COMPILATION OF BASIC BANKING LAWS WITHIN THE JURISDICTION …€¦ · · 2007-02-12committee...

COMMITTEE PRINT" !107th Congress1st Session COMMITTEEPRINT 107C

COMPILATION OF BASIC BANKING LAWS

WITHIN THE JURISDICTION OF THE

COMMITTEE ON FINANCIAL SERVICES

PREPARED FOR THE USE OF THE

COMMITTEE ON FINANCIAL SERVICESU.S. HOUSE OF REPRESENTATIVES

MAY 2001

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U.S. GOVERNMENT PRINTING OFFICEWASHINGTON :

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COMMITTEE PRINT" !107th Congress1st Session COMMITTEE

2001

PRINT 107C

COMPILATION OF BASIC BANKING LAWS

WITHIN THE JURISDICTION OF THE

COMMITTEE ON FINANCIAL SERVICES

PREPARED FOR THE USE OF THE

COMMITTEE ON FINANCIAL SERVICESU.S. HOUSE OF REPRESENTATIVES

MAY 2001

For sale by the Superintendent of Documents, U.S. Government Printing OfficeInternet: bookstore.gpo.gov Phone: (202) 5121800 Fax: (202) 5122250

Mail: Stop SSOP, Washington, DC 204020001

HOUSE COMMITTEE ON FINANCIAL SERVICES

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, IowaMARGE ROUKEMA, New Jersey, Vice ChairDOUG BEREUTER, NebraskaRICHARD H. BAKER, LouisianaSPENCER BACHUS, AlabamaMICHAEL N. CASTLE, DelawarePETER T. KING, New YorkEDWARD R. ROYCE, CaliforniaFRANK D. LUCAS, OklahomaROBERT W. NEY, OhioBOB BARR, GeorgiaSUE W. KELLY, New YorkRON PAUL, TexasPAUL E. GILLMOR, OhioCHRISTOPHER COX, CaliforniaDAVE WELDON, FloridaJIM RYUN, KansasBOB RILEY, AlabamaSTEVEN C. LATOURETTE, OhioDONALD A. MANZULLO, IllinoisWALTER B. JONES, North CarolinaDOUG OSE, CaliforniaJUDY BIGGERT, IllinoisMARK GREEN, WisconsinPATRICK J. TOOMEY, PennsylvaniaCHRISTOPHER SHAYS, ConnecticutJOHN B. SHADEGG, ArizonaVITO FOSSELLA, New YorkGARY G. MILLER, CaliforniaERIC CANTOR, VirginiaFELIX J. GRUCCI, JR., New YorkMELISSA A. HART, PennsylvaniaSHELLEY MOORE CAPITO, West VirginiaMIKE FERGUSON, New JerseyMIKE ROGERS, MichiganPATRICK J. TIBERI, Ohio

JOHN J. LAFALCE, New YorkBARNEY FRANK, MassachusettsPAUL E. KANJORSKI, PennsylvaniaMAXINE WATERS, CaliforniaCAROLYN B. MALONEY, New YorkLUIS V. GUTIERREZ, IllinoisNYDIA M. VELAZQUEZ, New YorkMELVIN L. WATT, North CarolinaGARY L. ACKERMAN, New YorkKEN BENTSEN, TexasJAMES H. MALONEY, ConnecticutDARLENE HOOLEY, OregonJULIA CARSON, IndianaBRAD SHERMAN, CaliforniaMAX SANDLIN, TexasGREGORY W. MEEKS, New YorkBARBARA LEE, CaliforniaFRANK MASCARA, PennsylvaniaJAY INSLEE, WashingtonJANICE D. SCHAKOWSKY, IllinoisDENNIS MOORE, KansasCHARLES A. GONZALEZ, TexasSTEPHANIE TUBBS JONES, OhioMICHAEL E. CAPUANO, MassachusettsHAROLD E. FORD JR., TennesseeRUBEN HINOJOSA, TexasKEN LUCAS, KentuckyRONNIE SHOWS, MississippiJOSEPH CROWLEY, New YorkWILLIAM LACY CLAY, MissouriSTEVE ISRAEL, New YorkMIKE ROSS, Arizona

BERNARD SANDERS, Vermont

TERRY HAINES, Chief Counsel and Staff Director

(II)

Notes to the Reader

1. Any material contained within brackets is not part of thetext of the law but is inserted as an aid to the reader.

2. Citations have been included to enable the reader to locate thesame material in the United States Code (U.S.C.). These citationsare not a part of the text of the law in which they appear. Forchanges after the closing date of this publication (December 31,2000) to provisions of law in this publication that have citations tothe U.S. Code, see the United States Code Classification Tablespublished by the Office of the Law Revision Counsel of the Houseof Representatives at http://uscode.house.gov/uscct.htm.

REVISED THROUGH DECEMBER 31, 2000

(III)

http://uscode.house.gov/uscct.htm

C O N T E N T S

Page

Act of May 1, 1886 ................................................................................................... 1Act of September 28, 1962 ...................................................................................... 5Act of October 26, 1970 ........................................................................................... 11Act of October 28, 1974 ........................................................................................... 17Alternative Mortgage Transaction Parity Act of 1982 .......................................... 21Bank Conservation Act ........................................................................................... 27Bank Enterprise Act of 1991 .................................................................................. 35Bank Holding Company Act of 1956 ...................................................................... 49Bank Holding Company Act Amendments of 1970 ............................................... 109Bank Protection Act of 1968 ................................................................................... 119Bank Service Company Act ..................................................................................... 123Banking Act of 1933 ................................................................................................ 129Community Development Credit Union Revolving Loan Fund Transfer Act ..... 135Community Reinvestment Act of 1977 .................................................................. 139Competitive Equality Banking Act of 1987 ........................................................... 149Consumer Credit Protection Act ............................................................................. 153

including the following Acts:Truth In Lending Act ................................................................................ 155Restriction on Garnishment (title III) ..................................................... 222Credit Repair Organizations Act .............................................................. 225Fair Credit Reporting Act ......................................................................... 233Equal Credit Opportunity Act .................................................................. 272Fair Debt Collection Practices Act ........................................................... 282Electronic Fund Transfer Act ................................................................... 293

Depository Institution Management Interlocks Act ............................................. 311Economic Growth and Regulatory Paperwork Reduction Act of 1996 ................ 319Expedited Funds Availability Act .......................................................................... 335Federal Credit Union Act ........................................................................................ 355Federal Deposit Insurance Act ............................................................................... 471Federal Deposit Insurance Corporation Improvement Act of 1991 ..................... 749Federal Financial Institutions Examination Council Act of 1978 ....................... 763Federal Home Loan Bank Act ................................................................................ 769Federal Reserve Act ................................................................................................. 905Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ............ 1009Gramm-Leach-Bliley Act ......................................................................................... 1043Home Mortgage Disclosure Act of 1975 ................................................................. 1085Home Owners Loan Act .......................................................................................... 1099International Banking Act of 1978 ......................................................................... 1181International Lending Supervision Act of 1983 .................................................... 1209Legal Certainty for Bank Products Act of 2000 .................................................... 1219National Bank Consolidation and Merger Act ...................................................... 1227National Bank Receivership Act ............................................................................. 1237Real Estate Settlement Procedures Act of 1974 .................................................... 1243Resolution Trust Corporation Funding Act of 1991 .............................................. 1263Resolution Trust Corporation Refinancing, Restructuring, and Improvement

Act of 1991 ............................................................................................................ 1267Revised Statutes of the United States, Title LXII ................................................ 1273Riegle Community Development and Regulatory Improvement Act of 1994 ..... 1327Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 .............. 1391Right To Financial Privacy Act of 1978 ................................................................. 1401Title 31, United States Code, Subtitle IV .............................................................. 1423Truth In Savings Act ............................................................................................... 1485Reporting Requirements ......................................................................................... 1499

(IV)

1

ACT OF MAY 1, 1886

3

ACT OF MAY 1, 1886

CHAP. 73.An Act to enable national banking associations to increase their capitalstock and to change their names or locations.

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

Section 1 was repealed by section 6 of Public Law 86230,73 Stat. 457.

SEC. 2. 12 U.S.C. 30 (a) Any national banking association,upon written notice to the Comptroller of the Currency, maychange its name, except that such new name shall include the wordNational.

(b) Any national banking association, upon written notice tothe Comptroller of the Currency, may change the location of itsmain office to any authorized branch location within the limits ofthe city, town, or village in which it is situated, or, with a vote ofshareholders owning two-thirds of the stock of such association fora relocation outside such limits and upon receipt of a certificate ofapproval from the Comptroller of the Currency, to any other loca-tion within or outside the limits of the city, town, or village inwhich it is located, but not more than thirty miles beyond such lim-its.

(c) COORDINATION WITH REVISED STATUTES.In the case of anational bank which relocates the main office of such bank from 1State to another State after May 31, 1997, the bank may retainand operate branches within the State from which the bank relo-cated such office only to the extent authorized in section 5155(e)(2)of the Revised Statutes.

(d) RETENTION OF FEDERAL IN NAME OF CONVERTED FEDERALSAVINGS ASSOCIATION.

(1) IN GENERAL.Notwithstanding subsection (a) or anyother provision of law, any depository institution, the charterof which is converted from that of a Federal savings associa-tion to a national bank or a State bank after the date of theenactment of the Gramm-Leach-Bliley Act may retain the termFederal in the name of such institution if such institution re-mains an insured depository institution.

