(a) Ownership or control of any company not a bank; engagement in activitiesother than banking. Except as otherwise provided in this Act,no bank holding company shall—
(1) after the date of enactment of thisAct acquire direct or indirect ownership or control of any votingshares of any company which is not a bank, or
(2) after two years from the date as ofwhich it becomes a bank holding company, or in the case of a companywhich has been continuously affiliated since May 15, 1955, with acompany which was registered under the Investment Company Act of1940, prior to May 15, 1955, in such a manner as to constitute anaffiliated company within the meaning of that Act, after December31, 1978, or in the case of any company which becomes, as a resultof the enactment of the Bank Holding Company Act Amendments of 1970,a bank holding company on the date of such enactment, after December31, 1980, retain direct or indirect ownership or control of any votingshares of any company which is not a bank or bank holding companyor engage in any activities other than (A) those of banking or ofmanaging or controlling banks and other subsidiaries authorized underthis Act or of furnishing services to or performing services for itssubsidiaries, and (B) those permitted under paragraph (8) of subsection(c) of this section subject to all the conditions specified in suchparagraph or in any order or regulation issued by the Board undersuch paragraph: Provided, That a company covered in 1970 mayalso engage in those activities in which directly or through a subsidiary(i) it was lawfully engaged on June 30, 1968 (or on a date subsequentto June 30, 1968 in the case of activities carried on as the resultof the acquisition by such company or subsidiary, pursuant to a bindingwritten contract entered into on or before June 30, 1968, of anothercompany engaged in such activities at the time of the acquisition),and (ii) it has been continuously engaged since June 30, 1968 (orsuch subsequent date). The Board by order, after opportunity for hearing,may terminate the authority conferred by the preceding proviso onany company to engage directly or through a subsidiary in an activityotherwise permitted by that proviso if it determines, having due regardto the purposes of this Act, that such action is necessary to preventundue concentration of resources, decreased or unfair competition,conflicts of interest, or unsound banking practices; and in the caseof any such company controlling a bank having bank assets in excessof $60,000,000 on or after the date of enactment of the Bank HoldingCompany Act Amendments of 1970 the Board shall determine, within twoyears after such date (or, if later, within two years after the dateon which the bank assets first exceed $60,000,000), whether the authorityconferred by the preceding proviso with respect to such company shouldbe terminated as provided in this sentence. Nothing in this paragraphshall be construed to authorize any bank holding company referredto in the preceding proviso, or any subsidiary thereof, to engagein activities authorized by that proviso through the acquisition,pursuant to a contract entered into after June 30, 1968, of any interestin or the assets of a going concern engaged in such activities. Anycompany which is authorized to engage in any activity pursuant tothe preceding proviso or subsection (d) of this section but, as aresult of action of the Board, is required to terminate such activitymay (notwithstanding any otherwise applicable time limit prescribedin this paragraph) retain the ownership or control of shares in anycompany carrying on such activity for a period of ten years from thedate on which its authority was so terminated by the Board.
4-072
The Board is authorized, upon application by a bank holdingcompany, to extend the two-year period referred to in paragraph (2)above from time to time as to such bank holding company for not morethan one year at a time, if, in its judgment, such an extension wouldnot be detrimental to the public interest, but no such extensionsshall in the aggregate exceed three years. Notwithstanding any otherprovision of this Act, the period ending December 31, 1980, referredto in paragraph (2) above, may be extended by the Board of Governorsto December 31, 1984, but only for the divestiture by a bank holdingcompany of real estate or interests in real estate lawfully acquiredfor investment or development. In making its decision whether to grantsuch extension, the Board shall consider whether the company has madea good faith effort to divest such interests and whether such extensionis necessary to avert substantial loss to the company. Notwithstandingany other provision of this paragraph, if any company that becamea bank holding company as a result of the enactment of the CompetitiveEquality Amendments of 1987 acquired, between March 5, 1987, and thedate of the enactment of such Amendments, an institution that becamea bank as a result of the enactment of such Amendments, that companyshall, upon the enactment of such Amendments, immediately come intocompliance with the requirements of this Act.
4-073
(b) Statement purporting to represent shares ofany company except a bank or bank holding company. After twoyears from the date of enactment of this Act, no certificate evidencingshares of any bank holding company shall bear any statement purportingto represent shares of any other company except a bank or a bank holdingcompany, nor shall the ownership, sale, or transfer of shares of anybank holding company be conditioned in any manner whatsoever uponthe ownership, sale, or transfer of shares of any other company excepta bank or a bank holding company.
4-074
(c) Exemptions. The prohibitions in this sectionshall not apply to (i) any company that was on January 4, 1977, botha bank holding company and a labor, agricultural, or horticulturalorganization exempt from taxation under section 501 of the InternalRevenue Code of 1954, or to any labor, agricultural, or horticulturalorganization to which all or substantially all of the assets of suchcompany are hereafter transferred, or (ii) a company covered in 1970more than 85 per centum of the voting stock of which was collectivelyowned on June 30, 1968, and continuously thereafter, directly or indirectly,by or for members of the same family, or their spouses, who are linealdescendants of common ancestors; and such prohibitions shall not,with respect to any other bank holding company, apply to—
(1) shares of any company engaged or tobe engaged solely in one or more of the following activities: (A)holding or operating properties used wholly or substantially by anybanking subsidiary of such bank holding company in the operationsof such banking subsidiary or acquired for such future use; or (B)conducting a safe deposit business; or (C) furnishing services toor performing services for such bank holding company or its bankingsubsidiaries; or (D) liquidating assets acquired from such bank holdingcompany or its banking subsidiaries or acquired from any other sourceprior to May 9, 1956, or the date on which such company became a bankholding company, whichever is later;
4-075
(2) shares acquired by a bank holding companyor any of its subsidiaries in satisfaction of a debt previously contractedin good faith, but such shares shall be disposed of within a periodof two years from the date on which they were acquired, except thatthe Board is authorized upon application by such bank holding companyto extend such period of two years from time to time as to such holdingcompany, in its judgment, such an extension would not be detrimentalto the public interest, and, in the case of a bank holding companywhich has not disposed of such shares within 5 years after the dateon which such shares were acquired, the Board may, upon the applicationof such company, grant additional exemptions if, in the judgment ofthe Board, such extension would not be detrimental to the public interestand, either the bank holding company has made a good faith attemptto dispose of such shares during such 5-year period, or the disposalof such shares during such 5-year period would have been detrimentalto the company, except that the aggregate duration of such extensionsshall not extend beyond 10 years after the date on which such shareswere acquired;
(3)shares acquired by such bank holding company from any of its subsidiarieswhich subsidiary has been requested to dispose of such shares by anyFederal or State authority having statutory power to examine suchsubsidiary, but such bank holding company shall dispose of such shareswithin a period of two years from the date on which they were acquired;
4-076
(4) shares held or acquiredby a bank in good faith in a fiduciary capacity, except where suchshares are held under a trust that constitutes a company as definedin section 2(b) and except as provided in paragraphs (2) and (3) ofsection 2(g);
(5) shareswhich are of the kinds and amounts eligible for investment by national banking associationsunder the provisions of section 5136 of the Revised Statutes;
(6) shares of any companywhich do not include more than 5 per centum of the outstanding votingshares of such company;
(7) shares of an investment company which is not a bank holding companyand which is not engaged in any business other than investing in securities,which securities do not include more than 5 per centum of the outstandingvoting shares of any company;
4-077
(8) shares of any company the activitiesof which had been determined by the Board by regulation or order underthis paragraph as of the day before the date of the enactment of theGramm-Leach-Bliley Act, to be so closely related to banking as tobe a proper incident thereto (subject to such terms and conditionscontained in such regulation or order, unless modified by the Board);
