[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2056 Reported in House (RH)]
Union Calendar No. 120
112th CONGRESS
1st Session
H. R. 2056
[Report No. 112-182]
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
July 26, 2011
Additional sponsors: Mr. Grimm, Mrs. Maloney, Mr. Hinojosa, Mr.
Schweikert, Mr. Manzullo, Mr. McIntyre, and Ms. Hayworth
July 26, 2011
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on May 31,
2011]
_______________________________________________________________________
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 a
performing 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 (including land development and 1-
to 4-family residential and commercial
construction loans), residential, or small
business loans) could be modified with fewer
LSAs, or if LSAs could be phased out
altogether;
(iii) the FDIC's policies and procedures
for monitoring LSAs, including those designed
to ensure institutions are not imprudently
selling assets at a depressed value;
(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 FDIC's policies and procedures for
terminating LSAs and mitigating the risk of acquiring
institutions having substantial assets remaining in
their portfolio when the LSAs are due to expire;
(C) the extent to which LSAs provide incentives for
loan modifications and other means of increasing the
probability of commercial assets being considered
``performing'';
(D) the nature and extent of differences for
modifying residential assets and working out commercial
real estate under LSAs; and
(E) 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) Appraisals.--
(A) The number of insured depository institutions
placed into receivership or conservatorship due to
asset write-downs and the policies and procedures for
evaluating the adequacy of an insured depository
institution's allowance for loan and lease losses.
(B) The policies and procedures examiners use for
evaluating the appraised values of property securing
real estate loans and the extent to which those
policies and procedures are followed.
(C) FDIC field examiner implementation of guidance
issued December 2, 2010, titled ``Agencies Issue Final
Appraisal and Evaluation Guidelines''.
(4) Capital.--
(A) The factors that examiners use to assess the
adequacy of capital at insured depository institutions,
including the extent to which the quality and risk
profile of the insured institution's loan portfolio is
considered in the examiners' assessment.
(B) The number of applications received by the FDIC
from private capital investors to acquire insured
depository institutions in receivership, the factors
used by the FDIC in evaluating the applications, and
the number of applications that have been approved or
not approved, including the reasons pertaining thereto.
(C) The policies and procedures associated with the
evaluation of potential private investments in insured
depository institutions and the extent to which those
policies and procedures are followed.
(5) 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 (including land development and 1- to 4-
family residential and commercial construction loans)
workouts.
(6) 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 or modify
credit to existing and new borrowers; and
(E) whether individual insured depository
institutions have improved enough to have such orders
removed.
(7) FDIC policy.--The application and impact of FDIC
policies, including--
(A) the impact of FDIC policies on the investment
in insured depository institutions, especially in
States where more than 10 such institutions 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.
(8) 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.
(e) Coordination Between FDIC IG, Treasury IG, and Federal Reserve
IG.--In carrying out this section, the Inspector General of the FDIC
shall consult with the Inspectors General of the Treasury and of the
Federal Reserve System, and such Inspectors General shall provide any
documents or other material requested by the Inspector General of the
FDIC in order to carry out this section.
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.
SEC. 3. GAO STUDY.
(a) Study.--The Comptroller General of the United States shall
carry out a study on the following:
(1) The causes of high levels of bank failures in states
with 10 or more failures since 2008.
(2) The procyclical impact of fair value accounting
standards.
(3) The causes and potential solutions for the ``vicious
cycle'' of loan write downs, raising capital, and failures.
(4) An analysis of the community impact of bank failures.
(5) The feasibility and overall impact of loss share
agreements.
(b) Report.--Not later than the end of the 1-year period beginning
on the date of the enactment of this Act, the Comptroller General shall
issue a report to the Congress on the study carried out pursuant to
subsection (a).
Union Calendar No. 120
112th CONGRESS
1st Session
H. R. 2056
[Report No. 112-182]
_______________________________________________________________________
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.
_______________________________________________________________________
July 26, 2011
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed