Federal Deposit Insurance Reform Act of 2005

Bill: 109-hr-1185
Sponsor: Rep. Bachus, Spencer [R-AL-6]
Introduced: 2005-03-09 in the House
Policy area: Finance and Financial Sector
Subjects: Accounting
Administrative procedure
Administrative remedies
Bank accounts
Bank capital
Bank deposits
Bank examination
Bank failures
Bank records
Bank reserves
Commerce
Congress
Congressional investigations
Congressional reporting requirements
Consumer education
Credit unions
Deposit insurance
Dividends
Economics and Public Finance
Federal Deposit Insurance Corporation
Federal home loan banks
Financial services
Fines (Penalties)
Government Operations and Politics
Government corporations
Government paperwork
Government publicity
Government trust funds
Governmental investigations
Indexing (Economic policy)
Individual retirement accounts
Insurance premiums
Labor and Employment
Law
Legislation
Limitation of actions
Losses
National Credit Union Administration
Pension funds
Privatization
Profit sharing
Rebates
Risk
Savings and loan associations
Signs and symbols
Surveys

Summary:
action_date: 2005-03-09
text: Federal Deposit Insurance Reform Act of 2005 - Requires the merger of the Bank Insurance Fund and the Savings Association Insurance Fund into the Deposit Insurance Fund. 
Amends the Federal Deposit Insurance Act (FDIA) and the Federal Credit Union Act to: (1) increase the amount of deposit insurance coverage; (2) couple such increase with an inflation adjustment; (3) double the amount of deposit insurance for certain retirement accounts; and (4) increase the maxzimum amount of deposit insurance coverage for in-State municipal deposits. 
Amends the FDIA to replace assessment guidelines for achieving and maintaining a designated reserve ratio and for independent treatment of deposit insurance funds with a requirement that the Board of Directors of the FDIC set assessments as it determines appropriate, including a maximum base rate for assessments at one basis point for insured depository institutions in the lowest-risk category.
Reduces from five years to three years the mandatory assessment recordkeeping period.
Replaces the current 1.25 percent statutory reserve ratio used to recapitalize undercapitalized insurance funds with a reserve ratio range of 1.15 to 1.4 percent of estimated insured deposits, subject to specified factors and annual redetermination. 
Instructs the FDIC to establish a Deposit Insurance Fund Restoration Plan to ensure adequate reserves whenever the actual ratio in the DIF falls below the designated reserve ratio. 
Directs the FDIC to conduct a bi-annual survey on efforts by insured depository institutions to bring into the conventional finance system those &quot;unbanked&quot; individuals and families who have rarely, if ever, held a checking account, a savings account, or other type of transaction or check cashing account at an insured depository institution.
action_date: 2005-04-29
text: 
Federal Deposit Insurance Reform Act of 2005 - Amends the Federal Deposit Insurance Act (FDIA) to merge the Bank Insurance Fund and the Savings Association Insurance Fund into the Deposit Insurance Fund (DIF).
 
