[House Report 111-18]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 111-18
======================================================================
TO MAKE PERMANENT THE TEMPORARY INCREASE IN DEPOSIT INSURANCE COVERAGE,
AND FOR OTHER PURPOSES
_______
February 23, 2009.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 786]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 786) to make permanent the temporary increase in
deposit insurance coverage, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 4
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
New Budget Authority, Entitlement Authority, and Tax Expenditures 6
Committee Cost Estimate.......................................... 6
Congressional Budget Office Estimate............................. 6
Federal Mandates Statement....................................... 10
Advisory Committee Statement..................................... 11
Constitutional Authority Statement............................... 11
Applicability to Legislative Branch.............................. 11
Earmark Identification........................................... 11
Section-by-Section Analysis of the Legislation................... 11
Changes in Existing Law Made by the Bill, as Reported............ 12
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. PERMANENT INCREASE IN DEPOSIT INSURANCE.
(a) Amendments to Federal Deposit Insurance Act.--Effective upon
the date of the enactment of this Act, section 11(a) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)) is amended--
(1) in paragraph (1)(E), by striking ``$100,000'' and
inserting ``$250,000'';
(2) in paragraph (1)(F)(i), by striking ``2010'' and inserting
``2015'';
(3) in subclause (I) of paragraph (1)(F)(i), by striking
``$100,000'' and inserting ``$250,000'';
(4) in subclause (II) of paragraph (1)(F)(i), by striking
``the calendar year preceding the date this subparagraph takes
effect under the Federal Deposit Insurance Reform Act of 2005''
and inserting ``calendar year 2008''; and
(5) in paragraph (3)(A), by striking ``, except that $250,000
shall be substituted for $100,000 wherever such term appears in
such paragraph''.
(b) Amendment to Federal Credit Union Act.--Section 207(k) of the
Federal Credit Union Act (12 U.S.C. 1787(k)) is amended--
(1) in paragraph (3)--
(A) by striking the opening quotation mark before
``$250,000'';
(B) by striking ``, except that $250,000 shall be
substituted for $100,000 wherever such term appears in
such section''; and
(C) by striking the closing quotation mark after the
closing parenthesis; and
(2) in paragraph (5), by striking ``$100,000'' and inserting
``$250,000''.
(c) Rule of Construction.--No provision of law, other than a
provision of the Federal Deposit Insurance Act (with respect to the
Federal Deposit Insurance Corporation and insured depository
institutions) or the Federal Credit Union Act (with respect to the
National Credit Union Administration and insured credit unions), may be
construed as limiting the authority of--
(1) the Board of Directors of the Federal Deposit Insurance
Corporation to set assessments under section 7(b)(2) of the
Federal Deposit Insurance Act or to make any inflation
adjustment under section 11(a)(1)(F) of such Act; or
(2) the National Credit Union Administration Board to
periodically adjust the amount of an insured credit union's
deposit under section 202(c)(1) of the Federal Credit Union
Act, set the insurance premium charge under section 202(c)(2)
of such Act, or to make any inflation adjustment pursuant to
section 207(k)(5) of such Act.
SEC. 2. EXTENSION OF RESTORATION PLAN PERIOD.
Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ``5-year period'' and
inserting ``8-year period''.
SEC. 3. FDIC AND NCUA BORROWING AUTHORITY.
(a) FDIC.--Section 14(a) of the Federal Deposit Insurance Act (12
U.S.C. 1824(a)) is amended by striking ``$30,000,000,000'' and
inserting ``$100,000,000,000''.
(b) NCUA.--Section 203(d)(1) of the Federal Credit Union Act (12
U.S.C. 1783(d)(1)) is amended by striking ``$100,000,000'' and
inserting ``$6,000,000,000''.
SEC. 4. EXPANDING SYSTEMIC RISK SPECIAL ASSESSMENTS.
Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:
``(ii) Repayment of loss.--
``(I) In general.--The Corporation
shall recover the loss to the Deposit
Insurance Fund arising from any action
taken or assistance provided with
respect to an insured depository
institution under clause (i) from 1 or
more special assessments on insured
depository institutions, depository
institution holding companies (with the
concurrence of the Secretary of the
Treasury with respect to holding
companies), or both, as the Corporation
determines to be appropriate.
``(II) Treatment of depository
institution holding companies.--For
purposes of this clause, sections
7(c)(2) and 18(h) shall apply to
depository institution holding
companies as if they were insured
depository institutions.
``(III) Regulations.--The Corporation
shall prescribe such regulations as it
deems necessary to implement this
clause. In prescribing such
regulations, defining terms, and
setting the appropriate assessment rate
or rates, the Corporation shall
establish rates sufficient to cover the
losses incurred as a result of the
actions of the Corporation under clause
(i) and shall consider: the types of
entities that benefit from any action
taken or assistance provided under this
subparagraph; economic conditions, the
effects on the industry, and such other
factors as the Corporation deems
appropriate and relevant to the action
taken or the assistance provided. Any
funds so collected that exceed actual
losses shall be placed in the Deposit
Insurance Fund.''.
SEC. 5. ESTABLISHMENT OF A NATIONAL CREDIT UNION SHARE INSURANCE FUND
RESTORATION PLAN PERIOD.
Section 202(c)(2) of the Federal Credit Union Act (12 U.S.C.
1782(c)(2)) is amended by adding at the end the following new
subparagraph:
``(D) Fund restoration plans.--
``(i) In general.--Whenever--
``(I) the Board projects that the
equity ratio of the Fund will, within 6
months of such determination, fall
below the minimum amount specified in
subparagraph (C) for the designated
equity ratio; or
``(II) the equity ratio of the Fund
actually falls below the minimum amount
specified in subparagraph (C) for the
equity ratio without any determination
under sub-clause (I) having been made,
the Board shall establish and implement
a Share Insurance Fund restoration plan
within 90 days that meets the
requirements of clause (ii) and such
other conditions as the Board
determines to be appropriate.
``(ii) Requirements of restoration plan.--A
Share Insurance Fund restoration plan meets the
requirements of this clause if the plan
provides that the equity ratio of the Fund will
meet or exceed the minimum amount specified in
subparagraph (C) for the designated equity
ratio before the end of the 5-year period
beginning upon the implementation of the plan
(or such longer period as the Board may
determine to be necessary due to extraordinary
circumstances).
``(iii) Transparency.--Not more than 30 days
after the Board establishes and implements a
restoration plan under clause (i), the Board
shall publish in the Federal Register a
detailed analysis of the factors considered and
the basis for the actions taken with regard to
the plan.''.
Purpose and Summary
H.R. 786, a bill to make permanent the temporary increase
in deposit insurance coverage, is intended to improve liquidity
at insured depository institutions and credit unions and to
maintain a robust and flexible deposit insurance system.
H.R. 786 would make permanent the temporary increase in
deposit insurance coverage for both the Federal Deposit
Insurance Corporation (FDIC) Deposit Insurance Fund and the
National Credit Union Administration (NCUA) Share Insurance
Fund to $250,000 (the temporary increase is currently scheduled
to sunset on December 31, 2009); extend the time limit for an
FDIC restoration plan to rebuild the reserve ratio of the
Deposit Insurance Fund from 5 years to 8 years; increase the
FDIC's borrowing authority from the Treasury Department from
$30 billion to $100 billion and the Share Insurance Fund's
borrowing authority from $100 million to $6 billion; clarify
the FDIC's ability to charge systemic risk special assessments;
and establish a five-year restoration plan period for the NCUA,
which is currently required to restore the equity ratio of the
Share Insurance Fund within one year.
