[Congressional Record (Bound Edition), Volume 152 (2006), Part 18]
[House]
[Pages 22840-22841]
[From the U.S. Government Publishing Office, www.gpo.gov]




                FEDERAL DEPOSIT INSURANCE ACT AMENDMENT

  Mr. HENSARLING. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 6345) to make a conforming amendment to the Federal Deposit 
Insurance Act with respect to examinations of certain insured 
depository institutions, and for other purposes.
  The Clerk read as follows:

                               H.R. 6345

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AMENDMENT TO THE FEDERAL DEPOSIT INSURANCE ACT.

       Paragraph (10) of section 10(d) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1820(d)(10)) is amended by striking 
     ``$250,000,000'' and inserting ``$500,000,000''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Hensarling) and the gentleman from Massachusetts (Mr. Frank) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on H.R. 6345.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in strong support of H.R. 6345 which makes 
a minor but important change to the Financial Services Regulatory 
Relief Act of 2006. The Regulatory Relief Act, a strong bipartisan bill 
which was recently signed into law, is a strong first step in reducing 
the excessive regulatory burden on America's insured financial 
institutions in order to benefit consumers and to benefit the overall 
economy. This bill, which is virtually identical to the provision 
included in our House regulatory relief bill, which passed with 
overwhelming bipartisan support and which I had the honor to coauthor, 
will make it even better.
  H.R. 6345, which is sponsored by Subcommittee Chairman Bachus, as 
well as Chairman Oxley and Ranking Member Frank, gives banking 
regulators the discretion to grant well-managed and well-capitalized 
institutions with good ratings an 18-month bank examination cycle 
rather than a 12-month cycle.
  The bill that we are considering today is consistent with the goals 
of the Regulatory Relief Act that again was signed recently into law. 
Prior to passage of the Regulatory Relief Act, well-managed, well-
capitalized insured depository institutions that had less than $250 
million in total assets and that had an outstanding rating qualified 
for an 18-month exam cycle instead of the 12-month exam cycle.
  In addition, the Federal banking regulators had the discretion to 
grant, through regulation, eligibility for the 18-month cycle to well-
capitalized and well-managed institutions with good ratings, which the 
regulators have indeed done. The Regulatory Relief Act of 2006 included 
language to extend the exam cycle from 12 to 18 months only for 
outstanding rated institutions with assets up to $500 million but did 
not make a conforming change for institutions with good ratings. H.R. 
6345 simply makes that parallel change.
  H.R. 6345 is commonsense legislation. Changing the current 
discretionary threshold from $250 million in assets to $500 million 
gives the regulators more flexibility to focus on troubled 
institutions, while still examining well-capitalized, well-managed 
institutions at least once every 18 months. Nonetheless, the 
legislation would not prevent a Federal banking agency from conducting 
an examination of any institution more frequently, if deemed necessary.
  Mr. Speaker, at this time, I insert into the Record a December 4, 
2006 letter requesting this change, signed by the Board of Governors of 
the Federal Reserve System, the Federal Deposit Insurance Corporation, 
the Office of the Comptroller of the Currency, and finally, the Office 
of Thrift Supervision.
                                                 December 4, 2006.
     Hon. Richard Shelby,
     Chairman, Committee on Banking, Housing And Urban Affairs 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: Before adjourning the 109th Congress, we 
     urge you to consider the attached additional regulatory 
     burden relief amendment that would allow the appropriate 
     Federal banking agency to extend, from 12 months to 18 
     months, the on-site examination cycle for all qualifying 
     highly rated banks and savings associations with total assets 
     of up to $500 million if the agency determined that such 
     action was consistent with safety and soundness.

