Full text of Garn-St Germain Depository Institutions Act of 1982

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PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1469

Public Law 97-320
97th Congress
An Act
To revitalize the housing industry by strengthening the financial stability of home
mortgage lending institutions and ensuring the availability of home mortgage
loans.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SHORT TITLE
SECTION 1. This Act may be cited as the "Garn-St Germain
Depository Institutions Act of 1982".

TITLE I—DEPOSIT INSURANCE FLEXIBILITY

Oct. 15, 1982
[H.R. 6267]
Garn-St
Germain
Depository
Institutions Act
of 1982.
12 u s e 226 note.

Deposit
Insurance
Flexibility Act.

SHORT TITLE

SEC. 101. This title may be cited as the "Deposit Insurance Flexibility Act".
PART A—FEDERAL DEPOSIT INSURANCE CORPORATION AMENDMENTS
ASSISTANCE TO INSURED BANKS

SEC. 111. Section 13(c) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)) is amended to read as follows:
"(cKD The Corporation is authorized, in its sole discretion and
upon such terms and conditions as the Board of Directors may
prescribe, to make loans to, to make deposits in, to purchase the
assets or securities of, to assume the liabilities of, or to make
contributions to, any insured bank—
"(A) if such action is taken to prevent the closing of such
insured bank;
"(B) if, with respect to a closed insured bank, such action is
taken to restore such closed insured bank to normal operation;
or
"(C) if, when severe financial conditions exist which threaten
the stability of a significant number of insured banks or of
insured banks possessing significant financial resources, such
action is taken in order to lessen the risk to the Corporation
posed by such insured bank under such threat of instability.
"(2XA) In order to facilitate a merger or consolidation of an
insured bank described in subparagraph (B) with an insured institution or the sale of assets of such insured bank and the assumption of
such insured bank's liabilities by an insured institution, or the
acquisition of the stock of such insured bank, the Corporation is
authorized, in its sole discretion and upon such terms and conditions
as the Board of Directors may prescribe—
"(i) to purchase any such assets or assume any such liabilities;

12 u s e 1811
note.

96 STAT. 1470

12 u s e 1823.

PUBLIC LAW 97-320—OCT. 15, 1982

"(ii) to make loans or contributions to, or deposits in, or
purchase the securities of, such insured institution or the company which controls or will acquire control of such insured
institution;
"(iii) to guarantee such insured institution or the company
which controls or will acquire control of such insured institution against loss by reason of such insured institution's merging
or consolidating with or assuming the liabilities and purchasing
the assets of such insured bank or by reason of such company
acquiring control of such insured bank; or
"(iv) to take any combination of the actions referred to in
subparagraphs (i) through (iii).
"(B) For the purpose of subparagraph (A), the insured bank must
be an insured bank—
"(i) which is closed;
"(ii) which, in the judgment of the Board of Directors, is in
danger of closing; or
"(iii) which, when severe financial conditions exist which
threaten the stability of a significant number of insured banks
or of insured banks possessing significant financial resources, is
determined by the Corporation, in its sole discretion, to require
assistance under subparagraph (A) in order to lessen the risk to
the Corporation posed by such insured bank under such threat
of instability.
"(3) The Corporation may provide any person acquiring control of,
merging with, consolidating with or acquiring the assets of an
insured bank under section 13(f) of this Act with such financial
assistance as it could provide an insured institution under this
subsection.
"(4)(A) No assistance shall be provided under this subsection in an
amount in excess of that amount which the Corporation determines
to be reasonably necessary to save the cost of liquidating, including
paying the insured accounts of, such insured bank, except that such
restriction shall not apply in any case in which the Corporation
determines that the continued operation of such insured bank is
essential to provide adequate banking services in its community.
"(B) The Corporation may not use its authority under this subsection to purchase the voting or common stock of an insured bank.
Nothing in the preceding sentence shall be construed to limit the
ability of the Corporation to enter into and enforce covenants and
agreements that it determines to be necessary to protect its financial interest.
"(5)(A) During any period in which an insured bank has received
assistance under this subsection and such assistance is still outstanding, such insured bank may defer the payment of any State or
local tax which is determined on the basis of the deposits held by
such insured bank or of the interest paid on such deposits.
"(B) When such insured bank no longer has any outstanding
assistance, such insured bank shall pay all taxes which were
deferred under subparagraph (A). Such payments shall be made in
accordance with a payment plan established by the Corporation,
after consultation with the applicable State and local taxing
authorities.
"(6) Any assistance provided under this subsection may be in
subordination to the rights of depositors and other creditors.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1471

"(7) In its annual report to the Congress, the Corporation shall
report the total amount it has saved, or estimates it has saved, by
exercising the authority provided in this subsection.
"(8) For purposes of this subsection, the term 'insured institution'
means an insured bank as defined in section 3 of this Act or an
insured institution as defined in section 401 of the National Housing
Act".

Report to
Congress.
"Insured
institution."

FEDERAL DEPOSIT INSURANCE CORPORATION; INSURED FEDERAL
SAVINGS BANKS

SEC. 112. Section 5 of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464) is amended by adding at the end thereof the following:
"(o)(l) Notwithstanding any other provision of this section, the
Board, subject to the provisions of this subsection, may authorize,
under the rules and regulations of the Board, the conversion of a
State-chartered savings bank insured by the Federal Deposit Insurance Corporation into a Federal savings bank, if such conversion is
not in contravention of State law, and provide for the organization,
incorporation, operation, and regulation of such institution.
"(2)(A) The Federal Deposit Insurance Corporation shall insure
the deposit accounts of any Federal savings bank chartered pursuant to this subsection, until such time as the accounts of such
institution are insured by the Federal Savings and Loan Insurance
Corporation.
"(B) The Board shall provide the Federal Deposit Insurance
Corporation with notification of any application under this Act for
conversion to a Federal charter by an institution insured by the
Corporation, shall consult with the Corporation before disposing of
the application, and shall provide said Corporation with notification
of the Board's determination with respect to such application.
"(C) The Federal Deposit Insurance Corporation shall have the
power to make special examinations of any Federal savings bank it
insures and for which the Board of Directors of the Federal Deposit
Insurance Corporation determines an examination is necessary to
determine the condition of the bank for insurance purposes.
"(D) Except with the prior written approval of the Federal Deposit
Insurance Corporation, no Federal savings bank insured by the
Federal Deposit Insurance Corporation shall—
"(i) merge or consolidate with any bank, association, or institution that is not insured by the Federal Deposit Insurance
Corporation;
"(ii) assume liability to pay any deposits made in, or similar
liabilities of, any bank, association, or institution that is not
insured by the Federal Deposit Insurance Corporation; or
"(iii) transfer assets to any bank, association, or institution
that is not insured by the Federal Deposit Insurance Corporation in consideration of the assumption of liabilities for any
portion of the deposits made in such bank.
"(E) In granting any approval required by paragraph (D) of this
subsection, the Board of Directors of the Federal Deposit Insurance
Corporation shall consider the financial and managerial resources
and the future prospects of the existing and proposed institutions.
"(F) Notwithstanding section 402(j) of the National Housing Act, 12 u s e 1725.
any provision of the constitution or laws of any State, or paragraph (1) of this subsection, if the Federal Deposit Insurance Corporation determines conversion into a Federal stock savings bank or

96 STAT. 1472

12 u s e 1881
290i'^^^ 320i'
note *35oi note.
15 u s e 1601
note, 1691 note,
1692 note, 1693
note, 78/.

12 u s e 1828.

PUBLIC LAW 97-320—OCT. 15, 1982

the chartering of a Federal stock savings bank is necessary to
prevent the closing of a savings bank it insures or to reopen a closed
savings bank it insured, or if the Federal Deposit Insurance Corporation determines, with the concurrence of the Board, that severe
financial conditions exist that threaten the stability of a savings
bank insured by such Corporation and that such a conversion or
charter is likely to improve the financial condition of such savings
bank, the Federal Deposit Insurance Corporation shall provide to
the Board a certificate of such determination, the reasons therefor
in conformance with the requirements of this Act, and the bank,
without further action by the Board, shall be converted or chartered
by the Board, pursuant to the rules and regulations thereof, from
the time the Federal Deposit Insurance Corporation issues such
certificate.
"(G) A bank may be converted under subparagraph (F) only where
the board of trustees of the bank—
"(i) has specified in writing that the bank is in danger of
closing or is closed, or that severe financial conditions exist that
threaten the stability of the bank and a conversion is likely to
improve the financial condition of the bank; and
"(ii) has requested in writing that the Corporation use the
authority of subparagraph (F).
"(H)(i) Before making a determination under subparagraph (F),
the Corporation shall consult the State bank supervisor of the State
in which the bank in danger of closing is chartered. The State bank
supervisor shall be given a reasonable opportunity, and in no event
less than forty-eight hours, to object to the use of the provisions of
subparagraph (F).
"(ii) If the State supervisor objects during such period, the Corporation may use the authority of subparagraph (F) only by a unanimous vote of the Board of Directors. The Board of Directors shall
provide to the State supervisor, as soon as practicable, a written
certification of its determination.
"(3) A Federal savings bank chartered under this subsection shall
have the same authority with respect to investments, operations,
and activities, and shall be subject to the same restrictions, including those applicable to branching and discrimination, as would
apply to it if it were chartered as a Federal savings bank under any
other provision of this Act.
"(4) For purposes of the Bank Protection Act of 1968, the Home
Mortgage Disclosure Act, the Community Reinvestment Act, the
Depository Institution Management Interlocks Act, the Depository
Institutions Deregulation Act of 1980, the Truth in Lending Act, the
Equal Credit Opportunity Act, the Fair Debt Collection Practices
Act, the Electronic Fund Transfer Act, and section 12(i) of the
Securities Exchange Act of 1934, a Federal savings bank the deposits
of which are insured by the Federal Deposit Insurance Corporation
shall be regarded as an institution the accounts of which are insured
by the Federal Savings and Loan Insurance Corporation.
"(5) Notwithstanding any limitation contained in the National
Housing Act, the Federal Savings and Loan Insurance Corporation,
in its sole discretion, and on such terms and conditions as it shall
determine, may provide the Federal Deposit Insurance Corporation
with financial assistance or guarantees in connection with a transaction subject to paragraph (2)(D) or section 18(c) of the Federal
Deposit Insurance Act".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1473

CX)NFORMING AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT

SEC. 113. (a) Section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q)) is amended—
(1) in paragraph (2) thereof, by striking out "and" at the end
thereof;
(2) in paragraph (3) thereof, by striking out the period at the
end thereof and inserting in lieu thereof "; and"; and
(3) by adding at the end thereof the following:
"(4) the Federal Home Loan Bank Board in the case of an
insured Federal savings bank.".
(b) Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)
is amended by adding at the end thereof the following:
"(t) The term 'insured Federal savings bank' means a Federal
savings bank chartered pursuant to section 5(o) of the Home
Owners' Loan Act of 1933 and insured by the Corporation.".
(c) Section 4 of the Federal Deposit Insurance Act (12 U.S.C. 1814)
is amended by inserting at the end thereof the following:
"(c) Every Federal savings bank which is chartered pursuant to
section 5(o) of the Home Owners' Loan Act of 1933, and which is
engaged in the business of receiving deposits other than trust funds,
shall be an insured bank from the time it is authorized to commence
business, until such time as its accounts are insured by the Federal
Savings and Loan Insurance Corporation.".
(d) Section 7(aX2) of the Federal Deposit Insurance Act (12 U.S.C.
1817(aX2)) is amended by inserting "(A)" after "(2)" and by inserting
at the end thereof the following:
"(B) The Corporation shall have access to reports of examination made by, and reports of condition made to, the Federal
Home Loan Bank Board or any Federal Home Loan Bank,
respecting any insured Federal savings bank, and the Corporation shall have access to all revisions of reports of condition
made to either such agency. Such agency shall promptly advise
the Corporation of any revisions or changes in respect to deposit
liabilities made or required to be made in any report of
condition.".
(e) The first 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:
"Each insured State nonmember bank (except a District bank) and
each foreign bank having an insured branch (other than a Federal
branch) shall make to the Corporation, each insured national bank,
each foreign bank having an insured branch which is a Federal
branch, and each insured District bank shall make to the Comptroller of the Currency, each insured State member bank shall make to
the Federal Reserve bank of which it is a member, and each insured
Federal savings bank shall make to the Federal Home Loan Bank
Board, four reports of condition annually upon dates which shall be
selected by the Chairman of the Board of Directors, the Comptroller
of the Currency, the Chairman of the Board of Governors of the
Federal Reserve System, and the Chairman of the Federal Home
Loan Bank Board.".
(f) Section 7(a)(6) of the Federal Deposit Insurance Act (12 U.S.C.
1817(a)(6)) is amended by inserting ", the Federal Home Loan Bank
Board," after "Comptroller of the Currency".
(g) Section 8(a) of the Federal Deposit Insurance Act (12 U.S.C.
1818(a)) is amended—

"insured
SfinSVank"
Ante, p. I47i.

96 STAT. 1474

PUBLIC LAW 97-320—OCT. 15, 1982

(1) in the second sentence thereof, by inserting after "district
bank," the following: "to the Federal Home Loan Bank Board in
the case of an insured Federal savings bank,"; and
(2) in the third sentence thereof, by inserting after "national
bank," the following: "or the Federal Home Loan Bank Board in
the case of an insured Federal savings bank,".
(h) Section 8(o) of the Federal Deposit Insurance Act (12 U.S.C.
1818(o)) is amended by inserting at the end thereof the following:
"Whenever the insured status of an insured Federal savings bank
shall be terminated by action of the Board of Directors, the Federal
Home Loan Bank Board shall appoint a receiver for the bank, which
shall be the Corporation.".
(i) Section 10(b) of the Federal Deposit Insurance Act (12 U.S.C.
18200t>)) is amended in the second sentence thereof by inserting after
"or District bank," the following: "or any insured Federal savings
bank,".
(j) Section 11(c) of the Federal Deposit Insurance Act (12 U.S.C.
1821(c)) is amended by inserting at the end thereof the following:
"Notwithstanding any other provision of law, whenever the Federal
Home Loan Bank Board shall appoint a receiver, other than a
conservator, of any insured Federal savings bank hereafter closed, it
shall appoint the Corporation receiver for such closed insured
Federal savings bank.".
(k) Section 11(g) of the Federal Deposit Insurance Act (12 U.S.C.
1821(g)) is amended in the first sentence by inserting after "District
bank," the following: "or closed insured Federal savings bank,".
(1) Section 12(a) of the Federal Deposit Insurance Act (12 U.S.C.
1822(a)) is amended by inserting after "foreign bank," the following:
"insured Federal savings bank,".
(m) Section 13 of the Federal Deposit Insurance Act (12 U.S.C.
1823) is amended—
(1) by redesignating subsections (f) and (g) as subsections (g)
and (h), respectively; and
(2) in subsection (e)—
(A) by inserting "(e)" before "No agreement"; and
(B) by striking out the first paragraph of such subsection,
(n) Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C.
1828(c)) is amended by inserting at the end thereof the following:
"(12) The provisions of this subsection shall not apply to any
merger transaction involving an insured Federal savings bank
unless the resulting institution will be an insured bank other than
an insured Federal savings bank.".
(o) Section 18(j) of the Federal Deposit Insurance Act (12 U.S.C.
1828(j)) is amended by adding at the end thereof the following:
"(4) The provisions of this subsection shall not apply to an insured
Federal savings bank.".
(p) Section 26 of the Federal Deposit Insurance Act (12 U.S.C.
1831c) is amended—
(1) by inserting "(a)" after "Sec. 26.";
(2) in subsection (a), as so redesignated under paragraph (1),
by adding at the end thereof the following: "The provisions of
this subsection shall apply only to mergers, consolidations, or
conversions consummated and effective prior to the effective
date of the Depository Institutions Amendments of 1982 or
mergers, consolidations, or conversions for which applications
have been received at a regional Federal Home Loan Bank prior
to such effective date."; and

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1475

(3) by adding at the end thereof the following:
"(b) No transaction involving a change of deposit insurance agencies from the Corporation to the Federal Savings and Loan Insurance Corporation shall be deemed a termination of insured status
under section 8(a) of this Act.".
(q) Section 7(j)(16) of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)(16)) is amended by adding at the end thereof the following:
"This subsection shall not apply to an insured Federal savings
bank.".

12 USC1818.

CONFORMING AMENDMENTS TO THE HOME OWNERS* LOAN ACT OF 1933

SEC. 114. (a) Section 2(d) of the Home Owners' Loan Act of 1933 (12 "Association."
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 savings bank chartered by the Board under
section 5 of this Act and any reference in any other law to a Federal 12 USC 1464.
savings and loan association shall be deemed to be also a reference
to such Federal savings banks, unless the context indicates
otherwise.".
(b) Section 5(d)(6) of the Home Owners' Loan Act of 1933 (12 U.S.C.
1464(d)(6)) is amended—
(1) in paragraph (B), by inserting after "Federal Savings and
Loan Insurance Corporation" the following: "or the Federal
Deposit Insurance Corporation";
(2) in the second sentence of subparagraph (D), by inserting
after "shall appoint" the following: ", except as hereafter
provided,"; and
(3) by inserting at the end of subparagraph (D): "In the case of
a Federal savings bank chartered pursuant to subsection (o) and
insured by the Federal Deposit Insurance Corporation, the
Board shall appoint only the Federal Deposit Insurance Corporation as receiver for the association and the Federal Deposit
Insurance Corporation shall have the same powers as receiver
as those powers granted by this paragraph to the Federal
Savings and Loan Insurance Corporation as receiver of other
(c) Section 5(d)(ll) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(d)(ll)) is amended by striking out "with other" and
inserting in lieu thereof "with associations or with any".
CONFORMING AMENDMENTS TO THE NATIONAL HOUSING ACT

SEC. 115. (a) Section 403(a) of the National Housing Act (12 U.S.C.
1726(a)) is amended to read as follows:
"(a)(1) It shall be the duty of the Corporation to insure the
accounts of all Federal savings and loan associations, and all Federal savings banks, except for Federal savings banks the deposits of
which are insured by the Federal Deposit Insurance Corporation.
"(2) The Corporation may insure the accounts of building and
loan, savings and loan, and homestead associations and cooperative
banks organized and operated according to the laws of the State,
District, territory, or possession in which they are chartered or
organized, and of savings banks chartered pursuant to section 5(o) of
the Home Owners' Loan Act of 1933.".
Ante, p. 1471.
(b) Subparagraphs (A) and (B) of section 408(a)(1) of the National
Housing Act (12 U.S.C. 1730a(a)(l)) are amended to read as follows:

96 STAT. 1476
"Insured
institution.

"Uninsured
institution."

PUBLIC LAW 97-320—OCT. 15, 1982

"(A) 'insured institution' means a Federal savings and loan
association, a Federal savings bank, a building and loan, savings
and loan or homestead association or a cooperative bank, the
accounts of which are insured by the Federal Savings and Loan
Insurance Corporation, and shall include a Federal savings
bank the deposits of which are insured by the Federal Deposit
Insurance Corporation;
"(B) 'uninsured institution' means any association or bank
referred to in subparagraph (A), the accounts of which are not
insured by the Federal Savings and Loan Insurance Corporation, except for a Federal savings bank the deposits of which are
insured by the Federal Deposit Insurance Corporation;".
(c) Section 407(m) of the National Housing Act (12 U.S.C. 1730(m))
is amended by adding at the end thereof the following:
"(4) The Federal Home Loan Bank Board, or its designated representative, shall have the same power with respect to a Federal
association, or affiliate thereof, the deposits of which are insured by
the Federal Deposit Insurance Corporation as it or the Corporation
has under paragraphs (1) and (2) of this subsection with respect to
insured institutions, or their affiliates.".
(d) Section 407(1)(6) of the National Housing Act (12 U.S.C.
1730(1X6)) is amended by adding at the end thereof the following:
"For the purpose of this subsection, the term 'insured institution'
shall include a Federal savings bank the deposits of which are
insured by the Federal Deposit Insurance Corporation.",
(e) Section 407(q)(13) of the National Housing Act (12 U.S.C.
1730(q)(13)) is amended by inserting "(A)" after "(13)" and by adding
at the end thereof the following:
"(B) For the purposes of this subsection, the term 'insured institution' shall include a Federal savings bank the deposits of which are
insured by the Federal Deposit Insurance Corporation.".
EXTRAORDINARY ACQUISITIONS

SEC. 116. Section 13 of the Federal Deposit Insurance Act (12
U.S.C. 1823) is amended by inserting after subsection (e) the
following:
"(f)(1) Nothing contained in paragraphs (2) or (3) shall be construed to limit the Corporation's powers in subsection (c) to assist a
transaction under paragraphs (2) or (3).
"(2)(A) Whenever an insured bank with total assets of $500,000,000
or more (as determined from its most recent report of condition) is
closed, the Corporation, as receiver, may, in its discretion and upon
such terms and conditions as the Corporation may determine,
arrange the sale of assets of the closed bank and the assumption of
the liabilities of the closed bank, including the sale of such assets to
and the assumption of such liabilities by an insured depository
institution located in the State where the closed bank was chartered
but established by an out-of-State bank or holding company. Where
otherwise lawfully required, a transaction under this subsection
must be approved by the primary Federal or State supervisor of all
parties thereto.
"(B)(i) Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State bank
supervisor of the State in which the closed insured bank was
chartered.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1477

"(ii) The State bank supervisor shall be given a reasonable opportunity, and in no event less than forty-eight hours, to object to the
use of the provisions of this paragraph. Such notice may be provided
by the Corporation prior to its appointment as receiver, but in
anticipation of an impending appointment.
"(iii) If the State supervisor objects during such period, the Corporation may use the authority of this paragraph only by a unanimous
vote of the Board of Directors. The Board of Directors shall provide
to the State supervisor, as soon as practicable, a written certification
of its determination.
"(3)(A)(i) Whenever the Corporation has determined, in its discretion, that an insured bank organized in mutual form with total
assets of $500,000,000 or more (as determined from its most recent
report of condition) is in danger of closing, the insured bank may
merge with or its assets may be purchased by and its liabilities
assumed by another institution, including an insured depository
institution located in the State where the insured bank is chartered
but established by an out-of-State bank or holding company.
"(ii) Where otherwise lawfully required, a transaction under this
subsection must be approved by the primary Federal or State supervisor of all parties thereto.
"(B) The Corporation may make a determination under paragraph
(A) only where the board of trustees of the insured bank and the
appropriate Federal or State chartering authority have specified in
writing that the bank is in danger of closing and have requested in
writing that the Corporation assist a merger or a purchase.
"(C)(i) Before making a determination under subparagraph (A),
the Corporation shall consult the State bank supervisor of the State
in which the bank in danger of closing is chartered.
"(ii) The State bank supervisor shall be given a reasonable opportunity, and in no event less than forty-eight hours, to object to the
use of the provisions of this paragraph.
"(iii) If the State supervisor objects during such period, the Corporation may use the authority of this paragraph only by a unanimous
vote of the Board of Directors. The Board of Directors shall provide
to the State supervisor, as soon as practicable, a written certification
of its determination.
"(4)(i) Notwithstanding section 3(d) of the Bank Holding Company
Act of 1956 or any other provision of law. State or Federal, or the 12 USC1842.
constitution of any State, an institution that merges with or
acquires an insured bank under paragraph (2) or (3) is authorized to
be and shall be operated as a subsidiary of an out-of-State bank or
bank holding company, except that an out-of-State bank may operate the resulting institution as a subsidiary only if such ownership is
otherwise specifically authorized.
"(ii) Any subsidiary created by operation of this subsection may
retain and operate any existing branch or branches of the institution merged with or acquired under paragraph (2) or (3), but otherwise shall be subject to the conditions upon which a national bank
may establish and operate branches in the State in which such
insured institution is located.
"(iii) No insured institution acquired under this subsection shall
after it is acquired move its principal office or any branch office
which it would be prohibited from moving if the institution were a
national bank.
"(5) In determining whether to arrange a sale of assets and
assumption of liabilities or to permit an acquisition or a merger

96 STAT. 1478

Definitions.

