[DOCID: f:h10rh.txt]




                                                 Union Calendar No. 217

105th CONGRESS

  1st Session

                                H. R. 10

               [Report No. 105-164, Parts I, II, and III]

_______________________________________________________________________

                                 A BILL

To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
     and other financial service providers, and for other purposes.

_______________________________________________________________________

                            November 3, 1997

Reported from the Committee on Commerce with an amendment, committed to 
the Committee of the Whole House on the State of the Union, and ordered 
                             to be printed





                                                 Union Calendar No. 217
105th CONGRESS
  1st Session
                                 H. R. 10

               [Report No. 105-164, Parts I, II, and III]

To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
     and other financial service providers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 7, 1997

Mr. Leach (for himself, Mrs. Roukema, Mr. Castle, and Mr. Lazio of New 
    York) introduced the following bill; which was referred to the 
  Committee on Banking and Financial Services, and in addition to the 
 Committee on Commerce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

                              July 3, 1997

 Reported from the Committee on Banking and Financial Services with an 
                               amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                              July 3, 1997

Referral to the Committee on Commerce extended for a period ending not 
                     later than September 15, 1997

                           September 5, 1997

Referral to the Committee on Commerce extended for a period ending not 
                     later than September 30, 1997

                           September 30, 1997

Referral to the Committee on Commerce extended for a period ending not 
                      later than October 31, 1997

                            October 30, 1997

Referral to the Committee on Commerce extended for a period ending not 
                      later than November 3, 1997

                            November 3, 1997

Reported from the Committee on Commerce with an amendment, committed to 
the Committee of the Whole House on the State of the Union, and ordered 
                             to be printed
 [Strike out all after the enacting clause and insert the part printed 
                           in boldface roman]
[For text of introduced bill, see copy of bill as introduced on January 
                                7, 1997]

_______________________________________________________________________

                                 A BILL


 
To enhance competition in the financial services industry by providing 
a prudential framework for the affiliation of banks, securities firms, 
     and other financial service providers, and for other purposes.

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

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

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

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

  TITLE I--POWERS AND AFFILIATIONS OF INSURED DEPOSITORY INSTITUTIONS

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

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

                   Subtitle B--Additional Safeguards

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

           Subtitle C--National Council on Financial Services

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

              Subtitle D--Bank Holding Company Supervision

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

      Subtitle E--Subsidiaries of Insured Depository Institutions

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

                 Subtitle F--Direct Activities of Banks

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

             Subtitle G--Noninsured Depository Institutions

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

               Subtitle H--Federal Home Loan Bank System

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

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

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

             Subtitle J--Redomestication of Mutual Insurers

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

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

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

                  Subtitle L--Effective Date of Title

Sec. 199. Effective date.

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

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

             Subtitle B--Bank Investment Company Activities

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

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

Sec. 301. Short title; definitions.

  Subtitle A--Facilitating Conversion of Savings Associations to Banks

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

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

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

                   Subtitle C--Combining OTS and OCC

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

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

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

   Subtitle E--Technical and Conforming Amendments to Other Statutes

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

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

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

  TITLE I--POWERS AND AFFILIATIONS OF INSURED DEPOSITORY INSTITUTIONS

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

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

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

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

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

SEC. 103. QUALIFYING BANK HOLDING COMPANIES.

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

``SEC. 6. QUALIFYING BANK HOLDING COMPANIES.

    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Qualifying bank holding company.--The term 
        `qualifying bank holding company' means any bank holding 
        company--
                    ``(A) all of the subsidiary depository institutions 
                of which are well capitalized;
                    ``(B) all of the subsidiary depository institutions 
                of which are well managed (as defined in section 
                5136A(a)(5)(D) of the Revised Statutes of the United 
                States);
                    ``(C) all of the subsidiary depository institutions 
                of which have achieved a rating of `satisfactory record 
                of meeting community credit needs', or better, at the 
                most recent examination of each such institution;
                    ``(D) all of the subsidiary depository institutions 
                of which have a demonstrable record of performance in 
                the provision of low-cost lifeline bank accounts;
                    ``(E) in the case of any bank holding company which 
                underwrites or sells, or any affiliate of which 
                underwrites or sells, annuities contracts or contracts 
                insuring, guaranteeing, or indemnifying against loss, 
                harm, damage, illness, disability, or death, which--
                            ``(i) has not been adjudicated in any 
                        Federal court, or has not entered into a 
                        consent decree filed in a Federal court or into 
                        a settlement agreement, premised upon a 
                        violation of the Fair Housing Act for the 
                        activities described in this subparagraph and 
                        is not in violation of any such decree or 
                        settlement agreement as determined by a court 
                        of competent jurisdiction or the agency with 
                        which the decree or agreement was entered into; 
                        or
                            ``(ii) has been exempted from the 
                        requirements of clause (i) by the Board under 
                        subsection (f)(3).
                    ``(F) that is deemed under paragraph (2) to be 
                engaged in activities in the United States that are 
                financial in nature or is engaged in activities that 
                are otherwise permissible under this Act (other than 
                activities engaged in pursuant to subsection (k));
                    ``(G) which, with respect to any activities engaged 
                in outside of the United States, engages in such 
                activities in conformance with subsection (f) and 
                section 2(h)(2); and
                    ``(H) that has filed with the Board a declaration 
                that it is a qualifying bank holding company.
            ``(2) Activities financial in nature.--A bank holding 
        company shall be deemed to be engaged in activities that are 
        financial in nature if not less than 85 percent of the gross 
        revenues of such company from activities conducted in the 
        United States are derived from financial activities in which 
        such company or any of its subsidiaries engages.
            ``(3) Financial activity.--The term `financial activity' 
        means any 1 or more of the following:
                    ``(A) Receiving money subject to a deposit or other 
                repayment obligation.
                    ``(B) Lending, exchanging, transferring, investing, 
                or safeguarding money or other financial assets.
                    ``(C) Providing any device or other instrumentality 
                for transferring money or other financial assets;
                    ``(D) Insuring, guaranteeing, or indemnifying 
                against loss, harm, damage, illness, disability, or 
                death, or providing and issuing annuities, and acting 
                as principal, agent, or broker for purposes of the 
                foregoing.
                    ``(E) Providing financial, investment, or economic 
                advisory or information services, including advising an 
                investment company (as defined in section 3 of the 
                Investment Company Act of 1940).
                    ``(F) Issuing or selling instruments representing 
                interests in pools of assets permissible for a bank to 
                hold directly.
                    ``(G) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 1 or 
                more entities (including entities other than depository 
                institutions or subsidiaries of depository institutions 
                that the bank holding company controls), or otherwise, 
                shares, assets, or ownership interests (including 
                without limitation debt or equity securities, 
                partnership interests, trust certificates, or other 
                instruments representing ownership) of a company or 
                other entity, whether or not constituting control of 
                such company or entity, engaged in any activity if--
                            ``(i) the shares, assets, or ownership 
                        interests are not acquired or held directly by 
                        a depository institution or a subsidiary of a 
                        depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held as part of a 
                        bona fide underwriting, or investment banking 
                        activity (including investment activities 
                        engaged in for the purpose of appreciation and 
                        ultimate sale or other disposition of the 
                        investment);
                            ``(iii) such shares, assets, or ownership 
                        interests are held for such a period as will 
                        permit the sale or disposition thereof on a 
                        reasonable basis consistent with the nature of 
                        the activities described in clause (ii); and
                            ``(iv) during the period such shares, 
                        assets, or ownership interests are held, the 
                        bank holding company does not actively manage 
                        or operate the company or entity, except 
                        insofar as necessary to achieve the objectives 
                        of clause (ii).
                    ``(H) Directly or indirectly acquiring or 
                controlling, whether as principal, on behalf of 1 or 
                more entities (including any subsidiary of the holding 
                company which is not a depository institution or a 
                subsidiary of a depository institution), or otherwise, 
                shares, assets, or ownership interests (including debt 
                or equity securities, partnership interests, trust 
                certificates, or other instruments representing 
                ownership) of a company or other entity, whether or not 
                constituting control of such company or entity, engaged 
                in activities not authorized pursuant to this section 
                if--
                            ``(i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution or a subsidiary of a 
                        depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by an insurance 
                        company that is predominantly engaged in 
                        underwriting life, accident and health, or 
                        property and casualty insurance (other than 
                        credit-related insurance);
                            ``(iii) such shares, assets, or ownership 
                        interests represent an investment made in the 
                        ordinary course of business of such insurance 
                        affiliate in accordance with relevant State law 
                        governing such investments; and
                            ``(iv) during the period such shares, 
                        assets, or ownership interests are held, the 
                        bank holding company does not directly or 
                        indirectly participate in the day-to-day 
                        management or operation of the company or 
                        entity except insofar as necessary to achieve 
                        the objectives of clauses (ii) and (iii).
                    ``(I) Arranging, effecting or facilitating 
                financial transactions for the account of third 
                parties.
                    ``(J) Underwriting, dealing in, or making a market 
                in securities.
                    ``(K) Engaging in any activity that was, by 
                regulation or order, permissible for a bank holding 
                company pursuant to section 4(c)(8) of this Act, as in 
                effect on the day before the date of enactment of the 
                Financial Services Competition Act of 1997.
                    ``(L) Engaging, in the United States, in any 
                activity that--
                            ``(i) a bank holding company may engage in 
                        outside the United States; and
                            ``(ii) the Board determined, under 
                        regulations issued pursuant to section 4(c)(13) 
                        of this Act (as in effect on the day before the 
                        date of enactment of the Financial Services 
                        Competition Act of 1997) to be usual in 
                        connection with the transaction of banking or 
                        other financial operations abroad.
                    ``(M) Owning shares of any company to the extent 
                permissible under paragraph (6) or (7) of section 4(c) 
                of this Act, as in effect on the day before the date of 
                enactment of the Financial Services Competition Act of 
                1997.
                    ``(N) Engaging in any activity that the National 
                Council on Financial Services determines, by regulation 
                or order, to be the functional equivalent of any 
                activity described in 1 or more of subparagraphs (A) 
                through (M).
                    ``(O) Engaging in any activity that the National 
                Council on Financial Services determines by regulation 
                or order to be financial, or related to a financial 
                activity, having taken into account--
                            ``(i) the purposes of this Act and the 
                        Financial Services Competition Act of 1997;
                            ``(ii) changes or reasonably expected 
                        changes in the market in which bank holding 
                        companies compete;
                            ``(iii) changes or reasonably expected 
                        changes in the technology for delivering 
                        financial services; and
                            ``(iv) whether such activity is necessary 
                        or appropriate to allow a bank holding company 
                        and its affiliates to--
                                    ``(I) compete effectively with any 
                                company seeking to provide financial 
                                services in the United States;
                                    ``(II) use any available or 
                                emerging technological means, including 
                                any application necessary to protect 
                                the security or efficacy of systems for 
                                the transmission of data or financial 
                                transactions, in providing financial 
                                services; and
                                    ``(III) offer customers any 
                                available or emerging technological 
                                means for using financial services.
            ``(4) Well capitalized.--The term `well capitalized' has 
        the same meaning as in section 38 of the Federal Deposit 
        Insurance Act. For purposes of this section, the appropriate 
        Federal banking agency shall have exclusive jurisdiction to 
        determine whether an insured depository institution is well 
        capitalized.
            ``(5) Foreign banks and companies.--For purposes of 
        paragraph (1), the Board shall establish and apply comparable 
        capital standards to a foreign bank that operates a branch or 
        agency or owns or controls a bank or commercial lending company 
        in the United States, and any company that owns or controls 
        such foreign bank, giving due regard to the principle of 
        national treatment and equality of competitive opportunity.
            ``(6) Limited exclusions from community needs requirements 
        for newly acquired depository institutions.--Any depository 
        institution acquired by a bank holding company during the 12-
        month period preceding the submission of a notice under 
        paragraph (1)(F) and any depository institution acquired after 
        the submission of such notice may be excluded for purposes of 
        paragraph (1)(C) during the 12-month period beginning on the 
        date of such acquisition if--
                    ``(A) the bank holding company has submitted an 
                affirmative plan to the appropriate Federal banking 
                agency to take such action as may be necessary in order 
                for such institution to achieve a rating of 
                `satisfactory record of meeting community credit 
                needs', or better, at the next examination of the 
                institution; and
                    ``(B) the plan has been accepted by such agency.
    ``(b) Authority to Engage in Activities Without Notice.--
            ``(1) In general.--A qualifying bank holding company may 
        engage, directly or through a subsidiary that is not an insured 
        depository institution (or a subsidiary thereof), in any 
        activity to the extent permissible under the Financial Services 
        Competition Act of 1997 without approval from or notice to the 
        Board.
            ``(2) Rule of construction.--No provision of this section 
        shall be construed as authorizing the acquisition of an 
        depository institution other than in accordance with section 3.
    ``(c) Restrictions Applicable to Nonqualifying Bank Holding 
Companies.--A bank holding company that is not a qualifying bank 
holding company may engage, directly or indirectly through a subsidiary 
that is not an insured depository institution (or a subsidiary of an 
insured depository institution), only in managing and controlling 
depository institutions and in any activity that was permissible under 
section 4(c) (as in effect on the day before the date of the enactment 
of the Financial Services Competition Act of 1997) other than 
underwriting securities which a national bank is not authorized to 
underwrite, except as otherwise provided by law.
    ``(d) Provisions Applicable to Qualifying Bank Holding Companies 
That Fail to Meet Requirements.--
            ``(1) In general.--If the Board finds that--
                    ``(A) a qualifying bank holding company is engaged, 
                directly or indirectly, in any activity other than 
                activities described in subsection (c); and
                    ``(B) such company is not in compliance with the 
                requirements of subsection (a)(1),