4-078
(9) shares held or activitiesconducted by any company organized under the laws of a foreign countrythe greater part of whose business is conducted outside the UnitedStates, if the Board by regulation or order determines that, underthe circ*mstances and subject to the conditions set forth in the regulationor order, the exemption would not be substantially at variance withthe purposes of this Act and would be in the public interest;
(10) shares lawfully acquiredand owned prior to May 9, 1956, by a bank which is a bank holdingcompany, or by any of its wholly owned subsidiaries;
(11) shares owned directly or indirectlyby a company covered in 1970 in a company which does not engage inany activities other than those in which the bank holding company,or its subsidiaries, may engage by virtue of this section, but nothingin this paragraph authorizes any bank holding company, or subsidiarythereof, to acquire any interest in or the assets of any going concern(except pursuant to a binding written contract entered into beforeJune 30, 1968, or pursuant to another provision of this Act) otherthan one which was a subsidiary on June 30, 1968;
4-079
(12) shares retained or acquired, or activitiesengaged in, by any company which becomes, as a result of the enactmentof the Bank Holding Company Act Amendments of 1970, a bank holdingcompany on the date of such enactment, or by any subsidiary thereof,if such company—
(A) within the applicable time limitsprescribed in subsection (a)(2) of this section (i) ceases to be abank holding company, or (ii) ceases to retain direct or indirectownership or control of those shares and to engage in those activitiesnot authorized under this section; and
(B) complies with such other conditionsas the Board may by regulation or order prescribe;
4-080
(13) shares of, or activitiesconducted by, any company which does no business in the United Statesexcept as an incident to its international or foreign business, ifthe Board by regulation or order determines that, under the circ*mstancesand subject to the conditions set forth in the regulation or order,the exemption would not be substantially at variance with the purposesof this Act and would be in the public interest; or
4-080.1
(14) shares of any company which is anexport trading company whose acquisition (including each acquisitionof shares) or formation by a bank holding company has not been disapprovedby the Board pursuant to this paragraph, except that such investments,whether direct or indirect, in such shares shall not exceed 5 percentum of the bank holding company’s consolidated capital and surplus.
(A) (i) No bank holding company shall investin an export trading company under this paragraph unless the Boardhas been given sixty days’ prior written notice of such proposed investmentand within such period has not issued a notice disapproving the proposedinvestment or extending for up to another thirty days the period duringwhich such disapproval may be issued.
(ii) The period for disapproval may be extendedfor such additional thirty-day period only if the Board determinesthat a bank holding company proposing to invest in an export tradingcompany has not furnished all the information required to be submittedor that in the Board’s judgment any material information submittedis substantially inaccurate.
(iii) The notice required to be filed by a bank holding company shallcontain such relevant information as the Board shall require by regulationor by specific request in connection with any particular notice.
(iv) The Board may disapproveany proposed investment only if—
(I) such disapproval is necessary to prevent unsafe or unsound bankingpractices, undue concentration of resources, decreased or unfair competition,or conflicts of interest;
(II) the Board finds that such investment would affect the financialor managerial resources of a bank holding company to an extent whichis likely to have a materially adverse effect on the safety and soundnessof any subsidiary bank of such bank holding company, or
(III) the bank hoding companyfails to furnish the information required under clause (iii).
(v) The Board may not disapproveany proposed investment solely on the basis of the anticipated orproposed asset-to-equity ratio of the export trading company withrespect to which such investment is proposed, unless the anticipatedor proposed annual average asset-to-equity ratio is greater than 20-to-1.
(vi) Within three days aftera decision to disapprove an investment, the Board shall notify thebank holding company in writing of the disapproval and shall providea written statement of the basis for the disapproval.
(vii) A proposed investment maybe made prior to the expiration of the disapproval period if the Boardissues written notice of its intent not to disapprove the investment.
4-080.2
(B) (i) The total amount of extensions of credit by a bank holdingcompany which invests in an export trading company, when combinedwith all such extensions of credit by all the subsidiaries of suchbank holding company, to an export trading company shall not exceedat any one time 10 per centum of the bank holding company’s consolidatedcapital and surplus. For purposes of the preceding sentence, an extensionof credit shall not be deemed to include any amount invested by abank holding company in the shares of an export trading company.
(ii) No provision of anyother Federal law in effect on October 1, 1982, relating specificallyto collateral requirements shall apply with respect to any such extensionof credit.
(iii) No bankholding company or subsidiary of such company which invests in anexport trading company may extend credit to such export trading companyor to customers of such export trading company on terms more favorablethan those afforded similar borrowers in similar circ*mstances, andsuch extension of credit shall not involve more than the normal riskof repayment or present other unfavorable features.
4-080.3
(C) For purposes of thisparagraph, an export trading company—
(i) may engage in or holdshares of a company engaged in the business of underwriting, selling,or distributing securities in the United States only to the extent that anybank holding company which invests in such export trading companymay do so under applicable Federal and State banking laws and regulations;and
(ii) may not engagein agricultural production activities or in manufacturing, exceptfor such incidental product modification including repackaging, reassemblingor extracting byproducts, as is necessary to enable United Statesgoods or services to conform with requirements of a foreign countryand to facilitate their sale in foreign countries.
4-080.4
(D) A bank holding companywhich invests in an export trading company may be required, by theBoard, to terminate its investment or may be made subject to suchlimitations or conditions as may be imposed by the Board, if the Boarddetermines that the export trading company has taken positions incommodities or commodity contracts, in securities, or in foreign exchange,other than as may be necessary in the course of the export tradingcompany’s business operations.
4-080.5
(E) Notwithstanding any other provisionof law, an Edge Act corporation, organized under section 25(a) ofthe Federal Reserve Act (12 U.S.C. 611-631), which is a subsidiaryof a bank holding company, or an agreement corporation, operatingsubject to section 25 of the Federal Reserve Act (12 U.S.C. 601-604(a)),which is a subsidiary of a bank holding company, may invest directlyand indirectly in the aggregate up to 5 per centum of its consolidatedcapital and surplus (25 per centum in the case of a corporation notengaged in banking) in the voting stock or other evidences of ownershipin one or more export trading companies.
4-080.6
(F) For purposes of this paragraph—
(i) the term “export trading company” means a company which doesbusiness under the laws of the United States or any State, which isexclusively engaged in activities related to international trade,and which is organized and operated principally for purposes of exportinggoods or services produced in the United States or for purposes offacilitating the exportation of goods or services produced in theUnited States by unaffiliated persons by providing one or more exporttrade services;
(ii) theterm “export trade services” includes, but is not limited to, consulting,international market research, advertising, marketing, insurance (otherthan acting as principal, agent or broker in the sale of insuranceon risks resident or located, or activities performed, in the UnitedStates, except for insurance covering the transportation of cargofrom any point of origin in the United States to a point of finaldestination outside the United States), product research and design,legal assistance, transportation, including trade documentation andfreight forwarding, communication and processing of foreign ordersto and for exporters and foreign purchasers, warehousing, foreignexchange, financing, and taking title to goods, when provided in orderto facilitate the export of goods or services produced in the UnitedStates;
(iii) the term“bank holding company” shall include a bank which (I) is organizedsolely to do business with other banks and their officers, directors,or employees; (II) is owned primarily by the banks with which it doesbusiness; and (III) does not do business with the general public.No such other bank, owning stock in a bank described in this clausethat invests in an export trading company, shall extend credit toan export trading company in an amount exceeding at any one time 10 per centumof such other bank’s capital and surplus; and
(iv) the term “extension of credit” shallhave the same meaning given such term in the fourth paragraph of section23A of the Federal Reserve Act.
