I

104TH CONGRESS

1ST SESSION H. R. 2363

To provide for adequate funding for the Financing Corporation, to provide

for the merger of the deposit insurance funds, to provide for the conversion of Federal savings associations into banks and the treatment of

State savings associations as banks for purposes of Federal banking

law, to abolish the position of Director of the Office of Thrift Supervision,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 19, 1995

Mrs. ROUKEMA (for herself, Mr. LEACH, Mr. MCCOLLUM, Mr. ROTH, Mr.

BAKER of Louisiana, Mr. BACHUS, Mr. VENTO, Mr. FLAKE, Mr. ROYCE,

Mr. LUCAS, Mr. WELLER, Mr. METCALF, and Mr. WATTS of Oklahoma)

introduced the following bill; which was referred to the Committee on

Banking and Financial Services, and in addition to the Committee on

Ways and Means, for a period to be subsequently determined by the

Speaker, in each case for consideration of such provisions as fall within

the jurisdiction of the committee concerned

A BILL

To provide for adequate funding for the Financing Corporation, to provide for the merger of the deposit insurance

funds, to provide for the conversion of Federal savings

associations into banks and the treatment of State savings associations as banks for purposes of Federal banking law, to abolish the position of Director of the Office

of Thrift Supervision, and for other purposes.
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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, TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Thrift Charter Conversion Act of 1995’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

TITLE I—BANK INSURANCE FUND AND SAVINGS ASSOCIATION

INSURANCE FUND

Sec. 101. Special assessment.

Sec. 102. Assessments on insured depository institutions.

Sec. 103. Merger of bank insurance fund and savings association insurance

fund after recapitalization of SAIF.

Sec. 104. Refund of amounts in deposit insurance fund in excess of designated

reserve amount.

Sec. 105. Assessments authorized only if needed to maintain the reserve ratio

of a deposit insurance fund.

TITLE II—STATUS OF BANKS AND SAVINGS ASSOCIATIONS

Sec. 201. Termination of Federal savings associations; treatment of State savings associations as banks for purposes of Federal banking law.

Sec. 202. Treatment of certain activities and affiliations of bank holding companies resulting from this Act.

Sec. 203. Transition provisions for activities of savings associations which convert into or become treated as banks.

Sec. 204. Registration of bank holding companies resulting from conversions of

savings associations to banks or treatment of savings associations as banks.

Sec. 205. Additional transition provisions and special rules.

Sec. 206. Technical and conforming amendments.

Sec. 207. References to savings associations and State banks in Federal law.

Sec. 208. Repeal of Home Owners’ Loan Act.

Sec. 209. Effective date; definitions.

TITLE III—TRANSFER OF FUNCTIONS, PERSONNEL, AND

PROPERTY

Sec. 301. Office of Thrift Supervision abolished.

Sec. 302. Determination of transferred functions and employees.

Sec. 303. Savings provisions.

Sec. 304. References in Federal law to Director of the Office of Thrift Supervision.

Sec. 305. Reconfiguration of board of directors of FDIC as a result of removal

of Director of the Office of Thrift Supervision.
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TITLE IV—LOAN LOSS RESERVE TREATMENT

Sec. 401. Repeal of special thrift bad debt reserve method.

1 TITLE I—BANK INSURANCE

2 FUND AND SAVINGS ASSOCIA3 TION INSURANCE FUND

4 SEC. 101. SPECIAL ASSESSMENT.

5 Section 7(b)(6) of the Federal Deposit Insurance Act

6 (12 U.S.C. 1817(b)(6)) is amended—

7 (1) by redesignating clauses (i), (ii), and (iii) of

8 subparagraph (A) as subclauses (I), (II), and (III),

9 respectively;

10 (2) by redesignating subparagraphs (A) and

11 (B) as clauses (i) and (ii), respectively;

12 (3) by moving the left margin of such clauses

13 and subclauses (as so redesignated) 2 ems to the

14 right;

15 (4) by striking ‘‘SPECIAL ASSESSMENTS.—In

16 addition to’’ and inserting ‘‘SPECIAL ASSESS17 MENTS.—

18 ‘‘(A) IN GENERAL.—In addition to’’; and

19 (5) by adding at the end the following new sub20 paragraph:

21 ‘‘(B) SINGLE ADDITIONAL SPECIAL AS22 SESSMENT WITH RESPECT TO CERTAIN AC23 COUNTS.—
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1 ‘‘(i) IN GENERAL.—The Corporation

2 shall impose, on the basis of such factors

3 as the Board of Directors considers to be

4 appropriate, a single special assessment on

5 the institutions described in the following

6 subclauses (other than institutions exempt

7 under subparagraph (C):

8 ‘‘(I) Each Savings Association

9 Insurance Fund member (including

10 any Savings Association Insurance

11 Fund member referred to in section

12 5(d)(2)(G)).

13 ‘‘(II) Each Bank Insurance Fund

14 member which has deposits which are

15 treated, under section 5(d)(3), as de16 posits which are insured by the Sav17 ings Association Insurance Fund.

18 ‘‘(ii) AMOUNT OF ASSESSMENT.—The

19 assessment imposed under clause (i) shall

20 be in an amount equal to such percentage

21 of the Savings Association Insurance Fund

22 assessment base of the institutions subject

23 to such assessment on which assessments

24 are imposed under the risk-based assess25 ment system established pursuant to para-
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1 graph (1) (or, in the case of an institution

2 described in subclause (II), the adjusted

3 attributable deposit amount determined

4 under subparagraph (C) of section 5(d)(3)

5 for purposes of subparagraph (B)(i) of

6 such section) as of March 31, 1995, as the

7 Board of Directors determines, in the

8 Board of Directors’ discretion, to be nec9 essary in order for the reserve ratio of the

10 Savings Association Insurance Fund to

11 meet the designated reserve ratio on the

12 1st business day of January, 1996.

13 ‘‘(iii) DEPOSIT OF ASSESSMENT.—

14 Notwithstanding any other provision of

15 law, the proceeds of any assessment im16 posed under clause (i) shall be deposited in

17 the Savings Association Insurance Fund.

18 ‘‘(iv) DATE PAYMENT DUE.—The spe19 cial assessment imposed under this sub20 paragraph shall be—

21 ‘‘(I) due on the 1st business day

22 of January, 1996; and

23 ‘‘(II) paid to the Corporation on

24 the later of the due date or such other

25 date as the Corporation may prescribe
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1 which may not be later than the end

2 of the 60-day period beginning on the

3 date of the Thrift Charter Conversion

4 Act of 1995.

5 ‘‘(C) SPECIAL RULES FOR CERTAIN

6 UNDERCAPITALIZED INSTITUTIONS.—

7 ‘‘(i) IN GENERAL.—The Board of Di8 rectors may exempt any insured depository

9 institution from the payment of the assess10 ment imposed under subparagraph (B)(i)

11 if the exemption would reduce risk to the

12 Savings Association Insurance Fund.

13 ‘‘(ii) CONTINUATION OF PRIOR AS14 SESSMENT RATE.—Notwithstanding para15 graph (2) or any other provision of this

16 subsection, the semiannual assessment rate

17 applicable under paragraph (2) during the

18 period beginning on January 1, 1996, and

19 ending on December 31, 1999, with re20 spect to any insured depository institution

21 which receives an exemption under clause

22 (i) shall be the semiannual assessment rate

23 applicable to Savings Association Insur24 ance Fund members under paragraph (2)

25 as of June 30, 1995.
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1 ‘‘(iii) SPECIAL RULE FOR OAKAR

2 BANKS.—If an insured depository institu3 tion to which clause (ii) applies is an insti4 tution described in subparagraph

5 (B)(i)(II), section 5(d)(3), as in effect on

6 September 13, 1995, shall continue to

7 apply with respect to such institution for

8 purposes of clause (ii) without regard to

9 the repeal of such section by section 102(c)

10 of the Thrift Charter Conversion Act of

11 1995.

12 ‘‘(iv) DEPOSIT OF ASSESSMENT.—As13 sessments imposed under paragraph (2) in

14 accordance with clause (i) on depository in15 stitutions to which such clause applies

16 shall be deposited—

17 ‘‘(I) in the Savings Association

18 Insurance Fund until such fund is

19 merged into the deposit insurance

20 fund pursuant to section 103(a)(2) of

21 the Thrift Charter Conversion Act of

22 1995; and

23 ‘‘(II) after such merger, in the

24 deposit insurance fund.
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1 ‘‘(D) PRO RATA PAYMENT OF SPECIAL AS2 SESSMENT BY EXEMPT INSTITUTIONS AUTHOR3 IZED.—In the case of any depository institution

4 which receives an exemption under subpara5 graph (C)(i) from the special assessment im6 posed under subparagraph (B), subparagraph

7 (C)(ii) shall cease to apply with respect to such

8 institution as of the date on which the institu9 tion makes a payment to the Corporation, on

10 such terms as the Board of Directors may pre11 scribe, in an amount equal to the product of—

12 ‘‘(i) 12.5 percent of the product of—

13 ‘‘(I) the Savings Association In14 surance Fund assessment base of the

15 institution which would have been

16 used in the calculation of the amount

17 of such special assessment if the insti18 tution had not received the exemption

19 from such assessment; and

20 ‘‘(II) the percentage rate cal21 culated by the Board of Directors

22 under subparagraph (B)(ii) for use in

23 determining the amount of the special

24 assessment for depository institutions
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1 which did not receive an exemption

2 under subparagraph (C); and

3 ‘‘(ii) the whole number of full semi4 annual periods which begin after the date

5 of such payment and end before January

6 1, 2000.’’.

7 SEC. 102. ASSESSMENTS ON INSURED DEPOSITORY INSTI8 TUTIONS.

9 (a) FINANCING CORPORATION ASSESSMENTS ON ALL

10 FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section

11 21(f) of the Federal Home Loan Bank Act (12 U.S.C.

12 1441(f)(2)) is amended—

13 (1) in the portion of paragraph (2) which pre14 cedes subparagraph (A)—

15 (A) by striking ‘‘each Savings Association

16 Insurance Fund member’’ and inserting ‘‘each

17 insured depository institution (as defined in sec18 tion 3(c)(2) of the Federal Deposit Insurance

19 Act)’’; and

20 (B) by striking ‘‘such members’’ and in21 serting ‘‘such institutions’’; and

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

23 Association Insurance Fund members’’ and inserting

24 ‘‘insured depository institutions’’.
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1 (b) ASSESSMENT RATES FOR SAIF MEMBERS MAY

2 NOT BE LESS THAN ASSESSMENT RATES FOR BIF MEM3 BERS.—Section 7(b)(2)(F) of the Federal Deposit Insur4 ance Act (12 U.S.C. 1817(b)(2)(F)) is amended—

5 (1) by striking ‘‘and’’ at the end of clause (i);

6 (2) by striking the period at the end of clause

7 (ii) and inserting ‘‘; and’’; and

8 (3) by adding at the end the following new

9 clause:

10 ‘‘(iii) notwithstanding any other provi11 sion of this subsection, assessment rates

12 for Savings Association Insurance Fund

13 members may not be less than assessment

14 rates for Bank Insurance Fund mem15 bers.’’.

16 (c) REPEAL OF EXIT MORATORIUM AND OAKAR

17 BANK PROVISIONS.—Effective January 1, 1998, section

18 5(d) of the Federal Deposit Insurance Act (12 U.S.C.

19 1815(d)) is amended by striking paragraphs (2) and (3).

20 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

21 (1) Section 7(b)(2)(D) of the Federal Deposit

22 Insurance Act (12 U.S.C. 1817(b)(2)(D)) is amend23 ed by striking ‘‘Savings Association Insurance Fund

24 members’’ and inserting ‘‘members of a deposit in25 surance fund’’.
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1 (2) Section 21(k) of the Federal Home Loan

2 Bank Act (12 U.S.C. 1441(k)) is amended—

3 (A) by striking paragraph (1); and

4 (B) by redesignating paragraphs (2) and

5 (3) as paragraphs (1) and (2), respectively.

6 (3) Section 7(b)(2)(A) of the Federal Deposit

7 Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amend8 ed by adding at the end the following new clause:

9 ‘‘(v) COORDINATION WITH SECTION 21

10 OF FEDERAL HOME LOAN BANK ACT.—No

11 provision of this subparagraph limiting the

12 amount of assessments for purposes of this

13 subsection shall be construed as limiting

14 the amount of assessments which may be

15 imposed by the Financing Corporation

16 under section 21(f)(2) of the Federal

17 Home Loan Bank Act.’’.

18 (e) EFFECTIVE DATE.—The amendments made by

19 subsections (a), (b), and (d) shall take effect on January

20 1, 1996.

21 SEC. 103. MERGER OF BANK INSURANCE FUND AND SAV22 INGS ASSOCIATION INSURANCE FUND AFTER

23 RECAPITALIZATION OF SAIF.

24 (a) ESTABLISHMENT OF DEPOSIT INSURANCE

25 FUND.—
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1 (1) IN GENERAL.—Effective January 1, 1998,

2 section 11(a)(5) of the Federal Deposit Insurance

3 Act (12 U.S.C. 1821(a)(5)) is amended to read as

4 follows:

5 ‘‘(5) DEPOSIT INSURANCE FUND.—

6 ‘‘(A) ESTABLISHMENT.—There is estab7 lished a fund to be known as the deposit insur8 ance fund which shall—

9 ‘‘(i) be maintained and administered

10 by the Corporation; and

11 ‘‘(ii) initially consist of the assets and

12 liabilities of the Bank Insurance Fund and

13 Savings Association Insurance Fund which

14 have been merged by the Corporation into

15 the deposit insurance fund pursuant to

16 section 103(a)(2) of the Thrift Charter

17 Conversion Act of 1995, other than any as18 sets of the Savings Association Insurance

19 Fund which have been deposited in the

20 special reserve of the deposit insurance

21 fund pursuant to section 103(b)(2) of such

22 Act.

23 ‘‘(B) USES.—The deposit insurance fund

24 shall be available to the Corporation for use in

25 carrying out the insurance purposes of the Cor-
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1 poration in accordance with this Act with re2 spect to insured depository institutions.

3 ‘‘(C) DEPOSITS.—All amounts assessed

4 against insured depository institutions by the

5 Corporation shall be deposited into the deposit

6 insurance fund.’’.

7 (2) MERGER BY CORPORATION.—Except with

8 respect to any assets of the Savings Association In9 surance Fund which are required to be deposited in

10 the special reserve of the deposit insurance fund

11 pursuant to subsection (b)(2), the Corporation shall

12 merge the Bank Insurance Fund and the Savings

13 Association Insurance Fund on January 1, 1998,

14 into the deposit insurance fund established by the

15 amendment made by paragraph (1).

16 (b) ESTABLISHMENT OF SPECIAL RESERVE OF THE

17 DEPOSIT INSURANCE FUND.—

18 (1) IN GENERAL.—Effective January 1, 1998,

19 section 11(a)(6) is amended to read as follows:

20 ‘‘(6) SPECIAL RESERVE OF THE DEPOSIT IN21 SURANCE FUND.—

22 ‘‘(A) IN GENERAL.—There is established a

23 fund to be known as the special reserve of the

24 deposit insurance fund which shall—
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1 ‘‘(i) be maintained and administered

2 by the Corporation; and

3 ‘‘(ii) initially consist of amounts de4 posited in the special reserve pursuant to

5 section 103(b)(2) of the Thrift Charter

6 Conversion Act of 1995.

7 ‘‘(B) EMERGENCY USE OF SPECIAL RE8 SERVE.—

9 ‘‘(i) USE AUTHORIZED.—Subject to

10 clause (ii) and notwithstanding subpara11 graph (C), the Corporation may, in the

12 sole discretion of the Board of Directors,

13 transfer amounts from the special reserve

14 for deposit in the deposit insurance fund

15 for use in accordance with paragraph

16 (5)(B).

17 ‘‘(ii) CONDITIONS ON TRANSFER.—

18 The Board of Directors may authorize a

19 transfer under clause (i) only if—

20 ‘‘(I) the Board of Directors de21 termines that the reserve ratio of the

22 deposit insurance fund is less than 50

23 percent of the designated reserve

24 ratio; and
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1 ‘‘(II) the Board of Directors

2 finds that the reserve ratio of the de3 posit insurance will likely be less than

4 the designated reserve ratio of the

5 fund for each of the 4 calendar quar6 ters beginning after the date of such

7 determination.

8 ‘‘(C) NO REFUNDS OR OTHER USES AU9 THORIZED.—Except as provided in subpara10 graph (B), the Corporation may not make any

11 payment from the special reserve, make any re12 fund or provide any credit to any insured de13 pository institution with respect to any amount

14 in the special reserve, or use any amount in the

15 special reserve for any other purpose (including

16 the use of any such amount as security for the

17 repayment of any obligation of the Corpora18 tion).

19 ‘‘(D) EXCLUSION OF SPECIAL RESERVE IN

20 CALCULATING THE RESERVE RATIO.—No

21 amount in the special reserve may be taken into

22 account in calculating the reserve ratio of the

23 deposit insurance fund under section 7.’’.

24 (2) TRANSFER AND DEPOSIT BY CORPORA25 TION.—If, at the time of the merger of the Bank In-
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1 surance Fund and the Savings Association Insur2 ance Fund pursuant to subsection (a)(2), the reserve

3 ratio of the Savings Association Insurance Fund ex4 ceeds the designated reserve ratio, the Corporation

5 shall transfer from such fund to the special reserve

6 of the deposit insurance fund established by the

7 amendment made by paragraph (1) an amount equal

8 to the amount which causes the reserve ratio of the

9 Savings Association Insurance Fund to exceed the

10 designated reserve ratio.

11 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

12 (1) Section 3(y) of the Federal Deposit Insur13 ance Act (12 U.S.C. 1813(y)) is amended by strik14 ing ‘‘Bank Insurance Fund or the Savings Associa15 tion Insurance Fund, as appropriate’’ and inserting

16 ‘‘the deposit insurance fund established under sec17 tion 11(a)(5)’’.

18 (2) Section 11(a) of the Federal Deposit Insur19 ance Act (12 U.S.C. 1821(a)) is amended by strik20 ing paragraphs 4(A) and (7).

21 (3) Section 5(d)(1) of the Federal Deposit In22 surance Act (12 U.S.C. 1815(d)(1)) is amended—

23 (A) in subparagraph (A), by striking ‘‘re24 serve ratios’’ and all that follows through the
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1 period and inserting ‘‘the reserve ratio of the

2 deposit insurance fund.’’;

3 (B) by striking subparagraph (B); and

4 (C) by redesignating subparagraph (C) as

5 subparagraph (B).

6 (4) Section 7 of the Federal Deposit Insurance

7 Act (12 U.S.C. 1817) is amended by striking sub8 section (l).

9 (5) Section 7(b)(2) of the Federal Deposit In10 surance Act (12 U.S.C. 1817(b)(2)) is amended—

11 (A) by striking subparagraphs (B), (F),

12 and (G);

13 (B) in clauses (i) and (iv) of subparagraph

14 (A), by striking ‘‘each deposit insurance fund’’

15 and inserting ‘‘the deposit insurance fund’’;

16 (C) in subparagraph (A)(iii), by striking

17 ‘‘a deposit insurance fund’’ and inserting ‘‘the

18 deposit insurance fund’’; and

19 (D) by inserting after subparagraph (E)

20 the following new subparagraph:

21 ‘‘(F) RESERVE RATIO DEFINED.—For pur22 poses of this subsection, the term ‘reserve ratio’

23 means the ratio of the net worth of the deposit

24 insurance fund to aggregate estimated insured
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1 deposits held in all insured depository institu2 tions.’’.

3 (6) Section 7(b)(3) of the Federal Deposit In4 surance Act (12 U.S.C. 1817(b)(3)) is amended—

5 (A) in subparagraph (A) by striking ‘‘any

6 deposit insurance fund’’ and inserting ‘‘the de7 posit insurance fund’’; and

8 (B) by striking subparagraphs (C) and

9 (D).

10 (7) Subparagraph (A) of section 7(b)(6) of the

11 Federal Deposit Insurance Act (12 U.S.C.

12 1817(b)(6)) (as so redesignated by section 101 of

13 this subtitle) is amended—

14 (A) in clause (i)—

15 (i) by inserting ‘‘or’’ after the semi16 colon at the end of subclause (I);

17 (ii) by striking subclause (II); and

18 (iii) by striking ‘‘; and’’ at the end of

19 subclause (III) and inserting a period; and

20 (B) by striking clause (ii).

21 (8) Section 11(a)(4)(B) of the Federal Deposit

22 Insurance Act (12 U.S.C. 1821(a)(4)(B)) is amend23 ed by striking ‘‘Bank Insurance Fund and the Sav24 ings Association Insurance Fund’’ and inserting ‘‘de25 posit insurance fund’’.
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1 (9) Paragraph (1) of section 11(f) of the Fed2 eral Deposit Insurance Act (12 U.S.C. 1821(f)) is

3 amended by striking ‘‘depositor, except that—’’ and

4 all that follows through the period at the end of the

5 paragraph and inserting ‘‘depositor.’’.

6 (10) Section 11(i)(3) of the Federal Deposit In7 surance Act (12 U.S.C. 1821(i)(3)) is amended—

8 (A) by striking subparagraph (B); and

9 (B) in subparagraph (C), by striking ‘‘sub10 paragraphs (A) and (B)’’ and inserting ‘‘sub11 paragraph (A)’’.

12 (11) Section 11A(a)(3) of the Federal Deposit

13 Insurance Act (12 U.S.C. 1821a(a)(3)) is amended

14 by striking ‘‘Bank Insurance Fund, the Savings As15 sociation Insurance Fund,’’ and inserting ‘‘deposit

16 insurance fund’’.

17 (12) Section 11A(f) of the Federal Deposit In18 surance Act (12 U.S.C. 1821a(f)) is amended by

19 striking ‘‘Savings Association Insurance Fund’’ and

20 inserting ‘‘deposit insurance fund’’.

21 (13) Section 13(a)(1) of the Federal Deposit

22 Insurance Act (12 U.S.C. 1823(a)(1)) is amended

23 by striking ‘‘Bank Insurance Fund, the Savings As24 sociation Insurance Fund,’’ and inserting ‘‘deposit
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1 insurance fund, the special reserve of the deposit in2 surance fund,’’.

3 (14) Section 13(c)(4)(G) of the Federal Deposit

4 Insurance Act (12 U.S.C. 1823(c)(4)(G)) is amend5 ed—

6 (A) in clause (ii)—

7 (i) by striking ‘‘appropriate insurance

8 fund’’ and inserting ‘‘deposit insurance

9 fund’’;

10 (ii) by striking ‘‘the members of the

11 insurance fund (of which such institution

12 is a member)’’ and inserting ‘‘insured de13 pository institutions’’;

14 (iii) by striking ‘‘each member’s’’ and

15 inserting ‘‘each insured depository institu16 tion’s’’; and

17 (iv) by striking ‘‘the member’s’’ and

18 inserting ‘‘the institution’s’’.

19 (15) Section 13(c) of the Federal Deposit In20 surance Act (12 U.S.C. 1823(c)) is amended by

21 striking paragraph (11).

22 (16) Section 13(h) of the Federal Deposit In23 surance Act (12 U.S.C. 1823(h)) is amended by

24 striking ‘‘Bank Insurance Fund’’ and inserting ‘‘de25 posit insurance fund’’.
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1 (17) Section 13(k)(4)(B)(i) of the Federal De2 posit Insurance Act (12 U.S.C. 1823(k)(4)(B)(i)) is

3 amended by striking ‘‘Savings Association Insurance

4 Fund member’’ and inserting ‘‘savings association’’.

5 (18) Section 13(k)(5)(A) of the Federal Deposit

6 Insurance Act (12 U.S.C. 1823(k)(5)(A)) is amend7 ed by striking ‘‘Savings Association Insurance Fund

8 members’’ and inserting ‘‘savings associations’’.

9 (19) Section 14(a) of the Federal Deposit In10 surance Act (12 U.S.C. 1824(a)) is amended—

11 (A) by striking ‘‘Bank Insurance Fund or

12 the Savings Association Insurance Fund’’ and

13 inserting ‘‘deposit insurance fund’’; and

14 (B) by striking ‘‘each such fund’’ and in15 serting ‘‘the fund’’.

16 (20) Section 14(b) of the Federal Deposit In17 surance Act (12 U.S.C. 1824(b)) is amended by

18 striking ‘‘Bank Insurance Fund or Savings Associa19 tion Insurance Fund’’ and inserting ‘‘deposit insur20 ance fund’’.

21 (21) Section 14(c) of the Federal Deposit In22 surance Act (12 U.S.C. 1824(c)) is amended by

23 striking paragraph (3).
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1 (22) Section 14 of the Federal Deposit Insur2 ance Act (12 U.S.C. 1824) is amended by striking

3 subsection (d).

4 (23) Section 15(c)(5) of the Federal Deposit

5 Insurance Act (12 U.S.C. 1825(c)(5)) is amended—

6 (A) by striking ‘‘Bank Insurance Fund or

7 Savings Association Insurance Fund, respec8 tively,’’ and inserting ‘‘deposit insurance fund’’;

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

10 Savings Association Insurance Fund, respec11 tively;’’ and inserting ‘‘deposit insurance fund;’’;

12 and

13 (C) by striking ‘‘Bank Insurance Fund or

14 the Savings Association Insurance Fund, re15 spectively,’’ and inserting ‘‘deposit insurance

16 fund,’’.

17 (24) Section 17(a)(1) of the Federal Deposit

18 Insurance Act (12 U.S.C. 1827(a)(1)) is amended

19 by striking ‘‘Bank Insurance Fund, the Savings As20 sociation Insurance Fund,’’ each place such term ap21 pears and inserting ‘‘deposit insurance fund’’.

22 (25) Section 17(d) of the Federal Deposit In23 surance Act (12 U.S.C. 1827(d)) is amended by

24 striking ‘‘Bank Insurance Fund, the Savings Asso-
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1 ciation Insurance Fund,’’ each place such term ap2 pears and inserting ‘‘deposit insurance fund’’.

3 (26) The heading for section 17(a) of the Fed4 eral Deposit Insurance Act (12 U.S.C. 1827(a)) is

5 amended by striking ‘‘BIF, SAIF,’’ and inserting

6 ‘‘THE DEPOSIT INSURANCE FUND’’.

7 (27) Section 18(m)(3) of the Federal Deposit

8 Insurance Act (12 U.S.C. 1828(m)(3)) is amend9 ed—

10 (A) in subparagraph (A)—

11 (i) by striking ‘‘Savings Association

12 Insurance Fund.’’ and inserting ‘‘deposit

13 insurance fund.’’; and

14 (ii) by striking ‘‘Savings Association

15 Insurance Fund member’’ and inserting

16 ‘‘savings association’’; and

17 (B) in subparagraph (C), by striking ‘‘Sav18 ings Association Insurance Fund or the Bank

19 Insurance Fund’’ and inserting ‘‘deposit insur20 ance fund’’.

21 (28) Subsections (a)(1) and (d)(1)(A) of section

22 24 of the Federal Deposit Insurance Act (12 U.S.C.

23 1831a) are each amended by striking ‘‘appropriate’’.
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1 (29) Section 24(e)(2) of the Federal Deposit

2 Insurance Act (12 U.S.C. 1831a(e)(2)) is amend3 ed—

4 (A) in subparagraph (A), by striking ‘‘of

5 which such banks are members’’; and

6 (B) in subparagraph (B)(ii), by striking

7 ‘‘of which such bank is a member’’.

8 (30) Section 24(f)(6)(B) of the Federal Deposit

9 Insurance Act (12 U.S.C. 1831a(f)(6)(B)) is amend10 ed by striking ‘‘of which such bank is a member’’.

11 (31) Section 28 of the Federal Deposit Insur12 ance Act (12 U.S.C. 1831e) is amended by striking

13 ‘‘affected deposit insurance fund’’ each place such

14 term appears and inserting ‘‘deposit insurance

15 fund’’.

16 (32) Section 31 of the Federal Deposit Insur17 ance Act (12 U.S.C. 1831h(a)) is hereby repealed.

18 (33) Section 36(i)(3) of the Federal Deposit In19 surance Act (12 U.S.C. 1831m(i)(3)) is amended by

20 striking ‘‘affected’’.

21 (34) Section 38 of the Federal Deposit Insur22 ance Act (12 U.S.C. 1831o) is amended by striking

23 subsection (o).

24 (35) Section 21B(f)(2)(C)(ii) of the Federal

25 Home Loan Bank Act (12 U.S.C.
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1 1441b(f)(2)(C)(ii)) is amended by striking ‘‘to Sav2 ings Association Insurance Fund members’’ where

3 such term appears in subclauses (I) and (II) and in4 serting ‘‘to insured depository institutions which

5 were Savings Association Insurance Fund members

6 as of the date of the enactment of the Thrift Char7 ter Conversion Act of 1995’’.

8 (d) EFFECTIVE DATE OF AMENDMENTS.—The

9 amendments made by subsection (c) shall take effect on

10 January 1, 1998.

11 SEC. 104. REFUND OF AMOUNTS IN DEPOSIT INSURANCE

12 FUND IN EXCESS OF DESIGNATED RESERVE

13 AMOUNT.

14 Subsection (e) of section 7 of the Federal Deposit In15 surance Act (12 U.S.C. 1817(e)) is amended to read as

16 follows:

17 ‘‘(e) REFUNDS.—

18 ‘‘(1) OVERPAYMENTS.—In the case of any pay19 ment of an assessment by an insured depository in20 stitution in excess of the amount due to the Cor21 poration, the Corporation may—

22 ‘‘(A) refund the amount of the excess pay23 ment to the insured depository institution; or
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1 ‘‘(B) credit such excess amount toward the

2 payment of subsequent semiannual assessments

3 until such credit is exhausted.

4 ‘‘(2) BALANCE IN INSURANCE FUND IN EXCESS

5 OF DESIGNATED RESERVE.—

6 ‘‘(A) IN GENERAL.—Subject to subpara7 graph (B), if as of the end of any semiannual

8 period the amount of the actual reserves in the

9 Bank Insurance Fund (until the merger of such

10 fund into the deposit insurance fund pursuant

11 to section 103(a)(2) of the Thrift Charter Con12 version Act of 1995) or the deposit insurance

13 fund (after the establishment of such fund

14 under section 103(a)(1) of such Act) exceeds

15 the balance required to meet the designated re16 serve applicable with respect to such fund, such

17 excess amount shall be refunded to members of

18 the fund by the Corporation on such basis as

19 the Board of Directors determines to be appro20 priate, taking into account the factors consid21 ered under the risk-based assessment system.

22 ‘‘(B) REFUND NOT TO EXCEED PREVIOUS

23 SEMIANNUAL ASSESSMENT.—The amount of

24 any refund under this paragraph to any mem25 ber of a deposit insurance fund for any semi-
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1 annual period may not exceed the total amount

2 of assessments paid by such member to the in3 surance fund with respect to such period.’’.

4 SEC. 105. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO

5 MAINTAIN THE RESERVE RATIO OF A DE6 POSIT INSURANCE FUND.

7 (a) IN GENERAL.—Section 7(b)(2)(A)(i) of the Fed8 eral Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i))

9 is amended in the portion of such section preceding

10 subclause (I) by inserting ‘‘when necessary, and only to

11 the extent necessary’’ after ‘‘insured depository institu12 tions’’.

13 (b) LIMITATION ON ASSESSMENT.—Section

14 7(b)(2)(A)(iii) of the Federal Deposit Insurance Act (12

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

16 ‘‘(iii) LIMITATION ON ASSESSMENT.—

17 The Board of Directors shall not set semi18 annual assessments with respect to a de19 posit insurance fund in excess of the

20 amount needed—

21 ‘‘(I) to maintain the reserve ratio

22 of the fund at the designated reserve

23 ratio; or

24 ‘‘(II) if the reserve ratio is less

25 than the designated reserve ratio, to
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1 increase the reserve ratio to the des2 ignated reserve ratio.’’.

3 TITLE II—STATUS OF BANKS

4 AND SAVINGS ASSOCIATIONS

5 SEC. 201. TERMINATION OF FEDERAL SAVINGS ASSOCIA6 TIONS; TREATMENT OF STATE SAVINGS ASSO7 CIATIONS AS BANKS FOR PURPOSES OF FED8 ERAL BANKING LAW.

9 (a) TERMINATION OF FEDERAL SAVINGS ASSOCIA10 TION CHARTERS.—

11 (1) IN GENERAL.—Each Federal savings asso12 ciation shall—

13 (A) convert to a national bank charter;

14 (B) convert to a State depository institu15 tion charter; or

16 (C) surrender the charter of such savings

17 association and liquidate the institution.

18 (2) CONVERSION TO NATIONAL BANK BY OPER19 ATION OF LAW.—If any Federal savings association

20 has not taken any action required under paragraph

21 (1) as of January 1, 1998, the savings association

22 shall—

23 (A) become a national bank on such date

24 by operation of law;
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1 (B) immediately file articles of association

2 and an organizational certificate with the

3 Comptroller of the Currency in accordance with

4 sections 5133, 5134, 5135 of the Revised Stat5 utes of the United States; and

6 (C) cease to exist as a Federal savings as7 sociation as of such date.

8 (3) PROHIBITION ON NEW CHARTERS OF FED9 ERAL SAVINGS ASSOCIATIONS.—The Director of the

10 Office of Thrift Supervision may not grant any char11 ter for a Federal savings association after the date

12 of the enactment of this Act.

13 (b) TREATMENT OF STATE SAVINGS ASSOCIATIONS

14 AS BANKS FOR PURPOSES OF FEDERAL BANKING

15 LAW.—

16 (1) AMENDMENTS TO FEDERAL DEPOSIT IN17 SURANCE ACT.—Section 3 of the Federal Deposit

18 Insurance Act (12 U.S.C. 1813) is amended—

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

20 (a) and inserting the following new paragraph:

21 ‘‘(2) STATE BANK.—The term ‘State bank’

22 means any bank, banking association, trust com23 pany, savings bank, industrial bank (or similar de24 pository institution which the Board of Directors

25 finds to be operating substantially in the same man-
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1 ner as an industrial bank), building and loan asso2 ciation, savings and loan association, homestead as3 sociation, cooperative bank, or other banking institu4 tion—

5 ‘‘(A) which is engaged in the business of

6 receiving deposits, other than trust funds (as

7 defined in this section); and

8 ‘‘(B) which—

9 ‘‘(i) is incorporated under the laws of

10 any State;

11 ‘‘(ii) is organized and operating ac12 cording to the laws of the State in which

13 such institution is chartered or organized;

14 or

15 ‘‘(iii) is operating under the Code of

16 Law for the District of Columbia (except a

17 national bank).’’; and

18 (B) in subsection (q)—

19 (i) by inserting ‘‘and’’ after the semi20 colon at the end of paragraph (2);

21 (ii) by striking ‘‘; and’’ at the end of

22 paragraph (3) and inserting a period; and

23 (iii) by striking paragraph (4).

