Financial Institutions Regulatory Relief Act of 1995

Summary

TABLE OF CONTENTS: Title I: Reductions in Government Overregulation Subtitle A: The Home Mortgage Process Subtitle B: Community Reinvestment Act Amendments Subtitle C: Consumer Banking Reforms Subtitle D: Equal Credit Opportunity Act Amendments Subtitle E: Consumer Leasing Act Amendments Subtitle F: Federal Home Loan Bank Amendments Title II: Streamlining Government Regulations Subtitle A: Regulatory Approval Issues Subtitle B: Streamlining of Government Regulations; Miscellaneous Provisions Title III: Lender Liability Financial Institutions Regulatory Relief Act of 1995 - Title I: Reductions in Government Overregulation - Subtitle A: The Home Mortgage Process - Amends the Real Estate Settlement Procedures Act (RESPA) to transfer regulatory authority from the Secretary of Housing and Urban Development to the Board of Governors of the Federal Reserve System (the Board). Eliminates redundant regulators by adding certain administrative enforcement provisions. (Sec. 102) Amends the Truth in Lending Act (TILA) and RESPA to provide for comparability of terms. (Sec. 103) Provides for increased regulatory flexibility and exemptive authority for the Board under TILA. (Sec. 104) Amends RESPA to repeal requirements that for certain federally related mortgage loans the lender disclose: (1) that it has previously assigned, sold, or transferred the servicing of such loans, or, during the most recent three-year period, a specified percentage of them; and (2) in the case of a lender who does not service federally related loans, a present intent to assign, sell or transfer them. Repeals the mandate for model disclosure statements. Excises from the definition of "federally related mortgage loan" any loan secured by a subordinate lien on residential real property (thereby removing second mortgages from RESPA restrictions). Directs the Board to ensure that regulations pertaining to business credit exemption from RESPA jurisdiction include all business credit exempted from TILA. (Sec. 105) Permits alternative disclosures for adjustable rate home mortgages which state that a monthly payment may increase or decrease significantly due to annual percentage rate increases. (Current law requires table illustrations of how a rate increase or decrease affects monthly payments.) Grants creditors the option of disclosing, in any variable interest rate residential mortgage transaction secured by the consumer's principal dwelling with greater than a one-year term, either a statement that the monthly payment may change substantially, or an historical example illustrating the effects of interest rate changes implemented according to the loan program. (Sec. 106) Excludes from the determination of finance charges (thereby exempting them from TILA disclosure requirements) those fees imposed by unaffiliated third parties that are neither expressly required nor retained by the creditor (including settlement agents, attorneys, and escrow and title companies). Exempts from the required computation of finance charge: (1) certain taxes on security instruments or evidences of indebtedness (if they are otherwise itemized and disclosed); and (2) fees for preparation of loan documents, as well as appraisal fees related to pest infestations, premises and structural inspections, and flood hazards. (Sec. 107) Denies the right of rescission to certain refinancings or consolidations of debt that are secured by a lien on a consumer's principal dwelling. (Sec. 108) Permits finance charge disclosures for certain consumer credit transactions to vary within a specified accuracy tolerance range. Sets disclosure accuracy guidelines for per diem interest rates. (Sec. 109) Amends TILA to establish certain limitations on liability, including: (1) limitations on liability for disclosures relating to certain fees and charges other than finance charges; and (2) an exemption from liability for finance charge disclosures within specified tolerance limits. (Sec. 111) Sets forth a limitation on the rescission period under TILA. (Sec. 112) Revises TILA provisions for the calculation of actual damages. (Sec. 113) States that the servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of an obligation unless the servicer owns it. (Sec. 114) Revises certain TILA provisions for recovery of fees. (Sec. 115) Amends the Housing and Urban Development Act of 1968 to repeal the mandate for homeownership debt counseling availability notification. (Sec. 116) Amends the Home Mortgage Disclosure Act of 1975 to increase the maximum asset-size of institutions exempt from its purview from $10 million to $50 million. Authorizes the Board to exempt from the Act's disclosure requirements institutions whose asset-size is over $50 million if the burden of compliance outweighs the usefulness of the requisite information, unless it is reasonable to believe that the institution is not fulfilling its obligations to serve the housing needs of the communities and neighborhoods in which it is located. Declares that a depository institution shall be deemed to have satisfied the public availability notification requirements