(Sec. 3) Amends the FDIA and the Federal Credit Union Act to: (1) increase the standard maximum amount of deposit insurance coverage from $100,000 to $130,000, coupled with a five-year cost-of-living adjustment index; (2) require the Federal Deposit Insurance Corporation (FDIC) to provide pass-through deposit insurance for the deposits of any employee benefit plan (except for an insured depository institution that is neither well capitalized nor adequately capitalized, which may not accept such deposits); (3) double to $260,000 the standard maximum deposit insurance for certain retirement accounts; and (4) increase the maximum amount of deposit insurance coverage for in-State municipal deposits according to a specified formula, but to no more than $2 million. 
(Sec. 4) Amends the FDIA to replace assessment guidelines for achieving and maintaining a designated reserve ratio (DRR) and for independent treatment of deposit insurance funds. Requires the Board of Directors (Board) of the FDIC to set assessments as it determines appropriate, including a maximum base rate for assessments at one basis point for insured depository institutions in the lowest-risk category. (Thus, eliminates the current minimum 23 basis point cliff rate.) 
Reduces from five years to three years the mandatory assessment recordkeeping period. 
Increases penalties from $100 to one percent of assessments per day for failure of a depository institution assessed more than $10,000 to make timely assessment payments. 
Revises guidelines governing the risk-based assessment system to make the portion of deposits attributable to lifeline accounts subject to half the assessment rate that would otherwise be applicable. 
(Sec. 5) Replaces the current 1.25 percent DRR used to recapitalize undercapitalized insurance funds with a reserve ratio range of 1.15 to 1.4 percent of estimated insured deposits, subject to specified factors and annual redetermination. 
(Sec. 6) Directs the Board to collect information from all appropriate sources in determining risk of DIF losses. 
(Sec. 7) Revises requirements for FDIC repayment of overpaid assessments and refunds of any balance in the insurance fund in excess of the DRR. 
Prescribes guidelines governing: (1) the payment of mandatory dividends to insured depository institutions whenever the DIF reserve ratio exceeds specified percentages of the estimated insured deposits required to maintain the DRR in effect at the time; and (2) a one-time credit predicated upon the December 31, 1996, assessment base of each eligible depository institution, as compared to the combined aggregate assessment base of all such institutions. Restricts the amount of such credit for depository institutions that exhibit financial, operational, or compliance weakness, including undercapitalization. 
Requires the Board to establish an on-going system of credits (on-going credit pool) to be applied against future assessments on the same basis as such dividends. 
(Sec. 8) Requires the Board to establish and implement a DIF restoration plan whenever its reserve ratio is projected to fall, or actually falls below the DRR. Prescribes requirements for such plans, notably restoration to the DRR level within ten years. 
(Sec. 9) Requires the FDIC to prescribe final regulations within 270 days establishing the DRR, implementing increases in deposit insurance coverage, implementing the dividend requirement and the one-time assessment credit, and providing for premium assessments. 
(Sec. 10) Requries studies and reports to Congress: (1) by the Comptroller General and the FDIC on the effectiveness of the prompt corrective action program administered by Federal banking agencies as well as the accuracy of FDIC risk assessments made, and the appropriateness of FDIC organizational structure in light of its regulatory mission; (2) by the FDIC and the National Credit Union Administration on the feasibility of establishing a voluntary deposit insurance system for deposits in excess of the maximum amount of deposit insurance, and of privatizing all deposit insurance at insured depository institutions and credit unions; (3) by the FDIC on the feasibility of using actual domestic deposits rather than estimated insured deposits in calculating and designating the DRR; and (4) by the FDIC on the reserve methodology and loss accounting it used between January 1, 1992, and December 31, 2004, with respect to insured depository institutions in a troubled condition. 
(Sec. 11) Directs the FDIC to conduct a bi-annual survey and report to Congress on efforts by insured depository institutions to bring into the conventional finance system those individuals and families who have rarely, if ever, held a checking account, a savings account, or other type of transaction or check cashing account at an insured depository institution. 
(Sec. 12) Establishes the Deposit Insurance Fund for use by the FDIC with respect to insured depository institutions whose deposits are insured by the Deposit Insurance Fund. 
Authorizes the FDIC to borrow from the Federal home loan banks, with the concurrence of the Federal Housing Finance Board, such funds as it considers necessary for DIF use. 
(Sec. 13) Amends specified Federal statutes to make technical and conforming amendments relating to the merger of the BIF and SAIF.
action_date: 2005-05-04
text: 

(This measure has not been amended since it was reported to the House on April 29, 2005. The summary of that version is repeated here.)

 
Federal Deposit Insurance Reform Act of 2005 - Amends the Federal Deposit Insurance Act (FDIA) to merge the Bank Insurance Fund and the Savings Association Insurance Fund into the Deposit Insurance Fund (DIF).
 