24 (2) AMENDMENTS TO THE BANK HOLDING

25 COMPANY ACT OF 1956.—Section 2 of the Bank
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1 Holding Company Act of 1956 (12 U.S.C. 1841) is

2 amended—

3 (A) by striking subparagraph (E) of sub4 section (a)(5); and

5 (B) by striking subparagraphs (B) and (J)

6 of subsection (c)(2).

7 (3) AMENDMENTS TO THE FEDERAL RESERVE

8 ACT.—The 2d and 3d paragraphs of the 1st section

9 of the Federal Reserve Act (12 U.S.C. 221) are each

10 amended by inserting ‘‘(as defined in section 3(a)(2)

11 of the Federal Deposit Insurance Act)’’ after ‘‘State

12 bank’’.

13 SEC. 202. TREATMENT OF CERTAIN ACTIVITIES AND AFFILI14 ATIONS OF BANK HOLDING COMPANIES RE15 SULTING FROM THIS ACT.

16 Section 4 of the Bank Holding Company Act of 1956

17 (12 U.S.C. 1843) is amended by adding at the end the

18 following new subsection:

19 ‘‘(k) TREATMENT OF COMPANIES RESULTING FROM

20 SAVINGS AND LOAN HOLDING COMPANIES.—

21 ‘‘(1) IN GENERAL.—Notwithstanding any other

22 provision of this section or any other provision of

23 Federal law including sections 20 and 32 of the

24 Banking Act of 1933, a qualified bank holding com-
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1 pany may continue, after such company becomes a

2 bank holding company—

3 ‘‘(A) to maintain or enter into any non4 banking affiliation which such company was au5 thorized to maintain or enter into as of Septem6 ber 13, 1995; and

7 ‘‘(B) to engage, directly or through any af8 filiate described in subparagraph (A) which is

9 not a bank, in any activity in which such com10 pany or any affiliate described in subparagraph

11 (A) was authorized to engage as of September

12 13, 1995,

13 if the requirements of paragraph (3) are met.

14 ‘‘(2) QUALIFIED BANK HOLDING COMPANY DE15 FINED.—For purposes of this subsection, the term

16 ‘qualified bank holding company’ means—

17 ‘‘(A) any company which—

18 ‘‘(i) as of September 13, 1995, is a

19 savings and loan holding company and is

20 not a bank holding company; and

21 ‘‘(ii) becomes a bank holding company

22 after such date; and

23 ‘‘(B) any bank holding company which—

24 ‘‘(i) as of September 13, 1995—
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1 ‘‘(I) is a savings and loan holding

2 company; and

3 ‘‘(II) is exempt from this Act

4 pursuant to an order issued by the

5 Board under subsection (d); and

6 ‘‘(ii) after such date, loses the exemp7 tion under subsection (d).

8 ‘‘(3) PREREQUISITES FOR CONTINUATION OF

9 GRANDFATHERED ACTIVITIES AND AFFILIATIONS.—

10 This subsection shall cease to apply with respect to

11 a qualified bank holding company if, at any time

12 after such company becomes a bank holding com13 pany company or, in the case of a qualified bank

14 holding company described in paragraph (2)(B),

15 loses such company’s exemption under subsection

16 (d)—

17 ‘‘(A) any insured depository institution

18 controlled by such company which, as of the

19 day before the company becomes a bank holding

20 company, was subject to the requirements con21 tained in section 10(m) of the Home Owners’

22 Loan Act, as in effect on such date, (and regu23 lations in effect on such date under such sec24 tion) for treatment as a qualified thrift lender
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1 under such section fails to meet such require2 ments;

3 ‘‘(B) any insured depository institution

4 controlled by such company fails to comply with

5 any limitation or restriction on the type or

6 amounts of loans or investments of the institu7 tion to which such institution was subject as of

8 the date of the enactment of the Thrift Charter

9 Conversion Act of 1995; or

10 ‘‘(C) the company or any subsidiary of the

11 company acquires more than 5 percent of the

12 shares or assets of any insured depository insti13 tution after September 13, 1995.

14 ‘‘(4) NONTRANSFERABLE.—This subsection

15 shall not apply with respect to any qualified bank

16 holding company if, after September 13, 1995, any

17 person acquires, directly or indirectly, control of the

18 company or the company is the subject of any merg19 er, consolidation, or other similar transaction.

20 ‘‘(5) PROHIBITION ON CERTAIN INSURED DE21 POSITORY INSTITUTIONS IDENTIFYING THEMSELVES

22 AS NATIONAL BANKS.—

23 ‘‘(A) IN GENERAL.—Notwithstanding the

24 requirement of section 5134 of the Revised

25 Statutes of the United States—
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1 ‘‘(i) the name of an insured depository

2 institution subsidiary of a qualified bank

3 holding company which—

4 ‘‘(I) as of the date of the enact5 ment of the Thrift Charter Conversion

6 Act of 1995, is a savings and loan

7 holding company described in section

8 10(c)(3) of the Home Owners’ Loan

9 Act (as in effect on such date); and

10 ‘‘(II) is subject to the restrictions

11 contained in paragraph (3),

12 may not include the term ‘national’; and

13 ‘‘(ii) such insured depository institu14 tion may not be identified as a national

15 bank on any sign displayed by the institu16 tion or in any advertisement or other pub17 lication of the institution.

18 ‘‘(B) DEPOSITORY INSTITUTION NOT LIA19 BLE FOR FRAUDULENT MISREPRESENTATION

20 FOR NOT REPRESENTING ITSELF AS A NA21 TIONAL BANK.—An insured depository institu22 tion which is subject to subparagraph (A) shall

23 not be liable for any civil or criminal penalty

24 under any Federal or State consumer protection

25 law, or in any criminal or civil action, for fraud-
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•HR 2363 IH

1 ulently misrepresenting the nature of the char2 ter of the institution, for falsely advertising the

3 status of the institution, for making a false

4 statement with respect to the status of the in5 stitution, or for any similar offense by reason of

6 the institution’s compliance with such subpara7 graph.

8 ‘‘(6) ENFORCEMENT.—In addition to any other

9 power of the Board, the Board may enforce compli10 ance with the provisions of this subsection with re11 spect to any qualified bank holding company and

12 any bank controlled by such company under section

13 8 of the Federal Deposit Insurance Act.’’.

14 SEC. 203. TRANSITION PROVISIONS FOR ACTIVITIES OF

15 SAVINGS ASSOCIATIONS WHICH CONVERT

16 INTO OR BECOME TREATED AS BANKS.

17 (a) IN GENERAL.—Notwithstanding any other provi18 sion of Federal law, any insured depository institution

19 which, as of September 13, 1995, is a savings association

20 (as defined in section 3(b) of the Federal Deposit Insur21 ance Act (as in effect on such date)) and after such date

22 converts to a national or State bank charter or becomes

23 treated as a State bank pursuant to the amendment made

24 by section 201(b) may continue to engage, directly or indi25 rectly, in any activity in which such institution was law-
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1 fully engaged as of such date during the 2-year period be2 ginning on the effective date of such conversion or the ef3 fective date of such amendments, as the case may be.

4 (b) TWO 1-YEAR EXTENSIONS AUTHORIZED.—The

5 2-year period described in subsection (a) with respect to

6 any insured depository institution may be extended for

7 such institution not to exceed 2 additional times for not

8 more than 1 year each time if the appropriate Federal

9 banking agency determines that such extension is nec10 essary to avert substantial loss to the institution and is

11 otherwise consistent with the safety and soundness of the

12 institution.

13 SEC. 204. REGISTRATION OF BANK HOLDING COMPANIES

14 RESULTING FROM CONVERSIONS OF SAV15 INGS ASSOCIATIONS TO BANKS OR TREAT16 MENT OF SAVINGS ASSOCIATIONS AS BANKS.

17 Section 3 of the Bank Holding Company Act of 1956

18 (12 U.S.C. 1842) is amended by adding at the end the

19 following new subsection:

20 ‘‘(h) REGISTRATION OF CERTAIN BANK HOLDING

21 COMPANIES.—A company which, as of September 13,

22 1995, is a savings and loan holding company (as defined

23 in section 10(a)(1)(D) of Home Owners’ Loan Act (as in

24 effect on such date) and is not a bank holding company

25 shall not be required to obtain the approval of the Board
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1 under subsection (a) to become a bank holding company

2 after September 13, 1995, as a result of the conversion

3 of any insured depository institution subsidiary of such

4 company into a bank or by virtue of the treatment of any

5 insured depository institution subsidiary of such company

6 as a bank pursuant to the amendments made by the Thrift

7 Charter Conversion Act of 1995, if such company—

8 ‘‘(1) registers as a bank holding company with

9 the Board in accordance with section 5(a); and

10 ‘‘(2) does not acquire, directly or indirectly,

11 ownership or control of any additional insured de12 pository institution or other company in connection

13 with such conversion or treatment.’’.

