[House Report 108-50]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-50
======================================================================
FEDERAL DEPOSIT INSURANCE REFORM ACT OF 2003
_______
March 27, 2003.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
SUPPLEMENTAL AND DISSENTING VIEWS
[To accompany H.R. 522]
The Committee on Financial Services, to whom was referred the
bill (H.R. 522) to reform the Federal deposit insurance system,
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........................................................ 1
Purpose and Summary.............................................. 20
Background and Need for Legislation.............................. 20
Hearings......................................................... 23
Committee Consideration.......................................... 23
Committee Votes.................................................. 23
Committee Oversight Findings..................................... 23
Performance Goals and Objectives................................. 24
New Budget Authority, Entitlement Authority, and Tax Expenditures 24
Committee Cost Estimate.......................................... 24
Congressional Budget Office Cost Estimate........................24, 31
Federal Mandates Statement....................................... 31
Constitutional Authority Statement............................... 31
Applicability to Legislative Branch.............................. 32
Section-by-Section Analysis...................................... 32
Changes in Existing Law Made by the Bill, as Reported............ 38
Supplemental and Dissenting Views..............................120, 121
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Federal Deposit
Insurance Reform Act of 2003''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Merging the BIF and SAIF.
Sec. 3. Increase in deposit insurance coverage.
Sec. 4. Setting assessments and repeal of special rules relating to
minimum assessments and free deposit insurance.
Sec. 5. Replacement of fixed designated reserve ratio with reserve
range.
Sec. 6. Requirements applicable to the risk-based assessment system.
Sec. 7. Refunds, dividends, and credits from Deposit Insurance Fund.
Sec. 8. Deposit Insurance Fund restoration plans.
Sec. 9. Regulations required.
Sec. 10. Studies of FDIC structure and expenses and certain activities
and further possible changes to deposit insurance system.
Sec. 11. Bi-annual FDIC survey and report on increasing the deposit
base by encouraging use of depository institutions by the unbanked.
Sec. 12. Technical and conforming amendments to the Federal Deposit
Insurance Act relating to the merger of the BIF and SAIF.
Sec. 13. Other technical and conforming amendments relating to the
merger of the BIF and SAIF.
SEC. 2. MERGING THE BIF AND SAIF.
(a) In General.--
(1) Merger.--The Bank Insurance Fund and the Savings
Association Insurance Fund shall be merged into the Deposit
Insurance Fund.
(2) Disposition of assets and liabilities.--All assets and
liabilities of the Bank Insurance Fund and the Savings
Association Insurance Fund shall be transferred to the Deposit
Insurance Fund.
(3) No separate existence.--The separate existence of the
Bank Insurance Fund and the Savings Association Insurance Fund
shall cease on the effective date of the merger thereof under
this section.
(b) Repeal of Outdated Merger Provision.--Section 2704 of the Deposit
Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is repealed.
(c) Effective Date.--This section shall take effect on the first day
of the first calendar quarter that begins after the end of the 90-day
period beginning on the date of the enactment of this Act.
SEC. 3. INCREASE IN DEPOSIT INSURANCE COVERAGE.
(a) In General.--Section 11(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(1)) is amended--
(1) by striking subparagraph (B) and inserting the following
new subparagraph:
``(B) Net amount of insured deposit.--The net amount
due to any depositor at an insured depository
institution shall not exceed the standard maximum
deposit insurance amount as determined in accordance
with subparagraphs (C), (D), (E) and (F) and paragraph
(3).''; and
(2) by adding at the end the following new subparagraphs:
``(E) Standard maximum deposit insurance amount
defined.--For purposes of this Act, the term `standard
maximum deposit insurance amount' means--
``(i) until the effective date of final
regulations prescribed pursuant to section
9(a)(2) of the Federal Deposit Insurance Reform
Act of 2003, $100,000; and
``(ii) on and after such effective date,
$130,000, adjusted as provided under
subparagraph (F).
``(F) Inflation adjustment.--
``(i) In general.--By April 1 of 2005, and
the 1st day of each subsequent 5-year period,
the Board of Directors and the National Credit
Union Administration Board 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) $130,000; and
``(II) the ratio of the value of the
Personal Consumption Expenditures
Chain-Type Index (or any successor
index thereto), published by the
Department of Commerce, as of December
31 of the year preceding the year in
which the adjustment is calculated
under this clause, to the value of such
index as of the date this subparagraph
takes effect.
``(ii) Rounding.--If the amount determined
under clause (ii) for any period is not a
multiple of $10,000, the amount so determined
shall be rounded to the nearest $10,000.
``(iii) Publication and report to the
congress.--Not later than April 5 of any
calendar year in which an adjustment is
required to be calculated under clause (i) to
the standard maximum deposit insurance amount
and the standard maximum share insurance amount
under such clause, the Board of Directors and
the National Credit Union Administration Board
shall--
``(I) publish in the Federal Register
the standard maximum deposit insurance
amount, the standard maximum share
insurance amount, and the amount of
coverage under paragraph (3)(A) and
section 207(k)(3) of the Federal Credit
Union Act, as so calculated; and
``(II) jointly submit a report to the
Congress containing the amounts
described in subclause (I).
``(iv) 6-month implementation period.--Unless
an Act of Congress enacted before July 1 of the
calendar year in which an adjustment is
required to be calculated under clause (i)
provides otherwise, the increase in the
standard maximum deposit insurance amount and
the standard maximum share insurance amount
shall take effect on January 1 of the year
immediately succeeding such calendar year.''.
(b) Coverage for Certain Employee Benefit Plan Deposits.--Section
11(a)(1)(D) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)(D)) is amended to read as follows:
``(D) Coverage for certain employee benefit plan
deposits.--
``(i) Pass-through insurance.--The
Corporation shall provide pass-through deposit
insurance for the deposits of any employee
benefit plan.
``(ii) Prohibition on acceptance of benefit
plan deposits.--An insured depository
institution that is not well capitalized or
adequately capitalized may not accept employee
benefit plan deposits.
``(iii) Definitions.--For purposes of this
subparagraph, the following definitions shall
apply:
``(I) Capital standards.--The terms
`well capitalized' and `adequately
capitalized' have the same meanings as
in section 38.
``(II) Employee benefit plan.--The
term `employee benefit plan' has the
same meaning as in paragraph
(8)(B)(ii), and includes any eligible
deferred compensation plan described in
section 457 of the Internal Revenue
Code of 1986.
``(III) Pass-through deposit
insurance.--The term `pass-through
deposit insurance' means, with respect
to an employee benefit plan, deposit
insurance coverage provided on a pro
rata basis to the participants in the
plan, in accordance with the interest
of each participant.''.
(c) Doubling of Deposit Insurance for Certain Retirement Accounts.--
Section 11(a)(3)(A) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(3)(A)) is amended by striking ``$100,000'' and inserting ``2
times the standard maximum deposit insurance amount (as determined
under paragraph (1))''.
(d) Increased Insurance Coverage for Municipal Deposits.--Section
11(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(2)) is
amended--
(1) in subparagraph (A)--
(A) by moving the margins of clauses (i) through (v)
4 ems to the right;
(B) by striking, in the matter following clause (v),
``such depositor shall'' and all that follows through
the period; and
(C) by striking the semicolon at the end of clause
(v) and inserting a period;
(2) by striking ``(2)(A) Notwithstanding'' and all that
follows through ``a depositor who is--'' and inserting the
following:
``(2) Municipal depositors.--
``(A) In general.--Notwithstanding any limitation in
this Act or in any other provision of law relating to
the amount of deposit insurance available to any 1
depositor--
``(i) a municipal depositor shall, for the
purpose of determining the amount of insured
deposits under this subsection, be deemed to be
a depositor separate and distinct from any
other officer, employee, or agent of the United
States or any public unit referred to in
subparagraph (E); and
``(ii) except as provided in subparagraph
(B), the deposits of a municipal depositor
shall be insured in an amount equal to the
standard maximum deposit insurance amount (as
determined under paragraph (1)).
``(B) In-state municipal depositors.--In the case of
the deposits of an in-State municipal depositor
described in clause (ii), (iii), (iv), or (v) of
subparagraph (E) at an insured depository institution,
such deposits shall be insured in an amount not to
exceed the lesser of--
``(i) $2,000,000; or
``(ii) the sum of the standard maximum
deposit insurance amount and 80 percent of the
amount of any deposits in excess of the
standard maximum deposit insurance amount.
``(C) Municipal deposit parity.--No State may deny to
insured depository institutions within its jurisdiction
the authority to accept deposits insured under this
paragraph, or prohibit the making of such deposits in
such institutions by any in-State municipal depositor.
``(D) In-state municipal depositor defined.--For
purposes of this paragraph, the term `in-State
municipal depositor' means a municipal depositor that
is located in the same State as the office or branch of
the insured depository institution at which the
deposits of that depositor are held.
``(E) Municipal depositor.--In this paragraph, the
term `municipal depositor' means a depositor that is--
'';
(3) by striking ``(B) The'' and inserting the following:
``(F) Authority to limit deposits.--The''; and
(4) by striking ``depositor referred to in subparagraph (A)
of this paragraph'' each place such term appears and inserting
``municipal depositor''.
(e) Technical and Conforming Amendment Relating to Insurance of Trust
Funds.--Paragraphs (1) and (3) of section 7(i) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(i)) are each amended by striking
``$100,000'' and inserting ``the standard maximum deposit insurance
amount (as determined under section 11(a)(1))''.
(f) Other Technical and Conforming Amendments.--
(1) Section 11(m)(6) of the Federal Deposit Insurance Act (12
U.S.C. 1821(m)(6)) is amended by striking ``$100,000'' and
inserting ``an amount equal to the standard maximum deposit
insurance amount''.
(2) Subsection (a) of section 18 of the Federal Deposit
Insurance Act (12 U.S.C. 1828(a)) is amended to read as
follows:
``(a) Insurance Logo.--
``(1) Insured depository institutions.--
``(A) In general.--Each insured depository
institution shall display at each place of business
maintained by that institution a sign or signs relating
to the insurance of the deposits of the institution, in
accordance with regulations to be prescribed by the
Corporation.
``(B) Statement to be included.--Each sign required
under subparagraph (A) shall include a statement that
insured deposits are backed by the full faith and
credit of the United States Government.
``(2) Regulations.--The Corporation shall prescribe
regulations to carry out this subsection, including regulations
governing the substance of signs required by paragraph (1) and
the manner of display or use of such signs.
``(3) Penalties.--For each day that an insured depository
institution continues to violate this subsection or any
regulation issued under this subsection, it shall be subject to
a penalty of not more than $100, which the Corporation may
recover for its use.''.
(3) Section 43(d) of the Federal Deposit Insurance Act (12
U.S.C. 1831t(d)) is amended by striking ``$100,000'' and
inserting ``an amount equal to the standard maximum deposit
insurance amount''.
(4) Section 6 of the International Banking Act of 1978 (12
U.S.C. 3104) is amended--
(A) by striking ``$100,000'' each place such term
appears and inserting ``an amount equal to the standard
maximum deposit insurance amount''; and
(B) by adding at the end the following new
subsection:
``(e) Standard Maximum Deposit Insurance Amount Defined.--For
purposes of this section, the term `standard maximum deposit insurance
amount' means the amount of the maximum amount of deposit insurance as
determined under section 11(a)(1) of the Federal Deposit Insurance
Act.''.
(g) Conforming Change to Credit Union Share Insurance Fund.--
(1) In general.--Section 207(k) of the Federal Credit Union
Act (12 U.S.C. 1787(k)) is amended--
(A) by striking ``(k)(1)'' and all that follows
through the end of paragraph (1) and inserting the
following:
``(k) Insured Amounts Payable.--
``(1) Net insured amount.--
``(A) In general.--Subject to the provisions of
paragraph (2), the net amount of share insurance
payable to any member at an insured credit union shall
not exceed the total amount of the shares or deposits
in the name of the member (after deducting offsets),
less any part thereof which is in excess of the
standard maximum share insurance amount, as determined
in accordance with this paragraph and paragraphs (5)
and (6), and consistently with actions taken by the
Federal Deposit Insurance Corporation under section
11(a) of the Federal Deposit Insurance Act.
``(B) Aggregation.--Determination of the net amount
of share insurance under subparagraph (A), shall be in
accordance with such regulations as the Board may
prescribe, and, in determining the amount payable to
any member, there shall be added together all accounts
in the credit union maintained by that member for that
member's own benefit, either in the member's own name
or in the names of others.
``(C) Authority to define the extent of coverage.--
The Board may define, with such classifications and
exceptions as it may prescribe, the extent of the share
insurance coverage provided for member accounts,
including member accounts in the name of a minor, in
trust, or in joint tenancy.'';
(B) in paragraph (2)--
(i) in subparagraph (A)--
(I) in clauses (i) through (v), by
moving the margins 4 ems to the right;
(II) in the matter following clause
(v), by striking ``his account'' and
all that follows through the period;
and
(III) by striking the semicolon at
the end of clause (v) and inserting a
period;
(ii) by striking ``(2)(A) Notwithstanding''
and all that follows through ``a depositor or
member who is--'' and inserting the following:
``(2) Municipal depositors or members.--
``(A) In general.--Notwithstanding any limitation in
this Act or in any other provision of law relating to
the amount of insurance available to any 1 depositor or
member, deposits or shares of a municipal depositor or
member shall be insured in an amount equal to the
standard maximum share insurance amount (as determined
under paragraph (5)), except as provided in
subparagraph (B).
``(B) In-state municipal depositors.--In the case of
the deposits of an in-State municipal depositor
described in clause (ii), (iii), (iv), or (v) of
subparagraph (E) at an insured credit union, such
deposits shall be insured in an amount equal to the
lesser of--
``(i) $2,000,000; or
``(ii) the sum of the standard maximum
deposit insurance amount and 80 percent of the
amount of any deposits in excess of the
standard maximum deposit insurance amount.
``(C) Rule of construction.--No provision of this
paragraph shall be construed as authorizing an insured
credit union to accept the deposits of a municipal
depositor in an amount greater than such credit union
is authorized to accept under any other provision of
Federal or State law.
``(D) In-state municipal depositor defined.--For
purposes of this paragraph, the term `in-State
municipal depositor' means a municipal depositor that
is located in the same State as the office or branch of
the insured credit union at which the deposits of that
depositor are held.
``(E) Municipal depositor.--In this paragraph, the
term `municipal depositor' means a depositor that is--
'';
(iii) by striking ``(B) The'' and inserting
the following:
``(F) Authority to limit deposits.--The''; and
(iv) by striking ``depositor or member
referred to in subparagraph (A)'' and inserting
``municipal depositor or member''; and
(C) by adding at the end the following new
paragraphs:
``(4) Coverage for certain employee benefit plan deposits.--
``(A) Pass-through insurance.--The Administration
shall provide pass-through share insurance for the
deposits or shares of any employee benefit plan.
``(B) Prohibition on acceptance of deposits.--An
insured credit union that is not well capitalized or
adequately capitalized may not accept employee benefit
plan deposits.
``(C) Definitions.--For purposes of this paragraph,
the following definitions shall apply:
``(i) Capital standards.--The terms `well
capitalized' and `adequately capitalized' have
the same meanings as in section 216(c).
``(ii) Employee benefit plan.--The term
`employee benefit plan'--
``(I) has the meaning given to such
term in section 3(3) of the Employee
Retirement Income Security Act of 1974;
``(II) includes any plan described in
section 401(d) of the Internal Revenue
Code of 1986; and
``(III) includes any eligible
deferred compensation plan described in
section 457 of the Internal Revenue
Code of 1986.
``(iii) Pass-through share insurance.--The
term `pass-through share insurance' means, with
respect to an employee benefit plan, insurance
coverage provided on a pro rata basis to the
participants in the plan, in accordance with
the interest of each participant.
``(D) Rule of construction.--No provision of this
paragraph shall be construed as authorizing an insured
credit union to accept the deposits of an employee
benefit plan in an amount greater than such credit
union is authorized to accept under any other provision
of Federal or State law.
``(5) Standard maximum share insurance amount defined.--For
purposes of this Act, the term `standard maximum share
insurance amount' means--
``(A) until the effective date of final regulations
prescribed pursuant to section 9(a)(2) of the Federal
Deposit Insurance Reform Act of 2003, $100,000; and
``(B) on and after such effective date, $130,000,
adjusted as provided under section 11(a)(1)(F) of the
Federal Deposit Insurance Act.''.
(2) Doubling of share insurance for certain retirement
accounts.--Section 207(k)(3) of the Federal Credit Union Act
(12 U.S.C. 1787(k)(3)) is amended by striking ``$100,000'' and
inserting ``2 times the standard maximum share insurance amount
(as determined under paragraph (1))''.
(h) Effective Date.--This section and the amendments made by this
section shall take effect on the date the final regulations required
under section 9(a)(2) take effect.
SEC. 4. SETTING ASSESSMENTS AND REPEAL OF SPECIAL RULES RELATING TO
MINIMUM ASSESSMENTS AND FREE DEPOSIT INSURANCE.
(a) Setting Assessments.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraphs (A) and (B) and inserting the
following new subparagraphs:
``(A) In general.--The Board of Directors shall set
assessments for insured depository institutions in such
amounts as the Board of Directors may determine to be
necessary or appropriate, subject to subparagraph (D).
``(B) Factors to be considered.--In setting
assessments under subparagraph (A), the Board of
Directors shall consider the following factors:
``(i) The estimated operating expenses of the
Deposit Insurance Fund.
``(ii) The estimated case resolution expenses
and income of the Deposit Insurance Fund.
``(iii) The projected effects of the payment
of assessments on the capital and earnings of
insured depository institutions.
``(iv) the risk factors and other factors
taken into account pursuant to paragraph (1)
under the risk-based assessment system,
including the requirement under such paragraph
to maintain a risk-based system.
``(v) Any other factors the Board of
Directors may determine to be appropriate.'';
and
(2) by inserting after subparagraph (C) the following new
subparagraph:
``(D) Base rate for assessments.--
``(i) In general.--In setting assessment
rates pursuant to subparagraph (A), the Board
of Directors shall establish a base rate of not
more than 1 basis point (exclusive of any
credit or dividend) for those insured
depository institutions in the lowest-risk
category under the risk-based assessment system
established pursuant to paragraph (1). No
insured depository institution shall be barred
from the lowest-risk category solely because of
size.
``(ii) Suspension.--Clause (i) shall not
apply during any period in which the reserve
ratio of the Deposit Insurance Fund is less
than the amount which is equal to 1.15 percent
of the aggregate estimated insured deposits.''.
(b) Assessment Recordkeeping Period Shortened.--Paragraph (5) of
section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b))
is amended to read as follows:
``(5) Depository institution required to maintain assessment-
related records.--Each insured depository institution shall
maintain all records that the Corporation may require for
verifying the correctness of any assessment on the insured
depository institution under this subsection until the later
of--
``(A) the end of the 3-year period beginning on the
due date of the assessment; or
``(B) in the case of a dispute between the insured
depository institution and the Corporation with respect
to such assessment, the date of a final determination
of any such dispute.''.
(c) Increase in Fees for Late Assessment Payments.--Subsection (h) of
section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828(h)) is
amended to read as follows:
``(h) Penalty for Failure to Timely Pay Assessments.--
``(1) In general.--Any insured depository institution which
fails or refuses to pay any assessment shall be subject to a
penalty in an amount not more than 1 percent of the amount of
the assessment due for each day that such violation continues.
``(2) Exception in case of dispute.--Paragraph (1) shall not
apply if--
``(A) the failure to pay an assessment is due to a
dispute between the insured depository institution and
the Corporation over the amount of such assessment; and
``(B) the insured depository institution deposits
security satisfactory to the Corporation for payment
upon final determination of the issue.
``(3) Authority to modify or remit penalty.--The Corporation,
in the sole discretion of the Corporation, may compromise,
modify or remit any penalty which the Corporation may assess or
has already assessed under paragraph (1) upon a finding that
good cause prevented the timely payment of an assessment.''.
(d) Assessments for Lifeline Accounts.--
(1) In general.--Section 232 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 1834) is amended
by striking subsection (c).
(2) Clarification of rate applicable to deposits attributable
to lifeline accounts.--Section 7(b)(2)(H) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(H)) is amended by
striking ``at a rate determined in accordance with such Act''
and inserting ``at \1/2\ the assessment rate otherwise
applicable for such insured depository institution''.
(3) Regulations.--Section 232(a)(1) of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (12 U.S.C.
1834(a)(1)) is amended by striking ``Board of Governors of the
Federal Reserve System, and the''.
(e) Technical and Conforming Amendments.--
(1) Paragraph (3) of section 7(a) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(a)(3)) is amended by striking the
3d sentence and inserting the following: ``Such reports of
condition shall be the basis for the certified statements to be
filed pursuant to subsection (c).''.
(2) Subparagraphs (B)(ii) and (C) of section 7(b)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) are each
amended by striking ``semiannual'' where such term appears in
each such subparagraph.
(3) Section 7(b)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1817(b)(2)) is amended--
(A) by striking subparagraphs (E), (F), and (G);
(B) in subparagraph (C), by striking ``semiannual'';
and
(C) by redesignating subparagraph (H) (as amended by
subsection (e)(2) of this section) as subparagraph (E).
(4) Section 7(b) of the Federal Deposit Insurance Act (12
U.S.C. 1817(b)) is amended by striking paragraph (4) and
redesignating paragraphs (5) (as amended by subsection (b) of
this section), (6), and (7) as paragraphs (4), (5), and (6)
respectively.
(5) Section 7(c) of the Federal Deposit Insurance Act (12
U.S.C. 1817(c)) is amended--
(A) in paragraph (1)(A), by striking ``semiannual'';
(B) in paragraph (2)(A), by striking ``semiannual'';
and
(C) in paragraph (3), by striking ``semiannual
period'' and inserting ``initial assessment period''.
(6) Section 8(p) of the Federal Deposit Insurance Act (12
U.S.C. 1818(p)) is amended by striking ``semiannual''.
(7) Section 8(q) of the Federal Deposit Insurance Act (12
U.S.C. 1818(q)) is amended by striking ``semiannual period''
and inserting ``assessment period''.
(8) Section 13(c)(4)(G)(ii)(II) of the Federal Deposit
Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)(II)) is amended by
striking ``semiannual period'' and inserting ``assessment
period''.
(9) Section 232(a) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 1834(a)) is
amended--
(A) in the matter preceding subparagraph (A) of
paragraph (2), by striking ``the Board and'';
(B) in subparagraph (J) of paragraph (2), by striking
``the Board'' and inserting ``the Corporation'';
(C) by striking subparagraph (A) of paragraph (3) and
inserting the following new subparagraph:
``(A) Corporation.--The term `Corporation' means the
Federal Deposit Insurance Corporation.''; and
(D) in subparagraph (C) of paragraph (3), by striking
``Board'' and inserting ``Corporation''.
(f) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(5) take effect.
SEC. 5. REPLACEMENT OF FIXED DESIGNATED RESERVE RATIO WITH RESERVE
RANGE.
(a) In General.--Section 7(b)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(3)) is amended to read as follows:
``(3) Designated reserve ratio.--
``(A) Establishment.--
``(i) In general.--The Board of Directors
shall designate, by regulation after notice and
opportunity for comment, the reserve ratio
applicable with respect to the Deposit
Insurance Fund.
``(ii) Not less than annual
redetermination.--A determination under clause
(i) shall be made by the Board of Directors at
least before the beginning of each calendar
year, for such calendar year, and at such other
times as the Board of Directors may determine
to be appropriate.
``(B) Range.--The reserve ratio designated by the
Board of Directors for any year--
``(i) may not exceed 1.4 percent of estimated
insured deposits; and
``(ii) may not be less than 1.15 percent of
estimated insured deposits.
``(C) Factors.--In designating a reserve ratio for
any year, the Board of Directors shall--
``(i) take into account the risk of losses to
the Deposit Insurance Fund in such year and
future years, including historic experience and
potential and estimated losses from insured
depository institutions;
``(ii) take into account economic conditions
generally affecting insured depository
institutions so as to allow the designated
reserve ratio to increase during more favorable
economic conditions and to decrease during less
favorable economic conditions, notwithstanding
the increased risks of loss that may exist
during such less favorable conditions, as
determined to be appropriate by the Board of
Directors;
``(iii) seek to prevent sharp swings in the
assessment rates for insured depository
institutions; and
``(iv) take into account such other factors
as the Board of Directors may determine to be
appropriate, consistent with the requirements
of this subparagraph.
``(D) Publication of proposed change in ratio.--In
soliciting comment on any proposed change in the
designated reserve ratio in accordance with
subparagraph (A), the Board of Directors shall include
in the published proposal a thorough analysis of the
data and projections on which the proposal is based.''.
(b) Technical and Conforming Amendment.--Section 3(y) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(y)) is amended--
(1) by striking ``(y) The term'' and inserting ``(y)
Definitions Relating to Deposit Insurance Fund.--
``(1) Deposit insurance fund.--The term''; and
(2) by inserting after paragraph (1) (as so designated by
paragraph (1) of this subsection) the following new paragraph:
``(2) Designated reserve ratio.--The term `designated reserve
ratio' means the reserve ratio designated by the Board of
Directors in accordance with section 7(b)(3).''.
(c) Effective Date.--This section and the amendments made by this
section shall take effect on the date that the final regulations
required under section 9(a)(1) take effect.
SEC. 6. REQUIREMENTS APPLICABLE TO THE RISK-BASED ASSESSMENT SYSTEM.
Section 7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(1)) is amended by adding at the end the following new
subparagraphs:
``(E) Information concerning risk of loss and
economic conditions.--
``(i) Sources of information.--For purposes
of determining risk of losses at insured
depository institutions and economic conditions
generally affecting depository institutions,
the Corporation shall collect information, as
appropriate, from all sources the Board of
Directors considers appropriate, such as
reports of condition, inspection reports, and
other information from all Federal banking
agencies, any information available from State
bank supervisors, State insurance and
securities regulators, the Securities and
Exchange Commission (including information
described in section 35), the Secretary of the
Treasury, the Commodity Futures Trading
Commission, the Farm Credit Administration, the
Federal Trade Commission, any Federal reserve
bank or Federal home loan bank, and other
regulators of financial institutions, and any
information available from credit rating
entities, and other private economic or
business analysts.
``(ii) Consultation with federal banking
agencies.--
``(I) In general.--Except as provided
in subclause (II), in assessing the
risk of loss to the Deposit Insurance
Fund with respect to any insured
depository institution, the Corporation
shall consult with the appropriate
Federal banking agency of such
institution.
``(II) Treatment on aggregate
basis.--In the case of insured
depository institutions that are well
capitalized (as defined in section 38)
and, in the most recent examination,
were found to be well managed, the
consultation under subclause (I)
concerning the assessment of the risk
of loss posed by such institutions may
be made on an aggregate basis.
``(iii) Rule of construction.--No provision
of this paragraph shall be construed as
providing any new authority for the Corporation
to require submission of information by insured
depository institutions to the Corporation.
``(F) Modifications to the risk-based assessment
system allowed only after notice and comment.--In
revising or modifying the risk-based assessment system
at any time after the date of the enactment of the
Federal Deposit Insurance Reform Act of 2003, the Board
of Directors may implement such revisions or
modification in final form only after notice and
opportunity for comment.''.
SEC. 7. REFUNDS, DIVIDENDS, AND CREDITS FROM DEPOSIT INSURANCE FUND.
(a) In General.--Subsection (e) of section 7 of the Federal Deposit
Insurance Act (12 U.S.C. 1817(e)) is amended to read as follows:
``(e) Refunds, Dividends, and Credits.--
``(1) Refunds of overpayments.--In the case of any payment of
an assessment by an insured depository institution in excess of
the amount due to the Corporation, the Corporation may--
``(A) refund the amount of the excess payment to the
insured depository institution; or
``(B) credit such excess amount toward the payment of
subsequent assessments until such credit is exhausted.
``(2) Dividends from excess amounts in deposit insurance
fund.--
``(A) Reserve ratio in excess of 1.4 percent of
estimated insured deposits.--Whenever the reserve ratio
of the Deposit Insurance Fund exceeds 1.4 percent of
estimated insured deposits, the Corporation shall
declare the amount in the Fund in excess of the amount
required to maintain the reserve ratio at 1.4 percent
of estimated insured deposits, as dividends to be paid
to insured depository institutions.
``(B) Reserve ratio equal to or in excess of 1.35
percent of estimated insured deposits and not more than
1.4 percent.--Whenever the reserve ratio of the Deposit
Insurance Fund equals or exceeds 1.35 percent of
estimated insured deposits and is not more than 1.4
percent of such deposits, the Corporation shall declare
the amount in the Fund that is equal to 50 percent of
the amount in excess of the amount required to maintain
the reserve ratio at 1.35 percent of the estimated
insured deposits as dividends to be paid to insured
depository institutions.
``(C) Basis for distribution of dividends.--
``(i) In general.--Solely for the purposes of
dividend distribution under this paragraph and
credit distribution under paragraph (3)(B), the
Corporation shall determine each insured
depository institution's relative contribution
to the Deposit Insurance Fund (or any
predecessor deposit insurance fund) for
calculating such institution's share of any
dividend or credit declared under this
paragraph or paragraph (3)(B), taking into
account the factors described in clause (ii).
``(ii) Factors for distribution.--In
implementing this paragraph and paragraph
(3)(B) in accordance with regulations, the
Corporation shall take into account the
following factors:
``(I) The ratio of the assessment
base of an insured depository
institution (including any predecessor)
on December 31, 1996, to the assessment
base of all eligible insured depository
institutions on that date.
``(II) The total amount of
assessments paid on or after January 1,
1997, by an insured depository
institution (including any predecessor)
to the Deposit Insurance Fund (and any
predecessor deposit insurance fund).
``(III) That portion of assessments
paid by an insured depository
institution (including any predecessor)
that reflects higher levels of risk
assumed by such institution.
``(IV) Such other factors as the
Corporation may determine to be
appropriate.
``(D) Notice and opportunity for comment.--The
Corporation shall prescribe by regulation, after notice
and opportunity for comment, the method for the
calculation, declaration, and payment of dividends
under this paragraph.
``(3) Credit pool.--
``(A) One-time credit based on total assessment base
at year-end 1996.--
``(i) In general.--Before the end of the 270-
day period beginning on the date of the
enactment of the Federal Deposit Insurance
Reform Act of 2003, the Board of Directors
shall, by regulation, provide for a credit to
each eligible insured depository institution,
based on the assessment base of the institution
(including any predecessor institution) on
December 31, 1996, as compared to the combined
aggregate assessment base of all eligible
insured depository institutions, taking into
account such factors as the Board of Directors
may determine to be appropriate.
``(ii) Credit limit.--The aggregate amount of
credits available under clause (i) to all
eligible insured depository institutions shall
equal the amount that the Corporation could
collect if the Corporation imposed an
assessment of 12 basis points on the combined
assessment base of the Bank Insurance Fund and
the Savings Association Insurance Fund as of
December 31, 2001.
``(iii) Eligible insured depository
institution defined.--For purposes of this
paragraph, the term `eligible insured
depository institution' means any insured
depository institution that--
``(I) was in existence on December
31, 1996, and paid a deposit insurance
assessment prior to that date; or
``(II) is a successor to any insured
depository institution described in
subclause (II).
``(iv) Application of credits.--
``(I) In general.--The amount of a
credit to any eligible insured
depository institution under this
paragraph shall be applied by the
Corporation, subject to subsection
(b)(3)(e), to the assessments imposed
on such institution under subsection
(b) that become due for assessment
periods beginning after the effective
date of regulations prescribed under
clause (i).
``(II) Regulations.--The regulations
prescribed under clause (i) shall
establish the qualifications and
procedures governing the application of
assessment credits pursuant to
subclause (I).
``(v) Limitation on amount of credit for
certain depository institutions.--In the case
of an insured depository institution that
exhibits financial, operational, or compliance
weaknesses ranging from moderately severe to
unsatisfactory, or is not adequately
capitalized (as defined in section 38) at the
beginning of an assessment period, the amount
of any credit allowed under this paragraph
against the assessment on that depository
institution for such period may not exceed the
amount calculated by applying to that
depository institution the average assessment
rate on all insured depository institutions for
such assessment period.
``(vi) Predecessor defined.--For purposes of
this paragraph, the term `predecessor', when
used with respect to any insured depository
institution, includes any other insured
depository institution acquired by or merged
with such insured depository institution.
``(B) On-going credit pool.--
``(i) In general.--In addition to the credit
provided pursuant to subparagraph (A) and
subject to the limitation contained in clause
(v) of such subparagraph, the Corporation
shall, by regulation, establish an on-going
system of credits to be applied against future
assessments under subsection (b)(1) on the same
basis as the dividends provided under paragraph
(2)(C).
``(ii) Limitation on credits under certain
circumstances.--No credits may be awarded by
the Corporation under this subparagraph during
any period in which--
``(I) the reserve ratio of the
Deposit Insurance Fund is less than the
designated reserve ratio of such Fund;
or
``(II) the reserve ratio of the Fund
is less than 1.25 percent of the amount
of estimated insured deposits.
``(iii) Criteria for determination.--In
determining the amounts of any assessment
credits under this subparagraph, the Board of
Directors shall take into account the factors
for designating the reserve ratio under
subsection (b)(3) and the factors for setting
assessments under subsection (b)(2)(B).
``(4) Administrative review.--
``(A) In general.--The regulations prescribed under
paragraph (2)(D) and subparagraphs (A) and (B) of
paragraph (3) shall include provisions allowing an
insured depository institution a reasonable opportunity
to challenge administratively the amount of the credit
or dividend determined under paragraph (2) or (3) for
such institution.
``(B) Administrative review.--Any review under
subparagraph (A) of any determination of the
Corporation under paragraph (2) or (3) shall be final
and not subject to judicial review.''.
(b) Definition of Reserve Ratio.--Section 3(y) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(y)) (as amended by section 5(b) of this
Act) is amended by adding at the end the following new paragraph:
``(3) Reserve ratio.--The term `reserve ratio', when used
with regard to the Deposit Insurance Fund other than in
connection with a reference to the designated reserve ratio,
means the ratio of the net worth of the Deposit Insurance Fund
to the value of the aggregate estimated insured deposits.''.
SEC. 8. DEPOSIT INSURANCE FUND RESTORATION PLANS.
Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(3)) (as amended by section 5(a) of this Act) is amended by
adding at the end the following new subparagraph:
``(E) DIF restoration plans.--
``(i) In general.--Whenever--
``(I) the Corporation projects that
the reserve ratio of the Deposit
Insurance Fund will, within 6 months of
such determination, fall below the
minimum amount specified in
subparagraph (B)(ii) for the designated
reserve ratio; or
``(II) the reserve ratio of the
Deposit Insurance Fund actually falls
below the minimum amount specified in
subparagraph (B)(ii) for the designated
reserve ratio without any determination
under subclause (I) having been made,
the Corporation shall establish and implement a
Deposit Insurance Fund restoration plan within
90 days that meets the requirements of clause
(ii) and such other conditions as the
Corporation determines to be appropriate.
``(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
10-year period beginning upon the
implementation of the plan.
``(iii) Restriction on assessment credits.--
As part of any restoration plan under this
subparagraph, the Corporation may elect to
restrict the application of assessment credits
provided under subsection (e)(3) for any period
that the plan is in effect.
``(iv) Limitation on restriction.--
Notwithstanding clause (iii), while any
restoration plan under this subparagraph is in
effect, the Corporation shall apply credits
provided to an insured depository institution
under subsection (e)(3) against any assessment
imposed on the institution for any assessment
period in an amount equal to the lesser of--
``(I) the amount of the assessment;
or
``(II) the amount equal to 3 basis
points of the institution's assessment
base.
