but no more burdensome or restrictive than 
                those in each of the following clauses:
                            (i) Restrictions prohibiting the 
                        rejection of an insurance policy by a 
                        depository institution or an affiliate 
                        of a depository institution, solely 
                        because the policy has been issued or 
                        underwritten by any person who is not 
                        associated with such depository 
                        institution or affiliate when the 
                        insurance is required in connection 
                        with a loan or extension of credit.
                            (ii) Restrictions prohibiting a 
                        requirement for any debtor, insurer, or 
                        insurance agent or broker to pay a 
                        separate charge in connection with the 
                        handling of insurance that is required 
                        in connection with a loan or other 
                        extension of credit or the provision of 
                        another traditional banking product by 
                        a depository institution, or any 
                        affiliate of a depository institution, 
                        unless such charge would be required 
                        when the depository institution or 
                        affiliate is the licensed insurance 
                        agent or broker providing the 
                        insurance.
                            (iii) Restrictions prohibiting the 
                        use of any advertisement or other 
                        insurance promotional material by a 
                        depository institution or any affiliate 
                        of a depository institution that would 
                        cause a reasonable person to believe 
                        mistakenly that--
                                    (I) the Federal Government 
                                or a State is responsible for 
                                the insurance sales activities 
                                of, or stands behind the credit 
                                of, the institution or 
                                affiliate; or
                                    (II) a State, or the 
                                Federal Government guarantees 
                                any returns on insurance 
                                products, or is a source of 
                                payment on any insurance 
                                obligation of or sold by the 
                                institution or affiliate;
                            (iv) Restrictions prohibiting the 
                        payment or receipt of any commission or 
                        brokerage fee or other valuable 
                        consideration for services as an 
                        insurance agent or broker to or by any 
                        person, unless such person holds a 
                        valid State license regarding the 
                        applicable class of insurance at the 
                        time at which the services are 
                        performed, except that, in this clause, 
                        the term ``services as an insurance 
                        agent or broker'' does not include a 
                        referral by an unlicensed person of a 
                        customer or potential customer to a 
                        licensed insurance agent or broker that 
                        does not include a discussion of 
                        specific insurance policy terms and 
                        conditions.
                            (v) Restrictions prohibiting any 
                        compensation paid to or received by any 
                        individual who is not licensed to sell 
                        insurance, for the referral of a 
                        customer that seeks to purchase, or 
                        seeks an opinion or advice on, any 
                        insurance product to a person that 
                        sells or provides opinions or advice on 
                        such product, based on the purchase of 
                        insurance by the customer.
                            (vi) Restrictions prohibiting the 
                        release of the insurance information of 
                        a customer (defined as information 
                        concerning the premiums, terms, and 
                        conditions of insurance coverage, 
                        including expiration dates and rates, 
                        and insurance claims of a customer 
                        contained in the records of the 
                        depository institution or an affiliate 
                        thereof) to any person other than an 
                        officer, director, employee, agent, or 
                        affiliate of a depository institution, 
                        for the purpose of soliciting or 
                        selling insurance, without the express 
                        consent of the customer, other than a 
                        provision that prohibits--
                                    (I) a transfer of insurance 
                                information to an unaffiliated 
                                insurer in connection with 
                                transferring insurance in force 
                                on existing insureds of the 
                                depository institution or an 
                                affiliate thereof, or in 
                                connection with a merger with 
                                or acquisition of an 
                                unaffiliated insurer; or
                                    (II) the release of 
                                information as otherwise 
                                authorized by State or Federal 
                                law.
                            (vii) Restrictions prohibiting the 
                        use of health information obtained from 
                        the insurance records of a customer for 
                        any purpose, other than for its 
                        activities as a licensed agent or 
                        broker, without the express consent of 
                        the customer.
                            (viii) Restrictions prohibiting the 
                        extension of credit or any product or 
                        service that is equivalent to an 
                        extension of credit, lease or sale of 
                        property of any kind, or furnishing of 
                        any services or fixing or varying the 
                        consideration for any of the foregoing, 
                        on the condition or requirement that 
                        the customer obtain insurance from a 
                        depository institution or an affiliate 
                        of a depository institution, or a 
                        particular insurer, agent, or broker, 
                        other than a prohibition that would 
                        prevent any such depository institution 
                        or affiliate--
                                    (I) from engaging in any 
                                activity described in this 
                                clause that would not violate 
                                section 106 of the Bank Holding 
                                Company Act Amendments of 1970, 
                                as interpreted by the Board of 
                                Governors of the Federal 
                                Reserve System; or
                                    (II) from informing a 
                                customer or prospective 
                                customer that insurance is 
                                required in order to obtain a 
                                loan or credit, that loan or 
                                credit approval is contingent 
                                upon the procurement by the 
                                customer of acceptable 
                                insurance, or that insurance is 
                                available from the depository 
                                institution or an affiliate of 
                                the depository institution.
                            (ix) Restrictions requiring, when 
                        an application by a consumer for a loan 
                        or other extension of credit from a 
                        depository institution is pending, and 
                        insurance is offered or sold to the 
                        consumer or is required in connection 
                        with the loan or extension of credit by 
                        the depository institution or any 
                        affiliate thereof, that a written 
                        disclosure be provided to the consumer 
                        or prospective customer indicating that 
                        the customer's choice of an insurance 
                        provider will not affect the credit 
                        decision or credit terms in any way, 
                        except that the depository institution 
                        may impose reasonable requirements 
                        concerning the creditworthiness of the 
                        insurer and scope of coverage chosen.
                            (x) Restrictions requiring clear 
                        and conspicuous disclosure, in writing, 
                        where practicable, to the customer 
                        prior to the sale of any insurance 
                        policy that such policy--
                                    (I) is not a deposit;
                                    (II) is not insured by the 
                                Federal Deposit Insurance 
                                Corporation;
                                    (III) is not guaranteed by 
                                any depository institution or, 
                                if appropriate, an affiliate of 
                                any such institution or any 
                                person soliciting the purchase 
                                of or selling insurance on the 
                                premises thereof; and
                                    (IV) where appropriate, 
                                involves investment risk, 
                                including potential loss of 
                                principal.
                            (xi) Restrictions requiring that, 
                        when a customer obtains insurance 
                        (other than credit insurance or flood 
                        insurance) and credit from a depository 
                        institution, or any affiliate of such 
                        institution, or any person soliciting 
                        the purchase of or selling insurance on 
                        the premises thereof, the credit and 
                        insurance transactions be completed 
                        through separate documents.
                            (xii) Restrictions prohibiting, 
                        when a customer obtains insurance 
                        (other than credit insurance or flood 
                        insurance) and credit from a depository 
                        institution or an affiliate of such 
                        institution, or any person soliciting 
                        the purchase of or selling insurance on 
                        the premises thereof, inclusion of the 
                        expense of insurance premiums in the 
                        primary credit transaction without the 
                        express written consent of the 
                        customer.
                            (xiii) Restrictions requiring 
                        maintenance of separate and distinct 
                        books and records relating to insurance 
                        transactions, including all files 
                        relating to and reflecting consumer 
                        complaints, and requiring that such 
                        insurance books and records be made 
                        available to the appropriate State 
                        insurance regulator for inspection upon 
                        reasonable notice.
                    (C) Limitations.--
                            (i) OCC deference.--Section 304(e) 
                        does not apply with respect to any 
                        State statute, regulation, order, 
                        interpretation, or other action 
                        regarding insurance sales, 
                        solicitation, or cross marketing 
                        activities described in subparagraph 
                        (A) that was issued, adopted, or 
                        enacted before September 3, 1998, and 
                        that is not described in subparagraph 
                        (B).
                            (ii) Nondiscrimination.--Subsection 
                        (e) does not apply with respect to any 
                        State statute, regulation, order, 
                        interpretation, or other action 
                        regarding insurance sales, 
                        solicitation, or cross marketing 
                        activities described in subparagraph 
                        (A) that was issued, adopted, or 
                        enacted before September 3, 1998, and 
                        that is not described in subparagraph 
                        (B).
                            (iii) Construction.--Nothing in 
                        this paragraph shall be construed--
                                    (I) to limit the 
                                applicability of the decision 
                                of the Supreme Court in Barnett 
                                Bank of Marion County N.A. v. 
                                Nelson, 517 U.S. 25 (1996) with 
                                respect to any State statute, 
                                regulation, order, 
                                interpretation, or other action 
                                that is not referred to or 
                                described in subparagraph (B); 
                                or
                                    (II) to create any 
                                inference with respect to any 
                                State statute, regulation, 
                                order, interpretation, or other 
                                action that is not described in 
                                this paragraph.
            (3) Insurance activities other than sales.--State 
        statutes, regulations, interpretations, orders, and 
        other actions shall not be preempted under paragraph 
        (1) to the extent that they--
                    (A) relate to, or are issued, adopted, or 
                enacted for the purpose of regulating the 
                business of insurance in accordance with the 
                Act entitled ``An Act to express the intent of 
                Congress with reference to the regulation of 
                the business of insurance'' and approved March 
                9, 1945 (15 U.S.C. 1011 et seq.) (commonly 
                referred to as the ``McCarran-Ferguson Act'');
                    (B) apply only to persons that are not 
                depository institutions, but that are directly 
                engaged in the business of insurance (except 
                that they may apply to depository institutions 
                engaged in providing savings bank life 
                insurance as principal to the extent of 
                regulating such insurance);
                    (C) do not relate to or directly or 
                indirectly regulate insurance sales, 
                solicitations, or cross marketing activities; 
                and
                    (D) are not prohibited under subsection 
                (e).
            (4) Financial activities other than insurance.--No 
        State statute, regulation, order, interpretation, or 
        other action shall be preempted under paragraph (1) to 
        the extent that--
                    (A) it does not relate to, and is not 
                issued and adopted, or enacted for the purpose 
                of regulating, directly or indirectly, 
                insurance sales, solicitations, or cross 
                marketing activities covered under paragraph 
                (2);
                    (B) it does not relate to, and is not 
                issued and adopted, or enacted for the purpose 
                of regulating, directly or indirectly, the 
                business of insurance activities other than 
                sales, solicitations, or cross marketing 
                activities, covered under paragraph (3);
                    (C) it does not relate to securities 
                investigations or enforcement actions referred 
                to in subsection (f); and
                    (D) it--
                            (i) does not distinguish by its 
                        terms between depository institutions, 
                        and affiliates thereof, engaged in the 
                        activity at issue and other persons 
                        engaged in the same activity in a 
                        manner that is in any way adverse with 
                        respect to the conduct of the activity 
                        by any such depository institution or 
                        affiliate engaged in the activity at 
                        issue;
                            (ii) as interpreted or applied, 
                        does not have, and will not have, an 
                        impact on depository institutions, or 
                        affiliates thereof, engaged in the 
                        activity at issue, or any person who 
                        has an association with any such 
                        depository institution or affiliate, 
                        that is substantially more adverse than 
                        its impact on other persons engaged in 
                        the same activity that are not 
                        depository institutions or affiliates 
                        thereof, or persons who do not have an 
                        association with any such depository 
                        institution or affiliate;
                            (iii) does not effectively prevent 
                        a depository institution or affiliate 
                        thereof from engaging in activities 
                        authorized or permitted by this Act or 
                        any other provision of Federal law; and
                            (iv) does not conflict with the 
                        intent of this Act generally to permit 
                        affiliations that are authorized or 
                        permitted by Federal law.
    (e) Nondiscrimination.--Except as provided in any 
restrictions described in subsection (d)(2)(B), no State may, 
by statute, regulation, order, interpretation, or other action, 
regulate the insurance activities authorized or permitted under 
this Act or any other provision of Federal law of a depository 
institution, or affiliate thereof, to the extent that such 
statute, regulation, order, interpretation, or other action--
            (1) distinguishes by its terms between depository 
        institutions, or affiliates thereof, and other persons 
        engaged in such activities, in a manner that is in any 
        way adverse to any such depository institution, or 
        affiliate thereof;
            (2) as interpreted or applied, has or will have an 
        impact on depository institutions, or affiliates 
        thereof, that is substantially more adverse than its 
        impact on other persons providing the same products or 
        services or engaged in the same activities that are not 
        depository institutions, or affiliates thereof, or 
        persons or entities affiliated therewith;
            (3) effectively prevents a depository institution, 
        or affiliate thereof, from engaging in insurance 
        activities authorized or permitted by this Act or any 
        other provision of Federal law; or
            (4) conflicts with the intent of this Act generally 
        to permit affiliations that are authorized or permitted 
        by Federal law between depository institutions, or 
        affiliates thereof, and persons engaged in the business 
        of insurance.
    (f) Limitation.--Subsections (c) and (d) shall not be 
construed to affect--
            (1) the jurisdiction of the securities commission 
        (or any agency or office performing like functions) of 
        any State, under the laws of such State--
                    (A) to investigate and bring enforcement 
                actions, consistent with section 18(c) of the 
                Securities Act of 1933, with respect to fraud 
                or deceit or unlawful conduct by any person, in 
                connection with securities or securities 
                transactions; or
                    (B) to require the registration of 
                securities or the licensure or registration of 
                brokers, dealers, or investment advisers 
                (consistent with section 203A of the Investment 
                Advisers Act of 1940), or the associated 
                persons of a broker, dealer, or investment 
                adviser (consistent with such section 203A); or
            (2) State laws, regulations, orders, 
        interpretations, or other actions of general 
        applicability relating to the governance of 
        corporations, partnerships, limited liability 
        companies, or other business associations incorporated 
        or formed under the laws of that State or domiciled in 
        that State, or the applicability of the antitrust laws 
        of any State or any State law that is similar to the 
        antitrust laws if such laws, regulations, orders, 
        interpretations, or other actions are not inconsistent 
        with the purposes of this Act to authorize or permit 
        certain affiliations and to remove barriers to such 
        affiliations.
    (g) Definitions.--For purposes of this section, the 
following definitions shall apply:
            (1) Affiliate.--The term ``affiliate'' means any 
        company that controls, is controlled by, or is under 
        common control with another company.
            (2) Antitrust laws.--The term ``antitrust laws'' 
        has the meaning given the term in subsection (a) of the 
        first section of the Clayton Act, and includes section 
        5 of the Federal Trade Commission Act (to the extent 
        that such section 5 relates to unfair methods of 
        competition).
            (3) Depository institution.--The term ``depository 
        institution''--
                    (A) has the meaning given the term in 
                section 3 of the Federal Deposit Insurance Act; 
                and
                    (B) includes any foreign bank that 
                maintains a branch, agency, or commercial 
                lending company in the United States.
            (4) Insurer.--The term ``insurer'' means any person 
        engaged in the business of insurance.
            (5) State.--The term ``State'' means any State of 
        the United States, the District of Columbia, any 
        territory of the United States, Puerto Rico, Guam, 
        American Samoa, the Trust Territory of the Pacific 
        Islands, the Virgin Islands, and the Northern Mariana 
        Islands.

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

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

SEC. 106. PROHIBITION ON DEPOSIT PRODUCTION OFFICES.

    Section 109(e)(4) of the Riegle-Neal Interstate Banking and 
Branching Efficiency Act of 1994 (12 U.S.C. 1835a(e)(4)) is 
amended by inserting ``and any branch of a bank controlled by 
an out-of-State bank holding company (as defined in section 
2(o)(7) of the Bank Holding Company Act of 1956)'' before the 
period.

SEC. 107. CROSS MARKETING RESTRICTION; LIMITED PURPOSE BANK RELIEF; 
                    DIVESTITURE.

    (a) Cross Marketing Restriction.--Section 4(f) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)) is amended by 
striking paragraph (3).
    (b) Daylight Overdrafts.--Section 4(f) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(f)) is amended by inserting 
after paragraph (2) the following new paragraph:
            ``(3) Permissible overdrafts described.--For 
        purposes of paragraph (2)(C), an overdraft is described 
        in this paragraph if--
                    ``(A) such overdraft results from an 
                inadvertent computer or accounting error that 
                is beyond the control of both the bank and the 
                affiliate;
                    ``(B) such overdraft--
                            ``(i) is permitted or incurred on 
                        behalf of an affiliate that is 
                        monitored by, reports to, and is 
                        recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                            ``(ii) is fully secured, as 
                        required by the Board, by bonds, notes, 
                        or other obligations that are direct 
                        obligations of the United States or on 
                        which the principal and interest are 
                        fully guaranteed by the United States 
                        or by securities and obligations 
                        eligible for settlement on the Federal 
                        Reserve book entry system; or
                    ``(C) such overdraft--
                            ``(i) is permitted or incurred by, 
                        or on behalf of, an affiliate in 
                        connection with an activity that is 
                        financial in nature or incidental to a 
                        financial activity; and
                            ``(ii) does not cause the bank to 
                        violate any provision of section 23A or 
                        23B of the Federal Reserve Act, either 
                        directly, in the case of a bank that is 
                        a member of the Federal Reserve System, 
                        or by virtue of section 18(j) of the 
                        Federal Deposit Insurance Act, in the 
                        case of a bank that is not a member of 
                        the Federal Reserve System.''.
    (c) Industrial Loan Companies; Affiliate Overdrafts.--
Section 2(c)(2)(H) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(c)(2)(H)) is amended by inserting ``, or that is 
otherwise permissible for a bank controlled by a company 
described in section 4(f)(1)'' before the period at the end.
    (d) Activities Limitations.--Section 4(f)(2) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)(2)) is amended--
            (1) by striking ``Paragraph (1) shall cease to 
        apply to any company described in such paragraph if--'' 
        and inserting ``Subject to paragraph (3), a company 
        described in paragraph (1) shall no longer qualify for 
        the exemption provided under that paragraph if--'';
            (2) in subparagraph (A)--
                    (A) in clause (ii)(IX), by striking ``and'' 
                at the end;
                    (B) in clause (ii)(X), by inserting ``and'' 
                after the semicolon;
                    (C) in clause (ii), by inserting after 
                subclause (X) the following new subclause:
                                    ``(XI) assets that are 
                                derived from, or incidental to, 
                                activities in which 
                                institutions described in 
                                subparagraph (F) or (H) of 
                                section 2(c)(2) are permitted 
                                to engage;''; and
                    (D) by striking ``or'' at the end; and
            (3) by striking subparagraph (B) and inserting the 
        following:
                    ``(B) any bank subsidiary of such company--
                            ``(i) accepts demand deposits or 
                        deposits that the depositor may 
                        withdraw by check or similar means for 
                        payment to third parties; and
                            ``(ii) engages in the business of 
                        making commercial loans (except that, 
                        for purposes of this clause, loans made 
                        in the ordinary course of a credit card 
                        operation shall not be treated as 
                        commercial loans); or
                    ``(C) after the date of the enactment of 
                the Competitive Equality Amendments of 1987, 
                any bank subsidiary of such company permits any 
                overdraft (including any intraday overdraft), 
                or incurs any such overdraft in the account of 
                the bank at a Federal reserve bank, on behalf 
                of an affiliate, other than an overdraft 
                described in paragraph (3).''.
    (e) Divestiture Requirement.--Section 4(f)(4) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(f)(4)) is amended 
to read as follows:
            ``(4) Divestiture in case of loss of exemption.--If 
        any company described in paragraph (1) fails to qualify 
        for the exemption provided under paragraph (1) by 
        operation of paragraph (2), such exemption shall cease 
        to apply to such company and such company shall divest 
        control of each bank it controls before the end of the 
        180-day period beginning on the date on which the 
        company receives notice from the Board that the company 
        has failed to continue to qualify for such exemption, 
        unless, before the end of such 180-day period, the 
        company has--
                    ``(A) either--
                            ``(i) corrected the condition or 
                        ceased the activity that caused the 
                        company to fail to continue to qualify 
                        for the exemption; or
                            ``(ii) submitted a plan to the 
                        Board for approval to cease the 
                        activity or correct the condition in a 
                        timely manner (which shall not exceed 1 
                        year); and
                    ``(B) implemented procedures that are 
                reasonably adapted to avoid the reoccurrence of 
                such condition or activity.''.
    (f) Foreign Bank Subsidiaries of Limited Purpose Credit 
Card Banks.--Section 4(f) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(f)) is amended by adding at the end the 
following new paragraph:
            ``(14) Foreign bank subsidiaries of limited purpose 
        credit card banks.--
                    ``(A) In general.--An institution described 
                in section 2(c)(2)(F) may control a foreign 
                bank if--
                            ``(i) the investment of the 
                        institution in the foreign bank meets 
                        the requirements of section 25 or 25A 
                        of the Federal Reserve Act and the 
                        foreign bank qualifies under such 
                        sections;
                            ``(ii) the foreign bank does not 
                        offer any products or services in the 
                        United States; and
                            ``(iii) the activities of the 
                        foreign bank are permissible under 
                        otherwise applicable law.
                    ``(B) Other limitations inapplicable.--The 
                limitations contained in any clause of section 
                2(c)(2)(F) shall not apply to a foreign bank 
                described in subparagraph (A) that is 
                controlled by an institution described in such 
                section.''.

SEC. 108. USE OF SUBORDINATED DEBT TO PROTECT FINANCIAL SYSTEM AND 
                    DEPOSIT FUNDS FROM ``TOO BIG TO FAIL'' 
                    INSTITUTIONS.

    (a) Study Required.--The Board of Governors of the Federal 
Reserve System and the Secretary of the Treasury shall conduct 
a study of--
            (1) the feasibility and appropriateness of 
        establishing a requirement that, with respect to large 
        insured depository institutions and depository 
        institution holding companies the failure of which 
        could have serious adverse effects on economic 
        conditions or financial stability, such institutions 
        and holding companies maintain some portion of their 
        capital in the form of subordinated debt in order to 
        bring market forces and market discipline to bear on 
        the operation of, and the assessment of the viability 
        of, such institutions and companies and reduce the risk 
        to economic conditions, financial stability, and any 
        deposit insurance fund;
            (2) if such requirement is feasible and 
        appropriate, the appropriate amount or percentage of 
        capital that should be subordinated debt consistent 
        with such purposes; and
            (3) the manner in which any such requirement could 
        be incorporated into existing capital standards and 
        other issues relating to the transition to such a 
        requirement.
    (b) Report.--Before the end of the 18-month period 
beginning on the date of the enactment of this Act, the Board 
of Governors of the Federal Reserve System and the Secretary of 
the Treasury shall submit a report to the Congress containing 
the findings and conclusions of the Board and the Secretary in 
connection with the study required under subsection (a), 
together with such legislative and administrative proposals as 
the Board and the Secretary may determine to be appropriate.
    (c) Definitions.--For purposes of subsection (a), the 
following definitions shall apply:
            (1) Bank holding company.--The term ``bank holding 
        company'' has the meaning given the term in section 2 
        of the Bank Holding Company Act of 1956.
            (2) Insured depository institution.--The term 
        ``insured depository institution'' has the meaning 
        given the term in section 3(c) of the Federal Deposit 
        Insurance Act.
            (3) Subordinated debt.--The term ``subordinated 
        debt'' means unsecured debt that--
                    (A) has an original weighted average 
                maturity of not less than 5 years;
                    (B) is subordinated as to payment of 
                principal and interest to all other 
                indebtedness of the bank, including deposits;
                    (C) is not supported by any form of credit 
                enhancement, including a guarantee or standby 
                letter of credit; and
                    (D) is not held in whole or in part by any 
                affiliate or institution-affiliated party of 
                the insured depository institution or bank 
                holding company.

SEC. 109. STUDY OF FINANCIAL MODERNIZATION'S EFFECT ON THE 
                    ACCESSIBILITY OF SMALL BUSINESS AND FARM LOANS.

    (a) Study.--The Secretary of the Treasury, in consultation 
with the Federal banking agencies (as defined in section 3(z) 
of the Federal Deposit Insurance Act), shall conduct a study of 
the extent to which credit is being provided to and for small 
businesses and farms, as a result of this Act and the 
amendments made by this Act.
    (b) Report.--Before the end of the 5-year period beginning 
on the date of the enactment of this Act, the Secretary, in 
consultation with the Federal banking agencies, shall submit a 
report to the Congress on the study conducted pursuant to 
subsection (a) and shall include such recommendations as the 
Secretary determines to be appropriate for administrative and 
legislative action.

     Subtitle B--Streamlining Supervision of Bank Holding Companies

SEC. 111. STREAMLINING BANK HOLDING COMPANY SUPERVISION.

    Section 5(c) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1844(c)) is amended to read as follows:
    ``(c) Reports and Examinations.--
            ``(1) Reports.--
                    ``(A) In general.--The Board, from time to 
                time, may require a bank holding company and 
                any subsidiary of such company to submit 
                reports under oath to keep the Board informed 
                as to--
                            ``(i) its financial condition, 
                        systems for monitoring and controlling 
                        financial and operating risks, and 
                        transactions with depository 
                        institution subsidiaries of the bank 
                        holding company; and
                            ``(ii) compliance by the company or 
                        subsidiary with applicable provisions 
                        of this Act or any other Federal law 
                        that the Board has specific 
                        jurisdiction to enforce against such 
                        company or subsidiary.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--For purposes of 
                        compliance with this paragraph, the 
                        Board shall, to the fullest extent 
                        possible, accept--
                                    ``(I) reports that a bank 
                                holding company or any 
                                subsidiary of such company has 
                                provided or been required to 
                                provide to other Federal or 
                                State supervisors or to 
                                appropriate self-regulatory 
                                organizations;
                                    ``(II) information that is 
                                otherwise required to be 
                                reported publicly; and
                                    ``(III) externally audited 
                                financial statements.
                            ``(ii) Availability.--A bank 
                        holding company or a subsidiary of such 
                        company shall provide to the Board, at 
                        the request of the Board, a report 
                        referred to in clause (i).
                            ``(iii) Reports filed with other 
                        agencies.--
                                    ``(I) In general.--In the 
                                event that the Board requires a 
                                report under this subsection 
                                from a functionally regulated 
                                subsidiary of a bank holding 
                                company of a kind that is not 
                                required by another Federal or 
                                State regulatory authority or 
                                an appropriate self-regulatory 
                                organization, the Board shall 
                                first request that the 
                                appropriate regulatory 
                                authority or self-regulatory 
                                organization obtain such 
                                report.
                                    ``(II) Availability from 
                                other subsidiary.--If the 
                                report is not made available to 
                                the Board, and the report is 
                                necessary to assess a material 
                                risk to the bank holding 
                                company or any of its 
                                depository institution 
                                subsidiaries or compliance with 
                                this Act or any other Federal 
                                law that the Board has specific 
                                jurisdiction to enforce against 
                                such company or subsidiary or 
                                the systems described in 
                                paragraph (2)(A)(ii)(II), the 
                                Board may require such 
                                functionally regulated 
                                subsidiary to provide such a 
                                report to the Board.
            ``(2) Examinations.--
                    ``(A) Examination authority for bank 
                holding companies and subsidiaries.--Subject to 
                subparagraph (B), the Board may make 
                examinations of each bank holding company and 
                each subsidiary of such holding company in 
                order--
                            ``(i) to inform the Board of the 
                        nature of the operations and financial 
                        condition of the holding company and 
                        such subsidiaries;
                            ``(ii) to inform the Board of--
                                    ``(I) the financial and 
                                operational risks within the 
                                holding company system that may 
                                pose a threat to the safety and 
                                soundness of any depository 
                                institution subsidiary of such 
                                holding company; and
                                    ``(II) the systems for 
                                monitoring and controlling such 
                                risks; and
                            ``(iii) to monitor compliance with 
                        the provisions of this Act or any other 
                        Federal law that the Board has specific 
                        jurisdiction to enforce against such 
                        company or subsidiary and those 
                        governing transactions and 
                        relationships between any depository 
                        institution subsidiary and its 
                        affiliates.
                    ``(B) Functionally regulated 
                subsidiaries.--Notwithstanding subparagraph 
                (A), the Board may make examinations of a 
                functionally regulated subsidiary of a bank 
                holding company only if--
                            ``(i) the Board has reasonable 
                        cause to believe that such subsidiary 
                        is engaged in activities that pose a 
                        material risk to an affiliated 
                        depository institution;
                            ``(ii) the Board reasonably 
                        determines, after reviewing relevant 
                        reports, that examination of the 
                        subsidiary is necessary to adequately 
                        inform the Board of the systems 
                        described in subparagraph (A)(ii)(II); 
                        or
                            ``(iii) based on reports and other 
                        available information, the Board has 
                        reasonable cause to believe that a 
                        subsidiary is not in compliance with 
                        this Act or any other Federal law that 
                        the Board has specific jurisdiction to 
                        enforce against such subsidiary, 
                        including provisions relating to 
                        transactions with an affiliated 
                        depository institution, and the Board 
                        cannot make such determination through 
                        examination of the affiliated 
                        depository institution or the bank 
                        holding company.
                    ``(C) Restricted focus of examinations.--
                The Board shall, to the fullest extent 
                possible, limit the focus and scope of any 
                examination of a bank holding company to--
                            ``(i) the bank holding company; and
                            ``(ii) any subsidiary of the bank 
                        holding company that could have a 
                        materially adverse effect on the safety 
                        and soundness of any depository 
                        institution subsidiary of the holding 
                        company due to--
                                    ``(I) the size, condition, 
                                or activities of the 
                                subsidiary; or
                                    ``(II) the nature or size 
                                of transactions between the 
                                subsidiary and any depository 
                                institution that is also a 
                                subsidiary of the bank holding 
                                company.
                    ``(D) Deference to bank examinations.--The 
                Board shall, to the fullest extent possible, 
                for the purposes of this paragraph, use the 
                reports of examinations of depository 
                institutions made by the appropriate Federal 
                and State depository institution supervisory 
                authority.
                    ``(E) Deference to other examinations.--The 
                Board shall, to the fullest extent possible, 
                forego an examination by the Board under this 
                paragraph and instead review the reports of 
                examination made of--
                            ``(i) any registered broker or 
                        dealer by or on behalf of the 
                        Securities and Exchange Commission;
                            ``(ii) any registered investment 
                        adviser properly registered by or on 
                        behalf of either the Securities and 
                        Exchange Commission or any State;
                            ``(iii) any licensed insurance 
                        company by or on behalf of any State 
                        regulatory authority responsible for 
                        the supervision of insurance companies; 
                        and
                            ``(iv) any other subsidiary that 
                        the Board finds to be comprehensively 
                        supervised by a Federal or State 
                        authority.
            ``(3) Capital.--
                    ``(A) In general.--The Board may not, by 
                regulation, guideline, order, or otherwise, 
                prescribe or impose any capital or capital 
                adequacy rules, guidelines, standards, or 
                requirements on any functionally regulated 
                subsidiary of a bank holding company that--
                            ``(i) is not a depository 
                        institution; and
                            ``(ii) is--
                                    ``(I) in compliance with 
                                the applicable capital 
                                requirements of its Federal 
                                regulatory authority (including 
                                the Securities and Exchange 
                                Commission) or State insurance 
                                authority;
                                    ``(II) properly registered 
                                as an investment adviser under 
                                the Investment Advisers Act of 
                                1940, or with any State; or
                                    ``(III) is licensed as an 
                                insurance agent with the 
                                appropriate State insurance 
                                authority.
                    ``(B) Rule of construction.--Subparagraph 
                (A) shall not be construed as preventing the 
                Board from imposing capital or capital adequacy 
                rules, guidelines, standards, or requirements 
                with respect to--
                            ``(i) activities of a registered 
                        investment adviser other than with 
                        respect to investment advisory 
                        activities or activities incidental to 
                        investment advisory activities; or
                            ``(ii) activities of a licensed 
                        insurance agent other than insurance 
                        agency activities or activities 
                        incidental to insurance agency 
                        activities.
                    ``(C) Limitations on indirect action.--In 
                developing, establishing, or assessing bank 
                holding company capital or capital adequacy 
                rules, guidelines, standards, or requirements 
                for purposes of this paragraph, the Board may 
                not take into account the activities, 
                operations, or investments of an affiliated 
                investment company registered under the 
                Investment Company Act of 1940, unless the 
                investment company is--
                            ``(i) a bank holding company; or
                            ``(ii) controlled by a bank holding 
                        company by reason of ownership by the 
                        bank holding company (including through 
                        all of its affiliates) of 25 percent or 
                        more of the shares of the investment 
                        company, and the shares owned by the 
                        bank holding company have a market 
                        value equal to more than $1,000,000.
            ``(4) Functional regulation of securities and 
        insurance activities.--
                    ``(A) Securities activities.--Securities 
                activities conducted in a functionally 
                regulated subsidiary of a depository 
                institution shall be subject to regulation by 
                the Securities and Exchange Commission, and by 
                relevant State securities authorities, as 
                appropriate, subject to section 104 of the 
                Gramm-Leach-Bliley Act, to the same extent as 
                if they were conducted in a nondepository 
                institution subsidiary of a bank holding 
                company.
                    ``(B) Insurance activities.--Subject to 
                section 104 of the Gramm-Leach-Bliley Act, 
                insurance agency and brokerage activities and 
                activities as principal conducted in a 
                functionally regulated subsidiary of a 
                depository institution shall be subject to 
                regulation by a State insurance authority to 
                the same extent as if they were conducted in a 
                nondepository institution subsidiary of a bank 
                holding company.
            ``(5) Definition.--For purposes of this subsection, 
        the term `functionally regulated subsidiary' means any 
        company--
                    ``(A) that is not a bank holding company or 
                a depository institution; and
                    ``(B) that is--
                            ``(i) a broker or dealer that is 
                        registered under the Securities 
                        Exchange Act of 1934;
                            ``(ii) a registered investment 
                        adviser, properly registered by or on 
                        behalf of either the Securities and 
                        Exchange Commission or any State, with 
                        respect to the investment advisory 
                        activities of such investment adviser 
                        and activities incidental to such 
                        investment advisory activities;
                            ``(iii) an investment company that 
                        is registered under the Investment 
                        Company Act of 1940;
                            ``(iv) an insurance company, with 
                        respect to insurance activities of the 
                        insurance company and activities 
                        incidental to such insurance 
                        activities, that is subject to 
                        supervision by a State insurance 
                        regulator; or
                            ``(v) an entity that is subject to 
                        regulation by the Commodity Futures 
                        Trading Commission, with respect to the 
                        commodities activities of such entity 
                        and activities incidental to such 
                        commodities activities.''.

SEC. 112. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND 
                    EXCHANGE COMMISSION.

    (a) Bank Holding Companies.--Section 5 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1844) is amended by adding at 
the end the following new subsection:
    ``(g) Authority of State Insurance Regulator and the 
Securities and Exchange Commission.--
            ``(1) In general.--Notwithstanding any other 
        provision of law, any regulation, order, or other 
        action of the Board that requires a bank holding 
        company to provide funds or other assets to a 
        subsidiary depository institution shall not be 
        effective nor enforceable with respect to an entity 
        described in subparagraph (A) if--
                    ``(A) such funds or assets are to be 
                provided by--
                            ``(i) a bank holding company that 
                        is an insurance company, a broker or 
                        dealer registered under the Securities 
                        Exchange Act of 1934, an investment 
                        company registered under the Investment 
                        Company Act of 1940, or an investment 
                        adviser registered by or on behalf of 
                        either the Securities and Exchange 
                        Commission or any State; or
                            ``(ii) an affiliate of the 
                        depository institution that is an 
                        insurance company or a broker or dealer 
                        registered under the Securities 
                        Exchange Act of 1934, an investment 
                        company registered under the Investment 
                        Company Act of 1940, or an investment 
                        adviser registered by or on behalf of 
                        either the Securities and Exchange 
                        Commission or any State; and
                    ``(B) the State insurance authority for the 
                insurance company or the Securities and 
                Exchange Commission for the registered broker, 
                dealer, investment adviser (solely with respect 
                to investment advisory activities or activities 
                incidental thereto), or investment company, as 
                the case may be, determines in writing sent to 
                the holding company and the Board that the 
                holding company shall not provide such funds or 
                assets because such action would have a 
                material adverse effect on the financial 
                condition of the insurance company or the 
                broker, dealer, investment company, or 
                investment adviser, as the case may be.
            ``(2) Notice to state insurance authority or sec 
        required.--If the Board requires a bank holding 
        company, or an affiliate of a bank holding company, 
        that is an insurance company or a broker, dealer, 
        investment company, or investment adviser described in 
        paragraph (1)(A) to provide funds or assets to a 
        depository institution subsidiary of the holding 
        company pursuant to any regulation, order, or other 
        action of the Board referred to in paragraph (1), the 
        Board shall promptly notify the State insurance 
        authority for the insurance company, the Securities and 
        Exchange Commission, or State securities regulator, as 
        the case may be, of such requirement.
            ``(3) Divestiture in lieu of other action.--If the 
        Board receives a notice described in paragraph (1)(B) 
        from a State insurance authority or the Securities and 
        Exchange Commission with regard to a bank holding 
        company or affiliate referred to in that paragraph, the 
        Board may order the bank holding company to divest the 
        depository institution not later than 180 days after 
        receiving the notice, or such longer period as the 
        Board determines consistent with the safe and sound 
        operation of the depository institution.
            ``(4) Conditions before divestiture.--During the 
        period beginning on the date an order to divest is 
        issued by the Board under paragraph (3) to a bank 
        holding company and ending on the date the divestiture 
        is completed, the Board may impose any conditions or 
        restrictions on the holding company's ownership or 
        operation of the depository institution, including 
        restricting or prohibiting transactions between the 
        depository institution and any affiliate of the 
        institution, as are appropriate under the circumstances.
            ``(5) Rule of construction.--No provision of this 
        subsection may be construed as limiting or otherwise 
        affecting, except to the extent specifically provided 
        in this subsection, the regulatory authority, including 
        the scope of the authority, of any Federal agency or 
        department with regard to any entity that is within the 
        jurisdiction of such agency or department.''.
    (b) Subsidiaries of Depository Institutions.--The Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by 
adding at the end the following new section:

``SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND 
                    EXCHANGE COMMISSION.

    ``(a) In General.--Notwithstanding any other provision of 
law, the provisions of--
            ``(1) section 5(c) of the Bank Holding Company Act 
        of 1956 that limit the authority of the Board of 
        Governors of the Federal Reserve System to require 
        reports from, to make examinations of, or to impose 
        capital requirements on holding companies and their 
        functionally regulated subsidiaries or that require 
        deference to other regulators;
            ``(2) section 5(g) of the Bank Holding Company Act 
        of 1956 that limit the authority of the Board to 
        require a functionally regulated subsidiary of a 
        holding company to provide capital or other funds or 
        assets to a depository institution subsidiary of the 
        holding company and to take certain actions including 
        requiring divestiture of the depository institution; 
        and
            ``(3) section 10A of the Bank Holding Company Act 
        of 1956 that limit whatever authority the Board might 
        otherwise have to take direct or indirect action with 
        respect to holding companies and their functionally 
        regulated subsidiaries;
shall also limit whatever authority that a Federal banking 
agency might otherwise have under any statute or regulation to 
require reports, make examinations, impose capital 
requirements, or take any other direct or indirect action with 
respect to any functionally regulated affiliate of a depository 
institution, subject to the same standards and requirements as 
are applicable to the Board under those provisions.
    ``(b) Certain Exemption Authorized.--No provision of this 
section shall be construed as preventing the Corporation, if 
the Corporation finds it necessary to determine the condition 
of a depository institution for insurance purposes, from 
examining an affiliate of any depository institution, pursuant 
to section 10(b)(4), as may be necessary to disclose fully the 
relationship between the depository institution and the 
affiliate, and the effect of such relationship on the 
depository institution.
    ``(c) Definitions.--For purposes of this section, the 
following definitions shall apply:
            ``(1) Functionally regulated subsidiary.--The term 
        `functionally regulated subsidiary' has the meaning 
        given the term in section 5(c)(5) of the Bank Holding 
        Company Act of 1956.
            ``(2) Functionally regulated affiliate.--The term 
        `functionally regulated affiliate' means, with respect 
        to any depository institution, any affiliate of such 
        depository institution that is--
                    ``(A) not a depository institution holding 
                company; and
                    ``(B) a company described in any clause of 
                section 5(c)(5)(B) of the Bank Holding Company 
                Act of 1956.''.

SEC. 113. ROLE OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) is amended by inserting after section 10 the following 
new section:

``SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND 
                    ENFORCEMENT AUTHORITY OF THE BOARD.

    ``(a) Limitation on Direct Action.--The Board may not 
prescribe regulations, issue or seek entry of orders, impose 
restraints, restrictions, guidelines, requirements, safeguards, 
or standards, or otherwise take any action under or pursuant to 
any provision of this Act or section 8 of the Federal Deposit 
Insurance Act against or with respect to a functionally 
regulated subsidiary of a bank holding company unless--
            ``(1) the action is necessary to prevent or redress 
        an unsafe or unsound practice or breach of fiduciary 
        duty by such subsidiary that poses a material risk to--
                    ``(A) the financial safety, soundness, or 
                stability of an affiliated depository 
                institution; or
                    ``(B) the domestic or international payment 
                system; and
            ``(2) the Board finds that it is not reasonably 
        possible to protect effectively against the material 
        risk at issue through action directed at or against the 
        affiliated depository institution or against depository 
        institutions generally.
    ``(b) Limitation on Indirect Action.--The Board may not 
prescribe regulations, issue or seek entry of orders, impose 
restraints, restrictions, guidelines, requirements, safeguards, 
or standards, or otherwise take any action under or pursuant to 
any provision of this Act or section 8 of the Federal Deposit 
Insurance Act against or with respect to a bank holding company 
that requires the bank holding company to require a 
functionally regulated subsidiary of the holding company to 
engage, or to refrain from engaging, in any conduct or 
activities unless the Board could take such action directly 
against or with respect to the functionally regulated 
subsidiary in accordance with subsection (a).
    ``(c) Actions Specifically Authorized.--Notwithstanding 
subsection (a) or (b), the Board may take action under this Act 
or section 8 of the Federal Deposit Insurance Act to enforce 
compliance by a functionally regulated subsidiary of a bank 
holding company with any Federal law that the Board has 
specific jurisdiction to enforce against such subsidiary.
    ``(d) Functionally Regulated Subsidiary Defined.--For 
purposes of this section, the term `functionally regulated 
subsidiary' has the meaning given the term in section 
5(c)(5).''.

SEC. 114. PRUDENTIAL SAFEGUARDS.

    (a) Comptroller of the Currency.--
            (1) In general.--The Comptroller of the Currency 
        may, by regulation or order, impose restrictions or 
        requirements on relationships or transactions between a 
        national bank and a subsidiary of the national bank 
        that the Comptroller finds are--
                    (A) consistent with the purposes of this 
                Act, title LXII of the Revised Statutes of the 
                United States, and other Federal law applicable 
                to national banks; and
                    (B) appropriate to avoid any significant 
                risk to the safety and soundness of insured 
                depository institutions or any Federal deposit 
                insurance fund or other adverse effects, such 
                as undue concentration of resources, decreased 
                or unfair competition, conflicts of interests, 
                or unsound banking practices.
            (2) Review.--The Comptroller of the Currency shall 
        regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to 
                determine whether there is a continuing need 
                for any such restriction or requirement to 
                carry out the purposes of the Act, including 
                the avoidance of any adverse effect referred to 
                in paragraph (1)(B); and
                    (B) modify or eliminate any such 
                restriction or requirement the Comptroller 
                finds is no longer required for such purposes.
    (b) Board of Governors of the Federal Reserve System.--
            (1) In general.--The Board of Governors of the 
        Federal Reserve System may, by regulation or order, 
        impose restrictions or requirements on relationships or 
        transactions--
                    (A) between a depository institution 
                subsidiary of a bank holding company and any 
                affiliate of such depository institution (other 
                than a subsidiary of such institution); or
                    (B) between a State member bank and a 
                subsidiary of such bank;
        if the Board makes a finding described in paragraph (2) 
        with respect to such restriction or requirement.
            (2) Finding.--The Board of Governors of the Federal 
        Reserve System may exercise authority under paragraph 
        (1) if the Board finds that the exercise of such 
        authority is--
                    (A) consistent with the purposes of this 
                Act, the Bank Holding Company Act of 1956, the 
                Federal Reserve Act, and other Federal law 
                applicable to depository institution 
                subsidiaries of bank holding companies or State 
                member banks, as the case may be; and
                    (B) appropriate to prevent an evasion of 
                any provision of law referred to in 
                subparagraph (A) or to avoid any significant 
                risk to the safety and soundness of depository 
                institutions or any Federal deposit insurance 
                fund or other adverse effects, such as undue 
                concentration of resources, decreased or unfair 
                competition, conflicts of interests, or unsound 
                banking practices.
            (3) Review.--The Board of Governors of the Federal 
        Reserve System shall regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) or (4) to 
                determine whether there is a continuing need 
                for any such restriction or requirement to 
                carry out the purposes of the Act, including 
                the avoidance of any adverse effect referred to 
                in paragraph (2)(B) or (4)(B); and
                    (B) modify or eliminate any such 
                restriction or requirement the Board finds is 
                no longer required for such purposes.
            (4) Foreign banks.--The Board may, by regulation or 
        order, impose restrictions or requirements on 
        relationships or transactions between a branch, agency, 
        or commercial lending company of a foreign bank in the 
        United States and any affiliate in the United States of 
        such foreign bank that the Board finds are--
                    (A) consistent with the purposes of this 
                Act, the Bank Holding Company Act of 1956, the 
                Federal Reserve Act, and other Federal law 
                applicable to foreign banks and their 
                affiliates in the United States; and
                    (B) appropriate to prevent an evasion of 
                any provision of law referred to in 
                subparagraph (A) or to avoid any significant 
                risk to the safety and soundness of depository 
                institutions or any Federal deposit insurance 
                fund or other adverse effects, such as undue 
                concentration of resources, decreased or unfair 
                competition, conflicts of interests, or unsound 
                banking practices.
    (c) Federal Deposit Insurance Corporation.--
            (1) In general.--The Federal Deposit Insurance 
        Corporation may, by regulation or order, impose 
        restrictions or requirements on relationships or 
        transactions between a State nonmember bank (as defined 
        in section 3 of the Federal Deposit Insurance Act) and 
        a subsidiary of the State nonmember bank that the 
        Corporation finds are--
                    (A) consistent with the purposes of this 
                Act, the Federal Deposit Insurance Act, or 
                other Federal law applicable to State nonmember 
                banks; and
                    (B) appropriate to avoid any significant 
                risk to the safety and soundness of depository 
                institutions or any Federal deposit insurance 
                fund or other adverse effects, such as undue 
                concentration of resources, decreased or unfair 
                competition, conflicts of interests, or unsound 
                banking practices.
            (2) Review.--The Federal Deposit Insurance 
        Corporation shall regularly--
                    (A) review all restrictions or requirements 
                established pursuant to paragraph (1) to 
                determine whether there is a continuing need 
                for any such restriction or requirement to 
                carry out the purposes of the Act, including 
                the avoidance of any adverse effect referred to 
                in paragraph (1)(B); and
                    (B) modify or eliminate any such 
                restriction or requirement the Corporation 
                finds is no longer required for such purposes.

SEC. 115. EXAMINATION OF INVESTMENT COMPANIES.

    (a) Exclusive Commission Authority.--Except as provided in 
subsection (c), a Federal banking agency may not inspect or 
examine any registered investment company that is not a bank 
holding company or a savings and loan holding company.
    (b) Examination Results and Other Information.--The 
Commission shall provide to any Federal banking agency, upon 
request, the results of any examination, reports, records, or 
other information with respect to any registered investment 
company to the extent necessary for the agency to carry out its 
statutory responsibilities.
    (c) Certain Examinations Authorized.--Nothing in this 
section shall prevent the Corporation, if the Corporation finds 
it necessary to determine the condition of an insured 
depository institution for insurance purposes, from examining 
an affiliate of any insured depository institution, pursuant to 
its authority under section10(b)(4) of the Federal Deposit 
Insurance Act, as may be necessary to disclose fully the relationship 
between the insured depository institution and the affiliate, and the 
effect of such relationship on the insured depository institution.
    (d) Definitions.--For purposes of this section, the 
following definitions shall apply:
            (1) Bank holding company.--The term ``bank holding 
        company'' has the meaning given the term in section 2 
        of the Bank Holding Company Act of 1956.
            (2) Commission.--The term ``Commission'' means the 
        Securities and Exchange Commission.
            (3) Corporation.--The term ``Corporation'' means 
        the Federal Deposit Insurance Corporation.
            (4) Federal banking agency.--The term ``Federal 
        banking agency'' has the meaning given the term in 
        section 3(z) of the Federal Deposit Insurance Act.
            (5) Insured depository institution.--The term 
        ``insured depository institution'' has the meaning 
        given the term in section 3(c) of the Federal Deposit 
        Insurance Act.
            (6) Registered investment company.--The term 
        ``registered investment company'' means an investment 
        company that is registered with the Commission under 
        the Investment Company Act of 1940.
            (7) Savings and loan holding company.--The term 
        ``savings and loan holding company'' has the meaning 
        given the term in section 10(a)(1)(D) of the Home 
        Owners' Loan Act.

SEC. 116. ELIMINATION OF APPLICATION REQUIREMENT FOR FINANCIAL HOLDING 
                    COMPANIES.

    (a) Prevention of Duplicative Filings.--Section 5(a) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1844(a)) is amended 
by adding at the end the following new sentence: ``A 
declaration filed in accordance with section 4(l)(1)(C) shall 
satisfy the requirements of this subsection with regard to the 
registration of a bank holding company but not any requirement 
to file an application to acquire a bank pursuant to section 
3.''.
    (b) Divestiture Procedures.--Section 5(e)(1) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1844(e)(1)) is amended--
            (1) by striking ``Financial Institutions 
        Supervisory Act of 1966, order'' and inserting 
        ``Financial Institutions Supervisory Act of 1966, at 
        the election of the bank holding company--
            ``(A) order''; and
            (2) by striking ``shareholders of the bank holding 
        company. Such distribution'' and inserting 
        ``shareholders of the bank holding company; or
            ``(B) order the bank holding company, after due 
        notice and opportunity for hearing, and after 
        consultation with the primary supervisor for the bank, 
        which shall be the Comptroller of the Currency in the 
        case of a national bank, and the Federal Deposit 
        Insurance Corporation and the appropriate State 
        supervisor in the case of an insured nonmember bank, to 
        terminate (within 120 days or such longer period as the 
        Board may direct) the ownership or control of any such 
        bank by such company.
The distribution referred to in subparagraph (A)''.

SEC. 117. PRESERVING THE INTEGRITY OF FDIC RESOURCES.

    Section 11(a)(4)(B) of the Federal Deposit Insurance Act 
(12 U.S.C. 1821(a)(4)(B)) is amended by striking ``to benefit 
any shareholder of'' and inserting ``to benefit any shareholder 
or affiliate (other than an insured depository institution that 
receives assistance in accordance with the provisions of this 
Act) of''.