14 SEC. 205. ADDITIONAL TRANSITION PROVISIONS AND SPE15 CIAL RULES.

16 (a) CONVERSION OF MUTUAL SAVINGS ASSOCIA17 TIONS INTO NATIONAL BANKS.—

18 (1) IN GENERAL.—Notwithstanding the para19 graph designated the ‘‘Third’’ of section 5134 of the

20 Revised Statutes of the United States and subject to

21 regulations prescribed by the Comptroller of the

22 Currency under subparagraph (B), any savings asso23 ciation which is organized in mutual form as of the

24 date of the enactment of this Act and at all times
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1 thereafter may organize as a national bank in mu2 tual form.

3 (2) APPLICABILITY OF CAPITAL STOCK RE4 QUIREMENTS.—The Comptroller of the Currency

5 shall prescribe regulations regarding the manner in

6 which requirements of title LXII of the Revised

7 Statutes of the United States with respect to capital

8 stock, and limitations imposed on national banks

9 under such title based on capital stock, shall apply

10 to national banks organized in mutual form pursu11 ant to subparagraph (A).

12 (3) RULE OF CONSTRUCTION.—No provision of

13 this subsection shall be construed as authorizing any

14 national bank to be organized in mutual form, or to

15 convert to a mutual form, other than a mutual na16 tional bank resulting from the conversion of a sav17 ings association described in subparagraph (A).

18 (4) CONVERSION TO STOCK NATIONAL BANK.—

19 Subject to such regulations as the Comptroller of the

20 Currency may prescribe for the protection of deposi21 tors’ rights and for any other purpose the Comptrol22 ler of the Currency may consider appropriate, any

23 national bank which is organized in mutual form

24 pursuant to paragraph (1) may reorganize as a

25 stock national bank.
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1 (b) MEMBERSHIP IN FEDERAL HOME LOAN

2 BANKS.—Any insured depository institution which—

3 (1) as of the date of the enactment of this Act,

4 is a Federal savings association which, pursuant to

5 section 6(e) of the Federal Home Loan Bank Act,

6 may not voluntarily withdraw from membership in a

7 Federal home loan bank; and

8 (2) after such date ceases to be a Federal sav9 ings association,

10 shall continue to be subject to the prohibition under such

11 section on voluntary withdrawal from such membership

12 after such institution ceases to be a Federal savings asso13 ciation.

14 (c) BRANCHES.—

15 (1) IN GENERAL.—Notwithstanding any provi16 sion of the Federal Deposit Insurance Act, the Bank

17 Holding Company Act of 1956, or any other Federal

18 or State law, any depository institution which—

19 (A) as of the date of the enactment of this

20 Act, is a savings association; and

21 (B) becomes a bank before January 1,

22 1998, or, pursuant to the amendments made by

23 this subsection, is treated as a bank as of such

24 date under the Federal Deposit Insurance Act,
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1 and any depository institution or bank holding com2 pany which acquires such depository institution, may

3 continue, after the depository institution becomes or

4 commences to be treated as a bank, to operate any

5 branch which the savings association operated as a

6 branch on September 13, 1995.

7 (2) NO ADDITIONAL BRANCHES.—Paragraph

8 (1) shall not be construed as authorizing the estab9 lishment, acquisition, or operation of any additional

10 branch of a depository institution in any State by

11 virtue of the operation by such institution of a

12 branch in such State pursuant to such paragraph

13 except to the extent such establishment, acquisition,

14 or operation is permitted under the Federal Deposit

15 Insurance Act, Bank Holding Company Act of 1956,

16 and any other applicable Federal or State law with17 out regard to such branch.

18 (d) TRANSITION PROVISION RELATING TO LIMITA19 TIONS ON LOANS TO 1 BORROWER.—Section 5200 of the

20 Revised Statutes of the United States (12 U.S.C. 84) is

21 amended by adding at the end the following new sub22 section:

23 ‘‘(e) TRANSITION PROVISION FOR SAVINGS ASSOCIA24 TIONS CONVERTING TO NATIONAL BANKS.—In the case

25 of any depository institution which, as of September 13,
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1 1995, is a savings association (as defined in section 3(b)

2 of the Federal Deposit Insurance Act (as in effect on such

3 date)) and becomes a national bank on or before January

4 1, 1998, any loan, or legally binding commitment to make

5 a loan, made or entered into by such institution which is

6 outstanding on the date the institution becomes a national

7 bank may continue to be held without regard to any limi8 tation contained in this section during the 3-year period

9 beginning on such date.’’.

10 SEC. 206. TECHNICAL AND CONFORMING AMENDMENTS.

11 (a) AMENDMENTS TO THE FEDERAL DEPOSIT IN12 SURANCE ACT.—

13 (1) Section 3(z) of the Federal Deposit Insur14 ance Act (12 U.S.C. 1813(z)) is amended by strik15 ing ‘‘, the Director of the Office of Thrift Super16 vision,’’.

17 (2) Section 8(b) of the Federal Deposit Insur18 ance Act (12 U.S.C. 1818(b)) is amended by strik19 ing paragraph (9).

20 (3) Section 13 of the Federal Deposit Insurance

21 Act (12 U.S.C. 1823) is amended by striking sub22 section (k).

23 (4) Subsections (c)(2) and (i)(2) of section 18

24 of the Federal Deposit Insurance Act (12 U.S.C.

25 1828) are each amended—
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1 (A) in subparagraph (B), by inserting

2 ‘‘and’’ after the semicolon;

3 (B) in subparagraph (C), by striking

4 ‘‘; and’’ and inserting a period; and

5 (C) by striking subparagraph (D).

6 (5) Section 18 of the Federal Deposit Insurance

7 Act (12 U.S.C. 1828) is amended by striking sub8 section (m).

9 (6) The Federal Deposit Insurance Act (12

10 U.S.C. 1811 et seq.) is amended by striking section

11 28.

12 (b) AMENDMENTS TO THE BANK HOLDING COMPANY

13 ACT OF 1956.—

14 (1) Section 2 of the Bank Holding Company

15 Act of 1956 (12 U.S.C. 1841) is amended by strik16 ing subsections (i) and (j).

17 (2) Section 4(c)(8) of the Bank Holding Com18 pany Act of 1956 (12 U.S.C. 1843(c)(8)) is amend19 ed by striking the sentence preceding the penul20 timate sentence.

21 (3) Section 4(f) of the Bank Holding Company

22 Act of 1956 (12 U.S.C. 1843(f)) is amended—

23 (A) in paragraph (2)(A)(i), by striking ‘‘or

24 an insured institution’’ and all that follows

25 through ‘‘of this subsection)’’;
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1 (B) in paragraph (2)(A)(ii)—

2 (i) by striking ‘‘or a savings associa3 tion’’ where such term appears in the por4 tion of such paragraph which precedes

5 subclause (I));

6 (ii) by inserting ‘‘and’’ at the end of

7 subclause (VI);

8 (iii) by striking subclauses (VIII),

9 (IX), and (X); and

10 (iv) by striking ‘‘(V), and (VIII)’’,

11 where such term appears in the portion of

12 such paragraph which appears after the

13 end of subclause (VII), and inserting ‘‘and

14 (V)’’; and

15 (C) by striking paragraphs (10), (11),

16 (12), and (13).

17 (4) Section 4(i) of the Bank Holding Company

18 Act of 1956 (12 U.S.C. 1843(i)) is amended—

19 (A) by striking paragraphs (1) and (2);

20 and

21 (B) in paragraph (3)(A), by striking ‘‘any

22 Federal savings association’’ and all that fol23 lows through the period at the end of such

24 paragraph and inserting ‘‘such association was
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1 authorized to engage under this section as of

2 September 15, 1995.’’.

3 (c) OTHER TECHNICAL AND CONFORMING AMEND4 MENTS.—

5 (1) Section 804(a) of the Alternative Mortgage

6 Transaction Parity Act of 1982 (12 U.S.C. 3803) is

7 amended—

8 (A) in paragraph (1), by inserting ‘‘(as

9 such term is defined in section 3(a) of the Fed10 eral Deposit Insurance Act)’’ after ‘‘with re11 spect to banks’’;

12 (B) by inserting ‘‘and’’ after the semicolon

13 at the end of paragraph (1);

14 (C) by striking ‘‘; and’’ at the end of para15 graph (2) and inserting a period; and

16 (D) by striking paragraph (3).

