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to advance funds to or on behalf of a person pursuant to a contractual commitment; and ‘‘(C) any credit exposure to a person arising from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the national banking association and the person;’’; (2) in paragraph (2), by striking the period at the end and inserting ‘‘; and’’; and (3) by adding at the end the following: ‘‘(3) the term ‘derivative transaction’ includes any trans- action that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.’’. (b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended by striking ‘‘Director’’ each place that term appears and inserting ‘‘Comptroller of the Currency’’. 12 USC 84 note. (c) EFFECTIVE DATE.—The amendments made by this section shall take effect 1 year after the transfer date.

SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS
IN LENDING LIMITS.
(a) AMENDMENT.—Section 18 of the Federal Deposit Insurance
Act (12 U.S.C. 1828) is amended by adding at the end the following:
‘‘(y) STATE LENDING LIMIT TREATMENT OF DERIVATIVES TRANS-
ACTIONS.—An insured State bank may engage in a derivative trans-
action, as defined in section 5200(b)(3) of the Revised Statutes
of the United States (12 U.S.C. 84(b)(3)), only if the law with
respect to lending limits of the State in which the insured State
bank is chartered takes into consideration credit exposure to deriva-
tive transactions.’’.
12 USC 1828 (b) EFFECTIVE DATE.—The amendment made by this section
note. shall take effect 18 months after the transfer date.

SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) CONVERSION OF A NATIONAL BANKING ASSOCIATION.—The
Act entitled ‘‘An Act to provide for the conversion of national
banking associations into and their merger or consolidation with
State banks, and for other purposes.’’ (12 U.S.C. 214 et seq.) is
amended by adding at the end the following:

12 USC 214d. ‘‘SEC. 10. PROHIBITION ON CONVERSION.
‘‘A national banking association may not convert to a State
bank or State savings association during any period in which the
national banking association is subject to a cease and desist order
(or other formal enforcement order) issued by, or a memorandum
of understanding entered into with, the Comptroller of the Currency
with respect to a significant supervisory matter.’’.
(b) CONVERSION OF A STATE BANK OR SAVINGS ASSOCIATION.—
Section 5154 of the Revised Statutes of the United States (12
U.S.C. 35) is amended by adding at the end the following: ‘‘The
Comptroller of the Currency may not approve the conversion of

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