[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 900 Enrolled Bill (ENR)]
S.900
One Hundred Sixth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the sixth day of January, one thousand nine hundred and ninety-nine
An Act
To enhance competition in the financial services industry by providing a
prudential framework for the affiliation of banks, securities firms,
insurance companies, and other financial service providers, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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

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INSURANCE COMPANIES
Subtitle A--Affiliations

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that are not financial holding companies.

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TITLE I

-FACILITATING AFFILIATION AMONG BANKS, SECURITIES FIRMS, AND

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deposit funds from ``too big to fail'' institutions.

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of small business and farm loans.
Subtitle B--Streamlining Supervision of Bank Holding Companies

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Subtitle C--Subsidiaries of National Banks

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subsidiaries.
Subtitle D--Preservation of FTC Authority

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notification and post-approval waiting period for section 3
transactions.

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Subtitle B--Bank Investment Company Activities

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TITLE II

-FUNCTIONAL REGULATION

adviser for banks that advise investment companies.

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

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Securities and Exchange Commission.
Subtitle D--Banks and Bank Holding Companies

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Subtitle A--State Regulation of Insurance

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TITLE III

-INSURANCE

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Subtitle B--Redomestication of Mutual Insurers

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Subtitle C--National Association of Registered Agents and Brokers

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Subtitle D--Rental Car Agency Insurance Activities

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commercial affiliates.
Subtitle A--Disclosure of Nonpublic Personal Information

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TITLE IV

-UNITARY SAVINGS AND LOAN HOLDING COMPANIES

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TITLE V

-PRIVACY

Subtitle B--Fraudulent Access to Financial Information

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TITLE VI

-FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

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TITLE VII

-OTHER PROVISIONS

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Subtitle C--Other Regulatory Improvements

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

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COMPANIES THAT ARE NOT FINANCIAL HOLDING COMPANIES.
(a) In General.--Section 4(c)(8) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(c)(8)) is amended to read as follows:
``(8) shares of any company the activities of which had been
determined by the Board by regulation or order under this paragraph
as of the day before the date of the enactment of the Gramm-Leach-
Bliley Act, to be so closely related to banking as to be a proper
incident thereto (subject to such terms and conditions contained in
such regulation or order, unless modified by the Board);''.
(b) Conforming Changes to Other Statutes.--
(1) Amendment to the bank holding company act amendments of
1970.--Section 105 of the Bank Holding Company Act Amendments of
1970 (12 U.S.C. 1850) is amended by striking ``, to engage directly
or indirectly in a nonbanking activity pursuant to section 4 of
such Act,''.
(2) Amendment to the bank service company act.--Section 4(f) of
the Bank Service Company Act (12 U.S.C. 1864(f)) is amended by
inserting before the period at the end the following: ``as of the
day before the date of the enactment of the Gramm-Leach-Bliley
Act''.

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

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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.''.

27d6d5b6a1e9d2426bbcf6f6e31a188d800cf4780cfe255a233e0ca178daba1c

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.

