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§ 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
---------------------------------------------------------------------------
    \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.



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