§ 1864. Permissible bank service company activities for other persons

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1962

   Pub. L. 87–856 § 4 · 76 Stat. 1132

   Enacted · 12 U.S.C. § 1864

   Pub. L. 87–856, § 4, Oct. 23, 1962, 76 Stat. 1132

   Source evidence

   Code source credit
   Pub. L. 87–856, § 4, Oct. 23, 1962, 76 Stat. 1132

   Enacted provision · exact public law section
   Sec. 4. No bank service corporation may engage in any activity other than the performance of bank services for banks.

2. 1982

   Garn-St Germain Depository Institutions Act of 1982

   Pub. L. 97–320 title VII § 709 · 96 Stat. 1469

   Substituted · 12 U.S.C. § 1864

   Pub. L. 97–320 substituted provisions relating to bank service corporation activities for other persons for provisions which read: “No bank service corporation may engage in any activity other than the performance of bank services for banks.”

   Source evidence

   Code amendment note
   Pub. L. 97–320 substituted provisions relating to bank service corporation activities for other persons for provisions which read: “No bank service corporation may engage in any activity other than the performance of bank services for banks.”

   Enacted provision · exact public law section
   Sec. 709. bank service corporations The Bank Service Corporation Act (12 U.S.C. 1861 et seq.) is amended to read as follows: “Section 1. “short title and definitions (a) This Act may be cited as the ‘Bank Service 12 USC 1861. 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. “Sec. 2. “amount of investment in bank service corporation Notwithstanding any limitation or prohibition otherwise 12 USC 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. “Sec. 3. “permissible bank service corporation activities for depository institutions Without regard to the provisions of sections 4 and 5 of this 12 USC 1863. 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. “Sec. 4. “permissible bank service corporation activities for other persons (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— “(1) 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 12 USC 1843. Act. “Sec. 5. “prior approval for investments in bank service corporations (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-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. “Sec. 6. “services to nonstockholders No bank service corporation shall unreasonably discriminate 12 USC 1866. 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. “Sec. 7. “regulation and examination of bank service corporations (a) A bank service corporation shall be subject to examination 12 USC 1867. 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 USC 1464 note. 1818(b) et seq.) as if the bank service corporation were an insured 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 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.”.

3. 1983

   Pub. L. 97–457 § 32(b)(2) · 96 Stat. 2507

   Substituted · 12 U.S.C. § 1864(d); 12 U.S.C. § 1864(e)

   Pub. L. 97–457 substituted “under the law of the United States” for “under this chapter”

   Source evidence

   Code amendment note
   Subsecs. (d), (e). Pub. L. 97–457 substituted “under the law of the United States” for “under this chapter”.

   Enacted provision · exact public law section
   (2) by striking out “under this Act” in subsections (d) and (e) of section 4 and inserting in lieu thereof “under the law of the United States”.

4. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(5) · 110 Stat. 3009

   Substituted · 12 U.S.C. § 1864

   Pub. L. 104–208, § 2613(e)(5), substituted “company” for “corporation” in section catchline

   Source evidence

   Code amendment note
   Pub. L. 104–208, § 2613(e)(5), substituted “company” for “corporation” in section catchline.

   Enacted provision · exact public law section
   (5) in the heading for such section, by striking “corporation” and inserting “company”.

5. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(1) · 110 Stat. 3009

   Substituted · 12 U.S.C. § 1864(a)

   Pub. L. 104–208, § 2613(e)(1), substituted “company” for “corporation” in two places

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 104–208, § 2613(e)(1), substituted “company” for “corporation” in two places.

   Enacted provision · exact public law section
   (1) by striking “corporation” each place such term appears and inserting “company”;

6. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(1) · 110 Stat. 3009

   1. Inserted · 12 U.S.C. § 1864(b)

      Pub. L. 104–208, § 2613(e)(1), (2), inserted “or members” after “shareholders” wherever appearing in text

   2. Substituted · 12 U.S.C. § 1864(b)

      Pub. L. 104–208, § 2613(e)(1), (2), substituted “company” for “corporation” in two places

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 104–208, § 2613(e)(1), (2), inserted “or members” after “shareholders” wherever appearing in text and substituted “company” for “corporation” in two places.

