HR 8337 — Bank Resilience and Regulatory Improvement Act

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 CONSUMER FINANCIAL PROTECTION ACT OF 2010

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TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION

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Subtitle B--General Powers of the Bureau

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SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND 
 CREDIT UNIONS.

 (a) Scope of Coverage.--This section shall apply to any 
covered person that is--
 (1) an insured depository institution with total 
 assets of more than [$10,000,000,000] $50,000,000,000 
 and any affiliate thereof; or
 (2) an insured credit union with total assets of more 
 than [$10,000,000,000] $50,000,000,000 and any 
 affiliate thereof.
 (b) Supervision.--
 (1) In general.--The Bureau shall have exclusive 
 authority to require reports and conduct examinations 
 on a periodic basis of persons described in subsection 
 (a) for purposes of--
 (A) assessing compliance with the 
 requirements of Federal consumer financial 
 laws;
 (B) obtaining information about the 
 activities subject to such laws and the 
 associated compliance systems or procedures of 
 such persons; and
 (C) detecting and assessing associated risks 
 to consumers and to markets for consumer 
 financial products and services.
 (2) Coordination.--To minimize regulatory burden, the 
 Bureau shall coordinate its supervisory activities with 
 the supervisory activities conducted by prudential 
 regulators and the State bank regulatory authorities, 
 including consultation regarding their respective 
 schedules for examining such persons described in 
 subsection (a) and requirements regarding reports to be 
 submitted by such persons.
 (3) Use of existing reports.--The Bureau shall, to 
 the fullest extent possible, use--
 (A) reports pertaining to a person described 
 in subsection (a) that have been provided or 
 required to have been provided to a Federal or 
 State agency; and
 (B) information that has been reported 
 publicly.
 (4) Preservation of authority.--Nothing in this title 
 may be construed as limiting the authority of the 
 Director to require reports from a person described in 
 subsection (a), as permitted under paragraph (1), 
 regarding information owned or under the control of 
 such person, regardless of whether such information is 
 maintained, stored, or processed by another person.
 (5) Reports of tax law noncompliance.--The Bureau 
 shall provide the Commissioner of Internal Revenue with 
 any report of examination or related information 
 identifying possible tax law noncompliance.
 (c) Primary Enforcement Authority.--
 (1) The bureau to have primary enforcement 
 authority.--To the extent that the Bureau and another 
 Federal agency are authorized to enforce a Federal 
 consumer financial law, the Bureau shall have primary 
 authority to enforce that Federal consumer financial 
 law with respect to any person described in subsection 
 (a).
 (2) Referral.--Any Federal agency, other than the 
 Federal Trade Commission, that is authorized to enforce 
 a Federal consumer financial law may recommend, in 
 writing, to the Bureau that the Bureau initiate an 
 enforcement proceeding with respect to a person 
 described in subsection (a), as the Bureau is 
 authorized to do by that Federal consumer financial 
 law.
 (3) Backup enforcement authority of other federal 
 agency.--If the Bureau does not, before the end of the 
 120-day period beginning on the date on which the 
 Bureau receives a recommendation under paragraph (2), 
 initiate an enforcement proceeding, the other agency 
 referred to in paragraph (2) may initiate an 
 enforcement proceeding, including performing follow up 
 supervisory and support functions incidental thereto, 
 to assure compliance with such proceeding.
 (d) Service Providers.--A service provider to a person 
described in subsection (a) shall be subject to the authority 
of the Bureau under this section, to the same extent as if the 
Bureau were an appropriate Federal banking agency under section 
7(c) of the Bank Service Company Act 12 U.S.C. 1867(c). In 
conducting any examination or requiring any report from a 
service provider subject to this subsection, the Bureau shall 
coordinate with the appropriate prudential regulator.
 (e) Simultaneous and Coordinated Supervisory Action.--
 (1) Examinations.--A prudential regulator and the 
 Bureau shall, with respect to each insured depository 
 institution, insured credit union, or other covered 
 person described in subsection (a) that is supervised 
 by the prudential regulator and the Bureau, 
 respectively--
 (A) coordinate the scheduling of examinations 
 of the insured depository institution, insured 
 credit union, or other covered person described 
 in subsection (a);
 (B) conduct simultaneous examinations of each 
 insured depository institution or insured 
 credit union, unless such institution requests 
 examinations to be conducted separately;
 (C) share each draft report of examination 
 with the other agency and permit the receiving 
 agency a reasonable opportunity (which shall 
 not be less than a period of 30 days after the 
 date of receipt) to comment on the draft report 
 before such report is made final; and
 (D) prior to issuing a final report of 
 examination or taking supervisory action, take 
 into consideration concerns, if any, raised in 
 the comments made by the other agency.
 (2) Coordination with state bank supervisors.--The 
 Bureau shall pursue arrangements and agreements with 
 State bank supervisors to coordinate examinations, 
 consistent with paragraph (1).
 (3) Avoidance of conflict in supervision.--
 (A) Request.--If the proposed supervisory 
 determinations of the Bureau and a prudential 
 regulator (in this section referred to 
 collectively as the ``agencies'') are 
 conflicting, an insured depository institution, 
 insured credit union, or other covered person 
 described in subsection (a) may request the 
 agencies to coordinate and present a joint 
 statement of coordinated supervisory action.
 (B) Joint statement.--The agencies shall 
 provide a joint statement under subparagraph 
 (A), not later than 30 days after the date of 
 receipt of the request of the insured 
 depository institution, credit union, or 
 covered person described in subsection (a).
 (4) Appeals to governing panel.--
 (A) In general.--If the agencies do not 
 resolve the conflict or issue a joint statement 
 required by subparagraph (B), or if either of 
 the agencies takes or attempts to take any 
 supervisory action relating to the request for 
 the joint statement without the consent of the 
 other agency, an insured depository 
 institution, insured credit union, or other 
 covered person described in subsection (a) may 
 institute an appeal to a governing panel, as 
 provided in this subsection, not later than 30 
 days after the expiration of the period during 
 which a joint statement is required to be filed 
 under paragraph (3)(B).
 (B) Composition of governing panel.--The 
 governing panel for an appeal under this 
 paragraph shall be composed of--
 (i) a representative from the Bureau 
 and a representative of the prudential 
 regulator, both of whom--
 (I) have not participated in 
 the material supervisory 
 determinations under appeal; 
 and
 (II) do not directly or 
 indirectly report to the person 
 who participated materially in 
 the supervisory determinations 
 under appeal; and
 (ii) one individual representative, 
 to be determined on a rotating basis, 
 from among the Board of Governors, the 
 Corporation, the National Credit Union 
 Administration, and the Office of the 
 Comptroller of the Currency, other than 
 any agency involved in the subject 
 dispute.
 (C) Conduct of appeal.--In an appeal under 
 this paragraph--
 (i) the insured depository 
 institution, insured credit union, or 
 other covered person described in 
 subsection (a)--
 (I) shall include in its 
 appeal all the facts and legal 
 arguments pertaining to the 
 matter; and
 (II) may, through counsel, 
 employees, or representatives, 
 appear before the governing 
 panel in person or by 
 telephone; and
 (ii) the governing panel--
 (I) may request the insured 
 depository institution, insured 
 credit union, or other covered 
 person described in subsection 
 (a), the Bureau, or the 
 prudential regulator to produce 
 additional information relevant 
 to the appeal; and
 (II) by a majority vote of 
 its members, shall provide a 
 final determination, in 
 writing, not later than 30 days 
 after the date of filing of an 
 informationally complete 
 appeal, or such longer period 
 as the panel and the insured 
 depository institution, insured 
 credit union, or other covered 
 person described in subsection 
 (a) may jointly agree.
 (D) Public availability of determinations.--A 
 governing panel shall publish all information 
 contained in a determination by the governing 
 panel, with appropriate redactions of 
 information that would be subject to an 
 exemption from disclosure under section 552 of 
 title 5, United States Code.
 (E) Prohibition against retaliation.--The 
 Bureau and the prudential regulators shall 
 prescribe rules to provide safeguards from 
 retaliation against the insured depository 
 institution, insured credit union, or other 
 covered person described in subsection (a) 
 instituting an appeal under this paragraph, as 
 well as their officers and employees.
 (F) Limitation.--The process provided in this 
 paragraph shall not apply to a determination by 
 a prudential regulator to appoint a conservator 
 or receiver for an insured depository 
 institution or a liquidating agent for an 
 insured credit union, as the case may be, or a 
 decision to take action pursuant to section 38 
 of the Federal Deposit Insurance Act (12 U.S.C. 
 1831o) or section 212 of the Federal Credit 
 Union Act (112 U.S.C. 1790a), as applicable.
 (G) Effect on other authority.--Nothing in 
 this section shall modify or limit the 
 authority of the Bureau to interpret, or take 
 enforcement action under, any Federal consumer 
 financial law, or the authority of a prudential 
 regulator to interpret or take enforcement 
 action under any other provision of Federal law 
 for safety and soundness purposes.

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 ELECTRONIC FUND TRANSFER ACT

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TITLE IX--ELECTRONIC FUND TRANSFERS

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SEC. 921. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.

 (a) Reasonable Interchange Transaction Fees for Electronic 
Debit Transactions.--
 (1) Regulatory authority over interchange transaction 
 fees.--The Board may prescribe regulations, pursuant to 
 section 553 of title 5, United States Code, regarding 
 any interchange transaction fee that an issuer may 
 receive or charge with respect to an electronic debit 
 transaction, to implement this subsection (including 
 related definitions), and to prevent circumvention or 
 evasion of this subsection.
 (2) Reasonable interchange transaction fees.--The 
 amount of any interchange transaction fee that an 
 issuer may receive or charge with respect to an 
 electronic debit transaction shall be reasonable and 
 proportional to the cost incurred by the issuer with 
 respect to the transaction.
 (3) Rulemaking required.--
 (A) In general.--The Board shall prescribe 
 regulations in final form not later than 9 
 months after the date of enactment of the 
 Consumer Financial Protection Act of 2010, to 
 establish standards for assessing whether the 
 amount of any interchange transaction fee 
 described in paragraph (2) is reasonable and 
 proportional to the cost incurred by the issuer 
 with respect to the transaction.
 (B) Information collection.--The Board may 
 require any issuer (or agent of an issuer) or 
 payment card network to provide the Board with 
 such information as may be necessary to carry 
 out the provisions of this subsection and the 
 Board, in issuing rules under subparagraph (A) 
 and on at least a bi-annual basis thereafter, 
 shall disclose such aggregate or summary 
 information concerning the costs incurred, and 
 interchange transaction fees charged or 
 received, by issuers or payment card networks 
 in connection with the authorization, clearance 
 or settlement of electronic debit transactions 
 as the Board considers appropriate and in the 
 public interest.
 (4) Considerations; consultation.--In prescribing 
 regulations under paragraph (3)(A), the Board shall--
 (A) consider the functional similarity 
 between--
 (i) electronic debit transactions; 
 and
 (ii) checking transactions that are 
 required within the Federal Reserve 
 bank system to clear at par;
 (B) distinguish between--
 (i) the incremental cost incurred by 
 an issuer for the role of the issuer in 
 the authorization, clearance, or 
 settlement of a particular electronic 
 debit transaction, which cost shall be 
 considered under paragraph (2); and
 (ii) other costs incurred by an 
 issuer which are not specific to a 
 particular electronic debit 
 transaction, which costs shall not be 
 considered under paragraph (2); and
 (C) consult, as appropriate, with the 
 Comptroller of the Currency, the Board of 
 Directors of the Federal Deposit Insurance 
 Corporation, the Director of the Office of 
 Thrift Supervision, the National Credit Union 
 Administration Board, the Administrator of the 
 Small Business Administration, and the Director 
 of the Bureau of Consumer Financial Protection.
 (5) Adjustments to interchange transaction fees for 
 fraud prevention costs.--
 (A) Adjustments.--The Board may allow for an 
 adjustment to the fee amount received or 
 charged by an issuer under paragraph (2), if--
 (i) such adjustment is reasonably 
 necessary to make allowance for costs 
 incurred by the issuer in preventing 
 fraud in relation to electronic debit 
 transactions involving that issuer; and
 (ii) the issuer complies with the 
 fraud-related standards established by 
 the Board under subparagraph (B), which 
 standards shall--
 (I) be designed to ensure 
 that any fraud-related 
 adjustment of the issuer is 
 limited to the amount described 
 in clause (i) and takes into 
 account any fraud-related 
 reimbursements (including 
 amounts from charge-backs) 
 received from consumers, 
 merchants, or payment card 
 networks in relation to 
 electronic debit transactions 
 involving the issuer; and
 (II) require issuers to take 
 effective steps to reduce the 
 occurrence of, and costs from, 
 fraud in relation to electronic 
 debit transactions, including 
 through the development and 
 implementation of cost-
 effective fraud prevention 
 technology.
 (B) Rulemaking required.--
 (i) In general.--The Board shall 
 prescribe regulations in final form not 
 later than 9 months after the date of 
 enactment of the Consumer Financial 
 Protection Act of 2010, to establish 
 standards for making adjustments under 
 this paragraph.
 (ii) Factors for consideration.--In 
 issuing the standards and prescribing 
 regulations under this paragraph, the 
 Board shall consider--
 (I) the nature, type, and 
 occurrence of fraud in 
 electronic debit transactions;
 (II) the extent to which the 
 occurrence of fraud depends on 
 whether authorization in an 
 electronic debit transaction is 
 based on signature, PIN, or 
 other means;
 (III) the available and 
 economical means by which fraud 
 on electronic debit 
 transactions may be reduced;
 (IV) the fraud prevention and 
 data security costs expended by 
 each party involved in 
 electronic debit transactions 
 (including consumers, persons 
 who accept debit cards as a 
 form of payment, financial 
 institutions, retailers and 
 payment card networks);
 (V) the costs of fraudulent 
 transactions absorbed by each 
 party involved in such 
 transactions (including 
 consumers, persons who accept 
 debit cards as a form of 
 payment, financial 
 institutions, retailers and 
 payment card networks);
 (VI) the extent to which 
 interchange transaction fees 
 have in the past reduced or 
 increased incentives for 
 parties involved in electronic 
 debit transactions to reduce 
 fraud on such transactions; and
 (VII) such other factors as 
 the Board considers 
 appropriate.
 (6) Exemption for small issuers.--
 (A) In general.--This subsection shall not 
 apply to any issuer that, together with its 
 affiliates, has assets of less than 
 [$10,000,000,000] $50,000,000,000, and the 
 Board shall exempt such issuers from 
 regulations prescribed under paragraph (3)(A).
 (B) Definition.--For purposes of this 
 paragraph, the term ``issuer'' shall be limited 
 to the person holding the asset account that is 
 debited through an electronic debit 
 transaction.
 (7) Exemption for government-administered payment 
 programs and reloadable prepaid cards.--
 (A) In general.--This subsection shall not 
 apply to an interchange transaction fee charged 
 or received with respect to an electronic debit 
 transaction in which a person uses--
 (i) a debit card or general-use 
 prepaid card that has been provided to 
 a person pursuant to a Federal, State 
 or local government-administered 
 payment program, in which the person 
 may only use the debit card or general-
 use prepaid card to transfer or debit 
 funds, monetary value, or other assets 
 that have been provided pursuant to 
 such program; or
 (ii) a plastic card, payment code, or 
 device that is--
 (I) linked to funds, monetary 
 value, or assets which are 
 purchased or loaded on a 
 prepaid basis;
 (II) not issued or approved 
 for use to access or debit any 
 account held by or for the 
 benefit of the card holder 
 (other than a subaccount or 
 other method of recording or 
 tracking funds purchased or 
 loaded on the card on a prepaid 
 basis);
 (III) redeemable at multiple, 
 unaffiliated merchants or 
 service providers, or automated 
 teller machines;
 (IV) used to transfer or 
 debit funds, monetary value, or 
 other assets; and
 (V) reloadable and not 
 marketed or labeled as a gift 
 card or gift certificate.
 (B) Exception.--Notwithstanding subparagraph 
 (A), after the end of the 1-year period 
 beginning on the effective date provided in 
 paragraph (9), this subsection shall apply to 
 an interchange transaction fee charged or 
 received with respect to an electronic debit 
 transaction described in subparagraph (A)(i) in 
 which a person uses a general-use prepaid card, 
 or an electronic debit transaction described in 
 subparagraph (A)(ii), if any of the following 
 fees may be charged to a person with respect to 
 the card:
 (i) A fee for an overdraft, including 
 a shortage of funds or a transaction 
 processed for an amount exceeding the 
 account balance.
 (ii) A fee imposed by the issuer for 
 the first withdrawal per month from an 
 automated teller machine that is part 
 of the issuer's designated automated 
 teller machine network.
 (C) Definition.--For purposes of subparagraph 
 (B), the term ``designated automated teller 
 machine network'' means either--
 (i) all automated teller machines 
 identified in the name of the issuer; 
 or
 (ii) any network of automated teller 
 machines identified by the issuer that 
 provides reasonable and convenient 
 access to the issuer's customers.
 (D) Reporting.--Beginning 12 months after the 
 date of enactment of the Consumer Financial 
 Protection Act of 2010, the Board shall 
 annually provide a report to the Congress 
 regarding --
 (i) the prevalence of the use of 
 general-use prepaid cards in Federal, 
 State or local government-administered 
 payment programs; and
 (ii) the interchange transaction fees 
 and cardholder fees charged with 
 respect to the use of such general-use 
 prepaid cards.
 (8) Regulatory authority over network fees.--
 (A) In general.--The Board may prescribe 
 regulations, pursuant to section 553 of title 
 5, United States Code, regarding any network 
 fee.
 (B) Limitation.--The authority under 
 subparagraph (A) to prescribe regulations shall 
 be limited to regulations to ensure that--
 (i) a network fee is not used to 
 directly or indirectly compensate an 
 issuer with respect to an electronic 
 debit transaction; and
 (ii) a network fee is not used to 
 circumvent or evade the restrictions of 
 this subsection and regulations 
 prescribed under such subsection.
 (C) Rulemaking required.--The Board shall 
 prescribe regulations in final form before the 
 end of the 9-month period beginning on the date 
 of the enactment of the Consumer Financial 
 Protection Act of 2010, to carry out the 
 authorities provided under subparagraph (A).
 (9) Effective date.--This subsection shall take 
 effect at the end of the 12-month period beginning on 
 the date of the enactment of the Consumer Financial 
 Protection Act of 2010.
 (b) Limitation on Payment Card Network Restrictions.--
 (1) Prohibitions against exclusivity arrangements.--
 (A) No exclusive network.--The Board shall, 
 before the end of the 1-year period beginning 
 on the date of the enactment of the Consumer 
 Financial Protection Act of 2010, prescribe 
 regulations providing that an issuer or payment 
 card network shall not directly or through any 
 agent, processor, or licensed member of a 
 payment card network, by contract, requirement, 
 condition, penalty, or otherwise, restrict the 
 number of payment card networks on which an 
 electronic debit transaction may be processed 
 to--
 (i) 1 such network; or
 (ii) 2 or more such networks which 
 are owned, controlled, or otherwise 
 operated by --
 (I) affiliated persons; or
 (II) networks affiliated with 
 such issuer.
 (B) No routing restrictions.--The Board 
 shall, before the end of the 1-year period 
 beginning on the date of the enactment of the 
 Consumer Financial Protection Act of 2010, 
 prescribe regulations providing that an issuer 
 or payment card network shall not, directly or 
 through any agent, processor, or licensed 
 member of the network, by contract, 
 requirement, condition, penalty, or otherwise, 
 inhibit the ability of any person who accepts 
 debit cards for payments to direct the routing 
 of electronic debit transactions for processing 
 over any payment card network that may process 
 such transactions.
 (2) Limitation on restrictions on offering discounts 
 for use of a form of payment.--
 (A) In general.--A payment card network shall 
 not, directly or through any agent, processor, 
 or licensed member of the network, by contract, 
 requirement, condition, penalty, or otherwise, 
 inhibit the ability of any person to provide a 
 discount or in-kind incentive for payment by 
 the use of cash, checks, debit cards, or credit 
 cards to the extent that--
 (i) in the case of a discount or in-
 kind incentive for payment by the use 
 of debit cards, the discount or in-kind 
 incentive does not differentiate on the 
 basis of the issuer or the payment card 
 network;
 (ii) in the case of a discount or in-
 kind incentive for payment by the use 
 of credit cards, the discount or in-
 kind incentive does not differentiate 
 on the basis of the issuer or the 
 payment card network; and
 (iii) to the extent required by 
 Federal law and applicable State law, 
 such discount or in-kind incentive is 
 offered to all prospective buyers and 
 disclosed clearly and conspicuously.
 (B) Lawful discounts.--For purposes of this 
 paragraph, the network may not penalize any 
 person for the providing of a discount that is 
 in compliance with Federal law and applicable 
 State law.
 (3) Limitation on restrictions on setting transaction 
 minimums or maximums.--
 (A) In general.--A payment card network shall 
 not, directly or through any agent, processor, 
 or licensed member of the network, by contract, 
 requirement, condition, penalty, or otherwise, 
 inhibit the ability--
 (i) of any person to set a minimum 
 dollar value for the acceptance by that 
 person of credit cards, to the extent 
 that --
 (I) such minimum dollar value 
 does not differentiate between 
 issuers or between payment card 
 networks; and
 (II) such minimum dollar 
 value does not exceed $10.00; 
 or
 (ii) of any Federal agency or 
 institution of higher education to set 
 a maximum dollar value for the 
 acceptance by that Federal agency or 
 institution of higher education of 
 credit cards, to the extent that such 
 maximum dollar value does not 
 differentiate between issuers or 
 between payment card networks.
 (B) Increase in minimum dollar amount.--The 
 Board may, by regulation prescribed pursuant to 
 section 553 of title 5, United States Code, 
 increase the amount of the dollar value listed 
 in subparagraph (A)(i)(II).
 (4) Rule of construction:.--No provision of this 
 subsection shall be construed to authorize any person--
 (A) to discriminate between debit cards 
 within a payment card network on the basis of 
 the issuer that issued the debit card; or
 (B) to discriminate between credit cards 
 within a payment card network on the basis of 
 the issuer that issued the credit card.
 (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
 (1) Affiliate.--The term ``affiliate'' means any 
 company that controls, is controlled by, or is under 
 common control with another company.
 (2) Debit card.--The term ``debit card''--
 (A) means any card, or other payment code or 
 device, issued or approved for use through a 
 payment card network to debit an asset account 
 (regardless of the purpose for which the 
 account is established), whether authorization 
 is based on signature, PIN, or other means;
 (B) includes a general-use prepaid card, as 
 that term is defined in section 915(a)(2)(A); 
 and
 (C) does not include paper checks.
 (3) Credit card.--The term ``credit card'' has the 
 same meaning as in section 103 of the Truth in Lending 
 Act.
 (4) Discount.--The term ``discount''--
 (A) means a reduction made from the price 
 that customers are informed is the regular 
 price; and
 (B) does not include any means of increasing 
 the price that customers are informed is the 
 regular price.
 (5) Electronic debit transaction.--The term 
 ``electronic debit transaction'' means a transaction in 
 which a person uses a debit card.
 (6) Federal agency.--The term ``Federal agency'' 
 means--
 (A) an agency (as defined in section 101 of 
 title 31, United States Code); and
 (B) a Government corporation (as defined in 
 section 103 of title 5, United States Code).
 (7) Institution of higher education.--The term 
 ``institution of higher education'' has the same 
 meaning as in 101 and 102 of the Higher Education Act 
 of 1965 (20 U.S.C. 1001, 1002).
 (8) Interchange transaction fee.--The term 
 ``interchange transaction fee'' means any fee 
 established, charged or received by a payment card 
 network for the purpose of compensating an issuer for 
 its involvement in an electronic debit transaction.
 (9) Issuer.--The term ``issuer'' means any person who 
 issues a debit card, or credit card, or the agent of 
 such person with respect to such card.
 (10) Network fee.--The term ``network fee'' means any 
 fee charged and received by a payment card network with 
 respect to an electronic debit transaction, other than 
 an interchange transaction fee.
 (11) Payment card network.--The term ``payment card 
 network'' means an entity that directly, or through 
 licensed members, processors, or agents, provides the 
 proprietary services, infrastructure, and software that 
 route information and data to conduct debit card or 
 credit card transaction authorization, clearance, and 
 settlement, and that a person uses in order to accept 
 as a form of payment a brand of debit card, credit card 
 or other device that may be used to carry out debit or 
 credit transactions.
 (d) Enforcement.--
 (1) In general.--Compliance with the requirements 
 imposed under this section shall be enforced under 
 section 918.
 (2) Exception.--Sections 916 and 917 shall not apply 
 with respect to this section or the requirements 
 imposed pursuant to this section.

