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PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3641

Public Law 95-630
95th Congress
An Act
To extend the authority for the flexible regulation of interest rates on deposits
and accounts in depository institutions.

Nov. 10. 1978
[H.R. 14279]

Be it enacted hy the Senate and House of Representatives
of the
United States of America in Congress assembled, T h a t this Act may Financial
be cited as the "Financial Institutions Regulatory and Interest R a t e Institutions
Control Act of 1978".
Regulatory and
Interest Kate
TITLE I—SUPERVISORY AUTHORITY OVER
f^^g"' ^""^ ""^
DEPOSITORY INSTITUTIONS
12 u s e 226 note.
SEC. 101. T h e Federal Reserve Act is amended by redesignating
sections 29 and 30 as sections 30 and 31, respectively, and by inserting
after section 28 a new section as follows:
" S E C . 29. (a) A n y member bank which violates or any officer,
director, employee, agent, or other person participating in t h e conduct of the affairs of such member bank who violates any provision of
section 22 or 23A of this Act, or any regulation issued p u r s u a n t thereto,
shall forfeit and pay a civil penalty of not more t h a n $1,000 per day
for each day d u r i n g which such violation continues. The penaltj^ shall
be assessed and collected by the Comptroller of the Currency in the
case of a national bank, or the B o a r d in the case of a State member
bank, by written notice. A s used in this section, the term 'violates'
includes without any limitation any action (alone or with another or
others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
" ( b ) I n determining the amount of the penalty the Comptroller of
the Currency or the Board, as the case may be, shall take into account
the appropriateness of the penalty with respect to the size of the
financial resources and good faith of the member bank or person
charged, the gravity of the violation, the history of previous violations,
and such other matters as justice may require.
" ( c ) T h e member bank or person assessed shall be afforded an opportunity for agency hearing, upon request made within ten days after
issuance of the notice of assessment. I n such hearing, all issues shall be
determined on the record pursuant to section 554 of title 5, United
States Code. T h e agency determination shall be made by final order
which may be reviewed only as provided in subsection ( d ) . I f no hearing is requested as herein provided, the assessment shall constitute a
final and unappealable order.
" ( d ) A n y member bank or person against whom an order imposing
a civil money penalty has been entered after agency hearing under this
section ma;^ obtain review by the United States court of appeals for
the circuit in which the home office of the member bank is located, or
the United States Court of Appeals for the District of Columbia Circuit, by filing a notice of appeal in such court within ten days from
the date of such order, and simultaneously sending a copy of such
notice by registered or certified mail to t h e Comptroller of t h e Currency or the Board, as the case may be. T h e Comptroller of the Currency or the Board, as the case may be, shall promptly certify and file

39-194 O-

-pt. 3

64 : QL3

12 u s e 226 note.
eivil penalty.
12 u s e 504.
12 u s e 375,
375a, 375b, 376,
503.
12 u s e 371c.
Notice.
"Violates."

Hearing
opportunity.

Review.

eertification.

92 STAT. 3642

Regulations.

12 use 505.
Civil penalty.

Notice.
"Violates.'

Hearing
opportunity.

Review.

Certification.

PUBLIC LAW 95-630—NOV. 10, 1978

in such court the record upon which the penalty was imposed, as provided in section 2112 of title 28, United States Code. The findings of
the Comptroller of the Currency or the Board, as the case may be, shall
be set aside if found to be unsupported by substantial evidence as provided by section 706(2) (E) of title 5, United States Code.
" (e) If any member bank or person fails to pay an assessment after
it has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the agency, the Comptroller of the Currency or the Board, as the case may be, shall refer the
matter to the Attorney General, who shall recover the amount assessed
by action in the appropriate United States district court. In such
action the validity and appropriateness of the final order imposing the
penalty shall not be subject to review.
"(f) The Comptroller of the Currency and the Board shall promulgate regulations establishing procedures necessary to implement this
section.
"(g) All penalties collected under authority of this section shall be
covered into the Treasury of the United States.".
SEC. 102. Section 19 of the Federal Reserve Act is amended by adding
at the end thereof the following new subsection:
"(j) (1) Any member bank which violates or any officer, director,
employee, agent, or other person participating in the conduct of the
affairs of such member bank who violates any provision of this section,
or any regulation or order issued by the Board pursuant thereto, shall
forfeit and pay a civil money penalty of not more than $100 per day
for each day during which such violation continues. The penalty shall
be assessed and collected by the Board by written notice. As used in this
section, the term 'violates' includes without any limitation any action
(alone or with another or others) for or toward causing, bringing
about, participating in, counseling, or aiding or abetting a violation.
"(2) In determining the amount of the penalty the Board shall
take into account the appropriateness of the penalty with respect to the
size of financial resources and good faith of the member bank or person
charged, the gravity of the violation, the history of previous violations,
and such other matters as justice may require.
" (3) The member bank or person assessed shall be afforded an opportunity for agency hearing, upon request made within ten days after
issuance of the notice of assessment. In such hearing, all issues shall be
determined on the record pursuant to section 554 of title 5, United
States Code. The agency determination shall be made by final order
which may be reviewed only as provided in paragraph (4). If no hearing is requested as herein provided, the assessment shall constitute a
final and unappealable order.
"(4) Any member bank or person against whom an order imposing
a civil money penalty has been entered after agency hearing under
this section may obtain review by the United States court of appeals
for the circuit in which the home office of the member bank is located,
or the United States Court of Appeals for the District of Columbia
Circuit, by filing a notice of appeal in such court within ten days from
the date of such order, and simultaneously sending a copy of such
notice by registered or certified mail to the Board. The Board shall
promptly certify and file in such court the record upon which the
penalty was imposed, as provided in section 2112 of title 28, United
States Code. The findings of the Board shall be set aside if found to
be unsupported bv substantial evidence as provided by section 706
(2) (E) of title 5, United States Code.

PUBLIC LAW 95-630—NOV. 10, 1978
" (5) If any member bank or person fails to pay an assessment after
it has become a final and unappealable order or after the court of
appeals has entered final judgment in favor of the agency, the Board
shall refer the matter to the Attorney General, who shall recover the
amount assessed by action in the appropriate LFnited States district
court. I n such action the validity and appropriateness of the final order
imposing the penalty shall not be subject to review.
" ( 6 ) T h e Board shall promulgate regulations establishing procedures necessary to implement this subsection.
" ( 7 ) All penalties collected under authority of this subsection shall
be covered into the Treasury of the United States.".
SEC. 103. Section 5239 of the Eevised Statutes (12 U.S.C. 93) is
amended by inserting " ( a ) " immediately after " S E C . 5239." and by
inserting at the end thereof the following new subsection:
" ( b ) ( 1 ) A n y national banking association which violates, or any
officer, director, employee, agent, or other person participating in the
conduct of the affairs of such association who violates any of the
provisions of this chapter, or any regulation issued pursuant thereto,
shall forfeit and pay a civil money penalty of not more than $1,000
per day for each day during which such violation continues. T h e
penalty shall be assessed and collected by the Comptroller of the Currency by written notice. As used in the section, the term 'violates'
includes without any limitation any action (alone or Avith another or
others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
" ( 2 ) I n detenmining the amount of the penalty the Comptroller
shall take into account t h e appropriateness of the penalty with respect
to the size of financial resources and good faith of the association or
person charged, the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
" (3) The association or person assessed shall be afforded an opportunity for agency hearing, upon request made within ten days after
issuance of the notice of assessment. I n such hearing all issues shall
be determined on the record pursuant to section 554 of title 5. The
agency determination shall be made by final order w^hich may be
reviewed only as provided in subsection ( 4 ) . I f no hearing is requested
as herein provided, the assessment shall constitute a final and unappealable order.
" ( 4 ) Any association or pers(*n against whom an order imposing
a civil money penalty has been entered after agency hearing under
this section may obtain review by the United States court of appeals
for the circuit in which the homo office of the bank is located, or in the
United States Court of Appeals for the District of Columbia Circuit,
by filing a notice of appeal in such court within thirty days from the
date of such order, and simultaneously sending a copy of such notice
by registered or certified mail to the Comptroller. The Comptroller
shall promptly certify and file in such court the record upon w^hich
the penalty was imposed, as provided in section 2112 of title 28. The
findings of the Comptroller shall be set aside if found to be unsupported
by substantial evidence as provided by section 706(2) (e) of title 5.
" ( 5 ) If any association or person fails to pay an assessment after
it has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the agency, the Comptroller shall refer the matter t o the Attorney General, who shall recover
the amount assessed by action in the appropriate United States district
court. I n such action the validity and api^ropriateness of the final order
imposing the penalty shall not be subj ect to review.

92 STAT. 3643

Regulations,

Civil penalty,

Notice,
"Violates."

Hearing
opportunity,

Review,

Certification,

9 2 STAT. 3 6 4 4

PUBLIC LAW 95-630—NOV. 10, 1978

" ( 6 ) The Comptroller may, in his discretion, compromise, modify,
or remit any civil money penalty which is subject to imposition or
has been imposed under this section.
Regulations.
" ( 7 ) The Comptroller shall promulgate regulations establishing
procedures necessary to implement this subsection.
" ( 8 ) All penalties collected under authority of this section shall
be covered into the Treasury of the United States.".
12 u s e 375b.
SEC. 104. Section 22 of the Federal Reserve Act is amended by adding at the end thereof the following new subsection:
Loan or extension
" ( h ) ( 1 ) No member bank shall make any loan or extension of credit
of credit to
in any manner to any of its executve officers, or to any person who
executive
directly or indirectly or acting through or in concert w i t h one or more
officers,
persons owns, controls, or has the power to vote more than 10 per
prohibitions.
centum of any class of voting securities of such member bank, except
in the case of such a bank located in a city, town, or village with less
t h a n t h i r t y thousand in population, in which case such per centum
shall be 18 per centum, or to any company controlled by such an executive officer or person, or to any political or campaign committee the
funds or services of which will benefit such an executive officer or
person or which is controlled by such an executive officer or person,
where the amount of such loan or extension of credit, when aggregated
with t h e amount of all other loans or extensions of credit then outstanding by such bank to such executive officer or person and to all companies controlled by such executive officer or person and to all political
or campaign committees the funds or services of which will benefit
such executive officer or person or which are controlled by such executive officer or person, would exceed the limits on loans to a single borrower established by section 5200 of the Revised Statutes, as amended.
12 u s e 84.
F o r purposes of this p a r a g r a p h , the provisions of section 5200 of the
Revised Statutes, as amended, shall be deemed to apply to a State
member bank as if such State member bank were a national banking
association.
" ( 2 ) No member bank shall make any loan or extension of credit in
any manner to any of its executive officers or directors, or to any person
who directly or indirectly or acting through or in concert with one or
more persons owns, controls, or has t h e power to vote more than 10
per centum of any class of voting securities of such member bank, or to
any compan}?^ controlled by such an executive officer, director, or person, or to any political or campaign committee the funds or services
of which will benefit such executive, director, or person or which is
controlled by such executive officer, director, or person, where the
amount of such loan or extension of credit, when aggregated with the
amount of all other loans or extensions of credit then outstanding by
such bank to such executive officer, director, or person and to all companies controlled by such executive officer, director, or person and to
all political or campaign committees the funds or services of which wull
benefit such executive officer, director, or person or which are controlled by such executive officer, director, or person, would exceed
$25,000, unless such loan, line of credit, or extension of credit is
approved in advance by a majority of the entire board of directors
with the interested p a r t y abstaining from participating directly or
indirectly in the voting.
" ( 3 ) No member bank shall make any loan or extension of credit
in any manner to any of its executive officers or directors, or to any
person who directly or acting t h r o u g h or in concert with one or more
persons, owns, controls, or has the power t o vote more t h a n 10 per
centum of any class of voting securities of such member bank, or to any

PUBLIC LAW 95-630—NOV. 10, 1978
company controlled by such executive officer, director, or person, or
to any political or campaign committee the funds or services of which
will benefit such executive officer, director, or person or which is controlled by such executive officer, direx;tor, or person, unless such loan
or extension of credit is made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and does not involve
more than the normal risk of repayment or present other unfavorable
features.
"(4) No member bank may pay an overdraft on an account at such
bank of an executive officer or director.
"(5) For purposes of this subsection, an executive officer, director,
or person shall be considered to have control of a company if such
executive officer, director, or person, directly or indirectly or acting
through or in concert with one or more other persons—
"(A) owns, controls, or has power to vote 25 per centum or
more of any class of voting securities of the company;
"(B) controls in any manner the election of a majority of the
directors of the company; or
"(C) has the power to exercise a controlling influence over the
management or policies of such company.
" (6) For the purposes of this subsection—
"(A) the term 'person' means an individual or company;
"(B) the term 'company' means any corporation, partnership,
business trust, association, joint venture, pool syndicate, sole proprietorship, unincorporated organization, any other form of business entity not specifically listed herein, or any other trust, but
shall not include any insured bank or any corporation the majority
of shares of which is owned by the United States or by any State;
"(C) the term 'extension of credit' has the same meaning
assigned such term in the fourth paragraph of section 23A of this
Act;
"(D) a person shall be deemed to be a 'director' of a member
bank or a 'person who directly or indirectly or acting through or in
concert with one or more persons owns, controls, or has power
to vote more than 10 per centum of any class of voting securities
of a member bank' if such person has such relationship with any
bank holding company of which such member is a subsidiary, as
defined by the Bank Holding Company Act (12 IT.S.C. 1841), or
with any other subsidiary of such bank holding company;
" (E) a person shall be deemed to be an 'officer' of a member bank
if such person is an officer of any bank holding company of which
such member bank is a subsidiary, as defined by the Bank Holding Company Act (12 IJ.S.C. 1841), or with any other subsidiary
of such bank holding company;
" ( F ) the term 'executive officer' has the same meaning, assigned
such term under section 22 (g) of this Act; and
"(G) the term 'pay an overdraft on an account' means the payment by a member bank of an amount for an account holder m
excess of the funds on deposit in the account and does not include
a payment of funds by the member bank in accordance with either
a written preauthorized, interest-bearing extension of credit specifying a method of repayment or a written preauthorized transfer
of funds from another account of the account holder at that bank.
"(7) The Board of Governors of the Federal Reserve System may
prescribe such rules and regulations, including definitions of terms, as
it deems necessary to effectuate the purposes and to prevent evasions of

92 STAT. 3645

Overdrafts,

Definitions.

12 use 371c.

12 USC 375a.

Rules and
regulations,

92 STAT. 3646

PUBLIC LAW 95-630—NOV. 10, 1978

this subsection. The Board may further prescribe rules providing a
reasonable period of time after the date of enactment of this subsection
within which the amount of outstanding loans or extensions of credit
made prior to such date of enactment shall be reduced so as to
conform to the limitations of this subsection.".
SEC. 105. (a) Section 5 of the B a n k Holding Company Act of 1956,
as amended (12 U.S.C. 1844), is amended by adding at the end thereof
the following new subsection:
Bank holding
" ( e ) ( 1 ) Notwithstanding any other provision of this Act, the Board
company,
may, whenever it has reasonable cause to believe t h a t the continuation
termination.
by a bank holding company of any activity or of ownership or control
Notice, hearing
of any of its nonbank subsidiaries, other than a nonbank subsidiary
opportunity.
of a bank, constitutes a serious risk to the financial safety, soundness,
or stability of a bank holding company subsidiary bank and is inconsistent with sound banking principles or with the purposes of this Act
or with the Financial Institutions Supervisory Act of 1966, order
12 use 1464
note.
the bank holding company or any such nonbank subsidiaries,
after due notice and opportunity for hearing, and after considering the views of the bank's p r i m a r y supervisor, which shall be
the Comptroller of the Currency in the case of a national bank or the
Federal Deposit Insurance Corporation and the appropriate State
supervisory authority in the case of an insured nonmember bank, to
terminate such activities or to terminate (within one hundred and
twenty days or such longer period as the B o a r d may direct in unusual
circumstances) its ownership or control of any such subsidiary either
by sale or by distribution of the shares of the subsidiary to the shareholders of the bank holding company. Such distribution shall be p r o
r a t a with respect to all of the shareholders of the distributing bank
holding company, and the holding company shall not make any charge
to its shareholders arising out of such a distribution.
Enforcement and
" ( 2 ) The Board may in its discretion apply to the United States
jurisdiction.
district court within the jurisdiction of which the principal office of
the holding company is located, for the enforcement of any effective
and outstanding order issued under this section, and such court shall
have jurisdiction and power to order and require compliance therewith, but except as provided in section 9 of this Act, no court shall
have jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under this section, or to review,
modify, suspend, terminate, or set aside any such notice or order.".
( b ) ( 1 ) Section 408(h) of the National Housing Act (12 U.S.C.
1780a(h)) is amended by adding immediately after "under subsection
(a) (2) ( D ) " in p a r a g r a p h s (3) (A) and (3) ( B ) of subsection (h) t h e
phrase "or under subsection (h) ( 5 ) " and is amended by redesignating p a r a g r a p h (h) (5) as (h) (6) and by adding a new p a r a g r a p h (h)
(5) to read as follows:
Savings and loan
" ( 5 ) ( A ) Notwithstanding any other provision of this section, the
holding company, Corporation may, whenever it has reasonable cause to believe that the
termination.
continuation by a savings and loan holding company of any activity
Notice, hearing
or of ownership or control of any of its noninsured subsidiaries constiopportunity.
tutes a serious risk to the financial safety, soundness, or stability of a
savings and loan holding company's subsidiary insured institution
and is inconsistent with the sound operation of an insured savings
and loan institution or with the purposes of this section or with the
Financial Institutions Supervisory Act, order the savings and loan
holding company or any of its subsidiaries, after due notice and
opportunity for hearing, to terminate such activities or to terminate
(within one hundred and twenty days or such longer period as the
Rules.

PUBLIC LAW 95-630—NOV. 10, 1978
Corporation directs in unusual circumstances) its ownership or control of any such noninsured subsidiary either by sale or by distribution
of the shares of the subsidiary to the shareholders of the savings and
loan holding company. Such distribution shall be pro rata with respect
to all of the shareholders of the distributing savings and loan holding company, and the holding company shall not make any charge to
its shareholders arising out of such a distribution.".
"(B) The Corporation may in its discretion apply to the United
States district court wdthin the jurisdiction of which the principal office
of the company is located, for the enforcement of any effective and outstanding order issued under this section, and such court shall have
jurisdiction and power to order and require compliance therewith, but
except as provided in subsection (k), no court shall have jurisdiction
to affect by injunction or otherwise the issuance or enforcement of any
notice or order under this section, or to review, modify, suspend, terminate, or set aside any such notice or order.".
(2) Section 406(f) of the National Housing Act (12 U.S.C.
1729 (f)) is amended to read as follows:
"(f) (1) In order to prevent a default in an insured institution or in
order to restore an insured institution in default to normal operation,
the Corporation is authorized, in its discretion and upon such terms
and conditions as it may determine, to make loans to, to purchase the
assets of, or to make a contribution to, an insured institution or an
insured institution in default.
"(2) Whenever an insured institution is in default or, in the judgment of the Corporation, is in danger of default, the Corporation may,
in order to facilitate a merger or consolidation of such insured institution with another insured institution or the sale of the assets of such
insured institution and the assumption of its liabilities by another
insured institution and upon such terms and conditions as the Corporation may determine, purchase any such assets or assume any such
liabilities, or make loans to such other insured institution, or guarantee
such other insured institution against loss by reason of its merging or
consolidating with or assuming the liabilities and purchasing the
assets of such insured institution in or in danger of default.
"(3) No contribution or guarantee shall be made pursuant to paragraphs (1) or (2) of this subsection (f) in an amount in excess of that
which the Corporation finds to be reasonably necessary to save the
cost of liquidating such insured institution in or in danger of default,
but if the Corporation determines that the continued operation of
such institution is essential to provide adequate savings or home
financing services in its community, such limitation upon the amount
of a contribution or guarantee shall not apply.".
SEC. 106. (a) Section 8 of the Bank Holding Company Act of 1956,
as amended (12 U.S.C. 1847), is amended by redesignating "SEC. 8."
as "SEC. 8. ( a ) " and by adding a new subsection (b) to read as follows:
"(b) (1) Any company which violates or any individual who participates in a violation of any provision of this Act, or any regulation
or order issued pursuant thereto, shall forfeit and pay a civil penalty
of not more than $1,000 per day for each day during which such violation continues. The penalty shall be assessed and collected by the Board
by written notice. As used in the section, the term 'violates' includes
without any limitation any action (alone or with another or others)
for or toward causing, bringing about, participating in, counseling, or
a iding or abetting a violation.

92 STAT. 3647

Enforcement and
jurisdiction.

Insured
institutions,
default
prevention and
restoration.

Civil penalty.

Notice.
"Violates."

92 STAT. 3648

Hearing
opportunity.

12 use 1848.

Regulations.

12 use 1844.

Rules and
regulations.

Misdemeanor.

PUBLIC LAW 95-630—NOV. 10, 1978

"(2) In determining the amount of the penalty the Board shall
take into account the appropriateness of the penalty with respect to
the size of financial resources and good faith of the company or person
charged, the gravity of the violation, the history of previous violations,
and such other matters as justice may require.
"(3) The company or person assessed shall be afforded an opportunity for agency hearing, upon request made within ten days after
issuance of the notice of assessment. In such hearing all issues shall be
determined on the record pursuant to section 554 of title 5, United
States Code. The agency determination shall be made by final order
which may be reviewed only as provided in section 9. If no hearing is
requested as herein provided, the assessment shall constitute a final and
unappealable order.
"(4) If any company or person fails to pay an assessment after it
has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the Board, the Board
shall refer the matter to the Attorney General, who shall recover the
amount assessed by action in the appropriate United States district
court. In such action the validity and appropriateness of the final
order imposing the penalty shall not be subject to review.
"(5) The Board shall promulgate regulations establishing procedures necessary to implement this subsection.
"(6) All penalties collected under authority of this subsection shall
be covered into the Treasury of the United States.".
(b) Section 5 of the Bank Holding Company Act is amended by
adding the following new paragraph:
"(f) In the course of or in connection with an application, examination, investigation or other proceeding under this Act, the Board, or
any member or designated representative thereof, including any person designated to conduct any hearing under this Act, shall have the
power to administer oaths and affirmations, to take or cause to be
taken depositions, and to issue, revoke, quash, or modify subpenas
and subpenas duces tecum; and the Board is empowered to make rules
and regulations to effectuate the purposes of this subsection. The
attendance of witnesses and the production of documents provided for
in this subsection may be required from any place in any State or in
any territory or other place subject to the jurisdiction of the United
States at any designated place where such proceeding is being conducted. Any party to proceedings under this Act may apply to the
United States District Court for the District of Columbia, or the
United States district court for the judicial district or the United
States court in any territory in which such proceeding is being conducted or where the witness resides or carries on business, for the
enforcement of any subpena or subpena duces tecum issued pursuant
to this subsection, and such courts shall have jurisdiction and power
to order and require compliance therewith. Witnesses subpenaed
under this subsection shall be paid the same fees and mileage that are
paid witnesses in the district courts of the United States. Any service
required under this subsection may be made by registered mail, or in
such other manner reasonably calculated to give actual notice as the
Board may by regulation or otherwise provide. Any court having
jurisdiction of any proceeding instituted under this subsection may
allow to any such party such reasonable expenses and attorneys' fees
as it deems just and proper. Any person who willfully shall fail or
refuse to attend and testify or to answer any lawful inquiry or to
produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in such person's power so to do, in obedience

PUBLIC LAW 95-630—NOV. 10, 1978
to the subpena of the Board, shall be guilty of a misdeineaiior and,
upon conviction, shall be subject to a line of not more than $1,000 or
to imprisonment for a term of not more than one year or both.''.
(c) Section 4:08(j) of the National H o u s i n g Act (12 U . 8 . ( \
1730a(]*)), is amended by adding thereto a new p a r a g r a p h (j) (-l) to
read as follows:
" ( 4 ) ( A ) A n y company which violates or any individual who
jjarticipates in a violation of any provision of this section, or any
regulation or order issued pursuant thereto, shall forfeit and pay a
civil penalty of not more than $1,000 per day for each day during
which such violation continues. The penalty shall be assessed and
collected by the Corporation by written notice. As used in the section.
the term 'violates' includes without any limitation any action (alone
or with another or others) for or- toward causing, bringing about,
participating in, counseling, or aiding or abetting a violation.
" ( B ) In determining the amount of the penalty the Corporation
shall take into account the appropriateness of the penalty with respect
to the size of financial resources and good faith of the company or
person charged, the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
" ( C ) T h e company or person assessed shall be aiforded an
opportunity for agency hearing, upon request made within ten days
after issuance of the notice of assessment. I n such hearing all issues
shall be determined on the record pursuant to section 554 of title 5,
United States Code. The agency determination shall be made by final
order which may be reviewed only as provided in subparagraph ( D ) .
If no hearing is requested as herein provided, the assessment shall
constitute a final and unappealable order.
" ( D ) Any company or person against whom an order imposing a
civil money penalty has been entered after agency hearing under this
section may obtain review by the United States court of appeals for
the circuit in which the home office of the company is located, or in
the United States Court of Appeals for the District of Columbia
Circuit, by filing a notice of appeal in such couil within thirty days
from the date of such order, and simultaneously sending a copy of
such notice by registered or certified mail to the Corporation. The
Corporation shall promptly certify and file in such court the record
upon Avhich the penalty was imposed, as provided in section 2112 of
title 28, United States Code. The findings of the Corporation shall be
set aside if found to be unsupported by substantial evidence as
provided by section 706(2) ( E ) of title 5, United States Code.
" ( E ) If any company or person fails to pay an assessment aftei- it
has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the agency, the
Corporation shall refer the matter to the Attorney General, who shall
recover the amount assessed by action in the appropriate United
States district court. I n such action the validity and appropriateness
of the final order imposing the penalty shall not be subject to review.
" ( F ) The Corporation shall promulgate regulations establishing
procedures necessary to implement this paragraph.
" ( G ) All penalties collected under authority of this p a r a g r a p h
shall be covered into the Treasury of the United States.".
SEC. 107. ( a ) ( 1 ) Section 8 ( b ) ' o f the Federal Deposit Insurance
Act (12 U.S.C. 1818(b)) is amended to read as follows:
" ( b ) ( 1 ) If, in t h e opinion of the appropriate Federal banking
agency, any insured bank, bank which has insured deposits, or any
director, officer, employee, agent, or other person paiticipating in the

92 STAT. 3649

Civil penalty,

Notice,
"Violates."

Hearing
opportunity,

Review,

Certification.

Regulations,

Notice of charges,

92 STAT. 3650

PUBLIC LAW 95-630—NOV. 10, 1978

conduct of the affairs of such a bank is engaging or has engaged, or
the agency has reasonable cause to believe that the bank or any
director, officer, employee, agent, or other person participating in the
conduct of the affairs of such bank is about to engage, in an unsafe
or unsound practice in conducting the business of such bank, or is
violating or has violated, or the agency has reasonable cause to believe
that the bank or any director, officer, employee, agent, or other person
participating in the conduct of the affairs of such bank is about to
violate, a law, rule, or regulation, or any condition imposed in
writing by the agency in connection with the granting of any
application or other request by the bank or any written agreement
entered into with the agency, the agency may issue and serve upon the
bank or such director, officer, employee, agent, or other person a notice
Hearing
of charges in respect thereof. The notice shall contain a statement of the
facts constituting the alleged violation or violations or the unsafe or
unsound practice or practices, and shall fix a time and place at which
a hearing will be held to determine whether an order to cease and
desist therefrom should issue against the bank or the director, officer,
employee, agent, or other person participating in the conduct of the
affairs of such bank. Such hearing shall be fixed for a date not earlier
than thirty days nor later than sixty days after service of such notice
unless an earlier or a later date is set by the agency at the request of
any party so served. Unless the party or parties so served shall appear
Cease-and-desist
order.
at the hearing personally or by a duly authorized representative, they
shall be deemed to have consented to the issuance of the cease-anddesist order. In the event of such consent, or if upon the record made
at any such hearing, the agency shall find that any violation or unsafe
or unsound practice specified in the notice of charges has been
established, the agency may issue and serve upon the bank or the
director, officer, employee, agent, or other person participating in the
conduct of the affairs of such bank an order to cease and desist from
any such violation or practice. Such order may, by provisions which
may be mandatory or otherwise, require the bank or its directors,
officers, employees, agents, and other persons participating in the
conduct of the affairs of such bank to cease and desist from the same,
and, further, to take affirmative action to correct the conditions
resulting from any such violation or practice.
"(2) A cease-and-desist order shall become effective at the expiration of thirty days after the service of such order upon the bank or
other person concerned (except in the case of a cease-and-desist order
issued upon consent, which shall become effective at the time specified
therein), and shall remain effective and enforceable as provided
therein, except to such extent as it is stayed, modified, terminated, or set
aside by action of the agency or a reviewing court.".
(2) Section 407(e) of the National Housing Act (12 U.S.C. 1730(e))
is amended to read as follows:
Notice of charges.
"(e) (1) If, in the opinion of the Corporation, any insured institution, institution which has insured accounts or any director, officer,
employee, agent, or other person participating in the conduct of the
affairs of such institution is engaging or has engaged, or the Corporation has reasonable cause to believe that the institution or any director,
officer, employee, agent, or other person participating in the conduct
of the affairs of such institution is about to engage, in an unsafe or
unsound practice in conducting the business of such institution, or is
violating or has violated, or the Corporation has reasonable cause to
believe that the institution or any director, officer, employee, agent, or
other person participating in the conduct of the affairs of such institu-

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3651

tion is about to violate, a law, rule, or regulation, or any condition
imposed in writing by the Corporation in connection with the granting
of any application or other request by the institution or any written
agreement entered into with the Corporation, including any agreement entered into under section 403 of this title, the Corporation may 12 USC 1726.
issue and serve upon the institution or such director, officer, employee,
agent, or other person a notice of charges in respect thereof. The notice Hearing,
shall contain a statement of the facts constituting the alleged violation
or violations or the unsafe or unsound practice or practices, and shall
fix a time and place at which a hearing will be held to determine
whether an order to cease and desist therefrom should issue against the
institution or the director, officer, employee, agent, or other person
participating in the conduct of the affairs of such institution. Such
hearing shall be fixed for a date not earlier than thirty days nor later
than sixty days after service of such notice unless an earlier or a later
date is set by the Corporation at the request of any party so served.
Unless the party or parties so served shall appear at the hearing by a Cease-and-desist
duly authorized representative, they shall be deemed to have consented order.
to the issuance of the cease-and-desist order. In the event of such consent, or if upon the record made at any such hearing, the Corporation
shall find that any violation or unsafe or unsound practice specified in
the notice of charges has been established, the Corporation may issue
and serve upon the institution or the director, officer, employee, agent,
or other person participating in the conduct of the affairs of such
institution an order to cease and desist from any such violation or
practice. Such order may, by provisions which may be mandatory or
otherwise, require the institution or directors, officers, employees,
agents, and other persons participating in the conduct of the affairs
of such institution to cease and desist from the same, and further
to take affirmative action to correct the conditions resulting from any
such violation or practice.
"(2) A cease-and-desist order shall become effective at the expiration of thirty days after service of such order upon the institution or
the party or parties so served (except in the case of a cease-and-desist
order issued upon consent, which shall become effective at the time
specified therein), and shall remain effective and enforceable except
to such extent as it is stayed, modified, terminated, or set aside by
action of the Corporation or a reviewing court.
"(3^ This subsection and subsections (f), (g), (h), (j), (k), (m) (3),
(n), (o), (p), and (q) of this section shall apply to any savings and
loan holding company, and to any subsidiary (other than an insured
institution) of a savings and loan holding company, as those terms are
defined in section 408 of this title, and to any affiliate service corporation of an insured institution in the same manner as they apply to
insured institutions".
(3) Section 5(d) (2) of the Home Owners' Loan Ac', as amended
(12 U.S.C. 1464(d) (2)), is amended to read as follows:
"(2) (A) If, in the opinion of the Board, any association or any di- Notice of charges,
rector, officer, employee, agent, or Other person participating in the
conduct of the affairs of such association is engaging or has engaged,
or the Board has reasonable cause to believe that the association or any
director, officer, employee, agent, or other person participating in the
conduct of the affairs of such association is about to engage, in an
unsafe or unsound practice in conducting the business of such association, or is violating or has violated or the Board has reasonable cause
to believe that the association or any director, officer, employee, agent,

92 STAT. 3652

PUBLIC LAW 95-630—NOV. 10, 1978

or other pei'son participating in the conduct of the affairs of such association is about to violate, a law, rule, or regulation, or charter, or any
condition imposed in writing by the Board in connection with the
granting of any application or other- request by the association or any
written agreement entered into with the Board, the Board may issue
and serve upon the association or such director, officer, employee, agent,
Hearing.
or other person a notice of charges in respect thei'eof. The notice shall
contain a statement of the facts constituting the alleged violation or
violations or the unsafe or unsound practice or practices, and shall fix
a time and place at which a hearing will be held to determine whether
an order to cease and desist therefrom should issue against the association or the director, officer, employee, agent, or other person participating in the conduct of the affairs of such association. Such hearing
shall be fixed for a date not earlier than thirty days nor later than sixty
days after service of such notice miless an earlier or a later date is set
by the Board at the request of any party so served. Unless the party
Cease-and-desist
order.
or parties so served shall appear at the hearing by a duly authorized
representative, they shall be deemed to have consented to the issuance
of the cease-and-desist order. In the event of such consent, or if upon
the record made at any such hearing, the Board shall find that any violation or unsafe or unsound practice specified in the notice of chai-ges
has been established, the Board may issue and serve upon the association or the director, officer, employee, agent, or other person participating in the conduct of the affairs of such association an order to
cease and desist from any such violation or i)ractice. Such order may,
by provisions which may be mandatory or otherwise, require the association or its directors, officers, employees, agents, and other persons
participating in the conduct of the affairs of such association to cease
and desist from the same, and, further, to take affirmative action to
correct the conditions resulting from any such violation or practice.
''(B) A cease-and-desist order shall become effective at the expiration of thirty days after service of such order upon the association or
the party or parties so served (except in the case of a cease-and-desist
order issued upon consent, which shall become effective at the time
specified therein), and shall remain effective and enforceable, except
to such extent as it is stayed, modified, terminated, or set aside by
action of the Board or a reviewing court.
"(C) This paragraph and paragraphs (3), (4), (5), (7), (8), (9),
(10), (12) (A) and (B), (13), and (14) of this subsection (d) shall
apply to any savings and loan holding company or to any subsidiary
(other than an association) of a savings and loan holding company,
as those terms are defined in section 408 of the Xational Housing Act
(12 U.S.C. r730a), as amended, and to any affiliate service corporation
of an association in the same manner as they apply to an association.".
^(4) Section 206(e) of the Federal Credit Union Act (12 U.S.C.
1786(e) (1)) is amended to read as follows:
Notice of charges.
"(e) (1) If, in the opinion of the Administrator, any insured credit
union, credit union which has insured accounts, or any director, officer,
committee member, employee, agent, or other person participating in
the conduct of the affairs of such a credit union is engaging or has
engaged, or the Administrator has reasonable cause to believe that the
credit union or any director, officer, committee member, employee,
agent, or other person participating in the conduct of the affairs of
such credit union is about to engage, in an unsafe or unsound practice
in conducting the business of such credit union, or is violating or has
violated, or the Administrator has reasonable cause to believ6 that the

PUBLIC LAW 95-630—NOV. 10, 1978
credit union or any director, officer, committee member, employee,
agent, or other person participating in the conduct of the affairs of
such credit union is about to violate, a law, rule, or regulation, or any
condition imposed in writing by the Administrator in connection with
the granting of any application or other request by the credit union
or any written agreement entered into with the Administrator, the
Administrator may issue and serve upon the credit union or such director, officer, committee member, employee, agent, or other person a
notice of charges in respect thereof. The notice shall contain a statement of the facts constituting the alleged violation or violations or the
unsafe or unsound practice or practices, and shall fix a time and place
at which a hearing will be held to determine whether an order to cease
and desist therefrom should issue against the credit union or the director, officer, committee member, employee, agent, or other person
participating in the conduct of the affairs of such credit union. Such
hearing shall be fixed for a date not earlier than thirty days nor later
than sixty days after service of such notice unless an earlier or a later
date is set by the Administrator at the request of any party so served.
Unless the party or parties so served shall appear at the hearing by
a duly authorized representative, they shall be deemed to have consented to the issuance of the cease-and-desist order. In the event of
such consent, or if upon the record made at any such hearing, the
Administrator shall find that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Administrator may issue and serve upon the credit union or the director,
officer, committee member, employee, agent, or other person participating in the conduct of the affairs of such credit union an order to cease
and desist from any such violation or practice. Such order may, by provisions which may be mandatory or otherwise, require the credit union
or its directors, officers, committee members, employees, agents, and
other persons participating in the conduct of the affairs of such credit
union to cease and desist from the same, and, further, to take affirmative action to correct the conditions resulting from any such violation
or practice.
"(2) A cease-and-desist order shall become effective at the expiration of thirty days after the service of such order upon the credit
union or other person concerned (except in the case of a cease-anddesist order issued upon consent, which shall become effective at the
time specified therein), and shall remain effective and enforceable as
provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Administrator or a reviewing
court.".
(b) Section 8(b)(3) of the Federal Deposit Insurance Act (12
U.S.C. 1818(b) (3)) is amended to read as follows:
"(3) This subsection and subsections (c) through (f) and (h)
through (n) of this section shall apply to any bank holding company,
and to any subsidiary (other than a bank) of a bank holding company, as those terms are defined in the Bank Holding Company Act
of 1956, and to any organization organized and operated under section
25A of the Federal Reserve Act or operating under section 25 of the
Federal Reserve Act, in the same manner as they apply to a State
member insured bank. Nothing in this subsection or in subsection (c)
of this section shall authorize any Federal banking agency, other than
the Board of Governors of the Federal Reserve System, to issue a
notice of charges or cease-and-desist order against a bank holding
company or any subsidiary thereof (other than a bank or subsidiary
of that bank).*'.