Background and Need for Legislation
In an effort to address what has been described as
potentially the worst economic crisis since the Great
Depression, Congress in October 2008 enacted the Emergency
Economic Stabilization Act (EESA) (Public Law 110-343). While
EESA focused mainly on providing the Secretary of Treasury with
authority and facilities to restore liquidity and stability to
the financial system of the United States, EESA also provided a
temporary increase in the deposit insurance coverage for FDIC-
insured banks as well as credit unions from $100,000 to
$250,000. Currently under EESA, this temporary increase would
expire on December 31, 2009, and revert to $100,000. H.R. 786
would, among other measures, make permanent this increase and
maintain deposit insurance coverage at $250,000.
Deposit insurance plays a crucial role in maintaining the
stability of the financial system by ensuring the security of
deposits, the critical source of funding available to financial
institutions to fuel lending to consumers and businesses and
generate economic activity and growth. Making permanent the
temporary increase in deposit insurance coverage would offer
reassurance to consumers that their deposits will remain safe
and bolster consumer confidence in the financial system. It
would also address a concern expressed by some consumers who
have purchased long-term certificates of deposit based in part
on the higher coverage that their deposits would no longer be
insured once the temporary increase expires. Overall, consumers
would be encouraged to keep their money in financial
institutions, providing much needed liquidity to promote
lending and unlock the credit markets.
To backstop the deposit insurance system, existing laws
provide the FDIC and the NCUA with borrowing authority from the
Treasury Department. In its testimony at a February 3, 2009
hearing before the Committee on Financial Services, the FDIC
stated that assets in the banking system have tripled since
1991 when the borrowing authority was last increased, and that
it would be appropriate to make a proportional adjustment to
the borrowing authority. The NCUA subsequently made a similar
request that its borrowing authority, unchanged since 1971, be
increased proportionate to asset size in the credit union
system. H.R. 786 would increase the borrowing authority of the
FDIC and the NCUA to further strengthen the deposit insurance
guarantee and the public's confidence in it.
In October 2008, the FDIC for the first time exercised its
authority to take action in circumstances involving systemic
risk to the banking industry and established the Temporary
Liquidity Guarantee Program to, among other purposes, guarantee
the debt of banks and their holding companies. The FDIC is
authorized under existing law to recoup the costs incurred in
its exercise of the systemic risk authority from banks, but not
their holding companies. In its testimony at the February 3
hearing, the FDIC recommended amending current law to allow
recoupment from holding companies as well as banks since
holding companies also have benefited from the FDIC's actions
under the systemic risk authority. H.R. 786 would allow the
FDIC to charge special assessments on banks and, with the
concurrence of the Secretary of Treasury, their holding
companies, to cover the costs of actions taken under the
systemic risk authority.
When the reserve ratio of the Deposit Insurance Fund falls
below a specified minimum level, current law requires the FDIC
to establish a restoration plan to meet or exceed the minimum
ratio within five years. Because permanently increasing the
level of deposit insurance coverage would have the effect of
reducing the reserve ratio, the FDIC in its February 3
testimony stated that it would be appropriate to extend the
time period for restoring the Deposit Insurance Fund. H.R. 786
accordingly would extend the FDIC's restoration plan period
from the current five years to eight years. H.R. 786 also
establishes a similar five-year restoration plan period for the
NCUA, which is currently required to restore the equity ratio
of the Share Insurance Fund within one year.
Hearings
The Committee on Financial Services held a hearing on
February 3, 2009, entitled ``Promoting Liquidity and Lending
Through Deposit Insurance, Hope for Homeowners, and Other
Enhancements.'' The following witnesses testified: Mr. John
Bovenzi, Chief Operating Officer, Federal Deposit Insurance
Corporation; Ms. Meg Burns, Director of the Office of Single
Family Program Development, U.S. Department of Housing and
Urban Development; Mr. Edward L. Yingling, President and Chief
Executive Officer, American Bankers Association; Mr. R. Michael
S. Menzies, Sr., President and Chief Executive Officer, Easton
Bank and Trust Company, on behalf of The Independent Community
Bankers of America; Mr. John Taylor, President and Chief
Executive, National Community Reinvestment Coalition; Mr. John
A. Courson, President and Chief Executive Officer, Mortgage
Bankers Association; Mr. Mike Calhoun, President and Chief
Operating Officer, Center for Responsible Lending; Mrs. Robin
Staudt; and Mr. Edward R. Morrison, Professor of Law, Columbia
Law School.
