[House Report 104-193]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-193
_______________________________________________________________________
FINANCIAL INSTITUTIONS REGULATORY RELIEF ACT OF 1995
July 18, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Leach, from the Committee on Banking and Financial Services,
submitted the following
R E P O R T
together with
MINORITY AND ADDITIONAL VIEWS
[To accompany H.R. 1858]
[Including cost estimate of the Congressional Budget Office]
The Committee on Banking and Financial Services, to whom was
referred the bill (H.R. 1858) to reduce paperwork and
additional regulatory burdens for depository institutions,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Financial
Institutions Regulatory Relief Act of 1995''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--REDUCTIONS IN GOVERNMENT OVERREGULATION
Subtitle A--The Home Mortgage Process
Sec. 101. Regulatory authority over disclosures and escrow accounts
under RESPA transferred to Federal Reserve Board.
Sec. 102. Simplification and unification of disclosures required under
RESPA and TILA for mortgage transactions.
Sec. 103. Increased regulatory flexibility under the Truth in Lending
Act.
Sec. 104. Reductions in RESPA regulatory burdens; clarifying
amendments.
Sec. 105. Disclosures for adjustable rate mortgages.
Sec. 106. Certain charges.
Sec. 107. Exemptions from rescission.
Sec. 108. Tolerances; basis of disclosures.
Sec. 109. Limitation on liability.
Sec. 110. Limitation on rescission liability.
Sec. 111. Calculation of damages.
Sec. 112. Assignee liability.
Sec. 113. Rescission rights in foreclosure.
Sec. 114. Recovery of fees.
Sec. 115. Home ownership debt counseling notification.
Sec. 116. Home Mortgage Disclosure Act.
Sec. 117. Applicability.
Subtitle B--Community Reinvestment Act Amendments
Sec. 121. Expression of congressional intent.
Sec. 122. Community Reinvestment Act exemption.
Sec. 123. Self-certification of CRA compliance.
Sec. 124. Community input and conclusive rating.
Sec. 125. Special purpose financial institutions.
Sec. 126. Increased incentives for lending to low- and moderate-income
communities.
Sec. 127. Prohibition on additional reporting under CRA.
Sec. 128. Technical amendment.
Sec. 129. Duplicative reporting.
Sec. 130. CRA congressional oversight.
Sec. 131. Consultation among examiners.
Sec. 132. Limitation on regulations.
Subtitle C--Consumer Banking Reforms
Sec. 141. Truth in Savings.
Sec. 142. Information sharing.
Sec. 143. Electronic Fund Transfer Act clarification.
Sec. 144. Limit on restitution for Truth in Lending violations if
safety and soundness of violator would be affected.
Subtitle D--Equal Credit Opportunity Act Amendments
Sec. 151. Short title.
Sec. 152. Findings and purpose.
Sec. 153. Equal Credit Opportunity Act amendments.
Sec. 154. Fair Credit Reporting Act amendments.
Sec. 155. Incentives for self-testing.
Sec. 156. Credit scoring systems.
Sec. 157. Consultation by Attorney General required in nonreferral
cases.
Sec. 158. Effective date.
Subtitle E--Consumer Leasing Act Amendments
Sec. 161. Short title.
Sec. 162. Congressional findings and declaration of purpose.
Sec. 163. Regulations.
Sec. 164. Consumer lease advertising.
Sec. 165. Statutory penalties.
Subtitle F--Federal Home Loan Bank Amendments
Sec. 171. Application for membership in the FHLB System.
Sec. 172. Federal home loan bank external auditors.
TITLE II--STREAMLINING GOVERNMENT REGULATIONS
Subtitle A--Regulatory Approval Issues
Sec. 201. Streamlined nonbanking acquisitions by well capitalized and
well managed banking organizations.
Sec. 202. Streamlined bank acquisitions by well capitalized and well
managed banking organizations.
Sec. 203. Eliminate filing and approval requirements for insured
depository institutions already controlled by the same holding company.
Sec. 204. Eliminate redundant approval requirement for Oakar
transactions.
Sec. 205. Elimination of duplicative requirements imposed upon bank
holding companies and other regulatory relief under the Home Owners'
Loan Act.
Sec. 206. Eliminate requirement that approval be obtained for
divestitures.
Sec. 207. Eliminate unnecessary branch applications.
Sec. 208. Eliminate branch applications and requirements for ATMs and
similar facilities.
Sec. 209. Eliminate requirement for approval of investments in bank
premises for well capitalized and well managed banks.
Sec. 210. Eliminate unnecessary filing for officer and director
appointments.
Sec. 211. Streamlining process for determining new nonbanking
activities.
Sec. 212. Disposition of foreclosed assets.
Sec. 213. Increase in certain credit union loan ceilings.
Subtitle B--Streamlining of Government Regulations; Miscellaneous
Provisions
Sec. 221. Eliminate the per-branch capital requirement for national
banks and State member banks.
Sec. 222. Branch closures.
Sec. 223. Amendments to the Depository Institutions Management
Interlocks Act.
Sec. 224. Acceleration of repayment to Treasury.
Sec. 225. Eliminate unnecessary and duplicative recordkeeping and
reporting requirements relating to loans to executive officers and
permit participation in employee benefit plans.
Sec. 226. Expanded regulatory discretion for small bank examinations.
Sec. 227. Cost reimbursement.
Sec. 228. Identification of foreign nonbank financial institution
customers.
Sec. 229. Paperwork reduction review.
Sec. 230. Daily confirmations for hold-in-custody repurchase
transactions.
Sec. 231. Required regulatory review of regulations.
Sec. 232. Country risk requirements.
Sec. 233. Audit costs.
Sec. 234. Standards for director and officer liability.
Sec. 235. Foreign bank applications.
Sec. 236. Duplicate examination of foreign banks.
Sec. 237. Second mortgages.
Sec. 238. Streamlining FDIC approval of new State bank powers.
Sec. 239. Repeal of call report attestation requirement.
Sec. 240. Authority of the Comptroller of the Currency.
Sec. 241. National bank community development insurance activities.
Sec. 242. Authorizing bank service companies to organize as limited
liability partnerships.
Sec. 243. Bank investments in Edge Act and agreement corporations.
Sec. 244. Report on the reconciliation of differences between
regulatory accounting principles and generally accepted accounting
principles.
Sec. 245. Waivers authorized for residency requirement for national
bank directors.
TITLE III--LENDER LIABILITY
Sec. 301. Lender liability.
TITLE IV--ANNUAL STUDY AND REPORT ON IMPACT ON LENDING TO SMALL
BUSINESS
Sec. 401. Annual study and report.
TITLE I--REDUCTIONS IN GOVERNMENT OVERREGULATION
Subtitle A--The Home Mortgage Process
SEC. 101. REGULATORY AUTHORITY OVER DISCLOSURES AND ESCROW ACCOUNTS
UNDER RESPA TRANSFERRED TO FEDERAL RESERVE BOARD.
(a) In General.--Sections 4, 5, 6, and 10(d) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) are amended
by striking ``Secretary'' each place such term appears and inserting
``Board''.
(b) Clarification of Purpose.--Section 2(b)(2) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601(b)(2)) is amended by
inserting the following before the semicolon at the end: ``without--
``(A) directly regulating settlement services prices;
or
``(B) directly regulating wages to bona fide
employees that are not designed as a subterfuge to
facilitate kickbacks among affiliated companies''.
(c) Board Defined.--Section 3 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2602) is amended--
(1) by striking ``and'' at the end of paragraph (7);
(2) by striking the period at the end of paragraph (8) and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(9) the term `Board' means the Board of Governors of the
Federal Reserve System.''.
(d) Negotiated Regulations Under Sections 8 and 9.--Section 8 of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2607) is
amended by adding at the end the following new subsection:
``(e) Negotiated Regulations.--
``(1) In general.--The Secretary may not publish a proposed
or final regulation under this section and section 9 after the
date of the enactment of the Financial Institutions Regulatory
Relief Act of 1995 unless the Secretary has used the negotiated
rulemaking procedure established under subchapter III of
chapter 5 of title 5, United States Code, to attempt to
negotiate and develop the rule.
``(2) Consistency with purpose.--Any regulation prescribed in
accordance with paragraph (1) shall be consistent with the
purposes of this title as set forth in section 2.''.
(e) Administrative Enforcement of Prohibition Against Kickbacks and
Unearned Fees.--Section 8 of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2607) is amended by adding after subsection (e) (as
added by subsection (d) of this section) the following new subsection:
``(f) Administrative Enforcement.--
``(1) In general.--Compliance with the requirements of this
section and sections 9 and 12 shall be enforced under this
Act--
``(A) in the case of an insured depository
institution (as defined in section 3 of the Federal
Deposit Insurance Act), by the appropriate Federal
banking agency (as defined in such section);
``(B) in the case of an insured credit union (as
defined in section 101(7) of the Federal Credit Union
Act), by the National Credit Union Administration;
``(C) in the case of a bank holding company (as
defined in section 2 of the Bank Holding Company Act of
1956) and any affiliate of any such holding company
(other than an insured depository institution), by the
Board;
``(D) in the case of a savings and loan holding
company (as defined in section 10 of the Home Owners'
Loan Act) and any affiliate of any such holding company
(other than an insured depository institution), by the
Director of the Office of Thrift Supervision; and
``(E) in the case of any other person, by the
Secretary.
``(2) Special rules relating to determination of appropriate
regulator.--
``(A) Cases of more than 1 appropriate regulator.--
If, under paragraph (1), a company may be regulated by
more than 1 agency, the Board shall determine which
agency shall be the responsible agency, notwithstanding
paragraph (1).
``(B) Cases involving joint ventures, partnerships,
and other affiliated business arrangements.--If any
insured depository institution is involved in a joint
venture, partnership, or other affiliated business
arrangement with any person who is not an insured
depository institution, the agency responsible for
enforcing this section and sections 9 and 12 with
respect to such insured depository institution shall be
the agency with such responsibility with respect to
such joint venture, partnership, or other affiliated
business arrangement.
``(3) Interagency cooperation and enforcement guidelines.--
All the agencies referred to in any subparagraph of paragraph
(1) shall cooperate with each other to develop enforcement
guidelines and other means for achieving effective compliance
with this section and sections 9 and 12.
``(4) Preference for civil enforcement over criminal
enforcement.--As part of the cooperative efforts required under
paragraph (3), the agencies referred to in paragraph (1) shall
consider means for achieving compliance with this section and
section 9 through the exercise of administrative enforcement
authority under this subsection without resorting to criminal
enforcement actions under subsection (d) except in appropriate
cases.
``(5) Effective date.--Paragraphs (1) and (2) shall not take
effect until joint interagency cooperation and enforcement
guidelines are adopted by all the agencies to which paragraphs
(1) and (2) apply and the enforcement authority of the
Secretary with respect to this section and sections 9 and 12
shall continue until such paragraphs take effect.''.
(f) Increased Scienter Requirement for Criminal Penalty.--Section
8(d) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2607(d)) is amended--
(1) in paragraph (1), by inserting ``willfully'' after
``persons who''; and
(2) in paragraph (3), by striking ``was not intentional
and''.
(g) Redesignation of Controlled Business Arrangements as Affiliated
Business Arrangements.--The Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2601 et seq.) is amended--
(1) in section 3(7), by striking ``controlled business
arrangement'' and inserting ``affiliated business
arrangement''; and
(2) in subsections (c)(4) and (d)(6) of section 8, by
striking ``controlled business arrangements'' and inserting
``affiliated business arrangements''.
(h) Technical and Conforming Amendments.--
(1) Section 4(a) of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2603(a)) is amended by striking ``Federal
Home Loan Bank Board'' and inserting ``Director of the Office
of Thrift Supervision''.
(2) Section 8(d)(4) of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2607(d)(4)) is amended by inserting
``any other agency described in subsection (f)(1),'' after
``the Secretary,''.
(3) Section 10(c)(1)(C) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2609(c)(1)(C)) is amended by
striking ``Not later than the expiration of the 90-day period
beginning on the date of the enactment of the Cranston-Gonzalez
National Affordable Housing Act, the'' and inserting ``The''.
(4) Section 16 of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2614) is amended by striking ``Secretary,''
and inserting ``Board, an agency referred to in any
subparagraph of section 8(f)(1),''.
(5) Section 18 of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2616) is amended--
(A) by striking ``Secretary is authorized to'' and
inserting ``Board and Secretary may jointly'';
(B) by striking ``Secretary'' each place such term
appears other than the 1st place and inserting ``Board
and Secretary''; and
(C) by striking ``determines that such laws'' and
inserting ``determine that such laws''.
(6) Section 19(a) of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2617(a)) is amended to read as follows:
``(a) Regulations.--
``(1) In general.--Subject to paragraph (2), the Secretary
and the Board may prescribe such regulations, make such
interpretations, and grant such reasonable exemptions for
classes of transactions, as may be necessary to achieve the
purposes of this Act.
``(2) Application.--
``(A) Board.--The authority of the Board under
paragraph (1) shall apply with respect to--
``(i) sections 4, 5, 6, 10, and 12; and
``(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable with
respect to the sections described in clause
(i).
``(B) Secretary.--The authority of the Secretary
under paragraph (1) shall apply with respect to--
``(i) sections 8 and 9; and
``(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable with
respect to the sections described in clause
(i). ''.
(7) Section 19(b) of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2617(b)) is amended by inserting ``, the
Board,'' after ``the Secretary''.
(8) Section 19(c) of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2617(c)) is amended--
(A) in paragraph (1)--
(i) by striking ``Secretary'' the 1st place
such term appears and inserting ``Board, with
respect to any action to enforce section 4, 5,
6, or 10, and each agency referred to in any
subparagraph of section 8(f)(1), with respect
to any action to enforce section 8, 9, or
12,''; and
(ii) by striking ``Secretary'' each place
such term appears other than the 1st place and
inserting ``Board or such other agency''; and
(B) in paragraph (2), by striking ``Secretary'' and
inserting ``Board or an agency referred to in any
subparagraph of section 8(f)(1)''.
(9) The heading for section 19 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2617) is amended to read as
follows:
``authority of the secretary and the federal reserve board''.
(i) Repeal of Obsolete Provisions.--The Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.) is amended by striking
sections 13, 14, and 15.
SEC. 102. SIMPLIFICATION AND UNIFICATION OF DISCLOSURES REQUIRED UNDER
RESPA AND TILA FOR MORTGAGE TRANSACTIONS.
(a) In General.--With respect to credit transactions which are
subject to the Real Estate Settlement Procedures Act of 1974 and the
Truth in Lending Act, the Board of Governors of the Federal Reserve
System shall take such action as may be necessary before the end of the
3-month period beginning on the date of the enactment of this Act--
(1) to simplify the disclosures applicable to such
transactions under such Acts, including the timing of the
disclosures; and
(2) to provide a single format for such disclosures which
will satisfy the requirements of each such Act with respect to
such transactions.
(b) Regulations.--To the extent that it is necessary to prescribe any
regulation in order to effect any changes required to be made under
subsection (a), the proposed regulation shall be published in the
Federal Register before the end of the 3-month period referred to in
subsection (a).
(c) Recommendations for Legislation.--If the Board of Governors of
the Federal Reserve System finds that legislative action may be
necessary or appropriate in order to simplify and unify the disclosure
requirements under the Real Estate Settlement Procedures Act of 1974
and the Truth in Lending Act, the Board shall submit a report
containing recommendations to the Congress concerning such action.
SEC. 103. INCREASED REGULATORY FLEXIBILITY UNDER THE TRUTH IN LENDING
ACT.
(a) Regulatory Flexibility.--Section 104 of the Truth in Lending Act
(15 U.S.C. 1603) is amended by adding at the end the following new
paragraph:
``(7) Transactions for which the Board, by regulation,
determines that coverage under the Act is not needed to carry
out the purposes of the Act.''.
(b) Exemptive Authority.--Section 105 of the Truth in Lending Act (15
U.S.C. 1604) is amended--
(1) by redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively; and
(2) by inserting after subsection (a) the following new
subsection:
``(b) Exemptive Authority.--
``(1) In general.--The Board shall exempt from all or parts
of this title any class of transactions for which, in the
Board's judgment, coverage under all or part of this title does
not provide a measurable benefit to consumers in the form of
useful information or protection.
``(2) Factors to be considered.--In determining which classes
of transactions to exempt in whole or in part, the Board shall
consider, among other factors, the following:
``(A) The amount of the loan or closing costs and
whether the disclosures, right of rescission, and other
provisions are necessary, particularly for small loans.
``(B) Whether the requirements of this title
complicate, hinder, or make more expensive the credit
process for the class of transactions.
``(C) The status of the borrower, including, the
borrowers' related financial arrangements, the
financial sophistication of the borrower relative to
the type of transaction, and the importance of the
credit and related supporting property to the
borrower.''.
SEC. 104. REDUCTIONS IN RESPA REGULATORY BURDENS; CLARIFYING
AMENDMENTS.
(a) Unnecessary Disclosure.--Section 6(a) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended to read
as follows:
``(a) Disclosure to Applicant Relating to Assignment, Sale, or
Transfer of Loan Servicing.--
``(1) In general.--Each person who makes a federally related
mortgage loan shall disclose to each person who applies for any
such loan, at the time of application for the loan, whether the
servicing of any such loan may be assigned, sold, or
transferred to any other person at any time while such loan is
outstanding.
``(2) Signature of applicant.--Any disclosure of the
information required under paragraph (1) shall not be effective
for purposes of this section unless the disclosure is
accompanied by a written statement, in such form as the
Secretary shall develop before the expiration of the 180-day
period beginning on the date of the enactment of the Financial
Institutions Regulatory Relief Act of 1995, that the applicant
has read and understood the disclosure and that is evidenced by
the signature of the applicant at the place where such
statement appears in the application.''.
(b) Effective Date.--The amendments made by subsection (a) shall take
effect 180 days after the date of the enactment of this Act.
(c) Second Mortgages.--Section 3(1)(A) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2602(1)(A)) is amended by striking
``or subordinate''.
(d) Consistency of RESPA and Truth in Lending Act Exemption of
Business Loans.--Section 7 of the Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2606) is amended--
(1) by inserting ``(a) In General.--'' before ``This Act'';
and
(2) by inserting at the end the following new subsection:
``(b) Interpretation.--In issuing regulations pursuant to section
19(a) of this Act, the Board shall ensure that, with regard to
subsection (a), the exemption for business credit includes all business
credit which is exempt from the Truth in Lending Act in accordance with
section 226.3(a) of the regulations prescribed by the Board known as
`regulation Z' (12 C.F.R. 226.3(a)), as in effect on the date of
enactment of the Financial Institutions Regulatory Relief Act of
1995.''.
SEC. 105. DISCLOSURES FOR ADJUSTABLE RATE MORTGAGES.
(a) In General.--Section 127A(a)(2)(G) of the Truth in Lending Act
(15 U.S.C. 1637a(a)(2)(G)) is amended by inserting before the semicolon
``, or a statement that the monthly payment may increase or decrease
significantly due to increases in the annual percentage rate''.
(b) Technical and Conforming Amendment.--Section 127A(b)(3) of the
Truth in Lending Act (15 U.S.C. 1637a(b)(3)) is amended by striking
``required under'' and inserting ``referred to in''.
(c) Alternative to Historical Example.--Section 128(a) of the Truth
in Lending Act (15 U.S.C. 1638(a)) is amended by inserting at the end
the following new paragraph:
``(14) In any variable rate transaction secured by the
consumer's principal dwelling with a term greater than 1 year,
at the creditors' option, a statement that the monthly payment
may increase or decrease substantially, or a historical example
illustrating the effects of interest rate changes implemented
according to the loan program.''.
(d) Ensuring Honoring of Lock-in Promises.--Section 128(b) of the
Truth in Lending Act (15 U.S.C. 1638(b)) is amended by adding at the
end the following new paragraph:
``(3) In the case of a residential mortgage transaction, the
disclosures under subsection (a) shall include the following:
``(A) The note rate and points, and a statement, if
applicable, that these terms are subject to change.
``(B) A statement that the creditor must include the
disclosed note rate and points in the credit agreement unless,
in relation to either or both of those terms--
``(i) the disclosure clearly and conspicuously
indicates that the term is subject to change, or
``(ii) in the case of any term to which clause (i)
does not apply--
``(I) the creditor has clearly and
conspicuously indicated that the term is
conditioned on closing the transaction within a
prescribed time;
``(II) the creditor has promptly and clearly
communicated to the consumer the information
and documentation that the consumer is required
to provide to the creditor; and
``(III) the consumer has failed to provide
such information and documentation within a
reasonable time after receiving that
communication.''.
SEC. 106. CERTAIN CHARGES.
(a) Third Party Fees.--Section 106(a) of the Truth in Lending Act (15
U.S.C. 1605(a)) is amended by adding after the 2d sentence the
following new sentence: ``The finance charge shall not include fees and
amounts imposed by third party closing agents (including settlement
agents, attorneys, and escrow and title companies) if the creditor does
not expressly require the imposition of the charges or the services
provided and does not retain the charges.''.
(b) Mortgage Broker Fees.--Section 106(a) of the Truth in Lending Act
(15 U.S.C. 1605(a)) is amended by adding at the end the following new
paragraph:
``(6) Mortgage broker fees.''.
(c) Treatment of Certain Debt Cancellation and Deficiency Waiver
Contracts.--Section 106(c) of the Truth in Lending Act (15 U.S.C.
1605(c)) is amended to read as follows:
``(c) Treatment of Certain Debt Cancellation and Deficiency Waiver
Contracts.--Charges or premiums for any insurance or for any voluntary
noninsurance product, written in connection with any consumer credit
transaction, that provides protections against loss of or damage to
property or against part or all of the debtor's liability for amounts
in excess of the value of the collateral securing the debtor's
obligation, or against liability arising out of the ownership or use of
property, shall be included in the finance charge unless a clear and
specific statement in writing is furnished by the creditor to the
person to whom the credit is extended, setting forth the cost of the
insurance or product if obtained from or through the creditor, and
stating that the person to whom credit is extended may choose the
person through which the insurance or product is to be obtained.''.
(d) Taxes on Security Instruments or Evidences of Indebtedness.--
Section 106(d) of the Truth in Lending Act (15 U.S.C. 1605(d)) is
amended by adding at the end the following new paragraph:
``(3) Any tax levied on security instruments or on documents
evidencing indebtedness if the payment of such taxes is a
precondition for recording the instrument securing the evidence
of indebtedness.''.
(e) Preparation of Loan Documents.--Section 106(e)(2) of the Truth in
Lending Act (15 U.S.C. 1605(e)(2)) is amended to read as follows:
``(2) Fees for preparation of loan-related documents and for
attending or conducting settlement.''.
(f) Fees Relating to Pest Infestations, Inspections, and Hazards.--
Section 106(e)(5) of the Truth in Lending Act (15 U.S.C. 1605(e)(5)) is
amended by inserting ``, including fees related to pest infestations,
premises and structural inspections, and flood hazards'' before the
period.
(g) Ensuring Finance Charges Reflect Cost of Credit.--
(1) Report.--
(A) In general.--Not later than 6 months after the
date of the enactment of this Act, the Board of
Governors of the Federal Reserve System shall submit to
the Congress a report containing recommendations on any
regulatory or statutory changes necessary--
(i) to ensure that finance charges imposed in
connection with consumer credit transactions
more accurately reflect the cost of providing
credit; and
(ii) to address abusive refinancing practices
engaged in solely for the purpose of avoiding
rescission.
(B) Report requirements.--In preparing the report
under this paragraph, the Board shall--
(i) consider the extent to which it is
feasible to include in finance charges all
charges payable directly or indirectly by the
consumer to whom credit is extended, and
imposed directly or indirectly by the creditor
as an incident to the extension of credit
(especially those charges excluded from finance
charges under section 106 of the Truth in
Lending Act as of the date of the enactment of
this Act), excepting only those charges which
are payable in a comparable cash transaction;
and
(ii) consult with and consider the views of
affected industries and consumer groups.
(2) Regulations.--The Board of Governors of the Federal
Reserve System shall prescribe any appropriate regulation in
order to effect any change included in the report under
paragraph (1), and shall publish the regulation in the Federal
Register before the end of the 1-year period beginning on the
date of enactment of this Act.
SEC. 107. EXEMPTIONS FROM RESCISSION.
(a) Certain Refinancing.--Section 125(e) of the Truth in Lending Act
(15 U.S.C. 1635(e)) is amended--
(1) by striking ``or'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; or''; and
(3) by adding at the end the following new paragraph:
``(5) a transaction, other than a mortgage referred to in
section 103(aa), which--
``(A) is a refinancing of the principal balance then
due and any accrued and unpaid finance charges of a
residential mortgage transaction as defined in section
103(w), or is any subsequent refinancing of such a
transaction; and
``(B) does not provide any new consolidation or new
advance.''.
(b) Technical and Conforming Amendment.--Section 125(e)(2) of the
Truth in Lending Act (15 U.S.C. 1635(e)(2)) is amended by inserting ``,
other than a transaction described in subsection (e)(5),'' after ``a
refinancing or consolidation (with no new advances)''.
SEC. 108. TOLERANCES; BASIS OF DISCLOSURES.
(a) Tolerances for Accuracy.--Section 106 of the Truth in Lending Act
(15 U.S.C. 1605) is amended by adding at the end the following new
subsection:
``(f) Tolerances for Accuracy.--In connection with credit
transactions not under an open end credit plan that are secured by real
property or a dwelling, the disclosure of the finance charge and other
disclosures affected by any finance charge--
``(1) except as provided in paragraph (2), shall be treated
as being accurate for purposes of this title if the amount
disclosed as the finance charge--
``(A) does not vary from the actual finance charge by
more than an amount equal to \1/2\ of the numerical
tolerance corresponding to, and generated by, the
tolerance provided by section 107(c) with respect to
the annual percentage rate, but in no case may the
tolerance under this paragraph be less than $25 or
greater than $200; or
``(B) is greater than the amount required to be
disclosed under this title; and
``(2) shall be treated as being accurate for purposes of
section 125 if the amount disclosed as the finance charge does
not vary from the actual finance charge by more than an amount
equal to 0.5 percent of the total amount of credit extended.''.
(b) Basis of Disclosure for Per Diem Interest.--Section 121(c) of the
Truth in Lending Act (15 U.S.C. 1631(c)) is amended by adding at the
end the following new sentence: ``In the case of any consumer credit
transaction a portion of the interest on which is determined on a per
diem basis and is to be collected upon the consummation of such
transaction, any disclosure with respect to such portion of interest
shall be deemed to be accurate for purposes of this title if the
disclosure is based on information actually known to the creditor at
the time that the disclosure documents are being prepared for the
consummation of the transaction.''.
SEC. 109. LIMITATION ON LIABILITY.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by adding at the end the following new
section:
``SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.
``(a) Limitations on Liability.--For any consumer credit transaction
subject to this title that is consummated before the date of the
enactment of the Financial Institutions Regulatory Relief Act of 1995,
a creditor or any assignee of a creditor shall have no civil,
administrative, or criminal liability under this title for, and a
consumer shall have no extended rescission rights under section 125(f)
with respect to--
``(1) the creditor's treatment, for disclosure purposes, of--
``(A) taxes described in section 106(d)(3);
``(B) fees and amounts described in section 106(e)
(2) and (5);
``(C) fees and amounts referred to in the 3rd
sentence of section 106(a); or
``(D) mortgage broker fees referred to in section
106(a)(6);
``(2) the form of written notice used by the creditor to
inform the obligor of the rights of the obligor under section
125 if the creditor provided the obligor with a properly dated
form of written notice published and adopted by the Board or a
comparable written notice; or
``(3) any disclosure relating to the finance charge imposed
with respect to the transaction if the amount or percentage
actually disclosed--
``(A) may be treated as accurate pursuant to section
106(f), or
``(B) is greater than the amount or percentage
required to be disclosed under this title.
``(b) Exceptions.--Subsection (a) shall not apply to--
``(1) any individual action or counterclaim brought under
this title which was filed before June 1, 1995;
``(2) any class action brought under this title for which a
final order certifying a class was entered before January 1,
1995;
``(3) the named individual plaintiffs in any class action
brought under this title which was filed before June 1, 1995;
or
``(4) any consumer credit transaction with respect to which a
timely notice of rescission was sent to the creditor before
June 1, 1995.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 138 the following new item:
``139. Certain limitations on liability.''.
SEC. 110. LIMITATION ON RESCISSION LIABILITY.
Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is further
amended by adding at the end the following new subsection:
``(h) Limitation on Rescission.--An obligor shall have no rescission
rights arising from the form of written notice used by the creditor to
inform the obligor of the rights of the obligor under this section, if
the creditor provided the obligor the appropriate form of written
notice published and adopted by the Board, or a comparable written
notice of the rights of the obligor, that was properly completed by the
creditor.''.
SEC. 111. CALCULATION OF DAMAGES.
Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)(A)) is amended--
(1) by striking ``or (ii)'' and inserting ``(ii)''; and
(2) by inserting before the semicolon at the end the
following: ``, or (iii) in the case of an individual action
relating to a credit transaction not under an open end credit
plan that is secured by real property or a dwelling, not less
than $250 or greater than $2,500''.
SEC. 112. ASSIGNEE LIABILITY.
(a) Violations Apparent on the Face of Transaction Documents.--
Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by
adding at the end the following new subsection:
``(e) Liability of Assignee for Consumer Credit Transactions Secured
by Real Property.--
``(1) In general.--Except as otherwise specifically provided
in this title, any civil action against a creditor for a
violation of this title, and any proceeding under section 108
against a creditor, with respect to a consumer credit
transaction secured by real property may be maintained against
any assignee of such creditor only if--
``(A) the violation for which such action or
proceeding is brought is apparent on the face of the
disclosure statement provided in connection with such
transaction pursuant to this title; and
``(B) the assignment to the assignee was voluntary.
``(2) Violation apparent on the face of the disclosure
described.--For the purpose of this section, a violation is
apparent on the face of the disclosure statement if--
``(A) the disclosure can be determined to be
incomplete or inaccurate from the face of the
disclosure statement, any itemization of the amount
financed, or any other disclosure of disbursement; or
``(B) the disclosure statement does not use the terms
or format required to be used by this title.''.
(b) Servicer Not Treated as Assignee.--Section 131 of the Truth in
Lending Act (15 U.S.C. 1641) is amended by inserting after subsection
(e) (as added by subsection (a) of this section) the following new
subsection:
``(f) Treatment of Servicer.--
``(1) In general.--A servicer of a consumer obligation
arising from a consumer credit transaction shall not be treated
as an assignee of such obligation for purposes of this section
unless the servicer is the owner of the obligation.
``(2) Servicer not treated as owner on basis of assignment
for administrative convenience.--A servicer of a consumer
obligation arising from a consumer credit transaction shall not
be treated as the owner of the obligation for purposes of this
section on the basis of an assignment of the obligation from
the creditor or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing the
obligation. Upon written request by the obligor, the servicer
shall provide the obligor, to the best knowledge of the
servicer, with the name, address, and telephone number of the
owner of the obligation or the master servicer of the
obligation.
``(3) Servicer defined.--For purposes of this subsection, the
term `servicer' has the same meaning as in section 6(i)(2) of
the Real Estate Settlement Procedures Act of 1974.''.
SEC. 113. RESCISSION RIGHTS IN FORECLOSURE.
Section 125 of the Truth in Lending Act (15 U.S.C. 1635) is amended
by inserting after subsection (h) (as added by section 110) the
following new subsection:
``(i) Rescission Rights in Foreclosure.--
``(1) In general.--Notwithstanding section 139, and subject
to the time period provided in subsection (f), in addition to
any other right of rescission available under this section for
a transaction, upon an action of a creditor to execute
foreclosure on the primary dwelling of an obligor securing an
extension of credit, the obligor shall have a right to rescind
the transaction equivalent to other rescission rights provided
by this section, if--
``(A) a mortgage brokers fee is not included in the
finance charge in accordance with the laws and
regulations in effect at the time the consumer credit
transaction was consummated; or
``(B) the form of notice of rescission for the
transaction is not the appropriate form of written
notice published and adopted by the Board or a
comparable written notice, or was not properly
completed by the creditor.
``(2) Tolerance for disclosures.--Notwithstanding section
106(f), and subject to the time period provided in subsection
(f), for the purposes of exercising any rescission rights
following an action by a creditor to foreclose on the principal
dwelling of the obligor securing an extension of credit, the
disclosure of the finance charge and other disclosures affected
by any finance charge shall be treated as being accurate for
purposes of this section if the amount disclosed as the finance
charge does not vary from the actual finance charge by more
than $35 or is greater than the amount required to be disclosed
under this title.''.
SEC. 114. RECOVERY OF FEES.
Section 125(b) of the Truth in Lending Act (15 U.S.C. 1635) is
amended--
(1) in the 1st sentence, by inserting ``, except any charge
for an appraisal report or credit report'' after ``other
charge''; and
(2) in the 2d sentence, by striking ``otherwise'' and
inserting ``as otherwise required under this subsection''.
SEC. 115. HOME OWNERSHIP DEBT COUNSELING NOTIFICATION.
Section 106(c) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(c)) is amended by striking paragraph (5).
SEC. 116. HOME MORTGAGE DISCLOSURE ACT.
(a) Section 309 of the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2808) is amended--
(1) in the 2d sentence, by striking ``$10,000,000'' and
inserting ``$50,000,000''; and
(2) by inserting at the end the following new sentences:
``The Board may also, by regulation, exempt from the provisions
of this Act institutions specified in section 303(2)(A) which
have total assets as of their last full fiscal year of
$50,000,000 or greater where the burden of complying with this
Act on such institutions outweighs the usefulness of the
information required to be disclosed. The exemptions provided
under this section shall not be applicable to an institution
which the Board, by order, has found a reasonable basis to
believe is not fulfilling its obligations to serve the housing
needs of the communities and neighborhoods in which it located.
An institution subject to such an order shall be required to
comply with the requirements of this Act for loans made after
the time that the order is issued at such time and for such
period as the Board deems appropriate. The dollar amount in
this section shall be adjusted annually after December 31,
1994, by the annual percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers published by
the Bureau of Labor Statistics.''.
(b) Section 304 of the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2803) is amended by adding at the end the following new
subsection:
``(m) Opportunity To Reduce Compliance Burden.--
``(1) A depository institution shall be considered to have
satisfied the public availability requirements of subsection
(a) if such institution keeps the information required under
that subsection at its home office and provides notice at the
branch locations specified in such subsection that such
information is available upon request from the home office of
the institution. A home office of the depository institution
receiving a request for such information pursuant to this
subsection shall provide the information pertinent to the
location of the branch in question within fifteen days of the
receipt of the written request.
``(2) In complying with paragraph (1), a depository
institution may provide the individual requesting such
information, at the institution's choice, with--
``(A) a paper copy of the information requested; or
``(B) if acceptable to the individual, the
information through a form of electronic medium, such
as computer disc.''.
SEC. 117. APPLICABILITY.
(a) In General.--The amendments made by subsections (a), (d), (e),
and (f) of section 106 and sections 108, 112, and 113 shall apply to
all consumer credit transactions in existence or consummated on or
after the date of enactment of this Act.
(b) Exception.--Notwithstanding subsection (a), in the case of--
(1) an individual action or a counterclaim referred to in
section 139(b)(1) of the Truth in Lending Act, as amended by
section 109(a) of this Act;
(2) a class action referred to in section 139(b)(2) of that
Act;
(3) a claim of an individual as a named individual plaintiff
in a class action referred to in section 139(b)(3) of that Act;
or
(4) a claim relating to a consumer credit transaction
referred to in section 139(b)(4) of that Act;
the Truth in Lending Act shall apply as in effect on the date of the
consummation of the consumer credit transaction that is the subject of
the individual action, counterclaim, class action, or claim,
respectively.
Subtitle B--Community Reinvestment Act Amendments
SEC. 121. EXPRESSION OF CONGRESSIONAL INTENT.
Subsection (b) of section 802 of the Community Reinvestment Act of
1977 (12 U.S.C. 2901) is amended to read as follows:
``(b) It is the purpose of this title to require each appropriate
Federal financial supervisory agency to use its authority, when
examining financial institutions, to encourage such institutions to
help meet the credit needs of the local communities in which they are
chartered consistent with the safe and sound operation of such
institutions. When examining financial institutions, a supervisory
agency shall not impose additional burden, recordkeeping, or reporting
upon such institutions.''.
SEC. 122. COMMUNITY REINVESTMENT ACT EXEMPTION.
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is
amended by adding at the end the following new section:
``SEC. 809. EXAMINATION EXEMPTION.
``(a) In General.--A regulated financial institution shall not be
subject to the examination requirements of this title or any
regulations issued under this section if the institution and any bank
holding company which controls such institution have aggregate assets
of not more than $100,000,000.
``(b) Annual Adjustment.--The dollar amount in subsection (a) shall
be adjusted annually after December 31, 1994, by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor Statistics.''.
SEC. 123. SELF-CERTIFICATION OF CRA COMPLIANCE.
Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C.
2903) is amended by adding at the end the following new subsection (c):
``(c) Self-Certification of CRA Compliance.--
``(1) Certification.--In lieu of being evaluated under
section 806A and receiving a written evaluation under section
807, a qualifying financial institution may elect to self-
certify to the appropriate Federal financial supervisory agency
that such institution is in compliance with the goals of this
title.
``(2) Qualifying institution.--
``(A) In general.--For purposes of paragraph (1), the
term `qualifying institution' means a financial
institution which--
``(i) has not more than $250 million in
assets;
``(ii) has not been found to have engaged in
a pattern or practice of illegal discrimination
under the Fair Housing Act or the Equal Credit
Opportunity Act for the preceding 5-year
calendar period; and
``(iii) received rating under section
807(b)(2) of `satisfactory' or `outstanding' in
the most recent evaluation of such institution
under this title.
``(B) Annual adjustment.--The dollar amount in
subparagraph (A) shall be adjusted annually after
December 31, 1994, by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor
Statistics.
``(3) Public notice.--
``(A) In general.--A qualifying institution shall
maintain in every branch a public notice stating that--
``(i) the institution has self-certified that
the institution is satisfactorily helping to
meet the credit needs of its community;
``(ii) the institution maintains--
``(I) at the main office of such
institution, a public file which
contains a copy of the self-
certification to the appropriate
Federal financial supervisory agency;
and
``(II) a map delineating the
community served by the institution;
``(iii) a list of the types of credit and
services that the institution provides to the
community served by the institution;
``(iv) such other information that the
institution believes demonstrates the
institution's record of helping to meet the
credit needs of its community; and
``(v) every public comment or letter to the
institution (and any response by the
institution) received within the previous 2-
year period about the record of the institution
of helping to meet the credit needs of its
community.
``(B) Public file.--A qualifying institution shall
maintain a public file containing the contents
described in this paragraph at the institution's main
office
``(4) Rating.--
``(A) In general.--A qualifying institution shall be
deemed to have a rating of a `satisfactory record of
meeting community credit needs' for the purposes of
this section and section 806A(c).
``(B) Publication.--Each Federal financial
supervisory agency shall publish in the Federal
Register once each month a list of institutions that
have self-certified during the previous month.
``(C) Publication constitutes disclosure.--
Publication of the name of the institution in the
Federal Register as having self-certified shall
constitute disclosure of the rating of the institution
to the public for purposes of sections 806A and 807.
``(5) Regulatory review.--
``(A) Assessment.--During each examination for safety
and soundness, a qualifying institution's supervisory
agency shall, as part of the agency's review of the
institution's loans, assess whether the institution's
basis for its self-certification is reasonable based on
the public notice and the information contained in the
public file pursuant to paragraph (3).
``(B) Examination if self-certification is not
reasonable.--If the agency determines that the
institution's basis for the institution's self-
certification is not reasonable, the agency shall
schedule an examination of the institution for the
purpose of assessing the institution's record of
helping to meet the credit needs of its community.
``(C) Revocation of self-certification.--If an
assessment pursuant to subparagraph (B) results in a
less than `satisfactory' rating, the agency shall
revoke the institution's self-certification and
substitute a written evaluation as provided under
section 807.
``(D) Period of ineligibility for self-
certification.--An institution whose self-certification
has been revoked may not self-certify pursuant to this
subsection during the 5 years succeeding the year in
which the self-certification is revoked.
``(E) Subsequent eligibility.--After the end of the
period of ineligibility described in subparagraph (D),
an institution which meets the requirements for self-
certification may elect to self-certify.
``(6) Prohibition on additional requirements.--No appropriate
Federal financial supervisory agency may impose any additional
requirements, whether by regulation or otherwise, relating to
the self-certification procedure under this subsection.''.
SEC. 124. COMMUNITY INPUT AND CONCLUSIVE RATING.
(a) Conforming Amendment.--Section 804(a) of the Community
Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by inserting
``conducted in accordance with section 806A,'' after ``financial
institution,''.
(b) Community Input and Conclusive Rating.--The Community
Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is amended by
inserting after section 806 the following new section:
``SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.
``(a) Publication of Exam Schedule and Opportunity for Comment.--
``(1) Publication of notice.--Each appropriate Federal
financial supervisory agency shall--
``(A) publish in the Federal Register, 30 days before
the beginning of a calendar quarter, a listing of
institutions scheduled for evaluation for compliance
with this title during such calendar quarter; and
``(B) provide opportunity for written comments from
the community on the performance, under this title, of
each institution scheduled for evaluation.
``(2) Comment period.--Written comments may not be submitted
to an appropriate Federal financial supervisory agency pursuant
to paragraph (1) after the end of the 30-day period beginning
on the first day of the calendar quarter.
``(3) Copy of comments.--The agency shall provide a copy of
such comments to the institution.
``(b) Evaluation.--The appropriate Federal financial supervisory
agency shall--
``(1) evaluate the institution in accordance with the
standards contained in section 804; and
``(2) prepare and publish a written evaluation of the
institution as required under section 807.
``(c) Reconsideration of Rating.--
``(1) Request for reconsideration.--A reconsideration of an
institution's rating referred to in section 807(b)(1)(C), may
be requested within 30 days of the rating's disclosure to the
public.
``(2) Procedures for request.--Any such request shall be made
in writing and filed with the appropriate Federal financial
supervisory agency, and may be filed by the institution or a
member of the community.
``(3) Basis for request.--Any request for reconsideration
under this subsection shall be based on significant issues of a
substantive nature which are relevant to the delineated
community of the institution and, in the case of a request by a
member of the community, shall be limited to issues previously
raised in comments submitted pursuant to subsection (a).
``(4) Completion of review.--The appropriate Federal
financial supervisory agency shall complete any requested
reconsideration within 30 days of the filing of the request.
``(d) Conclusive Rating.--
``(1) In general.--An institution's rating shall become
conclusive on the later of--
``(A) 30 days after the rating is disclosed to the
public; or
``(B) the completion of any requested reconsideration
by the Federal financial supervisory agency.
``(2) Rating conclusive of meeting community credit needs.--
An institution's rating shall be the conclusive assessment of
the institution's record of meeting the credit needs of its
community for purposes of section 804 until the institution's
next rating, developed pursuant to an examination, becomes
conclusive.
``(3) Safe harbor.--Institutions which have received a
`satisfactory' or `outstanding' rating shall be deemed to have
met the purposes of section 804.
``(4) Rule of construction.--Notwithstanding any other
provision of law, no provision of this section shall be
construed as granting a cause of action to any person.''.
(c) Overall Evaluation of Institution.--Paragraph (2) of section
804(a) of the Community Reinvestment Act of 1977 (12 U.S.C. 2903(a)) is
amended to read as follows:
``(2) take such record into account in the overall evaluation
of the condition of the institution by the appropriate Federal
financial supervisory agency.''.
SEC. 125. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.
(a) In General.--Section 804 of the Community Reinvestment Act of
1977 (12 U.S.C. 2903) is amended by inserting after subsection (c) (as
added by section 123 of this title) the following new subsection:
``(d) Special Purpose Institutions.--
``(1) In general.--In conducting assessments pursuant to this
section at any special purpose institution, the appropriate
Federal financial supervisory agency shall--
``(A) consider the nature of business such
institution is involved in; and
``(B) assess and take into account the record of the
institution commensurate with the amount of deposits
(as defined in section 3(1) of the Federal Deposit
Insurance Act) received by such institution.
``(2) Standards.--Each appropriate Federal financial
supervisory agency shall develop standards under which special
purpose institutions may be deemed to have complied with the
requirements of this title which are consistent with the
specific nature of such businesses.''.
(b) Special Purpose Institution Defined.--Section 803 of the
Community Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by
adding at the end the following new paragraph:
``(5) Special purpose institutions.--The term `special
purpose institution' means a financial institution that does
not generally accept deposits from the public in amounts of
less than $100,000, such as wholesale, credit card, and trust
institutions.''.
SEC. 126. INCREASED INCENTIVES FOR LENDING TO LOW- AND MODERATE-INCOME
COMMUNITIES.
(a) In General.--Section 804(b) of the Community Reinvestment Act of
1977 (12 U.S.C. 2903(b)) is amended to read as follows:
``(b) Positive Consideration of Certain Loans and Investments.--In
assessing and taking into account the records of a regulated financial
institution under subsection (a), the appropriate Federal financial
supervisory agency shall--
``(1) consider as a positive factor, consistent with the safe
and sound operation of the institution, the institution's
investment in or loan to--
``(A) any minority depository institution or women's
depository institution (as such terms are defined in
section 808(b)) or any low-income credit union;
``(B) any joint venture or other entity or project
which promotes the public welfare in any distressed
community (as defined by such agency) whether or not
the distressed community is located in the local
community in which the regulated financial institution
is chartered to do business; and
``(C) targeted low- and moderate-income communities,
including real property loans to such communities; and
``(2) consider equally with other factors capital investment,
loan participation, and other ventures undertaken by the
institution in cooperation with--
``(A) minority- and women-owned financial
institutions and low-income credit unions to the extent
that these activities help meet the credit needs of the
local communities in which such institutions are
chartered; and
``(B) community development corporations in extending
credit and other financial services principally to low-
and moderate-income persons and small businesses to the
extent that such community development corporations
help meet the credit needs of the local communities
served by the majority-owned institution.''.
(b) Amendment to Definitions.--Section 803 of the Community
Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by inserting after
paragraph (5) (as added by section 125(b) of this subtitle) the
following new paragraph:
``(6) State bank supervisor.--The term `State bank
supervisor' has the same meaning as in section 3(r) of the
Federal Deposit Insurance Act.''.
(c) Technical Correction.--The 1st of the 2 paragraphs designated as
paragraph (2) of section 803 of the Community Reinvestment Act of 1977
(12 U.S.C. 2902) is amended to read as follows:
``(D) the Director of the Office of Thrift
Supervision with respect to any savings association
(the deposits of which are insured by the Federal
Deposit Insurance Corporation) and any savings and loan
holding company (other than a company which is a bank
holding company);''.
SEC. 127. PROHIBITION ON ADDITIONAL REPORTING UNDER CRA.
Section 806 of the Community Reinvestment Act of 1977 (12 U.S.C.
2905) is amended to read as follows:
``SEC. 806. REGULATIONS.
``(a) In General.--
``(1) Publication requirement.--Regulations to carry out the
purposes of this title shall be published by each appropriate
Federal financial supervisory agency.
``(2) Prohibition on additional recordkeeping.--Regulations
prescribed and policy statements, commentary, examiner
guidance, or other supervisory material issued under this title
shall not impose any additional recordkeeping on a financial
institution.
``(3) Prohibition on loan data collection.--No loan data may
be required to be collected and reported by a financial
institution and no such data may be made public by any Federal
financial supervisory agency under this title.''.
SEC. 128. TECHNICAL AMENDMENT.
Section 807(b)(1)(B) of the Community Reinvestment Act (12 U.S.C.
2906) is amended by striking ``The information'' and inserting ``In the
case of a regulated financial institution that maintains domestic
branches in 2 or more States, the information''.
SEC. 129. DUPLICATIVE REPORTING.
Section 10(g) of the Federal Home Loan Bank Act (12 U.S.C. 1430(g))
is amended by adding at the end the following new paragraph (3):
``(3) Special rule.--This subsection shall not apply to
members receiving a grade of `outstanding' or `satisfactory'
under section 807 of the Community Reinvestment Act of 1977.''.
SEC. 130. CRA CONGRESSIONAL OVERSIGHT.
(a) Sense of Congress Relating to Aggressive Oversight.--It is the
sense of the Congress that the appropriate committees of the House of
Representatives and the Senate should exercise aggressive oversight of
the adoption and implementation of any regulation by any appropriate
Federal financial supervisory agency under the Community Reinvestment
Act of 1977 after the date of the enactment of this Act.
(b) Agency Reports Required.--
(1) In general.--Each appropriate Federal financial
supervisory agency shall submit a report to the Congress by
December 31, 1996, and by December 31, 1997, on the
implementation of all regulations prescribed by such agency
under the Community Reinvestment Act of 1977 after the date of
the enactment of this Act.
(2) Requirements relating to preparation of reports.--In
preparing each report required under paragraph (1), each
appropriate Federal financial supervisory agency shall--
(A) solicit and include comments from regulated
financial institutions with respect to the regulations
which are the subject of the report; and
(B) include quantifiable measures of the cost savings
achieved under the regulations which are the subject of
the report and the effectiveness of such regulations in
achieving the purposes of the Community Reinvestment
Act of 1977.
(3) Definitions.--For purposes of this section, the terms
``appropriate Federal financial supervisory agency'' and
``regulated financial institution'' have the same meanings as
in section 803 of the Community Reinvestment Act of 1977.
SEC. 131. CONSULTATION AMONG EXAMINERS.
Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is
amended by adding at the end the following new subsection:
``(j) Consultation Among Examiners.--
``(1) In general.--Each appropriate Federal banking agency
shall take such action as may be necessary to ensure that
examiners employed by the agency--
``(A) consult on examination activities with respect
to any depository institution; and
``(B) achieve an agreement and resolve any
inconsistencies on the recommendations to be given to
such institution as a consequence of any examinations.
``(2) Examiner-in-charge.--Each agency shall consider
appointing an examiner-in-charge with respect to a depository
institution to ensure consultation on examination activities
among all of the agency's examiners involved in examinations of
such institution.''.
SEC. 132. LIMITATION ON REGULATIONS.
Section 806 of the Community Reinvestment Act of 1977 (12 U.S.C.
2905) (as amended by section 127) is amended by adding at the end the
following new subsections:
``(b) Limitation on Regulations.--No regulation may be prescribed
under this title by any Federal agency which would--
``(1) require any regulated financial institution to--
``(A) make any loan or enter into any other agreement
on the basis of any discriminatory criteria prohibited
under any law of the United States; or
``(B) make any loan to, or enter into any other
agreement with, any uncreditworthy person that would
jeopardize the safety and soundness of such
institution; or
``(2) prevent or hinder in any way a financial institution's
full responsibility to provide credit to all segments of the
community.
``(c) Encourage Loans to Creditworthy Borrowers.--Regulations
prescribed under this title shall encourage regulated financial
institutions to make loans and extend credit to all creditworthy
persons, consistent with safety and soundness.''.
Subtitle C--Consumer Banking Reforms
SEC. 141. TRUTH IN SAVINGS.
(a) Purpose.--Section 262 of the Truth in Savings Act (12 U.S.C.
4301) is amended to read as follows:
``SEC. 262. PURPOSE.
``It is the purpose of this subtitle to ensure that consumers can
make a meaningful comparison between the competing claims of depository
institutions with regard to deposit accounts by requiring that
institutions offering interest-bearing accounts pay interest on the
full amount of principal each day in a consumer deposit account at the
rate agreed to be paid by the institution.''.
(b) Prohibition on Misleading or Inaccurate Advertisements and
Disclosures.--Section 263 is amended to read as follows:
``SEC. 263. PROHIBITION ON MISLEADING OR INACCURATE ADVERTISEMENTS AND
DISCLOSURES.
``No depository institution or deposit broker shall make any
advertisement, announcement, solicitation or disclosure relating to a
deposit account that is inaccurate or misleading, including any
inaccurate or misleading description of a free or no-cost account, or
that misrepresents its deposit contracts.''.
(c) Account Information Upon Opening an Account.--Section 264 of the
Truth in Savings Act (12 U.S.C. 4304) is amended to read as follows:
``SEC. 264. ACCOUNT INFORMATION.
``(a) In General.--Each depository institution shall disclose fees,
charges, penalties, and interest rates applicable to each class of
accounts offered by the institution in accordance with this section.
``(b) Information on Fees and Charges.--Each depository institution
shall disclose the following information with respect to any account to
a consumer at the time the account is opened, or at such earlier time
as a consumer may request (and no additional information may be
required to be disclosed under this subtitle by regulation or otherwise
with respect to such account):
``(1) A description of all fees, periodic service charges,
penalties, and interest rates which may be charged or assessed
against the account (or against the account holders in
connection with such account), the amount of any such fees,
charges, or penalties (or the method by which such amount will
be calculated), and the conditions under which any such amount
will be assessed.
``(2) All minimum balance requirements that affect fees,
charges, and penalties, including a clear description of how
each such minimum balance is calculated.
``(3) Any minimum amount required with respect to the initial
deposit in order to open the account.
``(c) Information on Interest Rates.--The disclosures required under
subsections (a) and (b) with respect to any account shall include the
following information:
``(1) Any annual rate of simple interest.
``(2) The frequency with which interest will be compounded
and credited.
``(d) No Regulations Authorized.--No regulations may be prescribed
with respect to this section by the Board or any agency referred to in
this title, including any regulation to define any terms used in this
section.''.
(d) Disclosure of Change in Terms.--Section 265 of the Truth in
Savings Act (12 U.S.C. 4304) is amended to read as follows:
``SEC. 265. DISCLOSURE OF CHANGE IN TERMS.
``If any change is made in any item required to be disclosed under
section 264, all account holders who may be affected by such change
shall be notified by mail and provided with a description of such
change at least 30 days before the effective date of the change.''.
(e) Repeal of Sections.--Sections 266, 268, 271, and 273 of the Truth
in Savings Act (12 U.S.C. 4304, 4305, 4307, 4310, and 4312,
respectively) are hereby repealed.
(f) Redesignation of Sections.--Section 267, 270, 272 of the Truth in
Savings Act (12 U.S.C. 4306, 4309, and 4311) are redesignated as
sections 266, 268, and 269, respectively.
(g) Redesignation and Amendment of Section 269.--Section 269 of the
Truth in Savings Act (12 U.S.C. 4308) (as determined before the
redesignation made by subsection (f) of this section) is amended to
read as follows:
``SEC. 267. REGULATIONS.
``(a) In General.--The Board, after consultation with each agency
referred to in section 268(a) and public notice and opportunity for
comment, shall prescribe regulations to carry out the purpose and
provisions of this subtitle.
``(b) Effective Date of Regulations.--The provisions of this subtitle
shall not apply with respect to any depository institution before the
effective date of regulations prescribed by the Board under this
subsection.''
(h) Redesignation and Amendment of Section 274.--Section 274 of the
Truth in Savings Act (12 U.S.C. 4313) is amended to read as follows:
``SEC. 270. DEFINITIONS.
``For the purposes of this subtitle, the following definitions shall
apply:
``(1) Accounts.--The term `account' means any account
intended for use by and generally used by a consumer primarily
for personal, family, or household purposes that is offered by
a depository institution.
``(2) Deposit broker.--The term `deposit broker'--
``(A) has the meaning given to such term in section
29(f)(1) of the Federal Deposit Insurance Act; and
``(B) includes any person who solicits any amount
from any other person for deposit in an insured
depository institution.
``(3) Depository institution.--The term `depository
institution'--
``(A) means an institution described in clause (i),
(ii), (iii), (iv), (v), or (vi) of section 19(b)(1)(A)
of the Federal Reserve Act; and
``(B) does not include nonautomated credit unions
which were not required to comply with the requirements
of this title as of the date of the enactment of the
Financial Institutions Regulatory Relief Act of 1995
pursuant to the determination of the National Credit
Union Administration Board.
``(4) Interest.--The term `interest' includes dividends paid
with respect to share accounts which are accounts within the
meaning of paragraph (1).
``(5) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.''.
(i) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on the effective date of regulations prescribed by
the Board of Governors of the Federal Reserve System to
implement such amendments.
(2) Authority to issue regulations.--Notwithstanding
paragraph (1), the Board of Governors of the Federal Reserve
System shall prescribe regulations in accordance with the
amendment made by subsection (g).
(3) Continued applicability of provisions until effective
date of new regulations.--The Truth in Savings Act, as in
effect on the day before the date of the enactment of this Act,
shall continue to apply on and after such date until the
effective date of the amendments to such Act under this
section.
SEC. 142. INFORMATION SHARING.
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is
amended by adding at the end the following new subsection:
``(s) Customer Access to Products.--
``(1) In general.--Notwithstanding any other provision of
law, any depository institution, or any affiliate or subsidiary
of any depository institution, may share or exchange
information or otherwise transfer information between or among
themselves without any restriction or limitation if it is
clearly and conspicuously disclosed that the information may be
communicated among such persons and the consumer is given the
opportunity, before the time that the information is initially
communicated, to direct that such information not be
communicated among such persons.
``(2) Definition.--For purposes of this subsection, the term
`information' means any and all data, records, or other
information and material obtained or maintained by any
depository institution or any affiliate or subsidiary thereof
in the ordinary course of its business that relates in any way
to a person (as such term is defined in section 603(b) of the
Fair Credit Reporting Act) who applies for, maintains, or has
maintained an account or credit relationship with or applied
for, purchased or obtained other products or services from any
depository institution or any affiliate or subsidiary of any
depository institution, regardless of the source or manner in
which the information is obtained or furnished.
``(3) Rule of construction.--Any depository institution, or
any affiliate or subsidiary of any depository institution,
relying on this subsection shall not be deemed to be a consumer
reporting agency, user, or third party, and the information
itself shall not constitute a consumer report, within the
meaning of the Fair Credit Reporting Act or other similar
law.''.
SEC. 143. ELECTRONIC FUND TRANSFER ACT CLARIFICATION.
(a) Definition of Accepted Card or Other Means of Access.--Section
903(1) of the Electronic Fund Transfer Act (15 U.S.C. 1693a(1)) is
amended by inserting before the semicolon at the end the following: ``,
but such term does not include a card, device, or computer that a
person may use to pay for transactions through use of value stored on,
or assigned to, the card, device, or computer itself, except for those
transactions where such card, device, or computer is actually used to
access an account to effect such transaction''.
(b) Definition of Account.--Section 903(2) of the Electronic Fund
Transfer Act (15 U.S.C. 1693a(2)) is amended by inserting before the
semicolon at the end the following: ``and does not include any value
which is stored on, or assigned to, a card, device, or computer itself
that enables a person to pay for transactions through use of that
stored value''.
SEC. 144. LIMIT ON RESTITUTION FOR TRUTH IN LENDING VIOLATIONS IF
SAFETY AND SOUNDNESS OF VIOLATOR WOULD BE AFFECTED.
Section 108(e)(3)(A) of the Truth in Lending Act (15 U.S.C.
1607(e)(3)(A)) is amended--
(1) by striking ``in any such case, the agency may require''
and inserting ``in any such case, the agency may (i) require'';
(2) by striking ``, except that with respect to any
transaction consummated after the effective date of section 608
of the Truth in Lending Simplification and Reform Act, the
agency shall'' and inserting ``; or (ii)''; and
(3) by striking ``reasonable,'' and inserting ``reasonable
if, in the case of an agency referred to in paragraph (1), (2),
or (3) of subsection (a), the agency determines that a partial
adjustment or the making of partial payments over an extended
period is necessary to avoid causing the creditor to become
undercapitalized (as determined in accordance with regulations
prescribed by such agency under section 38 of the Federal
Deposit Insurance Act);''.
Subtitle D--Equal Credit Opportunity Act Amendments
SEC. 151. SHORT TITLE.
This subtitle may be cited as the ``Equal Credit Opportunity Act
Amendments of 1995''.
SEC. 152. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds that both the Equal Credit
Opportunity Act (15 U.S.C. 1691, et seq.) and the Fair Credit Reporting
Act (15 U.S.C. 1681, et seq.) contain requirements that applicants for
consumer credit be given certain information in the event that adverse
action is taken on the application. These requirements differ in both
scope and content and for that reason are confusing to both the
consumer who receives the information and the party required to furnish
the information.
(b) Purpose.--It is the purpose of this subtitle to combine and
simplify the adverse action notification requirements of the Equal
Credit Opportunity Act and the Fair Credit Reporting Act regarding
applications for consumer credit and to make the information that is
required to be furnished more understandable.
SEC. 153. EQUAL CREDIT OPPORTUNITY ACT AMENDMENTS.
(a) Notice of Adverse Action.--Section 701(d)(2)(B) of the Equal
Credit Opportunity Act (15 U.S.C. 1691(d)(2)(B)) is amended to read as
follows:
``(B) giving written notification of adverse action
which discloses--
``(i) the applicant's right to a statement of
reasons within 30 days after receipt by the
creditor of a request made within 60 days after
such notification;
``(ii) if credit is denied or the charge for
such credit is increased either wholly or
partly because of information contained in a
consumer report from a consumer reporting
agency--
``(I) that fact and the name,
address, and telephone number of the
consumer reporting agency making the
report;
``(II) the consumer's right to
obtain, under section 612, a free copy
of a consumer report on the consumer,
from the consumer reporting agency
referred to in subclause (I) within the
30-day period provided under such
section; and
``(III) the consumer's right to
dispute, under section 611, with a
consumer reporting agency the accuracy
or completeness of any information in a
consumer report furnished by the
agency.
``(iii) if credit is denied or the charge for
credit is increased either wholly or partly
because of information obtained from a person
other than a consumer reporting agency bearing
upon the consumer's credit worthiness, credit
standing, credit capacity, character, general
reputation, personal characteristics or mode of
living, that fact and the right to receive
disclosure of the nature of the information so
received, within a reasonable period of time,
upon the consumer's written request for
information within 60 days after learning of
such adverse action; and
``(v) the identity of the person or office
from which such notification may be obtained.
Such statement of reasons may be given orally if the
written notification advises the applicant of his right
to have the statement of reasons confirmed in writing
on written request.''.
(b) Technical and Conforming Amendment.--Section 701(d)(3) of the
Equal Credit Opportunity Act (15 U.S.C. 1691(d)(3)) is amended by
striking the period at the end and adding the following: ``and, to the
extent applicable, the name, address, and telephone number of the
consumer reporting agency identified in accordance with the
requirements of subsection (d)(3)(ii) and a statement of the right to
obtain disclosure of the nature of the information upon which adverse
action was taken as required by such subsection.''.
(c) Reasonable Procedures to Assure Compliance.--Section 706 of the
Equal Credit Opportunity Act (15 U.S.C. 1691e) is amended by adding at
the end the following new subsection:
``(l) Reasonable Procedures To Assure Compliance.--No person shall be
held liable for any violation of subsection 701(d) if such person shows
by a preponderance of the evidence that at the time of the alleged
violation the person maintained reasonable procedures to assure
compliance with the provisions of the subsection.''.
SEC. 154. FAIR CREDIT REPORTING ACT AMENDMENTS.
(a) Section 615(a) of the Fair Credit Reporting Act (15 U.S.C.
1681m(a)) is amended by striking ``credit or'' each place such term
appears.
(b) Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is
amended by striking subsection (b) and redesignating subsection (c) as
subsection (b).
(c) Section 615(b) (as redesignated by this section) of the Fair
Credit Reporting Act (15 U.S.C. 1681m(b)) is amended by striking
``subsections (a) and (b)'' and inserting ``subsection (a)''.
SEC. 155. INCENTIVES FOR SELF-TESTING.
(a) Equal Credit Opportunity.--
(1) In general.--The Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.) is amended by inserting after section 704 the
following new section:
``SEC. 704A. INCENTIVES FOR SELF-TESTING AND SELF-CORRECTION.
``(a) In General.--If a creditor--
``(1) conducts, or authorizes an independent third party to
conduct, a self-test of the creditor's lending or any part of
the creditor's lending operations in order to determine the
level or effectiveness of compliance with this title by the
creditor; and
``(2) has identified discriminatory practices and has taken
or is taking appropriate corrective actions to address the
discrimination,
any report or results of such a self-test may not be obtained or used
by any applicant, department, or agency in any proceeding or civil
action brought under this title.
``(b) Results of Self-Testing.--No provision of this section shall be
construed as preventing an applicant, department, or agency from
obtaining and using the results of any self-testing in any proceeding
or civil action brought under this title if--
``(1) the creditor or any other entity conducted such
activity at the request of a department or agency;
``(2) the creditor or any other entity, or any person acting
on behalf of the creditor or other entity--
``(A) voluntarily releases or discloses all, or any
part of, such results; or
``(B) refers to or describes such results as a
defense to charges of unlawful discrimination against
such creditor, person, or entity; or
``(3) the results are sought by the applicant, department, or
agency by means of a discovery request for the purposes of
determining an appropriate penalty or remedy for a violation of
this title.
``(c) Regulations.--The appropriate Federal department or agency
shall prescribe regulations, after notice and opportunity for comment,
which determine what types of `self-tests' are sufficiently extensive
so as to constitute a determination of the level or effectiveness of a
creditor's compliance with this title.''.
(2) Referrals to the attorney general.--Section 706(g) of the
Equal Credit Opportunity Act (15 U.S.C. 1691e(g)) is amended--
(A) by striking ``(g) The agencies'' and inserting
``(g) Referrals to the Attorney General.--
``(1) In general.--The agencies''; and
(B) by adding at the end the following new
paragraphs:
``(2) Limitation on referrals of self-testing results.--
``(A) In general.--No agency shall be required to
refer any report or results of a self-test relating to
any creditor to the Attorney General if the creditor--
``(i) has already identified discriminatory
practices as the result of self-testing
instituted by the creditor to determine
compliance with this title; and
``(ii) has taken or is taking appropriate
corrective actions to address the
discrimination.
``(3) Enforcement under other laws.--No provision of this
section shall be construed as limiting the authority of the
agency to enforce the provisions of this title under any other
provision of law.''.
(3) Referrals to hud.--Section 706(k) of the Equal Credit
Opportunity Act (15 U.S.C. 1691e(k)) is amended by adding at
the end the following: ``No such agency shall be required to
notify the Secretary of Housing and Urban Development or the
applicant that the agency has reason to believe that a
violation of this title or the Fair Housing Act occurred if the
reason is based on a result of self-testing instituted by the
creditor to determine compliance with this title, and the
creditor has already identified the possible violation and has
taken or is taking appropriate corrective actions to address
the possible violation. No provisions of this section shall be
construed as limiting the authority of the agency to enforce
the provisions of this title under any other provision of
law.''.
(4) Clerical amendment.--The table of sections for title VII
of the Consumer Credit Protection Act is amended by inserting
after the item relating to section 704 the following new item:
``704A. Incentives for self-testing and self-correction.''.
(b) Fair Housing.--The Fair Housing Act (42 U.S.C. 3601 et seq.) is
amended by inserting after section 814 the following new section:
``SEC. 814A. SELF-TESTING ENHANCEMENT.
``(a) In General.--If any person--
``(1) conducts, or authorizes an independent third party to
conduct, a self-test of that person's residential real estate
related lending activities, or any part of such activities, in
order to determine the level or effectiveness of compliance
with this title by the person; and
``(2) has identified discriminatory practices and has taken
or is taking appropriate corrective actions to address the
discrimination,
any report or results of such a self-test may not be obtained or used
by any aggrieved person, complainant, department, or agency in any
proceeding or civil action brought under this title.
``(b) Results of Self-Testing.--No provision of this section shall be
construed as preventing an aggrieved person, complainant, department,
or agency from obtaining and using the results of any self-testing as
described in subsection (a) in any proceeding or civil action brought
under this title if--
``(1) the creditor or any other entity conducted such
activity at the request of a department or agency;
``(2) the creditor or any other entity, or any person acting
on behalf of the creditor or other entity--
``(A) voluntarily releases or discloses all, or any
part of, such results; or
``(B) refers to or describes such results as a
defense to charges of unlawful discrimination against
such creditor, person, or entity; or
``(3) the results are sought by the aggrieved person,
complainant, department, or agency by means of a discovery
request for the purposes of determining an appropriate penalty
or remedy for a violation of this title.
``(c) Regulations.--The appropriate Federal department or agency
shall prescribe regulations, after notice and opportunity for comment,
which determine what types of `self-tests' are sufficiently extensive
so as to constitute a determination of the level or effectiveness of a
creditor's compliance with this title.''.
SEC. 156. CREDIT SCORING SYSTEMS.
Section 701 of the Equal Credit Opportunity Act (15 U.S.C. 1691) is
amended by adding at the end the following new subsection:
``(f) Credit Scoring System.--
``(1) In general.--A creditor shall be deemed to be in
compliance with subsection (a) with respect to any credit
decision made by the creditor which is based solely on the use
of an empirically derived, demonstrably and statistically
sound, credit scoring system (as defined by the Board in
regulations prescribed under this title) if such system--
``(A) does not utilize any category protected under
subsection (a);
``(B) does not use as a factor in such system any
criterion which is so directly associated with such a
category as to be the functional equivalent of such a
category; and
``(C) does not use as a factor in such system any
criterion that has a disparate impact on a category
protected under subsection (a) unless use of the
criterion is justified by business necessity and there
is no less discriminatory alternative available.
``(2) Age as a factor.--No provision of this subsection shall
be construed as precluding a creditor from using age as a
factor in a credit scoring system under paragraph (1) to the
extent otherwise permitted under this title.''.
SEC. 157. CONSULTATION BY ATTORNEY GENERAL REQUIRED IN NONREFERRAL
CASES.
(a) Equal Credit Opportunity.--Section 706(h) of the Equal Credit
Opportunity Act (15 U.S.C. 1691e(h)) is amended by adding at the end
the following new sentence: ``Before bringing a civil action against
any creditor described in paragraph (1), (2), or (3) of section 704(a),
the Attorney General shall consult with the appropriate agency under
such paragraph.''.
(b) Fair Housing Act.--Section 814(a) of the Fair Housing Act (42
U.S.C. 3614(a)) is amended by adding at the end the following new
sentence: ``Before bringing a civil action under the preceding sentence
against any person or group of persons described in paragraph (1), (2),
or (3) of section 704(a) of the Equal Credit Opportunity Act with
respect to a violation of 805(a) of this title, the Attorney General
shall consult with the appropriate agency under such paragraph.''.
SEC. 158. EFFECTIVE DATE.
(a) In General.--Except with respect to the requirements of
subsection (b), this Act shall take effect at the end of the 270-day
period beginning on the date of the enactment of this Act.
(b) Implementing Regulations.--The Board of Governors of the Federal
Reserve System shall prescribe regulations to implement this Act and
such regulations shall be published in final form before the end of the
180-day period beginning on the date of the enactment of this Act.
Subtitle E--Consumer Leasing Act Amendments
SEC. 161. SHORT TITLE.
This subtitle may be cited as the ``Consumer Leasing Act Amendments
of 1995''.
SEC. 162. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSE.
(a) Findings.--The Congress finds the following:
(1) Competition among the various financial institutions and
other firms engaged in the business of consumer leasing is
greatest when there is informed use of leasing. The informed
use of leasing results from an awareness of the cost of leasing
by consumers.
(2) There has been a continued trend toward leasing
automobiles and other durable goods for consumer use as an
alternative to installment credit sales and that leasing
product advances have occurred such that lessors have been
unable to provide consistent industry-wide disclosures to fully
account for the competitive progress that has occurred.
(b) Purposes.--
(1) It is the purpose of this subtitle to assure a simple,
meaningful disclosure of leasing terms so that the consumer
will be able to compare more readily the various leasing terms
available to the consumer and avoid the uninformed use of
leasing, and to protect the consumer against inaccurate and
unfair leasing practices.
(2) To provide for adequate cost disclosures that reflect the
marketplace without impairing competition and the development
of new leasing products, it is the purpose of this subtitle to
provide the Board with the regulatory authority to assure a
simplified, meaningful definition and disclosure of the terms
of certain leases of personal property for personal, family, or
household purposes so as to enable the lessee to compare more
readily the various lease terms available to the lessee, enable
comparison of lease terms with credit terms where appropriate
and to assure meaningful and accurate disclosures of lease
terms in advertisements.
