Financial Services Competitiveness Act of 1995

Summary

TABLE OF CONTENTS: Title I: Bank Securities Activities and Affiliations Subtitle A: Securities Activities Subtitle B: Brokers and Dealers Subtitle C: Bank Investment Company Activities Subtitle D: Financial Activities Financial Services Competitiveness Act of 1995 - Title I: Bank Securities Activities and Affiliations With Securities Firms and Other Financial Companies - Subtitle A: Securities Activities - Amends the Banking Act of 1933 (Glass-Steagall Act) to repeal the proscription against affiliation of any member bank of the Federal Reserve System with an entity engaged principally in securities activities (securities affiliate). Permits an officer, director, or employee of a securities affiliate to serve simultaneously as an officer, director or employee of a member bank affiliated with such securities affiliate. (Sec. 102) Amends the Bank Holding Company Act of 1956 to authorize financial services holding companies (FSHCs) to own shares of a securities affiliate. (Sec. 103) Delineates the activities permissible for securities affiliates. Cites circumstances under which the Board of Governors of the Federal Reserve System (the Board) may permit an FSHC to: (1) acquire more than five percent of, or all or substantially all of, the voting shares or assets of a securities affiliate; (2) make additional investments that are considered capital for purposes of statutory capital requirements in a securities affiliate under its control; and (3) permit its securities affiliate to underwrite or deal in any security for a maximum aggregate period of two years. Excludes a securities affiliate's assets and liabilities (except those related to nonsecurities activities) from the determination of whether an FSHC is adequately capitalized. Delineates restrictions under which: (1) a well capitalized insured depository institution may extend credit to acquire or sell securities, or enhance the marketability of securities underwritten by a securities affiliate; (2) an FSHC or its subsidiary may extend credit or make payments to finance the purchase of a security underwritten by one of its securities affiliates; (3) directors and senior executive officer interlocks may be permitted between a securities affiliate and certain small FSHCs; and (4) a securities affiliate may underwrite securities secured by, or representing an interest in, obligations originated or purchased by an affiliated insured depository institution or its subsidiary. Prescribes guidelines under which each appropriate Federal banking agency and the Securities and Exchange Commission (SEC) shall establish information sharing and compliance programs and coordinate their activities to enforce this Act. Prohibits an FSHC that acquires control of a securities affiliate from permitting any depository institution of which it has control, or any subsidiary of that institution, from engaging in underwriting or dealing in certain securities originated or purchased by the institution or its affiliates. Requires the Board to deny any notice or application by an FSHC to engage in, or acquire shares of a company engaged in, underwriting or dealing in securities in the United States, except as permissible for a national bank to underwrite or deal in. Sets forth conditions under which an FSHC may own or control shares of any company engaged in underwriting or investment banking activities that are currently prohibited as an interest in a nonbanking organization. Amends the Federal Power Act to exempt from its prohibition against interlocking directorates certain persons currently serving or proposing to serve as directors or officers of a public utility and a banking firm permitted to underwrite or participate in the marketing of public utility securities, if that banking firm does not underwrite or participate in the marketing of securities of the same public utility. Amends the Bank Holding Company Act to set forth circumstances under which securities companies that become FSHCs may retain ownership of financial and nonfinancial companies. Identifies conditions which permit joint marketing of products or services between an insured depository institution and an affiliate owned by an FSHC. Amends the Bank Holding Company Act of 1956 to permit certain banks to increase their assets beyond a specified annual rate. Sets forth criteria under which banks controlled by certain companies that are not treated as bank holding companies are exempt from statutory limitations on their activities. (Sec. 104) Amends the Home Owners' Loan Act with respect to the regulation of savings and loan holding companies to set forth parameters for unitary thrift holding companies. (Sec. 105) Amends the Federal Deposit Insurance Act to set forth parameters within which certain insured depository institutions may be affiliates of a company acting as a securities underwriter or dealer. (Sec. 106) Amends the International Banking Act of 1978 to set a termination date for any (grandfathered) authority conferred upon a foreign bank or company regarding its affiliate engaged in securities activities after the Board determines that such activity is authorized for domestic FSHCs. (Sec. 107) Amends the Bank Holding Company Act of 1956 to preclude the States from prohibiting or limiting the affiliation of a bank or FSHC with a securities affiliate solely because the securities affiliate is engaged in specified activities. (Sec. 108) Amends the Revised Statutes to set criteria for certain well capitalized national banking associations to deal in, underwrite, and purchase municipal securities. (Sec. 109) Amends the Bank Holding Company Act of 1956 to set forth permissible affiliations for investment bank holding companies, including certain insurance underwriting activities. (Sec. 110) Amends the Federal Reserve Act to prescribe procedural guidelines and requirements for membership as a wholesale financial institution in the Federal Reserve System. Amends the Federal Deposit Insurance Act to prescribe a procedure by which an insured State-chartered bank or a national bank may voluntarily terminate its status as an insured depository institution. Requires any such terminated bank to become a wholesale financial institution in order to accept any deposits. Subtitle B: Brokers and Dealers - Amends the Securities Exchange Act