19–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–50

FEDERAL DEPOSIT INSURANCE REFORM ACT OF 2003

MARCH 27, 2003.—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 

together with 

SUPPLEMENTAL AND DISSENTING VIEWS 

[To accompany H.R. 522]

The Committee on Financial Services, to whom was referred the 

bill (H.R. 522) to reform the Federal deposit insurance system, 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 .............................................................................................................. 1

Purpose and Summary ............................................................................................ 20

Background and Need for Legislation .................................................................... 20

Hearings ................................................................................................................... 23

Committee Consideration ........................................................................................ 23

Committee Votes ...................................................................................................... 23

Committee Oversight Findings ............................................................................... 23

Performance Goals and Objectives ......................................................................... 24

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 24

Committee Cost Estimate ....................................................................................... 24

Congressional Budget Office Cost Estimate .......................................................... 24, 31

Federal Mandates Statement ................................................................................. 31

Constitutional Authority Statement ...................................................................... 31

Applicability to Legislative Branch ........................................................................ 32

Section-by-Section Analysis .................................................................................... 32

Changes in Existing Law Made by the Bill, as Reported ..................................... 38

Supplemental and Dissenting Views.................................................................. 120, 121

AMENDMENT

The amendment is as follows: 

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Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Federal Deposit Insurance Reform Act of 2003’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Merging the BIF and SAIF. 

Sec. 3. Increase in deposit insurance coverage. 

Sec. 4. Setting assessments and repeal of special rules relating to minimum assessments and free deposit insurance. Sec. 5. Replacement of fixed designated reserve ratio with reserve range. 

Sec. 6. Requirements applicable to the risk-based assessment system. 

Sec. 7. Refunds, dividends, and credits from Deposit Insurance Fund. 

Sec. 8. Deposit Insurance Fund restoration plans. 

Sec. 9. Regulations required. 

Sec. 10. Studies of FDIC structure and expenses and certain activities and further possible changes to deposit 

insurance system. 

Sec. 11. Bi-annual FDIC survey and report on increasing the deposit base by encouraging use of depository institutions by the unbanked. 

Sec. 12. Technical and conforming amendments to the Federal Deposit Insurance Act relating to the merger 

of the BIF and SAIF. 

Sec. 13. Other technical and conforming amendments relating to the merger of the BIF and SAIF.

SEC. 2. MERGING THE BIF AND SAIF. 

(a) IN GENERAL.—

(1) MERGER.—The Bank Insurance Fund and the Savings Association Insurance Fund shall be merged into the Deposit Insurance Fund. 

(2) DISPOSITION OF ASSETS AND LIABILITIES.—All assets and liabilities of the 

Bank Insurance Fund and the Savings Association Insurance Fund shall be 

transferred to the Deposit Insurance Fund. 

(3) NO SEPARATE EXISTENCE.—The separate existence of the Bank Insurance 

Fund and the Savings Association Insurance Fund shall cease on the effective 

date of the merger thereof under this section. 

(b) REPEAL OF OUTDATED MERGER PROVISION.—Section 2704 of the Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) is repealed. 

(c) EFFECTIVE DATE.—This section shall take effect on the first day of the first 

calendar quarter that begins after the end of the 90-day period beginning on the 

date of the enactment of this Act. 

SEC. 3. INCREASE IN DEPOSIT INSURANCE COVERAGE. 

(a) IN GENERAL.—Section 11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(a)(1)) is amended—

(1) by striking subparagraph (B) and inserting the following new subparagraph: 

‘‘(B) NET AMOUNT OF INSURED DEPOSIT.—The net amount due to any depositor at an insured depository institution shall not exceed the standard 

maximum deposit insurance amount as determined in accordance with subparagraphs (C), (D), (E) and (F) and paragraph (3).’’; and 

(2) by adding at the end the following new subparagraphs: 

‘‘(E) STANDARD MAXIMUM DEPOSIT INSURANCE AMOUNT DEFINED.—For purposes of this Act, the term ‘standard maximum deposit insurance amount’

means—

‘‘(i) until the effective date of final regulations prescribed pursuant to 

section 9(a)(2) of the Federal Deposit Insurance Reform Act of 2003, 

$100,000; and 

‘‘(ii) on and after such effective date, $130,000, adjusted as provided 

under subparagraph (F). 

‘‘(F) INFLATION ADJUSTMENT.—

‘‘(i) IN GENERAL.—By April 1 of 2005, and the 1st day of each subsequent 5-year period, the Board of Directors and the National Credit 

Union Administration Board shall jointly prescribe the amount by 

which the standard maximum deposit insurance amount and the standard maximum share insurance amount (as defined in section 207(k) of 

the Federal Credit Union Act) applicable to any depositor at an insured 

depository institution shall be increased by calculating the product of—

‘‘(I) $130,000; and 

‘‘(II) the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any successor index thereto), published 

by the Department of Commerce, as of December 31 of the year 

preceding the year in which the adjustment is calculated under 

this clause, to the value of such index as of the date this subparagraph takes effect. 

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‘‘(ii) ROUNDING.—If the amount determined under clause (ii) for any 

period is not a multiple of $10,000, the amount so determined shall be 

rounded to the nearest $10,000. 

‘‘(iii) PUBLICATION AND REPORT TO THE CONGRESS.—Not later than 

April 5 of any calendar year in which an adjustment is required to be 

calculated under clause (i) to the standard maximum deposit insurance 

amount and the standard maximum share insurance amount under 

such clause, the Board of Directors and the National Credit Union Administration Board shall—

‘‘(I) publish in the Federal Register the standard maximum deposit insurance amount, the standard maximum share insurance 

amount, and the amount of coverage under paragraph (3)(A) and 

section 207(k)(3) of the Federal Credit Union Act, as so calculated; 

and 

‘‘(II) jointly submit a report to the Congress containing the 

amounts described in subclause (I). 

‘‘(iv) 6-MONTH IMPLEMENTATION PERIOD.—Unless an Act of Congress 

enacted before July 1 of the calendar year in which an adjustment is 

required to be calculated under clause (i) provides otherwise, the increase in the standard maximum deposit insurance amount and the 

standard maximum share insurance amount shall take effect on January 1 of the year immediately succeeding such calendar year.’’. 

(b) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT PLAN DEPOSITS.—Section 

11(a)(1)(D) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)(D)) is amended to read as follows: 

‘‘(D) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT PLAN DEPOSITS.—

‘‘(i) PASS-THROUGH INSURANCE.—The Corporation shall provide passthrough deposit insurance for the deposits of any employee benefit 

plan. 

‘‘(ii) PROHIBITION ON ACCEPTANCE OF BENEFIT PLAN DEPOSITS.—An insured depository institution that is not well capitalized or adequately 

capitalized may not accept employee benefit plan deposits. 

‘‘(iii) DEFINITIONS.—For purposes of this subparagraph, the following 

definitions shall apply: 

‘‘(I) CAPITAL STANDARDS.—The terms ‘well capitalized’ and ‘adequately capitalized’ have the same meanings as in section 38. 

‘‘(II) EMPLOYEE BENEFIT PLAN.—The term ‘employee benefit plan’

has the same meaning as in paragraph (8)(B)(ii), and includes any 

eligible deferred compensation plan described in section 457 of the 

Internal Revenue Code of 1986. 

‘‘(III) PASS-THROUGH DEPOSIT INSURANCE.—The term ‘passthrough deposit insurance’ means, with respect to an employee 

benefit plan, deposit insurance coverage provided on a pro rata 

basis to the participants in the plan, in accordance with the interest of each participant.’’. 

(c) DOUBLING OF DEPOSIT INSURANCE FOR CERTAIN RETIREMENT ACCOUNTS.—Section 11(a)(3)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(3)(A)) is 

amended by striking ‘‘$100,000’’ and inserting ‘‘2 times the standard maximum deposit insurance amount (as determined under paragraph (1))’’. 

(d) INCREASED INSURANCE COVERAGE FOR MUNICIPAL DEPOSITS.—Section 11(a)(2) 

of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(2)) is amended—

(1) in subparagraph (A)—

(A) by moving the margins of clauses (i) through (v) 4 ems to the right; 

(B) by striking, in the matter following clause (v), ‘‘such depositor shall’’

and all that follows through the period; and 

(C) by striking the semicolon at the end of clause (v) and inserting a period; 

(2) by striking ‘‘(2)(A) Notwithstanding’’ and all that follows through ‘‘a depositor who is—’’ and inserting the following: 

‘‘(2) MUNICIPAL DEPOSITORS.—

‘‘(A) IN GENERAL.—Notwithstanding any limitation in this Act or in any 

other provision of law relating to the amount of deposit insurance available 

to any 1 depositor—

‘‘(i) a municipal depositor shall, for the purpose of determining the 

amount of insured deposits under this subsection, be deemed to be a 

depositor separate and distinct from any other officer, employee, or 

agent of the United States or any public unit referred to in subparagraph (E); and 

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‘‘(ii) except as provided in subparagraph (B), the deposits of a municipal depositor shall be insured in an amount equal to the standard 

maximum deposit insurance amount (as determined under paragraph 

(1)). ‘‘(B) IN-STATE MUNICIPAL DEPOSITORS.—In the case of the deposits of an 

in-State municipal depositor described in clause (ii), (iii), (iv), or (v) of subparagraph (E) at an insured depository institution, such deposits shall be 

insured in an amount not to exceed the lesser of— ‘‘(i) $2,000,000; or 

‘‘(ii) the sum of the standard maximum deposit insurance amount 

and 80 percent of the amount of any deposits in excess of the standard 

maximum deposit insurance amount. ‘‘(C) MUNICIPAL DEPOSIT PARITY.—No State may deny to insured depository institutions within its jurisdiction the authority to accept deposits insured under this paragraph, or prohibit the making of such deposits in such 

institutions by any in-State municipal depositor. ‘‘(D) IN-STATE MUNICIPAL DEPOSITOR DEFINED.—For purposes of this paragraph, the term ‘in-State municipal depositor’ means a municipal depositor 

that is located in the same State as the office or branch of the insured depository institution at which the deposits of that depositor are held. ‘‘(E) MUNICIPAL DEPOSITOR.—In this paragraph, the term ‘municipal depositor’ means a depositor that is—’’; 

(3) by striking ‘‘(B) The’’ and inserting the following: 

‘‘(F) AUTHORITY TO LIMIT DEPOSITS.—The’’; and 

(4) by striking ‘‘depositor referred to in subparagraph (A) of this paragraph’’

each place such term appears and inserting ‘‘municipal depositor’’. 

(e) TECHNICAL AND CONFORMING AMENDMENT RELATING TO INSURANCE OF TRUST

FUNDS.—Paragraphs (1) and (3) of section 7(i) of the Federal Deposit Insurance Act 

(12 U.S.C. 1817(i)) are each amended by striking ‘‘$100,000’’ and inserting ‘‘the 

standard maximum deposit insurance amount (as determined under section 

11(a)(1))’’. 

(f) OTHER TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Section 11(m)(6) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(m)(6)) is amended by striking ‘‘$100,000’’ and inserting ‘‘an amount equal 

to the standard maximum deposit insurance amount’’. 

(2) Subsection (a) of section 18 of the Federal Deposit Insurance Act (12 

U.S.C. 1828(a)) is amended to read as follows: 

‘‘(a) INSURANCE LOGO.—

‘‘(1) INSURED DEPOSITORY INSTITUTIONS.—

‘‘(A) IN GENERAL.—Each insured depository institution shall display at 

each place of business maintained by that institution a sign or signs relating to the insurance of the deposits of the institution, in accordance with 

regulations to be prescribed by the Corporation. 

‘‘(B) STATEMENT TO BE INCLUDED.—Each sign required under subparagraph (A) shall include a statement that insured deposits are backed by the 

full faith and credit of the United States Government. 

‘‘(2) REGULATIONS.—The Corporation shall prescribe regulations to carry out 

this subsection, including regulations governing the substance of signs required 

by paragraph (1) and the manner of display or use of such signs. 

‘‘(3) PENALTIES.—For each day that an insured depository institution continues to violate this subsection or any regulation issued under this subsection, 

it shall be subject to a penalty of not more than $100, which the Corporation 

may recover for its use.’’. 

(3) Section 43(d) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(d)) is 

amended by striking ‘‘$100,000’’ and inserting ‘‘an amount equal to the standard 

maximum deposit insurance amount’’. 

(4) Section 6 of the International Banking Act of 1978 (12 U.S.C. 3104) is 

amended—

(A) by striking ‘‘$100,000’’ each place such term appears and inserting 

‘‘an amount equal to the standard maximum deposit insurance amount’’; 

and 

(B) by adding at the end the following new subsection: 

‘‘(e) STANDARD MAXIMUM DEPOSIT INSURANCE AMOUNT DEFINED.—For purposes of 

this section, the term ‘standard maximum deposit insurance amount’ means the 

amount of the maximum amount of deposit insurance as determined under section 

11(a)(1) of the Federal Deposit Insurance Act.’’. 

(g) CONFORMING CHANGE TO CREDIT UNION SHARE INSURANCE FUND.—

(1) IN GENERAL.—Section 207(k) of the Federal Credit Union Act (12 U.S.C. 

1787(k)) is amended—

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(A) by striking ‘‘(k)(1)’’ and all that follows through the end of paragraph 

(1) and inserting the following: ‘‘(k) INSURED AMOUNTS PAYABLE.— ‘‘(1) NET INSURED AMOUNT.— ‘‘(A) IN GENERAL.—Subject to the provisions of paragraph (2), the net 

amount of share insurance payable to any member at an insured credit 

union shall not exceed the total amount of the shares or deposits in the 

name of the member (after deducting offsets), less any part thereof which 

is in excess of the standard maximum share insurance amount, as determined in accordance with this paragraph and paragraphs (5) and (6), and 

consistently with actions taken by the Federal Deposit Insurance Corporation under section 11(a) of the Federal Deposit Insurance Act. ‘‘(B) AGGREGATION.—Determination of the net amount of share insurance 

under subparagraph (A), shall be in accordance with such regulations as 

the Board may prescribe, and, in determining the amount payable to any 

member, there shall be added together all accounts in the credit union 

maintained by that member for that member’s own benefit, either in the 

member’s own name or in the names of others. ‘‘(C) AUTHORITY TO DEFINE THE EXTENT OF COVERAGE.—The Board may 

define, with such classifications and exceptions as it may prescribe, the extent of the share insurance coverage provided for member accounts, including member accounts in the name of a minor, in trust, or in joint tenancy.’’; 

(B) in paragraph (2)—

(i) in subparagraph (A)—

(I) in clauses (i) through (v), by moving the margins 4 ems to the 

right; 

(II) in the matter following clause (v), by striking ‘‘his account’’

and all that follows through the period; and 

(III) by striking the semicolon at the end of clause (v) and inserting a period; 

(ii) by striking ‘‘(2)(A) Notwithstanding’’ and all that follows through 

‘‘a depositor or member who is—’’ and inserting the following: 

‘‘(2) MUNICIPAL DEPOSITORS OR MEMBERS.—

‘‘(A) IN GENERAL.—Notwithstanding any limitation in this Act or in any 

other provision of law relating to the amount of insurance available to any 

1 depositor or member, deposits or shares of a municipal depositor or member shall be insured in an amount equal to the standard maximum share 

insurance amount (as determined under paragraph (5)), except as provided 

in subparagraph (B). 

‘‘(B) IN-STATE MUNICIPAL DEPOSITORS.—In the case of the deposits of an 

in-State municipal depositor described in clause (ii), (iii), (iv), or (v) of subparagraph (E) at an insured credit union, such deposits shall be insured in 

an amount equal to the lesser of—

‘‘(i) $2,000,000; or 

‘‘(ii) the sum of the standard maximum deposit insurance amount 

and 80 percent of the amount of any deposits in excess of the standard 

maximum deposit insurance amount. 

‘‘(C) RULE OF CONSTRUCTION.—No provision of this paragraph shall be 

construed as authorizing an insured credit union to accept the deposits of 

a municipal depositor in an amount greater than such credit union is authorized to accept under any other provision of Federal or State law. 

‘‘(D) IN-STATE MUNICIPAL DEPOSITOR DEFINED.—For purposes of this paragraph, the term ‘in-State municipal depositor’ means a municipal depositor 

that is located in the same State as the office or branch of the insured credit union at which the deposits of that depositor are held. 

‘‘(E) MUNICIPAL DEPOSITOR.—In this paragraph, the term ‘municipal depositor’ means a depositor that is—’’; 

(iii) by striking ‘‘(B) The’’ and inserting the following: 

‘‘(F) AUTHORITY TO LIMIT DEPOSITS.—The’’; and 

(iv) by striking ‘‘depositor or member referred to in subparagraph 

(A)’’ and inserting ‘‘municipal depositor or member’’; and 

(C) by adding at the end the following new paragraphs: 

‘‘(4) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT PLAN DEPOSITS.—

‘‘(A) PASS-THROUGH INSURANCE.—The Administration shall provide passthrough share insurance for the deposits or shares of any employee benefit 

plan. 

‘‘(B) PROHIBITION ON ACCEPTANCE OF DEPOSITS.—An insured credit union 

that is not well capitalized or adequately capitalized may not accept employee benefit plan deposits. 

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‘‘(C) DEFINITIONS.—For purposes of this paragraph, the following definitions shall apply: 

‘‘(i) CAPITAL STANDARDS.—The terms ‘well capitalized’ and ‘adequately capitalized’ have the same meanings as in section 216(c). 

‘‘(ii) EMPLOYEE BENEFIT PLAN.—The term ‘employee benefit plan’—

‘‘(I) has the meaning given to such term in section 3(3) of the 

Employee Retirement Income Security Act of 1974; 

‘‘(II) includes any plan described in section 401(d) of the Internal 

Revenue Code of 1986; and 

‘‘(III) includes any eligible deferred compensation plan described 

in section 457 of the Internal Revenue Code of 1986. 

‘‘(iii) PASS-THROUGH SHARE INSURANCE.—The term ‘pass-through 

share insurance’ means, with respect to an employee benefit plan, insurance coverage provided on a pro rata basis to the participants in the 

plan, in accordance with the interest of each participant. 

‘‘(D) RULE OF CONSTRUCTION.—No provision of this paragraph shall be 

construed as authorizing an insured credit union to accept the deposits of 

an employee benefit plan in an amount greater than such credit union is 

authorized to accept under any other provision of Federal or State law. 

‘‘(5) STANDARD MAXIMUM SHARE INSURANCE AMOUNT DEFINED.—For purposes 

of this Act, the term ‘standard maximum share insurance amount’ means—

‘‘(A) until the effective date of final regulations prescribed pursuant to 

section 9(a)(2) of the Federal Deposit Insurance Reform Act of 2003, 

$100,000; and 

‘‘(B) on and after such effective date, $130,000, adjusted as provided 

under section 11(a)(1)(F) of the Federal Deposit Insurance Act.’’. 

(2) DOUBLING OF SHARE INSURANCE FOR CERTAIN RETIREMENT ACCOUNTS.—

Section 207(k)(3) of the Federal Credit Union Act (12 U.S.C. 1787(k)(3)) is 

amended by striking ‘‘$100,000’’ and inserting ‘‘2 times the standard maximum 

share insurance amount (as determined under paragraph (1))’’. 

(h) EFFECTIVE DATE.—This section and the amendments made by this section 

shall take effect on the date the final regulations required under section 9(a)(2) take 

effect. 

SEC. 4. SETTING ASSESSMENTS AND REPEAL OF SPECIAL RULES RELATING TO MINIMUM ASSESSMENTS AND FREE DEPOSIT INSURANCE. 

(a) SETTING ASSESSMENTS.—Section 7(b)(2) of the Federal Deposit Insurance Act 

(12 U.S.C. 1817(b)(2)) is amended—

(1) by striking subparagraphs (A) and (B) and inserting the following new 

subparagraphs: 

‘‘(A) IN GENERAL.—The Board of Directors shall set assessments for insured depository institutions in such amounts as the Board of Directors 

may determine to be necessary or appropriate, subject to subparagraph (D). 

‘‘(B) FACTORS TO BE CONSIDERED.—In setting assessments under subparagraph (A), the Board of Directors shall consider the following factors: 

‘‘(i) The estimated operating expenses of the Deposit Insurance Fund. 

‘‘(ii) The estimated case resolution expenses and income of the Deposit Insurance Fund. 

‘‘(iii) The projected effects of the payment of assessments on the capital and earnings of insured depository institutions. 

‘‘(iv) the risk factors and other factors taken into account pursuant 

to paragraph (1) under the risk-based assessment system, including the 

requirement under such paragraph to maintain a risk-based system. 

‘‘(v) Any other factors the Board of Directors may determine to be appropriate.’’; and 

(2) by inserting after subparagraph (C) the following new subparagraph: 

‘‘(D) BASE RATE FOR ASSESSMENTS.—

‘‘(i) IN GENERAL.—In setting assessment rates pursuant to subparagraph (A), the Board of Directors shall establish a base rate of not more 

than 1 basis point (exclusive of any credit or dividend) for those insured 

depository institutions in the lowest-risk category under the risk-based 

assessment system established pursuant to paragraph (1). No insured 

depository institution shall be barred from the lowest-risk category 

solely because of size. 

‘‘(ii) SUSPENSION.—Clause (i) shall not apply during any period in 

which the reserve ratio of the Deposit Insurance Fund is less than the 

amount which is equal to 1.15 percent of the aggregate estimated insured deposits.’’. 

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(b) ASSESSMENT RECORDKEEPING PERIOD SHORTENED.—Paragraph (5) of section 

7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)) is amended to read 

as follows: ‘‘(5) DEPOSITORY INSTITUTION REQUIRED TO MAINTAIN ASSESSMENT-RELATED

RECORDS.—Each insured depository institution shall maintain all records that 

the Corporation may require for verifying the correctness of any assessment on 

the insured depository institution under this subsection until the later of— ‘‘(A) the end of the 3-year period beginning on the due date of the assessment; or ‘‘(B) in the case of a dispute between the insured depository institution 

and the Corporation with respect to such assessment, the date of a final 

determination of any such dispute.’’. (c) INCREASE IN FEES FOR LATE ASSESSMENT PAYMENTS.—Subsection (h) of section 

18 of the Federal Deposit Insurance Act (12 U.S.C. 1828(h)) is amended to read as 

follows: ‘‘(h) PENALTY FOR FAILURE TO TIMELY PAY ASSESSMENTS.— ‘‘(1) IN GENERAL.—Any insured depository institution which fails or refuses to 

pay any assessment shall be subject to a penalty in an amount not more than 

1 percent of the amount of the assessment due for each day that such violation 

continues. ‘‘(2) EXCEPTION IN CASE OF DISPUTE.—Paragraph (1) shall not apply if—

‘‘(A) the failure to pay an assessment is due to a dispute between the insured depository institution and the Corporation over the amount of such 

assessment; and 

‘‘(B) the insured depository institution deposits security satisfactory to the 

Corporation for payment upon final determination of the issue. 

‘‘(3) AUTHORITY TO MODIFY OR REMIT PENALTY.—The Corporation, in the sole 

discretion of the Corporation, may compromise, modify or remit any penalty 

which the Corporation may assess or has already assessed under paragraph (1) 

upon a finding that good cause prevented the timely payment of an assessment.’’. 

(d) ASSESSMENTS FOR LIFELINE ACCOUNTS.—

(1) IN GENERAL.—Section 232 of the Federal Deposit Insurance Corporation 

Improvement Act of 1991 (12 U.S.C. 1834) is amended by striking subsection 

(c). 

(2) CLARIFICATION OF RATE APPLICABLE TO DEPOSITS ATTRIBUTABLE TO LIFE- LINE ACCOUNTS.—Section 7(b)(2)(H) of the Federal Deposit Insurance Act (12 

U.S.C. 1817(b)(2)(H)) is amended by striking ‘‘at a rate determined in accordance with such Act’’ and inserting ‘‘at 1⁄2 the assessment rate otherwise applicable for such insured depository institution’’. 

(3) REGULATIONS.—Section 232(a)(1) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 1834(a)(1)) is amended by striking 

‘‘Board of Governors of the Federal Reserve System, and the’’. 

(e) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Paragraph (3) of section 7(a) of the Federal Deposit Insurance Act (12 

U.S.C. 1817(a)(3)) is amended by striking the 3d sentence and inserting the following: ‘‘Such reports of condition shall be the basis for the certified statements 

to be filed pursuant to subsection (c).’’. 

(2) Subparagraphs (B)(ii) and (C) of section 7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) are each amended by striking ‘‘semiannual’’ 

where such term appears in each such subparagraph. 

(3) Section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)) 

is amended—

(A) by striking subparagraphs (E), (F), and (G); 

(B) in subparagraph (C), by striking ‘‘semiannual’’; and 

(C) by redesignating subparagraph (H) (as amended by subsection (e)(2) 

of this section) as subparagraph (E). 

(4) Section 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)) is 

amended by striking paragraph (4) and redesignating paragraphs (5) (as 

amended by subsection (b) of this section), (6), and (7) as paragraphs (4), (5), 

and (6) respectively. 

(5) Section 7(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(c)) is 

amended—

(A) in paragraph (1)(A), by striking ‘‘semiannual’’; 

(B) in paragraph (2)(A), by striking ‘‘semiannual’’; and 

(C) in paragraph (3), by striking ‘‘semiannual period’’ and inserting ‘‘initial assessment period’’. 

(6) Section 8(p) of the Federal Deposit Insurance Act (12 U.S.C. 1818(p)) is 

amended by striking ‘‘semiannual’’. 

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(7) Section 8(q) of the Federal Deposit Insurance Act (12 U.S.C. 1818(q)) is 

amended by striking ‘‘semiannual period’’ and inserting ‘‘assessment period’’. 

(8) Section 13(c)(4)(G)(ii)(II) of the Federal Deposit Insurance Act (12 U.S.C. 

1823(c)(4)(G)(ii)(II)) is amended by striking ‘‘semiannual period’’ and inserting 

‘‘assessment period’’. 

(9) Section 232(a) of the Federal Deposit Insurance Corporation Improvement 

Act of 1991 (12 U.S.C. 1834(a)) is amended—

(A) in the matter preceding subparagraph (A) of paragraph (2), by striking ‘‘the Board and’’; 

(B) in subparagraph (J) of paragraph (2), by striking ‘‘the Board’’ and inserting ‘‘the Corporation’’; 

(C) by striking subparagraph (A) of paragraph (3) and inserting the following new subparagraph: 

‘‘(A) CORPORATION.—The term ‘Corporation’ means the Federal Deposit 

Insurance Corporation.’’; and 

(D) in subparagraph (C) of paragraph (3), by striking ‘‘Board’’ and inserting ‘‘Corporation’’. 

(f) EFFECTIVE DATE.—This section and the amendments made by this section shall 

take effect on the date that the final regulations required under section 9(a)(5) take 

effect. 

SEC. 5. REPLACEMENT OF FIXED DESIGNATED RESERVE RATIO WITH RESERVE RANGE. 

(a) IN GENERAL.—Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 

1817(b)(3)) is amended to read as follows: 

‘‘(3) DESIGNATED RESERVE RATIO.—

‘‘(A) ESTABLISHMENT.—

‘‘(i) IN GENERAL.—The Board of Directors shall designate, by regulation after notice and opportunity for comment, the reserve ratio applicable with respect to the Deposit Insurance Fund. 

‘‘(ii) NOT LESS THAN ANNUAL REDETERMINATION.—A determination 

under clause (i) shall be made by the Board of Directors at least before 

the beginning of each calendar year, for such calendar year, and at 

such other times as the Board of Directors may determine to be appropriate. 

‘‘(B) RANGE.—The reserve ratio designated by the Board of Directors for 

any year—

‘‘(i) may not exceed 1.4 percent of estimated insured deposits; and 

‘‘(ii) may not be less than 1.15 percent of estimated insured deposits.

‘‘(C) FACTORS.—In designating a reserve ratio for any year, the Board of 

Directors shall—

‘‘(i) take into account the risk of losses to the Deposit Insurance Fund 

in such year and future years, including historic experience and potential and estimated losses from insured depository institutions; 

‘‘(ii) take into account economic conditions generally affecting insured 

depository institutions so as to allow the designated reserve ratio to increase during more favorable economic conditions and to decrease during less favorable economic conditions, notwithstanding the increased 

risks of loss that may exist during such less favorable conditions, as determined to be appropriate by the Board of Directors; 

‘‘(iii) seek to prevent sharp swings in the assessment rates for insured depository institutions; and 

‘‘(iv) take into account such other factors as the Board of Directors 

may determine to be appropriate, consistent with the requirements of 

this subparagraph. 

‘‘(D) PUBLICATION OF PROPOSED CHANGE IN RATIO.—In soliciting comment 

on any proposed change in the designated reserve ratio in accordance with 

subparagraph (A), the Board of Directors shall include in the published proposal a thorough analysis of the data and projections on which the proposal 

is based.’’. 

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 3(y) of the Federal Deposit Insurance Act (12 U.S.C. 1813(y)) is amended—

(1) by striking ‘‘(y) The term’’ and inserting ‘‘(y) DEFINITIONS RELATING TO DEPOSIT INSURANCE FUND.—

‘‘(1) DEPOSIT INSURANCE FUND.—The term’’; and 

(2) by inserting after paragraph (1) (as so designated by paragraph (1) of this 

subsection) the following new paragraph: 

‘‘(2) DESIGNATED RESERVE RATIO.—The term ‘designated reserve ratio’ means 

the reserve ratio designated by the Board of Directors in accordance with section 7(b)(3).’’. 

9

(c) EFFECTIVE DATE.—This section and the amendments made by this section 

shall take effect on the date that the final regulations required under section 9(a)(1) 

take effect. 

SEC. 6. REQUIREMENTS APPLICABLE TO THE RISK-BASED ASSESSMENT SYSTEM. 

Section 7(b)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) is 

amended by adding at the end the following new subparagraphs: 

‘‘(E) INFORMATION CONCERNING RISK OF LOSS AND ECONOMIC CONDITIONS.—

‘‘(i) SOURCES OF INFORMATION.—For purposes of determining risk of 

losses at insured depository institutions and economic conditions generally affecting depository institutions, the Corporation shall collect information, as appropriate, from all sources the Board of Directors considers appropriate, such as reports of condition, inspection reports, and 

other information from all Federal banking agencies, any information 

available from State bank supervisors, State insurance and securities 

regulators, the Securities and Exchange Commission (including information described in section 35), the Secretary of the Treasury, the 

Commodity Futures Trading Commission, the Farm Credit Administration, the Federal Trade Commission, any Federal reserve bank or Federal home loan bank, and other regulators of financial institutions, and 

any information available from credit rating entities, and other private 

economic or business analysts. 

‘‘(ii) CONSULTATION WITH FEDERAL BANKING AGENCIES.—

‘‘(I) IN GENERAL.—Except as provided in subclause (II), in assessing the risk of loss to the Deposit Insurance Fund with respect to 

any insured depository institution, the Corporation shall consult 

with the appropriate Federal banking agency of such institution. 

‘‘(II) TREATMENT ON AGGREGATE BASIS.—In the case of insured 

depository institutions that are well capitalized (as defined in section 38) and, in the most recent examination, were found to be well 

managed, the consultation under subclause (I) concerning the assessment of the risk of loss posed by such institutions may be made 

on an aggregate basis. 

‘‘(iii) RULE OF CONSTRUCTION.—No provision of this paragraph shall 

be construed as providing any new authority for the Corporation to require submission of information by insured depository institutions to 

the Corporation. 

‘‘(F) MODIFICATIONS TO THE RISK-BASED ASSESSMENT SYSTEM ALLOWED

ONLY AFTER NOTICE AND COMMENT.—In revising or modifying the risk-based 

assessment system at any time after the date of the enactment of the Federal Deposit Insurance Reform Act of 2003, the Board of Directors may implement such revisions or modification in final form only after notice and 

opportunity for comment.’’. 

SEC. 7. REFUNDS, DIVIDENDS, AND CREDITS FROM DEPOSIT INSURANCE FUND. 

(a) IN GENERAL.—Subsection (e) of section 7 of the Federal Deposit Insurance Act 

(12 U.S.C. 1817(e)) is amended to read as follows: 

‘‘(e) REFUNDS, DIVIDENDS, AND CREDITS.—

‘‘(1) REFUNDS OF OVERPAYMENTS.—In the case of any payment of an assessment by an insured depository institution in excess of the amount due to the 

Corporation, the Corporation may—

‘‘(A) refund the amount of the excess payment to the insured depository 

institution; or 

‘‘(B) credit such excess amount toward the payment of subsequent assessments until such credit is exhausted. 

‘‘(2) DIVIDENDS FROM EXCESS AMOUNTS IN DEPOSIT INSURANCE FUND.—

‘‘(A) RESERVE RATIO IN EXCESS OF 1.4 PERCENT OF ESTIMATED INSURED DEPOSITS.—Whenever the reserve ratio of the Deposit Insurance Fund exceeds 

1.4 percent of estimated insured deposits, the Corporation shall declare the 

amount in the Fund in excess of the amount required to maintain the reserve ratio at 1.4 percent of estimated insured deposits, as dividends to be 

paid to insured depository institutions. 

‘‘(B) RESERVE RATIO EQUAL TO OR IN EXCESS OF 1.35 PERCENT OF ESTIMATED INSURED DEPOSITS AND NOT MORE THAN 1.4 PERCENT.—Whenever the 

reserve ratio of the Deposit Insurance Fund equals or exceeds 1.35 percent 

of estimated insured deposits and is not more than 1.4 percent of such deposits, the Corporation shall declare the amount in the Fund that is equal 

to 50 percent of the amount in excess of the amount required to maintain 

10

the reserve ratio at 1.35 percent of the estimated insured deposits as dividends to be paid to insured depository institutions. ‘‘(C) BASIS FOR DISTRIBUTION OF DIVIDENDS.— ‘‘(i) IN GENERAL.—Solely for the purposes of dividend distribution 

under this paragraph and credit distribution under paragraph (3)(B), 

the Corporation shall determine each insured depository institution’s relative contribution to the Deposit Insurance Fund (or any predecessor 

deposit insurance fund) for calculating such institution’s share of any 

dividend or credit declared under this paragraph or paragraph (3)(B), 

taking into account the factors described in clause (ii). ‘‘(ii) FACTORS FOR DISTRIBUTION.—In implementing this paragraph 

and paragraph (3)(B) in accordance with regulations, the Corporation 

shall take into account the following factors: ‘‘(I) The ratio of the assessment base of an insured depository institution (including any predecessor) on December 31, 1996, to the 

assessment base of all eligible insured depository institutions on 

that date. ‘‘(II) The total amount of assessments paid on or after January 

1, 1997, by an insured depository institution (including any predecessor) to the Deposit Insurance Fund (and any predecessor deposit 

insurance fund). 

‘‘(III) That portion of assessments paid by an insured depository 

institution (including any predecessor) that reflects higher levels of 

risk assumed by such institution. 

‘‘(IV) Such other factors as the Corporation may determine to be 

appropriate. 

‘‘(D) NOTICE AND OPPORTUNITY FOR COMMENT.—The Corporation shall 

prescribe by regulation, after notice and opportunity for comment, the 

method for the calculation, declaration, and payment of dividends under 

this paragraph. 

‘‘(3) CREDIT POOL.—

‘‘(A) ONE-TIME CREDIT BASED ON TOTAL ASSESSMENT BASE AT YEAR-END

1996.—

‘‘(i) IN GENERAL.—Before the end of the 270-day period beginning on 

the date of the enactment of the Federal Deposit Insurance Reform Act 

of 2003, the Board of Directors shall, by regulation, provide for a credit 

to each eligible insured depository institution, based on the assessment 

base of the institution (including any predecessor institution) on December 31, 1996, as compared to the combined aggregate assessment 

base of all eligible insured depository institutions, taking into account 

such factors as the Board of Directors may determine to be appropriate. 

‘‘(ii) CREDIT LIMIT.—The aggregate amount of credits available under 

clause (i) to all eligible insured depository institutions shall equal the 

amount that the Corporation could collect if the Corporation imposed 

an assessment of 12 basis points on the combined assessment base of 

the Bank Insurance Fund and the Savings Association Insurance Fund 

as of December 31, 2001. 

‘‘(iii) ELIGIBLE INSURED DEPOSITORY INSTITUTION DEFINED.—For purposes of this paragraph, the term ‘eligible insured depository institution’ means any insured depository institution that—

‘‘(I) was in existence on December 31, 1996, and paid a deposit 

insurance assessment prior to that date; or 

‘‘(II) is a successor to any insured depository institution described 

in subclause (II). 

‘‘(iv) APPLICATION OF CREDITS.—

‘‘(I) IN GENERAL.—The amount of a credit to any eligible insured 

depository institution under this paragraph shall be applied by the 

Corporation, subject to subsection (b)(3)(e), to the assessments imposed on such institution under subsection (b) that become due for 

assessment periods beginning after the effective date of regulations 

prescribed under clause (i). 

‘‘(II) REGULATIONS.—The regulations prescribed under clause (i) 

shall establish the qualifications and procedures governing the application of assessment credits pursuant to subclause (I). 

‘‘(v) LIMITATION ON AMOUNT OF CREDIT FOR CERTAIN DEPOSITORY IN- STITUTIONS.—In the case of an insured depository institution that exhibits financial, operational, or compliance weaknesses ranging from 

moderately severe to unsatisfactory, or is not adequately capitalized (as 

defined in section 38) at the beginning of an assessment period, the 

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amount of any credit allowed under this paragraph against the assessment on that depository institution for such period may not exceed the 

amount calculated by applying to that depository institution the average assessment rate on all insured depository institutions for such assessment period. 

‘‘(vi) PREDECESSOR DEFINED.—For purposes of this paragraph, the 

term ‘predecessor’, when used with respect to any insured depository 

institution, includes any other insured depository institution acquired 

by or merged with such insured depository institution. 

‘‘(B) ON-GOING CREDIT POOL.—

‘‘(i) IN GENERAL.—In addition to the credit provided pursuant to subparagraph (A) and subject to the limitation contained in clause (v) of 

such subparagraph, the Corporation shall, by regulation, establish an 

on-going system of credits to be applied against future assessments 

under subsection (b)(1) on the same basis as the dividends provided 

under paragraph (2)(C). 

‘‘(ii) LIMITATION ON CREDITS UNDER CERTAIN CIRCUMSTANCES.—No 

credits may be awarded by the Corporation under this subparagraph 

during any period in which—

‘‘(I) the reserve ratio of the Deposit Insurance Fund is less than 

the designated reserve ratio of such Fund; or 

‘‘(II) the reserve ratio of the Fund is less than 1.25 percent of the 

amount of estimated insured deposits. 

‘‘(iii) CRITERIA FOR DETERMINATION.—In determining the amounts of 

any assessment credits under this subparagraph, the Board of Directors shall take into account the factors for designating the reserve ratio 

under subsection (b)(3) and the factors for setting assessments under 

subsection (b)(2)(B). 

‘‘(4) ADMINISTRATIVE REVIEW.—

‘‘(A) IN GENERAL.—The regulations prescribed under paragraph (2)(D) and 

subparagraphs (A) and (B) of paragraph (3) shall include provisions allowing an insured depository institution a reasonable opportunity to challenge 

administratively the amount of the credit or dividend determined under 

paragraph (2) or (3) for such institution. 

‘‘(B) ADMINISTRATIVE REVIEW.—Any review under subparagraph (A) of 

any determination of the Corporation under paragraph (2) or (3) shall be 

final and not subject to judicial review.’’. 