Committee Consideration
The Committee on Financial Services met in open session on
February 4, 2009, and ordered H.R. 786, to make permanent the
temporary increase in deposit insurance coverage, as amended,
favorably reported to the House by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken with in conjunction with the
consideration of this legislation. A motion by Mr. Frank to
report the bill, as amended, to the House with a favorable
recommendation was agreed to by a voice vote.
During the consideration of the bill, the following
amendments were considered:
An amendment Mr. Kanjorski, No. 1, establishing a Share
Insurance Fund restoration period, was agreed to by a voice
vote.
An amendment by Mr. Gutierrez, No. 2, increasing NCUA
borrowing authority, was agreed to by a voice vote.
An amendment by Mr. Frank, No. 3, striking additional FDIC
borrowing authority, was agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a hearing and made
findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 786, a bill to make permanent the temporary increase
in deposit insurance coverage, is intended to improve liquidity
at insured depository institutions and credit unions and to
maintain a robust and flexible deposit insurance system.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
February 23, 2009.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 786, a bill to
make permanent the temporary increase in deposit insurance
coverage, and for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 786--A bill to make permanent the temporary increase in deposit
insurance coverage, and for other purposes
Summary: H.R. 786 would permanently increase the amount of
deposits insured by the Federal Deposit Insurance Corporation
(FDIC) and National Credit Union Administration (NCUA) from
$100,000 to $250,000 and modify other terms of both deposit
insurance programs. It would allow those agencies to replenish
the insurance funds over a longer period of time and increase
the amounts each agency can borrow from the Department of the
Treasury.
The legislation's affect on direct spending and revenues
over the 2009-2013 and 2009-2018 periods are relevant for
enforcing pay-as-you-go rules under the current budget
resolution. CBO estimates that enacting this legislation would
increase deficits by $14.0 billion over the five-year period
from 2009 through 2013, but would reduce deficits by $14.3
billion over the 2009-2018 period. (In total, CBO estimates
that the legislation would reduce deficits by $14.9 billion
through 2019.) Implementing H.R. 786 would not affect revenues
or spending subject to appropriation.
H.R. 786 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments.
H.R. 786 contains private-sector mandates, as defined in
UMRA, on depository institutions and certain bank holding
companies. The bill would impose a mandate by requiring certain
depository institutions to pay higher insurance premiums as a
result of the permanent increase in deposit insurance coverage.
In addition, the bill would authorize the FDIC to make
assessments on holding companies for depository institutions
when necessary to replenish the insurance fund. CBO expects
that the direct cost of the mandates would well exceed the
annual threshold established in UMRA for private-sector
mandates ($139 million in 2009, adjusted annually for
inflation).
Estimated cost to the Federal Government: The estimated
impact of enacting H.R. 786 is shown in the following table.
The budgetary effects of this legislation fall within budget
function 370 (commerce and housing credit).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars--
---------------------------------------------------------------------------------------------------------------------
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009-2014 2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated Budget Authority........ 0 0 0 0 0 0 0 0 0 0 0 0 0
Estimated Outlays................. 0 2.3 5.2 4.5 2.0 -6.4 -9.0 -6.8 -6.1 * -0.6 7.6 -14.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: *=between -$50 million and zero.