4-080.61
(G) (i) Forpurposes of determining whether an export trading company is operatedprincipally for the purposes described in subparagraph (F)(i)—
(I) the operations of such company duringthe 2-year period beginning on the date such company commences operationsshall not be taken into account in making any such determination;and
(II) not less than4 consecutive years of operations of such company (not including anyportion of the period referred to in subclause (I)) shall be takeninto account in making any such determination.
(ii) A company shall notbe treated as operated principally for the purposes described in subparagraph(F)(i) unless—
(I) the revenues of such company from the export, or facilitatingthe export, of goods or services produced in the United States exceedthe revenues of such company from the import, or facilitating theimport, into the United States of goods or services produced outsidethe United States; and
(II) at least ⅓ of such company’s total revenues are revenues fromthe export, or facilitating the export, of goods or services producedin the United States by persons not affiliated with such company.
4-080.62
(H) (i) The Board may notprescribe by regulation any maximum dollar amount limitation on thevalue of goods which an export trading company may maintain in inventoryat any time.
(ii) Notwithstandingclause (i), the Board may issue an order establishing a maximum dollaramount limitation on the value of goods which a particular exporttrading company may maintain in inventory at any time (after suchcompany has been operating for a reasonable period of time) if theBoard finds that, under the facts and circ*mstances, such limitationis necessary to prevent risks that would affect the financial or managerialresources of an investor bank holding company to an extent which wouldbe likely to have a materially adverse effect on the safety and soundnessof any subsidiary bank of such bank holding company.
The Board shall include in its annual report to the Congressa description and a statement of the reasons for approval of eachactivity approved by it by order or regulation under such paragraphduring the period covered by the report.
4-081
(d) Hardship exemption of company controllingone bank prior to July 1, 1968. To the extent that such actionwould not be substantially at variance with the purposes of this Actand subject to such conditions as it considers necessary to protectthe public interest, the Board by order, after opportunity for hearing,may grant exemptions from the provisions of this section to any bankholding company which controlled one bank prior to July 1, 1968, andhas not thereafter acquired the control of any other bank in order(1) to avoid disrupting business relationships that have existed overa long period of years without adversely affecting the banks or communitiesinvolved, or (2) to avoid forced sales of small locally owned banksto purchasers not similarly representative of community interests,or (3) to allow retention of banks that are so small in relation tothe holding company’s total interests and so small in relation tothe banking market to be served as to minimize the likelihood thatthe bank’s powers to grant or deny credit may be influenced by a desire to furtherthe holding company’s other interests.
4-082
(e) Divestiture of nonexempt shares. With respectto shares which were not subject to the prohibitions of this sectionas originally enacted by reason of any exemption with respect theretobut which were made subject to such prohibitions by the subsequentrepeal of such exemption, no bank holding company shall retain director indirect ownership or control of such shares after five years fromthe date of the repeal of such exemption, except as provided in paragraph(2) of subsection (a). Any bank holding company subject to such five-yearlimitation on the retention of nonbanking assets shall endeavor todivest itself of such shares promptly and such bank holding companyshall report its progress in such divestiture to the Board two yearsafter repeal of the exemption applicable to it and annually thereafter.
4-082.1
(f) Certain companies nottreated as bank holding companies.
(1) Except as provided in paragraph (9),any company which—
(A) on March 5, 1987, controlled aninstitution which became a bank as a result of the enactment of theCompetitive Equality Amendments of 1987; and
(B) was not a bank holding company onthe day before the date of the enactment of the Competitive EqualityAmendments of 1987,
shall not be treated as a bank holding company for purposesof this Act solely by virtue of such company’s control of such institution.
4-082.11
(2) Subject to paragraph(3), a company described in paragraph (1) shall no longer qualifyfor the exemption provided under that paragraph if—
(A) suchcompany directly or indirectly—
(i) acquires control of an additionalbank or an insured institution (other than an insured institutiondescribed in paragraph (10) or (12) of this subsection) after March5, 1987; or
(ii) acquirescontrol of more than 5 percent of the shares or assets of an additionalbank or a savings association other than—
(I) shares held as a bona fide fiduciary (whether with or withoutthe sole discretion to vote such shares);
(II) shares held by any person as a bonafide fiduciary solely for the benefit of employees of either the companydescribed in paragraph (1) or any subsidiary of that company and thebeneficiaries of those employees;
(III) shares held temporarily pursuant toan underwriting commitment in the normal course of an underwritingbusiness;
(IV) sharesheld in an account solely for trading purposes;
(V) shares over which no control is heldother than control of voting rights acquired in the normal courseof a proxy solicitation;
(VI) loans or other accounts receivable acquired in the normal courseof business;
(VII) sharesor assets acquired in securing or collecting a debt previously contractedin good faith, during the 2-year period beginning on the date of suchacquisition or for such additional time (not exceeding 3 years) asthe Board may permit if the Board determines that such an extensionwill not be detrimental to the public interest;
(VIII) shares or assets of a savings associationdescribed in paragraph (10) or (12) of this subsection;
(IX) shares of a savings associationheld by any insurance company, as defined in section 2(a)(17) of theInvestment Company Act of 1940, except as provided in paragraph (11);
(X) shares issued in a qualified stock issuanceunder section 10(q) of the Home Owners’ Loan Act; and
(XI) assets that are derivedfrom, or incidental to, activities in which institutions describedin subparagraph (F) or (H) of section 2(c)(2) are permitted to engage;
except that the aggregate amount of shares held underthis clause (other than under subclauses (I), (II), (III), (IV), (V),and (VIII)) may not exceed 15 percent of all outstanding shares orof the voting power of a savings association;
(B) any bank subsidiaryof such company—
(i) accepts demand deposits or deposits thatthe depositor may withdraw by check or similar means for payment tothird parties; and
(ii)engages in the business of making commercial loans (except that, forpurposes of this clause, loans made in the ordinary course of a creditcard operation shall not be treated as commercial loans); or
(C) after the date ofthe enactment of the Competitive Equality Amendments of 1987, anybank subsidiary of such company permits any overdraft (including anyintraday overdraft), or incurs any such overdraft in the account ofthe bank at a Federal reserve bank, on behalf of an affiliate, otherthan an overdraft described in paragraph (3).
4-082.12
(3) For purposes of paragraph (2)(C), anoverdraft is described in this paragraph if—
(A) such overdraft resultsfrom an inadvertent computer or accounting error that is beyond thecontrol of both the bank and the affiliate;
(B) such overdraft—
(i) is permittedor incurred on behalf of an affiliate that is monitored by, reportsto, and is recognized as a primary dealer by the Federal Reserve Bankof New York; and
(ii) isfully secured, as required by the Board, by bonds, notes, or otherobligations that are direct obligations of the United States or onwhich the principal and interest are fully guaranteed by the UnitedStates or by securities and obligations eligible for settlement onthe Federal Reserve book entry system; or
(C) such overdraft—
(i) is permitted or incurred by, or on behalf of, an affiliate inconnection with an activity that is financial in nature or incidentalto a financial activity; and
(ii) does not cause the bank to violate any provision of section23A or 23B of the Federal Reserve Act, either directly, in the caseof a bank that is a member of the Federal Reserve System, or by virtueof section 18(j) of the Federal Deposit Insurance Act, in the caseof a bank that is not a member of the Federal Reserve System.
