[105th Congress Public Law 164]
[From the U.S. Government Printing Office]


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[DOCID: f:publ164.105]


[[Page 31]]

                         EXAMINATION PARITY AND
                         YEAR 2000 READINESS FOR
                       FINANCIAL INSTITUTIONS ACT

[[Page 112 STAT. 32]]

Public Law 105-164
105th Congress

                                 An Act


 
  To address the Year 2000 computer problems with regard to financial 
institutions, to extend examination parity to the Director of the Office 
of Thrift Supervision and the National Credit Union Administration, and 
       for other purposes. <<NOTE: Mar. 20, 1998 -  [H.R. 3116]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in <<NOTE: Examination Parity and Year 2000 
Readiness for Financial Institutions Act.>>  Congress assembled,

SECTION 1. SHORT <<NOTE: 12 USC 1461 note.>>  TITLE.

    This Act may be cited as the ``Examination Parity and Year 2000 
Readiness for Financial Institutions Act''.

SEC. 2. YEAR 2000 READINESS FOR <<NOTE: 12 USC 1811 note.>>  FINANCIAL 
            INSTITUTIONS.

    (a) Findings.--The Congress finds that--
            (1) the Year 2000 computer problem poses a serious challenge 
        to the American economy, including the Nation's banking and 
        financial services industries;
            (2) thousands of banks, savings associations, and credit 
        unions rely heavily on internal information technology and 
        computer systems, as well as outside service providers, for 
        mission-critical functions, such as check clearing, direct 
        deposit, accounting, automated teller machine networks, credit 
        card processing, and data exchanges with domestic and 
        international borrowers, customers, and other financial 
        institutions; and
            (3) Federal financial regulatory agencies must have 
        sufficient examination authority to ensure that the safety and 
        soundness of the Nation's financial institutions will not be at 
        risk.

    (b) Definitions.--For purposes of this section--
            (1) the terms ``depository institution'' and ``Federal 
        banking agency'' have the same meanings as in section 3 of the 
        Federal Deposit Insurance Act;
            (2) the term ``Federal home loan bank'' has the same meaning 
        as in section 2 of the Federal Home Loan Bank Act;
            (3) the term ``Federal reserve bank'' means a reserve bank 
        established under the Federal Reserve Act;
            (4) the term ``insured credit union'' has the same meaning 
        as in section 101 of the Federal Credit Union Act; and
            (5) the term ``Year 2000 computer problem'' means, with 
        respect to information technology, any problem which prevents 
        such technology from accurately processing, calculating, 
        comparing, or sequencing date or time data--
                    (A) from, into, or between--
                          (i) the 20th and 21st centuries; or
                          (ii) the years 1999 and 2000; or
                    (B) with regard to leap year calculations.

[[Page 112 STAT. 33]]

    (c) Seminars and Model Approaches to Year 2000 Computer Problem.--
            (1) Seminars.--
                    (A) In general.--Each Federal banking agency and the 
                National Credit Union Administration Board shall offer 
                seminars to all depository institutions and insured 
                credit unions under the jurisdiction of such agency on 
                the implication of the Year 2000 computer problem for--
                          (i) the safe and sound operations of such 
                      depository institutions and credit unions; and
                          (ii) transactions with other financial 
                      institutions, including Federal reserve banks and 
                      Federal home loan banks.
                    (B) Content and schedule.--The content and schedule 
                of seminars offered pursuant to subparagraph (A) shall 
                be determined by each Federal banking agency and the 
                National Credit Union Administration Board taking into 
                account the resources and examination priorities of such 
                agency.
            (2) Model approaches.--
                    (A) In general.--Each Federal banking agency and the 
                National Credit Union Administration Board shall make 
                available to each depository institution and insured 
                credit union under the jurisdiction of such agency model 
                approaches to common Year 2000 computer problems, such 
                as model approaches with regard to project management, 
                vendor contracts, testing regimes, and business 
                continuity planning.
                    (B) Variety of approaches.--In developing model 
                approaches to the Year 2000 computer problem pursuant to 
                subparagraph (A), each Federal banking agency and the 
                National Credit Union Administration Board shall take 
                into account the need to develop a variety of approaches 
                to correspond to the variety of depository institutions 
                or credit unions within the jurisdiction of the agency.
            (3) Cooperation.--In carrying out this section, the Federal 
        banking agencies and the National Credit Union Administration 
        Board may cooperate and coordinate their activities with each 
        other, the Financial Institutions Examination Council, and 
        appropriate organizations representing depository institutions 
        and credit unions.

