Financial Institutions Safety and Consumer Choice Act of 1991

Financial Institutions Safety and Consumer Choice Act of 1991 - Title I: Federal Deposit Insurance Reform - Subtitle A: Federal Deposit Insurance Reform - Amends the Federal Deposit Insurance Act to exclude from the meaning of "insured deposit": (1) any deposits obtained from a deposit broker, with certain exceptions; and (2) any depository institution investment contracts (BICs) with an employee benefit plan. Limits the amount of an insured deposit for any deposit to $100,000 per insured depository institution. Prohibits the Federal Deposit Insurance Corporation (FDIC) from providing insurance coverage on a pro-rata or pass-through basis to an employee benefit plan participant or beneficiary, with specified exceptions. States that certain retirement accounts under which participants and beneficiaries have the right to direct the investment assets held on their behalf by the plan will be insured in an aggregate amount up to $100,000 per participant per insured depository institution. (Terminates separate insurance for each account.) Limits the insurance coverage of trust funds to $100,000 per trust estate held on deposit by a trustee institution under an irrevocable trust.

Requires the FDIC to study and report to the Congress on the feasibility of implementing a deposit insurance system based upon systemwide coverage limitations for each depositor. Directs the Board of Governors of the Federal Reserve System (the Board), as part of such feasibility study, to provide the FDIC with the results of a survey of the ownership of deposits held by individuals, including the dollar amount and type of deposit accounts held, and the type of financial institution in which they are held.

Prohibits an insured depository institution which does not meet applicable minimum capital requirements, as well as its employees, from soliciting deposits by offering interest rates significantly higher than the prevailing rates offered by other insured depository institutions in such institution's normal market areas.

Directs the FDIC to only provide assistance to any insured depository institution in such amounts as are necessary to satisfy its obligations to the institution's insured depositors at the least cost to the affected deposit insurance fund. Directs the FDIC to provide assistance to satisfy, in whole or in part, the institution's liability to its uninsured depositors if that would constitute the least-cost method of resolving the depository institution. States that upon a joint determination by the Board and the Secretary of the Treasury (the Secretary) that the FDIC cannot resolve an insured depository institution without causing a severe adverse impact upon the financial system, they shall direct the FDIC to provide assistance to satisfy such institution's liability to its depositors (or take whatever action is necessary to lessen the risk posed by such institution).

Requires the FDIC Board of Directors to establish a risk-based assessment system for insured depository institutions based upon categories of risk.

Prohibits an insured State bank from engaging as principal in any activity not permissible for a national bank unless: (1) the FDIC has determined that the activity poses no significant risk to the affected deposit insurance fund; and (2) the State bank is in compliance with federally prescribed capital standards. Prohibits equity investments by State banks which are impermissible for national banks (except for the equity interests in a subsidiary of which the State bank is a majority owner). Prohibits subsidiaries of insured State banks from engaging as principal in any type of activity that is impermissible for the subsidiary of a national bank unless: (1) the FDIC has determined that such activity poses no significant risk to the affected deposit insurance fund; and (2) the bank is in compliance with the minimum federally prescribed capital standards. Prohibits an insured State bank subsidiary from engaging in securities or insurance underwriting except to the extent such activities are permissible for national banks.

Amends the Federal Reserve Act to authorize the Board to conduct annual on-site examinations of depository institutions under its jurisdiction (including their affiliates).

Mandates that: (1) the appropriate Federal banking agencies and the Securities and Exchange Commission (SEC) jointly develop a supplemental disclosure method by which banks may include in their mandatory financial reports to such agencies the fair market value of assets and liabilities; (2) each insured bank provide to the appropriate Federal banking agency copies of audit reports; and (3) the appropriate Federal banking agencies develop a system to monitor interest rate risk, and adjust risk-based capital standards to reflect interest rate risk.

Amends the Federal Credit Union Act to require as part of a credit union's insurance application that the applicant agree to make initial capitalization payments to the National Credit Union Share Insurance Fund according to prescribed guidelines, in addition to an annual insurance premium.

Subtitle B: Reinsurance Demonstration Project - Directs the FDIC to establish a reinsurance demonstration project to determine the feasibility of developing a private reinsurance system. Establishes the Reinsurance Demonstration Project Committee to analyze, review, and report to the Congress the results of the reinsurance demonstration project.

Title II: Financial Services Modernization - Subtitle A: Financial Services Holding Companies - Amends the Bank Holding Company Act to define financial services holding companies and diversified holding companies.

Amends the Bank Holding Company Act of 1956 to specify additional financial entities prohibited from acquiring control or ownership of certain financial services organizations. Prohibits any insured depository institution (except foreign banks with insured branches in the United States) from becoming a financial services holding company or a diversified holding company.

Sets forth expedited procedures for acquisition of additional banks by zone one financial services holding companies. Sets forth guidelines for acquisitions involving diversified holding companies.

