49–006 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 109–326 

HURRICANE CHECK CASHING RELIEF ACT OF 2005 

DECEMBER 6, 2005.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 3909] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3909) to provide emergency authority for the Federal Deposit Insurance Corporation and the National Credit Union Administration, in accordance with guidance issued by the Board of Governors of the Federal Reserve System, to guarantee checks cashed 

by insured depository institutions and insured credit unions for the 

benefit of noncustomers who are victims of certain 2005 hurricanes, 

and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as 

amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 4 

Background and Need for Legislation .................................................................... 4 

Hearings ................................................................................................................... 5 

Committee Consideration ........................................................................................ 6 

Committee Votes ...................................................................................................... 6 

Committee Oversight Findings ............................................................................... 6 

Performance Goals and Objectives ......................................................................... 7 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 7 

Committee Cost Estimate ....................................................................................... 7 

Congressional Budget Office Estimate ................................................................... 7 

Federal Mandates Statement ................................................................................. 11 

Advisory Committee Statement .............................................................................. 11 

Constitutional Authority Statement ...................................................................... 11 

Applicability to Legislative Branch ........................................................................ 11 

Section-by-Section Analysis of the Legislation ...................................................... 11 

Changes in Existing Law Made by the Bill, as Reported ..................................... 12 

2 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE, PURPOSE. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Hurricane Check Cashing Relief 

Act of 2005’’. 

(b) PURPOSE.—The purpose of this Act is to reduce the suffering and financial difficulties of victims of 2005 hurricanes— 

(1) whose home insured depository institutions and insured credit unions, or 

the insured depository institution or insured credit union on which any check 

or share draft payable to any such victim is drawn, are closed, or whose records 

are otherwise inaccessible, due to certain 2005 hurricanes; 

(2) who lack access to operating automated teller machines for whatever reason as a result of any such hurricane, including inoperable payment networks; 

(3) who lack some or all of the requisite forms of identification necessary to 

cash their own or a third-party check or share draft; or 

(4) who are otherwise unable, by reason of any such hurricane, to access 

amounts on deposit at an insured depository institution or insured credit union. 

SEC. 2. EMERGENCY AUTHORITY TO GUARANTEE CHECKS CASHED FOR VICTIMS OF CERTAIN 

2005 HURRICANES. 

(a) FDIC.— 

(1) IN GENERAL.—Subject to subsection (d), the Federal Deposit Insurance 

Corporation shall establish, in accordance with emergency guidance issued by 

the Board of Governors of the Federal Reserve System under subsection (d)(1), 

an emergency program under which an insured depository institution may obtain, subject to subsection (d)(2), a commitment from the Corporation to indemnify the insured depository institution for any loss suffered by the institution 

through cashing a check or share draft that— 

(A) is presented for payment by any individual who, as of August 25, 

2005, resided in the State of Florida, Alabama, Mississippi, Louisiana, or 

Texas in an area in which the President, pursuant to section 401 of the 

Robert T. Stafford Disaster Relief and Emergency Assistance Act, determined, on or after August 25, 2005, that a major disaster exists; and 

(B) is subsequently uncollectible, 

in an amount not to exceed $2,000 for each such check or share draft. 

(2) SOURCE OF FUNDS FOR PAYMENTS.—Any payments required to be made by 

the Corporation pursuant to a commitment under paragraph (1) to an insured 

depository institution shall be drawn from funds available for such purposes 

under subsection (c). 

(b) NCUA.— 

(1) IN GENERAL.—Subject to subsection (d), the National Credit Union Administration shall establish, in accordance with emergency guidance issued by the 

Board under subsection (d)(1), an emergency program under which an insured 

credit union may obtain, subject to subsection (d)(2), a commitment from the 

Administration to indemnify the insured credit union for any loss suffered by 

the credit union through cashing a share draft or check that— 

(A) is presented for payment by any individual who, as of August 25, 

2005, resided in the State of Florida, Alabama, Mississippi, Louisiana, or 

Texas in an area in which the President, pursuant to section 401 of the 

Robert T. Stafford Disaster Relief and Emergency Assistance Act, determined, on or after August 25, 2005, that a major disaster exists; and 

(B) is subsequently uncollectible, 

in an amount not to exceed $2,000 for each such check or share draft 

(2) SOURCE OF FUNDS FOR PAYMENTS.—Any payments required to be made by 

the National Credit Union Administration pursuant to a commitment under 

paragraph (1) to an insured credit union shall be drawn from funds available 

for such purposes under subsection (c). 

