Depositor Protection Act of 2023

Subjects: Finance and Financial Sector


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1572 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                S. 1572

   To amend the Federal Deposit Insurance Act to address transaction 
              account guarantees, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 11, 2023

  Mr. Hagerty introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To amend the Federal Deposit Insurance Act to address transaction 
              account guarantees, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Depositor Protection Act of 2023''.

SEC. 2. TRANSACTION ACCOUNT GUARANTEES.

    (a) In General.--Section 11(a)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. 1821(a)(1)) is amended--
            (1) in subparagraph (B)--
                    (A) by striking ``The net amount'' and inserting 
                the following:
                            ``(i) In general.--Subject to clause (ii), 
                        the net amount''; and
                    (B) by adding at the end the following:
                            ``(ii) Insurance for noninterest-bearing 
                        transaction accounts.--
                                    ``(I) In general.--Notwithstanding 
                                clause (i), and subject to subclause 
                                (II) of this clause, the Corporation 
                                shall insure the net amount, in an 
                                amount that is not more than 
                                $100,000,000, that any depositor at an 
                                insured depository institution 
                                maintains in a noninterest-bearing 
                                transaction account. Such amount shall 
                                not be taken into account when 
                                computing the net amount due to such 
                                depositor under clause (i).
                                    ``(II) Ability of certain insured 
                                depository institutions to opt-out.--
                                            ``(aa) In general.--An 
                                        insured depository institution 
                                        that has less than 
                                        $250,000,000,000 in total 
                                        consolidated assets may elect 
                                        not to participate with respect 
                                        to the increased amount of 
                                        insurance made available under 
                                        subclause (I).
                                            ``(bb) Limitation on 
                                        assessment of fee.--The 
                                        Corporation may not assess a 
                                        fee on any insured depository 
                                        institution that elects not to 
                                        participate with respect to the 
                                        increased amount of insurance 
                                        made available under subclause 
                                        (I).
                                    ``(III) Definition.--In this 
                                clause, the term `noninterest-bearing 
                                transaction account' means a deposit or 
                                account maintained at an insured 
                                depository institution--
                                            ``(aa) with respect to 
                                        which interest is neither 
                                        accrued nor paid;
                                            ``(bb) on which the 
                                        depositor or account holder is 
                                        permitted to make withdrawals 
                                        by negotiable or transferable 
                                        instrument, payment orders of 
                                        withdrawal, telephone or other 
                                        electronic media transfers, or 
                                        other similar items for the 
                                        purpose of making payments or 
                                        transfers to third parties or 
                                        others; and
                                            ``(cc) on which the insured 
                                        depository institution does not 
                                        reserve the right to require 
                                        advance notice of an intended 
                                        withdrawal.''; and
            (2) in subparagraph (C), by striking ``subparagraph (B)'' 
        and inserting ``subparagraph (B)(i)''.
    (b) Reversion.--On the date that is 2 years after the date of 
enactment of this Act, section 11(a)(1) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
            (1) by amending subparagraph (B) to read as follows:
                    ``(B) Net amount of insured deposit.--The net 
                amount 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) in subparagraph (C), by striking ``subparagraph 
        (B)(i)'' and inserting ``subparagraph (B)''.

SEC. 3. RECIPROCAL DEPOSITS.

    Section 29(i)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
1831f(i)(1)) is amended--
            (1) in subparagraph (A), by striking ``$5,000,000,000'' and 
        inserting ``$10,000,000,000''; and
            (2) in subparagraph (B), by striking ``20 percent'' and 
        inserting ``25 percent''.

SEC. 4. ADJUSTED LEAST COST RESOLUTION.