(b) DEFINITION OF RESERVE RATIO.—Section 3(y) of the Federal Deposit Insurance 

Act (12 U.S.C. 1813(y)) (as amended by section 5(b) of this Act) is amended by adding at the end the following new paragraph: 

‘‘(3) RESERVE RATIO.—The term ‘reserve ratio’, when used with regard to the 

Deposit Insurance Fund other than in connection with a reference to the designated reserve ratio, means the ratio of the net worth of the Deposit Insurance 

Fund to the value of the aggregate estimated insured deposits.’’. 

SEC. 8. DEPOSIT INSURANCE FUND RESTORATION PLANS. 

Section 7(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(3)) (as 

amended by section 5(a) of this Act) is amended by adding at the end the following 

new subparagraph: 

‘‘(E) DIF RESTORATION PLANS.—

‘‘(i) IN GENERAL.—Whenever—

‘‘(I) the Corporation projects that the reserve ratio of the Deposit 

Insurance Fund will, within 6 months of such determination, fall 

below the minimum amount specified in subparagraph (B)(ii) for 

the designated reserve ratio; or 

‘‘(II) the reserve ratio of the Deposit Insurance Fund actually 

falls below the minimum amount specified in subparagraph (B)(ii) 

for the designated reserve ratio without any determination under 

subclause (I) having been made, 

the Corporation shall establish and implement a Deposit Insurance 

Fund restoration plan within 90 days that meets the requirements of 

clause (ii) and such other conditions as the Corporation determines to 

be appropriate. 

‘‘(ii) REQUIREMENTS OF RESTORATION PLAN.—A Deposit Insurance 

Fund restoration plan meets the requirements of this clause if the plan 

provides that the reserve ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (B)(ii) for the designated reserve ratio before the end of the 10-year period beginning upon the implementation of the plan.

12

‘‘(iii) RESTRICTION ON ASSESSMENT CREDITS.—As part of any restoration plan under this subparagraph, the Corporation may elect to restrict the application of assessment credits provided under subsection 

(e)(3) for any period that the plan is in effect. ‘‘(iv) LIMITATION ON RESTRICTION.—Notwithstanding clause (iii), while 

any restoration plan under this subparagraph is in effect, the Corporation shall apply credits provided to an insured depository institution 

under subsection (e)(3) against any assessment imposed on the institution for any assessment period in an amount equal to the lesser of— ‘‘(I) the amount of the assessment; or 

‘‘(II) the amount equal to 3 basis points of the institution’s as- sessment base. ‘‘(v) TRANSPARENCY.—Not more than 30 days after the Corporation 

establishes and implements a restoration plan under clause (i), the Corporation shall publish in the Federal Register a detailed analysis of the 

factors considered and the basis for the actions taken with regard to 

the plan.’’. 

SEC. 9. REGULATIONS REQUIRED. 

(a) IN GENERAL.—Not later than 270 days after the date of the enactment of this 

Act, the Board of Directors of the Federal Deposit Insurance Corporation shall prescribe final regulations, after notice and opportunity for comment— (1) designating the reserve ratio for the Deposit Insurance Fund in accordance 

with section 7(b)(3) of the Federal Deposit Insurance Act (as amended by section 

5 of this Act); 

(2) implementing increases in deposit insurance coverage in accordance with 

the amendments made by section 3 of this Act; 

(3) implementing the dividend requirement under section 7(e)(2) of the Federal Deposit Insurance Act (as amended by section 7 of this Act). 

(4) implementing the 1-time assessment credit to certain insured depository 

institutions in accordance with section 7(e)(3) of the Federal Deposit Insurance 

Act, as amended by section 7 of this Act, including the qualifications and procedures under which the Corporation would apply assessment credits; and 

(5) providing for assessments under section 7(b) of the Federal Deposit Insurance Act, as amended by this Act. 

(b) RULE OF CONSTRUCTION.—No provision of this Act or any amendment made 

by this Act shall be construed as affecting the authority of the Corporation to set 

or collect deposit insurance assessments before the effective date of the final regulations prescribed under subsection (a).

SEC. 10. STUDIES OF FDIC STRUCTURE AND EXPENSES AND CERTAIN ACTIVITIES AND FURTHER POSSIBLE CHANGES TO DEPOSIT INSURANCE SYSTEM. 

(a) STUDY BY COMPTROLLER GENERAL.—

(1) STUDY REQUIRED.—The Comptroller General shall conduct a study of the 

following issues: 

(A) The efficiency and effectiveness of the administration of the prompt 

corrective action program under section 38 of the Federal Deposit Insurance 

Act by the Federal banking agencies (as defined in section 3 of such Act), 

including the degree of effectiveness of such agencies in identifying troubled 

depository institutions and taking effective action with respect to such institutions, and the degree of accuracy of the risk assessments made by the 

Corporation. 

(B) The appropriateness of the organizational structure of the Federal Deposit Insurance Corporation for the mission of the Corporation taking into 

account—

(i) the current size and complexity of the business of insured depository institutions (as such term is defined in section 3 of the Federal Deposit Insurance Act); 

(ii) the extent to which the organizational structure contributes to or 

reduces operational inefficiencies that increase operational costs; and 

(iii) the effectiveness of internal controls. 

(2) REPORT TO THE CONGRESS.—The Comptroller General shall submit a report to the Congress before the end of the 1-year period beginning on the date 

of the enactment of this Act containing the findings and conclusions of the 

Comptroller General with respect to the study required under paragraph (1) together with such recommendations for legislative or administrative action as 

the Comptroller General may determine to be appropriate. 

(b) INTERNAL STUDY BY THE FDIC.—

(1) STUDY REQUIRED.—Concurrently with the study required to be conducted 

by the Comptroller General under subsection (a), the Federal Deposit Insurance 

13

Corporation shall conduct an internal study of the same conditions and factors 

included in the study under subsection (a). 

(2) REPORT TO THE CONGRESS.—The Federal Deposit Insurance Corporation 

shall submit a report to the Congress before the end of the 1-year period beginning on the date of the enactment of this Act containing the findings and conclusions of the Corporation with respect to the study required under paragraph 

(1) together with such recommendations for legislative or administrative action 

as the Board of Directors of the Corporation may determine to be appropriate. 

(c) STUDY OF FURTHER POSSIBLE CHANGES TO DEPOSIT INSURANCE SYSTEM.—

(1) STUDY REQUIRED.—The Board of Directors of the Federal Deposit Insurance Corporation and the National Credit Union Administration Board shall 

each conduct a study of the following: 

(A) The feasibility of establishing a voluntary deposit insurance system 

for deposits in excess of the maximum amount of deposit insurance for any 

depositor and the potential benefits and the potential adverse consequences 

that may result from the establishment of any such system. 

(B) The feasibility of privatizing all deposit insurance at insured depository institutions and insured credit unions. 

(2) REPORT.—Before the end of the 1-year period beginning on the date of the 

enactment of this Act, the Board of Directors of the Federal Deposit Insurance 

Corporation and the National Credit Union Administration Board shall each 

submit a report to the Congress on the study required under paragraph (1) containing the findings and conclusions of the reporting agency together with such 

recommendations for legislative or administrative changes as the agency may 

determine to be appropriate. 

(d) STUDY REGARDING APPROPRIATE DEPOSIT BASE IN DESIGNATING RESERVE

RATIO.—

(1) STUDY REQUIRED.—The Federal Deposit Insurance Corporation shall conduct a study of the feasibility of using actual domestic deposits rather than estimated insured deposits in calculating the reserve ratio of the Deposit Insurance 

Fund and designating a reserve ratio for such Fund. 

(2) REPORT.—The Federal Deposit Insurance Corporation shall submit a report to the Congress before the end of the 1-year period beginning on the date 

of the enactment of this Act containing the findings and conclusions of the Corporation with respect to the study required under paragraph (1) together with 

such recommendations for legislative or administrative action as the Board of 

Directors of the Corporation may determine to be appropriate. 

(e) STUDY OF RESERVE METHODOLOGY AND ACCOUNTING FOR LOSS.—

(1) STUDY REQUIRED.—The Federal Deposit Insurance Corporation, in consultation with the Comptroller General, shall conduct a study of the reserve 

methodology and loss accounting used by the Corporation during the period beginning on January 1, 1992, and ending December 31, 2002, with respect to insured depository institutions in a troubled condition (as defined in the regulations prescribed pursuant to section 32(f) of the Federal Deposit Insurance Act). 

(2) FACTORS TO BE INCLUDED.—In conducting the study pursuant to paragraph (1), the Federal Deposit Insurance Corporation shall—

(A) consider the overall effectiveness and accuracy of the methodology 

used by the Corporation for establishing and maintaining reserves and estimating and accounting for losses at insured depository institutions, during 

the period described in such paragraph;

(B) consider the appropriateness and reliability of information and criteria used by the Corporation in determining—

(i) whether an insured depository institution was in a troubled condition; and 

(ii) the amount of any loss anticipated at such institution; 

(C) analyze the actual historical loss experience over the period described 

in paragraph (1) and the causes of the exceptionally high rate of losses experienced by the Corporation in the final 3 years of that period; and 

(D) rate the efforts of the Corporation to reduce losses in such 3-year period to minimally acceptable levels and to historical levels. 

(3) REPORT REQUIRED.—The Board of Directors of the Federal Deposit Insurance Corporation shall submit a report to the Congress before the end of the 

6-month period beginning on the date of the enactment of this Act, containing 

the findings and conclusions of the Corporation, in consultation with the Comptroller General, with respect to the study required under paragraph (1), together with such recommendations for legislative or administrative action as 

the Board of Directors may determine to be appropriate.

14

SEC. 11. BI-ANNUAL FDIC SURVEY AND REPORT ON INCREASING THE DEPOSIT BASE BY ENCOURAGING USE OF DEPOSITORY INSTITUTIONS BY THE UNBANKED. 

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by adding 

at the end the following new section: 

‘‘SEC. 49. BI-ANNUAL FDIC SURVEY AND REPORT ON ENCOURAGING USE OF DEPOSITORY INSTITUTIONS BY THE UNBANKED. 

‘‘(a) SURVEY REQUIRED.— ‘‘(1) IN GENERAL.—The Corporation shall conduct a bi-annual survey on efforts 

by insured depository institutions to bring those individuals and families who 

have rarely, if ever, held a checking account, a savings account or other type 

of transaction or check cashing account at an insured depository institution 

(hereafter in this section referred to as the ‘unbanked’) into the conventional finance system. 

‘‘(2) FACTORS AND QUESTIONS TO CONSIDER.—In conducting the survey, the 

Corporation shall take the following factors and questions into account: 

‘‘(A) To what extent do insured depository institutions promote financial 

education and financial literacy outreach? 

‘‘(B) Which financial education efforts appear to be the most effective in 

bringing ‘unbanked’ individuals and families into the conventional finance 

system? 

‘‘(C) What efforts are insured institutions making at converting 

‘unbanked’ money order, wire transfer, and international remittance customers into conventional account holders? 

‘‘(D) What cultural, language and identification issues as well as transaction costs appear to most prevent ‘unbanked’ individuals from establishing conventional accounts? 

‘‘(E) What is a fair estimate of the size and worth of the ‘unbanked’ market in the United States? 

‘‘(b) REPORTS.—The Chairperson of the Board of Directors shall submit a bi-annual report to the Committee on Financial Services of the House of Representatives 

and the Committee on Banking, Housing, and Urban Affairs of the Senate containing the Corporation’s findings and conclusions with respect to the survey conducted pursuant to subsection (a), together with such recommendations for legislative or administrative action as the Chairperson may determine to be appropriate.’’. 

SEC. 12. TECHNICAL AND CONFORMING AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT RELATING TO THE MERGER OF THE BIF AND SAIF. 

(a) IN GENERAL.—The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 

amended—

(1) in section 3 (12 U.S.C. 1813)—

(A) by striking subparagraph (B) of subsection (a)(1) and inserting the following new subparagraph: 

‘‘(B) includes any former savings association.’’; and 

(B) by striking paragraph (1) of subsection (y) (as so designated by section 

5(b) of this Act) and inserting the following new paragraph: 

‘‘(1) DEPOSIT INSURANCE FUND.—The term ‘Deposit Insurance Fund’ means 

the Deposit Insurance Fund established under section 11(a)(4).’’; 

(2) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking ‘‘the Bank Insurance 

Fund or the Savings Association Insurance Fund,’’ and inserting ‘‘the Deposit 

Insurance Fund,’’; 

(3) in section 5(c)(4), by striking ‘‘deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(4) in section 5(d) (12 U.S.C. 1815(d)), by striking paragraphs (2) and (3) (and 

any funds resulting from the application of such paragraph (2) prior to its repeal shall be deposited into the general fund of the Deposit Insurance Fund); 

(5) in section 5(d)(1) (12 U.S.C. 1815(d)(1))—

(A) in subparagraph (A), by striking ‘‘reserve ratios in the Bank Insurance Fund and the Savings Association Insurance Fund as required by section 7’’ and inserting ‘‘the reserve ratio of the Deposit Insurance Fund’’; 

(B) by striking subparagraph (B) and inserting the following: 

‘‘(2) FEE CREDITED TO THE DEPOSIT INSURANCE FUND.—The fee paid by the depository institution under paragraph (1) shall be credited to the Deposit Insurance Fund.’’; 

(C) by striking ‘‘(1) UNINSURED INSTITUTIONS.—’’; and 

(D) by redesignating subparagraphs (A) and (C) as paragraphs (1) and 

(3), respectively, and moving the left margins 2 ems to the left; 

(6) in section 5(e) (12 U.S.C. 1815(e))—

(A) in paragraph (5)(A), by striking ‘‘Bank Insurance Fund or the Savings 

Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

15

(B) by striking paragraph (6); and 

(C) by redesignating paragraphs (7), (8), and (9) as paragraphs (6), (7), 

and (8), respectively; 

(7) in section 6(5) (12 U.S.C. 1816(5)), by striking ‘‘Bank Insurance Fund or 

the Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance 

Fund’’; 

(8) in section 7(b) (12 U.S.C. 1817(b))— (A) in paragraph (1)(C), by striking ‘‘deposit insurance fund’’ each place 

that term appears and inserting ‘‘Deposit Insurance Fund’’; 

(B) in paragraph (1)(D), by striking ‘‘each deposit insurance fund’’ and inserting ‘‘the Deposit Insurance Fund’’; and 

(C) in paragraph (5) (as so redesignated by section 4(e)(4) of this Act)— (i) by striking ‘‘any such assessment’’ and inserting ‘‘any such assessment is necessary’’; 

(ii) by striking subparagraph (B); 

(iii) in subparagraph (A)— (I) by striking ‘‘(A) is necessary—’’; 

(II) by striking ‘‘Bank Insurance Fund members’’ and inserting ‘‘insured depository institutions’’; and 

(III) by redesignating clauses (i), (ii), and (iii) as subparagraphs 

(A), (B), and (C), respectively, and moving the margins 2 ems to the 

left; and 

(iv) in subparagraph (C) (as so redesignated)—

(I) by inserting ‘‘that’’ before ‘‘the Corporation’’; and 

(II) by striking ‘‘; and’’ and inserting a period; 

(9) in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by striking ‘‘Bank Insurance 

Fund or the Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(10) in section 8(t)(2)(C) (12 U.S.C. 1818(t)(2)(C)), by striking ‘‘deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(11) in section 11 (12 U.S.C. 1821)—

(A) by striking ‘‘deposit insurance fund’’ each place that term appears and 

inserting ‘‘Deposit Insurance Fund’’; 

(B) by striking paragraph (4) of subsection (a) and inserting the following 

new paragraph: 

‘‘(4) DEPOSIT INSURANCE FUND.—

‘‘(A) ESTABLISHMENT.—There is established the Deposit Insurance Fund, 

which the Corporation shall—

‘‘(i) maintain and administer; 

‘‘(ii) use to carry out its insurance purposes, in the manner provided 

by this subsection; and 

‘‘(iii) invest in accordance with section 13(a). 

‘‘(B) USES.—The Deposit Insurance Fund shall be available to the Corporation for use with respect to insured depository institutions the deposits 

of which are insured by the Deposit Insurance Fund. 

‘‘(C) LIMITATION ON USE.—Notwithstanding any provision of law other 

than section 13(c)(4)(G), the Deposit Insurance Fund shall not be used in 

any manner to benefit any shareholder or affiliate (other than an insured 

depository institution that receives assistance in accordance with the provisions of this Act) of—

‘‘(i) any insured depository institution for which the Corporation has 

been appointed conservator or receiver, in connection with any type of 

resolution by the Corporation; 

‘‘(ii) any other insured depository institution in default or in danger 

of default, in connection with any type of resolution by the Corporation; 

or 

‘‘(iii) any insured depository institution, in connection with the provision of assistance under this section or section 13 with respect to such 

institution, except that this clause shall not prohibit any assistance to 

any insured depository institution that is not in default, or that is not 

in danger of default, that is acquiring (as defined in section 13(f)(8)(B)) 

another insured depository institution. 

‘‘(D) DEPOSITS.—All amounts assessed against insured depository institutions by the Corporation shall be deposited into the Deposit Insurance 

Fund.’’; 

(C) by striking paragraphs (5), (6), and (7) of subsection (a); and 

(D) by redesignating paragraph (8) of subsection (a) as paragraph (5); 

(12) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by striking ‘‘, except that—’’ and 

all that follows through the end of the paragraph and inserting a period; 

16

(13) in section 11(i)(3) (12 U.S.C. 1821(i)(3))— (A) by striking subparagraph (B); 

(B) by redesignating subparagraph (C) as subparagraph (B); and 

(C) in subparagraph (B) (as so redesignated), by striking ‘‘subparagraphs 

(A) and (B)’’ and inserting ‘‘subparagraph (A)’’; 

(14) in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by striking ‘‘institution, 

any’’ and inserting ‘‘institution, the’’; 

(15) in section 11A(a) (12 U.S.C. 1821a(a))— (A) in paragraph (2), by striking ‘‘LIABILITIES.—’’ and all that follows 

through ‘‘Except’’ and inserting ‘‘LIABILITIES.—Except’’; 

(B) by striking paragraph (2)(B); and 

(C) in paragraph (3), by striking ‘‘the Bank Insurance Fund, the Savings 

Association Insurance Fund,’’ and inserting ‘‘the Deposit Insurance Fund’’; 

(16) in section 11A(b) (12 U.S.C. 1821a(b)), by striking paragraph (4); 

(17) in section 11A(f) (12 U.S.C. 1821a(f)), by striking ‘‘Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(18) in section 12(f)(4)(E)(iv) (12 U.S.C. 1822(f)(4)(E)(iv)), by striking ‘‘Federal 

deposit insurance funds’’ and inserting ‘‘the Deposit Insurance Fund (or any 

predecessor deposit insurance fund)’’; 

(19) in section 13 (12 U.S.C. 1823)— (A) by striking ‘‘deposit insurance fund’’ each place that term appears and 

inserting ‘‘Deposit Insurance Fund’’; 

(B) in subsection (a)(1), by striking ‘‘Bank Insurance Fund, the Savings 

Association Insurance Fund,’’ and inserting ‘‘Deposit Insurance Fund’’; 

(C) in subsection (c)(4)(E)—

(i) in the subparagraph heading, by striking ‘‘FUNDS’’ and inserting 

‘‘FUND’’; and 

(ii) in clause (i), by striking ‘‘any insurance fund’’ and inserting ‘‘the 

Deposit Insurance Fund’’; 

(D) in subsection (c)(4)(G)(ii)—

(i) by striking ‘‘appropriate insurance fund’’ and inserting ‘‘Deposit 

Insurance Fund’’; 

(ii) by striking ‘‘the members of the insurance fund (of which such institution is a member)’’ and inserting ‘‘insured depository institutions’’; 

(iii) by striking ‘‘each member’s’’ and inserting ‘‘each insured depository institution’s’’; and 

(iv) by striking ‘‘the member’s’’ each place that term appears and inserting ‘‘the institution’s’’; 

(E) in subsection (c), by striking paragraph (11); 

(F) in subsection (h), by striking ‘‘Bank Insurance Fund’’ and inserting 

‘‘Deposit Insurance Fund’’;

(G) in subsection (k)(4)(B)(i), by striking ‘‘Savings Association Insurance 

Fund member’’ and inserting ‘‘savings association’’; and 

(H) in subsection (k)(5)(A), by striking ‘‘Savings Association Insurance 

Fund members’’ and inserting ‘‘savings associations’’; 

(20) in section 14(a) (12 U.S.C. 1824(a)), in the 5th sentence—

(A) by striking ‘‘Bank Insurance Fund or the Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; and 

(B) by striking ‘‘each such fund’’ and inserting ‘‘the Deposit Insurance 

Fund’’; 

(21) in section 14(b) (12 U.S.C. 1824(b)), by striking ‘‘Bank Insurance Fund 

or Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance 

Fund’’; 

(22) in section 14(c) (12 U.S.C. 1824(c)), by striking paragraph (3); 

(23) in section 14(d) (12 U.S.C. 1824(d))—

(A) by striking ‘‘Bank Insurance Fund member’’ each place that term appears and inserting ‘‘insured depository institution’’; 

(B) by striking ‘‘Bank Insurance Fund members’’ each place that term appears and inserting ‘‘insured depository institutions’’; 

(C) by striking ‘‘Bank Insurance Fund’’ each place that term appears 

(other than in connection with a reference to a term amended by subparagraph (A) or (B) of this paragraph) and inserting ‘‘Deposit Insurance Fund’’; 

(D) by striking the subsection heading and inserting the following: 

‘‘(d) BORROWING FOR THE DEPOSIT INSURANCE FUND FROM INSURED DEPOSITORY

INSTITUTIONS.—’’; 

(E) in paragraph (3), in the paragraph heading, by striking ‘‘BIF’’ and inserting ‘‘THE DEPOSIT INSURANCE FUND’’; and 

(F) in paragraph (5), in the paragraph heading, by striking ‘‘BIF MEMBERS’’ and inserting ‘‘INSURED DEPOSITORY INSTITUTIONS’’; 

17

(24) in section 14 (12 U.S.C. 1824), by adding at the end the following new 

subsection: 

‘‘(e) BORROWING FOR THE DEPOSIT INSURANCE FUND FROM FEDERAL HOME LOAN

BANKS.—

‘‘(1) IN GENERAL.—The Corporation may borrow from the Federal home loan 

banks, with the concurrence of the Federal Housing Finance Board, such funds 

as the Corporation considers necessary for the use of the Deposit Insurance 

Fund. 

‘‘(2) TERMS AND CONDITIONS.—Any loan from any Federal home loan bank 

under paragraph (1) to the Deposit Insurance Fund shall—

‘‘(A) bear a rate of interest of not less than the current marginal cost of 

funds to that bank, taking into account the maturities involved; 

‘‘(B) be adequately secured, as determined by the Federal Housing Finance Board; 

‘‘(C) be a direct liability of the Deposit Insurance Fund; and 

‘‘(D) be subject to the limitations of section 15(c).’’; 

(25) in section 15(c)(5) (12 U.S.C. 1825(c)(5))—

(A) by striking ‘‘the Bank Insurance Fund or Savings Association Insurance Fund, respectively’’ each place that term appears and inserting ‘‘the 

Deposit Insurance Fund’’; and 

(B) in subparagraph (B), by striking ‘‘the Bank Insurance Fund or the 

Savings Association Insurance Fund, respectively’’ and inserting ‘‘the Deposit Insurance Fund’’; 

(26) in section 17(a) (12 U.S.C. 1827(a))—

(A) in the subsection heading, by striking ‘‘BIF, SAIF,’’ and inserting ‘‘THE

DEPOSIT INSURANCE FUND’’; and 

(B) in paragraph (1)—

(i) by striking ‘‘the Bank Insurance Fund, the Savings Association Insurance Fund,’’ each place that term appears and inserting ‘‘the Deposit Insurance Fund’’; and 

(ii) in subparagraph (D), by striking ‘‘each insurance fund’’ and inserting ‘‘the Deposit Insurance Fund’’; 

(27) in section 17(d) (12 U.S.C. 1827(d)), by striking ‘‘, the Bank Insurance 

Fund, the Savings Association Insurance Fund,’’ each place that term appears 

and inserting ‘‘the Deposit Insurance Fund’’; 

(28) in section 18(m)(3) (12 U.S.C. 1828(m)(3))—

(A) by striking ‘‘Savings Association Insurance Fund’’ in the 1st sentence 

of subparagraph (A) and inserting ‘‘Deposit Insurance Fund’’; 

(B) by striking ‘‘Savings Association Insurance Fund member’’ in the last 

sentence of subparagraph (A) and inserting ‘‘savings association’’; and 

(C) by striking ‘‘Savings Association Insurance Fund or the Bank Insurance Fund’’ in subparagraph (C) and inserting ‘‘Deposit Insurance Fund’’; 

(29) in section 18(o) (12 U.S.C. 1828(o)), by striking ‘‘deposit insurance funds’’

and ‘‘deposit insurance fund’’ each place those terms appear and inserting ‘‘Deposit Insurance Fund’’; 

(30) in section 18(p) (12 U.S.C. 1828(p)), by striking ‘‘deposit insurance funds’’

and inserting ‘‘Deposit Insurance Fund’’; 

(31) in section 24 (12 U.S.C. 1831a)—

(A) in subsections (a)(1) and (d)(1)(A), by striking ‘‘appropriate deposit insurance fund’’ each place that term appears and inserting ‘‘Deposit Insurance Fund’’; 

(B) in subsection (e)(2)(A), by striking ‘‘risk to’’ and all that follows 

through the period and inserting ‘‘risk to the Deposit Insurance Fund.’’; and

(C) in subsections (e)(2)(B)(ii) and (f)(6)(B), by striking ‘‘the insurance 

fund of which such bank is a member’’ each place that term appears and 

inserting ‘‘the Deposit Insurance Fund’’; 

(32) in section 28 (12 U.S.C. 1831e), by striking ‘‘affected deposit insurance 

fund’’ each place that term appears and inserting ‘‘Deposit Insurance Fund’’; 

(33) by striking section 31 (12 U.S.C. 1831h); 

(34) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by striking ‘‘affected deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(35) in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by striking ‘‘insurance 

funds’’ and inserting ‘‘Deposit Insurance Fund’’; 

(36) in section 38 (12 U.S.C. 1831o), by striking ‘‘the deposit insurance fund’’

each place that term appears and inserting ‘‘the Deposit Insurance Fund’’; 

(37) in section 38(a) (12 U.S.C. 1831o(a)), in the subsection heading, by striking ‘‘FUNDS’’ and inserting ‘‘FUND’’; 

(38) in section 38(k) (12 U.S.C. 1831o(k))—

18

(A) in paragraph (1), by striking ‘‘a deposit insurance fund’’ and inserting ‘‘the Deposit Insurance Fund’’; 

(B) in paragraph (2), by striking ‘‘A deposit insurance fund’’ and inserting ‘‘The Deposit Insurance Fund’’; and 

(C) in paragraphs (2)(A) and (3)(B), by striking ‘‘the deposit insurance 

fund’s outlays’’ each place that term appears and inserting ‘‘the outlays of 

the Deposit Insurance Fund’’; and 

(39) in section 38(o) (12 U.S.C. 1831o(o))— (A) by striking ‘‘ASSOCIATIONS.—’’ and all that follows through ‘‘Subsections (e)(2)’’ and inserting ‘‘ASSOCIATIONS.—Subsections (e)(2)’’; 

(B) by redesignating subparagraphs (A), (B), and (C) as paragraphs (1), 

(2), and (3), respectively, and moving the margins 2 ems to the left; and 

(C) in paragraph (1) (as so redesignated), by redesignating clauses (i) and 

(ii) as subparagraphs (A) and (B), respectively, and moving the margins 2 

ems to the left. 

(b) EFFECTIVE DATE.—This section and the amendments made by this section 

shall take effect on the first day of the first calendar quarter that begins after the 

end of the 90-day period beginning on the date of the enactment of this Act. 

SEC. 13. OTHER TECHNICAL AND CONFORMING AMENDMENTS RELATING TO THE MERGER OF 

THE BIF AND SAIF. 

(a) SECTION 5136 OF THE REVISED STATUTES.—The paragraph designated the ‘‘Eleventh’’ of section 5136 of the Revised Statutes of the United States (12 U.S.C. 

24) is amended in the 5th sentence, by striking ‘‘affected deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’. (b) INVESTMENTS PROMOTING PUBLIC WELFARE; LIMITATIONS ON AGGREGATE IN- VESTMENTS.—The 23d undesignated paragraph of section 9 of the Federal Reserve 

Act (12 U.S.C. 338a) is amended in the 4th sentence, by striking ‘‘affected deposit 

insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’. (c) ADVANCES TO CRITICALLY UNDERCAPITALIZED DEPOSITORY INSTITUTIONS.—Section 10B(b)(3)(A)(ii) of the Federal Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii)) is 

amended by striking ‘‘any deposit insurance fund in’’ and inserting ‘‘the Deposit Insurance Fund of’’. (d) AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL

ACT OF 1985.—Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit 

Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended— (1) by striking ‘‘Bank Insurance Fund’’ and inserting ‘‘Deposit Insurance 

Fund’’; and 

(2) by striking ‘‘Federal Deposit Insurance Corporation, Savings Association 

Insurance Fund (51–4066–0–3–373);’’. (e) AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT.—The Federal Home 

Loan Bank Act (12 U.S.C. 1421 et seq.) is amended— (1) in section 11(k) (12 U.S.C. 1431(k))— (A) in the subsection heading, by striking ‘‘SAIF’’ and inserting ‘‘THE DE- POSIT INSURANCE FUND’’; and 

(B) by striking ‘‘Savings Association Insurance Fund’’ each place such 

term appears and inserting ‘‘Deposit Insurance Fund’’; 

(2) in section 21 (12 U.S.C. 1441)— (A) in subsection (f)(2), by striking ‘‘, except that’’ and all that follows 

through the end of the paragraph and inserting a period; and 

(B) in subsection (k), by striking paragraph (4); 

(3) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by striking ‘‘affected deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(4) in section 21A(b)(6)(B) (12 U.S.C. 1441a(b)(6)(B))— (A) in the subparagraph heading, by striking ‘‘SAIF-INSURED BANKS’’ and 

inserting ‘‘CHARTER CONVERSIONS’’; and 

(B) by striking ‘‘Savings Association Insurance Fund member’’ and inserting ‘‘savings association’’; 

(5) in section 21A(b)(10)(A)(iv)(II) (12 U.S.C. 1441a(b)(10)(A)(iv)(II)), by striking ‘‘Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance 

Fund’’; 

(6) in section 21A(n)(6)(E)(iv) (12 U.S.C. 1441(n)(6)(E)(iv)), by striking ‘‘Federal deposit insurance funds’’ and inserting ‘‘the Deposit Insurance Fund’’; 

(7) in section 21B(e) (12 U.S.C. 1441b(e))—

(A) in paragraph (5), by inserting ‘‘as of the date of funding’’ after ‘‘Savings Association Insurance Fund members’’ each place that term appears; 

and 

(B) by striking paragraphs (7) and (8); and

(8) in section 21B(k) (12 U.S.C. 1441b(k))—

(A) by inserting before the colon ‘‘, the following definitions shall apply’’; 

19

(B) by striking paragraph (8); and 

(C) by redesignating paragraphs (9) and (10) as paragraphs (8) and (9), 

respectively. 

(f) AMENDMENTS TO THE HOME OWNERS’ LOAN ACT.—The Home Owners’ Loan Act 

(12 U.S.C. 1461 et seq.) is amended—

(1) in section 5 (12 U.S.C. 1464)—

(A) in subsection (c)(5)(A), by striking ‘‘that is a member of the Bank Insurance Fund’’; 

(B) in subsection (c)(6), by striking ‘‘As used in this subsection—’’ and inserting ‘‘For purposes of this subsection, the following definitions shall 

apply:’’; 

(C) in subsection (o)(1), by striking ‘‘that is a Bank Insurance Fund member’’; 

(D) in subsection (o)(2)(A), by striking ‘‘a Bank Insurance Fund member 

until such time as it changes its status to a Savings Association Insurance 

Fund member’’ and inserting ‘‘insured by the Deposit Insurance Fund’’; 

(E) in subsection (t)(5)(D)(iii)(II), by striking ‘‘affected deposit insurance 

fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(F) in subsection (t)(7)(C)(i)(I), by striking ‘‘affected deposit insurance 

fund’’ and inserting ‘‘Deposit Insurance Fund’’; and 

(G) in subsection (v)(2)(A)(i), by striking ‘‘the Savings Association Insurance Fund’’ and inserting ‘‘or the Deposit Insurance Fund’’; and 

(2) in section 10 (12 U.S.C. 1467a)—

(A) in subsection (c)(6)(D), by striking ‘‘this title’’ and inserting ‘‘this Act’’; 

(B) in subsection (e)(1)(B), by striking ‘‘Savings Association Insurance 

Fund or Bank Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(C) in subsection (e)(2), by striking ‘‘Savings Association Insurance Fund 

or the Bank Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

(D) in subsection (e)(4)(B), by striking ‘‘subsection (1)’’ and inserting ‘‘subsection (l)’’; 

(E) in subsection (g)(3)(A), by striking ‘‘(5) of this section’’ and inserting 

‘‘(5) of this subsection’’; 

(F) in subsection (i), by redesignating paragraph (5) as paragraph (4); 

(G) in subsection (m)(3), by striking subparagraph (E) and by redesignating subparagraphs (F), (G), and (H) as subparagraphs (E), (F), and (G), 

respectively; 

(H) in subsection (m)(7)(A), by striking ‘‘during period’’ and inserting 

‘‘during the period’’; and 

(I) in subsection (o)(3)(D), by striking ‘‘sections 5(s) and (t) of this Act’’

and inserting ‘‘subsections (s) and (t) of section 5’’. 

(g) AMENDMENTS TO THE NATIONAL HOUSING ACT.—The National Housing Act (12 

U.S.C. 1701 et seq.) is amended—

(1) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by striking ‘‘Bank Insurance Fund for banks or through the Savings Association Insurance Fund for 

savings associations’’ and inserting ‘‘Deposit Insurance Fund’’; and 

(2) in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f–14(b)(1)(B)(ii)), by striking 

‘‘Bank Insurance Fund for banks and through the Savings Association Insurance Fund for savings associations’’ and inserting ‘‘Deposit Insurance Fund’’. 

(h) AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989.—The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note) is amended—

(1) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by inserting ‘‘and after 

the merger of such funds, the Deposit Insurance Fund,’’ after ‘‘the Savings Association Insurance Fund,’’; and 

(2) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by striking ‘‘Bank Insurance Fund, the Savings Association Insurance Fund,’’ and inserting ‘‘Deposit Insurance Fund’’. 

(i) AMENDMENT TO THE BANK HOLDING COMPANY ACT OF 1956.—The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended—

(1) in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking ‘‘Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; and 

(2) in section 3(d)(1)(D)(iii) (12 U.S.C. 1842(d)(1)(D)(iii)), by striking ‘‘appropriate deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’. 

(j) AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.—Section 114 of the GrammLeach-Bliley Act (12 U.S.C. 1828a) is amended by striking ‘‘any Federal deposit insurance fund’’ in subsection (a)(1)(B), paragraphs (2)(B) and (4)(B) of subsection (b), 

and subsection (c)(1)(B), each place that term appears and inserting ‘‘the Deposit Insurance Fund’’. 

20

(k) EFFECTIVE DATE.—This section and the amendments made by this section 

shall take effect on the first day of the first calendar quarter that begins after the 

end of the 90-day period beginning on the date of the enactment of this Act.

PURPOSE AND SUMMARY

H.R. 522, the Federal Deposit Insurance Reform Act of 2003, will 

preserve the value of insured deposits at insured depository institutions, advance the national priority of enhancing retirement security for all Americans, and ensure that the value, benefit and costs 

of deposit insurance are allocated equitably and fairly. 

The bill merges the Bank Insurance Fund (BIF) and the Savings 

Association Insurance Fund (SAIF); increases the standard maximum deposit insurance limit from $100,000 to $130,000, and indexes it every 5 years for inflation; doubles the new coverage level 

for certain retirement accounts; and increases the coverage amount 

for in-State municipal deposits. Federally chartered credit unions 

are provided with parity in general standard maximum deposit insurance coverage, coverage for retirement accounts and municipal 

deposits. 

H.R. 522 removes legal constraints on the authority of the Federal Deposit Insurance Corporation (FDIC) to charge risk-based 

premium assessments, so that all insured depository institutions 

pay for the value and benefit of deposit insurance fairly and equitably. 

The legislation authorizes the FDIC to set the ratio of reserves 

to estimated insured deposits within a range of 1.15 to 1.40 percent, replacing the 1.25 percent ‘‘hard target’’ mandated by current 

law. 

The bill also returns assessments in the form of refunds, credits, 

and dividends to insured depository institutions. Dividends are provided to qualified insured depository institutions whenever specified reserve ratios are exceeded. 

Finally, the legislation directs the FDIC to study its administrative and managerial processes and alternative means for administering the deposit insurance system. These studies will ensure 

that the deposit insurance fund and the overall deposit insurance 

system are managed and operated as efficiently and as effectively 

as possible. 

BACKGROUND AND NEED FOR LEGISLATION

Federal deposit insurance was created by Congress in 1934 and 

significantly modified in 1989 and 1991 in response to the savings 

and loan and bank crises. All banks and savings associations are 

required to carry Federal deposit insurance. 

The National Credit Union Share Insurance Fund (NCUSIF) was 

created in 1970. This fund insures ‘‘share’’ accounts at credit 

unions and is administered by the National Credit Union Administration (NCUA). All Federally chartered credit unions must belong 

to NCUSIF; membership is optional for State chartered credit 

unions. 

Deposit insurance makes deposits safe by assuring depositors 

that up to $100,000 will be available to them to cover their deposits 

even if their insured depository institution fails. It protects depositors from a sudden and unforeseen loss of wealth. It also protects 

21

the economy due to a loss of liquidity in the financial services system. 

Currently, the FDIC provides deposit insurance through two 

funds, the BIF and the SAIF. These funds are maintained in the 

U.S. Treasury and both earn interest income from investment in 

non-marketable Treasury securities. 

The Federal deposit insurance system has served the Nation well 

for the last 69 years—public confidence and stability in the Nation’s banking system were preserved through one of the largest 

banking crises since the Federally insured deposit system originated. During the crisis of the 1980’s and the 1990’s, the FDIC and 

the Resolution Trust Corporation (RTC) resolved 2,362 failures of 

insured depository institutions involving more than $700 billion in 

assets, with no bank runs, no panics, no disruptions to the financial markets, and no debilitating impact on overall economic activity. 

After conducting a comprehensive study of the overall deposit insurance system, the FDIC published a report in April 2001 (Keeping the Promise: Recommendations for Deposit Insurance Reform, 

April 2001), that identified 4 structural deficiencies that warranted 

legislative consideration: 

(1) Deposit insurance is provided by two insurance funds at potentially different prices; 

(2) Under current law, deposit insurance cannot be priced effectively to reflect risk; 

(3) Deposit insurance premiums are highest at the wrong point 

in the business cycle; and 

(4) The value of insurance coverage does not keep pace with inflation. 

Hearings before the Subcommittee on Financial Institutions and 

Consumer Credit during the 107th Congress yielded a broad consensus among the Bush Administration, the Federal and State 

banking and thrift regulators, and industry and consumer groups 

that the deposit insurance system could be improved and strengthened to make it more responsive to the cyclical nature of lending 

and deposit taking activities and the post-Gramm-Leach-Bliley financial and economic environment. 

Merging the BIF and the SAIF eliminates potential disparities in 

bank and thrift risk-based premium assessments and the administrative burden of maintaining and operating two separate funds. 

