Full text of Federal Deposit Insurance Corporation Improvement Act of 1991

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Public Law 102-242
102d Congress
An Act
Dec. 19, 1991
[S. 543]

Federal Deposit
Insurance
Corporation
Improvement
A ct o f 1991.
12, USC 1811
note.

To require the least-cost resolution o f insured depository institutions, to improve
supervision and examinations, to provide additional resources to the Bank Insur­
ance Fund, and for other purposes.

Be it enacted by the Senate and Home o f Representatives o f the
United States o f America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Federal Deposit Insurance Corporation Improvement Act of 1991” .

TITLE I— SAFETY AND SOUNDNESS
Subtitle A— Deposit Insurance Funds
SEC. 101. FUNDING FO R THE FEDERAL DEPOSIT INSURANCE FUNDS.

Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C.
1824(a)) is amended by striking “ $5,000,000,000” and inserting
“ $30,000,000,000” .
SEC. 102. LIMITATION ON OUTSTANDING BORROWING.

(a) I n G e n e r a l .—Section 15(c) of the Federal Deposit Insurance
Act (12 U.S.C. 1825(c)) is amended by striking paragraphs (5) and (6)
and inserting the following new paragraphs:
“ (5 ) M

a x im u m

a m o u n t l im it a t io n o n o u t s t a n d in g

o b l ig a ­

—Notwithstanding any other provisions of this Act, the
Corporation may not issue or incur any obligation, if, after
issuing or incurring the obligation, the aggregate amount of
obligations of the Bank Insurance Fund or Savings Association
Insurance Fund, respectively, outstanding would exceed the
sum of—
“ (A) the amount of cash or the equivalent of cash held by
the Bank Insurance Fund or Savings Association Insurance
Fund, respectively;
“ (B) the amount which is equal to 90 percent of the
Corporation’s estimate of the fair market value of assets
held by the Bank Insurance Fund or the Savings Associa­
tion Insurance Fund, respectively, other than assets
described in subparagraph (A); and
“ (C) the total of the amounts authorized to be borrowed
from the Secretary of the Treasury pursuant to section
14(a).
t io n s .

“ (6 ) O b l i g a t i o n d e f i n e d .—
“ (A) I n g e n e r a l .—For

purposes of paragraph (5), the
term ‘obligation’ includes—
“ (i) any guarantee issued by the Corporation, other
than deposit guarantees;

“(ii) any amount borrowed pursuant to section 14;
and
“(iii) any other obligation for which the Corporation
has a direct or contingent liability to pay any amount.
“(B) V a l u a t i o n o f c o n t i n g e n t l i a b i l i t i e s .—The Cor­
poration shall value any contingent liability at its expected
cost to the Corporation. ’.
(b ) GAO R e p o r t s .—
12 USC
(1) Q u a r t e r l y r e p o r t i n g .—The Comptroller General of the noteUnited States shall submit a report each calendar quarter on
the Federal Deposit Insurance Corporation’s compliance with
section 15(c)(5) of the Federal Deposit Insurance Act for the
preceding quarter to the Committee on Banking, Finance and
Urban Affairs of the House of Representatives and the Commit­
tee on Banking, Housing, and Urban Affairs of the Senate.
(2 ) A n a l y s e s t o b e i n c l u d e d . —Each report submitted under
paragraph (1) shall include—
(A) an analysis of the performance of the Federal Deposit
Insurance Corporation in meeting any repayment schedule
under section 14(c) of the Federal Deposit Insurance Act (as
added by section 103 of this Act); and
(B) an analysis of the actual recovery on asset sales
compared to the estimated fair market value of the assets
as determined for the purposes of section 15(c)(5)(B) of such
Act.
(c) T e c h n i c a l a n d C o n f o r m i n g A m e n d m e n t .—Section 15(c) of
the Federal Deposit Insurance Act (12 U .S .C . 1825(c)) is amended by
striking paragraph (7).
SEC. 103. REPAYMENT SCHEDULE.

(a) In G e n e r a l .—Section 14 of the Federal Deposit Insurance Act
(12 U.S.C. 1824) is amended by adding at the end the following new
subsection:
“(c) R e p a y m e n t S c h e d u l e s R e q u i r e d f o r a n y B o r r o w i n g .—
“(1) I n g e n e r a l . —No amount may be provided by the Sec­
retary of the Treasury to the Corporation under subsection (a)
unless an agreement is in effect between the Secretary and the
Corporation which—
“(A) provides a schedule for the repayment of the
outstanding amount of any borrowing under such subsec­
tion; and
“(B) demonstrates that income to the Corporation from
assessments under this Act will be sufficient to amortize
the outstanding balance within the period established in
the repayment schedule and pay the interest accruing on
such balance.
“ (2 ) C o n s u l t a t i o n w i t h a n d r e p o r t t o c o n g r e s s .—The Sec­
retary of the Treasury and the Corporation shall—
“(A) consult with the Committee on Banking, Finance
and Urban Affairs of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate on the terms of any repayment schedule agreement
described in paragraph (1) relating to repayment, including
terms relating to any emergency special assessment under
section 7(b)(7); and
“ (B) submit a copy of each repayment schedule agree­
ment entered into under paragraph (1) to the Committee on

49-194 O - 92 - 19 •o r . A Parf q

1825

Banking, Finance and Urban Affairs of the House of Rep­
resentatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate before the end of the 30-day
period beginning on the date any amount is provided by the
Secretary of the Treasury to the Corporation under subsec­
tion (a).” .
(b) E m e r g e n c y S p e c i a l A s s e s s m e n t s .— Section 7(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)) is amended—
(1) by redesignating paragraphs (7), (8), and (9) as paragraphs
(8), (9), and (10), respectively; and
(2) by inserting after paragraph (6) the following new para­
graph:
“(7) E m e r g e n c y s p e c i a l a s s e s s m e n t s .—In addition to the
other assessments imposed on insured depository institutions
under this subsection, the Corporation may impose 1 or more
special assessments on insured depository institutions in an
amount determined by the Corporation if the amount of any
such assessment—
“ (A) is necessary—
“ (i) to provide sufficient assessment income to repay
amounts borrowed from the Secretary of the Treasury
under section 14(a) in accordance with the repayment
schedule in effect under section 14(c) during the period
with respect to which such assessment is imposed;
“ (ii) to provide sufficient assessment income to repay
obligations issued to and other amounts borrowed from
Irank Insurance Fund members under section 14(d); or
“ (iii) for any other purpose the Corporation may
deem necessary; and
“ (B) is allocated between Bank Insurance Fund members
and Savings Association Insurance Fund members in
amounts which reflect the degree to which the proceeds of
the amounts borrowed are to be used for the benefit of the
respective insurance funds.” .
SEC. 104. RECAPITALIZING THE BANK INSURANCE FUND.

(a)
In G e n e r a l .—Section 7(b)(1)(C) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1817(b)(1)(C)) is amended to read as follows:
“(C) A s s e s s m e n t r a t e s f o r b a n k i n s u r a n c e f u n d m e m ­
b e r s .—

“(i) In g e n e r a l .—If the reserve ratio of the Bank
Insurance Fund equals or exceeds the fund’s designated
reserve ratio under subparagraph (B), the Board of
Directors shall set semiannual assessment rates for
members of that fund as appropriate to maintain the
reserve ratio at the designated reserve ratio.
“ (ii)
S p e c ia l
rules
for
r e c a p it a l iz in g
u n d e r c a p i t a l i z e d f u n d .—If the reserve ratio of the
Bank Insurance Fund is less than the designated re­
serve ratio under subparagraph (B), the Board of Direc­
tors shall set semiannual assessment rates for members
of that fund—
“ (I) that are sufficient to increase the reserve
ratio for that fund to the designated reserve ratio
not later than 1 year after such rates are set; or
“(II) in accordance with a schedule promulgated
by the Corporation under clause (iii).

“ ( iii) R e c a p i t a l i z a t i o n s c h e d u l e s . —For purposes of Regulations,
clause (ii)(II), the Corporation shall, by regulation,
promulgate a schedule that specifies, at semiannual
intervals, target reserve ratios for the Bank Insurance
Fund, culminating in a reserve ratio that is equal to
the designated reserve ratio no later than 15 years
after the date on which the schedule becomes effective.
“(iv) A m e n d i n g s c h e d u l e .—The Corporation may, by
regulation, amend a schedule promulgated under
clause (iii), but such an amendment may not extend the
date for achieving the designated reserve ratio.” .
(b) A s s e s s m e n t R a t e C h a n g e s .—Section 7(bXl)(A) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(1)(A)) is amended by strik­
ing clause (iii) and inserting the following:
“ (iii) R a t e c h a n g e s . —The Corporation shall notify
each insured depository institution of that institution’s
semiannual assessment. The Corporation may establish
and, from time to time, adjust the assessment rates for
such institutions.” .
SEC. 105. BORROWING FO R BIF FROM BIF MEMBERS.

Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is
amended by inserting after subsection (c) (as added by section 103 of
this subtitle) the following new subsection:
“(d) B o r r o w i n g f o r B I F F r o m B I F M e m b e r s .—
“(1) B o r r o w i n g a u t h o r i t y .—The Corporation may issue
obligations to Bank Insurance Fund members, and may borrow
from Bank Insurance Fund members and give security for any
amount borrowed, and may pay interest on (and any redemp­
tion premium with respect to) any such obligation or amount to
the extent—
“ (A) the proceeds of any such obligation or amount are
used by the Corporation solely for purposes of carrying out
the Corporation’s functions with respect to the Bank Insur­
ance Fund; and
“(B) the terms of the obligation or instrument limit the
liability of the Corporation or the Bank Insurance Fund for
the payment of interest and the repayment of principal to
the amount which is equal to the amount of assessment
income received by the Fund from assessments under sec­
tion 7.
“ (2 ) L i m i t a t i o n s o n b o r r o w i n g .—
“ (A ) A p p l ic a b il it y o f p u b l ic

d e b t l i m i t . —For purposes
of the public debt limit established in section 3101(b) of title
31, United States Code, any obligation issued, or amount
borrowed, by the Corporation under paragraph (1) shall be
considered to be an obligation to which such limit applies.
“ (B) A p p l i c a b i l i t y o f f d ic b o r r o w i n g l i m i t .—For pur­
poses of the dollar amount limitation established in section
14(a) of the Federal Deposit Insurance Act (12 U.S.C.
1824(a)), any obligation issued, or amount borrowed, by the
Corporation under paragraph (1) shall be considered to be
an amount borrowed from the Treasury under such section.
“(C) I n t e r e s t r a t e l i m i t .—The rate of interest payable in
connection with any obligation issued, or amount borrowed,
by the Corporation under paragraph (1) shall not exceed an
amount determined by the Secretary of the Treasury,

taking into consideration current market yields on
outstanding marketable obligations of the United States of
comparable maturities.
“ (D ) O b l i g a t i o n s t o b e h e l d o n l y b y b i f m e m b e r s . —The
terms of any obligation issued by the Corporation under
paragraph (1) shall provide that the obligation will be valid
only if held by a Bank Insurance Fund Member.
“ (3 ) L i a b i l i t y o f b i f . —Any obligation issued or amount bor­
rowed under paragraph (1) shall be a liability of the Bank
Insurance Fund.
“(4) T e e m s a n d c o n d i t i o n s .—Subject to paragraphs (1) and
(2), the Corporation shall establish the terms and conditions for
obligations issued or amounts borrowed under paragraph (1),
including interest rates and terms to maturity.
“ (5 ) I n v e s t m e n t b y b i f m e m b e r s .—
“ ( A ) A u t h o r i t y t o i n v e s t . —Subject

to subparagraph (B)
and notwithstanding any other provision of Federal law or
the law of any State, any Bank Insurance Fund member
may purchase and hold for investment any obligation
issued by the Corporation under paragraph (1) without
limitation, other than any limitation the appropriate Fed­
eral banking agency may impose specifically with respect to
such obligations.
“(B) I n v e s t m e n t o n l y f r o m c a p i t a l a n d r e t a i n e d e a r n ­
i n g s . —Any Bank Insurance Fund member may purchase
obligations or make loans to the Corporation under para­
graph (1) only to the extent the purchase money or the
money loaned is derived from the member’s capital or
retained earnings.
“ (6) A c c o u n t i n g t r e a t m e n t .—In accounting for any invest­
ment in an obligation purchased from, or any loan made to, the
Corporation for purposes of determining compliance with any
capital standard and preparing any report required pursuant to
section 7(a), the amount of such investment or loan shall be
treated as an asset.” .

Subtitle B— Supervisory Reforms
SEC. 111. IM PROVED EXAMINATIONS.

(a) I n G e n e r a l .—Section 10 of the Federal Deposit Insurance Act
(12 U.S.C. 1820) is amended by inserting after subsection (c) the
following new subsection:
“ (d ) A n n u a l O n -S i t e E x a m i n a t i o n s o f A l l I n s u r e d D e p o s i t o r y
I n s t i t u t i o n s R e q u i r e d .—
“ (1) I n g e n e r a l .—The appropriate Federal banking agency

shall, not less than once during each 12-month period, conduct a
full-scope, on-site examination of each insured depository
institution.
“ (2) E x a m i n a t i o n s b y c o r p o r a t i o n . —Paragraph (1) shall not
apply during any 12-month period in which the Corporation has
conducted a full-scope, on-site examination of the insured
depository institution.
“ (3 ) S t a t e e x a m i n a t i o n s a c c e p t a b l e .—The examinations
required by paragraph (1) may be conducted in alternate 12month periods, as appropriate, if the appropriate Federal bank­
ing agency determines that an examination of the insured

depository institution conducted by the State during the inter­
vening 12-month period carries out the purpose of this subsec­
tion.
“ (4 ) 1 8 - m o n t h r u l e f o r c e r t a i n s m a l l i n s t i t u t i o n s . — Para­
graphs (1), (2), and (3) shall apply with ‘18-month’ substituted for
‘12-month’ if—
“ (A) the insured depository institution has total assets of
less than $100,000,000;
“ (B) the institution is well capitalized, as defined in sec­
tion 38;
“ (C) when the institution was most recently examined, it
was found to be well managed, and its composite condition
was found to be outstanding; and
“ (D) no person acquired control of the institution during
the 12-month period in which a full-scope, on-site examina­
tion would be required but for this paragraph.
“ (5 )

C e r t a in

g o v e r n m e n t -c o n t r o l l e d

in s t it u t io n s

—Paragraph (1) does not apply to—
“(A) any institution for which the Corporation is con­
servator; or
. . .
“ (B) any bridge bank none of the voting securities of
which are owned by a person or agency other than the
Corporation.
“ (6) C o n s u m e r c o m p l i a n c e e x a m i n a t i o n s e x c l u d e d .—For
purposes of this subsection, the term ‘full-scope, on-site exam­
ination’ does not include a consumer compliance examination,
as defined in section 41(b).” .
(b) E f f e c t i v e D a t e . —The amendment made by subsection (a) 12 u se 1820
shall become effective 1 year after the date of enactment of this Act. note(c) T r a n s i t i o n R u l e . —Notwithstanding section 10(d) of the Fed- 12 u se 1820
eral Deposit Insurance Act (as added by subsection (a)), during the noteperiod beginning on the date of enactment of this Act and ending on
December 31, 1993, a full-scope, on-site examination of an insured
depository institution is not required more often than once during
every 18-month period, unless—
(1) the institution, when most recently examined, was found
to be in a less than satisfactory condition; or
. . .
(2) 1 or more persons acquired control of the institution.
exem pted.

(d) E x a m i n a t i o n I m p r o v e m e n t P r o g r a m . —

(1) In g e n e r a l .—The appropriate Federal banking agencies,
acting through the Federal Financial Institutions Examination
Council, shall each establish a comparable examination
improvement program that meets the requirements of para­
graph (2).
(2) R e q u i r e m e n t s .— An examination improvement program
meets the requirements of this paragraph if, under the pro­
gram, the agency is required—
(A) to periodically review the organization and training of
the staff of the agency who are responsible for conducting
examinations of insured depository institutions and to
make such improvements as the agency determines to be
appropriate to ensure frequent, objective, and thorough
examinations of such institutions; and
(B) to increase the number of examiners, supervisors, and
other individuals employed by the agency in connection
with conducting or supervising examinations of insured
depository institutions to the extent necessary to ensure

12 u se 3305
note.

'

frequent, objective, and thorough examinations of such
institutions.
(e) T e c h n i c a l a n d C o n f o r m i n g A m e n d m e n t .— Section 3(s) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(s)) is amended to read
as follows:
“(s) D e f i n i t i o n s R e l a t i n g t o F o r e i g n B a n k s a n d B r a n c h e s . —
“(1) F o r e i g n b a n k .—The term ‘foreign bank’ has the mean­
ing given to such term by section 1(b)(7) of the International
Banking Act of 1978.
“(2) F e d e r a l b r a n c h .—The term ‘Federal branch’ has the
meaning given to such term by section 1(b)(6) of the Inter­
national Banking Act of 1978.
“(3) I n s u r e d b r a n c h .—The term ‘insured branch’ means any
branch (as defined in section 1(b)(3) of the International Bank­
ing Act of 1978) of a foreign bank any deposits in which are
insured pursuant to this Act.” .
SEC. 112. INDEPENDENT ANNUAL
INSTITUTIONS.

AUDITS

OF

INSURED

DEPOSITORY

(a) I n G e n e r a l .—The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by adding at the end the following new
section:
12 USC 1831m.

“ SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINAN­
CIAL MANAGEMENT.
“ (a ) A

nnual

R eport

on

F in a n c ia l

C o n d it io n

and

M

anage­

m e n t .—

“(1) R e p o r t r e q u i r e d . —Each insured depository institution
shall submit an annual report to the Corporation, the appro­
priate Federal banking agency, and any appropriate State bank
supervisor (including any State bank supervisor of a host State).
“ (2) C o n t e n t s o f r e p o r t . —Any annual report required under
paragraph (1) shall contain—
“ (A) the information required to be provided by—
“ (i) the institution s management under subsection
(b); and
“ (ii) an independent public accountant under subsec­
tions (c) and (d); and
“ (B) such other information as the Corporation and the
appropriate Federal banking agency may determine to be
necessary to assess the financial condition and manage­
ment of the institution.
“ (3 ) P u b l i c a v a i l a b i l i t y . —Any annual report required under
paragraph (1) shall be available for public inspection.
“ (b ) M a n a g e m e n t R e s p o n s i b i l i t y f o r F i n a n c i a l S t a t e m e n t s
I n t e r n a l C o n t r o l s . —Each insured depository institution shall

and

Reports.

prepare—
“(1) annual financial statements in accordance with generally
accepted accounting principles and such other disclosure
requirements as the Corporation and the appropriate Federal
banking agency may prescribe; and
“ (2) a report signed by the chief executive officer and the
chief accounting or financial officer of the institution which
contains—
“ (A) a statement of the management’s responsibilities
for—
“(i) preparing financial statements;

“ (ii) establishing and maintaining an adequate in­
ternal control structure and procedures for financial
reporting; and
“ (iii) complying with the laws and regulations relat­
ing to safety and soundness which are designated by
the Corporation or the appropriate Federal banking
agency; and
“ (B) an assessment, as of the end of the institution’s most
recent fiscal year, of—
“ (i) the effectiveness of such internal control struc­
ture and procedures; and
“ (ii) the institution’s compliance with the laws and
regulations relating to safety and soundness which are
designated by the Corporation and the appropriate Fed­
eral banking agency.
“ (c ) I n t e r n a l C o n t r o l E v a l u a t i o n a n d R e p o r t i n g R e q u i r e ­
I n d e p e n d e n t P u b l i c A c c o u n t a n t s .—
“(1) In g e n e r a l . —With respect to any internal control report

m e n ts for

required by subsection (b)(2) of any institution, the institution’s
independent public accountant shall attest to, and report sepa­
rately on, the assertions of the institution's management con­
tained in such report.
“ (2) A t t e s t a t i o n r e q u i r e m e n t s .—Any attestation pursuant
to paragraph (1) shall be made in accordance with generally
accepted standards for attestation engagements.
“ (d) A n n u a l I n d e p e n d e n t A u d i t s o f F i n a n c i a l S t a t e m e n t s .—
“(1) A u d i t s r e q u i r e d .—The Corporation, in consultation with
the appropriate Federal banking agencies, shall prescribe regu­
lations requiring that each insured depository institution shall
have an annual independent audit made of the institution’s
financial statements by an independent public accountant in
accordance with generally accepted auditing standards and
section 37.
“ (2) S c o p e o f a u d i t . —In connection with any audit under this
subsection, the independent public accountant shall determine
and report whether the financial statements of the institution—
“ (A) are presented fairly in accordance with generally
accepted accounting principles; and
“ (B) comply with such other disclosure requirements as
the Corporation and the appropriate Federal banking
agency may prescribe.
“ (3) R e q u i r e m e n t s

for

in su r e d

s u b s id ia r ie s

of

h o l d in g

—The requirements for an independent audit under
this subsection may be satisfied for insured depository institu­
tions that are subsidiaries of a holding company by an
independent audit of the holding company.
c o m p a n ie s .

“ (e ) D e t e c t i n g a n d R e p o r t i n g V i o l a t i o n s
R e g u l a t i o n s .—
“(1) In g e n e r a l . —An independent public

of

Law s

and

accountant shall
apply procedures agreed upon by the Corporation to objectively
determine the extent of the compliance of any insured deposi­
tory institution or depository institution holding company with
laws and regulations designated by the Corporation, in consulta­
tion with the appropriate Federal banking agencies.
“ (2) A t t e s t a t i o n r e q u i r e m e n t s .—Any attestation pursuant
to paragraph (1) shall be made in accordance with generally
accepted standards for attestation engagements.

Regulations,

“ (f) F o r m

and

Content

of

R eports

and

A

u d it in g

S t a n d a r d s .—

“(1) In g e n e r a l .—The scope of each report by an independent
public accountant pursuant to this section, and the procedures
followed in preparing such report, shall meet or exceed the
scope and procedures required by generally accepted auditing
standards and other applicable standards recognized by the
Corporation.
“ (2) C o n s u l t a t i o n . —The Corporation shall consult with the
other appropriate Federal banking agencies in implementing
this subsection.
“(g) I m p r o v e d A c c o u n t a b i l i t y .—
“ (1 ) I n d e p e n d e n t a u d i t c o m m i t t e e .—
“ ( A ) E s t a b l i s h m e n t .—Each insured

depository institu­
tion (to which this section applies) shall have an independ­
ent audit committee entirely made up of outside directors
who are independent of management of the institution, and
who satisfy any specific requirements the Corporation may
establish.
“ (B) D u t i e s . —An independent audit committee’s duties
shall include reviewing with management and the
independent public accountant the basis for the reports
issued under subsections (b)(2), (c), and (d).
“ (C )

C r it e r ia

a p p l ic a b l e

to

c o m m it t e e s

of

larg e

—In the case of each
insured depository institution which the Corporation deter­
mines to be a large institution, the audit committee
required by subparagraph (A ) shall—
“ (i) include members with banking or related finan­
cial management expertise;
“ (ii) have access to the committee’s own outside coun­
sel; and
“ (iii) not include any large customers of the
institution.
in s u r e d

“ (2 ) R

d e p o s it o r y

in s t it u t io n s .

e v ie w o f q u a r t e r l y r e p o r t s o f l a r g e in s u r e d d e p o s i­

t o r y i n s t i t u t i o n s .—

“(A) In g e n e r a l .—In the case of any insured depository
institution which the Corporation has determined to be a
large institution, the Corporation may require the
independent public accountant retained by such institution
to perform reviews of the institution’s quarterly financial
reports in accordance with procedures agreed upon by the
Corporation.
“ (B) R e p o r t t o a u d i t c o m m i t t e e .—The independent
public accountant referred to in subparagraph (A) shall
provide the audit committee of the insured depository
institution with reports on the reviews under such subpara­
graph and the audit committee shall provide such reports to
the Corporation, any appropriate Federal banking agency,
and any appropriate State bank supervisor.
“(C) L i m i t a t i o n o n n o t i c e .—Reports provided under
subparagraph (B) shall be only for the information and use
of the insured depository institution, the Corporation, any
appropriate Federal banking agency, and any State bank
supervisor that received the report.
“ (3 ) Q u a l i f i c a t i o n s

o f i n d e p e n d e n t p u b l i c a c c o u n t a n t s .—

“(A) In g e n e r a l . —All audit services required by this
section shall be performed only by an independent public
accountant who—
“(i) has agreed to provide related working papers,
policies, and procedures to the Corporation, an appro­
priate Federal banking agency, and any State bank
supervisor, if requested; and
“ (ii) has received a peer review that meets guidelines
acceptable to the Corporation.
“(B) R e p o r t s o n p e e r r e v i e w s . —Reports on peer reviews
shall be filed with the Corporation and made available for
public inspection.

Public
information,

“ (4) E n f o r c e m e n t a c t i o n s .—
“ (A) In g e n e r a l . —In addition

to any authority contained
in section 8, the Corporation or an appropriate Federal
banking agency may remove, suspend, or bar an independ­
ent public accountant, upon a showing of good cause, from
performing audit services required by this section.
“(B) J o i n t r u l e m a k i n g . —The appropriate Federal baulk­
ing agencies shall jointly issue rules of practice to imple­
ment this paragraph.

“ (5 ) N o t i c e b y a c c o u n t a n t o f t e r m i n a t i o n o f s e r v i c e s . —

Any independent public accountant performing an audit under
this section who subsequently ceases to be the accountant for
the institution shall promptly notify the Corporation pursuant
to such rules as the Corporation shall prescribe.
“(h) E x c h a n g e o f R e p o r t s a n d I n f o r m a t i o n . —
“ (1) R e p o r t

t o t h e i n d e p e n d e n t a u d i t o r .—

“(A) In g e n e r a l . —Each insured depository institution
which has engaged the services of an independent auditor
to audit such institution shall transmit to the auditor a
copy of the most recent report of condition made by the
institution (pursuant to this Act or any other provision of
law) and a copy of the most recent report of examination
received by the institution.
“(B) A d d i t i o n a l i n f o r m a t i o n . —In addition to the copies
of the reports required to be provided under subparagraph
(A ), each insured depository institution shall provide the
auditor with—
“ (i) a copy of any supervisory memorandum of under­
standing with such institution and any written agree­
ment between such institution and any appropriate
Federal banking agency or any appropriate State bank
supervisor which is in effect during the period covered
by the audit; and
“ (ii) a report of—
“ (I) any action initiated or taken by the appro­
priate Federal banking agency or the Corporation
during such period under subsection (a), (b), (c), (e),
(g), (i), (s), or (t) of section 8;
“ (II) any action taken by any appropriate State
bank supervisor under State law which is similar
to any action referred to in subclause (I); or
“(III) any assessment of any civil money penalty
under any other provision of law with respect to
the institution or any institution-affiliated party.
“ (2 ) R e p o r t s

t o b a n k i n g a g e n c i e s .—

Regulations.

“ (A) I n d e p e n d e n t a u d i t o r r e p o r t s .—Each insured
depository institution shall provide to the Corporation, any
appropriate Federal banking agency, and any appropriate
State bank supervisor, a copy of each audit report and any
qualification to such report, any management letter, and
any other report within 15 days of receipt of any such
report, qualification, or letter from the institution’s
independent auditors.
“ (B) N o t ic e o f c h a n g e o f a u d i t o r .—Each insured
depository institution shall provide written notification to
the Corporation, the appropriate Federal banking agency,
and any appropriate State bank supervisor of the resigna­
tion or dismissal of the institution's independent auditor or
the engagement of a new independent auditor by the
institution, including a statement of the reasons for such
change within 15 calendar days of the occurrence of the
event.
“ (i) R e q u i r e m e n t s f o r I n s u r e d S u b s i d i a r i e s o f H o l d i n g C o m p a ­
—Except with respect to any audit requirements established
under or pursuant to subsection (d), the requirements of this section
may be satisfied for insured depository institutions that are subsidi­
aries of a holding company, if—
“(1) services and functions comparable to those required
under this section are provided at the holding company level;
and
“ (2) either—
“ (A) the institution has total assets, as of the beginning of
such fiscal year, of less than $5,000,000,000; or
“ (B) the institution—
“ (i) has total assets, as of the beginning of such fiscal
year, of more than $5,000,000,000 and less than
$9,000,000,000; and
“(ii) has a CAMEL composite rating of 1 or 2 under
the Uniform Financial Institutions Rating System (or
an equivalent rating by any such agency under a com­
parable rating system) as of the most recent examina­
tion of such institution by the Corporation or the
appropriate Federal banking agency.
“(j) E x e m p t i o n f o r S m a l l D e p o s i t o r y I n s t i t u t i o n s .—This section
shall not apply with respect to any fiscal year of any insured
depository institution the total assets of which, as of the beginning
of such fiscal year, are less than the greater of—
“ (1) $150,000,000; or
“ (2) such amount (in excess of $150,000,000) as the Corpora­
tion may prescribe by regulation.” .
(b) E f f e c t i v e D a t e . —The requirements established by the amendment made by subsection (a) shall apply with respect to fiscal years
of insured depository institutions which begin after December 31,
1992.
n ie s .

12 USC 1831m

note-

SEC. 113. ASSESSMENTS REQUIRED TO COVER COSTS O F EXAMINATIONS.

(a) I n G e n e r a l .—Section 10 of the Federal Deposit Insurance Act
(12 U.S.C. 1820) is amended—
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) (as added by section
111(a)(1) of this subtitle) the following new subsection:
“(e) E x a m i n a t i o n F e e s .—

“ (1)

R egular

and

s p e c ia l

e x a m in a t io n s

of

d e p o s it o r y

—The cost of conducting any regular examination
or special examination of any depository institution under
subsection (b)(2), (b)(3), or (d) may be assessed by the Corporation
against the institution to meet the Corporation’s expenses in
carrying out such examinations.
“ (2) E x a m i n a t i o n o f a f f i l i a t e s .—The cost of conducting any
examination of any affiliate of any insured depository institu­
tion under subsection (b)(4) may be assessed by the Corporation
against each affiliate which is examined to meet the Corpora­
tion’s expenses in carrying out such examination.
in s t it u t io n s .

“ (3) A s s e s s m e n t

a g a in s t d e p o s it o r y in s t it u t io n in c a s e o f

a f f i l i a t e ’ s r e f u s a l t o p a y .—

“ (A) In g e n e r a l . —Subject to subparagraph (B), if any
affiliate of any insured depository institution—
“(i) refuses to pay any assessment under paragraph
(2); or
“(ii) fails to pay any such assessment before the end
of the 60-day period beginning on the date the affiliate
receives notice of the assessment,
the Corporation may assess such cost against, and collect
such cost from, the depository institution.
“ (B) A f f i l i a t e o f m o r e t h a n l d e p o s i t o r y i n s t i t u t i o n .—
If any affiliate referred to in subparagraph (A) is an affili­
ate of more than 1 insured depository institution, the
assessment under subparagraph (A) may be assessed
against the depository institutions in such proportions as
the Corporation determines to be appropriate.
“ (4)

C iv il

m oney

penalty

for

a f f il ia t e ’s

refu sal

to

c o o p e r a t e .—

“(A) P e n a l t y i m p o s e d .—If any affiliate of any insured
depository institution—
“(i) refuses to permit an examiner appointed by the
Board of Directors under subsection (b)(1) to conduct an
examination; or
“ (ii) refuses to provide any information required to be
disclosed in the course of any examination,
the depository institution shall forfeit and pay a penalty of
not more than $5,000 for each day that any such refusal
continues.
“ (B) A s s e s s m e n t a n d c o l l e c t i o n .—Any penalty imposed
under subparagraph ( A ) shall be assessed and collected by
the Corporation in the manner provided in section 8(i)(2).
“ (5) D e p o s it s o f e x a m i n a t i o n a s s e s s m e n t .—Amounts re­
ceived by the Corporation under this subsection (other than
paragraph (4)) may be deposited in the manner provided in
section 13.” .
(b) E x a m i n a t i o n s o f A p p l i c a n t s f o r D e p o s i t I n s u r a n c e .—Sec­
tion 10(b)(2)(B) of the Federal Deposit Insurance Act (12 U.S.C.
1820(b)(2)(B)) is amended to read as follows:
“(B) any depository institution which files an application
with the Corporation to become an insured depository
institution;” .
(c) T e c h n i c a l a n d C o n f o r m i n g A m e n d m e n t .—
(1) Section 7(b)(10) of the Federal Deposit Insurance Act (as so
redesignated by section 103(b) of this Act) is amended by insert­
ing “ or section 10(e)” after “ under this section” .

(2) Section 10(b)(4)(A) of the Federal Deposit Insurance Act (12
U.S.C. 1820(b)(4)(A)) is amended by striking “insured” each
place such term appears.
SEC. 114. EXAMINATION AND SUPERVISION FEES FO R NATIONAL BANKS
AND SAYINGS ASSOCIATIONS.

(a) I n G e n e r a l .—Section 5240 of the Revised Statutes (12 U.S.C.
482) is amended—
(1) by striking the 4th undesignated paragraph and inserting
the following:
“The Comptroller of the Currency may impose and collect assess­
ments, fees, or other charges as necessary or appropriate to carry
out the responsibilities of the duties of the Comptroller. Such assess­
ments, fees, and other charges shall be set to meet the Comptroller’s
expenses in carrying out authorized activities.” ;
(2) by striking “ In addition to the expense of examination”
and all that follows through “to cover the expense thereof.” .
(b) T e c h n i c a l A m e n d m e n t .—Section 5240 of the Revised Statues
is amended in the 2d undesignated paragraph (12 U.S.C. 481)—
(1) by striking the 2d sentence;
(2) by striking the 3d sentence and inserting “ If any affiliate
of a national bank refuses to pay any assessments, fees, or other
charges imposed by the Comptroller of the Currency pursuant
to this section or fails to make such payment not later than 60
days after the date on which they are imposed, the Comptroller
of the Currency may impose such assessments, fees, or charges
against the affiliated national bank, and such assessments, fees,
or charges shall be paid by such national bank. If the affiliation
is with 2 or more national banks, such assessments, fees, or
charges may be imposed on, and collected from, any or all of
such national banks in such proportions as the Comptroller of
the Currency may prescribe.” ;
(3) in the 4th sentence, by inserting “ or from other fees or
charges imposed pursuant to this section” after “ assessments on
banks or affiliates thereof’; and
(4) in the 5th sentence—
(A) by inserting “ , fees, or charges” before “ may be
deposited” ; and
(B) by inserting “ or of other fees or charges imposed
pursuant to this section” before the period.
(c ) A s s e s s m e n t A u t h o r i t y o f t h e O f f i c e o f T h r i f t S u p e r ­
v i s i o n . —S e c t i o n 9 o f t h e Home Owners’ Loan A c t (12 U.S.C. 1467) is

amended—
(1) by striking subsections (a) and (b) and inserting the
following:
“(a) E x a m i n a t i o n o f S a v i n g s A s s o c i a t i o n s .—The cost of conduct­
ing examinations of savings associations pursuant to section 5(d)
shall be assessed by the Director against each such savings associa­
tion as the Director deems necessary or appropriate.
“ (b) E x a m i n a t i o n o f A f f i l i a t e s .— The cost of conducting
examinations of affiliates of savings associations pursuant to this
Act may be assessed by the Director against each affiliate that is
examined as the Director deems necessary or appropriate.” ;
(2) by amending subsection (k) to read as follows:
“(k) F e e s F o r E x a m i n a t i o n s a n d S u p e r v i s o r y A c t i v i t i e s .—The
Director may assess against institutions for which the Director is
the appropriate Federal banking agency, as defined in section 3 of

the Federal Deposit Insurance Act, fees to fund the direct and
indirect expenses of the Office as the Director deems necessary or
appropriate. The fees may be imposed more frequently than an­
nually at the discretion of the Director.” .
SEC. 115. APPLICATION TO FDIC REQUIRED FO R INSURANCE.

(a) I n G e n e r a l .—Section 5 of the Federal Deposit Insurance Act
(12 U.S.C. 1815(a)) is amended by striking all that precedes subsec­
tion (b) and inserting the following:
“ SEC. 5. DEPOSIT INSURANCE.

“(a) A p p l i c a t i o n t o C o r p o r a t i o n R e q u i r e d .—
“(1) In g e n e r a l . —Except as provided in paragraphs (2) and
(3), any depository institution which is engaged in the business
of receiving deposits other than trust funds (as defined in
section 3(p)), upon application to and examination by the Cor­
poration and approval by the Board of Directors, may become
an insured depository institution.
“ (2) I n t e r i m d e p o s i t o r y i n s t i t u t i o n s . —In the case of any
interim Federal depository institution that is chartered by the
appropriate Federal banking agency and will not open for
business, the depository institution shall be an insured deposi­
tory institution upon the issuance of the institution’s charter by
the agency.
“ (3 ) A

p p l ic a t io n

and

approval

not

r e q u ir e d

in

cases

of

—Paragraph (1) shall not apply in the
case of any depository institution whose insured status is contin­
ued pursuant to section 4.
“ (4) R e v i e w r e q u i r e m e n t s .—In reviewing any application
under this subsection, the Board of Directors shall consider the
factors described in section 6 in determining whether to approve
the application for insurance.
“(5) N o t i c e o f d e n i a l o f a p p l i c a t i o n f o r i n s u r a n c e . —If the
Board of Directors votes to deny any application for insurance
by any depository institution, the Board of Directors shall
promptly notify the appropriate Federal hanking agency and, in
the case of any State depository institution, the appropriate
State banking supervisor of the denial of such application,
giving specific reasons in writing for the Board of Directors’
determination with reference to the factors described in section
6.
“ (6 ) N o n d e l e g a t i o n r e q u i r e m e n t .— The authority of the
Board of Directors to make any determination to deny any
application under this subsection may not be delegated by the
Board of Directors.” .
(b) C o n t i n u a t i o n o f I n s u r a n c e U p o n B e c o m i n g a M e m b e r
B a n k .—4(b) of the Federal Deposit Insurance Act (12 U.S.C. 1814(b))
is amended to read as follows:
“(b) C o n t i n u a t i o n o f I n s u r a n c e U p o n B e c o m i n g a M e m b e r
B a n k . —In the case of an insured bank which is admitted to mem­
bership in the Federal Reserve System or an insured State bank
which is converted into a national member bank, the bank shall
continue as an insured bank.” .
c o n t in u e d

in s u r a n c e .

Subtitle C—Accounting Reforms
SEC. 121. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS.

(a) I n G e n e r a l . —The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by inserting after section 36 (as added by
section 112 of this title) the following new section:
12 USC 1831n.

“ SEC. 37. ACCOUNTING OBJECTIVES, STANDARDS, AND REQUIREMENTS.

“(a) I n

G e n e r a l.—
“ (1 ) O b j e c t i v e s . —Accounting

principles applicable to reports
or statements required to be filed with Federal banking agen­
cies by insured depository institutions should—
“ (A) result in financial statements and reports of condi­
tion that accurately reflect the capital of such institutions;
“(B) facilitate effective supervision of the institutions;
and
“ (C) facilitate prompt corrective action to resolve the
institutions at the least cost to the insurance funds.
“(2) S t a n d a r d s . —
“(A) U n i f o r m a c c o u n t i n g p r i n c i p l e s c o n s i s t e n t w i t h
g a a p . —Subject to the requirements of this Act and any
other provision of Federal law, the accounting principles
applicable to reports or statements required to be filed with
Federal banking agencies by all insured depository institu­
tions shall be uniform and consistent with generally
accepted accounting principles.
“ (B) S t r i n g e n c y . —If the appropriate Federal banking
agency or the Corporation determines that the application
of any generally accepted accounting principle to any in­
sured depository institution is inconsistent with the objec­
tives described in paragraph (1), the agency or the Corpora­
tion may, with respect to reports or statements required to
be filed with such agency or Corporation, prescribe an
accounting principle which is applicable to such institutions
which is no less stringent than generally accepted account­
ing principles.
“ (3 ) R e v i e w a n d i m p l e m e n t a t i o n o f a c c o u n t i n g p r i n c i p l e s
r e q u i r e d . —Before the end of the 1-year period beginning on the

Regulations.

date of the enactment of the Federal Deposit Insurance Cor­
poration Improvement Act of 1991, each appropriate Federal
banking agency shall take the following actions:
“(A) R e v i e w o f a c c o u n t i n g p r i n c i p l e s . —Review—
“(i) all accounting principles used by depository
institutions with respect to reports or statements re­
quired to be filed with a Federal banking agency;
“ (ii) all requirements established by the agency with
respect to such accounting procedures; and
“(iii) the procedures and format for reports to the
agency, including reports of condition.
“ (B) M o d i f i c a t i o n o f n o n c o m p l y i n g m e a s u r e s . —Modify
or eliminate any accounting principle or reporting require­
ment of such Federal agency which the agency determines
fails to comply with the objectives and standards estab­
lished under paragraphs (1) and (2).
“(C) I n c l u s i o n OF ‘ o f f BALANCE SHEET’ ITEMS.—Develop
and prescribe regulations which require that all assets and

liabilities, including contingent assets and liabilities, of
insured depository institutions be reported in, or otherwise
taken into account in the preparation of any balance sheet,
financial statement, report of condition, or other report of
such institution, required to be filed with a Federal banking
agency.
“ (D) M a r k e t v a l u e d i s c l o s u r e .—Develop jointly with
the other appropriate Federal banking agencies a method
for insured depository institutions to provide supplemental
disclosure of the estimated fair market value of assets and
liabilities, to the extent feasible and practicable, in any
balance sheet, financial statement, report of condition, or
other report of any insured depository institution required
to be filed with a Federal banking agency.
“(b) U n i f o r m A c c o u n t i n g o f C a p i t a l S t a n d a r d s .—
“ (1) In g e n e r a l .—Each appropriate Federal banking agency
shall maintain uniform accounting standards to be used for
determining compliance with statutory or regulatory require­
ments of depository institutions.
“ (2 ) T r a n s i t i o n p r o v i s i o n .—Any standards in effect on the
date of the enactment of the Federal Deposit Insurance Cor­
poration Improvement Act of 1991 under section 1215 of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 shall continue in effect after such date of enactment
until amended by the appropriate Federal banking agency
under paragraph (1).
“ (c) R e p o r t s t o B a n k i n g C o m m i t t e e s .—
“(1) A n n u a l r e p o r t s r e q u i r e d .—Each appropriate Federal
banking agency shall annually submit a report to the Commit­
tee on Banking, Finance and Urban Affairs of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing a description of any
difference between any accounting or capital standard used by
such agency and any accounting or capital standard used by any
other agency.
“(2) E x p l a n a t i o n o f r e a s o n s f o r d i s c r e p a n c y .—Each report
submitted under paragraph (1) shall contain an explanation of
the reasons for any discrepancy between any accounting or
capital standard used by such agency and any accounting or
capital standard used by any other agency.
“ (3) P u b l i c a t i o n .—Each report under this subsection shall be Federal
Register,
published in the Federal Register.” .
(b) R e p e a l o f P r o v i s i o n S u p e r s e d e d b y S u b s e c t i o n (a) A m e n d ­publication.
m e n t s . —Section 1215 of the Financial Institutions Reform, Recov­
ery, and Enforcement Act of 1989 (12 U .S .C . 1833d) is hereby
repealed.
SEC. 122. SMALL BUSINESS AND SM ALL FARM LOAN INFORMATION.

(a) I n G e n e r a l .—Before the end of the 180-day period beginning
on the date of the enactment of this Act, the appropriate Federal
banking agency shall prescribe regulations requiring insured deposi­
tory institutions to annually submit information on small businesses
and small farm lending in their reports of condition.
(b) C r e d i t A v a i l a b i l i t y .—The regulations prescribed under
subsection (a) shall require insured depository institutions to submit
such information as the agency may need to assess the availability
of credit to small businesses and small farms.

Regulations.
12 USC 1817
note.

(d)
C o n t e n t s . —The information required under subsection (a)
may include information regarding the following:
(1) The total number and aggregate dollar amount of commer­
cial loans and commercial mortgage loans to small businesses.
(2) Charge-offs, interest, and interest fee income on commer­
cial loans and commercial mortgage loans to small businesses.
(3) Agricultural loans to small farms.
SEC. 123. FDIC PRO PERTY DISPOSITION STANDARDS.

Discrimination.

Disadvantaged.

Discrimination.

Disadvantaged.

(a) I n G e n e r a l . —Section ll(d)(13) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1821(d)(13)) is amended by adding at the end the
following new subparagraph:
“ (E) D i s p o s i t i o n o f a s s e t s . —In exercising any right,
power, privilege, or authority as conservator or receiver in
connection with any sale or disposition of assets of any
insured depository institution for which the Corporation
has been appointed conservator or receiver, including any
sale or disposition of assets acquired by the Corporation
under section 13(d)(1), the Corporation shall conduct its
operations in a manner which—
“(i) maximizes the net present value return from the
sale or disposition of such assets;
“(ii) minimizes the amount of any loss realized in the
resolution of cases;
“ (iii) ensures adequate competition and fair and
consistent treatment of offerors;
“ (iv) prohibits discrimination on the basis of race,
sex, or ethnic groups in the solicitation and consider­
ation of offers; and
“(v) maximizes the preservation of the availability
and affordability of residential real property for lowand moderate-income individuals.” .
(b) C o r p o r a t e C a p a c i t y . —Section 13(d)(3) of the Federal Deposit
Insurance Act (12 U .S .C . 1823(d)(3)) is amended by adding at the end
the following new subparagraph:
“ (D ) D i s p o s i t i o n o f a s s e t s . —In exercising any right,
power, privilege, or authority described in subparagraph (A)
regarding the sale or disposition of assets sold to the Cor­
poration pursuant to paragraph (1), the Corporation shall
conduct its operations in a manner which—
“(i) maximizes the net present value return from the
sale or disposition of such assets;
“ (ii) minimizes the amount of any loss realized in the
resolution of cases;
“(iii) ensures adequate competition and fair and
consistent treatment of offerors;
“(iv) prohibits discrimination on the basis of race,
sex, or ethnic groups in the solicitation and consider­
ation of offers; and
“ (v) maximizes the preservation of the availability
and affordability of residential real property for lowand moderate-income individuals.” .

Subtitle D—Prompt Regulatory Action
SEC. 131. PROMPT REGULATORY ACTION.

(a)
E s t a b l i s h i n g S y s t e m o f P r o m p t C o r r e c t i v e A c t i o n .—The
Federal Deposit Insurance Act (12 U .S .C . 1811 et seq.) is amended by
adding after section 37 (as added by section 121 of this Act) the
following new section:
12 USC 1831o.

“ SEC. 38. PROMPT CORRECTIVE ACTION.
“ (a ) R e s o l v i n g
P r o b le m s To
F u n d s .—
“ (1) P u r p o s e .—The purpose

P ro te ct

D e p o s it

In su ra n ce

of this section is to resolve the
problems of insured depository institutions at the least possible
long-term loss to the deposit insurance fund.
“ (2 ) P r o m p t c o r r e c t i v e a c t i o n r e q u i r e d . —Each appropriate
Federal banking agency and the Corporation (acting in the
Corporation’s capacity as the insurer of depository institutions
under this Act) shall carry out the purpose of this section by
taking prompt corrective action to resolve the problems of
insured depository institutions.
“ (b) D e f i n i t i o n s .—For purposes of this section:
“ (1) C a p i t a l c a t e g o r i e s .—
“(A) W e l l c a p i t a l i z e d .—An

insured depository institu­
tion is ‘well capitalized’ if it significantly exceeds the re­
quired minimum level for each relevant capital measure.
“ (B) A d e q u a t e l y c a p i t a l i z e d .—An insured depository
institution is ‘adequately capitalized’ if it meets the re­
quired minimum level for each relevant capital measure.
“(C) U n d e r c a p i t a l i z e d .—An insured depository institu­
tion is ‘undercapitalized’ if it fails to meet the required
minimum level for any relevant capital measure.
“(D) S i g n i f i c a n t l y u n d e r c a p i t a l i z e d .—An insured
depository institution is ‘significantly undercapitalized’ if it
is significantly below the required minimum level for any
relevant capital measure.
“(E) C r i t i c a l l y u n d e r c a p i t a l i z e d .—An insured deposi­
tory institution is ‘critically undercapitalized’ if it fails to
meet any level specified under subsection (c)(3)(A).

“ (2) O t h e r d e f i n i t i o n s .—
“ ( A ) A v e r a g e .—
“(i) I n g e n e r a l . —The

‘average’ of an accounting
item (such as total assets or tangible equity) during a
given period means the sum of that item at the close of
business on each business day during that period di­
vided by the total number of business days in that
period.
“(ii) A g e n c y m a y p e r m i t w e e k l y a v e r a g i n g f o r
c e r t a i n i n s t i t u t i o n s .—In the case of insured deposi­
tory institutions that have total assets of less than
$300,000,000 and normally file reports of condition
reflecting weekly (rather than daily) averages of
accounting items, the appropriate Federal banking
agency may provide that the ‘average’ of an accounting
item during a given period means the sum of that item
at the close of business on the relevant business day

each week during that period divided by the total
number of weeks in that period.
“(B) C a p i t a l d i s t r i b u t i o n .—The term ‘capital distribu­
tion’ means—
“ (i) a distribution of cash or other property by any
insured depository institution or company to its owners
made on account of that ownership, but not including—
“ (I) any dividend consisting only of shares of the
institution or company or rights to purchase such
shares; or
“ (II) any amount paid on the deposits of a
mutual or cooperative institution that the appro­
priate Federal banking agency determines is not a
distribution for purposes of this section;
“(ii) a payment by an insured depository institution
or company to repurchase, redeem, retire, or otherwise
acquire any of its shares or other ownership interests,
including any extension of credit to finance an affili­
ated company’s acquisition of those shares or interests;
or
“(iii) a transaction that the appropriate Federal
banking agency or the Corporation determines, by
order or regulation, to be in substance a distribution of
capital to the owners of the insured depository institu­
tion or company.
“ (C ) C a p i t a l r e s t o r a t i o n p l a n .—The term ‘capital res­
toration plan’ means a plan submitted under subsection
(e)(2).
“ (D) C o m p a n y .—The term ‘company’ has the same mean­
ing as in section 2 of the Bank Holding Company Act of
1956.
“ (E) C o m p e n s a t i o n .—The term ‘compensation’ includes
any payment of money or provision of any other thing of
value in consideration of employment.
“ (F) R e l e v a n t c a p i t a l m e a s u r e .—The term ‘relevant
capital measure’ means the measures described in subsec­
tion (c).
“ (G) R e q u i r e d m i n i m u m l e v e l .—The term ‘required
minimum level’ means, with respect to each relevant
capital measure, the minimum acceptable capital level
specified by the appropriate Federal banking agency by
regulation.
“(H) S e n i o r e x e c u t i v e o f f i c e r .—The term ‘senior execu­
tive officer’ has the same meaning as the term ‘executive
officer’ in section 22(h) of the Federal Reserve Act.
“ (I ) S u b o r d i n a t e d d e b t .— The term ‘subordinated debt’
means debt subordinated to the claims of general creditors.
“ (c) C a p i t a l S t a n d a r d s .—
“ (1) R e l e v a n t c a p i t a l m e a s u r e s .—
“ (A) I n g e n e r a l . —Except as provided

in subparagraph
(B)(ii), the capital standards prescribed by each appropriate
Federal banking agency shall include—
“ (i) a leverage limit; and
“(ii) a risk-based capital requirement.
“(B) O t h e r c a p i t a l m e a s u r e s .—An appropriate Federal
banking agency may, by regulation—

“(i) establish any additional relevant capital meas­
ures to carry out the purpose of this section; or
“(ii) rescind any relevant capital measure required
under subparagraph (A) upon determining (with the
concurrence of the other Federal banking agencies)
that the measure is no longer an appropriate means for
carrying out the purpose of this section.
“ (2 ) C a p i t a l c a t e g o r i e s g e n e r a l l y . —Each appropriate Federal banking agency shall, by regulation, specify for each rel­
evant capital measure the levels at which an insured depository
institution is well capitalized, adequately capitalized,
undercapitalized, and significantly undercapitalized.
“ (3 ) C r i t i c a l c a p i t a l .—
“ ( A ) A g e n c y t o s p e c i f y l e v e l .—
“(i) L e v e r a g e l i m i t .—Each

appropriate Federal
banking agency shall, by regulation, in consultation
with the Corporation, specify the ratio of tangible
equity to total assets at which an insured depository
institution is critically undercapitalized.
“(ii) O t h e r r e l e v a n t c a p i t a l m e a s u r e s .— The
agency may, by regulation, specify for 1 or more other
relevant capital measures, the level at which an in­
sured
depository
institution
is
critically
undercapitalized.
“ (B) L e v e r a g e l i m i t r a n g e .—The level specified under
subparagraph (A)(i) shall require tangible equity in an
amount—
“(i) not less than 2 percent of total assets; and
“(ii) except as provided in clause (i), not more than 65
percent of the required minimum level of capital under
the leverage limit.
“ (C) FDIC’s c o n c u r r e n c e r e q u i r e d .— The appropriate
Federal banking agency shall not, without the concurrence
of the Corporation, specify a level under subparagraph (A)(i)
lower than that specified by the Corporation for State
nonmember insured banks.
“ (d) P r o v i s i o n s A p p l i c a b l e t o A l l I n s t i t u t i o n s .—
“ (1 ) C a p i t a l

d i s t r i b u t i o n s r e s t r i c t e d .—

“ (A) In g e n e r a l . —An insured depository institution
shall make no capital distribution if, after making the
distribution, the institution would be undercapitalized.
“ (B) E x c e p t i o n .—Notwithstanding subparagraph (A), the
appropriate Federal banking agency may permit, after con­
sultation with the Corporation, an insured depository
institution to repurchase, redeem, retire, or otherwise ac­
quire shares or ownership interests if the repurchase,
redemption, retirement, or other acquisition—
“(i) is made in connection with the issuance of addi­
tional shares or obligations of the institution in at least
an equivalent amount; and
“(ii) will reduce the institution’s financial obligations
or otherwise improve the institution’s financial condi­
tion.
“ (2 ) M a n a g e m e n t f e e s r e s t r i c t e d . —An insured depository
institution shall pay no management fee to any person having
control of that institution if, after making the payment, the
institution would be undercapitalized.

Regulations,

“ (e) P r o v i s i o n s
“ (1 ) M

A

p p l ic a b l e t o

U

o n it o r in g r e q u ir e d .

n d e r c a p it a l iz e d

I n s t i t u t i o n s .—

—Each appropriate Federal bank­

ing agency shall—
“ (A) closely monitor the condition of any undercapitalized
insured depository institution;
“ (B) closely monitor compliance with capital restoration
plans, restrictions, and requirements imposed under this
section; and
“(C) periodically review the plan, restrictions, and
requirements applicable to any undercapitalized insured
depository institution to determine whether the plan,
restrictions, and requirements are achieving the purpose of
this section.
“ (2 ) C a p i t a l

r e s t o r a t i o n p l a n r e q u i r e d .—

“(A) In g e n e r a l .—Any undercapitalized insured deposi­
tory institution shall submit an acceptable capital restora­
tion plan to the appropriate Federal banking agency within
the time allowed by the agency under subparagraph (D ).
“ (B) C o n t e n t s o f p l a n .—The capital restoration plan
shall—
“(i) specify—
“ (I) the steps the insured depository institution
will take to become adequately capitalized;
“(II) the levels of capital to be attained during
each year in which the plan will be in effect;
“(III) how the institution will comply with the
restrictions or requirements then in effect under
this section; and
“(IV) the types and levels of activities in which
the institution will engage; and
“ (ii) contain such other information as the appro-*
priate Federal banking agency may require.
“ (C ) C r i t e r i a f o r a c c e p t i n g p l a n .— The appropriate
Federal banking agency shall not accept a capital restora­
tion plan unless the agency determines that—
“ (i) the plan—
“ (I) complies with subparagraph (B);
“(II) is based on realistic assumptions, and is
likely to succeed in restoring the institution’s cap­
ital; and
“ (III) would not appreciably increase the risk
(including credit risk, interest-rate risk, and other
types of risk) to which the institution is exposed;
and
“(ii) if the insured depository institution is
undercapitalized, each company having control of the
institution has—
“ (I) guaranteed that the institution will comply
with the plan until the institution has been ade­
quately capitalized on average during each of 4
consecutive calendar quarters; and
“(II) provided appropriate assurances of perform­
ance.
Regulations.

“ (D ) D e a d l i n e s

f o r s u b m i s s i o n a n d r e v i e w o f p l a n s .—

The appropriate Federal banking agency shall by regula­
tion establish deadlines that—

“ (i) provide insured depository institutions with
reasonable time to submit capital restoration plans,
and generally require an institution to submit a plan
not later than 45 days after the institution becomes
undercapitalized; and
“ (ii) require the agency to act on capital restoration
plans expeditiously, and generally not later than 60
days after the plan is submitted; and
“(iii) require the agency to submit a copy of any plan
approved by the agency to the Corporation before the
end of the 45-day period beginning on the date such
approval is granted.
“ (E) G u a r a n t e e l i a b i l i t y l i m i t e d .—
“(i) In g e n e r a l . —The aggregate liability under
subparagraph (C)(ii) of all companies having control of
an insured depository institution shall be the lesser
of—

“(I) an amount equal to 5 percent of the institu­
tion’s total assets at the time the institution
became undercapitalized; or
“(II) the amount which is necessary (or would
have been necessary) to bring the institution into
compliance with all capital standards applicable
with respect to such institution as of the time the
institution fails to comply with a plan under this
subsection.
“(ii) C e r t a i n a f f i l i a t e s n o t a f f e c t e d .—This para­
graph may not be construed as—
“ (I) requiring any company not having control of
an undercapitalized insured depository institution
to guarantee, or otherwise be liable on, a capital
restoration plan;
“(II) requiring any person other than an insured
depository institution to submit a capital restora­
tion plan; or
“(III) affecting compliance by brokers, dealers,
government securities brokers, and government
securities dealers with the financial responsibility
requirements of the Securities Exchange Act of
1934 and regulations and orders thereunder.
“ (3 ) A s s e t g r o w t h r e s t r i c t e d . —An undercapitalized insured
depository institution shall not permit its average total assets
during any calendar quarter to exceed its average total assets
during the preceding calendar quarter unless—
“ (A) the appropriate Federal banking agency has
accepted the institution’s capital restoration plan;
“(B) any increase in total assets is consistent with the
plan; and
“ (C) the institution’s ratio of tangible equity to assets
increases during the calendar quarter at a rate sufficient to
enable the institution to become adequately capitalized
within a reasonable time.
“ (4 ) P r i o r

a p p r o v a l r e q u ir e d f o r a c q u is it io n s , b r a n c h i n g ,

o f b u s i n e s s .—An undercapitalized insured
depository institution shall not, directly or indirectly, acquire
any interest in any company or insured depository institution,
and

new

l in e s

establish or acquire any additional branch office, or engage in
any new line of business unless—
“(A) the appropriate Federal banking agency has
accepted the insured depository institution’s capital res­
toration plan, the institution is implementing the plan, and
the agency determines that the proposed action is consist­
ent with and will further the achievement of the plan; or
“ (B) the Board of Directors determines that the proposed
action will further the purpose of this section.
“ (5 ) D i s c r e t i o n a r y s a f e g u a r d s .— The appropriate Federal
hanking agency may, with respect to any undercapitalized in­
sured depository institution, take actions described in any
subparagraph of subsection (f)(2) if the agency determines that
those actions are necessary to carry out the purpose of this
section.
“ (f) P r o v i s i o n s A p p l i c a b l e t o S i g n i f i c a n t l y U n d e r c a p i t a l i z e d
I n s t i t u t i o n s a n d U n d e r c a p i t a l i z e d I n s t i t u t i o n s T h a t F a i l To
S u b m i t a n d I m p l e m e n t C a p i t a l R e s t o r a t i o n P l a n s .—
“(1) I n g e n e r a l . —This subsection shall apply with respect to

any insured depository institution that—
“ (A) is significantly undercapitalized; or
“ (B) is undercapitalized and—
“ (i) fails to submit an acceptable capital restoration
plan within the time allowed by the appropriate Fed­
eral banking agency under subsection (e)(2)(D); or
“ (ii) fails in any material respect to implement a plan
accepted by the agency.
“ (2 ) S p e c i f i c a c t i o n s a u t h o r i z e d .— The appropriate Federal
banking agency shall carry out this section by taking 1 or more
of the following actions:
“(A) R e q u i r i n g r e c a p i t a l i z a t i o n .—Doing 1 or more of
the following:
“(i) Requiring the institution to sell enough shares or
obligations of the institution so that the institution will
be adequately capitalized after the sale.
“ (ii) Further requiring that instruments sold under
clause (i) be voting shares.
“ (iii) Requiring the institution to be acquired by a
depository institution holding company, or to combine
with another insured depository institution, if 1 or
more grounds exist for appointing a conservator or
receiver for the institution.
“(B) R e s t r i c t i n g t r a n s a c t i o n s w i t h a f f i l i a t e s .—
“(i) Requiring the institution to comply with section
23A of the Federal Reserve Act as if subsection (d)(1) of
that section (exempting transactions with certain affili­
ated institutions) did not apply.
“ (ii) Further restricting the institution’s transactions
with affiliates.
“ (C ) R e s t r i c t i n g i n t e r e s t r a t e s p a i d .—
“ (i) I n g e n e r a l .—Restricting the interest

rates that
the institution pays on deposits to the prevailing rates
of interest on deposits of comparable amounts and
maturities in the region where the institution is lo­
cated, as determined by the agency.
“(ii) R e t r o a c t i v e r e s t r i c t i o n s p r o h i b i t e d .—This
subparagraph does not authorize the agency to restrict

interest rates paid on time deposits made before (and
not renewed or renegotiated after) the agency acted
under this subparagraph.
“ (D ) R e s t r i c t i n g a s s e t g r o w t h . —Restricting the institu­
tion’s asset growth more stringently than subsection (e)(3),
or requiring the institution to reduce its total assets.
“(E) R e s t r i c t i n g a c t i v i t i e s .—Requiring the institution
or any of its subsidiaries to alter, reduce, or terminate any
activity that the agency determines poses excessive risk to
the institution.
“ (F) I m p r o v i n g m a n a g e m e n t .— D o i n g 1 o r m o r e o f t h e
f o ll o w in g :

“(i) N e w e l e c t i o n o f d i r e c t o r s .—Ordering a new
election for the institution’s board of directors.
“(ii) D i s m i s s i n g d i r e c t o r s o r s e n i o r e x e c u t i v e o f f i ­
c e r s .—Requiring the institution to dismiss from office
any director or senior executive officer who had held
office for more than 180 days immediately before the
institution became undercapitalized. Dismissal under
this clause shall not be construed to be a removal under
section 8.
“(iii) E m p l o y i n g q u a l i f i e d s e n i o r e x e c u t i v e o f f i ­
c e r s .—Requiring the institution to employ qualified
senior executive officers (who, if the agency so specifies,
shall be subject to approval by the agency).
“ (G) P r o h i b i t i n g d e p o s it s f r o m c o r r e s p o n d e n t b a n k s .—
Prohibiting the acceptance by the institution of deposits
from correspondent depository institutions, including
renewals and rollovers of prior deposits.
“ (H) R e q u i r i n g p r i o r a p p r o v a l f o r c a p i t a l d i s t r i b u ­
t i o n s b y b a n k h o l d i n g c o m p a n y .—Prohibiting any bank
holding company having control of the insured depository
institution from making any capital distribution without
the prior approval of the Board of Governors of the Federal
Reserve System.
“ (I) R e q u i r i n g d i v e s t i t u r e . —Doing one or more of the
following:
“ (i) D i v e s t i t u r e b y t h e i n s t i t u t i o n .—Requiring the
institution to divest itself of or liquidate any subsidiary
if the agency determines that the subsidiary is in
danger of becoming insolvent and poses a significant
risk to the institution, or is likely to cause a significant
dissipation of the institution’s assets or earnings.
“(ii) D i v e s t i t u r e
by
parent
com pan y
of
n o n d e p o s it o r y
a f f i l i a t e .—Requiring any company
having control of the institution to divest itself of or
liquidate any affiliate other than an insured depository
institution if the appropriate Federal banking agency
for that company determines that the affiliate is in
danger of becoming insolvent and poses a significant
risk to the institution, or is likely to cause a significant
dissipation of the institution’s assets or earnings.
“(iii) D i v e s t i t u r e o f i n s t i t u t i o n .—Requiring any
company having control of the institution to divest
itself of the institution if the appropriate Federal bank­
ing agency for that company determines that divesti-

ture would improve the institution’s financial condition
and future prospects.
“(J) R e q u i r i n g o t h e r a c t i o n .—Requiring the institution
to take any other action that the agency determines will
better carry out the purpose of this section than any of the
actions described in this paragraph.
“ (3 ) P r e s u m p t i o n i n f a v o r o f c e r t a i n a c t i o n s . —In comply­
ing with paragraph (2), the agency shall take the following
actions, unless the agency determines that the actions would
not further the purpose of this section:
“(A) The action described in clause (i) or (iii) of paragraph
(2)(A) (relating to requiring the sale of shares or obligations,
or requiring the institution to be acquired by or combine
with another institution).
“ (B) The action described in paragraph (2)(B)(i) (relating
to restricting transactions with affiliates).
“ (C) The action described in paragraph (2)(C) (relating to
restricting interest rates).
“ (4 ) S e n i o r

e x e c u t i v e o f f i c e r s ’ c o m p e n s a t i o n r e s t r i c t e d .—

“(A) In g e n e r a l .—The insured depository institution
shall not do any of the following without the prior written
approval of the appropriate Federal banking agency:
“(i) Pay any bonus to any senior executive officer,
“(ii) Provide compensation to any senior executive
officer at a rate exceeding that officer’s average rate of
compensation (excluding bonuses, stock options, and
profit-sharing) during the 12 calendar months preced­
ing the calendar month in which the institution
became undercapitalized.
“ (B) F a i l i n g t o s u b m i t p l a n . —The appropriate Federal
banking agency shall not grant any approval under
subparagraph (A) with respect to an institution that has
failed to submit an acceptable capital restoration plan.
“ (5 )

D is c r e t io n

to

im p o s e

c e r t a in

a d d it io n a l

r e s t r ic ­

—The agency may impose 1 or more of the restrictions
prescribed by regulation under subsection (i) if the agency
determines that those restrictions are necessary to carry out the
purpose of this section.
“ (6 ) C o n s u l t a t i o n w i t h f u n c t i o n a l r e g u l a t o r s . —Before
the agency or Corporation makes a determination under para­
graph (2)(I) with respect to an affiliate that is a broker, dealer,
government securities broker, government securities dealer,
investment company, or investment adviser, the agency or Cor­
poration shall consult with the Securities and Exchange
Commisssion and, in the case of any other affiliate which is
subject to any financial responsibility or capital requirement,
any other functional regulator (as defined in section 2(s) of the
Bank Holding Company Act of 1 9 5 6 ) of such affiliate with
respect to the proposed determination of the agency or the
Corporation and actions pursuant to such determination.
t io n s .

“ (g ) M o r e S t r i n g e n t T r e a t m e n t B a s e d
C r i t e r i a .—
“(1) In g e n e r a l . —If the appropriate

on

O t h e r S u p e r v is o r y

Federal banking agency
determines (after notice and an opportunity for hearing) that an
insured depository institution is in an unsafe or unsound condi­
tion or, pursuant to section 8(b)(8), deems the institution to be
engaging in an unsafe or unsound practice, the agency may—

“ (A) if the institution is well capitalized, reclassify the
institution as adequately capitalized;
“(B) if the institution is adequately capitalized, require
the institution to comply with 1 or more provisions of
subsections (d) and (e), as if the institution were
undercapitalized; or
“ (C) if the institution is undercapitalized, take any 1 or
more actions authorized under subsection (f)(2) as if the
institution were significantly undercapitalized.
“ (2) C o n t e n t s o f p l a n .—Any plan required under paragraph
(1) shall specify the steps that the insured depository institution
will take to correct the unsafe or unsound condition or practice.
Capital restoration plans shall not be required under paragraph
(1KB).
“ (h ) P r o v i s i o n s A
I n s t i t u t i o n s .—
“ (1) A c t i v i t i e s

p p l ic a b l e

to

C r it ic a l l y

U

n d e r c a p it a l iz e d

_

—Any critically undercapitalized
insured depository institution shall comply with restrictions
prescribed by the Corporation under subsection (i).
r e s t r ic t e d .

“ ( 2) P a y m e n t s o n s u b o r d i n a t e d d e b t p r o h i b i t e d . —

“(A) I n g e n e r a l .—A critically undercapitalized insured
depository institution shall not, beginning 60 days after
becoming critically undercapitalized, make any payment of
principal or interest on the institution’s subordinated debt.
“ (B) E x c e p t i o n s .—The Corporation may make exceptions
to subparagraph (A) if—
“ (i) the appropriate Federal banking agency has
taken action with respect to the insured depository
institution under paragraph (3)(A)(ii); and
“ (ii) the Corporation determines that the exception
would further the purpose of this section.
“ (C )

L im it e d

e x e m p t io n

for

c e r t a in

s u b o r d in a t e d

—Until July 15, 1996, subparagraph ( A ) shall not
apply with respect to any subordinated debt outstanding on
July 15, 1991, and not extended or otherwise renegotiated
after July 15,1991.
“ (D) A c c r u a l o f i n t e r e s t . —Subparagraph ( A ) does not
prevent unpaid interest from accruing on subordinated debt
under the terms of that debt, to the extent otherwise
permitted by law.
debt.

“ (3) C o n s e r v a t o r s h i p ,

r e c e iv e r s h ip ,

or

other

a c t io n

re­

q u i r e d .—

“(A) I n g e n e r a l .—The appropriate Federal banking
agency shall, not later than 90 days after an insured deposi­
tory institution becomes critically undercapitalized—
“ (i) appoint a receiver (or, with the concurrence of
the Corporation, a conservator) for the institution; or
“ (ii) take such other action as the agency determines,
with the concurrence of the Corporation, would better
achieve the purpose of this section, after documenting
why the action would better achieve that purpose.
“ (B) P e r i o d i c r e d e t e r m i n a t i o n s r e q u i r e d .— Any deter- Termination
mination by an appropriate Federal banking agency under datesubparagraph (A)(ii) to take any action with respect to an
insured depository institution in lieu of appointing a con­
servator or receiver shall cease to be effective not later than
the end of the 90-day period beginning on the date that the

determination is made and a conservator or receiver shall
be appointed for that institution under subparagraph (A)(i)
unless the agency makes a new determination under
subparagraph (AXii) at the end of the effective period of the
prior determination.
“ (C) A p p o i n t m e n t o f r e c e i v e r r e q u i r e d i f o t h e r a c t i o n
FAILS TO RESTORE CAPITAL.—
“ (i) In g e n e r a l . —Notwithstanding

subparagraphs
(A) and (B), the appropriate Federal banking agency
shall appoint a receiver for the insured depository
institution
if
the
institution
is
critically
undercapitalized on average during the calendar quar­
ter beginning 270 days after the date on which the
institution became critically undercapitalized.
“(ii) E x c e p t i o n . —Notwithstanding clause (i), the
appropriate Federal banking agency may continue to
take such other action as the agency determines to be
appropriate in lieu of such appointment if—
“(I) the agency determines, with the concurrence
of the Corporation, that (aa) the insured depository
institution has positive net worth, (bb) the insured
depository institution has been in substantial
compliance with an approved capital restoration
plan which requires consistent improvement in the
institution’s capital since the date of the approval
of the plan, (cc) the insured depository institution
is profitable or has an upward trend in earnings
the agency projects as sustainable, and (dd) the
insured depository institution is reducing the ratio
of nonperforming loans to total loans; and
“(II) the head of the appropriate Federal banking
agency and the Chairperson of the Board of Direc­
tors both certify that the institution is viable and
not expected to fail.

Regulations.

“ (i) RESTRICTING ACTIVITIES OF CRITICALLY UNDERCAPITALIZED
I n s t i t u t i o n s . —To carry out the purpose of this section, the Corpora­
tion shall, by regulation or order—
“ (1) restrict the activities of any critically undercapitalized
insured depository institution; and
“ (2) at a minimum, prohibit any such institution from doing
any of the following without the Corporation’s prior written
approval:
“ (A) Entering into any material transaction other than in
the usual course of business, including any investment,
expansion, acquisition, sale of assets, or other similar action
with respect to which the depository institution is required
to provide notice to the appropriate Federal banking
agency.
“(B) Extending credit for any highly leveraged trans­
action.
“(C) Amending the institution’s charter or bylaws, except
to the extent necessary to carry out any other requirement
of any law, regulation, or order.
“(D) Making any material change in accounting methods.
“(E) Engaging in any covered transaction (as defined in
section 23A(b) of the Federal Reserve Act).
“ (F) Paying excessive compensation or bonuses.

“ (G) Paying interest on new or renewed liabilities at a
rate that would increase the institution’s weighted average
cost of funds to a level significantly exceeding the prevail­
ing rates of interest on insured deposits in the institution’s
normal market areas.
“ (j) C e r t a i n G o v e r n m e n t - C o n t r o l l e d I n s t i t u t i o n s E x e m p t e d . —

Subsections (e) through (i) (other than paragraph (3) of subsection
(e)) shall not apply—
“ (1) to an insured depository institution for which the Cor­
poration or the Resolution Trust Corporation is conservator; or
“ (2) to a bridge bank, none of the voting securities of which
are owned by a person or agency other than the Corporation or
the Resolution Trust Corporation.
M

“ (k ) R e v i e w R e q u i r e d W h e n D e p o s i t I n s u r a n c e F u n d I n c u r s
L o s s .—
“(1) In g e n e r a l . —If a deposit insurance fund incurs a mate­

a t e r ia l

rial loss with respect to an insured depository institution on or
after July 1, 1993, the inspector general of the appropriate
Federal banking agency shall—
“(A) make a written report to that agency reviewing the
agency’s supervision of the institution (including the agen­
cy’s implementation of this section), which shall—
“(i) ascertain why the institution’s problems resulted
in a material loss to the deposit insurance fund; and
“(ii) make recommendations for preventing any such
loss in the future; and
“(B) provide a copy of the report to—
“(i) the Comptroller General of the United States;
“(ii) the Corporation (if the agency is not the Corpora­
tion);
“ (iii) in the case of a State depository institution, the
appropriate State banking supervisor; and
“ (iv) upon request by any Member of Congress, to
that Member.
“ (2) M a t e r i a l l o s s i n c u r r e d . —For purposes of this subsec­
tion:
“(A) Loss i n c u r r e d . —A deposit insurance fund incurs a
loss with respect to an insured depository institution—
“(i) if the Corporation provides any assistance under
section 13(c) with respect to that institution; and—
“ (I) it is not substantially certain that the assist­
ance will be fully repaid not later than 24 months
after the date on which the Corporation initiated
the assistance; or
“(II) the institution ceases to repay the assist­
ance in accordance with its terms; or
“(ii) if the Corporation is appointed receiver of the
institution, and it is or becomes apparent that the
present value of the deposit insurance fund’s outlays
with respect to that institution will exceed the present
value of receivership dividends or other payments on
the claims held by the Corporation.
“(B) M a t e r i a l l o s s . —A loss is material if it exceeds the
greater of—
“(i) $25,000,000; or

Reports,

Effective date.
Termination
date.

“(ii) 2 percent of the institution’s total assets at the
time the Corporation initiated assistance under section
13(c) or was appointed receiver.
“(3) D e a d l i n e f o r r e p o r t . —The inspector general of the
appropriate Federal banking agency shall comply with para­
graph (1) expeditiously, and in any event (except with respect to
paragraph (l)(B)(iv)) as follows:
“(A) If the institution is described in paragraph (2)(A)(i),
during the 6-month period beginning on the earlier of—
“(i) the date on which the institution ceases to repay
assistance under section 13(c) in accordance with its
terms, or
“ (ii) the date on which it becomes apparent that the
assistance will not be fully repaid during the 24-month
period described in paragraph (2)(A)(i).
“ (B) If the institution is described in paragraph (2)(A)(ii),
during the 6-month period beginning on the date on which
it becomes apparent that the present value of the deposit
insurance fund’s outlays with respect to that institution
will exceed the present value of receivership dividends or
other payments on the claims held by the Corporation.
“(4) P u b l i c d i s c l o s u r e r e q u i r e d . —
“(A) I n g e n e r a l . —The appropriate Federal banking
agency shall disclose the report upon request under section
552 of title 5, United States Code, without excising—
“ (i) any portion under section 552(b)(5) of that title; or
“(ii) any information about the insured depository
institution under paragraph (4) (other than trade se­
crets) or paragraph (8) of section 552(b) of that title.
“(B) E x c e p t i o n . — Subparagraph (A) does not require the
agency to disclose the name of any customer of the insured
depository institution (other than an institution-affiliated
party), or information from which such a person’s identity
could reasonably be ascertained.
“(5) GAO r e v i e w . —The General Accounting Office shall an­
nually—
“ (A) review reports made under paragraph (1) and rec­
ommend improvements in the supervision of insured
depository institutions (including the implementation of
this section); and
“ (B) verify the accuracy of 1 or more of those reports.
“(6) T r a n s i t i o n r u l e . —During the period beginning on July
1, 1993, and ending on June 30, 1997, a loss incurred by the
Corporation with respect to an insured depository institution—
“(A) with respect to which the Corporation initiates
assistance under section 13(c) during the period in question,
or
“ (B) for which the Corporation was appointed receiver
during the period in question,
is material for purposes of this subsection only if that loss
exceeds the greater of $25,000,000 or the applicable percentage
of the institution’s total assets at that time, set forth in the
following table:
“ F or the
July
July
July
July

follow ing period:
1, 1993-June 30, 1994 ........................................................
1 , 1994-June 30, 1995........................................................
1, 1995-June 30, 1996........................................................
1, 1996-June 30, 1997........................................................

The applicable
percentage is:
7 percent
5 percent
4 percent
3 percent.

“ (1) I m p l e m e n t a t i o n .—
“ (1) R e g u l a t i o n s

a n d o t h e r a c t i o n s .—Each appropriate
Federal banking agency shall prescribe such regulations (in
consultation with the other Federal banking agencies), issue
such orders, and take such other actions as are necessary to
carry out this section.
“ (2) W r i t t e n d e t e r m i n a t i o n a n d c o n c u r r e n c e r e q u i r e d .—
Any determination or concurrence by an appropriate Federal
banking agency or the Corporation required under this section
shall be written.
“ (m) O t h e r A u t h o r i t y N o t A f f e c t e d .—This section does not
limit any authority of an appropriate Federal banking agency, the
Corporation, or a State to take action in addition to (but not in
derogation of) that required under this section.
“(n) A d m i n i s t r a t i v e R e v i e w o f D i s m i s s a l O r d e r s .—
“(1) T i m e l y p e t i t i o n r e q u i r e d . —A director or senior execu­
tive officer dismissed pursuant to an order under subsection
(f)(2)(F)(ii) may obtain review of that order by filing a written
petition for reinstatement with the appropriate Federal bank­
ing agency not later than 10 days after receiving notice of the
dismissal.
“ (2) P r o c e d u r e .—
“ (A) H e a r i n g r e q u i r e d .—The agency shall give the peti­
tioner an opportunity to—
“ (i) submit written materials in support of the peti­
tion; and
“ (ii) appear, personally or through counsel, before 1
or more members of the agency or designated employ­
ees of the agency.
“ (B) D e a d l i n e f o r h e a r i n g .— The agency shall—
“(i) schedule the hearing referred to in subparagraph
(A)(ii) promptly after the petition is filed; and
“(ii) hold the hearing not later than 30 days after the
petition is filed, unless the petitioner requests that the
hearing be held at a later time.
“(C) D e a d l i n e f o r d e c i s i o n .—Not later than 60 days
after the date of the hearing, the agency shall—
“(i) by order, grant or deny the petition;
“(ii) if the order is adverse to the petitioner, set forth
the basis for the order; and
“ (iii) notify the petitioner of the order.
“(3) S t a n d a r d f o r r e v i e w o f d i s m i s s a l o r d e r s .—The peti­
tioner shall bear the burden of proving that the petitioner’s
continued employment would materially strengthen the insured
depository institution’s ability—
“ (A) to become adequately capitalized, to the extent that
the order is based on the institution’s capital level or failure
to submit or implement a capital restoration plan; and
“ (B) to correct the unsafe or unsound condition or unsafe
or unsound practice, to the extent that the order is based on
subsection (g)(1).
“ (o) T r a n s i t i o n R u l e s f o r S a v i n g s A s s o c i a t i o n s .—

“ (1) R T C ’ s

r o l e d o e s n o t d i m i n i s h c a r e r e q u i r e d o f o t s .—

“ (A) In g e n e r a l .—In implementing this section, the
appropriate Federal banking agency (and, to the extent

Effective
date.
12 USC 1831o
note.

applicable, the Corporation) shall exercise the same care as
if the Savings Association Insurance Fund (rather than the
Resolution Trust Corporation) bore the cost of resolving the
problems of insured savings associations described in
clauses (i) and (ii)(II) of section 21A(b)(3)(A) of the Federal
Home Loan Bank Act.
“ (B) R e p o r t s . —Subparagraph (A) does not require reports
under subsection (k).
“ (2) A d d i t i o n a l f l e x i b i l i t y f o r c e r t a i n s a v i n g s a s s o c i a ­
t i o n s . —Subsections (e)(2), (f), and (h) shall not apply before July
1,1994, to any insured savings association if—
“(A) before the date of enactment of the Federal Deposit
Insurance Corporation Improvement Act of 1991—
“(i) the savings association had submitted a plan
meeting the requirements of section 5(t)(6)(A)(ii) of the
Home Owners’ Loan Act; and
“(ii) the Director of the Office of Thrift Supervision
had accepted the plan;
“(B) the plan remains in effect; and
“(C) the savings association remains in compliance with
the plan or is operating under a written agreement with the
appropriate Federal banking agency.” .
(b) D e a d l i n e f o r R e g u l a t i o n s . —Each appropriate Federal bank­
ing agency (as defined in section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1813)) (and the Corporation, acting in the Corpora­
tion’s capacity as insurer of depository institutions under that Act)
shall, after notice and opportunity for comment, promulgate final
regulations under section 38 of the Federal Deposit Insurance Act
(as added by subsection (a)) not later than 9 months after the date of
enactment of this Act, and those regulations shall become effective
not later than 1 year after that date of enactment.
(c) O t h e r A m e n d m e n t s t o t h e F e d e r a l D e p o s i t I n s u r a n c e
A c t .—
(1) E n f o r c e m e n t a c t i o n b a s e d o n u n s a t i s f a c t o r y a s s e t
QUALITY, MANAGEMENT, EARNINGS, OR LIQUIDITY.—Section 8 (b ) of

the Federal Deposit Insurance Act (12 U.S.C. 1818(b)) is amend­
ed by redesignating paragraph (8) as paragraph (9) and inserting
after paragraph (7) the following:
“ (8) U n s a t i s f a c t o r y a s s e t q u a l i t y , m a n a g e m e n t , e a r n i n g s ,
o r l i q u i d i t y a s u n s a f e o r u n s o u n d p r a c t i c e . —If an insured

depository institution receives, in its most recent report of
examination, a less-than-satisfactory rating for asset quality,
management, earnings, or liquidity, the appropriate Federal
banking agency may (if the deficiency is not corrected) deem the
institution to be engaging in an unsafe or unsound practice for
purposes of this subsection.” .
(2) C o n f o r m i n g a m e n d m e n t s r e l a t i n g t o f e d e r a l b a n k i n g
a g e n c i e s ’ e n f o r c e m e n t a u t h o r i t y . —Section 8(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(i)) is amended—
(A) in the first sentence of paragraph (1), by inserting “ or
under section 38” after “ section” ; and
(B) in paragraph (2)(A)(ii), by inserting “ , or fined order
under section 38” after “section” .
(3) D e f i n i t i o n . —Section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813) is amended by adding at the end the
following:

“(y) The term ‘deposit insurance fund’ means the Bank Insurance
Fund or the Savings Association Insurance Fund, as appropriate.” .
(d ) C o n f o r m i n g A m e n d m e n t t o S e c t i o n 5(t)(7) o f t h e H o m e
O w n e r s ’ L o a n A c t .— S e c t i o n 5(t)(7) o f t h e H o m e O w n e r s ’ L o a n A c t
(12 U .S .C . 1464(t)(7)) is a m e n d e d —
(1) in subsection (A), by inserting “ under this Act” before the
period; and
(2) in subsection (B), by inserting “ under this Act” after
“imposed by the Director” .
12 USC 1831o
note.

(e ) T r a n s i t i o n R u l e R e g a r d i n g C u r r e n t D i r e c t o r s a n d S e n i o r
E x e c u t i v e O f f i c e r s .—
(1) D i s m i s s a l f r o m o f f i c e .—Section 38(f)(2)(F)(ii) of the Fed­

eral Deposit Insurance Act (as added by subsection (a)) shall not
apply with respect to—
(A) any director whose current term as a director com­
menced on or before the date of enactment of this Act and
has not been extended—
(i) after that date of enactment, or
(ii) to evade section 38(fX2)(F)(ii); or
(B) any senior executive officer who accepted employment
in his or her current position on or before the date of
enactment of this Act and whose contract of employment
has not been renewed or renegotiated—
(i) after that date of enactment, or
(ii) to evade section 38(f)(2)(F)(ii).
(2) R e s t r i c t i n g c o m p e n s a t i o n .—Section 38(f)(4) of the Fed­
eral Deposit Insurance Act (as added by subsection (a)) shall not
apply with respect to any senior executive officer who accepted
employment in his or her current position on or before the date
of enactment of this Act and whose contract of employment has
not been renewed or renegotiated—
(A) after that date of enactment, or
(B) to evade section 38(f)(4).
(f) E f f e c t i v e D a t e .—The amendments made by this section shall
become effective 1 year after the date of enactment of this Act.

12 USC 1464
note.

SEC. 132. STANDARDS FO R SAFETY AND SOUNDNESS.

(a) I n G e n e r a l .—The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by adding after section 38 (as added by
section 131 of this Act) the following new section:
“ SEC. 39. STANDARDS FO R SAFETY AND SOUNDNESS.

“ (a) O p e r a t i o n a l a n d M a n a g e r i a l S t a n d a r d s .—Each appro­
priate Federal banking agency shall, for all insured depository
institutions and depository institution holding companies, pre­
scribe—
“ (1) standards relating to—
“ (A) internal controls, information systems, and internal
audit systems, in accordance with section 36;
“ (B) loan documentation;
“ (C) credit underwriting;
“(D) interest rate exposure;
“(E) asset growth; and
“ (F) compensation, fees, and benefits, in accordance with
subsection (c); and
“ (2) such other operational and managerial standards as the
agency determines to be appropriate.

12 USC 1831s.

“ (b) A s s e t Q u a l i t y , E a r n i n g s , a n d S t o c k V a l u a t i o n S t a n d ­
—Each appropriate Federal banking agency shall, for all in­
sured depository institutions and depository institution holding
companies, prescribe—
“ (1) standards specifying—
“ (A) a maximum ratio of classified assets to capital;
“ (B) minimum earnings sufficient to absorb losses with­
out impairing capital; and
“ (C) to the extent feasible, a minimum ratio of market
value to book value for publicly traded shares of the institu­
tion or company; and
“ (2) such other standards relating to asset quality, earnings,
and valuation as the agency determines to be appropriate.
“(c) C o m p e n s a t i o n S t a n d a r d s .— Each appropriate Federal bank­
ing agency shall, for all insured depository institutions, prescribe—
“(1) standards prohibiting as an unsafe and unsound practice
any employment contract, compensation or benefit agreement,
fee arrangement, perquisite, stock option plan, postemployment
benefit, or other compensatory arrangement that—
“ (A) would provide any executive officer, employee, direc­
tor, or principal shareholder of the institution with exces­
sive compensation, fees or benefits; or
“ (B) could lead to material financial loss to the institu­
tion;
“ (2) standards specifying when compensation, fees, or benefits
referred to in paragraph (1) are excessive, which shall require
the agency to determine whether the amounts are unreasonable
or disproportionate to the services actually performed by the
individual by considering—
“ (A) the combined value of all cash and noncash benefits
provided to the individual;
“(B) the compensation history of the individual and other
individuals with comparable expertise at the institution;
“(C) the financial condition of the institution;
“(D) comparable compensation practices at comparable
institutions, based upon such factors as asset size, geo­
graphic location, and the complexity of the loan portfolio or
other assets;
“ (E) for postemployment benefits, the projected total cost
and benefit to the institution;
“ (F) any connection between the individual and any
fraudulent act or omission, breach of trust or fiduciary
duty, or insider abuse with regard to the institution; and
“ (G) other factors that the agency determines to be rel­
evant; and
“(3) such other standards relating to compensation, fees, and
benefits as the agency determines to be appropriate.
“(d) S t a n d a r d s To B e P r e s c r i b e d b y R e g u l a t i o n . —Standards
under subsections (a), (b), and (c) shall be prescribed by regulation.
“(e) F a i l u r e To M e e t S t a n d a r d s . —
ards.

“ (1 ) P l a n r e q u i r e d .—
“ ( A ) I n g e n e r a l .—If

the appropriate Federal banking
agency determines that an insured depository institution or
depository institution holding company fails to meet any
standard prescribed under subsection (a), (b), or (c) the
agency shall require the institution or company to submit

an acceptable plan to the agency within the time allowed by
the agency under subparagraph (C).
“ (B) C o n t e n t s o f p l a n .—Any plan required under
subparagraph (A) shall specify the steps that the institution
or company will take to correct the deficiency. If the
institution is undercapitalized, the plan may be part of a
capital restoration plan.
“ (C ) D e a d l i n e s

f o r s u b m is s io n a n d r e v ie w

o f p l a n s .—

The appropriate Federal banking agency shall by regula­
tion establish deadlines that—
“ (i) provide institutions and companies with reason­
able time to submit plans required under subparagraph’
(A), and generally require the institution or company to
submit a plan not later than 30 days after the agency
determines that the institution or company fails to
meet any standard prescribed under subsection (a), (b),
or (c); and
“(ii) require the agency to act on plans expeditiously,
and generally not later than 30 days after the plan is
submitted.
“ (2 ) O r d e r

r e q u ir e d

if

in s t it u t io n

.—If

or

com pan y

f a il s

to

an insured depository institu­
tion or depository institution holding company fails to submit
an acceptable plan within the time allowed under paragraph
(1)(C), or fails in any material respect to implement a plan
accepted by the appropriate Federal banking agency, the
agency, by order—
“ (A) shall require the institution or company to correct
the deficiency; and
“ (B) may do 1 or more of the following until the defi­
ciency has been corrected:
“(i) Prohibit the institution or company from per­
mitting its average total assets during any calendar
quarter to exceed its average total assets during the
preceding calendar quarter, or restrict the rate at
which the average total assets of the institution or
company may increase from one calendar quarter to
another.
“(ii) Require the institution or company to increase
its ratio of tangible equity to assets.
“(iii) Take the action described in section 38(f)(2)(C).
“ (iv) Require the institution or company to take any
other action that the agency determines will better
carry out the purpose of section 38 than any of the
actions described in this subparagraph.
“ (3) R e s t r i c t i o n s m a n d a t o r y f o r c e r t a i n i n s t i t u t i o n s .—In
complying with paragraph (2), the appropriate Federal banking
agency shall take 1 or more of the actions described in clauses (i)
through (iii) of paragraph (2)(B) if—
“ (A) the agency determines that the insured depository
institution fails to meet any standard prescribed under
subsection (a)(1) or (b)(1);
“(B) the institution has not corrected the deficiency; and
“(C) either—
“(i) during the 24-month period before the date on
which the institution first failed to meet the standard—
“(I) the institution commenced operations; or
s u b m it o r im p l e m e n t p l a n

Regulations.

12 USC 1831s
note.

12 USC 1831s
note.

“(II) 1 or more persons acquired control of the
institution; or
“(ii) during the 18-month period before the date on
which the institution first failed to meet the standard,
the institution underwent extraordinary growth, as de­
fined by the agency.
“ (f) D e f i n i t i o n s .—For purposes of this section, the terms 'average’
and ‘capital restoration plan’ have the same meanings as in section
38.
“(g) O t h e r A u t h o r i t y N o t A f f e c t e d .—The authority granted by
this section is in addition to any other authority of the Federal
banking agencies.” .
(b) R e g u l a t i o n s R e q u i r e d .—Each appropriate Federal banking
agency (as defined in section 3 of the Federal Deposit Insurance Act)
shall promulgate final regulations under section 39 of the Federal
Deposit Insurance Act (as added by subsection (a)) not later than
August 1,1993.
(c) E f f e c t i v e D a t e .—The amendment made by subsection (a) shall
become effective on the earlier of—
(1) the date on which final regulations promulgated in accord­
ance with subsection (b) become effective; or
(2) December 1,1993.
SEC. 133. CONSERVATORSHIP AND RECEIVERSH IP AMENDMENTS
FACILITATE PROM PT REGULATORY ACTION.

TO

(a)

A d d it io n a l G r o u n d s f o r A p p o in t in g C o n s e r v a t o r o r R e­
C o n s is t e n t S t a n d a r d s f o r N a t io n a l , S t a t e M e m b e r , a n d
S t a t e N o n m e m b e r B a n k s .—Section 11(c)(5) of the Federal Deposit
Insurance Act (12 U .S .C . 1821(c)(5)) is amended to read as follows:
“ (5 ) G r o u n d s f o r a p p o i n t i n g c o n s e r v a t o r o r r e c e i v e r .—

c e iv e r ;

The grounds for appointing a conservator or receiver (which
may be the Corporation) for any insured depository institution
are as follows:
“ ( A ) A s s e t s i n s u f f i c i e n t f o r o b l i g a t i o n s .—The institu­
tion’s assets are less than the institution’s obligations to its
creditors and others, including members of the institution.
“ (B ) S u b s t a n t i a l d i s s i p a t i o n .—Substantial dissipation of
assets or earnings due to—
“(i) any violation of any statute or regulation; or
“(ii) any unsafe or unsound practice.
“ (C ) U n s a f e o r u n s o u n d c o n d i t i o n .—An unsafe or un­
sound condition to transact business.
“ (D) C e a s e a n d d e s is t o r d e r s .—Any willful violation of a
cease-and-desist order which has become final.
“(E) C o n c e a l m e n t .—Any concealment of the institu­
tion’s books, papers, records, or assets, or any refusal to
submit the institution’s books, papers, records, or affairs for
inspection to any examiner or to any lawful agent of the
appropriate Federal banking agency or State bank or sav­
ings association supervisor.
“(F) I n a b i l i t y t o m e e t o b l i g a t i o n s .—The institution is
likely to be unable to pay its obligations or meet its deposi­
tors’ demands in the normal course of business.
“ (G ) L o s s e s .—The institution has incurred or is likely to
incur losses that will deplete all or substantially all of its
capital, and there is no reasonable prospect for the institu­

tion to become adequately capitalized (as defined in section
38(b)) without Federal assistance.
“(H) V i o l a t i o n s o f l a w .—Any violation of any law or
regulation, or any unsafe or unsound practice or condition
that is likely to—
“ (i) cause insolvency or substantial dissipation of
assets or earnings;
“(ii) weaken the institution’s condition; or
“(iii) otherwise seriously prejudice the interests of
the institution’s depositors or the deposit insurance
fund.
“(I) C o n s e n t .—The institution, by resolution of its board
of directors or its shareholders or members, consents to the
appointment.
“ (J) C e s s a t i o n o f i n s u r e d s t a t u s .—The institution
ceases to be an insured institution.
“ (K)
U n d e r c a p i t a l i z a t i o n .— 1The
institution
is
undercapitalized (as defined in section 38(b)), and—
“(i) has no reasonable prospect of becoming ade­
quately capitalized (as defined in that section);
“(ii) fails to become adequately capitalized when re­
quired to do so under section 38(f)(2)(A);
“ (iii) fails to submit a capital restoration plan accept­
able to that agency within the time prescribed under
section 38(e)(2)(D); or
“ (iv) materially fails to implement a capital restora­
tion plan submitted and accepted under section 38(e)(2).
“ (L) The institution—
“(i) is critically undercapitalized, as defined in sec­
tion 38(b); or
“(ii) otherwise has substantially insufficient capital.” .
(b) C o n f o r m i n g A m e n d m e n t t o A u t h o r i t y To A p p o i n t R e c e i v e r
f o r N a t i o n a l B a n k . —Section 1 o f the Act o f June 3 0 , 1 8 7 6 (1 2
U.S.C. 1 9 1 ) is amended to read as follows:
“ S e c t i o n 1. The Comptroller of the Currency may, without prior
notice or hearings, appoint the Federal Deposit Insurance Corpora­
tion as receiver for any national banking association if the
Comptroller determines, in the Comptroller’s discretion, that—
“ (1) 1 or more of the grounds specified in section 11(c)(5) of the
Federal Deposit Insurance Act exist; or
“ (2) the association’s board of directors consists of fewer than
5 members.” .
(c) C o n f o r m i n g A m e n d m e n t t o t h e B a n k C o n s e r v a t i o n A c t .—
Section 203(a) of the Bank Conservation Act (12 U.S.C. 203(a)) is
amended to read as follows:
“(a) A p p o i n t m e n t .—The Comptroller of the Currency may, with­
out prior notice or hearings, appoint a conservator (which may be
the Federal Deposit Insurance Corporation) to the possession and
control of a bank whenever the Comptroller of the Currency deter­
mines that 1 or more of the grounds specified in section 11(c)(5) of
the Federal Deposit Insurance Act exist.” .
(d) C o n f o r m i n g A m e n d m e n t s t o t h e H o m e O w n e r s ’ L o a n
A c t .—S e c t i o n 5(d)(2) o f t h e H o m e O w n e r s ’ L o a n A c t (12 U.S.C.
1464(d)(2)) is a m e n d e d —
(1) by striking subparagraphs (A) through (D) and inserting
the following:

“(A)

G rounds

f o r a p p o in t in g c o n s e r v a t o r o r r e c e iv e r

a s s o c i a t i o n .—The Director of the
Office of Thrift Supervision may appoint a conservator or
receiver for any insured savings association if the Director
determines, in the Director’s discretion, that 1 or more of
the grounds specified in section 11(c)(5) of the Federal De­
posit Insurance Act exists” ; and
(2) by redesignating subparagraphs (E) through (I) as subpara­
graphs (B) through (F), respectively.
(e) A d d i t i o n a l P r o v i s i o n s R e l a t i n g t o A p p o i n t m e n t o f C o n ­
s e r v a t o r o r R e c e i v e r .—Section 11(c)(9) of the Federal Deposit
Insurance Act (12 U .S .C . 1821(c)(9)) is amended to read as follows:
“(9) A p p r o p r i a t e f e d e r a l b a n k i n g a g e n c y m a y a p p o i n t c o r ­
for

p o r a t io n

in s u r e d

as

s a v in g s

conservator

or

r e c e iv e r

for

d e p o s it o r y in s t it u t io n t o c a r r y o u t s e c t io n

in s u r e d

state

3 8 .—

“ ( A ) In g e n e r a l . —The appropriate Federal hanking
agency may appoint the Corporation as sole receiver (or,
subject to paragraph (11), sole conservator) of any insured
State depository institution, after consultation with the
appropriate State supervisor, if the appropriate Federal
banking agency determines that—
“(i) 1 or more of the grounds specified in subpara­
graphs (K) and (L) of paragraph (5) exist with respect to
that institution; and
“(ii) the appointment is necessary to carry out the
purpose of section 38.
“(B) N o n d e l e g a t i o n . —The appropriate Federal banking
agency shall not delegate any action under subpara­
graph (A).
“ (10) C o r p o r a t i o n m a y a p p o i n t i t s e l f a s c o n s e r v a t o r o r
r e c e iv e r f o r in s u r e d d e p o s it o r y in s t it u t io n t o p r e v e n t lo ss

—The Board of Directors may ap­
point the Corporation as sole conservator or receiver of an
insured depository institution, after consultation with the
appropriate Federal banking agency and the appropriate State
supervisor (if any), if the Board of Directors determines that—
“ (A) 1 or more of the grounds specified in any subpara­
graph of paragraph (5) exist with respect to the institution;
and
“(B) the appointment is necessary to reduce—
“(i) the risk that the deposit insurance fund would
incur a loss with respect to the insured depository
institution, or
“(ii) any loss that the deposit insurance fund is ex­
pected to incur with respect to that institution.
t o d e p o s it i n s u r a n c e f u n d .

“ (1 1 ) A

p p r o p r ia t e

f e d e r a l b a n k in g

a g e n c y sh all

not ap­

p o in t c o n s e r v a t o r u n d e r c e r t a in p r o v is io n s w it h o u t g i v in g
c o r p o r a t i o n o p p o r t u n i t y t o a p p o i n t r e c e i v e r .—The appro­
priate Federal banking agency shall not appoint a conservator
for an insured depository institution under subparagraph (K) or
(L) of paragraph (5) without the Corporation’s consent unless
the agency has given the Corporation 48 hours notice of the
agency’s intention to appoint the conservator and the grounds
for the appointment.
“ (12) D i r e c t o r s n o t l i a b l e f o r a c q u i e s c i n g i n a p p o i n t m e n t
o f c o n s e r v a t o r o r r e c e i v e r .—The members of the board of
directors of an insured depository institution shall not be liable

to the institution’s shareholders or creditors for acquiescing in
or consenting in good faith to—
“ (A) the appointment of the Corporation or the Resolu­
tion Trust Corporation as conservator or receiver for that
institution; or
“ (B) an acquisition or combination under section
38(f)(2)(A)(iii).
“(13) A d d i t i o n a l p o w e r s .—In any case in which the Corpora­
tion is appointed conservator or receiver under paragraph (4),
(6), (9), or (10) for any insured State depository institution—
“ (A) subject to subparagraph (B), this section shall apply
to the Corporation as conservator or receiver in the same
manner and to the same extent as if that institution were a
Federal depository institution for which the Corporation
had been appointed conservator or receiver;
“ (B) the Corporation shall apply the law of the State in
which the institution is chartered insofar as that law gives
the claims of depositors priority over those of other credi­
tors or claimants; and
“(C) the Corporation as receiver of the institution may—
“(i) liquidate the institution in an orderly manner;
and
“ (ii) make any other disposition of any matter
concerning the institution, as the Corporation deter­
mines is in the best interests of the institution, the
depositors of the institution, and the Corporation.” .
(f) C o n f o r m i n g

A m endm ent

to

th e

F e d e ra l R eserve

A c t .—

Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by
adding at the end the following new subsection:
“(p) A u t h o r i t y T o A p p o i n t C o n s e r v a t o r o r R e c e i v e r . —The
Board may appoint the Federal Deposit Insurance Corporation as
conservator or receiver for a State member bank under section
11(c)(9) of the Federal Deposit Insurance Act.” .
(g) E f f e c t i v e D a t e . —The amendments made by this section shall
become effective 1 year after the date of enactment of this Act.

12 USC 191
note.

Subtitle E—Least-Cost Resolution
SEC. 141. LEAST-COST RESOLUTION.

(a) L e a s t - C o s t R e s o l u t i o n s R e q u i r e d . —
(1) I n g e n e r a l . —Section 13(c) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1823(c)) is amended—
(A) by redesignating paragraphs (5), (6), (7), (8), and (9), as
paragraphs (6), (7), (8), (9), and (10), respectively;
(B) by redesignating subparagraph (B) of paragraph (4) as
paragraph (5); and
(C) by amending paragraph (4) (as amended by subpara­
graph (B) of this paragraph) to read as follows:
“ (4) L e a s t - c o s t r e s o l u t i o n r e q u i r e d . —
“ (A) I n g e n e r a l . —Notwithstanding any other provision
of this Act, the Corporation may not exercise any authority
under this subsection or subsection (d), (f), (h), (i), or (k) with
respect to any insured depository institution unless—
“(i) the Corporation determines that the exercise of
such authority is necessary to meet the obligation of

the Corporation to provide insurance coverage for the
insured deposits in such institution; and
“ (ii) the total amount of the expenditures by the
Corporation and obligations incurred by the Corpora­
tion (including any immediate and long-term obligation
of the Corporation and any direct or contingent liabil­
ity for future payment by the Corporation) in connec­
tion with the exercise of any such authority with
respect to such institution is the least costly to the
deposit insurance fund of all possible methods for meet­
ing the Corporation’s obligation under this section.
“ (B) D e t e r m i n i n g l e a s t c o s t l y a p p r o a c h . —In determin­
ing how to satisfy the Corporation’s obligations to an
institution’s insured depositors at the least possible cost to
the deposit insurance fund, the Corporation shall comply
with the following provisions:
“(i) P r e s e n t - v a l u e
a n a ly s is ;
d o c u m e n ta tio n
r e q u i r e d . —The Corporation shall—
“(I) evaluate alternatives on a present-value
basis, using a realistic discount rate;
“(II) document that evaluation and the assump­
tions on which the evaluation is based, including
any assumptions with regard to interest rates,
asset recovery rates, asset holding costs, and pay­
ment of contingent liabilities; and
“(III) retain the documentation for not less than
5 years.
“(ii) F o r e g o n e t a x r e v e n u e s . —Federal tax revenues
that the Government would forego as the result of a
proposed transaction, to the extent reasonably as­
certainable, shall be treated as if they were revenues
foregone by the deposit insurance fund.
“ (C) T im e o f d e t e r m i n a t i o n . —
“ (i) G e n e r a l r u l e . —For purposes of this subsection,
the determination of the costs of providing any assist­
ance under paragraph (1) or (2) or any other provision
of this section with respect to any depository institution
shall be made as of the date on which the Corporation
makes the determination to provide such assistance to
the institution under this section.
“(ii) R u l e f o r l i q u i d a t i o n s . — For purposes of this
subsection, the determination of the costs of liquidation
of any depository institution shall be made as of the
earliest of—
“(I) the date on which a conservator is appointed
for such institution;
“(II) the date on which a receiver is appointed for
such institution; or
“ (III) the date on which the Corporation makes
any determination to provide any assistance under
this section with respect to such institution.
“ (D) L i q u i d a t i o n c o s t s . —In determining the cost of liq­
uidating any depository institution for the purpose of
comparing the costs under subparagraph (A) (with respect
to such institution), the amount of such cost may not exceed
the amount which is equal to the sum of the insured
deposits of such institution as of the earliest of the dates

described in subparagraph (C), minus the present value of
the total net amount the Corporation reasonably expects to
receive from the disposition of the assets of such institution
in connection with such liquidation.
“ (E) D e p o s i t i n s u r a n c e f u n d s a v a i l a b l e f o r i n t e n d e d
p u r p o s e o n l y .—

“(i) In g e n e r a l .—After December 31, 1994, or at
such earlier time as the Corporation determines to be
appropriate, the Corporation may not take any action,
directly or indirectly, with respect to any insured
depository institution that would have the effect of
increasing losses to any insurance fund by protecting—
“(I) depositors for more than the insured portion
of deposits (determined without regard to whether
such institution is liquidated); or
“ (II) creditors other than depositors.
“(ii) D e a d l i n e f o r r e g u l a t i o n s .—The Corporation
shall prescribe regulations to implement clause (i) not
later than January 1, 1994, and the regulations shall
take effect not later than January 1,1995.
“(iii) P u r c h a s e a n d a s s u m p t i o n t r a n s a c t i o n s .—No
provision of this subparagraph shall be construed as
prohibiting the Corporation from allowing any person
who acquires any assets or assumes any liabilities of
any insured depository institution for which the Cor­
poration has been appointed conservator or receiver to
acquire uninsured deposit liabilities of such institution
so long as the insurance fund does not incur any loss
with respect to such deposit liabilities in an amount
greater than the loss which would have been incurred
with respect to such liabilities if the institution had
been liquidated.
“ (F) D i s c r e t i o n a r y d e t e r m i n a t i o n s .—Any determina­
tion which the Corporation may make under this
paragraph shall be made in the sole discretion of the Cor­
poration.
“ (G) S y s t e m i c r i s k .—
“(i) E m e r g e n c y d e t e r m i n a t i o n b y s e c r e t a r y o f t h e
t r e a s u r y . —Notwithstanding subparagraphs (A) and
(E ), if, upon the written recommendation of the Board
of Directors (upon a vote of not less than two-thirds of
the members of the Board of Directors) and the Board
of Governors of the Federal Reserve System (upon a
vote of not less than two-thirds of the members of such
Board), the Secretary of the Treasury (in consultation
with the President) determines that—
“(I) the Corporation’s compliance with subpara­
graphs (A) and (E) with respect to an insured
depository institution would have serious adverse
effects on economic conditions or financial stabil­
ity; and
“ (II) any action or assistance under this subpara­
graph would avoid or mitigate such adverse effects,
the Corporation may take other action or provide
assistance under this section as necessary to avoid or
mitigate such effects.