92 STAT. 3653

Hearing.

Cease-and-desist
order,

12 USC 1841
note.
12 USC
^9^~^o9*'
"il-"32.

92 STAT. 3654

PUBLIC LAW 95-630—NOV. 10, 1978

(c)(1) Sections 8(c) (1) and (2) of the Federal Deposit Insurance
Act (12 U.S.C. 1818(c) (1) and (2)) are amended to read as follows:
Cease-and-desist
"(c)(1) Whenever the appropriate Federal banking agency shall
order.
determine that the violation or threatened violation or the unsafe or
unsound practice or practices, specified in the notice of charges served
upon the bank or any director, officer, employee, agent, or other person
participating in the conduct of the affairs of such bank pursuant to
paragraph (1) of subsection (b) of this section, or the continuation
thereof, is likely to cause insolvency or substantial dissipation of assets
or earnings of the bank, or is likely to seriously weaken the condition
of the bank or otherwise seriously prejudice the interests of its depositors prior to the completion of the proceedings conducted pursuant
to paragraph (1) of subsection (b) of this section, the agency may
issue a temporai-y order requiring the bank or such director, officer,
employee, agent, or other person to cease and desist from any such
violation or practice and to take affirmative action to prevent such
insolvency, dissipation, condition, or prejudice pending completion of
such proceedings. Such order shall become effective upon service upon
the bank or such director, officer, employee, agent, or other person
participating in the conduct of the affairs of such bank and, unless
set aside, limited, or suspended by a court in proceedings authorized by paragraph (2) of this subsection, shall remain effective and
enforceable pending the completion of the administrative proceedings
pursuant to such notice and until such time as the agency shall dismiss
the charges specified in such notice, or if a cease-and-desist order is
issued against the bank or such director, officer, employee, agent, or
other person, until the effective date of such order.
"(2) Within ten days after the bank concerned or any director,
officer, employee, agent, or other person participating in the conduct
of the affairs of such bank has been served with a temporary ceaseand-desist order, the bank or such director, officer, employee, agent,
or other person may apply to the United States district court for the
judicial district in which the home office of the bank is located, or the
ITnited States District Court for the District of Columbia, for an
injuction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges served
upon the bank or such director, officer, employee, agent, or other person
under paragraph (1) of subsection (b) of this section, and such court
shall have jurisdiction to issue such injuction.".
(2) Section 407(f) (1) and (2) of the National Housing Act (12
U.S.C. 1730(f) (1) and (2)) is amended to read as follows:
Cease-and-desist
"(f) (1) Whenever the Corporation shall determine that the violaorder,
tion or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the institution or
any director, officer, employee, agent, or other person participating in
the conduct of the affairs of such institution or any institution any of
the accounts of which are insured pursuant to paragraph (1) of subsection (e) of this section, or the continuation thereof, is likely to cause
insolvency or substantial dissipation of assets or earnings of the institution, or is likely to seriously weaken the condition of the institution
or otherwise seriously prejudice the interests of its insured members
prior to the completion of the proceedings conducted pursuant to
paragraph (1) of subsection (c) of this section, the Corporation may
issue a temporary order requiring the institution or such director,
officer, employee, agent, or other person to cease and desist from any
such violation or practice and to take affirmative action to prevent such

PUBLIC LAW 95-630—NOV. 10, 1978
insolvency, dissipation, condition or prejudice pending- completion of
such proceedings. Such order shall become effective upon service upon
the institution and/or such dir-ector, officer, employee, agent, or other
person participating in the conduct of tiie affairs of such institution
and, unless set aside, limited, or suspended by a court in proceedings
authorized by p a r a g r a p h (2) of this subsection, shall remain effective
and enfoi-ceable pending the completion of the administrative proceedings pursuant to such notice and until such time as the Corporation
shall dismiss tlie charges specified in such notice, or if a cease-and-desist
oi-der is issued against the institution or such director, officer, employee,
agent, or other person, until the effective date of any such order.
" (2) W i t h i n ten days after the institution concerned or any director.
officer, employee, agent, or other |5crson participating in the conduct
of the affairs of such institution has been served with a temporary
cease-and-desist order, the institution or such director, officer,
employee, agent, or other jjerson may apply to the United States district court for the judicial district in which the principal office of the
institution is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting or suspending the enforcement, operation, or effectiveness of such order pending
the completion of the administrative proceedings p u r s u a n t to the
notice of charges served upon the institution or such director, officer,
employee, agent, or other person under p a r a g r a p h (1) of subsection
(e) of this section, and such couil shall have jurisdiction to issue such
injunction.".
(3) Section 5 ( d ) (3) ( A ) and ( B ) of the H o m e Owners' Loan Act,
as amended (12 U.S.C. l-t64(d) (3) ( A ) and ( B ) ) , is amended to read
as follows:
" ( 3 ) ( A ) Whenever the Board shall determine that the violation or
threatened violation or the unsafe or unsound practice or practices,
specified in the notice of charges served upon the association or any
director, officer, employee, agent, or other person participating in the
conduct of the affairs of such association pur-suant to p a r a g r a p h (2)
( A ) of this subsection, or the continuation thereof, is likely to cause
insolvency (as defined in p a r a g r a p h (6) ( A ) (i) of this subsection)
or substantial dissipation of assets or earnings of the association, or is
likely to seriously weaken the condition of the association or otherwise
seriously pi-ejudice the interests of its savings account holders prior to
the completion of the proceedings conducted pursuant to p a r a g r a p h
(2) ( A ) of this subsection the Boai'd may issue a temporary order
requiring the association or such director, officer, employee, agent, or
other person to cease and desist from any such violation or practice
and to take affirmative action to prevent such insolvency, dissipation,
condition or prejudice pending completion of such proceedings. Such
order shall become effective upon service upon the association or such
director, officer, employee, agent, or other person participating in the
conduct of the affairs of such institution and, unless set aside, limited,
or suspended by a court in proceedings authorized by subparagraph
( B ) of this p a r a g r a p h , shall remain effective and enforceable pending
the completion of the administrative proceedings pursuant to such
notice and until such time as the Board shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against
the association or such director, officer, employee, agent, or other person, until the effective date of such order.
" ( B ) W i t h i n ten days after the association concerned or any director, officer, employee, agent, or other person participating in t h e conduct of the affairs of such association has been served with a temporary

92 STAT. 3655

Injunction,

Cease-and-desist
order.

Injunction

92 STAT. 3656

Cease-and-desist
order.

Injunction.

PUBLIC LAW 95-630—NOV. 10, 1978
cease-and-desist order, the association or such director, officer,
employee, agent, or other person may apply to the United States district court for the judicial district in which the home office of the
association is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending
the completion of the administrative proceedings pursuant to the notice
of charges served upon the bank or such director, officer, employee,
agent, or other person under paragraph (2) (A) of this subsection,
and such court shall have jurisdiction to issue such injunction.".
(4) Sections 206(f) (1) and (2) of the Federal Credit Union Act
(12 U.S.C. 1786(f) (1) and (2)) are amended to read as follows:
"(f)(1) Whenever the Administrator shall determine that the
violation or threatened violation or the unsafe or unsound practice or
practices, specified in the notice of charges served upon the credit
imion or any director, officer, committee member, employee, agent, or
other person participating in the conduct of the affairs of such credit
union pursuant to paragraph (1) of subsection (e) of this section, or
the continuation thereof, is likely to cause insolvency or substantial
dissipation of assets or earnings of the credit union, or is likely to
seriously weaken the condition of the credit union or otherwise seriously prejudice the interests of its insured members prior to the
completion of the proceedings conducted pursuant to paragraph (1)
of subsection (e) of this section, the Administrator may issue a temporary order requiring the credit union or such director, officer, committee member, employee, agents, or other person to cease and desist
from any such violation or practice and to take affirmative action to
prevent such insolvency, dissipation, condition, or prejudice pending
completion of such proceedings. Such order shall become effective upon
service upon the credit union or such director, officer, committee member, employee, agent, or other person participating in the conduct of
the affairs of such credit union and, unless set aside, limited, or suspended b}' a court in proceedings authorized by paragraph (2) of this
subsection, shall remain effectiA^e and enforceable pending the completion of the administrative proceedings pursuant to such notice and
until such time as the Administration shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the
credit union or such director, officer, committee member, employee,
agent, or other person, until the effective date of such order.
"(2) Within ten days after the credit union concerned or any
director, officer, committee member, employee, agent, or other person
participating in the conduct of the affairs of such credit union has
been served with a temporary cease-and-desist order, the credit union
or such director, officer, committee member, employee, agent, or other
person may apply to the United States district court for the judicial
district in which the home office of the credit union is located, or the
United States District Court for the District of Columbia, for an
injunction setting aside, limiting, or suspending the enforcement,
operation, or effectiveness of such order pending the completion of
the administrative proceedings pursuant to the notice of charges served
upon the credit union or such director, officer, committee member,
employee, agent, or other person under paragraph (1) of subsection
(e) of this section, and such court shall have jurisdiction to issue such
injunction.".
(d)(1) Section 8(e) of the Federal Deposit Insurance Act, as
amended (12 U.S.C. 1818(e)), is amended to read as follows:

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3657

"(e) (1) Whenever, in the opmion of the appropriate Federal bank- Removal from
ing agency, any director or officer of an insured bank has coinmitted office, notice of
any violation of law, rule, or regulation or of a cease-and-desist order mtent.
which has become final, or has engaged or participated in any unsafe
or unsound practice in connection with the bank, or has committed
or engaged in any act, omission, or practice which consititutes a breach
of his fiduciary duty as such director or officei-, and the agency determines that the bank has suffered or will probably suffer substantial
financial loss or other damage or that the interests of its depositors
could be seriously prejudiced by reason of such violation or practice or
breach of fiduciary duty or that the director or office has received
financial gain by reason of such violation or practice or breach of
fiduciary duty, and that such violation or practice or breach of fiduciary
duty is one involving personal dishonesty on the part of such director
or officer, or one which demonstrates a willful or continuing disregard
for the safety or soundness of the bank, the agency may serve upon
such director or officer a written notice of its intention to remove him
from office.
"(2) Whenever, in the opinion of the appropriate Federal banking
agenc}^ any director or officer of an insured bank, by conduct or practice with respect to another insured bank or other business institution
which resulted in substantial financial loss or other damage, has
evidenced either his personal dishonesty or a willful or continuing disregard for its safety and soundness, and, in addition, has evidenced his
unfitness to continue as a director or officer and, whenever, in the
opinion of the appropriate Federal banking agency, any other person
participating in the conduct of the affairs of an insured bank, by
conduct or practice with respect to such bank or other insured bank
or other business institution which resulted in substantial financial
loss or other damage, has evidenced either his personal dishonesty
or a willful or continuing disregard for its safety and soundness,
and, in addition, has evidenced his unfitness to participate in the conduct of the affairs of such insured bank, the agency may serve upon
such director, officer, or other person a written notice of its intention
to remove him from office or to prohibit his further participation in
any manner in the conduct of the affairs of the bank.
"(3) In respect to any director or officer of an insured bank or any
other person referred to in paragraph (1) or (2) of this subsection,
the appropriate Federal banking agency may, if it deems it necessary
for the protection of the bank or the interests of its depositors, by
written notice to such effect served upon such director, officer, or other
person, suspend him from office or prohibit him from further participation in any manner in the conduct of the affairs of the bank. Such
suspension or prohibition shall become effective upon service of such
notice and, unless stayed by a court in proceedings authorized by subsection (f) of this section, shall remain in effect pending the completion of the administrative proceedings pursuant to the notice served
under paragraph (1) or (2) of this subsection and until such time as
the agency shall dismiss the charges specified in such notice, or, if an
order of removal or prohibition is issued against the director or officer
or other person, until the effective date of any such order. Copies of
any such notice shall also be served upon the bank of which he is
a director or officer or in the conduct of whose affairs he has
participated.
"(4) A notice of intention to remove a director, officer, or other Hearing,
person from office or to prohibit his participation in the conduct of the
affairs of an insured bank, shall contain a statement of the facts con-

39-194 O—80—pt. 3

65 : QL3

92 STAT. 3658

PUBLIC LAW 95-630—NOV. 10, 1978

stituting grounds therefor, and shall fix a time and place at which a
hearing will be held thereon. Such hearing shall be fixed for a date not
earlier than thirty days nor later than sixty days after the date of
service of such notice, unless an earlier or a later date is set by the
agency at the request of (A) such director or officer or other person,
and for good cause shown, or (B) the Attorney General of the United
States. Unless such director, officer, or other person shall appear at the
hearing in person or by a duly authorized representative, he shall be
deemed to have consented to the issuance of an order of such removal
or prohibition. In the event of such consent, or if upon the record
made at any such hearing the agency shall find that any of the grounds
specified in such notice have been established, the agency may issue
such orders of suspension or removal from office, or prohibition from
participation in the conduct of the affairs of the bank, as it may deem
appropriate. In any action brought under this section by the Comptroller of the Currency in respect to any director, officer or other person with respect to a national banking association or a District bank,
the findings and conclusions of the Administrative Law Judge shall
be cei-tified to the Board of Governors of the Federal Reserve System
for the determination of whether any order shall issue. Any such
order shall become effective at the expiration of thirty days after service upon such bank and the director, officer, or other person concerned
(except in the case of an order issued upon consent, which shall become
effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified,
terminated, or set aside by action of the agency or a reviewing court.".
(2) Section 407(g) (1) and (2) of the National Housing Act (12
U.S.C. 1730(g) (1) and (2)) is amended to read as follows:
Removal from
"(g) (1) Whenever, in the opinion of the Corporation, any director
office, notice of or officer of an insured institution has committed any violation of law,
intent.
rule, or regulation or of a cease-and-desist order which has become
final, or has engaged or participated in any imsafe or unsound practice
in connection with the institution or has committed or engaged in any
act, omission, or practice which constitutes a breach of his fiduciary
duty as such director or officer, and the Corporation determines that
the institution has suffered oi will probably suffer substantial financial
loss or other damage or that the interests of its insured members could
be seriously prejudiced by reason of such violation or practice or
breach of fiduciary duty or that the director or officer has received
financial gain by reason of such violation or practice or breach of
fiduciary duty, and that such violation or practice or breach of fiduciary duty is one involving personal dishonesty on the part of such
director or officer, or one which demonstrates a willful or continuing
disregard for the safety or soundness of the institution, the Corporation may serve upon such director or officer a written notice of its
intention to remove him from office or to prohibit his further participation in any manner in the conduct of the affairs of the institution.
"(2) Whenever, in the opinion of the Corporation, any director or
officer of an insured institution, by conduct or practice with respect to
another insured institution or other business institution which resulted
in substantial financial loss or other damage, has evidenced either his
personel dishonesty or a willful or continuing disregard for its safety
and soundne-s, and, in addition, has evidenced his unfitness to continue
as a director or officer and, whenever, in the opinion of the Corporation,
ai iKfih' any other person participating in the conduct of the affairs of an
insured institution, by conduct or practice with respect to such institution or other insured institution or other business institution which
i

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3659

resulted in substantial financial loss or other damage, has evidenced
either his personal dishonesty or a willful or continuing disregard for
its safety and soundness, and in addition, has evidenced his unfitness to
participate in the conduct of affairs of such insured institution, the
Corporation may serve upon such director, officer, or other person a
written notice of its intention to remove him from office or to prohibit
his further participation in any manner in the conduct of the affairs
of the institution.".
(3) Section 5(d) (4) (A) and (B) of the Home Owners' Loan Act,
as amended (12 U.S.C. 1464(d) (4) (A) and (B)) is amended to read
as follows:
"(4) (A) Whenever, in the opinion of the Board, any director or
officer of an association has committed any violation of law, rule, or
regulation or of a cease-and-desist order which has become final, or has
engaged or participated in any unsafe or unsound practice in connection with the association, or has committed or engaged in any act,
omission, or practice which constitutes a breach of his fiduciary duty
as such director or officer, and the Board determines that the association has suffered or will probably suffer substantial financial loss or
other damage or that the interests of its savings account holders could
be seriously prejudiced by reason of such violation or practice or
breach of fiduciary duty, or that the director or officer has received
financial gain by reason of such violation or practice or breach of
fiduciary duty, and that such violation or practice or breach of fiduciary duty is one involving personal dishonesty on the part of such
director or officer, or a willful or continuing disregard for the safety
or soundness of the association, the Board may serve upon such director or officer a written notice of its intention to remove him from office
or to prohibit his further participation in any manner in the conduct
of the affairs of the association.
"(B) Whenever, in the opinion of the Board, any director or officer
of an association, by conduct or practice with respect to another savings and loan association or other business institution which resulted
in substantial financial loss or other damage, has evidence either his
personal dishonesty or a willful or continuing disregard for its safety
and soundness, and, whenever, in the opinion of the Board, any other
person participating in the conduct of the affairs of an association, by
conduct or practice with respect to such association or other savings
and loan association or other business institution which resulted in
substantial financial loss or other damage, has evidenced either his
personal dishonesty or a willful or continuing disregard for its safety
and soundness, and, in addition, has evidenced his unfitness to participate in the conduct of the affairs of such association, the Board may
serve upon such director, officer, or other person a written notice of
its intention to remove him from ofiice or to prohibit his further participation in any manner in the conduct of the affairs of the
association.".
(4) Section 206(g) (3) through (4) of the Federal Credit Union
Act, as amended (12 U.S.C. 1786(g) (3) through (4)), is amended to
read as follows:
"(3) In respect to any director, committee member, or officer of an
insured credit union or any other person referred to in paragraph (1)
or (2) of this subsection, the Administrator may, if he deems it necessary for the protection of the credit union or the interests of its members, by written notice to such effect served upon such director,
committee member, officer, or other person, suspend him from office or
prohibit him irojn further participation in any manner in the conduct

Removal from
office, notice of
intent.

Suspension from
office.

92 STAT. 3660

Hearing.

Civil penalty.

Notice.
"Violates."

PUBLIC LAW 95-630—NOV. 10, 1978

of the affairs of the credit union. Such suspension or prohibition shall
become effective upon service of such notice and, unless stayed by a
court in proceedings authorized by paragraph (5) of this subsection,
shall remain in effect pending the completion of the administrative
proceedings pursuant to the notice served under paragraph (1) or (2)
of this subsection and until such time as the Administrator shall dismiss the charges specified in such notice, or, if an order of removal and
prohibition is issued against the director, committee member, or officer
or other person, until the effective date of any such order. Copies of
any such notice shall also be served upon the credit union of which
he is a director, committee member, or officer or in the conduct of
whose aft'airs he has participated.
"(4) A notice of intention to remove a director, committee member,
officer, or other person from office or to prohibit his participation in
the conduct of the affairs of an insured credit union, shall contain a
statement of the facts constituting grounds therefor, and shall fix a
time and place at which a hearing will be held thereon. Such hearing
shall be nxed for a date not earlier than thirty days nor later than
sixty days after the date of service of such notice, unless an earlier or
a later date is set by the Administrator at the request of (A) such
director, committee member, or officer or other person, and for good
cause shown, or (B) the Attorney General of the United States. Unless
such director, committee member, officer, or other person shall appear
at the hearing in person or by a duly authorized representative, ho
shall be deemed to have consented to the issuance of an order of such
removal or prohibition. In the event of such consent, or if upon the
record made at any such hearing the Administrator shall find that any
of the grounds specified in such notice have been established, the
Administrator may issue such orders of suspension or removal from
office, or prohibition from participation in the conduct of the affairs
of the credit union, as it ma^ deem appropriate. Any such order shall
become effective at the expiration of thirty days after service upon
such credit union and the director, committee member, officer, or other
person concerned (except in the case of an order issued upon consent,
which shall become effective at the time specified therein). Such order
shall remain effective and enforceable except to such extent as it is
stayed, modified, terminated, or set aside by action of the Administrator or a reviewing court.".
(e)(1) Section 8(i) of the Federal Deposit Insurance Act, as
amended (12 U.S.C. 1818(i)), is amended by redesignating section
8(i) as 8(i) (1) and by adding at the end thereof a new paragraph as
follows:
"(2)(i) Any insured bank which violates or any officer, director,
employee, agent, or other person participating in the conduct of the
affairs of such a bank who violates the terms of any order which has
become final and was issued pursuant to subsection (b) or (c) of this
section, shall forfeit and pay a civil penalty of not more than $1,000
per day for each day during which such violation continues. The
penalty shall be assessed and collected by the appropriate Federal
banking agency by written notice. As used in this section, the term
'violates' includes without any limitation any action (alone or with
another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
"(ii) In determining the amount of the penalty the appropriate
Federal banking agency shall take into account the appropriateness
of the penalty with respect to the size of financial resources and ^ood
faith of the insured bank or person charged, the gravity of the viola-

PUBLIC LAW 95-630—NOV. 10, 1978
tioii, the history of previous violations, and such other matters as
justice may require.
"(iii) The insured bank or person assessed shall be afforded an
opportunity for agency hearing, upon request made within ten days
after issuance of the notice of assessment. In such hearing all issues
shall be determined on the record pursuant to section 554 of title 5,
United States Code, The agency determination shall be made by final
order which may be reviewed only as provided in subparagraph (iv).
If no hearing is requested as herein provided, the assessment shall constitute a final and unappealable order.
"(iv) Any insured bank or person against whom an order imposing
a civil money penalty has been entered after agency hearing under this
section may obtain review by the United States court of appeals for
the circuit in which the home office of the insured bank is located,
or the United States Court of Appeals for the District of Columbia
Circuit, by filing a notice of appeal in such court within ten days from
the date of such order, and simultaneously sending a copy of such
notice by registered or certified mail to the appropriate Federal banking agency. The agency shall promptly certify and file in such Court
the record upon which the penalty was imposed, as provided in section
2112 of title 28, United States Code. The findings of the agency shall
be set aside if found to be unsupported by substantial evidence as provided by section 706(2) (E) of title 5, United States Code.
"(v) If any insured bank or person fails to pay an assessment after
it has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the agency, the agency
shall refer the matter to the Attorney General, who shall recover the
amount assessed by action in the appropriate United States district
court. In such action, the validity and appropriateness of the final
order imposing the penalty shall not be subject to review.
"(vi) Each Federal banking agency shall promulgate regulations
establishing procedures necessary to implement this paragraph.
"(vii) All penalties collected under authority of this section shall
be covered into the Treasury of the United States.".
(2) Section 407(k) of the National Housing Act (12 U.S.C. 1730
(k)) is amended by adding a new paragraph (k) (3) to read as
follows:
"(3) (A) Any insured institution or any institution any of the
accounts of which are insured which violates or any officer, director,
employee, agent, or other person participating in the conduct of the
affairs of such an institution who violates the term of any order which
has become final and was issued pursuant to subsection (e) or (f) of
this section shall forefit and pay a civil penalty of not more than
$1,000 per day for each day during which such violation continues.
The penalty shall be assessed and collected by the Corporation by written notice. As used in this section, the term 'violates' includes w'ithout
any limitation any action (alone or with another or others) for or
toward causing, bringing about, participating in, counseling, or aiding
or abetting a violation.
"(B) In determining the amount of the penalty the Corporation
shall take into account the appropriateness of the penalty with respect
to the size of financial resources and good faith of the insured institution or person charged, the gravity of the violation, the history of
previous violations, and such other matters as justice may require.
"(C) The insured institution or person assessed shall be afforded an
opportunity for agency hearing, upon request made within ten days
after issuance of the notice of assessment. In such hearinir all issues

92 STAT. 3661

Hearing
opportunity,

Review,
; -^

Certification,

Regulations,

Civil penalty,

Notice,
"Violates."

Hearing
opportunity,

92 STAT. 3662

Review.

.,.»<
Certification.

. ioHfe di:>

Regulations.

^fKH ';
Civil penalty.

Notice.
"Violates."

,,.,
,ci,,!
Hearing
opportunity.

.r

PUBLIC LAW 95-630—NOV. 10, 1978
shall be determined on the record pursuant to section 554 of title 5,
United States Code. T h e agency determination shall be made by final
order which m a y be reviewed only as provided in subparagraph ( D ) .
I f no hearing is requested as herein provided, the assessment shall
constitute a final and unappealable order.
"(I^) -^^J insured institution or person against whom an order
imposing a civil money penalty has been entered after agency hearing
under this section may obtain review by t h e United States court of
appeals for the circuit in which the home office of the insured institution is located, or the United States Court of Appeals for the District'
of Columbia Circuit, by filing a notice of appeal in such court within
ten days from the date of such order, and simultaneously sending a
copy of such notice by registered or certified mail t o the Corporation.
T h e Corporation shall promptly certify a n d file in such court the
record upon which t h e penalty was imposed, as provided in section
2112 of title 28, United States Code. T h e findings of t h e agency shall
be set aside if found to be unsupported by substantial evidence as provided by section 706(2) ( E ) of title 5, United States Code.
" ( E ) I f any insured institution or person fails to pay an assessment after it h a s become a final and unappealable order, or after the
court of appeals has entered final judgment in favor of t h e agency,
the Corporation shall refer t h e matter to t h e Attorney General, who
shall recover the amount assessed by action in the appropriate United
States district court. I n such action, the validity a n d appropriateness
of the final order imposing the penalty shall not be subject to review.
" ( F ) T h e Corporation shall promulgate regulations establishing
procedures necessary to implement this paragraph.
" ( G ) All penalties collected under authority of this p a r a g r a p h
shall be covered into the Treasury of the United States.".
(3) Section 5 ( d ) (8) of the H o m e Owners' Loan Act, as amended
(12 U.S.C. 1464(5) (d) ( 8 ) ) , is amended by redesignating section
5(d)(8) a s 5 ( d ) ( 8 ) ( A ) and by adding the following new paragraph:
"(B) (i) Any association which violates or any officer, director,
employee, agent, or other person participating in the conduct of the
affairs of such an association who violates the terms of any order
which has become final and was issued pursuant to paragraph (2)
or (3) of this subsection, shall forfeit and pay a civil penalty of not
more than $1,000 per day for each day during which such violation
continues. The penalty shall be assessed and collected by the Board by
written notice. As used in this section, the term 'violates' includes
without any limitation any action (alone or with another or others)
for or toward causing, bringing about, participating in, counseling,
or aiding or abetting a violation.
"(ii) In determining the amount of the penalty the Board shall
take into account the appropriateness of the penalty with respect to
the size of financial resources and good faith of the association bank
or person charged, the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
"(iii) The association or person charged shall be afforded an
opportunity for agency hearing, upon request made within ten days
after issuance of the notice of assessment. In such hearing all issues
shall be de'^ermined on the record pursuant to section 554 of title 5,
United States Code. The agency determination shall be made by final
order which may be reviewed only as provided in subparagraph (iv).
If no hearing is requested as herein provided, the assessment shall
constitute a final and unappealable order.

PUBLIC LAW 95-630—NOV. 10, 1978
"(iv) Any association or person against whom an order imposing a
civil money penalty has been entered after agency hearing under this
section may obtain review by the United States court of appeals for
the circuit in which the home office of the association is located, or the
United States Court of Appeals for the District of Columbia Circuit,
by filing a notice of appeal in such court within ten days from the date
of such order, and simultaneously sending a copy of such notice by
registered or certified mail to the Board. The agency shall promptly
certify and file in such court the record upon which the penalty was
imposed, as provided in section 2112 of title 28, United States Code.
The findings of the agency shall be set aside if found to be unsupported
by substantial evidence as provided by section 706(2) (E) of title 5,
United States Code.
"(v) If any association or person fails to pay an assessment after
it has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the agency, the Board
shall refer the matter to the Attorney General, who shall recover the
amount assessed by action in the appropriate United States district
court. In such action, the validity and appropriateness of the final order
imposing the penalty shall not be subject to review.
"(vi) The Board shall promulgate regulations establishing procedures necessary to implement this paragraph.
" (vii) All penalties collected under authority of this paragraph shall
be covered into the Treasury of the United States.".
(4) Section 206(j) of the Federal Credit Union Act, as amended
(12 U.S.C. 1786(j)), is amended by redesignating section 206(j) as
206(j) (1) and by adding a new paragraph as follows:
"(2) (A) Any insured credit union which violates or any officer,
director, committee member, employee, agent, or other person participating in the conduct of the affairs of such a credit union who violates
the terms of any order which has become final and was issued pursuant
to subsection (e) or (f) of this section, shall forfeit and pay a civil
penalty of not more than $1,000 per day for each day during which
such violation continues. The penalty shall be assessed and collected by
the Administrator by written notice. As used in this section, the term
'violates' includes without any limitation any action (alone or with
another or others) for or toward causing, bringing about, participating
in, counseling, or aiding or abetting a violation.
"(B) In determining the amount of the penalty, the Administrator
shall take into account t h e appropriateness of t h e penalty with respect
to t h e size of financial resources a n d good faith of the insured credit
union or person charged, t h e gravity of t h e violation, t h e history of
previous violations, a n d such other matters as justice m a y require.
" ( C ) T h e insured credit union or person charged shall be afforded
an opportunity for agency hearing, upon request made within ten
days after issuance of t h e notice of assessment. I n such hearing all
issues shall be determined on the record pursuant t o section 554 of title
5, United States Code. T h e Administrator's determination shall be
made by final order which m a y be reviewed only as provided in subp a r a g r a p h ( D ) . I f no hearing is requested as herein provided, t h e
assessment shall constitute a final a n d unappealable order.
" ( D ) A n y insured credit union or person against whom an order
imposing a civil money penalty has been entered after agency h e a r i n g
under this section m a y obtain review by t h e United States court of
appeals for t h e circuit in which the home office of t h e insured credit
union is located, o r t h e United States Court of Appeals for t h e District of Columbia Circuit, by filing a notice of appeal in such court

92 STAT. 3663
Review,
- •
>

Certification,

Regulations,
M •!

Civil penalty,

Notice,
"Violates."

• • •

Hearing
opportunity,

Review.

.Y-..-

••

92 STAT. 3664

Certification,

'«?•>

Regulations.

5
Ante, p. 3644.

t*

Civil penalty.

12 u s e 371c,
ante, p. 3644.
Notice.
"Violates."

f'-i'
Hearing
opportunity.

