§ 1843. — Interests in nonbanking organizations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1843]
TITLE 12--BANKS AND BANKING
CHAPTER 17--BANK HOLDING COMPANIES
Sec. 1843. Interests in nonbanking organizations
(a) Ownership or control of voting shares of any company not a bank;
engagement in activities other than banking
Except as otherwise provided in this chapter, no bank holding
company shall--
(1) after May 9, 1956, acquire direct or indirect ownership or
control of any voting shares of any company which is not a bank, or
(2) after two years from the date as of which it becomes a bank
holding company, or in the case of a company which has been
continuously affiliated since May 15, 1955, with a company which was
registered under the Investment Company Act of 1940 [15 U.S.C. 80a-1
et seq.], prior to May 15, 1955, in such a manner as to constitute
an affiliated company within the meaning of that Act, after December
31, 1978, or, in the case of any company which becomes, as a result
of the enactment of the Bank Holding Company Act Amendments of 1970,
a bank holding company on December 31, 1970, after December 31,
1980, retain direct or indirect ownership or control of any voting
shares of any company which is not a bank or bank holding company or
engage in any activities other than (A) those of banking or of
managing or controlling banks and other subsidiaries authorized
under this chapter or of furnishing services to or performing
services for its subsidiaries, and (B) those permitted under
paragraph (8) of subsection (c) of this section subject to all the
conditions specified in such paragraph or in any order or regulation
issued by the Board under such paragraph: Provided, That a company
covered in 1970 may also engage in those activities in which
directly or through a subsidiary (i) it was lawfully engaged on June
30, 1968 (or on a date subsequent to June 30, 1968 in the case of
activities carried on as the result of the acquisition by such
company or subsidiary, pursuant to a binding written contract
entered into on or before June 30, 1968, of another company engaged
in such activities at the time of the acquisition), and (ii) it has
been continuously engaged since June 30, 1968 (or such subsequent
date). The Board by order, after opportunity for hearing, may
terminate the authority conferred by the preceding proviso on any
company to engage directly or through a subsidiary in any activity
otherwise permitted by that proviso if it determines, having due
regard to the purposes of this chapter, that such action is
necessary to prevent undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking
practices; and in the case of any such company controlling a bank
having bank assets in excess of $60,000,000 on or after December 31,
1970, the Board shall determine, within two years after such date
(or, if later, within two years after the date on which the bank
assets first exceed $60,000,000), whether the authority conferred by
the preceding proviso with respect to such company should be
terminated as provided in this sentence. Nothing in this paragraph
shall be construed to authorize any bank holding company referred to
in the preceding proviso, or any subsidiary thereof, to engage in
activities authorized by that proviso through the acquisition,
pursuant to a contract entered into after June 30, 1968, of any
interest in or the assets of a going concern engaged in such
activities. Any company which is authorized to engage in any
activity pursuant to the preceding proviso or subsection (d) of this
section but, as a result of action of the Board, is required to
terminate such activity may (notwithstanding any otherwise
applicable time limit prescribed in this paragraph) retain the
ownership or control of shares in any company carrying on such
activity for a period of ten years from the date on which its
authority was so terminated by the Board. Notwithstanding any other
provision of this paragraph, if any company that became a bank
holding company as a result of the enactment of the Competitive
Equality Amendments of 1987 acquired, between March 5, 1987, and
August 10, 1987, an institution that became a bank as a result of
the enactment of such Amendments, that company shall, upon enactment
of such Amendments, immediately come into compliance with the
requirements of this chapter.
The Board is authorized, upon application by a bank holding company, to
extend the two year period referred to in paragraph (2) above from time
to time as to such bank holding company for not more than one year at a
time, if, in its judgment, such an extension would not be detrimental to
the public interest, but no such extensions shall in the aggregate
exceed three years. Notwithstanding any other provision of this chapter,
the period ending December 31, 1980, referred to in paragraph (2) above,
may be extended by the Board of Governors to December 31, 1984, but only
for the divestiture by a bank holding company of real estate or
interests in real estate lawfully acquired for investment or
development. In making its decision whether to grant such extension, the
Board shall consider whether the company has made a good faith effort to
divest such interests and whether such extension is necessary to avert
substantial loss to the company.
(b) Statement purporting to represent shares of any company except a
bank or bank holding company
After two years from May 9, 1956, no certificate evidencing shares
of any bank holding company shall bear any statement purporting to
represent shares of any other company except a bank or a bank holding
company, nor shall the ownership, sale, or transfer of shares of any
bank holding company be conditioned in any manner whatsoever upon the
ownership, sale, or transfer of shares of any other company except a
bank or a bank holding company.
(c) Exemptions
The prohibitions in this section shall not apply to (i) any company
that was on January 4, 1977, both a bank holding company and a labor,
agricultural, or horticultural organization exempt from taxation under
section 501 of title 26, or to any labor, agricultural, or horticultural
organization to which all or substantially all of the assets of such
company are hereafter transferred, or (ii) a company covered in 1970
more than 85 per centum of the voting stock of which was collectively
owned on June 30, 1968, and continuously thereafter, directly or
indirectly, by or for members of the same family, or their spouses, who
are lineal descendants of common ancestors; and such prohibitions shall
not, with respect to any other bank holding company, apply to--
(1) shares of any company engaged or to be engaged solely in one
or more of the following activities: (A) holding or operating
properties used wholly or substantially by any banking subsidiary of
such bank holding company in the operations of such banking
subsidiary or acquired for such future use; or (B) conducting a safe
deposit business; or (C) furnishing services to or performing
services for such bank holding company or its banking subsidiaries;
or (D) liquidating assets acquired from such bank holding company or
its banking subsidiaries or acquired from any other source prior to
May 9, 1956, or the date on which such company became a bank holding
company, whichever is later;
(2) shares acquired by a bank holding company or any of its
subsidiaries in satisfaction of a debt previously contracted in good
faith, but such shares shall be disposed of within a period of two
years from the date on which they were acquired, except that the
Board is authorized upon application by such bank holding company to
extend such period of two years from time to time as to such holding
company if, in its judgment, such an extension would not be
detrimental to the public interest, and, in the case of a bank
holding company which has not disposed of such shares within 5 years
after the date on which such shares were acquired, the Board may,
upon the application of such company, grant additional exemptions
if, in the judgment of the Board, such extension would not be
detrimental to the public interest and, either the bank holding
company has made a good faith attempt to dispose of such shares
during such 5-year period, or the disposal of such shares during
such 5-year period would have been detrimental to the company,
except that the aggregate duration of such extensions shall not
extend beyond 10 years after the date on which such shares were
acquired;
(3) shares acquired by such bank holding company from any of its
subsidiaries which subsidiary has been requested to dispose of such
shares by any Federal or State authority having statutory power to
examine such subsidiary, but such bank holding company shall dispose
of such shares within a period of two years from the date on which
they were acquired;
(4) shares held or acquired by a bank in good faith in a
fiduciary capacity, except where such shares are held under a trust
that constitutes a company as defined in section 1841(b) of this
title and except as provided in paragraphs (2) and (3) of section
1841(g) of this title;
(5) shares which are of the kinds and amounts eligible for
investment by national banking associations under the provisions of
section 24 of this title;
(6) shares of any company which do not include more than 5 per
centum of the outstanding voting shares of such company;
(7) shares of an investment company which is not a bank holding
company and which is not engaged in any business other than
investing in securities, which securities do not include more than 5
per centum of the outstanding voting shares of any company;
(8) shares of any company the activities of which had been
determined by the Board by regulation or order under this paragraph
as of the day before November 12, 1999, to be so closely related to
banking as to be a proper incident thereto (subject to such terms
and conditions contained in such regulation or order, unless
modified by the Board);
(9) shares held or activities conducted by any company organized
under the laws of a foreign country the greater part of whose
business is conducted outside the United States, if the Board by
regulation or order determines that, under the circumstances and
subject to the conditions set forth in the regulation or order, the
exemption would not be substantially at variance with the purposes
of this chapter and would be in the public interest;
(10) shares lawfully acquired and owned prior to May 9, 1956, by
a bank which is a bank holding company, or by any of its wholly
owned subsidiaries;
(11) shares owned directly or indirectly by a company covered in
1970 in a company which does not engage in any activities other than
those in which the bank holding company, or its subsidiaries, may
engage by virtue of this section, but nothing in this paragraph
authorizes any bank holding company, or subsidiary thereof, to
acquire any interest in or the assets of any going concern (except
pursuant to a binding written contract entered into before June 30,
1968, or pursuant to another provision of this chapter) other than
one which was a subsidiary on June 30, 1968;
(12) shares retained or acquired, or activities engaged in, by
any company which becomes, as a result of the enactment of the Bank
Holding Company Act Amendments of 1970, a bank holding company on
December 31, 1970, or by any subsidiary thereof, if such company--
(A) within the applicable time limits prescribed in
subsection (a)(2) of this section (i) ceases to be a bank
holding company, or (ii) ceases to retain direct or indirect
ownership or control of those shares and to engage in those
activities not authorized under this section; and
(B) complies with such other conditions as the Board may by
regulation or order prescribe;
(13) shares of, or activities conducted by, any company which
does no business in the United States except as an incident to its
international or foreign business, if the Board by regulation or
order determines that, under the circumstances and subject to the
conditions set forth in the regulation or order, the exemption would
not be substantially at variance with the purposes of this chapter
and would be in the public interest; or
(14) shares of any company which is an export trading company
whose acquisition (including each acquisition of shares) or
formation by a bank holding company has not been disapproved by the
Board pursuant to this paragraph, except that such investments,
whether direct or indirect, in such shares shall not exceed 5 per
centum of the bank holding company's consolidated capital and
surplus.
(A)(i) No bank holding company shall invest in an export
trading company under this paragraph unless the Board has been
given sixty days' prior written notice of such proposed
investment and within such period has not issued a notice
disapproving the proposed investment or extending for up to
another thirty days the period during which such disapproval may
be issued.
(ii) The period for disapproval may be extended for such
additional thirty-day period only if the Board determines that a
bank holding company proposing to invest in an export trading
company has not furnished all the information required to be
submitted or that in the Board's judgment any material
information submitted is substantially inaccurate.
(iii) The notice required to be filed by a bank holding
company shall contain such relevant information as the Board
shall require by regulation or by specific request in connection
with any particular notice.
(iv) The Board may disapprove any proposed investment only
if--
(I) such disapproval is necessary to prevent unsafe or
unsound banking practices, undue concentration of resources,
decreased or unfair competition, or conflicts of interest;
(II) the Board finds that such investment would affect
the financial or managerial resources of a bank holding
company to an extent which is likely to have a materially
adverse effect on the safety and soundness of any subsidiary
bank of such bank holding company, or
(III) the bank holding company fails to furnish the
information required under clause (iii).
(v) Leverage.--The Board may not disapprove any proposed
investment solely on the basis of the anticipated or proposed
asset-to-equity ratio of the export trading company with respect
to which such investment is proposed, unless the anticipated or
proposed annual average asset-to-equity ratio is greater than
20-to-1.