        the Board shall give notice to the company to that effect, 
        describing the conditions giving rise to the notice.
            ``(2) Agreement to correct conditions required.--Within 45 
        days of receipt by a qualifying bank holding company of a 
        notice given under paragraph (1) (or such additional period as 
        the Board may permit), the company shall execute an agreement 
        with the Board to comply with the requirements applicable to a 
        qualifying bank holding company.
            ``(3) Board may impose limitations.--Until the conditions 
        described in a notice to a qualifying bank holding company 
        under paragraph (1) are corrected, the Board may impose such 
        limitations on the conduct or activities of the company or any 
        affiliate of the company as the Board determines to be 
        appropriate under the circumstances.
            ``(4) Failure to correct.--If the conditions described in a 
        notice to a qualifying bank holding company under paragraph (1) 
        are not corrected within 180 days after receipt by the company 
        of notice under paragraph (1), the Board may require such 
        company, under such terms and conditions as may be imposed by 
        the Board and subject to such extension of time as may be 
        granted in the Board's discretion, either--
                    ``(A) to divest control of any subsidiary 
                depository institutions; or
                    ``(B) to cease to engage in any activity conducted 
                by such company or its subsidiaries (other than a 
                depository institution or a subsidiary of a depository 
                institution) that is not an activity that is 
                permissible under subsection (c).
    ``(e) Safeguards for Bank Subsidiaries.--A qualifying bank holding 
company shall assure that--
            ``(1) the procedures of the holding company for identifying 
        and managing financial and operational risks within the company 
        and the subsidiaries of such company which are not insured 
        depository institutions (or subsidiaries of such subsidiaries) 
        adequately protect the subsidiaries of such company which are 
        insured depository institutions from such risks;
            ``(2) the holding company has reasonable policies and 
        procedures to preserve the separate corporate identity and 
        limited liability of such company and the subsidiaries of such 
        company, for the protection of the company's subsidiary insured 
        depository institutions; and
            ``(3) the holding company complies with this section.
    ``(f) Exemptive Authority.--
            ``(1) Foreign banks and foreign investments.--The Board may 
        grant exemptions from any restriction on activities or 
        investments which is otherwise applicable to a bank holding 
        company, including a qualifying bank holding company--
                    ``(A) for shares held or activities conducted by a 
                company organized under the laws of a foreign country 
                the greater part of whose business is conducted outside 
                the United States; or
                    ``(B) for shares held of, or activities conducted 
                by, any company which does no business in the United 
                States except as an incident to such company's 
                international or foreign business,
        if the Board, by regulation or order, determines that, under 
        the circumstances and subject to any condition set forth in the 
        regulation or order, the exemption would not be substantially 
        at variance with the purposes of this Act or the Financial 
        Services Competition Act of 1997 and would be in the public 
        interest.
            ``(2) Continuation of prior exemption.--To the extent that 
        such action would not be substantially at variance with the 
        purposes of this Act and subject to such conditions as the 
        Board considers necessary to protect the public interest, the 
        Board by order, after opportunity for hearing, may grant 
        exemptions from the provisions of subsection (c) to any bank 
        holding company which controlled 1 bank prior to July 1, 1968, 
        and has not thereafter acquired the control of any other bank 
        in order--
                    ``(A) to avoid disrupting business relationships 
                that have existed over a long period of years without 
                adversely affecting the banks or communities involved;
                    ``(B) to avoid forced sales of small locally owned 
                banks to purchasers not similarly representative of 
                community interests; or
                    ``(C) to allow retention of banks that are so small 
                in relation to the holding company's total interests 
                and so small in relation to the banking market to be 
                served as to minimize the likelihood that the bank's 
                powers to grant or deny credit may be influenced by a 
                desire to further the holding company's other 
                interests.
            ``(3) Violations of the fair housing act.--The Board may, 
        on a case-by-case basis, exempt a bank holding company from 
        meeting the terms of subsection (a)(1)(E)(i) in satisfying the 
        definition of qualified bank holding company.
    ``(g) Certain Companies Not Treated as Bank Holding Companies.--
            ``(1) In general.--Except as provided in paragraph (9), any 
        company which--
                    ``(A) on March 5, 1987, controlled an institution 
                which became a bank as a result of the enactment of the 
                Competitive Equality Amendments of 1987; and
                    ``(B) was not a bank holding company on the day 
                before the date of the enactment of the Competitive 
                Equality Amendments of 1987,