(Sec. 3) Amends the FDIA and the Federal Credit Union Act to: (1) increase the standard maximum amount of deposit insurance coverage from $100,000 to $130,000, coupled with a five-year cost-of-living adjustment index; (2) require the Federal Deposit Insurance Corporation (FDIC) to provide pass-through deposit insurance for the deposits of any employee benefit plan (except for an insured depository institution that is neither well capitalized nor adequately capitalized, which may not accept such deposits); (3) double to $260,000 the standard maximum deposit insurance for certain retirement accounts; and (4) increase the maximum amount of deposit insurance coverage for in-State municipal deposits according to a specified formula, but to no more than $2 million. 
(Sec. 4) Amends the FDIA to replace assessment guidelines for achieving and maintaining a designated reserve ratio (DRR) and for independent treatment of deposit insurance funds. Requires the Board of Directors (Board) of the FDIC to set assessments as it determines appropriate, including a maximum base rate for assessments at one basis point for insured depository institutions in the lowest-risk category. (Thus, eliminates the current minimum 23 basis point cliff rate.) 
Reduces from five years to three years the mandatory assessment recordkeeping period. 
Increases penalties from $100 to one percent of assessments per day for failure of a depository institution assessed more than $10,000 to make timely assessment payments. 
Revises guidelines governing the risk-based assessment system to make the portion of deposits attributable to lifeline accounts subject to half the assessment rate that would otherwise be applicable. 
(Sec. 5) Replaces the current 1.25 percent DRR used to recapitalize undercapitalized insurance funds with a reserve ratio range of 1.15 to 1.4 percent of estimated insured deposits, subject to specified factors and annual redetermination. 
(Sec. 6) Directs the Board to collect information from all appropriate sources in determining risk of DIF losses. 
(Sec. 7) Revises requirements for FDIC repayment of overpaid assessments and refunds of any balance in the insurance fund in excess of the DRR. 
Prescribes guidelines governing: (1) the payment of mandatory dividends to insured depository institutions whenever the DIF reserve ratio exceeds specified percentages of the estimated insured deposits required to maintain the DRR in effect at the time; and (2) a one-time credit predicated upon the December 31, 1996, assessment base of each eligible depository institution, as compared to the combined aggregate assessment base of all such institutions. Restricts the amount of such credit for depository institutions that exhibit financial, operational, or compliance weakness, including undercapitalization. 
Requires the Board to establish an on-going system of credits (on-going credit pool) to be applied against future assessments on the same basis as such dividends. 
(Sec. 8) Requires the Board to establish and implement a DIF restoration plan whenever its reserve ratio is projected to fall, or actually falls below the DRR. Prescribes requirements for such plans, notably restoration to the DRR level within ten years. 
(Sec. 9) Requires the FDIC to prescribe final regulations within 270 days establishing the DRR, implementing increases in deposit insurance coverage, implementing the dividend requirement and the one-time assessment credit, and providing for premium assessments. 
(Sec. 10) Requries studies and reports to Congress: (1) by the Comptroller General and the FDIC on the effectiveness of the prompt corrective action program administered by Federal banking agencies as well as the accuracy of FDIC risk assessments made, and the appropriateness of FDIC organizational structure in light of its regulatory mission; (2) by the FDIC and the National Credit Union Administration on the feasibility of establishing a voluntary deposit insurance system for deposits in excess of the maximum amount of deposit insurance, and of privatizing all deposit insurance at insured depository institutions and credit unions; (3) by the FDIC on the feasibility of using actual domestic deposits rather than estimated insured deposits in calculating and designating the DRR; and (4) by the FDIC on the reserve methodology and loss accounting it used between January 1, 1992, and December 31, 2004, with respect to insured depository institutions in a troubled condition. 
(Sec. 11) Directs the FDIC to conduct a bi-annual survey and report to Congress on efforts by insured depository institutions to bring into the conventional finance system those individuals and families who have rarely, if ever, held a checking account, a savings account, or other type of transaction or check cashing account at an insured depository institution. 
(Sec. 12) Establishes the Deposit Insurance Fund for use by the FDIC with respect to insured depository institutions whose deposits are insured by the Deposit Insurance Fund. 
Authorizes the FDIC to borrow from the Federal home loan banks, with the concurrence of the Federal Housing Finance Board, such funds as it considers necessary for DIF use. 
(Sec. 13) Amends specified Federal statutes to make technical and conforming amendments relating to the merger of the BIF and SAIF.