Basis of Estimate: H.R. 786 would increase the amount of
federal deposit insurance coverage and make other changes to
the FDIC's and NCUA's programs. Assuming enactment by the end
of fiscal year 2009, CBO estimates that enacting this bill
would increase direct spending by $7.6 billion over the 2009-
2014 period but reduce net direct spending by $14.9 billion
over the 2009-2019 period. Specifically, the bill would:
Permanently increase the amount of deposits
insured by the FDIC and NCUA from $100,000 to $250,000
(the Emergency Economic Stabilization Act of 2008
raised the limit to $250,000 through December 31,
2009);
Adjust the limit on insured deposits for
inflation beginning in 2015 instead of 2010;
Allow both agencies to replenish the
insurance funds over longer periods of time, extending
the restoration period for the FDIC's Deposit Insurance
Fund (DIF) from five years to eight years and for
NCUA's Share Insurance Fund (SIF) from one year to five
years;
Modify how the FDIC recovers costs resulting
from actions taken to reduce systemic risks; and
Increase the amounts the agencies can borrow
from the Treasury, raising the FDIC's limit from $30
billion to $100 billion and the NCUA's limit from $100
million to $6 billion.
Raising the limit on insured deposits would increase the
FDIC's and NCUA's liabilities for failed institutions, but the
cost of any additional losses would be offset over time by
higher insurance premiums. In addition, depository institutions
would pay higher premiums to cover the newly insured deposits.
CBO expects that this change, coupled with provisions giving
the agencies more time to restore depleted fund balances, would
increase their net outlays over the 2009-2013 period because of
higher losses and lower collections but would significantly
reduce outlays by the end of the 2009-2019 period because of
the additional premiums paid to offset losses and to cover new
deposits.
CBO estimates that raising the coverage limit would
increase outlays for failed institutions by an estimated $5.7
billion over the next five years, and extending the recovery
period for the DIF and SIF would lower net premiums by about
$1.9 billion. Those costs would be offset in subsequent years,
however, assuming the agencies would charge premiums sufficient
to restore the DIF and the SIF to the levels currently
specified in agency regulations (1.25 percent and 1.2 percent,
respectively) within the respective restoration periods
specified in the bill. Based on information from the FDIC and
NCUA, CBO estimates that raising deposit insurance coverage
from $100,000 to $250,000 would increase insured deposits by 15
percent and 10 percent, respectively. Applying those increases
to CBO's January baseline projections for deposit growth, we
estimate that enacting this legislation would increase deposits
insured by the FDIC by about $1.1 trillion by 2019 and by the
NCUA by almost $100 billion. Thus, CBO estimates that enacting
this bill would reduce net outlays by about $14.9 billion over
the 2009-2019 period.
Finally, increasing the agencies' borrowing limits should
result no net cost to the government over time but could affect
their annual cash flows. For example, raising the borrowing
limit could increase the likelihood of agency actions aimed at
easing the financial pressures facing insured institutions,
such as maintaining the balances in the DIF and SIF at the
lower end of the allowable ranges or providing different forms
of systemic assistance to financial institutions. The net
budgetary impact of increasing borrowing limits over the next
10 years would largely depend on whether the FDIC and NCUA
would recoup any borrowing-related expenses by 2019. Assuming
the agencies restore the insurance funds to the levels
designated in their current regulations by 2019, CBO estimates
that providing the additional borrowing authority would have no
significant net effect on direct spending in 2009 or in
aggregate over the next 10 years.
Estimated impact on state, local, and tribal governments:
H.R. 786 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
tribal governments.
Estimated impact on the private sector: H.R. 786 contains
private-sector mandates, as defined in UMRA, on depository
institutions and certain bank holding companies. By making
permanent the increase in deposit insurance coverage, the bill
would cause depository institutions to pay higher premiums.
Most depository institutions (commercial banks, savings
associations, and most credit unions) are required by law to
have federal deposit insurance. CBO, therefore, considers
changes in the federal deposit insurance system that increase
requirements imposed on those institutions to be private-sector
mandates. In addition, the bill would expand the requirement
for depository institutions to pay special assessments to
include bank holding companies.
The cost of the mandates would be the net increase in
premiums. CBO estimates that the net increase in premiums for
depository institutions would amount to more than $6 billion in
2014 and thus would well exceed the annual threshold
established in UMRA for private-sector mandates ($139 million
in 2009, adjusted annually for inflation).