        shall not be treated as a bank holding company for purposes of 
        this Act solely by virtue of such company's control of such 
        institution.
            ``(2) Loss of exemption.--Subject to paragraph (3), a 
        company described in paragraph (1) shall no longer qualify for 
        the exemption provided under such paragraph if--
                    ``(A) such company directly or indirectly--
                            ``(i) acquires control of an additional 
                        bank or an insured institution (other than an 
                        insured institution described in paragraph (10) 
                        or (12) of this subsection) after March 5, 
                        1987; or
                            ``(ii) acquires control of more than 5 
                        percent of the shares or assets of an 
                        additional bank or a savings association other 
                        than--
                                    ``(I) shares held as a bona fide 
                                fiduciary (whether with or without the 
                                sole discretion to vote such shares);
                                    ``(II) shares held by any person as 
                                a bona fide fiduciary solely for the 
                                benefit of employees of either the 
                                company described in paragraph (1) or 
                                any subsidiary of that company and the 
                                beneficiaries of those employees;
                                    ``(III) shares held temporarily 
                                pursuant to an underwriting commitment 
                                in the normal course of an underwriting 
                                business;
                                    ``(IV) shares held in an account 
                                solely for trading purposes;
                                    ``(V) shares over which no control 
                                is held other than control of voting 
                                rights acquired in the normal course of 
                                a proxy solicitation;
                                    ``(VI) loans or other accounts 
                                receivable acquired in the normal 
                                course of business;
                                    ``(VII) shares or assets acquired 
                                in securing or collecting a debt 
                                previously contracted in good faith, 
                                during the 2-year period beginning on 
                                the date of such acquisition or for 
                                such additional time (not exceeding 3 
                                years) as the Board may permit if the 
                                Board determines that such an extension 
                                will not be detrimental to the public 
                                interest;
                                    ``(VIII) shares or assets of a 
                                savings association described in 
                                paragraph (10) or (12) of this 
                                subsection;
                                    ``(IX) shares of a savings 
                                association held by any insurance 
                                company, as defined in section 2(a)(17) 
                                of the Investment Company Act of 1940, 
                                except as provided in paragraph (11);
                                    ``(X) shares issued in a qualified 
                                stock issuance under section 10(q) of 
                                the Home Owners' Loan Act; and
                                    ``(XI) assets that are derived 
                                from, or are incidental to, activities 
                                in which institutions described in 
                                section 2(c)(2)(F) are permitted to 
                                engage,

                        except that the aggregate amount of shares held 
                        under this clause (other than under subclauses 
                        (I), (II), (III), (IV), (V), and (VIII)) may 
                        not exceed 15 percent of all outstanding shares 
                        or of the voting power of a savings 
                        association;
                    ``(B) any bank subsidiary of such company engages 
                in any activity in which the bank was not lawfully 
                engaged as of March 5, 1987, unless the bank is well 
                managed and well capitalized;
                    ``(C) any bank subsidiary of such company both--
                            ``(i) accepts demand deposits or deposits 
                        that the depositor may withdraw by check or 
                        similar means for payment to 3d parties; and
                            ``(ii) engages in the business of making 
                        commercial loans (and, for purposes of this 
                        clause, loans made in the ordinary course of a 
                        credit card operation shall not be treated as 
                        commercial loans); or
                    ``(D) after the date of the enactment of the 
                Competitive Equality Amendments of 1987, any bank 
                subsidiary of such company permits any overdraft 
                (including any intraday overdraft), or incurs any such 
                overdraft in such bank's account at a Federal reserve 
                bank, on behalf of an affiliate, other than an 
                overdraft described in paragraph (3).
            ``(3) Permissible overdrafts described.--For purposes of 
        paragraph (2)(C), an overdraft is described in this paragraph 
        if--
                    ``(A) such overdraft results from an inadvertent 
                computer or accounting error that is beyond the control 
                of both the bank and the affiliate; or
                    ``(B) such overdraft--
                            ``(i) is permitted or incurred on behalf of 
                        an affiliate which is monitored by, reports to, 
                        and is recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                            ``(ii) is fully secured, as required by the 
                        Board, by bonds, notes, or other obligations 
                        which are direct obligations of the United 
                        States or on which the principal and interest 
                        are fully guaranteed by the United States or by 
                        securities and obligations eligible for 
                        settlement on the Federal Reserve book entry 
                        system.
            ``(4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for the 
        exemption provided under such paragraph by operation of 
        paragraph (2), such exemption shall cease to apply to such 
        company and such company shall divest control of each bank it 
        controls before the end of the 180-day period beginning on the 
        date that the company receives notice from the Board that the 
        company has failed to continue to qualify for such exemption, 
        unless before the end of such 180-day period, the company has--
                    ``(A) corrected the condition or ceased the 
                activity that caused the company to fail to continue to 
                qualify for the exemption; and
                    ``(B) implemented procedures that are reasonably 
                adapted to avoid the reoccurrence of such condition or 
                activity.
            ``(5) Subsection ceases to apply under certain 
        circumstances.--This subsection shall cease to apply to any 
        company described in paragraph (1) if such company--
                    ``(A) registers as a bank holding company under 
                section 5(a) of this Act;
                    ``(B) immediately upon such registration, complies 
                with all of the requirements of this Act, and 
                regulations prescribed by the Board pursuant to this 
                Act, including the nonbanking restrictions of this 
                section; and
                    ``(C) does not, at the time of such registration, 
                control banks in more than one State, the acquisition 
                of which would be prohibited by section 3(d) of this 
                Act if an application for such acquisition by such 
                company were filed under section 3(a) of this Act.
            ``(6) Information requirement.--Each company described in 
        paragraph (1) shall, within 60 days after the date of enactment 
        of the Competitive Equality Amendments of 1987, provide the 
        Board with the name and address of such company, the name and 
        address of each bank such company controls, and a description 
        of each such bank's activities.
            ``(7) Examination.--The Board may, from time to time, 
        examine a company described in paragraph (1), or a bank 
        controlled by such company, or require reports under oath from 
        appropriate officers or directors of such company or bank 
        solely for purposes of assuring compliance with the provisions 
        of this subsection and enforcing such compliance.
            ``(8) Enforcement.--
                    ``(A) In general.--In addition to any other power 
                of the Board, the Board may enforce compliance with the 
                provisions of this Act which are applicable to any 
                company described in paragraph (1), and any bank 
                controlled by such company, under section 8 of the 
                Federal Deposit Insurance Act and such company or bank 
                shall be subject to such section (for such purposes) in 
                the same manner and to the same extent as if such 
                company or bank were a State member insured bank.
                    ``(B) Application of other act.--Any violation of 
                this Act by any company described in paragraph (1), and 
                any bank controlled by such company, may also be 
                treated as a violation of the Federal Deposit Insurance 
                Act for purposes of subparagraph (A).
                    ``(C) No effect on other authority.--No provision 
                of this paragraph shall be construed as limiting any 
                authority of the Comptroller of the Currency or the 
                Federal Deposit Insurance Corporation.
            ``(9) Tying provisions.--A company described in paragraph 
        (1) shall be--
                    ``(A) treated as a bank holding company for 
                purposes of section 106 of the Bank Holding Company Act 
                Amendments of 1970 and section 22(h) of the Federal 
                Reserve Act and any regulation prescribed under any 
                such section; and
                    ``(B) subject to the restrictions of section 106 of 
                the Bank Holding Company Act Amendments of 1970, in 
                connection with any transaction involving the products 
                or services of such company or affiliate and those of a 
                bank affiliate, as if such company or affiliate were a 
                bank and such bank were a subsidiary of a bank holding 
                company.
            ``(10) Exemption unaffected by certain emergency 
        acquisitions.--For purposes of clauses (i) and (ii)(VIII) of 
        paragraph (2)(A), an insured institution is described in this 
        paragraph if--
                    ``(A) the insured institution was acquired (or any 
                shares or assets of such institution were acquired) by 
                a company described in paragraph (1) in an acquisition 
                under section 408(m) of the National Housing Act or 
                section 13(k) of the Federal Deposit Insurance Act; and
                    ``(B) either--
                            ``(i) the insured institution is located in 
                        a State in which such company controlled a bank 
                        on March 5, 1987; or
                            ``(ii) the insured institution has total 
                        assets of $500,000,000 or more at the time of 
                        such acquisition.
            ``(11) Shares held by insurance affiliates.--Shares 
        described in clause (ii)(IX) of paragraph (2)(A) shall not be 
        excluded for purposes of clause (ii) of such paragraph if--
                    ``(A) all shares held under such clause (ii)(IX) by 
                all insurance company affiliates of such savings 
                association in the aggregate exceed 5 percent of all 
                outstanding shares or of the voting power of the 
                savings association; or
                    ``(B) such shares are acquired or retained with a 
                view to acquiring, exercising, or transferring control 
                of the savings association.
            ``(12) Exemption unaffected by certain other 
        acquisitions.--For purposes of clauses (i) and (ii)(VIII) of 
        paragraph (2)(A), an insured institution is described in this 
        paragraph if the insured institution was acquired (or any 
        shares or assets of such institution were acquired) by a 
        company described in paragraph (1)--
                    ``(A) from the Resolution Trust Corporation, the 
                Federal Deposit Insurance Corporation, or the Director 
                of the Office of Thrift Supervision, in any capacity; 
                or
                    ``(B) in an acquisition in which the insured 
                institution has been found to be in danger of default 
                (as defined in section 3 of the Federal Deposit 
                Insurance Act) by the appropriate Federal or State 
                authority.
            ``(13) Special rule relating to shares acquired in a 
        qualified stock issuance.--A company described in paragraph (1) 
        that holds shares issued in a qualified stock issuance pursuant 
        to section 10(q) of the Home Owners' Loan Act by any savings 
        association or savings and loan holding company (neither of 
        which is a subsidiary) shall not be deemed to control such 
        savings association or savings and loan holding company solely 
        because such company holds such shares unless--
                    ``(A) the company fails to comply with any 
                requirement or condition imposed by paragraph 
                (2)(A)(ii)(X) or section 10(q) of the Home Owners' Loan 
                Act with respect to such shares; or
                    ``(B) the shares are acquired or retained with a 
                view to acquiring, exercising, or transferring control 
                of the savings association or savings and loan holding 
                company.
    ``(h) Limitations on Certain Banks.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section (other than the last sentence of subsection 
        (a)(2)), a bank holding company which controls an institution 
        that became a bank as a result of the enactment of the 
        Competitive Equality Amendments of 1987 may retain control of 
        such institution if such institution does not--
                    ``(A) engage in any activity after the date of the 
                enactment of such Amendments which would have caused 
                such institution to be a bank (as defined in section 
                2(c), as in effect before such date) if such activities 
                had been engaged in before such date; or
                    ``(B) increase the number of locations from which 
                such institution conducts business after March 5, 1987.
            ``(2) Limitations cease to apply under certain 
        circumstances.--The limitations contained in paragraph (1) 
        shall cease to apply to a bank described in such paragraph at 
        such time as the acquisition of such bank, by the bank holding 
        company referred to in such paragraph, would not be prohibited 
        under section 3(d) of this Act if--
                    ``(A) an application for such acquisition were 
                filed under section 3(a) of this Act; and
                    ``(B) such bank were treated as an additional bank 
                (under section 3(d)).
    ``(i) Limitation on Bank Holding Company Affiliations.--
            ``(1) In general.--Except as otherwise provided in this 
        Act, a bank holding company may not become affiliated with any 
        company--
                    ``(A) less than 85 percent of the gross revenues of 
                which from activities conducted in the United States 
                are derived from financial activities in which such 
                company or any subsidiary of such company engages; and
                    ``(B) which has consolidated assets, at the time 
                such affiliation first occurs, of more than 
                $750,000,000.
            ``(2) Mirror image.--Except as otherwise provided in this 
        Act, no company that is, or is affiliated with, a company 
        described in subparagraphs (A) and (B) of paragraph (1) may 
        become a bank holding company.
    ``(j) Transactions with Nonfinancial Affiliates.--A subsidiary 
insured depository institution of a bank holding company may not engage 
in a covered transaction (as defined by section 23A(b)(7) of the 
Federal Reserve Act) with any affiliate unless the affiliate is engaged 
only in activities that are financial in nature (as defined in 
subsection (a)(2)).''.
    (b) Grandfather Shares Held Under Prior Exception.--A company that, 
on the date of the enactment of this Act, holds shares on the basis of 
an exception provided under section 4 of the Bank Holding Company Act 
of 1956, as in effect on the day before such date of enactment, may 
continue to retain such shares after such date subject to the same 
terms and conditions as were applicable, in accordance with such 
section 4 (as in effect on such day), to the retention of the shares by 
the company before such date of enactment.
    (c) Technical and Conforming Amendments.--
            (1) Section 4 of the Bank Holding Company Act of 1956 (12 
        U.S.C. 1843) is amended by striking subsections (d), (f), and 
        (g).
            (2) The heading and section designation for section 4 of 
        the Bank Holding Company Act of 1956 is amended to read as 
        follows:

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

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

SEC. 104. CERTAIN STATE LAWS PREEMPTED.

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

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

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

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

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

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

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

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

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

                   Subtitle B--Additional Safeguards

SEC. 111. FIREWALL SAFEGUARDS.

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

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

SEC. 112. CONSUMER PROTECTION.

    (a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811 
et seq.) is amended by adding at the end the following new section:

``SEC. 45. CONSUMER PROTECTION REGULATIONS.

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

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

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

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

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

           Subtitle C--National Council on Financial Services

SEC. 121. ESTABLISHMENT AND OPERATION OF THE COUNCIL.

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

SEC. 122. FUNCTIONS OF THE COUNCIL.

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

SEC. 123. ADVISORY COUNCIL ON COMMUNITY REVITALIZATION.

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

              Subtitle D--Bank Holding Company Supervision

SEC. 131. STREAMLINING BANK HOLDING COMPANY SUPERVISION.

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

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

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

SEC. 133. BANK HOLDING COMPANY CAPITAL.

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

SEC. 134. AUTHORITY OF STATE INSURANCE REGULATOR.

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

      Subtitle E--Subsidiaries of Insured Depository Institutions

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

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

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

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

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

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

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

SEC. 143. RULES APPLICABLE TO FINANCIAL SUBSIDIARIES.

    (a) Transactions Between Financial Subsidiaries and Other 
Affiliates.--Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is 
amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d), the following new 
        subsection:
    ``(e) Rules Relating to Banks With Financial Subsidiaries.--
            ``(1) Financial subsidiary defined.--For purposes of this 
        section and section 23B, the term `financial subsidiary' means 
        a company which--
                    ``(A) is a subsidiary of a bank (other than a 
                corporation organized under section 25A of the Federal 
                Reserve Act or a corporation operating under section 25 
                of such Act); and
                    ``(B) is engaged in a financial activity (as 
                defined in section 5136A(a)(4)) that is not a 
                permissible activity for a national bank to engage in 
                directly.
            ``(2) Application to transactions between a financial 
        subsidiary of a bank and the bank.--For purposes of applying 
        this section and section 23B to a transaction between a 
        financial subsidiary of a bank and the bank (or between such 
        financial subsidiary and any other subsidiary of the bank which 
        is not a financial subsidiary) and notwithstanding subsection 
        (b)(2) and section 23B(d)(1), the financial subsidiary of the 
        bank--
                    ``(A) shall be an affiliate of the bank and any 
                other subsidiary of the bank which is not a financial 
                subsidiary; and
                    ``(B) shall not be treated as a subsidiary of the 
                bank.
            ``(3) Application to transactions between financial 
        subsidiary and nonbank affiliates.--
                    ``(A) In general.--A transaction between a 
                financial subsidiary and an affiliate of the financial 
                subsidiary shall not be deemed to be a transaction 
                between a subsidiary of a national bank and an 
                affiliate of the bank for purposes of section 23A or 
                section 23B of the Federal Reserve Act.
                    ``(B) Certain affiliates excluded.--For purposes of 
                subparagraph (A) and notwithstanding paragraph (4), the 
                term `affiliate' shall not include a bank, or a 
                subsidiary of a bank, which is engaged exclusively in 
                activities permissible for a national bank to engage in 
                directly.
            ``(4) Equity investments excluded subject to the approval 
        of the banking agency.--Subsection (a)(1) shall not apply so as 
        to limit the equity investment of a bank in a financial 
        subsidiary of such bank, except that any investment that 
        exceeds the amount of a dividend that the bank could pay at the 
        time of the investment without obtaining prior approval of the 
        appropriate Federal banking agency and is in excess of the 
        limitation which would apply under subsection (a)(1), but for 
        this paragraph, may be made only with the approval of the 
        appropriate Federal banking agency (as defined in section 3(q) 
        of the Federal Deposit Insurance Act) with respect to such 
        bank.''.
    (b) Treatment of Financial Subsidiaries Under Other Provisions of 
Law.--
            (1) Bank Holding Company Act Amendments of 1970.--Section 
        106(a) of the Bank Holding Company Act Amendments of 1970 is 
        amended by adding at the end the following new sentence: ``For 
        purposes of this section, a financial subsidiary (as defined in 
        section 5136A(a)(5)(A) of the Revised Statutes of the United 
        States or referenced in the 20th undesignated paragraph of 
        section 9 of the Federal Reserve Act or section 24(d)(3)(A) of 
        the Federal Deposit Insurance Act) shall be deemed to be a 
        subsidiary of a bank holding company, and not a subsidiary of a 
        bank.''; and
            (2) Federal Reserve Act.--The 20th undesignated paragraph 
        of section 9 of the Federal Reserve Act (12 U.S.C. 335) is 
        amended by adding at the end of the following new sentence: 
        ``To the extent permitted under State law, a State member bank 
        may acquire or establish and retain a financial subsidiary (as 
        defined in section 5136A(a)(3)(A) of the Revised Statutes of 
        the United States, except that all references in that section 
        to the Comptroller of the Currency, the Comptroller, or 
        regulations or orders of the Comptroller shall be deemed to be 
        references to the Board or regulations or orders of the 
        Board.''.

