--S.900--

S.900

One Hundred Sixth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday,

the sixth day of January, one thousand nine hundred and ninety-nine

An Act

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Subtitle A--Affiliations

Subtitle B--Streamlining Supervision of Bank Holding Companies

Subtitle C--Subsidiaries of National Banks

Subtitle D--Preservation of FTC Authority

Subtitle E--National Treatment

Subtitle F--Direct Activities of Banks

Subtitle G--Effective Date

TITLE II--FUNCTIONAL REGULATION

Subtitle A--Brokers and Dealers

Subtitle B--Bank Investment Company Activities

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

Subtitle D--Banks and Bank Holding Companies

TITLE III--INSURANCE

Subtitle A--State Regulation of Insurance

Subtitle B--Redomestication of Mutual Insurers

Subtitle C--National Association of Registered Agents and Brokers

Subtitle D--Rental Car Agency Insurance Activities

TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

TITLE V--PRIVACY

Subtitle A--Disclosure of Nonpublic Personal Information

Subtitle B--Fraudulent Access to Financial Information

TITLE VI--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

TITLE VII--OTHER PROVISIONS

Subtitle A--ATM Fee Reform

Subtitle B--Community Reinvestment

Subtitle C--Other Regulatory Improvements

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

Subtitle A--Affiliations

SEC. 101. GLASS-STEAGALL ACT REPEALS.

SEC. 102. ACTIVITY RESTRICTIONS APPLICABLE TO BANK HOLDING COMPANIES THAT ARE NOT FINANCIAL HOLDING COMPANIES.

SEC. 103. FINANCIAL ACTIVITIES.

SEC. 104. OPERATION OF STATE LAW.

SEC. 105. MUTUAL BANK HOLDING COMPANIES AUTHORIZED.

SEC. 106. PROHIBITION ON DEPOSIT PRODUCTION OFFICES.

SEC. 107. CROSS MARKETING RESTRICTION; LIMITED PURPOSE BANK RELIEF; DIVESTITURE.

SEC. 108. USE OF SUBORDINATED DEBT TO PROTECT FINANCIAL SYSTEM AND DEPOSIT FUNDS FROM `TOO BIG TO FAIL' INSTITUTIONS.

SEC. 109. STUDY OF FINANCIAL MODERNIZATION'S EFFECT ON THE ACCESSIBILITY OF SMALL BUSINESS AND FARM LOANS.

Subtitle B--Streamlining Supervision of Bank Holding Companies

SEC. 111. STREAMLINING BANK HOLDING COMPANY SUPERVISION.

SEC. 112. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND EXCHANGE COMMISSION.

`SEC. 45. AUTHORITY OF STATE INSURANCE REGULATOR AND SECURITIES AND EXCHANGE COMMISSION.

SEC. 113. ROLE OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

`SEC. 10A. LIMITATION ON RULEMAKING, PRUDENTIAL, SUPERVISORY, AND ENFORCEMENT AUTHORITY OF THE BOARD.

SEC. 114. PRUDENTIAL SAFEGUARDS.

SEC. 115. EXAMINATION OF INVESTMENT COMPANIES.

SEC. 116. ELIMINATION OF APPLICATION REQUIREMENT FOR FINANCIAL HOLDING COMPANIES.

SEC. 117. PRESERVING THE INTEGRITY OF FDIC RESOURCES.

SEC. 118. REPEAL OF SAVINGS BANK PROVISIONS IN THE BANK HOLDING COMPANY ACT OF 1956.

SEC. 119. TECHNICAL AMENDMENT.

Subtitle C--Subsidiaries of National Banks

SEC. 121. SUBSIDIARIES OF NATIONAL BANKS.

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

`SEC. 46. SAFETY AND SOUNDNESS FIREWALLS APPLICABLE TO FINANCIAL SUBSIDIARIES OF BANKS.

SEC. 122. CONSIDERATION OF MERCHANT BANKING ACTIVITIES BY FINANCIAL SUBSIDIARIES.

Subtitle D--Preservation of FTC Authority

SEC. 131. AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956 TO MODIFY NOTIFICATION AND POST-APPROVAL WAITING PERIOD FOR SECTION 3 TRANSACTIONS.

