IIB
107TH CONGRESS
2D SESSION
H. R. 3717
IN THE SENATE OF THE UNITED STATES
MAY 23, 2002
Received; read twice and referred to the Committee on Banking, Housing, and
Urban Affairs
AN ACT
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,
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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. 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 fur-
ther possible changes to deposit insurance system.
Sec. 11. Technical and conforming amendments to the Federal Deposit Insur-
ance Act relating to the merger of the BIF and SAIF.
Sec. 12. 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
LIABIL-
ITIES.—All assets and liabilities of the Bank Insur-
ance 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 Sav-
ings Association Insurance Fund shall cease on the
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effective date of the merger thereof under this sec-
tion.
(b) REPEAL OF OUTDATED MERGER PROVISION.—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(12 U.S.C. 1821 note) is repealed.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
DE-
POSIT.—The net amount due to any depositor
at an insured depository institution shall not
exceed the standard maximum deposit insur-
ance amount as determined in accordance with
subparagraphs (C), (D), (E) and (F) and para-
graph (3).’’; and
(2) by adding at the end the following new sub-
paragraphs:
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‘‘(E) STANDARD
MAXIMUM
DEPOSIT
IN-
SURANCE 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 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
insurance 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
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‘‘(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 of Decem-
ber 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 subpara-
graph takes effect.
‘‘(ii) ROUNDING.—If the amount de-
termined 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 insur-
ance amount and the standard maximum
share insurance amount under such clause,
the Board of Directors and the National
Credit 
Union 
Administration 
Board
shall—
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‘‘(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
effect on January 1 of the year imme-
diately succeeding such calendar year.’’.
(b) COVERAGE FOR CERTAIN EMPLOYEE BENEFIT
PLAN DEPOSITS.—Section 11(a)(1)(D) of the Federal De-
posit Insurance Act (12 U.S.C. 1821(a)(1)(D)) is amend-
ed to read as follows:
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‘‘(D) COVERAGE FOR CERTAIN EMPLOYEE
BENEFIT PLAN DEPOSITS.—
‘‘(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 cap-
italized 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 ‘ade-
quately 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 Inter-
nal Revenue Code of 1986.
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‘‘(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 CER-
TAIN 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 insur-
ance amount (as determined 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;
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depository institution, such deposits shall be in-
sured in an amount not to exceed the lesser
of—
‘‘(i) $2,000,000; or
‘‘(ii) the sum of the standard max-
imum 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 institu-
tions within its jurisdiction the authority to ac-
cept deposits insured under this paragraph, or
prohibit the making of such deposits in such in-
stitutions by any in-State municipal depositor.
‘‘(D) IN-STATE MUNICIPAL DEPOSITOR DE-
FINED.—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 de-
pository 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—’’;
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(3) by striking ‘‘(B) The’’ and inserting the fol-
lowing:
‘‘(F) AUTHORITY
TO
LIMIT
DEPOSITS.—
The’’; and
(4) by striking ‘‘depositor referred to in sub-
paragraph (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 Insur-
ance Act (12 U.S.C. 1817(i)) are each amended by strik-
ing ‘‘$100,000’’ and inserting ‘‘the standard maximum de-
posit 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
amended to read as follows:
‘‘(a) INSURANCE LOGO.—
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‘‘(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 de-
posits of the institution, in accordance with regula-
tions to be prescribed by the Corporation.
‘‘(2) REGULATIONS.—The Corporation shall
prescribe regulations to carry out this subsection, in-
cluding regulations governing the substance of signs
required by paragraph (1) and the manner of dis-
play or use of such signs.
‘‘(3) PENALTIES.—For each day that an in-
sured depository institution continues to violate this
subsection or any regulation issued under this sub-
section, 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 strik-
ing ‘‘$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
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equal to the standard maximum deposit insur-
ance 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 in-
surance as determined under section 11(a)(1) of the Fed-
eral Deposit Insurance Act.’’.
