IB 
Union Calendar No. 120 
112TH CONGRESS 
1ST SESSION H. R. 2056 
[Report No. 112–182] 
To instruct the Inspector General of the Federal Deposit Insurance Corpora-
tion to study the impact of insured depository institution failures, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 31, 2011 
Mr. WESTMORELAND (for himself, Mr. DAVID SCOTT of Georgia, Mr. BROUN 
of Georgia, Mr. GARY G. MILLER of California, Mr. POSEY, Mr. MARCH-
ANT, and Mr. MACK) introduced the following bill; which was referred to 
the Committee on Financial Services 
JULY 26, 2011 
Additional sponsors: Mr. GRIMM, Mrs. MALONEY, Mr. HINOJOSA, Mr. 
SCHWEIKERT, Mr. MANZULLO, Mr. MCINTYRE, and Ms. HAYWORTH 
JULY 26, 2011 
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 May 31, 2011] 
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A BILL 
To instruct the Inspector General of the Federal Deposit 
Insurance Corporation to study the impact of insured 
depository institution failures, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. INSPECTOR GENERAL STUDY. 
(a) STUDY.—The Inspector General of the Federal De-
posit Insurance Corporation (FDIC) shall conduct a com-
prehensive study on the impact of the failure of insured de-
pository institutions. 
(b) DEFINITIONS.—For purposes of this Act— 
(1) the term ‘‘insured depository institution’’ has 
the meaning given such term in section 3(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(c)); 
(2) the term ‘‘private equity company’’ has the 
meaning given the terms ‘‘hedge fund’’ and ‘‘private 
equity fund’’ in section 13(h)(2) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1851(h)(2)); and 
(3) the term ‘‘paper-loss’’ means any write down 
on a performing asset held by an insured depository 
institution that causes such institution to raise more 
capital in order to cover the write down. 
(c) MATTERS TO BE STUDIED.—In conducting the 
study under this section, the Inspector General shall address 
the following: 
(1) LOSS-SHARING AGREEMENTS.—The effect of 
loss-sharing agreements (LSAs), including— 
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(A) the impact of loss-sharing on the in-
sured depository institutions that survive and 
the borrowers of insured depository institutions 
that fail, including— 
(i) the impact on the rate of loan 
modifications and adjustments; 
(ii) whether more types of loans (such 
as commercial (including land development 
and 1- to 4-family residential and commer-
cial construction loans), residential, or 
small business loans) could be modified with 
fewer LSAs, or if LSAs could be phased out 
altogether; 
(iii) the FDIC’s policies and proce-
dures for monitoring LSAs, including those 
designed to ensure institutions are not im-
prudently selling assets at a depressed 
value; 
(iv) the impact on the availability of 
credit; and 
(v) the impact on loans with partici-
pation agreements outstanding with other 
insured depository institutions; 
(B) the FDIC’s policies and procedures for 
terminating LSAs and mitigating the risk of ac-
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quiring institutions having substantial assets re-
maining in their portfolio when the LSAs are 
due to expire; 
(C) the extent to which LSAs provide incen-
tives for loan modifications and other means of 
increasing the probability of commercial assets 
being considered ‘‘performing’’; 
(D) the nature and extent of differences for 
modifying residential assets and working out 
commercial real estate under LSAs; and 
(E) methods of ensuring the orderly end of 
expiring LSAs to prevent any adverse impact on 
borrowing, real estate industry and the Deposi-
tors Insurance Fund. 
(2) PAPER LOSSES.—The significance of paper 
losses, including— 
(A) the number of insured depository insti-
tutions that have been placed into receivership or 
conservatorship due to paper losses; 
(B) the impact on paper losses of raising 
more capital; 
(C) the effect of changes in the application 
of the fair value of real estate accounting rules 
and other accounting standards; 
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(D) whether field examiners are using prop-
er appraisal procedures with respect to paper 
losses; and 
(E) methods of stopping the vicious down-
ward spiral of losses and write downs. 
(3) APPRAISALS.— 
(A) The number of insured depository insti-
tutions placed into receivership or conservator-
ship due to asset write-downs and the policies 
and procedures for evaluating the adequacy of an 
insured depository institution’s allowance for 
loan and lease losses. 