e317ca9a47aeda401cc9a97025d5d582223ce1a8adf47765b255f33f35be4890

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

0304a95472ae3f5e8b2370826e5596f12ef63f04163271fd88a6a64742ebf8d0

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

9e2d0414e2d35bf0e68e2e46f04df02f10c9b0e071deb9e46e1cfbd64e2e5120

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

cbb1612e9188952d3f88078927b527d3212e401bb10436b29d1a33f16c2c4215

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

e5a850906b1d3a228dbec2b25988d2076bc5bd1706e1ad66f4e5f3c50e72b043

EXCHANGE COMMISSION.
(a) Bank Holding Companies.--Section 5 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1844) is amended by adding at the end the
following new subsection:
``(g) Authority of State Insurance Regulator and the Securities and
Exchange Commission.--
``(1) In general.--Notwithstanding any other provision of law,
any regulation, order, or other action of the Board that requires a
bank holding company to provide funds or other assets to a
subsidiary depository institution shall not be effective nor
enforceable with respect to an entity described in subparagraph (A)
if--
``(A) such funds or assets are to be provided by--
``(i) a bank holding company that is an insurance
company, a broker or dealer registered under the Securities
Exchange Act of 1934, an investment company registered
under the Investment Company Act of 1940, or an investment
adviser registered by or on behalf of either the Securities
and Exchange Commission or any State; or
``(ii) an affiliate of the depository institution that
is an insurance company or a broker or dealer registered
under the Securities Exchange Act of 1934, an investment
company registered under the Investment Company Act of
1940, or an investment adviser registered by or on behalf
of either the Securities and Exchange Commission or any
State; and
``(B) the State insurance authority for the insurance
company or the Securities and Exchange Commission for the
registered broker, dealer, investment adviser (solely with
respect to investment advisory activities or activities
incidental thereto), or investment company, as the case may be,
determines in writing sent to the holding company and the Board
that the holding company shall not provide such funds or assets
because such action would have a material adverse effect on the
financial condition of the insurance company or the broker,
dealer, investment company, or investment adviser, as the case
may be.
``(2) Notice to state insurance authority or sec required.--If
the Board requires a bank holding company, or an affiliate of a
bank holding company, that is an insurance company or a broker,
dealer, investment company, or investment adviser described in
paragraph (1)(A) to provide funds or assets to a depository
institution subsidiary of the holding company pursuant to any
regulation, order, or other action of the Board referred to in
paragraph (1), the Board shall promptly notify the State insurance
authority for the insurance company, the Securities and Exchange
Commission, or State securities regulator, as the case may be, of
such requirement.
``(3) Divestiture in lieu of other action.--If the Board
receives a notice described in paragraph (1)(B) from a State
insurance authority or the Securities and Exchange Commission with
regard to a bank holding company or affiliate referred to in that
paragraph, the Board may order the bank holding company to divest
the depository institution not later than 180 days after receiving
the notice, or such longer period as the Board determines
consistent with the safe and sound operation of the depository
institution.
``(4) Conditions before divestiture.--During the period
beginning on the date an order to divest is issued by the Board
under paragraph (3) to a bank holding company and ending on the
date the divestiture is completed, the Board may impose any
conditions or restrictions on the holding company's ownership or
operation of the depository institution, including restricting or
prohibiting transactions between the depository institution and any
affiliate of the institution, as are appropriate under the
circumstances.
``(5) Rule of construction.--No provision of this subsection
may be construed as limiting or otherwise affecting, except to the
extent specifically provided in this subsection, the regulatory
authority, including the scope of the authority, of any Federal
agency or department with regard to any entity that is within the
jurisdiction of such agency or department.''.
(b) Subsidiaries of Depository Institutions.--The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding at the end
the following new section:
``SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES
AND EXCHANGE COMMISSION.
``(a) In General.--Notwithstanding any other provision of law, the
provisions of--
``(1) section 5(c) of the Bank Holding Company Act of 1956 that
limit the authority of the Board of Governors of the Federal
Reserve System to require reports from, to make examinations of, or
to impose capital requirements on holding companies and their
functionally regulated subsidiaries or that require deference to
other regulators;
``(2) section 5(g) of the Bank Holding Company Act of 1956 that
limit the authority of the Board to require a functionally
regulated subsidiary of a holding company to provide capital or
other funds or assets to a depository institution subsidiary of the
holding company and to take certain actions including requiring
divestiture of the depository institution; and
``(3) section 10A of the Bank Holding Company Act of 1956 that
limit whatever authority the Board might otherwise have to take
direct or indirect action with respect to holding companies and
their functionally regulated subsidiaries;
shall also limit whatever authority that a Federal banking agency might
otherwise have under any statute or regulation to require reports, make
examinations, impose capital requirements, or take any other direct or
indirect action with respect to any functionally regulated affiliate of
a depository institution, subject to the same standards and
requirements as are applicable to the Board under those provisions.
``(b) Certain Exemption Authorized.--No provision of this section
shall be construed as preventing the Corporation, if the Corporation
finds it necessary to determine the condition of a depository
institution for insurance purposes, from examining an affiliate of any
depository institution, pursuant to section 10(b)(4), as may be
necessary to disclose fully the relationship between the depository
institution and the affiliate, and the effect of such relationship on
the depository institution.
``(c) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the meaning given the term
in section 5(c)(5) of the Bank Holding Company Act of 1956.
``(2) Functionally regulated affiliate.--The term `functionally
regulated affiliate' means, with respect to any depository
institution, any affiliate of such depository institution that is--
``(A) not a depository institution holding company; and
``(B) a company described in any clause of section
5(c)(5)(B) of the Bank Holding Company Act of 1956.''.

