I

104TH CONGRESS

1ST SESSION H. R. 1476

To merge the Bank Insurance Fund and the Savings Association Insurance

Fund, to improve funding for the Financing Corporation, 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 merge the Bank Insurance Fund and the Savings Association Insurance Fund, to improve funding for the Financing Corporation, 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 ‘‘Bank Insurance Fund

5 and the Savings Association Insurance Fund Merger Act

6 of 1995’’.

7 SEC. 2. MERGER OF FDIC INSURANCE FUNDS IN 1998.

8 (a) IN GENERAL.—Section 11(a) of the Federal De9 posit Insurance Act (12 U.S.C. 1821(a)) is amended—
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1 (1) by striking paragraphs (5) and (6) and in2 serting the following new paragraphs:

3 ‘‘(5) DEPOSIT INSURANCE FUND.—

4 ‘‘(A) ESTABLISHMENT.—There is hereby

5 established a fund to be known as the deposit

6 insurance fund.

7 ‘‘(B) TRANSFER TO FUND.—On the date

8 of the enactment of the Deposit Insurance

9 Fund Merger Act of 1995, the Bank Insurance

10 Fund and the Savings Association Insurance

11 Fund shall be abolished and all assets and li12 abilities of each such fund shall be transferred

13 to the deposit insurance fund.

14 ‘‘(C) USES.—The deposit insurance fund

15 shall be available to the Corporation for use

16 with respect to insured depository institutions.

17 ‘‘(D) DEPOSITS.—All amounts assessed

18 against insured depository institutions under

19 this Act shall be deposited in the deposit insur20 ance fund.

21 ‘‘(6) ACCOUNTING REQUIREMENTS.—

22 ‘‘(A) ACCOUNTING FOR USE OF FACILITIES

23 AND RESOURCES.—The Corporation shall keep

24 a full and complete accounting of all costs and

25 expenses associated with the use of any facility
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1 or resource used in the course of conducting su2 pervisory, regulatory, conservatorship, receiver3 ship, or liquidation functions with respect to in4 sured depository institutions.

5 ‘‘(B) ACCOUNTING FOR HOLDING AND

6 MANAGING ASSETS AND LIABILITIES.—The Cor7 poration shall keep a full and complete account8 ing of all costs and expenses associated with the

9 holding and management of any asset or liabil10 ity belonging to insured depository institutions

11 in conservatorship or receivership.

12 ‘‘(C) ACCOUNTING FOR DISPOSITION OF

13 ASSETS AND LIABILITIES.—The Corporation

14 shall keep a full and complete accounting of all

15 expenses and receipts associated with the dis16 position of any asset or liability belonging to in17 sured depository institutions in conservatorship

18 or receivership.’’;

19 (2) by striking subparagraph (A) of paragraph

20 (4); and

21 (3) by striking paragraph (7) and redesignating

22 paragraph (8) as paragraph (7).

23 (b) ASSESSMENTS OF FORMER BIF MEMBERS

24 CAPPED AT RATES APPLICABLE BEFORE MERGER OF

25 FUNDS.—Section 7(b)(2) of the Federal Deposit Insur-
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1 ance Act (12 U.S.C. 1817(b)(2)) is amended by inserting

2 after subparagraph (G) the following new subparagraphs:

3 ‘‘(H) REDUCED ASSESSMENT RATES CON4 TINUE TO APPLY TO FORMER BIF MEMBERS.—

5 Until the deposit insurance fund first meets or

6 exceeds the designated reserve ratio, the aver7 age assessment rates applicable under the risk8 based assessment system for any semiannual

9 period with respect to insured depository insti10 tutions which were Bank Insurance Fund mem11 bers on the day before the date of the enact12 ment of the Deposit Insurance Fund Merger

13 Act of 1995 shall not exceed the greater of—

14 ‘‘(i) the average of the assessment

15 rates which would be applicable to such in16 stitutions under this section for any semi17 annual period if the amendments made by

18 such Act had not been enacted; or

19 ‘‘(ii) 6 basis points.

20 ‘‘(I) SCHEDULE FOR MEETING DES21 IGNATED RESERVE RATIO.—Notwithstanding

22 paragraph (3), upon the enactment of the De23 posit Insurance Fund Merger Act of 1995, the

24 Corporation shall prescribe a schedule in the

25 manner provided in paragraph (3)(B) which
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1 culminates in a reserve ratio that is equal to

2 or greater than the designated reserve ratio not

3 later than 5 years after the date of the enact4 ment of such Act.’’.