                 Subtitle F--Direct Activities of Banks

SEC. 151. POWERS OF NATIONAL BANKS.

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

SEC. 152. BANKING PRODUCTS DEFINED.

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

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

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

             Subtitle G--Noninsured Depository Institutions

SEC. 161. WHOLESALE FINANCIAL INSTITUTIONS.

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

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

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

``5136B. National wholesale financial institutions.''.
    (b) State Wholesale Financial Institutions.--The Federal Reserve 
Act (12 U.S.C. 221 et seq.) is amended by inserting after section 9A 
the following new section:

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

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

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

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

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

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

               Subtitle H--Federal Home Loan Bank System

SEC. 171. FEDERAL HOME LOAN BANKS-

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

SEC. 172. MEMBERSHIP AND COLLATERAL.

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

SEC. 172A. THE OFFICE OF FINANCE.

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

``SEC. 5. THE OFFICE OF FINANCE.

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

SEC. 172B. MANAGEMENT OF BANKS.

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

SEC. 173. ADVANCES TO NONMEMBER BORROWERS.

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

SEC. 174. POWERS AND DUTIES OF BANKS.

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

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

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

SEC. 174B. TECHNICAL AMENDMENTS.

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

SEC. 175. DEFINITIONS.

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

SEC. 176. RESOLUTION FUNDING CORPORATION

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

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

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

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

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

SEC. 178. INVESTMENTS.

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

SEC. 179. FEDERAL HOUSING FINANCE BOARD.

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

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

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

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

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

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

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

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

SEC. 184. ANNUAL GAO REPORT.

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

SEC. 185. APPLICABILITY OF ANTITRUST LAWS.

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

SEC. 186. EFFECTIVE DATE.

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

             Subtitle J--Redomestication of Mutual Insurers

SEC. 191. REDOMESTICATION OF MUTUAL INSURERS.

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

SEC. 192. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.

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

SEC. 193. DEFINITIONS.

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

 SEC. 194. EFFECTIVE DATE.

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

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

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

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

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

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

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

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

                  Subtitle L--Effective Date of Title

SEC. 199. EFFECTIVE DATE.

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

                    TITLE II--FUNCTIONAL REGULATION

                    Subtitle A--Brokers and Dealers

SEC. 201. DEFINITION OF BROKER.

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

SEC. 202. DEFINITION OF DEALER.

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

SEC. 203. BANK BROKER AND DEALER ACTIVITIES.

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

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

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

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

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

SEC. 206. EFFECTIVE DATE.

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

             Subtitle B--Bank Investment Company Activities

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

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

SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

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

SEC. 213. INDEPENDENT DIRECTORS.

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

SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.

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

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

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

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

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

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

    (a) Investment Adviser.--Section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended in 
subparagraph (A), by striking ``investment company'' and inserting 
``investment company, except that the term `investment adviser' 
includes any bank or bank holding company to the extent that such bank 
or bank holding company acts as an investment adviser to a registered 
investment company, or if, in the case of a bank, such services are 
performed through 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 of this Act or 
                the Investment Company Act of 1940 and rules and 
                regulations promulgated under this Act or the 
                Investment Company Act of 1940.''.

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

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

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

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

SEC. 220. INTERAGENCY CONSULTATION.

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

``SEC. 210A. CONSULTATION.

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

SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.

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

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

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

SEC. 223. CONFORMING CHANGE IN DEFINITION.

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

SEC. 224. EFFECTIVE DATE.

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

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

SEC. 301. SHORT TITLE; DEFINITIONS.

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

  Subtitle A--Facilitating Conversion of Savings Associations to Banks

SEC. 311. CONVERSION TO STATE OR NATIONAL BANKS.

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

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

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

``SEC. 5133A. MUTUAL NATIONAL BANKS.

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

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

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

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

SEC. 313. GRANDFATHERED ACTIVITIES OF SAVINGS ASSOCIATIONS.

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

SEC. 314. BRANCHES OF FORMER SAVINGS ASSOCIATIONS.

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

SEC. 315. PROGRAMS FOR PROMOTING HOUSING FINANCE.

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

SEC. 316. SAVINGS AND LOAN HOLDING COMPANIES.

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

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

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

SEC. 318. COST OF FUNDS INDEXES.

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

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

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

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

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

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

SEC. 323. HOME OWNERS' LOAN ACT REPEALED.

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

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

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

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

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

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

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

                   Subtitle C--Combining OTS and OCC

SEC. 331. PROHIBITION OF MERGER OR CONSOLIDATION REPEALED.

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

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

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

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

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

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

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

SEC. 335. CONTINUATION PROVISIONS.

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

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

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

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

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

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

SEC. 343. AMENDMENTS TO THE FEDERAL RESERVE ACT.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 358. AMENDMENTS TO THE NATIONAL HOUSING ACT.

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 365. EFFECTIVE DATE.

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

   Subtitle E--Technical and Conforming Amendments to Other Statutes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 378. EFFECTIVE DATE.

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

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

SEC. 401. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

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

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

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

SEC. 403. PURPOSE.

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

SEC. 404. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

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

SEC. 405. MEMBERSHIP.

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

SEC. 406. CORPORATE POWERS.

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

SEC. 407. BOARD OF DIRECTORS.

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

SEC. 408. OFFICERS.

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

SEC. 409. MEETINGS OF BOARD OF DIRECTORS.

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

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

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

SEC. 411. BORROWING AUTHORITY.

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

SEC. 412. ASSESSMENTS.

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

SEC. 413. FUNCTIONS OF THE COUNCIL.

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

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

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

SEC. 415. RELATIONSHIP TO STATE LAW.

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

SEC. 416. COORDINATION WITH OTHER REGULATORS.

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

SEC. 417. JUDICIAL REVIEW.

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

SEC. 418. DEFINITIONS.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Services 
Act of 1997''.
    (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 SECURITIES FIRMS, INSURANCE 
                 COMPANIES, AND DEPOSITORY INSTITUTIONS

                        Subtitle A--Affiliations

Sec. 101. Glass-Steagall Act reformed.
Sec. 102. Activity restrictions applicable to bank holding companies 
                            which are not financial holding companies.
Sec. 103. Financial holding companies.
Sec. 104. Certain State affiliation laws preempted.
Sec. 105. Mutual bank holding companies authorized.
Sec. 106. Prohibition on deposit production offices.
Sec. 107. Clarification of branch closure requirements.
Sec. 108. Amendments relating to limited purpose banks.
  Subtitle B--Streamlining Supervision of Financial Holding Companies

Sec. 111. Streamlining financial holding company supervision.
Sec. 112. Elimination of application requirement for financial holding 
                            companies.
Sec. 113. Authority of State insurance regulator and Securities and 
                            Exchange Commission.
Sec. 114. Prudential safeguards.
Sec. 115. Examination of investment companies.
Sec. 116. Limitation on rulemaking, prudential, supervisory, and 
                            enforcement authority of the Board.
               Subtitle C--Subsidiaries of National Banks

Sec. 121. Permissible activities for subsidiaries of national banks.
Sec. 122. Misrepresentations regarding depository institution liability 
                            for obligations of affiliates.
Sec. 123. Repeal of stock loan limit in Federal Reserve Act.
  Subtitle D--Investment Bank Holding Companies; Wholesale Financial 
                              Institutions

              Chapter 1--Investment Bank Holding Companies

Sec. 131. Investment bank holding companies established.
Sec. 132. Authorization to release reports.
Sec. 133. Conforming amendments.
              Chapter 2--Wholesale Financial Institutions

Sec. 136. Wholesale financial institutions.
  Subtitle E--Streamlining Antitrust Review of Bank Acquisitions and 
                                Mergers

Sec. 141. Amendments to the Bank Holding Company act of 1956.
Sec. 142. Amendments to the Federal Deposit Insurance Act to vest in 
                            the attorney general sole responsibility 
                            for antitrust review of depository 
                            institution mergers.
Sec. 143. Information filed by depository institutions; interagency 
                            data sharing.
Sec. 144. Applicability of antitrust laws.
Sec. 145. Clarification of status of subsidiaries and affiliates.
Sec. 146. Effective date.
Subtitle F--Applying the Principles of National Treatment and Equality 
   of Competitive Opportunity to Foreign Banks and Foreign Financial 
                              Institutions

Sec. 151. Applying the principles of national treatment and equality of 
                            competitive opportunity to foreign banks 
                            that are financial holding companies.
Sec. 152. Applying the principles of national treatment and equality of 
                            competitive opportunity to foreign banks 
                            and foreign financial institutions that are 
                            wholesale financial institutions.
                  Subtitle G--Effective Date of Title