SEC. 163. REGULATIONS.
(a) In General.--Chapter 5 of title I of the Consumer Credit
Protection Act (15 U.S.C. 1601 et seq.) is amended by adding at the end
the following new section:
``SEC. 187. REGULATIONS.
``(a) Regulations Authorized.--
``(1) In general.--The Board shall write regulations or staff
commentary, if appropriate, to update and clarify the
requirements and definitions for lease disclosures, contracts,
and any other specific issues related to consumer leasing which
would carry out the purposes of this chapter, to prevent any
circumvention of the chapter, and to facilitate compliance with
the requirements of the chapter.
``(2) Classifications, adjustments.--The regulations
prescribed under paragraph (1) may contain classifications and
differentiations and may provide for adjustments and exceptions
for any class of transaction.
``(b) Model Disclosures.--The Board shall publish model disclosure
forms and clauses to facilitate compliance with the disclosure
requirements and to aid the consumer in understanding the transaction.
In designing forms, the Board shall consider the use by lessors of data
processing or similar automated equipment. Use of the models shall be
optional. A lessor who properly uses the material aspects of the models
shall be deemed to be in compliance with the disclosure requirements.
``(c) Effective Dates.--
``(1) In general.--Any regulation of the Board, or any
amendment or interpretation of any regulation of the Board,
that requires a disclosure different from the disclosures
previously required shall have an effective date of the October
1 that follows the date of promulgation by at least 6 months.
``(2) Longer period.--The Board may, in the Board's
discretion, lengthen the period of time referred to in
paragraph (1) to permit lessors to adjust their forms to
accommodate new requirements.
``(3) Shorter period.--The Board may also shorten the period
of time referred to in paragraph (1) if the Board makes a
specific finding that such action is necessary to comply with
the findings of a court or to prevent unfair or deceptive
practices.
``(4) Compliance before effective date.--Lessors may comply
with any newly promulgated disclosure requirement before the
effective date of such requirement.''.
(b) Clerical Amendment.--The table of sections for chapter 5 of title
I of the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is
amended by inserting after the item relating to section 186 the
following new item:
``187. Regulations.''.
SEC. 164. CONSUMER LEASE ADVERTISING.
Section 184 of the Consumer Credit Protection Act (15 U.S.C. 1667c)
is amended to read as follows:
``SEC. 184. CONSUMER LEASE ADVERTISING.
``(a) In General.--If an advertisement for a consumer lease states
the amount of any payment or states that any or no initial payment is
required, the advertisement must also clearly and conspicuously state
the following terms, as applicable:
``(1) That the transaction advertised is a lease.
``(2) The total of initial payments required at or before
consummation of the lease or delivery of the property,
whichever is later.
``(3) That a security deposit is required.
``(4) The number, amounts, and timing of scheduled payments.
``(5) For a lease in which the consumer's liability at the
end of the lease term is based on the anticipated residual
value of the property, that an extra charge may be imposed at
the end of the lease term.
``(b) Advertising Medium Not Liable.--Any owner or personnel of any
medium in which an advertisement appears or through which it is
disseminated shall not be liable under this section.''.
SEC. 165. STATUTORY PENALTIES.
Section 185(a) of the Consumer Credit Protection Act (15 U.S.C.
1667d(a)) is amended by adding at the end the following new sentence:
``Notwithstanding the preceding sentence, a creditor shall only have
liability determined under section 130(a)(2) for failing to comply with
the requirements of paragraph (2), (8), (9), or (10) of section 182 or
for failing to comply with disclosure requirements under State law for
any term which the Board has determined to be substantially the same in
meaning under section 186 as any of the terms referred to in section
182.''.
Subtitle F--Federal Home Loan Bank Amendments
SEC. 171. APPLICATION FOR MEMBERSHIP IN THE FHLB SYSTEM.
Section 4(b) of the Federal Home Loan Bank Act (12 U.S.C. 1424) is
amended to read as follows:
``(b) Membership Based on Conveniency.--An institution eligible to
become a member of a Federal home loan bank under this section may
become a member by submitting the institution's application for
membership to the bank in the district where the applicant's principal
place of business is located. An application for membership shall be
approved by the bank if, in the judgment of the bank, the applicant
meets the criteria for eligibility contained in this section. An
institution eligible to become a member under this section may apply
for membership in an adjoining district, if appropriate for the
convenience of the institution and then only with the approval of the
Board.''.
SEC. 172. FEDERAL HOME LOAN BANK EXTERNAL AUDITORS.
Section 11(j) of the Federal Home Loan Bank Act (12 U.S.C. 1431(j))
is amended to read as follows:
``(j) Audits.--
``(1) Notwithstanding any other provision of law, audits by
the Comptroller General of the United States of the financial
transactions of a Federal home loan bank shall not be limited
to periods during which Government capital has been invested in
the bank. The provisions of section 9107(c)(2) and 9108(d)(1)
of title 31, of such Code, shall not apply to any Federal home
loan bank.
``(2) Notwithstanding any other provision of law, the Board
shall not participate in the hiring of an external auditor by
the banks; except, that the Board may establish requirements
for external audit contracts and, that all 12 banks shall
contract for an annual audit with a single provider.''.
TITLE II--STREAMLINING GOVERNMENT REGULATIONS
Subtitle A--Regulatory Approval Issues
SEC. 201. STREAMLINED NONBANKING ACQUISITIONS BY WELL CAPITALIZED AND
WELL MANAGED BANKING ORGANIZATIONS.
(a) Notice Requirements.--Section 4(j) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(j) is amended--
(1) in paragraph (1)(A), by striking ``No'' and inserting
``Except as provided in paragraph (3), no''; and
(2) by adding at the end the following new paragraphs:
``(3) No notice required for certain transactions.--No notice
under paragraph (1) or subsections (c)(8) or (a)(2)(B) is
required for a proposal by a bank holding company to engage in
any activity or acquire the shares or assets of any company if
the proposal qualifies under paragraph (4).
``(4) Criteria for statutory approval.--A proposal qualifies
under this paragraph if all of the following criteria are met:
``(A) Financial criteria.--Both before and
immediately after the proposed transaction--
``(i) the acquiring bank holding company is
well capitalized;
``(ii) the lead insured depository
institution of such holding company is well
capitalized;
``(iii) well capitalized insured depository
institutions control at least 80 percent of the
aggregate total risk-weighted assets of insured
depository institutions controlled by such
holding company; and
``(iv) no insured depository institution
controlled by such holding company is
undercapitalized.
``(B) Managerial criteria.--
``(i) Well managed.--At the time of the
transaction, the acquiring bank holding
company, its lead insured depository
institution, and insured depository
institutions that control at least 90 percent
of the aggregate total risk-weighted assets of
insured depository institutions controlled by
such holding company are well managed.
``(ii) Limitation on poorly managed
institutions.--Except with respect to insured
depository institutions described in paragraph
(6), no insured depository institution
controlled by the acquiring bank holding
company has received 1 of the 2 lowest
composite ratings at the later of the
institution's most recent examination or
subsequent review.
``(C) Activities permissible.--Following consummation
of the proposal, the bank holding company engages
directly or through a subsidiary solely in--
``(i) activities that are permissible under
subsection (c)(8), as determined by the Board
by regulation or order thereunder, subject to
all of the restrictions, terms and conditions
of such subsection and such regulation or
order; and
``(ii) such other activities as are otherwise
permissible under this section, subject to the
restrictions, terms and conditions, including
any prior notice or approval requirements,
provided in this section.
``(D) Size of acquisition.--
``(i) Asset size.--The book value of the
total assets to be acquired does not exceed 10
percent of the consolidated total risk-weighted
assets of the acquiring bank holding company;
and
``(ii) Consideration.--The gross
consideration to be paid for the securities or
assets does not exceed 15 percent of the
consolidated Tier 1 capital of the acquiring
bank holding company.
``(E) Notice not otherwise warranted.--For proposals
described in paragraph (5)(B), the Board has not,
before the conclusion of the period provided in
paragraph (5)(B), advised the bank holding company that
a notice under paragraph (1) is required.
``(F) Compliance criterion.--During the 12-month
period ending on the date on which the bank holding
company proposes to commence an activity or
acquisition, no administrative enforcement action has
been commenced, and no cease and desist order has been
issued pursuant to section 8 of the Federal Deposit
Insurance Act, against the bank holding company or any
depository institution subsidiary of the holding
company and no such enforcement action, order, or other
administrative enforcement proceeding is pending as of
such date.
``(5) Notification.--
``(A) Commencement of activities approved by rule.--A
bank holding company that qualifies under paragraph (4)
and that proposes to engage de novo, directly or
through a subsidiary, in any activity that is
permissible under subsection (c)(8), as determined by
the Board by regulation, may commence that activity
without prior notice to the Board and must provide
written notification to the Board no later than ten
business days after commencing the activity.
``(B) Activities permitted by order and
acquisitions.--
``(i) In general.--At least 12 business days
before commencing any activity pursuant to
paragraph (3) (other than an activity described
in subparagraph (A)) or acquiring shares or
assets of any company pursuant to paragraph
(3), the bank holding company shall provide
written notice of the proposal to the Board,
unless the Board determines that no notice or a
shorter notice period is appropriate.
``(ii) Description of activities and terms.--
A notification under this subparagraph shall
include a description of the proposed
activities and the terms of any proposed
acquisition.
``(6) Recently acquired institutions.--Insured depository
institutions which have been acquired by a bank holding company
during the 12-month period preceding the date on which the
company proposes to commence an activity or acquisition
pursuant to paragraph (3) may be excluded for purposes of
paragraph (4)(B)(ii) if--
``(A) the bank holding company has developed a plan
for the institution to restore the capital and
management of the institution which is acceptable to
the appropriate Federal banking agency; and
``(B) all such insured depository institutions
represent, in the aggregate, less than 10 percent of
the aggregate total risk-weighted assets of all insured
depository institutions controlled by the bank holding
company.
``(7) Adjustment of percentages.--The Board may, by
regulation, adjust the percentages and the manner in which the
percentages of insured depository institutions are calculated
under paragraph (4)(B)(i), (4)(D), or paragraph (6)(B) if the
Board determines that any such adjustment is consistent with
safety and soundness and the purposes of this Act.''.
(b) Definitions.--Section 2(o) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(o)) is amended--
(1) by striking paragraph (1) and inserting the following new
paragraph:
``(1) Capital terms.--
``(A) Insured depository institutions.--With respect
to insured depository institutions, the terms `well-
capitalized', `adequately capitalized', and
`uncapitalized' have the meaning given those terms in
section 38(b) of the Federal Deposit Insurance Act.
``(B) Bank holding company.--
``(i) Adequately capitalized.--The term
`adequately capitalized' means a level of
capitalization which meets or exceeds all
applicable Federal regulatory capital
standards.
``(ii) Well capitalized.--A bank holding
company is `well capitalized' if it meets the
required capital levels for well capitalized
bank holding companies established by the
Board.
``(C) Other capital terms.--The terms `Tier 1' and
`risk-weighted assets' have the meaning given those
terms in the capital guidelines or regulations
established by the Board for bank holding companies.'';
and
(2) by adding at the end the following new paragraphs:
``(8) Lead insured depository institutions.--
``(A) In general.--The term `lead insured depository
institution' means the largest insured depository
institution controlled by the bank holding company at
any time, based on a comparison of the average total
risk-weighted assets controlled by each insured
depository institution during the previous 12-month
period.
``(B) Branch or agency.--For purposes of this
paragraph and section 4(j)(4), the term `insured
depository institution' shall also include any branch
or agency operated in the United States by a foreign
bank.
``(9) Well managed.--The term `well managed' means--
``(A) in the case of any company or depository
institution which receives examinations, the
achievement of--
``(i) a CAMEL composite rating of 1 or 2 (or
an equivalent rating under an equivalent rating
system) in connection with the most recent
examination or subsequent review of such
company or institution; and
``(ii) at least a satisfactory rating for
management, if such rating is given; or
``(B) in the case of a company or depository
institution that has not received an examination
rating, the existence and use of managerial resources
which the Board determines are satisfactory.''.
SEC. 202. STREAMLINED BANK ACQUISITIONS BY WELL CAPITALIZED AND WELL
MANAGED BANKING ORGANIZATIONS.
Section 3 of the Bank Holding Company Act (12 U.S.C. 1842) is amended
by adding at the end the following new subsection:
``(h) No Approval Required for Certain Transactions.--
``(1) In general.--Notwithstanding paragraph (3) or (5) of
subsection (a) and subject to paragraphs (5) and (6), an
acquisition of shares by a registered bank holding company, or
a merger or consolidation between registered bank holding
companies, shall be deemed approved at the conclusion of the
period specified in subparagraph (G) if all of the following
conditions have been met:
``(A) Financial and managerial criteria.--
``(i) Well capitalized bank holding
company.--Both at the time of and immediately
after the proposed transaction, the acquiring
bank holding company is well capitalized.
``(ii) Well capitalized lead insured
depository institution.--Both at the time of
and immediately after the proposed transaction,
the lead insured depository institution of the
acquiring bank holding company is well
capitalized.
``(iii) Capital of other insured depository
institutions.--At the time of the transaction,
well capitalized insured depository
institutions control at least 80 percent of the
aggregate total risk-weighted assets of insured
depository institutions controlled by the
acquiring bank holding company.
``(iv) No undercapitalized insured depository
institutions.--At the time of the transaction,
no insured depository institution controlled by
the acquiring bank holding company is
undercapitalized.
``(v) Well managed.--
``(I) In general.--At the time of the
transaction, the acquiring bank holding
company, its lead insured depository
institution, and insured depository
institutions that control at least 90
percent of the aggregate total risk-
weighted assets of insured depository
institutions controlled by such holding
company are well managed.
``(II) No poorly managed
institutions.--Except with respect to
insured depository institutions
described in paragraph (2), no insured
depository institution controlled by
the acquiring bank holding company has
received 1 of the 2 lowest composite
ratings at the later of the
institution's most recent examination
or subsequent review.
``(B) No unsatisfactory cra ratings.--Except with
respect to insured depository institutions described in
paragraph (3), no insured depository institution
controlled by the acquiring bank holding company has
received a `needs to improve' or `substantial
noncompliance' composite rating as a result of the
institution's most recent examination under the
Community Reinvestment Act of 1977.
``(C) Competitive criteria.--Consummation of the
proposal complies with guidelines established by the
Board by regulation, after consultation with the
Attorney General, that identify proposals that are not
likely to have a significantly adverse effect on
competition in any relevant market.
``(D) Size of acquisition.--
``(i) Asset size.--The book value of the
total assets to be acquired does not exceed 10
percent of the consolidated total risk weighted
assets of the acquiring bank holding company.
``(ii) Consideration.--The gross
consideration to be paid for the securities or
assets does not exceed 15 percent of the
consolidated Tier 1 capital of the acquiring
bank holding company.
``(E) Interstate acquisitions.--Board approval of the
transaction is not prohibited under subsection (d).
``(F) Compliance criterion.--During the 12-month
period ending on the date of the transaction, no
administrative enforcement action has been commenced,
and no cease and desist order has been issued pursuant
to section 8 of the Federal Deposit Insurance Act,
against any bank holding company involved in the
transaction or any depository institution subsidiary of
any such holding company and no such enforcement
action, order, or other administrative enforcement
proceeding is pending as of such date.
``(G) Other considerations.--Board approval of the
transaction is not prohibited under subsection (c)(3).
``(H) Notification.--The acquiring bank holding
company provides written notice of the transaction,
including a description of the terms of the
transaction, to the Board and the Attorney General,
simultaneously, at least 15 business days (or such
shorter period as permitted by the Board) before the
transaction is consummated.
``(I) No board disapproval.--Before the end of the
15-day period (or the shorter period) referred to in
subparagraph (H), the Board has not required an
application under subsection (a).
``(2) Special rule relating to the requirement for well
managed institutions.--Insured depository institutions which
have been acquired by a bank holding company during the 12-
month period preceding the date of the transaction may be
excluded for purposes of paragraph (1)(A)(v)(II) if--
``(A) the bank holding company has developed a plan
for the institution to restore the capital and
management of the institution which is acceptable to
the appropriate Federal banking agency; and
``(B) all such insured depository institutions
represent, in the aggregate, less than 10 percent of
the aggregate total risk-weighted assets of all insured
depository institutions controlled by the holding
company.
``(3) Special rule relating to the requirement for community
investment.--Insured depository institutions acquired during
the 12-month period preceding the date of the transaction may
be excluded for purposes of paragraph (1)(B) if the bank
holding company has developed a plan to restore the performance
of the institution to at least a `satisfactory' rating under
the Community Reinvestment Act of 1977 which is acceptable to
the appropriate Federal banking agency.
``(4) Adjustment of percentages.--The Board may by regulation
adjust the percentages and the manner in which the percentages
of insured depository institutions are calculated under
subparagraph (A)(v)(I) or (D) of paragraph (1) or paragraph
(2)(B) if the Board determines that such adjustment is
consistent with safety and soundness and the purposes of this
Act.
``(5) Advice of attorney general.--The Attorney General shall
advise the Board during the period referred to in paragraph
(1)(H) in writing if any competitive concerns exist with
respect to the transaction.
``(6) Waiver of postapproval waiting period.--If the Attorney
General advises the Board that no competitive concerns exist
with respect to the transaction, the provisions of section
11(b) relating to a postapproval waiting shall not apply with
respect to such transaction.''.
SEC. 203. ELIMINATE FILING AND APPROVAL REQUIREMENTS FOR INSURED
DEPOSITORY INSTITUTIONS ALREADY CONTROLLED BY THE
SAME HOLDING COMPANY.
(a) Bank Merger Act.--Section 18(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1828(c)) is amended by adding at the end the following
new paragraph:
``(12) The provisions of this subsection shall not apply to
any merger, consolidation, acquisition of assets or assumption
of liabilities involving only insured depository institutions
that are subsidiaries of the same depository institution
holding company if--
``(A) the responsible agency would not be prohibited
from approving the transaction under section 44, if
applicable;
``(B) the acquiring, assuming, or resulting
institution complies with all applicable provisions of
section 44, if any, as if the merger, consolidation, or
acquisition were approved under this subsection;
``(C) the acquiring, assuming, or resulting
institution provides written notification of the
transaction to the appropriate Federal banking agency
for the institution at least 10 days prior to
consummation of the transaction; and
``(D) after receiving such notice, the agency does
not require the institution to submit an application
with respect to such transaction and so notifies the
institution.''.
(b) National Bank Consolidation and Merger Act.--
(1) Consolidations.--Section 2 of the National Bank
Consolidation and Merger Act (12 U.S.C. 215) is amended--
(A) in subsection (a), by adding at the end the
following new sentence:
``No approval by the Comptroller of the Currency is required under this
subsection for a transaction which involves the consolidation of banks
that, at the time of the consolidation, are all subsidiaries (as
defined in section 3 of the Federal Deposit Insurance Act) of the same
company.''; and
(B) in subsection (b)--
(i) by striking ``, and thereafter the
consolidation shall be approved by the
Comptroller''; and
(ii) by striking ``when such consolidation is
approved by the Comptroller''.
(2) Mergers.--Section 3 of the National Bank Consolidation
and Merger Act (12 U.S.C. 215a) is amended--
(A) in subsection (a), by adding at the end the
following new sentence:
``No approval by the Comptroller of the Currency is required under this
subsection for a transaction which involves the merger of banks that,
at the time of the merger, are all subsidiaries (as defined in section
3 of the Federal Deposit Insurance Act) of the same company.''; and
(B) in subsection (b)--
(i) by striking ``, and thereafter the merger
shall be approved by the Comptroller''; and
(ii) by striking ``when such merger shall be
approved by the Comptroller''.
SEC. 204. ELIMINATE REDUNDANT APPROVAL REQUIREMENT FOR OAKAR
TRANSACTIONS.
(a) In General.--Section 5(d)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1815(d)(3)) is amended--
(1) in subparagraph (A), by striking ``with the prior written
approval of the responsible agency under section 18(c)(2)'';
(2) in subparagraph (E)--
(A) by striking clause (iv) and inserting the
following new clause:
``(iv) A transaction shall not be authorized
under this paragraph unless the acquiring,
assuming, or resulting depository institution
will meet all applicable capital requirements
upon consummation of the transaction.'';
(B) by striking clauses (i) and (ii); and
(C) by redesignating clauses (iii) and (iv) (as
amended by subparagraph (A) of this paragraph) as
clauses (i) and (ii), respectively; and
(3) by striking subparagraph (G) and redesignating the
subsequent subparagraphs accordingly.
(b) Technical and Conforming Amendment.--Section 5156A(b)(1) of the
Revised Statutes of the United States (12 U.S.C. 215c(b)(1)) is amended
by striking ``section 5(d)(3) of the Federal Deposit Insurance Act
or''.
(c) Clerical Amendment.--The heading for section 5(d)(3)(E) of the
Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)(E)) is amended by
striking ``for approval, generally''.
SEC. 205. ELIMINATION OF DUPLICATIVE REQUIREMENTS IMPOSED UPON BANK
HOLDING COMPANIES AND OTHER REGULATORY RELIEF UNDER
THE HOME OWNERS' LOAN ACT.
(a) Exemption for Bank Holding Companies.--Section 10 of the Home
Owners' Loan Act (12 U.S.C. 1467a) is amended by adding at the end the
following new subsection:
``(t) Exemption for Bank Holding Companies.--This section shall not
apply to a bank holding company that is subject to the Bank Holding
Company Act of 1956 or any company controlled by such bank holding
company (other than a savings association).''.
(b) Definition of Savings and Loan Holding Company.--Section
10(a)(1)(D) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)(1)(D)) is
amended to read as follows:
``(D) Savings and loan holding company.--
``(i) In general.--Except as provided in
clause (ii), the term `savings and loan holding
company' means any company which directly or
indirectly controls a savings association or
controls any other company which is a savings
and loan holding company.
``(ii) Exception for bank holding company.--
The term `savings and loan holding company'
does not include any company which is
registered under, and subject to, the
provisions of the Bank Holding Company Act of
1956, or any company directly or indirectly
controlled by such company.''.
(c) Amendments to the Bank Holding Company Act of 1956.--Section 4(i)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(i)) is amended
by adding at the end the following new paragraphs:
``(4) Solicitation of views.--
``(A) Notice to director.--Upon receiving any
application or notice by a bank holding company to
acquire directly or indirectly a savings association
under subsection (c)(8), the Board shall solicit the
Director's comments and recommendations with respect to
such acquisition.
``(B) Comment period.--The comments and views of the
Director under subparagraph (A) with respect to any
acquisition subject to such subparagraph shall be
transmitted to the Board within 30 days of the receipt
by the Director of the notice relating to such
acquisition (or such shorter period as the Board may
specify if the Board advises the Director that an
emergency exists which requires expeditious action).
``(5) Examination.--
``(A) Scope.--The Board shall consult with the
Director, as appropriate, in establishing the scope of
an examination by the Board of a bank holding company
that controls directly or indirectly a savings
association.
``(B) Access to inspection reports.--Upon the request
of the Director, the Board shall furnish the Director
with a copy of any inspection report, additional
examination materials, or supervisory information
relating to any bank holding company which directly or
indirectly controls a savings association.
``(6) Coordination of enforcement efforts.--The Board and
the Director shall cooperate in any enforcement action against
any bank holding company which controls a savings association,
if the relevant conduct involves such association.
``(7) Director defined.--For purposes of this section, the
term `Director' means the Director of the Office of Thrift
Supervision.''.
(d) Alternative Test.--Section 10(m) of the Home Owners' Loan Act (12
U.S.C. 1467a(m)) is amended--
(1) in paragraph (1), by striking ``(2) and (7)'' and
inserting ``(2), (7), and (8)''; and
(2) by adding at the end the following new paragraph:
``(8) Alternative test.--Any savings association which meets
the requirements set forth in section 7701(a)(19)(C) of the
Internal Revenue Code of 1986 shall be deemed to be a qualified
thrift lender and any qualified thrift lender shall be deemed
to meet the requirements of such section.''.
SEC. 206. ELIMINATE REQUIREMENT THAT APPROVAL BE OBTAINED FOR
DIVESTITURES.
Section 2(g) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(g)) is amended--
(1) by striking paragraph (3);
(2) by inserting ``and'' after the semicolon at the end of
paragraph (1); and
(3) by striking ``; and'' at the end of paragraph (2) and
inserting a period.
SEC. 207. ELIMINATE UNNECESSARY BRANCH APPLICATIONS.
(a) National Bank Branch Applications.--Section 5155(i) of the
Revised Statutes (12 U.S.C. 36(i)) is amended--
(1) by striking ``(i) No branch'' and inserting ``(i)
Relocation.--
``(1) Approval required.--Except as provided in paragraph
(2), no branch''; and
(2) by adding at the end the following new paragraphs:
``(2) No approval required for certain branches.--
Notwithstanding this subsection or subsection (b) or (c), the
consent and approval of the Comptroller of the Currency shall
not be required for a national bank to establish and operate,
or to retain and operate, a branch or seasonal agency if--
``(A) the bank is well capitalized (as defined in
section 38 of the Federal Deposit Insurance Act and
regulations prescribed by the Comptroller of the
Currency under such section);
``(B) the bank received a composite CAMEL rating of
`1' or `2' under the Uniform Financial Institutions
Rating System (or an equivalent rating under a
comparable rating system) as of its most recent
examination;
``(C) the bank did not receive a `needs to improve'
or `substantial noncompliance' composite rating at its
most recent examination under the Community
Reinvestment Act of 1977; and
``(D) the Comptroller of the Currency is otherwise
authorized to grant approval under this section to such
bank to establish and operate, or to retain and
operate, a branch or seasonal agency at the proposed
location.
``(3) Certain branches deemed to have approved
applications.--A branch or seasonal agency established by a
national bank under paragraph (2) shall be deemed to have been
established and operated pursuant to an application approved
under this section.''.
(b) State Member Bank Branch Applications.--The third undesignated
paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 321) is
amended by adding at the end the following: ``Notwithstanding the
preceding 2 sentences, the approval of the Board shall not be required
for a State member bank to establish and operate a branch or seasonal
agency if--
``(A) the State member bank is well-capitalized (as
defined in section 38 of the Federal Deposit Insurance
Act and regulations prescribed by the Board under such
section);
``(B) the State member bank received a composite
CAMEL rating of `1' or `2' under the Uniform Financial
Institutions Rating System (or an equivalent rating
under a comparable rating system);
``(C) the State member bank did not receive a `needs
to improve' or `substantial noncompliance' composite
rating at its most recent examination under the
Community Reinvestment Act of 1977; and
``(D) the Board is otherwise authorized to grant
approval under this section to such State member bank
to establish and operate a branch or seasonal agency at
the proposed location.
A branch or seasonal agency established by a State member bank under
the previous sentence shall be deemed to have been established and
operated pursuant to an application approved under this section.''.
(c) State Nonmember Bank Branch Applications.--Section 18(d) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(d)) is amended by adding
at the end the following new paragraphs:
``(5) Application exemption for certain banks.--
Notwithstanding paragraph (1), the consent of the Corporation
shall not be required for a State nonmember insured bank to
establish and operate any domestic branch if--
``(A) the bank is well-capitalized (as defined in
section 38 and regulations prescribed by the
Corporation under such section);
``(B) the bank received a composite CAMEL rating of
`1' or `2' under the Uniform Financial Institutions
Rating System (or an equivalent rating under a
comparable rating system) as of its most recent
examination;
``(C) the bank did not receive a `needs to improve'
or `substantial noncompliance' composite rating as
result of the bank's most recent examination under the
Community Reinvestment Act of 1977; and
``(D) the Corporation is otherwise authorized to give
consent under this section to such bank to establish
and operate a domestic branch at the proposed location.
``(6) Approval granted.--A branch established by a State
member bank under paragraph (5) shall be deemed to have been
established and operated pursuant to an application approved
under this section.''.
SEC. 208. ELIMINATE BRANCH APPLICATIONS AND REQUIREMENTS FOR ATMs AND
SIMILAR FACILITIES.
(a) Definition of Branch Under National Bank Act.--Section 5155(j) of
the Revised Statutes (12 U.S.C. 36(j)) is amended--
(1) by striking ``(j) The term'' and inserting ``(j)
Branch.--
``(1) In general.--The term''; and
(2) by adding at the end the following new paragraph:
``(2) Certain proprietary atms and remote servicing units.--
The term `branch' does not include any automated teller machine
or remote service unit which is owned and operated by a
depository institution--
``(A) primarily for the benefit of the institution
and the affiliates of the institution; and
``(B) which could operate a branch at the location of
such machine or unit.''.
(b) Definition of Branch Under Federal Deposit Insurance Act.--
Section 3(o) of the Federal Deposit Insurance Act (12 U.S.C. 1813(o))
is amended--
(1) by striking ``(o) The term'' and inserting ``(o)
Definitions Relating to Branches.--
``(1) Domestic branch.--
``(A) In general.--The term''; and
(2) by striking ``lent; and the term'' and inserting ``lent.
``(B) Certain proprietary atms and remote servicing
units.--The term `domestic branch' does not include any
automated teller machine or remote service unit which
is owned and operated by a depository institution--
``(i) primarily for the benefit of the
institution and the affiliates of the
institution; and
``(ii) which could operate a branch at the
location of such machine or unit.
``(2) Foreign branch.--The term''.
SEC. 209. ELIMINATE REQUIREMENT FOR APPROVAL OF INVESTMENTS IN BANK
PREMISES FOR WELL CAPITALIZED AND WELL MANAGED
BANKS.
Section 24A of the Federal Reserve Act (12 U.S.C. 371d) is amended by
inserting before the period in that section the following: ``or, in the
case of a bank which received a composite CAMEL rating of `1' or `2'
under the Uniform Financial Institutions Rating System (or an
equivalent rating under a comparable rating system) as of its most
recent examination and, both before and immediately following the
investment or loan, is well capitalized (as defined under section 38 of
the Federal Deposit Insurance Act), the amount which is equal to 150
percent of the capital stock and surplus of such bank''.
SEC. 210. ELIMINATE UNNECESSARY FILING FOR OFFICER AND DIRECTOR
APPOINTMENTS.
Section 32(d) of the Federal Deposit Insurance Act (12 U.S.C.
1831i(d)) is amended to read as follows:
``(d) Additional Information.--
``(1) In general.--Any notice submitted to an appropriate
Federal banking agency with respect to an individual by any
insured depository institution or depository institution
holding company pursuant to subsection (a) shall include--
``(A) the information described in section 7(j)(6)(A)
about the individual; and
``(B) such other information as the agency may
prescribe by regulation.
``(2) Waiver.--An appropriate Federal banking agency may
waive the requirement of this section by regulation or on a
case-by-case basis consistent with safety and soundness.''.
SEC. 211. STREAMLINING PROCESS FOR DETERMINING NEW NONBANKING
ACTIVITIES.
Section 4(c)(8) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)(8)) is amended--
(1) by striking ``and opportunity for hearing''; and
(2) by striking ``approval by the Board prior to January 1,
1971.'' and inserting the following: ``approval by the Board
prior to January 1, 1971, except that, after March 30, 1997, it
shall be closely related to banking or managing or controlling
banks and a proper incident thereto to provide insurance as a
principal, agent, or broker in any State, in full compliance
with the laws and regulations of such State that apply
uniformly to each type of insurance license or authorization in
that State, including laws that restrict a bank in that State
from having an affiliate, agent, or employee in that State
licensed to provide insurance as principal, agent, or broker.
The Board shall prescribe regulations concerning insurance
affiliations that provide equivalent treatment for all stock
and mutual fund insurance companies that control or are
affiliated with a bank, and fully accommodate and are
consistent with State law.''.
SEC. 212. DISPOSITION OF FORECLOSED ASSETS.
Section 4(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)(2)) is amended--
(1) by striking ``for not more than one year at a time''; and
(2) by striking ``but no such extensions shall extend beyond
a date five years'' and inserting ``and, in the case of a bank
holding company which has not disposed of such shares within 5
years of the date such shares were acquired, the Board may,
upon the application of such company, grant additional
exemptions if, in the Board's judgment, such extension would
not be detrimental to the public interest and either the bank
holding company has made a good faith attempt to dispose of
such shares during such 5-year period or the disposal of such
shares during such 5-year period would have been detrimental to
the company, but the aggregate duration of such extensions
shall not extend 10 years''.
SEC. 213. INCREASE IN CERTAIN CREDIT UNION LOAN CEILINGS.
Section 107(5)(A) of the Federal Credit Union Act (12 U.S.C.
1757(5)(A)) is amended--
(1) in clause (iv), by striking ``$10,000'' and inserting
``$50,000''; and
(2) in clause (v), by striking ``$10,000'' and inserting
``$50,000''.
Subtitle B--Streamlining of Government Regulations; Miscellaneous
Provisions
SEC. 221. ELIMINATE THE PER-BRANCH CAPITAL REQUIREMENT FOR NATIONAL
BANKS AND STATE MEMBER BANKS.
Section 5155 of the Revised Statutes (12 U.S.C. 36) is amended--
(1) by striking subsection (h); and
(2) by redesignating subsections (i) (as amended by section
207(a) of this Act), (j) (as amended by section 208(a) of this
Act), (k), and (l) as subsections (h), (i), (j), and (k),
respectively.
SEC. 222. BRANCH CLOSURES.
(a) In General.--Section 42 of the Federal Deposit Insurance Act (12
U.S.C. 1831r-1) is amended by adding at the end the following new
subsection:
``(e) Scope of Application.--
``(1) In general.--This section shall not apply with respect
to--
``(A) an automated teller machine;
``(B) a branch which--
``(i) has been acquired through merger,
consolidation, purchase, assumption, or other
method; and
``(ii) is located--
``(I) within 2.5 miles of another
branch of the acquiring institution; or
``(II) within a neighborhood
currently being served by another
branch of the acquiring institution,
if such other branch of the acquiring institution is
expected to continue to provide banking services to
substantially all of the customers currently served by
the branch acquired;
``(C) a branch which is closing and reopening at a
location which is--
``(i) within 2.5 miles of the location of the
branch being closed; or
``(ii) within the same neighborhood as the
branch being closed,
if the branch at the new location is expected to
continue to provide banking services to substantially
all of the customers served by the branch at the former
location;
``(D) a branch that is closed in connection with--
``(i) an emergency acquisition under--
``(I) section 11(n); or
``(II) subsections (f) or (k) of
section 13; or
``(ii) any assistance provided by the
Corporation under section 13(c); and
``(E) any other branch closure whose exemption from
the notice requirements of this section would not
produce a result inconsistent with the purposes of this
section.
``(2) Regulations.--The appropriate Federal banking agency
shall, by regulation, determine the circumstances under which
any exemption under paragraph(1)(E) may be granted.''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
as if such amendment had been included in section 42 of the Federal
Deposit Insurance Act as of the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991.
SEC. 223. AMENDMENTS TO THE DEPOSITORY INSTITUTIONS MANAGEMENT
INTERLOCKS ACT.
(a) Dual Service in Same Area, Town, or Village.--Section 203 of the
Depository Institution Management Interlocks Act (12 U.S.C. 3202) is
amended--
(1) by inserting ``(a) Prohibitions.--'' before ``A
management official''; and
(2) by adding after subsection (a) the following new
subsection:
``(b) Small Market Share Exemption.--
``(1) In general.--This section shall not be construed as
prohibiting a management official of a depository institution
or depository holding company from serving as a management
official of another depository institution or depository
holding company not affiliated with such institution or holding
company if the depository institutions or depository holding
companies with which the management official serves hold,
together with all the affiliates of such institutions or
holding companies, in the aggregate no more that 20 percent of
the deposits in each relevant geographic banking market where
offices of the depository institutions or depository holding
companies or their affiliates are located.
``(2) Relevant geographic banking market defined.--For
purposes of paragraph (1), the term `relevant geographic
banking market' means--
``(A) the area defined by the boundaries identified
by the Board of Governors of the Federal Reserve
System;
``(B) if the Board has not defined such boundaries,
the area defined by the boundaries of the Ranally
Metropolitan Area in which the office of the depository
institution or the depository institution holding
company is located; and
``(C) if the office of such institution or company is
not located within a Ranally Metropolitan Area, the
area defined by the county (or an equivalent area of
general local government) in which such office is
located.''.
(b) Dual Service Among Larger Organizations.--Section 204 of the
Depository Institution Management Interlocks Act (12 U.S.C. 3203) is
amended to read as follows:
``SEC. 204. DUAL SERVICE AMONG LARGER ORGANIZATIONS.
``(a) In General.--If a depository institution, depository
institution holding company, or depository institution affiliate of any
such institution or company has total assets exceeding $2,500,000,000,
a management official of such institution, company, or affiliate may
not serve as a management official of any other depository institution,
depository institution holding company, or depository institution
affiliate of any such institution or company which--
``(1) is not an affiliate of the institution, company, or
affiliate of which such person is a management official; and
``(2) has total assets exceeding $1,500,000,000.
``(b) CPI Adjustments.--The dollar amounts in this section shall be
adjusted annually after December 31, 1994, by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor Statistics.''.
(c) Extension of Grandfather Exemption.--Section 206 of the
Depository Institution Management Interlocks Act (12 U.S.C. 3205) is
amended--
(1) in subsection (a), by striking ``for a period of, subject
to the requirements of subsection (c), 20 years after the date
of enactment of this title'';
(2) in subsection (b), by striking the 2d sentence; and
(3) by striking subsection (c).
(d) Rules or Regulations.--Section 209 of the Depository Institution
Management Interlocks Act (12 U.S.C. 3207) is amended--
(1) by striking ``(a) In General.--Rules'' and inserting
``Rules'';
(2) by inserting ``, including rules or regulations which
permit service by a management official which would otherwise
be prohibited by section 203 or section 204,'' after ``title'';
and
(3) by striking subsections (b) and (c).
SEC. 224. ACCELERATION OF REPAYMENT TO TREASURY.
The Appraisal Subcommittee of the Financial Institutions Examination
Council shall repay to the Secretary of the Treasury the funds
specified in section 1108 of Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 by not later than September 30, 1998, and
the Secretary shall deposit such funds in the general fund of the
Treasury.
SEC. 225. ELIMINATE UNNECESSARY AND DUPLICATIVE RECORDKEEPING AND
REPORTING REQUIREMENTS RELATING TO LOANS TO
EXECUTIVE OFFICERS AND PERMIT PARTICIPATION IN
EMPLOYEE BENEFIT PLANS.
(a) Amendments to Section 22(h) of the Federal Reserve Act.--
(1) Employee benefit plans.--Section 22(h)(2) of the Federal
Reserve Act (12 U.S.C. 375b(2)) is amended--
(A) by redesignating subparagraphs (A), (B), and (C)
as clauses (i), (ii), and (iii), respectively, and
moving the left margins of such clauses 2 ems to the
right;
(B) by striking ``(2) Preferential terms
prohibited.--A member bank'' and inserting ``(2)
Preferential terms prohibited.--
``(A) In general.--A member bank''; and
(C) by adding at the end the following new
subparagraph:
``(B) Exception.--No provision of this paragraph
shall be construed as prohibiting extensions of credit
that constitute a benefit or compensation program that
is widely available to and used by employees of the
member bank, including employees who are not executive
officers of the bank.''.
(2) Exception for extensions of credit to executive officers
and directors of nonbank affiliates.--Section 22(h)(8)(B) of
the Federal Reserve Act (12 U.S.C. 375b(8)(B)) is amended to
read as follows:
``(B) Exception.--The Board may, by regulation, make
exceptions to subparagraph (A) for an executive officer
or director of a subsidiary of a company that controls
the member bank if--
``(i) the executive officer or director does
not have authority to participate, and does not
participate, in major policymaking functions of
the member bank; and
``(ii) the assets of such subsidiary do not
exceed 10 percent of the consolidated assets of
a company that controls the member bank and
such subsidiary (and is not controlled by any
other company).''.
(3) Recordkeeping requirements.--Section 22(h)(10) of the
Federal Reserve Act (12 U.S.C. 375b(10)) is amended by adding
at the end the following: ``The Board shall specify by
regulation the recordkeeping required of member banks to ensure
compliance with this section.''.
(b) Reporting Requirements.--
(1) Unnecessary reports.--Section 22(g) of the Federal
Reserve Act (12 U.S.C. 375a) is amended--
(A) by striking paragraphs (6) and (9); and
(B) by redesignating paragraphs (7), (8), and (10) as
paragraphs (8), (9), and (10), respectively.
(2) Unnecessary reports.--Section 7 of the Federal Deposit
Insurance Act (12 U.S.C. 1817) is amended by striking
subsection (k).
(3) Unnecessary reports regarding loans from correspondent
banks.--Section 106(b)(2) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1972(2)) is amended--
(A) by striking subparagraph (G); and
(B) by redesignating subparagraphs (H) and (I) as
subparagraphs (G) and (H), respectively.
(c) Amendments Relating to Loans to Executive Officers.--Section
22(g) of the Federal Reserve Act (12 U.S.C. 375a) (as amended by
subsection (a) of this section) is amended--
(1) in paragraph (1)(D), by striking ``of any one of the
three categories respectively referred to in paragraphs (2),
(3), and (4)'' and inserting ``of any category referred to in
paragraph (2), (3), (4), (5), or (6)'';
(2) by redesignating paragraphs (4) and (5) as paragraphs (6)
and (7), respectively;
(3) by inserting after paragraph (3) the following new
paragraph:
``(4) Home equity lines of credit.--A member bank may make a
revolving open-end extension of credit to any executive officer
of the bank if the credit--
``(A) does not exceed $100,000; and
``(B) is secured by a dwelling that is owned by such
officer and used by the officer as a residence.
``(5) Loans secured by marketable assets.--A member bank may
extend credit to any executive officer of the bank if the
credit is secured by readily marketable assets of a value not
exceeding such amount as the Board may establish by
regulation.''; and
(4) in paragraph (7) (as so redesignated by paragraph (2) of
this subsection) by striking ``(4)'' each place such term
appears and inserting ``(6)''.
SEC. 226. EXPANDED REGULATORY DISCRETION FOR SMALL BANK EXAMINATIONS.
(a) Small Bank Size Discretion.--Section 10(d) of the Federal Deposit
Insurance Act (12 U.S.C. 1820(d)) is amended--
(1) by redesignating paragraph (9) as paragraph (10);
(2) by redesignating the 2d of the 2 paragraphs designated as
paragraph (8) as paragraph (9); and
(3) in paragraph (9) (as so redesignated), by striking
``$175,000,000'' and inserting ``$250,000,000''.
(b) Inflation Adjustment.--Section 10(d) of the Federal Deposit
Insurance Act (12 U.S.C. 1820(d)) is amended by inserting after
paragraph (10) (as so redesignated in subsection (a)(1) of this
section) the following new paragraph:
``(11) Annual cpi adjustment.--The dollar amount in this
section shall be adjusted annually after December 31, 1994, by
the annual percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers published by the Bureau
of Labor Statistics.''.
(c) Coordinated Federal and State Examinations.--The Federal banking
agencies (as defined in section 3 of the Federal Deposit Insurance Act)
shall submit semiannual reports to the Congress on the progress made by
such agencies in implementing the requirements of section 10(d)(6) of
the Federal Deposit Insurance Act until such agencies submit a final
report that--
(1) the examination system provided for in such section is in
place; and
(2) such system provides for full coordination of
examinations of State depository institutions with State bank
supervisors.
SEC. 227. COST REIMBURSEMENT.
Section 1115 of the Right to Financial Privacy Act (12 U.S.C. 3415)
is amended by inserting ``(including corporate customers)'' after
``pertaining to a customer''.
SEC. 228. IDENTIFICATION OF FOREIGN NONBANK FINANCIAL INSTITUTION
CUSTOMERS.
(a) In General.--Section 5327(a)(1) of title 31, United States Code,
is amended to read as follows:
``(1) is a financial institution (other than a foreign bank
(as defined in section 101(b) of the International Banking Act
of 1978)) which is a foreign person; and''.
(b) Technical and Conforming Amendment.--The heading for section 5327
of title 31, United States Code, is amended by inserting ``foreign
nonbank'' after ``of''.
(c) Clerical Amendment.--The table of sections for chapter 53 of
title 31, United States Code, is amended by striking the item relating
to section 5327 and inserting the following new item:
``5327. Identification of foreign nonbank financial institutions.''.
SEC. 229. PAPERWORK REDUCTION REVIEW.
Not later than 180 days after the date of enactment of this Act, each
appropriate Federal banking agency and the National Credit Union
Administration, in consultation with insured depository institutions,
insured credit unions, and other interested parties, shall--
(1) review the extent to which current regulations require
insured depository institutions and insured credit unions to
produce unnecessary internal written policies; and
(2) eliminate such requirements, where appropriate.
For purposes of this section, the terms ``insured depository
institution'' and ``appropriate Federal banking agency'' have the same
meanings as in section 3 of the Federal Deposit Insurance Act and the
term ``insured credit union'' has the same meaning as in section 101(7)
of the Federal Credit Union Act.
SEC. 230. DAILY CONFIRMATIONS FOR HOLD-IN-CUSTODY REPURCHASE
TRANSACTIONS.
Before the end of the 1-year period beginning on the date of the
enactment of this Act, the Secretary of the Treasury shall revise the
regulation under section 15C of the Securities Exchange Act of 1934
relating to the obligations of financial institutions and of brokers
and dealer registered under such Act holding custody of securities
subject to a repurchase agreement to confirm, daily and in writing, the
securities that are subject to such repurchase agreement. Such revision
shall permit the counterparty to such agreement to waive in writing the
right to obtain such daily written confirmation if the counterparty has
received a clear and conspicuous disclosure before entering into any
side agreement, in a form prescribed by the Secretary, that adequately
informs the counterparty of the benefits of receiving such daily
written confirmations.
SEC. 231. REQUIRED REGULATORY REVIEW OF REGULATIONS.
(a) In General.--Not less frequently than once every 10 years, the
Financial Institutions Examination Council (hereafter in this section
referred to as the ``Council'') and each appropriate Federal banking
agency (as defined in section 3(q) of the Federal Deposit Insurance
Act) represented on the Council shall conduct a review of all
regulations prescribed by the Council or by any such agency,
respectively, in order to identify outdated or otherwise unnecessary
regulatory requirements imposed upon insured depository institutions.
(b) Process.--In conducting the review under subsection (a), the
Council or the appropriate Federal banking agency shall--
(1) categorize the regulations by type (such as consumer
regulations, safety and soundness regulations, or such other
designations as determined by the Council); and
(2) at regular intervals, provide notice and solicit public
comment on a particular category or categories of regulations,
requesting commentators to identify areas of the regulations
that are outdated, unnecessary, or unduly burdensome.
(c) Complete Review.--The Council or the appropriate Federal banking
agency shall ensure that the notice and comment period described in
subsection (b)(2) is conducted with respect to all regulations
described in subsection (a) not less frequently than once every 10
years.
(d) Regulatory Response.--The Council or the appropriate Federal
banking agency shall--
(1) publish in the Federal Register a summary of the comments
received under this section, identifying significant issues
raised and providing comment on such issues; and
(2) eliminate unnecessary regulations to the extent that such
action is appropriate.
(e) Report to Congress.--Not later than 30 days after carrying out
subsection (d)(1), the Council shall provide to the Congress a report,
which shall include--
(1) a summary of any significant issues raised by public
comments received by the Council and the appropriate Federal
banking agencies under this section and the relative merits of
such issues; and
(2) an analysis of whether the appropriate Federal banking
agency involved is able to address the regulatory burdens
associated with such issues by regulation, or whether such
burdens must be addressed by legislative action.
SEC. 232. COUNTRY RISK REQUIREMENTS.
Subsections (a)(1) and (b) of section 905 of the International
Lending Supervision Act of 1983 (12 U.S.C. 3904) are amended by
striking ``shall'' and inserting ``may''.
SEC. 233. AUDIT COSTS.
(a) In General.--
(1) Auditor attestations.--Section 36 of the Federal Deposit
Insurance At (12 U.S.C. 1831m) is amended--
(A) in subsection (a)(2)(A)(ii), by striking
``subsections (c) and (d)'' and inserting ``subsection
(c)'';
(B) by striking subsections (c) and (e); and
(C) by redesignating subsections (d), (f), (g), (h),
(i), and (j) as subsections (c), (d), (e), (f), (g),
and (h), respectively.
(2) Public availability.--Section 36(a)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1831m(a)(3)) is amended by
inserting at the end the following new sentence:
``Notwithstanding the preceding sentence, the Corporation and
the appropriate Federal banking agencies may designate certain
information as privileged and confidential and not available to
the public.''.
(b) Exemption for Well-Capitalized and Well-Managed Insured
Depository Institutions.--Section 36 of the Federal Deposit Insurance
Act (12 U.S.C. 1831m) (as amended by subsection (a) of this section) is
amended by adding at the end the following new subsection:
``(i) Exemption for Well-Capitalized and Well-Managed Insured
Depository Institutions.--No provision of this section other than
subsection (c) shall apply with respect to any insured depository
institution which is well-capitalized and well-managed.''.
(c) Technical and Conforming Amendments.--
(1) Paragraph (1)(B) of section 36(e) of the Federal Deposit
Insurance Act (as so redesignated by subsection (a)(1)(C) of
this section) is amended by striking ``(b)(2), (c), and (d)''
and inserting ``(b)(2) and (c)''.
(2) Paragraph (1) of section 36(g) of the Federal Deposit
Insurance Act (as so redesignated by subsection (a)(1)(C) of
this section) is amended by striking ``(d)'' and inserting
``(c)''.
SEC. 234. STANDARDS FOR DIRECTOR AND OFFICER LIABILITY.
Section 3(u) of the Federal Deposit Insurance Act (12 U.S.C. 1813(u))
is amended--
(1) in paragraph (1), by inserting ``(other than an outside
director)'' after ``director'';
(2) in paragraph (3), by inserting ``(other than an outside
director)'' after ``any other person''; and
(3) in paragraph (4), by inserting ``or outside director''
after ``or accountant)''.
SEC. 235. FOREIGN BANK APPLICATIONS.
(a) Provisions Relating to Establishment of Bank Offices.--Section
7(d) of the International Banking Act of 1978 (12 U.S.C. 3105(d)) is
amended--
(1) in paragraph (2), by striking ``The'' and inserting
``Except as provided in paragraph (6), the'';
(2) in paragraph (5), by striking ``Consistent with the
standards for approval in paragraph (2), the'' and inserting
``The''; and
(3) by adding at the end the following new paragraphs:
``(6) Exception.--
``(A) In general.--If the Board is unable to find
under paragraph (2) that a foreign bank is subject to
comprehensive supervision or regulation on a
consolidated basis by the appropriate authorities in
its home country, the Board may nevertheless approve an
application under paragraph (1) by such foreign bank
if--
``(i) the appropriate authorities in the home
country of such foreign bank are working to
establish arrangements for the consolidated
supervision of such bank; and
``(ii) all other factors are consistent with
approval.
``(B) Additional conditions.--The Board, after
requesting and considering the views of the appropriate
State bank supervisor or the Comptroller of the
Currency, as the case may be, may impose such
conditions or restrictions relating to activities or
business operations of the proposed branch, agency, or
commercial lending company subsidiary, including
restrictions on sources of funding, as are considered
appropriate in the public interest.
``(C) Modification of conditions.--Any condition or
restriction imposed by the Board under this subsection
in connection with the approval of an application may
be varied or withdrawn where such modification is
consistent with the public interest.
``(7) Time period for board action.--
``(A) Final action.--The Board shall take final
action on any application under paragraph (1) within
180 days of receipt of the application, except that the
Board may extend for an additional 180 days the period
within which to take final action on such application,
after providing notice of, and the reasons for, the
extension to the applicant foreign bank and any
appropriate State bank supervisor or the Comptroller of
the Currency, as the case may be.
``(B) Failure to submit information.--The Board may
deny any application if it has not received information
requested from the applicant foreign bank or
appropriate authorities in the home country in
sufficient time to permit the Board to evaluate such
information adequately within the time periods for
final action set forth in subparagraph (A).
``(C) Waiver.--A foreign bank may waive the
applicability of subparagraph (A) with respect to any
such application.''.
(b) Provision Relating To Termination of Bank Offices.--Section
7(e)(1)(A) of the International Banking Act of 1978 (12 U.S.C.
3105(e)(1)(A)) is amended--
(1) by striking ``(A)'' and inserting ``(A)(i)'';
(2) by striking ``; or'' and inserting ``; and''; and
(3) by inserting at the end the following new clause:
``(ii) the appropriate authorities in the home
country are not making progress in establishing
arrangements for the comprehensive supervision or
regulation of such foreign bank on a consolidated
basis; or''.
(c) Uniform Terminations of Foreign Bank Offices, Agencies, Branches,
and Subsidiaries by the Federal Reserve System.--
(1) In general.--Section 7(e)(1) of the International Banking
Act of 1978 (12 U.S.C. 3105(e)(1)) is amended--
(A) by inserting ``or the Comptroller of the
Currency'' after ``State bank supervisor'';
(B) by inserting ``or a Federal branch or agency''
after ``commercial lending company subsidiary'' the 1st
place such term appears; and
(C) in the last sentence, by inserting ``or a Federal
branch or agency'' after ``commercial lending company
subsidiary''.
(2) Technical and conforming amendment.--Section 7(e) of the
International Banking Act of 1978 (12 U.S.C. 3105(e)) is
amended--
(A) by striking paragraph (5); and
(B) by redesignating paragraphs (6) and (7) as
paragraphs (5) and (6), respectively.
SEC. 236. DUPLICATE EXAMINATION OF FOREIGN BANKS.
Section 7(c)(1) of the International Banking Act of 1978 (12 U.S.C.
3105(c)(1)) is amended--
(1) by adding after clause (ii) of subparagraph (B) the
following new clause:
``(iii) Avoidance of duplication.--In
exercising its authority under this paragraph,
the Board shall take all reasonable measures to
reduce burden and avoid unnecessary duplication
of examinations.'';
(2) by striking subparagraph (C) and inserting the following:
``(C) On-site examination.--Each Federal branch or
agency, and each State branch or agency, of a foreign
bank shall be subject to on-site examination by a
Federal banking agency or State bank supervisor as
frequently as would a national bank or State bank,
respectively, by its appropriate Federal banking
agency.''; and
(3) by amending subparagraph (D) to read as follows:
``(D) Cost of examinations.--The cost of any
examination undertaken pursuant to subparagraph (A)
shall be assessed against and collected from the
foreign bank or the foreign company that controls the
foreign bank, as the case may be, but only to the same
extent that fees are collected by the Board for
examination of any State member insured bank.''.
SEC. 237. SECOND MORTGAGES.
(a) In General.--Section 103(aa)(1) of the Truth in Lending Act (15
U.S.C. 1602(aa)(1)) is amended--
(1) by inserting ``a subordinate mortgage on'' after
``secured by''; and
(2) by striking ``a residential mortgage transaction''.
(b) Effect on Pending Cases.--Any administrative enforcement
proceeding or other action which--
(1) is pending on the date of the enactment of this Act; and
(2) is based on regulations in effect as of such date under
the Truth in Lending Act with respect to high-cost residential
mortgage transactions which are not subordinate mortgages,
shall be dismissed as of such date.
SEC. 238. STREAMLINING FDIC APPROVAL OF NEW STATE BANK POWERS.
(a) In General.--Section 24(a) of the Federal Deposit Insurance Act
(12 U.S.C. 1831a(a)) is amended to read as follows:
``(a) Activities Generally.--
``(1) In general.--An insured State bank may not engage as
principal in any type of activity that is not permissible for a
national bank unless--
``(A) the bank has given the Corporation written
notice of the bank's intention to engage in such
activity at least 60 days before commencing to engage
in the activity and within such 60-day period (or
within the extended period provided under paragraph
(2)) the Corporation has not disapproved the activity;
and
``(B) the State bank is, and continues to be, in
compliance with applicable capital standards prescribed
by the appropriate Federal banking agency.
``(2) Extension of period.--The Corporation may extend the
60-day period referred to in paragraph (1) for issuing a notice
of disapproval with respect to any activity for an additional
30 days.
``(3) Contents of notice.--Any notice submitted by a State
bank under paragraph (1)(A) shall contain such information as
the Corporation may require.
``(4) Basis for disapproval.--The Corporation may disapprove
an activity for a State bank under this subsection unless the
Corporation determines that the activity would pose no
significant risk to the appropriate insurance fund.''.
(b) Subsidiaries of Insured State Banks.--Section 24(d)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1831a(d)(1)) is amended to
read as follows:
``(1) Activities generally.--
``(A) In general.--A subsidiary of an insured State
bank may not engage as principal in any type of
activity that is not permissible for a subsidiary of a
national bank unless--
``(i) the subsidiary has given the
Corporation written notice of the subsidiary's
intention to engage in such activity at least
60 days before commencing to engage in the
activity and within such 60-day period (or
within the extended period provided under
paragraph (2)) the Corporation has not
disapproved the activity; and
``(ii) the bank is, and continues to be, in
compliance with applicable capital standards
prescribed by the appropriate Federal banking
agency.
``(B) Extension of period.--The Corporation may
extend the 60-day period referred to in subparagraph
(A) for issuing a notice of disapproval with respect to
any activity for an additional 30 days.
``(C) Contents of notice.--Any notice submitted by a
subsidiary of an insured State bank under subparagraph
(A)(i) shall contain such information as the
Corporation may require.
``(D) Basis for disapproval.--The Corporation may
disapprove an activity for a subsidiary of an insured
State bank under this paragraph unless the Corporation
determines that the activity would pose no significant
risk to the appropriate insurance fund.''.
SEC. 239. REPEAL OF CALL REPORT ATTESTATION REQUIREMENT.
Section 5211(a) of the Revised Statutes (12 U.S.C. 161(a)) is amended
by striking the 4th sentence.
SEC. 240. AUTHORITY OF THE COMPTROLLER OF THE CURRENCY.
(a) State Supervision.--Chapter 1 of Title LXII of the Revised
Statutes of the United States (12 U.S.C. 21 et seq.) is amended--
(1) by redesignating section 5136A as section 5136C; and
(2) by inserting after section 5136 (12 U.S.C. 24) the
following new section:
``SEC. 5136A. STATE SUPERVISION OF INSURANCE.
``(a) State Licensing of Insurance Activities.--
``(1) In general.--Subject to paragraph (2), no provision of
section 5136, any other section of this title, or section 13 of
the Federal Reserve Act may be construed as limiting or
otherwise impairing the authority of any State to regulate--
``(A) the extent to which, and the manner in which, a
national bank may engage within the State in insurance
activities pursuant to section 5136B of this chapter or
section 13 of the Federal Reserve Act;
``(B) the manner in which a national bank may engage
within the State in insurance activities pursuant to
section 5136(b)(2)(B) of the Revised Statutes of the
United States; or
``(C) the manner in which a national bank may engage
within the State in insurance activities pursuant to
section 5136(b)(2)(A) of the Revised Statutes of the
United States through, and limited to, consumer
disclosure requirements or licensing requirements,
procedures, and qualifications as described in
paragraph (2)(C).
``(2) Prohibition on state discrimination against national
banks.--Notwithstanding paragraph (1)--
``(A) Providing insurance as agent or broker.--No
State may impose any insurance regulatory requirement
relating to providing insurance as an agent or broker
that treats a national bank differently than all other
persons who are authorized to provide insurance as
agents or brokers in such State, unless there is a
legitimate and reasonable State regulatory purpose for
the requirement for which there is no less restrictive
alternative.
``(B) Providing insurance as principal, agent, or
broker.--
``(i) No State may impose on a national bank
any insurance regulatory requirement relating
to providing insurance as principal, agent, or
broker that treats the national bank more
restrictively than any other depository
institution (as defined in section 3(c)(1) of
the Federal Deposit Insurance Act, 12 U.S.C.
1813(c)(1)) operating in the State.
``(ii) Nothing in this subparagraph shall
affect the validity of a State law that--
``(I) prevents a national bank from
engaging in insurance activities within
the State to as great an extent as a
savings association (as defined in
section 3(b)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(b)(1))
may engage in such activities within
the State; and
``(II) was in effect on June 1, 1995.
``(C) Licensing qualifications and procedures.--No
State may discriminate against a national bank with
respect to the following requirements, procedures, and
qualifications as such requirements, procedures, and
qualifications relate to the authority of the national
bank to provide insurance in such State as an agent or
broker:
``(i) License application and processing
procedures.
``(ii) Character, experience, and educational
qualifications for licenses.
``(iii) Testing and examination requirements
for licenses.
``(iv) Fee requirements for licenses.
``(v) Continuing education requirements.
``(vi) Types of licenses required.
``(vii) Standards and requirements for
renewal of licenses.
``(b) Authority of the Comptroller of the Currency.--A national bank
may not provide insurance as a principal, agent, or broker except as
specifically provided in this section, the paragraph designated as the
`Seventh' of section 5136(a) of this chapter, section 5136(b) or 5136B
of this chapter, or section 13 of the Federal Reserve Act.
``(c) Preservation of Federally Authorized Bank Activities in
Permissive States.--No provision of this section may be construed as
affecting the authority, pursuant to section 5136B of this chapter or
section 13 of the Federal Reserve Act, of a national bank to act as
insurance agent or broker consistent with State law.
``(d) Preservation of National Bank Authority Consistent With State
Bank Authority.--Except as provided in subsection (a)(2)(B), no
provision of this section or section 5136(b)(1) shall have the effect
of enabling a State to deny a national bank authority that the bank
otherwise possesses to provide a product in a State, including as
agent, broker, or principal, where the bank is not providing the
product in the State other than to an extent and in a manner that a
State bank (as defined in section 3(a)(2) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(a)(2)) is permitted by the law of the
State to provide such product, except that nothing in this subsection
shall be construed as granting any new authority to a national bank to
provide any product because the law of the State has authorized State
banks to provide such product.
``(e) Definitions.--For purposes of this section, sections 5136 and
5136B, and section 13 of the Federal Reserve Act, the following
definitions shall apply:
``(1) Insurance.--The term `insurance' means any product
defined or regulated as insurance, consistent with the relevant
State insurance law, by the insurance regulatory authority of
the State in which such product is sold, solicited, or
underwritten, including any annuity contract the income on
which is tax deferred under section 72 of the Internal Revenue
Code of 1986.
``(2) State.--The term `State' has the same meaning as in
section 3(a)(3) of the Federal Deposit Insurance Act.
``(f) Grandfather Provision.--
``(1) In general.--Any national bank which, before January 1,
1995, was providing insurance as agent or broker under section
13 of the Federal Reserve Act may provide insurance as an agent
or broker under such section, to no less extent and in a no
more restrictive manner as such bank was providing insurance as
agent or broker under such section on January 1, 1995,
notwithstanding contrary State law, subject to final,
controlling judgment in a pending action.
``(2) Termination.--This subsection shall cease to apply with
respect to any national bank described in paragraph (1) if--
``(A) the bank is subject to an acquisition, merger,
consolidation, or change in control, other than a
transaction to which section 18(c)(12) of the Federal
Deposit Insurance Act applies; or
``(B) any bank holding company which directly or
indirectly controls such bank is subject to an
acquisition, merger, consolidation, or change in
control, other than a transaction in which the
beneficial ownership of such bank holding company or of
a bank holding company which controls such company does
not change as a result of the transaction.
``(g) Preservation of Banking Products.--Nothing in this section
shall be construed as affecting the ability of a national bank, or a
subsidiary of a national bank, to engage in any activity, including any
activity authorized pursuant to the paragraph designated the
``Seventh'' of section 5136(a), that is part of, and not merely
incidental to, the business of banking.''.
(b) Interpretive Authority of the Comptroller of the Currency.--
Section 5136 of the Revised Statutes of the United States (12 U.S.C.
24) is amended--
(1) by striking ``Upon duly making and filing articles of
association'' and inserting ``(a) In General.--Upon duly making
and filing articles of association''; and
(2) by adding at the end the following new subsection:
``(b) Interpretive Authority of the Comptroller of the Currency.--
``(1) In general.--Subject to paragraph (2), it shall not be
incidental to banking for a national bank to provide insurance
as a principal, agent, or broker.
``(2) Scope of application.--Notwithstanding paragraph (1),
it shall be incidental to banking for a national bank to engage
in the following activities:
``(A) Providing, as an agent or broker, any annuity
contract the income on which is tax deferred under
section 72 of the Internal Revenue Code of 1986.
``(B) Providing, as a principal, agent, or broker,
any type of insurance, other than an annuity or title
insurance, which the Comptroller of the Currency
specifically determined, before May 1, 1995, to be
incidental to banking with respect to national
banks.''.
(c) Technical and Conforming Amendments.--
(1) The 11th undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 92) is amended by inserting ``,
and subject to section 5136A of the Revised Statutes of the
United States,'' after ``the laws of the United States''.
(2) The paragraph designated the ``Seventh'' of section 5136
of the Revised Statutes of the United States (12 U.S.C. 24) is
amended by striking ``subject to law,'' and inserting ``subject
to subsection (b), section 5136A, and any other provision of
law,''.
(3) Section 1306 of title 18, United States Code, is amended
by striking ``5136A'' and inserting ``5136C''.
(d) Clerical Amendment.--The table of sections for chapter 1 of title
LXII of the Revised Statutes of the United States is amended--
(1) by redesignating the item relating to section 5136A as
section 5136C; and
(2) by inserting after the item relating to section 5136 the
following new item:
``5136A. State supervision of insurance.''.
(e) Preservation of Bank Holding Company Insurance Authority.--No
provision of this section, and no amendment made by this section to any
other provision of law, may be construed as affecting the authority of
a bank holding company to engage in insurance agency activity pursuant
to section 4(c) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)).
SEC. 241. NATIONAL BANK COMMUNITY DEVELOPMENT INSURANCE ACTIVITIES.
(a) In General.--Chapter 1 of Title LXII of the Revised Statutes of
the United States (12 U.S.C. 21 et seq.) is amended by inserting after
section 5136A (as added by section 240(a) of this Act) the following
new section:
``SEC. 5136B. INSURANCE SALES IN EMPOWERMENT ZONES.
``(a) Authority To Sell Insurance as Agent From Empowerment Zones.--
The Comptroller of the Currency may approve an application by a
national bank maintaining a main office or full-service branch in an
empowerment zone to act as an agent or broker from such office or
branch for any fire, life, or other insurance company authorized to do
business in the State in which the customer is located if--
``(1) the bank provides sufficient evidence that the
availability of competitively priced insurance in the
empowerment zone is inadequate; and
``(2) the insurance is sold only in the empowerment zone.
``(b) Application of State Law.--State laws which regulate conducting
the business of insurance shall apply to national banks and their
employees that sell insurance as agent or broker under this section to
the same extent as such laws apply to other entities and persons not
affiliated with depository institutions except--
``(1) in any case in which the Comptroller of the Currency
determines, after notice to and comment by the appropriate
State insurance officials, that the application of a State law
would have an unreasonably discriminatory effect upon the sale
of insurance by national banks or their employees in comparison
with the effect the application of the State law would have
with respect to sale of insurance by other entities; or
``(2) when State law by its own terms does not apply to
national banks or employees of such banks.
``(c) Authority of Comptroller of the Currency.--
``(1) In general.-- The Comptroller of the Currency may
prescribe regulations governing sales of insurance by national
banks pursuant to this section.
``(2) Enforcement of state law.--The provisions of any State
law to which a national bank is subject under this section
shall be enforced with respect to such bank by the Comptroller
of the Currency.
``(d) Definitions.--
``(1) Empowerment zone.--The term `empowerment zone' means an
area that meets the standards for designation as an empowerment
zone or enterprise community under section 1392 of the Internal
Revenue Code of 1986 or an Indian reservation.
``(2) Full-service branch.--The term `full-service branch'
means a staffed facility which has been approved as a branch
and offers loan and deposit services.
``(3) Indian reservation.--The term `Indian reservation' has
the meaning given such term by section 168(j)(6) of the
Internal Revenue Code of 1986.''.
(b) Clerical Amendment.--The table of sections for chapter 1 of title
LXII of the Revised Statutes of the United States is amended by
inserting after the item relating to section 5136A (as added by section
240(d) of this title) the following new item:
``5136B. Insurance sales in empowerment zones.''.
SEC. 242. AUTHORIZING BANK SERVICE COMPANIES TO ORGANIZE AS LIMITED
LIABILITY PARTNERSHIPS.
(a) Amendment to Short Title.--Section 1 of the Bank Service
Corporation Act (12 U.S.C. 1861(a)) is amended by striking subsection
(a) and inserting the following new subsection:
``(a) Short Title.--This Act may be cited as the `Bank Service
Company Act'.'';
(b) Amendments to Definitions.--Section 1(b) of the Bank Service
Corporation Act (12 U.S.C. 1861(b)) is amended--
(1) by striking paragraph (2) and inserting the following new
paragraph:
``(2) the term `bank service company' means--
``(A) any corporation--
``(i) which is organized to perform services
authorized by this Act; and
``(ii) all of the capital stock of which is
owned by 1 or more insured banks; and
``(B) any limited liability company--
``(i) which is organized to perform services
authorized by this Act; and
``(ii) all of the members of which are 1 or
more insured banks.'';
(2) in paragraph (6)--
(A) by striking ``corporation'' and inserting
``company''; and
(B) by striking ``and'' after the semicolon;
(3) by redesignating paragraph (7) as paragraph (8) and
inserting after paragraph (6) the following new paragraph:
``(7) the term `limited liability company' means any company
organized under the law of a State (as defined in section 3 of
the Federal Deposit Insurance Act) which provides that a member
or manager of such company is not personally liable for a debt,
obligation, or liability of the company solely by reason of
being, or acting as, a member or manager of such company;
and''; and
(4) in paragraph (8) (as so redesignated)--
(A) by striking ``corporation'' each place such term
appears and inserting ``company''; and
(B) by striking ``capital stock'' and inserting
``equity''.
(c) Amendments to Section 2.--Section 2 of the Bank Service
Corporation Act (12 U.S.C. 1862) is amended--
(1) by striking ``corporation'' and inserting ``company'';
(2) by striking ``corporations'' and inserting ``companies'';
and
(3) in the heading for such section, by striking
``corporation'' and inserting ``company''.
(d) Amendments to Section 3.--Section 3 of the Bank Service
Corporation Act (12 U.S.C. 1863) is amended--
(1) by striking ``corporation'' each place such term appears
and inserting ``company''; and
(2) in the heading for such section, by striking
``corporation'' and inserting ``company''.
(e) Amendments to Section 4.--Section 4 of the Bank Service
Corporation Act (12 U.S.C. 1864) is amended--
(1) by striking ``corporation'' each place such term appears
and inserting ``company'';
(2) in subsection (b), by inserting ``or members'' after
``shareholders'' each place such term appears;
(3) in subsections (c) and (d), by inserting ``or member''
after ``shareholder'' each place such term appears;
(4) in subsection (e)--
(A) by inserting ``or members'' after ``national bank
and State bank shareholders'';
(B) by striking ``its national bank shareholder or
shareholders'' and inserting ``any shareholder or
member of the company which is a national bank'';
(C) by striking ``its State bank shareholder or
shareholders'' and inserting ``any shareholder or
member of the company which is a State bank'';
(D) by striking ``such State bank or banks'' and
inserting ``any such State bank''; and
(E) by inserting ``or members'' after ``State bank
and national bank shareholders'';
(5) in subsection (f), by inserting ``or providing insurance
as principal, agent, or broker (except to the extent permitted
under subparagraph (A) or (E) of section 4(c)(8) of the Bank
Holding Company Act of 1956)'' after ``or deposit taking''; and
(6) in the heading for such section, by striking
``corporation'' and inserting ``company''.
(f) Amendments to Section 5.--Section 5 of the Bank Service
Corporation Act (12 U.S.C. 1865) is amended--
(1) by striking ``corporation'' each place such term appears
and inserting ``company''; and
(2) in the heading for such section, by striking
``corporations'' and inserting ``companies''.