(2) DEFINITIONS.For purposes of this subsection, theterms depository institution, insured depository institution,national bank, and State bank have the meanings giventhose terms in section 3 of the Federal Deposit Insurance Act.SEC. 3. 12 U.S.C. 31 That all debts, liabilities, rights, provi-

sions, and powers of the association under its old name shall de-volve upon and inure to the association under its new name.

4

SEC. 4. 12 U.S.C. 32 That nothing in this act contained shallbe so construed as in any manner to release any national bankingassociation under its old name or at its old location from any liabil-ity, or affect any action or proceeding in law in which said associa-tion may be or become a party or interested.

5

ACT OF SEPTEMBER 28, 1962

7

ACT OF SEPTEMBER 28, 1962

AN ACT To place authority over the trust powers of national banks in theComptroller of the Currency.

Be it enacted by the Senate and House of Representatives of theUnited States of America in Congress assembled, That 12 U.S.C.92a (a) the Comptroller of the Currency shall be authorized andempowered to grant by special permit to national banks applyingtherefor, when not in contravention of State or local law, the rightto act as trustee, executor, administrator, registrar of stocks andbonds, guardian of estates, assignee, receiver, committee of estatesof lunatics, or in any other fiduciary capacity in which State banks,trust companies, or other corporations which come into competitionwith national banks are permitted to act under the laws of theState in which the national bank is located.

(b) Whenever the laws of such State authorize or permit theexercise of any or all of the foregoing powers by State banks, trustcompanies, or other corporations which compete with nationalbanks, the granting to and the exercise of such powers by nationalbanks shall not be deemed to be in contravention of State or locallaw within the meaning of this Act.

(c) National banks exercising any or all of the powers enumer-ating in this section shall segregate all assets held in any fiduciarycapacity from the general assets of the bank and shall keep a sepa-rate set of books and records showing in proper detail all trans-actions engaged in under authority of this section. The State bank-ing authorities may have access to reports of examination made bythe Comptroller of the Currency insofar as such reports relate tothe trust department of such bank, but nothing in this Act shallbe construed as authorizing the State banking authorities to exam-ine the books, records, and assets of such bank.

(d) No national bank shall receive in its trust department de-posits of current funds subject to check or the deposit of checks,drafts, bills of exchange, or other items for collection or exchangepurposes. Funds deposited or held in trust by the bank awaitinginvestment shall be carried in a separate account and shall not beused by the bank in the conduct of its business unless it shall firstset aside in the trust department United States bonds or othersecurities approved by the Comptroller of the Currency.

(e) In the event of the failure of such bank the owners of thefunds held in trust for investment shall have a lien on the bondsor other securities so set apart in addition to their claim againstthe estate of the bank.

(f) Whenever the laws of a State require corporations acting ina fiduciary capacity to deposit securities with the State authoritiesfor the protection of private or court trusts, national banks so act-ing shall be required to make similar deposits and securities so

8Sec. 1 ACT OF SEPTEMBER 28, 1962

deposited shall be held for the protection of private or court trusts,as provided by the State law. National banks in such cases shallnot be required to execute the bond usually required of individualsif State corporations under similar circumstances are exempt fromthis requirement. National banks shall have power to execute suchbond when so required by the laws of the State.

(g) In any case in which the laws of a State require that a cor-poration acting as trustee, executor, administrator, or in any capac-ity specified in this section, shall take an oath or make an affidavit,the president, vice president, cashier, or trust officer of such na-tional bank may take the necessary oath or execute the necessaryaffidavit.

(h) It shall be unlawful for any national banking association tolend any officer, director, or employee any funds held in trustunder the powers conferred by this section. Any officer, director, oremployee making such loan, or to whom such loan is made, maybe fined not more than $5,000, or imprisoned not more than fiveyears, or may be both fined and imprisoned, in the discretion of thecourt.

(i) In passing upon applications for permission to exercise thepowers enumerated in this section, the Comptroller of the Currencymay take into consideration the amount of capital and surplus ofthe applying bank, whether or not such capital and surplus is suffi-cient under the circumstances of the case, the needs of the commu-nity to be served, and any other facts and circumstances that seemto him proper, and may grant or refuse the application accordingly:Provided, That no permit shall be issued to any national bankingassociation having a capital and surplus less than the capital andsurplus required by State law of State banks, trust companies, andcorporations exercising such powers.

(j) Any national banking association desiring to surrender itsright to exercise the powers granted under this section, in order torelieve itself of the necessity of complying with the requirements ofthis section, or to have returned to it any securities which it mayhave deposited with the State authorities for the protection of pri-vate or court trusts, or for any other purpose, may file with theComptroller of the Currency a certified copy of a resolution of itsboard of directors signifying such desire. Upon receipt of such reso-lution, the Comptroller of the Currency, after satisfying himselfthat such bank has been relieved in accordance with State law ofall duties as trustee, executory, administrator, registrar of stocksand bonds, guardian of estates, assignee, receiver, committee of es-tates of lunatics or other fiduciary, under court, private, or otherappointments previously accepted under authority of this section,may, in his discretion, issue to such bank a certificate certifyingthat such bank is no longer authorized to exercise the powersgranted by this section. Upon the issuance of such a certificate bythe Comptroller of the Currency, such bank (1) shall no longer besubject to the provisions of this section or the regulations of theComptroller of the Currency made pursuant thereto, (2) shall beentitled to have returned to it any securities which it may havedeposited with the State authorities for the protection of private orcourt trusts, and (3) shall not exercise thereafter any of the powersgranted by this section without first applying for and obtaining a

9 Sec. 2ACT OF SEPTEMBER 28, 1962

new permit to exercise such powers pursuant to the provisions ofthis section. The Comptroller of the Currency is authorized andempowered to promulgate such regulations as he may deem nec-essary to enforce compliance with the provisions of this section andthe proper exercise of the powers granted therein.

(k)(1) In addition to the authority conferred by other law, if, inthe opinion of the Comptroller of the Currency, a national bankingassociation is unlawfully or unsoundly exercising, or has unlawfullyor unsoundly exercised, or has failed for a period of five consecutiveyears to exercise, the powers granted by this section or otherwisefails or has failed to comply with the requirements of this section,the Comptroller may issue and serve upon the association a noticeof intent to revoke the authority of the association to exercise thepowers granted by this section. The notice shall contain a state-ment of the facts constituting the alleged unlawful or unsoundexercise of powers, or failure to exercise powers, or failure to com-ply, and shall fix a time and place at which a hearing will be heldto determine whether an order revoking authority to exercise suchpowers should issue against the association.

(2) Such hearing shall be conducted in accordance with the pro-visions of subsection (h) of section 8 of the Federal Deposit Insur-ance Act (12 U.S.C. 1818(h)), and subject to judicial review as pro-vided in such section, and shall be fixed for a date not earlier thanthirty days nor later than sixty days after service of such notice un-less an earlier or later date is set by the Comptroller at the requestof any association so served.

(3) Unless the association so served shall appear at the hearingby a duly authorized representative, it shall be deemed to haveconsented to the issuance of the revocation order. In the event ofsuch consent, or if upon the record made at any such hearing, theComptroller shall find that any allegation specified in the notice ofcharges has been established, the Comptroller may issue and serveupon the association an order prohibiting it from accepting anynew or additional trust accounts and revoking authority to exerciseany and all powers granted by this section, except that such ordershall permit the association to continue to service all previouslyaccepted trust accounts pending their expeditious divestiture ortermination.

(4) A revocation order shall become effective not earlier thanthe expiration of thirty days after service of such order upon theassociation so served (except in the case of a revocation orderissued upon consent, which shall become effective at the time speci-fied therein), and shall remain effective and enforceable, except tosuch extent as it is stayed, modified, terminated, or set aside byaction of the Comptroller or a reviewing court.

SEC. 2. 12 U.S.C. 92a note Nothing contained in this Actshall be deemed to affect or curtail the right of any national bankto act in fiduciary capacities under a permit granted before thedate of enactment of this Act by the Board of Governors of the Fed-eral Reserve System, nor to affect the validity of any transactionsentered into at any time by any national bank pursuant to suchpermit. On and after the date of enactment of this Act the exerciseof fiduciary powers by national banks shall be subject to the provi-sions of this Act and the requirements of regulations issued by the

10Sec. 2 ACT OF SEPTEMBER 28, 1962

Comptroller of the Currency pursuant to the authority granted bythis Act.

* * * * * * *

11

ACT OF OCTOBER 26, 1970

13

1 Chapter 1 amended other laws.


(Public Law 91508)

AN ACT To amend the Federal Deposit Insurance Act to require insured banks tomaintain certain records, to require that certain transactions in United Statescurrency be reported to the Department of the Treasury, and for other purposes.


TITLE IFINANCIAL RECORDKEEPING

Chapter Sec.1. INSURED BANKS AND INSURED INSTITUTIONS ................................................... 1012. OTHER FINANCIAL INSTITUTIONS ....................................................................... 121

Chapter 1.INSURED BANKS AND INSUREDINSTITUTIONS 1

* * * * * * *

Chapter 2.OTHER FINANCIAL INSTITUTIONS

Sec.121. Congressional findings and purpose.122. Authority of Secretary with respect to reports on ownership and control.123. Authority of Secretary with respect to recordkeeping and procedures.124. Injunctions.125. Civil penalties.126. Criminal penalty.127. Additional criminal penalty in certain cases.128. Compliance.129. Administrative procedure.