of 1934 to modify the definitions of "broker" and "dealer" to reflect the provisions of this Act. (Sec. 123) Exempts loans made to a broker or dealer by a member bank from Board-prescribed margin requirements if the loan proceeds are to be used in the ordinary course of business (other than for the purpose of funding securities purchases for the account of such broker or dealer). Subtitle C: Bank Investment Company Activities - Amends the Investment Company Act of 1940 to permit a bank affiliate to serve as custodian of a registered investment company's assets. (Sec. 131) Prohibits a registered investment company from: (1) acquiring any security, during the existence of an underwriting or selling syndicate, whose proceeds will be used to retire an indebtedness owed to an affiliated person of such company; and (2) borrowing from a bank (or person affiliated with such bank) serving as an affiliated promoter, organizer, sponsor, or principal underwriter for such company, except if permitted by the SEC as in the public interest and consistent with the protection of investors. (Sec. 133) Modifies the definition of "interested person" with respect to an investment company to specify the kinds of transactions and services taking place during the preceding six months which would make a person an affiliated person of a broker or dealer. Prohibits a registered investment company from having a majority of its board of directors consisting of personnel or senior officers of the subsidiaries of any one bank, or of any single financial services holding company (and its affiliates and subsidiaries). (Sec. 134) Modifies the guidelines pertaining to unlawful misrepresentation of guarantees and the deceptive use of names. (Sec. 135) Modifies the definition of "broker" to state that it does not include any person solely by reason of the fact that such person is an underwriter for one or more investment companies. (Sec. 136) Modifies the definition of "dealer" to exclude an insurance or an investment company. (Sec. 137) Amends the Investment Advisers Act of 1940 to modify the definitions of investment adviser to remove the exclusion from such definition of an investment adviser for banks that advise investment companies. Revises the definitions of broker and dealer. (Sec. 140) Mandates interagency consultation between the appropriate Federal banking agency and the SEC regarding examination results and other information pertaining to the investment advisory activities of any registered bank holding company and its departments or divisions. (Sec. 141) Amends the Securities Act of 1933 and the Securities Exchange Act of 1934 to revise the exclusion from their purview of certain bank common trust funds to specify the exclusion of any interest or participation in any common trust fund or similar fund that is excluded from the definition of "investment company" under the Investment Company Act of 1940. Amends the Investment Company Act of 1940 to revise such exclusion guidelines for certain bank common trust funds. Expresses the sense of the Congress that the public interest would be furthered by amending the Internal Revenue Code to provide that conversion, mergers, or reorganization of certain taxable common trust funds shall not result in a gain or loss to the fund participants. (Sec. 142) Amends the Investment Company Act of 1940 to prescribe guidelines concerning: (1) controlling interests held by an investment adviser to a registered investment company in a fiduciary capacity; and (2) the purchase of investment company securities by an investment adviser acting as fiduciary for the account of a beneficiary. (Sec. 143) Amends the Federal Deposit Insurance Act to require the appropriate Federal banking agency to examine purchases made by an insured depository institution's trust department or division of the securities of an affiliated investment company, or an investment company that is an affiliated person of an affiliated person of the institution, in order to assure compliance with applicable Federal and State trust laws. Subtitle D:: Financial Activities - Amends the Bank Holding Company Act of 1956 to exempt from its proscription against interests in nonbanking organizations any activity that the Board has determined to be financial in nature or incidental to financial activities. (Sec. 150) Repeals the mandate that the Board consider, when determining whether a particular activity is a proper incident to banking, if its performance by a bank holding company affiliate is such that the public interest benefit outweighs any possible adverse effects (such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices). Permits Board regulations to differentiate between activities commenced by affiliates of different classes of banks. (Sec. 151) Sets forth criteria for statutory approval, without prior notice to the Board, of proposals by well capitalized and well managed FSHCs to engage in specified transactions and acquisitions. Sets forth expedited procedures for FSHCs to acquire companies engaged in new activities. (Sec. 152) Makes technical and conforming amendments to the Bank holding Company Act of 1956 and the Bank Holding Company Act of 1970. (Sec. 154) Amends the Federal Deposit Insurance Act to set forth conditions under which insured depository institutions that are subsidiaries of the same depository institution holding company are exempt from specified strictures concerning mergers.

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7 official files

• Reported in House (text)

  Reported in House · EN · 22 June 1995

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• Reported in House (PDF)

  Reported in House · EN · 22 June 1995

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• Reported to House amended, Part III

  summary · EN · 22 June 1995

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• Reported to House amended, Part I

  summary · EN · 18 May 1995

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• Introduced in House (text)

  Introduced in House · EN · 27 February 1995

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• Introduced in House (PDF)

  Introduced in House · EN · 27 February 1995

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• Introduced in House

  summary · EN · 27 February 1995

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