(vi) Within three days after a decision to disapprove an
investment, the Board shall notify the bank holding company in
writing of the disapproval and shall provide a written statement
of the basis for the disapproval.
(vii) A proposed investment may be made prior to the
expiration of the disapproval period if the Board issues written
notice of its intent not to disapprove the investment.
(B)(i) The total amount of extensions of credit by a bank
holding company which invests in an export trading company, when
combined with all such extensions of credit by all the
subsidiaries of such bank holding company, to an export trading
company shall not exceed at any one time 10 per centum of the
bank holding company's consolidated capital and surplus. For
purposes of the preceding sentence, an extension of credit shall
not be deemed to include any amount invested by a bank holding
company in the shares of an export trading company.
(ii) No provision of any other Federal law in effect on
October 1, 1982, relating specifically to collateral
requirements shall apply with respect to any such extension of
credit.
(iii) No bank holding company or subsidiary of such company
which invests in an export trading company may extend credit to
such export trading company or to customers of such export
trading company on terms more favorable than those afforded
similar borrowers in similar circumstances, and such extension
of credit shall not involve more than the normal risk of
repayment or present other unfavorable features.
(C) For purposes of this paragraph, an export trading
company--
(i) may engage in or hold shares of a company engaged in
the business of underwriting, selling, or distributing
securities in the United States only to the extent that any
bank holding company which invests in such export trading
company may do so under applicable Federal and State banking
laws and regulations; and
(ii) may not engage in agricultural production
activities or in manufacturing, except for such incidental
product modification including repackaging, reassembling or
extracting byproducts, as is necessary to enable United
States goods or services to conform with requirements of a
foreign country and to facilitate their sale in foreign
countries.
(D) A bank holding company which invests in an export
trading company may be required, by the Board, to terminate its
investment or may be made subject to such limitations or
conditions as may be imposed by the Board, if the Board
determines that the export trading company has taken positions
in commodities or commodity contracts, in securities, or in
foreign exchange, other than as may be necessary in the course
of the export trading company's business operations.
(E) Notwithstanding any other provision of law, an Edge Act
corporation, organized under section 25(a) \1\ of the Federal
Reserve Act (12 U.S.C. 611-631), which is a subsidiary of a bank
holding company, or an agreement corporation, operating subject
to section 25 of the Federal Reserve Act [12 U.S.C. 601 et
seq.], which is a subsidiary of a bank holding company, may
invest directly and indirectly in the aggregate up to 5 per
centum of its consolidated capital and surplus (25 per centum in
the case of a corporation not engaged in banking) in the voting
stock of other evidences of ownership in one or more export
trading companies.
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\1\ See References in Text note below.
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(F) For purposes of this paragraph--
(i) the term ``export trading company'' means a company
which does business under the laws of the United States or
any State, which is exclusively engaged in activities
related to international trade, and which is organized and
operated principally for purposes of exporting goods or
services produced in the United States or for purposes of
facilitating the exportation of goods or services produced
in the United States by unaffiliated persons by providing
one or more export trade services.\2\
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\2\ So in original. The period probably should be a semicolon.
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(ii) the term ``export trade services'' includes, but is
not limited to, consulting, international market research,
advertising, marketing, insurance (other than acting as
principal, agent or broker in the sale of insurance on risks
resident or located, or activities performed, in the United
States, except for insurance covering the transportation of
cargo from any point of origin in the United States to a
point of final destination outside the United States),
product research and design, legal assistance,
transportation, including trade documentation and freight
forwarding, communication and processing of foreign orders
to and for exporters and foreign purchasers, warehousing,
foreign exchange, financing, and taking title to goods, when
provided in order to facilitate the export of goods or
services produced in the United States;
(iii) the term ``bank holding company'' shall include a
bank which (I) is organized solely to do business with other
banks and their officers, directors, or employees; (II) is
owned primarily by the banks with which it does business;
and (III) does not do business with the general public. No
such other bank, owning stock in a bank described in this
clause that invests in an export trading company, shall
extend credit to an export trading company in an amount
exceeding at any one time 10 per centum of such other bank's
capital and surplus; and
(iv) the term ``extension of credit'' shall have the
same meaning given such term in the fourth paragraph of
section 371c \3\ of this title.
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\3\ See References in Text note below.
(G) Determination of status as export trading company.--
(i) Time period requirements.--For purposes of
determining whether an export trading company is operated
principally for the purposes described in subparagraph
(F)(i)--
(I) the operations of such company during the 2-year
period beginning on the date such company commences
operations shall not be taken into account in making any
such determination; and
(II) not less than 4 consecutive years of operations
of such company (not including any portion of the period
referred to in subclause (I)) shall be taken into
account in making any such determination.
(ii) Export revenue requirements.--A company shall not
be treated as operated principally for the purposes
described in subparagraph (F)(i) unless--
(I) the revenues of such company from the export, or
facilitating the export, of goods or services produced
in the United States exceed the revenues of such company
from the import, or facilitating the import, into the
United States of goods or services produced outside the
United States; and
(II) at least \1/3\ of such company's total revenues
are revenues from the export, or facilitating the
export, of goods or services produced in the United
States by persons not affiliated with such company.
(H) Inventory.--
(i) No general limitation.--The Board may not prescribe
by regulation any maximum dollar amount limitation on the
value of goods which an export trading company may maintain
in inventory at any time.
(ii) Specific limitation by order.--Notwithstanding
clause (i), the Board may issue an order establishing a
maximum dollar amount limitation on the value of goods which
a particular export trading company may maintain in
inventory at any time (after such company has been operating
for a reasonable period of time) if the Board finds that,
under the facts and circumstances, such limitation is
necessary to prevent risks that would affect the financial
or managerial resources of an investor bank holding company
to an extent which would be likely to have a materially
adverse effect on the safety and soundness of any subsidiary
bank of such bank holding company.
The Board shall include in its annual report to the Congress a
description and a statement of the reasons for approval of each activity
approved by it by order or regulation under such paragraph during the
period covered by the report.
(d) Exemption of company controlling one bank prior to July 1, 1968
To the extent that such action would not be substantially at
variance with the purposes of this chapter and subject to such
conditions as it considers necessary to protect the public interest, the
Board by order, after opportunity for hearing, may grant exemptions from
the provisions of this section to any bank holding company which
controlled one bank prior to July 1, 1968, and has not thereafter
acquired the control of any other bank in order (1) to avoid disrupting
business relationships that have existed over a long period of years
without adversely affecting the banks or communities involved, or (2) to
avoid forced sales of small locally owned banks to purchasers not
similarly representative of community interests, or (3) to allow
retention of banks that are so small in relation to the holding
company's total interests and so small in relation to the banking market
to be served as to minimize the likelihood that the bank's powers to
grant or deny credit may be influenced by a desire to further the
holding company's other interests.
(e) Divestiture of nonexempt shares
With respect to shares which were not subject to the prohibitions of
this section as originally enacted by reason of any exemption with
respect thereto but which were made subject to such prohibitions by the
subsequent repeal of such exemption, no bank holding company shall
retain direct or indirect ownership or control of such shares after five
years from the date of the repeal of such exemption, except as provided
in paragraph (2) of subsection (a) of this section. Any bank holding
company subject to such five-year limitation on the retention of
nonbanking assets shall endeavor to divest itself of such shares
promptly and such bank holding company shall report its progress in such
divestiture to the Board two years after repeal of the exemption
applicable to it and annually thereafter.
(f) Certain companies not treated as bank holding companies
(1) In general
Except as provided in paragraph (9), any company which--
(A) on March 5, 1987, controlled an institution which became
a bank as a result of the enactment of the Competitive Equality
Amendments of 1987; and
(B) was not a bank holding company on the day before August
10, 1987,
shall not be treated as a bank holding company for purposes of this
chapter solely by virtue of such company's control of such
institution.
(2) Loss of exemption
Subject to paragraph (3), a company described in paragraph (1)
shall no longer qualify for the exemption provided under that
paragraph if--
(A) such company directly or indirectly--
(i) acquires control of an additional bank or an insured
institution (other than an insured institution described in
paragraph (10) or (12) of this subsection) after March 5,
1987; or
(ii) acquires control of more than 5 percent of the
shares or assets of an additional bank or a savings
association other than--
(I) shares held as a bona fide fiduciary (whether
with or without the sole discretion to vote such
shares);
(II) shares held by any person as a bona fide
fiduciary solely for the benefit of employees of either
the company described in paragraph (1) or any subsidiary
of that company and the beneficiaries of those
employees;
(III) shares held temporarily pursuant to an
underwriting commitment in the normal course of an
underwriting business;
(IV) shares held in an account solely for trading
purposes;
(V) shares over which no control is held other than
control of voting rights acquired in the normal course
of a proxy solicitation;
(VI) loans or other accounts receivable acquired in
the normal course of business;
(VII) shares or assets acquired in securing or
collecting a debt previously contracted in good faith,
during the 2-year period beginning on the date of such
acquisition or for such additional time (not exceeding 3
years) as the Board may permit if the Board determines
that such an extension will not be detrimental to the
public interest;
(VIII) shares or assets of a savings association
described in paragraph (10) or (12) of this subsection;
(IX) shares of a savings association held by any
insurance company, as defined in section 2(a)(17) of the
Investment Company Act of 1940 [15 U.S.C. 80a-2(a)(17)],
except as provided in paragraph (11);
(X) shares issued in a qualified stock issuance
under section 1467a(q) of this title; and
(XI) assets that are derived from, or incidental to,
activities in which institutions described in
subparagraph (F) or (H) of section 1841(c)(2) of this
title are permitted to engage;
except that the aggregate amount of shares held under this
clause (other than under subclauses (I), (II), (III), (IV),
(V), and (VIII)) may not exceed 15 percent of all
outstanding shares or of the voting power of a savings
association;
(B) any bank subsidiary of such company--
(i) accepts demand deposits or deposits that the
depositor may withdraw by check or similar means for payment
to third parties; and
(ii) engages in the business of making commercial loans
(except that, for purposes of this clause, loans made in the
ordinary course of a credit card operation shall not be
treated as commercial loans); or
(C) after August 10, 1987, any bank subsidiary of such
company permits any overdraft (including any intraday
overdraft), or incurs any such overdraft in the account of the
bank at a Federal reserve bank, on behalf of an affiliate, other
than an overdraft described in paragraph (3).
(3) Permissible overdrafts described
For purposes of paragraph (2)(C), an overdraft is described in
this paragraph if--
(A) such overdraft results from an inadvertent computer or
accounting error that is beyond the control of both the bank and
the affiliate;
(B) such overdraft--
(i) is permitted or incurred on behalf of an affiliate
that is monitored by, reports to, and is recognized as a
primary dealer by the Federal Reserve Bank of New York; and
(ii) is fully secured, as required by the Board, by
bonds, notes, or other obligations that are direct
obligations of the United States or on which the principal
and interest are fully guaranteed by the United States or by
securities and obligations eligible for settlement on the
Federal Reserve book entry system; or
(C) such overdraft--
(i) is permitted or incurred by, or on behalf of, an
affiliate in connection with an activity that is financial
in nature or incidental to a financial activity; and
(ii) does not cause the bank to violate any provision of
section 371c or 371c-1 of this title, either directly, in
the case of a bank that is a member of the Federal Reserve
System, or by virtue of section 18(j) of the Federal Deposit
Insurance Act [12 U.S.C. 1828(j)], in the case of a bank
that is not a member of the Federal Reserve System.