121. 12 U.S.C. 1951 Congressional findings and purposes(a) The Congress finds that certain records maintained by busi-

nesses engaged in the functions described in section 123(b) of thisAct have a high degree of usefulness in criminal, tax, and regu-latory investigations and proceedings. The Congress further findsthat the power to require reports of changes in the ownership, con-trol, and managements of types of financial institutions referred toin section 122 of this Act may be necessary for the same purpose.

(b) It is the purpose of this chapter to require the maintenanceof appropriate types of records and the making of appropriate re-ports by such businesses in the United States where such recordsor reports have a high degree of usefulness in criminal, tax, or reg-ulatory investigations or proceedings.

14 122 ACT OF OCTOBER 26, 1970

122. 12 U.S.C. 1952 Authority of Secretary with respect toreports on ownership and control

Where the Secretary determines that the making of appro-priate reports by uninsured banks or uninsured institutions of anytype with respect to their ownership, control, and managementsand any changes therein has a high degree of usefulness in crimi-nal, tax, or regulatory investigations or proceedings, he may by reg-ulation require such banks or institutions to make such reports ashe determines in respect of such ownership, control, and manage-ments and changes therein.

123. 12 U.S.C. 1953 Authority of Secretary with respect torecordkeeping and procedures

(a) Where the Secretary determines that the maintenance ofappropriate records and procedures by any uninsured bank or un-insured institution, or any person engaging in the business of car-rying on in the United States any of the functions referred to insubsection (b) of this section, has a high degree of usefulness incriminal, tax, or regulatory investigations or proceedings, he mayby regulation require such bank, institution, or person

(1) to require, retain, or maintain, with respect to its func-tions as an uninsured bank or uninsured institution or itsfunctions referred to in subsection (b), any records or evidenceof any type which the Secretary is authorized under section 21of the Federal Deposit Insurance Act to require insured banksto require, retain, or maintain; and

(2) to maintain procedures to assure compliance withrequirements imposed under this chapter. For the purposes ofany civil or criminal penalty, a separate violation of anyrequirement under this paragraph occurs with respect to eachday and each separate office, branch, or place of business inwhich the violation occurs or continues.(b) INSTITUTIONS SUBJECT TO RECORDKEEPING REQUIRE-

MENTS.The authority of the Secretary of the Treasury under sub-section (a) extends to any financial institution (as defined in section5312(a)(2) of title 31, United States Code), other than any insuredbank (as defined in section 3(h) of the Federal Deposit InsuranceAct) and any insured institution (as defined in section 401(a) of theNational Housing Act), and any partner, officer, director, or em-ployee of any such financial institution.

(c) ACCEPTANCE OF AUTOMATED RECORDS.The Secretary shallpermit an uninsured bank or financial institution to retain ormaintain records referred to in subsection (a) in electronic or auto-mated form, subject to terms and conditions established by the Sec-retary.

124. 12 U.S.C. 1954 InjunctionsWhenever it appears to the Secretary that any person has en-

gaged, is engaged, or is about to engage in any acts or practicesconstituting a violation of any regulation under this chapter, hemay in his discretion bring an action, in the proper district courtof the United States or the proper United States court of any terri-tory or other place subject to the jurisdiction of the United States,

15 128ACT OF OCTOBER 26, 1970

to enjoin such acts or practices, and upon a proper showing a per-manent or temporary injunction or restraining order shall begranted without bond. Upon application of the Secretary, any suchcourt may also issue mandatory injunctions commanding any per-son to comply with any regulation of the Secretary under this chap-ter.

125. 12 U.S.C. 1955 Civil penalties(a) For each willful or grossly negligent violation of any regula-

tion under this chapter, the Secretary may assess upon any personto which the regulation applies, or any person willfully causing aviolation of the regulation, and, if such person is a partnership, cor-poration, or other entity, upon any partner, director, officer, or em-ployee thereof who willfully or through gross negligence partici-pates in the violation, a civil penalty not exceeding $10,000.

(b) In the event of the failure of any person to pay any penaltyassessed under this section, a civil action for the recovery thereofmay, in the discretion of the Secretary, be brought in the name ofthe United States.

126. 12 U.S.C. 1956 Criminal penaltyWhoever willfully violates any regulation under this chapter

shall be fined not more than $1,000 or imprisoned not more thanone year, or both.

127. 12 U.S.C. 1957 Additional criminal penalty in certaincases

Whoever willfully violates, or willfully causes a violation of anyregulation under this chapter, section 21 of the Federal DepositInsurance Act, or section 411 of the National Housing Act, wherethe violation is committed in furtherance of the commission of anyviolation of Federal law punishable by imprisonment for more thanone year, shall be fined not more than $10,000 or imprisoned notmore than five years, or both.

128. 12 U.S.C. 1958 ComplianceThe Secretary shall have the responsibility to assure compli-

ance with the requirements of this title and may delegate suchresponsibility to the appropriate bank supervisory agency, or othersupervisory agency.

16 129 ACT OF OCTOBER 26, 1970

1 Title II of this Act was repealed by section 5(b) of Public Law 97258 but the substance ofsuch title was incorporated into subchapter II of chapter 53 of title 31, United States Code.

129. 12 U.S.C. 1959 Administrative procedureThe administrative procedure and judicial review provisions of

subchapter II of chapter 5 and chapter 7 of title 5, United StatesCode, shall apply to all proceedings under this chapter, section 21of the Federal Deposit Insurance Act, and section 411 of the Na-tional Housing Act.

TITLE IIREPORTS OF CURRENCY AND FOREIGNTRANSACTIONS 1

17


19

1 Section 744(j) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989(P.L. 10173) amended section 3 of title I of Public Law 93495 by striking Federal Home LoanBank Board and inserting Director of the Office of Thrift Supervision. There is no section 3in such Public Law. The amendment probably should have been made to section 111 of suchlaw.


AN ACT To increase deposit insurance from $20,000 to $40,000, to provide full in-surance for public unit deposits of $100,000 per account, to establish a NationalCommission on Electronic Fund Transfers, and for other purposes.


TITLE IAMENDMENTS TO AND EXTENSIONS OF PROVI-SIONS OF LAW RELATING TO FEDERAL REGULATION OFDEPOSITORY INSTITUTIONS

* * * * * * *

INDEPENDENCE OF FINANCIAL REGULATORY AGENCIES

SEC. 111.1 12 U.S.C. 250 No officer or agency of the UnitedStates shall have any authority to require the Securities and Ex-change Commission, the Board of Governors of the Federal ReserveSystem, the Federal Deposit Insurance Corporation, the Comp-troller of the Currency, the Director of the Office of Thrift Super-vision, the Federal Housing Finance Board, or the National CreditUnion Administration to submit legislative recommendations, ortestimony, or comments on legislation, to any officer or agency ofthe United States for approval, comments, or review, prior to thesubmission of such recommendations, testimony, or comments tothe Congress if such recommendations, testimony, or comments tothe Congress include a statement indicating that the views ex-pressed therein are those of the agency submitting them and do notnecessarily represent the views of the President.

21

ALTERNATIVE MORTGAGE TRANSACTION PARITY ACTOF 1982

23

1 The Alternative Mortgage Transaction Parity Act of 1982 was enacted as title VIII of theGarn-St Germain Depository Institutions Act of 1982.

ALTERNATIVE MORTGAGE TRANSACTION PARITY ACTOF 1982

TITLE VIIIALTERNATIVE MORTGAGE TRANSACTIONS 1

SHORT TITLE

SEC. 801. 12 U.S.C. 3801 note This title may be cited as theAlternative Mortgage Transaction Parity Act of 1982.

FINDINGS AND PURPOSE.

SEC. 802. 12 U.S.C. 3801 (a) The Congress hereby findsthat

(1) increasingly volatile and dynamic changes in interestrates have seriously impaired the ability of housing creditorsto provide consumers with fixed-term, fixed-rate credit securedby interests in real property, cooperative housing, manufac-tured homes, and other dwellings;

(2) alternative mortgage transactions are essential to theprovision of an adequate supply of credit secured by residentialproperty necessary to meet the demand expected during the1980s; and

(3) the Comptroller of the Currency, the National CreditUnion Administration, and the Director of the Office of ThriftSupervision have recognized the importance of alternativemortgage transactions and have adopted regulations author-izing federally chartered depository institutions to engage inalternative mortgage financing.(b) It is the purpose of this title to eliminate the discriminatory

impact that those regulations have upon nonfederally charteredhousing creditors and provide them with parity with federally char-tered institutions by authorizing all housing creditors to make, pur-chase, and enforce alternative mortgage transactions so long as thetransactions are in conformity with the regulations issued by theFederal agencies.

