IB
Union Calendar No. 278
107TH CONGRESS
2D SESSION
H. R. 3717
[Report No. 107–467]
To reform the Federal deposit insurance system, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 12, 2002
Mr. BACHUS (for himself, Mr. OXLEY, Mr. GILLMOR, Mr. LEACH, Mrs. ROU-
KEMA, Mr. ROYCE, Mr. NEY, Mr. KING, Mr. WELDON of Florida, Mr.
RILEY, Mr. JONES of North Carolina, Mr. MANZULLO, Mr. TIBERI, Mrs.
BIGGERT, Mr. THUNE, and Ms. HART) introduced the following bill;
which was referred to the Committee on Financial Services
MAY 16, 2002
Additional sponsors: Mr. LATOURETTE, Mrs. KELLY, Mr. SHOWS, Mr. LUCAS
of Kentucky, Mr. MORAN of Kansas, Mr. UPTON, Mr. PICKERING, Mr.
GREEN of Wisconsin, Mr. RYUN of Kansas, Mr. LAHOOD, Mr. STEN-
HOLM, Mrs. CAPITO, Mr. GORDON, Mr. SIMMONS, Mr. SHIMKUS, Mr.
HOLDEN, Mr. KELLER, Ms. WATSON of California, Mr. COMBEST, Mr.
BOSWELL, Mr. BARR of Georgia, Mr. UDALL of Colorado, Mr. BEREU-
TER, Mr. KINGSTON, MR. MICA, Mr. NETHERCUTT, Mrs. JONES of Ohio,
Mr. HEFLEY, Mr. MCINNIS, Mr. PETERSON of Minnesota, Ms. SANCHEZ,
Mr. ROSS, Mr. THOMPSON of Mississippi, Mr. POMEROY, Mr. HILL, Mr.
BAIRD, Mr. BARTLETT of Maryland, Mr. TANCREDO, Mr. HOEKSTRA,
Mr. CRAMER, Mr. SCHAFFER, Mr. THORNBERRY, Mr. OSBORNE, Mr.
GUTKNECHT, Mr. GRAHAM, Mr. KIND, Mr. ADERHOLT, and Ms.
DEGETTE
MAY 16, 2002
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on February 12, 2002]
A BILL
To reform the Federal deposit insurance system, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Federal Deposit Insurance Reform Act of 2002’’.
(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 as-
sessments and free deposit insurance.
Sec. 5. Assessments on rapid-growth deposits to maintain Fund reserves without
penalizing low-growth institutions.
Sec. 6. Replacement of fixed designated reserve ratio with reserve range.
Sec. 7. Requirements applicable to the risk-based assessment system.
Sec. 8. Refunds, dividends, and credits from Deposit Insurance Fund.
Sec. 9. Deposit Insurance Fund restoration plans.
Sec. 10. Regulations required.
Sec. 11. Studies of FDIC structure and expenses and certain activities and fur-
ther possible changes to deposit insurance system.
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 ex-
istence of the Bank Insurance Fund and the Savings
Association Insurance Fund shall cease on the effec-
tive date of the merger thereof under this section.
(b) REPEAL OF OUTDATED MERGER PROVISION.—Sec-
tion 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 De-
posit 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 in-
sured 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 sub-
paragraphs:
‘‘(E) STANDARD MAXIMUM DEPOSIT INSUR-
ANCE AMOUNT DEFINED.—For purposes of this
Act, the term ‘standard maximum deposit insur-
ance amount’ means—
‘‘(i) until the effective date of final reg-
ulations prescribed pursuant to section
10(a)(2) of the Federal Deposit Insurance
Reform Act of 2002, $100,000; and
‘‘(ii) on and after such effective date,
$130,000, adjusted as provided under sub-
paragraph (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 in-
surance amount and the standard max-
imum 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 De-
partment of Commerce, as in effect on
the date this subparagraph takes effect,
to the value of such index as of Decem-
ber 31 of the year preceding the year
in which the adjustment is calculated
under this clause.
‘‘(ii) ROUNDING.—If the amount deter-
mined 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 Reg-
ister the standard maximum deposit
insurance amount, the standard max-
imum share insurance amount, and
the amount of coverage under para-
graph (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
PE-
RIOD.—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 in-
crease in the standard maximum deposit
insurance amount and the standard max-
imum share insurance amount shall take ef-
‘‘(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 de-
scribed 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.’’.
(c) DOUBLING OF DEPOSIT INSURANCE FOR CERTAIN
RETIREMENT ACCOUNTS.—Section 11(a)(3)(A) of the Fed-
eral 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 deter-
mined under paragraph (1))’’.
