Committee Documents Online -- 106th Congress



SUMMARY OF S. 900
FINANCIAL SERVICES MODERNIZATION ACT OF 1999
As Passed by the Senate on May 6, 1999

Title I

Subtitle A. Affiliations.

Sec. 101. Glass-Steagall Repealed. Repeals Section 20 of Glass-Steagall Act to permit affiliations between securities and banking companies. Repeals Section 32 of the Banking Act of 1933 to permit officers and directors to serve in those capacities with banking and securities firms.

Sec. 102. Financial Activities. Permits bank holding companies to engage in expanded activities that are financial in nature or incidental to such financial activities. The determination of financial activities will be made through a consultative process involving the Federal Reserve Board and the Secretary of the Treasury. Lists the expanded activities considered financial in nature. These activities include insurance and securities underwriting and merchant banking, among others. Expanded financial activities may be engaged in subject to the filing of a notice with the Federal Reserve Board.

In order to engage in expanded financial activities, all insured depository institution subsidiaries of the bank holding company must be well capitalized and well managed; and the bank holding company must certify to such compliance. Failure to comply with these conditions will subject the bank holding company to activities restrictions that may be imposed by the Federal Reserve Board. Noncompliance left uncorrected for more than 180 days after receiving notice from the Federal Reserve Board may subject the bank holding company to divestiture of any subsidiary insured depository institutions or to limitations on certain financial activities.

Grandfathers commodity activities and affiliations of certain companies becoming bank holding companies after the date of enactment of the Act. Generally, these companies 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 if the holding company or any subsidiary was lawfully engaged in such activities as of September 30, 1997 in the United States; and the holding company is predominantly engaged in activities financial in nature.

Sec. 103. Conforming Amendments. Conforming change to the Home Owners' Loan Act of 1933, as amended.

Sec. 104. Operation of State Law. Reaffirms state regulation of the business of insurance. Requires compliance with State insurance licensing requirements, subject to nondiscrimination requirements.

Directs States against actions that prevent or restrict affiliations permitted by the Act where the practical effect of the actions discriminates, either intentionally or unintentionally, against insured depository institutions, their subsidiaries and affiliates. With respect to activities permitted by the Act, States generally may not prevent or restrict insured depository institutions, their subsidiaries and affiliates from engaging in those activities. States may not prevent or significantly interfere with the ability of an insured depository institution, its subsidiaries and affiliates, to engage in insurance sales, solicitation or cross-marketing activities. Notwithstanding that general prohibition, States are permitted to impose certain restrictions, or restrictions that are substantially the same but no more burdensome or restrictive than those in 13 enumerated "safe harbors."

This section is not, however, intended to limit the jurisdiction of State securities commissions or of State laws relating to the governance of corporations or other entities, or the applicability of State antitrust laws or State laws similar to the antitrust laws. The section describes four categories under which a State statute, regulation, order, interpretation, or other action is deemed to be discriminatory against insured depository institutions, their subsidiaries and affiliates.

These categories are as follows: (1) the terms of the law are discriminatory; (2) the law as interpreted or applied to insured depository institutions, their subsidiaries and affiliates, has an impact that is substantially more adverse than its impact on other parties providing the same products or services or engaged in the same activities; (3) the law effectively prevents an insured depository institution, subsidiary or affiliate from engaging in activities authorized or permitted by the Act or any other provision of Federal law; or (4) the law conflicts with the intent of the Act generally to permit the affiliations authorized or permitted.

In connection with motor vehicle rental agency activities, the section includes findings that: (a) in many States, the insurance laws are unclear as to whether persons making insurance offers or sales in connection with the short-term rental or leasing of motor vehicles should be licensed by the State as an insurance activity; and (b) that in such States, a presumption should exist that no insurance license is required in connection with such offers or sales if States have not implemented regulations governing those activities. An exception is granted from the mandatory insurance licensing provision of the Act in those States that do not regulate such insurance offers or sales. A short-term lease or rental of a motor vehicle is one for a period not exceeding 60 days and where the insurance covers a period of consecutive days not exceeding the lease or rental period.

Subtitle B. Streamlining Supervision of Bank Holding Companies.

Sec. 111. Streamlining Bank Holding Company Supervision. The Federal Reserve Board will, to the fullest extent possible, accept existing reports that a bank holding company or subsidiary has provided to other Federal or State regulators.