(B) The policies and procedures examiners 
use for evaluating the appraised values of prop-
erty securing real estate loans and the extent to 
which those policies and procedures are followed. 
(C) FDIC field examiner implementation of 
guidance issued December 2, 2010, titled ‘‘Agen-
cies Issue Final Appraisal and Evaluation 
Guidelines’’. 
(4) CAPITAL.— 
(A) The factors that examiners use to assess 
the adequacy of capital at insured depository in-
stitutions, including the extent to which the 
quality and risk profile of the insured institu-
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tion’s loan portfolio is considered in the exam-
iners’ assessment. 
(B) The number of applications received by 
the FDIC from private capital investors to ac-
quire insured depository institutions in receiver-
ship, the factors used by the FDIC in evaluating 
the applications, and the number of applications 
that have been approved or not approved, includ-
ing the reasons pertaining thereto. 
(C) The policies and procedures associated 
with the evaluation of potential private invest-
ments in insured depository institutions and the 
extent to which those policies and procedures are 
followed. 
(5) WORKOUTS.—The success of FDIC field ex-
aminers in implementing FDIC guidelines titled 
‘‘Policy Statement on Prudent Commercial Real Es-
tate Loan Workouts’’ (October 31, 2009) regarding 
workouts of commercial real estate, including— 
(A) whether field examiners are using the 
correct appraisals; and 
(B) whether there is any difference in im-
plementation between residential workouts and 
commercial (including land development and 1- 
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cially in States where more than 10 such institu-
tions have failed since 2008; 
(B) whether the FDIC fairly and consist-
ently applies capital standards when an insured 
depository institution is successful in raising 
private capital; and 
(C) whether the FDIC steers potential inves-
tors away from insured depository institutions 
that may be in danger of being placed in receiv-
ership or conservatorship. 
(8) PRIVATE EQUITY COMPANIES.—The FDIC’s 
handling of potential investment from private equity 
companies in insured depository institutions, includ-
ing— 
(A) the number of insured depository insti-
tutions that have been approved to receive pri-
vate equity investment by the FDIC; 
(B) the number of insured depository insti-
tutions that have been rejected from receiving 
private equity investment by the FDIC; and 
(C) the reasons for rejection of private eq-
uity investment when such rejection occurs. 
(d) REPORT.—Not later than one year after the date 
of the enactment of this Act, the Inspector General shall sub-
mit to Congress a report— 
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(1) on the results of the study conducted pursu-
ant to this section; and 
(2) any recommendations based on such study. 
(e) COORDINATION BETWEEN FDIC IG, TREASURY IG, 
AND FEDERAL RESERVE IG.—In carrying out this section, 
the Inspector General of the FDIC shall consult with the 
Inspectors General of the Treasury and of the Federal Re-
serve System, and such Inspectors General shall provide 
any documents or other material requested by the Inspector 
General of the FDIC in order to carry out this section. 
SEC. 2. FUNDING. 
The FDIC shall make available from the portion of the 
FDIC budget allocated to management expenses, sums al-
lowing the FDIC Inspector General to complete this study. 
SEC. 3. GAO STUDY. 
(a) STUDY.—The Comptroller General of the United 
States shall carry out a study on the following: 
(1) The causes of high levels of bank failures in 
states with 10 or more failures since 2008. 
(2) The procyclical impact of fair value account-
ing standards. 
(3) The causes and potential solutions for the 
‘‘vicious cycle’’ of loan write downs, raising capital, 
and failures. 
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(4) An analysis of the community impact of 
bank failures. 
(5) The feasibility and overall impact of loss 
share agreements. 
(b) REPORT.—Not later than the end of the 1-year pe-
riod beginning on the date of the enactment of this Act, 
the Comptroller General shall issue a report to the Congress 
on the study carried out pursuant to subsection (a). 
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Union Calendar No. 120 
112TH CONGRESS 
1ST SESSION 
H. R. 2056 
[Report No. 112–182] 
A BILL 
To instruct the Inspector General of the Federal 
Deposit Insurance Corporation to study the im-
pact of insured depository institution failures, 
and for other purposes. 
JULY 26, 2011 
Committed to the Committee of the Whole House on the 
State of the Union and ordered to be printed 
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