SEC. 132. INTERAGENCY DATA SHARING.

SEC. 133. CLARIFICATION OF STATUS OF SUBSIDIARIES AND AFFILIATES.

Subtitle E--National Treatment

SEC. 141. FOREIGN BANKS THAT ARE FINANCIAL HOLDING COMPANIES.

SEC. 142. REPRESENTATIVE OFFICES.

Subtitle F--Direct Activities of Banks

SEC. 151. AUTHORITY OF NATIONAL BANKS TO UNDERWRITE CERTAIN MUNICIPAL BONDS.

Subtitle G--Effective Date

SEC. 161. EFFECTIVE DATE.

TITLE II--FUNCTIONAL REGULATION

Subtitle A--Brokers and Dealers

SEC. 201. DEFINITION OF BROKER.

`(aa) the bank does not solicit transactions or provide investment advice with respect to the purchase or sale of securities in connection with the plan; and

`(bb) the bank does not net shareholders' buy and sell orders, other than for programs for odd-lot holders or plans registered with the Commission.

`(aa) the bank does not solicit transactions or provide investment advice with respect to the purchase or sale of securities in connection with the plan or program; and

`(bb) the bank does not net shareholders' buy and sell orders, other than for programs for odd-lot holders or plans registered with the Commission.

`(aa) comparable in scope or nature to that permitted by the Commission as of the date of the enactment of the Gramm-Leach-Bliley Act; or

`(bb) otherwise permitted by the Commission.

`(aa) provides safekeeping or custody services with respect to securities, including the exercise of warrants and other rights on behalf of customers;

`(bb) facilitates the transfer of funds or securities, as a custodian or a clearing agency, in connection with the clearance and settlement of its customers' transactions in securities;

`(cc) effects securities lending or borrowing transactions with or on behalf of customers as part of services provided to customers pursuant to division (aa) or (bb) or invests cash collateral pledged in connection with such transactions;

`(dd) holds securities pledged by a customer to another person or securities subject to purchase or resale agreements involving a customer, or facilitates the pledging or transfer of such securities by book entry or as otherwise provided under applicable law, if the bank maintains records separately identifying the securities and the customer; or

`(ee) serves as a custodian or provider of other related administrative services to any individual retirement account, pension, retirement, profit sharing, bonus, thrift savings, incentive, or other similar benefit plan.

SEC. 202. DEFINITION OF DEALER.

SEC. 203. REGISTRATION FOR SALES OF PRIVATE SECURITIES OFFERINGS.

SEC. 204. INFORMATION SHARING.

SEC. 205. TREATMENT OF NEW HYBRID PRODUCTS.

SEC. 206. DEFINITION OF IDENTIFIED BANKING PRODUCT.

SEC. 207. ADDITIONAL DEFINITIONS.

SEC. 208. GOVERNMENT SECURITIES DEFINED.

SEC. 209. EFFECTIVE DATE.

SEC. 210. RULE OF CONSTRUCTION.

Subtitle B--Bank Investment Company Activities

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

SEC. 212. LENDING TO AN AFFILIATED INVESTMENT COMPANY.

SEC. 213. INDEPENDENT DIRECTORS.

SEC. 214. ADDITIONAL SEC DISCLOSURE AUTHORITY.

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

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

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

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

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

SEC. 220. INTERAGENCY CONSULTATION.

`SEC. 210A. CONSULTATION.

SEC. 221. TREATMENT OF BANK COMMON TRUST FUNDS.

SEC. 222. STATUTORY DISQUALIFICATION FOR BANK WRONGDOING.

SEC. 223. CONFORMING CHANGE IN DEFINITION.

SEC. 224. CONFORMING AMENDMENT.

SEC. 225. EFFECTIVE DATE.

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

SEC. 231. SUPERVISION OF INVESTMENT BANK HOLDING COMPANIES BY THE SECURITIES AND EXCHANGE COMMISSION.

`(aa) the nature of the operations and financial condition of the supervised investment bank holding company and its affiliates;

`(bb) the financial and operational risks within the supervised investment bank holding company that may affect any broker or dealer controlled by such supervised investment bank holding company; and

`(cc) the systems of the supervised investment bank holding company and its affiliates for monitoring and controlling those risks; and

Subtitle D--Banks and Bank Holding Companies

SEC. 241. CONSULTATION.