(3) LIMITED EXTENSION OF CHECK CASHING SERVICES.—Notwithstanding any 

limitation in section 107(12) of the Federal Credit Union Act with regard to 

field of membership, an insured credit union may cash any check presented for 

payment by any individual described in paragraph (1)(A). 

(c) REIMBURSEMENT FROM FEDERAL RESERVE SURPLUSES.—Section 7(b) of the 

Federal Reserve Act (12 U.S.C. 289(b)) is amended by adding at the end the following new paragraph: 

‘‘(4) ADDITIONAL TRANSFERS TO COVER CERTAIN RELIEF EFFORTS RESULTING

FROM HURRICANES OF 2005.— 

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‘‘(A) IN GENERAL.—Subject to subparagraph (C), from the surplus funds 

of the Federal reserve banks maintained pursuant to subsection (a)(2), the 

Federal reserve banks shall transfer to the Board of Governors of the Federal Reserve System for transfer to the Federal Deposit Insurance Corporation and the National Credit Union Administration, such sums as are necessary to meet any payments required under subsection (a)(1) or (b)(1) of 

section 2 of the Hurricane Check Cashing Relief Act. In the event that the 

total amount of requests for indemnification received by the Federal Deposit Insurance Corporation and the National Credit Union Administration 

exceed the maximum amount specified under subparagraph (C), the sums 

transferred to the Federal Deposit Insurance Corporation and the National 

Credit Union Administration, respectively, shall be in proportion to the 

amount of payments required under subsection (a)(1) and (b)(1) of section 

2 of the Hurricane Check Cashing Relief Act of 2005, respectively. 

‘‘(B) ALLOCATION BY FEDERAL RESERVE BOARD.—Of the total amount required to be paid by the Federal reserve banks, the Board of Governors of 

the Federal Reserve System shall determine the amount each such bank 

shall pay. 

‘‘(C) MAXIMUM AMOUNT.—The total amount transferred under subpara- graph (A) from all Federal reserve banks shall not exceed $200,000,000. 

‘‘(D) REPLENISHMENT OF SURPLUS FUND PROHIBITED.—No Federal reserve 

bank may replenish such bank’s surplus fund by the amount of any transfer 

by such bank under subparagraph (A).’’. 

(d) EMERGENCY GUIDANCE AND LIMITATIONS.— 

(1) IN GENERAL.—The Board, after consulting the Federal Deposit Insurance 

Corporation and the National Credit Union Administration, shall, upon the enactment of this Act, promptly issue appropriate guidance— 

(A) to carry out the purposes of this section and administer the programs 

established in accordance with this section; 

(B) to reduce the incidence of fraud and any other cause of loss to the 

greatest extent possible, consistent with the purpose of this Act; 

(C) to require insured depository institutions and insured credit unions 

to exercise due diligence in determining the eligibility of any check presented by any individual for indemnification under this section, including 

such measures as verification of Social Security numbers and other identifying information as the Board may determine to be practicable; 

(D) to provide insured depository institutions and insured credit unions 

with reasonable guidance, in light of the emergency circumstances presented by certain 2005 hurricanes, so as to meet the requirements for indemnification under this section, including the sharing of information on 

checks that have been presented for indemnification; and 

(E) notwithstanding any Federal or State law, to provide for the right of 

the Board of Governors of the Federal Reserve System, on behalf of the 

Federal reserve banks and through the Federal Deposit Insurance Corporation and the National Credit Union Administration, to recover from any insured depository institution or insured credit union the amount of any indemnification paid to such depository institution or credit union with respect to any check, to the extent of the amount so paid, if the insured depository institution or insured credit union collects on the check. 

(2) COMPLIANCE WITH GUIDANCE CONDITION.—The emergency guidance issued 

under paragraph (1) shall require any insured depository institution or insured 

credit union seeking a commitment under subsection (a)(1) or (b)(1) to demonstrate that the institution or credit union is in compliance with the guidance 

in such manner as the Board determines to be appropriate and practicable. 