(d) INCREASED INSURANCE COVERAGE FOR MUNIC-
IPAL 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 in-
serting 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 insur-
ance 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 dis-
tinct from any other officer, employee, or
agent of the United States or any public
unit referred to in subparagraph (D); and
‘‘(ii) except as provided in subpara-
graph (B), the deposits of a municipal de-
positor 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 munic-
ipal depositor described in clause (ii), (iii), (iv),
or (v) of subparagraph (D) at an insured deposi-
tory institution, such deposits shall be insured in
an amount not to exceed the lesser of—
‘‘(i) $5,000,000; or
‘‘(ii) the sum of the standard max-
imum deposit insurance amount and 80
percent of the amount of any deposits in ex-
cess of the standard maximum deposit in-
surance amount.
‘‘(C) IN-STATE MUNICIPAL DEPOSITOR DE-
FINED.—For purposes of this paragraph, the
term ‘in-State municipal depositor’ means a mu-
nicipal depositor that is located in the same
State as the office or branch of the insured de-
pository institution at which the deposits of that
depositor are held.
‘‘(D) 
MUNICIPAL
DEPOSITOR.—In 
this
paragraph, the term ‘municipal depositor’ means
a depositor that is—’’;
(3) by striking ‘‘(B) The’’ and inserting the fol-
lowing:
‘‘(E) AUTHORITY
TO
LIMIT
DEPOSITS.—
The’’; and
(4) by striking ‘‘depositor referred to in subpara-
graph (A) of this paragraph’’ each place such term
appears and inserting ‘‘municipal depositor’’.
(e) TECHNICAL AND CONFORMING AMENDMENT RE-
LATING 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 AMEND-
MENTS.—
(1) Section 11(m)(6) of the Federal Deposit In-
surance 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 amend-
ed to read as follows:
‘‘(a) INSURANCE LOGO.—
‘‘(1) INSURED
DEPOSITORY
INSTITUTIONS.—
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 depos-
its of the institution, in accordance with regulations
to be prescribed by the Corporation.
‘‘(2) REGULATIONS.—The Corporation shall pre-
scribe regulations to carry out this subsection, includ-
ing regulations governing the substance of signs re-
quired 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 sub-
section 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 Insur-
ance 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—
(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 provi-
sions 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
(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) Notwith-
standing’’ and all that follows through ‘‘a
depositor or member who is—’’ and insert-
ing 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 avail-
able 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 deter-
mined under paragraph (5)), except as provided
in subparagraph (B).
‘‘(B) IN-STATE MUNICIPAL DEPOSITORS.—
In the case of the deposits of an in-State munic-
ipal 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) $5,000,000; or
‘‘(ii) the sum of the standard max-
imum deposit insurance amount and 80
percent of the amount of any deposits in ex-
cess of the standard maximum deposit in-
surance amount.
‘‘(C) RULE OF CONSTRUCTION.—No provi-
sion of this paragraph shall be construed as au-
thorizing 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 DE-
FINED.—For purposes of this paragraph, the
term ‘in-State municipal depositor’ means a mu-
nicipal 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 insert-
ing the following:
‘‘(F) AUTHORITY
TO
LIMIT
DEPOSITS.—
The’’; and
(iv) by striking ‘‘depositor or member
referred to in subparagraph (A)’’ and in-
serting ‘‘municipal depositor or member’’;
and
(C) by adding at the end the following new
paragraphs:
‘‘(4) COVERAGE FOR CERTAIN EMPLOYEE BEN-
EFIT PLAN DEPOSITS.—
‘‘(A) PASS-THROUGH INSURANCE.—The Ad-
ministration shall provide pass-through share in-
surance for the deposits or shares of any em-
ployee benefit plan.
‘‘(B) PROHIBITION ON ACCEPTANCE OF DE-
POSITS.—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 capital-
ized’ 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 Em-
ployee Retirement Income Security Act
of 1974;
‘‘(II) includes any plan described
in section 401(d) of the Internal Rev-
enue Code of 1986; and
‘‘(III) includes any eligible de-
ferred compensation plan described in
section 457 of the Internal Revenue
Code of 1986.
‘‘(iii) PASS-THROUGH
SHARE
INSUR-
ANCE.—The term ‘pass-through share insur-
ance’ 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.
modification in final form only after notice and
opportunity for comment.’’.
SEC. 8. REFUNDS, DIVIDENDS, AND CREDITS FROM DE-
POSIT 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 de-
pository institution in excess of the amount due to the
Corporation, the Corporation may—
‘‘(A) refund the amount of the excess pay-
ment 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 DE-
POSIT INSURANCE FUND.—
‘‘(A) RESERVE RATIO EQUAL TO OR IN EX-
CESS OF 1.4 PERCENT OF ESTIMATED INSURED
DEPOSITS.—Whenever the reserve ratio of the De-
posit Insurance Fund equals or exceeds 1.4 per-
cent of estimated insured deposits, the Corpora-
tion shall declare the amount in the Fund in ex-