EQUALIZING COMPETITIVE OPPORTUNITJES FOR UNITED STATES AND FOREIGN BANKS.

SEC. 107. EQUALIZING COMPETITIVE OPPORTUNITJES FOR UNITED STATES AND FOREIGN BANKS. (a) Regulatory Objectives.—Section 6 of the International Banking Act of 1978 (12 U.S.C. 3104) is amended— (1) by redesignating subsections (a) through (c) as subsections (b) through (d), respectively; and (2) by inserting after “sec. 6” the following new subsection: “(a) Objective.—In implementing this section, the Comptroller and the Federal Deposit Insurance Corporation shall each, by affording equal competitive opportunities to foreign and United States108 STAT. 2359 banking organizations in their United States operations, ensure that foreign banking organizations do not receive an unfair competitive advantage over United States banking organizations.”. (b) Review of Regulations.— (1) In general.—Each Federal banking agency, after consultation with the other Federal banking agencies to assure uniformity, shall revise the regulations adopted by such agency under section 6 of the International Banking Act of 1978 to ensure that the regulations are consistent with the objective set forth in section 6(a) of the International Banking Act of 1978. (2) Specific factors.—In carrying out paragraph (1), each Federal banking agency shall consider whether to permit an uninsured branch of a foreign bank to accept initial deposits of less than $100,000 only from— (A) individuals who are not citizens or residents of the United States at the time of the initial deposit; (B) individuals who— (i) are not citizens of the United States; (ii) are residents of the United States; and (iii) are employed by a foreign bank, foreign business, foreign government, or recognized international organization; (C) persons to whom the branch or foreign bank has extended credit or provided other nondeposit banking services; (D) foreign businesses and large United States businesses; (E) foreign governmental units and recognized international organizations; and (F) persons who are depositing funds in connection with the issuance of a financial instrument by the branch for the transmission of funds. (3) Reduction in regulatory de minimis exemption.—In carrying out paragraph (1), each Federal banking agency shall limit any exemption which is— (A) available under any regulation prescribed pursuant to section 6(d) of the International Banking Act of 1978 providing for the acceptance of initial deposits of less than $100,000 by an uninsured branch of a foreign bank; and (B) based on a percentage of the average deposits at such branch; to not more than 1 percent of the average deposits at such branch. (4) Additional relevant considerations.—In carrying out paragraph (1), each Federal banking agency shall also consider the importance of maintaining and improving the availability of credit to all sectors of the United States economy, including the international trade finance sector of the United State economy. (5) Deadline for prescribing revised regulations.—Each Federal banking agency— (A) shall publish final regulations under paragraph (1) in the Federal Register not later than 12 months after the date of enactment of this Act; and (B) may establish reasonable transition rules to facilitate any termination of any deposit-taking activities that108 STAT. 2360 were permissible under regulations that were in effect before the date of enactment of this Act. (6) Definitions.—For purposes of this subsection— (A) the term “Federal banking agency” means— (i) the Comptroller of the Currency with respect to Federal branches of foreign banks; and (ii) the Federal Deposit Insurance Corporation with respect to State branches of foreign banks; and (B) the term “uninsured branch” means a branch of a foreign bank that is not an insured branch, as defined in section 3(s)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)(3)). (c) Amendment Affirming that Consumer Protection Laws Apply to Foreign Banks.—Section 9(b) of the International Banking Act of 1978 (12 U.S.C. 3106a) is amended— (1) in paragraph (1)— (A) by redesignating subparagraphs (A) and (B) as subparagraphs (B)and (C), respectively; and (B) by inserting after “which—” the following new subparagraph: “(A) impose requirements that protect the rights of consumers in financial transactions, to the extent that the branch, agency, or commercial lending company engages in activities that are subject to such laws;”; and (2) in paragraph (2)— (A) by redesignating subparagraphs (A) and (B) as subparagraphs (B) and (C), respectively; and (B) by inserting after “which—” the following new subparagraph: “(A) impose requirements that protect the rights of consumers in financial transactions, to the extent that the branch, agency, or commercial lending company engages in activities that are subject to such laws;”. (d) Insured Banks in Territories Not Treated as Foreign Banks for Purposes of Retail Deposit-Taking Rule.—Section 6(d) of the International Banking Act of 1978 (12 U.S.C. 31O4(c)) (as so redesignated by subsection (a)(1) of this section) is amended by adding at the end the following new paragraph: “(3) Insured banks in u.s. territories.—For purposes of this subsection, the term ‘foreign bank’ does not include any bank organized under the laws of any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands the deposits of which are insured by the Federal Deposit Insurance Corporation pursuant to the Federal Deposit Insurance Act.”. (e) Amendment Relating to Shell Branches.— (1) In general.—Section 7 of the International Banking Act of 1978 (12 U.S.C. 3105) is amended by adding at the end the following new subsection: “(k) Management of shell branches.— “(1) Transactions prohibited.—A branch or agency of a foreign bank shall not manage, through an office of the foreign bank which is located outside the United States and is managed or controlled by such branch or agency, any type of activity that a bank organized under the laws of the United States, any State, or the District of Columbia is not permitted108 STAT. 2361 to manage at any branch or subsidiary of such bank which is located outside the United States. “(2) Regulations.—Any regulations promulgated to carry out this section— “(A) shall be promulgated in accordance with section 13; and “(B) shall be uniform, to the extent practicable.”. (2) Effective date.—The amendment made by paragraph (1) shall become effective at the end of the 180-day period beginning on the date of enactment of this Act. (f) Meeting Community Credit Needs.—Section 5(a) of the International Banking Act of 1978 (12 U.S.C. 3103(a)) (as amended by section 104 of this Act) is amended by inserting after paragraph (7) the following new paragraph: “(8) Continuing requirement for meeting community credit needs after initial interstate entry by acquisition.— “(A) In general.—If a foreign bank acquires a bank or a branch of a bank, in a State in which the foreign bank does not maintain a branch, and such acquired bank is, or is part of, a regulated financial institution (as defined in section 803 of the Community Reinvestment Act of 1977), the Community Reinvestment Act of 1977 shall continue to apply to each branch of the foreign bank which results from the acquisition as if such branch were a regulated financial institution. “(B) Exception for branch that recelves only deposits permissible for an edge act corporation.— Paragraph (1) shall not apply to any branch that receives only such deposits as are permissible for a corporation organized under section 25A of the Federal Reserve Act to receive.”.