(3) PER INDIVIDUAL PER INSTITUTION LIMITATION.—No specific insured depository institution or insured credit union may be indemnified for losses in excess 

of $2,000 with respect to checks and share drafts presented by any one individual. 

(e) DEFINITIONS.—For purposes of this Act, the following definitions shall apply: 

(1) BOARD.—The term ‘‘Board’’ means the Board of Governors of the Federal 

Reserve System. 

(2) INSURED CREDIT UNION.—The term ‘‘insured credit union’’ has the same 

meaning as in section 101 of the Federal Credit Union Act. 

(3) INSURED DEPOSITORY INSTITUTION.—The term ‘‘insured depository institution’’ has the same meaning as in section 3 of the Federal Deposit Insurance 

Act. 

(f) RULE OF CONSTRUCTION.—No provision of this section shall be construed as affecting any right or obligation of an insured depository institution or insured credit 

union to take any action against any person in connection with a fraudulent check, 

4 

a fraudulent negotiation of a check, or any other intentional act of a fraudulent or 

deceptive nature. 

(g) EFFECTIVE DATE.— (1) IN GENERAL.—Subject to paragraph (2), the provisions of this section shall 

apply to checks or share drafts presented to an insured depository institution 

or an insured credit union during the period beginning on August 25, 2005, and 

ending November 15, 2005. 

(2) LIMITED EXTENSION.—The period described in paragraph (2) may be extended once for an additional 60 days if— 

(A) the Board, after consulting with the Federal Deposit Insurance Corporation and the National Credit Union Administration, determines that 

the continuing impact of the 2005 hurricane disasters on financial intermediation between consumers and financial institutions, on payment networks, and on other forms of communication require an extension of the 

programs established under this section in order to continue to meet the 

immediate needs of victims of the disaster; and 

(B) notice of such determination is published in the Federal Register at 

least 5 days before the end of the period described in paragraph (1). 

PURPOSE AND SUMMARY

H.R. 3909, The Hurricane Check Cashing Relief Act, as amended, will provide emergency authority for the Federal Deposit Insurance Corporation and the National Credit Union Administration, in 

accordance with guidance issued by the Board of Governors of the 

Federal Reserve System, to guarantee checks or share drafts 

cashed by insured depository institutions and insured credit unions 

for the benefit of customers who are victims of certain 2005 hurricanes. Specifically, H.R. 3909, as amended, provides certain financial institutions the incentive to continue their work with the victims of the recent hurricanes by indemnifying federally insured 

banks and credit unions that cash fraudulent or non-sufficient fund 

checks or share drafts. Institutions must continue to use due diligence in ensuring that checks or share drafts are legitimate and 

are collectable. 

The bill, as amended, provides that up to $200 million from the 

Federal Reserve Bank’s surplus fund is available to indemnify federally insured financial institutions that may receive up to $2,000 

for any check or share draft presented by any one individual who 

has resided in the areas affected by Hurricanes Katrina, Rita and 

Wilma, that is subsequently uncollectible between August 25, 2005, 

and November 15, 2005. 

BACKGROUND AND NEED FOR LEGISLATION

In 2005, numerous hurricanes have resulted in tremendous harm 

and damage to Alabama, Florida, Louisiana, Mississippi, and 

Texas. It has been estimated that over one million people have 

been displaced because of these hurricanes and approximately 

500,000 individuals may have lost their jobs. While the economic 

impact is still being estimated, the displacement of people and the 

large number of affected insured credit unions and insured depository institutions have made access to cash, credit, social security 

checks and other financial services very difficult. The situation has 

been further complicated by the victim’s loss of their personal identification and financial records. 

In early September, 2005, the House Financial Services Committee held a briefing for members by the financial services industry and Federal financial regulators in the aftermath of Hurricane 

Katrina to provide an outline of relief efforts. The Committee also 

5 

held two hearings in response to Hurricane Katrina in September, 

2005. The Financial Institutions and Consumer Credit Subcommittee held a hearing on September 14, 2005, that focused on 

the financial services response to Hurricane Katrina and regulatory 

and legislative relief recommendations to facilitate their efforts. 

The Housing and Community Opportunity Subcommittee held a 

hearing on September 15, 2005, that focused on the critical housing 

needs in the aftermath of Hurricane Katrina industry’s relief efforts. Many recommendations were provided to the Committee at 

these hearings and H.R. 3909 addresses some of these suggestions. 

