I

103D CONGRESS

1ST SESSION H. R. 268

To provide additional funding for the Resolution Trust Corporation, to reduce

the amount of losses of such Corporation through the establishment

of the supervisory goodwill buy-back program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. MCCOLLUM introduced the following bill; which was referred to the

Committee on Banking, Finance and Urban Affairs

A BILL

To provide additional funding for the Resolution Trust Corporation, to reduce the amount of losses of such Corporation through the establishment of the supervisory goodwill buy-back program, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Resolution Trust Cor5 poration Loss Reduction and Funding Act of 1993’’.

6 SEC. 2. FUNDING.

7 Section 21A(i) of the Federal Home Loan Bank Act

8 (12 U.S.C. 1441a(i)) is amended—
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1 (1) in paragraph (3), by striking ‘‘until April 1,

2 1992’’; and

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

4 paragraphs:

5 ‘‘(4) ADDITIONAL FUNDING.—Pursuant to the

6 request of the President and in addition to amounts

7 provided under paragraphs (2) and (3), the Sec8 retary of the Treasury shall provide, out of any

9 money in the Treasury not otherwise appropriated,

10 to the Corporation such sums as may be necessary

11 not to exceed $25,000,000,000 to carry out the pur12 poses of this section until April 1, 1994.

13 ‘‘(5) REDUCTION IN FUNDING IN AMOUNT

14 EQUAL TO SUPERVISORY GOODWILL BUY-BACK PRO15 GRAM SAVINGS.—Of the amounts appropriated

16 under paragraphs (3) and (4), the amount available

17 for obligation shall be reduced by the amount which

18 the Secretary determines is equal to the net reduc19 tion in the expenditures of the Corporation due to

20 the supervisory goodwill buy-back program estab21 lished under section 15 of the Home Owners’ Loan

22 Act.’’.

23 SEC. 3. REDUCTION OF RTC LOSSES.

24 (a) PURPOSE.—
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1 (1) IN GENERAL.—It is the purpose of this sec2 tion to directly reduce the amount of taxpayer funds

3 which would otherwise be required to be appro4 priated to the Resolution Trust Corporation by re5 moving the threat of large losses which would accrue

6 in connection with the resolution of savings associa7 tions which would be healthy associations but for the

8 supervisory goodwill acquired by such associations in

9 transactions with Federal regulatory agencies.

10 (2) NO EFFECT ON SUPERVISORY GOODWILL

11 LITIGATION NOT INVOLVING QUALIFIED SAVINGS AS12 SOCIATIONS.—No court may take into account sec13 tion 15 of the Home Owners’ Loan Act (as added

14 by the amendment made by subsection (b)) or the

15 program established under such section 15 in con16 sidering any litigation between any savings associa17 tion which is not a qualified savings association (as

18 defined in such section 15) and the United States

19 with regard to supervisory goodwill.

20 (b) ESTABLISHMENT OF SUPERVISORY GOODWILL

21 BUY-BACK PROGRAM.—The Home Owners’ Loan Act (12

22 U.S.C. 1461 et seq.) is amended by adding at the end

23 the following new section:
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1 ‘‘SEC. 15. SUPERVISORY GOODWILL BUY-BACK PROGRAM.

2 ‘‘(a) SUPERVISORY GOODWILL REPLACED WITH

3 TANGIBLE CAPITAL.—

4 ‘‘(1) IN GENERAL.—Upon determining that a

5 conservator or receiver is to be appointed for a sav6 ings association on or before the last day on which

7 the Corporation may be appointed as conservator or

8 receiver for a savings association in accordance with

9 section 21A(b)(3)(A)(ii) of the Federal Home Loan

10 Bank Act if no action is taken under this section,

11 the Director shall, in consultation with the Resolu12 tion Trust Corporation—

13 ‘‘(A) determine whether the savings asso14 ciation is a qualified savings association; and

15 ‘‘(B) if the association is a qualified sav16 ings association, pay the association the re17 placement amount from amounts made avail18 able pursuant to subsection (f).

19 ‘‘(2) REDUCTION IN SUPERVISORY GOOD20 WILL.—On receipt of any payment under paragraph

21 (1), a qualified savings association shall reduce its

22 supervisory goodwill by the amount of such payment.

23 ‘‘(b) DEFINITIONS.—For purposes of this section—

24 ‘‘(1) QUALIFIED SAVINGS ASSOCIATION.—The

25 term ‘qualified savings association’ means a savings

26 association described in subsection (a)(1) which—
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1 ‘‘(A) would be, in the determination of the

2 Director, a viable association, and would not be

3 expected to fail, if the association participates

4 in the program; and

5 ‘‘(B) has agreed to waive all claims the as6 sociation may have against the Federal Govern7 ment arising from changes in the statutory

8 treatment of supervisory goodwill as set forth in

9 section 5(t) since the creation of such goodwill

10 on the books of the association.