If the Federal Reserve Board requires a report from a functionally regulated nondepository institution subsidiary of a bank holding company otherwise not required by another Federal or State regulatory authority, the Federal Reserve Board must make a request for that report through the appropriate regulatory authority. If the report is not made available to the Board and is necessary to assess a material risk to the bank holding company or any of its depository institution subsidiaries, the Federal Reserve Board is authorized to require preparation of the report. The Federal Reserve Board is authorized to make examinations of bank holding companies and subsidiaries for specified purposes.

The Federal Reserve Board may make examinations of functionally regulated nondepository institution subsidiaries of bank holding companies only if: reasonable cause exists to believe that the subsidiary is engaged in activities posing a material risk to an affiliated depository institution; or based on reports and other available information the Federal Reserve Board has reasonable cause to believe that a subsidiary is not in compliance with statutory requirements.

The Federal Reserve Board is directed, to the fullest extent possible, to restrict the focus and scope of bank holding company examinations to the holding company itself and to any subsidiary that could have a materially adverse effect on the safety and soundness of any depository institution subsidiary of the holding company. To the fullest extent possible, the Federal Reserve Board must use the exam reports of depository institutions made by appropriate Federal and State depository institution supervisory authorities. To the fullest extent possible, the Federal Reserve Board is directed to forego making its own examinations of brokers or dealers registered with the SEC, investment advisers registered with the SEC or any State, licensed insurance companies, or any other subsidiary that the Board finds to be comprehensively supervised by a Federal or State authority.

The Federal Reserve Board may not unilaterally impose capital requirements on any subsidiary of a bank holding company that is not an insured depository institution and that is in compliance with the capital requirements of another Federal regulatory authority or State insurance authority, or that is registered with the SEC or any State as an investment adviser.

If a bank holding company is not significantly engaged in nonbanking activities, the Federal Reserve Board may, in consultation with the appropriate Federal banking agency of the lead depository institution subsidiary of the holding company, designate that agency as the appropriate Federal banking agency for the holding company. An agency to which the Board transfers authority will have the authority to examine and require reports from the holding company and any affiliate; to approve or disapprove applications or transactions; to take actions and impose penalties with respect to the holding company, any affiliate, or institution-affiliated party.

Functional regulation of securities and insurance activities is preserved, subject to the antidiscrimination provisions of section 104.

Sec. 112. Authority of State Insurance Regulator and Securities and Exchange Commission. The Federal Reserve Board may not require contributions of capital or assets to be made to an insured depository institution subsidiary by a bank holding company that is an insurance company or broker or dealer registered with the SEC, or by an affiliate that is an insurance company or broker or dealer registered with the SEC if the State insurance authority or the SEC prohibits the holding company from making such a contribution because it would have a material adverse effect on the financial condition of the insurance company or broker or dealer. The Federal Reserve Board may order the bank holding company to divest the insured depository institution subsidiary not later than 180 days after the holding company receives notice from its functional regulator prohibiting the contribution of capital or assets. Prior to divestiture, the Federal Reserve Board may restrict or limit activities of the insured depository institution or its affiliates.

Sec. 113. Role of the Board of Governors of the Federal Reserve System. The Federal Reserve Board may not prescribe regulations or issue or seek entry of orders or other requirements against or with respect to a regulated subsidiary of a bank holding company unless the action is necessary to prevent or redress an unsafe or unsound practice or breach of fiduciary duty by the subsidiary that poses a material risk to safety and soundness of an affiliated insured depository institution or the domestic or international payment system.

Sec. 114. Examination of Investment Companies. An investment company that is not a bank holding company or a savings and loan holding company is not subject to examination by a Federal banking agency. Upon request, the SEC is directed to provide to any Federal banking agency its examination reports or other information with respect to any registered investment company.

The FDIC is authorized to examine an affiliate of any insured depository institution necessary to ascertain the relationship between the insured depository institution and the affiliate and the effect of such relationship on the insured depository institution.

Sec. 115. Equivalent Regulation and Supervision. Certain restrictions imposed upon the Federal Reserve Board with respect to requiring reports, making examinations, or imposing capital requirements, are applicable to other Federal banking agencies with regard to their oversight of functionally regulated nondepository subsidiaries of insured depository institutions.

The FDIC is authorized to examine an affiliate of any insured depository institution necessary to ascertain the relationship between the insured depository institution and the affiliate and the effect of such relationship on the insured depository institution.

Sec. 116. Interagency Consultation. Directs Federal and State regulators to share information, consult with each other on certain affiliation issues, and to preserve the confidentiality of shared information.

