Summary: S.650 — 104th Congress (1995-1996)All Information (Except Text)

Bill summaries are authored by CRS.

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Reported to Senate with amendment(s) (12/14/1995)


Title I: Streamlining the Home Mortgage Lending Process

Title II: Streamlining Government Regulation

Subtitle A: Eliminating Unnecessary Regulatory

Requirements and Procedures

Subtitle B: Eliminating Unnecessary Regulatory Burdens

Subtitle C: Regulatory Micromanagement

Title III: Regulatory Impact on Cost of Credit and Credit


Title IV: Fair Credit Reporting

Title V: Asset Conservation, Lender Liability, and Deposit

Insurance Protection

Title VI: Studies and Reports; Miscellaneous

Economic Growth and Regulatory Paperwork Reduction Act of 1995 - Title I: Streamlining the Home Mortgage Lending Process - Amends the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) to require the Board of Governors of the Federal Reserve System (the Federal Reserve Board) to: (1) eliminate, modify, or simplify disclosure requirements if such action would result in uniformity with other statutory disclosure requirements relating to credit transactions; and (2) proscribe imposition of any disclosure requirement unless its effect is to eliminate, modify, or simplify any disclosure required under this Act.

(Sec. 102) Amends RESPA to transfer from the Secretary of Housing and Urban Development (HUD) to the Federal Reserve Board all rulemaking authority under such Act except with respect to the prohibitions against referrals, kickbacks, and unearned fees, and against direct purchases of title insurance.

(Sec. 103) Amends TILA to authorize the Federal Reserve Board to exempt those transactions from TILA disclosure requirements which the Board determines: (1) are not necessary to effectuate its purposes; or (2) do not provide a measurable benefit in the form of useful information or consumer protection. Includes among factors for Board consideration: (1) whether the loan in question is secured by the consumer's principal residence; and (2) whether the goal of consumer protection would be undermined by such an exemption.

(Sec. 104) Amends RESPA to repeal requirements that: (1) a federally related mortgage lender disclose to a mortgage loan applicant the servicing of any such mortgages the lender has assigned, sold, or transferred during the most recent three calendar years; and (2) a lender that does not service federally related loans similarly disclose any intention to assign, sell, or transfer such servicing. Repeals the mandate for model disclosure statements.

Exempts subordinate mortgage liens from the proscription against kickbacks and unearned fees for business referrals involving federally related mortgages.

Requires the Federal Reserve Board to ensure that the exemption from RESPA regulations for credit transactions for primarily business, commercial, or agricultural purposes shall be the same as the exemption for such transactions under TILA.

(Sec. 105) Declares that the proscription against kickbacks and unearned fees shall not be construed as prohibiting a payment made to a person or affinity group relating to an endorsement of the products or services of a settlement service provider if the endorser is not itself providing settlement services in connection with the real estate settlement involving the person to whom the endorsement was addressed.

(Sec. 106) Amends TILA to exempt from its disclosure requirements any credit transactions involving consumers with an annual earned income of more than $200,000 or having net assets in excess of $1 million at the time of the transaction, upon submission of a handwritten waiver, signed and dated by such consumer.

(Sec. 107) Grants creditors the option to set forth alternative disclosures regarding conditions which could trigger increases or decreases in payment and interest rates for variable interest rate residential mortgage transactions.

Title II: Streamlining Government Regulation - Subtitle A: Eliminating Unnecessary Regulatory Requirements and Procedures - Amends the Federal Deposit Insurance Act (FDIA) to set forth 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. 202) Permits an insured depository institution to participate in optional conversion transactions between members of the Bank Insurance Fund and the Savings Association Insurance Fund without prior approval of the responsible agency (but still requires approval). Eliminates the requirement for approval of such a merger under the Oakar Amendment as well as the Bank Merger Act.

(Sec. 203) 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.

Amends the Bank Holding Company Act of 1956 to direct the Federal Reserve Board to solicit the views of the Director of the Office of Thrift Supervision with respect to its examination and enforcement role over bank holding companies.

