Section 4 of the Bank Holding Company Act of 1956, as amended, is revised by re-designating subsection (k)(5) as subsection (k)(6) and subsection (k)(6) as subsection (k)(7) and adding the following new subsection (k)(5).

On page 11, line 16, insert the following new subparagraph (5) and renumber subsequent paragraphs accordingly:

"(5) AUTHORITY TO RETAIN COMMODITY ACTIVITIES AND AFFILIATIONS.--

Notwithstanding section 4(a), a company that is not a bank holding company or a foreign bank (as defined in section 1(b)(7) of the International Banking Act of 1978) and becomes a bank holding company after the date of enactment of the Financial Services Modernization Act of 1999, may continue to engage in, or directly or indirectly own or control shares of a company engaged in, activities related to the trading, sale, or investment in commodities and underlying physical properties that were not permissible for bank holding companies to conduct in the United States as of September 30, 1997, if--

"(A) the holding company, or any subsidiary of such holding company, lawfully was engaged, directly or indirectly, in any of such activities as of September 30, 1997, in the United States; and

"(B) the holding company is predominantly engaged in financial activities as defined in paragraph (4) of subsection (k).

EXPLANATION

The above amendment assures that a securities firm currently engaged in a broad range of commodities activities as part of its traditional investment banking activities, is not required to divest certain aspects of its business in order to participate in the new authorities granted under the Financial Services Modernization Act. This provision "grandfathers" existing commodities activities.