    Section 13(c)(4) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(c)(4)) is amended--
            (1) by redesignating subparagraph (H) as subparagraph (I); 
        and
            (2) by inserting after subparagraph (G) the following:
                    ``(H) Non-systemic secondary cost to the deposit 
                insurance fund.--
                            ``(i) Definitions.--In this subparagraph:
                                    ``(I) Large insured depository 
                                institution.--The term `large insured 
                                depository institution' means an 
                                insured depository institution with 
                                total consolidated assets of not less 
                                than $100,000,000,000.
                                    ``(II) Non-systemic secondary cost 
                                to the deposit insurance fund.--The 
                                term `non-systemic secondary cost to 
                                the Deposit Insurance Fund' means a 
                                cost to the Deposit Insurance Fund 
                                from--
                                            ``(aa) the appointment of 
                                        the Corporation as a receiver 
                                        for a second or additional 
                                        insured depository institution 
                                        as a direct and contemporaneous 
                                        result of the compliance by the 
                                        Corporation with subparagraphs 
                                        (A) and (E) with respect to a 
                                        large insured depository 
                                        institution, including the cost 
                                        of liquidating any such second 
                                        or additional insured 
                                        depository institution in 
                                        compliance with subparagraphs 
                                        (A) and (E);
                                            ``(bb) a reduction in the 
                                        price of an asset as a direct 
                                        and contemporaneous result of 
                                        the liquidation by the 
                                        Corporation of a large insured 
                                        depository institution in 
                                        compliance with subparagraphs 
                                        (A) and (E); or
                                            ``(cc) any other direct and 
                                        contemporaneous result of the 
                                        compliance by the Corporation 
                                        with subparagraphs (A) and (E) 
                                        with respect to a large insured 
                                        depository institution (other 
                                        than any such loss that arises 
                                        from serious adverse effects on 
                                        economic conditions or 
                                        financial stability within the 
                                        meaning of subparagraph (G)).
                            ``(ii) Action permitted upon determination 
                        by the board of directors.--
                                    ``(I) In general.--Notwithstanding 
                                subparagraphs (A) and (E), if the Board 
                                of Directors (upon a vote of not less 
                                than two-thirds of the members of the 
                                Board of Directors) makes a 
                                determination described in subclause 
                                (II), the Corporation may take action 
                                or assistance under paragraph (2) for 
                                the purpose of facilitating--
                                            ``(aa) a merger or 
                                        consolidation of the applicable 
                                        large insured depository 
                                        institution with another 
                                        insured depository institution;
                                            ``(bb) the sale of any or 
                                        all of the assets of the 
                                        applicable large insured 
                                        depository institution;
                                            ``(cc) the assumption of 
                                        any or all of the liabilities 
                                        of the applicable large insured 
                                        depository institution by 
                                        another insured depository 
                                        institution; or
                                            ``(dd) the acquisition of 
                                        the stock of the applicable 
                                        large insured depository 
                                        institution.
                                    ``(II) Determination described.--A 
                                determination described in this 
                                subclause is a determination that--
                                            ``(aa) the compliance by 
                                        the Corporation with 
                                        subparagraphs (A) and (E) with 
                                        respect to a large insured 
                                        depository institution for 
                                        which the Corporation has been 
                                        appointed receiver would result 
                                        in a non-systemic secondary 
                                        cost to the Deposit Insurance 
                                        Fund; and
                                            ``(bb) any action or 
                                        assistance under this 
                                        subparagraph would avoid or 
                                        mitigate the non-systemic 
                                        secondary cost to the Deposit 
                                        Insurance Fund described in 
                                        item (aa).
                            ``(iii) Adjusted least-cost resolution 
                        requirement.--The Corporation may not take any 
                        action or provide any assistance under this 
                        subparagraph unless 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 taking of 
                        that action or provision of that assistance 
                        with respect to an insured depository 
                        institution is the least costly to the Deposit 
                        Insurance Fund, taking into account the non-
                        systemic secondary costs to the Deposit 
                        Insurance Fund that would result without the 
                        taking of that action or the provision of that 
                        assistance, of all possible methods for meeting 
                        the obligations of the Corporation under this 
                        section.
                            ``(iv) Documentation required.--The 
                        Chairperson of the Board of Directors shall--
                                    ``(I) document any determination 
                                under clause (ii); and
                                    ``(II) retain the documentation for 
                                review under clause (v).
                            ``(v) GAO review.--The Comptroller General 
                        of the United States shall review and report to 
                        Congress on any determination under clause 
                        (ii), including--
                                    ``(I) the basis for the 
                                determination;
                                    ``(II) the purpose for which any 
                                action was taken pursuant to such 
                                clause; and
                                    ``(III) the likely effect of the 
                                determination and such action on the 
                                incentives and conduct of insured 
                                depository institutions and uninsured 
                                depositors.
                            ``(vi) Notice.--
                                    ``(I) In general.--Not later than 3 
                                days after making a determination under 
                                clause (ii), the Secretary of the 
                                Treasury shall provide written notice 
                                of any determination under clause (ii) 
                                to the Committee on Banking, Housing, 
                                and Urban Affairs of the Senate and the 
                                Committee on Financial Services of the 
                                House of Representatives.
                                    ``(II) Description of basis of 
                                determination.--The notice under 
                                subclause (I) shall include a 
                                description of the basis for any 
                                determination under clause (ii).''.

SEC. 5. ACQUISITIONS OF DISTRESSED BANKS.