Effective

te'

Reports.

“(ii) R e p a y m e n t o f l o s s . —The Corporation shall re­
cover the loss to the appropriate insurance fund arising
from any action taken or assistance provided with
respect to an insured depository institution under
clause (i) expeditiously from 1 or more emergency spe­
cial assessments on the members of the insurance fund
(of which such institution is a member) equal to the
product of—
“ (I) an assessment rate established by the Cor­
poration; and
“(II) the amount of each member’s average total
assets during the semiannual period, minus the
sum of the amount of the member’s average total
tangible equity and the amount of the member’s
average total subordinated debt.
“(iii) D o c u m e n t a t i o n r e q u i r e d . —The Secretary of
the Treasury shall—
“(I) document any determination under clause
(i); and
“ (II) retain the documentation for review under
clause (iv).
“(iv) GAO r e v i e w . —The Comptroller General of the
United States shall review and report to the Congress
on any determination under clause (i), including—
“ (I) the basis for the determination;
“ (II) the purpose for which any action was taken
pursuant to such clause; and
“(III) the likely effect of the determination and
such action on the incentives and conduct of in­
sured depository institutions and uninsured deposi­
tors.
“ (v) N o t i c e . —
“ (I) I n g e n e r a l . —The Secretary of the Treasury
shall provide written notice of any determination
under clause (i) to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Banking, Finance and Urban Affairs
of the House of Representatives.
“ (II) D e s c r i p t i o n o f b a s is o f d e t e r m i n a t i o n . —

12 USC 1823
note.

The notice under subclause (I) shall include a
description of the basis for any determination
under clause (i).
“ (H) R u l e o f c o n s t r u c t i o n . —No provision of law
shall be construed as permitting the Corporation to
take any action prohibited by paragraph (4) unless such
provision expressly provides, by direct reference to this
paragraph, that this paragraph shall not apply with
respect to such action.” .
(2) A n n u a l g a o c o m p l i a n c e a u d i t . —The Comptroller Gen­
eral of the United States shall annually audit the Federal
Deposit Insurance Corporation and the Resolution Trust Cor­
poration to determine the extent to which such corporations are
complying with section 13(c)(4) of the Federal Deposit Insurance
Act.
(3) C l a r i f i c a t i o n o f m a n n e r o f a p p l i c a t i o n t o t h e r t c . —
Section 21A(b)(4) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(b)(4)) is amended—

(A) by striking “ P o w e r s . —Except
“ P o w e r s .—
“ (A) I n g e n e r a l . —Except as” ; and

as” and inserting

(B) by adding at the end the following new subparagraph:
“ (B) M a n n e r o f a p p l i c a t i o n o f l e a s t - c o s t r e s o l u ­
t i o n . —For purposes of applying section 13(c)(4) of the Fed­
eral Deposit Insurance Act to the Corporation under
subparagraph (A), the Corporation shall be treated as the
affected deposit insurance fund.” .
(b) S e c u r e d C l a i m s i n E x c e s s o f V a l u e o f C o l l a t e r a l . —Section
11(d)(5)(D) of the Federal Deposit Insurance Act (12 U.S.C.
1821(d)(5)(D)) is amended to read as follows:
“ (D ) A

u t h o r i t y t o d i s a l l o w c l a i m s .—

“ (i) In g e n e r a l . —The receiver may disallow any
portion of any claim by a creditor or claim of security,
preference, or priority which is not proved to the satis­
faction of the receiver.
“(ii) P a y m e n t s t o l e s s t h a n f u l l y s e c u r e d c r e d i ­
t o r s . —In the case of a claim of a creditor against an
insured depository institution which is secured by any
property or other asset of such institution, any receiver
appointed for any insured depository institution—
“ (I) may treat the portion of such claim which
exceeds an amount equal to the fair market value
of such property or other asset as an unsecured
claim against the institution; and
“(II) may not make any payment with respect to
such unsecured portion of the claim other than in
connection with the disposition of all claims of
unsecured creditors of the institution.
“(iii) E x c e p t i o n s . —No provision of this paragraph
shall apply with respect to—
“(I) any extension of credit from any Federal
home loan bank or Federal Reserve bank to any
institution described in paragraph (3)(A); or
“ (II) any security interest in the assets of the
institution securing any such extension of credit.” .
(c) D a t a C o l l e c t i o n s . —Section 7(a)(8) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(a)(8)) is amended to read as follows:
“ (8) D a t a c o l l e c t i o n s . —In addition to or in connection with
any other report required under this subsection, the Corpora­
tion shall take such action as may be necessary to ensure that—
“(A) each insured depository institution maintains; and
“(B) the Corporation receives on a regular basis from
such institution,
information on the total amount of all insured deposits, pre­
ferred deposits, and uninsured deposits at the institution.” .
(d) I n d u s t r y I m p a c t A n a l y s i s R e q u i r e d . —
(1) In g e n e r a l . —Section 11(h) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1821(h)) is amended by adding at the end the
following new paragraph:
“ (4) F i n a n c i a l s e r v i c e s i n d u s t r y i m p a c t a n a l y s i s . —After
the appointment of the Corporation as conservator or receiver
for any insured depository institution and before taking any
action under this section or section 13 in connection with the
resolution of such institution, the Corporation shall—

“(A) evaluate the likely impact of the means of resolu­
tion, and any action which the Corporation may take in
connection with such resolution, on the viability of other
insured depository institutions in the same community; and
“(B) take such evaluation into account in determining the
means for resolving the institution and establishing the
terms and conditions for any such action.” .
(2) C l e r i c a l a m e n d m e n t . —'Hie heading for section 11(h) of
the Federal Deposit Insurance Act (12 U.S.C. 1821(h)) is
amended by striking “ L i q u i d a t i o n ” and inserting “ R e s o l u ­
tio n ” .
A s s is ta n c e
c e i v e r . —Section
U .S .C . 1823(c)) is

(e)

B e fo re

A p p o in tm e n t

of

C o n se rv a to r

or

R e­

13(c) of the Federal Deposit Insurance Act (12
amended by redesignating paragraphs (8), (9), and
(10) (as so redesignated by subsection (a)(1)(A) of this section), as
paragraphs (9), (10), and (11), respectively, and by inserting after
paragraph (7) the following new paragraph:
“ (8 ) A

s s is t a n c e b e f o r e a p p o in t m e n t o f c o n s e r v a t o r o r r e ­

c e i v e r .—

Federal

Resj?tef.>
publication.

“(A) In g e n e r a l . —Subject to the least-cost provisions of
paragraph (4), the Corporation shall consider providing
direct financial assistance under this section for depository
institutions before the appointment of a conservator or
receiver for such institution only under the following cir­
cumstances:
“ (i) T r o u b l e d c o n d i t i o n c r i t e r i a . —The Corporation
determines—
“(I) grounds for the appointment of a conservator
or receiver exist or likely will exist in the future
unless the depository institution’s capital levels
are increased; and
“ (II) it is unlikely that the institution can meet
all currently applicable capital standards without
assistance.
“(ii) O t h e r c r i t e r i a . —The depository institution
meets the following criteria:
“(I) The appropriate Federal banking agency and
the Corporation have determined that, during such
period of time preceding the date of such deter­
mination as the agency or the Corporation consid­
ers to be relevant, the institution’s management
has been competent and has complied with ap­
plicable laws, rules, and supervisory directives and
orders.
“ (II) The institution’s management did not
engage in any insider dealing, speculative practice,
or other abusive activity.
“(B) P u b l i c d i s c l o s u r e . —Any determination under this
paragraph to provide assistance under this section shall be
made in writing and published in the Federal Register.” .
(f) D e f i n i t i o n s . —Section 3(m) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(m)) is amended by adding at the end the follow­
ing new paragraphs:
“(3) U n i n s u r e d d e p o s i t s . —The term ‘uninsured deposit’
means the amount of any deposit of any depositor at any
insured depository institution in excess of the amount of the

insured deposits of such depositor (if any) at such depository
institution.
“ (4) P r e f e r r e d d e p o s i t s .—The term ‘preferred deposits’
means deposits of any public unit (as defined in paragraph (1))
at any insured depository institution which are secured or
collateralized as required under State law.” .
SEC. 142. FEDERAL RESERVE DISCOUNT WINDOW ADVANCES.
(a ) R e d e s i g n a t i n g S e c t i o n s 10(a) a n d
A c t .— T h e F e d e r a l R e s e r v e A c t
am ended—
serve

10(b) o f t h e F e d e r a l R e ­
(12 U.S.C. 221 e t s e q .) is

(1) by redesignating section 10(a) (12 U.S.C. 347a) as section
10A; and
(2) by redesignating section 10(b) (12 U.S.C. 347b) as section
10B.
(b) L i m i t a t i o n s o n L i q u i d i t y L e n d i n g f o r D e p o s i t I n s u r a n c e
P u r p o s e s .— Section 10B of the Federal Reserve Act (as redesignated
by subsection (a)) is amended—
(1) by striking “Any Federal Reserve bank” and inserting “ (a)
In G e n e r a l . —Any Federal Reserve bank” ; and
(2) by adding at the end the following:
“ (b) L i m i t a t i o n s o n A d v a n c e s .— .
“ (1) L i m i t a t i o n o n e x t e n d e d p e r i o d s .—Except as provided in
paragraph (2), no advances to any undercapitalized depository
institution by any Federal Reserve bank under this section may
be outstanding for more than 60 days in any 120-day period.
“(2) V i a b i l i t y e x c e p t i o n .—
“(A) In g e n e r a l . — If—
“(i) the head of the appropriate Federal banking
agency certifies in advance in writing to the Federal
Reserve bank that any depository institution is viable;
or
“ (ii) the Board conducts an examination of any
depository institution and the Chairman of the Board
certifies in writing to the Federal Reserve bank that
the institution is viable,
the limitation contained in paragraph (1) shall not apply
during the 60-day period beginning on the date such certifi­
cation is received.
“ (B) E x t e n s i o n s o f p e r i o d .—The 60-day period may be
extended for additional 60-day periods upon receipt by the
Federal Reserve bank of additional written certifications
under subparagraph (A) with respect to each such addi­
tional period.
“(C) A u t h o r i t y t o i s s u e a c e r t i f i c a t e o f v i a b i l i t y m a y
n o t b e d e l e g a t e d .—The authority of the head of any
agency to issue a written certification of viability under this
paragraph may not be delegated to any other person.
“ (D) E x t e n d e d a d v a n c e s s u b j e c t t o p a r a g r a p h ( 3 ) . —
Notwithstanding paragraph (1), an undercapitalized deposi­
tory institution which does not have a certificate of viability
in effect under this paragraph may have advances
outstanding for more than 60 days in any 120-day period if
the Board elects to treat—
“(i) such institution as critically undercapitalized
under paragraph (3); and

“(ii) any such advance as an advance described in
subparagraph (A)(i) of paragraph (3).
“ (3 ) A d v a n c e s t o
INSTITUTIONS.—
“(A) L i a b i l i t y

c r it ic a l l y

u n d e r c a p it a l iz e d

d e p o s it o r y

for
i n c r e a s e d l o s s . —Notwithstanding
any other provision of this section, if—
“(i) in the case of any critically undercapitalized
depository institution—
“ (I) any advance under this section to such
institution is outstanding without payment having
been demanded as of the end of the 5-day period
beginning on the date the institution becomes a
critically undercapitalized depository institution;
or
“(II) any new advance is made to such institution
under this section after the end of such period; and
“(ii) after the end of that 5-day period, any deposit
insurance fund in the Federal Deposit Insurance Cor­
poration incurs a loss exceeding the loss that the Cor­
poration would have incurred if it had liquidated that
institution as of the end of that period,
the Board shall, subject to the limitations in subparagraph
(B), be liable to the Federal Deposit Insurance Corporation
for the excess loss, without regard to the terms of the
advance or any collateral pledged to secure the advance.
“(B) L i m i t a t i o n o n e x c e s s l o s s .— The liability of the
Board under subparagraph (A) shall not exceed the lesser of
the following:
“ (i) The amount of the loss the Board or any Federal
Reserve bank would have incurred on the increases in
the amount of advances made after the 5-day period
referred to in subparagraph (A) if those increased ad­
vances had been unsecured.
“(ii) The interest received on the increases in the
amount of advances made after the 5-day period re­
ferred to in subparagraph (A).
“ (C) F e d e r a l r e s e r v e t o p a y o b l i g a t i o n .—The Board
shall pay the Federal Deposit Insurance Corporation the
amount of any liability of the Board under subparagraph

(A ).

“(D) R e p o r t .—The Board shall report to the Congress on
any excess loss liability it incurs under subparagraph (A),
as limited by subparagraph (B)(i), and the reasons therefore,
not later than 6 months after incurring the liability.
“ (4) No o b l i g a t i o n t o m a k e a d v a n c e s .—A Federal Reserve
bank shall have no obligation to make, increase, renew, or
extend any advance or discount under this Act to any depository
institution.
“(5) D e f i n i t i o n s .—
“ ( A ) A p p r o p r i a t e f e d e r a l b a n k i n g a g e n c y . —The term
‘appropriate Federal banking agency’ has the same mean­
ing as in section 3 of the Federal Deposit Insurance Act.
“(B) C r i t i c a l l y u n d e r c a p i t a l i z e d .—The term ‘critically
undercapitalized’ has the same meaning as in section 38 of
the Federal Deposit Insurance Act.

“ (C) D e p o s i t o r y i n s t i t u t i o n . —The term ‘depository
institution' has the same meaning as in section 3 of the
Federal Deposit Insurance Act.
“ (D ) U n d e r c a p i t a l i z e d d e p o s i t o r y i n s t i t u t i o n . —The
term ‘undercapitalized depository institution’ means any
depository institution which—
“(i) is undercapitalized, as defined in section 38 of the
Federal Deposit Insurance Act; or
“ (ii) has a composite CAMEL rating of 5 under the
Uniform Financial Institutions Rating System (or an
equivalent rating by any such agency under a com­
parable rating system) as of the most recent examina­
tion of such institution.
“ (E) V i a b l e . —A depository institution is ‘viable’ if the
Board or the appropriate Federal banking agency deter­
mines, giving due regard to the economic conditions and
circumstances in the market in which the institution oper­
ates, that the institution—
“ (i) is not critically undercapitalized;
“ (ii) is not expected to become critically
undercapitalized; and
“ (iii) is not expected to be placed in conservatorship
or receivership.” .
(c) B o a r d ’ s A u t h o r i t y To E x a m i n e D e p o s i t o r y I n s t i t u t i o n s a n d
A f f i l i a t e s . —Section 11 of the Federal Reserve Act is amended by 12U SC248.
adding at the end the following:
“(n) To examine, at the Board’s discretion, any depository institu­
tion, and any affiliate of such depository institution, in connection
with any advance to, any discount of any instrument for,, or any
request for any such advance or discount by, such depository institu­
tion under this Act.” .
(d) E f f e c t i v e D a t e . —The amendment made by subsection (b) l2 U S C 3 4 7 b
shall take effect at the end of the 2-year period beginning on the notedate of enactment of this Act.
(e) C o n f o r m i n g A m e n d m e n t s R e d e s i g n a t i n g S e c t i o n s 13a, 25(a),
a n d 25(b) o f t h e F e d e r a l R e s e r v e A c t . —The Federal Reserve Act
(12 U .S .C . 221 et seq.) is amended—
(1) by redesignating section 13a as section 13A;
12 u s c 348-352.
(2) b y redesignating section 25(a) as section 25A; and
12 USC 611
(3) by redesignating section 25(b) as section 25B.
^o
SEC. 143. E ARLY RESOLUTION.

(a) I n G e n e r a l . —It is the sense of the Congress that the Federal
banking agencies should facilitate early resolution of troubled in­
sured depository institutions whenever feasible if early resolution
would have the least possible long-term cost to the deposit insurance
fund, consistent with the least-cost and prompt corrective action
provisions of the Federal Deposit Insurance Act.
(b) G e n e r a l P r i n c i p l e s . —In encouraging the Federal banking
agencies to pursue early resolution strategies, the Congress con­
templates that any resolution transaction under section 13(c) of that
Act would observe the following general principles:
(1) C o m p e t i t i v e n e g o t i a t i o n . —The transaction should be
negotiated competitively, taking into account the value of
expediting the process.
(2) R e s u l t i n g i n s t i t u t i o n a d e q u a t e l y c a p i t a l i z e d . —Any in­
sured depository institution created or assisted in the trans­

12 USC 632.
12 USC 1823
note.

action (hereafter the “resulting institution” ) and any institution
acquiring the troubled institution should meet all applicable
minimum capital standards.
(3) S u b s t a n t i a l p r i v a t e i n v e s t m e n t .—The transaction
should involve substantial private investment.
(4) C o n c e s s i o n s .—Preexisting owners and debtholders of any
troubled institution or its holding company should make
substantial concessions.
(5) Q u a l i f i e d m a n a g e m e n t . —Directors and senior manage­
ment of the resulting institution should be qualified to perform
their duties, and should not include individuals substantially
responsible for the troubled institution’s problems.
(6) FDIC’s p a r t i c i p a t i o n .—The transaction should give the
Federal Deposit Insurance Corporation an opportunity to
participate in the success of the resulting institution.
(7) S t r u c t u r e o f t r a n s a c t i o n .— The transaction should,
insofar as practical, be structured so that—
(A) the Federal Deposit Insurance Corporation—
(i) does not acquire a significant proportion of the
troubled institution’s problem assets;
(ii) succeeds to the interests of the troubled institu­
tion’s preexisting owners and debtholders in proportion
to the assistance the Corporation provides; and
(iii) limits the Corporation’s assistance in term and
amount; and
(B) new investors share risk with the Corporation.
(c) R e p o r t . —Two years after the date of enactment of this Act, the
Federal Deposit Insurance Corporation shall submit a report to
Congress analyzing the effect of early resolution on the deposit
insurance funds.

Subtitle F— Federal Insurance for State
Chartered Depository Institutions
SEC. 151. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSUR­
ANCE.
(a )
A n n u a l I n d e p e n d e n t A u d it o f P r iv a t e D e p o s it I n s u r e r ;
D is c l o s u r e b y I n s t it u t io n s L a c k in g F e d e r a l D e p o s it I n s u r ­
a n c e .—
(1)
I n g e n e r a l .—The Federal Deposit Insurance Act (12

U.S.C. 1811 et seq.), as amended by the preceding provisions of
this Act, is further amended by adding at the end the following
new section:

12 usc

im t.

“ SEC. 40. DEPOSITORY INSTITUTIONS LACKING FEDERAL DEPOSIT INSUR­
ANCE.
“ (a ) A n n u a l I n d e p e n d e n t A u d i t
“ (1 ) A u d i t r e q u i r e d . —Any

of

P r i v a t e D e p o s i t I n s u r e r s .—

private deposit insurer shall
obtain an annual audit from an independent auditor using
generally accepted auditing standards. The audit shall include a
determination of whether the private deposit insurer follows
generally accepted accounting principles and has set aside suffi­
cient reserves for losses.
“ (2 ) P r o v i d i n g

c o p ie s o f a u d i t r e p o r t .—

“(A) P r i v a t e d e p o s i t i n s u r e r .—The private deposit
insurer shall provide a copy of the audit report—
“(i) to each depository institution the deposits of
which are insured by the private deposit insurer, not
later than 14 days after the audit is completed; and
“(ii) to the appropriate supervisory agency of each
State in which such an institution receives deposits, not
later than 7 days after the audit is completed.
“(B) D e p o s i t o r y i n s t i t u t i o n .—Any depository institution
the deposits of which are insured by the private deposit
insurer shall provide a copy of the audit report, upon
request, to any current or prospective customer of the
institution.
“(b) D i s c l o s u r e R e q u i r e d .—Any depository institution lacking
Federal deposit insurance shall, within the United States, do the
following:
“(1) P e r i o d i c s t a t e m e n t s ; a c c o u n t r e c o r d s . —Include
conspicuously in all periodic statements of account, On each
signature card, and on each passbook, certificate of deposit, or
similar instrument evidencing a deposit a notice that the
institution is not federally insured, and that if the institution
fails, the Federal Government does not guarantee that deposi­
tors will get back their money.
“ (2) A d v e r t i s i n g ; p r e m i s e s .—Include conspicuously in all
advertising and at each place where deposits are normally
received a notice that the institution is not federally insured.
“ (3 ) A c k n o w l e d g m e n t o f r i s k . —Receive deposits only for the
account of persons who have signed a written acknowledgment
that the institution is not federally insured, and that if the
institution fails, the Federal Government does not guarantee
that they will get back their money.
“(c) M a n n e r a n d C o n t e n t o f D i s c l o s u r e .—To ensure that cur­
rent and prospective customers understand the risks involved in
foregoing Federal deposit insurance, the Federal Trade Commission,
by regulation or order, shall prescribe the manner and content of
disclosure required under this section.
“(d) E x c e p t i o n s f o r I n s t i t u t i o n s N o t R e c e i v i n g R e t a i l D e ­
p o s i t s . —The Federal Trade Commission may, by regulation or
order, make exceptions to subsection (b) for any depository institu­
tion that, within the United States, does not receive initial deposits
of less than $100,000 from individuals who are citizens or residents
of the United States, other than money received in connection with
any draft or similar instrument issued to transmit money.
“ (e) E l i g i b i l i t y f o r F e d e r a l D e p o s i t I n s u r a n c e .—
“ (1) In g e n e r a l . —Except as permitted by the Federal Trade
Commission, in consultation with the Federal Deposit Insurance
Corporation, no depository institution (other than a bank,
including an unincorporated bank) lacking Federal deposit
insurance may use the mails or any instrumentality of inter­
state commerce to receive or facilitate receiving deposits, unless
the appropriate supervisor of the State in which the institution
is chartered has determined that the institution meets all eligi­
bility requirements for Federal deposit insurance, including—
“(A) in the case of an institution described in section
19(b)(l)(A)(iv) of the Federal Reserve Act, all eligibility
requirements set forth in the Federal Credit Union Act and

12 USC I83lt

note-

12 USC 1831e

note-

regulations of the National Credit Union Administration;
and
“(B) in the case of any other institution, all eligibility
requirements set forth in this Act and regulations of the
Corporation.
“ (2 ) A u t h o r i t y o f f d ic a n d n c u a n o t a f f e c t e d . —No deter­
mination under paragraph (1) shall bind, or otherwise affect the
authority of, the National Credit Union Administration or the
Corporation.
“ (f) D e f i n i t i o n s .—For purposes of this section:
“ (1) A p p r o p r i a t e s u p e r v i s o r .—The ‘appropriate supervisor’
of a depository institution means the agency primarily respon­
sible for supervising the institution.
“ (2) D e p o s i t o r y i n s t i t u t i o n .—The term ‘depository institu­
tion’ includes—
“(A) any entity described in section 19(b)(l)(A)(iv) of the
Federal Reserve Act; and
“(B) any entity that, as determined by the Federal Trade
Commission—
“(i) is engaged in the business of receiving deposits;
and
“(ii) could reasonably be mistaken for a depository
institution by the entity’s current or prospective cus­
tomers.
“ (8) L a c k i n g f e d e r a l d e p o s i t i n s u r a n c e .—A depository
institution lacks Federal deposit insurance if the institution is
not either—
“ (A) an insured depository institution; or
“(B) an insured credit union, as defined in section 101 of
the Federal Credit Union Act.
“ (4) P r i v a t e d e p o s i t i n s u r e r .—The term ‘private deposit
insurer’ means any entity insuring the deposits of any deposi­
tory institution lacking Federal deposit insurance.
“ (g) E n f o r c e m e n t .—Compliance with the requirements of this
section, and any regulation prescribed or order issued under this
section, shall be enforced under the Federal Trade Commission Act
by the Federal Trade Commission.” .
(2 ) E f f e c t i v e d a t e s .—Section 4 0 of the Federal Deposit Insurance Act (as added by paragraph (1)) shall become effective on
the date of enactment of this Act, except that—
(A) paragraphs (1) and (2) of subsection (b) shall become
effective 1 year after the date of enactment of this Act;
(B) during the period beginning 1 year after that date of
enactment of this Act and ending 30 months after that date
of enactment, subsection (b)(1) shall apply with “ , and that
if the institution fails, the Federal Government does not
guarantee that depositors will get back their money”
omitted;
(C) subsection (e) shall become effective 2 years after that
date of enactment; and
(D) subsection (b)(3) shall become effective 30 months
after that date of enactment.
(3 ) C o n f o r m i n g AMENDMENT TO FEDERAL DEPOSIT INSURANCE

—Effective 1 year after the date of enactment of this Act,
section 28 of the Federal Deposit Insurance Act (12 U.S.C. 1831e)
is amended—
(A) by striking subsection (h); and

act.

(B) by redesignating subsection (i) as subsection (h).
(b) V i a b i l i t y o f P r i v a t e D e p o s i t I n s u r e r s .—
(1) D e a d l i n e f o r i n i t i a l i n d e p e n d e n t a u d i t .—The initial
annual audit under section 40(a)(1) of the Federal Deposit Insur­
ance Act (as added by subsection (a)) shall be completed not
later than 120 days after the date of enactment of this Act.
(2) B u s i n e s s p l a n r e q u i r e d .—Not later than 240 days after
the date of enactment of this Act, any private deposit insurer
shall provide a business plan to each appropriate supervisor of
each State in which deposits are received by any depository
institution lacking Federal deposit insurance the deposits of
which are insured by a private deposit insurer. The business
plan shall explain in detail why the private deposit insurer is
viable, and shall, at a minimum—
(A) describe the insurer’s—
(i) underwriting standards;
(ii) resources, including trends in and forecasts of
assets, income, and expenses;
(iii) risk-management program, including examina­
tion and supervision, problem case resolution, and rem­
edies; and
(B) include, for the preceding 5 years, copies of annual
audits, annual reports, and annual meeting agendas and
minutes.
(3) D e f i n i t i o n s .—For purposes of this subsection, the terms
“ appropriate supervisor” , “deposit” , “ depository institution” ,
and “lacking Federal deposit insurance” have the same mean­
ing as in section 40(f) of the Federal Deposit Insurance Act (as
added by subsection (a)).

Subtitle G—Technical Corrections
SEC. 161. TECHNICAL CORRECTIONS AND CLARIFICATIONS.
(a ) S e c t i o n 11 o f t h e F e d e r a l D e p o s i t I n s u r a n c e A c t . — S e c t io n
o f t h e F e d e r a l D e p o s it I n s u r a n c e A c t (12 U.S.C. 1821) is
am ended—

11

(1) in subsection (d)(3)(A), by striking “(4)(A)” and inserting
“(4)” ;
(2) in subsection (d)(ll)(B), by striking “ (14)(C)” and inserting
“ (15XB)” ;
(3) in subsection (e)(3)(C)(ii), by striking “subsection (k)” and
inserting “subsection (i)” ;
(4) in subsection (e)(4)(B)(iii), by striking “ subsection (k)” and
inserting “ subsection (i)” ;
(5) in subparagraphs (A) and (E) of subsection (e)(8), by strik­
ing “subsections (d)(9) and (i)(4)(I)” and inserting “ subsection
(d)(9)” ;
(6 ) i n s u b s e c t io n (n X 9 ), b y s t r i k i n g “ (1 3 )” a n d in s e r t i n g “ (1 2 )” ;
and

(7) in subsection (n)(ll)(D), by striking “(8)” and inserting
“ (9)” .
(b ) C l a r i f i c a t i o n o f F D I C P o w e r s i n F S L I C R e s o l u t i o n F u n d
C o n s e r v a t o r s h i p s a n d R e c e i v e r s h i p s .— S e c t i o n H A ( a ) o f t h e F e d ­
e r a l D e p o s it I n s u r a n c e A c t (1 2 U .S .C . 1 8 2 1 a (a )) is a m e n d e d b y a d d in g
a t th e e n d th e fo llo w in g n e w p a ra g r a p h s:

12 USC I83lt
note.

Effective date.

“(4) R i g h t s , p o w e r s , a n d d u t i e s .—Effective August 10, 1989,
the Corporation shall have all rights, powers, and duties to
carry out the Corporation’s duties with respect to the assets and
liabilities of the FSLIC Resolution Fund that the Corporation
otherwise has under this Act.
“ (5 ) C o r p o r a t i o n a s c o n s e r v a t o r
“(A) I n g e n e r a l .—Effective

o r r e c e i v e r .—

August 10, 1989, the Cor­
poration shall succeed the Federal Savings and Loan Insur­
ance Corporation as conservator or receiver with respect to
any depository institution—
“ (i) the accounts of which were insured before August
10, 1989 by the Federal Savings and Loan Insurance
Corporation; and
“ (ii) for which a conservator or receiver was ap­
pointed before January 1,1989.
“(B) R i g h t s , p o w e r s , a n d d u t i e s .—When acting as con­
servator or receiver with respect to any depository institu­
tion described in subparagraph (A), the Corporation shall
have all rights, powers, and duties that the Corporation
otherwise has as conservator or receiver under this Act.” .

(c) C l e r i c a l A m e n d m e n t t o S u b s e c t i o n H e a d i n g .— T h e h e a d i n g
f o r s e c t i o n 3 (w ) o f t h e F e d e r a l D e p o s i t I n s u r a n c e A c t (1 2 U .S .C .
1 8 1 3 (w )) is a m e n d e d b y s t r i k i n g “ H o l d i n g C o m p a n i e s ” a n d in s e r t ­
in g “ A f f il ia t e s o f D e p o s it o r y In s t it u t io n s ” .
(d) FDIC R e m o v a l P e r i o d M a d e C o n s i s t e n t W i t h RTC P e r i o d .—

Section 9(b)(2)(B) of the Federal Deposit Insurance Act (12 U.S.C.
1819(b)(2)(B)) is amended by inserting “before the end of the 90-day
period beginning on the date the action, suit, or proceeding is filed
against the Corporation or the Corporation is substituted as a party”
before the period.
(e) C l a r i f i c a t i o n o f FDIC A uthority t o P a y D e Minimus
Claims.—The second sentence of section ll(i)(3)(A) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(i)(3)(A)) is amended by strik­
ing “The” and inserting “Notwithstanding any other provision of
Federal or State law, or the constitution of any State, the” .
(f) C l e r i c a l A

m e n d m e n t to

S e c t io n H

e a d i n g .—

(1) The heading for section 219 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 is amended by
striking “ FROM TA X A T IO N ” .
(2) The table of contents for the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 is amended by
striking “ from taxation” in the item relating to section 219.

TITLE II— REGULATORY IMPROVEMENT
Foreign Bank
Supervision
Enhancement
A ct o f 1991.
12 USC 3101
note.

Subtitle A— Regulation of Foreign Banks
SEC. 201. SHORT TITLE.

This subtitle may be cited as the “ Foreign Bank Supervision
Enhancement Act of 1991” .
SEC. 202. REGULATION OF FOREIGN BANK OPERATIONS.

(a)

E s t a b l is h m e n t a n d T e r m in a t io n
U n i t e d S t a t e s . —Section 7 of the

in th e

of

F o r e ig n B a n k O f f ic e s

International Banking Act

of 1978 (12 U.S.C. 3105) is amended by striking subsection (d) and
inserting the following new subsections:
“ (d ) E s t a b l i s h m e n t o f F o r e i g n B a n k O f f ic e s i n t h e U n i t e d
S t a t e s .—
“(1) P r i o r a p p r o v a l r e q u i r e d .—No foreign bank may estab­

lish a branch or an agency, or acquire ownership or control of a
commercial lending company, without the prior approval of the
Board.
“ (2) R e q u i r e d s t a n d a r d s f o r a p p r o v a l — The Board may not
approve an application under paragraph (1) unless it determines
that—
“ (A) the foreign bank engages directly in the business of
banking outside of the United States and is subject to
comprehensive supervision or regulation on a consolidated
basis by the appropriate authorities in its home country;
and
“(B) the foreign bank has furnished to the Board the
information it needs to adequately assess the application.
“ (3 ) S t a n d a r d s f o r a p p r o v a l .—In acting on any application
under paragraph (1), the Board may take into account—
“ (A) whether the appropriate authorities in the home
country of the foreign bank have consented to the proposed
establishment of a branch, agency or commercial lending
company in the United States by the foreign bank;
“ (B) the financial and managerial resources of the foreign
bank, including the bank’s experience and capacity to
engage in international banking;
“(C) whether the foreign bank has provided the Board
with adequate assurances that the bank will make avail­
able to the Board such information on the operations or
activities of the foreign bank and any affiliate of the bank
that the Board deems necessary to determine and enforce
compliance with this Act, the Bank Holding Company Act
of 1956, and other applicable Federal law; and
“ (D) whether the foreign bank and the United States
affiliates of the bank are in compliance with applicable
United States law.
“ (4) F a c t o r .—In acting on an application under paragraph
(1), the Board shall not make the size of the foreign bank the
sole determinant factor, and may take into account the needs of
the community as well as the length of operation of the foreign
bank and its relative size in its home country. Nothing in this
paragraph shall affect the ability of the Board to order a State
branch, agency, or commercial lending company subsidiary to
terminate its activities in the United States pursuant to any
standard set forth in this Act.
“ (5) E s t a b l i s h m e n t o f c o n d i t i o n s .—Consistent with the
standards for approval in paragraph (2), the Board may impose
such conditions on its approval under this subsection as it
deems necessary.
“ (e ) T e r m i n a t i o n o f F o r e i g n B a n k O f f i c e s i n
S t a t e s .—
“(1) S t a n d a r d s f o r t e r m i n a t i o n .—The Board,

the

U

n it e d

after notice
and opportunity for hearing and notice to any appropriate State
bank supervisor, may order a foreign bank that operates a State
branch or agency or commercial lending company subsidiary in

the United States to terminate the activities of such branch,
agency, or subsidiary if the Board finds that—
“ (A) the foreign bank is not subject to comprehensive
supervision or regulation on a consolidated basis by the
appropriate authorities in its home country; or
“(B)(i) there is reasonable cause to believe that such
foreign bank, or any affiliate of such foreign bank, has
committed a violation of law or engaged in an unsafe or
unsound banking practice in the United States; and
“ (ii) as a result of such violation or practice, the contin­
ued operation of the foreign bank’s branch, agency or
commercial lending company subsidiary in the United
States would not be consistent with the public interest or
with the purposes of this Act, the Bank Holding Company
Act of 1956, or the Federal Deposit Insurance Act.
However, in making findings under this paragraph, the Board
shall not make size the sole determinant factor, and may take
into account the needs of the community as well as the length of
operation of the foreign bank and its relative size in its home
country. Nothing in this paragraph shall affect the ability of the
Board to order a State branch, agency, or commercial lending
company subsidiary to terminate its activities in the United
States pursuant to any standard set forth in this Act.
“ (2) D i s c r e t i o n t o d e n y h e a r i n g .—The Board may issue an
order under paragraph (1) without providing for an opportunity
for a hearing if the Board determines that expeditious action is
necessary in order to protect the public interest.
“ (3 ) E f f e c t i v e d a t e o f t e r m i n a t i o n o r d e r .—An order issued
under paragraph (1) shall take effect before the end of the 120day period beginning on the date such order is issued unless the
Board extends such period.
“(4) C o m p l i a n c e w i t h s t a t e a n d f e d e r a l l a w .—Any foreign
bank required to terminate activities conducted at offices or
subsidiaries in the United States pursuant to this subsection
shall comply with the requirements of applicable Federal and
State law with respect to procedures for the closure or dissolu­
tion of such offices or subsidiaries.
“ (5) R e c o m m e n d a t i o n

t o a g e n c y f o r t e r m in a t io n o f a fe d ­

—The Board may transmit to the
Comptroller of the Currency a recommendation that the license
of any Federal branch or Federal agency of a foreign bank be
terminated in accordance with section 4(i) if the Board has
reasonable cause to believe that such foreign bank or any
affiliate of such foreign bank has engaged in conduct for which
the activities of any State branch or agency may be terminated
under paragraph (1).
eral

branch

or

agency.

“ (6 ) E n f o r c e m e n t o f o r d e r s .—
“ (A) I n g e n e r a l . —In the case

of contumacy of any office
or subsidiary of the foreign bank against which the Board
or, in the case of an order issued under section 4(i), the
Comptroller of the Currency has issued an order under
paragraph (1) or a refusal by such office or subsidiary to
comply with such order, the Board or the Comptroller of the
Currency may invoke the aid of the district court of the
United States within the jurisdiction of which the office or
subsidiary is located.

“ (B) C o u r t o r d e r .—Any court referred to in subpara­
graph (A) may issue an order requiring compliance with an
order issued under paragraph (1).
“(7) C r i t e r i a r e l a t i n g t o f o r e i g n s u p e r v i s i o n .—Not later
than 1 year after the date of enactment of this subsection, the
Board, in consultation with the Secretary of the Treasury, shall
develop and publish criteria to be used in evaluating the oper­
ation of any foreign bank in the United States that the Board
has determined is not subject to comprehensive supervision or
regulation on a consolidated basis. In developing such criteria,
the Board shall allow reasonable opportunity for pubic review
and comment.
“ (f) J u d i c i a l R e v i e w .—
“ (1 ) J u r i s d i c t i o n o f

u n i t e d s t a t e s c o u r t s o f a p p e a l s . —Any
foreign bank—
“ (A) whose application under subsection (d) or section
10(a) has been disapproved by the Board;
“ (B) against which the Board has issued an order under
subsection (e) or section 10(b); or
“ (C) against which the Comptroller of the Currency has
issued an order under section 4(i) of this Act,
may obtain a review of such order in the United States court of
appeals for any circuit in which such foreign bank operates a
branch, agency, or commercial lending company that has been
required by such order to terminate its activities, or in the
United States Court of Appeals for the District of Columbia
Circuit, by filing a petition for review in the court before the
end of the 80-day period beginning on the date the order was
issued.
“(2) S c o p e o f j u d i c i a l r e v i e w .—Section 706 of title 5, United
States Code (other than paragraph (2)(F) of such section) shall
apply with respect to any review under paragraph (1).
“(g) C o n s u l t a t i o n W i t h S t a t e B a n k S u p e r v i s o r .—The Board
shall request and consider any views of the appropriate State bank
supervisor with respect to any application or action under subsec­
tion (d) or (e).

“ (h )

L im it a t io n s

on

P ow ers

of

State B ranches

and

A

gen­

c ie s .—

“ (1) In g e n e r a l . —After the end of the 1-year period begin­
ning on the date of enactment of the Federal Deposit Insurance
Corporation Improvement Act of 1991, a State branch or State
agency may not engage in any type of activity that is not
permissible for a Federal branch unless—
“ (A) the Board has determined that such activity is
consistent with sound banking practice; and
“(B) in the case of an insured branch, the Federal Deposit
Insurance Corporation has determined that the activity
would pose no significant risk to the deposit insurance fund.
“ (2) S i n g l e b o r r o w e r l e n d i n g l i m i t .—A State branch or
State agency shall be subject to the same limitations with
respect to loans made to a single borrower as are applicable to a
Federal branch or Federal agency under section 4(b).
“(3) O t h e r a u t h o r i t y n o t a f f e c t e d .—This section does not
limit the authority of the Board or any State supervisory
authority to impose more stringent restrictions.” .

(b) S t a n d a r d s f o r A p p r o v a l o f F e d e r a l B r a n c h e s a n d A g e n ­
—S e c t i o n 4(a) o f t h e I n t e r n a t i o n a l B a n k i n g A c t o f 1 9 7 8 (1 2
U.S.C. 3 1 0 2 (a )) is a m e n d e d —
(1) by striking “ (a) Except as provided in section 5,” and
inserting “ (a) E s t a b l i s h m e n t a n d O p e r a t i o n o f F e d e r a l
c ie s .

B r a n c h e s a n d A g e n c i e s .—
“ (1) I n i t i a l f e d e r a l b r a n c h

o r a g e n c y .—Except as provided
in section 5,” ; and
(2) by adding at the end the following new paragraph:
“(2) B o a r d c o n d i t i o n s r e q u i r e d t o b e i n c l u d e d .—In consid­
ering any application for approval under this subsection, the
Comptroller of the Currency shall include any condition im­
posed by the Board under section 7(d)(5) as a’ condition for the
approval of such application by the agency.” .

(c ) S t a n d a r d s f o r A p p r o v a l o f A d d i t i o n a l F e d e r a l B r a n c h e s
A g e n c i e s .—S e c t i o n 4(h) o f t h e I n t e r n a t i o n a l B a n k i n g A c t o f
1978 (12 U.S.C. 3102(h)) is a m e n d e d —

and

(1) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively;
(2) by striking “(h) A foreign bank” and inserting “ (h) A d d i ­
B r a n c h e s o r A g e n c i e s .—
“ (1 ) A p p r o v a l o f a g e n c y r e q u i r e d .— A f o r e i g n b a n k ” ; a n d

t io n a l

(3) by adding at the end the following new paragraph:
“ (2) N o t ic e t o a n d c o m m e n t b y b o a r d .—The Comptroller of
the Currency shall provide the Board with notice and an
opportunity for comment on any application to establish an
additional Federal branch or Federal agency under this
subsection.” .
(d) D i s a p p r o v a l f o r F a i l u r e T o A g r e e T o P r o v i d e N e c e s s a r y
I n f o r m a t i o n . —Section 3(c) of the Bank Holding Company Act of
1956 (12 U.S.C. 1842(c)) is amended—
(1) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively;
(2) by striking “(c) The Board shall” and inserting “ (c) F a c ­
tors fo r

C o n s id e r a t io n

by

B o a r d .—

“ (1) C o m p e t i t i v e f a c t o r s .—The Board shall” ;
(3) by striking “ In every case” and inserting “ (2) B a n k i n g
a n d c o m m u n i t y f a c t o r s . —In every case” ;
(4) by striking “community to be served. Notwithstanding any
other provision of law” and inserting “community to be served.
“ (4 ) T r e a t m e n t o f c e r t a i n b a n k s t o c k l o a n s . —Notwith­
standing any other provision of law” ; and
(5) by inserting after paragraph (2) (as so designated by
paragraph (3) of this subsection) the following new paragraph:
“(3) S u p e r v i s o r y f a c t o r s .—The Board shall disapprove any
application under this section by any company if—
“ (A) the company fails to provide the Board with ade­
quate assurances that the company will make available to
the Board such information on the operations or activities
of the company, and any affiliate of the company, as the
Board determines to be appropriate to determine and en­
force compliance with this Act; or
“ (B) in the case of an application involving a foreign
bank, the foreign bank is not subject to comprehensive
supervision or regulation on a consolidated basis by the
appropriate authorities in the bank’s home country.” .
(e ) C o n f o r m i n g A

m e n d m e n t s .—

(1) A f f i l i a t e d e f i n e d .—Section l(b)(13) of the International
Banking Act of 1978 (12 U.S.C. 3101(13)) is amended by inserting
“ ‘affiliate,’ ” after “ the terms” the 1st place such term appears.
(2) D e f i n i t i o n s .—Section 1(b) of the International Banking
Act of 1978 (12 U.S.C. 3101(b)) is amended—
(A) by striking “ and” at the end of paragraph (13);
(B) by striking the period at the end of paragraph (14) and
inserting a semicolon; and
(C) by adding at the end the following new paragraphs:
“(15) the term ‘representative office’ means any office of a
foreign bank which is located in any State and is not a Federal
branch, Federal agency, State branch, State agency, or subsidi­
ary of a foreign bank;
“(16) the term ‘office’ means any branch, agency, or rep­
resentative office; and
“ (17) the term ‘State bank supervisor’ has the meaning given
to such term in section 3 of the Federal Deposit Insurance Act.” .
SEC. 203. CONDUCT AND COORDINATION OF EXAMINATIONS.

(a)

A

u t h o r it y o f

B oard T o Conduct

and

C o o r d in a t e E x a m i n a ­

—Section 7(c) of the International Banking Act of 1978 (12
U.S.C. 3105(b)) is amended—
(1) by striking paragraph (1) and inserting the following new
paragraph:

t io n s .

“ (1 ) E x a m i n a t i o n o f b r a n c h e s , a g e n c i e s , a n d a f f i l i a t e s .—
“ (A) I n g e n e r a l .—The Board may examine each branch

or agency of a foreign bank, each commercial lending com­
pany or bank controlled by 1 or more foreign banks or 1 or
more foreign companies that control a foreign bank, and
other office or affiliate of a foreign bank conducting busi­
ness in any State.
“ (B ) C o o r d i n a t i o n

o f e x a m in a t io n s

—

“(i) In g e n e r a l .—The Board shall coordinate
examinations under this paragraph with the Comptrol­
ler of the Currency, the Federal Deposit Insurance
Corporation, and appropriate State bank supervisors to
the extent such coordination is possible.
“ (ii) S i m u l t a n e o u s e x a m i n a t i o n s .—The Board may
request simultaneous examinations of each office of a
foreign bank and each affiliate of such bank operating
in the United States.
“ (C) A n n u a l o n -s it e e x a m i n a t i o n .—Each branch or
agency of a foreign bank shall be examined at least once
during each 12-month period (beginning on the date the
most recent examination of such branch or agency ended)
in an on-site examination.
“ (D) C o s t o f e x a m i n a t i o n s .—The cost of any examina­
tion under subparagraph (A) shall be assessed against and
collected from the foreign bank or the foreign company that
controls the foreign bank, as the case may be.” ; and
(2) in paragraph (2), by inserting “ R e p o r t i n g r e q u i r e ­
m e n t s . —” before “ Each branch” .
(b) C o o r d i n a t i o n o f E x a m i n a t i o n s .— Section 4(b) of the Inter­
national Banking Act of 1978 (12 U.S.C. 3102(b)) is amended by
adding at the end thereof the following new sentence: “ The
Comptroller of the Currency shall coordinate examinations of Fed­
eral branches and agencies of foreign banks with examinations

conducted by the Board under section 7(c)(1) and, to the extent
possible, shall participate in any simultaneous examinations of the
United States operations of a foreign bank requested by the Board
under such section.” .
(c) P a r t i c i p a t i o n i n C o o r d i n a t e d E x a m i n a t i o n s .—
(1) I n g e n e r a l . —Section 10(b) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1820(b)) is amended by redesignating para­
graphs (5) and (6) as paragraphs (6) and (7), respectively, and by
inserting after paragraph (4) the following new paragraph:
“ (5) E x a m i n a t i o n o f i n s u r e d s t a t e b r a n c h e s .—The Board of
Directors shall—
“ (A) coordinate examinations of insured State branches
of foreign banks with examinations conducted by the Board
of Governors of the Federal Reserve System under section
7(c)(1) of the International Banking Act of 1978; and
“(B) to the extent possible, participate in any simulta­
neous examination of the United States operations of a
foreign bank requested by the Board under such section.” .
(2) T e c h n i c a l a n d c o n f o r m i n g a m e n d m e n t .—Paragraph (6)
of section 10(b) of the Federal Deposit Insurance Act (12 U.S.C.
1820(b)) (as so redesignated under paragraph (1) of this subsec­
tion) by striking “or (4)” and inserting “(4), or (5)” .
SEC. 204. SUPERVISION OF THE REPRESENTATIVE OFFICES OF FOREIGN
BANKS.

Section 10 of the International Banking Act of 1978 (12 U.S.C.
3107) is amended to read as follows:
“ SEC. 10. REPRESENTATIVE OFFICES.

“(a)

P r io r A

pproval

T o E s t a b l i s h R e p r e s e n t a t i v e O f f i c e s .—

“(1) I n g e n e r a l . —No foreign bank may establish a represent­
ative office without the prior approval of the Board.
“(2) S t a n d a r d s f o r a p p r o v a l .—In acting on any application
under this paragraph to establish a representative office, the
Board shall take into account the standards contained in section
7(d)(2) and may impose any additional requirements that the
Board determines to be necessary to carry out the purposes of
this Act.
“ (b) T e r m i n a t i o n o f R e p r e s e n t a t i v e O f f i c e s .—The Board may
order the termination of the activities of a representative office of a
foreign bank on the basis of the standards, procedures, and require­
ments applicable under paragraphs (1), (2), and (3) of section 7(d)
with respect to branches and agencies.
“ (c) E x a m i n a t i o n s .—The Board may make examinations of each
representative office of a foreign bank, the cost of which shall be
assessed against and paid by such foreign bank.
“(d) C o m p l i a n c e W i t h S t a t e L a w .—This Act does not authorize
the establishment of a representative office in any State in con­
travention of State law.” .
SEC. 205. REPORTING OF STOCK LOANS.

Section 7(j)(9) of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)(9)) is amended to read as follows:
“ (9) R e p o r t i n g o f s t o c k l o a n s .—
“ (A) R e p o r t r e q u i r e d .—Any financial institution and
any affiliate of any financial institution that has credit
outstanding to any person or group of persons which is

secured, directly or indirectly, by shares of an insured
depository institution shall file a consolidated report with
the appropriate Federal banking agency for such insured
depository institution if the extensions of credit by the
financial institution and such institution’s affiliates, in the
aggregate, are secured, directly or indirectly, by 25 percent
or more of any class of shares of the same insured deposi­
tory institution.
“(B) D e f i n i t i o n s .—For purposes of this paragraph—
“(i) F i n a n c i a l i n s t i t u t i o n .—The term ‘financial
institution’ means any insured depository institution
and any foreign bank that is subject to the provisions of
the Bank Holding Company Act of 1956 by virtue of
section 8(a) of the International Banking Act of 1978.
“(ii) C r e d i t o u t s t a n d i n g .—The term ‘credit
outstanding’ includes—
“(I) any loan or extension of credit,
“(II) the issuance of a guarantee, acceptance, or
letter of credit, including an endorsement or
standby letter of credit, and
“(III) any other type of transaction that extends
credit or financing to the person or group of per­
sons.
“ (iii) G r o u p o f p e r s o n s .—The term ‘group of per­
sons’ includes any number of persons that the financial
institution reasonably believes—
“ (I) are acting together, in concert, or with one
another to acquire or control shares of the same
insured depository institution, including an ac­
quisition of shares of the same insured depository
institution at approximately the same time under
substantially the same terms; or
“ (II) have made, or propose to make, a joint filing
under section 13 of the Securities Exchange Act of
1934 regarding ownership of the shares of the same
insured depository institution.
“ (C ) I n c l u s i o n

o f s h a r e s h e l d b y t h e f in a n c ia l in s t it u ­

—Any shares of the insured depository institution held
by the financial institution or any of its affiliates as prin­
cipal shall be included in the calculation of the number of
shares in which the financial institution or its affiliates has
a security interest for purposes of subparagraph (A).
t io n .

“ (D ) R e p o r t r e q u i r e m e n t s .—
“(i) T i m i n g o f r e p o r t .—The

report required under
this paragraph shall be a consolidated report on behalf
of the financial institution and all affiliates of the
institution, and shall be filed in writing within 30 days
of the date on which the financial institution or any
such affiliate first believes that the security for any
outstanding credit consists of 25 percent or more of any
class of shares of an insured depository institution.
“(ii) C o n t e n t o f r e p o r t .—The report under this
paragraph shall indicate the number and percentage of
shares securing each applicable extension of credit, the
identity of the borrower, and the number of shares held
as principal by the financial institution and any affili­
ate of such institution.