(g) Amendments to Section 6.--Section 6 of the Bank Service
Corporation Act (12 U.S.C. 1866) is amended--
(1) by striking ``corporation'' each place such term appears
and inserting ``company'';
(2) by inserting ``or is not a member of'' after ``does not
own stock in'';
(3) by striking ``the nonstockholding institution'' and
inserting ``such depository institution'';
(4) by inserting ``or is a member of'' after ``that owns
stock in'';
(5) in paragraphs (1) and (2), by inserting ``or nonmember''
after ``nonstockholding''; and
(6) in the heading for such section by inserting ``or
nonmembers'' after ``nonstockholders''.
(h) Amendments to Section 7.--Section 7 of the Bank Service
Corporation Act (12 U.S.C. 1867) is amended--
(1) by striking ``corporation'' each place such term appears
and inserting ``company'';
(2) in subsection (a)--
(A) by inserting ``or principal member'' after
``principal shareholder''; and
(B) by inserting ``or member'' after ``other
shareholder''; and
(3) in the heading for such section, by striking
``corporations'' and inserting ``companies''.
SEC. 243. BANK INVESTMENTS IN EDGE ACT AND AGREEMENT CORPORATIONS.
The 10th undesignated paragraph of section 25A of the Federal Reserve
Act (12 U.S.C. 618) is amended by striking the last sentence and
inserting the following: ``Any national bank may invest in the stock of
any corporation organized under this section. The aggregate amount of
stock held by any national bank in all corporations engaged in business
of the kind described in this section or section 25 shall not exceed an
amount equal to 10 percent of the capital and surplus of such bank
unless the Board determines that the investment of an additional amount
by the bank would not be unsafe or unsound and, in any case, shall not
exceed an amount equal to 25 percent of the capital and surplus of such
bank.''.
SEC. 244. REPORT ON THE RECONCILIATION OF DIFFERENCES BETWEEN
REGULATORY ACCOUNTING PRINCIPLES AND GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES.
Before the end of the 180-day period beginning on the date of the
enactment of this Act, each appropriate Federal banking agency (as
defined in section 3 of the Federal Deposit Insurance Act) shall submit
to the Committee on Banking and Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate a report on the actions taken and to be taken by
the agency to eliminate or conform inconsistent or duplicative
accounting and reporting requirements applicable to reports or
statements filed with any such agency by insured depository
institutions, as required by section 121 of the Federal Deposit
Insurance Corporation Improvement Act of 1991.
SEC. 245. WAIVERS AUTHORIZED FOR RESIDENCY REQUIREMENT FOR NATIONAL
BANK DIRECTORS.
The 1st sentence of section 5146 of the Revised Statutes of the
United States (12 U.S.C. 72) is amended by inserting ``(1) the
Comptroller of the Currency may, in the Comptroller's discretion, waive
the residency requirement in the case of any director of a national
bank to whom the requirement would otherwise apply, and (2)'' after
``except that''.
TITLE III--LENDER LIABILITY
SEC. 301. LENDER LIABILITY.
(a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.) is amended by adding after section 44, the following new section:
``SEC. 45. LENDER, FIDUCIARY, AND GOVERNMENT AGENCY ENVIRONMENTAL
LIABILITIES.
``(a) Lender Environmental Liability.--
``(1) In general.-- Notwithstanding any other provision or
rule of Federal law, no lender, acting as defined in this
section, shall be liable pursuant to a Federal environmental
law, except as provided in this section.
``(2) Actual participation required.--A lender shall only be
liable pursuant to a Federal environmental law when the lender
actually participates in management of another person's
activities which create liability under the same Federal
environmental law.
``(3) Definitions.--The following definitions shall apply for
purposes of this section:
``(A) Participate in management.--The term
`participate in management' means actually
participating in the management or operational affairs
of other persons' activities, and does not include
merely having the capacity to influence, or the
unexercised right to control such activities;
``(B) Participate in management.--A person shall be
considered to `participate in management' while a
borrower is still in possession of property, only if
such person--
``(i) exercises decisionmaking control over
the environmental compliance of a borrower,
such that the person has undertaken
responsibility for the hazardous substance
handling or disposal practices of the borrower;
or
``(ii) exercises control at a level
comparable to that of a manager of the
enterprise of the borrower, such that the
person has assumed or manifested responsibility
for the overall management of the enterprise
encompassing day-to-day decisionmaking with
respect to environmental compliance, or with
respect to substantially all of the operational
aspects (as distinguished from financial or
administrative aspects) of the enterprise,
other than environmental compliance.
``(C) Participate in management.--The term
`participate in management' does not include engaging
in an act or failing to act before the time that an
extension of credit is made or a security interest is
created in property.
``(D) Participate in management.--The term
`participate in management' does not include, unless
such actions rise to the level of participating in
management (as defined in subparagraphs (A) and (B))--
``(i) holding an extension of credit or a
security interest or abandoning or releasing an
extension of credit or a security interest;
``(ii) including in the terms of an extension
of credit, or in a contract or security
agreement relating to such an extension,
covenants, warranties, or other terms and
conditions that relate to environmental
compliance;
``(iii) monitoring or enforcing the terms and
conditions of an extension of credit or
security interest;
``(iv) monitoring or undertaking 1 or more
inspections of property, except that monitoring
or undertaking any such inspection, although
not required by this subsection, shall provide
probative evidence that a holder of a security
interest is acting to preserve and protect the
property during the time the holder may have
possession or control of such property;
``(v) requiring or conducting a response
action or other lawful means of addressing the
release or threatened release of a hazardous
substance in connection with property prior to,
during, or upon the expiration of the term of
an extension of credit;
``(vi) providing financial or other advice or
counseling in an effort to mitigate, prevent,
or cure default or diminution in the value of
the property;
``(vii) restructuring, renegotiating, or
otherwise agreeing to alter the terms and
conditions of an extension of credit or
security interest, or exercising forbearance;
or
``(viii) exercising other remedies that may
be available under applicable law for the
breach of any term or condition of the
extension of credit or security agreement.
``(E) When a lender did not participate in management
of property prior to foreclosure, then the lender shall
not be liable even if such person forecloses on
property, sells, re-leases, or liquidates property,
maintains business activities, winds up operations, or
undertakes any response action with respect to
property, or takes other measures to preserve, protect,
or prepare property prior to sale or disposition, if
such person seeks to sell, release, or otherwise divest
the property at the earliest practical, commercially
reasonable time, on commercially reasonable terms,
taking into account market conditions and legal and
regulatory requirements.
``(4) Limitation on liability.--The liability of any lender
that is liable under any Federal environmental law shall be
limited to only the cost of any response action or corrective
action to the extent and in the amount that the lender actively
and directly contributed to the hazardous substance release. A
lender shall not be liable for the cost of any response action
or corrective action relating to the release of a hazardous
substance which commences before and continues after the lender
obtains a security interest in the property so long as the
lender does not actively and directly contribute to the
hazardous substance release.
``(b) Fiduciary Environmental Liability.--
``(1) In general.-- Notwithstanding any other provision or
rule of Federal law, no fiduciary, acting as defined in this
section, shall be liable pursuant to any Federal environmental
law, except as provided in this section.
``(2) Liability of fiduciary.--
``(A) Subject to subparagraphs (B) and (C), a
fiduciary holding title to property or otherwise
affiliated with property solely in a fiduciary capacity
shall be personally subject to the obligations and
liabilities of any person under any Federal
environmental law, to the same extent as if the
property were held by the fiduciary free of trust.
``(B) The personal obligations and liabilities of a
fiduciary referred to in subparagraph (A) shall be
limited to the extent to which the assets of the trust
or estate are sufficient to indemnify the fiduciary,
unless--
``(i) the obligations and liabilities would
have arisen even if the person had not served
as a fiduciary;
``(ii) the fiduciary's own failure to
exercise due care with respect to property
caused or contributed to the release of
hazardous substances following establishment of
the trust, estate, or fiduciary relationship;
or
``(iii) the fiduciary had a role in
establishing the trust, estate, or fiduciary
relationship, and such trust, estate, or
fiduciary relationship has no objectively
reasonable or substantial purpose apart from
the avoidance or limitation of liability under
an environmental law.
Nothing in the preceding sentence shall be construed as
requiring indemnification by an employee benefit plan
(within the meaning of paragraph (3) of section 3 of
Employee Retirement Income Security Act of 1974), or by
any trust forming a part thereof, of any fiduciary of
such plan contrary to the terms of the plan or in an
amount in excess of the amount permitted under the
terms of such plan.
``(C) A fiduciary shall not be personally liable for
undertaking or directing another to undertake a
response action.
``(3) Rule of construction.--No provision of this subsection
shall be construed as affecting the liability, if any, of any
person who--
``(A)(i) acts in a capacity other than a fiduciary
capacity; and
``(ii) directly or indirectly benefits from a trust
or fiduciary relationship; or
``(B)(i) is a beneficiary and a fiduciary with
respect to the same fiduciary estate; and
``(ii) as a fiduciary, receives benefits that exceed
customary or reasonable compensation, and incidental
benefits, permitted under other applicable laws.
``(c) Definitions.--For purposes of subsections (a) and (b), the
following definitions shall apply:
``(1) Federal environmental law.--The term `Federal
environmental law' means any Federal statute or rule of common
law with the purpose of protection of the environment and any
Federal regulation promulgated thereunder and any State statute
or regulation created as a federally approved or delegated
program implementing these laws, including the following:
``(A) The Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.).
``(B) The Toxic Substances Control Act (15 U.S.C.
2601 et seq.).
``(C) The Federal Water Pollution Control Act (33
U.S.C. 1251 et seq.).
``(D) The Oil Pollution Act of 1990 (33 U.S.C. 2701
et seq.).
``(E) The Clean Air Act (42 U.S.C. 7401 et seq.).
``(F) The Solid Waste Disposal Act (42 U.S.C. 6901 et
seq.).
``(G) The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. 9601
et seq.).
``(H) The Pollution Prevention Act of 1990 (42 U.S.C.
13101 et seq.).
``(2) Extension of credit.--The term `extension of credit'
means the making or renewal of any loan, a granting of a line
of credit or extending credit in any manner, such as an advance
by means of an overdraft or the issuance of a standby letter of
credit, and a lease finance transaction--
``(A) in which the lessor does not initially select
the leased property and does not, during the lease
term, control the daily operation or maintenance of the
property; or
``(B) that conforms with regulations issued by the
appropriate Federal banking agency or the appropriate
State bank supervisory (as these terms are defined in
section 3 of the Federal Deposit Insurance Act or with
regulations issued by the National Credit Union
Administration Board, as appropriate.
``(3) Fiduciary.--The term `fiduciary' means a person who
acts for the exclusive benefit of another person as a bona fide
fiduciary within the meaning of section 3(21) of the Employee
Retirement Income Security Act of 1974, trustee, executor,
administrator, custodian, guardian, conservator, receiver,
committee of estates of lunatics or other disabled persons, or
personal representative; except, that the term `fiduciary' does
not include any person--
``(A) who owns, or controls, is affiliated with, or
takes any action with respect to property on behalf of
or for the benefit of a lender or takes any action to
protect a lender's extension of credit or security
interest (any such person shall be treated as a lender
under subsection (a) of this section); or
``(B) who is acting as a fiduciary with respect to a
trust or other fiduciary estate that--
``(i) was not created as part of, or to
facilitate, one or more estate plans or
pursuant to the incapacity of a natural person;
and
``(ii) was organized for the primary purpose
of, or is engaged in, actively carrying on a
trade or business for profit.
``(4) Financial or administrative aspect.--The term
`financial or administrative aspect' means a function such as a
credit manager, accounts payable officer, accounts receivable
officer, personnel manager, comptroller, or chief financial
officer, or any similar function.
``(5) Foreclosure, foreclose.--The terms `foreclosure' and
`foreclose' means, respectively, acquiring, and to acquire,
property through--
``(A) purchase at sale under a judgment or decree, a
power of sale, a nonjudicial foreclosure sale, or from
a trustee, deed in lieu of foreclosure, or similar
conveyance, or through repossession, if such property
was security for an extension of credit previously
contracted;
``(B) conveyance pursuant to an extension of credit
previously contracted, including the termination of a
lease agreement; or
``(C) any other formal or informal manner by which
the person acquires, for subsequent disposition,
possession of collateral in order to protect the
security interest of the person.
``(6) Hazardous substance.--The term `hazardous substance'
means any chemical, biological, organic, inorganic, or
radioactive pollutants, contaminants, materials, waste, or
other substances regulated under, defined, listed, or included
in any Federal environmental law.
``(7) Lender.--The term `lender' means--
``(A) a person that makes a bona fide extension of
credit to or takes a security interest from another
person and includes a successor or assign of the person
which makes the extension of credit or takes the
security interest;
``(B) the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, the Federal
Agricultural Mortgage Corporation, or other entity that
in a bona fide manner is engaged in the business of
buying or selling loans on interests therein;
``(C) any person engaged in the business of insuring
or guaranteeing against a default in the repayment of
an extension of credit, or acting as a surety with
respect to an extension of credit, to other persons; or
``(D) any person regularly engaged in the business of
providing title insurance who acquires property as a
result of assignment or conveyance in the course of
underwriting claims and claims settlement.
``(8) Operational aspect.--The term `operational aspect'
means a function such as a facility or plant manager,
operations manager, chief operating officer, or chief executive
officer.
``(9) Person.--The term `person' means an individual, firm,
corporation, association, partnership, consortium, joint
venture, commercial entity, United States Government, State,
municipality, commission, political subdivision of a State, or
any interstate body.
``(10) Property.--The term `property' means real, personal,
and mixed property.
``(11) Response action.--The term `response action' shall
have the same meaning as that term is defined in section 101 of
the Comprehensive Environmental Response, Compensation and
Liability Act.
``(12) Security interest.--The term `security interest' means
a right under a mortgage, deed of trust, assignment, judgment
lien, pledge, security agreement, factoring agreement, or
lease, or any other right accruing to a person to secure the
repayment of money, the performance of a duty, or some other
obligation.
``(d) Savings Clause.--Nothing in subsections (a) (b), or (c),
shall--
``(1) affect the rights or immunities or other defenses that
are already available to lenders or fiduciaries under any
Federal environmental law;
``(2) be construed to create any liability for any lender or
fiduciary; or
``(3) create a private right of action against any lender or
fiduciary.
``(e) Federal Banking and Lending Agency Environmental Liability.--
``(1) Governmental entities.--
``(A) Banking and lending agencies.--Except as
provided in paragraph (C), a Federal banking or lending
agency shall not be liable under any law imposing
strict liability for the release or threatened release
of petroleum or a hazardous substance at or from
property (including any right or interest therein)
acquired--
``(i) in connection with the exercise of
receivership or conservatorship authority, or
the liquidation or winding up of the affairs of
an insured depository institution, including
any of its subsidiaries, and bridge bank;
``(ii) in connection with the provision of
loans, discounts, advances, guarantees,
insurance, or other financial assistance; or
``(iii) in connection with property received
in any civil or criminal proceeding, or
administrative enforcement action, whether by
settlement or order.
``(B) Application of state law.--Nothing in paragraph
(e) shall be construed as preempting, affecting,
applying to, or modifying any State law, or any rights,
actions, cause of action, or obligations under State
law, except that liability under State law shall not
exceed the value of the agency's interest in the asset
giving rise to such liability. Nothing in this section
shall be construed to prevent a Federal banking or
lending agency from agreeing with a State to transfer
property to such State in lieu of any liability that
might otherwise be imposed under State law.
``(C) Limitation.--Notwithstanding paragraph (A), and
subject to section 107(d) of the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, a Federal banking or lending agency that
directly caused or materially contributed to the
release of petroleum or a hazardous substance may be
liable for removal, remedial, or other response action
pertaining to that release.
``(D) Subsequent purchaser.--The immunity provided by
paragraphs (A) and (B) shall extend to the first
subsequent purchaser of property described in such
paragraph from a Federal banking or lending agency,
unless such purchaser--
``(i) would otherwise be liable or
potentially liable for all or part of the costs
of the removal, remedial, or other response
action due to a prior relationship with the
property;
``(ii) is or was affiliated with or related
to a party described in subparagraph (i);
``(iii) fails to agree to take reasonable
steps necessary to abate the release or
threatened release or to protect public health
and safety in a manner consistent with the
purposes of applicable Federal environmental
laws; or
``(iv) directly causes or significantly and
materially contributes to any additional
release or threatened release on the property.
``(E) Federal or state action.--Notwithstanding
subparagraph (D), if a Federal agency or State
environmental agency is required to take remedial
action due to the failure of a subsequent purchaser to
carry out, in good faith, the agreement described in
subparagraph (D)(iii), such subsequent purchaser shall
reimburse the Federal or State environmental agency for
the costs of such remedial action. Any such
reimbursement shall not exceed the increase in the fair
market value of the property attributable to the
remedial action.
``(2) Lien exemption.--Notwithstanding any other provision of
law, any property held by a subsequent purchaser referred to in
paragraph (1)(D) or held by a Federal banking or lending agency
shall not be subject to any lien for costs or damages
associated with the release or threatened release of petroleum
or a hazardous substance existing at the time of the transfer.
``(3) Exemption from covenants to remediate.--A Federal
banking or lending agency shall be exempt from any law
requiring such agency to grant covenants warranting that a
removal, remedial, or other response action has been, or will
in the future be, taken with respect to property acquired in
the manner described in paragraph (e)(1)(A).
``(4) Definitions.--For purposes of subsection (e), the
following definitions shall apply:
``(A) Federal banking or lending agency.--The term
`Federal banking or lending agency' means the
Corporation, the Resolution Trust Corporation, the
Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Office of Thrift
Supervision, a Federal Reserve Bank, a Federal Home
Loan Bank, the Department of Housing and Urban
Development, the National Credit Union Administration
Board, the Farm Credit Administration, the Farm Credit
System Insurance Corporation, the Farm Credit System
Assistance Board, the Farmers Home Administration, the
Rural Electrification Administration, the Small
Business Administration, and any other Federal agency
acting in a similar capacity, in any of their
capacities, and their agents or appointees.
``(B) Hazardous substance.--The term `hazardous
substance' has the same meaning as in section 101(14)
of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
``(C) Release.--The term `release' has the same
meaning as in section 101(22) of the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, and includes the use, storage, disposal,
treatment, generation, or transportation of a hazardous
substance.
``(5) Savings clause.--Nothing in subsection (e) shall--
``(A) affect the rights or immunities or other
defenses that are available under this Act or other
applicable law to any party, subject to the provisions
of this section;
``(B) be construed to create any liability for any
party; or
``(C) create a private right of action against an
insured depository institution or lender or against a
Federal banking or lending agency.''.
(b) Effective Date.--This section shall take effect upon the date of
the enactment of this Act and shall apply to any claim against any
lender, fiduciary, or government agency under any Federal environmental
law that has not been finally resolved by adjudication or settlement
before such date.
TITLE IV--ANNUAL STUDY AND REPORT ON IMPACT ON LENDING TO SMALL
BUSINESS
SEC. 401. ANNUAL STUDY AND REPORT.
Not later than 12 months after the date of the enactment of this Act,
and annually thereafter, the Board of Governors of the Federal Reserve
System, the Director of the Office of Thrift Supervision, the
Comptroller of the Currency, and the Board of Directors of the Federal
Deposit Insurance Corporation shall jointly conduct a study and submit
to the Congress a report on the extent to which this Act and the
amendments made by this Act have, through reductions in regulatory
burdens, resulted in increased lending to small businesses.
Background and Need for Legislation
The Financial Institutions Regulatory Relief Act of 1995
advances the effort begun by the 102nd Congress to remove
unnecessary and redundant regulations imposed on the nation's
financial institutions without affecting safety and soundness.
Over the past 25 years, a variety of new laws and regulations
in the areas of safety and soundness and consumer protections
has been imposed on financial institutions. Over the course of
time, however, some of these laws and regulations have proven
to be duplicative and counterproductive causing bank resources
to be dedicated to costly paperwork and compliance review
processes instead of commercial and consumer lending. Needless
regulations result in inefficiency and increased costs to both
financial institutions and consumers. In addition, the added
cost of regulation produces disintermediation--the movement of
savings dollars from traditional federally insured institutions
to other venues where regulatory requirements are less
burdensome and thus less costly. Ironically, the volume of
information required to be provided to consumers under the
numerous Federal consumer protection laws is so overwhelming
that consumers are frequently more confused than informed. By
removing excessive regulation this legislation is designed to
encourage operational efficiency and to support the
competitiveness of financial institutions without compromising
the safety and soundness mechanisms or consumer protections
required to uphold the integrity of the U.S. banking system.
The complex regulatory environment of the early 1990s
evolved in response to a variety of problems that occurred in
financial markets during the 1970s and 1980s, including the
savings and loans crisis. In an effort to respond to economic
immediacies, Congress enacted a series of statutes designed to
improve the supervision of savings associations and to curtail
investments and other activities that posed unacceptable risks
to the Federal deposit insurance funds.
While it is clear that many of the safety and soundness
provisions enacted as a result of the financial conditions in
the 1980s, such as those mandating strong capital requirements
and accurate accounting standards, are necessary, other
provisions are generally considered to be unnecessary burdens
by regulators and the banking industry. In addition, these
legislative actions were followed by an avalanche of
implementing regulations that have overwhelmed the management
of many depository institutions regardless of size.
Other significant factors in the growth of regulatory
burden are the numerous Federal consumer protection laws
enacted by Congress. These statutes include the Real Estate
Settlement Procedures Act of 1977 (RESPA), the Truth in Lending
Act (TILA), the Home Mortgage Disclosure Act (HMDA), the Equal
Credit Opportunity Act (ECOA), the Fair Credit Reporting Act
(FCRA), the Fair Housing Act (FHA), the Electronic Fund
Transfer Act (EFTA), and the Fair Debt Collection Practices Act
(FDCPA). Again, while the objectives of these laws may be
worthwhile, implementation of these and other new requirements
has increased reporting, disclosure, and recordkeeping which,
in turn, has increased the cost of extending credit and
offering deposit products. Moreover, experience has shown that
inundating consumers with a countless array of documents
written in legal, technical language generally fails to provide
consumers with the types of useful information intended by the
above laws.
As a result of all of these statutory and regulatory
developments, depository institutions today bear a heavy
regulatory burden. Three years ago, the banking industry
estimated that the cost of compliance was into the billions of
dollars. Various other studies over the past few years have
estimated that compliance with regulatory requirements imposes
significant direct costs on banks, some portion of which is
passed on to the consumer. At times, the burden falls
disproportionately on insured banks and thrifts, as compared
with other types of financial institutions. Given the increased
competition in the financial services market from nonbank
entities not subject to federal regulations, regulatory burdens
should not unnecessarily place banks at a competitive
disadvantage.
It is also important to recognize that regulatory burden
generally has a significantly greater impact on smaller
institutions. For example, one-quarter of the banks supervised
by the Federal Deposit Insurance Corporation (FDIC) have fewer
than 13 employees on a full-time basis. A labor force of this
size cannot deal with the complexity and sheer volume of
regulatory and legislative requirements, whereas larger
institutions can more easily integrate such requirements into
their business operations.
In short, the need for this legislation arises from the
fact that the regulatory environment is too complex, the cost
compliance is too high, and the resulting competitive
disadvantages facing financial institutions are too great. In
order to ensure the integrity, the competitiveness, and the
continued success of the nation's banking system, certain
legislative action must be taken to reduce the unnecessary
regulatory burdens currently imposed on financial institutions.
Purpose and Summary
The purpose of this legislation is to streamline,
rationalize, and modernize the regulation of financial
institutions and to maintain the safety and soundness of the
nation's financial systems and necessary consumer protections.
This threefold objective is principally achieved by removing
unnecessary reporting, disclosure, or recordkeeping
requirements or by making appropriate modifications thereto. By
reducing regulatory burdens, this legislation strives to
significantly lower the cost of compliance and to promote
competition among all types of financial institutions both
within and outside of the United States. At the same time, this
legislation deliberately preserves the legislative safeguards
already in law that pertain to safety and soundness and
consumer protection. This legislation, ultimately, is intended
to provide the consumer with greater choices and lower prices
for financial products and services.
Title I--Reductions in Government Overregulation
subtitle a--the home mortgage process
1. Rationalizing the home mortgage lending process
Government overregulation of the nation's home mortgage
lending process has resulted in higher costs, excessive
paperwork, and consumer frustration to the detriment of both
financial institutions and consumers. Legislation is needed to
rationalize the regulatory framework that governs the home
mortgage lending process in order to eliminate unnecessary
costs, burdens, and complexity while providing more useful
information to consumers.
Currently, the home mortgage lending process is governed by
the TILA and the RESPA. The TILA was enacted to enable
consumers to shop comparatively for consumer credit by
requiring lenders to disclose interest rates and other
information about credit terms and costs in a uniform way. The
TILA governs disclosures required for all consumer credit
transactions, a uniform way. The TILA governs disclosures
required for all consumer credit transactions, including home
mortgages. The RESPA was enacted to ensure that consumers are
provided with greater and more timely information on the nature
and costs of the real estate settlement process and are
protected from unnecessarily high settlement charges and fees.
Under this system of dual supervision, there is
considerable overlap in regulatory requirements, especially
with respect to disclosure statements. Duplicative disclosure
statements unnecessarily increase the costs of compliance and
ultimately lessen the financial institution's ability to engage
in mortgage lending. Moreover, redundancy in disclosure
statements is frequently confusing to the consumer and often
needlessly complicates the settlement process. In order to
reduce the statutory overlap and to eliminate unnecessary
paperwork, this legislation would transfer rulemaking authority
relating to the disclosure provisions under the RESPA from the
Department of Housing and Urban Development (HUD) to the
Federal Reserve Board, which currently has rulemaking authority
under the TILA. Furthermore, this legislation mandates the
Board to reconcile differences between the disclosure
provisions found in the TILA and the RESPA, to simplify
disclosures, including the timing thereof, and to create a
single format for such disclosures. These changes would reduce
compliance costs and provide more meaningful information to the
consumer.
The current enforcement structure with regard to
disclosures under the RESPA and the TILA is also problematic.
Not only do these statutes have two different mechanisms for
providing similar information in real estate transactions, but
they are presently interpreted by two different regulators. By
transferring interpretive authority for RESPA disclosures to
the Board, along with instructions to eliminate duplicative and
unnecessary requirements, real estate transactions will be
greatly simplified.
All other sections of RESPA pertaining to settlement
services, including section 8, remain under the jurisdiction of
HUD. In light of the fact that HUD is currently not providing
any clear and consistent regulatory guidance to settlement
service providers under RESPA, this legislation requires HUD to
utilize a negotiated rulemaking process provided for under the
Negotiated Rulemaking Act of 1990 before proceeding with any
additional proposed and final rules under Sections 8 and 9 of
the RESPA. Negotiated rulemaking will ensure that the concerns
of all parties are expressed before HUD issues any rules
regarding real estate settlement issues.
Enforcement of the settlement service sections of RESPA are
retained under HUD authority with regard to non-banking
entities and are transferred to the appropriate federal banking
agencies for banking organizations. Additionally, in situations
where numerous enforcement agencies are involved, agencies are
required to coordinate their enforcement activities in order to
assure that institutions are subject to the same rules of law
and enforcement policies.
2. Recent Truth in Lending Act litigation (``Rodash'')
This legislation also addresses the United States Court of
Appeals for the Eleventh Circuit's decision in Rodash v. AIB
Mortgage Co., 16 F.3d 1142 (11th Cir. 1994), a case involving
the TILA. The TILA requires lenders to disclose credit terms to
borrowers in a manner that allows them to compare objectively
various credit products. For example, the TILA requires lenders
to characterize certain charges associated with a loan as
``finance charges'' and requires them to aggregate all such
charges into one ``finance charge'' to be disclosed at real
estate closings. The TILA allows borrowers to rescind
transactions even for technical violations of the disclosure
provisions of the statute.
On March 21, 1994, the court in Rodash v. AIB, ruled that
certain taxes and fees (a $20 Federal Express delivery charge),
including some fees that are assessed by third parties other
than the lender, must be characterized as ``finance charges''
under the TILA. Because of this technical violation, the
borrower was able to rescind the mortgage. When a mortgage is
rescinded, the borrower is released from the mortgage lien
leaving the lender with the unsecured loan moreover, the
borrower is entitled to repayment of interest and all other
non-principal payments made on the loan.
The Eleventh Circuit's ruling has sparked numerous class
action lawsuits against lenders who have not characterized or
disclosed such taxes and fees as ``finance charges'' in the
past. It is argued that Rodash could have disastrous
consequences for both organizers of mortgage loans and the
secondary market. The potential cost of rescinding all
refinanced mortgages made in the last three years (the time
allowed under TILA to exercise the rescission right) has been
estimated to be as high as $217 billion.
This issue was addressed by the House in the 103rd Congress
by including the necessary corrective legislative language in a
bill to amend the FCRA. That language, which was passed as part
of H.R. 5178, would have expressly exempted from the definition
of ``finance charge'' the types of taxes and fees that the
Eleventh Circuit found objectionable. Although H.R. 5178 was
passed by the House on November 5, 1994 by voice vote, it was
not considered by the Senate.
On April 4, 1995, with bipartisan support, the House under
a suspension of the rules passed H.R. 1380, ``The Truth in
Lending Class Action Relief Act of 1995.'' The Senate passed
H.R. 1380 by unanimous consent on April 24, 1995. H.R. 1380
imposes a moratorium until October 1, 1995 on certain TILA
class action certifications, including Rodash-style class
actions brought in connection with first liens on real property
or dwellings that constitute a refinancing or consolidation of
a debt.
Again, this legislation reflects a bipartisan compromise.
This legislation exempts a number of charges from inclusion in
the ``finance charge'' and provides a tiered ``tolerance''
approach on finance charge miscalculations. The legislation
clarifies the applicability of the three year right of
rescission for material nondisclosure, and precludes rescission
for certain first-lien refinances. The legislation also
contains limitations on the liability of assignees and services
of home mortgages. It provides retroactive relief from
liability for certain errors in disclosures with respect to
certain individual cases and class actions.
subtitle b--community reinvestment act amendments
This legislation reaffirms the Community Reinvestment Act's
(CRA) original intent to encourage financial institutions to
reinvest in their communities, while not imposing comprehensive
credit allocation dictates or unnecessary burdens on banks and
savings associations. Under the current law, the CRA requires
federal regulatory agencies to encourage financial institutions
to meet the credit needs of their local communities consistent
with the safe and sound operation of such institutions.
Institutions are examined for CRA compliance and given one
of four ratings: (i) ``substantial noncompliance'', (ii)
``needs to improve'', (iii) ``satisfactory'', or (iv)
``outstanding.'' Agencies consider these ratings when
institutions apply to charter a bank or savings association, to
relocate or establish a deposit facility, or to merge,
consolidate or acquire assets of another institution.
Enacted as part of the Housing and Community Development
Act of 1977, the CRA was seen as a way to combat urban decay
that was blamed in part on redlining (the practice of financial
institutions intentionally not lending to certain neighborhoods
or parts of a community). CRA was premised on the view that
regulated institutions have a continuing obligation to meet the
credit needs of their local communities in exchange for deposit
insurance and a government charter.
This legislation is designed to respond to many of the
concerns that have been raised about the CRA and that were not
addressed in the new inter-agency regulations. First, the
legislation reemphasizes the original intent of the CRA not to
impose added regulatory burden by explicitly prohibiting
additional recordkeeping or reporting requirements unless such
requirements reduce regulatory burden.
Second, recognizing the inordinate regulatory impact of CRA
compliance on small, community institutions and the fact that
these institutions must meet the credit needs of their
community in order to survive, the legislation permits
institutions with less than $250 million in assets to self-
certify compliance with the CRA in lieu of receiving an agency
CRA evaluation. In general, banks with assets of $250 million
or less typically do not have the resources for a full time CRA
officer and cannot achieve the economies of scale in compliance
efforts that billion dollar banks can achieve in developing and
implementing CRA programs. The reasonableness of an
institution's self-certification would be assessed during that
institution's safety and soundness examination and would be
based on information contained in the institution's public
notice. Interested parties would be able to comment on an
institution's performance and all comments would be maintained
in the institution's public file. In addition, the legislation
exempts an institution if it and its holding company in the
aggregate have assets of $100 million or less from the
requirements of the CRA. In rural communities, in particular,
small banks lend to their community out of necessity as their
continued existence depends upon a strong thriving community.
In essence, small banks are already doing what the CRA
requires, that is lending to their entire community.
Third, for institutions with assets of $250 million or
greater, the appropriate federal banking agency would still
perform a full CRA evaluation of the institution. The inter-
agency regulations adopted in April would still be applicable.
The legislation, however, further reforms the CRA for large
institutions by establishing a new mechanism for community
input into an institution's CRA examination and further
provides that CRA ratings for institutions receiving a
``satisfactory'' or ``outstanding,'' would be conclusive until
the next examination.
Under the present CRA system, all too often banks find that
they do not hear from community advocates until the bank files
a merger or acquisition application. Because of the delay and
cost these protests add to the application process, many
community groups have found it a highly effective method of
``encouraging'' institutions to enter into significant lending
agreements in exchange for dropping the protest. Evidence
suggests that CRA protests typically result in bank-sponsored
targeted loan programs. The banks argue that they are being
held ``hostage'' by community groups. The regulatory system is
so flawed that even a bank with an ``outstanding'' CRA rating
can find its CRA record challenged at the time it files an
application.
This legislation, by providing a procedure for community
groups to respond to the institution's record of meeting its
community needs in connection with the institution's
examination rather than at the application stage, ensures that
examiners will focus on the community issues raised by
interested parties and encourages continuous dialogue between
the institutions and the communities in which they serve.
Fourth, in addition to the community comment period being
moved from the application process to the CRA examination
stage, the legislation also requires that an institution's CRA
performance be assessed as part of, and at the same time as,
the overall evaluation of the institutions. For those
institutions that do not receive a satisfactory or outstanding
rating, the regulators may take into account the institution's
CRA record when evaluation the institution's condition. In
addition, the institution's CFA rating may be determinative of
whether or not an institution can take advantage of other
benefits provided in law such as the streamlined applications
procedures. This approach is more systematic and less
disruptive to the business of banking.
subtitle C--Consumer Banking Reforms--the Truth in Savings Act
Enacted in 1991, the Truth in Savings Act (TISA) was
intended to allow consumers to make a ``meaningful comparison
between competing claims of depository institutions with regard
to deposit accounts.'' Currently, under the TISA, financial
institutions are required to disclose fees, interest rates, an
annual percentage yield (APY) and other account terms through
schedules and periodic disclosures for all checking and
interest-bearing accounts they offer. A bank is subject to
civil liability provisions if it fails to follow the strict and
complicated disclosure requirements.
Unfortunately, the disclosure requirements under TISA have
caused depository institutions and bank regulators more
compliance problems than they have provided useful information
to savers. As was noted in testimony before the Subcommittee on
Financial Institutions and Consumer Credit, it is ironic that a
law aimed at providing consumers adequate information about
interest rates in a simple understandable form, requires more
than 200 pages of rules, covering 56 pages in the Federal
Register.
Instead of providing savers a better opportunity to compare
``apples with apples'' when choosing among a wide array of
savings accounts, the Act and its implementing regulations have
limited the kinds of accounts banks can offer and created a
situation where savers are comparing ``apples with oranges.'' A
January 1995 Federal Reserve study indicated that the TISA has
not enhanced consumer awareness.
H.R. 1858 addresses these concerns by eliminating certain
provisions of the TISA which have caused the most compliance
problems, such as the requirement to disclose an APY. The
legislation does maintain, however, the beneficial provisions
of the Act which require disclosure of fees, penalties, charges
and the simple interest rate when an account is opened and when
there is a change in terms relating to the required
disclosures.
subtitle D--Equal Credit Opportunity Act Amendments
The goal of fair lending laws is to ensure that credit is
not denied based on an individual's race, national origin, sex
or age. One way to ensure that illegal discrimination is
eradicated is to enlist the help of financial institutions in
identifying and correcting discriminatory behavior. This
legislation establishes a privilege for lenders who self-test
for compliance with the ECOA and the FHA from having such tests
used against them in any proceeding or civil action brought
under these Acts where the lender has identified discriminatory
practices and has taken appropriate corrective actions. It
further grants Federal banking regulators discretionary
authority to refer fair lending problems to the Attorney
General or the Secretary of HUD under certain circumstances.
subtitle E--Consumer Leasing Act Amendments
The purpose of this subtitle is to assure simple,
meaningful disclosure of leasing terms to enable a consumer to
comparison shop for leasing arrangements and to be protected
from inaccurate and unfair leasing practices. The legislation
instructs the Federal Reserve Board to address consumer leasing
issues through regulation and requires the Board to publish
model disclosure forms.
Title II--Streamlining Government Regulations
subtitle A--Regulatory Approval Issues
In general, this title builds on the regulatory relief
effort begun in the Riegle Community Development and Regulatory
Improvement Act of 1994, which was enacted into law in the
103rd Congress. H.R. 1858 eliminates a number of routine, but
costly procedures and changes a number of overlapping and
unnecessary requirements in current law, such as prior approval
for the establishment of a domestic branch by institutions that
operate safely and soundly. It also establishes expedited
procedures for bank holding companies which are available only
to companies that are well capitalized and well managed.
Additionally, the title also removes per-branch capital
requirements without affecting the consolidated capital
requirements otherwise applicable to banks and amends the
Depository Management Interlocks Act to allow sharing of
management officials between small institutions in situations
in which there would be no competitive impact. Finally, the
legislation eliminates branch applications for automated teller
machines (ATMs) and other duplicative approval requirements
pertaining to mergers and divestitures and investments in bank
premises as long as the investment does not exceed 150% of
capital.
subtitle B--streamlining of government regulations
1. Branch closures
The provisions included in this legislation substantially
mirror the federal regulators' interagency policy statement on
branch closings and would reduce regulatory burden by
eliminating the need to give prior notice of decisions to close
automated teller machines, to close or relocate branches that
are within 2.5 miles of another branch of the same institution,
and to close certain branches acquired through mergers.
2. Insider lending
This legislation makes minor changes to requirements
governing insider lending. Specifically, the legislation amends
the Federal Reserve Act to allow insiders of financial
institutions to qualify for employee-wide benefit plans offered
by their institutions. Additionally, the legislation allows
executive officers to be eligible for home equity loans and
loans secured by readily marketable assets but only within
established limitations on amounts and on competitive terms.
The legislation also removes unnecessary restrictions on loans
to executive officers or directors of affiliates that represent
less than ten percent of the assets of the holding company if
the officers or directors do not participate in a major
policymaking role in the bank.
3. Insurance activities of national banks and bank holding companies
The legislation includes a restriction on the power of the
Office of the Comptroller of the Currency (OCC) to grant new
insurance powers without rolling back the status quo. It also
attends the Bank Holding Company Act (BHCA) to allow
affiliations between banks and insurance companies under a
holding company structure in accordance with state insurance
laws. Such affiliations would be delayed until March 30, 1997.
Additionally, national banks would be permitted to sell
insurance within empowerment zones, subject to state
regulation.
Title III--Lender Liability
Title III provides clarity to the issue of liability of
lenders, fiduciaries, and government agencies under Federal
environmental laws. This clarification resolves the uncertainty
of existing exemptions promulgated by the Environmental
Protection Agency and, subsequently, overturned by judicial
determination. The Court in United States v. Fleet Factors
Corporation, 901 F.2d 1550 (11th Cir. 1990), cert. denied, 498
U.S. 1046 (1991) decided that a lender could be held liable for
the costs of any corrective or response action when the lender
has the mere capacity to influence the borrower's treatment of
hazardous waste. In addition, in United States v. Maryland Bank
& Trusts Co., 632 F. Supp. 573 (D. Md. 1986), the Court held a
lender liable for foreclosing on a contaminated property and
later disposing of the property through sale. As a result of
such judicial opinions, lenders are hesitant to make loans to
certain borrowers and to foreclose on properties. Therefore,
Title III addresses the issue of how and to what extent a
lender can be held under environmental laws.
Besides providing clarity to the liability issue, Title III
provides encouragement and incentives to lenders and
fiduciaries to protect the properties through environmental
inspections and clean ups.
Hearings
The Subcommittee on Financial Institutions and Consumer
Credit held two days of hearings on the CRA.
Testifying before the Subcommittee on March 8, 1995 were:
The Honorable Joseph P. Kennedy II, U.S. House of
Representatives; The Honorable Ricki Helfer, Chairman, Federal
Deposit Insurance Corporation; The Honorable Eugene A. Ludwig,
Comptroller of the Currency; The Honorable Jonathan L.
Fiechter, Acting Director, Office of Thrift Supervision; The
Honorable Lawrence Lindsey, Governor, Federal Reserve System;
Mr. William A. Niskanen, Chairman, the Cato Institute; Ms. Lucy
H. Griffin, Compliance Management Services; Ms. Cathy Bessant,
Senior Vice President, Nations Bank; Mr. Warren Traiger, CRA
Practitioner; Mr. Ned Brown, Financial Modeling Concepts.
Testifying before the Subcommittee on March 9, 1995 were:
Mr. James Culberson, Jr., Chairman, First National Bank and
Trust Company; Mr. Tony Abbate, Chairman, Marketing Committee,
Independent Bankers Association; Mr. Mark Milligan, America's
Community Bankers; Mr. Benson F. Roberts, Vice President for
Policy, Local Initiatives Support Corporation; Ms. Michelle
Meier, Counsel, Government Affairs, Consumers Union; Ms. Gale
Cincotta, Chairperson, National People's Action; Mr. John E.
Taylor, President and C.E.O., National Community Reinvestment
Coalition; Mr. Allen Fishbein, General Counsel, Center for
Community Change; Rev. Charles R. Stith, National President,
Organization for a New Equality.
The Subcommittee on Financial Institutions and Consumer
Credit held four days of hearings on legislation to reduce the
regulatory burdens being imposed on financial institutions,
including H.R. 1362, introduced by Representative Bereuter.
Testifying before the Subcommittee on May 18, 1995, were:
The Honorable Richard Carnell, Assistant Secretary of Financial
Institutions, Department of the Treasury; The Honorable Susan
B. Phillips, Governor, Federal Reserve Board; The Honorable
Ricki Helfer, Chairman, Federal Deposit Insurance Corporation;
The Honorable Eugene A. Ludwig, Comptroller of the Currency;
The Honorable Jonathan L. Fiechter, Acting Director, Office of
Thrift Supervision; The Honorable Nicholas P. Retsinas,
Assistant Secretary of Housing, Department of Housing and Urban
Development; The Honorable Catherine Ghiglieri, Texas Banking
Commissioner, representing the Conference of State Bank
Supervisors.
Testifying before the Subcommittee on May 23, 1995 were:
Mr. James Culberson, Jr., American Bankers Association; Mr.
Richard L. Mount, President, Independent Bankers Association of
America; Mr. David Carson, America's Community Bankers; Mr. Ron
Snellings, National Association of Federal Credit Unions; Ms.
Nancy Pierce, Credit Union National Association, Inc.; Mr. H.
Jay Sarles, Consumer Bankers Association; Mr. Alfred Pollard,
Bankers Roundtable; Mr. John Davey, Mortgage Bankers
Association of America; Mr. Rick Adams, National Association of
Realtors; Mr. Larry Swank, National Association of Home
Builders; Mr. Hank Williams, Real Estate Services Providers
Council; Mr. Parker Kennedy, American Land Title Association.
Testifying before the Subcommittee on May 24, 1995 were:
The Honorable Maxine Waters, U.S. House of Representatives; Mr.
Bart Harvey, The Enterprise Foundation; Dr. Francine Justa,
Executive Director, Neighborhood Housing Services of New York
City; Dr. Steven Roberts, Regulatory Advisory Practice, KPMG
Peat Marwick LLP; Dr. Robert Edelstein, Walter A. Haas School
of Business, University of California at Berkeley; Ms. Michelle
Meier, Government Affairs Counsel, Consumers Union; Ms. Frances
Smith, Director, Consumers Alert; Ms. Madeline Houston, Passaic
County Legal Aid; Ms. Tess Canja, American Association of
Retired Persons; Ms. Maude Hurd, ACORN.
Testifying before the Subcommittee on June 8, 1995 were:
Mr. Robert Elliott, President and C.E.O., Household Finance
Corporation on behalf of the American Financial Services
Association; Mr. Harley Bergmeyer, President, Saline State
Bank; Mr. Wayne Holsted, Chairman and Chief Counsel, Northwest
Title and Escrow; Mr. Eric Carlsen, Senior Vice President,
Frontier Savings Bank; Mr. Richard Roberto, Vice President,
European American Bank; Mr. Stanley Lowe, First Representative,
Pittsburgh Community Reinvestment Group.
Committee Consideration and Votes
(Rule XI, Clause 2(l)(2)(B))
On June 21, 22, 27, and 28, 1995, the Committee met in open
session to mark up regulatory burden relief legislation. The
Committee considered as original text for purposes of amendment
a Committee Print which incorporated the provisions of H.R.
1362 as reported by the Subcommittee on Financial Institutions
and Consumer Credit and a provision placing a moratorium on the
authority of the Comptroller of the Currency to allow new
insurance powers for national banks.
During the markup, the Committee approved, by recorded
vote, 18 amendments to the Committee Print. The Committee also
defeated, by recorded vote, 14 amendments. The following
amendments were adopted by recorded vote.
An amendment offered by Mrs. Roukema and Mr. Bereuter
making a number of clarifications to Title I of the Committee
Print. Pages 1-9 of the amendment which make a number of
changes to the RESPA and the TILA, including the transfer of
rulemaking authority for all disclosure aspects of the RESPA to
the Federal Reserve Board, passed 27-11.
YEAS NAYS
Mr. Leach Mr. LaFalce
Mr. McCollum Mr. Vento
Mrs. Roukema Mrs. Maloney
Mr. Bereuter Ms. Roybal-Allard
Mr. Roth Mr. Barrett, (WI)
Mr. Baker, (LA) Ms. Velazquez
Mr. Lazio Mr. Wynn
Mr. Bachus Mr. Fields, (LA)
Mr. Castle Mr. Watt
Mr. King Mr. Hinchey
Mr. Royce Mr. Bentsen
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Orton
Page 10 of the amendment which requires federal bank
regulators to ensure that their examiners consult with each
other and to consider appointing an examiner in charge for all
agency exams passed 38-0.
YEAS NAYS
Mr. Leach
Mr. McCollum
Mrs. Roukema
Mr. Bereuter
Mr. Roth
Mr. Baker, (LA)
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. LaFalce
Mr. Vento
Mr. Orton
Mrs. Maloney
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Bentsen
Pages 11-12 of the amendment which clarify the effective
date of the amendments made to the TISA passed 39-0.
YEAS NAYS
Mr. Leach
Mr. McCollum
Mrs. Roukema
Mr. Bereuter
Mr. Roth
Mr. Baker, (LA)
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. LaFalce
Mr. Vento
Mr. Orton
Mr. Sanders
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Mr. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Bentsen
Page 13 of the amendment which clarifies the burden of
proof for unauthorized transfers remain on the creditors passed
30-10.
YEAS NAYS
Mr. Leach Mr. LaFalce
Mr. McCollum Mr. Vento
Mrs. Roukema Mr. Sanders
Mr. Bereuter Mrs. Maloney
Mr. Roth Mr. Gutierrez
Mr. Baker, (LA) Ms. Velazquez
Mr. Lazio Mr. Wynn
Mr. Bachus Mr. Fields, (LA)
Mr. King Mr. Watt
Mr. Royce Mr. Hinchey
Mr. Lucas
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Kanjorski
Mr. Orton
Ms. Roybal-Allard
Mr. Barrett, (WI)
Mr. Bentsen
Page 14 of the amendment which makes a number of changes
concerning consumer leases, including the placing of statutory
penalties for creditors under the Consumer Credit Protection
Act passed 41-0.
YEAS NAYS
Mr. Leach
Mr. McCollum
Mrs. Roukema
Mr. Bereuter
Mr. Roth
Mr. Baker, (LA)
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Lucas
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. LaFalce
Mr. Vento
Mr. Kanjorski
Mr. Orton
Mr. Sanders
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Bentsen
An amendment offered by Mr. Roth which prevents the CRA
regulations from requiring financial institutions from making
loans or other agreements to an uncreditworthy person,
business, organization, or any other entity that would
jeopardize safety and soundness of the subject lending
institutions was passed 25-13.
YEAS NAYS
Mr. Leach Mr. Ney
Mr. McCollum Mr. Fox
Mrs. Roukema Mr. Watts
Mr. Bereuter Mr. LaFalce
Mr. Roth Mr. Kennedy
Mr. Baker, (LA) Mr. Mfume
Mr. Bachus Ms. Waters
Mr. King Mr. Sanders
Mr. Royce Mr. Roybal-Allard
Mr. Weller Ms. Velazquez
Mr. Hayworth Mr. Wynn
Mr. Metcalf Mr. Fields, (LA)
Mr. Bono Mr. Hinchey
Mr. Ehrlich
Mr. Barr
Mr. Cremeans
Mr. Stockman
Mr. LoBiondo
Mrs. Kelly
Mr. Vento
Mr. Kanjorski
Mr. Barrett, (WI)
Mr. Watt
Mr. Ackerman
Mr. Bentsen
Present: Mr. Heineman.
An amendment offered by Mr. Weller which strikes the
requirement that regulated financial institutions with $100
million or less in assets be outside of a metropolitan
statistical area in order to be exempt from CRA examination
requirements was passed 23-16.
YEAS NAYS
Mr. Leach Mr. Bereuter
Mr. McCollum Mr. Vento
Mrs. Roukema Mr. Schumer
Mr. Roth Mr. Frank
Mr. Baker, (LA) Mr. Kennedy
Mr. Bachus Ms. Waters
Mr. Castle Mr. Sanders
Mr. King Mr. Gutierrez
Mr. Royce Ms. Roybal-Allard
Mr. Weller Mr. Barrett, (WI)
Mr. Hayworth Ms. Velazquez
Mr. Metcalf Mr. Wynn
Mr. Bono Mr. Fields, (LA)
Mr. Ney Mr. Watt
Mr. Ehrlich Mr. Hinchey
Mr. Barr Mr. Bentsen
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
An amendment offered by Mr. McCollum which strikes
assessment of an institution's CRA record during the
applications process for a deposit facility and instead
requires the CRA record to be included in the assessment of
overall evaluation of the condition of the institution was
passed 25-17.
YEAS NAYS
Mr. Leach Mr. Vento
Mr. McCollum Mr. Frank
Mrs. Roukema Mr. Kanjorski
Mr. Bereuter Mr. Kennedy
Mr. Roth Ms. Waters
Mr. Lazio Mr. Orton
Mr. Bachus Mr. Sanders
Mr. Castle Mrs. Maloney
Mr. King Mr. Gutierrez
Mr. Royce Ms. Roybal-Allard
Mr. Lucas Mr. Barrett, (WI)
Mr. Weller Ms. Velazquez
Mr. Hayworth Mr. Wynn
Mr. Metcalf Mr. Fields, (LA)
Mr. Bono Mr. Watt
Mr. Ney Mr. Hinchey
Mr. Ehrlich Mr. Bentsen
Mr. Barr
Mr. Cremeans
Mr Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mr. Kelly
An amendment offered by Mr. Schumer, Ms. Maloney and Mr.
Vento which deletes the provision that modified liability
provisions under the EFTA for the unauthorized use of
electronic fund transfers was passed 24-18.
YEAS NAYS
Mr. Leach Mrs. Roukema
Mr. Royce Mr. Bereuter
Mr. Heineman Mr. Baker, (LA)
Mr. Stockman Mr. Lazio
Mr. Watts Mr. Bachus
Mrs. Kelly Mr. Castle
Mr. LaFalce Mr. King
Mr. Vento Mr. Lucas
Mr. Schumer Mr. Weller
Mr. Frank Mr. Hayworth
Mr. Kennedy Mr. Bono
Mr. Flake Mr. Ney
Ms. Waters Mr. Ehrlich
Mr. Sanders Mr. Barr
Mrs. Maloney Mr. Chrysler
Ms. Roybal-Allard Mr. Cremeans
Mr. Barrett, (WI) Mr. Fox
Ms. Velazquez Mr. LoBiondo
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
An amendment offered by Mr. Schumer and Mr. Vento which
eliminates the provisions that modified the liability
provisions under the TILA for the unauthorized use of credit
cards was passed 23-21.
YEAS NAYS
Mr. Leach Mr. McCollum
Mr. Royce Mrs. Roukema
Mr. Heineman Mr. Bereuter
Mr. Stockman Mr. Baker, (LA)
Mr. Watts Mr. Lazio
Mrs. Kelly Mr. Bachus
Mr. LaFalce Mr. Castle
Mr. Vento Mr. King
Mr. Schumer Mr. Lucas
Mr. Kennedy Mr. Weller
Mr. Flake Mr. Hayworth
Ms. Waters Mr. Bono
Mr. Sanders Mr. Ney
Mrs. Maloney Mr. Ehrlich
Ms. Roybal-Allard Mr. Barr
Mr. Barrett, (WI) Mr. Chrysler
Ms. Velazquez Mr. Cremeans
Mr. Wynn Mr. Fox
Mr. Fields, (LA) Mr. LoBiondo
Mr. Watt Mr. Frank
Mr. Hinchey Mr. Orton
Mr. Ackerman
Mr. Bentsen
An amendment to Mr. Leach's amendment which strikes a
requirement that would have required agency concurrence in
Department of Justice enforcement actions under the fair
lending cases was passed 24-20.
YEAS NAYS
Mr. Bereuter Mr. Leach
Mr. Ney Mr. McCollum
Mr. Fox Mrs. Roukema
Mr. Watts Mr. Baker, (LA)
Mrs. Kelly Mr. Lazio
Mr. LaFalce Mr. Bachus
Mr. Vento Mr. King
Mr. Frank Mr. Royce
Mr. Kennedy Mr. Lucas
Mr. Flake Mr. Weller
Mr. Mfume Mr. Hayworth
Ms. Waters Mr. Metcalf
Mr. Orton Mr. Bono
Mr. Sanders Mr. Ehrlich
Mrs. Maloney Mr. Barr
Mr. Gutierrez Mr. Chrysler
Ms. Roybal-Allard Mr. Cremeans
Mr. Barrett, (WI) Mr. Heineman
Ms. Velazquez Mr. Stockman
Mr. Wynn Mr. LoBiondo
Mr. Watt
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
An amendment offered by Mr. Hinchey which requires that in
order to receive protection under the ECOA, credit scoring
systems cannot have a disparate impact on a protected class
unless the criterion used is justified by business necessity
and a no less discriminatory alternative is available was
passed 29-17.
YEAS NAYS
Mr. Leach Mr. McCollum
Mrs. Roukema Mr. Baker, (LA)
Mr. Bereuter Mr. Lazio
Mr. Castle Mr. Bachus
Mr. Weller Mr. King
Mr. Fox Mr. Royce
Mr. LoBiondo Mr. Lucas
Mr. Watts Mr. Hayworth
Mrs. Kelly Mr. Metcalf
Mr. LaFalce Mr. Bono
Mr. Vento Mr. Ney
Mr. Frank Mr. Ehrlich
Mr. Kanjorski Mr. Barr
Mr. Kennedy Mr. Chrysler
Mr. Flake Mr. Cremeans
Mr. Mfume Mr. Heineman
Ms. Waters Mr. Stockman
Mr. Orton
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
An amendment offered by Mr. Hinchey which strikes the
prohibition in the legislation which would have restricted the
use of disparate impact evidence in enforcing fair lending laws
was passed 32-15.
YEAS NAYS
Mr. Leach Mr. McCollum
Mrs. Roukema Mr. Baker, (LA)
Mr. Bereuter Mr. Bachus
Mr. Lazio Mr. King
Mr. Castle Mr. Royce
Mr. Metcalf Mr. Lucas
Mr. Fox Mr. Weller
Mr. Heineman Mr. Hayworth
Mr. LoBiondo Mr. Bono
Mr. Watts Mr. Ney
Mrs. Kelly Mr. Ehrlich
Mr. LaFalce Mr. Barr
Mr. Vento Mr. Chrysler
Mr. Frank Mr. Cremeans
Mr. Kanjorski Mr. Stockman
Mr. Kennedy
Mr. Flake
Mr. Mfume
Ms. Waters
Mr. Orton
Mr. Sanders
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
An amendment offered by Mr. Castle which makes
clarifications to the OCC insurance moratorium language
contained in Mr. Leach's amendment was passed 40-2.
YEAS NAYS
Mr. Leach Mr. McCollum
Mrs. Roukema Mr. Kanjorski
Mr. Bereuter
Mr. Roth
Mr. Baker, (LA)
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Lucas
Mr. Hayworth
Mr. metcalf
Mr. Bono
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Gonzalez
Mr. LaFalce
Mr. Vento
Mr. Schumer
Mr. Frank
Mr. Kennedy
Mr. Mfume
Ms. Waters
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Watt
Mr. Bentsen
An amendment offered by Mr. Baker, (LA), which amends
section (4)(c)(8) of the BHCA to allow bank holding companies
to own insurance companies in accordance with state insurance
laws was passed 36-12.
YEAS NAYS
Mrs. Roukema Mr. Leach
Mr. Roth Mr. McCollum
Mr. Baker, (LA) Mr. Bereuter
Mr. Lazio Mr. Weller
Mr. Bachus Mr. Hayworth
Mr. Castle Mr. Metcalf
Mr. King Mr. Ney
Mr. Royce Mr. Ehrlich
Mr. Lucas Mr. LoBiondo
Mr. Bono Mrs. Kelly
Mr. Barr Ms. Waters
Mr. Chrysler Mr. Sanders
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. Watts
Mr. Gonzalez
Mr. LaFalce
Mr. Vento
Mr. Schumer
Mr. Frank
Mr. Kanjorski
Mr. Kennedy
Mr. Flake
Mr. Mfume
Mr. Orton
Mrs. Maloney
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Watt
Mr. Hinchey
Mr. Bentsen
An amendment offered by Mr. McCollum which strikes the
provision putting restrictions on the ability of outside
counsel and accountants to serve on a financial institution's
board of directors was passed 27-17.
YEAS NAYS
Mr. Leach Mr. Gonzalez
Mr. McCollum Mr. LaFalce
Mrs. Roukema Mr. Vento
Mr. Bereuter Mr. Schumer
Mr. Baker, (LA) Mr. Kanjorski
Mr. Lazio Mr. Kennedy
Mr. Bachus Mr. Flake
Mr. Castle Mr. Mfume
Mr. King Ms. Waters
Mr. Royce Mr. Orton
Mr. Lucas Mrs. Maloney
Mr. Weller Mr. Gutierrez
Mr. Hayworth Ms. Roybal-Allard
Mr. Metcalf Mr. Barrett, (WI)
Mr. Bono Ms. Velazquez
Mr. Ney Mr. Hinchey
Mr. Ehrlich Mr. Bentsen
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Wynn
Mr. Watt
The following amendments were defeated by recorded vote.
An amendment offered by Mr. Barrett, (WI), to Mr. Roth's
amendment which strikes reference to uncreditworthy persons was
defeated 16-25.
YEAS NAYS
Mr. LaFalce Mr. Leach
Mr. Vento Mr. McCollum
Mr. Kanjorski Mrs. Roukema
Mr. Kennedy Mr. Bereuter
Mr. Mfume Mr. Roth
Ms. Waters Mr. Baker, (LA)
Mr. Sanders Mr. Lazio
Ms. Roybal-Allard Mr. Bachus
Mr. Barrett, (WI) Mr. Castle
Ms. Velazquez Mr. Royce
Mr. Wynn Mr. Lucas
Mr. Fields, (LA) Mr. Weller
Mr. Watt Mr. Hayworth
Mr. Hinchey Mr. Metcalf
Mr. Ackerman Mr. Bono
Mr. Bentsen Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
An amendment offered by Mr. Kennedy which strikes the CRA
subtitle was defeated 18-26.
YEAS NAYS
Mr. Gonzalez Mr. Leach
Mr. Vento Mr. McCollum
Mr. Frank Mrs. Roukema
Mr. Kanjorski Mr. Bereuter
Mr. Kennedy Mr. Roth
Mr. Flake Mr. Lazio
Ms. Waters Mr. Bachus
Mr. Sanders Mr. Castle
Mrs. Maloney Mr. King
Mr. Gutierrez Mr. Royce
Ms. Roybal-Allard Mr. Lucas
Mr. Barrett, (WI) Mr. Weller
Ms. Velazquez Mr. Hayworth
Mr. Wynn Mr. Metcalf
Mr. Fields, (LA) Mr. Bono
Mr. Watt Mr. Ehrlich
Mr. Hinchey Mr. Barr
Mr. Bentsen Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Orton
An amendment offered by Mr. McCollum which raises the level
of CRA self-certification from $25,000,000 to $1,000,000,000
was defeated 11-32.
YEAS NAYS
Mr. McCollum Mr. Leach
Mr. Roth Mrs. Roukema
Mr. Baker, (LA) Mr. Bereuter
Mr. Bachus Mr. Lazio
Mr. King Mr. Castle
Mr. Royce Mr. Hayworth
Mr. Weller Mr. Metcalf
Mr. Bono Mr. Ney
Mr. Ehrlich Mr. Cremeans
Mr. Barr Mr. Heineman
Mr. Fox Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Vento
Mr. Schumer
Mr. Frank
Mr. Kanjorski
Mr. Kennedy
Mr. Flake
Mr. Mfume
Ms. Waters
Mr. Orton
Mr. Sanders
Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Bensten
An amendment offered by Mr. McCollum which amends the CRA
to bring it back to its original purpose by making redlining
enforceable under the ECOA and the FHA was defeated 11-26.
YEAS NAYS
Mr. McCollum Mr. Leach
Mr. Roth Mrs. Roukema
Mr. Bachus Mr. Bereuter
Mr. King Mr. Lazio
Mr. Royce Mr. Castle
Mr. Lucas Mr. Metcalf
Mr. Hayworth Mr. Ney
Mr. Bono Mr. Cremeans
Mr. Ehrlich Mr. Fox
Mr. Barr Mr. Heineman
Mr. Chrysler Mr. LoBiondo
Mr. Watts
Mr. Vento
Mr. Frank
Mr. Kanjorski
Mr. Kennedy
Mr. Waters
Mr. Orton
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Fields, (LA)
Mr. Watt
Mr. Hinchey
Mr. Bensten
An amendment offered by Mr. Fields, (LA), which provides
for ``point of transaction'' fee disclosures for all automated
teller machine transactions was passed by a Voice Vote. A
motion to reconsider the amendment was approved 18-17.
YEAS NAYS
Mr. Leach Mr. Bachus
Mr. Bereuter Mr. Chrysler
Mr. Roth Mr. LaFalce
Mr. Lazio Mr. Vento
Mr. Castle Mr. Schumer
Mr. King Mr. Frank
Mr. Royce Ms. Waters
Mr. Lucas Mr. Orton
Mr. Weller Mrs. Maloney
Mr. Hayworth Ms. Roybal-Allard
Mr. Metcalf Mr. Barrett, (WI)
Mr. Bono Ms. Velazquez
Mr. Ehrlich Mr. Wynn
Mr. Cremeans Mr. Fields, (LA)
Mr. Heineman Mr. Watt
Mr. Stockman Mr. Hinchey
Mr. LoBiondo Mr. Ackerman
Mrs. Kelly
Mr. Fields' amendment was then defeated by a roll call vote
of 21-21.
YEAS NAYS
Mr. Bachus Mr. Leach
Mr. Stockman Mrs. Roukema
Mr. LaFalce Mr. Bereuter
Mr. Vento Mr. Roth
Mr. Schumer Mr. Lazio
Mr. Frank Mr. Castle
Mr. Kanjorski Mr. King
Mr. Kennedy Mr. Royce
Ms. Waters Mr. Lucas
Mr. Orton Mr. Weller
Mr. Sanders Mr. Hayworth
Mrs. Maloney Mr. Metcalf
Ms. Roybal-Allard Mr. Bono
Mr. Barrett, (WI) Mr. Ney
Ms. Velazquez Mr. Ehrlich
Mr. Wynn Mr. Barr
Mr. Fields, (LA) Mr. Chrysler
Mr. Watt Mr. Cremeans
Mr. Hinchey Mr. Heineman
Mr. Ackerman Mr. LoBiondo
Mr. Bentsen Mrs. Kelly
An amendment offered by Mr. Kennedy which strikes the
affiliate information sharing provision of the legislation was
defeated 19-23.
YEAS NAYS
Mr. Gonzalez Mr. Leach
Mr. LaFalce Mr. McCollum
Mr. Vento Mrs. Roukema
Mr. Schumer Mr. Bereuter
Mr. Frank Mr. Bachus
Mr. Kennedy Mr. Castle
Mr. Flake Mr. King
Ms. Waters Mr. Royce
Mr. Sanders Mr. Lucas
Mrs. Maloney Mr. Weller
Mr. Gutierrez Mr. Hayworth
Ms. Roybal-Allard Mr. Bono
Mr. Barrett, (WI) Mr. Ney
Ms. Velazquez Mr. Ehrlich
Mr. Wynn Mr. Barr
Mr. Watt Mr. Chrysler
Mr. Hinchey Mr. Cremeans
Mr. Ackerman Mr. Fox
Mr. Bentsen Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Orton
An amendment offered by Ms. Waters which imposes a two-year
moratorium on bank fee increases for accounts with an average
daily balance below $3,000 was defeated 4-30.
YEAS NAYS
Ms. Waters Mr. Leach
Mr. Sanders Mr. McCollum
Mr. Gutierrez Mrs. Roukema
Ms. Roybal-Allard Mr. Bereuter
Mr. Baker, (LA)
Mr. Lazio
Mr. Bachus
Mr. Castle
Mr. King
Mr. Royce
Mr. Weller
Mr. Hayworth
Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. Frank
Mr. Orton
Mr. Barrett, (WI)
Mr. Wynn
Mr. Watt
Mr. Hinchey
Mr. Ackerman
An amendment offered by Mr. Bentsen which changes the CRA
rating system was defeated 15-22.
YEAS NAYS
Mr. Vento Mr. Leach
Mr. Frank Mr. McCollum
Mr. Kanjorski Mrs. Roukema
Mr. Kennedy Mr. Bereuter
Ms. Waters Mr. Lazio
Mr. Orton Mr. Bachus
Mr. Sanders Mr. Castle
Ms. Roybal-Allard Mr. King
Mr. Barrett, (WI) Mr. Royce
Ms. Velazquez Mr. Lucas
Mr. Wynn Mr. Hayworth
Mr. Fields, (LA) Mr. Metcalf
Mr. Watt Mr. Bono
Mr. Hinchey Mr. Ehrlich
Mr. Bentsen Mr. Barr
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
An amendment offered by Mr. Schumer and Mrs. Maloney which
deletes provisions in the legislation modifying the current
restrictions on insider lending was defeated 15-26.
YEAS NAYS
Mr. LaFalce Mr. Leach
Mr. Vento Mr. McCollum
Mr. Schumer Mrs. Roukema
Mr. Flake Mr. Bereuter
Mr. Mfume Mr. Baker, (LA)
Mr. Orton Mr. Lazio
Mr. Sanders Mr. Bachus
Mrs. Maloney Mr. Castle
Ms. Roybal-Allard Mr. King
Mr. Barrett, (WI) Mr. Royce
Ms. Velazquez Mr. Lucas
Mr. Wynn Mr. Weller
Mr. Watt Mr. Hayworth
Mr. Hinchey Mr. Metcalf
Mr. Bentsen Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
An amendment offered by Mr. Schumer and Mrs. Maloney which
deletes the provision in the legislation modifying the current
statutory requirement that all members of bank audit committees
be independent directors was defeated 20-20.
YEAS NAYS
Mr. Leach Mr. McCollum
Mr. Lazio Mrs. Roukema
Mr. Castle Mr. Bereuter
Mr. Royce Mr. Roth
Mr. Metcalf Mr. Baker, (LA)
Mr. Heineman Mr. Bachus
Mrs. Kelly Mr. King
Mr. LaFalce Mr. Lucas
Mr. Vento Mr. Weller
Mr. Schumer Mr. Hayworth
Mr. Mfume Mr. Bono
Mr. Orton Mr. Ney
Mrs. Maloney Mr. Ehrlich
Mr. Gutierrez Mr. Barr
Ms. Roybal-Allard Mr. Chrysler
Mr. Barrett, (WI) Mr. Cremeans
Ms. Velazquez Mr. Fox
Mr. Wynn Mr. Stockman
Mr. Watt Mr. LoBiondo
Mr. Bentsen Mr. Watts
An amendment offered by Mr. Vento which strikes section 234
of the legislation modifying the culpability standards for
outside directors was defeated 17-24.
YEAS NAYS
Mr. Leach Mr. McCollum
Mrs. Roukema Mr. Bereuter
Mr. Gonzalez Mr. Roth
Mr. LaFalce Mr. Baker, (LA)
Mr. Vento Mr. Lazio
Mr. Frank Mr. Bachus
Mr. Kanjorski Mr. Castle
Mr. Kennedy Mr. King
Mr. Flake Mr. Royce
Mr. Orton Mr. Lucas
Mrs. Maloney Mr. Weller
Ms. Roybal-Allard Mr. Hayworth
Mr. Barrett, (WI) Mr. Bono
Ms. Velazquez Mr. Ney
Mr. Watt Mr. Ehrlich
Mr. Hinchey Mr. Barr
Mr. Bentsen Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
An amendment offered by Mr. Kennedy which strikes section
238 concerning second mortgages was defeated by 21-23.
YEAS NAYS
Mr. Leach Mr. McCollum
Mr. Lazio Mrs. Roukema
Mr. Metcalf Mr. Bereuter
Mr. Heineman Mr. Roth
Mr. LoBiondo Mr. Baker, (LA)
Mr. Gonzalez Mr. Bachus
Mr. LaFalce Mr. Castle
Mr. Vento Mr. King
Mr. Frank Mr. Royce
Mr. Kennedy Mr. Lucas
Mr. Flake Mr. Weller
Ms. Waters Mr. Hayworth
Mr. Sanders Mr. Bono
Mr. Gutierrez Mr. Ney
Ms. Roybal-Allard Mr. Ehrlich
Mr. Barrett, (WI) Mr. Barr
Ms. Velazquez Mr. Chrysler
Mr. Wynn Mr. Cremeans
Mr. Watt Mr. Fox
Mr. Ackerman Mr. Stockman
Mr. Bentsen Mr. Watts
Mrs. Kelly
Mr. Orton
An amendment offered by Mr. Bachus which makes a number of
reforms to the FDCPA was defeated 19-26.
YEAS NAYS
Mr. Bereuter Mr. McCollum
Mr. Roth Mrs. Roukema
Mr. Baker, (LA) Mr. Royce
Mr. Lazio Mr. Fox
Mr. Bachus Mr. LoBiondo
Mr. Castle Mr. Watts
Mr. King Mrs. Kelly
Mr. Lucas Mr. Gonzalez
Mr. Weller Mr. LaFalce
Mr. Hayworth Mr. Vento
Mr. Metcalf Mr. Schumer
Mr. Bono Mr. Frank
Mr. Ney Mr. Kennedy
Mr. Ehrlich Mr. Mfume
Mr. Barr Ms. Waters
Mr. Chrysler Mr. Orton
Mr. Cremeans Mr. Sanders
Mr. Heineman Mrs. Maloney
Mr. Stockman Mr. Gutierrez
Ms. Roybal-Allard
Mr. Barrett, (WI)
Ms. Velazquez
Mr. Wynn
Mr. Watt
Mr. Hinchey
Mr. Bentsen
Present: Mr. Leach.
An amendment offered by Mr. Vento which was an amendment in
the nature of a substitute was defeated 13-24.
