Financial Services Equity Act of 1985

Financial Services Equity Act of 1985 - Title I: Depository Institutions Act of 1985 - Amends the Bank Holding Company Act of 1956 to redefine the term "bank" to: (1) include any bank insured by the Federal Deposit Insurance Corporation; and (2) exclude foreign banks having an insured or uninsured branch in the United States, insured institutions, trust companies, credit unions that are, or are eligible for, insurance by the National Credit Union Administration Board, consumer banks (banks which do not make commercial loans), certain industrial banks which do not both make commercial loans and accept demand deposits, and institutions which engage solely in credit card operations. Defines the terms "depository institutions securities affiliate" and "commercial loan" for purposes of such Act. Provides that an institution shall not be deemed to be engaged in the business of making commercial loans if the aggregate principal amount of its outstanding commercial loans does not exceed ten percent of its total assets in three out of every four quarters and two out of every three years.

Permits a company, with 30 days notice to the Board of Governors of the Federal Reserve System, but without the Board's approval, to acquire a bank in a reorganization in which persons exchange their shares of the bank for the same proportional share interest in the company if, immediately after such acquisition, the company: (1) meets the financial standards prescribed by the Board for bank holding companies; and (2) does not engage in any activities other than banking or managing banks.

Revises provisions concerning nonbanking activities of bank holding companies.

Authorizes a bank holding company to acquire shares of a company the activities of which the Board has determined to be: (1) closely related to banking; (2) of a financial nature and designed to enable bank holding companies to adjust to technological innovations in the provision of banking-related services; or (3) of a financial nature and substantially identical to products or services offered by nonbanking concerns which are competitive with products or services provided by banks. Continues restrictions concerning insurance activities. Prohibits a bank holding company from engaging in authorized activity de novo or by acquisition unless it provides the Board 60 days' prior notice and the Board does not, within such 60 days, issue an order disapproving the proposal or suspending the 60-day period in order to obtain more information. Directs the Board to: (1) consider the managerial and financial resources of the companies involved as well as the public benefits and possible adverse effects when determining whether to disapprove an activity; and (2) periodically promulgate regulations designating authorized activities.

Permits a bank holding company to establish or acquire shares of a depository institution securities affiliate. Prescribes permissible activities for such affiliates, which include any securities or securities-related activity that a national banking association is not prohibited from conducting. Prohibits a holding company that establishes or acquires a securities affiliate which conducts such activities from allowing the depository institutions it controls to conduct certain securities or securities-related activities.

Sets forth reporting and examination requirements for nonbank subsidiaries of bank holding companies. Provides for the use of reports required by other statutes or agencies.

Prohibits any State from prohibiting the affiliation of a national banking association with a depository institution securities affiliate or other company in which a bank holding company may acquire an interest under this Act. Prohibits a State-chartered bank subsidiary of a bank holding company from conducting activities or making investments outside the State where it is chartered unless those activities are permissible for either a bank holding company under this Act or for a national bank under Federal law.

Subjects Board orders regarding company or securities affiliate acquisitions by bank holding companies under this Act to judicial review solely on questions relating to any Board finding: (1) that a proposed activity is permissible for a bank holding company; and (2) regarding unfair competition. Prohibits the reviewing court from: (1) staying the Board's order approving such acquisition pending judical review; or (2) overturning the Board's findings unless demonstrated to be plainly in error and at variance with the facts. Permits the court to assess litigation fees against any party that petitions for judical review of such an order of the Board if the court finds such petition to be nonmeritorious.

Amends the Banking Act of 1933 to authorize: (1) a bank that is a member of the Federal Reserve System (member bank) to be affiliated with a depository institution securities affiliate; and (2) an officer, director, or employee of any member bank to serve simultaneously in such a position with such an affiliate.

Amends the Federal Deposit Insurance Act to apply to insured nonmember banks the restrictions contained in the Banking Act of 1933 on affiliations and director, officer, and employee relationships between member banks and securities organizations, with specified exceptions.

Title II: Interstate Banking Act - Interstate Banking Act of 1985 - Authorizes interstate branching by national banks. Permits a national bank of one State to establish a branch in another State to the same extent such other State allows interstate branching by State banks. Authorizes States to allow such interstate branching: (1) without restrictions; or (2) based on the location of the other States involved or on reciprocal treatment by the other States. Requires any State which permits interstate branching on a geographic basis during the two years following enactment of this title: (1) beginning one year after the effective date of this title, to allow the establishment of branches by banks located in any contiguous State which provides reciprocal treatment; and (2) beginning two years after the effective date of this title, to allow the establishment of branches by banks located in any State providing reciprocal treatment.

Amends the Bank Holding Company Act of 1956 to allow a State to authorize a bank holding company, the banking operations of which are principally located in another State, to acquire interest in, or voting shares or assets of, a bank located in such State. Authorizes a State to allow such acquisitions: (1) without restriction; or (2) on the basis of the location of the other States involved or reciprocal treatment by such other States. Requires any State which permits such acquisitions on a geographic basis within the two years following enactment of this title: (1) beginning one year after the effective date of this title, to permit such an acquisition by an out-of-State bank holding company located in any contiguous State which provides for reciprocal treatment; and (2) beginning two years after the effective date of this title, to allow such an acquisition by any out-of-State bank holding company located in any State which provides for reciprocal treatment.