Current law limits the ability of the FDIC to assess premiums 

on depository institutions above amounts needed to achieve and 

maintain the existing ratio of reserves to estimated insured deposits at 1.25 percent. Currently over 90 percent of the industry does 

not pay for deposit insurance, and more than 900 institutions that 

were chartered within the last 6 years have never paid any premiums. Current law also limits the FDIC’s ability to charge riskier 

institutions, new entrants, and institutions growing at excessive 

rates appropriate premiums based on the risks they present to the 

fund. The current premium restrictions require safer institutions to 

subsidize riskier institutions unnecessarily, and new entrants and 

institutions that undergo significant growth are allowed to avoid 

paying premiums. 

Further, the current system’s ‘‘pro-cyclical’’ bias results in sharply higher premiums being assessed at ‘‘down’’ points in the ecoVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR050.XXX HR050
22

nomic cycle, when banks can least afford to pay them and the economy could most benefit from additional liquidity in the banking 

system. 

These inequities are addressed in H.R. 522 by giving the FDIC 

greater discretion to identify the relative risks all institutions 

present to the deposit insurance fund and set appropriate riskbased premiums. With this authority, the FDIC can better manage 

the insurance fund relative to industry and economic cyclicality. 

The current deposit insurance system’s emphasis on maintaining 

the 1.25 percent designated reserve ratio (DRR) and the requirement that a 23 basis point premium be assessed whenever the 

DRR drops and remains below this level for a year is pro-cyclical 

and creates the potential for volatile premium swings. This problem would also more than likely result in the industry paying high 

premiums when both banks and the economy could least afford it, 

and it could sustain and deepen an economic downturn. 

The legislation gives the FDIC the discretion to set the DRR 

within a range of 1.15 to 1.40 percent, addressing the system’s volatility and avoiding sharp premium swings. This flexibility gives 

the FDIC better tools with which to manage the deposit insurance 

fund during various economic environments. 

The Committee found that the overall value of basic insurance 

coverage had eroded over the last 23 years. If coverage had kept 

pace with inflation since 1980, when levels were last adjusted, it 

would now be at more than $200,000; and if it were adjusted for 

the $40,000 coverage level in effect in 1974 and indexed for inflation from that point forward, the level would be more than 

$140,000. The Committee believes that increasing the maximum 

standard deposit insurance amount to $130,000 is a modest step 

and indexing the new amount every 5 years appropriately restores 

and maintains the value of deposit insurance coverage.

The current deposit insurance scheme provides inadequate protection for in-State municipal deposits and certain retirement account deposits. The legislation doubles the coverage limit for insured retirement account deposits in order to enhance the retirement security of senior citizens and those planning for retirement. 

Coverage limits for in-State municipal deposits are also significantly expanded to ensure that more municipal deposits can be 

kept in local financial institutions and used to meet local credit 

needs. 

In sum, this legislation will respond to these issues by: 

• preserving the value of insured deposits at insured depository 

institutions; 

• strengthening the Nation’s insured depository institutions, especially small banks, thrifts, and credit unions; 

• ensuring that the Federal deposit insurance system does not 

harm the ability of insured depository institutions to meet the Nation’s credit needs at all stages of the economic cycle; 

• ensuring that the Federal deposit insurance system remains 

strong and complements the Federal and State regulatory structure 

that helps to maintain the safety and soundness of the Nation’s 

banks, thrifts, and credit unions; 

• advancing the national priority of enhancing retirement security for all Americans; 

23

• ensuring that the value, benefit and costs of deposit insurance 

are allocated equitably and fairly; and, 

• modernizing the Federal deposit insurance system by merging 

the BIF with the SAIF and reinforcing the risk-based nature of the 

system. 

HEARINGS

The Committee on Financial Services held a legislative hearing 

on H.R. 522, the Federal Deposit Insurance Reform Act of 2003, on 

March 4, 2003, at which the Chairman of the Federal Deposit Insurance Corporation, Donald E. Powell, testified. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

March 13, 2003 and ordered H.R. 522 reported to the House with 

a favorable recommendation, with an amendment, by a 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. 

A motion by Mr. Oxley to report the bill to the House with a favorable recommendation was agreed to by a voice vote. 

The following amendments were considered: 

An amendment in the nature of a substitute by Mr. 

Oxley, no. 1, making technical changes and clarifying several provisions to the bill, was agreed to by a voice vote, 

as amended. 

An amendment to the amendment in the nature of a 

substitute offered by Mr. Ose, no. 1a, maintaining coverage 

at $100,000 per account and striking the inflation adjustment, part 1 (consisting of paragraphs 1 and 4), was not 

agreed to by a voice vote and part 2 (consisting of paragraphs 2, 3, 5, and 6), tripling coverage for retirement account from the base, was not agreed to by a voice vote. 

An amendment to the amendment in the nature of a 

substitute offered by Mr. Meeks of New York, no. 1b, requiring a reduction in dividends and credits for depository 

institutions that substantially dilute fund reserves, was 

withdrawn. 

An amendment to the amendment in the nature of a 

substitute offered by Mr. Gonzalez, no. 1c, requiring a biannual FDIC survey and report on the unbanked, was 

agreed to by a voice vote. 

An amendment to the amendment in the nature of a 

substitute offered by Mr. Royce, no. 1d, striking increase 

in deposit coverage, was not 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 made findings that are reflected 

in this report. 

24

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: 

The bill will improve the deposit insurance system while keeping 

it well-funded, as well as reflect more accurately the risks to the 

fund that are imposed by institutions. As a result, the fund will be 

less susceptible to problems caused by changes in the economy and 

will better serve depository institutions and depositors. 

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 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 of 1974 for H.R. 3717 in the 107th 

Congress and reprinted below as the Committee’s cost estimate. 

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 for H.R. 3717 in the 

107th Congress and reprinted below as the Committee’s cost estimate. The Committee further estimates that the estimated cost to 

the Federal government for fiscal year 2008 will be the same in 

both budget authority and outlays as fiscal year 2007.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 3717—Federal Deposit Insurance Reform Act of 2002

Summary: H.R. 3717 would amend provisions of banking and 

credit union law to reform the deposit insurance system. Specifically, the bill would increase insurance coverage for insured accounts from $100,000 per account to $130,000 for most accounts 

(with higher levels of coverage for retirement accounts and municipal deposits). Over time, the coverage limit for insured deposits 

would increase to account for inflation. Those provisions of the bill 

would affect deposits held by banks and thrifts, which are insured 

by the Federal Deposit Insurance Corporation (FDIC), as well as 

those held by credit unions, which are insured by the National 

Credit Union Administration (NCUA). In addition, the bill would 

merge the Bank Insurance Fund (BIF) and the Savings Association 

Insurance Fund (SAIF) to create a new Deposit Insurance Fund 

(DIF), to pay the claims of depositors of failed banks and thrifts. 

Finally, H.R. 3717 would amend the conditions under which banks 

and thrifts would pay insurance premiums to the FDIC, which administers the funds. 

CBO estimates that H.R. 3717 would increase both the costs of 

resolving failed financial institutions and the income from premiums paid by financial institutions. During the 2003–2012 period, 

the additional premiums that would be collected under the bill 

would more than offset the added spending. On balance, CBO estiVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00024 Fmt 6659 Sfmt 6602 E:\HR\OC\HR050.XXX HR050
25

mates that H.R. 3717 would reduce net direct spending by $700 

million over the 2003–2012 period. Because H.R. 3717 would affect 

direct spending, pay-as-you-go procedures would apply. 

H.R. 3717 contains an intergovernmental mandate as defined in 

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

that the costs, if any, to comply with the requirement would not 

exceed the threshold established in UMRA ($58 million in 2002, adjusted annually for inflation). 

The bill also contains private-sector mandates as defined by 

UMRA. CBO estimates that the direct cost of those mandates 

would be well above the annual threshold specified in UMRA ($115 

million in 2002, adjusted annually for inflation), but we do not 

have sufficient information to provide a precise estimate of the aggregate cost. 

Estimated cost to the Federal Government: The estimate budgetary impact of H.R. 3717 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—

2003 2004 2005 2006 2007

DIRECT SPENDING

FDIC and NCUA spending under current law: 

Estimated budget authority ............................................. ¥31 ¥33 ¥34 ¥35 ¥36 

Estimated outlays ............................................................ 1,662 1,337 1,544 1,746 1,694 

Proposed changes to FDIC spending: 

Estimated budget authority ............................................. 0 0 0 0 0 

Estimated outlays ............................................................ ¥1,000 ¥400 0 ¥50 200 

Proposed changes to NCUA spending: 

Estimated budget authority ............................................. 0 0 0 0 0 

Estimated outlays ............................................................ ¥500 25 25 ¥125 25 

Total changes under H.R. 3717: 

Estimated budget authority ............................................. 0 0 0 0 0 

Estimated outlays ............................................................ ¥1,500 ¥375 25 ¥175 225 

FDIC and NCUA spending under H.R. 3717: 

Estimated budget authority ............................................. ¥31 ¥33 ¥34 ¥35 ¥36 

Estimated outlays ............................................................ 162 962 1,569 1,571 1,919

Basis of estimate 

Two federal agencies are primarily responsible for the deposit insurance system. The FDIC insures the deposits in banks with the 

BIF and the deposits of thrifts with the SAIF. The National Credit 

Union Administration insures the deposits in credit unions (referred to as shares) with the Share Insurance Fund. When a financial institution fails, the FDIC and the NCUA use the insurance 

funds to reimburse the insured depositors of the failed institution. 

These agencies then sell the assets of the failed institution and deposit any money recovered into the insurance funds. CBO estimates that H.R. 3717 would increase both the cost of resolving 

failed banks and the premiums paid by financial institutions. Over 

the 2003–2012 period, we estimate that the added premiums paid 

by financial institutions would more than offset the increase in outlays to resolve failed financial institutions. Adding these effects together, we estimate that enacting H.R. 3717 would result in a net 

decrease in direct spending of about $700 million over the 2003–

2012 period. The major components of this estimate are explained 

below. 

26

Increase in the cost of resolving failed financial institutions 

H.R. 3717 would increase deposit insurance coverage from $100,000 to $130,000 for most accounts, and to $260,000 for employee benefit plans. Coverage for in-state municipal deposits 

would be the lesser of $5 million or 80 percent of any deposits 

above $130,000. Such increases would apply to deposits held by 

credit unions as well as banks and thrifts. In addition, the bill 

would require the FDIC and NCUA to increase deposit insurance 

coverage every five years beginning January 1, 2006, to account for 

inflation. (According to committee staff, the intent of section 3 of 

H.R. 3717 is to increase deposit insurance coverage in 2006 and 

2011 to account for inflation. Despite a drafting error in this section, CBO assumes that such increases would occur.) 

By 2003, we expect that insured deposits will total more than $3.2 trillion under current law. Based on information from the 

FDIC and the experience of past increases in deposit insurance coverage, CBO estimates that H.R. 3717 would increase the deposits 

insured by the FDIC by about $325 billion—or around 10 percent. CBO estimates that about $33 billion of that amount would result 

from new deposits attracted to banks and thrifts as a result of the 

expanded coverage, an increase of about 1 percent. We expect that 

the assets of failed banks and thrifts would increase correspondingly—by about 1 percent. In 2003, we expect assets of failed banks and thrifts to be $3.65 billion under current law; such assets would 

increase slightly under the bill. 

By insuring deposits that are currently uninsured, the bill would 

increase the liability of the FDIC and NCUA without significantly 

increasing the assets of institutions that will fail in the future. 

Under current law, we expect the FDIC’s net losses on failed institutions to total about $12.6 billion over the 2003–2012 period. (We project that gross losses of $51.0 billion would be offset, in part, by 

recoveries of $38.4 billion from disposition of the institutions’ assets.) Based on historical patterns of losses from failed institutions, 

CBO estimates that increasing insured deposits by about 10 percent would increase losses by about 10 percent over the long term. 

But over the next 10 years outlays would grow more rapidly because disposal of the assets of failed banks often takes many years. 

As a result, CBO estimates H.R. 3717 would increase the FDIC’s 

net outlays to resolve failed banks and thrifts by about $2.7 billion 

over the 2003–2012 period. Similarly, we estimate that enacting 

H.R. 3717 would increase NCUA’s net outlays to resolve failed credit unions by about $100 million over the 2003–2012 period. 

By increasing deposit insurance coverage, H.R. 3717 could reduce 

incentives of depositors to monitor the behavior of financial institutions. Over the long term, this could lead to increased risk-taking 

by those institutions and ultimately to higher losses. On the other 

hand, if the DIF incurs larger losses to resolve failed banks and 

thrifts, H.R. 3717 would give the FDIC the flexibility to set premiums so as to restore the balances in the fund over a few years, 

thus allowing the agency to recover from large losses without imperiling other institutions. This new authority could reduce future 

losses. CBO has no basis for estimating the magnitude of either of 

these effects. We expect, however, that any changes in the costs of 

resolving failed institutions would eventually be borne by banks 

and thrifts through premiums. 

27

Increase in premiums paid to the FDIC by financial institutions 

Several provisions of H.R. 3717 would affect the total amount of 

premiums collected by the FDIC. Increasing the size of insured accounts would lead to increased collections. Considered separately, 

merging the BIF and SAIF and providing the FDIC with increased 

discretion to set regulations for premium assessments would tend 

to reduce collections relative to CBO’s baseline assumptions. Finally, establishing credits that certain institutions could use to pay 

the FDIC assessments in lieu of cash would also reduce collections. 

The amount of additional premiums that banks and thrifts would 

pay through the combined effects of all these provisions of H.R. 

3717 would depend on the DIF’s balance in each year, which in 

turn would depend on the costs of resolving failed institutions. To 

estimate the effects of the bill’s provisions on premium collections, 

CBO considered several thousand scenarios of the magnitude and 

timing of possible losses to the FDIC and resulting premiums collected under the bill. Because the fund balance in any given year 

depends on the losses of all prior years, each scenario included an 

estimate of losses over the entire 2003–2012 period. Applying a 

probability distribution to those loss scenarios, CBO estimated premium income to the government under H.R. 3717 reflecting the 

wide range of uncertainty about future costs of resolving failed financial institutions. 

Overall, CBO estimates that the net effect of these provisions on 

deposit insurance premiums would be an increase in collections of 

about $2.8 billion over the next 10 years, slightly more than our 

projected increase in the FDIC’s costs to resolve failed financial institutions. (We estimate that the FDIC will collect about $12 billion 

in premiums from members over the 2003–2012 period under current law.) Each of the bill’s provisions that would have an impact 

on premium assessments is described below. 

Increasing Deposit Insurance Coverage. Expanding deposit insurance coverage would result in increased premiums for the FDIC because premiums are based on the amount of insured deposits. CBO 

estimates that the increase in coverage would raise the amount of 

insured deposits by about 10 percent. But the bill would also give 

the FDIC more discretion in assessing premiums, which CBO expects would offset part of the impact of the increased coverage. 

Increasing the FDIC’s Regulatory Discretion. Under current law, 

the FDIC determines when to assess insurance premiums by calculating a figure known as the designated reserve ratio (DRR) for the 

BIF and SAIF. The DRR represents the ratio of the fund’s balances 

to total insured deposits. Under current law, the FDIC is required 

to assess premiums so as to maintain the DRR at all times, but 

under the bill, the agency would be authorized to establish a restoration plan of up to three years to gradually collect sufficient premiums to maintain the DRR at the desired level. 

Designated Reserve Ratio (DRR). The DRR is statutorily set at 

1.25 percent of insured deposits. If the reserve ratio of either fund 

falls below that point, the FDIC assesses institutions that are covered by that fund until the reserve ratio reaches at least 1.25 percent. H.R. 3717 would eliminate the requirement that the DRR be 

1.25 percent for the FDIC’s insurance funds and, instead, allow the 

FDIC the discretion to set the DRR between 1.15 percent and 1.4 

28

percent, inclusive. The bill would require the FDIC to set the DRR 

at least annually and at other times as it deems appropriate. The 

bill also would require the board of directors of the FDIC to consider increasing the DRR during more favorable economic conditions and reducing the DRR during less favorable economic conditions, notwithstanding the risk of loss that may occur under such 

conditions. 

Based on the actions of the NCUA when it was given discretion 

to set such a ratio, CBO expects that the FDIC would set the DRR 

at 1.25 percent for 2003 and adjust it annually as conditions warrant. To maintain stability in the banking system, we expect the 

FDIC would set the DRR within a relatively narrow range around 

1.25 percent, except under extreme conditions. In fact, the bill 

would require the FDIC to return some collections (referred to in 

the bill as dividends) if the reserve ratio of the DIF exceeds 1.35 

percent. In this event, the FDIC would be required to refund half 

of the amount in the fund that is above the amount necessary to 

maintain 1.35 percent. If the DRR were to exceed 1.4 percent, the 

FDIC would be required to refund enough to institutions to reduce 

the ratio below 1.4 percent. 

Restoration Plans. Under current law, the FDIC must charge assessments to return the funds to a level above the DRR within one 

year. H.R. 3717 could delay some of those assessments by allowing 

the FDIC to return the fund to a level above the DRR within three 

years. 

If the FDIC projects that the reserve ratio of the DIF will fall 

below the DRR, H.R. 3717 would require it to establish a restoration plan to return the reserve ratio to the DRR within three years. 

If the FDIC projects that the reserve ratio of the DIF will fall 

below 1 percent, H.R. 3717 would require the FDIC to establish a 

restoration plan to return the reserve ratio to 1 percent within two 

years and return the reserve ratio to the DRR within three years 

thereafter. The flexibility to set restoration plans would reduce the 

assessment income of the FDIC because it could take up to five 

years to return to the DRR, and government collections would be 

below baseline levels during this period. On the other hand, this 

provision of H.R. 3717 might provide the FDIC the discretion necessary to recover from a large loss in the fund without imperiling 

other institutions. 

Allowing the FDIC discretion over when premiums are charged 

would reduce total collections below the level that would be experienced without that discretion. However, CBO estimates that such 

reductions would be more than offset by the premium increases resulting from the increase in deposit insurance coverage. 

Merging BIF and SAIF. H.R. 3717 would require the FDIC to 

merge the Bank Insurance Fund and the Savings Association Insurance Fund and create a new Deposit Insurance Fund. By 2003, 

CBO expects the net worth of the combined fund will be about $42 

billion. By itself, merging the funds would delay the collection of 

premiums on institutions insured by the BIF. Although the BIF is 

much larger than the SAIF, the reserve ratio of the BIF is lower—

1.26 percent—due to rapid growth in insured deposits and the costs 

of recent bank failures. Under current law, we expect the FDIC to 

begin charging fees to institutions insured by the BIF in 2003. The 

reserve ratio of the combined fund would be about 1.3 percent, and 

29

in the absence of other changes made by the bill, the FDIC would 

not have to assess higher premiums in 2003 to maintain the reserve ratio at the designated level. 

Credits for Future Assessments. The bill would require the FDIC 

to provide certain banks and thrifts with credits against future assessments, based on their payments to the BIF or SAIF prior to 

1997. CBO expects that the use of those credits would reduce the 

amount of future collections by the DIF. 

Under the bill, credits would equal 12 basis points (0.12 percent) 

of the combined assessment base of the BIF and SAIF as of December 31, 2001. Based on information from the FDIC, CBO estimates 

that the credits would total nearly $5.4 billion. The credits would 

be allocated to each institution based on their market share as of 

December 31, 1996. Institutions established after that date would 

be ineligible for credits against their future assessments. The bill 

would prohibit institutions from using credits whenever the reserve 

ratio of the fund is less that the DRR or when the DRR is less than 

1.25 percent. 

H.R. 3717 also would limit the use of credits by institutions that 

are not well capitalized, or that exhibit financial, operational, or 

compliance weaknesses that range from moderately severe to unsatisfactory. Under the bill, such institutions could use no more in 

credits than the average assessment on all depository institutions 

for that period. In addition, because the least risky institutions 

(i.e., those that are well capitalized and do not exhibit those weaknesses) would be assessed no more than one basis point, their use 

of credits would be effectively constrained. Hence, CBO estimates 

that more than half of the credits would not be used during the 

2003–2012 period and would be available to reduce collections by 

the FDIC in subsequent years. 

Increase in premiums paid to NCUA by financial institutions 

Under current law, credit unions must pay the NCUA 1 percent 

of their net change in deposits each year. The NCUA provides rebates to credit unions if the balance in the share insurance fund 

exceeds 1.3 percent of insured deposits. CBO estimates that the 

NCUA will collect net premiums of about $2.4 billion from its members over the 2003–2012 period. 

Based on information from the NCUA, CBO expects that H.R. 

3717 would extend insurance coverage to about $38 billion in currently uninsured deposits in 2003 and that the higher insurance 

levels would attract another $4 billion in new deposits that year. 

Because these added amounts would reduce the ratio of insured deposits to fund balances below 1.3 percent in 2003, H.R. 3717 would 

reduce the amount of the rebate that the NCUA would otherwise 

provide that year. 

CBO estimates that, under the bill, the net premiums collected 

by the NCUA would increase by $700 million over the 2003–2012 

period. About $500 million of that amount would be realized in 

2003. The premiums collected for the expanded insurance coverage 

would more than offset the estimated additional costs to the NCUA 

of $100 million over the next 10 years. 

Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up pay-as-you-go procedures for legislation affecting direct spending or receipts. The net changes in 

30

outlays that are subject to pay-as-you-go procedures are shown in 

the following table. For the purposes of enforcing pay-as-you-go 

procedures, only the effects through fiscal year 2006 are counted. 

Section 252 of the Balanced Budget and Emergency Deficit Control Act exempts from pay-as-you-go procedures any changes in outlays resulting from the ‘‘full funding of, and continuation of, the deposit insurance guarantee commitment in effect under current estimates.’’ Increasing deposit insurance coverage is not part of the 

current guarantee commitment, and changing the premiums paid 

by banks and thrifts is not the type of change necessary for the 

continuation of the current guarantee commitment. Hence, CBO 

believes that the pay-as-you-go exemption for deposit insurance 

would not apply to H.R. 3717.

By fiscal year, in millions of dollars—

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Changes in outlays ............ 0 ¥1,500 ¥375 25 ¥175 225 325 325 275 ¥50 225

Changes in receipts ........... Not applicable 

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

3717 would preempt certain state laws regarding statutes of limitations by shortening the time allowed for insured depository institutions or the FDIC to file claims related to overpayments or late 

payments of assessments. Such a preemption would be an intergovernmental mandate as defined in UMRA. Because the mandate imposes no duty on states that would result in additional spending, 

CBO estimates that the costs of complying with the mandate would 

not exceed the threshold established in UMRA ($58 million in 

2002, adjusted annually for inflation). 

Estimated impact on the private sector: H.R. 3717 contains private-sector mandates as defined by UMRA. CBO estimates that the 

direct cost of those mandates would be well above the annual 

threshold established by UMRA for private-sector mandates ($115 

million in 2002, adjusted annually for inflation). We do not have 

sufficient information to provide a precise estimate of the aggregate 

cost because of uncertainties about how certain regulations would 

be implemented.

Banks and savings associations 

Commercial banks and savings associations must have federal 

deposit insurance. CBO, therefore, considers changes in the federal 

deposit insurance system that increase requirements on those institutions to be private-sector mandates under UMRA. Specifically, 

the bill would increase federal insurance coverage for insured depository accounts. That increase in coverage would require banks 

and savings associations to pay more in deposit insurance premiums. 

H.R. 3717 also would change the conditions under which banks 

and savings associations would pay insurance premiums to the 

FDIC. Under current law, banks and savings associations in the 

lowest risk category do not have to pay any deposit insurance premiums when their deposit insurance fund (BIF or SAIF) is above 

the designated reserve ratio of 1.25 percent of insured deposits. 

The bill would require that all banks and savings associations pay 

premiums for deposit insurance regardless of the reserve ratio. In 

31

addition, the bill would authorize the FDIC to charge fees to banks 

and thrifts that increase their net deposits more rapidly than the 

FDIC determines to be appropriate. The FDIC has indicated that 

determining the criteria for deciding whether growth is inappropriate would be difficult. At this time, CBO has no basis for estimating the amount of such fees. 

CBO estimates that, as a result of the increased deposit insurance coverage and the requirement that all banks and savings associations pay deposit insurance premiums regardless of the reserve ratio, those institutions would have to pay an additional $1 

billion in premiums in fiscal year 2003. The additional premium 

payments would total about $2.1 billion over the first five years the 

mandate is in effect. 

Credit unions 

Because the bill would increase the coverage of insured accounts 

for federally insured credit unions, those credit unions would pay 

higher premiums. CBO estimates that those institutions would pay 

an additional $500 million in fiscal year 2003. The additional premium payments would total about $600 million for the first five 

years the increased coverage is in effect. 

Estimate prepared by: Federal costs: Mark Hadley and Judith 

Ruud; impact on state, local, and tribal governments: Susan Sieg 

Tompkins; impact on the private sector: Judith Ruud. 

Estimate approved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis.

CONGRESSIONAL BUDGET OFFICE ESTIMATE

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

of Representatives, the cost estimate provided by the Congressional 

Budget Office pursuant to section 402 of the Congressional Budget 

Act of 1974 was not timely submitted to the Committee. The Chairman of the Committee will cause such estimate to be printed in the 

Congressional Record when it is available. 

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 for 

H.R. 3717 in the 107th Congress and reprinted as the Committee’s 

cost estimate. 

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 defense and general welfare of the United States), and clause 3 (relating to the power to 

regulate foreign and interstate commerce). 

32

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; Table of contents 

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

Deposit Insurance Reform Act of 2003,’’ and provides a table of contents. 

Section 2. Merging the BIF and SAIF 

This section amends provisions of the Federal Deposit Insurance 

Act to merge the Bank Insurance Fund and the Savings Association Insurance Fund. The section transfers each fund’s respective 

assets and liabilities into a newly created Deposit Insurance Fund 

(DIF). 

The section gives the FDIC at least 90 days after the bill is enacted to complete the merger of the BIF and SAIF. The effective 

date of the merger would be the first day of the next calendar quarter after the grace period elapses. For example, assuming the bill 

is enacted on March 10 the FDIC would have until June 8 to complete the merger, and all transactions would become operationally 

effective as of July 1. 

Section 3. Increase in deposit insurance coverage 

This section provides for a higher level of deposit insurance coverage and an inflation index for general depositors, individual retirement accounts, and municipalities. Further, it expands coverage 

to employee benefit plans. Credit unions are provided with complete parity in coverage with other insured depository institutions. 

The section also eliminates the $100,000 deposit insurance limit 

on accounts at insured depository institutions and replaces it with 

a new standard maximum deposit insurance limit of $130,000. 

The section further provides that, beginning January 1, 2006, the 

new standard maximum deposit insurance limit would be subject 

to a 5 year cost of living adjustment, calculated according to the 

Personal Consumption Expenditures Chain-Type Index (PCE) published by the Department of Commerce and rounded to the nearest 

$10,000. The FDIC and National Credit Union Administration 

(NCUA) Boards of Directors are required to publish the new standard maximum deposit insurance amount in the Federal Register 

and provide a corresponding report to Congress within 6 months of 

the new calculation. Also, the five year inflation-adjusted standard 

maximum amount would automatically increase unless a Congressional act provides otherwise. The new standard amount would 

take effect on January 1 of the year immediately succeeding the 

calendar year in which the new amount is calculated. 

The section also requires institutions to provide pass through 

coverage for employee benefit plans. However, institutions that are 

not well-capitalized or adequately-capitalized may not accept employee benefit plan deposits. 

33

The section also doubles the new standard maximum deposit insurance limit for certain retirement accounts to $260,000. 

Finally, this section increases coverage for in-State municipal deposits to the lesser of $2 million or the sum of the new standard 

coverage amount plus 80 percent of the amount of deposits in excess of the new standard, and provides that no State may deny to 

insured depository institutions within its jurisdiction the authority 

to accept insured in-State municipal deposits, or prohibit the making of such deposits in such institutions by any in-State municipal 

depositor. 

Section 4. Setting assessments and repeal of special rules relating 

to minimum assessments and free deposit insurance 

This section allows the FDIC Board to set assessments in such 

amounts as it may determine to be necessary or appropriate in 

order to maintain the reserve ratio at the designated reserve ratio. 

This provision also eliminates the existing restrictions on the 

FDIC’s authority to levy assessments on any institution above 

amounts needed to achieve and maintain the existing DRR of 1.25 

percent. In effect, the minimum statutory rate (23 basis point cliff 

rate) is eliminated. 

This section establishes a rate of not more than 1 basis point (exclusive of any credit or dividend) for those insured depository institutions in the lowest-risk category under the FDIC’s risk-based assessment system. This section also provides that no depository institution will be barred from the lowest-risk category solely because 

of size. The one basis point rate does not apply during any period 

in which the DIF’s reserve ratio is less than 1.15 percent of aggregate insured deposits. 

In testimony before the Subcommittee on Financial Institutions, 

FDIC Chairman Donald Powell stated that:

Using the current system as a starting point, I believe 

that the FDIC should consider additional objective financial indicators, based upon the kinds of information that 

banks and thrifts already report, to distinguish and price 

for risk more accurately within the existing least-risk (1A) 

category. The sample ‘‘scorecard’’ included in the FDIC’s 

April 2001 report represents the right kind of approach. 

(Hearing before the Subcommittee on Financial Institutions and Consumer Credit, Viewpoints of the FDIC and 

Select Industry Experts on Deposit Insurance Reform, Oct. 

17, 2001, Serial no. 107–47, p. 5.)

This scorecard example showed the lowest-risk category, 1A+, 

contained approximately 42 percent of all banks. The Committee 

looked to these examples, and the distribution of banks (including 

size, charter, and governance) within each of the 1A subcategories, 

as a basis for this provision. This section provides a necessary balance between the expanded authority and discretion of the FDIC 

to charge all institutions premiums and assuring that top-rated institutions are not excessively charged. 

The Committee envisions that this rate will be the starting point 

or base premium for the risk-based assessment schedule to be developed by the FDIC (with higher premiums associated with higher 

risk categories being set relative to this base rate). Nothing in this 

34

provision precludes the FDIC from providing credits or dividends 

should the fund be at sufficient levels to warrant such an action. 

The section also requires insured depository institutions to maintain all records that the FDIC may require for verifying the accuracy of any assessment for 3 years or, in the case of disputed assessments, until the dispute has been resolved, and increases fees 

for late assessment payments from $100 to 1 percent of assessments per day. 

This section also provides for a 50 percent discount in the assessment rate for deposits attributable to ‘‘lifeline’’ deposit accounts 

and repeals section 232 of the Federal Deposit Insurance Corporation Improvement Act of 1991 that required that credits for such 

accounts be funded from congressional appropriations. 

The bill repeals a number of provisions requiring the FDIC to set 

premiums on a semi-annual basis, replacing them with a provision 

granting the FDIC greater flexibility in the timing of those evaluations, so long as they are done at least once in a 12 month period. 

In granting this flexibility, the Committee intends that the FDIC 

should make these changes, absent extraordinary circumstances, in 

a manner that provides insured depository institutions with sufficient lead time to make reasonable budget preparations.

Section 5. Replacement of fixed designated reserve ratio with reserve 

range 

This section eliminates the current 1.25 percent ‘‘hard target’’

DRR and provides the FDIC Board with the discretion to set the 

DRR within a range of 1.15 to 1.40 percent for any given year, 

using the following criteria as a basis for making these determinations: 

(1) Present and future risk of losses to the deposit insurance 

fund; 

(2) Economic conditions; and 

(3) Any other factors the Board may determine to be appropriate. 

The more flexible range for setting the DRR is designed to prevent sharp swings in the assessment rates for insured depository 

institutions. In designating the reserve ratio, the FDIC must follow 

notice-and-comment rulemaking procedures, and is required to 

publish a thorough analysis of the data and projections on which 

the proposed DRR is based. 

Section 6. Requirements applicable to the risk-based assessment system 

This section directs the FDIC to collect information from all appropriate sources in determining risk of losses to the DIF. This provision does not authorize the FDIC to impose additional recordkeeping requirements on insured depository institutions. 

The FDIC is required to consult with the appropriate Federal 

banking agency in assessing the risk of loss to the DIF with respect 

to any insured depository institution. This risk of loss evaluation 

may be done on an aggregate basis for institutions that are determined to be well-capitalized and well-managed. 

The FDIC is also required to provide notice and opportunity for 

comment prior to revising or modifying the risk-based assessment 

system. 

35

Section 7. Refunds, dividends, and credits from Deposit Insurance 

Fund 

This section provides for refunds or credits of any assessment 

payment that was made by an insured depository institution in excess of the amount due the FDIC. 

The section specifies two circumstances under which the FDIC is 

required to pay dividends to insured depository institutions: (1) 

whenever the reserve ratio of the DIF equals or exceeds 1.35 percent of estimated insured deposits and is less than or equal to 1.4 

percent of such deposits, the FDIC is required to pay dividends 

equal to 50 percent of the amount in excess of what is required to 

maintain the reserve ratio at 1.35 percent; and (2) whenever the 

reserve ratio of the DIF exceeds 1.4 percent of estimated insured 

deposits, the FDIC is required to pay dividends in the amount of 

the excess of what is necessary to maintain the ratio at 1.4 percent. 

The requirement that when the DIF exceeds 1.35 percent and is 

less than or equal to 1.4 percent, the FDIC must provide a cash 

dividend equal to one-half the difference between the actual fund 

balance and the fund balance required to maintain a reserve ratio 

of 1.35 percent is intended to slow the fund’s growth automatically 

as it approaches its upper limit and return dividends to institutions 

that could be used for lending and to provide other financial services in their communities. 

The section also provides for a transitional credit of 12 basis 

points of the total assessment base as of December 31, 2001 (or 

about $5.4 billion) to eligible insured depository institutions based 

on their respective share or percentage of total industry insured deposits held as of December 31, 1996. Eligible insured depository institutions had to be in existence at December 31, 1996, or be a successor to such an institution, and paid a deposit insurance assessment prior to that date. 

In addition to the transitional credit, this section directs the 

FDIC to promulgate regulations establishing an ongoing system of 

credits to be applied against future premium assessments. Such 

credits will not be awarded, however, during any period in which 

(1) the reserve ratio of the DIF is less than the DRR; or (2) the reserve ratio is less than 1.25 percent of estimated insured deposits. 

In determining the amount of any ongoing assessment credits, the 

FDIC is required to consider the factors for designating the reserve 

ratio and setting assessments outlined elsewhere in the statute. 

For purposes of allocating dividends and credits, the FDIC is required to determine each insured depository institution’s relative 

contribution to the DIF (or any predecessor deposit insurance 

fund), taking into account the institution’s share of the assessment 

base as of December 31, 1996; the total amount of deposit insurance assessments paid by the institution after December 31, 1996; 

that portion of assessments paid by an institution that reflects 

higher levels of risk assumed by the institution; and such other factors as the FDIC deems appropriate. The FDIC’s calculation, declaration and payment of dividends are made subject to notice-andcomment rulemaking. 

For any insured depository institution that exhibits financial, 

operational or compliance weaknesses ranging from moderately severe to unsatisfactory at the beginning of the assessment period, 

36

credits may not exceed the amount equal to the average assessment on all insured depository institutions. 

In promulgating regulations establishing a system for dividends 

and credits, the FDIC is required to include provisions allowing insured depository institutions a reasonable opportunity to challenge 

administratively the amount of their dividends or credits. 

Nothing in this section precludes the FDIC from providing credits, over and above the mandated dividend requirement, should it 

so choose. 

The Committee intends that the FDIC, in determining the appropriate distribution of dividends or ongoing credits, weigh a number 

of factors in its rulemaking process. The calculation should recognize past contributions to the deposit insurance funds by incorporating the ratio determined for an institution in the calculation 

of the institution’s one-time credit based on total assessment base 

at year-end 1996, as well as the actual assessments paid since that 

time. In establishing the dividend and credit systems, the FDIC 

should also take into account and make adjustments that reflect 

the higher risk profiles of some institutions so that they are not rewarded for riskier behavior. The FDIC is given the discretion to incorporate additional factors, through the rulemaking process, as it 

deems appropriate. 

Initially, the Committee anticipates that the FDIC will establish 

a dividend account or similar mechanism for each insured depository institution. It is contemplated that when a dividend is declared, each institution would receive the same proportion of the 

total dividend declared as its dividend account bears to the sum of 

all institutions’ dividend accounts for that declaration. As an example of how this might work under such a scenario, the calculation 

of an institution’s dividend account could be based on the balance 

in the fund multiplied by the institution’s 1996 assessment base 

ratio (described above). In addition, after reducing the amount of 

assessments paid to account for an institution’s higher risk profile, 

and after considering other factors, the Corporation would incorporate the remainder in the calculation of the dividend account. In 

sum, it is the Committee’s intent that the FDIC create and implement a robust system of dividends and ongoing credits based upon 

the various factors set forth in the bill. 

Section 8. Deposit Insurance Fund restoration plans 

Whenever the reserve ratio falls or is projected to fall below the 

low end of the range within which the FDIC is authorized to set 

the DRR, the FDIC is required, within 90 days, to establish and 

implement a plan for restoring the DIF to that level within ten 

years. While such a restoration plan is in effect, the FDIC has the 

authority to restrict the use of assessment credits by insured depository institutions, but is required to apply to an institution’s assessment an amount that is the lesser of the institution’s assessment or 3 basis points of an institution’s assessment base. The 

FDIC must publish the details of its restoration plan in the Federal 

Register within 30 days of its implementation. 

Section 9. Regulations required 

This section provides that the FDIC has 270 days after the date 

of enactment to prescribe final regulations, after notice and opporVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00036 Fmt 6659 Sfmt 6602 E:\HR\OC\HR050.XXX HR050
37

tunity for public comment, establishing the DRR, implementing increases in deposit insurance coverage, implementing the dividend 

requirement and the one time assessment credit, and providing for 

premium assessments under the amended Act. 

Section 10. Studies of FDIC structure and expenses and certain activities and further possible changes to deposit insurance system 

This section provides that within one year of enactment, reports 

must be submitted to Congress on the following issues: 

(1) The efficiency and effectiveness of the administration of the 

prompt corrective action (PCA) program, including the degree of effectiveness of the Federal banking agencies in identifying troubled 

depository institutions and the degree of accuracy of the risk assessments made by the FDIC; 

(2) The appropriateness of the FDIC’s organizational structure 

for the mission of the FDIC, to take into account the current size 

and complexity of the business of insured depository institutions; 

the extent to which the organizational structure contributes to or 

reduces operational inefficiencies that increase operational costs; 

and the effectiveness of internal controls; 

(3) The feasibility of establishing a voluntary deposit insurance 

system for deposits in excess of the maximum amount of deposit insurance for any depositor; 

(4) The feasibility of privatizing all deposit insurance at insured 

depository institutions and insured credit unions; and, 

(5) The feasibility of using actual domestic deposits rather than 

estimated insured deposits in calculating the DIF’s reserve ratio 

and the DRR. 

Finally, the section directs the FDIC (in consultation with the 

GAO) to conduct a study of the reserve methodology and loss accounting for insured depository institutions in a troubled condition 

over the period January 1, 1992 through December 31, 2002, and 

report its findings and conclusions to Congress within 6 months of 

the date of enactment. 

Section 11. Bi-annual FDIC survey and report on increasing the deposit base by encouraging use of depository institutions by the 

unbanked 

This section requires the FDIC to conduct a bi-annual survey on 

efforts by insured depository institutions to bring the ‘‘unbanked’’

into the conventional finance system, and report its findings and 

conclusions to the House Committee on Financial Services and the 

Senate Committee on Banking, Housing and Urban Affairs, together with any recommendations for legislative or administrative 

action. 