YEAS NAYS
Mr. LaFalce Mr. Leach
Mr. Vento Mr. McCollum
Mr. Frank Mrs. Roukema
Mr. Kennedy Mr. Bereuter
Mr. Flake Mr. Roth
Mr. Mfume Mr. Baker, (LA)
Ms. Waters Mr. Bachus
Mr. Sanders Mr. King
Mr. Gutierrez Mr. Royce
Mr. Barrett, (WI) Mr. Lucas
Mr. Watt Mr. Weller
Mr. Ackerman Mr. Hayworth
Mr. Bentsen Mr. Metcalf
Mr. Bono
Mr. Ney
Mr. Ehrlich
Mr. Barr
Mr. Chrysler
Mr. Cremeans
Mr. Fox
Mr. Heineman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
After adopting the Committee Print, as amended, H.R. 1858
was called up for committee consideration. A motion to strike
everything after the enacting clause in H.R. 1858 and insert in
lieu thereof the Committee Print, as amended, was approved by
Voice Vote.
A motion to adopt H.R. 1858 and favorably report H.R. 1858,
as amended, to the House was approved 27-23.
YEAS NAYS
Mr. Leach Mr. Gonzalez
Mr. McCollum Mr. LaFalce
Mrs. Roukema Mr. Vento
Mr. Bereuter Mr. Schumer
Mr. Roth Mr. Frank
Mr. Baker, (LA) Mr. Kanjorski
Mr. Lazio Mr. Kennedy
Mr. Bachus Mr. Flake
Mr. Castle Mr. Mfume
Mr. King Ms. Waters
Mr. Royce Mr. Orton
Mr. Lucas Mr. Sanders
Mr. Weller Mrs. Maloney
Mr. Hayworth Mr. Gutierrez
Mr. Metcalf Ms. Roybal-Allard
Mr. Bono Mr. Barrett, (WI)
Mr. Ney Ms. Velazquez
Mr. Ehrlich Mr. Wynn
Mr. Barr Mr. Fields, (LA)
Mr. Chrysler Mr. Watt
Mr. Cremeans Mr. Hinchey
Mr. Fox Mr. Ackerman
Mr. Heineman Mr. Bentsen
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
A motion to give power to the Chair to request to go to
conference was approved 28-20.
YEAS NAYS
Mr. Leach Mr. Gonzalez
Mr. McCollum Mr. Vento
Mrs. Roukema Mr. Kanjorski
Mr. Bereuter Mr. Kennedy
Mr. Roth Mr. Flake
Mr. Baker, (LA) Mr. Mfume
Mr. Lazio Ms. Waters
Mr. Bachus Mr. Orton
Mr. Castle Mr. Sanders
Mr. King Mrs. Maloney
Mr. Royce Mr. Gutierrez
Mr. Lucas Ms. Roybal-Allard
Mr. Weller Mr. Barrett, (WI)
Mr. Hayworth Ms. Velazquez
Mr. Metcalf Mr. Wynn
Mr. Bono Mr. Fields, (LA)
Mr. Ney Mr. Watt
Mr. Ehrlich Mr. Hinchey
Mr. Barr Mr. Ackerman
Mr. Chrysler Mr. Bentsen
Mr. Cremeans Mr. Fox
Mr. Heineman
Mr. Stockman
Mr. LoBiondo
Mr. Watts
Mrs. Kelly
Mr. LaFalce
Committee Oversight Findings
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of Rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform and Oversight Findings
No findings and recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI and clause 4(c)(2) of rule X of
the Rules of the House of Representatives.
New Budget Authority and Tax Expenditures
Clause 2(l)(3)(B) of rule XI of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
The cost estimate pursuant to Clause 2(l)(3)(C) of rule XI,
of the Rules of the House of Representatives and Section 403 of
the Congressional Budget Act of 1974 has been requested, but
had not been prepared as of the filing of Part I of this
report. The estimate will be filed at a future date.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Congressional Accountability Act
The reporting requirement under section 102(b)(3) of the
Congressional Accountability Act (P.L. 104-1) is inapplicable
because this legislation does not relate to terms and
conditions of employment or access to public services or
accommodations.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that H.R.
1858 will have no significant inflationary impact on prices and
costs in the national economy.
Section-by-Section Analysis
TITLE I--REDUCTION IN GOVERNMENT OVERREGULATION
Subtitle A--The Home Mortgage Process
section 101. regulatory authority over disclosures and escrow accounts
under respa transferred to federal reserve board
Section 101 transfers rulemaking authority for all
disclosure provisions of the RESPA from HUD to the Federal
Reserve Board but maintains at HUD rulemaking authority
regarding certain real estate settlement services under the
RESPA including those prohibiting kickbacks and unearned fees.
This section also clarifies that the purpose of RESPA is to
effect changes in the residential real estate settlement
process that will result in the elimination of kickbacks or
referral fees without directly regulating settlement service
prices or wages paid to bona fide employees that are not
designed as a subterfuge to facilitate kickbacks among
affiliated companies. Section 101 also revises the rulemaking
process under the RESPA to incorporate negotiated rulemaking
procedures. The section distributes administrative enforcement
of Section 8 and 9 of RESPA among HUD (for non-financial
institutions) and the appropriate federal financial institution
regulators (for financial entities); enforcement authority for
disclosure requirements is shared among the Federal Reserve
Board and the Federal depository institution regulators.
In addition, the section requires interagency cooperation
in establishing uniform penalties and enforcement guidelines.
The Federal Reserve Board is given the authority to determine
the appropriate regulator in cases of more than one potential
regulator. The Director of the Office of Thrift Supervision
(OTS) is given this same authority for savings and loan holding
companies. In cases of joint ventures between a non-banking
entity and a banking entity, the section provides that the
banking entity's regulator will be the regulator of the joint
venture. The section provides that liability for criminal
penalties under the RESPA exists only for wilful violations
(current law allows criminal penalties for unintentional
violations). The section redesignates ``Controlled Business
Arrangements'' as ``Affiliated Business Arrangements.''
section 102. simplification and unification of disclosures required
under respa and tila for mortgage transactions
Section 102 directs the Federal Reserve Board to eliminate
duplicative disclosure requirements that require unnecessary,
confusing and costly paperwork which obscures important
consumer information. This section requires the Federal Reserve
Board to take swift action in this area to (1) simplify
disclosures provided under RESPA and TILA, including the timing
of the disclosures, and (2) provide a single format for RESPA
and TILA disclosures. In the event it is necessary to adopt
regulations to implement the provisions of this section, the
Board is required to publish such proposed regulations within
three months of the date of enactment of this legislation.
section 103. increased regulatory flexibility under the truth in
lending act
Section 103 (a) and (b) grants the Board statutory
authority to exempt various transactions from coverage under
TILA. The Board is directed to exempt from the TILA any class
of transaction for which coverage under the TILA does not
provide a measurable benefit to consumers in the form of useful
information or protection. The Board is encouraged to exercise
its discretionary authority granted under Sections 102 and 103
of H.R. 1858 to reduce the regulatory burdens and costs
associated with the credit-granting process.
section 104. reductions in respa regulatory burdens; clarifying
amendments
Section 104 amends the RESPA to require disclosure at the
time of application for a loan whether servicing of the loan
may be assigned, sold or transferred. It also eliminates
subordinate mortgages from RESPA coverage and clarifies that
business loans are exempt from the RESPA.
section 105. disclosures for adjustable rate mortgages
Section 105 provides financial institutions with options
for disclosing information regarding the impact of changes in
interest payments under adjustable rate mortgages.
Section 105 also adds a new paragraph to section 128(b) of
the TILA concerning the honoring of lock-in promises.
section 106. certain charges
This section clarifies whether certain fees should be
included or excluded in the calculation of the finance charge
under the TILA.
(a) Third Party Fees.--This section provides that fees
imposed by the closing agent should be excluded from the
finance charge when the creditor does not expressly require
their imposition or the services provided and the creditor does
not retain the charges. Settlement agents frequently incur
costs that they pass on to consumers without the creditor's
knowledge or retention of the specific charge; one common
example is courier fees. Creditors exercise little, if any,
control over settlement agents' charges.
(b) Mortgage Broker Fees.--This section, which applies to
transactions entered into after the date of enactment,
clarifies that borrower-paid mortgage broker fees will be
included in the finance charge. This bright line rule
eliminates a review of such factors as whether a borrower may
or may not obtain more favorable loan terms or more timely loan
funding using a broker rather than applying directly to the
creditor for a loan. Lender-paid broker fees are not included
in the finance charge because they are not paid by the
borrower; only those charges which the borrower actually pays
are included in the finance charge.
(c) Debt Cancellation.--Section 106(c) currently pertains
to the treatment of certain installment sale contracts or
leases under the TILA. Under subsection 106(c) of this
legislation, charges or premiums for such contracts must be
included in the finance charge unless the creditor makes a
clear and specific written statement to the borrower that sets
forth the cost of the contract and states that the borrower may
choose the person from whom he or she obtains coverage. This
treatment applies to contracts involving insurance or any
voluntary insurance product in connection with any consumer
credit transaction that provides protections against loss of or
damage to property or against part or all of the debtor's
liability for amounts in excess of the value of the collateral
securing the debtor's obligation, or against liability arising
out of the ownership or use of the property.
(d) Taxes on Security Instruments or evidences of
Indebtedness.--Section 106(d) of the TILA currently allows
creditors to exclude from the finance charge fees imposed by
law for perfecting security interests related to the credit
transaction, such as filing fees for recording the security
instrument. Some states impose taxes on the indebtedness or on
the documents evidencing the indebtedness or granting the
security interest, commonly referred to as intangible taxes.
This legislation provides that intangible taxes may be excluded
from the finance charge when the tax must be paid before the
creditor can perfect its security interest.
(e) Preparation of Loan Documents.--Section 106(e) of the
TILA currently excludes from the finance charge specific items
that are regularly incurred when credit is secured by an
interest in real property, such as appraisal fees, title
examinations and document preparation. The Official Staff
Commentary to Regulation Z explains that a lump sum charged for
conducting or attending a closing ``is excluded from the
finance charge if the charge is primarily for services related
to'' the items excluded by section 106(e). This legislation
clarifies that a closing fee that may also cover the incidental
services performed at the closing is not a finance charge.
(f) Fees Relating to Pest Infestations, Inspections, and
Hazards.--Currently, section 106(e) of the TILA excludes
appraisal fees incurred in connection with a real estate
mortgage transaction from the finance charge. Appraisal-related
fees, for such items as termite reports, building inspections
or flood hazard assessments, are also incurred in evaluating
potential risks to the value of the real property securing the
transaction both before and after extending credit. The same
reasoning that excludes appraisal fees from the finance charge
when the credit is secured by real estate should apply to these
fees. This legislation clarifies that fees for appraisal-type
services should be excludable from the finance charge, both
when the service is originally provided prior to settlement and
for subsequent maintenance or verification services after
settlement.
(g) Ensuring Finance Charges Reflect Cost of Credit.--
Section 106(f) of this legislation directs the Federal Reserve
Board to reexamine the costs that consumers incur in connection
with an extension of credit and to determine how to calculate
the finance charge to reflect more accurately these costs. The
definition of finance charge does not currently have a unified
approach to fees. The current list of excludable and excluded
fees prevents the consumer from knowing the total cost of the
credit while the discretion give to creditors on the treatment
of some charges results in non-uniform disclosures.
The existing exemption from rescission for same creditor
refinancings reportedly has enabled creditors to ``flip
loans,'' potentially charging consumers higher rates on
refinancings while eliminating their rights of rescission. The
Federal Reserve Board is directed to study this practice to
determine how creditors abuse the system the scope of such
abusive practices, and whether ``flipping'' can be prevented.
The Federal Reserve Board is specifically directed to work
with representatives of affected industries and consumer groups
(including working with those outside of the Consumer Advisory
Council) with respect to both issues in preparing its report to
Congress. The Federal Reserve Board is to report to Congress on
regulatory or legislative recommendations for resolving both
issues. To the extent regulatory changes need to be made, the
Federal Reserve Board is authorized and directed to promulgate
final regulations within one year of the date of enactment of
this legislation.
section 107. exemptions from rescission
Section 125(a) of TILA provides consumers with the right to
rescind credit transactions secured by their homes within three
days after consummation, receipt of the required disclosures,
and the notice of the right to rescind. This provision gives
consumers a ``cooling off'' period in which to reconsider
offering their homes to secure the credit transaction. It was
enacted in response to the abusive practices of certain home-
improvement contractors who showed up at consumers' doorsteps
and pressured them into purchasing home improvements on credit,
secured by the house.
The right of rescission has never applied to transactions
to finance the acquisition or construction of homes. 15 U.S.C.
Sec. 1635(e)(1). Similarly, section 125(e)(2) currently exempts
from rescission the refinancing or consolidating of existing
home-secured debt with the same creditor when there are no new
advances.
The amendment extends the exemption from rescission for
same creditor ``no-cash-out'' refinancings to all refinancings
of debt initially incurred to finance the acquisition or
construction of consumers' homes that are secured by a first
lien on the consumers' principal dwelling to the extent there
are no new advances and no consolidation of debt. The provision
does not exempt ``high cost'' mortgages, as defined in section
103(aa); these mortgages remain subject to full rescission
rights.
The requirement that the refinancing relate back to an
initial residential mortgage transaction prevents unscrupulous
home improvement contractors from making loans to consumers
with no existing liens on their homes for the purchase of
``improvements'' and then refinancing that debt to avoid
rescission rights. In addition, the exemption only applies to a
refinancing to the extent that no consolidation of debt and no
new advances are involved. However, if a consumer refinances a
residential mortgage transaction, (with a consolidation of debt
or new advances) regardless of the remaining principal amount
and subsequently refinances (with no consolidation or no new
advances), the entire new refinancing is exempt from
rescission. Thus, a refinancing with new advances within a
series of refinancings will not affect a future refinancing's
exemption from rescission, provided that the future refinancing
does not involve a consolidation of existing debt and new
advances.
Section 108. Tolerances; Basis of Disclosures
(a) Tolerances for Accuracy.--The two key disclosures
required by TILA are the finance charge and the annual
percentage rate (the ``APR''). In 1980, Congress amended
section 107(c) of TILA to explicitly provide a tolerance of
one-eighth of one percent in calculating the APR; no statutory
tolerance was specified for calculating the finance charge. The
Board subsequently adopted, as a footnote to Regulation Z, a
tolerance for finance charge calculations for closed-end credit
of $5 for an amount financed up to $1000 and $10 for an amount
financed greater than $1000. 12 C.F.R. Sec. 226.18 n. 41. Since
every transaction subject to TILA has APR and finance charge
disclosures, the lower of the two tolerances ultimately
determines whether a violation has occurred. Section 108(f)
provides a finance charge tolerance of one-half the APR
tolerance set forth in section 107(c) but includes a floor of
$25 and a ceiling of $200. The provision is not intended to
permit bad-faith intentional understatements of finance
charges.
The amendment provides that a disclosed finance charge that
is greater than the actual finance charge shall be considered
accurate for purposes of TILA. This language reinforces section
103(z) which allows for overstatements without imposing
liability.
The amendment also implements a different tolerance for
determining if the finance charge is accurate for purposes of
rescission. By providing a finance charge tolerance of one-half
of one percent of the loan amount, the penalty of rescission
will be limited to those circumstances in which there has been
a substantial disclosure error.
(b) Basis of Disclosure for Per Diem Interest.--Interim
interest, the interest due for the period from loan closing
until the date of the first payment, is regularly paid at the
closing. However, it can be difficult to accurately calculate
this charge at the time documents are prepared for the closing
since interim interest, unlike other charges, changes if the
date of closing is advanced or delayed. The existing regulation
is unclear with respect to a creditor's right to estimate
interim interest or treat it as a minor irregularity. If the
loan is consummated or funded on a date other than the date
anticipated when disclosures were prepared (for example,
because the consumer is unable to attend closing on the
targeted date), the finance charge disclosure may become out of
the range of tolerance. This provision allows creditors to have
documents produced for the closing and sent to the closing
agent based on the expected closing date and the information
available to the creditor at the time the documents are being
prepared.
Section 109. Limitation on Liability
Responding to the more that 50 nation-wide class actions
that have been filed in the last year based on the Rodash
decision, this amendment eliminates liability based on the
treatment of specific types of charges. The limitation on
liability extends to claims based on disclosure of a finance
charge, or other numerical disclosure, that is within the
tolerances established by this legislation. In addition, the
limitation includes a provision protecting creditors from
liability when they overstate an amount or percentage to be
disclosed.
The amendment also eliminates creditor liability for use of
the incorrect form for providing the consumer with notice of
his or her rescission rights. Existing section 125(a) of TILA
requires the creditor to give the consumer notice of the right
to rescind in accordance with regulations of the Board. The
Board has adopted two model forms, Form H-8 and Form H-9, for
notice of the consumer's right to rescind in closed end
transactions. The forms are labelled, respectively,
``Rescission Model Form (General)'' and ``Rescission Model Form
(Refinancing''. This amendment eliminates creditor liability
where a creditor has provided the consumer with notice of the
right of rescission using a model form but selected the
incorrect model form or a written notice based on the incorrect
model form.
The liability limitations set forth in this section do not
apply to class actions for which final orders certifying the
class were entered prior to January 1, 1995, and to individual
actions and actions brought by the named consumers in any class
action filed before June 1, 1995.
Section 110. Limitation on Rescission Liability
This section responds to a court opinion that held that a
lender's reliance on either form of rescission notice published
and adopted by the Federal Reserve Board was misplaced. Section
110 provides that where a creditor selects the appropriate
Federal Reserve Board form of notice and properly completes the
form, the borrower cannot rescind on the basis of improper
notice. The Federal Reserve Board is directed to reexamine
forms that have been adopted to eliminate further confusion
facing creditors and consumers.
Section 111. Calculation of Damages
Section 130(a) of TILA allows a consumer to recover both
actual and statutory damages in connection with TILA
violations. Congress provided for statutory damages because
actual damages in most cases would be nonexistent or extremely
difficult to prove. To recover actual damages, consumers must
show that they suffered a loss because they relied on an
inaccurate or incomplete disclosure.
Recognizing the difficulty of proving actual damages and
the increase in costs involved in mortgage lending, this
amendment increases the statutory damages available in closed
end credit transactions secured by real property or a dwelling
to a minimum of $250 and a maximum of $2,500.
Section 112. Assignee Liability
(a) Violations Apparent on the Face of Transaction.--
Section 131(a) of TILA currently provides that assignees are
liable only if the violation is apparent on ``the face of the
disclosure statement.'' To lessen the burden on the secondary
market while maintaining the deterrent the provision has on
unscrupulous lenders, this amendment to section 131 provides
that, for closed end loans secured by real property, the ``face
of the disclosure statement'' refers only to the Truth In
Lending disclosure document, any itemization of the amount
financed and any other disclosure of disbursement, and not to
``other documents assigned'' generally. Following Federal
Reserve Board review pursuant to section 106(g) and section 102
of this legislation, it is anticipated that the assignee will
be able to determine compliance based on a review of a single
format of disclosure.
(b) Servicer not Treated as Assignee.--A number of recent
consumer lawsuits against mortgage loan servicers have claimed
the servicer is an assignee of the creditor who made the loan
and is therefore liable for errors under section 131. This
provision clarifies that the loan servicer (the entity
collecting payments from the consumer and otherwise
administering the loan) is not an ``assignee'' under the TILA
unless the servicer is the owner of the loan obligation.
Moreover, a servicer shall not be deemed to be an owner of the
loan on the basis of an assignment of the loan or the mortgage
for administrative convenience in servicing the loan. A
``servicer'' is defined by reference to section 6(i)(2) of the
RESPA. The TILA continues to apply to servicers who were the
original creditors and then sold the loan but retained
servicing rights. This amendment does not change the law;
rather, it provides courts with further specific guidance on
the interpretation of current law.
Section 113. Rescission Rights in Foreclosure
This amendment adds a new subsection to section 125 of TILA
giving consumers the right to rescind a loan within the three-
year time period established in section 125(f) of TILA as a
defense if the creditor brings an action to foreclose on the
consumer's principal dwelling in three specific instances:
improper treatment of borrower-paid mortgage broker fees in
calculating the finance charge, use of the incorrect form of
notice of the right of rescission, and disclosure of a finance
charge which understates the actual finance charge by more than
$35. The consumer protection provisions of this section are
intended to benefit consumers that are unable to meet their
mortgage obligations and are not intended as a mechanism
whereby consumers can avoid their obligations by defaulting and
then raising the defense in foreclosure. Nothing in this
section is intended to override the exceptions to the rights of
rescission created in section 125(e).
Section 125(f) of TILA provides that the consumer's right
of rescission expires on the earlier of three years after the
date of consummation of the transaction or upon the sale of the
property even if the consumer has not received the required
disclosures or forms. Rescission rights expire in three years.
The time period shall not be extended except as explicitly
provided in section 125(f) relating to agency enforcement
proceedings. However, section 125(f) does not affect any
equitable remedies that may be available under State or common
law.
Section 114. Recovery of Fees
Section 114 makes a borrower who exercises a right of
rescission liable under TILA for any appraisal reports or
credit reports charges.
section 115. homeownership debt counseling notification
Section 115 repeals homeownership debt counseling
notification under the Housing and Urban Development Act of
1968. Homeownership is widely available through the private
sector. Therefore, a government program is both duplicative and
wasteful.
section 116. home mortgage disclosure act
The HMDA requires a financial insitution with assets of $10
million or more that has a headquarters or a branch within a
metropolitan statistical area to compile and report data
related to home mortgage loans. Section 116(a) modifies the
HMDA to exempt institutions with $50 million in assets or less
from the reporting requirements. The Federal Reserve Board is
also given the discretion to further exempt institutions with
assets of $50 million or greater if the Board determines that
the burden of compliance with the HMDA outweighs the usefulness
of the information required to be reported. Finally, section
116(b) permits depository institutions to keep such data in
their home office (instead of in each branch) and make it
available upon written request.
section 117. applicability
The amendments made by section 106(a), (d), (e), and (f)
and sections 108, 112 and 113 will apply to all consumer credit
transactions in existence or consummated on or after the date
of enactment. Subsections 106(a), (d), (e) and (f) (certain
charges) and section 112 (assignee liability) apply
retroactively. In contrast, section 106(b) regarding the
treatment of borrower-paid mortgage broker fees applies
prospectively. Sections 108 and 113 are applied retroactively.
Section 109 (limitation on liability) applies to all existing
transactions. The remaining sections, section 107 (exemption
for non-cashout refinancings), section 111 (statutory damages)
and section 110 (limitation on rescission liability), apply
prospectively. However, nothing in this section is intended to
change the law retroactively with respect to individual actions
or counterclaims filed before June 1, 1995, class actions for
which a final order certifying the class was entered before
January 1, 1995, actions by named individual plaintiffs in any
class action filed before June 1, 1995, or any consumer credit
transactions with respect to which a timely notice of
rescission was sent to the creditor before June 1, 1995 as
provided in section 109(a) (new section 139(b) of the TILA).
Subtitle B--Community Reinvestment Act Amendments
section 121. expression of congressional intent
Section 121 amends the Congressional purpose for the CRA by
stating that in encouraging financial institutions to meet the
credit needs of their communities, regulators are not supposed
to impose additional regulatory burden or paperwork on
financial institutions.
section 122. community reinvestment act exemption
Section 122 exempts from the examination requirements of
the CRA any financial institution if the institution and the
holding company which controls the institution have not more
than $100 million in assets (which is to be adjusted for
inflation).
section 123. self-certification of community reinvestment act
compliance
Section 123 allows a financial institution with no more
than $250 million in assets to self-certify compliance with the
CRA, provided the institution has not been found to have
engaged in a pattern or practice of illegal discrimination
under the FHA or the ECOA within the past 5 years and has a
current CRA rating of ``satisfactory'' or ``outstanding.'' This
section also requires the financial institution to maintain a
public notice of self-certification and provides for regulatory
review of self-certification reasonableness during each
examination for safety and soundness. In addition, this section
provides for the institution to be examined for CRA compliance
if the institution's self-certification is found to be ``not
reasonable.'' If after the regular CRA exam an institution
receives a less than ``satisfactory'' CRA rating, it shall not
be allowed to self-certify again for a period of five years.
section 124. community input and conclusive rating
Section 124 amends the CRA to establish a new mechanism for
community input for an institution's CRA examination by
providing the public advance notice in the Federal Register of
an institution's CRA examination. After the Federal financial
supervisory agency provides such notice and reviews all timely
comments, the financial institution is provided a conclusive
CRA rating until its next CRA examination. A reconsideration of
an institution's rating may be requested within 30 days of the
disclosure of the rating to the public.
Under section 124(c), an institution's CRA record is taken
into account in the overall evaluation of the condition of an
institution rather than at the time of an application for a
deposit facility. Current law requires the regulator to take
into consideration an institution's CRA record when it applies
for a deposit facility.
section 125. special purpose financial institutions
Section 125(a) requires the appropriate Federal financial
supervisory agency, in evaluating the CRA records of special
purpose institutions, to take into account the nature of the
business of such institutions and the amount of deposits
received by such institution. Subsection (b) defines the term
``special purpose institution'' to mean a financial institution
that does not generally accept deposits in amounts less than
$100,000 dollars. Such institutions include, but are not
limited to, wholesale, credit card and trust institutions.
SECTION 126. INCREASED INCENTIVES FOR LENDING TO LOW- AND MODERATE-
INCOME COMMUNITIES
Section 126 revises the CRA to expand the category of
capital investments, loan participations, and other ventures
for which an institution can receive CRA credit. Under current
law, in evaluating the record of a non-minority-owned and non-
women-owned financial institution, an agency may consider as a
factor capital investment, loan participants, and other
ventures undertaken by the institution in cooperation with
minority- and women-owned financial institutions and low-income
credit unions, provided that these activities help meet the
credit needs of local communities in which such institutions
and credit unions are chartered.
In order to encourage institutions to participate in
transactions that have the effect of providing credit to low-
and moderate-income neighborhoods, regardless of whether those
neighborhoods are in an institution's community, section 126
requires the agencies to give institutions credit for
investments in or loans to any minority or women's depository
institution or low-income credit union. The agencies are also
directed to give credit for participation in any joint venture
or other entity or project which provides benefits to any
distressed community, whether or not the distressed community
is where the institution is chartered to do business.
Institutions must also receive credit for investments in or
loans to targeted low- and moderate-income communities,
including real property loans to such communities.
Finally, the agencies are required to consider equally with
other factors capital investment, loan participation and other
ventures undertaken by the institution in cooperation with
minority and women owned financial institutions and low income
credit unions to the extent that these activities help meet the
credit needs of the community in which these institutions are
located. Capital investment, loan participations, and other
ventures undertaken by institution in cooperation with a
community development financial institution (so long as the
loans and other financial services provided to low- and
moderate-income persons and small business are meeting the
credit needs of the local communities served by the majority-
owned institution) are also to be considered equally with all
other factors.
SECTION 127. PROHIBITION ON ADDITIONAL REPORTING UNDER COMMUNITY
REINVESTMENT ACT
This section prohibits the Federal financial institution
regulators from requiring additional reporting or recordkeeping
from financial institutions as a result of any regulations
prescribed under the CRA.
SECTION 128. TECHNICAL AMENDMENT
The Riegle-Neal Interstate Banking and Branch Efficiency
Act of 1994 modified the CRA to include a requirement to have a
separate discussion of the findings and conclusions of a CRA
report for each metropolitan area in which a regulated
depository institution maintains one or more domestic branch
offices. Under current law, this requirement applies to all
regulated depository institutions including institutions that
are located in only one state. The legislative intent of the
provision was to have the requirement apply only to regulated
institutions with interstate branches. Section 128 makes a
technical revision to the CRA that provides that the
requirement apply only to regulated banks with interstate
branches.
SECTION 129. DUPLICATIVE REPORTING
Section 129 exempts institutions which are members of the
Federal Home Loan Bank System from meeting the Federal Home
Loan Bank Act's community investment and service requirements
if the institution has received a CRA rating of ``outstanding''
or ``satisfactory''.
SECTION 130. COMMUNITY REINVESTMENT ACT CONGRESSIONAL OVERSIGHT
Section 130 requires each Federal banking agency to report
to Congress by December 31, 1996 and by December 31, 1997,
respectively, on the implementation of the CRA regulations
prescribed after the date of enactment H.R. 1858. These reports
are to include input from the regulated financial institutions
and quantifiable measures of the cost savings of the new CRA
regulations and their effectiveness in achieving CRA
objectives.
SECTION 131. CONSULTATION AMONG EXAMINERS
Depository institutions frequently are subject to multiple
exams by the same agency. For example, an institution may have
an annual safety and soundness exam as well as a CRA exam and a
trust department exam, all of which may be conducted at
separate times. These separate and uncoordinated exams may
result in inconsistent recommendations to an institution. Sec.
131 is intended to reduce the burden placed on banks as a
result of multiple exams by requiring each agency to direct is
examiners to consult on examination activities related to an
institution and resolve any inconsistencies in the examiners'
recommendations. In addition, section 131 directs that each
agency appoint an ``examiner-in-charge'' who is responsible for
consultation with all examiners of an institution.
SECTION 132. LIMITATION ON REGULATIONS
Section 132 provides that no CRA regulation may be
promulgated which would require financial institutions to make
loans to any uncreditworthy person that would jeopardize the
safety and soundness of the institution. In addition, no
regulation prescribed under the CRA shall require a financial
institution to make a loan on the basis of any discriminatory
criteria prohibited under any U.S. law. It also clarifies that
no regulation shall prevent or hinder in any way a financial
institution's full responsibility to provide credit to all
segments of its community. Finally, it clarifies that these
regulations shall encourage financial institutions to extend
credit to all creditworthy persons, consistent with safety and
soundness.
Subtitle C--Consumer Banking Reforms
Section 141. truth in savings
Section 141 revises the TISA to eliminate provisions that
have resulted in unnecessary and overly complex regulations.
The revisions to the TISA retain the basic components of that
Act relating to disclosure of account fees, charges, penalties
and simple interest rates. Financial institutions would
continue to disclose minimum balance requirements at the time a
consumer opens an account or upon request and would also
continue to be required to disclose a change in the terms of an
account at least 30 days before such change becomes effective.
Section 141 also retains the prohibition against deceptive and
misleading advertising of accounts.
The changes that section 141 makes to the TISA primarily
concern the requirement that financial institutions disclose
the ``annual percentage yield'' for accounts and the
application of civil liability for violations of the TISA. The
TISA currently requires the Federal Reserve Board to develop a
formula for calculation of an annual percentage yield.
Development of such formula has proved to be extremely
difficult. Furthermore, it appears that disclosure of an annual
percentage yield may not provide consumers with significantly
more information concerning an account than disclosure of the
simple interest rate. As such, the requirement for financial
institutions to disclose an annual percentage yield is
repealed.
Section 141 also removes the civil liability provisions for
violations of the TISA. The imposition of civil liability for
violation of the TISA has resulted in financial institutions
seeking numerous clarifications and commentaries from the
Federal Reserve Board increasing the regulatory burden for both
the industry and the Board. Accordingly, the civil liability
provisions are repealed. The federal banking agencies would
still retain the authority to take administrative actions to
enforce the TISA.
section 142. information sharing
Section 142 pertains to the sharing of information among
depository institutions and their affiliates and subsidiaries
where such sharing or communication may be restricted or
limited by law. This section does not authorize the sharing of
information with persons or entities other than affiliates or
subsidiaries of a depository institution. In addition, this
section is not intended to restrict or otherwise affect the
sharing or communication of information that is otherwise
permissible. Before information regarding a consumer may be
shared or communicated in reliance on this provision, the
depository institution, subsidiary or affiliate must disclose
to the consumer that such information may be communicated or
shared and the customer must be given the opportunity to direct
that the information not be communicated or shared. This
section is not intended to supersede in any way any sales
practice rules issued by the National Association of Securities
Dealers. The Committee is of the opinion that such sales
practice rules concerning information sharing should apply
equally to all affiliates of a broker dealer.
section 143. electronic fund transfer act clarification
Section 143 clarifies that provisions of the EFTA do not
apply to stored value cards or value stored on such cards
except for transactions where the card is actually used to
access an account to effect a transaction. In addition,
computers, computer-driven programs, or software that are
functionally equivalent to stored value cards are also exempted
from EFTA.
section 144. limit on restitution for truth in lending violations if
safety and soundness of violator would be affected
Under current law, Section 108(e) of TILA prescribes rules
for reimbursement of inadequately disclosed finance charges,
and requires the federal financial institution supervisory
agencies to order restitution to consumers of amounts charged
but not adequately disclosed. Section 144 allows supervisory
agencies to take into account the safety and soundness of that
institution when requiring restitution from an institution.
Under the section, two alternatives to full, immediate
restitution exist. First, an agency is able to order partial
restitution, in an amount that would not have a significantly
adverse impact on the lender's safety and soundness. Second, an
agency is allowed to order restitution in the full amount, but
to be paid over a period of time to avoid a significantly
adverse impact. In the case of the federal financial
institution supervisory agencies, an agency cannot order
partial restitution or restitution in partial payments over an
extended period unless the agency made a factual determination
that full, immediate restitution would cause the creditor to
become undercapitalized pursuant to such agency's regulations
promulgated under section 38 of the Federal Deposit Insurance
Act.
Subtitle D--Equal Credit Opportunity Act Amendments
section 152. findings and purpose
Section 152 states that the purpose of this legislation is
to reconcile and coordinate the notice requirements under the
ECOA amd FCRA.
section 153. equal credit opportunity act amendments
Section 153 coordinates notices required under the ECOA
resulting from adverse credit actions with notices required
under the FCRA where requirements of the two Acts overlap. It
also ensures that when credit is denied based on a consumer
report, the adverse action notice must state that the credit
denial was based on information contained in the credit report.
In addition, the notice must contain: (1) the name, address,
and telephone number of the consumer reporting agency making
the report; and, (2) a statement of the consumer's right to
obtain a free copy of the consumer repot and to dispute the
accuracy or completeness of any information in the consumer
report. In addition, the ECOA is amended by limiting liability
for violations of the adverse notice requirements provided for
in section 701(d) if it can be shown that the creditor
maintained reasonable procedures to assure compliance.
section 154. fair credit reporting act amendments
Section 154 coordinates the notices required under the FCRA
resulting from adverse credit actions with notices required
under the ECOA where requirements of the two Acts overlap.
section 155. incentives for self-testing
Section 155 is designed to encourage lenders to conduct
self-tests in order to determine their compliance with fair
lending laws. First, the section establishes a privilege for
lenders who self-test for compliance with the ECOA or the FHA
from having such tests used against them in any proceeding or
civil action brought under these acts where the lender has
identified discriminatory practices and has taken appropriate
corrective actions. Such tests, however, can be used if the
lender conducted them at the request of an agency, they have
been disclosed to a third party by the lender, if they are used
as an affirmative defense by the lender, or in determining the
remedy for FHA or ECOA violations. Second, the section grants
the Federal banking regulators discretionary authority to refer
evidence of discrimination contained in a self-testing report
to the Attorney General or the Secretary of HUD under certain
circumstances.
Ambiguities under current law in the self-testing area
create disincentives for financial institutions to test their
activities with the nation's fair lending laws. Under current
law, the possibility exists that self-tests will be used as
evidence against a lender in a later administrative proceeding
or civil action. The privilege and discretionary referral
provided for under section 155 are designed to eliminate these
current disincentives.
Under this section, the appropriate federal department or
agency is given the authority to determine which kinds of tests
will qualify for the privilege. Although paired testing is a
widely accepted form of testing for noncompliance, other
testing methods may produce similar and reliable evidence of
unlawful practices and may be less cost-prohibitive for smaller
institutions. Therefore, these tests also warrant protection
under this section.
section 156. credit scoring systems
Section 156 amends the ECOA to clarify that credit
decisions based solely on an empirically derived, demonstrably
and statistically sound, credit scoring system, as defined by
the Federal Reserve Board in regulations prescribed under this
title, shall be in compliance with the non-discrimination
requirements under ECOA (subsection (a)) so long as the system
does not use any category protected under subsection (a), does
not use any functional equivalent of such a category, and does
not use any criterion that has a discriminatory effect on any
category unless the use of the criterion is justified by
business necessity and there is no less discriminatory
alternative available. The term business necessity as well as
the duty of showing a less discriminatory alternative shall be
construed consistent with U.S. Supreme Court precedent such as
Griggs v. Duke Power Company, 401 U.S. 424 (1971) and
Albermarle Paper Company v. Moody, 422 U.S. 405 (1975).
Section 157. Consultation by Attorney General required in Nonreferral
cases
Section 157 requires the Attorney General to consult with
the appropriate regulatory agency prior to bringing a civil
action. The Attorney General and the regulatory agencies are to
work in close cooperation to avoid unnecessary duplication of
effort, and to avoid unnecessary burdens on regulated entities.
Subtitle E--Consumer Leasing Act Amendments
Section 163. Regulations
Section 163 amends the Consumer Credit Protection Act by
directing the Federal Reserve Board to address consumer leasing
issues through regulation and requiring the Board to publish
model disclosure forms to facilitate compliance with the
disclosure requirements and to aid consumers in understanding
leasing transactions.
Section 164. Consumer Lease Advertising
Section 164 rewrites the disclosure requirements for
consumer lease advertising. Under this section, when an
advertisement states that an initial payment or that no initial
payment is required, the advertisement must also state that the
transaction is a lease; the number of payments; the
applicability of a security deposit; the number, amount and
timing of payments; and certain other pertinent information. In
addition, the special rules governing radio advertisements are
repealed under this section.
Section 165. Statutory penalties
Section 165 amends section 185(a) of the Consumer Credit
Protection Act to limit a creditor's liability for statutory
penalties for failure to provide certain consumer lease
disclosures.
Subtitle F--Federal Home Loan Bank Amendments
Section 171. Application for Membership in the Federal Home Loan bank
System
Section 171 establishes that an applicant for membership in
the Federal Home Loan Bank (FHLB) System may submit the
application in the district where the applicant's principal
place of business is located rather than submit the application
to the Federal Housing Finance Board in Washington. It also
establishes that applicants may apply in an adjoining district
if it is convenient and meets with the approval of the Federal
Housing Finance Board.
section 172. federal home loan bank external auditors
Section 172 provides that General Accounting Office audits
of FHLBs shall not be limited to periods during which
government capital has been invested in them. It also prohibits
the Federal Housing Finance Board from participating in the
hiring of an external auditor by the FHLBs, other than to
establish requirements for audit contracts.
TITLE II--STREAMLINING GOVERNMENT REGULATIONS
Subtitle A--Regulatory Approval Issues
section 201. streamlined nonbanking acquisitions by well capitalized
and well managed banking organizations
Under current law, a bank holding company must submit a
written notice to the Federal Reserve Board at least 60 days
before engaging in a nonbanking activity. The Federal Reserve
Board determines whether the activity is so closely related to
banking or managing or controlling banks as to be a proper
incident thereto.
Section 201 permits well capitalized and well managed bank
holding companies to engage, either directly or through an
acquisition, in nonbanking activities previously approved by
the Federal Reserve Board without prior notice or with an
abbreviated notice. In order to be eligible for these expedited
procedures (1) the bank holding company must be well
capitalized and well managed; (2) the company's lead insured
depository institution must be well capitalized and well
managed; (3) insured depository institutions controlling 80
percent of the company's banking assets must be well
capitalized; (4) insured depository institutions controlling 90
percent of the company's banking assets must be well managed;
(5) no insured depository institution controlled by the company
may be undercapitalized or poorly managed (with a limited
exception for recently acquired depository institutions); and,
(6) neither the bank holding company nor any subsidiary
depository institution may be the subject of any enforcement
action, order, or administrative enforcement proceeding within
the prior twelve months. In addition, the book value of the
assets to be acquired may not exceed 10 percent of the holding
company's consolidated total risk-weighted assets, and the
price paid may not exceed 15 percent of the consolidated Tier 1
capital of the company. All activities must be conducted in
compliance with any applicable regulations, orders, and
interpretations of the Federal Reserve Board.
Qualifying bank holding companies may engage de novo in any
``laundry list'' nonbanking activity approved by the Federal
Reserve Board by regulation without prior notice, but must
inform the Board within 10 days after commencing the activity.
Qualifying bank holding companies wishing to engage in an
activity approved by the Federal Reserve Board by order, or
wishing to acquire any nonbanking company, must provide 12 days
prior notice to the Board. Prior to expiration of the notice
period, the Federal Reserve Board may require the bank holding
company to comply with statutory notice and review provisions
that generally apply to proposals under section 4(c)(8).
section 202. streamlined bank acquisitions by well capitalized and well
managed banking organizations
Section 202 amends the notice procedures of the BHCA to
permit well capitalized and well managed bank holding companies
that are rated ``satisfactory'' or ``outstanding'' for CRA
performance to acquire another bank, without prior approval,
when the acquisition is limited in size, meets competitive
criteria established by the Federal Reserve Board (in
consultation with the Attorney General), and meets applicable
geographical and other established statutory requirements. In
addition, the bank holding company may not have been the
subject of any enforcement action, order, or administrative
enforcement proceeding within the twelve months prior to the
acquisition.
Section 202 requires bank holding companies to provide the
Federal Reserve Board with brief advance notification of the
proposal to allow the Board to require a full notice or
application if warranted by the specific case. It also
clarifies that the Department of Justice's anti-competitive
review remains applicable to notices filed under the
streamlined procedures. Under these streamlined procedures the
Attorney General will receive notification of the proposed
acquisition at the same time as the Federal Reserve Board. The
Attorney General shall advise the Federal Reserve Board during
the review period in writing if any competitive concerns exist
with respect to the transition. If the Attorney General advises
the Federal Reserve Board that no such concerns exist, the
post-approval waiting period in section 11(b) shall not apply.
section 203. eliminate filing and approval requirements for insured
depository institutions already controlled by the same holding company
Section 203 amends the Federal Deposit Insurance Act (FDIA)
and the National Bank Consolidation and Merger Act to allow
merger of banks controlled by the same bank holding company
without having to comply with certain filing and approval
requirements. Section 203 requires that these transactions meet
the recently enacted interstate branching requirements. The
responsible agency for the resulting bank may require an
application under these Acts, if the facts of the specific case
warrant.
section 204. eliminate redundant approval requirement for oakar
transactions
Section 204 amends the FDIA to remove the duplicative
approval requirements for the merger of a bank and a savings
association under thee Oakar Amendment to the FDIA. Section 204
leaves requirements under the Bank Merger Act intact. Section
204 does not remove the other provisions for Oakar
transactions, including the requirement that the resulting
institution remain adequately capitalized and the requirement
that assessments paid by the resulting institution go to the
appropriate FDIC insurance fund.
section 205. elimination of duplicative requirements imposed upon bank
holding companies and other regulatory relief under the home owners'
loan act
Section 205 amends the Home Owners' Loan Act (HOLA) to
eliminate duplicative regulation of bank holding companies
under the BHCA and the HOLA. Currently, a registered bank
holding company that controls a savings association is
supervised by the Federal Reserve Board and is also subject to
the requirements of the HOLA. As such, it must obtain approval
from the OTS for acquisitions and must register with the OTS as
a savings and loan association holding company. The amendment
eliminates duplicative supervision under the HOLA. However, the
amendment does not free savings associations owned by bank
holding companies from the Qualified Thrift Lender (QTL) test
or from any other requirements applicable to savings
associations under Federal law.
Section 205 also amends the BHCA to ensure that the Federal
Reserve Board and the OTS will cooperate in the supervision of
bank holding companies that control savings associations. The
Federal Reserve Board must seek and consider the views of the
Director of the OTS in considering any application or notice by
a bank holding company to acquire a savings association. The
Federal Reserve Board also must consult with the Director, as
appropriate, in establishing the scope of inspections of bank
holding companies that control savings associations. Such
consultation should be more involved when savings associations
make up a substantial portion of the assets of the holding
companies. The Federal Reserve Board must also, upon request of
the Director, provide the Director with any inspection report
or any other supervisory material relating to a bank holding
company that controls a savings association. Finally, the
Federal Reserve Board and the Director are required to
cooperate in any enforcement action against a bank holding
company that involves a savings association controlled by the
company.
Section 205(d) reduces the regulatory and paperwork burden
faced by savings and loan associations by allowing them to
satisfy the QTL test required under the HOLA by meeting the
Qualified Thrift Asset (QTA) test under the Internal Revenue
Code.
Under HOLA the QTL test requires thrifts to have at least
65% of their portfolios in mortgages and mortgage-related
products. In addition, the law also allows a limited amount of
consumer loans, commercial loans and educational loans to be
considered qualified lending. Thrifts must meet the QTL test in
order to receive certain benefits not afforded to banks.
Under the tax code, the QTA test requires thrifts to have
at least 60% of their assets in certain loans and investments
listed in the code. The list includes residential mortgage
loans, but not commercial loans or many types of mortgage
backed securities. The two tests are similar, but not
identical. In addition, the QTL test is computed on the basis
of portfolio assets and the tax test on total assets. By
meeting the QTA test, thrifts receive certain tax benefits, for
example, the choice of using the experience method or the
percentage of taxable income method of computing their bad debt
reserve. This subsection does not affect tax law in any way. It
merely reduces the paperwork burden on thrifts by no longer
requiring them to juggle their assets to ensure that they have
the correct balance of assets to meet their two similar but
different tests.
section 206. eliminate requirement that approval be obtained for
divestitures
Section 206 eliminates a statutory presumption that a bank
holding company that divests shares of any company to a third
party investor in a transaction funded by any subsidiary of the
bank holding company is presumed to continue to control those
shares unless the Federal Reserve Board determines that the
divestiture is genuine. The presumption was intended to prevent
sham divestitures, but the application burden imposed on the
banking industry has proved to outweigh the benefits of this
requirement. The Federal Reserve Board can detect sham
transactions through the examination process.
section 207. eliminate unnecessary branch applications
Section 207 eliminates the notice and approval requirements
concerning the operation of branches for well-capitalized,
CAMEL 1 or 2 institutions with ``outstanding'' or
``satisfactory'' CRA ratings. This section does not change in
any way the geographic restrictions that govern the
establishment or operation of a branch office.
section 208. eliminate branch application requirements for atms and
similar facilities
Section 208 amends the McFadden Act and the FDIA to provide
that automated teller machines (ATMs) or remote service unit
(RSUs) owned by a depository institution are not considered to
be branches for purposes of filing an application to establish
a branch so long as they are owned and operated at sites at
which the bank could operate a branch. Existing law regarding
when other categories of ATMs and RSUs are to be considered
branches is not affected by this amendment.
section 209. eliminate requirement for approval of investments in bank
premises for well capitalized and well managed banks
Section 209 amends the Federal Reserve Act to allow well
capitalized institutions which have received one of the two
highest composite CAMEL ratings to invest up to 150% of the
institution's capital in its premises without obtaining prior
approval.
section 210. eliminate unnecessary filing for officer and director
appointments
Section 32 of the FDIA requires insured depository
institutions and depository institution holding companies to
file a notice with their regulators at least 30 days before
hiring new directors or senior executive officers where the
institution is undercapitalized or otherwise in troubled
condition, has been chartered less than two years, or the
institution or holding company has undergone a change in
control during the past two years. In these situations, the
individuals would have to undergo background checks.
Section 210 adds a provision that lets the agencies waive
the notice requirement on a case-by-case basis in appropriate
circumstances.
section 211. streamlining process for determining new nonbanking
activities
Section 211 amends the BHCA to eliminate the hearing
requirement contained in Section 4(c)(8) of that Act. Section
211 also amends section 4(c)(8) to create an exception to that
section's general prohibition on bank holding company insurance
activities to allow bank holding companies to own insurance
affiliates in accordance with State insurance laws. The
provision states that it shall be ``closely related to
banking'' to provide insurance as a principal, agent, or broker
in any State, in full compliance with the laws and regulations
of such state that apply uniformly to each type of insurance
license or authorization in that State, including anti-
affiliation laws.
section 212. disposition of foreclosed assets
Under current law, bank holding companies are accorded up
to five years to dispose of stock acquired as a result of a
loan foreclosure; under certain circumstances, real estate
assets may be held for up to ten years. National banks may hold
both foreclosed real estate and foreclosed stock for a maximum
period of 10 years. Section 212 would equalize the treatment of
national banks and bank holding companies by amending section
4(c)(2) of the BHCA to provide authority for the Federal
Reserve Board to approve applications to hold foreclosed stock
for an additional five years. An extension beyond the initial
five year period would be dependent on a showing by the bank
holding company that it has made a good faith attempt to
dispose of the asset within five years, or that disposal within
the initial five year period would be detrimental to the
company. The section also eliminates the statutory requirement
that a bank holding company must apply for an extension every
year.
section 213. increase in certain credit union loan ceilings
Section 213 allows a federal credit union to make aggregate
loans up to $50,000 to officials of the credit union without
approval by the board of directors. Under present law, the
aggregate loan ceiling is $10,000.
Subtitle B--Streamlining of Government Regulations; Miscellaneous
Provisions
section 221. eliminate the per-branch capital requirement for national
banks and state member banks
Section 221 eliminates section 5155(h) of the Revised
Statues. Currently, section 5155(h) requires national bank
associations to maintain capital for their branches as if each
branch were a separately chartered bank. In deleting this
subsection, national banks' capital will be held against their
total assets and not the assets of each of their individual
branches.
section 222. branch closures
Section 222 clarifies the scope of the branch closing
notice requirement under section 42 of the FDIA. Under section
42, an insured depository institution that intends to close a
branch is required to notify the customers of the branch and
the institution's appropriate Federal banking agency 90 days
prior to the closing.
An interagency policy statement has interpreted section 42
such that (1) the term ``branch'' is defined as a traditional
brick and mortar branch and does not include an ATM or remote
service facility; and (2) the relocation or consolidation of a
branch does not constitute a branch closing provided that the
relocation or consolidation of a branch does not constitute a
branch closing provided that the relocation or consolidation is
within the same immediate neighborhood and the same customers
are served.
Section 222 confirms, and in one way, broadens these
interpretations in the intergency policy statement. ATMs are
explicitly excluded from the definition of branch. Furthermore,
the merger or relocation of branch is excluded from the notice
requirement when certain conditions are met. The merger or
relocation of a branch is excluded if the branch affected in
located within 2.5 miles of or in the same neighborhood as
another branch of the same institution. In other instances, the
other branch must serve substantially all of the customers
currently served by the branch to be closed.
Section 222 also excludes from the notice requirements
branch closings in connection with an emergency acquisition or
other FDIC assistance under the FDIC. Section 222 grants the
agencies authority to create further exceptions consistent with
the purposes of the section.
section 223. amendments to the depository institutions management
interlocks act
This section makes several changes to the Depository
Institutions Management Interlocks Act. First, it increases the
dollar thresholds in the rule currently prohibiting banks or
bank holding companies with more than $1 billion in assets from
having a management interlock with another nonaffiliated bank
or bank holding company, where ever located, with assets
greater than $500 million. This threshold would rise to $2.5
billion and $1.5 billion, respectively, and be adjusted
annually for inflation.
Second, this section permits grandfathered interlocks to
continue indefinitely (until the death or resignation of the
official in question). Third, it restores the exemptive
authority the regulators had prior to 1994. Fourth, it permits
a management official of one institution or hold company to
serve as a management official of another non-affiliated
institution or holding company if the institutions or holding
companies (and their affiliates) hold in the aggregate no more
than 20 percent of the deposits in each relevant geographic
area in which they are located.
section 224. acceleration of appraisal subcommittee repayment
This section requires the acceleration of repayment to the
Treasury of a five million dollar loan held by the Financial
Institutions Examination Council's Appraisal Subcommittee.
Under this section, the loan is to be repaid by the end of
Fiscal Year 1998.
section 225. eliminate unnecessary and duplicative recordkeeping and
reporting requirements relating to loans to executive officers and
permit participation in employee benefit plans
Section 22(h) of the Federal Reserve Act governs extensions
of credit to insiders (executive officers, directors, and
principal shareholders) of member banks and their affiliates,
including related interests of those insiders (such as
companies they control). In general, section 22(h) requires
that insider loans be within certain limits and not be on
preferential terms. Section 22(g) of the Federal Reserve Act
establishes special limits for extensions of credit to
executive officers only.
Without changing any of the core restrictions on insider
lending, section 225 eliminates extraneous and unnecessary
reporting requirements and ends coverage of certain persons who
are executive officers and directors of affiliates who cannot
affect policymaking at a bank. Section 225 does not affect the
effectiveness of the insider lending provisions of section 22
of the Federal Reserve Act of the Federal Reserve Board's
Regulation O in any significant way.
Section 225(a)(1) allows executive officers, directors, or
principal shareholders to receive extensions of credit that are
made pursuant to a benefit or compensation plan that is widely
available to, and used by, employees of the bank. Such loans
will continue to count toward the limits of section 22(h) but
will no longer be barred as preferential. This amendment will
permit such persons to participate in programs that allow
reduced closing costs or a slightly favorable rate in
connection with an employment-related relocation.
Section 225(a)(2) allows the Federal Reserve Board to
exempt from the restrictions of section 22(h) executive
officers and directors of affiliates who are not involved in
policymaking at the bank, provided that the affiliate by which
they are employed does not represent more than 10 percent of
the consolidated assets of the organization. Maintaining
updated records of the identities of all these persons, and
their related interests represent a substantial recordkeeping
burden. For large banks, this means tracking literally
thousands of directors and executive officers, sometimes
overseas, as well as any company those persons control. Given
that these people are not employed by the bank or a significant
affiliate and cannot therefore affect the bank's policies, the
costs of the recordkeeping requirement clearly outweigh the
benefits.
Section 225(b) eliminates unnecessary reporting and
recordkeeping requirements. The crucial recordkeeping
requirements necessary to monitor compliance with Regulation O
are contained in the Federal Reserve Board's regulation. Each
bank is required to track loans to its insiders and their
related interests, and examiners make certain that loans are
within statutory limits and that adequate records are being
kept. Various other statutory provisions, however, impose
unnecessary recordkeeping and reporting burdens on banks that
are not worth the costs they impose. Section 225(b) eliminates
these burdens.
Section 225(c) amends section 22(g) to allow member banks
to extend two types of credit to their executive officers: home
equity lines not to exceed $100,000 and loans secured by
readily marketable assets up to an amount to be set by the
Federal Reserve Board. These loans are secured by collateral
such that they pose minimal risk to the bank.
section 226. expanded regulatory discretion for small bank examinations
Current law requires annual examinations for banks with
$250 million or more in assets and permits examinations every
18 months for CAMEL 1 banks with less than $250 million in
assets and for CAMEL 2 banks with less than $100 million in
assets. The regulators may increase the CAMEL 2 threshold to
$175 million after September 1996. Section 226 amends current
law to permit the regulators to raise the CAMEL 2 asset
threshold to $250 million after September 1996. In addition,
the Federal banking agencies are required to report on a
semiannual basis on the progress being made on implementing a
system for coordinating examinations. The report must be filed
until a system is implemented.
section 227. cost reimbursement
This section adds corporate customers to the cost
reimbursement provisions of Section 3415 of Title 12 of the
U.S. Code.
section 228. identification of foreign nonbank financial institution
customers
Section 228 repeals the responsibility of a domestic
depository institution's obligation to maintain a listing of
all domestic financial institutions having an account there.
All foreign nonbank financial institutions with accounts at a
domestic financial institution, however, would still be
required to be identified and listed.
SECTION 229. PAPERWORK REDUCTION REVIEW
Section 229 requires each Federal financial institution
regulator and the National Credit Union Administration to
review and repeal unnecessary internal written policies.
SECTION 230. DAILY CONFIRMATIONS FOR HOLD-IN-CUSTODY REPURCHASE
TRANSACTIONS
Section 230 requires the Secretary of the Treasury to
revise regulations relating to confirmations for hold-in-
custody repurchase transactions to permit the waiver of the
right to obtain daily written confirmations if disclosure has
been received that adequately informed the counter party of the
benefits of receiving daily written confirmations, including,
but not limited to, the value of receiving confirmations in
verifying transactions and in perfecting a security interest
under the Uniform Commercial Code.
SECTION 231. REQUIRED REGULATORY REVIEW OF REGULATIONS
Section 231 requires a review of all banking regulations at
least once every ten years in order to identify outdated or
otherwise unnecessary regulatory requirements imposed upon
insured depository institutions. Each regulation will be
reviewed by the Financial Institution Examination Council (the
Council) or one of the Federal banking agencies, depending on
which agency or Council promulgated the regulation.
As part of the review process, the Council or such
appropriate Federal banking agency shall designate each
regulation by category. On a regular schedule within the 10-
year period, the Council or such appropriate Federal banking
agency shall notify and solicit comments on each category from
the pubic for their recommendations.
Further, the Council or such appropriate Federal banking
agency shall publish in the Federal Register a summary of the
comments including highlighted issues and comments. When it is
appropriate, the Council or such appropriate Federal banking
agency shall eliminate those regulations that were found to be
unnecessary. The Council shall report to the Congress within 30
days of the publication a summary including significant issues
raised during the review period, the relative merits of those
issues, and whether the problems need to be addressed by the
appropriate Federal banking agency or by legislation.
SECTION 232. COUNTRY RISK REQUIREMENTS
Under Section 905 of the International Lending Supervision
Act (ILSA), federal banking regulators are required to mandate
that banks maintain special reserves when their overseas loans
have become impaired due to a foreign borrower's inability to
make payment. Such reserves cannot be counted as capital or
surplus or allowances for possible loan losses and are charged
against current income. Section 233 provides that the
regulators may, but are not required to, impose such special
reserves.
section 233. audit costs
This section repeals the requirement that independent
auditors attest to bank compliance with safety and soundness
regulations and internal controls. It also inserts a
``privileged and confidential'' element to the annual
management report required under Federal Deposit Insurance
Corporation Improvement Act (FDICIA) that would permit
regulators to designate certain information included in such
reports as privileged and confidential and therefore not
available to the public. The designation of information as
privileged and confidential is not intended to alter or provide
an exemption from any requirement to file audited financial
statements and audit letters otherwise required under the
federal securities laws or rules or regulations adopted
thereunder. In addition, the section also creates a safe harbor
for well-capitalized and well-managed banks from the
requirements of section 36 of the FDIA except the requirement
for an independent financial audit.
section 234. standards for director and officer liability
Section 234 provides that outside directors are subject to
the same culpability standards as independent contractors in
enforcement actions by the regulatory agencies. Under the new
standard, regulators are required to show that an outside
director knowingly or recklessly committed the Act in question.
Under the present law, outside directors are subject to the
same standards as officers and inside directors of a financial
institution.
section 235. foreign bank applications
This section amends section 7(d) of the International
Banking Act (IBA) to permit the Federal Reserve Board to
approve an application by a foreign bank to establish a branch
or agency in the United States if the home country supervisor
is working to establish arrangements for the consolidated
supervision of such foreign bank. This changes current law,
which mandates denial of an application unless the foreign bank
is already subject to consolidated supervision. The mandatory
standard of consolidated supervision has prevented otherwise
qualified banks from entering the U.S. market, even if the home
country supervisors are working to put in place a framework for
consolidated supervision of the bank.
This section also requires the Federal Reserve Board to act
on an application within 180 days of its receipt, except that
the Board may, after giving notice to the applicant and the
licensing authority, extend the time for no more than an
additional 180 day period. Such time frames are appropriate in
light of the time that can elapse in transmitting and
translating information to and from foreign countries. The
amendment also permits the Board to deny an application if the
applicant does not respond in a timely manner to requests for
information necessary to process the application. Thus, the
amendment establishes a definite time frame for final action
while retaining an incentive for an applicant bank to provide
information in a timely manner.
The section also amends section 7(e)(1) of the IBA.
Currently, section 7(e)(1) allows the Board to terminate a
State-licensed office of a foreign bank if the foreign bank has
committed a violation of law or engaged in unsafe practices in
the United States or if the foreign bank is not subject to
consolidated supervision by its home country authorities.
Section 235(b) provides that, with respect to the consolidated
supervision standard, the Board can terminate a foreign bank's
operations for lack of consolidated supervision if the home
country authorities are not making progress in establishing
arrangements for the bank's consolidated supervision. Section
235(c) provides the Board parallel authority to terminate
federally licensed offices of foreign banks in addition to its
current authority to terminate State-licensed offices.
section 236. duplicate examination of foreign banks
This section amends section 7(c) of the IBA relating to the
Federal Reservice Board's examination authority over foreign
banks. The amendment provides that (1) the Board must take all
reasonable measures to coordinate examinations with the
licensing authority of the foreign bank's branch or agency; and
(2) a foreign bank's offices should be examined with the same
frequency as a State or national bank (currently annually) and
that this examination requirement may be met by an exam by
State supervisor.
This section also provides that the Board shall assess
foreign banks for the costs of examinations, but only to the
extent that State member banks are charged by the Board for
their examination costs. This provision ensures parallel
treatment of U.S. and foreign banks.
section 237. second mortgages
This section amends the Home Ownership and Equity
Protection Act of 1994 to apply only to subordinate mortgages.
It also mandates the dismissal of any administrative
enforcement proceedings or other actions which are pending on
the date of enacting of the Financial Institutions Regulatory
Relief Act of 1995 and are based on regulations in effect under
the TILA with respect to high-cost residential mortgage
transactions.
section 238. streamlining federal deposit insurance corporation
approval of new state bank powers
This section gives insured state banks and their
subsidiaries the ability to engage in new activities by giving
the FDIC 60 days notice as long as the institution remains in
compliance with appropriate capital standards. The FDIC may
extend this notice period up to 30 days for the purpose of
issuing notices of disapproval. The FDIC may disapprove any new
activity unless it determines that the activity would pose a
significant risk to the appropriate insurance fund.
section 239. repeal of call report attestation requirement
This section repeals the three-director attestation
requirement. This is in addition to the provision requiring an
officer to make a declaration as to the correctness of the call
report.
section 240. authority of the comptroller of the currency
Section 240 places a permanent moratorium on the authority
of the OCC to expand bank insurance powers, without rolling
back the status quo. The section also provides for the
functional regulation of national bank insurance activities. In
prescribing the terms of state supervision of insurance, the
section provides that no provision of section 5136, or any
other section of this Title of the revised statutes (including
section 5136B as added by this legislation) or section 13 of
the Federal Reserve Act may be construed as limiting or
otherwise impairing the authority of any state to regulate.
During consideration of H.R. 1858 by the Committee, several
modifications were made to section 240 to clarify its
provisions. These modifications included:
A ban on any State prohibitions relating to the
extent of insurance activities currently authorized for
national banks.
State supervision of annuities limited to disclosure
and licensing. No ability to limit lobby sales.
Grandfather from State regulation related to the
extent of insurance activities for all banks in towns
of 5000 currently engaged in insurance activities in
all States, subject to the outcome of pending
litigation.
Non-discrimination provisions to require that any
State supervisory limitation is applied equally to
state banks and S&Ls.
Non-discrimination language to protect against a
State insurance regulator labeling traditional banking
products as insurance.
Limitation on the definition of insurance requiring
that the definition must be tied to a State regulator's
authority under the relevant State insurance law.
Express protection of any rights to engage in
insurance activities by bank holding companies under
the BHCA.
In addition, the Committee adopted an amendment designed to
make it clear that State insurance regulators could not
overstep their authority to establish the regulatory framework
within which national banks can act as agent or broker in the
sale of insurance. That amendment also sought to assure that
State insurance regulators would not be able to define
traditional banking products as insurance. It did that by
retaining for the Comptroller of the Currency the ability to
define the ``business of banking'' and authorizing national
banks or their subsidiaries to engage in such activities. The
Committee wishes to make clear, however, that this language
does not permit the Comptroller to engage in definitional
``games'' which was the genesis of Section 240 in the first
place.
The effect of this provision is to clarify that a State may
not determine that certain traditional banking products--those
that are part of the business of banking--are actually
insurance products. The authority to determine what is
insurance and what is traditionally banking, subject to this
clarification, must be exercised in a manner consistent with
the overall objective of new section 5136A of the revised
statutes, which is to protect a State's authority to regulate
insurance. It is clearly not within the scope of a State's
authority under this Section, or otherwise, to determine that
other types of traditional banking products, like standby
letters of credit, swaps and other risk management tools, put
option bonds, asset-backed securities, loan participations,
stock indexed CDs, or other similar products, are insurance
products for purposes of the National Bank Act.
Insurance is a State regulated business and nothing in this
legislation is intended to interfere with the functional
regulation of insurance products. In keeping with that design,
the Committee would not expect for the Comptroller to define
any product as the ``business of banking'' which today is
regulated as insurance by the States. While it may be true that
some future products may have some insurance features and some
banking features, the Committee does not expect the Comptroller
to seek to broaden banking powers without Congressional
authorization and the Comptroller should not declare any
current insurance products, regulated as such by the States, to
be the ``business of banking''.
In addition, the Committee is aware that commodity futures
and option contracts are used by national banks to hedge
against or manage the risk of adverse price changes in various
physical commodities and financial products and that some of
these contracts are, in fact, traded by national banks to hedge
against price movements in homeowners, catastrophe and other
forms of insurance. In adopting a broad definition of
``insurance'' for purposes of national bank activities under
the legislation, the Committee does not intend to suggest that
state regulations may permissibly define insurance so as to
purport to regulate the offer, sale or trading in commodity
futures and option contracts by national banks which are
exclusively regulated by the CFTC under the Commodity Exchange
Act.
section 241. national bank community development insurance activities
Section 241 authorizes the Comptroller of the Currency to
approve an application by a national bank located in an
empowerment zone to act as an insurance agent or broker.
However, the bank must provide sufficient evidence that
competitively priced insurance products are not adequately
available and that the insurance products are sold only in the
empowerment zone.
This new section will provide greater access to insurance
in disadvantaged communities where competitively priced
insurance is inadequate. Moreover, this amendment will foster
economic revitalization, such as new business and employment
opportunities, in low income neighborhoods by permitting the
sale of insurance in empowerment zones. Additionally, by
requiring the sale of insurance to occur from a ``full-service
branch'' in the empowerment zone, the amendment provides a
significant incentive for banks to improve the quality and
quantity of banking services in such communities.
Effective immediately, this amendment allows national banks
having main offices or full-service branches in areas eligible
for designation as empowerment zones or enterprise communities
under section 1392 of the Internal Revenue Code of 1986, or in
Indian reservations, to sell insurance from that location. The
designation criteria for an empowerment zone or enterprise
community assures that the community is one experiencing
economic distress.
section 242. authorizing bank service companies to organize as limited
liability partnerships
Section 242 of this legislation modifies the Bank Service
Corporation Act by expanding the scope of companies that may be
owned by banks under the Act to include limited liability
companies. These companies often combine the elements of both
corporations and partnerships to provide more flexibility in
management and in the sharing of profits among its owners than
do corporations. Furthermore, these companies are taxed as
partnerships under the Internal Revenue Code.
Under current law, the Bank Service Corporation Act only
allows multiple banks to invest in stock-owned corporations.
These corporations are permitted to perform activities that the
banks could engage in directly. It enables banks to join
together to share overhead expenses and to realize the kinds of
efficiencies of scale that are available to larger banks. By
permitting institutions to own limited liability companies,
banks will be granted even greater regulatory relief because of
the increased flexibility, profit incentive, and tax treatment
noted above. Restrictions on activities that are imposed on
corporations under current law and the authority of the federal
banking agencies to examine and regulate these companies would
be maintained. Finally, banks would continue to be required to
obtain prior approval from their primary banking regulator in
order to invest in these companies.
section 243. bank investment in edge act and agreement corporations
Section 25A of the Federal Reserve Act imposes a non-
waivable limit on a member bank's ability to invest in
subsidiaries organized under that section (i.e., Edge Act
subsidiaries) and in subsidiaries held directly under Section
25 of the Federal Reserve Act (i.e., certain financial service
corporations held by a member bank's non-U.S. branches). The
current non-waivable limit of 10% of a member bank's capital
and surplus was enacted as part of the original Edge Act in
1919, before U.S. banks or the Federal Reserve Board had
significant international banking experience. The revision
would extend the non-waivable limit to 25% of capital and
surplus providing that the Federal Reserve Board does not find
the additional amount would be unsafe and unsound. In making
this determination, the Federal Reserve Board would consider,
inter alia, the capital and management strength of the member
bank. The amendment would not otherwise change current law.
section 244. report on the reconciliation of differences between
regulatory accounting principles and generally accepted accounting
principles.
When the FDICIA was enacted in 1991, the Congress noted
that differences between Regulatory Accounting Principles (RAP)
and Generally Accepted Accounting Principles (GAAP) created
significant, unnecessary and costly regulatory reporting and
control burdens. Accordingly, Section 121 of FDICIA called for
uniform accounting principles consistent with GAAP (unless the
appropriate regulator found that a RAP standard was necessary
to protect safety and soundness, etc.). However, the regulators
seem to have taken no significant actions toward this goal.
Therefore, this section requires each appropriate regulator to
report to both the House Committee on Banking and Financial
Services and the Senate Committee on Banking, Housing and Urban
Affairs, within 180 days of enactment, concerning the actions
taken and to be taken to achieve the goal set by FDICIA. This
report will set the stage for a meaningful Congressional review
as an important step toward making sure that there is steady
but prudent amelioration of this regulatory burden.
section 245. waivers authorized for residency requirement for national
bank directors
Section 5136 of the Revised Statutes of the United States
(12 U.S.C. 72) imposes a residency requirement on directors of
national banks. In general, current law requires all directors,
during their whole term of service, to be citizens of the U.S.
and requires that at least two-thirds of the directors must be
residents of the State in which the bank is located, subject to
certain exceptions. Section 245 provides that the Comptroller
of the Currency may waive the residency requirement.
TITLE III--LENDER LIABILITY
section 301. lender liability
Section 301 clarifies the liability under Federal
environmental law for lenders, fiduciaries, and Federal banking
and lending agencies by adding section 45 to the Federal
Deposit Insurance Act. Although the Environmental Protection
Agency promulgated rules which clarified exemptions for lenders
and those who act in these capacities, the rule was overturned
by a court case. Section 301, again, provides certainty as to
when and to what extent these parties may be liable for
violations under Federal environmental law for their lending,
financial and fiduciary activities.
New section 45(a) provides that a lender is liable when a
lender actually participates in management of another person's
environmental activities, regardless of the lender's status as
a lending institution. A lender is considered under this
section to be ``actually participating in management'' if a
lender makes decisions regarding the disposition of hazardous
substances or exercises control at a management level.
``Actually participating in management'' does not include
traditional lending activities, such as the extension of
credit, holding a security interest, providing financial
advice, or undertaking voluntary inspection of property, unless
these activities rise to the level of participating in the
operation and management of the property.
A lender who is held liable pursuant to new section 45(a)
shall be liable for the cost of any response or corrective
action to the extent and for the amount that the lender
actively and directly contributed to the hazardous substance
release. However, a lender shall not be liable for the cost of
any response or corrective action for a release of a hazardous
substance which commences prior to and continues after the
lender obtains a security interest in the property, so long as
the lender does not actually participate in the management
after obtaining a security interest in the property.
Further, new section 45(b) provides that a fiduciary, while
acting in a fiduciary capacity, is personally liable for non-
compliance with Federal environmental law as if the fiduciary
holds the property free of trust. The fiduciary's liability is
limited to assets of the trust or estate which are sufficient
to indemnify the fiduciary. If a fiduciary is liable for
environmental harm, section 45(b) makes clear that such
liability does not otherwise override indemnification terms of
the fiduciary contract of employee benefit plans made pursuant
to section 3(3) of the Employee Retirement Income Security Act
of 1974. However, the fiduciary's liability is not limited if
(1) the fiduciary had preexisting liability, (2) the fiduciary
fails to exercise due care or contributed to the release of a
hazardous substance, or (3) the fiduciary established the trust
for the purpose of avoiding or limiting liability under Federal
environmental law.
Lastly, new section 45(e) provides three limitations on
environmental liability of Federal banking and lending agencies
and their subsequent purchasers. First, new section 45(e)(1)(A)
exempts Federal banking and lending agencies, their
subsidiaries and subsequent purchasers from strict liability
for the release of a hazardous substance on properties which
were acquired in connection with (1) receivership,
conservatorship, or through liquidation, (2) the provision of
loans, discounts, advances, or other financial assistance, or
(3) civil or criminal proceeding or administrative enforcement
action, either by order or settlement under state law. However,
if the party directly caused or materially contributed to the
release of a hazardous substance, the party will be held liable
for any remedial measures to cure the damages. Second, section
45(e)(1)(B) limits the liability of these entities under State
law to the value of the entity's interest in the property.