``(v) Transparency.--Not more than 30 days
after the Corporation establishes and
implements a restoration plan under clause (i),
the Corporation 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.''.
SEC. 9. REGULATIONS REQUIRED.
(a) In General.--Not later than 270 days after the date of the
enactment of this Act, the Board of Directors of the Federal Deposit
Insurance Corporation shall prescribe final regulations, after notice
and opportunity for comment--
(1) designating the reserve ratio for the Deposit Insurance
Fund in accordance with section 7(b)(3) of the Federal Deposit
Insurance Act (as amended by section 5 of this Act);
(2) implementing increases in deposit insurance coverage in
accordance with the amendments made by section 3 of this Act;
(3) implementing the dividend requirement under section
7(e)(2) of the Federal Deposit Insurance Act (as amended by
section 7 of this Act).
(4) implementing the 1-time assessment credit to certain
insured depository institutions in accordance with section
7(e)(3) of the Federal Deposit Insurance Act, as amended by
section 7 of this Act, including the qualifications and
procedures under which the Corporation would apply assessment
credits; and
(5) providing for assessments under section 7(b) of the
Federal Deposit Insurance Act, as amended by this Act.
(b) Rule of Construction.--No provision of this Act or any amendment
made by this Act shall be construed as affecting the authority of the
Corporation to set or collect deposit insurance assessments before the
effective date of the final regulations prescribed under subsection
(a).
SEC. 10. STUDIES OF FDIC STRUCTURE AND EXPENSES AND CERTAIN ACTIVITIES
AND FURTHER POSSIBLE CHANGES TO DEPOSIT INSURANCE
SYSTEM.
(a) Study by Comptroller General.--
(1) Study required.--The Comptroller General shall conduct a
study of the following issues:
(A) The efficiency and effectiveness of the
administration of the prompt corrective action program
under section 38 of the Federal Deposit Insurance Act
by the Federal banking agencies (as defined in section
3 of such Act), including the degree of effectiveness
of such agencies in identifying troubled depository
institutions and taking effective action with respect
to such institutions, and the degree of accuracy of the
risk assessments made by the Corporation.
(B) The appropriateness of the organizational
structure of the Federal Deposit Insurance Corporation
for the mission of the Corporation taking into
account--
(i) the current size and complexity of the
business of insured depository institutions (as
such term is defined in section 3 of the
Federal Deposit Insurance Act);
(ii) the extent to which the organizational
structure contributes to or reduces operational
inefficiencies that increase operational costs;
and
(iii) the effectiveness of internal controls.
(2) Report to the congress.--The Comptroller General shall
submit a report to the Congress before the end of the 1-year
period beginning on the date of the enactment of this Act
containing the findings and conclusions of the Comptroller
General with respect to the study required under paragraph (1)
together with such recommendations for legislative or
administrative action as the Comptroller General may determine
to be appropriate.
(b) Internal Study by the FDIC.--
(1) Study required.--Concurrently with the study required to
be conducted by the Comptroller General under subsection (a),
the Federal Deposit Insurance Corporation shall conduct an
internal study of the same conditions and factors included in
the study under subsection (a).
(2) Report to the congress.--The Federal Deposit Insurance
Corporation shall submit a report to the Congress before the
end of the 1-year period beginning on the date of the enactment
of this Act containing the findings and conclusions of the
Corporation with respect to the study required under paragraph
(1) together with such recommendations for legislative or
administrative action as the Board of Directors of the
Corporation may determine to be appropriate.
(c) Study of Further Possible Changes to Deposit Insurance System.--
(1) Study required.--The Board of Directors of the Federal
Deposit Insurance Corporation and the National Credit Union
Administration Board shall each conduct a study of the
following:
(A) The feasibility of establishing a voluntary
deposit insurance system for deposits in excess of the
maximum amount of deposit insurance for any depositor
and the potential benefits and the potential adverse
consequences that may result from the establishment of
any such system.
(B) The feasibility of privatizing all deposit
insurance at insured depository institutions and
insured credit unions.
(2) Report.--Before the end of the 1-year period beginning on
the date of the enactment of this Act, the Board of Directors
of the Federal Deposit Insurance Corporation and the National
Credit Union Administration Board shall each submit a report to
the Congress on the study required under paragraph (1)
containing the findings and conclusions of the reporting agency
together with such recommendations for legislative or
administrative changes as the agency may determine to be
appropriate.
(d) Study Regarding Appropriate Deposit Base in Designating Reserve
Ratio.--
(1) Study required.--The Federal Deposit Insurance
Corporation shall conduct a study of the feasibility of using
actual domestic deposits rather than estimated insured deposits
in calculating the reserve ratio of the Deposit Insurance Fund
and designating a reserve ratio for such Fund.
(2) Report.--The Federal Deposit Insurance Corporation shall
submit a report to the Congress before the end of the 1-year
period beginning on the date of the enactment of this Act
containing the findings and conclusions of the Corporation with
respect to the study required under paragraph (1) together with
such recommendations for legislative or administrative action
as the Board of Directors of the Corporation may determine to
be appropriate.
(e) Study of Reserve Methodology and Accounting for Loss.--
(1) Study required.--The Federal Deposit Insurance
Corporation, in consultation with the Comptroller General,
shall conduct a study of the reserve methodology and loss
accounting used by the Corporation during the period beginning
on January 1, 1992, and ending December 31, 2002, with respect
to insured depository institutions in a troubled condition (as
defined in the regulations prescribed pursuant to section 32(f)
of the Federal Deposit Insurance Act).
(2) Factors to be included.--In conducting the study pursuant
to paragraph (1), the Federal Deposit Insurance Corporation
shall--
(A) consider the overall effectiveness and accuracy
of the methodology used by the Corporation for
establishing and maintaining reserves and estimating
and accounting for losses at insured depository
institutions, during the period described in such
paragraph;
(B) consider the appropriateness and reliability of
information and criteria used by the Corporation in
determining--
(i) whether an insured depository institution
was in a troubled condition; and
(ii) the amount of any loss anticipated at
such institution;
(C) analyze the actual historical loss experience
over the period described in paragraph (1) and the
causes of the exceptionally high rate of losses
experienced by the Corporation in the final 3 years of
that period; and
(D) rate the efforts of the Corporation to reduce
losses in such 3-year period to minimally acceptable
levels and to historical levels.
(3) Report required.--The Board of Directors of the Federal
Deposit Insurance Corporation shall submit a report to the
Congress before the end of the 6-month period beginning on the
date of the enactment of this Act, containing the findings and
conclusions of the Corporation, in consultation with the
Comptroller General, with respect to the study required under
paragraph (1), together with such recommendations for
legislative or administrative action as the Board of Directors
may determine to be appropriate.
SEC. 11. BI-ANNUAL FDIC SURVEY AND REPORT ON INCREASING THE DEPOSIT
BASE BY ENCOURAGING USE OF DEPOSITORY INSTITUTIONS
BY THE UNBANKED.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended
by adding at the end the following new section:
``SEC. 49. BI-ANNUAL FDIC SURVEY AND REPORT ON ENCOURAGING USE OF
DEPOSITORY INSTITUTIONS BY THE UNBANKED.
``(a) Survey Required.--
``(1) In general.--The Corporation shall conduct a bi-annual
survey on efforts by insured depository institutions to bring
those individuals and families who have rarely, if ever, held a
checking account, a savings account or other type of
transaction or check cashing account at an insured depository
institution (hereafter in this section referred to as the
`unbanked') into the conventional finance system.
``(2) Factors and questions to consider.--In conducting the
survey, the Corporation shall take the following factors and
questions into account:
``(A) To what extent do insured depository
institutions promote financial education and financial
literacy outreach?
``(B) Which financial education efforts appear to be
the most effective in bringing `unbanked' individuals
and families into the conventional finance system?
``(C) What efforts are insured institutions making at
converting `unbanked' money order, wire transfer, and
international remittance customers into conventional
account holders?
``(D) What cultural, language and identification
issues as well as transaction costs appear to most
prevent `unbanked' individuals from establishing
conventional accounts?
``(E) What is a fair estimate of the size and worth
of the `unbanked' market in the United States?
``(b) Reports.--The Chairperson of the Board of Directors shall
submit a bi-annual report to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing the Corporation's findings and
conclusions with respect to the survey conducted pursuant to subsection
(a), together with such recommendations for legislative or
administrative action as the Chairperson may determine to be
appropriate.''.
SEC. 12. TECHNICAL AND CONFORMING AMENDMENTS TO THE FEDERAL DEPOSIT
INSURANCE ACT RELATING TO THE MERGER OF THE BIF AND
SAIF.
(a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.) is amended--
(1) in section 3 (12 U.S.C. 1813)--
(A) by striking subparagraph (B) of subsection (a)(1)
and inserting the following new subparagraph:
``(B) includes any former savings association.''; and
(B) by striking paragraph (1) of subsection (y) (as
so designated by section 5(b) of this Act) and
inserting the following new paragraph:
``(1) Deposit insurance fund.--The term `Deposit Insurance
Fund' means the Deposit Insurance Fund established under
section 11(a)(4).'';
(2) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking
``the Bank Insurance Fund or the Savings Association Insurance
Fund,'' and inserting ``the Deposit Insurance Fund,'';
(3) in section 5(c)(4), by striking ``deposit insurance
fund'' and inserting ``Deposit Insurance Fund'';
(4) in section 5(d) (12 U.S.C. 1815(d)), by striking
paragraphs (2) and (3) (and any funds resulting from the
application of such paragraph (2) prior to its repeal shall be
deposited into the general fund of the Deposit Insurance Fund);
(5) in section 5(d)(1) (12 U.S.C. 1815(d)(1))--
(A) in subparagraph (A), by striking ``reserve ratios
in the Bank Insurance Fund and the Savings Association
Insurance Fund as required by section 7'' and inserting
``the reserve ratio of the Deposit Insurance Fund'';
(B) by striking subparagraph (B) and inserting the
following:
``(2) Fee credited to the deposit insurance fund.--The fee
paid by the depository institution under paragraph (1) shall be
credited to the Deposit Insurance Fund.'';
(C) by striking ``(1) Uninsured institutions.--'';
and
(D) by redesignating subparagraphs (A) and (C) as
paragraphs (1) and (3), respectively, and moving the
left margins 2 ems to the left;
(6) in section 5(e) (12 U.S.C. 1815(e))--
(A) in paragraph (5)(A), by striking ``Bank Insurance
Fund or the Savings Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(B) by striking paragraph (6); and
(C) by redesignating paragraphs (7), (8), and (9) as
paragraphs (6), (7), and (8), respectively;
(7) in section 6(5) (12 U.S.C. 1816(5)), by striking ``Bank
Insurance Fund or the Savings Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(8) in section 7(b) (12 U.S.C. 1817(b))--
(A) in paragraph (1)(C), by striking ``deposit
insurance fund'' each place that term appears and
inserting ``Deposit Insurance Fund'';
(B) in paragraph (1)(D), by striking ``each deposit
insurance fund'' and inserting ``the Deposit Insurance
Fund''; and
(C) in paragraph (5) (as so redesignated by section
4(e)(4) of this Act)--
(i) by striking ``any such assessment'' and
inserting ``any such assessment is necessary'';
(ii) by striking subparagraph (B);
(iii) in subparagraph (A)--
(I) by striking ``(A) is necessary--
'';
(II) by striking ``Bank Insurance
Fund members'' and inserting ``insured
depository institutions''; and
(III) by redesignating clauses (i),
(ii), and (iii) as subparagraphs (A),
(B), and (C), respectively, and moving
the margins 2 ems to the left; and
(iv) in subparagraph (C) (as so
redesignated)--
(I) by inserting ``that'' before
``the Corporation''; and
(II) by striking ``; and'' and
inserting a period;
(9) in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by
striking ``Bank Insurance Fund or the Savings Association
Insurance Fund'' and inserting ``Deposit Insurance Fund'';
(10) in section 8(t)(2)(C) (12 U.S.C. 1818(t)(2)(C)), by
striking ``deposit insurance fund'' and inserting ``Deposit
Insurance Fund'';
(11) in section 11 (12 U.S.C. 1821)--
(A) by striking ``deposit insurance fund'' each place
that term appears and inserting ``Deposit Insurance
Fund'';
(B) by striking paragraph (4) of subsection (a) and
inserting the following new paragraph:
``(4) Deposit insurance fund.--
``(A) Establishment.--There is established the
Deposit Insurance Fund, which the Corporation shall--
``(i) maintain and administer;
``(ii) use to carry out its insurance
purposes, in the manner provided by this
subsection; and
``(iii) invest in accordance with section
13(a).
``(B) Uses.--The Deposit Insurance Fund shall be
available to the Corporation for use with respect to
insured depository institutions the deposits of which
are insured by the Deposit Insurance Fund.
``(C) Limitation on use.--Notwithstanding any
provision of law other than section 13(c)(4)(G), the
Deposit Insurance Fund shall not be used in any manner
to benefit any shareholder or affiliate (other than an
insured depository institution that receives assistance
in accordance with the provisions of this Act) of--
``(i) any insured depository institution for
which the Corporation has been appointed
conservator or receiver, in connection with any
type of resolution by the Corporation;
``(ii) any other insured depository
institution in default or in danger of default,
in connection with any type of resolution by
the Corporation; or
``(iii) any insured depository institution,
in connection with the provision of assistance
under this section or section 13 with respect
to such institution, except that this clause
shall not prohibit any assistance to any
insured depository institution that is not in
default, or that is not in danger of default,
that is acquiring (as defined in section
13(f)(8)(B)) another insured depository
institution.
``(D) Deposits.--All amounts assessed against insured
depository institutions by the Corporation shall be
deposited into the Deposit Insurance Fund.'';
(C) by striking paragraphs (5), (6), and (7) of
subsection (a); and
(D) by redesignating paragraph (8) of subsection (a)
as paragraph (5);
(12) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by striking
``, except that--'' and all that follows through the end of the
paragraph and inserting a period;
(13) in section 11(i)(3) (12 U.S.C. 1821(i)(3))--
(A) by striking subparagraph (B);
(B) by redesignating subparagraph (C) as subparagraph
(B); and
(C) in subparagraph (B) (as so redesignated), by
striking ``subparagraphs (A) and (B)'' and inserting
``subparagraph (A)'';
(14) in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by
striking ``institution, any'' and inserting ``institution,
the'';
(15) in section 11A(a) (12 U.S.C. 1821a(a))--
(A) in paragraph (2), by striking ``liabilities.--''
and all that follows through ``Except'' and inserting
``liabilities.--Except'';
(B) by striking paragraph (2)(B); and
(C) in paragraph (3), by striking ``the Bank
Insurance Fund, the Savings Association Insurance
Fund,'' and inserting ``the Deposit Insurance Fund'';
(16) in section 11A(b) (12 U.S.C. 1821a(b)), by striking
paragraph (4);
(17) in section 11A(f) (12 U.S.C. 1821a(f)), by striking
``Savings Association Insurance Fund'' and inserting ``Deposit
Insurance Fund'';
(18) in section 12(f)(4)(E)(iv) (12 U.S.C.
1822(f)(4)(E)(iv)), by striking ``Federal deposit insurance
funds'' and inserting ``the Deposit Insurance Fund (or any
predecessor deposit insurance fund)'';
(19) in section 13 (12 U.S.C. 1823)--
(A) by striking ``deposit insurance fund'' each place
that term appears and inserting ``Deposit Insurance
Fund'';
(B) in subsection (a)(1), by striking ``Bank
Insurance Fund, the Savings Association Insurance
Fund,'' and inserting ``Deposit Insurance Fund'';
(C) in subsection (c)(4)(E)--
(i) in the subparagraph heading, by striking
``funds'' and inserting ``fund''; and
(ii) in clause (i), by striking ``any
insurance fund'' and inserting ``the Deposit
Insurance Fund'';
(D) in subsection (c)(4)(G)(ii)--
(i) by striking ``appropriate insurance
fund'' and inserting ``Deposit Insurance
Fund'';
(ii) by striking ``the members of the
insurance fund (of which such institution is a
member)'' and inserting ``insured depository
institutions'';
(iii) by striking ``each member's'' and
inserting ``each insured depository
institution's''; and
(iv) by striking ``the member's'' each place
that term appears and inserting ``the
institution's'';
(E) in subsection (c), by striking paragraph (11);
(F) in subsection (h), by striking ``Bank Insurance
Fund'' and inserting ``Deposit Insurance Fund'';
(G) in subsection (k)(4)(B)(i), by striking ``Savings
Association Insurance Fund member'' and inserting
``savings association''; and
(H) in subsection (k)(5)(A), by striking ``Savings
Association Insurance Fund members'' and inserting
``savings associations'';
(20) in section 14(a) (12 U.S.C. 1824(a)), in the 5th
sentence--
(A) by striking ``Bank Insurance Fund or the Savings
Association Insurance Fund'' and inserting ``Deposit
Insurance Fund''; and
(B) by striking ``each such fund'' and inserting
``the Deposit Insurance Fund'';
(21) in section 14(b) (12 U.S.C. 1824(b)), by striking ``Bank
Insurance Fund or Savings Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(22) in section 14(c) (12 U.S.C. 1824(c)), by striking
paragraph (3);
(23) in section 14(d) (12 U.S.C. 1824(d))--
(A) by striking ``Bank Insurance Fund member'' each
place that term appears and inserting ``insured
depository institution'';
(B) by striking ``Bank Insurance Fund members'' each
place that term appears and inserting ``insured
depository institutions'';
(C) by striking ``Bank Insurance Fund'' each place
that term appears (other than in connection with a
reference to a term amended by subparagraph (A) or (B)
of this paragraph) and inserting ``Deposit Insurance
Fund'';
(D) by striking the subsection heading and inserting
the following:
``(d) Borrowing for the Deposit Insurance Fund From Insured
Depository Institutions.--'';
(E) in paragraph (3), in the paragraph heading, by
striking ``bif'' and inserting ``the deposit insurance
fund''; and
(F) in paragraph (5), in the paragraph heading, by
striking ``bif members'' and inserting ``insured
depository institutions'';
(24) in section 14 (12 U.S.C. 1824), by adding at the end the
following new subsection:
``(e) Borrowing for the Deposit Insurance Fund From Federal Home Loan
Banks.--
``(1) In general.--The Corporation may borrow from the
Federal home loan banks, with the concurrence of the Federal
Housing Finance Board, such funds as the Corporation considers
necessary for the use of the Deposit Insurance Fund.
``(2) Terms and conditions.--Any loan from any Federal home
loan bank under paragraph (1) to the Deposit Insurance Fund
shall--
``(A) bear a rate of interest of not less than the
current marginal cost of funds to that bank, taking
into account the maturities involved;
``(B) be adequately secured, as determined by the
Federal Housing Finance Board;
``(C) be a direct liability of the Deposit Insurance
Fund; and
``(D) be subject to the limitations of section
15(c).'';
(25) in section 15(c)(5) (12 U.S.C. 1825(c)(5))--
(A) by striking ``the Bank Insurance Fund or Savings
Association Insurance Fund, respectively'' each place
that term appears and inserting ``the Deposit Insurance
Fund''; and
(B) in subparagraph (B), by striking ``the Bank
Insurance Fund or the Savings Association Insurance
Fund, respectively'' and inserting ``the Deposit
Insurance Fund'';
(26) in section 17(a) (12 U.S.C. 1827(a))--
(A) in the subsection heading, by striking ``BIF,
SAIF,'' and inserting ``the Deposit Insurance Fund'';
and
(B) in paragraph (1)--
(i) by striking ``the Bank Insurance Fund,
the Savings Association Insurance Fund,'' each
place that term appears and inserting ``the
Deposit Insurance Fund''; and
(ii) in subparagraph (D), by striking ``each
insurance fund'' and inserting ``the Deposit
Insurance Fund'';
(27) in section 17(d) (12 U.S.C. 1827(d)), by striking ``,
the Bank Insurance Fund, the Savings Association Insurance
Fund,'' each place that term appears and inserting ``the
Deposit Insurance Fund'';
(28) in section 18(m)(3) (12 U.S.C. 1828(m)(3))--
(A) by striking ``Savings Association Insurance
Fund'' in the 1st sentence of subparagraph (A) and
inserting ``Deposit Insurance Fund'';
(B) by striking ``Savings Association Insurance Fund
member'' in the last sentence of subparagraph (A) and
inserting ``savings association''; and
(C) by striking ``Savings Association Insurance Fund
or the Bank Insurance Fund'' in subparagraph (C) and
inserting ``Deposit Insurance Fund'';
(29) in section 18(o) (12 U.S.C. 1828(o)), by striking
``deposit insurance funds'' and ``deposit insurance fund'' each
place those terms appear and inserting ``Deposit Insurance
Fund'';
(30) in section 18(p) (12 U.S.C. 1828(p)), by striking
``deposit insurance funds'' and inserting ``Deposit Insurance
Fund'';
(31) in section 24 (12 U.S.C. 1831a)--
(A) in subsections (a)(1) and (d)(1)(A), by striking
``appropriate deposit insurance fund'' each place that
term appears and inserting ``Deposit Insurance Fund'';
(B) in subsection (e)(2)(A), by striking ``risk to''
and all that follows through the period and inserting
``risk to the Deposit Insurance Fund.''; and
(C) in subsections (e)(2)(B)(ii) and (f)(6)(B), by
striking ``the insurance fund of which such bank is a
member'' each place that term appears and inserting
``the Deposit Insurance Fund'';
(32) in section 28 (12 U.S.C. 1831e), by striking ``affected
deposit insurance fund'' each place that term appears and
inserting ``Deposit Insurance Fund'';
(33) by striking section 31 (12 U.S.C. 1831h);
(34) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by striking
``affected deposit insurance fund'' and inserting ``Deposit
Insurance Fund'';
(35) in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by
striking ``insurance funds'' and inserting ``Deposit Insurance
Fund'';
(36) in section 38 (12 U.S.C. 1831o), by striking ``the
deposit insurance fund'' each place that term appears and
inserting ``the Deposit Insurance Fund'';
(37) in section 38(a) (12 U.S.C. 1831o(a)), in the subsection
heading, by striking ``Funds'' and inserting ``Fund'';
(38) in section 38(k) (12 U.S.C. 1831o(k))--
(A) in paragraph (1), by striking ``a deposit
insurance fund'' and inserting ``the Deposit Insurance
Fund'';
(B) in paragraph (2), by striking ``A deposit
insurance fund'' and inserting ``The Deposit Insurance
Fund''; and
(C) in paragraphs (2)(A) and (3)(B), by striking
``the deposit insurance fund's outlays'' each place
that term appears and inserting ``the outlays of the
Deposit Insurance Fund''; and
(39) in section 38(o) (12 U.S.C. 1831o(o))--
(A) by striking ``Associations.--'' and all that
follows through ``Subsections (e)(2)'' and inserting
``Associations.--Subsections (e)(2)'';
(B) by redesignating subparagraphs (A), (B), and (C)
as paragraphs (1), (2), and (3), respectively, and
moving the margins 2 ems to the left; and
(C) in paragraph (1) (as so redesignated), by
redesignating clauses (i) and (ii) as subparagraphs (A)
and (B), respectively, and moving the margins 2 ems to
the left.
(b) Effective Date.--This section and the amendments made by this
section shall take effect on the first day of the first calendar
quarter that begins after the end of the 90-day period beginning on the
date of the enactment of this Act.
SEC. 13. OTHER TECHNICAL AND CONFORMING AMENDMENTS RELATING TO THE
MERGER OF THE BIF AND SAIF.
(a) Section 5136 of the Revised Statutes.--The paragraph designated
the ``Eleventh'' of section 5136 of the Revised Statutes of the United
States (12 U.S.C. 24) is amended in the 5th sentence, by striking
``affected deposit insurance fund'' and inserting ``Deposit Insurance
Fund''.
(b) Investments Promoting Public Welfare; Limitations on Aggregate
Investments.--The 23d undesignated paragraph of section 9 of the
Federal Reserve Act (12 U.S.C. 338a) is amended in the 4th sentence, by
striking ``affected deposit insurance fund'' and inserting ``Deposit
Insurance Fund''.
(c) Advances to Critically Undercapitalized Depository
Institutions.--Section 10B(b)(3)(A)(ii) of the Federal Reserve Act (12
U.S.C. 347b(b)(3)(A)(ii)) is amended by striking ``any deposit
insurance fund in'' and inserting ``the Deposit Insurance Fund of''.
(d) Amendments to the Balanced Budget and Emergency Deficit Control
Act of 1985.--Section 255(g)(1)(A) of the Balanced Budget and Emergency
Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended--
(1) by striking ``Bank Insurance Fund'' and inserting
``Deposit Insurance Fund''; and
(2) by striking ``Federal Deposit Insurance Corporation,
Savings Association Insurance Fund (51-4066-0-3-373);''.
(e) Amendments to the Federal Home Loan Bank Act.--The Federal Home
Loan Bank Act (12 U.S.C. 1421 et seq.) is amended--
(1) in section 11(k) (12 U.S.C. 1431(k))--
(A) in the subsection heading, by striking ``SAIF''
and inserting ``the Deposit Insurance Fund''; and
(B) by striking ``Savings Association Insurance
Fund'' each place such term appears and inserting
``Deposit Insurance Fund'';
(2) in section 21 (12 U.S.C. 1441)--
(A) in subsection (f)(2), by striking ``, except
that'' and all that follows through the end of the
paragraph and inserting a period; and
(B) in subsection (k), by striking paragraph (4);
(3) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by
striking ``affected deposit insurance fund'' and inserting
``Deposit Insurance Fund'';
(4) in section 21A(b)(6)(B) (12 U.S.C. 1441a(b)(6)(B))--
(A) in the subparagraph heading, by striking ``SAIF-
insured banks'' and inserting ``Charter conversions'';
and
(B) by striking ``Savings Association Insurance Fund
member'' and inserting ``savings association'';
(5) in section 21A(b)(10)(A)(iv)(II) (12 U.S.C.
1441a(b)(10)(A)(iv)(II)), by striking ``Savings Association
Insurance Fund'' and inserting ``Deposit Insurance Fund'';
(6) in section 21A(n)(6)(E)(iv) (12 U.S.C.
1441(n)(6)(E)(iv)), by striking ``Federal deposit insurance
funds'' and inserting ``the Deposit Insurance Fund'';
(7) in section 21B(e) (12 U.S.C. 1441b(e))--
(A) in paragraph (5), by inserting ``as of the date
of funding'' after ``Savings Association Insurance Fund
members'' each place that term appears; and
(B) by striking paragraphs (7) and (8); and
(8) in section 21B(k) (12 U.S.C. 1441b(k))--
(A) by inserting before the colon ``, the following
definitions shall apply'';
(B) by striking paragraph (8); and
(C) by redesignating paragraphs (9) and (10) as
paragraphs (8) and (9), respectively.
(f) Amendments to the Home Owners' Loan Act.--The Home Owners' Loan
Act (12 U.S.C. 1461 et seq.) is amended--
(1) in section 5 (12 U.S.C. 1464)--
(A) in subsection (c)(5)(A), by striking ``that is a
member of the Bank Insurance Fund'';
(B) in subsection (c)(6), by striking ``As used in
this subsection--'' and inserting ``For purposes of
this subsection, the following definitions shall
apply:'';
(C) in subsection (o)(1), by striking ``that is a
Bank Insurance Fund member'';
(D) in subsection (o)(2)(A), by striking ``a Bank
Insurance Fund member until such time as it changes its
status to a Savings Association Insurance Fund member''
and inserting ``insured by the Deposit Insurance
Fund'';
(E) in subsection (t)(5)(D)(iii)(II), by striking
``affected deposit insurance fund'' and inserting
``Deposit Insurance Fund'';
(F) in subsection (t)(7)(C)(i)(I), by striking
``affected deposit insurance fund'' and inserting
``Deposit Insurance Fund''; and
(G) in subsection (v)(2)(A)(i), by striking ``the
Savings Association Insurance Fund'' and inserting ``or
the Deposit Insurance Fund''; and
(2) in section 10 (12 U.S.C. 1467a)--
(A) in subsection (c)(6)(D), by striking ``this
title'' and inserting ``this Act'';
(B) in subsection (e)(1)(B), by striking ``Savings
Association Insurance Fund or Bank Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
(C) in subsection (e)(2), by striking ``Savings
Association Insurance Fund or the Bank Insurance Fund''
and inserting ``Deposit Insurance Fund'';
(D) in subsection (e)(4)(B), by striking ``subsection
(1)'' and inserting ``subsection (l)'';
(E) in subsection (g)(3)(A), by striking ``(5) of
this section'' and inserting ``(5) of this
subsection'';
(F) in subsection (i), by redesignating paragraph (5)
as paragraph (4);
(G) in subsection (m)(3), by striking subparagraph
(E) and by redesignating subparagraphs (F), (G), and
(H) as subparagraphs (E), (F), and (G), respectively;
(H) in subsection (m)(7)(A), by striking ``during
period'' and inserting ``during the period''; and
(I) in subsection (o)(3)(D), by striking ``sections
5(s) and (t) of this Act'' and inserting ``subsections
(s) and (t) of section 5''.
(g) Amendments to the National Housing Act.--The National Housing Act
(12 U.S.C. 1701 et seq.) is amended--
(1) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by
striking ``Bank Insurance Fund for banks or through the Savings
Association Insurance Fund for savings associations'' and
inserting ``Deposit Insurance Fund''; and
(2) in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f-
14(b)(1)(B)(ii)), by striking ``Bank Insurance Fund for banks
and through the Savings Association Insurance Fund for savings
associations'' and inserting ``Deposit Insurance Fund''.
(h) Amendments to the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.--The Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 1811 note) is amended--
(1) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by
inserting ``and after the merger of such funds, the Deposit
Insurance Fund,'' after ``the Savings Association Insurance
Fund,''; and
(2) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by
striking ``Bank Insurance Fund, the Savings Association
Insurance Fund,'' and inserting ``Deposit Insurance Fund''.
(i) Amendment to the Bank Holding Company Act of 1956.--The Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended--
(1) in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking
``Savings Association Insurance Fund'' and inserting ``Deposit
Insurance Fund''; and
(2) in section 3(d)(1)(D)(iii) (12 U.S.C.
1842(d)(1)(D)(iii)), by striking ``appropriate deposit
insurance fund'' and inserting ``Deposit Insurance Fund''.
(j) Amendments to the Gramm-Leach-Bliley Act.--Section 114 of the
Gramm-Leach-Bliley Act (12 U.S.C. 1828a) is amended by striking ``any
Federal deposit insurance fund'' in subsection (a)(1)(B), paragraphs
(2)(B) and (4)(B) of subsection (b), and subsection (c)(1)(B), each
place that term appears and inserting ``the Deposit Insurance Fund''.
(k) Effective Date.--This section and the amendments made by this
section shall take effect on the first day of the first calendar
quarter that begins after the end of the 90-day period beginning on the
date of the enactment of this Act.
Purpose and Summary
H.R. 522, the Federal Deposit Insurance Reform Act of 2003,
will preserve the value of insured deposits at insured
depository institutions, advance the national priority of
enhancing retirement security for all Americans, and ensure
that the value, benefit and costs of deposit insurance are
allocated equitably and fairly.
The bill merges the Bank Insurance Fund (BIF) and the
Savings Association Insurance Fund (SAIF); increases the
standard maximum deposit insurance limit from $100,000 to
$130,000, and indexes it every 5 years for inflation; doubles
the new coverage level for certain retirement accounts; and
increases the coverage amount for in-State municipal deposits.
Federally chartered credit unions are provided with parity in
general standard maximum deposit insurance coverage, coverage
for retirement accounts and municipal deposits.
H.R. 522 removes legal constraints on the authority of the
Federal Deposit Insurance Corporation (FDIC) to charge risk-
based premium assessments, so that all insured depository
institutions pay for the value and benefit of deposit insurance
fairly and equitably.
The legislation authorizes the FDIC to set the ratio of
reserves to estimated insured deposits within a range of 1.15
to 1.40 percent, replacing the 1.25 percent ``hard target''
mandated by current law.
The bill also returns assessments in the form of refunds,
credits, and dividends to insured depository institutions.
Dividends are provided to qualified insured depository
institutions whenever specified reserve ratios are exceeded.
Finally, the legislation directs the FDIC to study its
administrative and managerial processes and alternative means
for administering the deposit insurance system. These studies
will ensure that the deposit insurance fund and the overall
deposit insurance system are managed and operated as
efficiently and as effectively as possible.
Background and Need for Legislation
Federal deposit insurance was created by Congress in 1934
and significantly modified in 1989 and 1991 in response to the
savings and loan and bank crises. All banks and savings
associations are required to carry Federal deposit insurance.
The National Credit Union Share Insurance Fund (NCUSIF) was
created in 1970. This fund insures ``share'' accounts at credit
unions and is administered by the National Credit Union
Administration (NCUA). All Federally chartered credit unions
must belong to NCUSIF; membership is optional for State
chartered credit unions.
Deposit insurance makes deposits safe by assuring
depositors that up to $100,000 will be available to them to
cover their deposits even if their insured depository
institution fails. It protects depositors from a sudden and
unforeseen loss of wealth. It also protects the economy due to
a loss of liquidity in the financial services system.
Currently, the FDIC provides deposit insurance through two
funds, the BIF and the SAIF. These funds are maintained in the
U.S. Treasury and both earn interest income from investment in
non-marketable Treasury securities.
The Federal deposit insurance system has served the Nation
well for the last 69 years--public confidence and stability in
the Nation's banking system were preserved through one of the
largest banking crises since the Federally insured deposit
system originated. During the crisis of the 1980's and the
1990's, the FDIC and the Resolution Trust Corporation (RTC)
resolved 2,362 failures of insured depository institutions
involving more than $700 billion in assets, with no bank runs,
no panics, no disruptions to the financial markets, and no
debilitating impact on overall economic activity.
After conducting a comprehensive study of the overall
deposit insurance system, the FDIC published a report in April
2001 (Keeping the Promise: Recommendations for Deposit
Insurance Reform, April 2001), that identified 4 structural
deficiencies that warranted legislative consideration:
(1) Deposit insurance is provided by two insurance funds at
potentially different prices;
(2) Under current law, deposit insurance cannot be priced
effectively to reflect risk;
(3) Deposit insurance premiums are highest at the wrong
point in the business cycle; and
(4) The value of insurance coverage does not keep pace with
inflation.
Hearings before the Subcommittee on Financial Institutions
and Consumer Credit during the 107th Congress yielded a broad
consensus among the Bush Administration, the Federal and State
banking and thrift regulators, and industry and consumer groups
that the deposit insurance system could be improved and
strengthened to make it more responsive to the cyclical nature
of lending and deposit taking activities and the post-Gramm-
Leach-Bliley financial and economic environment.
Merging the BIF and the SAIF eliminates potential
disparities in bank and thrift risk-based premium assessments
and the administrative burden of maintaining and operating two
separate funds.
Current law limits the ability of the FDIC to assess
premiums on depository institutions above amounts needed to
achieve and maintain the existing ratio of reserves to
estimated insured deposits at 1.25 percent. Currently over 90
percent of the industry does not pay for deposit insurance, and
more than 900 institutions that were chartered within the last
6 years have never paid any premiums. Current law also limits
the FDIC's ability to charge riskier institutions, new
entrants, and institutions growing at excessive rates
appropriate premiums based on the risks they present to the
fund. The current premium restrictions require safer
institutions to subsidize riskier institutions unnecessarily,
and new entrants and institutions that undergo significant
growth are allowed to avoid paying premiums.
Further, the current system's ``pro-cyclical'' bias results
in sharply higher premiums being assessed at ``down'' points in
the economic cycle, when banks can least afford to pay them and
the economy could most benefit from additional liquidity in the
banking system.
These inequities are addressed in H.R. 522 by giving the
FDIC greater discretion to identify the relative risks all
institutions present to the deposit insurance fund and set
appropriate risk-based premiums. With this authority, the FDIC
can better manage the insurance fund relative to industry and
economic cyclicality.
The current deposit insurance system's emphasis on
maintaining the 1.25 percent designated reserve ratio (DRR) and
the requirement that a 23 basis point premium be assessed
whenever the DRR drops and remains below this level for a year
is pro-cyclical and creates the potential for volatile premium
swings. This problem would also more than likely result in the
industry paying high premiums when both banks and the economy
could least afford it, and it could sustain and deepen an
economic downturn.
The legislation gives the FDIC the discretion to set the
DRR within a range of 1.15 to 1.40 percent, addressing the
system's volatility and avoiding sharp premium swings. This
flexibility gives the FDIC better tools with which to manage
the deposit insurance fund during various economic
environments.
The Committee found that the overall value of basic
insurance coverage had eroded over the last 23 years. If
coverage had kept pace with inflation since 1980, when levels
were last adjusted, it would now be at more than $200,000; and
if it were adjusted for the $40,000 coverage level in effect in
1974 and indexed for inflation from that point forward, the
level would be more than $140,000. The Committee believes that
increasing the maximum standard deposit insurance amount to
$130,000 is a modest step and indexing the new amount every 5
years appropriately restores and maintains the value of deposit
insurance coverage.
The current deposit insurance scheme provides inadequate
protection for in-State municipal deposits and certain
retirement account deposits. The legislation doubles the
coverage limit for insured retirement account deposits in order
to enhance the retirement security of senior citizens and those
planning for retirement. Coverage limits for in-State municipal
deposits are also significantly expanded to ensure that more
municipal deposits can be kept in local financial institutions
and used to meet local credit needs.
In sum, this legislation will respond to these issues by:
preserving the value of insured deposits at
insured depository institutions;
strengthening the Nation's insured depository
institutions, especially small banks, thrifts, and credit
unions;
ensuring that the Federal deposit insurance system
does not harm the ability of insured depository institutions to
meet the Nation's credit needs at all stages of the economic
cycle;
ensuring that the Federal deposit insurance system
remains strong and complements the Federal and State regulatory
structure that helps to maintain the safety and soundness of
the Nation's banks, thrifts, and credit unions;
advancing the national priority of enhancing
retirement security for all Americans;
ensuring that the value, benefit and costs of
deposit insurance are allocated equitably and fairly; and,
modernizing the Federal deposit insurance system
by merging the BIF with the SAIF and reinforcing the risk-based
nature of the system.
Hearings
The Committee on Financial Services held a legislative
hearing on H.R. 522, the Federal Deposit Insurance Reform Act
of 2003, on March 4, 2003, at which the Chairman of the Federal
Deposit Insurance Corporation, Donald E. Powell, testified.
Committee Consideration
The Committee on Financial Services met in open session on
March 13, 2003 and ordered H.R. 522 reported to the House with
a favorable recommendation, with an amendment, 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. Oxley to
report the bill to the House with a favorable recommendation
was agreed to by a voice vote.
The following amendments were considered:
An amendment in the nature of a substitute by Mr.
Oxley, no. 1, making technical changes and clarifying
several provisions to the bill, was agreed to by a
voice vote, as amended.
An amendment to the amendment in the nature of a
substitute offered by Mr. Ose, no. 1a, maintaining
coverage at $100,000 per account and striking the
inflation adjustment, part 1 (consisting of paragraphs
1 and 4), was not agreed to by a voice vote and part 2
(consisting of paragraphs 2, 3, 5, and 6), tripling
coverage for retirement account from the base, was not
agreed to by a voice vote.
An amendment to the amendment in the nature of a
substitute offered by Mr. Meeks of New York, no. 1b,
requiring a reduction in dividends and credits for
depository institutions that substantially dilute fund
reserves, was withdrawn.
An amendment to the amendment in the nature of a
substitute offered by Mr. Gonzalez, no. 1c, requiring a
bi-annual FDIC survey and report on the unbanked, was
agreed to by a voice vote.
An amendment to the amendment in the nature of a
substitute offered by Mr. Royce, no. 1d, striking
increase in deposit coverage, was not 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 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:
The bill will improve the deposit insurance system while
keeping it well-funded, as well as reflect more accurately the
risks to the fund that are imposed by institutions. As a
result, the fund will be less susceptible to problems caused by
changes in the economy and will better serve depository
institutions and depositors.
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 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
for H.R. 3717 in the 107th Congress and reprinted below as the
Committee's cost estimate.
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 for H.R.
3717 in the 107th Congress and reprinted below as the
Committee's cost estimate. The Committee further estimates that
the estimated cost to the Federal government for fiscal year
2008 will be the same in both budget authority and outlays as
fiscal year 2007.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
H.R. 3717--Federal Deposit Insurance Reform Act of 2002
Summary: H.R. 3717 would amend provisions of banking and
credit union law to reform the deposit insurance system.
Specifically, the bill would increase insurance coverage for
insured accounts from $100,000 per account to $130,000 for most
accounts (with higher levels of coverage for retirement
accounts and municipal deposits). Over time, the coverage limit
for insured deposits would increase to account for inflation.
Those provisions of the bill would affect deposits held by
banks and thrifts, which are insured by the Federal Deposit
Insurance Corporation (FDIC), as well as those held by credit
unions, which are insured by the National Credit Union
Administration (NCUA). In addition, the bill would merge the
Bank Insurance Fund (BIF) and the Savings Association Insurance
Fund (SAIF) to create a new Deposit Insurance Fund (DIF), to
pay the claims of depositors of failed banks and thrifts.
Finally, H.R. 3717 would amend the conditions under which banks
and thrifts would pay insurance premiums to the FDIC, which
administers the funds.
CBO estimates that H.R. 3717 would increase both the costs
of resolving failed financial institutions and the income from
premiums paid by financial institutions. During the 2003-2012
period, the additional premiums that would be collected under
the bill would more than offset the added spending. On balance,
CBO estimates that H.R. 3717 would reduce net direct spending
by $700 million over the 2003-2012 period. Because H.R. 3717
would affect direct spending, pay-as-you-go procedures would
apply.
H.R. 3717 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates
that the costs, if any, to comply with the requirement would
not exceed the threshold established in UMRA ($58 million in
2002, adjusted annually for inflation).
The bill also contains private-sector mandates as defined
by UMRA. CBO estimates that the direct cost of those mandates
would be well above the annual threshold specified in UMRA
($115 million in 2002, adjusted annually for inflation), but we
do not have sufficient information to provide a precise
estimate of the aggregate cost.
Estimated cost to the Federal Government: The estimate
budgetary impact of H.R. 3717 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year in millions of dollars--
------------------------------------------------------
2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
DIRECT SPENDING
FDIC and NCUA spending under current law:
Estimated budget authority........................... -31 -33 -34 -35 -36
Estimated outlays.................................... 1,662 1,337 1,544 1,746 1,694
Proposed changes to FDIC spending:
Estimated budget authority........................... 0 0 0 0 0
Estimated outlays.................................... -1,000 -400 0 -50 200
Proposed changes to NCUA spending:
Estimated budget authority........................... 0 0 0 0 0
Estimated outlays.................................... -500 25 25 -125 25
Total changes under H.R. 3717:
Estimated budget authority........................... 0 0 0 0 0
Estimated outlays.................................... -1,500 -375 25 -175 225
FDIC and NCUA spending under H.R. 3717:
Estimated budget authority........................... -31 -33 -34 -35 -36
Estimated outlays.................................... 162 962 1,569 1,571 1,919
----------------------------------------------------------------------------------------------------------------
Basis of estimate
Two federal agencies are primarily responsible for the
deposit insurance system. The FDIC insures the deposits in
banks with the BIF and the deposits of thrifts with the SAIF.
The National Credit Union Administration insures the deposits
in credit unions (referred to as shares) with the Share
Insurance Fund. When a financial institution fails, the FDIC
and the NCUA use the insurance funds to reimburse the insured
depositors of the failed institution. These agencies then sell
the assets of the failed institution and deposit any money
recovered into the insurance funds. CBO estimates that H.R.
3717 would increase both the cost of resolving failed banks and
the premiums paid by financial institutions. Over the 2003-2012
period, we estimate that the added premiums paid by financial
institutions would more than offset the increase in outlays to
resolve failed financial institutions. Adding these effects
together, we estimate that enacting H.R. 3717 would result in a
net decrease in direct spending of about $700 million over the
2003-2012 period. The major components of this estimate are
explained below.
Increase in the cost of resolving failed financial
institutions
H.R. 3717 would increase deposit insurance coverage from
$100,000 to $130,000 for most accounts, and to $260,000 for
employee benefit plans. Coverage for in-state municipal
deposits would be the lesser of $5 million or 80 percent of any
deposits above $130,000. Such increases would apply to deposits
held by credit unions as well as banks and thrifts. In
addition, the bill would require the FDIC and NCUA to increase
deposit insurance coverage every five years beginning January
1, 2006, to account for inflation. (According to committee
staff, the intent of section 3 of H.R. 3717 is to increase
deposit insurance coverage in 2006 and 2011 to account for
inflation. Despite a drafting error in this section, CBO
assumes that such increases would occur.)
By 2003, we expect that insured deposits will total more
than $3.2 trillion under current law. Based on information from
the FDIC and the experience of past increases in deposit
insurance coverage, CBO estimates that H.R. 3717 would increase
the deposits insured by the FDIC by about $325 billion--or
around 10 percent. CBO estimates that about $33 billion of that
amount would result from new deposits attracted to banks and
thrifts as a result of the expanded coverage, an increase of
about 1 percent. We expect that the assets of failed banks and
thrifts would increase correspondingly--by about 1 percent. In
2003, we expect assets of failed banks and thrifts to be $3.65
billion under current law; such assets would increase slightly
under the bill.
By insuring deposits that are currently uninsured, the bill
would increase the liability of the FDIC and NCUA without
significantly increasing the assets of institutions that will
fail in the future. Under current law, we expect the FDIC's net
losses on failed institutions to total about $12.6 billion over
the 2003-2012 period. (We project that gross losses of $51.0
billion would be offset, in part, by recoveries of $38.4
billion from disposition of the institutions' assets.) Based on
historical patterns of losses from failed institutions, CBO
estimates that increasing insured deposits by about 10 percent
would increase losses by about 10 percent over the long term.
But over the next 10 years outlays would grow more rapidly
because disposal of the assets of failed banks often takes many
years. As a result, CBO estimates H.R. 3717 would increase the
FDIC's net outlays to resolve failed banks and thrifts by about
$2.7 billion over the 2003-2012 period. Similarly, we estimate
that enacting H.R. 3717 would increase NCUA's net outlays to
resolve failed credit unions by about $100 million over the
2003-2012 period.
By increasing deposit insurance coverage, H.R. 3717 could
reduce incentives of depositors to monitor the behavior of
financial institutions. Over the long term, this could lead to
increased risk-taking by those institutions and ultimately to
higher losses. On the other hand, if the DIF incurs larger
losses to resolve failed banks and thrifts, H.R. 3717 would
give the FDIC the flexibility to set premiums so as to restore
the balances in the fund over a few years, thus allowing the
agency to recover from large losses without imperiling other
institutions. This new authority could reduce future losses.
CBO has no basis for estimating the magnitude of either of
these effects. We expect, however, that any changes in the
costs of resolving failed institutions would eventually be
borne by banks and thrifts through premiums.
Increase in premiums paid to the FDIC by financial
institutions
Several provisions of H.R. 3717 would affect the total
amount of premiums collected by the FDIC. Increasing the size
of insured accounts would lead to increased collections.
Considered separately, merging the BIF and SAIF and providing
the FDIC with increased discretion to set regulations for
premium assessments would tend to reduce collections relative
to CBO's baseline assumptions. Finally, establishing credits
that certain institutions could use to pay the FDIC assessments
in lieu of cash would also reduce collections.
The amount of additional premiums that banks and thrifts
would pay through the combined effects of all these provisions
of H.R. 3717 would depend on the DIF's balance in each year,
which in turn would depend on the costs of resolving failed
institutions. To estimate the effects of the bill's provisions
on premium collections, CBO considered several thousand
scenarios of the magnitude and timing of possible losses to the
FDIC and resulting premiums collected under the bill. Because
the fund balance in any given year depends on the losses of all
prior years, each scenario included an estimate of losses over
the entire 2003-2012 period. Applying a probability
distribution to those loss scenarios, CBO estimated premium
income to the government under H.R. 3717 reflecting the wide
range of uncertainty about future costs of resolving failed
financial institutions.
Overall, CBO estimates that the net effect of these
provisions on deposit insurance premiums would be an increase
in collections of about $2.8 billion over the next 10 years,
slightly more than our projected increase in the FDIC's costs
to resolve failed financial institutions. (We estimate that the
FDIC will collect about $12 billion in premiums from members
over the 2003-2012 period under current law.) Each of the
bill's provisions that would have an impact on premium
assessments is described below.
Increasing Deposit Insurance Coverage. Expanding deposit
insurance coverage would result in increased premiums for the
FDIC because premiums are based on the amount of insured
deposits. CBO estimates that the increase in coverage would
raise the amount of insured deposits by about 10 percent. But
the bill would also give the FDIC more discretion in assessing
premiums, which CBO expects would offset part of the impact of
the increased coverage.
Increasing the FDIC's Regulatory Discretion. Under current
law, the FDIC determines when to assess insurance premiums by
calculating a figure known as the designated reserve ratio
(DRR) for the BIF and SAIF. The DRR represents the ratio of the
fund's balances to total insured deposits. Under current law,
the FDIC is required to assess premiums so as to maintain the
DRR at all times, but under the bill, the agency would be
authorized to establish a restoration plan of up to three years
to gradually collect sufficient premiums to maintain the DRR at
the desired level.
Designated Reserve Ratio (DRR). The DRR is statutorily set
at 1.25 percent of insured deposits. If the reserve ratio of
either fund falls below that point, the FDIC assesses
institutions that are covered by that fund until the reserve
ratio reaches at least 1.25 percent. H.R. 3717 would eliminate
the requirement that the DRR be 1.25 percent for the FDIC's
insurance funds and, instead, allow the FDIC the discretion to
set the DRR between 1.15 percent and 1.4 percent, inclusive.
The bill would require the FDIC to set the DRR at least
annually and at other times as it deems appropriate. The bill
also would require the board of directors of the FDIC to
consider increasing the DRR during more favorable economic
conditions and reducing the DRR during less favorable economic
conditions, notwithstanding the risk of loss that may occur
under such conditions.
Based on the actions of the NCUA when it was given
discretion to set such a ratio, CBO expects that the FDIC would
set the DRR at 1.25 percent for 2003 and adjust it annually as
conditions warrant. To maintain stability in the banking
system, we expect the FDIC would set the DRR within a
relatively narrow range around 1.25 percent, except under
extreme conditions. In fact, the bill would require the FDIC to
return some collections (referred to in the bill as dividends)
if the reserve ratio of the DIF exceeds 1.35 percent. In this
event, the FDIC would be required to refund half of the amount
in the fund that is above the amount necessary to maintain 1.35
percent. If the DRR were to exceed 1.4 percent, the FDIC would
be required to refund enough to institutions to reduce the
ratio below 1.4 percent.
Restoration Plans. Under current law, the FDIC must charge
assessments to return the funds to a level above the DRR within
one year. H.R. 3717 could delay some of those assessments by
allowing the FDIC to return the fund to a level above the DRR
within three years.
If the FDIC projects that the reserve ratio of the DIF will
fall below the DRR, H.R. 3717 would require it to establish a
restoration plan to return the reserve ratio to the DRR within
three years. If the FDIC projects that the reserve ratio of the
DIF will fall below 1 percent, H.R. 3717 would require the FDIC
to establish a restoration plan to return the reserve ratio to
1 percent within two years and return the reserve ratio to the
DRR within three years thereafter. The flexibility to set
restoration plans would reduce the assessment income of the
FDIC because it could take up to five years to return to the
DRR, and government collections would be below baseline levels
during this period. On the other hand, this provision of H.R.
3717 might provide the FDIC the discretion necessary to recover
from a large loss in the fund without imperiling other
institutions.
Allowing the FDIC discretion over when premiums are charged
would reduce total collections below the level that would be
experienced without that discretion. However, CBO estimates
that such reductions would be more than offset by the premium
increases resulting from the increase in deposit insurance
coverage.
Merging BIF and SAIF. H.R. 3717 would require the FDIC to
merge the Bank Insurance Fund and the Savings Association
Insurance Fund and create a new Deposit Insurance Fund. By
2003, CBO expects the net worth of the combined fund will be
about $42 billion. By itself, merging the funds would delay the
collection of premiums on institutions insured by the BIF.
Although the BIF is much larger than the SAIF, the reserve
ratio of the BIF is lower--1.26 percent--due to rapid growth in
insured deposits and the costs of recent bank failures. Under
current law, we expect the FDIC to begin charging fees to
institutions insured by the BIF in 2003. The reserve ratio of
the combined fund would be about 1.3 percent, and in the
absence of other changes made by the bill, the FDIC would not
have to assess higher premiums in 2003 to maintain the reserve
ratio at the designated level.
Credits for Future Assessments. The bill would require the
FDIC to provide certain banks and thrifts with credits against
future assessments, based on their payments to the BIF or SAIF
prior to 1997. CBO expects that the use of those credits would
reduce the amount of future collections by the DIF.
Under the bill, credits would equal 12 basis points (0.12
percent) of the combined assessment base of the BIF and SAIF as
of December 31, 2001. Based on information from the FDIC, CBO
estimates that the credits would total nearly $5.4 billion. The
credits would be allocated to each institution based on their
market share as of December 31, 1996. Institutions established
after that date would be ineligible for credits against their
future assessments. The bill would prohibit institutions from
using credits whenever the reserve ratio of the fund is less
that the DRR or when the DRR is less than 1.25 percent.
H.R. 3717 also would limit the use of credits by
institutions that are not well capitalized, or that exhibit
financial, operational, or compliance weaknesses that range
from moderately severe to unsatisfactory. Under the bill, such
institutions could use no more in credits than the average
assessment on all depository institutions for that period. In
addition, because the least risky institutions (i.e., those
that are well capitalized and do not exhibit those weaknesses)
would be assessed no more than one basis point, their use of
credits would be effectively constrained. Hence, CBO estimates
that more than half of the credits would not be used during the
2003-2012 period and would be available to reduce collections
by the FDIC in subsequent years.
Increase in premiums paid to NCUA by financial institutions
Under current law, credit unions must pay the NCUA 1
percent of their net change in deposits each year. The NCUA
provides rebates to credit unions if the balance in the share
insurance fund exceeds 1.3 percent of insured deposits. CBO
estimates that the NCUA will collect net premiums of about $2.4
billion from its members over the 2003-2012 period.
Based on information from the NCUA, CBO expects that H.R.
3717 would extend insurance coverage to about $38 billion in
currently uninsured deposits in 2003 and that the higher
insurance levels would attract another $4 billion in new
deposits that year. Because these added amounts would reduce
the ratio of insured deposits to fund balances below 1.3
percent in 2003, H.R. 3717 would reduce the amount of the
rebate that the NCUA would otherwise provide that year.
CBO estimates that, under the bill, the net premiums
collected by the NCUA would increase by $700 million over the
2003-2012 period. About $500 million of that amount would be
realized in 2003. The premiums collected for the expanded
insurance coverage would more than offset the estimated
additional costs to the NCUA of $100 million over the next 10
years.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays that are subject to pay-as-you-go procedures
are shown in the following table. For the purposes of enforcing
pay-as-you-go procedures, only the effects through fiscal year
2006 are counted.
Section 252 of the Balanced Budget and Emergency Deficit
Control Act exempts from pay-as-you-go procedures any changes
in outlays resulting from the ``full funding of, and
continuation of, the deposit insurance guarantee commitment in
effect under current estimates.'' Increasing deposit insurance
coverage is not part of the current guarantee commitment, and
changing the premiums paid by banks and thrifts is not the type
of change necessary for the continuation of the current
guarantee commitment. Hence, CBO believes that the pay-as-you-
go exemption for deposit insurance would not apply to H.R.
3717.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays................................................ 0 -1,500 -375 25 -175 225 325 325 275 -50 225
Changes in receipts............................................... Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated impact on state, local, and tribal governments:
H.R. 3717 would preempt certain state laws regarding statutes
of limitations by shortening the time allowed for insured
depository institutions or the FDIC to file claims related to
overpayments or late payments of assessments. Such a preemption
would be an intergovernmental mandate as defined in UMRA.
Because the mandate imposes no duty on states that would result
in additional spending, CBO estimates that the costs of
complying with the mandate would not exceed the threshold
established in UMRA ($58 million in 2002, adjusted annually for
inflation).
Estimated impact on the private sector: H.R. 3717 contains
private-sector mandates as defined by UMRA. CBO estimates that
the direct cost of those mandates would be well above the
annual threshold established by UMRA for private-sector
mandates ($115 million in 2002, adjusted annually for
inflation). We do not have sufficient information to provide a
precise estimate of the aggregate cost because of uncertainties
about how certain regulations would be implemented.
Banks and savings associations
Commercial banks and savings associations must have federal
deposit insurance. CBO, therefore, considers changes in the
federal deposit insurance system that increase requirements on
those institutions to be private-sector mandates under UMRA.
Specifically, the bill would increase federal insurance
coverage for insured depository accounts. That increase in
coverage would require banks and savings associations to pay
more in deposit insurance premiums.
H.R. 3717 also would change the conditions under which
banks and savings associations would pay insurance premiums to
the FDIC. Under current law, banks and savings associations in
the lowest risk category do not have to pay any deposit
insurance premiums when their deposit insurance fund (BIF or
SAIF) is above the designated reserve ratio of 1.25 percent of
insured deposits. The bill would require that all banks and
savings associations pay premiums for deposit insurance
regardless of the reserve ratio. In addition, the bill would
authorize the FDIC to charge fees to banks and thrifts that
increase their net deposits more rapidly than the FDIC
determines to be appropriate. The FDIC has indicated that
determining the criteria for deciding whether growth is
inappropriate would be difficult. At this time, CBO has no
basis for estimating the amount of such fees.
CBO estimates that, as a result of the increased deposit
insurance coverage and the requirement that all banks and
savings associations pay deposit insurance premiums regardless
of the reserve ratio, those institutions would have to pay an
additional $1 billion in premiums in fiscal year 2003. The
additional premium payments would total about $2.1 billion over
the first five years the mandate is in effect.
Credit unions
Because the bill would increase the coverage of insured
accounts for federally insured credit unions, those credit
unions would pay higher premiums. CBO estimates that those
institutions would pay an additional $500 million in fiscal
year 2003. The additional premium payments would total about
$600 million for the first five years the increased coverage is
in effect.
Estimate prepared by: Federal costs: Mark Hadley and Judith
Ruud; impact on state, local, and tribal governments: Susan
Sieg Tompkins; impact on the private sector: Judith Ruud.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the cost estimate provided by the
Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974 was not timely submitted to
the Committee. The Chairman of the Committee will cause such
estimate to be printed in the Congressional Record when it is
available.
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 for H.R. 3717 in the 107th Congress and reprinted as the
Committee's cost estimate.
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
defense and general welfare of the United States), and clause 3
(relating to the power to regulate foreign and 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.
Section-by-Section Analysis of the Legislation
Section 1. Short Title; Table of contents
This section establishes the short title of the bill, the
``Federal Deposit Insurance Reform Act of 2003,'' and provides
a table of contents.
Section 2. Merging the BIF and SAIF
This section amends provisions of the Federal Deposit
Insurance Act to merge the Bank Insurance Fund and the Savings
Association Insurance Fund. The section transfers each fund's
respective assets and liabilities into a newly created Deposit
Insurance Fund (DIF).
The section gives the FDIC at least 90 days after the bill
is enacted to complete the merger of the BIF and SAIF. The
effective date of the merger would be the first day of the next
calendar quarter after the grace period elapses. For example,
assuming the bill is enacted on March 10 the FDIC would have
until June 8 to complete the merger, and all transactions would
become operationally effective as of July 1.
Section 3. Increase in deposit insurance coverage
This section provides for a higher level of deposit
insurance coverage and an inflation index for general
depositors, individual retirement accounts, and municipalities.
Further, it expands coverage to employee benefit plans. Credit
unions are provided with complete parity in coverage with other
insured depository institutions.
The section also eliminates the $100,000 deposit insurance
limit on accounts at insured depository institutions and
replaces it with a new standard maximum deposit insurance limit
of $130,000.
The section further provides that, beginning January 1,
2006, the new standard maximum deposit insurance limit would be
subject to a 5 year cost of living adjustment, calculated
according to the Personal Consumption Expenditures Chain-Type
Index (PCE) published by the Department of Commerce and rounded
to the nearest $10,000. The FDIC and National Credit Union
Administration (NCUA) Boards of Directors are required to
publish the new standard maximum deposit insurance amount in
the Federal Register and provide a corresponding report to
Congress within 6 months of the new calculation. Also, the five
year inflation-adjusted standard maximum amount would
automatically increase unless a Congressional act provides
otherwise. The new standard amount would take effect on January
1 of the year immediately succeeding the calendar year in which
the new amount is calculated.
The section also requires institutions to provide pass
through coverage for employee benefit plans. However,
institutions that are not well-capitalized or adequately-
capitalized may not accept employee benefit plan deposits.
The section also doubles the new standard maximum deposit
insurance limit for certain retirement accounts to $260,000.
Finally, this section increases coverage for in-State
municipal deposits to the lesser of $2 million or the sum of
the new standard coverage amount plus 80 percent of the amount
of deposits in excess of the new standard, and provides that no
State may deny to insured depository institutions within its
jurisdiction the authority to accept insured in-State municipal
deposits, or prohibit the making of such deposits in such
institutions by any in-State municipal depositor.
Section 4. Setting assessments and repeal of special rules relating to
minimum assessments and free deposit insurance
This section allows the FDIC Board to set assessments in
such amounts as it may determine to be necessary or appropriate
in order to maintain the reserve ratio at the designated
reserve ratio. This provision also eliminates the existing
restrictions on the FDIC's authority to levy assessments on any
institution above amounts needed to achieve and maintain the
existing DRR of 1.25 percent. In effect, the minimum statutory
rate (23 basis point cliff rate) is eliminated.
This section establishes a rate of not more than 1 basis
point (exclusive of any credit or dividend) for those insured
depository institutions in the lowest-risk category under the
FDIC's risk-based assessment system. This section also provides
that no depository institution will be barred from the lowest-
risk category solely because of size. The one basis point rate
does not apply during any period in which the DIF's reserve
ratio is less than 1.15 percent of aggregate insured deposits.
In testimony before the Subcommittee on Financial
Institutions, FDIC Chairman Donald Powell stated that:
Using the current system as a starting point, I
believe that the FDIC should consider additional
objective financial indicators, based upon the kinds of
information that banks and thrifts already report, to
distinguish and price for risk more accurately within
the existing least-risk (1A) category. The sample
``scorecard'' included in the FDIC's April 2001 report
represents the right kind of approach. (Hearing before
the Subcommittee on Financial Institutions and Consumer
Credit, Viewpoints of the FDIC and Select Industry
Experts on Deposit Insurance Reform, Oct. 17, 2001,
Serial no. 107-47, p. 5.)
This scorecard example showed the lowest-risk category,
1A+, contained approximately 42 percent of all banks. The
Committee looked to these examples, and the distribution of
banks (including size, charter, and governance) within each of
the 1A subcategories, as a basis for this provision. This
section provides a necessary balance between the expanded
authority and discretion of the FDIC to charge all institutions
premiums and assuring that top-rated institutions are not
excessively charged.
The Committee envisions that this rate will be the starting
point or base premium for the risk-based assessment schedule to
be developed by the FDIC (with higher premiums associated with
higher risk categories being set relative to this base rate).
Nothing in this provision precludes the FDIC from providing
credits or dividends should the fund be at sufficient levels to
warrant such an action.
The section also requires insured depository institutions
to maintain all records that the FDIC may require for verifying
the accuracy of any assessment for 3 years or, in the case of
disputed assessments, until the dispute has been resolved, and
increases fees for late assessment payments from $100 to 1
percent of assessments per day.
This section also provides for a 50 percent discount in the
assessment rate for deposits attributable to ``lifeline''
deposit accounts and repeals section 232 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 that required
that credits for such accounts be funded from congressional
appropriations.
The bill repeals a number of provisions requiring the FDIC
to set premiums on a semi-annual basis, replacing them with a
provision granting the FDIC greater flexibility in the timing
of those evaluations, so long as they are done at least once in
a 12 month period. In granting this flexibility, the Committee
intends that the FDIC should make these changes, absent
extraordinary circumstances, in a manner that provides insured
depository institutions with sufficient lead time to make
reasonable budget preparations.
Section 5. Replacement of fixed designated reserve ratio with reserve
range
This section eliminates the current 1.25 percent ``hard
target'' DRR and provides the FDIC Board with the discretion to
set the DRR within a range of 1.15 to 1.40 percent for any
given year, using the following criteria as a basis for making
these determinations:
(1) Present and future risk of losses to the deposit
insurance fund;
(2) Economic conditions; and
(3) Any other factors the Board may determine to be
appropriate.
The more flexible range for setting the DRR is designed to
prevent sharp swings in the assessment rates for insured
depository institutions. In designating the reserve ratio, the
FDIC must follow notice-and-comment rulemaking procedures, and
is required to publish a thorough analysis of the data and
projections on which the proposed DRR is based.
Section 6. Requirements applicable to the risk-based assessment system
This section directs the FDIC to collect information from
all appropriate sources in determining risk of losses to the
DIF. This provision does not authorize the FDIC to impose
additional recordkeeping requirements on insured depository
institutions.
The FDIC is required to consult with the appropriate
Federal banking agency in assessing the risk of loss to the DIF
with respect to any insured depository institution. This risk
of loss evaluation may be done on an aggregate basis for
institutions that are determined to be well-capitalized and
well-managed.
The FDIC is also required to provide notice and opportunity
for comment prior to revising or modifying the risk-based
assessment system.
Section 7. Refunds, dividends, and credits from Deposit Insurance Fund
This section provides for refunds or credits of any
assessment payment that was made by an insured depository
institution in excess of the amount due the FDIC.
The section specifies two circumstances under which the
FDIC is required to pay dividends to insured depository
institutions: (1) whenever the reserve ratio of the DIF equals
or exceeds 1.35 percent of estimated insured deposits and is
less than or equal to 1.4 percent of such deposits, the FDIC is
required to pay dividends equal to 50 percent of the amount in
excess of what is required to maintain the reserve ratio at
1.35 percent; and (2) whenever the reserve ratio of the DIF
exceeds 1.4 percent of estimated insured deposits, the FDIC is
required to pay dividends in the amount of the excess of what
is necessary to maintain the ratio at 1.4 percent.
The requirement that when the DIF exceeds 1.35 percent and
is less than or equal to 1.4 percent, the FDIC must provide a
cash dividend equal to one-half the difference between the
actual fund balance and the fund balance required to maintain a
reserve ratio of 1.35 percent is intended to slow the fund's
growth automatically as it approaches its upper limit and
return dividends to institutions that could be used for lending
and to provide other financial services in their communities.
The section also provides for a transitional credit of 12
basis points of the total assessment base as of December 31,
2001 (or about $5.4 billion) to eligible insured depository
institutions based on their respective share or percentage of
total industry insured deposits held as of December 31, 1996.
Eligible insured depository institutions had to be in existence
at December 31, 1996, or be a successor to such an institution,
and paid a deposit insurance assessment prior to that date.
In addition to the transitional credit, this section
directs the FDIC to promulgate regulations establishing an
ongoing system of credits to be applied against future premium
assessments. Such credits will not be awarded, however, during
any period in which (1) the reserve ratio of the DIF is less
than the DRR; or (2) the reserve ratio is less than 1.25
percent of estimated insured deposits. In determining the
amount of any ongoing assessment credits, the FDIC is required
to consider the factors for designating the reserve ratio and
setting assessments outlined elsewhere in the statute.
For purposes of allocating dividends and credits, the FDIC
is required to determine each insured depository institution's
relative contribution to the DIF (or any predecessor deposit
insurance fund), taking into account the institution's share of
the assessment base as of December 31, 1996; the total amount
of deposit insurance assessments paid by the institution after
December 31, 1996; that portion of assessments paid by an
institution that reflects higher levels of risk assumed by the
institution; and such other factors as the FDIC deems
appropriate. The FDIC's calculation, declaration and payment of
dividends are made subject to notice-and-comment rulemaking.
For any insured depository institution that exhibits
financial, operational or compliance weaknesses ranging from
moderately severe to unsatisfactory at the beginning of the
assessment period, credits may not exceed the amount equal to
the average assessment on all insured depository institutions.
In promulgating regulations establishing a system for
dividends and credits, the FDIC is required to include
provisions allowing insured depository institutions a
reasonable opportunity to challenge administratively the amount
of their dividends or credits.
Nothing in this section precludes the FDIC from providing
credits, over and above the mandated dividend requirement,
should it so choose.
The Committee intends that the FDIC, in determining the
appropriate distribution of dividends or ongoing credits, weigh
a number of factors in its rulemaking process. The calculation
should recognize past contributions to the deposit insurance
funds by incorporating the ratio determined for an institution
in the calculation of the institution's one-time credit based
on total assessment base at year-end 1996, as well as the
actual assessments paid since that time. In establishing the
dividend and credit systems, the FDIC should also take into
account and make adjustments that reflect the higher risk
profiles of some institutions so that they are not rewarded for
riskier behavior. The FDIC is given the discretion to
incorporate additional factors, through the rulemaking process,
as it deems appropriate.
Initially, the Committee anticipates that the FDIC will
establish a dividend account or similar mechanism for each
insured depository institution. It is contemplated that when a
dividend is declared, each institution would receive the same
proportion of the total dividend declared as its dividend
account bears to the sum of all institutions' dividend accounts
for that declaration. As an example of how this might work
under such a scenario, the calculation of an institution's
dividend account could be based on the balance in the fund
multiplied by the institution's 1996 assessment base ratio
(described above). In addition, after reducing the amount of
assessments paid to account for an institution's higher risk
profile, and after considering other factors, the Corporation
would incorporate the remainder in the calculation of the
dividend account. In sum, it is the Committee's intent that the
FDIC create and implement a robust system of dividends and
ongoing credits based upon the various factors set forth in the
bill.
Section 8. Deposit Insurance Fund restoration plans
Whenever the reserve ratio falls or is projected to fall
below the low end of the range within which the FDIC is
authorized to set the DRR, the FDIC is required, within 90
days, to establish and implement a plan for restoring the DIF
to that level within ten years. While such a restoration plan
is in effect, the FDIC has the authority to restrict the use of
assessment credits by insured depository institutions, but is
required to apply to an institution's assessment an amount that
is the lesser of the institution's assessment or 3 basis points
of an institution's assessment base. The FDIC must publish the
details of its restoration plan in the Federal Register within
30 days of its implementation.
Section 9. Regulations required
This section provides that the FDIC has 270 days after the
date of enactment to prescribe final regulations, after notice
and opportunity for public comment, establishing the DRR,
implementing increases in deposit insurance coverage,
implementing the dividend requirement and the one time
assessment credit, and providing for premium assessments under
the amended Act.
Section 10. Studies of FDIC structure and expenses and certain
activities and further possible changes to deposit insurance
system
This section provides that within one year of enactment,
reports must be submitted to Congress on the following issues:
(1) The efficiency and effectiveness of the administration
of the prompt corrective action (PCA) program, including the
degree of effectiveness of the Federal banking agencies in
identifying troubled depository institutions and the degree of
accuracy of the risk assessments made by the FDIC;
(2) The appropriateness of the FDIC's organizational
structure for the mission of the FDIC, to take into account the
current size and complexity of the business of insured
depository institutions; the extent to which the organizational
structure contributes to or reduces operational inefficiencies
that increase operational costs; and the effectiveness of
internal controls;
(3) The feasibility of establishing a voluntary deposit
insurance system for deposits in excess of the maximum amount
of deposit insurance for any depositor;
(4) The feasibility of privatizing all deposit insurance at
insured depository institutions and insured credit unions; and,
(5) The feasibility of using actual domestic deposits
rather than estimated insured deposits in calculating the DIF's
reserve ratio and the DRR.
Finally, the section directs the FDIC (in consultation with
the GAO) to conduct a study of the reserve methodology and loss
accounting for insured depository institutions in a troubled
condition over the period January 1, 1992 through December 31,
2002, and report its findings and conclusions to Congress
within 6 months of the date of enactment.
Section 11. Bi-annual FDIC survey and report on increasing the deposit
base by encouraging use of depository institutions by the
unbanked
This section requires the FDIC to conduct a bi-annual
survey on efforts by insured depository institutions to bring
the ``unbanked'' into the conventional finance system, and
report its findings and conclusions to the House Committee on
Financial Services and the Senate Committee on Banking, Housing
and Urban Affairs, together with any recommendations for
legislative or administrative action.
Section 12. Technical and Conforming Amendments to the Federal Deposit
Insurance Act relating to the merger of the BIF and SAIF
This section makes numerous amendments to ensure the
technical conformity of the Federal Deposit Insurance Reform
Act to various provisions in the Federal Deposit Insurance Act
and other banking laws, to include the authority of the DIF to
borrow from insured depository institutions and the Federal
Home Loan Banks.
In particular, this section repeals section 5(d)(2) of the
Federal Deposit Insurance Act, dealing with exit fees collected
from institutions leaving the Savings Association Insurance
Fund (SAIF). The Committee intends that those funds be returned
to the DIF upon the repeal of this provision.
Section 13. Other Technical and Conforming Amendments relating to the
merger of the BIF and SAIF
This section ensures the technical conformity of the
Federal Deposit Insurance Reform Act to various provisions in
the Federal Deposit Insurance Act and other banking laws. Most
notably, amendments conform the Federal Deposit Insurance
Reform Act to the Balanced Budget and Emergency Control Act of
1985.
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):
SECTION 2704 OF THE DEPOSIT INSURANCE FUNDS ACT OF 1996
[SEC. 2704. MERGER OF BIF AND SAIF.
[(a) In General.--
[(1) Merger.--The Bank Insurance Fund and the Savings
Association Insurance Fund shall be merged into the
Deposit Insurance Fund established by section 11(a)(4)
of the Federal Deposit Insurance Act, as amended by
this section.
[(2) Disposition of assets and liabilities.--All
assets and liabilities of the Bank Insurance Fund and
the Savings Association Insurance Fund shall be
transferred to the Deposit Insurance Fund.
[(3) No separate existence.--The separate existence
of the Bank Insurance Fund and the Savings Association
Insurance Fund shall cease.
[(c) Effective Date.--This section and the amendments made by
this section shall become effective on January 1, 1999, if no
insured depository institution is a savings association on that
date.
[(d) Technical and Conforming Amendments.--
[(1) Deposit insurance fund.--Section 11(a)(4) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is
amended--
[(A) by redesignating subparagraph (B) as
subparagraph (C);
[(B) by striking subparagraph (A) and
inserting the following:
[``(A) Establishment.--There is established
the Deposit Insurance Fund, which the
Corporation shall--
[``(i) maintain and administer;
[``(ii) use to carry out its
insurance purposes in the manner
provided by this subsection; and
[``(iii) invest in accordance with
section 13(a).
[``(B) Uses.--The Deposit Insurance Fund
shall be available to the Corporation for use
with respect to Deposit Insurance Fund
members.''; and
[(C) by striking ``(4) General provisions
relating to funds.--'' and inserting the
following:
[``(4) Establishment of the deposit insurance
fund.--''.
[(2) Other references.--Section 11(a)(4)(C) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)(C),
as redesignated by paragraph (1) of this subsection) is
amended by striking ``Bank Insurance Fund and the
Savings Association Insurance Fund'' and inserting
``Deposit Insurance Fund''.
[(3) Deposits into fund.--Section 11(a)(4) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is
amended by adding at the end the following new
subparagraph:
[``(D) Deposits.--All amounts assessed
against insured depository institutions by the
Corporation shall be deposited in the Deposit
Insurance Fund.''.
[(5) Federal home loan bank act.--Section
21B(f)(2)(C)(ii) of the Federal Home Loan Bank Act (12
U.S.C. 1441b(f)(2)(C)(ii)) is amended--
[(A) in subclause (I), by striking ``to
Savings Associations Insurance Fund members''
and inserting ``to insured depository
institutions, and their successors, which were
Savings Association Insurance Fund members on
September 1, 1995''; and
[(B) in subclause (II), by striking ``to
Savings Associations Insurance Fund members''
and inserting ``to insured depository
institutions, and their successors, which were
Savings Association Insurance Fund members on
September 1, 1995''.
[(6) Repeals.--
[(A) Section 3.--Section 3(y) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(y)) is
amended to read as follows:
[``(y) Definitions Relating to the Deposit Insurance Fund.--
[``(1) Deposit insurance fund.--The term `Deposit
Insurance Fund' means the fund established under
section 11(a)(4).
[``(2) Reserve ratio.--The term `reserve ratio' means
the ratio of the net worth of the Deposit Insurance
Fund to aggregate estimated insured deposits held in
all insured depository institutions.
[``(3) Designated reserve ratio.--The designated
reserve ratio of the Deposit Insurance Fund for each
year shall be--
[``(A) 1.25 percent of estimated insured
deposits; or
[``(B) a higher percentage of estimated
insured deposits that the Board of Directors
determines to be justified for that year by
circumstances raising a significant risk of
substantial future losses to the fund.''
[(B) Section 7.--Section 7 of the Federal
Deposit Insurance Act (12 U.S.C. 1817) is
amended--
[(i) by striking subsection (l);
[(ii) by redesignating subsections
(m) and (n) as subsections (l) and (m),
respectively;
[(iii) in subsection (b)(2), by
striking subparagraphs (B) and (F), and
by redesignating subparagraphs (C),
(E), (G), and (H) as subparagraphs (B)
through (E), respectively.
[(C) Section 11.--Section 11(a) of the
Federal Deposit Insurance Act (12 U.S.C.
1821(a)) is amended--
[(i) by striking paragraphs (5), (6),
and (7); and
[(ii) by redesignating paragraph (8)
as paragraph (5).''.
[(7) Section 5136 of the revised statutes.--The
paragraph designated the ``Eleventh'' of section 5136
of the Revised Statutes of the United States (12 U.S.C.
24) is amended in the 5th sentence, by striking
``affected deposit insurance fund'' and inserting
``Deposit Insurance Fund''.
[(8) Investments promoting public welfare;
limitations on aggregate investments.--The 23d
undesignated paragraph of section 9 of the Federal
Reserve Act (12 U.S.C. 338a) is amended in the 4th
sentence, by striking ``affected deposit insurance
fund'' and inserting ``Deposit Insurance Fund''.
[(9) Advances to critically undercapitalized
depository institutions.--Section 10B(b)(3)(A)(ii) of
the Federal Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii))
is amended by striking ``any deposit insurance fund
in'' and inserting ``the Deposit Insurance Fund of''.
[(10) Amendments to the balanced budget and emergency
deficit control act of 1985.--Section 255(g)(1)(A) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 (2 U.S.C. 905(g)(1)(A)) is amended--
[(A) by striking ``Bank Insurance Fund'' and
inserting ``Deposit Insurance Fund''; and
[(B) by striking ``Federal Deposit Insurance
Corporation, Savings Association Insurance
Fund;''.
[(11) Further amendments to the federal home loan
bank act.--The Federal Home Loan Bank Act (12 U.S.C.
1421 et seq.) is amended--
[(A) in section 11(k) (12 U.S.C. 1431(k))--
[(i) in the subsection heading, by
striking ``SAIF'' and inserting ``the
Deposit Insurance Fund''; and
[(ii) by striking ``Savings
Association Insurance Fund'' each place
such term appears and inserting
``Deposit Insurance Fund'';
[(B) in section 21A(b)(4)(B) (12 U.S.C.
1441a(b)(4)(B)), by striking ``affected deposit
insurance fund'' and inserting ``Deposit
Insurance Fund'';
[(C) in section 21A(b)(6)(B) (12 U.S.C.
1441a(b)(6)(B))--
[(i) in the subparagraph heading, by
striking ``SAIF-insured banks'' and
inserting ``Charter conversions''; and
[(ii) by striking ``Savings
Association Insurance Fund member'' and
inserting ``savings association'';
[(D) in section 21A(b)(10)(A)(iv)(II) (12
U.S.C. 1441a(b)(10)(A)(iv)(II)), by striking
``Savings Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
[(E) in section 21B(e) (12 U.S.C. 1441b(e))--
[(i) in paragraph (5), by inserting
``as of the date of funding'' after
``Savings Association Insurance Fund
members'' each place such term appears;
[(ii) by striking paragraph (7); and
[(iii) by redesignating paragraph (8)
as paragraph (7); and
[(F) in section 21B(k) (12 U.S.C. 1441b(k))--
[(i) by striking paragraph (8); and
[(ii) by redesignating paragraphs (9)
and (10) as paragraphs (8) and (9),
respectively.
[(12) Amendments to the home owners' loan act.--The
Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is
amended--
[(A) in section 5--
[(i) in subsection (c)(5)(A), by
striking ``that is a member of the Bank
Insurance Fund'';
[(ii) in subsection (c)(6), by
striking ``As used in this subsection--
'' and inserting ``For purposes of this
subsection, the following definitions
shall apply:'';
[(iii) in subsection (o)(1), by
striking ``that is a Bank Insurance
Fund member'';
[(iv) in subsection (o)(2)(A), by
striking ``a Bank Insurance Fund member
until such time as it changes its
status to a Savings Association
Insurance Fund member'' and inserting
``insured by the Deposit Insurance
Fund'';
[(v) in subsection
(t)(5)(D)(iii)(II), by striking
``affected deposit insurance fund'' and
inserting ``Deposit Insurance Fund'';
[(vi) in subsection (t)(7)(C)(i)(I),
by striking ``affected deposit
insurance fund'' and inserting
``Deposit Insurance Fund''; and
[(vii) in subsection (v)(2)(A)(i), by
striking ``, the Savings Association
Insurance Fund'' and inserting ``or the
Deposit Insurance Fund''; and
[(B) in section 10--
[(i) in subsection
(e)(1)(A)(iii)(VII), by adding ``or''
at the end;
[(ii) in subsection (e)(1)(A)(iv), by
adding ``and'' at the end;
[(iii) in subsection (e)(1)(B), by
striking ``Savings Association
Insurance Fund or Bank Insurance Fund''
and inserting ``Deposit Insurance
Fund'';
[(iv) in subsection (e)(2), by
striking ``Savings Association
Insurance Fund or the Bank Insurance
Fund'' and inserting ``Deposit
Insurance Fund''; and
[(v) in subsection (m)(3), by
striking subparagraph (E), and by
redesignating subparagraphs (F), (G),
and (H) as subparagraphs (E), (F), and
(G), respectively.
[(13) Amendments to the national housing act.--The
National Housing Act (12 U.S.C. 1701 et seq.) is
amended--
[(A) in section 317(b)(1)(B) (12 U.S.C.
1723i(b)(1)(B)), by striking ``Bank Insurance
Fund for banks or through the Savings
Association Insurance Fund for savings
associations'' and inserting ``Deposit
Insurance Fund''; and
[(B) in section 526(b)(1)(B)(ii) (12 U.S.C.
1735f-14(b)(1)(B)(ii)), by striking ``Bank
Insurance Fund for banks and through the
Savings Association Insurance Fund for savings
associations'' and inserting ``Deposit
Insurance Fund''.
[(14) Further amendments to the federal deposit
insurance act.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended--
[(A) in section 3(a)(1) (12 U.S.C.
1813(a)(1)), by striking subparagraph (B) and
inserting the following:
[``(B) includes any former savings
association.'';
[(B) in section 5(b)(5) (12 U.S.C.
1815(b)(5)), by striking ``the Bank Insurance
Fund or the Savings Association Insurance
Fund;'' and inserting ``Deposit Insurance
Fund,'';
[(C) in section 5(d) (12 U.S.C. 1815(d)), by
striking paragraphs (2) and (3);
[(D) in section 5(d)(1) (12 U.S.C.
1815(d)(1))--
[(i) in subparagraph (A), by striking
``reserve ratios in the Bank Insurance
Fund and the Savings Association
Insurance Fund'' and inserting ``the
reserve ratio of the Deposit Insurance
Fund'';
[(ii) by striking subparagraph (B)
and inserting the following:
[``(2) Fee credited to the deposit insurance fund.--
The fee paid by the depository institution under
paragraph (1) shall be credited to the Deposit
Insurance Fund.'';
[(iii) by striking ``(1) Uninsured
institutions.--''; and
[(iv) by redesignating subparagraphs
(A) and (C) as paragraphs (1) and (3),
respectively, and moving the margins 2
ems to the left;
[(E) in section 5(e) (12 U.S.C. 1815(e))--
[(i) in paragraph (5)(A), by striking
``Bank Insurance Fund or the Savings
Association Insurance Fund'' and
inserting ``Deposit Insurance Fund'';
[(ii) by striking paragraph (6); and
[(iii) by redesignating paragraphs
(7), (8), and (9) as paragraphs (6),
(7), and (8), respectively;
[(F) in section 6(5) (12 U.S.C. 1816(5)), by
striking ``Bank Insurance Fund or the Savings
Association Insurance Fund'' and inserting
``Deposit Insurance Fund'';
[(G) in section 7(b) (12 U.S.C. 1817(b))--
[(i) in paragraph (1)(D), by striking
``each deposit insurance fund'' and
inserting ``the Deposit Insurance
Fund'';
[(ii) in clauses (i)(I) and (iv) of
paragraph (2)(A), by striking ``each
deposit insurance fund'' each place
such term appears and inserting ``the
Deposit Insurance Fund'';
[(iii) in paragraph (2)(A)(iii), by
striking ``a deposit insurance fund''
and inserting ``the Deposit Insurance
Fund'';
[(iv) by striking clause (iv) of
paragraph (2)(A);
[(v) in paragraph (2)(C) (as
redesignated by paragraph (6)(B) of
this subsection)--
[(I) by striking ``any
deposit insurance fund'' and
inserting ``the Deposit
Insurance Fund''; and
[(II) by striking ``that
fund'' each place such term
appears and inserting ``the
Deposit Insurance Fund'';
[(vi) in paragraph (2)(D) (as
redesignated by paragraph (6)(B) of
this subsection)--
[(I) in the subparagraph
heading, by striking ``funds
achieve'' and inserting ``fund
achieves''; and
[(II) by striking ``a deposit
insurance fund'' and inserting
``the Deposit Insurance Fund'';
[(vii) in paragraph (3)--
[(I) in the paragraph
heading, by striking ``funds''
and inserting ``fund'';
[(II) by striking ``members
of that fund'' where such term
appears in the portion of
subparagraph (A) which precedes
clause (i) of such subparagraph
and inserting ``insured
depository institutions'';
[(III) by striking ``that
fund'' each place such term
appears (other than in
connection with term amended in
subclause (II) of this clause)
and inserting ``the Deposit
Insurance Fund'';
[(IV) in subparagraph (A), by
striking ``Except as provided
in paragraph (2)(F), if'' and
inserting ``If'';
[(V) in subparagraph (A), by
striking ``any deposit
insurance fund'' and inserting
``the Deposit Insurance Fund'';
and
[(VI) by striking
subparagraphs (C) and (D) and
inserting the following:
[``(C) Amending schedule.--The Corporation
may, by regulation, amend a schedule prescribed
under subparagraph (B).''; and
[(viii) in paragraph (6)--
[(I) by striking ``any such
assessment'' and inserting
``any such assessment is
necessary'';
[(II) by striking ``(A) is
necessary--'';
[(III) by striking
subparagraph (B);
[(IV) by redesignating
clauses (i), (ii), and (iii) as
subparagraphs (A), (B), and
(C), respectively, and moving
the margins 2 ems to the left;
and
[(V) in subparagraph (C) (as
redesignated), by striking ``;
and'' and inserting a period;
[(H) in section 11(f)(1) (12 U.S.C.
1821(f)(1)), by striking ``, except that--''
and all that follows through the end of the
paragraph and inserting a period;
[(I) in section 11(i)(3) (12 U.S.C.
1821(i)(3))--
[(i) by striking subparagraph (B);
[(ii) by redesignating subparagraph
(C) as subparagraph (B); and
[(iii) in subparagraph (B) (as
redesignated), by striking
``subparagraphs (A) and (B)'' and
inserting ``subparagraph (A)'';
[(J) in section 11A(a) (12 U.S.C. 1821a(a))--
[(i) in paragraph (2), by striking
``liabilities.--'' and all that follows
through ``Except'' and inserting
``liabilities.--Except'';
[(ii) by striking paragraph (2)(B);
and
[(iii) in paragraph (3), by striking
``the Bank Insurance Fund, the Savings
Association Insurance Fund,'' and
inserting ``the Deposit Insurance
Fund'';
[(K) in section 11A(b) (12 U.S.C. 1821a(b)),
by striking paragraph (4);
[(L) in section 11A(f) (12 U.S.C. 1821a(f)),
by striking ``Savings Association Insurance
Fund'' and inserting ``Deposit Insurance
Fund'';
[(M) in section 13 (12 U.S.C. 1823)--
[(i) in subsection (a)(1), by
striking ``Bank Insurance Fund, the
Savings Association Insurance Fund,''
and inserting ``Deposit Insurance Fund,
the Special Reserve of the Deposit
Insurance Fund,'';
[(ii) in subsection (c)(4)(E)--
[(I) in the subparagraph
heading, by striking ``funds''
and inserting ``fund''; and
[(II) in clause (i), by
striking ``any insurance fund''
and inserting ``the Deposit
Insurance Fund'';
[(iii) in subsection (c)(4)(G)(ii)--
[(I) by striking
``appropriate insurance fund''
and inserting ``Deposit
Insurance Fund'';
[(II) by striking ``the
members of the insurance fund
(of which such institution is a
member)'' and inserting
``insured depository
institutions'';
[(III) by striking ``each
member's'' and inserting ``each
insured depository
institution's''; and
[(IV) by striking ``the
member's'' each place such term
appears and inserting ``the
institution's'';
[(iv) in subsection (c), by striking
paragraph (11);
[(v) in subsection (h), by striking
``Bank Insurance Fund'' and inserting
``Deposit Insurance Fund'';
[(vi) in subsection (k)(4)(B)(i), by
striking ``Savings Association
Insurance Fund'' and inserting
``Deposit Insurance Fund''; and
[(vii) in subsection (k)(5)(A), by
striking ``Savings Association
Insurance Fund'' and inserting
``Deposit Insurance Fund'';
[(N) in section 14(a) (12 U.S.C. 1824(a)) in
the 5th sentence--
[(i) by striking ``Bank Insurance
Fund or the Savings Association
Insurance Fund'' and inserting
``Deposit Insurance Fund''; and
[(ii) by striking ``each such fund''
and inserting ``the Deposit Insurance
Fund'';
[(O) in section 14(b) (12 U.S.C. 1824(b)), by
striking ``Bank Insurance Fund or Savings
Association Insurance Fund'' and inserting
``Deposit Insurance Fund'';
[(P) in section 14(c) (12 U.S.C. 1824(c)), by
striking paragraph (3);
[(Q) in section 14(d) (12 U.S.C. 1824(d))--
[(i) by striking ``BIF'' each place
such term appears and inserting
``DIF''; and
[(ii) by striking ``Bank Insurance
Fund'' each place such term appears and
inserting ``Deposit Insurance Fund'';
[(R) in section 15(c)(5) (12 U.S.C.
1825(c)(5))--
[(i) by striking ``the Bank Insurance
Fund or Savings Association Insurance
Fund, respectively'' each place such
term appears and inserting ``the
Deposit Insurance Fund''; and
[(ii) in subparagraph (B), by
striking ``the Bank Insurance Fund or
the Savings Association Insurance Fund,
respectively'' and inserting ``the
Deposit Insurance Fund'';
[(S) in section 17(a) (12 U.S.C. 1827(a))--
[(i) in the subsection heading, by
striking ``BIF, SAIF,'' and inserting
``the Deposit Insurance Fund''; and
[(ii) in paragraph (1), by striking
``the Bank Insurance Fund, the Savings
Association Insurance Fund,'' each
place such term appears and inserting
``the Deposit Insurance Fund'';
[(T) in section 17(d) (12 U.S.C. 1827(d)), by
striking ``the Bank Insurance Fund, the Savings
Association Insurance Fund,'' each place such
term appears and inserting ``the Deposit
Insurance Fund'';
[(U) in section 18(m)(3) (12 U.S.C.
1828(m)(3))--
[(i) by striking ``Savings
Association Insurance Fund'' each place
such term appears and inserting
``Deposit Insurance Fund''; and
[(ii) in subparagraph (C), by
striking ``or the Bank Insurance
Fund'';
[(V) in section 18(p) (12 U.S.C. 1828(p)), by
striking ``deposit insurance funds'' and
inserting ``Deposit Insurance Fund'';
[(W) in section 24 (12 U.S.C. 1831a) in
subsections (a)(1) and (d)(1)(A), by striking
``appropriate deposit insurance fund'' each
place such term appears and inserting ``Deposit
Insurance Fund'';
[(X) in section 28 (12 U.S.C. 1831e), by
striking ``affected deposit insurance fund''
each place such term appears and inserting
``Deposit Insurance Fund'';
[(Y) by striking section 31 (12 U.S.C.
1831h);
[(Z) in section 36(i)(3) (12 U.S.C.
1831m(i)(3)) by striking ``affected deposit
insurance fund'' and inserting ``Deposit
Insurance Fund'';
[(AA) in section 38(a) (12 U.S.C. 1831o(a))
in the subsection heading, by striking
``Funds'' and inserting ``Fund'';
[(BB) in section 38(k) (12 U.S.C. 1831o(k))--
[(i) in paragraph (1), by striking
``a deposit insurance fund'' and
inserting ``the Deposit Insurance
Fund''; and
[(ii) in paragraph (2)(A)--
[(I) by striking ``A deposit
insurance fund'' and inserting
``The Deposit Insurance Fund'';
and
[(II) by striking ``the
deposit insurance fund's
outlays'' and inserting ``the
outlays of the Deposit
Insurance Fund''; and
[(CC) in section 38(o) (12 U.S.C. 1831o(o))--
[(i) by striking ``Associations.--''
and all that follows through
``Subsections (e)(2)'' and inserting
``Associations.--Subsections (e)(2)'';
[(ii) by redesignating subparagraphs
(A), (B), and (C) as paragraphs (1),
(2), and (3), respectively, and moving
the margins 2 ems to the left; and
[(iii) in paragraph (1) (as
redesignated), by redesignating clauses
(i) and (ii) as subparagraphs (A) and
(B), respectively, and moving the
margins 2 ems to the left.
[(15) Amendments to the financial institutions
reform, recovery, and enforcement act of 1989.--The
Financial Institutions Reform, Recovery, and
Enforcement Act is amended--
[(A) in section 951(b)(3)(B) (12 U.S.C.
1833a(b)(3)(B)), by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,''
and inserting ``Deposit Insurance Fund''; and
[(B) in section 1112(c)(1)(B) (12 U.S.C.
3341(c)(1)(B)), by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,''
and inserting ``Deposit Insurance Fund''.
[(16) Amendment to the bank enterprise act of 1991.--
Section 232(a)(1) of the Bank Enterprise Act of 1991
(12 U.S.C. 1834(a)(1)) is amended by striking ``section
7(b)(2)(H)'' and inserting ``section 7(b)(2)(G)''.
[(17) Amendment to the bank holding company act of
1956.--Section 2(j)(2) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841(j)(2)) is amended by striking
``Savings Association Insurance Fund'' and inserting
``Deposit Insurance Fund''.]
----------
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 3. As used in this Act--
(a) Definitions of Bank and Related Terms.--
(1) Bank.--The term ``bank''--
(A) * * *
[(B) includes any former savings association
that--
[(i) has converted from a savings
association charter; and
[(ii) is a Savings Association
Insurance Fund member.]
(B) includes any former savings association.
* * * * * * *
[(y) The term ``deposit insurance fund'' means the Bank
Insurance Fund or the Savings Association Insurance Fund, as
appropriate.]
(y) Definitions Relating to Deposit Insurance Fund.--
(1) Deposit insurance fund.--The term ``Deposit
Insurance Fund'' means the Deposit Insurance Fund
established under section 11(a)(4).
(2) Designated reserve ratio.--The term ``designated
reserve ratio'' means the reserve ratio designated by
the Board of Directors in accordance with section
7(b)(3).
(3) Reserve ratio.--The term ``reserve ratio'', when
used with regard to the Deposit Insurance Fund other
than in connection with a reference to the designated
reserve ratio, means the ratio of the net worth of the
Deposit Insurance Fund to the value of the aggregate
estimated insured deposits.
* * * * * * *
SEC. 5. DEPOSIT INSURANCE.
(a) * * *
(b) Subject to the provisions of this Act and to such terms
and conditions as the Board of Directors may impose, any branch
of a foreign bank, upon application by the bank to the
Corporation, and examination by the Corporation of the branch,
and approval by the Board of Directors, may become an insured
branch. Before approving any such application, the Board of
Directors shall give consideration to--
(1) * * *
* * * * * * *
(5) the risk presented to [the Bank Insurance Fund or
the Savings Association Insurance Fund,] the Deposit
Insurance Fund,
* * * * * * *
(c)(1) * * *
* * * * * * *
(4) The purpose of the surety bonds and pledges of assets
required under this subsection is to provide protection to the
[deposit insurance fund] Deposit Insurance Fund against the
risks entailed in insuring the domestic deposits of a foreign
bank whose activities, assets, and personnel are in large part
outside the jurisdiction of the United States. In the
implementation of its authority under this subsection, however,
the Corporation shall endeavor to avoid imposing requirements
on such banks which would unnecessarily place them at a
competitive disadvantage in relation to domestically
incorporated banks.
* * * * * * *
(d) Insurance Fees.--
[(1) Uninsured institutions.--]
[(A)] (1) In general.--Any institution that becomes
insured by the Corporation, and any noninsured branch
that becomes insured by the Corporation, shall pay the
Corporation any fee which the Corporation may by
regulation prescribe, after giving due consideration to
the need to establish and maintain [reserve ratios in
the Bank Insurance Fund and the Savings Association
Insurance Fund as required by section 7] the reserve
ratio of the Deposit Insurance Fund.
[(B) Fee credited to appropriate fund.--The
fee paid by the depository institution shall be
credited to the Bank Insurance Fund if the
depository institution becomes a Bank Insurance
Fund member, and to the Savings Association
Insurance Fund if the depository institution
becomes a Savings Association Insurance Fund
member.]
(2) Fee credited to the deposit insurance fund.--The
fee paid by the depository institution under paragraph
(1) shall be credited to the Deposit Insurance Fund.
[(C)] (3) Exception for certain depository
institutions.--Any depository institution that becomes
an insured depository institution by operation of
section 4(a) shall not pay any fee.
[(2) Conversions.--
[(A) In general.--
[(i) Prior approval required.--No
insured depository institution may
participate in a conversion transaction
without the prior approval of the
Corporation.
[(ii) 5-year moratorium on
conversions.--Except as provided in
subparagraph (C), the Corporation may
not approve any conversion transaction
before the later of the end of the 5-
year period beginning on the date of
the enactment of the Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989 or the date on
which the Savings Association Insurance
Fund first meets or exceeds the
designated reserve ratio for such fund.
[(B) Conversion defined.--For purposes of
this paragraph, the term ``conversion
transaction'' means--
[(i) the change of status of an
insured depository institution from a
Bank Insurance Fund member to a Savings
Association Insurance Fund member or
from a Savings Association Insurance
Fund member to a Bank Insurance Fund
member;
[(ii) the merger or consolidation of
a Bank Insurance Fund member with a
Savings Association Insurance Fund
member;
[(iii) the assumption of any
liability by--
[(I) any Bank Insurance Fund
member to pay any deposits of a
Savings Association Insurance
Fund member; or
[(II) any Savings Association
Insurance Fund member to pay
any deposits of a Bank
Insurance Fund member;
[(iv) the transfer of assets of--
[(I) any Bank Insurance Fund
member to any Savings
Association Insurance Fund
member in consideration of the
assumption of liabilities for
any portion of the deposits of
such Bank Insurance Fund
member; or
[(II) any Savings Association
Insurance Fund member to any
Bank Insurance Fund member in
consideration of the assumption
of liabilities for any portion
of the deposits of such Savings
Association Insurance Fund
member; and
[(v) the transfer of deposits--
[(I) from a Bank Insurance
Fund member to a Savings
Association Insurance Fund
member; or
[(II) from a Savings
Association Insurance Fund
member to a Bank Insurance Fund
member;
in a transaction in which the deposit
is received from a depositor at an
insured depository institution for
which a receiver has been appointed and
the receiving insured depository
institution is acting as agent for the
Corporation in connection with the
payment of such deposit to the
depositor at the institution for which
a receiver has been appointed.
[(C) Approval during moratorium.--The
Corporation may approve a conversion
transaction at any time if--
[(i) the conversion transaction
affects an insubstantial portion, as
determined by the Corporation, of the
total deposits of each depository
institution participating in the
conversion transaction;
[(ii) the conversion occurs in
connection with the acquisition of a
Savings Association Insurance Fund
member in default or in danger of
default, and the Corporation determines
that the estimated financial benefits
to the Savings Association Insurance
Fund or Resolution Trust Corporation
equal or exceed the Corporation's
estimate of loss of assessment income
to such insurance fund over the
remaining balance of the moratorium
period established by subparagraph (A),
and the Resolution Trust Corporation
concurs in the Corporation's
determination; or
[(iii) the conversion occurs in
connection with the acquisition of a
Bank Insurance Fund member in default
or in danger of default and the
Corporation determines that the
estimated financial benefits to the
Bank Insurance Fund equal or exceed the
Corporation's estimate of the loss of
assessment income to the insurance fund
over the remaining balance of the
moratorium period established by
subparagraph (A).
[(D) Certain transfers deemed to affect
insubstantial portion of total deposits.--For
purposes of subparagraph (C)(i), any conversion
transaction shall be deemed to affect an
insubstantial portion of the total deposits of
an insured depository institution, to the
extent the aggregate amount of the total
deposits transferred in such transaction and in
all conversion transactions occurring after the
date of the enactment of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989 does not exceed 35 percent of the
lesser of--
[(i) the amount which is equal to the
sum of--
[(I) the total deposits of
such insured depository
institution on May 1, 1989; and
[(II) the total amount of net
interest credited to the
depository institution's
deposits during the period
beginning on May 1, 1989, and
ending on the date of the
transfer of deposits in
connection with such
transaction; or
[(ii) the amount which is equal to
the total deposits of such insured
depository institution on the date of
the transfer of deposits in connection
with such transaction.
[(E) Exit and entrance fees.--Each insured
depository institution participating in a
conversion transaction shall pay--
[(i) in the case of a conversion
transaction in which the resulting or
acquiring depository institution is not
a Savings Association Insurance Fund
member, an exit fee (in an amount to be
determined and assessed in accordance
with subparagraph (F)) which--
[(I) shall be deposited in
the Savings Association
Insurance Fund; or
[(II) shall be paid to the
Financing Corporation, if the
Secretary of the Treasury
determines that the Financing
Corporation has exhausted all
other sources of funding for
interest payments on the
obligations of the Financing
Corporation and orders that
such fees be paid to the
Financing Corporation;
[(ii) in the case of a conversion
transaction in which the resulting or
acquiring depository institution is not
a Bank Insurance Fund member, an exit
fee in an amount to be determined by
the Corporation (and assessed in
accordance with subparagraph (F)(ii))
which shall be deposited in the Bank
Insurance Fund; and
[(iii) an entrance fee in an amount
to be determined by the Corporation
(and assessed in accordance with
subparagraph (F)(ii)), except that--
[(I) in the case of a
conversion transaction in which
the resulting or acquiring
depository institution is a
Bank Insurance Fund member, the
fee shall be the approximate
amount which the Corporation
calculates as necessary to
prevent dilution of the Bank
Insurance Fund, and shall be
paid to the Bank Insurance
Fund; and
[(II) in the case of a
conversion transaction in which
the resulting or acquiring
depository institution is a
Savings Association Insurance
Fund member, the fee shall be
the approximate amount which
the Corporation calculates as
necessary to prevent dilution
of the Savings Association
Insurance Fund, and shall be
paid to the Savings Association
Insurance Fund.
[(F) Assessment of exit and entrance fees.--
[(i) Determination of amount of exit
fees.--
[(I) Conversions before
january 1, 1997.--In the case
of any exit fee assessed under
subparagraph (E)(i) for any
conversion transaction
consummated before January 1,
1997, the amount of such fee
shall be determined jointly by
the Corporation and the
Secretary of the Treasury.
[(II) Assessments after
december, 31, 1996.--In the
case of any exit fee assessed
under subparagraph (E)(i) for
any conversion transaction
consummated after December 31,
1996, the amount of such fee
shall be determined by the
Corporation.
[(ii) Procedures.--The Corporation
shall prescribe, by regulation,
procedures for assessing any exit or
entrance fee under subparagraph (E).
[(G) Charter conversion of saif members.--
This subsection shall not be construed as
prohibiting any savings association which is a
Savings Association Insurance Fund member from
converting to a bank charter during the period
described in subparagraph (A)(ii) if the
resulting bank remains a Savings Association
Insurance Fund member.
[(3) Optional conversions subject to special rules on
deposit insurance payments.--
[(A) Conversions allowed.--Notwithstanding
paragraph (2)(A), and subject to the
requirements of this paragraph, any insured
depository institution may participate in a
transaction described in clause (ii), (iii), or
(iv) of paragraph (2)(B) if the transaction is
approved by the responsible agency under
section 18(c)(2).
[(B) Assessments on deposits attributable to
former depository institution.--
[(i) Assessments by saif.--In the
case of any acquiring, assuming, or
resulting depository institution which
is a Bank Insurance Fund member, that
portion of the deposits of such member
for any semiannual period which is
equal to the adjusted attributable
deposit amount (determined under
subparagraph (C) with respect to the
transaction) shall be treated as
deposits which are insured by the
Savings Association Insurance Fund.
[(ii) Assessments by bif.--In the
case of any acquiring, assuming, or
resulting depository institution which
is a Savings Association Insurance Fund
member, that portion of the deposits of
such member for any semiannual period
which is equal to the adjusted
attributable deposit amount (determined
under subparagraph (C) with respect to
the transaction) shall be treated as
deposits which are insured by the Bank
Insurance Fund.
