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TITLE I-FINANCIAL INSTITUTIONS

COMPETITIVE EQUITY

AMENDMENTS TO THE BANKING ACT OF 1933

SEC. 101. (a) Section 20 of the Banking Act of 1933

5 (12 U.S.C. 377) is amended by inserting the following new

6 paragraph after the first paragraph of such section:

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"Notwithstanding any other provision of this section, a

8 member bank may be affiliated in any manner described in 9 section 2(b) with a depository institution securities affiliate as 10 defined in section 2(j) of the Bank Holding Company Act of 11 1956, as amended (12 U.S.C. 1841(j)).”.

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(b) Section 32 of the Banking Act of 1933 (12 U.S.C. 13 78) is amended by inserting the following sentence at the end 14 of the first paragraph of such section: "Notwithstanding any 15 other provision of this section, an officer, director, or employ16 ee of any member bank may serve at the same time as an 17 officer, director, or employee of any of its depository institu18 tion securities affiliates. The term 'depository institution se19 curities affiliate' shall have the meaning ascribed to it in sec20 tion 2(j) of the Bank Holding Company Act of 1956, as 21 amended (12 U.S.C. 1841(j)).".

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AMENDMENTS TO THE SECURITIES ACT OF 1933

SEC. 102. Section 4 of the Securities Act of 1933 (15

24 U.S.C. 77d) is amended adding at the end thereof the

25 following:

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"(7) Transactions involving offers or sales of equity se

2 curities, in connection with the acquisition of a bank by a 3 company under the Bank Holding Company Act of 1956 (12 4 U.S.C. 1841 et seq.), or in connection with the acquisition of 5 an insured institution by a company under the Savings and 6 Loan Holding Company Amendments of 1967 (12 U.S.C. 7 1730a), if such acquisition occurs solely as part of a reorgani8 zation in which a person or group of persons exchange their 9 shares of a bank or insured institution for shares of a newly 10 formed bank holding company or savings and loan holding 11 company and receive, after such reorganization, substantially 12 the same proportional share interests in the holding company 13 as they held in the bank or insured institution, except for 14 changes in shareholder interests resulting from the exercise 15 of dissenting shareholder rights under State law.".

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AMENDMENTS TO THE SECURITIES EXCHANGE ACT

SEC. 103. (a) Subparagraphs (i), (ii), and (iii) of para18 graph (34)(A) of subsection 3(a) of the Securities Exchange 19 Act of 1934 (15 U.S.C. 78c(a)(34)(A)) are each amended by 20 inserting immediately before the semicolons at the end there21 of the following: "other than a depository institution securi22 ties affiliate as defined in section 2(j) of the Bank Holding 23 Company Act of 1956 (12 U.S.C. 1841(j)) or as defined in 24 section 408(a)(1)(K) of the National Housing Act (12 U.S.C. 25 1730a(a)(1)(K))”.

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1 (b) Section 15B(b)(1) of the Securities Exchange Act of 2 1934 (15 U.S.C. 780-4(b)(1)) is amended by striking out 3 "subsidiaries" in subparagraphs (B) and (C) and inserting in 4 lieu thereof "affiliates".

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AMENDMENTS TO THE BANK HOLDING COMPANY ACT

SEC. 104. (a) Section 2 of the Bank Holding Company

7 Act of 1956 (12 U.S.C. 1841) is amended

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(1) by amending subsection (c) to read as follows: "(c) 'Bank' means (1) an 'insured bank' as defined in 10 section 3(h) of the Federal Deposit Insurance Act; or (2) any 11 institution organized under the laws of the United States, any 12 State of the United States, the District of Columbia, any ter13 ritory of the United States, Puerto Rico, Guam, American 14 Samoa, or the Virgin Islands, that accepts deposits that the 15 depositor may withdraw by check or similar means for pay16 ment to third parties and is engaged in the business of 17 making commercial loans. The term 'bank' does not include 18 (A) any foreign bank having an insured branch; (B) an in19 sured institution; (C) any organization operating under sec20 tion 25 or section 25(a) of the Federal Reserve Act; (D) any 21 organization that does not do business in the United States 22 except as an incident to its activities outside the United 23 States; or (E) any consumer bank as defined in subsection (k) 24 of this section or any industrial bank, Morris Plan bank, in25 dustrial loan company or similar institution, operated in the

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1 manner authorized by State law, that does not both engage 2 in the business of making commercial loans and accept depos

3 its that the depositor has a legal right to withdraw on 4 demand."; and

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(2) by inserting after subsection (i) the following new subsections:

"(j) The term 'depository institution securities affiliate' 8 means any corporation that (1) is engaged in the United 9 States in one or more of the activities authorized pursuant to 10 section 4(c)(15) of this Act, and (2) is a broker or dealer 11 within the meaning of paragraph (4) or (5) of section 3(a) of 12 the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), or 13 an investment adviser within the meaning of section 202(11) 14 of the Investment Advisers Act of 1940 (15 U.S.C. 80b15 2(11)). For purposes of this Act, a corporation engaged in 16 any such activities shall be deemed to be a depository institu17 tion securities affiliate only so long as it is a bank holding 18 company or is owned or controlled by a bank holding 19 company.

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"(k) The term 'consumer bank' means any institution

21 that would otherwise be a 'bank' under subsection (c) of this 22 section but that does not engage in the business of making 23 commercial loans.

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"(1) the term 'commercial loans' does not include (1)

25 loans to natural persons primarily for personal, family, or

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1 household purposes, whether directly, indirectly or through 2 the use of leases; (2) loans for charitable persons; (3) loans 3 secured by residential real property; (4) loans to natural per4 sons through use of credit cards or similar means of access; 5 or (5) investments such as commercial paper, certificates of 6 deposit, bankers acceptances and similar money market in7 struments, the extension of broker call loans, the sale of Fed8 eral funds, the deposit of interest-bearing funds, mortgage9 backed securities, obligations of the United States and local 10 and State governments, or agencies and instrumentalities 11 thereof, and such other similar types of investments as may 12 be permitted by the institution's primary regulator. An insti13 tution shall not be deemed to 'engage in the business of 14 making commercial loans' if the aggregate principal amount 15 of its outstanding commercial loans represented by (A) credit 16 to finance the inventorying of goods generally being acquired 17 by natural persons; (B) loans to small business concerns; and 18 (C) similar loans, does not exceed 5 percent of the institu19 tion's total assets.

"(m) For purposes of this Act

"(1) the term 'depository institution holding company' means a bank holding company;

"(2) the term 'depository institution' means bank;