[Congressional Record Volume 156, Number 56 (Tuesday, April 20, 2010)]
[House]
[Pages H2651-H2654]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DEPOSIT RESTRICTED QUALIFIED TUITION PROGRAMS ACT OF 2009
Mr. CLEAVER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4178) to amend the Federal Deposit Insurance Act to provide
for deposit restricted qualified tuition programs, and for other
purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4178
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Deposit Restricted Qualified
Tuition Programs Act of 2009''.
SEC. 2. DEPOSIT RESTRICTED QUALIFIED TUITION PROGRAMS.
Section 18 of the Federal Deposit Insurance Act (12 U.S.C.
1828) is amended by adding at the end the following new
subsection:
``(y) Deposit Restricted Qualified Tuition Programs.--
``(1) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Deposit restricted qualified tuition program.--The
term `deposit restricted qualified tuition program' means a
qualified tuition program in which--
``(i) the cash provided by a contributor to such a
qualified tuition program may be invested only in deposits
insured by the Corporation;
``(ii) the contributor may become a participant in the
program by depositing funds through the program into an
account at a depository institution participating in the
program; and
``(iii) the program may include multiple depository
institutions, subject to the requirements of section 529 of
the Internal Revenue Code of 1986, as amended.
``(B) Qualified tuition program.--The term `qualified
tuition program' has the same meaning as in section 529 of
the Internal Revenue Code of 1986, as amended.
``(2) Treatment.--Notwithstanding any other provision of
the law, the following provisions shall apply with respect to
any deposit restricted qualified tuition program:
``(A) A deposit restricted qualified tuition program shall
be deemed to be an `identified banking product' (as defined
in Section 206 of the Gramm-Leach-Bliley Act of 1999) for
purposes of the Securities Exchange Act of 1934.
``(B) None of the following shall be treated as a security,
as defined in section 2(a)(1) the Securities Act of 1933,
section 3(a)(10) of the Securities Exchange Act of 1934, or
section 2(a)(36) of the Investment Company Act of 1940:
``(i) The deposits of cash at an insured depository
institution relating to a deposit restricted tuition program.
``(ii) Any certificate of deposit or other instrument of an
insured depository institution evidencing any such deposit.
``(iii) The rights and obligations of participants in a
deposit restricted qualified tuition program arising from
section 529 of the Internal Revenue Code, as amended.
``(C) In no event shall a deposit restricted qualified
tuition program, the State entity designated by statute to
oversee such program, the administrator appointed to operate
the program on behalf of the State or a participating
depository institution, be deemed to be an issuer of a
security or to be an investment company (as defined in
section 3(a) of the Investment Company Act of 1940).''.
SEC. 3. BUDGET COMPLIANCE.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the Committee on the Budget of the House of
Representatives, provided that such statement has been
submitted prior to the vote on passage.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Missouri (Mr. Cleaver) and the gentlewoman from Illinois (Mrs. Biggert)
each will control 20 minutes.
The Chair recognizes the gentleman from Missouri.
General Leave
Mr. CLEAVER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. CLEAVER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today we are taking up H.R. 4178, the Deposit Restricted
Qualified Tuition Programs Act of 2009. This
[[Page H2652]]
bill establishes an avenue for those wanting to save for the college
education of a child, grandchild, or other related individual, to do so
in a Federal Deposit Insurance Corporation, FDIC-insured, deposit.
At the present time, savers can only access the 529 College Savings
Program through a securities-based plan, and my bill would not change
this avenue. However, following the recent crash of the stock market,
many savers saw their accounts drop in value by 50 percent or more, and
as such, are reluctant to place any more money in a securities-based
plan. Furthermore, many small savers can find investing in securities-
based products both complex and intimidating. An FDIC-insured deposit
option would provide guaranteed principal return and a guaranteed
return on the deposit, all from a commercial bank with which the saver
likely has a relationship.