    (a) Definitions.--In this section:
            (1) Appropriate federal banking agency; insured bank.--The 
        terms ``appropriate Federal banking agency'' and ``insured 
        bank'' have the meanings given the terms in section 3 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1813).
            (2) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
            (3) Bank holding company; control; subsidiary.--The terms 
        ``bank holding company'', ``control'', and ``subsidiary'' have 
        the meanings given the terms in section 2 of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841).
            (4) Covered entity.--The term ``covered entity'' means--
                    (A) after a transaction described in subsection 
                (b)(1)(A), the bank holding company of which the 
                applicable distressed insured bank has become a 
                subsidiary;
                    (B) after a transaction described in subsection 
                (b)(1)(B), the bank holding company that has acquired 
                the direct or indirect ownership or control described 
                in that provision; and
                    (C) after a merger or consolidation described in 
                subsection (b)(1)(C), the bank holding company that 
                results because of that merger or consolidation.
            (5) Distressed insured bank.--The term ``distressed insured 
        bank'' means an insured bank that has a class of equity 
        securities, or is controlled, directly or indirectly, by a 
        company that has a class of equity securities--
                    (A) registered pursuant to section 12(b) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78l(b)); and
                    (B) the price of which on a national securities 
                exchange has declined not less than 20 percent at any 
                time on or after March 1, 2023, as compared with the 
                highest price of those securities on that exchange on 
                or after March 1, 2023.
            (6) Equity security; exchange.--The terms ``equity 
        security'' and ``exchange'' have the meanings given the terms 
        in section 3(a) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)).
            (7) National securities exchange.--The term ``national 
        securities exchange'' means an exchange that is registered in 
        accordance with section 6 of the Securities Exchange Act of 
        1934 (15 U.S.C. 78f).
            (8) Total consolidated assets.--The term ``total 
        consolidated assets'' means, with respect to an entity, the 
        total consolidated assets of that entity, as determined 
        pursuant to the instructions of Form FR Y-9C of the Board.
    (b) Temporary Waiver of Regulatory Approvals for Acquisitions of 
Distressed Banks.--
            (1) In general.--Subject to paragraphs (2) and (3), except 
        as provided in paragraph (4), and notwithstanding any 
        requirement or restriction relating to notification, approval, 
        or other matter under section 3 or 4 of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1842, 1843), section 7(j) or 
        18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j), 
        1828(c)), or any other Federal or State law, after written 
        notice to the Board--
                    (A) a distressed insured bank may become a 
                subsidiary of a bank holding company;
                    (B) a bank holding company may acquire direct or 
                indirect ownership or control of any voting shares of 
                any distressed insured bank or any company that 
                controls a distressed insured bank; and
                    (C) a bank holding company may merge or consolidate 
                with a bank holding company that has a subsidiary that 
                is a distressed insured bank.
            (2) Conditions.--Paragraph (1) shall apply only if--
                    (A) after the applicable transaction or other 
                action under that paragraph--
                            (i) the applicable covered entity would 
                        meet the required capital levels for well 
                        capitalized bank holding companies established 
                        by the Board; or
                            (ii) in the case of a transaction or other 
                        action described in subparagraph (A) or (B) of 
                        that paragraph, the total consolidated assets 
                        of the applicable covered entity would be not 
                        more than 2 times the amount of the total 
                        consolidated assets (as measured immediately 
                        before the transaction or other action) of--
                                    (I) in the case of an action 
                                described in subparagraph (A) of that 
                                paragraph, the bank holding company of 
                                which the distressed insured bank is 
                                becoming a subsidiary as a result of 
                                that action; or
                                    (II) in the case of an acquisition 
                                described in subparagraph (B) of that 
                                paragraph, the bank holding company 
                                that is acquiring direct or indirect 
                                ownership or control of any voting 
                                shares of the distressed insured bank 
                                or the company that controls a 
                                distressed insured bank; and
                    (B) each insured bank controlled by the applicable 
                covered entity--
                            (i) has a composite rating, as determined 
                        by the appropriate Federal banking agency in 
                        the most recent report of examination of the 
                        applicable insured bank, of 1 or 2 under the 
                        Uniform Financial Institution Rating System; 
                        and
                            (ii) has been assigned by the appropriate 
                        Federal banking agency a rating of 
                        ``outstanding'' or ``satisfactory'' in the most 
                        recent Community Reinvestment Act examination 
                        of the applicable insured bank.
            (3) Expiration.--A transaction or other action to which 
        paragraph (1) applies shall be consummated not later than 90 
        days after the date of enactment of this Act.
            (4) Exceptions.--Paragraph (1) shall not apply to--
                    (A) any action that would cause a distressed 
                insured bank to become a subsidiary of an insured bank;
                    (B) any acquisition of direct or indirect ownership 
                or control by an insured bank of any voting shares of 
                any distressed insured bank or any company that 
                controls a distressed insured bank; or
                    (C) any merger, consolidation, acquisition of 
                assets, or other acquisition of control, of another 
                company that would be subject to section 14 of the Bank 
                Holding Company Act of 1956 (12 U.S.C. 1852).
    (c) No Premerger Notification and Waiting Period.--A transaction 
under subsection (b) shall be exempt from the requirements of section 
7A of the Clayton Act (15 U.S.C. 18a).
                                 &lt;all&gt;
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