Amends the Federal Deposit Insurance Act to prohibit the responsible agency from approving a merger that would result in a bank, insured by the Federal Deposit Insurance Corporation, operating branches in more than one State unless the merger is authorized by the laws of the States in which such branches will be operated. Authorizes States to allow interstate mergers: (1) without restriction; or (2) on the basis of the location of the other States involved or reciprocal treatment by such other States. Requires any State which permits such mergers on a geographic basis within the two years following enactment of this title: (1) beginning one year after the effective date of this title, to allow such a merger by an out-of-State bank located in any contiguous State which provides for reciprocal treatment; and (2) beginning two years after the effective date of this title, to allow such a merger by any out-of-State bank located in any State which provides for reciprocal treatment.

Amends the Home Owners' Loan Act of 1933 to authorize States to allow interstate branching by Federal savings and loan associations or Federal savings banks: (1) without restriction; or (2) on the basis of the location of the other States involved or reciprocal treatment by the other States. Requires any State which permits such interstate branching on a geographic basis within the two years following enactment of this title: (1) beginning one year after the effective date of this title, to allow the establishment of such branches by such banks located in any contiguous State which provides for reciprocal treatment; and (2) beginning two years after the effective date of this title, to allow the establishment of branches by such banks located in any State providing for reciprocal treatment.

Amends the National Housing Act to direct the Federal Savings and Loan Insurance Corporation (FSLIC) to permit a reorganization or merger involving insured Federal savings and loan associations located in different States if such a reorganization or merger or interstate branching by such associations is expressly permitted under the laws of the States involved. Authorizes a State to allow such a merger, reorganization, or interstate branching: (1) without restriction; or (2) on the basis of the location of the other States involved or reciprocal treatment by such other States. Requires any State which permits such a merger on a geographic basis within the two years following enactment of this title: (1) beginning one year after the effective date of this title, to allow such a merger by out-of-State savings and loan associations located in any contiguous State which provides for reciprocal treatment; and (2) beginning two years after the effective date of this title, to permit such a merger by any out-of-State associations located in any State which provides for reciprocal treatment.

Requires each savings and loan to notify the FSLIC of the State designated as its principal place of business. Authorizes the FSLIC to allow a savings and loan holding company whose operations are principally conducted in one State to acquire interest in, or the voting shares or assets of, any association located in another State if the laws of such State expressly permit such acquisition. Authorizes States to allow such acquisitions: (1) without restriction; or (2) on the basis of the location of the other States involved or recpiprocal treatment by such other States. Requires any State which permits such acquisitions on a geographic basis within the two years following enactment of this title: (1) beginning one year after the effective date of this title, to allow such acquisitions by out-of-State holding companies located in any continguous State which provides for reciprocal treatment; and (2) beginning two years after the effective date of this title, to permit such acquisitions by out-of-State holding companies located in any State which provides for reciprocal treatment.

Title III: Deposit Availability - Fair Deposit Availability Act of 1985 - Requires a depository institution to meet specified disclosure requirements concerning its general policy on the availability for withdrawal of funds deposited by a check or similar instrument into a deposit account.

Requires that interest be computed on funds deposited by such an instrument into an interest bearing account starting no later than the date the institution receives provisional credit for such instrument.

Requires the Federal Reserve Board to publish for comment and implement within three years a regulation to improve the check clearing system used by depository institutions in order to make deposits by a check drawn on: (1) local institutions available for withdrawal after one business day after deposit: and (2) other institutions available after three business days after deposit.

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 provisions governing the civil liability of institutions that fail to comply with this title.

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

Title IV: Truth in Savings - Truth in Savings Act - Requires each advertisement, announcement, or solicitation made by any depository institution regarding the rate of interest payable on any deposit to: (1) state the annual percentage yield and the method of compounding interest; (2) state the annual rate of simple interest and the period during which such rate will be effective; and (3) give equal prominence to all annual percentage yields and annual rate of simple interest.

Requires the annual percentage yield to always be stated before the annual rate of simple interest.

Requires the Federal Reserve Board to prescribe such regulations as necessary to carry out and facilitate compliance with the provisions of this Act and to prevent their evasion or circumvention.

Title V: Amendments to the Garn-St Germain Depository Institutions Act of 1982 - Amends the Garn-St Germain Depository Institutions Act of 1982 to extend the Deposit Insurance Flexibility Act for three years.

Title VI: Agricultural Bank Capital Assistance Act - Agricultural Bank Capital Assistance Act - Amends the Federal Deposit Insurance Act to direct the Federal Deposit Insurance Corporation to use its authority under the Net Worth Certificate Act to purchase net worth certificate of certain qualified financial institutions which have made more than 20 percent of their loans for agricultural purposes. Revises capital to adjusted total asset ratio requirements for such qualified institutions.

Amends the Garn-St Germain Depository Institutions Act of 1982 to extend the Net Worth Certificate Act by three years.