This proposed legislation will help families across the United States
save in a safe, sound, and simple manner for their children and
grandchildren's college education. This bill does not make any changes
to the current 529 College Savings Program nor the current delivery
system of the program through a securities-based plan, nor the tax
treatment of the 529 plans. It simply adds another 529 College Savings
Program delivery option through an FDIC-insured deposit.
This is a bipartisan bill. It has both the chairman and the ranking
Republican member of the House Financial Services Committee as
cosponsors, among other Republicans and Democrats. At a time when our
Nation is concerned about congressional quarreling based on political
party affiliation, it is refreshing that both parties can support this
bill.
Currently, section 529 programs are established and maintained by the
States, who in turn generally contract out with securities firms and
others to administer the programs. Investors may go through a State
agency to invest in a 529 or, in many cases, through a securities
dealer. Many States typically offer a number of investment options or
portfolios, including ones that minimize the potential loss of invested
principal. The bill is intended to encourage States to offer, among the
options they provide investors, deposit-restricted qualified tuition
programs.
The bill will not be independent of, nor compete with, the current
State programs. In order to qualify as a 529 program under section 529
of the Internal Revenue Code, the program must be established and
maintained by a State. Therefore, this program would be a State
program, and the laws of the various States would have to be adapted to
establish such a program.
In my home State of Missouri, the law which has already been adopted
establishes a deposit-only program as separate from the securities-
based program. The State would still generally hire a third party to
administer the program. The third party could be the same one that
manages the securities program or it could be a different third party.
I do have a letter of support from our State Treasurer asking that this
bill be approved.
H.R. 4178 does not create a State program. The bill is intended to
provide States another option to offer investors this deposit-
restricted qualified tuition program.
{time} 1415
Total 529 savings plans assets were $117 billion at the end of the
fourth quarter of 2009, reflecting a 6 percent increase from third
quarter 2009 assets of $110.5 billion.
My office asked the FDIC for statistical information on 529 plans and
deposit insurance programs. The FDIC provided the following
information: ``Currently seven States offer 529 plans that include an
option to invest in an insured deposit either as part of a broader
investment strategy or as a sole investment. All of these plans are
open to nonresidents, although the Ohio plan requires nonresidents to
go through a broker to access the plan. Two of the States have offered
the insured deposit option since 1998. Three of the States recently
added the insured deposit option to their plans. States offering an
insured deposit investment option are Arizona, Colorado, Montana, Ohio,
Utah, Virginia, and Wisconsin. Information gathered from five of these
States indicates that at the end of 2009, there was approximately $670
million invested in FDIC-insured deposit options of their plans. For
these States approximately $207 million was added to the FDIC-insured
option in 2009. Three of the responding States were able to identify
whether the funds invested in their FDIC-insured option represented new
money or a transfer of funds from another option in an already
established 529 plan. For these States approximately 47 percent of the
funds placed in the FDIC-insured option in 2009 were transferred from
other 529 options, representing approximately $82 million of the
approximately $173 million added to the FDIC-insured option in these
States.''
Additionally, the FDIC has already said they will insure 529
deposited accounts at the regular insured rate of $250,000, which we
raised. The Congressional Budget Office and the Joint Committee on
Taxation have completed the review of the budgetary impact of H.R.
4178, the Deposit Restricted Qualified Tuition Programs Act of 2009.
They determined that by enacting this legislation, it would affect
revenues but estimate that the reduction in revenues would not be
significant over the 2010-2020 period. Similarly, implementing the bill
could affect direct spending, but the net impact of such spending would
be negligible over the next 10 years.
Mr. Speaker, in particular I would like to congratulate the Missouri
Bankers Association president, Max Cook, for bringing this needed bill
to my attention. The Missouri Bankers Association moved a bill in the
Missouri legislature several years ago to allow the FDIC-insured 529
deposit accounts because they thought it would be helpful to Missouri
college students and parents who were saving for them.
