I

104TH CONGRESS

1ST SESSION H. R. 1470

To provide for sufficient funding to cover the costs of the Financing Corporation, to provide funds to carry out the purposes of the Savings Association Insurance Fund, 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 provide for sufficient funding to cover the costs of the

Financing Corporation, to provide funds to carry out

the purposes of the Savings Association Insurance Fund,

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 ‘‘Financing Corporation

5 and Savings Association Insurance Fund Reform Act of

6 1995’’.
2

•HR 1470 IH

1 SEC. 2. PAYMENT OF INTEREST EARNED ON RTC FUNDS TO

2 FICO.

3 (a) IN GENERAL.—Subsection (i) of section 21A of

4 the Federal Home Loan Bank Act (12 U.S.C. 1441a(i))

5 is amended by adding at the end the following new para6 graph:

7 ‘‘(7) TRUST FUND FOR UNEXPENDED RTC

8 FUNDING.—

9 ‘‘(A) IN GENERAL.—The Secretary of the

10 Treasury shall transfer that portion of the

11 amounts appropriated under paragraph (3)

12 which are available to the Corporation but have

13 not been paid to the Corporation to the Federal

14 Deposit Insurance Corporation for deposit in a

15 trust fund to be managed by the Federal De16 posit Insurance Corporation.

17 ‘‘(B) INVESTMENT.—The Board of Direc18 tors of the Federal Deposit Insurance Corpora19 tion shall invest such portion of the trust fund

20 established under subparagraph (A) as, in the

21 judgment of the Board of Directors, is not re22 quired to meet the short-term requirements of

23 the Resolution Trust Corporation or the Sav24 ings Association Insurance Fund.

25 ‘‘(C) INTEREST.—Interest earned on in26 vestments of the trust fund shall be paid to the
3

•HR 1470 IH

1 Financing Corporation to meet interest pay2 ments, issuance costs, and custodial fees on ob3 ligations issued by the Financing Corporation.

4 ‘‘(D) AVAILABILITY OF TRUST FUND PRIN5 CIPAL AS BACKSTOP FOR SAIF.—The balance in

6 the trust fund shall be available to the Federal

7 Deposit Insurance Corporation to cover losses

8 incurred, or reasonably anticipated to be in9 curred, by the Savings Association Insurance

10 Fund until the reserve ration of the Savings As11 sociation Insurance Fund first meets or exceeds

12 the applicable designated reserve ratio.

13 ‘‘(E) RETURN OF UNEXPENDED PRINCIPAL

14 TO TREASURY.—After the maturity and full re15 payment of all obligations issued by the Financ16 ing Corporation under section 21, any remain17 ing balance in the trust fund shall be returned

18 to the general fund of the Treasury and the

19 trust fund shall be abolished.’’.

20 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

21 (1) Section 21A(i)(5) of the Federal Home

22 Loan Bank Act (12 U.S.C. 1441a(i)(5)) is

23 amended—
4

•HR 1470 IH

1 (A) by striking ‘‘or to meet the require2 ments of section 11(a)(6)(F) of the Federal De3 posit Insurance Act’’; and

4 (B) by striking ‘‘general fund of the Treas5 ury’’ and inserting ‘‘trust fund established pur6 suant to paragraph (7)(A)’’.

7 (2) Section 11(a)(6) of the Federal Deposit In8 surance Act (12 U.S.C. 1821(a)(6)) is amended by

9 striking subparagraph (F).

10 (3) Section 11(a)(6)(K) of the Federal Deposit

11 Insurance Act (12 U.S.C. 1821(a)(6)(K)) is amend12 ed by striking ‘‘or (F)’’.

13 SEC. 3. CLARIFICATION OF EXISTING LAW.

14 (a) CONGRESSIONAL DECLARATION.—The Congress

15 declares as follows:

16 (1) The Financing Corporation was established

17 pursuant to the amendments made by title III of the

18 Competitive Equality Banking Act of 1987 for the

19 sole purpose of providing additional funding to the

20 Federal Savings and Loan Insurance Corporation to

21 meet the deposit insurance obligations of the Cor22 poration with respect to savings associations.