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 BANK HOLDING COMPANY ACT OF 1956

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 acquisition of bank shares or assets

 Sec. 3. (a) It shall be unlawful, except with the prior 
approval of the Board, (1) for any action to be taken that 
causes any company to become a bank holding company; (2) for 
any action to be taken that causes a bank to become a 
subsidiary of a bank holding company; (3) for any bank holding 
company to acquire direct or indirect ownership or control of 
any voting shares of any bank if, after such acquisition, such 
company will directly or indirectly own or control more than 5 
per centum of the voting shares of such bank; (4) for any bank 
holding company or subsidiary thereof, other than a bank, to 
acquire all or substantially all of the assets of a bank; or 
(5) for any bank holding company to merge or consolidate with 
any other bank holding company. Notwithstanding the foregoing 
this prohibition shall not apply to (A) shares acquired by a 
bank, (i) in good faith in a fiduciary capacity, except where 
such shares are held under a trust that constitutes a company 
as defined in section 2(b) and except as provided in paragraphs 
(2) and (3) of section 2(g), or (ii) in the regular course of 
securing or collecting a debt previously contracted in good 
faith, but any shares acquired after the date of enactment of 
this Act in securing or collecting any such previously 
contracted debt shall be disposed of within a period of two 
years from the date on which they were acquired; (B) additional 
shares acquired by a bank holding company in a bank in which 
such bank holding company owned or controlled a majority of the 
voting shares prior to such acquisition; or (C) the 
acquisition, by a company, of control of a bank in a 
reorganization in which a person or group of persons exchanges 
their shares of the bank for shares of a newly formed bank 
holding company and receives after the reorganization 
substantially the same proportional share interest in the 
holding company as they held in the bank except for changes in 
shareholders' interests resulting from the exercise of 
dissenting shareholders' rights under State or Federal law if--
 
 
 (i) immediately following the 
 acquisition--
 (I) the bank holding company 
 meets the capital and other 
 financial standards prescribed 
 by the Board by regulation for 
 such a bank holding company; 
 and
 (II) the bank is adequately 
 capitalized (as defined in 
 section 38 of the Federal 
 Deposit Insurance Act);
 (ii) the holding company does not 
 engage in any activities other than 
 those of managing and controlling banks 
 as a result of the reorganization;
 (iii) the company provides 30 days 
 prior notice to the Board and the Board 
 does not object to such transaction 
 during such 30-day period; and
 (iv) the holding company will not 
 acquire control of any additional bank 
 as a result of the reorganization..
The Board is authorized upon application by a bank to extend, 
from time to time for not more than one year at a time, the 
two-year period referred to above for disposing of any shares 
acquired by a bank in the regular course of securing or 
collecting a debt previously contracted in good faith, if, in 
the Board's judgment, such an extension would not be 
detrimental to the public interest, but no such extension shall 
in the aggregate exceed three years. For the purpose of the 
preceding sentence, bank shares acquired after the date of 
enactment of the Bank Holding Company Act Amendments of 1970 
shall not be deemed to have been acquired in good faith in a 
fiduciary capacity if the acquiring bank or company has sole 
discretionary authority to exercise voting rights with respect 
thereto, but in such instances acquisitions may be made without 
prior approval of the Board if the Board, upon application 
filed within ninety days after the shares are acquired, 
approves retention or, if retention is disapproved, the 
acquiring bank disposes of the shares or its sole discretionary 
voting rights within two years after issuance of the order of 
disapproval.
 (b)(1) Notice and Hearing Requirements.--[Upon receiving]
 (A) In general._Upon receiving from a company any 
 application for approval under this section, the Board 
 shall give notice to the Comptroller of the Currency, 
 if the applicant company or any bank the voting shares 
 or assets of which are sought to be [required] acquired 
 is a national banking association, or to the 
 appropriate supervisory authority of the interested 
 State, if the applicant company or any bank the voting 
 shares or assets of which are sought to be acquired is 
 a State bank, in order to provide for the submission of 
 the views and recommendations of the Comptroller of the 
 Currency or the State supervisory authority, as the 
 case may be. The views and recommendations shall be 
 submitted within thirty calendar days of the date on 
 which notice is given, or within ten calendar days of 
 such date if the Board advises the Comptroller of the 
 Currency or the State supervisory authority that an 
 emergency exists requiring expeditious action. If the 
 thirty-day notice period applies and if the Comptroller 
 of the Currency or the State supervisory authority so 
 notified by the Board disapproves the application in 
 writing within this period, the Board shall forthwith 
 give written notice of that fact to the applicant. 
 Within three days after giving such notice to the 
 applicant, the Board shall notify in writing the 
 applicant and the disapproving authority of the date 
 for commencement of a hearing by it on such 
 application. Any such hearing shall be commenced not 
 less than ten nor more than thirty days after the Board 
 has given written notice to the applicant of the action 
 of the disapproving authority. The length of any such 
 hearing shall be determined by the Board, but it shall 
 afford all interested parties a reasonable opportunity 
 to testify at such hearing. At the conclusion thereof, 
 the Board shall, by order, grant or deny the 
 application on the basis of the record made at such 
 hearing. [In the event of the failure of the Board to 
 act on any application for approval under this section 
 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.] Notwithstanding any other provision 
 of this subsection, if the Board finds that it must act 
 immediately on any application for approval under this 
 section in order to prevent the probable failure of a 
 bank or bank holding company involved in a proposed 
 acquisition, merger, or consolidation transaction, the 
 Board may dispense with the notice requirements of this 
 subsection, and if notice is given, the Board may 
 request that the views and recommendations of the 
 Comptroller of the Currency or the State supervisory 
 authority, as the case may be, be submitted immediately 
 in any form or by any means acceptable to the Board. If 
 the Board has found pursuant to this subsection either 
 that an emergency exists requiring expeditious action 
 or that it must act immediately to prevent probable 
 failure, the Board may grant or deny any such 
 application without a hearing not withstanding any 
 recommended disapproval by the appropriate supervisory 
 authority.
 (B) Complete record on an application.--
 (i) Notice to applicant.--Not later than 30 
 days after the date on which the Board receives 
 an application for approval under this section, 
 the Board shall transmit to the applicant a 
 letter that either--
 (I) confirms the record on the 
 application is complete; or
 (II) details all additional 
 information that is required for the 
 record on that application to be 
 complete.
 (ii) Extension of notice.--Notwithstanding 
 clause (i), the Board may, if an application is 
 complex, extend the 30-day period described 
 under clause (i) for an additional 30 days.
 (iii) Receipt of response; deeming of 
 complete record.--Upon receipt of a response 
 from an applicant to a notice requesting 
 additional information described under clause 
 (i)(II), the record on the application shall be 
 deemed complete unless the Board--
 (I) determines that the applicant's 
 response was materially deficient; and
 (II) not later than 30 days after the 
 date on which the Board received the 
 response, provides the applicant a 
 detailed notice describing the 
 deficiencies.
 (iv) Treatment of third-party information.--
 In determining whether the record on an 
 application is complete, the Board may take 
 into account only information provided by the 
 applicant, and may not base the determination 
 of completeness on any information (including 
 reports, views, or recommendations) provided by 
 third parties.
 (C) Deadline for determination.--
 (i) In general.--Notwithstanding 
 subparagraphs (A) and (B), the Board shall 
 grant or deny an application submitted under 
 this section not later than 90 days after the 
 date on which the application was initially 
 submitted to the Board, regardless of whether 
 the record on such initial application was 
 complete.
 (ii) Failure to make a determination.--If the 
 Board does not grant or deny an application 
 within the time period described under clause 
 (i), such application shall be deemed to have 
 been granted.
 (iii) Tolling of period.--The Board may at 
 any time extend the deadline described under 
 clause (i) at the request of the applicant, but 
 may not extend the deadline more than 30 days 
 past the deadline described under clause (i).
 (2) Waiver in Case of Bank in Danger of Closing.--If the 
Board receives a certification described in section 13(f)(8)(D) 
of the Federal Deposit Insurance Act from the appropriate 
Federal or State chartering authority that a bank is in danger 
of closing, the Board may dispense with the notice and hearing 
requirements of paragraph (1) with respect to any application 
received by the Board relating to the acquisition of such bank, 
the bank holding company which controls such bank, or any other 
affiliated bank.
 (c) Factors for Consideration by Board.--
 (1) Competitive factors.--The Board shall not 
 approve--
 (A) any acquisition or merger or consolidation under 
 this section which would result in a monopoly, or which 
 would be in furtherance of any combination or 
 conspiracy to monopolize or to attempt to monopolize 
 the business of banking in any part of the United 
 States, or
 (B) any other proposed acquisition or merger or 
 consolidation under this section whose effect in any 
 section of the country may be substantially to lessen 
 competition, or to tend to create a monopoly, or which 
 in any other manner would be in restraint or trade, 
 unless it finds that the anticompetitive effects of the 
 proposed transaction are clearly outweighed in the 
 public interest by the probable effect of the 
 transaction in meeting the convenience and needs of the 
 community to be served.
 (2) Banking and community factors.--In every case, 
 the Board shall take into consideration the financial 
 and managerial resources and future prospects of the 
 company or companies and the banks concerned, and the 
 convenience and needs of the community to be served.
 (3) Supervisory factors.--The Board shall disapprove 
 any application under this section by any company if--
 (A) the company fails to provide the Board 
 with adequate assurances that the company will 
 make available to the Board such information on 
 the operations or activities of the company, 
 and any affiliate of the company, as the Board 
 determines to be appropriate to determine and 
 enforce compliance with this Act; or
 (B) in the case of an application involving a 
 foreign bank, the foreign bank is not subject 
 to comprehensive supervision or regulation on a 
 consolidated basis by the appropriate 
 authorities in the bank's home country.
 (4) Treatment of certain bank stock loans.--
 Notwithstanding any other provision of law, the Board 
 shall not follow any practice or policy in the 
 consideration of any application for the formation of a 
 one-bank holding company if following such practice or 
 policy would result in the rejection of such 
 application solely because the transaction to form such 
 one-bank holding company involves a bank stock loan 
 which is for a period of not more than twenty-five 
 years. The previous sentence shall not be construed to 
 prohibit the Board from rejecting any application 
 solely because the other financial arrangements are 
 considered unsatisfactory. The Board shall consider 
 transactions involving bank stock loans for the 
 formation of a one-bank holding company having a 
 maturity of twelve years or more on a case by case 
 basis and no such transaction shall be approved if the 
 Board believes the safety or soundness of the bank may 
 be jeopardized.
 (5) Managerial resources.--Consideration of the 
 managerial resources of a company or bank under 
 paragraph (2) shall include consideration of the 
 competence, experience, and integrity of the officers, 
 directors, and principal shareholders of the company or 
 bank.
 (6) Money laundering.--In every case, the Board shall 
 take into consideration the effectiveness of the 
 company or companies in combatting money laundering 
 activities, including in overseas branches.
 (7) Financial stability.--In every case, the Board 
 shall take into consideration the extent to which a 
 proposed acquisition, merger, or consolidation would 
 result in greater or more concentrated risks to the 
 stability of the United States banking or financial 
 system.
 (d) Interstate Banking.--
 (1) Approvals authorized.--
 (A) Acquisition of banks.--The Board may 
 approve an application under this section by a 
 bank holding company that is well capitalized 
 and well managed to acquire control of, or 
 acquire all or substantially all of the assets 
 of, a bank located in a State other than the 
 home State of such bank holding company, 
 without regard to whether such transaction is 
 prohibited under the law of any State.
 (B) Preservation of state age laws.--
 (i) In general.--Notwithstanding 
 subparagraph (A), the Board may not 
 approve an application pursuant to such 
 subparagraph that would have the effect 
 of permitting an out-of-State bank 
 holding company to acquire a bank in a 
 host State that has not been in 
 existence for the minimum period of 
 time, if any, specified in the 
 statutory law of the host State.
 (ii) Special rule for state age laws 
 specifying a period of more than 5 
 years.--Notwithstanding clause (i), the 
 Board may approve, pursuant to 
 subparagraph (A), the acquisition of a 
 bank that has been in existence for at 
 least 5 years without regard to any 
 longer minimum period of time specified 
 in a statutory law of the host State.
 (C) Shell banks.--For purposes of this 
 subsection, a bank that has been chartered 
 solely for the purpose of, and does not open 
 for business prior to, acquiring control of, or 
 acquiring all or substantially all of the 
 assets of, an existing bank shall be deemed to 
 have been in existence for the same period of 
 time as the bank to be acquired.
 (D) Effect on state contingency laws.--No 
 provision of this subsection shall be construed 
 as affecting the applicability of a State law 
 that makes an acquisition of a bank contingent 
 upon a requirement to hold a portion of such 
 bank's assets available for call by a State-
 sponsored housing entity established pursuant 
 to State law, if--
 (i) the State law does not have the 
 effect of discriminating against out-
 of-State banks, out-of-State bank 
 holding companies, or subsidiaries of 
 such banks or bank holding companies;
 (ii) that State law was in effect as 
 of the date of enactment of the Riegle-
 Neal Interstate Banking and Branching 
 Efficiency Act of 1994;
 (iii) the Federal Deposit Insurance 
 Corporation has not determined that 
 compliance with such State law would 
 result in an unacceptable risk to the 
 Deposit Insurance Fund; and
 (iv) the appropriate Federal banking 
 agency for such bank has not found that 
 compliance with such State law would 
 place the bank in an unsafe or unsound 
 condition.
 (2) Concentration limits.--
 (A) Nationwide concentration limits.--The 
 Board may not approve an application pursuant 
 to paragraph (1)(A) if the applicant (including 
 all insured depository institutions which are 
 affiliates of the applicant) controls, or upon 
 consummation of the acquisition for which such 
 application is filed would control, more than 
 10 percent of the total amount of deposits of 
 insured depository institutions in the United 
 States.
 (B) Statewide concentration limits other than 
 with respect to initial entries.--The Board may 
 not approve an application pursuant to 
 paragraph (1)(A) if--
 (i) immediately before the 
 consummation of the acquisition for 
 which such application is filed, the 
 applicant (including any insured 
 depository institution affiliate of the 
 applicant) controls any insured 
 depository institution or any branch of 
 an insured depository institution in 
 the home State of any bank to be 
 acquired or in any host State in which 
 any such bank maintains a branch; and
 (ii) the applicant (including all 
 insured depository institutions which 
 are affiliates of the applicant), upon 
 consummation of the acquisition, would 
 control 30 percent or more of the total 
 amount of deposits of insured 
 depository institutions in any such 
 State.
 (C) Effectiveness of state deposit caps.--No 
 provision of this subsection shall be construed 
 as affecting the authority of any State to 
 limit, by statute, regulation, or order, the 
 percentage of the total amount of deposits of 
 insured depository institutions in the State 
 which may be held or controlled by any bank or 
 bank holding company (including all insured 
 depository institutions which are affiliates of 
 the bank or bank holding company) to the extent 
 the application of such limitation does not 
 discriminate against out-of-State banks, out-
 of-State bank holding companies, or 
 subsidiaries of such banks or holding
 companies.
 (D) Exceptions to subparagraph (b).--The 
 Board may approve an application pursuant to 
 paragraph (1)(A) without regard to the 
 applicability of subparagraph (B) with respect 
 to any State if--
 (i) there is a limitation described 
 in subparagraph (C) in a State statute, 
 regulation, or order which has the 
 effect of permitting a bank or bank 
 holding company (including all insured 
 depository institutions which are 
 affiliates of the bank or bank holding 
 company) to control a greater 
 percentage of total deposits of all 
 insured depository institutions in the 
 State than the percentage permitted 
 under subparagraph (B); or
 (ii) the acquisition is approved by 
 the appropriate State bank supervisor 
 of such State and the standard on which 
 such approval is based does not have 
 the effect of discriminating against 
 out-of-State banks, out-of-State bank 
 holding companies, or subsidiaries of 
 such banks or holding companies.
 (E) Deposit defined.--For purposes of this 
 paragraph, the term ``deposit'' has the same 
 meaning as in section 3(l) of the Federal 
 Deposit Insurance Act.
 (3) Community reinvestment compliance.--In 
 determining whether to approve an application under 
 paragraph (1)(A), the Board shall--
 (A) comply with the responsibilities of the 
 Board regarding such application under section 
 804 of the Community Reinvestment Act of 1977; 
 and
 (B) take into account the applicant's record 
 of compliance with applicable State community 
 reinvestment laws.
 (4) Applicability of antitrust laws.--No provision of 
 this subsection shall be construed as affecting--
 (A) the applicability of the antitrust laws; 
 or
 (B) the applicability, if any, of any State 
 law which is similar to the antitrust laws.
 (5) Exception for banks in default or in danger of 
 default.--The Board may approve an application pursuant 
 to paragraph (1)(A) which involves--
 (A) an acquisition of 1 or more banks in 
 default or in danger of default; or
 (B) an acquisition with respect to which 
 assistance is provided under section 13(c) of 
 the Federal Deposit Insurance Act;
 without regard to subparagraph (B) or (D) of paragraph 
 (1) or paragraph (2) or (3).
 (e) Every bank that is a holding company and every bank that 
is a subsidiary of such a company shall become and remain an 
insured depository institution as such term is defined in 
section 3 of the Federal Deposit Insurance Act.
 (g) Mutual Bank Holding Company.--
 (1) Establishment.--Notwithstanding any provision of 
 Federal law other than this Act, a savings bank or 
 cooperative bank operating in mutual form may 
 reorganize so as to form a holding company.
 (2) Regulations.--A bank holding company organized as 
 a mutual holding company shall be regulated on terms, 
 and shall be subject to limitations, comparable to 
 those applicable to any other bank holding company.

 * * * * * * *

SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS 
 WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.