Provides that financial services holding companies (except certain foreign banks) cannot be banks. Modifies the guidelines for ownership interests in nonbanking organizations. Replaces the current "closely related" standard for permissible activities with a "financial nature" standard. Sets forth the permissible parameters for insurance and securities affiliates. Sets a deadline by which a financial services holding company must notify the appropriate Federal banking agency with respect to its ownership or control of the shares of a company engaged in qualified financial activities. Outlines permissible nonbanking activities and acquisitions for zone one financial services holding companies. Sets forth additional capital requirements for a financial services holding company that intends to engage in, or acquire, or retain the shares of a company engaged in a new financial activity. Sets forth certain restrictions on the activities of financial services holding companies.

Prescribes guidelines for acquisition activities by diversified holding companies and their affiliates. Sets forth Federal administrative procedures for financial services holding companies and diversified holding companies (including their subsidiaries and affiliates). Prohibits the States from preventing or impeding certain acquisition or affiliation activities undertaken by: (1) insured depository institutions; (2) diversified holding companies; and (3) financial services holding companies.

Amends the Bank Holding Company Act Amendments of 1970 to prohibit a financial services holding company or a diversified holding company from: (1) engaging in certain tying arrangements; or (2) transacting insider loans.

Amends the Home Owners' Loan Act to exempt from its coverage financial services holding companies and diversified holding companies.

Subtitle B: Financial Activities of National Banks - Amends the Banking Act of 1933 to provide that its limitations and restrictions with respect to certain securities activities conducted by a national bank for its own account shall not apply to the distribution of securities issued by investment companies.

Amends the Banking Act of 1933 to repeal the proscription against: (1) the affiliation of member banks with organizations engaged principally in securities; and (2) member bank personnel serving simultaneously as employees or officers of securities organizations.

Authorizes national banking associations located in certain small-sized population areas to sell insurance to residents of the State in which the association is located.

Amends the Federal Reserve Act to: (1) set forth conditions under which a loan or extension of credit by a member bank shall not be deemed to be made to an affiliate; (2) require prior notification to the appropriate Federal banking agency before a financial services holding company may permit an insured depository institution under its control to engage in a covered transaction which exceeds five percent of its capital stock and surplus; and (3) revise definitions related to affiliates of member banks.

Amends the Federal Deposit Insurance Act to require customer disclosure by an insured depository institution with respect to the non-insured status of its non-banking products.

Subtitle C: Non-Banking Activities of Foreign Banks in the United States - Amends the International Banking Act of 1978 to set forth circumstances under which a foreign bank that maintains a branch or agency in the United States (or owns or controls a commercial lending company organized under State law) shall be subject to the provisions of this Act.

Subtitle D: Amendments to the Securities Acts - Amends the Securities Act of 1933 to: (1) subject to its provisions certain bank-issued securities and certain savings association-issued securities; (2) exempt from its provisions certain bank and savings association instruments functioning as securities in a secured transaction; (3) exempt from its provisions equity securities transactions with respect to bank acquisition by a financial services holding company, or acquisition of a financial services holding company by a diversified holding company.

Amends the Securities Exchange Act of 1934 to: (1) revise definitions relating to bank broker activities and bank dealer activities; (2) prohibit any bank from acting as broker or dealer except in the course of an exclusively intrastate business; and (3) prohibit certain securities transactions, with specified exceptions, taking place on bank premises which are commonly accessible to the general public for deposit-making purposes. Repeals the Federal agency administration provisions with respect to disclosure requirements for securities issued by insured depository institutions.

Amends the Investment Company Act of 1940 to mandate that the custody of investment company assets or unit investment trusts by affiliates of either the registered management company or the registered unit investment trust must be in accordance with Securities and Exchange Commission (SEC) rules prescribed for the protection of investors.

Prohibits a registered investment company from having a majority of its board of directors consisting of personnel of any one bank and its subsidiaries, or any one financial services holding company and its affiliates and subsidiaries.

Grants the SEC additional rulemaking authority regarding bank-affiliated mutual funds.

Prohibits registered investment company securities from being represented as: (1) guaranteed, sponsored, recommended or approved by any Federal agency; (2) insured by the FDIC; or (3) guaranteed or an obligation of any bank or insured institution.

Provides that any person issuing or selling securities of an investment company whose name is similar to that of a bank may be required to disclose prominently that the investment company and its securities are neither FDIC-insured, nor guaranteed by an affiliated bank or insured institution, nor otherwise an obligation of such bank or insured institution. Authorizes the SEC to determine by order that use of a name similar to a bank is deceptive and misleading, and to take action accordingly.