4-082.13
(4) If any company describedin paragraph (1) fails to qualify for the exemption provided underparagraph (1) by operation of paragraph (2), such exemption shallcease to apply to such company and such company shall divest controlof each bank it controls before the end of the 180-day period beginningon the date on which the company receives notice from the Board thatthe company has failed to continue to qualify for such exemption,unless, before the end of such 180-day period, the company has—
(A) either—
(i) corrected the condition or ceased theactivity that caused the company to fail to continue to qualify forthe exemption; or
(ii)submitted a plan to the Board for approval to cease the activity orcorrect the condition in a timely manner (which shall not exceed 1year); and
(B) implemented procedures that arereasonably adapted to avoid the reoccurrence of such condition oractivity.
(5) This subsection shall cease to apply to any company described in paragraph(1) if such company—
(A) registers as a bank holding companyunder section 5(a) of this Act;
(B) immediately upon such registration,complies with all of the requirements of this Act, and regulationsprescribed by the Board pursuant to this Act, including the nonbankingrestrictions of this section; and
(C) does not, at the time of such registration,control banks in more than one State, the acquisition of which wouldbe prohibited by section 3(d) of this Act if an application for suchacquisition by such company were filed under section 3(a) of thisAct.
4-082.14
(6)Each company described in paragraph (1) shall, within 60 days afterthe date of enactment of the Competitive Equality Amendments of 1987,provide the Board with the name and address of such company, the nameand address of each bank such company controls, and a descriptionof each such bank’s activities.
(7) The Board may, from time to time, examinea company described in paragraph (1), or a bank controlled by suchcompany, or require reports under oath from appropriate officers ordirectors of such company or bank solely for purposes of assuringcompliance with the provisions of this subsection and enforcing suchcompliance.
4-082.15
(8) (A) In addition to any otherpower of the Board, the Board may enforce compliance with the provisionsof this Act which are applicable to any company described in paragraph(1), and any bank controlled by such company, under section 8 of theFederal Deposit Insurance Act and such company or bank shall be subjectto such section (for such purposes) in the same manner and to thesame extent as if such company or bank were a State member insuredbank.
(B) Any violationof this Act by any company described in paragraph (1), and any bankcontrolled by such company, may also be treated as a violation ofthe Federal Deposit Insurance Act for purposes of subparagraph (A).
(C) No provision ofthis paragraph shall be construed as limiting any authority of theComptroller of the Currency or the Federal Deposit Insurance Corporation.
4-082.16
(9) A company describedin paragraph (1) shall be—
(A) treated as a bank holding companyfor purposes of section 106 of the Bank Holding Company Act Amendmentsof 1970 and section 22(h) of the Federal Reserve Act and any regulationprescribed under any such section; and
(B) subject to the restrictions of section106 of the Bank Holding Company Act Amendments of 1970, in connectionwith any transaction involving the products or services of such companyor affiliate and those of a bank affiliate, as if such company oraffiliate were a bank and such bank were a subsidiary of a bank holdingcompany.
(10) For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A),an insured institution is described in this paragraph if—
(A) the insuredinstitution was acquired (or any shares or assets of such institutionwere acquired) by a company described in paragraph (1) in an acquisitionunder section 408(m) of the National Housing Act or section 13(k)of the Federal Deposit Insurance Act; and
(B) either—
(i) the insured institutionis located in a State in which such company controlled a bank on March5, 1987; or
(ii) the insuredinstitution has total assets of $500,000,000 or more at the time ofsuch acquisition.
4-082.17
(11) Shares described in clause (ii)(IX)of paragraph (2)(A) shall not be excluded for purposes of clause (ii) of suchparagraph if—
(A) all shares held under such clause(ii)(IX) by all insurance company affiliates of such savings associationin the aggregate exceed 5 percent of all outstanding shares or ofthe voting power of the savings association; or
(B) such shares are acquired or retainedwith a view to acquiring, exercising, or transferring control of thesavings association.
(12) For purposes of clauses (i) and (ii)(VIII)of paragraph (2)(A), an insured institution is described in this paragraphif the insured institution was acquired (or any shares or assets ofsuch institution were acquired) by a company described in paragraph(1)—
(A) from the Resolution Trust Corporation,the Federal Deposit Insurance Corporation, or the Director of theOffice of Thrift Supervision, in any capacity; or
(B) in an acquisition in which the insuredinstitution has been found to be in danger of default (as definedin section 3 of the Federal Deposit Insurance Act by the appropriateFederal or State authority.
4-082.2
(13) A company described in paragraph (1)that holds shares issued in a qualified stock issuance pursuant tosection 10(q) of the Home Owners’ Loan Act by any savings associationor savings and loan holding company (neither of which is a subsidiary)shall not be deemed to control such savings association or savingsand loan holding company solely because such company holds such sharesunless—
(A) the company fails to comply withany requirement or condition imposed by paragraph (2)(A)(ii)(X) orsection 10(q) of the Home Owners’ Loan Act with respect to such shares;or
(B) the sharesare acquired or retained with a view to acquiring, exercising, ortransferring control of the savings association or savings and loanholding company.
4-082.21
(14) (A) An institutiondescribed in section 2(c)(2)(F) may control a foreign bank if—
(i) the investment of the institution in the foreign bank meets therequirements of section 25 or 25A of the Federal Reserve Act and theforeign bank qualifies under such sections;
(ii) the foreign bank does not offer any productsor services in the United States; and
(iii) the activities of the foreign bank arepermissible under otherwise applicable law.
(B) The limitations containedin any clause of section 2(c)(2)(F) shall not apply to a foreign bankdescribed in subparagraph (A) that is controlled by an institutiondescribed in such section.
4-082.3
(g) Limitations on certain banks.
(1) Notwithstanding any otherprovision of this section (other than the last sentence of subsection(a)(2)), a bank holding company which controls an institution thatbecame a bank as a result of the enactment of the Competitive EqualityAmendments of 1987 may retain control of such institution if suchinstitution does not—
(A) engage in any activity after thedate of the enactment of such Amendments which would have caused suchinstitution to be a bank (as defined in section 2(c), as in effectbefore such date) if such activities had been engaged in before suchdate; or
(B) increasethe number of locations from which such institution conducts businessafter March 5, 1987.
(2) The limitations contained in paragraph(1) shall cease to apply to a bank described in such paragraph atsuch time as the acquisition of such bank, by the bank holding companyreferred to in such paragraph, would not be prohibited under section3(d) of this Act if—
(A) an application for such acquisition were filedunder section 3(a) of this Act; and
(B) such bank were treated as an additionalbank (under section 3(d)).
4-082.4
(h) Tying provisions.
(1) An institution described in subparagraph(D), (F), (G), or (H) of section 2(c)(2) shall be treated as a bank,and a company that controls such an institution shall be treated asa bank holding company, for purposes of section 106 of the Bank HoldingCompany Act Amendments of 1970 and section 22(h) of the Federal ReserveAct and any regulation prescribed under any such section.
(2) A company that controlsan institution described in subparagraph (D), (F), (G), or (H) ofsection 2(c)(2) and any of such company’s other affiliates, shallbe subject to the tying restrictions of section 106 of the Bank HoldingCompany Act Amendments of 1970 in connection with any transactioninvolving the products or services of such company or affiliate andthose of such institution, as if such company or affiliate were abank and such institution were a subsidiary of a bank holding company.
4-082.5
(i) Acquisition of savingsassociations.
(1) The Board may approve an applicationby any bank holding company under subsection (c)(8) to acquire anysavings association in accordance with the requirements and limitationsof this section.