17 (2) Section 205 of the Depository Institution

18 Management Interlocks Act (12 U.S.C. 3204) is

19 amended—

20 (A) in the portion of paragraph (8)(A)

21 which precedes clause (i), by striking ‘‘diversi22 fied savings’’ and all that follows through ‘‘with

23 respect to’’ and inserting ‘‘A depository institu24 tion holding company which, as of September

25 13, 1995, and at all times thereafter, is a diver-
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1 sified savings and loan holding company (as de2 fined in section 10(1)(F) of Home Owners’

3 Loan Act, as such section is in effect on such

4 date) with respect to’’; and

5 (B) by striking paragraph (9).

6 (3) Section 19(b)(1)(A) of the Federal Reserve

7 Act (12 U.S.C. 461(b)(1)(A)) is amended—

8 (A) by inserting ‘‘and’’ after the semicolon

9 at the end of clause (v); and

10 (B) by striking clause (vi).

11 SEC. 207. REFERENCES TO SAVINGS ASSOCIATIONS AND

12 STATE BANKS IN FEDERAL LAW.

13 Effective January 1, 1998, any reference in any Fed14 eral banking law to—

15 (1) the term ‘‘savings association’’ shall be

16 deemed to be a reference to a bank as defined in

17 section 3(a) of the Federal Deposit Insurance Act;

18 and

19 (2) the term ‘‘State bank’’ shall be deemed to

20 include any depository institution included in the

21 definition of such term in section 3(a)(2) of such

22 Act.

23 SEC. 208. REPEAL OF HOME OWNERS’ LOAN ACT.

24 Effective January 1, 1998, the Home Owners’ Loan

25 Act (12 U.S.C. 1461 et seq.) is hereby repealed.
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1 SEC. 209. EFFECTIVE DATE; DEFINITIONS.

2 (a) EFFECTIVE DATE.—The amendments made by

3 this title shall take effect on January 1, 1998.

4 (b) DEFINITIONS.—For purposes of this title, the

5 terms ‘‘appropriate Federal banking agency’’, ‘‘bank hold6 ing company’’, ‘‘depository institution’’, ‘‘Federal savings

7 association’’, ‘‘insured depository institution’’, ‘‘savings

8 association’’, and ‘‘State bank’’ have the same meanings

9 as in section 3 of the Federal Deposit Insurance Act (as

10 in effect on the date of the enactment of this Act).

11 TITLE III—TRANSFER OF FUNC12 TIONS, PERSONNEL, AND

13 PROPERTY

14 SEC. 301. OFFICE OF THRIFT SUPERVISION ABOLISHED.

15 Effective January 1, 1998, the Office of Thrift Su16 pervision and the position of Director of the Office of

17 Thrift Supervision are hereby abolished.

18 SEC. 302. DETERMINATION OF TRANSFERRED FUNCTIONS

19 AND EMPLOYEES.

20 (a) ALL OFFICE OF THRIFT SUPERVISION EMPLOY21 EES SHALL BE TRANSFERRED.—All employees of the Of22 fice of Thrift Supervision shall be identified for transfer

23 under subsection (b) to the Office of the Comptroller of

24 the Currency, the Federal Deposit Insurance Corporation,

25 or the Board of Governors of the Federal Reserve System.

26 (b) FUNCTIONS AND EMPLOYEES TRANSFERRED.—
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1 (1) IN GENERAL.—The Director of the Office of

2 Thrift Supervision, the Comptroller of the Currency,

3 the Chairperson of the Federal Deposit Insurance

4 Corporation, and the Chairman of the Board of Gov5 ernors of the Federal Reserve System shall jointly

6 determine the functions or activities of the Office of

7 Thrift Supervision, and the number of employees of

8 such Office necessary to perform or support such

9 functions or activities, which are transferred from

10 the Office to the Office of the Comptroller of the

11 Currency, the Federal Deposit Insurance Corpora12 tion, or the Board of Governors of the Federal Re13 serve System, as the case may be.

14 (2) ALLOCATION OF EMPLOYEES.—The Comp15 troller of the Currency, the Chairperson of the Fed16 eral Deposit Insurance Corporation, and the Chair17 man of the Board of Governors of the Federal Re18 serve System shall allocate the employees of the Of19 fice of Thrift Supervision consistent with the num20 ber determined pursuant to paragraph (1) in a man21 ner which such Comptroller, Chairperson, and Chair22 man, in their sole discretion, deem equitable, except

23 that, within work units, the agency preferences of

24 individual employees shall be accommodated as far

25 as possible.
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1 (c) DISPOSITION OF AFFAIRS.—

2 (1) IN GENERAL.—In winding up the affairs of

3 the Office of Thrift Supervision, the Director of the

4 Office of Thrift Supervision shall consult and co5 operate with the Comptroller of the Currency, the

6 Federal Deposit Insurance Corporation, and the

7 Board of Governors of the Federal Reserve System,

8 as the case may be, to facilitate the orderly transfer

9 of the functions to such Comptroller, Corporation, or

10 Board.

11 (2) CONTINUING AUTHORITY OF DIRECTOR OF

12 THE OFFICE OF THRIFT SUPERVISION.—Except as

13 provided in paragraph (1), no provision of this sub14 title shall be construed as affecting the authority

15 vested in the Director of the Office of Thrift Super16 vision before the date of enactment of this Act which

17 is necessary to carry out the duties of the position

18 until the date upon which the position of Director of

19 the Office of Thrift Supervision is abolished.

20 (3) CONTINUATION OF AGENCY SERVICES.—

21 Any agency, department, or other instrumentality of

22 the United States, or any successor to any such

23 agency, department, or instrumentality, which was

24 providing support services to the Director of the Of-
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1 fice of Thrift Supervision on the day before the date

2 such position is abolished shall—

3 (A) continue to provide such services on a

4 reimbursable basis, in accordance with the

5 terms of the arrangement pursuant to which

6 such services were provided until the arrange7 ment is modified or terminated in accordance

8 with such terms, except that effective January

9 1, 1998, the Comptroller of the Currency, the

10 Federal Deposit Insurance Corporation, or the

11 Board of Governors of the Federal Reserve Sys12 tem, as the case may be, shall be substituted

13 for the Director of the Office of Thrift Super14 vision as a party to the arrangement; and

15 (B) consult with the Comptroller, the Cor16 poration, or the Board to coordinate and facili17 tate a prompt and reasonable transition.

18 (d) TRANSFER OF PROPERTY.—Effective January 1,

19 1998, all property of the Office of Thrift Supervision shall

20 be transferred to the Comptroller of the Currency, the

21 Federal Deposit Insurance Corporation, or the Board of

22 Governors of the Federal Reserve System, as determined

23 in accordance with subsections (a) and (b).
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1 SEC. 303. SAVINGS PROVISIONS.

2 (a) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS

3 NOT AFFECTED.—No provision of this title shall be con4 strued as affecting the validity of any right, duty, or obli5 gation of the United States, the Director of the Office of

6 Thrift Supervision, or any person, which existed on the

7 day before the date upon which the position of Director

8 of the Office of Thrift Supervision and the Office of Thrift

9 Supervision are abolished.

10 (b) CONTINUATION OF SUITS.—No action or other

11 proceeding commenced by or against the Director of the

12 Office of Thrift Supervision shall abate by reason of enact13 ment of this Act, except that, effective January 1, 1998,

14 the Comptroller of the Currency, the Federal Deposit In15 surance Corporation, or the Board of Governors of the

16 Federal Reserve System, as the case may be, shall be sub17 stituted as a party to any such action or proceeding.

18 (c) CONTINUATION OF ADMINISTRATIVE RULES.—

19 All orders, resolutions, determinations, regulations, inter20 pretative rules, other interpretations, guidelines, proce21 dures, supervisory and enforcement actions, and other ad22 visory material (other than any regulation to which section

23 3(f) of the Home Owners’ Loan Act (as in effect on Sep24 tember 13, 1995) applies) which—
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1 (1) have been issued, made, prescribed, or per2 mitted to become effective by the Office of Thrift

3 Supervision, and

4 (2) are in effect on December 31, 1996, (or be5 come effective after such date pursuant to the terms

6 of the order, resolution, determination, rule, other

7 interpretation, guideline, procedure, supervisory or

8 enforcement action, and other advisory material, as

9 in effect on such date), shall—

10 (A) continue in effect according to the

11 terms of such orders, resolutions, determina12 tions, regulations, interpretative rules, other in13 terpretations, guidelines, procedures, super14 visory or enforcement actions, or other advisory

15 material;

16 (B) be administered by the Comptroller of

17 the Currency, the Federal Deposit Insurance

18 Corporation, or the Board of Governors of the

19 Federal Reserve System; and

20 (C) be enforceable by or against the Comp21 troller of the Currency, the Federal Deposit In22 surance Corporation, or the Board of Governors

23 of the Federal Reserve System until modified,

24 terminated, set aside, or superseded in accord25 ance with applicable law by the Comptroller,
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1 Corporation, or Board, by any court of com2 petent jurisdiction, or by operation of law.