PUBLIC LAW 95-630—NOV. 10, 1978
within ten days from the date of such order, and simultaneously sending a copy of such notice by registered or certified mail to the Administrator. The Administrator shall promptly certify and file in such
court the record upon which the penalty was imposed, as provided in
section 2112 of title 28, United States Code. The findings of the
Administrator shall be set aside if found to be unsupported by substantial evidence as provided by section 706(2) (E) of title 5, United
States Code.
" ( E ) If any insured credit union or person fails to pay an assessment after it has become a final and unappealable order, or after the
court of appeals has entered final judgment in favor of the Administrator, the Administrator shall refer the matter to the Attorney
General, who shall recover the amount assessed by action in the appropriate United States district court. In such action, the validity and
appropriateness of the final order imposing the penalty shall not be
subject to review.
" ( F ) The Administrator shall promulgate regulations establishing
procedures necessary to implement this paragraph.
"(G) All penalties collected under authority of this paragraph shall
be covered into the Treasury of the United States.".
SEC. 108. Section 18(j) of the Federal Deposit Insurance Act, as
amended (12 U.S.C. 1828 ( j ) ) , is amended by redesignating section
18(j) as "18(j) (1)" and by adding at the end thereof the following:
"(2) The provisions of section 22(h) of the Federal Reserve Act,
as amended, relating to limits on loans and extensions of credit by a
member bank to its executive officers or directors or to any person who
directly or indirectly owns, controls, or has the power to vote more
than 10 per centum of any class of voting securities of such member
bank, except in the case of such a bank located in a city, town, or
village with less than thirty thousand in population, in which case
such per centiim shall be 18 per centum, or to companies controlled
by such an executive officer, director, or person, or to political or campaign committees the funds or services of which will benefit such an
officer, director, or person or which are controlled by such an officer,
director, or person and relating to board of directors' approval of and
terms of such loan, shall be applicable to every nonmember insured
bank in the same manner and to the same extent as if such nonmember
insured bank were a State member bank.
" (3) (A) Any nonmember insured bank which violates or any officer,
director, employee, agent, or other person participating in the conduct
of the affairs of such nonmember insured bank who violates any provision of section 23A or 22 (h) of the Federal Reserve Act, as amended,
or any lawful regulation issued pursuant thereto, shall forfeit and
pay a civil penalty of not more than $1,000 per day for each day during which such violation continues. The penalty shall be assessed and
collected by the Corporation by written notice. As used in this section,
the term 'violates' includes without any limitation any action (alone
or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
"(B) In determining the amount of the penalty the Corporation
shall take into account the appropriateness of the penalty with respect
to the size of financial resources and good faith of the member bank
or person charged, the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
"(C) The nonmember insured bank or person charged shall be
afforded an opportunity for agency hearing, upon request made within
ten days after issuance of the notice of assessment. In such hearing

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3665

all issues shall be determined on the record pursuant to section 554 of
title 5, United States Code. The agency determination shall be made
by final order which may be reviewed only as provided in subparagraph
(D). If no hearing is requested as herein provided the assessment
shall constitute a final and unappealable order.
"(D) Any nonmember insured bank or person against whom an Review.
order imposing a civil money penalty has been entered after agency
hearing under this section may obtain review by the United States
court of appeals for the circuit in which the home office of the member
bank is located, or the United States Court of Appeals for the District
of Cohmibia Circuit, by filing a notice of appeal in such court within
ten days from the date of such order, and simultaneously sending a
copy of such notice by registered or certified mail to the Corporation.
The Corpoi-ation shall promptly certify and file in such court the Certification,
record upon which the penalty was imposed, as provided in section 2112
of title 28, United States Code. The findings of the Corporation shall
be set aside if found to be unsupported by substantial evidence as provided by section 706(2) (E) of title 5, United States Code.
" ( E ) If any nonmember insured bank or person fails to pay an
assessment after it has become a final and unappealable order, or after
the court of appeals has entered final judgment in favor of the agency,
the Corporation shall refer the matter to the Attorney General, who
shall recover the amount assessed by action in the appropriate United
States district court. In such action the validity and appropriateness
of the final order imposing the penalty shall not be subject to review.
" ( F ) The Corporation shall promulgate regulations establishing Regulations,
procedures necessary to implement this paragraph,
"(G) All penalties collected under the authority of this paragraph
shall be covered into the Treasury of the United States.".
SEC. 109. Any amendment made by this title which provides for the 12 u s e 93 note.
imposition of civil penalties shall apply only to violations occurring
or continuing after the date of its enactment.
SEC. 110. Section 22(g) of the Federal Reserve Act, as amended (12
U.S.C. 375a), is amended by inserting the figure "$60,000" in lieu of
the figure "$30,000" in paragraph (2), and by inserting the figure
"$20,000" in lieu of the figure "$10,000" in paragraph (3); and by
inserting the figure "$10,000" in lieu of the figure "$5,000" in paragraph (4).
SEC. 111. (a) (1) Section 8(g) of the Federal Deposit Insurance Act
(12 U.S.C. 1818 (g)) is amended to read as follows:
" ( s ) ( l ) Whenever any director or officer of an insured bank, or Suspension from
other person participating in the conduct of the affairs of such bank, office.
is charged in any information, indictment, or complaint authorized by
a United States attorney, with the commission of or participation in a
crime involving dishonesty or breach of trust which is punishable by
imprisonment for a term exceeding one year under State or Federal
law, the appropriate Federal banking agency may, if continued service or participation by the individual may pose a threat to the interests
of the bank's depositors or may threaten to impair public confidence
in the bank, by written notice served upon such director, officer, or
other person, suspend him from office or prohibit him from further
participation in any manner in the conduct of the affairs of the bank,
A copy of such notice shall also be served upon the bank. Such suspension or prohibition shall remain in effect until such information, indictment, or complaint is finally disposed of or until terminated by the
agency. In the event that a judgment of conviction with respect to
such crime is entered against such director, officer, or other person,
and at such time as such judgment is not subject to further appellate

92 STAT. 3666

.owm SC- :>;;

Notification.

Rules.

PUBLIC LAW 95-630—NOV. 10, 1978
review, the agency may, if continued service or participation by the
individual may pose a threat to the interests of the bank's depositors or
may threaten to impair public confidence in the bank, issue and serve
upon such director, officer, or other person an order removing him from
office or prohibiting him from further participation in any manner in
the conduct of the affairs of the bank except with the consent of the
appropriate agency. A copy of such order shall also be served upon such
bank, whereupon such director or officer shall cease to be a director
or officer of such bank. A finding of not guilty or other disposition of
the charge shall not preclude the agency from thereafter instituting
proceedings to remove such director, officer, or other person from office
or to prohibit further participation in bank affairs, pursuant to paragraph (1), (2), or (3) of subsection (e) of this section. Any notice of
suspension or order of removal issued under this paragraph shall
remain effective and outstanding until the completion of any hearing
or appeal authorized under paragraph (3) hereof unless terminated
by the agency.
"(2) If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors of
a national bank less than a quorum of directors not so suspended, all
powers and functions vested in or exercisable by such board shall vest
in and be exercisable by the director or directors on the board not so
suspended, until such time as there shall be a quorum of the board of
directors. In the event all of the directors of a national bank are suspended pursuant to this section, the Comptroller of the Currency
shall appoint persons to serve temporarily as directors in their place
and stead pending the termination of such suspensions, or until such
time as those who have been suspended, cease to be directors of the
bank and their respective successors take office.
"(3) Within thirty days from service of any notice of suspension
or order of removal issued pursuant to paragraph (1) of this subsection, the director, officer, or other person concerned may request in
writing an opportunity to appear before the agency to show that the
continued service to or participation in the conduct of the affairs of the
bank by such individual does not, or is not likely to, pose a threat to
the interests of the bank's depositors or threaten to impair public confidence in the bank. Upon receipt of any such request, the appropriate
Federal banking agency shall fix a time (not more than thirty days
after receipt of such request, unless extended at the request of the concerned director, officer, or other person) and place at which the director, officer, or other person may appear, personally or through Counsel,
before one or more members of the agency or designated employees of
the agency to submit written materials (or, at the discretion of the
agency, oral testimony) and oral argument. Within sixty days of such
hearing, the agency shall notify the director, officer, or other person
whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the bank will be continued, terminated, or otherwise modified, or whether the order removing said
director, officer or other person from office or prohibiting such individual from further participation in any manner in the conduct of the
affairs of the bank will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the agency's decision, if
adverse to the director, officer or other person. The Federal banking
agencies are authorized to prescribe such rules as may be necessary to
effectuate the purposes of this subsection.".

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3667

(2) Section 8(h)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818(h)(1)) is amended by inserting after "Any hearing
provided for in this section" the following: "(other than the hearing
provided for in subsection (g) (3) of this section)".
(3) Section 8(j) of the Federal Deposit Insurance Act (12 U.S.C.
1818(j)) is amended by striking out " ( e ) ( 5 ) , (e)(7), (e)(8)" and
insertmg in lieu thereof " (e) (3), (e) (4)".
(4) Section 8(k) of the Federal Deposit Insurance Act (12 U.S.C.
1818 (k)) is amended by striking out "paragraph (1) of subsection
( g ) " and inserting in lieu thereof "paragraph (1) or (3) of
subsection (g)".
(5) Section 8(n) of the Federal Deposit Insurance Act (12 U.S.C.
1818 (n)) is amended by adding at the end thereof the following new
sentence: "Any person who willfully shall fail or refuse to attend and Misdemeanor,
testify or to answer any lawful inquiry or to produce books, papers,
correspondence, memoranda, contracts, agreements, or other records,
if in such person's power so to do, in obedience to the subpoena of
the appropriate Federal banking agency, shall be guilty of a
- •; h^
misdemeanor and, upon conviction, shall be subject to a fine of not
more than $1,000 or to imprisonment for a term of not more than one
year or both.".
(b)(1) Section 407(h) of the National Housing Act (12 U.S.C.
1730 (h)) is amended to read as follows:
"(h) (1) Whenever any director or officer of an insured institution, Notice of
or other persons participating in the conduct of the affairs of such suspension from
institution, is charged in any information, indictment, or complaint office.
authorized by a United States attorney, with the commission of or
participation in a crime involving dishonesty or breach of trust which
is punishable by imprisonment for a term exceeding one year under
State or Federal law, the Corporation may, if continued service or
participation by the individual may pose a threat to the interests of
the institution's depositors or may threaten to impair public
confidence in the institution, by written notice served upon such
director, officer, or other person suspend him from office or prohibit
him from further participation in any manner in the conduct of the
affairs of the institution. A copy of such notice shall also be served
upon the institution. Such suspension or prohibition shall remain in
effect until such information, indictment, or complaint is finally
disposed of or until terminated by the Corporation. In the event that Removal from
a judgment of conviction with respect to such crime is entered against office.
such director, officer, or other person, and at such time as such
judgment is not subject to further appellate review, the Corporation
may, if continued service or participation by the individual may pose
a threat to the interests of the institution's depositors or may threaten
to impair public confidence in the institution, issue and serve upon
such director, officer, or other person an order removing him from
office or prohibiting him from further participation in any manner
in the conduct of the affairs of the institution except with the consent
of the Corporation. A copy of such order shall also be served upon
such institution, whereupon such director or officer shall cease to be
a director or officer of such institution. A finding of not guilty or
other disposition of the charge shall not preclude the Corporation
from thereafter instituting proceedings to remove such director,
officer, or other person from office or to prohibit further participation
in institution affairs, pursuant to paragraph (1), (2), or (3) of
subsection (g) of this section. Any notice of suspension or order of
removal issued under this paragraph shall remain effective and

9 2 STAT. 3668

Notification.

Rules.

Suspension from
office.

PUBLIC LAW 95-630—NOV. 10, 1978
outstanding until the completion of any hearing or appeal authorized
under p a r a g r a p h (3) hereof unless terminated by the Corporation.
" ( 2 ) W i t h i n thirty days from service of any notice of suspension
or order of removal issued pursuant to p a r a g r a p h (1) of this
subsection, the director, officer, or other person concerned may request
in writing an opportunity to appear before the Corporation to show
that the continued service to or participation in the conduct of the
affairs of the institution by such individual does not, or is not likely
to, pose a threat to the interests of the institution's depositors or
threaten to impair public confidence in the institution. U p o n receipt
of any such request, the Corporation shall fix a time (not more than
thirty days after receipt of such request, unless extended at the request
of the concerned director, officer, or other person) and place at which
the director, officer, or other person may appear, personally or
through counsel, before one or more members of the Corporation or
designated employees of the Corporation to submit written materials
(or, at the discretion of the agency, oral testimony) and oral
argument. W i t h i n sixty days of such hearing, the Corporation shall
notify the director, officer, or other person whether the suspension or
prohibition from participation in any manner in the conduct of the
affairs of the institution will be continued, terminated or otherwise
modified, or whether the order removing said director, officer, or other
person from office or prohibiting such individual from further
participation in any manner in the conduct of the affairs of the
institution will be rescinded or otherwise modified. Such notification
shall contain a statement, of the basis for the Corporation's decision,
if adverse to the director, officer, or other person. T h e Corporation is
authorized to prescribe such rules as may be necessary to effectuate the
purposes of this subsection.".
(2) Section 4 0 7 ( j ) ( l ) of such Act (12 U.S.C. I 7 3 0 ( j ) ( l ) ) is
amended by inserting after " A n y hearing provided for in this section"
the following: " ( o t h e r than the hearing provided for in subsection
( h ) ( 2 ) of this section)".
(3) Section 4 0 7 ( j ) ( 2 ) of such Act (12 U.S.C. 1 7 3 0 ( j ) ( 2 ) ) is
amended by inserting " ( 1 ) " after "subsection ( h ) " .
( c ) ( 1 ) Section 5 ( d ) ( 5 ) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(d) ( 5 ) ) is amended to read as follows:
" ( 5 ) ( A ) Whenever any director or officer of an association, or
other person participating in the conduct of the affairs of such
association, is charged in any information, indictment, or complaint
authorized by a United States attorney, with the commission of or
participation in a crime involving dishonesty or breach of trust which
is punishable by imprisonment for a term exceeding one year under
State or Federal law, the B o a r d may, if continued service or
participation by the individual may pose a threat to the interests of
the association's depositors or may threaten to impair public
confidence in the association, by written notice served upon such
director, officer, or other person suspend him from office or prohibit
him from further participation in any manner in the conduct of the
affairs of the association. A copy of such notice shall also be served
upon the association. Such suspension or prohibition shall remain in
effect until such information, indictment, or complaint is finally
disposed of or until terminated by the Board. I n the event that a
judgment of conviction with respect to such crime is entered against
such director, officer, or other person, and at such time as such
judgment is not subject to further appellate review, the Board may,
if continued service or participation by the individual may pose a

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3669

threat to the interests of the association's depositors or may threaten
to impair public confidence in the association, issue and serve upon
such director, officer, or other person an order removing him from
office or prohibiting him from further participation in any manner
in the conduct of the affairs of the association except with the consent
of the Board. A copy of such order shall also be served upon such
association, whereupon such director or officer shall cease to be a
director or officer of such association. A finding of not guilty or other
disposition of the charge shall not preclude the Board from thereafter
instituting proceedings to remove such director, officer, or other
person from office or to prohibit further participation in association
affairs, pursuant to subparagraph (A), (B), or (C) of paragraph
(4). Any notice of suspension or order of removal issued under this
subparagraph shall remain effective and outstanding until the
completion of any hearing or appeal authorized under subparagraph
(C) hereof unless terminated by the Board.
"(B) If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors
of an association less than a quorum of directors not so suspended,
all powers and functions vested in or exercisable by such board shall
vest in and be exercisable by the director or directors on the board not
so suspended, until such time as there shall be a quorum of the board
of directors. In the event all of the directors of an association are suspended pursuant to this section, the Board shall appoint persons to
serve temporarily as directors in their place and stead pending the
•^
termination of such suspensions, or until such time as those who have
been suspended, cease to be directors of the association and their repective successors take office.
"(C) Within thirtj'^ days from service of any notice of suspension
or order of removal issued pursuant to subparagraph (A), the director,
officer, or other person concerned may request in writing an opportunity to appear before the Board to show that the continued service to
or participation in the conduct of the affairs of the association by such
individual does not, or is not likely to, pose a threat to the interests
of the association's depositors or threaten to impair public confidence
in the association. Upon receipt of any such request, the Board shall fix Hearing,
a time (not more than thirty days after receipt of such request, unless
extended at the request of the concerned director, officer, or other
person) and place at which the director, officer, or other person may
appear, personally or through counsel, before one or more members
of the agency or desig?iated employees of the Board to submit written
materials (or, at the discretion of the agency, oral testimony) and oral
argument. Within sixty days of such hearing, the Board shall notify Notification.
the director, officer, or other person whether the suspension or prohibition from participation in any manner in the conduct of the affairs of
the association will be continued, terminated or otherwise modified, or
whether the order removing said director, officer, or other person from
office or prohibiting such individual from further participation in any
manner in the conduct of the affairs of the association will be rescinded
or otherwise modified. Such notification shall contain a statement of
the basis for the Board's decision, if adverse to the director, officer, or
other person. The Board is authorized to prescribe such rules as may Rules.
be necessary to effectuate the purposes of this subsection.".
(2) Section 5(d) (7) (A) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(d)(7)(A)) is amended by inserting after "Any
hearing provided for in this subsection ( d ) " the following: "(other
than the hearing provided for in paragraph (5) (C) of this section)".

92 STAT. 3670

Suspension from
office.

Removal from
office.

^ • I ' E *'•

PUBLIC LAW 95-630—NOV. 10, 1978
(3) Section 5(d) (12) (A) of such Act (12U.S.C. 1464(d) (12) (A))
is amended by striking "or 5 ( A ) " and inserting in lieu thereof the
following: "5(A), or 5(C)".
(4) Section 5(d) (13) (A) (1) of such Act (12 U.S.C. 1464(d) (13)
(A) (1)) is amended by inserting after "paragraph (5) ( A ) " the following: "or (C)".
(d) (1) Section 206(h) of the Federal Credit Union Act (12 U.S.C.
1786 (h)) is amended to read as follows:
"(h)(1) Whenever any director, committee member, or officer of
an insured credit union, or other person participating in the conduct
of the affairs of such credit union, is charged in any information,
indictment, or complaint authorized by a United States attorney, with
the commission of or participation in a crime involving dishonesty or
breach of trust which is punishable by imprisonment for a term exceeding one year under State or Federal law, the Administrator may, if
continued service or participation by the individual may pose a threat
to the interests of the credit union's members or may threaten to impair
public confidence in the credit union, by written notice served upon
such director, committee member, officer, or other person suspend him
from office or prohibit him from further participation in any manner
in the conduct of the affairs of the credit union. A copy of such notice
shall also be served upon the credit union. Such suspension or prohibition shall remain in effect until such information, indictment, or complaint is finally disposed of or until terminated by the Administrator.
In the event that a judgment of conviction with respect to such crime
is entered against such director, committee member, officer, or other
person, and at such time as such judgment is not subject to further
appellate review, the Administrator may, if continued service or participation by the individual may pose a threat to the interests of the
credit union's depositors or may threaten to impair public confidence
in the credit union, issue and serve upon such director, committee member, officer, or other person an order removing him from office or prohibiting him from further participation in any manner in the conduct
of the affairs of the credit union except with the consent of the Administrator. A copy of such order shall also be served upon such credit
union, whereupon such director, committee member, or officer shall
cease to be a director, committee member, or officer of such credit
union. A finding of not guilty or other disposition of the charge shall
not preclude the Administrator from thereafter instituting proceedings to remove such director, committee member, officer, or other
person from office or to prohibit further participation in the affairs
of the credit union, pursuant to subsection (g) of this section. Any
notice of suspension or order of removal issued under this paragraph
shall remain effective and outstanding until the completion of any
hearing or appeal authorized under paragraph (3) hereof unless terminated by the Administrator.
"(2) If at any time, because of the suspension of one or more directors pursuant to this section, there shall be on the board of directors
of a Federal credit union less than a quorum of directors not so suspended, all powers and functions vested in or exercisable by such board
shall vest in and be exercisable by the director or directors on the board
not so suspended, until such time as there shall be a quorum of the
board of directors. In the event all of the directors of a Federal credit
union are suspended pursuant to this section, the Administrator shall
appoint persons to serve temporarily as directors in their place and
stead pending the termination of such suspensions, or until such time

PUBLIC LAW 95-630—NOV. 10, 1978
as those who have been suspended cease to be directors of the credit
union and their respective successors have been elected by the members
at an annual or special meeting and have taken office. Directors
appointed temporarily by the Administrator shall, within thirty days
following their appomtment, call a special meeting for the election
of new directors, unless during the thirty-day period (A) the regular
annual meeting is scheduled, or (B) the suspensions giving rise to
the appointment of temporary directors are terminated.
"(3) Within thirty days from service of any notice of suspension or
order of removal issued pursuant to paragraph (1) of this subsection,
the director, committee member, officer, or other person concerned may
request in writing an opportunity to appear before the Administrator
to show that the continued service to or participation in the conduct
of the affairs of the credit union by such individual does not, or is
not likely to, pose a threat to the interests of the credit union's members or threaten to impair public confidence in the credit union. Upon
receipt of any such request, the Administrator shall fix a time (not
more than thirty days after receipt of such request, unless extended
at the request of the concerned director, committee member, officer,
or other person) and place at which the director, committee member,
officer, or other person may appear, personally or through counsel,
before the Administrator or his designee to submit written materials
(or, at the discretion of the Administrator, oral testimony) and oral
arg-ument. Within sixty days of such hearing, the Administrator shall
notify the director, committee member, officer, or other person whether
the suspension or prohibition from participation in any manner in the
conduct of the affairs of the credit union will be continued, terminated
or otherwise modified, or whether the order removing said director, committee member, officer, or other person from office or prohibiting such individual from further participation in any manner in the
conduct of the affairs of the credit union will be rescinded or otherwise
modified. Such notification shall contain a statement of the basis for
the Administrator's decision, if adverse to the director, committee
member, officer, or other person. The Administrator is authorized to
prescribe such rules as may be necessary to effectuate the purposes of
this subsection.".
(2) Section 206 (i) (1) of the Federal Credit Union Act (12 U.S.C
I786(i)(l)) is amended by inserting after "Any hearing provided
for in this section" the following: "(other than the hearing provided
for in subsection (h) (3) of this section)".
(3) Section 206(i) (2) of such Act (12 U.S.C. 1786(i)(2)) is
amended by inserting " (1)" after "subsection (h)".
SEC. 112'. Section 4(c) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(c)) is amended by striking out "The prohibitions in
this section shall not apply to any bank holding company which is
(i) a labor, agricultural, or horticultural organization and which is
exempt from taxation under section 501 of the Internal Eevenue Code
of 1954," and inserting in lieu thereof the following: "The prohibitions
in this section shall not apply tb (i) any company that was on January 4,1977, both a bank holding company and a labor, agricultural, or
horticultural organization exempt from taxation under section 501 of
the Internal Eevenue Code of 1954, or to any labor, agricultural, or
horticultural organization to which all or substantially all of the assets
of such company are hereafter transferred,".
SEC. 113. The third sentence of the second paragraph of section 16
of the Federal Reserve Act (12 U.S.C. 412) is amended by striking the

92 STAT. 3671

,.,. ,.,

^
..j.." -.1
Hearing,
^ >;,;;, ,.-;

sOfTi ; '
Notification,

Rules,

26 USC 501.

92 STAT. 3672

PUBLIC LAW 95-630—NOV. 10, 1978
words "direct obligations of the United States" and inserting in lieu
thereof the words "any obligations which are direct obligations of, or
are fully guaranteed as to principal and interest by, the United States
or any agency thereof".

Depository
Institution
Management
Interlocks Act.
Short title.
12 u s e 3201
note.
Definitions.
12 u s e 3201.

12 u s e 1841.

12 u s e 1730a.
vUti'S^iMGY'

T I T L E II—INTERLOCKING

DIRECTOES

SEC. 201. This title may be cited as the "Depository Institution Management Interlocks Act".
SEC. 202. As used in this title—
(1) the term "depository institution" means a commercial bank,
a savings bank, a trust company, a savings and loan association, a
building and loan association, a homestead association, a cooperative bank, an industrial bank, or a credit union;
(2) the term "depository holding company" means a bank holding company as defined in section 2(a) of the Bank Holding
Company Act of 1956, a company which would be a bank holding
company as defined in section 2(a) of the Bank Holding Company
Act of 1956 but for the exemption contained in section 2 (a) (5) (F)
thereof, or a savings and loan holding company as defined in
section 408(a) (1) (D) of the National Housing Act;
(3) the characterization of any corporation (including depository institutions and depository holding companies), as an
"affiliate of," or as "affiliated" with any other corporation means
that—
(A) one of the corporations is a depository holding company and the other is a subsidiary thereof, or both corporations are subsidiaries of the same depository holding
company, as the term "subsidiary" is defined in either section
2(d) of the Bank Holding Company Act of 1956 in the case
of a bank holding company or section 408(a) (1) (H) of the
National Housing Act m the case of a saving and loan holding company; or
(B) more than 50 per centum of the voting stock of one
corporation is beneficially owned in the aggregate by one or
more persons who also beneficially own in the aggregate more
than 50 per centum of the voting stock of the other corporation; or
(C) one of the corporations is a trust company all of the
stock of which, except for directors qualifying shares, was
'"
owned by one or more mutual savings banks on the date of
enactment of this Act, and the other corporation is a mutual
savings bank; or
(D) one of the corporations is a bank, insured by the Federal Deposit Insurance Corporation and chartered under
State law, the voting securities of which are held by other
banks, as permitted by State law, and which bank is primarily
engaged in providing banking services for other banks and
not the public: Provided^ hoioever, That in no case shall the
voting securities of such corporation be held by any such
other bank in excess of 5 per centum of the paid-in capital
and 5 per centum of the surplus of such other bank; or
' *
(E) one of the corporations is a bank, chartered under
State law and insured by the Federal Deposit Insurance Corporation, the voting securities of which are held only by per-

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3673

sons who are officers of other banks, as permitted by State law,
and which bank is primarily engaged in providing banking
services for other banks and not the public: Provided, however, That in no case shall the voting securities of such
corporation be held by such officers of other banks in excess of
6 per centum of the paid-in capital and 6 per centum of the
surplus of such a bank.
(4) the term "management official" means an employee or
officer with management functions, a director (including an
advisory or honorary director), a trustee of a business organization under the control of trustees, or any person who has a representative or nominee serving in any such capacity: Provided,
That if a corporator, trustee, director, or other officer of a Statechartered savings bank or cooperative bank is specifically authorized under the laws of the State in which said institution is located
to serve as a trustee, director, or other officer of a State-chartered
trust company which does not make real estate mortgage loans
and does not accept savings deposits from natural persons, then,
for the purposes of this title, such corporator, trustee, director, or
other officer shall not be deemed to be a management official of
such trust company: And provided further^ That if a management official of a State-cha.rtered trust company which does not
make real estate mortgage loans and does not accept savings
deposits from natural persons is specifically authorized under the
laws of the State in which said institution is located to serve as
a corporator, trustee, director, or other officer of a State-chartered
savings bank or cooperative bank, then, for the purposes of this
title, such management official shall not be deemed to be a management official of any such savings bank or cooperative bank; and
(5) the term "office" used with reference to a depository institution means either a principal office or a branch.
SEC. 203. A management official of a depository institution or a Service in
depository holding company may not serve as a management official another
of any other depository institution or dei)ository holding company not institution,
affiliated therewith if an office of one of the institutions or any deposi- prohibition.
tory institution that is an affiliate of such institutions is located within 12 use 3202.
either—
(1) the same standard metropolitan statistical area as defined
by the Office of Management and Budget, except in the case of
depository institutions with less than $20,000,000 in assets in which
case the provision of paragraph (2) shall apply, as that in which
an office of the other institution or any depository institution that
is an affiliate of such other institution is located, or
(2) the same city, town, or village as that in which an office
of the other institution or any depository institution that is an
affiliate of such other institution is located, or in any city, town,
or village contiguous or adjacent thereto.
SEC. 204. If a depository institution or a depository holding company Service in
has total assets exceeding $1,000,000,000, a management official of such another
institution or any affiliate thereof may not serve as a management institution,
official of any other nonaffiliated depository institution or depository prohibition.
holding company having total assets exceeding $500,000,000 or as a 12 u s e 3203.
management official of any affiliate of such other institution.
SEC. 205. The prohibitions contained in sections 203 and 204 shall 12 u s e 3204.
not apply in the case of any one or more of the following or subsidiary
thereof:

39-194 0

pt. 3

QL. 3

92 STAT. 3674

PUBLIC LAW 95-630—NOV. 10, 1978

(1) A depository institution or depository holding company
which has been placed formally in liquidation, or which is in t h e
h a n d s of a receiver, conservator, or other oiiicial exercising a similar function.
12 use
(2) A corporation operating under section 25 or 25A of the
601-604a,
Federal Reserve Act.
611-632.
(3) A credit union being served by a management official of
another credit union.
(4) A depository institution or depository holding company
which does not do business within any State of t h e U n i t e d States,
the District of Columbia, any territory of the U n i t e d States,
P u e r t o Rico, Guam, American Samoa, or the Virgin Islands
except as an incident to its activities outside the U n i t e d States.
(5) A State-chartered savings and loan g u a r a n t y corporation.
(6) A Federal H o m e Loan Bank or any other bank organized
specifically to serve depository institutions.
Ii2 u s e 3205.
SEC. 206. A person whose service in a position as a management
official began prior to the date of enactment of this title and was not
immediately prior to the date of enactment of this title in violation of
15 u s e 19.
section 8 of the Clayton Act is not prohibited by section 203 or section
204 of this title from continuing to serve in t h a t position for a period
of ten years after the date of enactment of this title. T h e appropriate
Federal banking agency (as set forth in section 209) may provide a
reasonable period of time for compliance with this title, not exceeding
fifteen months, after any change in circumstances which makes such
service prohibited by this title.
Administration
SEC. 207. This title shall be administered and enforced by—
and enforcement.
(1) the Comptroller of the Currency with respect t o national
12 use 3206.
banks and banks located in the District of Columbia,
(2) the B o a r d of Governors of the Federal Reserve System with
respect to State banks which are members of t h e Federal Reserve
System, and bank holding companies,
(3) the B o a r d of Directors of the Federal Deposit Insurance
Corporation with respect to State banks which are not members
of the Federal Reserve System but the deposits of which are
insured by the Federal Deposit Insurance Corporation,
(4) t h e Federal H o m e Loan B a n k Board with respect to institutions the accounts of which are insured by t h e F e d e r a l Savings
and Loan Insurance Corporation, and savings and loan holding
companies,
(5) the National Credit Union Administration with respect to
credit unions the accounts of which are insured by t h e National
Credit Union Administration, and
(6) U p o n referral by the agencies named in the foregoing parag r a p h s (1) t h r o u g h ( 5 ) , the Attorney General shall have t h e
authority to enforce compliance by any person with this title.
SEC. 208. (a) Section 8(e) of t h e Federal Deposit Insurance Act
(12 U.S.C. 1818(e)) is amended by a d d i n g at the end thereof the following new p a r a g r a p h :
'Officer" and
" ( 5 ) F o r the purpose of enforcing any law, rule, regulation, or
'director."
cease-and-desist order in connection with an interlocking relationship,
the term 'officer' as used in this subsection means an employee or officer
with management functions, and the term 'director' includes an advisory or honorary director, a trustee of a bank under the control of
.••^ J
trustees, or any person who has a representative or nominee serving
in any such capacity.".

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3675

(b) Section 5 (d) of the Homeowners' Loan Act (12 U.S.C. 1464(dj)
. s o o d . a l <>$,'•
is amended by adding at the end thereof the following new paragraph:
"(15) For the purpose of enforcing any law, rule, regulation, or "Officer" and
cease-and-desist order in connection with an interlocking relationship, "director."
the term 'officer' as used in this subsection means an employee or officer
with management functions, and the term 'director' includes an advisory or honorary director, a trustee of an association under the control of trustees, or any person who has a representative or nominee
serving in any such capacity.".
(c) Section 407 (q) of the National Housing Act is amended by add- 12 use 1730.
ing at the end thereof the following:
"(4) For the purpose of enforcing any law, rule, regulation, or "Officer" and
cease-and-desist order in connection with an interlocking relationship, "director."
the term 'officer' as used in this subsection means an employee or officer
with management functions, and the term 'director' includes an advisory or honorary director, a trustee of an association under the control
of trustees, or any person who has a representative or nominee serving
in any such capacity.".
SEC. 209. Rules and regulations to carry out this title, including rules Rules and
or regulations which permit service by a management official which regulations.
would otherwise be prohibited by section 203 or section 204, may be 12 use 3207.
prescribed by—
(1) the Comptroller of the Currency with respect to national
banks and banks located in the District of Columbia,
(2) the Board of Governors of the Federal Reserve System
with respect to State banks which are members of the Federal
Reserve System, and bank holding companies,
(3) the Board of Directors of the Federal Deposit Insurance
Corporation with respect to State banks which are not members
of the Federal Reserve System but the deposits of which are
insured by the Federal Deposit Insurance Corporation,
(4) the Federal Home Loan Bank Board with respect to institutions the accounts of which are insured by the Federal Savings
and Loan Insurance Corporation, and savings and loan holding
companies, and
(5) the National Credit Union Administration with respect to
credit unions the accounts of which are insured by the National
Credit Union Administration.
T I T L E III—FOREIGN BRANCHING
SEC. 301. (a) Section 3(o) of the Federal Deposit Insurance Act
(12 U.S.C. 1813 (o)) is amended—
(1) by inserting "domestic" immediately before "branch" the
first place it appears; and
(2) by inserting before the period at the end thereof a semicolon and the following: "and the term 'foreign branch' means
any office or place of business located outside the United States,
its territories, Puerto Rico, Guam, American Samoa, or the Virgin
Islands, at which banking operations are conducted".
(b) Section 18(d) of the Federal Deposit Insurance Act (12 U.S.C.
1828(d)) is amended—
(1) by inserting " ( 1 ) " after " ( d ) " ;
(2) by inserting "domestic" between "new" and "branch";
(3) by inserting "such" between "any" and "branch"; and
'
(4) by adding at the end thereof the following new paragraph:

"Foreign
branch."

92 STAT. 3676
Regulations.

Regulations.

Liabilities
assumption.