For the Record, I would like to submit records of support from the
Missouri Bankers Association, the Missouri Independent Bankers
Association, the Office of the Missouri State Treasurer, the
Independent Community Bankers Association, and the American Bankers
Association. Although the support letters are written in support of
H.R. 3599, H.R. 4178 is identical to H.R. 3599 except for some small
technical changes and more cosponsors.
I am pleased this Congress will address H.R. 4178 and move the
legislation forward. This is a bill all Members can support. I strongly
urge all Members to vote for H.R. 4178.
Missouri Bankers Association,
Jefferson City, MO, Nov. 3, 2009.
Hon. Emanuel Cleaver II,
House of Representatives,
Washington, DC.
Dear Representative Cleaver: I am writing today on behalf
of the three hundred twenty-five Missouri Bankers Association
member banks and savings and loans to express our exuberant
support for H.R. 3599, The Deposit Restricted Qualified
Tuition Programs Act of 2009.
As you know, this legislation establishes a means for
thousands and thousands of Americans wanting to save for the
college education of a child, grandchild or other related
person and to do so in a Federal Deposit Insurance
Corporation (FDIC) insured deposit. At the present time,
savers can only access the 529 college savings program
through a securities based plan. This legislation leaves that
in place and adds the FDIC insured deposit option.
After the recent crash of the stock market, many savers saw
their 529 accounts drop in value by as much as fifty percent
or more and as such are reluctant to place any more monies in
a securities based plan. Furthermore, many small savers can
find investing in securities based products both complex and
intimidating. A FDIC insured deposit option would provide
guaranteed principal return and a guaranteed return on the
deposit, all from a commercial bank that the saver likely has
a relationship with. This proposed legislation will help
families across the United States save in a safe, sound and
simple manner for their children and grandchildren's college
education.
We sincerely thank you for your sponsorship of this
legislation and look forward to its swift passage in the
House.
Sincerely,
Max Cook,
President and CEO.
____
November 2, 2009.
Hon. Emanuel Cleaver,
House of Representatives,
Washington, DC.
Dear Representative Cleaver: It was a pleasure meeting with
you in Kansas City on October 13. We appreciate your interest
in all subjects pertaining to community banking, and we thank
you for your efforts on their behalf. We also commend your
efforts in the passing of H.R. 3599, the Deposit Restricted
Qualified Tuition Programs Act of 2009, which the House of
Representatives will take
[[Page H2653]]
up this week. The Missouri Independent Bankers Association,
like our national affiliate, the Independent Community
Bankers of America (ICBA), support H.R. 3599 and look forward
to its successful passage.
We strongly support your effort to allow more banks to
better assist families saving for college through the popular
529 program. H.R. 3599 would allow an avenue for consumers
wanting to save for the college education of a child,
grandchild or other related individual, to do so in a Federal
Deposit Insurance Corporation (FDIC) insured deposit. At the
present time, consumers can only access the 529 college
savings program through a securities based plan. This bill
would not affect those individuals that want to continue to
use a securities based plan.
Due to the distressed economy and equity markets, many
consumers saw their savings drop in value. These consumers
should have full access to a safe FDIC insured deposit option
for their education savings through their local banks. ICBA
supports H.R. 3599 because it gives community bank customers
both increased options and peace of mind that their savings
will be protected by FDIC insurance.
Thank you very much for your leadership on this proposal.
We urge all members of the House to vote yes on H.R. 3599.
Sincerely,
Jerry Sage,
Executive Director.
____
Office of the Missouri
State Treasurer,
Jefferson City, MO, November 19, 2009.
Hon. Emanuel Cleaver II,
House of Representatives,
Washington, DC.
Dear Congressman Cleaver: I am writing to you to express my
support for H.R. 3599, the Deposit Restricted Qualified
Tuition Programs Act of 2009.