Amends the Investment Advisers Act of 1940 to include within the meaning of "investment adviser" any bank or financial services holding company which acts an investment adviser to a registered investment company (unless it performs such services through a separately identifiable division). Requires the SEC to give notice to the appropriate Federal banking agency prior to initiating any investigative or enforcement proceedings against a financial services holding company bank, or bank division acting as registered investment adviser.

Amends the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940 to exempt certain bank common trust funds from their coverage. Amends the Internal Revenue Code to provide that the transfer to a regulated investment company of all or substantially all of the assets of a common trust fund shall not result in a gain or loss to the common trust fund participants if the transfer is the result of a merger, conversion, reorganization, transfer or similar transaction. (Thus, if a bank were to transfer a common trust fund to a mutual fund, such transfer per se would not be considered a taxable event for the fund participants.)

Directs the SEC to examine and report to the Congress on the appropriate treatment of: (1) bank collective investment funds and separate accounts under the securities laws and the Employee Retirement Income Security Act (ERISA); and (2) common trust funds under the securities laws.

Subtitle E: Prompt Corrective Action - Amends the Federal Deposit Insurance Act to set forth: (1) definitional guidelines (including capital zones and critical capital level); and (2) permissible activities for banks within various capital zones (including financial services holding companies).

Amends the Federal Deposit Insurance Act, the Bank Conservation Act, the Federal Reserve Act, and the Home Owners' Loan Act to set forth additional grounds for appointing conservators and receivers for specified undercapitalized depository institutions (as defined by their capital zones under this Act).

Subtitle F: Nationwide Banking and Branching - Amends the Financial Services Holding Company Act to authorize nationwide banking, notwithstanding certain State laws, by: (1) a diversified holding company; (2) a financial services holding company; or (3) a foreign bank.

Amends Federal banking law to permit a national banking association to establish and operate new branches at an initial location within any State in which a financial services holding company or State bank having the same home State (or chartered in the same home State as such association) could establish a branch. Provides for the interstate consolidation or merger of national banks, or State banks with national banks, and for the subsequent retention of pre-existing branches subject to regulatory approval.

Amends the Federal Deposit Insurance Act to prohibit State proscription against interstate branching by State banks. Permits a host State to determine compliance by interstate branches with its regulations, and to coordinate regulatory supervision with other State bank authorities regarding branches of State-chartered banks.

Amends the International Banking Act of 1978 to provide that during the three-year period starting on the date of enactment of this Act the Director may authorize foreign banks to establish and operate federally-chartered branches in the United States if such establishment is not prohibited by the law of the relevant State. Revises the limitations placed upon interstate branching by foreign banks to more closely conform with the limitations placed upon interstate branching by domestic banks.

Amends the Home Owners' Loan Act to authorize approval by the appropriate Federal banking agency for a savings and loan holding company or a foreign bank to acquire interstate interests in savings associations. Permits the consummation of such approved acquisitions even though State law would otherwise prohibit or limit them.

Title III: Regulatory Restructuring - Subtitle A: Office of Depository Institution Supervision - Establishes in the Department of the Treasury the Office of Depository Institutions Supervision (the Office) to be headed by a Director to: (1) grant or deny charters or other applications; (2) conduct examinations of banking entities within its purview; (3) appoint conservators or receivers for depository institutions; and (4) render a final decision in a contested administrative enforcement proceeding. Authorizes the Director to impose and collect from entities for which the Director is the appropriate Federal banking agency assessments, fees, and other user charges to meet the full cost of the Federal services provided.

Subtitle B: Interim Provisions; Transfer of Functions, Personnel, and Property - Outlines interim administrative functions of the Office prior to the date that the functions of the Comptroller of the Currency and the Office of Thrift Supervision are transferred to it.

Abolishes the Office of Thrift Supervision and the Office of the Comptroller of the Currency. Outlines transfer and interim provisions.

Subtitle C: Regulatory and Supervisory Responsibility - Transfers to the Office all powers and duties vested in the Director of the Office of Thrift Supervision and the Comptroller of the Currency. Amends the Federal Deposit Insurance Act to designate the institutions for which the appropriate Federal banking agency is either: (1) the Director of the Office of Depository Institutions Supervision; or (2) the Board of Governors of the Federal Reserve System. Sets forth guidelines to determine the appropriate Federal banking agency for foreign banks and multiple bank subsidiaries. Requires the Director to conduct an annual on-site examination of each depository institution and branch of a foreign bank under his or her purview, with specified exceptions. Authorizes the Director to examine a depository institution and its affiliate in order to disclose fully their relationship and its effect upon the depository institution. Provides for civil money penalties for affiliates who refuse to cooperate with authorized examinations. Amends Federal law to set forth circumstances under which the Director may appoint a receiver for a national banking association.

Subtitle D: Transfer of Federal Deposit Insurance Corporation Authority - Amends the Federal Deposit Insurance Act to subject financial services holding companies and their subsidiaries to certain of its enforcement proceedings.

