Summary: S.1405 — 105th Congress (1997-1998)All Information (Except Text)

Bill summaries are authored by CRS.

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Reported to Senate with amendment(s) (09/24/1998)


Title I: Improving Monetary Policy and Financial Institution

Management Practices

Title II: Streamlining Activities of Institutions

Title III: Streamlining Agency Actions

Title IV: Miscellaneous

Title V: Technical Corrections

Financial Regulatory Relief and Economic Efficiency Act of 1998 - Title I: Improving Monetary Policy and Financial Institution Management Practices - Amends the Federal Reserve Act (FRA) to permit interest payments on reserves maintained at a Federal reserve bank.

(Sec. 102) Authorizes any depository institution, before January 1, 2001, to permit the owner of any interest- or dividend-bearing deposit or account to make up to 24 transfers per month, for any purpose, to another account of the owner in the same institution.

Repeals the limitation on the authority of a depository institution to permit the owner of any deposit or account to make withdrawals by negotiable or transferable instruments for transfers to third parties. (Currently, the latter authority may be applied only with respect to the accounts of charitable, religious, and other nonprofit organizations, as well as to Federal, State, and local governments.)

Amends the FRA, the Home Owners' Loan Act (HOLA), and the Federal Deposit Insurance Act (FDIA) to repeal the prohibition against interest or dividend payments on demand deposits.

(Sec. 103) Amends HOLA to: (1) repeal savings association liquid asset and dividend notice requirements; (2) repeal certain restrictions on interstate acquisitions that result in the formation of a multiple savings and loan holding company which controls savings and loan associations in more than one State; and (3) permit a savings and loan holding company, with the prior approval by the Director of the Office of Thrift Supervision, to acquire more than five percent of the voting shares of a non-subsidiary savings association or non-subsidiary savings and loan holding company.

(Sec. 108) Amends the FDIA to repeal deposit broker notification and recordkeeping requirements.

(Sec. 109) Amends the FRA to reserve to the Board of Governors of the Federal Reserve System (the Board) (currently, the appropriate Federal banking agency) the authority to promulgate regulations on extensions of credit to executive officers of member banks.

(Sec. 110) Amends the National Bank Consolidation and Merger Act to prescribe expedited procedures permitting a national banking association to: (1) reorganize as either a bank holding company, or as a bank holding company subsidiary; or (2) merge with subsidiaries or nonbank affiliates.

(Sec. 111) Amends Federal banking law to increase from one year to three years the term of the national bank director. Amends the Banking Act of 1933 to authorize the Comptroller of the Currency to exempt a national banking association from the 25-member limit on the number of members of an association's governing body.

(Sec. 113) Amends Federal banking law and the FDIA to: (1) repeal the mandate that the purchase or acquisition by a national banking association or depository institution of its own capital stock to prevent loss upon a previously contracted debt be disposed of within six months from the time of purchase; and (2) provide that if an institution acquires its own stock to prevent loss upon a debt previously contracted for in good faith, such transaction shall not be deemed to be a loan or discount on the security of its own capital stock.

Exempts from the prohibition against depository institution affiliation with a Government-sponsored enterprise any investments in such an enterprise lawfully made before April 11, 1996.

(Sec. 115) Amends the Federal Deposit Improvement Act of 1991 to increase from 90 percent to 100 percent of fair market value the permissible valuation of readily marketable purchased mortgage servicing rights that may be included in calculating an insured depository institution's tangible capital, risk-based capital, or leverage limit, if the Federal regulatory agencies jointly find that such an increase will not adversely affect the deposit insurance funds or the safety and soundness of insured depository institutions.

(Sec. 116) Amends the Bank Holding Company Act of 1956 (BHCA) to: (1) repeal certain cross-marketing restrictions placed upon banks controlled by certain companies that are not treated as bank holding companies; (2) preserve the exemption from bank holding company treatment of certain companies whose limited purpose bank subsidiary may have permitted overdrafts resulting from an inadvertent computer or accounting error beyond the control of both the bank and the affiliate (daylight overdrafts); (3) repeal the prohibition against activities of limited purpose banks in which they were not engaged before March 5, 1987 (but continuing the prohibition against their both accepting demand deposits and engaging in the business of commercial lending); and (4) authorize actions which limited purpose banks may take to avoid divestiture following loss of exemption from treatment as bank holding companies.

Title II: Streamlining Activities of Institutions - Amends the HOLA to permit community development investments for the primary purpose of promoting the public welfare, including housing, services, and jobs for low- and moderate-income communities.

