Financial Services Competitive Equity Act

(Measure passed Senate, amended, roll call #238 (89-5))

Financial Services Competitive Equity Act - Title I: Financial Institutions Competitive Equity - Amends the Banking Act of 1933 to allow a member bank to be affiliated with a depository institution securities affiliate. Allows an officer, director, or employee of a member bank to serve at the same time as an officer, director, or employee of any of its depository institution securities affiliates.

Amends the Securities Act of 1933 to exempt from the registration requirements of such Act the issuance of a holding company's shares in connection with a reorganization in which the holding company becomes the parent of a bank or thrift institution.

Amends the definition of "appropriate regulatory agency" to make the Securities and Exchange Commission the appropriate regulatory agency for enforcing a depository institution securities affiliate's compliance with regulations governing transactions in municipal securities.

Amends the Bank Holding Company Act of 1956 to redefine the term "bank" to mean: (1) a bank insured under the Federal Deposit Insurance Act; (2) any institution that both accepts deposits that are withdrawable by a check or similar means and engages in the business of making commercial loans; or (3) a State-chartered, Federal Deposit Insurance Corporation (FDIC) - insured stock savings bank which was in existence on October 15, 1982, which is engaged in the business of making commercial loans and which, on the date of this Act, is not a Federal savings bank.

Defines the terms "commercial loans," "depository institution securities affiliate," and "depository institution holding company" for the purposes of such Act. Provides a 30 day notice process for the formation of a bank holding company.

Requires a bank holding company to divest itself of certain nonbank banks acquired after July 1, 1983. (A "nonbank bank" is a bank holding company subsidiary with a bank charter but which, by either not offering demand deposits or not making commercial loans, avoids the definition of "bank" under the Bank Holding Company Act, thus allowing the parent company to avoid certain activities restrictions and/or restrictions on interstate ownership of bank subsidiaries.)

Amends the Bank Holding Company Act of 1956 to expand the types of activities in which a bank holding company may directly engage.

Sets forth certain grandfather rights for companies that acquired a nonbank bank before July 1, 1983.

Permits bank holding companies, after notice and subject to approval by the Federal Reserve Board, to engage in the following: (1) ownership of thrift institutions subject to bank interstate operations and branching restrictions; and (2) activities closely related to banking or managing or controlling banks. Requires a bank holding company to submit a notice to the Federal Reserve Board 60 days in advance of engaging in any such activities.

Authorizes bank holding companies to acquire one or more thrift institutions.

Permits bank holding companies to operate a depository institution securities affiliate.

Prohibits any bank holding company that establishes or acquires a securities affiliate, or that engages in securities affiliate activities, from permitting any of its subsidiary banks to engage in any of specified securities activities.

Authorizes a depository institution securities affiliate to conduct all of the securities and securities-related activities that a national bank is not prohibited from conducting.

Specifies activities that may be conducted by a bank holding company or a holding company securities affiliate.

Subjects all transactions between a bank and its depository institution securities affiliate to the restrictions on interaffiliate transactions contained in the Federal Reserve Act.

Permits savings and loan holding companies to acquire depository institution securities affiliates.

Provides that no State may prohibit an affiliation between a national banking association and a company engaged in any of the activities authorized by this Act.

Subjects Federal Reserve Board orders regarding bank holding companies and securities affiliates to judicial review solely on questions relating to the Board's findings on the issue of unfair competition and of whether a proposed activity is permissible for a bank holding company.

Amends the Federal Reserve Act and the Bank Holding Company Act of 1956 to set forth restrictions on transactions between member banks and their affiliates. Provides for exemptions from such restrictions.

Amends the Investment Company Act of 1940 to describe the depository institution service corporation activities permissible for depository institutions.

Provides grandfather rights to service corporation investors and for service corporation activities where an investment was made and the activities were commenced prior to July 1, 1983.

Amends the National Housing Act to subject unitary savings and loan holding companies which are not qualified thrift lenders to the same restrictions on their activities as multiple savings and loan holding companies.

Grandfathers, under specified circumstances, certain activities of unitary savings and loan holding companies that were in existence on July 1, 1983, and which do not become qualified thrift lenders.

Increases the number of the activities authorized for all savings and loan holding companies.

Exempts a company that acquires a Federal Savings and Loan Insurance Corporation (FSLIC)-insured institution pursuant to emergency thrift acquisition provisions from the restrictions on business activities applicable to savings and loan holding companies.

Authorizes a holding company that was a unitary savings and loan holding company on July 1, 1983, to continue to engage in any activity in which it was engaged on June 27, 1984.