“(iii) C o p y t o o t h e r a g e n c i e s .—A copy of any report
under this paragraph shall be filed with the appro­
priate Federal banking agency for the financial institu­
tion (if other than the agency receiving the report
under this paragraph).
“(iv) O t h e r i n f o r m a t i o n .—Each appropriate Fed­
eral banking agency may require any additional
information necessary to carry out the agency’s super­
visory responsibilities.
“ (E ) E x c e p t i o n s .—
“(i) E x c e p t i o n w h e r e i n f o r m a t i o n p r o v i d e d b y b o r ­
r o w e r . —Notwithstanding subparagraph (A), a finan­

cial institution and the affiliates of such institution
shall not be required to report a transaction under this
paragraph if the person or group of persons re­
ferred to in such subparagraph has disclosed the
amount borrowed from such institution or affiliate and
the security interest of the institution or affiliate to the
appropriate Federal banking agency for the insured
depository institution in connection with a notice filed
under this subsection, an application filed under the
Bank Holding Company Act of 1956, section 10 of the
Home Owners’ Loan Act, or any other application filed
with the appropriate Federal banking agency for the
insured depository institution as a substitute for a
notice under this subsection, such as an application for
deposit insurance, membership in the Federal Reserve
System, or a national bank charter.
“ (ii) E x c e p t i o n f o r s h a r e s o w n e d f o r m o r e t h a n l
y e a r .—Notwithstanding subparagraph (A), a financial
institution and any affiliate of such institution shall
not be required to report a transaction involving—
“(I) a person or group of persons that has been
the owner or owners of record of the stock for a
period of 1 year or more; or
“ (II) stock issued by a newly chartered bank
before the bank’s opening.” .
SEC. 206. COOPERATION WITH FOREIGN SUPERVISORS.

The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is
amended by adding at the end the following new section:
12 USC 3109.

“ SEC. 15. COOPERATION WITH FOREIGN SUPERVISORS.
“ (a ) D i s c l o s u r e o f S u p e r v i s o r y I n f o r m a t i o n t o F o r e i g n S u p e r ­
N o t w i t h s t a n d i n g a n y o t h e r p r o v i s i o n o f la w , t h e B o a r d ,
C o m p tr o lle r o f th e C u r r e n c y , F e d e r a l D e p o s it I n s u r a n c e C o r p o r a ­
t i o n , a n d D i r e c t o r o f t h e O f f i c e o f T h r i f t S u p e r v i s i o n m a y d is c l o s e
in fo r m a tio n o b ta in e d in th e c o u r s e o f e x e r c is in g s u p e r v is o r y o r
e x a m in a tio n a u t h o r ity to a n y fo r e ig n b a n k r e g u la t o r y o r s u p e r ­
v is o r y a u t h o r it y i f th e B o a r d , C o m p tr o lle r , C o r p o r a tio n , o r D ir e c t o r
d e t e r m i n e s t h a t s u c h d i s c l o s u r e is a p p r o p r i a t e a n d w i l l n o t p r e ju ­
d i c e t h e in t e r e s t s o f t h e U n i t e d S t a te s .
“(b) R e q u i r e m e n t o f C o n f i d e n t i a l i t y .—Before making any
v i s o r s .—

disclosure of any information to a foreign authority, the Board,
Comptroller of the Currency, Federal Deposit Insurance Corpora­
tion, and Director of the Office of Thrift Supervision shall obtain, to
the extent necessary, the agreement of such foreign authority to

maintain the confidentiality of such information to the extent pos­
sible under applicable law.” .
SEC. 207. APPRO VAL REQUIRED FOR ACQUISITION BY FOREIGN BANKS
OF SHARES OF UNITED STATES BANKS.

Section 8(a) of the International Banking Act of 1978 (12 U.S.C.
3106(a)) is amended by striking “thereto” and all that follows
through the period and inserting “to such provisions.” .
SEC. 208. PENALTIES.

The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is
amended by inserting after section 15 (as added by section 206 of this
subtitle) the following new section:
“ SEC. 16. PENALTIES.

“ (a) C i v i l M o n e y P e n a l t y .—
“ (1) In g e n e r a l . —Any foreign bank, and any office or subsidi­
ary of a foreign bank, that violates, and any individual who
participates in a violation of, any provision of this Act, or any
regulation prescribed or order issued under this Act, shall
forfeit and pay a civil penalty of not more than $25,000 for each
day during which such violation continues.
“ (2) A s s e s s m e n t p r o c e d u r e s .—Any penalty imposed under
paragraph (1) may be assessed and collected by the Board or the
Comptroller of the Currency in the manner provided in sub­
paragraphs (E), (F), (G), (H), and (I) of section 8(i)(2) of the
Federal Deposit Insurance Act for penalties imposed (under
such section), and any such assessments shall be subject to the
provisions of such section.
' “ (3) H e a r i n g p r o c e d u r e . —Section 8(h) of the Federal Deposit
Insurance Act shall apply to any proceeding under this section.
“ (4) D i s b u r s e m e n t .—A l l penalties collected under authority
of this section shall be deposited into the Treasury.
“(5) V i o l a t e d e f i n e d .—For purposes of this section, the term
‘violate’ includes taking any action (alone or with others) for or
toward causing, bringing about, participating in, counseling, or
aiding or abetting a violation.
“(6) R e g u l a t i o n s .—The Board and the Comptroller of the
Currency shall each prescribe regulations establishing such
procedures as may be necessary to carry out this section.
“ (b) N o t ic e U n d e r T h i s S e c t i o n A f t e r S e p a r a t i o n F r o m S e r v ­
i c e .—The resignation, termination of employment or participation,
or separation of an institution-affiliated party (within the meaning
of section 3(u) of the Federal Deposit Insurance Act) with respect to
a foreign bank, or any office or subsidiary of a foreign bank (includ­
ing a separation caused by the termination of a location in the
United States), shall not affect the jurisdiction or authority of the
Board or the Comptroller of the Currency to issue any notice or to
proceed under this section against any such party, if such notice is
served before the end of the 6-year period beginning on the date
such party ceased to be an institution-affiliated party with respect to
such foreign bank or such office or subsidiary of a foreign bank
(whether such date occurs on, before, or after the date of the
enactment of the Foreign Bank Supervision Enhancement Act of
1991).
“(c) P e n a l t y f o r F a i l u r e t o M a k e R e p o r t s .—

12 USC 3lio.

“ (1) F i r s t t i e r . —Any foreign bank, or any office or subsidiary
of a foreign bank, that—
“(A) maintains procedures reasonably adapted to avoid
any inadvertent error and, unintentionally and as a result
of such error—
“(i) fails to make, submit, or publish such reports or
information as may be required under this Act or
under regulations prescribed by the Board or the
Comptroller of the Currency under this Act, within the
period of time specified by the agency; or
“ (ii) submits or publishes any false or misleading
report or information; or
“ (B) inadvertently transmits or publishes any report that
is minimally late,
shall be subject to a penalty of not more than $2,000 for each
day during which such failure continues or such false or mis­
leading information is not corrected. The foreign bank, or the
office or subsidiary of a foreign bank, shall have the burden of
proving that an error was inadvertent and that a report was
inadvertently transmitted or published late.
“ (2) S e c o n d t i e r .—Any foreign bank, or any office or subsidi­
ary of a foreign bank, that—
“ (A) fails to make, submit, or publish such reports or
information as may be required under this Act or under
regulations prescribed by the Board or the Comptroller of
the Currency pursuant to this Act, within the time period
specified by such agency; or
“(B) submits or publishes any false or misleading report
or information,
in a manner not described in paragraph (1) shall be subject to a
penalty of not more than $20,000 for each day during which
such failure continues or such false or misleading information is
not corrected.
“ (3) T h i r d t i e r .—Notwithstanding paragraph (2), if any com­
pany knowingly or with reckless disregard for the accuracy of
any information or report described in paragraph (2) submits or
publishes any false or misleading report or information, the
Board or the Comptroller of the Currency may, in the Board’s or
Comptroller’s discretion, assess a penalty of not more than
$1,000,000 or 1 percent of total assets of such foreign bank, or
such office or subsidiary of a foreign bank, whichever is less, per
day for each day during which such failure continues or such
false or misleading information is not corrected.
.
“ (4) A s s e s s m e n t o f p e n a l t i e s .—Any penalty imposed under
paragraph (1), (2), or (3) shall be assessed and collected by the
Board or the Comptroller of the Currency in the manner pro­
vided in subsection (a)(2) (for penalties imposed under such
subsection) and any such assessment (including the determina­
tion of the amount of the penalty) shall be subject to the
provisions of such subsection.
“ (5) H e a r i n g p r o c e d u r e .—Section 8(h) of the Federal Deposit
Insurance Act shall apply to any proceeding under this
subsection.” .

SEC. 209. POWERS OF AGENCIES RESPECTING APPLICATIONS, EXAMINA­
TIONS, AND OTHER PROCEEDINGS.

Section 13(b) of the International Banking Act of 1978 (12 U.S.C.
3108(b)) is amended—
(1) by striking “ (b) In addition to” and inserting “ (b) E n f o r c e ­
m e n t .—

“(1) I n g e n e r a l .—In addition to” ;
(2) by adding at the end the following new paragraphs:
“(2) A u t h o r i t y t o a d m i n i s t e r o a t h s ; s u b p o e n a p o w e r .—In
the course of, or in connection with, an application, examina­
tion, investigation, or other proceeding under this Act, the
Board, the Comptroller of the Currency, and the Federal De­
posit Insurance Corporation, as the case may be, any member of
the Board or of the Board of Directors of the Corporation, and
any designated representative of the Board, Comptroller, or
Corporation (including any person designated to conduct any
hearing under this Act) may—
“ (A) administer oaths and affirmations and take or cause
to be taken depositions; and
“ (B) issue, revoke, quash, or modify any subpoena, includ­
ing any subpoena requiring the attendance and testimony
of a witness or any subpoenas duces tecum.
“ (3 ) A d m i n i s t r a t i v e a s p e c t s o f s u b p o e n a s . —
“ (A ) A t t e n d a n c e a n d p r o d u c t io n a t d e s ig n a t e d

s i t e .—

The attendance of any witness and the production of any
document pursuant to a subpoena under paragraph (2) may
be required at the place designated in the subpoena from
any place in any State (as defined in section 3(a)(3) of the
Federal Deposit Insurance Act) or other place subject to the
jurisdiction of the United States.
“ (B) S e r v i c e o f s u b p o e n a .—Service of a subpoena issued
under this subsection may be made by registered mail, or in
such other manner reasonably calculated to give actual
notice as the Board, Comptroller of the Currency, or Fed­
eral Deposit Insurance Corporation may by regulation or
otherwise provide.
“ (C ) F e e s a n d t r a v e l e x p e n s e s . —Witnesses subpoenaed
under this subsection shall be paid the same fees and
mileage that are paid witnesses in the district courts of the
United States.
“ (4 ) C o n t u m a c y o r r e f u s a l .—
“ (A) I n g e n e r a l .—In the case

of contumacy of any person
issued a subpoena under this subsection or a refusal by such
person to comply with such subpoena, the Board, Comptrol­
ler of the Currency, or Federal Deposit Insurance Corpora­
tion, or any other party to proceedings in connection with
which subpoena was issued may invoke the aid of—
“ (i) the United States District Court for the District
of Columbia, or
“(ii) any district court of the United States within the
jurisdiction of which the proceeding is being conducted
or the witness resides or carries on business.
“(B) C o u r t o r d e r .—Any court referred to in subpara­
graph (A) may issue an order requiring compliance with a
subpoena issued under this subsection.

“ (5) E x p e n s e s a n d f e e s . —Any court having jurisdiction of
any proceeding instituted under this subsection may allow any
party to such proceeding such reasonable expenses and attor­
neys’ fees as the court deems just and proper.
“ (6) C r i m i n a l p e n a l t y . —Any person who willfully fails or
refuses to attend and testify or to answer any lawful inquiry or
to produce books, papers, correspondence, memoranda, con­
tracts, agreements, or other records in accordance with any
subpoena under this subsection shall be fined under title 18,
United States Code, imprisoned not more than 1 year, or both.
Each day during which any such failure or refusal continues
shall be treated as a separate offense.” .
SEC. 210. CLARIFICATION OF MANAGERIAL STANDARDS IN BANK H OLD­
ING COMPANY ACT OF 1956.

Section 3(c) of the Bank Holding Company Act of 1956 (12 U.S.C.
1842(c)) (as amended by section 202(d) of this subtitle) is amended by
adding at the end the following new paragraph:
“ (5) M a n a g e r i a l r e s o u r c e s . —Consideration of the manage­
rial resources of a company or bank under paragraph (2) shall
include consideration of the competence, experience, and integ­
rity of the officers, directors, and principal shareholders of the
company or bank.” .
SEC. 211. STANDARDS AND FACTORS IN THE HOME OWNERS’ LOAN ACT.

Section 10(e) of the Home Owners’ Loan Act (12 U.S.C. 1467a(e)) is
amended—
(1) in paragraph (1), by inserting after subparagraph (B) the
following:
“ Consideration of the managerial resources of a company or
savings association under subparagraph (B) shall include consid­
eration of the competence, experience, and integrity of the
officers, directors, and principal shareholders of the company or
association.” ;
(2) in paragraph (2)—
(A) by inserting after the second sentence “Consideration
of the managerial resources of a company or savings
association shall include consideration of the competence,
experience, and integrity of the officers, directors, and prin­
cipal shareholders of the company or association.” ;
(B) by striking “or” at the end of subparagraph (A);
(C) by striking the period at the end of subparagraph (B)
and inserting a comma; and
(D) by inserting after subparagraph (B) the following new
subparagraphs:
“ (C) if the company fails to provide adequate assurances
to the Director that the company will make available to the
Director such information on the operations or activities of
the company, and any affiliate of the company, as the
Director determines to be appropriate to determine and
enforce compliance with this Act, or
“ (D) in the case of an application involving a foreign
bank, if the foreign bank is not subject to comprehensive
supervision or regulation on a consolidated basis by the
appropriate authorities in the bank’s home country.” .

SEC. 212. AUTHORITY OF FEDERAL BANKING AGENCIES TO ENFORCE
CONSUMER STATUTES.

(a)

A m en d m en ts to
(1) M a i n t e n a n c e

the

Home

of records

M

ortgage

and

D i s c l o s u r e A c t .—
d i s c l o s u r e . —Sec­

p u b l ic

tion 304(h) of the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2803(h)) is amended—
(A) by striking paragraph (1) and inserting the following
new paragraph:
“ (1) the Office of the Comptroller of the Currency for national
banks and Federal branches and Federal agencies of foreign
banks;” ; and
(B) by striking paragraph (3) and inserting the following
new paragraph:
“ (3) the Federal Deposit Insurance Corporation for banks
insured by the Federal Deposit Insurance Corporation (other
than members of the Federal Reserve System), mutual savings
banks, insured State branches of foreign banks, and any other
depository institution described in section 303(2)(A) which is not
otherwise referred to in this paragraph;” .
(2) E n f o r c e m e n t .— Section 305(b) of the Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2804(b)) is amended—
(A) by striking paragraph (1) and inserting the following
new paragraph:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
of—
“(A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board; and
“ (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System), mutual savings banks as defined in section 3(f) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(f)), in­
sured State branches of foreign banks, and any other
depository institution not referred to in this paragraph or
paragraph (2) or (3) of this subsection, by the Board of
Directors of the Federal Deposit Insurance Corporation;” ;
and
(B) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
(b ) A m e n d m e n t t o t h e T r u t h i n L e n d i n g A c t .—Section 108(a) o f
the Truth in Lending Act (15 U.S.C. 1607(a)) is amended—
(1) by striking paragraph (1) and inserting the following new
paragraph:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
of—

“(A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“ (B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board; and
“(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration.” ; and
(2) by adding at the end the following:
“ The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
(c) A m e n d m e n t t o t h e F a i r C r e d i t R e p o r t i n g A c t . —Section
621(b) of the Fair Credit Reporting Act (15 U.S.C. 1681s(b)) is
amended—
(1) by striking paragraph (1) and inserting the following new
paragraph:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
o f—

“(A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board of Governors of the
Federal Reserve System; and
“ (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration.” ; and
(2) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
(d ) A m e n d m e n t t o t h e E q u a l C r e d i t O p p o r t u n i t y A c t .— S e c t io n
7 0 4 (a ) o f t h e E q u a l C r e d it O p p o r t u n i t y A c t (1 5 U .S .C . 1 6 9 1 c (a )) is
am ended—

(1) by striking paragraph (1) and inserting the following new
paragraph:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
o f—

“ (A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“ (B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board; and
“ (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration.” ; and
(2) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
( e ) A m e n d m e n t t o t h e F a i r D e b t C o l l e c t i o n P r a c t i c e s A c t .—
S e c t i o n 8 1 4 (b ) o f t h e F a i r D e b t C o l l e c t i o n P r a c t i c e s A c t (1 5 U .S .C .
1 6 921(b)) is a m e n d e d —

(1) by striking paragraph (1) and inserting the following:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
o f—

“(A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board of Governors of the
Federal Reserve System; and
“ (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration.” ; and
(2) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
(f) A m e n d m e n t t o t h e E l e c t r o n i c F u n d T r a n s f e r A c t . — S e c t io n
9 1 7 (a ) o f t h e E l e c t r o n i c F u n d T r a n s f e r A c t (1 5 U.S.C. 1 6 9 3 o (a )) is
am ended—

(1)
by striking paragraph (1) and inserting the following:
“(1) section 8 of the Federal Deposit Insurance Act, in the case
of—

4 Q -1 Q 4 n

_ 0 9 _ 1A - r v r

Q T>~_± o

“ (A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign
banks (other than Federal branches, Federal agencies, and
insured State branches of foreign banks), commercial lend­
ing companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25(a) of the
Federal Reserve Act, by the Board; and
“ (C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration;” ; and
(2) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
(g) A m e n d m e n t t o t h e F e d e r a l T r a d e C o m m i s s i o n A c t .—
(1) D e f i n i t i o n s .—Section 4 of the Federal Trade Commission
Act (15 U.S.C. 44) is amended by adding at the end the following
new paragraph:
“ ‘Banks’ means the types of banks and other financial
institutions referred to in section 18(f)(2).” .
(2 ) E n f o r c e m e n t . —Section 18(f) of the Federal Trade
Commission Act (15 U.S.C. 57a(f)) is amended—
(A) by striking paragraph (2) and inserting the following:
“ (2) E n f o r c e m e n t .—Compliance with regulations prescribed
under this subsection shall be enforced under section 8 of the
Federal Deposit Insurance Act, in the case of—
“ (A) national banks, banks operating under the code of
law for the District of Columbia, and Federal branches and
Federal agencies of foreign banks, by the divisions of
consumer affairs established by the Office of the Comptrol­
ler of the Currency;
“(B) member banks of the Federal Reserve System (other
than national banks and banks operating under the code of
law for the District of Columbia), branches and agencies of
foreign banks (other than Federal branches, Federal agen­
cies, and insured State branches of foreign banks), commer­
cial lending companies owned or controlled by foreign
banks, and organizations operating under section 25 or 25(a)
of the Federal Reserve Act, by the division of consumer
affairs established by the Board of Governors of the Federal
Reserve System; and
“(C) banks insured by the Federal Deposit Insurance
Corporation (other banks referred to in subparagraph (A) or
(B)) and insured State branches of foreign banks, by the
division of consumer affairs established by the Board of
Directors of the Federal Deposit Insurance Corporation.” ;
and
(B) by adding at the end the following:
“The terms used in this paragraph that are not defined in the
Federal Trade Commission Act or otherwise defined in section

3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s))
shall have the meaning given to them in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).” .
(h) A m e n d m e n t t o t h e E x p e d i t e d F u n d s A v a i l a b i l i t y A c t .—
Section 610(a) of the Expedited Funds Availability Act (12 U.S.C.
4009(a)) is amended—
(1) by striking paragraph (1) and inserting the following:
“ (1) section 8 of the Federal Deposit Insurance Act in the case
of—
“ (A) national banks, and Federal branches and Federal
agencies of foreign banks, by the Office of the Comptroller
of the Currency;
“ (B) member banks of the Federal Reserve System (other
than national banks), and offices, branches, and agencies of
foreign banks located in the United States (other than
Federal branches, Federal agencies, and insured State
branches of foreign banks), by the Board of Governors of the
Federal Reserve System; and
“(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance Cor­
poration;” ; and
(2) by adding at the end the following:
“The terms used in paragraph (1) that are not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(s)) shall have the meaning given to them in
section 1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).” .
SEC. 213. CRIMINAL PENALTY FO R VIOLATING
BANKING ACT OF 1978.

THE

INTERNATIONAL

The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is
amended by inserting after section 16 (as added by section 208 of this
subtitle) the following new section:
“ SEC. 17. CRIMINAL PENALTY.

12 USC 3111.

“Whoever, with the intent to deceive, to gain financially, or to
cause financial gain or loss to any person, knowingly violates any
provision of this Act or any regulation or order issued by the
appropriate Federal banking agency under this Act shall be impris­
oned not more than 5 years or fined not more than $1,000,000 for
each day during which a violation continues, or both.” .
SEC. 214. MISCELLANEOUS AMENDMENTS
BANKING ACT OF 1978.

TO

THE

INTERNATIONAL

(a) S e c t i o n 6.—Section 6 of the International Banking Act of 1978
(12 U.S.C. 3104) is amended—
(1) by redesignating subsection (b) as subsection (b)(1);
(2) by designating the last undesignated paragraph as para­
graph (2); and
(3) by adding at the end the following new subsection:
“(c) R e t a i l D e p o s i t -T a k i n g b y F o r e i g n B a n k s .—
“(1) In g e n e r a l . —After the date of enactment of this subsec­
tion, notwithstanding any other provision of this Act or any
provision of the Federal Deposit Insurance Act, in order to

Reports.

12 USC 3102

n°te-

accept or maintain deposit accounts having balances of less
than $100,000, a foreign bank shall—
“ (A) establish 1 or more banking subsidiaries in the United
States for that purpose; and
“(B) obtain Federal deposit insurance for any such
subsidiary in accordance with the Federal Deposit Insur­
ance Act.
“ (2 ) E x c e p t i o n .—Deposit accounts with balances of less than
$100,000 may be accepted or maintained in a branch of a foreign
bank only if such branch was an insured branch on the date of
the enactment of this subsection.” .
(b) S e c t i o n 7.—Section 7 of the International Banking Act of 1978
(12 U.S.C. 3105) is amended by adding at the end the following new
subsection:
“ (j) S t u d y ON EQUIVALENCE OF FOREIGN B AN K CAPITAL.—Not later
than 180 days after enactment of this subsection, the Board and the
Secretary of the Treasury shall jointly submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Commit­
tee on Banking, Finance and Urban Affairs of the House of Rep­
resentatives a report—
“ (1) analyzing the capital standards contained in the frame­
work for measurement of capital adequacy established by the
Supervisory committee of the Bank for International Settle­
ments, foreign regulatory capital standards that apply to for­
eign banks conducting banking operations in the United States,
and the relationship of the Basle and foreign standards to riskbased capital and leverage requirements for United States
banks; and
“ (2) establishing guidelines for the adjustments to be used by
the Board in converting data on the capital of such foreign
banks to the equivalent risk-based capital and leverage require­
ments for United States banks for purposes of determining
whether a foreign bank’s capital level is equivalent to that
imposed on United States banks for purposes of determinations
under section 7 of the International Banking Act of 1978 and
sections 3 and 4 of the Bank Holding Company Act of 1956.
An update shall be prepared annually explaining any changes in the
analysis under paragraph (1) and resulting changes in the guidelines
pursuant to paragraph (2).
SEC. 215. STUDY AND REPORT ON SUBSIDIARY REQUIREMENTS FO R FOR-

EIGN BANKS.

(a)
I n G e n e r a l .—The Secretary of the Treasury (hereafter re­
ferred to as the “ Secretary” ), jointly with the Board of Governors of
the Federal Reserve System and in consultation with the Comptrol­
ler of the Currency, the Federal Deposit Insurance Corporation, and
the Attorney General, shall conduct a study of whether foreign
banks should be required to conduct banking operations in the
United States through subsidiaries rather than branches. In
conducting the study, the Secretary shall take into account—
(1) differences in accounting and regulatory practices abroad
and the difficulty of assuring that the foreign bank meets
United States capital and management standards and is ade­
quately supervised;
(2) implications for the deposit insurance system;
(3) competitive equity considerations;
(4) national treatment of foreign financial institutions;

(5) the need to prohibit money laundering and illegal pay­
ments;
(6) safety and soundness considerations;
(7) implications for international negotiations for liberalized
trade in financial services;
(8) the tax liability of foreign banks;
(9) whether the establishment of subsidiaries by foreign banks
to operate in the United States should be required only if
United States Banks are authorized to engage in securities
activities and interstate banking and branching; and
(10) differences in treatment of United States creditors under
the bankruptcy and receivership laws.
(b) R e p o r t R e q u i r e d . —Not later than 1 year after the date of
enactment of this Act, the Secretary shall transmit to the Commit­
tee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Banking, Finance and Urban Affairs of the House of
Representatives a report on the results of the study under subsec­
tion (a). Any additional or dissenting views of participating agencies
shall be included in the report.

Subtitle B—Customer and Consumer
Provisions
SEC. 221. STUDY ON REGULATORY BURDEN.

(a) In G e n e r a l . — Not later than 1 year after the date of enact­
ment of this Act, the Federal Financial Institutions Examination
Council, in consultation with individuals representing insured
depository institutions, consumers, community groups, and other
interested parties, shall—
(1) review the policies and procedures, and recordkeeping and
documentation requirements used to monitor and enforce
compliance with—
(A) all laws under the jurisdiction of the Federal banking
agencies; and
(B) all laws affecting insured depository institutions
under the jurisdiction of the Secretary of the Treasury;
(2) determine whether such policies, procedures, and require­
ments impose unnecessary burdens on insured depository
institutions; and
(3) identify any revisions of such policies, procedures, and
requirements that could reduce unnecessary burdens on insured
depository institutions without in any respect—
(A) diminishing either compliance with or enforcement of
consumer laws in any respect; or
(B) endangering the safety and soundness of insured
depository institutions.
(b) R e p o r t . —Not later than I year after the date of enactment of
this Act, the Federal Financial Institutions Examination Council
shall submit to the Congress a report describing the revisions identi­
fied under subsection (a)(3).
(c) D e f i n i t i o n s . —For purposes of this section, the terms “insured
depository institution” and “Federal banking agency” have the
same meanings as in section 3 of the Federal Deposit Insurance Act.

12 USC 3305
note.

SEC. 222. DISCUSSION OF LENDING DATA.
(a )

P u b l ic S e c t io n s o f C o m m u n i t y R e in v e s t m e n t A c t R e ­
S e c t i o n 807(b)(1)(B) o f t h e C o m m u n i t y R e i n v e s t m e n t A c t o f
1977 (12 U .S .C . 2906(b)(1)(B)) is a m e n d e d b y i n s e r t i n g “ a n d d a t a ”
a fte r “ fa c ts ” .
(b ) O t h e r C o m m u n i t y R e i n v e s t m e n t A c t A m e n d m e n t s .— S e c t i o n
807 o f t h e C o m m u n i t y R e i n v e s t m e n t A c t o f 1977 (12 U .S .C . 2906) is
am ended—
p o r t s .—

(1) in subsection (a)(1), by striking “ depository institutions
regulatory agency” and inserting “ financial supervisory
agency” ;
(2) in subsection (b)(1)(A)—
(A) by striking “depository institutions regulatory agen­
cy’s” and inserting “financial supervisory agency’s” ; and
(B) by striking “depository institutions regulatory agen­
cies” and inserting “ financial supervisory agencies” ; and
(3) in subsection (c), by striking “ depository institutions regu­
latory agency” each place such term appears and inserting
“ financial supervisory agency” .
SEC. 223. ENFORCEMENT OF EQUAL CREDIT OPPORTUNITY ACT.

(a) P a t t e r n o r P r a c t i c e .—Section 706(g) of the Equal Credit
Opportunity Act (15 U.S.C. 1691e(g)) is amended by adding at the
end the following new sentence: “ Each agency referred to in para­
graphs (1), (2), and (3) of section 704(a) shall refer the matter to the
Attorney General whenever the agency has reason to believe that 1
or more creditors has engaged in a pattern or practice of discourag­
ing or denying applications for credit in violation of section 701(a).
Each such agency may refer the matter to the Attorney General
whenever the agency has reason to believe that 1 or more creditors
has violated section 701(a).” .
(b) D a m a g e s .—Section 706(h) of the Equal Credit Opportunity Act
(15 U.S.C. 1691e(h)) is amended by inserting “actual and punitive
damages and” after “ including” .
(c) N o t i c e t o HUD.—Section 706 of the Equal Credit Opportunity
Act (15 U.S.C. 1691e) is amended by adding at the end the following
new subsection:
“(k) N o t ic e t o HUD o f V i o l a t i o n s .—Whenever an agency re­
ferred to in paragraph (1), (2), or (3) of section 704(a)—
“(1) has reason to believe, as a result of receiving a consumer
complaint, conducting a consumer compliance examination, or
otherwise, that a violation of this title has occurred;
“ (2) has reason to believe that the alleged violation would be a
violation of the Fair Housing Act; and
“ (3) does not refer the matter to the Attorney General pursu­
ant to subsection (g),
the agency shall notify the Secretary of Housing and Urban Devel­
opment of the violation, and shall notify the applicant that the
Secretary of Housing and Urban Development has been notified of
the alleged violation and that remedies for the violation may be
available under the Fair Housing Act.” .
(d) A p p r a i s a l s .—Section 701 of the Equal Credit Opportunity Act
(15 U.S.C. 1691) is amended by adding at the end the following:
“(e) Each creditor shall promptly furnish an applicant, upon
written request by the applicant made within a reasonable period of
time of the application, a copy of the appraisal report used in
connection with the applicant’s application for a loan that is or

would have been secured by a lien on residential real property. The
creditor may require the applicant to reimburse the creditor for the
cost of the appraisal.” .
SEC. 224. HOME MORTGAGE DISCLOSURE ACT.

(a) I n G e n e r a l .—Section 309 of the Home Mortgage Disclosure
Act (12 U.S.C. 2808) is amended—
(1) by striking “ depository” before “ institution” ;
(2) by inserting “ specified in section 303(2)(A)” after “ institu­
tion” ; and
(3) by adding at the end the following: “The Board, in con­
sultation with the Secretary, may exempt institutions described
in section 303(2)(B) that are comparable within their respective
industries to institutions that are exempt under the preceding
sentence.” .
(b) E f f e c t i v e D a t e . —This section shall become effective on Janu- 12 usc 2808
ary 1,1992.
noteSEC. 225. NOTICE OF SAFEGUARD EXCEPTION.

Section 604 of the Expedited Funds Availability Act (12 U.S.C.
4003) is amended—
(1) in subsection (b), by inserting “(a)(2),” after “ subsection” ;
(2) in subsection (c)(1), by striking “(F)” after “ subsections
(a)(2)” ;
(3) in subsection (d), by inserting “(a)(2),” after “ subsections” ;
(4) in subsection (f)(l)(A)(i), by striking “day” and inserting
“time period within which” ; and
(5) in subsection (f), by adding at the end of paragraph (2) the
following:
“(D) In the case of a deposit to which subsection (b)(1) or
(b)(2) applies, the depository institution may, for
nonconsumer accounts and other classes of accounts, as
defined by the Board, that generally have a large number of
such deposits, provide notice at or before the time it first
determines that the subsection applies.
“ (E) In the case of a deposit to which subsection (b)(3)
applies, the depository institution may, subject to regula­
tions of the Board, provide notice at the beginning of each
time period it determines that the subsection applies. In
addition to the requirements contained in paragraph (1)(A),
the notice shall specify the time period for which the
exception will apply.” .
SEC. 226. DELEGATED PROCESSING.

Section 328(a) of the Cranston-Gonzalez National Affordable Hous­
ing Act (12 U.S.C. 1713 note) is amended in the first sentence by
inserting before the period “ or other individuals and entities ex­
pressly approved by the Department of Housing and Urban Develop­
ment’ .
SEC. 227. DEPOSITS
CHINES.

AT NONPROPRIETARY

AUTOMATED TELLER

MA­

(a) I n G e n e r a l .—Section 603(e) of the Expedited Funds Availabil­
ity Act (12 U.S.C. 4002(e)) is amended by striking paragraphs (1)(C)
and (2).
(b ) C o n f o r m i n g A m e n d m e n t s .— T h e E x p e d it e d F u n d s A v a i l a b i l ­
i t y A c t (12 U .S .C . 4001 e t s e q .) is a m e n d e d —

(1) in section 603(e) (12 U.S.C. 4002(e))—
(A) by striking the heading for paragraph (1) and insert­
ing the following:
“ (1 ) N o n p r o p r i e t a r y

a t m .—

and

(B) by redesignating paragraphs (3) and (4) as paragraphs
(2) and (3), respectively; and
(2) in section 604(a)(2) (12 U.S.C. 4003(a)(2)) by striking “ and
(2)” .
SEC. 228. NOTICE OF BRANCH CLOSURE.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended by adding after section 38 (as added by section 131 of this
Act) the following new section:
12 USC 1831p.

“ SEC. 39. NOTICE OF BRANCH CLOSURE.
“ (a ) N o t ic e
“ (1) I n

to

A

p p r o p r ia t e

F e d e r a l B a n k in g A

g e n c y .—

—An insured depository institution which
proposes to close any branch shall submit a notice of the
proposed closing to the appropriate Federal banking agency not
later than the first day of the 90-day period ending on the date
proposed for the closing.
“ (2) C o n t e n t s o f n o t i c e .—A notice under paragraph (1) shall
include—
“ (A) a detailed statement of the reasons for the decision
to close the branch; and
“ (B) statistical or other information in support of such
reasons.
“ (b) N o t ic e t o C u s t o m e r s .—
general.

“ (1) I n g e n e r a l .— A n i n s u r e d d e p o s i t o r y i n s t i t u t i o n w h i c h
p r o p o s e s t o c lo s e a b r a n c h s h a l l p r o v i d e n o t i c e o f t h e p r o p o s e d
c l o s i n g t o it s c u s t o m e r s .
“(2) C o n t e n t s o f n o t i c e .—Notice under paragraph (1) shall
co n s is t o f —

“(A) posting of a notice in a conspicuous manner on the
premises of the branch proposed to be closed during not less
than the 30-day period ending on the date proposed for that
closing; and
“(B) inclusion of a notice in—
“(i) at least one of any regular account statements
mailed to customers of the branch proposed to be
closed, or
“ (ii) in a separate mailing,
by not later than the beginning of the 90-day period ending
on the date proposed for that closing.
“ (c) A d o p t i o n o f P o l ic i e s .—Each insured depository institution
shall adopt policies for closings of branches of the institution.” .

Arton9^irprise
12 USC 1811

note'
12 USC 1834.

Subtitle C— Bank Enterprise Act
SEC. 231. SHORT TITLE.

This subtitle may be cited as the “ Bank Enterprise Act of 1991” .
SEC. 232. REDUCED ASSESSMENT RATE FOR DEPOSITS ATTRIBUTABLE TO
LIFELINE ACCOUNTS.
(a )
Q u a l if ic a t io n
B o a r d .—

of

L if e l in e A

ccounts

by

F ed eral R eserve

(1) I n g e n e r a l .—The Board of Governors of the Federal
Reserve System, and the Federal Deposit Insurance Corporation
shall establish minimum requirements for accounts providing
basic transaction services for consumers at insured depository
institutions in order for such accounts to qualify as lifeline
accounts for purposes of this section and section 7(b)(10) of the
Federal Deposit Insurance Act.
(2) F a c t o r s t o b e c o n s i d e r e d .— In determining the minimum
requirements under paragraph (1) for lifeline accounts at in­
sured depository institutions, the Board and the Corporation
shall consider the following factors:
(A) Whether the account is available to provide basic
transaction services for individuals who maintain a balance
of less than $1,000 or such other amount which the Board
may determine to be appropriate.
(B) Whether any service charges or fees to which the
account is subject, if any, for routine transactions do not
exceed a minimal amount.
(C) Whether any minimum balance or minimum opening
requirement to which the account is subject, if any, is not
more than a minimal amount.
(D) Whether checks, negotiable orders of withdrawal, or
similar instruments for making payments or other trans­
fers to third parties may be drawn on the account.
(E) Whether the depositor is permitted to make more
than a minimal number of withdrawals from the account
each month by any means described in subparagraph (D) or
any other means.
(F) Whether a monthly statement itemizing all trans­
actions for the monthly reporting period is made available
to the depositor with respect to such account or a passbook
is provided in which all transactions with respect to such
account are recorded.
(G) Whether depositors are permitted access to tellers at
the institution for conducting transactions with respect to
such account.
(H) Whether other account relationships with the institu­
tion are required in order to open any such account.
(I) Whether individuals are required to meet any pre­
requisite which discriminates against low-income individ­
uals in order to open such account.
(J) Such other factors as the Board may determine to be
appropriate.
(3) D e f i n i t i o n s .—For purposes of this subsection—
(A) B o a r d .—The term “Board” means the Board of Gov­
ernors of the Federal Reserve System.
(B) I n s u r e d d e p o s i t o r y i n s t i t u t i o n .—The term “insured
depository institution” has the meaning given to such term
in section 3(c)(2) of the Federal Deposit Insurance Act.
(C) L i f e l i n e a c c o u n t .—The term “lifeline account”
means any transaction account (as defined in section
19(b)(1)(C) of the Federal Reserve Act) which meets the
minimum requirements established by the Board under this
subsection.
(b )
p o s i t s .—

R educed

A ssessm en t

R ates

for

L if e l in e

A

ccount

D e­

A p p rop riation
authorization.

(1) R e p o r t i n g l i f e l i n e a c c o u n t d e p o s i t s .—Section 7(a) of the
Federal Deposit Insurance Act (12 U.S.C. 1817(a)) (as amended
by sections 122, 123, and 141 of this Act) is amended by re­
designating paragraphs (6), (7), (8), (9), and (10) as paragraphs
(7), (8), (9), (10), and (11), respectively, and by inserting after
paragraph (5) the following new paragraph:
“ (6) L i f e l i n e a c c o u n t d e p o s i t s .—In the reports of condition
required to be reported under this subsection, the deposits in
lifeline accounts (as defined in section 232(a)(3)(C) of the Bank
Enterprise Act of 1991) shall be reported separately.” .
(2) A s s e s s m e n t r a t e s a p p l i c a b l e t o l i f e l i n e d e p o s i t s . —Sec­
tion 7(b) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b))
is amended by redesignating paragraph (10) (as so redesignated
by section 103(b) of this Act) as paragraph (11) and by inserting
after paragraph (9) the following new paragraph:
“ (10) A s s e s s m e n t r a t e f o r l i f e l i n e a c c o u n t d e p o s i t s . —Not­
withstanding any other provision of this subsection, that por­
tion of the average assessment base of any insured depository
institution which is attributable to deposits in lifeline accounts
(as reported in the institution’s reports of condition pursuant to
subsection (a)(6)) shall be subject to assessment at the assess­
ment rate of Vz the maximum rate.” .
(3) A s s e s s m e n t p r o c e d u r e . —Section 7(b)(2)(A) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amended—
(A) by striking subclause (II) of clause (i) and inserting the
following new subclause:
“(II) such Bank Insurance Fund member’s aver­
age assessment base for the immediately preceding
semiannual period (minus any amount taken into
account under clause (iii) with respect to lifeline
account deposits); and” ; and
(B) by striking subclause (II) of clause (ii) and inserting
the following new subclause:
“ (II) such Savings Association Insurance Fund
member’s average assessment base for the imme­
diately preceding semiannual period (minus any
amount taken into account under clause (iii) with
respect to lifeline account deposits); and” ; and
(C) by adding at the end the following new clause:
“(iii) the semiannual assessment due from any Bank
Insurance Fund member or Savings Association Insur­
ance Fund member with respect to lifeline account
deposits for any semiannual assessment period shall be
the product of—
“(I) Vz the assessment rate applicable with re­
spect to such deposits pursuant to paragraph (10)
during that semiannual assessment period; and
“ (II) the portion of such member’s average
assessment base for the immediately preceding
semiannual period which is attributable to deposits
in lifeline accounts (as reported in the institution’s
reports of condition pursuant to subsection (a)(6)).” .
(c)
A v a i l a b i l i t y o f F u n d s . —The provisions of this secti
not take effect until appropriations are specifically provided in
advance. There are hereby authorized to be appropriated such sums
as may be necessary to carry out the provisions of this section.

SEC. 233. ASSESSMENT CREDITS FOR QUALIFYING ACTIVITIES RELATING
TO DISTRESSED COMMUNITIES.

12 USC 1834a.

(a )
D e t e r m i n a t i o n o f C r e d it s f o r I n c r e a s e s i n C o m m u n i t y
E n t e r p r i s e A c t i v i t i e s .—
(1) In g e n e r a l . —The Community Enterprise Assessment

Credit Board established under subsection (d) shall issue guide­
lines for insured depository institutions eligible under this
subsection for any community enterprise assessment credit with
respect to any semiannual period. Such guidelines shall—
(A) designate the eligibility requirements for any institu­
tion meeting applicable capital standards to receive an
assessment credit under section 7(d)(4) of the Federal De­
posit Insurance Act; and
(B) determine the community enterprise assessment
credit available to any eligible institution under paragraph
(3).
(2) Q u a l i f y i n g a c t i v i t i e s . —An insured depository institution
shall be eligible for any community enterprise assessment
credit for any semiannual period for—
(A) any increase during such period in the amount of new
originations of qualified loans and other financial assist­
ance provided for low- and moderate-income persons in
distressed communities, or enterprises integrally involved
with such neighborhoods, which the Board determines are
qualified to be taken into account for purposes of this
subsection; and
(B) any increase during such period in the amount of
deposits accepted from persons domiciled in the distressed
community, at any office of the institution (including any
branch) located in any qualified distressed community, and
any increase during such period in the amount of new
originations of loans and other financial assistance made
within that community, except that in no case shall the
credit for increased deposits at any institution or branch
exceed the credit for increased loan and other financial
assistance by the bank or branch in the distressed
community.
(3) A m o u n t o f a s s e s s m e n t c r e d i t . —The amount of any
community enterprise assessment credit available under section
7(d)(4) for any insured depository institution, or a qualified
portion thereof, for any semiannual period shall be the amount
which is equal to 5 percent, in the case of an institution which
does not meet the community development organization
requirements under section 235, and 15 percent, in the case of
an institution, or a qualified portion thereof, which meets such
requirements (or any percentage designated under paragraph
(5)) of the sum of—
(A) the amounts of assets described in paragraph (2)(A);
and
(B) the amounts of deposits, loans, and other extensions of
credit described in paragraph (2)(B).
(4) D e t e r m i n a t i o n o f q u a l i f i e d l o a n s a n d o t h e r f i n a n c i a l
a s s i s t a n c e . —Except as provided in paragraph (6), the types of
loans and other financial assistance which the Board may
determine to be qualified to be taken into account under para-

'

graph (2)(A) for purposes of the community enterprise assess­
ment credit, may include the following:
(A) Loans insured or guaranteed by the Secretary of
Housing and Urban Development, the Secretary of the
Department of Veterans Affairs, the Administrator of the
Small Business Administration, and the Secretary of Agri­
culture.
(B) Loans or financing provided in connection with activi­
ties assisted by the Administrator of the Small Business
Administration or any small business investment company
and investments in small business investment companies.
(C) Loans or financing provided in connection with any
neighborhood housing service program assisted under the
Neighborhood Reinvestment Corporation Act.
(D) Loans or financing provided in connection with any
activities assisted under the community development block
grant program under title I of the Housing and Community
Development Act of 1974.
(E) Loans or financing provided in connection with activi­
ties assisted under title II of the Cranston-Gonzalez Na­
tional Affordable Housing Act.
(F) Loans or financing provided in connection with a
homeownership program assisted under title III of the
United States Housing Act of 1937 or subtitle B or C of title
IV of the Cranston-Gonzalez National Affordable Housing
Act.
(G) Financial assistance provided through community
development corporations.
(H) Federal and State programs providing interest rate
assistance for homeowners.
(I) Extensions of credit to nonprofit developers or pur­
chasers of low-income housing and small business develop­
ments.
(J) In the case of members of any Federal home loan
bank, participation in the community investment fund pro­
gram established by the Federal home loan banks.
(K) Conventional mortgages targeted to low- or moderateincome persons.
(5) A d j u s t m e n t o f p e r c e n t a g e .—The Board may increase or
decrease the percentage referred to in paragraph (3) for deter­
mining the amount of any community enterprise assessment
credit pursuant to such paragraph, except that the percentage
established for insured depository institutions which meet the
community development organization requirements under sec­
tion 235 shall not be less than 3 times the amount of the
percentage applicable for insured depository institutions which
do not meet such requirements.
(6) C e r t a i n

in v e s t m e n t s

not

e l ig ib l e

to

be

taken

in t o

—Investments by any insured depository institution in
loans and securities that are not the result of originations by
the institution shall not be taken into account for purposes of
determining the amount of any credit pursuant to this
subsection.
account.

(b ) Q u a l i f i e d D i s t r e s s e d C o m m u n i t y D e f i n e d .—
(1)
I n g e n e r a l . —For purposes of this

section, the term
“ qualified distressed community” means any neighborhood or
community which—

(A) meets the minimum area requirements under para­
graph (3) and the eligibility requirements of paragraph (4);
and
(B) is designated as a distressed community by any in­
sured depository institution in accordance with paragraph
(2) and such designation is not disapproved under such
paragraph.
(2) D e s i g n a t i o n r e q u i r e m e n t s . —
(A ) N

o t ic e o f d e s i g n a t i o n .—

(i) N o t i c e t o a g e n c y . —Upon designating an area as
a qualified distressed community, an insured deposi­
tory institution shall notify the appropriate Federal
banking agency of the designation.
(ii) P u b l i c n o t i c e .—Upon the effective date of any
designation of an area as a qualified distressed commu­
nity, an insured depository institution shall publish a
notice of such designation in major newspapers and
other community publications which serve such area.
(B) A g e n c y d u t i e s r e l a t i n g t q d e s i g n a t i o n s . —
(i) P r o v i d i n g i n f o r m a t i o n . —At the request of any
insured depository institution, the appropriate Federal
banking agency shall provide to the institution appro­
priate information to assist the institution to identify
and designate a qualified distressed community.
(ii) P e r i o d f o r d i s a p p r o v a l . —Any notice received by Effective date,
the appropriate Federal banking agency from any in­
sured depository institution under subparagraph (A)(i)
shall take effect at the end of the 90-day period begin­
ning on the date such notice is received unless written
notice of the approval or disapproval of the application
by the agency is provided to the institution before the
end of such period.
(3) M in im u m a r e a r e q u i r e m e n t s . —For purposes of this
subsection, an area meets the requirements of this paragraph
if—
(A) the area is within the jurisdiction of 1 unit of general
local government;
(B) the boundary of the area is contiguous; and
(C) the area—
(i) has a population, as determined by the most
recent census data available, of not less than—
(I) 4,000, if any portion of such area is located
within a metropolitan statistical area (as des­
ignated by the Director of the Office of Manage­
ment and Budget) with a population of 50,000 or
more; or
(ID 1,000, in any other case; or
(ii) is entirely within an Indian reservation (as deter­
mined by the Secretary of the Interior).
(4) E l i g i b i l i t y r e q u i r e m e n t s .—For purposes of this subsec­
tion, an area meets the requirements of this paragraph if at
least 2 of the following criteria are met:
(A) I n c o m e . —At least 70 percent of the families and
unrelated individuals residing in the area have incomes of
less than 80 percent of the median income of the area.
(B) P o v e r t y .— At least 20 percent of the residents resid­
ing in the area have incomes which are less than the

national poverty level (as determined pursuant to criteria
established by the Director of the Office of Management
and Budget).
(C)
U n e m p l o y m e n t . —The unemployment rate for the
area is one and one-half times greater than the national
average (as determined by the Bureau of Labor Statistic’s
most recent figures).
(c) A s s e s s m e n t C r e d i t P r o v i d e d . —
(1 ) I n g e n e r a l . — Section 7(d) of the Federal Deposit Insurance
Act (12 U.S.C. 1817(d)) is amended—
(A) by redesignating paragraphs (4) and (5) as paragraphs
(6) and (7), respectively; and
(B) by inserting after paragraph (3) the following new
paragraphs:
“(4) C o m m u n i t y e n t e r p r i s e a s s e s s m e n t c r e d i t s . — Notwith­
standing paragraphs (2)(A) and (3)(A) and in addition to any
assessment credit authorized under paragraph (2)(B) or (3)(B),
the Corporation shall allow an assessment credit for any semi­
annual assessment period to any Bank Insurance Fund member
or Savings Association Insurance Fund member satisfying the
requirements of the Community Enterprise Assessment Credit
Board under section 233(a)(1) of the Bank Enterprise Act of 1991
in the amount determined by such Board through regulation for
such period pursuant to such section.
“ (5) M a x i m u m a m o u n t o f c r e d i t . —The total amount of
assessment credits allowed under this subsection (including
community enterprise assessment credits pursuant to para­
graph (4)) for any insured depository institution for any semi­
annual period shall not exceed the amount which is equal to 20
percent, in the case of an institution which does not meet the
community development organization requirements under sec­
tion 235 of the Bank Enterprise Act of 1991, and 50 percent, in
the case of an institution which meets such requirements, of the
assessment imposed on such institution for the semiannual
period.” .
(2) T e c h n i c a l a n d c o n f o r m i n g a m e n d m e n t s . —
(A) Subparagraph (A) of section 7(d)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended by
inserting “ (other than credits allowed pursuant to para­
graph (4))” after “amount to be credited” .
(B) Subparagraph (B) of section 7(d)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(d)(1)) is amended by
inserting “ (taking into account any assessment credit al­
lowed pursuant to paragraph (4))” after “should be
reduced” .
(d) C o m m u n i t y E n t e r p r i s e A s s e s s m e n t C r e d i t B o a r d . —
(1) E s t a b l i s h m e n t . —There is hereby established the
“ Community Enterprise Assessment Credit Board” .
(2) N u m b e r a n d a p p o i n t m e n t . —The Board shall be composed
of 5 members as follows:
(A) The Secretary of the Treasury or a designee of the
Secretary.
(B) The Secretary of Housing and Urban Development or
a designee of the Secretary.
(C) The Chairperson of the Federal Deposit Insurance
Corporation or a designee of the Chairperson.

(D) 2 individuals appointed by the President from among
individuals who represent community organizations.
(3) T e e m s .—
( A ) A p p o i n t e d m e m b e r s .— Each appointed member shall
be appointed for a term of 5 years.
(B) I n t e r i m a p p o i n t m e n t .—Any member appointed to fill
a vacancy occurring before the expiration of the term to
which such member’s predecessor was appointed shall be
appointed only for the remainder of such term.
(C ) C o n t i n u a t i o n o f s e r v i c e .— Each appointed member
may continue to serve after the expiration of the period to
which such member was appointed until a successor has
been appointed.
(4) C h a i r p e r s o n .—The Secretary of the Treasury shall serve
as the Chairperson of the Board.
(5) No p a y .—No members of the Commission may receive any
pay for service on the Board.
(6) T r a v e l e x p e n s e s .—Each member shall receive travel ex­
penses, including per diem in lieu of subsistence, in accordance
with sections 5702 and 5703 of title 5, United States Code.
(7) M e e t i n g s .—The Board shall meet at the call of the Chair­
person or a majority of the Board’s members.
(e) D u t i e s o f t h e B o a r d .—
(1)

P rocedure

for

d e t e r m in in g

c o m m u n it y

President,

e n t e r p r is e

—The Board shall establish procedures for
accepting and considering applications by insured depository
institutions under subsection (a)(1) for community enterprise
assessment credits and making determinations with respect to
such applications.
(2) N o t ic e t o f d i c .—The Board shall notify the applicant and
the Federal Deposit Insurance Corporation of any determina­
tion of the Board with respect to any application referred to in
paragraph (1) in sufficient time for the Corporation to include
the amount of such credit in the computation made for purposes
of the notification required under section 7(d)(1)(B).
(f) A v a i l a b i l i t y o f F u n d s .— The provisions of this section shall
not take effect until appropriations are specifically provided in
advance. There are hereby authorized to be appropriated such sums
as may be necessary to carry out the provisions of this section,
(g) D e f i n i t i o n s .—For purposes of this section—
(1) A p p r o p r i a t e f e d e r a l b a n k i n g a g e n c y .—The term
“ appropriate Federal banking agency” has the meaning given
to such term in section 3(q) of the Federal Deposit Insurance
Act.
(2) B o a r d .—The term “Board” means the Community Enter­
prise Assessment Credit Board established under the amend­
ment made by subsection (d).
(3) I n s u r e d d e p o s i t o r y i n s t i t u t i o n .—The term “ insured
depository institution” has the meaning given to such term in
section 3(c)(2) of the Federal Deposit Insurance Act.
a s s e s s m e n t c r e d it s .

SEC. 234. COMMUNITY DEVELOPMENT ORGANIZATIONS.

A p prop riation
authorization.