7b1afd2887fd3ab9694b0fd263e1a0c1d46eaf7636c73a50571803f61928f55b

SYSTEM.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 10 the following new section:
``SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND
ENFORCEMENT AUTHORITY OF THE BOARD.
``(a) Limitation on Direct Action.--The Board may not prescribe
regulations, issue or seek entry of orders, impose restraints,
restrictions, guidelines, requirements, safeguards, or standards, or
otherwise take any action under or pursuant to any provision of this
Act or section 8 of the Federal Deposit Insurance Act against or with
respect to a functionally regulated subsidiary of a bank holding
company unless--
``(1) the action is necessary to prevent or redress an unsafe
or unsound practice or breach of fiduciary duty by such subsidiary
that poses a material risk to--
``(A) the financial safety, soundness, or stability of an
affiliated depository institution; or
``(B) the domestic or international payment system; and
``(2) the Board finds that it is not reasonably possible to
protect effectively against the material risk at issue through
action directed at or against the affiliated depository institution
or against depository institutions generally.
``(b) Limitation on Indirect Action.--The Board may not prescribe
regulations, issue or seek entry of orders, impose restraints,
restrictions, guidelines, requirements, safeguards, or standards, or
otherwise take any action under or pursuant to any provision of this
Act or section 8 of the Federal Deposit Insurance Act against or with
respect to a bank holding company that requires the bank holding
company to require a functionally regulated subsidiary of the holding
company to engage, or to refrain from engaging, in any conduct or
activities unless the Board could take such action directly against or
with respect to the functionally regulated subsidiary in accordance
with subsection (a).
``(c) Actions Specifically Authorized.--Notwithstanding subsection
(a) or (b), the Board may take action under this Act or section 8 of
the Federal Deposit Insurance Act to enforce compliance by a
functionally regulated subsidiary of a bank holding company with any
Federal law that the Board has specific jurisdiction to enforce against
such subsidiary.
``(d) Functionally Regulated Subsidiary Defined.--For purposes of
this section, the term `functionally regulated subsidiary' has the
meaning given the term in section 5(c)(5).''.