PUBLIC LAW 95-630—NOV. 10, 1978
"(2) No State nonmember insured bank shall establish or operate
any foreign branch, except with the prior written consent of the Corporation and upon such conditions and pursuant to such regulations
as the Corporation may prescribe from time to time.".
(c) Section 18 of the Federal Deposit Insurance Act (12 U.S.C.
1828) is amended by adding at the end thereof the following new
subsection:
"(1) When authorized by State law, a State nonmember insured
bank may, but only with the prior written consent of the Corporation
and upon such conditions and under such regulations as the Corporation may prescribe from time to time, acquire and hold, directly or
indirectly, stock or other evidences of ownership in one or more banks
or other entities organized under the law of a foreign country or a
dependency or insular possession of the United States and not engaged,
directly or indirectly, m any activity in the United States except as,
in the judgment of the Board of Directors, shall be incidental to the
international or foreign business of such foreign bank or entity; and,
notwithstanding the provisions of subsection (j) of this section, such
State nonmember insured bank may, as to such foreign bank or entity,
engage in transactions that would otherwise be covered thereby, but
only in the manner and within the limit prescribed by the Corporation
by general or specific regulation or ruling.".
SEC. 302. The sixth sentence of section 7(a)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(a) (3)) is amended to read as
follows: "The correctness of said report of conditions shall be attested
by the signatures of at least two directors or trustees of the reporting
bank other than the officer making such declaration, with a declaration that the report has been examined by them and to the best of their
knowledge and belief is true and correct.".
SEC. 303. Section 8(n) of the Federal Deposit Insurance Act (12
U.S.C. 1818 (n)) is amended—
(1) by inserting in the first sentence after "this section," the
first place it appears therein the following: "or in connection with
any claim for insured deposits or any examination or investigation
under section 10(c),";
(2) by inserting "examination, or investigation or considering
the claim for insured deposits," in the first sentence after "proceeding," the second place it appears therein;
(3) by striking out "proceedings" at the end of the first sentence thereof and inserting in lieu thereof "proceedings, claims,
examinations, or investigations";
(4) by inserting "such agency or any" after "Any" at the beginning of the third sentence thereof; and
(5) by striking out "section" and inserting in lieu thereof "subsection" in the fourth sentence thereof.
SEC. 304. Section 8(q) of the Federal Deposit Insurance Act (12
U.S.C. 1818 (q)) is amended to read as follows:
"(q) Whenever the liabilities of an insured bank for deposits shall
have been assumed by another insured bank or banks, whether by way
of merger, consolidation, or Other statutory assumption, or pursuant
to contract (1) the insured status of the bank whose liabilities are so
assumed shall terminate on the date of receipt by the Corporation of
satisfactory evidence of such assumption; (2) the separate insurance
of all deposits so assumed shall terminate at the end of six months
from the date such assumption takes effect or, in the case of any time
deposit, the earliest maturity date after the six-month period; and (3)

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3677

the assuming or resulting bank shall give notice of such assumption
to each of the depositors of the bank whose liabilities are so assumed
within thirty days after such assumption takes effect. Where the deposits of an insured bank are assumed by a newly insured bank, the bank
whose deposits are assumed shall not be required to pay any assessment
upon the deposits w^hich have been so assumed after the semiannual
period in which the assumption takes effect.".
SEC. 305. (a) Section 10(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1820(b)) is amended by inserting "or other institution" in
the first sentence after the words "any State nonmember bank" and by
striking out the last two sentences of that subsection.
(b) Section 10 (c) and (d) of the Federal Deposit Insurance Act
(12 tJ.S.C 1820 (c) and (d)) are amended to read as follows:
"(c) In connection with examinations of insured banks, State nonmember banks or other institutions making application to become
insured banks, and affiliates thereof, or wdth other types of investigations to determine compliance with applicable law and regulations, the
appropriate Federal banking agency, or its designated representatives,
are authorized to administer oaths and affirmations, and to examine
and to take and preserve testimony under oath as to any matter in
respect to the affairs or ownership of any such bank or institution or
affiliate thereof, and to exercise such other powers as are set forth in
section 8 (n) of this Act.
"(d) For purposes of this section, the term 'affiliate' shall have the "Affiliate" and
same meaning as in section 23A of the Federal Reserve Act, except that "member bank."
the term 'member bank' in such section 23A and in section 2(b) of the 12 USC 371c.
Banking Act of 1933 shall be deemed to refer to an insured bank.". 12 USC 221a,
SEC. 306. Section 18(c) (1) (B) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(c) (1) (B)) is amended by inserting after the word
"deposits" the following: "(including liabilities which would be
'deposits' except for the proviso in section 3(1) (5) of this Act)".
^^ ^^^ ^^^^
SEC. 307. Section 1114 of title 18, United States Code, is amended
by inserting before "shall be punished" the following: "or any attorney, liquidator, examiner, claim agent, or other employee of the Federal Deposit Insurance Corporation, the Federal Savings and Loan
Insurance Corporation, the Comptroller of the Currency, the Federal
Home Loan Bank Board, the Board of Governors of the Federal
Reserve System, any Federal Reserve bank, or the National Credit
Union Administration engaged in or on account of the performance of
his official duties".
SEC. 308. Section 5 of the Bank Service Corporation Act (12 U.S.C.
• '
1865) is amended to read as follows:
"SEC. 5. Whenever any bank which is regularly examined by a Federal supervisory agency, or any subsidiary or affiliate of such bank
which IS subject to examination by that agency, causes to be performed, by contract or otherwise, any bank services for itself, whether
on or off its premises—
"(1) such performance shall be subject to regulation and examination by such agency to the same extent as if the services were
being performed by the bank itself on its own premises, and
"(2) the bank shall notify such agency of the existence of a Notification.
,,
service relationship within 30 days after the making of such service contract or the performance of the service, whichever occurs
first.".
SEC. 309. The last sentence of section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819) is amended to read as follows:

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3678
Rules and
regulations.

12 u s e 601 note.

Foreign bank
operations.
12 u s e 3106a.

,(•! '^i 3HU £1

Application
approval.

. rM'.'^^^'Hi'A

"Tenth. To prescribe by its Board of Directors such rules and regulations as it may deem necessary to carry out the provisions of this
Act or of any other law which it has the responsibility of administering or enforcing (except to the extent that authority to issue such rules
and regulations has been expressly and exclusively granted to any
other regulatory agency).".
SEC. 310. (a) Section 7(a) (4) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(a) (4)) is amended by adding at the end thereof the
following new sentence: "Deposits which are accumulated for the payment of personal loans and are assigned or pledged to assure payment
of loans at maturity shall not be included in the total deposits in such
reports, but shall be deducted from the loans for which such deposits
are assigned or pledged to assure repayment.".
(b) Section 7(a)(5) of the Federal Deposit Insurance Act (12
U.S.C. 1817(a) (5)) is amended by striking out "deposits accumulated
for the payment of personal loans," in the second sentence thereof.
(c) Section 7(b)(6) of the Federal Deposit Insurance Act (12
U.S.C. 1817(b) (6)) is amended by striking out subparagraph (B),
and redesignating subparagraphs (C) and (D) as (B) and (C),
respectively.
SEC. 311. Section 9 of the International Banking Act of 1978 (P.L.
95-369) is amended by inserting " ( a ) " immediately after "SEC. 9."
and by inserting at the end thereof the following new subsection:
"(b) (1) Every branch or agency of a foreign bank and every commercial lending company controlled by one or more foreign banks
or by one or more f o r e i ^ companies that control a foreign bank shall
conduct its operations m the United States in full compliance with
provisions of any law of the United States or any State thereof
which—
"(A) prohibit discrimination against any individual or
other person on the basis of the race, color, religion, sex,
marital status, age, or national origin of (i) such individual
or other person or (ii) any officer, director, employee, or
creditor of, or any owner of any interest in, such individual
or other person; and
"(B) apply to national banks or State-chartered banks
doing business in the State in which such branch or agency
or commercial lending company, as the case may be, is doing
business.
"(2) No application for a branch or agency shall be approved by
the Comptroller or by a State bank supervisory authority, as the case
may be, unless the entity making the application has agreed to conduct all of its operations in the United States in full compliance with
provisions of any law of the United States or any State thereof
which—
"(A) prohibit discrimination against individuals or other
persons on the basis of the race, color, religion, sex, marital
status, age, or national origin of (i) such individual or other
person or (ii) any officer, director, employee, or creditor of,
or any owner of any interest in, such individual or other
person; and
" ( B ) apply to national banks or State-chartered banks
doing business in the State in which the entity to be established is to do business.".
• r

> *••••

/*>i,

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3679

T I T L E IV—AMERICAN ARTS GOLD MEDALLIONS
SEC. 401. This title may be cited as the "American Arts Gold Medallion Act".
SEC. 402. The Secretary of the Treasury (hereinafter referred to as
the "Secretary") shall, during each of the first five calendar years
beginning after the date of enactment of this title, strike and sell to
the general public, as provided by this title, gold medallions (hereinafter referred to as "medallions") containing, in the aggregate, not
less than one million troy ounces of fine gold, and commemorating outstanding individuals in the American arts.
SEC. 403. (a) Medallions struck under authority of this title shall
be minted in two sizes containing, respectively, one troy ounce and
one-half troy ounce of fine gold. During the first year in which such
medallions are struck, at least five hundred thousand troy ounces of
fine gold shall be struck in each size of medallions authorized by this
subsection. In succeeding yeai-s, the proportion of gold devoted to each
size of medallions shall be determined by the Secretary on the basis
of expected demand.
(b) Medallions struck under authority of this title shall be of such
fineness that, of one thousand parts by weight, nine hundred shall be
of fijie gold and one hundred of alloy. Medallions shall not be struck
from ingots which deviate from the standard of this subsection by
more than one part per thousand.
(c) Medallions struck under the authority of this title shall bear
such designs and inscriptions as the Secretary may approve subject to
the following—
(1) during the first calendar year beginning after the date of
,
enactment of this title, one ounce medallions shall be struck with
a picture of Grant Wood on the obverse side and one-half ounce
medallions shall be struck with a picture of Marian Anderson on
the obverse side;
(2) during the second calendar year beginning after the date
;
of enactment of this title, one ounce medallions shall be struck
t'
with a picture of Mark Twain on the obverse side and one-half
^
ounce medallions shall be struck with a picture of .Willa Gather
on the obverse side;
(3) during the third calendar year beginning after the date of
enactment of this title, one ounce medallions shall be struck with
a picture of Louis Armstrong on the obverse side and one-half
ounce medallions shall be struck with a picture of Frank Lloyd
Wright on the obverse side;
(4) during the fourth calendar year beginning after the date of
enactment of this title, one ounce medallions shall be struck with a
picture of Robert Frost on the obverse side and one-half ounce
medallions shall be struck with a picture of Alexander Calder on
the obverse side; and
(5) during the fifth calendar year beginning after the date of
enactment of this title, one ounce medallions shall be struck with
a picture of Helen Hayes on the obverse side and one-half ounce
medallions shall be struck with a picture of John Steinbeck on
the obverse side.
The reverse side of each medallion shall be of different design, shall
be representative of the artistic achievements of the individual on the
obverse side, and shall include the inscription "American Arts Commemorative Series".

American Arts
Gold Medallion
Act.
Short title.

Designs and
inscriptions.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3680
Regulations.

Contracts.

Sale.

Rules and
regulations.
Effective date.

SEC. 404. Dies for use in striking the medallions authorized by this
title may be executed by the engraver, and the medallions struck by
the Superintendent of coining department of the mint at Philadelphia,
under such regulations as the Superintendent, with the approval of
the Director of the Mint, may prescribe. In order to carry out this title,
the Secretary may enter into contracts: Provided^ That suitable precautions are maintained to secure against counterfeiting and against
unauthorized issuance of medallions struck under authority of this
title.
SEG. 405. For purposes of section 485 of title 18 of the United States
Code, a coin of a denomination of higher than 5 cents shall be deemed
to include any medallion struck under the authority of this title.
SEC. 406. (a) Medallions struck under authority of this title shall
be sold to the general public at a competitive price equal to the free
market value of the gold contained therein plus the cost of manufacture, including labor, materials, dies, use of machinery, and overhead
expenses including marketing costs. In order to carry out the purposes
of this section, the Secretary shall enter into such arrangements with
the Administrator of General Services (hereinafter referred to as the
"Administrator") as may be appropriate.
(b) The Administrator shall make such arrangements for the sale
of medallions as will encourage broad public participation and will
not preclude purchases of single pieces.
(c) The Administrator may, after consultation with the Secretary,
issue rules and regulations to carry out this section.
SEC. 407. This title shall take eifect on October 1,1979.
TITLE V—CREDIT UNION RESTRUCTURING
SEC. 501. Section 102 of the Federal Credit Union Act (12 U.S.C.
1752a) is amended to read as follows:
,

National Credit
Union
Administration.
Establishment.
Membership.

Term.

Management.
Rules.

"CREATION or

ADMINISTRATION

"SEC. 102. (a) There is hereby established in the executive branch
of the Government an independent agency to be known as the National
Credit Union Administration. The Administration shall be under the
management of a National Credit Union Administration Board.
"(b) The Board shall consist of three members, who are broadly
representative of the public interest, appointed by the President, by
and with the advice and consent of the Senate. In appointing the members of the Board, the President shall designate the Chairman. Not
more than two members of the Board shall be members of the same
political party.
"(c) The term of office of each member of the Board shall be six
years, except that the terms of the two membere, other than the
Chairman, initially appointed shall expire one upon the expiration of
two years after the date of appointment, and the other upon the
expiration of four years after the date of appointment. Board members shall not be appointed to succeed themselves except the initial
members appointed for less than a six-year term may be reappointed
for a full six-year term and future members appointed to fill unexpired
terms may be reappointed for a full six-year term. Any Board member
may continue to serve as such after the expiration of said member's
term until a successor has qualified.
"(d) The management of the Administration shall be vested in the
Board. The Board shall adopt such rules as it sees fit for the trans-

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3681

action of its business and shall keep permanent and complete records Quorum
and minutes of its acts and proceedings. A majority of the Board shall
constitute a quorum. Not later than April 1 of each calendar year, and Report to
at such other times as the Congress shall determine, the Board shall President and
make a report to the President and to the Congress. Such a report shall Congress.
summarize the operations of the Administration and set forth such
information as is necessary for the Congress to review the financial
program approved by the Board.
"(e) The Chairman of the Board shall be the spokesman for the
Board and shall represent the Board and the National Credit Union
Administration in its official relations with other branches of the
Government. The Chairman shall determine each Board member's area
of responsibility and shall review such assignments biennially. It shall
be the Chairman's responsibility to direct the implementation of the
adopted policies and regulations of the Board.
"(f) The financial transactions of the Administration shall be sub- Audit.
ject to audit on a calendar year basis by the General Accounting Office Rules and
in accordance with the principles and procedures applicable to com- regulations.
mercial corporate transactions and under such rules and regulations as
may be prescribed by the Comptroller General of the United States.
The audit shall be conducted at the place or places where the accounts
of the Administration are kept,".
SEC. 502. (a) Section 101 of the Federal Credit Union Act is 12 USC 1752
amended—
(1) by striking out clause (2) and inserting in lieu thereof the
following:
"(2) the term 'Chairman' means the Chairman of the National
Credit Union Administration Board;";
(2) by inserting "Administration" after "Union" in clause
(4).
.
.
.
(b) The Federal Credit Union Act is amended by striking out
"Administrator" each place it appears and inserting m lieu thereof
"Board", and by striking out the personal pronouns "he", "him", and
"his" when referring to the Administrator and inserting in lieu thereof
"it", "them", and "its" as appropriate wherever such words appear
therein.
(c) Section 5108(a) of title 5, United States Code, is amended by
changing the number "3,301" in the first sentence to read "3,310".
(d) Section 5314 of title 5, United States Code, is amended by adding the following new paragraph:
"(66y Chairman, National Credit Union Administration
Board.".
(e) Section 5315 (93) of title 5, United States Code, is amended by
striking out "Administrator of the National Credit Union Administration" and inserting in lieu thereof "Members, National Credit
Union Administration Board (2)".
SEC. 503. (a) Paragraph (4) of section 101 of the Federal Credit
Union Act (12 U.S.C. 1752) which begins with "The terms 'member
account'" is redesignated paragraph " ( 5 ) " and the succeeding paragraphs numbered (5) through (8) are redesignated as paragraphs (6)
through (9), respectively.
(b) Paragraph (5) of section 101 of the Federal Credit Union Act
(12 U.S.C. 1752), as redesignated by subsection (a) of this section,
is amended—
(1) by striking "(when referring to the account of a member
of credit union)";

92 STAT. 3682

PUBLIC LAW 95-630—NOV. 10, 1978

•;> .<.

'•

(2) by striking "share, share certificate, or share deposit" each
time it appears therein a n d inserting "share or share certificate"
' H^, ' >
in lieu thereof;
"'••" "-'^
(3) by striking "those" and inserting "share or share certificate"
• -• • -'
i n lieu thereof; a n d
(4) by striking all language after "political subdivisions thereof" a n d inserting "enumerated in section 207 of this A c t :
Provided, T h a t for purposes of insured State credit unions, reference in this p a r a g r a p h to 'share' or 'share certificate' accounts
includes, as determined by t h e Board, the equivalent of such
accounts under State l a w ; " in lieu thereof,
(c) P a r a g r a p h (9) of section 101 of t h e Federal Credit Union A c t
(12 U.S.C. 1752), as redesignated by ( a ) of this section, is amended

(1) inserting ", including the trust territories," after "several
territories"; a n d
"Branch."
(2) adding t h e following new sentence: " T h e term 'branch'
iM.,.«.,v)-i
also includes a suboffice, operated by a Federal credit union or by
a credit union authorized by t h e D e p a r t m e n t of Defense, located
on an American military installation in a foreign country or in
the trust territories of the United States.".
SEC. 504. (a) Subsection ( a ) of section 201 of the Federal Credit
Kc:i .}:•: ' 1:1 Union Act (12 U.S.C. 1781) is amended by inserting ", including the
trust territories," after "several territories".
(b) P a r a g r a p h (b) (7) of such section is amended by inserting
"except for accounts authorized by State law for State credit unions"
before the semicolon.
(c) Such section is further amended by striking all of subsection
(d) and redesignating subsection (e) as ( d ) .
SEC. 505. ( a ) Section 202 of the Federal Credit Union A c t (12 U.S.C.
1782) is amended by strikin^ir o u t " h i s " in the fifth sentence of parag r a p h ( a ) (1) a n d inserting "such officer's" in lieu thereof.
(b) Subsection ( h ) (3) o f such section is amended t o read as follows:
/'Member
" ( 3 ) T h e term 'member account' when applied t o the premium
account."
jjj charge for insurance of accounts shall n o t include amounts
received from other federally insured credit unions in excess of
the insured account limit set forth in section 207(c) (1).".
SEC. 506. Section 208 of t h e Federal Credit Union A c t (12 U.S.C.
1788) is amended by s t r i k i n g out "SPECIAL ASSISTANCE TO AVOID LIQUIDAT I O N " a n d i n s e r t i n g "SPECIAL ASSISTANCE FOR FEDERALLY INSURED

CREDIT U N I O N S " in lieu thereof.

SEC. 507. Section 105 of t h e Federal Credit Union A c t (12 U.S.C.
1755) is amended to read as follows:
•tih'y

Rules.

'FEES

" S E C . 105. ( a ) I n accordance with rules prescribed by t h e Board,
each Federal credit union shall p a y to t h e Administration an annual
operating fee which may be composed of one or more charges identified
as to t h e function or functions for which assessed.
" ( b ) T h e fee assessed under this section shall be determined according t o a schedule, or schedules, or other method determined by the
Board to be appropriate, which gives due consideration to t h e
expenses of the Administration in carrying out its responsibilities
under this A c t a n d to t h e ability of Federal credit unions to pay t h e
fee. T h e Board shall, among other things, determine t h e periods for
which t h e fee shall be assessed a n d the date or dates for t h e payment
of the fee or increments thereof.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3683

"(c) If the annual operating fee is composed of separate charges,
no supervision charge shall be payable by a Federal credit union,
and the Board may waive payment of any or all other charges comprising the fee, with respect to the year in which its charter is issued,
or in which final distribution is made in its liquidation or the charter
is canceled.
"(d) All operating fees shall be deposited with the Treasurer of the
United States for the account of the Administration and may be
expended by the Board to defray the expenses incurred in carrying
out the provisions of this Act including the examination and supervision of Federal credit unions.".
SEC. 508. Section 106 of the Federal Credit Union Act (13 U.S.C.
1756) is amended to read as follows:
u REPORTS AND EXAMINATIONS

"SEC 106. Federal credit unions shall be under the supervision of
the Board, and shall make financial reports to it as and when it may
require, but at least annually. Each Federal credit union shall be subject
to examination by, and for this purpose shall make its books and
records accessible to, any person designated by the Board.".
SEC. 509. The amendments made by this title take effect upon the Effective date.
effective date of this Act, except that the functions of the Administra- 12 use 1752
tor of the National Credit Union Administration under the provisions note.
of the Federal Credit Union Act, as in effect on the date preceding the
date of enactment of this title, shall continue to be performed by him
in accordance with such provisions until such time as all the members
of the National Credit Union Administration Board, established under
the amendments made by this title, take office. All rules, regulations,
policies, and procedures of the Administrator in effect on the date of
enactment of this title shall remain in effect until amended, superseded,
or repealed.
T I T L E VI—CHANGE IN BANK CONTROL ACT

Change in Bank
Control Act of
1978.
Short title.
12 USC 1817
note.

SEC. 601. This title may be cited as the "Change in Bank Control
Act of 1978".
SEC. 602. Subsection (j) of section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817(j)) is amended to read as follows:
"(j) (1) No person, acting directly or indirectly or through or in
concert with one or more other persons, shall acquire control of any
insured bank through a purchase, assignment, transfer, pledge, or
ofifs itf
other disposition of voting stock of such insured bank unless the
appropriate Federal banking agency has been given sixty days' prior
written notice of such proposed acquisition and within that time
period the agency has not issued a notice disapproving the proposed
acquisition or extending for up to another thirty days the period
during which such a disapproval may issue. The period for disapproval may be further extended only if the agency determines that
any acquiring party has not furnished all the information required
under section (j) (6) or that in its judgment any material information
submitted is substantially inaccurate. An acquisition may be made
prior to expiration of the disapproval period if the agency issues
written notice of its intent not to disapprove the action. For purposes "Insured bank.'
of this subsection (j), the term 'insured bank' shall include any 'bank
holding company', as that term is defined in section 2 of the Bank
Holding Company Act, which has control of any such insured bank, 12 USC 1841.

92 STAT. 3684

Notification.

Hearing.

Review.

Certification.

'.Ji!sd ii-S'iJ

..CM

PUBLIC LAW 95-630—NOV. 10, 1978
and the appropriate Federal banking agency in the case of bank
holding companies shall be the Board of Governors of the Federal
Reserve System.
"(2) Upon receiving any notice under this subsection, the appropriate Federal banking agency shall forward a copy thereof to the
appropriate State bank supervisory agency if the bank the voting
shares of which are sought to be acquired is a State bank, and shall
allow thirty days within which the views and recommendations of
such State bank supervisory agency may be submitted. The appropriate Federal banking agency shall give due consideration to the views
and recommendations of such Sta+e agency in determining whether
to disapprove any proposed acquisition. Notwithstanding the provisions of this section (j)(2), if the appropriate Federal banking
agency determines that it must act immediately upon any notice of
a proposed acquisition in order to prevent the probable failure of the
bank involved in the proposed acquisition, such Federal banking
agency may dispense with the requirements of this subsection (j) (2)
or, if a copy of the notice is forwarded to the State bank supervisory
agency, such Federal banking agency may request that the views and
recommendations of such State bank supervisory agency be submitted
immediately in any form or by any means acceptable to such Federal
banking agency.
"(3) Within three days after its decision to disapprove any proposed acquisition, the appropriate Federal banking agency shall notify
the acquiring party in writing of the disapproval. Such notice shall
provide a statement of the basis for the disapproval.
" (4) Within ten days of receipt of such notice of disapproval, the
acquiring party may request an agencj^ hearing on the proposed acquisition. In such hearing all issues shall be determined on the record pursuant to section 554 of title 5, United States Code. The length of the
hearing shall be determined by the appropriate Federal banking
agency. At the conclusion thereof, the appropriate Federal banking
agency shall by order approve or disapprove the proposed acquisition
on thebasis of the record made at such hearing.
"(5) Any person whose proposed acquisition is disapproved after
agency hearings under this subsection may obtain review by the United
States court of appeals for the circuit in which the home office of the
bank to be acquired is located, or the United States Court of Appeals
for the District of Columbia Circuit, by filing a notice of appeal in
such court within ten days from the date of such order, and simultaneously sendinga copy of such notice by registered or certified mail to the
appropriate Federal banking agency. The appropriate Federal banking agency shall promptly certify and file in such court the record upon
which the disapproval was based. The findings of the appropriate
Federal banking agency shall be set aside if found to be arbitrary or
capricious or if found to violate procedures established by this
subsection.
" (6) Except as otherwise provided by regulation of the appropriate
Federal banking agency, a notice filed pursuant to this subsection shall
contain the following information:
"(A) The identity, personal history, business background and
experience of each person by whom or on whose behalf ^he acquisition is to be made, including his material business activities and
affiliations during the past five years, and a description of any
material pending legal or administrative proceedings in which
he is a party and any criminal indictment or conviction of such
person by a State or Federal court.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3685

i

"(B) A statement of the assets and liabilities of each person
by whom or on whose behalf the acquisition is to be made, as
of the end of the fiscal year for each of the five fiscal years immediately preceding the date of the notice, together with related statements of income and source and application of funds for each of
the fiscal years then concluded, all prepared in accordance with
generally accepted accounting principles consistently applied, and
an interim statement of the assets and liabilities for each such
person, together with related statements of income and source
and application of funds, as of a date not more than ninety days
prior to the date of the filing of the notice.
"(C) The terms and conditions of the proposed acquisition
£ and the manner in which the acquisition is to be made.
"(D) The identity, source and amount of the funds or other
consideration used or to be used in making the acquisition, and if
any part of these funds or other consideration has been or is to be
borrowed or otherwise obtained for the purpose of making the
acquisition, a description of the transaction, the names of the
parties, and any arrangements, agreements, or understandings
with such persons.
" ( E ) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the bank, to sell its
assets or merge it with any company or to make any other major
change in its business or corporate structure or management.
" ( F ) The identification of any person employed, retained, or
to be compensated by the acquiring party, or by any person on
his behalf, to make solicitations or recommendations to stockholders for the purpose of assisting in the acquisition, and a brief
description of the terms of such employment, retainer, or arrangement for compensation.
"(G) Copies of all invitations or tenders or advertisements
making a tender offer to stockholders for purchase of their stock
to be used in connection with the proposed acquisition.
" (H) Any additional relevant information in such form as the
appropriate Federal banking agency may require by regulation or
by specific request in connection with any particular notice.
" (7) The appropriate Federal banking agency may disapprove any
proposed acquisition if—
"(A) the proposed acquisition of control would result in a
monopoly or would be in furtherance of any combination or
conspiracy to monoplize or to attempt to monopolize the business
of banking in any part of the United States;
"(B) the effect of the proposed acquisition of control in any
section of the country may be substantially to lessen competition
or to tend to create a monopoly or the proposed acquisition of control would in any other manner be in restraint of trade, and the
anticompetitive effects of the proposed acquisition of control are
not clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of
the community to be served ;
"(C) the financial condition of any acquiring person is such
as might jeopardize the financial stability of the bank or prejudice the interests of the depositors of the bank;
"(D) the competence, experience, or integrity of any acquiring
person or of any of the proposed management personnel indicates
that it would not be in the interest of the depositors of the bank,

"-•«'• :-*'

•

^•'"- ^ "

. *' "f "

.. ''

92 STAT. 3686

'Person.

'Control.'

Rules and
regulations.
Report to
Congress.

Civil penalty.

Notice.

PUBLIC LAW 95-630—NOV. 10, 1978
or in the interest of the public to permit such person to control
the bank; or
" ( E ) any acquiring person neglects, fails, or refuses to furnish
the appropriate Federal banking agency all the information
required by the appropriate Federal banking agency.
" (8) For the purposes of this subsection, the term—
"(A) 'person' means an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any other form of
entity not specifically listed herein; and
"(B) 'control' means the power, directly or indirectly, to direct
ioi the management or policies of an insured bank or to vote 25 per
centum or more of any class of voting securities of an insured
bank.
"(9) Whenever any insured bank makes a loan or loans, secured,
or to be secured, by 25 per centum or more of the outstanding voting
stock of an insured bank, the president or other chief executive officer
of the lending bank shall promptly report such fact to the appropriate
Federal banking agency of the bank whose stock secures the loan or
loans upon obtaining knowledge of such loan or loans, except that no
report need be made in those cases where the borrower has been the
owner of record of the stock for a period of one year or more or where
the stock is that of the newly organized bank prior to its opening.
"(10) The reports required by paragraph (9) of this subsection
shall contain such of the information referred to in paragraph (6) of
this subsection, and such other relevant information, as the appropriate Federal banking agency may require by regulation or by specific
request in connection with any particular report.
" (11) The Federal banking agency receiving a notice or report filed
pursuant to paragraph (1) or (9) shall immediately furnish to the
other Federal banking agencies a copy of such notice or report.
"(12) Whenever such a change in control occurs, each insured bank
shall report promptly to the appropriate Federal banking agency
any changes or replacement of its chief executive officer or of any
director occurring in the next twelve-month period, including in its
report a statement of the past and current business and professional
affiliations of the new chief executive officer or directors.
"(13) The appropriate Federal banking agencies are authorized to
issue rules and regulations to carry out this subsection.
"(14) Within two years after the effective date of the Change in
Bank Control Act of 1978, and each year thereafter in each appropriate Federal banking agency's annual report to the Congress, the
appropriate Federal banking agency shall report to the Congress the
results of the administration of this subsection, and make any recommendations as to changes in the law which in the opinion of the appropriate Federal banking agency would be desirable.
"(15) Any person who willfully violates any provision of this subsection, or any regulation or order issued by the appropriate Federal
banking agency pursuant thereto, shall forfeit and pay a civil penalty
of not more than $10,000 per day for each day during which such
violation continues. The appropriate Federal banking agency shall
have authority to assess such a civil penalty, after giving notice and
an opportunity to the person to submit data, views, and arguments,
and after giving due consideration to the appropriateness of the
penalty with respect to the size of financial resources and good faith
of the person charged, the gravity of the violation, and any data,
views, and arguments submitted. The agency may collect such civil

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3687

penalty by agreement with the person or by bringmg an action in the
appropriate United States district court, except that in any such
action, the person against whom the penalty has been assessed shall
have a right to trial de novo.
"(16) This subsection shall not apply to a transaction subject to
section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842)
or section 18 of this Act (12 U.S.C. 1828).".
T I T L E VII—CHANGE IN SAVINGS AND LOAN
CONTKOL ACT
SEC. 701. This title may be cited as the "Change in Savings and Loan
Control Act of 1978".
SEC. 702. Paragraph (6) of section 407(1) of the National Housing
Act (12 U.S.C. 1730(1) (6)) is amended to read as follows:
"(6) As used in this subsection, the term 'stock' means rights, interests, or powers with respect to a mutual institution and the term
'insured institution' means a mutual insured institution.".
SEC. 703. Section 407 of the National Housing Act (12 U.S.C. 1730)
is amended by redesignating section 407(q) as 407(r) and inserting
immediately after " ( p ) " the following:
"(q) (1) No person, acting directly or indirectly or through or in
concert with one or more other persons, shall acquire control of any
insured institution through a purchase assignment, transfer, pledge,
or other disposition of voting stock of such insured institution unless
the Corporation has been given sixty days' prior written notice of such
proposed acquisition and within that time period the Corporation has
not issued a notice disapproving the proposed acquisition or extending
up to another thirty days the period during which a disapproval may
issue. The period for disapproval may be further extended only if
the Corporation determines that any acquiring party has not furnished
all the information required under subsection (q) (6) or that in its
judgment any material information submitted is substantially inaccurate. An acquisition may be made prior to expiration of the disapproval period if the Corporation issues written notice of its intent not
to disapprove the action. For purposes of this subsection (q), the
term 'insured institution' shall include any 'savings and loan holding
company', as that term is defined in section 408 of the National Housing Act, which has control of any such insured institution.
"(2) Upon receiving any notice under this subsection, the Corporation shall forward a copy thereof to the appropriate State savings and
loan association supervisory agency if the insured institution the voting shares of which are sought to be acquired is a State chartered
institution, and shall allow thirty days within which the views and
recommendations of such State supervisory agency may be submitted.
The Corporation shall give due consideration to the views and recommendations of such State agency in determining whether to disapprove
any proposed acquisition. Notwithstanding the provisions of this subsection (q) (2), if the Corporation determines that it must act immediately upon any notice of a proposed acquisition in order to prevent
the probable failure of the institution involved in the proposed acquisition, the Corporation may dispense with the requirement of this subsection (1) (2) or, if a copy of the notice is forwarded to the State
supervisory agency, the Corporation may request that the views and
recommendations of such State supervisory agency be submitted immediately in any form or by any means acceptable to the Corporation.

Change in
Savings and Loan
Control Act of
1978.
Short title.
12 u s e 1730
note.
"Stock" and
"insured
institution."

"Insured
institution."
12 u s e 1730a.

92 STAT. 3688
Notification.

Hearing.

Review.

Certification.

PUBLIC LAW 95-630—NOV. 10, 1978
"(3) Within three days after its decision to disapprove any proposed acquisition, the Corporation shall notify the acquiring party
in writing of the disapproval. Such notice shall provide a statement
of the basis for the disapproval.
"(4) Within ten days of receipt of such notice of disapproval, the
acquiring party may request an agency hearing on the proposed acquisition. In such hearing all issues shall be determined on the record
pursuant to section 554 of title 5, United States Code. The length of
the hearing shall be determined by the Corporation. At the conclusion
thereof, the Corporation shall by order approve or disapprove the
proposed acquisition on the basis of the record made at such hearing.
"(5) Any person whose proposed acquisition is disapproved after
agency hearing under this subsection may obtain review by the United
States court of appeals for the circuit in which the home office of the
institution to be acquired is located, or the United States Court of
Appeals for the District of Columbia Circuit, by filing a notice of
appeal in such court within ten days from the date of such order,
and simultaneously sending a copy of such notice by registered or
certified mail to the Corporation. The Corporation shall promptly
certify and file in such court the record upon which the disapproval
was based. The findings of the Corporation shall be set aside if found
to be arbitrary or capricious or if found to violate procedures established by this subsection.
"(6) Except as otherwise provided by regulation of the Corporation, a notice filed pursuant to this subsection shall contain the following information:
"(A) The identity, personal history, business background, and
experience of each person by whom or on whose behalf the acquisition is to be made, including his material business activities and
affiliations during the past five years, and a description of any
material pending legal or administrative proceedings in which he
is a party and any criminal indictment or conviction of such person by a State or Federal court.
"(B) A statement of the assets and liabilities of each person
by whom or on whose behalf the acquisition is to be made, as of the
end of the fiscal year for each of the five fiscal years immediately
preceding the date of the notice, together with related statements
of income and source and application of funds for each of the
fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied, and
an interim statement of tne assets and liabilities for each such
d person, together with related statements of income and source and
application of funds, as of a date not more than ninety days
prior to the date of the filing of the notice.
"(C) The terms and conditions of the proposed acquisition and
the manner in which the acquisition is to be made.
"(D) The identity, source, and amount of the funds or other
consideration used or to be used in making the acquisition, and
if any part of these funds or other consideration has been or is
to be borrowed, or otherwise obtained for the purpose of making
the acquisition, a description of the transaction, the names of the
parties, and any arrangements, agreements, or understandings
with such persons.
" ( E ) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the institution, to sell its
assets or merge it witli any company or to make any other major
change in its business or corporate structure or management.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3689

" ( F ) The identification of any person employed, retained, or to
be compensated by the acquiring party, or by any person on his
behalf, to make solicitations or recommendations to stockholders
for the purpose of assisting in the acquisition, and a brief description of the terms of such employment, retainer, or arrangement for
compensation.
" (G) Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be
used in connection with the proposed acquisition.
" ( H ) Any additional relevant information in such form as the
Corporation may require by regulation or by specific request in
connection with any particular notice.
" (7) The Corporation may disapjDrove any proposed acquisition if—
"(A) the proposed acquisition of control would result in a
monopoly or would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the savings and
loan business in any part of the United States;
"(B) the effect of the proposed acquisition of control in any
section of the country may be substantially to lessen competition
or to tend to create a monopoly or the proposed acquisition of
control would in any other manner be in restraint of trade, and
the anticompetitive effects of the proposed acquisition of control are not clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs
of the community to be served;
"(C) the financial condition of any acquiring person is such as
might jeopardize the financial stability of the institution or prejudice the interests of the depositors of the institution;
"(D) the competence, experience, or integrity of any acquiring
person or any of the proposed management personnel indicates
that it would not be in the interest of the depositors of the institution or in the interest of the public to permit such person
to control the institution; or
" ( E ) any acquiring person neglects, fails, or refuses to furnish
the Corporation all the information required by the Corporation.
"(8) For the purposes of this subsection, the term—
"(A) 'person' means an individual or a corporation, partner- "Person."
ship, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any other form of
entity not specifically listed herein, and
"(B) 'control' means the power, directly or indirectly, to direct "Control.
the management or policies of an insured institution or to vote
25 per centum or more of any class of voting securities of an
insured institution.
"(9) Whenever any insured institution or an insured bank makes a Report.
loan, or loans, secured, or to be secured, by 25 per centum or more of the
outstanding voting stock of an insured institution, the president or
other chief executive officer of the lending insured institution or
insured bank shall promptly report such fact to the Corporation upon
obtaining knowledge of such loan or loans, except that no report need
be made in those cases where the borrower has been the owner of record
of the stock for a period of one year or more or where the stock is that
of the newly organized institution prior to its opening,
"(10) The reports required by paragraph (9) of this subsection
shall contain such of the information referred to in paragraph (6)
of this subsection, and such other relevant information, as the Corporation may require by regulation or by specific request in connection with any particular report.
pt.