SEC. 118. REPEAL OF SAVINGS BANK PROVISIONS IN THE BANK HOLDING COMPANY 
                    ACT OF 1956.

    Section 3(f) of the Bank Holding Company Act of 1956 (12 
U.S.C. 1842(f)) is amended to read as follows:
    ``(f) [Repealed].''.

SEC. 119. TECHNICAL AMENDMENT.

    Section 2(o)(1)(A) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841(o)(1)(A)) is amended by striking ``section 
38(b)'' and inserting ``section 38''.

               Subtitle C--Subsidiaries of National Banks

SEC. 121. SUBSIDIARIES OF NATIONAL BANKS.

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

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

    ``(a) Authorization To Conduct in Subsidiaries Certain 
Activities That are Financial in Nature.--
            ``(1) In general.--Subject to paragraph (2), a 
        national bank may control a financial subsidiary, or 
        hold an interest in a financial subsidiary.
            ``(2) Conditions and requirements.--A national bank 
        may control a financial subsidiary, or hold an interest 
        in a financial subsidiary, only if--
                    ``(A) the financial subsidiary engages only 
                in--
                            ``(i) activities that are financial 
                        in nature or incidental to a financial 
                        activity pursuant to subsection (b); 
                        and
                            ``(ii) activities that are 
                        permitted for national banks to engage 
                        in directly (subject to the same terms 
                        and conditions that govern the conduct 
                        of the activities by a national bank);
                    ``(B) the activities engaged in by the 
                financial subsidiary as a principal do not 
                include--
                            ``(i) insuring, guaranteeing, or 
                        indemnifying against loss, harm, 
                        damage, illness, disability, or death 
                        (except to the extent permitted under 
                        section 302 or 303(c) of the Gramm-
                        Leach-Bliley Act) or providing or 
                        issuing annuities the income of which 
                        is subject to tax treatment under 
                        section 72 of the Internal Revenue Code 
                        of 1986;
                            ``(ii) real estate development or 
                        real estate investment activities, 
                        unless otherwise expressly authorized 
                        by law; or
                            ``(iii) any activity permitted in 
                        subparagraph (H) or (I) of section 
                        4(k)(4) of the Bank Holding Company Act 
                        of 1956, except activities described in 
                        section 4(k)(4)(H) that may be 
                        permitted in accordance with section 
                        122 of the Gramm-Leach-Bliley Act;
                    ``(C) the national bank and each depository 
                institution affiliate of the national bank are 
                well capitalized and well managed;
                    ``(D) the aggregate consolidated total 
                assets of all financial subsidiaries of the 
                national bank do not exceed the lesser of--
                            ``(i) 45 percent of the 
                        consolidated total assets of the parent 
                        bank; or
                            ``(ii) $50,000,000,000;
                    ``(E) except as provided in paragraph (4), 
                the national bank meets any applicable rating 
                or other requirement set forth in paragraph 
                (3); and
                    ``(F) the national bank has received the 
                approval of the Comptroller of the Currency for 
                the financial subsidiary to engage in such 
                activities, which approval shall be based 
                solely upon the factors set forth in this 
                section.
            ``(3) Rating or comparable requirement.--
                    ``(A) In general.--A national bank meets 
                the requirements of this paragraph if--
                            ``(i) the bank is 1 of the 50 
                        largest insured banks and has not fewer 
                        than 1 issue of outstanding eligible 
                        debt that is currently rated within the 
                        3 highest investment grade rating 
                        categories by a nationally recognized 
                        statistical rating organization; or
                            ``(ii) the bank is 1 of the second 
                        50 largest insured banks and meets the 
                        criteria set forth in clause (i) or 
                        such other criteria as the Secretary of 
                        the Treasury and the Board of Governors 
                        of the Federal Reserve System may 
                        jointly establish by regulation and 
                        determine to be comparable to and 
                        consistent with the purposes of the 
                        rating required in clause (i).
                    ``(B) Consolidated total assets.--For 
                purposes of this paragraph, the size of an 
                insured bank shall be determined on the basis 
                of the consolidated total assets of the bank as 
                of the end of each calendar year.
            ``(4) Financial agency subsidiary.--The requirement 
        in paragraph (2)(E) shall not apply with respect to the 
        ownership or control of a financial subsidiary that 
        engages in activities described in subsection (b)(1) 
        solely as agent and not directly or indirectly as 
        principal.
            ``(5) Regulations required.--Before the end of the 
        270-day period beginning on the date of the enactment 
        of the Gramm-Leach-Bliley Act, the Comptroller of the 
        Currency shall, by regulation, prescribe procedures to 
        implement this section.
            ``(6) Indexed asset limit.--The dollar amount 
        contained in paragraph (2)(D) shall be adjusted 
        according to an indexing mechanism jointly established 
        by regulation by the Secretary of the Treasury and the 
        Board of Governors of the Federal Reserve System.
            ``(7) Coordination with section 4(l)(2) of the bank 
        holding company act of 1956.--Section 4(l)(2) of the 
        Bank Holding Company Act of 1956 applies to a national 
        bank that controls a financial subsidiary in the manner 
        provided in that section.
    ``(b) Activities That Are Financial in Nature.--
            ``(1) Financial activities.--
                    ``(A) In general.--An activity shall be 
                financial in nature or incidental to such 
                financial activity only if--
                            ``(i) such activity has been 
                        defined to be financial in nature or 
                        incidental to a financial activity for 
                        bank holding companies pursuant to 
                        section 4(k)(4) of the Bank Holding 
                        Company Act of 1956; or
                            ``(ii) the Secretary of the 
                        Treasury determines the activity is 
                        financial in nature or incidental to a 
                        financial activity in accordance with 
                        subparagraph (B).
                    ``(B) Coordination between the board and 
                the secretary of the treasury.--
                            ``(i) Proposals raised before the 
                        secretary of the treasury.--
                                    ``(I) Consultation.--The 
                                Secretary of the Treasury shall 
                                notify the Board of, and 
                                consult with the Board 
                                concerning, any request, 
                                proposal, or application under 
                                this section for a 
                                determination of whether an 
                                activity is financial in nature 
                                or incidental to a financial 
                                activity.
                                    ``(II) Board view.--The 
                                Secretary of the Treasury shall 
                                not determine that any activity 
                                is financial in nature or 
                                incidental to a financial 
                                activity under this section if 
                                the Board notifies the 
                                Secretary in writing, not later 
                                than 30 days after the date of 
                                receipt of the notice described 
                                in subclause (I) (or such 
                                longer period as the Secretary 
                                determines to be appropriate 
                                under the circumstances) that 
                                the Board believes that the 
                                activity is not financial in 
                                nature or incidental to a 
                                financial activity or is not 
                                otherwise permissible under 
                                this section.
                            ``(ii) Proposals raised by the 
                        board.--
                                    ``(I) Board 
                                recommendation.--The Board may, 
                                at any time, recommend in 
                                writing that the Secretary of 
                                the Treasury find an activity 
                                to be financial in nature or 
                                incidental to a financial 
                                activity for purposes of this 
                                section.
                                    ``(II) Time period for 
                                secretarial action.--Not later 
                                than 30 days after the date of 
                                receipt of a written 
                                recommendation from the Board 
                                under subclause (I) (or such 
                                longer period as the Secretary 
                                of the Treasury and the Board 
                                determine to be appropriate 
                                under the circumstances), the 
                                Secretary shall determine 
                                whether to initiate a public 
                                rulemaking proposing that the 
                                subject recommended activity be 
                                found to be financial in nature 
                                or incidental to a financial 
                                activity under this section, 
                                and shall notify the Board in 
                                writing of the determination of 
                                the Secretary and, in the event 
                                that the Secretary determines 
                                not to seek public comment on 
                                the proposal, the reasons for 
                                that determination.
            ``(2) Factors to be considered.--In determining 
        whether an activity is financial in nature or 
        incidental to a financial activity, the Secretary shall 
        take into account--
                    ``(A) the purposes of this Act and the 
                Gramm-Leach-Bliley Act;
                    ``(B) changes or reasonably expected 
                changes in the marketplace in which banks 
                compete;
                    ``(C) changes or reasonably expected 
                changes in the technology for delivering 
                financial services; and
                    ``(D) whether such activity is necessary or 
                appropriate to allow a bank and the 
                subsidiaries of a bank to--
                            ``(i) compete effectively with any 
                        company seeking to provide financial 
                        services in the United States;
                            ``(ii) efficiently deliver 
                        information and services that are 
                        financial in nature through the use of 
                        technological means, including any 
                        application necessary to protect the 
                        security or efficacy of systems for the 
                        transmission of data or financial 
                        transactions; and
                            ``(iii) offer customers any 
                        available or emerging technological 
                        means for using financial services or 
                        for the document imaging of data.
            ``(3) Authorization of new financial activities.--
        The Secretary of the Treasury shall, by regulation or 
        order and in accordance with paragraph (1)(B), define, 
        consistent with the purposes of this Act and the Gramm-
        Leach-Bliley Act, the following activities as, and the 
        extent to which such activities are, financial in 
        nature or incidental to a financial activity:
                    ``(A) Lending, exchanging, transferring, 
                investing for others, or safeguarding financial 
                assets other than money or securities.
                    ``(B) Providing any device or other 
                instrumentality for transferring money or other 
                financial assets.
                    ``(C) Arranging, effecting, or facilitating 
                financial transactions for the account of third 
                parties.
    ``(c) Capital Deduction.--
            ``(1) Capital deduction required.--In determining 
        compliance with applicable capital standards--
                    ``(A) the aggregate amount of the 
                outstanding equity investment, including 
                retained earnings, of a national bank in all 
                financial subsidiaries shall be deducted from 
                the assets and tangible equity of the national 
                bank; and
                    ``(B) the assets and liabilities of the 
                financial subsidiaries shall not be 
                consolidated with those of the national bank.
            ``(2) Financial statement disclosure of capital 
        deduction.--Any published financial statement of a 
        national bank that controls a financial subsidiary 
        shall, in addition to providing information prepared in 
        accordance with generally accepted accounting 
        principles, separately present financial information 
        for the bank in the manner provided in paragraph (1).
    ``(d) Safeguards for the Bank.--A national bank that 
establishes or maintains a financial subsidiary shall assure 
that--
            ``(1) the procedures of the national bank for 
        identifying and managing financial and operational 
        risks within the national bank and the financial 
        subsidiary adequately protect the national bank from 
        such risks;
            ``(2) the national bank has, for the protection of 
        the bank, reasonable policies and procedures to 
        preserve the separate corporate identity and limited 
        liability of the national bank and the financial 
        subsidiaries of the national bank; and
            ``(3) the national bank is in compliance with this 
        section.
    ``(e) Provisions Applicable to National Banks That Fail To 
Continue To Meet Certain Requirements.--
            ``(1) In general.--If a national bank or insured 
        depository institution affiliate does not continue to 
        meet the requirements of subsection (a)(2)(C) or 
        subsection (d), the Comptroller of the Currency shall 
        promptly give notice to the national bank to that 
        effect describing the conditions giving rise to the 
        notice.
            ``(2) Agreement to correct conditions.--Not later 
        than 45 days after the date of receipt by a national 
        bank of a notice given under paragraph (1) (or such 
        additional period as the Comptroller of the Currency 
        may permit), the national bank shall execute an 
        agreement with the Comptroller of the Currency and any 
        relevant insured depository institution affiliate shall 
        execute an agreement with its appropriate Federal 
        banking agency to comply with the requirements of 
        subsection (a)(2)(C) and subsection (d).
            ``(3) Imposition of conditions.--Until the 
        conditions described in a notice under paragraph (1) 
        are corrected--
                    ``(A) the Comptroller of the Currency may 
                impose such limitations on the conduct or 
                activities of the national bank or any 
                subsidiary of the national bank as the 
                Comptroller of the Currency determines to be 
                appropriate under the circumstances and 
                consistent with the purposes of this section; 
                and
                    ``(B) the appropriate Federal banking 
                agency may impose such limitations on the 
                conduct or activities of any relevant insured 
                depository institution affiliate or any 
                subsidiary of the institution as such agency 
                determines to be appropriate under the 
                circumstances and consistent with the purposes 
                of this section.
            ``(4) Failure to correct.--If the conditions 
        described in a notice to a national bank under 
        paragraph (1) are not corrected within 180 days after 
        the date of receipt by the national bank of the notice, 
        the Comptroller of the Currency may require the 
        national bank, under such terms and conditions as may 
        be imposed by the Comptroller and subject to such 
        extension of time as may be granted in the discretion 
        of the Comptroller, to divest control of any financial 
        subsidiary.
            ``(5) Consultation.--In taking any action under 
        this subsection, the Comptroller shall consult with all 
        relevant Federal and State regulatory agencies and 
        authorities.
    ``(f) Failure To Maintain Public Rating or Meet Applicable 
Criteria.--
            ``(1) In general.--A national bank that does not 
        continue to meet any applicable rating or other 
        requirement of subsection (a)(2)(E) after acquiring or 
        establishing a financial subsidiary shall not, directly 
        or through a subsidiary, purchase or acquire any 
        additional equity capital of any financial subsidiary 
        until the bank meets such requirements.
            ``(2) Equity capital.--For purposes of this 
        subsection, the term `equity capital' includes, in 
        addition to any equity instrument, any debt instrument 
        issued by a financial subsidiary, if the instrument 
        qualifies as capital of the subsidiary under any 
        Federal or State law, regulation, or interpretation 
        applicable to the subsidiary.
    ``(g) Definitions.--For purposes of this section, the 
following definitions shall apply:
            ``(1) Affiliate, company, control, and 
        subsidiary.--The terms `affiliate', `company', 
        `control', and `subsidiary' have the meanings given 
        those terms in section 2 of the Bank Holding Company 
        Act of 1956.
            ``(2) Appropriate federal banking agency, 
        depository institution, insured bank, and insured 
        depository institution.--The terms `appropriate Federal 
        banking agency', `depository institution', `insured 
        bank', and `insured depository institution' have the 
        meanings given those terms in section 3 of the Federal 
        Deposit Insurance Act.
            ``(3) Financial subsidiary.--The term `financial 
        subsidiary' means any company that is controlled by 1 
        or more insured depository institutions other than a 
        subsidiary that--
                    ``(A) engages solely in activities that 
                national banks are permitted to engage in 
                directly and are conducted subject to the same 
                terms and conditions that govern the conduct of 
                such activities by national banks; or
                    ``(B) a national bank is specifically 
                authorized by the express terms of a Federal 
                statute (other than this section), and not by 
                implication or interpretation, to control, such 
                as by section 25 or 25A of the Federal Reserve 
                Act or the Bank Service Company Act.
            ``(4) Eligible debt.--The term `eligible debt' 
        means unsecured long-term debt that--
                    ``(A) is not supported by any form of 
                credit enhancement, including a guarantee or 
                standby letter of credit; and
                    ``(B) is not held in whole or in any 
                significant part by any affiliate, officer, 
                director, principal shareholder, or employee of 
                the bank or any other person acting on behalf 
                of or with funds from the bank or an affiliate 
                of the bank.
            ``(5) Well capitalized.--The term `well 
        capitalized' has the meaning given the term in section 
        38 of the Federal Deposit Insurance Act.
            ``(6) Well managed.--The term `well managed' 
        means--
                    ``(A) in the case of a depository 
                institution that has been examined, unless 
                otherwise determined in writing by the 
                appropriate Federal banking agency--
                            ``(i) the achievement of a 
                        composite rating of 1 or 2 under the 
                        Uniform Financial Institutions Rating 
                        System (or an equivalent rating under 
                        an equivalent rating system) in 
                        connection with the most recent 
                        examination or subsequent review of the 
                        depository institution; and
                            ``(ii) at least a rating of 2 for 
                        management, if such rating is given; or
                    ``(B) in the case of any depository 
                institution that has not been examined, the 
                existence and use of managerial resources that 
                the appropriate Federal banking agency 
                determines are satisfactory.''.
    (b) Sections 23A and 23B of the Federal Reserve Act.--
            (1) Limiting the exposure of a bank to a financial 
        subsidiary to the amount of permissible exposure to an 
        affiliate.--Section 23A of the Federal Reserve Act (12 
        U.S.C. 371c) is amended--
                    (A) by redesignating subsection (e) as 
                subsection (f); and
                    (B) by inserting after subsection (d), the 
                following new subsection:
    ``(e) Rules Relating to Banks with Financial 
Subsidiaries.--
            ``(1) Financial subsidiary defined.--For purposes 
        of this section and section 23B, the term `financial 
        subsidiary' means any company that is a subsidiary of a 
        bank that would be a financial subsidiary of a national 
        bank under section 5136A of the Revised Statutes of the 
        United States.
            ``(2) Financial subsidiary treated as an 
        affiliate.--For purposes of applying this section and 
        section 23B, and notwithstanding subsection (b)(2) of 
        this section or section 23B(d)(1), a financial 
        subsidiary of a bank--
                    ``(A) shall be deemed to be an affiliate of 
                the bank; and
                    ``(B) shall not be deemed to be a 
                subsidiary of the bank.
            ``(3) Exceptions for transactions with financial 
        subsidiaries.--
                    ``(A) Exception from limit on covered 
                transactions with any individual financial 
                subsidiary.--Notwithstanding paragraph (2), the 
                restriction contained in subsection (a)(1)(A) 
                shall not apply with respect to covered 
                transactions between a bank and any individual 
                financial subsidiary of the bank.
                    ``(B) Exception for earnings retained by 
                financial subsidiaries.--Notwithstanding 
                paragraph (2) or subsection (b)(7), a bank's 
                investment in a financial subsidiary of the 
                bank shall not include retained earnings of the 
                financial subsidiary.
            ``(4) Anti-evasion provision.--For purposes of this 
        section and section 23B--
                    ``(A) any purchase of, or investment in, 
                the securities of a financial subsidiary of a 
                bank by an affiliate of the bank shall be 
                considered to be a purchase of or investment in 
                such securities by the bank; and
                    ``(B) any extension of credit by an 
                affiliate of a bank to a financial subsidiary 
                of the bank shall be considered to be an 
                extension of credit by the bank to the 
                financial subsidiary if the Board determines 
                that such treatment is necessary or appropriate 
                to prevent evasions of this Act and the Gramm-
                Leach-Bliley Act.''.
            (2) Rebuttable presumption of control of portfolio 
        company.--Section 23A(b) of the Federal Reserve Act (12 
        U.S.C. 371c(b)) is amended by adding at the end the 
        following new paragraph--
            ``(11) Rebuttable presumption of control of 
        portfolio companies.--In addition to paragraph (3), a 
        company or shareholder shall be presumed to control any 
        other company if the company or shareholder, directly 
        or indirectly, or acting through 1 or more other 
        persons, owns or controls 15 percent or more of the 
        equity capital of the other company pursuant to 
        subparagraph (H) or (I) of section 4(k)(4) of the Bank 
        Holding Company Act of 1956 or rules adopted under 
        section 122 of the Gramm-Leach-Bliley Act, if any, 
        unless the company or shareholder provides information 
        acceptable to the Board to rebut this presumption of 
        control.''.
            (3) Rulemaking required concerning derivative 
        transactions and intraday credit.--Section 23A(f) of 
        the Federal Reserve Act (12 U.S.C. 371c(f)) (as so 
        redesignated by paragraph (1)(A) of this subsection) is 
        amended by inserting at the end the following new 
        paragraph:
            ``(3) Rulemaking required concerning derivative 
        transactions and intraday credit.--
                    ``(A) In general.--Not later than 18 months 
                after the date of the enactment of the Gramm-
                Leach-Bliley Act, the Board shall adopt final 
                rules under this section to address as covered 
                transactions credit exposure arising out of 
                derivative transactions between member banks 
                and their affiliates and intraday extensions of 
                credit by member banks to their affiliates.
                    ``(B) Effective date.--The effective date 
                of any final rule adopted by the Board pursuant 
                to subparagraph (A) shall be delayed for such 
                period as the Board deems necessary or 
                appropriate to permit banks to conform their 
                activities to the requirements of the final 
                rule without undue hardship.''.
    (c) Antitying.--Section 106(a) of the Bank Holding Company 
Act Amendments of 1970 (12 U.S.C. 1971) is amended by adding at 
the end the following: ``For purposes of this section, a 
financial subsidiary of a national bank engaging in activities 
pursuant to section 5136A(a) of the Revised Statutes of the 
United States shall be deemed to be a subsidiary of a bank 
holding company, and not a subsidiary of a bank.''.
    (d) Safety and Soundness Firewalls for State Banks With 
Financial Subsidiaries.--
            (1) Federal deposit insurance act.--The Federal 
        Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
        amended by inserting after section 45 (as added by 
        section 112(b) of this title) the following new 
        section:

``SEC. 46. SAFETY AND SOUNDNESS FIREWALLS APPLICABLE TO FINANCIAL 
                    SUBSIDIARIES OF BANKS.

    ``(a) In General.--An insured State bank may control or 
hold an interest in a subsidiary that engages in activities as 
principal that would only be permissible for a national bank to 
conduct through a financial subsidiary if--
            ``(1) the State bank and each insured depository 
        institution affiliate of the State bank are well 
        capitalized (after the capital deduction required by 
        paragraph (2));
            ``(2) the State bank complies with the capital 
        deduction and financial statement disclosure 
        requirements in section 5136A(c) of the Revised 
        Statutes of the United States;
            ``(3) the State bank complies with the financial 
        and operational safeguards required by section 5136A(d) 
        of the Revised Statutes of the United States; and
            ``(4) the State bank complies with the amendments 
        to sections 23A and 23B of the Federal Reserve Act made 
        by section 121(b) of the Gramm-Leach-Bliley Act.
    ``(b) Preservation of Existing Subsidiaries.--
Notwithstanding subsection (a), an insured State bank may 
retain control of a subsidiary, or retain an interest in a 
subsidiary, that the State bank lawfully controlled or acquired 
before the date of the enactment of the Gramm-Leach-Bliley Act, 
and conduct through such subsidiary any activities lawfully 
conducted in such subsidiary as of such date.
    ``(c) Definitions.--For purposes of this section, the 
following definitions shall apply:
            ``(1) Subsidiary.--The term `subsidiary' means any 
        company that is a subsidiary (as defined in section 
        3(w)(4)) of 1 or more insured banks.
            ``(2) Financial subsidiary.--The term `financial 
        subsidiary' has the meaning given the term in section 
        5136A(g) of the Revised Statutes of the United States.
    ``(d) Preservation of Authority.--
            ``(1) Federal deposit insurance act.--No provision 
        of this section shall be construed as superseding the 
        authority of the Federal Deposit Insurance Corporation 
        to review subsidiary activities under section 24.
            ``(2) Federal reserve act.--No provision of this 
        section shall be construed as affecting the 
        applicability of the 20th undesignated paragraph of 
        section 9 of the Federal Reserve Act.''.
            (2) Federal Reserve Act.--The 20th undesignated 
        paragraph of section 9 of the Federal Reserve Act (12 
        U.S.C. 335) is amended by adding at the end the 
        following: ``This paragraph shall not apply to any 
        interest held by a State member bank in accordance with 
        section 5136A of the Revised Statutes of the United 
        States and subject to the same conditions and 
        limitations provided in such section.''.
    (e) Clerical Amendment.--The table of sections for chapter 
one of title LXII of the Revised Statutes of the United States 
is amended--
            (1) by redesignating the item relating to section 
        5136A as section 5136B; and
            (2) by inserting after the item relating to section 
        5136 the following new item:

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

SEC. 122. CONSIDERATION OF MERCHANT BANKING ACTIVITIES BY FINANCIAL 
                    SUBSIDIARIES.

    After the end of the 5-year period beginning on the date of 
the enactment of the Gramm-Leach-Bliley Act, the Board of 
Governors of the Federal Reserve System and the Secretary of 
the Treasury may, if appropriate, after considering--
            (1) the experience with the effects of financial 
        modernization under this Act and merchant banking 
        activities of financial holding companies;
            (2) the potential effects on depository 
        institutions and the financial system of allowing 
        merchant banking activities in financial subsidiaries; 
        and
            (3) other relevant facts;
jointly adopt rules that permit financial subsidiaries to 
engage in merchant banking activities described in section 
4(k)(4)(H) of the Bank Holding Company Act of 1956, under such 
terms and conditions as the Board of Governors of the Federal 
Reserve System and the Secretary of the Treasury jointly 
determine to be appropriate.

               Subtitle D--Preservation of FTC Authority

SEC. 131. AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956 TO MODIFY 
                    NOTIFICATION AND POST-APPROVAL WAITING PERIOD FOR 
                    SECTION 3 TRANSACTIONS.

    Section 11(b)(1) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1849(b)(1)) is amended by inserting ``and, if the 
transaction also involves an acquisition under section 4, the 
Board shall also notify the Federal Trade Commission of such 
approval'' before the period at the end of the first sentence.

SEC. 132. INTERAGENCY DATA SHARING.

    (a) In General.--To the extent not prohibited by other law, 
the Comptroller of the Currency, the Director of the Office of 
Thrift Supervision, the Federal Deposit Insurance Corporation, 
and the Board of Governors of the Federal Reserve System shall 
make available to the Attorney General and the Federal Trade 
Commission any data in the possession of any such banking 
agency that the antitrust agency deems necessary for antitrust 
review of any transaction requiring notice to any such 
antitrust agency or the approval of such agency under section 3 
or 4 of the Bank Holding Company Act of 1956, section 18(c) of 
the Federal Deposit Insurance Act, the National Bank 
Consolidation and Merger Act, section 10 of the Home Owners' 
Loan Act, or the antitrust laws.
    (b) Confidentiality Requirements.--
            (1) In general.--Any information or material 
        obtained by any agency pursuant to subsection (a) shall 
        be treated as confidential.
            (2) Procedures for disclosure.--If any information 
        or material obtained by any agency pursuant to 
        subsection (a) is proposed to be disclosed to a third 
        party, written notice of such disclosure shall first be 
        provided to the agency from which such information or 
        material was obtained and an opportunity shall be given 
        to such agency to oppose or limit the proposed 
        disclosure.
            (3) Other privileges not waived by disclosure under 
        this section.--The provision by any Federal agency of 
        any information or material pursuant to subsection (a) 
        to another agency shall not constitute a waiver, or 
        otherwise affect, any privilege any agency or person 
        may claim with respect to such information under 
        Federal or State law.
            (4) Exception.--No provision of this section shall 
        be construed as preventing or limiting access to any 
        information by any duly authorized committee of the 
        Congress or the Comptroller General of the United 
        States.
    (c) Banking Agency Information Sharing.--The provisions of 
subsection (b) shall apply to--
            (1) any information or material obtained by any 
        Federal banking agency (as defined in section 3(z) of 
        the Federal Deposit Insurance Act) from any other 
        Federal banking agency; and
            (2) any report of examination or other confidential 
        supervisory information obtained by any State agency or 
        authority, or any other person, from a Federal banking 
        agency.

SEC. 133. CLARIFICATION OF STATUS OF SUBSIDIARIES AND AFFILIATES.

    (a) Clarification of Federal Trade Commission 
Jurisdiction.--Any person that directly or indirectly controls, 
is controlled directly or indirectly by, or is directly or 
indirectly under common control with, any bank or savings 
association (as such terms are defined in section 3 of the 
Federal Deposit Insurance Act) and is not itself a bank or 
savings association shall not be deemed to be a bank or savings 
association for purposes of any provisions applied by the 
Federal Trade Commission under the Federal Trade Commission 
Act.
    (b) Savings Provision.--No provision of this section shall 
be construed as restricting the authority of any Federal 
banking agency (as defined in section 3 of the Federal Deposit 
Insurance Act) under any Federal banking law, including section 
8 of the Federal Deposit Insurance Act.
    (c) Hart-Scott-Rodino Amendments.--
            (1) Banks.--Section 7A(c)(7) of the Clayton Act (15 
        U.S.C. 18a(c)(7)) is amended by inserting before the 
        semicolon at the end the following: ``, except that a 
        portion of a transaction is not exempt under this 
        paragraph if such portion of the transaction (A) is 
        subject to section 4(k) of the Bank Holding Company Act 
        of 1956; and (B) does not require agency approval under 
        section 3 of the Bank Holding Company Act of 1956''.
            (2) Bank holding companies.--Section 7A(c)(8) of 
        the Clayton Act (15 U.S.C. 18a(c)(8)) is amended by 
        inserting before the semicolon at the end the 
        following: ``, except that a portion of a transaction 
        is not exempt under this paragraph if such portion of 
        the transaction (A) is subject to section 4(k) of the 
        Bank Holding Company Act of 1956; and (B) does not 
        require agency approval under section 4 of the Bank 
        Holding Company Act of 1956''.

                     Subtitle E--National Treatment

SEC. 141. FOREIGN BANKS THAT ARE FINANCIAL HOLDING COMPANIES.

    Section 8(c) of the International Banking Act of 1978 (12 
U.S.C. 3106(c)) is amended by adding at the end the following 
new paragraph:
            ``(3) Termination of grandfathered rights.--
                    ``(A) In general.--If any foreign bank or 
                foreign company files a declaration under 
                section 4(l)(1)(C) of the Bank Holding Company 
                Act of 1956, any authority conferred by this 
                subsection on any foreign bank or company 
toengage in any activity that the Board has determined to be 
permissible for financial holding companies under section 4(k) of such 
Act shall terminate immediately.
                    ``(B) Restrictions and requirements 
                authorized.--If a foreign bank or company that 
                engages, directly or through an affiliate 
                pursuant to paragraph (1), in an activity that 
                the Board has determined to be permissible for 
                financial holding companies under section 4(k) 
                of the Bank Holding Company Act of 1956 has not 
                filed a declaration with the Board of its 
                status as a financial holding company under 
                such section by the end of the 2-year period 
                beginning on the date of the enactment of the 
                Gramm-Leach-Bliley Act, the Board, giving due 
                regard to the principle of national treatment 
                and equality of competitive opportunity, may 
                impose such restrictions and requirements on 
                the conduct of such activities by such foreign 
                bank or company as are comparable to those 
                imposed on a financial holding company 
                organized under the laws of the United States, 
                including a requirement to conduct such 
                activities in compliance with any prudential 
                safeguards established under section 114 of the 
                Gramm-Leach-Bliley Act.''.

SEC. 142. REPRESENTATIVE OFFICES.

    (a) Definition.--Section 1(b)(15) of the International 
Banking Act of 1978 (12 U.S.C. 3101(15)) is amended by striking 
``State agency, or subsidiary of a foreign bank'' and inserting 
``or State agency''.
    (b) Examinations.--Section 10(c) of the International 
Banking Act of 1978 (12 U.S.C. 3107(c)) is amended by adding at 
the end the following new sentence: ``The Board may also make 
examinations of any affiliate of a foreign bank conducting 
business in any State if the Board deems it necessary to 
determine and enforce compliance with this Act, the Bank 
Holding Company Act of 1956, or other applicable Federal 
banking law.''.

                 Subtitle F--Direct Activities of Banks

SEC. 151. AUTHORITY OF NATIONAL BANKS TO UNDERWRITE CERTAIN MUNICIPAL 
                    BONDS.

    The paragraph designated the Seventh of section 5136 of the 
Revised Statutes of the United States (12 U.S.C. 24(7)) is 
amended by adding at the end the following new sentence: ``In 
addition to the provisions in this paragraph for dealing in, 
underwriting, or purchasing securities, the limitations and 
restrictions contained in this paragraph as to dealing in, 
underwriting, and purchasing investment securities for the 
national bank's own account shall not apply to obligations 
(including limited obligation bonds, revenue bonds, and 
obligations that satisfy the requirements of section 142(b)(1) 
of the Internal Revenue Code of 1986) issued by or on behalf of 
any State or political subdivision of a State, including any 
municipal corporate instrumentality of 1 or more States, or any 
public agency or authority of any State or political 
subdivision of a State, if the national bank is well 
capitalized (as defined in section 38 of the Federal Deposit 
Insurance Act).''.

                       Subtitle G--Effective Date

SEC. 161. EFFECTIVE DATE.

    This title (other than section 104) and the amendments made 
by this title shall take effect 120 days after the date of the 
enactment of this Act.

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

SEC. 201. DEFINITION OF BROKER.

    Section 3(a)(4) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(4)) is amended to read as follows:
            ``(4) Broker.--
                    ``(A) In general.--The term `broker' means 
                any person engaged in the business of effecting 
                transactions in securities for the account of 
                others.
                    ``(B) Exception for certain bank 
                activities.--A bank shall not be considered to 
                be a broker because the bank engages in any one 
                or more of the following activities under the 
                conditions described:
                            ``(i) Third party brokerage 
                        arrangements.--The bank enters into a 
                        contractual or other written 
                        arrangement with a broker or dealer 
                        registered under this title under which 
                        the broker or dealer offers brokerage 
                        services on or off the premises of the 
                        bank if--
                                    ``(I) such broker or dealer 
                                is clearly identified as the 
                                person performing the brokerage 
                                services;
                                    ``(II) the broker or dealer 
                                performs brokerage services in 
                                an area that is clearly marked 
                                and, to the extent practicable, 
                                physically separate from the 
                                routine deposit-taking 
                                activities of the bank;
                                    ``(III) any materials used 
                                by the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                clearly indicate that the 
                                brokerage services are being 
                                provided by the broker or 
                                dealer and not by the bank;
                                    ``(IV) any materials used 
                                by the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                    ``(V) bank employees (other 
                                than associated persons of a 
                                broker or dealer who are 
                                qualified pursuant to the rules 
                                of a self-regulatory 
                                organization) perform only 
                                clerical or ministerial 
                                functions in connection with 
                                brokerage transactions 
                                including scheduling 
                                appointments with the 
                                associated persons of a broker 
                                or dealer, except that bank 
                                employees may forward customer 
                                funds or securities and may 
                                describe in general terms the 
                                types of investment vehicles 
                                available from the bank and the 
                                broker or dealer under the 
                                arrangement;
                                    ``(VI) bank employees do 
                                not receive incentive 
                                compensation for any brokerage 
                                transaction unless such 
                                employees are associated 
                                persons of a broker or dealer 
                                and are qualified pursuant to 
                                the rules of a self-regulatory 
                                organization, except that the 
                                bank employees may receive 
                                compensation for the referral 
                                of any customer if the 
                                compensation is a nominal one-
                                time cash fee of a fixed dollar 
                                amount and the payment of the 
                                fee is not contingent on 
                                whether the referral results in 
                                a transaction;
                                    ``(VII) such services are 
                                provided by the broker or 
                                dealer on a basis in which all 
                                customers that receive any 
                                services are fully disclosed to 
                                the broker or dealer;
                                    ``(VIII) the bank does not 
                                carry a securities account of 
                                the customer except as 
                                permitted under clause (ii) or 
                                (viii) of this subparagraph; 
                                and
                                    ``(IX) the bank, broker, or 
                                dealer informs each customer 
                                that the brokerage services are 
                                provided by the broker or 
                                dealer and not by the bank and 
                                that the securities are not 
                                deposits or other obligations 
                                of the bank, are not guaranteed 
                                by the bank, and are not 
                                insured by the Federal Deposit 
                                Insurance Corporation.
                            ``(ii) Trust activities.--The bank 
                        effects transactions in a trustee 
                        capacity, or effects transactions in a 
                        fiduciary capacity in its trust 
                        department or other department that is 
                        regularly examined by bank examiners 
                        for compliance with fiduciary 
                        principles and standards, and--
                                    ``(I) is chiefly 
                                compensated for such 
                                transactions, consistent with 
                                fiduciary principles and 
                                standards, on the basis of an 
                                administration or annual fee 
                                (payable on a monthly, 
                                quarterly, or other basis), a 
                                percentage of assets under 
                                management, or a flat or capped 
                                per order processing fee equal 
                                to not more than the cost 
                                incurred by the bank in 
                                connection with executing 
                                securities transactions for 
                                trustee and fiduciary 
                                customers, or any combination 
                                of such fees; and
                                    ``(II) does not publicly 
                                solicit brokerage business, 
                                other than by advertising that 
                                it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust 
                                activities.
                            ``(iii) Permissible securities 
                        transactions.--The bank effects 
                        transactions in--
                                    ``(I) commercial paper, 
                                bankers acceptances, or 
                                commercial bills;
                                    ``(II) exempted securities;
                                    ``(III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes, in conformity 
                                with section 15C of this title 
                                and the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                    ``(IV) any standardized, 
                                credit enhanced debt security 
                                issued by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                            ``(iv) Certain stock purchase 
                        plans.--
                                    ``(I) Employee benefit 
                                plans.--The bank effects 
                                transactions, as part of its 
                                transfer agency activities, in 
                                the securities of an issuer as 
                                part of any pension, 
                                retirement, profit-sharing, 
                                bonus, thrift, savings, 
                                incentive, or other similar 
                                benefit plan for the employees 
                                of that issuer or its 
                                affiliates (as defined in 
                                section 2 of the Bank Holding 
                                Company Act of 1956), if the 
                                bank does not solicit 
                                transactions or provide 
                                investment advice with respect 
                                to the purchase or sale of 
                                securities in connection with 
                                the plan.
                                    ``(II) Dividend 
                                reinvestment plans.--The bank 
                                effects transactions, as part 
                                of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of that 
                                issuer's dividend reinvestment 
                                plan, if--
                                            ``(aa) the bank 
                                        does not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan; and
                                            ``(bb) the bank 
                                        does not net 
                                        shareholders' buy and 
                                        sell orders, other than 
                                        for programs for odd-
                                        lot holders or plans 
                                        registered with the 
                                        Commission.
                                    ``(III) Issuer plans.--The 
                                bank effects transactions, as 
                                part of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of a plan 
                                or program for the purchase or 
                                sale of that issuer's shares, 
                                if--
                                            ``(aa) the bank 
                                        does not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan or program; and
                                            ``(bb) the bank 
                                        does not net 
                                        shareholders' buy and 
                                        sell orders, other than 
                                        for programs for odd-
                                        lot holders or plans 
                                        registered with the 
                                        Commission.
                                    ``(IV) Permissible delivery 
                                of materials.--The exception to 
                                being considered a broker for a 
                                bank engaged in activities 
                                described in subclauses (I), 
                                (II), and (III) will not be 
                                affected by delivery of written 
                                or electronic plan materials by 
                                a bank to employees of the 
                                issuer, shareholders of the 
                                issuer, or members of affinity 
                                groups of the issuer, so long 
                                as such materials are--
                                            ``(aa) comparable 
                                        in scope or nature to 
                                        that permitted by the 
                                        Commission as of the 
                                        date of the enactment 
                                        of the Gramm-Leach-
                                        Bliley Act; or
                                            ``(bb) otherwise 
                                        permitted by the 
                                        Commission.
                            ``(v) Sweep accounts.--The bank 
                        effects transactions as part of a 
                        program for the investment or 
                        reinvestment of deposit funds into any 
                        no-load, open-end management investment 
                        company registered under the Investment 
                        Company Act of 1940 that holds itself 
                        out as a money market fund.
                            ``(vi) Affiliate transactions.--The 
                        bank effects transactions for the 
                        account of any affiliate of the bank 
                        (as defined in section 2 of the Bank 
                        Holding Company Act of 1956) other 
                        than--
                                    ``(I) a registered broker 
                                or dealer; or
                                    ``(II) an affiliate that is 
                                engaged in merchant banking, as 
                                described in section 4(k)(4)(H) 
                                of the Bank Holding Company Act 
                                of 1956.
                            ``(vii) Private securities 
                        offerings.--The bank--
                                    ``(I) effects sales as part 
                                of a primary offering of 
                                securities not involving a 
                                public offering, pursuant to 
                                section 3(b), 4(2), or 4(6) of 
                                the Securities Act of 1933 or 
                                the rules and regulations 
                                issued thereunder;
                                    ``(II) at any time after 
                                the date that is 1 year after 
                                the date of the enactment of 
                                the Gramm-Leach-Bliley Act, is 
                                not affiliated with a broker or 
                                dealer that has been registered 
                                for more than 1 year in 
                                accordance with this Act, and 
                                engages in dealing, market 
                                making, or underwriting 
                                activities, other than with 
                                respect to exempted securities; 
                                and
                                    ``(III) if the bank is not 
                                affiliated with a broker or 
                                dealer, does not effect any 
                                primary offering described in 
                                subclause (I) the aggregate 
                                amount of which exceeds 25 
                                percent of the capital of the 
                                bank, except that the 
                                limitation of this subclause 
                                shall not apply with respect to 
                                any sale of government 
                                securities or municipal 
                                securities.
                            ``(viii) Safekeeping and custody 
                        activities.--
                                    ``(I) In general.--The 
                                bank, as part of customary 
                                banking activities--
                                            ``(aa) provides 
                                        safekeeping or custody 
                                        services with respect 
                                        to securities, 
                                        including the exercise 
                                        of warrants and other 
                                        rights on behalf of 
                                        customers;
                                            ``(bb) facilitates 
                                        the transfer of funds 
                                        or securities, as a 
                                        custodian or a clearing 
                                        agency, in connection 
                                        with the clearance and 
                                        settlement of its 
                                        customers' transactions 
                                        in securities;
                                            ``(cc) effects 
                                        securities lending or 
                                        borrowing transactions 
                                        with or on behalf of 
                                        customers as part of 
                                        services provided to 
                                        customers pursuant to 
                                        division (aa) or (bb) 
                                        or invests cash 
                                        collateral pledged in 
                                        connection with such 
                                        transactions;
                                            ``(dd) holds 
                                        securities pledged by a 
                                        customer to another 
                                        person or securities 
                                        subject to purchase or 
                                        resale agreements 
                                        involving a customer, 
                                        or facilitates the 
                                        pledging or transfer of 
                                        such securities by book 
                                        entry or as otherwise 
                                        provided under 
                                        applicable law, if the 
                                        bank maintains records 
                                        separately identifying 
                                        the securities and the 
                                        customer; or
                                            ``(ee) serves as a 
                                        custodian or provider 
                                        of other related 
                                        administrative services 
                                        to any individual 
                                        retirement account, 
                                        pension, retirement, 
                                        profit sharing, bonus, 
                                        thrift savings, 
                                        incentive, or other 
                                        similar benefit plan.
                                    ``(II) Exception for 
                                carrying broker activities.--
                                The exception to being 
                                considered a broker for a bank 
                                engaged in activities described 
                                in subclause (I) shall not 
                                apply if the bank, in 
                                connection with such 
                                activities, acts in the United 
                                States as a carrying broker (as 
                                such term, and different 
                                formulations thereof, are used 
                                in section 15(c)(3) of this 
                                title and the rules and 
                                regulations thereunder) for any 
                                broker or dealer, unless such 
                                carrying broker activities are 
                                engaged in with respect to 
                                government securities (as 
                                defined in paragraph (42) of 
                                this subsection).
                            ``(ix) Identified banking 
                        products.--The bank effects 
                        transactions in identified banking 
                        products as defined in section 206 of 
                        the Gramm-Leach-Bliley Act.
                            ``(x) Municipal securities.--The 
                        bank effects transactions in municipal 
                        securities.
                            ``(xi) De minimis exception.--The 
                        bank effects, other than in 
                        transactions referred to in clauses (i) 
                        through (x), not more than 500 
                        transactions in securities in any 
                        calendar year, and such transactions 
                        are not effected by an employee of the 
                        bank who is also an employee of a 
                        broker or dealer.
                    ``(C) Execution by broker or dealer.--The 
                exception to being considered a broker for a 
                bank engaged in activities described in clauses 
                (ii), (iv), and (viii) of subparagraph (B) 
                shall not apply if the activities described in 
                such provisions result in the trade in the 
                United States of any security that is a 
                publicly traded security in the United States, 
                unless--
                            ``(i) the bank directs such trade 
                        to a registered broker or dealer for 
                        execution;
                            ``(ii) the trade is a cross trade 
                        or other substantially similar trade of 
                        a security that--
                                    ``(I) is made by the bank 
                                or between the bank and an 
                                affiliated fiduciary; and
                                    ``(II) is not in 
                                contravention of fiduciary 
                                principles established under 
                                applicable Federal or State 
                                law; or
                            ``(iii) the trade is conducted in 
                        some other manner permitted under 
                        rules, regulations, or orders as the 
                        Commission may prescribe or issue.
                    ``(D) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii), the term `fiduciary 
                capacity' means--
                            ``(i) in the capacity as trustee, 
                        executor, administrator, registrar of 
                        stocks and bonds, transfer agent, 
                        guardian, assignee, receiver, or 
                        custodian under a uniform gift to minor 
                        act, or as an investment adviser if the 
                        bank receives a fee for its investment 
                        advice;
                            ``(ii) in any capacity in which the 
                        bank possesses investment discretion on 
                        behalf of another; or
                            ``(iii) in any other similar 
                        capacity.
                    ``(E) Exception for entities subject to 
                section 15(e).--The term `broker' does not 
                include a bank that--
                            ``(i) was, on the day before the 
                        date of enactment of the Gramm-Leach-
                        Bliley Act, subject to section 15(e); 
                        and
                            ``(ii) is subject to such 
                        restrictions and requirements as the 
                        Commission considers appropriate.''.

SEC. 202. DEFINITION OF DEALER.

    Section 3(a)(5) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(5)) is amended to read as follows:
            ``(5) Dealer.--
                    ``(A) In general.--The term `dealer' means 
                any person engaged in the business of buying 
                and selling securities for such person's own 
                account through a broker or otherwise.
                    ``(B) Exception for person not engaged in 
                the business of dealing.--The term `dealer' 
                does not include a person that buys or sells 
                securities for such person's own account, 
                either individually or in a fiduciary capacity, 
                but not as a part of a regular business.
                    ``(C) Exception for certain bank 
                activities.--A bank shall not be considered to 
                be a dealer because the bank engages in any of 
                the following activities under the conditions 
                described:
                            ``(i) Permissible securities 
                        transactions.--The bank buys or sells--
                                    ``(I) commercial paper, 
                                bankers acceptances, or 
                                commercial bills;
                                    ``(II) exempted securities;
                                    ``(III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes of the United 
                                States, in conformity with 
                                section 15C of this title and 
                                the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                    ``(IV) any standardized, 
                                credit enhanced debt security 
                                issued by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                            ``(ii) Investment, trustee, and 
                        fiduciary transactions.--The bank buys 
                        or sells securities for investment 
                        purposes--
                                    ``(I) for the bank; or
                                    ``(II) for accounts for 
                                which the bank acts as a 
                                trustee or fiduciary.
                            ``(iii) Asset-backed 
                        transactions.--The bank engages in the 
                        issuance or sale to qualified 
                        investors, through a grantor trust or 
                        other separate entity, of securities 
                        backed by or representing an interest 
                        in notes, drafts, acceptances, loans, 
                        leases, receivables, other obligations 
                        (other than securities of which the 
                        bank is not the issuer), or pools of 
                        any such obligations predominantly 
                        originated by--
                                    ``(I) the bank;
                                    ``(II) an affiliate of any 
                                such bank other than a broker 
                                or dealer; or
                                    ``(III) a syndicate of 
                                banks of which the bank is a 
                                member, if the obligations or 
                                pool of obligations consists of 
                                mortgage obligations or 
                                consumer-related receivables.
                            ``(iv) Identified banking 
                        products.--The bank buys or sells 
                        identified banking products, as defined 
                        in section 206 of the Gramm-Leach-
                        Bliley Act.''.

SEC. 203. REGISTRATION FOR SALES OF PRIVATE SECURITIES OFFERINGS.

    Section 15A of the Securities Exchange Act of 1934 (15 
U.S.C. 78o-3) is amended by inserting after subsection (i) the 
following new subsection:
    ``(j) Registration for Sales of Private Securities 
Offerings.--A registered securities association shall create a 
limited qualification category for any associated person of a 
member who effects sales as part of a primary offering of 
securities not involving a public offering, pursuant to section 
3(b), 4(2), or 4(6) of the Securities Act of 1933 and the rules 
and regulations thereunder, and shall deem qualified in such 
limited qualification category, without testing, any bank 
employee who, in the six month period preceding the date of the 
enactment of the Gramm-Leach-Bliley Act, engaged in effecting 
such sales.''.

SEC. 204. INFORMATION SHARING.

    Section 18 of the Federal Deposit Insurance Act is amended 
by adding at the end the following new subsection:
    ``(t) Recordkeeping Requirements.--
            ``(1) Requirements.--Each appropriate Federal 
        banking agency, after consultation with and 
        consideration of the views of the Commission, shall 
        establish recordkeeping requirements for banks relying 
        on exceptions contained in paragraphs (4) and (5) of 
        section 3(a) of the Securities Exchange Act of 1934. 
        Such recordkeeping requirements shall be sufficient to 
        demonstrate compliance with the terms of such 
        exceptions and be designed to facilitate compliance 
        with such exceptions.
            ``(2) Availability to commission; 
        confidentiality.--Each appropriate Federal banking 
        agency shall make any information required under 
        paragraph (1) available to the Commission upon request. 
        Notwithstanding any other provision of law, the 
        Commission shall not be compelled to disclose any such 
        information. Nothing in this paragraph shall authorize 
        the Commission to withhold information from Congress, 
        or prevent the Commission from complying with a request 
        for information from any other Federal department or 
        agency or any self-regulatory organization requesting 
        the information for purposes within the scope of its 
        jurisdiction, or complying with an order of a court of 
        the United States in an action brought by the United 
        States or the Commission. For purposes of section 552 
        of title 5, United States Code, this paragraph shall be 
        considered a statute described in subsection (b)(3)(B) 
        of such section 552.
            ``(3) Definitions.--As used in this subsection the 
        term `Commission' means the Securities and Exchange 
        Commission.''.

SEC. 205. TREATMENT OF NEW HYBRID PRODUCTS.