DEFINITIONS

SEC. 803. 12 U.S.C. 3802 As used in this title(1) the term alternative mortgage transaction means a

loan or credit sale secured by an interest in residential realproperty, a dwelling, all stock allocated to a dwelling unit ina residential cooperative housing corporation, or a residentialmanufactured home (as that term is defined in section 603(6)of the National Manufactured Home Construction and SafetyStandards Act of 1974)

24Sec. 804 ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT

(A) in which the interest rate or finance charge maybe adjusted or renegotiated;

(B) involving a fixed-rate, but which implicitly permitsrate adjustments by having the debt mature at the end ofan interval shorter than the term of the amortizationschedule; or

(C) involving any similar type of rate, method of deter-mining return, term, repayment, or other variation notcommon to traditional fixed-rate, fixed-term transactions,including without limitation, transactions that involve thesharing of equity or appreciation;

described and defined by applicable regulation; and(2) the term housing creditor means

(A) a depository institution, as defined in section501(a)(2) of the Depository Institutions Deregulation andMonetary Control Act of 1980;

(B) a lender approved by the Secretary of Housing andUrban Development for participation in any mortgageinsurance program under the National Housing Act;

(C) any person who regularly makes loans, creditsales, or advances secured by interests in properties re-ferred to in paragraph (1); or

(D) any transferee of any of them.A person is not a housing creditor with respect to a specificalternative mortgage transaction if, except for this title, inorder to enter into that transaction, the person would be re-quired to comply with licensing requirements imposed underState law, unless such person is licensed under applicableState law and such person remains, or becomes, subject to theapplicable regulatory requirements and enforcement mecha-nisms provided by State law.

ALTERNATIVE MORTGAGE AUTHORITY.

SEC. 804. 12 U.S.C. 3803 (a) In order to prevent discrimina-tion against State-chartered depository institutions, and other non-federally chartered housing creditors, with respect to making, pur-chasing, and enforcing alternative mortgage transactions, housingcreditors may make, purchase, and enforce alternative mortgagetransactions, except that this section shall apply

(1) with respect to banks, only to transactions made inaccordance with regulations governing alternative mortgagetransactions as issued by the Comptroller of the Currency fornational banks, to the extent that such regulations are author-ized by rulemaking authority granted to the Comptroller of theCurrency with regard to national banks under laws other thanthis section;

(2) with respect to credit unions, only to transactions madein accordance with regulations governing alternative mortgagetransactions as issued by the National Credit Union Adminis-tration Board for Federal credit unions, to the extent that suchregulations are authorized by rulemaking authority granted tothe National Credit Union Administration with regard to Fed-eral credit unions under laws other than this section; and

25 Sec. 805ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT

(3) with respect to all other housing creditors, includingwithout limitation, savings and loan associations, mutual sav-ings banks, and savings banks, only to transactions made inaccordance with regulations governing alternative mortgagetransactions as issued by the Director of the Office of ThriftSupervision for federally charter savings and loan associations,to the extent that such regulations are authorized by rule-making authority granted to the Director of the Office of ThriftSupervision with regard to federally chartered savings andloan associations under laws other than this section.(b) For the purpose of determining the applicability of this sec-

tion, an alternative mortgage transaction shall be deemed to bemade in accordance with the applicable regulation notwithstandingthe housing creditors failure to comply with the regulations, if

(1) the transaction is in substantial compliance with theregulation; and

(2) within 60 days of discovering any error, the housingcredit correct such error, including making appropriate adjust-ments, if any, to the account.(c) An alternative mortgage transaction, may be made by a

housing creditor in accordance with this section, notwithstandingany State constitution, law, or regulation.

APPLICABILITY

SEC. 805. 12 U.S.C. 3804 (a) The provisions of section 804shall not apply to any alternative mortgage transaction in anyState made on or after the effective date (if such effective date oc-curs on or after the effective date of this title and prior to a date3 years after the effective date of this title) of a State law or a cer-tification that the voters of such State have voted in favor of anyprovision, constitutional or otherwise, which states explicitly andby its terms that such State does not want the preemption providedin section 804 to apply with respect to alternative mortgage trans-actions subject to the laws of such State, except that section 804shall continue to apply to

(1) any alternative mortgage transaction undertaken on orafter such date pursuant to an agreement to undertake suchalternative mortgage transaction which was entered into on orafter the effective date of this title and prior to such later date(the preemption period); and

(2) any renewal, extension, refinancing, or other modifica-tion of an alternative mortgage transaction that was enteredinto during the preemption period.(b) An alternative mortgage transaction shall be deemed to

have been undertaken during the preemption period to which thissection applied if it

(1) is funded or extended in whole or in part during thepreemption period, regardless of whether pursuant to a com-mitment or other agreement therefor made prior to that period;or

(2) is a renewal, extension, refinancing, or other modifica-tion of an alternative mortgage transaction entered into beforethe preemption period and such renewal, extension, or other

26Sec. 806 ALTERNATIVE MORTGAGE TRANSACTION PARITY ACT

modification is made during such period with the written con-sent of any person obligated to repay such credit.

RELATION TO OTHER LAW

SEC. 806. 12 U.S.C. 3805 Section 501(c)(1) of the DepositoryInstitutions Deregulation and Monetary Control Act of 1980 shallnot apply to transactions which are subject to this title.

EFFECTIVE DATE

SEC. 807. 12 U.S.C. 3801 note (a) This title shall be effectiveupon enactment.

(b) Within 60 days of the enactment of this title, the Comp-troller of the Currency, the National Credit Union Administration,and the Federal Home Loan Bank Board shall identify, describe,publish those portions or provisions of their respective regulationsthat are inappropriate for (and thus inapplicable to), or that needto be conformed for the use of, the nonfederally chartered housingcreditors to which their respective regulations apply, includingwithout limitation, making necessary changes in terminology toconform the regulatory and disclosure provisions to those moretypically associated with various types of transactions includingcredit sales.

27

BANK CONSERVATION ACT

29

1 So in law. Probably should be take.

BANK CONSERVATION ACT

SEC. 201. 12 U.S.C. 201 This title may be cited as the BankConservation Act.

SEC. 202. 12 U.S.C. 202 As used in this title, the termbank means (1) any national banking association or any otherfinancial institution chartered or licensed under Federal law andsubject to the supervision of the Comptroller of the Currency, and(2) any bank or trust company located in the District of Columbiaand operating under the supervision of the Comptroller of the Cur-rency; the term voluntary dissolution and liquidation means atransaction pursuant to section 5220 of the Revised Statutes thatinvolves the assumption of the banks insured deposit liabilitiesand the sale of the bank, or of control of the bank, as a going con-cern; and the term State means any State, Territory, or posses-sion of the United States, and the Canal Zone.SEC. 203. 12 U.S.C. 203 APPOINTMENT OF CONSERVATOR.

(a) APPOINTMENT.The Comptroller of the Currency may,without prior notice or hearings, appoint a conservator (which maybe the Federal Deposit Insurance Corporation) to the 1 possessionand control of a bank whenever the Comptroller of the Currencydetermines that 1 or more of the grounds specified in section11(c)(5) of the Federal Deposit Insurance Act exist.

(b) JUDICIAL REVIEW.(1) IN GENERAL.Not later than 20 days after the initial

appointment of a conservator pursuant to this section, thebank may bring an action in the United States district courtfor the judicial district in which the home office of such bankis located, or in the United States District Court for the Dis-trict of Columbia, for an order requiring the Comptroller to ter-minate the appointment of the conservator, and the court,upon the merits, shall dismiss such action or shall direct theComptroller to terminate the appointment of such conservator.The Comptrollers decision to appoint a conservator pursuantto this section shall be set aside only if the court finds thatsuch decision was arbitrary, capricious, an abuse of discretion,or otherwise not in accordance with law.

(2) STAY.The conservator may request that any judicialaction or proceeding to which the conservator or the bank is ormay become a party be stayed for a period of up to 45 daysafter the appointment of the conservator. Upon petition, thecourt shall grant such stay as to all parties.

(3) ACTIONS AND ORDERS.Except as otherwise provided inthis subsection, no court may take any action regarding the re-moval of a conservator, or restrain, or affect the exercise ofpowers or functions of a conservator. A court, upon application

30Sec. 204 BANK CONSERVATION ACT

by the Comptroller, shall have jurisdiction to enforce an orderof the Comptroller relating to

(A) the conservatorship and the bank in conservator-ship, or

(B) restraining or affecting the exercise of powers orfunctions of a conservator.

(c) ADDITIONAL GROUNDS FOR APPOINTMENT.In addition tothe foregoing provisions, the Comptroller may appoint a conser-vator for a bank if

(1) the bank, by an affirmative vote of a majority of itsboard of directors or by an affirmative vote of a majority of itsshareholders, consents to such appointment, or

(2) the Federal Deposit Insurance Corporation terminatesthe banks status as an insured bank.

The appointment of a conservator pursuant to this subsection shallnot be subject to review.

(d) EXCLUSIVE AUTHORITY.The Comptroller shall have exclu-sive power and jurisdiction to appoint a conservator for a bank.Whenever the Comptroller appoints a conservator for any bank, theComptroller may appoint the Federal Deposit Insurance Corpora-tion conservator for such bank. The Federal Deposit Insurance Cor-poration, as such conservator, shall have all the powers grantedunder the Federal Deposit Insurance Act, and (when not incon-sistent therewith) any other rights, powers, and privileges pos-sessed by conservators of banks under this Act and any other pro-vision of law. The Comptroller may also appoint another person asconservator, who shall be subject to the provisions of this Act.