for its mortgage loan transactions if its branch offices provide notice of the availability upon request of the information from the home office. Subtitle B: Community Reinvestment Act Amendments - Amends the Community Reinvestment Act of 1977 (CRA) to revise the expression of congressional intent to prohibit a supervisory agency from imposing additional burdens, recordkeeping, or reporting when examining financial institutions. (Sec. 122) Exempts a regulated financial institution from the examination requirements of, or any regulations issued under, CRA if: (1) its main office (and each branch) is located in a local government unit, outside a metropolitan statistical area, with a population of not more than 30,000; and (2) the institution and its parent bank holding company have aggregate assets of not more than $100 million. (Sec. 123) Provides for self-certification of CRA compliance by certain "satisfactory" or "outstanding" financial institutions with assets of $250 million or less, subject to certain public notice requirements. (Sec. 124) Sets forth community input and conclusive rating requirements, including requirements for publication of exam schedule, opportunity for comment, evaluation by the appropriate Federal financial supervisory agency of how the institution meets community needs, and procedures for requests for reconsideration of the resulting rating. (Sec. 125) Defines a "special purpose bank" as one that does not generally accept retail deposits, such as a credit card bank or a trust bank. Mandates that, in conducting assessments of financial institutions, the appropriate Federal regulatory agency: (1) take into consideration the nature of the businesses of special purpose banks; and (2) develop standards under which they may be deemed to comply with CRA requirements that are consistent with the specific nature of such businesses. (Sec. 126) Gives institutions credit, for purposes of satisfying CRA requirements, for investments in, and loans, to minority or women's depository institutions and joint ventures or other entities or projects providing benefits to distressed communities, whether such institutions or communities are located within or outside of the regulated financial institution's service area. (Sec. 127) Prohibits regulations requiring certain additional recordkeeping and reporting under CRA. (Sec. 128) Applies a requirement of metropolitan area distinctions, with respect to the public section of written institution evaluations, only to institutions that maintain domestic branches in two or more States. (Sec. 129) Amends the Federal Home Loan Bank Act to make certain community investment or service reporting requirements inapplicable to members receiving an outstanding or satisfactory grade under specified CRA provisions. Subtitle C: Consumer Banking Reforms - Amends the Truth in Savings Act (TISA) to: (1) repeal the finding of the Congress that uniformity in the disclosure of terms and conditions on which interest is paid and fees are assessed would strengthen consumer ability to verify deposit accounts and make informed decisions; and (2) replace the current purpose requiring clear, uniform disclosure of interest rates and fees, with one requiring depository institutions to pay interest on the daily full amount of principal in interest-bearing consumer deposit accounts at the agreed-upon rate of interest. (Sec. 131) Repeals TISA disclosure requirements pertaining to interest rates and terms of accounts, including: (1) account schedules; (2) disclosure requirements for certain accounts; (3) schedule distribution; (4) clear and conspicuous disclosure in periodic statements of interest earned and charges imposed; (5) guidelines for Board regulations, including model forms and clauses for common disclosures to facilitate compliance; (6) civil liability for non-compliance with disclosure requirements; and (7) preemption of State law disclosure requirements. Excises the following definitions to reflect repeals made by this Act: (1) annual percentage yield; (2) annual rate of simple interest; (3) deposit broker; and (4) multiple rate account. (Sec. 132) Amends the Electronic Fund Transfer Act (EFTA) and TILA to identify conditions giving rise to cardholder liability for unauthorized electronic fund transfers or unauthorized use of credit cards. (Sec. 134) Amends the Federal Deposit Insurance Act (FDIA) to allow depository institutions (including affiliates and subsidiaries) to exchange information without limitation if such information sharing is disclosed and the consumer has opportunity beforehand to direct that the information not be communicated. (Sec. 135) Revises EFTA definitions of: (1) accepted card or other means of access; and (2) account. Subtitle D: Equal Credit Opportunity Act Amendments - Equal Credit Opportunity Act Amendments of 1995 - States that the purpose of this Act is to combine the adverse action notification requirements of the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA) with respect to consumer credit applications and to make information which must be furnished more understandable. (Sec. 143) Revises ECOA notification