(4) Divestiture in case of loss of exemption
If any company described in paragraph (1) fails to qualify for
the exemption provided under paragraph (1) by operation of paragraph
(2), such exemption shall cease to apply to such company and such
company shall divest control of each bank it controls before the end
of the 180-day period beginning on the date on which the company
receives notice from the Board that the company has failed to
continue to qualify for such exemption, unless, before the end of
such 180-day period, the company has--
(A) either--
(i) corrected the condition or ceased the activity that
caused the company to fail to continue to qualify for the
exemption; or
(ii) submitted a plan to the Board for approval to cease
the activity or correct the condition in a timely manner
(which shall not exceed 1 year); and
(B) implemented procedures that are reasonably adapted to
avoid the reoccurrence of such condition or activity.
(5) Subsection ceases to apply under certain circumstances
This subsection shall cease to apply to any company described in
paragraph (1) if such company--
(A) registers as a bank holding company under section
1844(a) of this title;
(B) immediately upon such registration, complies with all of
the requirements of this chapter, and regulations prescribed by
the Board pursuant to this chapter, including the nonbanking
restrictions of this section; and
(C) does not, at the time of such registration, control
banks in more than one State, the acquisition of which would be
prohibited by section 1842(d) of this title if an application
for such acquisition by such company were filed under section
1842(a) of this title.
(6) Information requirement
Each company described in paragraph (1) shall, within 60 days
after August 10, 1987, provide the Board with the name and address
of such company, the name and address of each bank such company
controls, and a description of each such bank's activities.
(7) Examination
The Board may, from time to time, examine a company described in
paragraph (1), or a bank controlled by such company, or require
reports under oath from appropriate officers or directors of such
company or bank solely for purposes of assuring compliance with the
provisions of this subsection and enforcing such compliance.
(8) Enforcement
(A) In general
In addition to any other power of the Board, the Board may
enforce compliance with the provisions of this chapter which are
applicable to any company described in paragraph (1), and any
bank controlled by such company, under section 8 of the Federal
Deposit Insurance Act [12 U.S.C. 1818] and such company or bank
shall be subject to such section (for such purposes) in the same
manner and to the same extent as if such company or bank were a
State member insured bank.
(B) Application of other act
Any violation of this chapter by any company described in
paragraph (1), and any bank controlled by such company, may also
be treated as a violation of the Federal Deposit Insurance Act
[12 U.S.C. 1811 et seq.] for purposes of subparagraph (A).
(C) No effect on other authority
No provision of this paragraph shall be construed as
limiting any authority of the Comptroller of the Currency or the
Federal Deposit Insurance Corporation.
(9) Tying provisions
A company described in paragraph (1) shall be--
(A) treated as a bank holding company for purposes of
section 106 of the Bank Holding Company Act Amendments of 1970
[12 U.S.C. 1971 et seq.] and section 22(h) of the Federal
Reserve Act [12 U.S.C. 375b] and any regulation prescribed under
any such section; and
(B) subject to the restrictions of section 106 of the Bank
Holding Company Act Amendments of 1970 [12 U.S.C. 1971 et seq.],
in connection with any transaction involving the products or
services of such company or affiliate and those of a bank
affiliate, as if such company or affiliate were a bank and such
bank were a subsidiary of a bank holding company.
(10) Exemption unaffected by certain emergency acquisitions
For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A),
an insured institution is described in this paragraph if--
(A) the insured institution was acquired (or any shares or
assets of such institution were acquired) by a company described
in paragraph (1) in an acquisition under section 1730a(m) \4\ of
this title or section 13(k) of the Federal Deposit Insurance Act
[12 U.S.C. 1823(k)]; and
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\4\ See References in Text note below.
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(B) either--
(i) the insured institution is located in a State in
which such company controlled a bank on March 5, 1987; or
(ii) the insured institution has total assets of
$500,000,000 or more at the time of such acquisition.
(11) Shares held by insurance affiliates
Shares described in clause (ii)(IX) of paragraph (2)(A) shall
not be excluded for purposes of clause (ii) of such paragraph if--
(A) all shares held under such clause (ii)(IX) by all
insurance company affiliates of such savings association in the
aggregate exceed 5 percent of all outstanding shares or of the
voting power of the savings association; or
(B) such shares are acquired or retained with a view to
acquiring, exercising, or transferring control of the savings
association.
(12) Exemption unaffected by certain other acquisitions
For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A),
an insured institution is described in this paragraph if the insured
institution was acquired (or any shares or assets of such
institution were acquired) by a company described in paragraph (1)--
(A) from the Resolution Trust Corporation, the Federal
Deposit Insurance Corporation, or the Director of the Office of
Thrift Supervision, in any capacity; or
(B) in an acquisition in which the insured institution has
been found to be in danger of default (as defined in section 3
of the Federal Deposit Insurance Act [12 U.S.C. 1813]) by the
appropriate Federal or State authority.
(13) Special rule relating to shares acquired in a qualified
stock issuance
A company described in paragraph (1) that holds shares issued in
a qualified stock issuance pursuant to section 1467a(q) of this
title by any savings association or savings and loan holding company
(neither of which is a subsidiary) shall not be deemed to control
such savings association or savings and loan holding company solely
because such company holds such shares unless--
(A) the company fails to comply with any requirement or
condition imposed by paragraph (2)(A)(ii)(X) or section 1467a(q)
of this title with respect to such shares; or
(B) the shares are acquired or retained with a view to
acquiring, exercising, or transferring control of the savings
association or savings and loan holding company.
(14) Foreign bank subsidiaries of limited purpose credit
card banks
(A) In general
An institution described in section 1841(c)(2)(F) of this
title may control a foreign bank if--
(i) the investment of the institution in the foreign
bank meets the requirements of section 25 or 25A of the
Federal Reserve Act [12 U.S.C. 601 et seq., 611 et seq.] and
the foreign bank qualifies under such sections;
(ii) the foreign bank does not offer any products or
services in the United States; and
(iii) the activities of the foreign bank are permissible
under otherwise applicable law.
(B) Other limitations inapplicable
The limitations contained in any clause of section
1841(c)(2)(F) of this title shall not apply to a foreign bank
described in subparagraph (A) that is controlled by an
institution described in such section.
(g) Limitations on certain banks
(1) In general
Notwithstanding any other provision of this section (other than
the last sentence of subsection (a)(2) of this section), a bank
holding company which controls an institution that became a bank as
a result of the enactment of the Competitive Equality Amendments of
1987 may retain control of such institution if such institution does
not--
(A) engage in any activity after August 10, 1987, which
would have caused such institution to be a bank (as defined in
section 1841(c) of this title, as in effect before such date) if
such activities had been engaged in before such date; or
(B) increase the number of locations from which such
institution conducts business after March 5, 1987.
(2) Limitations cease to apply under certain circumstances
The limitations contained in paragraph (1) shall cease to apply
to a bank described in such paragraph at such time as the
acquisition of such bank, by the bank holding company referred to in
such paragraph, would not be prohibited under section 1842(d) of
this title if--
(A) an application for such acquisition were filed under
section 1842(a) of this title; and
(B) such bank were treated as an additional bank (under
section 1842(d) of this title).
(h) Tying provisions
(1) Applicable to certain exempt institutions and parent
companies
An institution described in subparagraph (D), (F), (G), (H),
(I), or (J) of section 1841(c)(2) of this title shall be treated as
a bank, and a company that controls such an institution shall be
treated as a bank holding company, for purposes of section 106 of
the Bank Holding Company Act Amendments of 1970 [12 U.S.C. 1971 et
seq.] and section 22(h) of the Federal Reserve Act [12 U.S.C. 375b]
and any regulation prescribed under any such section.
(2) Applicable with respect to certain transactions
A company that controls an institution described in subparagraph
(D), (F), (G), (H), (I), or (J) of section 1841(c)(2) of this title
and any of such company's other affiliates, shall be subject to the
tying restrictions of section 106 of the Bank Holding Company Act
Amendments of 1970 [12 U.S.C. 1971 et seq.] in connection with any
transaction involving the products or services of such company or
affiliate and those of such institution, as if such company or
affiliate were a bank and such institution were a subsidiary of a
bank holding company.
(i) Acquisition of savings associations
(1) In general
The Board may approve an application by any bank holding company
under subsection (c)(8) of this section to acquire any savings
association in accordance with the requirements and limitations of
this section.
(2) Prohibition on tandem restrictions
In approving an application by a bank holding company to acquire
a savings association, the Board shall not impose any restriction on
transactions between the savings association and its holding company
affiliates, except as required under sections 371c and 371c-1 of
this title or any other applicable law.
(3) Acquisition of insolvent savings associations
(A) In general
Notwithstanding any other provision of this chapter, any
qualified savings association which became a federally chartered
stock company in December of 1986 and which is acquired by any
bank holding company without Federal financial assistance after
June 1, 1991, and before March 1, 1992, and any subsidiary of
any such association, may after such acquisition continue to
engage within the home State of the qualified savings
association in insurance agency activities in which any Federal
savings association (or any subsidiary thereof) may engage in
accordance with the Home Owners' Loan Act [12 U.S.C. 1461 et
seq.] and regulations pursuant to such Act if the qualified
savings association or subsidiary thereof was continuously
engaged in such activity from June 1, 1991, to the date of the
acquisition.
(B) ``Qualified savings association'' defined
For purposes of this paragraph, the term ``qualified savings
association'' means any savings association that--
(i) was chartered or organized as a savings association
before June 1, 1991;
(ii) had, immediately before the acquisition of such
association by the bank holding company referred to in
subparagraph (A), negative tangible capital and total
insured deposits in excess of $3,000,000,000; and
(iii) will meet all applicable regulatory capital
requirements as a result of such acquisition.
(4) Solicitation of views
(A) Notice to Director
Upon receiving any application or notice by a bank holding
company to acquire, directly or indirectly, a savings
association under subsection (c)(8) of this section, the Board
shall solicit comments and recommendations from the Director
with respect to such acquisition.
(B) Comment period
The comments and recommendations of the Director under
subparagraph (A) with respect to any acquisition subject to such
subparagraph shall be transmitted to the Board not later than 30
days after the receipt by the Director of the notice relating to
such acquisition (or such shorter period as the Board may
specify if the Board advises the Director that an emergency
exists that requires expeditious action).
(5) Examination
(A) Scope
The Board shall consult with the Director, as appropriate,
in establishing the scope of an examination by the Board of a
bank holding company that directly or indirectly controls a
savings association.