(e) REPLACEMENT OF CONSERVATOR.The Comptroller may,without notice or hearing, replace a conservator with another con-servator. Such replacement shall not affect the banks right undersubsection (b) to obtain judicial review of the Comptrollers originaldecision to appoint a conservator.SEC. 204. 12 U.S.C. 204 EXAMINATIONS.

The Comptroller of the Currency (in consultation with theBoard of Directors of the Federal Deposit Insurance Corporationwhen the Corporation is appointed conservator) is authorized to ex-amine and supervise the bank in conservatorship as long as thebank continues to operate as a going concern. The Comptroller mayuse reports and other information provided by the Federal DepositInsurance Corporation for this purpose.SEC. 205. 12 U.S.C. 205 TERMINATION OF CONSERVATORSHIP.

(a) GENERAL RULE.At any time the Comptroller becomes sat-isfied that it may safely be done and that it would be in the publicinterest, the Comptroller (with the agreement of the Board ofDirectors of the Federal Deposit Insurance Corporation when theCorporation has been appointed conservator) may

(1) terminate the conservatorship and permit the involvedbank to resume the transaction of its business subject to suchterms, conditions, and limitations as the Comptroller may pre-scribe; or

(2) terminate the conservatorship upon a sale, merger, con-solidation, purchase and assumption, change in control, or vol-untary dissolution and liquidation of the involved bank.

31 Sec. 206BANK CONSERVATION ACT

1 Indentation so in law

(b) OTHER GROUNDS FOR TERMINATION.The Comptroller alsomay terminate the conservatorship upon the appointment of a re-ceiver pursuant to the first section of the Act of June 30, 1876 (12U.S.C. 191).

(c) ENFORCEMENT UNDER FEDERAL DEPOSIT INSURANCE ACT.Such terms, conditions, and limitations as may be prescribed undersubsection (a)(1) shall be enforceable under the provisions of sec-tion 8(i) of the Federal Deposit Insurance Act, to the same extentas an order issued pursuant to section 8(b) of the Federal DepositInsurance Act which has become final. The bank may bring an ac-tion in the United States district court for the judicial district inwhich the home office of such bank is located or in the UnitedStates District Court for the District of Columbia for an order re-quiring the Comptroller to terminate the order. An action for judi-cial review of the terms, conditions, and limitations may not becommenced later than 20 days from the date of the termination ofthe conservatorship or the imposition of the order, whichever islater.

(d) ACTION UPON TERMINATION.(1) IN GENERAL.Upon termination of the conservatorship

under subsection (a)(2), the Federal Deposit Insurance Cor-poration, as conservator, or when another person is appointedconservator, such other person, shall conclude the affairs of theconservatorship in accordance with paragraph (2).(2) 1 DEPOSIT AND DISTRIBUTION OF PROCEEDS.(A) Within 180

days of the sale, merger, consolidation, purchase and assumption,change in control, or voluntary dissolution and liquidation, the con-servator shall deposit all net proceeds received from the trans-action, less any outstanding expenses of the conservatorship, withthe United States district court for the judicial district in which thehome office of such bank is located and shall cause notice to bepublished for three consecutive months and notify by mail allknown and remaining creditors and shareholders. Within 60 daysthereafter, any depositor, creditor, or other claimant of the bank,or any shareholder of the bank may bring an action in interpleaderin that court for distribution of the proceeds. The district courtshall distribute such funds equitably. If no such action is institutedwithin one year after the date the funds are deposited with the dis-trict court, title to such net proceeds shall revert to the UnitedStates and the district court shall remit the funds to the Treasuryof the United States.

(B) The conservator shall be deemed to have discharged allresponsibility of the conservatorship upon the deposit of the pro-ceeds with the district court and giving the required notifications.SEC. 206. 12 U.S.C. 206 CONSERVATOR; POWERS AND DUTIES.

(a) GENERAL POWERS.A conservator shall have all the powersof the shareholders, directors, and officers of the bank and may op-erate the bank in its own name unless the Comptroller in the orderof appointment limits the conservators authority.

(b) SUBJECT TO RULES OF COMPTROLLER.The conservatorshall be subject to such rules, regulations, and orders as the Comp-troller from time to time deems appropriate; and, except as other-

32Sec. 209 BANK CONSERVATION ACT

1 Since the date of the enactment of the Banking Act of 1935, the Federal Reserve Board hasbeen known as the Board of Governors of the Federal Reserve System (see section 203(a) of suchAct, 49 Stat. 704).

wise specifically provided in such rules, regulations, or orders or insection 209 of this Act, shall have the same rights and privilegesand be subject to the same duties, restrictions, penalties, condi-tions, and limitations as apply to directors, officers, or employeesof a national bank.

(c) PAYMENT OF DEPOSITORS AND CREDITORS.The Comptrollermay require the conservator to set aside and make available forwithdrawal by depositors and payment to other creditors suchamounts as in the opinion of the Comptroller may safely be usedfor that purpose. All depositors and creditors who are similarly sit-uated shall be treated in the same manner.

(d) COMPENSATION OF CONSERVATOR AND EMPLOYEES.Theconservator and professional employees appointed to represent orassist the conservator shall not be paid amounts greater than arepayable to employees of the Federal Government for similar serv-ices, except that the Comptroller of the Currency may authorizepayment at higher rates (but not in excess of rates prevailing inthe private sector), if the Comptroller determines that paying suchhigher rates is necessary in order to recruit and retain competentpersonnel.

(e) EXPENSES.All expenses of any such conservatorship shallbe paid by the bank and shall be a lien upon the bank which shallbe prior to any other lien.

207 and 208 repealed by section 808 of P.L. 10173 (103Stat. 446).SEC. 209. 12 U.S.C. 209 LIABILITY PROTECTION.

(a) FEDERAL AGENCY AND EMPLOYEES.In any case in whichthe conservator is a Federal agency or an employee of the Govern-ment, the provisions of chapters 161 and 171 of title 28, UnitedStates Code, shall apply with respect to such conservators liabilityfor acts or omissions performed pursuant to and in the course ofthe duties and responsibilities of the conservatorship.

(b) OTHER CONSERVATORS.In any case where the conservatoris not a conservator described in subsection (a), the conservatorshall not be liable for damages in tort or otherwise for acts or omis-sions performed pursuant to and in the course of the duties andresponsibilities of the conservatorship, unless such acts or omis-sions constitute gross negligence, including any similar conduct orany form of intentional tortious conduct, as determined by a court.

(c) INDEMNIFICATION.The Comptroller shall have authority toindemnify the conservator on such terms as the Comptroller deemsproper.

SEC. 210. 12 U.S.C. 210 Nothing in this title shall be con-strued to impair in any manner any powers of the President, theSecretary of the Treasury, the Comptroller of the Currency, or theFederal Reserve Board 1.

33 Sec. 211BANK CONSERVATION ACT

SEC. 211. 12 U.S.C. 211 RULES AND REGULATIONS.(a) IN GENERAL.The Comptroller of the Currency may pre-

scribe such rules and regulations as the Comptroller may deemnecessary to carry out the provisions of this Act.

(b) F.D.I.C. AS CONSERVATOR.In any case in which the Fed-eral Deposit Insurance Corporation is the conservator, any rules orregulations prescribed by the Comptroller shall be consistent withany rules and regulations prescribed by the Federal Deposit Insur-ance Corporation pursuant to the Federal Deposit Insurance Act.

35

BANK ENTERPRISE ACT OF 1991

37

1 This Act was enacted as subtitle C of title II of the Federal Deposit Insurance CorporationImprovement Act of 1991.

Subtitle CBank Enterprise Act 1

SEC. 231. 12 U.S.C. 1811 nt. SHORT TITLE.This subtitle may be cited as the Bank Enterprise Act of

1991.SEC. 232. 12 U.S.C. 1834 REDUCED ASSESSMENT RATE FOR DEPOS-

ITS ATTRIBUTABLE TO LIFELINE ACCOUNTS.(a) QUALIFICATION OF LIFELINE ACCOUNTS BY FEDERAL RE-

SERVE BOARD.(1) IN GENERAL.The Board of Governors of the Federal

Reserve System, and the Federal Deposit Insurance Corpora-tion shall establish minimum requirements for accounts pro-viding basic transaction services for consumers at insureddepository institutions in order for such accounts to qualify aslifeline accounts for purposes of this section and section7(b)(2)(H) of the Federal Deposit Insurance Act.

(2) FACTORS TO BE CONSIDERED.In determining the min-imum requirements under paragraph (1) for lifeline accountsat insured depository institutions, the Board and the Corpora-tion shall consider the following factors:

(A) Whether the account is available to provide basictransaction services for individuals who maintain a bal-ance of less than $1,000 or such other amount which theBoard may determine to be appropriate.

(B) Whether any service charges or fees to which theaccount is subject, if any, for routine transactions do notexceed a minimal amount.

(C) Whether any minimum balance or minimum open-ing requirement to which the account is subject, if any, isnot more than a minimal amount.

(D) Whether checks, negotiable orders of withdrawal,or similar instruments for making payments or othertransfers to third parties may be drawn on the account.

(E) Whether the depositor is permitted to make morethan a minimal number of withdrawals from the accounteach month by any means described in subparagraph (D)or any other means.

(F) Whether a monthly statement itemizing all trans-actions for the monthly reporting period is made availableto the depositor with respect to such account or a passbookis provided in which all transactions with respect to suchaccount are recorded.