Third, new section 45(e)(2) makes clear that government
agencies and their subsequent purchasers are not subject to the
environmental lien provisions at the time of transfer.
While new section 45(e) provides the liability limitations
for Federal banking and lending agencies and their subsequent
purchasers, it specifically states in new section 45(e)(1)(B)
that it does not preempt State law. It also does not immunize
subsequent purchasers from liability if the purchaser (1) had
preexisting liability to the property or is related to a party
with such liability, (2) fails to agree to take reasonable
steps necessary to abate the release or to protect public
health and safety consistent with Federal environmental laws,
or (3) directly causes or significantly and materially
contributes to any additional release or threatened release on
the property pursuant to new section 45(e)(1)(D)(iv).
Furthermore, if the subsequent purchaser failed to take
reasonable steps necessary to abate the release or to protect
public health and safety under applicable Federal environmental
laws, then the subsequent purchaser remains liable to the
appropriate government agency for the costs of such remedial
action, not exceeding the fair market value of the property,
according to new section 45(e)(1)(E).
Section 301(b) provides an effective date to occur upon the
section's enactment and applies to any claim that has not
reached final adjudication or settlement prior to enactment.
TITLE IV--ANNUAL STUDY AND REPORT ON IMPACT ON LENDING TO SMALL
BUSINESS
SECTION 401. ANNUAL STUDY AND REPORT ON SMALL BUSINESS LENDING
This section requires an annual study and report by the
federal banking regulators on the impact this legislation has
on lending to small businesses.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
* * * * * * *
findings and purpose
Sec. 2. (a) * * *
(b) It is the purpose of this Act to effect certain changes
in the settlement process for residential real estate that will
result--
(1) in more effective advance disclosure to home
buyers and sellers of settlement costs;
(2) in the elimination of kickbacks or referral fees
that tend to increase unnecessarily the costs of
certain settlement services without--
(A) directly regulating settlement services
prices; or
(B) directly regulating wages to bona fide
employees that are not designed as a subterfuge
to facilitate kickbacks among affiliated
companies;
* * * * * * *
definitions
Sec. 3. For purposes of this Act--
(1) the term ``federally related mortgage loan''
includes any loan (other than temporary financing such
as a construction loan) which--
(A) is secured by a first [or subordinate]
lien on residential real property (including
individual units of condominiums and
cooperatives) designed principally for the
occupancy of from one to four families,
including any such secured loan, the proceeds
of which are used to prepay or pay off an
existing loan secured by the same property; and
* * * * * * *
(7) the term ``[controlled business arrangement]
affiliated business arrangement'' means an arrangement
in which (A) a person who is in a position to refer
business incident to or a part of a real estate
settlement service involving a federally related
mortgage loan, or an associate of such person, has
either an affiliate relationship with or a direct or
beneficial ownership interest of more than 1 percent in
a provider of settlement services; and (B) either of
such persons directly or indirectly refers such
business to that provider or affirmately influences the
selection of that provider; [and]
(8) the term ``associate'' means one who has one or
more of the following relationships with a person in a
position to refer settlement business: (A) a spouse,
parent, or child of such person; (B) a corporation or
business entity that controls, is controlled by, or is
under common control with such person; (C) an employer,
officer, director, partner, franchisor, or franchisee
of such person; or (D) anyone who has an agreement,
arrangement, or understanding, with such person, the
purpose or substantial effect of which is to enable the
person in a position to refer settlement business to
benefit financially from the referrals of such
business[.]; and
(9) the term ``Board'' means the Board of Governors
of the Federal Reserve System.
uniform settlement statement
Sec. 4. (a) The [Secretary] Board, in consultation with the
Administrator of Veterans' Affairs, the Federal Deposit
Insurance Corporation, and the [Federal Home Loan Bank Board]
Director of the Office of Thrift Supervision, shall develop and
prescribe a standard form for the statement of settlement costs
which shall be used (with such variations as may be necessary
to reflect differences in legal and administrative requirements
or practices in different areas of the country) as the standard
real estate settlement form in all transactions in the United
States which involve federally related mortgage loans. Such
form shall conspicuously and clearly itemize all charges
imposed upon the borrower and all charges imposed upon the
seller in connection with the settlement and shall indicate
whether any title insurance premium included in such charges
covers or insures the lender's interest in the property, the
borrower's interest, or both. The [Secretary] Board may, by
regulation, permit the deletion from the form prescribed under
this section of items which are not, under local laws or
customs, applicable in any locality, except that such
regulation shall require that the numerical code prescribed by
the [Secretary] Board be retained in forms to be used in all
localities. Nothing in this section may be construed to require
that that part of the standard form which relates to the
borrower's transaction to be furnished to the seller, or to
require that that part of the standard form which relates to
the seller be furnished to the borrower.
(b) The form prescribed under this section shall be
completed and made available for inspection by the borrower at
or before settlement by the person conducting the settlement,
except that (1) the [Secretary] Board may exempt from the
requirements of this section settlements occurring in
localities where the final settlement statement is not
customarily provided at or before the date of settlement, or
settlements where such requirements are impractical and (2) the
borrower may, in accordance with regulations of the [Secretary]
Board, waive his right to have the form made available at such
time. Upon the request of the borrower to inspect the form
prescribed under this section during the business day
immediately preceding the day of settlement, the person who
will conduct the settlement shall permit the borrower to
inspect those items which are known to such person during such
preceding day.
special information booklets
Sec. 5. (a) The [Secretary] Board shall prepare and
distribute booklets to help persons borrowing money to finance
the purchase of residential real estate better to understand
the nature and costs of real estate settlement services. The
[Secretary] Board shall distribute such booklets to all lenders
which make federally related mortgage loans.
(b) Each booklet shall be in such form and detail as the
[Secretary] Board shall prescribe and, in addition to such
other information as the [Secretary] Board may provide, shall
include in clear and concise language--
(1) a description and explanation of the nature and
purpose of each cost incident to a real estate
settlement;
(2) an explanation and sample of the standard real
estate settlement form developed and prescribed under
section 4;
(3) a description and explanation of the nature and
purpose of escrow accounts when used in connection with
loans secured by residential real estate;
(4) an explanation of the choices available to buyers
of residential real estate in selecting persons to
provide necessary services incident to a real estate
settlement; and
(5) an explanation of the unfair practices and
unreasonable or unnecessary charges to be avoided by
the prospective buyer with respect to a real estate
settlement.
(c) Each lender shall include with the booklet a good faith
estimate of the amount or range of charges for specific
settlement services the borrower is likely to incur in
connection with the settlement as prescribed by the [Secretary]
Board. Such booklets shall take into consideration differences
in real estate settlement procedures which may exist among the
several States and territories of the United States and among
separate political subdivisions within the same State and
territory.
(d) Each lender referred to in subsection (a) shall provide
the booklet described in such subsection to each person from
whom it receives or for whom it prepares a written application
to borrow money to finance the purchase of residential real
estate. Such booklet shall be provided by delivering it or
placing it in the mail not later than 3 business days after the
lender receives the application, but no booklet need be
provided if the lender denies the application for credit before
the end of the 3-day period.
(e) Booklets may be printed and distributed by lenders if
their form and content are approved by the [Secretary] Board as
meeting the requirements of subsection (b) of this section.
servicing of mortgage loans and administration of escrow accounts
Sec. 6. [(a) Disclosure to Applicant Relating to Assignment,
Sale, or Transfer of Loan Servicing.--
[(1) In general.--Each person who makes a federally
related mortgage loan shall disclose to each person who
applies for any such loan, at the time of application
for the loan--
[(A) whether the servicing of any such loan
may be assigned, sold, or transferred to any
other person at any time while such loan is
outstanding;
[(B) at the choice of the person making a
federally related mortgage loan--
[(i) for each of the most recent 3
calendar years completed (at the time
of such application), the percentage
(rounded to the nearest quartile) of
loans made by such person for which the
servicing has been assigned, sold, or
transferred as of the end of the most
recent calendar year completed, except
that--
[(I) for any loan application
during the 12-month period
beginning on the date of the
enactment of the Cranston-
Gonzalez National Affordable
Housing Act, the information
disclosed under this
subparagraph may be for only
the most recent calendar year
completed, and for any loan
application during the 12-month
period beginning 1 year after
the date of the enactment of
the Cranston-Gonzalez National
Affordable Housing Act, the
information disclosed under
this subparagraph may be for
the most recent 2 calendar
years completed; and
[(II) this subparagraph may
not be construed to require the
inclusion, in the percentage
disclosed, of any loans the
servicing of which has been
assigned, sold, or transferred
by the person making the loan
to a transferee servicer that
is an affiliate or subsidiary
of such person; or
[(ii) a statement that the person
making the loan has previously
assigned, sold, or transferred the
servicing of federally related mortgage
loans; and
[(C) if the person who makes the loan does
not engage in the servicing of any federally
related mortgage loans, that there is a present
intent on the part of such person (at the time
of such application) to assign, sell, or
transfer the servicing of such loan to another
person.
[(2) Model disclosure statements.--Not later than 90
days after the date of the enactment of the Cranston-
Gonzalez National Affordable Housing Act, the Secretary
shall develop a model disclosure statement for
notification to applicants under paragraph (1) with
respect to servicing procedures, transfer practices and
requirements, and complaint resolution. The model
statement shall provide for the person originating the
loan to disclose their capacity to service loans and
the best available estimate of the percentage of all
loans made by such person for which the servicing will
be assigned, sold, or transferred during the 12-month
period beginning upon the origination. The estimate
shall be expressed as one of the following range of
possibilities--between 0 and 25 percent, between 26 and
50 percent, between 51 and 75 percent, or between 76
and 100 percent. This paragraph may not be construed to
require the inclusion, in the estimate disclosed, of
any loans the servicing of which will be assigned,
sold, or transferred by the person originating the loan
to a transferee servicer that is an affiliate or
subsidiary of such person.
[(3) Signature of applicant.--Any disclosure of the
information required under paragraph (1) shall not be
effective for purposes of this section unless the
disclosure is accompanied by a written statement, in
such form as the Secretary shall develop before the
expiration of the 90-day period beginning on the date
of the enactment of the Cranston-Gonzalez National
Affordable Housing Act, that the applicant has read and
understood the disclosure and that is evidenced by
the signature of the applicant at the place where
such statement appears in the application.]
(a) Disclosure to Applicant Relating to Assignment, Sale, or
Transfer of Loan Servicing.--
(1) In general.--Each person who makes a federally
related mortgage loan shall disclose to each person who
applies for any such loan, at the time of application
for the loan, whether the servicing of any such loan
may be assigned, sold, or transferred to any other
person at any time while such loan is outstanding.
(2) Signature of applicant.--Any disclosure of the
information required under paragraph (1) shall not be
effective for purposes of this section unless the
disclosure is accompanied by a written statement, in
such form as the Secretary shall develop before the
expiration of the 180-day period beginning on the date
of the enactment of the Financial Institutions
Regulatory Relief Act of 1995, that the applicant has
read and understood the disclosure and that is
evidenced by the signature of the applicant at the
place where such statement appears in the application.
* * * * * * *
(j) Transition.--
(1) * * *
* * * * * * *
(3) Regulations and effective date.--The [Secretary]
Board shall, by regulations that shall take effect not
later than April 20, 1991, establish any requirements
necessary to carry out this section. Such regulations
shall include the model disclosure statement required
under subsection (a)(2).
SEC. 7. EXEMPTED TRANSACTIONS.
(a) In General.--This Act does not apply to credit
transactions involving extensions of credit--
(1) primarily for business, commercial, or
agricultural purposes; or
(2) to government or governmental agencies or
instrumentalities.
(b) Interpretation.--In issuing regulations pursuant to
section 19(a) of this Act, the Board shall ensure that, with
regard to subsection (a), the exemption for business credit
includes all business credit which is exempt from the Truth in
Lending Act in accordance with section 226.3(a) of the
regulations prescribed by the Board known as ``regulation Z''
(12 C.F.R. 226.3(a)), as in effect on the date of enactment of
the Financial Institutions Regulatory Relief Act of 1995.
prohibition against kickbacks and unearned fees
Sec. 8. (a) * * *
* * * * * * *
(c) Nothing in this section shall be construed as
prohibiting (1) the payment of a fee (A) to attorneys at law
for services actually rendered or (B) by a title company to its
duly appointed agent for services actually performed in the
issuance of a policy of title insurance or (C) by a lender to
its duly appointed agent for services actually performed in the
making of a loan, (2) the payment to any person of a bona fide
salary or compensation or other payment for goods or facilities
actually furnished or for services actually performed, (3)
payments pursuant to cooperative brokerage and referral
arrangements or agreements between real estate agents and
brokers, (4) [controlled business arrangements] affiliated
business arrangements so long as (A) at or prior to the time of
the referral a disclosure is made of the existence of such an
arrangement to the person being referred and, in connection
with the referral, such person is provided a written estimate
of the charge or range of charges generally made by the
provider to which the person is referred, except that where a
lender makes the referral, this requirement may be satisfied as
part of and at the time that the estimates of settlement
charges required under section 5(c) are provided, (B) such
person is not required to use any particular provider of
settlement services, and (C) the only thing of value that is
received from the arrangement, other than the payments
permitted under this subsection, is a return on the ownership
interest or franchise relationship, or (5) such other payments
or classes of payments or other transfers as are specified in
regulations prescribed by the Secretary, after consultation
with the Attorney General, the Secretary of Veterans Affairs,
the Federal Home Loan Bank Board, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve
System, and the Secretary of Agriculture. For purposes of the
preceding sentence, the following shall not be considered a
violation of clause (4)(B): (i) any arrangement that requires a
buyer, borrower, or seller to pay for the services of an
attorney, credit reporting agency, or real estate appraiser
chosen by the lender to represent the lender's interest in a
real estate transaction, or (ii) any arrangement where an
attorney or law firm represents a client in a real estate
transaction issues or arranges for the issuance of a policy of
title insurance in the transaction directly as agent or through
a separate corporate title insurance agency that may be
established by that attorney or law firm and operated as an
adjunct to his or its law practice.
(d)(1) Any person or persons who willfully violate the
provisions of this section shall be fined not more than $10,000
or imprisoned for not more than one year, or both.
* * * * * * *
(3) No person or persons shall be liable for a violation of
the provisions of section (8)(c)(4)(A) if such person or
persons proves by a preponderance of the evidence that such
violation [was not intentional and] resulted from a bona fide
error notwithstanding maintenance of procedures that are
reasonably adapted to avoid such error.
(4) The Secretary, any other agency described in subsection
(f)(1), the Attorney General of any State, or the insurance
commissioner of any State may bring an action to enjoin
violations of this section.
* * * * * * *
(6) No provision of State law or regulation that imposes
more stringent limitations on [controlled business
arrangements] affiliated business arrangements shall be
construed as being inconsistent with this section.
* * * * * * *
(e) Negotiated Regulations.--
(1) In general.--The Secretary may not publish a
proposed or final regulation under this section and
section 9 after the date of the enactment of the
Financial Institutions Regulatory Relief Act of 1995
unless the Secretary has used the negotiated rulemaking
procedure established under subchapter III of chapter 5
of title 5, United States Code, to attempt to negotiate
and develop the rule.
(2) Consistency with purpose.--Any regulation
prescribed in accordance with paragraph (1) shall be
consistent with the purposes of this title as set forth
in section 2.
(f) Administrative Enforcement.--
(1) In general.--Compliance with the requirements of
this section and sections 9 and 12 shall be enforced
under this Act--
(A) in the case of an insured depository
institution (as defined in section 3 of the
Federal Deposit Insurance Act), by the
appropriate Federal banking agency (as defined
in such section);
(B) in the case of an insured credit union
(as defined in section 101(7) of the Federal
Credit Union Act), by the National Credit Union
Administration;
(C) in the case of a bank holding company (as
defined in section 2 of the Bank Holding
Company Act of 1956) and any affiliate of any
such holding company (other than an insured
depository institution), by the Board;
(D) in the case of a savings and loan holding
company (as defined in section 10 of the Home
Owners' Loan Act) and any affiliate of any such
holding company (other than an insured
depository institution), by the Director of the
Office of Thrift Supervision; and
(E) in the case of any other person, by the
Secretary.
(2) Special rules relating to determination of
appropriate regulator.--
(A) Cases of more than 1 appropriate
regulator.--If, under paragraph (1), a company
may be regulated by more than 1 agency, the
Board shall determine which agency shall be the
responsible agency, notwithstanding paragraph
(1).
(B) Cases involving joint ventures,
partnerships, and other affiliated business
arrangements.--If any insured depository
institution is involved in a joint venture,
partnership, or other affiliated business
arrangement with any person who is not an
insured depository institution, the agency
responsible for enforcing this section and
sections 9 and 12 with respect to such insured
depository institution shall be the agency with
such responsibility with respect to such joint
venture, partnership, or other affiliated
business arrangement.
(3) Interagency cooperation and enforcement
guidelines.--All the agencies referred to in any
subparagraph of paragraph (1) shall cooperate with each
other to develop enforcement guidelines and other means
for achieving effective compliance with this section
and sections 9 and 12.
(4) Preference for civil enforcement over criminal
enforcement.--As part of the cooperative efforts
required under paragraph (3), the agencies referred to
in paragraph (1) shall consider means for achieving
compliance with this section and section 9 through the
exercise of administrative enforcement authority under
this subsection without resorting to criminal
enforcement actions under subsection (d) except in
appropriate cases.
(5) Effective date.--Paragraphs (1) and (2) shall not
take effect until joint interagency cooperation and
enforcement guidelines are adopted by all the agencies
to which paragraphs (1) and (2) apply and the
enforcement authority of the Secretary with respect to
this section and sections 9 and 12 shall continue until
such paragraphs take effect.
* * * * * * *
escrow accounts
Sec. 10. (a) * * *
* * * * * * *
(c) Escrow Account Statements.--
(1) Initial statement.--
(A) * * *
* * * * * * *
(C) Initial statement at closing.--Any
servicer may submit the statement required
under subparagraph (A) to the borrower at
closing and may incorporate such statement in
the uniform settlement statement required under
section 4. [Not later than the expiration of
the 90-day period beginning on the date of the
enactment of the Cranston-Gonzalez National
Affordable Housing Act, the] The Secretary
shall issue regulations prescribing any changes
necessary to the uniform settlement statement
under section 4 that specify how the statement
required under subparagraph (A) of this section
shall be incorporated in the uniform settlement
statement.
* * * * * * *
(d) Penalties.--
(1) In general.--In the case of each failure to
submit a statement to a borrower as required under
subsection (c), the [Secretary] Board shall assess to
the lender or escrow servicer failing to submit the
statement a civil penalty of $50 for each such failure,
but the total amount imposed on such lender or escrow
servicer for all such failures during any 12-month
period referred to in subsection (b) may not exceed
$100,000.
* * * * * * *
[establishment on demonstration basis of land parcel recordation system
[Sec. 13. The Secretary shall establish and place in
operation on a demonstration basis, in representative political
subdivisions (selected by him) in various areas of the United
States, a model system or systems for the recordation of land
title information in a manner and form calculated to facilitate
and simplify land transfers and mortgage transactions and
reduce the cost thereof, with a view to the possible
development (utilizing the information and experience gained
under this section) of a nationally uniform system of land
parcel recordation.
[report of the secretary on necessity for further congressional action
[Sec. 14. (a) The Secretary, after consultation with the
Administrator of Veterans' Affairs, the Federal Deposit
Insurance Corporation, and the Federal Home Loan Bank Board,
and after such study, investigation, and hearings (at which
representatives of consumers' groups shall be allowed to
testify) as he deems appropriate, shall, not less than three
years nor more than five years from the effective date of this
Act, report to the Congress on whether, in view of the
implementation of the provisions of this Act imposing certain
requirements and prohibiting certain practices in connection
with real estate settlements, there is any necessity for
further legislation in this area.
[(b) If the Secretary concludes that there is necessity for
futher legislation, he shall report to the Congress on the
specific practices or problems that should be the subject of
such legislation and the corrective measures that need to be
taken. In addition, the Secretary shall include in his report--
[(1) recommendations on the desirability of requiring
lenders of federally related mortgage loans to bear the
costs of particular real estate settlement services
that would otherwise be paid for by borrowers;
[(2) recommendations on whether Federal regulation of
the charges for real estate settlement services in
federally related mortgage transactions is necessary
and desirable, and, if he concludes that such
regulation is necessary and desirable, a description
and analysis of the regulatory scheme he believes
Congress should adopt; and
[(3) recommendations on the ways in which the Federal
Government can assist and encourage local governments
to modernize their methods for the recordation of land
title information, including the feasibility of
providing financial assistance or incentives to local
governments that seek to adopt one of the model systems
developed by the Secretary in accordance with the
provisons of section 13 of this Act.
[demonstration to determine feasibility of including state- ments of
settlement costs in special information booklets
[Sec. 15. The Secretary shall, on a demonstration basis in
selected housing market areas, have prepared and included in
the special information booklets required to be furnished under
section 5 of this Act, statements of the range of costs for
specific settlement services in such areas. Not later than June
30, 1976, the Secretary shall transmit to the Congress a full
report on the demonstration conducted under this section. Such
report shall contain the Secretary's assessment of the
feasibility of preparing and including settlement cost range
statements for all housing market areas in the special
information booklets for such areas.]
jurisdiction of courts
Sec. 16. Any action pursuant to the provisions of section 8
or 9 may be brought in the United States district court or in
any other court of competent jurisdiction, for the district in
which the property involved is located, or where the violation
is alleged to have occurred, within one year from the date of
the occurrence of the violation, except that actions brought by
the [Secretary,] Board, an agency referred to in any
subparagraph of section 8(f)(1), the Attorney General of any
State, or the insurance commissioner of any State may be
brought within 3 years from the date of the occurrence of the
violation.
* * * * * * *
relation to state laws
Sec. 18. This Act does not annul, alter, or affect, or
exempt any person subject to the provisions of this Act from
complying with, the laws of any State with respect to
settlement practices, except to the extent that those laws are
inconsistent with any provision of this Act, and then only to
the extent of the inconsistency. The [Secretary is authorized
to] Board and Secretary may jointly determine whether such
inconsistencies exist. The Board and Secretary may not
determine that any State law is inconsistent with any provision
of this Act if the Board and Secretary [determines] determine
that such laws gives greater protection to the consumer. In
making these determinations the Board and Secretary shall
consult with the appropriate Federal agencies.
[authority of the secretary]
authority of the secretary and the federal reserve board
Sec. 19. [(a) The Secretary is authorized to prescribe such
rules and regulations, to make such interpretations, and to
grant such reasonable exemptions for classes of transactions,
as may be necessary to achieve the purposes of this Act.] (a)
Regulations.--
(1) In general.--Subject to paragraph (2), the
Secretary and the Board may prescribe such regulations,
make such interpretations, and grant such reasonable
exemptions for classes of transactions, as may be
necessary to achieve the purposes of this Act.
(2) Application.--
(A) Board.--The authority of the Board under
paragraph (1) shall apply with respect to--
(i) sections 4, 5, 6, 10, and 12; and
(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable
with respect to the sections described
in clause (i).
(B) Secretary.--The authority of the
Secretary under paragraph (1) shall apply with
respect to--
(i) sections 8 and 9; and
(ii) sections 3, 7, 17, and 18 to the
extent such sections are applicable
with respect to the sections described
in clause (i).
(b) No provision of this Act or the laws of any State
imposing any liability shall apply to any act done or omitted
in good faith in conformity with any rule, regulation, or
interpretation thereof by the Secretary, the Board, or the
Attorney General, notwithstanding that after such act or
omission has occurred, such rule, regulation, or interpretation
is amended, rescinded, or determined by judicial or other
authority to be invalid for any reason.
(c)(1) The [Secretary] Board, with respect to any action to
enforce section 4, 5, 6, or 10, and each agency referred to in
any subparagraph of section 8(f)(1), with respect to any action
to enforce section 8, 9, or 12, may investigate any facts,
conditions, practices, or matters that may be deemed necessary
or proper to aid in the enforcement of the provisions of this
Act, in prescribing of rules and regulations thereunder, or in
securing information to serve as a basis for recommending
further legislation concerning real estate settlement
practices. To aid in the investigations, the [Secretary] Board
or such other agency is authorized to hold such hearings,
administer such oaths, and require by subpena the attendance
and testimony of such witnesses and production of such
documents as the [Secretary] Board or such other agency deems
advisable.
(2) Any district court of the United States within the
jurisdiction of which an inquiry is carried on may, in the case
of contumacy or refusal to obey a subpena of the [Secretary]
Board or an agency referred to in any subparagraph of section
8(f)(1) issued under this section, issue an order requiring
compliance therewith; and any failure to obey such order of the
court may be punished by such court as a contempt thereof.
* * * * * * *
----------
TRUTH IN LENDING ACT
TITLE I--CONSUMER CREDIT COST
* * * * * * *
CHAPTER 1--GENERAL PROVISIONS
* * * * * * *
Sec. 101. Short title
This title may be cited as the Truth in Lending Act.
* * * * * * *
Sec. 103. Definitions and rules of construction
(a) * * *
* * * * * * *
(aa)(1) A mortgage referred to in this subsection means a
consumer credit transaction that is secured by a subordinate
mortgage on the consumer's principal dwelling, other than [a
residential mortgage transaction], a reverse mortgage
transaction, or a transaction under an open end credit plan,
if--
(A) * * *
* * * * * * *
Sec. 104. Exempted transactions
This title does not apply to the following:
(1) * * *
* * * * * * *
(7) Transactions for which the Board, by regulation,
determines that coverage under the Act is not needed to
carry out the purposes of the Act.
Sec. 105. Regulations
(a) * * *
(b) Exemptive Authority.--
(1) In general.--The Board shall exempt from all or
parts of this title any class of transactions for
which, in the Board's judgment, coverage under all or
part of this title does not provide a measurable
benefit to consumers in the form of useful information
or protection.
(2) Factors to be considered.--In determining which
classes of transactions to exempt in whole or in part,
the Board shall consider, among other factors, the
following:
(A) The amount of the loan or closing costs
and whether the disclosures, right of
rescission, and other provisions are necessary,
particularly for small loans.
(B) Whether the requirements of this title
complicate, hinder, or make more expensive the
credit process for the class of transactions.
(C) The status of the borrower, including,
the borrowers' related financial arrangements,
the financial sophistication of the borrower
relative to the type of transaction, and the
importance of the credit and related supporting
property to the borrower.
[(b)] (c) The Board shall publish model disclosure forms and
clauses for common transactions to facilitate compliance with
the disclosure requirements of this title and to aid the
borrower or lessee in understanding the transaction by
utilizing readily understandable language to simplify the
technical nature of the disclosures. In devising such forms,
the Board shall consider the use by creditors or lessors of
data processing or similar automated equipment. Nothing in this
title may be construed to require a creditor or lessor to use
any such model form or clause prescribed by the Board under
this section. A creditor or lessor shall be deemed to be in
compliance with the disclosure provisions of this title with
respect to other than numerical disclosures if the creditor or
lessor (1) uses any appropriate model form or clause as
published by the Board, or (2) uses any such model form or
clause and changes it by (A) deleting any information which is
not required by this title, or (B) rearranging the format, if
in making such deletion or rearranging the format, the creditor
or lessor does not affect the substance, clarity, or meaningful
sequence of the disclosure.
[(c)] (d) Model disclosure forms and clauses shall be adopted
by the Board after notice duly given in the Federal Register
and an opportunity for public comment in accordance with
section 553 of title 5, United States Code.
[(d)] (e) Any regulation of the Board, or any amendment or
interpretation thereof, requiring any disclosure which differs
from the disclosures previously required by this chapter,
chapter 4, or chapter 5, or by any regulation of the Board
promulgated thereunder shall have an effective date of that
October 1 which follows by at least six months the date of
promulgation, except that the Board may at its discretion take
interim action by regulation, amendment, or interpretation to
lengthen the period of time permitted for creditors or lessors
to adjust their forms to accommodate new requirements or
shorten the length of time for creditors or lessors to make
such adjustments when it makes a specific finding that such
action is necessary to comply with the findings of a court or
to prevent unfair or deceptive disclosure practices.
Notwithstanding the previous sentence, any creditor or lessor
may comply with any such newly promulgated disclosure
requirements prior to the effective date of the requirements.
Sec. 106. Determination of finance charge
(a) Except as otherwise provided in this section, the amount
of the finance charge in connection with any consumer credit
transaction shall be determined as the sum of all charges,
payable directly or indirectly by the person to whom the credit
is extended, and imposed directly or indirectly by the creditor
as an incident to the extension of credit. The finance charge
does not include charges of a type payable in a comparable cash
transaction. The finance charge shall not include fees and
amounts imposed by third party closing agents (including
settlement agents, attorneys, and escrow and title companies)
if the creditor does not expressly require the imposition of
the charges or the services provided and does not retain the
charges. Examples of charges which are included in the finance
charge include any of the following types of charges which are
applicable.
(1) Interest, time price differential, and any amount
payable under a point, discount, or other system of
additional charges.
(2) Service or carrying charge.
(3) Loan fee, finder's fee, or similar charge.
(4) Fee for an investigation or credit report.
(5) Premium or other charge for any guarantee or
insurance protecting the creditor against the obligor's
default or other credit loss.
(6) Mortgage broker fees.
* * * * * * *
[(c) Charges or premiums for insurance, written in connection
with any consumer credit transaction, against loss of or damage
to property or against liability arising out of the ownership
or use of property, shall be included in the finance charge
unless a clear and specific statement in writing is furnished
by the creditor to the person to whom the credit is extended,
setting forth the cost of the insurance if obtained from or
through the creditor, and stating that the person to whom the
credit is extended may choose the person through which the
insurance is to be obtained.]
(c) Treatment of Certain Debt Cancellation and Deficiency
Waiver Contracts.--Charges or premiums for any insurance or for
any voluntary noninsurance product, written in connection with
any consumer credit transaction, that provides protections
against loss of or damage to property or against part or all of
the debtor's liability for amounts in excess of the value of
the collateral securing the debtor's obligation, or against
liability arising out of the ownership or use of property,
shall be included in the finance charge unless a clear and
specific statement in writing is furnished by the creditor to
the person to whom the credit is extended, setting forth the
cost of the insurance or product if obtained from or through
the creditor, and stating that the person to whom credit is
extended may choose the person through which the insurance or
product is to be obtained.
(d) If any of the following items is itemized and disclosed
in accordance with the regulations of the Board in connection
with any transaction, then the creditor need not include that
item in the computation of the finance charge with respect to
that transaction:
(1) * * *
* * * * * * *
(3) Any tax levied on security instruments or on
documents evidencing indebtedness if the payment of
such taxes is a precondition for recording the
instrument securing the evidence of indebtedness.
(e) The following items, when charged in connection with any
extension of credit secured by an interest in real property,
shall not be included in the computation of the finance charge
with respect to that transaction:
(1) * * *
[(2) Fees for preparation of a deed, settlement
statement, or other documents.]
(2) Fees for preparation of loan-related documents
and for attending or conducting settlement.
(3) Escrows for future payments of taxes and
insurance.
(4) Fees for notarizing deeds and other documents.
(5) Appraisal fees, including fees related to pest
infestations, premises and structural inspections, and
flood hazards.
(6) Credit reports.
(f) Tolerances for Accuracy.--In connection with credit
transactions not under an open end credit plan that are secured
by real property or a dwelling, the disclosure of the finance
charge and other disclosures affected by any finance charge--
(1) except as provided in paragraph (2), shall be
treated as being accurate for purposes of this title if
the amount disclosed as the finance charge--
(A) does not vary from the actual finance
charge by more than an amount equal to \1/2\ of
the numerical tolerance corresponding to, and
generated by, the tolerance provided by section
107(c) with respect to the annual percentage
rate, but in no case may the tolerance under
this paragraph be less than $25 or greater than
$200; or
(B) is greater than the amount required to be
disclosed under this title; and
(2) shall be treated as being accurate for purposes
of section 125 if the amount disclosed as the finance
charge does not vary from the actual finance charge by
more than an amount equal to 0.5 percent of the total
amount of credit extended.
* * * * * * *
Sec. 108. Administrative enforcement
(a) * * *
* * * * * * *
(e)(1) * * *
* * * * * * *
(3) Notwithstanding paragraph (2), no adjustment shall be
ordered (A) if it would have a significantly adverse impact
upon the safety or soundness of the creditor, but [in any such
case, the agency may require] in any such case, the agency may
(i) require a partial adjustment in an amount which does not
have such an impact[, except that with respect to any
transaction consummated after the effective date of section 608
of the Truth in Lending Simplification and Reform Act, the
agency shall]; or (ii) require the full adjustment, but permit
the creditor to make the required adjustment in partial
payments over an extended period of time which the agency
considers to be [reasonable,] reasonable if, in the case of an
agency referred to in paragraph (1), (2), or (3) of subsection
(a), the agency determines that a partial adjustment or the
making of partial payments over an extended period is necessary
to avoid causing the creditor to become undercapitalized (as
determined in accordance with regulations prescribed by such
agency under section 38 of the Federal Deposit Insurance Act);
(B) if the amount of the adjustment would be less than $1,
except that if more than one year has elapsed since the date of
the violation, the agency may require that such amount be paid
into the Treasury of the United States, or (C) except where
such disclosure error resulted from a willful violation which
was intended to mislead the person to whom credit was extended,
in the case of an open-end credit plan, more than two years
after the violation, or in the case of any other extension of
credit, as follows:
(i) * * *
* * * * * * *
CHAPTER 2--CREDIT TRANSACTIONS
Sec.
121. General requirement of disclosure.
122. Form of disclosure; additional information.
* * * * * * *
139. Certain limitations on liability.
Sec. 121. General requirement of disclosure
(a) * * *
* * * * * * *
(c) The Board may provide by regulation that any portion of
the information required to be disclosed by this title may be
given in the form of estimates where the provider of such
information is not in a position to know exact information. In
the case of any consumer credit transaction a portion of the
interest on which is determined on a per diem basis and is to
be collected upon the consummation of such transaction, any
disclosure with respect to such portion of interest shall be
deemed to be accurate for purposes of this title if the
disclosure is based on information actually known to the
creditor at the time that the disclosure documents are being
prepared for the consummation of the transaction.
* * * * * * *
Sec. 125. Right of rescission as to certain transactions
(a) * * *
(b) When an obligor exercises his right to rescind under
subsection (a), he is not liable for any finance or other
charge, except any charge for an appraisal report or credit
report, and any security interest given by the obligor,
including any such interest arising by operation of law,
becomes void upon such a rescission. Within 20 days after
receipt of a notice of rescission, the creditor shall return to
the obligor any money or property given as earnest money,
downpayment, or [otherwise] as otherwise required under this
subsection, and shall take any action necessary or appropriate
to reflect the termination of any security interest created
under the transaction. If the creditor has delivered any
property to the obligor, the obligor may retain possession of
it. Upon the performance of the creditor's obligations under
this section, the obligor shall tender the property to the
creditor, except that if return of the property in kind would
be impracticable or inequitable, the obligor shall tender its
reasonable value. Tender shall be made at the location of the
property or at the residence of the obligor, at the option of
the obligor. If the creditor does not take possession of the
property within 20 days after tender by the obligor, ownership
of the property vests in the obligor without obligation on his
part to pay for it. The procedures prescribed by this
subsection shall apply except when otherwise ordered by a
court.
* * * * * * *
(e) This section does not apply to--
(1) a residential mortgage transaction as defined in
section 103(w);
(2) a transaction which constitutes a refinancing or
consolidation (with no new advances), other than a
transaction described in subsection (e)(5), of the
principal balance then due and any accrued and unpaid
finance charges of an existing extension of credit by
the same creditor secured by an interest in the same
property;
(3) a transaction in which an agency of a State is
the creditor; [or]
(4) advances under a preexisting open end credit plan
if a security interest has already been retained or
acquired and such advances are in accordance with a
previously established credit limit for such plan[.];
or
(5) a transaction, other than a mortgage referred to
in section 103(aa), which--
(A) is a refinancing of the principal balance
then due and any accrued and unpaid finance
charges of a residential mortgage transaction
as defined in section 103(w), or is any
subsequent refinancing of such a transaction;
and
(B) does not provide any new consolidation or
new advance.
* * * * * * *
(h) Limitation on Rescission.--An obligor shall have no
rescission rights arising from the form of written notice used
by the creditor to inform the obligor of the rights of the
obligor under this section, if the creditor provided the
obligor the appropriate form of written notice published and
adopted by the Board, or a comparable written notice of the
rights of the obligor, that was properly completed by the
creditor.
(i) Rescission Rights in Foreclosure.--
(1) In general.--Notwithstanding section 139, and
subject to the time period provided in subsection (f),
in addition to any other right of rescission available
under this section for a transaction, upon an action of
a creditor to execute foreclosure on the primary
dwelling of an obligor securing an extension of credit,
the obligor shall have a right to rescind the
transaction equivalent to other rescission rights
provided by this section, if--
(A) a mortgage brokers fee is not included in
the finance charge in accordance with the laws
and regulations in effect at the time the
consumer credit transaction was consummated; or
(B) the form of notice of rescission for the
transaction is not the appropriate form of
written notice published and adopted by the
Board or a comparable written notice, or was
not properly completed by the creditor.
(2) Tolerance for disclosures.--Notwithstanding
section 106(f), and subject to the time period provided
in subsection (f), for the purposes of exercising any
rescission rights following an action by a creditor to
foreclose on the principal dwelling of the obligor
securing an extension of credit, the disclosure of the
finance charge and other disclosures affected by any
finance charge shall be treated as being accurate for
purposes of this section if the amount disclosed as the
finance charge does not vary from the actual finance
charge by more than $35 or is greater than the amount
required to be disclosed under this title.
* * * * * * *
SEC. 127A. DISCLOSURE REQUIREMENTS FOR OPEN END CONSUMER CREDIT PLANS
SECURED BY THE CONSUMER'S PRINCIPAL DWELLING.
(a) Application Disclosures.--In the case of any open end
consumer credit plan which provides for any extension of credit
which is secured by the consumer's principal dwelling, the
creditor shall make the following disclosures in accordance
with subsection (b):
(1) Fixed annual percentage rate.--Each annual
percentage rate imposed in connection with extensions
of credit under the plan and a statement that such rate
does not include costs other than interest.
(2) Variable percentage rate.--In the case of a plan
which provides for variable rates of interest on credit
extended under the plan--
(A) * * *
* * * * * * *
(G) subject to subsection (b)(3), a table,
based on a $10,000 extension of credit, showing
how the annual percentage rate and the minimum
periodic payment amount under each repayment
option of the plan would have been affected
during the preceding 15-year period by changes
in any index used to compute such rate, or a
statement that the monthly payment may increase
or decrease significantly due to increases in
the annual percentage rate;
* * * * * * *
(b) Time and Form of Disclosures.--
(1) * * *
* * * * * * *
(3) Requirement for historical table.--In preparing
the table [required under] referred to in subsection
(a)(2)(G), the creditor shall consistently select one
rate of interest for each year and the manner of
selecting the rate from year to year shall be
consistent with the plan.
* * * * * * *
Sec. 128. Consumer credit not under open end credit plans
(a) For each consumer credit transaction other than under an
open end credit plan, the creditor shall disclose each of the
following items, to the extent applicable:
(1) * * *
* * * * * * *
(14) In any variable rate transaction secured by the
consumer's principal dwelling with a term greater than
1 year, at the creditors' option, a statement that the
monthly payment may increase or decrease substantially,
or a historical example illustrating the effects of
interest rate changes implemented according to the loan
program.
(b)(1) * * *
* * * * * * *
(3) In the case of a residential mortgage transaction, the
disclosures under subsection (a) shall include the following:
(A) The note rate and points, and a statement, if
applicable, that these terms are subject to change.
(B) A statement that the creditor must include the
disclosed note rate and points in the credit agreement
unless, in relation to either or both of those terms--
(i) the disclosure clearly and conspicuously
indicates that the term is subject to change,
or
(ii) in the case of any term to which clause
(i) does not apply--
(I) the creditor has clearly and
conspicuously indicated that the term
is conditioned on closing the
transaction within a prescribed time;
(II) the creditor has promptly and
clearly communicated to the consumer
the information and documentation that
the consumer is required to provide to
the creditor; and
(III) the consumer has failed to
provide such information and
documentation within a reasonable time
after receiving that communication.
* * * * * * *
Sec. 130. Civil liability
(a) Except as otherwise provided in this section, any
creditor who fails to comply with any requirement imposed under
this chapter, including any requirement under section 125, or
chapter 4 or 5 of this title with respect to any person is
liable to such person in an amount equal to the sum of--
(1) any actual damage sustained by such person as a
result of the failure;
(2)(A)(i) in the case of an individual action twice
the amount of any finance charge in connection with the
transaction, [or] (ii) in the case of an individual
action relating to a consumer lease under chapter 5 of
this title, 25 per centum of the total amount of
monthly payments under the lease, except that the
liability under this subparagraph shall not be less
than $100 nor greater than $1,000, or (iii) in the case
of an individual action relating to a credit
transaction not under an open end credit plan that is
secured by real property or a dwelling, not less than
$250 or greater than $2,500; or
* * * * * * *
Sec. 131. Liability of assignees
(a) * * *
* * * * * * *
(e) Liability of Assignee for Consumer Credit Transactions
Secured by Real Property.--
(1) In general.--Except as otherwise specifically
provided in this title, any civil action against a
creditor for a violation of this title, and any
proceeding under section 108 against a creditor, with
respect to a consumer credit transaction secured by
real property may be maintained against any assignee of
such creditor only if--
(A) the violation for which such action or
proceeding is brought is apparent on the face
of the disclosure statement provided in
connection with such transaction pursuant to
this title; and
(B) the assignment to the assignee was
voluntary.
(2) Violation apparent on the face of the disclosure
described.--For the purpose of this section, a
violation is apparent on the face of the disclosure
statement if--
(A) the disclosure can be determined to be
incomplete or inaccurate from the face of the
disclosure statement, any itemization of the
amount financed, or any other disclosure of
disbursement; or
(B) the disclosure statement does not use the
terms or format required to be used by this
title.
(f) Treatment of Servicer.--
(1) In general.--A servicer of a consumer obligation
arising from a consumer credit transaction shall not be
treated as an assignee of such obligation for purposes
of this section unless the servicer is the owner of the
obligation.
(2) Servicer not treated as owner on basis of
assignment for administrative convenience.--A servicer
of a consumer obligation arising from a consumer credit
transaction shall not be treated as the owner of the
obligation for purposes of this section on the basis of
an assignment of the obligation from the creditor or
another assignee to the servicer solely for the
administrative convenience of the servicer in servicing
the obligation. Upon written request by the obligor,
the servicer shall provide the obligor, to the best
knowledge of the servicer, with the name, address, and
telephone number of the owner of the obligation or the
master servicer of the obligation.
(3) Servicer defined.--For purposes of this
subsection, the term ``servicer'' has the same meaning
as in section 6(i)(2) of the Real Estate Settlement
Procedures Act of 1974.
* * * * * * *
SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.
(a) Limitations on Liability.--For any consumer credit
transaction subject to this title that is consummated before
the date of the enactment of the Financial Institutions
Regulatory Relief Act of 1995, a creditor or any assignee of a
creditor shall have no civil, administrative, or criminal
liability under this title for, and a consumer shall have no
extended rescission rights under section 125(f) with respect
to--
(1) the creditor's treatment, for disclosure
purposes, of--
(A) taxes described in section 106(d)(3);
(B) fees and amounts described in section
106(e) (2) and (5);
(C) fees and amounts referred to in the 3rd
sentence of section 106(a); or
(D) mortgage broker fees referred to in
section 106(a)(6);
(2) the form of written notice used by the creditor
to inform the obligor of the rights of the obligor
under section 125 if the creditor provided the obligor
with a properly dated form of written notice published
and adopted by the Board or a comparable written
notice; or
(3) any disclosure relating to the finance charge
imposed with respect to the transaction if the amount
or percentage actually disclosed--
(A) may be treated as accurate pursuant to
section 106(f), or
(B) is greater than the amount or percentage
required to be disclosed under this title.
(b) Exceptions.--Subsection (a) shall not apply to--
(1) any individual action or counterclaim brought
under this title which was filed before June 1, 1995;
(2) any class action brought under this title for
which a final order certifying a class was entered
before January 1, 1995;
(3) the named individual plaintiffs in any class
action brought under this title which was filed before
June 1, 1995; or
(4) any consumer credit transaction with respect to
which a timely notice of rescission was sent to the
creditor before June 1, 1995.
----------
SECTION 106 OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1968
technical assistance, counseling to tenants and homeowners, and loans
to sponsors of low- and moderate-income housing
Sec. 106. (a) * * *
* * * * * * *
(c) Grants for Homeownership Counseling Organizations.--
(1) * * *
* * * * * * *
[(5) Notification of availability of homeownership
counseling.--
[(A) Notification of availability of
homeownership counseling.--
[(i) Requirement.--Except as provided
in subparagraph (C), the creditor of a
loan (or proposed creditor) shall
provide notice under clause (ii) to (I)
any eligible homeowner who fails to pay
any amount by the date the amount is
due under a home loan, and (II) any
applicant for a mortgage described in
paragraph (4).
[(ii) Content.--Notification under
this subparagraph shall--
[(I) notify the homeowner or
mortgage applicant of the
availability of any
homeownership counseling
offered by the creditor (or
proposed creditor);
[(II) if provided to an
eligible mortgage applicant,
state that completion of a
counseling program is required
for insurance pursuant to
section 203 of the National
Housing Act; and
[(III) notify the homeowner
or mortgage applicant of the
availability of homeownership
counseling provided by
nonprofit organizations
approved by the Secretary and
experienced in the provision of
homeownership counseling, or
provide the toll-free telephone
number described in
subparagraph (D)(i).
[(B) Deadline for notification.--The
notification required in subparagraph (A) shall
be made--
[(i) in a manner approved by the
Secretary; and
[(ii) before the expiration of the
45-day period beginning on the date on
which the failure referred to in such
subparagraph occurs.
[(C) Exceptions.--Notification under
subparagraph (A) shall not be required with
respect to any loan--
[(i) insured or guaranteed under
chapter 37 of title 38, United States
Code; or
[(ii) for which the eligible
homeowner pays the amount overdue
before the expiration of the 45-day
period under subparagraph (B)(ii).
[(D) Administration and compliance.--The
Secretary shall, to the extent of amounts
approved in appropriation Acts, enter into an
agreement with an appropriate private entity
under which the entity will--
[(i) operate a toll-free telephone
number through which any eligible
homeowner can obtain a list of
nonprofit organizations, which shall be
updated annually, that--
[(I) are approved by the
Secretary and experienced in
the provision of homeownership
counseling; and
[(II) serve the area in which
the residential property of the
homeowner is located;
[(ii) monitor the compliance of
creditors with the requirements of
subparagraphs (A) and (B); and
[(iii) report to the Secretary not
less than annually regarding the extent
of compliance of creditors with the
requirements of subparagraphs (A) and
(B).
[(E) Report.--The Secretary shall submit a
report to the Congress not less than annually
regarding the extent of compliance of creditors
with the requirements of subparagraphs (A) and
(B) and the effectiveness of the entity
monitoring such compliance. The Secretary shall
also include in the report any recommendations
for legislative action to increase the
authority of the Secretary to penalize
creditors who do not comply with such
requirements.]
* * * * * * *
HOME MORTGAGE DISCLOSURE ACT OF 1975
TITLE III--HOME MORTGAGE DISCLOSURE
short title
Sec. 301. This title may be cited as the ``Home Mortgage
Disclosure Act of 1975''.
* * * * * * *
maintenance of records and public disclosure
Sec. 304. (a) * * *
* * * * * * *
(m) Opportunity To Reduce Compliance Burden.--
(1) A depository institution will have satisfied the
public availability requirements of subsection (a) if
such institution keeps the information required under
that subsection at its home office and provides notice
at the branch locations specified in such subsection
that such information is available upon request from
the home office of the institution. A home office of
the depository institution receiving a request for such
information pursuant to this subsection shall provide
the information pertinent to the location of the branch
in question within fifteen days of the receipt of the
written request.
(2) In complying with paragraph (1), a depository
institution may provide the individual requesting such
information, at the institution's choice, with--
(A) a paper copy of the information
requested; or
(B) if acceptable to the individual, the
information through a form of electronic
medium, such as computer disc.
* * * * * * *
effective date
Sec. 309. This title shall take effect on the one hundred
and eightieth day beginning after the date of its enactment.
Any institution specified in section 303(2)(A) which has total
assets as of its last full fiscal year of [$10,000,000]
$50,000,000 or less is exempt from the provisions of this
title. The Board, in consultation with the Secretary, may
exempt institutions described in section 303(2)(B) that are
comparable within their respective industries to institutions
that are exempt under the preceding sentence. The Board may
also, by regulation, exempt from the provisions of this Act
institutions specified in section 303(2)(A) which have total
assets as of their last full fiscal year of $50,000,000 or
greater where the burden of complying with this Act on such
institutions outweighs the usefulness of the information
required to be disclosed. The exemptions provided under this
section shall not be applicable to an institution which the
Board, by order, has found a reasonable basis to believe is not
fulfilling its obligations to serve the housing needs of the
communities and neighborhoods in which it located. An
institution subject to such an order shall be required to
comply with the requirements of this Act for loans made after
the time that the order is issued at such time and for such
period as the Board deems appropriate. The dollar amount in
this section shall be adjusted annually after December 31,
1994, by the annual percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers published by
the Bureau of Labor Statistics.
* * * * * * *
----------
COMMUNITY REINVESTMENT ACT OF 1977
TITLE VIII--COMMUNITY REINVESTMENT
Sec. 801. This title may be cited as the ``Community
Reinvestment Act of 1977''.
Sec. 802. (a) * * *
[(b) It is the purpose of this title to require each
appropriate Federal financial supervisory agency to use its
authority when examining financial institutions, to encourage
such institutions to help meet the credit needs of the local
communities in which they are chartered consistent with the
safe and sound operation of such institutions.]
(b) It is the purpose of this title to require each
appropriate Federal financial supervisory agency to use its
authority, when examining financial institutions, to encourage
such institutions to help meet the credit needs of the local
communities in which they are chartered consistent with the
safe and sound operation of such institutions. When examining
financial institutions, a supervisory agency shall not impose
additional burden, recordkeeping, or reporting upon such
institutions.
Sec. 803. For the purposes of this title--
(1) the term ``appropriate Federal financial
supervisory agency'' means--
(A) the Comptroller of the Currency with
respect to national banks;
* * * * * * *
[(2) section 8 of the Federal Deposit Insurance Act,
by the Director of the Office of Thrift Supervision, in
the case of a savings association (the deposits of
which are insured by the Federal Deposit Insurance
Corporation) and a savings and loan holding company;]
(D) the Director of the Office of Thrift
Supervision with respect to any savings
association (the deposits of which are insured
by the Federal Deposit Insurance Corporation)
and any savings and loan holding company (other
than a company which is a bank holding
company);
* * * * * * *
(5) Special purpose institutions.--The term ``special
purpose institution'' means a financial institution
that does not generally accept deposits from the public
in amounts of less than $100,000, such as wholesale,
credit card, and trust institutions.
(6) State bank supervisor.--The term ``State bank
supervisor'' has the same meaning as in section 3(r) of
the Federal Deposit Insurance Act.
Sec. 804. (a) In General.--In connection with its
examination of a financial institution, conducted in accordance
with section 806A, the appropriate Federal financial
supervisory agency shall--
(1) assess the institution's record of meeting the
credit needs of its entire community, including low-
and moderate-income neighborhoods, consistent with the
safe and sound operation of such institution; and
[(2) take such record into account in its evaluation
of an application for a deposit facility by such
institution.]
(2) take such record into account in the overall
evaluation of the condition of the institution by the
appropriate Federal financial supervisory agency.
[(b) Majority-Owned Institutions.--In assessing and taking
into account, under subsection (a), the record of a
nonminority-owned and nonwomen-owned financial institution, the
appropriate Federal financial supervisory agency may consider
as a factor capital investment, loan participation, and other
ventures undertaken by the institution in cooperation with
minority- and women-owned financial institutions and low-income
credit unions provided that these activities help meet the
credit needs of local communities in which such institutions
and credit unions are chartered.]
(b) Positive Consideration of Certain Loans and
Investments.--In assessing and taking into account the records
of a regulated financial institution under subsection (a), the
appropriate Federal financial supervisory agency shall--
(1) consider as a positive factor, consistent with
the safe and sound operation of the institution, the
institution's investment in or loan to--
(A) any minority depository institution or
women's depository institution (as such terms
are defined in section 808(b)) or any low-
income credit union;
(B) any joint venture or other entity or
project which promotes the public welfare in
any distressed community (as defined by such
agency) whether or not the distressed community
is located in the local community in which the
regulated financial institution is chartered to
do business; and
(C) targeted low- and moderate-income
communities, including real property loans to
such communities; and
(2) consider equally with other factors capital
investment, loan participation, and other ventures
undertaken by the institution in cooperation with--
(A) minority- and women-owned financial
institutions and low-income credit unions to
the extent that these activities help meet the
credit needs of the local communities in which
such institutions are chartered; and
(B) community development corporations in
extending credit and other financial services
principally to low- and moderate-income persons
and small businesses to the extent that such
community development corporations help meet
the credit needs of the local communities
served by the majority-owned institution.
(c) Self-Certification of CRA Compliance.--
(1) Certification.--In lieu of being evaluated under
section 806A and receiving a written evaluation under
section 807, a qualifying financial institution may
elect to self-certify to the appropriate Federal
financial supervisory agency that such institution is
in compliance with the goals of this title.
(2) Qualifying institution.--
(A) In general.--For purposes of paragraph
(1), the term ``qualifying institution'' means
a financial institution which--
(i) has not more than $250 million in
assets;
(ii) has not been found to have
engaged in a pattern or practice of
illegal discrimination under the Fair
Housing Act or the Equal Credit
Opportunity Act for the preceding 5-
year calendar period; and
(iii) received rating under section
807(b)(2) of ``satisfactory'' or
``outstanding'' in the most recent
evaluation of such institution under
this title.
(B) Annual adjustment.--The dollar amount in
subparagraph (A) shall be adjusted annually
after December 31, 1994, by the annual
percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers
published by the Bureau of Labor Statistics.
(3) Public notice.--
(A) In general.--A qualifying institution
shall maintain in every branch a public notice
stating that--
(i) the institution has self-
certified that the institution is
satisfactorily helping to meet the
credit needs of its community; and
(ii) the institution maintains--
(I) at the main office of
such institution, a public file
which contains a copy of the
self-certification to the
appropriate Federal financial
supervisory agency; and
(II) a map delineating the
community served by the
institution;
(iii) a list of the types of credit
and services that the institution
provides to the community served by the
institution;
(iv) such other information that the
institution believes demonstrates the
institution's record of helping to meet
the credit needs of its community; and
(v) every public comment or letter to
the institution (and any response by
the institution) received within the
previous 2-year period about the record
of the institution of helping to meet
the credit needs of its community.
(B) Public file.--A qualifying institution
shall maintain a public file containing the
contents described in this paragraph at the
institution's main office
(4) Rating.--
(A) In general.--A qualifying institution
shall be deemed to have a rating of a
``satisfactory record of meeting community
credit needs'' for the purposes of this section
and section 806A(c).
(B) Publication.--Each Federal financial
supervisory agency shall publish in the Federal
Register once each month a list of institutions
that have self-certified during the previous
month.
(C) Publication constitutes disclosure.--
Publication of the name of the institution in
the Federal Register as having self-certified
shall constitute disclosure of the rating of
the institution to the public for purposes of
sections 806A and 807.
(5) Regulatory review.--
(A) Assessment.--During each examination for
safety and soundness, a qualifying
institution's supervisory agency shall, as part
of the agency's review of the institution's
loans, assess whether the institution's basis
for its self-certification is reasonable based
on the public notice and the information
contained in the public file pursuant to
paragraph (3).
(B) Examination if self-certification is not
reasonable.--If the agency determines that the
institution's basis for the institution's self-
certification is not reasonable, the agency
shall schedule an examination of the
institution for the purpose of assessing the
institution's record of helping to meet the
credit needs of its community.
(C) Revocation of self-certification.--If an
assessment pursuant to subparagraph (B) results
in a less than ``satisfactory'' rating, the
agency shall revoke the institution's self-
certification and substitute a written
evaluation as provided under section 807.
(D) Period of ineligibility for self-
certification.--An institution whose self-
certification has been revoked may not self-
certify pursuant to this subsection during the
5 years succeeding the year in which the self-
certification is revoked.
(E) Subsequent eligibility.--After the end of
the period of ineligibility described in
subparagraph (D), an institution which meets
the requirements for self-certification may
elect to self-certify.
(6) Prohibition on additional requirements.--No
appropriate Federal financial supervisory agency may
impose any additional requirements, whether by
regulation or otherwise, relating to the self-
certification procedure under this subsection.
(d) Special Purpose Institutions.--
(1) In general.--In conducting assessments pursuant
to this section at any special purpose institution, the
appropriate Federal financial supervisory agency
shall--
(A) consider the nature of business such
institution is involved in; and
(B) assess and take into account the record
of the institution commensurate with the amount
of deposits (as defined in section 3(1) of the
Federal Deposit Insurance Act) received by such
institution.
(2) Standards.--Each appropriate Federal financial
supervisory agency shall develop standards under which
special purpose institutions may be deemed to have
complied with the requirements of this title which are
consistent with the specific nature of such businesses.
* * * * * * *
[Sec. 806. Regulations to carry out the purposes of this
title shall be published by each appropriate Federal financial
supervisory agency, and shall take effect no later than 390
days after the date of enactment of this title.]
SEC. 806. REGULATIONS.
(a) In General.--
(1) Publication requirement.--Regulations to carry
out the purposes of this title shall be published by
each appropriate Federal financial supervisory agency.
(2) Prohibition on additional recordkeeping.--
Regulations prescribed and policy statements,
commentary, examiner guidance, or other supervisory
material issued under this title shall not impose any
additional recordkeeping on a financial institution.
(3) Prohibition on loan data collection.--No loan
data may be required to be collected and reported by a
financial institution and no such data may be made
public by any Federal financial supervisory agency
under this title.
(b) Limitation on Regulations.--No regulation may be
prescribed under this title by any Federal agency which would--
(1) require any regulated financial institution to--
(A) make any loan or enter into any other
agreement on the basis of any discriminatory
criteria prohibited under any law of the United
States; or
(B) make any loan to, or enter into any other
agreement with, any uncreditworthy person that
would jeopardize the safety and soundness of
such institution; or
(2) prevent or hinder in any way a financial
institution's full responsibility to provide credit to
all segments of the community.
(c) Encourage Loans to Creditworthy Borrowers.--Regulations
prescribed under this title shall encourage regulated financial
institutions to make loans and extend credit to all
creditworthy persons, consistent with safety and soundness.
* * * * * * *
SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.
(a) Publication of Exam Schedule and Opportunity for
Comment.--
(1) Publication of notice.--Each appropriate Federal
financial supervisory agency shall
(A) publish in the Federal Register, 30 days
before the beginning of a calendar quarter, a
listing of institutions scheduled for
evaluation for compliance with this title
during such calendar quarter; and
(B) provide opportunity for written comments
from the community on the performance, under
this title, of each institution scheduled for
evaluation.
(2) Comment period.--Written comments may not be
submitted to an appropriate Federal financial
supervisory agency pursuant to paragraph (1) after the
end of the 30-day period beginning on the first day of
the calendar quarter.
(3) Copy of comments.--The agency shall provide a
copy of such comments to the institution.
(b) Evaluation.--The appropriate Federal financial
supervisory agency shall--
(1) evaluate the institution in accordance with the
standards contained in section 804; and
(2) prepare and publish a written evaluation of the
institution as required under section 807.
(c) Reconsideration of Rating.--
(1) Request for reconsideration.--A reconsideration
of an institution's rating referred to in section
807(b)(1)(C), may be requested within 30 days of the
rating's disclosure to the public.
(2) Procedures for request.--Any such request shall
be made in writing and filed with the appropriate
Federal financial supervisory agency, and may be filed
by the institution or a member of the community.
(3) Basis for request.--Any request for
reconsideration under this subsection shall be based on
significant issues of a substantive nature which are
relevant to the delineated community of the institution
and, in the case of a request by a member of the
community, shall be limited to issues previously raised
in comments submitted pursuant to subsection (a).
(4) Completion of review.--The appropriate Federal
financial supervisory agency shall complete any
requested reconsideration within 30 days of the filing
of the request.
(d) Conclusive Rating.--
(1) In general.--An institution's rating shall become
conclusive on the later of--
(A) 30 days after the rating is disclosed to
the public; or
(B) the completion of any requested
reconsideration by the Federal financial
supervisory agency.
(2) Rating conclusive of meeting community credit
needs.--An institution's rating shall be the conclusive
assessment of the institution's record of meeting the
credit needs of its community for purposes of section
804 until the institution's next rating, developed
pursuant to an examination, becomes conclusive.
(3) Safe harbor.--Institutions which have received a
``satisfactory'' or ``outstanding'' rating shall be
deemed to have met the purposes of section 804.
(4) Rule of construction.--Notwithstanding any other
provision of law, no provision of this section shall be
construed as granting a cause of action to any person.
SEC. 807. WRITTEN EVALUATIONS.
(a) * * *
(b) Public Section of Report.--
(1) Findings and conclusions.--
(A) * * *
(B) Metropolitan area distinctions.--[The
information] In the case of a regulated
financial institution that maintains domestic
branches in 2 or more States, the information
required by clauses (i) and (ii) of
subparagraph (A) shall be presented separately
for each metropolitan area in which a regulated
depository institution maintains one or more
domestic branch offices.
* * * * * * *
SEC. 809. EXAMINATION EXEMPTION.
(a) In General.--A regulated financial institution shall not
be subject to the examination requirements of this title or any
regulations issued under this section if the institution and
any bank holding company which controls such institution have
aggregate assets of not more than $100,000,000.
(b) Annual Adjustment.--The dollar amount in subsection (a)
shall be adjusted annually after December 31, 1994, by the
annual percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers published by the Bureau
of Labor Statistics.
----------
FEDERAL HOME LOAN BANK ACT
* * * * * * *
eligibility of members and nonmember borrowers
Sec. 4. (a) * * *
[(b) An institution eligible to become a member under this
section may become a member only of, or secure advances from,
the Federal Home Loan Bank of the district in which is located
the institution's principal place of business, or of the bank
of a district adjoining such district, if demanded by
convenience and then only with the approval of the Board.]
(b) Membership Based on Conveniency.--An institution eligible
to become a member of a Federal home loan bank under this
section may become a member by submitting the institution's
application for membership to the bank in the district where
the applicant's principal place of business is located. An
application for membership shall be approved by the bank if, in
the judgment of the bank, the applicant meets the criteria for
eligibility contained in this section. An institution eligible
to become a member under this section may apply for membership
in an adjoining district, if appropriate for the convenience of
the institution and then only with the approval of the Board.
* * * * * * *
advances to members
Sec. 10. (a) * * *
* * * * * * *
(g) Community Support Requirements.--
(1) * * *
* * * * * * *
(3) Special rule.--This subsection shall not apply to
members receiving a grade of ``outstanding'' or
``satisfactory'' under section 807 of the Community
Reinvestment Act of 1977.
* * * * * * *
general powers and duties of banks
Sec. 11. (a) * * *
* * * * * * *
[(j) Notwithstanding the provisions of the first sentence of
section 202 of the Government Corporation Control Act, audits
by the General Accounting Office of the financial transactions
of a Federal Home Loan Bank shall not be limited to periods
during which Government capital has been invested therein. The
provisions of the first sentence of subsection (d) of section
303 of the Government Corporation Control Act shall not apply
to any Federal Home Loan Bank.]
(j) Audits.--
(1) Notwithstanding any other provision of law,
audits by the Comptroller General of the United States
of the financial transactions of a Federal home loan
bank shall not be limited to periods during which
Government capital has been invested in the bank. The
provisions of section 9107(c)(2) and 9108(d)(1) of
title 31, of such Code, shall not apply to any Federal
home loan bank.
(2) Notwithstanding any other provision of law, the
Board shall not participate in the hiring of an
external auditor by the banks; except, that the Board
may establish requirements for external audit contracts
and, that all 12 banks shall contract for an annual
audit with a single provider.
* * * * * * *
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 3. As used in this Act--
(a) * * *
* * * * * * *
[(o) The term] (o) Definitions Relating to Branches.--
(1) Domestic Branch.--
(A) In general.--The term ``domestic branch''
includes any branch bank, branch office, branch
agency, additional office, or any branch place
of business located in any State of the United
States or in any Territory of the United
States, Puerto Rico, Guam, American Samoa, the
Trust Territory of the Pacific Islands, or the
Virgin Islands at which deposits are received
or checks paid or money [lent; and the term]
lent.
(B) Certain proprietary atms and remote
servicing units.--The term ``domestic branch''
does not include any automated teller machine
or remote service unit which is owned and
operated by a depository institution--
(i) primarily for the benefit of the
institution and the affiliates of the
institution; and
(ii) which could operate a branch at
the location of such machine or unit.
(2) Foreign branch.--The term ``foreign branch''
means any office or place of business located outside
the United States, its territories, Puerto Rico, Guam,
American Samoa, or the Virgin Islands, at which banking
operations are conducted.
* * * * * * *
(u) Institution-Affiliated Party.--The term ``institution-
affiliated party'' means--
(1) any director (other than an outside director),
officer, employee, or controlling stockholder (other
than a bank holding company) of, or agent for, an
insured depository institution;
* * * * * * *
(3) any shareholder (other than a bank holding
company), consultant, joint venture partner, and any
other person (other than an outside director) as
determined by the appropriate Federal banking agency
(by regulation or case-by-case) who participates in the
conduct of the affairs of an insured depository
institution; and
(4) any independent contractor (including any
attorney, appraiser, or accountant) or outside director
who knowingly or recklessly participates in--
(A) * * *
* * * * * * *
SEC. 5. DEPOSIT INSURANCE.
(a) * * *
* * * * * * *
(d) Insurance Fees.--
(1) * * *
* * * * * * *
(3) Optional conversions subject to special rules on
deposit insurance payments.--
(A) Conversions allowed.--Notwithstanding
paragraph (2)(A), and subject to the
requirements of this paragraph, any insured
depository institution may participate in a
transaction described in clause (ii), (iii), or
(iv) of paragraph (2)(B) [with the prior
written approval of the responsible agency
under section 18(c)(2)].
* * * * * * *
(E) Conditions [for approval, generally].--
[(i) Factors to be considered;
approval process.--In reviewing any
application for a proposed transaction
under subparagraph (A), the responsible
agency shall follow the procedures and
consider the factors set forth in
section 18(c).
[(ii) Information required.--An
application to engage in any
transaction under this paragraph shall
contain such information relating to
the factors to be considered for
approval as the responsible agency may
require, by regulation or by specific
request, in connection with any
particular application.
[(iii)] (i) No transfer of deposit
insurance permitted.--This paragraph
shall not be construed as authorizing
transactions which result in the
transfer of any insured depository
institution's Federal deposit insurance
from 1 Federal deposit insurance fund
to the other Federal deposit insurance
fund.
[(iv) Minimum capital.--The
responsible agency shall disapprove any
application for any transaction under
this paragraph unless such agency
determines that the acquiring,
assuming, or resulting depository
institution will meet all applicable
capital requirements upon consummation
of the transaction.]
(ii) A transaction shall not be
authorized under this paragraph unless
the acquiring, assuming, or resulting
depository institution will meet all
applicable capital requirements upon
consummation of the transaction.
* * * * * * *
[(G) Expedited approval of acquisitions.--
[(i) In general.--Any application by
a State nonmember insured bank to
acquire another insured depository
institution that is required to be
filed with the Corporation by
subparagraph (A) or any other
applicable law or regulation shall be
approved or disapproved in writing by
the Corporation before the end of the
60-day period beginning on the date
such application is filed with the
Corporation.
[(ii) Extensions of period.--The
period for approval or disapproval
referred to in clause (i) may be
extended for an additional 30-day
period if the Corporation determines
that--
[(I) an applicant has not
furnished all of the
information required to be
submitted; or
[(II) in the Corporation's
judgment, any material
information submitted is
substantially inaccurate or
incomplete.
[(H)] (G) Allocation of costs in event of
default.--If any acquiring, assuming, or
resulting depository institution is in default
or danger of default at any time before this
paragraph ceases to apply, any loss incurred by
the Corporation shall be allocated between the
Bank Insurance Fund and the Savings Association
Insurance Fund, in amounts reflecting the
amount of insured deposits of such acquiring,
assuming, or resulting depository institution
assessed by the Bank Insurance Fund and the
Savings Association Insurance Fund,
respectively, under subparagraph (B).
[(I)] (H) Subsequent approval of conversion
transaction.--This paragraph shall cease to
apply if--
(i) after the end of the moratorium
period established by paragraph (2)(A),
the Corporation approves an application
by any acquiring, assuming, or
resulting depository institution to
treat the transaction described in
subparagraph (A) as a conversion
transaction; and
(ii) the acquiring, assuming, or
resulting depository institution pays
the amount of any exit and entrance fee
assessed by the Corporation under
subparagraph (E) of paragraph (2) with
respect to such transaction.
[(J)] (I) Acquiring, assuming, or resulting
depository institution defined.--For purposes
of this paragraph, the term ``acquiring,
assuming, or resulting depository institution''
means any insured depository institution
which--
(i) results from any transaction
described in paragraph (2)(B)(ii) and
approved under this paragraph;
* * * * * * *
Sec. 7. (a) * * *
* * * * * * *
[(k) The appropriate Federal banking agencies are authorized
to issue rules and regulations, including definitions of terms,
to require the reporting and public disclosure of information
by a bank or any executive officer or prinicipal shareholder
thereof concerning extensions of credit by the bank to any of
its executive officers or principal shareholders, or the
related interests of such persons.]
* * * * * * *
Sec. 10. (a) * * *
* * * * * * *
(d) Annual On-Site Examinations of All Insured Depository
Institutions Required.--
(1) * * *
* * * * * * *
(8) Report.--At the time the system provided for in
paragraph (6) is established, the Federal banking
agencies shall submit a joint report describing the
system to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Banking,
Finance and Urban Affairs of the House of
Representatives. Thereafter, the Federal banking
agencies shall annually submit a joint report to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives regarding the
progress of the agencies in implementing the system and
indicating areas in which enhancements to the system,
including legislature improvements, would be
appropriate.
[(8)] (9) Agencies authorized to increase maximum
asset amount of institutions for certain purposes.--At
any time after the end of the 2-year period beginning
on the date of enactment of the Riegle Community
Development and Regulatory Improvement Act of 1994, the
appropriate Federal banking agency, in the agency's
discretion, may increase the maximum amount limitation
contained in paragraph (4)(C)(ii), by regulation, from
$100,000,000 to an amount not to exceed [$175,000,000]
$250,000,000 for purposes of such paragraph, if the
agency determines that the greater amount would be
consistent with the principles of safety and soundness
for insured depository institutions.
[(9)] (10) Standards for determining adequacy of
state examinations.--The Federal Financial Institutions
Examination Council shall issue guidelines establishing
standards to be used at the discretion of the
appropriate Federal banking agency for purposes of
making a determination under paragraph (3).
(11) Annual cpi adjustment.--The dollar amount in
this section shall be adjusted annually after December
31, 1994, by the annual percentage increase in the
Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor
Statistics.
* * * * * * *
(j) Consultation Among Examiners.--
(1) In general.--Each appropriate Federal banking
agency shall take such action as may be necessary to
ensure that examiners employed by the agency--
(A) consult on examination activities with
respect to any depository institution; and
(B) achieve an agreement and resolve any
inconsistencies on the recommendations to be
given to such institution as a consequence of
any examinations.