Section 12. Technical and Conforming Amendments to the Federal 

Deposit Insurance Act relating to the merger of the BIF and 

SAIF 

This section makes numerous amendments to ensure the technical conformity of the Federal Deposit Insurance Reform Act to 

various provisions in the Federal Deposit Insurance Act and other 

banking laws, to include the authority of the DIF to borrow from 

insured depository institutions and the Federal Home Loan Banks. 

38

In particular, this section repeals section 5(d)(2) of the Federal 

Deposit Insurance Act, dealing with exit fees collected from institutions leaving the Savings Association Insurance Fund (SAIF). The 

Committee intends that those funds be returned to the DIF upon 

the repeal of this provision. 

Section 13. Other Technical and Conforming Amendments relating 

to the merger of the BIF and SAIF 

This section ensures the technical conformity of the Federal Deposit Insurance Reform Act to various provisions in the Federal Deposit Insurance Act and other banking laws. Most notably, amendments conform the Federal Deposit Insurance Reform Act to the 

Balanced Budget and Emergency Control Act of 1985.

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 (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

SECTION 2704 OF THE DEPOSIT INSURANCE FUNDS ACT 

OF 1996

øSEC. 2704. MERGER OF BIF AND SAIF. 

ø(a) IN GENERAL.—

ø(1) MERGER.—The Bank Insurance Fund and the Savings 

Association Insurance Fund shall be merged into the Deposit 

Insurance Fund established by section 11(a)(4) of the Federal 

Deposit Insurance Act, as amended by this section. 

ø(2) DISPOSITION OF ASSETS AND LIABILITIES.—All assets and 

liabilities of the Bank Insurance Fund and the Savings Association Insurance Fund shall be transferred to the Deposit Insurance Fund. 

ø(3) NO SEPARATE EXISTENCE.—The separate existence of the 

Bank Insurance Fund and the Savings Association Insurance 

Fund shall cease. 

ø(c) EFFECTIVE DATE.—This section and the amendments made 

by this section shall become effective on January 1, 1999, if no insured depository institution is a savings association on that date. 

ø(d) TECHNICAL AND CONFORMING AMENDMENTS.—

ø(1) DEPOSIT INSURANCE FUND.—Section 11(a)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is amended—

ø(A) by redesignating subparagraph (B) as subparagraph 

(C); 

ø(B) by striking subparagraph (A) and inserting the following: 

ø‘‘(A) ESTABLISHMENT.—There is established the Deposit 

Insurance Fund, which the Corporation shall—

ø‘‘(i) maintain and administer; 

ø‘‘(ii) use to carry out its insurance purposes in the 

manner provided by this subsection; and 

ø‘‘(iii) invest in accordance with section 13(a). 

39

ø‘‘(B) USES.—The Deposit Insurance Fund shall be available to the Corporation for use with respect to Deposit Insurance Fund members.’’; and 

ø(C) by striking ‘‘(4) GENERAL PROVISIONS RELATING TO

FUNDS.—’’ and inserting the following: 

ø‘‘(4) ESTABLISHMENT OF THE DEPOSIT INSURANCE

FUND.—’’. 

ø(2) OTHER REFERENCES.—Section 11(a)(4)(C) of the Federal 

Deposit Insurance Act (12 U.S.C. 1821(a)(4)(C), as redesignated 

by paragraph (1) of this subsection) is amended by striking 

‘‘Bank Insurance Fund and the Savings Association Insurance 

Fund’’ and inserting ‘‘Deposit Insurance Fund’’. 

ø(3) DEPOSITS INTO FUND.—Section 11(a)(4) of the Federal 

Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is amended by 

adding at the end the following new subparagraph: 

ø‘‘(D) DEPOSITS.—All amounts assessed against insured 

depository institutions by the Corporation shall be deposited in the Deposit Insurance Fund.’’. 

ø(5) FEDERAL HOME LOAN BANK ACT.—Section 21B(f)(2)(C)(ii) 

of the Federal Home Loan Bank Act (12 U.S.C. 

1441b(f)(2)(C)(ii)) is amended—

ø(A) in subclause (I), by striking ‘‘to Savings Associations Insurance Fund members’’ and inserting ‘‘to insured 

depository institutions, and their successors, which were 

Savings Association Insurance Fund members on September 1, 1995’’; and 

ø(B) in subclause (II), by striking ‘‘to Savings Associations Insurance Fund members’’ and inserting ‘‘to insured 

depository institutions, and their successors, which were 

Savings Association Insurance Fund members on September 1, 1995’’. 

ø(6) REPEALS.—

ø(A) SECTION 3.—Section 3(y) of the Federal Deposit Insurance Act (12 U.S.C. 1813(y)) is amended to read as follows: 

ø‘‘(y) DEFINITIONS RELATING TO THE DEPOSIT INSURANCE FUND.—

ø‘‘(1) DEPOSIT INSURANCE FUND.—The term ‘Deposit Insurance Fund’ means the fund established under section 11(a)(4). 

ø‘‘(2) RESERVE RATIO.—The term ‘reserve ratio’ means the 

ratio of the net worth of the Deposit Insurance Fund to aggregate estimated insured deposits held in all insured depository 

institutions. 

ø‘‘(3) DESIGNATED RESERVE RATIO.—The designated reserve 

ratio of the Deposit Insurance Fund for each year shall be—

ø‘‘(A) 1.25 percent of estimated insured deposits; or 

ø‘‘(B) a higher percentage of estimated insured deposits 

that the Board of Directors determines to be justified for 

that year by circumstances raising a significant risk of 

substantial future losses to the fund.’’

ø(B) SECTION 7.—Section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817) is amended—

ø(i) by striking subsection (l); 

ø(ii) by redesignating subsections (m) and (n) as subsections (l) and (m), respectively; 

40

ø(iii) in subsection (b)(2), by striking subparagraphs 

(B) and (F), and by redesignating subparagraphs (C), 

(E), (G), and (H) as subparagraphs (B) through (E), respectively. 

ø(C) SECTION 11.—Section 11(a) of the Federal Deposit 

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

ø(i) by striking paragraphs (5), (6), and (7); and 

ø(ii) by redesignating paragraph (8) as paragraph 

(5).’’. 

ø(7) SECTION 5136 OF THE REVISED STATUTES.—The paragraph designated the ‘‘Eleventh’’ of section 5136 of the Revised 

Statutes of the United States (12 U.S.C. 24) is amended in the 

5th sentence, by striking ‘‘affected deposit insurance fund’’ and 

inserting ‘‘Deposit Insurance Fund’’. 

ø(8) INVESTMENTS PROMOTING PUBLIC WELFARE; LIMITATIONS

ON AGGREGATE INVESTMENTS.—The 23d undesignated paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 338a) 

is amended in the 4th sentence, by striking ‘‘affected deposit 

insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’. 

ø(9) ADVANCES TO CRITICALLY UNDERCAPITALIZED DEPOSITORY

INSTITUTIONS.—Section 10B(b)(3)(A)(ii) of the Federal Reserve 

Act (12 U.S.C. 347b(b)(3)(A)(ii)) is amended by striking ‘‘any 

deposit insurance fund in’’ and inserting ‘‘the Deposit Insurance Fund of’’. 

ø(10) AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985.—Section 255(g)(1)(A) of 

the Balanced Budget and Emergency Deficit Control Act of 

1985 (2 U.S.C. 905(g)(1)(A)) is amended—

ø(A) by striking ‘‘Bank Insurance Fund’’ and inserting 

‘‘Deposit Insurance Fund’’; and 

ø(B) by striking ‘‘Federal Deposit Insurance Corporation, 

Savings Association Insurance Fund;’’. 

ø(11) FURTHER AMENDMENTS TO THE FEDERAL HOME LOAN

BANK ACT.—The Federal Home Loan Bank Act (12 U.S.C. 1421 

et seq.) is amended—

ø(A) in section 11(k) (12 U.S.C. 1431(k))—

ø(i) in the subsection heading, by striking ‘‘SAIF’’

and inserting ‘‘THE DEPOSIT INSURANCE FUND’’; and 

ø(ii) by striking ‘‘Savings Association Insurance 

Fund’’ each place such term appears and inserting 

‘‘Deposit Insurance Fund’’; 

ø(B) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), 

by striking ‘‘affected deposit insurance fund’’ and inserting 

‘‘Deposit Insurance Fund’’; 

ø(C) in section 21A(b)(6)(B) (12 U.S.C. 1441a(b)(6)(B))—

ø(i) in the subparagraph heading, by striking ‘‘SAIFINSURED BANKS’’ and inserting ‘‘CHARTER CONVERSIONS’’; and 

ø(ii) by striking ‘‘Savings Association Insurance 

Fund member’’ and inserting ‘‘savings association’’; 

ø(D) in section 21A(b)(10)(A)(iv)(II) (12 U.S.C. 

1441a(b)(10)(A)(iv)(II)), by striking ‘‘Savings Association 

Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

ø(E) in section 21B(e) (12 U.S.C. 1441b(e))—

41

ø(i) in paragraph (5), by inserting ‘‘as of the date of 

funding’’ after ‘‘Savings Association Insurance Fund 

members’’ each place such term appears; 

ø(ii) by striking paragraph (7); and 

ø(iii) by redesignating paragraph (8) as paragraph 

(7); and 

ø(F) in section 21B(k) (12 U.S.C. 1441b(k))—

ø(i) by striking paragraph (8); and 

ø(ii) by redesignating paragraphs (9) and (10) as 

paragraphs (8) and (9), respectively. 

ø(12) AMENDMENTS TO THE HOME OWNERS’ LOAN ACT.—The 

Home Owners’ Loan Act (12 U.S.C. 1461 et seq.) is amended—

ø(A) in section 5—

ø(i) in subsection (c)(5)(A), by striking ‘‘that is a 

member of the Bank Insurance Fund’’; 

ø(ii) in subsection (c)(6), by striking ‘‘As used in this 

subsection—’’ and inserting ‘‘For purposes of this subsection, the following definitions shall apply:’’; 

ø(iii) in subsection (o)(1), by striking ‘‘that is a Bank 

Insurance Fund member’’; 

ø(iv) in subsection (o)(2)(A), by striking ‘‘a Bank Insurance Fund member until such time as it changes 

its status to a Savings Association Insurance Fund 

member’’ and inserting ‘‘insured by the Deposit Insurance Fund’’; 

ø(v) in subsection (t)(5)(D)(iii)(II), by striking ‘‘affected deposit insurance fund’’ and inserting ‘‘Deposit 

Insurance Fund’’; 

ø(vi) in subsection (t)(7)(C)(i)(I), by striking ‘‘affected 

deposit insurance fund’’ and inserting ‘‘Deposit Insurance Fund’’; and 

ø(vii) in subsection (v)(2)(A)(i), by striking ‘‘, the 

Savings Association Insurance Fund’’ and inserting ‘‘or 

the Deposit Insurance Fund’’; and 

ø(B) in section 10—

ø(i) in subsection (e)(1)(A)(iii)(VII), by adding ‘‘or’’ at 

the end; 

ø(ii) in subsection (e)(1)(A)(iv), by adding ‘‘and’’ at 

the end; 

ø(iii) in subsection (e)(1)(B), by striking ‘‘Savings Association Insurance Fund or Bank Insurance Fund’’

and inserting ‘‘Deposit Insurance Fund’’; 

ø(iv) in subsection (e)(2), by striking ‘‘Savings Association Insurance Fund or the Bank Insurance Fund’’

and inserting ‘‘Deposit Insurance Fund’’; and 

ø(v) in subsection (m)(3), by striking subparagraph 

(E), and by redesignating subparagraphs (F), (G), and 

(H) as subparagraphs (E), (F), and (G), respectively. 

ø(13) AMENDMENTS TO THE NATIONAL HOUSING ACT.—The 

National Housing Act (12 U.S.C. 1701 et seq.) is amended—

ø(A) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by 

striking ‘‘Bank Insurance Fund for banks or through the 

Savings Association Insurance Fund for savings associations’’ and inserting ‘‘Deposit Insurance Fund’’; and 

42

ø(B) in section 526(b)(1)(B)(ii) (12 U.S.C. 1735f– 14(b)(1)(B)(ii)), by striking ‘‘Bank Insurance Fund for 

banks and through the Savings Association Insurance 

Fund for savings associations’’ and inserting ‘‘Deposit Insurance Fund’’. ø(14) FURTHER AMENDMENTS TO THE FEDERAL DEPOSIT INSUR- ANCE ACT.—The Federal Deposit Insurance Act (12 U.S.C. 1811 

et seq.) is amended— ø(A) in section 3(a)(1) (12 U.S.C. 1813(a)(1)), by striking 

subparagraph (B) and inserting the following: 

ø‘‘(B) includes any former savings association.’’; 

ø(B) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking ‘‘the Bank Insurance Fund or the Savings Association Insurance Fund;’’ and inserting ‘‘Deposit Insurance Fund,’’; 

ø(C) in section 5(d) (12 U.S.C. 1815(d)), by striking paragraphs (2) and (3); 

ø(D) in section 5(d)(1) (12 U.S.C. 1815(d)(1))— ø(i) in subparagraph (A), by striking ‘‘reserve ratios 

in the Bank Insurance Fund and the Savings Association Insurance Fund’’ and inserting ‘‘the reserve ratio 

of the Deposit Insurance Fund’’; 

ø(ii) by striking subparagraph (B) and inserting the 

following: 

ø‘‘(2) FEE CREDITED TO THE DEPOSIT INSURANCE FUND.—The 

fee paid by the depository institution under paragraph (1) shall 

be credited to the Deposit Insurance Fund.’’; 

ø(iii) by striking ‘‘(1) UNINSURED INSTITUTIONS.—’’; 

and 

ø(iv) by redesignating subparagraphs (A) and (C) as 

paragraphs (1) and (3), respectively, and moving the 

margins 2 ems to the left; 

ø(E) in section 5(e) (12 U.S.C. 1815(e))— ø(i) in paragraph (5)(A), by striking ‘‘Bank Insurance Fund or the Savings Association Insurance Fund’’

and inserting ‘‘Deposit Insurance Fund’’; 

ø(ii) by striking paragraph (6); and 

ø(iii) by redesignating paragraphs (7), (8), and (9) as 

paragraphs (6), (7), and (8), respectively; 

ø(F) in section 6(5) (12 U.S.C. 1816(5)), by striking 

‘‘Bank Insurance Fund or the Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

ø(G) in section 7(b) (12 U.S.C. 1817(b))—

ø(i) in paragraph (1)(D), by striking ‘‘each deposit insurance fund’’ and inserting ‘‘the Deposit Insurance 

Fund’’; 

ø(ii) in clauses (i)(I) and (iv) of paragraph (2)(A), by 

striking ‘‘each deposit insurance fund’’ each place such 

term appears and inserting ‘‘the Deposit Insurance 

Fund’’; 

ø(iii) in paragraph (2)(A)(iii), by striking ‘‘a deposit 

insurance fund’’ and inserting ‘‘the Deposit Insurance 

Fund’’; 

ø(iv) by striking clause (iv) of paragraph (2)(A); 

ø(v) in paragraph (2)(C) (as redesignated by paragraph (6)(B) of this subsection)—

43

ø(I) by striking ‘‘any deposit insurance fund’’ and inserting ‘‘the Deposit Insurance Fund’’; and 

ø(II) by striking ‘‘that fund’’ each place such 

term appears and inserting ‘‘the Deposit Insurance Fund’’; 

ø(vi) in paragraph (2)(D) (as redesignated by paragraph (6)(B) of this subsection)— ø(I) in the subparagraph heading, by striking ‘‘FUNDS ACHIEVE’’ and inserting ‘‘FUND ACHIEVES’’; 

and 

ø(II) by striking ‘‘a deposit insurance fund’’ and 

inserting ‘‘the Deposit Insurance Fund’’; 

ø(vii) in paragraph (3)— ø(I) in the paragraph heading, by striking ‘‘FUNDS’’ and inserting ‘‘FUND’’; 

ø(II) by striking ‘‘members of that fund’’ where 

such term appears in the portion of subparagraph 

(A) which precedes clause (i) of such subparagraph 

and inserting ‘‘insured depository institutions’’; 

ø(III) by striking ‘‘that fund’’ each place such 

term appears (other than in connection with term 

amended in subclause (II) of this clause) and inserting ‘‘the Deposit Insurance Fund’’; 

ø(IV) in subparagraph (A), by striking ‘‘Except 

as provided in paragraph (2)(F), if’’ and inserting ‘‘If’’; 

ø(V) in subparagraph (A), by striking ‘‘any deposit insurance fund’’ and inserting ‘‘the Deposit 

Insurance Fund’’; and 

ø(VI) by striking subparagraphs (C) and (D) and 

inserting the following: 

ø‘‘(C) AMENDING SCHEDULE.—The Corporation may, by 

regulation, amend a schedule prescribed under subparagraph (B).’’; and 

ø(viii) in paragraph (6)— ø(I) by striking ‘‘any such assessment’’ and inserting ‘‘any such assessment is necessary’’; 

ø(II) by striking ‘‘(A) is necessary—’’; 

ø(III) by striking subparagraph (B); 

ø(IV) by redesignating clauses (i), (ii), and (iii) 

as subparagraphs (A), (B), and (C), respectively, 

and moving the margins 2 ems to the left; and 

ø(V) in subparagraph (C) (as redesignated), by 

striking ‘‘; and’’ and inserting a period; 

ø(H) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by striking ‘‘, except that—’’ and all that follows through the end of 

the paragraph and inserting a period; 

ø(I) in section 11(i)(3) (12 U.S.C. 1821(i)(3))— ø(i) by striking subparagraph (B); 

ø(ii) by redesignating subparagraph (C) as subparagraph (B); and 

ø(iii) in subparagraph (B) (as redesignated), by 

striking ‘‘subparagraphs (A) and (B)’’ and inserting 

‘‘subparagraph (A)’’; 

ø(J) in section 11A(a) (12 U.S.C. 1821a(a))—

44

ø(i) in paragraph (2), by striking ‘‘LIABILITIES.—’’

and all that follows through ‘‘Except’’ and inserting 

‘‘LIABILITIES.—Except’’; 

ø(ii) by striking paragraph (2)(B); and 

ø(iii) in paragraph (3), by striking ‘‘the Bank Insurance Fund, the Savings Association Insurance Fund,’’

and inserting ‘‘the Deposit Insurance Fund’’; 

ø(K) in section 11A(b) (12 U.S.C. 1821a(b)), by striking 

paragraph (4); 

ø(L) in section 11A(f) (12 U.S.C. 1821a(f)), by striking 

‘‘Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

ø(M) in section 13 (12 U.S.C. 1823)—

ø(i) in subsection (a)(1), by striking ‘‘Bank Insurance 

Fund, the Savings Association Insurance Fund,’’ and 

inserting ‘‘Deposit Insurance Fund, the Special Reserve of the Deposit Insurance Fund,’’; 

ø(ii) in subsection (c)(4)(E)—

ø(I) in the subparagraph heading, by striking 

‘‘FUNDS’’ and inserting ‘‘FUND’’; and 

ø(II) in clause (i), by striking ‘‘any insurance 

fund’’ and inserting ‘‘the Deposit Insurance Fund’’; 

ø(iii) in subsection (c)(4)(G)(ii)—

ø(I) by striking ‘‘appropriate insurance fund’’

and inserting ‘‘Deposit Insurance Fund’’; 

ø(II) by striking ‘‘the members of the insurance 

fund (of which such institution is a member)’’ and 

inserting ‘‘insured depository institutions’’; 

ø(III) by striking ‘‘each member’s’’ and inserting 

‘‘each insured depository institution’s’’; and 

ø(IV) by striking ‘‘the member’s’’ each place such 

term appears and inserting ‘‘the institution’s’’; 

ø(iv) in subsection (c), by striking paragraph (11); 

ø(v) in subsection (h), by striking ‘‘Bank Insurance 

Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

ø(vi) in subsection (k)(4)(B)(i), by striking ‘‘Savings 

Association Insurance Fund’’ and inserting ‘‘Deposit 

Insurance Fund’’; and 

ø(vii) in subsection (k)(5)(A), by striking ‘‘Savings 

Association Insurance Fund’’ and inserting ‘‘Deposit 

Insurance Fund’’; 

ø(N) in section 14(a) (12 U.S.C. 1824(a)) in the 5th sentence—

ø(i) by striking ‘‘Bank Insurance Fund or the Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance Fund’’; and 

ø(ii) by striking ‘‘each such fund’’ and inserting ‘‘the 

Deposit Insurance Fund’’; 

ø(O) in section 14(b) (12 U.S.C. 1824(b)), by striking 

‘‘Bank Insurance Fund or Savings Association Insurance 

Fund’’ and inserting ‘‘Deposit Insurance Fund’’; 

ø(P) in section 14(c) (12 U.S.C. 1824(c)), by striking 

paragraph (3); 

ø(Q) in section 14(d) (12 U.S.C. 1824(d))—

45

ø(i) by striking ‘‘BIF’’ each place such term appears 

and inserting ‘‘DIF’’; and 

ø(ii) by striking ‘‘Bank Insurance Fund’’ each place 

such term appears and inserting ‘‘Deposit Insurance 

Fund’’; 

ø(R) in section 15(c)(5) (12 U.S.C. 1825(c)(5))— ø(i) by striking ‘‘the Bank Insurance Fund or Savings Association Insurance Fund, respectively’’ each 

place such term appears and inserting ‘‘the Deposit Insurance Fund’’; and 

ø(ii) in subparagraph (B), by striking ‘‘the Bank Insurance Fund or the Savings Association Insurance 

Fund, respectively’’ and inserting ‘‘the Deposit Insurance Fund’’; 

ø(S) in section 17(a) (12 U.S.C. 1827(a))— ø(i) in the subsection heading, by striking ‘‘BIF, 

SAIF,’’ and inserting ‘‘THE DEPOSIT INSURANCE FUND’’; 

and 

ø(ii) in paragraph (1), by striking ‘‘the Bank Insurance Fund, the Savings Association Insurance Fund,’’ each place such term appears and inserting ‘‘the Deposit Insurance Fund’’; 

ø(T) in section 17(d) (12 U.S.C. 1827(d)), by striking ‘‘the 

Bank Insurance Fund, the Savings Association Insurance 

Fund,’’ each place such term appears and inserting ‘‘the 

Deposit Insurance Fund’’; 

ø(U) in section 18(m)(3) (12 U.S.C. 1828(m)(3))— ø(i) by striking ‘‘Savings Association Insurance 

Fund’’ each place such term appears and inserting ‘‘Deposit Insurance Fund’’; and 

ø(ii) in subparagraph (C), by striking ‘‘or the Bank 

Insurance Fund’’; 

ø(V) in section 18(p) (12 U.S.C. 1828(p)), by striking ‘‘deposit insurance funds’’ and inserting ‘‘Deposit Insurance 

Fund’’; 

ø(W) in section 24 (12 U.S.C. 1831a) in subsections (a)(1) 

and (d)(1)(A), by striking ‘‘appropriate deposit insurance 

fund’’ each place such term appears and inserting ‘‘Deposit 

Insurance Fund’’; 

ø(X) in section 28 (12 U.S.C. 1831e), by striking ‘‘affected 

deposit insurance fund’’ each place such term appears and 

inserting ‘‘Deposit Insurance Fund’’; 

ø(Y) by striking section 31 (12 U.S.C. 1831h); 

ø(Z) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)) by striking 

‘‘affected deposit insurance fund’’ and inserting ‘‘Deposit 

Insurance Fund’’; 

ø(AA) in section 38(a) (12 U.S.C. 1831o(a)) in the subsection heading, by striking ‘‘FUNDS’’ and inserting ‘‘FUND’’; 

ø(BB) in section 38(k) (12 U.S.C. 1831o(k))—

ø(i) in paragraph (1), by striking ‘‘a deposit insurance fund’’ and inserting ‘‘the Deposit Insurance 

Fund’’; and 

ø(ii) in paragraph (2)(A)—

ø(I) by striking ‘‘A deposit insurance fund’’ and 

inserting ‘‘The Deposit Insurance Fund’’; and 

46

ø(II) by striking ‘‘the deposit insurance fund’s 

outlays’’ and inserting ‘‘the outlays of the Deposit 

Insurance Fund’’; and 

ø(CC) in section 38(o) (12 U.S.C. 1831o(o))—

ø(i) by striking ‘‘ASSOCIATIONS.—’’ and all that follows through ‘‘Subsections (e)(2)’’ and inserting ‘‘ASSOCIATIONS.—Subsections (e)(2)’’; 

ø(ii) by redesignating subparagraphs (A), (B), and 

(C) as paragraphs (1), (2), and (3), respectively, and 

moving the margins 2 ems to the left; and 

ø(iii) in paragraph (1) (as redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and 

(B), respectively, and moving the margins 2 ems to the 

left. 

ø(15) AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, 

RECOVERY, AND ENFORCEMENT ACT OF 1989.—The Financial Institutions Reform, Recovery, and Enforcement Act is amended—

ø(A) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by 

striking ‘‘Bank Insurance Fund, the Savings Association 

Insurance Fund,’’ and inserting ‘‘Deposit Insurance Fund’’; 

and 

ø(B) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by 

striking ‘‘Bank Insurance Fund, the Savings Association 

Insurance Fund,’’ and inserting ‘‘Deposit Insurance Fund’’. 

ø(16) AMENDMENT TO THE BANK ENTERPRISE ACT OF 1991.—

Section 232(a)(1) of the Bank Enterprise Act of 1991 (12 U.S.C. 

1834(a)(1)) is amended by striking ‘‘section 7(b)(2)(H)’’ and inserting ‘‘section 7(b)(2)(G)’’. 

ø(17) AMENDMENT TO THE BANK HOLDING COMPANY ACT OF

1956.—Section 2(j)(2) of the Bank Holding Company Act of 

1956 (12 U.S.C. 1841(j)(2)) is amended by striking ‘‘Savings Association Insurance Fund’’ and inserting ‘‘Deposit Insurance 

Fund’’.¿

FEDERAL DEPOSIT INSURANCE ACT 

* * * * * * *

SEC. 3. As used in this Act—

(a) DEFINITIONS OF BANK AND RELATED TERMS.—

(1) BANK.—The term ‘‘bank’’—

(A) * * *

ø(B) includes any former savings association that—

ø(i) has converted from a savings association 

charter; and 

ø(ii) is a Savings Association Insurance Fund 

member.¿

(B) includes any former savings association.

* * * * * * *

ø(y) The term ‘‘deposit insurance fund’’ means the Bank Insurance Fund or the Savings Association Insurance Fund, as appropriate.¿

(y) DEFINITIONS RELATING TO DEPOSIT INSURANCE FUND.—

47

(1) DEPOSIT INSURANCE FUND.—The term ‘‘Deposit Insurance 

Fund’’ means the Deposit Insurance Fund established under 

section 11(a)(4). 

(2) DESIGNATED RESERVE RATIO.—The term ‘‘designated reserve ratio’’ means the reserve ratio designated by the Board of 

Directors in accordance with section 7(b)(3). 

(3) RESERVE RATIO.—The term ‘‘reserve ratio’’, when used 

with regard to the Deposit Insurance Fund other than in connection with a reference to the designated reserve ratio, means 

the ratio of the net worth of the Deposit Insurance Fund to the 

value of the aggregate estimated insured deposits.

* * * * * * *

SEC. 5. DEPOSIT INSURANCE. 

(a) * * *

(b) Subject to the provisions of this Act and to such terms and 

conditions as the Board of Directors may impose, any branch of a 

foreign bank, upon application by the bank to the Corporation, and 

examination by the Corporation of the branch, and approval by the 

Board of Directors, may become an insured branch. Before approving any such application, the Board of Directors shall give consideration to—

(1) * * *

* * * * * * *

(5) the risk presented to øthe Bank Insurance Fund or the 

Savings Association Insurance Fund,¿ the Deposit Insurance 

Fund,

* * * * * * *

(c)(1) * * *

* * * * * * *

(4) The purpose of the surety bonds and pledges of assets required under this subsection is to provide protection to the ødeposit 

insurance fund¿ Deposit Insurance Fund against the risks entailed 

in insuring the domestic deposits of a foreign bank whose activities, 

assets, and personnel are in large part outside the jurisdiction of 

the United States. In the implementation of its authority under 

this subsection, however, the Corporation shall endeavor to avoid 

imposing requirements on such banks which would unnecessarily 

place them at a competitive disadvantage in relation to domestically incorporated banks. 

* * * * * * *

(d) INSURANCE FEES.—

ø(1) UNINSURED INSTITUTIONS.—¿

ø(A)¿ (1) IN GENERAL.—Any institution that becomes insured 

by the Corporation, and any noninsured branch that becomes 

insured by the Corporation, shall pay the Corporation any fee 

which the Corporation may by regulation prescribe, after giving due consideration to the need to establish and maintain 

øreserve ratios in the Bank Insurance Fund and the Savings 

Association Insurance Fund as required by section 7¿ the reserve ratio of the Deposit Insurance Fund. 

ø(B) FEE CREDITED TO APPROPRIATE FUND.—The fee paid 

by the depository institution shall be credited to the Bank 

48

Insurance Fund if the depository institution becomes a 

Bank Insurance Fund member, and to the Savings Association Insurance Fund if the depository institution becomes a Savings Association Insurance Fund member.¿

(2) FEE CREDITED TO THE DEPOSIT INSURANCE FUND.—The fee 

paid by the depository institution under paragraph (1) shall be 

credited to the Deposit Insurance Fund.

ø(C)¿ (3) EXCEPTION FOR CERTAIN DEPOSITORY INSTITUTIONS.—Any depository institution that becomes an insured depository institution by operation of section 4(a) shall not pay 

any fee. 

ø(2) CONVERSIONS.—

ø(A) IN GENERAL.—

ø(i) PRIOR APPROVAL REQUIRED.—No insured depository institution may participate in a conversion transaction without the prior approval of the Corporation. 

ø(ii) 5-YEAR MORATORIUM ON CONVERSIONS.—Except 

as provided in subparagraph (C), the Corporation may 

not approve any conversion transaction before the 

later of the end of the 5-year period beginning on the 

date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 or the 

date on which the Savings Association Insurance Fund 

first meets or exceeds the designated reserve ratio for 

such fund. 

ø(B) CONVERSION DEFINED.—For purposes of this paragraph, the term ‘‘conversion transaction’’ means—

ø(i) the change of status of an insured depository institution from a Bank Insurance Fund member to a 

Savings Association Insurance Fund member or from 

a Savings Association Insurance Fund member to a 

Bank Insurance Fund member; 

ø(ii) the merger or consolidation of a Bank Insurance Fund member with a Savings Association Insurance Fund member; 

ø(iii) the assumption of any liability by—

ø(I) any Bank Insurance Fund member to pay 

any deposits of a Savings Association Insurance 

Fund member; or 

ø(II) any Savings Association Insurance Fund 

member to pay any deposits of a Bank Insurance 

Fund member; 

ø(iv) the transfer of assets of—

ø(I) any Bank Insurance Fund member to any 

Savings Association Insurance Fund member in 

consideration of the assumption of liabilities for 

any portion of the deposits of such Bank Insurance Fund member; or 

ø(II) any Savings Association Insurance Fund 

member to any Bank Insurance Fund member in 

consideration of the assumption of liabilities for 

any portion of the deposits of such Savings Association Insurance Fund member; and 

ø(v) the transfer of deposits—

49

ø(I) from a Bank Insurance Fund member to a 

Savings Association Insurance Fund member; or 

ø(II) from a Savings Association Insurance Fund 

member to a Bank Insurance Fund member; 

in a transaction in which the deposit is received from 

a depositor at an insured depository institution for 

which a receiver has been appointed and the receiving 

insured depository institution is acting as agent for 

the Corporation in connection with the payment of 

such deposit to the depositor at the institution for 

which a receiver has been appointed. 

ø(C) APPROVAL DURING MORATORIUM.—The Corporation 

may approve a conversion transaction at any time if—

ø(i) the conversion transaction affects an insubstantial portion, as determined by the Corporation, of the 

total deposits of each depository institution participating in the conversion transaction; 

ø(ii) the conversion occurs in connection with the acquisition of a Savings Association Insurance Fund 

member in default or in danger of default, and the 

Corporation determines that the estimated financial 

benefits to the Savings Association Insurance Fund or 

Resolution Trust Corporation equal or exceed the Corporation’s estimate of loss of assessment income to 

such insurance fund over the remaining balance of the 

moratorium period established by subparagraph (A), 

and the Resolution Trust Corporation concurs in the 

Corporation’s determination; or 

ø(iii) the conversion occurs in connection with the 

acquisition of a Bank Insurance Fund member in default or in danger of default and the Corporation determines that the estimated financial benefits to the 

Bank Insurance Fund equal or exceed the Corporation’s estimate of the loss of assessment income to the 

insurance fund over the remaining balance of the moratorium period established by subparagraph (A). 

ø(D) CERTAIN TRANSFERS DEEMED TO AFFECT INSUBSTANTIAL PORTION OF TOTAL DEPOSITS.—For purposes of subparagraph (C)(i), any conversion transaction shall be 

deemed to affect an insubstantial portion of the total deposits of an insured depository institution, to the extent 

the aggregate amount of the total deposits transferred in 

such transaction and in all conversion transactions occurring after the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

does not exceed 35 percent of the lesser of—

ø(i) the amount which is equal to the sum of—

ø(I) the total deposits of such insured depository 

institution on May 1, 1989; and 

ø(II) the total amount of net interest credited to 

the depository institution’s deposits during the period beginning on May 1, 1989, and ending on the 

date of the transfer of deposits in connection with 

such transaction; or 

50

ø(ii) the amount which is equal to the total deposits 

of such insured depository institution on the date of 

the transfer of deposits in connection with such transaction. 

ø(E) EXIT AND ENTRANCE FEES.—Each insured depository 

institution participating in a conversion transaction shall 

pay— ø(i) in the case of a conversion transaction in which 

the resulting or acquiring depository institution is not 

a Savings Association Insurance Fund member, an 

exit fee (in an amount to be determined and assessed 

in accordance with subparagraph (F)) which— ø(I) shall be deposited in the Savings Association Insurance Fund; or 

ø(II) shall be paid to the Financing Corporation, 

if the Secretary of the Treasury determines that 

the Financing Corporation has exhausted all other 

sources of funding for interest payments on the 

obligations of the Financing Corporation and orders that such fees be paid to the Financing Corporation; 

ø(ii) in the case of a conversion transaction in which 

the resulting or acquiring depository institution is not 

a Bank Insurance Fund member, an exit fee in an 

amount to be determined by the Corporation (and assessed in accordance with subparagraph (F)(ii)) which 

shall be deposited in the Bank Insurance Fund; and 

ø(iii) an entrance fee in an amount to be determined 

by the Corporation (and assessed in accordance with 

subparagraph (F)(ii)), except that— ø(I) in the case of a conversion transaction in 

which the resulting or acquiring depository institution is a Bank Insurance Fund member, the fee 

shall be the approximate amount which the Corporation calculates as necessary to prevent dilution of the Bank Insurance Fund, and shall be 

paid to the Bank Insurance Fund; and 

ø(II) in the case of a conversion transaction in 

which the resulting or acquiring depository institution is a Savings Association Insurance Fund 

member, the fee shall be the approximate amount 

which the Corporation calculates as necessary to 

prevent dilution of the Savings Association Insurance Fund, and shall be paid to the Savings Association Insurance Fund. 

ø(F) ASSESSMENT OF EXIT AND ENTRANCE FEES.—

ø(i) DETERMINATION OF AMOUNT OF EXIT FEES.—

ø(I) CONVERSIONS BEFORE JANUARY 1, 1997.—In 

the case of any exit fee assessed under subparagraph (E)(i) for any conversion transaction consummated before January 1, 1997, the amount of 

such fee shall be determined jointly by the Corporation and the Secretary of the Treasury. 

ø(II) ASSESSMENTS AFTER DECEMBER, 31, 1996.—

In the case of any exit fee assessed under subVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00050 Fmt 6659 Sfmt 6601 E:\HR\OC\HR050.XXX HR050
51

paragraph (E)(i) for any conversion transaction 

consummated after December 31, 1996, the 

amount of such fee shall be determined by the 

Corporation. 

ø(ii) PROCEDURES.—The Corporation shall prescribe, 

by regulation, procedures for assessing any exit or entrance fee under subparagraph (E). 

ø(G) CHARTER CONVERSION OF SAIF MEMBERS.—This subsection shall not be construed as prohibiting any savings 

association which is a Savings Association Insurance Fund 

member from converting to a bank charter during the period described in subparagraph (A)(ii) if the resulting bank 

remains a Savings Association Insurance Fund member. 

ø(3) OPTIONAL CONVERSIONS SUBJECT TO SPECIAL RULES ON

DEPOSIT INSURANCE PAYMENTS.— ø(A) CONVERSIONS ALLOWED.—Notwithstanding paragraph (2)(A), and subject to the requirements of this paragraph, any insured depository institution may participate 

in a transaction described in clause (ii), (iii), or (iv) of paragraph (2)(B) if the transaction is approved by the responsible agency under section 18(c)(2). 

ø(B) ASSESSMENTS ON DEPOSITS ATTRIBUTABLE TO

FORMER DEPOSITORY INSTITUTION.— ø(i) ASSESSMENTS BY SAIF.—In the case of any acquiring, assuming, or resulting depository institution 

which is a Bank Insurance Fund member, that portion 

of the deposits of such member for any semiannual period which is equal to the adjusted attributable deposit 

amount (determined under subparagraph (C) with respect to the transaction) shall be treated as deposits 

which are insured by the Savings Association Insurance Fund. 

ø(ii) ASSESSMENTS BY BIF.—In the case of any acquiring, assuming, or resulting depository institution 

which is a Savings Association Insurance Fund member, that portion of the deposits of such member for 

any semiannual period which is equal to the adjusted 

attributable deposit amount (determined under subparagraph (C) with respect to the transaction) shall be 

treated as deposits which are insured by the Bank 

Insurance Fund. 

ø(C) DETERMINATION OF ADJUSTED ATTRIBUTABLE DEPOSIT AMOUNT.—Except as provided in subparagraph (K), 

the adjusted attributable deposit amount which shall be 

taken into account for purposes of determining the amount 

of the assessment under subparagraph (B) for any semiannual period by any acquiring, assuming, or resulting depository institution in connection with a transaction under 

subparagraph (A) is the amount which is equal to the sum 

of— ø(i) the amount of any deposits acquired by the institution in connection with the transaction (as determined at the time of such transaction); 

ø(ii) the total of the amounts determined under 

clause (iii) for semiannual periods preceding the semiVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00051 Fmt 6659 Sfmt 6601 E:\HR\OC\HR050.XXX HR050
52

annual period for which the determination is being 

made under this subparagraph; and 

ø(iii) the amount by which the sum of the amounts 

described in clauses (i) and (ii) would have increased 

during the preceding semiannual period (other than 

any semiannual period beginning before the date of 

such transaction) if such increase occurred at a rate 

equal to the annual rate of growth of deposits of the 

acquiring, assuming, or resulting depository institution minus the amount of any deposits acquired 

through the acquisition, in whole or in part, of another 

insured depository institution. 

ø(D) DEPOSIT OF ASSESSMENT.—That portion of any assessment under section 7 which— ø(i) is determined in accordance with subparagraph 

(B)(i) shall be deposited in the Savings Association Insurance Fund; and 

ø(ii) is determined in accordance with subparagraph 

(B)(ii) shall be deposited in the Bank Insurance Fund. 

ø(E) CONDITIONS FOR APPROVAL, GENERALLY.— ø(i) INFORMATION REQUIRED.—An application to engage in any transaction under this paragraph shall 

contain such information relating to the factors to be 

considered for approval as the responsible agency may 

require, by regulation or by specific request, in connection with any particular application. 