5 (c) LIMIT ON DIFFERENTIAL BETWEEN ASSESS6 MENT RATES IMPOSED ON FORMER BIF MEMBERS AND

7 FORMER SAIF MEMBERS.—Section 7(b)(2) of the Fed8 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is

9 amended by inserting after subparagraph (I) (as added

10 by subsection (b) of this section) the following new sub11 paragraph:

12 ‘‘(J) CAP ON DIFFERENTIAL BETWEEN

13 FORMER BIF AND SAIF MEMBERS.—The aver14 age assessment rate under the risk-based as15 sessment system for insured depository institu16 tions which, as of December 31, 1994, were

17 Savings Association Insurance Fund members,

18 including the special assessment under para19 graph (9), shall not exceed the average assess20 ment rate under the risk-based assessment sys21 tem for insured depository institutions which,

22 as of December 31, 1994, were Bank Insurance

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

24 (d) REPEAL OF CONVERSION MORATORIUM, EXIT

25 FEE, AND ‘‘OAKAR BANK’’ PROVISIONS.—Section 5(d) of
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1 the Federal Deposit Insurance Act (12 U.S.C. 1815(d))

2 is amended by striking paragraphs (2) and (3).

3 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

4 (1) Section 5(d)(1) of the Federal Deposit In5 surance Act (12 U.S.C. 1815(d)(1)) is amended by

6 striking ‘‘Bank Insurance Fund and the Savings As7 sociation Insurance Fund’’ and inserting ‘‘deposit

8 insurance fund’’.

9 (2) Section 7(b) of the Federal Deposit Insur10 ance Act (12 U.S.C. 1817(b)) is amended—

11 (A) in paragraph (1)(D), by striking

12 ‘‘each’’ and inserting ‘‘the’’;

13 (B) in paragraph (2)(A)(i)(I), by striking

14 ‘‘each’’ and inserting ‘‘the’’;

15 (C) in paragraph (2)(A)(iii), by striking ‘‘a

16 deposit’’ and inserting ‘‘the deposit’’;

17 (D) in paragraph (2)(A)(iv), by striking

18 ‘‘each’’ and inserting ‘‘the’’;

19 (E) by striking subparagraph (B) of para20 graph (2);

21 (F) in paragraph (2)(C), by striking

22 ‘‘each’’ and inserting ‘‘the’’;

23 (G) by striking subparagraphs (E) and (F)

24 of paragraph (2);
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1 (H) in paragraph (2)(G), by striking ‘‘a

2 deposit’’ and inserting ‘‘the deposit’’;

3 (I) in paragraph (3)(A), by striking ‘‘any

4 deposit’’ and inserting ‘‘the deposit’’;

5 (J) by striking subparagraphs (C) and (D)

6 of paragraph (3);

7 (K) in paragraph (6)(A)(ii), by striking

8 ‘‘Bank Insurance Fund members’’ and inserting

9 ‘‘insured depository institutions’’; and

10 (L) by striking subparagraph (B) of para11 graph (6).

12 (3) Section 7 of the Federal Deposit Insurance

13 Act (12 U.S.C. 1817) is amended by striking sub14 section (l).

15 (4) Section 11(f)(1) of the Federal Deposit In16 surance Act (12 U.S.C. 1821(f)(1)) is amended by

17 striking ‘‘, except that—’’ and all that follows

18 through the period at the end and inserting a period.

19 (5) Section 11(i)(3) of the Federal Deposit In20 surance Act (12 U.S.C. 1821(i)(3)) is amended by

21 striking subparagraph (B) and by redesignating sub22 paragraph (C) as subparagraph (B).

23 (6) Section 11A(a) of the Federal Deposit In24 surance Act (12 U.S.C. 1821A(a)) is amended—
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1 (A) in paragraph (2)(B), by striking ‘‘Sav2 ings Association Insurance Fund’’ and inserting

3 ‘‘deposit insurance fund’’; and

4 (B) in paragraph (3), by striking ‘‘Bank

5 Insurance Fund, the Savings Association Insur6 ance Fund,’’ and inserting ‘‘deposit insurance

7 fund’’.

8 (7) Section 13 of the Federal Deposit Insurance

9 Act (12 U.S.C. 1823) is amended—

10 (A) in subsection (a)(1) by striking ‘‘Bank

11 Insurance Fund, Savings Association Insurance

12 Fund,’’ and inserting ‘‘deposit insurance fund’’;

13 (B) by striking paragraph (11) of sub14 section (c);

15 (C) in subsection (k)(4)(B)(ii), by striking

16 ‘‘Savings Association Insurance Fund member’’

17 and inserting ‘‘savings association’’; and

18 (D) in subsection (k)(5)(A), by striking

19 ‘‘Savings Association Insurance Fund mem20 bers’’ and inserting ‘‘savings associations’’.