[(C) Determination of adjusted attributable
deposit amount.--Except as provided in
subparagraph (K), the adjusted attributable
deposit amount which shall be taken into
account for purposes of determining the amount
of the assessment under subparagraph (B) for
any semiannual period by any acquiring,
assuming, or resulting depository institution
in connection with a transaction under
subparagraph (A) is the amount which is equal
to the sum of--
[(i) the amount of any deposits
acquired by the institution in
connection with the transaction (as
determined at the time of such
transaction);
[(ii) the total of the amounts
determined under clause (iii) for
semiannual periods preceding the
semiannual period for which the
determination is being made under this
subparagraph; and
[(iii) the amount by which the sum of
the amounts described in clauses (i)
and (ii) would have increased during
the preceding semiannual period (other
than any semiannual period beginning
before the date of such transaction) if
such increase occurred at a rate equal
to the annual rate of growth of
deposits of the acquiring, assuming, or
resulting depository institution minus
the amount of any deposits acquired
through the acquisition, in whole or in
part, of another insured depository
institution.
[(D) Deposit of assessment.--That portion of
any assessment under section 7 which--
[(i) is determined in accordance with
subparagraph (B)(i) shall be deposited
in the Savings Association Insurance
Fund; and
[(ii) is determined in accordance
with subparagraph (B)(ii) shall be
deposited in the Bank Insurance Fund.
[(E) Conditions for approval, generally.--
[(i) Information required.--An
application to engage in any
transaction under this paragraph shall
contain such information relating to
the factors to be considered for
approval as the responsible agency may
require, by regulation or by specific
request, in connection with any
particular application.
[(ii) No transfer of deposit
insurance permitted.--This paragraph
shall not be construed as authorizing
transactions which result in the
transfer of any insured depository
institution's Federal deposit insurance
from 1 Federal deposit insurance fund
to the other Federal deposit insurance
fund.
[(iii) Capital requirements.--A
transaction described in this paragraph
shall not be approved under section
18(c)(2) unless the acquiring,
assuming, or resulting depository
institution will meet all applicable
capital requirements upon consummation
of the transaction.
[(F) Certain interstate transactions.--A Bank
Insurance Fund member which is a subsidiary of
a bank holding company may not be the
acquiring, assuming, or resulting depository
institution in a transaction under subparagraph
(A) unless the transaction would comply with
the requirements of section 3(d) of the Bank
Holding Company Act of 1956 if, at the time of
such transaction, the Savings Association
Insurance Fund member involved in such
transaction was a State bank that the bank
holding company was applying to acquire.
[(G) Allocation of costs in event of
default.--If any acquiring, assuming, or
resulting depository institution is in default
or danger of default at any time before this
paragraph ceases to apply, any loss incurred by
the Corporation shall be allocated between the
Bank Insurance Fund and the Savings Association
Insurance Fund, in amounts reflecting the
amount of insured deposits of such acquiring,
assuming, or resulting depository institution
assessed by the Bank Insurance Fund and the
Savings Association Insurance Fund,
respectively, under subparagraph (B).
[(H) Subsequent approval of conversion
transaction.--This paragraph shall cease to
apply if--
[(i) after the end of the moratorium
period established by paragraph (2)(A),
the Corporation approves an application
by any acquiring, assuming, or
resulting depository institution to
treat the transaction described in
subparagraph (A) as a conversion
transaction; and
[(ii) the acquiring, assuming, or
resulting depository institution pays
the amount of any exit and entrance fee
assessed by the Corporation under
subparagraph (E) of paragraph (2) with
respect to such transaction.
[(I) Acquiring, assuming, or resulting
depository institution defined.--For purposes
of this paragraph, the term ``acquiring,
assuming, or resulting depository institution''
means any insured depository institution
which--
[(i) results from any transaction
described in paragraph (2)(B)(ii) and
approved under this paragraph;
[(ii) in connection with a
transaction described in paragraph
(2)(B)(iii) and approved under this
paragraph, assumes any liability to pay
deposits of another insured depository
institution; or
[(iii) in connection with a
transaction described in paragraph
(2)(B)(iv) and approved under this
paragraph, acquires assets from any
insured depository institution in
consideration of the assumption of
liability for any deposits of such
institution.
[(K) Adjustment of adjusted attributable
deposit amount.--The amount determined under
subparagraph (C)(i) for deposits acquired by
March 31, 1995, shall be reduced by 20 percent
for purposes of computing the adjusted
attributable deposit amount for the payment of
any assessment for any semiannual period that
begins after the date of the enactment of the
Deposit Insurance Funds Act of 1996 (other than
the special assessment imposed under section
2702(a) of such Act), for a Bank Insurance Fund
member bank that, as of June 30, 1995--
[(i) had an adjusted attributable
deposit amount that was less than 50
percent of the total deposits of that
member bank; or
[(ii)(I) had an adjusted attributable
deposit amount equal to less than 75
percent of the total assessable
deposits of that member bank;
[(II) had total assessable deposits
greater than $5,000,000,000; and
[(III) was owned or controlled by a
bank holding company that owned or
controlled insured depository
institutions having an aggregate amount
of deposits insured or treated as
insured by the Bank Insurance Fund
greater than the aggregate amount of
deposits insured or treated as insured
by the Savings Association Insurance
Fund.]
(e) Liability of Commonly Controlled Depository
Institutions.--
(1) * * *
* * * * * * *
(5) Waiver authority.--
(A) In general.--The Corporation, in its
discretion, may exempt any insured depository
institution from the provisions of this
subsection if the Corporation determines that
such exemption is in the best interests of the
[Bank Insurance Fund or the Savings Association
Insurance Fund] Deposit Insurance Fund.
* * * * * * *
[(6) 5-year transition rule.--During the 5-year
period beginning on the date of the enactment of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989--
[(A) no Savings Association Insurance Fund
member shall have any liability to the
Corporation under this subsection arising out
of assistance provided by the Corporation or
any loss incurred by the Corporation as a
result of the default of a Bank Insurance Fund
member which was acquired by such Savings
Association Insurance Fund member or any
affiliate of such member before the date of the
enactment of such Act; and
[(B) no Bank Insurance Fund member shall have
such liability with respect to assistance
provided by or loss incurred by the Corporation
as a result of the default of a Savings
Association Insurance Fund member which was
acquired by such Bank Insurance Fund member or
any affiliate of such member before the date of
the enactment of such Act.]
[(7)] (6) Exclusion for institutions acquired in debt
collections.--Any depository institution shall not be
treated as commonly controlled, for purposes of this
subsection, during the 5-year period beginning on the
date of an acquisition described in subparagraph (A) or
such longer period as the Corporation may determine
after written application by the acquirer, if--
(A) * * *
* * * * * * *
[(8)] (7) Exception for certain fslic assisted
institutions.--No depository institution shall have any
liability to the Corporation under this subsection as
the result of the default of, or assistance provided
with respect to, an insured depository institution
which is an affiliate of such depository institution
if--
(A) * * *
* * * * * * *
[(9)] (8) Commonly controlled defined.--For purposes
of this subsection, depository institutions are
commonly controlled if--
(A) * * *
* * * * * * *
SEC. 6. FACTORS TO BE CONSIDERED.
The factors that are required, under section 4, to be
considered in connection with, and enumerated in, any
certificate issued pursuant to section 4 and that are required,
under section 5, to be considered by the Board of Directors in
connection with any determination by such Board pursuant to
section 5 are the following:
(1) * * *
* * * * * * *
(5) The risk presented by such depository institution
to the [Bank Insurance Fund or the Savings Association
Insurance Fund] Deposit Insurance Fund.
* * * * * * *
Sec. 7. (a)(1) * * *
* * * * * * *
(3) Each insured depository institution shall make to the
appropriate Federal banking agency 4 reports of condition
annually upon dates which shall be selected by the Chairman of
the Board of Directors, the Comptroller of the Currency, the
Chairman of the Board of Governors of the Federal Reserve
System, and the Director of the Office of Thrift Supervision.
The dates selected shall be the same for all insured depository
institutions, except that when any of said reporting dates is a
nonbusiness day for any depository institution, the preceding
business day shall be its reporting date. [Two dates shall be
selected within the semiannual period of January to June
inclusive, and the reports on such dates shall be the basis for
the certified statement to be filed in July pursuant to
subsection (c) of this section, and two dates shall be selected
within the semiannual period of July to December inclusive, and
the reports on such dates shall be the basis for the certified
statement to be filed in January pursuant to subsection (c) of
this section.] Such reports of condition shall be the basis for
the certified statements to be filed pursuant to subsection
(c). The deposit liabilities shall be reported in said reports
of condition in accordance with and pursuant to paragraphs (4)
and (5) of this subsection, and such other information shall be
reported therein as may be required by the respective agencies.
Each said report of condition shall contain a declaration by
the president, a vice president, the cashier or the treasurer,
or by any other officer designated by the board of directors or
trustees of the reporting depository institution to make such
declaration, that the report is true and correct to the best of
his knowledge and belief. The correctness of said report of
conditions shall be attested by the signatures of at least two
directors or trustees of the reporting depository institution
other than the officer making such declaration, with a
declaration that the report has been examined by them and to
the best of their knowledge and belief is true and correct. At
the time of making said reports of condition each insured
depository institution shall furnish to the Corporation a copy
thereof containing such signed declaration and attestations.
Nothing herein shall preclude any of the foregoing agencies
from requiring the banks or savings associations under its
jurisdiction to make additional reports of condition at any
time.
* * * * * * *
(b) Assessments.--
(1) Risk-based assessment system.--
(A) * * *
(B) Private reinsurance authorized.--In
carrying out this paragraph, the Corporation
may--
(i) * * *
(ii) base that institution's
[semiannual] assessment (in whole or in
part) on the cost of the reinsurance.
(C) Risk-based assessment system defined.--
For purposes of this paragraph, the term
``risk-based assessment system'' means a system
for calculating a depository institution's
[semiannual] assessment based on--
(i) the probability that the [deposit
insurance fund] Deposit Insurance Fund
will incur a loss with respect to the
institution, taking into consideration
the risks attributable to--
(I) * * *
* * * * * * *
(iii) the revenue needs of the
[deposit insurance fund] Deposit
Insurance Fund.
(D) Separate assessment systems.--The Board
of Directors may establish separate risk-based
assessment systems for large and small members
of [each deposit insurance fund] the Deposit
Insurance Fund.
(E) Information concerning risk of loss and
economic conditions.--
(i) Sources of information.--For
purposes of determining risk of losses
at insured depository institutions and
economic conditions generally affecting
depository institutions, the
Corporation shall collect information,
as appropriate, from all sources the
Board of Directors considers
appropriate, such as reports of
condition, inspection reports, and
other information from all Federal
banking agencies, any information
available from State bank supervisors,
State insurance and securities
regulators, the Securities and Exchange
Commission (including information
described in section 35), the Secretary
of the Treasury, the Commodity Futures
Trading Commission, the Farm Credit
Administration, the Federal Trade
Commission, any Federal reserve bank or
Federal home loan bank, and other
regulators of financial institutions,
and any information available from
credit rating entities, and other
private economic or business analysts.
(ii) Consultation with federal
banking agencies.--
(I) In general.--Except as
provided in subclause (II), in
assessing the risk of loss to
the Deposit Insurance Fund with
respect to any insured
depository institution, the
Corporation shall consult with
the appropriate Federal banking
agency of such institution.
(II) Treatment on aggregate
basis.--In the case of insured
depository institutions that
are well capitalized (as
defined in section 38) and, in
the most recent examination,
were found to be well managed,
the consultation under
subclause (I) concerning the
assessment of the risk of loss
posed by such institutions may
be made on an aggregate basis.
(iii) Rule of construction.--No
provision of this paragraph shall be
construed as providing any new
authority for the Corporation to
require submission of information by
insured depository institutions to the
Corporation.
(F) Modifications to the risk-based
assessment system allowed only after notice and
comment.--In revising or modifying the risk-
based assessment system at any time after the
date of the enactment of the Federal Deposit
Insurance Reform Act of 2003, the Board of
Directors may implement such revisions or
modification in final form only after notice
and opportunity for comment.
(2) Setting assessments.--
[(A) Achieving and maintaining designated
reserve ratio.--
[(i) In general.--The Board of
Directors shall set semiannual
assessments for insured depository
institutions when necessary, and only
to the extent necessary--
[(I) to maintain the reserve
ratio of each deposit insurance
fund at the designated reserve
ratio; or
[(II) if the reserve ratio is
less than the designated
reserve ratio, to increase the
reserve ratio to the designated
reserve ratio as provided in
paragraph (3).
[(ii) Factors to be considered.--In
carrying out clause (i), the Board of
Directors shall consider the deposit
insurance fund's--
[(I) expected operating
expenses,
[(II) case resolution
expenditures and income,
[(III) the effect of
assessments on members'
earnings and capital, and
[(IV) any other factors that
the Board of Directors may deem
appropriate.
[(iii) Limitation on assessment.--
Except as provided in clause (v), the
Board of Directors shall not set
semiannual assessments with respect to
a deposit insurance fund in excess of
the amount needed--
[(I) to maintain the reserve
ratio of the fund at the
designated reserve ratio; or
[(II) if the reserve ratio is
less than the designated
reserve ratio, to increase the
reserve ratio to the designated
reserve ratio.
[(iv) Designated reserve ratio
defined.--The designated reserve ratio
of each deposit insurance fund for each
year shall be--
[(I) 1.25 percent of
estimated insured deposits; or
[(II) a higher percentage of
estimated insured deposits that
the Board of Directors
determines to be justified for
that year by circumstances
raising a significant risk of
substantial future losses to
the fund.
[(v) Exception to limitation on
assessments.--The Board of Directors
may set semiannual assessments in
excess of the amount permitted under
clauses (i) and (iii) with respect to
insured depository institutions that
exhibit financial, operational, or
compliance weaknesses ranging from
moderately severe to unsatisfactory, or
are not well capitalized, as that term
is defined in section 38.
[(B) Independent treatment of funds.--The
Board of Directors shall--
[(i) set semiannual assessments for
members of each deposit insurance fund
independently from semiannual
assessments for members of any other
deposit insurance fund; and
[(ii) set the designated reserve
ratio of each deposit insurance fund
independently from the designated
reserve ratio of any other deposit
insurance fund.]
(A) In general.--The Board of Directors shall
set assessments for insured depository
institutions in such amounts as the Board of
Directors may determine to be necessary or
appropriate, subject to subparagraph (D).
(B) Factors to be considered.--In setting
assessments under subparagraph (A), the Board
of Directors shall consider the following
factors:
(i) The estimated operating expenses
of the Deposit Insurance Fund.
(ii) The estimated case resolution
expenses and income of the Deposit
Insurance Fund.
(iii) The projected effects of the
payment of assessments on the capital
and earnings of insured depository
institutions.
(iv) the risk factors and other
factors taken into account pursuant to
paragraph (1) under the risk-based
assessment system, including the
requirement under such paragraph to
maintain a risk-based system.
(v) Any other factors the Board of
Directors may determine to be
appropriate.
(C) Notice of assessments.--The Corporation
shall notify each insured depository
institution of that institution's [semiannual]
assessment.
(D) Base rate for assessments.--
(i) In general.--In setting
assessment rates pursuant to
subparagraph (A), the Board of
Directors shall establish a base rate
of not more than 1 basis point
(exclusive of any credit or dividend)
for those insured depository
institutions in the lowest-risk
category under the risk-based
assessment system established pursuant
to paragraph (1). No insured depository
institution shall be barred from the
lowest-risk category solely because of
size.
(ii) Suspension.--Clause (i) shall
not apply during any period in which
the reserve ratio of the Deposit
Insurance Fund is less than the amount
which is equal to 1.15 percent of the
aggregate estimated insured deposits.
[(E) Minimum assessments.--The Corporation
shall design the risk-based assessment system
for any deposit insurance fund so that, if the
Corporation has borrowings outstanding under
section 14 on behalf of that fund or the
reserve ratio of that fund remains below the
designated reserve ratio, the total amount
raised by semiannual assessments on members of
that fund shall be not less than the total
amount that would have been raised if--
[(i) section 7(b) as in effect on
July 15, 1991 remained in effect;
[(ii) the assessment rate in effect
on July 15, 1991 remained in effect;
and
[(iii) notwithstanding any other
provision of this subsection, during
the period beginning on the date of
enactment of the Deposit Insurance
Funds Act of 1996, and ending on
December 31, 1998, the assessment rate
for a Savings Association Insurance
Fund member may not be less than the
assessment rate for a Bank Insurance
Fund member that poses a comparable
risk to the deposit insurance fund.
[(F) Transition rule for savings association
insurance fund.--With respect to the Savings
Association Insurance Fund, during the period
beginning on the effective date of the
amendments made by section 302(a) of the
Federal Deposit Insurance Corporation
Improvement Act of 1991 and ending on December
31, 1997--
[(i) subparagraph (A)(i)(II) shall
apply as if such subparagraph did not
include ``as provided in paragraph
(3)''; and
[(ii) subparagraph (E) shall be
applied by substituting ``if section
7(b) as in effect on July 15, 1991
remained in effect.'' for ``if--'' and
all that follows through clause (ii).
[(G) Special rule until the insurance funds
achieve the designated reserve ratio.--Until a
deposit insurance fund achieves the designated
reserve ratio, the Corporation may limit the
maximum assessment on insured depository
institutions under the risk-based assessment
system authorized under paragraph (1) to not
less than 10 basis points above the average
assessment on insured depository institutions
under that system.]
[(H)] (E) Bank enterprise act requirement.--
The Corporation shall design the risk-based
assessment system so that, insofar as the
system bases assessments, directly or
indirectly, on deposits, the portion of the
deposits of any insured depository institution
which are attributable to lifeline accounts
established in accordance with the Bank
Enterprise Act of 1991 shall be subject to
assessment [at a rate determined in accordance
with such Act] at \1/2\ the assessment rate
otherwise applicable for such insured
depository institution.
[(3) Special rule for recapitalizing
undercapitalized funds.--
[(A) In general.--Except as provided in
paragraph (2)(F), if the reserve ratio of any
deposit insurance fund is less than the
designated reserve ratio under paragraph
(2)(A)(iv), the Board of Directors shall set
semiannual assessment rates for members of that
fund--
[(i) that are sufficient to increase
the reserve ratio for that fund to the
designated reserve ratio not later than
1 year after such rates are set; or
[(ii) in accordance with a schedule
promulgated by the Corporation under
subparagraph (B).
[(B) Recapitalization schedules.--For
purposes of subparagraph (A)(ii), the
Corporation shall by regulation promulgate a
schedule that specifies, at semiannual
intervals, target reserve ratios for that fund,
culminating in a reserve ratio that is equal to
the designated reserve ratio not later than 15
years after the date on which the schedule is
implemented.
[(C) Amending schedule.--The Corporation may,
by regulation, amend a schedule promulgated
under subparagraph (B) and such amendment may
extend the date specified in subparagraph (B)
to such later date as the Corporation
determines will, over time, maximize the amount
of semiannual assessments received by the
Savings Association Insurance Fund, net of
insurance losses incurred by the Fund.
[(D) Application to saif members.--This
paragraph shall become applicable to Savings
Association Insurance Fund members on January
1, 1998.
[(4) Semiannual period defined.--For purposes of this
section, the term ``semiannual period'' means a period
beginning on January 1 of any calendar year and ending
on June 30 of the same year, or a period beginning on
July 1 of any calendar year and ending on December 31
of the same year.
[(5) Records to be maintained.--Each insured
depository institution shall maintain all records that
the Corporation may require for verifying the
correctness of the institution's semiannual
assessments. No insured depository institution shall be
required to retain those records for that purpose for a
period of more than 5 years from the date of the filing
of any certified statement, except that when there is a
dispute between the insured depository institution and
the Corporation over the amount of any assessment, the
depository institution shall retain the records until
final determination of the issue.]
(3) Designated reserve ratio.--
(A) Establishment.--
(i) In general.--The Board of
Directors shall designate, by
regulation after notice and opportunity
for comment, the reserve ratio
applicable with respect to the Deposit
Insurance Fund.
(ii) Not less than annual
redetermination.--A determination under
clause (i) shall be made by the Board
of Directors at least before the
beginning of each calendar year, for
such calendar year, and at such other
times as the Board of Directors may
determine to be appropriate.
(B) Range.--The reserve ratio designated by
the Board of Directors for any year--
(i) may not exceed 1.4 percent of
estimated insured deposits; and
(ii) may not be less than 1.15
percent of estimated insured deposits.
(C) Factors.--In designating a reserve ratio
for any year, the Board of Directors shall--
(i) take into account the risk of
losses to the Deposit Insurance Fund in
such year and future years, including
historic experience and potential and
estimated losses from insured
depository institutions;
(ii) take into account economic
conditions generally affecting insured
depository institutions so as to allow
the designated reserve ratio to
increase during more favorable economic
conditions and to decrease during less
favorable economic conditions,
notwithstanding the increased risks of
loss that may exist during such less
favorable conditions, as determined to
be appropriate by the Board of
Directors;
(iii) seek to prevent sharp swings in
the assessment rates for insured
depository institutions; and
(iv) take into account such other
factors as the Board of Directors may
determine to be appropriate, consistent
with the requirements of this
subparagraph.
(D) Publication of proposed change in
ratio.--In soliciting comment on any proposed
change in the designated reserve ratio in
accordance with subparagraph (A), the Board of
Directors shall include in the published
proposal a thorough analysis of the data and
projections on which the proposal is based.
(E) DIF restoration plans.--
(i) In general.--Whenever--
(I) the Corporation projects
that the reserve ratio of the
Deposit Insurance Fund will,
within 6 months of such
determination, fall below the
minimum amount specified in
subparagraph (B)(ii) for the
designated reserve ratio; or
(II) the reserve ratio of the
Deposit Insurance Fund actually
falls below the minimum amount
specified in subparagraph
(B)(ii) for the designated
reserve ratio without any
determination under subclause
(I) having been made,
the Corporation shall establish and
implement a Deposit Insurance Fund
restoration plan within 90 days that
meets the requirements of clause (ii)
and such other conditions as the
Corporation determines to be
appropriate.
(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 10-year period beginning
upon the implementation of the plan.
(iii) Restriction on assessment
credits.--As part of any restoration
plan under this subparagraph, the
Corporation may elect to restrict the
application of assessment credits
provided under subsection (e)(3) for
any period that the plan is in effect.
(iv) Limitation on restriction.--
Notwithstanding clause (iii), while any
restoration plan under this
subparagraph is in effect, the
Corporation shall apply credits
provided to an insured depository
institution under subsection (e)(3)
against any assessment imposed on the
institution for any assessment period
in an amount equal to the lesser of--
(I) the amount of the
assessment; or
(II) the amount equal to 3
basis points of the
institution's assessment base.
(v) Transparency.--Not more than 30
days after the Corporation establishes
and implements a restoration plan under
clause (i), the Corporation 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.
(4) Depository institution required to maintain
assessment-related records.--Each insured depository
institution shall maintain all records that the
Corporation may require for verifying the correctness
of any assessment on the insured depository institution
under this subsection until the later of--
(A) the end of the 3-year period beginning on
the due date of the assessment; or
(B) in the case of a dispute between the
insured depository institution and the
Corporation with respect to such assessment,
the date of a final determination of any such
dispute.
[(6)] (5) Emergency special assessments.--In addition
to the other assessments imposed on insured depository
institutions under this subsection, the Corporation may
impose 1 or more special assessments on insured
depository institutions in an amount determined by the
Corporation if the amount of [any such assessment] any
such assessment is necessary--
[(A) is necessary--]
[(i)] (A) to provide sufficient assessment
income to repay amounts borrowed from the
Secretary of the Treasury under section 14(a)
in accordance with the repayment schedule in
effect under section 14(c) during the period
with respect to which such assessment is
imposed;
[(ii)] (B) to provide sufficient assessment
income to repay obligations issued to and other
amounts borrowed from [Bank Insurance Fund
members] insured depository institutions under
section 14(d); or
[(iii)] (C) for any other purpose that the
Corporation may deem necessary[; and].
[(B) is allocated between Bank Insurance Fund
members and Savings Association Insurance Fund
members in amounts which reflect the degree to
which the proceeds of the amounts borrowed are
to be used for the benefit of the respective
insurance funds.]
[(7)] (6) Community enterprise credits.--The
Corporation shall allow a credit against any semiannual
assessment to any insured depository institution which
satisfies the requirements of the Community Enterprise
Assessment Credit Board under section 233(a)(1) of the
Bank Enterprise Act of 1991 in the amount determined by
such Board by regulation.
(c) Certified Statements; Payments.--
(1) Certified statements required.--
(A) In general.--Each insured depository
institution shall file with the Corporation a
certified statement containing such information
as the Corporation may require for determining
the institution's [semiannual] assessment.
* * * * * * *
(2) Payments required.--
(A) In general.--Each insured depository
institution shall pay to the Corporation the
[semiannual] assessment imposed under
subsection (b).
* * * * * * *
(3) Newly insured institutions.--To facilitate the
administration of this section, the Board of Directors
may waive the requirements of paragraphs (1) and (2)
for the [semiannual period] initial assessment period
in which a depository institution becomes insured.
* * * * * * *
[(e) Refunds.--
[(1) Overpayments.--In the case of any payment of an
assessment by an insured depository institution in
excess of the amount due to the Corporation, the
Corporation may--
[(A) refund the amount of the excess payment
to the insured depository institution; or
[(B) credit such excess amount toward the
payment of subsequent semiannual assessments
until such credit is exhausted.
[(2) Balance in insurance fund in excess of
designated reserve.--
[(A) In general.--Subject to subparagraphs
(B) and (C), if, as of the end of any
semiannual assessment period beginning after
the date of the enactment of the Deposit
Insurance Funds Act of 1996, the amount of the
actual reserves in--
[(i) the Bank Insurance Fund (until
the merger of such fund into the
Deposit Insurance Fund pursuant to
section 2704 of the Deposit Insurance
Funds Act of 1996); or
[(ii) the Deposit Insurance Fund
(after the establishment of such fund),
exceeds the balance required to meet the
designated reserve ratio applicable with
respect to such fund, such excess amount shall
be refunded to insured depository institutions
by the Corporation on such basis as the Board
of Directors determines to be appropriate,
taking into account the factors considered
under the risk-based assessment system.
[(B) Refund not to exceed previous semiannual
assessment.--The amount of any refund under
this paragraph to any member of a deposit
insurance fund for any semiannual assessment
period may not exceed the total amount of
assessments paid by such member to the
insurance fund with respect to such period.
[(C) Refund limitation for certain
institutions.--No refund may be made under this
paragraph with respect to the amount of any
assessment paid for any semiannual assessment
period by any insured depository institution
described in clause (v) of subsection
(b)(2)(A).]
(e) Refunds, Dividends, and Credits.--
(1) Refunds of overpayments.--In the case of any
payment of an assessment by an insured depository
institution in excess of the amount due to the
Corporation, the Corporation may--
(A) refund the amount of the excess payment
to the insured depository institution; or
(B) credit such excess amount toward the
payment of subsequent assessments until such
credit is exhausted.
(2) Dividends from excess amounts in deposit
insurance fund.--
(A) Reserve ratio in excess of 1.4 percent of
estimated insured deposits.--Whenever the
reserve ratio of the Deposit Insurance Fund
exceeds 1.4 percent of estimated insured
deposits, the Corporation shall declare the
amount in the Fund in excess of the amount
required to maintain the reserve ratio at 1.4
percent of estimated insured deposits, as
dividends to be paid to insured depository
institutions.
(B) Reserve ratio equal to or in excess of
1.35 percent of estimated insured deposits and
not more than 1.4 percent.--Whenever the
reserve ratio of the Deposit Insurance Fund
equals or exceeds 1.35 percent of estimated
insured deposits and is not more than 1.4
percent of such deposits, the Corporation shall
declare the amount in the Fund that is equal to
50 percent of the amount in excess of the
amount required to maintain the reserve ratio
at 1.35 percent of the estimated insured
deposits as dividends to be paid to insured
depository institutions.
(C) Basis for distribution of dividends.--
(i) In general.--Solely for the
purposes of dividend distribution under
this paragraph and credit distribution
under paragraph (3)(B), the Corporation
shall determine each insured depository
institution's relative contribution to
the Deposit Insurance Fund (or any
predecessor deposit insurance fund) for
calculating such institution's share of
any dividend or credit declared under
this paragraph or paragraph (3)(B),
taking into account the factors
described in clause (ii).
(ii) Factors for distribution.--In
implementing this paragraph and
paragraph (3)(B) in accordance with
regulations, the Corporation shall take
into account the following factors:
(I) The ratio of the
assessment base of an insured
depository institution
(including any predecessor) on
December 31, 1996, to the
assessment base of all eligible
insured depository institutions
on that date.
(II) The total amount of
assessments paid on or after
January 1, 1997, by an insured
depository institution
(including any predecessor) to
the Deposit Insurance Fund (and
any predecessor deposit
insurance fund).
(III) That portion of
assessments paid by an insured
depository institution
(including any predecessor)
that reflects higher levels of
risk assumed by such
institution.
(IV) Such other factors as
the Corporation may determine
to be appropriate.
(D) Notice and opportunity for comment.--The
Corporation shall prescribe by regulation,
after notice and opportunity for comment, the
method for the calculation, declaration, and
payment of dividends under this paragraph.
(3) Credit pool.--
(A) One-time credit based on total assessment
base at year-end 1996.--
(i) In general.--Before the end of
the 270-day period beginning on the
date of the enactment of the Federal
Deposit Insurance Reform Act of 2003,
the Board of Directors shall, by
regulation, provide for a credit to
each eligible insured depository
institution, based on the assessment
base of the institution (including any
predecessor institution) on December
31, 1996, as compared to the combined
aggregate assessment base of all
eligible insured depository
institutions, taking into account such
factors as the Board of Directors may
determine to be appropriate.
(ii) Credit limit.--The aggregate
amount of credits available under
clause (i) to all eligible insured
depository institutions shall equal the
amount that the Corporation could
collect if the Corporation imposed an
assessment of 12 basis points on the
combined assessment base of the Bank
Insurance Fund and the Savings
Association Insurance Fund as of
December 31, 2001.
(iii) Eligible insured depository
institution defined.--For purposes of
this paragraph, the term ``eligible
insured depository institution'' means
any insured depository institution
that--
(I) was in existence on
December 31, 1996, and paid a
deposit insurance assessment
prior to that date; or
(II) is a successor to any
insured depository institution
described in subclause (II).
(iv) Application of credits.--
(I) In general.--The amount
of a credit to any eligible
insured depository institution
under this paragraph shall be
applied by the Corporation,
subject to subsection
(b)(3)(e), to the assessments
imposed on such institution
under subsection (b) that
become due for assessment
periods beginning after the
effective date of regulations
prescribed under clause (i).
(II) Regulations.--The
regulations prescribed under
clause (i) shall establish the
qualifications and procedures
governing the application of
assessment credits pursuant to
subclause (I).
(v) Limitation on amount of credit
for certain depository institutions.--
In the case of an insured depository
institution that exhibits financial,
operational, or compliance weaknesses
ranging from moderately severe to
unsatisfactory, or is not adequately
capitalized (as defined in section 38)
at the beginning of an assessment
period, the amount of any credit
allowed under this paragraph against
the assessment on that depository
institution for such period may not
exceed the amount calculated by
applying to that depository institution
the average assessment rate on all
insured depository institutions for
such assessment period.
(vi) Predecessor defined.--For
purposes of this paragraph, the term
``predecessor'', when used with respect
to any insured depository institution,
includes any other insured depository
institution acquired by or merged with
such insured depository institution.
(B) On-going credit pool.--
(i) In general.--In addition to the
credit provided pursuant to
subparagraph (A) and subject to the
limitation contained in clause (v) of
such subparagraph, the Corporation
shall, by regulation, establish an on-
going system of credits to be applied
against future assessments under
subsection (b)(1) on the same basis as
the dividends provided under paragraph
(2)(C).
(ii) Limitation on credits under
certain circumstances.--No credits may
be awarded by the Corporation under
this subparagraph during any period in
which--
(I) the reserve ratio of the
Deposit Insurance Fund is less
than the designated reserve
ratio of such Fund; or
(II) the reserve ratio of the
Fund is less than 1.25 percent
of the amount of estimated
insured deposits.
(iii) Criteria for determination.--In
determining the amounts of any
assessment credits under this
subparagraph, the Board of Directors
shall take into account the factors for
designating the reserve ratio under
subsection (b)(3) and the factors for
setting assessments under subsection
(b)(2)(B).
(4) Administrative review.--
(A) In general.--The regulations prescribed
under paragraph (2)(D) and subparagraphs (A)
and (B) of paragraph (3) shall include
provisions allowing an insured depository
institution a reasonable opportunity to
challenge administratively the amount of the
credit or dividend determined under paragraph
(2) or (3) for such institution.
(B) Administrative review.--Any review under
subparagraph (A) of any determination of the
Corporation under paragraph (2) or (3) shall be
final and not subject to judicial review.
* * * * * * *
(i) Insurance of Trust Funds.--
(1) In general.--Trust funds held on deposit by an
insured depository institution in a fiduciary capacity
as trustee pursuant to any irrevocable trust
established pursuant to any statute or written trust
agreement shall be insured in an amount not to exceed
[$100,000] the standard maximum deposit insurance
amount (as determined under section 11(a)(1)) for each
trust estate.
* * * * * * *
(3) Bank deposit financial assistance program.--
Notwithstanding paragraph (1), funds deposited by an
insured depository institution pursuant to the Bank
Deposit Financial Assistance Program of the Department
of Energy shall be separately insured in an amount not
to exceed [$100,000] the standard maximum deposit
insurance amount (as determined under section 11(a)(1))
for each insured depository institution depositing such
funds.
* * * * * * *
(j)(1) * * *
* * * * * * *
(7) The appropriate Federal banking agency may disapprove any
proposed acquisition if--
(A) * * *
* * * * * * *
(F) the appropriate Federal banking agency determines
that the proposed transaction would result in an
adverse effect on the [Bank Insurance Fund or the
Savings Association Insurance Fund] Deposit Insurance
Fund.
* * * * * * *
Sec. 8. (a) * * *
* * * * * * *
(p) Notwithstanding any other provision of law, whenever the
Board of Directors shall determine that an insured depository
institution is not engaged in the business of receiving
deposits, other than trust funds as herein defined, the
Corporation shall notify the depository institution that its
insured status will terminate at the expiration of the first
full [semiannual] assessment period following such notice. A
finding by the Board of Directors that a depository institution
is not engaged in the business of receiving deposits, other
than such trust funds, shall be conclusive. The Board of
Directors shall prescribe the notice to be given by the
depository institution of such termination and the Corporation
may publish notice thereof. Upon the termination of the insured
status of any such depository institution, its deposits shall
thereupon cease to be insured and the depository institution
shall thereafter be relieved of all future obligations to the
Corporation, including the obligation to pay future
assessments.
(q) Whenever the liabilities of an insured depository
institution for deposits shall have been assumed by another
insured depository institution or depository institutions,
whether by way of merger, consolidation, or other statutory
assumption, or pursuant to contract (1) the insured status of
the depository institution whose liabilities are so assumed
shall terminate on the date of receipt by the Corporation of
satisfactory evidence of such assumption; (2) the separate
insurance of all deposits so assumed shall terminate at the end
of six months from the date such assumption takes effect or, in
the case of any time deposit, the earliest maturity date after
the six-month period. Where the deposits of an insured
depository institution are assumed by a newly insured
depository institution, the depository institution whose
deposits are assumed shall not be required to pay any
assessment with respect to the deposits which have been so
assumed after the [semiannual period] assessment period in
which the assumption takes effect.