As you know, this legislation is important to families
wishing to save for college. It would provide, for the first
time on a broad basis, for certificates of deposit and other
savings products insured by the Federal Deposit Insurance
Corporation (FDIC) to help families save on a tax-free basis
for college expenses. This is tremendously important for
promoting higher education, and is consistent with the goals
of the White House Task Force on Middle Class Families headed
by Vice President Biden. That task force is responsible for
making recommendations on how to make college more accessible
and affordable for lower- and middle-class families.
Providing FDIC-insured investment options is a clear cut way
to doing so.
Furthermore, H.R. 3599 would greatly expand the use of
FDIC-insured 529-qualified savings products because it would
make it easier for community banks across the country to
offer them. Presently, only a few states offer a bank product
within their 529 plans and due to current regulations, these
products are primarily offered by only a few larger
institutions. By extending the use of 529-qualified savings
products to a greater number of banks, I believe this product
will reach new groups of investors that previously have been
reluctant to invest in securities-dominated 529 investment
options. Additionally, the legislation would provide for a
no-risk investment option for current 529 investors,
something I believe is needed and will spur additional
savings.
I appreciate your sponsorship of this important
legislation, and am willing to help you in any way to secure
its passage.
Sincerely,
Clint Zweifel.
Independent Community Bankers
of America,
Washington, DC, November 2, 2009.
Hon. Emanuel Cleaver,
House of Representatives,
Washington, DC.
Dear Representative Cleaver: On behalf of the Independent
Community Bankers of America (ICBA) and the 5,000 community
banks that we represent around the nation, we want to thank
you for your leadership on H.R. 3599, the Deposit Restricted
Qualified Tuition Programs Act of 2009, which the House of
Representatives will take up this week.
We strongly support your effort to allow more banks to
better assist families saving for college through the popular
529 program. H.R. 3599 would allow an avenue for consumers
wanting to save for the college education of a child,
grandchild or other related individual, to do so in a Federal
Deposit Insurance Corporation (FDIC) insured deposit. At the
present time, consumers can only access the 529 college
savings program through a securities based plan. This bill
would not affect those individuals that want to continue to
use a securities based plan.
Due to the distressed economy and equity markets, many
consumers saw their savings drop in value. These consumers
should have full access to a safe FDIC insured deposit option
for their education savings through their local banks. ICBA
supports H.R. 3599 because it gives community bank customers
both increased options and peace of mind that their savings
will be protected by FDIC insurance.
Thank you very much for your leadership on this proposal.
We urge all members of the House to vote yes on H.R. 3599.
Sincerely,
Camden R. Fine,
President and CEO.
____
American Bankers Association,
Washington, DC, November 4, 2009.
Hon. Barney Frank,
Chairman, Committee on Financial Services, House of
Representatives, Washington, DC.
Hon. Emanuel Cleaver II,
House of Representatives,
Washington, DC.
Dear Chairman Frank and Representative Cleaver: On behalf
of the members of the American Bankers Association (ABA), I
am writing in strong support of H.R. 3599, the Deposit
Restricted Qualified Tuition Programs Act of 2009. The
legislation would provide families the opportunity to save
for college tuition and other education expenses using
deposits insured by the Federal Deposit Insurance Corporation
(FDIC). Designed after 529 plans, the Deposit Restricted
Qualified Tuition Program is a safe and secure way to protect
education contributions up to $250,000.
Under H.R. 3599, contributions to the Program would be
banking products, and not securities. Traditionally, 529
plans, while widely available, have primarily been used by
higher-income investors. By making the education tuition
savings program available through insured deposits, lower and
middle income families will have a greater opportunity to
plan for the future of their children. Moreover, the change
would increase deposit activity in our nation's banks,
particularly smaller community banks.
FDIC-insured banking deposits can be a safe alternative to
investments made through the financial markets. H.R. 3599
would protect the future education of American families while
also strengthening the banking system.
We look forward to working with you to have H.R. 3599
enacted into law as quickly as possible.
Sincerely,
Floyd E. Stoner.
I reserve the balance of my time.