21 (8) Section 14 of the Federal Deposit Insurance

22 Act (12 U.S.C. 1824) is amended—

23 (A) in subsection (a), by striking ‘‘Bank

24 Insurance Fund or the Savings Association In-
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1 surance Fund’’ and inserting ‘‘deposit insur2 ance fund’’;

3 (B) in subsection (a), by striking ‘‘Bank

4 Insurance Fund or Savings Association Insur5 ance Fund’’ and inserting ‘‘deposit insurance

6 fund’’;

7 (C) in subsection (c), by striking para8 graph (3); and

9 (D) in subsection (d)—

10 (i) by striking ‘‘Bank Insurance Fund

11 members’’ each place such term appears

12 and inserting ‘‘insured depository institu13 tions’’;

14 (ii) by striking ‘‘Bank Insurance

15 Fund member’’ each place such term ap16 pears and inserting ‘‘insured depository in17 stitution’’; and

18 (iii) by striking ‘‘Bank Insurance

19 Fund’’ each place such term appears

20 (other than in connection with a term re21 ferred to in clause (i) or (ii)) and inserting

22 ‘‘deposit insurance fund’’.

23 (9) Section 15(c)(5) of the Federal Deposit In24 surance Act (12 U.S.C. 1825(c)(5)) is amended—
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1 (A) by striking ‘‘Bank Insurance Fund or

2 Savings Association Insurance Fund, respec3 tively,’’ each place such term appears and in4 serting ‘‘deposit insurance fund’’; and

5 (B) by striking ‘‘Bank Insurance Fund or

6 the Savings Association Insurance Fund, re7 spectively,’’ each place such term appears and

8 inserting ‘‘deposit insurance fund’’.

9 (10) Section 17 of the Federal Deposit Insur10 ance Act (12 U.S.C. 1827) is amended by striking

11 ‘‘Bank Insurance Fund, Savings Association Insur12 ance Fund,’’ each place such term appears and in13 serting ‘‘deposit insurance fund’’.

14 (11) Section 18(m)(3) of the Federal Deposit

15 Insurance Act (12 U.S.C. 1828(m)(3)) is amend16 ed—

17 (A) in subparagraph (A)—

18 (i) by inserting ‘‘of an insured savings

19 association or a subsidiary of any such as20 sociation’’ after ‘‘specific activity’’;

21 (ii) by striking ‘‘Savings Association

22 Insurance Fund.’’ and inserting ‘‘deposit

23 insurance fund.’’; and
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1 (iii) by striking ‘‘that Savings Asso2 ciation Insurance Fund member’’ and in3 serting ‘‘such savings association’’; and

4 (B) in subparagraph (C), by striking ‘‘Sav5 ings Association Insurance Fund or the Bank

6 Insurance Fund’’ and inserting ‘‘deposit insur7 ance fund’’.

8 (12) Section 31 of the Federal Deposit Insur9 ance Act (12 U.S.C. 1831h) is amended—

10 (A) in subsection (a), by striking ‘‘Insur11 ance Fund’’; and

12 (B) in subsection (b)(2), by striking ‘‘Sav13 ings Association Insurance Fund members’’ and

14 inserting ‘‘savings associations’’.

15 (13) Section 38(o)(1)(B) of the Federal Deposit

16 Insurance Act (12 U.S.C. 1831o(o)(1)(B)) is amend17 ed by striking ‘‘Savings Association Insurance

18 Fund’’ and inserting ‘‘deposit insurance fund’’.

19 SEC. 3. FICO PAYMENTS BY ALL FDIC-INSURED DEPOSI20 TORY INSTITUTIONS.

21 Section 21(f) of the Federal Home Loan Bank Act

22 (12 U.S.C. 1441(f)(2)) is amended—

23 (1) in the portion of paragraph (2) which pre24 cedes subparagraph (A) of such paragraph—
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1 (A) by striking ‘‘each Savings Association

2 Insurance Fund member’’ and inserting ‘‘each

3 insured depository institution (as defined in sec4 tion 3(c)(2) of the Federal Deposit Insurance

5 Act); and

6 (B) by striking ‘‘such member’’ and insert7 ing ‘‘such institution’’;

8 (2) in paragraph (2)(A), by striking ‘‘Savings

9 Association Insurance Fund members’’ and inserting

10 ‘‘insured depository institutions’’; and

11 (3) in paragraph (2)(C) by inserting ‘‘, except

12 with respect to insured depository institutions which

13 were Bank Insurance Fund members on the day be14 fore the date of the enactment of the Deposit Insur15 ance Fund Merger Act of 1995’’ before the period

16 at the end.