(Sec. 204) Amends the Revised Statutes to repeal the requirement that the aggregate minimum capital of a national banking association and all its branches be no less than the aggregate minimum capital that would be required if each branch were a separately chartered national bank.

(Sec. 205) Amends the Revised Statutes and FDIA to exclude from the definition of "branch" an automated teller machine or remote service unit (thus exempting those entities from the approval requirements and geographic restrictions of such Acts).

(Sec. 206) Amends the Federal Reserve Act (FRA) to permit well- capitalized and well-managed banks to invest amounts equal to 150 percent (currently, only 100 percent) of capital and surplus in bank premises without prior approval.

(Sec. 207) Amends BHCA to repeal the presumption that shares transferred by a bank holding company to a transferee under its control (divestitures) remain under the holding company's control (thus subject to specified approval requirements).

(Sec. 208) States that prior notice and approval is not required (but written notice to the Federal Reserve Board within ten days after commencing such an activity is required) for a proposal by a well- capitalized, well-managed bank holding company to engage in any activity or acquire the shares or assets of any company (other than an insured depository institution) if it meets specified financial and managerial criteria.

(Sec. 209) Amends 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: (1) has been chartered less than two years; or (2) has undergone a change in control within the preceding two years. Retains the prior notice requirement for troubled insured depository institutions or depository institution holding companies only if the agency determines that prior notice is appropriate. Extends from 30 days up to 90 days the period during which, following notice, the agency may disapprove board of directors or senior executive officer appointments by such institutions or companies.

(Sec. 210) Amends the Depository Institutions Management Interlocks Act to revise the prohibition on dual service of management officials to raise the asset-size thresholds of the depository institutions or depository holding companies to which the prohibition applies. Authorizes Federal banking regulatory agencies to adjust such thresholds for inflation.

Repeals the 20-year exemption from the dual service prohibition for certain grandfathered directors and management officials (thus permitting them to continue their dual service permanently).

Repeals the requirement that each appropriate Federal depository institutions regulatory agency: (1) review according to prescribed criteria the petition of a management official to serve in more than one position (interlocking directorate); and (2) determine whether continuation of such dual service produces an anti-competitive effect.

Authorizes the appropriate regulatory agencies to prescribe rules and regulations permitting dual service by a management official that would otherwise be prohibited if such service would not result in a monopoly or substantial lessening of competition.

Repeals the criteria governing regulatory approval of management interlocks.

(Sec. 211) Amends FRA to exempt from its proscription against preferential terms in credit extensions to executive officers, directors, or principal shareholders (insider lending) any credit extension: (1) made pursuant to a benefit or compensation program widely available to employees of the member bank; and (2) that does not give preference to any officer, director, or principal shareholder of the member bank, or to any related interest of such person, over other employees of the member bank.

Authorizes the Federal Reserve Board to waive the proscription against such preferential terms for certain executive officers and directors of a subsidiary that controls the member bank if the subsidiary's assets do not exceed ten percent of the consolidated assets of a company that controls the member bank and such subsidiary (and is not controlled by any other company).

(Sec. 212) Amends the Federal Financial Institutions Examination Council Act of 1978 to abolish the Appraisal Subcommittee.

Amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to transfer the functions of the Appraisal Subcommittee to the Federal Financial Institutions Examination Council. Directs the Council to study and report to the Congress on the continuing need for Federal oversight of appraisal functions pursuant to such Act.

(Sec. 213) Amends the FDIA to exempt from branch closure notice requirements automated teller machines and relocated or consolidated bank branches, if: (1) the relocation or consolidation occurs within the same neighborhood and does not substantially affect the nature of the business or customers served; or (2) a branch is closed in connection with emergency acquisitions or any Federal Deposit Insurance Corporation (FDIC) assistance.

(Sec. 214) Amends the International Banking Act of 1978 to direct the Federal Reserve Board to avoid unnecessary duplication of foreign bank examinations.