* * * * * * *
(t) Authority of FDIC To Take Enforcement Action Against
Insured Depository Institutions and Institution-Affiliated
Parties.--
(1) * * *
(2) FDIC's authority to act if appropriate federal
banking agency fails to follow recommendation.--If the
appropriate Federal banking agency does not, before the
end of the 60-day period beginning on the date on which
the agency receives the recommendation under paragraph
(1), take the enforcement action recommended by the
Corporation or provide a plan acceptable to the
Corporation for responding to the Corporation's
concerns, the Corporation may take the recommended
enforcement action if the Board of Directors
determines, upon a vote of its members, that--
(A) * * *
* * * * * * *
(C) the conduct or threatened conduct
(including any acts or omissions) poses a risk
to the [deposit insurance fund] Deposit
Insurance Fund, or may prejudice the interests
of the institution's depositors.
* * * * * * *
Sec. 11. (a) Deposit Insurance.--
(1) Insured amounts payable.--
(A) * * *
[(B) Net amount of insured deposit.--The net
amount due to any depositor at an insured
depository institution shall not exceed
$100,000 as determined in accordance with
subparagraphs (C) and (D).]
(B) Net amount of insured deposit.--The net
amount due to any depositor at an insured
depository institution shall not exceed the
standard maximum deposit insurance amount as
determined in accordance with subparagraphs
(C), (D), (E) and (F) and paragraph (3).
* * * * * * *
[(D) Coverage on pro rata or ``pass-through''
basis.--
[(i) In general.--Except as provided
in clause (ii), for the purpose of
determining the amount of insurance due
under subparagraph (B), the Corporation
shall provide deposit insurance
coverage with respect to deposits
accepted by any insured depository
institution on a pro rata or ``pass-
through'' basis to a participant in or
beneficiary of an employee benefit plan
(as defined in section
11(a)(8)(B)(ii)), including any
eligible deferred compensation plan
described in section 457 of the
Internal Revenue Code of 1986.
[(ii) Exception.--After the end of
the 1-year period beginning on the date
of the enactment of the Federal Deposit
Insurance Corporation Improvement Act
of 1991, the Corporation shall not
provide insurance coverage on a pro
rata or ``pass-through'' basis pursuant
to clause (i) with respect to deposits
accepted by any insured depository
institution which, at the time such
deposits are accepted, may not accept
brokered deposits under section 29.
[(iii) Coverage under certain
circumstances.--Clause (ii) shall not
apply with respect to any deposit
accepted by an insured depository
institution described in such clause
if, at the time the deposit is
accepted--
[(I) the institution meets
each applicable capital
standard; and
[(II) the depositor receives
a written statement from the
institution that such deposits
at such institution are
eligible for insurance coverage
on a pro rata or ``pass-
through'' basis.]
(D) Coverage for certain employee benefit
plan deposits.--
(i) Pass-through insurance.--The
Corporation shall provide pass-through
deposit insurance for the deposits of
any employee benefit plan.
(ii) Prohibition on acceptance of
benefit plan deposits.--An insured
depository institution that is not well
capitalized or adequately capitalized
may not accept employee benefit plan
deposits.
(iii) Definitions.--For purposes of
this subparagraph, the following
definitions shall apply:
(I) Capital standards.--The
terms ``well capitalized'' and
``adequately capitalized'' have
the same meanings as in section
38.
(II) Employee benefit plan.--
The term ``employee benefit
plan'' has the same meaning as
in paragraph (8)(B)(ii), and
includes any eligible deferred
compensation plan described in
section 457 of the Internal
Revenue Code of 1986.
(III) Pass-through deposit
insurance.--The term ``pass-
through deposit insurance''
means, with respect to an
employee benefit plan, deposit
insurance coverage provided on
a pro rata basis to the
participants in the plan, in
accordance with the interest of
each participant.
(E) Standard maximum deposit insurance amount
defined.--For purposes of this Act, the term
``standard maximum deposit insurance amount''
means--
(i) until the effective date of final
regulations prescribed pursuant to
section 9(a)(2) of the Federal Deposit
Insurance Reform Act of 2003, $100,000;
and
(ii) on and after such effective
date, $130,000, adjusted as provided
under subparagraph (F).
(F) Inflation adjustment.--
(i) In general.--By April 1 of 2005,
and the 1st day of each subsequent 5-
year period, the Board of Directors and
the National Credit Union
Administration Board 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) $130,000; and
(II) the ratio of the value
of the Personal Consumption
Expenditures Chain-Type Index
(or any successor index
thereto), published by the
Department of Commerce, as of
December 31 of the year
preceding the year in which the
adjustment is calculated under
this clause, to the value of
such index as of the date this
subparagraph takes effect.
(ii) Rounding.--If the amount
determined under clause (ii) for any
period is not a multiple of $10,000,
the amount so determined shall be
rounded to the nearest $10,000.
(iii) Publication and report to the
congress.--Not later than April 5 of
any calendar year in which an
adjustment is required to be calculated
under clause (i) to the standard
maximum deposit insurance amount and
the standard maximum share insurance
amount under such clause, the Board of
Directors and the National Credit Union
Administration Board shall--
(I) publish in the Federal
Register the standard maximum
deposit insurance amount, the
standard maximum share
insurance amount, and the
amount of coverage under
paragraph (3)(A) and section
207(k)(3) of the Federal Credit
Union Act, as so calculated;
and
(II) jointly submit a report
to the Congress containing the
amounts described in subclause
(I).
(iv) 6-month implementation period.--
Unless an Act of Congress enacted
before July 1 of the calendar year in
which an adjustment is required to be
calculated under clause (i) provides
otherwise, the increase in the standard
maximum deposit insurance amount and
the standard maximum share insurance
amount shall take effect on January 1
of the year immediately succeeding such
calendar year.
[(2)(A) Notwithstanding any limitation in this Act or in any
other provision of law relating to the amount of deposit
insurance available for the account of any one depositor, in
the case of a depositor who is--]
(2) Municipal depositors.--
(A) In general.--Notwithstanding any
limitation in this Act or in any other
provision of law relating to the amount of
deposit insurance available to any 1
depositor--
(i) a municipal depositor shall, for
the purpose of determining the amount
of insured deposits under this
subsection, be deemed to be a depositor
separate and distinct from any other
officer, employee, or agent of the
United States or any public unit
referred to in subparagraph (E); and
(ii) except as provided in
subparagraph (B), the deposits of a
municipal depositor shall be insured in
an amount equal to the standard maximum
deposit insurance amount (as determined
under paragraph (1)).
(B) In-state municipal depositors.--In the
case of the deposits of an in-State municipal
depositor described in clause (ii), (iii),
(iv), or (v) of subparagraph (E) at an insured
depository institution, such deposits shall be
insured in an amount not to exceed the lesser
of--
(i) $2,000,000; or
(ii) the sum of the standard maximum
deposit insurance amount and 80 percent
of the amount of any deposits in excess
of the standard maximum deposit
insurance amount.
(C) Municipal deposit parity.--No State may
deny to insured depository institutions within
its jurisdiction the authority to accept
deposits insured under this paragraph, or
prohibit the making of such deposits in such
institutions by any in-State municipal
depositor.
(D) In-state municipal depositor defined.--
For purposes of this paragraph, the term ``in-
State municipal depositor'' means a municipal
depositor that is located in the same State as
the office or branch of the insured depository
institution at which the deposits of that
depositor are held.
(E) Municipal depositor.--In this paragraph,
the term ``municipal depositor'' means a
depositor that is--
(i) an officer, employee, or agent of
the United States having official
custody of public funds and lawfully
investing or depositing the same in
time and savings deposits in an insured
depository institution;
(ii) an officer, employee, or agent
of any State of the United States, or
of any county, municipality, or
political subdivision thereof having
official custody of public funds and
lawfully investing or depositing the
same in time and savings deposits in an
insured depository institution in such
State;
(iii) an officer, employee, or agent
of the District of Columbia having
official custody of public funds and
lawfully investing or depositing the
same in time and savings deposits in an
insured depository institution in the
District of Columbia;
(iv) an officer, employee, or agent
of the Commonwealth of Puerto Rico, of
the Virgin Islands, of American Samoa,
of the Trust Territory of the Pacific
Islands, or of Guam, or of any county,
municipality, or political subdivision
thereof having official custody of
public funds and lawfully investing or
depositing the same in time and savings
deposits in an insured depository
institution in the Commonwealth of
Puerto Rico, the Virgin Islands,
American Samoa, the Trust Territory of
the Pacific Islands, or Guam,
respectively; or
(v) an officer, employee, or agent of
any Indian tribe (as defined in section
3(c) of the Indian Financing Act of
1974) or agency thereof having official
custody of tribal funds and lawfully
investing or depositing the same in
time and savings deposits in an insured
depository institution[;].
[such depositor shall, for the purpose of determining the
amount of insured deposits under this subsection, be deemed a
depositor in such custodial capacity separate and distinct from
any other officer, employee, or agent of the United States or
any public unit referred to in clause (ii), (iii), (iv), or (v)
and the deposit of any such depositor shall be insured in an
amount not to exceed $100,000 per account in an amount not to
exceed $100,000 per account.]
[(B) The]
(F) Authority to limit deposits.--The
Corporation may limit the aggregate amount of
funds that may be invested or deposited in
deposits in any insured depository institution
by any [depositor referred to in subparagraph
(A) of this paragraph] municipal depositor on
the basis of the size of any such bank in terms
of its assets: Provided, however, such
limitation may be exceeded by the pledging of
acceptable securities to the [depositor
referred to in subparagraph (A) of this
paragraph] municipal depositor when and where
required.
(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 [$100,000] 2 times the standard
maximum deposit insurance amount (as determined
under paragraph (1)) per participant per
insured depository institution.
* * * * * * *
[(4) General provisions relating to funds.--
[(A) Maintenance and use of funds.--The Bank
Insurance Fund established under paragraph (5)
and the Savings Association Insurance Fund
established under paragraph (6) shall each be--
[(i) maintained and administered by
the Corporation;
[(ii) maintained separately and not
commingled; and
[(iii) used by the Corporation to
carry out its insurance purposes in the
manner provided in this subsection.
[(B) Limitation on use.--Notwithstanding any
provision of law other than section
13(c)(4)(G), the Bank Insurance Fund and the
Savings Association Insurance Fund shall not be
used in any manner to benefit any shareholder
or affiliate (other than an insured depository
institution that receives assistance in
accordance with the provisions of this Act)
of--
[(i) any insured depository
institution for which the Corporation
or the Resolution Trust Corporation has
been appointed conservator or receiver,
in connection with any type of
resolution by the Corporation or the
Resolution Trust Corporation;
[(ii) any other insured depository
institution in default or in danger of
default, in connection with any type of
resolution by the Corporation or the
Resolution Trust Corporation; or
[(iii) any insured depository
institution, in connection with the
provision of assistance under this
section or section 13 with respect to
such institution, except that this
clause shall not prohibit any
assistance to any insured depository
institution that is not in default, or
that is not in danger of default, that
is acquiring (as defined in section
13(f)(8)(B)) another insured depository
institution.
[(5) Bank insurance fund.--
[(A) Establishment.--There is established a
fund to be known as the Bank Insurance Fund.
[(B) Transfer to fund.--On the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, the
Permanent Insurance Fund shall be dissolved and
all assets and liabilities of the Permanent
Insurance Fund shall be transferred to the Bank
Insurance Fund.
[(C) Uses.--The Bank Insurance Fund shall be
available to the Corporation for use with
respect to Bank Insurance Fund members.
[(D) Deposits.--All amounts assessed against
Bank Insurance Fund members by the Corporation
shall be deposited into the Bank Insurance
Fund.
[(6) Savings association insurance fund.--
[(A) Establishment.--There is established a
fund to be known as the Savings Association
Insurance Fund.
[(B) Uses.--The Savings Association Insurance
Fund shall be available to the Corporation for
use with respect to Savings Association
Insurance Fund members.
[(C) Deposits.--All amounts assessed against
Savings Association Insurance Fund members
which are not required for the Financing
Corporation, the Resolution Funding
Corporation, or the FSLIC Resolution Fund shall
be deposited in the Savings Association
Insurance Fund.
[(D) Treasury payments to fund.--To the
extent of the availability of amounts provided
in appropriation Acts and subject to
subparagraphs (E) and (G), the Secretary of the
Treasury shall pay to the Savings Association
Insurance Fund such amounts as may be needed to
pay losses incurred by the Fund in fiscal years
1994 through 1998.
[(E) Certification conditions on availability
of funding.--No amount appropriated for
payments by the Secretary of the Treasury in
accordance with subparagraph (D) for any fiscal
year may be expended unless the Chairperson of
the Board of Directors certifies to the
Congress, at any time before the beginning of
or during such fiscal year, that--
[(i) such amount is needed to pay for
losses which have been incurred or can
reasonably be expected to be incurred
by the Savings Association Insurance
Fund;
[(ii) the Board of Directors has
determined that--
[(I) Savings Association
Insurance Fund members, in the
aggregate, are unable to pay
additional semiannual
assessments under section 7(b)
at the assessment rates which
would be required in order to
cover, from such additional
assessments, losses which have
been incurred or can reasonably
be expected to be incurred by
the Fund without adversely
affecting the ability of such
members to raise and maintain
capital or to maintain the
members' assessment base; and
[(II) an increase in the
assessment rates for Savings
Association Insurance Fund
members to cover such losses
could reasonably be expected to
result in greater losses to the
Government;
[(iii) the Board of Directors has
determined that--
[(I) Savings Association
Insurance Fund members, in the
aggregate, are unable to pay
additional semiannual
assessments under section 7(b)
at the assessment rates which
would be required in order to
meet the repayment schedule
required under section 14(c)
for any amount borrowed under
section 14(a) to cover losses
which have been incurred or can
reasonably be expected to be
incurred by the Fund without
adversely affecting the ability
of such members to raise and
maintain capital or to maintain
the members' assessment base;
and
[(II) an increase in the
assessment rates for Savings
Association Insurance Fund
members to meet any such
repayment schedule could
reasonably be expected to
result in greater losses to the
Government;
[(iv) as of the date of
certification, the Corporation has in
effect procedures designed to ensure
that the activities of the Savings
Association Insurance Fund and the
affairs of any Savings Association
Insurance Fund member for which a
conservator or receiver has been
appointed are conducted in an efficient
manner and the Corporation is in
compliance with such procedures;
[(v) with respect to the most recent
audit of the Savings Association
Insurance Fund by the Comptroller
General of the United States before the
date of the certification--
[(I) the Corporation has
taken or is taking appropriate
action to implement any
recommendation made by the
Comptroller General; or
[(II) no corrective action is
necessary or appropriate;
[(vi) the Corporation has provided
for the appointment of a chief
financial officer who--
[(I) does not have other
operating responsibilities;
[(II) will report directly to
the Chairperson of the
Corporation; and
[(III) will have such
authority and duties of chief
financial officers under
section 902 of title 31, United
States Code, as the Board of
Directors of the Corporation
determines to be appropriate
with respect to the
Corporation;
[(vii) the Corporation has provided
for the appointment of a senior officer
whose responsibilities shall include
setting uniform standards for
contracting and contracting enforcement
in connection with the administration
of the Fund;
[(viii) the Corporation is
implementing the minority outreach
provisions mandated by section 1216 of
the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
[(ix) the Corporation has provided
for the appointment of a senior
attorney, at the assistant general
counsel level or above, responsible for
professional liability cases; and
[(x) the Corporation has improved the
management of legal services by--
[(I) utilizing staff counsel
when such utilization would
provide the same level of
quality in legal services as
the use of outside counsel at
the same or a lower estimated
cost; and
[(II) employing outside
counsel only if the use of
outside counsel would provide
the most practicable,
efficient, and cost-effective
resolution to the action and
only under a negotiated fee,
contingent fee, or
competitively bid fee
agreement.
[(F) Availability of rtc funding.--At any
time before the end of the 2-year period
beginning on the date of the termination of the
Resolution Trust Corporation, the Secretary of
the Treasury shall provide, out of funds
appropriated to the Resolution Trust
Corporation pursuant to section 21A(i)(3) of
the Federal Home Loan Bank Act and not expended
by the Resolution Trust Corporation, to the
Savings Association Insurance Fund, for any
year such amounts as are needed by the Fund and
are not needed by the Resolution Trust
Corporation, if the Chairperson of the Board of
Directors has certified to the Congress that--
[(i) such amount is needed to pay for
losses which have been incurred or can
reasonably be expected to be incurred
by the Savings Association Insurance
Fund;
[(ii) the Board of Directors has
determined that--
[(I) Savings Association
Insurance Fund members, in the
aggregate, are unable to pay
additional semiannual
assessments under section 7(b)
at the assessment rates which
would be required in order to
cover, from such additional
assessments, losses which have
been incurred or can reasonably
be expected to be incurred by
the Savings Association
Insurance Fund without
adversely affecting the ability
of such members to raise and
maintain capital or to maintain
the members' assessment base;
and
[(II) an increase in the
assessment rates for Savings
Association Insurance Fund
members to cover such losses
could reasonably be expected to
result in greater losses to the
Government;
[(iii) the Board of Directors has
determined that--
[(I) Savings Association
Insurance Fund members, in the
aggregate, are unable to pay
additional semiannual
assessments under section 7(b)
at the assessment rates which
would be required in order to
meet the repayment schedule
required under section 14(c)
for any amount borrowed under
section 14(a) to cover losses
which have been incurred or can
reasonably be expected to be
incurred by the Savings
Association Insurance Fund
without adversely affecting the
ability of such members to
raise and maintain capital or
to maintain such members'
assessment base; and
[(II) an increase in the
assessment rates for Savings
Association Insurance Fund
members to meet any such
repayment schedule could
reasonably be expected to
result in greater losses to the
Government;
[(iv) the Corporation has provided
for the appointment of a chief
financial officer who--
[(I) does not have other
operating responsibilities;
[(II) will report directly to
the Chairperson of the
Corporation; and
[(III) will have such
authority and duties of chief
financial officers under
section 902 of title 31, United
States Code, as the Board of
Directors of the Corporation
determines to be appropriate
with respect to the
Corporation;
[(v) the Corporation has provided for
the appointment of a senior officer
whose responsibilities shall include
setting uniform standards for
contracting and contracting enforcement
in connection with the administration
of the Fund;
[(vi) the Corporation is implementing
the minority outreach provisions
mandated by section 1216 of the
Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
[(vii) the Corporation has provided
for the appointment of a senior
attorney, at the assistant general
counsel level or above, responsible for
professional liability cases; and
[(viii) the Corporation has improved
the management of legal services by--
[(I) utilizing staff counsel
when such utilization would
provide the same level of
quality in legal services as
the use of outside counsel at
the same or a lower estimated
cost; and
[(II) employing outside
counsel only if the use of
outside counsel would provide
the most practicable,
efficient, and cost-effective
resolution to the action and
only under a negotiated fee,
contingent fee, or
competitively bid fee
agreement.
[(G) Exception to subparagraph (d).--
Notwithstanding subparagraph (D), no payment
may be made pursuant to such subparagraphs
after the Savings Association Insurance Fund
achieves a reserve ratio of 1.25 percent.
[(H) Appearance upon request.--The Secretary
of the Treasury and the Chairperson of the
Board of Directors of the Federal Deposit
Insurance Corporation shall appear before the
Committee on Banking, Finance and Urban Affairs
of the House of Representatives or the
Committee on Banking, Housing, and Urban
Affairs of the Senate, upon the request of the
chairman of the committee, to report on any
certification made to the Congress under
subparagraph (E) or (F).
[(I) Borrowing authority.--
[(i) In general.--The Corporation may
borrow from the Federal home loan
banks, with the concurrence of the
Federal Housing Finance Board, such
funds as the Corporation considers
necessary for the use of the Savings
Association Insurance Fund.
[(ii) Terms and conditions.--Any loan
from any Federal home loan bank under
clause (i) to the Savings Association
Insurance Fund shall--
[(I) bear a rate of interest
of not less than such bank's
current marginal cost of funds,
taking into account the
maturities involved;
[(II) be adequately secured,
as determined by the Federal
Housing Finance Board;
[(III) be a direct liability
of such Fund; and
[(IV) be subject to the
limitations of section 15(c).
[(J) Authorization of appropriations.--
Subject to subparagraph (E), there are
authorized to be appropriated to the Secretary
of the Treasury, such sums as may be necessary
to carry out the provisions of subparagraph (D)
for fiscal years 1994 through 1998, except that
the aggregate amount appropriated pursuant to
this authorization may not exceed
$8,000,000,000.
[(K) Return to treasury.--If the aggregate
amount of funds transferred to the Savings
Association Insurance Fund under subparagraph
(D) or (F) exceeds the amount needed to cover
losses incurred by the Fund, such excess amount
shall be deposited in the general fund of the
Treasury.
[(7) Provisions applicable to maintenance of
accounts.--
[(A) Corporation's authority.--Any provision
of this Act forbidding the commingling of the
Bank Insurance Fund with the Savings
Association Insurance Fund, or requiring the
separate maintenance of the Bank Insurance Fund
and the Savings Association Insurance Fund, is
not intended--
[(i) to limit or impair the authority
of the Corporation to use the same
facilities and resources in the course
of conducting supervisory, regulatory,
conservatorship, receivership, or
liquidation functions with respect to
banks and savings associations, or to
integrate such functions; or
[(ii) to limit or impair the
Corporation's power to combine assets
or liabilities belonging to banks and
savings associations in conservatorship
or receivership for managerial
purposes, or to limit or impair the
Corporation's power to dispose of such
assets or liabilities on an aggregate
basis.
[(B) Accounting requirements.--
[(i) Accounting for use of facilities
and resources.--The Corporation shall
keep a full and complete accounting of
all costs and expenses associated with
the use of any facility or resource
used in the course of any function
specified in subparagraph (A)(i) and
shall allocate, in the manner provided
in subparagraph (C), any such costs and
expenses incurred by the Corporation--
[(I) with respect to Bank
Insurance Fund members to the
Bank Insurance Fund; and
[(II) with respect to Savings
Association Insurance Fund
members to the Savings
Association Insurance Fund.
[(ii) Accounting for holding and
managing assets and liabilities.--The
Corporation shall keep a full and
complete accounting of all costs and
expenses associated with the holding
and management of any asset or
liability specified in subparagraph
(A)(ii).
[(iii) Accounting for disposition of
assets and liabilities.--The
Corporation shall keep a full and
complete accounting of all expenses and
receipts associated with the
disposition of any asset or liability
specified in subparagraph (A)(ii).
[(iv) Allocation of cost, expenses
and receipts.--The Corporation shall
allocate any cost, expense, and receipt
described in clause (ii) or clause
(iii) which is associated with any
asset or liability belonging to--
[(I) any Bank Insurance Fund
member to the Bank Insurance
Fund; and
[(II) any Savings Association
Insurance Fund member to the
Savings Association Insurance
Fund.
[(C) Allocation of administrative expenses.--
Any personnel, administrative, or other
overhead expense of the Corporation shall be
allocated--
[(i) fully to the Bank Insurance
Fund, if the expense was incurred
directly as a result of the
Corporation's responsibilities solely
with respect to Bank Insurance Fund
members;
[(ii) fully to the Savings
Association Insurance Fund, if the
expense was incurred directly as a
result of the Corporation's
responsibilities solely with respect to
Savings Association Insurance Fund
members;
[(iii) between the Bank Insurance
Fund and the Savings Association
Insurance Fund, in amounts reflecting
the relative degree to which the
expense was incurred as a result of the
activities of Bank Insurance Fund and
Savings Association Insurance Fund
members; or
[(iv) between the Bank Insurance Fund
and the Savings Association Insurance
Fund, in amounts reflecting the
relative total assets as of the end of
the preceding calendar year of Bank
Insurance Fund members and Savings
Association Insurance Fund members, to
the extent that the Board of Directors
is unable to make a determination under
clause (i), (ii), or (iii).]
(4) Deposit insurance fund.--
(A) Establishment.--There is established the
Deposit Insurance Fund, which the Corporation
shall--
(i) maintain and administer;
(ii) use to carry out its insurance
purposes, in the manner provided by
this subsection; and
(iii) invest in accordance with
section 13(a).
(B) Uses.--The Deposit Insurance Fund shall
be available to the Corporation for use with
respect to insured depository institutions the
deposits of which are insured by the Deposit
Insurance Fund.
(C) Limitation on use.--Notwithstanding any
provision of law other than section
13(c)(4)(G), the Deposit Insurance Fund shall
not be used in any manner to benefit any
shareholder or affiliate (other than an insured
depository institution that receives assistance
in accordance with the provisions of this Act)
of--
(i) any insured depository
institution for which the Corporation
has been appointed conservator or
receiver, in connection with any type
of resolution by the Corporation;
(ii) any other insured depository
institution in default or in danger of
default, in connection with any type of
resolution by the Corporation; or
(iii) any insured depository
institution, in connection with the
provision of assistance under this
section or section 13 with respect to
such institution, except that this
clause shall not prohibit any
assistance to any insured depository
institution that is not in default, or
that is not in danger of default, that
is acquiring (as defined in section
13(f)(8)(B)) another insured depository
institution.
(D) Deposits.--All amounts assessed against
insured depository institutions by the
Corporation shall be deposited into the Deposit
Insurance Fund.
[(8)] (5) Certain investment contracts not treated as
insured deposits.--
(A) * * *
* * * * * * *
(c) Appointment of Corporation as Conservator or Receiver.--
(1) * * *
* * * * * * *
(5) Grounds for appointing conservator or receiver.--
The grounds for appointing a conservator or receiver
(which may be the Corporation) for any insured
depository institution are as follows:
(A) * * *
* * * * * * *
(H) Violations of law.--Any violation of any
law or regulation, or any unsafe or unsound
practice or condition that is likely to--
(i) * * *
* * * * * * *
(iii) otherwise seriously prejudice
the interests of the institution's
depositors or the [deposit insurance
fund] Deposit Insurance Fund.
* * * * * * *
(10) Corporation may appoint itself as conservator or
receiver for insured depository institution to prevent
loss to [deposit insurance fund] deposit insurance
fund.--The Board of Directors may appoint the
Corporation as sole conservator or receiver of an
insured depository institution, after consultation with
the appropriate Federal banking agency and the
appropriate State supervisor (if any), if the Board of
Directors determines that--
(A) * * *
(B) the appointment is necessary to reduce--
(i) the risk that the [deposit
insurance fund] Deposit Insurance Fund
would incur a loss with respect to the
insured depository institution, or
(ii) any loss that the [deposit
insurance fund] Deposit Insurance Fund
is expected to incur with respect to
that institution.
* * * * * * *
(e) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
(1) * * *
* * * * * * *
(14) Selling credit card accounts receivable.--
(A) * * *
(B) Waiver by corporation.--The Corporation
may at any time, in its sole discretion and
upon such terms as it may prescribe, waive its
right to repudiate an agreement to sell credit
card accounts receivable if the Corporation--
(i) determines that the waiver is in
the best interests of the [deposit
insurance fund] Deposit Insurance Fund;
and
(ii) provides a written waiver to the
selling institution.
* * * * * * *
(f) Payment of Insured Deposits.--
(1) In general.--In case of the liquidation of, or
other closing or winding up of the affairs of, any
insured depository institution, payment of the insured
deposits in such institution shall be made by the
Corporation as soon as possible, subject to the
provisions of subsection (g), either by cash or by
making available to each depositor a transferred
deposit in a new insured depository institution in the
same community or in another insured depository
institution in an amount equal to the insured deposit
of such depositor, [except that--
[(A) all payments made pursuant to this
section on account of a closed Bank Insurance
Fund member shall be made only from the Bank
Insurance Fund, and
[(B) all payments made pursuant to this
section on account of a closed Savings
Association Insurance Fund member shall be made
only from the Savings Association Insurance
Fund.].
* * * * * * *
(i) Valuation of Claims in Default.--
(1) * * *
* * * * * * *
(3) Additional payments authorized.--
(A) * * *
[(B) Source of funds.--If the depository
institution in default is a Bank Insurance Fund
member, the Corporation may only make such
payments out of funds held in the Bank
Insurance Fund. If the depository institution
in default is a Savings Association Insurance
Fund member, the Corporation may only make such
payments out of funds held in the Savings
Association Insurance Fund.]
[(C)] (B) Manner of payment.--The Corporation
may make the payments or credit the amounts
specified in [subparagraphs (A) and (B)]
subparagraph (A) directly to the claimants or
may make such payments or credit such amounts
to an open insured depository institution to
induce such institution to accept liability for
such claims.
* * * * * * *
(m) New Banks.--
(1) * * *
* * * * * * *
(6) New deposits.--The new bank may, with the
approval of the Corporation, accept new deposits which
shall be subject to withdrawal on demand and which,
except where the new bank is the only bank in the
community, shall not exceed [$100,000] an amount equal
to the standard maximum deposit insurance amount from
any depositor.
* * * * * * *
(p) Certain Sales of Assets Prohibited.--
(1) * * *
(2) Convicted debtors.--Except as provided in
paragraph (3), any person who--
(A) * * *
(B) is in default on any loan or other
extension of credit from such insured
depository institution which, if not paid, will
cause substantial loss to the [institution, any
deposit insurance fund] institution, the
Deposit Insurance Fund, the Corporation, the
FSLIC Resolution Fund, or the Resolution Trust
Corporation,
* * * * * * *
SEC. 11A. FSLIC RESOLUTION FUND.
(a) Established.--
(1) * * *
(2) Transfer of fslic assets and [liabilities.--
[(A) In general.--Except] liabilities.--
Except as provided in section 21A of the
Federal Home Loan Bank Act, all assets and
liabilities of the Federal Savings and Loan
Insurance Corporation on the day before the
date of the enactment of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989 shall be transferred to the FSLIC
Resolution Fund.
[(B) Additional claims on assets.--The FSLIC
Resolution Fund shall pay to the Savings
Association Insurance Fund such amounts as are
needed for administrative and supervisory
expenses from the date of enactment of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 through September 30,
1992.]
(3) Separate holding.--Assets and liabilities
transferred to the FSLIC Resolution Fund shall be the
assets and liabilities of the Fund and not of the
Corporation and shall not be consolidated with the
assets and liabilities of [the Bank Insurance Fund, the
Savings Association Insurance Fund,] the Deposit
Insurance Fund or the Corporation for accounting,
reporting, or any other purpose.
* * * * * * *
(b) Source of Funds.--The FSLIC Resolution Fund shall be
funded from the following sources to the extent funds are
needed in the listed priority:
(1) * * *
* * * * * * *
[(4) During the period beginning on the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 and ending on
December 31, 1992, amounts assessed against Savings
Association Insurance Fund members by the Corporation
pursuant to section 7 which are not required by the
Financing Corporation pursuant to section 21 of the
Federal Home Loan Bank Act or by the Resolution Funding
Corporation pursuant to section 21B of the Federal Home
Loan Bank Act.]
* * * * * * *
(f) Dissolution.--The FSLIC Resolution Fund shall be
dissolved upon satisfaction of all debts and liabilities and
sale of all assets. Upon dissolution any remaining funds shall
be paid into the Treasury. Any administrative facilities and
supplies, including offices and office supplies, shall be
transferred to the Corporation for use by and to be held as
assets of the [Savings Association Insurance Fund] Deposit
Insurance Fund.
* * * * * * *
Sec. 12. (a) * * *
* * * * * * *
(f) Conflict of Interest.--
(1) * * *
* * * * * * *
(4) Disapproval of contractors.--
(A) * * *
* * * * * * *
(E) Prohibition required in certain cases.--
The standards established under subparagraph
(A) shall require the Corporation to prohibit
any person who has--
(i) * * *
* * * * * * *
(iv) caused a substantial loss to
[Federal deposit insurance funds] the
Deposit Insurance Fund (or any
predecessor deposit insurance fund);
from performing any service on behalf of the
Corporation.
* * * * * * *
Sec. 13. (a) Investment of Corporation's Funds.--
(1) Authority.--Funds held in the [Bank Insurance
Fund, the Savings Association Insurance Fund,] Deposit
Insurance Fund or the FSLIC Resolution Fund, that are
not otherwise employed shall be invested in obligations
of the United States or in obligations guaranteed as to
principal and interest by the United States.
* * * * * * *
(c)(1) * * *
* * * * * * *
(4) Least-cost resolution required.--
(A) In general.--Notwithstanding any other
provision of this Act, the Corporation may not
exercise any authority under this subsection or
subsection (d), (f), (h), (i), or (k) with
respect to any insured depository institution
unless--
(i) * * *
(ii) the total amount of the
expenditures by the Corporation and
obligations incurred by the Corporation
(including any immediate and long-term
obligation of the Corporation and any
direct or contingent liability for
future payment by the Corporation) in
connection with the exercise of any
such authority with respect to such
institution is the least costly to the
[deposit insurance fund] Deposit
Insurance Fund of all possible methods
for meeting the Corporation's
obligation under this section.
(B) Determining least costly approach.--In
determining how to satisfy the Corporation's
obligations to an institution's insured
depositors at the least possible cost to the
[deposit insurance fund] Deposit Insurance
Fund, the Corporation shall comply with the
following provisions:
(i) * * *
(ii) Foregone tax revenues.--Federal
tax revenues that the Government would
forego as the result of a proposed
transaction, to the extent reasonably
ascertainable, shall be treated as if
they were revenues foregone by the
[deposit insurance fund] Deposit
Insurance Fund.
* * * * * * *
(E) Deposit insurance [funds] fund available
for intended purpose only.--
(i) In general.--After December 31,
1994, or at such earlier time as the
Corporation determines to be
appropriate, the Corporation may not
take any action, directly or
indirectly, with respect to any insured
depository institution that would have
the effect of increasing losses to [any
insurance fund] the Deposit Insurance
Fund by protecting--
(I) * * *
* * * * * * *
(G) Systemic risk.--
(i) * * *
(ii) Repayment of loss.--The
Corporation shall recover the loss to
the [appropriate insurance fund]
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 [the members of
the insurance fund (of which such
institution is a member)] insured
depository institutions equal to the
product of--
(I) an assessment rate
established by the Corporation;
and
(II) the amount of [each
member's] each insured
depository institution's
average total assets during the
[semiannual period] assessment
period, minus the sum of the
amount of the [member's]
institution's average total
tangible equity and the amount
of the [member's] institution's
average total subordinated
debt.
* * * * * * *
[(11) Payments made under this subsection shall be made--
[(A) from the Bank Insurance Fund in the case of
payments to or on behalf of a member of such Fund; or
[(B) from the Savings Association Insurance Fund or
from funds made available by the Resolution Trust
Corporation in the case of payments to or on behalf of
any Savings Association Insurance Fund member.]
* * * * * * *
(h) The powers conferred on the Board of Directors and the
Corporation by this section to take action to reopen an insured
depository institution in default or to avert the default of an
insured depository institution may be used with respect to an
insured branch of a foreign bank if, in the judgment of the
Board of Directors, the public interest in avoiding the closing
of such branch substantially outweighs any additional risk of
loss to the [Bank Insurance Fund] Deposit Insurance Fund which
the exercise of such powers would entail.