(B) Access to inspection reports
Upon the request of the Director, the Board shall furnish
the Director with a copy of any inspection report, additional
examination materials, or supervisory information relating to
any bank holding company that directly or indirectly controls a
savings association.
(6) Coordination of enforcement efforts
The Board and the Director shall cooperate in any enforcement
action against any bank holding company that controls a savings
association, if the relevant conduct involves such association.
(7) ``Director'' defined
For purposes of this section, the term ``Director'' means the
Director of the Office of Thrift Supervision.
(j) Notice procedures for nonbanking activities
(1) General notice procedure
(A) Notice requirement
Except as provided in paragraph (3), no bank holding company
may engage in any nonbanking activity or acquire or retain
ownership or control of the shares of a company engaged in
activities based on subsection (c)(8) or (a)(2) of this section
or in any complementary activity under subsection (k)(1)(B) of
this section without providing the Board with written notice of
the proposed transaction or activity at least 60 days before the
transaction or activity is proposed to occur or commence.
(B) Contents of notice
The notice submitted to the Board shall contain such
information as the Board shall prescribe by regulation or by
specific request in connection with a particular notice.
(C) Procedure for agency action
(i) Notice of disapproval
Any notice filed under this subsection shall be deemed
to be approved by the Board unless, before the end of the
60-day period beginning on the date the Board receives a
complete notice under subparagraph (A), the Board issues an
order disapproving the transaction or activity and setting
forth the reasons for disapproval.
(ii) Extension of period
The Board may extend the 60-day period referred to in
clause (i) for an additional 30 days. The Board may further
extend the period with the agreement of the bank holding
company submitting the notice pursuant to this subsection.
(iii) Determination of period in case of public
hearing
In the event a hearing is requested or the Board
determines that a hearing is warranted, the Board may extend
the notice period provided in this subsection for such time
as is reasonably necessary to conduct a hearing and to
evaluate the hearing record. Such extension shall not exceed
the 91-day period beginning on the date that the hearing
record is complete.
(D) Approval before end of period
(i) In general
Any transaction or activity may commence before the
expiration of any period for disapproval established under
this paragraph if the Board issues a written notice of
approval.
(ii) Shorter periods by regulation
The Board may prescribe regulations which provide for a
shorter notice period with respect to particular activities
or transactions.
(E) Extension of period
In the case of any notice to engage in, or to acquire or
retain ownership or control of shares of any company engaged in,
any activity pursuant to subsection (c)(8) or (a)(2) of this
section or in any complementary activity under subsection
(k)(1)(B) of this section that has not been previously approved
by regulation, the Board may extend the notice period under this
subsection for an additional 90 days. The Board may further
extend the period with the agreement of the bank holding company
submitting the notice pursuant to this subsection.
(2) General standards for review
(A) Criteria
In connection with a notice under this subsection, the Board
shall consider whether performance of the activity by a bank
holding company or a subsidiary of such company can reasonably
be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices.
(B) Grounds for disapproval
The Board may deny any proposed transaction or activity for
which notice has been submitted pursuant to this subsection if
the bank holding company submitting such notice neglects, fails,
or refuses to furnish the Board all the information required by
the Board.
(C) Conditional action
Nothing in this subsection limits the authority of the Board
to impose conditions in connection with an action under this
section.
(3) No notice required for certain transactions
No notice under paragraph (1) of this subsection or under
subsection (c)(8) or (a)(2)(B) of this section is required for a
proposal by a bank holding company to engage in any activity, other
than any complementary activity under subsection (k)(1)(B) of this
section, or acquire the shares or assets of any company, other than
an insured depository institution or a company engaged in any
complementary activity under subsection (k)(1)(B) of this section,
if the proposal qualifies under paragraph (4).
(4) Criteria for statutory approval
A proposal qualifies under this paragraph if all of the
following criteria are met:
(A) Financial criteria
Both before and immediately after the proposed transaction--
(i) the acquiring bank holding company is well
capitalized;
(ii) the lead insured depository institution of such
holding company is well capitalized;
(iii) well capitalized insured depository institutions
control at least 80 percent of the aggregate total risk-
weighted assets of insured depository institutions
controlled by such holding company; and
(iv) no insured depository institution controlled by
such holding company is undercapitalized.
(B) Managerial criteria
(i) Well managed
At the time of the transaction, the acquiring bank
holding company, its lead insured depository institution,
and insured depository institutions that control at least 90
percent of the aggregate total risk-weighted assets of
insured depository institutions controlled by such holding
company are well managed.
(ii) Limitation on poorly managed institutions
Except as provided in paragraph (6), no insured
depository institution controlled by the acquiring bank
holding company has received 1 of the 2 lowest composite
ratings at the later of the institution's most recent
examination or subsequent review.
(C) Activities permissible
Following consummation of the proposal, the bank holding
company engages directly or through a subsidiary solely in--
(i) activities that are permissible under subsection
(c)(8) of this section, as determined by the Board by
regulation or order thereunder, subject to all of the
restrictions, terms, and conditions of such subsection and
such regulation or order; and
(ii) such other activities as are otherwise permissible
under this section, subject to the restrictions, terms and
conditions, including any prior notice or approval
requirements, provided in this section.
(D) Size of acquisition
(i) Asset size
The book value of the total assets to be acquired does
not exceed 10 percent of the consolidated total risk-
weighted assets of the acquiring bank holding company.
(ii) Consideration
The gross consideration to be paid for the securities or
assets does not exceed 15 percent of the consolidated Tier 1
capital of the acquiring bank holding company.
(E) Notice not otherwise warranted
For proposals described in paragraph (5)(B), the Board has
not, before the conclusion of the period provided in paragraph
(5)(B), advised the bank holding company that a notice under
paragraph (1) is required.
(F) Compliance criterion
During the 12-month period ending on the date on which the
bank holding company proposes to commence an activity or
acquisition, no administrative enforcement action has been
commenced, and no cease and desist order has been issued
pursuant to section 8 of the Federal Deposit Insurance Act [12
U.S.C. 1818], against the bank holding company or any depository
institution subsidiary of the holding company, and no such
enforcement action, order, or other administrative enforcement
proceeding is pending as of such date.
(5) Notification
(A) Commencement of activities approved by rule
A bank holding company that qualifies under paragraph (4)
and that proposes to engage de novo, directly or through a
subsidiary, in any activity that is permissible under subsection
(c)(8) of this section, as determined by the Board by
regulation, may commence that activity without prior notice to
the Board and must provide written notification to the Board not
later than 10 business days after commencing the activity.
(B) Activities permitted by order and acquisitions
(i) In general
At least 12 business days before commencing any activity
pursuant to paragraph (3) (other than an activity described
in subparagraph (A) of this paragraph) or acquiring shares
or assets of any company pursuant to paragraph (3), the bank
holding company shall provide written notice of the proposal
to the Board, unless the Board determines that no notice or
a shorter notice period is appropriate.
(ii) Description of activities and terms
A notification under this subparagraph shall include a
description of the proposed activities and the terms of any
proposed acquisition.
(6) Recently acquired institutions
Any insured depository institution which has been acquired by a
bank holding company during the 12-month period preceding the date
on which the company proposes to commence an activity or acquisition
pursuant to paragraph (3) may be excluded for purposes of paragraph
(4)(B)(ii) if--
(A) the bank holding company has developed a plan for the
institution to restore the capital and management of the
institution which is acceptable to the appropriate Federal
banking agency; and
(B) all such insured depository institutions represent, in
the aggregate, less than 10 percent of the aggregate total risk-
weighted assets of all insured depository institutions
controlled by the bank holding company.
(7) Adjustment of percentages
The Board may, by regulation, adjust the percentages and the
manner in which the percentages of insured depository institutions
are calculated under paragraph (4)(B)(i), (4)(D), or (6)(B) if the
Board determines that any such adjustment is consistent with safety
and soundness and the purposes of this chapter.
(k) Engaging in activities that are financial in nature
(1) In general
Notwithstanding subsection (a) of this section, a financial
holding company may engage in any activity, and may acquire and
retain the shares of any company engaged in any activity, that the
Board, in accordance with paragraph (2), determines (by regulation
or order)--
(A) to be financial in nature or incidental to such
financial activity; or
(B) is complementary to a financial activity and does not
pose a substantial risk to the safety or soundness of depository
institutions or the financial system generally.
(2) Coordination between the Board and the Secretary of the
Treasury
(A) Proposals raised before the Board
(i) Consultation
The Board shall notify the Secretary of the Treasury of,
and consult with the Secretary of the Treasury concerning,
any request, proposal, or application under this subsection
for a determination of whether an activity is financial in
nature or incidental to a financial activity.
(ii) Treasury view
The Board shall not determine that any activity is
financial in nature or incidental to a financial activity
under this subsection if the Secretary of the Treasury
notifies the Board in writing, not later than 30 days after
the date of receipt of the notice described in clause (i)
(or such longer period as the Board determines to be
appropriate under the circumstances) that the Secretary of
the Treasury believes that the activity is not financial in
nature or incidental to a financial activity or is not
otherwise permissible under this section.
(B) Proposals raised by the Treasury
(i) Treasury recommendation
The Secretary of the Treasury may, at any time,
recommend in writing that the Board find an activity to be
financial in nature or incidental to a financial activity.
(ii) Time period for Board action
Not later than 30 days after the date of receipt of a
written recommendation from the Secretary of the Treasury
under clause (i) (or such longer period as the Secretary of
the Treasury and the Board determine to be appropriate under
the circumstances), the Board shall determine whether to
initiate a public rulemaking proposing that the recommended
activity be found to be financial in nature or incidental to
a financial activity under this subsection, and shall notify
the Secretary of the Treasury in writing of the
determination of the Board and, if the Board determines not
to seek public comment on the proposal, the reasons for that
determination.
(3) Factors to be considered
In determining whether an activity is financial in nature or
incidental to a financial activity, the Board shall take into
account--
(A) the purposes of this chapter and the Gramm-Leach-Bliley
Act;
(B) changes or reasonably expected changes in the
marketplace in which financial holding companies compete;
(C) changes or reasonably expected changes in the technology
for delivering financial services; and
(D) whether such activity is necessary or appropriate to
allow a financial holding company and the affiliates of a
financial holding company to--
(i) compete effectively with any company seeking to
provide financial services in the United States;
(ii) efficiently deliver information and services that
are financial in nature through the use of technological
means, including any application necessary to protect the
security or efficacy of systems for the transmission of data
or financial transactions; and
(iii) offer customers any available or emerging
technological means for using financial services or for the
document imaging of data.
(4) Activities that are financial in nature
For purposes of this subsection, the following activities shall
be considered to be financial in nature:
(A) Lending, exchanging, transferring, investing for others,
or safeguarding money or securities.
(B) Insuring, guaranteeing, or indemnifying against loss,
harm, damage, illness, disability, or death, or providing and
issuing annuities, and acting as principal, agent, or broker for
purposes of the foregoing, in any State.