Previous CBO estimate: On January 13, 2009, CBO transmitted
a cost estimate for H.R. 384, the TARP Reform and
Accountability Act, as introduced on January 9, 2009, which
included provisions similar to those in H.R. 786. Differences
between this estimate and the estimate for title VII of H.R.
384 reflect changes in the financial condition of the NCUA's
Share Insurance Fund since January and the effect of provisions
in H.R. 786 extending the time period for restoring the NCUA's
fund to statutorily designated levels.
Estimate prepared by: Federal Costs: Kathleen Gramp; Impact
on State, Local, and Tribal Governments: Elizabeth Cove
Delisle; Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 786 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. Permanent increase in deposit insurance
This section increases the deposit insurance limit from
$100,000 to $250,000 for both the Deposit Insurance Fund of the
FDIC and the Share Insurance Fund of the NCUA, provides for
inflation adjustment starting in 2015, and adds a rule of
construction clarifying the authority to set assessments.
Section 2. Extension of restoration period
This section extends the time limit for an FDIC restoration
plan to rebuild the reserve ratio of the Deposit Insurance Fund
from 5 years to 8 years.
Section 3. FDIC and NCUA borrowing authority
This section increases the FDIC's borrowing authority from
the Treasury Department from $30 billion to $100 billion and
the Share Insurance Fund's borrowing authority from the
Treasury Department from $100 million to $6 billion.
Section 4. Expanding systemic risk special assessments
This section allows the FDIC to charge systemic risk
special assessments by rulemaking, on both insured depository
institutions and depository institution holding companies. For
holding company assessments, the concurrence of the Secretary
of the Treasury would be required.
Section 5. Establishment of a national credit union share insurance
fund restoration plan period
This section requires the NCUA to establish a restoration
plan to rebuild the Share Insurance Fund within 5 years (or
longer as the NCUA may determine to be necessary due to
extraordinary circumstances) if the equity ratio falls below
certain minimum amount, and to publish a detailed analysis of
the factors considered and the basis for the actions taken with
regard to the restoration plan.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 7. (a) * * *
(b) Assessments.--
(1) * * *
* * * * * * *
(3) Designated reserve ratio.--
(A) * * *
* * * * * * *
(E) DIF restoration plans.--
(i) * * *
(ii) Requirements of restoration
plan.--A Deposit Insurance Fund
restoration plan meets the requirements
of this clause if the plan provides
that the reserve ratio of the Fund will
meet or exceed the minimum amount
specified in subparagraph (B)(ii) for
the designated reserve ratio before the
end of the [5-year period] 8-year
period beginning upon the
implementation of the plan (or such
longer period as the Corporation may
determine to be necessary due to
extraordinary circumstances).
* * * * * * *
Sec. 11. (a) Deposit Insurance.--
(1) Insured amounts payable.--
(A) * * *
* * * * * * *
(E) Standard maximum deposit insurance amount
defined.--For purposes of this Act, the term
``standard maximum deposit insurance amount''
means [$100,000] $250,000, adjusted as provided
under subparagraph (F) after March 31, 2010.
(F) Inflation adjustment.--
(i) In general.--By April 1 of [2010]
2015, and the 1st day of each
subsequent 5-year period, the Board of
Directors and the National Credit Union
Administration Board shall jointly
consider the factors set forth under
clause (v), and, upon determining that
an inflation adjustment is appropriate,
shall jointly prescribe the amount by
which the standard maximum deposit
insurance amount and the standard
maximum share insurance amount (as
defined in section 207(k) of the
Federal Credit Union Act) applicable to
any depositor at an insured depository
institution shall be increased by
calculating the product of--
(I) [$100,000] $250,000; and
(II) the ratio of the
published annual value of the
Personal Consumption
Expenditures Chain-Type Price
Index (or any successor index
thereto), published by the
Department of Commerce, for the
calendar year preceding the
year in which the adjustment is
calculated under this clause,
to the published annual value
of such index for [the calendar
year preceding the date this
subparagraph takes effect under
the Federal Deposit Insurance
Reform Act of 2005] calendar
year 2008.