SEC. 3. REGULATION AND EXAMINATION OF SERVICE PROVIDERS.

    (a) Regulation and Examination of Savings Association Service 
Companies.--
            (1) Amendment to home owners' loan act.--Section 5(d) of the 
        Home Owners' Loan Act (12 U.S.C. 1464(d)) is amended by adding 
        at the end the following:
            ``(7) Regulation and examination of savings association 
        service companies, subsidiaries, and service providers.--
                    ``(A) General examination and regulatory 
                authority.--A service company or subsidiary that is 
                owned in whole or in part by a savings association shall 
                be subject to examination and regulation by the Director 
                to the same extent as that savings association.

[[Page 112 STAT. 34]]

                    ``(B) Examination by other banking agencies.--The 
                Director may authorize any other Federal banking agency 
                that supervises any other owner of part of the service 
                company or subsidiary to perform an examination 
                described in subparagraph (A).
                    ``(C) Applicability of section 8 of the federal 
                deposit insurance act.--A service company or subsidiary 
                that is owned in whole or in part by a saving 
                association shall be subject to the provisions of 
                section 8 of the Federal Deposit Insurance Act as if the 
                service company or subsidiary were an insured depository 
                institution. In any such case, the Director shall be 
                deemed to be the appropriate Federal banking agency, 
                pursuant to section 3(q) of the Federal Deposit 
                Insurance Act.
                    ``(D) Service performed by contract or otherwise.--
                Notwithstanding subparagraph (A), if a savings 
                association, a subsidiary thereof, or any savings and 
                loan affiliate or entity, as identified by section 
                8(b)(9) of the Federal Deposit Insurance Act, that is 
                regularly examined or subject to examination by the 
                Director, causes to be performed for itself, by contract 
                or otherwise, any service authorized under this Act or, 
                in the case of a State savings association, any 
                applicable State law, whether on or off its premises--
                          ``(i) such performance shall be subject to 
                      regulation and examination by the Director to the 
                      same extent as if such services were being 
                      performed by the savings association on its own 
                      premises; and
                          ``(ii) the savings association shall notify 
                      the Director of the existence of the service 
                      relationship not later than 30 days after the 
                      earlier of--
                                    ``(I) the date on which the contract 
                                is entered into; or
                                    ``(II) the date on which the 
                                performance of the service is initiated.
                    ``(E) Administration by the director.--The Director 
                may issue such regulations and orders, including those 
                issued pursuant to section 8 of the Federal Deposit 
                Insurance Act, as may be necessary to enable the 
                Director to administer and carry out this paragraph and 
                to prevent evasion of this paragraph.
            ``(8) Definitions.--For purposes of this section--
                    ``(A) the term `service company' means--
                          ``(i) any corporation--
                                    ``(I) that is organized to perform 
                                services authorized by this Act or, in 
                                the case of a corporation owned in part 
                                by a State savings association, 
                                authorized by applicable State law; and
                                    ``(II) all of the capital stock of 
                                which is owned by 1 or more insured 
                                savings associations; and
                          ``(ii) any limited liability company--
                                    ``(I) that is organized to perform 
                                services authorized by this Act or, in 
                                the case of a company, 1 of the members 
                                of which is a State savings association, 
                                authorized by applicable State law; and

[[Page 112 STAT. 35]]