    Section 15 of the Securities Exchange Act of 1934 (15 
U.S.C. 78o) is amended by adding at the end the following new 
subsection:
    ``(i) Rulemaking To Extend Requirements to New Hybrid 
Products.--
            ``(1) Consultation.--Prior to commencing a 
        rulemaking under this subsection, the Commission shall 
        consult with and seek the concurrence of the Board 
        concerning the imposition of broker or dealer 
        registration requirements with respect to any new 
        hybrid product. In developing and promulgating rules 
        under this subsection, the Commission shall consider 
        the views of the Board, including views with respect to 
        the nature of the new hybrid product; the history, 
        purpose, extent, and appropriateness of the regulation 
        of the new product under the Federal banking laws; and 
        the impact of the proposed rule on the banking 
        industry.
            ``(2) Limitation.--The Commission shall not--
                    ``(A) require a bank to register as a 
                broker or dealer under this section because the 
                bank engages in any transaction in, or buys or 
                sells, a new hybrid product; or
                    ``(B) bring an action against a bank for a 
                failure to comply with a requirement described 
                in subparagraph (A),
        unless the Commission has imposed such requirement by 
        rule or regulation issued in accordance with this 
        section.
            ``(3) Criteria for rulemaking.--The Commission 
        shall not impose a requirement under paragraph (2) of 
        this subsection with respect to any new hybrid product 
        unless the Commission determines that--
                    ``(A) the new hybrid product is a security; 
                and
                    ``(B) imposing such requirement is 
                necessary and appropriate in the public 
                interest and for the protection of investors.
            ``(4) Considerations.--In making a determination 
        under paragraph (3), the Commission shall consider--
                    ``(A) the nature of the new hybrid product; 
                and
                    ``(B) the history, purpose, extent, and 
                appropriateness of the regulation of the new 
                hybrid product under the Federal securities 
                laws and under the Federal banking laws.
            ``(5) Objection to commission regulation.--
                    ``(A) Filing of petition for review.--The 
                Board may obtain review of any final regulation 
                described in paragraph (2) in the United States 
                Court of Appeals for the District of Columbia 
                Circuit by filing in such court, not later than 
                60 days after the date of publication of the 
                final regulation, a written petition requesting 
                that the regulation be set aside. Any 
                proceeding to challenge any such rule shall be 
                expedited by the Court of Appeals.
                    ``(B) Transmittal of petition and record.--
                A copy of a petition described in subparagraph 
                (A) shall be transmitted as soon as possible by 
                the Clerk of the Court to an officer or 
                employee of the Commission designated for that 
                purpose. Upon receipt of the petition, the 
                Commission shall file with the court the 
                regulation under review and any documents 
                referred to therein, and any other relevant 
                materials prescribed by the court.
                    ``(C) Exclusive jurisdiction.--On the date 
                of the filing of the petition under 
                subparagraph (A), the court has jurisdiction, 
                which becomes exclusive on the filing of the 
                materials set forth in subparagraph (B), to 
                affirm and enforce or to set aside the 
                regulation at issue.
                    ``(D) Standard of review.--The court shall 
                determine to affirm and enforce or set aside a 
                regulation of the Commission under this 
                subsection, based on the determination of the 
                court as to whether--
                            ``(i) the subject product is a new 
                        hybrid product, as defined in this 
                        subsection;
                            ``(ii) the subject product is a 
                        security; and
                            ``(iii) imposing a requirement to 
                        register as a broker or dealer for 
                        banks engaging in transactions in such 
                        product is appropriate in light of the 
                        history, purpose, and extent of 
                        regulation under the Federal securities 
                        laws and under the Federal banking 
                        laws, giving deference neither to the 
                        views of the Commission nor the Board.
                    ``(E) Judicial stay.--The filing of a 
                petition by the Board pursuant to subparagraph 
                (A) shall operate as a judicial stay, until the 
                date on which the determination of the court is 
                final (including any appeal of such 
                determination).
                    ``(F) Other authority to challenge.--Any 
                aggrieved party may seek judicial review of the 
                Commission's rulemaking under this subsection 
                pursuant to section 25 of this title.
            ``(6) Definitions.--For purposes of this 
        subsection:
                    ``(A) New hybrid product.--The term `new 
                hybrid product' means a product that--
                            ``(i) was not subjected to 
                        regulation by the Commission as a 
                        security prior to the date of the 
                        enactment of the Gramm-Leach-Bliley 
                        Act;
                            ``(ii) is not an identified banking 
                        product as such term is defined in 
                        section 206 of such Act; and
                            ``(iii) is not an equity swap 
                        within the meaning of section 206(a)(6) 
                        of such Act.
                    ``(B) Board.--The term `Board' means the 
                Board of Governors of the Federal Reserve 
                System.''.

SEC. 206. DEFINITION OF IDENTIFIED BANKING PRODUCT.

    (a) Definition of Identified Banking Product.--For purposes 
of paragraphs (4) and (5) of section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a) (4), (5)), the term 
``identified banking product'' means--
            (1) a deposit account, savings account, certificate 
        of deposit, or other deposit instrument issued by a 
        bank;
            (2) a banker's acceptance;
            (3) a letter of credit issued or loan made by a 
        bank;
            (4) a debit account at a bank arising from a credit 
        card or similar arrangement;
            (5) a participation in a loan which the bank or an 
        affiliate of the bank (other than a broker or dealer) 
        funds, participates in, or owns that is sold--
                    (A) to qualified investors; or
                    (B) to other persons that--
                            (i) have the opportunity to review 
                        and assess any material information, 
                        including information regarding the 
                        borrower's creditworthiness; and
                            (ii) based on such factors as 
                        financial sophistication, net worth, 
                        and knowledge and experience in 
                        financial matters, have the capability 
                        to evaluate the information available, 
                        as determined under generally 
                        applicable banking standards or 
                        guidelines; or
            (6) any swap agreement, including credit and equity 
        swaps, except that an equity swap that is sold directly 
        to any person other than a qualified investor (as 
        defined in section 3(a)(54) of the Securities Act of 
        1934) shall not be treated as an identified banking 
        product.
    (b) Definition of Swap Agreement.--For purposes of 
subsection (a)(6), the term ``swap agreement'' means any 
individually negotiated contract, agreement, warrant, note, or 
option that is based, in whole or in part, on the value of, any 
interest in, or any quantitative measure or the occurrence of 
any event relating to, one or more commodities, securities, 
currencies, interest or other rates, indices, or other assets, 
but does not include any other identified banking product, as 
defined in paragraphs (1) through (5) of subsection (a).
    (c) Classification Limited.--Classification of a particular 
product as an identified banking product pursuant to this 
section shall not be construed as finding or implying that such 
product is or is not a security for any purpose under the 
securities laws, or is or is not an account, agreement, 
contract, or transaction for any purpose under the Commodity 
Exchange Act.
    (d) Incorporated Definitions.--For purposes of this 
section, the terms ``bank'' and ``qualified investor'' have the 
same meanings as given in section 3(a) of the Securities 
Exchange Act of 1934, as amended by this Act.

SEC. 207. ADDITIONAL DEFINITIONS.

    Section 3(a) of the Securities Exchange Act of 1934 is 
amended by adding at the end the following new paragraph:
            ``(54) Qualified investor.--
                    ``(A) Definition.--Except as provided in 
                subparagraph (B), for purposes of this title, 
                the term `qualified investor' means--
                            ``(i) any investment company 
                        registered with the Commission under 
                        section 8 of the Investment Company Act 
                        of 1940;
                            ``(ii) any issuer eligible for an 
                        exclusion from the definition of 
                        investment company pursuant to section 
                        3(c)(7) of the Investment Company Act 
                        of 1940;
                            ``(iii) any bank (as defined in 
                        paragraph (6) of this subsection), 
                        savings association (as defined in 
                        section 3(b) of the Federal Deposit 
                        Insurance Act), broker, dealer, 
                        insurance company (as defined in 
                        section 2(a)(13) of the Securities Act 
                        of 1933), or business development 
                        company (as defined in section 2(a)(48) 
                        of the Investment Company Act of 1940);
                            ``(iv) any small business 
                        investment company licensed by the 
                        United States Small Business 
                        Administration under section 301 (c) or 
                        (d) of the Small Business Investment 
                        Act of 1958;
                            ``(v) any State sponsored employee 
                        benefit plan, or any other employee 
                        benefit plan, within the meaning of the 
                        Employee Retirement Income Security Act 
                        of 1974, other than an individual 
                        retirement account, if the investment 
                        decisions are made by a plan fiduciary, 
                        as defined in section 3(21) of that 
                        Act, which is either a bank, savings 
                        and loan association, insurance 
                        company, or registered investment 
                        adviser;
                            ``(vi) any trust whose purchases of 
                        securities are directed by a person 
                        described in clauses (i) through (v) of 
                        this subparagraph;
                            ``(vii) any market intermediary 
                        exempt under section 3(c)(2) of the 
                        Investment Company Act of 1940;
                            ``(viii) any associated person of a 
                        broker or dealer other than a natural 
                        person;
                            ``(ix) any foreign bank (as defined 
                        in section 1(b)(7) of the International 
                        Banking Act of 1978);
                            ``(x) the government of any foreign 
                        country;
                            ``(xi) any corporation, company, or 
                        partnership that owns and invests on a 
                        discretionary basis, not less than 
                        $25,000,000 in investments;
                            ``(xii) any natural person who owns 
                        and invests on a discretionary basis, 
                        not less than $25,000,000 in 
                        investments;
                            ``(xiii) any government or 
                        political subdivision, agency, or 
                        instrumentality of a government who 
                        owns and invests on a discretionary 
                        basis not less than $50,000,000 in 
                        investments; or
                            ``(xiv) any multinational or 
                        supranational entity or any agency or 
                        instrumentality thereof.
                    ``(B) Altered thresholds for asset-back 
                securities and loan participations.--For 
                purposes sections 3(a)(5)(C)(iii) of this title 
                and section 206(a)(5) of the Gramm-Leach-Bliley 
                Act, the term `qualified investor' has the 
                meaning given such term by subparagraph (A) of 
                this paragraph except that clauses (xi) and 
                (xii) shall be applied by substituting 
                `$10,000,000' for `$25,000,000'.
                    ``(C) Additional authority.--The Commission 
                may, by rule or order, define a `qualified 
                investor' as any other person, taking into 
                consideration such factors as the financial 
                sophistication of the person, net worth, and 
                knowledge and experience in financial 
                matters.''.

SEC. 208. GOVERNMENT SECURITIES DEFINED.

    Section 3(a)(42) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(42)) is amended--
            (1) by striking ``or'' at the end of subparagraph 
        (C);
            (2) by striking the period at the end of 
        subparagraph (D) and inserting ``; or''; and
            (3) by adding at the end the following new 
        subparagraph:
                    ``(E) for purposes of sections 15, 15C, and 
                17A as applied to a bank, a qualified Canadian 
                government obligation as defined in section 
                5136 of the Revised Statutes of the United 
                States.''.

SEC. 209. EFFECTIVE DATE.

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

SEC. 210. RULE OF CONSTRUCTION.

    Nothing in this Act shall supersede, affect, or otherwise 
limit the scope and applicability of the Commodity Exchange Act 
(7 U.S.C. 1 et seq.).

             Subtitle B--Bank Investment Company Activities

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

    (a) Management Companies.--Section 17(f) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-17(f)) is amended--
            (1) by redesignating paragraphs (1), (2), and (3) 
        as subparagraphs (A), (B), and (C), respectively;
            (2) by striking ``(f) Every registered'' and 
        inserting the following:
    ``(f) Custody of Securities.--
            ``(1) Every registered'';
            (3) by redesignating the second, third, fourth, and 
        fifth sentences of such subsection as paragraphs (2) 
        through (5), respectively, and indenting the left 
        margin of such paragraphs appropriately; and
            (4) by adding at the end the following new 
        paragraph:
            ``(6) The Commission may, after consultation with 
        and taking into consideration the views of the Federal 
        banking agencies (as defined in section 3 of the 
        Federal Deposit Insurance Act), adopt rules and 
        regulations, and issue orders, consistent with the 
        protection of investors, prescribing the conditions 
        under which a bank, or an affiliated person of a bank, 
        either of which is an affiliated person, promoter, 
        organizer, or sponsor of, or principal underwriter for, 
        a registered management company may serve as custodian 
        of that registered management company.''.
    (b) Unit Investment Trusts.--Section 26 of the Investment 
Company Act of 1940 (15 U.S.C. 80a-26) is amended--
            (1) by redesignating subsections (b) through (e) as 
        subsections (c) through (f), respectively; and
            (2) by inserting after subsection (a) the following 
        new subsection:
    ``(b) The Commission may, after consultation with and 
taking into consideration the views of the Federal banking 
agencies (as defined in section 3 of the Federal Deposit 
Insurance Act), adopt rules and regulations, and issue orders, 
consistent with the protection of investors, prescribing the 
conditions under which a bank, or an affiliated person of a 
bank, either of which is an affiliated person of a principal 
underwriter for, or depositor of, a registered unit investment 
trust, may serve as trustee or custodian under subsection 
(a)(1).''.

SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

    Section 17(a) of the Investment Company Act of 1940 (15 
U.S.C. 80a-17(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (2);
            (2) by striking the period at the end of paragraph 
        (3) and inserting ``; or''; and
            (3) by adding at the end the following new 
        paragraph:
            ``(4) to loan money or other property to such 
        registered company, or to any company controlled by 
        such registered company, in contravention of such 
        rules, regulations, or orders as the Commission may, 
        after consultation with and taking into consideration 
        the views of the Federal banking agencies (as defined 
        in section 3 of the Federal Deposit Insurance Act), 
        prescribe or issue consistent with the protection of 
        investors.''.

SEC. 213. INDEPENDENT DIRECTORS.

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

SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.

    Section 35(a) of the Investment Company Act of 1940 (15 
U.S.C. 80a-34(a)) is amended to read as follows:
    ``(a) Misrepresentation of Guarantees.--
            ``(1) In general.--It shall be unlawful for any 
        person, issuing or selling any security of which a 
        registered investment company is the issuer, to 
        represent or imply in any manner whatsoever that such 
        security or company--
                    ``(A) has been guaranteed, sponsored, 
                recommended, or approved by the United States, 
                or any agency, instrumentality or officer of 
                the United States;
                    ``(B) has been insured by the Federal 
                Deposit Insurance Corporation; or
                    ``(C) is guaranteed by or is otherwise an 
                obligation of any bank or insured depository 
                institution.
            ``(2) Disclosures.--Any person issuing or selling 
        the securities of a registered investment company that 
        is advised by, or sold through, a bankshall prominently 
disclose that an investment in the company is not insured by the 
Federal Deposit Insurance Corporation or any other government agency. 
The Commission may, after consultation with and taking into 
consideration the views of the Federal banking agencies (as defined in 
section 3 of the Federal Deposit Insurance Act), adopt rules and 
regulations, and issue orders, consistent with the protection of 
investors, prescribing the manner in which the disclosure under this 
paragraph shall be provided.
            ``(3) Definitions.--The terms `insured depository 
        institution' and `appropriate Federal banking agency' 
        have the same meanings as given in section 3 of the 
        Federal Deposit Insurance Act.''.

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

    Section 2(a)(6) of the Investment Company Act of 1940 (15 
U.S.C. 80a-2(a)(6)) is amended to read as follows:
            ``(6) The term `broker' has the same meaning as 
        given in section 3 of the Securities Exchange Act of 
        1934, except that such term does not include any person 
        solely by reason of the fact that such person is an 
        underwriter for one or more investment companies.''.

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

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

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

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

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

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

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

    Section 202(a)(7) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b-2(a)(7)) is amended to read as follows:
            ``(7) The term `dealer' has the same meaning as 
        given in section 3 of the Securities Exchange Act of 
        1934, but does not include an insurance company or 
        investment company.''.

SEC. 220. INTERAGENCY CONSULTATION.

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

``SEC. 210A. CONSULTATION.

    ``(a) Examination Results and Other Information.--
            ``(1) The appropriate Federal banking agency shall 
        provide the Commission upon request the results of any 
        examination, reports, records, or other information to 
        which such agency may have access--
                    ``(A) with respect to the investment 
                advisory activities of any--
                            ``(i) bank holding company;
                            ``(ii) bank; or
                            ``(iii) separately identifiable 
                        department or division of a bank,
                that is registered under section 203 of this 
                title; and
                    ``(B) in the case of a bank holding company 
                or bank that has a subsidiary or a separately 
                identifiable department or division registered 
                under that section, with respect to the 
                investment advisory activities of such bank or 
                bank holding company.
            ``(2) The Commission shall provide to the 
        appropriate Federal banking agency upon request the 
        results of any examination, reports, records, or other 
        information with respect to the investment advisory 
        activities of any bank holding company, bank, or 
        separately identifiable department or division of a 
        bank, which is registered under section 203 of this 
        title.
            ``(3) Notwithstanding any other provision of law, 
        the Commission and the appropriate Federal banking 
        agencies shall not be compelled to disclose any 
        information provided under paragraph (1) or (2). 
        Nothing in this paragraph shall authorize the 
        Commission or such agencies to withhold information 
        from Congress, or prevent the Commission or such 
        agencies from complying with a request for information 
        from any other Federal department or agency or any 
        self-regulatory organization requesting the information 
        for purposes within the scope of its jurisdiction, or 
        complying with an order of a court of the United States 
        in an action brought by the United States, the 
        Commission, or such agencies. For purposes of section 
        552 of title 5, United States Code, this paragraph 
        shall be considered a statute described in subsection 
        (b)(3)(B) of such section 552.
    ``(b) Effect on Other Authority.--Nothing in this section 
shall limit in any respect the authority of the appropriate 
Federal banking agency with respect to such bank holding 
company (or affiliates or subsidiaries thereof), bank, or 
subsidiary, department, or division or a bank under any other 
provision of law.
    ``(c) Definition.--For purposes of this section, the term 
`appropriate Federal banking agency' shall have the same 
meaning as given in section 3 of the Federal Deposit Insurance 
Act.''.

SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.

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

SEC. 222. STATUTORY DISQUALIFICATION FOR BANK WRONGDOING.

    Section 9(a) of the Investment Company Act of 1940 (15 
U.S.C. 80a-9(a)) is amended in paragraphs (1) and (2) by 
striking ``securities dealer, transfer agent,'' and inserting 
``securities dealer, bank, transfer agent,''.

SEC. 223. CONFORMING CHANGE IN DEFINITION.

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

SEC. 224. CONFORMING AMENDMENT.

    Section 202 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-2) is amended by adding at the end the following new 
subsection:
    ``(c) Consideration of Promotion of Efficiency, 
Competition, and Capital Formation.--Whenever pursuant to this 
title the Commission is engaged in rulemaking and is required 
to consider or determine whether an action is necessary or 
appropriate in the public interest, the Commission shall also 
consider, in addition to the protection of investors, whether 
the action will promote efficiency, competition, and capital 
formation.''.

SEC. 225. EFFECTIVE DATE.

    This subtitle shall take effect 18 months after the date of 
the enactment of this Act.

     Subtitle C--Securities and Exchange Commission Supervision of 
                   Investment Bank Holding Companies

SEC. 231. SUPERVISION OF INVESTMENT BANK HOLDING COMPANIES BY THE 
                    SECURITIES AND EXCHANGE COMMISSION.

    (a) Amendment.--Section 17 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78q) is amended--
            (1) by redesignating subsection (i) as subsection 
        (k); and
            (2) by inserting after subsection (h) the following 
        new subsections:
    ``(i) Investment Bank Holding Companies.--
            ``(1) Elective supervision of an investment bank 
        holding company not having a bank or savings 
        association affiliate.--
                    ``(A) In general.--An investment bank 
                holding company that is not--
                            ``(i) an affiliate of an insured 
                        bank (other than an institution 
                        described in subparagraph (D), (F), or 
                        (G) of section 2(c)(2), or held under 
                        section 4(f), of the Bank Holding 
                        Company Act of 1956), or a savings 
                        association;
                            ``(ii) a foreign bank, foreign 
                        company, or company that is described 
                        in section 8(a) of the International 
                        Banking Act of 1978; or
                            ``(iii) a foreign bank that 
                        controls, directly or indirectly, a 
                        corporation chartered under section 25A 
                        of the Federal Reserve Act,
                may elect to become supervised by filing with 
                the Commission a notice of intention to become 
                supervised, pursuant to subparagraph (B) of 
                this paragraph. Any investment bank holding 
                company filing such a notice shall be 
                supervised in accordance with this section and 
                comply with the rules promulgated by the 
                Commission applicable to supervised investment 
                bank holding companies.
                    ``(B) Notification of status as a 
                supervised investment bank holding company.--An 
                investment bank holding company that elects 
                under subparagraph (A) to become supervised by 
                the Commission shall file with the Commission a 
                written notice of intention to become 
                supervised by the Commission in such form and 
                containing such information and documents 
                concerning such investment bank holding company 
                as the Commission, by rule, may prescribe as 
                necessary or appropriate in furtherance of the 
                purposes of this section. Unless the Commission 
                finds that such supervision is not necessary or 
                appropriate in furtherance of the purposes of 
                this section, such supervision shall become 
                effective 45 days after the date of receipt of 
                such written notice by the Commission or within 
                such shorter time period as the Commission, by 
                rule or order, may determine.
            ``(2) Election not to be supervised by the 
        commission as an investment bank holding company.--
                    ``(A) Voluntary withdrawal.--A supervised 
                investment bank holding company that is 
                supervised pursuant to paragraph (1) may, upon 
                such terms and conditions as the Commission 
                deems necessary or appropriate, elect not to be 
                supervised by the Commission by filing a 
                written notice of withdrawal from Commission 
                supervision. Such notice shall not become 
                effective until 1 year after receipt by the 
                Commission, or such shorter or longer period as 
                the Commission deems necessary or appropriate 
                to ensure effective supervision of the material 
                risks to the supervised investment bank holding 
                company and to the affiliated broker or dealer, 
                or to prevent evasion of the purposes of this 
                section.
                    ``(B) Discontinuation of commission 
                supervision.--If the Commission finds that any 
                supervised investment bank holding company that 
                is supervised pursuant to paragraph (1) is no 
                longer in existence or has ceased to be an 
                investment bank holding company, or if the 
                Commission finds that continued supervision of 
                such a supervised investment bank holding 
                company is not consistent with the purposes of 
                this section, the Commission may discontinue 
                the supervision pursuant to a rule or order, if 
                any, promulgated by the Commission under this 
                section.
            ``(3) Supervision of investment bank holding 
        companies.--
                    ``(A) Recordkeeping and reporting.--
                            ``(i) In general.--Every supervised 
                        investment bank holding company and 
                        each affiliate thereof shall make and 
                        keep for prescribed periods such 
                        records, furnish copies thereof, and 
                        make such reports, as the Commission 
                        may require by rule, in order to keep 
                        the Commission informed as to--
                                    ``(I) the company's or 
                                affiliate's activities, 
                                financial condition, policies, 
                                systems for monitoring and 
                                controlling financial and 
                                operational risks, and 
                                transactions and relationships 
                                between any broker or dealer 
                                affiliate of the supervised 
                                investment bank holding 
                                company; and
                                    ``(II) the extent to which 
                                the company or affiliate has 
                                complied with the provisions of 
                                this Act and regulations 
                                prescribed and orders issued 
                                under this Act.
                            ``(ii) Form and contents.--Such 
                        records and reports shall be prepared 
                        in such form and according to such 
                        specifications (including certification 
                        by an independent public accountant), 
                        as the Commission may require and shall 
                        be providedpromptly at any time upon 
request by the Commission. Such records and reports may include--
                                    ``(I) a balance sheet and 
                                income statement;
                                    ``(II) an assessment of the 
                                consolidated capital of the 
                                supervised investment bank 
                                holding company;
                                    ``(III) an independent 
                                auditor's report attesting to 
                                the supervised investment bank 
                                holding company's compliance 
                                with its internal risk 
                                management and internal control 
                                objectives; and
                                    ``(IV) reports concerning 
                                the extent to which the company 
                                or affiliate has complied with 
                                the provisions of this title 
                                and any regulations prescribed 
                                and orders issued under this 
                                title.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--The Commission 
                        shall, to the fullest extent possible, 
                        accept reports in fulfillment of the 
                        requirements under this paragraph that 
                        the supervised investment bank holding 
                        company or its affiliates have been 
                        required to provide to another 
                        appropriate regulatory agency or self-
                        regulatory organization.
                            ``(ii) Availability.--A supervised 
                        investment bank holding company or an 
                        affiliate of such company shall provide 
                        to the Commission, at the request of 
                        the Commission, any report referred to 
                        in clause (i).
                    ``(C) Examination authority.--
                            ``(i) Focus of examination 
                        authority.--The Commission may make 
                        examinations of any supervised 
                        investment bank holding company and any 
                        affiliate of such company in order to--
                                    ``(I) inform the Commission 
                                regarding--
                                            ``(aa) the nature 
                                        of the operations and 
                                        financial condition of 
                                        the supervised 
                                        investment bank holding 
                                        company and its 
                                        affiliates;
                                            ``(bb) the 
                                        financial and 
                                        operational risks 
                                        within the supervised 
                                        investment bank holding 
                                        company that may affect 
                                        any broker or dealer 
                                        controlled by such 
                                        supervised investment 
                                        bank holding company; 
                                        and
                                            ``(cc) the systems 
                                        of the supervised 
                                        investment bank holding 
                                        company and its 
                                        affiliates for 
                                        monitoring and 
                                        controlling those 
                                        risks; and
                                    ``(II) monitor compliance 
                                with the provisions of this 
                                subsection, provisions 
                                governing transactions and 
                                relationships between any 
                                broker or dealer affiliated 
                                with the supervised investment 
                                bank holding company and any of 
                                the company's other affiliates, 
                                and applicable provisions of 
                                subchapter II of chapter 53, 
                                title 31, United States Code 
                                (commonly referred to as the 
                                `Bank Secrecy Act') and 
                                regulations thereunder.
                            ``(ii) Restricted focus of 
                        examinations.--The Commission shall 
                        limit the focus and scope of any 
                        examination of a supervised investment 
                        bank holding company to--
                                    ``(I) the company; and
                                    ``(II) any affiliate of the 
                                company that, because of its 
                                size, condition, or activities, 
                                the nature or size of the 
                                transactions between such 
                                affiliate and any affiliated 
                                broker or dealer, or the 
                                centralization of functions 
                                within the holding company 
                                system, could, in the 
                                discretion of the Commission, 
                                have a materially adverse 
                                effect on the operational or 
                                financial condition of the 
                                broker or dealer.
                            ``(iii) Deference to other 
                        examinations.--For purposes of this 
                        subparagraph, the Commission shall, to 
                        the fullest extent possible, use the 
                        reports of examination of an 
                        institution described in subparagraph 
                        (D), (F), or (G) of section 2(c)(2), or 
                        held under section 4(f), of the Bank 
                        Holding Company Act of 1956 made by the 
                        appropriate regulatory agency, or of a 
                        licensed insurance company made by the 
                        appropriate State insurance regulator.
            ``(4) Functional regulation of banking and 
        insurance activities of supervised investment bank 
        holding companies.--The Commission shall defer to--
                    ``(A) the appropriate regulatory agency 
                with regard to all interpretations of, and the 
                enforcement of, applicable banking laws 
                relating to the activities, conduct, ownership, 
                and operations of banks, and institutions 
                described in subparagraph (D), (F), and (G) of 
                section 2(c)(2), or held under section 4(f), of 
                the Bank Holding Company Act of 1956; and
                    ``(B) the appropriate State insurance 
                regulators with regard to all interpretations 
                of, and the enforcement of, applicable State 
                insurance laws relating to the activities, 
                conduct, and operations of insurance companies 
                and insurance agents.
            ``(5) Definitions.--For purposes of this 
        subsection:
                    ``(A) The term `investment bank holding 
                company' means--
                            ``(i) any person other than a 
                        natural person that owns or controls 
                        one or more brokers or dealers; and
                            ``(ii) the associated persons of 
                        the investment bank holding company.
                    ``(B) The term `supervised investment bank 
                holding company' means any investment bank 
                holding company that is supervised by the 
                Commission pursuant to this subsection.
                    ``(C) The terms `affiliate', `bank', `bank 
                holding company', `company', `control', and 
                `savings association' have the same meanings as 
                given in section 2 of the Bank Holding Company 
                Act of 1956 (12 U.S.C. 1841).
                    ``(D) The term `insured bank' has the same 
                meaning as given in section 3 of the Federal 
                Deposit Insurance Act.
                    ``(E) The term `foreign bank' has the same 
                meaning as given in section 1(b)(7) of the 
                International Banking Act of 1978.
                    ``(F) The terms `person associated with an 
                investment bank holding company' and 
                `associated person of an investment bank 
                holding company' mean any person directly or 
                indirectly controlling, controlled by, or under 
                common control with, an investment bank holding 
                company.
    ``(j) Authority To Limit Disclosure of Information.--
Notwithstanding any other provision of law, the Commission 
shall not be compelled to disclose any information required to 
be reported under subsection (h) or (i) or any information 
supplied to the Commission by any domestic or foreign 
regulatory agency that relates to the financial or operational 
condition of any associated person of a broker or dealer, 
investment bank holding company, or any affiliate of an 
investment bank holding company. Nothing in this subsection 
shall authorize the Commission to withhold information from 
Congress, or prevent the Commission from complying with a 
request for information from any other Federal department or 
agency or any self-regulatory organization requesting the 
information for purposes within the scope of its jurisdiction, 
or complying with an order of a court of the United States in 
an action brought by the United States or the Commission. For 
purposes of section 552 of title 5, United States Code, this 
subsection shall be considered a statute described in 
subsection (b)(3)(B) of such section 552. In prescribing 
regulations to carry out the requirements of this subsection, 
the Commission shall designate information described in or 
obtained pursuant to subparagraphs (A), (B), and (C) of 
subsection (i)(5) as confidential information for purposes of 
section 24(b)(2) of this title.''.
    (b) Conforming Amendments.--
            (1) Section 3(a)(34) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78c(a)(34)) is amended by adding at 
        the end the following new subparagraph:
                    ``(H) When used with respect to an 
                institution described in subparagraph (D), (F), 
                or (G) of section 2(c)(2), or held under 
                section 4(f), of the Bank Holding Company Act 
                of 1956--
                            ``(i) the Comptroller of the 
                        Currency, in the case of a national 
                        bank or a bank in the District of 
                        Columbia examined by the Comptroller of 
                        the Currency;
                            ``(ii) the Board of Governors of 
                        the Federal Reserve System, in the case 
                        of a State member bank of the Federal 
                        Reserve System or any corporation 
                        chartered under section 25A of the 
                        Federal Reserve Act;
                            ``(iii) the Federal Deposit 
                        Insurance Corporation, in the case of 
                        any other bank the deposits of which 
                        are insured in accordance with the 
                        Federal Deposit Insurance Act; or
                            ``(iv) the Commission in the case 
                        of all other such institutions.''.
            (2) Section 1112(e) of the Right to Financial 
        Privacy Act of 1978 (12 U.S.C. 3412(e)) is amended--
                    (A) by striking ``this title'' and 
                inserting ``law''; and
                    (B) by inserting ``, examination reports'' 
                after ``financial records''.

              Subtitle D--Banks and Bank Holding Companies

SEC. 241. CONSULTATION.

    (a) In General.--The Securities and Exchange Commission 
shall consult and coordinate comments with the appropriate 
Federal banking agency before taking any action or rendering 
any opinion with respect to the manner in which any insured 
depository institution or depository institution holding 
company reports loan loss reserves in its financial statement, 
including the amount of any such loan loss reserve.
    (b) Definitions.--For purposes of subsection (a), the terms 
``insured depository institution'', ``depository institution 
holding company'', and ``appropriate Federal banking agency'' 
have the same meaning as given in section 3 of the Federal 
Deposit Insurance Act.

                          TITLE III--INSURANCE

               Subtitle A--State Regulation of Insurance

SEC. 301. FUNCTIONAL REGULATION OF INSURANCE.

    The insurance activities of any person (including a 
national bank exercising its power to act as agent under the 
eleventh undesignated paragraph of section 13 of the Federal 
Reserve Act) shall be functionally regulated by the States, 
subject to section 104.

SEC. 302. INSURANCE UNDERWRITING IN NATIONAL BANKS.

    (a) In General.--Except as provided in section 303, a 
national bank and the subsidiaries of a national bank may not 
provide insurance in a State as principal except that this 
prohibition shall not apply to authorized products.
    (b) Authorized Products.--For the purposes of this section, 
a product is authorized if--
            (1) as of January 1, 1999, the Comptroller of the 
        Currency had determined in writing that national banks 
        may provide such product as principal, or national 
        banks were in fact lawfully providing such product as 
        principal;
            (2) no court of relevant jurisdiction had, by final 
        judgment, overturned a determination of the Comptroller 
        of the Currency that national banks may provide such 
        product as principal; and
            (3) the product is not title insurance, or an 
        annuity contract the income of which is subject to tax 
        treatment under section 72 of the Internal Revenue Code 
        of 1986.
    (c) Definition.--For purposes of this section, the term 
``insurance'' means--
            (1) any product regulated as insurance as of 
        January 1, 1999, in accordance with the relevant State 
        insurance law, in the State in which the product is 
        provided;
            (2) any product first offered after January 1, 
        1999, which--
                    (A) a State insurance regulator determines 
                shall be regulated as insurance in the State in 
                which the product is provided because the 
                product insures, guarantees, or indemnifies 
                against liability, loss of life, loss of 
                health, or loss through damage to or 
                destruction of property, including, but not 
                limited to, surety bonds, life insurance, 
                health insurance, title insurance, and property 
                and casualty insurance (such as private 
                passenger or commercial automobile, homeowners, 
                mortgage, commercial multiperil, general 
                liability, professional liability, workers' 
                compensation, fire and allied lines, farm 
                owners multiperil, aircraft, fidelity, surety, 
                medical malpractice, ocean marine, inland 
                marine, and boiler and machinery insurance); 
                and
                    (B) is not a product or service of a bank 
                that is--
                            (i) a deposit product;
                            (ii) a loan, discount, letter of 
                        credit, or other extension of credit;
                            (iii) a trust or other fiduciary 
                        service;
                            (iv) a qualified financial contract 
                        (as defined in or determined pursuant 
                        to section 11(e)(8)(D)(i) of the 
                        Federal Deposit Insurance Act); or
                            (v) a financial guaranty, except 
                        that this subparagraph (B) shall not 
                        apply to a product that includes an 
                        insurance component such that if the 
                        product is offered or proposed to be 
                        offered by the bank as principal--
                                    (I) it would be treated as 
                                a life insurance contract under 
                                section 7702 of the Internal 
                                Revenue Code of 1986; or
                                    (II) in the event that the 
                                product is not a letter of 
                                credit or other similar 
                                extension of credit, a 
                                qualified financial contract, 
                                or a financial guaranty, it 
                                would qualify for treatment for 
                                losses incurred with respect to 
                                such product under section 
                                832(b)(5) of the Internal 
                                Revenue Code of 1986, if the 
                                bank were subject to tax as an 
                                insurance company under section 
                                831 of that Code; or
            (3) any annuity contract, the income on which is 
        subject to tax treatment under section 72 of the 
        Internal Revenue Code of 1986.
    (d) Rule of Construction.--For purposes of this section, 
providing insurance (including reinsurance) outside the United 
States that insures, guarantees, or indemnifies insurance 
products provided in a State, or that indemnifies an insurance 
company with regard to insurance products provided in a State, 
shall be considered to be providing insurance as principal in 
that State.

SEC. 303. TITLE INSURANCE ACTIVITIES OF NATIONAL BANKS AND THEIR 
                    AFFILIATES.

    (a) General Prohibition.--No national bank may engage in 
any activity involving the underwriting or sale of title 
insurance.
    (b) Nondiscrimination Parity Exception.--
            (1) In general.--Notwithstanding any other 
        provision of law (including section 104 of this Act), 
        in the case of any State in which banks organized under 
        the laws of such State are authorized to sell title 
        insurance as agent, a national bank may sell title 
        insurance as agent in such State, but only in the same 
        manner, to the same extent, and under the same 
        restrictions as such State banks are authorized to sell 
        title insurance as agent in such State.
            (2) Coordination with ``wildcard'' provision.--A 
        State law which authorizes State banks to engage in any 
        activities in such State in which a national bank may 
        engage shall not be treated as a statute which 
        authorizes State banks to sell title insurance as 
        agent, for purposes of paragraph (1).
    (c) Grandfathering With Consistent Regulation.--
            (1) In general.--Except as provided in paragraphs 
        (2) and (3) and notwithstanding subsections (a) and 
        (b), a national bank, and a subsidiary of a national 
        bank, may conduct title insurance activities which such 
        national bank or subsidiary was actively and lawfully 
        conducting before the date of the enactment of this 
        Act.
            (2) Insurance affiliate.--In the case of a national 
        bank which has an affiliate which provides insurance as 
        principal and is not a subsidiary of the bank, the 
        national bank and any subsidiary of the national bank 
        may not engage in the underwriting of title insurance 
        pursuant to paragraph (1).
            (3) Insurance subsidiary.--In the case of a 
        national bank which has a subsidiary which provides 
        insurance as principal and has no affiliate other than 
        a subsidiary which provides insurance as principal, the 
        national bank may not directly engage in any activity 
        involving the underwriting of title insurance.
    (d) ``Affiliate'' and ``Subsidiary'' Defined.--For purposes 
of this section, the terms ``affiliate'' and ``subsidiary'' 
have the same meanings as in section 2 of the Bank Holding 
Company Act of 1956.
    (e) Rule of Construction.--No provision of this Act or any 
other Federal law shall be construed as superseding or 
affecting a State law which was in effect before the date of 
the enactment of this Act and which prohibits title insurance 
from being offered, provided, or sold in such State, or from 
being underwritten with respect to real property in such State, 
by any person whatsoever.

SEC. 304. EXPEDITED AND EQUALIZED DISPUTE RESOLUTION FOR FEDERAL 
                    REGULATORS.

    (a) Filing in Court of Appeals.--In the case of a 
regulatory conflict between a State insurance regulator and a 
Federal regulator regarding insurance issues, including whether 
a State law, rule, regulation, order, or interpretation 
regarding any insurance sales or solicitation activity is 
properly treated as preempted under Federal law, the Federal or 
State regulator may seek expedited judicial review of such 
determination by the United States Court of Appeals for the 
circuit in which the State is located or in the United States 
Court of Appeals for the District of Columbia Circuit by filing 
a petition for review in such court.
    (b) Expedited Review.--The United States Court of Appeals 
in which a petition for review is filed in accordance with 
subsection (a) shall complete all action on such petition, 
including rendering a judgment, before the end of the 60-day 
period beginning on the date on which such petition is filed, 
unless all parties to such proceeding agree to any extension of 
such period.
    (c) Supreme Court Review.--Any request for certiorari to 
the Supreme Court of the United States of any judgment of a 
United States Court of Appeals with respect to a petition for 
review under this section shall be filed with the Supreme Court 
of the United States as soon as practicable after such judgment 
is issued.
    (d) Statute of Limitation.--No petition may be filed under 
this section challenging an order, ruling, determination, or 
other action of a Federal regulator or State insurance 
regulator after the later of--
            (1) the end of the 12-month period beginning on the 
        date on which the first public notice is made of such 
        order, ruling, determination or other action in its 
        final form; or
            (2) the end of the 6-month period beginning on the 
        date on which such order, ruling, determination, or 
        other action takes effect.
    (e) Standard of Review.--The court shall decide a petition 
filed under this section based on its review on the merits of 
all questions presented under State and Federal law, including 
the nature of the product or activity and the history and 
purpose of its regulation under State and Federal law, without 
unequal deference.

SEC. 305. INSURANCE CUSTOMER PROTECTIONS.

    The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
is amended by inserting after section 46, as added by section 
121(d) of this Act, the following new section:

``SEC. 47. INSURANCE CUSTOMER PROTECTIONS.

    ``(a) Regulations Required.--
            ``(1) In general.--The Federal banking agencies 
        shall prescribe and publish in final form, before the 
        end of the 1-year period beginning on the date of the 
        enactment of the Gramm-Leach-Bliley Act, customer 
        protection regulations (which the agencies jointly 
        determine to be appropriate) that--
                    ``(A) apply to retail sales practices, 
                solicitations, advertising, or offers of any 
                insurance product by any depository institution 
                or any person that is engaged in such 
                activities at an office of the institution or 
                on behalf of the institution; and
                    ``(B) are consistent with the requirements 
                of this Act and provide such additional 
                protections for customers to whom such sales, 
                solicitations, advertising, or offers are 
                directed.
            ``(2) Applicability to subsidiaries.--The 
        regulations prescribed pursuant to paragraph (1) shall 
        extend such protections to any subsidiary of a 
        depository institution, as deemed appropriate by the 
        regulators referred to in paragraph (3), where such 
        extension is determined to be necessary to ensure the 
        consumer protections provided by this section.
            ``(3) Consultation and joint regulations.--The 
        Federal banking agencies shall consult with each other 
        and prescribe joint regulations pursuant to paragraph 
        (1), after consultation with the State insurance 
        regulators, as appropriate.
    ``(b) Sales Practices.--The regulations prescribed pursuant 
to subsection (a) shall include antitying and anticoercion 
rules applicable to the sale of insurance products that 
prohibit a depository institution from engaging in any practice 
that would lead a customer to believe an extension of credit, 
in violation of section 106(b) of the Bank Holding Company Act 
Amendments of 1970, is conditional upon--
            ``(1) the purchase of an insurance product from the 
        institution or any of its affiliates; or
            ``(2) an agreement by the consumer not to obtain, 
        or a prohibition on the consumer from obtaining, an 
        insurance product from an unaffiliated entity.
    ``(c) Disclosures and Advertising.--The regulations 
prescribed pursuant to subsection (a) shall include the 
following provisions relating to disclosures and advertising in 
connection with the initial purchase of an insurance product:
            ``(1) Disclosures.--
                    ``(A) In general.--Requirements that the 
                following disclosures be made orally and in 
                writing before the completion of the initial 
                sale and, in the case of clause (iii), at the 
                time of application for an extension of credit:
                            ``(i) Uninsured status.--As 
                        appropriate, the product is not insured 
                        by the Federal Deposit Insurance 
                        Corporation, the United States 
                        Government, or the depository 
                        institution.
                            ``(ii) Investment risk.--In the 
                        case of a variable annuity or other 
                        insurance product which involves an 
                        investment risk, that there is an 
                        investment risk associated with the 
                        product, including possible loss of 
                        value.
                            ``(iii) Coercion.--The approval of 
                        an extension of credit may not be 
                        conditioned on--
                                    ``(I) the purchase of an 
                                insurance product from the 
                                institution in which the 
                                application for credit is 
                                pending or any affiliate of the 
                                institution; or
                                    ``(II) an agreement by the 
                                consumer not to obtain, or a 
                                prohibition on the consumer 
                                from obtaining, an insurance 
                                product from an unaffiliated 
                                entity.
                    ``(B) Making disclosure readily 
                understandable.--Regulations prescribed under 
                subparagraph (A) shall encourage the use of 
                disclosure that is conspicuous, simple, direct, 
                and readily understandable, such as the 
                following:
                            ``(i) `NOT FDIC-INSURED'.
                            ``(ii) `NOT GUARANTEED BY THE 
                        BANK'.
                            ``(iii) `MAY GO DOWN IN VALUE'.
                            ``(iv) `NOT INSURED BY ANY 
                        GOVERNMENT AGENCY'.
                    ``(C) Limitation.--Nothing in this 
                paragraph requires the inclusion of the 
                foregoing disclosures in advertisements of a 
                general nature describing or listing the 
                services or products offered by an institution.
                    ``(D) Meaningful disclosures.--Disclosures 
                shall not be considered to be meaningfully 
                provided under this paragraph if the 
                institution or its representative states that 
                disclosures required by this subsection were 
                available to the customer in printed material 
                available for distribution, where such printed 
                material is not provided and such information 
                is not orally disclosed to the customer.
                    ``(E) Adjustments for alternative methods 
                of purchase.--In prescribing the requirements 
                under subparagraphs (A) and (F), necessary 
                adjustments shall be made for purchase in 
                person, by telephone, or by electronic media to 
                provide for the most appropriate and complete 
                form of disclosure and acknowledgments.
                    ``(F) Consumer acknowledgment.--A 
                requirement that a depository institution shall 
                require any person selling an insurance product 
                at any office of, or on behalf of, the 
                institution to obtain, at the time a consumer 
                receives the disclosures required under this 
                paragraph or at the time of the initial 
                purchase by the consumer of such product, an 
                acknowledgment by such consumer of the receipt 
                of the disclosure required under this 
                subsection with respect to such product.
            ``(2) Prohibition on misrepresentations.--A 
        prohibition on any practice, or any advertising, at any 
        office of, or on behalf of, the depository institution, 
        or any subsidiary, as appropriate, that could mislead 
        any person or otherwise cause a reasonable person to 
        reach an erroneous belief with respect to--
                    ``(A) the uninsured nature of any insurance 
                product sold, or offered for sale, by the 
                institution or any subsidiary of the 
                institution;
                    ``(B) in the case of a variable annuity or 
                insurance product that involves an investment 
                risk, the investment risk associated with any 
                such product; or
                    ``(C) in the case of an institution or 
                subsidiary at which insurance products are sold 
                or offered for sale, the fact that--
                            ``(i) the approval of an extension 
                        of credit to a customer by the 
                        institution or subsidiary may not be 
                        conditioned on the purchase of an 
                        insurance product by such customer from 
                        the institution or subsidiary; and
                            ``(ii) the customer is free to 
                        purchase the insurance product from 
                        another source.
    ``(d) Separation of Banking and Nonbanking Activities.--
            ``(1) Regulations required.--The regulations 
        prescribed pursuant to subsection (a) shall include 
        such provisions as the Federal banking agencies 
        consider appropriate to ensure that the routine 
        acceptance of deposits is kept, to the extent 
        practicable, physically segregated from insurance 
        product activity.
            ``(2) Requirements.--Regulations prescribed 
        pursuant to paragraph (1) shall include the following 
        requirements:
                    ``(A) Separate setting.--A clear 
                delineation of the setting in which, and the 
                circumstances under which, transactions 
                involving insurance products should be 
                conducted in a location physically segregated 
                from an area where retail deposits are 
                routinely accepted.
                    ``(B) Referrals.--Standards that permit any 
                person accepting deposits from the public in an 
                area where such transactions are routinely 
                conducted in a depository institution to refer 
                a customer who seeks to purchase any insurance 
                product to a qualified person who sells such 
                product, only if the person making the referral 
                receives no more than a one-time nominal fee of 
                a fixed dollar amount for each referral that 
                does not depend on whether the referral results 
                in a transaction.
                    ``(C) Qualification and licensing 
                requirements.--Standards prohibiting any 
                depository institution from permitting any 
                person to sell or offer for sale any insurance 
                product in any part of any office of the 
                institution, or on behalf of the institution, 
                unless such person is appropriately qualified 
                and licensed.
    ``(e) Domestic Violence Discrimination Prohibition.--
            ``(1) In general.--In the case of an applicant for, 
        or an insured under, any insurance product described in 
        paragraph (2), the status of the applicant or insured 
        as a victim of domestic violence, or as a provider of 
        services to victims of domestic violence, shall not be 
        considered as a criterion in any decision with regard 
        to insurance underwriting, pricing, renewal, or scope 
        of coverage of insurance policies, or payment of 
        insurance claims, except as required or expressly 
        permitted under State law.
            ``(2) Scope of application.--The prohibition 
        contained in paragraph (1) shall apply to any life or 
        health insurance product which is sold or offered for 
        sale, as principal, agent, or broker, by any depository 
        institution or any person who is engaged in such 
        activities at an office of the institution or on behalf 
        of the institution.
            ``(3) Domestic violence defined.--For purposes of 
        this subsection, the term `domestic violence' means the 
        occurrence of one or more of the following acts by a 
        current or former family member, household member, 
        intimate partner, or caretaker:
                    ``(A) Attempting to cause or causing or 
                threatening another person physical harm, 
                severe emotional distress, psychological 
                trauma, rape, or sexual assault.
                    ``(B) Engaging in a course of conduct or 
                repeatedly committing acts toward another 
                person, including following the person without 
                proper authority, under circumstances that 
                place the person in reasonable fear of bodily 
                injury or physical harm.
                    ``(C) Subjecting another person to false 
                imprisonment.
                    ``(D) Attempting to cause or cause damage 
                to property so as to intimidate or attempt to 
                control the behavior of another person.
    ``(f) Consumer Grievance Process.--The Federal banking 
agencies shall jointly establish a consumer complaint 
mechanism, for receiving and expeditiously addressing consumer 
complaints alleging a violation of regulations issued under the 
section, which shall--
            ``(1) establish a group within each regulatory 
        agency to receive such complaints;
            ``(2) develop procedures for investigating such 
        complaints;
            ``(3) develop procedures for informing consumers of 
        rights they may have in connection with such 
        complaints; and
            ``(4) develop procedures for addressing concerns 
        raised by such complaints, as appropriate, including 
        procedures for the recovery of losses to the extent 
        appropriate.
    ``(g) Effect on Other Authority.--
            ``(1) In general.--No provision of this section 
        shall be construed as granting, limiting, or otherwise 
        affecting--
                    ``(A) any authority of the Securities and 
                Exchange Commission, any self-regulatory 
                organization, the Municipal Securities 
                Rulemaking Board, or the Secretary of the 
                Treasury under any Federal securities law; or
                    ``(B) except as provided in paragraph (2), 
                any authority of any State insurance commission 
                (or any agency or office performing like 
                functions), or of any State securities 
                commission (or any agency or office performing 
                like functions), or other State authority under 
                any State law.
            ``(2) Coordination with state law.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), insurance customer protection 
                regulations prescribed by a Federal banking 
                agency under this section shall not apply to 
                retail sales, solicitations, advertising, or 
                offers of any insurance product by any 
                depository institution or to any person who is 
                engaged in such activities at an office of such 
                institution or on behalf of the institution, in 
                a State where the State has in effect statutes, 
                regulations, orders, or interpretations, that 
                are inconsistent with or contrary to the 
                regulations prescribed by the Federal banking 
                agencies.
                    ``(B) Preemption.--
                            ``(i) In general.--If, with respect 
                        to any provision of the regulations 
                        prescribed under this section, the 
                        Board of Governors of the Federal 
                        Reserve System, the Comptroller of the 
                        Currency, and the Board of Directors of 
                        the Corporation determine jointly that 
                        the protection afforded by such 
                        provision for customers is greater than 
                        the protection provided by a comparable 
                        provision of the statutes, regulations, 
                        orders, or interpretations referred to 
                        in subparagraph (A) of any State, the 
                        appropriate State regulatory authority 
                        shall be notified of such determination 
                        in writing.
                            ``(ii) Considerations.--Before 
                        making a final determination under 
                        clause (i), the Federal agencies 
                        referred to in clause (i) shall give 
                        appropriate consideration to comments 
                        submitted by the appropriate State 
                        regulatory authorities relating to the 
                        level of protection afforded to 
                        consumers under State law.
                            ``(iii) Federal preemption and 
                        ability of states to override federal 
                        preemption.--If the Federal agencies 
                        referred to in clause (i) jointly 
                        determine that any provision of the 
                        regulations prescribed under this 
                        section affords greater protections 
                        than a comparable State law, rule, 
                        regulation, order, or interpretation, 
                        those agencies shall send a written 
                        preemption notice to the appropriate 
                        State regulatory authority to notify 
                        the State that the Federal provision 
                        will preempt the State provision and 
                        will become applicable unless, not 
                        later than 3 years after the date of 
                        such notice, the State adopts 
                        legislation to override such 
                        preemption.
    ``(h) Non-Discrimination Against Non-Affiliated Agents.--
The Federal banking agencies shall ensure that the regulations 
prescribed pursuant to subsection (a) shall not have the effect 
of discriminating, either intentionally or unintentionally, 
against any person engaged in insurance sales or solicitations 
that is not affiliated with a depository institution.''.