Repeals the proscription against participation by State nonmember insured banks in lotteries and related activities.

Makes conforming amendments to the Federal Reserve Act.

Directs the Chairman of the Board of the FDIC and the Chairman of the Board of Governors of the Federal Reserve System to determine jointly which FDIC employees are necessary to FDIC functions transferred to the Federal Reserve System by this Act, and to transfer such employees accordingly. Outlines the employee transfer program.

Subtitle E: Litigation Authority - Authorizes the Director, the Board of Governors of the Federal Reserve System, the FDIC and the National Credit Union Administration to conduct litigation, subject to the prior consent and general direction and control of the Attorney General.

Subtitle F: Reorganization of Boards of Directors - Amends the Federal Deposit Insurance Act and the Federal Credit Union Act to make conforming amendments to organizational provisions regarding their respective boards of directors.

Subtitle G: Savings Provisions for the Transfer of Authority from the Board of Governors of the Federal Reserve System to the Director - Sets forth savings provisions for the transfer of authority from the Board of Governors of the Federal Reserve System to the Director of the Office of Depository Institutions Supervision.

Title IV: Bank Insurance Fund Recapitalization - Subtitle A: - Federal Deposit Insurance Corporation Borrowing - Amends the Federal Deposit Insurance Act to authorize the FDIC to borrow funds from any Federal Reserve bank to: (1) maintain or improve the liquidity of BIF; or (2) provide financial assistance with respect to an insured depository institution or its receivership or conservatorship. Sets a ceiling upon FDIC outstanding corporate debt from all Federal Reserve banks at any one time. Amends the Federal Reserve Act to authorize any Federal Reserve bank to make advances to the FDIC upon its request, subject to limitations set by the Board of Governors of the Federal Reserve System.

Subtitle B: Federal Deposit Insurance Corporation Assessments - Amends the Federal Deposit Insurance Act to specify the maximum aggregate assessment to be charged semiannually to Bank Insurance Fund members. Grants the FDIC authority to make estimates and projections for the purpose of computing assessment rates and aggregate assessment target amounts.

Authorizes the FDIC to pay interest and principal on its outstanding debt to a Federal Reserve bank from the semiannual BIF assessments.

Title V: Miscellaneous Provisions - Subtitle A: Payment System Risk Reduction - Outlines the netting procedures to be used by financial institutions engaged in transactions with one another directly or through the auspices of financial institutions' clearing organization. Precludes any judicial or administrative proceeding from delaying or limiting the application of such netting procedures.

Subtitle B: Right to Financial Privacy Act Amendments - Amends the Right to Financial Privacy Act of 1978 to permit the transfer of financial records of a financial institution by a Federal agency to the Attorney General for civil actions under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, or for forfeiture under Federal criminal law. Provides that the transferring agency shall not be deemed to have waived any privilege applicable to such records.

Subtitle C: Reduction in Regulatory Burden - Amends the Home Mortgage Disclosure Act to repeal the exemption from certain mortgage loan information disclosure requirements granted to depository institutions with $30,000,000 or less in assets. Raises the general disclosure exemption threshold for depository institutions from $10,000,000 to $50,000,000 or less in assets, adjusted annually according to the Consumer Price Index.

Requires the Secretary of the Treasury and the head of each appropriate Federal banking agency to review and report to the Congress on all laws and regulations under their jurisdiction to determine whether they: (1) adversely affect the capital position and profitability of insured depository institutions; and (2) impose duplicative paperwork and compliance requirements.

Prohibits an appropriate Federal banking agency from requiring any institution under its jurisdiction to prepare or maintain data to comply with the Fair Housing Act, other than the data prescribed pursuant to the Home Mortgage Disclosure Act.

Subtitles D: Expedited Funds Availability - Amends the Expedited Funds Availability Act with respect to the frequency of notices when funds will be held beyond statutory schedules to provide that no further notice is required after the required notice has been furnished until one year later or such other time as the exception for which the notice was provided ceases to apply, whichever is earlier.

Subtitle E: Final Settlement Payment Procedure - Amends the Federal Deposit Insurance Act to authorize the FDIC as conservator or receiver of an insured insolvent institution to: (1) settle all uninsured and unsecured claims on the receivership with a final settlement payment which shall constitute full payment and disposition of its obligations to the claimants; and (2) undertake any supervisory actions and promulgate regulations necessary to implement its final settlement payment functions.

Title VI: Technical and Conforming Amendments - Subtitle A: Severability; Transition References - Sets forth severability and transition provisions.

Subtitle B: Technical and Conforming Amendments - Makes technical and conforming amendments to specified Federal Acts.

Subtitle C: Repeal of Obsolete Provisions of Law - Repeals specified provisions of Federal law.

Subtitle D: Effective Date - Sets forth the effective date of amendments made by this title.