38Sec. 233 BANK ENTERPRISE ACT OF 1991

1 Probably should strike for. See section 114(c)(1)(A) of P.L. 103325.

(G) Whether depositors are permitted access to tellersat the institution for conducting transactions with respectto such account.

(H) Whether other account relationships with theinstitution are required in order to open any such account.

(I) Whether individuals are required to meet any pre-requisite which discriminates against low-income individ-uals in order to open such account.

(J) Such other factors as the Board may determine tobe appropriate.(3) DEFINITIONS.For purposes of this subsection

(A) BOARD.The term Board means the Board ofGovernors of the Federal Reserve System.

(B) INSURED DEPOSITORY INSTITUTION.The term in-sured depository institution has the meaning given tosuch term in section 3(c)(2) of the Federal Deposit Insur-ance Act.

(C) LIFELINE ACCOUNT.The term lifeline accountmeans any transaction account (as defined in section19(b)(1)(C) of the Federal Reserve Act) which meets theminimum requirements established by the Board underthis subsection.

Subsection (b) amended other provisions of law.(c) AVAILABILITY OF FUNDS.The provisions of this section

shall not take effect until appropriations are specifically providedin advance. There are hereby authorized to be appropriated suchsums as may be necessary to carry out the provisions of this sec-tion.SEC. 233. 12 U.S.C. 1834a ASSESSMENT CREDITS FOR QUALIFYING

ACTIVITIES RELATING TO DISTRESSED COMMUNITIES.(a) DETERMINATION OF CREDITS FOR INCREASES IN COMMUNITY

ENTERPRISE ACTIVITIES.(1) IN GENERAL.The Community Enterprise Assessment

Credit Board established under subsection (d) shall issueguidelines for insured depository institutions eligible underthis subsection for any community enterprise assessmentcredit with respect to any semiannual period. Such guidelinesshall

(A) designate the eligibility requirements for any insti-tution meeting applicable capital standards to receive anassessment credit under section 7(b)(7) of the Federal De-posit Insurance Act; and

(B) determine the community enterprise assessmentcredit available to any eligible institution under paragraph(3).(2) QUALIFYING ACTIVITIES.An insured depository institu-

tion may apply for 1 for any community enterprise assessmentcredit for any semiannual period for

(A) the amount, during such period, of new origina-tions of qualified loans and other assistance provided forlow- and moderate-income persons in distressed commu-nities, or enterprises integrally involved with such neigh-

39 Sec. 233BANK ENTERPRISE ACT OF 1991

borhoods, which the Board determines are qualified to betaken into account for purposes of this subsection;

(B) the amount, during such period, of depositsaccepted from persons domiciled in the distressed commu-nity, at any office of the institution (including any branch)located in any qualified distressed community, and neworiginations of any loans and other financial assistancemade within that community, except that in no case shallthe credit for deposits at any institution or branch exceedthe credit for loans and other financial assistance by thebank or branch in the distressed community; and

(C) any increase during the period in the amount ofnew equity investments in community development finan-cial institutions.(3) AMOUNT OF ASSESSMENT CREDIT.The amount of any

community enterprise assessment credit available under sec-tion 7(b)(7) of the Federal Deposit Insurance Act for any in-sured depository institution, or a qualified portion thereof,shall be the amount which is equal to 5 percent, in the caseof an institution which does not meet the community develop-ment organization requirements under section 234, and 15 per-cent, in the case of an institution, or a qualified portionthereof, which meets such requirements (or any percentagedesignated under paragraph (5)) of

(A) for the first full semiannual period in which com-munity enterprise assessment credits are available, thesum of

(i) the amounts of assets described in paragraph(2)(A); and

(ii) the amounts of deposits, loans, and otherfinancial assistance described in paragraph (2)(B); and(B) for any subsequent semiannual period, the sum

of(i) any increase during such period in the amount

of assets described in paragraph (2)(A) that has beendeemed eligible for credit by the Board; and

(ii) any increase during such period in theamounts of deposits, loans, and other financial assist-ance described in paragraph (2)(B) that has beendeemed eligible for credit by the Board.

(4) DETERMINATION OF QUALIFIED LOANS AND OTHER FINAN-CIAL ASSISTANCE.Except as provided in paragraph (6), thetypes of loans and other assistance which the Board may deter-mine to be qualified to be taken into account under paragraph(2)(A) for purposes of the community enterprise assessmentcredit, may include the following:

(A) Loans insured or guaranteed by the Secretary ofHousing and Urban Development, the Secretary of theDepartment of Veterans Affairs, the Administrator of theSmall Business Administration, and the Secretary of Agri-culture.

(B) Loans or financing provided in connection withactivities assisted by the Administrator of the Small Busi-ness Administration or any small business investment


company and investments in small business investmentcompanies.

(C) Loans or financing provided in connection with anyneighborhood housing service program assisted under theNeighborhood Reinvestment Corporation Act.

(D) Loans or financing provided in connection withany activities assisted under the community developmentblock grant program under title I of the Housing and Com-munity Development Act of 1974.

(E) Loans or financing provided in connection withactivities assisted under title II of the Cranston-GonzalezNational Affordable Housing Act.

(F) Loans or financing provided in connection with ahomeownership program assisted under title III of theUnited States Housing Act of 1937 or subtitle B or C oftitle IV of the Cranston-Gonzalez National AffordableHousing Act.

(G) Financial assistance provided through communitydevelopment corporations.

(H) Federal and State programs providing interestrate assistance for homeowners.

(I) Extensions of credit to nonprofit developers or pur-chasers of low-income housing and small business develop-ments.

(J) In the case of members of any Federal home loanbank, participation in the community investment fund pro-gram established by the Federal home loan banks.

(K) Conventional mortgages targeted to low- or mod-erate-income persons.

(L) Loans made for the purpose of developing orsupporting

(i) commercial facilities that enhance revitaliza-tion, community stability, or job creation and retentionefforts;

(ii) business creation and expansion efforts that(I) create or retain jobs for low-income people;(II) enhance the availability of products and

services to low-income people; or(III) create or retain businesses owned by low-

income people or residents of a targeted area;(iii) community facilities that provide benefits to

low-income people or enhance community stability;(iv) home ownership opportunities that are afford-

able to low-income households;(v) rental housing that is principally affordable to

low-income households; and(vi) other activities deemed appropriate by the

Board.(M) The provision of technical assistance to residents

of qualified distressed communities in managing their per-sonal finances through consumer education programseither sponsored or offered by insured depository institu-tions.


(N) The provision of technical assistance and con-sulting services to newly formed small businesses locatedin qualified distressed communities.

(O) The provision of technical assistance to, or serv-icing the loans of low- or moderate-income homeownersand homeowners located in qualified distressed commu-nities.(5) ADJUSTMENT OF PERCENTAGE.The Board may in-

crease or decrease the percentage referred to in paragraph(3)(A) for determining the amount of any community enterpriseassessment credit pursuant to such paragraph, except that thepercentage established for insured depository institutionswhich meet the community development organization require-ments under section 234 shall not be less than 3 times theamount of the percentage applicable for insured depositoryinstitutions which do not meet such requirements.

(6) CERTAIN INVESTMENTS NOT ELIGIBLE TO BE TAKEN INTOACCOUNT.Loans, financial assistance, and equity investmentsmade by any insured depository institution that are not the re-sult of originations by the institution shall not be taken intoaccount for purposes of determining the amount of any creditpursuant to this subsection.

(7) QUANTITATIVE ANALYSIS OF TECHNICAL ASSISTANCE.The Board may establish guidelines for analyzing the technicalassistance described in subparagraphs (M), (N), and (O) ofparagraph (4) for the purpose of quantifying the results of suchassistance in determining the amount of any communityassessment credit under this subsection.(b) QUALIFIED DISTRESSED COMMUNITY DEFINED.

(1) IN GENERAL.For purposes of this section, the termqualified distressed community means any neighborhood orcommunity which

(A) meets the minimum area requirements underparagraph (3) and the eligibility requirements of para-graph (4); and

(B) is designated as a distressed community by any in-sured depository institution in accordance with paragraph(2) and such designation is not disapproved under suchparagraph.(2) DESIGNATION REQUIREMENTS.

(A) NOTICE OF DESIGNATION.(i) NOTICE TO AGENCY.Upon designating an area

as a qualified distressed community, an insureddepository institution shall notify the appropriate Fed-eral banking agency of the designation.

(ii) PUBLIC NOTICE.Upon the effective date ofany designation of an area as a qualified distressedcommunity, an insured depository institution shallpublish a notice of such designation in major news-papers and other community publications which servesuch area.(B) AGENCY DUTIES RELATING TO DESIGNATIONS.

(i) PROVIDING INFORMATION.At the request ofany insured depository institution, the appropriate


Federal banking agency shall provide to the institu-tion appropriate information to assist the institutionto identify and designate a qualified distressed com-munity.

(ii) PERIOD FOR DISAPPROVAL.Any notice receivedby the appropriate Federal banking agency from anyinsured depository institution under subparagraph(A)(i) shall take effect at the end of the 90-day periodbeginning on the date such notice is received unlesswritten notice of the approval or disapproval of the ap-plication by the agency is provided to the institutionbefore the end of such period.