(g) CONFORMING CHANGE TO CREDIT UNION SHARE
INSURANCE FUND.—
(1) IN GENERAL.—Section 207(k) of the Fed-
eral Credit Union Act (12 U.S.C. 1787(k)) is
amended—
(A) by striking ‘‘(k)(1)’’ and all that fol-
lows through the end of paragraph (1) and in-
serting 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
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member (after deducting offsets), less any part
thereof which is in excess of the standard max-
imum share insurance amount, as determined
in accordance with this paragraph and para-
graphs (5) and (6), and consistently with ac-
tions 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 sub-
paragraph (A), shall be in accordance with such
regulations as the Board may prescribe, and, in
determining the amount payable to any mem-
ber, 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 cov-
erage provided for member accounts, including
member accounts in the name of a minor, in
trust, or in joint tenancy.’’;
(B) in paragraph (2)—
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(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 pe-
riod; 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
available to any 1 depositor or member, depos-
its or shares of a municipal depositor or mem-
ber 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).
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‘‘(B) IN-STATE MUNICIPAL DEPOSITORS.—
In the case of the deposits of an in-State mu-
nicipal 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 max-
imum 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 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
municipal depositor that is located in the same
State as the office or branch of the insured
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credit union at which the deposits of that de-
positor 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
Administration shall provide pass-through share
insurance for the deposits or shares of any em-
ployee 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 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 in-
surance’ means, with respect to an em-
ployee benefit plan, insurance coverage
provided on a pro rata basis to the partici-
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pants in the plan, in accordance with the
interest of each participant.
‘‘(D) RULE OF CONSTRUCTION.—No provi-
sion of this paragraph shall be construed as au-
thorizing an insured credit union to accept the
deposits of an employee benefit plan in an
amount greater than such credit union is au-
thorized 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 regula-
tions prescribed pursuant to section 9(a)(2) of
the Federal Deposit Insurance Reform Act of
2002, $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 CER-
TAIN
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
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inserting ‘‘2 times the standard maximum share in-
surance amount (as determined under paragraph
(1))’’.
(h) EFFECTIVE DATE.—This section and the amend-
ments 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 
ASSESS-
MENTS 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 Direc-
tors shall set assessments for insured depository
institutions in such amounts as the Board of
Directors may determine to be necessary or ap-
propriate, subject to subparagraph (D).
‘‘(B) FACTORS
TO
BE
CONSIDERED.—In
setting assessments under subparagraph (A),
the Board of Directors shall consider the fol-
lowing factors:
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‘‘(i) The estimated operating expenses
of the Deposit Insurance Fund.
‘‘(ii) The estimated case resolution ex-
penses and income of the Deposit Insur-
ance Fund.
‘‘(iii) The projected effects of the pay-
ment 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 sys-
tem, including the requirement under such
paragraph to maintain a risk-based sys-
tem.
‘‘(v) Any other factors the Board of
Directors may determine to be appro-
priate.’’; and
(2) by inserting after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) BASE RATE FOR ASSESSMENTS.—
‘‘(i) IN GENERAL.—In setting assess-
ment 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
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those insured depository institutions in the
lowest-risk category under the risk-based
assessment system established pursuant to
paragraph (1).
‘‘(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 esti-
mated insured deposits.’’.
(b) ASSESSMENT RECORDKEEPING PERIOD SHORT-
ENED.—Paragraph (5) of section 7(b) of the Federal De-
posit 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 begin-
ning on the due date of the assessment; or
‘‘(B) in the case of a dispute between the
insured depository institution and the Corpora-
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tion with respect to such assessment, the date
of a final determination of any such dispute.’’.
(c) INCREASE IN FEES FOR LATE ASSESSMENT PAY-
MENTS.—Subsection (h) of section 18 of the Federal De-
posit Insurance Act (12 U.S.C. 1828(h)) is amended to
read as follows:
‘‘(h) PENALTY FOR FAILURE TO TIMELY PAY AS-
SESSMENTS.—
‘‘(1) IN GENERAL.—Any insured depository in-
stitution which fails or refuses to pay any assess-
ment shall be subject to a penalty in an amount not
more than 1 percent of the amount of the assess-
ment due for each day that such violation continues.
