I

104TH CONGRESS

1ST SESSION H. R. 1474

To amend the Federal Deposit Insurance Act to improve the requirements

relating to the designated reserve ratio for the deposit insurance funds

and the procedures for funding the reserves in such funds, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 7, 1995

Mr. LAFALCE introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To amend the Federal Deposit Insurance Act to improve

the requirements relating to the designated reserve ratio

for the deposit insurance funds and the procedures for

funding the reserves in such funds, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Deposit Insurance

5 Funds Management Improvement Act of 1995’’.
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1 SEC. 2. DEPOSIT INSURANCE FUND IMPROVEMENTS.

2 (a) ESTABLISHMENT OF DESIGNATED RESERVE

3 RATIO AS A FLOOR RATHER THAN A TARGET.—Section

4 7(b)(2)(A)(iv) of the Federal Deposit Insurance Act (12

5 U.S.C. 1817(b)(2)(A)(iv)) is amended to read as follows:

6 ‘‘(iv) ESTABLISHMENT OF DES7 IGNATED RESERVE RATIO.—The Board of

8 Directors shall establish the designated re9 serve ratio for each insurance fund in ac10 cordance with the following:

11 ‘‘(I) The designated reserve ratio

12 of any insurance fund shall be not less

13 than 1.25 percent of the estimated in14 sured deposits of members of such

15 fund.

16 ‘‘(II) The ratio of any insurance

17 fund shall be established at an

18 amount which the Board of Directors

19 determines will provide for an appro20 priate amount of reserves against

21 losses which may reasonably be ex22 pected to be incurred by the fund

23 without resulting in an excessive

24 buildup in the fund.’’.

25 (b) REDUCTION IN ASSESSMENT RATE IF DES26 IGNATED RESERVE RATIO IS MET.—Section 7(b)(2)(A) of
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1 the Federal Deposit Insurance Act (12 U.S.C.

2 1817(b)(2)(A)) is amended by adding at the end the fol3 lowing new clause:

4 ‘‘(v) CLARIFICATION OF AUTHORITY

5 TO REDUCE ASSESSMENTS AMOUNTS.—The

6 authority of the Board of Directors to set

7 semiannual assessments to maintain the

8 reserve ratio of any insurance fund at the

9 designated reserve ratio includes the au10 thority to reduce such assessments by any

11 appropriate amount if the reserve ratio of

12 such fund is equal to or greater than the

13 minimum designated reserve ratio of such

14 fund.’’.

15 (c) CONSIDERATION OF EFFECT OF ASSESSMENT

16 RATE DIFFERENTIAL.—Section 7(b)(2)(B) of the Federal

17 Deposit Insurance Act (12 U.S.C. 1817(b)(2)(B)) is

18 amended to read as follows:

19 ‘‘(B) CONSIDERATION OF EFFECT OF AS20 SESSMENT RATE DIFFERENTIAL.—In setting

21 the semiannual assessment rates for insured de22 pository institutions, the Board of Directors

23 may consider any risk to the safety and sound24 ness of any deposit insurance fund, the mem25 bers of any deposit insurance fund, or the de-
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1 posit insurance system as a whole which is

2 posed by any difference between the assessment

3 rate for Savings Association Insurance Fund

4 members and the assessment rate for Bank In5 surance Fund members.’’.

6 (d) REPEAL OF MINIMUM SAIF ASSESSMENT

7 RULE.—Section 7(b)(2) of the Federal Deposit Insurance

8 Act (12 U.S.C. 1817(b)(2)) is amended by striking sub9 paragraph (E).

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