 (a) In General.--
 (1) Prohibition.--Unless otherwise provided in this 
 section, a banking entity shall not--
 (A) engage in proprietary trading; or
 (B) acquire or retain any equity, 
 partnership, or other ownership interest in or 
 sponsor a hedge fund or a private equity fund.
 (2) Nonbank financial companies supervised by the 
 board.--Any nonbank financial company supervised by the 
 Board that engages in proprietary trading or takes or 
 retains any equity, partnership, or other ownership 
 interest in or sponsors a hedge fund or a private 
 equity fund shall be subject, by rule, as provided in 
 subsection (b)(2), to additional capital requirements 
 for and additional quantitative limits with regards to 
 such proprietary trading and taking or retaining any 
 equity, partnership, or other ownership interest in or 
 sponsorship of a hedge fund or a private equity fund, 
 except that permitted activities as described in 
 subsection (d) shall not be subject to the additional 
 capital and additional quantitative limits except as 
 provided in subsection (d)(3), as if the nonbank 
 financial company supervised by the Board were a 
 banking entity.
 (b) Study and Rulemaking.--
 (1) Study.--Not later than 6 months after the date of 
 enactment of this section, the Financial Stability 
 Oversight Council shall study and make recommendations 
 on implementing the provisions of this section so as 
 to--
 (A) promote and enhance the safety and 
 soundness of banking entities;
 (B) protect taxpayers and consumers and 
 enhance financial stability by minimizing the 
 risk that insured depository institutions and 
 the affiliates of insured depository 
 institutions will engage in unsafe and unsound 
 activities;
 (C) limit the inappropriate transfer of 
 Federal subsidies from institutions that 
 benefit from deposit insurance and liquidity 
 facilities of the Federal Government to 
 unregulated entities;
 (D) reduce conflicts of interest between the 
 self-interest of banking entities and nonbank 
 financial companies supervised by the Board, 
 and the interests of the customers of such 
 entities and companies;
 (E) limit activities that have caused undue 
 risk or loss in banking entities and nonbank 
 financial companies supervised by the Board, or 
 that might reasonably be expected to create 
 undue risk or loss in such banking entities and 
 nonbank financial companies supervised by the 
 Board;
 (F) appropriately accommodate the business of 
 insurance within an insurance company, subject 
 to regulation in accordance with the relevant 
 insurance company investment laws, while 
 protecting the safety and soundness of any 
 banking entity with which such insurance 
 company is affiliated and of the United States 
 financial system; and
 (G) appropriately time the divestiture of 
 illiquid assets that are affected by the 
 implementation of the prohibitions under 
 subsection (a).
 (2) Rulemaking.--
 (A) In general.--Unless otherwise provided in 
 this section, not later than 9 months after the 
 completion of the study under paragraph (1), 
 the appropriate Federal banking agencies, the 
 Securities and Exchange Commission, and the 
 Commodity Futures Trading Commission, shall 
 consider the findings of the study under 
 paragraph (1) and adopt rules to carry out this 
 section, as provided in subparagraph (B).
 (B) Coordinated rulemaking.--
 (i) Regulatory authority.--The 
 regulations issued under this paragraph 
 shall be issued by--
 (I) the appropriate Federal 
 banking agencies, jointly, with 
 respect to insured depository 
 institutions;
 (II) the Board, with respect 
 to any company that controls an 
 insured depository institution, 
 or that is treated as a bank 
 holding company for purposes of 
 section 8 of the International 
 Banking Act, any nonbank 
 financial company supervised by 
 the Board, and any subsidiary 
 of any of the foregoing (other 
 than a subsidiary for which an 
 agency described in subclause 
 (I), (III), or (IV) is the 
 primary financial regulatory 
 agency);
 (III) the Commodity Futures 
 Trading Commission, with 
 respect to any entity for which 
 the Commodity Futures Trading 
 Commission is the primary 
 financial regulatory agency, as 
 defined in section 2 of the 
 Dodd-Frank Wall Street Reform 
 and Consumer Protection Act; 
 and
 (IV) the Securities and 
 Exchange Commission, with 
 respect to any entity for which 
 the Securities and Exchange 
 Commission is the primary 
 financial regulatory agency, as 
 defined in section 2 of the 
 Dodd-Frank Wall Street Reform 
 and Consumer Protection Act.
 (ii) Coordination, consistency, and 
 comparability.--In developing and 
 issuing regulations pursuant to this 
 section, the appropriate Federal 
 banking agencies, the Securities and 
 Exchange Commission, and the Commodity 
 Futures Trading Commission shall 
 consult and coordinate with each other, 
 as appropriate, for the purposes of 
 assuring, to the extent possible, that 
 such regulations are comparable and 
 provide for consistent application and 
 implementation of the applicable 
 provisions of this section to avoid 
 providing advantages or imposing 
 disadvantages to the companies affected 
 by this subsection and to protect the 
 safety and soundness of banking 
 entities and nonbank financial 
 companies supervised by the Board.
 (iii) Council role.--The Chairperson 
 of the Financial Stability Oversight 
 Council shall be responsible for 
 coordination of the regulations issued 
 under this section.
 (c) Effective Date.--
 (1) In general.--Except as provided in paragraphs (2) 
 and (3), this section shall take effect on the earlier 
 of--
 (A) 12 months after the date of the issuance 
 of final rules under subsection (b); or
 (B) 2 years after the date of enactment of 
 this section.
 (2) Conformance period for divestiture.--A banking 
 entity or nonbank financial company supervised by the 
 Board shall bring its activities and investments into 
 compliance with the requirements of this section not 
 later than 2 years after the date on which the 
 requirements become effective pursuant to this section 
 or 2 years after the date on which the entity or 
 company becomes a nonbank financial company supervised 
 by the Board. The Board may, by rule or order, extend 
 this two-year period for not more than one year at a 
 time, if, in the judgment of the Board, such an 
 extension is consistent with the purposes of this 
 section and would not be detrimental to the public 
 interest. The extensions made by the Board under the 
 preceding sentence may not exceed an aggregate of 3 
 years.
 (3) Extended transition for illiquid funds.--
 (A) Application.--The Board may, upon the 
 application of a banking entity, extend the 
 period during which the banking entity, to the 
 extent necessary to fulfill a contractual 
 obligation that was in effect on May 1, 2010, 
 may take or retain its equity, partnership, or 
 other ownership interest in, or otherwise 
 provide additional capital to, an illiquid 
 fund.
 (B) Time limit on approval.--The Board may 
 grant 1 extension under subparagraph (A), which 
 may not exceed 5 years.
 (4) Divestiture required.--Except as otherwise 
 provided in subsection (d)(1)(G), a banking entity may 
 not engage in any activity prohibited under subsection 
 (a)(1)(B) after the earlier of--
 (A) the date on which the contractual 
 obligation to invest in the illiquid fund 
 terminates; and
 (B) the date on which any extensions granted 
 by the Board under paragraph (3) expire.
 (5) Additional capital during transition period.--
 Notwithstanding paragraph (2), on the date on which the 
 rules are issued under subsection (b)(2), the 
 appropriate Federal banking agencies, the Securities 
 and Exchange Commission, and the Commodity Futures 
 Trading Commission shall issue rules, as provided in 
 subsection (b)(2), to impose additional capital 
 requirements, and any other restrictions, as 
 appropriate, on any equity, partnership, or ownership 
 interest in or sponsorship of a hedge fund or private 
 equity fund by a banking entity.
 (6) Special rulemaking.--Not later than 6 months 
 after the date of enactment of this section, the Board 
 shall issues rules to implement paragraphs (2) and (3).
 (d) Permitted Activities.--
 (1) In general.--Notwithstanding the restrictions 
 under subsection (a), to the extent permitted by any 
 other provision of Federal or State law, and subject to 
 the limitations under paragraph (2) and any 
 restrictions or limitations that the appropriate 
 Federal banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission, may determine, the following activities (in 
 this section referred to as ``permitted activities'') 
 are permitted:
 (A) The purchase, sale, acquisition, or 
 disposition of obligations of the United States 
 or any agency thereof, obligations, 
 participations, or other instruments of or 
 issued by the Government National Mortgage 
 Association, the Federal National Mortgage 
 Association, the Federal Home Loan Mortgage 
 Corporation, a Federal Home Loan Bank, the 
 Federal Agricultural Mortgage Corporation, or a 
 Farm Credit System institution chartered under 
 and subject to the provisions of the Farm 
 Credit Act of 1971 (12 U.S.C. 2001 et seq.), 
 and obligations of any State or of any 
 political subdivision thereof.
 (B) The purchase, sale, acquisition, or 
 disposition of securities and other instruments 
 described in subsection (h)(4) in connection 
 with underwriting or market-making-related 
 activities, to the extent that any such 
 activities permitted by this subparagraph are 
 designed not to exceed the reasonably expected 
 near term demands of clients, customers, or 
 counterparties.
 (C) Risk-mitigating hedging activities in 
 connection with and related to individual or 
 aggregated positions, contracts, or other 
 holdings of a banking entity that are designed 
 to reduce the specific risks to the banking 
 entity in connection with and related to such 
 positions, contracts, or other holdings.
 (D) The purchase, sale, acquisition, or 
 disposition of securities and other instruments 
 described in subsection (h)(4) on behalf of 
 customers.
 (E) Investments in one or more small business 
 investment companies, as defined in section 102 
 of the Small Business Investment Act of 1958 
 (15 U.S.C. 662), investments designed primarily 
 to promote the public welfare, of the type 
 permitted under paragraph (11) of section 5136 
 of the Revised Statutes of the United States 
 (12 U.S.C. 24), or investments that are 
 qualified rehabilitation expenditures with 
 respect to a qualified rehabilitated building 
 or certified historic structure, as such terms 
 are defined in section 47 of the Internal 
 Revenue Code of 1986 or a similar State 
 historic tax credit program.
 (F) The purchase, sale, acquisition, or 
 disposition of securities and other instruments 
 described in subsection (h)(4) by a regulated 
 insurance company directly engaged in the 
 business of insurance for the general account 
 of the company and by any affiliate of such 
 regulated insurance company, provided that such 
 activities by any affiliate are solely for the 
 general account of the regulated insurance 
 company, if--
 (i) the purchase, sale, acquisition, 
 or disposition is conducted in 
 compliance with, and subject to, the 
 insurance company investment laws, 
 regulations, and written guidance of 
 the State or jurisdiction in which each 
 such insurance company is domiciled; 
 and
 (ii) the appropriate Federal banking 
 agencies, after consultation with the 
 Financial Stability Oversight Council 
 and the relevant insurance 
 commissioners of the States and 
 territories of the United States, have 
 not jointly determined, after notice 
 and comment, that a particular law, 
 regulation, or written guidance 
 described in clause (i) is insufficient 
 to protect the safety and soundness of 
 the banking entity, or of the financial 
 stability of the United States.
 (G) Organizing and offering a private equity 
 or hedge fund, including serving as a general 
 partner, managing member, or trustee of the 
 fund and in any manner selecting or controlling 
 (or having employees, officers, directors, or 
 agents who constitute) a majority of the 
 directors, trustees, or management of the fund, 
 including any necessary expenses for the 
 foregoing, only if--
 (i) the banking entity provides bona 
 fide trust, fiduciary, or investment 
 advisory services;
 (ii) the fund is organized and 
 offered only in connection with the 
 provision of bona fide trust, 
 fiduciary, or investment advisory 
 services and only to persons that are 
 customers of such services of the 
 banking entity;
 (iii) the banking entity does not 
 acquire or retain an equity interest, 
 partnership interest, or other 
 ownership interest in the funds except 
 for a de minimis investment subject to 
 and in compliance with paragraph (4);
 (iv) the banking entity complies with 
 the restrictions under paragraphs (1) 
 and (2) of subparagraph (f);
 (v) the banking entity does not, 
 directly or indirectly, guarantee, 
 assume, or otherwise insure the 
 obligations or performance of the hedge 
 fund or private equity fund or of any 
 hedge fund or private equity fund in 
 which such hedge fund or private equity 
 fund invests;
 (vi) the banking entity does not 
 share with the hedge fund or private 
 equity fund, for corporate, marketing, 
 promotional, or other purposes, the 
 same name or a variation of the same 
 name, except that the hedge fund or 
 private equity fund may share the same 
 name or a variation of the same name as 
 a banking entity that is an investment 
 adviser to the hedge fund or private 
 equity fund, if--
 (I) such investment adviser 
 is not an insured depository 
 institution, a company that 
 controls an insured depository 
 institution, or a company that 
 is treated as a bank holding 
 company for purposes of section 
 8 of the International Banking 
 Act of 1978 (12 U.S.C. 3106);
 (II) such investment adviser 
 does not share the same name or 
 a variation of the same name as 
 an insured depository 
 institution, any company that 
 controls an insured depository 
 institution, or any company 
 that is treated as a bank 
 holding company for purposes of 
 section 8 of the International 
 Banking Act of 1978 (12 U.S.C. 
 3106); and
 (III) such name does not 
 contain the word ``bank'';
 (vii) no director or employee of the 
 banking entity takes or retains an 
 equity interest, partnership interest, 
 or other ownership interest in the 
 hedge fund or private equity fund, 
 except for any director or employee of 
 the banking entity who is directly 
 engaged in providing investment 
 advisory or other services to the hedge 
 fund or private equity fund; and
 (viii) the banking entity discloses 
 to prospective and actual investors in 
 the fund, in writing, that any losses 
 in such hedge fund or private equity 
 fund are borne solely by investors in 
 the fund and not by the banking entity, 
 and otherwise complies with any 
 additional rules of the appropriate 
 Federal banking agencies, the 
 Securities and Exchange Commission, or 
 the Commodity Futures Trading 
 Commission, as provided in subsection 
 (b)(2), designed to ensure that losses 
 in such hedge fund or private equity 
 fund are borne solely by investors in 
 the fund and not by the banking entity.
 (H) Proprietary trading conducted by a 
 banking entity pursuant to paragraph (9) or 
 (13) of section 4(c), provided that the trading 
 occurs solely outside of the United States and 
 that the banking entity is not directly or 
 indirectly controlled by a banking entity that 
 is organized under the laws of the United 
 States or of one or more States.
 (I) The acquisition or retention of any 
 equity, partnership, or other ownership 
 interest in, or the sponsorship of, a hedge 
 fund or a private equity fund by a banking 
 entity pursuant to paragraph (9) or (13) of 
 section 4(c) solely outside of the United 
 States, provided that no ownership interest in 
 such hedge fund or private equity fund is 
 offered for sale or sold to a resident of the 
 United States and that the banking entity is 
 not directly or indirectly controlled by a 
 banking entity that is organized under the laws 
 of the United States or of one or more States.
 (J) Such other activity as the appropriate 
 Federal banking agencies, the Securities and 
 Exchange Commission, and the Commodity Futures 
 Trading Commission determine, by rule, as 
 provided in subsection (b)(2), would promote 
 and protect the safety and soundness of the 
 banking entity and the financial stability of 
 the United States.
 (2) Limitation on permitted activities.--
 (A) In general.--No transaction, class of 
 transactions, or activity may be deemed a 
 permitted activity under paragraph (1) if the 
 transaction, class of transactions, or 
 activity--
 (i) would involve or result in a 
 material conflict of interest (as such 
 term shall be defined by rule as 
 provided in subsection (b)(2)) between 
 the banking entity and its clients, 
 customers, or counterparties;
 (ii) would result, directly or 
 indirectly, in a material exposure by 
 the banking entity to high-risk assets 
 or high-risk trading strategies (as 
 such terms shall be defined by rule as 
 provided in subsection (b)(2));
 (iii) would pose a threat to the 
 safety and soundness of such banking 
 entity; or
 (iv) would pose a threat to the 
 financial stability of the United 
 States.
 (B) Rulemaking.--The appropriate Federal 
 banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission shall issue regulations to implement 
 subparagraph (A), as part of the regulations 
 issued under subsection (b)(2).
 (3) Capital and quantitative limitations.--The 
 appropriate Federal banking agencies, the Securities 
 and Exchange Commission, and the Commodity Futures 
 Trading Commission shall, as provided in subsection 
 (b)(2), adopt rules imposing additional capital 
 requirements and quantitative limitations, including 
 diversification requirements, regarding the activities 
 permitted under this section if the appropriate Federal 
 banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission determine that additional capital and 
 quantitative limitations are appropriate to protect the 
 safety and soundness of banking entities engaged in 
 such activities.
 (4) De minimis investment.--
 (A) In general.--A banking entity may make 
 and retain an investment in a hedge fund or 
 private equity fund that the banking entity 
 organizes and offers, subject to the 
 limitations and restrictions in subparagraph 
 (B) for the purposes of--
 (i) establishing the fund and 
 providing the fund with sufficient 
 initial equity for investment to permit 
 the fund to attract unaffiliated 
 investors; or
 (ii) making a de minimis investment.
 (B) Limitations and restrictions on 
 investments.--
 (i) Requirement to seek other 
 investors.--A banking entity shall 
 actively seek unaffiliated investors to 
 reduce or dilute the investment of the 
 banking entity to the amount permitted 
 under clause (ii).
 (ii) Limitations on size of 
 investments.--Notwithstanding any other 
 provision of law, investments by a 
 banking entity in a hedge fund or 
 private equity fund shall--
 (I) not later than 1 year 
 after the date of establishment 
 of the fund, be reduced through 
 redemption, sale, or dilution 
 to an amount that is not more 
 than 3 percent of the total 
 ownership interests of the 
 fund;
 (II) be immaterial to the 
 banking entity, as defined, by 
 rule, pursuant to subsection 
 (b)(2), but in no case may the 
 aggregate of all of the 
 interests of the banking entity 
 in all such funds exceed 3 
 percent of the Tier 1 capital 
 of the banking entity.
 (iii) Capital.--For purposes of 
 determining compliance with applicable 
 capital standards under paragraph (3), 
 the aggregate amount of the outstanding 
 investments by a banking entity under 
 this paragraph, including retained 
 earnings, shall be deducted from the 
 assets and tangible equity of the 
 banking entity, and the amount of the 
 deduction shall increase commensurate 
 with the leverage of the hedge fund or 
 private equity fund.
 (C) Extension.--Upon an application by a 
 banking entity, the Board may extend the period 
 of time to meet the requirements under 
 subparagraph (B)(ii)(I) for 2 additional years, 
 if the Board finds that an extension would be 
 consistent with safety and soundness and in the 
 public interest.
 (e) Anti-evasion.--
 (1) Rulemaking.--The appropriate Federal banking 
 agencies, the Securities and Exchange Commission, and 
 the Commodity Futures Trading Commission shall issue 
 regulations, as part of the rulemaking provided for in 
 subsection (b)(2), regarding internal controls and 
 recordkeeping, in order to insure compliance with this 
 section.
 (2) Termination of activities or investment.--
 Notwithstanding any other provision of law, whenever an 
 appropriate Federal banking agency, the Securities and 
 Exchange Commission, or the Commodity Futures Trading 
 Commission, as appropriate, has reasonable cause to 
 believe that a banking entity or nonbank financial 
 company supervised by the Board under the respective 
 agency's jurisdiction has made an investment or engaged 
 in an activity in a manner that functions as an evasion 
 of the requirements of this section (including through 
 an abuse of any permitted activity) or otherwise 
 violates the restrictions under this section, the 
 appropriate Federal banking agency, the Securities and 
 Exchange Commission, or the Commodity Futures Trading 
 Commission, as appropriate, shall order, after due 
 notice and opportunity for hearing, the banking entity 
 or nonbank financial company supervised by the Board to 
 terminate the activity and, as relevant, dispose of the 
 investment. Nothing in this paragraph shall be 
 construed to limit the inherent authority of any 
 Federal agency or State regulatory authority to further 
 restrict any investments or activities under otherwise 
 applicable provisions of law.
 (f) Limitations on Relationships With Hedge Funds and Private 
Equity Funds.--
 (1) In general.--No banking entity that serves, 
 directly or indirectly, as the investment manager, 
 investment adviser, or sponsor to a hedge fund or 
 private equity fund, or that organizes and offers a 
 hedge fund or private equity fund pursuant to paragraph 
 (d)(1)(G), and no affiliate of such entity, may enter 
 into a transaction with the fund, or with any other 
 hedge fund or private equity fund that is controlled by 
 such fund, that would be a covered transaction, as 
 defined in section 23A of the Federal Reserve Act (12 
 U.S.C. 371c), with the hedge fund or private equity 
 fund, as if such banking entity and the affiliate 
 thereof were a member bank and the hedge fund or 
 private equity fund were an affiliate thereof.
 (2) Treatment as member bank.--A banking entity that 
 serves, directly or indirectly, as the investment 
 manager, investment adviser, or sponsor to a hedge fund 
 or private equity fund, or that organizes and offers a 
 hedge fund or private equity fund pursuant to paragraph 
 (d)(1)(G), shall be subject to section 23B of the 
 Federal Reserve Act (12 U.S.C. 371c-1), as if such 
 banking entity were a member bank and such hedge fund 
 or private equity fund were an affiliate thereof.
 (3) Permitted services.--
 (A) In general.--Notwithstanding paragraph 
 (1), the Board may permit a banking entity to 
 enter into any prime brokerage transaction with 
 any hedge fund or private equity fund in which 
 a hedge fund or private equity fund managed, 
 sponsored, or advised by such banking entity 
 has taken an equity, partnership, or other 
 ownership interest, if--
 (i) the banking entity is in 
 compliance with each of the limitations 
 set forth in subsection (d)(1)(G) with 
 regard to a hedge fund or private 
 equity fund organized and offered by 
 such banking entity;
 (ii) the chief executive officer (or 
 equivalent officer) of the banking 
 entity certifies in writing annually 
 (with a duty to update the 
 certification if the information in the 
 certification materially changes) that 
 the conditions specified in subsection 
 (d)(1)(g)(v) are satisfied; and
 (iii) the Board has determined that 
 such transaction is consistent with the 
 safe and sound operation and condition 
 of the banking entity.
 (B) Treatment of prime brokerage 
 transactions.--For purposes of subparagraph 
 (A), a prime brokerage transaction described in 
 subparagraph (A) shall be subject to section 
 23B of the Federal Reserve Act (12 U.S.C. 371c-
 1) as if the counterparty were an affiliate of 
 the banking entity.
 (4) Application to nonbank financial companies 
 supervised by the board.--The appropriate Federal 
 banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission shall adopt rules, as provided in subsection 
 (b)(2), imposing additional capital charges or other 
 restrictions for nonbank financial companies supervised 
 by the Board to address the risks to and conflicts of 
 interest of banking entities described in paragraphs 
 (1), (2), and (3) of this subsection.
 (g) Rules of Construction.--
 (1) Limitation on contrary authority.--Except as 
 provided in this section, notwithstanding any other 
 provision of law, the prohibitions and restrictions 
 under this section shall apply to activities of a 
 banking entity or nonbank financial company supervised 
 by the Board, even if such activities are authorized 
 for a banking entity or nonbank financial company 
 supervised by the Board.
 (2) Sale or securitization of loans.--Nothing in this 
 section shall be construed to limit or restrict the 
 ability of a banking entity or nonbank financial 
 company supervised by the Board to sell or securitize 
 loans in a manner otherwise permitted by law.
 (3) Authority of federal agencies and state 
 regulatory authorities.--Nothing in this section shall 
 be construed to limit the inherent authority of any 
 Federal agency or State regulatory authority under 
 otherwise applicable provisions of law.
 (h) Definitions.--In this section, the following definitions 
shall apply:
 (1) Banking entity.--The term ``banking entity'' 
 means any insured depository institution (as defined in 
 section 3 of the Federal Deposit Insurance Act (12 
 U.S.C. 1813)), any company that controls an insured 
 depository institution, or that is treated as a bank 
 holding company for purposes of section 8 of the 
 International Banking Act of 1978, and any affiliate or 
 subsidiary of any such entity. For purposes of this 
 paragraph, the term ``insured depository institution'' 
 does not include an institution--
 (A) that functions solely in a trust or 
 fiduciarycapacity, if--
 (i) all or substantially all of the 
 deposits of such institution are in 
 trust funds and are received in a bona 
 fide fiduciary capacity;
 (ii) no deposits of such institution 
 which are insured by the Federal 
 Deposit Insurance Corporation are 
 offered or marketed by or through an 
 affiliate of such institution;
 (iii) such institution does not 
 accept demand deposits or deposits that 
 the depositor may withdraw by check or 
 similar means for payment to third 
 parties or others or make commercial 
 loans; and
 (iv) such institution does not--
 (I) obtain payment or payment 
 related services from any 
 Federal Reserve bank, including 
 any service referred to in 
 section 11A of the Federal 
 Reserve Act (12 U.S.C. 248a); 
 or
 (II) exercise discount or 
 borrowing privileges pursuant 
 to section 19(b)(7) of the 
 Federal Reserve Act (12 U.S.C. 
 461(b)(7)); or
 (B) that does not have and is not controlled 
 by a company that has--
 (i) more than [$10,000,000,000] 
 $50,000,000,000 in total consolidated 
 assets; and
 (ii) total trading assets and trading 
 liabilities, as reported on the most 
 recent applicable regulatory filing 
 filed by the institution, that are more 
 than 5 percent of total consolidated 
 assets.
 (2) Hedge fund; private equity fund.--The terms 
 ``hedge fund'' and ``private equity fund'' mean an 
 issuer that would be an investment company, as defined 
 in the Investment Company Act of 1940 (15 U.S.C. 80a-1 
 et seq.), but for section 3(c)(1) or 3(c)(7) of that 
 Act, or such similar funds as the appropriate Federal 
 banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission may, by rule, as provided in subsection 
 (b)(2), determine.
 (3) Nonbank financial company supervised by the 
 board.--The term ``nonbank financial company supervised 
 by the Board'' means a nonbank financial company 
 supervised by the Board of Governors, as defined in 
 section 102 of the Financial Stability Act of 2010.
 (4) Proprietary trading.--The term ``proprietary 
 trading'', when used with respect to a banking entity 
 or nonbank financial company supervised by the Board, 
 means engaging as a principal for the trading account 
 of the banking entity or nonbank financial company 
 supervised by the Board in any transaction to purchase 
 or sell, or otherwise acquire or dispose of, any 
 security, any derivative, any contract of sale of a 
 commodity for future delivery, any option on any such 
 security, derivative, or contract, or any other 
 security or financial instrument that the appropriate 
 Federal banking agencies, the Securities and Exchange 
 Commission, and the Commodity Futures Trading 
 Commission may, by rule as provided in subsection 
 (b)(2), determine.
 (5) Sponsor.--The term to ``sponsor'' a fund means--
 (A) to serve as a general partner, managing 
 member, or trustee of a fund;
 (B) in any manner to select or to control (or 
 to have employees, officers, or directors, or 
 agents who constitute) a majority of the 
 directors, trustees, or management of a fund; 
 or
 (C) to share with a fund, for corporate, 
 marketing, promotional, or other purposes, the 
 same name or a variation of the same name, 
 except as permitted under subsection 
 (d)(1)(G)(vi).
 (6) Trading account.--The term ``trading account'' 
 means any account used for acquiring or taking 
 positions in the securities and instruments described 
 in paragraph (4) principally for the purpose of selling 
 in the near term (or otherwise with the intent to 
 resell in order to profit from short-term price 
 movements), and any such other accounts as the 
 appropriate Federal banking agencies, the Securities 
 and Exchange Commission, and the Commodity Futures 
 Trading Commission may, by rule as provided in 
 subsection (b)(2), determine.
 (7) Illiquid fund.--
 (A) In general.--The term ``illiquid fund'' 
 means a hedge fund or private equity fund 
 that--
 (i) as of May 1, 2010, was 
 principally invested in, or was 
 invested and contractually committed to 
 principally invest in, illiquid assets, 
 such as portfolio companies, real 
 estate investments, and venture capital 
 investments; and
 (ii) makes all investments pursuant 
 to, and consistent with, an investment 
 strategy to principally invest in 
 illiquid assets. In issuing rules 
 regarding this subparagraph, the Board 
 shall take into consideration the terms 
 of investment for the hedge fund or 
 private equity fund, including 
 contractual obligations, the ability of 
 the fund to divest of assets held by 
 the fund, and any other factors that 
 the Board determines are appropriate.
 (B) Hedge fund.--For the purposes of this 
 paragraph, the term ``hedge fund'' means any 
 fund identified under subsection (h)(2), and 
 does not include a private equity fund, as such 
 term is used in section 203(m) of the 
 Investment Advisers Act of 1940 (15 U.S.C. 80b-
 3(m)).