3

QL.

92 STAT. 3690
Report.

"Stock.'

Rules and
regulations.
Report to
Congress.

Civil penalty.

PUBLIC LAW 95-630—NOV. 10, 1978
"(11) Whenever a change in control occurs, each insured institution shall report promptly to the Corporation any changes or replacement of its chief executive oJSicer or of any director occurring in the
next twelve-month period, including in its report a statement of the
past and current business and professional affiliations of the new chief
executive officer or directors.
"(12) Without limitation by or on the foregoing provisions of this
subsection, the Corporation may require insured institutions and individuals or other persons who have or have had any connection with
the management of any insured institution, as defined by thq Corporation, to provide, in such manner as the Corporation may prescribe,
such periodic or other reports and disclosures, including proxy statements and the solicitation of proxies thereby, as the Corporation may
determine to be necessary or appropriate for the protection of
investors or the Corporation.
"(13) As used in this subsection, the term 'stock' means such stock
or other equity securities or equity interests in an insured institution
which is a stock company, or rights, interests, or powers with respect
thereto.
"(14) The Corporation is authorized to issue rules and regulations
to carry out this subsection.
"(15) Within two years after the effective date of the Change in
Savings and Loan Control Act of 1978 and each year thereafter in the
Corporation's annual report to the Congress, the Corporation shall
report to the Congress the results of the administration of this subsection, and make any recommendations as to changes in the law which
in the opinion of the Corporation would be desirable.
"(16) Any person who willfully violates any provision of this subsection, or any regulation or order issued by the Corporation pursuant
thereto, shall forfeit and pay a civil penalty of not more than $10,000
per day for each day during which such violation continues. The Corporation shall have authority to assess such a civil penalty, after giving
notice and an opportunity to the person to submit data, views, and
arguments, and after giving due consideration to the appropriateness
of the penalty with respect to the size of financial resources and good
faith of the person charged, the gravity of the violation, and any
data, views, and arguments submitted. The agency may collect such
civil penalty by agreement with the person or by laringing an action
in the appropriate United States district court, except that in any such
action, the person against whom the penalty has been assessed shall
have a right to trial de novo.
"(17) This subsection shall not apply to a transaction subject to
section 408 of this Act (12 U.S.C. 1730a) } \
T I T L E VIII—CORKESPONDENT ACCOUNTS
SEC. 801. Section 106(b) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1972) is amended by redesignating
paragraphs (1) through (5) as subparagraphs (A) through ( E ) ,
respectively, by inserting " ( 1 ) " immediately after "(b)", and by
inserting at the end thereof the following new paragi-aph:
"(2) (A) No bank which maintains a correspondent account in the
name of another bank shall make an extension of credit to an executive
officer or director of, or to any person who directly or indirectly or
acting through or in concert with one or more persons owns, controls,
or has the power to vote more than 10 per centum of any class of voting

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3691

securities of, such other bank unless such extension of credit is made
on substantially the same terms, including interest rates and collateral
as those prevailing at the time for comparable transactions witli other
persons and does not involve more than the normal risk of repayment
or present other unfavorable features.
"(B) No bank shall open a correspondent account at another bank
while such bank has outstanding an extension of credit to an executive
officer or director of, or other person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or
has the power to vote more than 10 per centum of any class of voting
securities of, the bank desiring to open the account, unless such extension of credit was made on substantially the same terms, including
interest rates and collateral as those prevailing at the time for comparable transactions with other persons and does not involve more
than the normal risk of repayment or present other unfavorable
features.
"(C) No bank which maintains a correspondent account at another
bank shall make an extension of credit to an executive officer or director of, or to any person who directly or indirectly acting through or in
concert with one or more persons owns, controls, or has the power to
vote more than 10 per centum of any class of voting securities of, such
other bank, unless such extension of credit is made on substantially the
same terms, including interest rates and collateral as those prevailing
at the time for comparable transactions with other persons and does
not involve more than the normal risk of repayment or present other
unfavorable features.
"(D) No bank which has outstanding an extension of credit to an
executive officer or director of, or to any person who directly or indirectly or acting through or in concert with one or more persons owns,
controls, or has the power to vote more than 10 per centum of any
class of voting securities of, another bank shall open a correspondent
account at such other bank, unless such extension of credit was made
on substantially the same terms, including interest rates and collateral
as those prevailing at the time for comparable transactions with other
persons and does not involve more than the normal risk of repayment
or present other unfavorable features.
" ( E ) For purposes of this paragraph, the term 'extension of "Extension of
credit' shall have the same meaning given it in section 23A of the credit" and
Federal Reserve Act and the term 'executive officer' shall have the same "executive
officer."
meaning given it under section 22(g) of the Federal Reserve Act.
" ( F ) (i) Any bank which violates or any officer, director, employee, Civil penalty
agent, or other person participating in the conduct of the affairs of such
bank who violates any provision of section 106 (b) (2) shall forfeit and
pay a civil penalty of not more than $1,000 per day for each day during
which such violation continues. The penalty shall be assessed and col- Notice.
lected by the Comptroller of the Currency in the case of a national
bank, the Board in the case of a State member bank, or the Federal
Deposit Insurance Corporation in the case of an insured nonmember
State bank, by written notice. As used in this section, the term 'violates' "Violates.'
includes without any limitation any action (alone or with another or
others) for or toward causing, bringing about, participating in, counselling, or aiding or abetting a violation.
"(ii) In determining the amount of the penalty the Comptroller of
the Currency, the Board or the Federal Deposit Insurance Corporation, as the case may be, shall take into account the appropriateness of
the penalty with respect to the size of the financial resources and good

92 STAT. 3692

Hearing
opportunity.

Review.

Certification.

Regulations.

Report.

PUBLIC LAW 95-630—NOV. 10, 1978
faith of the bank or person charged, the gravity of the violation, the
history of previous violations, and such other matters as justice may
require.
" (iii) The bank or person assessed shall be afforded an opportunity
for agencjr hearing, upon request made within ten days after issuance
of the notice of assessment. In such hearing, all issues shall be determined on the record pursuant to section 554 of title 5, United States
Code. The agency determination shall be made by final order which
may be reviewed only as provided in subsection (iv). If no hearing is
requested as herein provided, the assessment shall constitute a final
and unappealable order.
"(iv) Any bank or person against whom an order imposing a civil
money penalt;^ has been entered after agency hearing under this section may obtain review by the United States court of appeals for the
circuit in which the home office of the bank is located, or the United
States Court of Appeals for the District of Columbia Circuit, by filing
a notice of appeal in such court within ten days from the date of
such order, and simultaneously sending a copy of such notice by registered or certified mail to the Comptroller of the Currency, the Board
or the Federal Deposit Insurance Corporation, as the case may be.
The Comptroller of the Currency, the Board or the Federal Deposit
Insurance Corporation, as the case may be, shall promptly certify and
file in such court the record upon which the penalty was imposed, as
p,rovided in section 2112 of title 28, United States Code. The findings
of the Comptroller of the Currency, the Board or the Federal Deposit
Insurance Corporation, as the case may be, shall be set aside if found
to be unsupported by substantial evidence as provided by section
706(2) (E) of title 5, United States Code.
"(v) If any bank or person fails to pay an assessment after it has
become a final and unappealable order, or after the court of appeals
has entered final judgment in favor of the agency, the Comptroller
of the Currency, the Board or the Federal Deposit Insurance Corporation, as the case may be, shall refer the matter to the Attorney General,
who shall recover the amount assessed by action in the appropriate
United States district court. In such action the validity and apropriateness of the final order imposing the penalty shall not be subject to
review.
"(vi) The Comptroller of the Currency, the Board and the Federal
Deposit Insurance Corporation shall promulgate regulations establishing procedures necessary to implement this section.
"(vii) All penalties collected under authority of this section shall
be covered into the Treasury of the United States.
"(G) (i) Each executive officer and each stockholder of record who
directly or indirectly owns, controls, or has the power to vote more
than 10 per centum of any class of voting securities of an insured bank
shall make a written report to the board of directors of such bank for
any year during which such executive officer or shareholder has outstanding an extension of credit from a bank which maintains a corresponding account in the name of such bank. Such report shall
include the following information:
"(1) the maximum amount of indebtedness to the bank maintaining the correspondent account during such year of (a) such
executive officer or stockholder of record, (b) each company controlled by such executive officer or stockholder, or (c) each political or campaign committee the funds or services of which will
benefit such executive officer or stockholder, or which is controlled
by such executive officer or stockholder;

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3693

"(2) the amount of indebtedness to the bank maintaining the
correspondent account outstanding as of a date not more than ten
days prior to the date of filing of such report of (a) such executive
officer or stockholder of record, (b) each company controlled by
such executive officer or stockholder, or (c) each political or campaign committee the funds or services of which will benefit such
executive officer or stockholder;
"(3) the range of interest rates charged on such indebtedness
of such executive officer or stockholder of record; and
"(4) the terms and conditions of such indebtedness of such
executive officer or stockholder of record,
"(ii) Each insured bank shall compile the reports filed pursuant to Reports
subparagraph (G) (i) and forward such compilation to the Comp- compilation,
troller of the Currency in the case of a national bank, the Board in the
case of a State member bank, and the Federal Deposit Insurance Corporation in the case of an insured nonmember State bank.
"(iii) Each insured bank shall include in the report required to be
made under subsection (k) (1) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(k)(l)) a list by name of each executive officer or
stockholder of record who directly or indirectly owns, controls, or has
the power to vote more than 10 per centum of any class of voting
securities of the bank who files information required by subparagraph
(G) (i) and the aggregate amount of all extensions of credit by correspondent banks to such executive officers or stockholders of record,
any company controlled by such executive officers or stockholders, and
any political or campaign committee the funds or services of which
will benefit such executive officers or stockholders, or which is controlled by such executive officers or stockholders.".
TITLE IX—DISCLOSUEE OF MATERIAL FACTS
SEC. 901. Section 7 of the Federal Deposit Insurance Act (12 U.S.C.
f
1817) is amended by adding at the end thereof the following new
subsection:
"(k) (1) Each insured bank shall make to the appropriate Federal Annual report
banking agency an annual report which shall contain the following
information with respect to the preceding calendar year:
" (A) A list by name of each stockholder of record who directly
or indirectly owns, controls, or has the power to vote more than
10 per centum of any class of voting securities of the bank.
"(B) A list by name of each executive officer or stockholder of
record who directly or indirectly owns, controls, or has the power
to vote more than 10 per centum of any class of voting securities
of the bank and the aggregate amount of all extensions of credit
by such bank during such year to: (i) such executive officers or
stockholders of record, (ii) any company controlled by such executive officers, or stockholders, or (iii) any political or campaign
committee the funds or services of which will benefit such executive officers or stockholders, or which is controlled by such executive officers or stockholders,
" (2) For purposes of this subsection, the term 'executive officer' shall "Executive
have the same meaning given it under section 22(g) of the Federal officer."
12 u s e 375a.
Reserve Act.
"(3) The appropriate Federal banking agencies are authorized to Rules and
issue rules and regulations to carry out this subsection, including regulations.
authority to incorporate the information required to be filed by this

92 STAT. 3694

PUBLIC LAW 95-630—NOV. 10, 1978
subsection in any other report required to be filed by all insured banks
which would be available in its entirety to the public upon request.
"(4) Copies of any report required to be filed under this subsection
shall be made available, by the appropriate Federal banking agency
or by the bank, upon request, to the public".

Federal Financial
Institutions
Examination
Council Act of
1978.
Short title.
12 u s e 3301
note.
12 u s e 3301.

T I T L E X—FEDEKAL FINANCIAL INSTITUTIONS
EXAMINATION COUNCIL
SEC. 1001. This title may be cited as the "Federal Financial Institutions Examination Council Act of 1978".
PURPOSE

SEC. 1002. I t is the purpose of this title to establish a Financial Institutions Examination Council which shall prescribe uniform principles
and standards for the Federal examination of financial institutions
by the Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Federal Home Loan Bank Board, and the National Credit
Union Administration and make recommendations to promote uniformity in the supervision of these financial institutions. The Council's
actions shall be designed to promote consistency in such examination
and to insure progressive and vigilant supervision.
DEFINITIONS

12 USC3302.

SEC. 1003. As used in this title—
(1) the term "Federal financial institutions regulatory agencies"
means the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Federal Home Loan Bank Board, and
the National Credit Union Administration;
(2) the term "Council" means the Financial Institutions Examination Council; and
(3) the term "financial institution" means a commercial bank,
a savings bank, a trust company, a savings and loan association,
a building and loan association, a homestead association, a cooperative bank, or a credit union;
ESTABLISHMENT OF T H E COUNCIL

Financial
Institutions
Examination
Council.
12 u s e 3303.

Members.

Term.

SEC. 1004. (a) There is established the Financial Institutions Examination Council which shall consist of—
(1) the Comptroller of the Currency,
(2) the Chairman of the Board of Directors of the Federal
Deposit Insurance Corporation,
(3) a Governor of the Board of Governors of the Federal
Reserve System designated by the Chairman of the Board,
(4) the Chairman of the Federal Home Loan Bank Board, and
(6) the Chairman of the National Credit Union Administration Board.
(b) The members of the Council shall select the first chairman of
the Council. Thereafter the chairmanship shall rotate among the members of the Council.
(c) The term of the Chairman of the Council shall be two years.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3695

(d) The members of the Council may, from time to time, designate
other officers or employees of their respective agencies to carry out
their duties on the Council.
(e) Each member of the Council shall serve without additional
compensation but shall be entitled to reasonable expenses incurred in
carrying out his official duties as such a member.
EXPENSES OF T H E COUNCIL

SEC. 1005. One-fifth of the costs and expenses of the Council, includ- 12 use 3304.
ing the salaries of its employees, shall be paid by each of the Federal
financial institutions regulatory agencies. Annual assessments for such
share shall be levied by the Council based upon its projected budget
for the year, and additional assessments may be made during the year
if necessary.
FUNCTIONS OF T H E COUNCIL

SEC. 1006. (a) The Council shall establish uniform principles and
standards and report forms for the examination of financial institutions which shall be applied by the Federal financial institutions regulatory agencies.
(b) (1) The Council shall make recommendations for uniformity in
other supervisory matters, such as, but not limited to, classifying loans
subject to country risk, identifying financial institutions in need of
special supervisory attention, and evaluating the soundness of large
loans that are shared by two or more financial institutions. In addition, the Council shall make recommendations regarding the adequacy
of supervisory tools for determining the impact of holding company
operations on the financial institutions within the holding company
and shall consider the ability of supervisory agencies to discover possible fraud or questionable and illegal payments and practices which
might occur in the operation of financial institutions or their holding
companies.
(2) When a recommendation of the Council is found unaccepted by
one or more of the applicable Federal financial institutions regulatory
agencies, the agency or agencies shall submit to the Council, within a
time period specified by the Council, a written statement of the reasons
the recommendation is unacceptable.
(c) The Council shall develop uniform reporting systems for federally supervised financial institutions, their holding companies, and
nonfinancial institution subsidiaries of such institutions or holding
companies. The authority to develop uniform reporting systems shall
not restrict or amend the requirements of section 12 (i) of the Securities
Exchang:e Act of 1934.
(d) The Council shall conduct schools for examiners and assistant
examiners employed by the Federal financial institutions regulatory
agencies. Such schools shall be open to enrollment by employees of
State financial institutions supervisory agencies under conditions specified by the Council.
(e) Nothing in this title shall be construed to limit or discourage
Federal regulatory agency research and development of new financial
institutions supervisory methods and tools, nor to preclude the field
testing of any innovation devised by any Federal regulatory agency.
(f) Not later than April 1 of each year, the Council shall prepare an
annual report covering its activities during the preceding year.

Principles and
standards.

12 use 3305.

Reporting
systems,

. .., ,

Annual report,

92 STAT. 3696

PUBLIC LAW 95-630—NOV. 10, 1978
STATE LIAISON

Establishment.

12 use 3306.
Allowance.

=
'

;^

;

SEC. 1007. To encoura^;e the application of uniform examination
principles and standards by State and Federal supervisory agencies,
the Council shall establish a liaison committee composed of five representatives of State agencies which supervise financial institutions
which shall meet at least twice a year with the Council. Members of the
liaison committee shall receive a reasonable allowance for necessary
expenses incurred in attending meetings.
ADMINISTRATION

12 use 3307.

Experts and
consultants,

SEC. 1008. (a) The Chairman of the Council is authorized to carry
out and to delegate the authority to carry out the internal administration of the Council, including the appointment and supervision of
employees and the distribution of business among members, employees,
and administrative units.
(b) in addition to any other authority conferred upon it by this title,
in carrying out its functions under this title, the Council may utilize,
with their consent and to the extent practical, the personnel, services,
and facilities of the Federal financial institutions regulatory agencies,
Federal Reserve banks, and Federal Home Loan Banks, with or without reimbursement therefor.
(c) In addition, the Council may—
(1) subject to the provisions of title 5, United States Code,
relating to the competitive service, classification, and General
Schedule pay rates, appoint and fix the compensation of such
officers and employees as are necessary to carry out the provisions
of this title, and to prescribe the authority and duties of such
officers and employees; and
(2) obtain the services of such experts and consultants as are
necessary to carry out the provisions of this title.

services.
ACCESS TO INFORMATION BY T H E COUNCIL

12 use 3308.

SEC. 1009. For the purpose of carrying out this title, the Council
shall have access to all books, accounts, records, reports, files, memorandums, papers, things, and property belonging to or in use by Federal financial institutions regulatory agencies, including reports of
examination of financial institutions or their holding companies from
whatever source, together with workpapers and correspondence files
related to such reports, whether or not a part of the report, and all
without any deletions.
AUDITS BY T H E COMPTROLLER

31 use 67.

GENERAL

SEC 1010. Section 117 of the Accounting and Auditing Act of 1950,
as amended by the Federal Banking Agency Audit Act (Public Law
95-320), is further amended by:
(1) redesignating clauses (A), (B), and (C) of subsection
(e)(1) as (B), (C), and (D), respectively, and inserting in
subsection (e) (1) the clau^ "(A) of the Financial Institutions
Examination Council;" immediately following "audits"; and
(2) striking out in subsection (e) (2) "and ( C ) " and inserting
in lieu thereof" (C), and (D)".

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3697

Right to
Financial Privacy
SEC. 1100. This title may be cited as the "Right to Financial Privacy Act of 1978.
Short title.
Act of 1978".
12 u s e 3401
DEFINITIONS
note.
12 u s e 3401.
SEC. 1101. For the purpose of this title, the term—

T I T L E XI—RIGHT TO FINANCIAL PEIVACY

(1) "financial institution" means any office of a bank, savings
bank, card issuer as defined in section 103 of the Consumers Credit
Protection Act (15 U.S.C. 1602 ( n ) ) , industrial loan company,
trust companj^, savings and loan, building and loan, or homestead
association (including cooperative banks), credit union, or consumer finance institution, located in any State or territory of the
United States, the District of Columbia, Puerto Rico, Guam,
American Samoa, or the Virgin Islands;
(2) "financial record" means an original of, a copy of, or information known to have been derived from, any record held by a
financial institution pertaining to a customer's relationship with
the financial institution;
(3) "Government authority" means any agency or department
of the United States, or any officer, employee, or agent thereof ;
(4) "person" means an individual or a partnership of five or
fewer individuals ;
(5) "customer" means any person or authorized representative
of that person who utilized or is utilizing any service of a financial institution, or for whom a financial institution is acting or has
acted as a fiduciary, in relation to an account maintained in the
person's name;
(6) "supervisory agency" means, with respect to any particular financial institution any of the following which has statutory
authority to examine the financial condition or business operations of that institution—
(A) the Federal Deposit Insurance Corporation;
(B) the Federal Savings and Loan Insurance Corporation;
(C) the Federal Home Loan Bank Board;
(D) the National Credit Union Administration;
(E) the Board of Governors of the Federal Reserve
System;
(F) the Comptroller of the Currency;
(G) the Securities and Exchange Commission;
(H) the Secretary of the Treasury, with respect to the
Bank Secrecy Act and the Currency and Foreign Transactions Reporting Act (Public Law 91-508, title I and I I ) ; or
(I) any State banking or securities department or agency:
and
(7) "law enforcement in(|uir5^" means a lawful investigation
or official proceeding inquiring into a violation of, or failure to
comply with, any criminal or civil statute or any regulation, rule,
or order issued pursuant thereto.
CONFIDENTIALITY OP RECORDS

12 use
1829b-1831,
1951-1959.
31 u s e 1051
note.

GOVERNMENT AUTHORITIES

SEC. 1102. Except as provided by section 1103 (c) or (d), 1113, or 12 USe 3402.
1114, no Government authority may have access to or obtain copies of,
or the information contained m the financial records of any customer

92 STAT. 3698

,, ^^,
' '

PUBLIC LAW 95-630—NOV. 10, 1978
from a financial institution unless the financial records are reasonably
described and—
(1) such customer has authorized such disclosure in accordance
with section 1104;
(2) such financial records are disclosed in response to an administrative subpena or summons which meets the requirements of
section 1105;
(3) such financial records are disclosed in response to a search
warrant which meets the requirements of section 1106;
(4) such financial records are disclosed in response to a judicial
subpena which meets the requirements of section 1107; or
(5) such financial records are disclosed in response to a formal
written request which meets the requirements of section 1108.
CONFIDEXTIALTTY

12 use 3403.

OF RECORDS—FINANCIAL

INSTITUTIONS

SEC. 1103. (a) No financial institution, or officer, employees, or agent
of a financial institution, may provide to any Government authority
access to or copies of, or the information contained in, the financial
records of any customer except in accoi-dance with the provisions of
this title.
(b) A financial institution shall not release the financial records of
a customer until the Government authority seeking such records
certifies in writing to the financial institution that it has complied
v,'ith the applicable provisions of this title.
(c) Nothing in this title shall preclude any financial institution, or
any officer, employee, or agent of a financial institution, from notifying
a Government authority that such institution, or officer, employee, or
agent has information which may be relevant to a possible violation of
any statute or regulation.
(d) (1) Nothing in this title shall preclude a financial institution,
as an incident to perfecting a security interest, proving a claim in
bankruptcy, or otherwise collecting on a debt owing either to the
financial institution itself or in its role as a fiduciary, from providing
copies of any financial record to any court or Government authority.
(2) Nothing in this title shall preclude a financial institution, as
an incident to processing an application for assistance to a customer
in the form of a Government loan, loan guaranty, or loan insurance
agreement, or as an incident to processing a default on, or administering, a Government guaranteed or insured loan, from initiating
contact with an appropriate Government authority for the purpose
of providing any financial record necessary to permit such authority
to carry out its responsibilities under a loan, loan guaranty, or loan
insurance agreement.
CUSTOMER AUTHORIZATIONS

12 use 3404.

SEC. 1104. (a) A customer may authorize disclosure under section
1102(1) if he furnishes to the financial institution and to the Government authority seeking to obtain such disclosure a signed and dated
statement which—
(1) authorizes such disclosure for a period not in excess of
three months;
111 - ! • J
(2) states that the customer may revoke such authorization at
any time before the financial records are disclosed;
(3) identifies the financial records which are authorized to be
disclosed;

PUBLIC LAW 95-630—NOV. 10, 1978
(4) specifies the purposes for which, and the Government
authority to which, such records may be disclosed; and
(5) states the customer's rights under this title.
(b) No such authorization shall be required as a condition of doing
business with any financial institution.
(c) The customer has the right, unless the Government authority
obtains a court order as provided in section 1109, to obtain a copy of
the record which the financial institution shall keep of all instances
in which the customer's record is disclosed to a Government authority
pursuant to this section, including the identity of the Government
authority to which such disclosure is made.
(d) All financial institutions shall promptly notify all of their
customers of their rights under this title. The Board of Governors of
the Federal Reserve System shall prepare a statement of customers'
rights under this title. Any financial institution that provides its
customers a statement of customers' rights prepared by the Board
shall be deemed to be in compliance with this subsection.

92 STAT. 3699

Notification.
Statement.

ADMINISTRATIVE SUBPENA AND SUMMONS

SEC. 1105. A Government authority may obtain financial records Financial
under section 1102(2) pursuant to an administrative subpena or records.
12 use 3405.
summons otherwise authorized by law only if—
(1) there is reason to believe that the records sought are
relevant to a legitimate law enforcement inquiry;
(2) a copy of the subpena or summons has been served upon
the customer or mailed to his last known address on or before the
date on which the subpena or summons was served on the
financial institution together with the following notice which
shall state with reasonable specificity the nature of the law
enforcement inquiry:
"Records or information concerning your transactions held by
the financial institution named in the attached subpena or
summons are being sought by this (agency or department) in
accordance with the Right to Financial Privacy Act of 1978 for
the following purpose; If you desire that such records or
information not be made available, you must:
" 1 . Fill out the accompanying motion paper and sworn
statement or write one of your own, stating that you are the
customer whose records are being requested by the Government and either giving the reasons you believe that the
records are not relevant to the legitimate law enforcement
inquiry stated in this notice or any other legal basis for
objecting to the release of the records.
^'2. File the motion and statement by mailing or delivering
them to the clerk of any one of the following United States
district courts:
"3. Serve the Government authority requesting the records
by mailing or delivering a copy of your motion and
statement to
"4. Be prepared to come to court and present your position
in further detail.
"5. You do not need to have a lawyer, although you may
wish to employ one to represent you and protect yotir rights.
If you do not follow the above procedures, upon the expiration of
ten days from the date of service or fourteen days from the date

92 STAT. 3700

PUBLIC LAW 95-630—NOV. 10, 1978
of mailing of this notice, the records or information requested
therein will be made available. These records may be transferred
to other Government authorities for legitimate law enforcement
inquiries, in which event you will be notified after the transfer.";
and
(3) ten days have expired from the date of service of the notice
or fourteen days have expired from the date of mailing the notice
to the customer and within such time period the customer has
not filed a sworn statement and motion to quash in an appropriate
court, or the customer challenge provisions of section 1110 have
been complied with.
SEARCH

Financial
records.
12 use 3406.
18 use app.

WARRANTS

SEC. 1106. (a) A Government authority may obtain financial records
under section 1102(3) only if it obtains a search warrant pursuant
to the Federal Rules of Criminal Procedure.
(b) No later than ninetj" days after the Government authority
serves the search warrant, it shall mail to the customer's last known
address a copy of the search warrant together with the following
notice:
"Records or information concerning your transactions held by the
financial institution named in the attached search warrant were
obtained by this (agency or department) on (date) for the following
purpose:
. You may have rights under the Right to Financial
Privacy Act of 1978.".
(c) Upon application of the Government authority, a court may
grant a delay in the mailing of the notice required in subsection (b),
which delay shall not exceed one hundred and eighty days following
the service of the warrant, if the court makes the findings required in
section 1109(a). If the court so finds, it shall enter an ex parte order
granting the requested delay and an order prohibiting the financial
institution from disclosing that records have been obtained or that a
search warrant for such records has been executed. Additional delays
of up to ninety days may be granted by the court upon application, but
only in accordance with this subsection. "Upon expiration of the period
of delay of notification of the customer, the following notice shall be
mailed to the customer along with a copy of the search warrant:
"Records or information concerning your transactions held by the
financial institution named in the attached search warrant were
obtained by this (agency or department) on (date), Notification was
delayed beyond the statutory ninety-day delay period pursuant to a
determination by the court that such notice would seriously jeopardize
an investigation concerning
. You may have rights under the
Right to Financial Privacy Act of 1978.".
JUDICIAL STJBPENA

Financial
records.

12 use 3407.

SEC. 1107. A Government authority may obtain financial records
under section 1102(4) pursuant to judicial subpena only if—
(1) such siibpena is authorized by law and there is reason to
believe that the records sought are relevant to a legitimate law
enforcement inquiry;
(2) a copy of the subpena has been served upon the customer
or mailed to his last known address on or before the date on which
the subpena was served on the financial institution together with
the following notice which shall state with reasonable specificity
the nature of the law enforcement inquiry:

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3701

'•Records or information concerning your transactions which
are held b}' the financial institution named in the attached subpena
are being sought by this (agency or department^r authority) in
accordance with the Right to Financial Privacy Act of 1978 for
the following purpose: If you desire that such records or information not be made available, you must:
"1. Fill out the accompanying motion paper and sworn
statement or write one of your own, stating that you are the
customer whose records are being requested by the Government and either giving the reasons you believe that the records
are not relevant to the legitimate law enforcement inquiry
stated in this notice or any other legal basis for objecting
to the release of the records.
"2. File the motion and statement by mailing or delivering
them to the clerk of the
Court.
"3. Serve the Government authority requesting the records
bv mailing or delivering a copy of your motion and statement
to
"4. Be prepared to come to court and present your position
in further detail.
"5. You do not need to have a lawyer, although you may
wish to employ one to represent you and protect your rights.
If you do not follow the above procedures, upon the expiration of
ten days from the date of service or fourteen days from the date
of mailing- of this notice, the records or information requested
therein will be made available. These records may be transferred
to other government authorities for legitimate law enforcement
inquiries, in Avhich event you will be notified after the transfer;"
and
(3) ten days have expired from the date of service or fourteen
days from the date of mailing of the notice to the customer and
within such time period the customer has not filed a sworn statement and motion to quash in an appropriate court, or the customer
challenge provisions of section 1110 have been complied with.
FORMAL ^VR1TTEN REQUEST

SEC. 1108. A Government authority may request financial records Financial
under section 1102(5) pursuant to a formal written request only if— records.
(1) no administrative summons or subpena authority reasona- 12 USC 3408.
bly appears to be available to that Government authority to obtain
financial records for the purpose for which such records are sought;
(2) the request is authorized by regulations promulgated by the
head of the agency or department;
(3) there is reason to believe that the records sought are relevant to a legitimate law enforcement inquiry; and
(4) (A) a copy of the request has been served upon the customer or mailed to his last known address on or before the date
on which the request was made to the financial institution
together with the following notice which shall state with reasonable specificity the nature of the law enforcement inquiry:
"Records or information concerning your transactions held by
the financial institution named in the attached request are being
sought by this (agency or department) in accordance with the
Right to Financial Privacy Act of 1978 for the following
purpose:

92 STAT. 3702

PUBLIC LAW 95-630—NOV. 10, 1978
"If you desire that such records or information not be made
available, you must:
" 1 . Fill out the accompanying motion paper and sworn
statement or write one of your own, stating that you are the
customer whose records are being requested by the Government and either giving the reasons you believe that the
records are not relevant to the legitimate law enforcement
inquiry stated in this notice or any other legal basis for
objecting to the release of the records.
"2. File the motion and statement by mailing or delivering
them to the clerk of any one of the following United States
District Courts:
"3. Serve the Government authority requesting the records
by mailing or delivering a copy of your motion and statement to
"4. Be prepared to come to court and present your position
in further detail.
"5. You do not need to have a lawyer, although you may
wish to employ one to represent you and protect your
rights.
If you do not follow the above procedures, upon the expiration
of ten days from the date of service or fourteen days from the
date of mailing of this notice, the records or information
requested therein may be made available. These records may be
transferred to other Government authorities for legitimate law
enforcement inquiries, in which event you will be notified after
the transfer;" and
(B) ten days have expired from the date of service or fourteen
days from the date of mailing of the notice by the customer and
within such time period the customer has not filed a sworn statement and an application to enjoin the Government authority in
an appropriate court, or the customer challenge provisions of
section 1110 have been complied with.
DELAYED NOTICE

12 use 3409.

^PRESERVATION OF RECORDS

SEC. 1109. (a) Upon application of the Government authority, the
customer notice required under section 1104(c), 1105(2), 1106 (c),
1107(2), 1108(4), or 1112(b) may be delayed by order of an appropriate court if the presiding judge or magistrate finds that—
(1) the investigation being conducted is within the lawful
jurisdiction of the Government authority seeking the financial
records:
(2) there is reason to believe that the records being sought are
relevant to a legitimate law enforcement inquiry; and
(3) there is reason to believe that such notice will result in—
(A') endangering life or physical safety of any person;
( B ) flight from prosecution;
(C) destruction of or tamperiniT with evidence;
( D ) intimidation of potential witnesses; or
(E) otherwise seriously ieopardizing an investigation or
official proceedinjT or unduly delaying a trial or ongoing
official proceeding to the same extent as the circumstances in
the preceedin.Tr subpara.crraphs.
An application for delay must be made with reasonable specificity.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3703

(b) (1) If the court makes the findings required in paragraphs (1),
(2), and (3) of subsection (a), it shall enter an ex parte order granting the requested delay for a period not to exceed ninety days and an
order prohibiting the financial institution from disclosing that records have been obtained or that a request for records has been made,
except that, if the records have been sought by a Government
authority exercising financial controls over foreign accounts in the
United States under section 5(b) of the Trading with the Enemy
Act (50 U.S.C. App. 5(b)), the International Emergency Economic
Powers Act (title I I , Public Law 95-223), or section 5 of the United 50 USC 1701
Nations Participation Act (22 U.S.C. 287c), and the court finds that "o^.
there is reason to believe that such notice may endanger the lives or
physical safety of a customer or group of customers, or any person
or group of persons associated with a customer, the court may specify
that the delay be indefinite.
(2) Extensions of the delay of notice provided in paragraph (1)
of up to ninety days each may be granted by the court upon application, but only in accordance with this subsection.
(3) Upon expiration of the period of delay of notification under
paragraph (1) or (2), the customer shall be served with or mailed
a copy of the process or request together with the following notice
which shall state with reasonable specificity the nature of the law
enforcement inquiry:
>
"Records or information concerning your transactions which are
held by the financial institution named in the attached process or
request were supplied to or requested by the Government authority
named in the process or request on (date). Notification was withheld
pursuant to a determination by the (title of court so ordering) under
the Right to Financial Privacy Act of 1978 that such notice might
(state reason).
The purpose of the investigation
or official proceeding was
.".
(c) When access to financial records is obtained pursuant to section
1114(b) (emergency access), the Government authority shall, unless
a court has authorized delay of notice pursuant to subsections (a) and
(b), as soon as practicable after such records are obtained serve upon
the customer, or mail by registered or certified mail to his last known
address, a copy of the request to the financial institution together with
the following notice which shall state with reasonable specificity the
nature of the law enforcement inquiry:
"Records concerning your transactions held by the financial institution named in the attached request were obtained by (agency or department) under the Right to Financial Privacy Act of 1978 on (date) for
the following purpose:
Emergency access to such
records was obtained on the grounds that (state grounds).".
(d) Any memorandum, affidavit, or other paper filed in connection
with a request for delay in notification shall be preserved by the court.
Upon petition by the customer to whom such records pertain, the court
may order disclosure of such papers to the petitioner unless the court
makes the findings required in subsection (a).
CUSTOMER CHALLENGE PROVISIONS

SEC. 1110. (a) Within ten days of service or within fourteen days 12 USC 3410.
of mailing of a subpena, summons, or formal written request, a customer may file a motion to quash an administrative summons or judicial
subpena, or an application to enjoin a Government authority from
obtaining financial records pursuant to a formal written request, with

92 STAT. 3704

"Delivery."
28 u s e app.
Sworn response
filing.