TITLE III--INSURANCE

Subtitle A--State Regulation of Insurance

SEC. 301. FUNCTIONAL REGULATION OF INSURANCE.

SEC. 302. INSURANCE UNDERWRITING IN NATIONAL BANKS.

SEC. 303. TITLE INSURANCE ACTIVITIES OF NATIONAL BANKS AND THEIR AFFILIATES.

SEC. 304. EXPEDITED AND EQUALIZED DISPUTE RESOLUTION FOR FEDERAL REGULATORS.

SEC. 305. INSURANCE CUSTOMER PROTECTIONS.

`SEC. 47. INSURANCE CUSTOMER PROTECTIONS.

SEC. 306. CERTAIN STATE AFFILIATION LAWS PREEMPTED FOR INSURANCE COMPANIES AND AFFILIATES.

SEC. 307. INTERAGENCY CONSULTATION.

SEC. 308. DEFINITION OF STATE.

Subtitle B--Redomestication of Mutual Insurers

SEC. 311. GENERAL APPLICATION.

SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.

SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMESTICATION.

SEC. 314. OTHER PROVISIONS.

SEC. 315. DEFINITIONS.

SEC. 316. EFFECTIVE DATE.

Subtitle C--National Association of Registered Agents and Brokers

SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.

SEC. 323. PURPOSE.

SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

SEC. 325. MEMBERSHIP.

SEC. 326. BOARD OF DIRECTORS.

SEC. 327. OFFICERS.

SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.

SEC. 329. ASSESSMENTS.

SEC. 330. FUNCTIONS OF THE NAIC.

SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, AND EMPLOYEES OF THE ASSOCIATION.

SEC. 332. ELIMINATION OF NAIC OVERSIGHT.

SEC. 333. RELATIONSHIP TO STATE LAW.

SEC. 334. COORDINATION WITH OTHER REGULATORS.

SEC. 335. JUDICIAL REVIEW.

SEC. 336. DEFINITIONS.

Subtitle D--Rental Car Agency Insurance Activities

SEC. 341. STANDARD OF REGULATION FOR MOTOR VEHICLE RENTALS.

TITLE IV--UNITARY SAVINGS AND LOAN HOLDING COMPANIES

SEC. 401. PREVENTION OF CREATION OF NEW S&L HOLDING COMPANIES WITH COMMERCIAL AFFILIATES.

TITLE V--PRIVACY

Subtitle A--Disclosure of Nonpublic Personal Information

SEC. 501. PROTECTION OF NONPUBLIC PERSONAL INFORMATION.

SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PERSONAL INFORMATION.

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.

SEC. 504. RULEMAKING.

SEC. 505. ENFORCEMENT.

SEC. 506. PROTECTION OF FAIR CREDIT REPORTING ACT.

SEC. 507. RELATION TO STATE LAWS.

SEC. 508. STUDY OF INFORMATION SHARING AMONG FINANCIAL AFFILIATES.

SEC. 509. DEFINITIONS.

SEC. 510. EFFECTIVE DATE.

Subtitle B--Fraudulent Access to Financial Information

SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF FINANCIAL INSTITUTIONS.

SEC. 522. ADMINISTRATIVE ENFORCEMENT.

SEC. 523. CRIMINAL PENALTY.

SEC. 524. RELATION TO STATE LAWS.

SEC. 525. AGENCY GUIDANCE.

SEC. 526. REPORTS.

SEC. 527. DEFINITIONS.

TITLE VI--FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

SEC. 601. SHORT TITLE.

SEC. 602. DEFINITIONS.

SEC. 603. SAVINGS ASSOCIATION MEMBERSHIP.

SEC. 604. ADVANCES TO MEMBERS; COLLATERAL.

`SEC. 10. ADVANCES TO MEMBERS.'.

SEC. 605. ELIGIBILITY CRITERIA.

SEC. 606. MANAGEMENT OF BANKS.

`In the case of the--

The annual compensation

may not exceed--

Chairperson

$25,000

Vice Chairperson

$20,000

All other members

$15,000.

SEC. 607. RESOLUTION FUNDING CORPORATION.