ø(ii) NO TRANSFER OF DEPOSIT INSURANCE PER- MITTED.—This paragraph shall not be construed as authorizing transactions which result in the transfer of 

any insured depository institution’s Federal deposit insurance from 1 Federal deposit insurance fund to the 

other Federal deposit insurance fund. 

ø(iii) CAPITAL REQUIREMENTS.—A transaction described in this paragraph shall not be approved under 

section 18(c)(2) unless the acquiring, assuming, or resulting depository institution will meet all applicable 

capital requirements upon consummation of the transaction. 

ø(F) CERTAIN INTERSTATE TRANSACTIONS.—A Bank Insurance Fund member which is a subsidiary of a bank 

holding company may not be the acquiring, assuming, or 

resulting depository institution in a transaction under subparagraph (A) unless the transaction would comply with 

the requirements of section 3(d) of the Bank Holding Company Act of 1956 if, at the time of such transaction, the 

Savings Association Insurance Fund member involved in 

such transaction was a State bank that the bank holding 

company was applying to acquire. 

ø(G) ALLOCATION OF COSTS IN EVENT OF DEFAULT.—If 

any acquiring, assuming, or resulting depository institution is in default or danger of default at any time before 

this paragraph ceases to apply, any loss incurred by the 

Corporation shall be allocated between the Bank Insurance 

Fund and the Savings Association Insurance Fund, in 

amounts reflecting the amount of insured deposits of such 

53

acquiring, assuming, or resulting depository institution assessed by the Bank Insurance Fund and the Savings Association Insurance Fund, respectively, under subparagraph 

(B). 

ø(H) SUBSEQUENT APPROVAL OF CONVERSION TRANS- ACTION.—This paragraph shall cease to apply if— ø(i) after the end of the moratorium period established by paragraph (2)(A), the Corporation approves 

an application by any acquiring, assuming, or resulting depository institution to treat the transaction described in subparagraph (A) as a conversion transaction; and 

ø(ii) the acquiring, assuming, or resulting depository 

institution pays the amount of any exit and entrance 

fee assessed by the Corporation under subparagraph 

(E) of paragraph (2) with respect to such transaction. 

ø(I) ACQUIRING, ASSUMING, OR RESULTING DEPOSITORY

INSTITUTION DEFINED.—For purposes of this paragraph, 

the term ‘‘acquiring, assuming, or resulting depository institution’’ means any insured depository institution 

which—

ø(i) results from any transaction described in paragraph (2)(B)(ii) and approved under this paragraph; 

ø(ii) in connection with a transaction described in 

paragraph (2)(B)(iii) and approved under this paragraph, assumes any liability to pay deposits of another 

insured depository institution; or 

ø(iii) in connection with a transaction described in 

paragraph (2)(B)(iv) and approved under this paragraph, acquires assets from any insured depository institution in consideration of the assumption of liability 

for any deposits of such institution. 

ø(K) ADJUSTMENT OF ADJUSTED ATTRIBUTABLE DEPOSIT

AMOUNT.—The amount determined under subparagraph 

(C)(i) for deposits acquired by March 31, 1995, shall be reduced by 20 percent for purposes of computing the adjusted attributable deposit amount for the payment of any 

assessment for any semiannual period that begins after 

the date of the enactment of the Deposit Insurance Funds 

Act of 1996 (other than the special assessment imposed 

under section 2702(a) of such Act), for a Bank Insurance 

Fund member bank that, as of June 30, 1995—

ø(i) had an adjusted attributable deposit amount 

that was less than 50 percent of the total deposits of 

that member bank; or 

ø(ii)(I) had an adjusted attributable deposit amount 

equal to less than 75 percent of the total assessable 

deposits of that member bank; 

ø(II) had total assessable deposits greater than 

$5,000,000,000; and 

ø(III) was owned or controlled by a bank holding 

company that owned or controlled insured depository 

institutions having an aggregate amount of deposits 

insured or treated as insured by the Bank Insurance 

Fund greater than the aggregate amount of deposits 

54

insured or treated as insured by the Savings Association Insurance Fund.¿

(e) LIABILITY OF COMMONLY CONTROLLED DEPOSITORY INSTITU- TIONS.—

(1) * * *

* * * * * * *

(5) WAIVER AUTHORITY.— (A) IN GENERAL.—The Corporation, in its discretion, may 

exempt any insured depository institution from the provisions of this subsection if the Corporation determines that 

such exemption is in the best interests of the øBank Insurance Fund or the Savings Association Insurance Fund¿ Deposit Insurance Fund. 

* * * * * * *

ø(6) 5-YEAR TRANSITION RULE.—During the 5-year period beginning on the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— ø(A) no Savings Association Insurance Fund member 

shall have any liability to the Corporation under this subsection arising out of assistance provided by the Corporation or any loss incurred by the Corporation as a result of 

the default of a Bank Insurance Fund member which was 

acquired by such Savings Association Insurance Fund 

member or any affiliate of such member before the date of 

the enactment of such Act; and 

ø(B) no Bank Insurance Fund member shall have such 

liability with respect to assistance provided by or loss incurred by the Corporation as a result of the default of a 

Savings Association Insurance Fund member which was 

acquired by such Bank Insurance Fund member or any affiliate of such member before the date of the enactment of 

such Act.¿

ø(7)¿ (6) EXCLUSION FOR INSTITUTIONS ACQUIRED IN DEBT

COLLECTIONS.—Any depository institution shall not be treated 

as commonly controlled, for purposes of this subsection, during 

the 5-year period beginning on the date of an acquisition described in subparagraph (A) or such longer period as the 

Corporation may determine after written application by the 

acquirer, if—

(A) * * *

* * * * * * *

ø(8)¿ (7) EXCEPTION FOR CERTAIN FSLIC ASSISTED INSTITUTIONS.—No depository institution shall have any liability to the 

Corporation under this subsection as the result of the default 

of, or assistance provided with respect to, an insured depository institution which is an affiliate of such depository institution if—

(A) * * *

* * * * * * *

ø(9)¿ (8) COMMONLY CONTROLLED DEFINED.—For purposes of 

this subsection, depository institutions are commonly controlled if—

55

(A) * * *

* * * * * * *

SEC. 6. FACTORS TO BE CONSIDERED. 

The factors that are required, under section 4, to be considered 

in connection with, and enumerated in, any certificate issued pursuant to section 4 and that are required, under section 5, to be considered by the Board of Directors in connection with any determination by such Board pursuant to section 5 are the following: 

(1) * * *

* * * * * * *

(5) The risk presented by such depository institution to the 

øBank Insurance Fund or the Savings Association Insurance 

Fund¿ Deposit Insurance Fund. 

* * * * * * *

SEC. 7. (a)(1) * * *

* * * * * * *

(3) Each insured depository institution shall make to the appropriate Federal banking agency 4 reports of condition annually upon 

dates which shall be selected by the Chairman of the Board of Directors, the Comptroller of the Currency, the Chairman of the 

Board of Governors of the Federal Reserve System, and the Director of the Office of Thrift Supervision. The dates selected shall be 

the same for all insured depository institutions, except that when 

any of said reporting dates is a nonbusiness day for any depository 

institution, the preceding business day shall be its reporting date. 

øTwo dates shall be selected within the semiannual period of January to June inclusive, and the reports on such dates shall be the 

basis for the certified statement to be filed in July pursuant to subsection (c) of this section, and two dates shall be selected within 

the semiannual period of July to December inclusive, and the reports on such dates shall be the basis for the certified statement 

to be filed in January pursuant to subsection (c) of this section.¿

Such reports of condition shall be the basis for the certified statements to be filed pursuant to subsection (c). The deposit liabilities 

shall be reported in said reports of condition in accordance with 

and pursuant to paragraphs (4) and (5) of this subsection, and such 

other information shall be reported therein as may be required by 

the respective agencies. Each said report of condition shall contain 

a declaration by the president, a vice president, the cashier or the 

treasurer, or by any other officer designated by the board of directors or trustees of the reporting depository institution to make such 

declaration, that the report is true and correct to the best of his 

knowledge and belief. The correctness of said report of conditions 

shall be attested by the signatures of at least two directors or 

trustees of the reporting depository institution other than the officer making such declaration, with a declaration that the report has 

been examined by them and to the best of their knowledge and belief is true and correct. At the time of making said reports of condition each insured depository institution shall furnish to the Corporation a copy thereof containing such signed declaration and attestations. Nothing herein shall preclude any of the foregoing agenVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00055 Fmt 6659 Sfmt 6601 E:\HR\OC\HR050.XXX HR050
56

cies from requiring the banks or savings associations under its jurisdiction to make additional reports of condition at any time. 

* * * * * * *

(b) ASSESSMENTS.—

(1) RISK-BASED ASSESSMENT SYSTEM.—

(A) * * *

(B) PRIVATE REINSURANCE AUTHORIZED.—In carrying out 

this paragraph, the Corporation may—

(i) * * *

(ii) base that institution’s øsemiannual¿ assessment 

(in whole or in part) on the cost of the reinsurance. 

(C) RISK-BASED ASSESSMENT SYSTEM DEFINED.—For purposes of this paragraph, the term ‘‘risk-based assessment 

system’’ means a system for calculating a depository institution’s øsemiannual¿ assessment based on—

(i) the probability that the ødeposit insurance fund¿

Deposit Insurance Fund will incur a loss with respect 

to the institution, taking into consideration the risks 

attributable to—

(I) * * *

* * * * * * *

(iii) the revenue needs of the ødeposit insurance 

fund¿ Deposit Insurance Fund. (D) SEPARATE ASSESSMENT SYSTEMS.—The Board of Directors may establish separate risk-based assessment systems for large and small members of øeach deposit insurance fund¿ the Deposit Insurance Fund.

(E) INFORMATION CONCERNING RISK OF LOSS AND ECONOMIC CONDITIONS.—

(i) SOURCES OF INFORMATION.—For purposes of determining risk of losses at insured depository institutions and economic conditions generally affecting depository institutions, the Corporation shall collect information, as appropriate, from all sources the Board 

of Directors considers appropriate, such as reports of 

condition, inspection reports, and other information 

from all Federal banking agencies, any information 

available from State bank supervisors, State insurance 

and securities regulators, the Securities and Exchange 

Commission (including information described in section 35), the Secretary of the Treasury, the Commodity 

Futures Trading Commission, the Farm Credit Administration, the Federal Trade Commission, any Federal 

reserve bank or Federal home loan bank, and other 

regulators of financial institutions, and any information available from credit rating entities, and other private economic or business analysts. 

(ii) CONSULTATION WITH FEDERAL BANKING AGENCIES.—

(I) IN GENERAL.—Except as provided in subclause (II), in assessing the risk of loss to the Deposit Insurance Fund with respect to any insured 

depository institution, the Corporation shall conVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00056 Fmt 6659 Sfmt 6603 E:\HR\OC\HR050.XXX HR050
57

sult with the appropriate Federal banking agency 

of such institution. 

(II) TREATMENT ON AGGREGATE BASIS.—In the 

case of insured depository institutions that are well 

capitalized (as defined in section 38) and, in the 

most recent examination, were found to be well 

managed, the consultation under subclause (I) concerning the assessment of the risk of loss posed by 

such institutions may be made on an aggregate 

basis. 

(iii) RULE OF CONSTRUCTION.—No provision of this 

paragraph shall be construed as providing any new 

authority for the Corporation to require submission of 

information by insured depository institutions to the 

Corporation. 

(F) MODIFICATIONS TO THE RISK-BASED ASSESSMENT SYSTEM ALLOWED ONLY AFTER NOTICE AND COMMENT.—In revising or modifying the risk-based assessment system at 

any time after the date of the enactment of the Federal Deposit Insurance Reform Act of 2003, the Board of Directors 

may implement such revisions or modification in final form 

only after notice and opportunity for comment.

(2) SETTING ASSESSMENTS.—

ø(A) ACHIEVING AND MAINTAINING DESIGNATED RESERVE

RATIO.—

ø(i) IN GENERAL.—The Board of Directors shall set 

semiannual assessments for insured depository institutions when necessary, and only to the extent necessary—

ø(I) to maintain the reserve ratio of each deposit 

insurance fund at the designated reserve ratio; or 

ø(II) if the reserve ratio is less than the designated reserve ratio, to increase the reserve ratio 

to the designated reserve ratio as provided in 

paragraph (3). 

ø(ii) FACTORS TO BE CONSIDERED.—In carrying out 

clause (i), the Board of Directors shall consider the deposit insurance fund’s—

ø(I) expected operating expenses, 

ø(II) case resolution expenditures and income, 

ø(III) the effect of assessments on members’

earnings and capital, and 

ø(IV) any other factors that the Board of Directors may deem appropriate. 

ø(iii) LIMITATION ON ASSESSMENT.—Except as provided in clause (v), the Board of Directors shall not set 

semiannual assessments with respect to a deposit insurance fund in excess of the amount needed—

ø(I) to maintain the reserve ratio of the fund at 

the designated reserve ratio; or 

ø(II) if the reserve ratio is less than the designated reserve ratio, to increase the reserve ratio 

to the designated reserve ratio. 

58

ø(iv) DESIGNATED RESERVE RATIO DEFINED.—The 

designated reserve ratio of each deposit insurance 

fund for each year shall be— ø(I) 1.25 percent of estimated insured deposits; 

or 

ø(II) a higher percentage of estimated insured 

deposits that the Board of Directors determines to 

be justified for that year by circumstances raising 

a significant risk of substantial future losses to 

the fund. 

ø(v) EXCEPTION TO LIMITATION ON ASSESSMENTS.— The Board of Directors may set semiannual assessments in excess of the amount permitted under 

clauses (i) and (iii) with respect to insured depository 

institutions that exhibit financial, operational, or compliance weaknesses ranging from moderately severe to 

unsatisfactory, or are not well capitalized, as that 

term is defined in section 38. 

ø(B) INDEPENDENT TREATMENT OF FUNDS.—The Board of 

Directors shall— ø(i) set semiannual assessments for members of 

each deposit insurance fund independently from semiannual assessments for members of any other deposit 

insurance fund; and 

ø(ii) set the designated reserve ratio of each deposit 

insurance fund independently from the designated 

reserve ratio of any other deposit insurance fund.¿

(A) IN GENERAL.—The Board of Directors shall set assessments for insured depository institutions in such amounts 

as the Board of Directors may determine to be necessary or 

appropriate, subject to subparagraph (D). 

(B) FACTORS TO BE CONSIDERED.—In setting assessments 

under subparagraph (A), the Board of Directors shall consider the following factors: 

(i) The estimated operating expenses of the Deposit 

Insurance Fund. 

(ii) The estimated case resolution expenses and income of the Deposit Insurance Fund. 

(iii) The projected effects of the payment of assessments on the capital and earnings of insured depository institutions. 

(iv) the risk factors and other factors taken into account pursuant to paragraph (1) under the risk-based 

assessment system, including the requirement under 

such paragraph to maintain a risk-based system. 

(v) Any other factors the Board of Directors may determine to be appropriate.

(C) NOTICE OF ASSESSMENTS.—The Corporation shall notify each insured depository institution of that institution’s 

øsemiannual¿ assessment.

(D) BASE RATE FOR ASSESSMENTS.—

(i) IN GENERAL.—In setting assessment rates pursuant to subparagraph (A), the Board of Directors shall 

establish a base rate of not more than 1 basis point (exclusive of any credit or dividend) for those insured deVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00058 Fmt 6659 Sfmt 6603 E:\HR\OC\HR050.XXX HR050
59

pository institutions in the lowest-risk category under 

the risk-based assessment system established pursuant 

to paragraph (1). No insured depository institution 

shall be barred from the lowest-risk category solely because of size. 

(ii) SUSPENSION.—Clause (i) shall not apply during 

any period in which the reserve ratio of the Deposit Insurance Fund is less than the amount which is equal 

to 1.15 percent of the aggregate estimated insured deposits.

ø(E) MINIMUM ASSESSMENTS.—The Corporation shall design the risk-based assessment system for any deposit insurance fund so that, if the Corporation has borrowings 

outstanding under section 14 on behalf of that fund or the 

reserve ratio of that fund remains below the designated reserve ratio, the total amount raised by semiannual assessments on members of that fund shall be not less than the 

total amount that would have been raised if— ø(i) section 7(b) as in effect on July 15, 1991 remained in effect; 

ø(ii) the assessment rate in effect on July 15, 1991 

remained in effect; and 

ø(iii) notwithstanding any other provision of this 

subsection, during the period beginning on the date of 

enactment of the Deposit Insurance Funds Act of 

1996, and ending on December 31, 1998, the assessment rate for a Savings Association Insurance Fund 

member may not be less than the assessment rate for 

a Bank Insurance Fund member that poses a comparable risk to the deposit insurance fund. 

ø(F) TRANSITION RULE FOR SAVINGS ASSOCIATION INSURANCE FUND.—With respect to the Savings Association Insurance Fund, during the period beginning on the effective 

date of the amendments made by section 302(a) of the Federal Deposit Insurance Corporation Improvement Act of 

1991 and ending on December 31, 1997— ø(i) subparagraph (A)(i)(II) shall apply as if such 

subparagraph did not include ‘‘as provided in paragraph (3)’’; and 

ø(ii) subparagraph (E) shall be applied by substituting ‘‘if section 7(b) as in effect on July 15, 1991 

remained in effect.’’ for ‘‘if—’’ and all that follows 

through clause (ii). 

ø(G) SPECIAL RULE UNTIL THE INSURANCE FUNDS

ACHIEVE THE DESIGNATED RESERVE RATIO.—Until a deposit 

insurance fund achieves the designated reserve ratio, the 

Corporation may limit the maximum assessment on insured depository institutions under the risk-based assessment system authorized under paragraph (1) to not less 

than 10 basis points above the average assessment on insured depository institutions under that system.¿

ø(H)¿ (E) BANK ENTERPRISE ACT REQUIREMENT.—The 

Corporation shall design the risk-based assessment system 

so that, insofar as the system bases assessments, directly 

or indirectly, on deposits, the portion of the deposits of any 

60

insured depository institution which are attributable to 

lifeline accounts established in accordance with the Bank 

Enterprise Act of 1991 shall be subject to assessment øat 

a rate determined in accordance with such Act¿ at 1⁄2 the 

assessment rate otherwise applicable for such insured depository institution. ø(3) SPECIAL RULE FOR RECAPITALIZING UNDERCAPITALIZED

FUNDS.—

ø(A) IN GENERAL.—Except as provided in paragraph 

(2)(F), if the reserve ratio of any deposit insurance fund is 

less than the designated reserve ratio under paragraph 

(2)(A)(iv), the Board of Directors shall set semiannual assessment rates for members of that fund— ø(i) that are sufficient to increase the reserve ratio 

for that fund to the designated reserve ratio not later 

than 1 year after such rates are set; or 

ø(ii) in accordance with a schedule promulgated by 

the Corporation under subparagraph (B). 

ø(B) RECAPITALIZATION SCHEDULES.—For purposes of 

subparagraph (A)(ii), the Corporation shall by regulation 

promulgate a schedule that specifies, at semiannual intervals, target reserve ratios for that fund, culminating in a 

reserve ratio that is equal to the designated reserve ratio 

not later than 15 years after the date on which the schedule is implemented. 

ø(C) AMENDING SCHEDULE.—The Corporation may, by 

regulation, amend a schedule promulgated under subparagraph (B) and such amendment may extend the date specified in subparagraph (B) to such later date as the Corporation determines will, over time, maximize the amount of 

semiannual assessments received by the Savings Association Insurance Fund, net of insurance losses incurred by 

the Fund. 

ø(D) APPLICATION TO SAIF MEMBERS.—This paragraph 

shall become applicable to Savings Association Insurance 

Fund members on January 1, 1998. 

ø(4) SEMIANNUAL PERIOD DEFINED.—For purposes of this section, the term ‘‘semiannual period’’ means a period beginning 

on January 1 of any calendar year and ending on June 30 of 

the same year, or a period beginning on July 1 of any calendar 

year and ending on December 31 of the same year. 

ø(5) RECORDS TO BE MAINTAINED.—Each insured depository 

institution shall maintain all records that the Corporation may 

require for verifying the correctness of the institution’s semiannual assessments. No insured depository institution shall be 

required to retain those records for that purpose for a period 

of more than 5 years from the date of the filing of any certified 

statement, except that when there is a dispute between the insured depository institution and the Corporation over the 

amount of any assessment, the depository institution shall retain the records until final determination of the issue.¿

(3) DESIGNATED RESERVE RATIO.— (A) ESTABLISHMENT.—

(i) IN GENERAL.—The Board of Directors shall designate, by regulation after notice and opportunity for 

61

comment, the reserve ratio applicable with respect to 

the Deposit Insurance Fund. 

(ii) NOT LESS THAN ANNUAL REDETERMINATION.—A 

determination under clause (i) shall be made by the 

Board of Directors at least before the beginning of each 

calendar year, for such calendar year, and at such 

other times as the Board of Directors may determine to 

be appropriate. 

(B) RANGE.—The reserve ratio designated by the Board of 

Directors for any year—

(i) may not exceed 1.4 percent of estimated insured 

deposits; and 

(ii) may not be less than 1.15 percent of estimated insured deposits. 

(C) FACTORS.—In designating a reserve ratio for any 

year, the Board of Directors shall—

(i) take into account the risk of losses to the Deposit 

Insurance Fund in such year and future years, including historic experience and potential and estimated 

losses from insured depository institutions; 

(ii) take into account economic conditions generally 

affecting insured depository institutions so as to allow 

the designated reserve ratio to increase during more favorable economic conditions and to decrease during 

less favorable economic conditions, notwithstanding the 

increased risks of loss that may exist during such less 

favorable conditions, as determined to be appropriate 

by the Board of Directors; 

(iii) seek to prevent sharp swings in the assessment 

rates for insured depository institutions; and 

(iv) take into account such other factors as the Board 

of Directors may determine to be appropriate, consistent with the requirements of this subparagraph. 

(D) PUBLICATION OF PROPOSED CHANGE IN RATIO.—In soliciting comment on any proposed change in the designated 

reserve ratio in accordance with subparagraph (A), the 

Board of Directors shall include in the published proposal 

a thorough analysis of the data and projections on which 

the proposal is based. 

(E) DIF RESTORATION PLANS.—

(i) IN GENERAL.—Whenever—

(I) the Corporation projects that the reserve ratio 

of the Deposit Insurance Fund will, within 6 

months of such determination, fall below the minimum amount specified in subparagraph (B)(ii) for 

the designated reserve ratio; or 

(II) the reserve ratio of the Deposit Insurance 

Fund actually falls below the minimum amount 

specified in subparagraph (B)(ii) for the designated 

reserve ratio without any determination under subclause (I) having been made, 

the Corporation shall establish and implement a Deposit Insurance Fund restoration plan within 90 days 

that meets the requirements of clause (ii) and such 

62

other conditions as the Corporation determines to be 

appropriate. 

(ii) REQUIREMENTS OF RESTORATION PLAN.—A Deposit Insurance Fund restoration plan meets the requirements of this clause if the plan provides that the 

reserve ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (B)(ii) for the 

designated reserve ratio before the end of the 10-year 

period beginning upon the implementation of the plan. 

(iii) RESTRICTION ON ASSESSMENT CREDITS.—As part 

of any restoration plan under this subparagraph, the 

Corporation may elect to restrict the application of assessment credits provided under subsection (e)(3) for 

any period that the plan is in effect. 

(iv) LIMITATION ON RESTRICTION.—Notwithstanding 

clause (iii), while any restoration plan under this subparagraph is in effect, the Corporation shall apply 

credits provided to an insured depository institution 

under subsection (e)(3) against any assessment imposed 

on the institution for any assessment period in an 

amount equal to the lesser of— (I) the amount of the assessment; or 

(II) the amount equal to 3 basis points of the institution’s assessment base. 

(v) TRANSPARENCY.—Not more than 30 days after the 

Corporation establishes and implements a restoration 

plan under clause (i), the Corporation shall publish in 

the Federal Register a detailed analysis of the factors 

considered and the basis for the actions taken with regard to the plan. 

(4) DEPOSITORY INSTITUTION REQUIRED TO MAINTAIN ASSESSMENT-RELATED RECORDS.—Each insured depository institution 

shall maintain all records that the Corporation may require for 

verifying the correctness of any assessment on the insured depository institution under this subsection until the later of— (A) the end of the 3-year period beginning on the due date 

of the assessment; or 

(B) in the case of a dispute between the insured depository institution and the Corporation with respect to such 

assessment, the date of a final determination of any such 

dispute.

ø(6)¿ (5) EMERGENCY SPECIAL ASSESSMENTS.—In addition to 

the other assessments imposed on insured depository institutions under this subsection, the Corporation may impose 1 or 

more special assessments on insured depository institutions in 

an amount determined by the Corporation if the amount of 

øany such assessment¿ any such assessment is necessary—

ø(A) is necessary—¿

ø(i)¿ (A) to provide sufficient assessment income to repay 

amounts borrowed from the Secretary of the Treasury 

under section 14(a) in accordance with the repayment 

schedule in effect under section 14(c) during the period 

with respect to which such assessment is imposed; 

ø(ii)¿ (B) to provide sufficient assessment income to 

repay obligations issued to and other amounts borrowed 

63

from øBank Insurance Fund members¿ insured depository 

institutions under section 14(d); or 

ø(iii)¿ (C) for any other purpose that the Corporation 

may deem necessaryø; and¿. ø(B) is allocated between Bank Insurance Fund members and Savings Association Insurance Fund members in 

amounts which reflect the degree to which the proceeds of 

the amounts borrowed are to be used for the benefit of the 

respective insurance funds.¿

ø(7)¿ (6) COMMUNITY ENTERPRISE CREDITS.—The Corporation 

shall allow a credit against any semiannual assessment to any 

insured depository institution which satisfies the requirements 

of the Community Enterprise Assessment Credit Board under 

section 233(a)(1) of the Bank Enterprise Act of 1991 in the 

amount determined by such Board by regulation. 

(c) CERTIFIED STATEMENTS; PAYMENTS.— (1) CERTIFIED STATEMENTS REQUIRED.— (A) IN GENERAL.—Each insured depository institution 

shall file with the Corporation a certified statement containing such information as the Corporation may require 

for determining the institution’s øsemiannual¿ assessment. 

* * * * * * *

(2) PAYMENTS REQUIRED.—

(A) IN GENERAL.—Each insured depository institution 

shall pay to the Corporation the øsemiannual¿ assessment 

imposed under subsection (b). 

* * * * * * *

(3) NEWLY INSURED INSTITUTIONS.—To facilitate the administration of this section, the Board of Directors may waive the 

requirements of paragraphs (1) and (2) for the øsemiannual period¿ initial assessment period in which a depository institution becomes insured. 

* * * * * * *

ø(e) REFUNDS.—

ø(1) OVERPAYMENTS.—In the case of any payment of an assessment by an insured depository institution in excess of the 

amount due to the Corporation, the Corporation may—

ø(A) refund the amount of the excess payment to the insured depository institution; or 

ø(B) credit such excess amount toward the payment of 

subsequent semiannual assessments until such credit is 

exhausted. 

ø(2) BALANCE IN INSURANCE FUND IN EXCESS OF DESIGNATED

RESERVE.—

ø(A) IN GENERAL.—Subject to subparagraphs (B) and (C), 

if, as of the end of any semiannual assessment period beginning after the date of the enactment of the Deposit Insurance Funds Act of 1996, the amount of the actual reserves in—

ø(i) the Bank Insurance Fund (until the merger of 

such fund into the Deposit Insurance Fund pursuant 

to section 2704 of the Deposit Insurance Funds Act of 

1996); or 

64

ø(ii) the Deposit Insurance Fund (after the establishment of such fund),

exceeds the balance required to meet the designated reserve ratio applicable with respect to such fund, such excess amount shall be refunded to insured depository institutions by the Corporation on such basis as the Board of 

Directors determines to be appropriate, taking into account 

the factors considered under the risk-based assessment 

system. 

ø(B) REFUND NOT TO EXCEED PREVIOUS SEMIANNUAL AS- SESSMENT.—The amount of any refund under this paragraph to any member of a deposit insurance fund for any 

semiannual assessment period may not exceed the total 

amount of assessments paid by such member to the insurance fund with respect to such period. 

ø(C) REFUND LIMITATION FOR CERTAIN INSTITUTIONS.— No refund may be made under this paragraph with respect 

to the amount of any assessment paid for any semiannual 

assessment period by any insured depository institution 

described in clause (v) of subsection (b)(2)(A).¿

(e) REFUNDS, DIVIDENDS, AND CREDITS.— (1) REFUNDS OF OVERPAYMENTS.—In the case of any payment 

of an assessment by an insured depository institution in excess 

of the amount due to the Corporation, the Corporation may— (A) refund the amount of the excess payment to the insured depository institution; or 

(B) credit such excess amount toward the payment of subsequent assessments until such credit is exhausted. 

(2) DIVIDENDS FROM EXCESS AMOUNTS IN DEPOSIT INSURANCE

FUND.—

(A) RESERVE RATIO IN EXCESS OF 1.4 PERCENT OF ESTI- MATED INSURED DEPOSITS.—Whenever the reserve ratio of 

the Deposit Insurance Fund exceeds 1.4 percent of estimated insured deposits, the Corporation shall declare the 

amount in the Fund in excess of the amount required to 

maintain the reserve ratio at 1.4 percent of estimated insured deposits, as dividends to be paid to insured depository institutions. 

(B) RESERVE RATIO EQUAL TO OR IN EXCESS OF 1.35 PERCENT OF ESTIMATED INSURED DEPOSITS AND NOT MORE

THAN 1.4 PERCENT.—Whenever the reserve ratio of the Deposit Insurance Fund equals or exceeds 1.35 percent of estimated insured deposits and is not more than 1.4 percent of 

such deposits, the Corporation shall declare the amount in 

the Fund that is equal to 50 percent of the amount in excess 

of the amount required to maintain the reserve ratio at 1.35 

percent of the estimated insured deposits as dividends to be 

paid to insured depository institutions. 

(C) BASIS FOR DISTRIBUTION OF DIVIDENDS.—

(i) IN GENERAL.—Solely for the purposes of dividend 

distribution under this paragraph and credit distribution under paragraph (3)(B), the Corporation shall determine each insured depository institution’s relative 

contribution to the Deposit Insurance Fund (or any 

predecessor deposit insurance fund) for calculating 

65

such institution’s share of any dividend or credit declared under this paragraph or paragraph (3)(B), taking into account the factors described in clause (ii). 

(ii) FACTORS FOR DISTRIBUTION.—In implementing 

this paragraph and paragraph (3)(B) in accordance 

with regulations, the Corporation shall take into account the following factors: 

(I) The ratio of the assessment base of an insured depository institution (including any predecessor) on December 31, 1996, to the assessment 

base of all eligible insured depository institutions 

on that date. 

(II) The total amount of assessments paid on or 

after January 1, 1997, by an insured depository institution (including any predecessor) to the Deposit 

Insurance Fund (and any predecessor deposit insurance fund). 

(III) That portion of assessments paid by an insured depository institution (including any predecessor) that reflects higher levels of risk assumed 

by such institution. 

(IV) Such other factors as the Corporation may 

determine to be appropriate. 

(D) NOTICE AND OPPORTUNITY FOR COMMENT.—The Corporation shall prescribe by regulation, after notice and opportunity for comment, the method for the calculation, declaration, and payment of dividends under this paragraph. 

(3) CREDIT POOL.—

(A) ONE-TIME CREDIT BASED ON TOTAL ASSESSMENT BASE

AT YEAR-END 1996.—

(i) IN GENERAL.—Before the end of the 270-day period beginning on the date of the enactment of the Federal Deposit Insurance Reform Act of 2003, the Board 

of Directors shall, by regulation, provide for a credit to 

each eligible insured depository institution, based on 

the assessment base of the institution (including any 

predecessor institution) on December 31, 1996, as compared to the combined aggregate assessment base of all 

eligible insured depository institutions, taking into account such factors as the Board of Directors may determine to be appropriate. 

(ii) CREDIT LIMIT.—The aggregate amount of credits 

available under clause (i) to all eligible insured depository institutions shall equal the amount that the Corporation could collect if the Corporation imposed an 

assessment of 12 basis points on the combined assessment base of the Bank Insurance Fund and the Savings Association Insurance Fund as of December 31, 

2001. 

(iii) ELIGIBLE INSURED DEPOSITORY INSTITUTION DEFINED.—For purposes of this paragraph, the term ‘‘eligible insured depository institution’’ means any insured 

depository institution that—

66

(I) was in existence on December 31, 1996, and 

paid a deposit insurance assessment prior to that 

date; or 

(II) is a successor to any insured depository institution described in subclause (II). 

(iv) APPLICATION OF CREDITS.—

(I) IN GENERAL.—The amount of a credit to any 

eligible insured depository institution under this 

paragraph shall be applied by the Corporation, 

subject to subsection (b)(3)(e), to the assessments 

imposed on such institution under subsection (b) 

that become due for assessment periods beginning 

after the effective date of regulations prescribed 

under clause (i). 

(II) REGULATIONS.—The regulations prescribed 

under clause (i) shall establish the qualifications 

and procedures governing the application of assessment credits pursuant to subclause (I). 

(v) LIMITATION ON AMOUNT OF CREDIT FOR CERTAIN

DEPOSITORY INSTITUTIONS.—In the case of an insured 

depository institution that exhibits financial, operational, or compliance weaknesses ranging from moderately severe to unsatisfactory, or is not adequately 

capitalized (as defined in section 38) at the beginning 

of an assessment period, the amount of any credit allowed under this paragraph against the assessment on 

that depository institution for such period may not exceed the amount calculated by applying to that depository institution the average assessment rate on all insured depository institutions for such assessment period. 

(vi) PREDECESSOR DEFINED.—For purposes of this 

paragraph, the term ‘‘predecessor’’, when used with respect to any insured depository institution, includes 

any other insured depository institution acquired by or 

merged with such insured depository institution. 

(B) ON-GOING CREDIT POOL.—

(i) IN GENERAL.—In addition to the credit provided 

pursuant to subparagraph (A) and subject to the limitation contained in clause (v) of such subparagraph, 

the Corporation shall, by regulation, establish an ongoing system of credits to be applied against future assessments under subsection (b)(1) on the same basis as 

the dividends provided under paragraph (2)(C). 

(ii) LIMITATION ON CREDITS UNDER CERTAIN CIRCUMSTANCES.—No credits may be awarded by the Corporation under this subparagraph during any period 

in which—

(I) the reserve ratio of the Deposit Insurance 

Fund is less than the designated reserve ratio of 

such Fund; or 

(II) the reserve ratio of the Fund is less than 

1.25 percent of the amount of estimated insured 

deposits. 

67

(iii) CRITERIA FOR DETERMINATION.—In determining 

the amounts of any assessment credits under this subparagraph, the Board of Directors shall take into account the factors for designating the reserve ratio 

under subsection (b)(3) and the factors for setting assessments under subsection (b)(2)(B). 

(4) ADMINISTRATIVE REVIEW.— (A) IN GENERAL.—The regulations prescribed under paragraph (2)(D) and subparagraphs (A) and (B) of paragraph 

(3) shall include provisions allowing an insured depository 

institution a reasonable opportunity to challenge administratively the amount of the credit or dividend determined 

under paragraph (2) or (3) for such institution. 

(B) ADMINISTRATIVE REVIEW.—Any review under subparagraph (A) of any determination of the Corporation 

under paragraph (2) or (3) shall be final and not subject 

to judicial review.

* * * * * * *

(i) INSURANCE OF TRUST FUNDS.—

(1) IN GENERAL.—Trust funds held on deposit by an insured 

depository institution in a fiduciary capacity as trustee pursuant to any irrevocable trust established pursuant to any statute or written trust agreement shall be insured in an amount 

not to exceed ø$100,000¿ the standard maximum deposit insurance amount (as determined under section 11(a)(1)) for each 

trust estate. 

* * * * * * *

(3) BANK DEPOSIT FINANCIAL ASSISTANCE PROGRAM.—Notwithstanding paragraph (1), funds deposited by an insured depository institution pursuant to the Bank Deposit Financial 

Assistance Program of the Department of Energy shall be separately insured in an amount not to exceed ø$100,000¿ the 

standard maximum deposit insurance amount (as determined 

under section 11(a)(1)) for each insured depository institution 

depositing such funds. 

* * * * * * *

(j)(1) * * *

* * * * * * *

(7) The appropriate Federal banking agency may disapprove any 

proposed acquisition if— (A) * * *

* * * * * * *

(F) the appropriate Federal banking agency determines that 

the proposed transaction would result in an adverse effect on 

the øBank Insurance Fund or the Savings Association Insurance Fund¿ Deposit Insurance Fund. 

* * * * * * *

SEC. 8. (a) * * *

* * * * * * *

(p) Notwithstanding any other provision of law, whenever the 

Board of Directors shall determine that an insured depository instiVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00067 Fmt 6659 Sfmt 6601 E:\HR\OC\HR050.XXX HR050
68

tution is not engaged in the business of receiving deposits, other 

than trust funds as herein defined, the Corporation shall notify the 

depository institution that its insured status will terminate at the 

expiration of the first full øsemiannual¿ assessment period following such notice. A finding by the Board of Directors that a depository institution is not engaged in the business of receiving deposits, other than such trust funds, shall be conclusive. The Board 

of Directors shall prescribe the notice to be given by the depository 

institution of such termination and the Corporation may publish 

notice thereof. Upon the termination of the insured status of any 

such depository institution, its deposits shall thereupon cease to be 

insured and the depository institution shall thereafter be relieved 

of all future obligations to the Corporation, including the obligation 

to pay future assessments. 

(q) Whenever the liabilities of an insured depository institution 

for deposits shall have been assumed by another insured depository 

institution or depository institutions, whether by way of merger, 

consolidation, or other statutory assumption, or pursuant to contract (1) the insured status of the depository institution whose liabilities are so assumed shall terminate on the date of receipt by 

the Corporation of satisfactory evidence of such assumption; (2) the 

separate insurance of all deposits so assumed shall terminate at 

the end of six months from the date such assumption takes effect 

or, in the case of any time deposit, the earliest maturity date after 

the six-month period. Where the deposits of an insured depository 

institution are assumed by a newly insured depository institution, 

the depository institution whose deposits are assumed shall not be 

required to pay any assessment with respect to the deposits which 

have been so assumed after the øsemiannual period¿ assessment 

period in which the assumption takes effect. 

* * * * * * *

(t) AUTHORITY OF FDIC TO TAKE ENFORCEMENT ACTION AGAINST

INSURED DEPOSITORY INSTITUTIONS AND INSTITUTION-AFFILIATED

PARTIES.—

(1) * * *

(2) FDIC’S AUTHORITY TO ACT IF APPROPRIATE FEDERAL BANKING AGENCY FAILS TO FOLLOW RECOMMENDATION.—If the appropriate Federal banking agency does not, before the end of the 

60-day period beginning on the date on which the agency receives the recommendation under paragraph (1), take the enforcement action recommended by the Corporation or provide 

a plan acceptable to the Corporation for responding to the Corporation’s concerns, the Corporation may take the recommended enforcement action if the Board of Directors determines, upon a vote of its members, that—

(A) * * *

* * * * * * *

(C) the conduct or threatened conduct (including any 

acts or omissions) poses a risk to the ødeposit insurance 

fund¿ Deposit Insurance Fund, or may prejudice the interests of the institution’s depositors. 

