[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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