Sec. 117. Preserving the Integrity of FDIC Resources. Makes clear that FDIC resources will not be used for the benefit of any shareholder, affiliate (other than an insured depository institution) or subsidiary of an insured depository institution.

Subtitle C. Activities of National Banks.

Sec. 121. Authority of National Banks to Underwrite Municipal Revenue Bonds. National banks are permitted to underwrite municipal revenue bonds.

Sec. 122. Subsidiaries of National Banks. Permits national banks with total consolidated assets not exceeding $1 billion and that are not affiliated with bank holding companies to conduct financial activities as principal through operating subsidiaries. Generally real estate development and real estate investment activities are prohibited. In order to engage in expanded activities, a national bank and all insured depository institution affiliates must be well capitalized and well managed and receive the approval of the Comptroller. Compliance with certain safety and soundness firewalls is required. Restrictions are imposed on affiliate transactions and tie-in sales are prohibited.

National banks lawfully conducting activities through an operating subsidiary as of the date of enactment of the Financial Services Modernization Act of 1999 are permitted to continue such activities.

Sec. 123. Agency Activities. National banks, regardless of size, are permitted to engage through subsidiaries, as agent in activities determined by the Comptroller of the Currency to be permissible for national banks or to be financial in nature or incidental to such activities pursuant to section 4(k) of the Bank Holding Company Act.

Sec. 124. Prohibiting Fraudulent Representations. Makes it a criminal offense punishable by imprisonment of up to one year and/or a fine for any institution-affiliated party of an insured depository institution or of a subsidiary or affiliate of an insured depository institution to fraudulently represent that the institution is or will be liable for any obligation of a subsidiary or other affiliate of the institution.

Sec. 125. Insurance Underwriting by National Banks. Generally, a national bank is permitted to engage in insurance activities as principal through an operating subsidiary in accordance with safety and soundness considerations of section 5136A(a) of the Revised Statutes of the United States (as added by this Act), and provided that the bank has total assets not exceeding $1 billion and is well-capitalized and well-managed. A national bank and subsidiaries of a national bank may provide certain authorized insurance products as principal without regard to section 5136A(a). The section defines "authorized insurance product" and "insurance."

Subtitle D. Applying the Principles of National Treatment and Equality of Competitive Opportunity to Foreign Banks and Foreign Financial Institutions.

Sec. 151. Applying the Principles of National Treatment and Equality of Competitive Opportunity to Certain Foreign Banks. Generally, if a foreign bank elects to engage in expanded financial activities under new authority granted by this Act, its International Bank Act grandfather rights under section 8(c) of the International Banking Act are terminated.

Sec. 152. Representative Offices. Amends the International Banking Act to permit the Federal Reserve Board to examine any affiliate of a foreign bank if deemed necessary by the Board to determine and enforce compliance with this Act, the Bank Holding Company Act, or other applicable Federal banking law.

Title II--Insurance Customer Protections.

Sec. 201. Insurance Customer Protections. The Federal banking agencies are directed to jointly promulgate customer protection regulations applying to retail sales practices, solicitations, advertising, or offers of any insurance product of any insured depository institution or any person engaged in such activities at an office of the institution or on behalf of the institution. The sales practices that the joint regulations should address include antitying and anticoercion in the sale of insurance products and the appropriate disclosures about and advertising of insurance products. The regulations also must address standards for the qualification and licensing of persons selling or offering for sale any insurance product in any part of any office of an insured depository institution.

The Federal banking agencies must assure that the regulations prescribed pursuant to this section do not have the practical effect of discriminating against any person engaged in insurance sales or solicitations that is not affiliated with an insured depository institution.

To the extent the Federal banking authorities believe that any provision of their rules is more protective of customers than a State provision, Federal preemption will occur, but only if the State fails to enact legislation within 3 years of the date of notice from Federal regulators.

Sec. 202. Federal and State Dispute Resolution. The resolution of regulatory conflicts between Federal regulators and State insurance regulators on insurance issues, may be expedited at the Federal appellate court level. The court is directed to accord equal deference to the Federal regulator and the State insurance regulator.

Title III--Regulatory Improvements.

Sec. 301. Elimination of SAIF and DIF Special Reserves. The SAIF and DIF special reserves created in 1996 are eliminated.

Sec. 302. Expanded Small Bank Access to S Corporation Treatment. The GAO is required to report to Congress within six months of the date of enactment on certain revisions to S corporation rules permitting greater access by community banks to S corporation treatment.