(2) Examiner-in-charge.--Each agency shall consider
appointing an examiner-in-charge with respect to a
depository institution to ensure consultation on
examination activities among all of the agency's
examiners involved in examinations of such institution.
* * * * * * *
Sec. 18. (a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(12) The provisions of this subsection shall not
apply to any merger, consolidation, acquisition of
assets or assumption of liabilities involving only
insured depository institutions that are subsidiaries
of the same depository institution holding company if--
(A) the responsible agency would not be
prohibited from approving the transaction under
section 44, if applicable;
(B) the acquiring, assuming, or resulting
institution complies with all applicable
provisions of section 44, if any, as if the
merger, consolidation, or acquisition were
approved under this subsection;
(C) the acquiring, assuming, or resulting
institution provides written notification of
the transaction to the appropriate Federal
banking agency for the institution at least 10
days prior to consummation of the transaction;
and
(D) after receiving such notice, the agency
does not require the institution to submit an
application with respect to such transaction
and so notifies the institution.
(d)(1) * * *
* * * * * * *
(5) Application exemption for certain banks.--
Notwithstanding paragraph (1), the consent of the
Corporation shall not be required for a State nonmember
insured bank to establish and operate any domestic
branch if--
(A) the bank is well-capitalized (as defined
in section 38 and regulations prescribed by the
Corporation under such section);
(B) the bank received a composite CAMEL
rating of ``1'' or ``2'' under the Uniform
Financial Institutions Rating System (or an
equivalent rating under a comparable rating
system) as of its most recent examination;
(C) the bank did not receive a ``needs to
improve'' or ``substantial noncompliance''
composite rating as result of the bank's most
recent examination under the Community
Reinvestment Act of 1977; and
(D) the Corporation is otherwise authorized
to give consent under this section to such bank
to establish and operate a domestic branch at
the proposed location.
(6) Approval granted.--A branch established by a
State member bank under paragraph (5) shall be deemed
to have been established and operated pursuant to an
application approved under this section.
* * * * * * *
(s) Customer Access to Products.--
(1) In general.--Notwithstanding any other provision
of law, any depository institution, or any affiliate or
subsidiary of any depository institution, may share or
exchange information or otherwise transfer information
between or among themselves without any restriction or
limitation if it is clearly and conspicuously disclosed
that the information may be communicated among such
persons and the consumer is given the opportunity,
before the time that the information is initially
communicated, to direct that such information not be
communicated among such persons.
(2) Definition.--For purposes of this subsection, the
term ``information'' means any and all data, records,
or other information and material obtained or
maintained by any depository institution or any
affiliate or subsidiary thereof in the ordinary course
of its business that relates in any way to a person (as
such term is defined in section 603(b) of the Fair
Credit Reporting Act) who applies for, maintains, or
has maintained an account or credit relationship with
or applied for, purchased or obtained other products or
services from any depository institution or any
affiliate or subsidiary of any depository institution,
regardless of the source of manner in which the
information is obtained or furnished.
(3) Rule of construction.--Any depository
institution, or any affiliate or subsidiary of any
depository institution, relying on this subsection
shall not be deemed to be a consumer reporting agency,
user, or third party, and the information itself shall
not constitute a consumer report, within the meaning of
the Fair Credit Reporting Act or other similar law.
* * * * * * *
SEC. 24. ACTIVITIES OF INSURED STATE BANKS.
[(a) In General.--After the end of the 1-year period
beginning on the date of the enactment of the Federal Deposit
Insurance Corporation Improvement Act of 1991, an insured State
bank may not engage as principal in any type of activity that
is not permissible for a national bank unless--
[(1) the Corporation has determined that the activity
would pose no significant risk to the appropriate
deposit insurance fund; and
[(2) the State bank is, and continues to be, in
compliance with applicable capital standards prescribed
by the appropriate Federal banking agency.]
(a) Activities Generally.--
(1) In general.--An insured State bank may not engage
as principal in any type of activity that is not
permissible for a national bank unless--
(A) the bank has given the Corporation
written notice of the bank's intention to
engage in such activity at least 60 days before
commencing to engage in the activity and within
such 60-day period (or within the extended
period provided under paragraph (2)) the
Corporation has not disapproved the activity;
and
(B) the State bank is, and continues to be,
in compliance with applicable capital standards
prescribed by the appropriate Federal banking
agency.
(2) Extension of period.--The Corporation may extend
the 60-day period referred to in paragraph (1) for
issuing a notice of disapproval with respect to any
activity for an additional 30 days.
(3) Contents of notice.--Any notice submitted by a
State bank under paragraph (1)(A) shall contain such
information as the Corporation may require.
(4) Basis for disapproval.--The Corporation may
disapprove an activity for a State bank under this
subsection unless the Corporation determines that the
activity would pose no significant risk to the
appropriate insurance fund.
* * * * * * *
(d) Subsidiaries of Insured State Banks.--
[(1) In general.--After the end of the 1-year period
beginning on the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991,
a subsidiary of an insured State bank may not engage as
principal in any type of activity that is not
permissible for a subsidiary of a national bank
unless--
[(A) the Corporation has determined that the
activity poses no significant risk to the
appropriate deposit insurance fund; and
[(B) the bank is, and continues to be, in
compliance with applicable capital standards
prescribed by the appropriate Federal banking
agency.]
(1) Activities generally.--
(A) In general.--A subsidiary of an insured
State bank may not engage as principal in any
type of activity that is not permissible for a
subsidiary of a national bank unless--
(i) the subsidiary has given the
Corporation written notice of the
subsidiary's intention to engage in
such activity at least 60 days before
commencing to engage in the activity
and within such 60-day period (or
within the extended period provided
under paragraph (2)) the Corporation
has not disapproved the activity; and
(ii) the bank is, and continues to
be, in compliance with applicable
capital standards prescribed by the
appropriate Federal banking agency.
(B) Extension of period.--The Corporation may
extend the 60-day period referred to in
subparagraph (A) for issuing a notice of
disapproval with respect to any activity for an
additional 30 days.
(C) Contents of notice.--Any notice submitted
by a subsidiary of an insured State bank under
subparagraph (A)(i) shall contain such
information as the Corporation may require.
(D) Basis for disapproval.--The Corporation
may disapprove an activity for a subsidiary of
an insured State bank under this paragraph
unless the Corporation determines that the
activity would pose no significant risk to the
appropriate insurance fund.
* * * * * * *
SEC. 32. AGENCY DISAPPROVAL OF DIRECTORS AND SENIOR EXECUTIVE OFFICERS
OF INSURED DEPOSITORY INSTITUTIONS OR DEPOSITORY
INSTITUTION HOLDING COMPANIES.
(a) * * *
* * * * * * *
[(d) Additional Information.--Any notice submitted to an
appropriate Federal banking agency with respect to an
individual by any insured depository institution or depository
institution holding company pursuant to subsection (a) shall
include--
[(1) the information described in section 7(j)(6)(A)
about the individual; and
[(2) such other information as the agency may
prescribe by regulation.]
(d) Additional Information.--
(1) In general.--Any notice submitted to an
appropriate Federal banking agency with respect to an
individual by any insured depository institution or
depository institution holding company pursuant to
subsection (a) shall include--
(A) the information described in section
7(j)(6)(A) about the individual; and
(B) such other information as the agency may
prescribe by regulation.
(2) Waiver.--An appropriate Federal banking agency
may waive the requirement of this section by regulation
or on a case-by-case basis consistent with safety and
soundness.
* * * * * * *
SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINANCIAL
MANAGEMENT.
(a) Annual Report on Financial Condition and Management.--
(1) * * *
(2) Contents of report.--Any annual report required
under paragraph (1) shall contain--
(A) the information required to be provided
by--
(i) the institution's management
under subsection (b); and
(ii) an independent public accountant
under [subsections (c) and (d)]
subsection (c); and
(3) Public availability.--Any annual report required
under paragraph (1) shall be available for public
inspection. Notwithstanding the preceding sentence, the
Corporation and the appropriate Federal banking
agencies may designate certain information as
privileged and confidential and not available to the
public.
* * * * * * *
[(c) Internal Control Evaluation and Reporting Requirements
for Independent Public Accountants.--
[(1) In general.--With respect to any internal
control report required by subsection (b)(2) of any
institution, the institution's independent public
accountant shall attest to, and report separately on,
the assertions of the institution's management
contained in such report.
[(2) Attestation requirements.--Any attestation
pursuant to paragraph (1) shall be made in accordance
with generally accepted standards for attestation
engagements.
[(d)] (c) Annual Independent Audits of Financial
Statements.--
(1) Audits required.--The Corporation, in
consultation with the appropriate Federal banking
agencies, shall prescribe regulations requiring that
each insured depository institution shall have an
annual independent audit made of the institution's
financial statements by an independent public
accountant in accordance with generally accepted
auditing standards and section 37.
* * * * * * *
[(e) Detecting and Reporting Violations of Laws and
Regulations.--
[(1) In general.--An independent public accountant
shall apply procedures agreed upon by the Corporation
to objectively determine the extent of the compliance
of any insured depository institution or depository
institution holding company with laws and regulations
designated by the Corporation, in consultation with the
appropriate Federal banking agencies.
[(2) Attestation requirements.--Any attestation
pursuant to paragraph (1) shall be made in accordance
with generally accepted standards for attestation
engagements.
[(f)] (d) Form and Content of Reports and Auditing
Standards.--
(1) In general.--The scope of each report by an
independent public accountant pursuant to this section,
and the procedures followed in preparing such report,
shall meet or exceed the scope and procedures required
by generally accepted auditing standards and other
applicable standards recognized by the Corporation.
* * * * * * *
[(g)] (e) Improved Accountability.--
(1) Independent audit committee.--
(A) Establishment.--Each insured depository
institution (to which this section applies)
shall have an independent audit committee
entirely made up of outside directors who are
independent of management of the institution,
and who satisfy any specific requirements the
Corporation may establish.
(B) Duties.--An independent audit committee's
duties shall include reviewing with management
and the independent public accountant the basis
for the reports issued under subsections
[(b)(2), (c), and (d)] (b)(2) and (c).
* * * * * * *
[(h)] (f) Exchange of Reports and Information.--
(1) Report to the independent auditor.--
(A) In general.--Each insured depository
institution which has engaged the services of
an independent auditor to audit such
institution shall transmit to the auditor a
copy of the most recent report of condition
made by the institution (pursuant to this Act
or any other provision of law) and a copy of
the most recent report of examination received
by the institution.
* * * * * * *
[(i)] (g) Requirements for Insured Subsidiaries of Holding
Companies.--
(1) In general.--Except with respect to any audit
requirements established under or pursuant to
subsection [(d)] (c), the requirements of this section
may be satisfied for insured depository institutions
that are subsidiaries of a holding company, if--
(A) * * *
* * * * * * *
[(j)] (h) Exemption for Small Depository Institutions.--This
section shall not apply with respect to any fiscal year of any
insured depository institution the total assets of which, as of
the beginning of such fiscal year, are less than the greater
of--
(1) * * *
* * * * * * *
(i) Exemption for Well-Capitalized and Well-Managed Insured
Depository Institutions.--No provision of this section other
than subsection (c) shall apply with respect to any insured
depository institution which is well-capitalized and well-
managed.
* * * * * * *
SEC. 42. NOTICE OF BRANCH CLOSURE.
(a) * * *
* * * * * * *
(e) Scope of Application.--
(1) In general.--This section shall not apply with
respect to--
(A) an automated teller machine;
(B) a branch which--
(i) has been acquired through merger,
consolidation, purchase, assumption, or
other method; and
(ii) is located--
(I) within 2.5 miles of
another branch of the acquiring
institution; or
(II) within a neighborhood
currently being served by
another branch of the acquiring
institution,
if such other branch of the acquiring
institution is expected to continue to provide
banking services to substantially all of the
customers currently served by the branch
acquired;
(C) a branch which is closing and reopening
at a location which is--
(i) within 2.5 miles of the location
of the branch being closed; or
(ii) within the same neighborhood as
the branch being closed,
if the branch at the new location is expected
to continue to provide banking services to
substantially all of the customers served by
the branch at the former location;
(D) a branch that is closed in connection
with--
(i) an emergency acquisition under--
(I) section 11(n); or
(II) subsections (f) or (k)
of section 13; or
(ii) any assistance provided by the
Corporation under section 13(c); and
(E) any other branch closure whose exemption
from the notice requirements of this section
would not produce a result inconsistent with
the purposes of this section.
(2) Regulations.--The appropriate Federal banking
agency shall, by regulation, determine the
circumstances under which any exemption under
paragraph(1)(E) may be granted.
* * * * * * *
SEC. 45. LENDER, FIDUCIARY, AND GOVERNMENT AGENCY ENVIRONMENTAL
LIABILITIES.
(a) Lender Environmental Liability.--
(1) In general.--Notwithstanding any other provision
or rule of Federal law, no lender, acting as defined in
this section, shall be liable pursuant to a Federal
environmental law, except as provided in this section.
(2) Actual participation required.--A lender shall
only be liable pursuant to a Federal environmental law
when the lender actually participates in management of
another person's activities which create liability
under the same Federal environmental law.
(3) Definitions.--The following definitions shall
apply for purposes of this section:
(A) Participate in management.--The term
``participate in management'' means actually
participating in the management or operational
affairs of other persons' activities, and does
not include merely having the capacity to
influence, or the unexercised right to control
such activities;
(B) Participate in management.--A person
shall be considered to ``participate in
management'' while a borrower is still in
possession of property, only if such person--
(i) exercises decisionmaking control
over the environmental compliance of a
borrower, such that the person has
undertaken responsibility for the
hazardous substance handling or
disposal practices of the borrower; or
(ii) exercises control at a level
comparable to that of a manager of the
enterprise of the borrower, such that
the person has assumed or manifested
responsibility for the overall
management of the enterprise
encompassing day-to-day decisionmaking
with respect to environmental
compliance, or with respect to
substantially all of the operational
aspects (as distinguished from
financial or administrative aspects) of
the enterprise, other than
environmental compliance.
(C) Participate in management.--The term
``participate in management'' does not include
engaging in an act or failing to act before the
time that an extension of credit is made or a
security interest is created in property.
(D) Participate in management.--The term
``participate in management'' does not include,
unless such actions rise to the level of
participating in management (as defined in
subparagraphs (A) and (B))--
(i) holding an extension of credit or
a security interest or abandoning or
releasing an extension of credit or a
security interest;
(ii) including in the terms of an
extension of credit, or in a contract
or security agreement relating to such
an extension, covenants, warranties, or
other terms and conditions that relate
to environmental compliance;
(iii) monitoring or enforcing the
terms and conditions of an extension of
credit or security interest;
(iv) monitoring or undertaking 1 or
more inspections of property, except
that monitoring or undertaking any such
inspection, although not required by
this subsection, shall provide
probative evidence that a holder of a
security interest is acting to preserve
and protect the property during the
time the holder may have possession or
control of such property;
(v) requiring or conducting a
response action or other lawful means
of addressing the release or threatened
release of a hazardous substance in
connection with property prior to,
during, or upon the expiration of the
term of an extension of credit;
(vi) providing financial or other
advice or counseling in an effort to
mitigate, prevent, or cure default or
diminution in the value of the
property;
(vii) restructuring, renegotiating,
or otherwise agreeing to alter the
terms and conditions of an extension of
credit or security interest, or
exercising forbearance; or
(viii) exercising other remedies that
may be available under applicable law
for the breach of any term or condition
of the extension of credit or security
agreement.
(E) When a lender did not participate in
management of property prior to foreclosure,
then the lender shall not be liable even if
such person forecloses on property, sells, re-
leases, or liquidates property, maintains
business activities, winds up operations, or
undertakes any response action with respect to
property, or takes other measures to preserve,
protect, or prepare property prior to sale or
disposition, if such person seeks to sell,
release, or otherwise divest the property at
the earliest practical, commercially reasonable
time, on commercially reasonable terms, taking
into account market conditions and legal and
regulatory requirements.
(4) Limitation on liability.--The liability of any
lender that is liable under any Federal environmental
law shall be limited to only the cost of any response
action or corrective action to the extent and in the
amount that the lender actively and directly
contributed to the hazardous substance release. A
lender shall not be liable for the cost of any response
action or corrective action relating to the release of
a hazardous substance which commences before and
continues after the lender obtains a security interest
in the property so long as the lender does not actively
and directly contribute to the hazardous substance
release.
(b) Fiduciary Environmental Liability.--
(1) In general.--Notwithstanding any other provision
or rule of Federal law, no fiduciary, acting as defined
in this section, shall be liable pursuant to any
Federal environmental law, except as provided in this
section.
(2) Liability of fiduciary.--
(A) Subject to subparagraphs (B) and (C), a
fiduciary holding title to property or
otherwise affiliated with property solely in a
fiduciary capacity shall be personally subject
to the obligations and liabilities of any
person under any Federal environmental law, to
the same extent as if the property were held by
the fiduciary free of trust.
(B) The personal obligations and liabilities
of a fiduciary referred to in subparagraph (A)
shall be limited to the extent to which the
assets of the trust or estate are sufficient to
indemnify the fiduciary, unless--
(i) the obligations and liabilities
would have arisen even if the person
had not served as a fiduciary;
(ii) the fiduciary's own failure to
exercise due care with respect to
property caused or contributed to the
release of hazardous substances
following establishment of the trust,
estate, or fiduciary relationship; or
(iii) the fiduciary had a role in
establishing the trust, estate, or
fiduciary relationship, and such trust,
estate, or fiduciary relationship has
no objectively reasonable or
substantial purpose apart from the
avoidance or limitation of liability
under an environmental law.
Nothing in the preceding sentence shall be
construed as requiring indemnification by an
employee benefit plan (within the meaning of
paragraph (3) of section 3 of Employee
Retirement Income Security Act of 1974), or by
any trust forming a part thereof, of any
fiduciary of such plan contrary to the terms of
the plan or in an amount in excess of the
amount permitted under the terms of such plan.
(C) A fiduciary shall not be personally
liable for undertaking or directing another to
undertake a response action.
(3) Rule of construction.--No provision of this
subsection shall be construed as affecting the
liability, if any, of any person who--
(A)(i) acts in a capacity other than a
fiduciary capacity; and
(ii) directly or indirectly benefits from a
trust or fiduciary relationship; or
(B)(i) is a beneficiary and a fiduciary with
respect to the same fiduciary estate; and
(ii) as a fiduciary, receives benefits that
exceed customary or reasonable compensation,
and incidental benefits, permitted under other
applicable laws.
(c) Definitions.--For purposes of subsections (a) and (b),
the following definitions shall apply:
(1) Federal environmental law.--The term ``Federal
environmental law'' means any Federal statute or rule
of common law with the purpose of protection of the
environment and any Federal regulation promulgated
thereunder and any State statute or regulation created
as a federally approved or delegated program
implementing these laws, including the following:
(A) The Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.).
(B) The Toxic Substances Control Act (15
U.S.C. 2601 et seq.).
(C) The Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.).
(D) The Oil Pollution Act of 1990 (33 U.S.C.
2701 et seq.).
(E) The Clean Air Act (42 U.S.C. 7401 et
seq.).
(F) The Solid Waste Disposal Act (42 U.S.C.
6901 et seq.).
(G) The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42
U.S.C. 9601 et seq.).
(H) The Pollution Prevention Act of 1990 (42
U.S.C. 13101 et seq.).
(2) Extension of credit.--The term ``extension of
credit'' means the making or renewal of any loan, a
granting of a line of credit or extending credit in any
manner, such as an advance by means of an overdraft or
the issuance of a standby letter of credit, and a lease
finance transaction--
(A) in which the lessor does not initially
select the leased property and does not, during
the lease term, control the daily operation or
maintenance of the property; or
(B) that conforms with regulations issued by
the appropriate Federal banking agency or the
appropriate State bank supervisory (as these
terms are defined in section 3 of the Federal
Deposit Insurance Act or with regulations
issued by the National Credit Union
Administration Board, as appropriate.
(3) Fiduciary.--The term ``fiduciary'' means a person
who acts for the exclusive benefit of another person as
a bona fide fiduciary within the meaning of section
3(21) of the Employee Retirement Income Security Act of
1974, trustee, executor, administrator, custodian,
guardian, conservator, receiver, committee of estates
of lunatics or other disabled persons, or personal
representative; except, that the term ``fiduciary''
does not include any person--
(A) who owns, or controls, is affiliated
with, or takes any action with respect to
property on behalf of or for the benefit of a
lender or takes any action to protect a
lender's extension of credit or security
interest (any such person shall be treated as a
lender under subsection (a) of this section);
or
(B) who is acting as a fiduciary with respect
to a trust or other fiduciary estate that--
(i) was not created as part of, or to
facilitate, one or more estate plans or
pursuant to the incapacity of a natural
person; and
(ii) was organized for the primary
purpose of, or is engaged in, actively
carrying on a trade or business for
profit.
(4) Financial or administrative aspect.--The term
``financial or administrative aspect'' means a function
such as a credit manager, accounts payable officer,
accounts receivable officer, personnel manager,
comptroller, or chief financial officer, or any similar
function.
(5) Foreclosure, foreclose.--The terms
``foreclosure'' and ``foreclose'' means, respectively,
acquiring, and to acquire, property through--
(A) purchase at sale under a judgment or
decree, a power of sale, a nonjudicial
foreclosure sale, or from a trustee, deed in
lieu of foreclosure, or similar conveyance, or
through repossession, if such property was
security for an extension of credit previously
contracted;
(B) conveyance pursuant to an extension of
credit previously contracted, including the
termination of a lease agreement; or
(C) any other formal or informal manner by
which the person acquires, for subsequent
disposition, possession of collateral in order
to protect the security interest of the person.
(6) Hazardous substance.--The term ``hazardous
substance'' means any chemical, biological, organic,
inorganic, or radioactive pollutants, contaminants,
materials, waste, or other substances regulated under,
defined, listed, or included in any Federal
environmental law.
(7) Lender.--The term ``lender'' means--
(A) a person that makes a bona fide extension
of credit to or takes a security interest from
another person and includes a successor or
assign of the person which makes the extension
of credit or takes the security interest;
(B) the Federal National Mortgage
Association, the Federal Home Loan Mortgage
Corporation, the Federal Agricultural Mortgage
Corporation, or other entity that in a bona
fide manner is engaged in the business of
buying or selling loans on interests therein;
(C) any person engaged in the business of
insuring or guaranteeing against a default in
the repayment of an extension of credit, or
acting as a surety with respect to an extension
of credit, to other persons; or
(D) any person regularly engaged in the
business of providing title insurance who
acquires property as a result of assignment or
conveyance in the course of underwriting claims
and claims settlement.
(8) Operational aspect.--The term ``operational
aspect'' means a function such as a facility or plant
manager, operations manager, chief operating officer,
or chief executive officer.
(9) Person.--The term ``person'' means an individual,
firm, corporation, association, partnership,
consortium, joint venture, commercial entity, United
States Government, State, municipality, commission,
political subdivision of a State, or any interstate
body.
(10) Property.--The term ``property'' means real,
personal, and mixed property.
(11) Response action.--The term ``response action''
shall have the same meaning as that term is defined in
section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act.
(12) Security interest.--The term ``security
interest'' means a right under a mortgage, deed of
trust, assignment, judgment lien, pledge, security
agreement, factoring agreement, or lease, or any other
right accruing to a person to secure the repayment of
money, the performance of a duty, or some other
obligation.
(d) Savings Clause.--Nothing in subsections (a) (b), or (c),
shall--
(1) affect the rights or immunities or other defenses
that are already available to lenders or fiduciaries
under any Federal environmental law;
(2) be construed to create any liability for any
lender or fiduciary; or
(3) create a private right of action against any
lender or fiduciary.
(e) Federal Banking and Lending Agency Environmental
Liability.--
(1) Governmental entities.--
(A) Banking and lending agencies.--Except as
provided in paragraph (C), a Federal banking or
lending agency shall not be liable under any
law imposing strict liability for the release
or threatened release of petroleum or a
hazardous substance at or from property
(including any right or interest therein)
acquired--
(i) in connection with the exercise
of receivership or conservatorship
authority, or the liquidation or
winding up of the affairs of an insured
depository institution, including any
of its subsidiaries, and bridge bank;
(ii) in connection with the provision
of loans, discounts, advances,
guarantees, insurance, or other
financial assistance; or
(iii) in connection with property
received in any civil or criminal
proceeding, or administrative
enforcement action, whether by
settlement or order.
(B) Application of state law.--Nothing in
paragraph (e) shall be construed as preempting,
affecting, applying to, or modifying any State
law, or any rights, actions, cause of action,
or obligations under State law, except that
liability under State law shall not exceed the
value of the agency's interest in the asset
giving rise to such liability. Nothing in this
section shall be construed to prevent a Federal
banking or lending agency from agreeing with a
State to transfer property to such State in
lieu of any liability that might otherwise be
imposed under State law.
(C) Limitation.--Notwithstanding paragraph
(A), and subject to section 107(d) of the
Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, a
Federal banking or lending agency that directly
caused or materially contributed to the release
of petroleum or a hazardous substance may be
liable for removal, remedial, or other response
action pertaining to that release.
(D) Subsequent purchaser.--The immunity
provided by paragraphs (A) and (B) shall extend
to the first subsequent purchaser of property
described in such paragraph from a Federal
banking or lending agency, unless such
purchaser--
(i) would otherwise be liable or
potentially liable for all or part of
the costs of the removal, remedial, or
other response action due to a prior
relationship with the property;
(ii) is or was affiliated with or
related to a party described in
subparagraph (i);
(iii) fails to agree to take
reasonable steps necessary to abate the
release or threatened release or to
protect public health and safety in a
manner consistent with the purposes of
applicable Federal environmental laws;
or
(iv) directly causes or significantly
and materially contributes to any
additional release or threatened
release on the property.
(E) Federal or state action.--Notwithstanding
subparagraph (D), if a Federal agency or State
environmental agency is required to take
remedial action due to the failure of a
subsequent purchaser to carry out, in good
faith, the agreement described in subparagraph
(D)(iii), such subsequent purchaser shall
reimburse the Federal or State environmental
agency for the costs of such remedial action.
Any such reimbursement shall not exceed the
increase in the fair market value of the
property attributable to the remedial action.
(2) Lien exemption.--Notwithstanding any other
provision of law, any property held by a subsequent
purchaser referred to in paragraph (1)(D) or held by a
Federal banking or lending agency shall not be subject
to any lien for costs or damages associated with the
release or threatened release of petroleum or a
hazardous substance existing at the time of the
transfer.
(3) Exemption from covenants to remediate.--A Federal
banking or lending agency shall be exempt from any law
requiring such agency to grant covenants warranting
that a removal, remedial, or other response action has
been, or will in the future be, taken with respect to
property acquired in the manner described in paragraph
(e)(1)(A).
(4) Definitions.--For purposes of subsection (e), the
following definitions shall apply:
(A) Federal banking or lending agency.--The
term ``Federal banking or lending agency''
means the Corporation, the Resolution Trust
Corporation, the Board of Governors of the
Federal Reserve System, the Comptroller of the
Currency, the Office of Thrift Supervision, a
Federal Reserve Bank, a Federal Home Loan Bank,
the Department of Housing and Urban
Development, the National Credit Union
Administration Board, the Farm Credit
Administration, the Farm Credit System
Insurance Corporation, the Farm Credit System
Assistance Board, the Farmers Home
Administration, the Rural Electrification
Administration, the Small Business
Administration, and any other Federal agency
acting in a similar capacity, in any of their
capacities, and their agents or appointees.
(B) Hazardous substance.--The term
``hazardous substance'' has the same meaning as
in section 101(14) of the Comprehensive
Environmental Response, Compensation, and
Liability Act of 1980.
(C) Release.--The term ``release'' has the
same meaning as in section 101(22) of the
Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, and
includes the use, storage, disposal, treatment,
generation, or transportation of a hazardous
substance.
(5) Savings clause.--Nothing in subsection (e)
shall--
(A) affect the rights or immunities or other
defenses that are available under this Act or
other applicable law to any party, subject to
the provisions of this section;
(B) be construed to create any liability for
any party; or
(C) create a private right of action against
an insured depository institution or lender or
against a Federal banking or lending agency.
----------
TRUTH IN SAVINGS ACT
Subtitle F--Truth in Savings
SEC. 261. SHORT TITLE.
This subtitle may be cited as the ``Truth in Savings Act''.
[SEC. 262. FINDINGS AND PURPOSE.
[(a) Findings.--The Congress hereby finds that economic
stability would be enhanced, competition between depository
institutions would be improved, and the ability of the consumer
to make informed decisions regarding deposit accounts, and to
verify accounts, would be strengthened if there was uniformity
in the disclosure of terms and conditions on which interest is
paid and fees are assessed in connection with such accounts.
[(b) Purpose.--It is the purpose of this subtitle to require
the clear and uniform disclosure of--
[(1) the rates of interest which are payable on
deposit accounts by depository institutions; and
[(2) the fees that are assessable against deposit
accounts,
so that consumers can make a meaningful comparison between the
competing claims of depository institutions with regard to
deposit accounts.
[SEC. 263. DISCLOSURE OF INTEREST RATES AND TERMS OF ACCOUNTS.
[(a) In General.--Except as provided in subsections (b) and
(c), each advertisement, announcement, or solicitation
initiated by any depository institution or deposit broker
relating to any demand or interest-bearing account offered by
an insured depository institution which includes any reference
to a specific rate of interest payable on amounts deposited in
such account, or to a specific yield or rate of earnings on
amounts so deposited, shall state the following information, to
the extent applicable, in a clear and conspicuous manner:
[(1) The annual percentage yield.
[(2) The period during which such annual percentage
yield is in effect.
[(3) All minimum account balance and time
requirements which must be met in order to earn the
advertised yield (and, in the case of accounts for
which more than 1 yield is stated, each annual
percentage yield and the account minimum balance
requirement associated with each such yield shall be in
close proximity and have equal prominence).
[(4) The minimum amount of the initial deposit which
is required to open the account in order to obtain the
yield advertised, if such minimum amount is greater
than the minimum balance necessary to earn the
advertised yield.
[(5) A statement that regular fees or other
conditions could reduce the yield.
[(6) A statement that an interest penalty is required
for early withdrawal.
[(b) Broadcast and Electronic Media and Outdoor Advertising
Exception.--The Board may, by regulation, exempt
advertisements, announcements, or solicitations made by any
broadcast or electronic medium or outdoor advertising display
not on the premises of the depository institution from any
disclosure requirements described in paragraph (4) or (5) of
subsection (a) if the Board finds that any such disclosure
would be unnecessarily burdensome.
[(c) Disclosure Required for On-Premises Displays.--
[(1) In general.--The disclosure requirements
contained in this section shall not apply to any sign
(including a rate board) disclosing a rate or rates of
interest which is displayed on the premises of the
depository institution if such sign contains--
[(A) the accompanying annual percentage
yield; and
[(B) a statement that the consumer should
request further information from an employee of
the depository institution concerning the fees
and terms applicable to the advertised account.
[(2) Definition.--For purposes of paragraph (1), a
sign shall only be considered to be displayed on the
premises of a depository institution if the sign is
designed to be viewed only from the interior of the
premises of the depository institution.
[(d) Misleading Descriptions of Free or No-Cost Accounts
Prohibited.--No advertisement, announcement, or solicitation
made by any depository institution or deposit broker may refer
to or describe an account as a free or no-cost account (or
words of similar meaning) if--
[(1) in order to avoid fees or service charges for
any period--
[(A) a minimum balance must be maintained in
the account during such period; or
[(B) the number of transactions during such
period may not exceed a maximum number; or
[(2) any regular service or transaction fee is
imposed.
[(e) Misleading or Inaccurate Advertisements, Etc.,
Prohibited.--No depository institution or deposit broker shall
make any advertisement, announcement, or solicitation relating
to a deposit account that is inaccurate or misleading or that
misrepresents its deposit contracts.
[SEC. 264. ACCOUNT SCHEDULE.
[(a) In General.--Each depository institution shall maintain
a schedule of fees, charges, interest rates, and terms and
conditions applicable to each class of accounts offered by the
depository institution, in accordance with the requirements of
this section and regulations which the Board shall prescribe.
The Board shall specify, in regulations, which fees, charges,
penalties, terms, conditions, and account restrictions must be
included in a schedule required under this subsection. A
depository institution need not include in such schedule any
information not specified in such regulation.
[(b) Information on Fees and Charges.--The schedule required
under subsection (a) with respect to any account shall contain
the following information:
[(1) A description of all fees, periodic service
charges, and penalties which may be charged or assessed
against the account (or against the account holder in
connection with such account), the amount of any such
fees, charge, or penalty (or the method by which such
amount will be calculated), and the conditions under
which any such amount will be assessed.
[(2) All minimum balance requirements that affect
fees, charges, and penalties, including a clear
description of how each such minimum balance is
calculated.
[(3) Any minimum amount required with respect to the
initial deposit in order to open the account.
[(c) Information on Interest Rates.--The schedule required
under subsection (a) with respect to any account shall include
the following information:
[(1) Any annual percentage yield.
[(2) The period during which any such annual
percentage yield will be in effect.
[(3) Any annual rate of simple interest.
[(4) The frequency with which interest will be
compounded and credited.
[(5) A clear description of the method used to
determine the balance on which interest is paid.
[(6) The information described in paragraphs (1)
through (4) with respect to any period after the end of
the period referred to in paragraph (2) (or the method
for computing any information described in any such
paragraph), if applicable.
[(7) Any minimum balance which must be maintained to
earn the rates and obtain the yields disclosed pursuant
to this subsection and a clear description of how any
such minimum balance is calculated.
[(8) A clear description of any minimum time
requirement which must be met in order to obtain the
yields disclosed pursuant to this subsection and any
information described in paragraph (1), (2), (3), or
(4) that will apply if any time requirement is not met.
[(9) A statement, if applicable, that any interest
which has accrued but has not been credited to an
account at the time of a withdrawal from the account
will not be paid by the depository institution or
credited to the account by reason of such withdrawal.
[(10) Any provision or requirement relating to
nonpayment of interest, including any charge or penalty
for early withdrawal, and the conditions under which
any such charge or penalty may be assessed.
[(d) Other Information.--The schedule required under
subsection (a) shall include such other disclosures as the
Board may determine to be necessary to allow consumers to
understand and compare accounts, including frequency of
interest rate adjustments, account restrictions, and renewal
policies for time accounts.
[(e) Style and Format.--Schedules required under subsection
(a) shall be written in clear and plain language and be
presented in a format designed to allow consumers to readily
understand the terms of the accounts offered.
[SEC. 265. DISCLOSURE REQUIREMENTS FOR CERTAIN ACCOUNTS.
[The Board shall require, in regulations which the Board
shall prescribe, such modification in the disclosure
requirements under this Act relating to annual percentage yield
as may be necessary to carry out the purposes of this Act in
the case of--
[(1) accounts with respect to which determination of
annual percentage yield is based on an annual rate of
interest that is guaranteed for a period of less than 1
year;
[(2) variable rate accounts;
[(3) accounts which, pursuant to law, do not
guarantee payment of a stated rate;
[(4) multiple rate accounts; and
[(5) accounts with respect to which determination of
annual percentage yield is based on an annual rate of
interest that is guaranteed for a stated term.
[SEC. 266. DISTRIBUTION OF SCHEDULES.
[(a) In General.--A schedule required under section 264 for
an appropriate account shall be--
[(1) made available to any person upon request;
[(2) provided to any potential customer before an
account is opened or a service is rendered; and
[(3) provided to the depositor, in the case of any
time deposit which is renewable at maturity without
notice from the depositor, at least 30 days before the
date of maturity.
[(b) Distribution in Case of Certain Initial Deposits.--If--
[(1) a depositor is not physically present at an
office of a depository institution at the time an
initial deposit is accepted with respect to an account
established by or for such person; and
[(2) the schedule required under section 264(a) has
not been furnished previously to such depositor,
the depository institution shall mail the schedule to the
depositor at the address shown on the records of the depository
institution for such account no later than 10 days after the
date of the initial deposit.
[(c) Distribution of Notice of Certain Changes.--If--
[(1) any change is made in any term or condition
which is required to be disclosed in the schedule
required under section 264(a) with respect to any
account; and
[(2) the change may reduce the yield or adversely
affect any holder of the account,
all account holders who may be affected by such change shall be
notified and provided with a description of the change by mail
at least 30 days before the change takes effect.
[(d) Distribution in Case of Accounts Established by More
Than 1 Individual or by a Group.--If an account is established
by more than 1 individual or for a person other than an
individual, any distribution described in this section with
respect to such account meets the requirements of this section
if the distribution is made to 1 of the individuals who
established the account or 1 individual representative of the
person on whose behalf such account was established.
[(e) Notice to Account Holders as of the Effective Date of
Regulations.--For any account for which the depository
institution delivers an account statement on a quarterly or
more frequent basis, the depository institution shall include
on or with any regularly scheduled mailing posted or delivered
within 180 days after publication of regulations issued by the
Board in final form, a statement that the account holder has
the right to request an account schedule containing the terms,
charges, and interest rates of the account, and that the
account holder may wish to request such an account schedule.]
SEC. 262. PURPOSE.
It is the purpose of this subtitle to ensure that consumers
can make a meaningful comparison between the competing claims
of depository institutions with regard to deposit accounts by
requiring that institutions offering interest-bearing accounts
pay interest on the full amount of principal each day in a
consumer deposit account at the rate agreed to be paid by the
institution.
SEC. 263. PROHIBITION ON MISLEADING OR INACCURATE ADVERTISEMENTS AND
DISCLOSURES.
No depository institution or deposit broker shall make any
advertisement, announcement, solicitation or disclosure
relating to a deposit account that is inaccurate or misleading,
including any inaccurate or misleading description of a free or
no-cost account, or that misrepresents its deposit contracts.
SEC. 264. ACCOUNT INFORMATION.
(a) In General.--Each depository institution shall disclose
fees, charges, penalties, and interest rates applicable to each
class of accounts offered by the institution in accordance with
this section.
(b) Information on Fees and Charges.--Each depository
institution shall disclose the following information with
respect to any account to a consumer at the time the account is
opened, or at such earlier time as a consumer may request (and
no additional information may be required to be disclosed under
this subtitle by regulation or otherwise with respect to such
account):
(1) A description of all fees, periodic service
charges, penalties, and interest rates which may be
charged or assessed against the account (or against the
account holder in connection with such account), the
amount of any such fees, charges, or penalties (or the
method by which such amount will be calculated), and
the conditions under which any such amount will be
assessed.
(2) All minimum balance requirements that affect
fees, charges, and penalties, including a clear
description of how each such minimum balance is
calculated.
(3) Any minimum amount required with respect to the
initial deposit in order to open the account.
(c) Information on Interest Rates.--The disclosures required
under subsections (a) and (b) with respect to any account shall
include the following information:
(1) Any annual rate of simple interest.
(2) The frequency with which interest will be
compounded and credited.
(d) No Regulations Authorized.--No regulations may be
prescribed with respect to this section by the Board or any
agency referred to in this title, including any regulation to
define any terms used in this section.
SEC. 265. DISCLOSURE OF CHANGE IN TERMS.
If any change is made in any item required to be disclosed
under section 264, all account holders who may be affected by
such change shall be notified by mail and provided with a
description of such change at least 30 days before the
effective date of the change.
SEC. [267.] 266. PAYMENT OF INTEREST.
(a) Calculated on Full Amount of Principal.--Interest on an
interest-bearing account at any depository institution shall be
calculated by such institution on the full amount of principal
in the account for each day of the stated calculation period at
the rate or rates of interest disclosed pursuant to this Act.
(b) No Particular Method of Compounding Interest Required.--
Subsection (a) shall not be construed as prohibiting or
requiring the use of any particular method of compounding or
crediting of interest.
(c) Date by Which Interest Must Accrue.--Interest on accounts
that are subject to this Act shall begin to accrue not later
than the business day specified for interest-bearing accounts
in section 606 of the Expedited Funds Availability Act, subject
to subsections (b) and (c) of such section.
[SEC. 268. PERIODIC STATEMENTS.
[Each depository institution shall include on or with each
periodic statement provided to each account holder at such
institution a clear and conspicuous disclosure of the following
information with respect to such account:
[(1) The annual percentage yield earned.
[(2) The amount of interest earned.
[(3) The amount of any fees or charges imposed.
[(4) The number of days in the reporting period.
[SEC. 269. REGULATIONS.
[(a) In General.--
[(1) Regulations required.--Before the end of the 9-
month period beginning on the date of the enactment of
this Act, the Board, after consultation with each
agency referred to in section 270(a) and public notice
and opportunity for comment, shall prescribe
regulations to carry out the purpose and provisions of
this Act.
[(2) Effective date of regulations.--The regulations
prescribed under paragraph (1) shall take effect not
later than 9 months after publication in final form.
[(3) Contents of regulations.--The regulations
prescribed under paragraph (1) may contain such
classifications, differentiations, or other provisions,
and may provide for such adjustments and exceptions for
any class of accounts as, in the judgment of the Board,
are necessary or proper to carry out the purposes of
this Act, to prevent circumvention or evasion of the
requirements of this Act, or to facilitate compliance
with the requirements of this Act.
[(4) Date of applicability.--The provisions of this
Act shall not apply with respect to any depository
institution before the effective date of regulations
prescribed by the Board under this subsection (or by
the National Credit Union Administration Board under
section 12(b), in the case of any depository
institution described in clause (iv) of section
19(b)(1)(A) of the Federal Reserve Act).
[(b) Model Forms and Clauses.--
[(1) In general.--The Board shall publish model forms
and clauses for common disclosures to facilitate
compliance with this Act. In devising such forms, the
Board shall consider the use by depository institutions
of data processing or similar automated machines.
[(2) Use of forms and clauses deemed in compliance.--
Nothing in this Act may be construed to require a
depository institution to use any such model form or
clause prescribed by the Board under this subsection. A
depository institution shall be deemed to be in
compliance with the disclosure provisions of this Act
if the depository institution--
[(A) uses any appropriate model form or
clause as published by the Board; or
[(B) uses any such model form or clause and
changes it by--
[(i) deleting any information which
is not required by this Act; or
[(ii) rearranging the format,
if in making such deletion or rearranging the
format, the depository institution does not
affect the substance, clarity, or meaningful
sequence of the disclosure.
[(3) Public notice and opportunity for comment.--
Model disclosure forms and clauses shall be adopted by
the Board after duly given notice in the Federal
Register and an opportunity for public comment in
accordance with section 553 of title 5, United States
Code.]
SEC. 267. REGULATIONS.
(a) In General.--The Board, after consultation with each
agency referred to in section 265(a) and public notice and
opportunity for comment, shall prescribe regulations to carry
out the purpose and provisions of this subtitle.
(b) Effective Date of Regulations.--The provisions of this
subtitle shall not apply with respect to any depository
institution before the effective date of regulations prescribed
by the Board under this subsection.
SEC. [270.] 268. ADMINISTRATIVE ENFORCEMENT.
(a) In General.--Compliance with the requirements imposed
under this Act shall be enforced under--
(1) section 8 of the Federal Deposit Insurance Act--
(A) by the appropriate Federal banking agency
(as defined in section 3(q) of the Federal
Deposit Insurance Act) in the case of insured
depository institutions (as defined in section
3(c)(2) of such Act);
(B) by the Federal Deposit Insurance
Corporation in the case of depository
institutions described in clause (i), (ii), or
(iii) of section 19(b)(1)(A) of the Federal
Reserve Act which are not insured depository
institutions (as defined in section 3(c)(2) of
the Federal Deposit Insurance Act); and
(C) by the Director of the Office of Thrift
Supervision in the case of depository
institutions described in clause (v) and or
(vi) of section 19(b)(1)(A) of the Federal
Reserve Act which are not insured depository
institutions (as defined in section 3(c)(2) of
the Federal Deposit Insurance Act); and
(2) the Federal Credit Union Act, by the National
Credit Union Administration Board in the case of
depository institutions described in clause (iv) of
section 19(b)(1)(A) of the Federal Reserve Act.
(b) Additional Enforcement Powers.--
(1) Violation of this act treated as violation of
other acts.--For purposes of the exercise by any agency
referred to in subsection (a) of such agency's powers
under any Act referred to in such subsection, a
violation of a requirement imposed under this Act shall
be deemed to be a violation of a requirement imposed
under that Act.
(2) Enforcement authority under other acts.--In
addition to the powers of any agency referred to in
subsection (a) under any provision of law specifically
referred to in such subsection, each such agency may
exercise, for purposes of enforcing compliance with any
requirement imposed under this Act, any other authority
conferred on such agency by law.
(c) Regulations by Agencies Other Than the Board.--The
authority of the Board to issue regulations under this Act does
not impair the authority of any other agency referred to in
subsection (a) to make rules regarding its own procedures in
enforcing compliance with the requirements imposed under this
Act.
[SEC. 271. CIVIL LIABILITY.
[(a) Civil Liability.--Except as otherwise provided in this
section, any depository institution which fails to comply with
any requirement imposed under this Act or any regulation
prescribed under this Act with respect to any person who is an
account holder is liable to such person in an amount equal to
the sum of--
[(1) any actual damage sustained by such person as a
result of the failure;
[(2)(A) in the case of an individual action, such
additional amount as the court may allow, except that
the liability under this subparagraph shall not be less
than $100 nor greater than $1,000; or
[(B) in the case of a class action, such amount as
the court may allow, except that--
[(i) as to each member of the class, no
minimum recovery shall be applicable; and
[(ii) the total recovery under this
subparagraph in any class action or series of
class actions arising out of the same failure
to comply by the same depository institution
shall not be more than the lesser of $500,000
or 1 percent of the net worth of the depository
institution involved; and
[(3) in the case of any successful action to enforce
any liability under paragraph (1) or (2), the costs of
the action, together with a reasonable attorney's fee
as determined by the court.
[(b) Class Action Awards.--In determining the amount of any
award in any class action, the court shall consider, among
other relevant factors--
[(1) the amount of any actual damages awarded;
[(2) the frequency and persistence of failures of
compliance;
[(3) the resources of the depository institution;
[(4) the number of persons adversely affected; and
[(5) the extent to which the failure of compliance
was intentional.
[(c) Bona Fide Errors.--
[(1) General rule.--A depository institution may not
be held liable in any action brought under this section
for a violation of this Act if the depository
institution demonstrates by a preponderance of the
evidence that the violation was not intentional and
resulted from a bona fide error, notwithstanding the
maintenance of procedures reasonably adapted to avoid
any such error.
[(2) Examples.--Examples of a bona fide error include
clerical, calculation, computer malfunction and
programming, and printing errors, except that an error
of legal judgment with respect to a depository
institution's obligation under this Act is not a bona
fide error.
[(d) No Liability for Overpayment.--A depository institution
may not be held liable in any action under this section for a
violation of this Act if the violation has resulted in--
[(1) an interest payment to the account holder in an
amount greater than the amount determined under any
disclosed rate of interest applicable with respect to
such payment; or
[(2) a charge to the consumer in an amount less than
the amount determined under the disclosed charge or fee
schedule applicable with respect to such charge.
[(e) Jurisdiction.--Any action under this section may be
brought in any United States district court, or in any other
court of competent jurisdiction, within 1 year after the date
of the occurrence of the violation involved.
[(f) Reliance on Board Rulings.--No provision of this section
imposing any liability shall apply to any act done or omitted
in good faith in conformity with any regulation or order, or
any interpretation of any regulation or order, of the Board, or
in conformity with any interpretation or approval by an
official or employee of the Board duly authorized by the Board
to issue such interpretation or approval under procedures
prescribed by the Board, notwithstanding, the fact that after
such act or omission has occurred, such regulation, order,
interpretation, or approval is amended, rescinded, or
determined by judicial or other authority to be invalid for any
reason.
[(g) Notification of and Adjustment for Errors.--A depository
institution shall not be liable under this section or section
270 for any failure to comply with any requirement imposed
under this Act with respect to any account if--
[(1) before--
[(A) the end of the 60-day period beginning
on the date on which the depository institution
discovered the failure to comply;
[(B) any action is instituted against the
depository institution by the account holder
under this section with respect to such failure
to comply; and
[(C) any written notice of such failure to
comply is received by the depository
institution from the account holder,
the depository institution notifies the account holder
of the failure of such institution to comply with such
requirement; and
[(2) the depository institution makes such
adjustments as may be necessary with respect to such
account to ensure that--
[(A) the account holder will not be liable
for any amount in excess of the amount actually
disclosed with respect to any fee or charge;
[(B) the account holder will not be liable
for any fee or charge imposed under any
condition not actually disclosed; and
[(C) interest on amounts in such account will
accrue at the annual percentage yield, and
under the conditions, actually disclosed (and
credit will be provided for interest already
accrued at a different annual percentage yield
and under different conditions than the yield
or conditions disclosed).
[(h) Multiple Interests in 1 Account.--If more than 1 person
holds an interest in any account--
[(1) the minimum and maximum amounts of liability
under subsection (a)(2)(A) for any failure to comply
with the requirements of this Act shall apply with
respect to such account; and
[(2) the court shall determine the manner in which
the amount of any such liability with respect to such
account shall be distributed among such persons.
[(i) Continuing Failure to Disclose.--
[(1) Certain continuing failures treated as 1
violation.--Except as provided in paragraph (2), the
continuing failure of any depository institution to
disclose any particular term required to be disclosed
under this Act with respect to a particular account
shall be treated as a single violation for purposes of
determining the amount of any liability of such
institution under subsection (a) for such failure to
disclose.
[(2) Subsequent failure to disclose.--The continuing
failure of any depository institution to disclose any
particular term required to be disclosed under this Act
with respect to a particular account after judgment has
been rendered in favor of the account holder in
connection with a prior failure to disclose such term
with respect to such account shall be treated as a
subsequent violation for purposes of determining
liability under subsection (a).
[(3) Coordination with section 270.--This subsection
shall not limit or otherwise affect the enforcement
power under section 270 of any agency referred to in
subsection (a) of such section.]
SEC. [272.] 269. CREDIT UNIONS.
(a) In General.--No regulation prescribed by the Board under
this Act shall apply directly with respect to any depository
institution described in clause (iv) of section 19(b)(1)(A) of
the Federal Reserve Act.
(b) Regulations Prescribed by the NCUA.--Within 90 days of
the effective date of any regulation prescribed by the Board
under this Act, the National Credit Union Administration Board
shall prescribe a regulation substantially similar to the
regulation prescribed by the Board taking into account the
unique nature of credit unions and the limitations under which
they may pay dividends on member accounts.
[SEC. 273. EFFECT ON STATE LAW.
[The provisions of this Act do not supersede any provisions
of the law of any State relating to the disclosure of yields
payable or terms for accounts to the extent such State law
requires the disclosure of such yields or terms for accounts,
except to the extent that those laws are inconsistent with the
provisions of this Act, and then only to the extent of the
inconsistency. The Board may determine whether such
inconsistencies exist.
[SEC. 274. DEFINITIONS.
[For the purposes of this Act--
[(1) Account.--The term ``account'' means any account
intended for use by and generally used by consumers
primarily for personal, family, or household purposes
that is offered by a depository institution into which
a consumer deposits funds, including demand accounts,
time accounts, negotiable order of withdrawal accounts,
and share draft accounts.
[(2) Annual percentage yield.--The term ``annual
percentage yield'' means the total amount of interest
that would be received on a $100 deposit, based on the
annual rate of simple interest and the frequency of
compounding for a 365-day period, expressed as a
percentage calculated by a method which shall be
prescribed by the Board in regulations.
[(3) Annual rate of simple interest.--The term
``annual rate of simple interest''--
[(A) means the annualized rate of interest
paid with respect to each compounding period,
expressed as a percentage; and
[(B) may be referred to as the ``annual
percentage rate''.
[(4) Board.--The term ``Board'' means the Board of
Governors of the Federal Reserve System.
[(5) Deposit broker.--The term ``deposit broker''--
[(A) has the meaning given to such term in
section 29(f)(1) of the Federal Deposit
Insurance Act; and
[(B) includes any person who solicits any
amount from any other person for deposit in an
insured depository institution.
[(6) Depository institution.--The term ``depository
institution'' has the meaning given such term in
clauses (i) through (vi) of section 19(b)(1)(A) of the
Federal Reserve Act.
[(7) Interest.--The term ``interest'' includes
dividends paid with respect to share draft accounts
which are accounts within the meaning of paragraph (3).
[(8) Multiple rate account.--The term ``multiple rate
account'' means any account that has 2 or more annual
rates of simple interest which take effect at the same
time or in succeeding periods and which are known at
the time of disclosure.]
SEC. 270. DEFINITIONS.
For the purposes of this subtitle, the following definitions
shall apply:
(1) Accounts.--The term ``account'' means any account
intended for use by and generally used by a consumer
primarily for personal, family, or household purposes
that is offered by a depository institution.
(2) Deposit broker.--The term ``deposit broker''--
(A) has the meaning given to such term in
section 29(f)(1) of the Federal Deposit
Insurance Act; and
(B) includes any person who solicits any
amount from any other person for deposit in an
insured depository institution.
(3) Depository institution.--The term ``depository
institution''--
(A) means an institution described in clause
(i), (ii), (iii), (iv), (v), or (vi) of section
19(b)(1)(A) of the Federal Reserve Act; and
(B) does not include nonautomated credit
unions which were not required to comply with
the requirements of this title as of the date
of the enactment of the Financial Institutions
Regulatory Relief Act of 1995 pursuant to the
determination of the National Credit Union
Administration Board.
(4) Interest.--The term ``interest'' includes
dividends paid with respect to share accounts which are
accounts within the meaning of paragraph (1).
(5) Board.--The term ``Board'' means the Board of
Governors of the Federal Reserve System.
----------
SECTION 903 OF THE ELECTRONIC FUND TRANSFER ACT
Sec. 903. [15 U.S.C. 1693a] Definitions
As used in this title--
(1) the term ``accepted card or other means of
access'' means a card, code, or other means of access
to a consumer's account for the purpose of initiating
electronic fund transfers when the person to whom such
card or other means of access was issued has requested
and received or has signed or has used, or authorized
another to use, such card or other means of access for
the purpose of transferring money between accounts or
obtaining money, property, labor, or services, but such
term does not include a card, device, or computer that
a person may use to pay for transactions through use of
value stored on, or assigned to, the card, device, or
computer itself, except for those transactions where
such card, device, or computer is actually used to
access an account to effect such transaction;
(2) the term ``account'' means a demand deposit,
savings deposit, or other asset account (other than an
occasional or incidental credit balance in an open end
credit plan as defined in section 103(i) of this Act),
as described in regulations of the Board, established
primarily for personal, family, or household purposes,
but such term does not include an account held by a
financial institution pursuant to a bona fide trust
agreement and does not include any value which is
stored on, or assigned to, a card, device, or computer
itself that enables a person to pay for transactions
through use of that stored value;
* * * * * * *
----------
EQUAL CREDIT OPPORTUNITY ACT
TITLE VII--EQUAL CREDIT OPPORTUNITY
Sec.
701. Prohibited discrimination.
* * * * * * *
704A. Incentives for self-testing and self-correction.
* * * * * * *
Sec. 701. Prohibited discrimination; reasons for adverse action
(a) * * *
* * * * * * *
(d)(1) Within thirty days (or such longer reasonable time as
specified in regulations of the Board for any class of credit
transaction) after receipt of a completed application for
credit, a creditor shall notify the applicant of its action on
the application.
(2) Each applicant against whom adverse action is taken shall
be entitled to a statement of reasons for such action from the
creditor. A creditor satisfies this obligation by--
(A) providing statements of reasons in writing as a
matter of course to applicants against whom adverse
action is taken; or
[(B) giving written notification of adverse action
which discloses (i) the applicant's right to a
statement of reasons within thirty days after receipt
by the creditor of a request made within sixty days
after such notification, and (ii) the identity of the
person or office from which such statement may be
obtained. Such statement may be given orally, if the
written notification advises the applicant of his right
to have the statement of reasons confirmed in writing
on written request.]
(B) giving written notification of adverse
action which discloses--
(i) the applicant's right to a
statement of reasons within 30 days
after receipt by the creditor of a
request made within 60 days after such
notification;
(ii) if credit is denied or the
charge for such credit is increased
either wholly or partly because of
information contained in a consumer
report from a consumer reporting
agency--
(I) that fact and the name,
address, and telephone number
of the consumer reporting
agency making the report;
(II) the consumer's right to
obtain, under section 612, a
free copy of a consumer report
on the consumer, from the
consumer reporting agency
referred to in subclause (I)
within the 30-day period
provided under such section;
and
(III) the consumer's right to
dispute, under section 611,
with a consumer reporting
agency the accuracy or
completeness of any information
in a consumer report furnished
by the agency.
(iii) if credit is denied or the
charge for credit is increased either
wholly or partly because of information
obtained from a person other than a
consumer reporting agency bearing upon
the consumer's credit worthiness,
credit standing, credit capacity,
character, general reputation, personal
characteristics or mode of living, that
fact and the right to receive
disclosure of the nature of the
information so received, within a
reasonable period of time, upon the
consumer's written request for
information within 60 days after
learning of such adverse action; and
(iv) the identity of the person or
office from which such notification may
be obtained.
Such statement of reasons may be given orally
if the written notification advises the
applicant of his right to have the statement of
reasons confirmed in writing on written
request.
* * * * * * *
(3) A statement of reasons meets the requirements of this
section only if it contains the specific reasons for the
adverse action taken[.] and, to the extent applicable, the name
and address, and telephone number of the consumer reporting
agency identified in accordance with the requirements of
subsection (d)(3)(ii) and a statement of the right to obtain
disclosure of the nature of the information upon which adverse
action was taken as required by such subsection.
* * * * * * *
SEC. 704A. INCENTIVES FOR SELF-TESTING AND SELF-CORRECTION.
(a) In General.--If a creditor--
(1) conducts, or authorizes an independent third
party to conduct, a self-test of the creditor's lending
or any part of the creditor's lending operations in
order to determine the level or effectiveness of
compliance with this title by the creditor; and
(2) has identified discriminatory practices and has
taken or is taking appropriate corrective actions to
address the discrimination,
any report or results of such a self-test may not be obtained
or used by any applicant, department, or agency in any
proceeding or civil action brought under this title.
(b) Results of Self-Testing.--No provision of this section
shall be construed as preventing an applicant, department, or
agency from obtaining and using the results of any self-testing
in any proceeding or civil action brought under this title if--
(1) the creditor or any other entity conducted such
activity at the request of a department or agency;
(2) the creditor or any other entity, or any person
acting on behalf of the creditor or other entity--
(A) voluntarily releases or discloses all, or
any part of, such results; or
(B) refers to or describes such results as a
defense to charges of unlawful discrimination
against such creditor, person, or entity; or
(3) the results are sought by the applicant,
department, or agency by means of a discovery request
for the purposes of determining an appropriate penalty
or remedy for a violation of this title.
(c) Regulations.--The appropriate Federal department or
agency shall prescribe regulations, after notice and
opportunity for comment, which determine what types of ``self-
tests'' are sufficiently extensive so as to constitute a
determination of the level or effectiveness of a creditor's
compliance with this title.
* * * * * * *
Sec. 706. Civil liability
(a) * * *
* * * * * * *
[(g) The agencies] (g) Referrals to the Attorney General.--
(1) In general.--The agencies having responsibility
for administrative enforcement under section 704, if
unable to obtain compliance with section 701, are
authorized to refer the matter to the Attorney General
with a recommendation that an appropriate civil action
be instituted. Each agency referred to in paragraphs
(1), (2), and (3) of section 704(a) shall refer the
matter to the Attorney General whenever the agency has
reason to believe that 1 or more creditors has engaged
in a pattern or practice of discouraging or denying
applications for credit in violation of section 701(a).
Each such agency may refer the matter to the Attorney
General whenever the agency has reason to believe that
1 or more creditors has violated section 701(a).
(2) Limitation on referrals of self-testing
results.--
(A) In general.--No agency shall be required
to refer any report or results of a self-test
relating to any creditor to the Attorney
General if the creditor--
(i) has already identified
discriminatory practices as the result
of self-testing instituted by the
creditor to determine compliance with
this title; and
(ii) has taken or is taking
appropriate corrective actions to
address the discrimination.
(3) Enforcement under other laws.--No provision of
this section shall be construed as limiting the
authority of the agency to enforce the provisions of
this Act under any other provision of law.
* * * * * * *
(k) Notice to HUD of Violations.--Whenever an agency referred
to in paragraph (1), (2), or (3) of section 704(a)--
(1) has reason to believe, as a result of receiving a
consumer complaint, conducting a consumer compliance
examination, or otherwise, that a violation of this
title has occurred;
(2) has reason to believe that the alleged violation
would be a violation of the Fair Housing Act; and
(3) does not refer the matter to the Attorney General
pursuant to subsection (g),
the agency shall notify the Secretary of Housing and Urban
Development of the violation, and shall notify the applicant
that the Secretary of Housing and Urban Development has been
notified of the alleged violation and that remedies for the
violation may be available under the Fair Housing Act. No such
agency shall be required to notify the Secretary of Housing and
Urban Development or the applicant that the agency has reason
to believe that a violation of this title or the Fair Housing
Act occurred if the reason is based on a result of self-testing
instituted by the creditor to determine compliance with this
title, and the creditor has already identified the possible
violation and has taken or is taking appropriate corrective
actions to address the possible violation. No provisions of
this section shall be construed as limiting the authority of
the agency to enforce the provisions of this title under any
other provision of law.
(l) Reasonable Procedures to Assure Compliance.--No person
shall be held liable for any violation of subsection 701(d) if
such person shows by a preponderance of the evidence that at
the time of the alleged violation the person maintained
reasonable procedures to assure compliance with the provisions
of the subsection.
* * * * * * *
Sec. 709. Short title
This title may be cited as the ``Equal Credit Opportunity
Act''.
----------
SECTION 615 OF THE FAIR CREDIT REPORTING ACT
Sec. 615. Requirements on users of consumer reports
(a) Whenever [credit or] insurance for personal, family, or
household purposes, or employment involving a consumer is
denied or the charge for such [credit or] insurance is
increased either wholly or partly because of information
contained in a consumer report from a consumer reporting
agency, the user of the consumer report shall so advise the
consumer against whom such adverse action has been taken and
supply the name and address of the consumer reporting agency
making the report.
[(b) Whenever credit for personal, family, or household
purposes involving a consumer is denied or the charge for such
credit is increased either wholly or partly because of
information obtained from a person other than a consumer
reporting agency bearing upon the consumer's credit worthiness,
credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living, the
user of such information shall, within a reasonable period of
time, upon the consumer's written request for the reasons for
such adverse action received within sixty days after learning
of such adverse action, disclose the nature of the information
to the consumer. The user of such information shall clearly and
accurately disclose to the consumer his right to make such
written request at the time such adverse action is communicated
to the consumer.]
[(c)] (b) No person shall be held liable for any violation of
this section if he shows by a preponderance of the evidence
that at the time of the alleged violation he maintained
reasonable procedures to assure compliance with the provisions
of [subsections (a) and (b)] subsection (a).
----------
FAIR HOUSING ACT
TITLE VIII--FAIR HOUSING
short title
Sec. 800. This title may be cited as the ``Fair Housing
Act''.
* * * * * * *
enforcement by the attorney general
Sec. 814. (a) Pattern or Practice Cases.--Whenever the
Attorney General has reasonable cause to believe that any
person or group of persons is engaged in a pattern or practice
of resistance to the full enjoyment of any of the rights
granted by this title, or that any group of persons has been
denied any of the rights granted by this title and such denial
raises an issue of general public importance, the Attorney
General may commence a civil action in any appropriate United
States district court. Before bringing a civil action under the
preceding sentence against any person or group of persons
described in paragraph (1), (2), or (3) of section 704(a) of
the Equal Credit Opportunity Act with respect to a violation of
805(a) of this title, the Attorney General shall consult with
the appropriate agency under such paragraph.
* * * * * * *
SEC. 814A. SELF-TESTING ENHANCEMENT.
(a) In General.--If any person--
(1) conducts, or authorizes an independent third
party to conduct, a self-test of that person's
residential real estate related lending activities, or
any part of such activities, in order to determine the
level or effectiveness of compliance with this title by
the person; and
(2) has identified discriminatory practices and has
taken or is taking appropriate corrective actions to
address the discrimination,
any report or results of such a self-test may not be obtained
or used by any aggrieved person, complainant, department, or
agency in any proceeding or civil action brought under this
title.
(b) Results of Self-Testing.--No provision of this section
shall be construed as preventing an aggrieved person,
complainant, department, or agency from obtaining and using the
results of any self-testing as described in subsection (a) in
any proceeding or civil action brought under this title if--
(1) the creditor or any other entity conducted such
activity at the request of a department or agency;
(2) the creditor or any other entity, or any person
acting on behalf of the creditor or other entity--
(A) voluntarily releases or discloses all, or
any part of, such results; or
(B) refers to or describes such results as a
defense to charges of unlawful discrimination
against such creditor, person, or entity; or
(3) the results are sought by the aggrieved person,
complainant, department, or agency by means of a
discovery request for the purposes of determining an
appropriate penalty or remedy for a violation of this
title.
(c) Regulations.--The appropriate Federal department or
agency shall prescribe regulations, after notice and
opportunity for comment, which determine what types of ``self-
tests'' are sufficiently extensive so as to constitute a
determination of the level or effectiveness of a creditor's
compliance with this title.
* * * * * * *
----------
EQUAL CREDIT OPPORTUNITY ACT
TITLE VII--EQUAL CREDIT OPPORTUNITY
* * * * * * *
Sec. 701. Prohibited discrimination; reasons for adverse action
(a) * * *
* * * * * * *
(f) Credit Scoring System.--
(1) In general.--A creditor shall be deemed to be in
compliance with subsection (a) with respect to any
credit decision made by the creditor which is based
solely on the use of an empirically derived,
demonstrably and statistically sound, credit scoring
system (as defined by the Board in regulations
prescribed under this title) if such system--
(A) does not utilize any category protected
under subsection (a);
(B) does not use as a factor in such system
any criterion which is so directly associated
with such a category as to be the functional
equivalent of such a category; and
(C) does not use as a factor in such system
any criterion that has a disparate impact on a
category protected under subsection (a) unless
use of the criterion is justified by business
necessity and there is no less discriminatory
alternative available.
(2) Age as a factor.--No provision of this subsection
shall be construed as precluding a creditor from using
age as a factor in a credit scoring system under
paragraph (1) to the extent otherwise permitted under
this title.
* * * * * * *
Sec. 706. Civil liability
(a) * * *
* * * * * * *
(h) When a matter is referred to the Attorney General
pursuant to subsection (g), or whenever he has reason to
believe that one or more creditors are engaged in a pattern or
practice in violation of this title, the Attorney General may
bring a civil action in any appropriate United States district
court for such relief as may be appropriate, including actual
and punitive damages and injunctive relief. Before bringing a
civil action against any creditor described in paragraph (1),
(2), or (3) of section 704(a), the Attorney General shall
consult with the appropriate agency under such paragraph.
* * * * * * *
----------
CONSUMER CREDIT PROTECTION ACT
* * * * * * *
TITLE I--CONSUMER CREDIT COST
DISCLOSURE
* * * * * * *
CHAPTER 5--CONSUMER LEASES
Sec.
181. Definitions.
* * * * * * *
187. Regulations.
* * * * * * *
[Sec. 184. Consumer lease advertising
[(a) No advertisement to aid, promote, or assist directly or
indirectly any consumer lease shall state the amount of any
payment, the number of required payments, or that any or no
downpayment or other payment is required at inception of the
lease unless the advertisement also states clearly and
conspicuously and in accordance with regulations issued by the
Board each of the following items of information which is
applicable:
[(1) That the transaction advertised is a lease.
[(2) The amount of any payment required at the
inception of the lease or that no such payment is
required if that is the case.
[(3) The number, amounts, due dates or periods of
scheduled payments, and the total of payments under the
lease.
[(4) That the lessee shall be liable for the
differential, if any, between the anticipated fair
market value of the leased property and its appraised
actual value at the termination of the lease, if the
lessee has such liability.
[(5) A statement of the amount or method of
determining the amount of any liabilities the lease
imposes upon the lessee at the end of the term and
whether or not the lessee has the option to purchase
the leased property and at what price and time.
[(b) Radio Advertisements.--
[(1) In general.--An advertisement by radio broadcast
to aid, promote, or assist, directly or indirectly, any
consumer lease shall be deemed to be in compliance with
the requirements of subsection (a) if such
advertisement clearly and conspicuously--
[(A) states the information required by
paragraphs (1) and (2) of subsection (a);
[(B) states the number, amounts, due dates or
periods of scheduled payments, and the total of
such payments under the lease;
[(C) includes--
[(i) a referral to--
[(I) a toll-free telephone
number established in
accordance with paragraph (2)
that may be used by consumers
to obtain the information
required under subsection (a);
or
[(II) a written advertisement
that--
[(aa) appears in a
publication in general
circulation in the
community served by the
radio station on which
such advertisement is
broadcast during the
period beginning 3 days
before any such
broadcast and ending 10
days after such
broadcast; and
[(bb) includes the
information required to
be disclosed under
subsection (a); and
[(ii) the name and dates of any
publication referred to in clause
(i)(II); and
[(D) includes any other information which the
Board determines necessary to carry out this
chapter.
[(2) Establishment of toll-free number.--
[(A) In general.--In the case of a radio
broadcast advertisement described in paragraph
(1) that includes a referral to a toll-free
telephone number, the lessor who offers the
consumer lease shall--
[(i) establish such a toll-free
telephone number not later than the
date on which the advertisement
including the referral is broadcast;
[(ii) maintain such telephone number
for a period of not less than 10 days,
beginning on the date of any such
broadcast; and
[(iii) provide the information
required under subsection (a) with
respect to the lease to any person who
calls such number.
[(B) Form of information.--The information
required to be provided under subparagraph
(A)(iii) shall be provided verbally or, if
requested by the consumer, in written form.
[(3) No effect on other law.--Nothing in this
subsection shall affect the requirements of Federal law
as such requirements apply to advertisement by any
medium other than radio broadcast.
[(c) There is no liability under this section on the part of
any owner or personnel, as such, of any medium in which an
advertisement appears or through which it is disseminated.]
SEC. 184. CONSUMER LEASE ADVERTISING.
(a) In General.--If an advertisement for a consumer lease
states the amount of any payment or states that any or no
initial payment is required, the advertisement must also
clearly and conspicuously state the following terms, as
applicable:
(1) That the transaction advertised is a lease.
(2) The total of initial payments required at or
before consummation of the lease or delivery of the
property, whichever is later.
(3) That a security deposit is required.
(4) The number, amounts, and timing of scheduled
payments.
(5) For a lease in which the consumer's liability at
the end of the lease term is based on the anticipated
residual value of the property, that an extra charge
may be imposed at the end of the lease term.
(b) Advertising Medium Not Liable.--Any owner or personnel of
any medium in which an advertisement appears or through which
it is disseminated shall not be liable under this section.
Sec. 185. Civil liability
(a) Any lessor who fails to comply with any requirement
imposed under section 182 or 183 of this chapter with respect
to any person is liable to such person as provided in section
130. Notwithstanding the preceding sentence, a creditor shall
only have liability determined under section 130(a)(2) for
failing to comply with the requirements of paragraph (2), (8),
(9), or (10) of section 182 or for failing to comply with
disclosure requirements under State law for any term which the
Board has determined to be substantially the same in meaning
under section 186 as any of the terms referred to in section
182.
* * * * * * *
SEC. 187. REGULATIONS.
(a) Regulations Authorized.--
(1) In general.--The Board shall write regulations or
staff commentary, if appropriate, to update and clarify
the requirements and definitions for lease disclosures,
contracts, and any other specific issues related to
consumer leasing which would carry out the purposes of
this chapter, to prevent any circumvention of the
chapter, and to facilitate compliance with the
requirements of the chapter.