Legislative actions:
action_date: 2005-05-09
text: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
action_date: 2005-05-04
text: Motion to reconsider laid on the table Agreed to without objection.
action_date: 2005-05-04
text: On passage Passed by the Yeas and Nays: 413 - 10 (Roll no. 157). (text: CR H2924-2931)
action_date: 2005-05-04
text: Passed/agreed to in House: On passage Passed by the Yeas and Nays: 413 - 10 (Roll no. 157).(text: CR H2924-2931)
action_date: 2005-05-04
text: The House adopted the amendment as agreed to by the Committee of the Whole House on the state of the Union.
action_date: 2005-05-04
text: The previous question was ordered pursuant to the rule. (consideration: CR H2935)
action_date: 2005-05-04
text: The House rose from the Committee of the Whole House on the state of the Union to report H.R. 1185.
action_date: 2005-05-04
text: DEBATE - The Committee of the Whole proceeded with debate on the Rohrabacher amendment under the five minute rule.
action_date: 2005-05-04
text: DEBATE - The Committee of the Whole proceeded with debate on the Maloney amendment under the five minute rule.
action_date: 2005-05-04
text: GENERAL DEBATE - The Committee of the Whole proceeded with one hour of general debate on H.R. 1185.
action_date: 2005-05-04
text: The Speaker designated the Honorable Charles F. Bass to act as Chairman of the Committee.
action_date: 2005-05-04
text: House resolved itself into the Committee of the Whole House on the state of the Union pursuant to H. Res. 255 and Rule XVIII.
action_date: 2005-05-04
text: Rule provides for consideration of H.R. 1185 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. It shall be in order to consider as an original bill for the purpose of amendment under the five-minute rule the amendent in the nature of a substitute recommended by the Committee on Financial Services now printed in the bill. Measure will be read by section. Bill is open to amendments.
action_date: 2005-05-04
text: Considered under the provisions of rule H. Res. 255. (consideration: CR H2919-2936, H2937)
action_date: 2005-05-04
text: Rule H. Res. 255 passed House.
action_date: 2005-05-03
text: Rules Committee Resolution H. Res. 255 Reported to House. Rule provides for consideration of H.R. 1185 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. It shall be in order to consider as an original bill for the purpose of amendment under the five-minute rule the amendent in the nature of a substitute recommended by the Committee on Financial Services now printed in the bill. Measure will be read by section. Bill is open to amendments.
action_date: 2005-04-29
text: Placed on the Union Calendar, Calendar No. 33.
action_date: 2005-04-29
text: Reported (Amended) by the Committee on Financial Services. H. Rept. 109-67.
action_date: 2005-04-29
text: Reported (Amended) by the Committee on Financial Services. H. Rept. 109-67.
action_date: 2005-04-27
text: Ordered to be Reported (Amended) by Voice Vote.
action_date: 2005-04-27
text: Committee Consideration and Mark-up Session Held.
action_date: 2005-04-27
text: Subcommittee on Financial Institutions and Consumer Credit Discharged.
action_date: 2005-03-17
text: Subcommittee Hearings Held.
action_date: 2005-03-09
text: Referred to the Subcommittee on Financial Institutions and Consumer Credit.
action_date: 2005-03-09
text: Referred to the House Committee on Financial Services.
action_date: 2005-03-09
text: Introduced in House
action_date: 2005-03-09
text: Introduced in House