 * * * * * * *

 ---------- 

 TRUTH IN LENDING ACT

 * * * * * * *
TITLE I--CONSUMER CREDIT COST DISCLOSURE

 * * * * * * *

CHAPTER 2--CREDIT TRANSACTIONS

 * * * * * * *

Sec. 129C. Minimum standards for residential mortgage loans

 (a) Ability To Repay.--
 (1) In general.--In accordance with regulations 
 prescribed by the Board, no creditor may make a 
 residential mortgage loan unless the creditor makes a 
 reasonable and good faith determination based on 
 verified and documented information that, at the time 
 the loan is consummated, the consumer has a reasonable 
 ability to repay the loan, according to its terms, and 
 all applicable taxes, insurance (including mortgage 
 guarantee insurance), and assessments.
 (2) Multiple loans.--If the creditor knows, or has 
 reason to know, that 1 or more residential mortgage 
 loans secured by the same dwelling will be made to the 
 same consumer, the creditor shall make a reasonable and 
 good faith determination, based on verified and 
 documented information, that the consumer has a 
 reasonable ability to repay the combined payments of 
 all loans on the same dwelling according to the terms 
 of those loans and all applicable taxes, insurance 
 (including mortgage guarantee insurance), and 
 assessments.
 (3) Basis for determination.--A determination under 
 this subsection of a consumer's ability to repay a 
 residential mortgage loan shall include consideration 
 of the consumer's credit history, current income, 
 expected income the consumer is reasonably assured of 
 receiving, current obligations, debt-to-income ratio or 
 the residual income the consumer will have after paying 
 non-mortgage debt and mortgage-related obligations, 
 employment status, and other financial resources other 
 than the consumer's equity in the dwelling or real 
 property that secures repayment of the loan. A creditor 
 shall determine the ability of the consumer to repay 
 using a payment schedule that fully amortizes the loan 
 over the term of the loan.
 (4) Income verification.--A creditor making a 
 residential mortgage loan shall verify amounts of 
 income or assets that such creditor relies on to 
 determine repayment ability, including expected income 
 or assets, by reviewing the consumer's Internal Revenue 
 Service Form W-2, tax returns, payroll receipts, 
 financial institution records, or other third-party 
 documents that provide reasonably reliable evidence of 
 the consumer's income or assets. In order to safeguard 
 against fraudulent reporting, any consideration of a 
 consumer's income history in making a determination 
 under this subsection shall include the verification of 
 such income by the use of--
 (A) Internal Revenue Service transcripts of 
 tax returns; or
 (B) a method that quickly and effectively 
 verifies income documentation by a third party 
 subject to rules prescribed by the Board.
 (5) Exemption.--With respect to loans made, 
 guaranteed, or insured by Federal departments or 
 agencies identified in subsection (b)(3)(B)(ii), such 
 departments or agencies may exempt refinancings under a 
 streamlined refinancing from this income verification 
 requirement as long as the following conditions are 
 met:
 (A) The consumer is not 30 days or more past 
 due on the prior existing residential mortgage 
 loan.
 (B) The refinancing does not increase the 
 principal balance outstanding on the prior 
 existing residential mortgage loan, except to 
 the extent of fees and charges allowed by the 
 department or agency making, guaranteeing, or 
 insuring the refinancing.
 (C) Total points and fees (as defined in 
 section 103(aa)(4), other than bona fide third 
 party charges not retained by the mortgage 
 originator, creditor, or an affiliate of the 
 creditor or mortgage originator) payable in 
 connection with the refinancing do not exceed 3 
 percent of the total new loan amount.
 (D) The interest rate on the refinanced loan 
 is lower than the interest rate of the original 
 loan, unless the borrower is refinancing from 
 an adjustable rate to a fixed-rate loan, under 
 guidelines that the department or agency shall 
 establish for loans they make, guarantee, or 
 issue.
 (E) The refinancing is subject to a payment 
 schedule that will fully amortize the 
 refinancing in accordance with the regulations 
 prescribed by the department or agency making, 
 guaranteeing, or insuring the refinancing.
 (F) The terms of the refinancing do not 
 result in a balloon payment, as defined in 
 subsection (b)(2)(A)(ii).
 (G) Both the residential mortgage loan being 
 refinanced and the refinancing satisfy all 
 requirements of the department or agency 
 making, guaranteeing, or insuring the 
 refinancing.
 (6) Nonstandard loans.--
 (A) Variable rate loans that defer repayment 
 of any principal or interest.--For purposes of 
 determining, under this subsection, a 
 consumer's ability to repay a variable rate 
 residential mortgage loan that allows or 
 requires the consumer to defer the repayment of 
 any principal or interest, the creditor shall 
 use a fully amortizing repayment schedule.
 (B) Interest-only loans.--For purposes of 
 determining, under this subsection, a 
 consumer's ability to repay a residential 
 mortgage loan that permits or requires the 
 payment of interest only, the creditor shall 
 use the payment amount required to amortize the 
 loan by its final maturity.
 (C) Calculation for negative amortization.--
 In making any determination under this 
 subsection, a creditor shall also take into 
 consideration any balance increase that may 
 accrue from any negative amortization 
 provision.
 (D) Calculation process.--For purposes of 
 making any determination under this subsection, 
 a creditor shall calculate the monthly payment 
 amount for principal and interest on any 
 residential mortgage loan by assuming--
 (i) the loan proceeds are fully 
 disbursed on the date of the 
 consummation of the loan;
 (ii) the loan is to be repaid in 
 substantially equal monthly amortizing 
 payments for principal and interest 
 over the entire term of the loan with 
 no balloon payment, unless the loan 
 contract requires more rapid repayment 
 (including balloon payment), in which 
 case the calculation shall be made (I) 
 in accordance with regulations 
 prescribed by the Board, with respect 
 to any loan which has an annual 
 percentage rate that does not exceed 
 the average prime offer rate for a 
 comparable transaction, as of the date 
 the interest rate is set, by 1.5 or 
 more percentage points for a first lien 
 residential mortgage loan; and by 3.5 
 or more percentage points for a 
 subordinate lien residential mortgage 
 loan; or (II) using the contract's 
 repayment schedule, with respect to a 
 loan which has an annual percentage 
 rate, as of the date the interest rate 
 is set, that is at least 1.5 percentage 
 points above the average prime offer 
 rate for a first lien residential 
 mortgage loan; and 3.5 percentage 
 points above the average prime offer 
 rate for a subordinate lien residential 
 mortgage loan; and
 (iii) the interest rate over the 
 entire term of the loan is a fixed rate 
 equal to the fully indexed rate at the 
 time of the loan closing, without 
 considering the introductory rate.
 (E) Refinance of hybrid loans with current 
 lender.--In considering any application for 
 refinancing an existing hybrid loan by the 
 creditor into a standard loan to be made by the 
 same creditor in any case in which there would 
 be a reduction in monthly payment and the 
 mortgagor has not been delinquent on any 
 payment on the existing hybrid loan, the 
 creditor may--
 (i) consider the mortgagor's good 
 standing on the existing mortgage;
 (ii) consider if the extension of new 
 credit would prevent a likely default 
 should the original mortgage reset and 
 give such concerns a higher priority as 
 an acceptable underwriting practice; 
 and
 (iii) offer rate discounts and other 
 favorable terms to such mortgagor that 
 would be available to new customers 
 with high credit ratings based on such 
 underwriting practice.
 (7) Fully-indexed rate defined.--For purposes of this 
 subsection, the term ``fully indexed rate'' means the 
 index rate prevailing on a residential mortgage loan at 
 the time the loan is made plus the margin that will 
 apply after the expiration of any introductory interest 
 rates.
 (8) Reverse mortgages and bridge loans.--This 
 subsection shall not apply with respect to any reverse 
 mortgage or temporary or bridge loan with a term of 12 
 months or less, including to any loan to purchase a new 
 dwelling where the consumer plans to sell a different 
 dwelling within 12 months.
 (9) Seasonal income.--If documented income, including 
 income from a small business, is a repayment source for 
 a residential mortgage loan, a creditor may consider 
 the seasonality and irregularity of such income in the 
 underwriting of and scheduling of payments for such 
 credit.
 (b) Presumption of Ability To Repay.--
 (1) In general.--Any creditor with respect to any 
 residential mortgage loan, and any assignee of such 
 loan subject to liability under this title, may presume 
 that the loan has met the requirements of subsection 
 (a), if the loan is a qualified mortgage.
 (2) Definitions.--For purposes of this subsection, 
 the following definitions shall apply:
 (A) Qualified mortgage.--The term ``qualified 
 mortgage'' means any residential mortgage 
 loan--
 (i) for which the regular periodic 
 payments for the loan may not--
 (I) result in an increase of 
 the principal balance; or
 (II) except as provided in 
 subparagraph (E), allow the 
 consumer to defer repayment of 
 principal;
 (ii) except as provided in 
 subparagraph (E), the terms of which do 
 not result in a balloon payment, where 
 a ``balloon payment'' is a scheduled 
 payment that is more than twice as 
 large as the average of earlier 
 scheduled payments;
 (iii) for which the income and 
 financial resources relied upon to 
 qualify the obligors on the loan are 
 verified and documented;
 (iv) in the case of a fixed rate 
 loan, for which the underwriting 
 process is based on a payment schedule 
 that fully amortizes the loan over the 
 loan term and takes into account all 
 applicable taxes, insurance, and 
 assessments;
 (v) in the case of an adjustable rate 
 loan, for which the underwriting is 
 based on the maximum rate permitted 
 under the loan during the first 5 
 years, and a payment schedule that 
 fully amortizes the loan over the loan 
 term and takes into account all 
 applicable taxes, insurance, and 
 assessments;
 (vi) that complies with any 
 guidelines or regulations established 
 by the Board relating to ratios of 
 total monthly debt to monthly income or 
 alternative measures of ability to pay 
 regular expenses after payment of total 
 monthly debt, taking into account the 
 income levels of the borrower and such 
 other factors as the Board may 
 determine relevant and consistent with 
 the purposes described in paragraph 
 (3)(B)(i);
 (vii) for which the total points and 
 fees (as defined in subparagraph (C)) 
 payable in connection with the loan do 
 not exceed 3 percent of the total loan 
 amount;
 (viii) for which the term of the loan 
 does not exceed 30 years, except as 
 such term may be extended under 
 paragraph (3), such as in high-cost 
 areas; and
 (ix) in the case of a reverse 
 mortgage (except for the purposes of 
 subsection (a) of section 129C, to the 
 extent that such mortgages are exempt 
 altogether from those requirements), a 
 reverse mortgage which meets the 
 standards for a qualified mortgage, as 
 set by the Board in rules that are 
 consistent with the purposes of this 
 subsection.
 (B) Average prime offer rate.--The term 
 ``average prime offer rate'' means the average 
 prime offer rate for a comparable transaction 
 as of the date on which the interest rate for 
 the transaction is set, as published by the 
 Board..
 (C) Points and fees.--
 (i) In general.--For purposes of 
 subparagraph (A), the term ``points and 
 fees'' means points and fees as defined 
 by section 103(aa)(4) (other than bona 
 fide third party charges not retained 
 by the mortgage originator, creditor, 
 or an affiliate of the creditor or 
 mortgage originator).
 (ii) Computation.--For purposes of 
 computing the total points and fees 
 under this subparagraph, the total 
 points and fees shall exclude either of 
 the amounts described in the following 
 subclauses, but not both:
 (I) Up to and including 2 
 bona fide discount points 
 payable by the consumer in 
 connection with the mortgage, 
 but only if the interest rate 
 from which the mortgage's 
 interest rate will be 
 discounted does not exceed by 
 more than 1 percentage point 
 the average prime offer rate.
 (II) Unless 2 bona fide 
 discount points have been 
 excluded under subclause (I), 
 up to and including 1 bona fide 
 discount point payable by the 
 consumer in connection with the 
 mortgage, but only if the 
 interest rate from which the 
 mortgage's interest rate will 
 be discounted does not exceed 
 by more than 2 percentage 
 points the average prime offer 
 rate.
 (iii) Bona fide discount points 
 defined.--For purposes of clause (ii), 
 the term ``bona fide discount points'' 
 means loan discount points which are 
 knowingly paid by the consumer for the 
 purpose of reducing, and which in fact 
 result in a bona fide reduction of, the 
 interest rate or time-price 
 differential applicable to the 
 mortgage.
 (iv) Interest rate reduction.--
 Subclauses (I) and (II) of clause (ii) 
 shall not apply to discount points used 
 to purchase an interest rate reduction 
 unless the amount of the interest rate 
 reduction purchased is reasonably 
 consistent with established industry 
 norms and practices for secondary 
 mortgage market transactions.
 (D) Smaller loans.--The Board shall prescribe 
 rules adjusting the criteria under subparagraph 
 (A)(vii) in order to permit lenders that extend 
 smaller loans to meet the requirements of the 
 presumption of compliance under paragraph (1). 
 In prescribing such rules, the Board shall 
 consider the potential impact of such rules on 
 rural areas and other areas where home values 
 are lower.
 (E) Balloon loans.--The Board may, by 
 regulation, provide that the term ``qualified 
 mortgage'' includes a balloon loan--
 (i) that meets all of the criteria 
 for a qualified mortgage under 
 subparagraph (A) (except clauses 
 (i)(II), (ii), (iv), and (v) of such 
 subparagraph);
 (ii) for which the creditor makes a 
 determination that the consumer is able 
 to make all scheduled payments, except 
 the balloon payment, out of income or 
 assets other than the collateral;
 (iii) for which the underwriting is 
 based on a payment schedule that fully 
 amortizes the loan over a period of not 
 more than 30 years and takes into 
 account all applicable taxes, 
 insurance, and assessments; and
 (iv) that is extended by a creditor 
 that--
 (I) operates in rural or 
 underserved areas;
 (II) together with all 
 affiliates, has total annual 
 residential mortgage loan 
 originations that do not exceed 
 a limit set by the Board;
 (III) retains the balloon 
 loans in portfolio; and
 (IV) meets any asset size 
 threshold and any other 
 criteria as the Board may 
 establish, consistent with the 
 purposes of this subtitle.
 (F) Safe harbor.--
 (i) Definitions.--In this 
 subparagraph--
 (I) the term ``covered 
 institution'' means an insured 
 depository institution or an 
 insured credit union that, 
 together with its affiliates, 
 has less than [$10,000,000,000] 
 $50,000,000,000 in total 
 consolidated assets;
 (II) the term ``insured 
 credit union'' has the meaning 
 given the term in section 101 
 of the Federal Credit Union Act 
 (12 U.S.C. 1752);
 (III) the term ``insured 
 depository institution'' has 
 the meaning given the term in 
 section 3 of the Federal 
 Deposit Insurance Act (12 
 U.S.C. 1813);
 (IV) the term ``interest-
 only'' means that, under the 
 terms of the legal obligation, 
 one or more of the periodic 
 payments may be applied solely 
 to accrued interest and not to 
 loan principal; and
 (V) the term ``negative 
 amortization'' means payment of 
 periodic payments that will 
 result in an increase in the 
 principal balance under the 
 terms of the legal obligation.
 (ii) Safe harbor.--In this section--
 (I) the term``qualified 
 mortgage'' includes any 
 residential mortgage loan--
 (aa) that is 
 originated and retained 
 in portfolio by a 
 covered institution;
 (bb) that is in 
 compliance with the 
 limitations with 
 respect to prepayment 
 penalties described in 
 subsections (c)(1) and 
 (c)(3);
 (cc) that is in 
 compliance with the 
 requirements of clause 
 (vii) of subparagraph 
 (A);
 (dd) that does not 
 have negative 
 amortization or 
 interest-only features; 
 and
 (ee) for which the 
 covered institution 
 considers and documents 
 the debt, income, and 
 financial resources of 
 the consumer in 
 accordance with clause 
 (iv); and
 (II) a residential mortgage 
 loan described in subclause (I) 
 shall be deemed to meet the 
 requirements of subsection (a).
 (iii) Exception for certain 
 transfers.--A residential mortgage loan 
 described in clause (ii)(I) shall not 
 qualify for the safe harbor under 
 clause (ii) if the legal title to the 
 residential mortgage loan is sold, 
 assigned, or otherwise transferred to 
 another person unless the residential 
 mortgage loan is sold, assigned, or 
 otherwise transferred--
 (I) to another person by 
 reason of the bankruptcy or 
 failure of a covered 
 institution;
 (II) to a covered institution 
 so long as the loan is retained 
 in portfolio by the covered 
 institution to which the loan 
 is sold, assigned, or otherwise 
 transferred;
 (III) pursuant to a merger of 
 a covered institution with 
 another person or the 
 acquisition of a covered 
 institution by another person 
 or of another person by a 
 covered institution, so long as 
 the loan is retained in 
 portfolio by the person to whom 
 the loan is sold, assigned, or 
 otherwise transferred; or
 (IV) to a wholly owned 
 subsidiary of a covered 
 institution, provided that, 
 after the sale, assignment, or 
 transfer, the residential 
 mortgage loan is considered to 
 be an asset of the covered 
 institution for regulatory 
 accounting purposes.
 (iv) Consideration and documentation 
 requirements.--The consideration and 
 documentation requirements described in 
 clause (ii)(I)(ee) shall--
 (I) not be construed to 
 require compliance with, or 
 documentation in accordance 
 with, appendix Q to part 1026 
 of title 12, Code of Federal 
 Regulations, or any successor 
 regulation; and
 (II) be construed to permit 
 multiple methods of 
 documentation.
 (3) Regulations.--
 (A) In general.--The Board shall prescribe 
 regulations to carry out the purposes of this 
 subsection.
 (B) Revision of safe harbor criteria.--
 (i) In general.--The Board may 
 prescribe regulations that revise, add 
 to, or subtract from the criteria that 
 define a qualified mortgage upon a 
 finding that such regulations are 
 necessary or proper to ensure that 
 responsible, affordable mortgage credit 
 remains available to consumers in a 
 manner consistent with the purposes of 
 this section, necessary and appropriate 
 to effectuate the purposes of this 
 section and section 129B, to prevent 
 circumvention or evasion thereof, or to 
 facilitate compliance with such 
 sections.
 (ii) Loan definition.--The following 
 agencies shall, in consultation with 
 the Board, prescribe rules defining the 
 types of loans they insure, guarantee, 
 or administer, as the case may be, that 
 are qualified mortgages for purposes of 
 paragraph (2)(A), and such rules may 
 revise, add to, or subtract from the 
 criteria used to define a qualified 
 mortgage under paragraph (2)(A), upon a 
 finding that such rules are consistent 
 with the purposes of this section and 
 section 129B, to prevent circumvention 
 or evasion thereof, or to facilitate 
 compliance with such sections:
 (I) The Department of Housing 
 and Urban Development, with 
 regard to mortgages insured 
 under the National Housing Act 
 (12 U.S.C. 1707 et seq.).
 (II) The Department of 
 Veterans Affairs, with regard 
 to a loan made or guaranteed by 
 the Secretary of Veterans 
 Affairs.
 (III) The Department of 
 Agriculture, with regard loans 
 guaranteed by the Secretary of 
 Agriculture pursuant to 42 
 U.S.C. 1472(h).
 (IV) The Rural Housing 
 Service, with regard to loans 
 insured by the Rural Housing 
 Service.
 (C) Consideration of underwriting 
 requirements for property assessed clean energy 
 financing.--
 (i) Definition.--In this 
 subparagraph, the term ``Property 
 Assessed Clean Energy financing'' means 
 financing to cover the costs of home 
 improvements that results in a tax 
 assessment on the real property of the 
 consumer.
 (ii) Regulations.--The Bureau shall 
 prescribe regulations that carry out 
 the purposes of subsection (a) and 
 apply section 130 with respect to 
 violations under subsection (a) of this 
 section with respect to Property 
 Assessed Clean Energy financing, which 
 shall account for the unique nature of 
 Property Assessed Clean Energy 
 financing.
 (iii) Collection of information and 
 consultation.--In prescribing the 
 regulations under this subparagraph, 
 the Bureau--
 (I) may collect such 
 information and data that the 
 Bureau determines is necessary; 
 and
 (II) shall consult with State 
 and local governments and bond-
 issuing authorities.
 (c) Prohibition on Certain Prepayment Penalties.--
 (1) Prohibited on certain loans.--
 (A) In general.--A residential mortgage loan 
 that is not a ``qualified mortgage'', as 
 defined under subsection (b)(2), may not 
 contain terms under which a consumer must pay a 
 prepayment penalty for paying all or part of 
 the principal after the loan is consummated.
 (B) Exclusions.--For purposes of this 
 subsection, a ``qualified mortgage'' may not 
 include a residential mortgage loan that--
 (i) has an adjustable rate; or
 (ii) has an annual percentage rate 
 that exceeds the average prime offer 
 rate for a comparable transaction, as 
 of the date the interest rate is set--
 (I) by 1.5 or more percentage 
 points, in the case of a first 
 lien residential mortgage loan 
 having a original principal 
 obligation amount that is equal 
 to or less than the amount of 
 the maximum limitation on the 
 original principal obligation 
 of mortgage in effect for a 
 residence of the applicable 
 size, as of the date of such 
 interest rate set, pursuant to 
 the 6th sentence of section 
 305(a)(2) the Federal Home Loan 
 Mortgage Corporation Act (12 
 U.S.C. 1454(a)(2));
 (II) by 2.5 or more 
 percentage points, in the case 
 of a first lien residential 
 mortgage loan having a original 
 principal obligation amount 
 that is more than the amount of 
 the maximum limitation on the 
 original principal obligation 
 of mortgage in effect for a 
 residence of the applicable 
 size, as of the date of such 
 interest rate set, pursuant to 
 the 6th sentence of section 
 305(a)(2) the Federal Home Loan 
 Mortgage Corporation Act (12 
 U.S.C. 1454(a)(2)); and
 (III) by 3.5 or more 
 percentage points, in the case 
 of a subordinate lien 
 residential mortgage loan.
 (2) Publication of average prime offer rate and apr 
 thresholds.--The Board--
 (A) shall publish, and update at least 
 weekly, average prime offer rates;
 (B) may publish multiple rates based on 
 varying types of mortgage transactions; and
 (C) shall adjust the thresholds established 
 under subclause (I), (II), and (III) of 
 paragraph (1)(B)(ii) as necessary to reflect 
 significant changes in market conditions and to 
 effectuate the purposes of the Mortgage Reform 
 and Anti-Predatory Lending Act.
 (3) Phased-out penalties on qualified mortgages.--A 
 qualified mortgage (as defined in subsection (b)(2)) 
 may not contain terms under which a consumer must pay a 
 prepayment penalty for paying all or part of the 
 principal after the loan is consummated in excess of 
 the following limitations:
 (A) During the 1-year period beginning on the 
 date the loan is consummated, the prepayment 
 penalty shall not exceed an amount equal to 3 
 percent of the outstanding balance on the loan.
 (B) During the 1-year period beginning after 
 the period described in subparagraph (A), the 
 prepayment penalty shall not exceed an amount 
 equal to 2 percent of the outstanding balance 
 on the loan.
 (C) During the 1-year period beginning after 
 the 1-year period described in subparagraph 
 (B), the prepayment penalty shall not exceed an 
 amount equal to 1 percent of the outstanding 
 balance on the loan.
 (D) After the end of the 3-year period 
 beginning on the date the loan is consummated, 
 no prepayment penalty may be imposed on a 
 qualified mortgage.
 (4) Option for no prepayment penalty required.--A 
 creditor may not offer a consumer a residential 
 mortgage loan product that has a prepayment penalty for 
 paying all or part of the principal after the loan is 
 consummated as a term of the loan without offering the 
 consumer a residential mortgage loan product that does 
 not have a prepayment penalty as a term of the loan.
 (d) Single Premium Credit Insurance Prohibited.--No creditor 
may finance, directly or indirectly, in connection with any 
residential mortgage loan or with any extension of credit under 
an open end consumer credit plan secured by the principal 
dwelling of the consumer, any credit life, credit disability, 
credit unemployment, or credit property insurance, or any other 
accident, loss-of-income, life, or health insurance, or any 
payments directly or indirectly for any debt cancellation or 
suspension agreement or contract, except that--
 (1) insurance premiums or debt cancellation or 
 suspension fees calculated and paid in full on a 
 monthly basis shall not be considered financed by the 
 creditor; and
 (2) this subsection shall not apply to credit 
 unemployment insurance for which the unemployment 
 insurance premiums are reasonable, the creditor 
 receives no direct or indirect compensation in 
 connection with the unemployment insurance premiums, 
 and the unemployment insurance premiums are paid 
 pursuant to another insurance contract and not paid to 
 an affiliate of the creditor.
 (e) Arbitration.--
 (1) In general.--No residential mortgage loan and no 
 extension of credit under an open end consumer credit 
 plan secured by the principal dwelling of the consumer 
 may include terms which require arbitration or any 
 other nonjudicial procedure as the method for resolving 
 any controversy or settling any claims arising out of 
 the transaction.
 (2) Post-controversy agreements.--Subject to 
 paragraph (3), paragraph (1) shall not be construed as 
 limiting the right of the consumer and the creditor or 
 any assignee to agree to arbitration or any other 
 nonjudicial procedure as the method for resolving any 
 controversy at any time after a dispute or claim under 
 the transaction arises.
 (3) No waiver of statutory cause of action.--No 
 provision of any residential mortgage loan or of any 
 extension of credit under an open end consumer credit 
 plan secured by the principal dwelling of the consumer, 
 and no other agreement between the consumer and the 
 creditor relating to the residential mortgage loan or 
 extension of credit referred to in paragraph (1), shall 
 be applied or interpreted so as to bar a consumer from 
 bringing an action in an appropriate district court of 
 the United States, or any other court of competent 
 jurisdiction, pursuant to section 130 or any other 
 provision of law, for damages or other relief in 
 connection with any alleged violation of this section, 
 any other provision of this title, or any other Federal 
 law.
 (f) Mortgages With Negative Amortization.--No creditor may 
extend credit to a borrower in connection with a consumer 
credit transaction under an open or closed end consumer credit 
plan secured by a dwelling or residential real property that 
includes a dwelling, other than a reverse mortgage, that 
provides or permits a payment plan that may, at any time over 
the term of the extension of credit, result in negative 
amortization unless, before such transaction is consummated--
 (1) the creditor provides the consumer with a 
 statement that--
 (A) the pending transaction will or may, as 
 the case may be, result in negative 
 amortization;
 (B) describes negative amortization in such 
 manner as the Board shall prescribe;
 (C) negative amortization increases the 
 outstanding principal balance of the account; 
 and
 (D) negative amortization reduces the 
 consumer's equity in the dwelling or real 
 property; and
 (2) in the case of a first-time borrower with respect 
 to a residential mortgage loan that is not a qualified 
 mortgage, the first-time borrower provides the creditor 
 with sufficient documentation to demonstrate that the 
 consumer received homeownership counseling from 
 organizations or counselors certified by the Secretary 
 of Housing and Urban Development as competent to 
 provide such counseling.
 (g) Protection Against Loss of Anti-deficiency Protection.--
 (1) Definition.--For purposes of this subsection, the 
 term ``anti-deficiency law'' means the law of any State 
 which provides that, in the event of foreclosure on the 
 residential property of a consumer securing a mortgage, 
 the consumer is not liable, in accordance with the 
 terms and limitations of such State law, for any 
 deficiency between the sale price obtained on such 
 property through foreclosure and the outstanding 
 balance of the mortgage.
 (2) Notice at time of consummation.--In the case of 
 any residential mortgage loan that is, or upon 
 consummation will be, subject to protection under an 
 anti-deficiency law, the creditor or mortgage 
 originator shall provide a written notice to the 
 consumer describing the protection provided by the 
 anti-deficiency law and the significance for the 
 consumer of the loss of such protection before such 
 loan is consummated.
 (3) Notice before refinancing that would cause loss 
 of protection.--In the case of any residential mortgage 
 loan that is subject to protection under an anti-
 deficiency law, if a creditor or mortgage originator 
 provides an application to a consumer, or receives an 
 application from a consumer, for any type of 
 refinancing for such loan that would cause the loan to 
 lose the protection of such anti-deficiency law, the 
 creditor or mortgage originator shall provide a written 
 notice to the consumer describing the protection 
 provided by the anti-deficiency law and the 
 significance for the consumer of the loss of such 
 protection before any agreement for any such 
 refinancing is consummated.
 (h) Policy Regarding Acceptance of Partial Payment.--In the 
case of any residential mortgage loan, a creditor shall 
disclose prior to settlement or, in the case of a person 
becoming a creditor with respect to an existing residential 
mortgage loan, at the time such person becomes a creditor--
 (1) the creditor's policy regarding the acceptance of 
 partial payments; and
 (2) if partial payments are accepted, how such 
 payments will be applied to such mortgage and if such 
 payments will be placed in escrow.
 (i) Timeshare Plans.--This section and any regulations 
promulgated under this section do not apply to an extension of 
credit relating to a plan described in section 101(53D) of 
title 11, United States Code.