SEC. 306. CERTAIN STATE AFFILIATION LAWS PREEMPTED FOR INSURANCE 
                    COMPANIES AND AFFILIATES.

    Except as provided in section 104(c)(2), no State may, by 
law, regulation, order, interpretation, or otherwise--
            (1) prevent or significantly interfere with the 
        ability of any insurer, or any affiliate of an insurer 
        (whether such affiliate is organized as a stock 
        company, mutual holding company, or otherwise), to 
        become a financial holding company or to acquire 
        control of a depository institution;
            (2) limit the amount of an insurer's assets that 
        may be invested in the voting securities of a 
        depository institution (or any company which controls 
        such institution), except that the laws of an insurer's 
        State of domicile may limit the amount of such 
        investment to an amount that is not less than 5 percent 
        of the insurer's admitted assets; or
            (3) prevent, significantly interfere with, or have 
        the authority to review, approve, or disapprove a plan 
        of reorganization by which an insurer proposes to 
        reorganize from mutual form to become a stock insurer 
        (whether as a direct or indirect subsidiary of a mutual 
        holding company or otherwise) unless such State is the 
        State of domicile of the insurer.

SEC. 307. INTERAGENCY CONSULTATION.

    (a) Purpose.--It is the intention of the Congress that the 
Board of Governors of the Federal Reserve System, as the 
umbrella supervisor for financial holding companies, and the 
State insurance regulators, as the functional regulators of 
companies engaged in insurance activities, coordinate efforts 
to supervise companies that control both a depository 
institution and a company engaged in insurance activities 
regulated under State law. In particular, Congress believes 
that the Board and the State insurance regulators should share, 
on a confidential basis, information relevant to the 
supervision of companies that control both a depository 
institution and a company engaged in insurance activities, 
including information regarding the financial health of the 
consolidated organization and information regarding 
transactions and relationships between insurance companies and 
affiliated depository institutions. The appropriate Federal 
banking agencies for depository institutions should also share, 
on a confidential basis, information with the relevant State 
insurance regulators regarding transactions and relationships 
between depository institutions and affiliated companies 
engaged in insurance activities. The purpose of this section is 
to encourage this coordination and confidential sharing of 
information, and to thereby improve both the efficiency and the 
quality of the supervision of financial holding companies and 
their affiliated depository institutions and companies engaged 
in insurance activities.
    (b) Examination Results and Other Information.--
            (1) Information of the board.--Upon the request of 
        the appropriate insurance regulator of any State, the 
        Board may provide any information of the Board 
        regarding the financial condition, risk management 
        policies, and operations of any financial holding 
        company that controls a company that is engaged in 
        insurance activities and is regulated by such State 
        insurance regulator, and regarding any transaction or 
        relationship between such an insurance company and any 
        affiliated depository institution. The Board may 
        provide any other information to the appropriate State 
        insurance regulator that the Board believes is 
        necessary or appropriate to permit the State insurance 
        regulator to administer and enforce applicable State 
        insurance laws.
            (2) Banking agency information.--Upon the request 
        of the appropriate insurance regulator of any State, 
        the appropriate Federal banking agency may provide any 
        information of the agency regarding any transaction or 
        relationship between a depository institution 
        supervised by such Federal banking agency and any 
        affiliated company that is engaged in insurance 
        activities regulated by such State insurance regulator. 
        The appropriate Federal banking agency may provide any 
        other information to the appropriate State insurance 
        regulator that the agency believes is necessary or 
        appropriate to permit the State insurance regulator to 
        administer and enforce applicable State insurance laws.
            (3) State insurance regulator information.--Upon 
        the request of the Board or the appropriate Federal 
        banking agency, a State insurance regulator may provide 
        any examination or other reports, records, or other 
        information to which such insurance regulator may have 
        access with respect to a company which--
                    (A) is engaged in insurance activities and 
                regulated by such insurance regulator; and
                    (B) is an affiliate of a depository 
                institution or financial holding company.
    (c) Consultation.--Before making any determination relating 
to the initial affiliation of, or the continuing affiliation 
of, a depository institution or financial holding company with 
a company engaged in insurance activities, the appropriate 
Federal banking agency shall consult with the appropriate State 
insurance regulator of such company and take the views of such 
insurance regulator into account in making such determination.
    (d) Effect on Other Authority.--Nothing in this section 
shall limit in any respect the authority of the appropriate 
Federal banking agency with respect to a depository institution 
or bank holding company or any affiliate thereof under any 
provision of law.
    (e) Confidentiality and Privilege.--
            (1) Confidentiality.--The appropriate Federal 
        banking agency shall not provide any information or 
        material that is entitled to confidential treatment 
        under applicable Federal banking agency regulations, or 
        other applicable law, to a State insurance regulator 
        unless such regulator agrees to maintain the 
        information or material in confidence and to take all 
        reasonable steps to oppose any effort to secure 
        disclosure of the information or material by the 
        regulator. The appropriate Federal banking agency shall 
        treat as confidential any information or material 
        obtained from a State insurance regulator that is 
        entitled to confidential treatment under applicable 
        State regulations, or other applicable law, and take 
        all reasonable steps to oppose any effort to secure 
        disclosure of the information or material by the 
        Federal banking agency.
            (2) Privilege.--The provision pursuant to this 
        section of information or material by a Federal banking 
        agency or State insurance regulator shall not 
        constitute a waiver of, or otherwise affect, any 
        privilege to which the information or material is 
        otherwise subject.
    (f) Definitions.--For purposes of this section, the 
following definitions shall apply:
            (1) Appropriate federal banking agency; depository 
        institution.--The terms ``appropriate Federal banking 
        agency'' and ``depository institution'' have the same 
        meanings as in section 3 of the Federal Deposit 
        Insurance Act.
            (2) Board and financial holding company.--The terms 
        ``Board'' and ``financial holding company'' have the 
        same meanings as in section 2 of the Bank Holding 
        Company Act of 1956.

SEC. 308. DEFINITION OF STATE.

    For purposes of this subtitle, the term ``State'' means any 
State of the United States, the District of Columbia, any 
territory of the United States, Puerto Rico, Guam, American 
Samoa, the Trust Territory of the Pacific Islands, the Virgin 
Islands, and the Northern Mariana Islands.

             Subtitle B--Redomestication of Mutual Insurers

SEC. 311. GENERAL APPLICATION.

    This subtitle shall only apply to a mutual insurance 
company in a State which has not enacted a law which expressly 
establishes reasonable terms and conditions for a mutual 
insurance company domiciled in such State to reorganize into a 
mutual holding company.

SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.

    (a) Redomestication.--A mutual insurer organized under the 
laws of any State may transfer its domicile to a transferee 
domicile as a step in a reorganization in which, pursuant to 
the laws of the transferee domicile and consistent with the 
standards in subsection (f), the mutual insurer becomes a stock 
insurer that is a direct or indirect subsidiary of a mutual 
holding company.
    (b) Resulting Domicile.--Upon complying with the applicable 
law of the transferee domicile governing transfers of domicile 
and completion of a transfer pursuant to this section, the 
mutual insurer shall cease to be a domestic insurer in the 
transferor domicile and, as a continuation of its corporate 
existence, shall be a domestic insurer of the transferee 
domicile.
    (c) Licenses Preserved.--The certificate of authority, 
agents' appointments and licenses, rates, approvals and other 
items that a licensed State allows and that are in existence 
immediately prior to the date that a redomesticating insurer 
transfers its domicile pursuant to this subtitle shall continue 
in full force and effect upon transfer, if the insurer remains 
duly qualified to transact the business of insurance in such 
licensed State.
    (d) Effectiveness of Outstanding Policies and Contracts.--
            (1) In general.--All outstanding insurance policies 
        and annuities contracts of a redomesticating insurer 
        shall remain in full force and effect and need not be 
        endorsed as to the new domicile of the insurer, unless 
        so ordered by the State insurance regulator of a 
        licensed State, and then only in the case of 
        outstanding policies and contracts whose owners reside 
        in such licensed State.
            (2) Forms.--
                    (A) Applicable State law may require a 
                redomesticating insurer to file new policy 
                forms with the State insurance regulator of a 
                licensed State on or before the effective date 
                of the transfer.
                    (B) Notwithstanding subparagraph (A), a 
                redomesticating insurer may use existing policy 
                forms with appropriate endorsements to reflect 
                the new domicile of the redomesticating insurer 
                until the new policy forms are approved for use 
                by the State insurance regulator of such 
                licensed State.
    (e) Notice.--A redomesticating insurer shall give notice of 
the proposed transfer to the State insurance regulator of each 
licensed State and shall file promptly any resulting amendments 
to corporate documents required to be filed by a foreign 
licensed mutual insurer with the insurance regulator of each 
such licensed State.
    (f) Procedural Requirements.--No mutual insurer may 
redomesticate to another State and reorganize into a mutual 
holding company pursuant to this section unless the State 
insurance regulator of the transferee domicile determines that 
the plan of reorganization of the insurer includes the 
following requirements:
            (1) Approval by board of directors and 
        policyholders.--The reorganization is approved by at 
        least a majority of the board of directors of the 
        mutual insurer and at least a majority of the 
        policyholders who vote after notice, disclosure of the 
        reorganization and the effects of the transaction on 
        policyholder contractual rights, and reasonable 
        opportunity to vote, in accordance with such notice, 
        disclosure, and voting procedures as are approved bythe 
State insurance regulator of the transferee domicile.
            (2) Continued voting control by policyholders; 
        review of public stock offering.--After the 
        consummation of a reorganization, the policyholders of 
        the reorganized insurer shall have the same voting 
        rights with respect to the mutual holding company as 
        they had before the reorganization with respect to the 
        mutual insurer. With respect to an initial public 
        offering of stock, the offering shall be conducted in 
        compliance with applicable securities laws and in a 
        manner approved by the State insurance regulator of the 
        transferee domicile.
            (3) Award of stock or grant of options to officers 
        and directors.--During the applicable period provided 
        for under the State law of the transferee domicile 
        following completion of an initial public offering, or 
        for a period of six months if no such applicable period 
        is provided, neither a stock holding company nor the 
        converted insurer shall award any stock options or 
        stock grants to persons who are elected officers or 
        directors of the mutual holding company, the stock 
        holding company, or the converted insurer, except with 
        respect to any such awards or options to which a person 
        is entitled as a policyholder and as approved by the 
        State insurance regulator of the transferee domicile.
            (4) Policyholder rights.--Upon reorganization into 
        a mutual holding company, the contractual rights of the 
        policyholders are preserved.
            (5) Fair and equitable treatment of 
        policyholders.--The reorganization is approved as fair 
        and equitable to the policyholders by the insurance 
        regulator of the transferee domicile.

SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.

    (a) In General.--Unless otherwise permitted by this 
subtitle, State laws of any transferor domicile that conflict 
with the purposes and intent of this subtitle are preempted, 
including but not limited to--
            (1) any law that has the purpose or effect of 
        impeding the activities of, taking any action against, 
        or applying any provision of law or regulation to, any 
        insurer or an affiliate of such insurer because that 
        insurer or any affiliate plans to redomesticate, or has 
        redomesticated, pursuant to this subtitle;
            (2) any law that has the purpose or effect of 
        impeding the activities of, taking action against, or 
        applying any provision of law or regulation to, any 
        insured or any insurance licensee or other intermediary 
        because such person has procured insurance from or 
        placed insurance with any insurer or affiliate of such 
        insurer that plans to redomesticate, or has 
        redomesticated, pursuant to this subtitle, but only to 
        the extent that such law would treat such insured 
        licensee or other intermediary differently than if the 
        person procured insurance from, or placed insurance 
        with, an insured licensee or other intermediary which 
        had not redomesticated; and
            (3) any law that has the purpose or effect of 
        terminating, because of the redomestication of a mutual 
        insurer pursuant to this subtitle, any certificate of 
        authority, agent appointment or license, rate approval, 
        or other approval, of any State insurance regulator or 
        other State authority in existence immediately prior to 
        the redomestication in any State other than the 
        transferee domicile.
    (b) Differential Treatment Prohibited.--No State law, 
regulation, interpretation, or functional equivalent thereof, 
of a State other than a transferee domicile may treat a 
redomesticating or redomesticated insurer or any affiliate 
thereof any differently than an insurer operating in that State 
that is not a redomesticating or redomesticated insurer.
    (c) Laws Prohibiting Operations.--If any licensed State 
fails to issue, delays the issuance of, or seeks to revoke an 
original or renewal certificate of authority of a 
redomesticated insurer promptly following redomestication, 
except on grounds and in a manner consistent with its past 
practices regarding the issuance of certificates of authority 
to foreign insurers that are not redomesticating, then the 
redomesticating insurer shall be exempt from any State law of 
the licensed State to the extent that such State law or the 
operation of such State law would make unlawful, or regulate, 
directly or indirectly, the operation of the redomesticated 
insurer, except that such licensed State may require the 
redomesticated insurer to--
            (1) comply with the unfair claim settlement 
        practices law of the licensed State;
            (2) pay, on a nondiscriminatory basis, applicable 
        premium and other taxes which are levied on licensed 
        insurers or policyholders under the laws of the 
        licensed State;
            (3) register with and designate the State insurance 
        regulator as its agent solely for the purpose of 
        receiving service of legal documents or process;
            (4) submit to an examination by the State insurance 
        regulator in any licensed State in which the 
        redomesticated insurer is doing business to determine 
        the insurer's financial condition, if--
                    (A) the State insurance regulator of the 
                transferee domicile has not begun an 
                examination of the redomesticated insurer and 
                has not scheduled such an examination to begin 
                before the end of the 1-year period beginning 
                on the date of the redomestication; and
                    (B) any such examination is coordinated to 
                avoid unjustified duplication and repetition;
            (5) comply with a lawful order issued in--
                    (A) a delinquency proceeding commenced by 
                the State insurance regulator of any licensed 
                State if there has been a judicial finding of 
                financial impairment under paragraph (7); or
                    (B) a voluntary dissolution proceeding;
            (6) comply with any State law regarding deceptive, 
        false, or fraudulent acts or practices, except that if 
        the licensed State seeks an injunction regarding the 
        conduct described in this paragraph, such injunction 
        must be obtained from a court of competent jurisdiction 
        as provided in section 314(a);
            (7) comply with an injunction issued by a court of 
        competent jurisdiction, upon a petition by the State 
        insurance regulator alleging that the redomesticating 
        insurer is in hazardous financial condition or is 
        financially impaired;
            (8) participate in any insurance insolvency 
        guaranty association on the same basis as any other 
        insurer licensed in the licensed State; and
            (9) require a person acting, or offering to act, as 
        an insurance licensee for a redomesticated insurer in 
        the licensed State to obtain a license from that State, 
        except that such State may not impose any qualification 
        or requirement that discriminates against a nonresident 
        insurance licensee.

SEC. 314. OTHER PROVISIONS.

    (a) Judicial Review.--The appropriate United States 
district court shall have exclusive jurisdiction over 
litigation arising under this section involving any 
redomesticating or redomesticated insurer.
    (b) Severability.--If any provision of this section, or the 
application thereof to any person or circumstances, is held 
invalid, the remainder of the section, and the application of 
such provision to other persons or circumstances, shall not be 
affected thereby.

SEC. 315. DEFINITIONS.

    For purposes of this subtitle, the following definitions 
shall apply:
            (1) Court of competent jurisdiction.--The term 
        ``court of competent jurisdiction'' means a court 
        authorized pursuant to section 314(a) to adjudicate 
        litigation arising under this subtitle.
            (2) Domicile.--The term ``domicile'' means the 
        State in which an insurer is incorporated, chartered, 
        or organized.
            (3) Insurance licensee.--The term ``insurance 
        licensee'' means any person holding a license under 
        State law to act as insurance agent, subagent, broker, 
        or consultant.
            (4) Institution.--The term ``institution'' means a 
        corporation, joint stock company, limited liability 
        company, limited liability partnership, association, 
        trust, partnership, or any similar entity.
            (5) Licensed state.--The term ``licensed State'' 
        means any State, the District of Columbia, any 
        territory of the United States, Puerto Rico, Guam, 
        American Samoa, the Trust Territory of the Pacific 
        Islands, the Virgin Islands, and the Northern Mariana 
        Islands in which the redomesticating insurer has a 
        certificate of authority in effect immediately prior to 
        the redomestication.
            (6) Mutual insurer.--The term ``mutual insurer'' 
        means a mutual insurer organized under the laws of any 
        State.
            (7) Person.--The term ``person'' means an 
        individual, institution, government or governmental 
        agency, State or political subdivision of a State, 
        public corporation, board, association, estate, 
        trustee, or fiduciary, or other similar entity.
            (8) Policyholder.--The term ``policyholder'' means 
        the owner of a policy issued by a mutual insurer, 
        except that, with respect to voting rights, the term 
        means a member of a mutual insurer or mutual holding 
        company granted the right to vote, as determined under 
        applicable State law.
            (9) Redomesticated insurer.--The term 
        ``redomesticated insurer'' means a mutual insurer that 
        has redomesticated pursuant to this subtitle.
            (10) Redomesticating insurer.--The term 
        ``redomesticating insurer'' means a mutual insurer that 
        is redomesticating pursuant to this subtitle.
            (11) Redomestication or transfer.--The term 
        ``redomestication'' or ``transfer'' means the transfer 
        of the domicile of a mutual insurer from one State to 
        another State pursuant to this subtitle.
            (12) State insurance regulator.--The term ``State 
        insurance regulator'' means the principal insurance 
        regulatory authority of a State, the District of 
        Columbia, any territory of the United States, Puerto 
        Rico, Guam, American Samoa, the Trust Territory of the 
        Pacific Islands, the Virgin Islands, and the Northern 
        Mariana Islands.
            (13) State law.--The term ``State law'' means the 
        statutes of any State, the District of Columbia, any 
        territory of the United States, Puerto Rico, Guam, 
        American Samoa, the Trust Territory of the Pacific 
        Islands, the Virgin Islands, and the Northern Mariana 
        Islands and any regulation, order, or requirement 
        prescribed pursuant to any such statute.
            (14) Transferee domicile.--The term ``transferee 
        domicile'' means the State to which a mutual insurer is 
        redomesticating pursuant to this subtitle.
            (15) Transferor domicile.--The term ``transferor 
        domicile'' means the State from which a mutual insurer 
        is redomesticating pursuant to this subtitle.

SEC. 316. EFFECTIVE DATE.

    This subtitle shall take effect on the date of the 
enactment of this Act.

   Subtitle C--National Association of Registered Agents and Brokers

SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

     (a) In General.--The provisions of this subtitle shall 
take effect unless, not later than 3 years after the date of 
the enactment of this Act, at least a majority of the States--
            (1) have enacted uniform laws and regulations 
        governing the licensure of individuals and entities 
        authorized to sell and solicit the purchase of 
        insurance within the State; or
            (2) have enacted reciprocity laws and regulations 
        governing the licensure of nonresident individuals and 
        entities authorized to sell and solicit insurance 
        within those States.
    (b) Uniformity Required.--States shall be deemed to have 
established the uniformity necessary to satisfy subsection 
(a)(1) if the States--
            (1) establish uniform criteria regarding the 
        integrity, personal qualifications, education, 
        training, and experience of licensed insurance 
        producers, including the qualification and training of 
        sales personnel in ascertaining the appropriateness of 
        a particular insurance product for a prospective 
        customer;
            (2) establish uniform continuing education 
        requirements for licensed insurance producers;
            (3) establish uniform ethics course requirements 
        for licensed insurance producers in conjunction with 
        the continuing education requirements under paragraph 
        (2);
            (4) establish uniform criteria to ensure that an 
        insurance product, including any annuity contract, sold 
        to a consumer is suitable and appropriate for the 
        consumer based on financial information disclosed by 
        the consumer; and
            (5) do not impose any requirement upon any 
        insurance producer to be licensed or otherwise 
        qualified to do business as a nonresident that has the 
        effect of limiting or conditioning that producer's 
        activities because of its residence or place of 
        operations, except that counter-signature requirements 
        imposed on nonresident producers shall not be deemed to 
        have the effect of limiting or conditioning a 
        producer's activities because of its residence or place 
        of operations under this section.
    (c) Reciprocity Required.--States shall be deemed to have 
established the reciprocity required to satisfy subsection 
(a)(2) if the following conditions are met:
            (1) Administrative licensing procedures.--At least 
        a majority of the States permit a producer that has a 
        resident license for selling or soliciting the purchase 
        of insurance in its home State to receive a license to 
        sell or solicit the purchase of insurance in such 
        majority of States as a nonresident to the same extent 
        that such producer is permitted to sell or solicit the 
        purchase of insurance in its State, if the producer's 
        home State also awards such licenses on such a 
        reciprocal basis, without satisfying any additional 
        requirements other than submitting--
                    (A) a request for licensure;
                    (B) the application for licensure that the 
                producer submitted to its home State;
                    (C) proof that the producer is licensed and 
                in good standing in its home State; and
                    (D) the payment of any requisite fee to the 
                appropriate authority.
            (2) Continuing education requirements.--A majority 
        of the States accept an insurance producer's 
        satisfaction of its home State's continuing education 
        requirements for licensed insurance producers to 
        satisfy the State's own continuing education 
        requirements if the producer's home State also 
        recognizes the satisfaction of continuing education 
        requirements on such a reciprocal basis.
            (3) No limiting nonresident requirements.--A 
        majority of the States do not impose any requirement 
        upon any insurance producer to be licensed or otherwise 
        qualified to do business as a nonresident that has the 
        effect of limiting or conditioning that producer's 
        activities because of its residence or place of 
        operations, except that countersignature requirements 
        imposed on nonresident producers shall not be deemed to 
        have the effect of limiting or conditioning a 
        producer's activities because of its residence or place 
        of operations under this section.
            (4) Reciprocal reciprocity.--Each of the States 
        that satisfies paragraphs (1), (2), and (3) grants 
        reciprocity to residents of all of the other States 
        that satisfy such paragraphs.
    (d) Determination.--
            (1) NAIC determination.--At the end of the 3-year 
        period beginning on the date of the enactment of this 
        Act, the National Association of Insurance 
        Commissioners (hereafter in this subtitle referred to 
        as the ``NAIC'') shall determine, in consultation with 
        the insurance commissioners or chief insurance 
        regulatory officials of the States, whether the 
        uniformity or reciprocity required by subsections (b) 
        and (c) has been achieved.
            (2) Judicial review.--The appropriate United States 
        district court shall have exclusive jurisdiction over 
        any challenge to the NAIC's determination under this 
        section and such court shall apply the standards set 
        forth in section 706 of title 5, United States Code, 
        when reviewing any such challenge.
    (e) Continued Application.--If, at any time, the uniformity 
or reciprocity required by subsections (b) and (c) no longer 
exists, the provisions of this subtitle shall take effect 2 
years after the date on which such uniformity or reciprocity 
ceases to exist, unless the uniformity or reciprocity required 
by those provisions is satisfied before the expiration of that 
2-year period.
    (f) Savings Provision.--No provision of this section shall 
be construed as requiring that any law, regulation, provision, 
or action of any State which purports to regulate insurance 
producers, including any such law, regulation, provision, or 
action which purports to regulate unfair trade practices or 
establish consumer protections, including countersignature 
laws, be altered or amended in order to satisfy the uniformity 
or reciprocity required by subsections (b) and (c), unless any 
such law, regulation, provision, or action is inconsistent with 
a specific requirement of any such subsection and then only to 
the extent of such inconsistency.
    (g) Uniform Licensing.--Nothing in this section shall be 
construed to require any State to adopt new or additional 
licensing requirements to achieve the uniformity necessary to 
satisfy subsection (a)(1).

SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.

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

SEC. 323. PURPOSE.

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

SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

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

SEC. 325. MEMBERSHIP.

    (a) Eligibility.--
            (1) In general.--Any State-licensed insurance 
        producer shall be eligible to become a member in the 
        Association.
            (2) Ineligibility for suspension or revocation of 
        license.--Notwithstanding paragraph (1), a State-
        licensed insurance producer shall not be eligible to 
        become a member if a State insurance regulator has 
        suspended or revoked such producer's license in that 
        State during the 3-year period preceding the date on 
        which such producer applies for membership.
            (3) Resumption of eligibility.--Paragraph (2) shall 
        cease to apply to any insurance producer if--
                    (A) the State insurance regulator renews 
                the license of such producer in the State in 
                which the license was suspended or revoked; or
                    (B) the suspension or revocation is 
                subsequently overturned.
    (b) Authority To Establish Membership Criteria.--The 
Association shall have the authority to establish membership 
criteria that--
            (1) bear a reasonable relationship to the purposes 
        for which the Association was established; and
            (2) do not unfairly limit the access of smaller 
        agencies to the Association membership.
    (c) Establishment of Classes and Categories.--
            (1) Classes of membership.--The Association may 
        establish separate classes of membership, with separate 
        criteria, if the Association reasonably determines that 
        performance of different duties requires different 
        levels of education, training, or experience.
            (2) Categories.--The Association may establish 
        separate categories of membership for individuals and 
        for other persons. The establishment of any such 
        categories of membership shall be based either on the 
        types of licensing categories that exist under State 
        laws or on the aggregate amount of business handled by 
        an insurance producer. No special categories of 
        membership, and no distinct membership criteria, shall 
        be established for members which are depository 
        institutions or for their employees, agents, or 
        affiliates.
    (d) Membership Criteria.--
            (1) In general.--The Association may establish 
        criteria for membership which shall include standards 
        for integrity, personal qualifications, education, 
        training, and experience.
            (2) Minimum standard.--In establishing criteria 
        under paragraph (1), the Association shall consider the 
        highest levels of insurance producer qualifications 
        established under the licensing laws of the States.
    (e) Effect of Membership.--Membership in the Association 
shall entitle the member to licensure in each State for which 
the member pays the requisite fees, including licensing fees 
and, where applicable, bonding requirements, set by such State.
    (f) Annual Renewal.--Membership in the Association shall be 
renewed on an annual basis.
    (g) Continuing Education.--The Association shall establish, 
as a condition of membership, continuing education requirements 
which shall be comparable to or greater than the continuing 
education requirements under the licensing laws of a majority 
of the States.
    (h) Suspension and Revocation.--The Association may--
            (1) inspect and examine the records and offices of 
        the members of the Association to determine compliance 
        with the criteria for membership established by the 
        Association; and
            (2) suspend or revoke the membership of an 
        insurance producer if--
                    (A) the producer fails to meet the 
                applicable membership criteria of the 
                Association; or
                    (B) the producer has been subject to 
                disciplinary action pursuant to a final 
                adjudicatory proceeding under the jurisdiction 
                of a State insurance regulator, and the 
                Association concludes that retention of 
                membership in the Association would not be in 
                the public interest.
    (i) Office of Consumer Complaints.--
            (1) In general.--The Association shall establish an 
        office of consumer complaints that shall--
                    (A) receive and investigate complaints from 
                both consumers and State insurance regulators 
                related to members of the Association; and
                    (B) recommend to the Association any 
                disciplinary actions that the office considers 
                appropriate, to the extent that any such 
                recommendation is not inconsistent with State 
                law.
            (2) Records and referrals.--The office of consumer 
        complaints of the Association shall--
                    (A) maintain records of all complaints 
                received in accordance with paragraph (1) and 
                make such records available to the NAIC and to 
                each State insurance regulator for the State of 
                residence of the consumer who filed the 
                complaint; and
                    (B) refer, when appropriate, any such 
                complaint to any appropriate State insurance 
                regulator.
            (3) Telephone and other access.--The office of 
        consumer complaints shall maintain a toll-free 
        telephone number for the purpose of this subsection 
        and, as practicable, other alternative means of 
        communication with consumers, such as an Internet home 
        page.

SEC. 326. BOARD OF DIRECTORS.

    (a) Establishment.--There is established the board of 
directors of the Association (hereafter in this subtitle 
referred to as the ``Board'') for the purpose of governing and 
supervising the activities of the Association and the members 
of the Association.
    (b) Powers.--The Board shall have such powers and authority 
as may be specified in the bylaws of the Association.
    (c) Composition.--
            (1) Members.--The Board shall be composed of 7 
        members appointed by the NAIC.
            (2) Requirement.--At least 4 of the members of the 
        Board shall each have significant experience with the 
        regulation of commercial lines of insurance in at least 
        1 of the 20 States in which the greatest total dollar 
        amount of commercial-lines insurance is placed in the 
        United States.
            (3) Initial board membership.--
                    (A) In general.--If, by the end of the 2-
                year period beginning on the date of the 
                enactment of this Act, the NAIC has not 
                appointed the initial 7 members of the Board of 
                the Association, the initial Board shall 
                consist of the 7 State insurance regulators of 
                the 7 States with the greatest total dollar 
                amount of commercial-lines insurance in place 
                as of the end of such period.
                    (B) Alternate composition.--If any of the 
                State insurance regulators described in 
                subparagraph (A) declines to serve on the 
                Board, the State insurance regulator with the 
                next greatest total dollar amount of 
                commercial-lines insurance in place, as 
                determined by the NAIC as of the end of such 
                period, shall serve as a member of the Board.
                    (C) Inoperability.--If fewer than 7 State 
                insurance regulators accept appointment to the 
                Board, the Association shall be established 
                without NAIC oversight pursuant to section 332.
    (d) Terms.--The term of each director shall, after the 
initial appointment of the members of the Board, be for 3 
years, with one-third of the directors to be appointed each 
year.
    (e) Board Vacancies.--A vacancy on the Board shall be 
filled in the same manner as the original appointment of the 
initial Board for the remainder of the term of the vacating 
member.
    (f) Meetings.--The Board shall meet at the call of the 
chairperson, or as otherwise provided by the bylaws of the 
Association.

SEC. 327. OFFICERS.

    (a) In General.--
            (1) Positions.--The officers of the Association 
        shall consist of a chairperson and a vice chairperson 
        of the Board, a president, secretary, and treasurer of 
        the Association, and such other officers and assistant 
        officers as may be deemed necessary.
            (2) Manner of selection.--Each officer of the Board 
        and the Association shall be elected or appointed at 
        such time and in such manner and for such terms not 
        exceeding 3 years as may be prescribed in the bylaws of 
        the Association.
    (b) Criteria for Chairperson.--Only individuals who are 
members of the NAIC shall be eligible to serve as the 
chairperson of the board of directors.

SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.

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

SEC. 329. ASSESSMENTS.

    (a) Insurance Producers Subject to Assessment.--The 
Association may establish such application and membership fees 
as the Association finds necessary to cover the costs of its 
operations, including fees made reimbursable to the NAIC under 
subsection (b), except that, in setting such fees, the 
Association may not discriminate against smaller insurance 
producers.
    (b) NAIC Assessments.--The NAIC may assess the Association 
for any costs that the NAIC incurs under this subtitle.

SEC. 330. FUNCTIONS OF THE NAIC.

    (a) Administrative Procedure.--Determinations of the NAIC, 
for purposes of making rules pursuant to section 328, shall be 
made after appropriate notice and opportunity for a hearing and 
for submission of views of interested persons.
    (b) Examinations and Reports.--
            (1) Examinations.--The NAIC may make such 
        examinations and inspections of the Association and 
        require the Association to furnish to the NAIC such 
        reports and records or copies thereof as the NAIC may 
        consider necessary or appropriate in the public 
        interest or to effectuate the purposes of this 
        subtitle.
            (2) Report by association.--As soon as practicable 
        after the close of each fiscal year, the Association 
        shall submit to the NAIC a written report regarding the 
        conduct of its business, and the exercise of the other 
        rights and powers granted by this subtitle, during such 
        fiscal year. Such report shall include financial 
        statements setting forth the financial position of the 
        Association at the end of such fiscal year and the 
        results of its operations (including the source and 
        application of its funds) for such fiscal year. The 
        NAIC shall transmit such report to the President and 
        the Congress with such comment thereon as the NAIC 
        determines to be appropriate.

SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, AND 
                    EMPLOYEES OF THE ASSOCIATION.

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

SEC. 332. ELIMINATION OF NAIC OVERSIGHT.

    (a) In General.--The Association shall be established 
without NAIC oversight and the provisions set forth in section 
324, subsections (a), (b), (c), and (e) of section 328, and 
sections 329(b) and 330 of this subtitle shall cease to be 
effective if, at the end of the 2-year period beginning on the 
date on which the provisions of this subtitle take effect 
pursuant to section 321--
            (1) at least a majority of the States representing 
        at least 50 percent of the total United States 
        commercial-lines insurance premiums have not satisfied 
        the uniformity or reciprocity requirements of 
        subsections (a), (b), and (c) of section 321; and
            (2) the NAIC has not approved the Association's 
        bylaws as required by section 328 or is unable to 
        operate or supervise the Association, or the 
        Association is not conducting its activities as 
        required under this Act.
    (b) Board Appointments.--If the repeals required by 
subsection (a) are implemented, the following shall apply:
            (1) General appointment power.--The President, with 
        the advice and consent of the Senate, shall appoint the 
        members of the Association's Board established under 
        section 326 from lists of candidates recommended to the 
        President by the NAIC.
            (2) Procedures for obtaining naic appointment 
        recommendations.--
                    (A) Initial determination and 
                recommendations.--After the date on which the 
                provisions of subsection (a) take effect, the 
                NAIC shall, not later than 60 days thereafter, 
                provide a list of recommended candidates to the 
                President. If the NAIC fails to provide a list 
                by that date, or if any list that is provided 
                does not include at least 14 recommended 
                candidates or comply with the requirements of 
                section 326(c), the President shall, with the 
                advice and consent of the Senate, make the 
                requisite appointments without considering the 
                views of the NAIC.
                    (B) Subsequent appointments.--After the 
                initial appointments, the NAIC shall provide a 
                list of at least six recommended candidates for 
                the Board to the President by January 15 of 
                each subsequent year. If the NAIC fails to 
                provide a list by that date, or if any list 
                that is provided does not include at least six 
                recommended candidates or comply with the 
                requirements of section 326(c), the President, 
                with the advice and consent of the Senate, 
                shall make the requisite appointments without 
                considering the views of the NAIC.
                    (C) Presidential oversight.--
                            (i) Removal.--If the President 
                        determines that the Association is not 
                        acting in the interests of the public, 
                        the President may remove the entire 
                        existing Board for the remainder of the 
                        term to which the members of the Board 
                        were appointed and appoint, with the 
                        advice and consent of the Senate, new 
                        members to fill the vacancies on the 
                        Board for the remainder of such terms.
                            (ii) Suspension of rules or 
                        actions.--The President, or a person 
                        designated by the President for such 
                        purpose, may suspend the effectiveness 
                        of any rule, or prohibit any action, of 
                        the Association which the President or 
                        the designee determines is contrary to 
                        the public interest.
    (c) Annual Report.--As soon as practicable after the close 
of each fiscal year, the Association shall submit to the 
President and to the Congress a written report relative to the 
conduct of its business, and the exercise of the other rights 
and powers granted by this subtitle, during such fiscal year. 
Such report shall include financial statements setting forth 
the financial position of the Association at the end of such 
fiscal year and the results of its operations (including the 
source and application of its funds) for such fiscal year.

SEC. 333. RELATIONSHIP TO STATE LAW.

    (a) Preemption of State Laws.--State laws, regulations, 
provisions, or other actions purporting to regulate insurance 
producers shall be preempted as provided in subsection (b).
    (b) Prohibited Actions.--No State shall--
            (1) impede the activities of, take any action 
        against, or apply any provision of law or regulation 
        to, any insurance producer because that insurance 
        producer or any affiliate plans to become, has applied 
        to become, or is a member of the Association;
            (2) impose any requirement upon a member of the 
        Association that it pay different fees to be licensed 
        or otherwise qualified to do business in that State, 
        including bonding requirements, based on its residency;
            (3) impose any licensing, appointment, integrity, 
        personal or corporate qualifications, education, 
        training, experience, residency, or continuing 
        education requirement upon a member of the Association 
        that is different from the criteria for membership in 
        the Association or renewal of such membership, except 
        that counter-signature requirements imposed on 
        nonresident producers shall not be deemed to have the 
        effect of limiting or conditioning a producer's 
        activities because of its residence or place of 
        operations under this section; or
            (4) implement the procedures of such State's system 
        of licensing or renewing the licenses of insurance 
        producers in a manner different from the authority of 
        the Association under section 325.
    (c) Savings Provision.--Except as provided in subsections 
(a) and (b), no provision of this section shall be construed as 
altering or affecting the continuing effectiveness of any law, 
regulation, provision, or other action of any State which 
purports to regulate insurance producers, including any such 
law, regulation, provision, or action which purports to 
regulate unfair trade practices or establish consumer 
protections, including countersignature laws.

SEC. 334. COORDINATION WITH OTHER REGULATORS.

    (a) Coordination With State Insurance Regulators.--The 
Association shall have the authority to--
            (1) issue uniform insurance producer applications 
        and renewal applications that may be used to apply for 
        the issuance or removal of State licenses, while 
        preserving the ability of each State to impose such 
        conditions on the issuance or renewal of a license as 
        are consistent with section 333;
            (2) establish a central clearinghouse through which 
        members of the Association may apply for the issuance 
        or renewal of licenses in multiple States; and
            (3) establish or utilize a national database for 
        the collection of regulatory information concerning the 
        activities of insurance producers.
    (b) Coordination With the National Association of 
Securities Dealers.--The Association shall coordinate with the 
National Association of Securities Dealers in order to ease any 
administrative burdens that fall on persons that are members of 
both associations, consistent with the purposes of this 
subtitle and the Federal securities laws.

SEC. 335. JUDICIAL REVIEW.

    (a) Jurisdiction.--The appropriate United States district 
court shall have exclusive jurisdiction over litigation 
involving the Association, including disputes between the 
Association and its members that arise under this subtitle. 
Suits brought in State court involving the Association shall be 
deemed to have arisen under Federal law and therefore be 
subject to jurisdiction in the appropriate United States 
district court.
    (b) Exhaustion of Remedies.--An aggrieved person shall be 
required to exhaust all available administrative remedies 
before the Association and the NAIC before it may seek judicial 
review of an Association decision.
    (c) Standards of Review.--The standards set forth in 
section 553 of title 5, United States Code, shall be applied 
whenever a rule or bylaw of the Association is under judicial 
review, and the standards set forth in section 554 of title 5, 
United States Code, shall be applied whenever a disciplinary 
action of the Association is judicially reviewed.

SEC. 336. DEFINITIONS.

    For purposes of this subtitle, the following definitions 
shall apply:
            (1) Home state.--The term ``home State'' means the 
        State in which the insurance producer maintains its 
        principal place of residence and is licensed to act as 
        an insurance producer.
            (2) Insurance.--The term ``insurance'' means any 
        product, other than title insurance, defined or 
        regulated as insurance by the appropriate State 
        insurance regulatory authority.
            (3) Insurance producer.--The term ``insurance 
        producer'' means any insurance agent or broker, surplus 
        lines broker, insurance consultant, limited insurance 
        representative, and any other person that solicits, 
        negotiates, effects, procures, delivers, renews, 
        continues or binds policies of insurance or offers 
        advice, counsel, opinions or services related to 
        insurance.
            (4) State.--The term ``State'' includes any State, 
        the District of Columbia, any territory of the United 
        States, Puerto Rico, Guam, American Samoa, the Trust 
        Territory of the Pacific Islands, the Virgin Islands, 
        and the Northern Mariana Islands.
            (5) State law.--The term ``State law'' includes all 
        laws, decisions, rules, regulations, or other State 
        action having the effect of law, of any State. A law of 
        the United States applicable only to the District of 
        Columbia shall be treated as a State law rather than a 
        law of the United States.

           Subtitle D--Rental Car Agency Insurance Activities

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

    (a) Protection Against Retroactive Application of 
Regulatory and Legal Action.--Except as provided in subsection 
(b), during the 3-year period beginning on the date of the 
enactment of this Act, it shall be a presumption that no State 
law imposes any licensing, appointment, or education 
requirements on any personwho solicits the purchase of or sells 
insurance connected with, and incidental to, the lease or rental of a 
motor vehicle.
    (b) Preeminence of State Insurance Law.--No provision of 
this section shall be construed as altering the validity, 
interpretation, construction, or effect of--
            (1) any State statute;
            (2) the prospective application of any court 
        judgment interpreting or applying any State statute; or
            (3) the prospective application of any final State 
        regulation, order, bulletin, or other statutorily 
        authorized interpretation or action,
which, by its specific terms, expressly regulates or exempts 
from regulation any person who solicits the purchase of or 
sells insurance connected with, and incidental to, the short-
term lease or rental of a motor vehicle.
    (c) Scope of Application.--This section shall apply with 
respect to--
            (1) the lease or rental of a motor vehicle for a 
        total period of 90 consecutive days or less; and
            (2) insurance which is provided in connection with, 
        and incidentally to, such lease or rental for a period 
        of consecutive days not exceeding the lease or rental 
        period.
    (d) Motor Vehicle Defined.--For purposes of this section, 
the term ``motor vehicle'' has the same meaning as in section 
13102 of title 49, United States Code.

          TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLDING COMPANIES WITH 
                    COMMERCIAL AFFILIATES.

    (a) In General.--Section 10(c) of the Home Owners' Loan Act 
(12 U.S.C. 1467a(c)) is amended by adding at the end the 
following new paragraph:
            ``(9) Prevention of new affiliations between s&l 
        holding companies and commercial firms.--
                    ``(A) In general.--Notwithstanding 
                paragraph (3), no company may directly or 
                indirectly, including through any merger, 
                consolidation, or other type of business 
                combination, acquire control of a savings 
                association after May 4, 1999, unless the 
                company is engaged, directly or indirectly 
                (including through a subsidiary other than a 
                savings association), only in activities that 
                are permitted--
                            ``(i) under paragraph (1)(C) or (2) 
                        of this subsection; or
                            ``(ii) for financial holding 
                        companies under section 4(k) of the 
                        Bank Holding Company Act of 1956.
                    ``(B) Prevention of new commercial 
                affiliations.--Notwithstanding paragraph (3), 
                no savings and loan holding company may engage 
                directly or indirectly (including through a 
                subsidiary other than a savings association) in 
                any activity other than as described in clauses 
                (i) and (ii) of subparagraph (A).
                    ``(C) Preservation of authority of existing 
                unitary s&l holding companies.--Subparagraphs 
                (A) and (B) do not apply with respect to any 
                company that was a savings and loan holding 
                company on May 4, 1999, or that becomes a 
                savings and loan holding company pursuant to an 
                application pending before the Office on or 
                before that date, and that--
                            ``(i) meets and continues to meet 
                        the requirements of paragraph (3); and
                            ``(ii) continues to control not 
                        fewer than 1 savings association that 
                        it controlled on May 4, 1999, or that 
                        it acquired pursuant to an application 
                        pending beforethe Office on or before 
that date, or the successor to such savings association.
                    ``(D) Corporate reorganizations 
                permitted.--This paragraph does not prevent a 
                transaction that--
                            ``(i) involves solely a company 
                        under common control with a savings and 
                        loan holding company from acquiring, 
                        directly or indirectly, control of the 
                        savings and loan holding company or any 
                        savings association that is already a 
                        subsidiary of the savings and loan 
                        holding company; or
                            ``(ii) involves solely a merger, 
                        consolidation, or other type of 
                        business combination as a result of 
                        which a company under common control 
                        with the savings and loan holding 
                        company acquires, directly or 
                        indirectly, control of the savings and 
                        loan holding company or any savings 
                        association that is already a 
                        subsidiary of the savings and loan 
                        holding company.
                    ``(E) Authority to prevent evasions.--The 
                Director may issue interpretations, 
                regulations, or orders that the Director 
                determines necessary to administer and carry 
                out the purpose and prevent evasions of this 
                paragraph, including a determination that, 
                notwithstanding the form of a transaction, the 
                transaction would in substance result in a 
                company acquiring control of a savings 
                association.
                    ``(F) Preservation of authority for family 
                trusts.--Subparagraphs (A) and (B) do not apply 
                with respect to any trust that becomes a 
                savings and loan holding company with respect 
                to a savings association, if--
                            ``(i) not less than 85 percent of 
                        the beneficial ownership interests in 
                        the trust are continuously owned, 
                        directly or indirectly, by or for the 
                        benefit of members of the same family, 
                        or their spouses, who are lineal 
                        descendants of common ancestors who 
                        controlled, directly or indirectly, 
                        such savings association on May 4, 
                        1999, or a subsequent date, pursuant to 
                        an application pending before the 
                        Office on or before May 4, 1999; and
                            ``(ii) at the time at which such 
                        trust becomes a savings and loan 
                        holding company, such ancestors or 
                        lineal descendants, or spouses of such 
                        descendants, have directly or 
                        indirectly controlled the savings 
                        association continuously since May 4, 
                        1999, or a subsequent date, pursuant to 
                        an application pending before the 
                        Office on or before May 4, 1999.''.
    (b) Conforming Amendment.--Section 10(o)(5)(E) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(o)(5)(E)) is amended by 
striking ``, except subparagraph (B)'' and inserting ``or 
(c)(9)(A)(ii)''.
    (c) Rule of Construction for Certain Applications.--
            (1) In general.--In the case of a company that--
                    (A) submits an application with the 
                Director of the Office of Thrift Supervision 
                before the date of the enactment of this Act to 
                convert a State-chartered trust company 
                controlled by such company on May 4, 1999, to a 
                savings association; and
                    (B) controlled a subsidiary on May 4, 1999, 
                that had submitted an application to the 
                Director on September 2, 1998;
        the company (including any subsidiary controlled by 
        such company as of such date of enactment) shall be 
        treated as having filed such conversion application 
        with the Director before May 4, 1999, for purposes of 
        section 10(c)(9)(C) of the Home Owners' Loan Act (as 
        added by subsection (a)).
            (2) Definitions.--For purposes of paragraph (1), 
        the terms ``company'', ``control'', ``savings 
        association'', and ``subsidiary'' have the meanings 
        given those terms in section 10 of the Home Owners' 
        Loan Act.

                            TITLE V--PRIVACY

        Subtitle A--Disclosure of Nonpublic Personal Information

SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.

    (a) Privacy Obligation Policy.--It is the policy of the 
Congress that each financial institution has an affirmative and 
continuing obligation to respect the privacy of its customers 
and to protect the security and confidentiality of those 
customers' nonpublic personal information.
    (b) Financial Institutions Safeguards.--In furtherance of 
the policy in subsection (a), each agency or authority 
described in section 505(a) shall establish appropriate 
standards for the financial institutions subject to their 
jurisdiction relating to administrative, technical, and 
physical safeguards--
            (1) to insure the security and confidentiality of 
        customer records and information;
            (2) to protect against any anticipated threats or 
        hazards to the security or integrity of such records; 
        and
            (3) to protect against unauthorized access to or 
        use of such records or information which could result 
        in substantial harm or inconvenience to any customer.

SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PERSONAL 
                    INFORMATION.

    (a) Notice Requirements.--Except as otherwise provided in 
this subtitle, a financial institution may not, directly or 
through any affiliate, disclose to a nonaffiliated third party 
any nonpublic personal information, unless such financial 
institution provides or has provided to the consumer a notice 
that complies with section 503.
    (b) Opt Out.--
            (1) In general.--A financial institution may not 
        disclose nonpublic personal information to a 
        nonaffiliated third party unless--
                    (A) such financial institution clearly and 
                conspicuously discloses to the consumer, in 
                writing or in electronic form or other form 
                permitted by the regulations prescribed under 
                section 504, that such information may be 
                disclosed to such third party;
                    (B) the consumer is given the opportunity, 
                before the time that such information is 
                initially disclosed, to direct that such 
                information not be disclosed to such third 
                party; and
                    (C) the consumer is given an explanation of 
                how the consumer can exercise that 
                nondisclosure option.
            (2) Exception.--This subsection shall not prevent a 
        financial institution from providing nonpublic personal 
        information to a nonaffiliated third party to perform 
        services for or functions on behalf of the financial 
        institution, including marketing of the financial 
        institution's own products or services, or financial 
        products or services offered pursuant to joint 
        agreements between two or more financial institutions 
        that comply with the requirements imposed by the 
        regulations prescribed under section 504, if the 
        financial institution fully discloses the providing of 
        such information and enters into a contractual 
        agreement with the third party that requires the third 
        party to maintain the confidentiality of such 
        information.
    (c) Limits on Reuse of Information.--Except as otherwise 
provided in this subtitle, a nonaffiliated third party that 
receives from a financial institution nonpublic personal 
information under this section shall not, directly or through 
an affiliate of such receiving third party, disclose such 
information to any other person that is a nonaffiliated third 
party of both the financial institution and such receiving 
third party, unless such disclosure would be lawful if made 
directly to such other person by the financial institution.
    (d) Limitations on the Sharing of Account Number 
Information for Marketing Purposes.--A financial institution 
shall not disclose, other than to a consumer reporting agency, 
an account number or similar form of access number or access 
code for a credit card account, deposit account, or transaction 
account of a consumer to any nonaffiliated third party for use 
in telemarketing, direct mail marketing, or other marketing 
through electronic mail to the consumer.
    (e) General Exceptions.--Subsections (a) and (b) shall not 
prohibit the disclosure of nonpublic personal information--
            (1) as necessary to effect, administer, or enforce 
        a transaction requested or authorized by the consumer, 
        or in connection with--
                    (A) servicing or processing a financial 
                product or service requested or authorized by 
                the consumer;
                    (B) maintaining or servicing the consumer's 
                account with the financial institution, or with 
                another entity as part of a private label 
                credit card program or other extension of 
                credit on behalf of such entity; or
                    (C) a proposed or actual securitization, 
                secondary market sale (including sales of 
                servicing rights), or similar transaction 
                related to a transaction of the consumer;
            (2) with the consent or at the direction of the 
        consumer;
            (3)(A) to protect the confidentiality or security 
        of the financial institution's records pertaining to 
        the consumer, the service or product, or the 
        transaction therein; (B) to protect against or prevent 
        actual or potential fraud, unauthorized transactions, 
        claims, or other liability; (C) for required 
        institutional risk control, or for resolving customer 
        disputes or inquiries; (D) to persons holding a legal 
        or beneficial interest relating to the consumer; or (E) 
        to persons acting in a fiduciary or representative 
        capacity on behalf of the consumer;
            (4) to provide information to insurance rate 
        advisory organizations, guaranty funds or agencies, 
        applicable rating agencies of the financial 
        institution, persons assessing the institution's 
        compliance with industry standards, and the 
        institution's attorneys, accountants, and auditors;
            (5) to the extent specifically permitted or 
        required under other provisions of law and in 
        accordance with the Right to Financial Privacy Act of 
        1978, to law enforcement agencies (including a Federal 
        functional regulator, the Secretary of the Treasury 
        with respect to subchapter II of chapter 53 of title 
        31, United States Code, and chapter 2 of title I of 
        Public Law 91-508 (12 U.S.C. 1951-1959), a State 
        insurance authority, or the Federal Trade Commission), 
        self-regulatory organizations, or for an investigation 
        on a matter related to public safety;
            (6)(A) to a consumer reporting agency in accordance 
        with the Fair Credit Reporting Act, or (B) from a 
        consumer report reported by a consumer reporting 
        agency;
            (7) in connection with a proposed or actual sale, 
        merger, transfer, or exchange of all or a portion of a 
        business or operating unit if the disclosure of 
        nonpublic personal information concerns solely 
        consumers of such business or unit; or
            (8) to comply with Federal, State, or local laws, 
        rules, and other applicable legal requirements; to 
        comply with a properly authorized civil, criminal, or 
        regulatory investigation or subpoena or summons by 
        Federal, State, or local authorities; or to respond to 
        judicial process or government regulatory authorities 
        having jurisdiction over the financial institution for 
        examination, compliance, or other purposes as 
        authorized by law.