12 USC 1834b.

(a)
C o m m u n i t y D e v e l o p m e n t O r g a n i z a t i o n s D e s c r i b e d .—For
purposes of this subtitle, any insured depository institution, or a
qualified portion thereof, shall be treated as meeting the community
development organization requirements of this section if—
(1) the institution—

(A) is a community development bank, or controls any
community development bank, which meets the require­
ments of subsection (b);
(B) controls any community development corporation, or
maintains any community development unit within the
institution, which meets the requirements of subsection (c);
(C) invests in accounts in any community development
credit union designated as a low-income credit union, sub­
ject to restrictions established for such credit unions by the
National Credit Union Administration Board; or
(D) invests in a community development organization
jointly controlled by two or more institutions;
(2) except in the case of an institution which is a community
development bank, the amount of the capital invested, in the
form of debt or equity, by the institution in the community
development organization referred to in paragraph (1) (or, in the
case of any community development unit, the amount which the
institution irrevocably makes available to such unit for the
purposes described in paragraph (3)) is not less than the greater
of—
(A) Vz of 1 percent of the capital, as defined by generally
accepted accounting principles, of the institution; or
(B) the sum of the amounts invested in such community
development organization; and
(3) the community development organization provides loans
for residential mortgages, home improvement, and community
development and other financial services, other than financing
for the purchase of automobiles or extension of credit under any
open-end credit plan (as defined in section 103(i) of the Truth in
Lending Act), to low- and moderate-income persons, nonprofit
organizations, and small businesses located in qualified dis­
tressed communities in a manner consistent with the intent of
this subtitle.
(b) C o m m u n i t y D e v e l o p m e n t B a n k R e q u i r e m e n t s . —A commu­
nity development bank meets the requirements of this subsection
if—
(1) the community development bank has a 15-member ad­
visory board designated as the “ Community Investment Board”
and consisting entirely of community leaders who—
(A) shall be appointed initially by the board of directors of
the community development bank and thereafter by the
Community Investment Board from nominations received
from the community; and
(B) are appointed for a single term of 2 years, except that,
of the initial members appointed to the Community Invest­
ment Board, Vs shall be appointed for a term of 8 months,
Vs shall be appointed for a term of 16 months, and Vs shall
be appointed for a term of 2 4 months, as designated by the
board of directors of the community development bank at
the time of the appointment;
(2 ) Vs of the members of the community development bank’s
board of directors are appointed from among individuals nomi­
nated by the Community Investment Board; and
(3) the bylaws of the community development bank require
that the board of directors of the bank meet with the Commu­
nity Investment Board at least once every 3 months.

(c) C o m m u n i t y D e v e l o p m e n t C o r p o r a t i o n R e q u i r e m e n t s .—Any
community development corporation, or community development
unit within any insured depository institution meets the require­
ments of this subsection if the corporation or unit provides the same
or greater, as determined by the appropriate Federal banking
agency, community participation in the activities of such corpora­
tion or unit as would be provided by a Community Investment Board
under subsection (b) if such corporation or unit were a community
development bank.
(d) A d e q u a t e D i s p e r s a l R e q u i r e m e n t .—The appropriate Federal
banking agency may approve the establishment of a community
development organization under this subtitle only upon finding that
the distressed community is not adequately served by an existing
community development organization.
(e) D e f i n i t i o n s .—For purposes of this section—
(1) C o m m u n i t y d e v e l o p m e n t b a n k .—The term “community
development bank” means any depository institution (as de­
fined in section 3(c)(1) of the Federal Deposit Insurance Act).
(2) C o m m u n i t y d e v e l o p m e n t o r g a n i z a t i o n .—The term
“community development organization” means any community
development bank, community development corporation,
community development unit within any insured depository
institution, or community development credit union.
(3) Low- a n d m o d e r a t e - i n c o m e p e r s o n s .—The term “lowand moderate-income persons” has the meaning given such
term in section 102(a)(20) of the Housing and Community Devel­
opment Act of 1974.
(4) N o n p r o f i t o r g a n i z a t i o n ; s m a l l b u s i n e s s .— The terms
“ nonprofit organization” and “ small business” have the mean­
ings given to such terms by regulations which the appropriate
Federal banking agency shall prescribe for purposes of this
section.
(5) Q u a l i f i e d d i s t r e s s e d c o m m u n i t y .—The term “qualified
distressed community” has the meaning given to such term in
section 233(b).

Subtitle D— FDIC Property Disposition
SEC. 241. FDIC AFFORDABLE HOUSING PROGRAM.

(a) I n G e n e r a l .—The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by adding after section 39 (as added by
section 228 of this title) the following new section:
“ SEC. 40. FDIC AFFORDABLE HOUSING PROGRAM.
“ (a ) P u r p o s e .— T h e p u r p o s e o f t h is s e c t i o n is t o p r o v id e
h o m e o w n e r s h i p a n d r e n t a l h o u s i n g o p p o r t u n i t i e s f o r v e r y lo w in c o m e , lo w - i n c o m e , a n d m o d e r a t e - i n c o m e f a m ilie s .
“ (b ) F u n d i n g a n d L i m i t a t i o n s o f P r o g r a m .—
“ (1) D u r a t i o n o f p r o g r a m .— T h e p r o v is io n s o f t h is s e c t i o n
s h a l l b e e f f e c t i v e , s u b j e c t t o t h e p r o v is io n s o f p a r a g r a p h (2 ), o n l y
d u r i n g t h e 3 -y e a r p e r i o d b e g i n n i n g u p o n t h e c o m m e n c e m e n t o f
t h e f i r s t f i s c a l y e a r f o r w h i c h a m o u n t s a r e p r o v id e d p u r s u a n t t o
p a r a g r a p h (2 )(A ).
“ (2 ) A n n u a l f i s c a l l i m i t a t i o n s .—

Disadvantaged.
12 USC 1831q.

Federal
Register,
publication.

“ ( A ) In g e n e r a l . — In each fiscal year during the 3-year
period referred to in paragraph (1), the provisions of this
section shall apply only—
“(i) to such extent or in such amounts as are provided
in appropriations Acts for any losses resulting during
the fiscal year from the sale of properties under this
section, except that such amounts for losses may not
exceed $30,000,000 in any fiscal year; and
“ (ii) to the extent that amounts are provided in
appropriations Acts pursuant to subparagraph (C) for
any other costs relating to the program under this
section.
“ (B) D e f i n i t i o n o f l o s s e s . —For purposes of this para­
graph, the amount of losses resulting from the sale of
properties under this section during any fiscal year shall be
the amount equal to the sum of any affordable housing
discounts reasonably anticipated to accrue during the fiscal
year.
“ (C) A u t h o r i z a t i o n o f a p p r o p r i a t i o n s . —There are au­
thorized to be appropriated, for each fiscal year during the
3-year period referred to in paragraph (1), such sums as
may be necessary for any costs of the program under this
section other than losses resulting from the sale of prop­
erties under this section.
“ (D ) O t h e r d e f i n i t i o n s . —For purposes of this paragraph:
“(i) A f f o r d a b l e h o u s i n g d i s c o u n t . —The term
‘affordable housing discount’ means, with respect to
any eligible residential or eligible condominium prop­
erty transferred under this section by the Corporation,
the difference (if any) between the realizable disposi­
tion value of the property and the actual sale price of
the property under this section.
“(ii) R e a l i z a b l e d i s p o s i t i o n v a l u e . —The term
‘realizable disposition value’ means the estimated sale
price that the Corporation reasonably would be able to
obtain upon the sale of a property by the Corporation
under the provisions of this Act, not including this
section, and any other applicable laws. Not later than
the expiration of the 120-day period beginning upon the
commencement of the first fiscal year for which
amounts are provided pursuant to paragraph (2)(A), the
Corporation shall establish, and publish in the Federal
Register, procedures for determining the realizable dis­
position value of a property transferred under this
section, which shall take into consideration such fac­
tors as the Corporation considers appropriate, includ­
ing the actual sale prices of properties disposed of by
the Resolution Trust Corporation under section 21A(c)
of the Federal Home Loan Bank Act, the prices of other
properties sold under similar programs, and the ap­
praised value of the property transferred under this
section. Until such procedures are established, the Cor­
poration may consider the realizable disposition value
of any eligible residential or condominium property to
be equal to the appraised value of the property.
“ (3) E x i s t i n g c o n t r a c t s . —The provisions of this section shall
not apply to any eligible residential property or any eligible

condominium property that is subject to an agreement entered
into by the Corporation before the commencement of the first
fiscal year for which amounts are provided pursuant to para­
graph (2)(A) that provides for any other disposition of the
property.
“ (c ) R u l e s G o v e r n i n g D i s p o s i t i o n o f E l i g i b l e S i n g l e F a m i l y
P r o p e r t i e s .—
“ (1 ) N o t ic e t o c l e a r i n g h o u s e s .—Within a reasonable period

of time after acquiring title to an eligible single family property,
the Corporation shall provide written notice to clearinghouses.
Such notice shall contain basic information about the property,
including but not limited to location, condition, and information
relating to the estimated fair market value of the property.
Each clearinghouse shall make such information available,
upon request, to other public agencies, other nonprofit organiza­
tions, and qualifying households. The Corporation shall allow
public agencies, nonprofit organizations, and qualifying house­
holds reasonable access to eligible single family property for
purposes of inspection.
“ (2) O f f e r s

to

sell

to

n o n p r o f it

o r g a n iz a t io n s ,

p u b l ic

—During the 180-day
period beginning on the date on which the Corporation makes
an eligible single family property available for sale, the Cor­
poration shall offer to sell the property to—
“ (A) qualifying households (including qualifying house­
holds with members who are veterans); or
“(B) public agencies or nonprofit organizations that agree
to (i) make the property available for occupancy by and
maintain it as affordable for low-income families (including
low-income families with members who are veterans) for
the remaining useful life of such property, or (ii) make the
property available for purchase by any such family who,
except as provided in paragraph (4), agrees to occupy the
property as a principal residence for at least 12 months and
certifies in writing that the family intends to occupy the
property for at least 12 months.
The restrictions described in clause (i) of subparagraph (B) shall
be contained in the deed or other recorded instrument. If, upon
the expiration of such 180-day period, no qualifying household,
public agency, or nonprofit organization has made a bona fide
offer to purchase the property, the Corporation may offer to sell
the property to any purchaser. The Corporation shall actively
market eligible single family properties for sale to low-income
families and to low-income families with members who are
veterans.
“(3) R e c a p t u r e o f p r o f i t s f r o m r e s a l e . —Except as provided
in paragraph (4), if any eligible single family property sold (A) to
a qualifying household, or (B) to a low-income family pursuant
to paragraph (2)(B)(ii), subsection (j)(3)(A), or subsection (k)(2), is
resold by the qualifying household or low-income family during
the 1-year period beginning upon initial acquisition by the
household or low-income family, the Corporation shall recap­
ture 75 percent of the amount of any proceeds from the resale
that exceed the sum of (i) the original sale price for the acquisi­
tion of the property by the qualifying household or low-income
family, (ii) the costs of any improvements to the property made
a g e n c ie s , a n d

q u a l if y in g

h o u seh o lds.

after the date of the acquisition, and (iii) any closing costs in
connection with the acquisition.
“ (4 ) E x c e p t i o n s t o r e c a p t u r e r e q u i r e m e n t .—
“ (A) R e l o c a t i o n .—The Corporation may in

its discretion
waive the applicability (i) to any qualifying household of the
requirement under paragraph (3) and the requirements
relating to residency of a qualifying household under
subsections (p)(12) (B) and (C), and (ii) to any low-income
family of the requirement under paragraph (3) and the
residency requirements under paragraph (2)(B)(ii). The Cor­
poration may grant any such waiver only for good cause
shown, including any necessary relocation of the qualifying
household or low-income family.
“ (B) O t h e r r e c a p t u r e p r o v i s i o n s .— The requirement
under paragraph (3) shall not apply to any eligible single
family property for which, upon resale by the qualifying
household or low-income family during the 1-year period
beginning upon initial acquisition by the household or
family, a portion of the sale proceeds or any subsidy pro­
vided in connection with the acquisition of the property by
the household or family is required to be recaptured or
repaid under any other Federal, State, or local law (includ­
ing section 143(m) of the Internal Revenue Code of 1986) or
regulation or under any sale agreement.

“ (5 ) E x c e p t i o n

to

a v o id

d is p l a c e m e n t

of

e x is t in g

r e s i­

—Notwithstanding the first sentence of paragraph (2),
during the 180-day period following the date on which the
Corporation makes an eligible single family property available
for sale, the Corporation may sell the property to the household
residing in the property, but only if (A) such household was
residing in the property at the time notice regarding the prop­
erty was provided to clearinghouses under paragraph (1), (B)
such sale is necessary to avoid the displacement of, and un­
necessary hardship to, the resident household, (C) the resident
household intends to occupy the property as a principal resi­
dence for at least 12 months, and (D ) the resident household
certifies in writing that the household intends to occupy the
property for at least 12 months.
den ts.

“ (d ) R u l e s G o v e r n i n g D i s p o s i t i o n o f E l i g i b l e M u l t i f a m i l y
H o u s i n g P r o p e r t i e s .—
“(1) N o t ic e t o c l e a r i n g h o u s e s .—Within a reasonable period

of time after acquiring title to an eligible multifamily housing
property, the Corporation shall provide written notice to
clearinghouses. Such notice shall contain basic information
about the property, including but not limited to location,
number of units (identified by number of bedrooms), and
information relating to the estimated fair market value of the
property. Each clearinghouse shall make such information
available, upon request, to qualifying multifamily purchasers.
The Corporation shall allow qualifying multifamily purchasers
reasonable access to eligible multifamily housing properties for
purposes of inspection.
“(2) E x p r e s s i o n o f s e r i o u s i n t e r e s t .—Qualifying multifamily
purchasers may give written notice of serious interest in a
property during a period ending 90 days after the time the
Corporation provides notice under paragraph (1). The notice of

serious interest shall be in such form and include such informa­
tion as the Corporation may prescribe.
“ (3 ) N o t ic e o f h e a d i n e s s f o e s a l e .—Upon the expiration of
the period referred to in paragraph (2) for a property, the
Corporation shall provide written notice to any qualifying
multifamily purchaser that has expressed serious interest in the
property. Such notice shall specify the minimum terms and
conditions for sale of the property.
“ (4 ) O f f e e s b y q u a l i f y i n g m u l t i f a m i l y p u r c h a s e r s .— A
q u a lify in g m u lt ifa m ily p u r c h a s e r r e c e iv in g n o tic e in a c c o r d a n c e
w i t h p a r a g r a p h (3 ) s h a l l h a v e 4 5 d a y s ( f r o m t h e d a t e n o t i c e is
r e c e iv e d ) t o m a k e a b o n a fid e o ffe r to p u r c h a s e th e p r o p e r ty .

The Corporation shall accept an offer that complies with the
terms and conditions established by the Corporation. If, before
the expiration of such 45-day period, any offer to purchase a
property initially accepted by the Corporation is subsequently
rejected or fails (for any reason), the Corporation shall accept
another offer to purchase the property made during such period
that complies with the terms and conditions established by the
Corporation (if such another offer is made). The preceding
sentence may not be construed to require a qualifying multifam­
ily purchaser whose offer is accepted during the 45-day period to
purchase the property before the expiration of the period.
“ (5 ) E x t e n s i o n o f r e s t r i c t e d o f f e r p e r i o d s .—The Corpora­
tion may provide notice to clearinghouses regarding, and offer
for sale under the provisions of paragraphs (1) through (4), any
eligible multifamily housing property—
“ (A) in which no qualifying multifamily purchaser has
expressed serious interest during the period referred to in
paragraph (2), or
“ (B) for which no qualifying multifamily purchaser has
made a bona fide offer before the expiration of the period
referred to in paragraph (4),
except that the Corporation may, in the discretion of the Cor­
poration, alter the duration of the periods referred to in para­
graphs (2) and (4) in offering any property for sale under this
paragraph.
“ (6 ) S a l e

o f m u l t i f a m i l y p r o p e r t i e s t o o t h e r p u r c h a s e r s .—

“ (A) T i m i n g . —If, upon the expiration of the period re­
ferred to in paragraph (2), no qualifying multifamily pur­
chaser has expressed serious interest in a property, the
Corporation may offer to sell the property, individually or
in combination with other properties, to any purchaser.
“(B) L i m i t a t i o n o n c o m b i n a t i o n s a l e s . — The Corpora­
tion may not sell in combination with other properties any
property for which a qualifying multifamily purchaser has
expressed serious interest in purchasing individually.
“(C) E x p i r a t i o n o f o f f e r p e r i o d . —If, upon the expira­
tion of the period referred to in paragraph (4), no qualifying
multifamily purchaser has made an offer to purchase a
property, the Corporation may offer to sell the property,
individually or in combination with other properties, to any
purchaser.
“ (7 ) L o w - i n c o m e o c c u p a n c y r e q u i r e m e n t s .—
“(A) S i n g l e p r o p e r t y p u r c h a s e s . —With

respect to any
purchase of a single eligible multifamily housing property

by a qualifying multifamily purchaser under paragraph (4)
or (5)—
“ (i) not less than 35 percent of all dwelling units
purchased shall be made available for occupancy by
and maintained as affordable for low-income and very
low-income families during the remaining useful life of
the property in which the units are located; provided
that
“(ii) not less than 20 percent of all dwelling units
purchased shall be made available for occupancy by
and maintained as affordable for very low-income fami­
lies during the remaining useful life of the property in
which the units are located.
“(B) A g g r e g a t i o n r e q u i r e m e n t s f o r m u l t i p r o p e r t y
p u r c h a s e s . —With respect to any purchase under para­
graph (4) or (5) by a qualifying multifamily purchaser
involving more than one eligible multifamily housing prop­
erty as a part of the same negotiation, with respect to which
the purchaser intends to aggregate the low-income occu­
pancy required under this paragraph over the total number
of units so purchased—
“ (i) not less than 40 percent of the aggregate number
of all dwelling units purchased shall be made available
for occupancy by and maintained as affordable for lowincome and very low-income families during the
remaining useful life of the building or structure in
which the units are located; provided that
“ (ii) not less than 20 percent of the aggregate number
of all dwelling units purchased shall be made available
for occupancy by and maintained as affordable for very
low-income families during the remaining useful life of
the building or structure in which the units are located;
and further provided that
“ (iii) not less than 10 percent of the dwelling units in
each separate property purchased shall be made avail­
able for occupancy by and maintained as affordable for
low-income families during the remaining useful life of
the property in which the units are located.
The requirements of this paragraph shall be contained in the
deed or other recorded instrument.
“ (8 ) E x e m p t i o n s .—
“ ( A ) C o n t i n u e d o c c u p a n c y o f c u r r e n t r e s i d e n t s . —No

purchaser of an eligible multifamily property may termi­
nate the occupancy of any person residing in the property
on the date of purchase for purposes of meeting low-income
occupancy requirement applicable to the property under
paragraph (7). The purchaser shall be considered to be in
compliance with this subsection if each newly vacant dwell­
ing unit is reserved for low-income occupancy until the lowincome occupancy requirement is met.
“ (B) F i n a n c i a l i n f e a s i b i l i t y . —The Secretary or the
State housing finance agency for the State in which an
eligible multifamily housing property is located may tempo­
rarily reduce the low-income occupancy requirements
under paragraph (7) applicable to the property, if the
Secretary or such agency determines that an owner’s
compliance with such requirements is no longer financially

feasible. The owner of the property shall make a good-faith
effort to return low-income occupancy to the level required
under paragraph (7), and the Secretary or the State housing
finance agency, as appropriate, shall review the reduction
annually to determine whether financial infeasibility
continues to exist.
“ (e) R e n t L i m i t a t i o n s .—
“ (1) In g e n e r a l . —With respect to properties under para­
graph (2), rents charged to tenants for unite made available for
occupancy by very low-income families shall not exceed 80
percent of the adjusted income of a family whose income equals
50 percent of the median income for the area, as determined by
the Secretary, with adjustment for family size. Rents charged to
tenants for units made available for occupancy by low-income
families other than very low-income families shall not exceed 30
percent of the adjusted income of a family whose income equals
65 percent of the median income for the area, as determined by
the Secretary, with adjustment for family size.
“ (2) A p p l i c a b i l i t y .—The rent limitations under t h is subsec­
tion shall apply to any eligible single family property sold
pursuant to subsection (c)(2)(B)(i) and to any eligible multifamily
housing property sold pursuant to subsection (d).
“(f) P r e f e r e n c e s f o r S a l e s .—
“ (1) In g e n e r a l . —In selling any eligible multifamily housing
property or combinations of eligible residential properties, the
Corporation shall give preference, among substantially similar
offers, to the offer that would reserve the highest percentage of
dwelling units for occupancy or purchase by very low-income
and low-income families and would retain such affordability for
the longest term.
“ (2) M u l t i p r o p e r t y p u r c h a s e s . —The Corporation shall give
preference, among substantially similar offers made under
paragraph (4) or (5) of subsection (d) to purchase more than one
eligible multifamily housing property as a part of the same
negotiation, to offers made by purchasers who agree to maintain
low-income occupancy in each separate property purchased in
compliance with the levels required for properties under subsec­
tion (d)(7)(A).
“ (3) D e f i n i t i o n o f s u b s t a n t i a l l y s i m i l a r o f f e r s .—For pur­
poses of this subsection, a given offer to purchase eligible multi­
family housing property or combinations of such properties
shall be considered to be substantially similar to another offer if
the purchase price under such given offer is not less than 85
percent of the purchase price under the other offer.
“(g) F i n a n c i n g S a l e s .—
“ (1 ) A s s i s t a n c e
“ (A) S a l e

by

c o r p o r a t io n .—

—The Corporation shall establish a
market value for each eligible multifamily housing prop­
erty. The Corporation shall sell eligible multifamily hous­
ing property at the net realizable market value, except that
the Corporation may agree to sell eligible multifamily hous­
ing property at a price below the net realizable market
value to the extent necessary to facilitate an expedited sale
of such property and enable a public agency or nonprofit
organization to comply with the low-income occupancy
requirements applicable to such property under subsection
(d)(7). The Corporation may sell eligible single family prop­
p r ic e .

erty or eligible condominium property to qualifying house­
holds, nonprofit organizations, and public agencies without
regard to any minimum sale price.
“ (B) P u r c h a s e l o a n . —The Corporation may provide a
loan at market interest rates to any purchaser of eligible
residential property for all or a portion of the purchase
price, which loan shall be secured by a first or second
mortgage on the property. The Corporation may provide
the loan at below market interest rates to the extent nec­
essary to facilitate an expedited sale of eligible residential
property and permit (i) a low-income family to purchase an
eligible single family property under subsection (c), or (ii) a
public agency or nonprofit organization to comply with the
low-income occupancy requirements applicable to the pur­
chase of an eligible residential property under subsection (c)
or (d). The Corporation shall provide loans under this
subparagraph in a form permitting sale or transfer of the
loan to a subsequent holder. In providing financing for
combinations of eligible multifamily housing properties
under this section, the Corporation may hold a participat­
ing share, including a subordinate participation.
“(2) A s s i s t a n c e b y h u d .—The Secretary shall take such
action as may be necessary to expedite the processing of applica­
tions for assistance under section 202 of the Housing Act of
1959, the United States Housing Act of 1937, title IV of the
Stewart B. McKinney Homeless Assistance Act, and the Na­
tional Housing Act, to enable any organization or individual to
purchase eligible residential property.
“ (3 ) A s s i s t a n c e b y f m h a .—The Secretary of Agriculture shall
take such action as may be necessary to expedite the processing
of applications for assistance under title V of the Housing Act of
1949 to enable any organization or individual to purchase eli­
gible residential property.
“(4) E x c e p t i o n t o d i s p o s i t i o n r u l e s . —Notwithstanding the
requirements under paragraphs (1), (2), (3), (4), (6), and (8) of
subsection (d), the Corporation may provide for the disposition
of eligible multifamily housing properties as necessary to facili­
tate purchase of such properties for use in connection with
section 202 of the Housing Act of 1959.
“ (5) B u l k a c q u i s i t i o n s u n d e r h o m e i n v e s t m e n t p a r t n e r ­
ACT.—
“ (A) P u r c h a s e p r i c e .—In providing for bulk acquisition

s h ip s

of eligible single family properties by participating jurisdic­
tions for inclusion in affordable housing activities under
title II of the Cranston-Gonzalez National Affordable Hous­
ing Act, the Corporation shall agree to an amount to be
paid for acquisition of such properties. The acquisition price
shall include discounts for bulk purchase and for holding of
the property such that the acquisition price for each prop­
erty shall not exceed the fair market value of the property,
as valued individually.
“(B) E x e m p t i o n s .—To the extent necessary to facilitate
sale of properties under this paragraph, the requirements
of subsections (c) and (f) and of paragraph (1) of this subsec­
tion shall not apply to such transactions and properties
involved in such transactions.

“(C) I n v e n t o r i e s .—To facilitate acquisitions by such
participating jurisdictions, the Corporation shall provide
the participating jurisdictions with inventories of eligible
single family properties not less than 4 times each year.
“ (h ) C o o r d i n a t i o n W i t h O t h e r P r o g r a m s .—
“ (1) U s e o f s e c o n d a r y m a r k e t a g e n c i e s .—In

the disposition
of eligible residential properties, the Corporation (in consulta­
tion with the Secretary) shall explore opportunities to work
with secondary market entities to provide housing for low- and
moderate-income families.
“(2) C r e d i t e n h a n c e m e n t .—
“ (A) I n g e n e r a l . —With respect to such properties, the
Secretary may, consistent with statutory authorities, work
through the Federal Housing Administration, the Govern­
ment National Mortgage Association, the Federal National
Mortgage Association, the Federal Home Loan Mortgage
Corporation, and other secondary market entities to de­
velop risk-sharing structures, mortgage insurance, and
other credit enhancements to assist in the provision of
property ownership, rental, and cooperative housing
opportunities for low- and moderate-income families.
“ (B) C e r t a i n t a x - e x e m p t b o n d s .—The Corporation may
provide credit enhancements with respect to tax-exempt
bonds issued on behalf of nonprofit organizations pursuant
to section 103, and subpart A of part IV of subchapter A of
chapter 1, of the Internal Revenue Code of 1986, with
respect to the disposition of eligible residential properties
for the purposes described in subparagraph (A).
“ (3) N a t i o n a l a f f o r d a b l e h o u s i n g a c t . —The Corporation
shall coordinate the disposition of eligible residential property
under this section with appropriate programs and provisions of,
and amendments made by, the Cranston-Gonzalez National
Affordable Housing Act, including titles II and IV of such Act.
“ (i) E x e m p t i o n f o r C e r t a i n T r a n s a c t i o n s W i t h I n s u r e d D e p o s i ­
t o r y I n s t i t u t i o n s .—The provisions of this section shall not apply
with respect to any eligible residential property after the date the
Corporation enters into a contract to sell such property to an
insured depository institution (as defined in section 3), including any
sale in connection with a transfer of all or substantially all of the
assets of a closed insured depository institution (including such
property) to another insured depository institution.
“ (j) T r a n s f e r o f C e r t a i n E l i g i b l e R e s i d e n t i a l P r o p e r t i e s t o
St a te
H o u s in g
A g e n c ie s
for
D i s p o s i t i o n .— N o t w i t h s t a n d i n g
s u b s e c t io n s (c), (d ), (f), a n d (g), t h e C o r p o r a t i o n m a y t r a n s f e r e l i g i b l e
r e s i d e n t i a l p r o p e r t ie s t o t h e S t a t e h o u s i n g f i n a n c e a g e n c y o r a n y
o t h e r S t a t e h o u s in g a g e n c y f o r t h e S t a t e i n w h i c h t h e p r o p e r t y is
lo c a t e d , o r t o a n y l o c a l h o u s i n g a g e n c y in w h o s e j u r i s d i c t i o n t h e
p r o p e r t y is lo c a t e d . T r a n s f e r s o f e l i g i b l e r e s id e n t i a l p r o p e r t i e s u n d e r
t h i s s u b s e c t io n m a y b e c o n d u c t e d b y d i r e c t s a le , c o n s i g n m e n t s a le ,
o r a n y o th e r m e th o d th e C o r p o r a tio n c o n sid e r s a p p r o p r ia t e a n d
s h a ll b e s u b j e c t t o t h e f o l l o w i n g r e q u ir e m e n t s :
“(1) I n d i v i d u a l o r b u l k t r a n s f e r .—The Corporation may

transfer such properties individually or in bulk, as agreed to by
the Corporation and the State housing finance agency or State
or local housing agency.
“(2) A c q u i s i t i o n p r i c e .—The acquisition price paid by the
State housing finance agency or State or local housing agency to

the Corporation for properties transferred under this subsection
shall be an amount agreed to by the Corporation and the
transferee agency.
“ (8) L o w - i n c o m e u s e . —Any State housing finance agency or
State or local housing agency acquiring properties under this
subsection shall offer to sell or transfer the properties only as
follows:
“ (A ) E l i g i b l e s i n g l e f a m i l y
s in g le fa m ily p r o p e r t ie s —

p r o p e r t ie s .— F o r

e l ig ib le

“(i) to purchasers described under subparagraphs (A)
and (B) of subsection (c)(2);
“(ii) if the purchaser is a purchaser described under
subsection (c)(2)(B)(i), subject to the rent limitations
under subsection (e)(1);
“(iii) subject to the requirement in the second sen­
tence of subsection (c)(2); and
“(iv) subject to recapture by the Corporation of excess
proceeds from resale of the properties under para­
graphs (3) and (4) of subsection (c).
“ (B) E l i g i b l e m u l t i f a m i l y h o u s i n g p r o p e r t i e s . —For eli­
gible multifamily housing properties—
“ (i) to qualifying multifamily purchasers;
“ (ii) subject to the low-income occupancy require­
ments under subsection (d)(7);
“ (iii) subject to the provisions of subsection (d)(8);
“ (iv) subject to a preference, among financially
acceptable offers, to the offer that would reserve the
highest percentage of dwelling units for occupancy or
purchase by very low- and low-income families and
would retain such affordability for the longest term;
and
“(v) subject to the rent limitations under subsection
(e)(1).
“ (4) A f f o r d a b i l i t y . — T h e S t a t e h o u s i n g f i n a n c e a g e n c y o r
S ta te o r lo c a l h o u s in g a g e n c y s h a ll e n d e a v o r to m a k e th e
p r o p e r t i e s t r a n s f e r r e d u n d e r t h is s u b s e c t io n m o r e a f f o r d a b l e t o
lo w - i n c o m e f a m i l i e s b a s e d u p o n t h e e x t e n t t o w h i c h t h e a c q u is i­
t i o n p r i c e o f a p r o p e r t y u n d e r p a r a g r a p h (2 ) is le s s t h a n t h e
m a r k e t v a lu e o f th e p r o p e rty .
“ (k ) E x c e p t i o n f o r S a l e s t o N o n p r o f i t O r g a n i z a t i o n s a n d
P u b l i c A g e n c i e s .—
“ (1) S u s p e n s i o n o f o f f e r p e r i o d s . —With respect to any eli­

gible residential property, the Corporation may (in the discre­
tion of the Corporation) suspend any of the requirements of
paragraphs (1) and (2) of subsection (c) and paragraphs (1)
through (4) of subsection (d), as applicable, but only to the
extent that for the duration of the suspension the Corporation
negotiates the sale of the property to a nonprofit organization or
public agency. If the property is not sold pursuant to such
negotiations, the requirements of any provisions suspended
shall apply upon the termination of the suspension. Any time
period referred to in such subsections shall toll for the duration
of any suspension under this paragraph.
“(2) U s e r e s t r i c t i o n s . —
“(A) E l i g i b l e s i n g l e f a m i l y p r o p e r t y . —Any eligible
single family property sold under this subsection shall be (i)
made available for occupancy by and maintained as afford­

able for low-income families for the remaining useful life of
the property, or made available for purchase by such fami­
lies, (ii) subject to the rent limitations under subsection
(e)(1), (iii) subject to the requirements relating to residency
of a qualifying household under subsection (p)(12) and to
residency of a low-income family under subsection (c)(2)(B),
and (iv) subject to recapture by the Corporation of excess
proceeds from resale of the property under paragraphs (3)
and (4) of subsection (c).
“(B) E l i g i b l e m u l t i f a m i l y h o u s i n g p r o p e r t y .—Any eli­
gible multifamily housing property sold under this subsec­
tion shall comply with the low-income occupancy require­
ments under subsection (d)(7) and shall be subject to the
rent limitations under subsection (e)(1).
“ (1) R u l e s G o v e r n i n g D i s p o s i t i o n o f E l i g i b l e C o n d o m i n i u m
P r o p e r t y .—
“(1) N o t ic e t o c l e a r i n g h o u s e s .—Within a reasonable period

of time after acquiring title to an eligible condominium prop­
erty, the Corporation shall provide written notice to clearing­
houses. Such notice shall contain basic information about the
property. Each clearinghouse shall make such information
available, upon request, to purchasers described in subpara­
graphs (A) through (D ) of paragraph (2). The Corporation shall
allow such purchasers reasonable access to an eligible con­
dominium property for purposes of inspection.
“(2) O f f e r s t o s e l l .—For the 180-day period following the
date on which the Corporation makes an eligible condominium
property available for sale, the Corporation may offer to sell the
property, at the discretion of the Corporation, to 1 or more of
the following purchasers:
“ (A) Qualifying households.
“ (B) Nonprofit organizations.
“(C) Public agencies.
“(D) For-profit entities.
“(3) L o w - i n c o m e o c c u p a n c y r e q u i r e m e n t s .—
“(A) I n g e n e r a l .—Except as provided in subparagraph
(B), any nonprofit organization, public agency, or for-profit
entity that purchases an eligible condominium property
shall (i) make the property available for occupancy by and
maintain it as affordable for low-income families for the
remaining useful life of the property, or (ii) make the
property available for purchase by any such family who,
except as provided in paragraph (5), agrees to occupy the
property as a principal residence for at least 12 months and
certifies in writing that the family intends to occupy the
property for at least 12 months. The restriction described in
clause (i) of the preceding sentence shall be contained in the
deed or other recorded instrument.
“ (B) M u l t i p l e -u n i t p u r c h a s e s .—If any nonprofit
organization, public agency, or for-profit entity purchases
more than 1 eligible condominium property as a part of the
same negotiation or purchase, the Corporation may (in the
discretion of the Corporation) waive the requirement under
subparagraph (A) and provide instead that not less than 35
percent of all eligible condominium properties purchased
shall be (i) made available for occupancy by and maintained
as affordable for low-income families for the remaining

useful life of the property, or (ii) made available for pur­
chase by any such family who, except as provided in para­
graph (5), agrees to occupy the property as a principal
residence for at least 12 months and certifies in writing
that the family intends to occupy the property for at least
12 months. The restriction described in clause (i) of the
preceding sentence shall be contained in the deed or other
recorded instrument.
“ (C) S a l e t o o t h e r p u r c h a s e r s .—If, upon the expiration
of the 180-day period referred to in paragraph (2), no pur­
chaser described in subparagraphs (A) through (D) of para­
graph (2) has made a bona fide offer to purchase the
property, the Corporation may offer to sell the property to
any other purchaser.
“(4) R e c a p t u r e o f p r o f i t s f r o m r e s a l e .—Except as provided
in paragraph (5), if any eligible condominium property sold (A)
to a qualifying household, or (B) to a low-income family pursu­
ant to paragraph (3)(A)(ii) or (3)(B)(ii), is resold by the qualifying
household or low-income family during the 1-year period begin­
ning upon initial acquisition by the household or family, the
Corporation shall recapture 75 percent of the amount of any
proceeds from the resale that exceed the sum of (i) the original
sale price for the acquisition of the property by the qualifying
household or low-income family, (ii) the costs of any improve­
ments to the property made after the date of the acquisition,
and (iii) any closing costs in connection with the acquisition.
“ (5 ) E x c e p t i o n t o r e c a p t u r e r e q u i r e m e n t . —The Corpora­
tion (or its successor) may in its discretion waive the applicabil­
ity to any qualifying household or low-income family of the
requirement under paragraph (4) and the requirements relating
to residency of a qualifying household or low-income family
(under subsection (p)(12) and paragraph (3) of this subsection,
respectively). The Corporation may grant any such a waiver
only for good cause shown, including any necessary relocation of
the qualifying household or low-income family.
“ (6 ) L i m i t a t i o n s o n m u l t i p l e u n i t p u r c h a s e s .— The Corpora­
tion may not sell or offer to sell as part of the same negotiation
or purchase any eligible condominium properties that are not
located in the same condominium project (as such term is
defined in section 604 of the Housing and Community Develop­
ment Act of 1980). The preceding sentence may not be construed
to require all eligible condominium properties offered or sold as
part of the same negotiation or purchase to be located in the
same structure.
“ (7) R e n t l i m i t a t i o n s .—Rents charged to tenants of eligible
condominium properties made available for occupancy by very
low-income families shall not exceed 30 percent of the adjusted
income of a family whose income equals 50 percent of the
median income for the area, as determined by the Secretary,
with adjustment for family size. Rents charged to tenants of
eligible condominium properties made available for occupancy
by low-income families other than very low-income families
shall not exceed 30 percent of the adjusted income of a family
whose income equals 65 percent of the median income for the
area, as determined by the Secretary, with adjustment for
family size.
‘(m ) L i a b i l i t y P r o v i s i o n s .—

“ (1 ) I n g e n e r a l .—The provisions of this section, or any fail­
ure by the Corporation to comply with such provisions, may not
be used by any person to attack or defeat any title to property
after it is conveyed by the Corporation.
“ (2) L o w - i n c o m e o c c u p a n c y .—The low-income occupancy
requirements under subsections (c), (d), <j)(3), (k)(2), and (1)(3)
shall be judicially enforceable against purchasers of property
under this section and their successors in interest by affected
very low- and low-income families, State housing finance agen­
cies, and any agency, corporation, or authority of the United
States. The parties specified in the preceding sentence shall be
entitled to reasonable attorney fees upon prevailing in any such
judicial action.
“ (3 ) C l e a r i n g h o u s e s .— A c l e a r i n g h o u s e s h a l l n o t b e s u b j e c t
t o s u it f o r it s f a i l u r e t o c o m p l y w i t h t h e r e q u i r e m e n t s o f t h i s
se ctio n .
“ (4) C o r p o r a t i o n .—The Corporation shall not be liable to any

depositor, creditor, or shareholder of any insured depository
institution for which the Corporation has been appointed re­
ceiver, or any claimant against such an institution, because the
disposition of assets of the institution under this section affects
the amount of return from the assets.
“ (n) A f f o r d a b l e H o u s i n g P r o g r a m O f f i c e .—The Corporation
shall establish an Affordable Housing Program Office within the
Corporation to carry out the provisions of this section and shall
dedicate certain staff of the Corporation to the office.
“(o) R e p o r t .—To the extent applicable, in the annual report
submitted by the Secretary to the Congress under section 8 of the
Department of Housing and Urban Development Act, the Secretary
shall include a detailed description of any activities under this
section, including recommendations for any additional authority the
Secretary considers necessary to implement the provisions of this
section.
“(p) D e f i n i t i o n s .—For purposes of this section:
“(1) A d j u s t e d i n c o m e a n d i n c o m e . —The terms ‘adjusted
income’ and ‘income’ shall have the meaning given such terms
in section 3(b) of the United States Housing Act of 1937.
“(2) C l e a r i n g h o u s e .—The term ‘clearinghouse’ means—
“(A) the State housing finance agency for the State in
which an eligible residential property or eligible condomin­
ium property is located;
“(B) the Office of Community Investment (or other com­
parable division) within the Federal Housing Finance
Board; and
“(C) any national nonprofit organizations (including any
nonprofit entity established by the corporation established
under title IX of the Housing and Community Development
Act of 1968) that the Corporation determines has the capac­
ity to act as a clearinghouse for information.
“(3) C o r p o r a t i o n .—The term ‘Corporation’ means the Fed­
eral Deposit Insurance Corporation acting in its corporate
capacity or its capacity as receiver.
“(4) E l i g i b l e c o n d o m i n i u m p r o p e r t y .—The term ‘eligible
condominium property’ means a condominium unit, as such
term is defined in section 604 of the Housing and Community
Development Act of 1980—
“ (A) to which such Corporation acquires title; and

Establishment,

“(B) that has an appraised value that does not exceed the
applicable dollar amount set forth in the first sentence of
section 203(b)(2) of the National Housing Act (which may, in
the discretion of the Corporation, take into consideration
any increase of such amount for high-cost areas).
“ (5 ) E l i g i b l e m u l t i f a m i l y h o u s i n g p r o p e r t y . — The term ‘eli­
gible multifamily housing property’ means a property consist­
ing of more than 4 dwelling units—
“ (A) to which the Corporation acquires title; and
“(B) that has an appraised value that does not exceed the
applicable dollar amount set forth in section 221(d)(3)(ii) of
the National Housing Act for elevator-type structures
(which may, in the discretion of the Corporation, take into
consideration any increase of such amount for high-cost
areas).
“ (6) E l i g i b l e r e s i d e n t i a l p r o p e r t y . —The term ‘eligible resi­
dential property’ includes eligible single family properties and
eligible multifamily housing properties.
“ (7) E l i g i b l e s i n g l e f a m i l y p r o p e r t y . —The term ‘eligible
single family property’ means a 1- to 4-family residence (includ­
ing a manufactured home)—
“ (A) to which the Corporation acquires title; and
“(B) that has an appraised value that does not exceed the
applicable dollar amount set forth in the first sentence of
section 203(b)(2) of the National Housing Act (which may, in
the discretion of the Corporation, take into consideration
any increase of such amount for high-cost areas).
“ (8 ) L o w - i n c o m e f a m i l i e s . —The term ‘low-income families’
means families and individuals whose incomes do not exceed 80
percent of the median income of the area involved, as deter­
mined by the Secretary, with adjustment for family size.
“ (9) Net r e a l i z a b l e m a r k e t v a l u e . —The term net realizable
market value’ means a price below the market value that takes
into account (A) any reductions in holding costs resulting from
the expedited sale of a property, including foregone real estate
taxes, insurance, maintenance costs, security costs, and loss of
use of funds, and (B) the avoidance, if applicable, of fees paid to
real estate brokers, auctioneers, or other individuals or
organizations involved in the sale of property owned by the
Corporation.
“(10) N o n p r o f i t o r g a n i z a t i o n . —The term ‘nonprofit
organization’ means a private organization (including a limited
equity cooperative)—
“ (A) no part of the earnings of which inures to the benefit
of any member, shareholder, founder, contributor, or
individual; and
“ (B) that is approved by the Corporation as to financial
responsibility.
“(11) P u b l i c a g e n c y .—The term ‘public agency’ means any
Federal, State, local, or other governmental entity, and includes
any public housing agency.
“(12) Q u a l i f y i n g h o u s e h o l d . —The term ‘qualifying house­
hold’ means a household—
“(A) who intends to occupy eligible single family property
as a principal residence;
“(B) who agrees to occupy the property as a principal
residence for at least 12 months;

“(C) who certifies in writing that the household intends to
occupy the property as a principal residence for at least 12
months; and
“(D) whose income does not exceed 115 percent of the
median income for the area, as determined by the Sec­
retary, with adjustment for family size.
“ (13) Q u a l i f y i n g m u l t i f a m i l y p u r c h a s e r .—The term
‘qualifying multifamily purchaser’ means—
“ (A) a public agency;
“(B) a nonprofit organization; or
“(C) a for-profit entity, which makes a commitment (for
itself or any related entity) to comply with the low-income
occupancy requirements under subsection (d)(7) for any
eligible multifamily housing property for which an offer to
purchase is made during or after the periods specified
under subsection (d).
“ (14) S e c r e t a r y .—The term ‘Secretary’ means the Secretary
of Housing and Urban Development.
“(15) S t a t e h o u s i n g f i n a n c e a g e n c y .—The term ‘State hous­
ing finance agency’ means the public agency, authority, cor­
poration, or other instrumentality of a State that has the
authority to provide residential mortgage loan financing
throughout the State.
“(16) V e r y l o w -i n c o m e f a m i l i e s .—The term ‘very low-income
families’ means families and individuals whose incomes do not
exceed 50 percent of the median income of the area involved, as
determined by the Secretary, with adjustment for family size.” .
(b) C o o r d i n a t i o n .—The Federal Deposit Insurance Corporation 12 USC I83lq
and the Resolution Trust Corporation shall consult and coordinate notewith each other in carrying out their respective responsibilities
under the affordable housing programs under section 42 of the
Federal Deposit Insurance Act and section 21A(c) of the Federal
Home Loan Bank Act. Such corporations shall develop any proce­
dures, and may enter into any agreements, necessary to provide for
the coordinated, efficient, and effective operation of such programs.
(c) C o n f o r m i n g A m e n d m e n t s .—
(1) F e d e r a l d e p o s i t i n s u r a n c e a c t .—Section 11(d) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(d)) is amended—
(A) in paragraph (2)(B), in the matter preceding clause (i),
by inserting “(subject to the provisions of section 42)” before
the comma; and
(B) in paragraph (2)(E), by inserting “(subject to the provi­
sions of section 42)” before the first comma.
(2) H o u s i n g a c t o f 1 9 5 9 . —Section 202(h)(2) of the Housing
Act of 1959 (12 U.S.p. 1701q(h)(2)), as amended by section 801(a)
of the Cranston-Gonzalez National Affordable Housing Act, is
amended by inserting “ or from the Federal Deposit Insurance
Corporation under section 42 of the Federal Deposit Insurance
Act” after “ Federal Home Loan Bank Act” .

Subtitle E—Whistleblower Protections
SEC. 251. ADDITIONAL WHISTLEBLOW ER PROTECTIONS.
(a )
A d d it io n a l C o v e r a g e E s t a b l is h e d U
I n s u r a n c e A c t .—

nder

F e d e r a l D e p o s it

(1) I n g e n e r a l . —Section 33(a) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1831j(a)) is amended to read as follows:
“ (a ) I n G e n e r a l .—
“ (1) E m p l o y e e s

12 USC I83lj

note'

o f d e p o s i t o r y i n s t i t u t i o n s . —No insured
depository institution may discharge or otherwise discriminate
against any employee with respect to compensation, terms,
conditions, or privileges of employment because the employee
(or any person acting pursuant to the request of the employee)
provided information to any Federal banking agency or to the
Attorney General regarding any possible violation of any law or
regulation by the depository institution or any director, officer,
or employee of the institution.
“ (2 ) E m p l o y e e s o f b a n k i n g a g e n c i e s .— N o Federal banking
agency, Federal home loan bank, or Federal Reserve bank may
discharge or otherwise discriminate against any employee with
respect to compensation, terms, conditions, or privileges of
employment because the employee (or any person acting pursu­
ant to the request of the employee) provided information to any
such agency or bank or to the Attorney General regarding any
possible violation of any law or regulation by—
“ (A) any depository institution or any such bank or
agency;
“ (B) any director, officer, or employee of any depository
institution or any such bank; or
“(C) any officer or employee of the agency which employs
such employee.” .
(2) T e c h n i c a l a n d c o n f o r m i n g a m e n d m e n t .—Section 33(c) of
the Federal Deposit Insurance Act (12 U.S.C. 1831j(c)) is amend­
ed by inserting “ , Federal home loan bank, Federal Reserve
bank, or Federal banking agency” after “ depository institu­
tion” .
(3) D e f i n i t i o n . —Section 33 of the Federal Deposit Insurance
Act (12 U.S.C. 1831j) is amended by adding at the end the
following new subsection:
“ (e) F e d e r a l B a n k i n g A g e n c y D e f i n e d . —For purposes of subsec­
tions (a) and (c), the term ‘Federal banking agency’ means the
Corporation, the Board of Governors of the Federal Reserve System,
the Federal Housing Finance Board, the Comptroller of the Cur­
rency, and the Director of the Office of Thrift Supervision.” .
(4) E f f e c t i v e d a t e . —Paragraph (2) of section 33(a) of the
Federal Deposit Insurance Act (as added under the amendment
made by paragraph (1)) shall be treated as having taken effect
on January 1, 1987, and for purposes of any cause of action
arising under such paragraph (as so effective) before the date of
the enactment of this Act, the 2-year period referred to in
section 33(b) of such Act shall be deemed to begin on such date
of enactment.

(b )
U

n io n

A d d it io n a l C o v e r a g e E s t a b l is h e d U n d e r F e d e r a l C r e d it
A c t .—
(1) I n g e n e r a l .—Section 213(a) of the Federal Credit Union

Act (12 U.S.C. 1790b(a)) is amended to read as follows:
In G e n e r a l .—
“(1) E m p l o y e e s o f c r e d i t u n i o n s .—No insured credit union
may discharge or otherwise discriminate against any employee
with respect to compensation, terms, conditions, or privileges of
employment because the employee (or any person acting pursu­
ant to the request of the employee) provided information to the

“ (a )

Board or the Attorney General regarding any possible violation
of any law or regulation by the credit union or any director,
officer, or employee of the credit union.
“ (2) E m p l o y e e s o f t h e a d m i n i s t r a t i o n .—The Administration
may not discharge or otherwise discriminate against any em­
ployee (including any employee of the National Credit Union
Central Liquidity Facility) with respect to compensation, terms,
conditions, or privileges of employment because the employee
(or any person acting pursuant to the request of the employee)
provided information to the Administration or the Attorney
General regarding any possible violation of any law or regula­
tion by—
“(A) any credit union the Administration;
“(B) any director, officer, or employee of any depository
institution or any such bank; or
“ (C) any officer or employee of the Administration.” .
(2) T e c h n i c a l a n d c o n f o r m i n g a m e n d m e n t .—Section 213(c)
of the Federal Credit Union Act (12 U.S.C. 1790b(c)) is amended
by inserting “ or the Administration” after “ credit union” .
(3) E f f e c t i v e d a t e .—Paragraph (2) of section 213(a) of the 12 USC
Federal Credit Union Act (as added under the amendment made note'
by paragraph (1)) shall be treated as having taken effect on
January 1, 1987, and for purposes of any cause of action arising
under such paragraph (as so effective) before the date of the
enactment of this Act, the 2-year period referred to in section
213(b) of such Act shall be deemed to begin on such date of
enactment.
(c)
C o v e r a g e f o r E m p l o y e e s o f RTC, O v e r s i g h t B o a r d , a n d RTC
C o n t r a c t o r s .—
(1) C o v e r a g e

e s t a b l i s h e d .— Section 21A of the Federal Home
Loan Bank Act (12 U.S.C. 1441a) is amended by adding at the
end the following new subsection:
“ (q ) RTC, O v e r s i g h t B o a r d , a n d RTC C o n t r a c t o r E m p l o y e e

P r o t e c t i o n R e m e d y .—
“ (1 ) P r o h i b i t i o n

a g a i n s t d i s c r i m i n a t i o n .— The Corporation,
the Oversight Board, and any person who is performing, di­
rectly or indirectly, any function or service on behalf of the
Corporation or the Oversight Board may not discharge or other­
wise discriminate against any employee (including any em­
ployee of the Federal Deposit Insurance Corporation on assign­
ment to the Corporation under this section or any personnel
referred to in subparagraphs (C) and (F) of subsection (a)(5)) with
respect to compensation, terms, conditions, or privileges of
employment because the employee (or any person acting pursu­
ant to the request of the employee) provided information to the
Corporation, the Oversight Board, the Attorney General, or any
appropriate Federal banking agency (as defined in section 3(q)
of the Federal Deposit Insurance Act) regarding any possible
violation of any law or regulation by the Corporation, the
Oversight Board, or such person or any director, officer, or
employee of the Corporation, the Oversight Board, or the
person.
“ (2 ) E n f o r c e m e n t . —Any employee or former employee who
believes that such employee has been discharged or discrimi­
nated against in violation of paragraph (1) may file a civil action
in the appropriate United States district court before the end of

1790b

12 USC 1441a
note.

Truth in
Savings Act.
Consumer
protection.
Public
information.
12 USC 4301
note.
12 USC 4301.

12 USC 4302.

the 2-year period beginning on the date of such discharge or
discrimination.
“ (3) R e m e d i e s . —If the district court determines that a viola­
tion has occurred, the court may order the Corporation or the
person which committed the violation to—
“ (A) reinstate the employee to the employee’s former
position;
“ (B) pay compensatory damages; or
“(C) take other appropriate actions to remedy any past
discrimination.
“ (4) L i m i t a t i o n . —The protections of this section shall not
apply to any employee who—
“(A) deliberately causes or participates in the alleged
violation of law or regulation; or
“ (B) knowingly or recklessly provides substantially false
information to the Corporation, the Attorney General, or
any appropriate Federal banking agency.” .
(2)
E f f e c t i v e d a t e .—Subsection (q) of section 21A of the
Federal Home Loan Bank Act (as added under the amendment
made by paragraph (1)) shall be treated as having taken effect
on August 9, 1989, and for purposes of any cause of action
arising under such subsection (as so effective) before the date of
the enactment of this Act, the 2-year period referred to in
section 21A(q)(2) of such Act shall be deemed to begin on such
date of enactment.

Subtitle F— Truth in Savings
SEC. 261. SHORT TITLE.

This subtitle may be cited as the “Truth in Savings Act” .
SEC. 262. FINDINGS AND PURPOSE.

(a) F i n d i n g s .—The Congress hereby finds that economic stability
would be enhanced, competition between depository institutions
would be improved, and the ability of the consumer to make
informed decisions regarding deposit accounts, and to verify ac­
counts, would be strengthened if there was uniformity in the disclo­
sure of terms and conditions on which interest is paid and fees are
assessed in connection with such accounts.
(b) P u r p o s e .—It is the purpose of this subtitle to require the clear
and uniform disclosure of—
(1) the rates of interest which are payable on deposit accounts
by depository institutions; and
(2) the fees that are assessable against deposit accounts,
so that consumers can make a meaningful comparison between the
competing claims of depository institutions with regard to deposit
accounts.
SEC. 263. DISCLOSURE OF INTEREST RATES AND TERMS OF ACCOUNTS.