11 ‘‘(2) REPLACEMENT AMOUNT.—The term ‘re12 placement amount’ means, with respect to a quali13 fied savings association, the lesser of—

14 ‘‘(A) the determined amount; and

15 ‘‘(B) the least amount that, if paid to the

16 association, would cause the association to be

17 adequately capitalized (as defined in section 38

18 of the Federal Deposit Insurance Act) under all

19 fully phased in capital standards.

20 ‘‘(3) DETERMINED AMOUNT.—The term ‘deter21 mined amount’ means, with respect to a savings as22 sociation, an amount determined appropriate by the

23 Office of Thrift Supervision, taking into account the

24 circumstances of the association, which is—
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1 ‘‘(A) not less than the amount of the su2 pervisory goodwill of the association, as of the

3 date of the determination; and

4 ‘‘(B) not more than the amount of the su5 pervisory goodwill of the association, as of the

6 date of the enactment of the Financial Institu7 tions Reform, Recovery, and Enforcement Act

8 of 1989.

9 ‘‘(c) CAPITAL REQUIREMENTS.—

10 ‘‘(1) FULLY PHASED IN CAPITAL STAND11 ARDS.—If, after receipt of funds pursuant to sub12 section (a), a qualified savings association meets all

13 fully phased in capital standards, then such stand14 ards shall apply to the association, notwithstanding

15 any other provision of law.

16 ‘‘(2) ADDITIONAL REQUIREMENTS.—The Office

17 of Thrift Supervision may set additional capital re18 quirements for qualified savings associations to en19 sure that such associations will progressively prepare

20 to meet all applicable capital requirements.

21 ‘‘(d) ASSESSMENT IMPOSED.—

22 ‘‘(1) IN GENERAL.—The Director shall impose

23 an annual assessment on each qualified savings as24 sociation which receives the payment of any amount

25 pursuant to subsection (a)(2)—
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1 ‘‘(A) beginning on or after the date of a

2 determination by the Director that the savings

3 association is sufficiently viable to begin paying

4 such assessment; and

5 ‘‘(B) continuing until the aggregate

6 amount of assessments paid under this sub7 section by the association equals or exceeds the

8 aggregate amount received under subsection

9 (a)(2) by the association.

10 ‘‘(2) AMOUNT OF ASSESSMENT.—The amount

11 of the annual assessment imposed on any savings as12 sociation for any year shall be determined by the Di13 rector after considering—

14 ‘‘(A) the viability and profitability of the

15 association;

16 ‘‘(B) the amortization period which was

17 applicable with respect to any supervisory good18 will of the association as of the date such good19 will was first entered on the books of the asso20 ciation; and

21 ‘‘(C) the amount received by the associa22 tion pursuant to subsection (a)(2).

23 ‘‘(3) DEPOSIT OF ASSESSMENTS IN TREAS24 URY.—
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1 ‘‘(A) TRANSFER TO SECRETARY OF THE

2 TREASURY.—All amounts received by the Direc3 tor under this subsection shall be transferred to

4 the Secretary of the Treasury.

5 ‘‘(B) PUBLIC DEBT REDUCTION.—

6 Amounts received by the Secretary of the

7 Treasury under subparagraph (A) shall be de8 posited in the general fund of the Treasury and

9 shall be used for the sole purpose of reducing

10 the national debt.

11 ‘‘(e) ADDITIONAL LIMITATIONS AND REQUIRE12 MENTS.—

13 ‘‘(1) LIMITATION ON DISTRIBUTION OF CAPITAL

14 OR PAYMENT OF DIVIDENDS.—No savings associa15 tion may make any capital distribution or pay any

16 dividend until the sum of the amount of the assess17 ments imposed under subsection (d) equals or ex18 ceeds the replacement amount received by such asso19 ciation under subsection (a)(1)(B).

20 ‘‘(2) OTHER REQUIREMENTS.—The Office of

21 Thrift Supervision may establish any other require22 ments needed to ensure the safe and sound oper23 ation of qualified savings associations.

24 ‘‘(f) FUNDING PROVIDED BY RTC.—The Resolution

25 Trust Corporation shall provide such funds as may be nec-
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1 essary to carry out this section to the Director of the Of2 fice of Thrift Supervision from amounts made available

3 to the Corporation under section 21A of the Federal Home

4 Loan Bank Act.’’.

5 (c) APPLICABILITY TO CERTAIN ASSOCIATIONS.—

6 Upon the enactment of this Act, the Director of the Office

7 of Thrift Supervision shall promptly make the determina8 tion required under section 15(a)(1)(A) of the Home Own9 ers’ Loan Act (as added by subsection (a) of this section)

10 for any savings association for which the determination

11 to appoint a conservator or receiver had been made before

12 the date of the enactment of this Act but for which a con13 servator or receiver had not been appointed as of such

14 date.

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