* * * * * * *

SEC. 11. (a) DEPOSIT INSURANCE.—

69

(1) INSURED AMOUNTS PAYABLE.— (A) * * *

ø(B) NET AMOUNT OF INSURED DEPOSIT.—The net 

amount due to any depositor at an insured depository institution shall not exceed $100,000 as determined in accordance with subparagraphs (C) and (D).¿

(B) NET AMOUNT OF INSURED DEPOSIT.—The net amount 

due to any depositor at an insured depository institution 

shall not exceed the standard maximum deposit insurance 

amount as determined in accordance with subparagraphs 

(C), (D), (E) and (F) and paragraph (3).

* * * * * * *

ø(D) COVERAGE ON PRO RATA OR ‘‘PASS-THROUGH’’ BASIS.—

ø(i) IN GENERAL.—Except as provided in clause (ii), 

for the purpose of determining the amount of insurance due under subparagraph (B), the Corporation 

shall provide deposit insurance coverage with respect 

to deposits accepted by any insured depository institution on a pro rata or ‘‘pass-through’’ basis to a participant in or beneficiary of an employee benefit plan (as 

defined in section 11(a)(8)(B)(ii)), including any eligible 

deferred compensation plan described in section 457 of 

the Internal Revenue Code of 1986. 

ø(ii) EXCEPTION.—After the end of the 1-year period 

beginning on the date of the enactment of the Federal 

Deposit Insurance Corporation Improvement Act of 

1991, the Corporation shall not provide insurance coverage on a pro rata or ‘‘pass-through’’ basis pursuant 

to clause (i) with respect to deposits accepted by any 

insured depository institution which, at the time such 

deposits are accepted, may not accept brokered deposits under section 29. 

ø(iii) COVERAGE UNDER CERTAIN CIRCUMSTANCES.— Clause (ii) shall not apply with respect to any deposit 

accepted by an insured depository institution described in such clause if, at the time the deposit is accepted—

ø(I) the institution meets each applicable capital 

standard; and 

ø(II) the depositor receives a written statement 

from the institution that such deposits at such institution are eligible for insurance coverage on a 

pro rata or ‘‘pass-through’’ basis.¿

(D) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT PLAN DE- POSITS.—

(i) PASS-THROUGH INSURANCE.—The Corporation 

shall provide pass-through deposit insurance for the 

deposits of any employee benefit plan. 

(ii) PROHIBITION ON ACCEPTANCE OF BENEFIT PLAN

DEPOSITS.—An insured depository institution that is 

not well capitalized or adequately capitalized may not 

accept employee benefit plan deposits. 

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

70

(I) CAPITAL STANDARDS.—The terms ‘‘well capitalized’’ and ‘‘adequately capitalized’’ have the 

same meanings as in section 38. 

(II) EMPLOYEE BENEFIT PLAN.—The term ‘‘employee benefit plan’’ has the same meaning as in 

paragraph (8)(B)(ii), and includes any eligible deferred compensation plan described in section 457 

of the Internal Revenue Code of 1986. 

(III) PASS-THROUGH DEPOSIT INSURANCE.—The 

term ‘‘pass-through deposit insurance’’ means, with 

respect to an employee benefit plan, deposit insurance coverage provided on a pro rata basis to the 

participants in the plan, in accordance with the interest of each participant. 

(E) STANDARD MAXIMUM DEPOSIT INSURANCE AMOUNT DE- FINED.—For purposes of this Act, the term ‘‘standard maximum deposit insurance amount’’ means— (i) until the effective date of final regulations prescribed pursuant to section 9(a)(2) of the Federal Deposit Insurance Reform Act of 2003, $100,000; and (ii) on and after such effective date, $130,000, adjusted as provided under subparagraph (F). 

(F) INFLATION ADJUSTMENT.— (i) IN GENERAL.—By April 1 of 2005, and the 1st day 

of each subsequent 5-year period, the Board of Directors and the National Credit Union Administration 

Board shall jointly prescribe the amount by which the 

standard maximum deposit insurance amount and the 

standard maximum share insurance amount (as defined in section 207(k) of the Federal Credit Union Act) 

applicable to any depositor at an insured depository institution shall be increased by calculating the product 

of— (I) $130,000; and 

(II) the ratio of the value of the Personal Consumption Expenditures Chain-Type Index (or any 

successor index thereto), published by the Department of Commerce, as of December 31 of the year 

preceding the year in which the adjustment is calculated under this clause, to the value of such 

index as of the date this subparagraph takes effect. 

(ii) ROUNDING.—If the amount determined under 

clause (ii) for any period is not a multiple of $10,000, 

the amount so determined shall be rounded to the 

nearest $10,000. 

(iii) PUBLICATION AND REPORT TO THE CONGRESS.—

Not later than April 5 of any calendar year in which 

an adjustment is required to be calculated under 

clause (i) to the standard maximum deposit insurance 

amount and the standard maximum share insurance 

amount under such clause, the Board of Directors and 

the National Credit Union Administration Board 

shall—

(I) publish in the Federal Register the standard 

maximum deposit insurance amount, the standard 

71

maximum share insurance amount, and the 

amount of coverage under paragraph (3)(A) and 

section 207(k)(3) of the Federal Credit Union Act, 

as so calculated; and 

(II) jointly submit a report to the Congress containing the amounts described in subclause (I). 

(iv) 6-MONTH IMPLEMENTATION PERIOD.—Unless an 

Act of Congress enacted before July 1 of the calendar 

year in which an adjustment is required to be calculated under clause (i) provides otherwise, the increase in the standard maximum deposit insurance 

amount and the standard maximum share insurance 

amount shall take effect on January 1 of the year immediately succeeding such calendar year.

ø(2)(A) Notwithstanding any limitation in this Act or in any 

other provision of law relating to the amount of deposit insurance 

available for the account of any one depositor, in the case of a depositor who is—¿

(2) MUNICIPAL DEPOSITORS.—

(A) IN GENERAL.—Notwithstanding any limitation in this 

Act or in any other provision of law relating to the amount 

of deposit insurance available to any 1 depositor—

(i) a municipal depositor shall, for the purpose of determining the amount of insured deposits under this 

subsection, be deemed to be a depositor separate and 

distinct from any other officer, employee, or agent of 

the United States or any public unit referred to in subparagraph (E); and 

(ii) except as provided in subparagraph (B), the deposits of a municipal depositor shall be insured in an 

amount equal to the standard maximum deposit insurance amount (as determined under paragraph (1)). 

(B) IN-STATE MUNICIPAL DEPOSITORS.—In the case of the 

deposits of an in-State municipal depositor described in 

clause (ii), (iii), (iv), or (v) of subparagraph (E) at an insured depository institution, such deposits shall be insured 

in an amount not to exceed the lesser of—

(i) $2,000,000; or 

(ii) the sum of the standard maximum deposit insurance amount and 80 percent of the amount of any deposits in excess of the standard maximum deposit insurance amount. 

(C) MUNICIPAL DEPOSIT PARITY.—No State may deny to 

insured depository institutions within its jurisdiction the 

authority to accept deposits insured under this paragraph, 

or prohibit the making of such deposits in such institutions 

by any in-State municipal depositor. 

(D) IN-STATE MUNICIPAL DEPOSITOR DEFINED.—For purposes of this paragraph, the term ‘‘in-State municipal depositor’’ means a municipal depositor that is located in the 

same State as the office or branch of the insured depository 

institution at which the deposits of that depositor are held. 

(E) MUNICIPAL DEPOSITOR.—In this paragraph, the term 

‘‘municipal depositor’’ means a depositor that is—

72

(i) an officer, employee, or agent of the United 

States having official custody of public funds and lawfully investing or depositing the same in time and savings deposits in an insured depository institution; 

(ii) an officer, employee, or agent of any State of the 

United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing or depositing the same 

in time and savings deposits in an insured depository 

institution in such State; 

(iii) an officer, employee, or agent of the District of 

Columbia having official custody of public funds and 

lawfully investing or depositing the same in time and 

savings deposits in an insured depository institution 

in the District of Columbia; 

(iv) an officer, employee, or agent of the Commonwealth of Puerto Rico, of the Virgin Islands, of American Samoa, of the Trust Territory of the Pacific Islands, or of Guam, or of any county, municipality, or 

political subdivision thereof having official custody of 

public funds and lawfully investing or depositing the 

same in time and savings deposits in an insured depository institution in the Commonwealth of Puerto 

Rico, the Virgin Islands, American Samoa, the Trust 

Territory of the Pacific Islands, or Guam, respectively; 

or 

(v) an officer, employee, or agent of any Indian tribe 

(as defined in section 3(c) of the Indian Financing Act 

of 1974) or agency thereof having official custody of 

tribal funds and lawfully investing or depositing the 

same in time and savings deposits in an insured depository institutionø;¿. øsuch depositor shall, for the purpose of determining the amount 

of insured deposits under this subsection, be deemed a depositor in 

such custodial capacity separate and distinct from any other officer, 

employee, or agent of the United States or any public unit referred 

to in clause (ii), (iii), (iv), or (v) and the deposit of any such depositor shall be insured in an amount not to exceed $100,000 per account in an amount not to exceed $100,000 per account.¿

ø(B) The¿

(F) AUTHORITY TO LIMIT DEPOSITS.—The Corporation 

may limit the aggregate amount of funds that may be invested or deposited in deposits in any insured depository 

institution by any ødepositor referred to in subparagraph 

(A) of this paragraph¿ municipal depositor on the basis of 

the size of any such bank in terms of its assets: Provided, 

however, such limitation may be exceeded by the pledging 

of acceptable securities to the ødepositor referred to in subparagraph (A) of this paragraph¿ municipal depositor

when and where required. 

(3) CERTAIN RETIREMENT ACCOUNTS.—

(A) IN GENERAL.—Notwithstanding any limitation in this 

Act relating to the amount of deposit insurance available 

for the account of any 1 depositor, deposits in an insured 

depository institution made in connection with—

73

(i) * * *

* * * * * * *

shall be aggregated and insured in an amount not to exceed ø$100,000¿ 2 times the standard maximum deposit insurance amount (as determined under paragraph (1)) per 

participant per insured depository institution. 

* * * * * * *

ø(4) GENERAL PROVISIONS RELATING TO FUNDS.—

ø(A) MAINTENANCE AND USE OF FUNDS.—The Bank Insurance Fund established under paragraph (5) and the 

Savings Association Insurance Fund established under 

paragraph (6) shall each be—

ø(i) maintained and administered by the Corporation; 

ø(ii) maintained separately and not commingled; 

and 

ø(iii) used by the Corporation to carry out its insurance purposes in the manner provided in this subsection. 

ø(B) LIMITATION ON USE.—Notwithstanding any provision of law other than section 13(c)(4)(G), the Bank Insurance Fund and the Savings Association Insurance Fund 

shall not be used in any manner to benefit any shareholder or affiliate (other than an insured depository institution that receives assistance in accordance with the provisions of this Act) of—

ø(i) any insured depository institution for which the 

Corporation or the Resolution Trust Corporation has 

been appointed conservator or receiver, in connection 

with any type of resolution by the Corporation or the 

Resolution Trust Corporation; 

ø(ii) any other insured depository institution in default or in danger of default, in connection with any 

type of resolution by the Corporation or the Resolution 

Trust Corporation; or 

ø(iii) any insured depository institution, in connection with the provision of assistance under this section 

or section 13 with respect to such institution, except 

that this clause shall not prohibit any assistance to 

any insured depository institution that is not in default, or that is not in danger of default, that is acquiring (as defined in section 13(f)(8)(B)) another insured 

depository institution. 

ø(5) BANK INSURANCE FUND.—

ø(A) ESTABLISHMENT.—There is established a fund to be 

known as the Bank Insurance Fund. 

ø(B) TRANSFER TO FUND.—On the date of the enactment 

of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Permanent Insurance Fund 

shall be dissolved and all assets and liabilities of the Permanent Insurance Fund shall be transferred to the Bank 

Insurance Fund. 

74

ø(C) USES.—The Bank Insurance Fund shall be available to the Corporation for use with respect to Bank Insurance Fund members. 

ø(D) DEPOSITS.—All amounts assessed against Bank Insurance Fund members by the Corporation shall be deposited into the Bank Insurance Fund. 

ø(6) SAVINGS ASSOCIATION INSURANCE FUND.— ø(A) ESTABLISHMENT.—There is established a fund to be 

known as the Savings Association Insurance Fund. 

ø(B) USES.—The Savings Association Insurance Fund 

shall be available to the Corporation for use with respect 

to Savings Association Insurance Fund members. 

ø(C) DEPOSITS.—All amounts assessed against Savings 

Association Insurance Fund members which are not required for the Financing Corporation, the Resolution 

Funding Corporation, or the FSLIC Resolution Fund shall 

be deposited in the Savings Association Insurance Fund. 

ø(D) TREASURY PAYMENTS TO FUND.—To the extent of 

the availability of amounts provided in appropriation Acts 

and subject to subparagraphs (E) and (G), the Secretary of 

the Treasury shall pay to the Savings Association Insurance Fund such amounts as may be needed to pay losses 

incurred by the Fund in fiscal years 1994 through 1998. 

ø(E) CERTIFICATION CONDITIONS ON AVAILABILITY OF

FUNDING.—No amount appropriated for payments by the 

Secretary of the Treasury in accordance with subparagraph (D) for any fiscal year may be expended unless the 

Chairperson of the Board of Directors certifies to the Congress, at any time before the beginning of or during such 

fiscal year, that— ø(i) such amount is needed to pay for losses which 

have been incurred or can reasonably be expected to 

be incurred by the Savings Association Insurance 

Fund; 

ø(ii) the Board of Directors has determined that—

ø(I) Savings Association Insurance Fund members, in the aggregate, are unable to pay additional semiannual assessments under section 7(b) 

at the assessment rates which would be required 

in order to cover, from such additional assessments, losses which have been incurred or can 

reasonably be expected to be incurred by the Fund 

without adversely affecting the ability of such 

members to raise and maintain capital or to maintain the members’ assessment base; and 

ø(II) an increase in the assessment rates for 

Savings Association Insurance Fund members to 

cover such losses could reasonably be expected to 

result in greater losses to the Government; 

ø(iii) the Board of Directors has determined that—

ø(I) Savings Association Insurance Fund members, in the aggregate, are unable to pay additional semiannual assessments under section 7(b) 

at the assessment rates which would be required 

in order to meet the repayment schedule required 

75

under section 14(c) for any amount borrowed 

under section 14(a) to cover losses which have 

been incurred or can reasonably be expected to be 

incurred by the Fund without adversely affecting 

the ability of such members to raise and maintain 

capital or to maintain the members’ assessment 

base; and 

ø(II) an increase in the assessment rates for 

Savings Association Insurance Fund members to 

meet any such repayment schedule could reasonably be expected to result in greater losses to the 

Government; 

ø(iv) as of the date of certification, the Corporation 

has in effect procedures designed to ensure that the 

activities of the Savings Association Insurance Fund 

and the affairs of any Savings Association Insurance 

Fund member for which a conservator or receiver has 

been appointed are conducted in an efficient manner 

and the Corporation is in compliance with such procedures; 

ø(v) with respect to the most recent audit of the 

Savings Association Insurance Fund by the Comptroller General of the United States before the date of 

the certification— ø(I) the Corporation has taken or is taking appropriate action to implement any recommendation made by the Comptroller General; or 

ø(II) no corrective action is necessary or appropriate; 

ø(vi) the Corporation has provided for the appointment of a chief financial officer who— ø(I) does not have other operating responsibilities; 

ø(II) will report directly to the Chairperson of 

the Corporation; and 

ø(III) will have such authority and duties of 

chief financial officers under section 902 of title 

31, United States Code, as the Board of Directors 

of the Corporation determines to be appropriate 

with respect to the Corporation; 

ø(vii) the Corporation has provided for the appointment of a senior officer whose responsibilities shall include setting uniform standards for contracting and 

contracting enforcement in connection with the administration of the Fund; 

ø(viii) the Corporation is implementing the minority 

outreach provisions mandated by section 1216 of the 

Financial Institutions Reform, Recovery, and Enforcement Act of 1989; 

ø(ix) the Corporation has provided for the appointment of a senior attorney, at the assistant general 

counsel level or above, responsible for professional liability cases; and 

ø(x) the Corporation has improved the management 

of legal services by—

76

ø(I) utilizing staff counsel when such utilization 

would provide the same level of quality in legal 

services as the use of outside counsel at the same 

or a lower estimated cost; and 

ø(II) employing outside counsel only if the use of 

outside counsel would provide the most practicable, efficient, and cost-effective resolution to 

the action and only under a negotiated fee, contingent fee, or competitively bid fee agreement. 

ø(F) AVAILABILITY OF RTC FUNDING.—At any time before 

the end of the 2-year period beginning on the date of the 

termination of the Resolution Trust Corporation, the Secretary of the Treasury shall provide, out of funds appropriated to the Resolution Trust Corporation pursuant to 

section 21A(i)(3) of the Federal Home Loan Bank Act and 

not expended by the Resolution Trust Corporation, to the 

Savings Association Insurance Fund, for any year such 

amounts as are needed by the Fund and are not needed by 

the Resolution Trust Corporation, if the Chairperson of the 

Board of Directors has certified to the Congress that— ø(i) such amount is needed to pay for losses which 

have been incurred or can reasonably be expected to 

be incurred by the Savings Association Insurance 

Fund; 

ø(ii) the Board of Directors has determined that— ø(I) Savings Association Insurance Fund members, in the aggregate, are unable to pay additional semiannual assessments under section 7(b) 

at the assessment rates which would be required 

in order to cover, from such additional assessments, losses which have been incurred or can 

reasonably be expected to be incurred by the Savings Association Insurance Fund without adversely affecting the ability of such members to 

raise and maintain capital or to maintain the 

members’ assessment base; and 

ø(II) an increase in the assessment rates for 

Savings Association Insurance Fund members to 

cover such losses could reasonably be expected to 

result in greater losses to the Government; 

ø(iii) the Board of Directors has determined that—

ø(I) Savings Association Insurance Fund members, in the aggregate, are unable to pay additional semiannual assessments under section 7(b) 

at the assessment rates which would be required 

in order to meet the repayment schedule required 

under section 14(c) for any amount borrowed 

under section 14(a) to cover losses which have 

been incurred or can reasonably be expected to be 

incurred by the Savings Association Insurance 

Fund without adversely affecting the ability of 

such members to raise and maintain capital or to 

maintain such members’ assessment base; and 

ø(II) an increase in the assessment rates for 

Savings Association Insurance Fund members to 

77

meet any such repayment schedule could reasonably be expected to result in greater losses to the 

Government; 

ø(iv) the Corporation has provided for the appointment of a chief financial officer who— ø(I) does not have other operating responsibilities; 

ø(II) will report directly to the Chairperson of 

the Corporation; and 

ø(III) will have such authority and duties of 

chief financial officers under section 902 of title 

31, United States Code, as the Board of Directors 

of the Corporation determines to be appropriate 

with respect to the Corporation; 

ø(v) the Corporation has provided for the appointment of a senior officer whose responsibilities shall include setting uniform standards for contracting and 

contracting enforcement in connection with the administration of the Fund; 

ø(vi) the Corporation is implementing the minority 

outreach provisions mandated by section 1216 of the 

Financial Institutions Reform, Recovery, and Enforcement Act of 1989; 

ø(vii) the Corporation has provided for the appointment of a senior attorney, at the assistant general 

counsel level or above, responsible for professional liability cases; and 

ø(viii) the Corporation has improved the management of legal services by— ø(I) utilizing staff counsel when such utilization 

would provide the same level of quality in legal 

services as the use of outside counsel at the same 

or a lower estimated cost; and 

ø(II) employing outside counsel only if the use of 

outside counsel would provide the most practicable, efficient, and cost-effective resolution to 

the action and only under a negotiated fee, contingent fee, or competitively bid fee agreement. 

ø(G) EXCEPTION TO SUBPARAGRAPH (D).—Notwithstanding subparagraph (D), no payment may be made pursuant to such subparagraphs after the Savings Association 

Insurance Fund achieves a reserve ratio of 1.25 percent. 

ø(H) APPEARANCE UPON REQUEST.—The Secretary of the 

Treasury and the Chairperson of the Board of Directors of 

the Federal Deposit Insurance Corporation shall appear 

before the Committee on Banking, Finance and Urban Affairs of the House of Representatives or the Committee on 

Banking, Housing, and Urban Affairs of the Senate, upon 

the request of the chairman of the committee, to report on 

any certification made to the Congress under subparagraph (E) or (F). 

ø(I) BORROWING AUTHORITY.— ø(i) IN GENERAL.—The Corporation may borrow from 

the Federal home loan banks, with the concurrence of 

the Federal Housing Finance Board, such funds as the 

78

Corporation considers necessary for the use of the Savings Association Insurance Fund. 

ø(ii) TERMS AND CONDITIONS.—Any loan from any 

Federal home loan bank under clause (i) to the Savings Association Insurance Fund shall— ø(I) bear a rate of interest of not less than such 

bank’s current marginal cost of funds, taking into 

account the maturities involved; 

ø(II) be adequately secured, as determined by 

the Federal Housing Finance Board; 

ø(III) be a direct liability of such Fund; and 

ø(IV) be subject to the limitations of section 

15(c). 

ø(J) AUTHORIZATION OF APPROPRIATIONS.—Subject to 

subparagraph (E), there are authorized to be appropriated 

to the Secretary of the Treasury, such sums as may be necessary to carry out the provisions of subparagraph (D) for 

fiscal years 1994 through 1998, except that the aggregate 

amount appropriated pursuant to this authorization may 

not exceed $8,000,000,000. 

ø(K) RETURN TO TREASURY.—If the aggregate amount of 

funds transferred to the Savings Association Insurance 

Fund under subparagraph (D) or (F) exceeds the amount 

needed to cover losses incurred by the Fund, such excess 

amount shall be deposited in the general fund of the 

Treasury. 

ø(7) PROVISIONS APPLICABLE TO MAINTENANCE OF AC- COUNTS.—

ø(A) CORPORATION’S AUTHORITY.—Any provision of this 

Act forbidding the commingling of the Bank Insurance 

Fund with the Savings Association Insurance Fund, or requiring the separate maintenance of the Bank Insurance 

Fund and the Savings Association Insurance Fund, is not 

intended—

ø(i) to limit or impair the authority of the Corporation to use the same facilities and resources in the 

course of conducting supervisory, regulatory, conservatorship, receivership, or liquidation functions 

with respect to banks and savings associations, or to 

integrate such functions; or 

ø(ii) to limit or impair the Corporation’s power to 

combine assets or liabilities belonging to banks and 

savings associations in conservatorship or receivership 

for managerial purposes, or to limit or impair the Corporation’s power to dispose of such assets or liabilities 

on an aggregate basis. 

ø(B) ACCOUNTING REQUIREMENTS.—

ø(i) ACCOUNTING FOR USE OF FACILITIES AND RESOURCES.—The Corporation shall keep a full and complete accounting of all costs and expenses associated 

with the use of any facility or resource used in the 

course of any function specified in subparagraph (A)(i) 

and shall allocate, in the manner provided in subparagraph (C), any such costs and expenses incurred by 

the Corporation—

79

ø(I) with respect to Bank Insurance Fund members to the Bank Insurance Fund; and 

ø(II) with respect to Savings Association Insurance Fund members to the Savings Association Insurance Fund. 

ø(ii) ACCOUNTING FOR HOLDING AND MANAGING ASSETS AND LIABILITIES.—The Corporation shall keep a 

full and complete accounting of all costs and expenses 

associated with the holding and management of any 

asset or liability specified in subparagraph (A)(ii). 

ø(iii) ACCOUNTING FOR DISPOSITION OF ASSETS AND

LIABILITIES.—The Corporation shall keep a full and 

complete accounting of all expenses and receipts associated with the disposition of any asset or liability 

specified in subparagraph (A)(ii). 

ø(iv) ALLOCATION OF COST, EXPENSES AND RECEIPTS.—The Corporation shall allocate any cost, expense, and receipt described in clause (ii) or clause (iii) 

which is associated with any asset or liability belonging to—

ø(I) any Bank Insurance Fund member to the 

Bank Insurance Fund; and 

ø(II) any Savings Association Insurance Fund 

member to the Savings Association Insurance 

Fund. 

ø(C) ALLOCATION OF ADMINISTRATIVE EXPENSES.—Any 

personnel, administrative, or other overhead expense of 

the Corporation shall be allocated—

ø(i) fully to the Bank Insurance Fund, if the expense 

was incurred directly as a result of the Corporation’s 

responsibilities solely with respect to Bank Insurance 

Fund members; 

ø(ii) fully to the Savings Association Insurance 

Fund, if the expense was incurred directly as a result 

of the Corporation’s responsibilities solely with respect 

to Savings Association Insurance Fund members; 

ø(iii) between the Bank Insurance Fund and the 

Savings Association Insurance Fund, in amounts reflecting the relative degree to which the expense was 

incurred as a result of the activities of Bank Insurance 

Fund and Savings Association Insurance Fund members; or 

ø(iv) between the Bank Insurance Fund and the 

Savings Association Insurance Fund, in amounts reflecting the relative total assets as of the end of the 

preceding calendar year of Bank Insurance Fund 

members and Savings Association Insurance Fund 

members, to the extent that the Board of Directors is 

unable to make a determination under clause (i), (ii), 

or (iii).¿

(4) DEPOSIT INSURANCE FUND.—

(A) ESTABLISHMENT.—There is established the Deposit 

Insurance Fund, which the Corporation shall—

(i) maintain and administer; 

80

(ii) use to carry out its insurance purposes, in the 

manner provided by this subsection; and 

(iii) invest in accordance with section 13(a). 

(B) USES.—The Deposit Insurance Fund shall be available to the Corporation for use with respect to insured depository institutions the deposits of which are insured by 

the Deposit Insurance Fund. 

(C) LIMITATION ON USE.—Notwithstanding any provision 

of law other than section 13(c)(4)(G), the Deposit Insurance 

Fund shall not be used in any manner to benefit any shareholder or affiliate (other than an insured depository institution that receives assistance in accordance with the provisions of this Act) of—

(i) any insured depository institution for which the 

Corporation has been appointed conservator or receiver, in connection with any type of resolution by the 

Corporation; 

(ii) any other insured depository institution in default or in danger of default, in connection with any 

type of resolution by the Corporation; or 

(iii) any insured depository institution, in connection 

with the provision of assistance under this section or 

section 13 with respect to such institution, except that 

this clause shall not prohibit any assistance to any insured depository institution that is not in default, or 

that is not in danger of default, that is acquiring (as 

defined in section 13(f)(8)(B)) another insured depository institution. 

(D) DEPOSITS.—All amounts assessed against insured depository institutions by the Corporation shall be deposited 

into the Deposit Insurance Fund.

ø(8)¿ (5) CERTAIN INVESTMENT CONTRACTS NOT TREATED AS

INSURED DEPOSITS.—

(A) * * *

* * * * * * *

(c) APPOINTMENT OF CORPORATION AS CONSERVATOR OR

RECEIVER.—

(1) * * *

* * * * * * *

(5) GROUNDS FOR APPOINTING CONSERVATOR OR RECEIVER.—

The grounds for appointing a conservator or receiver (which 

may be the Corporation) for any insured depository institution 

are as follows: 

(A) * * *

* * * * * * *

(H) VIOLATIONS OF LAW.—Any violation of any law or 

regulation, or any unsafe or unsound practice or condition 

that is likely to—

(i) * * *

* * * * * * *

81

(iii) otherwise seriously prejudice the interests of the 

institution’s depositors or the ødeposit insurance 

fund¿ Deposit Insurance Fund. 

* * * * * * *

(10) CORPORATION MAY APPOINT ITSELF AS CONSERVATOR OR

RECEIVER FOR INSURED DEPOSITORY INSTITUTION TO PREVENT

LOSS TO øDEPOSIT INSURANCE FUND¿ DEPOSIT INSURANCE

FUND.—The Board of Directors may appoint the Corporation as 

sole conservator or receiver of an insured depository institution, after consultation with the appropriate Federal banking 

agency and the appropriate State supervisor (if any), if the 

Board of Directors determines that— (A) * * *

(B) the appointment is necessary to reduce— (i) the risk that the ødeposit insurance fund¿ Deposit Insurance Fund would incur a loss with respect 

to the insured depository institution, or 

(ii) any loss that the ødeposit insurance fund¿ Deposit Insurance Fund is expected to incur with respect 

to that institution. 

* * * * * * *

(e) PROVISIONS RELATING TO CONTRACTS ENTERED INTO BEFORE

APPOINTMENT OF CONSERVATOR OR RECEIVER.—

(1) * * *

* * * * * * *

(14) SELLING CREDIT CARD ACCOUNTS RECEIVABLE.— (A) * * *

(B) WAIVER BY CORPORATION.—The Corporation may at 

any time, in its sole discretion and upon such terms as it 

may prescribe, waive its right to repudiate an agreement 

to sell credit card accounts receivable if the Corporation—

(i) determines that the waiver is in the best interests of the ødeposit insurance fund¿ Deposit Insurance 

Fund; and 

(ii) provides a written waiver to the selling institution. 

* * * * * * *

(f) PAYMENT OF INSURED DEPOSITS.—

(1) IN GENERAL.—In case of the liquidation of, or other closing or winding up of the affairs of, any insured depository institution, payment of the insured deposits in such institution 

shall be made by the Corporation as soon as possible, subject 

to the provisions of subsection (g), either by cash or by making 

available to each depositor a transferred deposit in a new insured depository institution in the same community or in another insured depository institution in an amount equal to the 

insured deposit of such depositor, øexcept that—

ø(A) all payments made pursuant to this section on account of a closed Bank Insurance Fund member shall be 

made only from the Bank Insurance Fund, and 

ø(B) all payments made pursuant to this section on account of a closed Savings Association Insurance Fund 

82

member shall be made only from the Savings Association 

Insurance Fund.¿.

* * * * * * *

(i) VALUATION OF CLAIMS IN DEFAULT.—

(1) * * *

* * * * * * *

(3) ADDITIONAL PAYMENTS AUTHORIZED.—

(A) * * *

ø(B) SOURCE OF FUNDS.—If the depository institution in 

default is a Bank Insurance Fund member, the Corporation may only make such payments out of funds held in 

the Bank Insurance Fund. If the depository institution in 

default is a Savings Association Insurance Fund member, 

the Corporation may only make such payments out of 

funds held in the Savings Association Insurance Fund.¿

ø(C)¿ (B) MANNER OF PAYMENT.—The Corporation may 

make the payments or credit the amounts specified in 

øsubparagraphs (A) and (B)¿ subparagraph (A) directly to 

the claimants or may make such payments or credit such 

amounts to an open insured depository institution to induce such institution to accept liability for such claims. 

* * * * * * *

(m) NEW BANKS.—

(1) * * *

* * * * * * *

(6) NEW DEPOSITS.—The new bank may, with the approval of 

the Corporation, accept new deposits which shall be subject to 

withdrawal on demand and which, except where the new bank 

is the only bank in the community, shall not exceed 

ø$100,000¿ an amount equal to the standard maximum deposit 

insurance amount from any depositor. 

* * * * * * *

(p) CERTAIN SALES OF ASSETS PROHIBITED.— (1) * * *

(2) CONVICTED DEBTORS.—Except as provided in paragraph 

(3), any person who— (A) * * *

(B) is in default on any loan or other extension of credit 

from such insured depository institution which, if not paid, 

will cause substantial loss to the øinstitution, any deposit 

insurance fund¿ institution, the Deposit Insurance Fund, the Corporation, the FSLIC Resolution Fund, or the Resolution Trust Corporation, 

* * * * * * *

SEC. 11A. FSLIC RESOLUTION FUND. 

(a) ESTABLISHED.— (1) * * *

(2) TRANSFER OF FSLIC ASSETS AND øLIABILITIES.— ø(A) IN GENERAL.—Except¿ LIABILITIES.—Except as provided in section 21A of the Federal Home Loan Bank Act, 

all assets and liabilities of the Federal Savings and Loan 

83

Insurance Corporation on the day before the date of the 

enactment of the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989 shall be transferred to the 

FSLIC Resolution Fund. 

ø(B) ADDITIONAL CLAIMS ON ASSETS.—The FSLIC Resolution Fund shall pay to the Savings Association Insurance 

Fund such amounts as are needed for administrative and 

supervisory expenses from the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement 

Act of 1989 through September 30, 1992.¿

(3) SEPARATE HOLDING.—Assets and liabilities transferred to 

the FSLIC Resolution Fund shall be the assets and liabilities 

of the Fund and not of the Corporation and shall not be consolidated with the assets and liabilities of øthe Bank Insurance 

Fund, the Savings Association Insurance Fund,¿ the Deposit 

Insurance Fund or the Corporation for accounting, reporting, 

or any other purpose. 

* * * * * * *

(b) SOURCE OF FUNDS.—The FSLIC Resolution Fund shall be 

funded from the following sources to the extent funds are needed 

in the listed priority: 

(1) * * *

* * * * * * *

ø(4) During the period beginning on the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and ending on December 31, 1992, 

amounts assessed against Savings Association Insurance Fund 

members by the Corporation pursuant to section 7 which are 

not required by the Financing Corporation pursuant to section 

21 of the Federal Home Loan Bank Act or by the Resolution 

Funding Corporation pursuant to section 21B of the Federal 

Home Loan Bank Act.¿

* * * * * * *

(f) DISSOLUTION.—The FSLIC Resolution Fund shall be dissolved 

upon satisfaction of all debts and liabilities and sale of all assets. 

Upon dissolution any remaining funds shall be paid into the Treasury. Any administrative facilities and supplies, including offices 

and office supplies, shall be transferred to the Corporation for use 

by and to be held as assets of the øSavings Association Insurance 

Fund¿ Deposit Insurance Fund. 

* * * * * * *

SEC. 12. (a) * * *

* * * * * * *

(f) CONFLICT OF INTEREST.— (1) * * *

* * * * * * *

(4) DISAPPROVAL OF CONTRACTORS.—

(A) * * *

* * * * * * *

84

(E) PROHIBITION REQUIRED IN CERTAIN CASES.—The 

standards established under subparagraph (A) shall require the Corporation to prohibit any person who has— (i) * * *

* * * * * * *

(iv) caused a substantial loss to øFederal deposit insurance funds¿ the Deposit Insurance Fund (or any 

predecessor deposit insurance fund); 

from performing any service on behalf of the Corporation. 

* * * * * * *

SEC. 13. (a) INVESTMENT OF CORPORATION’S FUNDS.—

(1) AUTHORITY.—Funds held in the øBank Insurance Fund, 

the Savings Association Insurance Fund,¿ Deposit Insurance 

Fund or the FSLIC Resolution Fund, that are not otherwise 

employed shall be invested in obligations of the United States 

or in obligations guaranteed as to principal and interest by the 

United States. 

* * * * * * *

(c)(1) * * *

* * * * * * *

(4) LEAST-COST RESOLUTION REQUIRED.—

(A) IN GENERAL.—Notwithstanding any other provision 

of this Act, the Corporation may not exercise any authority 

under this subsection or subsection (d), (f), (h), (i), or (k) 

with respect to any insured depository institution unless—

(i) * * *

(ii) the total amount of the expenditures by the Corporation and obligations incurred by the Corporation 

(including any immediate and long-term obligation of 

the Corporation and any direct or contingent liability 

for future payment by the Corporation) in connection 

with the exercise of any such authority with respect to 

such institution is the least costly to the ødeposit insurance fund¿ Deposit Insurance Fund of all possible 

methods for meeting the Corporation’s obligation 

under this section. 

(B) DETERMINING LEAST COSTLY APPROACH.—In determining how to satisfy the Corporation’s obligations to an 

institution’s insured depositors at the least possible cost to 

the ødeposit insurance fund¿ Deposit Insurance Fund, the 

Corporation shall comply with the following provisions: 

(i) * * *

(ii) FOREGONE TAX REVENUES.—Federal tax revenues 

that the Government would forego as the result of a 

proposed transaction, to the extent reasonably ascertainable, shall be treated as if they were revenues 

foregone by the ødeposit insurance fund¿ Deposit Insurance Fund. 

* * * * * * *

(E) DEPOSIT INSURANCE øFUNDS¿ FUND AVAILABLE FOR

INTENDED PURPOSE ONLY.—

85

(i) IN GENERAL.—After December 31, 1994, or at 

such earlier time as the Corporation determines to be 

appropriate, the Corporation may not take any action, 

directly or indirectly, with respect to any insured depository institution that would have the effect of increasing losses to øany insurance fund¿ the Deposit Insurance Fund by protecting— (I) * * *

* * * * * * *

(G) SYSTEMIC RISK.—

(i) * * *

(ii) REPAYMENT OF LOSS.—The Corporation shall recover the loss to the øappropriate insurance fund¿ Deposit Insurance Fund arising from any action taken or 

assistance provided with respect to an insured depository institution under clause (i) expeditiously from 1 

or more emergency special assessments on øthe members of the insurance fund (of which such institution 

is a member)¿ insured depository institutions equal to 

the product of—

(I) an assessment rate established by the Corporation; and 

(II) the amount of øeach member’s¿ each insured depository institution’s average total assets 

during the øsemiannual period¿ assessment period, minus the sum of the amount of the ømember’s¿ institution’s average total tangible equity 

and the amount of the ømember’s¿ institution’s

average total subordinated debt. 

* * * * * * *

ø(11) Payments made under this subsection shall be made—

ø(A) from the Bank Insurance Fund in the case of payments 

to or on behalf of a member of such Fund; or 

ø(B) from the Savings Association Insurance Fund or from 

funds made available by the Resolution Trust Corporation in 

the case of payments to or on behalf of any Savings Association 

Insurance Fund member.¿

* * * * * * *

(h) The powers conferred on the Board of Directors and the Corporation by this section to take action to reopen an insured depository institution in default or to avert the default of an insured depository institution may be used with respect to an insured branch 

of a foreign bank if, in the judgment of the Board of Directors, the 

public interest in avoiding the closing of such branch substantially 

outweighs any additional risk of loss to the øBank Insurance 

Fund¿ Deposit Insurance Fund which the exercise of such powers 

would entail. 

* * * * * * *

(k) EMERGENCY ACQUISITIONS.—

(1) * * *

* * * * * * *

(4) BRANCHING PROVISIONS.—

86

(A) * * *

(B) RESTRICTIONS.— (i) IN GENERAL.—Notwithstanding subparagraph (A), 

if— (I) * * *

* * * * * * *

such savings association shall be subject to the conditions upon which a bank may retain, operate, and establish branches in the State in which the øSavings 

Association Insurance Fund member¿ savings association is located. 

* * * * * * *

(5) ASSISTANCE BEFORE APPOINTMENT OF CONSERVATOR OR

RECEIVER.—

(A) ASSISTANCE PROPOSALS.—The Corporation shall consider proposals by øSavings Association Insurance Fund 

members¿ savings associations for assistance pursuant to 

subsection (c) before grounds exist for appointment of a 

conservator or receiver for such member under the following circumstances: 

(i) * * *

* * * * * * *

SEC. 14. BORROWING AUTHORITY. 

(a) BORROWING FROM TREASURY.—The Corporation is authorized 

to borrow from the Treasury, and the Secretary of the Treasury is 

authorized and directed to loan to the Corporation on such terms 

as may be fixed by the Corporation and the Secretary, such funds 

as in the judgment of the Board of Directors of the Corporation are 

from time to time required for insurance purposes, not exceeding 

in the aggregate $30,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, 

That the rate of interest to be charged in connection with any loan 

made pursuant to this subsection shall not be less than an amount 

determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations 

of the United States of comparable maturities. For such purpose 

the Secretary of the Treasury is authorized to use as a public-debt 

transaction the proceeds of the sale of any securities hereafter 

issued under the Second Liberty Bond Act, as amended, and the 

purposes for which securities may be issued under the Second Liberty Bond Act, as amended, are extended to include such loans. 

