Banking Reform and Community Benefits Act of 1988

Banking Reform and Community Benefits Act of 1988 - Title I: Certain Securities Activities Allowed for Bank Holding Companies and Bank Service Corporations - Financial Services Competitive Enhancement Act - Amends the Bank Holding Company Act of 1956 to allow bank holding companies to own shares of certain qualified securities affiliates. Defines a "qualified securities affiliate" to mean any company which: (1) is a broker or dealer under the Securities Exchange Act of 1934; and (2) does not underwrite or deal in securities except to the extent authorized by this Act.

Allows any qualified securities affiliate to: (1) buy, sell, or underwrite asset-backed securities, municipal securities, and securities in which a national bank may deal or underwrite; (2) buy, sell, and underwrite commercial paper and long-term corporate debt; and (3) buy, sell, and underwrite shares issued by any investment company.

Directs the Board of Governors of the Federal Reserve System (Federal Reserve Board) to disapprove the acquisition of a qualified securities affiliate by a bank holding company if the acquisition would result in the affiliation of a large bank or bank holding company (one having assets of more than $30,000,000,000) with a large investment banking organization (one having assets of more than $15,000,000,000).

Establishes criteria for bank holding company funding of qualified securities affiliates. Establishes capital adequacy criteria to be used by the Board in determining whether a bank holding company meets acquisition guidelines.

Establishes restrictions on inter-affiliate transactions, including prohibiting a bank or insured institution from: (1) extending credit to a securities affiliate; and (2) purchasing the assets of a securities affiliate.

Amends the Bank Service Corporation Act to allow bank service corporations to engage in any securities activity in which a qualified securities affiliate may engage.

Amends the Banking Act of 1933 to allow member banks (banks which are members of a Federal Reserve bank) to become affiliates of: (1) a qualified securities affiliate; or (2) a bank service corporation. Permits national banks having assets of less than $500,000,000 to engage in certain securities activities including buying, selling, and underwriting municipal securities and buying and selling securities issued by investment companies.

Amends the Bank Holding Company Act of 1956 and the Bank Service Corporation Act to establish expedited procedures for bank holding companies and bank service corporations seeking approval to engage in nonbanking activities.

Imposes criminal penalties for violations of prohibitions on: (1) interaffiliate transactions; and (2) transactions between bank service corporations and affiliated institutions.

Allows a bank holding company which controls an institution that became a bank as a result of the Competitive Equality Amendments of 1987 to retain control of such institution if the institution does not accept demand deposits or deposits that may be withdrawn by check or make commercial loans, unless such institution has been: (1) authorized to do so by the Federal Reserve Board; or (2) informed that an application for approval to do so is not required.

Title II: Insurance Activities - Insurance Activity Regulation Act of 1988 - Amends the Bank Holding Company Act of 1956 to prohibit a bank holding company from engaging in any insurance activities in the United States, either directly or through any of its bank or nonbank subsidiaries or affiliates, unless such activities qualify under specified exemptions. Accords grandfather rights with respect to specified insurance activities conducted by certain bank holding companies through State banks or subsidiaries.

Amends the National Bank Act to provide that, with specified exceptions, a national bank or subsidiary thereof may engage in only those insurance activities which are limited to assuring the repayment of the outstanding balance due on a specific extension of credit by the national bank in the event of the death, disability, or involuntary unemployment of the debtor. Provides that a national bank located in an area with a population not exceeding 5,000 may engage in other insurance activities only so long as: (1) the insurance activities are confined to such an area; and (2) the insurance is sold only to residents of the State in which the bank is located or to natural persons employed in that State.

Allows certain companies to continue to engage in insurance activities otherwise not permitted under this Act.

Title III: Real Estate Provisions - Imposes an 18-month moratorium on any additional real estate activities by banks and bank holding companies. Prohibits the Federal banking agencies from prescribing any regulation or issuing any order during such moratorium period which would have the effect of increasing the real estate powers of banks and bank holding companies.

Requires the Comptroller General to conduct a study and report to the Congress on the advisability of expanding the authority of insured banks, bank holding companies, and nonbank subsidiaries of bank holding companies to engage in real estate activities.

Title IV: Community Benefits Requirements - Amends the Bank Holding Company Act of 1956 to provide that in addition to the other requirements of this Act, certain community benefit conditions must be met prior to Federal Reserve Board approval of the acquisition of securities affiliates by bank holding companies. Specifies such community benefit conditions as: (1) participation in community development programs; or (2) meeting specified community benefit ratings.

Describes a "community development program" as: (1) a holding company controlling a community development bank or a community development corporation; (2) a bank holding company investing capital in the community development bank or the community development corporation in a total amount of not less than 0.1 percent of capital; and (3) such community development bank or community development corporation providing financial services in such forms as loans for residential mortgages, home improvement, and community development to low- and moderate-income persons, nonprofit organizations and small businesses in low- and moderate-income neighborhoods or equivalent areas.

Provides that a bank holding company shall be considered in compliance with specified community benefit ratings if: (1) the applicable written community benefit evaluation and community benefit rating have been made public by the Federal Reserve Board; and (2) the Board finds that each bank owned by the bank holding company for at least three years has a current community benefit rating no less favorable than "good" (as measured by a five-point performance rating scale ranging from excellent to poor or insubstantial noncompliance) and the bank holding company has made written commitments to improve the availability of reasonably priced credit and deposit services. Sets forth requirements and procedures for the public disclosure of such evaluations and ratings. Specifies assessment factors to be considered by the Federal Reserve Board in making such evaluations and ratings.

Requires the Federal Reserve Board to disapprove the application of a bank holding company to acquire a securities affiliate if the applicant holding company or any subsidiary has established a pattern of: (1) closing deposit facilities in a manner that excludes low- and moderate-income neighborhoods or equivalent areas; or (2) failing to provide reasonably priced and accessible deposit services to low- and moderate-income persons and such services are not otherwise adequately provided. Allows the Federal Reserve Board to presume that a bank holding company has not established such a pattern if the bank holding company has established a community development bank.

Requires the appropriate Federal banking agencies to establish procedures for conducting periodic reviews of, or requiring periodic reports by, community development corporations to ensure continuing compliance with this Act.