(2)In approving an application by a bank holding company to acquire asavings association, the Board shall not impose any restriction ontransactions between the savings association and its holding companyaffiliates, except as required under sections 23A and 23B of the FederalReserve Act or any other applicable law.
(3) (A) Notwithstandingany other provision of this Act, any qualified savings associationwhich became a federally chartered stock company in December of 1986and which is acquired by any bank holding company without Federalfinancial assistance after June 1, 1991, and before March 1, 1992,and any subsidiary of any such association, may after such acquisitioncontinue to engage within the home State of the qualified savingsassociation in insurance agency activities in which any Federal savingsassociation (or any subsidiary thereof) may engage in accordance withthe Home Owners’ Loan Act and regulations pursuant to such Act ifthe qualified savings association or subsidiary thereof was continuouslyengaged in such activity from June 1, 1991, to the date of the acquisition.
(B) For purposes ofthis paragraph, the term “qualified savings association” meansany savings association that—
(i) was chartered or organizedas a savings association before June 1, 1991;
(ii) had, immediately before the acquisitionof such association by the bank holding company referred to in subparagraph(A), negative tangible capital and total insured deposits in excessof $3,000,000,000; and
(iii) will meet all applicable regulatory capital requirements asa result of such acquisition.
(4) (A)Upon receiving any application or notice by a bank holding companyto acquire, directly or indirectly, a savings association under subsection(c)(8), the Board shall solicit comments and recommendations from—
(i) the Comptroller of the Currency, with respect to the acquisitionof a Federal savings association; and
(ii) the Federal Deposit Insurance Corporation,with respect to the acquisition of a State savings association.
(B)The comments and recommendations of the Comptroller of the Currencyor the Federal Deposit Insurance Corporation, as applicable, undersubparagraph (A) with respect to any acquisition subject to such subparagraphshall be transmitted to the Board not later than 30 days after thereceipt by the Comptroller of the Currency or the Federal DepositInsurance Corporation, as applicable, of the notice relating to suchacquisition (or such shorter period as the Board may specify if theBoard advises the Comptroller of the Currency or the Federal DepositInsurance Corporation, as applicable, that an emergency exists thatrequires expeditious action).
(5) (A) The Boardshall consult with the Director, as appropriate, in establishing thescope of an examination by the Board of a bank holding company thatdirectly or indirectly controls a savings association.
(B) Upon the request ofthe Comptroller of the Currency or the Federal Deposit Insurance Corporation,as applicable, the Board shall furnish the Comptroller of the Currencyor the Federal Deposit Insurance Corporation, as applicable, witha copy of any inspection report, additional examination materials,or supervisory information relating to any bank holding company thatdirectly or indirectly controls a savings association.
(6) The Board and theComptroller of the Currency or the Federal Deposit Insurance Corporation,as applicable, shall cooperate in any enforcement action against anybank holding company that controls a savings association, if the relevantconduct involves such association.
(8)*
(A) The Board may not approve an applicationby a bank holding company to acquire an insured depository institutionunder subsection (c)(8) or any other provision of this Act if—
(i) the home State of such insured depository institution is a Stateother than the home State of the bank holding company; and
(ii) the applicant (includingall insured depository institutions which are affiliates of the applicant)controls, or upon consummation of the transaction would control, morethan 10 percent of the total amount of deposits of insured depositoryinstitutions in the United States.
(B) Subparagraph (A) shall not applyto an acquisition that involves an insured depository institutionin default or in danger of default, or with respect to which the FederalDeposit Insurance Corporation provides assistance under section 13of the Federal Deposit Insurance Act (12 U.S.C. 1823).
4-082.6
(j) Notice procedures fornonbanking activities.
(1) (A) Exceptas provided in paragraph (3), no bank holding company may engage inany nonbanking activity or acquire or retain ownership or controlof the shares of a company engaged in activities based on subsection(c)(8) or (a)(2) or in any complementary activity under subsection(k)(1)(B) without providing the Board with written notice of the proposedtransaction or activity at least 60 days before the transaction oractivity is proposed to occur or commence.
(B) The notice submitted to the Boardshall contain such information as the Board shall prescribe by regulationor by specific request in connection with a particular notice.
(C) (i) Any notice filed under this subsection shall be deemed tobe approved by the Board unless, before the end of the 60-day periodbeginning on the date the Board receives a complete notice under subparagraph(A), the Board issues an order disapproving the transaction or activityand setting forth the reasons for disapproval.
(ii) The Board may extend the 60-day periodreferred to in clause (i) for an additional 30 days. The Board mayfurther extend the period with the agreement of the bank holding companysubmitting the notice pursuant to this subsection.
(iii) In the event a hearing is requestedor the Board determines that a hearing is warranted, the Board mayextend the notice period provided in this subsection for such time as is reasonablynecessary to conduct a hearing and to evaluate the hearing record.Such extension shall not exceed the 91-day period beginning on thedate that the hearing record is complete.
4-082.61
(D) (i) Any transaction or activity maycommence before the expiration of any period for disapproval establishedunder this paragraph if the Board issues a written notice of approval.
(ii) The Board may prescriberegulations which provide for a shorter notice period with respectto particular activities or transactions.
(E) In the case of any noticeto engage in, or to acquire or retain ownership or control of sharesof any company engaged in, any activity pursuant to subsection (c)(8)or (a)(2) or in any complementary activity under subsection (k)(1)(B)that has not been previously approved by regulation, the Board mayextend the notice period under this subsection for an additional 90days. The Board may further extend the period with the agreement ofthe bank holding company submitting the notice pursuant to this subsection.
4-082.62
(2) (A) In connection with a noticeunder this subsection, the Board shall consider whether performanceof the activity by a bank holding company or a subsidiary of suchcompany can reasonably be expected to produce benefits to the public,such as greater convenience, increased competition, or gains in efficiency,that outweigh possible adverse effects, such as undue concentrationof resources, decreased or unfair competition, conflicts of interests,unsound banking practices, or risk to the stability of the UnitedStates banking or financial system.
(B) The Board may deny any proposedtransaction or activity for which notice has been submitted pursuantto this subsection if the bank holding company submitting such noticeneglects, fails, or refuses to furnish the Board all the informationrequired by the Board.
(C) Nothing in this subsection limits the authority of the Boardto impose conditions in connection with an action under this section.
(3) No noticeunder paragraph (1) of this subsection or under subsection (c)(8)or (a)(2)(B) is required for a proposal by a bank holding companyto engage in any activity, other than any complementary activity undersubsection (k)(1)(B), or acquire the shares or assets of any company,other than an insured depository institution or a company engagedin any complementary activity under subsection (k)(1)(B), if the proposalqualifies under paragraph (4).
4-082.63
(4) A proposal qualifies under this paragraphif all of the following criteria are met:
(A) Both before andimmediately after the proposed transaction—
(i) the acquiringbank holding company is well capitalized;
(ii) the lead insured depository institutionof such holding company is well capitalized;
(iii) well capitalized insured depositoryinstitutions control at least 80 percent of the aggregate total risk-weightedassets of insured depository institutions controlled by such holdingcompany; and
(iv) no insureddepository institution controlled by such holding company is undercapitalized.
(B) (i) At the time of the transaction,the acquiring bank holding company, its lead insured depository institution,and insured depository institutions that control at least 90 percentof the aggregate total risk-weighted assets of insured depositoryinstitutions controlled by such holding company are well managed.
(ii) Except as provided inparagraph (6), no insured depository institution controlled by the acquiringbank holding company has received 1 of the 2 lowest composite ratingsat the later of the institution’s most recent examination or subsequentreview.
