Financial Services Competitive Enhancement Act

Summary

Financial Services Competitive Enhancement Act - Amends the Banking Act of 1933 (Glass-Steagall Act) to repeal its prohibition against: (1) bank affiliation with any entity principally engaged in securities transactions; and (2) securities transaction personnel serving simultaneously as national bank personnel. (Sec. 102) Amends the Bank Holding Company Act of 1956 (BHCA) to permit a bank holding company (BHC) to acquire shares in nonbanking organizations if such shares have been determined by the Board of Governors of the Federal Reserve System ( Board) to be either financial in nature, or incidental to financial activities. States that after enactment of this Act it shall be financial in nature to provide insurance as principal, agent, or broker in any State. Shields bank holding companies from State restrictions against insurance affiliates of banking companies. (Sec. 103) Cites circumstances permitting a BHC to acquire or control shares, assets, or ownership interests of previously proscribed entities. (Sec. 104) Permits a BHC to engage in any activity which the Board has determined to be either financial in nature, or incidental to financial activities, including: (1) lending; (2) insuring; (3) financial advisory services; (4) securities transactions; and (5) ownership or control of banking interests. (Sec 105) Prohibits the Board from imposing any capital or capital adequacy criteria upon a non-depository institution BHC subsidiary that is in compliance with State or Federal capitalization rules, or is registered under the Investment Advisers Act of 1940. Prohibits the Board, in developing capital adequacy requirements, from taking into consideration any affiliated investment company which is not a BHC nor controlled by one holding 25 percent or more shares of the investment company worth more than $1 million. Authorizes the Board to transfer its BHC oversight authority to the appropriate Federal banking agency if a BHC is not significantly engaged in non-banking activities. Mandates Board deference to the Securities and Exchange Commission and relevant State securities and insurance authorities with respect to interpretations and enforcement of activities (functional regulation) within their respective jurisdictions. (Sec. 106) Revises BHCA divestiture procedures to permit a BHC to elect divestiture of either a nonbanking subsidiary or an insured depository institution. (Sec. 107) Declares ineffective and non-enforceable any Board actions requiring an insurance company BHC or a registered securities broker-dealer BHC to provide assets to a subsidiary insured depository institution if the State insurance authority, or the SEC, determines in writing that such actions would have a material adverse effect on the BHC's financial condition. Permits the Board to order divestiture of the subsidiary in lieu of other action. (Sec. 108) Authorizes the Board to restrict relationships or transactions between a BHC depository institution subsidiary and its affiliates (other than a subsidiary of the institution). (Sec. 109) Grants the SEC exclusive authority to examine and inspect any non-BHC registered investment company. Prohibits a Federal banking agency from inspecting or examining such a non-BHC company. (Sec. 110) Prohibits the Board from taking any action under the BHCA or the Federal Deposit Insurance Act against a BHC-regulated subsidiary unless it is necessary to prevent or redress an unsafe or unsound practice or breach of fiduciary duty by the subsidiary that poses a material risk to the financial safety, soundness, or stability of an affiliated depository institution or to the domestic or international payment systems.

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3 official files

• Introduced in House (text)

  Introduced in House · EN · 24 February 1999

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• Introduced in House (PDF)

  Introduced in House · EN · 24 February 1999

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• Introduced in House

  summary · EN · 24 February 1999

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