[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:
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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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