 * * * * * * *

 ---------- 

 ECONOMIC GROWTH, REGULATORY RELIEF, AND CONSUMER PROTECTION ACT

 * * * * * * *
 TITLE II--REGULATORY RELIEF AND PROTECTING CONSUMER ACCESS TO CREDIT

SEC. 201. CAPITAL SIMPLIFICATION FOR QUALIFYING COMMUNITY BANKS.

 (a) Definitions.--In this section:
 (1) Community bank leverage ratio.--The term 
 ``Community Bank Leverage Ratio'' means the ratio of 
 the tangible equity capital of a qualifying community 
 bank, as reported on the qualifying community bank's 
 applicable regulatory filing with the qualifying 
 community bank's appropriate Federal banking agency, to 
 the average total consolidated assets of the qualifying 
 community bank, as reported on the qualifying community 
 bank's applicable regulatory filing with the qualifying 
 community bank's appropriate Federal banking agency.
 (2) Generally applicable leverage capital 
 requirements; generally applicable risk-based capital 
 requirements.--The terms ``generally applicable 
 leverage capital requirements'' and ``generally 
 applicable risk-based capital requirements'' have the 
 meanings given those terms in section 171(a) of the 
 Financial Stability Act of 2010 (12 U.S.C. 5371(a)).
 (3) Qualifying community bank.--
 (A) Asset threshold.--The term ``qualifying 
 community bank'' means a depository institution 
 or depository institution holding company with 
 total consolidated assets of less than 
 [$10,000,000,000] $50,000,000,000.
 (B) Risk profile.--The appropriate Federal 
 banking agencies may determine that a 
 depository institution or depository 
 institution holding company (or a class of 
 depository institutions or depository 
 institution holding companies) described in 
 subparagraph (A) is not a qualifying community 
 bank based on the depository institution's or 
 depository institution holding company's risk 
 profile, which shall be based on consideration 
 of--
 (i) off-balance sheet exposures;
 (ii) trading assets and liabilities;
 (iii) total notional derivatives 
 exposures; and
 (iv) such other factors as the 
 appropriate Federal banking agencies 
 determine appropriate.
 (b) Community Bank Leverage Ratio.--The appropriate Federal 
banking agencies shall, through notice and comment rule making 
under section 553 of title 5, United States Code--
 (1) develop a Community Bank Leverage Ratio of not 
 less than 8 percent and not more than 10 percent for 
 qualifying community banks; and
 (2) establish procedures for treatment of a 
 qualifying community bank that has a Community Bank 
 Leverage Ratio that falls below the percentage 
 developed under paragraph (1) after exceeding the 
 percentage developed under paragraph (1).
 (c) Capital Compliance.--
 (1) In general.--Any qualifying community bank that 
 exceeds the Community Bank Leverage Ratio developed 
 under subsection (b)(1) shall be considered to have 
 met--
 (A) the generally applicable leverage capital 
 requirements and the generally applicable risk-
 based capital requirements;
 (B) in the case of a qualifying community 
 bank that is a depository institution, the 
 capital ratio requirements that are required in 
 order to be considered well capitalized under 
 section 38 of the Federal Deposit Insurance Act 
 (12 U.S.C. 1831o) and any regulation 
 implementing that section; and
 (C) any other capital or leverage 
 requirements to which the qualifying community 
 bank is subject.
 (2) Existing authorities.--Nothing in paragraph (1) 
 shall limit the authority of the appropriate Federal 
 banking agencies as in effect on the date of enactment 
 of this Act.
 (d) Consultation.--The appropriate Federal banking agencies 
shall--
 (1) consult with the applicable State bank 
 supervisors in carrying out this section; and
 (2) notify the applicable State bank supervisor of 
 any qualifying community bank that it supervises that 
 exceeds, or does not exceed after previously exceeding, 
 the Community Bank Leverage ratio developed under 
 subsection (b)(1).

 * * * * * * *

 ---------- 

 HOME OWNERS' LOAN ACT

 * * * * * * *
SEC. 10. REGULATION OF HOLDING COMPANIES.