PUBLIC LAW 97-320—OCT. 15, 1982

under the authority of paragraph (2) or (3), the Corporation may
solicit such offers or proposals as are practicable from any prospective purchasers or merger partners it determines, in its sole discretion, are both qualified and capable of acquiring the assets and
liabilities of the closed bank or the bank in danger of closing.
"(6)(A) If, after receiving offers, the offer presenting the lowest
expense to the Corporation, that is in a form and with conditions
acceptable to the Corporation (hereinafter referred to as the 'lowest
acceptable offer'), is from an offeror that is not an existing in-State
bank of the same type as the bank that has closed or is in danger of
closing (or, where the closed bank is an insured bank other than a
mutual savings bank, the lowest acceptable offer is not from an
in-State bank holding company), the Corporation shall permit each
offeror who made an offer the estimated cost of which to the
Corporation was within 15 per centum or $15,000,000, whichever is
less, of the initial lowest acceptable offer to submit a new offer.
"(B) In considering authorizations under this subsection, the Corporation shall give consideration to the need to minimize the cost of
financial assistance and to the maintenance of specialized depository institutions. The Corporation shall authorize transactions
under this subsection considering the following priorities:
"(i) First, between depository institutions of the same t3T)e
within the same State;
"(ii) Second, between depository institutions of the same type
In different States;
"(iii) Third, between depository institutions of different tjrpes
in the same State; and
"(iv) Fourth, between depository institutions of different types
in different States.
"(C) In considering offers from different States, the Corporation
shall give a priority to offers from adjoining States.
"(D) In determining the cost of offers and reoffers, the Corporation's calculations and estimations shall be determinative. The Corporation may set reasonable time limits on offers and reoffers.
"(7) No sale may be made under the provisions of paragraph (2) or
(3)"(A) which would result in a monopoly, or which would be in
furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of
the United States; or
"(B) whose effect in any section of the country may be substantially to lessen competition, or to tend to create a monopoly,
or which in any other manner would be in restraint of trade,
unless the Corporation finds that the anticompetitive effects of
the proposed transactions are 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.
"(8) As used in this subsection—
"(A) the term 'receiver' means the Corporation when it has
been appointed the receiver of a closed insured bank;
"(B) the term 'insured depository institution' means an
insured bank or an association or savings bank insured by the
Federal Savings and Loan Insurance Corporation; and
"(C) the term 'in-State depository institution or in-State holding company' means an existing insured depository institution
currently operating in the State in which the closed bank or the
bank in danger of closing is chartered or a company that is

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1479

operating an insured depository institution subsidiary in the
State in which the closed bank or the bank in danger of closing
is chartered.".
ASSESSMENTS

SEC. 117. The third sentence of section 7(d)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended—
(1) by striking out "and" before "(3) the insurance losses"; and
(2) by inserting before the period at the end thereof the
following: "; and (4) any lending costs for the calendar year,
which costs shall be equal to the amount by which the amount
of interest earned, if any, from each loan made by the Corporation under section 13 of this Act after January 1, 1982, is less 12 USC 1823.
than the amount which the Corporation would have earned in
interest for the calendar year if interest had been paid on such
loan during such calendar year at a rate equal to the average
current value of funds to the United States Treasury for such
calendar year".
WAIVER OF NOTICE REQUIREMENTS

SEC. 118. (a) Section 4(c)(8) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(c)(8)) is amended by striking out the semicolon
at the end thereof and inserting in lieu thereof the following: ".
Notwithstanding any other provision of this Act, if the Board finds
that an emergency exists which requires the Board to act immediately on any application under this subsection involving a thrift
institution, and the primary Federal regulator of such institution
concurs in such finding, the Board may dispense with the notice and
hearing requirement of this subsection and the Board may approve
or deny any such application without notice or hearing;".
(b) Section 2(i) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(i)) is amended by—
(1) striking out "or" before "(3)"; and
(2) by inserting before the period at the end thereof the
following: "or (4) a Federal savings bank".
(c) The first sentence of section 3(d) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1842(d)) is amended by inserting after "no
application" the following: "(except an application filed as a result
of a transaction authorized under section 13(f) of the Federal Deposit
Insurance Act)".
Ante, p. 1476.
PART B—FEDERAL HOME LOAN BANK BOARD AMENDMENTS
FEDERAL STOCK SAVINGS INSTITUTIONS

SEC. 121. Section 5 of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464), as amended by section 112, is amended by adding at the
end thereof the following:
"(p)(l) Notwithstanding any other provision of Federal law or the
laws or constitution of any State, and consistent with the purposes
of this Act, the Board may authorize (or in the case of a Federal
association, require) the conversion of a mutual savings and loan
association or Federal mutual savings bank that is insured by the
Federal Savings and Loan Insurance Corporation into a Federal
stock savings and loan association or Federal stock savings bank, or

96 STAT. 1480

PUBLIC LAW 97-320—OCT. 15, 1982

charter a Federal stock savings and loan association or Federal
stock savings bank to acquire the assets of, or merge with such a
mutual institution under the rules and regulations of the Board.
"(2) Authorizations under this subsection may be made only to
assist an institution in receivership, or if the Board has determined
that severe financial conditions exist which threaten the stability of
an institution and that such authorization is likely to improve the
financial condition of the institution, or when the Federal Savings
and Loan Insurance Corporation has contracted to provide assistance to such institution under section 406 of the National Housing
12 u s e 1729.

Act.

"(3) A Federal savings bank chartered under this subsection shall
have the same authority with respect to investments, operations and
activities, and shall be subject to the same restrictions, including
those applicable to branching and discrimination, as would apply to
it if it were chartered as a Federal savings bank under any other
provisions of this Act, and may engage in any investment, activity,
or operation that the institution it acquired was engaged in if that
institution was a Federal savings bank, or would have been authorized to engage in had that institution converted to a Federal
charter.".
ASSISTANCE TO THRIFT INSTITUTIONS

SEC. 122. (a) Section 406(f) of the National Housing Act (12 U.S.C.
1729(f)) is amended to read as follows:
"(f)(1) The Corporation is authorized, in its sole discretion and
upon such terms and conditions as the Corporation may prescribe, to
make loans to, to make deposits in, to purchase the assets or
securities of, to assume the liabilities of, or to make contributions to,
any insured institution—
"(A) if such action is taken to prevent the default of such
insured institution;
"(B) if, with respect to an insured institution in default, such
action is taken to restore such insured institution in default to
normal operation; or
"(C) if, when severe financial conditions exist which threaten
the stability of a significant number of insured institutions or of
insured institutions possessing significant resources, such action
is taken in order to lessen the risk to the Corporation posed by
such insured institution under such threat of instability.
"(2)(A) In order to facilitate a merger or consolidation of an
insured institution described in subparagraph (B) with another
insured institution or the sale of assets of such insured institution
and the assumption of such insured institution's liabilities by another insured institution, the Corporation is authorized, in its sole
discretion and upon such terms and conditions as the (Ilorporation
may prescribe—
"(i) to purchase any such assets or assume any such liabilities;
"(ii) to make loans or contributions to, or deposits in, or
purchase the securities of, such other insured institution
(which, for the purposes of this subparagraph, shall include a
Federal savings bank insured by the Federal Deposit Insurance
Corporation);
"(iii) to guarantee such other insured institution (which, for
the purposes of this subparagraph, shall include a Federal
savings bank insured by the Federal Deposit Insurance Corporation) against loss by reason of such other insured institution's

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1481

merging or consolidating with or assuming the liabilities and
purchasing the assets of such insured institution; or
"(iv) to take any combination of the actions referred to in
clauses (i) through (iii).
"(B) An insured institution described in this subparagraph—
"(i) is an insured institution which is in default;
"(ii) is an insured institution which, in the judgment of the
Corporation is in danger of default; or
"(iii) is an insured institution which, when severe financial
conditions exist which threaten the stability of a significant
number of insured institutions, or of insured institutions possessing significant financial resources, is determined by the
Corporation, in its sole discretion, to require assistance under
subparagraph (A) in order to lessen the risk to the Corporation
posed by such insured institution under such threat of
instability.
"(3) The Corporation may provide any person acquiring control of,
merging with, consolidating with or acquiring the assets of an
insured institution under section 408(m) of this Act with such Post, p. 1483.
financial assistance as it could provide an insured institution under
this subsection.
"(4) (A) No assistance shall be provided under paragraph (1), (2), or
(3) of this subsection in an amount in excess of that amount which
the Corporation determines to be reasonably necessary to save the
cost of liquidating (including paying the insured accounts of) such
insured institution, except that such restriction shall not apply in
any case in which the Corporation determines that the continued
operation of such insured institution is essential to provide adequate
savings or home financing services in its community.
"(B) The Corporation may not use its authority under this subsection to purchase the voting or common stock of an insured institution. Nothing in the preceding sentence shall be construed to limit
the ability of the Corporation to enter into and enforce covenants
and agreements that it determines to be necessary to protect its
(b) Section 406(b) of the National Housing Act (12 U.S.C. 1729(b))
is amended to read as follows:
"Ob)(l) In the event that a Federal association is in default, the
Corporation shall be appointed as conservator or receiver and as
such—
"(A) is authorized—
"(i) to take over the assets of and operate such
association;
"(ii) to take such action as may be necessary to put it in a
sound solvent condition;
"(iii) to merge it with another insured institution;
"(iv) to organize a new Federal association to take over its
assets;
"(v) to proceed to liquidate its assets in an orderly
manner; or
"(vi) to make such other disposition of the matter as it
deems appropriate;
whichever it deems to be in the best interest of the association,
its savers, and the Corporation; and
"(B) shall pay all valid credit obligations of the association.

96 STAT. 1482

"Federal
association."

12 use 1464.

PUBLIC LAW 97-320—OCT. 15, 1982

"(2) The corporation shall pay insurance as provided in section
405. The surrender and transfer to the Corporation of an insured
account in any such association which is in default shall subrogate
the Corporation with respect to such insured account, but shall not
affect any right which the insured member may have in the uninsured portion of his account or any right which he may have to
participate in the distribution of the net proceeds remaining from
the disposition of the assets of such association.
"(3) As used in this section, the term 'Federal association' means a
Federal savings and loan association or a Federal savings bank.".
(c) Section 406(c) of the National Housing Act (12 U.S.C. 1729(c)) is
amended by striking out "savings and loan" wherever it appears.
(d) Section 406(c)(1) of the National Housing Act (12 U.S.C.
1729(c)(1)) is amended by inserting "(A)" after "(c)(1)" and by adding
at the end thereof the following:
"(B)(i)(I) Notwithstanding any provision of the constitution or
laws of any State, or of this section, in the event the Federal
Home Loan Bank Board determines that any of the grounds
specified in section 5(d)(6)(A) (i), (ii), or (iii) of the Home Owners'
Loan Act of 1933 exist with respect to an insured institution,
other than a Federal association, the Board shall have exclusive
power and jurisdiction to appoint the Corporation as sole conservator or receiver of such institution.
"(II) In such cases the corporation shall have the same powers
and duties with respect to insured institutions as are conferred
upon it under subsection (b) of this section with respect to
Federal associations.
"(ii)(I) The authority conferred by this subparagraph shall not
be exercised without the written approval of the State official
having jurisdiction over the State-chartered insured institution
that the grounds specified for such exercise exist.
"(II) If such approval has not been received by the Board
within 90 days of receipt of notice by the State that the Board
has determined such grounds exist, and the Board has responded in writing to the State's written reasons, if any, for
withholding approval, then the Board may proceed without
State approval only by a unanimous vote of the Board. The
corporation may also proceed without State approval if the
Corporation has been appointed conservator, receiver, or other
legal custodian pursusint to State law under subparagraph (A).".
(e) The first sentence of section 406(c)(2) of the National Housing
Act (12 U.S.C. 1729(c)(2)) is amended by inserting "conservator or
after "sole".
(f) Section 406(c)(3) of the National Housing Act (12 U.S.C.
1729(c)(3)) is amended—
(1) by inserting "conservator or" before "receiver" wherever
it appears therein;
(2) by striking out "paragraph (2)" and inserting in lieu
thereof "paragraphs (1) or (2)'; and
(3) by striking out the second sentence.
(g) Section 406(d) of the National Housing Act (12 U.S.C. 1729(d)) is
amended to read as follows:
"(d) In connection with the liquidation of insured institutions, the
Corporation shall have power to carry on the business of and to
collect all obligations to the insured institutions, to settle, compromise, or release claims in favor of or against the insured institutions, and to do all other things that may be necessary in connection

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1483

therewith, subject only to the regulation of the Federal Home Loan
Bank Board, or, in cases where the Corporation has been appointed
conservator, receiver, or legal custodian solely by a public authority
having jurisdiction over the matter other than said Board, subject
only to the regulation of such public authority.".
EMERGENCY THRIFT ACQUISITIONS

SEC. 123. (a) Section 408 of the National Housing Act (12 U.S.C.
1730a) is amended by adding at the end thereof the following:
"(m)(l)(A)(i) Notwithstanding any provision of the laws or constitution of any State or any provision of Federal law, except as
provided in subsections (eX2) and (1) of this section, and in clause (iii)
of this subparagraph, the Corporation, upon its determination that
severe financial conditions exist which threaten the stability of a
significant number of insured institutions, or of insured institutions
possessing significant financial resources, may authorize, in its discretion and where it determines such authorization would lessen the
risk to the Corporation, an insured institution that is eligible for
assistance pursuant to section 406(f) of this Act to merge or consoli- Post, p. 1489.
date with, or to transfer its assets and liabilities to, any other
insured institution or any insured bank (as such term 'insured bank'
is defined in section 3(h) of the Federal Deposit Insurance Act), may 12 USC1813.
authorize any other insured institution to acquire control of said
insured institution, or may authorize any company to acquire control of said insured institution or to acquire the assets or assume the
liabilities thereof.
"(ii) Mergers, consolidations, transfers, and acquisitions under this
subsection shall be on such terms as the Corporation shall provide.
"(iii) Where otherwise required by law, transactions under this
subsection must be approved by the primary Federal supervisor of
the party thereto that is not an insured institution.
"(B)(i) Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State official
having jurisdiction of the acquired institution.
"(ii) The State official shall be given a reasonable opportunity, and
in no event less than forty-eight hours, to object to the use of the
provisions of this paragraph. Such notice may be provided by the
Corporation prior to its appointment as receiver, but in anticipation
of an impending appointment.
"(iii) If the State official objects during such period, the Corporation may use the authority of this paragraph only by a unanimous
vote of the Board of Directors. The Board of Directors shall provide
to the State official, as soon as practicable, a written certification of
its determination.
"(2) In considering authorizations under this subsection, the Corporation may solicit such offers or proposals as are practicable from
any prospective purchasers or merger partners it determines, in its
sole discretion, are both qualified and capable of acquiring the assets
and liabilities of the insured institution.
"(3)(A) If, after receiving offers, the offer presenting the lowest
expense to the Corporation, that is in a form and with conditions
acceptable to the Corporation (hereinafter referred to as the 'lowest
acceptable offer'), is from an institution that is not an existing inState insured institution or an in-State savings and loan holding
company, the Corporation shall permit each offeror who made an
offer the estimated cost of which to the Corporation was within 15

96 STAT. 1484

Definitions.

26 u s e 7701.

PUBLIC LAW 97-320—OCT. 15, 1982

per centum or $15,000,000, whichever is less, of the initial lowest
acceptable offer to submit a new offer.
"(B) In considering authorizations under this subsection, the Corporation shall give consideration to the need to minimize the cost of
financial assistance and to the maintenance of specialized depository institutions. The Corporation shall authorize transactions
under this subsection considering the following priorities:
"(i) First, between depository institutions of the same type
within the same State;
"(ii) Second, between depository institutions of the same type
in different States;
"(iii) Third, between depository institutions of different types
in the same State; and
"(iv) Fourth, between depository institutions of different types
in different States.
"(C) In the case of a minority-controlled institution, the Corporation shall seek an offer from other minority-controlled institutions
before proceeding with the sequence set forth in the preceding
subparagraph.
"(D) In considering offers from different States, the Corporation
shall give a priority to offers from adjoining States.
"(E) In determining the cost of offers and reoffers under this
subsection, the Corporation's calculations and estimations shall be
determinative. The Corporation may set reasonable time limits on
offers and reoffers.
"(4) For purposes of this subsection—
"(A) the term 'insured depository institution* means an
insured institution or a bank insured by the Federal Deposit
Insurance Corporation; and
"(B) the term 'in-State depository institution or in-State
depository institution holding company' means an existing
insured depository institution currently operating in the State
in which the closed institution is chartered or a company that is
operating an insured depository institution subsidiary in the
State in which the closed institution is chartered.
"(5)(A) Where a merger, consolidation, transfer, or acquisition
under this subsection involves an insured institution eligible for
assistance and a bank or bank holding company, an insured institution may retain and operate any existing branch or branches or any
other existing facilities but otherwise shall be subject to the conditions upon which a national bank may establish and operate
branches in the State in which such insured institution is located.
"(B) No such insured institution shall move its principal office or
any branch office after it is acquired which it would be prohibited
from moving if it were a national bank.
"(CXi) Notwithstanding the foregoing, if such an insured institution does not have its home office in the State of the bank holding
company bank subsidiary, and if such institution does not qualify as
a domestic building and loan association under section 7701(aX19) of
the Internal Revenue Code of 1954, or does not meet the asset
composition test imposed by subparagraph (C) of that section on
institutions seeking so to qualify, then such insured institution shall
be subject to the conditions upon which a bank may retain, operate,
and establish branches in the State in which the insured institution
is located.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1485

"(ii) The Corporation, for good cause shown, may allow insured
institutions up to two years to comply with the requirements of
(b) Section 408(e)(2) of the National Housing Act (12 U.S.C.
1730a(e)(2)) is amended—
(1) in the first sentence, by inserting after "subsection" the
following: ", or any transaction under subsection (m) of this
section,'; and
(2) in the third sentence, by inserting after "acquisition," the
following: "except a transaction under subsection (m) of this
section,'.
ASSISTANCE TO FEDERAL HOME LOAN BANKS MEMBERS

SEC. 124. Section 16 of the Federal Home Loan Bank Act (12
U.S.C. 1436) is amended bv inserting "(a)" after "SEC. 16." and by
adding at the end thereof the following:
"(b) Notwithstanding subsection (a) or any other provision of this
Act, if the Board determines that severe financial conditions exist
threatening the stability of member institutions, the Board may
suspend temporarily the requirements of subsection (a) that a portion of net earnings be set aside semiannually by each Federal
Home Loan Bank to a reserve account and permit each Federal
Home Loan Bank to declare and pay dividends out of undivided
profits.".
BORROWING AUTHORITY

SEC. 125. (a) The first sentence of section 402(d) of the National
Housing Act (12 U.S.C. 1725(d)) is amended by inserting before the
period at the end thereof the following: ", except that interest on
loans from the Federal Home Loan Banks shall be not less than
their current marginal cost of funds, taking into account the maturities involved, and loans from the Federal Home Loan Banks shall be
adequately secured, as determined by the Board".
(b) The first sentence of section 402(i) of the National Housing Act
(12 U.S.C. 1725(i)) is amended—
(1) by striking out "any other source" and inserting in lieu
thereof "any source other than the Federal Home Loan
Banks"; and
(2) by inserting "from the Treasury" after "Provided, That
Prich SllCil lo3.Tl

(c) Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431)
is amended by adding at the end thereof the following:
"(k) The Federal Home Loan Banks are hereby authorized, as
directed by the Board, to make loans to the Federal Savings and
Loan Insurance Corporation. All such loans shall be made in accordance with the provisions of section 402(d) of the National Housing
Act".
INSURANCE FUND RESERVES

SEC. 126. Section 404 of the National Housing Act (12 U.S.C. 1727)
is amended by redesignating subsection (h) as subsection (i) and by
inserting after subsection (g) the following:
"(h) Notwithstanding any other provision of this section, the
Corporation, upon its determination that extraordinary financial

96 STAT. 1486

PUBLIC LAW 97-320—OCT. 15, 1982

conditions exist increasing the risk to the Corporation, may terminate distribution of shares of the secondary reserve and utilize said
reserve on the same basis as the primary reserve. If otherwise
authorized, the Corporation may resume such distribution upon its
determination that said conditions no longer exist.".
FEDERAL HOME LOAN BANK ACT

SEC. 127. Section 17(a) of the Federal Home Loan Bank Act (12
U.S.C. 1437(a)) is amended by inserting after the first sentence the
following: "Notwithstanding any other provision of law, the Board
may from time to time make such provision as it deems appropriate
authorizing the performance by any officer, employee, agent, or
administrative unit thereof of any function of the Board (including
any function of the Federal Savings and Loan Insurance Corporation), except with regard to promulgation of rules and regulations in
accordance with the Administrative Procedure Act, and adjudications subject to such Act.".
CONTINUATION OF INSURANCE

SEC. 128. Section 405(a) of the National Housing Act (12 U.S.C.
1728(a)) is amended by adding after the first sentence the following:
"Whenever the liabilities of an insured institution for accounts shall
have been assumed by another insured institution or institutions,
whether by way of merger, consolidation, or other statutory assumption, or pursuant to contract, all accounts so assumed shall have
separate insurance which shall terminate at the end of six months
from the date such assumption takes effect or, in the case of any
certificate account, the earliest maturity date after the six-month
period.".
PART C—CREDIT UNIONS
CREDIT U N I O N MERGERS

SEC. 131. Section 205 of the Federal Credit Union Act (12 U.S.C.
1785) is amended by adding at the end thereof the following:
"(h) Notwithstanding any other provision of law, the Board may
authorize a merger or consolidation of an insured credit union
which is insolvent or is in danger of insolvency with any other
insured credit union or may authorize an insured credit union to >
purchase any of the assets of, or assume any of the liabilities of, any
other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that—
"(1) an emergency requiring expeditious action exists with
respect to such other insured credit union;
"(2) other alternatives are not reasonably available; and
"(3) the public interest would best be served by approval of
such merger, consolidation, purchase, or assumption.
"(i)(l) Notwithstanding any other provision of this Act or of State
law, the Board may authorize an institution whose deposits or
accounts are insured by the Federal Deposit Insurance Corporation
or the Federal Savings and Loan Insurance Corporation to purchase
any of the assets of or assume any of the liabilities of an insured
credit union which is insolvent or in danger of insolvency, except
that prior to exercising this authority the Board must attempt to

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1487

effect the merger or consolidation of an insured credit union which
is insolvent or in danger of insolvency with another insured credit
union, as provided in subsection (h).
"(2) For purposes of the authority contained in paragraph (1),
insured accounts of the credit union may upon consummation of the
purchase and assumption be converted to insured deposits or other
comparable accounts in the acquiring institution, and the Board and
the National Credit Union Share Insurance Fund shall be absolved
of any liability to the credit union's members with respect to those
accounts.".
BOARD'S AUTHORITY AS CONSERVATOR

SEC. 132. (a) Section 206 of the Federal Credit Union Act (12 U.S.C.
1786) is amended—
(1) by redesignating subsections (h) through (o) as subsections
(i) through (p), respectively; and
(2) by inserting after subsection (g) the following new
subsection:
"(h)(1) The Board may, ex parte without notice, appoint itself as
conservator and immediately take possession and control of the
business and assets of any insured credit union in any case in
which—
"(A) the Board determines that such action is necessary to
conserve the assets of any insured credit union or to protect the
Fund or the interests of the members of such insured credit
union; or
"(B) an insured credit union, by a resolution of its board of
directors, consents to such an action by the Board.
"(2)(A) In the case of a State-chartered insured credit union, the
authority conferred by paragraph (1) shall not be exercised without
the written approval of the State official having jurisdiction over the
State-chartered credit union that the grounds specified for such
exercise exist.
"(B) If such approval has not been received by the Board within
ninety days of receipt of notice by the State that the Board has
determined such grounds exist, and the Board has responded in
writing to the State's written reasons, if any, for withholding approval, then the Board may proceed without State approval only by
a unanimous vote of the Board.
"(3) Not later than ten days after the date on which the Board
takes possession and control of the business and assets of an insured
credit union pursuant to paragraph (1), such insured credit union
may apply to the United States district court for the judicial district
in which the principal office of such insured credit union is located
or the United States District Court for the District of Columbia, for
an order requiring the Board to show cause why it should not be
enjoined from continuing such possession and control.
'(4) Except as provided in paragraph (3), in the case of a Federal
credit union, the Board may maintain possession and control of the
business and assets of such credit union and may operate such credit
union until such time—
"(A) as the Board shall permit such credit union to continue
business subject to such terms and conditions as may be
imposed by the Board; or
"(B) as such credit union is liquidated in accordance with the
provisions of section 207.
12 USC 1787.

96 STAT. 1488

12 use 1787.

PUBLIC LAW 97-320—OCT. 15, 1982

"(5) Except as provided in paragraph (3), in the case of an insured
State-chartered credit union, the Board may maintain possession
and control of the business and assets of such credit union and may
operate such credit union until such time—
"(A) as the Board shall permit such credit union to continue
business, subject to such terms and conditions as may be
imposed by the Board;
"(B) as the Board shall permit the transfer of possession and
control of such credit union to any commission, board, or
authority which has supervisory authority over such credit
union and which is authorized by State law to operate such
credit union; or
"(C) as such credit union is liquidated in accordance with the
provisions of section 207.
"(6) The Board may appoint such agents as it considers necessary
in order to assist the Board in carrying out its duties as a conservator under this subsection.
"(7) All expenses incurred by the Board in exercising its authority
under this subsection with respect to any credit union shall be paid
out of the assets of such credit union.
"(8) The authority granted by this subsection is in addition to all
other authority granted to the Board under this Act.".
(b) Section 206(b)(2) of the Federal Credit Union Act (12 U.S.C.
1786(b)(2)) is amended by striking out "subsection (i)" and inserting
in lieu thereof "subsection (j)".
(c) Section 206g)(l) of such Act (12 U.S.C. 1786(j)(l)), as so redesignated by subsection (a), is amended—
(1) in the first sentence, by striking out "subsection (h)(3)" and
inserting in lieu thereof "subsection (i)(3)"; and
(2) in the fourth sentence, by striking out "subsection (i)" and
inserting in lieu thereof "subsection (j)".
(d) The first sentence of section 206(j)(2) of such Act (12 U.S.C.
1786(j)(2)), as redesignated by subsection (a), is amended by striking
out "subsection (h)(1)" and inserting in lieu thereof "subsection
(i)(l)".
(e) The first sentence of section 206(1) of such Act (12 U.S.C.
1786(1)), as redesignated by subsection (a), is amended by striking
out "(h)" and inserting in lieu thereof "(i)".
(f) Section 206(m) of such Act (12 U.S.C. 1786(m)), as redesignated
by subsection (a), is amended—
(1) by striking out "subsection (i)" and inserting in lieu
thereof "subsection (j)"; and
(2) by striking out "subsection (h)" and inserting in lieu
thereof "subsection (i)".
(g) The section heading for section 206 of the Federal Credit Union
Act (12 U.S.C. 1786) is amended by inserting "; TAKING POSSESSION OF

BUSINESS AND ASSETs" after "COMMITTEE MEMBERS".
PART D—SUNSET PROVISION
SUNSET OF C E R T A I N PROVISIONS

12 u s e 1464
"°^^Ante, p. 1469.

