12 U.S.C. § 1861 — Short title and definitions

Page 1266 TITLE 12—BANKS AND BANKING § 1861 guidance regarding the application of this sec- tion to an individual financial company or to fi- nancial companies in general. (e) Council study and rulemaking (1) Study and recommendations Not later than 6 months after July 21, 2010, the Council shall— (A) complete a study of the extent to which the concentration limit under this section would affect financial stability, moral hazard in the financial system, the ef- ficiency and competitiveness of United States financial firms and financial mar- kets, and the cost and availability of credit and other financial services to households and businesses in the United States; and (B) make recommendations regarding any modifications to the concentration limit that the Council determines would more ef- fectively implement this section. (2) Rulemaking Not later than 9 months after the date of completion of the study under paragraph (1), and notwithstanding subsections (b) and (d), the Board shall issue final regulations imple- menting this section, which shall reflect any recommendations by the Council under para- graph (1)(B). (May 9, 1956, ch. 240, § 14, as added Pub. L. 111–203, title VI, § 622, July 21, 2010, 124 Stat. 1632.) Editorial Notes REFERENCES IN TEXT The Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in subsec. (a)(2)(E), is Pub. L. 111–203, July 21, 2010, 124 Stat. 1376. Title I of the Act, known as the Financial Stability Act of 2010, is classi- fied principally to subchapter I (§ 5311 et seq.) of chap- ter 53 of this title. For complete classification of title I to the Code, see Short Title note set out under section 5301 of this title and Tables. This chapter, referred to in subsec. (a)(2)(F), was in the original ‘‘this Act’’, meaning act May 9, 1956, ch. 240, 70 Stat. 133, known as the Bank Holding Company Act of 1956, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 1841 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. CHAPTER 18—BANK SERVICE COMPANIES Sec. 1861. Short title and definitions. 1862. Amount of investment in bank service com- pany. 1863. Permissible bank service company activities for depository institutions. 1864. Permissible bank service company activities for other persons. 1865. Prior approval for investments in bank serv- ice companies. 1866. Services to nonstockholders or nonmembers. 1867. Regulation and examination of bank service companies. § 1861. Short title and definitions (a) Short title This chapter may be cited as the ‘‘Bank Serv- ice Company Act’’. (b) Definitions For the purpose of this chapter— (1) the term ‘‘appropriate Federal banking agency’’ shall have the meaning provided in section 1813(q) of this title; (2) the term ‘‘bank service company’’ means— (A) any corporation— (i) which is organized to perform services authorized by this chapter; and (ii) all of the capital stock of which is owned by 1 or more insured depository in- stitutions; and (B) any limited liability company— (i) which is organized to perform services authorized by this chapter; and (ii) all of the members of which are 1 or more insured depository institutions. (3) the term ‘‘Board’’ means the Board of Governors of the Federal Reserve System; (4) the term ‘‘depository institution’’ means, except when such term appears in connection with the term ‘‘insured depository institu- tion’’, an insured bank, a savings association, a financial institution subject to examination by the appropriate Federal banking agency or the National Credit Union Administration Board, or a financial institution the accounts or deposits of which are insured or guaranteed under State law and are eligible to be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration Board; (5) INSURED DEPOSITORY INSTITUTION.—The terms ‘‘depository institution’’ and ‘‘savings association’’ have the same meanings as in section 1813 of this title; (6) the term ‘‘invest’’ includes any advance of funds to a bank service company, 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; (7) the term ‘‘limited liability company’’ means any company, partnership, trust, or similar business entity organized under the law of a State (as defined in section 1813 of this title) which provides that a member or manager of such company is not personally liable for a debt, obligation, or liability of the company solely by reason of being, or acting as, a member or manager of such company; (8) the term ‘‘principal investor’’ means the insured depository institution that has the largest dollar amount invested in the equity of a bank service company. In any case where two or more insured depository institutions have equal dollar amounts invested in a bank service company, the company shall, prior to commencing operations, select one of the in- sured depository institutions as its principal investor and shall notify the depository insti- tution’s appropriate Federal banking agency of that choice within 5 business days of its se- lection; and Page 1267 TITLE 12—BANKS AND BANKING § 1862 (9) the terms ‘‘State depository institution’’, ‘‘Federal depository institution’’, ‘‘State sav- ings association’’ and ‘‘Federal savings asso- ciation’’ have the same meanings as in section 1813 of this title. (Pub. L. 87–856, § 1, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97–320, title VII, § 709, Oct. 15, 1982, 96 Stat. 1540; Pub. L. 97–457, § 32(a), Jan. 12, 1983, 96 Stat. 2511; Pub. L. 104–208, div. A, title II, § 2613(a), (b), Sept. 30, 1996, 110 Stat. 3009–476; Pub. L. 109–351, title VI, § 602(b)(1), Oct. 13, 2006, 120 Stat. 1979; Pub. L. 111–203, title III, § 357(1), (2), July 21, 2010, 124 Stat. 1547, 1548.) Editorial Notes AMENDMENTS 2010—Subsec. (b)(4). Pub. L. 111–203, § 357(1), inserted ‘‘a savings association,’’ after ‘‘an insured bank,’’, sub- stituted ‘‘appropriate Federal banking agency’’ for ‘‘Di- rector of the Office of Thrift Supervision’’, and struck out ‘‘, the Federal Savings and Loan Insurance Cor- poration,’’ after ‘‘Federal Deposit Insurance Corpora- tion’’. Subsec. (b)(5). Pub. L. 111–203, § 357(2), substituted ‘‘terms ‘depository institution’ and ‘savings associa- tion’ have the same meanings as in section 1813’’ for ‘‘term ‘insured depository institution’ has the same meaning as in section 1813(c)’’. 