(a)
I n G e n e r a l . —Except as provided in subsection (b), each
advertisement, announcement, or solicitation initiated by any
depository institution or deposit broker relating to any demand or
interest-bearing account offered by an insured depository institution
which includes any reference to a specific rate of interest payable on
amounts deposited in such account, or to a specific yield or rate of

earnings on amounts so deposited, shall state the following informa­
tion, to the extent applicable, in a clear and conspicuous manner:
(1) The annual percentage yield.
(2) The period during which such annual percentage yield is
in effect.
(3) All minimum account balance and time requirements
which must be met in order to earn the advertised yield (and, in
the case of accounts for which more than 1 yield is stated, each
annual percentage yield and the account minimum balance
requirement associated with each such yield shall be in close
proximity and have equal prominence).
(4) The minimum amount of the initial deposit which is
required to open the account in order to obtain the yield adver­
tised, if such minimum amount is greater than the minimum
balance necessary to earn the advertised yield.
(5) A statement that regular fees or other conditions could
reduce the yield.
(6) A statement that an interest penalty is required for early
withdrawal.
(b) B r o a d c a s t a n d E l e c t r o n i c M e d i a a n d O u t d o o r A d v e r t i s i n g
E x c e p t i o n . —The Board may, by regulation, exempt advertisements,
announcements, or solicitations made by any broadcast or electronic
medium or outdoor advertising display not on the premises of the
depository institution from any disclosure requirements described in
paragraph (4) or (5) of subsection (a) if the Board finds that any such
disclosure would be unnecessarily burdensome.
(c) M i s l e a d i n g D e s c r i p t i o n s o f F r e e o r N o - C o s t A c c o u n t s
P r o h i b i t e d . —No advertisement, announcement, or solicitation
made by any depository institution or deposit broker may refer to or
describe an account as a free or no-cost account (or words of similar
meaning) if—
(1) in order to avoid fees or service charges for any period—
(A) a minimum balance must be maintained in the ac­
count during such period; or
(B) the number of transactions during such period may
not exceed a maximum number; or
(2) any regular service or transaction fee is imposed.
(d) M i s l e a d i n g o r I n a c c u r a t e A d v e r t i s e m e n t s , E t c . , P r o h i b ­
i t e d . —No depository institution or deposit broker shall make any
advertisement, announcement, or solicitation relating to a deposit
account that is inaccurate or misleading or that misrepresents its
deposit contracts.
SEC. 264. ACCOUNT SCHEDULE.

12 USC 4303.

(a) I n G e n e r a l . —Each depository institution shall maintain a
schedule of fees, charges, interest rates, and terms and conditions
applicable to each class of accounts offered by the depository institu­
tion, in accordance with the requirements of this section and regula­
tions which the Board shall prescribe. The Board shall specify, in
regulations, which fees, charges, penalties, terms, conditions, and
account restrictions must be included in a schedule required under
this subsection. A depository institution need not include in such
schedule any information not specified in such regulation.
(b) I n f o r m a t i o n o n F e e s a n d C h a r g e s . —The schedule required
under subsection (a) with respect to any account shall contain the
following information:

Regulations,

(1) A description of all fees, periodic service charges, and
penalties which may be charged or assessed against the account
(or against the account holder in connection with such account),
the amount of any such fees, charge, or penalty (or the method
by which such amount will be calculated), and the conditions
under which any such amount will be assessed.
(2) All minimum balance requirements that affect fees,
charges, and penalties, including a clear description of how each
such minimum balance is calculated.
(3) Any minimum amount required with respect to the initial
deposit in order to open the account.
(c) I n f o r m a t i o n o n I n t e r e s t R a t e s .—The schedule required
under subsection (a) with respect to any account shall include the
following information:
(1) Any annual percentage yield.
(2) The period during which any such annual percentage yield
will be in effect.
(3) Any annual rate of simple interest.
(4) The frequency with which interest will be compounded and
credited.
(5) A clear description of the method used to determine the
balance on which interest is paid.
(6) The information described in paragraphs (1) through (4)
with respect to any period after the end of the period referred to
in paragraph (2) (or the method for computing any information
described in any such paragraph), if applicable.
(7) Any minimum balance which must be maintained to earn
the rates and obtain the yields disclosed pursuant to this subsec­
tion and a clear description of how any such minimum balance
is calculated.
(8) A clear description of any minimum time requirement
which must be met in order to obtain the yields disclosed
pursuant to this subsection and any information described in
paragraph (1), (2), (3), or (4) that will apply if any time require­
ment is not met.
(9) A statement, if applicable, that any interest which has
accrued but has not been credited to an account at the time of a
withdrawal from the account will not be paid by the depository
institution or credited to the account by reason of such with­
drawal.
(10) Any provision or requirement relating to nonpayment of
interest, including any charge or penalty for early withdrawal,
and the conditions under which any such charge or penalty may
be assessed.
(d) O t h e r I n f o r m a t i o n . —The schedule required under subsection
(a) shall include such other disclosures as the Board may determine
to be necessary to allow consumers to understand and compare
accounts, including frequency of interest rate adjustments, account
restrictions, and renewal policies for time accounts.
(e) S t y l e a n d F o r m a t .—Schedules required under subsection (a)
shall be written in clear and plain language and be presented in a
format designed to allow consumers to readily understand the terms
of the accounts offered.
Regulations.

SEC. 265. DISCLOSURE REQUIREMENTS FO R CERTAIN ACCOUNTS.

12 USC 4304.

The Board shall require, in regulations which the Board shall
prescribe, such modification in the disclosure requirements under

this Act relating to annual percentage yield as may be necessary to
carry out the purposes of this Act in the case of—
(1) accounts with respect to which determination of annual
percentage yield is based on an annual rate of interest that is
guaranteed for a period of less than 1 year;
(2) variable rate accounts;
(3) accounts which, pursuant to law, do not guarantee pay­
ment of a stated rate;
(4) multiple rate accounts; and
(5) accounts with respect to which determination of annual
percentage yield is based on an annual rate of interest that is
guaranteed for a stated term.
SEC. 266. DISTRIBUTION OF SCHEDULES.

(a) I n G e n e r a l . —A schedule required under section 264 for an
appropriate account shall be—
(1) made available to any person upon request;
(2) provided to any potential customer before an account is
opened or a service is rendered; and
(3) provided to the depositor, in the case of any time deposit
which is renewable at maturity without notice from the deposi­
tor, at least 30 days before the date of maturity.
(b) D i s t r i b u t i o n i n C a s e o f C e r t a i n I n i t i a l D e p o s i t s .— I f —
(1) a depositor is not physically present at an office of a
depository institution at the time an initial deposit is accepted
with respect to an account established by or for such person;
and
(2) the schedule required under section 264(a) has not been
furnished previously to such depositor,
the depository institution shall mail the schedule to the depositor at
the address shown on the records of the depository institution for
such account no later than 10 days after the date of the initial
deposit.
(c) D i s t r i b u t i o n o f N o t i c e o f C e r t a i n C h a n g e s . —If—
(1) any change is made in any term or condition which is
required to be disclosed in the schedule required under section
264(a) with respect to any account; and
(2) the change may reduce the yield or adversely affect any
holder of the account,
all account holders who may be affected by such change shall be
notified and provided with a description of the change by mail at
least 30 days before the change takes effect.
(d) D i s t r i b u t i o n i n C a s e o f A c c o u n t s E s t a b l i s h e d b y M o r e
T h a n 1 I n d i v i d u a l o r b y a G r o u p . —If an account is established by
more than 1 individual or for a person other than an individual, any
distribution described in this section with respect to such account
meets the requirements of this section if the distribution is made to
1 of the individuals who established the account or 1 individual
representative of the person on whose behalf such account was
established.
(e) N o t i c e t o A c c o u n t H o l d e r s a s o f t h e E f f e c t i v e D a t e o f
R e g u l a t i o n s . —For any account for which the depository institution
delivers an account statement on a quarterly or more frequent basis,
the depository institution shall include on or with any regularly
scheduled mailing posted or delivered within 180 days after publica­
tion of regulations issued by the Board in final form, a statement
that the account holder has the right to request an account schedule

12 USC 4305.

containing the terms, charges, and interest rates of the account, and
that the account holder may wish to request such an account
schedule.
12 USC 4306.

SEC. 267. PAYMENT OF INTEREST.

(a) C a l c u l a t e d o n F u l l A m o u n t o f P r i n c i p a l .— Interest on an
interest-bearing account at any depository institution shall be cal­
culated by such institution on the full amount of principal in the
account for each day of the stated calculation period at the rate or
rates of interest disclosed pursuant to this Act.
(b) No P a r t i c u l a r M e t h o d o f C o m p o u n d i n g I n t e r e s t R e ­
q u i r e d .—Subsection (a) shall not be construed as prohibiting or
requiring the use of any particular method of compounding or
crediting of interest.
(c) D a t e b y W h i c h I n t e r e s t M u s t A c c r u e .—Interest on accounts
that are subject to this Act shall begin to accrue not later than the
business day specified for interest-bearing accounts in section 606 of
the Expedited Funds Availability Act, subject to subsections (b) and
(c) of such section.
12 USC 4307.

SEC. 268. PERIODIC STATEMENTS.

Each depository institution shall include on or with each periodic
statement provided to each account holder at such institution a
clear and conspicuous disclosure of the following information with
respect to such account:
(1) The annual percentage yield earned.
(2) The amount of interest earned.
(3 ) The amount of any fees or charges imposed.
(4) The number of days in the reporting period.
12 USC 4308.

SEC. 269. REGULATIONS.

(a) I n G e n e r a l . —
(1) R e g u l a t i o n s r e q u i r e d .—Before the end of the 9-month
period beginning on the date of the enactment of this Act, the
Board, after consultation with each agency referred to in section
270(a) and public notice and opportunity for comment, shall
prescribe regulations to carry out the purpose and provisions of
this Act.
(2 ) E f f e c t i v e d a t e o f r e g u l a t i o n s .— The regulations pre­
scribed under paragraph (1) shall take effect not later than 6
months after publication in final form.
(3 ) C o n t e n t s o f r e g u l a t i o n s .— The regulations prescribed
under paragraph (1) may contain such classifications, differen­
tiations, or other provisions, and may provide for such adjust­
ments and exceptions for any class of accounts as, in the
judgment of the Board, are necessary or proper to carry out
the purposes of this Act, to prevent circumvention or evasion of
the requirements of this Act, or to facilitate compliance with
the requirements of this Act.
(4) D a t e o f a p p l i c a b i l i t y . —The provisions of this Act shall
not apply with respect to any depository institution before the
effective date of regulations prescribed by the Board under this
subsection (or by the National Credit Union Administration
Board under section 12(b), in the case of any depository institu­
tion described in clause (iv) of section 19(b)(1)(A) of the Federal
Reserve Act).
(b) M o d e l F o r m s a n d C l a u s e s .—

(1) In g e n e r a l .—The Board shall publish model forms and
clauses for common disclosures to facilitate compliance with
this Act. In devising such forms, the Board shall consider the
use by depository institutions of data processing or similar
automated machines.
(2) U s e o f f o r m s a n d c l a u s e s d e e m e d i n c o m p l i a n c e .—
Nothing in this Act may be construed to require a depository
institution to use any such model form or clause prescribed by
the Board under this subsection. A depository institution shall
be deemed to be in compliance with the disclosure provisions of
this Act if the depository institution—
(A) uses any appropriate model form or clause as pub­
lished by the Board; or
(B) uses any such model form or clause and changes it
by—
(i) deleting any information which is not required by
this Act; or
(ii) rearranging the format,
if in making such deletion or rearranging the format, the
depository institution does not affect the substance, clarity,
or meaningful sequence of the disclosure.
(3) P u b l i c n o t i c e a n d o p p o r t u n i t y f o r c o m m e n t .—Model
disclosure forms and clauses shall be adopted by the Board after
duly given notice in the Federal Register and an opportunity for
public comment in accordance with section 553 of title 5, United
States Code.

12 USC 4309.

SEC. 270. ADMINISTRATIVE ENFORCEMENT.

(a) I n G e n e r a l .—Compliance with the requirements imposed
under this Act shall be enforced under—
(1) section 8 of the Federal Deposit Insurance Act—
(A) by the appropriate Federal banking agency (as de­
fined in section 3(q) of the Federal Deposit Insurance Act)
in the case of insured depository institutions (as defined in
section 3(c)(2) of such Act);
(B) by the Federal Deposit Insurance Corporation in the
case of depository institutions described in clause (i), (ii), or
(iii) of section 19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance Act); and
(C) by the Director of the Office of Thrift Supervision in
the case of depository institutions described in clause (v)
and or (vi) of section 19(b)(1)(A) of the Federal Reserve Act
which are not insured depository institutions (as defined in
section 3(c)(2) of the Federal Deposit Insurance Act); and
(2) the Federal Credit Union Act, by the National Credit
Union Administration Board in the case of depository institu­
tions described in clause (iv) of section 19(b)(1)(A) of the Federal
Reserve Act.
(b) A d d i t i o n a l E n f o r c e m e n t P o w e r s .—
(1 ) V

io l a t io n

of

t h is

act

treated

as

v io l a t io n

of

other

—For purposes of the exercise by any agency referred to in
subsection (a) of such agency’s powers under any Act referred to
in such subsection, a violation of a requirement imposed under
this Act shall be deemed to be a violation of a requirement
imposed under that Act.
acts.

Federal
Register,
publication.

(2 )
E n f o r c e m e n t a u t h o r i t y u n d e r o t h e r a c t s . —In addition
to the powers of any agency referred to in subsection (a) under
any provision of law specifically referred to in such subsection,
each such agency may exercise, for purposes of enforcing
compliance with any requirement imposed under this Act, any
other authority conferred on such agency by law.
(c )
R e g u la t io n s b y A g e n c ie s O t h e r T h a n t h e B o a r d .— T h e
a u t h o r i t y o f t h e B o a r d t o is s u e r e g u l a t i o n s u n d e r t h is A c t d o e s n o t
i m p a i r t h e a u t h o r i t y o f a n y o t h e r a g e n c y r e f e r r e d t o i n s u b s e c t io n
(a ) t o m a k e r u l e s r e g a r d i n g it s o w n p r o c e d u r e s i n e n f o r c i n g c o m p l i ­
a n c e w i t h t h e r e q u i r e m e n t s i m p o s e d u n d e r t h is A c t .
12 USC 4310.

SEC. 271. CIVIL LIABILITY.

(a) C i v i l L i a b i l i t y .—Except as otherwise provided in this section,
any depository institution which fails to comply with any require­
ment imposed under this Act or any regulation prescribed under
this Act with respect to any person who is an account holder is
liable to such person in an amount equal to the sum of—
(1) any actual damage sustained by such person as a result of
the failure;
(2)(A) in the case of an individual action, such additional
amount as the court may allow, except that the liability under
this subparagraph shall not be less than $100 nor greater than
$1,000; or
(B) in the case of a class action, such amount as the court may
allow, except that—
(i) as to each member of the class, no minimum recovery
shall be applicable; and
(ii) the total recovery under this subparagraph in any
class action or series of class actions arising out of the same
failure to comply by the same depository institution shall
not be more than the lesser of $500,000 or 1 percent of the
net worth of the depository institution involved; and
(3) in the case of any successful action to enforce any liability
under paragraph (1) or (2), the costs of the action, together with
a reasonable attorney’s fee as determined by the court.
(b) C l a s s A c t i o n A w a r d s .—In determining the amount of any
award in any class action, the court shall consider, among other
relevant factors—
(1) the amount of any actual damages awarded;
(2) the frequency and persistence of failures of compliance;
(3) the resources of the depository institution;
(4) the number of persons adversely affected; and
(5) the extent to which the failure of compliance was
intentional.
(c ) B o n a F i d e E r r o r s .—
(1) G e n e r a l r u l e .—A

depository institution may not be held
liable in any action brought under this section for a violation of
this Act if the depository institution demonstrates by a prepon­
derance of the evidence that the violation was not intentional
and resulted from a bona fide error, notwithstanding the
maintenance of procedures reasonably adapted to avoid any
such error.
(2) E x a m p l e s . —Examples of a bona fide error include clerical,
calculation, computer malfunction and programming, and
printing errors, except that an error of legal judgment with

respect to a depository institution’s obligation under this Act is
not a bona fide error.
(d) No L i a b i l i t y f o r O v e r p a y m e n t .—A depository institution
may not be held liable in any action under this section for a
violation of this Act if the violation has resulted in—
(1) an interest payment to the account holder in an amount
greater than the amount determined under any disclosed rate of
interest applicable with respect to such payment; or
(2) a charge to the consumer in an amount less than the
amount determined under the disclosed charge or fee schedule
applicable with respect to such charge.
(e) J u r i s d i c t i o n .—Any action under this section may be brought
in any United States district court, or in any other court of com­
petent jurisdiction, within 1 year after the date of the occurrence of
the violation involved.
(f) R e l i a n c e o n B o a r d R u l i n g s .—No provision of this section
imposing any liability shall apply to any act done or omitted in good
faith in conformity with any regulation or order, or any interpreta­
tion of any regulation or order, of the Board, or in conformity with
any interpretation or approval by an official or employee of the
Board duly authorized by the Board to issue such interpretation or
approval under procedures prescribed by the Board, notwithstand­
ing, the fact that after such act or omission has occurred, such
regulation, order, interpretation, or approval is amended, rescinded,
or determined by judicial or other authority to be invalid for any
reason.
(g) N o t i f i c a t i o n o f a n d A d j u s t m e n t f o r E r r o r s .— A depository
institution shall not be liable under this section or section 270 for
any failure to comply with any requirement imposed under this Act
with respect to any account if—
(1) before—
(A) the end of the 60-day period beginning on the date on
which the depository institution discovered the failure to
comply;
(B) any action is instituted against the depository institu­
tion by the account holder under this section with respect
to such failure to comply; and
(C) any written notice of such failure to comply is
received by the depository institution from the account
holder,
the depository institution notifies the account holder of the
failure of such institution to comply with such requirement; and
(2) the depository institution makes such adjustments as may
be necessary with respect to such account to ensure that—
(A) the account holder will not be liable for any amount
in excess of the amount actually disclosed with respect to
any fee or charge;
(B) the account holder will not be liable for any fee or
charge imposed under any condition not actually disclosed;
and
(C) interest on amounts in such account will accrue at the
annual percentage yield, and under the conditions, actually
disclosed (and credit will be provided for interest already
accrued at a different annual percentage yield and under
different conditions than the yield or conditions disclosed).
(h ) M u l t i p l e I n t e r e s t s i n 1 A
h o l d s a n i n t e r e s t in a n y a c c o u n t —

c c o u n t .—

If m o r e th a n 1 p e r so n

(1) the minimum and maximum amounts of liability under
subsection (a)(2)(A) for any failure to comply with the require­
ments of this Act shall apply with respect to such account; and
(2) the court shall determine the manner in which the amount
of any such liability with respect to such account shall be
distributed among such persons.
(i) C o n t i n u i n g F a i l u r e t o D i s c l o s e —
(1 ) C e r t a i n

c o n t in u in g f a il u r e s t r e a t e d a s

i v i o l a t i o n .—

Except as provided in paragraph (2), the continuing failure of
any depository institution to disclose any particular term re­
quired to be disclosed under this Act with respect to a particular
account shall be treated as a single violation for purposes of
determining the amount of any liability of such institution
under subsection (a) for such failure to disclose.
(2) S u b s e q u e n t f a i l u r e t o d i s c l o s e .—The continuing failure
of any depository institution to disclose any particular term
required to be disclosed under this Act with respect to a particu­
lar account after judgment has been rendered in favor of the
account holder in connection with a prior failure to disclose
such term with respect to such account shall be treated as a
subsequent violation for purposes of determining liability under
subsection (a).
(3) C o o r d i n a t i o n w i t h s e c t i o n 2 7 0 — This subsection shall
not limit or otherwise affect the enforcement power under
section 270 of any agency referred to in subsection (a) of such
section.
12 USC 4311.

SEC. 272. CREDIT UNIONS.

(a) I n G e n e r a l .—No regulation prescribed by the Board under
this Act shall apply directly with respect to any depository institu­
tion described in clause (iv) of section 19(b)(1)(A) of the Federal
Reserve Act.
(b) R e g u l a t i o n s P r e s c r i b e d b y t h e NCUA.—Within 90 days of
the effective date of any regulation prescribed by the Board under
this Act, the National Credit Union Administration Board shall
prescribe a regulation substantially similar to the regulation pre­
scribed by the Board taking into account the unique nature of credit
unions and the limitations under which they may pay dividends on
member accounts.
12 USC 4312.

SEC. 273. EFFECT ON STATE LAW .

The provisions of this Act do not supersede any provisions of the
law of any State relating to the disclosure of yields payable or terms
for accounts to the extent such State law requires the disclosure of
such yields or terms for accounts, except to the extent that those
laws are inconsistent with the provisions of this Act, and then only
to the extent of the inconsistency. The Board may determine
whether such inconsistencies exist.
12 USC 4313.

SEC. 274. DEFINITIONS.

For the purposes of this Act—
(1 )
A c c o u n t . —The term “account” means any account
offered to 1 or more individuals or an unincorporated
nonbusiness association of individuals by a depository institu­
tion into which a customer deposits funds, including demand
accounts, time accounts, negotiable order of withdrawal ac­
counts, and share draft accounts.

(2) A n n u a l p e r c e n t a g e y i e l d . —The term “annual percent­
age yield” means the total amount of interest that would be
received on a $100 deposit, based on the annual rate of simple
interest and the frequency of compounding for a 365-day period,
expressed as a percentage calculated by a method which shall
be prescribed by the Board in regulations.
(3) A n n u a l r a t e o f s i m p l e i n t e r e s t .—The term “ annual rate
of simple interest” —
(A) means the annualized rate of interest paid with
respect to each compounding period, expressed as a percent­
age; and
(B) may be referred to as the “ annual percentage rate” .
(4) B o a r d .—The term “ Board” means the Board of Governors
of the Federal Reserve System.
(5) D e p o s i t b r o k e r .—The term “ deposit broker”—
(A) has the meaning given to such term in section 29(f)(1)
of the Federal Deposit Insurance Act; and
(B) includes any person who solicits any amount from any
other person for deposit in an insured depository institu­
tion.
(6) D e p o s i t o r y i n s t i t u t i o n .—The term "depository institu­
tion” has the meaning given such term in clauses (i) through (vi)
of section 19(b)(1)(A) of the Federal Reserve Act.
(7 ) I n t e r e s t .— The term “interest” includes dividends paid
with respect to share draft accounts which are accounts within
the meaning of paragraph (3).
(8) M u l t i p l e r a t e a c c o u n t .—The term “multiple rate
account” means any account that has 2 or more annual rates of
simple interest which take effect at the same time or in succeed­
ing periods and which are known at the time of disclosure.

TITLE III—REGULATORY IMPROVEMENT
Subtitle A—Activities
SEC. 301. LIMITATIONS ON BROKERED DEPOSITS AND DEPOSIT SOLICI­
TATIONS.

(a) I n G e n e r a l .—Section 29 of the Federal Deposit Insurance Act
(12 U.S.C. 1831f) is amended—
(1) in subsection (a), by striking “troubled institution” and
inserting “insured depository institution that is not well capital­
ized” ;
(2) in subsection (c), by inserting “ which is adequately capital­
ized” after “ insured depository institution” ;
(3) in subsection (d), by striking all after “ unsound practice;”
and inserting the following:
“(2) is necessary to enable the institution to meet the de­
mands of its depositors or pay its obligations in the ordinary
course of business; and
“(3) is consistent with the conservator’s fiduciary duty to
minimize the institution’s losses.
Effective 90 days after the date on which the institution was placed Effective date,
in conservatorship, the institution may not accept such deposits.” ;

(4) by redesignating subsections (e) through (g) as subsections
(f) through (h), respectively, and inserting after subsection (d)
the following:
“ (e) R e s t r i c t i o n o n I n t e r e s t R a t e P a i d .—Any insured depository
institution which, under subsection (c) or (d), accepts funds obtained,
directly or indirectly, by or through a deposit broker, may not pay a
rate of interest on such funds which, at the time that such funds are
accepted, significantly exceeds—
“(1) the rate paid on deposits of similar maturity in such
institution’s normal market area for deposits accepted in the
institution’s normal market area; or
“(2) the national rate paid on deposits of comparable matu­
rity, as established by the Corporation, for deposits accepted
outside the institution’s normal market area.” ;
(5 ) i n s u b s e c t i o n (f), a s r e d e s ig n a t e d , b y s t r i k i n g “ t r o u b l e d ” ;
and

(6) by striking subsection (h), as redesignated.
N o t i f i c a t i o n a n d R e c o r d k e e p i n g .— The Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.) is amended b y inserting after
section 29 the following:
(b )

12 USC 1831f-l.

“ SEC. 29A. DEPOSIT BRO KER NOTIFICATION AND RECORDKEEPING.

“(a) N o t i f i c a t i o n .—
“ (1 ) I n g e n e r a l .— A d e p o s i t b r o k e r , a s d e f i n e d in s e c t i o n
2 9 (g ), s h a l l n o t s o l i c i t o r p l a c e a n y d e p o s i t w i t h a n i n s u r e d
d e p o s i t o r y i n s t i t u t i o n , u n l e s s s u c h d e p o s it b r o k e r h a s p r o v i d e d
t h e C o r p o r a t i o n w i t h w r i t t e n n o t i c e t h a t i t is a d e p o s i t b r o k e r .
“(2) T e r m i n a t i o n o f d e p o s i t b r o k e r s t a t u s .—When a deposit

broker referred to in paragraph (1) ceases to act as a deposit
broker it shall provide the Corporation with a written notice
that it is no longer acting as a deposit broker.
“(3) F o r m a n d c o n t e n t .—The notices required by paragraphs
(1) and (2) shall be in such form and contain such information
concerning the deposit solicitation and placement activities of a
deposit broker as the Corporation may prescribe as necessary or
appropriate to carry out the purposes of this subsection.
“(b) R e c o r d s .—The Corporation may prescribe regulations requir­
ing each deposit broker that has filed a notice under subsection (a)(1)
to maintain separate records relating to the total amounts and
maturities of the deposits placed by such broker for each insured
depository institution during specified time periods. Such regula­
tions shall specify the format in which and the period for which such
records shall be preserved, as well as the time period within which
the deposit broker shall furnish to the Corporation copies of such
records (or designated portions thereof) as the Corporation may
request.
“ (c) P e r i o d i c R e p o r t s .—
“ (1) I n g e n e r a l . —The Corporation may prescribe regulations
requiring each deposit broker that has filed a notice under
subsection (a)(1) to file with the Corporation separate quarterly
reports relating to the total amounts and maturities of the
deposits placed by such broker for each depository institution
during the applicable quarter. Such regulations shall specify the
form and content of such reports, as well as the applicable
reporting period.
‘ (2 ) D e s i g n a t e d a g e n t .—The Corporation may designate an­
other entity as its agent for the purpose of receiving and

maintaining reports under this subsection. If the Corporation
designates such an agent the Corporation may, through its
agent, prescribe and collect an appropriate quarterly fee from
each deposit broker that filed reports with the agent during the
applicable quarter, in an amount sufficient to defray the Cor­
poration’s cost of retaining the agent and to reflect the propor­
tionate amount of the deposits placed with insured depository
institutions by each broker during the applicable quarter.” .
(c) D e p o s i t S o l i c i t a t i o n R e s t r i c t e d .—Section 29 of the Federal
Deposit Insurance Act (12 U.S.C. 1831f) is amended by adding at the
end the following:
“(h) D e p o s i t S o l i c i t a t i o n R e s t r i c t e d .—An insured depository
institution that is undercapitalized, as defined in section 38, shall
not solicit deposits by offering rates of interest that are significantly
higher than the prevailing rates of interest on insured deposits—
“ (1) in such institution’s normal market areas; or
“ (2) in the market area in which such deposits would other­
wise be accepted.” .
(d) D e a d l i n e f o r R e g u l a t i o n s . —The Corporation shall promul- 12 USC
gate final regulations to carry out the amendments made under notesubsections (a), (b), and (c) not later than 150 days after the date of
enactment of this Act, and those regulations shall become effective
not later than 180 days after that date of enactment, except that
such regulations shall not apply to any specific time deposit made
before that date of enactment until the stated maturity of the time
deposit.
SEC. 302. RISK-BASED ASSESSMENTS.

(a) R i s k - B a s e d A s s e s s m e n t S y s t e m .—Section 7(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)) is amended to read as
follows:
“(b) A s s e s s m e n t s .—
“ (1 ) R is k - b a s e d a s s e s s m e n t s y s t e m .—
“ (A) R i s k - b a s e d a s s e s s m e n t s y s t e m

r e q u i r e d . —The
Board of Directors shall, by regulation, establish a riskbased assessment system for insured depository
institutions.
“(B) P r i v a t e r e i n s u r a n c e a u t h o r i z e d .—In carrying out
this paragraph, the Corporation may—
“(i) obtain private reinsurance covering not more
than 10 percent of any loss the Corporation incurs with
respect to an insured depository institution; and
“ (ii) base that institution’s semiannual assessment
(in whole or in part) on the cost of the reinsurance.
“ (C) R i s k - b a s e d a s s e s s m e n t s y s t e m d e f i n e d .—For pur­
poses of this paragraph, the term ‘risk-based assessment
system’ means a system for calculating a depository institu­
tion's semiannual assessment based on—
“(i) the probability that the deposit insurance fund
will incur a loss with respect to the institution, taking
into consideration the risks attributable to—
“ (I) different categories and concentrations of
assets;
“(II) different categories and concentrations of
liabilities, both insured and uninsured, contingent
and noncontingent; and

I8 3 if

“(III) any other factors the Corporation deter­
mines are relevant to assessing such probability;
“(ii) the likely amount of any such loss; and
“ (iii) the revenue needs of the deposit insurance fund.
“(D) S e p a r a t e a s s e s s m e n t s y s t e m s .—The Board of Direc­
tors may establish separate risk-based assessment systems
for large and small members of each deposit insurance
fund.
“ (2 ) S e t t i n g a s s e s s m e n t s .—
“ (A ) A c h ie v in g a n d m a i n t a i n i n g d e s ig n a t e d
r a t i o .—
“(i) In g e n e r a l .—The Board of Directors

reserve

shall set
semiannual assessments for insured depository
institutions—
“(I) to maintain the reserve ratio of each deposit
insurance fund at the designated reserve ratio; or
“(II) if the reserve ratio is less than the des­
ignated reserve ratio, to increase the reserve ratio
to the designated reserve ratio as provided in para­
graph (8).
“(ii) F a c t o r s t o b e c o n s i d e r e d .—In carrying out
clause (i), the Board of Directors shall consider the
deposit insurance fund’s—
“(I) expected operating expenses,
“ (II) case resolution expenditures and income,
“ (III) the effect of assessments on members’ earn­
ings and capital, and
“(IV) any other factors that the Board of Direc­
tors may deem appropriate.
“(iii) M i n i m u m a s s e s s m e n t .—The semiannual assess­
ment for each member of a deposit insurance fund shall
be not less than $1,000.
“ (iv) D e s i g n a t e d r e s e r v e r a t i o d e f i n e d .—The des­
ignated reserve ratio of each deposit insurance fund for
each year shall be—
“(I) 1.25 percent of estimated insured deposits; or
“(II) a higher percentage of estimated insured
deposits that the Board of Directors determines to
be justified for that year by circumstances raising
a significant risk of substantial future losses to the
fund.
“ (B) I n d e p e n d e n t t r e a t m e n t o f f u n d s .— The Board of
Directors shall—
“ (i) set semiannual assessments for members of each
deposit insurance fund independently from semiannual
assessments for members of any other deposit insur­
ance fund; and
“(ii) set the designated reserve ratio of each deposit
insurance fund independently from the designated
reserve ratio of any other deposit insurance fund.
“(C) N o t ic e o f a s s e s s m e n t s .— The Corporation shall
notify each insured depository institution of that institu­
tion’s semiannual assessment.
“ (D ) P r i o r i t y

o f f in a n c in g

c o r p o r a t io n

and

f u n d in g

—Notwithstanding any other
provision of this paragraph, amounts assessed by the
Financing Corporation under section 21 of the Federal
c o r p o r a t io n

assessm en ts.

Home Loan Bank Act against Savings Association Insur­
ance Fund members, shall be subtracted from the amounts
authorized to be assessed by the Corporation under this
paragraph.
“(E) M i n i m u m a s s e s s m e n t s .— The Corporation shall
design the risk-based assessment system for any deposit
insurance fund so that, if the Corporation has borrowings
outstanding under section 14 on behalf of that fund or the
reserve ratio of that fund remains below the designated
reserve ratio, the total amount raised by semiannual assess­
ments on members of that fund shall be not less than the
total amount that would have been raised if—
“(i) section 7(b) as in effect on July 15,1991 remained
in effect; and
“(ii) the assessment rate in effect on July 15, 1991
remained in effect.
“ (F) T r a n s i t i o n r u l e f o r s a v i n g s a s s o c i a t i o n i n s u r ­
a n c e f u n d .—With respect to the Savings Association Insur­
ance Fund, during the period beginning on the effective
date of the amendments made by section 302(a) of the
Federal Deposit Insurance Corporation Improvement Act of
1991 and ending on December 31,1997—
“(i) subparagraph (A)(i)(II) shall apply as if such
subparagraph did not include ‘as provided in paragraph
(3)’; and
“(ii) subparagraph (E) shall be applied by substitut­
ing ‘if section 7(b) as in effect on July 15,1991 remained
in effect.’ for ‘if—’ and all that follows through clause
(ii).
“ (G) S p e c i a l r u l e u n t i l t h e i n s u r a n c e f u n d s a c h i e v e
t h e d e s i g n a t e d r e s e r v e r a t i o .—Until a deposit insurance
fund achieves the designated reserve ratio, the Corporation
may limit the maximum assessment on insured depository
institutions under the risk-based assessment system au­
thorized under paragraph (1) to not less than 10 basis points
above the average assessment on insured depository institu­
tions under that system.
“ (3 )

S p e c ia l

rule

for

r e c a p it a l iz in g

u n d e r c a p it a l iz e d

f u n d s .—

“ (A) I n g e n e r a l .—Except as provided in paragraph (2)(F),
if the reserve ratio of any deposit insurance fund is less
than the designated reserve ratio under paragraph
(2)(A)(iv), the Board of Directors shall set semiannual
assessment rates for members of that fund—
“ (i) that are sufficient to increase the reserve ratio
for that fund to the designated reserve ratio not later
than 1 year after such rates are set; or
“(ii) in accordance with a schedule promulgated by
the Corporation under subparagraph (B).
“(B) R e c a p i t a l i z a t i o n s c h e d u l e s .—For purposes of
subparagraph (A)(ii), the Corporation shall by regulation
promulgate a schedule that specifies, at semiannual inter­
vals, target reserve ratios for that fund, culminating in a
reserve ratio that is equal to the designated reserve ratio
not later than 15 years after the date on which the schedule
is implemented.

“(C) A m e n d i n g s c h e d u l e .—The Corporation may, by
regulation, amend a schedule promulgated under subpara­
graph (B), but such amendments may not extend the date
specified in subparagraph (B).
“ (D) A p p l i c a t i o n t o s a i f m e m b e r s .—This paragraph
shall become applicable to Savings Association Insurance
Fund members on January 1,1998.
“(4) S e m i a n n u a l p e r i o d d e f i n e d .—For purposes of this sec­
tion, the term ‘semiannual period’ means a period beginning on
January 1 of any calendar year and ending on June 30 of the
same year, or a period beginning on July 1 of any calendar year
and ending on December 31 of the same year.
“(5) R e c o r d s t o b e m a i n t a i n e d .—Each insured depository
institution shall maintain all records that the Corporation may
require for verifying the correctness of the institution’s semi­
annual assessments. No insured depository institution shall be
required to retain those records for that purpose for a period of
more than 5 years from the date of the filing of any certified
statement, except that when there is a dispute between the
insured depository institution and the Corporation over the
amount of any assessment, the depository institution shall
retain the records until final determination of the issue.” ,
(b) C e r t i f i e d S t a t e m e n t s a n d P a y m e n t P r o c e d u r e s .—Section
7(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(c)) is
amended to read as follows:
“ (c) C e r t i f i e d S t a t e m e n t s ; P a y m e n t s .—
“ (1 ) C e r t i f i e d

12 u sc 1817
note-

s t a t e m e n t s r e q u i r e d .—

“(A) In g e n e r a l . —Each insured depository institution
shall file with the Corporation a certified statement
containing such information as the Corporation may re­
quire for determining the institution’s semiannual
assessment.
“ (B) F o r m o f c e r t i f i c a t i o n .—The certified statement
required under subparagraph (A) shall—
“ (i) be in such form and set forth such supporting
information as the Board of Directors shall prescribe;
and
“(ii) be certified by the president of the depository
institution or any other officer designated by its board
of directors or trustees that to the best of his or her
knowledge and belief, the statement is true, correct and
complete, and in accordance with this Act and regula­
tions issued hereunder.
“(2) P a y m e n t s r e q u i r e d .—
“ (A) In g e n e r a l .—Each insured depository institution
shall pay to the Corporation the semiannual assessment
imposed under subsection (b).
“(B) F o r m o f p a y m e n t .—The payments required under
subparagraph (A) shall be made in such manner and at
such time or times as the Board of Directors shall prescribe
by regulation.
“(3) N e w l y i n s u r e d i n s t i t u t i o n s . —To facilitate the adminis­
tration of this section, the Board of Directors may waive the
requirements of paragraphs (1) and (2) for the semiannual
period in which a depository institution becomes insured.” .
(c) R e g u l a t i o n s . —To implement the risk-based assessment
system required under section 7(b) of the Federal Deposit Insurance

Act (as amended by subsection (a)), the Federal Deposit Insurance
Corporation shall—
(1) provide notice of proposed regulations in the Federal
Register, not later than December 31,1992, with an opportunity
for comment on the proposal of not less than 120 days; and
(2) promulgate final regulations not later than July 1, 1993.
(d) A u t h o r i t y To P r e s c r i b e R e g u l a t i o n s a n d D e f i n i t i o n s .—
Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is
amended by adding at the end the following:
“(f) A u t h o r i t y T o P r e s c r i b e R e g u l a t i o n s a n d D e f i n i t i o n s .—
Except to the extent that authority under this Act is conferred on
any of the Federal banking agencies other than the Corporation, the
Corporation may—
“(1) prescribe regulations to carry out this Act; and
“(2) by regulation define terms as necessary to carry out this
Act.” .
(e) C o n f o r m i n g A m e n d m e n t s .—The Federal Deposit Insurance
Act (12 U.S.C. 1811 et seq.) is amended—
(1) in section 5(d)(3)(B)—
(A) by striking “average assessment base” and inserting
“ deposits” ; and
(B) by striking “shall—” and all that follows through “(iii)
shall be treated” and inserting “shall be treated” ;
(2) in section 7(a)(5) by striking “and for the computation of
assessments provided in subsection (b) of this section” ;
(3) in section 7 by amending subsection (d) to read as follows:
“(d) C o r p o r a t i o n E x e m p t F r o m A p p o r t i o n m e n t .—Notwithstand­
ing any other provision of law, amounts received pursuant to any
assessment under this section and any other amounts received by
the Corporation shall not be subject to apportionment for the pur­
poses of chapter 15 of title 31, United States Code, or under any
other authority.” ; and
(4) in the last sentence of section 8(q) by striking “ upon” and
inserting “with respect to” .
(f) T r a n s i t i o n t o N e w A s s e s s m e n t S y s t e m .—To carry out the
amendments made by this section, the Corporation may promulgate
regulations governing the transition from the assessment system in
effect on the date of enactment of this Act to the assessment system
required under the amendments made by this section.
(g) E f f e c t i v e D a t e o f A m e n d m e n t s .—The amendments made by
this section shall become effective on the earlier of—
(1) 180 days after the date on which final regulations promul­
gated in accordance with subsection (c) become effective; or
(2) January 1,1994.

Federal
Register,
publication.

12 USC 1815.

12 USC 1817.

12 USC 1818.
12 USC 1817
note.

12 USC 1817
note.

SEC. 303. RESTRICTIONS ON INSURED STATE BANK ACTIVITIES.

(a) I n G e n e r a l .—The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by inserting after section 23 the following
new section:
“ SEC. 24. ACTIVITIES OF INSURED STATE BANKS.

“ (a) I n G e n e r a l .—After the end of the 1-year period beginning on
the date of the enactment of the Federal Deposit Insurance Corpora­
tion Improvement Act of 1991, an insured State bank may not
engage as principal in any type of activity that is not permissible for
a national bank unless—

12 USC 1831a
note.

“ (1) the Corporation has determined that the activity would
pose no significant risk to the appropriate deposit insurance
fund; and
“ (2) the State bank is, and continues to be, in compliance with
applicable capital standards prescribed by the appropriate Fed­
eral banking agency.
“(b) I n s u r a n c e U n d e r w r i t i n g .—
“ (1 ) I n g e n e r a l .—Notwithstanding subsection (a), an insured
State bank may not engage in insurance underwriting except to
the extent that activity is permissible for national banks.
“ (2 )

E x c e p t io n

for

c e r t a in

federally

r e in s u r e d

crop

—Notwithstanding any other provision of law, an
insured State bank or any of its subsidiaries that provided
insurance on or before September 30,1991, which was reinsured
in whole or in part by the Federal Crop Insurance Corporation
may continue to provide such insurance.” .
“(c) E q u i t y I n v e s t m e n t s b y I n s u r e d S t a t e B a n k s .—
“(1) In g e n e r a l .—An insured State bank may not, directly or
indirectly, acquire or retain any equity investment of a type
that is not permissible for a national bank.
“ (2 ) E x c e p t i o n f o r c e r t a i n s u b s i d i a r i e s . —Paragraph (1)
shall not prohibit an insured State bank from acquiring or
retaining an equity investment in a subsidiary of which the
insured State bank is a majority owner.
“ (3) E x c e p t i o n f o r q u a l i f i e d h o u s i n g p r o j e c t s .—
“ (A) E x c e p t i o n .—Notwithstanding any other provision of
this subsection, an insured State bank may invest as a
limited partner in a partnership, the sole purpose of which
is direct or indirect investment in the acquisition, re­
habilitation, or new construction of a qualified housing
project.
“ (B ) L i m i t a t i o n .—The aggregate of the investments of
any insured State bank pursuant to this paragraph shall
not exceed 2 percent of the total assets of the bank.
“(C) Q u a l i f i e d h o u s i n g p r o j e c t d e f i n e d .—As used in
this paragraph—
“ (i) Q u a l i f i e d h o u s i n g p r o j e c t .—The term ‘quali­
fied housing project’ means residential real estate that
is intended to primarily benefit lower income peoples
throughout the period of the investment.
“ (ii) L o w e r i n c o m e .—The term ‘lower income' means
income that is less than or equal to the median income
based on statistics from State or Federal sources.
in s u r a n c e .

“ (4 ) T r a n s i t i o n r u l e .—
“ (A) I n g e n e r a l .—The

Corporation shall require any
insured State bank to divest any equity investment the
retention of which is not permissible under this subsection
as quickly as can be prudently done, and in any event
before the end of the 5-year period beginning on the date of
the enactment of the Federal Deposit Insurance Corpora­
tion Improvement Act of 1991.
“ (B )

T reatm ent

of

n o n c o m p l ia n c e

d u r in g

d iv e s t ­

—With respect to any equity investment held by any
insured State bank on the date of enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991
which was lawfully acquired before such date, the bank
shall be deemed not to be in violation of the prohibition in
m ent.

this subsection on retaining such investment so long as the
bank complies with the applicable requirements established
by the Corporation for divesting such investments.
“ (d) S u b s i d i a r i e s o f I n s u r e d S t a t e B a n k s .—
“(1) In g e n e r a l .—After the end of the 1-year period begin­
ning on the date of the enactment of the Federal Deposit
Insurance Corporation Improvement Act of 1991, a subsidiary of
an insured State bank may not engage as principal in any type
of activity that is not permissible for a subsidiary of a national
bank unless—
“(A) the Corporation has determined that the activity
poses no significant risk to the appropriate deposit insur­
ance fund; and
“ (B) the bank is, and continues to be, in compliance with
applicable capital standards prescribed by the appropriate
Federal banking agency.
“ (2) I n s u r a n c e u n d e r w r i t i n g p r o h i b i t e d .—
“ (A) P r o h i b i t i o n .—Notwithstanding paragraph (1), no
subsidiary of an insured State bank may engage in insur­
ance underwriting except to the extent such activities are
permissible for national banks.
“ (B) C o n t i n u a t i o n o f e x i s t i n g a c t i v i t i e s .—Notwith­
standing subparagraph (A), a well-capitalized insured State
bank or any of its subsidiaries that was lawfully providing
insurance as principal in a State on November 21, 1991,
may continue to provide, as principal, insurance of the
same type to residents of the State (including companies or
partnerships incorporated in, organized under the laws of,
licensed to do business in, or having an office in the State,
but only on behalf of their employees resident in or prop­
erty located in the State), individuals employed in the
State, and any other person to whom the bank or subsidiary
has provided insurance as principal, without interruption,
since such person resided in or was employed in such State.
“ (C ) E x c e p t i o n .—Subparagraph (A) does not apply to a
subsidiary of an insured State bank if—
“(i) the insured State bank was required, before June
1, 1991, to provide title insurance as a condition of the
bank’s initial chartering under State law; and
“(ii) control of the insured State bank has not
changed since that date.
“(e) S a v i n g s B a n k L i f e I n s u r a n c e .—
“ (1) In g e n e r a l .—No provision of this Act shall be construed
as prohibiting or impairing the sale or underwriting of savings
bank life insurance, or the ownership of stock in a savings bank
life insurance company, by any insured bank which—
“ (A) is located in the Commonwealth of Massachusetts or
the State of New York or Connecticut; and
“ (B) meets the consumer disclosure requirements under
section 18(k) with respect to such insurance.
“(2) F D I C f i n d i n g a n d a c t i o n r e g a r d i n g r i s k .—
“(A) F i n d i n g .—Before the end of the 1-year period begin­
ning on the date of the enactment of the Federal Deposit
Insurance Corporation Improvement Act of 1991, the Cor­
poration shall make a finding whether savings bank life
insurance activities of insured banks pose or may pose any

State listing.

significant risk to the insurance fund of which such banks
are members.
“(B) A c t i o n s .—
“(i) I n g e n e r a l . —The Corporation shall, pursuant to
any finding made under subparagraph (A), take appro­
priate actions to address any risk that exists or may
subsequently develop with respect to insured banks
described in paragraph (1)(A).
“ (ii) A u t h o r i z e d a c t i o n s .—Actions the Corporation
may take under this subparagraph include requiring
the modification, suspension, or termination of insur­
ance activities conducted by any insured bank if the
Corporation finds that the activities pose a significant
risk to any insured bank described in paragraph (1 )(A )
or to the insurance fund of which such bank is a
member.
“ (f) C o m m o n a n d P r e f e r r e d S t o c k I n v e s t m e n t .—
“ (1) I n g e n e r a l . —An insured State bank shall

not acquire or
retain, directly or indirectly, any equity investment of a type or
in an amount that is not permissible for a national bank or is
not otherwise permitted under this section.
“(2) E x c e p t i o n f o r b a n k s i n c e r t a i n s t a t e s .— Notwithstand­
ing paragraph (1), an insured State bank may, to the extent
permitted by the Corporation, acquire and retain ownership of
securities described in paragraph (1) to the extent the aggregate
amount of such investment does not exceed an amount equal to
100 percent of the bank’s capital if such bank—
“(A) is located in a State that permitted, as of September
30, 1991, investment in common or preferred stock listed on
a national securities exchange or shares of an investment
company registered under the Investment Company Act of
1940; and
“ (B) made or maintained an investment in such securities
during the period beginning on September 30, 1990, and
ending on November 26,1991.
“ (3) E x c e p t i o n f o r c e r t a i n t y p e s o f i n s t i t u t i o n s .—Notwith­
standing paragraph (1), an insured State bank may—
“ (A) acquire not more than 10 percent of a corporation
that only—
“ (i) provides directors’, trustees', and officers’ liabil­
ity insurance coverage or bankers’ blanket bond group
insurance coverage for insured depository institutions;
or
“(ii) reinsures such policies; and
“ (B) acquire or retain shares of a depository institution
if—
“(i) the institution engages only in activities permis­
sible for national banks;
“(ii) the institution is subject to examination and
regulation by a State bank supervisor;
“(iii) 20 or more depository institutions own shares of
the institution and none of those institutions owns
more than 15 percent of the institution’s shares; and
“(iv) the institution’s shares (other than directors’
qualifying shares or shares held under or initially ac­
quired through a plan established for the benefit of the

i n s t i t u t i o n ’ s o f f i c e r s a n d e m p lo y e e s ) a r e o w n e d o n l y b y
t h e in s t it u t i o n .
“ (4 ) T r a n s i t i o n

p e r io d

for

com mon

and

preferred

stock

i n v e s t m e n t s .—

“ (A) I n g e n e r a l .—During each year in the 3-year period
beginning on the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991,
each insured State bank shall reduce by not less than 1/3 of
its shares (as of such date of enactment) the bank’s owner­
ship of securities in excess of the amount equal to 100
percent of the capital of such bank.
“(B) C o m p l i a n c e a t e n d o f p e r i o d .—By the end of the 3 year period referred to in subparagraph (A), each insured
State bank and each subsidiary of a State bank shall be in
compliance with the maximum amount limitations on
investments referred to in paragraph (1).
“(5) Loss o f e x c e p t i o n u p o n a c q u i s i t i o n .—Any exception
applicable under paragraph (2) with respect to any insured
State bank shall cease to apply with respect to such bank upon
any change in control of such bank or any conversion of the
charter of such bank.
“ (6 ) N o t ic e a n d a p p r o v a l .— A n i n s u r e d S t a t e b a n k m a y o n l y
e n g a g e i n a n y i n v e s t m e n t p u r s u a n t t o p a r a g r a p h (2 ) i f —

“(A) the bank has filed a 1-time notice of the bank’s
intention to acquire and retain investments described in
paragraph (1); and
“ (B) the Corporation has determined, within 60 days of
receiving such notice, that acquiring or retaining such
investments does not pose a significant risk to the insur­
ance fund of which such bank is a member.
“ (7 ) D i v e s t i t u r e .—
“(A) I n g e n e r a l .—The

Corporation may require divesti­
ture by an insured State bank of any investment permitted
under this subsection if the Corporation determines that
such investment will have an adverse effect on the safety
and soundness of the bank.
“(B) R e a s o n a b l e s t a n d a r d .—The Corporation shall not
require divestiture by any bank pursuant to subparagraph
(A) without reason to believe that such investment will
have an adverse effect on the safety and soundness of the
bank.
“(g) D e t e r m i n a t i o n s .—The Corporation shall make determina­
tions under this section by regulation or order.
“(h) A c t i v i t y D e f i n e d .—For purposes of this section, the term
‘activity’ includes acquiring or retaining any investment.
“(i) O t h e r A u t h o r i t y n o t A f f e c t e d .—This section shall not be
construed as limiting the authority of any appropriate Federal
banking agency or any State supervisory authority to impose more
stringent restrictions.” .
(b) T e c h n i c a l a n d C o n f o r m i n g A m e n d m e n t .—The 13th undesig­
nated paragraph of section 9 of the Federal Reserve Act (12 U.S.C.
330) is amended by striking
Provided, however, That no Federal
reserve bank” and inserting ", except that the Board of Governors of
the Federal Reserve System may limit the activities of State
member banks and subsidiaries of State member banks in a manner
consistent with section 24 of the Federal Deposit Insurance Act. No
Federal reserve bank” .

SEC. 304. RESTRICTIONS ON REAL ESTATE LENDING.

(a) In G e n e r a l .—Section 18 of the Federal Deposit Insurance Act
(12 U.S.C. 1828) is amended by adding at the end the following new
subsection:
“ (o ) R e a l E s t a t e L e n d i n g .—
“ (1 ) U n i f o r m r e g u l a t i o n s .—Not

more than 9 months after
the date of enactment of the Federal Deposit Insurance Cor­
poration Improvement Act of 1 9 9 1 , each appropriate Federal
banking agency shall adopt uniform regulations prescribing
standards for extensions of credit that are—
“ (A) secured by liens on interests in real estate; or
“(B) made for the purpose of financing the construction of
a building or other improvements to real estate.
“(2) S t a n d a r d s .—
“(A) C r i t e r i a .—In prescribing standards under para­
graph (1), the agencies shall consider—
“ (i) the risk posed to the deposit insurance funds by
such extensions of credit;
“ (ii) the need for safe and sound operation of insured
depository institutions; and
“(iii) the availability of credit.
“(B) V a r i a t i o n s p e r m i t t e d .—In prescribing standards
under paragraph (1), the appropriate Federal banking agen­
cies may differentiate among types of loans—
‘ (i) as may be required by Federal statute;
“(ii) as may be warranted, based on the risk to the
deposit insurance fund; or
“ (iii) as may be warranted, based on the safety and
soundness of the institutions.
“ (3) L o a n e v a l u a t i o n s t a n d a r d .—No appropriate Federal
banking agency shall adversely evaluate an investment or a
loan made by an insured depository institution, or consider such
a loan to be nonperforming, solely because the loan is made to
or the investment is in commercial, residential, or industrial
property, unless such investment or loan may affect the institu­
tion’s safety and soundness.
“(4) E f f e c t i v e d a t e .—The regulations adopted under para­
graph (1 ) shall become effective not later than 1 5 months after
the date of enactment of the Federal Deposit Insurance Cor­
poration Improvement Act of 1 9 9 1 . Such regulations shall con­
tinue in effect except as uniformly amended by the appropriate
Federal banking agencies, acting in concert.” .
(b) C o n f o r m i n g A m e n d m e n t .—Section 24(a) of the Federal Re­
serve Act (12 U.S.C. 371(a)) is amended by striking “ such terms,”
and all that follows through the period and inserting “section 18(o)
of the Federal Deposit Insurance Act and such restrictions and
requirements as the Comptroller of the Currency may prescribe by
regulation or order.” .
SEC. 305. IMPROVING CAPITAL STANDARDS.