(3) MINIMUM AREA REQUIREMENTS.For purposes of thissubsection, an area meets the requirements of this paragraphif

(A) the area is within the jurisdiction of 1 unit of gen-eral local government;

(B) the boundary of the area is contiguous; and(C) the area

(i) has a population, as determined by the most re-cent census data available, of not less than

(I) 4,000, if any portion of such area is locatedwithin a metropolitan statistical area (as des-ignated by the Director of the Office of Manage-ment and Budget) with a population of 50,000 ormore; or

(II) 1,000, in any other case; or(ii) is entirely within an Indian reservation (as

determined by the Secretary of the Interior).(4) ELIGIBILITY REQUIREMENTS.For purposes of this sub-

section, an area meets the requirements of this paragraph ifthe following criteria are met:

(A) At least 30 percent of the residents residing in thearea have incomes which are less than the national pov-erty level.

(B) The unemployment rate for the area is 112 timesgreater than the national average (as determined by theBureau of Labor Statistics most recent figures).

(C) Such additional eligibility requirements as theBoard may, in its discretion, deem necessary to carry outthe provisions of this subtitle.

[Subsection (c) amended other provisions of law.](d) COMMUNITY ENTERPRISE ASSESSMENT CREDIT BOARD.

(1) ESTABLISHMENT.There is hereby established theCommunity Enterprise Assessment Credit Board.

(2) NUMBER AND APPOINTMENT.The Board shall be com-posed of 5 members as follows:

(A) The Secretary of the Treasury or a designee of theSecretary.

(B) The Secretary of Housing and Urban Developmentor a designee of the Secretary.

(C) The Chairperson of the Federal Deposit InsuranceCorporation or a designee of the Chairperson.


(D) 2 individuals appointed by the President fromamong individuals who represent community organiza-tions.(3) TERMS.

(A) APPOINTED MEMBERS.Each appointed membershall be appointed for a term of 5 years.

(B) INTERIM APPOINTMENT.Any member appointed tofill a vacancy occurring before the expiration of the termto which such members predecessor was appointed shallbe appointed only for the remainder of such term.

(C) CONTINUATION OF SERVICE.Each appointed mem-ber may continue to serve after the expiration of the periodto which such member was appointed until a successor hasbeen appointed.(4) CHAIRPERSON.The Secretary of the Treasury shall

serve as the Chairperson of the Board.(5) NO PAY.No members of the Commission may receive

any pay for service on the Board.(6) TRAVEL EXPENSES.Each member shall receive travel

expenses, including per diem in lieu of subsistence, in accord-ance with sections 5702 and 5703 of title 5, United StatesCode.

(7) MEETINGS.The Board shall meet at the call of theChairperson or a majority of the Boards members.(e) DUTIES OF THE BOARD.

(1) PROCEDURE FOR DETERMINING COMMUNITY ENTERPRISEASSESSMENT CREDITS.The Board shall establish proceduresfor accepting and considering applications by insured deposi-tory institutions under subsection (a)(1) for community enter-prise assessment credits and making determinations with re-spect to such applications.

(2) NOTICE TO FDIC.The Board shall notify the applicantand the Federal Deposit Insurance Corporation of any deter-mination of the Board with respect to any application referredto in paragraph (1) in sufficient time for the Corporation to in-clude the amount of such credit in the computation of the semi-annual assessment to which such credit is applicable.(f) AVAILABILITY OF FUNDS.The provisions of this section

shall not take effect until appropriations are specifically providedin advance. There are hereby authorized to be appropriated suchsums as may be necessary to carry out the provisions of this sec-tion.

(g) PROHIBITION ON DOUBLE FUNDING FOR SAME ACTIVITIES.No community development financial institution may receive acommunity enterprise assessment credit if such institution, eitherdirectly or through a community partnership

(1) has received assistance within the preceding 12-monthperiod, or has an application for assistance pending, under sec-tion 105 of the Community Development Banking and Finan-cial Institutions Act of 1994; or

(2) has ever received assistance, under section 108 of theCommunity Development Banking and Financial InstitutionsAct of 1994, for the same activity during the same semiannual


period for which the institution seeks a community enterpriseassessment credit under this section.(h) PRIORITY OF AWARDS.

(1) QUALIFYING LOANS AND SERVICES.(A) IN GENERAL.If the amount of funds appropriated

for purposes of carrying out this section for any fiscal yearare insufficient to award the amount of assessment creditsfor which insured depository institutions have applied andare eligible under this section, the Board shall, in award-ing community enterprise assessment credits for qualifyingactivities under subparagraphs (A) and (B) of subsection(a)(2) for any semiannual period for which such appropria-tion is available, determine which institutions shall receivean award.

(B) PRIORITY FOR SUPPORT OF EFFORTS OF CDFI.TheBoard shall give priority to institutions that have sup-ported the efforts of community development financialinstitutions in the qualified distressed community.

(C) OTHER FACTORS.The Board may also consider thefollowing factors:

(i) DEGREE OF DIFFICULTY.The degree of dif-ficulty in carrying out the activities that form thebasis for the institutions application.

(ii) COMMUNITY IMPACT.The extent to which theactivities that form the basis for the institutions ap-plication have benefited the qualified distressed com-munity.

(iii) INNOVATION.The degree to which the activi-ties that form the basis for the institutions applicationhave incorporated innovative methods for meetingcommunity needs.

(iv) LEVERAGE.The leverage ratio between thedollar amount of the activities that form the basis forthe institutions application and the amount of theassessment credit calculated in accordance with thissection for such activities.

(v) SIZE.The amount of total assets of the insti-tution.

(vi) NEW ENTRY.Whether the institution hadprovided financial services in the designated dis-tressed community before such semiannual period.

(vii) NEED FOR SUBSIDY.The degree to which thequalified activity which forms the basis for the appli-cation needs enhancement through an assessmentcredit.

(viii) EXTENT OF DISTRESS IN COMMUNITY.Thedegree of poverty and unemployment in the designateddistressed community, the proportion of the totalpopulation of the community which are low-incomefamilies and unrelated individuals, and the extent ofother adverse economic conditions in such community.

(2) QUALIFYING INVESTMENTS.If the amount of fundsappropriated for purposes of carrying out this section for anyfiscal year are insufficient to award the amount of assessment


credits for which insured depository institutions have appliedand are eligible under this section, the Board shall, in award-ing community enterprise assessment credits for qualifyingactivities under subsection (a)(2)(C) for any semiannual periodfor which such appropriation is available, determine whichinstitutions shall receive an award based on the leverage ratiobetween the dollar amount of the activities that form the basisfor the institutions application and the amount of the assess-ment credit calculated in accordance with this section for suchactivities.(i) DETERMINATION OF AMOUNT OF ASSESSMENT CREDIT.Not-

withstanding any other provision of this section, the determinationof the amount of any community enterprise assessment creditunder subsection (a)(3) for any insured depository institution forany semiannual period shall be made solely at the discretion of theBoard. No insured depository institution shall be awarded commu-nity enterprise assessment credits for any semiannual period in ex-cess of an amount determined by the Board.

(j) DEFINITIONS.For purposes of this section(1) APPROPRIATE FEDERAL BANKING AGENCY.The term

appropriate Federal banking agency has the meaning givento such term in section 3(q) of the Federal Deposit InsuranceAct.

(2) BOARD.The term Board means the CommunityEnterprise Assessment Credit Board established under theamendment made by subsection (d).

(3) INSURED DEPOSITORY INSTITUTION.The term insureddepository institution has the meaning given to such term insection 3(c)(2) of the Federal Deposit Insurance Act.

(4) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.The term community development financial institution hasthe same meaning as in section 103(5) of the CommunityDevelopment Banking and Financial Institutions Act of 1994.

(5) AFFILIATE.The term affiliate has the same meaningas in section 2 of the Bank Holding Company Act of 1956.

SEC. 234. 12 U.S.C. 1834b COMMUNITY DEVELOPMENT ORGANIZA-TIONS.

(a) COMMUNITY DEVELOPMENT ORGANIZATIONS DESCRIBED.For purposes of this subtitle, any insured depository institution, ora qualified portion thereof, shall be treated as meeting the commu-nity development organization requirements of this section if

(1) the institution(A) is a community development bank, or controls any

community development bank, which meets the require-ments of subsection (b);

(B) controls any community development corporation,or maintains any community development unit within theinstitution, which meets the requirements of subsection (c);

(C) invests in accounts in any community developmentcredit union designated as a low-income credit union, sub-ject to restrictions established for such credit unions by theNational Credit Union Administration Board; or

(D) invests in a community development organizationjointly controlled by two or more institutions;


(2) except in the case of an institution which is a commu-nity development bank, the amount of the capital invested, inthe form of debt or equity, by the institution in the communitydevelopment organization referred to in paragraph (1) (or, inthe case of any community development unit, the amountwhich the institution irrevocably makes available to such unitfor the purposes described in paragraph (3)) is not less thanthe greater of

(A) 12 of 1 percent of the capital, as defined by gen-erally accepted accounting principles, of the institution; or

(B) the sum of the amounts invested in such commu-nity development organization; and(3) the community development organization provides

loans for residential mortgages, home improvement, and com-munity development and other financial services, other than fi-nancing for the purchase of automobiles or extension of creditunder any open-end credit plan (as defined in section 103(i) ofthe Truth in Lending Act), to low- and moderate-income per-sons, nonprofit organizations, and small businesses located inqualified distressed communities in a manner consistent withthe intent of this subtitle.(b) COMMUNITY DEVELOPMENT BANK REQUIREMENTS.A com-

munity development bank meets the requirements of this sub-section if

(1) the community development bank has a 15-member ad-visory board designated as the Community Investment Boardand consisting entirely of community leaders who

(A) shall be appointed initially by the board of direc-tors of the community development bank and thereafter bythe Community Investment Board from nominations re-ceived from the community; and

(B) are appointed for a single term of 2 years, exceptthat, of the initial members appointed to the CommunityInvestment Board, 13 shall be appointed for a term of 8months, 13 shall be appointed for a term of 16 months, and13 shall be appointed for a term of 24 months, as des-ignated by the board of directors of the community devel-opment bank at the time of the appointment;(2) 13 of the members of the community development

banks board of directors are appointed from among individualsnominated by the Community Investment Board; and

(3) the bylaws of the community development bank requirethat the board of directors of the bank meet with the Commu-nity Investment Board at least once every 3 months.(c) COMMUNITY DEVELOPMENT CORPORATION REQUIREMENTS.