 (a) Definitions.--
 (1) In general.--As used in this section, unless the 
 context otherwise requires--
 (A) Savings association.--The term ``savings 
 association'' includes a savings bank or 
 cooperative bank which is deemed by the 
 appropriate Federal banking agency to be a 
 savings association under subsection (l).
 (B) Uninsured institution.--The term 
 ``uninsured institution'' means any depository 
 institution the deposits of which are not 
 insured by the Federal Deposit Insurance 
 Corporation.
 (C) Company.--The term ``company'' means any 
 corporation, partnership, trust, joint-stock 
 company, or similar organization, but does not 
 include the Federal Deposit Insurance 
 Corporation, the Resolution Trust Corporation, 
 any Federal home loan bank, or any company the 
 majority of the shares of which is owned by the 
 United States or any State, or by an 
 instrumentality of the United States or any 
 State.
 (D) Savings and loan holding company.--
 (i) In general.--Except as provided 
 in clause (ii), the term ``savings and 
 loan holding company'' means any 
 company that directly or indirectly 
 controls a savings association or that 
 controls any other company that is a 
 savings and loan holding company.
 (ii) Exclusion.--The term ``savings 
 and loan holding company'' does not 
 include--
 (I) a bank holding company 
 that is registered under, and 
 subject to, the Bank Holding 
 Company Act of 1956 (12 U.S.C. 
 1841 et seq.), or to any 
 company directly or indirectly 
 controlled by such company 
 (other than a savings 
 association);
 (II) a company that controls 
 a savings association that 
 functions solely in a trust or 
 fiduciary capacity as described 
 in section 2(c)(2)(D) of the 
 Bank Holding Company Act of 
 1956 (12 U.S.C. 1841(c)(2)(D)); 
 or
 (III) a company described in 
 subsection (c)(9)(C) solely by 
 virtue of such company's 
 control of an intermediate 
 holding company established 
 pursuant to section 10A.
 (E) Multiple savings and loan holding 
 company.--The term ``multiple savings and loan 
 holding company'' means any savings and loan 
 holding company which directly or indirectly 
 controls 2 or more savings associations.
 (F) Diversified savings and loan holding 
 company.--The term ``diversified savings and 
 loan holding company'' means any savings and 
 loan holding company whose subsidiary savings 
 association and related activities as permitted 
 under paragraph (2) of subsection (c) of this 
 section represented, on either an actual or a 
 pro forma basis, less than 50 percent of its 
 consolidated net worth at the close of its 
 preceding fiscal year and of its consolidated 
 net earnings for such fiscal year, as 
 determined in accordance with regulations 
 issued by the appropriate Federal banking 
 agency.
 (G) Subsidiary.--The term ``subsidiary'' has 
 the same meaning as in section 3 of the Federal 
 Deposit Insurance Act.
 (H) Affiliate.--The term ``affiliate'' of a 
 savings association means any person which 
 controls, is controlled by, or is under common 
 control with, such savings association.
 (I) Bank holding company.--The terms ``bank 
 holding company'' and ``bank'' have the 
 meanings given to such terms in section 2 of 
 the Bank Holding Company Act of 1956.
 (J) Acquire.--The term ``acquire'' has the 
 meaning given to such term in section 13(f)(8) 
 of the Federal Deposit Insurance Act.
 (2) Control.--For purposes of this section, a person 
 shall be deemed to have control of--
 (A) a savings association if the person 
 directly or indirectly or acting in concert 
 with one or more other persons, or through one 
 or more subsidiaries, owns, controls, or holds 
 with power to vote, or holds proxies 
 representing, more than 25 percent of the 
 voting shares of such savings association, or 
 controls in any manner the election of a 
 majority of the directors of such association;
 (B) any other company if the person directly 
 or indirectly or acting in concert with one or 
 more other persons, or through one or more 
 subsidiaries, owns, controls, or holds with 
 power to vote, or holds proxies representing, 
 more than 25 percent of the voting shares or 
 rights of such other company, or controls in 
 any manner the election or appointment of a 
 majority of the directors or trustees of such 
 other company, or is a general partner in or 
 has contributed more than 25 percent of the 
 capital of such other company;
 (C) a trust if the person is a trustee 
 thereof; or
 (D) a savings association or any other 
 company if the Board determines, after 
 reasonable notice and opportunity for hearing, 
 that such person directly or indirectly 
 exercises a controlling influence over the 
 management or policies of such association or 
 other company.
 (3) Exclusions.--Notwithstanding any other provision 
 of this subsection, the term ``savings and loan holding 
 company'' does not include--
 (A) any company by virtue of its ownership or 
 control of voting shares of a savings 
 association or a savings and loan holding 
 company acquired in connection with the 
 underwriting of securities if such shares are 
 held only for such period of time (not 
 exceeding 120 days unless extended by the 
 Board) as will permit the sale thereof on a 
 reasonable basis; and
 (B) any trust (other than a pension, profit-
 sharing, shareholders', voting, or business 
 trust) which controls a savings association or 
 a savings and loan holding company if such 
 trust by its terms must terminate within 25 
 years or not later than 21 years and 10 months 
 after the death of individuals living on the 
 effective date of the trust, and is (i) in 
 existence on June 26, 1967, or (ii) a 
 testamentary trust created on or after June 26, 
 1967.
 (4) Special rule relating to qualified stock 
 issuance.--No savings and loan holding company shall be 
 deemed to control a savings association solely by 
 reason of the purchase by such savings and loan holding 
 company of shares issued by such savings association, 
 or issued by any savings and loan holding company 
 (other than a bank holding company) which controls such 
 savings association, in connection with a qualified 
 stock issuance if such purchase is approved by the 
 Board under subsection (q)(1)(D), unless the acquiring 
 savings and loan holding company, directly or 
 indirectly, or acting in concert with 1 or more other 
 persons, or through 1 or more subsidiaries, owns, 
 controls, or holds with power to vote, or holds proxies 
 representing, more than 15 percent of the voting shares 
 of such savings association or holding company.
 (b) Registration and Examination.--
 (1) In general.--Within 90 days after becoming a 
 savings and loan holding company, each savings and loan 
 holding company shall register with the Board on forms 
 prescribed by the Board, which shall include such 
 information, under oath or otherwise, with respect to 
 the financial condition, ownership, operations, 
 management, and intercompany relationships of such 
 holding company and its subsidiaries, and related 
 matters, as the Board may deem necessary or appropriate 
 to carry out the purposes of this section. Upon 
 application, the Board may extend the time within which 
 a savings and loan holding company shall register and 
 file the requisite information.
 (2) Reports.--
 (A) In general.--Each savings and loan 
 holding company and each subsidiary thereof, 
 other than a savings association, shall file 
 with the Board, such reports as may be required 
 by the Board. Such reports shall be made under 
 oath or otherwise, and shall be in such form 
 and for such periods, as the Board may 
 prescribe. Each report shall contain such 
 information concerning the operations of such 
 savings and loan holding company and its 
 subsidiaries as the Board may require.
 (B) Use of existing reports and other 
 supervisory information.--The Board shall, to 
 the fullest extent possible, use--
 (i) reports and other supervisory 
 information that the savings and loan 
 holding company or any subsidiary 
 thereof has been required to provide to 
 other Federal or State regulatory 
 agencies;
 (ii) externally audited financial 
 statements of the savings and loan 
 holding company or subsidiary;
 (iii) information that is otherwise 
 available from Federal or State 
 regulatory agencies; and
 (iv) information that is otherwise 
 required to be reported publicly.
 (C) Availability.--Upon the request of the 
 Board, a savings and loan holding company or a 
 subsidiary of a savings and loan holding 
 company shall promptly provide to the Board any 
 information described in clauses (i) through 
 (iii) of subparagraph (B).
 (3) Books and records.--Each savings and loan holding 
 company shall maintain such books and records as may be 
 prescribed by the Board.
 (4) Examinations.--
 (A) In general.--Subject to subtitle B of the 
 Consumer Financial Protection Act of 2010, the 
 Board may make examinations of a savings and 
 loan holding company and each subsidiary of a 
 savings and loan holding company system, in 
 order to--
 (i) inform the Board of--
 (I) the nature of the 
 operations and financial 
 condition of the savings and 
 loan holding company and the 
 subsidiary;
 (II) the financial, 
 operational, and other risks 
 within the savings and loan 
 holding company system that may 
 pose a threat to--
 (aa) the safety and 
 soundness of the 
 savings and loan 
 holding company or of 
 any depository 
 institution subsidiary 
 of the savings and loan 
 holding company; or
 (bb) the stability of 
 the financial system of 
 the United States; and
 (III) the systems of the 
 savings and loan holding 
 company for monitoring and 
 controlling the risks described 
 in subclause (II); and
 (ii) monitor the compliance of the 
 savings and loan holding company and 
 the subsidiary with--
 (I) this Act;
 (II) Federal laws that the 
 Board has specific jurisdiction 
 to enforce against the company 
 or subsidiary; and
 (III) other than in the case 
 of an insured depository 
 institution or functionally 
 regulated subsidiary, any other 
 applicable provisions of 
 Federal law.
 (B) Use of reports to reduce examinations.--
 For purposes of this subsection, the Board 
 shall, to the fullest extent possible, rely 
 on--
 (i) the examination reports made by 
 other Federal or State regulatory 
 agencies relating to a savings and loan 
 holding company and any subsidiary; and
 (ii) the reports and other 
 information required under paragraph 
 (2).
 (C) Coordination with other regulators.--The 
 Board shall--
 (i) provide reasonable notice to, and 
 consult with, the appropriate Federal 
 banking agency, the Securities and 
 Exchange Commission, the Commodity 
 Futures Trading Commission, or State 
 regulatory agency, as appropriate, for 
 a subsidiary that is a depository 
 institution or a functionally regulated 
 subsidiary of a savings and loan 
 holding company before commencing an 
 examination of the subsidiary under 
 this section; and
 (ii) to the fullest extent possible, 
 avoid duplication of examination 
 activities, reporting requirements, and 
 requests for information.
 (5) Agent for service of process.--The Board may 
 require any savings and loan holding company, or 
 persons connected therewith if it is not a corporation, 
 to execute and file a prescribed form of irrevocable 
 appointment of agent for service of process.
 (6) Release from registration.--The Board may at any 
 time, upon the motion or application of the Board, 
 release a registered savings and loan holding company 
 from any registration theretofore made by such company, 
 if the Board determines that such company no longer has 
 control of any savings association.
 (c) Holding Company Activities.--
 (1) Prohibited activities.--Except as otherwise 
 provided in this subsection, no savings and loan 
 holding company and no subsidiary which is not a 
 savings association shall--
 (A) engage in any activity or render any 
 service for or on behalf of a savings 
 association subsidiary for the purpose or with 
 the effect of evading any law or regulation 
 applicable to such savings association;
 (B) commence any business activity, other 
 than the activities described in paragraph (2); 
 or
 (C) continue any business activity, other 
 than the activities described in paragraph (2), 
 after the end of the 2-year period beginning on 
 the date on which such company received 
 approval under subsection (e) of this section 
 to become a savings and loan holding company 
 subject to the limitations contained in this 
 subparagraph.
 (2) Exempt activities.--The prohibitions of 
 subparagraphs (B) and (C) of paragraph (1) shall not 
 apply to the following business activities of any 
 savings and loan holding company or any subsidiary (of 
 such company) which is not a savings association:
 (A) Furnishing or performing management 
 services for a savings association subsidiary 
 of such company.
 (B) Conducting an insurance agency or escrow 
 business.
 (C) Holding, managing, or liquidating assets 
 owned or acquired from a savings association 
 subsidiary of such company.
 (D) Holding or managing properties used or 
 occupied by a savings association subsidiary of 
 such company.
 (E) Acting as trustee under deed of trust.
 (F) Any other activity--
 (i) which the Board, by regulation, 
 has determined to be permissible for 
 bank holding companies under section 
 4(c) of the Bank Holding Company Act of 
 1956, unless the Board, by regulation, 
 prohibits or limits any such activity 
 for savings and loan holding companies; 
 or
 (ii) in which multiple savings and 
 loan holding companies were authorized 
 (by regulation) to directly engage on 
 March 5, 1987.
 (G) In the case of a savings and loan holding 
 company, purchasing, holding, or disposing of 
 stock acquired in connection with a qualified 
 stock issuance if the purchase of such stock by 
 such savings and loan holding company is 
 approved by the Board pursuant to subsection 
 (q)(1)(D).
 (H) Any activity that is permissible for a 
 financial holding company (as such term is 
 defined under section 2(p) of the Bank Holding 
 Company Act of 1956 (12 U.S.C. 1841(p)) to 
 conduct under section 4(k) of the Bank Holding 
 Company Act of 1956 if--
 (i) the savings and loan holding 
 company meets all of the criteria to 
 qualify as a financial holding company, 
 and complies with all of the 
 requirements applicable to a financial 
 holding company, under sections 4(l) 
 and 4(m) of the Bank Holding Company 
 Act and section 804(c) of the Community 
 Reinvestment Act of 1977 (12 U.S.C. 
 2903(c)) as if the savings and loan 
 holding company was a bank holding 
 company; and
 (ii) the savings and loan holding 
 company conducts the activity in 
 accordance with the same terms, 
 conditions, and requirements that apply 
 to the conduct of such activity by a 
 bank holding company under the Bank 
 Holding Company Act of 1956 and the 
 Board's regulations and interpretations 
 under such Act.
 (3) Certain limitations on activities not applicable 
 to certain holding companies.--Notwithstanding 
 paragraphs (4) and (6) of this subsection, the 
 limitations contained in subparagraphs (B) and (C) of 
 paragraph (1) shall not apply to any savings and loan 
 holding company (or any subsidiary of such company) 
 which controls--
 (A) only 1 savings association, if the 
 savings association subsidiary of such company 
 is a qualified thrift lender (as determined 
 under subsection (m)); or
 (B) more than 1 savings association, if--
 (i) all, or all but 1, of the savings 
 association subsidiaries of such 
 company were initially acquired by the 
 company or by an individual who would 
 be deemed to control such company if 
 such individual were a company--
 (I) pursuant to an 
 acquisition under section 13(c) 
 or 13(k) of the Federal Deposit 
 Insurance Act or section 408(m) 
 of the National Housing Act; or
 (II) pursuant to an 
 acquisition in which assistance 
 was continued to a savings 
 association under section 13(i) 
 of the Federal Deposit 
 Insurance Act; and
 (ii) all of the savings association 
 subsidiaries of such company are 
 qualified thrift lenders (as determined 
 under subsection (m)).
 (4) Prior approval of certain new activities 
 required.--
 (A) In general.--No savings and loan holding 
 company and no subsidiary which is not a 
 savings association shall commence, either de 
 novo or by an acquisition (in whole or in part) 
 of a going concern, any activity described in 
 paragraph (2)(F)(i) of this subsection without 
 the prior approval of the Board.
 (B) Factors to be considered.--In considering 
 any application under subparagraph (A) by any 
 savings and loan holding company or any 
 subsidiary of any such company which is not a 
 savings association, the Board shall consider--
 (i) whether the performance of the 
 activity described in such application 
 by the company or the subsidiary 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 of such 
 activity (such as undue concentration 
 of resources, decreased or unfair 
 competition, conflicts of interest, or 
 unsound financial practices);
 (ii) the managerial resources of the 
 companies involved; and
 (iii) the adequacy of the financial 
 resources, including capital, of the 
 companies involved.
 (C) Director may differentiate between new 
 and ongoing activities.--In prescribing any 
 regulation or considering any application under 
 this paragraph, the Board may differentiate 
 between activities commenced de novo and 
 activities commenced by the acquisition, in 
 whole or in part, of a going concern.
 (D) Approval or disapproval by order.--The 
 approval or disapproval of any application 
 under this paragraph by the Board shall be made 
 in an order issued by the Board containing the 
 reasons for such approval or disapproval.
 (5) Grace period to achieve compliance.--If any 
 savings association referred to in paragraph (3) fails 
 to maintain the status of such association as a 
 qualified thrift lender, the Board may allow, for good 
 cause shown, any company that controls such association 
 (or any subsidiary of such company which is not a 
 savings association) up to 3 years to comply with the 
 limitations contained in paragraph (1)(C).
 (6) Special provisions relating to certain companies 
 affected by 1987 amendments.--
 (A) Exception to 2-year grace period for 
 achieving compliance.--Notwithstanding 
 paragraph (1)(C), any company which received 
 approval under subsection (e) of this section 
 to acquire control of a savings association 
 between March 5, 1987, and August 10, 1987, 
 shall not continue any business activity other 
 than an activity described in paragraph (2) 
 after August 10, 1987.
 (B) Exemption for activities lawfully engaged 
 in before march 5, 1987.--Notwithstanding 
 paragraph (1)(C) and subject to subparagraphs 
 (C) and (D), any savings and loan holding 
 company which received approval, before March 
 5, 1987, under subsection (e) of this section 
 to acquire control of a savings association may 
 engage, directly or through any subsidiary 
 (other than a savings association subsidiary of 
 such company), in any activity in which such 
 company or such subsidiary was lawfully engaged 
 on such date.
 (C) Termination of subparagraph (b) 
 exemption.--The exemption provided under 
 subparagraph (B) for activities engaged in by 
 any savings and loan holding company or a 
 subsidiary of such company (which is not a 
 savings association) which would otherwise be 
 prohibited under paragraph (1)(C) shall 
 terminate with respect to such activities of 
 such company or subsidiary upon the occurrence 
 (after August 10, 1987) of any of the 
 following:
 (i) The savings and loan holding 
 company acquires control of a bank or 
 an additional savings association 
 (other than a savings association 
 acquired pursuant to section 13(c) or 
 13(k) of the Federal Deposit Insurance 
 Act or section 406(f) or 408(m) of the 
 National Housing Act).
 (ii) Any savings association 
 subsidiary of the savings and loan 
 holding company fails to qualify as a 
 domestic building and loan association 
 under section 7701(a)(19) of the 
 Internal Revenue Code of 1986.
 (iii) The savings and loan holding 
 company engages in any business 
 activity--
 (I) which is not described in 
 paragraph (2); and
 (II) in which it was not 
 engaged on March 5, 1987.
 (iv) Any savings association 
 subsidiary of the savings and loan 
 holding company increases the number of 
 locations from which such savings 
 association conducts business after 
 March 5, 1987 (other than an increase 
 which occurs in connection with a 
 transaction under section 13(c) or (k) 
 of the Federal Deposit Insurance Act or 
 section 408(m) of the National Housing 
 Act.
 (v) Any savings association 
 subsidiary of the savings and loan 
 holding company permits any overdraft 
 (including an intraday overdraft), or 
 incurs any such overdraft in its 
 account at a Federal Reserve bank, on 
 behalf of an affiliate, unless such 
 overdraft is the result of an 
 inadvertent computer or accounting 
 error that is beyond the control of 
 both the savings association subsidiary 
 and the affiliate.
 (D) Order to terminate subparagraph (b) 
 activity.--Any activity described in 
 subparagraph (B) may also be terminated by the 
 Board, after opportunity for hearing, if the 
 Board determines, having due regard for the 
 purposes of this Act, that such action is 
 necessary to prevent conflicts of interest or 
 unsound practices or is in the public interest.
 (7) Foreign savings and loan holding company.--
 Notwithstanding any other provision of this section, 
 any savings and loan holding company organized under 
 the laws of a foreign country as of June 1, 1984 
 (including any subsidiary thereof which is not a 
 savings association), which controls a single savings 
 association on August 10, 1987, shall not be subject to 
 this subsection with respect to any activities of such 
 holding company which are conducted exclusively in a 
 foreign country.
 (8) Exemption for bank holding companies.--Except for 
 paragraph (1)(A), this subsection shall not apply to 
 any company that is treated as a bank holding company 
 for purposes of section 4 of the Bank Holding Company 
 Act of 1956, or any of its subsidiaries.
 (9) Prevention of new affiliations between s&l 
 holding companies and commercial firms.--
 (A) In general.--Notwithstanding paragraph 
 (3), no company may directly or indirectly, 
 including through any merger, consolidation, or 
 other type of business combination, acquire 
 control of a savings association after May 4, 
 1999, unless the company is engaged, directly 
 or indirectly (including through a subsidiary 
 other than a savings association), only in 
 activities that are permitted--
 (i) under paragraph (1)(C) or (2) of 
 this subsection; or
 (ii) for financial holding companies 
 under section 4(k) of the Bank Holding 
 Company Act of 1956.
 (B) Prevention of new commercial 
 affiliations.--Notwithstanding paragraph (3), 
 no savings and loan holding company may engage 
 directly or indirectly (including through a 
 subsidiary other than a savings association) in 
 any activity other than as described in clauses 
 (i) and (ii) of subparagraph (A).
 (C) Preservation of authority of existing 
 unitary s&l holding companies.--Subparagraphs 
 (A) and (B) do not apply with respect to any 
 company that was a savings and loan holding 
 company on May 4, 1999, or that becomes a 
 savings and loan holding company pursuant to an 
 application pending before the Office on or 
 before that date, and that--
 (i) meets and continues to meet the 
 requirements of paragraph (3); and
 (ii) continues to control not fewer 
 than 1 savings association that it 
 controlled on May 4, 1999, or that it 
 acquired pursuant to an application 
 pending before the Office on or before 
 that date, or the successor to such 
 savings association.
 (D) Corporate reorganizations permitted.--
 This paragraph does not prevent a transaction 
 that--
 (i) involves solely a company under 
 common control with a savings and loan 
 holding company from acquiring, 
 directly or indirectly, control of the 
 savings and loan holding company or any 
 savings association that is already a 
 subsidiary of the savings and loan 
 holding company; or
 (ii) involves solely a merger, 
 consolidation, or other type of 
 business combination as a result of 
 which a company under common control 
 with the savings and loan holding 
 company acquires, directly or 
 indirectly, control of the savings and 
 loan holding company or any savings 
 association that is already a 
 subsidiary of the savings and loan 
 holding company.
 (E) Authority to prevent evasions.--The Board 
 may issue interpretations, regulations, or 
 orders that the Board determines necessary to 
 administer and carry out the purpose and 
 prevent evasions of this paragraph, including a 
 determination (in consultation with the 
 appropriate Federal banking agency) that, 
 notwithstanding the form of a transaction, the 
 transaction would in substance result in a 
 company acquiring control of a savings 
 association.
 (F) Preservation of authority for family 
 trusts.--Subparagraphs (A) and (B) do not apply 
 with respect to any trust that becomes a 
 savings and loan holding company with respect 
 to a savings association, if--
 (i) not less than 85 percent of the 
 beneficial ownership interests in the 
 trust are continuously owned, directly 
 or indirectly, by or for the benefit of 
 members of the same family, or their 
 spouses, who are lineal descendants of 
 common ancestors who controlled, 
 directly or indirectly, such savings 
 association on May 4, 1999, or a 
 subsequent date, pursuant to an 
 application pending before the Office 
 on or before May 4, 1999; and
 (ii) at the time at which such trust 
 becomes a savings and loan holding 
 company, such ancestors or lineal 
 descendants, or spouses of such 
 descendants, have directly or 
 indirectly controlled the savings 
 association continuously since May 4, 
 1999, or a subsequent date, pursuant to 
 an application pending before the 
 Office on or before May 4, 1999.
 (d) Transactions With Affiliates.--Transactions between any 
subsidiary savings association of a savings and loan holding 
company and any affiliate (of such savings association 
subsidiary) shall be subject to the limitations and 
prohibitions specified in section 11 of this Act.
 (e) Acquisitions.--
 (1) In general.--It shall be unlawful for--
 (A) any savings and loan holding company 
 directly or indirectly, or through one or more 
 subsidiaries or through one or more 
 transactions--
 (i) to acquire, except with the prior 
 written approval of the Board, the 
 control of a savings association or a 
 savings and loan holding company, or to 
 retain the control of such an 
 association or holding company acquired 
 or retained in violation of this 
 section as heretofore or hereafter in 
 effect;
 (ii) to acquire, except with the 
 prior written approval of the Board, by 
 the process of merger, consolidation, 
 or purchase of assets, another savings 
 association or a savings and loan 
 holding company, or all or 
 substantially all of the assets of any 
 such association or holding company;
 (iii) to acquire, by purchase or 
 otherwise, or to retain, except with 
 the prior written approval of the 
 Board, more than 5 percent of the 
 voting shares of a savings association 
 not a subsidiary, or of a savings and 
 loan holding company not a subsidiary, 
 or in the case of a multiple savings 
 and loan holding company (other than a 
 company described in subsection 
 (c)(8)), to acquire or retain, and the 
 Board may not authorize acquisition or 
 retention of, more than 5 percent of 
 the voting shares of any company not a 
 subsidiary which is engaged in any 
 business activity other than the 
 activities specified in subsection 
 (c)(2). This clause shall not apply to 
 shares of a savings association or of a 
 savings and loan holding company--
 (I) held as a bona fide 
 fiduciary (whether with or 
 without the sole discretion to 
 vote such shares);
 (II) held temporarily 
 pursuant to an underwriting 
 commitment in the normal course 
 of an underwriting business;
 (III) held in an account 
 solely for trading purposes;
 (IV) over which no control is 
 held other than control of 
 voting rights acquired in the 
 normal course of a proxy 
 solicitation;
 (V) 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;
 (VI) acquired under section 
 408(m) of the National Housing 
 Act or section 13(k) of the 
 Federal Deposit Insurance Act;
 (VII) held by any insurance 
 company, as defined in section 
 2(a)(17) of the Investment 
 Company Act of 1940, except as 
 provided in paragraph (6); or
 (VIII) acquired pursuant to a 
 qualified stock issuance if 
 such purchase is approved by 
 the Board under subsection 
 (q)(1)(D);
 except that the aggregate amount of 
 shares held under this clause (other 
 than under subclauses (I), (II), (III), 
 (IV), and (VI)) may not exceed 15 
 percent of all outstanding shares or of 
 the voting power of a savings 
 association or savings and loan holding 
 company; or
 (iv) to acquire the control of an 
 uninsured institution, or to retain for 
 more than one year after February 14, 
 1968, or from the date on which such 
 control was acquired, whichever is 
 later, except that the Board may upon 
 application by such company extend such 
 one-year period from year to year, for 
 an additional period not exceeding 3 
 years, if the Board finds such 
 extension is warranted and is not 
 detrimental to the public interest; and
 (B) any other company, without the prior 
 written approval of the Board, directly or 
 indirectly, or through one or more subsidiaries 
 or through one or more transactions, to acquire 
 the control of one or more savings 
 associations, except that such approval shall 
 not be required in connection with the control 
 of a savings association, (i) acquired by 
 devise under the terms of a will creating a 
 trust which is excluded from the definition of 
 ``savings and loan holding company'' under 
 subsection (a) of this section, (ii) acquired 
 in connection with a reorganization in which a 
 person or group of persons, having had control 
 of a savings association for more than 3 years, 
 vests control of that association in a newly 
 formed holding company subject to the control 
 of the same person or group of persons, or 
 (iii) acquired by a bank holding company that 
 is registered under, and subject to, the Bank 
 Holding Company Act of 1956, or any company 
 controlled by such bank holding company. The 
 Board shall approve an acquisition of a savings 
 association under this subparagraph unless the 
 Board finds the financial and managerial 
 resources and future prospects of the company 
 and association involved to be such that the 
 acquisition would be detrimental to the 
 association or the insurance risk of the 
 Deposit Insurance Fund, and shall render a 
 decision within 90 days after submission to the 
 Board of the complete record on the 
 application.
 Consideration of the managerial resources of a company 
 or savings association under subparagraph (B) shall 
 include consideration of the competence, experience, 
 and integrity of the officers, directors, and principal 
 shareholders of the company or association.
 (2) Factors to be considered.--The Board shall not 
 approve any acquisition under subparagraph (A)(i) or 
 (A)(ii), or of more than one savings association under 
 subparagraph (B) of paragraph (1) of this subsection, 
 any acquisition of stock in connection with a qualified 
 stock issuance, any acquisition under paragraph (4)(A), 
 or any transaction under section 13(k) of the Federal 
 Deposit Insurance Act, except in accordance with this 
 paragraph. In every case, the Board shall take into 
 consideration the financial and managerial resources 
 and future prospects of the company and association 
 involved, the effect of the acquisition on the 
 association, the insurance risk to the Deposit 
 Insurance Fund, and the convenience and needs of the 
 community to be served[, and shall render a decision 
 within 90 days after submission to the Board of the 
 complete record on the application]. Consideration of 
 the managerial resources of a company or savings 
 association shall include consideration of the 
 competence, experience, and integrity of the officers, 
 directors, and principal shareholders of the company or 
 association. Before approving any such acquisition, 
 except a transaction under section 13(k) of the Federal 
 Deposit Insurance Act, the Board shall request from the 
 Attorney General and consider any report rendered 
 within 30 days on the competitive factors involved. The 
 Board shall not approve any proposed acquisition--
 (A) which would result in a monopoly, or 
 which would be in furtherance of any 
 combination or conspiracy to monopolize or to 
 attempt to monopolize the savings and loan 
 business in any part of the United States,
 (B) the effect of which in any section of the 
 country may be substantially to lessen 
 competition, or tend to create a monopoly, or 
 which in any other manner would be in restraint 
 of trade, unless it finds that the 
 anticompetitive effects of the proposed 
 acquisition are clearly outweighed in the 
 public interest by the probable effect of the 
 acquisition in meeting the convenience and 
 needs of the community to be served,
 (C) if the company fails to provide adequate 
 assurances to the Board that the company will 
 make available to the Board such information on 
 the operations or activities of the company, 
 and any affiliate of the company, as the Board 
 determines to be appropriate to determine and 
 enforce compliance with this Act,
 (D) in the case of an application involving a 
 foreign bank, if the foreign bank is not 
 subject to comprehensive supervision or 
 regulation on a consolidated basis by the 
 appropriate authorities in the bank's home 
 country, or
 (E) in the case of an application by a 
 savings and loan holding company to acquire an 
 insured depository institution, if--
 (i) the home State of the insured 
 depository institution is a State other 
 than the home State of the savings and 
 loan holding company;
 (ii) the applicant (including all 
 insured depository institutions which 
 are affiliates of the applicant) 
 controls, or upon consummation of the 
 transaction would control, more than 10 
 percent of the total amount of deposits 
 of insured depository institutions in 
 the United States; and
 (iii) the acquisition does not 
 involve an insured depository 
 institution in default or in danger of 
 default, or with respect to which the 
 Federal Deposit Insurance Corporation 
 provides assistance under section 13 of 
 the Federal Deposit Insurance Act (12 
 U.S.C. 1823).
 (3) Interstate Acquisitions.--No acquisition shall be 
 approved by the Board under this subsection which will 
 result in the formation by any company, through one or 
 more subsidiaries or through one or more transactions, 
 of a multiple savings and loan holding company 
 controlling savings associations in more than one 
 State, unless--
 (A) such company, or a savings association 
 subsidiary of such company, is authorized to 
 acquire control of a savings association 
 subsidiary, or to operate a home or branch 
 office, in the additional State or States 
 pursuant to section 13(k) of the Federal 
 Deposit Insurance Act;
 (B) such company controls a savings 
 association subsidiary which operated a home or 
 branch office in the additional State or States 
 as of March 5, 1987; or
 (C) the statutes of the State in which the 
 savings association to be acquired is located 
 permit a savings association chartered by such 
 State to be acquired by a savings association 
 chartered by the State where the acquiring 
 savings association or savings and loan holding 
 company is located or by a holding company that 
 controls such a State chartered savings 
 association, and such statutes specifically 
 authorize such an acquisition by language to 
 that effect and not merely by implication.
 (4) Acquisitions by certain individuals.--
 (A) In general.--Notwithstanding subsection 
 (h)(2), any director or officer of a savings 
 and loan holding company, or any individual who 
 owns, controls, or holds with power to vote (or 
 holds proxies representing) more than 25 
 percent of the voting shares of such holding 
 company, may acquire control of any savings 
 association not a subsidiary of such savings 
 and loan holding company with the prior written 
 approval of the Board.
 (B) Treatment of certain holding companies.--
 If any individual referred to in subparagraph 
 (A) controls more than 1 savings and loan 
 holding company or more than 1 savings 
 association, any savings and loan holding 
 company controlled by such individual shall be 
 subject to the activities limitations contained 
 in subsection (c) to the same extent such 
 limitations apply to multiple savings and loan 
 holding companies, unless all or all but 1 of 
 the savings associations (including any 
 institution deemed to be a savings association 
 under subsection (l) of this section) 
 controlled directly or indirectly by such 
 individual was acquired pursuant to an 
 acquisition described in subclause (I) or (II) 
 of subsection (c)(3)(B)(i).
 (5) Acquisitions pursuant to certain security 
 interests.--This subsection and subsection (c)(2) of 
 this section do not apply to any savings and loan 
 holding company which acquired the control of a savings 
 association or of a savings and loan holding company 
 pursuant to a pledge or hypothecation to secure a loan, 
 or in connection with the liquidation of a loan, made 
 in the ordinary course of business. It shall be 
 unlawful for any such company to retain such control 
 for more than one year after February 14, 1968, or from 
 the date on which such control was acquired, whichever 
 is later, except that the Board may upon application by 
 such company extend such one-year period from year to 