(a) P e r i o d i c R e v i e w o f C a p i t a l S t a n d a r d s G e n e r a l l y .—Section
18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended
by adding at the end the following new subsection:
“(o) P e r i o d i c R e v i e w o f C a p i t a l S t a n d a r d s .—Each appropriate
Federal banking agency shall, in consultation with the other Fed­
eral banking agencies, biennially review its capital standards for
insured depository institutions to determine whether those stand­

ards require sufficient capital to facilitate prompt corrective action
to prevent or minimize loss to the deposit insurance funds, consist­
ent with section 38.” .
(b ) R e v i e w

of

R i s k -B a s e d C a p i t a l S t a n d a r d s .—

12 USC 1828

(1) In g e n e r a l .—Each appropriate Federal banking agency note.
shall revise its risk-based capital standards for insured deposi­
tory institutions to ensure that those standards—
(A) take adequate account of—
(i) interest-rate risk;
(ii) concentration of credit risk; and
(iii) the risks of nontraditional activities; and
(B) reflect the actual performance and expected risk of
loss of multifamily mortgages.
(2) I n t e r n a t i o n a l d i s c u s s i o n s .—The Federal banking agen­
cies shall discuss the development of comparable standards with
members of the supervisory committee of the Bank for Inter­
national Settlements.
(3) D e a d l i n e f o r p r e s c r i b i n g r e v i s e d s t a n d a r d s .—Each
appropriate Federal banking agency shall—
(A) publish final regulations in the Federal Register to Federal
implement paragraph (1) not later than 18 months after the Register,
publication.
date of enactment of this Act; and
(B) establish reasonable transition rules to facilitate
compliance with those regulations.
(4) D e f i n i t i o n s .—For purposes of this subsection, the terms
“appropriate Federal banking agency” , “ Federal banking
agency” and “ insured depository institution” have the same
meanings as in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
(c) C o n f o r m i n g A m e n d m e n t D e f i n i n g F e d e r a l B a n k i n g A g e n ­
c ie s .—Section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813) is amended by adding at the end the following:
“(z) F e d e r a l B a n k i n g A g e n c i e s .—The term ‘Federal banking
agencies’ means the Office of the Comptroller of the Currency, the
Office of Thrift Supervision, the Board of Governors of the Federal
Reserve System, and the Federal Deposit Insurance Corporation.” .
SEC. 306. SAFEGUARDS AGAINST INSIDER ABUSE.

(a) R e c o d i f i c a t i o n o f C u r r e n t L a w R e s t r i c t i n g E x t e n s i o n s o f
C r e d i t t o I n s i d e r s .—Section 22(h) of the Federal Reserve Act (12
U .S .C . 375b) is amended to read as follows:
“ (h ) E x t e n s i o n s o f C r e d i t t o E x e c u t i v e O f f i c e r s , D i r e c t o r s ,
a n d P r i n c i p a l S h a r e h o l d e r s o f M e m b e r B a n k s .—
“(1) In g e n e r a l .—No member bank may extend credit to any
of its executive officers, directors, or principal shareholders, or
to any related interest of such a person, except to the extent
permitted under paragraphs (2), (3), (4), and (6).
“ (2) P r e f e r e n t i a l t e r m s p r o h i b i t e d .— A m e m b e r b a n k m a y
e x t e n d c r e d i t t o it s e x e c u t i v e o f f i c e r s , d ir e c t o r s , o r p r i n c i p a l
s h a r e h o ld e r s , o r t o a n y r e la t e d i n t e r e s t o f s u c h a p e r s o n , o n l y i f
th e e x t e n s io n o f c r e d it—

“(A) is made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions by the bank with persons who
are not executive officers, directors, principal shareholders,
or employees of the bank; and

“ (B) does not involve more than the normal risk of repay­
ment or present other unfavorable features.
“(3) P r i o r a p p r o v a l r e q u i r e d .— A member bank may extend
credit to a person described in paragraph (1) in an amount that,
when aggregated with the amount of all other outstanding
extensions of credit by that bank to each such person and that
person’s related interests, would exceed an amount prescribed
by regulation of the appropriate Federal banking agency (as
defined in section 8 of the Federal Deposit Insurance Act) only
“ (A) the extension of credit has been approved in advance
by a majority vote of that bank’s entire board of directors;
and
“(B) the interested party has abstained from participat­
ing, directly or indirectly, in the deliberations or voting on
the extension of credit.
“ (4 ) A

g g r e g a t e l im i t o n e x t e n s io n s o p c r e d it t o a n y e x e c u ­

A member bank may
extend credit to any executive officer or principal shareholder,
or to any related interest of such a person, only if the extension
of credit is in an amount that, when aggregated with the
amount of all outstanding extensions of credit by that bank to
that person and that person’s related interests, would not
exceed the limits on loans to a single borrower established by
section 5200 of the Revised Statutes. For purposes of this para­
graph, section 5200 of the Revised Statutes shall be deemed to
apply to a State member bank as if the State member bank
were a national banking association.
“(5) [Reserved.]
t i v e o f f i c e r o r p r i n c i p a l s h a r e h o l d e r .—

“ (6 ) O v e r d r a f t s
PROHIBITED.—

by

e x e c u t iv e

o f f ic e r s

and

d ir e c t o r s

“ (A) In g e n e r a l .—If any executive officer or director has
an account at the member bank, the bank may not pay on
behalf of that person an amount exceeding the funds on
deposit in the account.
“(B) E x c e p t i o n s .—Subparagraph (A) does not prohibit a
member bank from paying funds in accordance with—
“(i) a written preauthorized, interest-bearing exten­
sion of credit specifying a method of repayment; and
“ (ii) a written preauthorized transfer of funds from
another account of the executive officer or director at
that bank.
“(7) [Reserved.]
“ (8 ) E x e c u t i v e

o f f ic e r , d ir e c t o r , o r p r in c ip a l s h a r e h o l d e r

o f c e r t a in a f f il ia t e s t r e a t e d a s e x e c u t iv e o f f ic e r , d ir e c t o r ,
o r p r i n c i p a l s h a r e h o l d e r o f m e m b e r b a n k .—For purposes of
this subsection, any executive officer, director, or principal
shareholder (as the case may be) of any bank holding company
of which the member bank is a subsidiary, or of any other
subsidiary of that company, shall be deemed to be an executive
officer, director, or principal shareholder (as the case may be) of
the member bank.
“(9) D e f i n i t i o n s .—For purposes of this subsection:
“(A) C o m p a n y .—
“(i) In g e n e r a l .—Except as provided in clause (ii),
the term ‘company’ means any corporation, partner­
ship, business or other trust, association, joint venture,

pool syndicate, sole proprietorship, unincorporated
organization, or other business entity.
“(ii) E x c e p t i o n s .—The term ‘company’ does not
include—
“ (I) an insured depository institution (as defined
in section 3 of the Federal Deposit Insurance Act);
or
“ (II) a corporation the majority of the shares of
which are owned by the United States or by any
State.
“ (B) C o n t r o l .— A p e r s o n c o n t r o l s a c o m p a n y o r b a n k i f
t h a t p e r s o n , d i r e c t l y o r i n d i r e c t l y , o r a c t i n g t h r o u g h o r in
c o n c e r t w ith 1 o r m o r e p e r s o n s —

“ (i) owns, controls, or has the power to vote 25 per­
cent or more of any class of the company’s voting
securities;
“(ii) controls in any manner the election of a majority
of the company’s directors; or
“(iii) has the power to exercise a controlling influence
over the company’s management or policies.
“(C) E x e c u t i v e o f f i c e r .—A person is an ‘executive offi­
cer’ of a company or bank if that person participates or has
authority to participate (other than as a director) in major
policymaking functions of the company or bank.
“(D) E x t e n s i o n o f c r e d i t .—A member bank extends
credit by making or renewing any loan, granting a line of
credit, or entering into any similar transaction as a result
of which a person becomes obligated (directly or indirectly,
or by any means whatsoever) to pay money or its equivalent
to the bank.
“ (E) [Reserved.]
“ (F) P r i n c i p a l s h a r e h o l d e r .—The term ‘principal share­
holder’ means any person that directly or indirectly, or
acting through or in concert with one or more persons,
owns, controls, or has the power to vote more than 10
percent of any class of voting securities of a member bank
or company. For purposes of paragraph (4), if a member
bank has its main banking office in a city, town, or village
with a population of less than 30,000, the preceding sen­
tence shall apply with ‘18 percent’ substituted for ‘10
percent’.
“ (G) R e l a t e d i n t e r e s t .—A ‘related interest’ of a person
is—
“ (i) any company controlled by that person; and
“(ii) any political or campaign committee that is
controlled by that person or the funds or services of
which will benefit that person.
“(H) S u b s i d i a r y .—The term ‘subsidiary’ has the same
meaning as in section 2 of the Bank Holding Company Act
of 1956.
“(10) B o a r d ’ s r u l e m a k i n g a u t h o r i t y .—The Board of Gov­
ernors of the Federal Reserve System may prescribe such regu­
lations, including definitions of terms, as it determines to be
necessary to effectuate the purposes and prevent evasions of
this subsection.” .
(b)
R e q u i r i n g D e p o s i t o r y I n s t i t u t i o n s To F o l l o w
N orm al
C r e d it

U n d e r w r itin g

P roced u res

W hen

E x te n d in g

C r e d it t o

I n s i d e r s .—Section 22(h)(2) of the Federal Reserve Act (12 U.S.C.
375b(2)), as amended by subsection (a), is amended—
(1) by striking “ and” at the end of subparagraph (A);
(2) by striking the period at the end of subparagraph (B) and
inserting and” ; and
(3) by inserting after subparagraph (B) the following new
subparagraph:
“ (C) the bank follows credit underwriting procedures that
are not less stringent than those applicable to comparable
transactions by the bank with persons who are not execu­
tive officers, directors, principal shareholders, or employees
of the bank.” .
(c) A p p l y i n g t o D i r e c t o r s t h e L i m i t o n L o a n s t o O n e B o r ­
r o w e r .—Section 22(h)(4) of the Federal Reserve Act (12 U.S.C.
375b(4)), as amended by subsection (a), is amended—
(1) by inserting “ , d i r e c t o r ,” after “ A g g r e g a t e l i m i t o n
e x t e n s i o n s o f c r e d i t t o a n y e x e c u t i v e o f f i c e r ” ; and
(2) by inserting “ , director,” after “ A member bank may
extend credit to any executive officer” .
(d) L i m i t i n g D e p o s i t o r y I n s t i t u t i o n ’ s A g g r e g a t e E x t e n s i o n s o f
C r e d it

to

I n s i d e r s .—

(1) I n g e n e r a l . — Section 22(h)(5) of the Federal Reserve Act

(12 U.S.C. 375b(5)), as amended by subsection (a), is amended to
read as follows:
“ (5 ) A

g g r e g a t e l im it o n e x t e n s io n s o f c r e d it t o a l l e x e c u ­

t i v e o f f i c e r s , d i r e c t o r s , a n d p r i n c i p a l s h a r e h o l d e r s .—

“ (A) I n g e n e r a l . —A member bank may extend credit to
any executive officer, director, or principal shareholder, or
to any related interest of such a person, if the extension of
credit is in an amount that, when aggregated with the
amount of all outstanding extensions of credit by that bank
to its executive officers, directors, principal shareholders,
and those persons’ related interests would not exceed the
bank’s unimpaired capital and unimpaired surplus.
“ (B) M o r e s t r i n g e n t l i m i t a u t h o r i z e d .—The Board
may, by regulation, prescribe a limit that is more stringent
than that contained in subparagraph (A).
“ (C ) B o a r d

m a y m a k e e x c e p t i o n s f o r c e r t a i n b a n k s .—

The Board may, by regulation, make exceptions to subpara­
graph (A) for member banks with less than $100,000,000 in
deposits if the Board determines that the exceptions are
important to avoid constricting the availability of credit in
small communities or to attract directors to such banks. In
no case may the aggregate amount of all outstanding exten­
sions of credit to a bank’s executive officers, directors,
principal shareholders, and those persons’ related interests
be more than 2 times the bank’s unimpaired capital and
unimpaired surplus.” .
(2) C o n f o r m i n g a m e n d m e n t .—Section 22(h)(1) of the Federal
Reserve Act (12 U .S .C . 375b(l)), as amended by subsection (a), is
amended by inserting “(5),” after “ (4),” .
(e ) P r o h i b i t i n g I n s i d e r s F r o m A c c e p t i n g U n a u t h o r i z e d E x t e n ­
o f C r e d i t .— S e c t i o n 2 2 (h )(7 ) o f t h e F e d e r a l R e s e r v e A c t (12
U .S .C . 3 7 5 b (7 )), a s a m e n d e d b y s u b s e c t io n (a), is a m e n d e d t o r e a d a s
f o llo w s :
“ (7 ) P r o h i b i t i o n o n k n o w i n g l y r e c e i v i n g u n a u t h o r i z e d
e x t e n s i o n o f c r e d i t . —No executive officer, director, or prin­

s io n s

cipal shareholder shall knowingly receive (or knowingly permit
any of that person’s related interests to receive) from a member
bank, directly or indirectly, any extension of credit not au­
thorized under this subsection.” .
(f) A p p l y i n g U n i f o r m R u l e s t o A l l C o m p a n i e s C o n t r o l l i n g
D e p o s i t o r y I n s t i t u t i o n s .—Section 22(h)(8) of the Federal Reserve
Act (12 U.S.C. 375b(8)), as amended by subsection (a), is amended by
striking “bank holding” .
(g ) A p p l y i n g S a f e g u a r d s t o I n s i d e r T r a n s a c t i o n s W i t h D e p o s i ­
I n s t i t u t i o n ’ s S u b s i d i a r i e s .— S e c t i o n 2 2 (h )(9 )(E ) o f t h e F e d e r a l
R e s e r v e A c t (1 2 U.S.C. 3 7 5 b (9 )(E )), a s a m e n d e d b y s u b s e c t io n (a ), is
a m e n d e d t o r e a d a s f o llo w s :
“ (E) M e m b e r b a n k .—The term ‘member bank’ includes any

tory

subsidiary of a member bank.” .
(h ) A

p p l y in g

U

n if o r m

R ules

to

A

ll

P r i n c i p a l S h a r e h o l d e r s .—

Section 22(h)(9)(F) of the Federal Reserve Act (12 U.S.C. 375b(9)(F)),
as amended by subsection (a), is amended by striking the last
sentence.
(i) L i m i t i n g S a v i n g s A s s o c i a t i o n s ’ E x t e n s i o n s o f C r e d i t t o
E x e c u t i v e O f f i c e r s .—Section 11(b)(1) of the Home Owners’ Loan
Act (12 U.S.C. 1468(b)(1)) is amended by striking “ Section 22(h)” and
inserting “Subsections (g) and (h) of section 22” .
O')

P r e v e n t in g S a v in g s A s s o c ia t io n s F r o m M a k in g P r e f ­
E x t e n s io n s o f C r e d it T h r o u g h C o r r e s p o n d e n t I n s t it u ­
t i o n s .—Section 106(b)(2)(H)(i) of the Bank Holding Company Act
e r e n t ia l

Amendments of 1970 (12 U.S.C. 1972(2)(H)(i)) is amended by insert­
ing “ , a savings bank, and a savings association (as those terms are
defined in section 3 of the Federal Deposit Insurance Act)” after
“ mutual savings bank” .
(k ) L i m i t i n g S t a t e N o n m e m b e r B a n k ’ s E x t e n s i o n s o f C r e d i t t o
E x e c u t iv e O f f ic e r s ; C l a r i f y in g t h e P r o h ib it io n o n P r e f e r e n t ia l
E x t e n s i o n s o f C r e d i t t o I n s i d e r s . —Section 180') of the Federal
Deposit Insurance Act (12 U .S .C . 1828(j)) is amended to read as

follows:
“ 0 ) R e s t r ic t io n s

on

T r a n s a c t io n s W

it h

A

f f il ia t e s a n d

In s i d ­

e r s .—

“ (1) T r a n s a c t i o n s w i t h a f f i l i a t e s .—
“(A) I n g e n e r a l .—Sections 23A

and 23B of the Federal
Reserve Act shall apply with respect to every nonmember
insured bank in the same manner and to the same extent as
if the nonmember insured bank were a member bank.
“ (B) A f f i l i a t e d e f i n e d .—For the purpose of subpara­
graph (A ), any company that would be an affiliate (as
defined in sections 23A and 23B) of a nonmember insured
bank if the nonmember insured bank were a member bank
shall be deemed to be an affiliate of that nonmember
insured bank.

“ (2 ) E x t e n s i o n s

o f c r e d it t o o f f ic e r s , d ir e c t o r s , a n d p r in ­

—Subsections (g ) and (h) of section 2 2 of
the Federal Reserve Act shall apply with respect to every
nonmember insured bank in the same manner and to the same
extent as if the nonmember insured bank were a member bank.
c ip a l

“ (3 )

shareh olders.

A

v o id in g

e x t r a t e r r it o r ia l

a p p l ic a t io n

to

f o r e ig n

b a n k s .—

“(A) T r a n s a c t i o n s w i t h a f f i l i a t e s .—Paragraph (1) shall
not apply with respect to a foreign bank solely because the
foreign bank has an insured branch.

“ (B)

E x t e n s io n s

of

c r e d it t o o f f ic e r s , d ir e c t o r s , a n d

Paragraph (2) shall not apply
with respect to a foreign bank solely because the foreign
bank has an insured branch, but shall apply with respect to
the insured branch.
“(C) F o r e i g n b a n k d e f i n e d .—For purposes of this para­
graph, the term ‘foreign bank’ has the same meaning as in
section 1(b)(7) of the International Banking Act of 1978.” .
(1) E f f e c t i v e D a t e .—The amendments made by this section shall
become effective upon the earlier of—
(1) the date on which final regulations under subsection (m)(l)
become effective; or
(2) 150 days after the date of enactment of this Act.
(m) R e g u l a t i o n s .—
(1) I n g e n e r a l .—The Board of Governors of the Federal
Reserve System shall, not later than 120 days sifter the date of
enactment of this Act, promulgate final regulations to imple­
ment the amendments made by this section, other than the
amendments made by subsections (i) and (k).
(2) L i m i t i n g e x t e n s i o n s o f c r e d i t t o e x e c u t i v e o f f i c e r s .—
The Federal Deposit Insurance Corporation and Director of the
Office of Thrift Supervision shall each, not later than 120 days
after the date of enactment of this Act, promulgate final regula­
tions prescribing the maximum amount that a nonmember
insured bank or insured savings association (as the case may be)
may lend under section 22(g)(4) of the Federal Reserve Act, as
made applicable to those institutions by subsections (k) and (i),
respectively.
(n) E x i s t i n g T r a n s a c t i o n s N o t A f f e c t e d .—The amendments
made by this section do not affect the validity of any extension of
credit or other transaction lawfully entered into on or before the
effective date of those amendments.
(o) R e p o r t i n g o f C r e d i t b y E x e c u t i v e O f f i c e r s a n d D i r e c t o r s .—
An executive officer or director of an insured depository institution,
a bank holding company, or a savings and loan holding company,
the shares of which are not publicly traded, shall report annually to
the board of directors of the institution or holding company the
outstanding amount of any credit that was extended to such execu­
tive officer or director and that is secured by shares of the institu­
tion or holding company.
p r in c ip a l

s h a r e h o l d e r s .—

SEC. 307. FDIC BACK-UP ENFORCEMENT AUTHORITY.

Section 8(t) of the Federal Deposit Insurance Act (12 U.S.C.
1818(t)) is amended to read as follows:
“ (t) A u t h o r i t y o f FDIC To T a k e E n f o r c e m e n t A c t i o n A g a i n s t
I n s u r e d D e p o s it o r y In s t it u t io n s

and

I n s t it u t io n - A f f il ia t e d P a r ­

t i e s .—

“ (1 ) R

e c o m m e n d in g a c t io n b y a p p r o p r ia t e f e d e r a l b a n k in g

—The Corporation, based on an examination of an in­
sured depository institution by the Corporation or by the appro­
priate Federal banking agency or on other information, may
recommend in writing to the appropriate Federal banking
agency that the agency take any enforcement action authorized
under section 7(j), this section, or section 18(j) with respect to
any insured depository institution or any institution-affiliated
party. The recommendation shall be accompanied by a written
explanation of the concerns giving rise to the recommendation.
agency.

“ (2) FDIC’S AUTHORITY

TO ACT IF APPROPRIATE FEDERAL BANK­

—If the appro­
priate Federal hanking agency does not, before the end of the
60-day period beginning on the date on which the agency re­
ceives the recommendation under paragraph (1), take the
enforcement action recommended by the Corporation or provide
a plan acceptable to the Corporation for responding to the
Corporation’s concerns, the Corporation may take the rec­
ommended enforcement action if the Board of Directors deter­
mines, upon a vote of its members, that—
“ (A) the insured depository institution is in an unsafe or
unsound condition;
“ (B) the institution is engaging in unsafe or unsound
practices, and the recommended enforcement action will
prevent the institution from continuing such practices; or
“ (C) the institution’s conduct or threatened conduct
(including any acts or omissions) poses a risk to the deposit
insurance fund, or may prejudice the interests of the
institution’s depositors.
ING

a g e n c y f a il s t o f o l l o w r e c o m m e n d a t i o n .

“ (3 ) E f f e c t o f e x i g e n t c i r c u m s t a n c e s .—
“ ( A ) A u t h o r i t y t o a c t . —The Corporation

may, upon a
vote of the Board of Directors, and after notice to the
appropriate Federal banking agency, exercise its authority
under paragraph (2) in exigent circumstances without
regard to the time period set forth in paragraph (2).
“ (B) A g r e e m e n t o n e x i g e n t c i r c u m s t a n c e s .—The Cor­
poration shall, by agreement with the appropriate Federal
banking agency, set forth those exigent circumstances in
which the Corporation may act under subparagraph (A ).
“ (4 ) C o r p o r a t i o n ’ s p o w e r s ; i n s t i t u t i o n ’ s d u t i e s .—For pur­
poses of this subsection—
“ (A) the Corporation shall have the same powers with
respect to any insured depository institution and its affili­
ates as the appropriate Federal banking agency has with
respect to the institution and its affiliates; and
“ (B) the institution and its affiliates shall have the same
duties and obligations with respect to the Corporation as
the institution and its affiliates have with respect to the
appropriate Federal banking agency.
“ (5) R e q u e s t s f o r f o r m a l a c t i o n s a n d i n v e s t i g a t i o n s .—
“ (A ) S u b m i s s i o n o f r e q u e s t s . —A regional office of an

appropriate Federal banking agency (including a Federal
Reserve bank) that requests a formal investigation of or
civil enforcement action against an insured depository
institution shall submit the request concurrently to the
chief officer of the appropriate Federal banking agency and
to the Corporation.
“(B) A g e n c i e s r e q u i r e d t o r e p o r t o n r e q u e s t s .—Each
appropriate Federal banking agency shall report semiannu­
ally to the Corporation on the status or disposition of all
requests under subparagraph ( A ), including the reasons for
any decision by the agency to approve or deny such
requests.” .

SEC. 308. INTERBANK LIABILITIES.

(a) R e d u c i n g S y s t e m i c R i s k s P o s e d b y L a r g e B a n k F a i l u r e s .—
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by
inserting after section 22 the following new section:
“ in t e r b a n k
12 USC 37lb-2.

-

12 u se 37ib-2

note-

l ia b il it ie s

“ S e c . 23. (a) P u r p o s e .—The purpose of this section is to limit the
risks that the failure of a large depository institution (whether or
not that institution is an insured depository institution) would pose
to insured depository institutions.
“ (b) A g g r e g a t e L i m i t s o n I n s u r e d D e p o s i t o r y I n s t i t u t i o n s ’
E x p o s u r e t o O t h e r D e p o s i t o r y I n s t i t u t i o n s .—The Board shall, by
regulation or order, prescribe standards that have the effect of
limiting the risks posed by an insured depository institution’s expo­
sure to any other depository institution.
“(c) E x p o s u r e D e f i n e d .—
“ (1) In g e n e r a l .—For purposes of subsection (b), an insured
depository institution’s ‘exposure’ to another depository institu­
tion means—
“ (A) all extensions of credit to the other depository
institution, regardless of name or description, including—
“(i) all deposits at the other depository institution;
“(ii) all purchases of securities or other assets from
the other depository institution subject to an agree­
ment to repurchase; and
“ (iii) all guarantees, acceptances, or letters of credit
(including endorsements or standby letters of credit) on
behalf of the other depository institution;
“ (B) all purchases of or investments in securities issued
by the other depository institution;
“ (C) all securities issued by the other depository institu­
tion accepted as collateral for an extension of credit to any
person; and
“(D) all similar transactions that the Board by regulation
determines to be exposure for purposes of this section.
“(2) E x e m p t i o n s .—The Board may, at its discretion, by regu­
lation or order, exempt transactions from the definition of
‘exposure’ if it finds the exemptions to be in the public interest
and consistent with the purpose of this section.
“ (3) A t t r i b u t i o n r u l e .—For purposes of this section, any
transaction by an insured depository institution with any
person is a transaction with another depository institution to
the extent that the proceeds of the transaction are used for the
benefit of, or transferred to, that other depository institution.
“ (d) I n s u r e d D e p o s i t o r y I n s t i t u t i o n .—For purposes of this sec­
tion, the term ‘insured depository institution’ has the same meaning
as in section 3 of the Federal Deposit Insurance Act.
“ (e) R u l e m a k i n g A u t h o r i t y ; E n f o r c e m e n t .—The Board may
issue such regulations and orders, including definitions consistent
with this section, as may be necessary to administer and carry out
the purpose of this section. The appropriate Federal banking agency
shall enforce compliance with those regulations under section 8 of
the Federal Deposit Insurance Act.” .
(b) T r a n s i t i o n R u l e s .— The Board shall prescribe reasonable
transition rules to facilitate compliance with section 23 of the
Federal Reserve Act (as added by subsection (a)).

(c) E f f e c t i v e D a t e .—The amendment made by this section shall 12 USC 371b-2
become effective 1 year after the date of enactment of this Act. note-

Subtitle B— Coverage
SEC. 311. DEPOSIT AND PASS-THROUGH INSURANCE.

(a) E x c l u s i o n o f C e r t a i n O b l i g a t i o n s F r o m D e p o s i t I n s u r a n c e
C o v e r a g e .—
(1) I n g e n e r a l .—Section 11(a) of the Federal Deposit Insur­
ance Act (12 U.S.C. 1821(a)) is amended by adding at the end the
following new paragraph:
“ (8 ) C e r t a i n

in v e s t m e n t c o n t r a c t s n o t t r e a t e d a s in s u r e d

d e p o s i t s .—

“ (A) I n g e n e r a l .—A liability of an insured depository
institution shall not be treated as an insured deposit if the
liability arises under any insured depository institution
investment contract between any insured depository
institution and any employee benefit plan which expressly
permits benefit-responsive withdrawals or transfers.
“ (B) D e f i n i t i o n s .—For purposes of subparagraph (A)—
“ (i) B e n e f i t - r e s p o n s i v e w i t h d r a w a l s o r t r a n s f e r s .—The term ‘benefit-responsive withdrawals or
transfers’ means any withdrawal or transfer of funds
(consisting of any portion of the principal and any
interest credited at a rate guaranteed by the insured
depository institution investment contract) during the
period in which any guaranteed rate is in effect, with­
out substantial penalty or adjustment, to pay benefits
provided by the employee benefit plan or to permit a
plan participant or beneficiary to redirect the invest­
ment of his or her account balance.
“(ii) E m p l o y e e b e n e f i t p l a n .—The term ‘employee
benefit plan’—
“(I) has the meaning given to such term in sec­
tion 3(3) of the Employee Retirement Income Secu­
rity Act of 1974; and
“(II) includes any plan described in section 401(d)
of the Internal Revenue Code of 1986.” .
(2) E x c l u s i o n o f o b l i g a t i o n s f r o m t r e a t m e n t a s d e p o s it s
f o r o t h e r p u r p o s e s .—Section 7(b)(6) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(6)) is amended—
(A) by striking “and” at the end of subparagraph (B);
(B) by striking the period at the end of subparagraph (C)
and inserting “ ; and” ; and
(C) by adding at the end the following new subparagraph:
“(D) any liability of the insured depository institution
which is not treated as an insured deposit pursuant to
section 11(a)(8).” .
(b) I n s u r a n c e o f . D e p o s i t s .—
(1) I n s u r e d a m o u n t s p a y a b l e .—Section 11(a) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)) (as amended by subsec­
tion (a)(1) of this section) is amended by striking “(a)(1)” and all
that follows through paragraph (1) and inserting the following:
“ (a) D e p o s i t I n s u r a n c e —
“ (1) I n s u r e d

a m o u n t s p a y a b l e .—

.

“ (A) I n g e n e r a l . —The Corporation shall insure the de­
posits of all insured depository institutions as provided in
this Act.
“ (B) N e t a m o u n t o f i n s u r e d d e p o s i t .—The net amount
due to any depositor at an insured depository institution
shall not exceed $100,000 as determined in accordance with
subparagraphs (C) and (D).
“(C) A g g r e g a t i o n o f d e p o s i t s .—For the purpose of deter­
mining the net amount due to any depositor under subpara­
graph (B), the Corporation shall aggregate the amounts of
all deposits in the insured depository institution which are
maintained by a depositor in the same capacity and the
same right for the benefit of the depositor either in the
name of the depositor or in the name of any other person,
other than any amount in a trust fund described in section
7(iXD-

“ (D)

C overage on

p r o r a t a o r ‘ p a s s - t h r o u g h ’ b a s i s .—

“ (i) I n g e n e r a l . —Except as provided in clause (ii),
for the purpose of determining the amount of insurance
due under subparagraph (B), the Corporation shall pro­
vide deposit insurance coverage with respect to deposits
accepted by any insured depository institution on a pro
rata or ‘pass-through’ basis to a participant in or bene­
ficiary of an employee benefit plan (as defined in sec­
tion ll(a)(8)(B)(ii)), including any eligible deferred com­
pensation plan described in section 457 of the Internal
Revenue Code of 1986.
“(ii) E x c e p t i o n .—After the end of the 1-year period
beginning on the date of the enactment of the Federal
Deposit Insurance Corporation Improvement Act of
1991, the Corporation shall not provide insurance cov­
erage on a pro rata or ‘pass-through’ basis pursuant to
clause (i) with respect to deposits accepted by any
insured depository institution which, at the time such
deposits are accepted, may not accept brokered deposits
under section 29.
“ (iii) C o v e r a g e u n d e r c e r t a i n c i r c u m s t a n c e s .—
Clause (ii) shall not apply with respect to any deposit
accepted by an insured depository institution described
in such clause if, at the time the deposit is accepted—
“ (I) the institution meets each applicable capital
standard; and
“ (II) the depositor receives a written statement
from the institution that such deposits at such
institution are eligible for insurance coverage on a
pro rata or ‘pass-through’ basis.” .
(2)
C e r t a i n r e t i r e m e n t a c c o u n t s .— Section 11(a)(3) of the
Federal Deposit Insurance Act (12 U.S.C. 1821(a)(3)) is amended
to read as follows:
“ (3) C e r t a i n r e t i r e m e n t a c c o u n t s .—
“(A) I n g e n e r a l . —Notwithstanding any limitation in
this Act relating to the amount of deposit insurance avail­
able for the account of any 1 depositor, deposits in an
insured depository institution made in connection with—
“(i) any individual retirement account described in
section 408(a) of the Internal Revenue Code of 1986;

“(ii) subject to the exception contained in paragraph
(l)(D)(ii), any eligible deferred compensation plan de­
scribed in section 457 of such Code; and
“ (iii) any individual account plan defined in section
3(34) of the Employee Retirement Income Security Act,
and any plan described in section 401(d) of the Internal
Revenue Code of 1986, to the extent that participants
and beneficiaries under such plan have the right to
direct the investment of assets held in individual ac­
counts maintained on their behalf by the plan,
shall be aggregated and insured in an amount not to exceed
$100,000 per participant per insured depository institution.
“ (B) A m o u n t s t a k e n i n t o a c c o u n t .—For purposes of
subparagraph ( A ), the amount aggregated for insurance
coverage under this paragraph shall consist of the present
vested and ascertainable interest of each participant under
the plan, excluding any remainder interest created by, or as
a result of, the plan.” .
(3) C e r t a i n t r u s t f u n d s .—Section 7(i) of the Federal Deposit
Insurance Act (12 U .S .C . 1817(i)) is amended to read as follows:
“ (i) I n s u r a n c e

T r u s t F u n d s .—

of

“ (1) In g e n e r a l .—Trust funds held on deposit by an insured
depository institution in a fiduciary capacity as trustee pursu­
ant to any irrevocable trust established pursuant to any statute
or written trust agreement shall be insured in an amount not to
exceed $100,000 for each trust estate.
“ (2) I n t e r b a n k d e p o s i t s .—Trust funds described in para­
graph (1) which are deposited by the fiduciary depository
institution in another insured depository institution shall be
similarly insured to the fiduciary depository institution accord­
ing to the trust estates represented.
“ (3 ) R e g u l a t i o n s . —The Board of Directors may prescribe
such regulations as may be necessary to clarify the insurance
coverage under this subsection and to prescribe the manner of
reporting and depositing such trust funds.” .

(4 ) E x p a n d e d

c o v e r a g e by r e g u la t io n .—

12 use 1821

(A) R e v i e w o f c o v e r a g e .—For the purpose of prescribing noteregulations, during the 1-year period beginning on the date
of the enactment of this Act, the Board of Directors shall
review the capacities and rights in which deposit accounts
are maintained and for which deposit insurance coverage is
provided by the Corporation.
(B) R e g u l a t i o n s .—After the end of the 1-year period
referred to in subparagraph (A), the Board of Directors may
prescribe regulations that provide for separate insurance
coverage for the different capacities and rights in which
deposit accounts are maintained if a determination is made
by the Board of Directors that such separate insurance
coverage is consistent with—
(i) the purpose of protecting small depositors and
limiting the undue expansion of deposit insurance cov­
erage; and
(ii) the insurance provisions of the Federal Deposit
Insurance Act.
(C) D e l a y e d e f f e c t i v e d a t e f o r r e g u l a t i o n s .—No regu­
lation prescribed under subparagraph (B) may take effect

AQ 1 0 A n

oo

ic . a t

n n __ l «■»

before the 2-year period beginning on the date of the enact­
ment of this Act.
(5 ) T e c h n i c a l

12 USC 1821
note.

a n d c o n f o r m i n g a m e n d m e n t s .—

(A) Section 3(m) of the Federal Deposit Insurance Act (12
U.S.C. 1813(m)) is amended by striking “ (m)(l)” and all that
follows through paragraph (1) and inserting the following:
“(m) I n s u r e d D e p o s i t .—
“ (1) I n g e n e r a l .—Subject to paragraph (2), the term ‘insured
deposit’ means the net amount due to any depositor for deposits
in an insured depository institution as determined under sec­
tions 7(i) and 11(a).” .
(B) Section 11(a)(2)(A) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(2)(A)) is amended by striking “his
deposit shall be insured” and inserting “ such depositor
shall, for the purpose of determining the amount of insured
deposits under this subsection, be deemed a depositor in
such custodial capacity separate and distinct from any
other officer, employee, or agent of the United States or any
public unit referred to in clause (ii), (iii), (iv), or (v) and the
deposit of any such depositor shall be insured in an amount
not to exceed $100,000 per account” .
(C) The 2d subparagraph of section 11(a)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)(2)) is amended by
striking “ (b)” and inserting “(B)” .
(c) E f f e c t i v e D a t e .—
(1) In g e n e r a l .—Except as provided in paragraph (2), the
amendments made by subsection (a) and paragraphs (2) and (3)
of subsection (b) shall take effect at the end of the 2-year period
beginning on the date of the enactment of this Act.
(2 ) A p p l i c a t i o n t o t i m e d e p o s i t s .—
(A) C e r t a i n d e p o s i t s e x c l u d e d .—Except

with respect to
the amendment referred to in paragraph (3), the amend­
ments made by subsections (a) and (b) shall not apply to any
time deposit which—
(i) was made before the date of enactment of this Act;
and
(ii) matures after the end of the 2-year period re­
ferred to in paragraph (1).
(B) R o l l o v e r s a n d r e n e w a l s t r e a t e d a s n e w d e p o s i t .—
Any renewal or rollover of a time deposit described in
subparagraph (A) after the date of the enactment of this
Act shall be treated as a new deposit which is not described
in such subparagraph.

(3 ) E f f e c t i v e

date

for

am endm ent

r e l a t in g

to

c e r t a in

e m p l o y e e p l a n s .—

12 USC 1821
note.

(A) Section 11(a)(1)(B) of the Federal Deposit Insurance
Act (as amended by subsection (b)(1) of this section) shall
take effect on the earlier of—
(i) the date of the enactment of this Act; or
(ii) January 1,1992.
(B) Section 11(a)(3)(A) of the Federal Deposit Insurance
Act (as amended by subsection (b)(2) of this section) shall
take effect on the earlier of the dates described in clauses (i)
and (ii) of subparagraph (A) with respect to plans described
in clause (ii) of such section.
(d) I n f o r m a t i o n a l S t u d y .—

(1) I n g e n e r a l .—The Federal Deposit Insurance Corporation,
in conjunction with such consultants and technical experts as
the Corporation determines to be appropriate, shall conduct a
study of the cost and feasibility of tracking the insured and
uninsured deposits of any individual and the exposure, under
any Act of Congress or any regulation of any appropriate
Federal banking agency, of the Federal Government with re­
spect to all insured depository institutions.
(2 ) A n a l y s i s o f c o s t s a n d b e n e f i t s .— The study under para­
graph (1) shall include detailed, technical analysis of the costs
and benefits associated with the least expensive way to imple­
ment the system.
(3) S p e c i f i c f a c t o r s t o b e s t u d i e d .—As part of the study
under paragraph (1), the Corporation shall investigate, review,
and evaluate—
(A) the data systems that would be required to track
deposits in all insured depository institutions;
(B) the reporting burdens of such tracking on individual
depository institutions;
(C) the systems which exist or which would be required to
be developed to aggregate such data on an accurate basis;
(D) the implications such tracking would have for individ­
ual privacy; and
(E) the manner in which systems would be administered
and enforced.
(4) F e d e r a l r e s e r v e b o a r d s u r v e y .—As part of the informa­
tional study required under paragraph (1), the Board of Gov­
ernors of the Federal Reserve System shall conduct, in conjunc­
tion with other Federal departments and agencies as necessary,
a survey of the ownership of deposits held by individuals includ­
ing the dollar amount of deposits held, the type of deposit
accounts held, and the type of financial institutions in which
the deposit accounts are held.
(5) A n a l y s i s b y f d i c .—The results of the survey under para­
graph (4) shall be provided to the Federal Deposit Insurance
Corporation before the end of the 1-year period beginning on the
date of the enactment of this Act for analysis and inclusion in
the informational study.
(6) R e p o r t t o c o n g r e s s .—Before the end of the 18-month
period beginning on the date of the enactment of this Act, the
Federal Deposit Insurance Corporation shall submit to the Con­
gress a report containing a detailed statement of findings made
and conclusions drawn from the study conducted under this
section, including such recommendations for administrative and
legislative action as the Corporation determines to be appro­
priate.
SEC. 312. FOREIGN DEPOSITS.

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended by inserting after section 40 (as added by preceding provi­
sions of this Act) the following new section:
“ SEC. 41. PAYMENTS ON FOREIGN DEPOSITS PROHIBITED.

“ (a) I n G e n e r a l .—Notwithstanding any other provision of law,
the Corporation, the Board of Governors of the Federal Reserve
System, the Resolution Trust Corporation, any other agency, depart­
ment, and instrumentality of the United States, and any corporation

12 USC 1831r.

owned or controlled by the United States may not, directly or
indirectly, make any payment or provide any assistance, guarantee,
or transfer under this Act or any other provision of law in connec­
tion with any insured depository institution which would have the
direct or indirect effect of satisfying, in whole or in part, any claim
against the institution for obligations of the institution which would
constitute deposits as defined in section 3(1) but for subparagraphs
(A) and (B) of section 3(1X5).” .
“(b) E x c e p t i o n .—Subsection (a) shall not apply to any payment,
assistance, guarantee, or transfer made or provided by the Corpora­
tion if the Board of Directors determines in writing that such action
is not inconsistent with any requirement of section 13(c).
“ (c) D i s c o u n t W i n d o w L e n d i n g .—No provision of this section
shall be construed as prohibiting any Federal Reserve bank from
making advances or otherwise extending credit pursuant to the
Federal Reserve Act to any insured depository institution to the
extent that such advance or extension of credit is consistent with
the conditions and limitations imposed under section 10B of such
Act.” .
SEC. 313. PENALTY FO R FALSE ASSESSMENT REPORTS.

(a) I n s u r e d D e p o s i t o r y I n s t i t u t i o n s .—Section 7(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(c)) is amended by adding at
the end the following new paragraph:
“ (5) P e n a l t y

f o r f a il u r e t o m a k e a c c u r a t e c e r t if ie d s t a t e ­

m e n t .—

“ (A )

F ir s t

t i e r .—

A ny

in s u r e d

d e p o s ito r y

in s t i t u t i o n

which—
“(i) maintains procedures reasonably adapted to
avoid any inadvertent error and, unintentionally and
as a result of such an error, fails to submit the certified
statement under paragraph (1) or (2) within the period
of time required under paragraph (1) or (2) or submits a
false or misleading certified statement; or
“ (ii) submits the statement at a time which is mini­
mally after the time required in such paragraph,
shall be subject to a penalty of not more than $2,000 for
each day during which such failure continues or such false
and misleading information is not corrected. The institution
shall have the burden of proving that an error was
inadvertent or that a statement was inadvertently submit­
ted late.
“(B) S e c o n d t i e r .—Any insured depository institution
which fails to submit the certified statement under para­
graph (1) or (2) within the period of time required under
paragraph (1) or (2) or submits a false or misleading cer­
tified statement in a manner not described in subparagraph
(A) shall be subject to a penalty of not more than $20,000 for
each day during which such failure continues or such false
and misleading information is not corrected.
“ (C) T h i r d t i e r .—Notwithstanding subparagraphs (A)
and (B), if any insured depository institution knowingly or
with reckless disregard for the accuracy of any certified
statement described in paragraph (1) or (2) submits a false
or misleading certified statement under paragraph (1) or (2),
the Corporation may assess a penalty of not more than
$1,000,000 or not more than 1 percent of the total assets of

the institution, whichever is less, per day for each day
during which the failure continues or the false or mislead­
ing information in such statement is not corrected.
“ (D) A s s e s s m e n t p r o c e d u r e .—Any penalty imposed
under this paragraph shall be assessed and collected by the
Corporation in the manner provided in subparagraphs (E),
(F), (G), and (I) of section 8(i)(2) (for penalties imposed under
such section) and any such assessment (including the deter­
mination of the amount of the penalty) shall be subject to
the provisions of such section.
“(E) H e a r i n g .—Any insured depository institution
against which any penalty is assessed under this paragraph
shall be afforded an agency hearing if the institution sub­
mits a request for such hearing within 20 days after the
issuance of the notice of the assessment. Section 8(h) shall
apply to any proceeding under this subparagraph.” .
(b )
I n s u r e d C r e d i t U n i o n s . —Section 202(d)(2) of the Federal
Credit Union Act (12 U.S.C. 1782(d)(2)) is amended to read as follows:
“ (2) P e n a l t y

f o r f a il u r e t o m a k e a c c u r a t e c e r t if ie d s t a t e ­

m e n t o r t o p a y d e p o s it o r p r e m i u m

.—

“ (A) F i r s t t i e r .—Any insured credit union which—
“ (i) maintains procedures reasonably adapted to
avoid any inadvertent error and, unintentionally and
as a result of such an error, fails to submit any certified
statement under subsection (b)(1) within the period of
time required or submits a false or misleading certified
statement under such subsection; or
“ (ii) submits the statement at a time which is mini­
mally after the time required,
shall be subject to a penalty of not more than $2,000 for
each day during which such failure continues or such false
and misleading information is not corrected. The insured
credit union shall have the burden of proving that an error
was inadvertent or that a statement was inadvertently
submitted late.
“(B) S e c o n d t i e r .—Any insured credit union which—
“(i) fails to submit any certified statement under
subsection (b)(1) within the period of time required or
submits a false or misleading certified statement in a
manner not described in subparagraph (A); or
“ (ii) fails or refuses to pay any deposit or premium
for insurance required under this title,
shall be subject to a penalty of not more than $20,000 for
each day during which such failure continues, such false
and misleading information is not corrected, or such deposit
or premium is not paid.
“ (C) T h i r d t i e r .—Notwithstanding subparagraphs (A)
and (B), if any insured depository institution knowingly or
with reckless disregard for the accuracy of any certified
statement under subsection (b)(1) or submits a false or
misleading certified statement under such subsection, the
Corporation may assess a penalty of not more than
$1,000,000 or not more than 1 percent of the total assets of
the institution, whichever is less, per day for each day
during which the failure continues or the false or mislead­
ing information in such statement is not corrected.

“ (D) A s s e s s m e n t p r o c e d u r e .—Any penalty imposed
under this paragraph shall be assessed and collected by the
Corporation in the manner provided in section 206(k)(2) (for
penalties imposed under such section) and any such assess­
ment (including the determination of the amount of the
penalty) shall be subject to the provisions of such section.
“ (E) H e a r i n g .—Any insured depository institution
against which any penalty is assessed under this paragraph
shall be afforded an agency hearing if the institution sub­
mits a request for such hearing within 20 days after the
issuance of the notice of the assessment. Section 206(j) shall
apply to any proceeding under this subparagraph.
“(F) S p e c i a l r u l e f o r d i s p u t e d p a y m e n t s .—No penalty
may be assessed for the failure of any insured credit union
to pay any deposit or premium for insurance if—
“ (i) the failure is due to a dispute between the credit
union and the Board over the amount of the deposit or
premium which is due from the credit union; and
“(ii) the credit union deposits security satisfactory to
the Board for payment of the deposit or insurance
premium upon final determination of the dispute.” .

Subtitle C— Demonstration Project and Studies
12 USC 1811

note.

SEC. 321. FEASIBILITY STUDY ON AUTHORIZING INSURED AND UNIN­
SURED DEPOSIT ACCOUNTS.

(a) S t u d y R e q u i r e d .—The Federal Deposit Insurance Corporation
shall study the feasibility of authorizing insured depository institu­
tions to offer both insured and uninsured deposit accounts to cus­
tomers.
(b) F a c t o r s t o C o n s i d e r .—In conducting the study required under
subsection (a), the Corporation shall consider the following factors:
(1) The risk a 2-window deposit system would pose to the
deposit insurance system.
(2) The disclosure standards which would be necessary to
prevent customer confusion over the insured status of deposits
and fraudulent or misleading practices with respect to such
insured status.
(3) The extent to which accounting standards would have to
be revised or changed.
(4) The manner in which a 2-window deposit plan could be
implemented with the least disruption to the stability of, and
the confidence of consumers in, the banking system.
(c) R e p o r t .—Before the end of the 6-month period beginning on
the date of the enactment of this Act, the Corporation shall submit a
report to the Congress containing the Corporation’s findings and
conclusions with respect to the study under subsection (a) and any
recommendations for legislative or administrative action the Cor­
poration may determine to be appropriate.
12 USC 1811

note.

SEC. 322. PRIVATE REINSURANCE STUDY.

(a) S t u d y .—
(1) In g e n e r a l .—The Board of Directors of the Federal De­
posit Insurance Corporation, in consultation with the Secretary
of the Treasury and individuals from the private sector with
expertise in private insurance, private reinsurance, depository

institutions, or economics, shall conduct a study of the feasibil­
ity of establishing a private reinsurance system.
(2) P r o j e c t .—The study conducted under this subsection shall
include a demonstration project consisting of a simulation, by a
sample of private reinsurers and insured depository institu­
tions, of the activities required for a private reinsurance system,
including—
(A) establishment of a pricing structure for risk-based
premiums;
(B) formulation of insurance or reinsurance contracts;
and
(C) identification and collection of information necessary
to evaluate and monitor the risks in insured depository
institutions.
(3) A c t u a l r e i n s u r a n c e t r a n s a c t i o n s .— The Federal Deposit
Insurance Corporation may engage in actual reinsurance trans­
actions as part of a demonstration project conducted under
paragraph (2).
(b) R e p o r t .—
(1) I n g e n e r a l .—Before the end of the 18-month period begin­
ning on the date of the enactment of this Act, the Federal
Deposit Insurance Corporation shall submit to the Congress a
report on the study conducted under this section.
(2 ) C o n t e n t s .— The report under this subsection shall in­
clude—
(A) an analysis and review of the project conducted under
subsection (a)(2);
(B) conclusions regarding the feasibility of a private re­
insurance system;
(C) recommendations regarding whether—
(i) such a system should be restricted to depository
institutions over a certain asset size;
(ii) similar systems are feasible for depository institu­
tions or groups of depository institutions of a lesser
asset size; and
(iii) public policy goals can be satisfied by such sys­
tems; and
(D) recommendations for administrative and legislative
action that may be necessary to establish such systems.

TITLE IV—MISCELLANEOUS PROVISIONS
Subtitle A—Payment System Risk Reduction
SEC. 401. FINDINGS AND PURPOSE.

The Congress finds that—
(1) many financial institutions engage daily in thousands of
transactions with other financial institutions directly and
through clearing organizations;
(2) the efficient processing of such transactions is essential to
a smoothly functioning economy;
(3) such transactions can be processed most efficiently if,
consistent with applicable contractual terms, obligations among
financial institutions are netted;

12 USC 4401.

(4) such netting procedures would reduce the systemic risk
within the banking system and financial markets; and
(5) the effectiveness of such netting procedures can be assured
only if they are recognized as valid and legally binding in the
event of the closing of a financial institution participating in
the netting procedures.
12 USC 4402.

SEC. 402. DEFINITIONS.

For purposes of this subtitle—
(1) B r o k e r o r d e a l e r .—The term ‘broker or dealer’ means—
(A) any company that is registered or licensed under
Federal or State law to engage in the business of brokering,
underwriting, or dealing in securities in the United States;
and
(B) to the extent consistent with this title, as determined
by the Board of Governors of the Federal Reserve System,
any company that is an affiliate of a company described in
subparagraph (A) and that is engaged in the business of
entering into netting contracts.
(2) C l e a r i n g o r g a n i z a t i o n .—The term “ clearing organiza­
tion” means a clearinghouse, clearing association, clearing cor­
poration, or similar organization—
(A) that provides clearing, netting, or settlement services
for its members and—
(i) in which all members other than the clearing
organization itself are financial institutions or other
clearing organizations; or
(ii) which is registered as a clearing agency under the
Securities Exchange Act of 1934; or
(B) that performs clearing functions for a contract market
designated pursuant to the Commodity Exchange Act.
(3) C o v e r e d c l e a r i n g o b l i g a t i o n .—The term “ covered clear­
ing obligation” means an obligation of a member of a clearing
organization to make payment to another member of a clearing
organization, subject to a netting contract.
(4) C o v e r e d c o n t r a c t u a l p a y m e n t e n t i t l e m e n t .—The term
“ covered contractual payment entitlement” means—
(A) an entitlement of a financial institution to receive a
payment, subject to a netting contract from another finan­
cial institution; and
(B) an entitlement of a member of a clearing organization
to receive payment, subject to a netting contract, from
another member of a clearing organization of a covered
clearing obligation.
(5) C o v e r e d c o n t r a c t u a l p a y m e n t o b l i g a t i o n .—The term
“covered contractual payment obligation” means—
(A) an obligation of a financial institution to make pay­
ment, subject to a netting contract to another financial
institution; and
(B) a covered clearing obligation.
(6) D e p o s i t o r y i n s t i t u t i o n .—The term “ depository institu­
tion” means—
(A) a depository institution as defined in section
19(b)(1)(A) of the Federal Reserve Act (other than clause
(vii));
(B) a branch or agency as defined in section 1(b) of the
International Banking Act of 1978;

(C) a corporation chartered under section 25(a) of the
Federal Reserve Act; or
(D) a corporation having an agreement or undertaking
with the Board of Governors of the Federal Reserve System
under section 25 of the Federal Reserve Act.
(7) F a i l e d f i n a n c i a l i n s t i t u t i o n .—The term “ failed financial
institution” means a financial institution that—
(A) fails to satisfy a covered contractual payment obliga­
tion when due;
(B) has commenced or had commenced against it insol­
vency, liquidation, reorganization, receivership (including
the appointment of a receiver), conservatorship, or similar
proceedings; or
(C) has generally ceased to meet its obligations when due.
(8 ) F a i l e d m e m b e r .— The term “ failed member” means any
member that—
(A) fails to satisfy a covered clearing obligation when due,
(B) has commenced or had commenced against it insol­
vency, liquidation, reorganization, receivership (including
the appointment of a receiver), conservatorship, or similar
proceedings, or
(C) has generally ceased to meet its obligations when due.
(9) F i n a n c i a l i n s t i t u t i o n .—The term “ financial institution”
means a broker or dealer, a depository institution, a futures
commission merchant, or any other institution as determined
by the Board of Governors of the Federal Reserve System.
(1 0 ) F u t u r e s c o m m i s s i o n m e r c h a n t .—The term “futures
commission merchant” means a company that is registered or
licensed under Federal law to engage in the business of selling
futures and options in commodities.
(11) M e m b e r .—The term “ member” means a member of or
participant in a clearing organization, and includes the clearing
organization.
(12) N e t e n t i t l e m e n t .—The term “net entitlement” means
the amount by which the covered contractual payment entitle­
ments of a financial institution or member exceed the covered
contractual payment obligations of the institution or member
after netting under a netting contract.
(13) N e t o b l i g a t i o n .—The term “net obligation” means the
amount by which the covered contractual payment obligations
of a financial institution or member exceed the covered contrac­
tual payment entitlements of the institution or member after
netting under a netting contract.
(14) N e t t i n g c o n t r a c t .—
(A) I n g e n e r a l .—The term “ netting contract”—
(i) means a contract or agreement between 2 or more
financial institutions or members, that—
(I) is governed by the laws of the United States,
any State, or any political subdivision of any State,
and
(II) provides for netting present or future pay­
ment obligations or payment entitlements (includ­
ing liquidation or close-out values relating to the
obligations or entitlements) among the parties to
the agreement; and
(ii) includes the rules of a clearing organization.