requirements regarding adverse actions against credit applicants. Shields from liability for non-compliance persons who show by a preponderance of the evidence that they maintained reasonable procedures to assure compliance with such requirements at the time of the alleged violation. (Sec. 144) Revises specified FCRA disclosure requirements for users of consumer reports to eliminate such requirements for credit denials and adverse actions based on reports of persons other than consumer reporting agencies. (Sec. 145) Amends ECOA and the Fair Housing Act to add incentives for self-testing by prohibiting review, examination, or acquisition by: (1) an applicant in any legal proceeding of a creditor's self-procured test or review of its lending activities; or (2) an applicant or aggrieved party of a person's self-procured test or review of its residential real estate or real estate-related activities. (Sec. 146) Provides that creditors shall be deemed in compliance with ECOA nondiscrimination requirements with respect to any credit decision based solely on the use of an empirically derived, demonstrably and statistically sound, credit scoring system if such system does not use: (1) any protected category of applicant; or (2) any criterion so directly associated as to be a functional equivalent of such a category (does not preclude using age as a factor in such a system as otherwise permitted under ECOA). Subtitle E: Consumer Leasing Act Amendments - Consumer Leasing Act Amendments of 1995 - Amends the Consumer Credit Protection Act (CCPA) to direct the Board to: (1) write regulations or staff commentary to update and clarify requirements and definitions for lease disclosures, contracts, and other issues related to consumer leasing which would carry out the purposes of the Consumer Leasing Act; and (2) publish model disclosure forms and clauses to facilitate compliance with such disclosure requirements and aid the consumer in understanding the transaction. (Sec. 154) Revises CCPA provisions for consumer lease disclosures to require prior separate leasing disclosures of specified items in a tabular format. (Sec. 155) Revises CCPA provisions relating to consumer lease advertising, repealing special requirements for radio advertisements. Subtitle F: Federal Home Loan Bank Amendments - Amends the Federal Home Loan Bank Act (FHLBA) to revise an FHLB system membership eligibility location requirement. (Sec. 162) Revises FHLBA audit provisions to: (1) prohibit the FHFB from participating in the hiring of external auditors by banks; (2) permit the FHFB to establish requirements for external audit contracts and accounting standards; and (3) require all 12 banks to contract for an annual audit with a single provider. Title II: Streamlining Government Regulations - Subtitle A: Regulatory Approval Issues - Amends the Bank Holding Company Act (BHCA) to identify criteria for a well-capitalized and well-managed banking organization under which an acquisition of shares in a nonbanking or another banking organization by a bank holding company, or a merger or consolidation between registered bank holding companies, shall be deemed to be approved. (Current law requires prior Board approval.) (Sec. 203) Amends the FDIA to cite conditions under which prior approval is not required for any merger, consolidation, asset acquisition, or liabilities assumption, involving only insured depository institution subsidiaries of the same depository institution holding company. (Sec. 204) Permits any insured depository institution to participate in optional conversion transactions between members of the Bank Insurance Fund and the Savings Association Insurance Fund (Oakar transactions) without the prior written approval of the responsible agency. Repeals guidelines for agency approval of such transactions (but retains the proscription against transactions which result in the transfer of any insured depository institution's Federal deposit insurance from one Federal deposit insurance fund to the other). (Sec. 205) Amends the Home Owners' Loan Act to remove from its regulatory purview a bank holding company subject to the BHCA. Revises the definition of "savings and loan holding company" to exclude a bank holding company under BHCA jurisdiction. Provides that acquisition of a savings association by a bank holding company under BHCA jurisdiction obviates approval by the Director of the Office of Thrift Supervision. (Sec. 206) Amends the BHCA to repeal the provision that shares transferred by a bank holding company to a transferee under its control are deemed to be under such holding company's control unless the Board determines otherwise and approves the divestiture. (Sec. 207) Amends the Revised Statutes, the Federal Reserve Act (FRA), and the FDIA to delineate conditions under which prior approval is not required for well-capitalized and well-managed banks within their purview to establish and operate a branch or seasonal agency. (Sec. 208) Amends the Revised Statutes and the FDIA to exclude from the definition of "branch" an automated teller machine or remote service unit (thus removing those entities from such