Provides that: (1) each Federal and State branch or agency of a foreign bank shall be subject to on-site examination by the appropriate regulator as frequently as would its U.S. counterpart (instead of annually, as at present); and (2) the cost of such examination shall be assessed against its owner to the same extent that fees are collected by the Federal Reserve Board for examination of any State member bank.

Authorizes the Board to approve an application by a foreign bank even if the authorities in the home country have not yet established a comprehensive regulation on a consolidated basis, as long as they are actively working to establish one.

Instructs the Board to consider, when acting on a foreign bank application, whether the foreign bank has adopted and implemented procedures to combat money laundering.

Directs the Board to take final action on any application within 180 days after its receipt.

Authorizes the Board to terminate a foreign bank office in the United States if it finds that the authorities in the home country are not making demonstrable progress in establishing arrangements for comprehensive consolidated supervision.

(Sec. 215) Amends the BHCA to authorize the Board to approve extensions beyond the current five-year deadline for a bank holding company to dispose of foreclosed assets, under certain conditions, up to an aggregate of five more years.

Subtitle B: Eliminating Unnecessary Regulatory Burdens - Amends FDIA to increase from $175 million to $250 million the asset-size ceiling on the meaning of "small depository institution" which Federal banking agencies may in their discretion determine for examination on an 18-month cycle.

(Sec. 222) Directs the Federal Financial Institutions Examinations Council, and each Federal banking agency represented on it, to review and report to the Congress on Federal banking regulations at least every ten years to identify unnecessary regulatory requirements imposed upon insured depository institutions. Requires the Council or the pertinent banking agency to eliminate unnecessary regulations to the extent appropriate.

(Sec. 223) Amends Federal monetary law to repeal the authority of the Secretary of the Treasury to require each insured depository institution to identify certain non-bank financial institution customers.

(Sec. 224) Amends the Federal Deposit Insurance Corporation Improvement Act of 1991 to repeal the mandate that insured depository institutions include information on small businesses and small farm lending in their annual reports of condition.

(Sec. 225) Amends the Home Mortgage Disclosure Act of 1975 to increase from $10 million to $50 million the maximum asset-size of institutions exempt from its requirements.

Declares that a depository institution shall be deemed to have satisfied the public availability requirements for its mortgage loan transactions if its branch offices provide notice of the availability of such information from the home office upon request.

(Sec. 226) Amends FDIA guidelines governing a change in control of insured depository institutions to repeal mandatory reporting by financial institutions (or affiliates) of any loans secured by 25 percent or more of any class of shares of an insured depository institution (stock loans). Retains such mandatory reporting for foreign banks and their affiliates.

(Sec. 227) Requires the Federal Reserve Board to study and report to the Congress on the extent of small business lending by all creditors. Delineates study contents.

Subtitle C: Regulatory Micromanagement - Amends the Revised Statutes to allow the Comptroller of the Currency to waive the residency requirement on national banking association directors. Repeals the Comptroller's authority to waive citizenship requirements for a minority of the directors of a foreign bank subsidiary or affiliate.

(Sec. 242) Amends the Riegle Community Development and Regulatory Improvement Act of 1994 to require each Federal banking agency to review and eliminate regulations which require insured depository institutions and credit unions to produce unnecessary internal written policies.

(Sec. 243) Amends FDIA to mandate: (1) that one of the presidentially appointed directors serving on the FDIC Board have State bank supervisory experience; (2) that each appropriate Federal banking agency take action necessary to ensure that depository institution examiners consult and reach agreement on examination activities and resultant recommendations; and (3) consider appointing an examiner-in-charge to ensure such consultation.

Title III: Regulatory Impact on Cost of Credit and Credit Availability - Amends FDIA guidelines for improved accountability in financial management to: (1) eliminate the use of an independent public accountant to detect and report violations of law by an insured depository institution or depository institution holding company; and (2) authorize a Federal banking agency to permit an independent audit committee to be composed of a majority of outside directors independent of institution management (currently the entire committee must be composed of such outside directors) if it determines that an insured depository institution has encountered hardships in retaining competent directors on such committee.