SEC. 141. (a) Effective upon the expiration of three years after the
date of enactment of this Act—
(1) section 13(c)(5) of the Federal Deposit Insurance Act, as
added by section 111 of this Act, shall be repealed;

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1489

(2) subparagraphs (F) and (G) of section 5(oX2) of the Home
Owners* Loan Act of 1933, as added by section 112 of this Act,
shall be repealed;
(3) the provision of law amended by section 116 of this Act
shall be amended to read as it would without such amendment;
(4) the provisions of law amended by subsections (a) and (c) of
section 118 shall be amended to read as they would without
such amendments;
(5) the provision of law amended by section 121 of this Act
shall be amended to read as it would without such amendment;
(6) the provisions of law amended by subsections (d) through
(g) of section 122 of this Act shall be amended to read as they
would without such amendments;
(7) the provisions of law amended by section 123 of this Act
shall be amended to read as they would without such
amendments; and
(8) the provisions of law amended by sections 131 and 132
shall be amended to read as they would without such amendments.
(b) The rei)eal or termination by subsection (a) of any amendment
made by this Act shall have no effect on any action taken or
authorized while such amendment was in effect.
TITLE II—NET WORTH CERTIFICATES

Ante, p. 1471.
12 u s e 1823.

12 u s e 1843,
1842.
12 u s e 1464.

12 u s e 1729.
12 u s e 1730a.

12 u s e 1785,
1786.
12 u s e 1464
note.

Net Worth
eertificate Act.

SHORT TITLE

SEC. 201. This title may be cited as the "Net Worth Certificate 12 use I8II
Act".
"''^^•
INSURED INSTITUTIONS

SEC. 202. (a) Section 406(f) of the National Housing Act (12 U.S.C.
1729(f)), as amended by section 122 of this Act, is amended by adding
at the end thereof the following:
"(5XAXi) Notwithstanding any other provision of State or Federal
law, and without limitation on any authority provided elsewhere in
this Act or the Home Owners' Loan Act of 1933, the Corporation, in 12 use 1461.
its sole discretion and on such terms and conditions as it may
prescribe, is authorized to increase or maintain the capital of a
qualified institution by making periodic purchases of capital instruments to be known as net worth certificates, as defined by the
Corporation, for such form of consideration as the Corporation may
determine, from such qualified institution, and may authorize such
institution to issue such net worth certificates, pursuant to this
paragraph.
"(ii) Dividends on any certificate so purchased shall be at a rate
equivalent to the rate of interest paid on any promissory note used
to purchase the certificate.
"(iii) In making a determination under this paragraph, the State
supervisor of the State in which a State chartered institution which
is the subject of the eligibility determination is located shall be
consulted.
"(iv) With respect to certificates held by it, the claim of the
Corporation shall have a priority over any claim arising out of an
equity interest in the insitution in the event of a liquidation or
reorganization, subject to the prior payment of all accounts, certificates of deposit, and debt obligations other than debt obligations

96 STAT. 1490

"Qualified
institution."

PUBLIC LAW 97-320—OCT. 15, 1982

subordinated to the claims of general creditors which were outstanding when any certificates were purchased, and over any right of
equity holders to participate in future earnings.
"(B) For the purposes of this paragraph, the term 'qualified
institution' means an institution the deposits of which are insured
under this title or insured or guaranteed under State law which, as
determined by the Corporation—
"(i) has net worth equal to or less than 3 per centum of its
assets;
"(ii) has incurred losses during the two previous quarters;
"(iii) has not incurred such losses as a result of transactions
involving speculation in futures or forward contracts, of management action designed solely for the purpose of qualifying for
assistance, or of excessive operating expenses;
"(iv) agrees to comply with all the terms and conditions
established by the Corporation for receiving assistance pursuant
to this paragraph, including those relating to reporting, compliance with laws, rules and regulations, execution and implementation of resolutions and agreements to merge or reorganize,
submission and adoption of plans of operation, restrictions on
operations, repayment of assistance received, and consent to
supervisory action;
"(v) will have a net worth of not less than one-half of one per
centum of assets after any purchase of its net worth certificates
by the Corporation, as determined by the Corporation in accordance with the methods for calculating net worth pursuant to
this paragraph; and
"(vi) has investments in residential mortgages or securities
backed by such mortgages aggregating at least 20 per centum of
its loans.
"(C)(i) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's
board to allow such institution to be merged with or acquired by
another company if the Corporation finds that such institution will
have positive net worth for a period of at least six months after such
certificates are purchased.
"(ii) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's
board to make specified management personnel changes if the
Corporation finds that if such institution will have positive net
worth for a period of at least nine months after such certificates are
purchased.
"(D) In any case where the staff of the Corporation finds for the
purpose of subparagraph (C) that the length of time during which
the institution will have positive net worth after a purchase of
certificates is less than six months or nine months, as the case may
be, the institution may submit to the staff its plans and projections.
If the staff does not change its position after considering such plans
and projections, the institution may submit such plans and projections to the Board and the institution shall be entitled to an appeal
to, and a review of the staffs findings by, the Board.
"(E) The Corporation may initially purchase net worth certificates
as follows:
"(i) With respect to a qualified institution having net worth
greater than 2 per centum and less than or equal to 3 per
centum, the Corporation may purchase net worth certificates in
any period from such institution in an amount equal to 50 per

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1491

centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation.
"(ii) With respect to a qualified institution having net worth
greater than 1 per centum and less than or equal to 2 per
centum, the Corporation may purchase net worth certificates in
any period from such institution in an amount equal to 60 per
centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation.
"(iii) With respect to a qualified institution having net worth
less than or equal to 1 per centum, the Corporation may purchase net worth certificates in any period from such institution
in an amount equal to 70 per centum of its operating losses (not
occasioned by mismanagement or speculation in futures or
forward contracts), as determined by the Corporation.
"(F) In the exercise of its authority under this paragraph, the
Corporation may at any time, in its sole discretion, establish criteria
which, with respect to ranges of net worth, calculation of losses, and
percentage of losses to be met by purchases of net worth certificates,
differ from those set forth in subparagraph (E), except that the
Corporation shall in no period purchase net worth certificates from
a qualified institution in an amount equal to more than 100 per
centum of such institution's operating losses incurred for the immediately preceding period.
"(G) No assistance may be provided to a qualified institution
pursuant to this paragraph if the Corporation determines that
providing such assistance would be costlier than liquidating (including paying the insured accounts of) such institution or dealing with
it in accordance with paragraph (1) or (2) of this subsection.
"(H) The provisions of the constitution or the laws, civil or criminal, of any State, express or implied, limiting the authority of a
qualified institution (i) to take part in programs under this paragraph, (ii) to issue and otherwise deal in net worth certificates issued
pursuant to this paragraph, or (iii) to continue operations, including
the receipt of deposits and the payment or crediting of interest or
dividends to depositors, because of the level of such institution's net
worth, surplus fund, or guaranty fund, shall not apply to any
qualified institution which the Corporation has approved for the
purpose of taking part in programs under this paragraph, continuing operations, or paying interest or dividends.
"(I) During any period when a qualified institution has outstanding net worth certificates issued in accordance with this paragraph,
such institution shall not be liable for any State or local tax which is
determined on the basis of the deposits held by such institution or
the interest paid on such deposits.
"(J) Notwithstanding any other Federal or State law, net worth
certificates purchased by the Corporation under this paragraph
shall be deemed to be net worth for statutory and regulatory
purposes.
"(K) The Corporation may not use its authority under this paragraph to purchase the voting or common stock of a qualified institution. Nothing in this subparagraph shall be construed to limit the
ability of the Corporation to enter into and enforce covenants and
agreements that it determines to be necessary to protect its financial interests.

97-200 O-84-pt. 2

5 : QL3

96 STAT. 1492

Ante, p. 1480.

PUBLIC LAW 97-320—OCT. 15, 1982

"(L) The Corporation may provide assistance to a qualified institution which is not an insured institution only if the State fund which
insures or guarantees the deposits of such qualified institution
enters into an agreement with the Corporation which provides
that—
"(i) the State fund will indemnify the Corporation for any
losses which the Corporation may incur as a result of providing
assistance under this paragraph to such qualified institution;
and
"(ii) during any period when such qualified institution has
outstanding capital instruments issued in accordance with this
paragraph, the State insurance fund maintains a level of assessments on its members which results in costs to its members
which are at least equivalent to the premium assessments paid
to the Corporation by insured institutions during such period.
"(M) During any period in which a qualified institution which has
a stock form of ownership has outstanding certificates under this
paragraph, such qualified insured institution may not pay dividends
to its sn3.rpriol(iGrs
(b) Section 5(b)(5) of the Home Owners' Loan Act of 1933 (12 U.S.C.
1464(b)(5)) is amended—
(1) by striking out subparagraph (B) and inserting in lieu
thereof the following:
"(B) Net worth certificates issued by an association pursuant to
section 406(f) of the National Housing Act shall constitute part of
the general reserves and net worth of the association, in accordance
with the rules and regulations of the Board."; and
(2) by adding at the end thereof a new subparagraph (C) as
follows:
"(C) The Board shall provide in its rules and regulations for
charging losses to mutual capital certificates, net worth certificates
issued pursuant to section 406(f) of the National Housing Act,
reserves, and other net worth accounts.".
(c) Section 403(b) of the National Housing Act (12 U.S.C. 1726(b)) is
amended—
(1) in the fourth-to-last sentence by inserting after "items,"
the following: "including net worth certificates issued pursuant
to section 406(f) of this Act,"; and
(2) in the second-to-last sentence by striking out "the mutual
capital certificate" and inserting in lieu thereof "mutual capital
certificates, net worth certificates issued pursuant to section
406(f) of this Act,".
(d) Section 403(b) of the National Housing Act (12 U.S.C. 1726(b)) is
amended by striking out "will provide adequate reserves satisfactory to the Corporation" and all that follows through the end of the
sentence immediately preceding the fourth sentence from the end of
such subsection, and inserting in lieu thereof the following: "and
will provide adequate reserves in a form satisfactory to the Corporation, to be established in accordance with regulations made by the
Corporation.".
INSURED BANKS

SEC. 203. Section 13 of the Federal Deposit Insurance Act (12
U.S.C. 1823), as amended by section 113 of this Act is amended by
adding at the end thereof the following:
"(i)(l)(A) Notwithstanding any other provision of State or Federal
law, and without limitation on any authority provided elsewhere in

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1493

this Act, the Corporation, in its sole discretion and on such terms
and conditions as it may prescribe, is authorized to increase or
maintain the capital of a qualified institution by making periodic
purchases of capital instruments to be known as net worth certificates, as defined by the Corporation, for such form of consideration
as the Corporation may determine, from such institution, and may
authorize such institution to issue net worth certificates, pursuant
to this subsection.
"(B) Dividends on any certificate so purchased shall be at a rate
equivalent to the rate of interest paid on any promissory note used
to purchase the certificate.
"(C) In making a determination under this subsection, the corporation shall consult the State supervisor of the State in which a
State chartered bank which is the subject of the eligibility determination is located, and in the case of a State member bank or a
national bank, the Corporation shall consult the Board of Governors
of the Federal Reserve System or the Comptroller of the Currency,
respectively.
"(D) With respect to certificates held by it, the claim of the
Corporation shall have a priority over any claim arising out of an
equity interest in the institution in the event of a liquidation or
reorganization, subject to the prior payment of all accounts, certificates of deposit, and debt obligations other than debt obligations
subordinated to the claims of general creditors which were outstanding when any certificates were purchased, and over any right of
equity holders to participate in future earnings.
"(2) For the purposes of this subsection, the term 'qualified institu- "Qualified
tion' means an institution the deposits of which are insured under institution."
this title or insured or guaranteed under State law which, as
determined by the Corporation—
"(A) has net worth equal to or less than 3 per centum of its
assets;
"(B) has incurred losses during the two previous quarters;
"(C) has not incurred such losses as a result of transactions
involving speculation in futures or forward contracts, of management action designed solely for the purpose of qualifying for
assistance, or of excessive operating expenses;
"(D) agrees to comply with all the terms and conditions
established by the Corporation for receiving assistance pursuant
to this paragraph, including those relating to reporting, compliance with laws, rules and regulations, execution and implementation of resolutions and agreements to merge or reorganize,
submission and adoption of plans of operation, restrictions on
operations, repayment of assistance received, and consent to
supervisory action;
"(E) will have a net worth of not less than one-half of one per
centum of assets after any purchase of its net worth certificates
by the Corporation, as determined by the Corporation in accordance with the methods for calculating net worth pursuant to
this paragraph; and
"(F) has investments in residential mortgages or securities
backed by such mortgages aggregating at least 20 per centum of
its loans.
"(3) (A) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's
board to allow such institution to be merged with or acquired by
another company if the Corporation finds that such institution will

96 STAT. 1494

PUBLIC LAW 97-320—OCT. 15, 1982

have positive net worth for a period of at least six months after such
certificates are purchased.
"(B) The Corporation may not condition the purchase of certificates under this paragraph on the agreement of the institution's
board to make specified management personnel changes if the
Corporation finds that such institution will have positive net worth
for a period of at least nine months after such certificates are
purchased.
"(4) In any case where the staff of the Corporation finds for the
purpose of paragraph (3) that the length of time during which the
institution will have positive net worth after a purchase of certificates is less than six months or nine months, as the case may be, the
institution may submit to the staff its plans and projections. If the
staff does not change its position after considering such plans and
projections, the institution may submit such plans and projections to
the Board and the institution shall be entitled to an appeal to, and a
review of the staffs findings by, the Board.
"(5) The Corporation may initially purchase net worth certificates
as follows:
"(A) With respect to a qualified institution having net worth
greater than 2 per centum and less than or equal to 3 per
centum, the Corporation may purchase net worth certificates in
any period from such institution in an amount equal to 50 per
centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation.
"(B) With respect to a qualified institution having net worth
greater than 1 per centum and less than or equal to 2 per
centum, the Corporation may purchase net worth certificates in
any period from such institution in an amount equal to 60 per
centum of its operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the Corporation.
"(C) With respect to a qualified institution having net worth
greater than zero and less than or equal to 1 per centum, the
Corporation may purchase net worth certificates in any period
from such institution in an amount equal to 70 per centum of its
operating losses (not occasioned by mismanagement or speculation in futures or forward contracts), as determined by the
Corporation.
"(6) In the exercise of its authority under this subsection, the
Corporation may at any time, in its sole discretion, establish criteria
which, with respect to ranges of net worth, calculation of losses, and
percentage of losses to be met by purchases of net worth certificates,
differ from those set forth in paragraph (5), except that the Corporation shall in no period purchase net worth certificates from a
qualified institution in an amount equal to more than 100 per
centum of such institution's operating losses incurred for the immediately preceding period.
"(7) No assistance may be provided to a qualified institution
pursuant to this subsection if the Corporation determines that
providing such assistance would be costlier than liquidating (including paying the insured accounts of) such institution or dealing with
it in accordance with subsection (c) or (d) of this subsection.
"(8) The provisions of the constitution or the laws, civil or criminal, of any State, express or implied, limiting the authority of a
qualified institution (A) to take part in programs under this subsec-

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1495

tion, (B) to issue and otherwise deal in net worth certificates issued
pursuant to this paragraph, or (C) to continue operations, including
the receipt of deposits and the payment or crediting of interest or
dividends to depositors, because of the level of such institution's net
worth, surplus fund, or guaranty fund, shall not apply to any
qualified institution which the Corporation has approved for the
purpose of taking part in programs under this subsection, continuing operations, or paying interest or dividends.
"(9) During any period when a qualified institution has outstanding net worth certificates issued in accordance with this subsection,
such institution shall not be liable for any State or local tax which is
determined on the basis of the deposits held by such institution or
the interest paid on such deposits.
"(10) Notwithstanding any other Federal or State law, net worth
certificates purchased by the Corporation under this subsection
shall be deemed to be net worth for statutory and regulatory
purposes.
"(11) The Corporation may not use its authority under this subsection to purchase the voting or common stock of a qualified institution. Nothing in this paragraph shall be construed to limit the
ability of the Corporation to enter into and enforce covenants and
agreements that it determines to be necessary to protect its financial interests.
"(12) The Corporation may provide assistance to a qualified institution which is not an insured institution only if the State fund
which insures or guarantees tho deposits of such qualified institution enters into an agreement with the Corporation which provides
that—
"(A) the State fund will indemnify the Corporation for any
losses which the Corporation may incur as a result of providing
assistance under this subsection to such qualified institution;
and
"(B) during any period when such qualified institution has
outstanding capital instruments issued in accordance with this
subsection, the State insurance fund maintains a level of assessments on its members which results in costs to its members
which are at least equivalent to the premium assessments paid
to the Corporation by insured institutions during such period.
"(13) During any period in which a qualified institution which has
a stock form of ownership has outstanding certificates under this
subsection, such qualified insured institution may not pay dividends
to its shareholders.".
REPORTS TO CONGRESS

SEC. 204. The Federal Home Loan Bank Board and the Board of 12 use I823
Directors of the Federal Deposit Insurance Corporation shall each "ote.
transmit an annual report to each House of the Congress specifying
the types and amounts of net worth certificates purchased from each
depository institution and the conditions imposed on each such
depository institution.
GENERAL ACCOUNTING OFFICE AUDIT

SEC. 205. The Comptroller General of the United States shall 12 u s e 1823
conduct on a semiannual basis an audit of the net worth certificate "°^^'
programs of the Federal Deposit Insurance Corporation and the

96 STAT. 1496
Report to
Congress.

PUBLIC LAW 97-320—OCT. 15, 1982

Federal Home Loan Bank Board. A report on each such audit shall
be transmitted to each House of the Congress.
REPEAL

Ante, p. 1489.
12 u s e 1729,
1823.
Ante, p. 1492.
Thrift
Institutions
Restructuring
Act.
12 u s e 1461
note.

SEC. 206. Upon the expiration of three years after the date of
enactment of this Act, section 406(f)(5) of the National Housing Act
and section 13(i) of the Federal Deposit Insurance Act are repealed.
TITLE III—THRIFT INSTITUTIONS RESTRUCTURING
SHORT TITLE

SEC. 301. This title may be cited as the "Thrift Institutions
Restructuring Act".
PART A—FORM OF CHARTER; DEMAND ACCOUNTS
CHARTERING AND PURPOSE

SEC. 311. 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 thrift institutions for the deposit or
investment of funds and for the extension of credit for homes and
other goods and services, 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 savings banks, and to issue charters therefor, giving primary consideration to the best practices of thrift institutions in the
United States. The lending and investment authorities are conferred
by this section to provide such institutions the flexibility necessary
to maintain their role of providing credit for housing,".
DEMAND ACCOUNTS AND CAPITAL STOCK

SEC. 312. Paragraphs (1) and (2) of section 5(b) of the Home
Owners' Loan Act of 1933 (12 U.S.C. 1464(b)) are amended to read as
follows:
"(1)(A) An association may raise capital in the form of such
savings deposits, shares, or other accounts, for fixed, minimum, or
indefinite periods of time (all of which are referred to in this section
as savings accounts), or in the form of such demand accounts of
those persons or organizations that have a business, corporate,
commercial, or agricultural loan relationship with the association as
are authorized by its charter or by regulations of the Board, and
may issue such passbooks, time certificates of deposit, or other
evidence of accounts as are so authorized.
"(B) An association may also accept demand accounts from a
commercial, corporate, business, or agricultural entity for the sole
purpose of effectuating payments thereto by a nonbusiness customer. An association may not pay interest on a demand account. All
savings accounts and demand accounts shall have the same priority
upon liquidation. Holders of accounts and obligors of an association
shall, to such extent as may be provided by its charter or by
regulations of the Board, be members of the association, and shall

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1497

have such voting rights and such other rights as are thereby
provided.
"(C) Except as may be otherwise authorized by an association's
charter or regulation of the Board in the case of savings accounts for
fixed or minimum terms of not less than fourteen days, the payment
of any savings account shall be subject to the right of the association
to require such advance notice, not less than fourteen days, as shall
be provided for by the charter of the association or the regulations of
the Board.
"(D) The payment of withdrawals from accounts in the event an
association does not pay all withdrawals in full (subject to the right
of the association, where applicable, to require notice) shall be
subject to such rules and procedures as may be prescribed by the
association's charter or by regulation of the Board, but any association which, except as authorized in writing by the Board, fails to
make full payment of any withdrawal when due shall be deemed to
be in an unsafe or unsound condition to transact business within the
meaning of subsection (d) of this section.
"(E) Accounts may be subject to check or to withdrawal or transfer on negotiable or transferable or other order or authorization to
the association, as the Board may by regulation provide.
"(F) Notwithstanding any limitation of this section, associations
may establish remote service units for the purpose of crediting
savings or demand accounts, debiting such accounts, crediting payments on loans, and the disposition of related financial transactions,
as provided in regulations prescribed by the Board.
"(2) To such extent as the Board may authorize by regulation or
advice in writing, an association may borrow, may give security,
may be surety as defined by the Board and may issue such notes,
bonds, debentures, or other obligations, or other securities, including
capital stock, as the Board may so authorize.".
CONVERSIONS TO FEDERAL CHARTERS

SEC. 313. Section 5(i) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(i)) is amended to read as follows:
"(iXD Any institution which is, or is eligible to become, a member
of a Federal home loan bank may convert itself into a Federal
savings and loan association or Federal savings bank under this Act
(and in so doing may change directly from the mutual form to the
stock form, or from the stock form to the mutual form), but such
conversion shall be subject to such rules and regulations as the
Board shall prescribe, and thereafter the converted association shall
be entitled to all the benefits of this section and shall be subject to
examination and regulation to the same extent as other associations
incorporated pursuant to this Act.
"(2) Subject to the rules and regulations of the Board, any Federal
association may convert itself from the mutual form to the stock
form of organization, or from the stock form to the mutual form, and
any Federal association may change its designation from a Federal
savings and loan association to a Federal savings bank, or the
reverse.
"(3XA) Any Federal association may convert itself into a savings
and loan or savings bank type of institution organized pursuant to
the laws of the State, district, commonwealth, or territory (hereinafter referred to in this section as the 'State') in which the principal
office of such Federal association is located if—

96 STAT. 1498

12 use 1726.

12 u s e 1730a.