The bill is intended to reduce the suffering and financial difficulties for those victims of the 2005 hurricanes who are unable to access their home insured depository institutions or insured credit 

unions, who cannot utilize their ATMs, who lack some or all of the 

requisite forms of identification to cash checks or share drafts, and 

who cannot access their deposits at an insured depository institution or insured credit union by guaranteeing their ability to cash 

checks or insured share drafts up to $2,000 at insured depository 

institutions and insured credit unions. 

HEARINGS

The Subcommittee on Financial Institutions and Consumer Credit held a hearing on September 14, 2005, on ‘‘Hurricane Katrina: 

The Financial Institutions’ Response.’’ The following witnesses testified: 

Mr. McKinley W. ‘‘Mac’’ Deaver, Executive Director, Mississippi Bankers Association, representing American Bankers 

Association; 

Mr. Ken Bordelon, President and CEO, E Federal Credit 

Union (LA), representing National Association of Federal Credit Unions; 

Mr. C. R. ‘‘Rusty’’ Cloutier, President and CEO, MidSouth 

Bank, N.A. (LA), representing Independent Community Bankers of America; 

Mr. Charles Elliott, President and CEO, Mississippi Credit 

Union Association, representing Credit Union National Association; 

Ms. Diane Casey-Landry, President and CEO, America’s 

Community Bankers; 

Mr. David Gibbons, Senior Executive Vice President and 

Chief Risk Officer, HSBC North America (IL), representing 

American Financial Services Association; and 

Mr. Hilary Shelton, Director, Washington Bureau, NAACP. 

The Subcommittee on Housing and Community Opportunity held 

a hearing on September 15, 2005, on ‘‘Emergency Housing Needs 

in the Aftermath of Hurricane Katrina.’’ The following witnesses 

testified: 

Mr. Henry A. Alvarez III, President and CEO, San Antonio 

Housing Authority, San Antonio, TX, testifying on behalf of 

National Association of Housing and Redevelopment Officials; 

Ms. Sharon M. Daly, Senior Advisor for Public Policy, Catholic Charities USA; 

Ms. J. K. Huey, Senior Vice President, IndyMac Bank, Pasadena, CA, testifying of behalf of the Mortgage Bankers Association; 

6 

Ms. Kay Miller, President, T.A. Miller, Inc. and Tra-Dor, 

Inc.; Management, Shreveport, LA, testifying on behalf of the 

Council for Affordable and Rural Housing; 

Mr. David A. Roberson, President and CEO, Cavalier Homes, 

Inc., Addison, AL, testifying on behalf of Manufactured Housing Institute and the Manufactured Housing Association for 

Regulatory Reform; 

Ms. Nan P. Roman, President, National Alliance to End 

Homelessness; 

Ms. Barbara Thompson, Executive Director, National Council of State Housing Agencies; 

Mr. David F. Wilson, Homebuilder, Ketchum, ID, President, 

National Association of Home Builders; 

Mr. Clanton Beamon, Executive Director, Delta Housing Development Corporation, Indianola, MS, testifying on behalf of 

the National Rural Housing Coalition; 

Mr. Jeffrey I. Brodsky, President, Related Management 

Company, LLC, New York City, NY, testifying on behalf of the 

National Multi Housing Council and National Leased Housing 

Association; 

Ms. Judith A. Kennedy, President and CEO, National Association of Affordable Housing Lenders; 

Ms. Michelle Norris, Senior Vice President of Development, 

National Church Residences, testifying on behalf of the American Association of Homes and Services for the Aging; 

Ms. Ellen Lee, Deputy Executive Assistant for Neighborhood 

Development, City of New Orleans, LA, testifying on behalf of 

the National Community Development Association (submitted 

for the record); and 

National Association of Realtors (submitted for the record). 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on October 27, 2005, and ordered H.R. 3909, the Hurricane Check Cashing Relief Act of 2005, favorably reported to the House with an 

amendment by voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken with in conjunction with the consideration of this legislation. 

An amendment in the nature of a substitute offered by Mr. Bachus, 

No. 1, making various technical and substantive changes to the 

bill, was agreed to by voice vote. A motion by Mr. Oxley to report 

the bill, as amended, to the House with a favorable recommendation was agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee held hearings and made findings that are reflected in this report. 