(Sec. 302) Amends the Equal Credit Opportunity Act and the Fair Housing Act to set forth incentives for self-testing and self- correcting by lenders subject to such Acts. Prescribes conditions under which: (1) an enforcing agency is prohibited from acquiring or using reports generated by any creditor-conducted review of lending operations to determine compliance with such Acts; and (2) such self- test results may be used by an adversary party.

(Sec. 303) Amends the Home Owners' Loan Act, with respect to savings and loan holding companies, to revise the exemption from the Qualified Thrift Lender test of a savings association subsidiary of a savings and loan holding company at least 90 percent of whose customers are active or retired military personnel or dependents. Repeals the current date restriction on when the holding company must have acquired control of the savings association.

(Sec. 304) Permits a Federal savings association to make credit card loans or education loans without being subject to a percentage-of-assets limitation.

Raises from ten percent to 20 percent the percentage-of-assets limitations ceiling placed upon commercial and agricultural loans offered by an association. Restricts loan amounts exceeding ten percent of an association's total assets to loans made to small businesses.

Repeals the five-percent-of-assets loan restriction placed upon education loans offered by an association.

Expands the scope of "qualified thrift lender" to include a domestic building and loan association.

Redefines "qualified thrift investment" to cover, as assets includible without limit, educational loans, small business loans, and loans made through credit cards or credit card accounts.

Removes the ten-percent-of-assets loan restriction placed upon certain personal, family, household or education loans.

(Sec. 305) Amends FRA, with respect to regulations governing payment system risk or intraday credit, to: (1) require them to include net debit caps appropriate to the credit quality of each Federal Home Loan Bank (FHLB) (together with normal fees for daylight overdrafts); or (2) exempt FHLB's from such regulations.

(Sec. 306) Amends the Federal Home Loan Bank Act (FHLBA) to: (1) grant FHLB's authority to approve all applications for membership; (2) mandate that the FHLB's contract annually for an annual audit with a single auditor; and (3) preclude the Federal Housing Finance Board from participation in any audit or audit contracting process (other than to establish independent audit contract and reporting consistency).

(Sec. 308) Amends BHCA to repeal the seven percent growth cap restrictions placed upon banks controlled by certain bank holding companies not statutorily treated as bank holding companies.

Excludes from BHCA jurisdiction any limited purpose institution that accepts collateral for extensions of credit by holding deposits under $100,000.

(Sec. 309) Amends FHLBA to: (1) permit a Federal Home Loan Bank to accept federally insured or guaranteed mortgages on improved residential property as collateral for a secured advance (second mortgages); and (2) increase from 30 percent to 40 percent the limit on total advances to non-qualified thrift lender institutions.

(Sec. 311) Amends the Fair Debt Collection Practices Act to: (1) identify as a false or misleading representation failure to disclose clearly in the initial written communication with the consumer concerning a debt collection (instead of in all such communications, as at present) that the debt collector is attempting to collect a debt and that any information will be used for that purpose; and (2) include a statement within the requisite debt validation notice that the debt collector may demand and collect repayment during the 30-day period in which the consumer may request a verification of debt.

Title IV: Fair Credit Reporting - Consumer Reporting Reform Act of 1995 - Amends the Fair Credit Reporting Act (FCRA) to cite additional permissible purposes for which a consumer reporting agency may furnish a consumer report, including: (1) for employment purposes; (2) for credit or insurance transactions that are not initiated by the consumer; and (3) for direct marketing transactions that are not initiated by the consumer. Mandates consumer consent as a prerequisite to furnishing medical information contained in a consumer report.

(Sec. 406) Repeals specified exceptions which permit the reporting of obsolete information in a consumer credit report. Provides that the seven-year reporting period applicable to accounts placed for collection begins no later than 180 days after the beginning of the delinquency immediately preceding the collection activity.

Mandates disclosure in a consumer report of: (1) the particular chapter under which a bankruptcy case arises; (2) withdrawal of a bankruptcy case prior to final judgment; (3) voluntary closure by a consumer of a credit account; (4) information disputed by the consumer.