Any such loan shall be used by the Corporation solely in carrying 

out its functions with respect to such insurance. All loans and repayments under this subsection shall be treated as public-debt 

transactions of the United States. The Corporation may employ any 

funds obtained under this section for purposes of the øBank Insurance Fund or the Savings Association Insurance Fund¿ Deposit Insurance Fund and the borrowing shall become a liability of øeach 

such fund¿ the Deposit Insurance Fund to the extent funds are employed therefor. There are hereby appropriated to the Secretary, for 

fiscal year 1989 and each fiscal year thereafter, such sums as may 

be necessary to carry out this subsection. 

87

(b) BORROWING FROM FEDERAL FINANCING BANK.—The Corporation is authorized to issue and sell the Corporation’s obligations, on 

behalf of the øBank Insurance Fund or Savings Association Insurance Fund¿ Deposit Insurance Fund, to the Federal Financing 

Bank established by the Federal Financing Bank Act of 1973. The 

Federal Financing Bank is authorized to purchase and sell the Corporation’s obligations on terms and conditions determined by the 

Federal Financing Bank. Any such borrowings shall be obligations 

subject to the obligation limitation of section 15(c) of this Act. This 

subsection does not affect the eligibility of any other entity to borrow from the Federal Financing Bank. 

(c) REPAYMENT SCHEDULES REQUIRED FOR ANY BORROWING.— (1) * * *

* * * * * * *

ø(3) INDUSTRY REPAYMENT.— ø(A) BIF MEMBER PAYMENTS.—No agreement or repayment schedule under paragraph (1) shall require any payment by a Bank Insurance Fund member for funds obtained under subsection (a) for purposes of the Savings Association Fund. 

ø(B) SAIF MEMBER PAYMENTS.—No agreement or repayment schedule under paragraph (1) shall require any payment by a Savings Association Insurance Fund member for 

funds obtained under subsection (a) for purposes of the 

Bank Insurance Fund.¿

ø(d) BORROWING FOR BIF FROM BIF MEMBERS.—¿

(d) BORROWING FOR THE DEPOSIT INSURANCE FUND FROM IN- SURED DEPOSITORY INSTITUTIONS.— (1) BORROWING AUTHORITY.—The Corporation may issue obligations to øBank Insurance Fund members¿ insured depository 

institutions, and may borrow from øBank Insurance Fund 

members¿ insured depository institutions and give security for 

any amount borrowed, and may pay interest on (and any redemption premium with respect to) any such obligation or 

amount to the extent— (A) the proceeds of any such obligation or amount are 

used by the Corporation solely for purposes of carrying out 

the Corporation’s functions with respect to the øBank Insurance Fund¿ Deposit Insurance Fund; and 

(B) the terms of the obligation or instrument limit the 

liability of the Corporation or the øBank Insurance Fund¿

Deposit Insurance Fund for the payment of interest and 

the repayment of principal to the amount which is equal 

to the amount of assessment income received by the Fund 

from assessments under section 7. 

(2) LIMITATIONS ON BORROWING.— (A) APPLICABILITY OF PUBLIC DEBT LIMIT.—For purposes 

of the public debt limit established in section 3101(b) of 

title 31, United States Code, any obligation issued, or 

amount borrowed, by the Corporation under paragraph (1) 

shall be considered to be an obligation to which such limit 

applies. 

(B) APPLICABILITY OF FDIC BORROWING LIMIT.—For purposes of the dollar amount limitation established in section 

14(a) of the Federal Deposit Insurance Act (12 U.S.C. 

88

1824(a)), any obligation issued, or amount borrowed, by 

the Corporation under paragraph (1) shall be considered to 

be an amount borrowed from the Treasury under such section. 

(C) INTEREST RATE LIMIT.—The rate of interest payable 

in connection with any obligation issued, or amount borrowed, by the Corporation under paragraph (1) shall not 

exceed an amount determined by the Secretary of the 

Treasury, taking into consideration current market yields 

on outstanding marketable obligations of the United States 

of comparable maturities. 

(D) OBLIGATIONS TO BE HELD ONLY BY BIF MEMBERS.— The terms of any obligation issued by the Corporation 

under paragraph (1) shall provide that the obligation will 

be valid only if held by a øBank Insurance Fund member¿

insured depository institution. (3) LIABILITY OF øBIF¿ THE DEPOSIT INSURANCE FUND.—Any 

obligation issued or amount borrowed under paragraph (1) 

shall be a liability of the øBank Insurance Fund¿ Deposit Insurance Fund. (4) TERMS AND CONDITIONS.—Subject to paragraphs (1) and 

(2), the Corporation shall establish the terms and conditions 

for obligations issued or amounts borrowed under paragraph 

(1), including interest rates and terms to maturity. 

(5) INVESTMENT BY øBIF MEMBERS¿ INSURED DEPOSITORY IN- STITUTIONS.— (A) AUTHORITY TO INVEST.—Subject to subparagraph (B) 

and notwithstanding any other provision of Federal law or 

the law of any State, any øBank Insurance Fund member¿

insured depository institution may purchase and hold for 

investment any obligation issued by the Corporation under 

paragraph (1) without limitation, other than any limitation 

the appropriate Federal banking agency may impose specifically with respect to such obligations. 

(B) INVESTMENT ONLY FROM CAPITAL AND RETAINED

EARNINGS.—Any øBank Insurance Fund member¿ insured 

depository institution may purchase obligations or make 

loans to the Corporation under paragraph (1) only to the 

extent the purchase money or the money loaned is derived 

from the member’s capital or retained earnings. 

(6) ACCOUNTING TREATMENT.—In accounting for any investment in an obligation purchased from, or any loan made to, the 

Corporation for purposes of determining compliance with any 

capital standard and preparing any report required pursuant 

to section 7(a), the amount of such investment or loan shall be 

treated as an asset.

(e) BORROWING FOR THE DEPOSIT INSURANCE FUND FROM FED- ERAL HOME LOAN BANKS.—

(1) IN GENERAL.—The Corporation may borrow from the Federal home loan banks, with the concurrence of the Federal 

Housing Finance Board, such funds as the Corporation considers necessary for the use of the Deposit Insurance Fund. 

(2) TERMS AND CONDITIONS.—Any loan from any Federal 

home loan bank under paragraph (1) to the Deposit Insurance 

Fund shall—

89

(A) bear a rate of interest of not less than the current 

marginal cost of funds to that bank, taking into account the 

maturities involved; 

(B) be adequately secured, as determined by the Federal 

Housing Finance Board; 

(C) be a direct liability of the Deposit Insurance Fund; 

and 

(D) be subject to the limitations of section 15(c).

SEC. 15. (a) * * *

* * * * * * *

(c) LIMITATION ON BORROWING.—

(1) * * *

* * * * * * *

(5) MAXIMUM AMOUNT LIMITATION ON OUTSTANDING OBLIGATIONS.—Notwithstanding any other provisions of this Act, the 

Corporation may not issue or incur any obligation, if, after 

issuing or incurring the obligation, the aggregate amount of obligations of øthe Bank Insurance Fund or Savings Association 

Insurance Fund, respectively¿ the Deposit Insurance Fund, outstanding would exceed the sum of—

(A) the amount of cash or the equivalent of cash held by 

øthe Bank Insurance Fund or Savings Association Insurance Fund, respectively¿ the Deposit Insurance Fund; 

(B) the amount which is equal to 90 percent of the Corporation’s estimate of the fair market value of assets held 

by øthe Bank Insurance Fund or the Savings Association 

Insurance Fund, respectively¿ the Deposit Insurance Fund, 

other than assets described in subparagraph (A); and 

(C) the total of the amounts authorized to be borrowed 

from the Secretary of the Treasury pursuant to section 

14(a). 

* * * * * * *

SEC. 17. (a) ANNUAL REPORTS ON øBIF, SAIF,¿ THE DEPOSIT INSURANCE FUND AND THE FSLIC RESOLUTION FUND.—

(1) IN GENERAL.—The Corporation shall annually submit a 

full report of its operations, activities, budget, receipts, and expenditures for the preceding 12-month period. The report shall 

include, with respect to øthe Bank Insurance Fund, the Savings Association Insurance Fund,¿ the Deposit Insurance Fund

and the FSLIC Resolution Fund, an analysis by the Corporation of—

(A) * * *

* * * * * * *

(D) the exposure of øeach insurance fund¿ the Deposit 

Insurance Fund to changes in those economic factors most 

likely to affect the condition of that fund; 

(E) a current estimate of the resources needed for øthe 

Bank Insurance Fund, the Savings Association Insurance 

Fund,¿ the Deposit Insurance Fund or the FSLIC Resolution Fund to achieve the purposes of this Act; and 

90

(F) any findings, conclusions, and recommendations for 

legislative and administrative actions considered appropriate to future resolution activities by the Corporation. 

* * * * * * *

(d) AUDIT.— (1) AUDIT REQUIRED.—The Comptroller General shall audit 

annually the financial transactions of the Corporation, øthe 

Bank Insurance Fund, the Savings Association Insurance 

Fund,¿ the Deposit Insurance Fund and the FSLIC Resolution 

Fund in accordance with generally accepted government auditing standards. 

(2) ACCESS TO BOOKS AND RECORDS.—All books, records, accounts, reports, files, and property belonging to or used by the 

Corporation, øthe Bank Insurance Fund, the Savings Association Insurance Fund,¿ the Deposit Insurance Fund and the 

FSLIC Resolution Fund, or by an independent certified public 

accountant retained to audit the Fund’s financial statements, 

shall be made available to the Comptroller General. 

* * * * * * *

SEC. 18. ø(a) INSURANCE LOGO.— ø(1) INSURED SAVINGS ASSOCIATIONS.—Each insured savings 

association shall display at each place of business maintained 

by such association a sign containing only the following items: 

ø(A) A statement that insured deposits are backed by 

the full faith and credit of the United States Government. 

ø(B) A statement that deposits are federally insured to $100,000. 

ø(C) The symbol of an eagle. 

The sign shall not contain any reference to a Government 

agency and shall accord each item substantially equal prominence. 

ø(2) INSURED BANKS.—Not later than 30 days after the date 

of enactment of the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989, each insured bank shall display 

at each place of business maintained by such bank one of the 

following: 

ø(A) The sign required to be displayed by insured banks 

under regulations prescribed by the Corporation in effect 

on January 1, 1989. 

ø(B) The sign prescribed under paragraph (1). 

ø(3) REGULATIONS.—The Corporation shall prescribe regulations to carry out the purposes of this subsection, including 

regulations governing the manner of display or use of such 

signs, except that the size of the sign prescribed under paragraph (1) shall be similar to that prescribed under paragraph 

(2)(A). Initial regulations under this subsection shall be prescribed on the date of enactment of the Financial Institutions 

Recovery, Reform, and Enforcement Act of 1989. For each day 

an insured depository institution continues to violate any provisions of this subsection or any lawful provisions of said regulations, it shall be subject to a penalty of not more than $100, 

which the Corporation may recover for its use.¿

(a) INSURANCE LOGO.—

(1) INSURED DEPOSITORY INSTITUTIONS.—

91

(A) IN GENERAL.—Each insured depository institution 

shall display at each place of business maintained by that 

institution a sign or signs relating to the insurance of the 

deposits of the institution, in accordance with regulations 

to be prescribed by the Corporation. 

(B) STATEMENT TO BE INCLUDED.—Each sign required 

under subparagraph (A) shall include a statement that insured deposits are backed by the full faith and credit of the 

United States Government. 

(2) REGULATIONS.—The Corporation shall prescribe regulations to carry out this subsection, including regulations governing the substance of signs required by paragraph (1) and the 

manner of display or use of such signs. 

(3) PENALTIES.—For each day that an insured depository institution continues to violate this subsection or any regulation 

issued under this subsection, it shall be subject to a penalty of 

not more than $100, which the Corporation may recover for its 

use.

* * * * * * *

ø(h) Any insured depository institution which willfully fails or refuses to file any certified statement or pay any assessment required 

under this Act shall be subject to a penalty of not more than $100 

for each day that such violations continue, which penalty the Corporation may recover for its use: Provided, That this subsection 

shall not be applicable under the circumstances stated in the proviso of subsection (b) of this section.¿

(h) PENALTY FOR FAILURE TO TIMELY PAY ASSESSMENTS.—

(1) IN GENERAL.—Any insured depository institution which 

fails or refuses to pay any assessment shall be subject to a penalty in an amount not more than 1 percent of the amount of the 

assessment due for each day that such violation continues. 

(2) EXCEPTION IN CASE OF DISPUTE.—Paragraph (1) shall not 

apply if—

(A) the failure to pay an assessment is due to a dispute 

between the insured depository institution and the Corporation over the amount of such assessment; and 

(B) the insured depository institution deposits security 

satisfactory to the Corporation for payment upon final determination of the issue. 

(3) AUTHORITY TO MODIFY OR REMIT PENALTY.—The Corporation, in the sole discretion of the Corporation, may compromise, 

modify or remit any penalty which the Corporation may assess 

or has already assessed under paragraph (1) upon a finding 

that good cause prevented the timely payment of an assessment.

* * * * * * *

(m) ACTIVITIES OF SAVINGS ASSOCIATIONS AND THEIR SUBSIDIARIES.—

(1) * * *

* * * * * * *

(3) ACTIVITIES INCOMPATIBLE WITH DEPOSIT INSURANCE.—

(A) IN GENERAL.—The Corporation may determine by 

regulation or order that any specific activity poses a serious threat to the øSavings Association Insurance Fund¿

92

Deposit Insurance Fund. Prior to adopting any such regulation, the Corporation shall consult with the Director of 

the Office of Thrift Supervision and shall provide appropriate State supervisors the opportunity to comment thereon, and the Corporation shall specifically take such comments into consideration. Any such regulation shall be 

issued in accordance with section 553 of title 5, United 

States Code. If the Board of Directors makes such a determination with respect to an activity, the Corporation shall 

have authority to order that no øSavings Association Insurance Fund member¿ savings association may engage in 

the activity directly. 

* * * * * * *

(C) ADDITIONAL AUTHORITY OF FDIC TO PREVENT SERIOUS

RISKS TO INSURANCE FUND.—Notwithstanding subparagraph (A), the Corporation may prescribe and enforce such 

regulations and issue such orders as the Corporation determines to be necessary to prevent actions or practices of 

savings associations that pose a serious threat to the øSavings Association Insurance Fund or the Bank Insurance 

Fund¿ Deposit Insurance Fund. 

* * * * * * *

(o) REAL ESTATE LENDING.—

(1) * * *

(2) STANDARDS.—

(A) CRITERIA.—In prescribing standards under paragraph (1), the agencies shall consider—

(i) the risk posed to the ødeposit insurance funds¿

Deposit Insurance Fund by such extensions of credit; 

* * * * * * *

(B) VARIATIONS PERMITTED.—In prescribing standards 

under paragraph (1), the appropriate Federal banking 

agencies may differentiate among types of loans—

(i) as may be required by Federal statute; 

(ii) as may be warranted, based on the risk to the 

ødeposit insurance fund¿ Deposit Insurance Fund; or 

* * * * * * *

(p) PERIODIC REVIEW OF CAPITAL STANDARDS.—Each appropriate 

Federal banking agency shall, in consultation with the other Federal banking agencies, biennially review its capital standards for 

insured depository institutions to determine whether those standards require sufficient capital to facilitate prompt corrective action 

to prevent or minimize loss to the ødeposit insurance funds¿ Deposit Insurance Fund, consistent with section 38. 

* * * * * * *

SEC. 24. ACTIVITIES OF INSURED STATE BANKS. 

(a) PERMISSIBLE ACTIVITIES.— (1) IN GENERAL.—After the end of the 1-year period beginning on the date of the enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991, an insured 

State bank may not engage as principal in any type of activity 

that is not permissible for a national bank unless—

93

(A) the Corporation has determined that the activity 

would pose no significant risk to the øappropriate deposit 

insurance fund¿ Deposit Insurance Fund; and 

(B) the State bank is, and continues to be, in compliance 

with applicable capital standards prescribed by the appropriate Federal banking agency. 

* * * * * * *

(d) SUBSIDIARIES OF INSURED STATE BANKS.— (1) IN GENERAL.—After the end of the 1-year period beginning on the date of the enactment of the Federal Deposit Insurance Corporation Improvement Act of 1991, a subsidiary of 

an insured State bank may not engage as principal in any type 

of activity that is not permissible for a subsidiary of a national 

bank unless— (A) the Corporation has determined that the activity 

poses no significant risk to the øappropriate deposit insurance fund¿ Deposit Insurance Fund; and 

* * * * * * *

(e) SAVINGS BANK LIFE INSURANCE.— (1) * * *

(2) FDIC FINDING AND ACTION REGARDING RISK.— (A) FINDING.—Before the end of the 1-year period beginning on the date of the enactment of the Federal Deposit 

Insurance Corporation Improvement Act of 1991, the Corporation shall make a finding whether savings bank life 

insurance activities of insured banks pose or may pose any 

significant ørisk to the insurance fund of which such banks 

are members.¿ risk to the Deposit Insurance Fund.

(B) ACTIONS.— (i) * * *

(ii) AUTHORIZED ACTIONS.—Actions the Corporation 

may take under this subparagraph include requiring 

the modification, suspension, or termination of insurance activities conducted by any insured bank if the 

Corporation finds that the activities pose a significant 

risk to any insured bank described in paragraph (1)(A) 

or to øthe insurance fund of which such bank is a 

member¿ the Deposit Insurance Fund. 

(f) COMMON AND PREFERRED STOCK INVESTMENT.—

(1) * * *

* * * * * * *

(6) NOTICE AND APPROVAL.—An insured State bank may only 

engage in any investment pursuant to paragraph (2) if—

(A) the bank has filed a 1-time notice of the bank’s intention to acquire and retain investments described in 

paragraph (1); and 

(B) the Corporation has determined, within 60 days of 

receiving such notice, that acquiring or retaining such investments does not pose a significant risk to øthe insurance fund of which such bank is a member¿ the Deposit Insurance Fund. 

* * * * * * *

94

SEC. 28. ACTIVITIES OF SAVINGS ASSOCIATIONS. 

(a) IN GENERAL.—On and after January 1, 1990, a savings association chartered under State law may not engage as principal in 

any type of activity, or in any activity in an amount, that is not 

permissible for a Federal savings association unless—

(1) the Corporation has determined that the activity would 

pose no significant risk to the øaffected deposit insurance 

fund¿ Deposit Insurance Fund; and 

* * * * * * *

(b) DIFFERENCES OF MAGNITUDE BETWEEN STATE AND FEDERAL

POWERS.—Notwithstanding subsection (a)(1), if an activity (other 

than an activity described in section 5(c)(2)(B) of the Home Owners’

Loan Act) is permissible for a Federal savings association, a savings association chartered under State law may engage as principal 

in that activity in an amount greater than the amount permissible 

for a Federal savings association if—

(1) the Corporation has not determined that engaging in that 

amount of the activity poses any significant risk to the øaffected deposit insurance fund¿ Deposit Insurance Fund; and 

* * * * * * *

(c) EQUITY INVESTMENTS BY STATE SAVINGS ASSOCIATIONS.— (1) * * *

(2) EXCEPTION FOR SERVICE CORPORATIONS.—Paragraph (1) 

does not prohibit a savings association from acquiring or retaining shares of one or more service corporations if— (A) the Corporation has determined that no significant 

risk to the øaffected deposit insurance fund¿ Deposit Insurance Fund is posed by— (i) * * *

* * * * * * *

øSEC. 31. SAVINGS ASSOCIATION INSURANCE FUND INDUSTRY ADVISORY COMMITTEE. 

ø(a) ESTABLISHMENT.—There is hereby established the Savings 

Association Insurance Fund Industry Advisory Committee (hereinafter referred to in this section as the ‘‘Committee’’). 

ø(b) MEMBERSHIP.—The Committee shall consist of 18 members, 

appointed as follows: 

ø(1) 1 member elected from each Federal home loan bank 

district (by the members of the board of directors of each such 

bank who were elected by the members of such bank) from 

among individuals residing therein who are officers of insured 

depository institutions that are Savings Association Insurance 

Fund members. 

ø(2) 6 members appointed by the Corporation from among individuals who shall represent the public interest. 

ø(c) VACANCIES.—Any vacancy on the Committee shall be filled 

in the same manner in which the original appointment was made. 

ø(d) PAY AND EXPENSES.—Members of the Committee shall serve 

without pay, but each member shall be reimbursed, in such manner as the Corporation shall prescribe by regulation, for expenses 

incurred in connection with attendance of such members at meetings of the Committee. 

95

ø(e) TERMS.—Members shall be appointed or elected for terms of 

1 year. 

ø(f) AUTHORITY OF THE COMMITTEE.—The Committee may select 

its Chairperson, Vice Chairperson, and Secretary, and adopt methods of procedure, and shall have power— ø(1) to confer with the Board of Directors on general and special business conditions and regulatory and other matters affecting insured financial institutions that are members of the 

Savings Association Insurance Fund; and 

ø(2) to request information, and to make recommendations, 

with respect to matters within the jurisdiction of the Corporation. 

ø(g) MEETINGS.—The Committee shall meet 4 times each year, 

and more frequently if requested by the Corporation. 

ø(h) REPORTS.—The Committee shall submit a semiannual written report to the Committee on Banking, Finance and Urban Affairs of the House and to the Committee on Banking, Housing, and 

Urban Affairs of the Senate. Such report shall describe the activities of the Committee for such semiannual period and contain such 

recommendations as the Committee considers appropriate. 

ø(i) PROVISION OF STAFF AND OTHER RESOURCES.—The Corporation shall provide the Committee with the use of such resources, 

including staff, as the Committee reasonably shall require to carry 

out its duties, including the preparation and submission of reports 

to Congress, under this section. 

ø(j) FEDERAL ADVISORY COMMITTEE ACT DOES NOT APPLY.—The 

Federal Advisory Committee Act shall not apply to the Committee. 

ø(k) SUNSET.—The Committee shall cease to exist 10 years after 

the enactment of this section.¿

* * * * * * *

SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINANCIAL MANAGEMENT. 

(a) * * *

* * * * * * *

(i) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING COM- PANIES.—

(1) * * *

* * * * * * *

(3) APPLICABILITY BASED ON RISK TO FUND.—The appropriate 

Federal banking agency may require an institution with total 

assets in excess of $9,000,000,000 to comply with this section, 

notwithstanding the exemption provided by this subsection, if 

it determines that such exemption would create a significant 

risk to the øaffected deposit insurance fund¿ Deposit Insurance 

Fund if applied to that institution. 

* * * * * * *

SEC. 37. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS. 

(a) IN GENERAL.— (1) OBJECTIVES.—Accounting principles applicable to reports 

or statements required to be filed with Federal banking agencies by insured depository institutions should—

96

(A) * * *

* * * * * * *

(C) facilitate prompt corrective action to resolve the institutions at the least cost to the øinsurance funds¿ Deposit Insurance Fund. 

* * * * * * *

SEC. 38. PROMPT CORRECTIVE ACTION. 

(a) RESOLVING PROBLEMS TO PROTECT DEPOSIT INSURANCE

øFUNDS¿ FUND.—

(1) PURPOSE.—The purpose of this section is to resolve the 

problems of insured depository institutions at the least possible 

long-term loss to øthe deposit insurance fund¿ the Deposit Insurance Fund. 

* * * * * * *

(k) REVIEW REQUIRED WHEN DEPOSIT INSURANCE FUND INCURS

MATERIAL LOSS.—

(1) IN GENERAL.—If øa deposit insurance fund¿ the Deposit 

Insurance Fund incurs a material loss with respect to an insured depository institution on or after July 1, 1993, the inspector general of the appropriate Federal banking agency 

shall—

(A) make a written report to that agency reviewing the 

agency’s supervision of the institution (including the agency’s implementation of this section), which shall—

(i) ascertain why the institution’s problems resulted 

in a material loss to øthe deposit insurance fund¿ the 

Deposit Insurance Fund; and 

(ii) make recommendations for preventing any such 

loss in the future; and 

* * * * * * *

(2) MATERIAL LOSS INCURRED.—For purposes of this subsection: 

(A) LOSS INCURRED.—øA deposit insurance fund¿ The 

Deposit Insurance Fund incurs a loss with respect to an insured depository institution— (i) if the Corporation provides any assistance under 

section 13(c) with respect to that institution; and— (I) * * *

* * * * * * *

(ii) if the Corporation is appointed receiver of the institution, and it is or becomes apparent that the 

present value of øthe deposit insurance fund’s outlays¿

the outlays of the Deposit Insurance Fund with respect 

to that institution will exceed the present value of receivership dividends or other payments on the claims 

held by the Corporation. 

* * * * * * *

(3) DEADLINE FOR REPORT.—The inspector general of the appropriate Federal banking agency shall comply with paragraph 

(1) expeditiously, and in any event (except with respect to 

paragraph (1)(B)(iv)) as follows: 

97

(A) * * *

(B) If the institution is described in paragraph (2)(A)(ii), 

during the 6-month period beginning on the date on which 

it becomes apparent that the present value of øthe deposit 

insurance fund’s outlays¿ the outlays of the Deposit Insurance Fund with respect to that institution will exceed the 

present value of receivership dividends or other payments 

on the claims held by the Corporation. 

* * * * * * *

(o) TRANSITION RULES FOR SAVINGS øASSOCIATIONS.—

ø(1) RTC’S ROLE DOES NOT DIMINISH CARE REQUIRED OF

OTS.—

ø(A) IN GENERAL.—In implementing this section, the appropriate Federal banking agency (and, to the extent applicable, the Corporation) shall exercise the same care as if 

the Savings Association Insurance Fund (rather than the 

Resolution Trust Corporation) bore the cost of resolving 

the problems of insured savings associations described in 

clauses (i) and (ii)(II) of section 21A(b)(3)(A) of the Federal 

Home Loan Bank Act. 

ø(B) REPORTS.—Subparagraph (A) does not require reports under subsection (k). 

ø(2) ADDITIONAL FLEXIBILITY FOR CERTAIN SAVINGS ASSOCIATIONS.—Subsections (e)(2)¿ ASSOCIATIONS.—Subsections (e)(2), 

(f), and (h) shall not apply before July 1, 1994, to any insured 

savings association if—

ø(A)¿ (1) before the date of enactment of the Federal Deposit 

Insurance Corporation Improvement Act of 1991—

ø(i)¿ (A) the savings association had submitted a plan 

meeting the requirements of section 5(t)(6)(A)(ii) of the 

Home Owners’ Loan Act; and 

ø(ii)¿ (B) the Director of the Office of Thrift Supervision 

had accepted the plan; 

ø(B)¿ (2) the plan remains in effect; and 

ø(C)¿ (3) the savings association remains in compliance with 

the plan or is operating under a written agreement with the 

appropriate Federal banking agency. 

* * * * * * *

SEC. 43. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSURANCE. 

(a) * * *

* * * * * * *

(d) EXCEPTIONS FOR INSTITUTIONS NOT RECEIVING RETAIL DEPOS- ITS.—The Federal Trade Commission may, by regulation or order, 

make exceptions to subsection (b) for any depository institution 

that, within the United States, does not receive initial deposits of 

less than ø$100,000¿ an amount equal to the standard maximum 

deposit insurance amount from individuals who are citizens or residents of the United States, other than money received in connection with any draft or similar instrument issued to transmit 

money. 

* * * * * * *

98

SEC. 49. BI-ANNUAL FDIC SURVEY AND REPORT ON ENCOURAGING 

USE OF DEPOSITORY INSTITUTIONS BY THE UNBANKED. 

(a) SURVEY REQUIRED.— (1) IN GENERAL.—The Corporation shall conduct a bi-annual 

survey on efforts by insured depository institutions to bring 

those individuals and families who have rarely, if ever, held a 

checking account, a savings account or other type of transaction 

or check cashing account at an insured depository institution 

(hereafter in this section referred to as the ‘‘unbanked’’) into the 

conventional finance system. 

(2) FACTORS AND QUESTIONS TO CONSIDER.—In conducting 

the survey, the Corporation shall take the following factors and 

questions into account: 

(A) To what extent do insured depository institutions promote financial education and financial literacy outreach? 

(B) Which financial education efforts appear to be the 

most effective in bringing ‘‘unbanked’’ individuals and families into the conventional finance system? 

(C) What efforts are insured institutions making at converting ‘‘unbanked’’ money order, wire transfer, and international remittance customers into conventional account 

holders? 

(D) What cultural, language and identification issues as 

well as transaction costs appear to most prevent 

‘‘unbanked’’ individuals from establishing conventional accounts? 

(E) What is a fair estimate of the size and worth of the ‘‘unbanked’’ market in the United States? 

(b) REPORTS.—The Chairperson of the Board of Directors shall 

submit a bi-annual report to the Committee on Financial Services 

of the House of Representatives and the Committee on Banking, 

Housing, and Urban Affairs of the Senate containing the Corporation’s findings and conclusions with respect to the survey conducted 

pursuant to subsection (a), together with such recommendations for 

legislative or administrative action as the Chairperson may determine to be appropriate.

SECTION 6 OF THE INTERNATIONAL BANKING ACT OF 

1978

INSURANCE OF DEPOSITS

SEC. 6. (a) * * *

(b) No foreign bank may establish or operate a Federal branch 

which receives deposits of less than ø$100,000¿ an amount equal 

to the standard maximum deposit insurance amount unless the 

branch is an insured branch as defined in section 3(s) of the Federal Deposit Insurance Act, or unless the Comptroller determines 

by order or regulation that the branch is not engaged in domestic 

retail deposit activities requiring deposit insurance protection, taking account of the size and nature of depositors and deposit accounts. 

(c)(1) After the date of enactment of this Act no foreign bank may 

establish a branch, and after one year following such date no foreign bank may operate a branch, in any State in which the deposits 

of a bank organized and existing under the laws of that State 

99

would be required to be insured, unless the branch is an insured 

branch as defined in section 3(s) of the Federal Deposit Insurance 

Act, or unless the branch will not thereafter accept deposits of less 

than ø$100,000¿ an amount equal to the standard maximum deposit insurance amount or unless the Federal Deposit Insurance 

Corporation determines by order or regulation that the branch is 

not engaged in domestic retail deposit activities requiring deposit 

insurance protection, taking account of the size and nature of depositors and deposit accounts. 

* * * * * * *

(d) RETAIL DEPOSIT-TAKING BY FOREIGN BANKS.— (1) IN GENERAL.—After the date of enactment of this subsection, notwithstanding any other provision of this Act or any 

provision of the Federal Deposit Insurance Act, in order to accept or maintain domestic retail deposit accounts having balances of less than ø$100,000¿ an amount equal to the standard 

maximum deposit insurance amount, and requiring deposit insurance protection, a foreign bank shall— (A) * * *

* * * * * * *

(2) EXCEPTION.—Domestic retail deposit accounts with balances of less than ø$100,000¿ an amount equal to the standard 

maximum deposit insurance amount that require deposit insurance protection may be accepted or maintained in a branch of 

a foreign bank only if such branch was an insured branch on 

the date of the enactment of this subsection. 

* * * * * * *

(e) STANDARD MAXIMUM DEPOSIT INSURANCE AMOUNT DEFINED.—For purposes of this section, the term ‘‘standard maximum 

deposit insurance amount’’ means the amount of the maximum 

amount of deposit insurance as determined under section 11(a)(1) of 

the Federal Deposit Insurance Act.

SECTION 207 OF THE FEDERAL CREDIT UNION ACT 

PAYMENT OF INSURANCE

SEC. 207. (a) * * *

* * * * * * *

ø(k)(1) Subject to the provisions of paragraph (2), for the purposes of this subsection, the term ‘‘insured account’’ means the 

total amount of the account in the member’s name (after deducting 

offsets) less any part thereof which is in excess of $100,000. Such 

amount shall be determined according to such regulations as the 

Board may prescribe, and, in determining the amount due to any 

member, there shall be added together all accounts in the credit 

union maintained by him for his own benefit either in his own 

name or in the names of others. The Board may define, with such 

classifications and exceptions as it may prescribe, the extent of the 

insurance coverage provided for member accounts, including member accounts in the name of a minor, in trust, or in joint tenancy.¿

(k) INSURED AMOUNTS PAYABLE.—

(1) NET INSURED AMOUNT.—

100

(A) IN GENERAL.—Subject to the provisions of paragraph 

(2), the net amount of share insurance payable to any member at an insured credit union shall not exceed the total 

amount of the shares or deposits in the name of the member 

(after deducting offsets), less any part thereof which is in 

excess of the standard maximum share insurance amount, 

as determined in accordance with this paragraph and 

paragraphs (5) and (6), and consistently with actions taken 

by the Federal Deposit Insurance Corporation under section 

11(a) of the Federal Deposit Insurance Act. 

(B) AGGREGATION.—Determination of the net amount of 

share insurance under subparagraph (A), shall be in accordance with such regulations as the Board may prescribe, 

and, in determining the amount payable to any member, 

there shall be added together all accounts in the credit 

union maintained by that member for that member’s own 

benefit, either in the member’s own name or in the names 

of others. 

(C) AUTHORITY TO DEFINE THE EXTENT OF COVERAGE.—

The Board may define, with such classifications and exceptions as it may prescribe, the extent of the share insurance 

coverage provided for member accounts, including member 

accounts in the name of a minor, in trust, or in joint tenancy. 

ø(2)(A) Notwithstanding any limitation in this Act or in any 

other provision of law relating to the amount of insurance available 

for the account of any one depositor or member, in the case of a 

depositor or member who is—¿

(2) MUNICIPAL DEPOSITORS OR MEMBERS.—

(A) IN GENERAL.—Notwithstanding any limitation in this 

Act or in any other provision of law relating to the amount 

of insurance available to any 1 depositor or member, deposits or shares of a municipal depositor or member shall be 

insured in an amount equal to the standard maximum 

share insurance amount (as determined under paragraph 

(5)), except as provided in subparagraph (B). 

(B) IN-STATE MUNICIPAL DEPOSITORS.—In the case of the 

deposits of an in-State municipal depositor described in 

clause (ii), (iii), (iv), or (v) of subparagraph (E) at an insured credit union, such deposits shall be insured in an 

amount equal to the lesser of—

(i) $2,000,000; or 

(ii) the sum of the standard maximum deposit insurance amount and 80 percent of the amount of any deposits in excess of the standard maximum deposit insurance amount. 

(C) RULE OF CONSTRUCTION.—No provision of this paragraph shall be construed as authorizing an insured credit 

union to accept the deposits of a municipal depositor in an 

amount greater than such credit union is authorized to accept under any other provision of Federal or State law. 

(D) IN-STATE MUNICIPAL DEPOSITOR DEFINED.—For purposes of this paragraph, the term ‘‘in-State municipal depositor’’ means a municipal depositor that is located in the 

101

same State as the office or branch of the insured credit 

union at which the deposits of that depositor are held. 

(E) MUNICIPAL DEPOSITOR.—In this paragraph, the term ‘‘municipal depositor’’ means a depositor that is— (i) an officer, employee, or agent of the United 

States having official custody of public funds and lawfully investing the same in a credit union insured in 

accordance with this title; 

(ii) an officer, employee, or agent of any State of the 

United States, or of any county, municipality, or political subdivision thereof having official custody of public funds and lawfully investing the same in a credit 

union insured in accordance with this title in such 

State; 

(iii) an officer, employee, or agent of the District of 

Columbia having official custody of public funds and 

lawfully investing the same in a credit union insured 

in accordance with this title in the District of Columbia; 

(iv) an officer, employee, or agent of the Commonwealth of Puerto Rico, of the Panama Canal Zone, or 

of any territory or possession of the United States, or 

of any county, municipality, or political subdivision 

thereof having official custody of public funds and lawfully investing the same in a credit union insured in 

accordance with this title in the Commonwealth of 

Puerto Rico, the Panama Canal Zone, or any such territory or possession, respectively; or 

(v) an officer, employee, or agent of any Indian tribe 

(as defined in section 3(c) of the Indian Financing Act 

of 1974) or agency thereof having official custody of 

tribal funds and lawfully investing the same in a credit union insured in accordance with this titleø;¿. øhis account shall be insured in an amount not to exceed $100,000 

per account.¿

ø(B) The¿

(F) AUTHORITY TO LIMIT DEPOSITS.—The Board may 

limit the aggregate amount of funds that may be invested 

or deposited in any credit union insured in accordance 

with this title by any ødepositor or member referred to in 

subparagraph (A)¿ municipal depositor or member on the 

basis of the size of any such credit union in terms of its 

assets. 

(3) Notwithstanding any limitation in this title or in any other 

provision of law relating to the amount of insurance available for 

the account of any one depositor or member, funds invested in a 

credit union insured in accordance with this title pursuant to a 

pension or profit-sharing plan described in section 401(d) of the Internal Revenue Code of 1954, as amended, and funds invested in 

such an insured credit union in the form of individual retirement 

accounts as described in section 408(a) of the Internal Revenue 

Code of 1954, as amended, shall be insured in the amount of 

ø$100,000¿ 2 times the standard maximum share insurance 

amount (as determined under paragraph (1)) per account. As to any 

plan qualifying under section 401(d) or section 408(a) of the InterVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00101 Fmt 6659 Sfmt 6601 E:\HR\OC\HR050.XXX HR050
102

nal Revenue Code of 1954, the term ‘‘per account’’ means the 

present vested and ascertainable interest of each beneficiary under 

the plan, excluding any remainder interest created by, or as a result of, the plan.

(4) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT PLAN DEPOSITS.—

(A) PASS-THROUGH INSURANCE.—The Administration 

shall provide pass-through share insurance for the deposits 

or shares of any employee benefit plan. 

(B) PROHIBITION ON ACCEPTANCE OF DEPOSITS.—An insured credit union that is not well capitalized or adequately capitalized may not accept employee benefit plan 

deposits. 

(C) DEFINITIONS.—For purposes of this paragraph, the 

following definitions shall apply: 

(i) CAPITAL STANDARDS.—The terms ‘‘well capitalized’’ and ‘‘adequately capitalized’’ have the same 

meanings as in section 216(c). 

(ii) EMPLOYEE BENEFIT PLAN.—The term ‘‘employee 

benefit plan’’—

(I) has the meaning given to such term in section 

3(3) of the Employee Retirement Income Security 

Act of 1974; 

(II) includes any plan described in section 401(d) 

of the Internal Revenue Code of 1986; and 

(III) includes any eligible deferred compensation 

plan described in section 457 of the Internal Revenue Code of 1986. 

(iii) PASS-THROUGH SHARE INSURANCE.—The term 

‘‘pass-through share insurance’’ means, with respect to 

an employee benefit plan, insurance coverage provided 

on a pro rata basis to the participants in the plan, in 

accordance with the interest of each participant. 

(D) RULE OF CONSTRUCTION.—No provision of this paragraph shall be construed as authorizing an insured credit 

union to accept the deposits of an employee benefit plan in 

an amount greater than such credit union is authorized to 

accept under any other provision of Federal or State law. 

(5) STANDARD MAXIMUM SHARE INSURANCE AMOUNT DEFINED.—For purposes of this Act, the term ‘‘standard maximum 

share insurance amount’’ means—

(A) until the effective date of final regulations prescribed 

pursuant to section 9(a)(2) of the Federal Deposit Insurance 

Reform Act of 2003, $100,000; and 

(B) on and after such effective date, $130,000, adjusted 

as provided under section 11(a)(1)(F) of the Federal Deposit 

Insurance Act.

* * * * * * *

103

SECTION 232 OF THE FEDERAL DEPOSIT INSURANCE 

CORPORATION IMPROVEMENT ACT OF 1991

SEC. 232. REDUCED ASSESSMENT RATE FOR DEPOSITS ATTRIBUTABLE TO LIFELINE ACCOUNTS. 