(C) Following consummation of the proposal, the bank holding companyengages directly or through a subsidiary solely in—
(i) activitiesthat are permissible under subsection (c)(8), as determined by theBoard by regulation or order thereunder, subject to all of the restrictions,terms, and conditions of such subsection and such regulation or order;and
(ii) such other activitiesas are otherwise permissible under this section, subject to the restrictions,terms and conditions, including any prior notice or approval requirements,provided in this section.
(D) (i) The book valueof the total assets to be acquired does not exceed 10 percent of theconsolidated total risk-weighted assets of the acquiring bank holdingcompany.
(ii) The grossconsideration to be paid for the securities or assets does not exceed15 percent of the consolidated Tier 1 capital of the acquiring bankholding company.
(E) For proposals described in paragraph(5)(B), the Board has not, before the conclusion of the period providedin paragraph (5)(B), advised the bank holding company that a noticeunder paragraph (1) is required.
(F) During the 12-month period endingon the date on which the bank holding company proposes to commencean activity or acquisition, no administrative enforcement action hasbeen commenced, and no cease and desist order has been issued pursuantto section 8 of the Federal Deposit Insurance Act, against the bankholding company or any depository institution subsidiary of the holdingcompany, and no such enforcement action, order, or other administrativeenforcement proceeding is pending as of such date.
4-082.64
(5) (A) A bank holding companythat qualifies under paragraph (4) and that proposes to engage denovo, directly or through a subsidiary, in any activity that is permissibleunder subsection (c)(8), as determined by the Board by regulation,may commence that activity without prior notice to the Board and mustprovide written notification to the Board not later than 10 businessdays after commencing the activity.
(B) (i) At least 12 businessdays before commencing any activity pursuant to paragraph (3) (otherthan an activity described in subparagraph (A) of this paragraph)or acquiring shares or assets of any company pursuant to paragraph(3), the bank holding company shall provide written notice of theproposal to the Board, unless the Board determines that no noticeor a shorter notice period is appropriate.
(ii) A notification under this subparagraphshall include a description of the proposed activities and the termsof any proposed acquisition.
4-082.65
(6) Any insured depository institutionwhich has been acquired by a bank holding company during the 12-monthperiod preceding the date on which the company proposes to commencean activity or acquisition pursuant to paragraph (3) may be excludedfor purposes of paragraph (4)(B)(ii) if—
(A) the bank holdingcompany has developed a plan for the institution to restore the capitaland management of the institution which is acceptable to the appropriateFederal banking agency; and
(B) all such insured depository institutionsrepresent, in the aggregate, less than 10 percent of the aggregatetotal risk-weighted assets of all insured depository institutionscontrolled by the bank holding company.
(7) The Board may, by regulation, adjust the percentagesand the manner in which the percentages of insured depository institutionsare calculated under paragraph (4)(B)(i), (4)(D), or (6)(B) if theBoard determines that any such adjustment is consistent with safetyand soundness and the purposes of this Act.
4-082.7
(k) Engaging in activities that are financialin nature.
(1) Notwithstanding subsection (a), a financialholding company may engage in any activity, and may acquire and retainthe shares of any company engaged in any activity, that the Board,in accordance with paragraph (2), determines (by regulation or order)—
(A) to be financial in nature or incidental to such financial activity;or
(B) is complementaryto a financial activity and does not pose a substantial risk to thesafety or soundness of depository institutions or the financial systemgenerally.
(2) (A)
(i) The Boardshall notify the Secretary of the Treasury of, and consult with theSecretary of the Treasury concerning, any request, proposal, or applicationunder this subsection for a determination of whether an activity isfinancial in nature or incidental to a financial activity.
(ii) The Board shall not determinethat any activity is financial in nature or incidental to a financialactivity under this subsection if the Secretary of the Treasury notifiesthe Board in writing, not later than 30 days after the date of receiptof the notice described in clause (i) (or such longer period as theBoard determines to be appropriate under the circ*mstances) that theSecretary of the Treasury believes that the activity is not financialin nature or incidental to a financial activity or is not otherwisepermissible under this section.
(B) (i) TheSecretary of the Treasury may, at any time, recommend in writing thatthe Board find an activity to be financial in nature or incidentalto a financial activity.
(ii) Not later than 30 days after the date of receipt of a writtenrecommendation from the Secretary of the Treasury under clause (i)(or such longer period as the Secretary of the Treasury and the Boarddetermine to be appropriate under the circ*mstances), the Board shalldetermine whether to initiate a public rulemaking proposing that therecommended activity be found to be financial in nature or incidentalto a financial activity under this subsection, and shall notify theSecretary of the Treasury in writing of the determination of the Boardand, if the Board determines not to seek public comment on the proposal,the reasons for that determination.
4-082.71
(3) In determining whetheran activity is financial in nature or incidental to a financial activity,the Board shall take into account—
(A) the purposes of thisAct and the Gramm-Leach-Bliley Act;
(B) changes or reasonably expected changesin the marketplace in which financial holding companies compete;
(C) changes or reasonablyexpected changes in the technology for delivering financial services;and
(D) whether suchactivity is necessary or appropriate to allow a financial holdingcompany and the affiliates of a financial holding company to—
(i) compete effectivelywith any company seeking to provide financial services in the UnitedStates;
(ii) efficientlydeliver information and services that are financial in nature throughthe use of technological means, including any application necessaryto protect the security or efficacy of systems for the transmissionof data or financial transactions; and
(iii) offer customers any available or emergingtechnological means for using financial services or for the documentimaging of data.
4-082.72
(4) For purposes of this subsection, thefollowing activities shall be considered to be financial in nature:
(A) Lending, exchanging, transferring, investing for others, or safeguardingmoney or securities.
(B) Insuring, guaranteeing, or indemnifying against loss, harm, damage,illness, disability, or death, or providing and issuing annuities,and acting as principal, agent, or broker for purposes of the foregoing,in any State.
(C)Providing financial, investment, or economic advisory services, includingadvising an investment company (as defined in section 3 of the InvestmentCompany Act of 1940).
(D) Issuing or selling instruments representing interests in poolsof assets permissible for a bank to hold directly.
(E) Underwriting, dealing in, or makinga market in securities.
(F) Engaging in any activity that theBoard has determined, by order or regulation that is in effect onthe date of the enactment of the Gramm-Leach-Bliley Act, to be soclosely related to banking or managing or controlling banks as tobe a proper incident thereto (subject to the same terms and conditionscontained in such order or regulation, unless modified by the Board).
(G) Engaging, in theUnited States, in any activity that—
(i) a bank holding companymay engage in outside of the United States; and
(ii) the Board has determined, under regulationsprescribed or interpretations issued pursuant to subsection (c)(13)(as in effect on the day before the date of the enactment of the Gramm-Leach-BlileyAct) to be usual in connection with the transaction of banking orother financial operations abroad.