Sec. 171. 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. Grievance process.
Sec. 205. Information sharing.
Sec. 206. Banking products, derivative instrument, and qualified 
                            investor defined.
Sec. 207. Government securities defined.
Sec. 208. Effective date.
             Subtitle B--Bank Investment Company Activities

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

Sec. 241. Study of methods to inform investors and consumers of 
                            uninsured products.
                          TITLE III--INSURANCE

               Subtitle A--State Regulation of Insurance

Sec. 301. State regulation of the business of insurance.
Sec. 302. Mandatory insurance licensing requirements.
Sec. 303. Functional regulation of insurance.
Sec. 304. Insurance underwriting in national banks.
Sec. 305. New bank agency activities only through acquisition of 
                            existing licensed agents.
Sec. 306. Title insurance activities of national banks and their 
                            affiliates.
Sec. 307. Expedited and equalized dispute resolution for financial 
                            regulators.
Sec. 308. Consumer protection regulations.
Sec. 309. Certain State affiliation laws preempted for insurance 
                            companies and affiliates.
             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.
TITLE IV--MERGER OF BANK AND THRIFT CHARTERS, REGULATORS, AND INSURANCE 
                                 FUNDS

Sec. 401. Short title; definitions.
  Subtitle A--Facilitating Conversion of Savings Associations to Banks

Sec. 411. Conversion to State or national banks.
Sec. 412. Mutual national banks and Federal mutual bank holding 
                            companies authorized.
Sec. 413. Grandfathered activities of savings associations.
Sec. 414. Branches of former savings associations.
Sec. 415. Programs for promoting housing finance.
Sec. 416. Savings and loan holding companies.
Sec. 417. Treatment of references in adjustable rate mortgages.
Sec. 418. Cost of funds indexes.
Subtitle B--Ending Separate Federal Regulation of Savings Associations 
                 and Savings and Loan Holding Companies

Sec. 421. State savings associations treated as State banks under 
                            Federal banking law.
Sec. 422. Home Owners' Loan Act repealed.
Sec. 423. Conforming amendment reflecting elimination of the Federal 
                            thrift charter and the separate system of 
                            thrift regulation.
Sec. 424. Conforming amendments to the Federal Home Loan Bank Act.
Sec. 425. Amendments to title 11, United States Code.
                   Subtitle C--Combining OTS and OCC

Sec. 431. Prohibition of merger or consolidation repealed.
Sec. 432. Secretary of the Treasury required to formulate plans for 
                            combining Office of Thrift Supervision with 
                            Office of the Comptroller of the Currency.
Sec. 433. Office of Thrift Supervision and position of Director of the 
                            Office of Thrift Supervision abolished.
Sec. 434. Reconfiguration of Board of Directors of FDIC as a result of 
                            removal of Director of the Office of Thrift 
                            Supervision.
Sec. 435. Continuation provisions.
   Subtitle D--Technical and Conforming Amendments to the Depository 
                          Institution Statutes

Sec. 441. Amendments to the Federal Deposit Insurance Act.
Sec. 442. Amendment to the Bank Holding Company Act of 1956.
Sec. 443. Amendments to the Federal Reserve Act.
Sec. 444. Amendments to Alternative Mortgage Transaction Parity Act of 
                            1982.
Sec. 445. Amendments to the Bank Protection Act of 1968.
Sec. 446. Amendments to the Community Reinvestment Act of 1977.
Sec. 447. Amendments to the Depository Institutions Deregulation and 
                            Monetary Control Act of 1980.
Sec. 448. Amendments to the Depository Institution Management 
                            Interlocks Act.
Sec. 449. Amendment to the Economic Growth and Regulatory Paperwork 
                            Reduction Act of 1996.
Sec. 450. Amendment to the Emergency Home Finance Act of 1970.
Sec. 451. Amendments to the Expedited Funds Availability Act.
Sec. 452. Amendments to the Federal Credit Union Act.
Sec. 453. Amendments to the Federal Financial Institutions Examination 
                            Council Act of 1978.
Sec. 454. Amendments to the Financial Institutions Reform, Recovery, 
                            and Enforcement Act of 1989.
Sec. 455. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 456. Amendments to the Housing and Community Development Act of 
                            1992.
Sec. 457. Amendment to the International Banking Act of 1978.
Sec. 458. Amendments to the National Housing Act.
Sec. 459. Amendment to Public Law 93-495.
Sec. 460. Amendment to the Real Estate Settlement Procedures Act of 
                            1974.
Sec. 461. Amendment to the Revised Statutes of the United States.
Sec. 462. Amendments to the Riegle Community Development and Regulatory 
                            Improvement Act of 1994.
Sec. 463. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 464. Amendments to the Truth in Savings Act.
Sec. 465. Effective date.

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

                        Subtitle A--Affiliations

SEC. 101. GLASS-STEAGALL ACT REFORMED.

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

SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK HOLDING COMPANIES 
              WHICH 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 under this paragraph 
        as of the day before the date of the enactment of the Financial 
        Services Act of 1997, to be so closely related to banking as to 
        be a proper incident thereto (subject to such terms and 
        conditions contained in such regulation, 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 striking the period and adding at the end the 
        following: ``as of the day before the date of enactment of the 
        Financial Services Act of 1997.''.

SEC. 103. FINANCIAL HOLDING COMPANIES.

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

``SEC. 6. FINANCIAL HOLDING COMPANIES.

