Common Sense Economic Recovery Act of 2015

To permit certain current loans that would otherwise be treated as non-accrual loans as accrual loans, and for other purposes. 1. Short title This Act may be cited as the Common Sense Economic Recovery Act of 2015 2. Treatment of certain loans (a) In general For purposes of determining capital requirements or measuring capital of an insured depository institution under section 38 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831o (1) the loan is current; (2) during the previous 6-month period, no monthly payment on the loan has been more than 30 days delinquent; and (3) the payments on the loan are being made pursuant to the contractual terms of the loan agreement and any refinances and modifications that are agreed to by all of the parties. (b) Demonstration of Ability To perform on a Loan Notwithstanding subsection (a), a modified or restructured loan may not be treated as a non-accrual loan if the borrower demonstrates the ability to perform on such a loan— (1) over a period of 6 months; or (2) with respect to a loan on a quarterly, semi-annual, or longer repayment schedule, over a period of 3 consecutive payments. (c) No additional adverse treatment With respect to a loan held by an insured depository institution and treated as an accrual loan by reason of subsection (a), an appropriate Federal banking agency may not impose any additional accounting requirements on such institution with respect to such loan compared to the requirements that would otherwise have been placed on such institution with respect to such loan if such loan were not being treated as an accrual loan by reason of subsection (a), if the result of such additional requirement would adversely impact the measurement of capital of the institution. (d) Prohibition on the Re-Classification of Loans Based Solely on Collateral Value An appropriate Federal banking agency may not require an insured depository institution to treat a loan as a non-accrual loan solely on the basis that the collateral of such loan has reduced in value. (e) Provisions not applicable to publicly traded institutions This section shall not apply with respect to any issuer of a security registered pursuant to section 12 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78l 3. Study (a) In general The Financial Stability Oversight Council shall conduct a study of how best to prevent contradictory guidance from being issued by appropriate Federal banking agencies to insured depository institutions with respect to loan classifications and capital requirements. (b) Report Not later than the end of the 60-day period beginning on the date of the enactment of this Act, the Financial Stability Oversight Council shall issue a report to the Congress containing— (1) all determinations and conclusions made by the Council in carrying out the study required under subsection (a); and (2) legislative recommendations that the Council believes will prevent contradictory guidance from being issued by appropriate Federal banking agencies to insured depository institutions with respect to loan classifications and capital requirements. 4. Definitions For purposes of this Act: (1) Appropriate Federal banking agency The term appropriate Federal banking agency (A) has the meaning given such term under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (B) means the National Credit Union Administration Board, in the case of a credit union. (2) Insured depository institution The term insured depository institution (A) an insured depository institution, as defined under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (B) a credit union. 5. Sunset Effective after the end of the 2-year period beginning on the date of the enactment of this Act, this Act shall cease to have any force or effect.

Summary: Common Sense Economic Recovery Act of 2015 This bill cites circumstances under which, for purposes of determining capital requirements or measuring an insured depository institution's capital, such an institution may treat a non-accrual loan as an accrual loan. (Non-accrual [also known as non-performing or doubtful] loans are those on which interest is overdue and full collection of principal is uncertain, and so interest, if it has not been paid in over 90 days, cannot be credited to the bank's revenue account until it has actually been received.) An insured depository institution may treat a non-accrual loan as an accrual loan if: (1) the loan is current, (2) no monthly payment has been more than 30 days delinquent during the previous 6-month period, and (3) loan payments are being made pursuant to the contract terms and all parties agree to any refinances and modifications. A modified or restructured loan may not be treated as a non-accrual loan if the borrower demonstrates the ability to perform on such a loan: (1) over a period of 6 months; or (2) over a period of 3 consecutive payments in the case of a quarterly, semi-annual, or longer repayment schedule. The appropriate federal banking agency is prohibitted from: (1) imposing any additional accounting requirements upon an insured depository institution with respect to a loan treated as an accrual loan under this Act if the result of such requirement would adversely impact measurement of the institution's capital, or (2) requiring an insured depository institution to treat a loan as a non-accrual loan solely because the loan collateral has reduced in value. Any issuer of a security registered under the Securities Exchange Act of 1934 is excluded from the accounting requirements and prohibitions of this Act. The Financial Stability Oversight Council must study how best to prevent the issuance of contradictory guidance to such institutions by federal banking agencies with respect to loan classifications and capital requirements.