* * * * * * *
(k) Emergency Acquisitions.--
(1) * * *
* * * * * * *
(4) Branching provisions.--
(A) * * *
(B) Restrictions.--
(i) In general.--Notwithstanding
subparagraph (A), if--
(I) * * *
* * * * * * *
such savings association shall be
subject to the conditions upon which a
bank may retain, operate, and establish
branches in the State in which the
[Savings Association Insurance Fund
member] savings association is located.
* * * * * * *
(5) Assistance before appointment of conservator or
receiver.--
(A) Assistance proposals.--The Corporation
shall consider proposals by [Savings
Association Insurance Fund members] savings
associations for assistance pursuant to
subsection (c) before grounds exist for
appointment of a conservator or receiver for
such member under the following circumstances:
(i) * * *
* * * * * * *
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
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 [Bank Insurance Fund or the Savings
Association Insurance Fund] Deposit Insurance Fund and the
borrowing shall become a liability of [each such fund] 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.
(b) Borrowing From Federal Financing Bank.--The Corporation
is authorized to issue and sell the Corporation's obligations,
on behalf of the [Bank Insurance Fund or Savings Association
Insurance Fund] Deposit Insurance Fund, to the Federal
Financing Bank established by the Federal Financing Bank Act of
1973. The Federal Financing Bank is authorized to purchase and
sell the Corporation's obligations on terms and conditions
determined by the Federal Financing Bank. Any such borrowings
shall be obligations subject to the obligation limitation of
section 15(c) of this Act. This subsection does not affect the
eligibility of any other entity to borrow from the Federal
Financing Bank.
(c) Repayment Schedules Required for any Borrowing.--
(1) * * *
* * * * * * *
[(3) Industry repayment.--
[(A) BIF member payments.--No agreement or
repayment schedule under paragraph (1) shall
require any payment by a Bank Insurance Fund
member for funds obtained under subsection (a)
for purposes of the Savings Association Fund.
[(B) SAIF member payments.--No agreement or
repayment schedule under paragraph (1) shall
require any payment by a Savings Association
Insurance Fund member for funds obtained under
subsection (a) for purposes of the Bank
Insurance Fund.]
[(d) Borrowing for BIF From BIF Members.--]
(d) Borrowing for the Deposit Insurance Fund From Insured
Depository Institutions.--
(1) Borrowing authority.--The Corporation may issue
obligations to [Bank Insurance Fund members] insured
depository institutions, and may borrow from [Bank
Insurance Fund members] insured depository institutions
and give security for any amount borrowed, and may pay
interest on (and any redemption premium with respect
to) any such obligation or amount to the extent--
(A) the proceeds of any such obligation or
amount are used by the Corporation solely for
purposes of carrying out the Corporation's
functions with respect to the [Bank Insurance
Fund] Deposit Insurance Fund; and
(B) the terms of the obligation or instrument
limit the liability of the Corporation or the
[Bank Insurance Fund] Deposit Insurance Fund
for the payment of interest and the repayment
of principal to the amount which is equal to
the amount of assessment income received by the
Fund from assessments under section 7.
(2) Limitations on borrowing.--
(A) Applicability of public debt limit.--For
purposes of the public debt limit established
in section 3101(b) of title 31, United States
Code, any obligation issued, or amount
borrowed, by the Corporation under paragraph
(1) shall be considered to be an obligation to
which such limit applies.
(B) Applicability of fdic borrowing limit.--
For purposes of the dollar amount limitation
established in section 14(a) of the Federal
Deposit Insurance Act (12 U.S.C. 1824(a)), any
obligation issued, or amount borrowed, by the
Corporation under paragraph (1) shall be
considered to be an amount borrowed from the
Treasury under such section.
(C) Interest rate limit.--The rate of
interest payable in connection with any
obligation issued, or amount borrowed, by the
Corporation under paragraph (1) shall not
exceed 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.
(D) Obligations to be held only by bif
members.--The terms of any obligation issued by
the Corporation under paragraph (1) shall
provide that the obligation will be valid only
if held by a [Bank Insurance Fund member]
insured depository institution.
(3) Liability of [bif] the deposit insurance fund.--
Any obligation issued or amount borrowed under
paragraph (1) shall be a liability of the [Bank
Insurance Fund] Deposit Insurance Fund.
(4) Terms and conditions.--Subject to paragraphs (1)
and (2), the Corporation shall establish the terms and
conditions for obligations issued or amounts borrowed
under paragraph (1), including interest rates and terms
to maturity.
(5) Investment by [bif members] insured depository
institutions.--
(A) Authority to invest.--Subject to
subparagraph (B) and notwithstanding any other
provision of Federal law or the law of any
State, any [Bank Insurance Fund member] insured
depository institution may purchase and hold
for investment any obligation issued by the
Corporation under paragraph (1) without
limitation, other than any limitation the
appropriate Federal banking agency may impose
specifically with respect to such obligations.
(B) Investment only from capital and retained
earnings.--Any [Bank Insurance Fund member]
insured depository institution may purchase
obligations or make loans to the Corporation
under paragraph (1) only to the extent the
purchase money or the money loaned is derived
from the member's capital or retained earnings.
(6) Accounting treatment.--In accounting for any
investment in an obligation purchased from, or any loan
made to, the Corporation for purposes of determining
compliance with any capital standard and preparing any
report required pursuant to section 7(a), the amount of
such investment or loan shall be treated as an asset.
(e) Borrowing for the Deposit Insurance Fund From Federal
Home Loan Banks.--
(1) In general.--The Corporation may borrow from the
Federal home loan banks, with the concurrence of the
Federal Housing Finance Board, such funds as the
Corporation considers necessary for the use of the
Deposit Insurance Fund.
(2) Terms and conditions.--Any loan from any Federal
home loan bank under paragraph (1) to the Deposit
Insurance Fund shall--
(A) bear a rate of interest of not less than
the current marginal cost of funds to that
bank, taking into account the maturities
involved;
(B) be adequately secured, as determined by
the Federal Housing Finance Board;
(C) be a direct liability of the Deposit
Insurance Fund; and
(D) be subject to the limitations of section
15(c).
Sec. 15. (a) * * *
* * * * * * *
(c) Limitation on Borrowing.--
(1) * * *
* * * * * * *
(5) Maximum amount limitation on outstanding
obligations.--Notwithstanding any other provisions of
this Act, the Corporation may not issue or incur any
obligation, if, after issuing or incurring the
obligation, the aggregate amount of obligations of [the
Bank Insurance Fund or Savings Association Insurance
Fund, respectively] the Deposit Insurance Fund,
outstanding would exceed the sum of--
(A) the amount of cash or the equivalent of
cash held by [the Bank Insurance Fund or
Savings Association Insurance Fund,
respectively] the Deposit Insurance Fund;
(B) the amount which is equal to 90 percent
of the Corporation's estimate of the fair
market value of assets held by [the Bank
Insurance Fund or the Savings Association
Insurance Fund, respectively] the Deposit
Insurance Fund, other than assets described in
subparagraph (A); and
(C) the total of the amounts authorized to be
borrowed from the Secretary of the Treasury
pursuant to section 14(a).
* * * * * * *
Sec. 17. (a) Annual Reports on [BIF, SAIF,] the Deposit
Insurance Fund and the FSLIC Resolution Fund.--
(1) In general.--The Corporation shall annually
submit a full report of its operations, activities,
budget, receipts, and expenditures for the preceding
12-month period. The report shall include, with respect
to [the Bank Insurance Fund, the Savings Association
Insurance Fund,] the Deposit Insurance Fund and the
FSLIC Resolution Fund, an analysis by the Corporation
of--
(A) * * *
* * * * * * *
(D) the exposure of [each insurance fund] the
Deposit Insurance Fund to changes in those
economic factors most likely to affect the
condition of that fund;
(E) a current estimate of the resources
needed for [the Bank Insurance Fund, the
Savings Association Insurance Fund,] the
Deposit Insurance Fund or the FSLIC Resolution
Fund to achieve the purposes of this Act; and
(F) any findings, conclusions, and
recommendations for legislative and
administrative actions considered appropriate
to future resolution activities by the
Corporation.
* * * * * * *
(d) Audit.--
(1) Audit required.--The Comptroller General shall
audit annually the financial transactions of the
Corporation, [the Bank Insurance Fund, the Savings
Association Insurance Fund,] the Deposit Insurance Fund
and the FSLIC Resolution Fund in accordance with
generally accepted government auditing standards.
(2) Access to books and records.--All books, records,
accounts, reports, files, and property belonging to or
used by the Corporation, [the Bank Insurance Fund, the
Savings Association Insurance Fund,] the Deposit
Insurance Fund and the FSLIC Resolution Fund, or by an
independent certified public accountant retained to
audit the Fund's financial statements, shall be made
available to the Comptroller General.
* * * * * * *
Sec. 18. [(a) Insurance Logo.--
[(1) Insured savings associations.--Each insured
savings association shall display at each place of
business maintained by such association a sign
containing only the following items:
[(A) A statement that insured deposits are
backed by the full faith and credit of the
United States Government.
[(B) A statement that deposits are federally
insured to $100,000.
[(C) The symbol of an eagle.
The sign shall not contain any reference to a
Government agency and shall accord each item
substantially equal prominence.
[(2) Insured banks.--Not later than 30 days after the
date of enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, each insured
bank shall display at each place of business maintained
by such bank one of the following:
[(A) The sign required to be displayed by
insured banks under regulations prescribed by
the Corporation in effect on January 1, 1989.
[(B) The sign prescribed under paragraph (1).
[(3) Regulations.--The Corporation shall prescribe
regulations to carry out the purposes of this
subsection, including regulations governing the manner
of display or use of such signs, except that the size
of the sign prescribed under paragraph (1) shall be
similar to that prescribed under paragraph (2)(A).
Initial regulations under this subsection shall be
prescribed on the date of enactment of the Financial
Institutions Recovery, Reform, and Enforcement Act of
1989. For each day an insured depository institution
continues to violate any provisions of this subsection
or any lawful provisions of said regulations, it shall
be subject to a penalty of not more than $100, which
the Corporation may recover for its use.]
(a) Insurance Logo.--
(1) Insured depository institutions.--
(A) In general.--Each insured depository
institution shall display at each place of
business maintained by that institution a sign
or signs relating to the insurance of the
deposits of the institution, in accordance with
regulations to be prescribed by the
Corporation.
(B) Statement to be included.--Each sign
required under subparagraph (A) shall include a
statement that insured deposits are backed by
the full faith and credit of the United States
Government.
(2) Regulations.--The Corporation shall prescribe
regulations to carry out this subsection, including
regulations governing the substance of signs required
by paragraph (1) and the manner of display or use of
such signs.
(3) Penalties.--For each day that an insured
depository institution continues to violate this
subsection or any regulation issued under this
subsection, it shall be subject to a penalty of not
more than $100, which the Corporation may recover for
its use.
* * * * * * *
[(h) Any insured depository institution which willfully fails
or refuses to file any certified statement or pay any
assessment required under this Act shall be subject to a
penalty of not more than $100 for each day that such violations
continue, which penalty the Corporation may recover for its
use: Provided, That this subsection shall not be applicable
under the circumstances stated in the proviso of subsection (b)
of this section.]
(h) Penalty for Failure to Timely Pay Assessments.--
(1) In general.--Any insured depository institution
which fails or refuses to pay any assessment shall be
subject to a penalty in an amount not more than 1
percent of the amount of the assessment due for each
day that such violation continues.
(2) Exception in case of dispute.--Paragraph (1)
shall not apply if--
(A) the failure to pay an assessment is due
to a dispute between the insured depository
institution and the Corporation over the amount
of such assessment; and
(B) the insured depository institution
deposits security satisfactory to the
Corporation for payment upon final
determination of the issue.
(3) Authority to modify or remit penalty.--The
Corporation, in the sole discretion of the Corporation,
may compromise, modify or remit any penalty which the
Corporation may assess or has already assessed under
paragraph (1) upon a finding that good cause prevented
the timely payment of an assessment.
* * * * * * *
(m) Activities of Savings Associations and Their
Subsidiaries.--
(1) * * *
* * * * * * *
(3) Activities incompatible with deposit insurance.--
(A) In general.--The Corporation may
determine by regulation or order that any
specific activity poses a serious threat to the
[Savings Association Insurance Fund] Deposit
Insurance Fund. Prior to adopting any such
regulation, the Corporation shall consult with
the Director of the Office of Thrift
Supervision and shall provide appropriate State
supervisors the opportunity to comment thereon,
and the Corporation shall specifically take
such comments into consideration. Any such
regulation shall be issued in accordance with
section 553 of title 5, United States Code. If
the Board of Directors makes such a
determination with respect to an activity, the
Corporation shall have authority to order that
no [Savings Association Insurance Fund member]
savings association may engage in the activity
directly.
* * * * * * *
(C) Additional authority of fdic to prevent
serious risks to insurance fund.--
Notwithstanding subparagraph (A), the
Corporation may prescribe and enforce such
regulations and issue such orders as the
Corporation determines to be necessary to
prevent actions or practices of savings
associations that pose a serious threat to the
[Savings Association Insurance Fund or the Bank
Insurance Fund] Deposit Insurance Fund.
* * * * * * *
(o) Real Estate Lending.--
(1) * * *
(2) Standards.--
(A) Criteria.--In prescribing standards under
paragraph (1), the agencies shall consider--
(i) the risk posed to the [deposit
insurance funds] Deposit Insurance Fund
by such extensions of credit;
* * * * * * *
(B) Variations permitted.--In prescribing
standards under paragraph (1), the appropriate
Federal banking agencies may differentiate
among types of loans--
(i) as may be required by Federal
statute;
(ii) as may be warranted, based on
the risk to the [deposit insurance
fund] Deposit Insurance Fund; or
* * * * * * *
(p) Periodic Review of Capital Standards.--Each appropriate
Federal banking agency shall, in consultation with the other
Federal banking agencies, biennially review its capital
standards for insured depository institutions to determine
whether those standards require sufficient capital to
facilitate prompt corrective action to prevent or minimize loss
to the [deposit insurance funds] Deposit Insurance Fund,
consistent with section 38.
* * * * * * *
SEC. 24. ACTIVITIES OF INSURED STATE BANKS.
(a) Permissible activities.--
(1) In general.--After the end of the 1-year period
beginning on the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991,
an insured State bank may not engage as principal in
any type of activity that is not permissible for a
national bank unless--
(A) the Corporation has determined that the
activity would pose no significant risk to the
[appropriate deposit insurance fund] Deposit
Insurance Fund; and
(B) the State bank is, and continues to be,
in compliance with applicable capital standards
prescribed by the appropriate Federal banking
agency.
* * * * * * *
(d) Subsidiaries of Insured State Banks.--
(1) In general.--After the end of the 1-year period
beginning on the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991,
a subsidiary of an insured State bank may not engage as
principal in any type of activity that is not
permissible for a subsidiary of a national bank
unless--
(A) the Corporation has determined that the
activity poses no significant risk to the
[appropriate deposit insurance fund] Deposit
Insurance Fund; and
* * * * * * *
(e) Savings Bank Life Insurance.--
(1) * * *
(2) FDIC finding and action regarding risk.--
(A) Finding.--Before the end of the 1-year
period beginning on the date of the enactment
of the Federal Deposit Insurance Corporation
Improvement Act of 1991, the Corporation shall
make a finding whether savings bank life
insurance activities of insured banks pose or
may pose any significant [risk to the insurance
fund of which such banks are members.] risk to
the Deposit Insurance Fund.
(B) Actions.--
(i) * * *
(ii) Authorized actions.--Actions the
Corporation may take under this
subparagraph include requiring the
modification, suspension, or
termination of insurance activities
conducted by any insured bank if the
Corporation finds that the activities
pose a significant risk to any insured
bank described in paragraph (1)(A) or
to [the insurance fund of which such
bank is a member] the Deposit Insurance
Fund.
(f) Common and Preferred Stock Investment.--
(1) * * *
* * * * * * *
(6) Notice and approval.--An insured State bank may
only engage in any investment pursuant to paragraph (2)
if--
(A) the bank has filed a 1-time notice of the
bank's intention to acquire and retain
investments described in paragraph (1); and
(B) the Corporation has determined, within 60
days of receiving such notice, that acquiring
or retaining such investments does not pose a
significant risk to [the insurance fund of
which such bank is a member] the Deposit
Insurance Fund.
* * * * * * *
SEC. 28. ACTIVITIES OF SAVINGS ASSOCIATIONS.
(a) In General.--On and after January 1, 1990, a savings
association chartered under State law may not engage as
principal in any type of activity, or in any activity in an
amount, that is not permissible for a Federal savings
association unless--
(1) the Corporation has determined that the activity
would pose no significant risk to the [affected deposit
insurance fund] Deposit Insurance Fund; and
* * * * * * *
(b) Differences of Magnitude Between State and Federal
Powers.--Notwithstanding subsection (a)(1), if an activity
(other than an activity described in section 5(c)(2)(B) of the
Home Owners' Loan Act) is permissible for a Federal savings
association, a savings association chartered under State law
may engage as principal in that activity in an amount greater
than the amount permissible for a Federal savings association
if--
(1) the Corporation has not determined that engaging
in that amount of the activity poses any significant
risk to the [affected deposit insurance fund] Deposit
Insurance Fund; and
* * * * * * *
(c) Equity Investments by State Savings Associations.--
(1) * * *
(2) Exception for service corporations.--Paragraph
(1) does not prohibit a savings association from
acquiring or retaining shares of one or more service
corporations if--
(A) the Corporation has determined that no
significant risk to the [affected deposit
insurance fund] Deposit Insurance Fund is posed
by--
(i) * * *
* * * * * * *
[SEC. 31. SAVINGS ASSOCIATION INSURANCE FUND INDUSTRY ADVISORY
COMMITTEE.
[(a) Establishment.--There is hereby established the Savings
Association Insurance Fund Industry Advisory Committee
(hereinafter referred to in this section as the ``Committee'').
[(b) Membership.--The Committee shall consist of 18 members,
appointed as follows:
[(1) 1 member elected from each Federal home loan
bank district (by the members of the board of directors
of each such bank who were elected by the members of
such bank) from among individuals residing therein who
are officers of insured depository institutions that
are Savings Association Insurance Fund members.
[(2) 6 members appointed by the Corporation from
among individuals who shall represent the public
interest.
[(c) Vacancies.--Any vacancy on the Committee shall be filled
in the same manner in which the original appointment was made.
[(d) Pay and Expenses.--Members of the Committee shall serve
without pay, but each member shall be reimbursed, in such
manner as the Corporation shall prescribe by regulation, for
expenses incurred in connection with attendance of such members
at meetings of the Committee.
[(e) Terms.--Members shall be appointed or elected for terms
of 1 year.
[(f) Authority of the Committee.--The Committee may select
its Chairperson, Vice Chairperson, and Secretary, and adopt
methods of procedure, and shall have power--
[(1) to confer with the Board of Directors on general
and special business conditions and regulatory and
other matters affecting insured financial institutions
that are members of the Savings Association Insurance
Fund; and
[(2) to request information, and to make
recommendations, with respect to matters within the
jurisdiction of the Corporation.
[(g) Meetings.--The Committee shall meet 4 times each year,
and more frequently if requested by the Corporation.
[(h) Reports.--The Committee shall submit a semiannual
written report to the Committee on Banking, Finance and Urban
Affairs of the House and to the Committee on Banking, Housing,
and Urban Affairs of the Senate. Such report shall describe the
activities of the Committee for such semiannual period and
contain such recommendations as the Committee considers
appropriate.
[(i) Provision of Staff and Other Resources.--The Corporation
shall provide the Committee with the use of such resources,
including staff, as the Committee reasonably shall require to
carry out its duties, including the preparation and submission
of reports to Congress, under this section.
[(j) Federal Advisory Committee Act Does Not Apply.--The
Federal Advisory Committee Act shall not apply to the
Committee.
[(k) Sunset.--The Committee shall cease to exist 10 years
after the enactment of this section.]
* * * * * * *
SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINANCIAL
MANAGEMENT.
(a) * * *
* * * * * * *
(i) Requirements for Insured Subsidiaries of Holding
Companies.--
(1) * * *
* * * * * * *
(3) Applicability based on risk to fund.--The
appropriate Federal banking agency may require an
institution with total assets in excess of
$9,000,000,000 to comply with this section,
notwithstanding the exemption provided by this
subsection, if it determines that such exemption would
create a significant risk to the [affected deposit
insurance fund] Deposit Insurance Fund if applied to
that institution.
* * * * * * *
SEC. 37. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS.
(a) In General.--
(1) Objectives.--Accounting principles applicable to
reports or statements required to be filed with Federal
banking agencies by insured depository institutions
should--
(A) * * *
* * * * * * *
(C) facilitate prompt corrective action to
resolve the institutions at the least cost to
the [insurance funds] Deposit Insurance Fund.
* * * * * * *
SEC. 38. PROMPT CORRECTIVE ACTION.
(a) Resolving Problems To Protect Deposit Insurance [Funds]
Fund.--
(1) Purpose.--The purpose of this section is to
resolve the problems of insured depository institutions
at the least possible long-term loss to [the deposit
insurance fund] the Deposit Insurance Fund.
* * * * * * *
(k) Review Required When Deposit Insurance Fund Incurs
Material Loss.--
(1) In general.--If [a deposit insurance fund] the
Deposit Insurance Fund incurs a material loss with
respect to an insured depository institution on or
after July 1, 1993, the inspector general of the
appropriate Federal banking agency shall--
(A) make a written report to that agency
reviewing the agency's supervision of the
institution (including the agency's
implementation of this section), which shall--
(i) ascertain why the institution's
problems resulted in a material loss to
[the deposit insurance fund] the
Deposit Insurance Fund; and
(ii) make recommendations for
preventing any such loss in the future;
and
* * * * * * *
(2) Material loss incurred.--For purposes of this
subsection:
(A) Loss incurred.--[A deposit insurance
fund] The Deposit Insurance Fund incurs a loss
with respect to an insured depository
institution--
(i) if the Corporation provides any
assistance under section 13(c) with
respect to that institution; and--
(I) * * *
* * * * * * *
(ii) if the Corporation is appointed
receiver of the institution, and it is
or becomes apparent that the present
value of [the deposit insurance fund's
outlays] the outlays of the Deposit
Insurance Fund with respect to that
institution will exceed the present
value of receivership dividends or
other payments on the claims held by
the Corporation.
* * * * * * *
(3) Deadline for report.--The inspector general of
the appropriate Federal banking agency shall comply
with paragraph (1) expeditiously, and in any event
(except with respect to paragraph (1)(B)(iv)) as
follows:
(A) * * *
(B) If the institution is described in
paragraph (2)(A)(ii), during the 6-month period
beginning on the date on which it becomes
apparent that the present value of [the deposit
insurance fund's outlays] the outlays of the
Deposit Insurance Fund with respect to that
institution will exceed the present value of
receivership dividends or other payments on the
claims held by the Corporation.
* * * * * * *
(o) Transition Rules for Savings [Associations.--
[(1) RTC's role does not diminish care required of
ots.--
[(A) In general.--In implementing this
section, the appropriate Federal banking agency
(and, to the extent applicable, the
Corporation) shall exercise the same care as if
the Savings Association Insurance Fund (rather
than the Resolution Trust Corporation) bore the
cost of resolving the problems of insured
savings associations described in clauses (i)
and (ii)(II) of section 21A(b)(3)(A) of the
Federal Home Loan Bank Act.
[(B) Reports.--Subparagraph (A) does not
require reports under subsection (k).
[(2) Additional flexibility for certain savings
associations.--Subsections (e)(2)] Associations.--
Subsections (e)(2), (f), and (h) shall not apply before
July 1, 1994, to any insured savings association if--
[(A)] (1) before the date of enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991--
[(i)] (A) the savings association had
submitted a plan meeting the requirements of
section 5(t)(6)(A)(ii) of the Home Owners' Loan
Act; and
[(ii)] (B) the Director of the Office of
Thrift Supervision had accepted the plan;
[(B)] (2) the plan remains in effect; and
[(C)] (3) the savings association remains in
compliance with the plan or is operating under a
written agreement with the appropriate Federal banking
agency.
* * * * * * *
SEC. 43. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSURANCE.
(a) * * *
* * * * * * *
(d) Exceptions for Institutions Not Receiving Retail
Deposits.--The Federal Trade Commission may, by regulation or
order, make exceptions to subsection (b) for any depository
institution that, within the United States, does not receive
initial deposits of less than [$100,000] an amount equal to the
standard maximum deposit insurance amount from individuals who
are citizens or residents of the United States, other than
money received in connection with any draft or similar
instrument issued to transmit money.
* * * * * * *
SEC. 49. BI-ANNUAL FDIC SURVEY AND REPORT ON ENCOURAGING USE OF
DEPOSITORY INSTITUTIONS BY THE UNBANKED.
(a) Survey Required.--
(1) In general.--The Corporation shall conduct a bi-
annual survey on efforts by insured depository
institutions to bring those individuals and families
who have rarely, if ever, held a checking account, a
savings account or other type of transaction or check
cashing account at an insured depository institution
(hereafter in this section referred to as the
``unbanked'') into the conventional finance system.
(2) Factors and questions to consider.--In conducting
the survey, the Corporation shall take the following
factors and questions into account:
(A) To what extent do insured depository
institutions promote financial education and
financial literacy outreach?
(B) Which financial education efforts appear
to be the most effective in bringing
``unbanked'' individuals and families into the
conventional finance system?
(C) What efforts are insured institutions
making at converting ``unbanked'' money order,
wire transfer, and international remittance
customers into conventional account holders?
(D) What cultural, language and
identification issues as well as transaction
costs appear to most prevent ``unbanked''
individuals from establishing conventional
accounts?
(E) What is a fair estimate of the size and
worth of the ``unbanked'' market in the United
States?
(b) Reports.--The Chairperson of the Board of Directors shall
submit a bi-annual report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate containing
the Corporation's findings and conclusions with respect to the
survey conducted pursuant to subsection (a), together with such
recommendations for legislative or administrative action as the
Chairperson may determine to be appropriate.
----------
SECTION 6 OF THE INTERNATIONAL BANKING ACT OF 1978
INSURANCE OF DEPOSITS
Sec. 6. (a) * * *
(b) No foreign bank may establish or operate a Federal branch
which receives deposits of less than [$100,000] an amount equal
to the standard maximum deposit insurance amount unless the
branch is an insured branch as defined in section 3(s) of the
Federal Deposit Insurance Act, or unless the Comptroller
determines by order or regulation that the branch is not
engaged in domestic retail deposit activities requiring deposit
insurance protection, taking account of the size and nature of
depositors and deposit accounts.
(c)(1) After the date of enactment of this Act no foreign
bank may establish a branch, and after one year following such
date no foreign bank may operate a branch, in any State in
which the deposits of a bank organized and existing under the
laws of that State would be required to be insured, unless the
branch is an insured branch as defined in section 3(s) of the
Federal Deposit Insurance Act, or unless the branch will not
thereafter accept deposits of less than [$100,000] an amount
equal to the standard maximum deposit insurance amount or
unless the Federal Deposit Insurance Corporation determines by
order or regulation that the branch is not engaged in domestic
retail deposit activities requiring deposit insurance
protection, taking account of the size and nature of depositors
and deposit accounts.
* * * * * * *
(d) Retail Deposit-Taking by Foreign Banks.--
(1) in general.--After the date of enactment of this
subsection, notwithstanding any other provision of this
Act or any provision of the Federal Deposit Insurance
Act, in order to accept or maintain domestic retail
deposit accounts having balances of less than
[$100,000] an amount equal to the standard maximum
deposit insurance amount, and requiring deposit
insurance protection, a foreign bank shall--
(A) * * *
* * * * * * *
(2) Exception.--Domestic retail deposit accounts with
balances of less than [$100,000] an amount equal to the
standard maximum deposit insurance amount that require
deposit insurance protection may be accepted or
maintained in a branch of a foreign bank only if such
branch was an insured branch on the date of the
enactment of this subsection.
* * * * * * *
(e) Standard Maximum Deposit Insurance Amount Defined.--For
purposes of this section, the term ``standard maximum deposit
insurance amount'' means the amount of the maximum amount of
deposit insurance as determined under section 11(a)(1) of the
Federal Deposit Insurance Act.
----------
SECTION 207 OF THE FEDERAL CREDIT UNION ACT
payment of insurance
Sec. 207. (a) * * *
* * * * * * *
[(k)(1) Subject to the provisions of paragraph (2), for the
purposes of this subsection, the term ``insured account'' means
the total amount of the account in the member's name (after
deducting offsets) less any part thereof which is in excess of
$100,000. Such amount shall be determined according to such
regulations as the Board may prescribe, and, in determining the
amount due to any member, there shall be added together all
accounts in the credit union maintained by him for his own
benefit either in his own name or in the names of others. The
Board may define, with such classifications and exceptions as
it may prescribe, the extent of the insurance coverage provided
for member accounts, including member accounts in the name of a
minor, in trust, or in joint tenancy.]
(k) Insured Amounts Payable.--
(1) Net insured amount.--
(A) In general.--Subject to the provisions of
paragraph (2), the net amount of share
insurance payable to any member at an insured
credit union shall not exceed the total amount
of the shares or deposits in the name of the
member (after deducting offsets), less any part
thereof which is in excess of the standard
maximum share insurance amount, as determined
in accordance with this paragraph and
paragraphs (5) and (6), and consistently with
actions taken by the Federal Deposit Insurance
Corporation under section 11(a) of the Federal
Deposit Insurance Act.
(B) Aggregation.--Determination of the net
amount of share insurance under subparagraph
(A), shall be in accordance with such
regulations as the Board may prescribe, and, in
determining the amount payable to any member,
there shall be added together all accounts in
the credit union maintained by that member for
that member's own benefit, either in the
member's own name or in the names of others.
(C) Authority to define the extent of
coverage.--The Board may define, with such
classifications and exceptions as it may
prescribe, the extent of the share insurance
coverage provided for member accounts,
including member accounts in the name of a
minor, in trust, or in joint tenancy.
[(2)(A) Notwithstanding any limitation in this Act or in any
other provision of law relating to the amount of insurance
available for the account of any one depositor or member, in
the case of a depositor or member who is--]
(2) Municipal depositors or members.--
(A) In general.--Notwithstanding any
limitation in this Act or in any other
provision of law relating to the amount of
insurance available to any 1 depositor or
member, deposits or shares of a municipal
depositor or member shall be insured in an
amount equal to the standard maximum share
insurance amount (as determined under paragraph
(5)), except as provided in subparagraph (B).
(B) In-state municipal depositors.--In the
case of the deposits of an in-State municipal
depositor described in clause (ii), (iii),
(iv), or (v) of subparagraph (E) at an insured
credit union, such deposits shall be insured in
an amount equal to the lesser of--
(i) $2,000,000; or
(ii) the sum of the standard maximum
deposit insurance amount and 80 percent
of the amount of any deposits in excess
of the standard maximum deposit
insurance amount.
(C) Rule of construction.--No provision of
this paragraph shall be construed as
authorizing an insured credit union to accept
the deposits of a municipal depositor in an
amount greater than such credit union is
authorized to accept under any other provision
of Federal or State law.
(D) In-state municipal depositor defined.--
For purposes of this paragraph, the term ``in-
State municipal depositor'' means a municipal
depositor that is located in the same State as
the office or branch of the insured credit
union at which the deposits of that depositor
are held.
(E) Municipal depositor.--In this paragraph,
the term ``municipal depositor'' means a
depositor that is--
(i) an officer, employee, or agent of
the United States having official
custody of public funds and lawfully
investing the same in a credit union
insured in accordance with this title;
(ii) an officer, employee, or agent
of any State of the United States, or
of any county, municipality, or
political subdivision thereof having
official custody of public funds and
lawfully investing the same in a credit
union insured in accordance with this
title in such State;
(iii) an officer, employee, or agent
of the District of Columbia having
official custody of public funds and
lawfully investing the same in a credit
union insured in accordance with this
title in the District of Columbia;
(iv) an officer, employee, or agent
of the Commonwealth of Puerto Rico, of
the Panama Canal Zone, or of any
territory or possession of the United
States, or of any county, municipality,
or political subdivision thereof having
official custody of public funds and
lawfully investing the same in a credit
union insured in accordance with this
title in the Commonwealth of Puerto
Rico, the Panama Canal Zone, or any
such territory or possession,
respectively; or
(v) an officer, employee, or agent of
any Indian tribe (as defined in section
3(c) of the Indian Financing Act of
1974) or agency thereof having official
custody of tribal funds and lawfully
investing the same in a credit union
insured in accordance with this
title[;].
[his account shall be insured in an amount not to exceed
$100,000 per account.]
[(B) The]
(F) Authority to limit deposits.--The Board
may limit the aggregate amount of funds that
may be invested or deposited in any credit
union insured in accordance with this title by
any [depositor or member referred to in
subparagraph (A)] municipal depositor or member
on the basis of the size of any such credit
union in terms of its assets.
(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 [$100,000] 2 times
the standard maximum share insurance amount (as determined
under paragraph (1)) 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.
(4) Coverage for certain employee benefit plan
deposits.--
(A) Pass-through insurance.--The
Administration shall provide pass-through share
insurance for the deposits or shares of any
employee benefit plan.
(B) Prohibition on acceptance of deposits.--
An insured credit union that is not well
capitalized or adequately capitalized may not
accept employee benefit plan deposits.
(C) Definitions.--For purposes of this
paragraph, the following definitions shall
apply:
(i) Capital standards.--The terms
``well capitalized'' and ``adequately
capitalized'' have the same meanings as
in section 216(c).
(ii) Employee benefit plan.--The term
``employee benefit plan''--
(I) has the meaning given to
such term in section 3(3) of
the Employee Retirement Income
Security Act of 1974;
(II) includes any plan
described in section 401(d) of
the Internal Revenue Code of
1986; and
(III) includes any eligible
deferred compensation plan
described in section 457 of the
Internal Revenue Code of 1986.
(iii) Pass-through share insurance.--
The term ``pass-through share
insurance'' means, with respect to an
employee benefit plan, insurance
coverage provided on a pro rata basis
to the participants in the plan, in
accordance with the interest of each
participant.
(D) Rule of construction.--No provision of
this paragraph shall be construed as
authorizing an insured credit union to accept
the deposits of an employee benefit plan in an
amount greater than such credit union is
authorized to accept under any other provision
of Federal or State law.
(5) Standard maximum share insurance amount
defined.--For purposes of this Act, the term ``standard
maximum share insurance amount'' means--
(A) until the effective date of final
regulations prescribed pursuant to section
9(a)(2) of the Federal Deposit Insurance Reform
Act of 2003, $100,000; and
(B) on and after such effective date,
$130,000, adjusted as provided under section
11(a)(1)(F) of the Federal Deposit Insurance
Act.
* * * * * * *
----------
SECTION 232 OF THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT
ACT OF 1991
SEC. 232. REDUCED ASSESSMENT RATE FOR DEPOSITS ATTRIBUTABLE TO LIFELINE
ACCOUNTS.
(a) Qualification of Lifeline Accounts by Federal Reserve
Board.--
(1) In general.--The [Board of Governors of the
Federal Reserve System, and the] Federal Deposit
Insurance Corporation shall establish minimum
requirements for accounts providing basic transaction
services for consumers at insured depository
institutions in order for such accounts to qualify as
lifeline accounts for purposes of this section and
section 7(b)(2)(G) of the Federal Deposit Insurance
Act.
(2) Factors to be considered.--In determining the
minimum requirements under paragraph (1) for lifeline
accounts at insured depository institutions, [the Board
and] the Corporation shall consider the following
factors:
(A) * * *
* * * * * * *
(J) Such other factors as [the Board] the
Corporation may determine to be appropriate.