Motion or
application
denial.

Notification.
Certification.

PUBLIC LAW 95-630—NOV. 10, 1978
copies served upon the Government authority. A motion to quash a
judicial subpena shall be filed in the court which issued the subpena.
A motion to quash an administrative summons or an application to
enjoin a Government authority from obtaining records pursuant to a
formal v^^ritten request shall be filed in the appropriate United States
district court. Such motion or application shall contain an affidavit
or sworn statement—
(1) stating that the applicant is a customer of the financial
institution from which financial records pertaining to him have
been sought; and
(2) stating the applicant's reasons for believing that the
financial records sought are not relevant to the legitimate law
enforcement inquiry stated by the Government authority in its
notice, or that there has not been substantial compliance with the
provisions of this title.
Service shall be made under this section upon a Government authority
by delivering or mailing by registered or certified mail a copy of the
papers to the person, office, or department specified in the notice which
the customer has received pursuant to this title. For the purposes of
this section, "delivery" has the meaning stated in rule 5(b) of the
Federal Rules of Civil Procedure.
(b) If the court finds that the customer has complied with subsection
(a), it shall order the Government authority to file a sworn response,
which may be filed in camera if the Government includes in its response
the reasons which make in camera review appropriate. If the court is
unable to determine the motion or application on the basis of the
parties' initial allegations and response, the court may conduct such
additional proceedings as it deems appropriate. All such proceedings
shall be completed and the motion or application decided within seven
calendar days of the filing of the Government's response.
(c) If the court finds that the applicant is not the customer to whom
the financial records sought by the Government authority pertain, or
that there is a demonstrable reason to believe that the law enforcement
inquiry is legitimate and a reasonable belief that the records sought
are relevant to that inquiry, it shall deny the motion or application,
and, in the case of an administrative summons or court order other
than a search warrant, order such process enforced. If the court finds
that the applicant is the customer to whom the records sought by the
Government authority pertain, and that there is not a demonstrable
reason to believe that the law enforcement inquiry is legitimate and a
reasonable belief that the records sought are relevant to that inquiry,
or that there has not been substantial compliance with the provisions
of this title, it shall order the process quashed or shall enjoin the
Government authority's formal written request.
(d) A court ruling denying a motion or application under this section shall not be deemed a final order and no interlocutory appeal may
be taken therefrom by the customer. An appeal of a ruling denying a
motion or application under this section may be taken by the customer
(1) within such period of time as provided by law as part of any
appeal from a final order in any legal proceeciing initiated against
him arising out of or based upon the financial records, or (2) within
thirty days after a notification that no legal proceeding is contemplated
against him. The Government authority obtaining the financial records
shall promptly notify a customer when a determination has been made
that no legal proceeding against him is contemplated. After one hundred and eighty days from the denial of the motion or application, if
the Government authority obtaining the records has not initiated such

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3705

a proceeding, a supervisory official of the Government authority shall
certify to the appropriate court that no such determination has been
made. The court may require that such certijfications be made, at reasonable intervals thereafter, until either notification to the customer
has occurred or a legal proceeding is initiated as described in clause
(e) The challenge procedures of this title constitute the sole judicial
remedy available to a customer to oppose disclosure of financial records
pursuant to this title.
(f) N^othing in this title shall enlarge or restrict any rights of a
financial institution to challenge requests for records made by a Government authority under existing law. Nothing in this title shall entitle
a customer to assert the rights of a financial mstitution.
DUTY OF F I N A N C I A L INSTITUTIONS

SEC. 1111. Upon receipt of a request for financial records made by a 12 USC 3411.
Government authority under section 1105 or 1107, the financial institution shall, unless otherwise provided by law, proceed to assemble the
records requested and must be prepared to deliver the records to the
Government authority upon receipt of the certificate required under
section 1103(b).
USE o r

INFORMATION

SEC. 1112. (a) Financial records originally obtained pursuant to this
title shall not be transferred to another agency or department unless
the transferring agency or department certifies in writing that there
is reason to believe that the records are relevant to a legitimate law
enforcement inquiry within the jurisdiction of the receiving agency or
department.
(b) When financial records subject to this title are transferred
pursuant to subsection (a), the transferring agency or department
shall, within fourteen days, send to the customer a copy of the certification made pursuant to subsection (a) and the following notice,
which shall state the nature of the law enforcement inquiry with reasonable specificity: "Copies of, or information contained in, your
financial records lawfully in possession of
have
been furnished to
pursuant to the Right of
Financial Privacy Act of 1978 for the following purpose:
. If you believe that this transfer has not been made to
further a legitimate law enforcement inquiry, you may have legal
rights under the Financial Privacy Act of 1978 or the Privacy Act
of 1974."
(c) Notwithstanding subsection (b), notice to the customer may be
delayed if the transferring agency or department has obtained a court
order delaying notice pursuant to section 1109 (a) and (b) and that
order is still in effect, or if the receiving agency or department obtains
a court order authorizing a delay in notice pursuant to section 1109 (a)
and (b). Upon the expiration of any such period of delay, the transferring agency or department shall serve to the customer the notice
specified in subsection (b) above and the agency or department that
obtained the court order authorizing a delay in notice pursuant to section 1109 (a) and (b) shall serve to the customer the notice specified
in section 1109(b).
(d) Nothing in this title prohibits any superAdsory agency from
exchanging examination reports or other information with another
supervisory agency. Nothing in this title prohibits the transfer of a
customer's financial records needed by counsel for a Government

39-194 O—80—pt, 3

68 : QL3

Transfer,
certification.
12 USC 3412.

Notice.

92 STAT. 3706

PUBLIC LAW 95-630—NOV. 10, 1978
authority to defend an action brought by the customer. Nothing in this
title shall authorize the withholding of information by any officer or
employee of a supervisory agency from a duly authoi'ized committee
or subcommittee of the Congress.
EXCEPTIONS

12 use 3413.

SEC. 1113. (a) Nothing in this title prohibits the disclosure of any
financial records or information which is not identified with or identifiable as being derived from the financial records of a particular
customer.
(b) Nothing in this title prohibits examination by or disclosure to
any supervisory agency of financial records or information in the
exercise of its supervisory, regulatory, or monetary functions with
respect to a financial institution.
(c) Nothing in this title prohibits the disclosure of financial records
in accordance with procedures authorized by the Internal Revenue
26 use 1 et seq. Code.
(d) Nothing in this title shall authorize the withholding of financial
records or information recjuired to be reported in accordance with any
Federal statute or rule promulgated thereunder.
(e) Nothing in this title shall apply when financial records are
sought by a Government authority imder the Federal Rules of Civil
or Criminal Procedure or comparable rules of other courts in connection with litigation to which the Government authority and the
customer are parties.
(f) Nothing in this title shall apply when financial records are
sought by a Government authority pursuant to an administrative subpena issued by an administrative law judge in an adjudicatory proceeding subject to section 554 of title 5, United States Code, and to
w'hich the Government authority and the customer are parties.
(g) The notice requirements of this title and sections 1110 and 1112
shall not apply when a Government authority by a means described in
section 1102 and for a legitimate law enforcement inquiry is seeking
only the name, address, account number, and type of account of any
customer or ascertainable group of customers associated (1) with a
financial transaction or class of financial transactions, or (2) with a
foreign country or subdivision thereof in the case of a Government
authority exercising financial controls over foreign accounts in the
United States under section 5(b) of the Trading with the Enemy Act
(50 U.S.C. App. 5 ( b ) ) ; the International Emergency Economic Pow50 use 1701
ers Act (title I I , Public Law 95-223); or section 5 of the United
»ot«Nations Participation Act (22 U.S.C. 287(c)).
(h) (1) Nothing in this title (except sections 1103, 1117 and 1118)
shall apply when financial records are sought by a Government
authority—
(A) in connection with a lawful proceeding, investigation,
examination, or inspection directed at the financial institution in
possession of such records or at a legal entity which is not a customer; or
(B) in connection with the authority's consideration or administration of assistance to the customer in the form of a Government loan, loan guaranty, or loan insurance program.
Certification.
(2) When financial records are sought pursuant to this subsection,
the Government authority shall submit to the financial institution the
certificate required by section 1103(b). For access pursuant to paragraph ( 1 ) ( B ) , no further certification shall be required for subse-

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3707

quent access by the certifying Government authority during the term
of the loan, loan guaranty, or loan insurance agreement.
(3) After the effectiv^e date of this title, whenever a customer applies
for participation in a Government loan, loan guaranty, or loan msurance program, the Government authority administering such program
shall give the customer written notice of the authority's access rights
under this subsection. Xo further notification shall be required for
subsequent access by that authority during the term of the loan, loan
guaranty, or loan insurance agreement.
(4) Financial records obtained pursuant to this subsection may be
used only for the purpose for which they were originally obtained,
and may be transferred to another agency or department only when
the transfer is to facilitate a lawful proceeding, investigation, examination, or inspection directed at the financial institution in possession
of such records, or at a legal entity which is not a customer, except
that—
(A) nothing in this paragraph prohibits the use or transfer of
a customer's financial records needed by counsel representing a
Government authority in a civil action arising from a Government loan, loan guaranty, or loan insurance agreement; and
(B) nothing in this paragraph prohibits a Government authority providing assistance to a customer in the form of a loan, loan
guaranty, or loan insurance agreement from using or transferring
financial records necessary to process, service or foreclose a loan,
or to collect on an indebtedness to the Government resulting from
a customer's default.
(5) Notification that financial records obtained pursuant to this
subsection may relate to a potential civil, criminal, or regulatory
violation by a customer may be given to an agency or department with
jurisdiction over that violation, and such agency or department may
then seek access to the records pursuant to the provisions of this title.
(6) Each financial institution shall keep a notation of each disclosure made pursuant to paragraph (1) (B) of this subsection, including the date of such disclosure and the Government authority to which
it was made. The customer shall be entitled to inspect this information.
(i) Nothing in this title (except sections 1115 and 1120) shall apply
to any subpena or court order issued in connection with proceedings
before a grand jury.
(j) This title shall not apply when financial records are sought by
the General Accounting Office pursuant to an authorized proceeding,
investigation, examination or audit directed at a government authority.

Notice.

Audit.

SPECIAL PROCEDUKES

SEC. 1114. (a) (1) Nothing in this title (except sections 1115, 1117, 12 USC 3414
1118, and 1121) shall apply to the production and disclosure of financial records pursuant to requests from—
(A) a Government authority authorized to conduct foreign
counter- or foreign positive-intelligence activities for purposes of
conducting such activities; or
< 0 ii(B) the Secret Service for the purpose of conducting its protective functions (18 U.S.C. 3056; 3 U.S.C. 202, Public Law 90331, as amended).
(2) In the instances specified in paragraph (1), the Government Certification,
authority shall submit to the financial institution the certificate
required in section 1103(b) signed by a supervisory official of a rank
designated by the head of the Government authority.

92 STAT. 3708

PUBLIC LAW 95-630—NOV. 10, 1978

Disclosure,
prohibition.

(3) No financial institution, or officer, employee, or agent of such
institution, shall disclose to any person that a Government authority
described in paragraph (1) has sought or obtained access to a customer's financial records.
(4) The Government authority specified in paragraph (1) shall
compile an annual tabulation of the occasions in which this section
was used.
Obtaining
(b) (1) Nothing in this title shall prohibit a Government authority
financial records. from obtaining miancial records from a financial institution if the
Government authority determines that delay in obtaining access to
such records would create imminent danger of—
^A) physical injury to any person;
(B) serious property damage; or
(C) flight to avoid prosecution.
(2) In the instances specified in paragraph (1), the Government
shall submit to the financial institution of the certificate required in
section 1103(b) signed by a supervisory official of a rank designated
by the head of the Government authority.
(3) Within five days of obtaining access to financial records under
this subsection, the Government authority shall file with the appropriate court a signed, sworn statement of a supervisory official of a rank
designated by the head of the Government authority setting forth the
grounds for the emergency access. The Government authority shall
thereafter comply with the notice provisions of section 1109(c).
Annual
(4) The Government authority specified in paragraph (1) shall
tabulation.
compile an annual tabulation of the occasions in which this section was
used.
COST REIMBURSEMENT

12 u s e 3415.

Regulation.
Effective date.

SEC. 1115. (a) Except for records obtained pursuant to section
1103(d) or 1113 (a) through (h), or as otherwise provided by law, a
Government authority shall pay to the financial institution assembling
or providing financial records pertaining to a customer and in accordance with procedures established by this title a fee for reimbursement
for such costs as are reasonably necessary and which have been directly
incurred in searching for, reproducing, or transporting books, papers.
records, or other data required or requested to be produced. The Board
of Governors of the Federal Reserve System shall, by regulation, establish the rates and conditions under which such payment may be made.
(b) This section shall take effect on October 1,1979.
JURISDICTION

12 u s e 3416.

SEC. 1116. An action to enforce any provision of this title may be
brought in any appropriate United States district court without
regard to the amount in controversy within three years from the date
on which the violation occurs or the date of discovery of such violation,
whichever is later.
CIVIL PENALTIES

12 u s e 3417.

SEC. 1117. (a) Any agency or department of the United States or
financial institution obtaining or disclosing financial records or information contained therein in violation of this title is liable to the customer to whom such records relate in an amount equal to the sum of—
(1^ $100 without regard to the volume of records involved;
(2) any actual damages sustained by the customer as a result
of the disclosure;

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3709

(3) such punitive damages as the court may allow, where the
violation is found to have been willful or intentional; and
(4) in the case of any successful action to enforce liability
under this section, the costs of the action together with reasonable
attorney's fees as determined by the court.
(b) Whenever the court determines that any agency or department
of the LTnited States has violated any provision of this title and the
court finds that the circumstances surrounding the violation raise
questions of whether an officer or employee of the department or
agency acted willfully or intentionally with respect to the violation,
the Civil Service Commission shall promptly initiate a proceeding
to determine whether disciplinary action is warranted against the
agent or employee who was primarily responsible for the violation.
The Commission after investigation and consideration of the evidence
submitted, shall submit its findings and recommendations to the
administrative authority of the agency concerned and shall send
copies of the findings and recommendations to the officer or employee
or his representative. The administrative authority shall take the corrective action that the Commission recommends.
(c) Any financial institution or agent or employee thereof making Liability,
a disclosure of financial records pursuant to this title in good-faith
reliance upon a certificate by any Government authority shall not be
liable to the customer for such disclosure.
(d) The remedies and sanctions described in this title shall be the
only authorized judicial remedies and sanctions for violations of this
title.
I N J U N C T I V E RELIEF

SEC. 1118. In addition to any other remedy contained in this title, 12 USC 3418.
injunctive relief shall be available to require that the procedures of
this title are complied with. In the event of any successful action, costs
together with reasonable attorney's fees as determined by the court
may be recovered.
SUSPENSION o r STATUTES OF LIMITATIONS

SEC. 1119. If any individual files a motion or application under this 12 USC 3419.
title which has the effect of delaying the access of a Government
authority to financial records pertaining to such individual, any
applicable statute of limitations shall be deemed to be tolled for the
period extending from the date such motion or application was filed
until the date upon which the motion or application is decided.
GRAND J U R Y INFORMATION

SEC. 1120. Financial records about a customer obtained ;from a 12 USC 3420.
financial institution pursuant to a subpena issued under the authority
of a Federal grand jury—
(1) shall be returned and actually presented to the grand jury ;
(2) shall be used only for the purpose of considering whether
to issue an indictment or presentment by that grand jury, or of
prosecuting a crime for which that indictment or presentment is
issued, or for a purpose authorized by rule 6(e) of the Federal
Rules of Criminal Procedure;
18 USC app.
(3) shall be destroyed or returned to the financial institution if
not used for one of the purposes specified in paragraph ( 2 ) ; and
(4) shall not be maintained, or a description of the contents of
such records shall not be maintained by any Government authority

|

92 STAT. 3710

18 u s e app.

PUBLIC LAW 95-630—NOV. 10, 1978
other than in the sealed records of the grand jury, unless such
record has been used in the prosecution of a crime for which the
grand jury issued an indictment or presentment or for a purpose
authorized by rule 6(e) of the Federal Rules of Criminal
Procedure.
REPORTING REQUIREMENTS

Report to
congressional
committees.

12 use 3421.

Report to
congressional
committees.

12 u s e 3422.

SEC. 1121. (a) In April of each year, the Director of the Administrative Office of the United States Courts shall send to the appropriate committees of Congress a report concerning the number of
applications for delays of notice made pursuant to section 1109 and
the number of customer challenges made pursuant to section 1110
during the preceding calendar year. Such report shall include: the
identity of the Government authority requesting a delay of notice; the
number of notice delays sought and the number granted under each
subparagraph of section 1109(a)(3); the number of notice delay
extensions sought and the number granted; and the number of customer challenges made and the number that are successful.
(b) In April of each year, each Government authority that requests
access to jfinancial records of any customer from a financial institution
pursuant to section 1104, 1105, 1106, 1107, 1108, 1109, or 1114 shall
send to the appropriate committees of Congress a report describing
requests made during the preceding calendar year. Such report shall
include the number of requests for records made pursuant to each
section of this title listed in the preceding sentence and any other
related information deemed relevant or useful by the Government
authority.
SEC. 1122. The Securities and Exchange Commission shall not be
subject to the provisions of this title for a period of two years from
the date of enactment of the title.
T I T L E XII—CHARTERS FOR T H R I F T INSTITUTIONS

"Association."

Rules and
regulations.

SEC. 1201. Section 2(d) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1462(d)) is amended to read as follows:
"(d) The term 'association' means a Federal savings and loan association or a Federal mutual savings bank chartered by the Board
under section 5, and any reference in any other law to a Federal savings and loan association shall be deemed to be also a reference to a
Federal mutual savings bank, unless the context indicates otherwise.".
SEC. 1202. Section 5(a) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(a)) is amended to read as follows:
"SEC. 5. (a) In order to provide local mutual thrift institutions in
which people may invest their funds and in order to provide for the
financing of homes, the Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be
known as 'Federal Savings and Loan Associations', or 'Federal mutual
savings banks' (but only in the case of institutions which, prior to conversion, were State mutual savings banks located in States which
authorize the chartering of State mutual savings banks, provided such
conversion is not in contravention of State law), and to issue charters
therefor, giving primary consideration to the best practices of local
mutual thrift and home-financing institutions in the United States.
An association which was formerly organized as a savings bank under
State law may not convert from the mutual to the stock form of ownership. An association which was formerly organized as a savings bank

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3711

under State law may not convert from the mutual to the stock form of
ownership," An association which was formally organized as a savings
bank under State law may, to the extent authorized by the Board,
continue to carry on any activities it was engaged in on December 31,1977, and to retain or make any investments of a type it held on
that date, except that its equity, corporate bond, and consumer loan
investments may not exceed the average ratio of such investments to
total assets for the five-year period immediately preceding the filing of
an application for conversion and such an association which was
formerly organized as a savings bank under State law shall only be
permitted to establish branch offices and other facilities in accordance
with the limitations imposed by State law controlling applications of
a savings bank organized under such State law, provided that such an
,
association: (1) shall be exempt from any numerical limitations of
State law on the establishment of branch offices and other facilities,
and (2) may, in any case, subject to the approval of the Board, establish branch offices and other facilities in its own Standard Metropolitan
Statistical Area, its own county or within thirty-five miles of its home
office, but only in its State of domicile. An association which was
formerly organized as a savings bank under State law shall be subject to the requirements of State law (including any regulations
promulgated thereunder and any sanction for the violation of any
such law or regulation) in effect at the time of conversion, in the State
of its original charter—
"(1) pertaining to discrimination in the extension of home
mortgage loans or adjustment in the terms of mortgage instruments based on neighborhood or geographical area,
:.
"(2) pertaining to requirements imposed under the Consumer
Credit Protection Act,
15 USC 1601
if the Board determines that State law and regulations impose more note,
stringent requirements than Federal law and regulations.".
SEC. 1203. Section 403(a) of the National Housing Act (12 U.S.C.
1726(a)) is amended by inserting after "Federal savings and loan
associations" the following: "and Federal mutual savings banks".
SEC. 1204. The first paragraph of section 6 (i) of the Home Owners'
Loan Act of 1933 (12 U.S.C. 1464(i)) is amended by inserting
" (including a savings bank)" after "member of a Federal Home Loan
Bank".
SEC. 1205. The Federal Deposit Insurance Act is amended by adding
at the end thereof the following new section:
u CONVERSION o r MUTUAL SAVINGS BANKS

"SEC. 26. With respect to any State-chartered insured mutual sav- Indemnification,
ings bank which converts into a Federal savings bank or merges or 12 USC 1831c.
consolidates into a Federal savings bank or a savings bank which is
(or within sixty days after the merger or consolidation becomes) an
insured institution within the meaning of section 401 of the National
Housing Act, the Corporation shall indemnify the Federal Savings
and Loan Insurance Corporation against any losses incurred by it
which arise out of losses incurred by the converting bank prior to
conversion as follows: One hundred per centum of such losses incurred
by the Federal Savings and Loan Insurance Corporation during the
first two years after conversion, 75 per centum during the third year,
50 per centum during the fourth year, and 25 per centum during the
fifth year. The Corporation and the Federal Savings and Loan Insurance Corporation shall, within six months after enactment hereof,
mutually agree on what shall be treated as 'losses incurred by it which
arise out of losses incurred by the converting bank prior to conversion'

92 STAT. 3712

PUBLIC LAW 95-630—NOV. 10, 1978
for purposes hereof and, failing such agreement, the General Accounting Office shall prescribe the meaning of those terms. Any conversion,
merger, or consolidation covered by this section shall not be deemed a
termination of insured status under section 8(a) of this Act.".
T I T L E XIII—NOW ACCOUNTS

Effective date.

12 use 1832
note.

26 use 401.
"Per account.'

26 use 408.

"Per account."

SEC. 1301. Section 2(a") of Public Law 93-100 (12 U.S.C. 1832(a))
is amended by inserting "New York," after "Vermont,".
SEC. 1302. This title shall take effect upon enactment.
TITLE XIV—INSURANCE OF IRA AND KEOGH
ACCOUNTS
SEC. 1401. (a) Section 11(a) of the Federal Deposit Insurance Act,
as amended (12 U.S.C. 1821 ( a ) ) , is amended by adding at the end
thereof the following new paragraph:
" (3) Notwithstanding any limitation in this Act or in any other provision of law relating to the amount of deposit insurance available for
the account of any one depositor, time and savings deposits in an
insured bank made pursuant to a pension or profit-sharing plan
described in section 401(d) of the Internal Revenue Code of 1954, as
amended, or made in the form of individual retirement accounts as
described in section 408(a) of the Internal Revenue Code of 1954, as
amended, shall be insured in the amount of $100,000 per account. As
to any plan qualifying under section 401(d) or section 408(a) of the
Internal Revenue Code of 1954, the term 'per account' means the present vested and ascertainable interest of each beneficiary under the plan,
excluding any remainder interest created by, or as a result of, the
plan.".
(b) Section 405(d) of the National Housing Act, as amended (12
U.S.C. 1728(d)), is amended by adding at the end thereof the following new paragraph:
"(3) Notwithstanding any limitation in this title or in any other
provision of law relating to the amount of deposit insurance available
for any one account, funds invested in an insured institution pursuant
to a pension or profit-sharing plan described in section 401(d) of the
Internal Revenue Code of 1954, as amended, and funds invested in an
insured institution in the form of individual retirement accounts as
described in section 408(a) of the Internal Revenue Code of 1954, as
amended, shall be insured in the amount of $100,000 per account. As
to any plan qualifying under section 401(d) or section 408(a) of the
Internal Revenue Code of 1954, the term 'per account' means the present vested and ascertainable interest of each beneficiary under the plan,
excluding any remainder interest created by, or as a result of, the
plan.".
(c) Section 207(c) of the Federal Credit Union Act, as amended
(12 U.S.C. 1787(c)), is amended by adding at the end thereof the
following paragraph:
"(3) Notwithstanding any limitation in this title or in any other
provision of law relating to the amount of insurance available for
the account of any one depositor or member, funds invested in a credit
union insured in accordance with this title pursuant to a pension or
profit-sharing plan described in section 401 (d) of the Internal Revenue Code of 1954, as amended, and funds invested in such an insured

PUBLIC LAW 95-630—NOV. 10, 1978
credit union in the form of individual retirement accounts as described
in section 408(a) of the Internal Kevenue Code of 1954, as amended,
shall be insured in the amount of $100,000 per account. As to any plan
qualifying under section 401(d) or section 408(a) of the Internal
Revenue Code of 1954, the term 'per account' means the present vested
and ascertainable interest of each beneficiary under the plan, excluding
any remainder interest created by, or as a result of, the plan.".
SEC. 1402. This title shall take effect upon enactment.
T I T L E XV—MISCELLANEOUS PROVISIONS

92 STAT. 3713

"Per account.'
26 u s e 401,
408.
Effective date.
12 u s e 1728
note.

SEC. 1501. Paragraph (2) of section 3(c) of Public Law 94-222 (15
U.S.C. 1666f note) is amended to read as follows :
"(2) The amendment made by paragraph (1) shall cease to be effective on February 27,1981.".
SEC. 1502. Section 803 of Public Law 95-128 (12 U.S.C. 2902) is
amended by adding at the end thereof the following new subsection:
"(4) A financial institution whose business predominately con- "Entire
sists of serving the needs of military personnel who are not located community
within a defined geographic area may define its 'entire community'
to include its entire deposit customer base without regard to geographic proximity.".
SEC. 1503. The last sentence of section 245 of the National Housing 12 use
Act is amended by inserting immediately before "limiting the amount 1715Z-10.
of interest" " ( 1 ) " and by inserting immediately before the period at
the end thereof the following: ", or (2) requiring a minimum amortization of principle or otherwise relating to the amortization of principle under the mortgage or loan".
SEC. 1504. Section 5169 of the Revised Statutes (12 U.S.C. 27) is
amended by adding at the end thereof the following new sentence: "A
National Bank xAssociation, to which the Comptroller of the Currency
has heretofore issued or hereafter issues such certificate, is not illegally
constituted solely because its operations are or have been required by
the Comptroller of the Currency to be limited to those of a trust company and activities related thereto."
Effective date.
SEC. 1505. This title shall take effect upon enactment.
12 u s e 27 note.

TITLE XVI—INTEREST RATE CONTROL
SEC. 1601. Section 7 of the Act of September 21, 1966 (Public Law
89-597) is amended by striking out "December 15,1978" and inserting
in lieu thereof "December 15, 1980".
SEC. 1602. Section 102 of Public Law 94-200 (12 U.S.C. 461 note)
is amended by adding at the end thereof the following new subsection:
"(c) In any State where any provision of State or Federal law
authorizes any savings and loan, building and loan, or homestead association (including any cooperative bank) the deposits or accounts of
which are insured by the Federal Savings and Loan Insurance Corporation or any mutual savings bank, as defined in section 3(f) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(f)), to offer any
third-party payment account, there shall be no differential in the maximum interest rate payable tjetween (1) banks (other than savings
banks) the deposits of which are insured by the Federal Deposit Insurance Corporation, and (2) savings and loan, building and loan, or
homestead associations (including cooperative banks) the deposits or
accounts of which are insured by the Federal Savings and Loan Insur-

12 u s e 461 note.

PUBLIC LAW 95-630—NOV. 10, 1 9 7 8

9 2 STAT. 3 7 1 4

Effective date.
12 u s e 461 note.

ance Corporation or mutual savings banks, as defined i n section 3 ( f ) of
t h e Federal Deposit Insurance A c t (12 U.S.C. 1 8 1 3 ( f ) ) , with respect
to savings deposits or accounts from which automatic transfers to the
institution itself or to a demand or other deposit account of t h e same
depositor or accountholder a t such institution may be made as a norm a l practice, p u r s u a n t t o a prearranged agreement with the depositor
or accountholder to make such transfers to cover checks, drafts, or simil a r instruments d r a w n by the depositor or accountholder on such institution. Notwithstanding any of the provisions of subsection (b) of
this section, the maximum rate of interest payable on a savings deposit
or account described in the preceding sentence shall be the rate which
banks (other t h a n m u t u a l savings banks) t h e deposits of which a r e
insured by t h e F e d e r a l Deposit Insurance Corporation m a y p a y on
such accounts.".
SEC. 1603. This title shall take effect upon enactment.
TITLE XVII—FEDEEAL SAVINGS AND LOAN
INVESTMENT AUTHORITY

Rules and
regulations.

SEC. 1701. W i t h t h e exception of undesignated p a r a g r a p h 15, 17,
and 23, section 5 (c) of the Home Owners' Loan Act of 1933 (12 U.S.C.
1464 ( c ) ) is amended to read as follows:
" ( C ) A n association may, t o such extent, a n d subject to such rules
^^^ regulations as t h e B o a r d may prescribe from time to time invest
in, sell, or otherwise deal with t h e following loans, or other investments :
" ( 1 ) LOANS OR INVESTMENTS WITHOUT PERCENTAGE OF ASSETS

LIMITATION.—^Without limitation as a percentage of assets, the
following are p e r m i t t e d :
"(A)

SAVINGS ACCOUNT LOANS.—Loans on t h e security of

its savings accounts.
"(B)

*

12 u s e 1713.

SINGLE FAMILY AND MULTIFAMILT MORTGAGE LOANS.—

Loans on the security of first liens upon residential real p r o p erty within one hundred miles of its home office or within the
State i n which such home office is located; loans so secured
shall not exceed $60,000 in principal amount (except t h a t with
respect t o residential real estate i n Alaska, Guam, and H a w a i i
the foregoing limitation may be increased b y n o t t o exceed
50 per centum) for each single family dwelling n o r exceed
such amount p e r room within t h e limits allowable ( a t t h e
time of the loan) i n section 207(c) (3) of the National Housi n g A c t f o r a n y other dwelling u n i t covered b y such lien.
"(C)

UNITED

STATES

GOVERNMENT

SECURITIES.—Invest-

ments in obligations of, or fully guaranteed as t o principal
and interest by, the United States.
" ( D ) FEDERAL HOME LOAN BANK AND FEDERAL NATIONAL
MORTGAGE ASSOCIATION SECURITIES.—Investments i n the stock

or bonds of a F e d e r a l home loan bank o r in t h e stock of t h e
F e d e r a l National Mortgage Association.
"(E)

12 u s e 1454,
1455.

FEDERAL HOME LOAN MORTGAGE CORPORATION INSTRU-

MENTS.—^Investments i n mortgages, obligations, or other
securities which a r e or ever have been sold by t h e F e d e r a l
H o m e L o a n Mortgage Corporation p u r s u a n t t o section 305
o r 306 of t h e F e d e r a l H o m e L o a n Mortgage Corporation Act.
"(F)

OTHER

GOVERNMENT

SECURITIES.—Investments

in

obligations, participations, securities, o r other instruments

92 STAT. 3 7 1 5

PUBLIC LAW 9 5 - 6 3 0 — N O V . 10, 1978

of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association, the Student L o a n M a r k e t i n g Association or the Government National
Mortgage Association, or any other agency of the L'nited
States and an association m a y issue and sell securities which
are guaranteed p u r s u a n t to section 306(g) of the National
12 use 1721.
H o u s i n g Act.
" ( G ) B A N K DEPOSITS.—Investments in the time deposits,
certificates, or accounts of any bank the deposits of which are
insured by t h e Federal Deposit Insurance Corporation.
" ( H ) STATE SECUKITIKS.—Investments in general obligations of a n y State or any political subdivision thereof.
"(I)

P U R C H A S E OF INSURED LOANS.—Purchase subject

to

all the provisions of p a r a g r a p h ( 1 ) ( B ) , except the area
restriction, loans secured by first liens on improved real estate
which are insured under provisions of the National H o u s i n g
Act, or insured as provided in the Servicemen's Readjustment 12 use 1701.
A c t of 1944 or chapter 37 of title 38 of the United States
38 use 1801.
Code.
"(J)

HOME

IMPROVEMENT

AND MOBILE

HOME

LOANS.—

Loans made for the repair, equipping, alteration, or improvement of any residential real property, and loans made for the
purpose of mobile home financing.
"(K)

INSURED LOANS TO FINANCE T H E PURCHASE OF FEE

SIMPLE.—Loans as to which the association h a s the benefit
of insurance under section 240 of t h e National H o u s i n g Act, 12 use 1715Z-5.
o r of a commitment or agreement therefor.
" ( L ) LOANS

TO FINANCIAL

INSTITUTIONS, BROKERS, AND

DEALERS.—Loans to financial institutions with respect to which
the United States or an agency or instrumentality thereof h a s
a n y function of examination or supervision, or to any broker
or dealer registered w i t h the Securities and Exchange Commission, secured by loans, obligations, or investments in which
the association has the statutory authority to invest directly.
"(M)

LIQUIDITY INVESTMENTS.—Investments which, at the

time of m a k i n g , are assets eligible for inclusion tow^ard the
satisfaction of any liquidity requirement imposed by the
B o a r d p u r s u a n t to section 5A of the Federal Home Loan
B a n k Act, but only to t h e extent t h a t the investment is per- 12 use 1425a.
mitted to be so included under regulations of the B o a r d or
is otherwise authorized.
" ( N ) INVESTMENT I N T H E NATIONAL HOUSING PARTNERSHIP
CORPORATION, PARTNERSHIPS, AND J O I N T VENTURES.—Invest-

ments in shares of stock issued by a corporation authorized
to be created p u r s u a n t to title IX'^of the H o u s i n g and U r b a n
Development A c t of 1968, and investments in any partner- 42 use 3931.
ship, limited p a r t n e r s h i p or joint venture formed pursuant to
42 use 3937.
section 907(a) or 907(c) of t h a t Act.
"(O)

HOUSING

AND

URBAN

DEVELOPMENT

GUARANTEED

INVESTMENTS.—^Loans as t o which the association has the
benefit of any g u a r a n t y u n d e r title TV of the H o u s i n g and
U r b a n Development Act of 1968 or under p a r t B of the U r b a n 42 use 3901.
G r o w t h and New Community Development Act of 1970 or 42 use 4511.
under section 802 of the H o u s i n g and Community Development A c t of 1974 as now or hereafter in effect, or of a com- 42 use 1440.
mitment o r agreement therefor.