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.

    (a) Disclosure Required.--At the time of establishing a 
customer relationship with a consumer and not less than 
annually during the continuation of such relationship, a 
financial institution shall provide a clear and conspicuous 
disclosure to such consumer, in writing or in electronic form 
or other form permitted by the regulations prescribed under 
section 504, of such financial institution's policies and 
practices with respect to--
            (1) disclosing nonpublic personal information to 
        affiliates and nonaffiliated third parties, consistent 
        with section 502, including the categories of 
        information that may be disclosed;
            (2) disclosing nonpublic personal information of 
        persons who have ceased to be customers of the 
        financial institution; and
            (3) protecting the nonpublic personal information 
        of consumers.
Such disclosures shall be made in accordance with the 
regulations prescribed under section 504.
    (b) Information To Be Included.--The disclosure required by 
subsection (a) shall include--
            (1) the policies and practices of the institution 
        with respect to disclosing nonpublic personal 
        information to nonaffiliated third parties, other than 
        agents of the institution, consistent with section 502 
        of this subtitle, and including--
                    (A) the categories of persons to whom the 
                information is or may be disclosed, other than 
                the persons to whom the information may be 
                provided pursuant to section 502(e); and
                    (B) the policies and practices of the 
                institution with respect to disclosing of 
                nonpublic personal information of persons who 
                have ceased to be customers of the financial 
                institution;
            (2) the categories of nonpublic personal 
        information that are collected by the financial 
        institution;
            (3) the policies that the institution maintains to 
        protect the confidentiality and security of nonpublic 
        personal information in accordance with section 501; 
        and
            (4) the disclosures required, if any, under section 
        603(d)(2)(A)(iii) of the Fair Credit Reporting Act.

SEC. 504. RULEMAKING.

    (a) Regulatory Authority.--
            (1) Rulemaking.--The Federal banking agencies, the 
        National Credit Union Administration, the Secretary of 
        the Treasury, the Securities and Exchange Commission, 
        and the Federal Trade Commission shall each prescribe, 
        after consultation as appropriate with representatives 
        of State insurance authorities designated by the 
        National Association of Insurance Commissioners, such 
        regulations as may be necessary to carry out the 
        purposes of this subtitle with respect to the financial 
        institutions subject to their jurisdiction under 
        section 505.
            (2) Coordination, consistency, and comparability.--
        Each of the agencies and authorities required under 
        paragraph (1) to prescribe regulations shall consult 
        and coordinate with the other such agencies and 
        authorities for the purposes of assuring, to the extent 
        possible, that the regulations prescribed by each such 
        agency and authority are consistent and comparable with 
        the regulations prescribed by the other such agencies 
        and authorities.
            (3) Procedures and deadline.--Such regulations 
        shall be prescribed in accordance with applicable 
        requirements of title 5, United States Code, and shall 
        be issued in final form not later than 6 months after 
        the date of the enactment of this Act.
    (b) Authority To Grant Exceptions.--The regulations 
prescribed under subsection (a) may include such additional 
exceptions to subsections (a) through (d) of section 502 as are 
deemed consistent with the purposes of this subtitle.

SEC. 505. ENFORCEMENT.

    (a) In General.--This subtitle and the regulations 
prescribed thereunder shall be enforced by the Federal 
functional regulators, the State insurance authorities, and the 
Federal Trade Commission with respect to financial institutions 
and other persons subject to their jurisdiction under 
applicable law, as follows:
            (1) Under section 8 of the Federal Deposit 
        Insurance Act, in the case of--
                    (A) national banks, Federal branches and 
                Federal agencies of foreign banks, and any 
                subsidiaries of such entities (except brokers, 
                dealers, persons providing insurance, 
                investment companies, and investment advisers), 
                by the Office of the Comptroller of the 
                Currency;
                    (B) member banks of the Federal Reserve 
                System (other than national banks), branches 
                and agencies of foreign banks (other than 
                Federal branches, Federal agencies, and insured 
                State branches of foreign banks), commercial 
                lending companies owned or controlled by 
                foreign banks, organizations operating under 
                section 25 or 25A of the Federal Reserve Act, 
                and bank holding companies and their nonbank 
                subsidiaries or affiliates (except brokers, 
                dealers, persons providing insurance, 
                investment companies, and investment advisers), 
                by the Board of Governors of the Federal 
                Reserve System;
                    (C) banks insured by the Federal Deposit 
                Insurance Corporation (other than members of 
                the Federal Reserve System), insured State 
                branches of foreign banks, and any subsidiaries 
                of such entities (except brokers, dealers, 
                persons providing insurance, investment 
                companies, and investment advisers), by the 
                Board of Directors of the Federal Deposit 
                Insurance Corporation; and
                    (D) savings associations the deposits of 
                which are insured by the Federal Deposit 
                Insurance Corporation, and any subsidiaries of 
                such savings associations (except brokers, 
                dealers, persons providing insurance, 
                investment companies, and investment advisers), 
                by the Director of the Office of Thrift 
                Supervision.
            (2) Under the Federal Credit Union Act, by the 
        Board of the National Credit Union Administration with 
        respect to any federally insured credit union, and any 
        subsidiaries of such an entity.
            (3) Under the Securities Exchange Act of 1934, by 
        the Securities and Exchange Commission with respect to 
        any broker or dealer.
            (4) Under the Investment Company Act of 1940, by 
        the Securities and Exchange Commission with respect to 
        investment companies.
            (5) Under the Investment Advisers Act of 1940, by 
        the Securities and Exchange Commission with respect to 
        investment advisers registered with the Commission 
        under such Act.
            (6) Under State insurance law, in the case of any 
        person engaged in providing insurance, by the 
        applicable State insurance authority of the State in 
        which the person is domiciled, subject to section 104 
        of this Act.
            (7) Under the Federal Trade Commission Act, by the 
        Federal Trade Commission for any other financial 
        institution or other person that is not subject to the 
        jurisdiction of any agency or authority under 
        paragraphs (1) through (6) of this subsection.
    (b) Enforcement of Section 501.--
            (1) In general.--Except as provided in paragraph 
        (2), the agencies and authorities described in 
        subsection (a) shall implement the standards prescribed 
        under section 501(b) in the same manner, to the extent 
        practicable, as standards prescribed pursuant to 
        section 39(a) of the Federal Deposit Insurance Act are 
        implemented pursuant to such section.
            (2) Exception.--The agencies and authorities 
        described in paragraphs (3), (4), (5), (6), and (7) of 
        subsection (a) shall implement the standards prescribed 
        under section 501(b) by rule with respect to the 
        financial institutions and other persons subject to 
        their respective jurisdictions under subsection (a).
    (c) Absence of State Action.--If a State insurance 
authority fails to adopt regulations to carry out this 
subtitle, such State shall not be eligible to override, 
pursuant to section 47(g)(2)(B)(iii) of the Federal Deposit 
Insurance Act, the insurance customer protection regulations 
prescribed by a Federal banking agency under section 47(a) of 
such Act.
    (d) Definitions.--The terms used in subsection (a)(1) that 
are not defined in this subtitle or otherwisedefined in section 
3(s) of the Federal Deposit Insurance Act shall have the same meaning 
as given in section 1(b) of the International Banking Act of 1978.

SEC. 506. PROTECTION OF FAIR CREDIT REPORTING ACT.

    (a) Amendment.--Section 621 of the Fair Credit Reporting 
Act (15 U.S.C. 1681s) is amended--
            (1) in subsection (d), by striking everything 
        following the end of the second sentence; and
            (2) by striking subsection (e) and inserting the 
        following:
    ``(e) Regulatory Authority.--
            ``(1) The Federal banking agencies referred to in 
        paragraphs (1) and (2) of subsection (b) shall jointly 
        prescribe such regulations as necessary to carry out 
        the purposes of this Act with respect to any persons 
        identified under paragraphs (1) and (2) of subsection 
        (b), and the Board of Governors of the Federal Reserve 
        System shall have authority to prescribe regulations 
        consistent with such joint regulations with respect to 
        bank holding companies and affiliates (other than 
        depository institutions and consumer reporting 
        agencies) of such holding companies.
            ``(2) The Board of the National Credit Union 
        Administration shall prescribe such regulations as 
        necessary to carry out the purposes of this Act with 
        respect to any persons identified under paragraph (3) 
        of subsection (b).''.
    (b) Conforming Amendment.--Section 621(a) of the Fair 
Credit Reporting Act (15 U.S.C. 1681s(a)) is amended by 
striking paragraph (4).
    (c) Relation to Other Provisions.--Except for the 
amendments made by subsections (a) and (b), nothing in this 
title shall be construed to modify, limit, or supersede the 
operation of the Fair Credit Reporting Act, and no inference 
shall be drawn on the basis of the provisions of this title 
regarding whether information is transaction or experience 
information under section 603 of such Act.

SEC. 507. RELATION TO STATE LAWS.

    (a) In General.--This subtitle and the amendments made by 
this subtitle shall not be construed as superseding, altering, 
or affecting any statute, regulation, order, or interpretation 
in effect in any State, except to the extent that such statute, 
regulation, order, or interpretation is inconsistent with the 
provisions of this subtitle, and then only to the extent of the 
inconsistency.
    (b) Greater Protection Under State Law.--For purposes of 
this section, a State statute, regulation, order, or 
interpretation is not inconsistent with the provisions of this 
subtitle if the protection such statute, regulation, order, or 
interpretation affords any person is greater than the 
protection provided under this subtitle and the amendments made 
by this subtitle, as determined by the Federal Trade 
Commission, after consultation with the agency or authority 
with jurisdiction under section 505(a) of either the person 
that initiated the complaint or that is the subject of the 
complaint, on its own motion or upon the petition of any 
interested party.

SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL AFFILIATES.

    (a) In General.--The Secretary of the Treasury, in 
conjunction with the Federal functional regulators and the 
Federal Trade Commission, shall conduct a study of information 
sharing practices among financial institutions and their 
affiliates. Such study shall include--
            (1) the purposes for the sharing of confidential 
        customer information with affiliates or with 
        nonaffiliated third parties;
            (2) the extent and adequacy of security protections 
        for such information;
            (3) the potential risks for customer privacy of 
        such sharing of information;
            (4) the potential benefits for financial 
        institutions and affiliates of such sharing of 
        information;
            (5) the potential benefits for customers of such 
        sharing of information;
            (6) the adequacy of existing laws to protect 
        customer privacy;
            (7) the adequacy of financial institution privacy 
        policy and privacy rights disclosure under existing 
        law;
            (8) the feasibility of different approaches, 
        including opt-out and opt-in, to permit customers to 
        direct that confidential information not be shared with 
        affiliates and nonaffiliated third parties; and
            (9) the feasibility of restricting sharing of 
        information for specific uses or of permitting 
        customers to direct the uses for which information may 
        be shared.
    (b) Consultation.--The Secretary shall consult with 
representatives of State insurance authorities designated by 
the National Association of Insurance Commissioners, and also 
with financial services industry, consumer organizations and 
privacy groups, and other representatives of the general 
public, in formulating and conducting the study required by 
subsection (a).
    (c) Report.--On or before January 1, 2002, the Secretary 
shall submit a report to the Congress containing the findings 
and conclusions of the study required under subsection (a), 
together with such recommendations for legislative or 
administrative action as may be appropriate.

SEC. 509. DEFINITIONS.

    As used in this subtitle:
            (1) Federal banking agency.--The term ``Federal 
        banking agency'' has the same meaning as given in 
        section 3 of the Federal Deposit Insurance Act.
            (2) Federal functional regulator.--The term 
        ``Federal functional regulator'' means--
                    (A) the Board of Governors of the Federal 
                Reserve System;
                    (B) the Office of the Comptroller of the 
                Currency;
                    (C) the Board of Directors of the Federal 
                Deposit Insurance Corporation;
                    (D) the Director of the Office of Thrift 
                Supervision;
                    (E) the National Credit Union 
                Administration Board; and
                    (F) the Securities and Exchange Commission.
            (3) Financial institution.--
                    (A) In general.--The term ``financial 
                institution'' means any institution the 
                business of which is engaging in financial 
                activities as described in section 4(k) of the 
                Bank Holding Company Act of 1956.
                    (B) Persons subject to cftc regulation.--
                Notwithstanding subparagraph (A), the term 
                ``financial institution'' does not include any 
                person or entity with respect to any financial 
                activity that is subject to the jurisdiction of 
                the Commodity Futures Trading Commission under 
                the Commodity Exchange Act.
                    (C) Farm credit institutions.--
                Notwithstanding subparagraph (A), the term 
                ``financial institution'' does not include the 
                Federal Agricultural Mortgage Corporation or 
                any entity chartered and operating under the 
                Farm Credit Act of 1971.
                    (D) Other secondary market institutions.--
                Notwithstanding subparagraph (A), the term 
                ``financial institution'' does not include 
                institutions chartered by Congress specifically 
                to engage in transactions described in section 
                502(e)(1)(C), as long as such institutions do 
                not sell or transfer nonpublic personal 
                information to a nonaffiliated third party.
            (4) Nonpublic personal information.--
                    (A) The term ``nonpublic personal 
                information'' means personally identifiable 
                financial information--
                            (i) provided by a consumer to a 
                        financial institution;
                            (ii) resulting from any transaction 
                        with the consumer or any service 
                        performed for the consumer; or
                            (iii) otherwise obtained by the 
                        financial institution.
                    (B) Such term does not include publicly 
                available information, as such term is defined 
                by the regulations prescribed under section 
                504.
                    (C) Notwithstanding subparagraph (B), such 
                term--
                            (i) shall include any list, 
                        description, or other grouping of 
                        consumers (and publicly available 
                        information pertaining to them) that is 
                        derived using any nonpublic personal 
                        information other than publicly 
                        available information; but
                            (ii) shall not include any list, 
                        description, or other grouping of 
                        consumers (and publicly available 
                        information pertaining to them) that is 
                        derived without using any nonpublic 
                        personal information.
            (5) Nonaffiliated third party.--The term 
        ``nonaffiliated third party'' means any entity that is 
        not an affiliate of, or related by common ownership or 
        affiliated by corporate control with, the financial 
        institution, but does not include a joint employee of 
        such institution.
            (6) Affiliate.--The term ``affiliate'' means any 
        company that controls, is controlled by, or is under 
        common control with another company.
            (7) Necessary to effect, administer, or enforce.--
        The term ``as necessary to effect, administer, or 
        enforce the transaction'' means--
                    (A) the disclosure is required, or is a 
                usual, appropriate, or acceptable method, to 
                carry out the transaction or the product or 
                service business of which the transaction is a 
                part, and record or service or maintain the 
                consumer's account in the ordinary course of 
                providing the financial service or financial 
                product, or to administer or service benefits 
                or claims relating to the transaction or the 
                product or service business of which it is a 
                part, and includes--
                            (i) providing the consumer or the 
                        consumer's agent or broker with a 
                        confirmation, statement, or other 
                        record of the transaction, or 
                        information on the status or value of 
                        the financial service or financial 
                        product; and
                            (ii) the accrual or recognition of 
                        incentives or bonuses associated with 
                        the transaction that are provided by 
                        the financial institution or any other 
                        party;
                    (B) the disclosure is required, or is one 
                of the lawful or appropriate methods, to 
                enforce the rights of the financial institution 
                or of other persons engaged in carrying out the 
                financial transaction, or providing the product 
                or service;
                    (C) the disclosure is required, or is a 
                usual, appropriate, or acceptable method, for 
                insurance underwriting at the consumer's 
                request or for reinsurance purposes, or for any 
                of the following purposes as they relate to a 
                consumer's insurance: account administration, 
                reporting, investigating, or preventing fraud 
                or material misrepresentation, processing 
                premium payments, processing insurance claims, 
                administering insurance benefits (including 
                utilization review activities), participating 
                in research projects, or as otherwise required 
                or specifically permitted by Federal or State 
                law; or
                    (D) the disclosure is required, or is a 
                usual, appropriate or acceptable method, in 
                connection with--
                            (i) the authorization, settlement, 
                        billing, processing, clearing, 
                        transferring, reconciling, or 
                        collection of amounts charged, debited, 
                        or otherwise paid using a debit, credit 
                        or other payment card, check, or 
                        account number, or by other payment 
                        means;
                            (ii) the transfer of receivables, 
                        accounts or interests therein; or
                            (iii) the audit of debit, credit or 
                        other payment information.
            (8) State insurance authority.--The term ``State 
        insurance authority'' means, in the case of any person 
        engaged in providing insurance, the State insurance 
        authority of the State in which the person is 
        domiciled.
            (9) Consumer.--The term ``consumer'' means an 
        individual who obtains, from a financial institution, 
        financial products or services which are to be used 
        primarily for personal, family, or household purposes, 
        and also means the legal representative of such an 
        individual.
            (10) Joint agreement.--The term ``joint agreement'' 
        means a formal written contract pursuant to which two 
        or more financial institutions jointly offer, endorse, 
        or sponsor a financial product or service, and as may 
        be further defined in the regulations prescribed under 
        section 504.
            (11) Customer relationship.--The term ``time of 
        establishing a customer relationship'' shall be defined 
        by the regulations prescribed under section 504, and 
        shall, in the case of a financial institution engaged 
        in extending credit directly to consumers to finance 
        purchases of goods or services, mean the time of 
        establishing the credit relationship with the consumer.

SEC. 510. EFFECTIVE DATE.

    This subtitle shall take effect 6 months after the date on 
which rules are required to be prescribed under section 
504(a)(3), except--
            (1) to the extent that a later date is specified in 
        the rules prescribed under section 504; and
            (2) that sections 504 and 506 shall be effective 
        upon enactment.

         Subtitle B--Fraudulent Access to Financial Information

SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF FINANCIAL 
                    INSTITUTIONS.

    (a) Prohibition on Obtaining Customer Information by False 
Pretenses.--It shall be a violation of this subtitle for any 
person to obtain or attempt to obtain, or cause to be disclosed 
or attempt to cause to be disclosed to any person, customer 
information of a financial institution relating to another 
person--
            (1) by making a false, fictitious, or fraudulent 
        statement or representation to an officer, employee, or 
        agent of a financial institution;
            (2) by making a false, fictitious, or fraudulent 
        statement or representation to a customer of a 
        financial institution; or
            (3) by providing any document to an officer, 
        employee, or agent of a financial institution, knowing 
        that the document is forged, counterfeit, lost, or 
        stolen, was fraudulently obtained, or contains a false, 
        fictitious, or fraudulent statement or representation.
    (b) Prohibition on Solicitation of a Person To Obtain 
Customer Information From Financial Institution Under False 
Pretenses.--It shall be a violation of this subtitle to request 
a person to obtain customer information of a financial 
institution, knowing that the person will obtain, or attempt to 
obtain, the information from the institution in any manner 
described in subsection (a).
    (c) Nonapplicability to Law Enforcement Agencies.--No 
provision of this section shall be construed so as to prevent 
any action by a law enforcement agency, or any officer, 
employee, or agent of such agency, to obtain customer 
information of a financial institution in connection with the 
performance of the official duties of the agency.
    (d) Nonapplicability to Financial Institutions in Certain 
Cases.--No provision of this section shall be construed so as 
to prevent any financial institution, or any officer, employee, 
or agent of a financial institution, from obtaining customer 
information of such financial institution in the course of--
            (1) testing the security procedures or systems of 
        such institution for maintaining the confidentiality of 
        customer information;
            (2) investigating allegations of misconduct or 
        negligence on the part of any officer, employee, or 
        agent of the financial institution; or
            (3) recovering customer information of the 
        financial institution which was obtained or received by 
        another person in any manner described in subsection 
        (a) or (b).
    (e) Nonapplicability to Insurance Institutions for 
Investigation of Insurance Fraud.--No provision of this section 
shall be construed so as to prevent any insurance institution, 
or any officer, employee, or agency of an insurance 
institution, from obtaining information as part of an insurance 
investigation into criminal activity, fraud, material 
misrepresentation, or material nondisclosure that is authorized 
for such institution under State law, regulation, 
interpretation, or order.
    (f) Nonapplicability to Certain Types of Customer 
Information of Financial Institutions.--No provision of this 
section shall be construed so as to prevent any person from 
obtaining customer information of a financial institution that 
otherwise is available as a public record filed pursuant to the 
securities laws (as defined in section 3(a)(47) of the 
Securities Exchange Act of 1934).
    (g) Nonapplicability to Collection of Child Support 
Judgments.--No provision of this section shall be construed to 
prevent any State-licensed private investigator, or any 
officer, employee, or agent of such private investigator, from 
obtaining customer information of a financial institution, to 
the extent reasonably necessary to collect child support from a 
person adjudged to have been delinquent in his or her 
obligations by a Federal or State court, and to the extent that 
such action by a State-licensed private investigator is not 
unlawful under any other Federal or State law or regulation, 
and has been authorized by an order or judgment of a court of 
competent jurisdiction.

SEC. 522. ADMINISTRATIVE ENFORCEMENT.

    (a) Enforcement by Federal Trade Commission.--Except as 
provided in subsection (b), compliance with this subtitle shall 
be enforced by the Federal Trade Commission in the same manner 
and with the same power and authority as the Commission has 
under the Fair Debt Collection Practices Act to enforce 
compliance with such Act.
    (b) Enforcement by Other Agencies in Certain Cases.--
            (1) In general.--Compliance with this subtitle 
        shall be enforced under--
                    (A) section 8 of the Federal Deposit 
                Insurance Act, in the case of--
                            (i) national banks, and Federal 
                        branches and Federal agencies of 
                        foreignbanks, by the Office of the 
Comptroller of the Currency;
                            (ii) member banks of the Federal 
                        Reserve System (other than national 
                        banks), branches and agencies of 
                        foreign banks (other than Federal 
                        branches, Federal agencies, and insured 
                        State branches of foreign banks), 
                        commercial lending companies owned or 
                        controlled by foreign banks, and 
                        organizations operating under section 
                        25 or 25A of the Federal Reserve Act, 
                        by the Board;
                            (iii) banks insured by the Federal 
                        Deposit Insurance Corporation (other 
                        than members of the Federal Reserve 
                        System and national nonmember banks) 
                        and insured State branches of foreign 
                        banks, by the Board of Directors of the 
                        Federal Deposit Insurance Corporation; 
                        and
                            (iv) savings associations the 
                        deposits of which are insured by the 
                        Federal Deposit Insurance Corporation, 
                        by the Director of the Office of Thrift 
                        Supervision; and
                    (B) the Federal Credit Union Act, by the 
                Administrator of the National Credit Union 
                Administration with respect to any Federal 
                credit union.
            (2) Violations of this subtitle treated as 
        violations of other laws.--For the purpose of the 
        exercise by any agency referred to in paragraph (1) of 
        its powers under any Act referred to in that paragraph, 
        a violation of this subtitle shall be deemed to be a 
        violation of a requirement imposed under that Act. In 
        addition to its powers under any provision of law 
        specifically referred to in paragraph (1), each of the 
        agencies referred to in that paragraph may exercise, 
        for the purpose of enforcing compliance with this 
        subtitle, any other authority conferred on such agency 
        by law.

SEC. 523. CRIMINAL PENALTY.

    (a) In General.--Whoever knowingly and intentionally 
violates, or knowingly and intentionally attempts to violate, 
section 521 shall be fined in accordance with title 18, United 
States Code, or imprisoned for not more than 5 years, or both.
    (b) Enhanced Penalty for Aggravated Cases.--Whoever 
violates, or attempts to violate, section 521 while violating 
another law of the United States or as part of a pattern of any 
illegal activity involving more than $100,000 in a 12-month 
period shall be fined twice the amount provided in subsection 
(b)(3) or (c)(3) (as the case may be) of section 3571 of title 
18, United States Code, imprisoned for not more than 10 years, 
or both.

SEC. 524. RELATION TO STATE LAWS.

    (a) In General.--This subtitle shall not be construed as 
superseding, altering, or affecting the statutes, regulations, 
orders, or interpretations in effect in any State, except to 
the extent that such statutes, regulations, orders, or 
interpretations are inconsistent with the provisions of this 
subtitle, and then only to the extent of the inconsistency.
    (b) Greater Protection Under State Law.--For purposes of 
this section, a State statute, regulation, order, or 
interpretation is not inconsistent with the provisions of this 
subtitle if the protection such statute, regulation, order, or 
interpretation affords any person is greater than the 
protection provided under this subtitle as determined by the 
Federal Trade Commission, after consultation with the agency or 
authority with jurisdiction under section 522 of either the 
person that initiated the complaint or that is the subject of 
the complaint, on its own motion or upon the petition of any 
interested party.

SEC. 525. AGENCY GUIDANCE.

    In furtherance of the objectives of this subtitle, each 
Federal banking agency (as defined in section 3(z) of the 
Federal Deposit Insurance Act), the National Credit Union 
Administration, and the Securities and Exchange Commission or 
self-regulatory organizations, as appropriate, shall review 
regulations and guidelines applicable to financial institutions 
under their respective jurisdictions and shall prescribe such 
revisions to such regulations and guidelines as may be 
necessary to ensure that such financial institutions have 
policies, procedures, and controls in place to prevent the 
unauthorized disclosure of customer financial information and 
to deter and detect activities proscribed under section 521.

SEC. 526. REPORTS.

    (a) Report to the Congress.--Before the end of the 18-month 
period beginning on the date of the enactment of this Act, the 
Comptroller General, in consultation with the Federal Trade 
Commission, Federal banking agencies, the National Credit Union 
Administration, the Securities and Exchange Commission, 
appropriate Federal law enforcement agencies, and appropriate 
State insurance regulators, shall submit to the Congress a 
report on the following:
            (1) The efficacy and adequacy of the remedies 
        provided in this subtitle in addressing attempts to 
        obtain financial information by fraudulent means or by 
        false pretenses.
            (2) Any recommendations for additional legislative 
        or regulatory action to address threats to the privacy 
        of financial information created by attempts to obtain 
        information by fraudulent means or false pretenses.
    (b) Annual Report by Administering Agencies.--The Federal 
Trade Commission and the Attorney General shall submit to 
Congress an annual report on number and disposition of all 
enforcement actions taken pursuant to this subtitle.

SEC. 527. DEFINITIONS.

    For purposes of this subtitle, the following definitions 
shall apply:
            (1) Customer.--The term ``customer'' means, with 
        respect to a financial institution, any person (or 
        authorized representative of a person) to whom the 
        financial institution provides a product or service, 
        including that of acting as a fiduciary.
            (2) Customer information of a financial 
        institution.--The term ``customer information of a 
        financial institution'' means any information 
        maintained by or for a financial institution which is 
        derived from the relationship between the financial 
        institution and a customer of the financial institution 
        and is identified with the customer.
            (3) Document.--The term ``document'' means any 
        information in any form.
            (4) Financial institution.--
                    (A) In general.--The term ``financial 
                institution'' means any institution engaged in 
                the business of providing financial services to 
                customers who maintain a credit, deposit, 
                trust, or other financial account or 
                relationship with the institution.
                    (B) Certain financial institutions 
                specifically included.--The term ``financial 
                institution'' includes any depository 
                institution (as defined in section 19(b)(1)(A) 
                of the Federal Reserve Act), any broker or 
                dealer, any investment adviser or investment 
                company, any insurance company, any loan or 
                finance company, any credit card issuer or 
                operator of a credit card system, and any 
                consumer reporting agency that compiles and 
                maintains files on consumers on a nationwide 
                basis (as defined in section 603(p) of the 
                Consumer Credit Protection Act).
                    (C) Securities institutions.--For purposes 
                of subparagraph (B)--
                            (i) the terms ``broker'' and 
                        ``dealer'' have the same meanings as 
                        given in section 3 of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78c);
                            (ii) the term ``investment 
                        adviser'' has the same meaning as given 
                        in section 202(a)(11) of the Investment 
                        Advisers Act of 1940 (15 U.S.C. 80b-
                        2(a)); and
                            (iii) the term ``investment 
                        company'' has the same meaning as given 
                        in section 3 of the Investment Company 
                        Act of 1940 (15 U.S.C. 80a-3).
                    (D) Certain persons and entities 
                specifically excluded.--The term ``financial 
                institution'' does not include any person or 
                entity with respect to any financial activity 
                that is subject to the jurisdiction of the 
                Commodity Futures Trading Commission under the 
                Commodity Exchange Act and does not include the 
                Federal Agricultural Mortgage Corporation or 
                any entity chartered and operating under the 
                Farm Credit Act of 1971.
                    (E) Further definition by regulation.--The 
                Federal Trade Commission, after consultation 
                with Federal banking agencies and the 
                Securities and Exchange Commission, may 
                prescribe regulations clarifying or describing 
                the types of institutions which shall be 
                treated as financial institutions for purposes 
                of this subtitle.

         TITLE VI--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

SEC. 601. SHORT TITLE.

    This title may be cited as the ``Federal Home Loan Bank 
System Modernization Act of 1999''.

SEC. 602. DEFINITIONS.

    Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 
1422) is amended--
            (1) in paragraph (1), by striking ``term `Board' 
        means'' and inserting ``terms `Finance Board' and 
        `Board' mean'';
            (2) by striking paragraph (3) and inserting the 
        following:
            ``(3) State.--The term `State', in addition to the 
        States of the United States, includes the District of 
        Columbia, Guam, Puerto Rico, the United States Virgin 
        Islands, American Samoa, and the Commonwealth of the 
        Northern Mariana Islands.''; and
            (3) by adding at the end the following new 
        paragraph:
            ``(13) Community financial institution.--
                    ``(A) In general.--The term `community 
                financial institution' means a member--
                            ``(i) the deposits of which are 
                        insured under the Federal Deposit 
                        Insurance Act; and
                            ``(ii) that has, as of the date of 
                        the transaction at issue, less than 
                        $500,000,000 in average total assets, 
                        based on an average of total assets 
                        over the 3 years preceding that date.
                    ``(B) Adjustments.--The $500,000,000 limit 
                referred to in subparagraph (A)(ii) shall be 
                adjusted annually by the Finance Board, based 
                on the annual percentage increase, if any, in 
                the Consumer Price Index for all urban 
                consumers, as published by the Department of 
                Labor.''.

SEC. 603. SAVINGS ASSOCIATION MEMBERSHIP.

    Section 5(f) of the Home Owners' Loan Act (12 U.S.C. 
1464(f)) is amended to read as follows:
    ``(f) Federal Home Loan Bank Membership.--After the end of 
the 6-month period beginning on the date of the enactment of 
the Federal Home Loan Bank System Modernization Act of 1999, a 
Federal savings association may become a member of the Federal 
Home Loan Bank System, and shall qualify for such membership in 
the manner provided by the Federal Home Loan Bank Act.''.

SEC. 604. ADVANCES TO MEMBERS; COLLATERAL.

    (a) In General.--Section 10(a) of the Federal Home Loan 
Bank Act (12 U.S.C. 1430(a)) is amended--
            (1) by redesignating paragraphs (1) through (4) as 
        subparagraphs (A) through (D), respectively, and 
        indenting appropriately;
            (2) by striking ``(a) Each'' and inserting the 
        following:
    ``(a) In General.--
            ``(1) All advances.--Each'';
            (3) by striking the second sentence and inserting 
        the following:
            ``(2) Purposes of advances.--A long-term advance 
        may only be made for the purposes of--
                    ``(A) providing funds to any member for 
                residential housing finance; and
                    ``(B) providing funds to any community 
                financial institution for small businesses, 
                small farms, and small agri-businesses.'';
            (4) by striking ``A Bank'' and inserting the 
        following:
            ``(3) Collateral.--A Bank'';
            (5) in paragraph (3) (as so designated by paragraph 
        (4) of this subsection)--
                    (A) in subparagraph (C) (as so redesignated 
                by paragraph (1) of this subsection) by 
                striking ``Deposits'' and inserting ``Cash or 
                deposits'';
                    (B) in subparagraph (D) (as so redesignated 
                by paragraph (1) of this subsection), by 
                striking the second sentence; and
                    (C) by inserting after subparagraph (D) (as 
                so redesignated by paragraph (1) of this 
                subsection) the following new subparagraph:
                    ``(E) Secured loans for small business, 
                agriculture, or securities representing a whole 
                interest in such secured loans, in the case of 
                any community financial institution.'';
            (6) in paragraph (5)--
                    (A) in the second sentence, by striking 
                ``and the Board'';
                    (B) in the third sentence, by striking 
                ``Board'' and inserting ``Federal home loan 
                bank''; and
                    (C) by striking ``(5) Paragraphs (1) 
                through (4)'' and inserting the following:
            ``(4) Additional bank authority.--Subparagraphs (A) 
        through (E) of paragraph (3)''; and
            (7) by adding at the end the following:
            ``(5) Review of certain collateral standards.--The 
        Board may review the collateral standards applicable to 
        each Federal home loan bank for the classes of 
        collateral described in subparagraphs (D) and (E) of 
        paragraph (3), and may, if necessary for safety and 
        soundness purposes, require an increase in the 
        collateral standards for any or all of those classes of 
        collateral.
            ``(6) Definitions.--For purposes of this 
        subsection, the terms `small business', `agriculture', 
        `small farm', and `small agri-business' shall have the 
        meanings given those terms by regulation of the Finance 
        Board.''.
    (b) Clerical Amendment.--The section heading for section 10 
of the Federal Home Loan Bank Act (12 U.S.C. 1430) is amended 
to read as follows:

``SEC. 10. ADVANCES TO MEMBERS.''.

    (c) Qualified Thrift Lender Status.--Section 10 of the 
Federal Home Loan Bank Act (12 U.S.C. 1430) is amended by 
striking the 1st of the 2 subsections designated as subsection 
(e).
    (d) Federal Home Loan Bank Access.--Section 10(m)(3)(B) of 
the Home Owners' Loan Act (12 U.S.C. 1467a(m)(3)(B)) is 
amended--
            (1) in clause (i), by striking subclause (III) and 
        redesignating subclause (IV) as subclause (III); and
            (2) by striking clause (ii) and inserting the 
        following:
                            ``(ii) Additional restrictions 
                        effective after 3 years.--Beginning 3 
                        years after the date on which a savings 
                        association should have become a 
                        qualified thrift lender, or the date on 
                        which the savings association ceases to 
                        be a qualified thrift lender, as 
                        applicable, the savings association 
                        shall not retain any investment 
                        (including an investment in any 
                        subsidiary) or engage, directly or 
                        indirectly, in any activity, unless 
                        that investment or activity--
                                    ``(I) would be permissible 
                                for the savings association if 
                                it were a national bank; and
                                    ``(II) is permissible for 
                                the savings association as a 
                                savings association.''.

SEC. 605. ELIGIBILITY CRITERIA.

    Section 4(a) of the Federal Home Loan Bank Act (12 U.S.C. 
1424(a)) is amended--
            (1) in paragraph (2)(A), by inserting, ``(other 
        than a community financial institution)'' after 
        ``institution'';
            (2) in the matter immediately following paragraph 
        (2)(C)--
                    (A) by striking ``An insured'' and 
                inserting the following:
            ``(3) Certain institutions.--An insured''; and
                    (B) by striking ``preceding sentence'' and 
                inserting ``paragraph (2)''; and
            (3) by adding at the end the following new 
        paragraph:
            ``(4) Limited exemption for community financial 
        institutions.--A community financial institution that 
        otherwise meets the requirements of paragraph (2) may 
        become a member without regard to the percentage of its 
        total assets that is represented by residential 
        mortgage loans, as described in subparagraph (A) of 
        paragraph (2).''.

SEC. 606. MANAGEMENT OF BANKS.

    (a) Board of Directors.--Section 7 of the Federal Home Loan 
Bank Act (12 U.S.C. 1427(d)) is amended--
            (1) in subsection (a), by striking ``and bona fide 
        residents of the district in which such bank is 
        located'' and inserting ``, and each of whom shall be 
        either a bona fide resident of the district in which 
        such bank is located or an officer or director of a 
        member of such bank located in that district'';
            (2) in subsection (d), by striking the 1st sentence 
        and inserting the following: ``The term of each 
        director, whether elected or appointed, shall be 3 
        years. The board of directors of each Federal home loan 
        bank and the Finance Board shall adjust the terms of 
        members first elected or appointed after the date of 
        the enactment of the Federal Home Loan Bank System 
        Modernization Act of 1999 to ensure that the terms of 
        the members of the board of directors are staggered 
        with approximately \1/3\ of the terms expiring each 
        year.''; and
            (3) by striking subsection (g) and inserting the 
        following:
    ``(g) Chairperson and Vice Chairperson.--
            ``(1) Election.--The Chairperson and Vice 
        Chairperson of the board of directors of each Federal 
        home loan bank shall be elected by a majority of all 
        the directors of such bank from among the directors of 
        the bank.
            ``(2) Terms.--The term of office of the Chairperson 
        and the Vice Chairperson of the board of directors of a 
        Federal home loan bank shall be 2 years.
            ``(3) Acting chairperson.--In the event of a 
        vacancy in the position of Chairperson of the board of 
        directors or during the absence or disability of the 
        Chairperson, the Vice Chairperson shall act as 
        Chairperson.
            ``(4) Procedures.--The board of directors of each 
        Federal home loan bank shall establish procedures, in 
        the bylaws of such board, for designating an acting 
        chairperson for any period during which the Chairperson 
        and the Vice Chairperson are not available to carry out 
        the requirements of that position for any reason and 
        removing any person from any such position for good 
        cause.''.
    (b) Compensation.--Section 7(i) of the Federal Home Loan 
Bank Act (12 U.S.C. 1427(i)) is amended--
            (1) by striking ``(i) Each bank may pay its 
        directors'' and inserting ``(i) Directors' 
        Compensation.--
            ``(1) In general.--Subject to paragraph (2), each 
        bank may pay its directors''; and
            (2) by adding at the end the following new 
        paragraph:
            ``(2) Limitation.--
                    ``(A) In general.--The annual salary of 
                each of the following members of the board of 
                directors of a Federal home loan bank may not 
                exceed the amount specified:

``In the case of theThe annual compensation may not exceed--
    Chairperson...............................................  $25,000 
    Vice Chairperson..........................................  $20,000 
    All other members.........................................  $15,000.

                    ``(B) Adjustment.--Beginning January 1, 
                2001, each dollar amount referred to in the 
                table in subparagraph (A) shall be adjusted 
                annually by the Finance Board, based on the 
                annual percentage increase, if any, in the 
                Consumer Price Index for all urban consumers, 
                as published by the Department of Labor.
                    ``(C) Expenses.--Subparagraph (A) shall not 
                be construed as prohibiting the reimbursement 
                of expenses incurred by members of the board of 
                directors of any Federal home loan bank in 
                connection with service on the board of 
                directors.''.
    (c) Repeal of Sections 22A and 27.--The Federal Home Loan 
Bank Act (12 U.S.C. 1421 et seq.) is amended by striking 
sections 22A (12 U.S.C. 1442a) and 27 (12 U.S.C. 1447).
    (d) Section 12.--Section 12 of the Federal Home Loan Bank 
Act (12 U.S.C. 1432) is amended--
            (1) in subsection (a)--
                    (A) by striking ``, but, except'' and all 
                that follows through ``ten years'';
                    (B) by striking ``subject to the approval 
                of the Board'' the first place that term 
                appears;
                    (C) by striking ``and, by its Board of 
                directors,'' and all that follows through 
                ``agent of such bank,'' and inserting ``and, by 
                the board of directors of the bank, to 
                prescribe, amend, and repeal by-laws governing 
                the manner in which its affairs may be 
                administered, consistent with applicable laws 
                and regulations, as administered by the Finance 
                Board. No officer, employee, attorney, or agent 
                of a Federal home loan bank''; and
                    (D) by striking ``Board of directors'' 
                where such term appears in the penultimate 
                sentence and inserting ``board of directors''; 
                and
            (2) in subsection (b), by striking ``loans banks'' 
        and inserting ``loan banks''.
    (e) Powers and Duties of Federal Housing Finance Board.--
            (1) Issuance of notices of violations.--Section 
        2B(a) of the Federal Home Loan Bank Act (12 U.S.C. 
        1422b(a)) is amended by adding at the end the following 
        new paragraphs:
            ``(5) To issue and serve a notice of charges upon a 
        Federal home loan bank or upon any executive officer or 
        director of a Federal home loan bank if, in the 
        determination of the Finance Board, the Bank, executive 
        officer, or director is engaging or has engaged in, or 
        the Finance Board has reasonable cause to believe that 
        the Bank, executive officer, or director is about to 
        engage in an unsafe or unsound practice in conducting 
        the business of the bank, or any conduct that violates 
        any provision of this Act or any law, order, rule, or 
        regulation or any condition imposed in writing by the 
        Finance Board in connection with the granting of any 
        application or other request by the Bank, or any 
        written agreement entered into by the Bank with the 
        agency, in accordance with the procedures provided in 
        subsection (c) or (f) of section 1371 of the Federal 
        Housing Enterprises Financial Safety and Soundness Act 
        of 1992. Such authority includes the same authority to 
        issue an order requiring a party to take affirmative 
        action to correct conditions resulting from violations 
        or practices or to limit activities of a Bank or any 
        executive officer or director of a Bank as appropriate 
        Federal banking agencies have to take with respect to 
        insured depository institutions under paragraphs (6) 
        and (7) of section 8(b) of the Federal Deposit 
        Insurance Act, and to have all other powers, rights, 
        and duties to enforce this Act with respect to the 
        Federal home loan banks and their executive officers 
        and directors as the Office of Federal Housing 
        Enterprise Oversight has to enforce the Federal Housing 
        Enterprises Financial Safety and Soundness Act of 1992, 
        the Federal National Mortgage Association Charter Act, 
        or the Federal Home Loan Mortgage Corporation Act with 
        respect to the Federal housing enterprises under 
        subtitle C (other than section 1371) of the Federal 
        Housing Enterprises Financial Safety and Soundness Act 
        of 1992.
            ``(6) To address any insufficiencies in capital 
        levels resulting from the application of section 5(f) 
        of the Home Owners' Loan Act.
            ``(7) To act in its own name and through its own 
        attorneys--
                    ``(A) in enforcing any provision of this 
                Act or any regulation promulgated under this 
                Act; or
                    ``(B) in any action, suit, or proceeding to 
                which the Finance Board is a party that 
                involves the Board's regulation or supervision 
                of any Federal home loan bank.''.
            (2) Technical amendment.--Section 111 of Public Law 
        93-495 (12 U.S.C. 250) is amended by striking ``Federal 
        Home Loan Bank Board,'' and inserting ``Director of the 
        Office of Thrift Supervision, the Federal Housing 
        Finance Board,''.
    (f) Eligibility To Secure Advances.--
            (1) Section 9.--Section 9 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1429) is amended--
                    (A) in the second sentence, by striking 
                ``with the approval of the Board''; and
                    (B) in the third sentence, by striking ``, 
                subject to the approval of the Board,''.
            (2) Section 10.--Section 10 of the Federal Home 
        Loan Bank Act (12 U.S.C. 1430) is amended--
                    (A) in subsection (c)--
                            (i) in the first sentence, by 
                        striking ``Board'' and inserting 
                        ``Federal home loan bank''; and
                            (ii) by striking the second 
                        sentence; and
                    (B) in subsection (d)--
                            (i) in the first sentence, by 
                        striking ``and the approval of the 
                        Board''; and
                            (ii) by striking ``Subject to the 
                        approval of the Board, any'' and 
                        inserting ``Any''.
    (g) Section 16.--Section 16(a) of the Federal Home Loan 
Bank Act (12 U.S.C. 1436(a)) is amended--
            (1) in the third sentence--
                    (A) by striking ``net earnings'' and 
                inserting ``previously retained earnings or 
                current net earnings''; and
                    (B) by striking ``, and then only with the 
                approval of the Federal Housing Finance 
                Board''; and
            (2) by striking the fourth sentence.
    (h) Section 18.--Section 18(b) of the Federal Home Loan 
Bank Act (12 U.S.C. 1438(b)) is amended by striking paragraph 
(4).

SEC. 607. RESOLUTION FUNDING CORPORATION.

    (a) In General.--Section 21B(f)(2)(C) of the Federal Home 
Loan Bank Act (12 U.S.C. 1441b(f)(2)(C)) is amended to read as 
follows:
                    ``(C) Payments by federal home loan 
                banks.--
                            ``(i) In general.--To the extent 
                        that the amounts available pursuant to 
                        subparagraphs (A) and (B) are 
                        insufficient tocover the amount of 
interest payments, each Federal home loan bank shall pay to the Funding 
Corporation in each calendar year, 20.0 percent of the net earnings of 
that Bank (after deducting expenses relating to section 10(j) and 
operating expenses).
                            ``(ii) Annual determination.--The 
                        Board annually shall determine the 
                        extent to which the value of the 
                        aggregate amounts paid by the Federal 
                        home loan banks exceeds or falls short 
                        of the value of an annuity of 
                        $300,000,000 per year that commences on 
                        the issuance date and ends on the final 
                        scheduled maturity date of the 
                        obligations, and shall select 
                        appropriate present value factors for 
                        making such determinations, in 
                        consultation with the Secretary of the 
                        Treasury.
                            ``(iii) Payment term alterations.--
                        The Board shall extend or shorten the 
                        term of the payment obligations of a 
                        Federal home loan bank under this 
                        subparagraph as necessary to ensure 
                        that the value of all payments made by 
                        the Banks is equivalent to the value of 
                        an annuity referred to in clause (ii).
                            ``(iv) Term beyond maturity.--If 
                        the Board extends the term of payment 
                        obligations beyond the final scheduled 
                        maturity date for the obligations, each 
                        Federal home loan bank shall continue 
                        to pay 20.0 percent of its net earnings 
                        (after deducting expenses relating to 
                        section 10(j) and operating expenses) 
                        to the Treasury of the United States 
                        until the value of all such payments by 
                        the Federal home loan banks is 
                        equivalent to the value of an annuity 
                        referred to in clause (ii). In the 
                        final year in which the Federal home 
                        loan banks are required to make any 
                        payment to the Treasury under this 
                        subparagraph, if the dollar amount 
                        represented by 20.0 percent of the net 
                        earnings of the Federal home loan banks 
                        exceeds the remaining obligation of the 
                        Banks to the Treasury, the Finance 
                        Board shall reduce the percentage pro 
                        rata to a level sufficient to pay the 
                        remaining obligation.''.
    (b) Effective Date.--The amendment made by subsection (a) 
shall become effective on January 1, 2000. Payments made by a 
Federal home loan bank before that effective date shall be 
counted toward the total obligation of that Bank under section 
21B(f)(2)(C) of the Federal Home Loan Bank Act, as amended by 
this section.