Acts' approval requirements). (Sec. 209) Amends the FRA to exempt well-capitalized and well-managed banks from the approval requirement for investments in bank premises. (Sec. 210) Amends the FDIA to repeal the requirement that the appropriate Federal banking agency be notified prior to the appointment or addition of a new director or senior executive officer if the affected insured depository institution or depository institution holding company has: (1) been chartered less than two years; or (2) undergone a change in control within the preceding two years. (Sec. 211) Repeals the requirement for a hearing in the determination of new nonbanking activities. Subtitle B: Streamlining of Government Regulations; Miscellaneous Provisions - Amends the Revised Statutes to repeal the aggregate minimum per-branch capital requirements imposed upon a national banking association and its branches. (Sec. 222) Amends the FDIA to exclude automated teller machines and bank branches in specified merger or relocation situations from the definition of "bank branch" (thus exempting them from Federal bank closure notification requirements). Makes such exemption retroactive to the enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991. (Sec. 223) Amends the Depository Institutions Management Interlocks Act to exempt management officials of depository institutions or holding companies with small (under 20 percent) market shares from prohibitions against dual service with unaffiliated institutions or companies in the same geographic banking market. Raises from $1 billion to $2 billion the asset-size ceiling beneath which a depository institution or depository holding company may retain directors and management officials performing dual service for nonaffiliated institutions whose total assets do not exceed $1 billion (currently $500 million). Authorizes Federal regulatory agencies to adjust such ceiling annually for cost-of-living increases. Extends a specified grandfather exemption which allows certain management officials to continue dual service despite interlocks prohibitions (thus permitting them to continue their dual service permanently). (Sec. 224) Abolishes the Appraisal Subcommittee established under the Federal Financial Institutions Council Act of 1978, and consolidates its functions with the Financial Institutions Examination Council. Amends the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) to revise provisions relating to rosters of State certified or licensed appraisers. Provides for reduction of assessments on appraisers. (Sec. 225) Amends the FRA to exempt from its proscription against preferential lending terms to executive officers, directors, or principal shareholders (insider lending) loans made pursuant to a benefit or compensation program widely available to employees of the member bank. Expands the Board's authority to waive the proscription against such preferential terms for certain executive officers and directors of subsidiary banks. Repeals the requirement that: (1) an executive officer indebted to a bank over a certain lawful amount submit a written report of such debt to the board of directors; and (2) a member bank include in its condition of report all loans to executive officers made since its previous report. Amends the FDIA to repeal Federal banking agency authority to require banks to disclose loans made to their executive officers or principal shareholders. Amends the Bank Holding Company Act Amendments of 1970 to repeal the requirement that bank executive officers and stockholders who own more than a ten percent controlling interest report to the bank's board of directors those loans made to them by a bank maintaining a correspondent account. (Sec. 226) Amends the FDIA to: (1) expand from 18 to 24 months the discretionary timeframe for mandatory on-site examinations of certain small-sized depository institutions; and (2) allow the appropriate Federal banking agency to increase from $175 million to $250 million the asset-size ceiling on such small institutions. (Sec. 227) Amends the Right to Financial Privacy Act to require a Government authority to reimburse a financial institution for assembling or providing the financial records of corporate customers. (Sec. 228) Amends specified Federal monetary law to repeal the Secretary of the Treasury's authority to require financial institutions to identify nonbank financial institution customers. (Sec. 229) Requires each appropriate Federal banking agency to conduct a paperwork reduction review, and eliminate any requirements for unnecessary internal written policies. (Sec. 230) Amends the Federal Deposit Insurance Corporation Improvement Act of 1991 to repeal the mandate that: (1) insured depository institutions annually include information on small businesses and small farm lending in their reports of condition; and (2) the Board publish annually information on credit availability to small businesses. (Sec. 231) Instructs the Secretary of the Treasury to revise the daily confirmation requirement under the Securities Exchange Act of 1934 concerning hold-in custody repurchase agreements to permit the counterparty to