(2) Classifications, adjustments.--The regulations
prescribed under paragraph (1) may contain
classifications and differentiations and may provide
for adjustments and exceptions for any class of
transaction.
(b) Model Disclosures.--The Board shall publish model
disclosure forms and clauses to facilitate compliance with the
disclosure requirements and to aid the consumer in
understanding the transaction. In designing forms, the Board
shall consider the use by lessors of data processing or similar
automated equipment. Use of the models shall be optional. A
lessor who properly uses the material aspects of the models
shall be deemed to be in compliance with the disclosure
requirements.
(c) Effective Dates.--
(1) In general.--Any regulation of the Board, or any
amendment or interpretation thereof, that requires a
disclosure different from the disclosures previously
required shall have an effective date of the October 1
that follows the date of promulgation by at least 6
months.
(2) Longer period.--The Board may, in the Board's
discretion, lengthen the period of time referred to in
paragraph (1) to permit lessors to adjust their forms
to accommodate new requirements.
(3) Shorter period.--The Board may also shorten the
period of time referred to in paragraph (1) if the
Board makes a specific finding that such action is
necessary to comply with the findings of a court or to
prevent unfair or deceptive practices.
(4) Compliance before effective date.--Lessors may
comply with any newly promulgated disclosure
requirement before the effective date of such
requirement.
----------
BANK HOLDING COMPANY ACT OF 1956
definitions
Sec. 2. (a) * * *
* * * * * * *
(g) For the purposes of this Act--
(1) shares owned or controlled by any subsidiary of a
bank holding company shall be deemed to be indirectly
owned or controlled by such bank holding company; and
(2) shares held or controlled directly or indirectly
by trustees for the benefit of (A) a company, (B) the
shareholders or members of a company, or (C) the
employees (whether exclusively or not) of a company,
shall be deemed to be controlled by such company[;
and].
[(3) shares transferred after January 1, 1966, by any
bank holding company (or by any company which, but for
such transfer, would be a bank holding company)
directly or indirectly to any transferee that is
indebted to the transferor, or has one or more
officers, directors, trustees, or beneficiaries in
common with or subject to control by the transferor,
shall be deemed to be indirectly owned or controlled by
the transferor unless the Board, after opportunity for
hearing, determines that the transferor is not in fact
capable of controlling the transferee.]
* * * * * * *
(o) Other Definitions.--For purposes of this Act, the
following definitions shall apply:
[(1) Adequately capitalized.--The term ``adequately
capitalized'' means a level of capitalization which
meets or exceeds all applicable Federal regulatory
capital standards.]
(1) Capital terms.--
(A) Insured depository institutions.--With
respect to insured depository institutions, the
terms ``well-capitalized'', ``adequately
capitalized'', and ``uncapitalized'' have the
meaning given those terms in section 38(b) of
the Federal Deposit Insurance Act.
(B) Bank holding company.--
(i) Adequately capitalized.--The term
``adequately capitalized'' means a
level of capitalization which meets or
exceeds all applicable Federal
regulatory capital standards.
(ii) Well capitalized.--A bank
holding company is ``well capitalized''
if it meets the required capital levels
for well capitalized bank holding
companies established by the Board.
(C) Other capital terms.--The terms ``Tier
1'' and ``risk-weighted assets'' have the
meaning given those terms in the capital
guidelines or regulations established by the
Board for bank holding companies.
* * * * * * *
(8) Lead insured depository institutions.--
(A) In general.--The term ``lead insured
depository institution'' means the largest
insured depository institution controlled by
the bank holding company at any time, based on
a comparison of the average total risk-weighted
assets controlled by each insured depository
institution during the previous 12-month
period.
(B) Branch or agency.--For purposes of this
paragraph and section 4(j)(4), the term
`insured depository institution' shall also
include any branch or agency operated in the
United States by a foreign bank.
(9) Well managed.--The term ``well managed'' means--
(A) in the case of any company or depository
institution which receives examinations, the
achievement of--
(i) a CAMEL composite rating of 1 or
2 (or an equivalent rating under an
equivalent rating system) in connection
with the most recent examination or
subsequent review of such company or
institution; and
(ii) at least a satisfactory rating
for management, if such rating is
given; or
(B) in the case of a company or depository
institution that has not received an
examination rating, the existence and use of
managerial resources which the Board determines
are satisfactory.
* * * * * * *
acquisition of bank shares or assets
Sec. 3. (a) * * *
* * * * * * *
(h) No Approval Required for Certain Transactions.--
(1) In general.--Notwithstanding paragraph (3) or (5)
of subsection (a) and subject to paragraphs (5) and
(6), an acquisition of shares by a registered bank
holding company, or a merger or consolidation between
registered bank holding companies, shall be deemed
approved at the conclusion of the period specified in
subparagraph (G) if all of the following conditions
have been met:
(A) Financial and managerial criteria.--
(i) Well capitalized bank holding
company.--Both at the time of and
immediately after the proposed
transaction, the acquiring bank holding
company is well capitalized.
(ii) Well capitalized lead insured
depository institution.--Both at the
time of and immediately after the
proposed transaction, the lead insured
depository institution of the acquiring
bank holding company is well
capitalized.
(iii) Capital of other insured
depository institutions.--At the time
of the transaction, well capitalized
insured depository institutions control
at least 80 percent of the aggregate
total risk-weighted assets of insured
depository institutions controlled by
the acquiring bank holding company.
(iv) No undercapitalized insured
depository institutions.--At the time
of the transaction, no insured
depository institution controlled by
the acquiring bank holding company is
undercapitalized.
(v) Well managed.--
(I) In general.--At the time
of the transaction, the
acquiring bank holding company,
its lead insured depository
institution, and insured
depository institutions that
control at least 90 percent of
the aggregate total risk-
weighted assets of insured
depository institutions
controlled by such holding
company are well managed.
(II) No poorly managed
institutions.--Except with
respect to insured depository
institutions described in
paragraph (2), no insured
depository institution
controlled by the acquiring
bank holding company has
received 1 of the 2 lowest
composite ratings at the later
of the institution's most
recent examination or
subsequent review.
(B) No unsatisfactory cra ratings.--Except
with respect to insured depository institutions
described in paragraph (3), no insured
depository institution controlled by the
acquiring bank holding company has received a
``needs to improve'' or ``substantial
noncompliance'' composite rating as a result of
the institution's most recent examination under
the Community Reinvestment Act of 1977.
(C) Competitive criteria.--Consummation of
the proposal complies with guidelines
established by the Board by regulation, after
consultation with the Attorney General, that
identify proposals that are not likely to have
a significantly adverse effect on competition
in any relevant market.
(D) Size of acquisition.--
(i) Asset size.--The book value of
the total assets to be acquired does
not exceed 10 percent of the
consolidated total risk weighted assets
of the acquiring bank holding company.
(ii) Consideration.--The gross
consideration to be paid for the
securities or assets does not exceed 15
percent of the consolidated Tier 1
capital of the acquiring bank holding
company.
(E) Interstate acquisitions.--Board approval
of the transaction is not prohibited under
subsection (d).
(F) Compliance criterion.--During the 12-
month period ending on the date of the
transaction, no administrative enforcement
action has been commenced, and no cease and
desist order has been issued pursuant to
section 8 of the Federal Deposit Insurance Act,
against any bank holding company involved in
the transaction or any depository institution
subsidiary of any such holding company and no
such enforcement action, order, or other
administrative enforcement proceeding is
pending as of such date.
(G) Other considerations.--Board approval of
the transaction is not prohibited under
subsection (c)(3).
(H) Notification.--The acquiring bank holding
company provides written notice of the
transaction, including a description of the
terms of the transaction, to the Board and the
Attorney General, simultaneously, at least 15
business days (or such shorter period as
permitted by the Board) before the transaction
is consummated.
(I) No board disapproval.--Before the end of
the 15-day period (or the shorter period)
referred to in subparagraph (H), the Board has
not required an application under subsection
(a).
(2) Special rule relating to the requirement for well
managed institutions.--Insured depository institutions
which have been acquired by a bank holding company
during the 12-month period preceding the date of the
transaction may be excluded for purposes of paragraph
(1)(A)(v)(II) if--
(A) the bank holding company has developed a
plan for the institution to restore the capital
and management of the institution which is
acceptable to the appropriate Federal banking
agency; and
(B) all such insured depository institutions
represent, in the aggregate, less than 10
percent of the aggregate total risk-weighted
assets of all insured depository institutions
controlled by the holding company.
(3) Special rule relating to the requirement for
community investment.--Insured depository institutions
acquired during the 12-month period preceding the date
of the transaction may be excluded for purposes of
paragraph (1)(B) if the bank holding company has
developed a plan to restore the performance of the
institution to at least a ``satisfactory'' rating under
the Community Reinvestment Act of 1977 which is
acceptable to the appropriate Federal banking agency.
(4) Adjustment of percentages.--The Board may by
regulation adjust the percentages and the manner in
which the percentages of insured depository
institutions are calculated under subparagraph
(A)(v)(I) or (D) of paragraph (1) or paragraph (2)(B)
if the Board determines that such adjustment is
consistent with safety and soundness and the purposes
of this Act.
(5) Advice of attorney general.--The Attorney General
shall advise the Board during the period referred to in
paragraph (1)(H) in writing if any competitive concerns
exist with respect to the transaction.
(6) Waiver of postapproval waiting period.--If the
Attorney General advises the Board that no competitive
concerns exist with respect to the transaction, the
provisions of section 11(b) relating to a postapproval
waiting shall not apply with respect to such
transaction.
interests in nonbanking organizations
Sec. 4. (a) * * *
* * * * * * *
(c) The prohibitions in this section shall not apply to (i)
any company that was on January 4, 1977, both a bank holding
company and a labor, agricultural, or horticultural
organization exempt from taxation under section 501 of the
Internal Revenue Code of 1954, or to any labor, agricultural,
or horticultural organization to which all or substantially all
of the assets of such company are hereafter transferred, or
(ii) a company covered in 1970 more than 85 per centum of the
voting stock of which was collectively owned on June 30, 1968,
and continuously thereafter, directly or indirectly, by or for
members of the same family, or their spouses, who are lineal
descendants of common ancestors; and such prohibitions shall
not, with respect to any other bank holding company, apply to--
(1) shares of any company engaged or to be engaged
solely in one or more of the following activities: (A)
holding or operating properties used wholly or
substantially by any banking subsidiary of such bank
holding company in the operations of such banking
subsidiary or acquired for such future use; or (B)
conducting a safe deposit business; or (C) furnishing
services to or performing services for such bank
holding company or its banking subsidiaries; or (D)
liquidating assets acquired from such bank holding
company or its banking subsidiaries or acquired from
any other source prior to May 9, 1956, or the date on
which such company became a bank holding company,
whichever is later;
(2) shares acquired by a bank holding company or any
of its subsidiaries in satisfaction of a debt
previously contracted in good faith, but such shares
shall be disposed of within a period of two years from
the date on which they were acquired, except that the
Board is authorized upon application by such bank
holding company to extend such period of two years from
time to time as to such holding company [for not more
than one year at a time] if, in its judgment, such an
extension would not be detrimental to the public
interest, [but no such extensions shall extend beyond a
date five years] and, in the case of a bank holding
company which has not disposed of such shares within 5
years of the date such shares were acquired, the Board
may, upon the application of such company, grant
additional exemptions if, in the Board's judgment, such
extension would not be detrimental to the public
interest and either the bank holding company has made a
good faith attempt to dispose of such shares during
such 5-year period or the disposal of such shares
during such 5-year period would have been detrimental
to the company, but the aggregate duration of such
extensions shall not extend 10 years after the date on
which such shares were acquired;
* * * * * * *
(8) shares of any company the activities of which the
Board after due notice [and opportunity for hearing]
has determined (by order or regulation) to be so
closely related to banking or managing or controlling
banks as to be a proper incident thereto, but for
purposes of this subsection it is not closely related
to banking or managing or controlling banks for a bank
holding company to provide insurance as a principal,
agent, or broker except (A) where the insurance is
limited to assuring repayment of the outstanding
balance due on a specific extension of credit by a bank
holding company or its subsidiary in the event of the
death, disability, or involuntary unemployment of the
debtor; (B) in the case of a finance company which is a
subsidiary of a bank holding company, where the
insurance is also limited to assuring repayment of the
outstanding balance on an extension of credit in the
event of loss or damage to any property used as
collateral on such extention of credit and, during the
period beginning on the date of the enactment of this
subparagraph and ending on December 31, 1982, such
extension of credit is not more than $10,000 ($25,000
in the case of an extension of credit which is made to
finance the purchase of a residential manufactured home
and which is secured by such residential manufactured
home) and for any given year after 1982, such extension
of credit is not more than an amount equal to $10,000
($25,000 in the case of an extension of credit which is
made to finance the purchase of a residential
manufactured home and which is secured by such
residential manufactured home) increased by the
percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers published
monthly by the Bureau of Labor Statistics for the
period beginning on January 1, 1982, and ending on
December 31 of the year preceding the year in which
such extension of credit is made; (C) any insurance
agency activity in a place that (i) has a population
not exceeding five thousand (as shown by the last
preceding decennial census), or (ii) the bank holding
company, after notice and opportunity for a hearing,
demonstrates has inadequate insurance agency
facilities; (D) any insurance agency activity which was
engaged in by the bank holding company or any of its
subsidiaries on May 1, 1982, or which the Board
approved for such company or any of its subsidiaries on
or before May 1, 1982, including (i) sales of insurance
at new locations of the same bank holding company or
the same subsidiary or subsidiaries with respect to
which insurance was sold on May 1, 1982, or approved to
be sold on or before May 1, 1982, if such new locations
are confined to the State in which the principal place
of business of the bank holding company is located, any
State or States immediately adjacent to such State, and
any State or States in which insurance activities were
conducted by the bank holding company or any of its
subsidiaries on May 1, 1982, or were approved to be
conducted by the bank holding company or any of its
subsidiaries on or before May 1, 1982, and (ii) sales
of insurance coverages which may become available after
May 1, 1982, so long as those coverages insure against
the same types of risks as, or are otherwise
functionally equivalent to, coverages sold on May 1,
1982, or approved to be sold on or before May 1, 1982
(for purposes of this subparagraph, activities engaged
in or approved by the Board on May 1, 1982, shall
include activities carried on subsequent to that date
as the result of an application to engage in such
activities pending on May 1, 1982, and approved
subsequent to that date or of the acquisition by such
company pursuant to a binding written contract entered
into on or before May 1, 1982, of another company
engaged in such activities at the time of the
acquisition); (E) any insurance activity where the
activity is limited solely to supervising on behalf of
insurance underwriters the activities of retail
insurance agents who sell (i) fidelity insurance and
property and casualty insurance on the real and
personal property used in the operations of the bank
holding company or any of its subsidiaries, and (ii)
group insurance that protects the employees of the bank
holding company or any of its subsidiaries; (F) any
insurance agency activity engaged in by a bank holding
company, or any of its subsidiaries, which bank holding
company has total assets of $50,000,000 or less:
Provided, however, That such a bank holding company and
its subsidiaries may not engage in the sale of life
insurance or annuities except as provided in
subparagraph (A), (B), or (C); or (G) where the
activity is performed, or shares of the company
involved are owned, directly or indirectly, by a bank
holding company which is registered with the Board of
Governors of the Federal Reserve System and which,
prior to January 1, 1971, was engaged, directly or
indirectly, in insurance agency activities as a
[consequence of approval by the Board prior to January
1, 1971.] consequence of approval by the Board prior to
January 1, 1971, except that, after March 30, 1997, it
shall be closely related to banking or managing or
controlling banks and a proper incident thereto to
provide insurance as a principal, agent, or broker in
any State, in full compliance with the laws and
regulations of such State that apply uniformly to each
type of insurance license or authorization in that
State, including laws that restrict a bank in that
State from having an affiliate, agent, or employee in
that State licensed to provide insurance as principal,
agent, or broker. The Board shall prescribe regulations
concerning insurance affiliations that provide
equivalent treatment for all stock and mutual fund
insurance companies that control or are affiliated with
a bank, and fully accommodate and are consistent with
State law. In determining whether a particular activity
is a proper incident to banking or managing or
controlling banks the Board shall consider whether its
performance by an affiliate of a holding company can
reasonably be expected to produce benefits to the
public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration
of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices.
In orders and regulation under this subsection, the
Board may differentiate between activities commenced de
novo and activities commenced by the acquisition, in
whole or in part, of a going concern. Notwithstanding
any other provision of this Act, if the Board finds
that an emergency exists which requires the Board to
act immediately on any application under this
subsection involving a thrift institution, and the
primary Federal regulator of such institution concurs
in such finding, the Board may dispense with the notice
and hearing requirement of this subsection and the
Board may approve or deny any such application without
notice or hearing. If an application is filed under
this paragraph in connection with an application to
make an acquisition pursuant to section 13(f) of the
Federal Deposit Insurance Act, the Board may dispense
with the notice and hearing requirement of this
paragraph and the Board may approve or deny the
application under this paragraph without notice or
hearing. If an application described in the preceding
sentence is approved, the Board shall publish in the
Federal Register, not later than 7 days after such
approval is granted, the order approving the
application and a description of the nonbanking
activities involved in the acquisition;
* * * * * * *
(i) Acquisition of Savings Associations.--
(1) * * *
* * * * * * *
(4) Solicitation of views.--
(A) Notice to director.--Upon receiving any
application or notice by a bank holding company
to acquire directly or indirectly a savings
association under subsection (c)(8), the Board
shall solicit the Director's comments and
recommendations with respect to such
acquisition.
(B) Comment period.--The comments and views
of the Director under subparagraph (A) with
respect to any acquisition subject to such
subparagraph shall be transmitted to the Board
within 30 days of the receipt by the Director
of the notice relating to such acquisition (or
such shorter period as the Board may specify if
the Board advises the Director that an
emergency exists which requires expeditious
action).
(5) Examination.--
(A) Scope.--The Board shall consult with the
Director, as appropriate, in establishing the
scope of an examination by the Board of a bank
holding company that controls directly or
indirectly a savings association.
(B) Access to inspection reports.--Upon the
request of the Director, the Board shall
furnish the Director with a copy of any
inspection report, additional examination
materials, or supervisory information relating
to any bank holding company which directly or
indirectly controls a savings association.
(6) Coordination of enforcement efforts.--The Board
and the Director shall cooperate in any enforcement
action against any bank holding company which controls
a savings association, if the relevant conduct involves
such association.
(7) Director defined.--For purposes of this section,
the term ``Director'' means the Director of the Office
of Thrift Supervision.
(j) Notice Procedures for Nonbanking Activities.--
(1) General notice procedure.--
(A) Notice requirement.--[No] Except as
provided in paragraph (3), no bank holding
company may engage in any nonbanking activity
or acquire or retain ownership or control of
the shares of a company engaged in activities
based on subsection (c)(8) or (a)(2) without
providing the Board with written notice of the
proposed transaction or activity at least 60
days before the transaction or activity is
proposed to occur or commence.
* * * * * * *
(3) No notice required for certain transactions.--No
notice under paragraph (1) or subsections (c)(8) or
(a)(2)(B) is required for a proposal by a bank holding
company to engage in any activity or acquire the shares
or assets of any company if the proposal qualifies
under paragraph (4).
(4) Criteria for statutory approval.--A proposal
qualifies under this paragraph if all of the following
criteria are met:
(A) Financial criteria.--Both before and
immediately after the proposed transaction--
(i) the acquiring bank holding
company is well capitalized;
(ii) the lead insured depository
institution of such holding company is
well capitalized;
(iii) well capitalized insured
depository institutions control at
least 80 percent of the aggregate total
risk-weighted assets of insured
depository institutions controlled by
such holding company; and
(iv) no insured depository
institution controlled by such holding
company is undercapitalized.
(B) Managerial criteria.--
(i) Well managed.--At the time of the
transaction, the acquiring bank holding
company, its lead insured depository
institution, and insured depository
institutions that control at least 90
percent of the aggregate total risk-
weighted assets of insured depository
institutions controlled by such holding
company are well managed.
(ii) Limitation on poorly managed
institutions.--Except with respect to
insured depository institutions
described in paragraph (6), no insured
depository institution controlled by
the acquiring bank holding company has
received 1 of the 2 lowest composite
ratings at the later of the
institution's most recent examination
or subsequent review.
(C) Activities permissible.--Following
consummation of the proposal, the bank holding
company engages directly or through a
subsidiary solely in--
(i) activities that are permissible
under subsection (c)(8), as determined
by the Board by regulation or order
thereunder, subject to all of the
restrictions, terms and conditions of
such subsection and such regulation or
order; and
(ii) such other activities as are
otherwise permissible under this
section, subject to the restrictions,
terms and conditions, including any
prior notice or approval requirements,
provided in this section.
(D) Size of acquisition.--
(i) Asset size.--The book value of
the total assets to be acquired does
not exceed 10 percent of the
consolidated total risk-weighted assets
of the acquiring bank holding company;
and
(ii) Consideration.--The gross
consideration to be paid for the
securities or assets does not exceed 15
percent of the consolidated Tier 1
capital of the acquiring bank holding
company.
(E) Notice not otherwise warranted.--For
proposals described in paragraph (5)(B), the
Board has not, before the conclusion of the
period provided in paragraph (5)(B), advised
the bank holding company that a notice under
paragraph (1) is required.
(F) Compliance criterion.--During the 12-
month period ending on the date on which the
bank holding company proposes to commence an
activity or acquisition, no administrative
enforcement action has been commenced, and no
cease and desist order has been issued pursuant
to section 8 of the Federal Deposit Insurance
Act, against the bank holding company or any
depository institution subsidiary of the
holding company and no such enforcement action,
order, or other administrative enforcement
proceeding is pending as of such date.
(5) Notification.--
(A) Commencement of activities approved by
rule.--A bank holding company that qualifies
under paragraph (4) and that proposes to engage
de novo, directly or through a subsidiary, in
any activity that is permissible under
subsection (c)(8), as determined by the Board
by regulation, may commence that activity
without prior notice to the Board and must
provide written notification to the Board no
later than ten business days after commencing
the activity.
(B) Activities permitted by order and
acquisitions.--
(i) In general.--At least 12 business
days before commencing any activity
pursuant to paragraph (3) (other than
an activity described in subparagraph
(A)) or acquiring shares or assets of
any company pursuant to paragraph (3),
the bank holding company shall provide
the written notification of the
proposal to the Board, unless the Board
determines that no notice or a shorter
notice period is appropriate.
(ii) Description of activities and
terms.--A notification under this
subparagraph shall include a
description of the proposed activities
and the terms of any proposed
acquisition.
(6) Recently acquired institutions.--Insured
depository institutions which have been acquired by a
bank holding company during the 12-month period
preceding the date on which the company proposes to
commence an activity or acquisition pursuant to
paragraph (3) may be excluded for purposes of paragraph
(4)(B)(ii) if--
(A) the bank holding company has developed a
plan for the institution to restore the capital
and management of the institution which is
acceptable to the appropriate Federal banking
agency; and
(B) all such insured depository institutions
represent, in the aggregate, less than 10
percent of the aggregate total risk-weighted
assets of all insured depository institutions
controlled by the bank holding company.
(7) Adjustment of percentages.--The Board may, by
regulation, adjust the percentages and the manner in
which the percentages of insured depository
institutions are calculated under paragraph (4)(B)(i),
(4)(D), or paragraph (6)(B) if the Board determines
that any such adjustment is consistent with safety and
soundness and the purposes of this Act.
* * * * * * *
----------
NATIONAL BANK CONSOLIDATION AND MERGER ACT
* * * * * * *
SEC. 2. CONSOLIDATION OF BANKS WITHIN THE SAME STATE.
(a) In General.--Any national bank or any bank incorporated
under the laws of any State may, with the approval of the
Comptroller, be consolidated with one or more national banking
associations located in the same State under the charter of a
national banking association on such terms and conditions as
may be lawfully agreed upon by a majority of the board of
directors of each association or bank proposing to consolidate,
and be ratified and confirmed by the affirmative vote of the
shareholders of each such association or bank owning at least
two-thirds of its capital stock outstanding, or by a greater
proportion of such capital stock in the case of such State bank
if the laws of the State where it is organized so require, at a
meeting to be held on the call of the directors after
publishing notice of the time, place, and object of the meeting
for four consecutive weeks in a newspaper of general
circulation published in the place where the association or
bank is located, or, if there is no such newspaper, then in the
paper of general circulation published nearest thereto, and
after sending such notice to each shareholder of record by
certified or registered mail at least ten days prior to the
meeting, except to those shareholders who specifically waive
notice, but any additional notice shall be given to the
shareholders of such State bank which may be required by the
laws of the State where it is organized. Publication of notice
may be waived, in cases where the Comptroller determines that
an emergency exists justifying such waiver, by unanimous action
of the shareholders of the association or State bank. No
approval by the Comptroller of the Currency is required under
this subsection for a transaction which involves the
consolidation of banks that, at the time of the consolidation,
are all subsidiaries (as defined in section 3 of the Federal
Deposit Insurance Act) of the same company.
(b) The consolidated association shall be liable for all
liabilities of the respective consolidating banks or
associations. The capital stock of such consolidated
association shall not be less than that required under existing
law for the organization of a national bank in the place in
which it is located: Provided, That if such consolidation shall
be voted for at such meetings by the necessary majorities of
the shareholders of each association and State bank proposing
to consolidate[, and thereafter the consolidation shall be
approved by the Comptroller], any shareholder of any of the
associations or State banks so consolidated who has voted
against such consolidation at the meeting of the association or
bank of which he is a stockholder, or who has given notice in
writing at or prior to such meeting to the presiding officer
that he dissents from the plan of consolidation, shall be
entitled to receive the value of the shares so held by him
[when such consolidation is approved by the Comptroller] upon
written request made to the consolidated association at any
time before thirty days after the date of consummation of the
consolidation, accompanied by the surrender of his stock
certificates.
* * * * * * *
Sec. 3. (a) One or more national banking associations or one
or more State banks, with the approval of the Comptroller,
under an agreement not inconsistent with this Act, may merge
into a national banking association located within the same
State, under the charter of the receiving association. The
merger agreement shall--
(1) * * *
* * * * * * *
No approval by the Comptroller of the Currency is required
under this subsection for a transaction which involves the
merger of banks that, at the time of the merger, are all
subsidiaries (as defined in section 3 of the Federal Deposit
Insurance Act) of the same company.
(b) If a merger shall be voted for at the called meetings by
the necessary majorities of the shareholders of each
association or State bank participating in the plan of merger[,
and thereafter the merger shall be approved by the
Comptroller], any shareholder of any association or State bank
to be merged into the receiving association who has voted
against such merger at the meeting of the association or bank
of which he is a stockholder, or has given notice in writing at
or prior to such meeting to the presiding officer that he
dissents from the plan of merger shall be entitled to receive
the value of the shares so held by him [when such merger shall
be approved by the Comptroller] upon written request made to
the receiving association at any time before thirty days after
the date of consummation of the merger, accompanied by the
surrender of his stock certificates.
* * * * * * *
----------
REVISED STATUTES
* * * * * * *
TITLE LXII
NATIONAL BANKS
* * * * * * *
CHAPTER ONE
ORGANIZATION AND POWERS
Sec.
5133. Formation of national banking associations.
5134. Requisites of organization certificate.
5135. How certificate shall be acknowledged and filed.
5136. Corporate powers of associations.
5136A. State supervision of insurance.
5136B. Insurance sales in empowerment zones.
[5136A.] 5136C. Participation in lotteries prohibited.
5137. Power to hold real property.
* * * * * * *
Sec. 5136. [Upon duly making and filing articles of
association] (a) In General.--Upon duly making and filing
articles of association and an organization certificate, the
association shall become, as from the date of the execution of
its organization certificate, a body corporate, and as such,
and in the name designated in the organization certificate, it
shall have power--
First. To adopt and use a corporate seal.
Second. To have succession from the date of the approval of
this Act, or from the date of its organization if organized
after such date of approval until such time as it be dissolved
by the act of its shareholders owning two-thirds of its stock,
or until its franchise becomes forfeited by reason of violation
of law, or until terminated by either a general or a special
Act of Congress or until its affairs be placed in the hands of
a receiver and finally wound up by him.
* * * * * * *
Seventh. To exercise by its board of directors or duly
authorized officers or agents, [subject to law,] subject to
subsection (b), section 5136A, and any other provision of law,
all such incidental powers as shall be necessary to carry on
the business of banking; by discounting and negotiating
promissory notes, drafts, bills of exchange, and other
evidences of debt; by receiving deposits; by buying and selling
exchange, coin, and bullion; by loaning money on personal
security; and by obtaining, issuing, and circulating notes
according to the provisions of this title. The business of
dealing in securities and stock by the association shall be
limited to purchasing and selling such securities and stock
without recourse, solely upon the order, and for the account
of, customers, and in no case for its own account, and the
association shall not underwrite any issue of securities or
stock: Provided, That the association may purchase for its own
account investment securities under such limitations and
restrictions as the Comptroller of the Currency may by
regulation prescribe. In no event shall the total amount of the
investment securities of any one obligor or maker, held by the
association for its own account, exceed at any time 10 per
centum of its capital stock actually paid in and unimpaired and
10 per centum of its unimpaired surplus fund, except that this
limitation shall not require any association to dispose of any
securities lawfully held by it on the date of enactment of the
Banking Act of 1935. As used in this section the term
``investment securities'' shall mean marketable obligations
evidencing indebtedness of any person, copartnership,
association, or corporation in the form of bonds, notes and/or
debentures commonly known as investment securities under such
further definition of the term ``investment securities'' as may
by regulation be prescribed by the Comptroller of the Currency.
Except as hereinafter provided or otherwise permitted by law,
nothing herein contained shall authorize the purchase by the
association for its own account of any shares of stock of any
corporation. The limitations and restrictions herein contained
as to dealing in, underwriting and purchasing for its own
account, investment securities shall not apply to obligations
of the United States, or general obligations of any State or of
any political subdivision thereof, or obligations of the
Washington Metropolitan Area Transit Authority which are
guaranteed by the Secretary of Transportation under section 9
of the National Capital Transportation Act of 1969, or
obligations issued under authority of the Federal Farm Loan
Act, as amended, or issued by the thirteen banks for
cooperatives or any of them or the Federal Home Loan Banks, or
obligations which are insured by the Secretary of Housing and
Urban Development under title XI of the National Housing Act,
or obligations which are insured by the Secretary of Housing
and Urban Development (hereafter in this sentence referred to
as the ``Secretary'' pursuant to section 207 of the National
Housing Act, if the debentures to be issued in payment of such
insured obligations are guaranteed as to principal and interest
by the United States, or obligations, participations, or other
instruments of or issued by the Federal National Mortgage
Association or the Government National Mortgage Association, or
mortgages, obligations, or other securities which are or ever
have been sold by the Federal Home Loan Mortgage Corporation
pursuant to section 305 or section 306 of the Federal Home Loan
Mortgage Corporation Act or obligations of the Federal
Financing Bank or obligations of the Environmental Financing
Authority or obligations or other instruments or securities of
the Student Loan Marketing Association, or such obligations of
any local public agency (as defined in section 110 (h) of the
Housing Act of 1949) as are secured by an agreement between the
local public agency and the Secretary in which the local public
agency agrees to borrow from said Secretary and said Secretary
agrees to lend to said local public agency, monies in an
aggregate amount which (together with any other monies
irrevocably committed to the payment of interest on such
obligations) will suffice to pay, when due, the interest on and
all installments (including the final installment) of the
principal of such obligations, which monies under the terms of
said agreement are required to be used for such payments, or
such obligations of a public housing agency (as defined in the
United States Housing Act of 1937, as amended) as are secured
(1) by an agreement between the public housing agency and the
Secretary in which the public housing agency agrees to borrow
from the Secretary and the Secretary agrees to lend to the
public housing agency, prior to the maturity of such
obligations, monies in an amount which (together with any other
monies irrevocably committed to the payment of interest on such
obligations) will suffice to pay the principal of such
obligations with interest to maturity thereon, which monies
under the terms of said agreement are required to be used for
the purpose of paying the principal of and the interest on such
obligations at their maturity, (2) by a pledge of annual
contributions under an annual contributions contract between
such public housing agency and the Secretary if such contract
shall contain the covenant by the Secretary which is authorized
by subsection (b) of section 22 of the United States Housing
Act of 1937, as amended, and if the maximum sum and the maximum
period specified in such contract pursuant to said subsection
22(b) shall not be less than the annual amount and the period
for payment which are requisite to provide for the payment when
due of all installments of principal and interest on such
obligations, or (3) by a pledge or both annual contributions
under an annual contributions contract containing the covenant
by the Secretary which is authorized by section 6(g) of the
United States Housing Act of 1937, and a loan under an
agreement between the local public housing agency and the
Secretary in which the public housing agency agrees to borrow
from the Secretary, and the Secretary agrees to lend to the
public housing agency, prior to the maturity of the obligations
involved, moneys in an amount which (together with any other
moneys irrevocably committed under the annual contributions
contract to the payment of principal and interest on such
obligations) will suffice to provide for the payment when due
of all installments of principal and interest on such
obligations, which moneys under the terms of the agreement are
required to be used for the purpose of paying the principal and
interest on such obligations at their maturity: Provided, That
in carrying on the business commonly known as the safe-deposit
business the association shall not invest in the capital stock
of a corporation organized under the law of any State to
conduct a safe-deposit business in an amount in excess of 15
per centum of the capital stock of the association actually
paid in and unimpaired and 15 per centum of its unimpaired
surplus. The limitations and restrictions herein contained as
to dealing in and underwriting investment securities shall not
apply to obligations issued by the International Bank for
Reconstruction and Development, the European Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank the African Development Bank,
the Inter-American Investment Corporation, or the International
Finance Corporation, or obligations issued by any State or
political subdivision or any agency of a State or political
subdivision for housing, university, or dormitory purposes,
which are at the time eligible for purchase by a national bank
for its own account, nor to bonds, notes and other obligations
issued by the Tennessee Valley Authority or by the United
States Postal Service,: Provided, That no association shall
hold obligations issued by any of said organizations as a
result of underwriting, dealing, or purchasing for its own
account (and for this purpose obligations as to which it is
under commitment shall be deemed to be held by it) in a total
amount exceeding at any one time 10 per centum of its capital
stock actually paid in and unimpaired and 10 per centum of its
unimpaired surplus fund. Notwithstanding any other provision in
this paragraph, the association may purchase for its own
account shares of stock issued by a corporation authorized to
be created pursuant to title IX of the Housing and Urban
Development Act of 1968, and may make investments in a
partnership, limited partnership, or joint venture formed
pursuant to section 907(a) or 907(c) of that Act.
Notwithstanding any other provision of this paragraph, the
association may purchase for its own account shares of stock
issued by any State housing corporation incorporated in the
State in which the association is located and may make
investments in loans and commitments for loans to any such
corporation: Provided, That in no event shall the total amount
of such stock held for its own account and such investments in
loans and commitments made by the association exceed at any
time 5 per centum of its capital stock actually paid in and
unimpaired plus 5 per centum of its unimpaired surplus fund.
Notwithstanding any other provision in this paragraph, the
association may purchase for its own account shares of stock
issued by a corporation organized solely for the purpose of
making loans to farmers and ranchers for agricultural purposes,
including the breeding, raising, fattening, or marketing of
livestock. However, unless the association owns at least 80 per
centum of the stock of such agricultural credit corporation the
amount invested by the association at any one time in the stock
of such corporation shall not exceed 20 per centum of the
unimpaired capital and surplus of the association: Provided
further, That notwithstanding any other provision of this
paragraph, the association may purchase for its own account
shares of stock of a bank insured by the Federal Deposit
Insurance Corporation or a holding company which owns or
controls such an insured bank if the stock of such bank or
company is owned exclusively (except to the extent directors'
qualifying shares are required by law) by depository
institutions or depository institution holding companies (as
defined in section 3 of the Federal Deposit Insurance Act) and
such bank or company and all subsidiaries thereof are engaged
exclusively in providing services to or for other depository
institutions, their holding companies, and the officers,
directors, and employees of such institutions and companies,
and in providing correspondent banking services at the request
of other depository institutions or their holding companies
(also referred to as a ``banker's bank''), but in no event
shall the total amount of such stock held by the association in
any bank or holding company exceed at any time 10 per centum of
the associations capital stock and paid in and unimpaired
surplus and in no event shall the purchase of such stock result
in an association's acquiring more than 5 per centum of any
class of voting securities of such bank or company. The
limitations and restrictions contained in this paragraph as to
an association purchasing for its own account investment
securities shall not apply to securities that (A) are offered
and sold pursuant to section 4(5) of the Securities Act of 1933
(15 U.S.C. 77d(5)); (B) are small business related securities
(as defined in section 3(a)(53) of the Securities Exchange Act
of 1934); or (C) are mortgage related securities (as that term
is defined in section 3(a)(41) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)(41)). The exception provided for the
securities described in subparagraphs (A), (B), and (C) shall
be subject to such regulations as the Comptroller of the
Currency may prescribe, including regulations prescribing
minimum size of the issue (at the time of initial distribution)
or minimum aggregate sales prices, or both. A national banking
association may deal in, underwrite, and purchase for such
association's own account qualified Canadian government
obligations to the same extent that such association may deal
in, underwrite, and purchase for such association's own account
obligations of the United States or general obligations of any
State or of any political subdivision thereof. For purposes of
this paragraph--
(1) the term ``qualified Canadian government
obligations'' means any debt obligation which is backed
by Canada, any Province of Canada, or any political
subdivision of any such Province to a degree which is
comparable to the liability of the United States, any
State, or any political subdivision thereof for any
obligation which is backed by the full faith and credit
of the United States, such State, or such political
subdivision, and such term includes any debt obligation
of any agent of Canada or any such Province or any
political subdivision of such Province if--
(A) the obligation of the agent is assumed in
such agent's capacity as agent for Canada or
such Province or such political subdivision;
and
(B) Canada, such Province, or such political
subdivision on whose behalf such agent is
acting with respect to such obligation is
ultimately and unconditionally liable for such
obligation; and
(2) the term ``Province of Canada'' means a Province
of Canada and includes the Yukon Territory and the
Northwest Territories and their successors.
(b) Interpretive Authority of the Comptroller of the
Currency.--
(1) In general.--Subject to paragraph (2), it shall
not be incidental to banking for a national bank to
provide insurance as a principal, agent, or broker.
(2) Scope of application.--Notwithstanding paragraph
(1), it shall be incidental to banking for a national
bank to engage in the following activities:
(A) Providing, as an agent or broker, any
annuity contract the income on which is tax
deferred under section 72 of the Internal
Revenue Code of 1986.
(B) Providing, as a principal, agent, or
broker, any type of insurance, other than an
annuity or title insurance, which the
Comptroller of the Currency specifically
determined, before May 1, 1995, to be
incidental to banking with respect to national
banks.
SEC. 5136A. STATE SUPERVISION OF INSURANCE.
(a) State Licensing of Insurance Activities.--
(1) In general.--Subject to paragraph (2), no
provision of section 5136, any other section of this
title, or section 13 of the Federal Reserve Act may be
construed as limiting or otherwise impairing the
authority of any State to regulate--
(A) the extent to which, and the manner in
which, a national bank may engage within the
State in insurance activities pursuant to
section 5136B of this chapter or section 13 of
the Federal Reserve Act;
(B) the manner in which a national bank may
engage within the State in insurance activities
pursuant to section 5136(b)(2)(B) of the
Revised Statutes of the United States; or
(C) the manner in which a national bank may
engage within the State in insurance activities
pursuant to section 5136(b)(2)(A) of the
Revised Statutes of the United States through,
and limited to, consumer disclosure
requirements or licensing requirements,
procedures, and qualifications as described in
paragraph (2)(C).
(2) Prohibition on state discrimination against
national banks.--Notwithstanding paragraph (1)--
(A) Providing insurance as agent or broker.--
No State may impose any insurance regulatory
requirement relating to providing insurance as
an agent or broker that treats a national bank
differently than all other persons who are
authorized to provide insurance as agents or
brokers in such State, unless there is a
legitimate and reasonable State regulatory
purpose for the requirement for which there is
no less restrictive alternative.
(B) Providing insurance as principal, agent,
or broker.--
(i) No State may impose on a national
bank any insurance regulatory
requirement relating to providing
insurance as principal, agent, or
broker that treats the national bank
more restrictively than any other
depository institution (as defined in
section 3(c)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(c)(1))
operating in the State.
(ii) Nothing in this subparagraph
shall affect the validity of a State
law that--
(I) prevents a national bank
from engaging in insurance
activities within the State to
as great an extent as a savings
association (as defined in
section 3(b)(1) of the Federal
Deposit Insurance Act, 12
U.S.C. 1813(b)(1)) may engage
in such activities within the
State; and
(II) was in effect on June 1,
1995.
(C) Licensing qualifications and
procedures.--No State may discriminate against
a national bank with respect to the following
requirements, procedures, and qualifications as
such requirements, procedures, and
qualifications relate to the authority of the
national bank to provide insurance in such
State as an agent or broker:
(i) License application and
processing procedures.
(ii) Character, experience, and
educational qualifications for
licenses.
(iii) Testing and examination
requirements for licenses.
(iv) Fee requirements for licenses.
(v) Continuing education
requirements.
(vi) Types of licenses required.
(vii) Standards and requirements for
renewal of licenses.
(b) Authority of the Comptroller of the Currency.--A national
bank may not provide insurance as a principal, agent, or broker
except as specifically provided in this section, the paragraph
designated as the ``Seventh'' of section 5136(a) of this
chapter, section 5136(b) or 5136B of this chapter, or section
13 of the Federal Reserve Act.
(c) Preservation of Federally Authorized Bank Activities in
Permissive States.--No provision of this section may be
construed as affecting the authority, pursuant to section 5136B
of this chapter or section 13 of the Federal Reserve Act, of a
national bank to act as insurance agent or broker consistent
with State law.
(d) Preservation of National Bank Authority Consistent With
State Bank Authority.--Except as provided in subsection
(a)(2)(B), no provision of this section or section 5136(b)(1)
shall have the effect of enabling a State to deny a national
bank authority that the bank otherwise possesses to provide a
product in a State, including as agent, broker, or principal,
where the bank is not providing the product in the State other
than to an extent and in a manner that a State bank (as defined
in section 3(a)(2) of the Federal Deposit Insurance Act, 12
U.S.C. 1813(a)(2)) is permitted by the law of the State to
provide such product, except that nothing in this subsection
shall be construed as granting any new authority to a national
bank to provide any product because the law of the State has
authorized State banks to provide such product.
(e) Definitions.--For purposes of this section, sections 5136
and 5136B, and section 13 of the Federal Reserve Act, the
following definitions shall apply:
(1) Insurance.--The term ``insurance'' means any
product defined or regulated as insurance, consistent
with the relevant State insurance law, by the insurance
regulatory authority of the State in which such product
is sold, solicited, or underwritten, including any
annuity contract the income on which is tax deferred
under section 72 of the Internal Revenue Code of 1986.
(2) State.--The term ``State'' has the same meaning
as in section 3(a)(3) of the Federal Deposit Insurance
Act.
(f) Grandfather Provision.--
(1) In general.--Any national bank which, before
January 1, 1995, was providing insurance as agent or
broker under section 13 of the Federal Reserve Act may
provide insurance as an agent or broker under such
section, to no less extent and in a no more restrictive
manner as such bank was providing insurance as agent or
broker under such section on January 1, 1995,
notwithstanding contrary State law, subject to final,
controlling judgment in a pending action.
(2) Termination.--This subsection shall cease to
apply with respect to any national bank described in
paragraph (1) if--
(A) the bank is subject to an acquisition,
merger, consolidation, or change in control,
other than a transaction to which section
18(c)(12) of the Federal Deposit Insurance Act
applies; or
(B) any bank holding company which directly
or indirectly controls such bank is subject to
an acquisition, merger, consolidation, or
change in control, other than a transaction in
which the beneficial ownership of such bank
holding company or of a bank holding company
which controls such company does not change as
a result of the transaction.
(g) Preservation of Banking Products.--Nothing in this
section shall be construed as affecting the ability of a
national bank, or a subsidiary of a national bank, to engage in
any activity, including any activity authorized pursuant to the
paragraph designated the ``Seventh'' of section 5136(a), that
is part of, and not merely incidental to, the business of
banking.
SEC. 5136B. INSURANCE SALES IN EMPOWERMENT ZONES.
(a) Authority to Sell Insurance as Agent From Empowerment
Zones.--The Comptroller of the Currency may approve an
application by a national bank maintaining a main office or
full-service branch in an empowerment zone to act as an agent
or broker from such office or branch for any fire, life, or
other insurance company authorized to do business in the State
in which the customer is located if--
(1) the bank provides sufficient evidence that the
availability of competitively priced insurance products
in the empowerment zone is inadequate; and
(2) the insurance products are sold only in the
empowerment zone.
(b) Application of State Law.--State laws which regulate
conducting the business of insurance shall apply to national
banks and their employees that sell insurance as agent or
broker under this section to the same extent as such laws apply
to other entities and persons not affiliated with depository
institutions except--
(1) in any case in which the Comptroller of the
Currency determines, after notice to and comment by the
appropriate State insurance officials, that the
application of a State law would have an unreasonably
discriminatory effect upon the sale of insurance by
national banks or their employees in comparison with
the effect the application of the State law would have
with respect to sale of insurance by other entities; or
(2) when State law by its own terms does not apply to
national banks or employees of such banks.
(c) Authority of Comptroller of the Currency.--
(1) In general.--The Comptroller of the Currency may
prescribe regulations governing sales of insurance by
national banks pursuant to this section.
(2) Enforcement of state law.--The provisions of any
State law to which an national bank is subject under
this section shall be enforced with respect to such
bank by the Comptroller of the Currency.
(d) Definitions.--
(1) Empowerment zone.--The term ``empowerment zone''
means an area that meets the standards for designation
as an empowerment zone or enterprise community under
section 1392 of the Internal Revenue Code of 1986 or an
Indian reservation.
(2) Full-service branch.--The term ``full-service
branch'' means a staffed facility which has been
approved as a branch and offers loan and deposit
services.
(3) Indian reservation.--The term ``Indian
reservation'' has the meaning given such term by
section 168(j)(6) of the Internal Revenue Code of 1986.
Sec. [5136A.] 5136C. (a) A national bank may not--
(1) deal in lottery tickets;
(2) deal in bets used as a means or substitute for
participation in a lottery;
* * * * * * *
Sec. 5146. Every director must during his whole term of
service, be a citizen of the United States, and at least a
majority of the directors must have resided in the State,
Territory, or District in which the association is located, or
within one hundred miles of the location of the office of the
association, for at least one year immediately preceding their
election, and must be residents of such State or within a one-
hundred-mile territory of the location of the association
during their continuance in office, except that (1) the
Comptroller of the Currency may, in the Comptroller's
discretion, waive the residency requirement in the case of any
director of a national bank to whom the requirement would
otherwise apply, and (2) in the case of an association which is
a subsidiary or affiliate of a foreign bank, the Comptroller of
the Currency may in his discretion waive the requirement of
citizenship in the case of not more than a minority of the
total number of directors. Every director must own in his or
her own right either shares of the capital stock of the
association of which he or she is a director the aggregate par
value of which is not less than $1,000, or an equivalent
interest, as determined by the Comptroller of the Currency, in
any company which has control over such association within the
meaning of section 2 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841). If the capital of the bank does not exceed
$25,000, every director must own in his or her own right either
shares of such capital stock the aggregate par value of which
is not less than $500, or an equivalent interest, as determined
by the Comptroller of the Currency, in any company which has
control over such association within the meaning of section 2
of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). Any
director who ceases to be the owner of the required number of
shares of the stock, or who becomes in any other manner
disqualified, shall thereby vacate his place.
* * * * * * *
Sec. 5155. The conditions upon which a national banking
association may retain or establish and operate a branch or
branches are the following:
(a) * * *
* * * * * * *
[(h) The aggregate capital of every national banking
association and its branches shall at no time be less than the
aggregate minimum capital required by law for the establishment
of an equal number of national banking associations situated in
the various places where such association and its branches are
situated.
[(i) No branch] (h) Relocation._
(1) Approval required._Except as provided in
paragraph (2), no branch of any national banking
association shall be established or moved from one
location to another without first obtaining the consent
and approval of the Comptroller of the Currency.
(2) No approval required for certain branches.--
Notwithstanding this subsection or subsection (b) or
(c), the consent and approval of the Comptroller of the
Currency shall not be required for a national bank to
establish and operate, or to retain and operate, a
branch or seasonal agency if--
(A) the bank is well capitalized (as defined
in section 38 of the Federal Deposit Insurance
Act and regulations prescribed by the
Comptroller of the Currency under such
section);
(B) the bank received a composite CAMEL
rating of ``1'' or ``2'' under the Uniform
Financial Institutions Rating System (or an
equivalent rating under a comparable rating
system) as of its most recent examination;
(C) the bank did not receive a ``needs to
improve'' or ``substantial noncompliance''
composite rating at its most recent examination
under the Community Reinvestment Act of 1977;
and
(D) the Comptroller of the Currency is
otherwise authorized to grant approval under
this section to such bank to establish and
operate, or to retain and operate, a branch or
seasonal agency at the proposed location.
(3) Certain branches deemed to have approved
applications.--A branch or seasonal agency established
by a national bank under paragraph (2) shall be deemed
to have been established and operated pursuant to an
application approved under this section.
[(j) The term] (i) Branch.--
(1) In general.--The term ``branch'' as used in this
section shall be held to include any branch bank,
branch office, branch agency, additional office, or any
branch place of business located in any State or
Territory of the United States or in the District of
Columbia at which deposits are received, or checks
paid, or money lent.
(2) Certain proprietary atms and remote servicing
units.--The term ``branch'' does not include any
automated teller machine or remote service unit which
is owned and operated by a depository institution--
(A) primarily for the benefit of the
institution and the affiliates of the
institution; and
(B) which could operate a branch at the
location of such machine or unit.
[(k)] (j) This section shall not be construed to amend or
repeal section 25 of the Federal Reserve Act, as amended,
authorizing the establishment by national banking associations
of branches in foreign countries, or dependencies, or insular
possessions of the United States.
[(l)] (k) The words ``State bank,'' ``State banks,''
``bank,'' or ``banks,'' as used in this section, shall be held
to include trust companies, savings banks, or other such
corporations or institutions carrying on the banking business
under the authority of State laws.
SEC. 5156A. MERGERS, CONSOLIDATIONS, AND OTHER ACQUISITIONS AUTHORIZED.
(a) * * *
(b) Expedited Approval of Acquisitions.--
(1) In general.--Any application by a national bank
to acquire or be acquired by another insured depository
institution which is required to be filed with the
Comptroller of the Currency by [section 5(d)(3) of the
Federal Deposit Insurance Act or] any other applicable
law or regulation shall be approved or disapproved in
writing by the agency before the end of the 60-day
period beginning on the date such application is filed
with the agency.
* * * * * * *
CHAPTER THREE
REGULATION OF THE BANKING BUSINESS
* * * * * * *
Sec. 5211. (a) Every association shall make reports of
condition to the Comptroller of the Currency in accordance with
the Federal Deposit Insurance Act. The Comptroller of the
Currency may call for additional reports of condition, in such
form and containing such information as he may prescribe, on
dates to be fixed by him, and may call for special reports from
any particular association whenever in his judgment the same
are necessary for his use in the performance of his supervisory
duties. Each report of condition shall contain a declaration by
the president, a vice president, the cashier, or by any other
officer designated by the board of directors of the bank to
make such declaration, that the report is true and correct to
the best of his knowledge and belief. [The correctness of the
report of condition shall be attested by the signatures of
least three of the directors of the bank other than the officer
making such declaration, with the declaration that the report
has been examined by them and to the best of their knowledge
and belief is true and correct.] Each report shall exhibit in
detail and under appropriate heads the resources and
liabilities of the association at the close of business on any
past day specified by the Comptroller, and shall be transmitted
to the Comptroller within the period of time specified by the
Comptroller. Special reports called for by the Comptroller need
contain only such information as is specified by the
Comptroller in his request therefore, and publication of such
reports need to be made only if directed by the Comptroller.
* * * * * * *
----------
SECTION 10 OF THE HOME OWNERS' LOAN ACT
SEC. 10. REGULATION OF HOLDING COMPANIES.
(a) Definitions.--
(1) In general.--As used in this section, unless the
context otherwise requires--
(A) * * *
* * * * * * *
[(D) Savings and loan holding company.--The
term ``savings and loan holding company'' means
any company which directly or indirectly
controls a savings association or controls any
other company which is a savings and loan
holding company.]
(D) Savings and loan holding company.--
(i) In general.--Except as provided
in clause (ii), the term ``savings and
loan holding company'' means any
company which directly or indirectly
controls a savings association or
controls any other company which is a
savings and loan holding company.
(ii) Exception for bank holding
company.--The term ``savings and loan
holding company'' does not include any
company which is registered under, and
subject to, the provisions of the Bank
Holding Company Act of 1956, or any
company directly or indirectly
controlled by such company.
* * * * * * *
(m) Qualified Thrift Lender Test.--
(1) In general.--Except as provided in paragraphs
[(2) and (7)] (2), (7), and (8), any savings
association is a qualified thrift lender if--
(A) the savings association's qualified
thrift investments equal or exceed 65 percent
of the savings association's portfolio assets;
and
(B) the savings association's qualified
thrift investments continue to equal or exceed
65 percent of the savings association's
portfolio assets on a monthly average basis in
9 out of every 12 months.
* * * * * * *
(8) Alternative test.--Any savings association which
meets the requirements set forth in section
7701(a)(19)(C) of the Internal Revenue Code of 1986
shall be deemed to be a qualified thrift lender and any
qualified thrift lender shall be deemed to meet the
requirements of such section.
* * * * * * *
(t) Exemption for Bank Holding Companies.--This section shall
not apply to a bank holding company that is subject to the Bank
Holding Company Act of 1956 or any company controlled by such
bank holding company (other than a savings association).
----------
FEDERAL RESERVE ACT
state banks as members
Sec. 9. Any bank incorporated by special law of any State, or
organized under the general laws of any State or of the United
States, including Morris Plan banks and other incorporated
banking institutions engaged in similar business, desiring to
become a member of the Federal Reserve System, may make
application to the Board of Governors of the Federal Reserve
System, under such rules and regulations as it may prescribe,
for the right to subscribe to the stock of the Federal reserve
bank organized within the district in which the applying bank
is located. Such application shall be for the same amount of
stock that the applying bank would be required to subscribe to
as a national bank. For the purposes of membership of any such
bank the terms ``capital'' and ``capital stock'' shall include
the amount of outstanding capital notes and debentures legally
issued by the applying bank and purchased by the Reconstruction
Finance Corporation. The Board of Governors of the Federal
Reserve System, subject to the provisions of this Act and to
such conditions as it may prescribe pursuant thereto may permit
the applying bank to become a stockholder of such Federal
reserve bank.
* * * * * * *
Any such State bank which, at the date of the approval of
this Act, has established and is operating a branch or branches
in conformity with the State law, may retain and operate the
same while remaining or upon becoming a stockholder of such
Federal reserve bank; but no such State bank may retain or
acquire stock in a Federal reserve bank except upon
relinquishment of any branch or branches established after the
date of the approval of this Act beyond the limits of the city,
town, or village in which the parent bank is situated.
Provided, however, That nothing herein contained shall prevent
any State member bank from establishing and operating branches
in the United States or any dependency or insular possession
thereof or in any foreign country, on the same terms and
conditions and subject to the same limitations and restrictions
as are applicable to the establishment of branches by national
banks except that the approval of the Board of Governors of the
Federal Reserve System, instead of the Comptroller of the
Currency, shall be obtained before any State member bank may
hereafter establish any branch and before any State bank
hereafter admitted to membership may retain any branch
established after February 25, 1927, beyond the limits of the
city, town, or village in which the parent bank is situated.
The approval of the Board shall likewise be obtained before any
State member bank may establish any new branch within the
limits of any such city, town, or village (except within the
District of Columbia.) Notwithstanding the preceding 2
sentences, the approval of the Board shall not be required for
a State member bank to establish and operate a branch or
seasonal agency if--
(A) the State member bank is well-capitalized (as
defined in section 38 of the Federal Deposit Insurance
Act and regulations prescribed by the Board under such
section);
(B) the State member bank received a composite CAMEL
rating of ``1'' or ``2'' under the Uniform Financial
Institutions Rating System (or an equivalent rating
under a comparable rating system);
(C) the State member bank did not receive a ``needs
to improve'' or ``substantial noncompliance'' composite
rating at its most recent examination under the
Community reinvestment Act; and
(D) the Board is otherwise authorized to grant
approval under this section to such State member bank
to establish and operate a branch or seasonal agency at
the proposed location.
A branch or seasonal agency established by a State member bank
under the previous sentence shall be deemed to have been
established and operated pursuant to an application approved
under this section.
* * * * * * *
powers of federal reserve banks
Sec. 13. Any Federal reserve bank may receive from any of its
member banks or other depository institutions, and from the
United States, deposits of current funds in lawful money,
national-bank notes, Federal reserve notes, or checks, and
drafts, payable upon presentation or other items, and also, for
collection, maturing notes and bills; or, solely for purposes
of exchange or of collection, may receive from other Federal
reserve banks deposits of current funds in lawful money,
national-bank notes, or checks upon other Federal reserve
banks, and checks and drafts, payable upon presentation within
its district or other items, and maturing notes and bills
payable within its district; or, solely for the purposes of
exchange or of collection, may receive from any nonmember bank
or trust company or other depository institution deposits of
current funds in lawful money, national-bank notes, Federal
reserve notes, checks and drafts payable upon presentation or
other items, or maturing notes and bills: Provided, Such
nonmember bank or trust company or other depository institution
maintains with the Federal reserve bank of its district a
balance in such amount as the Board determines taking into
account items in transit, services provided by the Federal
Reserve bank, and other factors as the Board may deem
appropriate: Provided further, That nothing in this or any
other section of this Act shall be construed as prohibiting a
member or nonmember bank or other depository institution from
making reasonable charges, to be determined and regulated by
the Board of Governors of the Federal Reserve System, but in no
case to exceed 10 cents per $100 or fraction thereof, based on
the total of checks and drafts presented at any one time, for
collection or payment of checks and drafts and remission
therefor by exchange or otherwise; but no such charges shall be
made against the Federal reserve banks.
* * * * * * *
That in addition to the powers not vested by law in national
banking associations organized under the laws of the United
States, and subject to section 5136A of the Revised Statutes of
the United States, any such association located and doing
business in any place the population of which does not exceed
five thousand inhabitants, as shown by the last preceding
decennial census, may, under such rules and regulations as may
be prescribed by the Comptroller of the Currency, act as the
agent for any fire, life, or other insurance company authorized
by the authorities of the State in which said bank is located
to do business in said State, by soliciting and selling
insurance and collecting premiums on policies issued by such
company; and may receive for services so rendered such fees or
commissions as may be agreed upon between the said association
and the insurance company for which it may act as agent:
Provided, however, That no such bank shall in any case assume
or guarantee the payment of any premium on insurance policies
issued through its agency by its principal: And provided
further, That the bank shall not guarantee the truth of any
statement made by an assured in filing his application for
insurance.
* * * * * * *
Sec. 22. * * *
(d) * * *
* * * * * * *
(g)(1) Except as authorized under this subsection, no member
bank may extend credit in any manner to any of its own
executive officers. No executive officer of any member bank may
become indebted to that member bank except by means of an
extension of credit which the bank is authorized to make under
this subsection. Any extension of credit under this subsection
shall be promptly reported to the board of directors of the
bank, and may be made only if--
(A) the bank would be authorized to make it to
borrowers other than its officers;
(B) it is on terms not more favorable than those
afforded other borrowers;
(C) the officer has submitted a detailed current
financial statement; and
(D) it is on condition that it shall become due and
payable on demand of the bank at any time when the
officer is indebted to any other bank or banks on
account of extensions of credit [of any one of the
three categories respectively referred to in paragraphs
(2), (3), and (4)] of any category referred to in
paragraph (2), (3), (4), (5), or (6) in an aggregate
amount greater than the amount of credit of the same
category that could be extended to him by the bank of
which he is an officer.
* * * * * * *
(4) Home equity lines of credit.--A member bank may make a
revolving open-end extension of credit to any executive officer
of the bank if the credit--
(A) does not exceed $100,000; and
(B) is secured by a dwelling that is owned by such
officer and used by the officer as a residence.
(5) Loans secured by marketable assets.--A member bank may
extend credit to any executive officer of the bank if the
credit is secured by readily marketable assets of a value not
exceeding such amount as the Board may establish by regulation.
[(4)] (6) A member bank may make extensions of credit not
otherwise specifically authorized under this subsection to any
executive officer of the bank in an amount prescribed in a
regulation of the member bank's appropriate Federal banking
agency.
[(5)] (7) Except to the extent permitted under paragraph
[(4)] (6), a member bank may not extend credit to a partnership
in which one or more of its executive officers are partners
having either individually or together a majority interest. For
the purposes of paragraph [(4)] (6), the full amount of any
credit so extended shall be considered to have been extended to
each officer of the bank who is a member of the partnership.
[(6) Whenever an executive officer of a member bank becomes
indebted to any bank or banks (other than the one of which he
is an officer) on account of extensions of credit of any one of
the three categories respectively referred to in paragraphs
(2), (3) and (4) in an aggregate amount greater than the
aggregate amount of credit of the same category that could
lawfully be extended to him by the bank, he shall make a
written report to the board of directors of the bank, stating
the date and amount of each such extension of credit, the
security therefor, and the purposes for which the proceeds have
been or are to be used.]
[(7)] (8) This subsection does not prohibit any executive
officer of a member bank from endorsing or guaranteeing for the
protection of the bank any loan or other asset previously
acquired by the bank in good faith or from incurring any
indebtedness to the bank for the purpose of protecting the bank
against loss or giving financial assistance to it.
[(8)] (9) Each day that any extension of credit in violation
of this subsection exists is a continuation of the violation
for the purposes of section 8 of the Federal Deposit Insurance
Act.
[(9) Each member bank shall include with (but not as part of)
each report of condition and copy thereof filed under section
7(a)(3) of the Federal Deposit Insurance Act a report of all
loans under authority of this subsection made by the bank since
its previous report of condition.]
(10) The Board of Governors of the Federal Reserve System may
prescribe such rules and regulations, including definitions of
terms, as it deems necessary to effectuate the purposes and to
prevent evasions of this subsection. (12 U.S.C. 375a).
(h) Extensions of Credit to Executive Officers, Directors,
and Principal Shareholders of Member Banks.--
(1) * * *
[(2) Preferential terms prohibited.--A member bank]
(2) Preferential terms prohibited.--
(A) In general.--A member bank may extend
credit to its executive officers, directors, or
principal shareholders, or to any related
interest of such a person, only if the
extension of credit--
[(A)] (i) is made on substantially
the same terms, including interest
rates and collateral, as those
prevailing at the time for comparable
transactions by the bank with persons
who are not executive officers,
directors, principal shareholders, or
employees of the bank;
[(B)] (ii) does not involve more than
the normal risk of repayment or present
other unfavorable features; and
[(C)] (iii) the bank follows credit
underwriting procedures that are not
less stringent than those applicable to
comparable transactions by the bank
with persons who are not executive
officers, directors, principal
shareholders, or employees of the bank.
(B) Exception.--No provision of this
paragraph shall be construed as prohibiting
extensions of credit that constitute a benefit
or compensation program that is widely
available to and used by employees of the
member bank, including employees who are not
executive officers of the bank.
* * * * * * *
(8) Executive officer, director, or principal
shareholder of certain affiliates treated as executive
officer, director, or principal shareholder of member
bank.--
(A) * * *
[(B) Exception.--The Board may, by
regulation, make exceptions to subparagraph
(A), except as that subparagraph makes
applicable paragraph (2), for an executive
officer or director of a subsidiary of a
company that controls the member bank, if that
executive officer or director does not have
authority to participate, and does not
participate, in major policymaking functions of
the member bank.]
(B) Exception.--The Board may, by regulation,
make exceptions to subparagraph (A) for an
executive officer or director of a subsidiary
of a company that controls the member bank if--
(i) the executive officer or director
does not have authority to participate,
and does not participate, in major
policymaking functions of the member
bank; and
(ii) the assets of such subsidiary do
not exceed 10 percent of the
consolidated assets of a company that
controls the member bank and such
subsidiary (and is not controlled by
any other company).
* * * * * * *
(10) Board's rulemaking authority.--The Board of
Governors of the Federal Reserve System may prescribe
such regulations, including definitions of terms, as it
determines to be necessary to effectuate the purposes
and prevent evasions of this subsection. The Board
shall specify by regulation the recordkeeping required
of member banks to ensure compliance with this section.
* * * * * * *
Sec. 24A. Hereafter no national bank, without the approval of
the Comptroller of the Currency, and no State member bank,
without the approval of the Board of Governors of the Federal
Reserve System, shall (1) invest in bank premises, or in the
stock, bonds, debentures, or other such obligations of any
corporation holding the premises of such bank or (2) make loans
to or upon the security of the stock of any such corporation,
if the aggregate of all such investments and loans, together
with the amount of any indebtedness incurred by any such
corporation which is an affiliate of the bank, as defined in
section 2 of the Banking Act of 1933, as amended, will exceed
the amount of the capital stock of such bank or, in the case of
a bank which received a composite CAMEL rating of ``1'' or
``2'' under the Uniform Financial Institutions Rating System
(or an equivalent rating under a comparable rating system) as
of its most recent examination and, both before and immediately
following the investment or loan, is well capitalized (as
defined under section 38 of the Federal Deposit Insurance Act),
the amount which is equal to 150 percent of the capital stock
and surplus of such bank.
* * * * * * *
banking corporations authorized to do foreign banking business
Sec. 25A. Corporations to be organized for the purpose of
engaging in international or foreign banking or other
international or foreign financial operations, or in banking or
other financial operations in a dependency or insular
possession of the United States, either directly or through the
agency, ownership, or control of local institutions in foreign
countries, or in such dependencies or insular possessions as
provided by this section, and to act when required by the
Secretary of the Treasury as fiscal agents of the United
States, may be formed by any number of natural persons, not
less in any case than five: Provided, That nothing in this
section shall be construed to deny the right of the Secretary
of the Treasury to use any corporation organized under this
section as depositaries in Panama and the Panama Canal Zone, or
in the Philippine Islands and other insular possessions and
dependencies of the United States.
* * * * * * *
No corporation shall be organized under the provisions of
this section with a capital stock of less than $2,000,000, one-
quarter of which must be paid in before the corporation may be
authorized to begin business, and the remainder of the capital
stock of such corporation shall be paid in installments of at
least 10 per centum on the whole amount to which the
corporation shall be limited as frequently as one installment
at the end of each succeeding two months from the time of the
commencement of its business operations until the whole of the
capital stock shall be paid in: Provided, however, That
whenever $2,000,000 of the capital stock of any corporation is
paid in the remainder of the corporation's capital stock or any
unpaid part of such remainder may, with the consent of the
Board of Governors of the Federal Reserve System and subject to
such regulations and conditions as it may prescribe, be paid in
upon call from the board of directors; such unpaid
subscriptions, however, to be included in the maximum of 10 per
centum of the national bank's capital and surplus which a
national bank is permitted under the provisions of this Act to
hold in stock of corporations engaged in business of the kind
described in this section and in section 25 of the Federal
Reserve Act as amended. The capital stock of any such
corporation may be increased at any time, with the approval of
the Board of Governors of the Federal Reserve System, by a vote
of two-thirds of its shareholders or by unanimous consent in
writing of the shareholders without a meeting and without a
formal vote, but any such increase of capital shall be fully
paid in within ninety days after such approval; and may be
reduced in like manner, provided that in no event shall it be
less than $2,000,000. No corporation, except as herein
provided, shall during the time it shall continue its
operations, withdraw or permit to be withdrawn, either in the
form of dividends or otherwise, any portion of its capital.
[Any national banking association may invest in the stock of
any corporation organized under the provisions of this section,
but the aggregate amount of stock held in all corporations
engaged in business of the kind described in this section and
in section 25 of the Federal Reserve Act as amended shall not
exceed 10 per centum of the subscribing bank's capital and
surplus.] Any national bank may invest in the stock of any
corporation organized under this section. The aggregate amount
of stock held by any national bank in all corporations engaged
in business of the kind described in this section or section 25
shall not exceed an amount equal to 10 percent of the capital
and surplus of such bank unless the Board determines that the
investment of an additional amount by the bank would not be
unsafe or unsound and, in any case, shall not exceed an amount
equal to 25 percent of the capital and surplus of such bank.
* * * * * * *
----------
SECTION 107 OF THE FEDERAL CREDIT UNION ACT
powers
Sec. 107. A Federal credit union shall have succession in its
corporate name during its existence and shall have power--
(1) * * *
* * * * * * *
(5) to make loans, the maturities of which shall not
exceed twelve years except as otherwise provided
herein, and extend lines of credit to its members, to
other credit unions, and to credit union organizations
and to participate with other credit unions, credit
union organizations, or financial organizations in
making loans to credit union members in accordance with
the following:
(A) Loans to members shall be made in
conformity with criteria established by the
board of directors: Provided, That--
(i) * * *
* * * * * * *
(iv) a loan or aggregate of loans to
a director or member of the supervisory
or credit committee of the credit union
making the loan which exceeds [$10,000]
$50,000 plus pledged shares, be
approved by the board of directors;
(v) loans to other members for which
directors or members of the supervisory
or credit committee act as guarantor or
endorser be approved by the board of
directors when such loans standing
alone or when added to any outstanding
loan or loans of the guarantor or
endorser exceeds [$10,000] $50,000;
* * * * * * *
----------
DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT
Sec. 203. (a) Prohibitions.--A management official of a
depository institution or a depository holding company may not
serve as a management official of any other depository
institution or depository holding company not affiliated
therewith if an office of one of the institutions or any
depository institution that is an affiliate of such
institutions is located within either--
(1) the same primary metropolitan statistical area,
the same metropolitan statistical area, or the same
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan
statistical areas as defined by the Office of
Management and Budget, except in the case of depository
institutions with less than $20,000,000 in assets in
which case the provision of paragraph (2) shall apply,
as that in which an office of the other institution or
any depository institution that is an affiliate of such
institution is located, or
(2) the same city, town, or village as that in which
an office of the other institution or any depository
institution that is an affiliate of such other
institution is located, or in any city, town, or
village contiguous or adjacent thereto.
(b) Small Market Share Exemption.--
(1) In general.--This section shall not be construed
as prohibiting a management official of a depository
institution or depository holding company from serving
as a management official of another depository
institution or depository holding company not
affiliated with such institution or holding company if
the depository institutions or depository holding
companies with which the management official serves
hold, together with all the affiliates of such
institutions or holding companies, in the aggregate no
more that 20 percent of the deposits in each relevant
geographic banking market where offices of the
depository institutions or depository holding companies
or their affiliates are located.
(2) Relevant geographic banking market defined.--For
purposes of paragraph (1), the term ``relevant
geographic banking market'' means--
(A) the area defined by the boundaries
identified by the Board of Governors of the
Federal Reserve System;
(B) if the Board has not defined such
boundaries, the area defined by the boundaries
of the Ranally Metropolitan Area in which the
office of the depository institution or the
depository institution holding company is
located; and
(C) if the office of such institution or
company is not located within a Ranally
Metropolitan Area, the area defined by the
county (or an equivalent area of general local
government) in which such office is located.
[Sec. 204. If a depository institution or a depository
holding company has total assets exceeding $1,000,000,000, a
management official of such institution or any affiliate
thereof may not serve as a management official of any other
nonaffiliated depository institution or depository holding
company having total assets exceeding $500,000,000 or as a
management official of any affiliate of such other
institution.]
SEC. 204. DUAL SERVICE AMONG LARGER ORGANIZATIONS.
