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may be with or without recourse to the issuer thereof) which, by its terms, provides

for payments of principal in relation to payments, or reasonable projections of payments, on notes meeting the above requirements or participation interests therein which are pledged as security for such obligation and which are rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization.

"(iv) A bank holding company seeking to acquire shares of a depository institution securities affiliate or engage directly in securities or securities-related activities pursuant to this paragraph shall comply with the notice and other require

ments of clauses (i) through (vi) of paragraph

(8)(B) of this subsection; or".

(f) Section 4(c) of the Bank Holding Company Act of 19 1956 (12 U.S.C. 1843(c)) is amended by adding at the end

20 thereof the following:

"(16) shares of any company engaged in any activity in which a multiple savings and loan holding

company was authorized by law or regulation to engage directly on July 1, 1983: Provided, however,

That the activities of real estate investment and devel

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opment may only be engaged in within the limitations

of clause (iii) of section 4(c)(8)(A) of this Act: And pro

vided further, That any conditions and limitations ap

plicable to a savings and loan company with respect to such activities shall likewise be applicable to such a

bank holding company, except that a bank holding company seeking to acquire shares of such a company pursuant to this paragraph shall comply with the notice and other requirements of clauses (i) through (vi) of paragraph (8)(B) of this subsection and except that the Board may by regulation prohibit any bank holding

company from engaging in such activities or limit their conduct.".

14 (g) Section 5(c) of the Bank Holding Company Act (12

15 U.S.C. 1844(c)) is amended to read as follows:

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"(c)(1) The Board from time to time may require reports

17 under oath, in such scope and detail as it may determine, of a 18 bank holding company and each subsidiary thereof to keep 19 the Board informed as to whether such companies are com20 plying with the provisions of this chapter and regulations and 21 orders issued thereunder.

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"(2) Except where the Board determines that a lesser 23 reporting requirement is appropriate, the Board shall accept 24 in fulfillment of the reporting requirements established by this 25 subsection for nonbank subsidiaries separate reports consist

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1 ing of (A) for companies subject to the reporting requirements 2 of section 17 of the Securities Exchange Act of 1934 (15 3 U.S.C. 78q), the same information required to be submitted 4 to the Securities and Exchange Commission under such sec5 tion (and the rules and regulations thereunder) at the same 6 time such information is so submitted; and (B) for all other 7 companies, the same information as would be required to be 8 submitted under section 13 of the Securities Exchange Act of 9 1934 (15 U.S.C. 78m) (and the rules and regulations there10 under) by companies subject to the reporting requirements of 11 such Act, that are engaged in the same or similar lines of 12 business, not more frequently than quarterly. In particular 13 circumstances, the Board may require additional information 14 in order to fulfill its responsibilities under this Act.

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"(3) The Board may make examinations of each bank 16 holding company and each subsidiary thereof, the cost of 17 which may be assessed against, and paid by, such holding 18 company. The Board shall, however, insofar as possible, 19 minimize the scope and frequency of examinations of nonbank 20 subsidiaries of a bank holding company by utilizing, where 21 feasible, reports of applicable regulatory agencies or other 22 bodies public or private, and by directing, to the extent feasi23 ble, the focus of such examinations to the activities or finan24 cial condition of such nonbank subsidiaries that may have a 25 materially adverse effect on the safety and soundness or fi

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1 nancial condition of a subsidiary bank of the bank holding

2 company.".

3 (h) Section 7 of the Bank Holding Company Act of 4 1956 (12 U.S.C. 1846) is amended by striking out the period 5 at the end thereof and inserting in lieu thereof ", except that 6 (1) no State may prohibit the affiliation of a national banking 7 association, as such term is used in section 21 of this title, 8 with a company engaged only in one or more of the activities 9 described in paragraphs (8), (15), and (16) of subsection 4(c) 10 of this Act, and (2) no State may authorize banks which it 11 charters to engage in insurance activities outside such State 12 on a basis different from that authorized for such banks 13 within the State.".

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AMENDMENT TO THE FEDERAL RESERVE ACT

SEC. 105. (a) The Federal Reserve Act is amended by

16 inserting after section 23A the following:

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SEC. 23B. RESTRICTIONS ON TRANSACTIONS WITH

18 AFFILIATES.-(a) A member bank and its subsidiaries may 19 engage in any of the following transactions, only on terms 20 and under circumstances, including credit standards, that are 21 substantially the same as, or at least as favorable to such 22 bank or its subsidiary as those prevailing at the time for com23 parable transactions with or involving other nonaffiliated 24 companies or, in the absence of comparable transactions,

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1 those terms and circumstances that in good faith would be

2 offered to, or would apply to nonaffiliated companies—

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"(1) any covered transaction, as defined in section

23A, with an affiliate;

"(2) the sale of securities or other assets, including assets subject to an agreement to repurchase, to an

affiliate;

“(3) the payment of money or the furnishing of services to an affiliate, under contract, a lease, or otherwise;

"(4) any transaction in which an affiliate acts as an agent or broker or receives a fee for its services to

the bank or any other person; or

“(5) any transaction or series of transactions with

a third party, (A) if an affiliate has a financial interest

in the third party, or (B) if an affiliate is a participant in such transaction or series of transactions.

18 For the purposes of this subsection, any transaction by a 19 member bank with any person shall be deemed to be a trans20 action with an affiliate of such bank to the extent that the 21 proceeds of the transaction are used for the benefit of, or 22 transferred to, such affiliate.

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"(b) A member bank and the affiliates of such bank shall

24 not publish any advertisement or enter into any agreement 25 stating or suggesting that the bank shall in any way be re

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