(Sec. 202) Amends the FRA to terminate the power of the Board to set lending limitations upon member banks' extension of loans that are collateralized by stocks and bonds (thus eliminating the Board's duty to prevent undue use of bank loans for the speculative carrying of securities). (Sec. 203) Amends the BHCA to permit certain banks and bank holding companies to extend credit card accounts for business purposes, including the issuance of such accounts to small businesses.

(Sec. 204) Amends the Real Estate Settlement Procedures Act of 1974 to exempt from its prohibition against kickbacks and unearned fees the transfer to an affinity group of any thing of value in connection with its written endorsement to a consumer of the products or services of a settlement service provider (other than as to a federally related mortgage loan), the proceeds of which are used to acquire the property securing the loan, if: (1) the consumer receives a direct financial benefit from such endorsement; and (2) such payment is clearly disclosed to the consumer at the time of the first written communication with the consumer.

(Sec. 205) Amends the Fair Debt Collection Practices Act to permit: (1) debt collection in connection with certain bad-check penalties not exceeding $25; (2) continuation of collection activities and legal proceedings during the thirty-day initial notice period in which the debtor may dispute a debt and ask for its verification; and (3) a debt collector to engage in third-party communications without the consumer's consent if a prejudgment administrative wage garnishment has been obtained pursuant to the Higher Education Act of 1965.

(Sec. 206) Amends BHCA to exempt from treatment as a bank holding company any company that acquires control from the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, or the Director of the Office of Thrift Supervision of more than five percent of the shares of an undercapitalized bank, savings association, or other insured institution.

(Sec. 207) Revises HOLA guidelines governing reorganization by a mutual savings association into a holding company.

(Sec. 208) Mandates that the Federal banking agencies work jointly to develop: (1) electronic filing and public dissemination of depository institution status reports (call reports); and (2) uniform formats and simplified filing instructions for such reports.

Title III: Streamlining Agency Actions - Amends the FDIA to: (1) repeal the mandate that Federal banking agencies develop jointly a method for supplemental disclosures in required Federal filings of the estimated fair market value of depository institution assets and liabilities; (2) authorize the Federal Deposit Insurance Corporation (FDIC) to establish the interest rate for or make postinsolvency interest payments to creditors' claims against the receivership estates of insured Federal or State depository institutions following satisfaction by the receiver of the principal amount of all creditor claims; and (3) mandate that Federal banking agencies jointly submit an annual report to certain congressional banking committees regarding differences in accounting and capital standards used by such agencies (currently such reports must be filed by the agencies individually).

(Sec. 304) Requires the agency responsible for review of the competitive factors in bank merger filings, to request a report solely from the Attorney General (currently, from the Attorney General and the other Federal banking agencies).

Amends the BHCA and the FDIA to require the Board and the responsible agency, respectively, to consider specified criteria concerning competitive effects before disapproving a bank merger transaction on the grounds of disproportionate anticompetitive effects.

(Sec. 305) Amends the FDIA and the Deposit Insurance Funds Act of 1996 to eliminate the Special Reserve of the Savings Association Insurance Fund (SAIF), and the Deposit Insurance Fund (DIF), respectively (established to provide emergency funds if the reserve ratio of either fund remains below 50 percent of its designated ratio for one year).

Title IV: Miscellaneous - Amends the Truth in Lending Act to set forth requirements for alternative compliance methods for advertising credit terms.

(Sec. 402) Revises the positions of Board members on the Executive Schedule (increasing their salary levels).

(Sec. 403) Prescribes enrollment guidelines for certain enrollees in health plans administered by the Federal banking agencies.

(Sec. 404) Amends the Federal Home Loan Bank Act (FHLBA) to eliminate the position of consumer representative from mandatory membership on the board of directors of the Federal Housing Finance Board.

(Sec. 405) Amends the Trust Indenture Act of 1939 to require an indenture trustee to forward annually to each indenture security holder a form requesting change of address information.

Title V: Technical Corrections - Makes technical corrections to related Acts.

(Sec. 503) Amends Federal banking law to: (1) authorize the Comptroller of the Currency to waive the citizenship requirement for a minority of the total number of directors sitting on the board of a national bank; (2) declare it is unlawful for the Comptroller to hold an interest in any national bank; and (3) repeal specified capital and surplus requirements for national banking associations.

(Sec. 504) Amends the International Bank Act of 1978 to modify examination requirements pertaining to establishment and operation by a foreign bank of Federal branches and agencies.