    ``(a) Financial Holding Company Defined.--For purposes of this 
section, the term `financial holding company' means a bank holding 
company which meets the requirements of subsection (b).
    ``(b) Eligibility Requirements for Financial Holding Companies.--
            ``(1) In general.--No bank holding company may engage in 
        any activity or directly or indirectly acquire or retain shares 
        of any company under this section unless the bank holding 
        company meets the following requirements:
                    ``(A) All of the subsidiary depository institutions 
                of the bank holding company are well capitalized.
                    ``(B) All of the subsidiary depository institutions 
                of the bank holding company are well managed.
                    ``(C) All of the subsidiary depository institutions 
                of the bank holding company have achieved a rating of 
                `satisfactory record of meeting community credit 
                needs', or better, at the most recent examination of 
                each such institution under the Community Reinvestment 
                Act of 1977.
                    ``(D) The company has filed with the Board a 
                declaration that the company elects to be a financial 
                holding company and certifying that the company meets 
                the requirements of subparagraphs (A) through (C).
            ``(2) Foreign banks and companies.--For purposes of 
        paragraph (1), the Board shall establish and apply comparable 
        capital standards to a foreign bank that operates a branch or 
        agency or owns or controls a bank or commercial lending company 
        in the United States, and any company that owns or controls 
        such foreign bank, giving due regard to the principle of 
        national treatment and equality of competitive opportunity.
            ``(3) Limited exclusions from community needs requirements 
        for newly acquired depository institutions.--
                    ``(A) In general.--If the requirements of 
                subparagraph (B) are met, any depository institution 
                acquired by a bank holding company during the 24-month 
                period preceding the submission of a declaration under 
                paragraph (1)(D) and any depository institution 
                acquired after the submission of such declaration may 
                be excluded for purposes of paragraph (1)(C) until the 
                later of--
                            ``(i) the end of the 24-month period 
                        beginning on the date the acquisition of the 
                        depository institution by such company is 
                        consummated; or
                            ``(ii) the date of completion of the 1st 
                        examination of such depository institution 
                        under the Community Reinvestment Act of 1977 
                        which is conducted after the date of the 
                        acquisition of the depository institution.
                    ``(B) Requirements.--The requirements of this 
                subparagraph are met with respect to any bank holding 
                company referred to in subparagraph (A) if--
                            ``(i) the bank holding company has 
                        submitted an affirmative plan to the 
                        appropriate Federal banking agency to take such 
                        action as may be necessary in order for such 
                        institution to achieve a rating of 
                        `satisfactory record of meeting community 
                        credit needs', or better, at the next 
                        examination of the institution under the 
                        Community Reinvestment Act of 1977; and
                            ``(ii) the plan has been approved by such 
                        agency.
    ``(c) Engaging in Activities Financial in Nature.--
            ``(1) In general.--Notwithstanding section 4(a), a 
        financial holding company and a Board supervised investment 
        bank holding company may engage in any activity and acquire and 
        retain the shares of any company the activities of which the 
        Board has determined (by regulation or order) to be financial 
        in nature or incidental to such financial activities.
            ``(2) Factors to be considered.--In determining whether an 
        activity is financial in nature or incidental to financial 
        activities, the Board shall take into account--
                    ``(A) the purposes of this Act and the Financial 
                Services Act of 1997;
                    ``(B) changes or reasonably expected changes in the 
                marketplace in which bank 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 bank holding company and the 
                affiliates of a bank holding company to--
                            ``(i) compete effectively with any company 
                        seeking to provide financial services in the 
                        United States;
                            ``(ii) use any available or emerging 
                        technological means, including any application 
                        necessary to protect the security or efficacy 
                        of systems for the transmission of data or 
                        financial transactions, in providing financial 
                        services; and
                            ``(iii) offer customers any available or 
                        emerging technological means for using 
                        financial services.
            ``(3) Activities that are financial in nature.--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.
                    ``(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 enactment of the Financial Services Act of 
                1997, 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 the United States; and
                            ``(ii) the Board has determined, under 
                        regulations issued pursuant to section 4(c)(13) 
                        of this Act (as in effect on the day before the 
                        date of enactment of the Financial Services Act 
                        of 1997) 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 without limitation debt or equity 
                securities, partnership interests, trust certificates 
                or other instruments representing ownership) of a 
                company or other entity, whether or not constituting 
                control of such company or entity, engaged in any 
                activity 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 a securities 
                        affiliate or an affiliate thereof as part of a 
                        bona fide underwriting or merchant 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 only for such a period of 
                        time as will permit the sale or disposition 
                        thereof on a reasonable basis consistent with 
                        the nature of the activities described in 
                        clause (ii); and
                            ``(iv) during the period such shares, 
                        assets, or ownership interests are held, the 
                        bank holding company does not actively 
                        participate in the day to day management or 
                        operation of such company or entity, except 
                        insofar as necessary to achieve the objectives 
                        of clause (ii).
                    ``(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 without limitation debt or equity 
                securities, partnership interests, trust certificates 
                or other instruments representing ownership) of a 
                company or other entity, whether or not constituting 
                control of such company or entity, engaged in any 
                activity not authorized pursuant to this section if--
                            ``(i) the shares, assets, or ownership 
                        interests are not acquired or held by a 
                        depository institution or a subsidiary of a 
                        depository institution;
                            ``(ii) such shares, assets, or ownership 
                        interests are acquired and held by an insurance 
                        company that is predominantly engaged in 
                        underwriting life, accident and health, or 
                        property and casualty insurance (other than 
                        credit-related insurance);
                            ``(iii) such shares, assets, or ownership 
                        interests represent an investment made in the 
                        ordinary course of business of such insurance 
                        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 directly or 
                        indirectly participate in the day-to-day 
                        management or operation of the company or 
                        entity except insofar as necessary to achieve 
                        the objectives of clauses (ii) and (iii).
            ``(4) Actions required.--The Board shall, by regulation or 
        order, define, consistent with the purposes of this Act, the 
        following activities as, and the extent to which such 
        activities are, financial in nature or incidental to activities 
        which are financial in nature:
                    ``(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.
            ``(5) Post consummation notification.--
                    ``(A) In general.--A financial holding company and 
                a Board supervised investment bank 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 no later than 30 
                calendar days after commencing the activity or 
                consummating the acquisition.
                    ``(B) Approval not required for certain financial 
                activities.--Except as provided in section 4(j) with 
                regard to the acquisition of a savings association, a 
                financial holding company and a Board supervised 
                investment bank holding company may commence any 
                activity, or acquire any company, pursuant to paragraph 
                (3) or any regulation prescribed or order issued under 
                paragraph (4), without prior approval of the Board.
    ``(d) Provisions Applicable to Financial Holding Companies That 
Fail To Meet Requirements.--
            ``(1) In general.--If the Board finds that a financial 
        holding company is not in compliance with the requirements of 
        subparagraph (A), (B), or (C) of subsection (b)(1), the Board 
        shall give notice of such finding to the company.
            ``(2) Agreement to correct conditions required.--Within 45 
        days of receipt by a financial holding company of a notice 
        given under paragraph (1) (or such additional period as the 
        Board may permit), the company shall execute an agreement 
        acceptable to the Board to comply with the requirements 
        applicable to a financial holding company.
            ``(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 the company or any 
        affiliate of the company as the Board determines to be 
        appropriate under the circumstances.
            ``(4) Failure to correct.--If, after receiving a notice 
        under paragraph (1), a financial holding company does not--
                    ``(A) execute and implement an agreement in 
                accordance with paragraph (2);
                    ``(B) comply with any limitations imposed under 
                paragraph (3);
                    ``(C) in the case of a notice of failure to comply 
                with subsection (b)(1)(A), restore each depository 
                institution subsidiary to well capitalized status 
                before the end of the 180-day period beginning on the 
                date such notice is received by the company (or such 
                other period permitted by the Board); or
                    ``(D) in the case of a notice of failure to comply 
                with subparagraph (B) or (C) of subsection (b)(1), 
                restore compliance with any such subparagraph by the 
                date the next examination of the depository institution 
                subsidiary is completed or by the end of such other 
                period as the Board determines to be appropriate,
        the Board may require such company, under such terms and 
        conditions as may be imposed by the Board and subject to such 
        extension of time as may be granted in the Board's discretion, 
        to divest control of any depository institution subsidiary or, 
        at the election of the financial holding company, instead to 
        cease to engage in any activity conducted by such company or 
        its subsidiaries pursuant to this section.
            ``(5) Consultation.--In taking any action under this 
        subsection, the Board shall consult with all relevant Federal 
        and State regulatory agencies.
    ``(e) Safeguards for Bank Subsidiaries.--A financial holding 
company shall assure that--
            ``(1) the procedures of the holding company for identifying 
        and managing financial and operational risks within the 
        company, and the subsidiaries of such company, adequately 
        protect the subsidiaries of such company which are insured 
        depository institutions from such risks;
            ``(2) the holding company has reasonable policies and 
        procedures to preserve the separate corporate identity and 
        limited liability of such company and the subsidiaries of such 
        company, for the protection of the company's subsidiary insured 
        depository institutions; and
            ``(3) the holding company complies with this section.
    ``(f) Nonfinancial Activities.--
            ``(1) In general.--Notwithstanding section 4(a), a 
        financial holding company may engage in activities which are 
        not (or have not been determined to be) financial in nature or 
        incidental to activities which are financial in nature, or 
        acquire and retain ownership and control of the shares of a 
        company engaged in such activities, if--
                    ``(A) the aggregate annual gross revenues derived 
                from all such activities and all such companies does 
                not exceed the lesser of--
                            ``(i) 5 percent of the consolidated annual 
                        gross revenues of the financial holding 
                        company; or
                            ``(ii) $500,000,000;
                    ``(B) the consolidated total assets of any company 
                the shares of which are acquired by the financial 
                holding company pursuant to this paragraph are less 
                than $750,000,000 at the time the shares are acquired 
                by the holding company; and
                    ``(C) the holding company provides notice to the 
                Board within 30 days of commencing the activity or 
                acquiring the ownership or control.
            ``(2) Inclusion of grandfathered activities.--For purposes 
        of determining the limits contained in paragraph (1)(A), the 
        gross revenues derived from all activities conducted, and 
        companies the shares of which are held, under subsection (g) 
        shall be considered to be derived or held under this 
        subsection.
            ``(3) Foreign banks.--In lieu of the limitation contained 
        in paragraph (1)(A) in the case of a foreign bank or a company 
        that owns or controls a foreign bank which engages in any 
        activity or acquires or retains ownership or control of shares 
        of any company pursuant to paragraph (1), the aggregate annual 
        gross revenues derived from all such activities and all such 
        companies in the United States shall not exceed the lesser of--
                    ``(A) 5 percent of the consolidated annual gross 
                revenues of the foreign bank or company in the United 
                States derived from any branch, agency, commercial 
                lending company, or depository institution controlled 
                by the foreign bank or company and any subsidiary 
                engaged in the United States in activities permissible 
                under section 4 or 6; or
                    ``(B) $500,000,000.
            ``(4) Indexing revenue test.--After December 31, 1998, the 
        Board shall annually adjust the dollar amount contained in 
        paragraphs (1)(A) and (3) by the annual percentage increase in 
        the Consumer Price Index for Urban Wage Earners and Clerical 
        Workers published by the Bureau of Labor Statistics.
            ``(5) Nonapplicability of other exemption.--Any foreign 
        bank or company that owns or controls a foreign bank which 
        engages in any activity or acquires or retains ownership or 
        control of shares of any company pursuant to this subsection 
        shall not be eligible for any exception described in section 
        2(h).
    ``(g) Authority To Retain Limited Nonfinancial Activities and 
Affiliations.--
            ``(1) In general.--Notwithstanding subsection (f)(1) and 
        section 4(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 
        Financial Services Act of 1997 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, 1997;
                    ``(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, 1997, and other 
                activities permissible under this Act.
            ``(2) Predominantly financial.--For purposes of this 
        subsection, a company is predominantly engaged in financial 
        activities if, as of the day before the company becomes a 
        financial holding company, the annual gross revenues derived by 
        the holding company and all subsidiaries of the holding 
        company, on a consolidated basis, from engaging in activities 
        that are financial in nature or are incidental to activities 
        that are financial in nature under subsection (c) 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 which is 
        engaged in any activity which the Board has not determined to 
        be financial in nature or incidental to activities that are 
        financial in nature under subsection (c).
            ``(4) Cross marketing restrictions applicable to commercial 
        activities.--A depository institution controlled by a financial 
        holding company shall not--
                    ``(A) 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, subsection (f), or subparagraph (H) or 
                (I) of subsection (c)(3); or
                    ``(B) permit any of its products or services to be 
                offered or marketed, directly or through any 
                arrangement, by or through any company described in 
                subparagraph (A).
            ``(5) Transactions with nonfinancial affiliates.--An 
        insured depository institution controlled by a financial 
        holding company may not engage in a covered transaction (as 
        defined by section 23A(b)(7) of the Federal Reserve Act) with 
        any affiliate controlled by the company pursuant to this 
        subsection or subparagraph (H) or (I) of subsection (c)(3).
    ``(h) Developing Activities.--A financial holding company and a 
Board supervised investment bank holding company may engage, or 
directly or indirectly or acquire shares of any company engaged, in any 
activity that the Board has not determined to be financial in nature or 
incidental to financial activities under subsection (c) if--
            ``(1) the holding company reasonably concludes that the 
        activity is financial in nature or incidental to financial 
        activities;
            ``(2) the gross revenues from all activities conducted 
        under this subsection represent less than 5 percent of the 
        consolidated gross revenues of the holding company;
            ``(3) the aggregate total assets of all companies the 
        shares of which are held under this subsection do not exceed 5 
        percent of the holding company's consolidated total assets;
            ``(4) the total capital invested in activities conducted 
        under this subsection represents less than 5 percent of the 
        consolidated total capital of the holding company;
            ``(5) the Board has not previously determined that the 
        activity is not financial in nature or incidental to financial 
        activities under subsection (c); and
            ``(6) the holding company provides written notification to 
        the Board describing the activity commenced or conducted by the 
        company acquired no later than 10 business days after 
        commencing the activity or consummating the acquisition.''.