Sec. 303. Meaningful CRA Examinations. Establishes a rebuttable presumption of CRA compliance for insured depository institutions achieving a "satisfactory" or better rating in their most recent CRA exams and in each of their CRA exams during the immediately preceding 36-month period. Deemed in compliance status would continue until the next regularly scheduled CRA exam unless substantial verifiable information arising since the time of the most recent CRA exam and demonstrating noncompliance with CRA is filed with the appropriate Federal banking agency. The appropriate Federal banking agency must determine, on a timely basis, whether the information filed by any person against an institution's CRA compliance is of a substantial verifiable nature. The burden of proof is upon the person filing such information.

Sec. 304. Financial Information Privacy Protection. Makes it illegal to obtain financial information from a financial institution or customer of a financial institution by knowingly making a false, fictitious, or fraudulent statement or representation to cause the release of such information (“Pretext calling” prohibition). There are exceptions for law enforcement activities. The affected customer and the bank may sue the pretext caller for civil money damages. The court may award additional damages that it believes are appropriate. In any successful action, the customer or bank may also receive reasonable attorneys’ fees. A criminal prosecution may also be brought against the pretext caller. Criminal penalties include imprisonment for not more than 5 years and monetary penalties allowed under Title 18 of the US Code. Persons who engage in a pattern of pretext calling violations involving more than $100,000 in a 12-month period will be subject to doubled monetary fines or imprisonment of up to 10 years, or both.

This section also requires the GAO in consultation with the FTC and the Federal banking agencies to report to Congress on the efficacy and adequacy of the remedies provided to prevent false pretext calls to obtain financial information and recommendations for any additional legislation to prevent pretext calling.

The FTC is required to submit interim reports to Congress on its ongoing study of consumer privacy issues.

The Federal banking agencies are directed to create a consumer grievance process for receiving and expeditiously addressing consumer complaints alleging a violation of regulations issued under Section 202 of this Act (dealing with insurance customer protections). Each Federal banking agency is required to: (1) establish a group within the agency to receive consumer complaints; (2) develop procedures for investigating such complaints; (3) develop procedures for informing consumers of rights they may have in connection with such complaints; and (4) develop procedures for addressing concerns raised by such complaints, as appropriate, including procedures for the recovery of losses to the extent appropriate.

Sec. 305. Cross Marketing Restriction; Limited Purpose Bank Relief; Divestiture. Removes the limitations that were placed on institutions that were covered under CEBA in 1987 with respect to permissible activities within the holding company, and cross-marketing of products. In addition, this section grants limited overdraft flexibility to limited purpose institutions and their affiliates. Also modifies the provision of CEBA requiring divestiture of a limited purpose bank in the event the bank or its owner fails to remain qualified for the CEBA exception. Allows limited purpose bank owners to avoid divestiture by promptly correcting the violation (within 180 days of receipt of notice from the Federal Reserve Bank) that would otherwise lead to divestiture.

Sec. 306. "Plain Language" Requirement for Federal Banking Agency Rules. Directs Federal banking agencies to use plain language in all proposed and final rulemakings published by the agency in the Federal Register after January 1, 2000.

Sec. 307. Retention of "Federal" in Name of Converted Federal Savings Association. Allows a Federal savings association converting its charter to that of a national bank or state bank to continue to use the word "Federal" in its name.

Sec. 308. Community Reinvestment Act Exemption. Banks with total assets of $100 million or less located in non-metropolitan areas are exempt from the requirements of the Community Reinvestment Act of 1977.

Sec. 309. Bank Officers and Directors as Officers and Directors of Public Utilities. A technical change also permits officers or directors of public utilities to serve as officers or directors of banking and securities firms, subject to certain requirements to protect against conflicts of interest.

Sec. 310. Control of Banker's Banks. Allows one or more thrift institutions to own a state-chartered bank or trust company, whose business is restricted to accepting deposits from thrift institutions or savings banks; deposits arising from the corporate business of the thrift institutions or savings banks that own the bank or trust company; or deposits of public funds.

Sec. 311. Multistate Licensing and Interstate Insurance Sales Activities. Expresses the sense of the Congress that by the end of the 36-month period beginning on the date of enactment of the Act, the States should implement uniform insurance agent and broker licensing application and qualification requirements; eliminate pre- or post-licensure requirements having the practical effect of discriminating, directly or indirectly, against nonresident insurance agents or brokers; and if such actions are not taken, Congress should take steps to rectify the problems noted. Any entity established by the Congress should be under the supervision and oversight of the National Association of Insurance Commissioners.