PUBLIC LAW 97-320—OCT. 15, 1982

"(i) the State permits the conversion of any savings and loan
or savings bank type of institution of such State into a Federal
association;
"(ii) such conversion of a Federal association into such a State
institution is determined upon the vote in favor of such conversion cast in person or by proxy at a special meeting of members
or stockholders called to consider such action, specified by the
law of the State in which the home office of the Federal
association is located, as required by such law for a Statechartered institution to convert itself into a Federal association,
but in no event upon a vote of less than 51 per centum of all the
votes cast at such meeting, and upon compliance with other
requirements reciprocally equivalent to the requirements of
such State law for the conversion of a State-chartered institution into a Federal association;
"(iii) notice of the meeting to vote on conversion shall be given
as herein provided and no other notice thereof shall be necessary; the notice shall expressly state that such meeting is called
to vote thereon, as well as the time and place thereof, and such
notice shall be mailed, postage prepaid, at least thirty and not
more than sixty days prior to the date of the meeting, to each
member or stockholder of record of the Federal association at
his last address as shown on the books of the Federal association
and to the General Counsel of the Federal Home Loan Bank
Board, Washington, District of Columbia;
"(iv) in the event of dissolution of a mutual association after
conversion, the members or shareholders of the association will
share on a mutual basis in the assets of the association in exact
proportion to their relative share or account credits;
"(v) in the event of dissolution of a stock association after
conversion, the stockholders will share on a equitable basis in
the assets of the association; and
"(vi) such conversion shall be effective upon the date that all
the provisions of this Act shall have been fully complied with
and upon the issuance of a new charter by the State wherein
the association is located.
"(B)(i) The act of conversion constitutes consent by the institution
to be bound by all the requirements that the Federal Savings and
Loan Insurance Corporation may legally impose under section 403 of
the National Housing Act.
"(ii) The association shall upon conversion and thereafter be
authorized to issue securities in any form currently approved at the
time of issue by the Federal Savings and Loan Insurance Corporation for issuance by similar insured institutions in such State,
"(iii) If the insurance of accounts is terminated in connection with
such conversion, the notice and other action shall be taken as
provided by law and regulations for the termination of insurance of
accounts.
"(4) Any aggrieved person may obtain review of a final action of
the Board or the Federal Savings and Loan Insurance Corporation
which approves, with or without conditions, or disapproves a plan of
conversion from the mutual to the stock form, only by complying
with the provisions of subsection (k) of section 408 of the National
Housing Act within the time limit and in the manner therein
prescribed, which provisions shall apply in all respects as if such
final action were an order the review of which is therein provided
for, except that such time limit shall commence upon publication of

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1499

notice of such final action in the Federal Register or upon the giving
of such general notice of final action as is required by or approved
under regulations of the Corporation, whichever is later.
"(5)(A) To the extent authorized by the Board—
"(i) any Federal savings bank chartered as such prior to the
enactment of this paragraph may continue to make any investment or engage in any activity not otherwise authorized under
this section, to the degree it was permitted to do so as a Federal
savings bank prior to such enactment; and
"(ii) any Federal savings bank formerly organized as a mutual
savings bank under State law may continue to make any investment or engage in any activity not otherwise authorized under
this section, to the degree it was authorized to do so as a mutual
savings bank under State law.
"(B) The authority conferred by this paragraph may be utilized by
any Federal association that acquires, by merger or consolidation, a
Federal savings bank enjoying grandfathered rights hereunder.".
CONVERSION FROM STATE MUTUAL TO STATE STOCK

SEC. 314. Section 402(j) of the National Housing Act (12 U.S.C.
1725(j)) is amended—
(1) by amending paragraph (1) to read as follows:
"(1) Except as provided in section 5 of the Home Owners' Loan Act
of 1933, no insured institution may convert from the mutual to the
stock form except in accordance with the rules and regulations of
the Corporation."; and
(2) by striking out paragraphs (2), (3), (5), and (6) and redesignating paragraph (4) as paragraph (2).
PART B—INVESTMENTS
OVERDRAFTS

SEC. 321. Section 5(c)(1)(A) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(c)(1)(A)) is amended to read as follows:
"(A) ACCOUNT LOANS.—Loans on the security of its savings

accounts and
accounts.".

loans

specifically

related

to

transaction

REAL ESTATE LOANS

SEC. 322. Section 5(c)(1)(B) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(c)(1)(B)) is amended to read as follows:
"(B) REAL PROPERTY LOANS.—Loans on the security of liens
upon residential or nonresidential real property, except that the
loans and investments of an association on nonresidential real
property may not exceed 40 per centum of its assets.".
TIME DEPOSITS

SEC. 323. Section 5(c)(1)(G) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(c)(1)(G)) is amended to read as follows:
"(G) DEPOSITS.—Investments in the time deposits, certificates,
or accounts of any bank the deposits of which are insured by the
Federal Deposit Insurance Corporation, or in the savings
accounts, certificates, or other accounts of any institution the

96 STAT. 1500

PUBLIC LAW 97-320—OCT. 15, 1982
accounts of which are insured by the Federal Savings and Loan
Insurance Corporation.".
GOVERNMENT SECURITIES

SEC. 324. Section 5(c)(1)(H) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(cXl)(H)) is amended to read as follows:
"(H) STATE SECURITIES.—Investments in obligations of, or

issued by, any State or political subdivision thereof (including
any agency, corporation, or instrumentality of a State or political subdivision), except that an association may not invest more
than 10 per centum of its capital and surplus in obligations of
any one issuer, exclusive of investments in general obligations
of any issuer.".
COMMERCIAL AND OTHER LOANS

SEC. 325. Section 5(c)(1) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(cXl)) is amended by adding at the end thereof the
following:
"(R) COMMERCIAL AND OTHER LOANS.—Secured or unsecured

loans for commercial, corporate, business, or agricultural purposes. No association may make loans to one borrower under
the authority provided by this subparagraph in excess of the
amount a national bank having an identical total capital and
surplus could lend such borrower. The aggregate amount of
loans under this paragraph shall not exceed 5 per centum of the
assets of a savings and loan association (7 y% per centum of the
assets of a savings bank) prior to January 1, 1984, or 10 per
centum of the assets of a savings and loan association or savings
bank thereafter.".
EUMINATION OF DIFFERENTIAL

12 u s e 461
12 use 3503
note.

Post, p. 1501.

SEC. 326. (a) Section 102 of Public Law 94-200 is repealed.
^\^) Interest rate differentials for all categories of deposits or
accounts between (i) any bank (other than a savings bank) the
deposits of which are insured by the Federal Deposit Insurance
Corporation, and (ii) any savings and loan, building and loan, or
homestead association (including cooperative banks) 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(0 of the Federal Deposit Insurance Act (12 U.S.C. 1813(j)),
shall be phased out on or before January 1,1984.
(2) Any differential which is being phased out pursuant to a
schedule established by regulations prescribed by the Depository
Institutions Deregulation Committee prior to the aate of enactment
of this Act shall be phased out as soon as practicable, but in no event
later than such schedule provides.
(3) Notwithstanding any other provision of law, no differential for
any category of deposits or accounts shall be established or maintained on or after January 1,1984.
(c) No interest rate differential may be established or maintained
in the case of the deposit account authorized pursuant to section
204(c) of the Depository Institutions Deregulation Act of 1980.
(d) In the case of the elimination or reduction of any interest rate
differential under subsection (b) with respect to any category of

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1501

deposits or accounts between (1) any bank (other than a savings
bank) the deposits of which are insured by the Federal Deposit
Insurance Corporation and (2) any savings and loan, building and
loan, or homestead association (including cooperative banks) 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, the 12 u s e 1813.
maximum rate of interest which shall be established for such
category of deposits for banks (other than savings banks) the deposits of which are insured by the Federal Deposit Insurance Corporation shall be equal to the highest rate of interest which savings and
loan associations the deposits or accounts of which are insured by
the Federal Savings and Loan Insurance Corporation were permitted to pay on such category of deposits immediately prior to the
elimination or reduction of such interest rate differential.
MONEY MARKET DEPOSIT ACCOUNT

SEC. 327. Section 204 of the Depository Institutions Deregulation
Act of 1980 (12 U.S.C. 3503) is amended by adding at the end thereof
the following:
"(c)(1) The Committee shall issue a regulation authorizing a new
deposit account, effective not later than 60 days after the date of
enactment of this subsection. Such account shall be directly equivalent to and competitive with money market mutual funds registered
with the Securities and Exchange Commission under the Investment Company Act of 1940.
15 usc 80a-5i.
"(2) No limitation on the meiximum rate or rates of interest
payable on deposit accounts shall apply to the account authorized by
this subsection.
"(3) For purposes of section 19(b) of the Federal Reserve Act, i2USC46i.
accounts established pursuant to this subsection which are not
'transaction accounts' as defined by the reserve requirement regulations of the Board of Governors of the Federal Reserve System as
those regulations existed on August 1, 1982, shall not be subject to
transaction account reserves, even though no minimum maturity is
required, and even though up to three preauthorized or automatic
transfers and three transfers to third parties are permitted
monthly.".
HOUSING AND LAND DEVELOPMENT LOANS

SEC. 328. Section 5(cXl)(0) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(c)(l)(0)) is amended to read as follows:
"(O) HOUSING AND LAND AND URBAN DEVELOPMENT INSURED OR

GUARANTEED INVESTMENTS.—Loans (i) secured by mortgages as
to which the association has the benefit of insurance under title
X of the National Housing Act or of a commitment or agreement for such insurance, or (ii) as to which the association has
the benefit of any guarantee under title IV of the Housing and
Urban Development Act of 1968 or under part B of the National
Urban Policy and New Community Development Act of 1970 or
under section 802 of the Housing and Community Development
Act of 1974, or of a commitment or agreement therefor.".

12 use I749aa.
42 use 390i.
42 use 4511.
42 use 1440,12
u s e 371, 1464.

96 STAT. 1502

PUBLIC LAW 97-320—OCT. 15, 1982
CONSUMER LOANS

SEC. 329. Section 5(c)(2)(B) of the Home Owners' Loan Act of 1933
(12 U.S.C. 1464(c)(2)(B)) is amended—
(1) by inserting ", including loans reasonably incident to the
provision of such credit," after "household purposes"; and
(2) by inserting before the period at the end thereof the
following: ", except that loans of an association under this
subparagraph may not exceed 30 per centum of the assets of the
association".
ADDITIONAL INVESTMENT AUTHORITIES

SEC. 330. Section 5(c) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(c)) is amended—
(1) in paragraph (2), by striking out "20 per centum" and
inserting in lieu thereof "the following percentages";
(2) by redesignating paragraph (6) as paragraph (5);
(3) by striking out paragraph (2)(A) and inserting in lieu
thereof the following:
"(A) INVESTMENTS IN PERSONALTY.—Investments in tangi-

ble personal property, including, without limitation, vehicles, manufactured homes, machinery, equipment, or furniture, for rental or sale, but such investment may not exceed
10 per centum of the assets of the association.";
(4) in paragraph (3)—
(A) by striking out subparagraph (D); and
(B) by amending subparagraph (A) to read as follows:
"(A) EDUCATION LOANS.—Loans made for the payment of
educational expenses."; and
(5) in paragraph (4)—
(A) by amending subparagraph (C) to read as follows:
"(C) FOREIGN ASSISTANCE INVESTMENTS.—Investments in

22 u s e 2181.
22 use 2183 note.

22 u s e 2181,
^^^^-

15 u s e 681.

housing project loans having the benefit of any guaranty
under section 221 of the Foreign Assistance Act of 1961 or
loans having the benefit of any guarantee under section 224
of such Act, or any commitment or agreement with respect
to such loans made pursuant to either of such sections and
in the share capital and capital reserve of the Inter-American Savings and Loan Bank. This authority extends to the
acquisition, holding and disposition of loans having the
benefit of any guaranty under section 221 or 222 of such Act
as hereafter amended or extended, or of any commitment or
agreement for any such guaranty. Investments under this
subparagraph shall not exceed, in the case of any association, 1 per centum of the assets of such association."; and
(B) by amending subparagraph (D) to read as follows:
"(D) SMALL BUSINESS INVESTMENT COMPANIES.—An association may invest in stock, obligations, or other securities of
any small business investment company formed pursuant
to section 301(d) of the Small Business Investment Act of
1958, for the purpose of aiding members of the Federal
Home Loan Bank System, but no association may make any
investment under this subparagraph if its aggregate outstanding investment under this subparagraph would exceed
1 per centum of the assets of such association.".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1503

TYING ARRANGEMENTS

SEC. 331. Section 5 of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464), as amended by sections 112 and 121, is amended by
adding at the end thereof the following:
"(qXl) An association shall not in any manner extend credit, lease,
or sell property of any kind, or furnish any service, or fix or vary the
consideration for any of the foregoing, on the condition or
requirement—
"(A) that the customer shall obtain additional credit, property, or service from such association, or from any service
corporation or affiliate of such association, other than a loan,
discount, deposit, or trust service;
"(B) that the customer provide additional credit, property, or
service to such association, or to any service corporation or
affiliate of such association, other than those related to and
usually provided in connection with a similar loan, discount,
deposit, or trust service; and
"(C) that the customer shall not obtain some other credit,
property, or service from a competitor of such association, or
from a competitor of any service corporation or affiliate of such
association, other than a condition or requirement that such
association shall reasonably impose in connection with credit
transactions to assure the soundness of credit.
"(2)(A) Any person may sue for and have injunctive relief, in any
court of the United States having jurisdiction over the parties,
against threatened loss or damage by reason of a violation of
paragraph (1), under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage
is granted by courts of equity and under the rules governing such
proceedings.
"(B) Upon the execution of proper bond against damages for an
injunction improvidently granted and a showing that the danger of
irreparable loss or damage is immediate, a preliminary injunction
may issue.
"(3) any person who is injured in his business or property by
reason of anything forbidden in paragraph (1) may sue therefor in
any district court of the United States in which the defendant
resides or is found or has an agent, without regard to the amount in
controversy, or may sue therefor in any other court of competent
jurisdiction, and shall be entitled to recover three times the amount
of the damages sustained by him, and the cost of suit, including a
reasonable attorney's fee. Any such suit shall be brought within four
years from the date of the occurrence of the violation.
"(4) Nothing contained in this subsection shall be construed as
affecting in any manner the right of the United States or any other
party to bring an action under any other law of the United States or
of any State, including any right which may exist in addition to
specific statutory authority, challenging the legality of any act or
practice which may be proscribed by this subsection. No regulation
or order issued by the Board under this subsection shall in any
manner constitute a defense to such action.
"(5) For purposes of this subsection—
"(A) the term 'affiliate' of an association means any individual
or company (including any corporation, partnership, trust,
joint-stock company, or similar organization) which controls, is

Ante, pp. 1471,
1479.

"Affiliate.

96 STAT. 1504

"Loan."

PUBLIC LAW 97-320—OCT. 15, 1982
controlled by, or is under common control with such association;
and
"(B) the term 'loan' includes obligations and extensions or
advances of credit.".
LIQUIDITY INVESTMENTS

SEC. 332. Section 5A(b)(l)(B) of the Federal Home Loan Bank Act
(12 U.S.C. 1425a(b)(l)(B)) is amended by striking out "and commercial banks" and inserting in lieu thereof the following: ", institutions which are, or are eligible to become, members thereof, and
commercial banks".
REGULATORY JURISDICTION

SEC. 333. Section 2(c) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)) is amended by inserting after "Islands" the
following: ", except an institution the accounts of which are insured
by the Federal Savings and Loan Insurance Corporation or an
institution chartered by the Federal Home Loan Bank Board,".
BRANCHING

Ante, p. 1503.

26 use 7701.

Ante, p. 1483.

SEC. 334. Section 5 of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464), as amended by sections 112, 121, and 331, is amended
by adding at the end thereof the following:
"(rXD No association may establish, retain, or operate a branch
outside the State in which the association has its home office, unless
the association qualifies as a domestic building and loan association
under section 7701(aX19) of the Internal Revenue Code of 1954 or
meets the asset composition test imposed by subparagraph (c) of that
section on institutions seeking so to qualify. No out-of-State branch
so established shall be retained or operated unless the total assets of
the association attributable to all branches of the association in that
State would qualify the branches as a whole, were they otherwise
eligible, for treatment as a domestic building and loan association
under said section 7701(aX19).
"(2) The limitations of paragraph (1) shall not apply if—
"(A) the branch results from a transaction authorized under
section 408(m) of the National Housing Act;
"(B) the branch was authorized for the association prior to the
enactment of the Depository Institutions Amendments of 1982;
"(C) the law of the State in which the branch is or is to be
located would permit establishment of the branch were the
association an institution of the savings and loan or savings
bank type chartered by the State in which its home office is
located; or
"(D) the branch was operated lawfully as a branch under
State law prior to the association's conversion to a Federal
charter.
"(3) The Board, for good cause shown, may allow associations up to
two years to comply with the requirements of this subsection.".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1505

HOLDING COMPANY ACTIVITIES

SEC. 335. Section 408 of the National Housing Act (12 U.S.C.
1730a), as amended by section 123, is amended by adding at the end ^^*«. P-1483.
thereof the following:
"(n) A savings and loan holding company, or any subsidiary
thereof which is not an insured institution, whose subsidiary insured institution fails to qualify as a domestic building and loan
association under section 7701(a)(19) of the Internal Revenue Code of
1954, may not commence, or continue for more than three years 26USC7701.
after such failure, any business activity other than those specified
for multiple savings and loan holding companies and their subsidiaries under subsection (c)(2) of this section.".
PART C—PREEMPTION OF DUE ON SALE PROHIBITIONS
DUE-ON S A L E C L A U S E S

SEC. 341. (a) For the purpose of this section—
Definitions.
(1) the term "due-on-sale clause" means a contract provision ^^ USC i70lj-3.
which authorizes a lender, at its option, to declare due and
payable sums secured by the lender's security instrument if all
or any part of the property, or an interest therein, securing the
real property loan is sold or transferred without the lender's
prior written consent;
(2) the term "lender" means a person or government agency
making a real property loan or any assignee or transferee, in
whole or in part, of such a person or agency;
(3) the term "real property loan" means a loan, mortgage,
advance, or credit sale secured by a lien on real property, the
stock allocated to a dwelling unit in a cooperative housing
corporation, or a residential manufactured home, whether real
or personal property; and
(4) the term "residential manufactured home" means a manufactured home as defined in section 603(6) of the National
Manufactured Home Construction and Safety Standards Act of
1974 which is used as a residence; and
42 USC 5402.
(5) the term "State" means any State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, the Northern Mariana Islands, American
Samoa, and the Trust Territory of the Pacific Islands.
(b)(1) Notwithstanding any provision of the constitution or laws
(including the judicial decisions) of any State to the contrary, a
lender may, subject to subsection (c), enter into or enforce a contract
containing a due-on-sale clause with respect to a real property loan.
(2) Except as otherwise provided in subsection (d), the exercise by
the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and
remedies of the lender and the borrower shall be fixed and governed
by the contract.
(3) In the exercise of its option under a due-on-sale clause, a lender
is encouraged to permit an assumption of a real property loan at the
existing contract rate or at a rate which is at or below the average
between the contract and market rates, and nothing in this section
shall be interpreted to prohibit any such assumption.
(c)(1) In the case of a contract involving a real property loan which
was made or assumed, including a transfer of the liened property

96 STAT. 1506

PUBLIC LAW 97-320—OCT. 15, 1982

subject to the real property loan, during the period beginning on the
date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the
highest court of such State has rendered a decision (or if the highest
court has not so decided, the date on which the next highest
appellate court has rendered a decision resulting in a final judgment
if such decision applies State-wide) prohibiting such exercise, and
ending on the date of enactment of this section, the provisions of
subsection (b) shall apply only in the case of a transfer which occurs
on or after the expiration of 3 years after the date of enactment of
this Act, except that—
(A) a State, by a State law enacted by the State legislature
prior to the close of such 3-year period, with respect to real
property loans originated in the State by lenders other than
national banks, Federal savings and loan associations. Federal
savings banks, and Federal credit unions, may otherwise regulate such contracts, in which case subsection (h) shall apply only
if such State law so provides; and
(B) the Comptroller of the Currency with respect to real
property loans originated by national banks or the National
Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise
regulate such contracts, in which case subsection (b) shall apply
only if such regulation so provides.
(2XA) For any contract to which subsection (b) does not apply
pursuant to this subsection, a lender may require any successor or
transferee of the borrower to meet customary credit standards
applied to loans secured by similar property, and the lender may
declare the loan due and payable pursuant to the terms of the
contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.
(B) A lender may not exercise its option pursuant to a due-on-sale
clause in the case of a transfer of a real property loan which is
subject to this subsection where the transfer occurred prior to the
date of enactment of this Act,
(C) This subsection does not apply to a loan which was originated
by a Federal savings and loan association or Federal savings bank.
(d) A lender may not exercise its option pursuant to a due-on-sale
clause upon—
(1) the creation of a lien or other encumbrance subordinate to
the lender's security instrument which does not relate to a
transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for
household appliances;
(3) a transfer by devise, descent, or operation of law on the
death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less
not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a
borrower;
(6) a transfer where the spouse or children of the borrower
become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of
marriage, legal separation agreement, or from an incidental
property settlement agreement, by which the spouse of the
borrower becomes an owner of the property;

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1507

(8) a transfer into an inter vivos trust in which the borrower
is and remains a beneficiary and which does not relate to a
transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations
prescribed by the Federal Home Loan Bank Board.
(e)(1) The Federal Home Loan Bank Board, in consultation with
the Comptroller of the Currency and the National Credit Union
Administration Board, is authorized to issue rules and regulations
and to publish interpretations governing the implementation of this
section.
(2) Notwithstanding the provisions of subsection (d), the rules and
regulations prescribed under this section may permit a lender to
exercise its option pursuant to a due-on-sale clause with respect to a
real property loan and any related agreement pursuant to which a
borrower obtains the right to receive future income.
(f) The Federal Home Loan Mortgage Corporation (hereinafter
referred to as the "Corporation") shall not, prior to July 1, 1983,
implement the change in its policy announced on July 2, 1982, with
respect to enforcement of due-on-sale clauses in real property loans
which are owned in whole or in part by the Corporation.
(g) Federal Home Loan Bank Board regulations restricting the use
of a balloon payment shall not apply to a loan, mortgage, advance,
or credit sale to which this section applies.
PART D—MISCELLANEOUS
ATTORNEYS FEES

SEC. 351. The last sentence of section 5(d)(8)(A) of the Home
Owners' Loan Act of 1933 (12 U.S.C. 1464(dX8)(A)) is amended by
inserting ", which prevails," after "party".
SECURITY FOR ADVANCES

SEC. 352. Section 10 of the Federal Loan Bank Act (12 U.S.C. 1430)
is amended—
(1) by amending subsection (a) to read as follows:
"(a) Each Federal Home Loan Bank is authorized to make secured
advances to its members upon such security as the Board may
prescribe.";
(2) by striking out the first two sentences of subsection Ot)); and
(3) by striking out the word "twelve" wherever it appears in
subsection (c) and inserting in lieu thereof the word "twenty".
DELETION OF OBSOLETE REQUIREMENT

SEC. 353. Section 6(cX2) of the Federal Home Loan Bank Act (12
U.S.C. 1426(c)(2)) is amended to read as follows:
"(2) Notwithstanding any other provision of this subsection, no
action shall be taken by any bank with respect to any member
pursuant to any of the foregoing provisions of this subsection if the
effect of such action would be to cause the aggregate outstanding
advances, within the meaning of the last sentence of subsection (c) of
section 10 of this Act or within the meaning of regulations of the 12 USC 1230.
Board defining such term for the purposes of this sentence, made by
such bank to such member to exceed twenty times the amounts paid

96 STAT. 1508

PUBLIC LAW 97-320—OCT. 15, 1982

in by such member for outstanding capital stock held by such
member.".
COMPENSATION OF ADVISORY COMMITTEE MEMBERS

5 use app.

SEC. 354. Section 8a of the Federal Home Loan Bank Act (12
U.S.C. 1428a) is amended by striking out the fifth sentence and
inserting in lieu thereof the following: "Subject to the provisions of
section 7 of the Federal Advisory Committee Act, all members and
alternates of the Council may be compensated and shall be entitled
to reimbursement from the Board for traveling expenses incurred in
attendance at meetings of such Council.".
WITHDRAWAL FROM MEMBERSHIP

SEC. 355. (a) Section 6(i) of the Federal Home Loan Bank Act (12
U.S.C. 1426(i)) is amended by inserting before the period at the end
of the second sentence the following: ", except that in the case of a
voluntary withdrawal, such liquidation shall be deemed a prepayment of any such indebtedness, and shall be subject to any penalties
applicable to such prepayment".
(b) Section 6 of the Federal Home Loan Bank Act (12 U.S.C. 1426)
is amended by adding at the end thereof the following:
"(m) Notwithstanding any other provision of this Act, an institution which withdraws from membership may acquire membership in
any Federal Home Loan Bank only after the expiration of a period
of five years thereafter, except where such withdrawal is a consequence of a transfer of membership on a non-interrupted basis
between Banks.".
TITLE IV—PROVISIONS RELATING TO NATIONAL AND
MEMBER BANKS
PART A—GENERAL PROVISIONS
LENDING UMITS

"Loans and
extensions of
credit.