(C) Providing financial, investment, or economic advisory
services, including advising an investment company (as defined
in section 3 of the Investment Company Act of 1940 [15 U.S.C.
80a-3]).
(D) Issuing or selling instruments representing interests in
pools of assets permissible for a bank to hold directly.
(E) Underwriting, dealing in, or making a market in
securities.
(F) Engaging in any activity that the Board has determined,
by order or regulation that is in effect on November 12, 1999,
to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto (subject to the same
terms and conditions contained in such order or regulation,
unless modified by the Board).
(G) Engaging, in the United States, in any activity that--
(i) a bank holding company may engage in outside of the
United States; and
(ii) the Board has determined, under regulations
prescribed or interpretations issued pursuant to subsection
(c)(13) of this section (as in effect on the day before
November 12, 1999) to be usual in connection with the
transaction of banking or other financial operations abroad.
(H) Directly or indirectly acquiring or controlling, whether
as principal, on behalf of 1 or more entities (including
entities, other than a depository institution or subsidiary of a
depository institution, that the bank holding company controls),
or otherwise, shares, assets, or ownership interests (including
debt or equity securities, partnership interests, trust
certificates, or other instruments representing ownership) of a
company or other entity, whether or not constituting control of
such company or entity, engaged in any activity not authorized
pursuant to this section if--
(i) the shares, assets, or ownership interests are not
acquired or held by a depository institution or subsidiary
of a depository institution;
(ii) such shares, assets, or ownership interests are
acquired and held by--
(I) a securities affiliate or an affiliate thereof;
or
(II) an affiliate of an insurance company described
in subparagraph (I)(ii) that provides investment advice
to an insurance company and is registered pursuant to
the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et
seq.], or an affiliate of such investment adviser;
as part of a bona fide underwriting or merchant or investment
banking activity, including investment activities engaged in
for the purpose of appreciation and ultimate resale or
disposition of the investment;
(iii) such shares, assets, or ownership interests are
held for a period of time to enable the sale or disposition
thereof on a reasonable basis consistent with the financial
viability of the activities described in clause (ii); and
(iv) during the period such shares, assets, or ownership
interests are held, the bank holding company does not
routinely manage or operate such company or entity except as
may be necessary or required to obtain a reasonable return
on investment upon resale or disposition.
(I) Directly or indirectly acquiring or controlling, whether
as principal, on behalf of 1 or more entities (including
entities, other than a depository institution or subsidiary of a
depository institution, that the bank holding company controls)
or otherwise, shares, assets, or ownership interests (including
debt or equity securities, partnership interests, trust
certificates or other instruments representing ownership) of a
company or other entity, whether or not constituting control of
such company or entity, engaged in any activity not authorized
pursuant to this section if--
(i) the shares, assets, or ownership interests are not
acquired or held by a depository institution or a subsidiary
of a depository institution;
(ii) such shares, assets, or ownership interests are
acquired and held by an insurance company that is
predominantly engaged in underwriting life, accident and
health, or property and casualty insurance (other than
credit-related insurance) or providing and issuing
annuities;
(iii) such shares, assets, or ownership interests
represent an investment made in the ordinary course of
business of such insurance company in accordance with
relevant State law governing such investments; and
(iv) during the period such shares, assets, or ownership
interests are held, the bank holding company does not
routinely manage or operate such company except as may be
necessary or required to obtain a reasonable return on
investment.
(5) Actions required
(A) In general
The Board shall, by regulation or order, define, consistent
with the purposes of this chapter, the activities described in
subparagraph (B) as financial in nature, and the extent to which
such activities are financial in nature or incidental to a
financial activity.
(B) Activities
The activities described in this subparagraph are as
follows:
(i) Lending, exchanging, transferring, investing for
others, or safeguarding financial assets other than money or
securities.
(ii) Providing any device or other instrumentality for
transferring money or other financial assets.
(iii) Arranging, effecting, or facilitating financial
transactions for the account of third parties.
(6) Required notification
(A) In general
A financial holding company that acquires any company or
commences any activity pursuant to this subsection shall provide
written notice to the Board describing the activity commenced or
conducted by the company acquired not later than 30 calendar
days after commencing the activity or consummating the
acquisition, as the case may be.
(B) Approval not required for certain financial activities
Except as provided in subsection (j) of this section with
regard to the acquisition of a savings association, a financial
holding company may commence any activity, or acquire any
company, pursuant to paragraph (4) or any regulation prescribed
or order issued under paragraph (5), without prior approval of
the Board.
(7) Merchant banking activities
(A) Joint regulations
The Board and the Secretary of the Treasury may issue such
regulations implementing paragraph (4)(H), including limitations
on transactions between depository institutions and companies
controlled pursuant to such paragraph, as the Board and the
Secretary jointly deem appropriate to assure compliance with the
purposes and prevent evasions of this chapter and the Gramm-
Leach-Bliley Act and to protect depository institutions.
(B) Sunset of restrictions on merchant banking activities of
financial subsidiaries
The restrictions contained in paragraph (4)(H) on the
ownership and control of shares, assets, or ownership interests
by or on behalf of a subsidiary of a depository institution
shall not apply to a financial subsidiary (as defined in section
24a of this title) of a bank, if the Board and the Secretary of
the Treasury jointly authorize financial subsidiaries of banks
to engage in merchant banking activities pursuant to section 122
of the Gramm-Leach-Bliley Act.
(l) Conditions for engaging in expanded financial activities
(1) In general
Notwithstanding subsection (k), (n), or (o) of this section, a
bank holding company may not engage in any activity, or directly or
indirectly acquire or retain shares of any company engaged in any
activity, under subsection (k), (n), or (o) of this section, other
than activities permissible for any bank holding company under
subsection (c)(8) of this section, unless--
(A) all of the depository institution subsidiaries of the
bank holding company are well capitalized;
(B) all of the depository institution subsidiaries of the
bank holding company are well managed; and
(C) the bank holding company has filed with the Board--
(i) a declaration that the company elects to be a
financial holding company to engage in activities or acquire
and retain shares of a company that were not permissible for
a bank holding company to engage in or acquire before the
enactment of the Gramm-Leach-Bliley Act; and
(ii) a certification that the company meets the
requirements of subparagraphs (A) and (B).
(2) CRA requirement
Notwithstanding subsection (k) or (n) of this section, section
24a(a) of this title, or section 46(a) of the Federal Deposit
Insurance Act [12 U.S.C. 1831w(a)], the appropriate Federal banking
agency shall prohibit a financial holding company or any insured
depository institution from--
(A) commencing any new activity under subsection (k) or (n)
of this section, section 24a(a) of this title, or section 46(a)
of the Federal Deposit Insurance Act; or
(B) directly or indirectly acquiring control of a company
engaged in any activity under subsection (k) or (n) of this
section, section 24a(a) of this title, or section 46(a) of the
Federal Deposit Insurance Act (other than an investment made
pursuant to subparagraph (H) or (I) of subsection (k)(4) of this
section, or section 122 of the Gramm-Leach-Bliley Act, or under
section 46(a) of the Federal Deposit Insurance Act by reason of
such section 122, by an affiliate already engaged in activities
under any such provision);
if any insured depository institution subsidiary of such financial
holding company, or the insured depository institution or any of its
insured depository institution affiliates, has received in its most
recent examination under the Community Reinvestment Act of 1977 [12
U.S.C. 2901 et seq.], a rating of less than ``satisfactory record of
meeting community credit needs''.
(3) Foreign banks
For purposes of paragraph (1), the Board shall apply comparable
capital and management standards to a foreign bank that operates a
branch or agency or owns or controls a commercial lending company in
the United States, giving due regard to the principle of national
treatment and equality of competitive opportunity.
(m) Provisions applicable to financial holding companies that fail to
meet certain requirements
(1) In general
If the Board finds that--
(A) a financial holding company is engaged, directly or
indirectly, in any activity under subsection (k), (n), or (o) of
this section, other than activities that are permissible for a
bank holding company under subsection (c)(8) of this section;
and
(B) such financial holding company is not in compliance with
the requirements of subsection (l)(1) of this section;
the Board shall give notice to the financial holding company to that
effect, describing the conditions giving rise to the notice.
(2) Agreement to correct conditions required
Not later than 45 days after the date of receipt by a financial
holding company of a notice given under paragraph (1) (or such
additional period as the Board may permit), the financial holding
company shall execute an agreement with the Board to comply with the
requirements applicable to a financial holding company under
subsection (l)(1) of this section.
(3) Board may impose limitations
Until the conditions described in a notice to a financial
holding company under paragraph (1) are corrected, the Board may
impose such limitations on the conduct or activities of that
financial holding company or any affiliate of that company as the
Board determines to be appropriate under the circumstances and
consistent with the purposes of this chapter.
(4) Failure to correct
If the conditions described in a notice to a financial holding
company under paragraph (1) are not corrected within 180 days after
the date of receipt by the financial holding company of a notice
under paragraph (1), the Board may require such financial holding
company, under such terms and conditions as may be imposed by the
Board and subject to such extension of time as may be granted in the
discretion of the Board, either--
(A) to divest control of any subsidiary depository
institution; or
(B) at the election of the financial holding company instead
to cease to engage in any activity conducted by such financial
holding company or its subsidiaries (other than a depository
institution or a subsidiary of a depository institution) that is
not an activity that is permissible for a bank holding company
under subsection (c)(8) of this section.
(5) Consultation
In taking any action under this subsection, the Board shall
consult with all relevant Federal and State regulatory agencies and
authorities.
(n) Authority to retain limited nonfinancial activities and affiliations
(1) In general
Notwithstanding subsection (a) of this section, a company that
is not a bank holding company or a foreign bank (as defined in
section 3101(7) of this title) and becomes a financial holding
company after November 12, 1999, may continue to engage in any
activity and retain direct or indirect ownership or control of
shares of a company engaged in any activity if--
(A) the holding company lawfully was engaged in the activity
or held the shares of such company on September 30, 1999;
(B) the holding company is predominantly engaged in
financial activities as defined in paragraph (2); and
(C) the company engaged in such activity continues to engage
only in the same activities that such company conducted on
September 30, 1999, and other activities permissible under this
chapter.
(2) Predominantly financial
For purposes of this subsection, a company is predominantly
engaged in financial activities if the annual gross revenues derived
by the holding company and all subsidiaries of the holding company
(excluding revenues derived from subsidiary depository
institutions), on a consolidated basis, from engaging in activities
that are financial in nature or are incidental to a financial
activity under subsection (k) of this section represent at least 85
percent of the consolidated annual gross revenues of the company.
(3) No expansion of grandfathered commercial activities
through merger or consolidation
A financial holding company that engages in activities or holds
shares pursuant to this subsection, or a subsidiary of such
financial holding company, may not acquire, in any merger,
consolidation, or other type of business combination, assets of any
other company that is engaged in any activity that the Board has not
determined to be financial in nature or incidental to a financial
activity under subsection (k) of this section, except this paragraph
shall not apply with respect to a company that owns a broadcasting
station licensed under title III of the Communications Act of 1934
[47 U.S.C. 301 et seq.] and the shares of which are under common
control with an insurance company since January 1, 1998, unless such
company is acquired by, or otherwise becomes an affiliate of, a bank
holding company that, at the time such acquisition or affiliation is
consummated, is 1 of the 5 largest domestic bank holding companies
(as determined on the basis of the consolidated total assets of such
companies).