(H) Directly or indirectly acquiringor controlling, whether as principal, on behalf of 1 or more entities(including entities, other than a depository institution or subsidiaryof a depository institution, that the bank holding company controls),or otherwise, shares, assets, or ownership interests (including debtor equity securities, partnership interests, trust certificates, orother instruments representing ownership) of a company or other entity,whether or not constituting control of such company or entity, engagedin any activity not authorized pursuant to this section if—
(i) the shares,assets, or ownership interests are not acquired or held by a depositoryinstitution or subsidiary of a depository institution;
(ii) such shares, assets, orownership interests are acquired and held by—
(I) a securities affiliate or an affiliatethereof; or
(II) an affiliateof an insurance company described in subparagraph (I)(ii) that providesinvestment advice to an insurance company and is registered pursuantto the Investment Advisers Act of 1940, or an affiliate of such investmentadviser;
as part of a bona fide underwriting or merchantor investment banking activity, including investment activities engagedin for the purpose of appreciation and ultimate resale or dispositionof the investment;
(iii)such shares, assets, or ownership interests are held for a periodof time to enable the sale or disposition thereof on a reasonablebasis consistent with the financial viability of the activities describedin clause (ii); and
(iv)during the period such shares, assets, or ownership interests areheld, the bank holding company does not routinely manage or operatesuch company or entity except as may be necessary or required to obtaina reasonable return on investment upon resale or disposition.
(I) Directly or indirectlyacquiring or controlling, whether as principal, on behalf of 1 ormore entities (including entities, other than a depository institutionor subsidiary of a depository institution, that the bank holding companycontrols) or otherwise, shares, assets, or ownership interests (includingdebt or equity securities, partnership interests, trust certificatesor other instruments representing ownership) of a company or otherentity, whether or not constituting control of such company or entity,engaged in any activity not authorized pursuant to this section if—
(i) the shares, assets, or ownership interests are not acquired orheld by a depository institution or a subsidiary of a depository institution;
(ii) such shares, assets,or ownership interests are acquired and held by an insurance companythat is predominantly engaged in underwriting life, accident and health,or property and casualty insurance (other than credit-related insurance)or providing and issuing annuities;
(iii) such shares, assets, or ownership interestsrepresent an investment made in the ordinary course of business ofsuch insurance company in accordance with relevant State law governingsuch investments; and
(iv) during the period such shares, assets, or ownership interestsare held, the bank holding company does not routinely manage or operatesuch company except as may be necessary or required to obtain a reasonablereturn on investment.
4-082.73
(5) (A)The Board shall, by regulation or order, define, consistent with thepurposes of this Act, the activities described in subparagraph (B)as financial in nature, and the extent to which such activities arefinancial in nature or incidental to a financial activity.
(B) The activities describedin this subparagraph are as follows:
(i) Lending, exchanging, transferring,investing for others, or safeguarding financial assets other thanmoney or securities.
(ii)Providing any device or other instrumentality for transferring moneyor other financial assets.
(iii) Arranging, effecting, or facilitating financial transactionsfor the account of third parties.
(6) (A) A financial holding companythat acquires any company or commences any activity pursuant to thissubsection shall provide written notice to the Board describing theactivity commenced or conducted by the company acquired not laterthan 30 calendar days after commencing the activity or consummatingthe acquisition, as the case may be.
(B) (i) Except as providedin subsection (j) with regard to the acquisition of an insured depositoryinstitution and clause (ii), a financial holding company may commenceany activity, or acquire any company, pursuant to paragraph (4) orany regulation prescribed or order issued under paragraph (5), withoutprior approval of the Board.
(ii) A financial holding company may not acquire a company, withoutthe prior approval of the Board, in a transaction in which the totalconsolidated assets to be acquired by the financial holding companyexceed $10,000,000,000.
(iii) Solely for purposes of section 7A(c)(8) of the Clayton Act(15 U.S.C. 18a(c)(8)), the transactions subject to the requirementsof this paragraph shall be treated as if the approval of the Boardis not required.
4-082.74
(7) (A)The Board and the Secretary of the Treasury may issue such regulationsimplementing paragraph (4)(H), including limitations on transactionsbetween depository institutions and companies controlled pursuantto such paragraph, as the Board and the Secretary jointly deem appropriateto assure compliance with the purposes and prevent evasions of thisAct and the Gramm-Leach-Bliley Act and to protect depository institutions.
(B) The restrictionscontained in paragraph (4)(H) on the ownership and control of shares,assets, or ownership interests by or on behalf of a subsidiary ofa depository institution shall not apply to a financial subsidiary(as defined in section 5136A of the Revised Statutes of the UnitedStates) of a bank, if the Board and the Secretary of the Treasuryjointly authorize financial subsidiaries of banks to engage in merchantbanking activities pursuant to section 122 of the Gramm-Leach-BlileyAct.
4-082.8
(l) Conditions for engaging in expanded financialactivities.
(1) Notwithstanding subsection (k), (n),or (o), a bank holding company may not engage in any activity, ordirectly or indirectly acquire or retain shares of any company engagedin any activity, under subsection (k), (n), or (o), other than activitiespermissible for any bank holding company under subsection (c)(8),unless—
(A) all of the depository institutionsubsidiaries of the bank holding company are well capitalized;
(B) all of the depositoryinstitution subsidiaries of the bank holding company are well managed;
(C) the bank holdingcompany is well capitalized and well managed; and
(D) the bank holding company has filedwith the Board—
(i) a declaration that the company electsto be a financial holding company to engage in activities or acquireand retain shares of a company that were not permissible for a bankholding company to engage in or acquire before the enactment of theGramm-Leach-Bliley Act; and
(ii) a certification that the company meets the requirements of subparagraphs(A), (B), and (C).
4-082.81
(2) Notwithstanding subsection (k) or (n)of this section, section 5136A(a) of the Revised Statutes of the UnitedStates, or section 46(a) of the Federal Deposit Insurance Act, theappropriate Federal banking agency shall prohibit a financial holdingcompany or any insured depository institution from—
(A) commencingany new activity under subsection (k) or (n) of this section, section5136A(a) of the Revised Statutes of the United States, or section46(a) of the Federal Deposit Insurance Act; or
(B) directly or indirectly acquiringcontrol of a company engaged in any activity under subsection (k)or (n) of this section, section 5136A(a) of the Revised Statutes ofthe United States, or section 46(a) of the Federal Deposit InsuranceAct (other than an investment made pursuant to subparagraph (H) or(I) of subsection (k)(4), or section 122 of the Gramm-Leach-BlileyAct, or under section 46(a) of the Federal Deposit Insurance Act byreason of such section 122, by an affiliate already engaged in activitiesunder any such provision);
if any insured depository institution subsidiary of suchfinancial holding company, or the insured depository institution orany of its insured depository institution affiliates, has receivedin its most recent examination under the Community Reinvestment Actof 1977, a rating of less than “satisfactory record of meeting communitycredit needs”.
(3)For purposes of paragraph (1), the Board shall apply comparable capitaland management standards to a foreign bank that operates a branchor agency or owns or controls a commercial lending company in theUnited States, giving due regard to the principle of national treatmentand equality of competitive opportunity.
4-082.85
(m) Provisions applicable to financialholding companies that fail to meet certain requirements.
(1) If the Board finds that—
(A) a financialholding company is engaged, directly or indirectly, in any activityunder subsection (k), (n), or (o), other than activities that arepermissible for a bank holding company under subsection (c)(8); and
(B) such financialholding company is not in compliance with the requirements of subsection(l)(1); the Board shall give notice to the financial holdingcompany to that effect, describing the conditions giving rise to thenotice.
(2) Not later than 45 days after the date of receipt by a financialholding company of a notice given under paragraph (1) (or such additionalperiod as the Board may permit), the financial holding company shallexecute an agreement with the Board to comply with the requirementsapplicable to a financial holding company under subsection (l)(1).
(3) Until theconditions described in a notice to a financial holding company underparagraph (1) are corrected, the Board may impose such limitationson the conduct or activities of that financial holding company orany affiliate of that company as the Board determines to be appropriateunder the circ*mstances and consistent with the purposes of this Act.