SEC. 401. (a) Section 5200 of the Revised Statutes (12 U.S.C. 84) is
amended to read as follows:
"SEC. 5200. (aXD The total loans and extensions of credit by a
national banking association to a person outstanding at one time
and not fully secured, as determined in a manner consistent with
paragraph (2) of this subsection, by collateral having a market value
at least equal to the amount of the loan or extension of credit shall
not exceed 15 per centum of the unimpaired capital and unimpaired
surplus of the association.
"(2) The total loans and extensions of credit by a national banking
association to a person outstanding at one time and fully secured by
readily marketable collateral having a market value, as determined
by reliable and continuously available price quotations, at least
equal to the amount of the funds outstanding shall not exceed 10 per
centum of the unimpaired capital and unimpaired surplus of the
association. This limitation shall be separate from and in addition to
the limitation contained in paragraph (1) of this subsection.
"(h) For the purposes of this section—
"(1) the term 'loans and extensions of credit' shall include all
direct or indirect advances of funds to a person made on the

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1509

basis of any obligation of that person to repay the funds or
repayable from specific property pledged by or on behalf of the
person and to the extent specified by the Comptroller of the
Currency, such term shall also include any liability of a
national banking association to advance funds to or on behalf of
a person pursuant to a contractual commitment; and
"(2) the term 'person' shall include an individual, sole propri- "Person."
etorship, partnership, joint venture, association, trust, estate,
business trust, corporation, sovereign government or agency,
instrumentality, or political subdivision thereof, or any similar
entity or organization.
"(c) The limitations contained in subsection (a) shall be subject to
the following exceptions:
"(1) Loans or extensions of credit arising from the discount of
commercial or business paper evidencing an obligation to the
person negotiating it with recourse shall not be subject to any
limitation based on capital and surplus.
"(2) The purchase of bankers' acceptances of the kind
described in section 13 of the Federal Reserve Act and issued by 12 use 82, 342other banks shall not be subject to any limitation based on ^^'^' ^'^'^^' ^'^2.
capital and surplus.
"(3) Loans and extensions of credit secured by bills of lading,
warehouse receipts, or similar documents transferring or securing title to readily marketable staples shall be subject to a
limitation of 35 per centum of capital and surplus in addition to
the general limitations if the market value of the staples securing each additional loan or extension of credit at all times
equals or exceeds 115 per centum of the outstanding amount of
such loan or extension of credit. The staples shall be fully
covered by insurance whenever it is customary to insure such
staples.
"(4) Loans or extensions of credit secured by bonds, notes,
certificates of indebtedness, or Treasury bills of the United
States or by other such obligations fully guaranteed as to
principal and interest by the United States shall not be subject
to any limitation based on capital and surplus.
"(5) Loans or extensions of credit to or secured by unconditional takeout commitments or guarantees of any department,
agency, bureau, board, commission, or establishment of the
United States or any corporation wholly owned directly or
indirectly by the United States shall not be subject to any
limitation based on capital and surplus.
"(6) Loans or extensions of credit secured by a segregated
deposit account in the lending bank shall not be subject to any
limitation based on capital and surplus.
"(7) Loans or extensions of credit to any financial institution
or to any receiver, conservator, superintendent of banks, or
other agent in charge of the business and property of such
financial institution, when such loans or extensions of credit are
approved by the Comptroller of the Currency, shall not be
subject to any limitation based on capital and surplus.
"(8)(A) Loans and extensions of credit arising from the discount of negotiable or nonnegotiable installment consumer
paper which carries a full recourse endorsement or unconditional guarantee by the person transferring the paper shall be
subject under this section to a maximum limitation equal to 25

96 STAT. 1510

PUBLIC LAW 97-320—OCT. 15, 1982

per centum of such capital and surplus, notwithstanding the
collateral requirements set forth in subsection (a)(2).
"(B) If the bank's files or the knowledge of its officers of the
financial condition of each maker of such consumer paper is
reasonably adequate, and an officer of the bank designated for
that purpose by the board of directors of the bank certifies in
writing that the bank is relying primarily upon the responsibility of each maker for payment of such loans or extensions of
credit and not upon any full or partial recourse endorsement or
guarantee by the transferor, the limitations of this section as to
the loans or extensions of credit of each such maker shall be the
sole applicable loan limitations.
"(9)(A) Loans and extensions of credit secured by shipping
documents or instruments transferring or securing title covering livestock or giving a lien on livestock when the market
value of the livestock securing the obligation is not at any time
less than 115 per centum of the face amount of the note covered,
shall be subject under this section, notwithstanding the collateral requirements set forth in subsection (a)(2), to a maximum
limitation equal to 25 per centum of such capital and surplus.
"(B) Loans and extensions of credit which arise from the
discount by dealers in dairy cattle of paper given in payment for
dairy cattle, which paper carries a full recourse endorsement or
unconditional guarantee of the seller, and which are secured by
the cattle being sold, shall be subject under this section, notwithstanding the collateral requirements set forth in subsection
(a)(2), to a limitation of 25 per centum of such capital and
surplus.
"(10) Loans or extensions of credit to the Student Loan Marketing Association shall not be subject to any limitation based
on capital and surplus.
"(d)(1) The Comptroller of the Currency may prescribe rules and
regulations to administer and carry out the purposes of this section,
including rules or regulations to define or further define terms used
in this section and to establish limits or requirements other than
those specified in this section for particular classes or categories of
loans or extensions of credit.
"(2) The Comptroller of the Currency also shall have authority to
determine when a loan putatively made to a person shall for purposes of this section be attributed to another person.".
12 u s e 84 note.
(b) This section shall take effect upon the expiration of one
hundred and eighty days after the date of its enactment.
BORROWING LIMITS

Repeal.

SEC. 402. Section 5202 of the Revised Statutes (12 U.S.C. 82) is
repealed.
REAL ESTATE LOANS

SEC. 403. (a) Section 24 of the Federal Reserve Act (12 U.S.C. 371)
is amended to read as follows:
" R E A L ESTATE LOANS

"SEC. 24. (a) Any national banking association may make,
arrange, purchase or sell loans or extensions of credit secured by
liens on interests in real estate, subject to such terms, conditions,

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1511

and limitations as may be prescribed by the Comptroller of the
Currency by order, rule, or regulation.
"(b) Notes representing loans made under this section to finance
the construction of residential or farm buildings and having maturities not to exceed nine months shall be eligible for discount as
commercial paper within the terms of the second paragraph of
section 13 of the Federal Reserve Act if accompanied by a valid and 12 USC 82,
binding agreement to advance the full amount of the loan upon the o4Y~^oIk
completion of the building entered into by an individual, partner^'
ship, association, or corporation acceptable to the discounting
bank.".
(b) The Act of September 7, 1916 (12 U.S.C. 92; 39 Stat. 753) is
amended—
(1) by striking out "; and may also act as the broker or agent
for others in making or procuring loans on real estate located
within one hundred miles of the place in which said bank may
be located, receiving for such services a reasonable fee or commission"; and
(2) by striking out "guarantee either the principal or interest
of any such loans or".
(c) This section shall take effect upon the expiration of one 12USC371
hundred and eighty days after the date of its enactment.
"^^^•
BANKERS' BANKS

SEC. 404. (a) Section 5169 of the Revised Statutes (12 U.S.C. 27) is
amended—
(1) by inserting "(a)" before "If,"; and
(2) by adding at the end thereof the following:
"(b)(1) The Comptroller of the Currency may also issue a certificate of authority to commence the business of banking pursuant to
this section to a national banking association which is owned exclusively (except to the extent directors' qualifying shares are required
by law) by other depository institutions and is organized to engage
exclusively in providing services for other depository institutions
and their officers, directors, and employees.
"(2) Any national banking association chartered pursuant to paragraph (1) shall be subject to such rules, regulations, and orders as
the Comptroller deems appropriate, and, except as otherwise specifically provided in such rules, regulations, or orders, shall be vested
with or subject to the same rights, privileges, duties, restrictions,
penalties, liabilities, conditions, and limitations that would apply
under the national banking laws to a national bank.".
(b) The paragraph numbered "Seventh" of section 5136 of the
Revised Statutes (12 U.S.C. 24) is amended by striking out ''Provided
further. That," and all that follows through the end thereof and by
inserting in lieu thereof the following: "Provided further, That
notwithstanding any other provision of this paragraph, the association may purchase for its own account shares of stock of a bank
insured by the Federal Deposit Insurance Corporation or a holding
company which owns or controls such an insured bank if the stock of
such bank or company is owned exclusively (except to the extent
directors' qualifying shares are required by law) by depository institutions and such bank or company and all subsidiaries thereof are
engaged exclusively in providing services for other depository institutions and their officers, directors, and employees, but in no event
shall the total amount of such stock held by the association in any

96 STAT. 1512

12 u s e 1842.

PUBLIC LAW 97-320—OCT. 15, 1982
bank or holding company exceed at any time 10 per centum of its
capital stock and paid in and unimpaired surplus and in no event
shall the purchase of such stock result in an association's acquiring
more than 5 per centum of any class of voting securities of such
bank or company.".
(c) Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)) is amended by adding at the end thereof the following:
"(5) This section shall apply, in the same manner as it applies to
any insured bank for which the appropriate Federal banking agency
is the Comptroller of the Currency, to any national banking association chartered by the Comptroller of the Currency, including an
uninsured association.".
(d)(1) Section 2(c) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)) is amended by adding at the end thereof the following: "The term 'bank' also includes a State chartered bank or a
national banking association which is owned exclusively (except to
the extent directors' qualifying shares are required by law) by other
depository institutions or by a bank holding company which is
owned exclusively by other depository institutions and is organized
to engage exclusively in providing services for other depository
institutions and their officers, directors, and employees.".
(2) Section 3(e) of such Act is amended by adding at the end
thereof the following: "This subsection does not apply to a bank
described in the last sentence of section 2(c).".
NAME OR HEADQUARTERS CHANGE

SEC. 405. (a) Section 2 of the Act of May 1, 1886 (24 Stat. 18; 12
U.S.C. 30) is amended to read as follows:
"SEC. 2. (a) Any national banking association, upon written notice
to the Comptroller of the Currency, may change its name, except
that such new name shall include the word "National".
"(b) Any national banking association, upon written notice to the
Comptroller of the Currency, may change the location of its main
office to any authorized branch location within the limits of the city,
town, or village in which it is situated, or, with a vote of shareholders owning two-thirds of the stock of such association and upon
receipt of a certificate of approval from the Comptroller of the
Currency, to any other location within or outside the limits of the
city, town, or village in which it is located, but not more than thirty
miles beyond such limits.".
(b) The first proviso of section 5134 of the Revised Statutes (12
U.S.C. 22) is amended by placing a period after the word "national"
and striking the remainder of that sentence.
VENUE PROVISIONS

SEC. 406. Section 5198 of the Revised Statutes (12 U.S.C. 94) is
amended to read as follows:
"SEC. 5198. Any action or proceeding against a national banking
association for which the Federal Deposit Insurance Corporation has
been appointed receiver, or against the Federal Deposit Insurance
Corporation as receiver of such association, shall be brought in the
district or territorial court of the United States held within the
district in which that association's principal place of business is
located, or, in the event any State, county, or municipal court has
jurisdiction over such an action or proceeding, in such court in the

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1513

county or city in which that association's principal place of business
is located.".
LEGAL HOUDAYS

SEC. 407. The last sentence of section 403)(1) of the Act of March 9,
1933 (48 Stat. 2; 12 U.S.C. 95(b)(1)) is amended to read as follows: "In
the event that a State official authorized by law designates any day
as a legal holiday for ceremonial or emergency reasons, for the State
or any part thereof, that same day shall be a legal holiday for all
national banking associations or their offices located in that State or
the part so affected. A national banking association or its affected
offices may close or remain open on such a State-designated holiday
unless the Comptroller of the Currency by written order directs
otherwise.".
UNCLAIMED PROPERTY

SEC. 408. Title VII of the Depository Institutions Deregulation and
Monetary Control Act of 1980 is amended by adding after
section 723 the following:
"PART C—DISPOSITION OF UNCLAIMED PROPERTY RECOVERED FROM
CLOSED NATIONAL BANKS
"PURPOSE

"SEC. 731. The purpose of this part is to dispose of unclaimed 12 use 216.
property in the possession, custody, or control of the Comptroller of
the Currency by—
"(1) providing final notice of the availability of unclaimed
property from closed nationed banks and closed banks in the
District of Columbia;
"(2) barring rights of claimants to obtain such property from
the Comptroller after a reasonable period of time following such
notice; and
"(3) authorizing the Comptroller to dispose of such property
for which no claims have been filed and validated under this
part.
"DEFINITIONS

"SEC. 732. For purposes of this part—
12 use 2i6a.
"(1) the term 'Comptroller' means the Comptroller of the
Currency;
"(2) the term 'unclaimed property' means any articles, items,
assets, other property, or the proceeds thereof from safe deposit
boxes or other safekeeping arrangements with closed national
banks or closed banks in the District of Columbia, which are in
the possession, custody, or control of the Comptroller in its
capacity as successor to receivers of those banks; and
'(3) the term 'claimant' means any person or entity, including
a State under applicable statutory law, asserting a demonstrable legal interest in title to, or custody or possession of,
unclaimed property.
"DISPOSITION OF UNCLAIMED PROPERTY

"SEC. 733. (a)(1) Within twelve months following the date of the Publication in
enactment of this part, the Comptroller shall publish formal notice federal
12 u s e 216b.

96 STAT. 1514

PUBLIC LAW 97-320—OCT. 15, 1982

in the Federal Register that all claims to rights of any claimant to
obtain title to, or custody or possession of, any unclaimed property
in the possession, custody, or control of the Comptroller must be
filed within twelve months following the last date of publication of
such formal notice in the Federal Register or shall thereafter be
barred.
"(2) Such notice shall contain the names of last known owners, if
any, names and locations of affected closed banks, and a general
description of the types of unclaimed property held by the Comptroller. The Comptroller may provide additional notice in local communities as it deems appropriate.
"(3)(A) The Comptroller shall not disclose, by publication, inspection or otherwise, information relating to the ownership or description of any specific unclaimed property prior to publication of
formal notice under this section.
"(B) Thereafter, the Comptroller shall disclose descriptive information of specific unclaimed property only to a claimant thereof.
The Comptroller may recoup expenses associated with any publication or other provision of notice from any sale of property authorized by this part. Reasonable opportunity for inspection of specific
property by a claimant thereof shall be provided in Washington,
District of Columbia.
"(b)(1) The Comptroller shall deliver such property to any claimant or his or her legally authorized representative upon receiving
proof deemed adequate by the Comptroller that such claimant is
entitled to the property, but only if the claimant files for the
property within twelve months following the last date formal notice
is published in the Federal Register.
"(2)(A) The Comptroller shall have authority to determine the
validity of all claims filed. The Comptroller may recoup expenses
associated with the handling and processing of claims from any sale
of property authorized by this part.
"(B) All expenses associated with the delivery of any property
shall be borne by the claimant. The Comptroller shall not be responsible for any loss in connection with the handling, storage, or
delivery of any property to the claimant. The Comptroller may
require the claimant to purchase insurance to cover the risk of any
loss.
"(c)(1) If, after twelve months from the date formal notice is
published in the Federal Register, any such property remains in the
possession, custody, or control of the Comptroller for which no valid
claim has been filed, all rights, title, and interest in such property
shall immediately be vested in the United States.
"(2) The Comptroller shall thereupon, in his discretion, sell, use,
destroy, or otherwise dispose of any such unclaimed property. Such
disposition may include donations to the Smithsonian Institution for
addition to the national collection.
"(3) The proceeds of any sale authorized by this section, after
recoupment by the Comptroller of any expenses incurred hereunder,
shall be covered into the Treasury as miscellaneous receipts.
"(d) The United States, the Comptroller, or any officer, employee,
or agent thereof shall not be subject to personal or legal liability for
any determination as to the validity of any claim or claims filed
under this part or for any delivery, sale, destruction, or other
disposition of unclaimed property.
"(e)(1) A court action to determine legal ownership, entitlement,
or right to possession may be filed in any State or Federal court of

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1515

competent jurisdiction other than against the United States, the
Comptroller, or any officer, agent, or employee thereof.
"(2) Such actions shall be determined de novo without regard to
any agency determination or any disposition or delivery by the
Comptroller of any particular property to any person.
"(3) The United States, the Comptroller, or any officer, employee,
or agent thereof shall neither be a party to any such judicial
proceeding nor be bound by any decision, decree, or order resulting
therefrom.
"(f)(1) The United States Claims Court shall have exclusive jurisdiction to hear and determine any suit brought against the United
States, the Comptroller, or any officer, employee, or agent thereof
with regard to any determination of a claim or the disposition of any
unclaimed property.
"(2) The United States Claims Court may set aside actions of the
Comptroller only if such actions are found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law.
"(3) All claims for which the United States Claims Court has
jurisdiction under this subsection shall be barred unless suit is filed
within two years from the date of expiration of the twelve-month
notice period provided by this part.
"(4) For purposes of section 1491 of title 28, United States Code,
any Claim against the Comptroller, the United States, or any officer,
employee, or agent thereof shall be considered a claim against the
United States.
"RULEMAKING AUTHORITY

"SEC. 734. The Comptroller may issue rules and regulations neces- 12 USC 2l6c.
sary or appropriate to carry out this part.
"SEVERABILITY

"SEC. 735. If any provision of this part or the application of such i2USC2l6d.
provision to any person or circumstance is held invalid, the remainder of this part and the application of such provision to other
persons or circumstances shall not be affected thereby.".
AMENDMENTS TO DEREGULATION ACT

SEC. 409. Sections 721 and 722 of the Depository Institutions
Deregulation and Monetary Control Act of 1980 (12 U.S.C. 191 note)
are amended by striking out the phrase "closed on or before January 22, 1934" each place it appears and inserting in lieu thereof
"which have been closed and for which the Comptroller has
appointed a receiver other than the Federal Deposit Insurance
Corporation".
BANKING AFFILIATES

SEC. 410. (a) This section may be cited as the "Banking Affiliates
A c t of 1 9 8 2 " .

Banking
Affiliates Act oi"

(b) Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is }1^USC226
amended to read as follows:
note.
"SEC. 23A. (a) RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES.—

"(1) A member bank and its subsidiaries may engage in a
covered transaction with an affiliate only if—

96 STAT. 1516

15 u s e 80a-2.

PUBLIC LAW 97-320—OCT. 15, 1982
"(A) in the case of any affiliate, the aggregate amount of
covered transactions of the member bank and its subsidiaries will not exceed 10 per centum of the capital stock and
surplus of the member bank; and
"(B) in the case of all affiliates, the aggregate amount of
covered transactions of the member bank and its subsidiaries will not exceed 20 per centum of the capital stock and
surplus of the member bank.
"(2) For the purpose of this section, any transaction by a
member bank with any person shall be deemed to be a transaction with an affiliate to the extent that the proceeds of the
transaction are used for the benefit of, or transferred to, that
affiliate.
"(3) A member bank and its subsidiaries may not purchase a
low-quality asset from an affiliate unless the bank or such
subsidiary, pursuant to an independent credit evaluation, committed itself to purchase such asset prior to the time such asset
was acquired by the affiliate.
"(4) Any covered transactions and any transactions exempt
under subsection (d) between a member bank and an affiliate
shall be on terms and conditions that are consistent with safe
and sound banking practices.
"(h) DEFINITIONS.—For the purpose of this section—
"(1) the term 'affiliate' with respect to a member bank
means—
"(A) any company that controls the member bank and
any other company that is controlled by the company that
controls the member bank;
"(B) a bank subsidiary of the member bank;
"(C) any company—
"(i) that is controlled directly or indirectly, by a trust
or otherwise, by or for the benefit of shareholders who
beneficially or otherwise control, directly or indirectly,
by trust or otherwise, the member bank or any company that controls the member bank; or
"(ii) in which a majority of its directors or trustees
constitute a majority of the persons holding any such
office with the member bank or any company that
controls the member bank;
"(D)(i) any company, including a real estate investment
trust, that is sponsored and advised on a contractual basis
by the member bank or any subsidiary or affiliate of the
member bank; or
"(ii) any investment company with respect to which a
member bank or any affiliate thereof is an investment
advisor as defined in section 2(a)(20) of the Investment
Company Act of 1940; and
"(E) any company that the Board determines by regulation or order to have a relationship with the member bank
or any subsidiary or affiliate of the member bank, such that
covered transactions by the member bank or its subsidiary
with that company may be affected by the relationship to
the detriment of the member bank or its subsidiary; and
"(2) the following shall not be considered to be an affiliate:
"(A) any company, other than a bank, that is a subsidiary
of a member bank, unless a determination is made under

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1517

paragraph (1)(E) not to exclude such subsidiary company
from the definition of affiliate;
"(B) any company engaged solely in holding the premises
of the member bank;
"(C) any company engaged solely in conducting a safe
deposit business;
"(D) any company engaged solely in holding obligations of
the United States or its agencies or obligations fully guaranteed by the United States or its agencies as to principal
and interest; and
"(E) any company where control results from the exercise
of rights arising out of a bona fide debt previously contracted, but only for the period of time specifically authorized under applicable State or Federal law or regulation or,
in the absence of such law or regulation, for a period of two
years from the date of the exercise of such rights or the
effective date of this Act, whichever date is later, subject,
upon application, to authorization by the Board for good
cause shown of extensions of time for not more than one
year at a time, but such extensions in the aggregate shall
not exceed three years;
"(3)(A) a company or shareholder shall be deemed to have
control over another company if—
"(i) such company or shareholder, directly or indirectly,
or acting through one or more other persons owns, controls,
or has power to vote 25 per centum or more of any class of
voting securities of the other company;
"(ii) such company or shareholder controls in any manner
the election of a majority of the directors or trustees of the
other company; or
"(iii) the Board determines, after notice and opportunity
for hearing, that such company or shareholder, directly or
indirectly, exercises a controlling influence over the management or policies of the other company; and
"(B) notwithstanding any other provision of this section, no
company shall be deemed to own or control another company by
virtue of its ownership or control of shares in a fiduciary
capacity, except as provided in paragraph (1)(C) of this subsection or if the company owning or controlling such shares is a
business trust;
"(4) the term 'subsidiary' with respect to a specified company
means a company that is controlled by such specified company;
"(5) the term 'bank' includes a State bank, national bank,
banking association, and trust company;
"(6) the term 'company' means a corporation, partnership,
business trust, association, or similar organization and, unless
specifically excluded, the term 'company' includes a 'member
bank' and a 'bank';
"(7) the term 'covered transaction' means with respect to an
affiliate of a member bank—"(A) a loan or extension of credit to the affiliate;
"(B) a purchase of or an investment in securities issued
by the affiliate;
"(C) a purchase of assets, including assets subject to an
agreement to repurchase, from the affiliate, except such
purchase of real and personal property as may be specifically exempted by the Board by order or regulation;

96 STAT. 1518

PUBLIC LAW 97-320—OCT. 15, 1982
"(D) the acceptance of securities issued by the affiliate as
collateral security for a loan or extension of credit to any
person or company; or
"(E) the issuance of a guarantee, acceptance, or letter of
credit, including an endorsement or standby letter of credit,
on behalf of an affiliate;
"(8) the term 'aggregate amount of covered transactions'
means the amount of the covered transactions about to be
engaged in added to the current amount of all outstanding
covered transactions;
"(9) the term 'securities' means stocks, bonds, debentures,
notes, or other similar obligations; and
"(10) the term 'low-quality asset' means an asset that falls in
any one or more of the following categories:
"(A) an asset classified as 'substandard', 'doubtful', or
'loss' or treated as 'other loans especially mentioned' in the
most recent report of examination or inspection of an affiliate prepared by either a Federal or State supervisory
agency;
"(B) an asset in a nonaccrual status;
"(C) an asset on which principal or interest payments are
more than thirty days past due; or
"(D) an asset whose terms have been renegotiated or
compromised due to the deteriorating financial condition of
the obligor.
"(c) COLLATERAL FOR CERTAIN TRANSACTIONS WITH AFFILIATES.—

"(1) Each loan or extension of credit to, or guarantee, acceptance, or letter of credit issued on behalf of, an affiliate by a
member bank or its subsidiary shall be secured at the time of
the transaction by collateral having a market value equal to—
"(A) 100 per centum of the amount of such loan or
extension of credit, guarantee, acceptance, or letter - of
credit, if the collateral is composed of—
"(i) obligations of the United States or its agencies;
"(ii) obligations fully guaranteed by the United
States or its agencies as to principal and interest;
"(iii) notes, drafts, bills of exchange or bankers'
acceptances that are eligible for rediscount or purchase
by a Federal Reserve Bank; or
"(iv) a segregated, earmarked deposit account with
the member bank;
"(B) 110 per centum of the amount of such loan or
extension of credit, guarantee, acceptance, or letter of
credit if the collateral is composed of obligations of any
State or political subdivision of any State;
"(C) 120 per centum of the amount of such loan or
extension of credit, guarantee, acceptance, or letter of
credit if the collateral is composed of other debt instruments, including receivables; or
"(D) 130 per centum of the amount of such loan or
extension of credit, guarantee, acceptance, or letter of
credit if the collateral is composed of stock, leases, or other
real or personal property.
"(2) Any such collateral that is subsequently retired or amortized shall be replaced by additional eligible collateral where
needed to keep the percentage of the collateral value relative to
the amount of the outstanding loan or extension of credit,

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1519

guarantee, acceptance, or letter of credit equal to the minimum
percentage required at the inception of the transaction.
"(3) A low-quality asset shall not be acceptable as collateral
for a loan or extension of credit to, or guarantee, acceptance, or
letter of credit issued on behalf of, an affiliate.
"(4) The securities issued by an affiliate of the member bank
shall not be acceptable as collateral for a loan or extension of
credit to, or guarantee, acceptance, or letter of credit issued on
behalf of, that affiliate or any other affiliate of the member
bank.
"(5) The collateral requirements of this paragraph shall not
be applicable to an acceptance that is already fully secured
either by attached documents or by other property having an
ascertainable market value that is involved in the transaction.
"(d) EXEMPTIONS.—The provisions of this section, except paragraph (a)(4), shall not be applicable to—
"(1) any transaction, except for the purchase of a low-quality
asset which is prohibited, with a bank—
"(A) which controls 80 per centum or more of the voting
shares of the member bank;
"(B) in which the member bank controls 80 per centum or
more of the voting shares; or
"(C) in which 80 per centum or more of the voting shares
are controlled by the company that controls 80 per centum
or more of the voting shares of the member bank;
"(2) making deposits in an affiliated bank or affiliated foreign
bank in the ordinary course of correspondent business, subject
to any restrictions that the Board may prescribe by regulation
or order;
"(3) giving immediate credit to an affiliate for uncollected
items received in the ordinary course of business;
"(4) making a loan or extension of credit to, or issuing a
guarantee, acceptance, or letter of credit on behalf of, an affiliate that is fully secured by—
"(A) obligations of the United States or its agencies;
"(B) obligations fully guaranteed by the United States or
its agencies as to principal and interest; or
"(C) a segregated, earmarked deposit account with the
member bank;
"(5) purchasing securities issued by any company of the kinds
described in section 4(c)(1) of the Bank Holding Company Act of
1956;
"(6) purchasing assets having a readily identifiable and publicly available market quotation and purchased at that market
quotation or purchasing loans on a non-recourse basis from
affiliated banks; and
"(7) purchasing from an affiliate a loan or extension of credit
that was originated by the member bank and sold to the affiliate subject to a repurchase agreement or with recourse.
"(e) RULEMAKING AND ADDITIONAL EXEMPTIONS.—

"(1) The Board may issue such further regulations and orders,
including definitions consistent with this section, as may be
necessary to administer and carry out the purposes of this
section and to prevent evasions thereof.
"(2) The Board may, at its discretion, by regulation or order
exempt transactions or relationships from the requirements of

12 use 1843.