* * * * * * *
(3) Certain retirement accounts.--
(A) In general.--Notwithstanding any
limitation in this Act relating to the amount
of deposit insurance available for the account
of any 1 depositor, deposits in an insured
depository institution made in connection
with--
(i) * * *
* * * * * * *
shall be aggregated and insured in an amount
not to exceed $250,000 (which amount shall be
subject to inflation adjustments as provided in
paragraph (1)(F)[, except that $250,000 shall
be substituted for $100,000 wherever such term
appears in such paragraph]) per participant per
insured depository institution.
* * * * * * *
Sec. 13. (a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(4) Least-cost resolution required.--
(A) * * *
* * * * * * *
(G) Systemic risk.--
(i) * * *
[(ii) Repayment of loss.--The
Corporation shall recover the loss to
the Deposit Insurance Fund arising from
any action taken or assistance provided
with respect to an insured depository
institution under clause (i)
expeditiously from 1 or more emergency
special assessments on insured
depository institutions equal to the
product of--
[(I) an assessment rate
established by the Corporation;
and
[(II) the amount of each
insured depository
institution's average total
assets during the assessment
period, minus the sum of the
amount of the institution's
average total tangible equity
and the amount of the
institution's average total
subordinated debt.]
(ii) Repayment of loss.--
(I) In general.--The Corporation shall
recover the loss to the Deposit Insurance Fund
arising from any action taken or assistance
provided with respect to an insured depository
institution under clause (i) from 1 or more
special assessments on insured depository
institutions, depository institution holding
companies (with the concurrence of the
Secretary of the Treasury with respect to
holding companies), or both, as the Corporation
determines to be appropriate.
(II) Treatment of depository institution
holding companies.--For purposes of this
clause, sections 7(c)(2) and 18(h) shall apply
to depository institution holding companies as
if they were insured depository institutions.
(III) Regulations.--The Corporation shall
prescribe such regulations as it deems
necessary to implement this clause. In
prescribing such regulations, defining terms,
and setting the appropriate assessment rate or
rates, the Corporation shall establish rates
sufficient to cover the losses incurred as a
result of the actions of the Corporation under
clause (i) and shall consider: the types of
entities that benefit from any action taken or
assistance provided under this subparagraph;
economic conditions, the effects on the
industry, and such other factors as the
Corporation deems appropriate and relevant to
the action taken or the assistance provided.
Any funds so collected that exceed actual
losses shall be placed in the Deposit Insurance
Fund.
* * * * * * *
SEC. 14. BORROWING AUTHORITY.
(a) Borrowing From Treasury.--The Corporation is authorized
to borrow from the Treasury, and the Secretary of the Treasury
is authorized and directed to loan to the Corporation on such
terms as may be fixed by the Corporation and the Secretary,
such funds as in the judgment of the Board of Directors of the
Corporation are from time to time required for insurance
purposes, not exceeding in the aggregate [$30,000,000,000]
$100,000,000,000 outstanding at any one time, subject to the
approval of the Secretary of the Treasury: Provided, That the
rate of interest to be charged in connection with any loan made
pursuant to this subsection shall not be less than an amount
determined by the Secretary of the Treasury, taking into
consideration current market yields on outstanding marketable
obligations of the United States of comparable maturities. For
such purpose the Secretary of the Treasury is authorized to use
as a public-debt transaction the proceeds of the sale of any
securities hereafter issued under the Second Liberty Bond Act,
as amended, and the purposes for which securities may be issued
under the Second Liberty Bond Act, as amended, are extended to
include such loans. Any such loan shall be used by the
Corporation solely in carrying out its functions with respect
to such insurance. All loans and repayments under this
subsection shall be treated as public-debt transactions of the
United States. The Corporation may employ any funds obtained
under this section for purposes of the Deposit Insurance Fund
and the borrowing shall become a liability of the Deposit
Insurance Fund to the extent funds are employed therefor. There
are hereby appropriated to the Secretary, for fiscal year 1989
and each fiscal year thereafter, such sums as may be necessary
to carry out this subsection.