 year, for an additional period not exceeding 3 years, 
 if the Board finds such extension is warranted and 
 would not be detrimental to the public interest.
 (6) Shares held by insurance affiliates.--Shares 
 described in clause (iii)(VII) of paragraph (1)(A) 
 shall not be excluded for purposes of clause (iii) of 
 such paragraph if--
 (A) all shares held under such clause 
 (iii)(VII) by all insurance company affiliates 
 of such savings association or savings and loan 
 holding company in the aggregate exceed 5 
 percent of all outstanding shares or of the 
 voting power of the savings association or 
 savings and loan holding company; or
 (B) such shares are acquired or retained with 
 a view to acquiring, exercising, or 
 transferring control of the savings association 
 or savings and loan holding company.
 (7) Complete record on an application.--
 (A) Notice to applicant.--Not later than 30 
 days after the date on which the Board receives 
 an application for approval under this 
 subsection, the Board shall transmit to the 
 applicant a letter that either--
 (i) confirms the record on the 
 application is complete; or
 (ii) details all additional 
 information that is required for the 
 record on that application to be 
 complete.
 (B) Extension of notice.--Notwithstanding 
 subparagraph (A), the Board may, if an 
 application is complex, extend the 30-day 
 period described under subparagraph (A) for an 
 additional 30 days.
 (C) Receipt of response; deeming of complete 
 record.--Upon receipt of a response from an 
 applicant to a notice requesting additional 
 information described under subparagraph 
 (A)(ii), the record on the application shall be 
 deemed complete unless the Board--
 (i) determines that the applicant's 
 response was materially deficient; and
 (ii) not later than 30 days after the 
 date on which the Board received the 
 response, provides the applicant a 
 detailed notice describing the 
 deficiencies.
 (D) Treatment of third-party information.--In 
 determining whether the record on an 
 application is complete, the Board may take 
 into account only information provided by the 
 applicant, and may not base the determination 
 of completeness on any information (including 
 reports, views, or recommendations) provided by 
 third parties.
 (8) Deadline for determination.--
 (A) In general.--Notwithstanding any other 
 provision of this subsection, the Board shall 
 grant or deny an application submitted under 
 this subsection not later than 90 days after 
 the date on which the application was initially 
 submitted to the Board, regardless of whether 
 the record on such initial application was 
 complete.
 (B) Failure to make a determination.--If the 
 Board does not grant or deny an application 
 within the time period described under 
 subparagraph (A), such application shall be 
 deemed to have been granted.
 (C) Tolling of period.--The Board may at any 
 time extend the deadline described under 
 subparagraph (A) at the request of the 
 applicant, but may not extend the deadline more 
 than 30 days past the deadline described under 
 subparagraph (A).
 [(7)] (9) Definitions.--For purposes of paragraph 
 (2)(E)--
 (A) the terms ``default'', ``in danger of 
 default'', and ``insured depository 
 institution'' have the same meanings as in 
 section 3 of the Federal Deposit Insurance Act 
 (12 U.S.C. 1813); and
 (B) the term ``home State'' means--
 (i) with respect to a national bank, 
 the State in which the main office of 
 the bank is located;
 (ii) with respect to a State bank or 
 State savings association, the State by 
 which the savings association is 
 chartered;
 (iii) with respect to a Federal 
 savings association, the State in which 
 the home office (as defined by the 
 regulations of the Board of the Office 
 of Thrift Supervision, or, on and after 
 the transfer date, the Comptroller of 
 the Currency) of the Federal savings 
 association is located; and
 (iv) with respect to a savings and 
 loan holding company, the State in 
 which the amount of total deposits of 
 all insured depository institution 
 subsidiaries of such company was the 
 greatest on the date on which the 
 company became a savings and loan 
 holding company.
 (f) Declaration of Dividend.--Every subsidiary savings 
association of a savings and loan holding company shall give 
the Board not less than 30 days' advance notice of the proposed 
declaration by its directors of any dividend on its guaranty, 
permanent, or other nonwithdrawable stock. Such notice period 
shall commence to run from the date of receipt of such notice 
by the Board. Any such dividend declared within such period, or 
without the giving of such notice to the Board, shall be 
invalid and shall confer no rights or benefits upon the holder 
of any such stock.
 (g) Administration and Enforcement.--
 (1) In general.--The Board is authorized to issue 
 such regulations and orders, including regulations and 
 orders relating to capital requirements for savings and 
 loan holding companies, as the Board deems necessary or 
 appropriate to enable the Board to administer and carry 
 out the purposes of this section, and to require 
 compliance therewith and prevent evasions thereof. In 
 establishing capital regulations pursuant to this 
 subsection, the appropriate Federal banking agency 
 shall seek to make such requirements countercyclical so 
 that the amount of capital required to be maintained by 
 a company increases in times of economic expansion and 
 decreases in times of economic contraction, consistent 
 with the safety and soundness of the company.
 (2) Investigations.--The Board may make such 
 investigations as the Board deems necessary or 
 appropriate to determine whether the provisions of this 
 section, and regulations and orders thereunder, are 
 being and have been complied with by savings and loan 
 holding companies and subsidiaries and affiliates 
 thereof. For the purpose of any investigation under 
 this section, the Board may administer oaths and 
 affirmations, issue subpenas, take evidence, and 
 require the production of any books, papers, 
 correspondence, memorandums, or other records which may 
 be relevant or material to the inquiry. The attendance 
 of witnesses and the production of any such records may 
 be required from any place in any State. The Board may 
 apply to the United States district court for the 
 judicial district (or the United States court in any 
 territory) in which any witness or company subpenaed 
 resides or carries on business, for enforcement of any 
 subpena issued pursuant to this paragraph, and such 
 courts shall have jurisdiction and power to order and 
 require compliance.
 (3) Proceedings.--(A) In any proceeding under 
 subsection (a)(2)(D) or under paragraph (5) of this 
 subsection, the Board may administer oaths and 
 affirmations, take or cause to be taken depositions, 
 and issue subpenas. The Board may make regulations with 
 respect to any such proceedings. The attendance of 
 witnesses and the production of documents provided for 
 in this paragraph may be required from any place in any 
 State or in any territory at any designated place where 
 such proceeding is being conducted. Any party to such 
 proceedings may apply to the United States District 
 Court for the District of Columbia, or the United 
 States district court for the judicial district or the 
 United States court in any territory in which such 
 proceeding is being conducted, or where the witness 
 resides or carries on business, for enforcement of any 
 subpena issued pursuant to this paragraph, and such 
 courts shall have jurisdiction and power to order and 
 require compliance therewith. Witnesses subpenaed under 
 this section shall be paid the same fees and mileage 
 that are paid witnesses in the district courts of the 
 United States.
 (B) Any hearing provided for in subsection (a)(2)(D) 
 or under paragraph (5) of this section shall be held in 
 the Federal judicial district or in the territory in 
 which the principal office of the association or other 
 company is located unless the party afforded the 
 hearing consents to another place, and shall be 
 conducted in accordance with the provisions of chapter 
 5 of title 5, United States Code.
 (4) Injunctions.--Whenever it appears to the Board 
 that any person is engaged or has engaged or is about 
 to engage in any acts or practices which constitute or 
 will constitute a violation of the provisions of this 
 section or of any regulation or order thereunder, the 
 Board may bring an action in the proper United States 
 district court, or the United States court of any 
 territory or other place subject to the jurisdiction of 
 the United States, to enjoin such acts or practices, to 
 enforce compliance with this section or any regulation 
 or order, or to require the divestiture of any 
 acquisition in violation of this section, or for any 
 combination of the foregoing, and such courts shall 
 have jurisdiction of such actions. Upon a proper 
 showing an injunction, decree, restraining order, order 
 of divestiture, or other appropriate order shall be 
 granted without bond.
 (5) Cease and desist orders.--(A) Notwithstanding any 
 other provision of this section, the Board may, 
 whenever the Board has reasonable cause to believe that 
 the continuation by a savings and loan holding company 
 of any activity or of ownership or control of any of 
 its noninsured subsidiaries constitutes a serious risk 
 to the financial safety, soundness, or stability of a 
 savings and loan holding company's subsidiary savings 
 association and is inconsistent with the sound 
 operation of a savings association or with the purposes 
 of this section or section 8 of the Federal Deposit 
 Insurance Act, order the savings and loan holding 
 company or any of its subsidiaries, after due notice 
 and opportunity for hearing, to terminate such 
 activities or to terminate (within 120 days or such 
 longer period as the Board directs in unusual 
 circumstances) its ownership or control of any such 
 noninsured subsidiary either by sale or by distribution 
 of the shares of the subsidiary to the shareholders of 
 the savings and loan holding company. Such distribution 
 shall be pro rata with respect to all of the 
 shareholders of the distributing savings and loan 
 holding company, and the holding company shall not make 
 any charge to its shareholders arising out of such a 
 distribution.
 (B) The Board may in the discretion of the Board 
 apply to the United States district court within the 
 jurisdiction of which the principal office of the 
 company is located, for the enforcement of any 
 effective and outstanding order issued under this 
 section, and such court shall have jurisdiction and 
 power to order and require compliance therewith. Except 
 as provided in subsection (j), no court shall have 
 jurisdiction to affect by injunction or otherwise the 
 issuance or enforcement of any notice or order under 
 this section, or to review, modify, suspend, terminate, 
 or set aside any such notice or order.
 (h) Prohibited Acts.--It shall be unlawful for--
 (1) any savings and loan holding company or 
 subsidiary thereof, or any director, officer, employee, 
 or person owning, controlling, or holding with power to 
 vote, or holding proxies representing, more than 25 
 percent of the voting shares, of such holding company 
 or subsidiary, to hold, solicit, or exercise any 
 proxies in respect of any voting rights in a savings 
 association which is a mutual association;
 (2) any director or officer of a savings and loan 
 holding company, or any individual who owns, controls, 
 or holds with power to vote (or holds proxies 
 representing) more than 25 percent of the voting shares 
 of such holding company, to acquire control of any 
 savings association not a subsidiary of such savings 
 and loan holding company, unless such acquisition is 
 approved by the Board pursuant to subsection (e)(4); or
 (3) any individual, except with the prior approval of 
 the Board, to serve or act as a director, officer, or 
 trustee of, or become a partner in, any savings and 
 loan holding company after having been convicted of any 
 criminal offense involving dishonesty or breach of 
 trust.
 (i) Penalties.--
 (1) Criminal penalty.--(A) Whoever knowingly violates 
 any provision of this section or being a company, 
 violates any regulation or order issued by the Board 
 under this section, shall be imprisoned not more than 1 
 year, fined not more than $100,000 per day for each day 
 during which the violation continues, or both.
 (B) Whoever, with the intent to deceive, defraud, or 
 profit significantly, knowingly violates any provision 
 of this section shall be fined not more than $1,000,000 
 per day for each day during which the violation 
 continues, imprisoned not more than 5 years, or both.
 (2) Civil money penalty.--
 (A) Penalty.--Any company which violates, and 
 any person who participates in a violation of, 
 any provision of this section, or any 
 regulation or order issued pursuant thereto, 
 shall forfeit and pay a civil penalty of not 
 more than $25,000 for each day during which 
 such violation continues.
 (B) Assessment.--Any penalty imposed under 
 subparagraph (A) may be assessed and collected 
 by the Board in the manner provided in 
 subparagraphs (E), (F), (G), and (I) of section 
 8(i)(2) of the Federal Deposit Insurance Act 
 for penalties imposed (under such section) and 
 any such assessment shall be subject to the 
 provisions of such section.
 (C) Hearing.--The company or other person 
 against whom any civil penalty is assessed 
 under this paragraph shall be afforded a 
 hearing if such company or person submits a 
 request for such hearing within 20 days after 
 the issuance of the notice of assessment. 
 Section 8(h) of the Federal Deposit Insurance 
 Act shall apply to any proceeding under this 
 paragraph.
 (D) Disbursement.--All penalties collected 
 under authority of this paragraph shall be 
 deposited into the Treasury.
 (E) Violate defined.--For purposes of this 
 section, the term ``violate'' includes any 
 action (alone or with another or others) for or 
 toward causing, bringing about, participating 
 in, counseling, or aiding or abetting a 
 violation.
 (F) Regulations.--The Board shall prescribe 
 regulations establishing such procedures as may 
 be necessary to carry out this paragraph.
 (3) Civil money penalty.--
 (A) Penalty.--Any company which violates, and 
 any person who participates in a violation of, 
 any provision of this section, or any 
 regulation or order issued pursuant thereto, 
 shall forfeit and pay a civil penalty of not 
 more than $25,000 for each day during which 
 such violation continues.
 (B) Assessment; etc.--Any penalty imposed 
 under subparagraph (A) may be assessed and 
 collected by the Board in the manner provided 
 in subparagraphs (E), (F), (G), and (I) of 
 section 8(i)(2) of the Federal Deposit 
 Insurance Act for penalties imposed (under such 
 section) and any such assessment shall be 
 subject to the provisions of such section.
 (C) Hearing.--The company or other person 
 against whom any penalty is assessed under this 
 paragraph shall be afforded an agency hearing 
 if such company or person submits a request for 
 such hearing within 20 days after the issuance 
 of the notice of assessment. Section 8(h) of 
 the Federal Deposit Insurance Act shall apply 
 to any proceeding under this paragraph.
 (D) Disbursement.--All penalties collected 
 under authority of this paragraph shall be 
 deposited into the Treasury.
 (E) Violate defined.--For purposes of this 
 section, the term ``violate'' includes any 
 action (alone or with another or others) for or 
 toward causing, bringing about, participating 
 in, counseling, or aiding or abetting a 
 violation.
 (F) Regulations.--The Board shall prescribe 
 regulations establishing such procedures as may 
 be necessary to carry out this paragraph.
 (4) Notice under this section after separation from 
 service.--The resignation, termination of employment or 
 participation, or separation of an institution-
 affiliated party (within the meaning of section 3(u) of 
 the Federal Deposit Insurance Act) with respect to a 
 savings and loan holding company or subsidiary thereof 
 (including a separation caused by the deregistration of 
 such a company or such a subsidiary) shall not affect 
 the jurisdiction and authority of the Board to issue 
 any notice and proceed under this section against any 
 such party, if such notice is served before the end of 
 the 6-year period beginning on the date such party 
 ceased to be such a party with respect to such holding 
 company or its subsidiary (whether such date occurs 
 before, on, or after the date of the enactment of this 
 paragraph).
 (j) Judicial Review.--Any party aggrieved by an order of the 
Board under this section may obtain a review of such order by 
filing in the court of appeals of the United States for the 
circuit in which the principal office of such party is located, 
or in the United States Court of Appeals for the District of 
Columbia Circuit, within 30 days after the date of service of 
such order, a written petition praying that the order of the 
Board be modified, terminated, or set aside. A copy of the 
petition shall be forthwith transmitted by the clerk of the 
court to the Board, and thereupon the Board shall file in the 
court the record in the proceeding, as provided in section 2112 
of title 28, United States Code. Upon the filing of such 
petition, such court shall have jurisdiction, which upon the 
filing of the record shall be exclusive, to affirm, modify, 
terminate, or set aside, in whole or in part, the order of the 
Board. Review of such proceedings shall be had as provided in 
chapter 7 of title 5, United States Code. The judgment and 
decree of the court shall be final, except that the same shall 
be subject to review by the Supreme Court upon certiorari as 
provided in section 1254 of title 28, United States Code.
 (k) Savings Clause.--Nothing contained in this section, other 
than any transaction approved under subsection (e)(2) of this 
section or section 13 of the Federal Deposit Insurance Act, 
shall be interpreted or construed as approving any act, action, 
or conduct which is or has been or may be in violation of 
existing law, nor shall anything herein contained constitute a 
defense to any action, suit, or proceeding pending or hereafter 
instituted on account of any act, action, or conduct in 
violation of the antitrust laws.
 (l) Treatment of FDIC Insured State Savings Banks and 
Cooperative Banks as Savings Associations.--
 (1) In general.--Notwithstanding any other provision 
 of law, a savings bank (as defined in section 3(g) of 
 the Federal Deposit Insurance Act) and a cooperative 
 bank that is an insured bank (as defined in section 
 3(h) of the Federal Deposit Insurance Act) upon 
 application shall be deemed to be a savings association 
 for the purpose of this section, if the appropriate 
 Federal banking agency determines that such bank is a 
 qualified thrift lender (as determined under subsection 
 (m)).
 (2) Failure to maintain qualified thrift lender 
 status.--If any savings bank which is deemed to be a 
 savings association under paragraph (1) subsequently 
 fails to maintain its status as a qualified thrift 
 lender, as determined by the appropriate Federal 
 banking agency, such bank may not thereafter be a 
 qualified thrift lender for a period of 5 years.
 (m) Qualified Thrift Lender Test.--
 (1) In general.--Except as provided in paragraphs (2) 
 and (7), any savings association is a qualified thrift 
 lender if--
 (A) the savings association qualifies as a 
 domestic building and loan association, as such 
 term is defined in section 7701(a)(19) of the 
 Internal Revenue Code of 1986; or
 (B)(i) the savings association's qualified 
 thrift investments equal or exceed 65 percent 
 of the savings association's portfolio assets; 
 and
 (ii) the savings association's qualified 
 thrift investments continue to equal or exceed 
 65 percent of the savings association's 
 portfolio assets on a monthly average basis in 
 9 out of every 12 months.
 (2) Exceptions granted by director.--Notwithstanding 
 paragraph (1), the appropriate Federal banking agency 
 may grant such temporary and limited exceptions from 
 the minimum actual thrift investment percentage 
 requirement contained in such paragraph as the 
 appropriate Federal banking agency deems necessary if--
 (A) the appropriate Federal banking agency 
 determines that extraordinary circumstances 
 exist, such as when the effects of high 
 interest rates reduce mortgage demand to such a 
 degree that an insufficient opportunity exists 
 for a savings association to meet such 
 investment requirements; or
 (B) the appropriate Federal banking agency 
 determines that--
 (i) the grant of any such exception 
 will significantly facilitate an 
 acquisition under section 13(c) or 
 13(k) of the Federal Deposit Insurance 
 Act;
 (ii) the acquired association will 
 comply with the transition requirements 
 of paragraph (7)(B), as if the date of 
 the exemption were the starting date 
 for the transition period described in 
 that paragraph; and
 (iii) the appropriate Federal banking 
 agency determines that the exemption 
 will not have an undue adverse effect 
 on competing savings associations in 
 the relevant market and will further 
 the purposes of this subsection.
 (3) Failure to become and remain a qualified thrift 
 lender.--
 (A) In general.--A savings association that 
 fails to become or remain a qualified thrift 
 lender shall immediately be subject to the 
 restrictions under subparagraph (B).
 (B) Restrictions applicable to savings 
 associations that are not qualified thrift 
 lenders.--
 (i) Restrictions effective 
 immediately.--The following 
 restrictions shall apply to a savings 
 association beginning on the date on 
 which the savings association should 
 have become or ceases to be a qualified 
 thrift lender:
 (I) Activities.--The savings 
 association shall not make any 
 new investment (including an 
 investment in a subsidiary) or 
 engage, directly or indirectly, 
 in any other new activity 
 unless that investment or 
 activity would be permissible 
 for the savings association if 
 it were a national bank, and is 
 also permissible for the 
 savings association as a 
 savings association.
 (II) Branching.--The savings 
 association shall not establish 
 any new branch office at any 
 location at which a national 
 bank located in the savings 
 association's home State may 
 not establish a branch office. 
 For purposes of this subclause, 
 a savings association's home 
 State is the State in which the 
 savings association's total 
 deposits were largest on the 
 date on which the savings 
 association should have become 
 or ceased to be a qualified 
 thrift lender.
 (III) Dividends.--The savings 
 association may not pay 
 dividends, except for dividends 
 that--
 (aa) would be 
 permissible for a 
 national bank;
 (bb) are necessary to 
 meet obligations of a 
 company that controls 
 such savings 
 association; and
 (cc) are specifically 
 approved by the 
 Comptroller of the 
 Currency and the Board 
 after a written request 
 submitted to the 
 Comptroller of the 
 Currency and the Board 
 by the savings 
 association not later 
 than 30 days before the 
 date of the proposed 
 payment.
 (IV) Regulatory authority.--A 
 savings association that fails 
 to become or remain a qualified 
 thrift lender shall be deemed 
 to have violated section 5 of 
 the Home Owners' Loan Act (12 
 U.S.C. 1464) and subject to 
 actions authorized by section 
 5(d) of the Home Owners' Loan 
 Act (12 U.S.C. 1464(d)).
 (ii) Additional restrictions 
 effective after 3 years.--Beginning 3 
 years after the date on which a savings 
 association should have become a 
 qualified thrift lender, or the date on 
 which the savings association ceases to 
 be a qualified thrift lender, as 
 applicable, the savings association 
 shall not retain any investment 
 (including an investment in any 
 subsidiary) or engage, directly or 
 indirectly, in any activity, unless 
 that investment or activity--
 (I) would be permissible for 
 the savings association if it 
 were a national bank; and
 (II) is permissible for the 
 savings association as a 
 savings association.
 (C) Holding company regulation.--Any company 
 that controls a savings association that is 
 subject to any provision of subparagraph (B) 
 shall, within one year after the date on which 
 the savings association should have become or 
 ceases to be a qualified thrift lender, 
 register as and be deemed to be a bank holding 
 company subject to all of the provisions of the 
 Bank Holding Company Act of 1956, section 8 of 
 the Federal Deposit Insurance Act, and other 
 statutes applicable to bank holding companies, 
 in the same manner and to the same extent as if 
 the company were a bank holding company and the 
 savings association were a bank, as those terms 
 are defined in the Bank Holding Company Act of 
 1956.
 (D) Requalification.--A savings association 
 that should have become or ceases to be a 
 qualified thrift lender shall not be subject to 
 subparagraph (B) or (C) if the savings 
 association becomes a qualified thrift lender 
 by meeting the qualified thrift lender 
 requirement in paragraph (1) on a monthly 
 average basis in 9 out of the preceding 12 
 months and remains a qualified thrift lender. 
 If the savings association (or any savings 
 association that acquired all or substantially 
 all of its assets from that savings 
 association) at any time thereafter ceases to 
 be a qualified thrift lender, it shall 
 immediately be subject to all provisions of 
 subparagraphs (B) and (C) as if all the periods 
 described in subparagraphs (B)(ii) and (C) had 
 expired.
 (E) Exemption for specialized savings 
 associations serving certain military 
 personnel.--Subparagraph (A) shall not apply to 
 a savings association subsidiary of a savings 
 and loan holding company if at least 90 percent 
 of the customers of the savings and loan 
 holding company and its subsidiaries and 
 affiliates are active or former members in the 
 United States military services or the widows, 
 widowers, divorced spouses, or current or 
 former dependents of such members.
 (F) Exemption for certain federal savings 
 associations.--This paragraph shall not apply 
 to any Federal savings association in existence 
 as a Federal savings association on the date of 
 enactment of the Financial Institutions Reform, 
 Recovery, and Enforcement Act of 1989--
 (i) that was chartered before October 
 15, 1982, as a savings bank or a 
 cooperative bank under State law; or
 (ii) that acquired its principal 
 assets from an association that was 
 chartered before October 15, 1982, as a 
 savings bank or a cooperative bank 
 under State law.
 (G) No circumvention of exit moratorium.--
 Subparagraph (A) of this paragraph shall not be 
 construed as permitting any insured depository 
 institution to engage in any conversion 
 transaction prohibited under section 5(d) of 
 the Federal Deposit Insurance Act.
 (4) Definitions.--For purposes of this subsection, 
 the following definitions shall apply:
 (A) Actual thrift investment percentage.--The 
 term ``actual thrift investment percentage'' 
 means the percentage determined by dividing--
 (i) the amount of a savings 
 association's qualified thrift 
 investments, by
 (ii) the amount of the savings 
 association's portfolio assets.
 (B) Portfolio assets.--The term ``portfolio 
 assets'' means, with respect to any savings 
 association, the total assets of the savings 
 association, minus the sum of--
 (i) goodwill and other intangible 
 assets;
 (ii) the value of property used by 
 the savings association to conduct its 
 business; and
 (iii) liquid assets of the type 
 required to be maintained under section 
 6 of the Home Owners' Loan Act, as in 
 effect on the day before the date of 
 the enactment of the Financial 
 Regulatory Relief and Economic 
 Efficiency Act of 2000, in an amount 
 not exceeding the amount equal to 20 
 percent of the savings association's 
 total assets.
 (C) Qualified thrift investments.--
 (i) In general.--The term ``qualified 
 thrift investments'' means, with 
 respect to any savings association, the 
 assets of the savings association that 
 are described in clauses (ii) and 
 (iii).
 (ii) Assets includible without 
 limit.--The following assets are 
 described in this clause for purposes 
 of clause (i):
 (I) The aggregate amount of 
 loans held by the savings 
 association that were made to 
 purchase, refinance, construct, 
 improve, or repair domestic 
 residential housing or 
 manufactured housing.
 (II) Home-equity loans.
 (III) Securities backed by or 
 representing an interest in 
 mortgages on domestic 
 residential housing or 
 manufactured housing.
 (IV) Existing obligations of 
 deposit insurance agencies.--
 Direct or indirect obligations 
 of the Federal Deposit 
 Insurance Corporation or the 
 Federal Savings and Loan 
 Insurance Corporation issued in 
 accordance with the terms of 
 agreements entered into prior 
 to July 1, 1989, for the 10-
 year period beginning on the 
 date of issuance of such 
 obligations.
 (V) New obligations of 
 deposit insurance agencies.--
 Obligations of the Federal 
 Deposit Insurance Corporation, 
 the Federal Savings and Loan 
 Insurance Corporation, the 
 FSLIC Resolution Fund, and the 
 Resolution Trust Corporation 
 issued in accordance with the 
 terms of agreements entered 
 into on or after July 1, 1989, 
 for the 5-year period beginning 
 on the date of issuance of such 
 obligations.
 (VI) Shares of stock issued 
 by any Federal home loan bank.
 (VII) Loans for educational 
 purposes, loans to small 
 businesses, and loans made 
 through credit cards or credit 
 card accounts.
 (iii) Assets includible subject to 
 percentage restriction.--The following 
 assets are described in this clause for 
 purposes of clause (i):
 (I) 50 percent of the dollar 
 amount of the residential 
 mortgage loans originated by 
 such savings association and 
 sold within 90 days of 
 origination.
 (II) Investments in the 
 capital stock or obligations 
 of, and any other security 
 issued by, any service 
 corporation if such service 
 corporation derives at least 80 
 percent of its annual gross 
 revenues from activities 
 directly related to purchasing, 
 refinancing, constructing, 
 improving, or repairing 
 domestic residential real 
 estate or manufactured housing.
 (III) 200 percent of the 
 dollar amount of loans and 
 investments made to acquire, 
 develop, and construct 1- to 4-
 family residences the purchase 
 price of which is or is 
 guaranteed to be not greater 
 than 60 percent of the median 
 value of comparable newly 
 constructed 1- to 4-family 
 residences within the local 
 community in which such real 
 estate is located, except that 
 not more than 25 percent of the 
 amount included under this 
 subclause may consist of 
 commercial properties related 
 to the development if those 
 properties are directly related 
 to providing services to 
 residents of the development.
 (IV) 200 percent of the 
 dollar amount of loans for the 
 acquisition or improvement of 
 residential real property, 
 churches, schools, and nursing 
 homes located within, and loans 
 for any other purpose to any 
 small businesses located within 
 any area which has been 
 identified by the appropriate 
 Federal banking agency, in 
 connection with any review or 
 examination of community 
 reinvestment practices, as a 
 geographic area or neighborhood 
 in which the credit needs of 
 the low- and moderate-income 
 residents of such area or 
 neighborhood are not being 
 adequately met.
 (V) Loans for the purchase or 
 construction of churches, 
 schools, nursing homes, and 
 hospitals, other than those 
 qualifying under clause (IV), 
 and loans for the improvement 
 and upkeep of such properties.
 (VI) Loans for personal, 
 family, or household purposes 
 (other than loans for personal, 
 family, or household purposes 
 described in clause (ii)(VII)).
 (VII) Shares of stock issued 
 by the Federal Home Loan 
 Mortgage Corporation or the 
 Federal National Mortgage 
 Association.
 (iv) Percentage restriction 
 applicable to certain assets.--The 
 aggregate amount of the assets 
 described in clause (iii) which may be 
 taken into account in determining the 
 amount of the qualified thrift 
 investments of any savings association 
 shall not exceed the amount which is 
 equal to 20 percent of a savings 
 association's portfolio assets.
 (v) The term ``qualified thrift 
 investments'' excludes--
 (I) except for home equity 
 loans, that portion of any loan 
 or investment that is used for 
 any purpose other than those 
 expressly qualifying under any 
 subparagraph of clause (ii) or 
 (iii); or
 (II) goodwill or any other 
 intangible asset.
 (D) Credit card.--The appropriate Federal 
 banking agency shall issue such regulations as 
 may be necessary to define the term ``credit 
 card''.
 (E) Small business.--The appropriate Federal 
 banking agency shall issue such regulations as 
 may be necessary to define the term ``small 
 business''.
 (5) Consistent accounting required.--
 (A) In determining the amount of a savings 
 association's portfolio assets, the assets of 
 any subsidiary of the savings association shall 
 be consolidated with the assets of the savings 
 association if--
 (i) Assets of the subsidiary are 
 consolidated with the assets of the 
 savings association in determining the 
 savings association's qualified thrift 
 investments; or
 (ii) Residential mortgage loans 
 originated by the subsidiary are 
 included pursuant to paragraph 
 (4)(C)(iii)(I) in determining the 
 savings association's qualified thrift 
 investments.
 (B) In determining the amount of a savings 
 association's portfolio assets and qualified 
 thrift investments, consistent accounting 
 principles shall be applied.
 (6) Special rules for puerto rico and virgin islands 
 savings associations.--
 (A) Puerto rico savings associations.--With 
 respect to any savings association 
 headquartered and operating primarily in Puerto 
 Rico--
 (i) the term ``qualified thrift 
 investments'' includes, in addition to 
 the items specified in paragraph (4)--
 (I) the aggregate amount of 
 loans for personal, family, 
 educational, or household 
 purposes made to persons 
 residing or domiciled in the 
 Commonwealth of Puerto Rico; 
 and
 (II) the aggregate amount of 
 loans for the acquisition or 
 improvement of churches, 
 schools, or nursing homes, and 
 of loans to small businesses, 
 located within the Commonwealth 
 of Puerto Rico; and
 (ii) the aggregate amount of loans 
 related to the purchase, acquisition, 
 development and construction of 1- to 
 4-family residential real estate--
 (I) which is located within 
 the Commonwealth of Puerto 
 Rico; and
 (II) the value of which (at 
 the time of acquisition or upon 
 completion of the development 
 and construction) is below the 
 median value of newly 
 constructed 1- to 4-family 
 residences in the Commonwealth 
 of Puerto Rico, which may be 
 taken into account in 
 determining the amount of the 
 qualified thrift investments 
 and of such savings association 
 shall be doubled.
 (B) Virgin islands savings associations.--
 With respect to any savings association 
 headquartered and operating primarily in the 
 Virgin Islands--
 (i) the term ``qualified thrift 
 investments'' includes, in addition to 
 the items specified in paragraph (4)--
 (I) the aggregate amount of 
 loans for personal, family, 
 educational, or household 
 purposes made to persons 
 residing or domiciled in the 
 Virgin Islands; and
 (II) the aggregate amount of 
 loans for the acquisition or 
 improvement of churches, 
 schools, or nursing homes, and 
 of loans to small businesses, 
 located within the Virgin 
 Islands; and
 (ii) the aggregate amount of loans 
 related to the purchase, acquisition, 
 development and construction of 1- to 
 4-family residential real estate--
 (I) which is located within 
 the Virgin Islands; and
 (II) the value of which (at 
 the time of acquisition or upon 
 completion of the development 
 and construction) is below the 
 median value of newly 
 constructed 1- to 4-family 
 residences in the Virgin 
 Islands, which may be taken 
 into account in determining the 
 amount of the qualified thrift 
 investments and of such savings 
 association shall be doubled.
 (7) Transitional rule for certain savings 
 associations.--
 (A) In general.--If any Federal savings 
 association in existence as a Federal savings 
 association on the date of enactment of the 
 Financial Institutions Reform, Recovery, and 
 Enforcement Act of 1989--
 (i) that was chartered as a savings 
 bank or a cooperative bank under State 
 law before October 15, 1982; or
 (ii) that acquired its principal 
 assets from an association that was 
 chartered before October 15, 1982, as a 
 savings bank or a cooperative bank 
 under State law,
 meets the requirements of subparagraph (B), 
 such savings association shall be treated as a 
 qualified thrift lender during the period 
 ending on September 30, 1995.
 (B) Subparagraph (b) requirements.--A savings 
 association meets the requirements of this 
 subparagraph if, in the determination of the 
 appropriate Federal banking agency--
 (i) the actual thrift investment 
 percentage of such association does 
 not, after the date of enactment of the 
 Financial Institutions Reform, 
 Recovery, and Enforcement Act of 1989, 
 decrease below the actual thrift 
 investment percentage of such 
 association on July 15, 1989; and
 (ii) the amount by which--
 (I) the actual thrift 
 investment percentage of such 
 association at the end of each 
 period described in the 
 following table, exceeds
 (II) the actual thrift 
 investment percentage of such 
 association on July 15, 1989,
 is equal to or greater than the 
 applicable percentage (as determined 
 under the following table) of the 
 amount by which 70 percent exceeds the 
 actual thrift investment percentage of 
 such association on such date of 
 enactment:

 For the following The applicable
 period: percentage is:
 July 1, 1991-September 30, 1992................. 25 percent
 October 1, 1992-March 31, 1994.................. 50 percent
 April 1, 1994-September 30, 1995................ 75 percent
 Thereafter...................................... 100 percent

 (C) For purposes of this paragraph, the 
 actual thrift investment percentage of an 
 association on July 15, 1989, shall be 
 determined by applying the definition of 
 ``actual thrift investment percentage'' that 
 takes effect on July 1, 1991.
 (n) Tying Restrictions.--A savings and loan holding company 
and any of its affiliates shall be subject to section 5(q) and 
regulations prescribed under such section, in connection with 
transactions involving the products or services of such company 
or affiliate and those of an affiliated savings association as 
if such company or affiliate were a savings association.
 (o) Mutual Holding Companies.--
 (1) In general.--A savings association operating in 
 mutual form may reorganize so as to become a holding 
 company by--
 (A) chartering an interim savings 
 association, the stock of which is to be wholly 
 owned, except as otherwise provided in this 
 section, by the mutual association; and
 (B) transferring the substantial part of its 
 assets and liabilities, including all of its 
 insured liabilities, to the interim savings 
 association.
 (2) Directors and certain account holders' approval 
 of plan required.--A reorganization is not authorized 
 under this subsection unless--
 (A) a plan providing for such reorganization 
 has been approved by a majority of the board of 
 directors of the mutual savings association; 
 and
 (B) in the case of an association in which 
 holders of accounts and obligors exercise 
 voting rights, such plan has been submitted to 
 and approved by a majority of such individuals 
 at a meeting held at the call of the directors 
 in accordance with the procedures prescribed by 
 the association's charter and bylaws.
 (3) Notice to the director; disapproval period.--
 (A) Notice required.--At least 60 days prior 
 to taking any action described in paragraph 
 (1), a savings association seeking to establish 
 a mutual holding company shall provide written 
 notice to the Board. The notice shall contain 
 such relevant information as the Board shall 
 require by regulation or by specific request in 
 connection with any particular notice.
 (B) Transaction allowed if not disapproved.--
 Unless the Board within such 60-day notice 
 period disapproves the proposed holding company 
 formation, or extends for another 30 days the 
 period during which such disapproval may be 
 issued, the savings association providing such 
 notice may proceed with the transaction, if the 
 requirements of paragraph (2) have been met.
 (C) Grounds for disapproval.--The Board may 
 disapprove any proposed holding company 
 formation only if--
 (i) such disapproval is necessary to 
 prevent unsafe or unsound practices;
 (ii) the financial or management 
 resources of the savings association 
 involved warrant disapproval;
 (iii) the savings association fails 
 to furnish the information required 
 under subparagraph (A); or
 (iv) the savings association fails to 
 comply with the requirement of 
 paragraph (2).
 (D) Retention of capital assets.--In 
 connection with the transaction described in 
 paragraph (1), a savings association may, 
 subject to the approval of the Board, retain 
 capital assets at the holding company level to 
 the extent that such capital exceeds the 
 association's capital requirement established 
 by the Board pursuant to subsections (s) and 
 (t) of section 5.
 (4) Ownership.--
 (A) In general.--Persons having ownership 
 rights in the mutual association pursuant to 
 section 5(b)(1)(B) of this Act or State law 
 shall have the same ownership rights with 
 respect to the mutual holding company.
 (B) Holders of certain accounts.--Holders of 
 savings, demand or other accounts of--
 (i) a savings association chartered 
 as part of a transaction described in 
 para