Sec. 312. CRA Sunshine Requirements. Requires public disclosure of agreements entered into by insured depository institutions or their affiliates and nongovernmental entities or persons made in connection with the CRA and involving funds or other resources of the insured depository institution or affiliate. These agreements must be disclosed in their entirety and made available to the appropriate Federal banking ageancy with supervisory authority over the insured depository institution. The agreements also must be made available to the public and must obligate each party to comply with the provisions of this section.

At least annually, each party to the agreement must report to the appropriate Federal banking agency the information that may be required by rule relating to the following: (1) payments, fees, or loans made to any party to the agreement or received from any party and their terms and conditions; (2) aggregate data on loans, investments and services provided by each party in its community or communities pursuant to the agreement; and (3) other information as the appropriate Federal banking agency may require.

All of the foregoing requirements are deemed to be fulfilled with respect to agreements made before May 5, 1999. Agreements made on or after May 5, 1999 pursuant to an agreement of the type described above are also subject to the disclosure requirements of this section. The term “agreement” is defined to mean any written contract, arrangement, or other written understanding with a value in excess of $10,000 annually, or a group of substantially related contracts with an aggregate value of $10,000 annually, made in connection with the CRA and where at least one party is an insured depository institution or affiliate.

The term “agreement” does not include any specific contract or commitment for a loan or extension of credit to individuals, businesses, farms, or other entities when the purpose of the loan or extension of credit does not include any re-lending of the borrowed funds to other parties. If the party that is not an insured depository institution or affiliate fails to comply with the requirements of this section, the agreement will not be enforceable. The appropriate Federal banking agencies will not have authority to enforce the provisions of agreements subject to this section.

Sec. 313. Interstate Branches and Agencies of Foreign Banks. Permits agencies of foreign banks operating in the US to upgrade to foreign branches with the approval of the Federal reserve and the appropriate chartering authority if the agenacy has been in existence for at least 5 years.

Sec. 314. Disclosures to Consumers under the Truth in Lending Act. The provision calls for disclosures of late payment deadlines and penalties, as well as disclosures of teaser rates offered in connection with a credit card solicitation. With respect to late payment deadlines and penalties, disclosure must be made of the date on which a late payment is due or on which it will be charged. This disclosure must be made prominently and stated in a conspicuous location on the billing statement, together with the amount of the charge to be imposed if payment is made after that date. With respect to teaser rates, disclosure must be made of the annual percentage rate that will apply at the end of the introductory period. Also, if the annual percentage rate that will apply at the end of the introductory period will vary in accordance with an index, disclosures must include the amount of the payment based on the index, applying for illustrative purposes, the current amount balance.

Sec. 315. Approval for Purchases of Securities. Allows a majority of the board of directors of a bank to approve the purchase of securities underwritten by an affiliate if the purchase is deemed to be a sound investment for the bank.

Sec. 316. Provision of Technical Assistance to Microenterprises. Expands the Community Development Financial Institutions (“CDFI”) Fund, allowing banks and community development venture capital funds to apply for Federal funds to be used for technical and financial assistance to distressed communities. The Administrator of the CDFI Fund is authorized to establish a microenterprise technical assistance and capacity building grant program. Grants to microenterprises would be used to train and give technical assistance to disadvantaged entrepreneurs and for other services that the Administrator of the CDFI Fund deems appropriate. The provision authorizes $15 million for the program in each of fiscal years 2000 through 2003.

Sec. 317. Federal Reserve Audits. Amends the Federal Reserve Act to require annual audits of each Federal Reserve bank in accordance with generally accepted accounting principles and by an independent auditor. Auditors must meet certain requirements as to independence and qualifications. Annual audits also would be reuqired of the Federal Reserve System, including priced services. Excluded from the audit would be deliberations on monetary policy, open market operations, reserves of national banks, securities credit, and interest on deposits.

Sec. 318. Study and Report on Advertising Practices of Online Brokerage Services. The SEC, in consultation with the NASD and other interested parties, are directed to conduct a study of the nature and content of online brokerage services in all media; whether ads through these media influence investors to make inappropriate investment decisions; whether risks are disclosed properly; and whether existing regulatory provisions may prevent improper or deceptive ads. The report to Congress is due within 180 days of the date of enactment of the Act.

Sec. 319. Eligibility of Community Development Financial Institution to Borrow from the Federal Home Loan Bank System. Allows community development institutions to be eligible to borrow funds from the Federal Home Loan Bank System as nonmembers of the System.

Title IV--Federal Home Loan Bank System Reforms.