* * * * * * *
----------
FEDERAL CREDIT UNION ACT
* * * * * * *
TITLE II--SHARE INSURANCE
* * * * * * *
REPORTS OF CONDITION; CERTIFIED STATEMENTS; PREMIUMS FOR INSURANCE
Sec. 202. (a) * * *
* * * * * * *
(c)(1) * * *
(2) Insurance premium charges.--
(A) * * *
* * * * * * *
(D) Fund restoration plans.--
(i) In general.--Whenever--
(I) the Board projects that
the equity ratio of the Fund
will, within 6 months of such
determination, fall below the
minimum amount specified in
subparagraph (C) for the
designated equity ratio; or
(II) the equity ratio of the
Fund actually falls below the
minimum amount specified in
subparagraph (C) for the equity
ratio without any determination
under sub-clause (I) having
been made,
the Board shall establish and implement
a Share Insurance Fund restoration plan
within 90 days that meets the
requirements of clause (ii) and such
other conditions as the Board
determines to be appropriate.
(ii) Requirements of restoration
plan.--A Share Insurance Fund
restoration plan meets the requirements
of this clause if the plan provides
that the equity ratio of the Fund will
meet or exceed the minimum amount
specified in subparagraph (C) for the
designated equity ratio before the end
of the 5-year period beginning upon the
implementation of the plan (or such
longer period as the Board may
determine to be necessary due to
extraordinary circumstances).
(iii) Transparency.--Not more than 30 days
after the Board establishes and implements a
restoration plan under clause (i), the Board
shall publish in the Federal Register a
detailed analysis of the factors considered and
the basis for the actions taken with regard to
the plan.
* * * * * * *
NATIONAL CREDIT UNION SHARE INSURANCE FUND
Sec. 203. (a) * * *
* * * * * * *
(d)(1) If, in the judgment of the Board, a loan to the fund
is required at any time for carrying out the purposes of this
title, the Secretary of the Treasury shall make the loan, but
loans under this paragraph shall not exceed in the aggregate
[$100,000,000] $6,000,000,000 outstanding at any one time.
Except as otherwise provided in this subsection and in
subsection (e) of this section, each loan under this paragraph
shall be made on such terms as may be fixed by agreement
between the Board and the Secretary of the Treasury.
* * * * * * *
PAYMENT OF INSURANCE
Sec. 207. (a) * * *
* * * * * * *
(k) Insured Amounts Payable.--
(1) * * *
* * * * * * *
(3) Notwithstanding any limitation in this title or in any
other provision of law relating to the amount of insurance
available for the account of any one depositor or member, funds
invested in a credit union insured in accordance with this
title pursuant to a pension or profit-sharing plan described in
section 401(d) of the Internal Revenue Code of 1954, as
amended, and funds invested in such an insured credit union in
the form of individual retirement accounts as described in
section 408(a) of the Internal Revenue Code of 1954, as
amended, shall be insured in the amount of [``]$250,000 (which
amount shall be subject to inflation adjustments as provided
under section 11(a)(1)(F) of the Federal Deposit Insurance
Act[, except that $250,000 shall be substituted for $100,000
wherever such term appears in such section])[''] per account.
As to any plan qualifying under section 401(d) or section
408(a) of the Internal Revenue Code of 1954, the term ``per
account'' means the present vested and ascertainable interest
of each beneficiary under the plan, excluding any remainder
interest created by, or as a result of, the plan.
* * * * * * *
(5) Standard maximum share insurance amount
defined.--For purposes of this Act, the term ``standard
maximum share insurance amount'' means [$100,000]
$250,000, adjusted as provided under section
11(a)(1)(F) of the Federal Deposit Insurance Act.
* * * * * * *