Any community development corporation, or community develop-ment unit within any insured depository institution meets therequirements of this subsection if the corporation or unit providesthe same or greater, as determined by the appropriate Federalbanking agency, community participation in the activities of suchcorporation or unit as would be provided by a Community Invest-ment Board under subsection (b) if such corporation or unit werea community development bank.


(d) ADEQUATE DISPERSAL REQUIREMENT.The appropriateFederal banking agency may approve the establishment of a com-munity development organization under this subtitle only uponfinding that the distressed community is not adequately served byan existing community development organization.

(e) DEFINITIONS.For purposes of this section(1) COMMUNITY DEVELOPMENT BANK.The term commu-

nity development bank means any depository institution (asdefined in section 3(c)(1) of the Federal Deposit Insurance Act).

(2) COMMUNITY DEVELOPMENT ORGANIZATION.The termcommunity development organization means any communitydevelopment bank, community development corporation, com-munity development unit within any insured depository insti-tution, or community development credit union.

(3) LOW- AND MODERATE-INCOME PERSONS.The term low-and moderate-income persons has the meaning given suchterm in section 102(a)(20) of the Housing and CommunityDevelopment Act of 1974.

(4) NONPROFIT ORGANIZATION; SMALL BUSINESS.Theterms nonprofit organization and small business have themeanings given to such terms by regulations which the appro-priate Federal banking agency shall prescribe for purposes ofthis section.

(5) QUALIFIED DISTRESSED COMMUNITY.The term quali-fied distressed community has the meaning given to suchterm in section 233(b).

49

BANK HOLDING COMPANY ACT OF 1956

51

BANK HOLDING COMPANY ACT OF 1956

(70 Stat. 133; 12 U.S.C. 1841 et seq.)

AN ACT To define bank holding companies, control their future expansion, andrequire divestment of their nonbanking interests.

Be is enacted by the Senate and House of Representatives of theUnited States of America in Congress assembled, That this Act maybe cited as the Bank Holding Company Act of 1956.

DEFINITIONS

SEC. 2. 12 U.S.C. 1841 (a)(1) Except as provided in para-graph (5) of this subsection, bank holding company means anycompany which has control over any bank or over any companythat is or becomes a bank holding company by virtue of this Act.

(2) Any company has control over a bank or over any companyif

(A) the company directly or indirectly or acting throughone or more other persons owns, controls, or has power to vote25 per centum or more of any class of voting securities of thebank or company;

(B) the company controls in any manner the election of amajority of the directors or trustees of the bank or company;or

(C) the Board determines, after notice and opportunity forhearing, that the company directly or indirectly exercises acontrolling influence over the management or policies of thebank or company.(3) For the purposes of any proceeding under paragraph (2)(C)

of this subsection, there is a presumption that any company whichdirectly or indirectly owns, controls, or has power to vote less than5 per centum of any class of voting securities of a given bank orcompany does not have control over that bank or company.

(4) In any administrative or judicial proceeding under this Act,other than a proceeding under paragraph (2)(C) of this subsection,a company may not be held to have had control over any givenbank or company at any given time unless that company, at thetime in question, directly or indirectly owned, controlled, or hadpower to vote 5 per centum or more of any class of voting securitiesof the bank or company, or had already been found to have controlin a proceeding under paragraph (2)(C).

(5) Notwithstanding any other provision of this subsection(A) No bank and no company owning or controlling voting

shares of a bank is a bank holding company by virtue of itsownership or control of shares in a fiduciary capacity, exceptas provided in paragraphs (2) and (3) of subsection (g) of thissection. For the purpose of the preceding sentence, bank shares

52Sec. 2 BANK HOLDING COMPANY ACT OF 1956

shall not be deemed to have been acquired in a fiduciary capac-ity if the acquiring bank or company has sole discretionary au-thority to exercise voting rights with respect thereto; exceptthat this limitation is applicable in the case of a bank or com-pany acquiring such shares prior to the date of enactment ofthe Bank Holding Company Act Amendments of 1970 only ifthe bank or company has the right consistent with its obliga-tions under the instrument, agreement, or other arrangementestablishing the fidiciary relationship to divest itself of suchvoting rights and fails to exercise that right to divest withina reasonable period not to exceed one year after the date ofenactment of the Bank Holding Company Act Amendments of1970.

(B) No company is a bank holding company by virtue of itsownership or control of shares acquired by it in connectionwith its underwriting of securities if such shares are held onlyfor such period of time as will permit the sale thereof on a rea-sonable basis.

(C) No company formed for the sole purpose of partici-pating in a proxy solicitation is a bank holding company by vir-tue of its control of voting rights of shares acquired in thecourse of such solicitation.

(D) No company is a bank holding company by virtue of itsownership or control of shares acquired in securing or col-lecting a debt previously contracted in good faith, until twoyears after the date of acquisition. The Board is authorizedupon application by a company to extend, from time to time fornot more than one year at a time, the two-year period referredto herein for disposing of any shares acquired by a company inthe regular course of securing or collecting a debt previouslycontracted in good faith, if, in the Boards judgment, such anextension would not be detrimental to the public interest, butno such extension shall in the aggregate exceed three years.

(E) No company is a bank holding company by virtue of itsownership or control of any State-chartered bank or trust com-pany which

(i) is wholly owned by 1 or more thrift institutions or sav-ings banks; and

(ii) is restricted to accepting(I) deposits from thrift institutions or savings banks;(II) deposits arising out of the corporate business of

the thrift institutions or savings banks that own the bankor trust company; or

(III) deposits of public moneys.(F) No trust company or mutual savings bank which is an

insured bank under the Federal Deposit Insurance Act is abank holding company by virtue of its direct or indirect owner-ship or control of one bank located in the same State, if (i) suchownership or control existed on the date of enactment of theBank Holding Company Act Amendments of 1970 and is spe-cifically authorized by applicable State law, and (ii) the trustcompany or mutual savings bank does not after that date ac-quire an interest in any company that, together with any otherinterest it holds in that company, will exceed 5 per centum of

53 Sec. 2BANK HOLDING COMPANY ACT OF 1956

any class of the voting shares of that company, except that thislimitation shall not be applicable to investments of the trustcompany or mutual savings bank, direct and indirect, whichare otherwise in accordance with the limitations applicable tonational banks under section 5136 of the Revised Statutes. (12U.S.C. 24)(6) For the purposes of this Act, any successor to a bank hold-

ing company shall be deemed to be a bank holding company fromthe date on which the predecessor company became a bank holdingcompany.

(b) Company means any corporation, partnership, businesstrust, association, or similar organization, or any other trust unlessby its terms it must terminate within twenty-five years or not laterthan twenty-one years and ten months after the death of individ-uals living on the effective date of the trust, but shall not includeany corporation the majority of the shares of which are owned bythe United States or by any State, and shall not include a qualifiedfamily partnership. Company covered in 1970 means a companywhich becomes a bank holding company as a result of the enact-ment of the Bank Holding Company Act Amendments of 1970 andwhich would have been a bank holding company on June 30, 1968,if those amendments had been enacted on that date.

(c) BANK DEFINED.For purposes of this Act(1) IN GENERAL.Except as provided in paragraph (2), the

term bank means any of the following:(A) An insured bank as defined in section 3(h) of the

Federal Deposit Insurance Act.(B) An institution organized under the laws of the

United States, any State of the United States, the Districtof Columbia, any territory of the United States, PuertoRico, Guam, American Samoa, or the Virgin Islands whichboth

(i) accepts demand deposits or deposits that thedepositor may withdraw by check or similar means forpayment to third parties or others; and

(ii) is engaged in the business of making commer-cial loans.

(2) EXCEPTIONS.The term bank does not include any ofthe following:

(A) A foreign bank which would be a bank within themeaning of paragraph (1) solely because such bank has aninsured or uninsured branch in the United States.

(B) An insured institution (as defined in subsection(j)).

(C) An organization that does not do business in theUnited States except as an incident to its activities outsidethe United States.

(D) An institution that functions solely in a trust orfiduciary capacity, if

(i) all or substantially all of the deposits of suchinstitution are in trust funds and are received in abona fide fiduciary capacity;

(ii) no deposits

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