   Enacted provision · exact public law section
   (1) by striking “corporation” each place such term appears and inserting “company”;

7. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(1) · 110 Stat. 3009

   1. Inserted · 12 U.S.C. § 1864(c); 12 U.S.C. § 1864(d)

      Pub. L. 104–208, § 2613(e)(1), (3), inserted “or member” after “shareholder” wherever appearing

   2. Substituted · 12 U.S.C. § 1864(c); 12 U.S.C. § 1864(d)

      Pub. L. 104–208, § 2613(e)(1), (3), substituted “company” for “corporation”

   Source evidence

   Code amendment note
   Subsecs. (c), (d). Pub. L. 104–208, § 2613(e)(1), (3), inserted “or member” after “shareholder” wherever appearing and substituted “company” for “corporation”.

   Enacted provision · exact public law section
   (1) by striking “corporation” each place such term appears and inserting “company”;

8. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(1) · 110 Stat. 3009

   1. Substituted · 12 U.S.C. § 1864(e)

      Pub. L. 104–208, § 2613(e)(1), (4), substituted “company” for “corporation”

   2. Substituted · 12 U.S.C. § 1864(e)

      Pub. L. 104–208, § 2613(e)(1), (4), substituted “any shareholder or member of the company which is a national bank” for “its national bank shareholder or shareholders”

   3. Substituted · 12 U.S.C. § 1864(e)

      Pub. L. 104–208, § 2613(e)(1), (4), substituted “any shareholder or member of the company which is a State bank” for “its State bank shareholder or shareholders”

   4. Substituted · 12 U.S.C. § 1864(e)

      Pub. L. 104–208, § 2613(e)(1), (4), substituted “any such State bank” for “such State bank or banks”

   5. Inserted · 12 U.S.C. § 1864(e)

      Pub. L. 104–208, § 2613(e)(1), (4), inserted “or members” after “national bank and State bank shareholders” and after “State bank and national bank shareholders”

   Source evidence

   Code amendment note
   Subsec. (e). Pub. L. 104–208, § 2613(e)(1), (4), substituted “company” for “corporation”, “any shareholder or member of the company which is a national bank” for “its national bank shareholder or shareholders”, “any shareholder or member of the company which is a State bank” for “its State bank shareholder or shareholders”, and “any such State bank” for “such State bank or banks”, and inserted “or members” after “national bank and State bank shareholders” and after “State bank and national bank shareholders”.

   Enacted provision · exact public law section
   (1) by striking “corporation” each place such term appears and inserting “company”;

9. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2613(e)(1) · 110 Stat. 3009

   Substituted · 12 U.S.C. § 1864(f)

   Pub. L. 104–208, § 2613(e)(1), substituted “company” for “corporation”

   Source evidence

   Code amendment note
   Subsec. (f). Pub. L. 104–208, § 2613(e)(1), substituted “company” for “corporation”.

   Enacted provision · exact public law section
   (1) by striking “corporation” each place such term appears and inserting “company”;

10. 1999

    Pub. L. 106–102 title I § 102(b)(2) · 113 Stat. 1338

    Inserted · 12 U.S.C. § 1864(f)

    Pub. L. 106–102 inserted before period at end “as of the day before November 12, 1999”

    Source evidence

    Code amendment note
    Subsec. (f). Pub. L. 106–102 inserted before period at end “as of the day before November 12, 1999”.

    Enacted provision · exact public law section
    (2) Amendment to the Bank Service Company Act.— Section 4(f) of the Bank Service Company Act (12 U.S.C. 1864(f)) is amended by inserting before the period at the end the following: “as of the day before the date of the enactment of the Gramm-Leach-Bliley Act”.

    Effective date note
    Amendment by Pub. L. 106–102 effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106–102, set out as a note under section 24 of this title.