(a) QUALIFICATION OF LIFELINE ACCOUNTS BY FEDERAL RESERVE

BOARD.—

(1) IN GENERAL.—The øBoard of Governors of the Federal 

Reserve System, and the¿ Federal Deposit Insurance Corporation shall establish minimum requirements for accounts providing basic transaction services for consumers at insured depository institutions in order for such accounts to qualify as 

lifeline accounts for purposes of this section and section 

7(b)(2)(G) of the Federal Deposit Insurance Act. 

(2) FACTORS TO BE CONSIDERED.—In determining the minimum requirements under paragraph (1) for lifeline accounts 

at insured depository institutions, øthe Board and¿ the Corporation shall consider the following factors: 

(A) * * *

* * * * * * *

(J) Such other factors as øthe Board¿ the Corporation

may determine to be appropriate. 

(3) DEFINITIONS.—For purposes of this subsection—

ø(A) BOARD.—The term ‘‘Board’’ means the Board of 

Governors of the Federal Reserve System.¿

(A) CORPORATION.—The term ‘‘Corporation’’ means the 

Federal Deposit Insurance Corporation.

* * * * * * *

(C) LIFELINE ACCOUNT.—The term ‘‘lifeline account’’

means any transaction account (as defined in section 

19(b)(1)(C) of the Federal Reserve Act) which meets the 

minimum requirements established by the øBoard¿ Corporation under this subsection. 

* * * * * * *

ø(c) AVAILABILITY OF FUNDS.—The provisions of this section shall 

not take effect until appropriations are specifically provided in advance. There are hereby authorized to be appropriated such sums 

as may be necessary to carry out the provisions of this section.¿

SECTION 5136 OF THE REVISED STATUTES OF THE 

UNITED STATES 

SEC. 5136. Upon duly making and filing articles of association 

and an organization certificate, the association shall become, as 

from the date of the execution of its organization certificate, a body 

corporate, and as such, and in the name designated in the organization certificate, it shall have power—

First. To adopt and use a corporate seal. 

* * * * * * *

Eleventh. To make investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as by providing 

housing, services, or jobs). A national banking association may 

104

make such investments directly or by purchasing interests in 

an entity primarily engaged in making such investments. An 

association shall not make any such investment if the investment would expose the association to unlimited liability. The 

Comptroller of the Currency shall limit an association’s investments in any 1 project and an association’s aggregate investments under this paragraph. An association’s aggregate 

investments under this paragraph shall not exceed an amount 

equal to the sum of 5 percent of the association’s capital stock 

actually paid in and unimpaired and 5 percent of the association’s unimpaired surplus fund, unless the Comptroller 

determines by order that the higher amount will pose no significant risk to the øaffected deposit insurance fund¿ Deposit 

Insurance Fund, and the association is adequately capitalized. 

In no case shall an association’s aggregate investments under 

this paragraph exceed an amount equal to the sum of 10 percent of the association’s capital stock actually paid in and 

unimpaired and 10 percent of the association’s unimpaired surplus fund. 

* * * * * * *

FEDERAL RESERVE ACT 

* * * * * * *

STATE BANKS AS MEMBERS. 

SEC. 9. Any bank incorporated by special law of any State, or organized under the general laws of any State or of the United 

States, including Morris Plan banks and other incorporated banking institutions engaged in similar business, desiring to become a 

member of the Federal Reserve System, may make application to 

the Board of Governors of the Federal Reserve System, under such 

rules and regulations as it may prescribe, for the right to subscribe 

to the stock of the Federal reserve bank organized within the district in which the applying bank is located. Such application shall 

be for the same amount of stock that the applying bank would be 

required to subscribe to as a national bank. For the purposes of 

membership of any such bank the terms ‘‘capital’’ and ‘‘capital 

stock’’ shall include the amount of outstanding capital notes and 

debentures legally issued by the applying bank and purchased by 

the Reconstruction Finance Corporation. The Board of Governors of 

the Federal Reserve System, subject to the provisions of this Act 

and to such conditions as it may prescribe pursuant thereto may 

permit the applying bank to become a stockholder of such Federal 

reserve bank. 

* * * * * * *

State member banks may make investments designed primarily to promote the public welfare, including the welfare of 

low- and moderate-income communities or families (such as by 

providing housing, services, or jobs), to the extent permissible 

under State law, and subject to such restrictions and requirements as the Board of Governors of the Federal Reserve System may prescribe by regulation or order. A bank shall not 

105

make any such investment if the investment would expose the 

bank to unlimited liability. The Board shall limit a bank’s investments in any 1 project and bank’s aggregate investments 

under this paragraph. A bank’s aggregate investments under 

this paragraph shall not exceed an amount equal to the sum 

of 5 percent of the bank’s capital stock actually paid in and 

unimpaired and 5 percent of the bank’s unimpaired surplus 

fund, unless the Board determines by order that the higher 

amount will pose no significant risk to the øaffected deposit insurance fund¿ Deposit Insurance Fund, and the bank is adequately capitalized. In no case shall a bank’s aggregate investments under this paragraph exceed an amount equal to the 

sum of 10 percent of the bank’s capital stock actually paid in 

and unimpaired and 10 percent of the bank’s unimpaired surplus fund. 

* * * * * * *

SEC. 10B. (a) * * *

(b) LIMITATIONS ON ADVANCES.—

(1) * * *

* * * * * * *

(3) ADVANCES TO CRITICALLY UNDERCAPITALIZED DEPOSITORY

INSTITUTIONS.—

(A) LIABILITY FOR INCREASED LOSS.—Notwithstanding 

any other provision of this section, if—

(i) * * *

(ii) after the end of that 5-day period, øany deposit 

insurance fund in¿ the Deposit Insurance Fund of the 

Federal Deposit Insurance Corporation incurs a loss 

exceeding the loss that the Corporation would have incurred if it had liquidated that institution as of the 

end of that period, 

* * * * * * *

SECTION 255 OF THE BALANCED BUDGET AND 

EMERGENCY DEFICIT CONTROL ACT OF 1985

SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES. 

(a) * * *

* * * * * * *

(g) OTHER PROGRAMS AND ACTIVITIES.—

(1)(A) The following budget accounts and activities shall be 

exempt from reduction under any order issued under this part: 

Activities resulting from private donations, bequests, or 

voluntary contributions to the Government; 

Activities financed by voluntary payments to the Government for goods or services to be provided for such payments; 

* * * * * * *

Federal Deposit Insurance Corporation, øBank Insurance Fund¿ Deposit Insurance Fund (51–4064–0–3–373); 

* * * * * * *

106

øFederal Deposit Insurance Corporation, Savings Association Insurance Fund (51–4066–0–3–373);¿

* * * * * * *

FEDERAL HOME LOAN BANK ACT 

* * * * * * *

GENERAL POWERS AND DUTIES OF BANKS

SEC. 11. (a) * * *

* * * * * * *

(k) BANK LOANS TO øSAIF¿ THE DEPOSIT INSURANCE FUND.—

(1) LOANS AUTHORIZED.—Subject to paragraph (3), the Federal Home Loan Banks may, upon the request of the Federal 

Deposit Insurance Corporation, make loans to such Corporation for the use of the øSavings Association Insurance Fund¿

Deposit Insurance Fund.

(2) LIABILITY OF THE FUND.—Any loan by a Federal Home 

Loan Bank pursuant to paragraph (1) shall be a direct liability 

of the øSavings Association Insurance Fund¿ Deposit Insurance 

Fund. 

* * * * * * *

SEC. 21. FINANCING CORPORATION. 

(a) * * *

* * * * * * *

(f) SOURCES OF FUNDS FOR INTEREST PAYMENTS; FINANCING CORPORATION ASSESSMENT AUTHORITY.—The Financing Corporation 

shall obtain funds for anticipated interest payments, issuance 

costs, and custodial fees on obligations issued hereunder from the 

following sources: 

(1) * * *

(2) NEW ASSESSMENT AUTHORITY.—In addition to the 

amounts obtained pursuant to paragraph (1), the Financing 

Corporation, with the approval of the Board of Directors of the 

Federal Deposit Insurance Corporation, shall assess against 

each insured depository institution an assessment (in the same 

manner as assessments are assessed against such institutions 

by the Federal Deposit Insurance Corporation under section 7 

of the Federal Deposit Insurance Act)ø, except that—

ø(A) the assessments imposed on insured depository institutions with respect to any BIF-assessable deposit shall 

be assessed at a rate equal to 1⁄5 of the rate of the assessments imposed on insured depository institutions with respect to any SAIF-assessable deposit; and 

ø(B) no limitation under clause (i) or (iii) of section 

7(b)(2)(A) of the Federal Deposit Insurance Act shall apply 

for purposes of this paragraph¿. 

* * * * * * *

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

107

(1) * * *

* * * * * * *

ø(4) DEPOSIT TERMS.—

ø(A) BIF-ASSESSABLE DEPOSITS.—The term ‘‘BIF-assessable deposit’’ means a deposit that is subject to assessment 

for purposes of the Bank Insurance Fund under the Federal Deposit Insurance Act (including a deposit that is 

treated as a deposit insured by the Bank Insurance Fund 

under section 5(d)(3) of the Federal Deposit Insurance 

Act). 

ø(B) SAIF-ASSESSABLE DEPOSIT.—The term ‘‘SAIF-assessable deposit’’ has the meaning given to such term in 

section 2710 of the Deposit Insurance Funds Act of 1996.¿

* * * * * * *

SEC. 21A. THRIFT DEPOSITOR PROTECTION OVERSIGHT BOARD AND 

RESOLUTION TRUST CORPORATION. 

(a) * * *

(b) RESOLUTION TRUST CORPORATION ESTABLISHED.—

(1) * * *

* * * * * * *

(4) CONSERVATORSHIP, RECEIVERSHIP, AND ASSISTANCE POWERS.—

(A) * * *

(B) MANNER OF APPLICATION OF LEAST-COST RESOLUTION.—For purposes of applying section 13(c)(4) of the Federal Deposit Insurance Act to the Corporation under subparagraph (A), the Corporation shall be treated as the 

øaffected deposit insurance fund¿ Deposit Insurance Fund. 

* * * * * * *

(6) CONTINUATION OF RTC RECEIVERSHIP OR CONSERVATORSHIP.—

(A) * * *

(B) øSAIF-INSURED BANKS¿ CHARTER CONVERSIONS.—

Notwithstanding any other provision of Federal or State 

law, if the Federal Deposit Insurance Corporation is appointed as conservator or receiver for any øSavings Association Insurance Fund member¿ savings association that 

has converted to a bank charter and otherwise meets the 

criteria in paragraph (3)(A) or (6)(A), the Federal Deposit 

Insurance Corporation may tender such appointment to 

the Corporation, and the Corporation shall accept such appointment, if the Corporation is authorized to accept such 

appointment under this section. 

* * * * * * *

(10) SPECIAL POWERS.— (A) IN GENERAL.—In addition to the powers of the Corporation described in paragraph (9), the Corporation shall 

have the following powers: 

(i) * * *

* * * * * * *

108

(iv) ORGANIZATION OF SAVINGS ASSOCIATIONS.—The 

Corporation may organize 1 or more Federal savings 

associations— (I) * * *

(II) the deposits of which, if any, shall be insured by the Federal Deposit Insurance Corporation through the øSavings Association Insurance 

Fund¿ Deposit Insurance Fund, and 

* * * * * * *

(n) CONFLICT OF INTEREST.—

(1) * * *

* * * * * * *

(6) DISAPPROVAL OF CONTRACTORS.— (A) * * *

* * * * * * *

(E) PROHIBITION REQUIRED IN CERTAIN CASES.—The 

standards established under subparagraph (A) shall require the Corporation to prohibit any person who has—

(i) * * *

* * * * * * *

(iv) caused a substantial loss to øFederal deposit insurance funds¿ the Deposit Insurance Fund, 

* * * * * * *

SEC. 21B. RESOLUTION FUNDING CORPORATION ESTABLISHED. 

(a) * * *

* * * * * * *

(e) CAPITALIZATION OF FUNDING CORPORATION, ETC.— (1) * * *

* * * * * * *

(5) PRO RATA DISTRIBUTION OF AMOUNTS REQUIRED TO BE INVESTED IN EXCESS OF $1,000,000,000.—Of any amount which the 

Thrift Depositor Protection Oversight Board may require the 

Federal Home Loan Banks to invest in capital stock of the 

Funding Corporation under this subsection in excess of the 

$1,000,000,000 amount referred to in paragraph (4), the 

amount which each Federal Home Loan Bank (or any successor 

to such Bank) shall invest shall be determined by the Thrift 

Depositor Protection Oversight Board by multiplying the excess amount by the percentage arrived at by dividing—

(A) the sum of the total assets (as of the most recent December 31) held by all Savings Association Insurance Fund 

members as of the date of funding which are members of 

such Bank; by

(B) the sum of the total assets (as of such date) held by 

all Savings Association Insurance Fund members as of the 

date of funding which are members of a Federal Home 

Loan Bank. 

* * * * * * *

ø(7) ADDITIONAL SOURCES.—If each Federal Home Loan 

Bank has exhausted the amount applicable with respect to the 

109

Bank under paragraph (3) after purchases under paragraphs 

(4), (5), and (6), the amounts necessary to provide additional 

funding for the Funding Corporation Principal Fund shall be 

obtained from the following sources: 

ø(A) ASSESSMENTS.—The Funding Corporation, with the 

approval of the Board of Directors of the Federal Deposit 

Insurance Corporation, shall assess against each Savings 

Association Insurance Fund member an assessment (in the 

same manner as assessments are assessed against such 

members by the Federal Deposit Insurance Corporation 

pursuant to section 7 of the Federal Deposit Insurance 

Act) except that— ø(i) the maximum amount of the aggregate amount 

assessed shall be the amount of additional funds necessary to fund the Funding Corporation Principal 

Fund; 

ø(ii) the sum of— ø(I) the amount assessed under this subparagraph; and 

ø(II) the amount assessed by the Financing Corporation under section 21; 

shall not exceed the amount authorized to be assessed 

against Savings Association Insurance Fund members 

pursuant to section 7 of the Federal Deposit Insurance 

Act; 

ø(iii) the Financing Corporation shall have first priority to make the assessment; and 

ø(iv) the amount of the applicable assessment determined under such section 7 shall be reduced by the 

sum described in clause (ii) of this subparagraph. 

ø(B) RECEIVERSHIP PROCEEDS.—To the extent the 

amounts available pursuant to subparagraph (A) are insufficient to fund the Funding Corporation Principal Fund, 

the Federal Deposit Insurance Corporation shall transfer 

amounts to the Funding Corporation from the liquidating 

dividends and payments made on claims received by the 

FSLIC Resolution Fund from receiverships. 

ø(8) TRANSFER TO RTC.—The Funding Corporation shall 

transfer to the Resolution Trust Corporation $1,200,000,000 in 

fiscal year 1989.¿

* * * * * * *

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

(1) * * *

* * * * * * *

ø(8) SAVINGS ASSOCIATION INSURANCE FUND MEMBER.—The 

term ‘‘Savings Association Insurance Fund member’’ means a 

Savings Association Insurance member as such term is defined 

by section 7(l) of the Federal Deposit Insurance Act.¿

ø(9)¿ (8) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury. 

ø(10)¿ (9) UNDIVIDED PROFITS.—The term ‘‘undivided profits’’

means earnings retained after dividends have been paid minus 

the sum of—

110

(A) that portion required to be added to reserves maintained pursuant to the first 2 sentences of section 16; and 

(B) the dollar amounts held by the respective Federal 

Home Loan Banks in special dividend stabilization reserves on December 31, 1985, as determined by the table 

set forth in section 21(d)(7). 

* * * * * * *

HOME OWNERS’ LOAN ACT 

* * * * * * *

SEC. 5. FEDERAL SAVINGS ASSOCIATIONS. 

(a) * * *

* * * * * * *

(c) LOANS AND INVESTMENTS.—To the extent specified in regulations of the Director, a Federal savings association may invest in, 

sell, or otherwise deal in the following loans and other investments: 

(1) * * *

* * * * * * *

(5) TRANSITION RULE FOR SAVINGS ASSOCIATIONS ACQUIRING

BANKS.—

(A) IN GENERAL.—If, under section 5(d)(3) of the Federal 

Deposit Insurance Act, a savings association acquires all 

or substantially all of the assets of a bank øthat is a member of the Bank Insurance Fund¿, the Director may permit 

the savings association to retain any such asset during the 

2-year period beginning on the date of the acquisition. 

* * * * * * *

(6) DEFINITIONS.—øAs used in this subsection—¿ For purposes of this subsection, the following definitions shall apply:

(A) * * *

* * * * * * *

(o) CONVERSION OF STATE SAVINGS BANKS.—(1) Subject to the 

provisions of this subsection and under regulations of the Director, 

the Director may authorize the conversion of a State-chartered savings bank øthat is a Bank Insurance Fund member¿ into a Federal 

savings bank, if such conversion is not in contravention of State 

law, and provide for the organization, incorporation, operation, examination, and regulation of such institution. 

(2)(A) Any Federal savings bank chartered pursuant to this subsection shall continue to be øa Bank Insurance Fund member until 

such time as it changes its status to a Savings Association Insurance Fund member¿ insured by the Deposit Insurance Fund. 

* * * * * * *

(t) CAPITAL STANDARDS.—

(1) * * *

* * * * * * *

(5) SEPARATE CAPITALIZATION REQUIRED FOR CERTAIN SUBSIDIARIES.—

111

(A) * * *

* * * * * * *

(D) TRANSITION RULE.—

(i) * * *

* * * * * * *

(iii) AGENCY DISCRETION TO PRESCRIBE GREATER PERCENTAGE.—Subject to clauses (iv), (v), and (vi), the Director may prescribe by order, with respect to a particular qualified savings association, an applicable percentage greater than that provided in clause (ii) if the 

Director determines, in the Director’s sole discretion, 

that the use of the greater percentage, under the circumstances—

(I) would not constitute an unsafe or unsound 

practice; 

(II) would not increase the risk to the øaffected 

deposit insurance fund¿ Deposit Insurance Fund; 

and 

* * * * * * *

(7) EXEMPTION FROM CERTAIN SANCTIONS.— (A) * * *

* * * * * * *

(C) STANDARDS FOR APPROVAL OR DISAPPROVAL.— (i) APPROVAL.—The Director may approve an application for an exemption if the Director determines 

that—(I) such exemption would pose no significant 

risk to the øaffected deposit insurance fund¿ Deposit Insurance Fund; 

* * * * * * *

(v) REPORTS OF CONDITION.—

(1) * * *

(2) PUBLIC DISCLOSURE.—

(A) Reports required under paragraph (1) and all information contained therein shall be available to the public 

upon request, unless the Director determines—

(i) that a particular item or classification of information should not be made public in order to protect the 

safety or soundness of the institution concerned or institutions concerned, øthe Savings Association Insurance Fund¿ or the Deposit Insurance Fund; or 

* * * * * * *

SEC. 10. REGULATION OF HOLDING COMPANIES. 

(a) * * *

* * * * * * *

(c) HOLDING COMPANY ACTIVITIES.—

(1) * * *

* * * * * * *

(6) SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES

AFFECTED BY 1987 AMENDMENTS.—

112

(A) * * *

* * * * * * *

(D) ORDER BY DIRECTOR TO TERMINATE SUBPARAGRAPH

(B) ACTIVITY.—Any activity described in subparagraph (B) 

may also be terminated by the Director, after opportunity 

for hearing, if the Director determines, having due regard 

for the purposes of this øtitle¿ Act, that such action is necessary to prevent conflicts of interest or unsound practices 

or is in the public interest. 

* * * * * * *

(e) ACQUISITIONS.—

(1) IN GENERAL.—It shall be unlawful for—

(A) * * *

(B) any other company, without the prior written approval of the Director, directly or indirectly, or through one 

or more subsidiaries or through one or more transactions, 

to acquire the control of one or more savings associations, 

except that such approval shall not be required in connection with the control of a savings association, (i) acquired 

by devise under the terms of a will creating a trust which 

is excluded from the definition of ‘‘savings and loan holding company’’ under subsection (a) of this section, (ii) acquired in connection with a reorganization in which a person or group of persons, having had control of a savings 

association for more than 3 years, vests control of that association in a newly formed holding company subject to the 

control of the same person or group of persons, or (iii) acquired by a bank holding company that is registered 

under, and subject to, the Bank Holding Company Act of 

1956, or any company controlled by such bank holding 

company. The Director shall approve an acquisition of a 

savings association under this subparagraph unless the Director finds the financial and managerial resources and future prospects of the company and association involved to 

be such that the acquisition would be detrimental to the 

association or the insurance risk of the øSavings Association Insurance Fund or Bank Insurance Fund¿ Deposit Insurance Fund, and shall render a decision within 90 days 

after submission to the Director of the complete record on 

the application. 

* * * * * * *

(2) FACTORS TO BE CONSIDERED.—The Director shall not approve any acquisition under subparagraph (A)(i) or (A)(ii), or of 

more than one savings association under subparagraph (B) of 

paragraph (1) of this subsection, any acquisition of stock in 

connection with a qualified stock issuance, any acquisition 

under paragraph (4)(A), or any transaction under section 13(k) 

of the Federal Deposit Insurance Act, except in accordance 

with this paragraph. In every case, the Director shall take into 

consideration the financial and managerial resources and future prospects of the company and association involved, the effect of the acquisition on the association, the insurance risk to 

the øSavings Association Insurance Fund or the Bank InsurVerDate Jan 31 2003 04:01 Mar 28, 2003 Jkt 019006 PO 00000 Frm 00112 Fmt 6659 Sfmt 9001 E:\HR\OC\HR050.XXX HR050
113

ance Fund¿ Deposit Insurance Fund, and the convenience and 

needs of the community to be served, and shall render a decision within 90 days after submission to the Director of the 

complete record on the application. Consideration of the managerial resources of a company or savings association shall include consideration of the competence, experience, and integrity of the officers, directors, and principal shareholders of the 

company or association. Before approving any such acquisition, 

except a transaction under section 13(k) of the Federal Deposit 

Insurance Act, the Director shall request from the Attorney 

General and consider any report rendered within 30 days on 

the competitive factors involved. The Director shall not approve any proposed acquisition—

(A) * * *

* * * * * * *

(4) ACQUISITIONS BY CERTAIN INDIVIDUALS.—

(A) * * *

(B) TREATMENT OF CERTAIN HOLDING COMPANIES.—If any 

individual referred to in subparagraph (A) controls more 

than 1 savings and loan holding company or more than 1 

savings association, any savings and loan holding company 

controlled by such individual shall be subject to the activities limitations contained in subsection (c) to the same extent such limitations apply to multiple savings and loan 

holding companies, unless all or all but 1 of the savings associations (including any institution deemed to be a savings association under subsection ø(1)¿ (l) of this section) 

controlled directly or indirectly by such individual was acquired pursuant to an acquisition described in subclause 

(I) or (II) of subsection (c)(3)(B)(i). 

* * * * * * *

(g) ADMINISTRATION AND ENFORCEMENT.—

(1) * * *

* * * * * * *

(3) PROCEEDINGS.—(A) In any proceeding under subsection 

(a)(2)(D) or under paragraph (5) of this øsection¿ subsection, 

the Director may administer oaths and affirmations, take or 

cause to be taken depositions, and issue subpenas. The Director may make regulations with respect to any such proceedings. The attendance of witnesses and the production of 

documents provided for in this paragraph may be required 

from any place in any State or in any territory at any designated place where such proceeding is being conducted. Any 

party to such proceedings may apply to the United States District Court for the District of Columbia, or the United States 

district court for the judicial district or the United States court 

in any territory in which such proceeding is being conducted, 

or where the witness resides or carries on business, for enforcement of any subpena issued pursuant to this paragraph, and 

such courts shall have jurisdiction and power to order and require compliance therewith. Witnesses subpenaed under this 

114

section shall be paid the same fees and mileage that are paid 

witnesses in the district courts of the United States. 

* * * * * * *

(i) PENALTIES.—

(1) * * *

* * * * * * *

ø(5)¿ (4) NOTICE UNDER THIS SECTION AFTER SEPARATION

FROM SERVICE.—The resignation, termination of employment or 

participation, or separation of an institution-affiliated party 

(within the meaning of section 3(u) of the Federal Deposit Insurance Act) with respect to a savings and loan holding company or subsidiary thereof (including a separation caused by 

the deregistration of such a company or such a subsidiary) 

shall not affect the jurisdiction and authority of the Director to 

issue any notice and proceed under this section against any 

such party, if such notice is served before the end of the 6-year 

period beginning on the date such party ceased to be such a 

party with respect to such holding company or its subsidiary 

(whether such date occurs before, on, or after the date of the 

enactment of this paragraph). 

* * * * * * *

(m) QUALIFIED THRIFT LENDER TEST.—

(1) * * *

* * * * * * *

(3) FAILURE TO BECOME AND REMAIN A QUALIFIED THRIFT

LENDER.—

(A) * * *

* * * * * * *

ø(E) DEPOSIT INSURANCE ASSESSMENTS.—Any bank chartered as a result of the requirements of this section shall 

be obligated until December 31, 1993, to pay to the Savings Association Insurance Fund the assessments assessed 

on savings associations under the Federal Deposit Insurance Act. Such association shall also be assessed, on the 

date of its change of status from a Savings Association Insurance Fund member, the exit fee and entrance fee provided in section 5(d) of the Federal Deposit Insurance Act. 

Such institution shall not be obligated to pay the assessments assessed on banks under the Federal Deposit Insurance Act until— ø(i) December 31, 1993, or 

ø(ii) the institution’s change of status from a Savings Association Insurance Fund member to a Bank 

Insurance Fund member, 

whichever is later.¿

ø(F)¿ (E) EXEMPTION FOR SPECIALIZED SAVINGS ASSOCIA- TIONS SERVING CERTAIN MILITARY PERSONNEL.—Subparagraph (A) shall not apply to a savings association subsidiary of a savings and loan holding company if at least 

90 percent of the customers of the savings and loan holding company and its subsidiaries and affiliates are active 

or former members in the United States military services 

115

or the widows, widowers, divorced spouses, or current or 

former dependents of such members. 

ø(G)¿ (F) EXEMPTION FOR CERTAIN FEDERAL SAVINGS ASSOCIATIONS.—This paragraph shall not apply to any Federal savings association in existence as a Federal savings 

association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— (i) that was chartered before October 15, 1982, as a 

savings bank or a cooperative bank under State law; 

or 

(ii) that acquired its principal assets from an association that was chartered before October 15, 1982, as 

a savings bank or a cooperative bank under State law. 

ø(H)¿ (G) NO CIRCUMVENTION OF EXIT MORATORIUM.—

Subparagraph (A) of this paragraph shall not be construed 

as permitting any insured depository institution to engage 

in any conversion transaction prohibited under section 5(d) 

of the Federal Deposit Insurance Act. 

* * * * * * *

(7) TRANSITIONAL RULE FOR CERTAIN SAVINGS ASSOCIATIONS.—

(A) IN GENERAL.—If any Federal savings association in 

existence as a Federal savings association on the date of 

enactment of the Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989—

(i) that was chartered as a savings bank or a cooperative bank under State law before October 15, 1982; or 

(ii) that acquired its principal assets from an association that was chartered before October 15, 1982, as 

a savings bank or a cooperative bank under State law, 

meets the requirements of subparagraph (B), such savings 

association shall be treated as a qualified thrift lender 

øduring period¿ during the period ending on September 

30, 1995. 

* * * * * * *

(o) MUTUAL HOLDING COMPANIES.— (1) * * *

* * * * * * *

(3) NOTICE TO THE DIRECTOR; DISAPPROVAL PERIOD.— (A) * * *

* * * * * * *

(D) RETENTION OF CAPITAL ASSETS.—In connection with 

the transaction described in paragraph (1), a savings association may, subject to the approval of the Director, retain 

capital assets at the holding company level to the extent 

that such capital exceeds the association’s capital requirement established by the Director pursuant to øsections 5 

(s) and (t) of this Act¿ subsections (s) and (t) of section 5. 

* * * * * * *

116

NATIONAL HOUSING ACT 

* * * * * * *

TITLE III—NATIONAL MORTGAGE ASSOCIATIONS 

* * * * * * *

CIVIL MONEY PENALTIES AGAINST ISSUERS

SEC. 317. (a) * * *

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.—

(1) VIOLATIONS.—The violations by an issuer or a custodian 

for which the Secretary may impose a civil money penalty 

under subsection (a) are the following: 

(A) * * *

(B) Failure to segregate cash flow from pooled mortgages 

or to deposit either principal and interest funds or escrow 

funds into special accounts with a depository institution 

whose accounts are insured by the National Credit Union 

Administration or by the Federal Deposit Insurance Corporation through the øBank Insurance Fund for banks or 

through the Savings Association Insurance Fund for savings associations¿ Deposit Insurance Fund. 

* * * * * * *

TITLE V—MISCELLANEOUS 

* * * * * * *

SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, 

AND OTHER PARTICIPANTS IN FHA PROGRAMS. 

(a) * * *

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.—

(1) VIOLATIONS.—The Secretary may impose a civil money 

penalty under subsection (a) for any knowing and material violation by a mortgagee or lender, as follows: 

(A) * * *

(B) Failure of a nonsupervised mortgagee, as defined by 

the Secretary—

(i) * * *

(ii) to deposit these funds in a special account with 

a depository institution whose accounts are insured by 

the Federal Deposit Insurance Corporation through 

the øBank Insurance Fund for banks and through the 

Savings Association Insurance Fund for savings associations¿ Deposit Insurance Fund, or by the National 

Credit Union Administration. 

* * * * * * *

FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND 

ENFORCEMENT ACT OF 1989

* * * * * * *

117

TITLE IX—REGULATORY ENFORCEMENT AUTHORITY AND CRIMINAL ENHANCEMENTS 

* * * * * * *

Subtitle E—Civil Penalties For Violations 

Involving Financial Institutions 

SEC. 951. CIVIL PENALTIES. 

(a) * * *

(b) MAXIMUM AMOUNT OF PENALTY.—

(1) * * *

* * * * * * *

(3) SPECIAL RULE FOR VIOLATIONS CREATING GAIN OR LOSS.—

(A) * * *

(B) As used in this paragraph, the term ‘‘person’’ includes 

the Bank Insurance Fund, the Savings Association Insurance 

Fund, and after the merger of such funds, the Deposit Insurance Fund, and the National Credit Union Share Insurance 

Fund. 

* * * * * * *

TITLE XI—REAL ESTATE APPRAISAL 

REFORM AMENDMENTS 

* * * * * * *

SEC. 1112. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS 

REGULATORY AGENCIES RELATING TO APPRAISER 

QUALIFICATIONS. 

(a) * * *

* * * * * * *

(c) GAO STUDY OF APPRAISALS IN CONNECTION WITH REAL ESTATE RELATED FINANCIAL TRANSACTIONS BELOW THE THRESHOLD

LEVEL.—

(1) GAO STUDIES.—The Comptroller General of the United 

States may conduct, under such conditions as the Comptroller 

General determines appropriate, studies on the adequacy and 

quality of appraisals or evaluations conducted in connection 

with real estate related financial transactions below the 

threshold level established under subsection (b), taking into account—

(A) * * *

(B) the possibility of losses to the øBank Insurance 

Fund, the Savings Association Insurance Fund,¿ Deposit 

Insurance Fund or the National Credit Union Share Insurance Fund; 

* * * * * * *

118

BANK HOLDING COMPANY ACT OF 1956

* * * * * * *

DEFINITIONS

SEC. 2. (a) * * *

* * * * * * *

(j) DEFINITION OF SAVINGS ASSOCIATIONS AND RELATED TERM.— The term ‘‘savings association’’ or ‘‘insured institution’’ means— (1) any Federal savings association or Federal savings bank; 

(2) any building and loan association, savings and loan association, homestead association, or cooperative bank if such association or cooperative bank is a member of the øSavings Association Insurance Fund¿ Deposit Insurance Fund; and 

* * * * * * *

ACQUISITION OF BANK SHARES OR ASSETS

SEC. 3. (a) * * *

* * * * * * *

(d) INTERSTATE BANKING.—

(1) APPROVALS AUTHORIZED.—

(A) * * *

* * * * * * *

(D) EFFECT ON STATE CONTINGENCY LAWS.—No provision 

of this subsection shall be construed as affecting the applicability of a State law that makes an acquisition of a bank 

contingent upon a requirement to hold a portion of such 

bank’s assets available for call by a State-sponsored housing entity established pursuant to State law, if—

(i) * * *

* * * * * * *

(iii) the Federal Deposit Insurance Corporation has 

not determined that compliance with such State law 

would result in an unacceptable risk to the øappropriate deposit insurance fund¿ Deposit Insurance 

Fund; and 

* * * * * * *

SECTION 114 OF THE GRAMM-LEACH-BLILEY ACT 

SEC. 114. PRUDENTIAL SAFEGUARDS. 

(a) COMPTROLLER OF THE CURRENCY.—

(1) IN GENERAL.—The Comptroller of the Currency may, by 

regulation or order, impose restrictions or requirements on relationships or transactions between a national bank and a subsidiary of the national bank that the Comptroller finds are— (A) * * *

(B) appropriate to avoid any significant risk to the safety 

and soundness of insured depository institutions or øany 

Federal deposit insurance fund¿ the Deposit Insurance 

Fund or other adverse effects, such as undue concentration 

119

of resources, decreased or unfair competition, conflicts of 

interests, or unsound banking practices. 

* * * * * * *

(b) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.—

(1) * * *

(2) FINDING.—The Board of Governors of the Federal Reserve 

System may exercise authority under paragraph (1) if the 

Board finds that the exercise of such authority is—

(A) * * *

(B) appropriate to prevent an evasion of any provision of 

law referred to in subparagraph (A) or to avoid any significant risk to the safety and soundness of depository institutions or øany Federal deposit insurance fund¿ the Deposit 

Insurance Fund or other adverse effects, such as undue 

concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. 

* * * * * * *

(4) FOREIGN BANKS.—The Board may, by regulation or order, 

impose restrictions or requirements on relationships or transactions between a branch, agency, or commercial lending company of a foreign bank in the United States and any affiliate 

in the United States of such foreign bank that the Board finds 

are—

(A) * * *

(B) appropriate to prevent an evasion of any provision of 

law referred to in subparagraph (A) or to avoid any significant risk to the safety and soundness of depository institutions or øany Federal deposit insurance fund¿ the Deposit 

Insurance Fund or other adverse effects, such as undue 

concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. 

(c) FEDERAL DEPOSIT INSURANCE CORPORATION.—

(1) IN GENERAL.—The Federal Deposit Insurance Corporation 

may, by regulation or order, impose restrictions or requirements on relationships or transactions between a State nonmember bank (as defined in section 3 of the Federal Deposit 

Insurance Act) and a subsidiary of the State nonmember bank 

that the Corporation finds are—

(A) * * *

(B) appropriate to avoid any significant risk to the safety 

and soundness of depository institutions or øany Federal 

deposit insurance fund¿ the Deposit Insurance Fund or 

other adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. 

* * * * * * *

(120)

SUPPLEMENTAL VIEWS 

Section 4 of H.R. 522 contains a provision, originally authored by 

Congresswoman Waters, that gives depository institutions a 50 

percent credit toward their premiums for deposits held in lifeline 

banking accounts. These are accounts intended for persons who 

might otherwise not be able to afford access to basic banking services, such as free or low-cost checking and savings accounts. This 

is a vital provision that, for the first time, implements a provision 

of the Bank Enterprise Act enacted in 1991, giving financial institutions an incentive to provide low-cost basic banking services to 

consumers who might not otherwise have access to them. The inclusion of the lifeline account credit was critical to our support of 

the favorable reporting of H.R. 522, and we are strongly committed 

to do all that is necessary to retain it in the bill throughout the 

legislative process.

BARNEY FRANK. 

MAXINE WATERS. 

(121)

DISSENTING VIEWS 

H.R. 522, the Federal Deposit Insurance Reform Act, expands the 

Federal government’s unconstitutional control over the financial 

services industry and raises taxes on all financial institutions. Furthermore, this legislation could increase the possibility of future 

bank failures. Therefore, I must oppose this bill. 

I primarily object to the provisions in H.R. 522 which may increase the premiums assessed on participating financial institutions. These ‘‘premiums,’’ which are actually taxes, are the premier 

sources of funds for the Deposit Insurance Fund. This fund is used 

to bail out banks that experience difficulties meeting their commitments to their depositors. Thus, the deposit insurance system 

transfers liability for poor management decisions from those who 

made the decisions, to their competitors. This system punishes 

those financial institutions which follow sound practices, as they 

are forced to absorb the losses of their competitors. This also compounds the moral hazard problem created whenever government 

socializes business losses. 

In the event of a severe banking crisis, Congress will likely 

transfer funds from the general revenue into the Deposit Insurance 

Fund, which could make all taxpayers liable for the mistakes of a 

few. Of course, such a bailout would require separate authorization 

from Congress, but can anyone imagine Congress saying ‘‘No’’ to 

banking lobbyists pleading for relief from the costs of bailing out 

their weaker competitors? 

Government subsidies lead to government control, as regulations 

are imposed on the recipients of the subsidies in order to address 

the moral hazard problem. This is certainly the case in banking, 

which is one of the most heavily regulated industries in America. 

However, as George Kaufman, the John Smith Professor of Banking and Finance at Loyola University in Chicago, and co-chair of 

the Shadow Financial Regulatory Committee, pointed out in a 

study for the CATO Institute, the FDIC’s history of poor management exacerbated the banking crisis of the eighties and nineties. 

Professor Kaufman properly identifies a key reason for the FDIC’s 

poor track record in protecting individual depositors: regulators 

have incentives to downplay or even cover-up problems in the financial system such as banking failures. Banking failures are black 

marks on the regulators’ records. In addition, regulators may be 

subject to political pressure to delay imposing sanctions on failing 

institutions, thus increasing the magnitude of the loss. 

Immediately after a problem in the banking industry comes to 

light, the media and Congress will inevitably blame it on regulators 

who were ‘‘asleep at the switch.’’ Yet, most politicians continue to 

believe that giving the very regulators whose incompetence (or 

worst) either caused or contributed to the problem will somehow 

prevent future crises! 

122

The presence of deposit insurance and government regulations 

removes incentives for individuals to act on their own to protect 

their deposits or even inquire as to the health of their financial institutions. After all, why should individuals be concerned with the 

health of their financial institutions when the Federal government 

is insuring banks following sound practices and has insured their 

deposits? 

Finally, I would remind my colleagues that the Federal deposit 

insurance program lacks constitutional authority. Congress’ only 

mandate in the area of money, and banking is to maintain the 

value of the money. Unfortunately, Congress abdicated its responsibility over monetary policy with the passage of the Federal Reserve 

Act of 1913, which allows the Federal government to erode the 

value of the currency at the will of the central bank. Congress’ embrace of fiat money is directly responsible for the instability in the 

banking system that created the justification for deposit insurance. 

In conclusion, H.R. 522 imposes new taxes on financial institutions, forces sound institutions to pay for the mistakes of their 

reckless competitors, increases the chances of taxpayers being 

forced to bail out unsound financial institutions, reduces individual 

depositors’ incentives to take action to protect their deposits, and 

exceeds Congress’s constitutional authority. I therefore urge my 

colleagues to reject this bill. Instead of extending this Federal program, Congress should work to prevent the crises which justify 

government programs like deposit insurance, by fulfilling our constitutional responsibility to pursue sound monetary. 

RON PAUL.

Æ