[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2056 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2056
To instruct the Inspector General of the Federal Deposit Insurance
Corporation to study the impact of insured depository institution
failures, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 31, 2011
Mr. Westmoreland (for himself, Mr. David Scott of Georgia, Mr. Broun of
Georgia, Mr. Gary G. Miller of California, Mr. Posey, Mr. Marchant, and
Mr. Mack) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To instruct the Inspector General of the Federal Deposit Insurance
Corporation to study the impact of insured depository institution
failures, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. INSPECTOR GENERAL STUDY.
(a) Study.--The Inspector General of the Federal Deposit Insurance
Corporation (FDIC) shall conduct a comprehensive study on the impact of
the failure of insured depository institutions.
(b) Definitions.--For purposes of this Act--
(1) the term ``insured depository institution'' has the
meaning given such term in section 3(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(c));
(2) the term ``private equity company'' has the meaning
given the terms ``hedge fund'' and ``private equity fund'' in
section 13(h)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1851(h)(2)); and
(3) the term ``paper-loss'' means any write down on an
asset held by an insured depository institution that causes
such institution to raise more capital in order to cover the
write down.
(c) Matters To Be Studied.--In conducting the study under this
section, the Inspector General shall address the following:
(1) Loss-sharing agreements.--The effect of loss-sharing
agreements (LSAs), including--
(A) The impact of loss-sharing on the insured
depository institutions that survive and the borrowers
of insured depository institutions that fail,
including--
(i) the impact on the rate of loan
modifications and adjustments;
(ii) whether more types of loans (such as
commercial, residential, or small business
loans) could be modified with fewer LSAs, or if
LSAs could be phased out altogether;
(iii) the impact on current borrowers
seeking loan modification from an acquiring
institution with an LSA;
(iv) the impact on the availability of
credit; and
(v) the impact on loans with participation
agreements outstanding with other insured
depository institutions;
(B) The effect of FDIC policies and procedures
regarding maturing LSAs, including--
(i) any impact LSAs may have on continuing
weakness in the real estate market; and
(ii) the likelihood that banks will sell
off assets to take advantage of LSAs before
such agreements are no longer available; and
(C) Methods of ensuring the orderly end of expiring
LSAs to prevent any adverse impact on borrowing, real
estate industry and the Depositors Insurance Fund.
(2) Paper losses.--The significance of paper losses,
including--
(A) the number of insured depository institutions
that have been placed into receivership or
conservatorship due to paper losses;
(B) the impact on paper losses of raising more
capital;
(C) the effect of changes in the application of the
fair value of real estate accounting rules and other
accounting standards;
(D) whether field examiners are using proper
appraisal procedures with respect to paper losses; and
(E) methods of stopping the vicious downward spiral
of losses and write downs.
(3) Workouts.--The success of FDIC field examiners in
implementing FDIC guidelines titled ``Policy Statement on
Prudent Commercial Real Estate Loan Workouts'' (October 31,
2009) regarding workouts of commercial real estate, including--
(A) whether field examiners are using the correct
appraisals; and
(B) whether there is any difference in
implementation between residential workouts and
commercial workouts.
(4) Orders.--The application and impact of consent orders
and cease and desist orders, including--
(A) whether such orders have been applied uniformly
and fairly across all insured depository institutions;
(B) the reasons for failing to apply such orders
uniformly and fairly when such failure occurs;
(C) the impact of such orders on the ability of
insured depository institutions to raise capital;
(D) the impact of such orders on the ability of
insured depository institutions to extend credit to
existing and new borrowers;
(E) whether individual insured depository
institutions have improved enough to have such orders
removed; and
(F) the reasons for failure where insured
depository institutions have not so improved.
(5) FDIC policy.--The application and impact of FDIC
policies, including--
(A) the impact of FDIC policies on the private
capitalization of insured depository institutions,
especially in States where more than 10 such
insitutions have failed since 2008;
(B) whether the FDIC fairly and consistently
applies capital standards when an insured depository
institution is successful in raising private capital;
and
(C) whether the FDIC steers potential investors
away from insured depository institutions that may be
in danger of being placed in receivership or
conservatorship.
(6) Private equity companies.--The FDIC's handling of
potential investment from private equity companies in insured
depository institutions, including--
(A) the number of insured depository institutions
that have been approved to receive private equity
investment by the FDIC;
(B) the number of insured depository institutions
that have been rejected from receiving private equity
investment by the FDIC; and
(C) the reasons for rejection of private equity
investment when such rejection occurs.
(d) Report.--Not later than one year after the date of the
enactment of this Act, the Inspector General shall submit to Congress a
report--
(1) on the results of the study conducted pursuant to this
section; and
(2) any recommendations based on such study.
SEC. 2. FUNDING.
The FDIC shall make available from the portion of the FDIC budget
allocated to management expenses, sums allowing the FDIC Inspector
General to complete this study.
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