Mrs. BIGGERT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today to express my strong support for H.R. 4178
and to commend the sponsor of this measure, the gentleman from Missouri
(Mr. Cleaver), for his thoughtful efforts to encourage Americans to
save for their children's college education.
529 plans have been around for many years and have become common
vehicles for saving and investment; however, given recent market
volatility, some families are understandably hesitant to save in these
securities-based plans. Therefore, for the first time, H.R. 4178
provides an option for States to expand their 529 programs. The bill
allows community banks, which are FDIC-insured institutions, to
directly offer consumers a college savings plan. At the same time,
savers in these new deposit-based plans will be able to benefit from
all of the traditional tax incentives of existing securities-based
529s.
As an added benefit, this legislation will protect accounts under the
FDIC's insurance fund up to $250,000 per account. For those families
seeking lower-risk alternatives, the FDIC-insured college savings plan
would provide a guaranteed return. By expanding the options available
to those saving for an education, this simple step will help more
families prepare for their children's future and provide added
financial security in today's difficult economic climate.
Again, I thank Mr. Cleaver and his staff for their hard work on this
bipartisan measure, and I urge my colleagues to support it.
Ms. JACKSON LEE of Texas. Mr. Speaker, today I rise in support of
H.R. 4178--The Deposit Restricted Qualified Tuition Programs Act. As
co-chair of the Congressional Children's Caucus, I support this
legislation because I believe that it is an important measure to help
families pay for higher education. A quality education continues to be
the best pathway to social and economic mobility in this country, and
this legislation will enable such paths. I want to thank my colleague,
Emanuel Cleaver, for introducing this important legislation.
Today, Americans are simultaneously faced with rising higher
education costs and a difficult economy. Families across Texas are
sending their children to college and when they graduate, they should
not be saddled with debt. Democrats pledged to make a college education
more affordable, and this legislation makes good on our promise. This
legislation is evidence that the Democratic-led Congress is committed
to working on a bipartisan basis, and with this President, to address
the key concerns of America's families.
During these tough economic times, many Americans saving for college
saw their accounts drop over 50 percent in value and are now reluctant
to invest in a securities-based
[[Page H2654]]
plan. During the past year, many parents who contributed to a 529
college savings plan--an investment vehicle where earnings grow tax
free--saw those savings take a hit. Many 529 plans were heavily
invested in stocks, though their beneficiaries were just a few years
away from attending college. This is a big blow to the 63 percent of
parents who are saving for college expenses, according to a September
2009 Fidelity survey, and who must now manage a wide array of expenses
with less money and security.
H.R. 4178 establishes an avenue for those wanting to save for the
college education of a child, grandchild or other related individual,
in a Federal Deposit Insurance Corporation, FDIC, insured deposit.
Today, savers can only access the 529 college savings program through a
securities-based plan, and this plan would offer another option. H.R.
4178 amends the Federal Deposit Insurance Act to prescribe requirements
for deposit restricted qualified tuition programs which are exempt from
Federal income tax. It also declares that in no event shall a deposit
restricted qualified tuition program, the State entity designated by
statute to oversee such program, or the administrator appointed to
operate it on behalf of the State or a participating depository
institution, be deemed to be an issuer of a security or an investment
company. This bill does not make any changes to the current 529 college
savings program nor the current delivery system of the program through
a securities based plan. It simply adds another 529 college savings
program delivery option through an FDIC insured deposit.
The Congressional Budget Office and the Joint Committee on Tax have
completed a review of the budgetary impact of H.R. 4178, the Deposit
Restricted Qualified Tuition Programs Act of 2009. They determined that
by enacting this legislation it would affect revenues, but estimate
that the reduction in revenues would not be significant over the 2010-
2020 period. Similarly, implementing the bill could affect direct
spending but the net impact of such spending would be negligible over
the next 10 years.
Mrs. BIGGERT. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
Mr. CLEAVER. Mr. Speaker, I have no further requests for time, and I
yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Missouri (Mr. Cleaver) that the House suspend the rules
and pass the bill, H.R. 4178, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________