(Sec. 407) Prohibits a consumer reporting agency from prohibiting disclosure by a user to the consumer of report contents if the user has taken adverse action against the consumer based on such report.

Prescribes guidelines for procurement of a consumer report for resale.

(Sec. 408) States that nothing requires a consumer reporting agency to disclose to a consumer any credit scores, risk scores, and other predictors relating to him or her. Provides for mandatory disclosure to a consumer of additional kinds of information, including a summary of consumer rights.

Requires the Federal Trade Commission to take action to assure that consumer standardization and comprehensibility are achieved.

(Sec. 409) Revises procedural and disclosure guidelines governing: (1) disputed information in a consumer's file, including free mandatory reinvestigation by the reporting agency; and (2) users of information in a consumer report taking adverse actions, or making written credit or insurance solicitations based upon such report (including any direct marketing transaction that is not initiated by the consumer).

(Sec. 412) Revises civil liability guidelines to set forth liquidated damages for willful and negligent noncompliance, and to award attorney's fees to the prevailing party for pleadings filed in bad faith.

(Sec. 413) Specifies the responsibilities of persons who furnish information to a consumer reporting agency, including the obligation to provide accurate, updated information and notices of information disputed by consumers.

(Sec. 414) Revises disclosure guidelines governing investigative consumer reports to require: (1) certification that the consumer has been notified; and (2) confirmation of any adverse information obtained from personal sources.

(Sec. 415) Increases criminal penalties for obtaining information under false pretenses, and for unauthorized disclosures.

(Sec. 416) Revises administrative enforcement guidelines to empower the Federal Trade Commission (FTC) to enforce: (1) FCRA compliance by any person that is subject to FTC jurisdiction and is not subject to enforcement under FDIA; and (2) FCRA in the same manner as if a violation had been a violation of any FTC regulation rule.

(Sec. 417) Authorizes the States to bring a court action for FCRA violations.

(Sec. 418) Authorizes the Federal Reserve Board to issue interpretations of the FCRA with respect to certain financial institutions and holding companies.

(Sec. 419) Identifies specified FCRA provisions that preempt State law.

(Sec. 420) Authorizes the FTC and the Federal Reserve Board to promulgate requirements more stringent than certain FCRA requirements concerning consumer reporting agencies and certain persons under FCRA jurisdiction.

(Sec. 421) Amends the Fair Debt Collection Practices Act to exempt specified communications from its proscription against false or misleading representations.

(Sec. 422) Amends FCRA to identify circumstances under which a consumer reporting agency may furnish a consumer report for certain purposes relating to: (1) State enforcement of child support orders; and (2) FBI counterintelligence purposes.

Title V: Asset Conservation, Lender Liability, and Deposit Insurance Protection - Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1995 - Amends the Federal Deposit Insurance Act to preclude Federal banking or lending agency liability under any law imposing strict liability for the release (actual or threatened) of hazardous substances (including petroleum) from property acquired in connection with: (1) receivership or conservatorship authority or the liquidation of an insured depository institution; (2) the provision of loans or other financial assistance; or (3) property received in a civil or criminal proceeding or administrative enforcement action.

Extends such immunity to the first subsequent purchaser of property acquired from such an agency, except under certain conditions.

Provides that such an agency that causes or contributes to a release may be liable for response actions under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Superfund) or under Subtitle I of the Solid Waste Disposal Act (provisions pertaining to underground storage tanks).

Exempts such agencies from any law requiring them to grant covenants warranting that a response action has been, or will be, taken with respect to such acquired property.

(Sec. 503) Amends CERCLA to limit liability under such Act and Subtitle I of the Solid Waste Disposal Act of insured depository institutions or other lenders in connection with property acquired through foreclosure, subject to a security interest, held by a lessor pursuant to an extension of credit, or subject to financial control pursuant to an extension of credit. Limits such liability to the actual benefit conferred on the institution or lender by a removal, remedial, corrective, or other response action undertaken by another party.

Defines the "actual benefit" as the net gain realized by the institution or lender due to such action. Provides that institutions or lenders that caused or contributed to hazardous substance releases may be liable for response actions.