17 SEC. 4. AVAILABILITY OF RTC FUNDS TO LEND TO FDIC TO

18 RECAPITALIZE DEPOSIT INSURANCE FUND.

19 (a) IN GENERAL.—Section 7(b) of the Federal De20 posit Insurance Act (12 U.S.C. 1817(b)) is amended by

21 adding at the end the following new paragraph:

22 ‘‘(8) AVAILABILITY OF RTC FUNDING.—

23 ‘‘(A) LOANS TO FDIC.—At the request of

24 the Board of Directors of the Federal Deposit

25 Insurance Corporation, the Secretary of the
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1 Treasury shall lend, out of funds appropriated

2 to the Resolution Trust Corporation pursuant

3 to section 21A(i)(3) of the Federal Home Loan

4 Bank Act and not expended by the Resolution

5 Trust Corporation, to the deposit insurance

6 fund such amounts as may be requested by the

7 Board of Directors to recapitalize such fund

8 and are not needed by the Resolution Trust

9 Corporation.

10 ‘‘(B) TERMS AND CONDITIONS TO ENSURE

11 REPAYMENT.—The Secretary of the Treasury

12 may establish such terms and conditions to en13 sure the repayment of any loan under subpara14 graph (A) as the Secretary determines to be ap15 propriate.

16 ‘‘(C) OTHER TERMS.—The annual repay17 ment terms and the length of time for which

18 the loan is made shall be established by the

19 Federal Deposit Insurance Corporation in con20 sultation with the Secretary of the Treasury.

21 ‘‘(D) TERMINATION OF LENDING AUTHOR22 ITY.—No additional advances may be made to

23 the Federal Deposit Insurance Corporation

24 under this paragraph after the reserve ratio of
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1 the deposit insurance fund first meets or ex2 ceeds the designated reserve ratio.’’.

3 (b) SPECIAL 1-TIME ASSESSMENT TO REPAY

4 LOANS.—Section 7(b) of the Federal Deposit Insurance

5 Act (12 U.S.C. 1817(b)) is amended by inserting after

6 paragraph (8) (as added by subsection (a) of this section)

7 the following new paragraphs:

8 ‘‘(9) SPECIAL 1-TIME ASSESSMENT TO RECAPI9 TALIZE SAIF.—

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

11 in the discretion of the Board of Directors, im12 pose a special assessment on any designated in13 sured depository institution in an amount not

14 greater than 0.40 percent of the assessment

15 base on which assessments are imposed under

16 the risk-based assessment system established

17 pursuant to paragraph (1).

18 ‘‘(B) USE OF PROCEEDS TO REPAY

19 LOANS.—The proceeds of any assessment im20 posed under subparagraph (A) shall be used to

21 repay any recapitalization loan under paragraph

22 (8).

23 ‘‘(C) IMPOSITION OVER PERIOD OF

24 YEARS.—The assessment authorized under sub25 paragraph (A) may be imposed incrementally
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1 over such period of years as the Board of Di2 rectors may determine to be appropriate, except

3 the larger percentage of any such incremental

4 assessment shall be allocated to the first year of

5 the effective period for such assessment.

6 ‘‘(D) ABATEMENT FOR TROUBLED INSTI7 TUTIONS.—The Board of Directors may abate

8 any portion of any assessment under this para9 graph in the case of any undercapitalized insti10 tution or any institution which would become

11 undercapitalized as a result of the imposition of

12 such assessment.

13 ‘‘(10) DESIGNATED INSURED DEPOSITORY IN14 STITUTION DEFINED.—For purposes of paragraph

15 (9), the term ‘designated insured depository institu16 tion’—

17 ‘‘(A) means any insured depository institu18 tion which, as of January 1, 1995, or at any

19 time after such date, was a Savings Association

20 Insurance Fund member under the Federal De21 posit Insurance Act (as in effect on the day be22 fore the date of the enactment of the Deposit

23 Insurance Fund Merger Act of 1995); and

24 ‘‘(B) includes any other insured depository

25 institution which acquires (as defined in section
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1 13(f)(8)(B) of the Federal Deposit Insurance

2 Act) such insured depository institution or is

3 otherwise a successor in interest to such institu4 tion.’’.

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