                                    ``(II) all of the members of which 
                                are 1 or more insured savings 
                                associations;
                    ``(B) the term `limited liability company' means any 
                company, partnership, trust, or similar business entity 
                organized under the law of a State (as defined in 
                section 3 of the Federal Deposit Insurance Act) that 
                provides that a member or manager of such company is not 
                personally liable for a debt, obligation, or liability 
                of the company solely by reason of being, or acting as, 
                a member or manager of such company; and
                    ``(C) the terms `State savings association' and 
                `subsidiary' have the same meanings as in section 3 of 
                the Federal Deposit Insurance Act.''.
            (2) Conforming amendments to section 8 of the federal 
        deposit insurance act.--Section 8 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1818) is amended--
                    (A) in subsection (b)(9), by striking ``to any 
                service corporation of a savings association and to any 
                subsidiary of such service corporation'';
                    (B) in subsection (e)(7)(A)(ii), by striking 
                ``(b)(8)'' and inserting ``(b)(9)''; and
                    (C) in subsection (j)(2), by striking ``(b)(8)'' and 
                inserting ``(b)(9)''.

    (b) Regulation and Examination of Service Providers for Credit 
Unions.--Title II of the Federal Credit Union Act (12 U.S.C. 1781 et 
seq.) is amended by inserting after section 206 the following new 
section:

``SEC. 206A. REGULATION <<NOTE: 12 USC 1786a.>>  AND EXAMINATION OF 
            CREDIT UNION ORGANIZATIONS AND SERVICE PROVIDERS.

    ``(a) Regulation and Examination of Credit Union Organizations.--
            ``(1) General examination and regulatory authority.--A 
        credit union organization shall be subject to examination and 
        regulation by the Board to the same extent as that insured 
        credit union.
            ``(2) Examination by other banking agencies.--The Board may 
        authorize to make an examination of a credit union organization 
        in accordance with paragraph (1)--
                    ``(A) any Federal regulator agency that supervises 
                any activity of a credit union organization; or
                    ``(B) any Federal banking agency that supervises any 
                other person who maintains an ownership interest in a 
                credit union organization.

    ``(b) Applicability of Section 206.--A credit union organization 
shall be subject to the provisions of section 206 as if the credit union 
organization were an insured credit union.
    ``(c) Service Performed by Contract or Otherwise.--Notwithstanding 
subsection (a), if an insured credit union or a credit union 
organization that is regularly examined or subject to examination by the 
Board, causes to be performed for itself, by contract or otherwise, any 
service authorized under this Act, or in the case of a State credit 
union, any applicable State law, whether on or off its premises--
            ``(1) such performance shall be subject to regulation and 
        examination by the Board to the same extent as if such services

[[Page 112 STAT. 36]]

        were being performed by the insured credit union or credit union 
        organization itself on its own premises; and
            ``(2) the insured credit union or credit union organization 
        shall notify the Board of the existence of the service 
        relationship not later than 30 days after the earlier of--
                    ``(A) the date on which the contract is entered 
                into; or
                    ``(B) the date on which the performance of the 
                service is initiated.

    ``(d) Administration by the Board.--The Board may issue such 
regulations and orders as may be necessary to enable the Board to 
administer and carry out this section and to prevent evasion of this 
section.
    ``(e) Definitions.--For purposes of this section--
            ``(1) the term `credit union organization' means any entity 
        that--
                    ``(A) is not a credit union;
                    ``(B) is an entity in which an insured credit union 
                may lawfully hold an ownership interest or investment; 
                and
                    ``(C) is owned in whole or in part by an insured 
                credit union; and
            ``(2) the term `Federal banking agency' has the same meaning 
        as in section 3 of the Federal Deposit Insurance Act.

    ``(f) Expiration of Authority.--This section and all powers and 
authority of the Board under this section shall cease to be effective as 
of December 31, 2001.''.

    Approved March 20, 1998.

LEGISLATIVE HISTORY--H.R. 3116:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 105-417 (Comm. on Banking and Financial Services).
CONGRESSIONAL RECORD, Vol. 144 (1998):
            Feb. 24, considered and passed House.
            Mar. 6, considered and passed Senate.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
            Mar. 20, Presidential statement.

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