92 STAT. 3716

PUBLIC LAW 95-630—NOV. 10, 1978
"(P)

N
12 u s e 1701.

STATE HOUSING CORPORATION INVESTMENTS.—^Invest-

ments in, commitments to invest in, loans to, o r commitments
to lend to any State housing corporation, j^rovided t h a t such
obligations or loans are secured directly, or indirectly t h r o u g h
an agent or fiduciary, by a first lien on improved real estate
which is insured under t h e provisions of the National Housing
Act, as amended, a n d t h a t in the event of default, t h e holder
of such obligations or loans would have the r i g h t directly, or
indirectly t h r o u g h an agent or fiduciary, t o cause to be subject t o the satisfaction of such obligations or loans the real
estate described in t h e first lien or the insurance proceeds
u n d e r the National H o u s i n g Act.
"(2)

L O A N S OR INVESTMENTS LIMITED TO 20 PER CENTUM OF

ASSETS.—The following loans or investments are x)ermitted, b u t
authority conferred in t h e following s u b p a r a g r a p h s is limited to
not in excess of 20 p e r centum of the assets of the association for
each s u b p a r a g r a p h :
" ( A ) O T H E R REAL ESTATE LOANS.—Loans on security of first

=

liens upon improved real estate; but t h e amount deemed to
be loaned in transactions which, except for excess i n amount,
would be eligible for such association u n d e r s u b p a r a g r a p h s
( 1 ) ( B ) or ( 1 ) ( I ) shall be only the outstanding amount of
such excess.
" ( B ) PARTICIPATION LOANS.—^Without regard t o t h e area
restriction contained in s u b p a r a g r a p h ( 1 ) ( B ) , investments
for the m a k i n g or purchase of participation interests in first
liens on residential real property.
"(3)

LOANS OR INVESTMENTS LIMITED TO 5 PER CENTUM

or

ASSETS.—The following loans or investments are permitted, b u t the
authority conferred in the following s u b p a r a g r a p h s is limited to
not in excess of 5 p e r centum of assets of the association for each
subparagraph:
" ( A ) EDUCATION LOANS.—^Loans made for t h e payment of
expenses of college, university, or vocational education.
" ( B ) L A N D ACQUISITION.—An association whose general
reserves, surplus, a n d undivided profits aggregate a sum in
excess of 5 p e r centum of its withdrawable accounts is
authorized to invest in, subject to the area restriction contained in s u b p a r a g r a p h (1) ( B ) , loans to finance t h e acquisition a n d development of l a n d for p r i m a r y residential usage.
"(C)

H O U S I N G FACILITIES FOR T H E AGING.—Subject to the

area restriction contained in s u b p a r a g r a p h ( 1 ) ( B ) , amortized loans which are secured by first liens upon improved
real estate used to provide housing facilities for the aging.
"(D)

42 u s e 5301.

COMMUNITY

DEVELOPMENT

INVESTMENTS.—Invest-

ments in real property and obligations secured by liens on
real property located within a geographic area or neighborhood receiving concentrated development assistance by a
local government under title I of the Housing a n d Community
Development A c t of 1974, as amended b u t no investment i n
real property may exceed an aggregate investment of 2 per
centum of the assets of the association.
" ( E ) NONCONFORMING LOANS.—Loans upon the security of
or respecting real property or interests therein used for primarily residential or farm purposes t h a t do not comply with
the limitations of this section.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3717

" ( F ) CONSTRUCTION LOANS, W I T H OR WITHOUT SECURITY.—

Subject t o t h e area restriction of subparagraph ( 1 ) ( B ) ,
investments not exceeding t h e greater of ( A ) the sum of its
surplus, undivided profits, and reserves or ( B ) 5 p e r centum
of the assets of the association, in loans the principal purpose
of which is to provide financing with respect to what is or is
expected t o become primarily residential real estate where
(i) t h e association relies substantially for repayment on the
borrower's general credit standing a n d forecast of income,
with or without other security, o r (ii) t h e association relies
on other assurances for repayment, including but not limited
to a g u a r a n t y or similar obligation of a t h i r d party, and, in
either case described in clause (i) or ( i i ) , regardless of
whether or not t h e association takes security; a n d investments under this subsection shall n o t be included in any
percentage of assets or other percentage referred to in this
subsection.
"(4)

O T H E R LOANS AND IN^^ESTMENTS.—The following

*"'^,

addi-

tional loans a n d other investments t o t h e extent authorized
below:
"(A)

B U S I N E S S DEVELOPMENT CREDIT CORPORATIONS.—An

association whose general reserves, surplus a n d undivided
profits aggregate a sum in excess of 5 per centum of its
withdrawable accounts is authorized to invest in, lend to, or
to commit itself to lend to, any business development credit
corporation incorporated in the State in which the home
office of t h e association is located in the same manner a n d to
the same extent as savings a n d loan associations chartered
by such State are authorized, b u t t h e aggregate amount of
such investments, loans, a n d commitments of any such
association shall not exceed one-half of 1 p e r centum of the
total outstanding loans of t h e association or $250,000,
whichever is less.
"(B)

SERVICE CORPORATIONS.—Investments in the capital

stock, obligations, or other securities of any corporation
organized under the laws of the State in which the home
office of the association is located, if the entire capital stock
of such corporation is available for purchase only by savings
and loan associations of t h a t State a n d by Federal associations having their home offices therein, b u t no association
may make any investment under this subparagraph if its
aggregate outstanding investment under this s u b p a r a g r a p h
would exceed 1 p e r centum of the assets of the association.
"(C)

FOREIGN ASSISTANCE, CERTAIN GUARANTEED LOANS.—

(i) Loans secured by mortgages as t o which the association
has t h e benefit of insurance under title X of the National
Housing Act or of a commitment or agreement for such insurance, or (ii) acquire and hold investments in housing project
loans having the benefit of any guaranty under section 221 of
the Foreign Assistance Act of 1961 or loans having the bene- 22 USC 2181.
fit of a n y guaranty under section 224 of such Act, or any 22 USC 2184.
commitment or agreement with respect to such loans made
p u r s u a n t t o either of such sections a n d in the share capital
and capital reserve of the Inter-American Savings and Loan
Bank. T h i s authority extends to the acquisition, holding, and
disposition of loans having the benefit of any guaranty under
section 221 or 222 of such A c t as hereafter amended or 22 USC 2181,
2182.

92 STAT. 3718

PUBLIC LAW 95-630—NOV. 10, 1978
extended, or of any commitment or agreement for any such
guaranty. Investments under clause (i) of this subparagraph
shall not be included in a n y percentage of assets or other
percentage referred to in this section. Investments under
clause (ii) of this s u b p a r a g r a p h shall not exceed, in the case
of any association, 1 p e r centum of t h e assets of such
association.
" ( D ) STATE AND LOCAL GOVERNMENT OBLIGATIONS.—^An asso-

V

ciation whose general reserves, surplus, and undivided profits
aggregate a sum in excess of 5 per centum of its withdrawable
accounts is authorized to invest in obligations which constitute
prudent investments, as defined by t h e Board, of its home
State and political subdivisions thereof (including a n y
agency, corporation, or instrumentality) : Provided^ T h a t
the proceeds of such obligations are t o be used for rehabilitation, financing, or the construction of residential real estate:
Arid -provided further, T h a t the aggregate amount of all
investments under this s u b p a r a g r a p h shall n o t exceed the
amount of t h e association's general reserves, surplus and
undivided profits.
" ( 5 ) CONVERTED STATE-CHARTERED ASSOCIATIONS.—Any associa-

"Residential
mortgage.'

tion which is converted from a State-chartered institution m a y
continue to make loans in t h e territory in which i t made loans
while operating under State charter.
" ( 6 ) DEFINITIONS.—As used in this section—
" ( A ) t h e terms 'residential real property' or 'residential
real estate' include leaseholds a n d mean homes (including
condominiums and cooperatives except t h a t in connection
with loans on individual cooperative units, t h e first lien
requirement shall not apply but such loans shall be adequately
secured as defined by the B o a r d ) , combinations of homes and
business property, other dwelling units, or combinations of
dwelling units including homes and business p r o p e r t y involving only minor or incidental business use;
' ' ( B ) t h e term 'loans' includes obligations a n d extensions
or advances of credit; a n d any reference t o a loan or investment includes an interest in such a loan or investment; and
" ( C ) the term 'State' means any State of the United States,
the District of Columbia, the Commonwealth of P u e r t o Eico,
the Virgin Islands, t h e Canal Zone, Guam, American Samoa,
and any territory or possession of the United States.",
(b) Undesignated p a r a g r a p h 15 of such section 5(c) is transferred
to t h e end of section 5 of t h e H o m e Owners' Loan A c t of 1933 (12
U.S.C. 1464) and redesignated as subsection ( m ) of t h a t section,
undesignated p a r a g r a p h 17 of such section 5(c) is transferred t o t h e
end of section 5 of t h e Home Owners' Loan A c t of 1933 a n d redesignated as subsection (1) of t h a t section, and undesignated p a r a g r a p h 23
of such section 5 ( c ) is transferred to t h e end of section 5 ( b ) of t h e
Home Owners' Loan Act of 1933 and redesignated as section 5(b) ( 3 ) .
SEC. 1702. Section 302(h) of the Federal H o m e Loan Mortgage Corporation Act (12 U.S.C. 1451 ( h ) ) is amended by adding the following
at the end thereof: " T h e term 'residential mortgage' is also deemed to
include a secured loan or advance of credit the proceeds of which are
intended to finance t h e rehabilitation, renovation, modernization,
refurbishment, or improvement of properties as to which t h e Corporation m a y purchase a 'residential mortgage' as defined under t h e first

PUBLIC LAW 95-630—NOV. 10, 1978
sentence of this subsection. The maximum principal obligation of loans
purchased by virtue of the preceding sentence shall not exceed the
dollar limits prescribed by the Federal Home Loan Bank Board with
respect to similar types of loans made by Federal savings and loan
associations. A 'secured loan or advance of credit' is one in which a
security interest is taken in the rehabilitated, renovated, modernized,
refurbished, or improved property.".
SEC. 1703. This title shall take effect upon enactment.
TITLE XVIII—NATIONAL CKEDIT UNION CENTRAL
LIQUIDITY FACILITY
SEC. 1801. This title may be cited as the "National Credit Union
Central Liquiditv Facility Act"',
SEC. 1802. The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is
amended by adding at the end thereof the following new subchapter:

92 STAT. 3719

"Secured loan or
advance of
credit."
Effective date.
12 USC 1464
note.
National Credit
Union Central
Liquidity Facility
Act.
Short title.
12 USC 1751
note.

"SUBCHAPTER III—CENTRAL LIQUIDITY
FACILITY
"SEC. 301. The Congress finds that the establishment of a National 12 USC 1795.
Credit Union Central Liquidity Facility is needed to improve general
financial stability by meeting the liquidity needs of credit unions and
thereby encourage savings, support consumer and mortgage lending,
and provide basic financial resources to all segments of the economy.
a DEFINITIONS

"SEC. 302. As used in this subchapter, the term—
"(1) 'liquidity needs' means the needs of credit unions primarily serving natural persons for—
"(A) short-term adjustment credit available to assist in
meeting temporary requirements for funds or to cushion more
persistent outflows of funds pending an orderly adjustment
of credit union assets and liabilities;
"(B) seasonal credit available for longer periods to assist
in meeting seasonal needs for funds arising from a combination of expected patterns of movement in share and deposit
accounts and loans; and
"(C) protracted adjustment credit available in the event
of unusual or emergency circumstances of a longer term
nature resulting from national, regional or local difficulties.
"(2) 'Central Liquidity Facility' or 'Facility' means the
National Credit Union Central Liquidity Facility;
"(3) 'paid-in and unimpaired capital and surplus' means the
balance of the paid-in share accounts and deposits as of a given
date, less any loss that may have been incurred for which there
is no reserve or which has not been charged against undivided
earnings, plus the credit balance (or less the debit balance) of
the undivided earnings account as of a given date, after all losses
have been provided for and net earnings or net losses have been
added thereto or deducted therefrom. Reserves shall not be considered as part of surplus, and
"(4) 'member' means a Regular or an Agent member of the
Facility.

12 USC 1795a.

92 STAT. 3720

PUBLIC LAW 95-630—NOV. 10, 1978
"ESTABLISHMENT or

T H E N A T I O N A L CREDIT U N I O N A D M I N I S T R A T I O N

CENTRAL L I Q U I D I T Y FACILITY
12 u s e 1795b.

" S E C . 303. There is hereby created the National Credit Union Administration Central Liquidity Facility. T h e Central Liquidity Facility
shall exist within the National Credit Union Administration and be
managed by the Administrator. T h e United States district court
shall have original jurisdiction over any case to which t h e Administrator on behalf of the Facility is a party, without regard to the
amount in controversy.
"MEMBERSHIP

12 u s e 1795c.

Rules and
regulations.

Stock
subscriptions.

Membership
termination,
hearing
opportunity.

" S E C . 304. (a) A credit union primarily serving n a t u r a l persons
may be a Regular member of the Facility by subscribing to the capital
stock of the Facility in an amount not less t h a n one-half of 1 per
centum of the credit union's paid-in and unimpaired capital and
surplus.
(b) A credit union or group of credit unions, primarily serving
other credit unions, may be an Agent member of the Facility by—
" (1) obtaining the approval of the A d m i n i s t r a t o r ;
" ( 2 ) subscribing to the capital stock of the Facility in an
amount not less than one-half of 1 per centum of the paid-in and
unimpaired capital and surplus of all those credit unions which
primarily serve natural persons, which are members of such credit
union or of any credit union comprising such credit union group,
and which are not regular members;
" (3) agreeing to comply with rules and regulations the Administrator shall prescribe with respect to, but not limited to, management quality, asset and liability safety and soundness, internal
operating and control practices and procedures, and participation
of natural persons in the affairs or such credit union or credit
union g r o u p ; and
" ( 4 ) agreeing to submit to the supervision of the Administrator which shall include, but not be limited to, reporting requirements and periodic unrestricted examinations.
" ( c ) Stock subscriptions provided for in subsections (a) and ( b ) ( 2 )
of this section shall be—
" ( 1 ) based on an arithmetic average of paid-in capital and surplus over the six months preceding application and membership;
and
" ( 2 ) adjusted at the close of each calendar year in accordance
with an arithmetic average of paid-in capital and surplus over
a period determined by the Administrator.
" ( d ) A n Agent member of the Facility shall perform for its member credit unions those functions required by the Administrator to
carry out this subchapter.
" ( e ) (1) A member of the Facility whose capital stock subscription
constitutes less than 5 per centum of such stock outstanding, may
withdraw from membership in the Facility six months after notifying the Administrator of its intention to do so.
" ( 2 ) A member of the Facility whose capital stock subscription
constitutes 5 per centum or more of such stock outstanding, may
withdraw from membership in t h e Facility twenty-four months after
notifying the Administrator of its intention to do so.
" ( 3 ) T h e Administrator may terminate membership in the Facility
if, after opportunity for a hearing, the Administrator determines a
member has failed to comply with any provision of this subchapter or
regulation issued p u r s u a n t thereto.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3721

' ' C A P I T A L STOCK

"SEC. 305. (a) As soon as practicable, the Administrator shall open Subscriptions,
books for subscriptions to the capital stock of the Facility. The mini- 12 USC 1795d.
mum subscription shall be $50.
"(b) The capital stock of the Facility—
"(1) shall be divided into shares having a par value of $50
each;
" (2) shall be paid for with cash or with securities of the United
States or any Agency thereof in accordance with requirements the
Administrator may impose;
"(3) shall share in dividend distributions without preference
and at rates to be determined by the Administrator; and
"(4) shall not be transferred or hypothecated except as provided for herein.
"(c) When circumstances require that all or a portion of a member's
stock be redeemed by the Facility, the Administrator shall pay an
amount equal to what the member originally paid for the stock less
any amount owed by the member to the Facility.
"(d) At least one-half of the payment for the subscription amount
required for membership under section 304 of this subchapter shall
be transferred to the Facility. The remainder may be held by the
member on call of the Administrator and shall be invested in assets
designated by the Administrator.
"(e) A credit union or credit union group that becomes a member
of the Facility later than six months after the date the Administrator
opens books for capital stock subscriptions, may not borrow or receive
advances from the Facility without approval by the Administrator for
a period of six months after becoming a member.
a EXTENSIONS O r CREDIT

"SEC. 306. (a) (1) A member may apply for an extension of credit Application.
from the Facility to meet its liquidity needs. The Administrator shall 12 USC 1795e.
approve or deny any such application within five working days after
receiving it. The Administrator shall not approve an application for
credit the intent of which is to expand credit union portfolios.
"(2) The Administrator may advance funds to a member on terms
and conditions prescribed by the Administrator after giving due consideration to creditworthiness.
"(3) The Administrator shall not advance funds for the benefit of
a credit union whose share or deposit accounts are insured by a State
share or deposit guaranty credit union, insurance corporation, or
guaranty association, without consultation with the appropriate State
share or deposit guaranty credit union, insurance corporation, or
guaranty association.
"(b) The Secretary of the Treasury is authorized to lend to the Certification.
Facility up to $500,000,000, in the event the Administrator certifies
to the Secretary that the Facility does not have sufficient funds to meet
liquidity needs of credit unions. Any such loan shall bear an interest
•
rate not greater than one-eighth of 1 per centum above the current
average market yield on outstanding obligations of the United States
with remaining time to maturity comparable to the maturity of such
loan. The authority of the Secretary to lend under this subsection
shall be limited to such extent or in such amounts as are provided in
advance in appropriation Acts.

39-194 O—80—pt. 3

69 : QL3

92 STAT. 3722

PUBLIC LAW 95-630—NOV. 10, 1978
"POWERS OF THE ADMINISTRATOR

12 use 1795f.

"SEC. 307. The Administrator on behalf of the Facility shall have
the ability to—
"(1) prescribe the manner in which the general business of the
Facility shall be conducted;
Rules and
;-* "(2) prescribe rules and regulations to carry out this subregulations,
chapter;
;,; I " (3) determine the expenditures incurred by the Administration
to carry out this subchapter, and the expenditures incurred by
the Facility to carry out subchapters I and I I of this chapter, and
v.rr annually assess the Facility and the Administration accordingly;
" (4) borrow from—
,,;.
" (A) any source, provided that the total face value of these
obligations shall not exceed twelve times the subscribed capir' iA(f>!' j tal stock and surplus of the Facility; and
, J,' ,
"(B) the National Credit Union Share Insurance Fund up
, ,:
to $500,000 to defray initial organizational and operating
expenses of the Facility at such rates and terms consistent
uw.
with prevailing market conditions;
"(5) guarantee performance of the terms of any financial obligation of a member but only when such obligation bears a clear
^, and conspicuous notice on its face that only the resources of the
Facility underlie such guarantee;
"(6) purchase any asset from a member with the member's
endorsement;
"(7) invest in obligations of the United States or any agency
thereof;
"(8) make deposits in federally insured financial institutions
and make investments in shares or deposits of credit unions;
"(9) sue and be sued, complain, and defend, in any State or
Federal court;
r,.'!:, •••(' |'> ,
" (10) adopt a seal;
.'"V": 'j-M s\
"(11) pursue to final disposition by way of compromise or
otherwise claims both for and against the United States (other
., than tort claims, claims involving administrative expenses, and
claims in excess of $5,000 arising out of contracts for construction,
repairs, and the purchase of supplies and materials) which are
not in litigation and have not been referred to the Department of
Justice;
•^^j
"(12) appoint officers and employees to assist in carrying out
'i,
this subchapter, who shall be appointed subject to the provisions
,,,' of title 5, United States Code;
'j4,
"(13) conduct business, carry on operations, have offices, and
„.^' exercise the powers granted by this subchapter in any State or
territory;
,! r:s-»;VittsO '
"(1'^) lease, purchase, or otherwise acquire and own, hold,
improve, use, or otherwise deal in and with property, real, personal, or mixed, or any interest therein, wherever situated;
Contracts.
"(15) enter into contracts with any public or private organization, partnership, corporation, or individual, to the extent or in
such amounts as are provided in advance in appropriation Acts;
and
"(16) advance funds on a fully secured basis to a State credit
^^
union share or deposit insurance corporation, guaranty credit
union, or guaranty asso*ation. Such advance shall not exceed
twelve months in maturity, shall be relent at an interest rate not
exceeding that imposed by the Facility, and shall not be renewable.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3723

a DEPOSITORIES, CUSTODIANS, AND r i S C A I i AGENTS

"SEC. 308. The Federal Keserve Banks are authorized to act as 12 USC 1795g.
depositories, custodians and/or fiscal agents for the Central Liquidity
Facility in the general performance of its powers conferred by this
subchapter. Each Federal Reserve Bank when designated by the
Administrator as fiscal agent for the Central Liquidity Facility, shall
be entitled to be reimbursed for all expenses incurred as such fiscal
agent.
" A U D I T o r FINANCIAL TRANSACTIONS

s

"SEC. 309. The Comptroller General of the United States shall audit Rules and
the Central Liquidity Facility under such rules and regulations as regulations,
the Comptroller may prescribe.
12 USC 1795h.
a A N N U A L REPORT

"SEC. 310. The annual report required by section 102(e) shall include 12 USC 1795i.
a full report of the activities of the Facility.".
SEC. 1803. (a) Paragraph (6) of section 107 of the Federal Credit
Union Act (12 U.S.C. 1757) is amended by inserting "from the Central Liquidity Facility," after "prescribed,".
(b) Paragraph (7) of such section is amended by striking the word
"and" preceding " ( H ) " , and adding at the end thereof the following:
"and (J) in the capital stock of the National Credit Union Central
Liquidity Facility;".
(c) Paragraph (9) of such section is amended by inserting ", except
as authorized by the Administrator in carrying out the provisions of
subchapter I I I , " after "exceeding".
SEC. 1804. Section 709 of title 18 of the United States Code is
amended by striking the fourth paragraph and inserting in lieu thereof
the following new paragraph:
"Whoever, other than a bona fide organization or association of False advertising.
Federal or State credit unions or except as permitted by the laws of
the United States, uses as a firm or business name or transacts business
using the words 'National Credit Union', 'National Credit Union
Administration', 'National Credit Union Board', 'National Credit
u - . ,,
Union Share Insurance Fund', 'Share Insurance', or 'Central Liquidity
Facility', or the letters 'NCUA', 'NCUSIF', or 'CLF', or any other
combination or variation of those words or letters alone or with other
words or letters, or any device or symbol or other means, reasonably
calculated to convey the false impression that such name or business
has some connection with, or authorization from, the National Credit
r- ; ,. j :
Union Administration, the Government of the United States, or any
agency thereof, which does not in fact exist, or falsely advertises or
otherwise represents by any device whatsoever that his or its business,
product, or service has been in any Avay endorsed, authorized, or
approved by the National Credit Union Administration, the Government of the United States, or any agency thereof, or falsely advertises
or otherwise represents by any device whatsoever that his or its deposit
liabilities, obligations, certificates, shares, or accounts are insured
under the Federal Credit Union Act or by the United States or any
instrumentality thereof, or being an insured credit union as defined
in that Act falsely advertises or otherwise represents by any device
whatsoever the extent to which or the manner in which share holdings in such credit union are insured under such Act; or".

92 STAT. 3724

PUBLIC LAW 95-630—NOV. 10, 1978
SEC. 1805. Section 201 of the Government Corporation Control Act
(31 U.S.C. 856) is amended—
(1) by striking out "and" before " (8)"; and
(2) by inserting before the period at the end thereof a comma
and the following: "and (9) the National Credit Union Administration Central Liquidity Facility".
SEC. 1806. This title shall take effect on October 1,1979.

Effective date.
12 u s e 1795
note.
T I T L E XIX—EXPORT-IMPORT BANK ACT
Export-Import
AMENDMENTS
Bank Act
Amendments of
1978.
SEC. 1901. That this title may be cited as the "Export-Import Bank
Short title.
Act Amendments of 1978".
12 u s e 635 note.
PRENOTIFICATION
12 u s e 635.

SEC. 1902. Section 2(b)(3) of the Export-Import Bank Act of
1945 is amended—
(1) by striking out "No" in the first sentence and inserting in
lieu thereof "Except as provided by the fourth sentence of this
paragraph, no";
(2) by striking out "$60,000,000" in the first sentence and
inserting in lieu thereof "$100,000,000"; and
(3) by adding at the end thereof the following: "If the Bank
submits a statement to the Congress under this paragraph and
either House of Congress is in an adjournment for a period which
continues for at least ten days after the date of submission of
the statement, then any such loan or guarantee or combination
thereof may, subject to the second sentence of this paragraph,
be finally approved by the Board of Directors upon the termination of the twenty-five-day period referred to in the first
sentence of this paragraph or upon the termination of a thirtyfive-calendar-day period (which commences upon the date of submission of the statement), whichever occurs sooner.".
FRACTIONAL CHARGES

12 use 635.

SEC. 1903. Section 2(c)(1) of the Export-Import Bank Act of
1945 is amended by striking out "$20,000,000,000" and inserting in
lieu thereof "$25,000,000,000".
DENIAL or EXPORT APPLICATIONS

12 use 635.

SEC. 1904. Section 2 ( b ) ( 1 ) ( B ) of the Export-Import Bank Act
of 1945 is amended by striking out the remainder of the paragraph
after "and employment in the United States," and inserting in lieu
thereof "and shall give particular emphasis to the objective of
strengthening the competitive position of United States exporters
and thereby of expanding total United States exports. Only in cases
where the President determines that such action would be in the
national interest where such action would clearly and importantly
advance United States policy in such areas as international terrorism,
nuclear proliferation, environmental protection and human rights,
should the Export-Import Bank deny applications for credit for
nonfinancial or noncommercial considerations".

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3725

AUTHORIZATION

SEC. 1905. Section 7(a) of the Export-Import Bank Act of 1945 12 USC635e.
is amended by striking out "$25,000,000,000" and inserting in lieu
thereof "$40,000,000,000".
EXTENSION o r AUTHORITY

SEC. 1906. Section 8 of the Export-Import Bank Act of 1945 is 12 USC 635f.
amended by striking out "December 31, 1978" and inserting in lieu
tliereof "September 30, 1983".
E N E R G Y POLICY

SEC. 1907. (a) Section 2(b)(1) of the Export-Import Bank Act
of 1945 is amended by adding at the end thereof the following:
"(C) Consistent with the policy of section 501 of the Nuclear NonProliferation Act of 1978 and section 119 of the Foreign Assistance
Act of 1961, the Board of Directors shall name an oiRcer of the Bank
whose duties shall include advising the President of the Bank on
Avays of piomoting the expoit of goods and services to be used in the
development, production, and distribution of nonnuclear renewable
energy resources, disseminating information concerning export opportunities and the availability of Bank support for such activities, and
acting as a liaison between the Bank and the Department of Commerce
and other appropriate departments and agencies.".
(b) Section 9(b) of such Act is amended by adding at the end
thereof the following: "In addition, the Bank shall include in the
report a description of specific activities and programs undertaken by
it to achieve the policy of section 501 of the Nuclear Non-Proliferation
Act of 1978, and section 119 of the Foreign Assistance Act of 1961,
as required by section 2(b) (1) (C) of this Act.".

12 USC 635.
^nte, p. 148.
22 USC 2151q.

12 USC 635g.

Supra.

EXPORT CREDIT COMPETITION

SEC. 1908. (a) The President is authorized and requested to begin
negotiations at the ministerial level with other major exporting countries to end predatory export financing programs and other forms of
export subsidies, including mixed ci-edits, in third country markets
as well as within the United States. The President shall report to the
Congiess prior to January 15, 1979, on progress toward meeting the
goals of this section.
(b) The Export-Import Bank of the United States is authorized
to provide guarantees, insurance, and extensions of credit at rates and
terms and other conditions which are, in the opinion of the Board of
Directors of the Bank, competitive with those provided by the government-supported export credit instrumentalities of other nations.
SEC. 1909. Section 2(b) of the Export-Import Bank Act of 1945
is amended by inserting at the end thereof the following new
paragraph:
"(7) The Bank shall supplement but not compete with private
capital and the programs of the Commodity Credit Corporation to
ensure that adequate financing will be made available to assist the
export of agricultural commodities, except that, consistent with section
2(b) (1) (A^ of this Act, the Bank in assisting any such export transactions shall, in cooperation with the export financing instrumentalities
of other governments, seek to minimize competition in Government-

Negotiations,
12 USC 635a-l.
Report to
Congress,

,
12 USC 635.

92 STAT. 3726

PUBLIC LAW 95-630—NOV. 10, 1978

supported export financing, and shall, in cooperation with other
appropriate United States Government agencies, seek to reach international agreements to reduce Government subsidized export financing.
In order to carry out the purposes of this subsection, the Bank shall
consult with the Secretary of Agriculture and where the Secretary
of Agriculture has recommended against Bank financing of the
export of a particular agricultural commodity, shall take such recommendation into consideration in determining whether to provide
credit or other assistance for any export sale of such commodity, and
shall consider the importance of agricultural commodity exports to
the United States export market and the nation's balance of trade
in deciding whether or not to provide assistance under this subsection. The Bank shall include in the report to Congress under section 9(a) of this Act a description of the measures undertaken by it
pursuant to this subsection.".
SEC. 1910. Section 2(b) (1) (A) of the Export-Import Bank Act of
12 use 635.
1945 is amended by striking the words "goods and related services"
in the first sentence and inserting in lieu thereof "manufactured goods,
agricultural products, and other goods and services".
Regulations.
SEC. 1911. The Bank shall implement such regulations and proce12 u s e 635adures as may be appropriate to insure that full consideration is given
to the extent to which any loan or financial guarantee is likely to
have an adverse effect on industries, including agriculture, and employment in the United States, either by reducing demand for goods
produced in the United States or by increasing imports to the United
States. To carry out the purposes of this subsection, the Bank shall
request, and the United States International Trade Commission shall
furnish, a report assessing the impact of the Bank's activities on
industries and employment in the United States. Such report shall
include an assessment of previous loans or financial guarantees and
shall provide recommendations concerning general areas which may
adversely affect domestic industries, including agriculture, and
employment.
Inquiry.
SEC. 1912. (a) (1) Upon receipt of information that foreign sales
12 u s e 635a-3. to the United States are being offered involving foreign official export
credits which exceed limits under existing standstills, minutes, or
practices to which the United States and other major exporting countries have agreed, the Secretary of the Treasury shall immediately
t"it!f*t^H
conduct an inquiry to determine whether "noncompetitive financing"
••'W
is being offered.
(2) If the Secretary determines that such foreign "noncompetitive"
financing is being offered, he shall request the immediate withdrawal of
such financing by the foreign official export credit agency involved.
Notification.
(3) If the offer is not withdrawn or if there is no immediate response
to the withdrawal request, the Secretary of the Treasury shall notify
the country offering such financing and all parties to the proposed
:r.)?:J
transaction that the Eximbank may be authorized to provide competing United States sellers with financing to match that available
through the foreign official export financing entity.
(b) The Secretary of the Treasury shall only issue such authorization to the Bank to provide guarantees, insurance and credits to competing United States sellers, if he determines that:
(1) the availability of foreign official noncompetitive financing
is likely to be a determining factor in the sale, and
(2) the foreign noncompetitive financing has not been withdrawn on the date the Bank is authorized to provide competitive
financing.

PUBLIC LAW 95-630—NOV. 10, 1978
(c) Upon receipt of authorization by the Secretary of the Treasury,
the Export-Import Bank may provide financing to match that offered
by the foreign official export credit entity: Provided, however., That
loans, guarantees and insurance provided under this authority shall
conform to all provisions of the Export-Import Bank Act of 1945,
as amended.
SEC. 1913. No environmental rule, regulation, or procedure shall
become effective vidth regard to exports subject to the provisions of
22 U.S.C. 3201 et seq., the Nuclear Non-Proliferation Act of 1978,
until such time as the President has reported to Congress on the progress achieved pursuant to section 407 of the Act (42 U.S.C. 2153e)
entitled "Protection of the Environment" which requires the President to seek to provide, in agreements required under the Act, for
cooperation between the parties in protecting the environment from
radioactive, chemical or thermal contaminations arising from peaceful nuclear activities.
SEC. 1914. Section 7(a) of the Export-Import Bank Act of 1945 is
amended by adding at the end thereof the following: "All spending
authority provided under this Act shall be effective for any fiscal
year only to such extent or in such amounts as are provided in appropriation Acts.".
SEC. 1915. Section 2(b) of the Export-Import Bank Act of 1945
(12 U.S.C. 635(b)) is amended by inserting at the end thereof the
following new paragraph:
"(8) In no event shall the Bank guarantee, insure, or extend credit
or participate in the extension of credit (a) in support of any export
which would contribute to enabling the Government of the Kepublfc
of South Africa to maintain or enforce apartheid; (b) in support of
any export to the Government of the Republic of South Africa or its
agencies unless the President determines that significant progress
toward the elimination of apartheid has been made and transmits to
the Congress a statement describing and explaining that determination; or (c) in support of any export to other purchasers in the
Republic of South Africa unless the United States Secretary of State
certifies that the purchaser has endorsed and has proceeded toward
the implementation of the following principles: nonsegregation of
the races in all work facilities; equal and fair employment for all
employees; equal pay for equal work for all employees; initiation and
development of training programs to prepare nonwhite South Africans
for supervisory, administrative, clerical, and technical jobs; increasing the number of nonwhites in management and supervisory positions; a willingness to engage in collective bargaining with labor
unions; and improving the quality of life for employees in such
areas as housing, transportation, schooling, recreation, and health
facilities.".
SEC. 191*6. Section 2(b) (1) (B) of the Export-Import Bank Act of
1945 is amended by inserting after "in matters affecting small business concerns;" the following: "that the Bank should give emphasis
to assisting new and small business entrants in the agricultural export
market, and shall, in cooperation with other relevant Government
agencies, including the Commodity Credit Corporation, develop a
program of education to increase awareness of export opportunities
among small agribusinesses and cooperatives;".
SEC. 1917. This title shall take effect upon enactment.

92 STAT. 3727

42 u s e 2153e-l.

12 u s e 635e.

Government of
the Republic of
South Africa
support,
extension of
credit
prohibition.

Effective date.
12 u s e 635
note.

92 STAT. 3728

PUBLIC LAW 95-630—NOV. 10, 1978
T I T L E XX—ELECTRONIC FUND TRANSFERS
SEC. 2001. The Consumer Credit Protection Act (15 U.S.C. 1601
et seq.) is amended by adding at the end thereof the following new
title:

Electronic Fund
Transfer Act.
15 u s e 1601
note.
15 u s e 1693.

15 use 1693a.

