11

12

(10) For the purpose of paragraphs (5), (6), (7), (8), and
13 (9) of this section, a "securities affiliate" means a company
14 that engages in underwriting, distributing or dealing in secu-
15 rities of any type, except that such term shall not include
16 insurance products deemed to be securities, including and
17 without limitation variable annuities and variable life insur-
18 ance.

19 (d) CAPITALIZATION.—(1) As a supplement to the min-
20 imum capital otherwise required for insured banks or insured
21 institutions, as applicable, that are not controlled by financial
22 services holding companies subject to its jurisdiction, the ap-

23 propriate Federal regulatory agency may act by regulation to

24 cause each insured bank or insured institution subject to its 25 jurisdiction that is controlled by a depository institution hold

14

(f) DIFFERENTIAL TREATMENT PROHIBITION; LAWS
15 INCONSISTENT WITH THIS ACT.-(1) Notwithstanding any
16 other Federal law, no State, and no Federal or State regula-
17 tory agency, including the appropriate Federal regulatory
18 agency, may act by law, rule, regulation, order, or otherwise
19 if the effect of such action would be to differentiate insured
20 banks or insured institutions controlled by depository institu-
21 tion holding companies from any other insured banks or in-
22 sured institutions in a manner adverse to insured banks or
23 insured institutions controlled by depository institution hold-
24 ing companies, or to differentiate depository institution hold-
25 ing companies or their affiliates from bank holding companies

7 finds that certain State laws and regulations have the pur

8 pose or effect of preventing insured banks or insured institu-
9 tions from being or becoming affiliated with companies or
10 persons engaged in nonbanking activities. Such laws restrain
11 legitimate competition in interstate commerce and deny con-
12 sumers freedom of choice in selecting financial services. Such
13 restrictions also threaten the long-term safety and soundness
14 of insured banks and insured institutions by denying them
15 access to capital. Given the preponderant Federal interest in
16 ensuring competition in national markets for financial serv-
17 ices and in ensuring the safety and soundness of the feder-
18 ally-insured banking and thrift industries, Congress hereby
19 finds that it is necessary to preempt such anticompetitive
20 State laws and regulations to the extent necessary to permit
21 the formation and efficient operation of depository institution
22 holding companies. However, the Congress also recognizes
23 that there is a legitimate and traditional State interest in en-
24 suring that State banks and other companies are operated in
25 a safe and sound manner to serve the interests of the public

1

6

(B) PREEMPTION.-Any provision of Federal or State
7 law, rule, regulation or order that is expressly or impliedly
8 inconsistent with the provisions and purposes of this section
9 is hereby preempted, including, without limitation, State
10 banking, savings and loan, insurance, real estate, securities,
11 finance company, retail or other laws which (i) have the pur-
12 pose or effect of preventing or impeding insured banks or
13 insured institutions or affiliates, agents, principals, brokers,
14 directors, officers, employees or other representatives of such

15 institutions or affiliates thereof from being owned or con-
16 trolled by or from being affiliated in any way with a deposi-
17 tory institution holding company or any affiliate thereof as a
18 result of the types of nonbanking activities engaged in direct-

19 ly or indirectly by such company or any affiliate thereof or by
20 any agent, principal, solicitor, broker, director, officer, em-
21 ployee or other representative of such company or affiliate
22 thereof or (ii) have the purpose or effect of preventing insured
23 banks or insured institutions or affiliates, agents, principals,
24 brokers, directors, officers, employees or other representa-
25 tives of such institutions or affiliates thereof from offering or

8

(3) No State or State regulatory agency may act by law,
9 rule, regulation or order if the effect of such action would be
10 to impede or prevent an insured bank or insured institution
11 that is located in another State from qualifying to maintain or
12 defend in court any action which could be maintained or de-
13 fended under similar circumstances by a company that is lo-
14 cated in such other State and that is not an insured bank or
15 insured institution, provided that the insured bank or insured
16 institution does not establish or operate in any State so

17 acting or in the State of any State regulatory agency so
18 acting a "domestic branch", as defined in section 3(0));
19 except that, where the maintenance or defense of such an
20 action by a company that is located in such other State and
21 that is not an insured bank or insured institution is subject to
22 certain conditions, the maintenance or defense of such an
23 action by an insured bank or insured institution located in
24 such other State may be subject to those same conditions, so
25 long as such conditions are applied in a nondiscriminatory

5

(4) Except for licensing, marketing, compensation, em-
6 ployment or other requirements applied in a nondiscrimina-
7 tory manner to fulfill legitimate State regulatory objectives

8 which are not inconsistent with the purposes of this Act as
9 set forth in section 2 hereof, no State may through legisla-
10 tive, administrative, executive or judicial action impede or
11 prevent a depository institution holding company or affiliate
12 thereof from utilizing or compensating any agent, solicitor,
13 broker, employee or other person located in that State and

14 representing in any lawful capacity any insured bank or in-
15 sured institution or any such depository institution holding
16 company or such affiliate thereof; provided that, where any
17 such person is being utilized or compensated for the perform-
18 ance of activities on behalf of an insured bank or insured
19 institution, such activities do not result in the establishment
20 or operation by the insured bank or insured institution of a

21 "domestic branch," as defined in section 3(0) of the Federal
22 Deposit Insurance Act (12 U.S.C. 1813(a)), at any location
23 other than the main or branch offices of such insured bank or
24 insured institution.