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PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

This bill provides emergency authority for regulators to guarantee checks cashed by insured depository institutions and credit 

unions for the benefit of individuals who resided in the areas affected by Hurricanes Katrina, Rita, and Wilma as of August 25, 

2005, in order to assist in the recovery from the destructive hurricanes of 2005. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, November 30, 2005. 

Hon. MICHAEL G. OXLEY, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3909, the Hurricane 

Check Cashing Relief Act of 2005. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Kathleen Gramp (for 

federal costs) and Barbara Edwards (for federal revenues). 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, Director. 

Enclosure. 

H.R. 3909—Hurricane Check Cashing Relief Act of 2005 

Summary: H.R. 3909 would direct the Federal Deposit Insurance 

Corporation (FDIC) and National Credit Union Administration 

(NCUA) to idemnify insured financial institutions for any losses resulting from certain uncollectible checks presented by individuals 

8 

who resided in areas designated as disaster areas after August 25, 

2005. This idemnification would apply to checks presented to those 

institutions from August 25, 2005, through November 15, 2005. Indemnification would be limited to $2,000 per individual. Under the 

bill, the Federal Reserve would be required to transfer up to $200 

million from its surplus to cover the indemnification payments. 

CBO estimates that enacting this bill would increase direct spending for indemnification payments by about $120 million over 

the 2006–2007 period. Those outlays would be initially offset by a 

transfer of $120 million from the Federal Reserve. Such transfers 

are recorded in the budget as an increase in revenues. However, 

monies transferred from the surplus of the Federal Reserve would 

no longer be invested in securities and would no longer earn interest that otherwise would be transferred to the Treasury—as the 

Federal Reserve routinely does each year. CBO estimates that the 

interest earnings forgone would reduce revenues by about $1 million in 2006, $3 million in 2007, and $6 million each year thereafter. Therefore, CBO estimates that net revenues over the 2006– 

2015 period would increase by $68 million. Thus, enacting this bill 

would result in a net increase in federal deficits of about $52 million over the 2006–2015 period, with additional revenue losses of 

about $6 million a year continuing indefinitely thereafter. 

H.R. 3909 contains an intergovernmental mandate as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

that the mandate would result in no costs to state, local, or tribal 

governments. Hence, the mandate would not have costs that exceed 

the threshold established in that act ($62 million in 2005, adjusted 

annually for inflation). H.R. 3909 contains no new private-sector 

mandates as defined in UMRA. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 3909 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce and 

housing credit). 

By fiscal year, in millions of dollars— 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 

CHANGES IN DIRECT SPENDING 

FDIC and NCUA.

Estimated Budget Authority 30 90 0 0 0 0 0 0 0 0 

Estimated Outlays ................ 30 90 0 0 0 0 0 0 0 0 

CHANGES IN REVENUES 

Estimated Revenues ...................... 29 87 ¥6 ¥6 ¥6 ¥6 ¥6 ¥6 ¥6 ¥6 

Basis of estimate: For this estimate, CBO assumes that the bill 

will be enacted before the end of calendar year 2005. We assume 

that any insured institution in the country could seek reimbursement for uncollectible checks issued by individuals from areas in 

the states of Alabama, Florida, Louisiana, Mississippi, and Texas 

that have been declared eligible for any type of disaster assistance 

since August 25, 2005. 

Direct spending 

The amounts paid to indemnify insured depository institutions 

and credit unions would depend on the volume of uncollectible 

checks submitted for reimbursement. CBO expects that requests 

9 

for indemnification would equal the normal volume of uncollectible 

checks for the portion of the population covered by the bill, plus 

any extraordinary losses that may have occurred in the wake of 

Hurricanes Katrina, Rita, and Wilma. Based on industry surveys 

of check fraud, CBO estimates that indemnification payments could 

range from $40 million to $200 million, with a midpoint of about 

$120 million. Given the time needed to issue regulations and process requests, CBO assumes that most of the payments would be 

made in fiscal year 2007. 