Sets forth permissible activities for savings and loan holding companies. Requires a savings and loan holding company to notify the Federal Savings and Loan Insurance Corporation 60 days in advance of engaging in any such activity.

Authorizes savings and loan holding companies to acquire one or more banks.

Permits the activities of companies which own or control shares of a single savings and loan association to continue to engage in certain activities conducted exclusively overseas, provided such companies were chartered in a foreign country by June 1, 1984.

Exempts from the prohibitions against interaffiliate transactions any transactions between FSLIC-insured thrifts and their affiliates engaged in permissible savings and loan holding company activities.

Exempts from prior approval requirements the formation of a savings and loan holding company involving a simple reorganization of interest from individual ownership to holding company form.

Subjects Federal Home Loan Bank Board orders under the National Housing Act to judicial review on questions related to the Board's findings regarding the issue of unfair competition and whether the proposed activity is permissible for a savings and loan holding company.

Declares that no State shall prohibit the affiliation of any federally-chartered thrift institution with a company engaged in permissible activities for savings and loan holding companies.

Amends the Home Owners' Loan Act of 1933 to authorize Federal savings and loan associations to offer demand deposits to all their customers.

Amends the Federal Home Loan Bank Act to require members of the Federal Home Loan Bank system to meet the qualified thrift lender asset test in order to obtain advances from a Federal Home Loan Bank. Authorizes a waiver of such requirement in appropriate circumstances.

Amends the Garn-St. Germain Depository Institutions Act of 1982 to extend the capital assistance programs for three years.

Permits national banks to lease tangible personal property in amounts up to ten percent of the assets of the bank.

Amends the Federal Deposit Insurance Act to make any commercial bank which has investments in agricultural loans aggregating at least 20 percent of its loans eligible for capital assistance in the form of net worth certificates purchased by the FDIC.

Amends the National Housing Act to apply to FSLIC-insured institutions the provisions of the Bank Act of 1933 relating to affiliations between member banks and organizations engaged principally in certain securities activities, and relating to certain officer, director, or employee relationships involving member banks and a person or organization primarily engaged in certain securities activities. Amends the Federal Deposit Insurance Act to apply these same provisions to insured nonmember banks, with specified exceptions.

Authorizes the establishment of holding companies for mutual thrift institutions.

Amends the Homeowners' Loan Act of 1933 to authorize Federal thrift institutions to underwrite and deal in mortgage-backed securities through separate holding company subsidiaries (mortgage securities corporations).

Title II: Credit Union Amendments - Amends the Federal Credit Union Act to permit a term of longer than 15 years on second mortgage loans when approved by the National Credit Union Administration Board.

Provides for regulation by the Board defining fidelity bond coverage for credit union officers and employees.

Repeals the sunset provision concerning conservatorship authority given the Administration in the three year emergency acquisitions provisions of the Garn-St Germain Act.

Title III: Bankers Bank - Permits a national banking association, if certain conditions are met, to purchase for its own account shares of stock of a bank or a holding company which owns or controls such a bank.

Title IV: Consumer Leases and Lease-Purchase Agreements - Consumer Lease and Lease-Purchase Agreement Act - Amends the Consumer Credit Protection Act to establish certain disclosure requirements for consumer lease and lease purchase agreements. Allocates liability between lessors and lessees and parties to lease purchase agreements.

Grants the Federal Trade Commission primary but not exclusive enforcement authority under this Act. Prescribes civil and criminal penalties for violations. Preempts State laws on consumer credit in specified circumstances.

Title V: Deposit Availability - Fair Deposit Availability Act of 1984 - Requires a depository institution to give a customer written disclosure of its general policy on withdrawal of funds deposited into a deposit account.

Requires a depository institution to provide a written disclosure to the potential customer of all fees and charges that can be assessed against deposit accounts.

Requires that interest be computed on a check deposited in an interest bearing account starting no later than the date the institution receives provisional credit for the check.

Requires the Board of Governors of the Federal Reserve System to publish for comment a regulation for the purpose of improving the check clearing system used by depository institutions.

Requires the Board to establish an Expedited Funds Availability Council to advise and consult with the Board in the exercise of its functions under this title.

Requires the Secretary of the Treasury to require that funds deposited by a check drawn on the Treasury, which is endorsed for deposit by a customer with an established relationship with the depository institution, be available for withdrawal when the depository institution is given provisional credit for that check.

Sets forth civil penalties for institutions that fail to comply with this Act.

Requires the Board to prepare a study and submit its findings to Congress on the effect of improvements and changes in the check clearing system.