the agreement to waive such confirmation upon receipt of certain disclosures. (Sec. 232) Requires the Financial Institutions Examination Council to review regulations within every ten-year period and report thereon to the Congress. (Sec. 233) Amends the International Lending Supervision Act to change from mandatory to discretionary the duty of each appropriate Federal banking agency to: (1) require a banking institution to maintain a special reserve whenever the quality of its assets has been impaired by protracted inability of debtors in a foreign country to make payments; (2) analyze the results of foreign loan rescheduling negotiations and attendant loan risks; and (3) ensure that bank capital and reserve positions are adequate to accommodate potential losses on foreign loans. Repeals the mandate for Federal banking regulatory agencies to: (1) review foreign country loan risks incurred by domestic banks; and (2) provide direction to such institutions regarding additions to bank-maintained general reserves for potential loan losses arising from such risks. (Sec. 234) Amends FDIA financial management accountability guidelines to: (1) repeal certain internal control evaluation and reporting attestation requirements for independent public accountants; (2) eliminate the use of independent public accountants to detect and report violations of law by an insured depository institution or depository institution holding company; (3) alter the makeup of independent audit committees from being composed entirely of outside directors independent of institution management, to being composed of a majority of independent directors; and (4) require each appropriate Federal banking agency to exempt from independent audit committee requirements any insured depository institution that has encountered hardships in retaining competent directors on such committee. (Sec. 235) Amends the FDIA and the Federal Credit Union Act to: (1) reinstate a showing of irreparable and immediate harm as a prerequisite to attachment of assets by the Federal Deposit Insurance Corporation (FDIC) and other injunctive relief; and (2) confer oversight authority on the FDIC to prohibit removal of assets in cease and desist proceedings if it results in immediate and irreparable harm. (Sec. 236) Amends the FDIA to: (1) exclude outside directors from the primary definition of an "institution-affiliated party" but include them in such definition as independent contractors if they have knowingly or recklessly participated in certain prohibited activities; and (2) revise the definition of "deposit broker" to specify any institution that is undercapitalized (currently any institution that is not well capitalized). (Sec. 238) Amends the Riegle Community Development and Regulatory Improvement Act of 1994 to extend the transition period for new regulations. (Sec. 239) Amends the International Banking Act of 1978 to: (1) change from required to discretionary current criteria governing Board approval of foreign bank applications to establish a U.S. presence; and (2) make the purpose of the Board's review a determination whether application approval would place at risk the safe and sound operation of the domestic banking system. (Sec. 240) Replaces the current requirement that the Board coordinate foreign bank examinations with the Comptroller of the Currency, the FDIC, and the appropriate State bank supervisor with a requirement merely to rely upon their examination reports. Subjects foreign banks to the same on-site examination schedule and examination fee collections as apply to domestic banks. (Sec. 241) Amends TILA to redefine "mortgage" as a consumer credit transaction secured by a subordinate mortgage on the consumer's principal dwelling. Repeals the exclusion of a residential mortgage transaction from such definition (thus permitting its inclusion). (Sec. 242) Prohibits: (1) the Comptroller of the Currency from taking any action (or inaction) which would have the effect of permitting a national bank to provide insurance as principal, agent or broker; and (2) a national bank from engaging in any such activity (except to the extent that it was authorized for national banks as of June 12, 1995). Title III: Lender Liability - Amends the FDIA to prescribe guidelines for lender, fiduciary, and Federal banking and lending agency environmental liabilities.

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6 official files

• Reported in House (text)

  Reported in House · EN · 18 July 1995

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• Reported in House (PDF)

  Reported in House · EN · 18 July 1995

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• Reported to House with amendment(s)

  summary · EN · 18 July 1995

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• Introduced in House (text)

  Introduced in House · EN · 15 June 1995

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• Introduced in House (PDF)

  Introduced in House · EN · 15 June 1995

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• Introduced in House

  summary · EN · 15 June 1995

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