23 (2) The interest payments, issuance costs, and

24 custodial fees on obligations issued by the Financing

25 Corporation are paid, pursuant to section 21 of the
5

•HR 1470 IH

1 Federal Home Loan Bank Act, by assessments on

2 savings associations.

3 (3) The total amount of assessments paid by

4 savings associations to the Federal Savings and

5 Loan Insurance Corporation, and since 1989, to the

6 Federal Deposit Insurance Corporation, as pre7 miums for deposit insurance are required to be re8 duced by the amount of the assessments paid by

9 such associations to the Financing Corporation in

10 recognition of the fact that the latter assessments

11 are being made to finance the insurance obligations

12 incurred with respect to savings associations.

13 (b) TREATMENT OF FICO ASSESSMENTS.—The as14 sessments paid by Savings Association Insurance Fund

15 members to the Financing Corporation shall be treated as

16 insurance outlays for purposes of Federal law.

17 SEC. 4. 1-TIME SPECIAL SAIF CAPITALIZATION ASSESS18 MENT.

19 Section 7(b) of the Federal Deposit Insurance Act

20 (12 U.S.C. 1817(b)) is amended by adding at the end the

21 following new paragraph:

22 ‘‘(8) SPECIAL 1-TIME ASSESSMENT TO RECAPI23 TALIZE SAIF.—

24 ‘‘(A) IN GENERAL.—The Corporation may,

25 in the discretion of the Board of Directors, im-
6

•HR 1470 IH

1 pose a special assessment on each Savings As2 sociation Insurance Fund member in an

3 amount not greater than 0.40 percent of the as4 sessment base, as of January 1, 1995, on which

5 assessments are imposed under the risk-based

6 assessment system established pursuant to

7 paragraph (1).

8 ‘‘(B) DEPOSIT OF ASSESSMENT IN SAIF.—

9 The proceeds of any assessment imposed under

10 subparagraph (A) shall be deposited in the Sav11 ings Association Insurance Fund.

12 ‘‘(C) IMPOSITION OVER PERIOD OF

13 YEARS.—The assessment authorized under sub14 paragraph (A) may be imposed incrementally

15 over such period of years as the Board of Di16 rectors may determine to be appropriate, except

17 the larger percentage of any such incremental

18 assessment shall be allocated to the first year of

19 the effective period for such assessment.

20 ‘‘(D) ABATEMENT FOR TROUBLED INSTI21 TUTIONS.—The Board of Directors may abate

22 any portion of any assessment under this para23 graph in the case of any undercapitalized insti24 tution or any institution which would become
7

•HR 1470 IH

1 undercapitalized as a result of the imposition of

2 such assessment.’’.

3 SEC. 5. REPEAL OF MINIMUM SAIF ASSESSMENT RULE.

4 Section 7(b)(2) of the Federal Deposit Insurance Act

5 (12 U.S.C. 1817(b)(2)) is amended by striking subpara6 graph (E).

7 SEC. 6. LIMIT ON DIFFERENTIAL BETWEEN ASSESSMENT

8 RATES IMPOSED ON FORMER BIF MEMBERS

9 AND FORMER SAIF MEMBERS.

10 Section 7(b)(2) of the Federal Deposit Insurance Act

11 (12 U.S.C. 1817(b)(2)) is amended by inserting after

12 paragraph (G) the following new subparagraph:

13 ‘‘(H) CAP ON DIFFERENTIAL BETWEEN

14 FORMER BIF AND SAIF MEMBERS.—The aver15 age assessment rate under the risk-based as16 sessment system for insured depository institu17 tions which, as of December 31, 1994, were

18 Savings Association Insurance Fund members,

19 including the special assessment under para20 graph (9), shall not exceed the average assess21 ment rate under the risk-based assessment sys22 tem for insured depository institutions which,

23 as of December 31, 1994, were Bank Insurance

24 Fund members by more than 9 basis points.’’.

Æ