(4) Continuing revenue limitation on grandfathered
commercial activities
Notwithstanding any other provision of this subsection, a
financial holding company may continue to engage in activities or
hold shares in companies pursuant to this subsection only to the
extent that the aggregate annual gross revenues derived from all
such activities and all such companies does not exceed 15 percent of
the consolidated annual gross revenues of the financial holding
company (excluding revenues derived from subsidiary depository
institutions).
(5) Cross marketing restrictions applicable to commercial
activities
(A) In general
A depository institution controlled by a financial holding
company shall not--
(i) offer or market, directly or through any
arrangement, any product or service of a company whose
activities are conducted or whose shares are owned or
controlled by the financial holding company pursuant to this
subsection or subparagraph (H) or (I) of subsection (k)(4)
of this section; or
(ii) permit any of its products or services to be
offered or marketed, directly or through any arrangement, by
or through any company described in clause (i).
(B) Rule of construction
Subparagraph (A) shall not be construed as prohibiting an
arrangement between a depository institution and a company owned
or controlled pursuant to subsection (k)(4)(I) of this section
for the marketing of products or services through statement
inserts or Internet websites if--
(i) such arrangement does not violate section 106 of the
Bank Holding Company Act Amendments of 1970 [12 U.S.C. 1971
et seq.]; and
(ii) the Board determines that the arrangement is in the
public interest, does not undermine the separation of
banking and commerce, and is consistent with the safety and
soundness of depository institutions.
(6) Transactions with nonfinancial affiliates
A depository institution controlled by a financial holding
company may not engage in a covered transaction (as defined in
section 371c(b)(7) of this title) with any affiliate controlled by
the company pursuant to this subsection.
(7) Sunset of grandfather
A financial holding company engaged in any activity, or
retaining direct or indirect ownership or control of shares of a
company, pursuant to this subsection, shall terminate such activity
and divest ownership or control of the shares of such company before
the end of the 10-year period beginning on November 12, 1999. The
Board may, upon application by a financial holding company, extend
such 10-year period by a period not to exceed an additional 5 years
if such extension would not be detrimental to the public interest.
(o) Regulation of certain financial holding companies
Notwithstanding subsection (a) of this section, a company that is
not a bank holding company or a foreign bank (as defined in section
3101(7) of this title) and becomes a financial holding company after
November 12, 1999, may continue to engage in, or directly or indirectly
own or control shares of a company engaged in, activities related to the
trading, sale, or investment in commodities and underlying physical
properties that were not permissible for bank holding companies to
conduct in the United States as of September 30, 1997, if--
(1) the holding company, or any subsidiary of the holding
company, lawfully was engaged, directly or indirectly, in any of
such activities as of September 30, 1997, in the United States;
(2) the attributed aggregate consolidated assets of the company
held by the holding company pursuant to this subsection, and not
otherwise permitted to be held by a financial holding company, are
equal to not more than 5 percent of the total consolidated assets of
the bank holding company, except that the Board may increase that
percentage by such amounts and under such circumstances as the Board
considers appropriate, consistent with the purposes of this chapter;
and
(3) the holding company does not permit--
(A) any company, the shares of which it owns or controls
pursuant to this subsection, to offer or market any product or
service of an affiliated depository institution; or
(B) any affiliated depository institution to offer or market
any product or service of any company, the shares of which are
owned or controlled by such holding company pursuant to this
subsection.
(May 9, 1956, ch. 240, Sec. 4, 70 Stat. 135; Pub. L. 89-485, Sec. 8,
July 1, 1966, 80 Stat. 238; Pub. L. 91-607, title I, Sec. 103, Dec. 31,
1970, 84 Stat. 1763; Pub. L. 95-188, title III, Sec. 301(c), Nov. 16,
1977, 91 Stat. 1389; Pub. L. 95-630, title I, Sec. 112, Nov. 10, 1978,
92 Stat. 3671; Pub. L. 96-221, title VII, Sec. 701(b), Mar. 31, 1980, 94
Stat. 186; Pub. L. 97-290, title II, Sec. 203, Oct. 8, 1982, 96 Stat.
1236; Pub. L. 97-320, title I, Secs. 118(a), 141(a)(4), title IV,
Sec. 433(b), title VI, Sec. 601, Oct. 15, 1982, 96 Stat. 1479, 1489,
1527, 1536; Pub. L. 97-457, Sec. 30, Jan. 12, 1983, 96 Stat. 2511; Pub.
L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100-86, title
I, Sec. 101(b), (c), title V, Secs. 502(h)(2), 509(a), Aug. 10, 1987,
101 Stat. 557, 628, 635; Pub. L. 100-418, title III, Sec. 3402, Aug. 23,
1988, 102 Stat. 1384; Pub. L. 101-73, title VI, Secs. 601(a), 603,
604(b), title XII, Sec. 1219, Aug. 9, 1989, 103 Stat. 408, 409, 411,
546; Pub. L. 102-242, title IV, Sec. 461, Dec. 19, 1991, 105 Stat. 2384;
Pub. L. 102-550, title XVI, Sec. 1606(h)(1), Oct. 28, 1992, 106 Stat.
4089; Pub. L. 103-325, title III, Sec. 346, Sept. 23, 1994, 108 Stat.
2239; Pub. L. 104-208, div. A, title II, Secs. 2203(d), 2208(a), 2215,
2304(a), 2612, Sept. 30, 1996, 110 Stat. 3009-404, 3009-406, 3009-413,
3009-425, 3009-476; Pub. L. 106-102, title I, Secs. 102(a), 103(a),
(c)(2), 107(a), (b), (d)-(f), Nov. 12, 1999, 113 Stat. 1341, 1342, 1351,
1359-1361.)
References in Text
The Investment Company Act of 1940, referred to in subsec. (a)(2),
is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended,
which is classified generally to subchapter I (Sec. 80a-1 et seq.) of
chapter 2D of Title 15, Commerce and Trade. For complete classification
of this Act to the Code, see section 80a-51 of Title 15 and Tables.
Enactment of the Bank Holding Company Act Amendments of 1970,
referred to in subsecs. (a)(2) and (c)(12), means enactment of Pub. L.
91-607 on Dec. 31, 1970. For classification of Pub. L. 91-607, see Short
Title of 1970 Amendment note set out under section 1841 of this title.
Enactment of the Competitive Equality Amendments of 1987, referred
to in subsecs. (a)(2), (f)(1)(A), and (g)(1), means enactment of title I
of Pub. L. 100-86, Aug. 10, 1987, 101 Stat. 554. For classification of
title I of Pub. L. 100-86, see Short Title of 1987 Amendment note set
out under section 226 of this title and Tables.
Section 25 of the Federal Reserve Act, referred to in subsecs.
(c)(14)(E) and (f)(14)(A)(i), is classified to subchapter I (Sec. 601 et
seq.) of chapter 6 of this title. Section 25(a) of the Federal Reserve
Act (12 U.S.C. 611-631), referred to in subsec. (c)(14)(E), was
renumbered section 25A of the Federal Reserve Act by Pub. L. 102-242,
title I, Sec. 142(e)(2), Dec. 19, 1991, 105 Stat. 2281 and is classified
to subchapter II (Sec. 611 et seq.) of chapter 6 of this title.
Section 371c of this title, referred to in subsec. (c)(14)(F)(iv),
was amended generally by Pub. L. 97-320, title IV, Sec. 410(b), Oct. 15,
1982, 96 Stat. 1515, and, as so amended, no longer contains undesignated
pars. and no longer defines ``extension of credit''.
The Federal Deposit Insurance Act, referred to in subsec. (f)(8)(B),
is act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended, which
is classified generally to chapter 16 (Sec. 1811 et seq.) of this title.
For complete classification of this Act to the Code, see Short Title
note set out under section 1811 of this title and Tables.
Section 106 of the Bank Holding Company Act Amendments of 1970,
referred to in subsecs. (f)(9)(A), (h) and (n)(5)(B)(i), is Pub. L. 91-
607, title I, Sec. 106, Dec. 31, 1970, 84 Stat. 1766, as amended, which
is classified generally to chapter 22 (Sec. 1971 et seq.) of this title.
Section 1730a of this title, referred to in subsec. (f)(10)(A), was
repealed by Pub. L. 101-73, title IV, Sec. 407, Aug. 9, 1989, 103 Stat.
363.
The Home Owners' Loan Act, referred to in subsec. (i)(3)(A), is act
June 13, 1933, ch. 64, 48 Stat. 128, as amended, which is classified
generally to chapter 12 (Sec. 1461 et seq.) of this title. For complete
classification of this Act to the Code, see section 1461 of this title
and Tables.
The Gramm-Leach-Bliley Act, referred to in subsecs. (k)(3)(A), (7)
and (l)(1)(C)(i), (2)(B), is Pub. L. 106-102, Nov. 12, 1999, 113 Stat.
1338. Section 122 of the Act is set out as a note below. For complete
classification of this Act to the Code, see Short Title of 1999
Amendment note set out under section 1811 of this title and Tables.
The Investment Advisers Act of 1940, referred to in subsec.
(k)(4)(H)(ii)(II), is title II of act Aug. 22, 1940, ch. 686, 54 Stat.
847, as amended, which is classified generally to subchapter II
(Sec. 80b-1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For
complete classification of this Act to the Code, see section 80b-20 of
Title 15 and Tables.
The Community Reinvestment Act of 1977, referred to in subsec.
(l)(2), is title VIII of Pub. L. 95-128, Oct. 12, 1977, 91 Stat. 1147,
as amended, which is classified generally to chapter 30 (Sec. 2901 et
seq.) of this title. For complete classification of this Act to the
Code, see Short Title note set out under section 2901 of this title and
Tables.
The Communications Act of 1934, referred to in subsec. (n)(3), is
act June 19, 1934, ch. 652, 48 Stat. 1964, as amended. Title III of the
Act is classified generally to subchapter III (Sec. 301 et seq.) of
chapter 5 of Title 47, Telegraphs, Telephones, and Radiotelegraphs. For
complete classification of this Act to the Code, see section 609 of
Title 47 and Tables.
Amendments
1999--Subsec. (c)(8). Pub. L. 106-102, Sec. 102(a), amended par. (8)
generally, substituting present provisions for provisions which exempted
from prohibitions of this section shares of any bank holding company the
activities of which were determined to be so closely related to banking
or managing or controlling banks as to be a proper incident thereto,
which further provided that for purposes of this subsection it was not
closely related to banking or managing or controlling banks for a bank
holding company to provide insurance as a principal, agent, or broker
except in certain circumstances, which further provided factors to
consider in determining whether a particular activity is a proper
incident to banking or managing or controlling banks, and which further
provided notice and other procedural requirements in making such
determinations.