SEC. 608. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

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

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

    ``(a) Regulations.--
            ``(1) Capital standards.--Not later than 1 year 
        after the date of the enactment of the Federal Home 
        Loan Bank System Modernization Act of 1999, the Finance 
        Board shall issue regulations prescribing uniform 
        capital standards applicable to each Federal home loan 
        bank, which shall require each such bank to meet--
                    ``(A) the leverage requirement specified in 
                paragraph (2); and
                    ``(B) the risk-based capital requirements, 
                in accordance with paragraph (3).
            ``(2) Leverage requirement.--
                    ``(A) In general.--The leverage requirement 
                shall require each Federal home loan bank to 
                maintain a minimum amount of total capital 
                based on the total assets of the bank and shall 
                be 5 percent.
                    ``(B) Treatment of stock and retained 
                earnings.--In determining compliance with the 
                minimum leverage ratio established under 
                subparagraph (A), the paid-in value of the 
                outstanding Class B stock and the amount of 
                retained earnings shall be multiplied by 1.5, 
                and such higher amounts shall be deemed to be 
                capital for purposes of meeting the 5 percent 
                minimum leverage ratio, except that a Federal 
                home loan bank's total capital (determined 
                without taking into account any such 
                multiplier) shall not be less than 4 percent of 
                the total assets of the bank.
            ``(3) Risk-based capital standards.--
                    ``(A) In general.--Each Federal home loan 
                bank shall maintain permanent capital in an 
                amount that is sufficient, as determined in 
                accordance with the regulations of the Finance 
                Board, to meet--
                            ``(i) the credit risk to which the 
                        Federal home loan bank is subject; and
                            ``(ii) the market risk, including 
                        interest rate risk, to which the 
                        Federal home loan bank is subject, 
                        based on a stress test established by 
                        the Finance Board that rigorously tests 
                        for changes in market variables, 
                        including changes in interest rates, 
                        rate volatility, and changes in the 
                        shape of the yield curve.
                    ``(B) Consideration of other risk-based 
                standards.--In establishing the risk-based 
                standard under subparagraph (A)(ii), the 
                Finance Board shall take due consideration of 
                any risk-based capital test established 
                pursuant to section 1361 of the Federal Housing 
                Enterprises Financial Safety and Soundness Act 
                of 1992 (12 U.S.C. 4611) for the enterprises 
                (as defined in that Act), with such 
                modifications as the Finance Board determines 
                to be appropriate to reflect differences in 
                operations between the Federal home loan banks 
                and those enterprises.
            ``(4) Other regulatory requirements.--The 
        regulations issued by the Finance Board under paragraph 
        (1) shall--
                    ``(A) permit each Federal home loan bank to 
                issue, with such rights, terms, and 
                preferences, not inconsistent with this Act and 
                the regulations issued hereunder, as the board 
                of directors of that bank may approve, any 1 or 
                more of--
                            ``(i) Class A stock, which shall be 
                        redeemable in cash and at par 6 months 
                        following submission by a member of a 
                        written notice of its intent to redeem 
                        such shares; and
                            ``(ii) Class B stock, which shall 
                        be redeemable in cash and at par 5 
                        years following submission by a member 
                        of a written notice of its intent to 
                        redeem such shares;
                    ``(B) provide that the stock of a Federal 
                home loan bank may be issued to and held by 
                only members of the bank, and that a bank may 
                not issue any stock other than as provided in 
                this section;
                    ``(C) prescribe the manner in which stock 
                of a Federal home loan bank may be sold, 
                transferred, redeemed, or repurchased; and
                    ``(D) provide the manner of disposition of 
                outstanding stock held by, and the liquidation 
                of any claims of the Federal home loan bank 
                against, an institution that ceases to be a 
                member of the bank, through merger or 
                otherwise, or that provides notice of intention 
                to withdraw from membership in the bank.
            ``(5) Definitions of capital.--For purposes of 
        determining compliance with the capital standards 
        established under this subsection--
                    ``(A) permanent capital of a Federal home 
                loan bank shall include--
                            ``(i) the amounts paid for the 
                        Class B stock; and
                            ``(ii) the retained earnings of the 
                        bank (as determined in accordance with 
                        generally accepted accounting 
                        principles); and
                    ``(B) total capital of a Federal home loan 
                bank shall include--
                            ``(i) permanent capital;
                            ``(ii) the amounts paid for the 
                        Class A stock;
                            ``(iii) consistent with generally 
                        accepted accounting principles, and 
                        subject to the regulation of the 
                        Finance Board, a general allowance for 
                        losses, which may not include any 
                        reserves or allowances made or held 
                        against specific assets; and
                            ``(iv) any other amounts from 
                        sources available to absorb losses 
                        incurred by the bank that the Finance 
                        Board determines by regulation to be 
                        appropriate to include in determining 
                        total capital.
            ``(6) Transition period.--Notwithstanding any other 
        provision of this Act, the requirements relating to 
        purchase and retention of capital stock of a Federal 
        home loan bank by any member thereof in effect on the 
        day before the date of the enactment of the Federal 
        Home Loan Bank System Modernization Act of 1999, shall 
        continue in effect with respect to each Federal home 
        loan bank until the regulations required by this 
        subsection have taken effect and the capital structure 
        plan required by subsection (b) has been approved by 
        the Finance Board and implemented by such bank.
    ``(b) Capital Structure Plan.--
            ``(1) Approval of plans.--Not later than 270 days 
        after the date of publication by the Finance Board of 
        final regulations in accordance with subsection (a), 
        the board of directors of each Federal home loan bank 
        shall submit for Finance Board approval a plan 
        establishing and implementing a capital structure for 
        such bank that--
                    ``(A) the board of directors determines is 
                best suited for the condition and operation of 
                the bank and the interests of the members of 
                the bank;
                    ``(B) meets the requirements of subsection 
                (c); and
                    ``(C) meets the minimum capital standards 
                and requirements established under subsection 
                (a) and other regulations prescribed by the 
                Finance Board.
            ``(2) Approval of modifications.--The board of 
        directors of a Federal home loan bank shall submit to 
        the Finance Board for approval any modifications that 
        the bank proposes to make to an approved capital 
        structure plan.
    ``(c) Contents of Plan.--The capital structure plan of each 
Federal home loan bank shall contain provisions addressing each 
of the following:
            ``(1) Minimum investment.--
                    ``(A) In general.--Each capital structure 
                plan of a Federal home loan bank shall require 
                each member of the bank to maintain a minimum 
                investment in the stock of the bank, the amount 
                of which shall be determined in a manner to be 
                prescribed by the board of directors of each 
                bank and to be included as part of the plan.
                    ``(B) Investment alternatives.--
                            ``(i) In general.--In establishing 
                        the minimum investment required for 
                        each member under subparagraph (A), a 
                        Federal home loan bank may, in its 
                        discretion, include any 1 or more of 
                        the requirements referred to in clause 
                        (ii), or any other provisions approved 
                        by the Finance Board.
                            ``(ii) Authorized requirements.--A 
                        requirement is referred to in this 
                        clause if it is a requirement for--
                                    ``(I) a stock purchase 
                                based on a percentage of the 
                                total assets of a member; or
                                    ``(II) a stock purchase 
                                based on a percentage of the 
                                outstanding advances from the 
                                bank to the member.
                    ``(C) Minimum amount.--Each capital 
                structure plan of a Federal home loan bank 
                shall require that the minimum stock investment 
                established for members shall be set at a level 
                that is sufficient for the bank to meet the 
                minimum capital requirements established by the 
                Finance Board under subsection (a).
                    ``(D) Adjustments to minimum required 
                investment.--The capital structure plan of each 
                Federal home loan bank shall impose a 
                continuing obligation on the board of directors 
                of the bank to review and adjust the minimum 
                investment required of each member of that 
                bank, as necessary to ensure that the bank 
                remains in compliance with applicable minimum 
                capital levels established by the Finance 
                Board, and shall require each member to comply 
                promptly with any adjustments to the required 
                minimum investment.
            ``(2) Transition rule.--
                    ``(A) In general.--The capital structure 
                plan of each Federal home loan bank shall 
                specify the date on which it shall take effect, 
                and may provide for a transition period of not 
                longer than 3 years to allow the bank to come 
                into compliance with the capital requirements 
                prescribed under subsection (a), and to allow 
                any institution that was a member of the bank 
                on the date of the enactment of the Federal 
                Home Loan Bank System Modernization Act of 
                1999, to come into compliance with the minimum 
                investment required pursuant to the plan.
                    ``(B) Interim purchase requirements.--The 
                capital structure plan of a Federal home loan 
                bank may allow any member referred to in 
                subparagraph (A) that would be required by the 
                terms of the capital structure plan to increase 
                its investment in the stock of the bank to do 
                so in periodic installments during the 
                transition period.
            ``(3) Disposition of shares.--The capital structure 
        plan of a Federal home loan bank shall provide for the 
        manner of disposition of any stock held by a member of 
        that bank that terminates its membership or that 
        provides notice of its intention to withdraw from 
        membership in that bank.
            ``(4) Classes of stock.--
                    ``(A) In general.--The capital structure 
                plan of a Federal home loan bank shall afford 
                each member of that bank the option of 
                maintaining its required investment in the bank 
                through the purchase of any combination of 
                classes of stock authorized by the board of 
                directors of the bank and approved by the 
                Finance Board in accordance with its 
                regulations.
                    ``(B) Rights requirement.--A Federal home 
                loan bank shall include in its capital 
                structure plan provisions establishing terms, 
                rights, and preferences, including minimum 
                investment, dividends, voting, and liquidation 
                preferences of each class of stock issued by 
                the bank, consistent with Finance Board 
                regulations and market requirements.
                    ``(C) Reduced minimum investment.--The 
                capital structure plan of a Federal home loan 
                bank may provide for a reduced minimum stock 
                investment for any member of that bank that 
                elects to purchase Class B in a manner that is 
                consistent with meeting the minimum capital 
                requirements of the bank, as established by the 
                Finance Board.
                    ``(D) Liquidation of claims.--The capital 
                structure plan of a Federal home loan bank 
                shall provide for the liquidation in an orderly 
                manner, as determined by the bank, of any claim 
                of that bank against a member, including claims 
                for any applicable prepayment fees or penalties 
                resulting from prepayment of advances prior to 
                stated maturity.
            ``(5) Limited transferability of stock.--The 
        capital structure plan of a Federal home loan bank 
        shall--
                    ``(A) provide that any stock issued by that 
                bank shall be available only to and held only 
                by members of that bank and tradable only 
                between that bank and its members; and
                    ``(B) establish standards, criteria, and 
                requirements for the issuance, purchase, 
                transfer, retirement, and redemption of stock 
                issued by that bank.
            ``(6) Bank review of plan.--Before filing a capital 
        structure plan with the Finance Board, each Federal 
        home loan bank shall conduct a review of the plan by--
                    ``(A) an independent certified public 
                accountant, to ensure, to the extent possible, 
                that implementation of the plan would not 
                result in any write-down of the redeemable bank 
                stock investment of its members; and
                    ``(B) at least one major credit rating 
                agency, to determine, to the extent possible, 
                whether implementation of the plan would have 
                any material effect on the credit ratings of 
                the bank.
    ``(d) Termination of Membership.--
            ``(1) Voluntary withdrawal.--Any member may 
        withdraw from a Federal home loan bank if the member 
        provides written notice to the bank of its intent to do 
        so and if, on the date of withdrawal, there is in 
        effect a certification by the Finance Board that the 
        withdrawal will not cause the Federal Home Loan Bank 
        System to fail to meet its obligation under section 
        21B(f)(2)(C) to contribute to the debt service for the 
        obligations issued by the Resolution Funding 
        Corporation. The applicable stock redemption notice 
        periods shall commence upon receipt of the notice by 
        the bank. Upon the expiration of the applicable notice 
        period for each class of redeemable stock, the member 
        may surrender such stock to the bank, and shall be 
        entitled to receive in cash the par value of the stock. 
        During the applicable notice periods, the member shall 
        be entitled to dividends and other membership rights 
        commensurate with continuing stock ownership.
            ``(2) Involuntary withdrawal.--
                    ``(A) In general.--The board of directors 
                of a Federal home loan bank may terminate the 
                membership of any institution if, subject to 
                Finance Board regulations, it determines that--
                            ``(i) the member has failed to 
                        comply with a provision of this Act or 
                        any regulation prescribed under this 
                        Act; or
                            ``(ii) the member has been 
                        determined to be insolvent, or 
                        otherwise subject to the appointment of 
                        a conservator, receiver, or other legal 
                        custodian, by a Federal or State 
                        authority with regulatory and 
                        supervisory responsibility for the 
                        member.
                    ``(B) Stock disposition.--An institution, 
                the membership of which is terminated in 
                accordance with subparagraph (A)--
                            ``(i) shall surrender redeemable 
                        stock to the Federal home loan bank, 
                        and shall receive in cash the par value 
                        of the stock, upon the expiration of 
                        the applicable notice period under 
                        subsection (a)(4)(A);
                            ``(ii) shall receive any dividends 
                        declared on its redeemable stock, 
                        during the applicable notice period 
                        under subsection (a)(4)(A); and
                            ``(iii) shall not be entitled to 
                        any other rights or privileges accorded 
                        to members after the date of the 
                        termination.
                    ``(C) Commencement of notice period.--With 
                respect to an institution, the membership of 
                which is terminated in accordance with 
                subparagraph (A), the applicable notice period 
                under subsection (a)(4) for each class of 
                redeemable stock shall commence on the earlier 
                of--
                            ``(i) the date of such termination; 
                        or
                            ``(ii) the date on which the member 
                        has provided notice of its intent to 
                        redeem such stock.
            ``(3) Liquidation of indebtedness.--Upon the 
        termination of the membership of an institution for any 
        reason, the outstanding indebtedness of the member to 
        the bank shall be liquidated in an orderly manner, as 
        determined by the bank and, upon the extinguishment of 
        all such indebtedness, the bank shall return to the 
        member all collateral pledged to secure the 
        indebtedness.
    ``(e) Redemption of Excess Stock.--
            ``(1) In general.--A Federal home loan bank, in its 
        sole discretion, may redeem or repurchase, as 
        appropriate, any shares of Class A or Class B stock 
        issued by the bank and held by a member that are in 
        excess of the minimum stock investment required of that 
        member.
            ``(2) Excess stock.--Shares of stock held by a 
        member shall not be deemed to be `excess stock' for 
        purposes of this subsection by virtue of a member's 
        submission of a notice of intent to withdraw from 
        membership or termination of its membership in any 
        other manner.
            ``(3) Priority.--A Federal home loan bank may not 
        redeem any excess Class B stock prior to the end of the 
        5-year notice period, unless the member has no Class A 
        stock outstanding that could be redeemed as excess.
    ``(f) Impairment of Capital.--If the Finance Board or the 
board of directors of a Federal home loan bank determines that 
the bank has incurred or is likely to incur losses that result 
in or are expected to result in charges against the capital of 
the bank, the bank shall not redeem or repurchase any stock of 
the bank without the prior approval of the Finance Board while 
such charges are continuing or are expected to continue. In no 
case may a bank redeem or repurchase any applicable capital 
stock if, following the redemption, the bank would fail to 
satisfy any minimum capital requirement.
    ``(g) Rejoining After Divestiture of All Shares.--
            ``(1) In general.--Except as provided in paragraph 
        (2), and notwithstanding any other provision of this 
        Act, an institution that divests all shares of stock in 
        a Federal home loan bank may not, after such 
        divestiture, acquire shares of any Federal home loan 
        bank before the end of the 5-year period beginning on 
        the date of the completion of such divestiture, unless 
        the divestiture is a consequence of a transfer of 
        membership on an uninterrupted basis between banks.
            ``(2) Exception for withdrawals from membership 
        before 1998.--Any institution that withdrew from 
        membership in any Federal home loan bank before 
        December 31, 1997, may acquire shares of a Federal home 
        loan bank at any time after that date, subject to the 
        approval of the Finance Board and the requirements of 
        this Act.
    ``(h) Treatment of Retained Earnings.--
            ``(1) In general.--The holders of the Class B stock 
        of a Federal home loan bank shall own the retained 
        earnings, surplus, undivided profits, and equity 
        reserves, if any, of the bank.
            ``(2) Exception.--Except as specifically provided 
        in this section or through the declaration of a 
        dividend or a capital distribution by a Federal home 
        loan bank, or in the event of liquidation of the bank, 
        a member shall have no right to withdraw or otherwise 
        receive distribution of any portion of the retained 
        earnings of the bank.
            ``(3) Limitation.--A Federal home loan bank may not 
        make any distribution of its retained earnings unless, 
        following such distribution, the bank would continue to 
        meet all applicable capital requirements.''.

                      TITLE VII--OTHER PROVISIONS

                       Subtitle A--ATM Fee Reform

SEC. 701. SHORT TITLE.

    This subtitle may be cited as the ``ATM Fee Reform Act of 
1999''.

SEC. 702. ELECTRONIC FUND TRANSFER FEE DISCLOSURES AT ANY HOST ATM.

    Section 904(d) of the Electronic Fund Transfer Act (15 
U.S.C. 1693b(d)) is amended by adding at the end the following 
new paragraph:
            ``(3) Fee disclosures at automated teller 
        machines.--
                    ``(A) In general.--The regulations 
                prescribed under paragraph (1) shall require 
                any automated teller machine operator who 
                imposes a fee on any consumer for providing 
                host transfer services to such consumer to 
                provide notice in accordance with subparagraph 
                (B) to the consumer (at the time the service is 
                provided) of--
                            ``(i) the fact that a fee is 
                        imposed by such operator for providing 
                        the service; and
                            ``(ii) the amount of any such fee.
                    ``(B) Notice requirements.--
                            ``(i) On the machine.--The notice 
                        required under clause (i) of 
                        subparagraph (A) with respect to any 
                        fee described in such subparagraph 
                        shall be posted in a prominent and 
                        conspicuous location on or at the 
                        automated teller machine at which the 
                        electronic fund transfer is initiated 
                        by the consumer.
                            ``(ii) On the screen.--The notice 
                        required under clauses (i) and (ii) of 
                        subparagraph (A) with respect to any 
                        fee described in such subparagraph 
                        shall appear on the screen of the 
                        automated teller machine, or on a paper 
                        notice issued from such machine, after 
                        the transaction is initiated and before 
                        the consumer is irrevocably committed 
                        to completing the transaction, except 
                        that during the period beginning on the 
                        date of the enactment of the Gramm-
                        Leach-Bliley Act and ending on December 
                        31, 2004, this clause shall not apply 
                        to any automated teller machine that 
                        lacks the technical capability to 
                        disclose the notice on the screen or to 
                        issue a paper notice after the 
                        transaction is initiated and before the 
                        consumer is irrevocably committed to 
                        completing the transaction.
                    ``(C) Prohibition on fees not properly 
                disclosed and explicitly assumed by consumer.--
                No fee may be imposed by any automated teller 
                machine operator in connection with any 
                electronic fund transfer initiated by a 
                consumer for which a notice is required under 
                subparagraph (A), unless--
                            ``(i) the consumer receives such 
                        notice in accordance with subparagraph 
                        (B); and
                            ``(ii) the consumer elects to 
                        continue in the manner necessary to 
                        effect the transaction after receiving 
                        such notice.
                    ``(D) Definitions.--For purposes of this 
                paragraph, the following definitions shall 
                apply:
                            ``(i) Automated teller machine 
                        operator.--The term `automated teller 
                        machine operator' means any person 
                        who--
                                    ``(I) operates an automated 
                                teller machine at which 
                                consumers initiate electronic 
                                fund transfers; and
                                    ``(II) is not the financial 
                                institution that holds the 
                                account of such consumer from 
                                which the transfer is made.
                            ``(ii) Electronic fund transfer.--
                        The term `electronic fund transfer' 
                        includes a transaction that involves a 
                        balance inquiry initiated by a consumer 
                        in the same manner as an electronic 
                        fund transfer, whether or not the 
                        consumer initiates a transfer of funds 
                        in the course of the transaction.
                            ``(iii) Host transfer services.--
                        The term `host transfer services' means 
                        any electronic fund transfer made by an 
                        automated teller machine operator in 
                        connection with a transaction initiated 
                        by a consumer at an automated teller 
                        machine operated by such operator.''.

SEC. 703. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS WHEN ATM CARD IS 
                    ISSUED.

    Section 905(a) of the Electronic Fund Transfer Act (15 
U.S.C. 1693c(a)) is amended--
            (1) by striking ``and'' at the end of paragraph 
        (8);
            (2) by striking the period at the end of paragraph 
        (9) and inserting ``; and''; and
            (3) by inserting after paragraph (9) the following 
        new paragraph:
            ``(10) a notice to the consumer that a fee may be 
        imposed by--
                    ``(A) an automated teller machine operator 
                (as defined in section 904(d)(3)(D)(i)) if the 
                consumer initiates a transfer from an automated 
                teller machine that is not operated by the 
                person issuing the card or other means of 
                access; and
                    ``(B) any national, regional, or local 
                network utilized to effect the transaction.''.

SEC. 704. FEASIBILITY STUDY.

    (a) In General.--The Comptroller General of the United 
States shall conduct a study of the feasibility of requiring, 
in connection with any electronic fund transfer initiated by a 
consumer through the use of an automated teller machine--
            (1) a notice to be provided to the consumer before 
        the consumer is irrevocably committed to completing the 
        transaction, which clearly states the amount of any fee 
        that will be imposed upon the consummation of the 
        transaction by--
                    (A) any automated teller machine operator 
                (as defined in section 904(d)(3)(D)(i) of the 
                Electronic Fund Transfer Act) involved in the 
                transaction;
                    (B) the financial institution holding the 
                account of the consumer;
                    (C) any national, regional, or local 
                network utilized to effect the transaction; and
                    (D) any other party involved in the 
                transfer; and
            (2) the consumer to elect to consummate the 
        transaction after receiving the notice described in 
        paragraph (1).
    (b) Factors To Be Considered.--In conducting the study 
required under subsection (a) with regard to the notice 
requirement described in such subsection, the Comptroller 
General shall consider the following factors:
            (1) The availability of appropriate technology.
            (2) Implementation and operating costs.
            (3) The competitive impact any such notice 
        requirement would have on various sizes and types of 
        institutions, if implemented.
            (4) The period of time that would be reasonable for 
        implementing any such notice requirement.
            (5) The extent to which consumers would benefit 
        from any such notice requirement.
            (6) Any other factor the Comptroller General 
        determines to be appropriate in analyzing the 
        feasibility of imposing any such notice requirement.
    (c) Report to the Congress.--Before the end of the 6-month 
period beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress 
containing--
            (1) the findings and conclusions of the Comptroller 
        General in connection with the study required under 
        subsection (a); and
            (2) the recommendation of the Comptroller General 
        with regard to the question of whether a notice 
        requirement described in subsection (a) should be 
        implemented and, if so, the manner in which such 
        requirement should be implemented.

SEC. 705. NO LIABILITY IF POSTED NOTICES ARE DAMAGED.

    Section 910 of the Electronic Fund Transfer Act (15 U.S.C. 
1693h) is amended by adding at the end the following new 
subsection:
    ``(d) Exception for Damaged Notices.--If the notice 
required to be posted pursuant to section 904(d)(3)(B)(i) by an 
automated teller machine operator has been posted by such 
operator in compliance with such section and the notice is 
subsequently removed, damaged, or altered by any person other 
than the operator of the automated teller machine, the operator 
shall have no liability under this section for failure to 
comply with section 904(d)(3)(B)(i).''.

                   Subtitle B--Community Reinvestment

SEC. 711. CRA SUNSHINE REQUIREMENTS.

    The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
is amended by inserting after section 47, as added by section 
305 of this Act, the following new section:

``SEC. 48. CRA SUNSHINE REQUIREMENTS.

    ``(a) Public Disclosure of Agreements.--Any agreement (as 
defined in subsection (e)) entered into after the date of the 
enactment of the Gramm-Leach-Bliley Act by an insured 
depository institution or affiliate with a nongovernmental 
entity or person made pursuant to or in connection with the 
Community Reinvestment Act of 1977 involving funds or other 
resources of such insured depository institution or affiliate--
            ``(1) shall be in its entirety fully disclosed, and 
        the full text thereof made available to the appropriate 
        Federal banking agency with supervisory responsibility 
        over the insured depository institution and to the 
        public by each party to the agreement; and
            ``(2) shall obligate each party to comply with this 
        section.
    ``(b) Annual Report of Activity by Insured Depository 
Institution.--Each insured depository institution or affiliate 
that is a party to an agreement described in subsection (a) 
shall report to the appropriate Federal banking agency with 
supervisory responsibility over the insured depository 
institution, not less frequently than once each year, such 
information as the Federal banking agency may by rule require 
relating to the following actions taken by the party pursuant 
to the agreement during the preceding 12-month period:
            ``(1) Payments, fees, or loans made to any party to 
        the agreement or received from any party to the 
        agreement and the terms and conditions of the same.
            ``(2) Aggregate data on loans, investments, and 
        services provided by each party in its community or 
        communities pursuant to the agreement.
            ``(3) Such other pertinent matters as determined by 
        regulation by the appropriate Federal banking agency 
        with supervisory responsibility over the insured 
        depository institution.
    ``(c) Annual Report of Activity by Nongovernmental 
Entities.--
            ``(1) In general.--Each nongovernmental entity or 
        person that is not an affiliate of an insured 
        depository institution and that is a party to an 
        agreement described in subsection (a) shall report to 
        the appropriate Federal banking agency with supervisory 
        responsibility over the insured depository institution 
        that is a party to such agreement, not less frequently 
        than once each year, an accounting of the use of funds 
        received pursuant to each such agreement during the 
        preceding 12-month period.
            ``(2) Submission to insured depository 
        institution.--A nongovernmental entity or person 
        referred to in paragraph (1) may comply with the 
        reporting requirement in such paragraph by transmitting 
        the report to the insured depository institution that 
        is a party to the agreement, and such insured 
        depository institution shall promptly transmit such 
        report to the appropriate Federal banking agency with 
        supervisory authority over the insured depository 
        institution.
            ``(3) Information to be included.--The accounting 
        referred to in paragraph (1) shall include a detailed, 
        itemized list of the uses to which such funds have been 
        made, including compensation, administrative expenses, 
        travel, entertainment, consulting and professional fees 
        paid, and such other categories, as determined by 
        regulation by the appropriate Federal banking agency 
        with supervisory responsibility over the insured 
        depository institution.
    ``(d) Applicability.--Subsections (b) and (c) shall not 
apply with respect to any agreement entered into before the end 
of the 6-month period beginning on the date of the enactment of 
the Gramm-Leach-Bliley Act.
    ``(e) Definitions.--
            ``(1) Agreement.--For purposes of this section, the 
        term `agreement'--
                    ``(A) means--
                            ``(i) any written contract, written 
                        arrangement, or other written 
                        understanding that provides for cash 
                        payments, grants, or other 
                        consideration with a value in excess of 
                        $10,000, or for loans the aggregate 
                        amount of principal of which exceeds 
                        $50,000, annually (or the sum of all 
                        such agreements during a 12-month 
                        period with an aggregate value of cash 
                        payments, grants, or other 
                        consideration in excess of $10,000, or 
                        with an aggregate amount of loan 
                        principal in excess of $50,000); or
                            ``(ii) a group of substantively 
                        related contracts with an aggregate 
                        value of cash payments, grants, or 
                        other consideration in excess of 
                        $10,000, or with an aggregate amount of 
                        loan principal in excess of $50,000, 
                        annually;
                made pursuant to, or in connection with, the 
                fulfillment of the Community Reinvestment Act 
                of 1977, at least 1 party to which is an 
                insured depository institution or affiliate 
                thereof, whether organized on a profit or not-
                for-profit basis; and
                    ``(B) does not include--
                            ``(i) any individual mortgage loan;
                            ``(ii) any specific contract or 
                        commitment for a loan or extension of 
                        credit to individuals, businesses, 
                        farms, or other entities, if the funds 
                        are loaned at rates not substantially 
                        below market rates and if the purpose 
                        of the loan or extension of credit does 
                        not include any re-lending of the 
                        borrowed funds to other parties; or
                            ``(iii) any agreement entered into 
                        by an insured depository institution or 
                        affiliate with a nongovernmental entity 
                        or person who has not commented on, 
                        testified about, or discussed with the 
                        institution, or otherwise contacted the 
                        institution, concerning the Community 
                        Reinvestment Act of 1977.
            ``(2) Fulfillment of cra.--For purposes of 
        subparagraph (A), the term `fulfillment' means a list 
        of factors that the appropriate Federal banking agency 
        determines have a material impact on the agency's 
        decision--
                    ``(A) to approve or disapprove an 
                application for a deposit facility (as defined 
                in section 803 of the Community Reinvestment 
                Act of 1977); or
                    ``(B) to assign a rating to an insured 
                depository institution under section 807 of the 
                Community Reinvestment Act of 1977.
    ``(f) Violations.--
            ``(1) Violations by persons other than insured 
        depository institutions or their affiliates.--
                    ``(A) Material failure to comply.--If the 
                party to an agreement described in subsection 
                (a) that is not an insured depository 
                institution or affiliate willfully fails to 
                comply with this section in a material way, as 
                determined by the appropriate Federal banking 
                agency, the agreement shall be unenforceable 
                after the offending party has been given notice 
                and a reasonable period of time to perform or 
                comply.
                    ``(B) Diversion of funds or resources.--If 
                funds or resources received under an agreement 
                described in subsection (a) have been diverted 
                contrary to the purposes of the agreement for 
                personal financial gain, the appropriate 
                Federal banking agency with supervisory 
                responsibility over the insured depository 
                institution may impose either or both of the 
                following penalties:
                            ``(i) Disgorgement by the offending 
                        individual of funds received under the 
                        agreement.
                            ``(ii) Prohibition of the offending 
                        individual from being a party to any 
                        agreement described in subsection (a) 
                        for a period of not to exceed 10 years.
            ``(2) Designation of successor nongovernmental 
        party.--If an agreement described in subsection (a) is 
        found to be unenforceable under this subsection, the 
        appropriate Federal banking agency may assist the 
        insured depository institution in identifying a 
        successor nongovernmental party to assume the 
        responsibilities of the agreement.
            ``(3) Inadvertent or de minimis reporting errors.--
        An error in a report filed under subsection (c) that is 
        inadvertent or de minimis shall not subject the filing 
        party to any penalty.
    ``(g) Rule of Construction.--No provision of this section 
shall be construed as authorizing any appropriate Federal 
banking agency to enforce the provisions of any agreement 
described in subsection (a).
    ``(h) Regulations.--
            ``(1) In general.--Each appropriate Federal banking 
        agency shall prescribe regulations, in accordance with 
        paragraph (4), requiring procedures reasonably designed 
        to ensure and monitor compliance with the requirements 
        of this section.
            ``(2) Protection of parties.--In carrying out 
        paragraph (1), each appropriate Federal banking agency 
        shall--
                    ``(A) ensure that the regulations 
                prescribed by the agency do not impose an undue 
                burden on the parties and that proprietary and 
                confidential information is protected; and
                    ``(B) establish procedures to allow any 
                nongovernmental entity or person who is a party 
                to a large number of agreements described in 
                subsection (a) to make a single or consolidated 
                filing of a report under subsection (c) to an 
                insured depository institution or an 
                appropriate Federal banking agency.
            ``(3) Parties not subject to reporting 
        requirements.--The Board of Governors of the Federal 
        Reserve System may prescribe regulations--
                    ``(A) to prevent evasions of subsection 
                (e)(1)(B)(iii); and
                    ``(B) to provide further exemptions under 
                such subsection, consistent with the purposes 
                of this section.
            ``(4) Coordination, consistency, and 
        comparability.--In carrying out paragraph (1), each 
        appropriate Federal banking agency shall consult and 
        coordinate with the other such agencies for the 
        purposes of assuring, to the extent possible, that the 
        regulations prescribed by each such agency are 
        consistent and comparable with the regulations 
        prescribed by the other such agencies.''.

SEC. 712. SMALL BANK REGULATORY RELIEF.

    The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et 
seq.) is amended by adding at the end the following new 
section:

``SEC. 809. SMALL BANK REGULATORY RELIEF.

    ``(a) In General.--Except as provided in subsections (b) 
and (c), any regulated financial institution with aggregate 
assets of not more than $250,000,000 shall be subject to 
routine examination under this title--
            ``(1) not more than once every 60 months for an 
        institution that has achieved a rating of `outstanding 
        record of meeting community credit needs' at its most 
        recent examination under section 804;
            ``(2) not more than once every 48 months for an 
        institution that has received a rating of `satisfactory 
        record of meeting community credit needs' at its most 
        recent examination under section 804; and
            ``(3) as deemed necessary by the appropriate 
        Federal financial supervisory agency, for an 
        institution that has received a rating of less than 
        `satisfactory record of meeting community credit needs' 
        at its most recent examination under section 804.
    ``(b) No Exception From CRA Examinations in Connection With 
Applications for Deposit Facilities.--A regulated financial 
institution described in subsection (a) shall remain subject to 
examination under this title in connection with an application 
for a deposit facility.
    ``(c) Discretion.--A regulated financial institution 
described in subsection (a) may be subject to more frequent or 
less frequent examinations for reasonable cause under such 
circumstances as may be determined by the appropriate Federal 
financial supervisory agency.''.

SEC. 713. FEDERAL RESERVE BOARD STUDY OF CRA LENDING.

    The Board of Governors of the Federal Reserve System shall 
conduct a comprehensive study, in consultation with the 
Chairman and Ranking Member of the Committee on Banking and 
Financial Services of the House of Representatives and the 
Chairman and Ranking Member of the Committee on Banking, 
Housing, and Urban Affairs of the Senate, of the Community 
Reinvestment Act of 1977, which shall focus on--
            (1) the default rates;
            (2) the delinquency rates; and
            (3) the profitability;
of loans made in conformity with such Act, and report on the 
study to such Committees not later than March 15, 2000. Such 
report and supporting data shall also be made available by the 
Board of Governors of the Federal Reserve System to the public.

SEC. 714. PRESERVING THE COMMUNITY REINVESTMENT ACT OF 1977.

    Nothing in this Act shall be construed to repeal any 
provision of the Community Reinvestment Act of 1977.

SEC. 715. RESPONSIVENESS TO COMMUNITY NEEDS FOR FINANCIAL SERVICES.

    (a) Study.--The Secretary of the Treasury, in consultation 
with the Federal banking agencies (as defined in section 3(z) 
of the Federal Deposit Insurance Act), shall conduct a study of 
the extent to which adequate services are being provided as 
intended by the Community Reinvestment Act of 1977, including 
services in low- and moderate-income neighborhoods and for 
persons of modest means, as a result of the enactment of this 
Act.
    (b) Reports.--
            (1) In general.--The Secretary of the Treasury 
        shall--
                    (A) before March 15, 2000, submit a 
                baseline report to the Congress on the study 
                conducted pursuant to subsection (a); and
                    (B) before the end of the 2-year period 
                beginning on the date of the enactment of this 
                Act, in consultation with the Federal banking 
                agencies, submit a final report to the Congress 
                on the study conducted pursuant to subsection 
                (a).
            (2) Recommendations.--The final report submitted 
        under paragraph (1)(B) shall include such 
        recommendations as the Secretary determines to be 
        appropriate for administrative and legislative action 
        with respect to institutions covered under the 
        Community Reinvestment Act of 1977.

               Subtitle C--Other Regulatory Improvements

SEC. 721. EXPANDED SMALL BANK ACCESS TO S CORPORATION TREATMENT.

    (a) Study.--The Comptroller General of the United States 
shall conduct a study of--
            (1) possible revisions to the rules governing S 
        corporations, including--
                    (A) increasing the permissible number of 
                shareholders in such corporations;
                    (B) permitting shares of such corporations 
                to be held in individual retirement accounts;
                    (C) clarifying that interest on investments 
                held for safety, soundness, and liquidity 
                purposes should not be considered to be passive 
                income;
                    (D) discontinuation of the treatment of 
                stock held by bank directors as a disqualifying 
                personal class of stock for such corporations; 
                and
                    (E) improving Federal tax treatment of bad 
                debt and interest deductions; and
            (2) what impact such revisions might have on 
        community banks.
    (b) Report to the Congress.--Not later than 6 months after 
the date of the enactment of this Act, the Comptroller General 
of the United States shall submit a report to the Congress on 
the results of the study conducted under subsection (a).
    (c) Definition.--For purposes of this section, the term ``S 
corporation'' has the meaning given the term in section 
1361(a)(1) of the Internal Revenue Code of 1986.

SEC. 722. ``PLAIN LANGUAGE'' REQUIREMENT FOR FEDERAL BANKING AGENCY 
                    RULES.

    (a) In General.--Each Federal banking agency shall use 
plain language in all proposed and final rulemakings published 
by the agency in the Federal Register after January 1, 2000.
    (b) Report.--Not later than March 1, 2001, each Federal 
banking agency shall submit to the Congress a report that 
describes how the agency has complied with subsection (a).
    (c) Definition.--For purposes of this section, the term 
``Federal banking agency'' has the meaning given that term in 
section 3 of the Federal Deposit Insurance Act.

SEC. 723. RETENTION OF ``FEDERAL'' IN NAME OF CONVERTED FEDERAL SAVINGS 
                    ASSOCIATION.

    Section 2 of the Act entitled ``An Act to enable national 
banking associations to increase their capital stock and to 
change their names or locations'', approved May 1, 1886 (12 
U.S.C. 30), is amended by adding at the end the following new 
subsection:
    ``(d) Retention of `Federal' in Name of Converted Federal 
Savings Association.--
            ``(1) In general.--Notwithstanding subsection (a) 
        or any other provision of law, any depository 
        institution, the charter of which is converted from 
        that of a Federal savings association to a national 
        bank or a State bank after the date of the enactment of 
        the Gramm-Leach-Bliley Act may retain the term 
        `Federal' in the name of such institution if such 
        institution remains an insured depository institution.
            ``(2) Definitions.--For purposes of this 
        subsection, the terms `depository institution', 
        `insured depository institution', `national bank', and 
        `State bank' have the meanings given those terms in 
        section 3 of the Federal Deposit Insurance Act.''.

SEC. 724. CONTROL OF BANKERS' BANKS.

    Section 2(a)(5)(E)(i) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1841(a)(5)(E)(i)) is amended by inserting ``1 
or more'' before ``thrift institutions''.

SEC. 725. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTERPRISES.

    Title I of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4701 et seq.) is amended by 
adding at the end the following new subtitle:

    ``Subtitle C--Microenterprise Technical Assistance and Capacity 
                            Building Program

``SEC. 171. SHORT TITLE.

    ``This subtitle may be cited as the `Program for Investment 
in Microentrepreneurs Act of 1999', also referred to as the 
`PRIME Act'.

``SEC. 172. DEFINITIONS.

    ``For purposes of this subtitle, the following definitions 
shall apply:
            ``(1) Administration.--The term `Administration' 
        means the Small Business Administration.
            ``(2) Administrator.--The term `Administrator' 
        means the Administrator of the Small Business 
        Administration.
            ``(3) Capacity building services.--The term 
        `capacity building services' means services provided to 
        an organization that is, or that is in the process of 
        becoming, a microenterprise development organization or 
        program, for the purpose of enhancing its ability to 
        provide training and services to disadvantaged 
        entrepreneurs.
            ``(4) Collaborative.--The term `collaborative' 
        means 2 or more nonprofit entities that agree to act 
        jointly as a qualified organization under this 
        subtitle.
            ``(5) Disadvantaged entrepreneur.--The term 
        `disadvantaged entrepreneur' means a microentrepreneur 
        that is--
                    ``(A) a low-income person;
                    ``(B) a very low-income person; or
                    ``(C) an entrepreneur that lacks adequate 
                access to capital or other resources essential 
                for business success, or is economically 
                disadvantaged, as determined by the 
                Administrator.
            ``(6) Indian tribe.--The term `Indian tribe' has 
        the meaning given the term in section 103.
            ``(7) Intermediary.--The term `intermediary' means 
        a private, nonprofit entity that seeks to serve 
        microenterprise development organizations and programs 
        as authorized under section 175.
            ``(8) Low-income person.--The term `low-income 
        person' has the meaning given the term in section 103.
            ``(9) Microentrepreneur.--The term 
        `microentrepreneur' means the owner or developer of a 
        microenterprise.
            ``(10) Microenterprise.--The term `microenterprise' 
        means a sole proprietorship, partnership, or 
        corporation that--
                    ``(A) has fewer than 5 employees; and
                    ``(B) generally lacks access to 
                conventional loans, equity, or other banking 
                services.
            ``(11) Microenterprise development organization or 
        program.--The term `microenterprise development 
        organization or program' means a nonprofit entity, or a 
        program administered by such an entity, including 
        community development corporations or other nonprofit 
        development organizations and social service 
        organizations, that provides services to disadvantaged 
        entrepreneurs.
            ``(12) Training and technical assistance.--The term 
        `training and technical assistance' means services and 
        support provided to disadvantaged entrepreneurs, such 
        as assistance for the purpose of enhancing business 
        planning, marketing, management, financial management 
        skills, and assistance for the purpose of accessing 
        financial services.
            ``(13) Very low-income person.--The term `very low-
        income person' means having an income, adjusted for 
        family size, of not more than 150 percent of the 
        poverty line (as defined in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2)), 
        including any revision required by that section).

``SEC. 173. ESTABLISHMENT OF PROGRAM.

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

``SEC. 174. USES OF ASSISTANCE.

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

``SEC. 175. QUALIFIED ORGANIZATIONS.

    ``For purposes of eligibility for assistance under this 
subtitle, a qualified organization shall be--
            ``(1) a nonprofit microenterprise development 
        organization or program (or a group or collaborative 
        thereof) that has a demonstrated record of delivering 
        microenterprise services to disadvantaged 
        entrepreneurs;
            ``(2) an intermediary;
            ``(3) a microenterprise development organization or 
        program that is accountable to a local community, 
        working in conjunction with a State or local government 
        or Indian tribe; or
            ``(4) an Indian tribe acting on its own, if the 
        Indian tribe can certify that no private organization 
        or program referred to in this paragraph exists within 
        its jurisdiction.

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

    ``(a) Allocation of Assistance.--
            ``(1) In general.--The Administrator shall allocate 
        assistance from the Administration under this subtitle 
        to ensure that--
                    ``(A) activities described in section 
                174(1) are funded using not less than 75 
                percent of amounts made available for such 
                assistance; and
                    ``(B) activities described in section 
                174(2) are funded using not less than 15 
                percent of amounts made available for such 
                assistance.
            ``(2) Limit on individual assistance.--No single 
        person may receive more than 10 percent of the total 
        funds appropriated under this subtitle in a single 
        fiscal year.
    ``(b) Targeted Assistance.--The Administrator shall ensure 
that not less than 50 percent of the grants made under this 
subtitle are used to benefit very low-income persons, including 
those residing on Indian reservations.
    ``(c) Subgrants Authorized.--
            ``(1) In general.--A qualified organization 
        receiving assistance under this subtitle may provide 
        grants using that assistance to qualified small and 
        emerging microenterprise organizations and programs, 
        subject to such rules and regulations as the 
        Administrator determines to be appropriate.
            ``(2) Limit on administrative expenses.--Not more 
        than 7.5 percent of assistance received by a qualified 
        organization under this subtitle may be used for 
        administrative expenses in connection with the making 
        of subgrants under paragraph (1).
    ``(d) Diversity.--In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both 
large and small microenterprise organizations, serving urban, 
rural, and Indian tribal communities serving diverse 
populations.
    ``(e) Prohibition on Preferential Consideration of Certain 
SBA Program Participants.--In making grants under this 
subtitle, the Administrator shall ensure that any application 
made by a qualified organization that is a participant in the 
program established under section 7(m) of the Small Business 
Act does not receive preferential consideration over 
applications from other qualified organizations that are not 
participants in such program.

``SEC. 177. MATCHING REQUIREMENTS.

    ``(a) In General.--Financial assistance under this subtitle 
shall be matched with funds from sources other than the Federal 
Government on the basis of not less than 50 percent of each 
dollar provided by the Administration.
    ``(b) Sources of Matching Funds.--Fees, grants, gifts, 
funds from loan sources, and in-kind resources of a grant 
recipient from public or private sources may be used to comply 
with the matching requirement in subsection (a).
    ``(c) Exception.--
            ``(1) In general.--In the case of an applicant for 
        assistance under this subtitle with severe constraints 
        on available sources of matching funds, the 
        Administrator may reduce or eliminate the matching 
        requirements of subsection (a).
            ``(2) Limitation.--Not more than 10 percent of the 
        total funds made available from the Administration in 
        any fiscal year to carry out this subtitle may be 
        excepted from the matching requirements of subsection 
        (a), as authorized by paragraph (1) of this subsection.

``SEC. 178. APPLICATIONS FOR ASSISTANCE.

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

``SEC. 179. RECORDKEEPING.

    ``The requirements of section 115 shall apply to a 
qualified organization receiving assistance from the 
Administration under this subtitle as if it were a community 
development financial institution receiving assistance from the 
Fund under subtitle A.

``SEC. 180. AUTHORIZATION.

    ``In addition to funds otherwise authorized to be 
appropriated to the Fund to carry out this title, there are 
authorized to be appropriated to the Administrator to carry out 
this subtitle--
            ``(1) $15,000,000 for fiscal year 2000;
            ``(2) $15,000,000 for fiscal year 2001;
            ``(3) $15,000,000 for fiscal year 2002; and
            ``(4) $15,000,000 for fiscal year 2003.

``SEC. 181. IMPLEMENTATION.

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

SEC. 726. FEDERAL RESERVE AUDITS.

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

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

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

SEC. 727. AUTHORIZATION TO RELEASE REPORTS.

    (a) Federal Reserve Act.--The eighth undesignated paragraph 
of section 9 of the Federal Reserve Act (12 U.S.C. 326) is 
amended by striking the last sentence and inserting the 
following: ``The Board of Governors of the Federal Reserve 
System, at its discretion, may furnish any report of 
examination or other confidential supervisory information 
concerning any State member bank or other entity examined under 
any other authority of the Board, to any Federal or State 
agency or authority with supervisory or regulatory authority 
over the examined entity, to any officer, director, or receiver 
of the examined entity, and to any other person that the Board 
determines to be proper.''.
    (b) Commodity Futures Trading Commission.--The Right to 
Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.) is 
amended--
            (1) in section 1101(7)--
                    (A) by redesignating subparagraphs (G) and 
                (H) as subparagraphs (H) and (I), respectively; 
                and
                    (B) by inserting after subparagraph (F) the 
                following new subparagraph:
                    ``(G) the Commodity Futures Trading 
                Commission;''; and
            (2) in section 1112(e), by striking ``and the 
        Securities and Exchange Commission'' and inserting ``, 
        the Securities and Exchange Commission, and the 
        Commodity Futures Trading Commission''.

SEC. 728. GENERAL ACCOUNTING OFFICE STUDY OF CONFLICTS OF INTEREST.

    (a) Study Required.--The Comptroller General of the United 
States shall conduct a study analyzing the conflict of interest 
faced by the Board of Governors of the Federal Reserve System 
between its role as a primary regulator of the banking industry 
and its role as a vendor of services to the banking and 
financial services industry.
    (b) Specific Conflict Required To Be Addressed.--In the 
course of the study required under subsection (a), the 
Comptroller General shall address the conflict of interest 
faced by the Board of Governors of the Federal Reserve System 
between the role of the Board as a regulator of the payment 
system, generally, and its participation in the payment system 
as a competitor with private entities who are providing payment 
services.
    (c) Report to the Congress.--Before the end of the 1-year 
period beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress 
containing the findings and conclusions of the Comptroller 
General in connection with the study required under this 
section, together with such recommendations for such 
legislative or administrative actions as the Comptroller 
General may determine to be appropriate, including 
recommendations for resolving any such conflict of interest.

SEC. 729. STUDY AND REPORT ON ADAPTING EXISTING LEGISLATIVE 
                    REQUIREMENTS TO ONLINE BANKING AND LENDING.

    (a) Study Required.--The Federal banking agencies shall 
conduct a study of banking regulations regarding the delivery 
of financial services, including those regulations that may 
assume that there will be person-to-person contact during the 
course of a financial services transaction, and report their 
recommendations on adapting those existing requirements to 
online banking and lending.
    (b) Report Required.--Before the end of the 2-year period 
beginning on the date of the enactment of thisAct, the Federal 
banking agencies shall submit a report to the Congress on the findings 
and conclusions of the agencies with respect to the study required 
under subsection (a), together with such recommendations for 
legislative or regulatory action as the agencies may determine to be 
appropriate.
    (c) Definition.--For purposes of this section, the term 
``Federal banking agencies'' means each Federal banking agency 
(as defined in section 3(z) of the Federal Deposit Insurance 
Act).

SEC. 730. CLARIFICATION OF SOURCE OF STRENGTH DOCTRINE.

    Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 
1828) is amended by adding at the end the following new 
subsection:
    ``(t) Limitation on Claims.--
            ``(1) In general.--No person may bring a claim 
        against any Federal banking agency (including in its 
        capacity as conservator or receiver) for the return of 
        assets of an affiliate or controlling shareholder of 
        the insured depository institution transferred to, or 
        for the benefit of, an insured depository institution 
        by such affiliate or controlling shareholder of the 
        insured depository institution, or a claim against such 
        Federal banking agency for monetary damages or other 
        legal or equitable relief in connection with such 
        transfer, if at the time of the transfer--
                    ``(A) the insured depository institution is 
                subject to any direction issued in writing by a 
                Federal banking agency to increase its capital;
                    ``(B) the insured depository institution is 
                undercapitalized (as defined in section 38 of 
                this Act); and
                    ``(C) for that portion of the transfer that 
                is made by an entity covered by section 5(g) of 
                the Bank Holding Company Act of 1956 or section 
                45 of this Act, the Federal banking agency has 
                followed the procedure set forth in such 
                section.
            ``(2) Definition of claim.--For purposes of 
        paragraph (1), the term `claim'--
                    ``(A) means a cause of action based on 
                Federal or State law that--
                            ``(i) provides for the avoidance of 
                        preferential or fraudulent transfers or 
                        conveyances; or
                            ``(ii) provides similar remedies 
                        for preferential or fraudulent 
                        transfers or conveyances; and
                    ``(B) does not include any claim based on 
                actual intent to hinder, delay, or defraud 
                pursuant to such a fraudulent transfer or 
                conveyance law.''.

SEC. 731. INTEREST RATES AND OTHER CHARGES AT INTERSTATE BRANCHES.

    Section 44 of the Federal Deposit Insurance Act (12 U.S.C. 
1831u) is amended--
            (1) by redesignating subsection (f) as subsection 
        (g); and
            (2) by inserting after subsection (e) the following 
        new subsection:
    ``(f) Applicable Rate and Other Charge Limitations.--
            ``(1) In general.--In the case of any State that 
        has a constitutional provision that sets a maximum 
        lawful annual percentage rate of interest on any 
        contract at not more than 5 percent above the discount 
        rate for 90-day commercial paper in effect at the 
        Federal reserve bank for the Federal reserve district 
        in which such State is located, except as provided in 
        paragraph (2), upon the establishment in such State of 
        a branch of any out-of-State insured depository 
        institution in such State under this section, the 
        maximum interest rate or amount of interest, discount 
        points, finance charges, or other similar charges that 
        may be charged, taken, received, or reserved from time 
        to time in any loan or discount made or upon any note, 
        bill of exchange, financing transaction, or other 
        evidence of debt by any insured depository institution 
        whose home State is such State shall be equal to not 
        more than the greater of--
                    ``(A) the maximum interest rate or amount 
                of interest, discount points, finance charges, 
                or other similar charges that may be charged, 
                taken, received, or reserved in a similar 
                transaction under the constitution, statutory, 
                or other laws of the home State of the out-of-
                State insured depository institution 
                establishing any such branch, without reference 
                to this section, as such maximum interest rate 
                or amount of interest may change from time to 
                time; or
                    ``(B) the maximum rate or amount of 
                interest, discount points, finance charges, or 
                other similar charges that may be charged, 
                taken, received, or reserved in a similar 
                transaction by a State insured depository 
                institution chartered under the laws of such 
                State or a national bank or Federal savings 
                associationwhose main office is located in such 
State without reference to this section.
            ``(2) Rule of construction.--No provision of this 
        subsection shall be construed as superseding or 
        affecting--
                    ``(A) the authority of any insured 
                depository institution to take, receive, 
                reserve, and charge interest on any loan made 
                in any State other than the State referred to 
                in paragraph (1); or
                    ``(B) the applicability of section 501 of 
                the Depository Institutions Deregulation and 
                Monetary Control Act of 1980, section 5197 of 
                the Revised Statutes of the United States, or 
                section 27 of this Act.''.

SEC. 732. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.