‘‘(2) EXCEPTION IN CASE OF DISPUTE.—Para-
graph (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 de-
posits security satisfactory to the Corporation
for payment upon final determination of the
issue.
‘‘(3) AUTHORITY TO MODIFY OR REMIT PEN-
ALTY.—The Corporation, in the sole discretion of
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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 pay-
ment 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 sub-
section (c).
(2) CLARIFICATION OF RATE APPLICABLE TO
DEPOSITS
ATTRIBUTABLE
TO
LIFELINE
AC-
COUNTS.—Section 7(b)(2)(H) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)(H)) is amend-
ed 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.—
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(1) Paragraph (3) of section 7(a) of the Fed-
eral 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 pursu-
ant 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 In-
surance 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 Insur-
ance Act (12 U.S.C. 1817(b)) is amended by strik-
ing paragraph (4) and redesignating paragraphs (5)
(as amended by subsection (b) of this section), (6),
and (7) as paragraphs (4), (5), and (6) respectively.
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(5) Section 7(c) of the Federal Deposit Insur-
ance 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 ‘‘semi-
annual period’’ and inserting ‘‘initial assess-
ment period’’.
(6) Section 7(g)(6) of the Federal Deposit In-
surance Act (12 U.S.C. 1817(g)(6)) (as amended by
subsection (c) of this section) is amended by striking
‘‘(b)(5)’’ and inserting ‘‘(b)(4)’’.
(7) Section 8(p) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1818(p)) is amended by strik-
ing ‘‘semiannual’’.
(8) Section 8(q) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1818(q)) is amended by strik-
ing ‘‘semiannual period’’ and inserting ‘‘assessment
period’’.
(9) 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 ‘‘semi-
annual period’’ and inserting ‘‘assessment period’’.
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(10) Section 232(a) of the Federal Deposit In-
surance 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 para-
graph (3) and inserting the following new sub-
paragraph:
‘‘(A) CORPORATION.—The term ‘Corpora-
tion’ means the Federal Deposit Insurance Cor-
poration.’’; and
(D) in subparagraph (C) of paragraph (3),
by striking ‘‘Board’’ and inserting ‘‘Corpora-
tion’’.
(f) EFFECTIVE DATE.—Except as provided in sub-
section (c), this section and the amendments made by this
section shall take effect on the date that the final regula-
tions required under section 9(a)(5) take effect.
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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 Di-
rectors 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 REDE-
TERMINATION.—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 des-
ignated by the Board of Directors for any
year—
‘‘(i) may not exceed 1.4 percent of es-
timated insured deposits; and
‘‘(ii) may not be less than 1.15 per-
cent of estimated insured deposits.
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‘‘(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 his-
toric experience and potential and esti-
mated losses from insured depository insti-
tutions;
‘‘(ii) take into account economic con-
ditions generally affecting insured deposi-
tory institutions so as to allow the des-
ignated 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 fac-
tors as the Board of Directors may deter-
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mine to be appropriate, consistent with the
requirements of this subparagraph.
‘‘(D) PUBLICATION OF PROPOSED CHANGE
IN RATIO.—In soliciting comment on any pro-
posed change in the designated reserve ratio in
accordance with subparagraph (A), the Board
of Directors shall include in the published pro-
posal a thorough analysis of the data and pro-
jections 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 INSUR-
ANCE FUND.—
‘‘(1) DEPOSIT INSURANCE FUND.—The term’’;
and
(2) by inserting after paragraph (1) (as so des-
ignated by paragraph (1) of this subsection) the fol-
lowing 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).’’.
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(c) EFFECTIVE DATE.—This section and the amend-
ments 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 eco-
nomic conditions generally affecting depos-
itory institutions, the Corporation shall col-
lect 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 in-
formation available from State bank super-
visors, State insurance and securities regu-
lators, the Securities and Exchange Com-
mission (including information described in