3 (d) TREATMENT OF REFERENCES IN ADJUSTABLE

4 RATE MORTGAGES ISSUED BEFORE FIRREA.—

5 (1) REFERENCES IN PRIOR LAW.—For purposes

6 of section 402(e) of Financial Institutions Reform,

7 Recovery, and Enforcement Act of 1989 (12 U.S.C.

8 1437 note), any reference in such section to—

9 (A) the Director of the Office of Thrift Su10 pervision shall be deemed to be a reference to

11 the Secretary of the Treasury; and

12 (B) a Savings Association Insurance Fund

13 member shall be deemed to be a reference to an

14 insured depository institution (as defined in sec15 tion 3 of the Federal Deposit Insurance Act).

16 (e) TREATMENT OF REFERENCES IN ADJUSTABLE

17 RATE MORTGAGE INSTRUMENTS ISSUED AFTER

18 FIRREA.—

19 (1) IN GENERAL.—For purposes of adjustable

20 rate mortgage instruments that are in effect as of

21 the date of enactment of this Act, any reference in

22 the instrument to the Director of the Office of

23 Thrift Supervision or Savings Association Insurance

24 Fund members shall be treated as a reference to the

25 Secretary of the Treasury or insured depository in-
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1 stitutions (as defined in section 3 of the Federal De2 posit Insurance Act), as appropriate.

3 (2) SUBSTITUTION FOR INDEXES.—If any index

4 used to calculate the applicable interest rate on any

5 adjustable rate mortgage instrument is no longer

6 calculated and made available as a direct or indirect

7 result of the enactment of this Act, any index—

8 (A) made available by the Secretary of the

9 Treasury; or

10 (B) determined by the Secretary of the

11 Treasury, pursuant to paragraph (4), to be sub12 stantially similar to the index which is no

13 longer calculated or made available,

14 may be substituted by the holder of any such adjust15 able rate mortgage instrument upon notice to the

16 borrower.

17 (3) AGENCY ACTION REQUIRED TO PROVIDE

18 CONTINUED AVAILABILITY OF INDEXES.—Promptly

19 after the enactment of this subsection, the Secretary

20 of the Treasury, the Chairperson of the Federal De21 posit Insurance Corporation, and the Comptroller of

22 the Currency shall take such action as may be nec23 essary to assure that the indexes prepared by the

24 Director of the Office of Thrift Supervision imme25 diately prior to the enactment of this subsection and
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1 used to calculate the interest rate on adjustable rate

2 mortgage instruments continue to be available.

3 (4) REQUIREMENTS RELATING TO SUBSTITUTE

4 INDEXES.—If any agency can no longer make avail5 able an index pursuant to paragraph (3), an index

6 that is substantially similar to such index may be

7 substituted for such index for purposes of paragraph

8 (2) if the Secretary of the Treasury determines,

9 after notice and opportunity for comment, that—

10 (A) the new index is based upon data sub11 stantially similar to that of the original index;

12 and

13 (B) the substitution of the new index will

14 result in an interest rate substantially similar to

15 the rate in effect at the time the original index

16 became unavailable.

17 SEC. 304. REFERENCES IN FEDERAL LAW TO DIRECTOR OF

18 THE OFFICE OF THRIFT SUPERVISION.

19 Any reference in any Federal law to the Director of

20 the Office of Thrift Supervision or the Office of Thrift

21 Supervision shall be deemed to be a reference to the appro22 priate Federal banking agency (as defined in section 3(q)

23 of the Federal Deposit Insurance Act).
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1 SEC. 305. RECONFIGURATION OF BOARD OF DIRECTORS OF

2 FDIC AS A RESULT OF REMOVAL OF DIREC3 TOR OF THE OFFICE OF THRIFT SUPER4 VISION.

5 (a) IN GENERAL.—Section 2(a)(1) of the Federal

6 Deposit Insurance Act (12 U.S.C. 1812(a)(1)) is amended

7 to read as follows:

8 ‘‘(1) IN GENERAL.—The management of the

9 Corporation shall be vested in a Board of Directors

10 consisting of 3 members—

11 ‘‘(A) 1 of whom shall be the Comptroller of

12 the Currency; and

13 ‘‘(B) 2 of whom shall be appointed by the

14 President, by and with the advice and consent

15 of the Senate, from among individuals who are

16 citizens of the United States.’’.

17 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

18 (1) Section 2(a)(2) of the Federal Deposit In19 surance Act (12 U.S.C. 1812(a)(2)) is amended—

20 (A) by striking ‘‘February 28, 1993’’ and

21 inserting ‘‘January 1, 1998’’; and

22 (B) by striking ‘‘3’’ and inserting ‘‘2’’.

23 (2) Section 2(d)(2) of the Federal Deposit In24 surance Act (12 U.S.C. 1812(d)(2)) is amended—

25 (A) by striking ‘‘or the office of Director

26 of the Office of Thrift Supervision’’;
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1 (B) by striking ‘‘or such Director’’;

2 (C) by striking ‘‘or the Acting Director of

3 the Office of Thrift Supervision, as the case

4 may be’’; and

5 (D) by striking ‘‘or Director’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 subsections (a) and (b) shall take effect on January 1,

8 1998.

9 (d) DESIGNATION OF ABOLISHED POSITION.—Unless

10 there is a vacancy in the position of an appointed member

11 of the Board of Directors as of January 1, 1998, the

12 President, consistent with the requirements of section

13 2(a)(2) of the Federal Deposit Insurance Act, shall des14 ignate which of the 3 positions of appointed member of

15 such Board of Directors shall be abolished pursuant to

16 the amendment made by subsection (a).

17 TITLE IV—LOAN LOSS RESERVE

18 TREATMENT

19 SEC. 401. REPEAL OF SPECIAL THRIFT BAD DEBT RESERVE

20 METHOD.

21 (a) GENERAL RULE.—Section 593 of the Internal

22 Revenue Code of 1986 (relating to reserves for losses on

23 loans) is hereby repealed.

24 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—The amendment made by

2 this section shall apply to taxable years beginning

3 after December 31, 1995.

4 (2) AMENDMENT TREATED AS CHANGE IN

5 METHOD OF ACCOUNTING.—In the case of any tax6 payer who is required by reason of the amendment

7 made by this section to change his method of com8 puting reserves for bad debts—

9 (A) such change shall be treated as a

10 change in a method of accounting,

11 (B) such change shall be treated as initi12 ated by the taxpayer,

13 (C) such change shall be treated as having

14 been made with the consent of the Secretary,

15 and

16 (D) the net adjustments which are re17 quired by section 481 of the Internal Revenue

18 Code of 1986 as a result of the initial change

19 in method of accounting for bad debts required

20 by this section shall be treated as zero.

21 (3) TRANSITIONAL RULE FOR SMALL THRIFTS

22 TAKING DEDUCTION ALLOWABLE UNDER SECTION

23 585.—

24 (A) IN GENERAL.—In the case of an orga25 nization that—
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1 (i) on the effective date of the amend2 ment made by this section is an association

3 or bank referred to by section 593(a)(1) of

4 the Internal Revenue Code of 1986 (as in

5 effect prior to the amendment made by

6 this section),

7 (ii) is a bank to which section 585 ap8 plies, and

9 (iii) elects to compute a reasonable

10 addition to a reserve for bad debts under

11 section 585 in lieu of any deduction under

12 section 168(a),

13 then the reserve at the beginning of the first

14 taxable year beginning after December 31,

15 1995, and the base year amount for purposes of

16 section 585(b)(2)(B) shall be equal to the

17 amount computed under section 585(b)(2)(A)

18 as of the end of the last taxable year beginning

19 before January 1, 1996.

20 (B) TREATMENT OF BEGINNING RESERVE

21 AMOUNT.—Such beginning reserve amount—

22 (i) shall not be deductible in the year

23 of the initial change of method, and

24 (ii) shall not be included in gross in25 come if the bank no longer computes a rea-
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1 sonable addition to a reserve for bad debts

2 under section 585 for any reason.

3 The Secretary shall prescribe such regulations

4 as may be necessary or appropriate to carry out

5 the purposes of this subsection.

6 (c) CLERICAL AMENDMENT.—The table of sections

7 for part 1 of subchapter H of chapter 1 of the Internal

8 Revenue Code of 1986 is amended by striking the item

9 relating to section 593.

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