    Section 5(a)(7) of the International Banking Act of 1978 
(12 U.S.C. 3103(a)(7)) is amended to read as follows:
            ``(7) Additional authority for interstate branches 
        and agencies of foreign banks, upgrades of certain 
        foreign bank agencies and branches.--Notwithstanding 
        paragraphs (1) and (2), a foreign bank may--
                    ``(A) with the approval of the Board and 
                the Comptroller of the Currency, establish and 
                operate a Federal branch or Federal agency or, 
                with the approval of the Board and the 
                appropriate State bank supervisor, a State 
                branch or State agency in any State outside the 
                foreign bank's home State if--
                            ``(i) the establishment and 
                        operation of such branch or agency is 
                        permitted by the State in which the 
                        branch or agency is to be established; 
                        and
                            ``(ii) in the case of a Federal or 
                        State branch, the branch receives only 
                        such deposits as would be permitted for 
                        a corporation organized under section 
                        25A of the Federal Reserve Act; or
                    ``(B) with the approval of the Board and 
                the relevant licensing authority (the 
                Comptroller in the case of a Federal branch or 
                the appropriate State supervisor in the case of 
                a State branch), upgrade an agency, or a branch 
                of the type referred to in subparagraph 
                (A)(ii), located in a State outside the foreign 
                bank's home State, into a Federal or State 
                branch if--
                            ``(i) the establishment and 
                        operation of such branch is permitted 
                        by such State; and
                            ``(ii) such agency or branch--
                                    ``(I) was in operation in 
                                such State on the day before 
                                September 29, 1994; or
                                    ``(II) has been in 
                                operation in such State for a 
                                period of time that meets the 
                                State's minimum age requirement 
                                permitted under section 
                                44(a)(5) of the Federal Deposit 
                                Insurance Act.''.

SEC. 733. FAIR TREATMENT OF WOMEN BY FINANCIAL ADVISERS.

    It is the sense of the Congress that individuals offering 
financial advice and products should offer such services and 
products in a nondiscriminatory, nongender-specific manner.

SEC. 734. MEMBERSHIP OF LOAN GUARANTEE BOARDS.

    (a) Emergency Steel Loan Guarantee Board.--Section 101(e) 
of the Emergency Steel Loan Guarantee Act of 1999 is amended--
            (1) in paragraph (2), by inserting ``, or a member 
        of the Board of Governors of the Federal Reserve System 
        designated by the Chairman'' after ``the Chairman of 
        the Board of Governors of the Federal Reserve System''; 
        and
            (2) in paragraph (3), by inserting ``, or a 
        commissioner of the Securities and Exchange Commission 
        designated by the Chairman'' before the period.
    (b) Emergency Oil and Gas Loan Guarantee Board.--Section 
201(d)(2) of the Emergency Oil and Gas Guarantee Loan Program 
Act is amended--
            (1) in subparagraph (B), by inserting ``, or a 
        member of the Board of Governors of the Federal Reserve 
        System designated by the Chairman'' after ``the 
        Chairman of the Board of Governors of the Federal 
        Reserve System''; and
            (2) in subparagraph (C), by inserting ``, or a 
        commissioner of the Securities and Exchange Commission 
        designated by the Chairman'' before the period.

SEC. 735. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RESERVE ACT.

    Section 11 of the Federal Reserve Act (12 U.S.C. 248) is 
amended by striking the paragraph designated as ``(m)'' and 
inserting ``(m) [Repealed]''.

SEC. 736. ELIMINATION OF SAIF AND DIF SPECIAL RESERVES.

    (a) SAIF Special Reserve.--Section 11(a)(6) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)(6)) is amended by 
striking subparagraph (L).
    (b) DIF Special Reserve.--Section 2704 of the Deposit 
Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is amended--
            (1) by striking subsection (b); and
            (2) in subsection (d)--
                    (A) by striking paragraph (4);
                    (B) in paragraph (6)(C)(i), by striking 
                ``(6) and (7)'' and inserting ``(5), (6), and 
                (7)''; and
                    (C) in paragraph (6)(C), by striking clause 
                (ii) and inserting the following:
                            ``(ii) by redesignating paragraph 
                        (8) as paragraph (5).''.
    (c) Effective Date.--This section and the amendments made 
by this section shall become effective on the date of the 
enactment of this Act.

SEC. 737. BANK OFFICERS AND DIRECTORS AS OFFICERS AND DIRECTORS OF 
                    PUBLIC UTILITIES.

    Section 305(b) of the Federal Power Act (16 U.S.C. 825d(b)) 
is amended--
            (1) by striking ``(b) After six'' and inserting the 
        following:
    ``(b) Interlocking Directorates.--
            ``(1) In general.--After 6''; and
            (2) by adding at the end the following:
            ``(2) Applicability.--
                    ``(A) In general.--In the circumstances 
                described in subparagraph (B), paragraph (1) 
                shall not apply to a person that holds or 
                proposes to hold the positions of--
                            ``(i) officer or director of a 
                        public utility; and
                            ``(ii) officer or director of a 
                        bank, trust company, banking 
                        association, or firm authorized by law 
                        to underwrite or participate in the 
                        marketing of securities of a public 
                        utility.
                    ``(B) Circumstances.--The circumstances 
                described in this subparagraph are that--
                            ``(i) a person described in 
                        subparagraph (A) does not participate 
                        in any deliberations or decisions of 
                        the public utility regarding the 
                        selection of a bank, trust company, 
                        banking association, or firm to 
                        underwrite or participate in the 
                        marketing of securities of the public 
                        utility, if the person serves as an 
                        officer or director of a bank, trust 
                        company, banking association, or firm 
                        that is under consideration in the 
                        deliberation process;
                            ``(ii) the bank, trust company, 
                        banking association, or firm of which 
                        the person is an officer or director 
                        does not engage in the underwriting of, 
                        or participate in the marketing of, 
                        securities of the public utility of 
                        which the person holds the position of 
                        officer or director;
                            ``(iii) the public utility for 
                        which the person serves or proposes to 
                        serve as an officer or director selects 
                        underwriters by competitive procedures; 
                        or
                            ``(iv) the issuance of securities 
                        the public utility for which the person 
                        serves or proposes to serve as an 
                        officer or director has been approved 
                        by all Federal and State regulatory 
                        agencies having jurisdiction over the 
                        issuance.''.

SEC. 738. APPROVAL FOR PURCHASES OF SECURITIES.

    Section 23B(b)(2) of the Federal Reserve Act (12 U.S.C. 
371c-1) is amended to read as follows:
    ``Subparagraph (B) of paragraph (1) shall not apply if the 
purchase or acquisition of such securities has been approved, 
before such securities are initially offered for sale to the 
public, by a majority of the directors of the bank based on a 
determination that the purchase is a sound investment for the 
bank irrespective of the fact that an affiliate of the bank is 
a principal underwriter of the securities.''.

SEC. 739. OPTIONAL CONVERSION OF FEDERAL SAVINGS ASSOCIATIONS.

    Section 5(i) of the Home Owners' Loan Act (12 U.S.C. 
1464(i)) is amended by adding at the end the following new 
paragraph:
            ``(5) Conversion to national or state bank.--
                    ``(A) In general.--Any Federal savings 
                association chartered and in operation before 
                the date of the enactment of the Gramm-Leach-
                Bliley Act, with branches in operation before 
                such date of enactment in 1 or more States, may 
                convert, at its option, with the approval of 
                the Comptroller of the Currency or the 
                appropriate State bank supervisor, into 1 or 
                more national or State banks, each of which may 
                encompass 1 or more of the branches of the 
                Federal savings association in operation before 
                such date of enactment in 1 or more States, but 
                only if each resulting national or State bank 
                will meet all financial, management, and 
                capital requirements applicable to the 
                resulting national or State bank.
                    ``(B) Definitions.--For purposes of this 
                paragraph, the terms `State bank' and `State 
                bank supervisor' have the meanings given those 
                terms in section 3 of the Federal Deposit 
                Insurance Act.''.

SEC. 740. GRAND JURY PROCEEDINGS.

    Section 3322(b) of title 18, United States Code, is 
amended--
            (1) in paragraph (1), by inserting ``Federal or 
        State'' before ``financial institution''; and
            (2) in paragraph (2), by inserting ``at any time 
        during or after the completion of the investigation of 
        the grand jury,'' before ``upon''.

      And the House agree to the same.

      That the House recede from its amendment to the title of 
the bill.
                From the Committee on Banking and Financial 
                Services, for consideration of the Senate bill, 
                and the House amendment, and modifications 
                committed to conference:
                                   James A. Leach,
                                   Bill McCollum,
                                   Marge Roukema,
                                   Doug Bereuter,
                                   Rick Lazio,
                                   Spencer Bachus,
                                   Michael N. Castle,
                                   John J. LaFalce,
                                   Bruce F. Vento,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of titles I, III (except section 
                304), IV, and VII of the Senate bill, and title 
                I of the House amendment, and modifications 
                committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title V of the Senate bill, 
                and title II of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                                   James H. Maloney,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title II of the Senate bill, 
                and title III of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                                   Nydia M. Velazquez,
                                   Darlene Hooley,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title VI of the Senate bill, 
                and title IV of the House amendment, and 
                modifications committed to conference:
                                   Carolyn B. Maloney,
                                   Luis V. Gutierrez,
                                   Ken Bentsen,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of section 304 of the Senate 
                bill, and title V of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Gary L. Ackerman,
                From the Committee on Commerce, for 
                consideration of the Senate bill, and the House 
                amendment, and modifications committed to 
                conference:
                                   Tom Bliley,
                                   Michael G. Oxley,
                                   Billy Tauzin,
                                   Paul Gillmor,
                                   James Greenwood,
                                   Chris Cox,
                                   Steve Largent,
                                   Brian Bilbray,
                                   E. Towns,
                                   Diana DeGette,
                                   Lois Capps,
                Provided that Mr. Rush is appointed in lieu of 
                Mrs. Capps for consideration of section 316 of 
                the Senate bill:
                                   Bobby L. Rush,
                From the Committee on Agriculture, for 
                consideration of title V of the House 
                amendment, and modifications committed to 
                conference:
                                   Larry Combest,
                                   Thomas W. Ewing,
                                   Charles W. Stenholm,
                From the Committee on the Judiciary, for 
                consideration of sections 104(a), 104(d)(3), 
                and 104(f)(2) of the Senate bill, and sections 
                104(a)(3), 104(b)(3)(A), 104(b)(4)(B), 136(b), 
                136(d)-(e), 141-44, 197, 301, and 306 of the 
                House amendment, and modifications committed to 
                conference:
                                   Henry Hyde,
                                   George W. Gekas,
                From the Committee on Banking and Financial 
                Services, for consideration of section 101 of 
                the Senate bill and section 101 of the House 
                amendment: Mr. King is appointed in lieu of Mr. 
                Bachus; Mr. Royce is appointed in lieu of Mr. 
                Castle:
                                   Peter T. King,
                                   Ed Royce,
                From the Committee on Commerce, for 
                consideration of section 101 of the Senate bill 
                and section 101 of the House amendment: Mrs. 
                Wilson is appointed in lieu of Mr. Largent; Mr. 
                Fossella is appointed in lieu of Mr. Bilbray:
                                   Heather Wilson,
                                   Vito Fossella,
                                 Managers on the Part of the House.

                                   Phil Gramm,
                                   Connie Mack,
                                   Robert F. Bennett,
                                   Rod Grams,
                                   Wayne Allard,
                                   Michael B. Enzi,
                                   Chuck Hagel,
                                   Rick Santorum,
                                   Jim Bunning,
                                   Mike Crapo,
                                   Paul Sarbanes,
                                   Christopher J. Dodd,
                                   John F. Kerry,
                                   Tim Johnson,
                                   Jack Reed,
                                   Charles Schumer,
                                   Evan Bayh,
                                   John Edwards,
                                Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The Managers on the part of the House and the Senate at 
the conference on the disagreeing votes of the two Houses on 
the amendments of the House to the bill (S. 900), to enhance 
competition in the financial services industry by providing a 
prudential framework for the affiliation of banks, securities 
firms, insurance companies, and other financial service 
providers, and for other purposes, submit the following joint 
statement to the House and the Senate in explanation of the 
effect of the action agreed upon by the managers and 
recommended in the accompanying conference report:
      The House amendment to the text of the bill struck all of 
the Senate bill after the enacting clause and inserted a 
substitute text.
      The Senate recedes from its disagreement to the amendment 
of the House with an amendment that is a substitute for the 
Senate bill and the House amendment. The differences between 
the Senate bill, the House amendment, and the substitute agreed 
to in conference are noted below, except for clerical 
corrections, conforming changes made necessary by agreements 
reached by the conferees, and minor drafting and clerical 
changes.

 Title I--Facilitating Affiliations Among Banks, Securities Firms, and 
                          Insurance Companies

      The legislation approved by the Conference Managers 
eliminates many Federal and State law barriers to affiliations 
among banks and securities firms, insurance companies, and 
other financial service providers. The House and Senate bills 
established an identical statutory framework (except for minor 
drafting differences) pursuant to which full affiliations can 
occur between banks and securities firms, insurance companies, 
and other financial companies. The Conferees adopted this 
framework. Furthermore, the legislation provides financial 
organizations with flexibility in structuring these new 
financial affiliations through a holding company structure, or 
a financial subsidiary (with certain prudential limitations on 
activities and appropriate safeguards). Reflected in the 
legislation is the determination made by both Houses to 
preserve the role of the Board of Governors of the Federal 
Reserve System (the ``Federal Reserve Board'' or the ``Board'') 
as the umbrella supervisor for holding companies, but to 
incorporate a system of functional regulation designed to 
utilize the strengths of the various Federal and State 
financial supervisors. Incorporating provisions found in both 
the House and Senate bills, the legislation establishes a 
mechanism for coordination between the Federal Reserve Board 
and the Secretary of the Treasury (``the Secretary'') regarding 
the approval of new financial activities for both holding 
companies and national bank financial subsidiaries. The 
legislation enhances safety and soundness and improves access 
to financial services by requiring that banks may not 
participate in the new financial affiliations unless the banks 
are well capitalized and well managed. The appropriate 
regulators are given clear authority to address any failure to 
maintain these safety and soundness standards in a prompt 
manner. The legislation also requires that Federal bank 
regulators prohibit banks from participating in the new 
financial affiliations if, at the time of certification, any 
bank affiliate had received a less than ``satisfactory'' 
Community Reinvestment Act of 1977 (``CRA'') rating as of its 
most recent examination.

                   Subtitle A--Financial Affiliations

      Senate Position: The Senate bill contains provisions 
repealing restrictions in the Glass-Steagall Act and the Bank 
Holding Company Act of 1956 (``BHCA'') on affiliations 
involving securities firms and insurance companies, 
respectively. The Senate bill establishes a new framework in 
section 4 of the BHCA for bank holding companies to engage in 
financial activities. It does not create a separate designation 
for bank holding companies engaged in the new financial 
activities but it does require that the subsidiary insured 
depository institutions of such holding companies be well 
capitalized and well managed in order to take advantage of the 
new activities. In the event that a bank holding company's 
subsidiary depository institutions fall out of compliance, a 
``cure'' procedure is established. The Senate bill authorizes 
bank holding companies to engage in activities that the Federal 
Reserve Board has determined to be financial in nature and 
incidentalto such financial activities. It also authorizes 
qualifying bank holding companies to engage in activities that the 
Federal Reserve Board determines are complementary to financial 
activities, or any other service that the Federal Reserve Board 
determines not to pose a substantial risk to the safety and soundness 
of depository institutions or the financial system generally. It 
contains a list of pre-approved activities that includes merchant 
banking and insurance company portfolio investment activities. There is 
also a grandfather provision for the commodities activities engaged in 
by a company as of September 30, 1997, if that company becomes a bank 
holding company after the date of enactment.
      House Position: The House bill also repeals the 
restrictions contained in the Glass-Steagall Act on 
affiliations between banks and securities firms engaged in 
underwriting and in the BHCA on affiliations between banks and 
insurance companies and insurance agents. It creates a new 
section 6 of the BHCA which authorizes new financial activities 
for bank holding companies that qualify as ``financial holding 
companies.'' In order for a bank holding company to qualify as 
a financial holding company (``FHC''), its subsidiary 
depository institutions must be well managed, well capitalized, 
and have received at least a ``satisfactory'' CRA rating as of 
their last examination. In the event that an FHC falls out of 
compliance, a ``cure'' procedure is established. It authorizes 
FHCs to engage in activities that the Federal Reserve Board has 
determined to be financial in nature, incidental to such 
financial activities or complementary to financial activities 
to the extent that the amount of such complementary activities 
remains small. It contains a list of pre-approved activities 
that includes investment banking and insurance company 
portfolio investment activities. The House bill also authorizes 
FHCs to engage in developing activities to a limited extent. A 
ten-year grandfather is included for the nonfinancial 
activities of companies that become bank holding companies 
after enactment of this legislation and are predominantly 
financial in nature at the time they become FHCs.
      Conference Substitute: The Conferees acceded to the 
Senate by agreeing to amend section 4 of the BHCA to add a 
series of new subsections that contain the framework for 
engaging in new financial activities. The Conferees have 
acceded to the House in designating as FHCs those bank holding 
companies qualifying to engage in the new financial activities.
      New section 4(k) permits bank holding companies that 
qualify as FHCs to engage in activities, and acquire companies 
engaged in activities, that are financial in nature or 
incidental to such financial activities. FHCs are also 
permitted to engage in activities that are complementary to 
financial activities if the Federal Reserve Board determines 
that the activity does not pose a substantial risk to the 
safety or soundness of depository institutions or the financial 
system in general.
      Permitting banks to affiliate with firms engaged in 
financial activities represents a significant expansion from 
the current requirement that bank affiliates may only be 
engaged in activities that are closely related to banking. The 
Board has primary jurisdiction for determining what activities 
are financial in nature, incidental to financial in nature, or 
complementary. The Board may act by regulation or order. In 
determining what activities are financial in nature or 
incidental, the Federal Reserve Board must notify the Secretary 
of applications or requests to engage in new financial 
activities. The Federal Reserve Board may not determine that 
anactivity is financial or incidental to a financial activity if the 
Secretary objects. The Secretary may also propose to the Federal 
Reserve Board that the Board find that a particular activity is 
financial in nature or incidental to a financial activity. A similar 
procedure is included in the legislation with regard to the 
determination of financial activities and activities that are 
incidental to financial activities for financial subsidiaries of 
national banks. The intent of the Conferees is that the Federal Reserve 
Board and the Secretary of the Treasury will establish a consultative 
process that will negate the need for either agency to veto a proposal 
of the other agency. Establishing such a process should bring balance 
to the determinations regarding the type of activities that are 
financial and limit regulatory arbitrage.
      Section 4(k) contains a list of activities that are 
considered to be financial in nature. An FHC may engage in the 
activities on this list without obtaining prior approval from 
the Federal Reserve Board. Notice must be given to the Federal 
Reserve Board not later than 30 days after the activity is 
commenced or a company is acquired. The list includes 
securities underwriting, dealing, and market making without any 
revenue limitation such as sponsoring and distributing all 
types of mutual funds and investment companies. Other 
activities include insurance underwriting and agency 
activities, merchant banking, and insurance company portfolio 
investments. The reference to ``* * * insuring, guaranteeing or 
indemnifying against * * * illness,'' is meant to include 
activities commonly thought of as health insurance, including 
such activities when provided by companies such as Blue Cross 
and Blue Shield organizations which are licensed under State 
laws to provide health insurance benefits in consideration of 
the payment of premiums or subscriber contributions. Such 
reference is not meant to include the activity of directly 
providing health care on a basis other than to the extent that 
it may be incidental to the business of insurance as defined in 
section 4(k)(4)(B) of the BHCA.
Merchant banking
      The authorization of merchant banking activities as 
provided in new section 4(k)(4)(H) of the BHCA is designed to 
recognize the essential role that these activities play in 
modern finance and permits an FHC that has a securities 
affiliate or an affiliate of an insurance company engaged in 
underwriting life, accident and health, or property and 
casualty insurance, or providing and issuing annuities, to 
conduct such activities. Under this provision, the FHC may 
directly or indirectly acquire or control any kind of ownership 
interest (including debt and equity securities, partnership 
interests, trust certificates, or other instruments 
representing ownership) in an entity engaged in any kind of 
trade or business whatsoever. The FHC may make such acquisition 
whether acting as principal, on behalf of one or more entities 
(e.g., as adviser to a fund, regardless of whether the FHC is 
also an investor in the fund), including entities that the FHC 
controls (other than a depository institution or a subsidiary 
of a depository institution), or otherwise.
      Section 122 provides that after a 5 year period from the 
date of enactment, the Board and the Secretary may jointly 
adopt rules permitting financial subsidiaries to engage in the 
activities under section 4(k)(4)(H) of the BHCA subject to the 
conditions that the agencies may jointly determine.
Insurance company portfolio investments
      New section 4(k)(4)(I) of the BHCA recognizes that as 
part of the ordinary course of business, insurance companies 
frequently invest funds received from policyholders by 
acquiring most or all the shares of stock of a company that may 
not be engaged in a financial activity. These investments are 
made in the ordinary course of business pursuant to state 
insurance laws governing investments by insurance companies, 
and are subject to ongoing review and approval by the 
applicable state regulator. Section 4(k)(4)(I) permits an 
insurance company that is affiliated with a depository 
institution to continue to directly or indirectly acquire or 
control any kind of ownership interest in any company if 
certain requirements are met. The shares held by such a 
company: (i) must not be acquired or held by a depository 
institution or a subsidiary of a depository institution; (ii) 
must be acquired and held by an insurance company that is 
predominantly engaged in underwriting life, accident and 
health, or property and casualty (other than credit-related 
insurance) or in providing and issuing annuities; and (iii) 
must represent an investment made in the ordinary course of 
business of such insurance company in accordance with relevant 
state law governing such investments. In addition, during the 
period such ownership interests are held, the FHC must not 
routinely manage or operate the portfolio company except as may 
be necessary or required to obtain a reasonable return on the 
investment. To the extent an FHC participates in the management 
or operation of a portfolio company, such participation would 
ordinarily be for the purpose of safeguarding the investment of 
the insurance company in accordance with the applicable 
requirements of state insurance law. This is irrespective of 
any overlap between board members and officers of the FHC and 
the portfolio company.

                 CONDITIONS TO ENGAGE IN NEW ACTIVITIES

      New section 4(l) of the BHCA establishes the requirements 
for permitting a bank holding company to engage in the new 
financial activities and affiliations. A bank holding company 
may elect to become a financial holding company if all of its 
subsidiary banks are well capitalized and well managed. A bank 
holding company that meets such requirements may file a 
certification to that effect with the Board and a declaration 
that the company chooses to be an FHC.
      After the filing of such a declaration and certification, 
an FHC may engage either de novo, or through an acquisition, in 
any activity that has been determined by the Board to be 
financial in nature or incidental to such financial activity. 
FHCs may engage in activities on the preapproved list of 
financial activities contained in section 4(k) of the BHCA and 
any other financial activity approved by the Board without 
prior notice. Complementary activities, however, must be 
approved by the Board on a case-by-case basis under the notice 
procedures contained in section 4(j) of the BHCA.
      The legislation also amends the CRA to provide that an 
election of a bank holding company to become an FHC shall not 
be effective if the Board finds that as of the date of the 
election not all of the subsidiary insured depository 
institutions of the holding company had received a 
``satisfactory'' or better CRA rating at their most recent CRA 
examinations. In addition, the legislation amends the BHCA to 
require the appropriate Federal banking agency to prohibit an 
FHC, or a bank through a financial subsidiary, from commencing 
any new activities or acquiring any companies under sections 
4(k) or (n) of the BHCA, section 5136A(a) of the Revised 
Statutes of the United States, or section 46(a) of the Federal 
Deposit Insurance Act, in the event that the bank or any of its 
insured depository institution affiliates or any insured 
depository institution affiliate of the FHC fails to have at 
least a ``satisfactory'' CRA rating at the time of its last 
examination. It is the most recent rating alone that shall be 
looked to by the regulator in connection with these provisions. 
This provision does not authorize any agency to require the 
divestiture of any company already owned by the FHC prior to 
the time that the prohibition becomes effective or to limit in 
any way any activity already engaged in by the FHC prior to 
that time. The prohibition ceases to apply once all of the 
insured depository institutions controlled by the FHC or the 
bank and all of its insured depository institution affiliates 
have restored their CRA performance rating to at least the 
``satisfactory'' level.
      This provision applies to the ownership and activities of 
financial subsidiaries of national banks to the same extent as 
it applies to FHCs. It also applies in the same way to 
subsidiaries held by insured State banks subject to newly added 
section 46(a) of the Federal Deposit Insurance Act.

                         OPERATION OF STATE LAW

      Senate Position: The Senate bill establishes in section 
104 the parameters for the appropriate balance between Federal 
and State regulation of the activities and affiliations allowed 
under this legislation.
      House Position: The House provision is similar, with 
parallel provisions contained in sections 104, 301, and 302 of 
the House bill.
      Conference Substitute: The House agreed to incorporate 
its sections 301 and 302 into section 104, and the Senate 
agreed to adopt the language of the House's section 302. The 
House discrimination standard was adopted with modifications, 
and the Conferees agreed to incorporate House provisions 
protecting the ability of the States to require restoration of 
an entity's capital, and restricting changes in stock ownership 
of demutualizing insurers, as modified. The House receded on 
its provision specifically addressing a North Carolina Blue-
Cross Blue-Shield organization, as the State laws governing 
those types of entities would not be preempted so long as the 
State laws do not discriminate, as set forth in the 
legislation.
      This section reaffirms the McCarran-Ferguson Act, 
recognizing the primacy and legal authority of the States to 
regulate insurance activities of all persons. No persons are 
permitted to engage in the business of insurance unless they 
are licensed by the States, as required under State law. States 
are not allowed to prevent certain affiliations or activities 
or discriminate against depository institutions in providing 
such insurance licenses.
      In general, States are not allowed to prevent or restrict 
affiliations permitted under Federal law. With respect to an 
affiliation by an insurer, States may collect information, and 
the insurer's State of domicile may take action on the 
affiliation (including approval or disapproval), but only 
within 60 days of receiving notice of the affiliation, and only 
if the actions do not discriminate against the insurer based on 
an association with a depository institution. An affiliating 
insurer's State of domicile may require capital restoration to 
the level required under State law, so long as such request is 
made within 60 days of notice of the affiliation. Any State, as 
permitted under State law, may restrict changes in ownership of 
a demutualizing insurer so long as the restrictions are not 
discriminatory as set forth in the legislation. Section 
104(c)(2)(C) means that State laws and State regulators shall 
not discriminate against depository institutions or their 
affiliates with respect to acquiring or otherwise changing the 
ownership of stock in newly demutualized insurance companies 
relative to other persons.
      Except with respect to insurance, States may not prevent 
or restrict a depository institution or affiliate thereof from 
engaging in any activity set forth under the Gramm-Leach-Bliley 
Act. With respect to insurance sales, solicitations, and cross-
marketing, States may not prevent or significantly interfere 
with the activities of depository institutions or their 
affiliates, as set forth in Barnett Bank of Marion County N.A. 
v. Nelson, 517 U.S. 25 (1996). However, State restrictions that 
are substantially the same as but no more burdensome than the 
thirteen general safe harbors provided are not subject to 
potential preemption. States are also allowed to continue the 
regulation of insurance activities other than sales, 
solicitation, and cross-marketing, and the preemption standard 
does not apply to such regulation if consistent with the 
standards set forth in the legislation.
      State regulation other than of insurance or securities 
activities is not preempted even if it does prevent or restrict 
an activity so long as it does not discriminate. The Conferees 
adopted the House discrimination standard with respect to 
insurance activities. The discrimination standard does not 
apply to State regulations governing insurance sales, 
solicitations, or cross-marketing activities adopted before 
September 3, 1998, and does not apply to State regulations that 
are substantially the same as but no more burdensome than the 
safe harbors. State securities regulation is not preempted by 
the ``prevent or restrict'' standard with regard to a State 
securities commission's ability to investigate and enforce 
certain unlawful securities transactions or to require the 
licensure or registration of securities and securities brokers, 
dealers, and investment advisors and their associates. State 
actions of general corporate applicability applying to 
companies domiciled or incorporated in the State are also 
protected from the ``prevent or restrict'' preemption, as well 
as State laws similar to the antitrust laws, so long as the 
State actions are not inconsistent with the intent of this Act 
to permit affiliations. The term ``depository institution'' is 
defined as including foreign banks and their domestic 
affiliates and subsidiaries. The term ``affiliate'' is defined 
for section 104 to include any person under common control 
(including a subsidiary).

     Subtitle B--Streamlining Supervision of Bank Holding Companies

      Both the House and Senate bills generally adhere to the 
principle of functional regulation, which holds that similar 
activities should be regulated by the same regulator. Different 
regulators have expertise at supervising different activities. 
It is inefficient and impractical to expect a regulator to have 
or develop expertise in regulating all aspects of financial 
services. Accordingly, the legislation intends to ensure that 
banking activities are regulated by bank regulators, securities 
activities are regulated by securities regulators, and 
insurance activities are regulated by insurance regulators.
      In keeping with the Board's role as an umbrella 
supervisor, the legislation provides that the Board may require 
any bank holding company or subsidiary thereof to submit 
reports regarding its financial condition, systems for 
monitoring and controlling financial and operating risks, 
transactions with depository institutions, and compliance with 
the BHCA or other Federal laws that the Board has specific 
jurisdiction to enforce. The Board is directed to use existing 
examination reports prepared by other regulators, publicly 
reported information, and reports filed with other agencies, to 
the fullest extent possible.
      The Board is authorized to examine each holding company 
and its subsidiaries. It may examine functionally regulated 
subsidiaries only if: (1) the Board has reasonable cause to 
believe that such a subsidiary is engaged in activities that 
pose a material risk to an affiliate depository institution; 
(2) it reasonably believes after reviewing the relevant reports 
that examining the subsidiary is necessary to adequately inform 
the Board of the systems for monitoring risks; or, (3) based on 
reports and other available information, the Board has 
reasonable cause to believe that a subsidiary is not in 
compliance with the BHCA or other Federal law that the Board 
has specific jurisdiction to enforce and the Board cannot make 
such a determination through examination of an affiliated 
depository institution or the holding company. The Board is 
directed to use, to the fullest extent possible, examinations 
made by appropriate Federal and State regulators.
      The Board is not authorized to prescribe capital 
requirements for any functionally regulated subsidiary that is 
in compliance with applicable capital requirements of another 
Federal regulatory authority, a State insurance authority, or 
is a registered investment adviser or licensed insurance agent. 
The legislation also makes it clear that securities and 
insurance activities conducted in regulated entities are 
subject to functional regulation by the relevant State 
securities authorities, the Securities and Exchange (``SEC''), 
or State insurance regulators.
      The Board is prohibited from requiring a broker-dealer or 
insurance company that is a bank holding company to infuse 
funds into a depository institution if the company's functional 
regulator determines, in writing, such action would have a 
material adverse effect on the broker-dealer or insurance 
company. If the functional regulator makes such a 
determination, the Board may require the holding company to 
divest its depository institution. All the Federal banking 
agencies are subject to the same limits on reports, 
examinations and capital requirements for functionally 
regulated affiliates which apply to the Board. This ensures 
that the Office of the Comptroller of the Currency (``OCC''), 
the Office of Thrift Supervision (``OTS''), and the Federal 
Deposit Insurance Corporation (``FDIC'') will not be able to 
assume and duplicate the function of being the general 
supervisor over functionally regulated subsidiaries. The 
legislation specifically preserves, however, the FDIC's 
authority to examine a functionally regulated affiliate. This 
authority, which should be used sparingly, is necessary to 
protect the deposit insurance funds.
      The legislation also specifically addresses indirect 
action by the Board against functionally regulated affiliates. 
Consistent with functional regulation, the Board's authority to 
take indirect action against a functionally regulated affiliate 
is limited. The Board may not promulgate rules, adopt 
restrictions, safeguards or any other requirement affecting a 
functionally regulated affiliate unless the action is necessary 
to address a ``material risk'' to the safety and soundness of 
the depository institution or the domestic or international 
payments system and it is not possible to guard against such 
material risk through requirements imposed directly upon the 
depository institution.
      The Federal banking regulators are empowered to adopt 
prudential safeguards governing transactions between depository 
institutions, their subsidiaries and affiliates so as to avoid, 
among other items, significant risk to the safety and soundness 
of the institution. The regulators are required to review these 
safeguards regularly and modify or eliminate those requirements 
which are no longer necessary.
      Bank holding companies may elect to become FHCs by 
meeting the statutory requirements and filing a declaration and 
a certification with the Board. The legislation makes it clear 
that a duplicative registration statement under section 5 of 
the BHCA is not required. The integrity of the deposit 
insurance funds is preserved by prohibiting the use of deposit 
insurance funds to benefit any shareholder, subsidiary or 
nondepository affiliate of an FHC. This section ensures that 
the federal safety net is not extended to persons who are not 
entitled to Federal deposit insurance coverage.
      The savings bank restrictions in the BHCA are repealed. 
This repeal is designed to conform the regulation of savings 
bank life insurance to other provisions of Federal banking law.
      The Conferees intend that the Board be flexible in its 
application of holding company consolidated capital standards 
for the leverage requirement and the timing of the asset 
calculations to FHCs of which the predominant regulated 
subsidiary is a broker-dealer. The Conferees intend that, to 
the extent the Board deems feasible and consistent with the 
overall financial condition and activities of the holding 
company, the capital requirements for such holding companies be 
consistent with the capital standards applied by the SEC to the 
broker-dealer, which accounts for the predominant amount of 
assets and activities of the holding company.

               Subtitle C--Subsidiaries of National Banks

      Senate Position: The Senate bill authorizes a national 
bank to control a subsidiary engaged in financial activities 
permissible for a bank holding company (but not permissible for 
a national bank directly) under section 4(k) if the bank has 
consolidated total assets not exceeding $1 billion, is not 
affiliated with a bank holding company, is well capitalized, 
and well managed. For the purpose of determining a parent 
national bank's regulatory capital, a deduction from assets and 
tangible equity is required for the amount of outstanding 
equity investments made in a financial subsidiary. In addition, 
the assets and liabilities of the financial subsidiary must not 
be consolidated with those of the parent bank. Equity 
investments in the operating subsidiary by a parent national 
bank must not exceed the amount the bank could pay as a 
dividend without obtaining prior regulatory approval. The 
Senate bill also clarifies that a national bank may conduct 
through a subsidiary any activity which the national bank may 
engage directly and any activity lawfully conducted as of the 
date of enactment of this legislation.
      House Position: The House bill authorizes a national bank 
subsidiary to engage only in activities permissible for 
national banks to engage in directly, activities otherwise 
expressly authorized by statute, and activities that are 
financial in nature or incidental to financial activities. 
Financial activities are defined as those activities 
permissible for an FHC or activities that the Secretary of the 
Treasury determines to be financial in nature or incidental to 
financial activities in consultation and coordination with the 
Federal Reserve Board. Excluded from the list of permissible 
financial activities are insurance underwriting, insurance 
company portfolio investments, and real estate investment and 
development. National bank operating subsidiaries also may 
engage in developing activities. In order for a national bank 
operating subsidiary to engage in activities that are financial 
in nature, its parent bank and all its depository institution 
affiliates must be well capitalized, well managed, and have a 
satisfactory CRA rating. A cure procedure is established to 
address situations where there is a failure to comply with 
these conditions. It also requires that the aggregate amount of 
the national bank parent's equity investments in the bank be 
deducted from the bank's capital including the operating 
subsidiary's retained earnings. In addition, the assets and 
liabilities of the subsidiary must not be consolidated with 
those of its parent bank. Equity investments in the operating 
subsidiary by a parent national bank must not exceed the amount 
the bank could pay as a dividend without obtaining prior 
regulatory approval.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      Under the amendment, national banks of any size are 
permitted to engage through a financial subsidiary only in 
financial activities (with exceptions) authorized by this Act. 
Section 121 specifically excludes four types of activities for 
financial subsidiaries: insurance or annuity underwriting, 
insurance company portfolio investments, real estate investment 
and development, and merchant banking (subject to section 122). 
These types of financial activities may only be done in FHC 
affiliates. The federal banking regulators are prohibited from 
interpreting these provisions to provide for any expansion of 
these activities contrary to the express language of this 
statute. It is the intent of the Conferees that these new 
statutory provisions--and the regulations to be adopted 
pursuant thereto--supercede and replace the OCC's Part 5 
regulations on operating subsidiaries.

               Subtitle D--Preservation of FTC Authority

Section 131. Amendment to the Bank Holding Company Act of 1956 to 
        modify notification and post-approval waiting period for 
        section 3 transactions
      Senate Position: No provision.
      House Position: Section 141 of the House amendment amends 
section 11(b)(1) of the BHCA (12 U.S.C. section 1849(b)(1)) to 
provide for notice to the Federal Trade Commission (``FTC'') 
when the Board of Governors of the Federal Reserve System 
approves a transaction under section 3 of the BHCA if that 
transaction also involves a transaction under section 4 or 6 of 
the BHCA.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      Under section 131 of the Conference Report, the 
modification simply eliminated the reference to section 6 
because the new activities for FHCs are now included within 
section 4 of the BHCA as amended by the Conference Report. The 
FTC currently has no role in reviewing pure section 3 
transactions, and this amendment does not change that. However, 
the FTC does perform reviews of certain section 4 transactions. 
This amendment will simply allow the FTC to coordinate its 
review with the Board in those cases that also involve a 
section 3 transaction.
Section 132. Interagency data sharing
      Senate Position: No provision.
      House Position: Section 142 of the House amendment 
provided that, except as otherwise prohibited by law, the 
banking regulators who review mergers or acquisitions (the OCC, 
the OTS, the FDIC, and Federal Reserve Board) shall make 
available to the antitrust agencies (the Department of Justice 
and the Federal Trade Commission (``FTC'')) any information in 
the bank regulators' possession that the antitrust agencies 
deem necessary for their antitrust review under sections 3, 4, 
or 6 of the BHCA, section 18(c) of the Federal Deposit 
Insurance Act, the NationalBank Consolidation and Merger Act, 
section 10 of the Home Owners' Loan Act, or the antitrust laws.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      Under section 132 of the Conference Report, the 
modification eliminated the reference to section 6 of the BHCA 
because the new activities for FHCs are now included within 
section 4 of the BHCA as amended by the Conference Report. In 
addition, the modification added new sections 132(b) and 
132(c). New section 132(b) requires that any information shared 
under this provision be kept confidential; that before any 
information shared under this provision is disclosed to a third 
party, the agency which shared it must be notified in writing 
and given a chance to oppose or limit the disclosure; that any 
sharing under this provision does not affect any claim of 
privilege with respect to such information; and that nothing in 
this section shall be construed to limit access to any 
information by the Congress or the Comptroller General. New 
section 132(c) simply applies the provisions of new section 
132(b) to the sharing of information between Federal banking 
agencies and State regulators or any other party.
      In the past, there have been difficulties with banking 
agencies sharing bank examination reports with the antitrust 
agencies because of doubts about whether they had sufficient 
authority to do so. The reports have generally been shared in 
the end. However, in cases of failing institutions in which 
review has been expedited or of institutions taken over by the 
government, delays in providing these reports have sometimes 
impeded antitrust review. This language simply allows all of 
the involved agencies to do their respective tasks in the most 
expeditious manner possible.
Section 133. Clarification of status of subsidiaries and affiliates
      Senate Position: No provision.
      House Position: Section 143(a) of the House amendment 
provided that subsidiaries or affiliates of banks or savings 
associations which are not themselves banks or savings 
associations shall not be treated as banks or savings 
associations for purposes of the FTC Act or any other law 
enforced by the FTC. Section 143(b) clarified that nothing in 
this section shall be construed as restricting the authority of 
any Federal banking agency.
      Section 143(c) amended the existing BHCA exceptions to 
the Hart-Scott-Rodino (``H-S-R'') Act, 15 U.S.C. section 
18a(c)(7) and 18a(c)(8). Under current law, transactions 
subject to approval under section 3 of the BHCA are exempt from 
H-S-R review. Likewise, assuming certain conditions are met, 
transactions subject to approval under section 4 are also 
exempt. The amendments in section 143(c) clarified that when 
FHCs acquire other FHCs and either of those companies was 
involved in new activities under section 6 of the BHCA as 
amended by the House amendment, the portion of the transaction 
involving those section 6 activities would be subject to H-S-R 
review. However, the remainder of the transaction will continue 
to be reviewed under the existing BHCA.
      Conference Substitute: The Senate receded to the House 
with modifications.
      Under section 133 of the conference report, the 
modification to section 133(a) clarified that the language 
applied to any provision of law applied by the FTC under the 
FTC Act. This clarification makes it clear that the section is 
limited to laws that the FTC currently enforces and is not 
intended to provide authority to enforce any new statutes. 
Under current law, section 5(a)(2) of the FTC Act prohibits the 
FTC from enforcing the Act against banks or savings 
associations. The conference report will, however, allow these 
entities to acquire other kinds of businesses, for example, 
securities firms, against which the FTC can currently enforce 
the Act. This provision simply makes it clear that these kinds 
of businesses do not fall within the bank or savings 
association exemption because they are owned by such an entity.
      There was no modification to the savings provision 
contained in section 133(b).
      The modification to section 133(c) replaced the reference 
to section 6 of the BHCA as amended by the House amendment with 
a reference to section 4(k) of the BHCA as amended by the 
conference report. Under the conference report, section 4(k) 
now contains the language allowing FHCs to engage in new 
activities. This amendment to the H-S-R exemptions will allow 
the antitrust agencies to continue to review mergers between 
insurance companies, securities firms, and other businesses 
newly allowed to FHCs as they are today, notwithstanding the 
ownership interest of the FHC. This clarification for the new 
FHC structure is consistent with, and does not disturb, 
existing law and precedents under which mergers involving 
complex corporate entities, some parts of which are in 
industries subject to merger review by specialized regulatory 
agencies and other parts of which are not, are considered 
according to agency jurisdiction over their respective parts, 
so that normal H-S-R Act requirements apply to those parts that 
do not fall within the specialized agency's specific authority. 
See 16 CFR section 802.6.
Annual GAO report (section 144 of the House amendment)
      Senate Position: No provision.
      House Position: Section 144 of the House amendment 
provided for the General Accounting Office to submit an annual 
report to Congress on market concentration in the financial 
services industry for each of the next five years.
      Conference Substitute: The House receded to the Senate.

                     Subtitle E--National Treatment

Section 141. Foreign Banks that are Financial Holding Companies
      Senate Position: The Senate bill, at section 151, permits 
termination of the financial grandfathering authority granted 
by the International Banking Act and other statutes to foreign 
banks to engage in certain financial activities. Foreign banks 
with grandfathered financial affiliates would be permitted to 
retain these grandfathered companies on the same terms that 
domestic banking organizations are permitted to establish them.
      House Position: The House amendment, at section 151, is 
similar.
      Conference Substitute: The Senate receded to the House.
Section 142. Representative offices
      Senate Position: The Senate bill, at section 152, 
requires prior approval by the Federal Reserve Board for the 
establishment of representative offices that are subsidiaries 
of a foreign bank.
      House Position: The House bill, at section 153, contains 
the same provision.
      Conference Substitute: The Senate receded to the House.

                 Subtitle F--Direct Activities of Banks

      Senate Position: The Senate bill authorizes national 
banks to deal in, underwrite, and purchase municipal bonds for 
their own investment accounts.
      House Position: The House amendment is identical.
      Conference Substitute: The House receded to the Senate.

                                Title II

                    Subtitle A--Brokers and Dealers

      Senate Position: The Senate bill repeals the exemptions 
from the definition of broker and dealer under the Federal 
securities laws that currently apply to banks, generally 
subjecting banks and their affiliates and subsidiaries to the 
same regulation as all other providers of securities products. 
However, the Senate bill replaces the general bank exemption 
with specific exemptions for certain bank activities.
      House Position: The House amendment also repeals the 
general bank exemptions from the definition of broker and 
dealer under the Federal securities laws but provides more 
limited exemptions than does the Senate bill.
      Conference Substitute: Subtitle A of title II of the 
Gramm-Leach-Bliley Act provides for functional regulation of 
bank securities activities. The Conferees retained certain 
limited exemptions to facilitate certain activities in which 
banks have traditionally engaged. These exceptions relate to 
third-party networking arrangements, trust activities, 
traditional banking transactions such as commercial paper and 
exempted securities, employee and shareholder benefit plans, 
sweep accounts, affiliate transactions, private placements, 
safekeeping and custody services, asset-backed securities, 
derivatives, and identified banking products.
      The Conferees provided for an exception for networking 
arrangements between banks and brokers. Revisions to Rule 1060 
recently approved by the National Association of Securities 
Dealers (``NASD'') are in conflict with this provision. As a 
consequence, revisions to the rule should be made to exempt 
banks and their employees from the provisions' coverage.
      The Conferees provided that banks that effect 
transactions in a trustee or fiduciary capacity under certain 
conditions will be exempt from registration under the Federal 
securities laws if the bank: (1) is chiefly compensated by 
means of administration and certain other fees, including a 
combination of such fees, and (2) does not publicly solicit 
brokerage business. The Conferees expect that the SEC will not 
disturb traditional bank trust activities under this provision.
      The Conferees also provided that classification of a 
particular product as an identified banking product shall not 
be construed as a finding or implication that such product is 
or is not a security for purposes of the securities laws, or is 
or is not a transaction for any purpose under the Commodity 
Exchange Act. The Conferees do not intend in the Gramm-Leach-
Bliley Act to express an opinion upon or to address the issue 
of legal certainty for swap agreements under the securities and 
commodity exchange laws.
      The Conferees also provided that the Commodity Exchange 
Act is not amended by the Gramm-Leach-Bliley Act, and no 
transaction or person which is otherwise subject to the 
jurisdiction of the Commodity Futures Trading Commission 
pursuant to the Commodity Exchange Act is exempted from such 
jurisdiction because of the provisions of the Gramm-Leach-
Bliley Act.
      For new hybrid products, the Conferees codified in the 
securities laws a process that requires the SEC to act by 
rulemaking prior to seeking to regulate any bank sales of any 
such new product. This rulemaking process is designed to give 
notice to the banking industry in an area that could involve 
complex new products with many elements.
      The process contemplated by the Conferees would work as 
follows. Prior to seeking to require a bank to register as a 
broker or dealer with respect to sales of any new hybrid 
product, the SEC would have to engage in a rulemaking. In its 
rulemaking, the SEC would need to find that the new product is 
a security. In addition, the SEC would have to determine that 
the product is a ``new hybrid product.''
      A new hybrid product is not one of the products listed in 
the definition of ``identified banking product''. Including a 
product on the list of identified banking products shall not be 
construed as a finding or implication that such product is or 
is not a security, but it would not be a new hybrid product. 
The Conferees codified the definition of Identified Banking 
Products as a freestanding provision of law, neither in the 
securities laws nor in the banking laws.
      In addition, during the rulemaking process, the SEC must 
also make a number of findings. When considering whether such 
an action is in the public interest, the SEC must also consider 
whether the action will promote efficiency, competition and 
capital formation, as set forth in section 3(f) of the 
Securities Exchange Act of 1934 (``Exchange Act''). The 
Conferees note that the SEC's record in implementing section 
3(f) has failed to meet Congressional intent. The Conferees 
expect that the SEC will improve in this area.
      Prior to commencing a rulemaking process, the SEC is 
required to consult with and seek the concurrence of the 
Federal Reserve Board concerning the imposition of broker or 
dealer registration requirements with respect to any new hybrid 
product. In developing and promulgating rules under this 
subsection, the SEC shall consider the views of the Board, 
including views with respect to the nature of the new hybrid 
product; the history, purpose, extent, and appropriateness of 
the regulation of the new product under the Federal banking 
laws; and the impact of the proposed rule on the banking 
industry.
      If the Board seeks review of any final regulation under 
this section, such review will serve as a stay on the 
rulemaking until final adjudication of the matter between the 
SEC and the Board. In considering such an appeal, the United 
States Court of Appeals for the District of Columbia Circuit 
shall determine to affirm and enforce or set aside a regulation 
of the SEC under this subsection, based on the determination of 
the court as to whether: (1) the subject product is a new 
hybrid product; (2) the subject product is a security; (3) 
imposing a requirement to register as a broker or dealer for 
banks engaging in transactions in such product is appropriate 
in light of the history, purpose and extent of regulation under 
the Federal securities laws and under the Federal banking laws, 
giving deference neither to the views of the SEC nor to the 
Board.

             Subtitle B--Bank Investment Company Activities

      Senate Position: No provision.
      House Position: The House bill amends the Investment 
Advisers Act and the Investment Company Act to subject banks 
that advise mutual funds to the same regulatory scheme as other 
advisers to mutual funds. It also requires banks to make 
additional disclosure when a fund is sold or advised by a bank.
      Conference Substitute: The Senate recedes to the House 
provision with an amendment.

     Subtitle C--Securities and Exchange Commission Supervision of 
                   Investment Bank Holding Companies

      Senate Position: No provision.
      House Position: The House amendment creates a new 
investment bank holding company structure under the Exchange 
Act. This subtitle is designed to implement a new concept of 
SEC supervision of broker/dealer holding companies (that do not 
control depository institutions with certain exceptions) that 
voluntarily elect SEC supervision. This provision is designed 
to assure that the supervision of an investment bank holding 
company by the SEC is a meaningful option. Non-U.S. financial 
institutions supervisors, when reviewing regulatory 
applications or notices submitted by a U.S. financial 
institution supervised in the United States as an investment 
bank holding company by the SEC under section 231, shall treat 
the SEC as the principal U.S. consolidated home country 
supervisor of such financial institution on the same basis and 
terms as if the Federal Reserve Board were the principal U.S. 
consolidated home country supervisor.
      Conference Substitute: The Senate recedes with an 
amendment. The Conferees eliminated the authority of the SEC to 
regulate investment bank holding company capital.

              Subtitle D--Banks and Bank Holding Companies

      Senate Position: No provision.
      House Position: The House amendment requires the SEC to 
consult and coordinate comments with the appropriate Federal 
banking regulators before any action or rendering any opinion 
with respect to the manner in which an insured depository 
institution or insured depository holding company reports loan 
loss reserves.
      Conference Substitute: The Senate recedes to the House 
provision. The Conferees note that the SEC's actions with 
respect to the reporting of loan loss reserves by certain 
insured depository institutions did not reflect adequate 
consultation with the Federal banking agencies with respect to 
potential implications on the safety and soundness of the 
Federal deposit insurance fund. The Conferees expect that this 
provision will facilitate better coordination and decision-
making by the SEC in this area.