96 STAT. 1520

12 u s e 371c
^^te,^^ 071 „
12 u s e 371c.

12 u s e 221a.

PUBLIC LAW 97-320—OCT. 15, 1982

this section if it finds such exemptions to be in the public
interest and consistent with the purposes of this section.".
(c) Section 23A of the Federal Reserve Act, as amended by this
section, shall apply to any transaction entered into after the date of
enactment of this Act, except for transactions which are the subject
of a binding written contract or commitment entered into on or
before July 28, 1982, and except that any renewal of a participation
in a loan outstanding on July 28, 1982, to a company that becomes
an affiliate as a result of the enactment of this Act, or any participation in a loan to such an affiliate emanating from the renewal of a
binding written contract or commitment outstanding on July 28,
1982, shall not be subject to the collateral requirements of this Act.
(d) Section 18(j) of the Federal Deposit Insurance Act (12 U.S.C.
1828(j)) is amended by striking out ", within the meaning of section 2
of the Banking Act of 1933, and".
(e) Section 22(h)(6)(C) of the Federal Reserve Act (12 U.S.C. 375b(6)(C)) is repealed and subparagraphs (D) through (G) of such section
are redesignated as subparagraphs (C) through (F), respectively.
(f) Section 106(b)(2)(E) of the Bank Holding Company Amendments
of 1970 (12 U.S.C. 1972(2)(E)) is amended by striking out "the same
meaning given it in section 23A of the Federal Reserve Act" and
inserting in lieu thereof "the meaning prescribed by the Board
pursuant to section 22(h) of the Federal Reserve Act (12 U.S.C.
375b),".
(g) Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C.
1820(d)) is amended by inserting "as in section 2(b) of the Banking
Act of 1933 (12 U.S.C. 221a(b)) and" after "shall have the same
meaning".
EXEMPTION FROM RESERVE REQUIREMENTS

SEC. 411. (a) Section 19(b) of the Federal Reserve Act (12 U.S.C.
461(b)) is amended by adding at the end thereof the following:
"(11) ADDITIONAL EXEMPTIONS.—(A)(i) Notwithstanding

the

reserve requirement ratios established under paragraphs (2)
and (5) of this subsection, a reserve ratio of zero per centum
shall apply to any combination of reservable liabilities, which
do not exceed $2,000,000 (as adjusted under subparagraph (B)),
of each depository institution.
"(ii) Each depository institution may designate, in accordance
with such rules and regulations as the Board shall prescribe,
the types and amounts of reservable liabilities to which the
reserve ratio of zero per centum shall apply, except that transaction accounts which are designated to be subject to a reserve
ratio of zero per centum shall be accounts which would otherwise be subject to a reserve ratio of 3 per centum under paragraph (2).
"(iii) The Board shall minimize the reporting necessary to
determine whether depository institutions have total reservable
liabilities of less than $2,000,000 (as adjusted under subparagraph (B)). Consistent with the Board's responsibility to monitor
and control monetary and credit aggregates, depository institutions which have reserve requirements under this subsection
equal to zero per centum shall be subject to less overall reporting requirements than depository institutions which have a
reserve requirement under this subsection that exceeds zero per
centum.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1521

"(B)(i) Beginning in 1982, not later than December 31 of each
year, the Board shall issue a regulation increasing for the next
succeeding calendar year the dollar amount specified in subparagraph (A), as previously adjusted under this subparagraph, by
an amount obtained by multiplying such dollar amount by 80
per centum of the percentage increase in the total reservable
liabilities of all depository institutions.
"(ii) The increase in total reservable liabilities shall be determined by subtracting the amount of total reservable liabilities
on June 30 of the preceding calendar year from the amount of
total reservable liabilities on June 30 of the calendar year
involved. In the case of any such twelve-month period in which
there has been a decrease in the total reservable liabilities of all
depository institutions, no adjustment shall be made. A
decrease in total reservable liabilities shall be determined by
subtracting the amount of total reservable liabilities on June 30
of the calendar year involved from the amount of total reservable liabilities on June 30 of the previous calendar year.".
(b) Section 19(b)(4)(A)(iv) of the Federal Reserve Act (12 U.S.C.
461(b)(4)(A){iv)) is amended by inserting "except as provided in
paragraph (11)," after "requirement is imposed,".
(c) Section 19(b)(1) of the Federal Reserve Act (12 U.S.C. 461(b)(1))
is amended by redesignating subparagraph (E) as subparagraph (F)
and by inserting after subparagraph (D) the following:
"(E) The term 'reservable liabilities' means transaction accounts, nonpersonal time deposits, and all net balances, loans,
assets, and obligations which are, or may be, subject to reserve
requirements under paragraph (5).".
VISITORIAL POWERS

SEC. 412. Section 5240 of the Revised Statutes (12 U.S.C. 484) is
amended to read as follows:
"SEC. 5240. (a) No national bank shall be subject to any visitorial
powers except as authorized by Federal law, vested in the courts of
justice or such as shall be, or have been exercised or directed by
Congress or by either House thereof or by any committee of Congress or of either House duly authorized.
"(b) Notwithstanding subsection (a), lawfully authorized State
auditors and examiners may, at reasonable times and upon reasonable notice to a bank, review its records solely to ensure compliance
with applicable State unclaimed property or escheat laws upon
reasonable cause to believe that the bank has failed to comply with
such laws.".
REAL ESTATE HOLDING PERIOD

SEC. 413. Section 5137 of the Revised Statutes (12 U.S.C. 29) is
amended by striking out the last paragraph thereof and inserting in
lieu thereof the following:
"Notwithstanding the five-year holding limitation of this section
or any other provision of this title, any national banking association
which on the date of enactment of this paragraph held, directly or
indirectly, real estate, including any subsurface rights or interests
therein, that since December 31, 1979, had not been valued on the
books of such association for more than a nominal amount, may
continue to hold such real estate, rights, or interests for such longer
period of time as would be permitted a State chartered bank by the

Regulations.

"Reservable
liabilities."

96 STAT. 1522

PUBLIC LAW 97-320—OCT. 15, 1982

law of the State in which the association is located if the aggregate
amount of earnings from such real estate, rights, or interests is
separately disclosed in the annual financial statements of the
association.".
PART B—FINANCIAL INSTITUTIONS REGULATORY ACT AMENDMENTS
LOAN LIMITS

SEC. 421. (a) Section 22(g) of the Federal Reserve Act (12 U.S.C.
375a) is amended by striking out "not exceeding $60,000" in paragraph (2), and by striking out ", not exceeding the aggregate
amount of $20,000 outstanding at any one time," in paragraph (3).
(b) Paragraph (4) of section 22(g) of the Federal Reserve Act (12
U.S.C. 375a(4)) is amended by striking "not exceeding the aggregate
amount of $10,000 outstanding at any one time" and inserting in
lieu thereof "in an amount prescribed in a regulation of the member
bank's appropriate Federal banking agency".
APPROVAL OF CERTAIN LOANS

SEC. 422. Paragraph (2) of section 22(h) of the Federal Reserve Act
(12 U.S.C. 375b(2)) is amended by striking out "$25,000" and inserting in lieu thereof "an amount prescribed in a regulation of the
appropriate Federal banking agency".
E X C L U S I O N OF FOREIGN BANKS

SEC. 423. Section 18(j)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1828(j)(2)) is amended by adding at the end thereof the
following: "The provisions of this subsection shall not apply to any
foreign bank, as defined in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(7)), having an insured branch in the
United States, but shall apply to the insured branch.".
CIVIL MONEY P E N A L T I E S

SEC. 424. (a) Section 19(1)(1) of the Federal Reserve Act (12 U.S.C.
505(1)); section 5(d)(8)(B)(i) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(d)(8)(B)(i)); section 8(b)(1) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1847(b)(1)); and section 206(j)(2)(A) of the
Federal Credit Union Act (12 U.S.C. 1786(j)(2)(A)) are amended by
inserting before the period at the end of the first sentence thereof
the following: ": Provided, That the Board may, in its discretion,
compromise, modify, or remit any civil money penalty which is
subject to imposition or has been imposed under authority of this
subsection".
(b) Section 407(k)(3)(A) of the National Housing Act (12 U.S.C.
1730(k)(3)(A)); section 408(j)(4)(A) of the National Housing Act (12
U.S.C. 1730a(j)(4)(A)); and section. 18(j)(3)(A) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(j)(3)(A)) are amended by inserting
before the period at the end of the first sentence thereof the
following: ": Provided, That the Corporation may, in its discretion,
compromise, modify, or remit any civil money penalty which is
subject to imposition or has been imposed under authority of this
subsection".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1523

(c) Section 29(a) of the Federal Reserve Act (12 U.S.C. 504(a));
section 8(i)(2)(i) of the Federal Deposit Insurance Act (12 U.S.C.
1818(i)(2)(i)); and section 106(b)(2)(F)(i) of the Bank Holding Company
Act Amendments of 1970 (12 U.S.C. 1972(2)(F)(i)) are amended by
inserting before the period at the end of the first sentence thereof
the following: ": Provided, That the agency having authority to
impose a civil money penalty may, in its discretion, compromise,
modify, or remit any civil money penalty which is subject to imposition or has been imposed under such authority".
(d) Each of the following provisions is amended by striking the
term "shall" and inserting in lieu thereof the term "may":
(1) The second sentence of section 29(a) of the Federal Reserve
Act (12 U.S.C. 504(a));
(2) The second sentence of section 19(1)(1) of the Federal
Reserve Act (12 U.S.C. 505(1));
(3) The second sentence of section 52390t))(l) of the Revised
Statutes (12 U.S.C. 93(bXl));
(4) The second sentence of section 8(b)(1) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1847(b)(1));
(5) The second sentence of section 408(j)(4)(A) of the National
Housing Act (12 U.S.C. 1730a(jX4XA));
(6) The second sentence of section 8(iX2Xi) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(iX2Xi));
(7) The second sentence of section 407(kX3XA) of the National
Housing Act (12 U.S.C. 1730(kX3XA));
(8) The second sentence of section 5(dX8XBXi) of the Home
Owners' Loan Act of 1933 (12 U.S.C. 1464(dX8XBXi));
(9) The second sentence of section 206(jX2XA) of the Federal
Credit Union Act (12 U.S.C. 1786(jX2XA));
(10) The second sentence of section 180'X3XA) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(jX3XA)); and
(11) The second sentence of section 106(bX2XFXi) of the Bank
Holding Company Act Amendments of 1970 (12 U.S.C.
1972(2XFXi)).
(e) Sections 29(d) and 19(1X4) of the Federal Reserve Act (12 U.S.C.
504(d) and 505(4)), 18(jX3XD) and 8(iX2Xiv) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(jX3XD) and 1818(iX2Xiv)), 407(kX3XD)
of the National Housing Act (12 U.S.C. 1730(kX3XD)), 5(dX8XBXiv) of
the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(dX8XBXiv)),
206(jX2)(D) of the Federal Credit Union Act (12 U.S.C. 1786(jX2XD)),
and 106(bX2XFXiv) of the Bank Holding Company Act Amendments
of 1970 (12 U.S.C. 1972(2XFXiv)) are amended by striking out "ten
days from the date" in each section and inserting in lieu thereof
"twenty days from the service".
if) Section 5239(bXl) of the Revised Statutes (12 U.S.C. 93(h)(1)) is
amended by striking out the word "chapter" and inserting in lieu
thereof "title".
(g) Section 5239(bXl) of the Revised Statutes (12 U.S.C. 93(bXl)) is
amended by inserting before ", or any regulation issued pursuant
thereto," the following: "or any of the provisions of the first section
of the Act of September 28, 1962 (76 Stat. 688; 12 U.S.C. 92a)".
TECHNICAL AMENDMENTS

SEC. 425. (a) Section 407(hXl) of the National Housing Act (12
U.S.C. 1730(hXl)) is amended—

97-200 0 - 8 4 - p t . 2

6 : QL3

96 STAT. 1524

12 use 3106.

PUBLIC LAW 97-320—OCT. 15, 1982

(1) by striking out "persons" in the first sentence and inserting in lieu thereof "person"; and
(2) by striking out "(3)" in the last sentence and inserting in
lieu thereof "(2)".
(b) The first sentence of section 8(b)(3) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(b)(3)) is amended by striking out
"25A" and inserting in lieu thereof "25(a)".
(c) Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)) is amended by adding at the end thereof the following:
"(4) This subsection and subsections (c), (d), (h), (i), (k), (1), (m), and
(n) of this section shall apply to any foreign bank or company to
which subsection (a) of section 8 of the International Banking Act of
1978 applies and to any subsidiary (other than a bank) of any such
foreign bank or company in the same manner as they apply to a
bank holding company and any subsidiary thereof (other than a
bank) under subparagraph (3) of this subsection. For the purposes of
this paragraph, the term 'subsidiary' shall have the meaning assigned to it in section 2 of the Bank Holding Company Act of 1956.".
(d) Section 205(2) of the Depository Institution Management Interlocks Act (12 U.S.C. 3204(2)) is amended by striking "25A" and
inserting in lieu thereof "25(a)".
MANAGEMENT INTERLOCKS

12 use 3208.
15 use 12.

SEC. 426. The Depository Institution Management Interlocks Act
is amended by adding at the end thereof the following new section:
"SEC. 210. (a) For the purpose of the exercise by the Attorney
General of his enforcement functions under section 207(6) of this
title, all of the functions and powers of the Attorney General under
the Clayton Act are available to the Attorney General, irrespective
of any jurisdictional tests in the Clayton Act, including the power to
take enforcement actions in the same manner as if the violation had
been a violation of the Clayton Act.
"(b) All of the functions and powers of the Attorney General or
the Assistant Attorney General in charge of the Antitrust Division
of the Department of Justice are available to the Attorney General
or to such Assistant Attorney General to investigate possible violations under section 207(6) of the title in the same manner as if such
possible violations were possible violations of the Clayton Act.".
REMOVAL AUTHORITY

SEC. 427. (a) Section 5(d) of the Home Owners' Loan Act of 1933 (12
U.S.C. 1464(d)) is amended—
(1) by redesignating paragraphs (4) (C) through (E) as paragraphs
(4) (D) through (F), respectively, and by inserting after paragraph
(4)(B) the following new paragraph:
"(C) Whenever, in the opinion of the Board, any director or officer
of an association has committed a violation of the Depository Institution Management Interlocks Act (12 U.S.C. 3201 et seq.), 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.";
(2) by striking out "(A) or (B)" each place it appears in
paragraphs (4)(D) and (4)(F), as redesignated, and inserting in
lieu thereof "(A), (B), or (C)";

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1525

(3) by striking out "(E)" in the second sentence of paragraph
(4)(D), as redesignated, and inserting in lieu thereof '(F)";
(4) by striking out "(C)" in paragraph (F), as redesignated, and
inserting in lieu thereof "(D)";
(5) by striking out, in paragraph (5)(A), "or (C)" and inserting
in lieu thereof "(C), or (D)"; and
(6) by striking out, in paragraph (12)(A), "(4)(C), (4)(D)" and
inserting in lieu thereof "(4)(D), (4)(E)".
(b)(1) Section 407(g) of the National Housing Act (12 U.S.C. 1730(g))
is amended—
(A) by redesignating paragraphs (3) through (5) as paragraphs
(4) through (6), respectively, and by inserting after paragraph (2)
the following new paragraph:
"(3) Whenever, in the opinion of the Corporation, any director or
officer of an insured institution has committed a violation of the
Depository Institution Management Interlocks Act, the Corporation 12 USC 3201
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.";
(B) by striking out "or (2)" each place it appears in paragraphs (4) and (6), as redesignated, and inserting in lieu thereof
", (2) or (3)";
(C) by striking out "(5)" in paragraph (4), as redesignated, and
inserting in lieu thereof "(6)"; and
(D) by striking out "(3)" in paragraph (6), as redesignated, and
inserting in lieu thereof "(4)".
(2) Section 407(h)(1) of the National Housing Act (12 U.S.C.
1730(h)(1)) is amended by striking out "or (3)" in the fourth sentence
and inserting in lieu thereof "(3) or (4)".
(3) Section 407(p)(l) of the National Housing Act (12 U.S.C.
1730(p)(l)) is amended by striking out "(g)(3), (g)(4)," and inserting in
lieu thereof "(g)(4), (g)(5),".
(c)(1) Section 206(g) of the Federal Credit Union Act (12 U.S.C.
1786(g)) is amended—
(A) by redesignating paragraphs (3) through (5) as paragraphs
(4) through (6), respectively, and by inserting after paragraph (2)
the following new paragraph:
"(3) Whenever, in the opinion of the Board, any director, officer,
or committee member of an insured credit union has committed any
violation of the Depository Institution Management Interlocks Act,
the Board may serve upon such director, officer, or committee
member a written notice of its intention to remove him from
office.";
(B) by striking out "or (2)" each place it appears in paragraphs (4) or (6), as redesignated, and inserting in lieu thereof ",
(2), or (3)";
(C) by striking out "(5)" in paragraph (4), as redesignated, and
inserting in lieu thereof "(6)"; and
(D) by striking out "(3)" in paragraph (6), as redesignated, and
inserting in lieu thereof "(4)".
(2) Section 206(k) of the Federal Credit Union Act (12 U.S.C.
1786(k)) is amended by striking out "(3), (g)(4)" and inserting in lieu
thereof "(4), (g)(5)".
(d) (1) Section 8(e) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)) is amended—

96 STAT. 1526

12 u s e 3201
note.

PUBLIC LAW 97-320—OCT. 15, 1982

(A) by redesignating paragraphs (3) through (5) as paragraphs
(4) through (6), respectively, and by inserting after paragraph (2)
the following new paragraph:
"(3) Whenever, in the opinion of the appropriate Federal banking
agency, any director or officer of an insured bank has committed
any violation of the Depository Institution Management Interlocks
Act, the agency may serve upon such director or officer a written
notice of its intention to remove him from office."; and
(B) by striking out "or (2)" each place it appears in paragraph
(4), as redesignated, and inserting in lieu thereof ", (2), or (3)".
(2) Section 8(f) of the Federal Deposit Insurance Act (12 U.S.C.
1818(f)) is amended by striking out "(e)(5) or (e)(7)" and "(e)(1), (e)(3),
or (e)(7)" and inserting in lieu thereof "(e)(4)" and "(e)(1), (e)(2), or
(e)(3)" respectively.
(3) Section 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(g)(1)) is amended by striking out "or (3)" in the penultimate
sentence and inserting in lieu thereof ", (3), or (4)".
(4) Section 8(j) of the Federal Deposit Insurance Act (12 U.S.C.
1818(j)) is amended by striking out "(e)(3), (e)(4)" and inserting in
lieu thereof "(e)(4), (e)(5)".
CORRESPONDENT ACCOUNTS

Rules and
regulations.

Definitions.

SEC. 428. (a) Section 106(b)(2) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1972(2)) is amended—
(1) by inserting in subparagraph (A) after the phrase "such
other bank" the phrase "or to any related interest of such
person";
(2) by inserting in subparagraph (B) after the phrase "desiring
to open the account" the phrase "or to any related interest of
such person";
(3) by inserting in subparagraph (C) after the phrase "such
other bank" the phrase "or to any related interest of such
person"; and
(4) by inserting in subparagraph (D) after the phrase "another
bank" the phrase "or to any related interest of such person".
(b) Section 106(b)(2)(G) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972(2)(G)) is amended—
(1) by striking out subparagraph (ii) and inserting in lieu
thereof the following:
"(ii) The appropriate Federal banking agencies are authorized
to issue rules and regulations, including definitions of terms, to
require the reporting and public disclosure of information by
any bank or executive officer or principal shareholder thereof
concerning any extension of credit by a correspondent bank to
the reporting bank's executive officers or principal shareholders, or the related interests of such persons."; and
(2) by striking out subparagraph (iii).
(c) Section 106(b)(2) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972(2)) is amended by adding at the end
thereof the following:
"(H) For the purpose of this paragraph—
"(i) the term 'bank' includes a mutual savings bank;
"(ii) the term 'related interests of such persons' includes
any company controlled by such executive officer, director,
or person, or any political or campaign committee the funds
or services of which will benefit such executive officer.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1527

director, or person or which is controlled by such executive
officer, director, or person; and
"(iii) the terms 'control of a company' and 'company' have
the same meaning as under section 22(h) of the Federal
Reserve Act (12 U.S.C. 375b).".
DISCLOSURE OF MATERIAL FACTS

SEC. 429. Section 7(k) of the Federal Deposit Insurance Act (12
U.S.C. 1817(k)) is amended to read as follows:
"(k) The appropriate Federal banking agencies are authorized to
issue rules and regulations, including definitions of terms, to require
the reporting and public disclosure of information by a bank or any
executive officer or principal shareholder thereof concerning extensions of credit by the bank to any of its executive officers or
principal shareholders, or the related interests of such persons.".
EFFECTIVE DATE OF REPORTING PROVISIONS

SEC. 430. The provision of law amended by section 4280t)) and 12 use I817
section 429 shall remain in effect until the regulations referred to in note.
such amendments become effective.
TECHNICAL AMENDMENT

SEC. 431. Section 10060>X2) of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3305(bX2)) is amended by
striking out "unaccepted" and inserting in lieu thereof
"unacceptable".
RIGHT TO F I N A N C I A L PRIVACY ACT AMENDMENTS

SEC. 432. (a) Section 1112 of the Right to Financial Privacy Act of
1978 (12 U.S.C. 3412) is amended by adding at the end thereof the
following new subsection:
"(e) Notwithstanding section 1101(6) or any other provision of this
title, the exchange of financial records or other information with
respect to a financial institution among and between the five
member supervisory agencies of the Federal Financial Institutions
Examination Council is permitted.".
(b) Section 1114(bX2) of the Right to Financial Privacy Act of 1978
(12 U.S.C. 3414(bX2)) is amended by striking out "of following the
term "institution".
MISCELLANEOUS AMENDMENTS

SEC. 433. (a) Section 8(q) of the Federal Deposit Insurance Act (12
U.S.C. 1818(q)) is amended by placing a period after the phrase "sixmonth period" in the first sentence and striking the remainder of
(b) Section 4(aX2) of the Bank Holding Company Act of 1956 (18
U.S.C. 1843(aX2)) is amended by striking out "December 31,1982" in
the last paragraph and inserting in lieu thereof "December 31,
1984".