11. 2006

    Pub. L. 109–351 § 602(b)(3)(A) · 120 Stat. 1966

    Inserted · 12 U.S.C. § 1864(b)

    Pub. L. 109–351, § 602(b)(3)(A), inserted “as permissible under subsection (c), (d), or (e) or” after “Except” in introductory provisions

    Source evidence

    Code amendment note
    Subsec. (b). Pub. L. 109–351, § 602(b)(3)(A), inserted “as permissible under subsection (c), (d), or (e) or” after “Except” in introductory provisions.

    Enacted provision · exact public law section
    (A) in subsection (b), by inserting “as permissible under subsection (c), (d), or (e) or” after “Except”;

12. 2006

    Pub. L. 109–351 § 602(b)(3)(B) · 120 Stat. 1966

    Inserted · 12 U.S.C. § 1864(c)

    Pub. L. 109–351, § 602(b)(3)(B), inserted “or State savings association” after “State bank” wherever appearing

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 109–351, § 602(b)(3)(B), inserted “or State savings association” after “State bank” wherever appearing.

    Enacted provision · exact public law section
    (B) in subsection (c), by inserting “or State savings association” after “State bank” each place that term appears;

13. 2006

    Pub. L. 109–351 § 602(b)(3)(C) · 120 Stat. 1966

    Inserted · 12 U.S.C. § 1864(d)

    Pub. L. 109–351, § 602(b)(3)(C), inserted “or Federal savings association” after “national bank” wherever appearing

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 109–351, § 602(b)(3)(C), inserted “or Federal savings association” after “national bank” wherever appearing.

    Enacted provision · exact public law section
    (C) in subsection (d), by inserting “or Federal savings association” after “national bank” each place that term appears;

14. 2006

    Pub. L. 109–351 § 602(b)(3)(D) · 120 Stat. 1966

    1. Inserted · 12 U.S.C. § 1864(e)

       Pub. L. 109–351, § 602(b)(3)(D), inserted heading

    2. Amended · 12 U.S.C. § 1864(e)

       Pub. L. 109–351, § 602(b)(3)(D), amended text generally. Prior to amendment, text read as follows: “A bank service company that has both national bank and State bank shareholders or members shall perform only those services that may lawfully be performed by both any shareholder or member of the company which is a national bank under the law of the United States and any shareholder or member of the company which is a State bank under the law of the State in which any such State bank operate and shall perform such services only at locations in the State at which both its State bank and national bank shareholders or members could be authorized to perform such services.”

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 109–351, § 602(b)(3)(D), inserted heading and amended text generally. Prior to amendment, text read as follows: “A bank service company that has both national bank and State bank shareholders or members shall perform only those services that may lawfully be performed by both any shareholder or member of the company which is a national bank under the law of the United States and any shareholder or member of the company which is a State bank under the law of the State in which any such State bank operate and shall perform such services only at locations in the State at which both its State bank and national bank shareholders or members could be authorized to perform such services.”

    Enacted provision · exact public law section
    (D) by striking subsection (e) and inserting the following: “(e) Performance Where State Bank and National Bank Are Shareholders or Members.— A bank service company may perform— “(1) only those services that each depository institution shareholder or member is otherwise authorized to perform under any applicable Federal or State law; and “(2) such services only at locations in a State in which each such shareholder or member is authorized to perform such services.” ; and

15. 2006

    Pub. L. 109–351 § 602(b)(3)(E) · 120 Stat. 1966

    Inserted · 12 U.S.C. § 1864(f)

    Pub. L. 109–351, § 602(b)(3)(E), inserted “or savings associations” after “location of banks”

    Source evidence

    Code amendment note
    Subsec. (f). Pub. L. 109–351, § 602(b)(3)(E), inserted “or savings associations” after “location of banks”.

    Enacted provision · exact public law section
    (E) in subsection (f), by inserting “or savings associations” after “location of banks”.

22 of 22 references resolved to an enrolled provision