Directs the Administrator to issue guidelines for such institutions and lenders to develop procedures to evaluate environmental risks that may arise from or at property prior to making an extension of credit secured by such property.

Provides that the liability of a fiduciary that is liable under other CERCLA provisions or Subtitle I of the Solid Waste Disposal Act for releases in connection with property held in a fiduciary capacity may not exceed the assets held in such capacity that are available to indemnify the fiduciary.

Makes fiduciaries potentially liable for response or corrective actions if their failure to exercise due care caused or contributed to a hazardous substance release.

Lists additional conditions under which fiduciaries are exempted from liability.

Makes liability provisions regarding fiduciaries inapplicable to Federal banking or lending agencies.

Excludes from the definition of "owner or operator," for purposes of limiting liability under CERCLA, the United States, a Federal agency, or a conservator or receiver appointed by a Federal agency which acquired ownership of a facility or vessel in connection with the exercise of receivership or conservatorship, forfeiture or seizure authority, or pursuant to a law specifying the property to be acquired, provided such entity does not participate in operations that result in a release. Excludes persons who did not participate in management of a vessel or facility prior to foreclosure (even if they engage in specified foreclosure, business, or response activities) from such definition as well. Includes underground storage tanks in the definition of "facility or vessel."

Makes conforming amendments to the Solid Waste Disposal Act with respect to limitations on liability established by this Act. Title VI: Studies and Reports; Miscellaneous - Amends the Electronic Fund Transfer Act to redefine "accepted card" and "account" to exclude stored value cards or value stored on such cards to the extent that such devices are used as a cash equivalent, except for a transaction in which such a card or device is actually used to access an account to effect such transaction.

(Sec. 602) Amends FDIA to treat any final judgment for monetary damages, in an action against a Federal banking agency for breach of post-appointment agreements, as administrative expenses of the conservator or receiver.

(Sec. 603) Amends the Federal criminal code to: (1) increase the penalty for certain counterfeiting violations; and (2) establish criminal penalties for the production, sale, transportation, or possession of fictitious financial instruments purporting to be those of the States, political subdivisions, and of private organizations.

(Sec. 604) Amends the Truth in Savings Act to repeal: (1) the mandate for conspicuous disclosures in periodic statements of earned interest, fees, and the number of days in the reporting period; (2) civil liability for violations of such Act; and (3) the definition of an on-premises display in a depository institution.

Redefines "depository institution" to exclude certain nonautomated credit unions (thus exempting them from such Act).

(Sec. 605) Amends TILA to direct the Federal Reserve Board to: (1) promulgate regulations to update and clarify requirements and definitions applicable to lease disclosures and contracts; (2) publish model disclosure forms to facilitate compliance with disclosure requirements; and (3) consider, when establishing such model forms, the use of automated equipment by lessors.

Amends the guidelines governing requisite disclosures in consumer lease advertisements. Shields the owner or employee of an advertising medium from liability relating to such disclosures.

(Sec. 606) Directs the Secretary of the Treasury to study and report to the Congress on: (1) the regulatory practices of the National Credit Union Administration Board with respect to the National Credit Union Share Insurance Fund; (2) the potential effects of the administration of that Fund by an entity other than the National Credit Union Administration; and (3) the investment practices and financial status of the ten largest corporate credit unions.

(Sec. 607) Directs each Federal banking agency to report to the Congress on its actions regarding inconsistent or duplicative accounting and reporting requirements (differences between regulatory accounting principles and generally accepted accounting principles) affecting certain reports filed by insured depository institutions.

(Sec. 608) Amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to instruct the Federal Reserve Board to include in its annual report to the Congress a description of any discernible trend in the cost and availability of certain retail banking services in the nation as a whole, in each of the 50 States and in each consolidated metropolitan statistical area or primary metropolitan statistical area.

(Sec. 609) Amends the Federal monetary code to continue the ban on gold clauses in contracts prior to 1977 unless all parties to a pre- 1977 contract specifically agree to include such clause in the new agreement.