96 STAT. 1528

PUBLIC LAW 97-320—OCT. 15, 1982
TITLE V-AMENDMENTS TO THE FEDERAL CREDIT UNION
ACT
CUSTODIAL ACCOUNTS

SEC. 501. Section 101(5) of the Federal Credit Union Act (12 U.S.C.
1752(5)) is amended by inserting ", and such terms mean custodial
accounts established for loans sold in whole or in part pursuant to
section 107(13)" after "section 207 of this Act".
AUDIT OF NATIONAL CREDIT UNION AMINISTRATION

SEC. 502. Section 102(0 of the Federal Credit Union Act (12 U.S.C.
1752a(f)) is amended by striking out "on a calendar year basis".
ORGANIZATIONAL PROCESS

SEC. 503. Section 103 of the Federal Credit Union Act (12 U.S.C.
1753) is amended by striking out "subscribe" and inserting in lieu
thereof "each subscribe either individually or collectively".
PAR VALUE OF SHARES

SEC. 504. Section 103(4) of the Federal Credit Union Act (12 U.S.C.
1753(4)) is amended by inserting "initial" before "par value" and by
striking out ", which shall be $5 each".
INVESTMENT OF FEES

SEC. 505. Section 105 of the Federal Credit Union Act (12 U.S.C.
1755) is amended by adding at the end thereof the following new
subsection:
"(e)(1) Upon request of the Board, the Secretary of the Treasury
shall invest and reinvest such portions of the annual operating fees
deposited under subsection (d) as the Board determines are not
needed for current operations.
"(2) Such investments may be made only in interest bearing
securities of the United States with maturities requested by the
Board bearing interest at rates determined by the Secretary of the
Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable
maturities.
"(3) All income derived from such investments and reinvestments
shall be deposited to the account of the Administration described in
subsection (d).".
TECHNICAL AMENDMENT

SEC. 506. Section 107(5)(A) of the Federal Credit Union Act (12
U.S.C. 1757(5)) is amended by striking out the period at the end of
clause (ix) and inserting in lieu thereof a semicolon and by adding at
the end thereof the following:
"(x) loans must be approved by the credit committee
or a loan officer, but no loan may be made to any
member if, upon the making of that loan, the member
would be indebted to the Federal credit union upon
loans made to him in an aggregate amount which
would exceed 10 per centum of the credit union's unimpaired capital and surplus.".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1529

REAL ESTATE LENDING; MAXIMUM MATURITY

SEC. 507. Section 107(5XAXi) of the Federal Credit Union Act (12
U.S.C. 1757(5XA)(i)) is amended by inserting "or such other limits as
shall be set by the National Credit Union Association Board" after
"not exceeding thirty years.".
REAL ESTATE LENDING; MEDIAN PRICE RULE

SEC. 508. Section 107(5XAXi) of the Federal Credit Union Act (12
U.S.C, 1757(5XAXi)) is amended by striking out "the sales price of
which is not more than 150 per centum of the median sales price of
residential real property situated in the geographical area (as determined by the board of directors) in which the property is located,".
REAL ESTATE LENDING; REFINANCING

SEC. 509. Section 107(5XAXi) of the Federal Credit Union Act (12
U.S.C. 1757(5XAXi)) is amended by striking out "which is made to
finance the acquisition o f and inserting in lieu thereof "on" and by
striking out "for" the first time it appears £md inserting in lieu
therof "that is or will be".
REAL ESTATE LENDING; SECOND MORTGAGES

SEC. 510. Section 107(5XAXii) of the Federal Credit Union Act (12
U.S.C. 1757(5XAXii)) is amended to read as follows:
"(ii) a loan to finance the purchase of a mobile home,
which shall be secured by a first lein on such mobile
home, to be used by the credit union member as his
residence, or a second mortgage loan secured by a
residential dwelling which is the residence of a credit
union member shall have a maturity not to exceed
fifteen years unless such loan is insured or guaranteed
as provided in subparagraph (iii);".
TERMS OF GUARANTEED LOANS

SEC. 511. Section 107(5XAXiii) of the Federal Credit Union Act (12
U.S.C. 1757(5XAXiii)) is amended to read as follows:
"(iii) a loan secured by the insurance or guarantee of,
or with advance commitment to purchase the loan by,
the Federal Government, a State government, or any
agency of either may be made for the maturity and
under the terms and conditions specified in the law
under which such insurance, guarantee, or commitment is provided;".
LOANS TO DIRECTORS OR COMMITTEE MEMBERS

SEC. 512. Sections 107(5XA) (iv) and (v) of the Federal Credit Union
Act (12 U.S.C. 1757(5XA) (iv) and (v)) are amended by striking out
"$5,000" and inserting in lieu thereof "$10,000".
REAL ESTATE LENDING; PARTIAL PAYMENTS

SEC. 513. Section 107(5XA)(viii) of the Federal Credit Union Act (12
U.S.C. 1757(5XAXviii)) is amended by inserting before the semicolon

96 STAT. 1530

PUBLIC LAW 97-320—OCT. 15, 1982

at the end thereof the following: ", except that on a first or second
mortgage loan a Federal credit union may require that any partial
prepayments (I) be made on the date monthly installments are due,
and (II) be in the amount of that part of one or more monthly
installments which would be applicable to principal".
INVESTMENT IN STATE AND LOCAL GOVERNMENT OBUGATIONS

SEC. 514. Section 107(7) of the Federal Credit Union Act (12 U.S.C.
1757(7)) is amended by adding at the end thereof the following: "(L)
investments in obligations of, or issued by, any State or political
subdivision thereof (including any agency, corporation, or instrumentality of a State or political subdivision), except that no credit
union may invest more than 10 per centum of its unimpaired capital
and surplus in the obligations of any one issuer (exclusive of general
obligations of the issuer); and".
USE OP SPACE AND FACILITIES

SEC. 515. Section 124 of the Federal Credit Union Act (12 U.S.C.
1770) is amended by adding at the end thereof the following: "For
the purpose of this section, the term 'services' includes, but is not
limited to, the providing of lighting, heating, cooling, electricity,
office furniture, office machines and equipment, telephone service
(including installation lines and equipment and other expenses
associated with telephone service), and security systems (including
installation and other expenses associated with security systems).
Where there is an agreement for the pa3mient of costs associated
with the provision of space or services, nothing in title 31, United
States Code, or any other provision of law, shall be construed to
prohibit or restrict payment by reimbursement to the miscellaneous
receipts or other appropriate account of the Treasury.".
INVESTMENT IN SECONDARY MARKET INSTRUMENTS

12 use 1721.

SEC. 516. Section 107(7)(E) of the Federal Credit Union Act (12
U.S.C. 1757(7)(E)) is amended by inserting after the last semicolon
the following: "or in obligations, participations, securities, or other
instruments of, or issued by, or fully guaranteed as to principal and
interest by any other agency of the United States and a Federal
credit union may issue and sell securities which are guaranteed
pursuant to section 306(g) of the National Housing Act;".
DEPOSITS IN OUT-OF-STATE INSURED STATE BANKS

SEC. 517. Section 107(8) of the Federal Credit Union Act (12 U.S.C.
1757(8)) is amended by inserting after "in which the Federal credit
union does business," the following: "or in banks or institutions the
accounts of which are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation,".
MONEY TRANSFER SERVICES

SEC. 518. Section 107(12) of the Federal Credit Union Act (12
U.S.C. 1757(12)) is amended—

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1531

(1) by striking out "and money orders" and inserting in lieu
thereof ", money orders, and other similar money transfer
instruments"; and
(2) by striking out all after "for a fee" and inserting in lieu
thereof a semicolon.
ANNUAL MEETINGS

SEC. 519. Section 110 of the Federal Credit Union Act (12 U.S.C.
1760) is amended to read as follows:
"MEMBERS' MEETINGS

"SEC. 110. The fiscal year of all Federal credit unions shall end
December 31. The annual meeting of each Federal credit union shall
be held at such place as its bylaws shall prescribe. Special meetings
may be held in the manner indicated in the bylaws. No member
shall be entitled to vote by proxy, but a member other than a
natural person may vote through an agent designated for the purpose. Irrespective of the number of shares held, no member shall
have more than one vote.".
TECHNICAL WORDING CHANGES IN MANAGEMENT AUTHORITY

SEC. 520. Section 111 of the Federal Credit Union Act (12 U.S.C.
1761) is amended to read as follows:
"MANAGEMENT

"SEC. 111. (a) The management of a Federal credit union shall be
by a board of directors, a supervisory committee, and where the
bylaws so provide, a credit committee. The board shall consist of an
odd number of directors, at least five in number, to be elected
annually by and from the members as the bylaws provide. Any
vacancy occurring on the board shall be filled until the next annual
election by appointment by the remainder of the directors.
"(b) The supervisory committee shall be appointed by the board of
directors and shall consist of not less than three members nor more
than five members, one of whom may be a director other than the
compensated officer of the board. A record of the names and
addresses of the executive officers, members of the supervisory
committee, credit committee, and loan officers, shall be filed
with the Administration within ten days after their election or
appointment.
"(c) No member of the board or of any other committee shall, as
such, be compensated, except that reasonable health, accident, similar insurance protection, and the reimbursement of reasonable
expenses incurred in the execution of the duties of the position shall
not be considered compensation.".
ELIMINATION OF SPECIFIC REFERENCE TO THE TITLES OF THE OFFICERS
OF THE BOARD

SEC. 521. Section 112 of the Federal Credit Union Act (12 U.S.C.
1761(a)) is amended to read as follows:

12 USC I76ia.

96 STAT. 1532

PUBLIC LAW 97-320—OCT. 15, 1982
"OFFICERS OF THE BOARD

"SEC. 112. At their first meeting after the annual meeting of the
members, the directors shall elect from their number the board
officers specified in the bylaws. Only one board officer may be
compensated as an officer of the board and the bylaws shall specify
such position as well as the specific duties of each of the board
officers. The board shall elect from their number a financial officer
who shall give bond with good and sufficient surety, in an amount
and character to be determined by the board of directors in compliance with regulations prescribed from time to time by the Board
conditioned upon the faithful performance of the officer's trust.".
CLARIFICATION OF BOARD OF DIRECTOR'S DUTIES

SEC. 522. Section 113 of the Federal Credit Union Act (12 U.S.C.
1761b) is amended to read as follows:
"BOARD OF DIRECTORS; MEETINGS; POWERS AND DUTIES; EXECUTIVE
COMMITTEE; MEMBERSHIP OFFICERS; MEMBERSHIP APPLICATIONS

"SEC. 113. The board of directors shall meet at least once a month
and shall have the general directions and control of the affairs of
the Federal credit union. Minutes of all meetings shall be kept.
Among other things, the board of directors shall—
"(1) act upon applications for membership or appoint membership officers from among the members of the board of directors, other than the board member paid as an officer, the
financial board officer, any assistant to the paid officer of the
board or to the financial officer, or any loan officer;
"(2) require any officer or employee having custody of or
handling funds to give bond with good and sufficient surety in
an amount and character in compliance with regulations of the
Board, and authorize the payment of the premium or premiums
therefor from the funds of the Federal credit unions;
"(3) fill vacancies on the board of directors until successors
elected at the next annual meeting have qualified;
"(4) if the bylaws provide for an elected credit committee, fill
vacancies on the credit committee until successors elected at the
next annual meeting have qualified;
"(5) appoint the members of the supervisory committee and, if
the bylaws so provide, appoint the members of the credit
committee;
"(6) have charge of investments including the right to designate an investment committee of not less than two to act on its
behalf;
"(7) determine the maximum number of shares, share certificates, and share draft accounts, and the classes of shares, share
certificates, and share draft accounts;
"(8) subject to any limitations of this subchapter, determine
the interest rates on loans, the security, and the maximum
amount which may be loaned and provided in lines of credit;
"(9) authorize interest refunds to members of record at the
close of business on the last day of any dividend period from
income earned and received in proportion to the interest paid
them during that dividend period;

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1533

"(10) if the bylaws so provide, appoint one or more loan
officers and delegate to these officers the power to approve or
disapprove loans, lines of credit, or advances from lines of
credit;
"(11) establish the par value of the share;
"(12) subject to the limitations of this title and the bylaws of
the credit union, provide for the hiring and compensation of
officers and employees;
"(13) if the bylaws so provide, appoint an executive committee
of not less than three directors to act on its behalf and any other
committees to which it can delegate specific functions;
"(14) prescribe conditions and limitations for any committee
which it appoints;
"(15) review at each monthly meeting a list of approved or
pending applications for membership received since the previous monthly meetings together with such other related information as it or the bylaws require;
"(16) provide for the furnishing of the written reasons for any
denial of a membership application to the applicant upon the
written request of the applicant;
"(17) in the absence of a credit committee, and upon the
written request of a member, review a loan application denied
by a loan officer;
"(18) declare the dividend rate to be paid on shares, share
certificates, and share draft accounts pursuant to the terms and
conditions of section 117;
"(19) establish and maintain a system of internal controls
consistent with the regulations of the Board;
"(20) establish lending policies; and
"(21) do all other things that are necessary and proper to
carry out all the purposes and powers of the Federal credit
union, subject to regulations issued by the Board.".

Post, p. 1534.

OPTIONAL CREDIT COMMITTEE

SEC. 523. Section 114 of the Federal Credit Union Act (12 U.S.C.
1761c) is amended to read as follows:
" C R E D I T COMMITTEE

"SEC. 114. (a) If the bylaws provide for a credit committee, then
pursuant to the provisions of the bylaws, the board of directors may
appoint or the members may elect a credit committee which shall
consist of an odd number of members of the credit union, but which
shall not include more than one loan officer. The method used shall
be set forth in the bylaws. The credit committee shall hold such
meetings as the business of the Federal credit union may require,
not less frequently than once a month, to consider applications for
loans or lines of credit. Reasonable notice of such meetings shall be
given to all members of the committee. Except for those loans or
lines of credit required to be approved by the board of directors in
section 107(5) of this Act, approval of an application shall be by
majority of the committee who are present at the meeting at which
it is considered provided that a majority of the full committee is
present. The credit committee may appoint and delegate to loan
officers the authority to approve applications.

^^*e, pp. 1528,
^^^^•

96 STAT. 1534

PUBLIC LAW 97-320—OCT. 15, 1982

"(b) If the bylaws provide for a credit committee, all applications
not approved by the loan officer shall be reviewed by the credit
committee, and the approval of a majority of the members who are
present at the meeting when such review is undertaken shall be
required to reverse the loan officer's decision provided a majority of
the full committee is present. If there is not a credit committee, a
member shall have the right upon written request of review by the
board of directors of a loan application which has been denied. No
individual shall have authority to disburse funds of the Federal
credit union with respect to any loan or line of credit for which the
application has been approved by him in his capacity as a loan
officer.".
REQUIREMENT THAT CREDIT UNION PAY ON ALL DOLLARS AFTER
PURCHASE OF FULL SHARE

SEC. 524. Section 117 of the Federal Credit Union Act (12 U.S.C.
1763) is amended to read as follows:
"DIVIDENDS

"SEC. 117. At such intervals as the board of directors may authorize, and after provision for required reserves, the board of directors
may declare, pursuant to such regulations as may be issued by the
Board, a dividend to be paid at different rates on different types of
shares, at different rates and maturity dates in the case of share
certificates, and at different rates on different types of share draft
accounts. Dividends credited may be accrued on various types of
shares, share certificates, and share draft accounts as authorized by
the board of directors. If the par value of a share exceeds $5,
dividends shall be paid on all funds in the regular share account
once a full share has been purchased.".
NONPARTICIPATION

SEC. 525. Section 118 of the Federal Credit Union Act (12 U.S.C.
1764) is amended to read as follows:
" E X P U L S I O N A N D WITHDRAWAL

"SEC. 118. (a) Subject to subsection (b) of this section, a member
may be expelled by a two-thirds vote of the members of a Federal
credit union present at a special meeting called for the purpose, but
only after opportunity has been given him to be heard.
"(b) The board of directors of a Federal credit union may, by
majority vote of a quorum of directors, adopt a policy with respect to
expulsion from membership based on nonparticipation by a member
in the affairs of the credit union. In establishing its policy, the board
should consider a member's failure to vote in annual credit union
elections or failure to purchase shares from, obtain a loan from, or
lend to the Federal credit union. If such a policy is adopted, written
notice of the policy as adopted and the effective date of such policy
shall be mailed to each member of the credit union at the member's
current address appearing on the records of the credit union not less
than thirty days prior to the effective date of such policy. In
addition, each new member shall be provided written notice of any
such policy prior to or upon applying for membership.

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1535

"(c) Withdrawal or expulsion of a member pursuant to either
subsection (a) or (b) of this section shall not operate to relieve him
from liability to the Federal credit union. The amount to be paid a
withdrawing or expelled member by a Federal credit union shall be
determined and paid in a manner specified in the bylaws.".
NATIONAL CREDIT UNION ADMINISTRATION B O A R D ' S REGULATORY
AUTHORITY

SEC. 526. Section 120(a) of the Federal Credit Union Act (12 U.S.C.
1766(a)) is amended by adding at the end thereof the following: "Any
central credit union chartered by the Board shall be subject to such
rules, regulations, and orders as the Board deems appropriate and,
except as otherwise specifically provided in such rules, regulations,
or orders, shall be vested with or subject to the same rights, privileges, duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to all Federal credit unions under this
Act.".
C H A R T E R CONVERSION

SEC. 527. Section 125(a)(1) of the Federal Credit Union Act (12
U.S.C. 1771(a)(1)) is amended by striking out the last sentence and
inserting in lieu thereof the following: "Approval of the proposition
for conversion shall be by the affirmative vote of a majority of the
members of the credit union who vote on the proposal. The written
notice of the proposition shall in boldface type state that the issue
will be decided by a majority of the members who vote.".
ELIMINATION OF DISCRIMINATORY INSURANCE PREMIUM ASSESSMENT
FOR DEPOSITS OF STATE CHARTERED CREDIT UNIONS

SEC. 528. Section 202(h)(8) of the Federal Credit Union Act (12 "Members
U.S.C. 1782(h)(8)) is amended to read as follows:
accounts."
"(3) the term 'members accounts' when applied to the premium charge for insurance of accounts shall not include
amounts received from other credit unions, the accounts of
which are federally insured or insured or guaranteed by a fund
established under State law or regulation for this purpose, in
excess of the insured account limit set forth in section
207(c)(1);".
12 use 1787.
E L I M I N A T I O N O F PARTIAL INSURANCE PREMIUMS AND REBATES

SEC. 529. Section 202(c) of the Federal Credit Union Act (12 U.S.C.
1782(c)) is amended by striking out paragraphs (3) and (6) and by
redesignating paragraphs (4) and (5) as paragraphs (3) and (4),
respectively.
AUTHORIZATION FOR FUND TO BORROW FROM CLF

SEC. 530. Section 203 of the Federal Credit Union Act (12 U.S.C.
1783) is amended by adding at the end thereof the following:
"(f) In addition to the authority to borrow from the Secretary of
the Treasury provided in subsection (d), if in the judgment of the
Board, a loan to the fund is required at any time for carrying out the
purposes of this title, the fund is authorized to borrow from the
National Credit Union Administration Central Liquidity Facility.".

96 STAT. 1536

PUBLIC LAW 97-320—OCT. 15, 1982
CENTRAL LIQUIDITY FACILITY LENDING AND INVESTMENT AUTHORITY

SEC. 531. Section 307(a) of the Federal Credit Union Act (12 U.S.C.
1795f(a)) is amended—
(1) by striking out "and" at the end of paragraph (15);
(2) by striking out the period at the end of paragraph (16) and
inserting in lieu thereof a semicolon; and
(3) by adding at the end thereof the following:
"(17) exercise such incidental powers as shall be necessary or
requisite to enable it to carry out effectively the purposes for
which the facility is incorporated; and
"(18) advance funds to the National Credit Union Share
Insurance Fund under such terms and conditions as may be
established by the Board.",
CENTRAL LIQUIDITY FACILITY AS AGENT OF FEDERAL RESERVE SYSTEM

SEC. 532. Title III of the Federal Credit Union Act (12 U.S.C. 1795
through 17951) is amended by adding at the end thereof the
following:
" A G E N T O F T H E FEDERAL RESERVE SYSTEM

12 u s e 1795J.

"SEC. 311. The facility is authorized to act upon the request of the
Board of Governors of the Federal Reserve System as an agent of the
Federal Reserve System in matters pertaining to credit unions
under such terms and conditions as may be established by the Board
of Governors of the Federal Reserve System.".
STUDY O F D I R E C T O R S ' COMPENSATION

SEC. 533. The national Credit Union Administration Board shall
conduct a study to determine the feasibility and desirability of
permitting Federal credit unions to compensate members of their
boards of directors. A report containing the results of such study
shall be transmitted to the Congress not later than 6 months after
the date of enactment of this Act.
TITLE VI—PROPERTY, CASUALTY, LIFE INSURANCE
ACTIVITIES OF BANK HOLDING COMPANIES
A M E N D M E N T T O T H E B A N K H O L D I N G COMPANY ACT OF

1956

SEC. 601. Section 4(c)(8) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(c)(8)) is amended by striking out the period at the end
of the first sentence and inserting in lieu thereof the following: ",
but for purposes of this subsection it is not closely related to banking
or managing or controlling banks for a bank holding company to
provide insurance as a principal, agent, or broker except (A) where
the insurance is limited to assuring repayment of the outstanding
balance due on a specific extension of credit by a bank holding
company or its subsidiary in the event of the death, disability, or
involuntary unemployment of the debtor; (B) in the case of a finance
company which is a subsidiary of a bank holding company, where
the insurance is also limited to assuring repayment of the outstanding balance on an extension of credit in the event of loss or damage
to any property used as collateral on such extention of credit and,
during the period beginning on the date of the enactment of this

PUBLIC LAW 97-320-OCT. 15, 1982

96 STAT. 1537

subparagraph and ending on December 31, 1982, such extension of
credit is not more than $10,000 ($25,000 in the case of an extension
of credit which is made to finance the purchase of a residential
manufactured home and which is secured by such residential manufactured home) and for any given year after 1982, such extension of
credit is not more than an amount equal to $10,000 ($25,000 in the
case of an extension of credit which is made to finance the purchase
of a residential manufactured home and which is secured by such
residential manufactured home) increased by the percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers published monthly by the Bureau of Labor Statistics for the period beginning on January 1, 1982, and ending on
December 31 of the year preceding the year in which such extension
of credit is made; (C) any insurance agency activity in a place that (i)
has a population not exceeding five thousand (as shown by the last
preceding decennial census), or (ii) the bank holding company, after
notice and opportunity for a hearing, demonstrates has inadequate
insurance agency facilities; (D) any insurance agency activity which
was engaged in by the bank holding company or any of its subsidiaries on May 1, 1982, or which the Board approved for such company
or any of its subsidiaries on or before May 1, 1982, including (i) sales
of insurance at new locations of the same bank holding company or
the same subsidiary or subsidiaries with respect to which insurance
was sold on May 1, 1982, or approved to be sold on or before May 1,
1982, if such new locations are confined to the State in which the
principal place of business of the bank holding company is located,
any State or States immediately adjacent to such State, and any
State or States in which insurance activities were conducted by the
bank holding company or any of its subsidiaries on May 1, 1982, or
were approved to be conducted by the bank holding company or any
of its subsidiaries on or before May 1, 1982, and (ii) sales of insurance coverages which may become available after May 1, 1982, so
long as those coverages insure against the same types of risks as, or
are otherwise functionally equivalent to, coverages sold on May 1,
1982, or approved to be sold on or before May 1, 1982 (for purposes of
this subparagraph, activities engaged in or approved by the Board
on May 1, 1982, shall include activities carried on subsequent to that
date as the result of an application to engage in such activities
pending on May 1, 1982, and approved subsequent to that date or of
the acquisition by such company pursuant to a binding written
contract entered into on or before May 1, 1982, of another company
engaged in such activities at the time of the acquisition); (E) any
insurance activity where the activity is limited solely to supervising
on behalf of insurance underwriters the activities of retail insurance
agents who sell (i) fidelity insurance and property and casualty
insurance on the real and personal property used in the operations
of the bank holding company or any of its subsidiaries, and (ii) group
insurance that protects the employees of the bank holding company
or any of its subsidiaries; (F) any insurance agency activity engaged
in by a bank holding company, or any of its subsidiaries, which bank
holding company has total assets of $50,000,000 or less; or (G) where
the activity is performed, or shares of the company involved are
owned, directly or indirectly, by a bank holding company which is
registered with the Board of Governors of the Federal Reserve
System and which, prior to January 1, 1971, was engaged, directly or
indirectly, in insurance agency activities as a consequence of
approval by the Board prior to January 1, 1971: Provided, however,

96 STAT. 1538

PUBLIC LAW 97-320—OCT. 15, 1982

That such bank holding company and its subsidiaries may not
engage in the sale of life insurance or annuities except as provided
in subparagraph (A), (B), or (C).".
TITLE VII—MISCELLANEOUS
AMENDMENT TO THE TRUTH IN LENDING ACT

15 use 1603.

20 u s e 1099.

15 u s e 1603
"^^^-

SEC. 701. (a) Section 104 of the Truth in Lending Act (15 U.S.C.
1601) is amended by adding at the end thereof the following:
"(6) Loans made, insured, or guaranteed pursuant to a program
authorized by title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.).^'.
(b) Loans made, insured, or guaranteed pursuant to a program
authorized by title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.) shall not be subject to any disclosure requirements of
any State law.
(c) The amendment made by subsection (a) and subsection Ob) shall
be effective both with respect to loans made prior to and after the
date of enactment of this Act.
DEFINITION OF CREDITOR

15 use 1666
etseq., 1637.