CBO expects that insured financial institutions would normally expect to lose about $40 million from bad checks issued over a 

three-month period from the affected areas. That estimate is based 

on a 2004 survey by the American Bankers Association on check 

fraud experienced by banks and savings associations (the data did 

not include credit unions). The study found that attempted check 

fraud totaled about $5.5 billion in 2003, but actual losses were less 

than $700 million (or 13 percent of the attempted fraud) because 

of various controls and detection measures. Prorating those losses 

by population—17 percent of the country’s population resided in 

the areas covered by the bill—suggests that the normal level of annual losses for this group totaled about $120 million in 2003. Assuming losses occur evenly throughout the year, losses for a threemonth period would have totaled about $30 million in 2003. Adjusting those figures to include credit unions and possible growth in 

the level of losses from 2003 through 2005 suggests that the normal losses covered by the bill would total about $40 million. 

How Hurricane Katrina and other disasters affected the level of 

attempted fraud and institutions’ ability to prevent it are very uncertain. So too is the effect of having a federal indemnification program, which could reduce institutions’ incentives to investigate and 

prosecute check fraud. There are no data available at this time to 

determine whether costs would reach the $200 million limit in the 

bill for the Federal Reserve’s coverage of agency costs; that amount 

is five times higher than CBO’s estimate of normal losses but lower 

than CBO’s estimate of the region’s proportionate share of the routine level of attempted fraud (about $300 million, after adjusting 

for credit unions and possible growth in attempted fraud). Thus, 

the agencies’ indemnification payments could reach the cap in the 

bill if there was a significant drop in institutions’ ability to stem 

attempted fraud by individuals from the disaster areas over the 

designated period. 

Revenues 

This bill would direct the Federal Reserve banks to transfer up 

to $200 million from their surplus funds to the FDIC and NCUA 

to cover the indemnification payments for uncollectible checks or 

share drafts presented to them by insured banks or credit unions. 

Transfers from the Federal Reserve System to the Treasury are 

classified as revenues. Thus, anything that affects the size of the 

transfers affects federal revenues. 

Such transfers originate with the net income of the Federal Reserve System. The Federal Reserve possesses a portfolio of assets 

that generates a large amount of interest income. Net income of 

the system represents the amount of the system’s earnings less its 

expenses of operation. Out of its annual net income, the Federal 

10 

Reserve pays a fixed dividend to its member banks, retains monies 

for its surplus fund, and voluntarily remits the remaining profits 

to the U.S. Treasury. The system’s surplus fund is a stock of retained earnings accumulated over time and is set by the Federal 

Reserve each year at a level equal to the paid-in capital of its member banks. The surplus is invested in interest-earning assets and 

generates some of the income that is in turn remitted to the Treasury in subsequent years. 

H.R. 3909 specifies that the amount to be remitted (to cover the 

indemnification payments) would be paid from the Federal Reserve 

surplus. The bill also would prohibit the Federal Reserve from replenishing its surplus. Thus, any remittances would be in addition 

to the amount that CBO has estimated as regular annual transfers 

of the Federal Reserve’s net income to the U.S. Treasury, after payment of dividends and retention of monies for its surplus fund. 

CBO estimates that the additional transfer under the bill would 

increase revenues by $30 million in fiscal year 2006 and $90 million in fiscal year 2007. However, the permanent reduction in the 

surplus of the Federal Reserve would lead to a decrease in investments of the Federal Reserve. This permanent decrease in investments would cause a drop in the investment income that is earned 

by the Federal Reserve and subsequently sent to the Treasury as 

revenues. CBO estimates that the revenues from the Federal Reserve would thereby be lowered by $1 million in fiscal year 2006, 

$3 million in 2007, and $6 million each year thereafter. Thus, CBO 

estimates that these forgone interest earnings would total $52 million over the 2006–2015 period, and an additional $6 million a year 

after 2015. 

Overall impact for revenue transferred from the Federal Reserve 

surplus 

H.R. 3909’s provisions for transferring the Federal Reserve surplus give the appearance of financing the additional outlays of the 

FDIC and NCUA. This initial outcome is attributable to the fact 

that the Federal Reserve is treated as a nongovernmental entity for 

budgetary purposes, with its transfers to the Treasury counted as 

revenues. The proposal would also reduce future Federal Reserve 

transfers to the Treasury by an amount equal to the interest 

earned on the initial $120 million transfer. Over time, the reduction in these remissions would equal the value of the transfer to 

the FDIC and NCUA (in present value terms). But much of the loss 

of Federal Reserve payments occurs outside the budget window of 

10 years so that the initial costs of the legislation appear to be partially paid for. In economic terms, however, H.R. 3909 does not provide any new resources to the federal government to pay for the 

outlays called for by the legislation. 