"TITLE IX—ELECTRONIC F U N D TRANSFERS
"§ 901. Short title
"This title may be cited as the 'Electronic Fund Transfer Act'.
"§ 902. Findings and purpose
" (a) The Congress finds that the use of electronic systems to transfer
funds provides the potential for substantial benefits to consumers.
However, due to the unique characteristics of such systems, the application of existing consumer protection legislation is unclear, leaving
the rights and liabilities of consumers, financial institutions, and intermediaries in electronic fund transfers undefined.
"(b) It is the purpose of this title to provide a basic framework
establishing the rights, liabilities, and responsibilities of participants
in electronic fund transfer systems. The primary objective of this title,
however, is the provision of individual consumer rights.
Ǥ 903. Definitions
"As used in this title—
"(1) the term 'accepted card or other means of access' means
a card, code, or other means of access to a consumer's account
for the purpose of initiating electronic fund transfers when the
person to whom such card or other means of access was issued has
requested and received or has signed or has used, or authorized
another to use, such card or other means of access for the purpose
of transferring money between accounts or obtaining money, property, labor, or services;
"(2) the term 'account' means a demand deposit, savings
deposit, or other asset account (other than an occasional or incidental credit balance in an open end credit plan as defined in
section 103(i) of this Act), as described in regulations of the
Board, established primarily for personal, family, or household
purposes, but such term does not include an account held by a
financial institution pursuant to a bona fide trust agreement;
"(3) the term 'Board' means the Board of Governors of the
Federal Reserve System;
" (4) the term 'business day' means any day on which the offices
of the consumer's financial institution involved in an electronic
fund transfer are open to the public for carrying on substantially
all of its business functions;
" (5) the term 'consumer' means a natural person;
"(6) the term 'electronic fund transfer' means any transfer
of funds, other than a transaction originated by check, draft, or
similar paper instrument, which is initiated through an electronic
terminal, telephonic instrument, or computer or magnetic tape so
as to order, instruct, or authorize a financial institution to debit
or credit an account. Such term includes, but is not limited to,
point-of-sale transfers, automated teller machine transactions,

PUBLIC LAW 95-630—NOV. 10, 1978
direct deposits or withdrawals of funds, and transfers initiated
by telephone. Such term does not include—
"(A) any check guarantee or authorization service which
does not directly result in a debit or credit to a consumer's
account:
"(B) any transfer of funds, other than those processed by
automated clearinghouse, made by a financial institution on
behalf of a consumer by means of a service that transfers
funds held at either Federal Keserve banks or other depository
institutions and which is not designed primarily to transfer
funds on behalf of a consumer;
"(C) any transaction the primary purpose of which is the
purchase or sale of securities or commodities through a
broker-dealer registered with or regulated by the Securities
and Exchange Commission;
"(D) any automatic transfer from a savings account to
a demand deposit account pursuant to an agreement between
a consumer and a financial institution for the purpose of
covering an overdraft or maintaining an agreed upon minimum balance in the consumer's demand deposit account; or
" ( E ) any transfer of funds which is initiated by a telephone conversation between a consumer and an officer or
employee of a financial institution which is not pursuant to
a prearranged plan and under which periodic or recurring
transfers are not contemplated;
as determined under regulations of the Board;
"(7) the term 'electronic terminal' means an electronic device,
other than a telephone operated by a consumer, through which
a consumer may initiate an electronic fund transfer. Such term
includes, but is not limited to, point-of-sale terminals, automated
teller machines, and cash dispensing machines;
"(8) the term 'financial institution' means a State or National
bank, a State or Federal savings and loan association, a mutual
savings bank, a State or Federal credit union, or any other person
who, directly or indirectly, holds an account belonging to a
consumer ;
"(9) the term 'preauthorized electronic fund transfer' means an
electronic fund transfer authorized in advance to recur at substantially regular intervals;
"(10) the term 'State' means any State, territory, or possession
of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, or any political subdivision of any of the foregoing ; and
" (11) the term 'unauthorized electronic fund transfer' means an
electronic fund transfer from a consumer's account initiated by
a person other than the consumer without actual authority to
initiate such transfer and from which the consumer receives no
benefit, but the term does not include any electronic fund transfer
(A) initiated by a person other than the consumer who was
furnished with the card, code, or other means of access to such
consumer's account by such consumer, unless the consumer has
notified the financial institution involved that transfers by such
other person are no longer authorized, (B) initiated with fraudulent intent by the consumer or any person acting in concert with
the consumer, or (C) which constitutes an error committed by a
financial institution.

92 STAT. 3729
;

92 STAT. 3730
15 use 1693b.

PUBLIC LAW 95-630—NOV. 10, 1978

Ǥ 904. Regulations
-'i ':^-. ?u^fuyibiT':yr j^, aih
" (a) The Board shall prescribe regulations to carry out the purposes
of this title. In prescribing such regulations, the Board shall:
"(1) consult with the other agencies referred to in section 917
and take into account, and allow for, the continuing evolution of
'
electronic banking services and the technology utilized in such
"
services,
"(2) prepare an analysis of economic impact which considers
the costs and benefits to financial institutions, consumers, and other
•
users of electronic fund ti-ansfers, including the extent to which
additional documentation, reports, records, or other paper work
would be required, and the effects upon competition in the pro''
vision of electronic banking services among large and small
''"•'
financial institutions and the availability of such services to
different classes of consumers, particularly low income consumers,
" (3) to the extent practicable, the Board shall demonstrate that
'
the consumer protections of the proposed regulations outweij^h
•
the compliance costs imposed upon consumers and financial
institutions, and
'
"(4) any proposed regulations and accompanying analyses
shall be sent promptly to Congress by the Board.
"(b) The Board shall issue model clauses for optional use by
financial institutions to facilitate compliance with the disclosure
requirements of section 905 and to aid consumers in understanding the
rights and responsibilities of participants in electronic fund transfers
Notice in Federal by utilizing readily understandable language. Such model clauses
Register.
shall be adopted after notice duly given in the Federal Register and
opportunity for public comment in accordance with section 553 of
title 5, United States Code. With respect to the disclosures required
by section 905(a) (3) and (4), the Board shall take account of
variations in the services and charges under different electronic fund
transfer systems and, as appropriate, shall issue alternative model
clauses for disclosure of these differing account terms.
"(c) Regulations prescribed hereunder may contain such classifications, differentiations, or other provisions, and may provide for such
adjustments and exceptions for any class of electronic fund transfers,
as in the judgment of the Board are necessary or proper to effectuate
the purposes of this title, to prevent circumvention or evasion thereof,
or to facilitate compliance therewith. The Board shall by regulation
modify the requirements imposed by this title on small financial
institutions if the Board determines that such modifications are necessary to alleviate any undue compliance burden on small financial
institutions and such modifications are consistent with the purpose
'- and objective of this title.
"(d) In the event that electronic fund transfer services are made
• available to consumers by a person other than a financial institution
holding a consumer's account, the Board shall by regulation assure
that the disclosures, protections, responsibilities, and remedies created by this title are made applicable to such persons and services.
15 use 1693c.
"§ 905. Terms and conditions of transfers
" (a) The terms and conditions of electronic fund transfers involving
a consumer's account shall be disclosed at the time the consumer
contracts for an electronic fund transfer service, in accordance with
regulations of the Board. Such disclosures shall be in readily understandable language and shall include, to the extent applicable—
"(1) the consumer's liability for unauthorized electronic fund
transfers and, at the financial institution's option, notice of the

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3731

advisability of prompt reporting of any loss, theft, or unauthorized use of a card, code, or other means of access;
" (2) the telephone number and address of the person or office
to be notified in the event the consumer believes than an unauthorized electronic fund transfer has been or may be effected;
" (3) the type and nature of electronic fund transfers which the
consumer may initiate, including any limitations on the frequency or dollar amount of such transiers, except that the details
of such limitations need not be disclosed if their confidentiality is
necessary to maintain the security of an electronic fund transfer
system, as determined by the Board;
"(4) any charges for electronic fund transfers or for the right
to make such transfers;
"(5) the consumer's right to stop payment of a preauthorized
electronic fund transfer and the procedure to initiate such a stop
payment order;
" (6) the consumer's right to receive documentation of electronic
fund transfers under section 906;
"(7) a summary, in a form prescribed by regulations of the
Board, of the error resolution provisions of section 908 and the
consumer's rights thereunder. The financial institution shall thereafter transmit such summary at least once per calendar year;
"(8) the financial institution's liability to the consumer under
section 910; and
"(9) under what circumstances the financial institution will in
the ordinary course of business disclose information concerning
the consumer's account to third persons.
"(b) A financial institution shall notify a consumer in writing at Notification,
least twenty-one days prior to the effective date of any change in any
term or condition of the consumer's account required to be disclosed
under subsection (a) if such change would result in greater cost or
liability for such consumer or decreased access to the consumer's
account. A financial institution may, however, implement a change
in the terms or conditions of an account without prior notice when
such change is immediately necessary to maintain or restore the security of an electronic fund transfer system or a consumer's account.
Subject to subsection (a)(3), the Board shall require subsequent
notification if such a change is made permanent.
"(c) For any account of a consumer made accessible to electronic
fund transfers prior to the effective date of this title, the information
required to be disclosed to the consumer under subsection (a) shall be
disclosed not later than the earlier of—
"(1) the first periodic statement required by section 906(c)
,
after the effective date of this title; or
'''
"(2) thirty days after the effective date of this title.
"§ 906. Documentation of transfers; periodic statements
15 USC 1693d.
"(a) For each electronic fund transfer initiated by a consumer from
an electronic terminal, the financial institution holding such consumer's account shall, directly or indirectly, at the time the transfer is
initiated, make available to the consumer written documentation of
such transfer. The documentation shall clearly set forth to the extent
applicable—
"(1) the amount involved and date the transfer is initiated;
" (2) the type of transfer;
"(3) the identity of the consumer's account with the financial
institution from which or to which funds are transferred;

92 STAT. 3732

PUBLIC LAW 95-630—NOV. 10, 1978
"(4) the identity of any third party to whom or from whom
funds are transferred; and
"(5) the location or identification of the electronic terminal
involved.
"(b) For a consumer's account which is scheduled to be credited
by a preauthorized electronic fund transfer from the same payor at
least once in each successive sixty-day period, except where the payor
provides positive notice of the transfer to the consumer, the financial
institution shall elect to provide promptly either positive notice to
the consumer when the credit is made as scheduled, or negative notice
to the consumer when the credit is not made as scheduled, in accordance with regulations of the Board. The means of notice elected shall
be disclosed to the consumer in accordance with section 905.
"(c) A financial institution shall provide each consumer with a
periodic statement for each account of such consumer that may be
accessed by means of an electronic fund transfer. Except as provided
in subsections (d) and (e), such statement shall be provided at least
monthly for each monthly or shorter cycle in which an electronic
fund transfer affecting the account has occurred, or every three
months, whichever is more frequent. The statement, which may include
information regarding transactions other than electronic fund transfers, shall clearly set forth—
"(1) with regard to each electronic fund transfer during the
period, the information described in subsection (a), which may
be provided on an accompanying document;
"(2) the amount of any fee or charge assessed by the financial
institution during the period for electronic fund transfers or for
account maintenance;
"(3) the balances in the consumer's account at the beginning
of the period and at the close of the period; and
"(4) the address and telephone number to be used by the
financial institution for the purpose of receiving any statement
inquiry or notice of account error from the consumer. Such address
and telephone number shall be preceded by the caption 'Direct
Inquiries To:' or other similar language indicating that the
address and number are to be used for such inquiries or notices.
"(d) In the case of a consumer's passbook account which may not
be accessed by electronic fund transfers other than preauthorized
electronic fund transfers crediting the account, a financial institution
may, in lieu of complying with the requirements of subsection (c),
upon presentation of the passbook provide the consumer in writing
with the amount and date of each such transfer involving the account
since the passbook was last presented.
"(e) In the case of a consumer's account, other than a passbook
account, which may not be accessed by electronic fund transfers other
than preauthorized electronic fund transfers crediting the account,
the financial institution may provide a periodic statement on a quarterly basis which otherwise complies with the requirements of subsection (c).
"(f) In any action involving a consumer, any documentation
required by this section to be given to the consumer which indicates
that an electronic fund transfer was made to another person shall be
admissible as evidence of such transfer and shall constitute prima
facie proof that such transfer was made.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3733

"§ 907. Preauthorized transfers
15 USC I693e.
"(a) A preauthorized electronic fund transfer from a consumer's
account may be authorized by the consumer only in writing, and a
copy of such authorization shall be provided to the consumer when
made. A consumer may stop payment of a preauthorized electronic
f imd transfer by notifying the financial institution orally or in writing
at any time up to three business days preceding the scheduled date of
such transfer. The financial institution may require written confirmation to be provided to it within fourteen days of an oral notification if, when the oral notification is made, the consumer is advised
of such requirement and the address to which such confirmation
should be sent.
"(b) In the case of preauthorized transfers from a consumer's
account to the same person which may vary in amount, the financial
institution or designated payee shall, prior to each transfer, provide
reasonable advance notice to the consumer, in accordance with regulations of the Board, of the amount to be transferred and the scheduled date of the transfer.
"§ 908. Error resolution
15 USC I693f.
"(a) If a financial institution, within sixty days after having transmitted to a consumer documentation pursuant to section 906 (a), (c),
or (d) or notification pursuant to section 906(b), receives oral or
written notice in which the consumer—
"(1) sets forth or otherwise enables the financial institution to
identify the name and account number of the consumer;
" (2) indicates the consumer's belief that the documentation, or,
in the case of notification pursuant to section 9106 (b), the consumer's account, contains an error and the amount of such error;
and
"(3) sets forth the reasons for the consumer's belief (where
applicable) that an error has occurred,
the financial institution shall investigate the alleged error, determine
whether an error has occurred, and report or mail the results of such
investigation and determination to the consumer within ten business
days. The financial institution may require written confirmation to be
provided to it within ten business days of an oral notification of error
if, when the oral notification is made, the consumer is advised of
such requirement and the address to which such confirmation should
be sent. A financial institution which requires written confirmation
in accordance with the previous sentence need not provisionally
recredit a consumer's account in accordance with subsection (c), nor
shall the financial institution be liable under subsection (e) if the
written confirmation is not received within the ten-day period referred
to in the previous sentence.
"(b) If the financial institution determines that an error did occur,
it shall promptly, but in no event more than one business day after
such determination, correct the error, subject to section 909, including
the crediting of interest where applicable.
"(c) If a financial institution receives notice of an error in the Investigation,
manner and within the time period specified in subsection (a), it may,
in lieu of the requirements of subsections (a) and (b), within ten
business days after receiving such notice provisionally recredit the
consumer's account for the amount alleged to be in error, subject to
section 909, including interest where applicable, pending the conclusion of its investigation and its determination of whether an error
has occurred. Such investigation shall be concluded not later than

92 STAT. 3734

PUBLIC LAW 95-630—NOV. 10, 1978

"»• ^

forty-tive days after receipt of notice of the error. During the pendency of the investigation, the consumer shall have full use of the funds
provisionally recredited.
"(d) If the financial institution determines after its investigation
pursuant to subsection (a) or (c) that an error did not occur, it shall
deliver or mail to the consumer an explanation of its findings within
3 business days after the conclusion of its investigation, and upon
request of the consumer promptly deliver or mail to the consumer
reproductions of all documents which the financial institution relied
on to conclude that such error did not occur. The financial institution
shall include notice of the right to request reproductions with the
explanation of its findings.
" (e) If in any action under section 915, the court finds that—
"(1) the financial institution did not provisionally recredit a
consumer's account within the ten-day period specified in subsection (c), and the financial institution (A) did not make a good
faith investigation of the alleged error, or (B) did not have a
reasonable basis for believing that the consumer's account was
, .. ' . , .
not in error; or
" (2) the financial institution knowingly and willfully concluded
that the consumer's account was not in error when such conclusion could not reasonably have been drawn from the evidence
available to the financial institution at the time of its investigation,
then the consumer shall be entitled to treble damages determined
under section 915(a) (1).
"(f) For the purpose of this section, an error consists of—
"(1) an unauthorized electronic fund transfer;
"(2) an incorrect electronic fund transfer from or to the consumer's account;
"(3) the omission from a periodic statement of an electronic
fund transfer affecting the consumer's account which should have
been included;
"(4) a computational error by the financial institution;
"(5) the consumer's receipt of an incorrect amount of money
from an electronic terminal;
"(6) a consumer's request for additional information or clarification concerning an electronic fund transfer or any documentation required by this title; or
" (7) any other error described in regulations of the Board.
15 use I693g. "§ 909. Consumer liability for unauthorized transfers
"(a) A consumer shall be liable for any unauthorized electronic
fund transfer involving the account of such consumer only if the card
or other means of access utilized for such transfer was an accepted
card or other meanas of access and if the issuer of such card, code,
or other means of access has provided a means whereby the user of
such card, code, or other means of access can be identified as the
erson authorized to use it, such as by signature, photograph, or
ngerprint or by electronic or mechanical confirmation. In no event,
however, shall a consumer's liability for an unauthorized transfer
exceed the lesser of—
"(l)$50;or
"(2) the amount of money or value of property or services
obtained in such unauthorized electronic fund transfer prior to
the time the financial institution is notified of, or otherwise
becomes aware of, circumstances which lead to the reasonable
iiiii_ belief that an unauthorized electronic fund transfer involving the

g

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3735

consumer's account has been or may be effected. Notice under this
paragraph is sufficient when such steps have been taken as may be
reasonably recjuired in the ordinary course of business to provide
the financial institution with the pertinent information, whether
or not any particular officer, employee, or agent of the financial
institution does in fact receive such information.
Notwithstanding the foregoing, reimbursement need not be made to
the consumer for losses the financial institution establishes would
not have occurred but for the failure of the consumer to report within
sixty days of transmittal of the statement (or in extenuating circumstances such as extended travel or hospitalization, within a reasonable
'time under the circumstances) any unauthorized electronic fund
transfer or account error which appears on the periodic statement
provided to the consumer under section 906. In addition, reimbursement need not be made to the consumer for losses which the financial
institution establishes would not have occurred but for the failure of
the consumer to report any loss or theft of a card or other means of
access within two business days after the consumer learns of the loss
or theft (or in extenuating circumstances such as extended travel or
hospitalization, within a longer period which is reasonable under the
circumstances), but the consumer's liability under this subsection in
any such case may not exceed a total of $500, or the amount of unauthorized electronic fund transfers which occur following the close of
two business days (or such longer period) after the consumer learns
of the loss or theft but prior to notice to the financial institution under
this subsection, whichevei- is less.
"(b) In any action which involves a consumer's liability for an
unauthorized electronic fund transfer, the burden of proof is upon the
financial institution to show that the electronic fund transfer was
authorized or, if the electronic fund transfer was unauthorized, then
the burden of proof is upon the financial institution to establish that
the conditions of liability set forth in subsection (a) have been met,
.gC'd' -c I 5
and, if the transfer was initiated after the effective date of section 905,
that the disclosures required to be made to the consumer under section
905(a) (1) and (2) were in fact made in accordance with such section.
"(c) In the event of a transaction which involves both an unauthorized electronic fund transfer and an extension of credit as defined
in section 103(e) of this Act pursuant to an agreement between the 15 USC 1602.
consumer and the financial institution to extend such credit to the
consumer in the event the consumer's account is overdrawn, the limitation on the consumer's liability for such transaction shall be determined solely in accordance with this section.
"(d) Nothing in this section imposes liability upon a consumer for
an unauthorized electronic fund transfer in excess of his liability for
such a transfer under other applicable law or under any agreement
with the consumer's financial institution.
" (e) Except as provided in this section, a consumer incurs no liability from an unauthorized electronic fund transfer.
"§ 910. Liability of financial institutions
15 USC I693h.
"(a) Subject to subsections (b) and (c), a financial institution
shall be liable to a consumer for all damages proximately caused by—
"(1) the financial institution's failure to make an electronic
fund transfer, in accordance with the terms and conditions of an
account, in the correct amount or in a timely manner when
properly instructed to do so by the consumer, except where—
"(A) the consumer's account has insufficient funds;

92 STAT. 3736

PUBLIC LAW 95-630—NOV. 10, 1978
I ^'

15 use 16931.

• '

'

" (B) the funds are subject to legal process or other encumbrance restricting such transfer;
"(C) such transfer would exceed an established credit
limit;
"(D) an electronic terminal has insufficient cash to complete the transaction; or
" ( E ) as otherwise provided in regulations of the Board;
"(2) the financial institution's failure to make an electronic
fund transfer due to insufficient funds when the financal institution failed to credit, in accordance with the terms and conditions
of an account, a deposit of funds to the consumer's account which
would have provided sufficient funds to make the transfer, and
"(3) the financial institution's failure to stop payment of a preauthorized transfer from a consumer's account when instructed to
do so in accordance with the terms and conditions of the account.
"(b) A financial institution shall not be liable under subsection
(a) (1) or (2) if the financial institution shows by a preponderance
of the evidence that its action or failure to act resulted from—
"(1) an act of God or other circumstance beyond its control,
that it exercised reasonable care to prevent such an occurrence,
and that it exercised such diligence as the circumstances required;
or
" (2) a technical malfunction which was known to the consumer
at the time he attempted to initiate an electronic fund transfer or,
in the case of a preauthorized transfer, at the time such transfer
should have occurred.
"(c) In the case of a failure described in subsection (a) which was
not intentional and which resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid
any such error, the financial institution shall be liable for actual
damages proved.
Ǥ 911. Issuance of cards or other means of access
"(a) No person may issue to a consumer any card, code, or other
means of access to such consumer's account for the purpose of initiating an electronic fund transfer other than—
"(1) in response to a request or application therefor; or
"(2) as a renewal of, or in substitution for, an accepted card,
code, or other means of access, whether issued by the initial issuer
or a successor.
"(b) Notwithstanding the provisions of subsection (a), a person
may distribute to a consumer on an unsolicited basis a card, code, or
other means of access for use. in initiating an electronic fund transfer
from such consumer's account, if—
"(1) such card, code, or other means of access is not validated;
"(2) such distribution is accompanied by a complete disclosure,
in accordance with section 905, of the consumer's rights and liabilities which will apply if such card, code, or other means of
access is validated;
"(3) such distribution is accompanied by a clear explanation,
in accordance with regulations of the Board, that such card, code,
or other means of access is not validated and how the consumer
may dispose of such code, card, or other means of access if
validation is not desired; and
"(4) such card, code, or other means of access is validated only
in response to a request or application from the consumer, upon
verification of the consumer's identity.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3737

"(c) For the purpose of subsection (b), a card, code, or other means
of access is validated when it may be used to initiate an electronic
fund transfer.
"§ 912. Suspension of obligations
"If a system malfunction prevents the effectuation of an electronic
fund transfer initiated by a consumer to another person, and such
other person has agreed to accept payment by such means, the consumer's obligation to the other person shall be suspended until the
malfunction is corrected and the electronic fund transfer may be completed, unless such other person has subsequently, by written request,
demanded payment by means other than an electronic fund transfer.
"§ 913. Compulsory use of electronic fund transfers
"No person may—
"(1) condition the extension of credit to a consumer on such
consumer's repayment by means of preauthorized electronic fund
transfers; or
"(2) require a consumer to establish an account for receipt of
electronic fund transfers with a particular financial institution as
a condition of employment or receipt of a government benefit.
"§ 914. Waiver of rights
"No writing or other agreement between a consumer and any other
peison may contain any provision which constitutes a waiver of any
right conferred or cause of action created by this title. Nothing in this
section prohibits, however, any writing or other agreement which
grants to a consumer a more extensive right or remedy or greater
protection than contained in this title or a waiver given in settlement
of a dispute or action.
"§915. Civil liability
"(a) Except as otherwise provided by this section ana section 910,
any person who fails to comply with any provision of this title with
respect to any consumer, except for an error resolved in accordance
with section 908, is liable to such consumer in an amount equal to the
sum of—
"(1) any actual damage sustained by such consumer as a result
of such failure;
"(2) (A) in the case of an individual action, an amount not
less than $100 nor greater than $1,000; or
"(B) in the case of a class action, such amount as the court
may allow, except that (i) as to each member of the class no
minimum recovery shall be applicable, and (ii) the total recovery
under this subparagraph in any class action or series of class
f actions arising out of the same failure to comply by the same
person shall not be more than the lesser of $500,000 or 1 per
centum of the net worth of the defendant; and
" (3) in the case of any successful action to enforce the foregoing
liability, the costs of the action, together with a reasonable
attorney's fee as determined by the court.
"(b) In determining the amount of liability in any action under
subsection (a), the court shall consider, among other relevant factors—
"(1) in any individual action under subsection (a) (2) (A), the
frequency and persistence of noncompliance, the nature of such
noncompliance, and the extent to which the noncompliance was
intentional; or

39-194 O—80—pt. 3

70 : QL3

15 use 1693J.

15 use 1693k.

15 use 1693/.

15 use 1693in.

PUBLIC LAW 95-630—NOV. 10, 1978

92 STAT. 3738
'

'-U 38:

.wfit'dl

15 u s e 1693n.

"(2) in any class action under subsection (a) (2) (B), the frequency and persistence of noncompliance, the nature of such
noncompliance, the resources of the defendant, the number of persons adversely affected, and the extent to which the noncompliance
was intentional.
"(c) Except as provided in section 910, a person may not be held
liable in any action brought under this section for a violation of this
title if the person shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid
any such error.
"(d) No provision of this section or section 916 imposing any
liability shall apply to—
(1) any act done or omitted in good faith in conformity with
any rule, regulation, or interpretation thereof by the Board or in
conformity with any interpretation or approval by an official
or employee of the Federal Reserve System duly authorized by the
Board to issue such interpretations or approvals under such procedures as the Board may prescribe therefor; or
" (2) any failure to make disclosure in proper form if a financial
institution utilized an appropriate model clause issued by the
Board,
notwithstanding that after such act, omission, or failure has occurred,
such rule, regulation, approval, or model clause is amended, rescinded,
or determined by judicial or other authority to be invalid for any
reason.
"(e) A person has no liability under this section for any failure
to comply with any requirement under this title if, prior to the institution of an action under this section, the person notifies the consumer
concerned of the failure, complies with the requirements of this title,
and makes an appropriate adjustment to the consumer's account and
pays actual damages or, where applicable, damages in accordance with
section 910.
"(f) On a finding by the court that an unsuccessful action under
this section was brought in bad faith or for purposes of harassment,
the court shall award to the defendant attorney's fees reasonable in
relation to the work expended and costs.
"(g) Without regard to the amount in controversy, any action
under this section may be brought in any United States district
court, or in any other court of competent jurisdiction, within one
year from the date of the occurrence of the violation.
"§ 916. Criminal liability
^ .^
s
" (a) Whoever knowingly and willfully—
"(1) gives false or inaccurate information or fails to provide
,,, information which he is required to disclose by this title or any
regulation issued thereunder; or
"(2) otherwise fails to comply with any provision of this title;
shall be fined not more than $5,000 or imprisoned not more than one
year, or both.
"(b) Whoever—
"(1) knowingly, in a transaction affecting interstate or foreign
commerce,^ uses or attempts or conspires to use any counterfeit,
fictitious, altered, forged, lost, stolen, or fraudulently obtained
,;.^^ debit instrument to obtain money, goods, services, or anything else
of value which within any one-year period has a value aggregating $1,000 or more; or

PUBLIC LAW 95-630—NOV. 10, 1978
V f « (2) with unlawful or fraudulent intent, transports or attempts
M
or conspires to transport in interstate or foreign commerce a
counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently
obtained debit instrument knowing the same to be counterfeit,
fictitious, altered, forged, lost, stolen, or fraudulently obtained;
or
"(3) with unlawful or fraudulent intent, uses any instrumentality of interstate or foreign commerce to sell or transport a
counterfeit, fictitious, altered, forged, lost, stolen, or fraudulently
obtained debit instrument knowing the same to be counterfeit,
fictitious, altered, forged, lost, stolen, or fraudulently obtained;
or
"(4) knowingly receives, conceals, uses, or transports money,
goods, services, or anything else of value (except tickets for interstate or foreign transportation) which (A) within any one-year
period has a value aggregating $1,000 or more, (B) has moved in
or is part of, or which constitutes interstate or foreign commerce,
and (C) has been obtained with a counterfeit, fictitious, altered,
forged, lost, stolen, or fraudulently obtained debit instrument; or
"(5) knowingly receives, conceals, uses, sells, or transports in
interstate or foreign commerce one or more tickets for interstate
or foreign transportation, which (A) within any one-year period
have a value aggregating $500 or more, and (B) have been purchased or obtained with one or more counterfeit, fictitious,
altered, forged, lost, stolen, or fraudulently obtained debit instrument ; or
"(6) in a transaction affecting interstate or foreign commerce,
furnishes money, property, services, or anything else of value,
which within any one-year period has a value aggregating $1,000
or more, through the use of any counterfeit, fictitious, altered,
forged, lost, stolen, or fraudulently obtained debit instrument
knowing the same to be counterfeit, fictitious, altered, forged,
lost, stolen, or fraudulently obtained—
shall be fined not more than $10,000 or imprisoned not more than
ten years, or both.
"(c) As used in this section, the term 'debit instrument' means a
card, code, or other device, other than a check, draft, or similar paper
instrument, by the use of which a person may initiate an electronic
fund transfer.
"§ 917. Administrative enforcement
"(a) Compliance with the requirements imposed under this title
shall be enforced under—
"(1) section 8 of the Federal Deposit Insurance Act, in the
case of—
=
" (A) national banks, by the Comptroller of the Currency;
"(B) member banks of the Federal Reserve System
(other than national banks), by the Board;
"(C) banks insured by the Federal Deposit Insurance
:=;
Corporation (other than members of the Federal Reserve
System), by the Board of Directors of the Federal Deposit
i
Insurance Corporation;
"(2) section 5(d) of the Home Owners' Loan Act of 1933, section 407 of the National Housing Act, and sections 6(i) and 17 of
the Federal Home Loan Bank Act, by the Federal Home Loan
Bank Board (acting directly or through the Federal Savings

92 STAT. 3739

"Debit
instrument.'

15 use 1693o.
12 USC 1818.

12 USC 1464.
12 USC 1730.
12 USC 1426,
1437.

92 STAT. 3740

PUBLIC LAW 95-630—NOV. 10, 1978

and Loan Insurance Corporation), in the case of any institution
subject to any of those provisions;
12 use 1751.
"(3) the Federal Credit Union Act, by the Administrator of
the National Credit Union Administration with respect to any
Federal credit union.
49 use 1301
"(4) the Federal Aviation Act of 1958, by the Civil Aero°°*®nautics Board, with respect to any air carrier or foreign air
carrier subject to that Act; and
15 use 78a.
"(5) the Securities Exchange Act of 1934, by the Securities
and Exchange Commission, with respect to any broker or dealer
subject to that Act.
"(b) For the purpose of the exercise by any agency referred to in
subsection (a) of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title shall be
deemed to be a violation of a requirement imposed under that Act.
In addition to its powers under any provision of law specifically
referred to in subsection (a), each of the agencies referred to in that
subsection may exercise, for the purpose of enforcing compliance
with any requirement imposed under this title, any other authority
conferred on it by law.
"(c) Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other Government agency under subsection (a), the Federal Trade Commission
shall enforce such requirements. For the purpose of the exercise by
the Federal Trade Commission of its functions and powers under the
Federal Trade Commission Act, a violation of any requirement
imposed under this title shall be deemed a violation of a requirement
imposed under that Act. All of the functions and powers of the
Federal Trade Commission under the Federal Trade Commission
Act are available to the Commission to enforce compliance by any
person subject to the jurisdiction of the Commission with the requirements imposed under this title, irrespective of whether that person
is engaged in commerce or meets any other jurisdictional tests in the
15 use 41 e« 56^. Federal Trade Commission Act.
15 use I693p.
Ǥ 918. Reports to Congress
"(a) Not later than twelve months after the effective date of this
title and at one-year intervals thereafter, the Board and the Attorney
General shall, respectively, make reports to the Congress concerning
the administration of their functions under this title, including such
recommendations as the Board and the Attorney General, respectively,
deem necessary or appropriate. In addition, each report of the Board
shall include its assessment of the extent to which compliance with this
title is being achieved, and a summary of the enforcement actions
taken under section 917 of this title. In such report, the Board shall
particularly address the effects of this title on the costs and benefits
to financial institutions and consumers, on competition, on the introduction of new technology, on the operations of financial institutions,
and on the adequacy of consumer protection. The report of the Attorney General shall also contain an analysis of the impact of this title
on the operation, workload, and efficiency of the Federal courts.
"(b) In the exercise of its functions under this title, the Board
may obtain upon request the views of any other Federal agency which,
in the judgment of the Board, exercises regulatory or supervisory
functions with respect to any class of persons subject to this title.

PUBLIC LAW 95-630—NOV. 10, 1978
"§ 919. Relation to State laws

92 STAT. 3741
15 use I693q.

"This title does not annul, alter, or affect the laws of any State
relating to electronic fund transfers, except to the extent that those
laws are inconsistent with the provisions of this title, and then only
to the extent of the inconsistency. A State law is not inconsistent with
this title if the protection such law affords any consumer is greater
than the protection afforded by this title. The Board shall, upon
its own motion or upon the request of any financial institution. State,
or other interested party, submitted in accordance with procedures prescribed in regulations of the Board, determine whether a State requirement is inconsistent or affords greater protection. If the Board determines that a State requirement is inconsistent, financial institutions
shall incur no liability under the law of that State for a good faith
failure to comply with that law, notwithstanding that such determination is subsequently amended, rescinded, or determined by judicial
or other authority to be invalid for any reason. This title does not
extend the applicability of any such law to any class of persons or
transactions to which it would not otherwise apply.
"§ 920. Exemption for State regulation
15 use I693r.
"The Board shall by regulation exempt from the requirements of
this title any class of electronic fund transfers within any State if the
Board determines that under the law of that State that class of electronic fund transfers is subject to requirements substantially similar
to those imposed by this title, and that there is adequate provision
for enforcement,
"§ 921. Effective date
15 use 1693
"This title takes effect upon the expiration of eighteen months °°*®*
from the date of its enactment, except that sections 909 and 911 take
effect upon the expiration of ninety days after the date of enactment.".
T I T L E X X I — E F F E C T I V E DATE
SEC. 2101. Except as otherwise provided herein, this Act shall take 12 USe 375b
effect upon the expiration of one hundred and twenty days after the °otedate of its enactment.
Approved November 10, 1978.
LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 95-1115 accompanying H.R. 12157, No. 95-1315 accompanying H.R. 13007, and No. 95-1383 accompanying H.R. 13471 all
from (eomm. on Banking, Finance and Urban Affairs).
SENATE REPORTS: No. 95-323 accompanying S. 71, No. 95-844 accompanying S.
3077, No. 95-915 accompanying S. 3156, and No. 95-1273
accompanying S. 3499 all from (eomm. on Banking, Housing, and
Urban Affairs) and No. 95-1039 accompanying S. 3077 (eomm.
on Environmental and Public Works).
eONGRESSIONAL REeORD, Vol. 124 (1978):
July 27, H.R. 12157 considered and passed House.
Aug. 5, S. 71 considered and passed Senate.
Aug. 11, H.R. 13007 considered and passed House.
Oct. 11, considered and passed House.
Oct. 12, considered and passed Senate, amended.
Oct. 15, House concurred in Senate amendments with amendments; Senate
concurred in House amendments.