15 u s e 1602
""*^-

SEC. 702. (a) Section 103(f) of the Truth in Lending Act (15 U.S.C.
1602(f)) is amended to read as follows:
"(f) The term 'creditor' refers only to a person who both (1)
regularly extends, whether in connection with loans, sales of
property or services, or otherwise, consumer credit which is payable
by agreement in more than four installments or for which the
payment of a finance charge is or may be required, and (2) is the
person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness
or, if there is no such evidence of indebtedness, by agreement.
Notwithstanding the preceding sentence, in the case of an open-end
credit plan involving a credit card, the card issuer and any person
who honors the credit card and offers a discount which is a finance
charge are creditors. For the purpose of the requirements imposed
under chapter 4 and sections 127(aX5), 127(aX6), 127(aX7), 127a)Xl),
127(bX2), 127(bX3), 127(bX8), and 127(bX10) of chapter 2 of this title,
the term 'creditor' shall also include card issuers whether or not the
amount due is payable by agreement in more than four installments
or the payment of a finance charge is or may be required, and the
Board shall, by regulation, apply these requirements to such card
issuers, to the extent appropriate, even though the requirements are
by their terms applicable only to creditors offering open-end credit
plans.".
(b) The amendment made by subsection (a) shall take effect on the
effective date of title VI of the Depository Institutions Deregulation
and Monetary Control Act of 1980.
INDUSTRIAL BANKS EUGIBIUTY FOR FDIC INSURANCE

SEC. 703. (a) Section 3(a) of the Federal Deposit Insurance Act (12
U.S.C. 1813(a)) is amended by inserting "industrial bank or similar
financial institution which the Board of Directors finds to be operating substantially in the same manner as an industrial bank," before
"or other banking institution".

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1539

(b) Section 3(1)(1) of such Act (12 U.S.C. 1813(1X1)) is amended by
inserting "thrift certificate, investment certificate, certificate of
indebtedness, or other similar name," before "or a check or draft
drawn against a deposit account".
(c) Section 5(a) of such Act (12 U.S.C. 1815(a)) is amended by
adding at the end thereof the following: "Before approving the
application of any industrial bank or similar financial institution,
the Board of Directors shall determine that it is chartered and
operating under laws providing for examination, supervision, and
liquidation substantially comparable to those applicable to banks
operating in the same State.".
(d) Section 109(b)(2) of title 11, United States Code, is amended by
striking out "or" before "credit union", and by inserting ", or
industrial bank or similar institution which is an insured bank as
defined in section 3(h) of the Federal Deposit Insurance Act (12
U.S.C. 1813(h))" after "credit union".
APPLICABILITY OF THE INTERNATIONAL BANKING ACT OF 1978

SEC. 704. Section 8(c) of the International Banking Act of 1978 (12
U.S.C. 3106(c)) is amended by inserting in the first sentence immediately after the words "on the date of enactment of this Act" the
following: "or on the date of the establishment of a branch in a State
an application for which was filed on or before July 26, 1978".
SECURITIES A C T I V I T I E S UNDER THE INTERNATIONAL BANKING ACT OF
1978

SEC. 705. (a) The last sentence of section 8(c) of the International
Banking Act of 1978 (12 U.S.C. 3106(c)) is amended by striking out
all after "company, and" and inserting in lieu thereof the following:
"the term 'domestically-controlled affiliate covered in 1978' shall
mean an affiliate organized under the laws of the United States or
any State thereof if (i) no foreign bank or group of foreign banks
acting in concert owns or controls, directly or indirectly, 45 per
centum or more of its voting shares, and (ii) no more than 20 per
centum of the number of directors as established from time to time
to constitute the whole board of directors and 20 per centum of the
executive officers of such affiliate are persons affiliated with any
such foreign bank. For the purpose of the preceding sentence, the
term 'persons affiliated with any such foreign bank' shall mean (A)
any person who is or was an employee, officer, agent, or director of
such foreign bank or who otherwise has or had such a relationship
with such foreign bank that would lead such person to represent the
interests of such foreign bank, and (B) in the case of any director of
such domestically controlled affiliate covered in 1978, any person in
favor of whose election as a director votes were cast by less than
two-thirds of all shares voting in connection with such election other
than shares owned or controlled, directly or indirectly, by any such
foreign bank.".
(b) The second sentence of section 8(c) of such Act is amended to
read as follows: "Notwithstanding subsection (a) of this section, a
foreign bank or company referred to in this subsection may retain
ownership or control of any voting shares (or, where necessary to
prevent dilution of its voting interest, acquire additional voting
shares) of any domestically-controlled affiliate covered in 1978
which since July 26, 1978, has engaged in the business of underwrit-

96 STAT. 1540

PUBLIC LAW 97-320—OCT. 15, 1982

ing, distributing, or otherwise buying or selling stocks, bonds, and
other securities in the United States, notwithstanding that such
affiliate acquired after July 26, 1978, an interest in, or any or all of
the assets of, a going concern, or commences to engage in any new
activity or activities.".
NOW ACCOUNTS FOR PUBLIC FUNDS

SEC. 706. (a) Section 2(a)(2) of Public Law 93-100 (12 U.S.C.
1832(a)(2)) is amended by inserting before the period at the end
thereof the following: ", and with respect to deposits of public funds
by an officer, employee, or agent of the United States, any State,
county, municipality, or political subdivision thereof, the District of
Columbia, the Commonwealth of Puerto Rico, American Samoa,
Guam, any territory or possession of the United States, or any
political subdivision thereof.
(b) Section 205(f)(2) of the Federal Credit Union Act (12 U.S.C.
1785(f)(2)) is amended by inserting before the period at the end
thereof the following: ", and with respect to deposits of public funds
by an officer, employee, or agent of the United States, any State,
county, municipality, or political subdivision thereof, the District of
Columbia, the Commonwealth of Puerto Rico, American Samoa,
Guam, any territory or possession of the United States, or any
political subdivision thereof.
FEDERAL NATIONAL MORTGAGE ASSOCIATION

12 u s e 1718.

12 use 1719.

SEC. 707. (a) Section 303(a) of the Federal National Mortgage
Association Charter Act is amended—
(1) by inserting after the first sentence the following: "The
corporation may have preferred stock on such terms and conditions as the board of directors shall prescribe."; and
(2) by striking out "common" in the last sentence thereof.
(b) Section 304(e) of such Act is amended by striking out the fourth
sentence.
RESERVE REQUIREMENT PHASE-IN

SEC. 708. Section 19(b)(8)(D) of the Federal Reserve Act (12 U.S.C.
461(b)(8)(D)) is amended—
(1) by striking out clause (i) and inserting in lieu thereof the
following:
"(i) Any bank which was a member bank on July 1, 1979, and
which withdrew from membership in the Federal Reserve
System during the period beginning July 1, 1979, and ending on
March 31, 1980, shall maintain reserves during the first twelvemonth period beginning on the date of enactment of this clause
in amounts equal to one-half of those otherwise required by this
subsection, during the second such twelve-month period in
amounts equal to two-thirds of those otherwise required, and
during the third such twelve-month period in amounts equal to
five-sixths of those otherwise required."
(2) in clause (ii) by striking the words "on or".
BANK S E R V I C E CORPORATIONS

SEC. 709. The Bank Service Corporation Act (12 U.S.C. 1861 et
seq.) is amended to read as follows:

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1541

"SHORT TITLE AND DEFINITIONS
"SECTION 1. (a) This Act may be cited as the 'Bank Service 12USC1861.
Corporation Act'.
"(b) For the purpose of this Act—
"(1) the term 'appropriate Federal banking agency' shall have
the meaning provided in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q));
"(2) the term 'bank service corporation' means a corporation
organized to perform services authorized by this Act, all of the
capital stock of which is owned by one or more insured banks;
"(3) the term 'Board' means the Board of Governors of the
Federal Reserve System;
"(4) the term 'depository institution' means an insured bank,
or another financial institution subject to examination by the
Federal Home Loan Bank Board or the National Credit Union
Administration Board;
"(5) the term 'insured bank' shall have the meaning provided
in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C.
1813(h));
"(6) the term 'invest' includes any advance of funds to a bank
service corporation, whether by the purchase of stock, the
making of a loan, or otherwise, except a payment for rent
earned, goods sold and delivered, or services rendered prior to
the making of such payment; and
"(7) the term 'principal investor' means the insured bank that
has the largest dollar amount invested in the capital stock of a
bank service corporation. In any case where two or more
insured banks have equal dollar amounts invested in a bank
service corporation, the corporation shall, prior to commencing
operations, select one of the insured banks as its principal
investor and shall notify the bank's appropriate Federal banking agency of that choice within 5 business days of its selection.
"AMOUNT OF INVESTMENT IN BANK SERVICE CORPORATION

"SEC. 2. Notwithstanding any limitation or prohibition otherwise 12 use 1862.
imposed by any provision of law exclusively relating to banks, an
insured bank may invest not more than 10 per centum of paid-in
and unimpaired capital and unimpaired surplus in a bank service
corporation. No insured bank shall invest more than 5 per centum
of its total assets in bank service corporations.
"PERMISSIBLE BANK SERVICE CORPORATION ACTIVITIES FOR DEPOSITORY
INSTITUTIONS

"SEC. 3. Without regard to the provisions of sections 4 and 5 of this 12 USC1863.
Act, an insured bank may invest in a bank service corporation that
performs, and a bank service corporation may perform, the following services only for depository institutions: check and deposit sorting and posting, computation and posting of interest and other
credits and charges, preparation and mailing of checks, statements,
notices, and similar items, or any other clerical, bookkeeping,
accounting, statistical, or similar functions performed for a depository institution.

96 STAT. 1542

PUBLIC LAW 97-320—OCT. 15, 1982
"PERMISSIBLE BANK SERVICE CORPORATION ACTIVITIES FOR OTHER
PERSONS

12 use 1864.

12 u s e 1843.

"SEC. 4. (a) A bank service corporation may provide to any person
any service authorized by this section, except that a bank service
corporation shall not take deposits.
"(b) Except with the prior approval of the Board under section 5(b)
of this Act in accordance with subsection (f) of this section—
"(Da bank service corporation shall not perform the services
authorized by this section in any State other than that State in
which its shareholders are located; and
"(2) all insured bank shareholders of a bank service corporation shall be located in the same State.
"(c) A bank service corporation in which a State bank is a
shareholder shall perform only those services that such State bank
shareholder is authorized to perform under the law of the State in
which such State bank operates and shall perform such services
only at locations in the State in which such State bank shareholder
could be authorized to perform such services.
"(d) A bank service corporation in which a national bank is a
shareholder shall perform only those services that such national
bank shareholder is authorized to perform under this Act and shall
perform such services only at locations in the State at which such
national bank shareholder could be authorized to perform such
services.
"(e) A bank service corporation that has both national bank and
State bank shareholders shall perform only those services that may
lawfully be performed by both its national bank shareholder or
shareholders under this Act and its State bank shareholder or
shareholders under the law of the State in which such State bank or
banks operate and shall perform such services only at locations in
the State at which both its State bank and national bank shareholders could be authorized to perform such services.
"(f) Notwithstanding the other provisions of this section or any
other provision of law, other than the provisions of Federal and
State branching law regulating the geographic location of banks to
the extent that those laws are applicable to an activity authorized
by this subsection, a bank service corporation may perform at any
geographic location any service, other than deposit taking, that the
Board has determined, by regulation, to be permissible for a bank
holding company under section 4(c)(8) of the Bank Holding Company
Act.
" P R I O R APPROVAL FOR INVESTMENTS IN BANK SERVICE CORPORATIONS

12 u s e 1865.

"SEC. 5. (a) No insured bank shall invest in the capital stock of a
bank service corporation that performs any service under authority
of subsection (c), (d), or (e) of section 4 of this Act without the prior
approval of the bank's appropriate Federal banking agency.
"(b) No insured bank shall invest in the capital stock of a bank
service corporation that performs any service under authority of
section 4(f) of this Act and no bank service corporation shall perform
any activity under section 4(f) of this Act without the prior approval
of the Board.
"(c) In determining whether to approve or deny any application
for prior approval under this section, the Board or the appropriate
Federal banking agency, as the case may be, is authorized to consid-

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1543

er the financial and managerial resources and future prospects of
the bank or banks and bank service corporation involved, including
the financial capability of the bank to make a proposed investment
under this Act, and possible adverse effects such as undue concentration of resources, unfair or decreased competition, conflicts of
interest, or unsafe or unsound banking practices.
"(d) In the event the Board or the appropriate Federal banking
agency, as the case may be, fails to act on any application under this
section within ninety days of the submission of a complete application to the agency, the application shall be deemed approved.
"SERVICES TO NONSTOCKHOLDERS

"SEC. 6. No bank service corporation shall unreasonably discrimi- 12 USC1866.
nate in the provision of any services authorized under this Act to
any depository institution that does not own stock in the service
corporation on the basis of the fact that the nonstockholding institution is in competition with an institution that owns stock in the
bank service corporation, except that—
"(1) it shall not be considered unreasonable discrimination for
a bank service corporation to provide services to a nonstockholding institution only at a price that fully reflects all of the costs
of offering those services, including the cost of capital and a
reasonable return thereon; and
"(2) a bank service corporation may refuse to provide services
to a nonstockholding institution if comparable services are
available from another source at competitive overall costs, or if
the providing of services would be beyond the practical capacity
of the service corporation.
"REGULATION AND EXAMINATION OF BANK SERVICE CORPORATIONS

"SEC. 7. (a) A bank service corporation shall be subject to examina- 12 use 1867.
tion and regulation by the appropriate Federal banking agency of its
principal investor to the same extent as its principal investor. The
appropriate Federal banking agency of the principal shareholder of
such a bank service corporation may authorize any other Federal
banking agency that supervises any other shareholder of the bank
service corporation to make such an examination.
"(b) A bank service corporation shall be subject to the provisions
of the Financial Institutions Supervisory Act of 1966 (12 U.S.C. 12 use 1464
1818(b) et seq.) as if the bank service corporation were an insured note.
bank. For this purpose, the appropriate Federal banking agency
shall be the appropriate Federal banking agency of the principal
investor of the bank service corporation.
"(c) Notwithstanding subsection (a) of this section, whenever a
bank that is regularly examined by an appropriate Federal banking
agency, or any subsidiary or affiliate of such a bank that is subject
to examination by that agency, causes to be performed for itself, by
contract or otherwise, any services authorized under this Act,
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 such
services were being performed by the bank itself on its own
premises, and
"(2) the bank shall notify such agency of the existence of the
service relationship within thirty days after the making of such

96 STAT. 1544

Regulations and
orders.

PUBLIC LAW 97-320—OCT. 15, 1982

service contract or the performance of the service, whichever
occurs first.
"(d) The Board and the appropriate Federal banking agencies are
authorized to issue such regulations and orders as may be necessary
to enable them to administer and to carry out the purposes of this
Act and to prevent evasions thereof.".
NEIGHBORHOOD REINVESTMENT CORPORATION

42 u s e 8103.

42 u s e 8105.

SEC. 710. (a) Section 604 of the Neighborhood Reinvestment Corporation Act (Public Law 95-557) is amended—
(1) by redesignating subsections (f), (g), and (h) as subsections
(g), (h), and (i), respectively, and by inserting after subsection (e)
the following:
"(DA director who is necessarily absent from a meeting of the
board, or of a committee of the board, may participate in such
meeting through a duly designated representative who is serving,
pursuant to appointment by the President of the United States, by
and with the advice and consent of the Senate, in the same department, agency, corporation, or instrumentality as the absent director,
or in the case of the Comptroller of the Currency, through a duly
designated Deputy Comptroller."; and
(2) by inserting in section 604(g), as redesignated, after "members" a comma and the words "or their representatives as
provided in subsection (f),".
(b) Section 606(c)(3) of such Act is amended by inserting "funds,"
after "provide".
M A R R I N E R S. E C C L E S F E D E R A L R E S E R V E B O A R D BUILDING

Designation.

SEC. 711. The building at 20th and Constitution Avenue, Northwest, in Washington, District of Columbia (commonly known as the
Federal Reserve Board Main Building) shall hereafter be known and
designated as the "Marriner S. Eccles Federal Reserve Board Building". Any reference in a law, map, regulation, document, record, or
other paper of the United States to that building shall be held to be
a reference to the "Marriner S. Eccles Federal Reserve Board
Building".
INSURANCE STUDY

SEC. 712. (a) The Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation, and the National
Credit Union Administration Board shall each conduct a study of—
(1) the current system of deposit insurance and its impact on
the structure and operations of depository institutions;
(2) the feasibility of providing depositors the option to purchase additional deposit insurance covering deposits in excess of
the general limit provided by law and the capabilities of the
private insurance system, either directly or through reinsurance, to provide risk coverage in excess of the general statutory
limit;
(3) the feasibility of basing deposit insurance premiums on the
risk posed by either the insured institution or the category or
size of the depository institution rather than the present flat
rate system;

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1545

(4) the impact of expanding coverage of insured deposits upon
the operations of the insurance funds, including the possibility
of increased or undue risk to the funds;
(5) the feasibility of revising the deposit insurance system to
provide even greater protection for smaller depositors while
fostering a greater degree of discipline with respect to large
depositors;
(6) the adequacy of existing public disclosure regarding the
condition and business practices of insured depository institutions, and providing an assessment of changes which may be
needed to assure adequate public disclosure;
(7) the feasibility of consolidating the three separate insurance funds; and
(8) other related issues.
(b) A report containing the results of each of the studies carried
out under subsection (a) shall be transmitted to the Committee on
Banking, Finance and Urban Affairs of the House of Representatives
and to the Committee on Banking, Housing, and Urban Affairs of the
Senate not later than six months after the date of enactment of this
Act.
TITLE VIII—ALTERNATIVE MORTGAGE TRANSACTIONS
SHORT TITLE

SEC. 801. This title may be cited as the "Alternative Mortgage
Transaction Parity Act of 1982".

^J^T"^^'^^
Mortgage
Transaction
Parity Act of
1982.

12 use 380i

note.

FINDINGS AND PURPOSE

SEC. 802. (a) The Congress hereby finds that—
12 use 3801.
(1) increasingly volatile and dynamic changes in interest rates
have seriously impared the ability of housing creditors to provide consumers with fixed-term, fixed-rate credit secured by
interests in real property, cooperative housing, manufactured
homes, and other dwellings;
(2) alternative mortgage transactions are essential to the
provision of an adequate supply of credit secured by residential
property necessary to meet the demand expected during the
1980's; and
(3) the Comptroller of the Currency, the National Credit
Union Administration, and the Federal Home Loan Bank Board
have recognized the importance of alternative mortgage transactions and have adopted regulations authorizing federally
chartered depository institutions to engage in alternative mortgage financing.
(b) It is the purpose of this title to eliminate the discriminatory
impact that those regulations have upon nonfederally chartered
housing creditors and provide them with parity with federally chartered institutions by authorizing all housing creditors to make,
purchase, and enforce alternative mortgage transactions so long as
the transactions are in conformity with the regulations issued by
the Federal agencies.
DEFINITIONS

SEC. 803. As used in this title—

12 use 3802.

96 STAT. 1546

42 u s e 5402.

12 u s e i735f-7
"°^^12 use 1701.

PUBLIC LAW 97-320—OCT. 15, 1982
(1) the term "alternative mortgage transaction" means a loan
or credit sale secured by an interest in residential real property,
a dwelling, all stock allocated to a dwelling unit in a residential
cooperative housing corporation, or a residential manufactured
home (as that term is defined in section 603(6) of the National
Manufactured Home Construction and Safety Standards Act of
1974)—
(A) in which the interest rate or finance charge may be
adjusted or renegotiated;
(B) involving a fixed-rate, but which implicitly permits
rate adjustments by having the debt mature at the end of
an interval shorter than the term of the amortization
schedule; or
(C) involving any similar type of rate, method of determining return, term, repayment, or other variation not
common to traditional fixed-rate, fixed-term transactions,
including without limitation, transactions that involve the
sharing of equity or appreciation;
described and defined by applicable regulation; and
(2) the term "housing creditor" means—
(A) a depository institution, as defined in section 501(a) (2)
of the Depository Institutions Deregulation and Monetary
Control Act of 1980;
(B) a lender approved by the Secretary of Housing and
Urban Development for participation in any mortgage insurance program under the National Housing Act;
(C) any person who regularly makes loans, credit sales, or
advances secured by interests in properties referred to in
paragraph (1); or
(D) any transferee of any of them.
A person is not a "housing creditor" with respect to a specific
alternative mortgage transaction if, except for this title, in
order to enter into that transaction, the person would be
required to comply with licensing requirements imposed under
State law, unless such person is licensed under applicable State
law and such person remains, or becomes, subject to the applicable regulatory requirements and enforcement mechanisms
provided by State law.
ALTERNATIVE MORTGAGE AUTHORITY

12 u s e 3803.

SEC. 804. (a) In order to prevent discrimination against Statechartered depository institutions, and other nonfederally chartered
housing creditors, with respect to making, purchasing, and enforcing alternative mortgage transactions, housing creditors may make,
purchase, and enforce alternative mortgage transactions, except
that this section shall apply—
(1) with respect to banks, only to transactions made in accordance with regulations governing alternative mortgage transactions as issued by the Comptroller of the Currency for national
banks, to the extent that such regulations are authorized by
rulemaking authority granted to the Comptroller of the Currency with regard to national banks under laws other than this
section;
(2) with respect to credit unions, only to transactions made in
accordance with regulations governing alternative mortgage

PUBLIC LAW 97-320—OCT. 15, 1982

96 STAT. 1547

transactions as issued by the National Credit Union Administration Board for Federal credit unions, to the extent that such
regulations are authorized by rulemaking authority granted to
the National Credit Union Administration with regard to Federal credit unions under laws other than this section; and
(3) with respect to all other housing creditors, including without limitation, savings and loan associations, mutual savings
banks, and savings banks, only to transactions made in accordance with regulations governing alternative mortgage transactions as issued by the Federal Home Loan Bank Board for
federally chartered savings and loan associations, to the extent
that such regulations are authorized by rulemaking authority
granted to the Federal Home Loan Bank Board with regard to
federally chartered savings and loan associations under laws
other than this section.
(b) For the purpose of determining the applicability of this section,
an alternative mortgage transaction shall be deemed to be made in
accordance with the applicable regulation notwithstanding the
housing creditor's failure to comply with the regulation, if—
(1) the transaction is in substantial compliance with the
regulation; and
(2) within sixty days of discovering any error, the housing
creditor corrects such error, including making appropriate
adjustments, if any, to the account.
(c) An alternative mortgage transaction may be made by a housing creditor in accordance with this section, notwithstanding any
State constitution, law, or regulation.
APPLICABILITY

SEC. 805. (a) The provisions of section 804 shall not apply to any 12 USC 3804.
alternative mortgage transaction in any State made on or after the
effective date (if such effective date occurs on or after the effective
date of this title and prior to a date three years after the effective
date of this title) of a State law or a certification that the voters of
such State have voted in favor of any provision, constitutional or
otherwise, which states explicitly and by its terms that such State
does not want the preemption provided in section 804 to apply with
respect to alternative mortgage transactions subject to the laws of
such State, except that section 804 shall continue to apply to—
(1) any alternative mortgage transaction undertaken on or
after such date pursuant to an agreement to undertake such
alternative mortgage transaction which was entered into on or
after the effective date of this title and prior to such later date
(the "preemption period"); and
(2) any renewal, extension, refinancing, or other modification
of an alternative mortgage transaction that was entered into
during the preemption period.
(b) An alternative mortgage transaction shall be deemed to have
been undertaken during the preemption period to which this section
applies if it—
(1) is funded or extended in whole or in part during the
preemption period, regardless of whether pursuant to a commitment or other agreement therefor made prior to that period; or
(2) is a renewal, extension, refinancing, or other modification
of an alternative mortgage transaction entered into before the
preemption period and such renewal, extension, or other modifi-

96 STAT. 1548

PUBLIC LAW 97-320—OCT. 15, 1982
cation is made during such period with the written consent of
any person obligated to repay such credit.
RELATION TO OTHER LAW

12 u s e 3805.
12 u s e i735f-7
note.

SEC. 806. Section 501(c)(1) of the Depository Institutions Deregulation and Monetary Control Act of 1980 shall not apply to transactions which are subject to this title.
EFFECTIVE DATE

12 u s e 3801
"^^^"

SEC. 807. (a) This title shall be effective upon enactment.
(b) Within sixty days of the enactment of this title, the Comptroller of the Currency, the National Credit Union Administration, and
the Federal Home Loan Bank Board shall identify, describe, and
publish those portions or provisions of their respective regulations
that are inappropriate for (and thus inapplicable to), or that need to
be conformed for the use of, the nonfederally chartered housing
creditors to which their respective regulations apply, including
without limitation, making necessary changes in terminology to
conform the regulatory and disclosure provisions to those more
typically associated with various types of transactions including
credit sales.
Approved October 15, 1982.

LEGISLATIVE HISTORY—H.R. 6267 (S. 2879):
HOUSE REPORTS: No. 97-550 (Comm. on Banking, Finance and Urban Affairs)
and No. 97-899 (Comm. of Conference).
SENATE REPORTS: No. 97-536 accompanying S. 2879 (Comm. on Banking, Housing,
and Urban Affairs) and No. 97-641 (Comm. of Conference).
CONGRESSIONAL RECORD, Vol. 128 (1982):
May 20, considered and passed House.
Sept. 24, S. 2879 considered and passed Senate; H.R. 6267, amended, passed in
lieu.
Sept. 30, Senate agreed to conference report.
Oct. 1, House agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 18, No. 41 (1982):
Oct. 15, Presidential statement.