(a) In General.--If a depository institution, depository
institution holding company, or depository institution
affiliate of any such institution or company has total assets
exceeding $2,500,000,000, a management official of such
institution, company, or affiliate may not serve as a
management official of any other depository institution,
depository institution holding company, or depository
institution affiliate of any such institution or company
which--
(1) is not an affiliate of the institution, company,
or affiliate of which such person is a management
official; and
(2) has total assets exceeding $1,500,000,000.
(b) CPI Adjustments.--The dollar amounts in this section
shall be adjusted annually after December 31, 1994, by the
annual percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers published by the Bureau
of Labor Statistics.
* * * * * * *
Sec. 206. (a) A person whose service in a position as a
management official began prior to the date of enactment of
this title and who was not immediately prior to the date of
enactment of this title in violation of section 8 of the
Clayton Act is not prohibited by section 203 or section 204 of
this title from continuing to serve in that position [for a
period of, subject to the requirements of subsection (c), 20
years after the date of enactment of this title]. The
appropriate Federal depository institutions regulatory agency
may provide a reasonable period of time for compliance with
this title, not exceeding fifteen months, after any change in
circumstances which makes service described in the preceding
sentence prohibited by this title, except that a merger,
acquisition, increase in total assets, establishment of one or
more offices, or change in management responsibilities shall
not constitute changes in circumstances which would make such
service prohibited by section 203 or section 204 of this title.
(b) Effective on the date of enactment of this title, a
person who serves as a management official of a company which
is not a depository institution or a depository holding company
and as a management official of that depository institution or
depository holding company as a result of that company which is
not a depository institution or depository holding company
becoming a diversified savings and loan holding company as that
term is defined in section 408(a) of the National Housing Act.
[This subsection shall expire, subject to the requirements of
subsection (c), 20 years after the date of enactment of this
title.
[(c) Review of Existing Management Interlocks.--Upon the
timely filing of a submission by a person petitioning to serve
as a management official in more than 1 position pursuant to
subsection (a) or (b), each appropriate Federal depository
institutions regulatory agency shall, not later than 6 months
after the date of enactment of this Act--
[(1) review, on a case-by-case basis, the
circumstances under which such person has served as a
management official under the provisions of subsection
(a) or (b); and
[(2) permit the management official to continue to
serve in such position only if--
[(A) such person has provided a resolution
from the boards of directors of each affected
depository institution, depository holding
company, or company described in subsection
(b), certifying to the appropriate Federal
depository institutions regulatory agency for
each of the institutions involved that there is
no other qualified candidate from the community
described in paragraph (1) or (2) of section
203 who--
[(i) possesses the level of expertise
necessary for such service with respect
to the affected depository institution,
depository holding company, or company
described in subsection (b); and
[(ii) is willing to serve as a
management official at the affected
depository institution, depository
holding company, or company described
in subsection (b); and
[(B) the appropriate Federal depository
institutions regulatory agency determines that
continuation of service by the management
official does not produce an anticompetitive
effect with respect to each affected depository
institution, depository holding company, or
company described in subsection (b).]
* * * * * * *
Sec. 209. [(a) In General.--] Rules and regulations to carry
out this title, including rules or regulations which permit
service by a management official which would otherwise be
prohibited by section 203 or section 204, may be prescribed
by--
(1) * * *
* * * * * * *
[(b) Regulatory Standards.--An appropriate Federal depository
institution regulatory agency may permit, on a case-by-case
basis, service by a management official which would otherwise
be prohibited by section 203 or 204 only if--
[(1) the board of directors of the affected
depository institution, depository institution holding
company, or company described in section 206(b),
provides a resolution to the appropriate Federal
depository institutions regulatory agency certifying
that there is no other candidate from the community
described in paragraph (1) or (2) of section 203 who--
[(A) possesses the level of expertise
necessary for such service with respect to the
affected depository institution, depository
institution holding company, or company
described in section 206(b) and is not
prohibited from service under section 203 or
204; and
[(B) is willing to serve as a management
official at the affected depository
institution, depository institution holding
company, or company described in section
206(b); and
[(2) the appropriate Federal depository institutions
regulatory agency determines that--
[(A) the management official is critical to
the safe and sound operations of the affected
depository institution, depository institution
holding company, or company described in
section 206(b);
[(B) continuation of service by the
management official does not produce an
anticompetitive effect with respect to the
affected depository institution, depository
institution holding company, or company
described in section 206(b); and
[(C) the management official meets such
additional requirements as the agency may
impose.
[(c) Limited Exception for Management Official Consignment
Program.--
[(1) In general.--Notwithstanding the requirements of
subsection (b), an appropriate Federal depository
institutions regulatory agency may establish a program
to permit, on a case-by-case basis, service by a
management official which would otherwise be prohibited
by section 203 or 204, for a period of not more than 2
years, if the agency determines that such service
would--
[(A) improve the provision of credit to low-
and moderate-income areas;
[(B) increase the competitive position of
minority- and woman-owned institutions; or
[(C) strengthen the management of newly
chartered institutions that are in an unsafe or
unsound condition.
[(2) Extension of service period.--The appropriate
Federal depository institutions regulatory agency may
extend the 2-year period referred to in paragraph (1)
for one additional period of not more than 2 years,
subject to making a new determination described in
subparagraphs (A) through (C) of paragraph (1).]
* * * * * * *
----------
SECTION 106 OF THE BANK HOLDING COMPANY ACT AMENDMENTS OF 1970
Sec. 106. (a) * * *
(b)(1) * * *
(2)(A) * * *
* * * * * * *
[(G)(i) Each executive officer and each stockholder of
record who directly or indirectly owns, controls, or has the
power to vote more than 10 per centum of any class of voting
securities of an insured bank shall make a written report to
the board of directors of such bank for any year during which
such executive officer or shareholder has outstanding an
extension of credit from a bank which maintains a corresponding
account in the name of such bank. Such report shall include the
following information:
[(1) the maximum amount of indebtedness to the bank
maintaining the correspondent account during such year
of (a) such executive officer or stockholder of record,
(b) each company controlled by such executive officer
or stockholder, or (c) each political or campaign
committee the funds or services of which will benefit
such executive officer or stockholder, or which is
controlled by such executive officer or stockholder;
[(2) the amount of indebtedness to the bank
maintaining the correspondent account outstanding as of
a date not more than ten days prior to the date of
filing of such report of (a) such executive officer or
stockholder of record, (b) each company controlled by
such executive officer or stockholder, or (c) each
political or campaign committee the funds or services
of which will benefit such executive officer or
stockholder;
[(3) the range of interest rates charged on such
indebtedness of such executive officer or stockholder
of record; and
[(4) the terms and conditions of such indebtedness of
such executive officer or stockholder of record.
[(ii) The appropriate Federal banking agencies are
authorized to issue rules and regulations, including
definitions of terms, to require the reporting and public
disclosure of information by any bank or executive officer or
principal shareholder thereof concerning any extension of
credit by a correspondent bank to the reporting bank's
executive officers or principal shareholders, or the related
interests of such persons.]
[(H) (G) For the purpose of this paragraph--
[(i) the term ``bank'' includes a mutual savings
bank, a savings bank, and a savings association (as
those terms are defined in section 3 of the Federal
Deposit Insurance Act);
(ii) the term ``related interests of such persons''
includes any company controlled by such executive
officer, director, or person, or nay political or
campaign committee the funds or services of which will
benefit such executive officer, director, or person or
which is controlled by such executive officer,
director, or person; and
(iii) the terms ``control of a company'' and
``company'' have the same meaning as under section
22(h) of the Federal Reserve Act (12 U.S.C. 375b).
[(I)] (H) Notice under this section after separation from
service.--The resignation, termination of employment or
participation, or separation of an institution-affiliated party
(within the meaning of section 3(u) of the Federal Deposit
Insurance Act) with respect to such a bank (including a
separation caused by the closing of such a bank) shall not
affect the jurisdiction and authority of the appropriate
Federal banking agency to issue any notice and proceed under
this section against any such party, if such notice is served
before the end of the 6-year period beginning on the date such
party ceased to be such a party with respect to such bank
(whether such date occurs before, on, or after the date of the
enactment of this subparagraph).
* * * * * * *
----------
SECTION 1115 OF THE RIGHT TO FINANCIAL PRIVACY ACT
cost reimbursement
Sec. 1115. (a) Except for records obtained pursuant to
section 1103(d) or 1113 (a) through (h), or as otherwise
provided by law, a Government authority shall pay to the
financial institution assembling or providing financial records
pertaining to a customer (including corporate customers) and in
accordance with procedures established by this title a fee for
reimbursement for such costs as are reasonably necessary and
which have been directly incurred in searching for,
reproducing, or transporting books, papers, records, or other
data required or requested to be produced. The Board of
Governors of the Federal Reserve System shall, by regulation,
establish the rates and conditions under which such payment may
be made.
(b) This section shall take effect on October 1, 1979.
----------
CHAPTER 53 OF TITLE 31, UNITED STATES CODE
CHAPTER 53--MONETARY TRANSACTIONS
* * * * * * *
SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS
5311. Declaration of purpose.
* * * * * * *
[5327. Identification of financial institutions.]
5327. Identification of foreign nonbank financial institutions.
* * * * * * *
Sec. 5327. Identification of foreign nonbank financial institutions
(a) Regulations Required.--The Secretary of the Treasury
shall prescribe regulations requiring each depository
institution to identify any customer (of the depository
institution) which--
[(1) is a financial institution described in--
[(A) any subparagraph of section 5312(a)(2)
other than subparagraphs (A) through (G); or
[(B) any regulation under any such
subparagraph; and]
(1) is a financial institution (other than a foreign
bank (as defined in section 101(b) of the International
Banking Act of 1978)) which is a foreign person; and
* * * * * * *
----------
SECTION 905 OF THE INTERNATIONAL LENDING SUPERVISION ACT OF 1983
reserves
Sec. 905. (a)(1) Each appropriate Federal banking agency
[shall] may require a banking institution to establish and
maintain a special reserve whenever, in the judgment of such
appropriate Federal banking agency--
(A) the quality of such banking institution's assets
has been impaired by a protracted inability of public
or private borrowers in a foreign country to make
payments on their external indebtedness as indicated by
such factors, among others, as--
(i) a failure by such public or private
borrowers to make full interest payments on
external indebtedness;
(ii) a failure to comply with the terms of
any restructured indebtedness; or
(iii) a failure by the foreign country to
comply with any International Monetary Fund or
other suitable adjustment program; or
(B) no definite prospects exist for the orderly
restoration of debt service.
* * * * * * *
(b) The appropriate Federal banking agencies [shall] may
analyze the results of foreign loan rescheduling negotiations,
assess the loan loss risk reflected in rescheduling agreements,
and, using the powers set forth in section 908 (regarding
capital adequacy), ensure that the capital and reserve
positions of United States banks are adequate to accommodate
potential losses on their foreign loans.
* * * * * * *
SECTION 7 OF THE INTERNATIONAL BANKING ACT OF 1978
authority of federal reserve system
Sec. 7. (a) * * *
* * * * * * *
(c)
(1) Examination of branches, agencies, and
affiliates.--
(A) In general.--The Board may examine each
branch or agency of a foreign bank, each
commercial lending company or bank controlled
by 1 or more foreign banks or 1 or more foreign
companies that control a foreign bank, and
other office or affiliate of a foreign bank
conducting business in any State.
(B) Coordination of examinations.--
(i) In general.--The Board shall
coordinate examinations under this
paragraph with the Comptroller of the
Currency, the Federal Deposit Insurance
Corporation, and appropriate State bank
supervisors to the extent such
coordination is possible.
(ii) Simultaneous examinations.--The
Board may request simultaneous
examinations of each office of a
foreign bank and each affiliate of such
bank operating in the United States.
(iii) Avoidance of duplication.--In
exercising its authority under this
paragraph, the Board shall take all
reasonable measures to reduce burden
and avoid unnecessary duplication of
examinations.
[(C) Annual on-site examination.--Each branch
or agency of a foreign bank shall be examined
at least once during each 12-month period
(beginning on the date the most recent
examination of such branch or agency ended) in
an on-site examination.
[(D) Cost of examinations.--The cost of any
examination under subparagraph (A) shall be
assessed against and collected from the foreign
bank or the foreign company that controls the
foreign bank, as the case may be.]
(C) On-site examination.--Each Federal branch
or agency, and each State branch or agency, of
a foreign bank shall be subject to on-site
examination by a Federal banking agency or
State bank supervisor as frequently as would a
national bank or State bank, respectively, by
its appropriate Federal banking agency.
(D) Cost of examinations.--The cost of any
examination undertaken pursuant to subparagraph
(A) shall be assessed against and collected
from the foreign bank or the foreign company
that controls the foreign bank, as the case may
be, but only to the same extent that fees are
collected by the Board for examination of any
State member insured bank.
(d) Establishment of Foreign Bank Offices in the United
States.--
(1) Prior approval required.--No foreign bank may
establish a branch or an agency, or acquire ownership
or control of a commercial lending company, without the
prior approval of the Board.
(2) Required standards for approval.--[The] Except as
provided in paragraph (6), the Board may not approve an
application under paragraph (1) unless it determines
that--
(A) the foreign bank engages directly in the
business of banking outside of the United
States and is subject to comprehensive
supervision or regulation on a consolidated
basis by the appropriate authorities in its
home country; and
(B) the foreign bank has furnished to the
Board the information it needs to adequately
assess the application.
* * * * * * *
(5) Establishment of conditions.--[Consistent with
the standards for approval in paragraph (2), the] The
Board may impose such conditions on its approval under
this subsection as it deems necessary.
(6) Exception.--
(A) In general.--If the Board is unable to
find under paragraph (2) that a foreign bank is
subject to comprehensive supervision or
regulation on a consolidated basis by the
appropriate authorities in its home country,
the Board may nevertheless approve an
application under paragraph (1) by such foreign
bank if--
(i) the appropriate authorities in
the home country of such foreign bank
are working to establish arrangements
for the consolidated supervision of
such bank; and
(ii) all other factors are consistent
with approval.
(B) Additional conditions.--The Board, after
requesting and considering the views of the
appropriate State bank supervisor or the
Comptroller of the Currency, as the case may
be, may impose such conditions or restrictions
relating to activities or business operations
of the proposed branch, agency, or commercial
lending company subsidiary, including
restrictions on sources of funding, as are
considered appropriate in the public interest.
(C) Modification of conditions.--Any
condition or restriction imposed by the Board
under this subsection in connection with the
approval of an application may be varied or
withdrawn where such modification is consistent
with the public interest.
(7) Time period for board action.--
(A) Final action.--The Board shall take final
action on any application under paragraph (1)
within 180 days of receipt of the application,
except that the Board may extend for 180 days
the period within which to take final action on
such application, after providing notice of,
and the reasons for, the extension to the
applicant foreign bank and any appropriate
State bank supervisor or the Comptroller of the
Currency, as the case may be.
(B) Failure to submit information.--The Board
may deny any application if it has not received
information requested from the applicant
foreign bank or appropriate authorities in the
home country in sufficient time to permit the
Board to evaluate such information adequately
within the time periods for final action set
forth in subparagraph (A).
(C) Waiver.--A foreign bank may waive the
applicability of subparagraph (A) with respect
to any such application.
(e) Termination of Foreign Bank Offices in the United
States.--
(1) Standards for termination.--The Board, after
notice and opportunity for hearing and notice to any
appropriate State bank supervisor or the Comptroller of
the Currency, may order a foreign bank that operates a
State branch or agency or commercial lending company
subsidiary or a Federal branch or agency in the United
States to terminate the activities of such branch,
agency, or subsidiary if the Board finds that--
(A)(i) the foreign bank is not subject to
comprehensive supervision or regulation on a
consolidated basis by the appropriate
authorities in its home country; [or] and
(ii) the appropriate authorities in the home
country are not making progress in establishing
arrangements for the comprehensive supervision
or regulation of such foreign bank on a
consolidated basis; or
(B)(i) there is reasonable cause to believe
that such foreign bank, or any affiliate of
such foreign bank, has committed a violation of
law or engaged in an unsafe or unsound banking
practice in the United States; and
(ii) as a result of such violation or
practice, the continued operation of the
foreign bank's branch, agency or commercial
lending company subsidiary in the United States
would not be consistent with the public
interest or with the purposes of this Act, the
Bank Holding Company Act of 1956, or the
Federal Deposit Insurance Act.
However, in making findings under this paragraph, the
Board shall not make size the sole determinant factor,
and may take into account the needs of the community as
well as the length of operation of the foreign bank and
its relative size in its home country. Nothing in this
paragraph shall affect the ability of the Board to
order a State branch, agency, or commercial lending
company subsidiary or a Federal branch or agency to
terminate its activities in the United States pursuant
to any standard set forth in this Act.
* * * * * * *
[(5) Recommendation to agency for termination of a
federal branch or agency.--The Board may transmit to
the Comptroller of the Currency a recommendation that
the license of any Federal branch or Federal agency of
a foreign bank be terminated in accordance with section
4(i) if the Board has reasonable cause to believe that
such foreign bank or any affiliate of such foreign bank
has engaged in conduct for which the activities of any
State branch or agency may be terminated under
paragraph (1).]
[(6)] (5) Enforcement of orders.--
(A) In general.--In the case of contumacy of
any office or subsidiary of the foreign bank
against which--
(i) the Board has issued an order
under paragraph (1); or
(ii) the Comptroller of the Currency
has issued an order under section 4(i),
or a refusal by such office or subsidiary to
comply with such order, the Board or the
Comptroller of the Currency may invoke the aid
of the district court of the United States
within the jurisdiction of which the office or
subsidiary is located.
(B) Court order.--Any court referred to in
subparagraph (A) may issue an order requiring
compliance with an order referred to in
subparagraph (A).
[(7)] (6) Criteria relating to foreign supervision.--
Not later than 1 year after the date of enactment of
this subsection, the Board, in consultation with the
Secretary of the Treasury, shall develop and publish
criteria to be used in evaluating the operation of any
foreign bank in the United States that the Board has
determined is not subject to comprehensive supervision
or regulation on a consolidated basis. In developing
such criteria, the Board shall allow reasonable
opportunity for public review and comment.
* * * * * * *
----------
SECTION 1306 OF TITLE 18, UNITED STATES CODE
Sec. 1306. Participation by financial institutions
Whoever knowingly violates section [5136A] 5136C of the
Revised Statutes of the United States, section 9A of the
Federal Reserve Act, or section 20 of the Federal Deposit
Insurance Act shall be fined under this title or imprisoned not
more than one year, or both.
----------
BANK SERVICE CORPORATION ACT
short title and definitions
Section 1. [(a) This Act may be cited as the ``Bank Service
Corporation Act''.]
(a) Short Title.--This Act may be cited as the ``Bank Service
Company Act''.
(b) For the purpose of this Act--
(1) the term ``appropriate Federal banking agency'' shall
have the meaning provided in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q));
[(2) the term ``bank service corporation'' means a
corporation organized to perform services authorized by this
Act, all of the capital stock of which is owned by one or more
insured banks;]
(2) the term ``bank service company'' means--
(A) any corporation--
(i) which is organized to perform services
authorized by this Act; and
(ii) all of the capital stock of which is
owned by 1 or more insured banks; and
(B) any limited liability company--
(i) which is organized to perform services
authorized by this Act; and
(ii) all of the members of which are 1 or
more insured banks.
* * * * * * *
(6) the term ``invest'' includes any advance of funds to a
bank service [corporation] company, whether by the purchase of
stock, the making of a loan, or otherwise, except a payment for
rent earned, goods sold and delivered, or services rendered
prior to the making of such payment; [and]
(7) the term ``limited liability company'' means any company
organized under the law of a State (as defined in section 3 of
the Federal Deposit Insurance Act) which provides that a member
or manager of such company is not personally liable for a debt,
obligation, or liability of the company solely by reason of
being, or acting as, a member or manager of such company; and
[(7)] (8) the term ``principal investor'' means the insured
bank that has the largest dollar amount invested in the
[capital stock] equity of a bank service [corporation] company.
In any case where two or more insured banks have equal dollar
amounts invested in a bank service [corporation] company, the
[corporation] company shall, prior to commencing operations,
select one of the insured banks as its principal investor and
shall notify the bank's appropriate Federal banking agency of
that choice within 5 business days of its selection.
amount of investment in bank service [corporation] company
Sec. 2. Notwithstanding any limitation or prohibition
otherwise imposed by any provision of law exclusively relating
to banks, an insured bank may invest not more than 10 per
centum of paid-in and unimpaired capital and unimpaired surplus
in a bank service [corporation] company. No insured bank shall
invest more than 5 per centum of its total assets in bank
service [corporation] companies.
permissible bank service [corporation] company activities for
depository institutions
Sec. 3. Without regard to the provisions of sections 4 and 5
of this Act, an insured bank may invest in a bank service
[corporation] company that performs, and a bank service
[corporation] company may perform, the following services only
for depository institutions: check and deposit sorting and
posting, computation and posting of interest and other credits
and charges, preparation and mailing of checks, statements,
notices, and similar items, or any other clerical, bookkeeping,
accounting, statistical, or similar functions performed for a
depository institution.
permissible bank service [corporation] company activities for other
persons
Sec. 4. (a) A bank service [corporation] company may provide
to any person any service authorized by this section, except
that a bank service [corporation] company shall not take
deposits.
(b) Except with the prior approval of the Board under section
5(b) of this Act in accordance with subsection (f) of this
section--
(1) a bank service [corporation] company shall not
perform the services authorized by this section in any
State other than that State in which its shareholders
or members are located; and
(2) all insured bank shareholders or members of a
bank service [corporation] company shall be located in
the same State.
(c) A bank service [corporation] company in which a State
bank is a shareholder or member shall perform only those
services that such State bank shareholder or member is
authorized to perform under the law of the State in which such
State bank operates and shall perform such services only at
locations in the State in which such State bank shareholder or
member could be authorized to perform such services.
(d) A bank service [corporation] company in which a national
bank is a shareholder or member shall perform only those
services that such national bank shareholder or member is
authorized to perform under the law of the United States and
shall perform such services only at locations in the State at
which such national bank shareholder or member could be
authorized to perform such services.
(e) A bank service [corporation] company that has both
national bank and State bank shareholders or members shall
perform only those services that may lawfully be performed by
both [its national bank shareholder or shareholders] any
shareholder or member of the company which is a national bank
under the law of the United States and [its State bank
shareholder or shareholders] any shareholder or member of the
company which is a State bank under the law of the State in
which [such State bank or banks] any such State bank operate
and shall perform such services only at location in the State
at which both its State bank and national bank shareholders or
members could be authorized to perform such services.
(f) Notwithstanding the other provisions of this section or
any other provision of law, other than the provisions of
Federal and State branching law regulating the geographic
location of banks to the extent that those laws are applicable
to an activity authorized by this subsection, a bank service
[corporation] company may perform at any geographic location
any service, other than deposit taking company, that the Board
has determined, by regulation, to be permissible for a bank
holding company under section 4(c)(8) of the Bank Holding
Company Act.
prior approval for investments in bank service [corporations] companies
Sec. 5. (a) No insured bank shall invest in the capital stock
of a bank service [corporation] company that performs any
service under authority of subsection (c), (d), or (e) of
section 4 of this Act without prior notice, as determined by
the bank's appropriate Federal banking agency.
(b) No insured bank shall invest in the capital stock of a
bank service [corporation] company that performs any service
under authority of section 4(f) of this Act and no bank service
[corporation] company shall perform any activity under section
4(f) of this Act without the prior approval of the Board.
(c) In determining whether to approve or deny any application
for prior approval or whether to approve or disapprove any
notice under this section, the Board or the appropriate Federal
banking agency, as the case may be, is authorized to consider
the financial and managerial resources and future prospects of
the bank or banks and bank service [corporation] company
involved, including the financial capability of the bank to
make a proposed investment under this Act, and possible adverse
effects such as undue concentration of resources, unfair or
decreased competition, conflicts of interest, or unsafe or
unsound banking practices.
(d) In the event the Board or the appropriate Federal banking
agency, as the case may be, fails to act on any application
under this section within ninety days of the submission of a
complete application to the agency, the application shall be
deemed approved.
services to nonstockholders or nonmembers
Sec. 6. No bank service [corporation] company shall
unreasonably discriminate in the provision of any services
authorized under this Act to any depository institution that
does not own stock in or is not a member of the service
[corporation] company on the basis of the fact that [the
nonstockholding institution] such depository institution is in
competition with an institution that owns stock in or is a
member of the bank service [corporation] company, except that--
(1) it shall not be considered unreasonable
discrimination for a bank service [corporation] company
to provide services to a nonstockholding or nonmember
institution only at a price that fully reflects all of
the costs of offering those services, including the
cost of capital and a reasonable return thereon; and
(2) a bank service [corporation] company may refuse
to provide services to a nonstockholding or nonmember
institution if comparable services are available from
another source at competitive overall costs, or if the
providing of services would be beyond the practical
capacity of the service [corporation] company.
regulation and examination of bank service [corporation] companies
Sec. 7. (a) A bank service [corporation] company shall be
subject to examination and regulation by the appropriate
Federal banking agency of its principal investor to the same
extent as its principal investor. The appropriate Federal
banking agency of the principal shareholder or principal member
of such a bank service [corporation] company may authorize any
other Federal banking agency that supervises any other
shareholder or member of the bank service [corporation] company
to make such an examination.
(b) A bank service [corporation] company shall be subject to
the provisions of section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818) as if the bank service [corporation]
company were an insured bank. For this purpose, the appropriate
Federal banking agency shall be the appropriate Federal banking
agency of the principal investor of the bank service
[corporation] company.
* * * * * * *
MINORITY VIEWS TO H.R. 1858
The Democratic and Independent Members of the Committee on
Banking and Financial Services voted unanimously to oppose the
Financial Institutions Regulatory Relief Act of 1995. We oppose
this ill-conceived bill because it poses a danger to the safety
and soundness of the nation's banking industry, eviscerates
well proven community development law, and seriously
compromises many consumer safeguards.
H.R. 1362 (the precursor of H.R. 1858) as introduced, was a
grab bag and was overreaching in responding to special
interests and lobbyists. This bill follows a new trend of
legislating by anecdote, not fact, as the Committee received no
documentation of costs supposedly borne by banks because of
their community or consumer obligations imposed by law. In
fact, many of the provisions in the bill were rejected in the
last Congress because they were unjustified, they gutted
consumer protection laws and they compromised the safe and
sound operation of our banks. Nonetheless, the bill, H.R. 1362,
actually was made even worse during the Subcommittee markup by
Republican amendments. As a result of these amendments,
important civil rights laws were hobbled; community development
laws were further eroded; and directors and officers who in the
past pillaged their institutions would be sheltered in the
future from liability.
Because these amendments were so damaging, to the point of
embarrassing our colleagues, a number were either pared back or
dropped altogether in the full Committee deliberations. Far
from ``accommodating'' the concerns of the minority, as
suggested by the Chairman, these amendments and other
provisions in the bill were voted down because they are simply
bad policy. Although the full Committee markup improved the
bill in several areas, the community reinvestment provisions
were made dramatically worse--so much so that there remains no
enforcement mechanism for the gutted CRA law.
As a result, the bill has justly earned the distinction of
becoming a veto target. In fact, following the Committee's
action, Secretary of the Treasury Robert Rubin wrote to inform
Chairman Leach that he would recommend that the President veto
the bill in its current form.
We, Democratic and Independent Members, fully, support
reasonable efforts to streamline government regulations, but
cannot support this extreme and radical legislation. As the
Vento substitute illustrates, it is possible to achieve more
efficient regulation without putting communities, consumers and
the deposit insurance funds at risk.
i. erosion of banks' and thrifts' commitment to serving their
communities
A. Gutting of CRA
We are extremely disappointed and alarmed by the
Committee's action in systematically dismantling the Community
Reinvestment Act (``CRA''). Because of a series of Republican
amendments, CRA, a law that has been responsible for the flow
of more than $30 billion (and by some estimates over $60
billion) to urban and rural communities across the country has
been crippled. CRA, a law that simply requires banks and
thrifts to make credit available to the communities they are
chartered to serve, has been unjustly demonized by the
Republicans on the Committee. One of our Republican colleagues
went so far as to refer to CRA as ``a bunch of crap.'' This
attitude and the actions of the Republicans demonstrate a
complete insensitivity to or lack of understanding of the
inability of low and moderate income Americans to obtain credit
in our society.
CRA has been a law that has made credit accessible for
hundreds of thousands of low- and moderate-income Americans.
CRA is not a civil rights law nor an affirmative action
measure, but rather, a law that requires institutions chartered
and insured by the federal government to lend within all the
communities they are chartered to serve. And, CRA expressly
states that serving the credit needs of local communities is to
be consistent with the safe and sound operations of
institutions.
In fact, CRA has not been found to jeopardize the safety
and soundness of institutions, nor the underlying backstop of
federal deposit insurance. Federal Reserve Board Governor
Lawrence Lindsey, in a response to Representative Frank,
referred to a few of the studies analyzing CRA loan
performance. Regarding one such study by the Woodstock
institute in 1993, Governor Lindsey wrote: ``the combined
delinquency and foreclosure rates for multifamily housing loans
in low- and moderate-income areas were slightly superior to
those gleaned from national samples reflecting loans in all
income area.'' Governor Lindsey also asserted that anecdotal
information has shown that ``loans to low- and moderate-income
people perform with respect to repayment as well as, and in
some cases better than, loans to others. Furthermore, I have
heard of no cases in which a bank's portfolio contained such a
large number of such loans that even if a significant number of
the borrowers defaulted, it would put the bank in a seriously
adverse safety and soundness position.''
President Clinton and the banking regulators are to be
lauded for their two year efforts to reform CRA regulations.
They have produced regulations which emphasize performance over
paperwork. Banks and thrifts will be judged by the loans,
investments, and services they provide to their communities--
not by the quality of their documentation. Small banks would
receive streamlined examinations and will have no reporting
requirements under CRA. Yet, despite being hailed by both the
banking industry and community groups, these regulations will
not even have the opportunity to go into effect if this bill
ever becomes law.
Because of the Republican actions in Committee,
institutions with $100 million or less in assets will be exempt
from CRA coverage altogether. Institutions with $250 million or
less in assets will be able to ``self certify'' their
compliance with the law. These two provisions would effectively
exempt close to 90% percent of banks and thrifts from CRA
coverage. Furthermore, institutions with CRA ratings of
satisfactory or above--95% of the industry--will be deemed to
have satisfied their CRA obligations until their next
examination. And, the most egregious vote by the Republicans
was to eliminate the sole enforcement mechanism in CRA--the
obligation of the regulators to take into account an
institution's record of meeting its community credit needs when
considering an institution's application to branch, acquire, or
merge with another bank or thrift.
The Republicans have effectively reduced CRA to a hollow
hope; a shadow of its former self. They have hobbled a law that
has successfully channeled billions of dollars to urban and
rural communities. At a time when public funds for such
communities are getting scarcer, private dollars are essential
to the economic vitality of these neighborhoods.
The Republican attack on the Community Reinvestment Act is
one of the major reasons cited by Secretary Rubin in a letter
to Chairman Leach advising that he would recommend to the
President that this regulatory bill be vetoed in its current
form.
B. Exemption of over 3,000 institutions from HMDA
By increasing the statutory exemption from the Home
Mortgage Disclosure Act (``HMDA'') for institutions with $10
million in assets or less, to those with $50 million in assets
or less, section 116 will exempt more than 3,000 additional
lenders from the law's coverage. Although purported to adjust
the exemption for inflation, this provision more than doubles
the actual CPI adjusted dollar figure from 1975. Furthermore,
it is unclear how many more institutions (with over $50 million
in assets) will be exempt from HMDA under the new grant of
discretion to the Federal Reserve Board. The bill permits the
Board to exempt any other lender from complying with HMDA
because the law is too burdensome. There is simply no
justification for granting this exemptive authority to the
Board which will create a gaping loophole in the law.
HMDA imposes no more obligation on financial institutions
than to report their loan data. But this data has proven to be
critical in revealing discrepancies between lending to
minorities and non-minority applicants. HMDA has put both
lenders and the public on notice about the fairness of
individual institutions' lending practices.
Disclosures under HMDA are important for purposes of
monitoring an institution's service to its community and its
compliance with the fair lending laws. While HMDA data alone is
not determinative of a fair lending violation, it is an
essential investigative tool. Because of the utility of HMDA,
both Secretary Cisneros and Acting Assistant Attorney General
Kent Markus have written letters to Committee members strongly
condemning this roll back of HMDA by the Committee.
C. Restoration of fair lending laws
We were successful in striking provisions adopted by the
Subcommittee that seriously undermined our civil rights laws.
The Subcommittee passed an amendment that would have stripped
the Attorney General of the authority to initiate cases
charging a ``pattern or practice'' of discrimination under the
Fair Housing Act and the Equal Credit Opportunity Act. In a
letter to Chairman Leach, Attorney General Reno wrote that to
prohibit the Department of Justice from challenging pattern or
practice cases would be ``unthinkable.'' Furthermore, the
amendment would have disallowed the use of disparate impact
theory in fair lending cases.
Yet, one of our Republican colleagues exhorted the
Committee to ``rein in the whole idea of the blackmail
opportunities that are here today when these suits are being
brought on disparate impact, and courts of appeals are divided
on this issue, and let's not go along with this kind of funny
business anymore . . .''. We are offended that lawsuits to
vindicate the rights of individuals who have been mistreated by
financial institutions are equated with ``blackmail'' and
``funny business.''
Moreover, amendments to the Fair Housing Act are well
outside of the Committee's jurisdiction and expertise. The far
reaching amendment would have impeded lawsuits beyond the
lending context and extended to such areas as realtor and
rental practices, and housing discrimination against families
with children. All this, without even one hearing on the topic.
Fortunately, the Committee recognized the potential and
far-reaching damage that would have been done by these
provisions and struck them from the bill.
ii. a retreat from safety and soundness
We also oppose this bill because it weakens measures
designed to ensure the safe and sound operation of federally
insured institutions. Without critical safeguards, the
taxpayers stand to lose a lot. The recent savings and loan
crisis should serve as a grave reminder of the dangers of
irresponsible deregulation of an industry. We cannot support a
bill that poses increased risk of loss to the deposit insurance
funds and the taxpayers who guarantee that fund.
A. BCCI redux
The Republican majority on the Committee struck a positive
amendment to section 223 by Congressman Kanjorski adopted at
the Subcommittee. The Kanjorski amendment provided important
safeguards necessary to help prevent another BCCI scandal. The
provisions would have (1) required that boards of directors be
comprised of a majority of outside directors; (2) prohibited
lawyers and accountants who provide professional advice to the
board of financial institutions over $250 million in size from
serving on those boards of directors; and (3) required certain
ownership disclosures to boards of directors. Those provisions
are crucial to ensuring that a board of directors serve as an
independent overseer of the financial institution. The
independence of a board is best insured when a majority of the
directors are outside directors. Furthermore, prohibiting such
outside counsel and accountants from serving on the board would
prevent a clear conflict of interest from arising, as in the
case of BCCI.
B. The wrong signal on insider lending
The amendments to current law contained in section 225
would effectively encourage the risky and unsafe practice of
self-serving insider lending. A major cause of the failure of
banks and thrifts over the past decade was their penchant for
making exorbitant and risky loans to their own officers and
directors. This unsafe practice was properly restricted in
recent years. The Republican majority now seeks to seriously
weaken those restrictions and the ability of the banking
regulators to monitor and detect that conduct. This section
contains major exceptions to the prohibition on insider lending
and eliminates bank reports on such loans.
C. The chilling of Government investigations
Section 227, requiring the government to reimburse a
financial institution for providing financial records on
corporate customers pursuant to a government request, would
have a chilling effect on major investigations and cost the
taxpayers approximately thirty million dollars in the first
year alone. In opposing this provision, the Justice Department
has stated that: ``Financial information about corporations is
a critical component of some of the Government's most important
investigations. For example, such information is often
indispensable in defense procurement fraud and money laundering
cases. . . . investigators and prosecutors with whom we spoke
indicated that requiring reimbursement for corporate record
requests could have chilling impact on investigations,
particularly in a time of declining government resources.''
D. Audit committees compromised
Section 233 of the bill repeals important bank audit
requirements legislated in response to the egregious abuses of
the thrift crisis. These requirements sought to ensure that
insured depository institutions be subject to independent,
objective and public financial audit procedures in a manner
consistent with their fiduciary responsibilities and the safety
and soundness of the banking system.
The bill would eviscerate nearly all of these requirements
for well over 90% of the nation's banking institutions. For
example, it repeals the requirement that the banks' boards of
directors establish audit committees composed entirely of
independent, outside directors. Thus, all but fewer than 10% of
U.S. banks would be able to either abolish their audit
committee altogether or appoint all insiders to the audit
committee. Service of insiders on the audit committee presents
a clear conflict of interest since those who manage the
institution can hardly be expected to objectively audit or
criticize its operations. Such an exception from the audit
committee requirement, for instutitions which enjoy the
benefits of federal deposit insurance, is a standard far below
that for nearly all privately-owned, publicly-traded American
corporations. And to make matters worse, this exception is
absolute--banking regulators are given no discretion to require
that even one member of the audit committee be an independent,
outside director.
The bill also eliminates statutory requirements that a
bank's independent accountants attest to the bank's compliance
with safety and soundness laws. It also repeals the requirement
that accountants report on, and attest to, the effectiveness of
a bank's internal control polices and procedures, which are key
to the institution's risk management and financial soundness.
These attestation requirements are critical in maintaining the
accountants' objectivity and providing essential information
about the bank's condition. The bill would also permit banking
regulators to designate certain aspects of the bank's audited
financial reports as confidential and unavailable to the
public. This patently undermines the fundamental principle of
public accountability for federally insured banks and opens the
door to concealment of basic financial information that all
investors, depositors and taxpayers have the right to know.
E. Outside directors--Hear no evil, see no evil
Section 234 would exclude outside directors from the
definition of ``institution affiliated party'' for purposes of
various enforcement actions. They should thus be subject to an
enforcement action only if an agency could prove that the
outside director ``knowingly'' or ``recklessly'' participated
in a violation of law or regulation. Currently, outside
directors are subject to the same negligence standard as
applies to other directors.
This amendment would harm corporate governance and create
perverse incentives for outside directors to avoid learning
about, or following up on, facts that could give raise to
liability. As the Federal Deposit Insurance Corporation has
stated in correspondence on the provision: ``All directors of
insured depository institutions, regardless of whether they are
inside or outside directors, have a duty to set policies for
their institutions and see that those policies are implemented
and adhered to while meeting its community's needs on a safe
and sound basis. Losses an insured depository institution can
sustain as a result of negligent oversight are not determined
by whether the negligent director is an insider or an outsider.
The experience of the FDIC has shown that both inside and
outside directors can engage in negligent conduct as well as
abusive self-dealing transactions. We believe good corporate
governance and effective regulatory oversight require that all
directors know that they will be held responsible for
fulfilling their duties to properly manage their institution.
Put differently, telling outside directors that they can be
negligent with impunity is definitely the wrong message.''
These are only the most egregious examples of how this
legislation would in many ways place our nation's insured
depository institutions on unsafe and unsound footing, and
thereby increase the risk that the taxpayers will once again be
asked to pay for the excesses of an unregulated financial
institutions industries. Fortunately, a very dangerous and
costly section of the bill added by the Republicans at the
Subcommittee was deleted at the full Committee by other
Republicans who painfully recognized the harm it would cause.
The provision would have established new rules governing the
legal liability and standard of conduct for directors and
officers of insured depository institutions. Those directors
and officers of insured depository institutions. Those rules
were roundly opposed by the banking regulators as irresponsibly
absolving directors and officers of any real duty to safely and
soundly oversee an insured depository institution.
III. The consumer is the Big Loser
A. The Home Ownership and Equity Protection Act is substantially
weakened
The bill effectively eliminates the important consumer
protection of the Home Ownership and Equity Protection Act
passed just last year, by limiting the Act's coverage to second
mortgages. The Home Ownership and Equity Protection Act, which
has not even been implemented, requires additional disclosures
in the case of mortgages with interest rates more than 10
points above comparable Treasury securities or mortgages with
fees that are more than the greater of 8 points or $400. The
Act also prohibits certain particularly abusive terms in
connection with these high cost mortgages, such as negative
amortization, prepayment penalties and balloon payments within
5 years.
The law was enacted with bipartisan support and addresses
unscrupulous lending practices. Congressional hearings
documented abusive tactics employed by certain lenders whereby
these lenders would target poor people with equity in their
homes, oftentimes with credit problems, for home equity loans.
The loans would be made for purposes of debt consolidation or
home improvements, improvements which the homeowners were often
convinced to undertake by the lender. Testimony from numerous
sources, including the National Housing Law Project and AARP,
indicated that, in the vast majority of cases lenders target
homeowners who either own their homes outright or have very
small payments remaining on their mortgages. Where mortgages do
remain, the new lender pays off any existing balance in order
to obtain the first lien. This is done both to ensure that the
new lender gets the priority lien and because federal law
prohibits interest rate regulation on first mortgages thus
allowing the high rates to be charged.
Multiple fees are usually folded into the loan amounts,
often without the knowledge of the borrower. In many cases,
because of these fees, the proceeds to the homeowner amount to
as little as one third of the loan amount. As a result,
homeowners with fixed incomes are saddled with monthly payments
they cannot afford, and inevitably their homes are subject to
foreclosure.
The Home Ownership and Equity Protection Act does not
affect a single legitimate lender, as indicated by industry
testimony during the last Congress in support of the
legislation. This year, in testimony before the Subcommittee,
Federal Reserve Board Governor Susan Phillips stated, ``It is
not immediately apparent why this revision is being proposed,
however, given the clear anecdotal and other evidence presented
to Congress at the time the law was enacted--which showed that
the abuses and problems associated with high-cost loans
occurred primarily in connection with first-lien
refinancings.''
We join the Federal Reserve Board in questioning the reason
for gutting this Act. It appears to us to be no more than
pandering to special interests at the expense of unsuspecting
consumers.
B. Truth in Savings Act protections are diminished
The bill repeals important provisions of the Truth in
Savings Act (``TISA''), which protect bank customers from
misleading, deceptive or incomplete disclosures and advertising
relating to their federally insured deposits. As introduced,
H.R. 1362 would have repealed nearly the entire Act, which
became effective only in 1993, but improvements were made
during the Subcommittee and full Committee markups. Because of
a Democrat-initiated amendment, significant consumer
protections concerning mandatory disclosure of the rates, fees
and terms of deposit accounts and any change in those items,
was restored. Under the bill, however, TISA's requirement that
banks use a uniform method of calculating and disclosing
account yields--the annual percentage yield--would be repealed.
Without such uniform disclosures, consumers cannot make
informed comparisons about banks and bank products.
Additionally, the bull strips TISA of its civil liability
provisions. Therefore, if a consumer is misled about the terms
of an account, or even if the bank fails to give the consumer
the proper interest rate, the consumer is left without recourse
against the bank under the Act. Only administrative remedies
remain. Administrative remedies alone are insufficient to
enforce the Act's provisions and vindicate an individual
customer's rights.
C. Consumer privacy breached by information sharing among affiliates
We strongly disagree with the manner in which the bill
permits affiliates and subsidiaries of depository institutions
to share confidential and sensitive financial information on
their customers. Section 142 completely overrides the statutory
protections of the Fair Credit Reporting Act (``FCRA'') without
putting in place any mechanism whereby consumers can ensure the
accuracy of the information that is being shared among
affiliated companies.
Should H.R. 1062, the Financial Services Modernization Act,
be enacted, the scope of this provision will be far reaching.
Depository institutions will be permitted to freely share
sensitive customer information with their affiliated securities
firms, and in some instances, commercial entities and insurance
companies. Under section 142, depository institutions could
establish affiliated credit bureaus with files on millions of
customers to service these companies free of any regulation.
While permitting affiliated companies to share credit
information on their customers may be a desired goal, it should
be accomplished in the context of reforming the FCRA. This was
the approach taken by the Committee in the last Congress. Last
year, the Committee, and the full House voted to allow such
sharing of information among affiliated companies, without
limiting it to depository institutions and their affiliates. In
so doing, the Committee also passed important consumer
safeguards and strengthened the FCRA. It is time for the
Committee to once again demonstrate its resolve to aid
consumers by considering and passing much needed reforms to the
FCRA.
D. The bill cedes too much authority to the Federal Reserve Board to
reduce TILA's coverage
Section 103 of the bill provides the Federal Reserve Board
with broad authority to run literally roughshod over the Truth
in Lending Act (``TILA''). This section automatically excludes
from the law's coverage any transaction that the Board
determines by regulation is not needed to carry out the
purposes of the Act. The bill further directs the Board to
exclude from TILA's coverage any class of transaction that the
Board determines does not provide a ``measurable benefit to
consumers''. Far from providing the Board with appropriate
regulatory flexibility to interpret the Act, this section
amounts to an extraordinary grant of legislative authority to a
regulator which could serve to undermine the purposes of the
Act.
E. RESPA is balkanized
Amendments made at the Subcommittee and full Committee have
mangled the enforcement of the Real Estate Settlement
Procedures Act (RESPA). These proposed changes could render
this law, which was designed to protect consumers during
settlement procedures for a home purchase, useless as a result
of the regulatory confusion. The Republican bill will transfer
responsibility for all of RESPA from the Department of Housing
and Urban Development (HUD) to the Federal Reserve except for
Sections 8, 9 and 12. The enforcement aspects of these sections
will be balkanized because enforcement will be divided among
the financial institutions' regulators and HUD.
The amendments to RESPA would also mandate HUD to use
negotiated rulemaking--even on the somewhat contentious rules
that are soon to be completed by the Department after over two
years of work by this Administration's HUD alone. Requiring HUD
to conduct negotiated rulemaking, particularly where affected
industries will never agree, will prolong the rulemaking
process indefinitely and will only further delay the resolution
of issues such as Computerized Loan Originations (CLOs) and
Controlled Business Arrangements (CBAs).
Finally, despite being labeled as mere changes to the
``purposes'' section of RESPA, the amendments will make
substantive revisions to RESPA by directing HUD how to
specifically regulate settlement services prices or
compensation agreements. Numerous Congressional hearings have
highlighted egregious practices utilized by some in the
mortgage settlement industries. Significant changes were made
in this bill to RESPA, without consideration of the
ramifications for consumers.
IV. Bank Insurance Powers--Why Are We Rolling Back Insurance Powers in
a Deregulation Bill?
A number of us are troubled by the inclusion of a provision
in a regulatory relief bill that addresses bank insurance
powers. We recognize that the approach adopted by the
Republicans was an attempt to balance the competing demands of
the banking and insurance industries and was done so at the
direction of the Republican leadership. However, this is an
issue most appropriately addressed in legislation amending the
Glass Steagall Act. We must admonish our Republican colleagues
that any attempts to join this regulatory relief bill with the
Financial Services Modernization Act of 1995, H.R. 1062, will
severely erode any possible bipartisan support that H.R. 1062
might enjoy and will diminish prospects for its v passage.
V. We Stand for Responsible Regulatory and Statutory Reform
Responding to the need for real regulatory relief, the
Committee Democrats crafted a comprehensive substitute bill
with provisions that would reduce regulatory burden without
sacrificing communities, consumers, or the taxpayer.
The Vento substitute would modernize and streamline
numerous banking laws and regulations. This regulatory burden
relief proposal will provide for a simplified and improved Real
Estate Settlement Practices Act (``RESPA'') and Truth in
Lending Act (``TILA''). It also simplifies the TILA disclosures
for Adjustable Rate Mortages (``ARMs''). Other provisions
clarify confusing disclosures to applicants relating to
assignment, sale, or transfer of loan services under RESPA.
The Democratic proposal streamlines the Truth in Savings
Act (``TISA'') without compromising its effectiveness. The
Vento substitute modifies the civil liability provision to
exclude its application to advertisements, and would further
require the Federal Reserve Board (FRB) to determine and report
to Congress within six months which accounts (if any) are not
appropriately served by the calculation of interest under the
Annual Percentage Yield (APY) formula.
The Vento substitute allows for a realistic adjustment of
the Home Mortgage Disclosure Act (HMDA) exception from
reporting for institutions with assets of $10 million or less
every five years based on CPI for inflation starting from the
beginning of calendar year 1990. It also encourages self-
testing by creditors by protecting the results of such self-
testing unless it was conducted at an agency's request, the
creditor used the results to defend themselves, or the agency
received evidence of discrimination independently of the self-
testing.
The substitute includes the comprehensive bipartisan
provisions providing relief from the ``Rodash'' case that
destabilize the mortgage banking system, including the
secondary market for mortgages. Major provisions of the
proposal include the exclusion of certain third party fees
imposed by closing agents and intangible taxes from the finance
charge; the elimination of the right of rescission for
mortgages that are refinanced with a certain lenders only where
those loans contain no new cash advances and consolidation of
other existing debt; the provision for a higher tolerance for
errors in the calculation of the finance charge equal to \1/16\
of 1% of the APR, but in no event less than $25 or more than
$200; the raising of statutory damages for loans secured by
homes from $100 to $1,000, to $250 to $2,500; and, the
provision of retroactive relief for lenders against individual
claims filed after June 1, 1995 and for class actions certified
after January 1, 1995 that relate to misdisclosure of third
party fees, errors exceeding the tolerance in section 108, or
the use of improper rescission forms.
The substitute streamlines the Bank Holding Company Act by
permitting well-capitalized and well-managed BHCs whose banks
all have received ``satisfactory'' CRA ratings to acquire
certain other banks without prior approval of the Federal
Reserve Board, but rather, through a public notice of 30 days.
It further would permit these BHCs to engage in any nonbanking
activity (closely related to banking) simply by noticing the
Board. The bill further streamlines the bank application
process for branches of banks that are well-capitalized, rated
a CAMEL 1 and 2, have at least a ``satisfactory'' CRA rating,
and seek to operate in an area that satisfies all applicable
geographic limitations with appropriate public notice and
comment.
Other streamlining measures would direct the Office of
Thrift Supervision (OTS) and the Federal Reserve Board to
coordinate and establish a unified examination procedure for
dual holding companies and streamline regulatory oversight of
such companies by requiring the agencies to coordinate and
unify regulatory requirements imposed on dual holding companies
consistent.
Importantly, the Vento substitute expands regulatory
discretion for examinations from institutions with up to $175
million to institutions with up to $250 million. It also
eliminates branch application requirements for automated teller
machines (ATMs) and remote service units while it removes the
out-dated per-branch capital standard in 12 U.S.C. Section
36(h).
Also included are reductions in overlap in foreign bank
applications and requirements that the Federal Reserve Board
should rely on examinations of other Federal and State
regulators for the examination of foreign banks to the maximum
extent practicable. The substitute would amend provisions of
the Depository Institutions Management Interlocks Act (DIMIA)
to prohibit an outside attorney or accountant of a depository
institution from serving as a director of the institution with
limited exceptions, while also requiring that a majority of
each board be made up of outside directors.
As part of comprehensive, on-going regulatory review the
substitute requires the Federal Financial Institutions
Examination Council (FFIEC) and each respective federal banking
agency represented on the FFIEC, and the National Credit Union
Administration (NCUA) Board to identify outdated or otherwise
unnecessary regulatory requirements on financial institutions,
and eliminate them as appropriate within every 10 year period.
The Vento substitute also includes the bipartisan
provisions limiting lender liability for environmental clean-up
by clarifying the liability under Federal environmental law for
lenders, fiduciaries, and Federal banking and lending agencies
and providing certainty as to when and to what extent these
parties may have liability for violations under Federal
environmental law for their lending, financial and fiduciary
activities.
These provisions show that Democratic and Independent
Members of the Banking Committee have been listening and do
what to respond to the call for true regulatory relief in an
bipartisan manner whenever possible. However, this relief
should not and does not have to come at the expense of the
American consumers, its communities or the taxpayers.
Proponents of many of the provisions of the Committee reported
regulatory repeal bill have not yet demonstrated that laws such
as the Truth in Savings Act or the Community Reinvestment Act,
significantly add to the costs of or are detrimental to
financial institutions--especially in light of record bank
profits.
For the reasons generally outlined in these views, we will
continue to oppose the provisions of H.R. 1858. We will
actively seek, however, to further improve this bill or
ultimately work for its timely demise.
Henry Gonzales.
Floyd H. Flake.
John J. LaFalce.
Cleo Fields.
Tom Barrett.
Kweisi Mfume.
Joe Kennedy.
Maurice Hinchey.
Nydia Velazquez.
Lucille Roybal-Allard.
Albert R. Wynn.
Bruce F. Vento.
Gary L. Ackerman.
Carolyn B. Maloney.
Luis V. Gutierrez.
Maxine Waters.
Paul E. Kanjorski.
Charles Schumer.
Melvin L. Watt.
Bernie Sanders.
ADDITIONAL VIEWS OF MR. FLAKE
As author of this amendment, I am offering my separate
views to be included in the final report in order to clarify
any interpretations of my empowerment zone amendment. It is my
intention for it to operate independently of section 5136A, and
the provisions of section 5136A shall not apply to the powers
of National Banks as so conferred under section 5136B.
This new section will provide greater access to insurance
in disadvantaged communities where competively priced insurance
is inadequate. Moreover, this amendment will foster economic
revitalization, such a new business and employment
opportunities, in low income neighborhoods by permitting the
sale of insurance in empowerment zones. Additionally, by
requiring the sale of insurance to occur from a ``full-service
branch'' in the empowerment zone, the amendment provides a
significant incentive for banks to improve the quality and
quantity of banking services in such communities.
Effective immediately, this amendment allows national banks
having main offices or full-service branches in areas eligible
for designation as empowerment zones or enterprise communities
under section 1392 of the Internal Revenue Code of 1986, or in
Indian reservations, to sell insurance from that location. The
designation criteria for an empowerment zone or enterprise
community assures that the community is one experiencing
economic distress.
State laws that regulate conducting the business of
insurance, including those that provide operational
restrictions protecting consumers, would apply to national
banks sale of insurance under this section. However, State laws
would not apply if the appropriate Federal banking agency
determined, after notice to and comment by the appropriate
State officials, that application of a specific State law would
have an unreasonably discriminatory effect upon the sale of
insurance by banks or their employees in comparison with the
effect the application of such state law would have on the sale
of insurance by other entities. This provision will ensure that
banks selling insurance in a State are subject to the same
operational and customer protection standards that apply to
other entities selling insurance in the State.
Floyd H. Flake.
ADDITIONAL VIEWS OF MS. WATERS
This legislation contains many objectionable provisions.
However, during consideration of the bill in committee, perhaps
the most objectionable discussion of the deliberations centered
around the bill's proposed changes to the legal standards
applied to the Fair Housing Act and Equal Credit Opportunity
Act.
Combined with the severe weakening of the Community
Reinvestment Act, including changes in its enforceability, and
the rollback of several consumer laws, I felt personally
offended by the changes which were proposed in the committee
print.
The attempt to eliminate disparate impact as a standard for
review of discrimination claims brought under the Fair Housing
Act and the Equal Credit Opportunity Act--changes which were
contained in the committee print of the bill--represented a
frontal attack on civil rights law--civil rights laws that
people have fought and died for.
Disparate impact is one of three long-standing legal
standards (intentional discrimination and disparate treatment
are the others) used to challenge discrimination. Disparate
impact is used to challenge practices that are neutral in
design but when applied has a disproportionate and
substantially discriminatory effect on people because of their
race, color, religion, sex, familial status, national origin,
or handicap. Under this analysis, practices and policies which
have a discriminatory effect must be eliminated or changed
where they have no business necessity.
This attack on our civil rights laws did not belong in this
bill. It did not belong in the Banking Committee. I do not know
who was behind it. I do not know whether it was an organized
effort on the part of a special interest. I do not know if it
was one person's bias. But whatever the source, I, and others
on the Banking Committee, were seriously disrespected by the
kinds of representations of civil rights laws that were made
during the committee deliberations.
Fortunately, the committee had the good sense to strike the
most egregious part of the underlying bill which would have
exempted an entire class of fair lending and fair housing
violations from enforcement. Those disparate impact provisions
would have created a loophole for a single industry from the
standards Congress and the Federal Courts have determined are
necessary to prohibit discrimination.
Despite the removal of these provisions from the bill, I
remain troubled that the committee was forced to spend many
hours debating an attempt to deny me my rights, my children
their rights, and which would have dramatically affected the
future of me and my people. I truly hope that as this bill
moves forward, we will not see any recurrence of this effort to
undermine longstanding civil rights laws and practices.
Maxine Waters.
ADDITIONAL VIEWS OF CONGRESSMAN MAURICE HINCHEY
incentives for self-testing for discrimination
As the author of the section 155 provisions providing
incentives for institutions to test themselves for lending or
housing discrimination, I would like to explain the intent of
this section. My substitute language for the original self-
testing provisions of the bill was adopted on a voice vote by
the Committee, and it reflects a fair and balanced approach to
this issue. It is supported by both the Justice Department and
Department of Housing and Urban Development, two of the primary
enforcement agencies for our fair lending and housing laws.
In order to provide incentives for institutions to self-
test for and correct violations of the Fair Housing Act or
Equal Credit Opportunity Act, Section 155 prevents evidence of
discrimination gathered through a self-test from being used
against an institution if the institution is taking appropriate
corrective actions for any discrimination that is found.
Testing, as defined by the Supreme Court, refers to the
method of using ``individuals who, without the intent to rent
or purchase . . . pose as renters or purchasers for the purpose
of collecting evidence of unlawful . . . practices.'' Havens
Realty Corp v. Coleman, 455 U.S. 363, 373 (1982) (defining
testers in the context of fair housing investigations). In the
fair housing and employment context, testing has traditionally
been ``paired testing''--a process that examines disparate
treatment of two individuals that are matched in every respect
except for the protected category (e.g. race, gender
disability, etc.). Paired testing is a valuable method of
obtaining evidence of disparate treatment and I strongly
encourage its use by lending institutions to find and correct
discriminatory practices.
Although paired testing is the most widely accepted form of
testing, I recognize that other testing methods may produce
similar and reliable new evidence of unlawful practices and
therefore warrant protection under the law. I intended for
Federal regulations to address the scope of what additional
practices should be accommodated within the definition of the
term ``self-test.''
The principal attribute of self-testing is that it produces
new evidence of discrimination against fictitious applicants.
Self-testing should be distinguished from compliance reviews,
file analysis, the use of second review committees, or other
methods that examine existing evidence of discrimination
against real applicants. I did not intend for Section 155 to
provide protection to apply to such activities.
It is my intent to limit evidentiary protection to those
institutions that correct discrimination found through self-
testing. Section 155 is not intended to create an evidentiary
shield for institutions that find violations of fair lending or
housing laws and fail to take appropriate steps to correct such
discrimination.
An institution that discovers discrimination should make
all reasonable efforts to determine the extent of the
discrimination and its cause including, for example, whether
the discrimination is grounded in the institution's policies,
the implementation of its policies, employee misconduct, or
some other factor. Appropriate action to rectify the cause and
effect of discrimination should be taken commensurate with the
scope of discrimination. On April 15, 1994, the Interagency
Fair Lending Task Force addressed several specific components
of ``appropriate corrective actions to address the
discrimination'' found through self-testing. ``Policy Statement
on Discrimination in Lending.'' 59 Fed. Reg. 18266, 18270-71
(``Joint Statement'').\1\ I agree with this analysis and intend
that ``appropriate corrective actions'' under Section 155 be
construed in line with the Joint Statement's guidelines.
\1\ The Task Force is composed of the top officials from each of
the ten agencies with responsibilities for fair lending enforcement--
the Department of Housing and Urban Development, Office of Federal
Enterprise Oversight, Department of Justice, Office of the Comptroller
of the Currency, Office of Thrift Supervision, Board of Governors of
the Federal Reserve System, Federal Deposit Insurance Corporation,
Federal Housing Finance Board, Federal Trade Commission, and the
National Credit Union Administration.
---------------------------------------------------------------------------
credit scoring systems
Section 156 amends the Equal Credit Opportunity Act to
clarify that credit decisions based solely on an empirically
derived, demonstrably and statistically sound credit scoring
system, as defined by the Federal Reserve Board in regulations
prescribed under this title (12 C.F.R. Pt. 202,``Regulation
B''), shall be in compliance with the non-discrimination
requirement under ECOA (subsection (a)) as long as the system
does not use any category protected under subsection (a), does
not use the functional equivalent of such a category, and does
not use any criterion that has a discriminatory effect on any
such a category unless the use of the criterion is justified by
business necessity and there in no less discriminatory
alternative available. This provision is consistent with the
Federal Reserve Board's current interpretation concerning the
use of credit scoring systems for credit decisions.
Credit scoring systems treat all applicants objectively and
therefore generally avoid the risk of disparage treatment.
There may be instances, however, when individual discretion may
be used in conjunction with the use of a credit scoring system
and therefore lend opportunity for the disparate treatment of
applicants. I firmly believe that it was not the intent of the
Committee to shield such treatment from analysis under ECOA.
Only those decision made solely based on a credit scoring
system should be deemed to be in compliance with ECOA under
this section.
The Committee accepted, by a vote of 29 to 17, my amendment
that clarifies that credit scoring systems are not immune to a
discriminatory effect analysis. As the Federal Reserve Board
has recognized, the ECOA may prohibit a practice that, although
neutral on its face and not intended to discriminate, has a
disproportionately negative effect on a prohibited basis if the
practice is not justified by business necessity with no less
discriminatory alternative available. See Appendix D to Part
202, Section 202.6, 12 C.F.R. Sec 202, Supp. 1 (1995).
disparate impact
By a vote of 32 to 15, the Committee approved my amendment
to strike provisions added at Subcommittee that would have
limited the use of disparate impact theory in fair housing and
lending cases. In doing so, the Committee, on an overwhelming
and bipartisan basis, has spoken strongly about preserving a
fundamental civil rights protection against policies that have
discriminatory effects on applicants, whether or not intent can
be proven.
Maurice Hinchey.
ADDITIONAL VIEWS OF CONGRESSMAN KENNETH E. BENTSEN, JR.
House Resolution 1858 is a flawed bill. While it could have
been a good piece of legislation providing needed regulatory
relief, protecting consumer interests, and continuing our
commitment to community reinvestment, the final bill failed to
do so, For that reason, I could not support the legislation.
I believe the Committee failed to find the appropriate
balance between regulatory relief and consumer needs with
respect to disclosure and reinvestment. While I support
addressing ``Rodash,'' RESPA, lender liability under Superfund,
as well as streamlining the financial regulatory process, this
bill strayed from its original purpose by going too far in
removing consumer safeguards and curtailing the Community
Reinvestment Act of 1977 (``CRA'').
I agree with the concept of ``self-compliance'' and ``safe
harbor'' for CRA. Banks that make a good faith effort to invest
in the communities from which they receive deposits and reach
out to traditionally underserved areas deserve to be rewarded.
However, the Committee's approach does not necessarily reward
such behavior, but rather it rewards all behavior.
I attempted to amend Sections 123 and 125 which would have
raised the rating threshold for self-compliance and safe harbor
from ``satisfactory'' to ``high satisfactory.'' The Committee
provision for the lower threshold of a ``satisfactory'' rating
exempted far too many institutions and would reward them for
less than satisfactory behavior in some categories. This
concept of ``high satisfactory'' was originally suggested by
members of the Board of Governors of the Federal Reserve and
discussed in the May 5, 1995 publication of the new rules
relating to CRA. A new category would have ensured that banks
that truly excel at meeting CRA--and there are many, including
many in my hometown of Houston--would be rewarded based upon
good performance in all categories of at least
``satisfactory.'' Unfortunately, the Committee chose to reward
ninety-five percent of all banks even if they receive a low
satisfactory rating on lending and even lower ratings on
service and investment. I could not support that, and I believe
the Administration will also find it hard to support.
The Committee also chose to change the Truth in Lending Act
by limiting disclosure relating to adjustable rate mortgage
loans. Under the Committee's bill, a lender would only have to
tell a borrower that adjustable rates fluctuate, rather than
provide historical data on adjustable rate mortgages. During
the last ten years, such rates have fluctuated within a band of
600 basis points and within the last three years a band of 300
basis point. That is considerable volatility to be described
only in rhetorical terms.
Every day, sophisticated investors and institutions
purchase adjustable rate mortgage instruments in the primary
and secondary markets relying in part on substantial historical
data. Yet the Committee believes that individual homebuyers who
may not trade in the mortgage market do not need even the
simplest and most readily available historical data in order to
understand the interest rate risk associated with such floating
rate instruments. I completely disagree with that proposition,
and I believe this Committee revisit this issue upon learning
of the number of consumers who end up with products they did
not understand due to a lack of proper disclosure. If its is
good for institutional investors, it should be good for
individual borrowers.
This bill had the opportunity to be good legislation, but
it failed. We made strides toward addressing the banking and
insurance question, albeit in a symbiotic way. The Committee
came close to engaging in a full-fledged discussion of the
proper role for banks in the insurance market. Yet, on the one
hand, while we gave banks in certain states more insurance
powers, with the other hand we took most of those powers away.
After studying this issue over the last six months, I have
become convinced that we should consider affiliation. We should
try to determine whether affiliation will increase benefits to
purchasers of insurance while protecting the professional
criteria of insurance brokerage. Consumer protection and
professionalism should not be viewed as mutually exclusive in
this instance. insurance agents and brokers bring knowledge of
both product and rules to the market which benefit the
consumer. Finally, as presented to the Committee, the
moratorium on the Comptroller of the Currency is unevenly
drafted, since it curtails institutions, not powers, thus
exacerbating not only the insurance power question, but also
creating an uneven playing field among banks.
I support finding ways to eliminate unnecessary and
redundant regulations for banks. I have supported legislative
efforts to rewrite Glass-Steagall which will make banks more
competitive and ensure that consumers can buy new products to
meet their financial needs. I believe we must maintain a
balance between protecting the consumer and giving banks needed
flexibility to adapt to the marketplace. Regulations need to be
reasonable and fair-minded. Congress should regularly exercise
its prerogative to review regulations and make appropriate
change to reflect the changing marketplace.
In fact, I would argue that the financial marketplace is
changing faster every day. Through court decisions and state
actions, federal regulations are falling behind the
marketplace. The financial market is producing new financial
products that benefit both consumers and the banks that supply
them.
We addressed issues which needed relief, but the Committee
went beyond reasonableness and reported a bill which rolls back
too much. For that reason, I could not support the bill in its
current form.
Kenneth E. Bentsen, Jr.
A P P E N D I X
----------
Committee on Commerce,
Washington, DC, July 17, 1995.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, Rayburn House
Office Building, Washington, DC.
Dear Chairman Leach: On June 29, 1995, the Committee on
Banking and Financial Services ordered reported H.R. 1858, the
Financial Institutions Regulatory Relief Act of 1995.
A number of provisions of H.R. 1858 as approved by the
Banking Committee fall within the jurisdiction of the Commerce
Committee. These include, but are not limited to, provisions
amending the Government Securities Act, provisions pertaining
to a lender's liability for environmental hazards, provisions
affecting the regulation and sale of insurance and affiliation
among different service providers, and provisions that may
apply to registrants' obligations to provide certain
information pursuant to the Securities and Exchange Act of
1934.
I have appreciated your willingness to address my concerns
with many of the provisions of H.R. 1858 that fall within the
jurisdiction of the Commerce Committee. In view of your desire
to move this legislation to the Floor in an expeditious
fashion, I do not intend to seek a sequential referral of H.R.
1858. I would appreciate, however, your commitment that the
agreements worked out between our staffs will be effected
without the need for separate amendments by the Commerce
Committee on the House Floor.
Please be advised that my agreement not to seek a
sequential referral is based on an understanding that this
waiver will be without prejudice to the Commerce Committee's
jurisdictional claims over H.R. 1858 and similar bills that may
be offered in the future and that the Commerce Committee's
jurisdiction will be protected through the appointment of
conferees should H.R. 1858 go to conference.
I appreciate your cooperation in these matters and would
further appreciate the inclusion of this letter in the Banking
Committee's report on H.R. 1858.
Sincerely,
Thomas J. Bliley, Jr., Chairman.
------
Committee on Banking and Financial Services,
Washington, DC, July 17, 1995.
Hon. Thomas J. Bliley, Jr.,
Chairman, House Commerce Committee,
Washington, DC.
Dear Mr. Chairman: Thank you for your letter of July 17,
1995, regarding a bill reported by the Committee on Banking and
Financial Services, H.R. 1858, Financial Institutions
Regulatory Relief Act of 1995.
I appreciate the interest that the Committee on Commerce
has in this important legislation. As your letter indicates,
the Committee could be successful in asserting a right to a
sequential referral of H.R. 1858. Therefore, I am most
appreciative of your decision not to request such a referral in
the interest of accommodating consideration of the bill.
You have my assurance that the agreements worked out by our
respective staffs concerning changes to Title III will be
included in a manager's amendment as we take the bill to the
House floor. You also have my commitment to work together to
achieve a mutually satisfactory resolution of the insurance and
securities issues within the jurisdiction of the Commerce
Committee. In addition, I will also support your Committee's
request to seek conferees on these matters within the
jurisdiction of the Commerce Committee.
Thank you for your cooperation in this matter and for your
support of this legislation.
Sincerely,
James A. Leach, Chairman.
------
Committee on Transportation and Infrastructure,
Washington, DC, July 12, 1995.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, Rayburn House
Office Building, Washington, DC.
Dear Mr. Chairman: Thank you for the information that on
June 29, 1995, the Committee on Banking and Financial Services
ordered reported, H.R. 1858, the Financial Institutions
Regulatory Relief Act of 1995. I believe that the Committee on
Transportation and Infrastructure clearly has a right to
sequential referral of Title III of this bill, relating to
liability of lenders and others under various Federal
environmental laws.
Title III includes detailed criteria and requirements for
liability of lenders, fiduciaries, and Federal agencies under
Federal environmental law. The bill expansively defines Federal
environmental law to include specific statutes, Federal
implementing regulations, and state-delegated laws and
regulations. H.R. 1858 also explicitly addresses liability
under the Comprehensive Environmental Response, Compensation
and Liability Act (``Superfund''), the Oil Pollution Act, and
the Clean Water Act.
As you know, the Transportation and Infrastructure
Committee has jurisdiction over Superfund, the Oil Production
Act and the Clean Water Act. Lender liability under Superfund
is of particular interest and concern to the Committee. We are
currently working on a comprehensive bill to reauthorize and
reform Superfund--the law that has generated much of the debate
over lender liability. This year, we held six hearings on
Superfund; much of the testimony focused on lender liability
and specifically on the provisions in H.R. 3800, Superfund
legislation reported by this Committee last year.
In the interest of accommodating the schedule for
consideration of H.R. 1858, I do not intend to request a
sequential referral of the bill to the Committee. However, I
would appreciate receiving assurances that the agreements
worked out between our respective staffs will be effected to
our satisfaction without the need for a Floor amendment by this
Committee. Meanwhile, my action here is not intended to waive
the Committee's jurisdiction over this matter, and should this
legislation go to a House-Senate Conference, the Committee on
Transportation and Infrastructure will request to be included
as conferees on any provisions within this Committee's
jurisdiction.
With kind personal regards, I remain
Sincerely,
Bud Shuster, Chairman.
------
Committee on Banking and Financial Services,
Washington, DC, July 17, 1995.
Hon. Bud Shuster,
Chairman, Committee on Transportation and Infrastructure,
Washington, DC.
Dear Mr. Chairman: Thank you for your letter of July 12,
1995, regarding a bill reported by the Committee on Banking and
Financial Services, H.R. 1858, the Financial Institutions
Regulatory Relief Act of 1995.
I appreciate the interest that the Committee on
Transportation and Infrastructure has in this important
legislation. I agree that your Committee has a right to
sequential referral of Title III of H.R. 1858. Therefore, I am
most appreciative of your decision not to request such a
referral in the interest of accommodating the schedule for
consideration of the bill.
You have my assurance that agreements worked out by our
respective staffs will be included in a manager's amendment as
we take the bill to the House floor and that I will support
your request to be conferees on Title III of the bill.
Thank you for your cooperation in this matter.
Sincerely,
James A. Leach, Chairman.