SEC. 104. CERTAIN STATE AFFILIATION LAWS PREEMPTED.

    (a) In General.--Section 7 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1846) is amended by adding at the end the following new 
subsection:
    ``(c) Preemption of Certain State Restrictions.--
            ``(1) Affiliations.--No State may by law, regulation, 
        order, interpretation, or otherwise, prevent or restrict an 
        insured depository institution or a wholesale financial 
        institution from being affiliated with an entity (including an 
        entity engaged in insurance activities) as authorized by this 
        Act or section 17(i) of the Securities Exchange Act of 1934.
            ``(2) Certain activities conducted in conjunction with 
        affiliates.--No State may by law, regulation, order, 
        interpretation, or otherwise, prevent a national bank or a 
        wholesale financial institution from engaging, or significantly 
        interfere with the ability of such national bank or wholesale 
        financial institution to engage, directly or indirectly, or in 
        conjunction with an affiliate referred to in paragraph (1), in 
        any activity as authorized under section 6 or 10 of this Act or 
        section 17(i) of the Securities Exchange Act of 1934.''.
    (b) Technical and Conforming Amendment.--Section 7(a) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1846(a)) is amended by striking 
``No provision'' and inserting ``Except as provided in subsection (c), 
no provision''.

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

    (a) In General.--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.

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

SEC. 107. CLARIFICATION OF BRANCH CLOSURE REQUIREMENTS.

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

SEC. 108. AMENDMENTS RELATING TO LIMITED PURPOSE BANKS.

    Section 4(f) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1843(f)) is amended--
            (1) in paragraph (2)(A)(ii)--
                    (A) by striking ``and'' at the end of subclause 
                (IX);
                    (B) by inserting ``and'' after the semicolon at the 
                end of subclause (X); and
                    (C) by inserting after subclause (X) the following 
                new subclause:
                                    ``(XI) assets that are derived 
                                from, or are incidental to, activities 
                                in which institutions described in 
                                section 2(c)(2)(F) are permitted to 
                                engage,'';
            (2) in paragraph (2), by striking subparagraph (B) and 
        inserting the following new subparagraphs:
                    ``(B) any bank subsidiary of such company engages 
                in any activity in which the bank was not lawfully 
                engaged as of March 5, 1987, unless the bank is well 
                managed and well capitalized;
                    ``(C) any bank subsidiary of such company both--
                            ``(i) accepts demand deposits or deposits 
                        that the depositor may withdraw by check or 
                        similar means for payment to third parties; and
                            ``(ii) engages in the business of making 
                        commercial loans (and, for purposes of this 
                        clause, loans made in the ordinary course of a 
                        credit card operation shall not be treated as 
                        commercial loans); or
                    ``(D) after the date of the enactment of the 
                Competitive Equality Amendments of 1987, any bank 
                subsidiary of such company permits any overdraft 
                (including any intraday overdraft), or incurs any such 
                overdraft in such bank's account at a Federal reserve 
                bank, on behalf of an affiliate, other than an 
                overdraft described in paragraph (3).''; and
            (3) by striking paragraphs (3) and (4) and inserting the 
        following new paragraphs:
            ``(3) Permissible overdrafts described.--For purposes of 
        paragraph (2)(D), an overdraft is described in this paragraph 
        if--
                    ``(A) such overdraft results from an inadvertent 
                computer or accounting error that is beyond the control 
                of both the bank and the affiliate; or
                    ``(B) such overdraft--
                            ``(i) is permitted or incurred on behalf of 
                        an affiliate which is monitored by, reports to, 
                        and is recognized as a primary dealer by the 
                        Federal Reserve Bank of New York; and
                            ``(ii) is fully secured, as required by the 
                        Board, by bonds, notes, or other obligations 
                        which are direct obligations of the United 
                        States or on which the principal and interest 
                        are fully guaranteed by the United States or by 
                        securities and obligations eligible for 
                        settlement on the Federal Reserve book entry 
                        system.
            ``(4) Divestiture in case of loss of exemption.--If any 
        company described in paragraph (1) fails to qualify for the 
        exemption provided under such paragraph by operation of 
        paragraph (2), such exemption shall cease to apply to such 
        company and such company shall divest control of each bank it 
        controls before the end of the 180-day period beginning on the 
        date that the company receives notice from the Board that the 
        company has failed to continue to qualify for such exemption, 
        unless before the end of such 180-day period, the company has--
                    ``(A) corrected the condition or ceased the 
                activity that caused the company to fail to continue to 
                qualify for the exemption; and
                    ``(B) implemented procedures that are reasonably 
                adapted to avoid the reoccurrence of such condition or 
                activity.''.

  Subtitle B--Streamlining Supervision of Financial Holding Companies

SEC. 111. STREAMLINING FINANCIAL HOLDING COMPANY SUPERVISION.

    Section 5(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1844(c)) is amended to read as follows:
    ``(c) Reports and Examinations.--
            ``(1) Reports.--
                    ``(A) In general.--The Board from time to time may 
                require any bank holding company 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 
                        holding company; and
                            ``(ii) compliance by the company or 
                        subsidiary with applicable provisions of this 
                        Act.
                    ``(B) Use of existing reports.--
                            ``(i) In general.--The Board shall, to the 
                        fullest extent possible, accept reports in 
                        fulfillment of the Board's reporting 
                        requirements under this paragraph that a bank 
                        holding company or any subsidiary of such 
                        company has provided or been required to 
                        provide to other Federal and State supervisors 
                        or to appropriate self-regulatory 
                        organizations.
                            ``(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) Required use of publicly reported 
                        information.--The Board shall, to the fullest 
                        extent possible, accept in fulfillment of any 
                        reporting or recordkeeping requirements under 
                        this Act information that is otherwise required 
                        to be reported publicly and externally audited 
                        financial statements.
                            ``(iv) Reports filed with other agencies.--
                        In the event the Board requires a report from a 
                        functionally regulated nondepository 
                        institution subsidiary of a bank holding 
                        company of a kind that is not required by 
                        another Federal or State regulator or 
                        appropriate self-regulatory organization, the 
                        Board shall request that the appropriate 
                        regulator or self-regulatory organization 
                        obtain such report. 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 its subsidiary depository 
                        institution or compliance with this Act, the 
                        Board may require such subsidiary to provide 
                        such a report to the Board.
                    ``(C) Definition.--For purposes of this subsection, 
                the term `functionally regulated nondepository 
                institution' means--
                            ``(i) a broker or dealer registered under 
                        the Securities Exchange Act of 1934;
                            ``(ii) an investment adviser registered 
                        under the Investment Advisers Act of 1940, with 
                        respect to the investment advisory activities 
                        of such investment adviser and activities 
                        incidental to such investment advisory 
                        activities;
                            ``(iii) an insurance company subject to 
                        supervision by a State insurance commission, 
                        agency, or similar authority; and
                            ``(iv) an entity 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.
            ``(2) Examinations.--
                    ``(A) Examination authority.--
                            ``(i) In general.--The Board may make 
                        examinations of each bank holding company and 
                        each subsidiary of a bank holding company.
                            ``(ii) Functionally regulated nondepository 
                        institution subsidiaries.--Notwithstanding 
                        clause (i), the Board may make examinations of 
                        a functionally regulated nondepository 
                        institution 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, or
                                    ``(II) based on reports and other