Title VI: Credit Deregulation and Availability - Credit Deregulation and Availability Act of 1984 - Amends the Depository Institutions Deregulation and Monetary Control Act of 1980 to state that if the applicable rate of interest allowed is greater than State law would otherwise permit for business and agricultural credit, then any lender may charge interest at the Federal rate.

Sets forth a penalty for charging an interest rate higher than allowed by this title.

Applies the provisions of this title to business and agricultural credit extended between April 1, 1980, and July 1, 1987.

Identifies business and agricultural credit which will not be affected by this title.

Amends the Federal Credit Union Act to permit the Board of Directors of each credit union to set the interest rates of the institution.

Title VII: Brokered Deposits - Brokered Deposits Act of 1984 - Amends the National Housing Act to prohibit the Federal Home Loan Bank Board from promulgating rules or regulations which would have the effect of causing the deposit insurance available to a person for deposits or accounts placed through a deposit broker to differ from the deposit insurance available to such a person for deposits or accounts not placed through a deposit broker.

Excludes from the definition of "deposit broker" any agent of an insured institution where, as of September 12, 1984, that institution used such persons to serve it exclusively in order to solicit deposits and provide loan applications services for residents of the location State, and where such persons are regulated by the FSLIC.

Prohibits an insured institution from accepting or maintaining short-term insured accounts placed through a deposit broker in excess of the lesser of: (1) 200 percent of the institution's unimpaired capital and unimpaired surplus; or (2) 15 percent of total deposits.

Amends the Federal Deposit Insurance Act to make similar prohibitions with respect to the FDIC Board of Directors and FDIC-insured institutions.

Title VIII: Fraudulent Use of Credit Cards and Debit Cards - Amends the Truth In Lending Act to prescribe a fine or imprisonment for certain fraudulent uses of credit cards, debit instruments or account numbers.

Title IX: Interstate Banking - Interstate Banking Act of 1984 - Authorizes interstate bank branching among States in which State laws specifically authorize such branching.

Requires the President to report to Congress concerning the effect of this Act on the financial, economic, and banking environment.

Terminates the statutory amendments enacted in this title five years after the date of enactment.

Title X: Miscellaneous - Amends the Truth in Lending Act to permanently exempt advances on open-end lines of credit secured by real estate from Truth-in- Lending Act rescission rights.

Amends the Depository Institutions Deregulation and Monetary Control Act of 1980 to require the Federal Home Loan Bank Board to publish model forms for mobile home loan transactions subject to Board consumer regulations which apply when State usury laws are preempted.

Eliminates the exemption for attorneys from the provisions of the Fair Debt Collection Practices.

Amends the Federal Reserve Act to require the Board of Governors of the Federal Reserve System to provide maximum information to the private sector concerning the service activities of the Federal reserve banks.

Requires the Board to establish a Payments System Advisory Council to advise and consult with it in the exercise of its payment system functions.

Provides that organizations operated primarily for political purposes and not for profit are eligible to own negotiable order of withdrawal (NOW) accounts.

Amends the Securities Exchange Act of 1934 to prohibit a company from purchasing at a price above the market any of its securities from a person who holds more than three percent of such securities and who has held them for less than two years.

Prohibits, during certain tender offers for any class of securities, any increase in the current or future compensation of any officer or director.

Amends the Federal Home Loan Bank Board Act to permit the Federal Home Loan Bank Board to accept payment and reimbursement, in cash or in kind, from non-Federal agencies, organizations, and individuals for travel, subsistence, and other necessary expenses incurred by Board members and employees in attending meetings and conferences concerning the functions or activities of the Board.

Directs the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Comptroller of the Currency to conduct independent studies of how the risk of bank failures may be reduced.

Amends the National Housing Act to permit the Federal Savings and Loan Insurance Corporation, upon application, to grant insurance of accounts to an FDIC-insured savings bank.

Provides that when FSLIC insurance becomes effective, such an institution automatically shall lose its status as such an FDIC-insured bank.

Requires a creditor, in connection with a residential mortgage transaction of less than $500,000, to limit the total amount of the increase in the interest rate on variable rate mortgages to not more than five percentage points above the initial rate over the term of the loan.

Amends the Bank Holding Company Act of 1956 to prohibit the Student Loan Marketing Association from owning a depository institution.

Amends the Depository Institutions Deregulation and Monetary Control Act of 1984 to provide that the Depository Institutions Deregulation Committee shall hold public meetings at least quarterly.

Declares that it is the sense of the Congress that the Securities and Exchange Commission should reinstate the requirements for the disclosure of executive compensation which were in effect immediately prior to December 31, 1983.