Estimated impact on state, local, and tribal governments: H.R. 

3909 contains an intergovenmental mandate as defined in UMRA. 

Section 2(d)(1)(E) would preempt any state laws that restrict the 

ability of the FDIC and the NCUA to recover certain funds. CBO 

is unaware of any state that has such a law. We estimate that this 

mandate would result in no costs to state, local, or tribal governments. 

Estimated impact on the private sector: This bill contains no new 

private-sector mandates as defined in UMRA. 

11 

Estimate prepared by: Federal Spending: Kathleen Gramp; Federal Revenues: Barbara Edwards; Impact on State, Local, and Tribal Governments: Sarah Puro; Impact on the Private Sector: Paige 

Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis; G. Thomas Woodward, Assistant Director for Tax Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title, purpose 

This section establishes the short title of the bill, the ‘‘Hurricane 

Check Cashing Relief Act of 2005.’’ This section also specifies the 

Congressional purposes of the Act. 

Section 2. Emergency authority to guarantee checks cashed for victims of certain 2005 hurricanes 

This section directs the Federal Deposit Insurance Corporation 

(FDIC) and the National Credit Union Administration (NCUA) to 

establish, in accordance with emergency guidance issued by the 

Board of Governors of the Federal Reserve System (Board), an 

emergency program under which an insured depository institution 

and insured credit union may obtain an indemnification commitment from the FDIC for loss it has suffered (up to $2,000 for any 

one individual) through cashing a check or share draft between August 25, 2005, and November 15, 2005, that: (1) is presented for 

payment by any individual who, as of August 25, 2005, resided in 

Florida, Alabama, Mississippi, Louisiana, or Texas in a Presidentially declared major disaster area; and (2) is subsequently 

uncollectible. 

12 

This section also amends the Federal Reserve Act to direct the 

Federal Reserve banks to transfer from their surplus funds to the 

Board for the transfer to the Corporation or Administrator, up to 

$200 million to meet the indemnification requirements of this Act. 

This section also directs the Board to issue emergency guidance 

and limitations for the Corporation and Administration to implement the provisions of this section. The Board, in consultation with 

the Corporation and Administration, may extend for 60 days the 

provisions of this section after appropriate notice is published in 

the Federal Register of this limited extension. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

SECTION 7 OF THE FEDERAL RESERVE ACT 

DIVISION OF EARNINGS

SEC. 7. (a) * * * 

(b) TRANSFER FOR FISCAL YEAR 2000.— 

(1) * * * 

* * * * * * * 

(4) ADDITIONAL TRANSFERS TO COVER CERTAIN RELIEF EF- FORTS RESULTING FROM HURRICANES OF 2005.— (A) IN GENERAL.—Subject to subparagraph (C), from the 

surplus funds of the Federal reserve banks maintained pursuant to subsection (a)(2), the Federal reserve banks shall 

transfer to the Board of Governors of the Federal Reserve 

System for transfer to the Federal Deposit Insurance Corporation and the National Credit Union Administration, 

such sums as are necessary to meet any payments required 

under subsection (a)(1) or (b)(1) of section 2 of the Hurricane Check Cashing Relief Act. In the event that the total 

amount of requests for indemnification received by the Federal Deposit Insurance Corporation and the National Credit Union Administration exceed the maximum amount specified under subparagraph (C), the sums transferred to the 

Federal Deposit Insurance Corporation and the National 

Credit Union Administration, respectively, shall be in proportion to the amount of payments required under subsection (a)(1) and (b)(1) of section 2 of the Hurricane Check 

Cashing Relief Act of 2005, respectively. 

(B) ALLOCATION BY FEDERAL RESERVE BOARD.—Of the 

total amount required to be paid by the Federal reserve 

banks, the Board of Governors of the Federal Reserve System shall determine the amount each such bank shall pay. 

(C) MAXIMUM AMOUNT.—The total amount transferred 

under subparagraph (A) from all Federal reserve banks 

shall not exceed $200,000,000. 

(D) REPLENISHMENT OF SURPLUS FUND PROHIBITED.—No 

Federal reserve bank may replenish such bank’s surplus 

13 

fund by the amount of any transfer by such bank under 

subparagraph (A). 

* * * * * * * 

Æ