Sec. 401. Short Title. Federal Home Loan Bank System Reform Act of 1999.

Sec. 402. Definitions. Among the terms defined is "community financial institution," which is an insured depository institution with total assets of less than $500 million.

Sec. 403. Savings Association Membership. On and after June 1, 2000, makes Federal Home Loan Bank System membership voluntary.

Sec. 404. Advances to Members; Collateral. Allows non-QTL qualified banks with less than $500 million in assets (community banks) to use advances for small business, small farm and small agribusiness lending. Also allows community banks to collateralize advances with small business and agricultural loans.

Sec. 405. Eligibility Criteria. Allows community banks to become members without regard to the percentage of total assets represented by residential mortgage loans.

Sec. 406. Management of Banks. Modifies the governance structure of the system to give more authority to the regional banks.

Sec. 407. Resolution Funding Corporation. Changes the financing mechanism, from a flat fee to a percentage of system net earnings, on the system's obligation to pay a portion of the interest on Refinancing Corporation bonds issued to cover the S&L bailout.

Sec. 408. GAO Study on Federal Home Loan Bank System Capital. Directs the Comptroller General of the United States to conduct a study of possible revisions to the capital structure of the Federal Home Loan Bank System.

Title V--Functional Regulation of Brokers and Dealers.

Sec. 501. Definition of Broker. Replaces the current bank exemption from registration as a broker under the Securities Exchange Act with a series of exemptions for banks engaging in certain specified activities.

Sec. 502. Definition of Dealer. Replaces the current bank exemption from registration as a dealer under the Securities Exchange Act with a series of exemptions for particular activities undertaken by banks.

Sec. 503. Definition and Treatment of Banking Products. Specifies that the SEC, with the concurrence of the Federal Reserve Board, may determine by regulation those new products which, if offered or sold by a bank, would subject it to registration with the SEC. A bank may offer or sell "traditional banking products," as defined in this section, without becoming subject to registration with the SEC.

Sec. 504. Qualified Investor Defined. Amends the Securities Exchange Act of 1934 to include a definition of "qualified investor" for purposes of transactions by banks involving certain traditional banking products.

Sec. 505. Government Securities Defined. Amends the definition of "government securities" in the Securities Exchange Act of 1934 to include for purposes of section 15C, as applied to a bank, a qualified Canadian government obligation.

Sec. 506. Effective Date. This title becomes effective one-year after the date of enactment of the Act.

Sec. 507. Rule of Construction. Nothing in this title supersedes, affects, or otherwise limits the scope and applicability of the Commodity Exchange Act.

Title VI--Unitary Savings and Loan Holding Companies.

Sec. 601. Prohibition on New Unitary Savings and Loan Holding Companies. Amends the Home Owners' Loan Act of 1933, as amended, to terminate the current unitary savings and loan holding company authority for all applications other than those approved or pending as of February 28, 1999.

Sec. 602. Optional Conversion of Federal Savings Associations. Amends the Home Owners’ Loan Acct of 1933 to allow any Federal savings association chartered and in operation prior to the date of enactment of the Financial Services Modernization Act of 1999, with branches in one or more States, to convert, with the approval of the Comptroller of the Currency, into one or more national banks. The resulting national bank or banks must meet any and all financial, management, and capital requirements applicable to national banks.

Title VII -- ATM Fee Reform.

Sec. 701. Title is cited as the “ATM Fee Reform Act of 1999”.

Sec. 702. Electronic Fund transfer Fee Disclosures at Any Host ATM. The Electronic Fund Transfer Act is amended by requiring fee disclosures at ATM’s. If the consumer is not provided with proper fee disclosure, no fee may be imposed by any ATM operator in connection with any electronic fund transfer initiated by a consumer.

Sec. 703. Disclosure of Possible Fees to Consumers When ATM Card is Issued. The Electronic Fund Transfer Act is amended to require fee disclosures to consumers by ATM operators and by any national, regional, or local network utilized to effect the electronic funds transaction.

Sec. 704. Feasibility Study. Requires the GAO to conduct a study of the feasibility of requiring disclosure of transaction fees to ATM users before the transaction is consummated, and taking into consideration certain enumerated factors. The report to Congress is due within six months of the date of enactment of the Financial Services Modernization Act of 1999.

Sec. 705. No Liability if Posted Notices are Damaged. The Electronic Funds Transfer Act is amended to provide that ATM operators will not be liable for failure to comply with the notice requirements if their notices are removed, damaged or altered by any person other than the operators of the ATM’s.