Subsec. (f)(2). Pub. L. 106-102, Sec. 107(d)(1), added introductory
provisions and struck out former introductory provisions which read as
follows: ``Paragraph (1) shall cease to apply to any company described
in such paragraph if--''.
Subsec. (f)(2)(A)(ii)(XI). Pub. L. 106-102, Sec. 107(d)(2)(A)-(C),
added subcl. (XI).
Subsec. (f)(2)(B), (C). Pub. L. 106-102, Sec. 107(d)(2)(D), (3),
added subpars. (B) and (C) and struck out former subpar. (B) which read
as follows: ``any bank subsidiary of such company fails to comply with
the restrictions contained in paragraph (3)(B).''
Subsec. (f)(3). Pub. L. 106-102, Sec. 107(a), (b), added par. (3)
and struck out heading and text of former par. (3) which related to
limitation on banks controlled by paragraph (1) companies.
Subsec. (f)(4). Pub. L. 106-102, Sec. 107(e), reenacted heading
without change and amended text of par. (4) generally. Prior to
amendment, text read as follows: ``If any company described in paragraph
(1) loses the exemption provided under such paragraph by operation of
paragraph (2), such company shall divest control of each bank it
controls within 180 days after such company becomes a bank holding
company due to the loss of such exemption.''
Subsec. (f)(14). Pub. L. 106-102, Sec. 107(f), added par. (14).
Subsec. (j)(1)(A), (E). Pub. L. 106-102, Sec. 103(c)(2)(A), inserted
``or in any complementary activity under subsection (k)(1)(B) of this
section'' after ``subsection (c)(8) or (a)(2) of this section''.
Subsec. (j)(3). Pub. L. 106-102, Sec. 103(c)(2)(B), inserted ``,
other than any complementary activity under subsection (k)(1)(B) of this
section,'' after ``to engage in any activity'' and ``or a company
engaged in any complementary activity under subsection (k)(1)(B) of this
section'' after ``insured depository institution''.
Subsecs. (k) to (o). Pub. L. 106-102, Sec. 103(a), added subsecs.
(k) to (o).
1996--Subsec. (c)(2). Pub. L. 104-208, Sec. 2215, struck out ``for
not more than one year at a time'' before ``if, in its judgment,'' and
substituted ``and, in the case of a bank holding company which has not
disposed of such shares within 5 years after the date on which such
shares were acquired, the Board may, upon the application of such
company, grant additional exemptions if, in the judgment of the Board,
such extension would not be detrimental to the public interest and,
either the bank holding company has made a good faith attempt to dispose
of such shares during such 5-year period, or the disposal of such shares
during such 5-year period would have been detrimental to the company,
except that the aggregate duration of such extensions shall not extend
beyond 10 years'' for ``but no such extensions shall extend beyond a
date five years''.
Subsec. (c)(8). Pub. L. 104-208, Sec. 2612, substituted ``(and
opportunity for hearing in the case of an acquisition of a savings
association)'' for ``and opportunity for hearing''.
Subsec. (f)(3)(B)(iv). Pub. L. 104-208, Sec. 2304(a), struck out cl.
(iv) which read as follows: ``increase its assets at an annual rate of
more than 7 percent during any 12-month period beginning after the end
of the 1-year period beginning on August 10, 1987.''
Subsec. (i)(4) to (7). Pub. L. 104-208, Sec. 2203(d), added pars.
(4) to (7).
Subsec. (j)(1)(A). Pub. L. 104-208, Sec. 2208(a)(1), substituted
``Except as provided in paragraph (3), no'' for ``No''.
Subsec. (j)(3) to (7). Pub. L. 104-208, Sec. 2208(a)(2), added pars.
(3) to (7).
1994--Subsec. (c). Pub. L. 103-325, Sec. 346(2), struck out before
last sentence ``In the event of the failure of the Board to act on any
application for an order under paragraph (8) of this subsection within
the ninety-one-day period which begins on the date of submission to the
Board of the complete record on that application, the application shall
be deemed to have been granted.''
Subsec. (j). Pub. L. 103-325, Sec. 346(1), added subsec. (j).
1992--Subsec. (i)(3). Pub. L. 102-550, Sec. 1606(h)(1), amended
directory language of Pub. L. 102-242, Sec. 461. See 1991 Amendment note
below.
1991--Subsec. (i)(3). Pub. L. 102-242, Sec. 461, as amended by Pub.
L. 102-550, Sec. 1606(h)(1), added par. (3).
1989--Subsec. (f)(2)(A)(i). Pub. L. 101-73, Sec. 604(b)(2), inserted
reference to par. (12).
Subsec. (f)(2)(A)(ii). Pub. L. 101-73, Sec. 603(a), amended cl. (ii)
generally. Prior to amendment, cl. (ii) read as follows: ``acquires
control of more than 5 percent of the shares or assets of an additional
bank or an insured institution other than--
``(I) shares acquired in a bona fide fiduciary capacity;
``(II) shares held temporarily pursuant to an underwriting
commitment in the normal course of an underwriting business;
``(III) shares held in an account solely for trading purposes;
``(IV) loans or other accounts receivable acquired in the normal
course of business; and
``(V) shares or assets of an insured institution described in
paragraph (10) of this subsection; or''.
Subsec. (f)(3)(B)(ii). Pub. L. 101-73, Sec. 1219, added cl. (ii) and
struck out former cl. (ii) which read as follows: ``offer or market
products or services of an affiliate that are not permissible for bank
holding companies to provide under subsection (c)(8) of this section, or
permit its products or services to be offered or marketed by or through
an affiliate (other than an affiliate that engages only in activities
permissible for bank holding companies under subsection (c)(8) of this
section), unless such products or services were being so offered or
marketed as of March 5, 1987, and then only in the same manner in which
they were being offered or marketed as of that date;''.
Subsec. (f)(10). Pub. L. 101-73, Sec. 603(b)(1), substituted ``and
(ii)(VIII)'' for ``and (ii)(V)'', and in subpar. (A) inserted reference
to section 13(k) of the Federal Deposit Insurance Act.
Subsec. (f)(11). Pub. L. 101-73, Sec. 603(b)(2), added par. (11).
Subsec. (f)(12), (13). Pub. L. 101-73, Sec. 604(b)(1), added pars.
(12) and (13).
Subsec. (i). Pub. L. 101-73, Sec. 601(a), added subsec. (i).
1988--Subsec. (c)(14)(A). Pub. L. 100-418, Sec. 3402(b), added cl.
(v) and redesignated former cls. (v) and (vi) as (vi) and (vii),
respectively.
Subsec. (c)(14)(G). Pub. L. 100-418, Sec. 3402(a), added subpar.
(G).
Subsec. (c)(14)(H). Pub. L. 100-418, Sec. 3402(c), added subpar.
(H).
1987--Pub. L. 100-86, Sec. 509(a), repealed Pub. L. 97-320,
Sec. 141. See 1982 Amendment note below.
Subsec. (a)(2). Pub. L. 100-86, Sec. 101(b), inserted at end
``Notwithstanding any other provision of this paragraph, if any company
that became a bank holding company as a result of the enactment of the
Competitive Equality Amendments of 1987 acquired, between March 5, 1987,
and August 10, 1987, an institution that became a bank as a result of
the enactment of such Amendments, that company shall, upon enactment of
such Amendments, immediately come into compliance with the requirements
of this chapter.''
Subsec. (c)(8). Pub. L. 100-86, Sec. 502(h)(2), struck out semicolon
at end and substituted a period and following sentences: ``If an
application is filed under this paragraph in connection with an
application to make an acquisition pursuant to section 13(f) of the
Federal Deposit Insurance Act, the Board may dispense with the notice
and hearing requirement of this paragraph and the Board may approve or
deny the application under this paragraph without notice or hearing. If
an application described in the preceding sentence is approved, the
Board shall publish in the Federal Register, not later than 7 days after
such approval is granted, the order approving the application and a
description of the nonbanking activities involved in the acquisition;''.
Subsecs. (f) to (h). Pub. L. 100-86, Sec. 101(c), added subsecs. (f)
to (h).
1986--Subsec. (c). Pub. L. 99-514 substituted ``Internal Revenue
Code of 1986'' for ``Internal Revenue Code of 1954'', which for purposes
of codification was translated as ``title 26'' thus requiring no change
in text.
1983--Subsec. (c)(8)(F). Pub. L. 97-457, Sec. 30(1), inserted
proviso that such a bank holding company and its subsidiaries may not
engage in sale of life insurance or annuities except as provided in
subparagraph (A), (B), or (C).
Subsec. (c)(8)(G). Pub. L. 97-457, Sec. 30(2), struck out proviso
that such bank holding company and its subsidiaries may not engage in
sale of life insurance or annuities except as provided in subparagraph
(A), (B), or (C).
1982--Subsec. (a). Pub. L. 97-320, Sec. 433(b), substituted
``December 31, 1984'' for ``December 31, 1982''.
Subsec. (c)(8). Pub. L. 97-320, Secs. 118(a), 601, inserted
specification that providing insurance is not being closely related to
banking or managing or controlling banks for purposes of this
subsection, exceptions thereto in cls. (A) through (G), and the
subsequent proviso relating to the sale of life insurance or annuities,
and inserted provisions relating to dispensation from the notice and
hearing requirement in the event of an emergency.
Pub. L. 97-320, Sec. 141(a)(4), which directed that, effective Oct.
13, 1986, the provisions of law amended by section 118 of Pub. L. 97-320
shall be amended to read as they would without such amendment, was
repealed by Pub. L. 100-86, Sec. 509(a). See Effective and Termination
Dates of 1982 Amendment note and Extension of Emergency Acquisition and
Net Worth Guarantee Provisions of Pub. L. 97-320 note set out under
section 1464 of this title.
Subsec. (c)(14). Pub. L. 97-290 added par. (14).
1980--Subsec. (a). Pub. L. 96-221 inserted provisions relating to
extension of period ending Dec. 31, 1980, to Dec. 31, 1982.
1978--Subsec. (c). Pub. L. 95-630 substituted ``The prohibitions in
this section shall not apply to (i) any company that was on January 4,
1977, both a bank holding company and a labor, agricultural, or
horticultural organization exempt from taxation under section 501 of
title 26, or to any labor, agricultural, or horticultural organization
to which all or substantially all of the assets of such company are
hereafter transferred'' for ``The prohibitions in this section shall not
apply to any bank holding company which is (i) a labor, agricultural, or
horticultural organization and which is exempt from taxation under
section 501 of title 26''.
1977--Subsec. (c)(2). Pub. L. 95-188 substituted ``shares acquired
by a bank holding company or any of its subsidiaries in satisfaction of
a debt previously contracted in good faith, but such shares shall be
disposed of within a period of two years'' for ``shares acquired by a
bank in satisfaction of a debt previously contracted in good faith, but
such bank shall dispose of such shares within a period of two years''.