                          Title III--Insurance

               Subtitle A--State Regulation of Insurance

      Senate Position: The Senate bill contains a number of 
provisions intended to preserve State regulation of insurance.
      House Position: The House amendment similarly contains a 
number of provisions intended to preserve and enhance State 
regulation of insurance.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      In general, Subtitle A of Title III reaffirms that States 
are the regulators for the insurance activities for all 
persons, including acting as the functional regulator for the 
insurance activities of federally chartered banks. This 
functional regulatory power is subject to section 104 of Title 
I, however, which sets forth the appropriate balance of 
protections against discriminatory actions. Federally chartered 
banks and their subsidiaries are prohibited from underwriting 
insurance, except for authorized products. A rule of 
construction was added by the Conference Committee to prevent 
evasion of State insurance regulation by foreign reinsurance 
subsidiaries or offices of domestic banks, clarifying that 
providing insurance (including reinsurance) outside of the 
United States to indemnify an insurance product or company in a 
State shall be considered to be providing insurance as 
principal in that State.
      Federally chartered banks are prohibited from engaging in 
any activity involving the underwriting or sale of title 
insurance, except that national banks may sell title insurance 
products in any State in which state-chartered banks are 
authorized to do so (other than through a ``wild card 
provision''), so long as such sales are undertaken ``in the 
same manner, to the same extent, and under the same 
restrictions'' that apply to such state-chartered banks. 
Certain currently and lawfully conducted title insurance 
activities of banks are grandfathered, and existing State laws 
prohibiting all persons from providing title insurance are 
protected.
      An expedited and equalized dispute resolution mechanism 
is established to guide the courts in deciding conflicts 
between Federal and State regulators regarding insurance 
issues. The ``without unequal deference'' standard of review 
does not apply to State regulation of insurance agency 
activities that were issued before September 3, 1998 (other 
than those protected by the scope of the safe harbor provision 
of section 104).
      The Federal banking agencies are required to issue final 
consumer protection regulations within one year, to provide 
additional safeguards for the sale of insurance by any bank or 
other depository institution, or by any person at or on behalf 
of such institution.
      State laws that prevent or significantly interfere with 
the ability of insurers to affiliate, become an FHC, or 
demutualize, are preempted, except as provided in section 
104(c)(2), and with respect to demutualizing insurers for the 
State of domicile (and as set forth in the Redomestication 
Subtitle). State laws limiting the investment of an insurer's 
assets in a depository institution are also preempted, except 
that an insurer's State of domicile may limit such investment 
as provided.
      The Federal banking agencies and the State insurance 
regulators are directed to coordinate efforts to supervise 
companies that control both depository institutions and persons 
engaged in the business of insurance, and to share, on a 
confidential basis, supervisory information including financial 
health and business unit transactions. The agencies are further 
directed to provide notice and to consult with the State 
regulators before taking actions which effect any affiliates 
engaging in insurance activities. A banking regulator is not 
required to provide confidential information to a State 
insurance regulator unless such State regulator agrees to keep 
the information in confidence and make all reasonable efforts 
to oppose disclosure of such information. Conversely, Federal 
banking regulators are directed to treat as confidential any 
information received from a State regulator which is entitled 
to confidential treatment under State law, and to make similar 
reasonable efforts to oppose disclosure of the information.

             Subtitle B--Redomestication of Mutual Insurers

      Senate Position: No provision.
      House Position: The House bill allows mutual insurance 
companies to redomesticate to another state and reorganize into 
a mutual holding company or stock company. It only applies to 
insurers in States which have not established reasonable terms 
and conditions for allowing mutual insurance companies to 
reorganize into a mutual holding company. All licenses of the 
insurer are preserved, and all outstanding policies, contracts, 
and forms remain in full force. A redomesticating company must 
provide notice to the state insurance regulators of each State 
for which the company is licensed. A mutual insurance company 
may only redomesticate under this Subtitle if the State 
insurance regulator of the new (transferee) domicile 
affirmatively determines that the company's reorganization plan 
meets certain reasonable terms and conditions: the 
reorganization is approved by a majority of the company's board 
of directors and voting policyholders, after notice and 
disclosure of the reorganization and its effects on 
policyholder contractual rights; the policyholders have 
equivalent voting rights in the new mutual holding company as 
compared to the original mutual insurer; any initial public 
offering of stock shall be in accordance with applicable 
securities laws and under the supervision of the State 
insurance regulator of the transferee domicile; the new mutual 
holding company may not award any stock options or grants to 
its elected officers or directors for six months; all 
contractual rights of thepolicyholders are preserved; and the 
reorganization is approved as fair and equitable to the policyholders 
by the insurance regulators of transferee domicile.
      Conference Substitute: The Senate receded to the House 
with an amendment.

   Subtitle C--National Association of Registered Agents and Brokers

      Senate Position: The Senate bill contains a sense of the 
Congress statement that States should provide for a uniform 
insurance agent and broker licensing system.
      House Position: The House bill encourages the States to 
establish uniform or reciprocal requirements for the licensing 
of insurance agents. If a majority of the States do not 
establish uniform or reciprocal licensing provisions within a 
three-year period (as determined by the National Association of 
Insurance Commissioners [``NAIC'']), then the National 
Association of Registered Agents and Brokers (``NARAB'') would 
be established as a private, non-profit entity managed and 
supervised by the State insurance regulators. State insurance 
laws and regulations shall not be affected except to the extent 
that they are inconsistent with a specific requirement of the 
Subtitle. Membership in NARAB is voluntary and does not affect 
the rights of a producer under each individual state license. 
Any state-licensed insurance producer whose license has not 
been suspended or revoked is eligible to join NARAB. NARAB 
shall be base membership criteria on the highest levels 
insurance producer qualification set by the States on standards 
such as integrity, personal qualification, education, training, 
and experience. NARAB members shall continue to pay the 
appropriate fees required by each State in which they are 
licensed, and shall renew their membership annually. NARAB may 
inspect members records, and revoke a membership where 
appropriate. NARAB shall establish an Office of Consumer 
Complaints, which shall have a toll-free phone number (and 
Internet website) to receive and investigate consumer 
complaints and recommend disciplinary actions. The Office shall 
maintain records of such complaints, which shall be made 
available to the NAIC and individual State insurance 
regulators, and shall refer complaints where appropriate to 
such regulators.
      If the NAIC determines that the States have not met the 
uniformity or reciprocity requirements, then the NAIC has two 
years to establish NARAB. The NAIC shall appoint NARAB's board 
of directors, some of whom must have significant experience 
with the regulation of commercial insurance lines in the 20 
States with the most commercial lines business. If within the 
time period allotted for NARAB's creation, the NAIC has still 
not appointed the initial board of directors for NARAB, then 
the initial directors shall be the State insurance regulators 
of the seven States with the greatest amount of commercial 
lines insurance. NARAB's bylaws are required to be filed with 
the NAIC, taking effect 30 days after filing unless disapproves 
by the NAIC as being contrary to the public interest or 
requiring a public hearing. The NAIC may require NARAB to adopt 
or repeal additional bylaws or rules as it determines 
appropriate to the public interest. The NAIC is given the 
responsibility of overseeing NARAB, and is authorized to 
examine and inspect NARAB's records, and require NARAB to 
furnish it with any reports.
      If at the end of two years after NARAB is required to be 
established, (1) a majority of the States representing at least 
50% of the total commercial-lines insurance premiums in the 
United States have not established uniform or reciprocal 
licensing regulations, or (2) the NAIC has not approved NARAB's 
bylaws or is unable to operate or supervise NARAB (or if NARAB 
is not conducting its activities under this Act), then NARAB 
shall be created and supervised by the President, and shall 
exist without NAIC oversight. The President shall appoint 
NARAB's board, with the advice and consent of the Senate, from 
lists of candidates submitted by the NAIC. If the President 
determines that NARAB's board is not acting in the public 
interest, the President may replace the entire board with new 
members (subject to the advice and consent of the Senate). The 
President may also suspend the effectiveness of any rule or 
action by NARAB which the President determines is contrary to 
the public interest. NARAB shall report annually to the 
President and Congress on its activities.
      State laws regulating insurance licensing that 
discriminate against NARAB members based on non-residency are 
preempted, as well as State laws and regulations which impose 
additional licensing requirements on non-resident NARAB members 
beyond those established by the NARAB board (pursuant to this 
Subtitle), except that State unfair trade practices and 
consumer protection laws are protected from preemption, 
including counter-signature requirements. NARAB is required to 
coordinate its multistate licensing with the various States. It 
is also required to coordinate with the States on establishing 
a central clearinghouse for license issuance and renewal, and 
for the collection of regulatory information on insurance 
producer activities. NARAB shall further coordinate with the 
NASD to facilitate joint membership. Any dispute involving 
NARAB shall be brought in the appropriate U.S. District Court 
under federal law, after all administrative remedies through 
NARAB and the NAIC have been exhausted.
      Conference Substitute: The Senate receded to the House.

           Subtitle D--Rental Car Agency Insurance Activities

      Senate Position: The Senate bill provides that the 
requirements under section 104 with respect to mandatory 
licensing do not apply to persons who offer insurance connected 
with a short term motor vehicle rental so long as the State 
does not require such licensing.
      House Position: The House bill creates a Federal 
presumption for a three-year period that no State law imposes 
any licensing, appointment, or education requirements on 
persons who rent motor vehicles for a period of 90 days or less 
and sell insurance to customers in connection with the rental 
transaction. This presumption shall not apply to a State 
statute, the prospective application of a statutorily-
authorized final State regulation or order interpreting a State 
statute, or the prospective application of a court judgment 
interpreting or applying a State statute, if such State statute 
or final State regulation or order specifically and expressly 
regulates (or exempts from regulation) persons who solicit or 
sell such short term vehicle rental insurance. This presumption 
shall apply to the retroactive application of a final State 
regulation or order interpreting a general State insurance 
licensing statute, or the retroactive application of a 
courtjudgment interpreting or applying a general State insurance 
licensing statute, with respect to the regulation of persons who 
solicit or sell such short term vehicle rental insurance.
      Conference Substitute: The Senate receded to the House.

                      Subtitle E--Confidentiality

      Senate Position: No provision.
      House Position: The House bill requires insurance 
companies and their affiliates to protect the confidentiality 
of individually identifiable customer health and medical and 
genetic information. Such companies may only disclose such 
information with the consent of the customer or for statutorily 
specified purposes.
      Conference Substitute: The House receded to the Senate.

          Title IV--Unitary Thrift Holding Company Provisions

Sec. 401. Prohibition on new unitary savings and loan holding companies
      Senate Position: The Senate bill, at section 601(a), 
amends the Home Owners' Loan Act to prohibit (except for 
corporate reorganizations) new unitary savings and loan holding 
companies from engaging in nonfinancial activities or 
affiliating with nonfinancial entities. The prohibition applies 
to a company that becomes a unitary savings and loan holding 
company pursuant to an application filed with the OTS after May 
4, 1999. A grandfathered unitary thrift holding company (one in 
existence or applied for on or before May 4, 1999) retains its 
authority to engage in nonfinancial activities. The Senate 
bill, at section 601(b), allows mutual savings and loan holding 
companies to engage in new financial activities authorized 
under the Gramm-Leach-Bliley Act.
      House Position: The House bill, at section 401(a), 
prohibits new unitary thrift holding companies after the 
grandfather date of March 4, 1999, from engaging in 
nonfinancial activities or from affiliating with a nonfinancial 
entity. The provision also allows a nonfinancial company to 
purchase a grandfathered unitary thrift holding company upon 
approval of an application filed with the OTS and approval or 
no objection to a notice filed with the Federal Reserve Board. 
The House bill, at section 401(b), permits a mutual holding 
company to engage in activities permissible for multiple stock 
holding companies and permits unitary mutual savings and loan 
holding companies to engage in the new financial activities 
authorized for FHCs.
      Conference Substitute: The House receded to the Senate.

                            Title V--Privacy

        Subtitle A--Disclosure of Nonpublic Personal Information

      Senate Position: No provision.
      House Position: The House bill contained important 
provisions providing consumers with new protections with 
respect to the transfer and use of their nonpublic personal 
information by financial institutions.
      Among other things, the House bill directed relevant 
regulators to establish comprehensive standards for ensuring 
the security and confidentiality of consumers' personal 
information maintained by financial institutions; allowed 
customers of financial institutions to ``opt out'' of having 
their personal financial information shared with nonaffiliated 
third parties, subject to certain exceptions; barred financial 
institutions from disclosing customer account numbers or 
similar forms of access codes to nonaffiliated third parties 
for telemarketing or other direct marketing purposes; and 
mandated annual disclosure--in clear and conspicuous terms--of 
a financial institution's policies and procedures for 
protecting customers' nonpublic personal information.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      The amendment modified the House position in the 
following ways:
      1. The Federal functional regulators, the Secretary of 
the Treasury, and the FTC, in consultation with State insurance 
authorities, are directed to prescribe such regulations as may 
be necessary to carry out the purposes of the privacy subtitle. 
The House bill had called for a joint rulemaking. The relevant 
agencies are required to consult and coordinate with one 
another in order to assure to the maximum extent possible that 
the regulations each prescribes are consistent and comparable 
with those prescribed by the other agencies. It is the hope of 
the Conferees that State insurance authorities would implement 
regulations necessary to carry out the purposes of this title 
and enforce such regulations as provided in this title.
      2. To address the concern that the House bill failed to 
provide a mechanism for enforcing the subtitle's provisions 
against non-financial institutions, the Conferees agreed to 
clarify that the FTC's enforcement authority extends to such 
entities.
      3. The Conferees agreed to clarify the relation between 
Title V's privacy provisions and other consumer protections 
already in law, by stating that nothing in the title shall be 
construed to modify, limit, or supersede the operation of the 
Fair Credit Reporting Act, and no inference shall be drawn on 
the basis of the provisions of the title regarding whether 
information is transaction or experience information under 
section 603 of that Act.
      4. At the request of the Conferees from the Committee on 
Agriculture, the Conferees agreed to exclude from the scope of 
the privacy title any person or entity that is subject to the 
jurisdiction of the Commodity Futures Trading Commission under 
theCommodity Exchange Act, as well as the Federal Agricultural 
Mortgage Corporation or any entity chartered and operating under the 
Farm Credit Act of 1971. The Conferees also excluded from this subtitle 
institutions chartered by Congress specifically to engage in 
securitization or secondary market transactions, so long as such 
institutions do not sell or transfer nonpublic personal information to 
nonaffiliated third parties. The Conferees granted the exception based 
on the understanding that the covered entities do not market products 
directly to consumers.
      5. The Conferees agreed to clarify that a financial 
institution's annual disclosure of its privacy policy to its 
customers must include a statement of the institution's 
policies and practices regarding the sharing of nonpublic 
personal information with affiliated entities, as well as with 
nonaffiliated third parties.
      6. The Conferees agreed to provide that the disclosure of 
nonpublic personal information contained in a consumer report 
reported by a consumer reporting agency does not fall within 
section 502's notice and opt out requirements.
      7. The Conferees agreed to modify the statutory 
definition of ``nonpublic personal information'' by clarifying 
that such term does not encompass any list, description, or 
other grouping of consumers (and publicly available information 
pertaining to them) that is derived without using any nonpublic 
personal information.
      8. The Conferees agreed to exclude disclosures to 
consumer reporting agencies from section 502(d)'s limitations 
on the sharing of account number information.
      9. The Conferees agreed to give the relevant regulatory 
agencies the authority to prescribe exceptions to subsections 
(a) through (d) of section 502, rather than just sections 502 
(a) and (b), as provided for in the House bill.
      10. The Conferees inserted language stating that the 
privacy provisions in the subtitle do not supersede any State 
statutes, regulations, orders, or interpretations, except to 
the extent that such State provisions are inconsistent with the 
provisions of the subtitle, and then only to the extent of the 
inconsistency. The amendment provides that a State statute, 
regulation, order, or interpretation is not inconsistent with 
the provisions of this subtitle if the protection such statute, 
regulation, order, or interpretation affords any consumer is 
greater than the protection provided under this subtitle, as 
determined by the FTC in consultation with the agency or 
authority with jurisdiction under section 505(a) over either 
the person that initiated the complaint or that is the subject 
of the complaint, on its own motion or upon the petition of any 
interested party.
      11. Section 506 authorizes the Federal banking agencies 
and the National Credit Union Administration to prescribe joint 
regulations governing the institutions under their jurisdiction 
with respect to the Fair Credit Reporting Act; the Conferees 
agreed to an amendment giving the Board of Governors of the 
Federal Reserve the authority to prescribe FCRA regulations 
governing bank holding companies and their affiliates.
      12. The Conferees agreed to modify section 502(e)(5), to 
include the Secretary of the Treasury as a ``law enforcement 
agency'' for the purposes of the Bank Secrecy Act, to avoid 
unintended interference with the existing functions of the 
Treasury's anti-money laundering unit, the Financial Crimes 
Enforcement Network (``FinCEN'').
      The Conferees wish to ensure that smaller financial 
institutions are not placed at acompetitive disadvantage by a 
statutory regime that permits certain information to be shared freely 
within an affiliate structure while limiting the ability to share that 
same information with nonaffiliated third parties. Accordingly, in 
prescribing regulations pursuant to this subtitle, the agencies and 
authorities described in section 504(a)(1) should take into 
consideration any adverse competitive effects upon small commercial 
banks, thrifts, and credit unions. In issuing regulations under section 
503, the regulators should take into account the degree of consumer 
access to disclosure by electronic means.
      In exercising their authority under section 504(b), the 
agencies and authorities described in section 504(a)(1) may 
consider it consistent with the purposes of this subtitle to 
permit the disclosure of customer account numbers or similar 
forms of access numbers or access codes in an encrypted, 
scrambled, or similarly coded form, where the disclosure is 
expressly authorized by the customer and is necessary to 
service or process a transaction expressly requested or 
authorized by the customer.
      The Conferees recognize the need to foster technological 
innovation in the financial services and related industries. 
The Conferees believe that the development of new technologies 
that facilitate consumers' access to the broad range of 
products and services available through online media should be 
encouraged, provided that such technologies continue to 
incorporate safeguards for consumer privacy.

         Subtitle B--Fraudulent Access to Financial Information

      Senate Position: The Senate bill contained provisions 
making it a Federal crime--punishable by up to five years in 
prison--to obtain or attempt to obtain, or cause to be 
disclosed or attempt to cause to be disclosed, customer 
information of a financial institution through fraudulent or 
deceptive means, such as by misrepresenting the identity of the 
person requesting the information or otherwise misleading an 
institution or customer into making unwitting disclosures of 
such information. In addition, it provided for a private right 
of action and enforcement by state attorneys general.
      House Position: Similar provisions, with no private right 
of action or enforcement by State Attorneys General.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      The amendment provided that authority for enforcing the 
subtitle would be placed in the FTC, the Federal banking 
agencies and the National Credit Union Administration (for 
enforcement of these provisions with respect to compliance by 
depository institutions within their jurisdiction).

         Title VI--Federal Home Loan Bank System Modernization

      The Senate and House bills reform the Federal Home Loan 
Bank (``FHLBank'') System in several important ways. Mandatory 
FHLBank membership for Federal savings associations is 
eliminated, in order to provide completely voluntary 
membership. Small bank members are given expanded access to 
FHLBank advances. Governance of the FHLBanks is decentralized 
from the Federal Housing Finance Board (``FHFB'') to the 
individual FHLBanks. The Resolution Funding Corporation 
(``REFCORP'') obligation of the FHLBanks, stemming from the 
savings and loan crisis, is changed from a fixed dollar amount 
to a fixed percentage of annual net earnings. The Senate bill 
directs the General Accounting Office to study FHLBank capital 
and the House bill establishes a new capital structure for the 
FHLBanks. The conference committee addressed three of these 
major areas.
Sec. 604. Advances to members; collateral
      Senate Position: The Senate bill authorizes community 
financial institutions (FDIC-insured depository institutions 
with assets less than $500 million) to obtain long-term FHLBank 
advances for lending to small businesses, small farms, and 
small agri-businesses. Eligible collateral for community 
financial institutions receiving any FHLBank advances could 
include secured loans for small business, agriculture, or 
securities representing a whole interest in such loans.
      House Position: The House bill authorizes community 
financial institutions to obtain long-term FHLBank advances for 
small business, agricultural, rural development, or low-income 
community development lending. Eligible collateral for 
community financial institutions receiving any FHLBank advances 
could include secured loans for small business, agriculture, 
rural development, or low-income community development, or 
securities representing a whole interest in such loans. Such 
advances-funded non-housing loans are treated as qualified 
thrift investments in determining required FHLBank stock 
purchases for community financial institutions that are not 
qualified thrift lenders (``QTLs'').
      Conference Substitute: The House receded to the Senate on 
the purposes and collateral for advances to community financial 
institutions. Greater stock purchases required of FHLBank 
members, that are not QTLs, when they receive advances are 
eliminated as is the requirement that such members only apply 
for advances for housing finance purposes. A priority for 
making advances to QTL members and a 30% limit on total 
advances to non-QTL members are also removed. Restrictions on 
obtaining new advances and having to repay advances after three 
years, applicable to savings associations that are not QTLs, 
are eliminated.
Sec. 606. Management of FHLBanks
      Senate Position: The Senate bill changed the term of 
elected FHLBank directors from two to four years to make the 
term the same as for appointed directors. It transferred from 
the FHFB to the individual FHLBanks authority over a number of 
operational areas. It also gave the FHFB the same enforcement 
authority over FHLBanks and their executive officers and 
directors as the Federal banking agencies and the Office of 
Federal Housing Enterprise Oversight have under their statutes.
      House Position: The House bill contained the same 
provisions. It also empowered the FHFB to address any capital 
insufficiencies resulting from voluntary membership and 
eliminated the 20:1 advances to stock ratio limit for a FHLBank 
member.
      Conference Substitute: The Conference set terms for both 
elected and appointed directors at 3 years (staggered with 
approximately one-third of the terms expiring each year). A 
FHLBank's board of directors is authorized to elect by majority 
vote the board's Chairperson and Vice Chairperson. The term of 
office for the Chairperson and Vice Chairperson is two years. 
The annual salaries of FHLBank directors may not exceed 
specified amounts plus reimbursement of expenses. The maximum 
amounts are: Chairperson--$25,000; Vice Chairperson--$20,000; 
and other directors--$15,000. FHLBank directors may reside 
outside the FHLBank district if they are an officer or director 
of a member institution located in the district. The Senate 
receded to the House regarding the provisions on capital 
insufficiencies and the advances to stock ratio limit.
Sec. 608. Capital structure of the FHLBanks
      Senate Position: The Senate bill directs the General 
Accounting Office to submit to Congress within one year of 
enactment a study on possible revisions to the FHLBanks' 
capital structure, including the need for more permanent 
capital, a statutory leverage ratio, and a risk-based capital 
structure. GAO would also study the impact such revisions might 
have on the FHLBanks' operations, including the REFCORP payment 
obligation.
      House Position: The House bill establishes a new capital 
structure for the FHLBanks. The FHLBanks were authorized to 
issue three classes of stock: Class A (redeemable on 6-months 
notice), Class B (redeemable on 5-years notice), and Class C 
(nonredeemable). FHLBanks were required to meet a 5% leverage 
minimum tied to total capital and a risk-based requirement tied 
to permanent capital. Permanent capital included Class C stock, 
retained earnings, and up to 1% of a FHLBank's assets in Class 
B stock. Total capital included permanent capital plus Class A 
stock, Class B stock (other than what counted toward permanent 
capital), and a general allowance for losses. A FHLBank must at 
all times comply with both the leverage and risk-based capital 
requirements. In determining compliance with the 5% minimum 
leverage ratio, Class A stock was counted at paid-in value, 
Class B stock was weighted at 1.5 times paid-in value, and 
Class C stock and retained earnings at 2.0 times. The current 
capital structure of the FHLBanks must be maintained until the 
new capital requirements are fully implemented. Within one year 
of enactment, the FHFB must issue implementing regulations. The 
board of directorsof each FHLBank must develop a capital plan, 
subject to FHFB approval. The FHLBanks have up to three years to carry 
out their plans.
      Conference Substitute: The Senate receded to the House 
with an amendment regarding a new capital structure. Two 
classes of stock are authorized: Class A (redeemable on 6-
months notice) and Class B (redeemable on 5-years notice). 
FHLBanks are required to meet a 5% leverage minimum tied to 
total capital and a risk-based requirement tied to permanent 
capital. Permanent capital includes Class B stock and retained 
earnings. Total capital includes permanent capital plus Class A 
stock, generally. In determining compliance with the 5% minimum 
leverage ratio, Class A stock is counted at paid-in value and 
Class B stock and retained earnings are weighted at 1.5 times; 
however, a FHLBank's total capital, determined without taking 
into account any multiplier, must not be less than 4% of total 
assets.
      The weighting provision is included to encourage the 
FHLBanks to build more permanent, longer-term capital. Using 
the capital multiplier, the paid-in value of outstanding Class 
A stock plus 1.5 times the paid-in value of outstanding Class B 
stock and retained earnings must be at least 5% of total 
assets. Using no weighting factor, total capital must be at 
least 4% of total assets. For example, a FHLBank with $100 
million in assets would comply with $5 million in Class A 
capital stock or $2 million in Class A capital stock and an 
unweighted $2 million in Class B capital stock and retained 
earnings (which would constitute $3 million on a weighted 
basis).
      A FHLBank's permanent capital, used to measure its 
compliance with the risk-based capital requirement, consists of 
the amounts paid by members for Class B stock and the amount of 
the FHLBank's retained earnings. The amount of retained 
earnings that may be included in permanent capital must be 
determined in accordance with generally accepted accounting 
principles (GAAP), which precludes the use of non-GAAP 
regulatory accounting standards for measuring retained 
earnings. The amount of Class B stock that is to be included in 
permanent capital is the full amount paid by a member to the 
FHLBank for the purchase of Class B stock.
      A FHLBank's total capital, used to measure its compliance 
with the statutory leverage ratio, consists of permanent 
capital, the amounts paid by members for Class A stock, any 
general allowance for losses (consistent with GAAP and subject 
to FHFB regulation), and any other amounts from sources 
determined by the FHFB to be available to absorb losses 
incurred by the FHLBank and appropriate for including as 
capital. Any loss reserve that is held or established against a 
specific asset of the FHLBank is expressly prohibited from 
being included in total capital, as such reserves are not 
capable of absorbing potential losses on other assets.
      In recognition of Congressional concern regarding the 
Financial Management and Mission Achievement (``FMMA'') rule 
recently proposed by the FHFB, the Chairman of the FHFB sent a 
letter on October 18, 1999 to the Senate and House Banking 
Committee Chairmen (inserted below) providing assurances that 
the proposal would be withdrawn, upon enactment of this 
legislation. It is the conference committee's understanding and 
expectation that the FMMA will be withdrawn and that the FHFB 
will take no action to promulgate proposed or final regulations 
limiting assets or advances beyond those currently in effect 
until the statutorily required FHLBank System capital rules are 
finalized and the statutory period for submission of capital 
plans by the FHLBanks has expired. If and when the FHFB 
develops a new FMMA, or similar rules, we expect that the FHFB 
will provide ample opportunity for public comment and hearings. 
It is the desire of the conference committee that the FHFB 
consult with the Banking Committees regarding both the capital 
regulations and any financial management and/or mission related 
rules prior to issuing them in proposed form.

                             Federal Housing Finance Board,
                                  Washington, DC, October 18, 1999.
Hon. Phil Gramm,
Chairman, Committee on Banking, Housing, and Urban Affairs, Washington, 
        DC.
Hon. Jim Leach,
Chairman, Committee on Banking and Financial Services, Washington, DC.
      Dear Senator Gramm and Congressman Leach: As you proceed 
to consider legislation to modernize the Federal Home Loan Bank 
System as part of the S. 900/H.R. 10 conference, I am aware 
that there is substantial concern regarding our proposed 
Financial Management and Mission Achievement regulation (FMMA). 
Unfortunately, this legitimate concern regarding a far-reaching 
regulatory initiative has resulted in a proposal for a 
statutory moratorium on our regulatory authority. Despite the 
best efforts of well-meaning advocates, such statutory language 
can only lead to serious ambiguity and potential litigation 
over the independent regulatory authority of the Finance Board.
      Therefore, this letter is intended to give you and your 
colleagues on the Committee of Conference solid assurances 
about our intentions upon final enactment of the statute being 
drafted in conference. Upon such enactment, the Finance Board 
will:
      1. Withdraw, forthwith, its proposed FMMA.
      2. Proceed in accordance with the statutory instructions 
regarding regulations governing a risk-based capital system and 
a minimum leverage requirement for the Federal Home Loan Banks.
      3. Take no action to promulgate proposed or final 
regulations limiting assets or advances beyond those currently 
in effect (except to the extent necessary to protect the safety 
and soundness of the Federal Home Loan Banks) until such time 
as the regulations described in number 2 have become final and 
the statutory period for submission of capital plans by the 
Banks has expired.
      4. Consult with each of you and your colleagues on the 
Banking Committees of the House and the Senate, regarding the 
content of both the capital regulations and any regulations on 
the subjects described in number 3, prior to issuing them in 
proposed form.
      I believe that these commitments cover the areas of 
concern which have led to a proposal for moratorium 
legislation. You can rely on this commitment to achieve those 
legitimate ends sought by moratorium proponents without 
clouding the necessary regulatory authority of the Finance 
Board which could result from statutory language.
      Thank you for your consideration.
            Sincerely,
                                                 Bruce A. Morrison.

                      Title VII--Other Provisions

                       Subtitle A--ATM Fee Reform

      Senate Position: The Senate bill at Title VII requires 
automated teller machine (``ATM'') operators who impose a fee 
for use of an ATM by a noncustomer to post a notice on the 
machine and on the screen that a fee will be charged and the 
amount of the fee. This notice must be posted before the 
consumer is irrevocably committed to completing the 
transaction. A paper notice issued from the machine may be used 
in lieu of a posting to the screen. No surcharge may be imposed 
unless the notices are made and the consumer elects to proceed 
with the transaction. A notice is required when ATM cards are 
issued that surcharges may be imposed by other parties when 
transactions are initiated from ATMs not operated by the card 
issuer. ATM operators are exempt from liability if properly 
placed notices on the machines are subsequently removed, 
damaged, or altered by anyone other than the ATM operator.
      House Position: Same.
      Conference Substitute: The House receded to the Senate 
with an amendment.
      The amendment grants a temporary exemption for those 
older machines that are unable to provide certain of the 
notices required.

                   Subtitle B--Community Reinvestment

Sec. 711. CRA sunshine requirements
      Senate Position: Section 312 of the Senate bill amends 
the Federal Deposit Insurance Act by creating a new Section 46, 
to require full disclosure of agreements entered into between 
insured depository institutions or their affiliates and 
nongovernmental entities or persons made pursuant to or in 
connection with the fulfillment of the CRA. The section does 
not confer any authority on the Federal banking agencies to 
enforce the provisions of these agreements.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate, 
with an amendment.
      As recommended by the Conferees, the provision requires 
full disclosure of agreements, as defined in this section, 
between an insured depository institution or affiliate and a 
nongovernmental entity or person where the agreement is made 
pursuant to or in connection with the CRA, involving funds or 
other resources of an insured depository institution or 
affiliate.
      The provision is not intended to define as a CRA 
agreement an individual mortgage loan (although it could apply 
to agreements involving, for example, parties acting as 
mortgage intermediaries or facilitators), or other specific 
contract to an individual, business, farm, or other entity, 
where funds are loaned at rates not substantially below market 
rates and if the purpose of the loan or extension of credit 
does not include any re-lending of borrowed funds to other 
parties. In addition, the scope of the provision does not 
extend to an agreement entered into by an insured depository 
institution or affiliate with a nongovernmental entity or 
person who has not commented on, testified about, or discussed 
with the institution, or otherwise contacted the institution, 
concerning the CRA. This exception to the coverage could 
include, for example, service organizations such as civil 
rights groups, community groups providing housing or other 
services in low-income neighborhoods, the American Legion, 
community theater groups, and so forth. The Federal Reserve 
Board may prescribe regulations to provide further exemptions 
consistent with the purposes of the provision.
      In defining the agreements to which this provision would 
apply, the legislation assigns to the appropriate Federal 
banking agency the responsibility to identify a list of factors 
that the agency determines have a material impact on the 
agency's decision to approve or disapprove an application for a 
deposit facility or to assign a rating in an examination under 
the CRA. It is expected that the regulator will include in such 
list a full enumeration of the relevant factors that the agency 
reviews and considers in examining the performance of an 
insured financial institution in connection with the CRA, 
including any and all items a regulator would attach importance 
to in determining the evaluation under the act of the 
performance of a financial institution.
      The Conferees note that while an agency may not give a 
great deal of weight to a mere agreement to perform certain 
CRA-related activities, per se, the agency does look carefully 
at the activities that the institution may have actually 
performed in fact pursuant to such an agreement. The disclosure 
and reporting requirements of this section apply to agreements 
defined in subsection (a) in either event.
      As a general rule, the parties are required to disclose 
fully such agreements and make them available to the public and 
to the Federal banking agencies.
      In addition, parties to each CRA agreement are required 
to report at least once each year on the use of resources 
provided pursuant to each agreement. A bank would file its 
report directly with its Federal regulator. A nongovernmental 
party is required to file its report with the appropriate 
Federal banking agency with supervisory responsibility over the 
insured depository institution that is a party to the 
agreement, either directly with the agency or via the 
insureddepository institution, which would be required promptly to 
transmit the report to the Federal banking agency.
      The Federal banking agencies are directed, in 
implementing regulations under this provision, to minimize the 
regulatory burden on reporting parties. One way in which to 
accomplish this goal would be wherever possible and appropriate 
with the purposes of this section, to make use of existing 
reporting and auditing requirements and practices of reporting 
parties, and thus avoid unnecessary duplication of effort. The 
Managers intend that, in issuing regulations under this 
section, the appropriate Federal supervisory agency may provide 
that the nongovernmental entity or person that is not an 
insured depository institution may, where appropriate and in 
keeping with the provisions of this section, fulfill the 
requirements of subsection (c) by the submission of its annual 
audited financial statement or its Federal income tax return.
Sec. 712. Small bank regulatory relief
      Senate Position: The Senate provision amended the CRA to 
exempt from the provisions of that Act banks and savings and 
loan associations with total assets less than $100 million and 
that are located in nonmetropolitan areas.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate 
provision with an amendment.
      The provision directs that ``regulated financial 
institutions'' with aggregate assets not exceeding $250 million 
will be subject to routine examinations under the CRA as 
follows: (i) not more than once every 60 months if the 
institution received a rating of ``outstanding record of 
meeting community credit needs'' at its most recent 
examination; (ii) not more than once every 48 months if the 
institution received a rating of ``satisfactory record of 
meeting community credit needs'' at its most recent 
examination; and (iii) as deemed necessary by the appropriate 
Federal banking agency if the institution received a rating of 
less than ``satisfactory record of meeting community credit 
needs'' at its most recent examination. The provision also 
states that the Federal banking agencies may subject an 
institution to more frequent or less frequent examinations for 
reasonable cause. A regulated financial institution shall 
remain subject to examination under this title in connection 
with an application for a deposit facility.
Sec. 713-715. Federal Reserve Board and Treasury studies, Impact on CRA
      Senate Position: No provision.
      House Position: The House bill at Section 110 requires a 
study by the Secretary of the Treasury, in consultation with 
the Federal banking agencies, of the extent to which adequate 
services are being provided as intended by the CRA, including 
services in low- and moderate-income neighborhoods and for 
persons of modest means, as a result of the enactment of the 
Gramm-Leach-Bliley Act. The report must be submitted to the 
Congress within two years.
      Conference Substitute: The Senate receded to the House 
with an amendment directing, in addition, that the Federal 
Reserve Board conduct a comprehensive study of the CRA, in 
consultation with the Chairman and Ranking Member of the House 
Banking and Financial Services Committee and the Chairman and 
Ranking Member of the Senate Banking, Housing, and Urban 
Affairs Committee. The study is to focus on default rates, 
delinquency rates, and the profitability of loans made in 
conformity with that Act. The report must be submitted to the 
House and Senate Banking Committees no later than March 15, 
2000. The provision also directs that the report and all of the 
supporting data be made available at the same time to the 
public by the Federal Reserve Board, to the extent that the 
data are not confidential.
      The Conferees recommended further amending the House 
study with an amendment permitting the Secretary of the 
Treasury to submit to the Congress by March 15, 2000, a 
baseline report in addition to the final report as required in 
the House provision. The purpose of the baseline report is to 
give a set of data against which the Secretary will be able to 
measure change by the end of the two-year reporting period.
      The Conferees also recommended an amendment to the House 
language to state that nothing in the Gramm-Leach-Bliley Act 
shall be construed to repeal any provision of the CRA.

               Subtitle C--Other Regulatory Improvements

Sec. 721. Expanded small bank access to S corporation treatment
      Senate Position: The Senate bill at section 302 requires 
the GAO to study and report to Congress within six months of 
the date of enactment on certain revisions to S corporation 
rules permitting greater access by community banks to S 
corporation treatment.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate.
Sec. 722. ``Plain Language'' requirement for Federal banking agency 
        rules
      Senate Position: The Senate bill at section 306 directs 
the Federal banking agencies to use plain language in all 
proposed and final rule-makings published by the agency in the 
Federal Register after January 1, 2000, and to report to 
Congress by no later than March 1, 2001 on how they have 
complied with the plain language requirement.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate.
Sec. 723. Retention of ``Federal'' in name of converted Federal savings 
        associations
      Senate Position: The Senate bill at section 307 would 
permit Federal savings associations that convert to national or 
state bank charters to keep the word ``Federal'' in their 
names.
      House Position: Same.
      Conference Substitute: The Senate receded to the House.
Sec. 724. Control of Bankers' Banks
      Senate Position: The Senate bill at section 310 allows 
one or more thrift institutions to own a state-chartered bank 
or trust company, whose business is restricted to accepting 
deposits from thrift institutions or savings banks, deposits 
arising from the corporate business of the thrift institutions 
or savings banks that own the bank or trust company, or 
deposits of public funds.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate.
Sec. 725. Provision of technical assistance to microenterprises
      Senate Position: The Senate bill at section 316 
establishes a grant program to fund nonprofit microenterprise 
development organizations, programs, collaboratives, or 
intermediaries engaged in (1) providing training and technical 
assistance to low-income and disadvantaged entrepreneurs 
interested in starting or expanding their own businesses; (2) 
building the capacity of organizations that serve low-income 
and disadvantaged entrepreneurs; and (3) supporting research 
and development aimed at identifying and promoting training and 
technical assistance programs that effectively serve low-income 
and disadvantaged entrepreneurs.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate 
with an amendment.
      While the Senate bill made the new microenterprise 
program a part of the Treasury Department's Community 
Development Financial Institutions program, the Conferees chose 
to have the new program administered by the Small Business 
Administration.
Sec. 726. Federal Reserve audits
      Senate Position: The Senate bill at section 317 requires 
annual outside independent accounting firm audits of the 
Federal Reserve Banks and the Federal Reserve Board. In 
addition, the bill changes the definitions and rules that apply 
to the pricing of Federal Reserve System services under the 
Monetary Control Act.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate 
with an amendment in the nature of a substitute. The substitute 
provision requires the Federal Reserve Board to order an annual 
independent audit of the financial statements of each Federal 
Reserve Bank and of the Board.
Sec. 727. Authorization to release reports
      Senate Position: No provision.
      House Position: The House bill at section 132 permits the 
Federal Reserve Board, at its discretion, to furnish exam 
reports and other confidential supervisory information 
concerning State member banks or other entities it examines to 
any Federal or State authorities with supervisory authority 
over an examined entity, to officers, directors, or receivers 
of the entity, or any other person that the Federal Reserve 
Board determines is proper. In addition, the House bill 
includes the Commodity Futures Trading Commission under 
definitions in the Right to Financial Privacy Act.
      Conference Substitute: The Senate receded to the House 
with an amendment.
      The amendment adds to the provision allowing the 
disclosure of reports and information by applying certain 
confidentiality requirements and procedures for disclosure.
Sec. 728. General Accounting Office study of conflicts of interest
      Senate Position: No provision.
      House Position: The House bill at section 193 requires 
the Comptroller General of the GAO to study the conflict of 
interest faced by the Federal Reserve Board between its role as 
a primary regulator of the banking industry and its role as a 
vendor of services. Specifically, the GAO should address the 
conflict between the Board's role as a regulator of the payment 
system and its role as a competitor with private sector 
providers of payment services, and how best to resolve that 
conflict. The study is due one year after enactment of the 
legislation.
      Conference Substitute: The Senate receded to the House.
Sec. 729. Study and report on adapting existing legislative 
        requirements to on-line banking and lending
      Senate Position: No provision.
      House Position: The House bill at section 195 requires 
the Federal banking agencies to conduct a study of banking 
regulations regarding the delivery of financial services, 
including those regulations that may assume that there will be 
face-to-face contact, and report their recommendations on 
adapting those existing requirements to online banking and 
lending. Thereport, with any recommended legislative or 
regulatory action, is due one year after the date of enactment of the 
legislation.
      Conference Substitute: The Senate receded to the House 
with an amendment changing the due date of the study to two 
years after date of enactment.
Sec. 730. Clarification of source of strength doctrine
      Senate Position: No provision.
      House Position: The House bill at section 197 enhances 
the source of strength doctrine by, in certain circumstances, 
protecting the Federal banking agencies and the deposit 
insurance funds from claims brought by the bankruptcy trustee 
of a depository institution holding company or other person for 
the return of capital infusions.
      Conference Substitute: The Senate receded to the House 
with an amendment in the nature of a substitute.
      The substitute narrows and clarifies the circumstances 
under which a Federal banking agency would be protected from a 
claim. First, it clarifies that the transferred assets must be 
those of an affiliate or a controlling shareholder of an 
insured depository institution. The House amendment did not so 
specify. Second, section 730 provides that the transfer must be 
to or for the benefit of an insured depository institution and 
that it must be made by an affiliate or controlling shareholder 
of such insured depository institution. The House amendment did 
not include such clarifying language. Third, section 730 
specifies that no person may bring a claim against a Federal 
banking agency for monetary damages, return of assets, or for 
other legal or equitable relief in connection with such 
transfer, consistent with certain limitations. The House 
amendment only referred to claims for monetary damages or for 
the return of assets or other property. Fourth, section 730 
adds a definition of the term ``claim.'' For purposes of this 
provision, a claim is defined as a cause of action based on 
Federal or State law providing for the avoidance of 
preferential or fraudulent transfers or conveyances, or 
providing for similar remedies. The definition, however, 
explicitly excepts any claim based on actual intent to hinder, 
delay or defraud pursuant to such fraudulent transfer or 
conveyance law.
      This section does not limit the right of a depository 
institution, a controlling stockholder, or a depository 
institution holding company to seek direct review of an order 
or directive of a Federal banking agency under the 
Administrative Procedure Act in accordance with various banking 
statutes. In addition, the provision does not limit the rights 
of a claimant to bring suit against the United States for a 
breach of contract or a taking under the 5th Amendment to the 
Constitution.
Sec. 731. Interest rates and other charges at interstate branches
      Senate Position: No provision.
      House Position: The House bill at section 198 provides 
loan pricing parity among interstate banks. Specifically, if an 
interstate bank can charge a particular interest rate, then a 
local bank in the State into which the interstate bank has 
branched, may charge a comparable rate.
      Conference Substitute: The Senate receded to the House.
Sec. 732. Interstate branches and agencies of foreign banks
      Senate Position: The Senate bill at section 313 allows a 
Federal or State agency of a foreign bank to upgrade to a 
branch with the approval of the appropriate chartering 
authority and the Federal Reserve Board.
      House Position: Same.
      Conference Substitute: The House receded to the Senate.
Sec. 733. Fair treatment of women by financial advisers
      Senate Position: No provision.
      House Position: The House bill at section 198B 
establishes the sense of the Congress that estate planners, 
trust officers, investment advisers, and other financial 
planners and advisors should eliminate examples in their 
training materials which portray women as incapable and 
foolish, and develop fairer and more balanced presentations 
that eliminate outmoded and stereotypical examples which lead 
clients to take actions that are financially detrimental to 
their wives and daughters.
      Conference Substitute: The Senate receded to the House 
with an amendment in the nature of a substitute.
      The substitute establishes the sense of the Congress that 
individuals offering financial advice and products should do so 
in a nondiscriminatory, nongender-specific manner.
Sec. 734. Membership of loan guarantee boards
      Senate Position: No provision.
      House Position: No provision.
      Conference Substitute: The Conferees adopted a provision 
that would modify the membership of the Emergency Steel Loan 
Guarantee Board and the Emergency Oil and Gas Loan Guarantee 
Board. Where under existing law the Chairmen of the Federal 
Reserve Board and SEC were designated as members, the provision 
permits both to designate another Member of the Board or 
another Commissioner as appropriate.
Sec. 735. Repeal of stock loan limit in Federal Reserve Act
      Senate Position: No provision.
      House Position: The House bill at section 124 repeals the 
restrictions 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.
      Conference Substitute: The Senate receded to the House.
Sec. 736. Elimination of SAIF and DIF Special Reserves
      Senate Position: The Senate bill at section 301 
eliminates the need for the establishment of a SAIF ``special 
reserve'' which the FDIC was required to establish beginning in 
1999. This revision becomes effective on the date of enactment.
      House Position: Same other than the effective date.
      Conference Substitute: The House receded to the Senate.
Sec. 737. Bank officers and directors as officers and directors of 
        public utilities
      Senate Position: The Senate bill at section 309 amends 
the Federal Power Act to permit officers or directors of public 
utilities to serve as officers or directors of banks, trust 
companies, or securities firms, if certain safeguards against 
conflicts of interest are complied with.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate.
Sec. 738. Approval for purchases of securities
      Senate Position: The Senate bill at section 315 
authorizes a majority of the entire board of directors of a 
bank to vote on the purchase of securities from an affiliate, 
based on a determination that the purchase is a sound 
investment for the bank. Such a standard does not exist under 
current law, which simply requires the vote to be taken by a 
majority of independent directors.
      House Position: No provision.
      Conference Substitute: The House receded to the Senate.
Sec. 739. Optional conversion of Federal savings associations
      Senate Position: The Senate bill at section 602 allows a 
Federal savings association chartered prior to the date of 
enactment to convert into one or more national banks, subject 
to the approval of the OCC, each of which may encompass one or 
more of the branches of the Federal savings association in one 
or more States.
      House Position: No provision.
      Conference Substitute: The House recedes to the Senate 
with an amendment.
      The amendment would allow the conversion to State as well 
as national banks.
Sec. 740. Grand jury proceedings
      Senate Position: No provision.
      House Position: No provision.
      Conference Substitute: The Conferees adopted a provision 
that would permit U.S. Attorneys offices to seek a court order 
to provide financial institution regulatory agencies with 
access to grand jury material, giving State regulatory agencies 
parity with Federal regulatory agencies.

                From the Committee on Banking and Financial 
                Services, for consideration of the Senate bill, 
                and the House amendment, and modifications 
                committed to conference:
                                   James A. Leach,
                                   Bill McCollum,
                                   Marge Roukema,
                                   Doug Bereuter,
                                   Rick Lazio,
                                   Spencer Bachus,
                                   Michael N. Castle,
                                   John J. LaFalce,
                                   Bruce F. Vento,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of titles I, III (except section 
                304), IV, and VII of the Senate bill, and title 
                I of the House amendment, and modifications 
                committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title V of the Senate bill, 
                and title II of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                                   James H. Maloney,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title II of the Senate bill, 
                and title III of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Carolyn B. Maloney,
                                   Nydia M. Velazquez,
                                   Darlene Hooley,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of title VI of the Senate bill, 
                and title IV of the House amendment, and 
                modifications committed to conference:
                                   Carolyn B. Maloney,
                                   Luis V. Gutierrez,
                                   Ken Bentsen,
                As additional conferees from the Committee on 
                Banking and Financial Services, for 
                consideration of section 304 of the Senate 
                bill, and title V of the House amendment, and 
                modifications committed to conference:
                                   Paul E. Kanjorski,
                                   Gary L. Ackerman,
                From the Committee on Commerce, for 
                consideration of the Senate bill, and the House 
                amendment, and modifications committed to 
                conference:
                                   Tom Bliley,
                                   Michael G. Oxley,
                                   Billy Tauzin,
                                   Paul Gillmor,
                                   James Greenwood,
                                   Chris Cox,
                                   Steve Largent,
                                   Brian Bilbray,
                                   E. Towns,
                                   Diana DeGette,
                                   Lois Capps,
                Provided that Mr. Rush is appointed in lieu of 
                Mrs. Capps for consideration of section 316 of 
                the Senate bill:
                                   Bobby L. Rush,
                From the Committee on Agriculture, for 
                consideration of title V of the House 
                amendment, and modifications committed to 
                conference:
                                   Larry Combest,
                                   Thomas W. Ewing,
                                   Charles W. Stenholm,
                From the Committee on the Judiciary, for 
                consideration of sections 104(a), 104(d)(3), 
                and 104(f)(2) of the Senate bill, and sections 
                104(a)(3), 104(d)(3)(A), 104(b)(4)(B), 136(b), 
                136(d)-(e), 141-44, 197, 301, 306 of the House 
                amendment, and modifications committed to 
                conference:
                                   Henry Hyde,
                                   George W. Gekas,
                From the Committee on Banking and Financial 
                Services, for consideration of section 101 of 
                the Senate bill and section 101 of the House 
                amendment: Mr. King is appointed in lieu of Mr. 
                Bachus; Mr. Royce is appointed in lieu of Mr. 
                Castle
                                   Peter T. King,
                                   Ed Royce,
                From the Committee on Commerce, for 
                consideration of section 101 of the Senate bill 
                and section 101 of the House amendment: Mrs. 
                Wilson is appointed in lieu of Mr. Largent; Mr. 
                Fossella is appointed in lieu of Mr. Bilbray
                                   Heather Wilson,
                                   Vito Fossella,
                                 Managers on the Part of the House.

                                   Phil Gramm,
                                   Connie Mack,
                                   Robert F. Bennett,
                                   Rod Grams,
                                   Wayne Allard,
                                   Michael B. Enzi,
                                   Chuck Hagel,
                                   Rick Santorum,
                                   Jim Bunning,
                                   Mike Crapo,
                                   Paul Sarbanes,
                                   Christopher J. Dodd,
                                   John F. Kerry,
                                   Tim Johnson,
                                   Jack Reed,
                                   Charles Schumer,
                                   Evan Bayh,
                                   John Edwards,
                                Managers on the Part of the Senate.

                                  
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