SEC. 608. CAPITAL STRUCTURE OF FEDERAL HOME LOAN BANKS.

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

TITLE VII--OTHER PROVISIONS

Subtitle A--ATM Fee Reform

SEC. 701. SHORT TITLE.

SEC. 702. ELECTRONIC FUND TRANSFER FEE DISCLOSURES AT ANY HOST ATM.

SEC. 703. DISCLOSURE OF POSSIBLE FEES TO CONSUMERS WHEN ATM CARD IS ISSUED.

SEC. 704. FEASIBILITY STUDY.

SEC. 705. NO LIABILITY IF POSTED NOTICES ARE DAMAGED.

Subtitle B--Community Reinvestment

SEC. 711. CRA SUNSHINE REQUIREMENTS.

`SEC. 48. CRA SUNSHINE REQUIREMENTS.

SEC. 712. SMALL BANK REGULATORY RELIEF.

`SEC. 809. SMALL BANK REGULATORY RELIEF.

SEC. 713. FEDERAL RESERVE BOARD STUDY OF CRA LENDING.

SEC. 714. PRESERVING THE COMMUNITY REINVESTMENT ACT OF 1977.

SEC. 715. RESPONSIVENESS TO COMMUNITY NEEDS FOR FINANCIAL SERVICES.

Subtitle C--Other Regulatory Improvements

SEC. 721. EXPANDED SMALL BANK ACCESS TO S CORPORATION TREATMENT.

SEC. 722. `PLAIN LANGUAGE' REQUIREMENT FOR FEDERAL BANKING AGENCY RULES.

SEC. 723. RETENTION OF `FEDERAL' IN NAME OF CONVERTED FEDERAL SAVINGS ASSOCIATION.

SEC. 724. CONTROL OF BANKERS' BANKS.

SEC. 725. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTERPRISES.

`Subtitle C--Microenterprise Technical Assistance and Capacity Building Program

`SEC. 171. SHORT TITLE.

`SEC. 172. DEFINITIONS.

`SEC. 173. ESTABLISHMENT OF PROGRAM.

`SEC. 174. USES OF ASSISTANCE.

`SEC. 175. QUALIFIED ORGANIZATIONS.

`SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

`SEC. 177. MATCHING REQUIREMENTS.

`SEC. 178. APPLICATIONS FOR ASSISTANCE.

`SEC. 179. RECORDKEEPING.

`SEC. 180. AUTHORIZATION.

`SEC. 181. IMPLEMENTATION.

SEC. 726. FEDERAL RESERVE AUDITS.

`SEC. 11B. ANNUAL INDEPENDENT AUDITS OF FEDERAL RESERVE BANKS AND BOARD.

SEC. 727. AUTHORIZATION TO RELEASE REPORTS.

SEC. 728. GENERAL ACCOUNTING OFFICE STUDY OF CONFLICTS OF INTEREST.

SEC. 729. STUDY AND REPORT ON ADAPTING EXISTING LEGISLATIVE REQUIREMENTS TO ONLINE BANKING AND LENDING.

SEC. 730. CLARIFICATION OF SOURCE OF STRENGTH DOCTRINE.

SEC. 731. INTEREST RATES AND OTHER CHARGES AT INTERSTATE BRANCHES.

SEC. 732. INTERSTATE BRANCHES AND AGENCIES OF FOREIGN BANKS.

SEC. 733. FAIR TREATMENT OF WOMEN BY FINANCIAL ADVISERS.

SEC. 734. MEMBERSHIP OF LOAN GUARANTEE BOARDS.

SEC. 735. REPEAL OF STOCK LOAN LIMIT IN FEDERAL RESERVE ACT.

SEC. 736. ELIMINATION OF SAIF AND DIF SPECIAL RESERVES.

SEC. 737. BANK OFFICERS AND DIRECTORS AS OFFICERS AND DIRECTORS OF PUBLIC UTILITIES.

SEC. 738. APPROVAL FOR PURCHASES OF SECURITIES.

SEC. 739. OPTIONAL CONVERSION OF FEDERAL SAVINGS ASSOCIATIONS.

SEC. 740. GRAND JURY PROCEEDINGS.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.

END