1970--Subsec. (a). Pub. L. 91-607, Sec. 103(1), (2), in par. (2) of
first sentence, inserted provision respecting prohibition in the case of
a company which becomes, as a result of the enactment of the Bank
Holding Company Act Amendments of 1970, a bank holding company on the
date of such enactment, after Dec. 31, 1980, substituted ``engage in any
activities'' for ``engage in any business'', designated existing
provisions as cl. (A), substituting therein ``and other subsidiaries
authorized under this chapter or of furnishing services to or performing
services for its subsidiaries'' for ``or of furnishing services to or
performing services for any bank of which it owns or controls 25 per
centum or more of the voting shares'', added cl. (B) and provisions
respecting activities of a company covered in 1970, and termination of
authority for engaging in the activities, authorization of bank holding
company to engage in activities through acquisition of interest in or
assets of a going concern engaged in the activities, and retention for
period of ten years ownership or control of shares in a company carrying
on the activity, where the activity of the company has been terminated;
and, in second sentence substituted ``two year period'' for ``period'',
respectively.
Subsec. (c). Pub. L. 91-607, Sec. 103(3), (6), designated existing
provisions of text preceding par. (1) as cl. (i) and added cl. (2), and
inserted concluding text following par. (13) deeming an application
under par. (8) as granted upon failure of Board to act within prescribed
period and requiring the Board in the report to Congress to include a
description and a statement of reasons for approval of each activity
under par. (8), respectively.
Subsec. (c)(8). Pub. L. 91-607, Sec. 103(4), inserted provisions
respecting criteria to be used for determining whether particular
activity is proper incident to banking and provision for differentiation
by orders and regulations between de novo activities and going concern
activities, deleted description of company activities as being of a
financial, fiduciary, or insurance nature, specific language respecting
determination on basis of record made at the hearing, and provision
respecting the close relationship of the activities making it
unnecessary for prohibitions of this section to apply in order to carry
out the purposes of this chapter, substituted ``opportunity for
hearing'' for ``hearing'', and provided for determination by regulation.
Subsec. (c)(9). Pub. L. 91-607, Sec. 103(5), extended exemption to
company activities, substituted provision respecting conduct of greater
part of company's business; outside the United States for prior
provision respecting engaging principally in the banking business
outside the United States, and conditioned exemption on Board
determination by regulation or order that the exemption would not be
substantially at variance with the purposes of this chapter and would be
in the public interest.
Subsec. (c)(11) to (13). Pub. L. 91-607, Sec. 103(6), added pars.
(11) to (13).
Subsecs. (d), (e). Pub. L. 91-607, Sec. 103(7), added subsec. (d)
and redesignated former subsec. (d) as (e).
1966--Subsec. (a). Pub. L. 89-485, Sec. 8(a), extended until
December 31, 1978, the deadline for divestiture by bank holding
companies of their nonbanking interests in the case of any company that
has been continuously affiliated since May 15, 1955, with a company
which was registered under the Investment Company Act of 1940, prior to
May 15, 1955, in such a manner as to constitute an affiliated company
within the meaning of that Act.
Subsec. (c). Pub. L. 89-485, Sec. 8(b), limited the exception
granted companies engaged in liquidating assets acquired by the bank
holding company by requiring that, to qualify for the exception, the
company be engaged solely in liquidating assets acquired from the
holding company and its banks or from another source before it became
subject to this chapter and not merely engaged in the general
liquidating business with only a part of its operations performed for
the holding company system, authorized the grant of one year extensions
up to a total of three years to the two year period allowed for the
disposal of shares acquired by a bank in satisfaction of a debt
previously contracted in good faith, substituted reference, in par. (4),
to shares held under a trust that constitutes a company as defined in
section 1841(b) and except as provided in pars. (2) and (3) of section
1841(g) of this title for reference to shares held for the benefit of
the shareholders of a bank holding company or any of its subsidiaries,
and eliminated the requirement that, in order to qualify for the
exemption allowing a bank holding company to hold shares in a nonbanking
company, the shares do not exceed 5 per centum of the holding company's
assets in value.
Subsec. (d). Pub. L. 89-485, Sec. 8(c), added subsec. (d).
Effective Date of 1999 Amendment
Amendment by Pub. L. 106-102 effective 120 days after Nov. 12, 1999,
see section 161 of Pub. L. 106-102, set out as a note under section 24
of this title.
Effective Date of 1992 Amendment
Amendment by Pub. L. 102-550 effective as if included in the Federal
Deposit Insurance Corporation Improvement Act of 1991, Pub. L. 102-242,
as of Dec. 19, 1991, see section 1609(a) of Pub. L. 102-550, set out as
a note under section 191 of this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
Short Title of 1982 Amendment
For short title of title II of Pub. L. 97-290 as the ``Bank Export
Services Act'', see Short Title of 1982 Amendment note set out under
section 1841 of this title.
Termination of Reporting Requirements
For termination, effective May 15, 2000, of provisions of law
requiring submittal to Congress of any annual, semiannual, or other
regular periodic report listed in House Document No. 103-7 (in which a
report required under subsection (c) (last sentence) of this section is
listed on page 171), see section 3003 of Pub. L. 104-66, as amended, set
out as a note under section 1113 of Title 31, Money and Finance.
Report to Congress on New Activities of Financial Holding Companies
Pub. L. 106-102, title I, Sec. 103(d), Nov. 12, 1999, 113 Stat.
1351, provided that:
``(1) In general.--By the end of the 4-year period beginning on the
date of the enactment of this Act [Nov. 12, 1999], the Board of
Governors of the Federal Reserve System and the Secretary of the
Treasury shall submit a joint report to the Congress containing a
summary of new activities, including grandfathered commercial
activities, in which any financial holding company is engaged pursuant
to subsection (k)(1) or (n) of section 4 of the Bank Holding Company Act
of 1956 [12 U.S.C. 1843(k)(1), (n)] (as added by subsection (a)).
``(2) Other contents.--The report submitted to the Congress pursuant
to paragraph (1) shall also contain the following:
``(A) A discussion of actions by the Board of Governors of the
Federal Reserve System and the Secretary of the Treasury, whether by
regulation, order, interpretation, or guideline or by approval or
disapproval of an application, with regard to activities of
financial holding companies that are incidental to activities that
are financial in nature or complementary to such financial
activities.
``(B) An analysis and discussion of the risks posed by
commercial activities of financial holding companies to the safety
and soundness of affiliate depository institutions.
``(C) An analysis and discussion of the effect of mergers and
acquisitions under section 4(k) of the Bank Holding Company Act of
1956 [12 U.S.C. 1843(k)] on market concentration in the financial
services industry.''
Consideration of Merchant Banking Activities by Financial Subsidiaries
Pub. L. 106-102, title I, Sec. 122, Nov. 12, 1999, 113 Stat. 1381,
provided that: ``After the end of the 5-year period beginning on the
date of the enactment of the Gramm-Leach-Bliley Act [Nov. 12, 1999], the
Board of Governors of the Federal Reserve System and the Secretary of
the Treasury may, if appropriate, after considering--
``(1) the experience with the effects of financial modernization
under this Act [see Tables for classification] and merchant banking
activities of financial holding companies;
``(2) the potential effects on depository institutions and the
financial system of allowing merchant banking activities in
financial subsidiaries; and
``(3) other relevant facts;
jointly adopt rules that permit financial subsidiaries to engage in
merchant banking activities described in section 4(k)(4)(H) of the Bank
Holding Company Act of 1956 [12 U.S.C. 1843(k)(4)(H)], under such terms
and conditions as the Board of Governors of the Federal Reserve System
and the Secretary of the Treasury jointly determine to be appropriate.''
Modification of Prior Approvals
Section 601(b) of Pub. L. 101-73 provided that: ``If the Board of
Governors of the Federal Reserve System, in approving an application by
a bank holding company to acquire a savings association, imposed any
restriction that would have been prohibited under section 4(i)(2) of the
Bank Holding Company Act of 1956 [12 U.S.C. 1843(i)(2)] (as added by
subsection (a) of this section) if that section had been in effect when
the application was approved, the Board shall modify that approval in a
manner consistent with that section.''
Extension of Emergency Acquisition and Net Worth Guarantee Provisions of
Pub. L. 97-320
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect before Aug. 10,
1987, to any other provision of law to be deemed to have taken effect
before such date and any such provision of law to be in effect as if no
such amendment had been made before such date, see section 509(c) of
Pub. L. 100-86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect on the day before
Oct. 8, 1986, to any other provision of law to be deemed to have taken
effect before such date and any such provision of law to be in effect as
if no such amendment had taken effect before such date, see section 1(c)
of Pub. L. 99-452, set out as a note under section 1464 of this title.
Section 141(a) of Pub. L. 97-320, set out as a note under section
1464 of this title, as in effect on the day after Aug. 27, 1986,
applicable as if included in Pub. L. 97-320 on Oct. 15, 1982, with no
amendment made by such section to any other provision of law to be
deemed to have taken effect before Aug. 27, 1986, and any such provision
of law to be in effect as if no such amendment had taken effect before
Aug. 27, 1986, see section 1(c) of Pub. L. 99-400, set out as a note
under section 1464 of this title.
Bank Export Services
Section 202 of Pub. L. 97-290 provided that: ``The Congress hereby
declares that it is the purpose of this title [enacting section 635a-4
of this title, amending sections 372 and 1843 of this title, and
enacting provisions set out as notes under section 1843 of this title]
to provide for meaningful and effective participation by bank holding
companies, bankers' banks, and Edge Act [12 U.S.C. 611 et seq.]
corporations, in the financing and development of export trading
companies in the United States. In furtherance of such purpose, the
Congress intends that, in implementing its authority under section
4(c)(14) of the Bank Holding Company Act of 1956 [subsec. (c)(14) of
this section] the Board of Governors of the Federal Reserve System
should pursue regulatory policies that--
``(1) provide for the establishment of export trading companies
with powers sufficiently broad to enable them to complete with
similar foreign-owned institutions in the United States and abroad;
``(2) afford to United States commerce, industry, and
agriculture, especially small- and medium-size firms, a means of
exporting at all times;
``(3) foster the participation by regional and smaller banks in
the development of export trading companies; and
``(4) facilitate the formation of joint venture export trading
companies between bank holding companies and nonbank firms that
provide for the efficient combination of complementary trade and
financing services designed to create export trading companies that
can handle all of an exporting company's needs.''
Report to Congress by Federal Reserve Board Regarding Changes in
Financing of United States Exports
Section 205 of Pub. L. 97-290 required Federal Reserve Board, within
two years after Oct. 8, 1982, to report to Congress its recommendations
with respect to implementation of this section, on any changes in United
States law to facilitate financing of United States exports, and on
effects of ownership of United States banks by foreign banking
organizations affiliated with trading companies doing business in United
States.
Section Referred to in Other Sections
This section is referred to in sections 24a, 371c, 635a-4, 1467a,
1815, 1828b, 1841, 1844, 1849, 1864, 1972, 2903, 3105, 3106, 3401 of
this title; title 15 sections 18a, 78c, 78q, 6809; title 31 section
5318.