110 HR 7226 IH: Net Worth Certificate Program Act of 2008 U.S. House of Representatives 2008-09-29 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 110th CONGRESS 2d Session H. R. 7226 IN THE HOUSE OF REPRESENTATIVES September 29, 2008 Mr. Shadegg (for himself, Mr. Kingston, Mr. Roskam, Mr. Deal of Georgia, Mr. Fortenberry, Mr. Gingrey, Mr. Westmoreland, Mrs. Bachmann, Mr. Sali, Mr. Weldon of Florida, Mr. Gohmert, Ms. Foxx, Mrs. Drake, Mr. Garrett of New Jersey, Mr. Sessions, Mr. Pearce, Mr. Akin, Mr. Hoekstra, Mr. Rogers of Michigan, Mr. Barrett of South Carolina, Mr. Flake, Mrs. Blackburn, Mr. Brady of Texas, Mr. Carter, Mr. McCaul of Texas, Mr. Tiberi, Ms. Ginny Brown-Waite of Florida, Mr. Sam Johnson of Texas, Mr. King of Iowa, Mr. Manzullo, Mr. Sensenbrenner, Mr. Feeney, Mrs. Biggert, and Mr. Doolittle) introduced the following bill; which was referred to the Committee on Financial Services A BILL To direct the Federal Deposit Insurance Corporation to create a net worth certificate program along the lines of what Congress enacted in the 1980s for the savings and loan industry.

1.

Short title

This Act may be cited as the Net Worth Certificate Program Act of 2008.

2.

Specification of constitutional authority for enactment of law

This Act is enacted pursuant to power granted Congress under article 1, section 8, clause 3 of the United States Constitution.

3.

Findings and purpose

(a)

Findings

The Congress finds the following: (1)The Federal Deposit Insurance Corporation enacted a similar program in the 1980s; (2)That program, in the 1980s, resolved a $100 billion insolvency in the savings banks for a total cost of less than $2 billion; (3)Such a program will bolster the capital position of banks with real estate holdings; (4)Such a program will give banks the ability to sell and restructure assets and get on with their rehabilitation; and (5)This program would not require taxpayer money would be spent, and the asset sale transactions would remain in the private sector where they belong. (b)

Purpose

The purpose of this Act is to: (1)Create a program, managed by the Chairman of the Federal Deposit Insurance Corporation, to purchase net worth certificates in order to help banks with their capital position.

4.

Net worth certificate program

The Chairman of the Federal Deposit Insurance Corporation is directed to create a net worth certificate program that will settle the financial markets without significant expense to taxpayers. (1)The program created by the Chairman of the Federal Deposit Insurance Corporation will be authorized to purchase net worth certificates by issuing FDIC senior notes to the banks in the form of subordinated debentures, a commonly used form of capital in banks, or in any other form the Chairman determines meets the goals and requirements of this program; (2)For a bank to be eligible to participate in the program the Chairman must certify that it is both in danger of failing, and could be viable if they were given more time than they are eligible to participate; (3)The Chairman is required to issue new, strict supervision rules for banks that wish to enter the program and the banks must document their agreement to comply with the new rules. These new oversight rules must also include, but are not to be limited to, oversight of compensation of top executives and removal of poor management.