Consumer Products and Financial Services Equity Act of 1986

Consumer Products and Financial Services Equity Act of 1986 - Title I: Depository Institution Holding Company Securities Subsidiaries - Amends the Bank Holding Company Act of 1956 and the National Housing Act to permit a bank holding company or a multiple savings and loan holding company to acquire a securities subsidiary the formation or acquisition of which by the holding company has been approved by the Board of Governors of the Federal Reserve System (Board) or the Federal Savings and Loan Insurance Corporation (FSLIC), respectively. Defines a securities subsidiary as any company which is a subsidiary of a holding company and which is authorized to conduct business as a securities broker, dealer, or underwriter, an investment company, or an investment adviser. Prohibits a holding company from establishing a securities subsidiary unless it provides advance written notice to, and obtains the approval of, the Board or FSLIC. Limits the securities activities of such a subsidiary. Provides for the termination of a holding company's control of a securities subsidiary if: (1) the subsidiary engages in unauthorized securities activities; (2) the Board or FSLIC determines that continued control threatens the safety and soundness of a bank or insured institution controlled by such holding company; or (3) the Board or FSLIC approves a recommendation by the Securities and Exchange Commission that such control be terminated.

Amends the Banking Act of 1933 to permit a member bank of the Federal Reserve System to be an affiliate of a securities subsidiary. Permits an officer, director, or employee of such member bank to serve as an officer, director, or employee of an affiliated securities subsidiary.

Title II: Regulation of Consumer Banks - Consumer Bank Act of 1986 - Amends the Bank Holding Company Act of 1956 to redefine a "bank" to include any institution which is insured by the Federal Deposit Insurance Corporation (FDIC) or which makes commercial loans and accepts demand deposits or other deposits withdrawable by check or similar means for payment to third parties. Excludes from such definition: (1) any foreign bank having an insured or uninsured branch in the United States; (2) mutual savings banks, savings banks, credit unions, thrifts, and savings and loan associations which are federally insured or eligible to apply for such insurance; (3) consumer banks or industrial banks, Morris Plan banks, and industrial loan companies which do not both make commercial loans and accept deposits that depositors may withdraw on demand; and (4) certain trust companies, the FDIC-insured deposits of which are not marketed through an affiliated company and which do not obtain payment or payment-related services from any Federal Reserve bank or exercise Federal Reserve discount or borrowing privileges.

Lists the requirements of a "consumer bank" which include: (1) a prohibition against making commercial loans; (2) a requirement to maintain investments in specified types of consumer loans; and (3) a requirement to make available in a State an aggregate amount of loans equal to 65 percent of the consumer deposits held by such institution which were received in such State. Defines a "commercial loan" as any loan or extension of credit for commercial, agricultural, or cultural purposes.

Applies typing arrangement provisions of the Bank Holding Company Act of 1956 to consumer banks and consumer bank holding companies. Applies the Community Reinvestment Act to consumer banks. Prohibits consumer banks from selling any product or service that a national bank may not sell.

Requires the Board to notify a company that operates a depository institution as a consumer bank or seeks to acquire a depository institution to operate as a consumer bank if such company is or would be a bank holding company because such institution does not or will not qualify as a consumer bank. Prohibits the company from being treated as a bank holding company: (1) for 120 days following such notice; or (2) after such 120 days if the company shows that the institution qualifies or will qualify as a consumer bank.

Sets forth procedures by which the Board may issue a cease and desist order to the parent company of a consumer bank concerning an activity or the ownership or control of a nonbank subsidiary which constitutes a serious actual risk to the financial safety, soundness, or stability of the consumer bank and is inconsistent with sound banking principles.

Provides that a State may not prohibit the affiliation of a bank or any other institution with a consumer bank.

Amends the Federal Reserve Act to provide that for purposes of such Act an extension of credit by a member bank of the Federal Reserve System to a holder of a credit card issued by such bank to finance the purchase of any good or service from a bank affiliate shall not be considered as a transaction with an affiliate if the credit card can be used by the holder for purchases from any person that is not a bank affiliate.