4-082.86
(4) If the conditionsdescribed in a notice to a financial holding company under paragraph(1) are not corrected within 180 days after the date of receipt bythe financial holding company of a notice under paragraph (1), theBoard may require such financial holding company, under such termsand conditions as may be imposed by the Board and subject to suchextension of time as may be granted in the discretion of the Board,either—
(A) to divest control of any subsidiarydepository institution; or
(B) at the election of the financialholding company instead to cease to engage in any activity conductedby such financial holding company or its subsidiaries (other thana depository institution or a subsidiary of a depository institution)that is not an activity that is permissible for a bank holding companyunder subsection (c)(8).
(5) In taking any action under this subsection,the Board shall consult with all relevant Federal and State regulatoryagencies and authorities.
4-082.9
(n) Authority to retain limited nonfinancial activitiesand affiliations.
(1) Notwithstanding subsection (a), a companythat is not a bank holding company or a foreign bank (as defined insection 1(b)(7) of the International Banking Act of 1978) and becomesa financial holding company after the date of the enactment of theGramm-Leach-Bliley Act may continue to engage in any activity andretain direct or indirect ownership or control of shares of a companyengaged in any activity if—
(A) the holding company lawfully wasengaged in the activity or held the shares of such company on September30, 1999;
(B) theholding company is predominantly engaged in financial activities asdefined in paragraph (2); and
(C) the company engaged in such activitycontinues to engage only in the same activities that such companyconducted on September 30, 1999, and other activities permissibleunder this Act.
(2) For purposes of this subsection, acompany is predominantly engaged in financial activities if the annualgross revenues derived by the holding company and all subsidiariesof the holding company (excluding revenues derived from subsidiarydepository institutions), on a consolidated basis, from engaging inactivities that are financial in nature or are incidental to a financialactivity under subsection (k) represent at least 85 percent of theconsolidated annual gross revenues of the company.
4-082.91
(3) A financial holding company that engagesin activities or holds shares pursuant to this subsection, or a subsidiaryof such financial holding company, may not acquire, in any merger,consolidation, or other type of business combination, assets of anyother company that is engaged in any activity that the Board has notdetermined to be financial in nature or incidental to a financialactivity under subsection (k), except this paragraph shall not applywith respect to a company that owns a broadcasting station licensedunder title III of the Communications Act of 1934 and the shares ofwhich are under common control with an insurance company since January1, 1998, unless such company is acquired by, or otherwise becomesan affiliate of, a bank holding company that, at the time such acquisitionor affiliation is consummated, is 1 of the 5 largest domestic bankholding companies (as determined on the basis of the consolidatedtotal assets of such companies).
(4) Notwithstanding any other provisionof this subsection, a financial holding company may continue to engagein activities or hold shares in companies pursuant to this subsectiononly to the extent that the aggregate annual gross revenues derivedfrom all such activities and all such companies does not exceed 15percent of the consolidated annual gross revenues of the financialholding company (excluding revenues derived from subsidiary depositoryinstitutions).
4-082.92
(5) (A) A depository institutioncontrolled by a financial holding company shall not—
(i) offer or market,directly or through any arrangement, any product or service of a companywhose activities are conducted or whose shares are owned or controlledby the financial holding company pursuant to this subsection or subparagraph(H) or (I) of subsection (k)(4); or
(ii) permit any of its products or servicesto be offered or marketed, directly or through any arrangement, byor through any company described in clause (i).
(B) Subparagraph (A)shall not be construed as prohibiting an arrangement between a depositoryinstitution and a company owned or controlled pursuant to subparagraph(H) or (I) of subsection (k)(4) for the marketing of products or servicesthrough statement inserts or Internet websites if—
(i) such arrangementdoes not violate section 106 of the Bank Holding Company Act Amendmentsof 1970; and
(ii) theBoard determines that the arrangement is in the public interest, doesnot undermine the separation of banking and commerce, and is consistentwith the safety and soundness of depository institutions.
4-082.93
(6) A depository institutioncontrolled by a financial holding company may not engage in a coveredtransaction (as defined in section 23A(b)(7) of the Federal ReserveAct) with any affiliate controlled by the company pursuant to thissubsection.
(7) A financialholding company engaged in any activity, or retaining direct or indirectownership or control of shares of a company, pursuant to this subsection,shall terminate such activity and divest ownership or control of theshares of such company before the end of the 10-year period beginningon the date of the enactment of the Gramm-Leach-Bliley Act. The Boardmay, upon application by a financial holding company, extend such10-year period by a period not to exceed an additional 5 years ifsuch extension would not be detrimental to the public interest.
4-082.95
(o) Regulation of certainfinancial holding companies. Notwithstanding subsection (a),a company that is not a bank holding company or a foreign bank (asdefined in section 1(b)(7) of the International Banking Act of 1978)and becomes a financial holding company after the date of enactmentof the Gramm-Leach-Bliley Act, may continue to engage in, or directlyor indirectly own or control shares of a company engaged in, activitiesrelated to the trading, sale, or investment in commodities and underlyingphysical properties that were not permissible for bank holdingcompanies to conduct in the United States as of September 30, 1997,if—
(1) the holding company, orany subsidiary of the holding company, lawfully was engaged, directlyor indirectly, in any of such activities as of September 30, 1997,in the United States;
(2) the attributed aggregate consolidated assets of the company heldby the holding company pursuant to this subsection, and not otherwisepermitted to be held by a financial holding company, are equal tonot more than 5 percent of the total consolidated assets of the bankholding company, except that the Board may increase that percentageby such amounts and under such circ*mstances as the Board considersappropriate, consistent with the purposes of this Act; and
(3) the holding company doesnot permit—
(A) any company, the shares of whichit owns or controls pursuant to this subsection, to offer or marketany product or service of an affiliated depository institution; or
(B) any affiliateddepository institution to offer or market any product or service ofany company, the shares of which are owned or controlled by such holdingcompany pursuant to this subsection.
[12 USC 1843. As amendedby acts of July 1, 1966 (80 Stat. 238); Dec. 31, 1970 (84 Stat. 1763);Nov. 16, 1977 (91 Stat. 1389); Nov. 10, 1978 (92 Stat. 3671); March31, 1980 (94 Stat. 186); Oct. 8, 1982 (96 Stat. 1236); Oct. 15, 1982(96 Stat. 1479, 1489, 1527, 1536); Jan. 12, 1983 (96 Stat. 2511);Oct. 22, 1986 (100 Stat. 2095); Aug. 10, 1987 (101 Stat. 557, 558,628, 635); Aug. 23, 1988 (102 Stat. 1384); Aug. 9, 1989 (103 Stat.408, 409, 410, 411, 546); Dec. 19, 1991 (105 Stat. 2384); Sept. 23,1994 (108 Stat. 2239, 2240); Sept. 30, 1996 (110 Stat. 3009-404, 406,413, 425, 476); Nov. 12, 1999 (113 Stat. 1341, 1342, 1351, 1359, 1360,1361); Oct. 13, 2006 (120 Stat. 1984, 2003); and July 21, 2010 (124Stat. 1546, 1547, 1601, 1602, 1607, 1634).
Section 601(b) ofthe Financial Institutions Reform, Recovery, and Enforcement Act of1989 (12 USC 1843 note) reads as follows:
(b) If the Board of Governors of the Federal Reserve System,in approving an application by a bank holding company to acquire asavings association, imposed any restriction that would have beenprohibited under section 4(i)(2) of the Bank Holding Company Act of1956 (as added by subsection (a) of this section) if that sectionhad been in effect when the application was approved, the Board shallmodify that approval in a manner consistent with that section.]