2006—Subsec. (b)(2)(A)(ii), (B)(ii). Pub. L. 109–351, § 602(b)(1)(F), substituted ‘‘insured depository institu- tions’’ for ‘‘insured banks’’. Subsec. (b)(4). Pub. L. 109–351, § 602(b)(1)(A), inserted ‘‘, except when such term appears in connection with the term ‘insured depository institution’,’’ after ‘‘means’’ and substituted ‘‘Director of the Office of Thrift Supervision’’ for ‘‘Federal Home Loan Bank Board’’. Subsec. (b)(5). Pub. L. 109–351, § 602(b)(1)(B), added par. (5) and struck out former par. (5) which defined ‘‘in- sured bank’’. Subsec. (b)(8). Pub. L. 109–351, § 602(b)(1)(G), sub- stituted ‘‘means the insured depository institution’’ for ‘‘means the insured bank’’, ‘‘insured depository institu- tions’’ for ‘‘insured banks’’ in two places, and ‘‘the de- pository institution’s appropriate’’ for ‘‘the bank’s ap- propriate’’. Subsec. (b)(9). Pub. L. 109–351, § 602(b)(1)(C)–(E), added par. (9). 1996—Subsec. (a). Pub. L. 104–208, § 2613(a), inserted heading and amended text of subsec. (a) generally. Prior to amendment, text read as follows: ‘‘This chap- ter may be cited as the ‘Bank Service Corporation Act’.’’ Subsec. (b)(2). Pub. L. 104–208, § 2613(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘the term ‘bank service corporation’ means a corporation organized to perform services authorized by this chapter, all of the capital stock of which is owned by one or more insured banks;’’. Subsec. (b)(6). Pub. L. 104–208, § 2613(b)(2), substituted ‘‘company’’ for ‘‘corporation’’ and struck out ‘‘and’’ after semicolon at end. Subsec. (b)(7). Pub. L. 104–208, § 2613(b)(3), added par. (7). Former par. (7) redesignated (8). Subsec. (b)(8). Pub. L. 104–208, § 2613(b)(4), substituted ‘‘company’’ for ‘‘corporation’’ wherever appearing and ‘‘equity’’ for ‘‘capital stock’’. Pub. L. 104–208, § 2613(b)(3), redesignated par. (7) as (8). 1983—Subsec. (b)(4). Pub. L. 97–457 substituted ‘‘a’’ for ‘‘or another’’ after ‘‘insured bank,’’ and inserted ref- erence to a financial institution insured by State law and eligible to be insured by certain Federal agencies. 1982—Subsec. (a). Pub. L. 97–320 substituted provision that this chapter may be cited as the ‘‘Bank Service Corporation Act’’ for provision that term ‘‘Federal su- pervisory agency’’ meant the Comptroller of the Cur- rency, the Board of Governors of the Federal Reserve System, or the Board of Directors of the Federal De- posit Insurance Corporation. Subsec. (b). Pub. L. 97–320 substituted definitions of ‘‘appropriate Federal banking agency’’, ‘‘bank service corporation’’, ‘‘Board’’, ‘‘depository institution’’, ‘‘in- sured bank’’, ‘‘invest’’, and ‘‘principal investor’’ for provision that term ‘‘bank services’’ meant services such as check and deposit sorting and posting, com- putation and posting of interest and other credits and charges, preparation and mailing of checks, state- ments, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar func- tions performed for a bank. Subsec. (c). Pub. L. 97–320 redesignated provisions of subsec. (c) defining ‘‘bank service corporation’’ as (b)(2), and revised definition. Subsec. (d). Pub. L. 97–320 redesignated provisions of subsec. (d) as (b)(6). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the trans- fer date, see section 351 of Pub. L. 111–203, set out as a note under section 906 of Title 2, The Congress. § 1862. Amount of investment in bank service company Notwithstanding any limitation or prohibition otherwise imposed by any provision of law ex- clusively relating to banks or savings associa- tions, other than the limitation on the amount of investment by a Federal savings association contained in section 1464(c)(4)(B) of this title, an insured depository institution may invest not more than 10 per centum of paid-in and unimpaired capital and unimpaired surplus in a bank service company. No insured depository in- stitution shall invest more than 5 per centum of its total assets in bank service companies. (Pub. L. 87–856, § 2, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97–320, title VII, § 709, Oct. 15, 1982, 96 Stat. 1541; Pub. L. 104–208, div. A, title II, § 2613(c), Sept. 30, 1996, 110 Stat. 3009–477; Pub. L. 109–351, title VI, § 602(a), (b)(2), Oct. 13, 2006, 120 Stat. 1978, 1979.) Editorial Notes AMENDMENTS 2006—Pub. L. 109–351 inserted ‘‘or savings associa- tions, other than the limitation on the amount of in- vestment by a Federal savings association contained in section 1464(c)(4)(B) of this title’’ after ‘‘relating to banks’’ and substituted ‘‘insured depository institu- tion’’ for ‘‘insured bank’’ in two places. 1996—Pub. L. 104–208 substituted ‘‘company’’ for ‘‘cor- poration’’ in section catchline and ‘‘company’’ and ‘‘companies’’ for ‘‘corporation’’ and ‘‘corporations’’, re- spectively, in text. 1982—Pub. L. 97–320 substituted provisions relating to the maximum permissible amount of investment in a bank service corporation by an insured bank for provi- sions which read as follows: ‘‘(a) No limitation or prohibition otherwise imposed by any provision of Federal law exclusively relating to banks shall prevent any two or more banks from in- vesting not more than 10 per centum of the paid-in and unimpaired capital and unimpaired surplus of each of them in a bank service corporation. ‘‘(b) If stock in a bank service corporation has been held by two banks, and one of such banks ceases to uti- lize the services of the corporation and ceases to hold stock in it, and leaves the other as the sole stock-