(B) I n v a l i d c o n t r a c t s n o t i n c l u d e d .—The term “ net­
ting contract” does not include any contract or agreement
that is invalid under or precluded by Federal commodities
law.
12 USC 4403.

SEC. 403. BILATERAL NETTING.

(a) G e n e r a l R u l e .—Notwithstanding any other provision of law,
the covered contractual payment obligations and the covered
contractual payment entitlements between any 2 financial institu­
tions shall be netted in accordance with, and subject to the condi­
tions of, the terms of any applicable netting contract.
(b) L i m i t a t i o n o n O b l i g a t i o n To M a k e P a y m e n t .—The only
obligation, if any, of a financial institution to make payment with
respect to covered contractual payment obligations to another finan­
cial institution shall be equal to its net obligation to such other
financial institution, and no such obligation shall exist if there is no
net obligation.
(c) L i m i t a t i o n o n R i g h t T o R e c e i v e P a y m e n t .—The only right, if
any, of a financial institution to receive payments with respect to
covered contractual payment entitlements from another financial
institution shall be equal to its net entitlement with respect to such
other financial institution, and no such right shall exist if there is
no net entitlement.
(d) P a y m e n t o f N e t E n t i t l e m e n t o f F a i l e d F i n a n c i a l I n s t i t u ­
t i o n .—The net entitlement of any failed financial institution, if any,
shall be paid to the failed financial institution in accordance with,
and subject to the conditions of, the applicable netting contract.
(e) E f f e c t i v e n e s s N o t w i t h s t a n d i n g S t a t u s a s F i n a n c i a l
I n s t i t u t i o n .—This section shall be given effect notwithstanding
that a financial institution is a failed financial institution.
12 USC 4404.

SEC. 404. CLEARING ORGANIZATION NETTING.

(a) G e n e r a l N e t t i n g R u l e .—Notwithstanding any other provi­
sion of law, the covered contractual payment obligations and cov­
ered contractual payment entitlements of a member of a clearing
organization to and from all other members of a clearing organiza­
tion shall be netted in accordance with and subject to the conditions
of any applicable netting contract.
(b) L i m i t a t i o n o f O b l i g a t i o n T o M a k e P a y m e n t .—The only
obligation, if any, of a member of a clearing organization to make
payment with respect to covered contractual payment obligations
arising under a single netting contract to any other member of a
clearing organization shall be equal to its net obligation arising
under that netting contract, and no such obligation shall exist if
there is no net obligation.
(c) L i m i t a t i o n o n R i g h t To R e c e i v e P a y m e n t .—The only right, if
any, of a member of a clearing organization to receive payment with
respect to a covered contractual payment entitlement arising under
a single netting contract from other members of a clearing organiza­
tion shall be equal to its net entitlement arising under that netting
contract, and no such right shall exist if there is no net entitlement.
(d) E n t i t l e m e n t o f F a i l e d M e m b e r s .— The net entitlement, if
any, of any failed member of a clearing organization shall be paid to
the failed member in accordance with, and subject to the conditions
of, the applicable netting contract.
(e) O b l i g a t i o n s o f F a i l e d M e m b e r s .—The net obligation, if any,
of any failed member of a clearing organization shall be determined

in accordance with, and subject to the conditions of, the applicable
netting contract.
(f) L i m i t a t i o n o n C l a i m s f o r E n t i t l e m e n t .—A failed member of
a clearing organization shall have no recognizable claim against any
member of a clearing organization for any amount based on such
covered contractual payment entitlements other than its net
entitlement.
(g) E f f e c t i v e n e s s N o t w i t h s t a n d i n g S t a t u s a s M e m b e r .—This
section shall be given effect notwithstanding that a member is a
failed member.
SEC. 405. PREEMPTION.

12 USC 4405.

No stay, injunction, avoidance, moratorium, or similar proceeding
or order, whether issued or granted by a court, administrative
agency, or otherwise, shall limit or delay application of otherwise
enforceable netting contracts in accordance with sections 403 and
404.
SEC. 406. RELATIONSHIP TO OTHER PAYMENTS SYSTEMS.

12 USC 4406.

This subtitle shall have no effect by implication or otherwise on
the validity or legal enforceability of a netting arrangement of any
payment system which is not subject to this subtitle.
SEC. 407. NATIONAL EMERGENCIES.

The provisions of this subtitle may not be construed to limit the
authority of the President under the Trading With the Enemy Act
(50 U.S.C. App. 1 et seq.) or the International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.).

Subtitle B—Right to Financial Privacy Act of
1978
SEC. 411. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF
1978.

The Right to Financial Privacy Act of 1978 is amended—
(1) in section 1112(f)(2) (12 U.S.C. 3412(f)(2))—
(A) by inserting “ for civil actions under section 951 of the
Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, or for forfeiture under sections 981 or 982 of
title 18, United States Code” after “ purposes” ; and
(B) by adding at the end the following new sentence: “ No
agency or department so transferring such records shall be
deemed to have waived any privilege applicable to those
records under law.” ;
(2) in section 1113(h)(1)(A) (12 U.S.C. 3413(h)(1)(A)), by striking
“ the financial institution in possession of such records” and
inserting “a financial institution (whether or not such proceed­
ing, investigation, examination, or inspection is also directed at
s l customer)” *
(3) in section 1113(h)(4) (12 U.S.C. 3413(h)(4)) bv striking “the
financial institution in possession of such records and inserting
“ a financial institution (whether or not such proceeding, inves­
tigation, examination, or inspection is also directed at a cus­
tomer)” ; and
(4) in section 1113(1) (12 U.S.C. 3413(1)), by adding after para­
graph (2) the following new sentence:

12 USC 4407.

“ No supervisory agency which transfers any such record under this
subsection shall be deemed to have waived any privilege applicable
to that record under law.” .

Subtitle C— Final Settlement Payment
Procedure
SEC. 416. FINAL SETTLEMENT PAYMENT PROCEDURE.

Section 11(d)(4) of the Federal Deposit Insurance Act (12 U.S.C.
1821(d)) is amended to read as follows:
“ (4 ) R u l e m a k i n g a u t h o r i t y r e l a t i n g t o d e t e r m i n a t i o n o f
CLAIMS.—
“(A) I n g e n e r a l .—The Corporation may prescribe regu­

lations regarding the allowance or disallowance of claims
by the receiver and providing for administrative determina­
tions of claims and review of such determination.
“(B) F i n a l s e t t l e m e n t p a y m e n t p r o c e d u r e .—
“(i) I n g e n e r a l .—In the handling of receiverships of
insured depository institutions, to maintain essential
liquidity and to prevent financial disruption, the Cor­
poration may, after the declaration of an institution’s
insolvency, settle all uninsured and unsecured claims
on the receivership with a final settlement payment
which shall constitute full payment and disposition of
the Corporation’s obligations to such claimants.
“ (ii) F i n a l s e t t l e m e n t p a y m e n t .—For purposes of
clause (i), a final settlement payment shall be payment
of an amount equal to the product of the final settle­
ment payment rate and the amount of the uninsured
and unsecured claim on the receivership; and
“ (iii) F i n a l s e t t l e m e n t p a y m e n t r a t e .—For pur­
poses of clause (ii), the final settlement payment rate
shall be a percentage rate reflecting an average of the
Corporation’s receivership recovery experience, deter­
mined by the Corporation in such a way that over such
time period as the Corporation may deem appropriate,
the Corporation in total will receive no more or less
than it would have received in total as a general credi­
tor standing in the place of insured depositors in each
specific receivership.
“(iv) C o r p o r a t i o n a u t h o r i t y .—The Corporation may
undertake such supervisory actions and promulgate
such regulations as may be necessary to assure that the
requirements of this section can be implemented with
respect to each insured depository institution in the
event of its insolvency.” .

Subtitle D— Miscellaneous Committees,
Studies, and Reports
SEC. 421. AMENDMENTS RELATING TO FEDERAL RESERVE BOARD RE­
SERVE REQUIREMENTS.
(a ) S t u d y o n P a y m e n t o f I m p u t e d E a r n i n g s o n S t e r i l e R e ­
I n s u r a n c e F u n d s .— T h e B o a r d o f G o v e r n o r s o f t h e F e d ­
e r a l R e s e r v e S y s t e m , t h e F e d e r a l D e p o s it I n s u r a n c e C o r p o r a t i o n ,
th e C o m p tr o lle r o f t h e C u r r e n c y , th e D ir e c t o r o f th e O ffic e o f T h r ift
S u p e r v i s io n , a n d t h e N a t i o n a l C r e d it U n i o n A d m i n i s t r a t i o n s h a l l
jo i n t ly —
serves to

(1) conduct a study on the feasibility of assessing Federal
Reserve banks an amount equal to the imputed earnings on
reserves held at such banks by insured depository institutions
under section 19(b) of the Federal Reserve Act; and
(2) assess the likely beneficial and adverse effects such an
assessment would have on the Federal reserve banks, the de­
posit insurance funds, the insured depository institutions, and
the Federal payment system, including a comparison of the
effects on each such subject of the study.
(b) R e p o r t t o C o n g r e s s .—Before the end of the 6-month period
beginning on the date of the enactment of this Act, the Board of
Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the Direc­
tor of the Office of Thrift Supervision, and the National Credit
Union Administration shall jointly submit a report to the Congress
on the findings and conclusions made with respect to the study
under subsection (a), together with any recommendation for any
legislative or administrative action which such agencies may deter­
mine to be appropriate.
(c) R e p o r t o f D i s s e n t i n g V i e w s .—Any agency described in
subsections (a) and (b) which does not concur in the findings, conclu­
sions, or recommendations referred to in subsection (5) or has
additional findings, conclusions, or recommendations which were
not included in the report may submit a report to the Congress
describing—
(1) the reasons why the agency does not concur in the find­
ings, conclusions, or recommendations referred to in subsection
(b); and
(2) such additional findings, conclusions, or recommendations.
SEC. 422. PERMANENT AUTHORIZATION OF CREDIT STANDARDS BOARD.

(a) I n G e n e r a l .—Section 1205 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1818
note) is amended by adding at the end the following new subsec­
tion:
“ (f) F e d e r a l A d v i s o r y C o m m i t t e e A c t D o e s n o t A p p l y .—The
Federal Advisory Committee Act shall not apply with respect to the
Committee.” .
(b) C h a i r p e r s o n .—Section 1205(b)(3) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U .S .C . 1818
note) is amended to read as follows:
“(3) C h a i r p e r s o n . —The Chairperson of the Committee shall President,
be designated by the President from among the members ap­
pointed under paragraph (1)(F).” .

Subtitle E— Utilization of Private Sector
SEC. 426. UTILIZATION OF PRIVATE SECTOR.

Section 11(d)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1821(d)(2)) is amended by adding at the end the following new
subparagraph:
“(K) U t i l i z a t i o n o f p r i v a t e s e c t o r .—In carrying out its
responsibilities in the management and disposition of assets
from insured depository institutions, as conservator, re­
ceiver, or in its corporate capacity, the Corporation shall
utilize the services of private persons, including real estate
and loan portfolio asset management, property manage­
ment, auction marketing, and brokerage services, if such
services are available in the private sector and the Corpora­
tion determines utilization of such services is practicable,
efficient, and cost effective.” .
SEC. 427. REPORTING.

Section 17 of the Federal Deposit Insurance Act (12 U.S.C. 1827) is
amended by adding at the end the following new subsection:
“(h) A d d i t i o n a l R e p o r t s .—
“(1) I n g e n e r a l .—In addition to the reports required under
subsections (a), (b), and (c), the Corporation shall submit to
Congress not later than April 30 and October 31 of each year, a
semiannual report on the activities and efforts of the Corpora­
tion for the 6-month period ending on the last day of the month
prior to the month in which such report is required to be
submitted.
“ (2) C o n t e n t s o f r e p o r t .—Each semiannual report required
under this subsection shall include the following information
with respect to the Corporation’s assets and liabilities and the
assets and liabilities of institutions for which the Corporation
serves as a conservator or receiver:
“ (A) A statement of the total book value of all assets held
or managed by the Corporation at the beginning and end of
the reporting period.
“ (B) A statement of the total book value of such assets
which are under contract to be managed by private persons
and entities at the beginning and end of the reporting
period.
“ (C) The number of employees of the Corporation at the
beginning and end of the reporting period.
“ (D) A statement of the total amount expended on private
contractors for the management of such assets.
“ (E) A statement of the efforts of the Corporation to
maximize the efficient utilization of the resources of the
private sector during the reporting period and in future
reporting periods and a description of the policies and
procedures adopted to ensure adequate competition and fair
and consistent treatment of qualified third parties seeking
to provide services to the Corporation.” .

Subtitle F—Emergency Assistance for Rhode
Island
SEC. 431. EMERGENCY LOAN GUARANTEE.

(a) I n G e n e r a l .—
(1) P r o v i s i o n f o r g u a r a n t e e .—Subject to the terms and
conditions established by or under this subsection, the Secretary
of the Treasury shall guarantee the repayment of any amount
not to exceed $180,000,000 borrowed by the State of Rhode
Island and Providence Plantations (hereafter in this section
referred to as the “ State of Rhode Island” ), or the Depositors
Economic Protection Corporation established by such State, to
expedite the repayment of depositors at State-chartered banks
and credit unions in receivership in such State and to facilitate
the resolution of such receiverships.
(2) L o a n

collateral

r e q u ir e d

as

c o n d it io n

for

guaran

­

—The Secretary of the Treasury may not guarantee the
repayment of any amount under paragraph (1) unless the
amount of any loan for which the guarantee is sought is fully
secured as follows:
(A) A first lien on assets held or controlled by the Deposi­
tors Economic Protection Corporation and the proceeds
from the sale of such assets, are irrevocably pledged to the
extent necessary to provide collateral for the guarantee.
(B) If the liens and assets described in subparagraph (A)
are insufficient to fully secure the guarantee, then a first
lien on any assets held or controlled by the State of Rhode
Island or any instrumentality of the State of Rhode Island
and the proceeds from the sale of such assets, are irrev­
ocably pledged to the extent necessary to provide collateral
for the guarantee.
(C) If the liens and assets described in subparagraphs (A)
and (B) are insufficient to fully secure the guarantee, then
any revenue from the State sales tax which is dedicated to
the Depositors Economic Protection Corporation under the
law of the State of Rhode Island in excess of the amount
necessary to pay principal and interest on any obligation of
the State or the Corporation issued before the date of the
loan is irrevocably dedicated to the extent necessary to
provide collateral for the guarantee.
(3) G u a r a n t e e f e e s .—The Secretary may assess and collect
with respect to loans guaranteed under this subsection an
annual guarantee fee computed daily at a rate which may not
exceed one-half of 1 percent of the outstanding principal
amount of the guaranteed loan.
(4) P l e d g e o f c e r t a i n i n c o m e f o r r e p a y m e n t .—The Sec­
retary may not guarantee under this section the repayment of
any loan proposed to be made to the Depositors Economic
Protection Corporation unless, for each fiscal year of the Deposi­
tors Economic Protection Corporation, all rents, issues, profits,
products, proceeds, revenues, and other income (including insur­
ance proceeds and condemnation awards) received by the Cor­
poration from, or attributable to, the assets pledged to the
United States in accordance with this subsection, in excess of
the amount necessary to pay the interest, or principal and

tee.

interest on any loan to the Corporation guaranteed under para­
graph (1) that is payable in such fiscal year are irrevocably
pledged to be deposited into a sinking fund or defeasance fund
maintained by the Corporation and are irrevocably pledged and
dedicated to the repayment of the principal of such guaranteed
loan in the inverse order of the maturity of such principal
installments.
(5) I n v e s t m e n t g r a d e r a t i n g .—The Secretary may not
guarantee under this section the repayment of any loan pro­
posed to be made to the State of Rhode Island or the Depositors
Economic Protection Corporation unless each such proposed
loan has received a rating (for purposes of which the collateral
securing the guarantee is considered to be securing the loan)
of—
(A) the highest investment grade from a nationally recog­
nized statistical rating organization;
(B) not less than 1 less than the investment grade rating
from 2 nationally recognized statistical rating organiza­
tions; or
(C) not less than 2 less than the highest investment grade
from 2 nationally recognized statistical rating organizations
to the extent that—
(i) a rating of not less than 1 less than the highest
investment grade rating from 2 nationally recognized
statistical rating organization has not been achieved
through the use of all of the collateral listed in subsec­
tion (a)(2)(A) and the available collateral under
subparagraph (B) or (C) of subsection (a)(2) at the time
of the State of Rhode Island’s request for the loan
guarantee; and
(ii) representatives of the State of Rhode Island and
the Secretary are able to agree upon the lesser grade
rating based on changes negotiated to other terms of
this subtitle, including the purchase of bond insurance.
(6 ) T e r m s .—
(A) I n

g e n e r a l .—The guarantee provided for in this
subsection shall be with respect to a loan which—
(i) is made not more than 1 year after the date of
enactment of this Act;
(ii) will mature not later than 8 years after the date
of such loan; and
(iii) is scheduled to be repaid in equal installments of
principal during the last 4 years of the repayment term
of such loan.
(B) A u t h o r i t y t o v a r y t i m e p e r i o d s .—The Secretary and
the duly authorized representative of the State of Rhode
Island may, by mutual agreement, modify any durational
requirement specified in subparagraph (A ).
(7) A d d i t i o n a l t e r m s a n d c o n d i t i o n s .—Except as otherwise
provided in this subsection, the terms and conditions of any loan
guarantee under this section shall be established by mutual
agreement of the Secretary of the Treasury and the duly au­
thorized representative of the State of Rhode Island.
(b) A p p r o p r i a t i o n o f A m o u n t s .—There are hereby appropriated
to the Secretary of the Treasury such sums as may be necessary for
any fiscal year to meet the obligation of the United States under
subsection (a)(1).

Subtitle G— Qualified Thrift Lender Test
Improvements

Qualified Thrift
Lender Reform
Act o f 1991.

SEC. 436. SHORT TITLE.

This subtitle may be cited as the “Qualified Thrift Lender Reform
Act of 1991” .
SEC. 437. ADJUSTMENT OF COMPLIANCE PERIODS FOR PURPOSES OF
QUALIFIED THRIFT LENDER TEST.

Section 10(m)(l)(B) of the Home Owners’ Loan Act (12 U.S.C.
1467a(m)(l)(B)) (as in effect on July 1, 1991) is amended to read as
follows:
“(B) the savings association’s qualified thrift investments
continue to equal or exceed 65 percent of the savings
association’s portfolio assets on a monthly average basis in
9 out of every 12 months.” .
SEC. 438. INCREASE IN AMOUNT OF LIQUID ASSETS EXCLUDABLE FROM
PORTFOLIO ASSETS.

Section 10(m)(4)(B)(iii) of the Home Owners’ Loan Act (12 U.S.C.
1467a(m)(4)(B)(iii)) (as in effect on July 1, 1991) is amended by
striking “ 10 percent” and inserting “ 20 percent” .
SEC. 439. ADDITIONAL INVESTMENTS INCLUDED
QUALIFIED THRIFT ASSETS.

IN

DEFINITION

OF

Section 10(m)(4)(C) of the Home Owners’ Loan Act (12 U.S.C.
1467a(m)(4)(C)) (as in effect on July 1,1991) is amended—
(1) by adding at the end of clause (ii) the following new
subclause:
“ (VI) Shares of stock issued by any Federal home
loan bank.” ; and
(2) by adding at the end of clause (iii) the following new
subclause:
“ (VII) Shares of stock issued by the Federal
Home Loan Mortgage Corporation or the Federal
National Mortgage Association.” .
SEC. 440. PRUDENT DIVERSIFICATION OF ASSETS.

(a) In G e n e r a l .—Section 10(m)(4)(C)(iii)(VI) of the Home Owners’
Loan Act (12 U.S.C. 1467a(m)(4)(C)(iii)(VI)) (as in effect on July 1,
1991) is amended by striking “ 5 percent” and inserting “ 10 percent” .
(b)
T e c h n ic a l
and
C o n f o r m in g
A m e n d m e n t .—Section
10(m)(4)(C)(iv) of the Home Owners’ Loan Act (12 U .S .C .
1467a(m)(4)(C)(iv)) (as in effect on July 1, 1991) is amended by
striking “ 15 percent” and inserting “ 20 percent” .
SEC. 441. CONSUMER LENDING BY FEDERAL SAVINGS ASSOCIATIONS.

(a) P e r c e n t a g e A d j u s t m e n t .—Section 5(c)(2)(D) of the Home
Owners’ Loan Act (12 U.S.C. 1464(c)(2)(D)) is amended in the second
sentence by striking “ 30 percent” and inserting “ 35 percent” .
(b) L o a n s t o O r i g i n a l O b l i g o r .—Section 5(c)(2)(B) of the Home
Owners’ Loan Act (12 U.S.C. 1464(c)(2)(B)) is amended by inserting
before the period at the end the following: provided however, that
no amount in excess of 30 percent of the assets may be invested in
loans made directly by the association to the original obligor, and

12 USC 1461
note.

the association does not pay finder, referral, or other fees, directly or
indirectly, to a third party.” .

Subtitle H—Prohibition on Entering Secrecy
Agreements and Protective Orders
SEC. 446. PROHIBITION ON ENTERING INTO SECRECY AGREEMENTS AND
PROTECTIVE ORDERS.

Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is
amended by adding at the end the following new subsection:
“ (s) P r o h i b i t i o n o n E n t e r i n g S e c r e c y A g r e e m e n t s a n d P r o t e c ­
t i v e O r d e r s .—The Corporation may not enter into any agreement
or approve any protective order which prohibits the Corporation
from disclosing the terms of any settlement of an administrative or
other action for damages or restitution brought by the Corporation
in its capacity as conservator or receiver for an insured depository
institution.” .

Subtitle I—Bank and Thrift Employee
Provisions
12 USC 1821
note.

SEC. 451. CONTINUATION OF HEALTH PLAN COVERAGE IN CASES OF
FAILED FINANCIAL INSTITUTIONS.

(a) C o n t i n u a t i o n C o v e r a g e .—The Federal Deposit Insurance
Corporation—
(1) shall, in its capacity as a successor of a failed depository
institution (whether acting directly or through any bridge
bank), have the same obligation to provide a group health plan
meeting the requirements of section 602 of the Employee Retire­
ment Income Security Act of 1974 (relating to continuation
coverage requirements of group health plans) with respect to
former employees of such institution as such institution would
have had but for its failure, and
(2) shall require that any successor described in subsection
(b)(l)(B)(iii) provide a group health plan with respect to former
employees of such institution in the same manner as the failed
depository institution would have been required to provide but
for its failure.
(b) D e f i n i t i o n s .—For purposes of this section—
(1) S u c c e s s o r .—An entity is a successor of a failed depository
institution during any period if—
(A) such entity holds substantially all of the assets or
liabilities of such institution, and
(B) such entity is—
(i) the Federal Deposit Insurance Corporation,
(ii) any bridge bank, or
(iii) an entity that acquires such assets or liabilities
from the Federal Deposit Insurance Corporation or a
bridge bank.
(2) F a i l e d d e p o s i t o r y i n s t i t u t i o n .—The term “ failed deposi­
tory institution” means any depository institution (as defined in
section 3(c) of the Federal Deposit Insurance Act) for which a
receiver has been appointed.

(3) B r i d g e b a n k .—The term “bridge bank” has the meaning
given such term by section ll(i) of the Federal Deposit Insur­
ance Act.
(c) No p r e m i u m c o s t s i m p o s e d o n f d i c .—Subsection (a) shall not
be construed as requiring the Federal Deposit Insurance Corpora­
tion to incur, by reason of this section, any obligation for any
premium under any group health plan referred to in such
subsection.
(d) E f f e c t i v e D a t e .—This section shall apply to plan years begin­
ning on or after the date of the enactment of this Act, regardless of
whether the qualifying event under section 603 of the Employee
Retirement Income Security Act of 1974 occurred before, on, or after
such date.

Subtitle J— Sense of the Congress Regarding
the Credit Crisis
SEC. 456. CREDIT CRUNCH.

(a) F i n d i n g s .—The Congress finds that—
(1) during the past year and a half a credit crunch of crisis
proportions has taken hold of the economy and grown increas­
ingly severe, particularly for real estate;
(2) to date the credit crisis has shown no sign of improvement
with its effects being felt broadly throughout the Nation as
business failures soar, financial institutions weaken, real estate
values decline, and State and local property tax bases further
erode;
(3)
approximately
$200,000,000,000
of
the
nearly
$400,000,000,000 in commercial real estate loans now held by
commercial banks are coming due within the next 2 years;
(4) banks for a variety of reasons, are reluctant to renew these
maturing real estate loans;
(5) both pension funds in the United States, with assets of
nearly $2,000,000,000,000, and a stronger and more active
secondary market for commercial real estate debt and equity
could play a more significant role in providing liquidity and
credit to the real estate and banking sectors of the economy;
(6) many regulatory practices encourage banks to reduce their
real estate lending without regard to long-term historical risk;
and
(7) the stability of real estate has suffered during the past
decade first from tax rules that in 1981 stimulated excessive
investment in real estate, and then in 1986 when rules were
adopted that discourage capital investment in real estate, artifi­
cially eroding real estate values.
(b) S e n s e o f t h e C o n g r e s s .—It is the sense of the Congress that—
(1) immediate and carefully-coordinated action should be
taken by the Congress and the President to arrest the credit
crisis referred to in subsection (a) and provide a healthy and
efficient marketplace that works for owners, lenders, and inves­
tors; and
(2) that efforts should be undertaken to explore measures
that—

(A) modernize and simplify the rules that apply to pen­
sion investment in real estate to remove unnecessary bar­
riers to pension funds seeking to invest in real estate;
(B) strengthen the secondary market for commercial real
estate debt and equity by removing arbitrary obstacles to
private forms of credit enhancement;
(C) restore balance to the regulatory environment by
considering the impact of risk-based capital standards on
commercial, multifamily and single-family real estate;
ending mark-to-market, liquidation-based, appraisals;
encouraging loan renewals; and, fully communicating the
supervisory policy to bank examiners in the field; and
(D) rationalize the tax system for real estate owners and
operators by modifying the passive loss rules and encourag­
ing loan restructures.

Subtitle K—Aquisition of Insolvent Savings
Associations
SEC. 461. ACQUISITION OF INSOLVENT SAVINGS ASSOCIATIONS.

Section 4(i) of the Bank Holding Company Act (12 U.S.C. 1843(i)) is
amended by adding at the end the following new paragraph:
“ (3) A c q u i s i t i o n o f i n s o l v e n t s a v i n g s a s s o c i a t i o n s .—
“ (A) In g e n e r a l .— Notwithstanding any other provision
of this Act, any qualified savings association which became
a federally chartered stock company in December of 1986
and which is acquired by any bank holding company with­
out Federal financial assistance after June 1, 1991, and
before March 1, 1992, and any subsidiary of any such
association, may after such acquisition continue to engage
within the home State of the qualified savings association
in insurance agency activities in which any Federal savings
association (or any subsidiary thereof) may engage in
accordance with the Home Owners’ Loan Act and regula­
tions pursuant to such Act if the qualified savings associa­
tion or subsidiary thereof was continuously engaged in such
activity from June 1, 1991, to the date of the acquisition.
“(B) D e f i n i t i o n o f q u a l i f i e d s a v i n g s a s s o c i a t i o n .—For
purposes of this paragraph, the term ‘qualified savings
association’ means any savings association that—
“(i) was chartered or organized as a savings associa­
tion before June 1,1991;
“(ii) had, immediately before the acquisition of such
association by the bank holding company referred to in
subparagraph (A), negative tangible capital and total
insured deposits in excess of $3,000,000,000; and
“ (iii) will meet all applicable regulatory capital
requirements as a result of such acquisition.” .

Subtitle L—Creditability of Service
SEC. 466. CREDITABILITY OF SERVICE.

(a) C h a p t e r 83.—Section 8332 of title 5, United States Code, is
amended by adding at the end the following new subsection:

“ (n) Any employee who—
“(1) served in a position in which the employee was excluded
from coverage under this subchapter because the employee was
covered under a retirement system established under section 10
of the Federal Reserve Act; and
“ (2) transferred without a break in service to a position to
which the employee was appointed by the President, with the
advice and consent of the Senate, and in which position the
employee is subject to this subchapter,
shall be treated for all purposes of this subchapter as if any service
that would have been creditable under the retirement system estab­
lished under section 10 of the Federal Reserve Act was service
performed while subject to this subchapter if any employee and
employer deductions, contributions or rights with respect to the
employee’s service are transferred from such retirement system to
the Fund.” .
(b) C h a p t e r 8 4 . —Section 8 4 1 1 of title 5, United States Code, is
amended by adding at the end the following new subsection:
“(g) Any employee who—
“(1) served in a position in which the employee was excluded
from coverage under this subchapter because the employee was
covered under a retirement system established under section 10
of the Federal Reserve Act; and
“(2) transferred without a break in service to a position to
which the employee was appointed by the President, with the
advice and consent of the Senate, and in which position the
employee is subject to this subchapter,
shall be treated for all purposes of this subchapter as if any service
that would have been creditable under the retirement system estab­
lished under section 10 of the Federal Reserve Act was service
performed while subject to this subchapter if any employee and
employer deductions, contributions or rights with respect to the
employee’s service are transferred from such retirement system to
the Fund.” .
(c) A p p l i c a b i l i t y .—The amendment made by this section shall 5 USC 8332
apply with respect to any individual who transfers to a position in notewhich he or she is subject to subchapter III of chapter 83 or chapter
84 of title 5, United States Code, on or after October 1, 1991.

Subtitle M— Other Miscellaneous Provisions
SEC. 471. PROVIDING SERVICES TO INSURED DEPOSITORY INSTITUTIONS.

Section 21A of the Home Owners’ Loan Act (12 U.S.C. 1441a) is
amended by adding at the end the following:
“ (q ) C o n t i n u a t i o n

of

O b l ig a t io n

To

P r o v id e

S e r v i c e s .— N o

person obligated to provide services to an insured depository institu­
tion at the time the Resolution Trust Corporation is appointed
conservator or receiver for the institution shall fail to provide those
services to any person to whom the right to receive those services
was transferred by the Resolution Trust Corporation after August 9,
1989, unless the refusal is based on the transferee’s failure to comply
with any material term or condition of the original obligation. This
subsection does not limit any authority of the Resolution Trust
Corporation as conservator or receiver under section 11(e) of the
Federal Deposit Insurance Act.” .

SEC. 472. REAL ESTATE APPRAISALS.

(a) C e r t i f i c a t i o n a n d L i c e n s i n g R e q u i r e m e n t s .—Section 1116 of
the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U .S .C . 3345) is amended by adding at the end the
following new subsection:
“ (e ) A u t h o r i t y o f t h e A p p r a i s a l S u b c o m m i t t e e .— T h e A p p r a i s a l
S u b c o m m itt e e s h a ll n o t se t q u a lific a t io n s o r e x p e r ie n c e r e q u ir e ­
m e n t s f o r t h e S t a t e s in l i c e n s i n g r e a l e s t a t e a p p r a is e r s , i n c l u d i n g a
d e m i n i m u s s t a n d a r d . R e c o m m e n d a t i o n s o f t h e S u b c o m m i t t e e s h a ll
b e n o n b i n d i n g o n t h e S t a t e s .” .
(b ) U s e o f S t a t e C e r t i f i e d a n d S t a t e L i c e n s e d A p p r a i s e r s .—
(1) E f f e c t i v e d a t e f o r u s e .—Section 1119(a)(1) of the Finan­

cial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3348(a)(1)) is amended by striking “July 1, 1991”
and inserting "December 31,1992” .
(2) E x t e n s i o n o f e f f e c t i v e d a t e .—Section 1119(b) of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3348(b)) is amended—
(A) in the first sentence, by striking “ leading to inordi­
nate delays” and inserting
or in any geographical politi­
cal subdivision of a State, leading to significant delays” ; and
(B) in the second sentence, by striking “inordinate” and
inserting “ significant” .
(c) OMB S t u d y o f D e M i n i m u s S t a n d a r d s .—Before the end of the
6-month period beginning on the date of the enactment of this Act,
the Director of the Office of Management and Budget shall conduct
a study of whether there is a need to establish de minimus levels for
commercial real estate.
SEC. 473. EMERGENCY LIQUIDITY.

Section 13 of the Federal Reserve Act (12 U.S.C. 343) is amended
in the third paragraph by striking “of the kinds and maturities
made eligible for discount for member banks under other provisions
of this Act” .
SEC. 474. DISCRIMINATION AGAINST REORGANIZED DEBTORS.

Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C.
1817(a)) is amended by adding at the end the following new para­
graph:
“(9) A Federal banking agency may not, by regulation or
otherwise, designate, or require an insured institution or an
affiliate to designate, a corporation as highly leveraged or a
transaction with a corporation as a highly leveraged transaction
solely because such corporation is or has been a debtor or
bankrupt under title 11, United States Code, if, after confirma­
tion of a plan of reorganization, such corporation would not
otherwise be highly leveraged.” .
12 USC 1828

note.

SEC. 475. PURCHASED MORTGAGE SERVICING RIGHTS.

(a)
I n G e n e r a l . —Notwithstanding section 5(t)(4) of the Home
Owners’ Loan Act, each appropriate Federal banking agency shall
determine, with respect to insured depository institutions for which
it is the appropriate Federal regulator, the amount of readily
marketable purchased mortgage servicing rights that may be in­
cluded in calculating such institution’s tangible capital, risk-based
capital, or leverage limit, if—

(1) such servicing rights are valued at not more than 90
percent of their fair market value; and
(2) the fair market value of such servicing rights is deter­
mined not less often than quarterly.
(b) D e f i n i t i o n .—For purposes of this section, the terms “ appro­
priate Federal banking agency” and “insured depository institu­
tion” have the same meanings as in section 3 of the Federal Deposit
Insurance Act.
(c) E f f e c t i v e D a t e .—The amendments made by this Act shall
take effect at the end of the 60-day period beginning on the date of
the enactment of this Act.
SEC. 476. LIMITATION ON SECURITIES PRIVATE RIGHTS OF ACTION.

The Securities Exchange Act of 1934 is amended by inserting after
section 27 (15 U.S.C. 78aa) the following new section:
“ s p e c ia l

p r o v is io n r e l a t in g t o s t a t u t e o f l im it a t io n s o n

PRIVATE CAUSES OF ACTION
“ S e c . 27A . (a) E f f e c t o n P e n d i n g C a u s e s o f A c t i o n . —The limita­
tion period for any private civil action implied under section 10(b) of
this Act that was commenced on or before June 19,1991, shall be the
limitation period provided by the laws applicable in the jurisdiction,
including principles of retroactivity, as such laws existed on June
19,1991.
“(b) E f f e c t o n D i s m is s e d C a u s e s o f A c t i o n .—Any private civil
action implied under section 10(b) of this Act that was commenced
on or before June 19,1991—
“ (1) which was dismissed as time barred subsequent to June
19,1991, and
“ (2) which would have been timely filed under the limitation
period provided by the laws applicable in the jurisdiction,
including principles of retroactivity, as such laws existed on
June 19,1991,
shall be reinstated on motion by the plaintiff not later than 60 days
after the date of enactment of this section.” .

15 USC 78aa-l.

SEC. 477. MODIFIED SMALL BUSINESS LENDING DISCLOSURE.

12 USC 251.

The Federal Reserve Board shall collect and publish, on an annual
basis, information on the availability of credit to small businesses.
The information shall, to the extent practicable—
(1) include information on commercial loans to small
businesses, agricultural loans to small farms, and loans to
minority-owned small businesses;
(2) be given for categories of small businesses determined by
annual sales and for small businesses in existence for less than
1 year; and
(3) be given for each geographic region of the United States.
In collecting the information, the Federal Reserve Board shall take
into consideration the need to minimize reporting costs, if any, on
financial institutions.

New York.

SEC. 478. SPECIAL INSURED DEPOSITS.

For purposes of the Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.), the deposits of the Freedom National Bank of New York and
the deposits of Community National Bank and Trust Company of
New York that—
(1) were deposited by a charitable organization as such term is
defined by New York State law, or by a religious organization;
and
(2) were deposits of such bank on the date of its closure by the
Office of the Comptroller of the Currency,
shall be fully insured notwithstanding any other provisions of the
Federal Deposit Insurance Act.

Subtitle N— Severability
12 USC 1811

'

SEC. 481. SEVERABILITY.

If any provision of this Act, or any application of any provision of
this Act to any person or circumstance, is held invalid, the remain­
der of the Act, and the application of any remaining provision of the
Act to any other person or circumstance, shall not be affected by
such holding.

TITLE V— DEPOSITORY INSTITUTION
CONVERSIONS
SEC. 501. MERGERS AND ACQUISITIONS OF INSURED DEPOSITORY
INSTITUTIONS DURING CONVERSION MORATORIUM.

(a) I n G e n e r a l .—Section 5(d)(3) of the Federal Deposit Insurance
Act (12 U.S.C. 1815(d)(3)) is amended to read as follows:
“ (3 ) O p t i o n a l

c o n v e r s io n s s u b je c t t o s p e c ia l r u l e s o n d e ­

p o s i t i n s u r a n c e p a y m e n t s .—

“ ( A ) C o n v e r s i o n s a l l o w e d .—
“(i) I n g e n e r a l .—Notwithstanding

paragraph (2)(A)
and subject to the requirements of this paragraph, any
insured depository institution may participate in a
transaction described in clause (ii), (iii), or (iv) of para­
graph (2)(B) with the prior written approval of the
responsible agency under section 18(c)(2).
‘ (ii) H o l d i n g c o m p a n y s u b s i d i a r i e s .—If, in connec­
tion with any transaction referred to in clause (i), the
acquiring, assuming, or resulting depository institution
is a Bank Insurance Fund member which is a sub­
sidiary of a bank holding company, the prior written
approval of the Board shall be required for such
transaction in addition to the approval of any agency
referred to in clause (i).
“ (B) A s s e s s m e n t s o n d e p o s i t s a t t r i b u t a b l e t o f o r m e r
d e p o s i t o r y i n s t i t u t i o n .—

“(i) A s s e s s m e n t s b y s a i f .— In the case of any acquir­
ing, assuming, or resulting depository institution which
is a Bank Insurance Fund member, that portion of the
average assessment base of such member for any
semiannual period which is equal to the adjusted
attributable deposit amount (determined under sub­
paragraph (C) with respect to the transaction) shall—

“(I) be subject to assessment at the assessment
rate applicable under section 7 for Savings Associa­
tion Insurance Fund members;
“(II) not be taken into account for purposes of
any assessment under section 7 for Bank Insurance
Fund members; and
“ (III) be treated as deposits which are insured by
the Savings Association Insurance Fund.
“(ii) A s s e s s m e n t s b y b i f .—In the case of any acquir­
ing, assuming, or resulting depository institution which
is a Savings Association Insurance Fund member, that
portion of the average assessment base of such member
for any semiannual period which is equal to the ad­
justed attributable deposit amount (determined under
subparagraph (C ) with respect to the transaction)
shall—
“ (I) be subject to assessment at the assessment
rate applicable under section 7 for Bank Insurance
Fund members;
“(II) not be taken into account for purposes of
any assessment under section 7 for Savings
Association Insurance Fund members; and
“ (III) be treated as deposits which are insured by
the Bank Insurance Fund.
“ (C ) D e t e r m i n a t i o n

o f a d ju s t e d a t t r ib u t a b l e

d e p o s it

—The adjusted attributable deposit amount which
shall be taken into account for purposes of determining the
amount of the assessment under subparagraph (B) for any
semiannual period by any acquiring, assuming, or resulting
depository institution in connection with a transaction
under subparagraph (A) is the amount which is equal to the
sum of—
“(i) the amount of any deposits acquired by the
institution in connection with the transaction (as deter­
mined at the time of such transaction);
“ (ii) the total of the amounts determined under
clause (iii) for semiannual periods preceding the semi­
annual period for which the determination is being
made under this subparagraph; and
“(iii) the amount by which the sum of the amounts
described in clauses (i) and (ii) would have increased
during the preceding semiannual period (other than
any semiannual period beginning before the date of
such transaction) if such increase occurred at a rate
equal to the annual rate of growth of deposits of the
acquiring, assuming, or resulting depository institution
minus the amount of any deposits acquired through the
acquisition, in whole or in part, of another insured
depository institution.
“ (D ) D e p o s i t o f a s s e s s m e n t .—That portion of any assess­
ment under section 7 which—
“(i) is determined in accordance with subparagraph
(B)(i) shall be deposited in the Savings Association
Insurance Fund; and
“(ii) is determined in accordance with subparagraph
(B)(ii) shall be deposited in the Bank Insurance Fund.
am ount.

“ (E ) C o n d i t i o n s

f o r a p p r o v a l , g e n e r a l l y .—

“ (i) F a c t o r s

t o b e c o n s i d e r e d ; a p p r o v a l p r o c e s s .—

In reviewing any application for a proposed transaction
under subparagraph (A), the responsible agency (and,
in the event the acquiring, assuming, or resulting
depository institution is a Bank Insurance Fund
member which is a subsidiary of a bank holding com­
pany, the Board) shall follow the procedures and con­
sider the factors set forth in section 18(c).
"(ii) I n f o r m a t i o n r e q u i r e d .—An application to
engage in any transaction under this paragraph shall
contain such information relating to the factors to be
considered for approval as the responsible agency or
Board may require, by regulation or by specific request,
in connection with any particular application.
“(iii) No t r a n s f e r o f d e p o s i t i n s u r a n c e p e r ­
m i t t e d .—This paragraph shall not be construed as au­
thorizing transactions which result in the transfer of
any insured depository institution’s Federal deposit
insurance from 1 Federal deposit insurance fund to the
other Federal deposit insurance fund.
“(iv) M i n i m u m c a p i t a l . —The responsible agency,
and the appropriate Federal banking agency for any
depository institution holding company, shall dis­
approve any application for any transaction under this
paragraph unless each such agency determines that the
acquiring, assuming, or resulting depository institu­
tion, and any depository institution holding company
which controls such institution, will meet all applicable
capital requirements upon consummation of the trans­
action.
“(F) C e r t a i n i n t e r s t a t e t r a n s a c t i o n s .—The Board may
not approve any transaction under subparagraph (A) in
which the acquiring, assuming, or resulting depository
institution is a Bank Insurance Fund member which is a
subsidiary of a bank holding company unless the Board
determines that the transaction would comply with the
requirements of section 3(d) of the Bank Holding Company
Act of 1956 if, at the time of such transaction, the Savings
Association Insurance Fund member involved in such
transaction was a State bank that the bank holding com­
pany was applying to acquire.
“(G) E x p e d i t e d a p p r o v a l o f a c q u i s i t i o n s .—
“(i) In g e n e r a l . —Any application by a State
nonmember insured bank to acquire another insured
depository institution that is required to be filed with
the Corporation by subparagraph (A) or any other ap­
plicable law or regulation shall be approved or dis­
approved in writing by the Corporation before the end
of the 60-day period beginning on the date such applica­
tion is filed with the Corporation.
“ (ii) E x t e n s i o n s o f p e r i o d .—The period for approval
or disapproval referred to in clause (i) may be extended
for an additional 30-day period if the Corporation deter­
mines that—
“(I) an applicant has not furnished all of the
information required to be submitted; or

“ (II) in the Corporation’s judgment, any material
information submitted is substantially inaccurate
or incomplete.
“(H) A l l o c a t i o n o f c o s t s i n e v e n t o f d e f a u l t .—If any
acquiring, assuming, or resulting depository institution is
in default or danger of default at any time before this
paragraph ceases to apply, any loss incurred by the Cor­
poration shall be allocated between the Bank Insurance
Fund and the Savings Association Insurance Fund, in
amounts reflecting the amount of insured deposits of such
acquiring, assuming, or resulting depository institution as­
sessed by the Bank Insurance Fund and the Savings
Association Insurance Fund, respectively, under subpara­
graph (B).
“ (I)

Subsequent
approval
of
c o n v e r s io n
T h is p a r a g r a p h s h a l l c e a s e t o a p p l y if —

tran s­

a c t i o n .—

“(i) after the end of the 5-year period referred to in
paragraph (2)(A), the Corporation approves an applica­
tion by any acquiring, assuming, or resulting deposi­
tory institution to treat the transaction described in
subparagraph (A) as a conversion transaction; and
“ (ii) the acquiring, assuming, or resulting depository
institution pays the amount of any exit and entrance
fee assessed by the Corporation under subparagraph (E)
of paragraph (2) with respect to such transaction.
“ (J) A c q u i r i n g , a s s u m i n g , o r r e s u l t i n g d e p o s i t o r y
i n s t i t u t i o n d e f i n e d . —For purposes of this paragraph, the
term ‘acquiring, assuming, or resulting depository institu­
tion’ means any insured depository institution which—
“(i) results from any transaction described in para­
graph (2)(B)(ii) and approved under this paragraph;
“(ii) in connection with a transaction described in
paragraph (2)(B)(iii) and approved under this para­
graph, assumes any liability to pay deposits of another
insured depository institution; or
“ (iii) in connection with a transaction described in
paragraph (2)(B)(iv) and approved under this para­
graph, acquires assets from any insured depository
institution in consideration of the assumption of liabil­
ity for any deposits of such institution.” .
(b) E f f e c t i v e D a t e .—The amendment made by subsection (a) to 12 USC
section 5(d)(3)(C) of the Federal Deposit Insurance Act shall apply notewith respect to semiannual periods beginning after the date of the
enactment of this Act.
(c) T r a n s i t i o n R u l e f o r S a v i n g s A s s o c i a t i o n s A c q u i r i n g
B a n k s .—Section 5(c) of the Home Owners’ Loan Act (12 U.S.C.
1464(c)) is amended—
(1) by redesignating paragraph (5) as paragraph (6); and
(2) by inserting after paragraph (4) the following new para­
graph:
“ (5 ) T r a n s i t i o n

rule

for

s a v in g s

a s s o c ia t io n s

a c q u ir in g

b a n k s .—

“(A) In g e n e r a l .— If, under section 5(d)(3) of the Federal
Deposit Insurance Act, a savings association acquires all or
substantially all of the assets of a bank that is a member of
the Bank Insurance Fund, the Director may permit the

1815

savings association to retain any such asset during the 2year period beginning on the date of the acquisition.
“ (B) E x t e n s i o n .—The Director may extend the 2-year
period described in subparagraph (A) for not more than 1
year at a time and not more than 2 years in the aggregate,
if the Director determines that the extension is consistent
with the purposes of this Act.” .
SEC. 502. MERGERS, CONSOLIDATIONS, AND OTHER ACQUISITIONS AU­
THORIZED.

(a) F e d e r a l S a v i n g s A s s o c i a t i o n s .—Section 10 of the Home
Owners' Loan Act (12 U.S.C. 1467a) is amended by adding at the end
the following new subsection:
“ (t)

M

ergers,

C o n s o l id a t io n s ,

and

O ther

A

c q u is it io n s

A

u­

t h o r i z e d .—

“(1) I n g e n e r a l . —Subject to sections 5(d)(3) and 18(c) of the
Federal Deposit Insurance Act and all other applicable laws,
any Federal savings association may acquire or be acquired by
any insured depository institution.
(2) E x p e d i t e d a p p r o v a l o f a c q u i s i t i o n s .—
“(A) I n g e n e r a l .—Any application by a savings associa­
tion to acquire or be acquired by another insured depository
institution which is required to be filed with the Director
under section 5(d)(3) of the Federal Deposit Insurance Act
or any other applicable law or regulation shall be approved
or disapproved in writing by the Director before the end of
the 60-day period beginning on the date such application is
filed with the agency.
“ (B) E x t e n s i o n o f p e r i o d .—The period for approval or
disapproval referred to in subparagraph (A) may be ex­
tended for an additional 30-day period if the Director deter­
mines that—
“ (i) an applicant has not furnished all of the informa­
tion required to be submitted; or
“ (ii) in the Director’s judgment, any material
information submitted is substantially inaccurate or
incomplete.
“(3) A c q u i r e d e f i n e d .—For purposes of this subsection, the
term ‘acquire’ means to acquire, directly or indirectly, owner­
ship or control through a merger or consolidation or an acquisi­
tion of assets or assumption of liabilities, provided that follow­
ing such merger, consolidation, or acquisition, an acquiring
insured depository institution may not own the shares of the
acquired insured depository institution.
“ (4 ) R e g u l a t i o n s .—
“(A) R e q u i r e d .—The

Director shall prescribe such regu­
lations as may be necessary to carry out paragraph (1).
“ (B) E f f e c t i v e d a t e .—The regulations required under
subparagraph (A) shall—
“ (i) be prescribed in final form before the end of the
90-day period beginning on the date of the enactment of
this subsection; and
“ (ii) take effect before the end of the 120-day period
beginning on such date.
“ (5 ) L i m i t a t i o n . —No provision of this section shall be con­
strued to authorize a national bank or any subsidiary thereof to
engage in any activity not otherwise authorized under the

National Bank Act or any other law governing the powers of a
national bank.” .
(b)
N a t i o n a l B a n k s .—Chapter 1 of title LXII of the Revised
Statutes of the United States (12 U.S.C. 5133 et seq.) is amended by
adding at the end the following new section:
“ SEC. 5156A. MERGERS, CONSOLIDATIONS, AND OTHER ACQUISITIONS AUTHORIZED.

“ (a) I n G e n e r a l .—Subject to sections 5(d)(3) and 18(c) of the
Federal Deposit Insurance Act and all other applicable laws, any
national bank may acquire or be acquired by any insured depository
institution.
“ (b) E x p e d i t e d A p p r o v a l o f A c q u i s i t i o n s .—
“ (1) I n g e n e r a l .—Any application by a national bank to
acquire or be acquired by another insured depository institution
which is required to be filed with the Comptroller of the Cur­
rency by section 5(d)(3) of the Federal Deposit Insurance Act or
any other applicable law or regulation shall be approved or
disapproved in writing by the agency before the end of the 60day period beginning on the date such application is filed with
the agency.
“(2) E x t e n s i o n s o f p e r i o d .—The period for approval or dis­
approval referred to in paragraph (1) may be extended for an
additional 30-day period if the Comptroller of the Currency
determines that—
“(A) an applicant has not furnished all of the information
required to be submitted; or
“(B) in the Comptroller’s judgment, any material
information submitted is substantially inaccurate or in­
complete.
“(c) R u l e o f C o n s t r u c t i o n .—No provision of this section shall be
construed as authorizing a national bank or a subsidiary of a
national bank to engage in any activity not otherwise authorized
under this Act or any other law governing the powers of national
banks.
“ (d) A c q u i r e D e f i n e d .—For purposes of this section, the term
‘acquire’ means to acquire, directly or indirectly, ownership or
control through a merger or consolidation or an acquisition of assets
or assumption of liabilities, provided that following such merger,
consolidation, or acquisition, an acquiring insured depository
institution may not own the shares of the acquired insured deposi­
tory institution.” .
Approved December 19, 1991.
LEGISLATIVE HISTORY—S. 543 (H.R. 3768):
HOUSE REPORTS: Nos. 102-330 accompanying H.R. 3768 (Comm, on Banking,
Finance and Urban Affairs) and 102-407 (Comm, o f Conference).
SENATE REPORTS: No. 102-167 (Comm, on Banking, Housing, and Urban Affairs).
CONGRESSIONAL RECORD, Vol. 137 (1991):
Nov. 13, 14, 18,19, 21, considered and passed Senate.
Nov. 21, H.R. 3768 considered and passed House.
Nov. 23, S. 543 considered and passed House, amended, in lieu o f H.R. 3768.
Nov. 26, House agreed to conference report.
Nov. 27, Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 27 (1991):
Dec. 19, Presidential statement.

12 USC 215c.