04f5a5a72448902da28bac1ad43428aa2826aef3cb45c49f04b74145605732b6

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

20d680f674b2058df1d4f3267beaf0142caf85c32a73c81e6a79fc64af696a7c

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

5cd838d75946612e64e79a222e9bf79c01a245887e41a49d6777763fa1d14641

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

82c6c665656de190404bc70d2f2da926946f76ac64069525454ad545b853d485

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

d4cd4605a489fb70276d9b878208b74d8c8b628558bac6042f66088b3f990090

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

e79091c15b73344442848c58be91a065ca6857463bdb95f6d29c65337c76d53b

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

ec0b51c107feb3e2f6dde26e815f4847a51e3775c4830ef452ce992d7ac582de

6cc3a1d99d947d290e0257e7fa59ac9543bf09cad1933546cf1740d846ea5dfc

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

1fccbe55ea9a0f1d5767cf12a37202aefd98c3f9b7b8053b29385696979b2a5e

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

b967eea02ca158c04461502d155931b8597df1613b76df9c93ca24e8f234550c

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

ceefff5d4ebd47c3168677ca40c1ec70b4bf2629d10f37dcec89a20c90a8b790

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

b5fc1ca2fe3c5a540722aaf71286c07cf9ec96d6ad2924edca107d9a4841609d

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

9a33f5655f5fed8ac74fefd3a09b1c14d46eb6d959ce1a25efea3ff2c4138b8c

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

2cfd9462c371de74eb49cae2a6131b26b00a0a082c0915c7718a743df28d34b6

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

815643020260fa4e4b70e6fdf6e5dd56f5cb0883157043574e540b0082a761df

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

b3a3069e9a3f18a7ebb9377886d27f8a730be74135f763d0971f6fee874d5360

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

e44eb1b550ef940cbd011e777331dd1b5557c8b643307827216b86e1f5f80789

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

876ef4a9610bea0532be4a1b4e6e8c2668a9b8e45ec50e2c06a26103ff6d0383

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

28884b229ddd0d779a3d6fe7a46112b110d0e8d10599175c163ae584b3850e11

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

f5fdfa147cea5d05cc21df17826f337baeb336c19065de608e892f5fa06f7814

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

571ee71e27054b0428bf83da2248902b544af8eb66708787cdba976d96891fc3

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

71899d85f7b47bb1896422d4ac79b8cc7955638d4e9911368439b325c6b635fc

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

67bf6cd793e59adf1ea276e149da990cb43f01e2eb05b933d766b36a1db84c67

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

2a646b1d194f8c7a1ea0af635e83b748673e391ab3fe39449a516ecce5f4ea9f

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

92bbfee93ec250b47f73e17f541e43cc67be0a113a179345647512b42d8443b3

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

6727f6162a95150359562f2bc3be05418838f03f82d0aa0522c6a88f4784c1ec

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

d7154e2dcb4f92898c7f367672f9beb0e6c86a22e9a06ddd97c5f49e1a71af3a

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

ff1763bd095592e75bd06f59541e4fdc32019c8fb31d25e594c5a519b670d376

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

10efab2a807e7ae83c5b71397f695dbde5fd339ca79d7daa4e6782b7a23a2621

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

a71d383da63c5a1aea6019207f5255cb404864d2bb34848bb40418e6df1fb59a

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

206dfc8d44802f1271f5aca5df69cd53f916c878460b62357a5c7b45cc5a3661

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

9bc7f84676c27a460274cc9ce6a987127749b95b68e4ec30f78f44523bf43bee

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

88551c2fa22b78f3429191c2f47ef147601943a71124d7e345cf3f1f1825590a

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

e77442f86cae5e0826b56f1d95b9ffdbc70df9f9b03b31b2e9cd86f57469c420

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

89d50569b622952326a666d65f59117de739c27da128b508d52330452732e342

The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
amended by inserting after section 210 the following new section:
``SEC. 210A. CONSULTATION.
``(a) Examination Results and Other Information.--
``(1) The appropriate Federal banking agency shall provide the
Commission upon request the results of any examination, reports,
records, or other information to which such agency may have
access--
``(A) with respect to the investment advisory activities of
any--
``(i) bank holding company;
``(ii) bank; or
``(iii) separately identifiable department or division
of a bank,
that is registered under section 203 of this title; and
``(B) in the case of a bank holding company or bank that
has a subsidiary or a separately identifiable department or
division registered under that section, with respect to the
investment advisory activities of such bank or bank holding
company.
``(2) The Commission shall provide to the appropriate Federal
banking agency upon request the results of any examination,
reports, records, or other information with respect to the
investment advisory activities of any bank holding company, bank,
or separately identifiable department or division of a bank, which
is registered under section 203 of this title.
``(3) Notwithstanding any other provision of law, the
Commission and the appropriate Federal banking agencies shall not
be compelled to disclose any information provided under paragraph
(1) or (2). Nothing in this paragraph shall authorize the
Commission or such agencies to withhold information from Congress,
or prevent the Commission or such agencies from complying with a
request for information from any other Federal department or agency
or any self-regulatory organization requesting the information for
purposes within the scope of its jurisdiction, or complying with an
order of a court of the United States in an action brought by the
United States, the Commission, or such agencies. For purposes of
section 552 of title 5, United States Code, this paragraph shall be
considered a statute described in subsection (b)(3)(B) of such
section 552.
``(b) Effect on Other Authority.--Nothing in this section shall
limit in any respect the authority of the appropriate Federal banking
agency with respect to such bank holding company (or affiliates or
subsidiaries thereof), bank, or subsidiary, department, or division or
a bank under any other provision of law.
``(c) Definition.--For purposes of this section, the term
`appropriate Federal banking agency' shall have the same meaning as
given in section 3 of the Federal Deposit Insurance Act.''.

18c43b9888119ac2a8660bde12fc2c76ef9a9bd6e2dc176c549f80cd2d9271c7

(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''.

823ea59b54abeda58718489b80342a7154b19791907fe46a63b71740c8101bfe

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

4d55cbec730842acddcb562a6bcb585e2aaa6f47561f277aa4f0df14d54e6b27

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)''.

5a7e343a9e4a76062a644b96232c9951883c388e87abba2a704a787f4e1c5dff

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

54b0ed0ab7e05390c23c0b49a2be2ea1e28db275af9b5cf3ef84e72b6092e896

This subtitle shall take effect 18 months after the date of the
enactment of this Act.
Subtitle C--Securities and Exchange Commission Supervision of
Investment Bank Holding Companies

0947ac404a39083eb300efe3befdbecdb138d6caeb8de2d445f64a22ea9d2db7

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

c6a1b73cebf05ba582e3b2094b6ec615a9664d17aecef3a423dea89803b9a18a

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

fc519dd8dd50d1082eb5bfa3eb1df800e620dc277947e6f7825c7d54a9e2ada7

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

b390aee59ad97f1339f19b77c2cd855ce17392b4aae183c1949ee47673107428

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

a14cfffec1a88866b3ae1aefdcf2167e7e1e39c2eb7ae8f338d683edf8989c0b

Financial Services Modernization bill — S. 900

Other Sections