(3) Definitions.--For purposes of this subsection--
[(A) Board.--The term ``Board'' means the
Board of Governors of the Federal Reserve
System.]
(A) Corporation.--The term ``Corporation''
means the Federal Deposit Insurance
Corporation.
* * * * * * *
(C) Lifeline account.--The term ``lifeline
account'' means any transaction account (as
defined in section 19(b)(1)(C) of the Federal
Reserve Act) which meets the minimum
requirements established by the [Board]
Corporation under this subsection.
* * * * * * *
[(c) Availability of Funds.--The provisions of this section
shall not take effect until appropriations are specifically
provided in advance. There are hereby authorized to be
appropriated such sums as may be necessary to carry out the
provisions of this section.]
----------
SECTION 5136 OF THE REVISED STATUTES OF THE UNITED STATES
Sec. 5136. Upon duly making and filing articles of
association and an organization certificate, the association
shall become, as from the date of the execution of its
organization certificate, a body corporate, and as such, and in
the name designated in the organization certificate, it shall
have power--
First. To adopt and use a corporate seal.
* * * * * * *
Eleventh. To make investments designed primarily to
promote the public welfare, including the welfare of
low- and moderate-income communities or families (such
as by providing housing, services, or jobs). A national
banking association may make such investments directly
or by purchasing interests in an entity primarily
engaged in making such investments. An association
shall not make any such investment if the investment
would expose the association to unlimited liability.
The Comptroller of the Currency shall limit an
association's investments in any 1 project and an
association's aggregate investments under this
paragraph. An association's aggregate investments under
this paragraph shall not exceed an amount equal to the
sum of 5 percent of the association's capital stock
actually paid in and unimpaired and 5 percent of the
association's unimpaired surplus fund, unless the
Comptroller determines by order that the higher amount
will pose no significant risk to the [affected deposit
insurance fund] Deposit Insurance Fund, and the
association is adequately capitalized. In no case shall
an association's aggregate investments under this
paragraph exceed an amount equal to the sum of 10
percent of the association's capital stock actually
paid in and unimpaired and 10 percent of the
association's unimpaired surplus fund.
* * * * * * *
----------
FEDERAL RESERVE ACT
* * * * * * *
state banks as members.
Sec. 9. Any bank incorporated by special law of any State, or
organized under the general laws of any State or of the United
States, including Morris Plan banks and other incorporated
banking institutions engaged in similar business, desiring to
become a member of the Federal Reserve System, may make
application to the Board of Governors of the Federal Reserve
System, under such rules and regulations as it may prescribe,
for the right to subscribe to the stock of the Federal reserve
bank organized within the district in which the applying bank
is located. Such application shall be for the same amount of
stock that the applying bank would be required to subscribe to
as a national bank. For the purposes of membership of any such
bank the terms ``capital'' and ``capital stock'' shall include
the amount of outstanding capital notes and debentures legally
issued by the applying bank and purchased by the Reconstruction
Finance Corporation. The Board of Governors of the Federal
Reserve System, subject to the provisions of this Act and to
such conditions as it may prescribe pursuant thereto may permit
the applying bank to become a stockholder of such Federal
reserve bank.
* * * * * * *
State member banks may make investments designed
primarily to promote the public welfare, including the
welfare of low- and moderate-income communities or
families (such as by providing housing, services, or
jobs), to the extent permissible under State law, and
subject to such restrictions and requirements as the
Board of Governors of the Federal Reserve System may
prescribe by regulation or order. A bank shall not make
any such investment if the investment would expose the
bank to unlimited liability. The Board shall limit a
bank's investments in any 1 project and bank's
aggregate investments under this paragraph. A bank's
aggregate investments under this paragraph shall not
exceed an amount equal to the sum of 5 percent of the
bank's capital stock actually paid in and unimpaired
and 5 percent of the bank's unimpaired surplus fund,
unless the Board determines by order that the higher
amount will pose no significant risk to the [affected
deposit insurance fund] Deposit Insurance Fund, and the
bank is adequately capitalized. In no case shall a
bank's aggregate investments under this paragraph
exceed an amount equal to the sum of 10 percent of the
bank's capital stock actually paid in and unimpaired
and 10 percent of the bank's unimpaired surplus fund.
* * * * * * *
Sec. 10B. (a) * * *
(b) Limitations on Advances.--
(1) * * *
* * * * * * *
(3) Advances to critically undercapitalized
depository institutions.--
(A) Liability for increased loss.--
Notwithstanding any other provision of this
section, if--
(i) * * *
(ii) after the end of that 5-day
period, [any deposit insurance fund in]
the Deposit Insurance Fund of the
Federal Deposit Insurance Corporation
incurs a loss exceeding the loss that
the Corporation would have incurred if
it had liquidated that institution as
of the end of that period,
* * * * * * *
----------
SECTION 255 OF THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF
1985
SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES.
(a) * * *
* * * * * * *
(g) Other Programs and Activities.--
(1)(A) The following budget accounts and activities
shall be exempt from reduction under any order issued
under this part:
Activities resulting from private donations,
bequests, or voluntary contributions to the
Government;
Activities financed by voluntary payments to
the Government for goods or services to be
provided for such payments;
* * * * * * *
Federal Deposit Insurance Corporation, [Bank
Insurance Fund] Deposit Insurance Fund (51-
4064-0-3-373);
* * * * * * *
[Federal Deposit Insurance Corporation,
Savings Association Insurance Fund (51-4066-0-
3-373);]
* * * * * * *
----------
FEDERAL HOME LOAN BANK ACT
* * * * * * *
GENERAL POWERS AND DUTIES OF BANKS
Sec. 11. (a) * * *
* * * * * * *
(k) Bank Loans to [SAIF] the Deposit Insurance Fund.--
(1) Loans authorized.--Subject to paragraph (3), the
Federal Home Loan Banks may, upon the request of the
Federal Deposit Insurance Corporation, make loans to
such Corporation for the use of the [Savings
Association Insurance Fund] Deposit Insurance Fund.
(2) Liability of the fund.--Any loan by a Federal
Home Loan Bank pursuant to paragraph (1) shall be a
direct liability of the [Savings Association Insurance
Fund] Deposit Insurance Fund.
* * * * * * *
SEC. 21. FINANCING CORPORATION.
(a) * * *
* * * * * * *
(f) Sources of Funds for Interest Payments; Financing
Corporation Assessment Authority.--The Financing Corporation
shall obtain funds for anticipated interest payments, issuance
costs, and custodial fees on obligations issued hereunder from
the following sources:
(1) * * *
(2) New assessment authority.--In addition to the
amounts obtained pursuant to paragraph (1), the
Financing Corporation, with the approval of the Board
of Directors of the Federal Deposit Insurance
Corporation, shall assess against each insured
depository institution an assessment (in the same
manner as assessments are assessed against such
institutions by the Federal Deposit Insurance
Corporation under section 7 of the Federal Deposit
Insurance Act)[, except that--
[(A) the assessments imposed on insured
depository institutions with respect to any
BIF-assessable deposit shall be assessed at a
rate equal to \1/5\ of the rate of the
assessments imposed on insured depository
institutions with respect to any SAIF-
assessable deposit; and
[(B) no limitation under clause (i) or (iii)
of section 7(b)(2)(A) of the Federal Deposit
Insurance Act shall apply for purposes of this
paragraph].
* * * * * * *
(k) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) * * *
* * * * * * *
[(4) Deposit terms.--
[(A) BIF-assessable deposits.--The term
``BIF-assessable deposit'' means a deposit that
is subject to assessment for purposes of the
Bank Insurance Fund under the Federal Deposit
Insurance Act (including a deposit that is
treated as a deposit insured by the Bank
Insurance Fund under section 5(d)(3) of the
Federal Deposit Insurance Act).
[(B) SAIF-assessable deposit.--The term
``SAIF-assessable deposit'' has the meaning
given to such term in section 2710 of the
Deposit Insurance Funds Act of 1996.]
* * * * * * *
SEC. 21A. THRIFT DEPOSITOR PROTECTION OVERSIGHT BOARD AND RESOLUTION
TRUST CORPORATION.
(a) * * *
(b) Resolution Trust Corporation Established.--
(1) * * *
* * * * * * *
(4) Conservatorship, receivership, and assistance
powers.--
(A) * * *
(B) Manner of application of least-cost
resolution.--For purposes of applying section
13(c)(4) of the Federal Deposit Insurance Act
to the Corporation under subparagraph (A), the
Corporation shall be treated as the [affected
deposit insurance fund] Deposit Insurance Fund.
* * * * * * *
(6) Continuation of rtc receivership or
conservatorship.--
(A) * * *
(B) [SAIF-insured banks] Charter
conversions.--Notwithstanding any other
provision of Federal or State law, if the
Federal Deposit Insurance Corporation is
appointed as conservator or receiver for any
[Savings Association Insurance Fund member]
savings association that has converted to a
bank charter and otherwise meets the criteria
in paragraph (3)(A) or (6)(A), the Federal
Deposit Insurance Corporation may tender such
appointment to the Corporation, and the
Corporation shall accept such appointment, if
the Corporation is authorized to accept such
appointment under this section.
* * * * * * *
(10) Special powers.--
(A) In general.--In addition to the powers of
the Corporation described in paragraph (9), the
Corporation shall have the following powers:
(i) * * *
* * * * * * *
(iv) Organization of savings
associations.--The Corporation may
organize 1 or more Federal savings
associations--
(I) * * *
(II) the deposits of which,
if any, shall be insured by the
Federal Deposit Insurance
Corporation through the
[Savings Association Insurance
Fund] Deposit Insurance Fund,
and
* * * * * * *
(n) Conflict of Interest.--
(1) * * *
* * * * * * *
(6) Disapproval of contractors.--
(A) * * *
* * * * * * *
(E) Prohibition required in certain cases.--
The standards established under subparagraph
(A) shall require the Corporation to prohibit
any person who has--
(i) * * *
* * * * * * *
(iv) caused a substantial loss to
[Federal deposit insurance funds] the
Deposit Insurance Fund,
* * * * * * *
SEC. 21B. RESOLUTION FUNDING CORPORATION ESTABLISHED.
(a) * * *
* * * * * * *
(e) Capitalization of Funding Corporation, etc.--
(1) * * *
* * * * * * *
(5) Pro rata distribution of amounts required to be
invested in excess of $1,000,000,000.--Of any amount
which the Thrift Depositor Protection Oversight Board
may require the Federal Home Loan Banks to invest in
capital stock of the Funding Corporation under this
subsection in excess of the $1,000,000,000 amount
referred to in paragraph (4), the amount which each
Federal Home Loan Bank (or any successor to such Bank)
shall invest shall be determined by the Thrift
Depositor Protection Oversight Board by multiplying the
excess amount by the percentage arrived at by
dividing--
(A) the sum of the total assets (as of the
most recent December 31) held by all Savings
Association Insurance Fund members as of the
date of funding which are members of such Bank;
by
(B) the sum of the total assets (as of such
date) held by all Savings Association Insurance
Fund members as of the date of funding which
are members of a Federal Home Loan Bank.
* * * * * * *
[(7) Additional sources.--If each Federal Home Loan
Bank has exhausted the amount applicable with respect
to the Bank under paragraph (3) after purchases under
paragraphs (4), (5), and (6), the amounts necessary to
provide additional funding for the Funding Corporation
Principal Fund shall be obtained from the following
sources:
[(A) Assessments.--The Funding Corporation,
with the approval of the Board of Directors of
the Federal Deposit Insurance Corporation,
shall assess against each Savings Association
Insurance Fund member an assessment (in the
same manner as assessments are assessed against
such members by the Federal Deposit Insurance
Corporation pursuant to section 7 of the
Federal Deposit Insurance Act) except that--
[(i) the maximum amount of the
aggregate amount assessed shall be the
amount of additional funds necessary to
fund the Funding Corporation Principal
Fund;
[(ii) the sum of--
[(I) the amount assessed
under this subparagraph; and
[(II) the amount assessed by
the Financing Corporation under
section 21;
shall not exceed the amount authorized
to be assessed against Savings
Association Insurance Fund members
pursuant to section 7 of the Federal
Deposit Insurance Act;
[(iii) the Financing Corporation
shall have first priority to make the
assessment; and
[(iv) the amount of the applicable
assessment determined under such
section 7 shall be reduced by the sum
described in clause (ii) of this
subparagraph.
[(B) Receivership proceeds.--To the extent
the amounts available pursuant to subparagraph
(A) are insufficient to fund the Funding
Corporation Principal Fund, the Federal Deposit
Insurance Corporation shall transfer amounts to
the Funding Corporation from the liquidating
dividends and payments made on claims received
by the FSLIC Resolution Fund from
receiverships.
[(8) Transfer to rtc.--The Funding Corporation shall
transfer to the Resolution Trust Corporation
$1,200,000,000 in fiscal year 1989.]
* * * * * * *
(k) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) * * *
* * * * * * *
[(8) Savings association insurance fund member.--The
term ``Savings Association Insurance Fund member''
means a Savings Association Insurance member as such
term is defined by section 7(l) of the Federal Deposit
Insurance Act.]
[(9)] (8) Secretary.--The term ``Secretary'' means
the Secretary of the Treasury.
[(10)] (9) Undivided profits.--The term ``undivided
profits'' means earnings retained after dividends have
been paid minus the sum of--
(A) that portion required to be added to
reserves maintained pursuant to the first 2
sentences of section 16; and
(B) the dollar amounts held by the respective
Federal Home Loan Banks in special dividend
stabilization reserves on December 31, 1985, as
determined by the table set forth in section
21(d)(7).
* * * * * * *
----------
HOME OWNERS' LOAN ACT
* * * * * * *
SEC. 5. FEDERAL SAVINGS ASSOCIATIONS.
(a) * * *
* * * * * * *
(c) Loans and Investments.--To the extent specified in
regulations of the Director, a Federal savings association may
invest in, sell, or otherwise deal in the following loans and
other investments:
(1) * * *
* * * * * * *
(5) Transition rule for savings associations
acquiring banks.--
(A) In general.--If, under section 5(d)(3) of
the Federal Deposit Insurance Act, a savings
association acquires all or substantially all
of the assets of a bank [that is a member of
the Bank Insurance Fund], the Director may
permit the savings association to retain any
such asset during the 2-year period beginning
on the date of the acquisition.
* * * * * * *
(6) Definitions.--[As used in this subsection--] For
purposes of this subsection, the following definitions
shall apply:
(A) * * *
* * * * * * *
(o) Conversion of State Savings Banks.--(1) Subject to the
provisions of this subsection and under regulations of the
Director, the Director may authorize the conversion of a State-
chartered savings bank [that is a Bank Insurance Fund member]
into a Federal savings bank, if such conversion is not in
contravention of State law, and provide for the organization,
incorporation, operation, examination, and regulation of such
institution.
(2)(A) Any Federal savings bank chartered pursuant to this
subsection shall continue to be [a Bank Insurance Fund member
until such time as it changes its status to a Savings
Association Insurance Fund member] insured by the Deposit
Insurance Fund.
* * * * * * *
(t) Capital Standards.--
(1) * * *
* * * * * * *
(5) Separate capitalization required for certain
subsidiaries.--
(A) * * *
* * * * * * *
(D) Transition rule.--
(i) * * *
* * * * * * *
(iii) Agency discretion to prescribe
greater percentage.--Subject to clauses
(iv), (v), and (vi), the Director may
prescribe by order, with respect to a
particular qualified savings
association, an applicable percentage
greater than that provided in clause
(ii) if the Director determines, in the
Director's sole discretion, that the
use of the greater percentage, under
the circumstances--
(I) would not constitute an
unsafe or unsound practice;
(II) would not increase the
risk to the [affected deposit
insurance fund] Deposit
Insurance Fund; and
* * * * * * *
(7) Exemption from certain sanctions.--
(A) * * *
* * * * * * *
(C) Standards for approval or disapproval.--
(i) Approval.--The Director may
approve an application for an exemption
if the Director determines that--
(I) such exemption would pose
no significant risk to the
[affected deposit insurance
fund] Deposit Insurance Fund;
* * * * * * *
(v) Reports of Condition.--
(1) * * *
(2) Public disclosure.--
(A) Reports required under paragraph (1) and
all information contained therein shall be
available to the public upon request, unless
the Director determines--
(i) that a particular item or
classification of information should
not be made public in order to protect
the safety or soundness of the
institution concerned or institutions
concerned, [the Savings Association
Insurance Fund] or the Deposit
Insurance Fund; or
* * * * * * *
SEC. 10. REGULATION OF HOLDING COMPANIES.
(a) * * *
* * * * * * *
(c) Holding Company Activities.--
(1) * * *
* * * * * * *
(6) Special provisions relating to certain companies
affected by 1987 amendments.--
(A) * * *
* * * * * * *
(D) Order by Director to terminate
subparagraph (b) activity.--Any activity
described in subparagraph (B) may also be
terminated by the Director, after opportunity
for hearing, if the Director determines, having
due regard for the purposes of this [title]
Act, that such action is necessary to prevent
conflicts of interest or unsound practices or
is in the public interest.
* * * * * * *
(e) Acquisitions.--
(1) In general.--It shall be unlawful for--
(A) * * *
(B) any other company, without the prior
written approval of the Director, directly or
indirectly, or through one or more subsidiaries
or through one or more transactions, to acquire
the control of one or more savings
associations, except that such approval shall
not be required in connection with the control
of a savings association, (i) acquired by
devise under the terms of a will creating a
trust which is excluded from the definition of
``savings and loan holding company'' under
subsection (a) of this section, (ii) acquired
in connection with a reorganization in which a
person or group of persons, having had control
of a savings association for more than 3 years,
vests control of that association in a newly
formed holding company subject to the control
of the same person or group of persons, or
(iii) acquired by a bank holding company that
is registered under, and subject to, the Bank
Holding Company Act of 1956, or any company
controlled by such bank holding company. The
Director shall approve an acquisition of a
savings association under this subparagraph
unless the Director finds the financial and
managerial resources and future prospects of
the company and association involved to be such
that the acquisition would be detrimental to
the association or the insurance risk of the
[Savings Association Insurance Fund or Bank
Insurance Fund] Deposit Insurance Fund, and
shall render a decision within 90 days after
submission to the Director of the complete
record on the application.
* * * * * * *
(2) Factors to be considered.--The Director shall not
approve any acquisition under subparagraph (A)(i) or
(A)(ii), or of more than one savings association under
subparagraph (B) of paragraph (1) of this subsection,
any acquisition of stock in connection with a qualified
stock issuance, any acquisition under paragraph (4)(A),
or any transaction under section 13(k) of the Federal
Deposit Insurance Act, except in accordance with this
paragraph. In every case, the Director shall take into
consideration the financial and managerial resources
and future prospects of the company and association
involved, the effect of the acquisition on the
association, the insurance risk to the [Savings
Association Insurance Fund or the Bank Insurance Fund]
Deposit Insurance Fund, and the convenience and needs
of the community to be served, and shall render a
decision within 90 days after submission to the
Director of the complete record on the application.
Consideration of the managerial resources of a company
or savings association shall include consideration of
the competence, experience, and integrity of the
officers, directors, and principal shareholders of the
company or association. Before approving any such
acquisition, except a transaction under section 13(k)
of the Federal Deposit Insurance Act, the Director
shall request from the Attorney General and consider
any report rendered within 30 days on the competitive
factors involved. The Director shall not approve any
proposed acquisition--
(A) * * *
* * * * * * *
(4) Acquisitions by certain individuals.--
(A) * * *
(B) Treatment of certain holding companies.--
If any individual referred to in subparagraph
(A) controls more than 1 savings and loan
holding company or more than 1 savings
association, any savings and loan holding
company controlled by such individual shall be
subject to the activities limitations contained
in subsection (c) to the same extent such
limitations apply to multiple savings and loan
holding companies, unless all or all but 1 of
the savings associations (including any
institution deemed to be a savings association
under subsection [(1)] (l) of this section)
controlled directly or indirectly by such
individual was acquired pursuant to an
acquisition described in subclause (I) or (II)
of subsection (c)(3)(B)(i).
* * * * * * *
(g) Administration and Enforcement.--
(1) * * *
* * * * * * *
(3) Proceedings.--(A) In any proceeding under
subsection (a)(2)(D) or under paragraph (5) of this
[section] subsection, the Director may administer oaths
and affirmations, take or cause to be taken
depositions, and issue subpenas. The Director may make
regulations with respect to any such proceedings. The
attendance of witnesses and the production of documents
provided for in this paragraph may be required from any
place in any State or in any territory at any
designated place where such proceeding is being
conducted. Any party to such proceedings may apply to
the United States District Court for the District of
Columbia, or the United States district court for the
judicial district or the United States court in any
territory in which such proceeding is being conducted,
or where the witness resides or carries on business,
for enforcement of any subpena issued pursuant to this
paragraph, and such courts shall have jurisdiction and
power to order and require compliance therewith.
Witnesses subpenaed under this section shall be paid
the same fees and mileage that are paid witnesses in
the district courts of the United States.
* * * * * * *
(i) Penalties.--
(1) * * *
* * * * * * *
[(5)] (4) Notice under this section after separation
from service.--The resignation, termination of
employment or participation, or separation of an
institution-affiliated party (within the meaning of
section 3(u) of the Federal Deposit Insurance Act) with
respect to a savings and loan holding company or
subsidiary thereof (including a separation caused by
the deregistration of such a company or such a
subsidiary) shall not affect the jurisdiction and
authority of the Director to issue any notice and
proceed under this section against any such party, if
such notice is served before the end of the 6-year
period beginning on the date such party ceased to be
such a party with respect to such holding company or
its subsidiary (whether such date occurs before, on, or
after the date of the enactment of this paragraph).
* * * * * * *
(m) Qualified Thrift Lender Test.--
(1) * * *
* * * * * * *
(3) Failure to become and remain a qualified thrift
lender.--
(A) * * *
* * * * * * *
[(E) Deposit insurance assessments.--Any bank
chartered as a result of the requirements of
this section shall be obligated until December
31, 1993, to pay to the Savings Association
Insurance Fund the assessments assessed on
savings associations under the Federal Deposit
Insurance Act. Such association shall also be
assessed, on the date of its change of status
from a Savings Association Insurance Fund
member, the exit fee and entrance fee provided
in section 5(d) of the Federal Deposit
Insurance Act. Such institution shall not be
obligated to pay the assessments assessed on
banks under the Federal Deposit Insurance Act
until--
[(i) December 31, 1993, or
[(ii) the institution's change of
status from a Savings Association
Insurance Fund member to a Bank
Insurance Fund member,
whichever is later.]
[(F)] (E) Exemption for specialized savings
associations serving certain military
personnel.--Subparagraph (A) shall not apply to
a savings association subsidiary of a savings
and loan holding company if at least 90 percent
of the customers of the savings and loan
holding company and its subsidiaries and
affiliates are active or former members in the
United States military services or the widows,
widowers, divorced spouses, or current or
former dependents of such members.
[(G)] (F) Exemption for certain federal
savings associations.--This paragraph shall not
apply to any Federal savings association in
existence as a Federal savings association on
the date of enactment of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989--
(i) that was chartered before October
15, 1982, as a savings bank or a
cooperative bank under State law; or
(ii) that acquired its principal
assets from an association that was
chartered before October 15, 1982, as a
savings bank or a cooperative bank
under State law.
[(H)] (G) No circumvention of exit
moratorium.--Subparagraph (A) of this paragraph
shall not be construed as permitting any
insured depository institution to engage in any
conversion transaction prohibited under section
5(d) of the Federal Deposit Insurance Act.
* * * * * * *
(7) Transitional rule for certain savings
associations.--
(A) In general.--If any Federal savings
association in existence as a Federal savings
association on the date of enactment of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989--
(i) that was chartered as a savings
bank or a cooperative bank under State
law before October 15, 1982; or
(ii) that acquired its principal
assets from an association that was
chartered before October 15, 1982, as a
savings bank or a cooperative bank
under State law,
meets the requirements of subparagraph (B),
such savings association shall be treated as a
qualified thrift lender [during period] during
the period ending on September 30, 1995.
* * * * * * *
(o) Mutual Holding Companies.--
(1) * * *
* * * * * * *
(3) Notice to the director; disapproval period.--
(A) * * *
* * * * * * *
(D) Retention of capital assets.--In
connection with the transaction described in
paragraph (1), a savings association may,
subject to the approval of the Director, retain
capital assets at the holding company level to
the extent that such capital exceeds the
association's capital requirement established
by the Director pursuant to [sections 5 (s) and
(t) of this Act] subsections (s) and (t) of
section 5.
* * * * * * *
----------
NATIONAL HOUSING ACT
* * * * * * *
TITLE III--NATIONAL MORTGAGE ASSOCIATIONS
* * * * * * *
civil money penalties against issuers
Sec. 317. (a) * * *
(b) Violations for Which a Penalty May Be Imposed.--
(1) Violations.--The violations by an issuer or a
custodian for which the Secretary may impose a civil
money penalty under subsection (a) are the following:
(A) * * *
(B) Failure to segregate cash flow from
pooled mortgages or to deposit either principal
and interest funds or escrow funds into special
accounts with a depository institution whose
accounts are insured by the National Credit
Union Administration or by the Federal Deposit
Insurance Corporation through the [Bank
Insurance Fund for banks or through the Savings
Association Insurance Fund for savings
associations] Deposit Insurance Fund.
* * * * * * *
TITLE V--MISCELLANEOUS
* * * * * * *
SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER
PARTICIPANTS IN FHA PROGRAMS.
(a) * * *
(b) Violations for Which a Penalty May Be Imposed.--
(1) Violations.--The Secretary may impose a civil
money penalty under subsection (a) for any knowing and
material violation by a mortgagee or lender, as
follows:
(A) * * *
(B) Failure of a nonsupervised mortgagee, as
defined by the Secretary--
(i) * * *
(ii) to deposit these funds in a
special account with a depository
institution whose accounts are insured
by the Federal Deposit Insurance
Corporation through the [Bank Insurance
Fund for banks and through the Savings
Association Insurance Fund for savings
associations] Deposit Insurance Fund,
or by the National Credit Union
Administration.
* * * * * * *
----------
FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989
* * * * * * *
TITLE IX--REGULATORY ENFORCEMENT AUTHORITY AND CRIMINAL ENHANCEMENTS
* * * * * * *
Subtitle E--Civil Penalties For Violations Involving Financial
Institutions
SEC. 951. CIVIL PENALTIES.
(a) * * *
(b) Maximum Amount of Penalty.--
(1) * * *
* * * * * * *
(3) Special rule for violations creating gain or
loss.--(A) * * *
(B) As used in this paragraph, the term ``person''
includes the Bank Insurance Fund, the Savings
Association Insurance Fund, and after the merger of
such funds, the Deposit Insurance Fund, and the
National Credit Union Share Insurance Fund.
* * * * * * *
TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS
* * * * * * *
SEC. 1112. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGULATORY
AGENCIES RELATING TO APPRAISER QUALIFICATIONS.
(a) * * *
* * * * * * *
(c) GAO Study of Appraisals in Connection With Real Estate
Related Financial Transactions Below the Threshold Level.--
(1) GAO studies.--The Comptroller General of the
United States may conduct, under such conditions as the
Comptroller General determines appropriate, studies on
the adequacy and quality of appraisals or evaluations
conducted in connection with real estate related
financial transactions below the threshold level
established under subsection (b), taking into account--
(A) * * *
(B) the possibility of losses to the [Bank
Insurance Fund, the Savings Association
Insurance Fund,] Deposit Insurance Fund or the
National Credit Union Share Insurance Fund;
* * * * * * *
----------
BANK HOLDING COMPANY ACT OF 1956
* * * * * * *
definitions
Sec. 2. (a) * * *
* * * * * * *
(j) Definition of Savings Associations and Related Term.--The
term ``savings association'' or ``insured institution'' means--
(1) any Federal savings association or Federal
savings bank;
(2) any building and loan association, savings and
loan association, homestead association, or cooperative
bank if such association or cooperative bank is a
member of the [Savings Association Insurance Fund]
Deposit Insurance Fund; and
* * * * * * *
acquisition of bank shares or assets
Sec. 3. (a) * * *
* * * * * * *
(d) Interstate Banking.--
(1) Approvals authorized.--
(A) * * *
* * * * * * *
(D) Effect on state contingency laws.--No
provision of this subsection shall be construed
as affecting the applicability of a State law
that makes an acquisition of a bank contingent
upon a requirement to hold a portion of such
bank's assets available for call by a State-
sponsored housing entity established pursuant
to State law, if--
(i) * * *
* * * * * * *
(iii) the Federal Deposit Insurance
Corporation has not determined that
compliance with such State law would
result in an unacceptable risk to the
[appropriate deposit insurance fund]
Deposit Insurance Fund; and
* * * * * * *
----------
SECTION 114 OF THE GRAMM-LEACH-BLILEY ACT
SEC. 114. PRUDENTIAL SAFEGUARDS.
(a) Comptroller of the Currency.--
(1) In general.--The Comptroller of the Currency may,
by regulation or order, impose restrictions or
requirements on relationships or transactions between a
national bank and a subsidiary of the national bank
that the Comptroller finds are--
(A) * * *
(B) appropriate to avoid any significant risk
to the safety and soundness of insured
depository institutions or [any Federal deposit
insurance fund] the Deposit Insurance Fund or
other adverse effects, such as undue
concentration of resources, decreased or unfair
competition, conflicts of interests, or unsound
banking practices.
* * * * * * *
(b) Board of Governors of the Federal Reserve System.--
(1) * * *
(2) Finding.--The Board of Governors of the Federal
Reserve System may exercise authority under paragraph
(1) if the Board finds that the exercise of such
authority is--
(A) * * *
(B) appropriate to prevent an evasion of any
provision of law referred to in subparagraph
(A) or to avoid any significant risk to the
safety and soundness of depository institutions
or [any Federal deposit insurance fund] the
Deposit Insurance Fund or other adverse
effects, such as undue concentration of
resources, decreased or unfair competition,
conflicts of interests, or unsound banking
practices.
* * * * * * *
(4) Foreign banks.--The Board may, by regulation or
order, impose restrictions or requirements on
relationships or transactions between a branch, agency,
or commercial lending company of a foreign bank in the
United States and any affiliate in the United States of
such foreign bank that the Board finds are--
(A) * * *
(B) appropriate to prevent an evasion of any
provision of law referred to in subparagraph
(A) or to avoid any significant risk to the
safety and soundness of depository institutions
or [any Federal deposit insurance fund] the
Deposit Insurance Fund or other adverse
effects, such as undue concentration of
resources, decreased or unfair competition,
conflicts of interests, or unsound banking
practices.
(c) Federal Deposit Insurance Corporation.--
(1) In general.--The Federal Deposit Insurance
Corporation may, by regulation or order, impose
restrictions or requirements on relationships or
transactions between a State nonmember bank (as defined
in section 3 of the Federal Deposit Insurance Act) and
a subsidiary of the State nonmember bank that the
Corporation finds are--
(A) * * *
(B) appropriate to avoid any significant risk
to the safety and soundness of depository
institutions or [any Federal deposit insurance
fund] the Deposit Insurance Fund or other
adverse effects, such as undue concentration of
resources, decreased or unfair competition,
conflicts of interests, or unsound banking
practices.
* * * * * * *
SUPPLEMENTAL VIEWS
Section 4 of H.R. 522 contains a provision, originally
authored by Congresswoman Waters, that gives depository
institutions a 50 percent credit toward their premiums for
deposits held in lifeline banking accounts. These are accounts
intended for persons who might otherwise not be able to afford
access to basic banking services, such as free or low-cost
checking and savings accounts. This is a vital provision that,
for the first time, implements a provision of the Bank
Enterprise Act enacted in 1991, giving financial institutions
an incentive to provide low-cost basic banking services to
consumers who might not otherwise have access to them. The
inclusion of the lifeline account credit was critical to our
support of the favorable reporting of H.R. 522, and we are
strongly committed to do all that is necessary to retain it in
the bill throughout the legislative process.
Barney Frank.
Maxine Waters.
DISSENTING VIEWS
H.R. 522, the Federal Deposit Insurance Reform Act, expands
the Federal government's unconstitutional control over the
financial services industry and raises taxes on all financial
institutions. Furthermore, this legislation could increase the
possibility of future bank failures. Therefore, I must oppose
this bill.
I primarily object to the provisions in H.R. 522 which may
increase the premiums assessed on participating financial
institutions. These ``premiums,'' which are actually taxes, are
the premier sources of funds for the Deposit Insurance Fund.
This fund is used to bail out banks that experience
difficulties meeting their commitments to their depositors.
Thus, the deposit insurance system transfers liability for poor
management decisions from those who made the decisions, to
their competitors. This system punishes those financial
institutions which follow sound practices, as they are forced
to absorb the losses of their competitors. This also compounds
the moral hazard problem created whenever government socializes
business losses.
In the event of a severe banking crisis, Congress will
likely transfer funds from the general revenue into the Deposit
Insurance Fund, which could make all taxpayers liable for the
mistakes of a few. Of course, such a bailout would require
separate authorization from Congress, but can anyone imagine
Congress saying ``No'' to banking lobbyists pleading for relief
from the costs of bailing out their weaker competitors?
Government subsidies lead to government control, as
regulations are imposed on the recipients of the subsidies in
order to address the moral hazard problem. This is certainly
the case in banking, which is one of the most heavily regulated
industries in America. However, as George Kaufman, the John
Smith Professor of Banking and Finance at Loyola University in
Chicago, and co-chair of the Shadow Financial Regulatory
Committee, pointed out in a study for the CATO Institute, the
FDIC's history of poor management exacerbated the banking
crisis of the eighties and nineties. Professor Kaufman properly
identifies a key reason for the FDIC's poor track record in
protecting individual depositors: regulators have incentives to
downplay or even cover-up problems in the financial system such
as banking failures. Banking failures are black marks on the
regulators' records. In addition, regulators may be subject to
political pressure to delay imposing sanctions on failing
institutions, thus increasing the magnitude of the loss.
Immediately after a problem in the banking industry comes
to light, the media and Congress will inevitably blame it on
regulators who were ``asleep at the switch.'' Yet, most
politicians continue to believe that giving the very regulators
whose incompetence (or worst) either caused or contributed to
the problem will somehow prevent future crises!
The presence of deposit insurance and government
regulations removes incentives for individuals to act on their
own to protect their deposits or even inquire as to the health
of their financial institutions. After all, why should
individuals be concerned with the health of their financial
institutions when the Federal government is insuring banks
following sound practices and has insured their deposits?
Finally, I would remind my colleagues that the Federal
deposit insurance program lacks constitutional authority.
Congress' only mandate in the area of money, and banking is to
maintain the value of the money. Unfortunately, Congress
abdicated its responsibility over monetary policy with the
passage of the Federal Reserve Act of 1913, which allows the
Federal government to erode the value of the currency at the
will of the central bank. Congress' embrace of fiat money is
directly responsible for the instability in the banking system
that created the justification for deposit insurance.
In conclusion, H.R. 522 imposes new taxes on financial
institutions, forces sound institutions to pay for the mistakes
of their reckless competitors, increases the chances of
taxpayers being forced to bail out unsound financial
institutions, reduces individual depositors' incentives to take
action to protect their deposits, and exceeds Congress's
constitutional authority. I therefore urge my colleagues to
reject this bill. Instead of extending this Federal program,
Congress should work to prevent the crises which justify
government programs like deposit insurance, by fulfilling our
constitutional responsibility to pursue sound monetary.
Ron Paul.