[[Page 22841]]

       The Financial Services Regulatory Relief Act of 2006 
     (``FSRRA''), Pub. L. No. 109-351, made many important changes 
     that relieve unnecessary burden on our nation's depository 
     institutions. One such amendment in Section 605 raised, from 
     $250 million to $500 million, the total asset threshold below 
     which an insured depository institution may qualify for an 
     18-month (rather than a 12-month) examination cycle. In order 
     to qualify for an extended 18-month exam cycle, a small 
     insured depository institution also must be well capitalized 
     and well managed and meet certain other supervisory 
     conditions set forth in section 10(d) the Federal Deposit 
     Insurance Act. See 12 U.S.C. Sec. 1820(d).
       One of these other supervisory conditions relates to the 
     composite condition of the institution. Prior to FSRRA, all 
     insured depository institutions that had less than $250 
     million in total assets (the then effective total asset 
     limit) could qualify for an 18-month exam cycle if the 
     institution had received a composite rating of 
     ``outstanding'' or ``good'' at its most recent examination. 
     This was because Federal law authorized the Federal banking 
     agencies to permit institutions with assets of up to $250 
     million in total assets and a ``good'' composite rating to 
     qualify for an 18-month exam cycle if the agencies 
     determined, as we did, that such action was consistent with 
     principles of safety and soundness. See id. at 
     Sec. 1820(d)(10); 63 Federal Register 16378 (April 2, 1998).
       Although FSRRA raised the total asset threshold for an 18-
     month exam cycle to $500 million in section 10(d)(4), the Act 
     did not make a corresponding change to section 10(d)(l0) to 
     allow an institution with between $250 million and $500 
     million in total assets to qualify, with agency approval, for 
     an extended exam cycle if the institution has a ``good'' 
     composite rating. Accordingly, numerous well capitalized, 
     well managed and well run community banks and savings 
     associations currently are not able to benefit from the 
     increased regulatory flexibility granted by section 605 of 
     FSRRA.
       Consistent with prior law, we respectfully request that you 
     consider the attached additional burden relief amendment 
     before adjournment. The amendment would authorize the 
     appropriate agency, if it determined the action was 
     consistent with safety and soundness, to permit a well 
     capitalized and well managed institution that has between 
     $250 million and $500 million in total assets and a composite 
     rating of ``good'' to potentially qualify for an 18-month 
     exam cycle. The Federal banking agencies have used this 
     authority effectively to examine institutions with assets 
     under $250 million and believe that the 18-month examination 
     cycle would also be effective for institutions that have 
     assets of between $250 million and $500 million where the 
     institution meets all of the other statutory qualifying 
     criteria and has at least a good composite rating. Notably, 
     the law does not prevent a Federal banking agency from 
     conducting an examination of any institution more frequently 
     if deemed necessary and the same would be true if the 
     attached amendment is adopted.
       We thank you in advance for your consideration of this 
     amendment.
           Sincerely,
     Ben S. Bernanke,
       Chairman, Board of Governors of the Federal Reserve System.
     John C. Dugan,
       Comptroller of the Currency.
     Shelia C. Bair,
       Chairman, Federal Deposit Insurance Corporation.
     John M. Reich,
       Director, Office of Thrift Supervision.

  This legislation is also, Mr. Speaker, supported by the American 
Bankers Association, the Independent Community Bankers of America and 
the Conference of State Bank Supervisors.
  In closing, let me thank again Subcommittee Chairman Bachus for 
bringing this bill to the floor today, as well as Chairman Oxley and 
Ranking Member Frank for their support of H.R. 6345 and their continued 
commitment to providing commonsense regulatory relief to our financial 
institutions.
  Mr. Speaker, I urge my colleagues to support this important 
legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I join with the gentleman 
from Texas in urging the House to pass this bill. It is an example, I 
think, of how we should be flexible in our approach to regulation. 
Regulation plays a very important role in a sensible, capitalist 
economy, but it can only play that role if it is flexible and 
appropriate, and overregulating does damage in ways different, but 
still quite tangible, than underregulating.
  We are in particular here responding, our committee is, in a 
bipartisan way to a very important group of officials, the State bank 
supervisors. In fact, it was the Conference of State Bank Supervisors 
who most pushed for this because what they have asked us to do is to 
give the Federal regulators with whom they work the flexibility that 
most of them have on their own.
  As Members know, Mr. Speaker, some banks, depending on how they are 
chartered, are entirely Federal in their regulation but some are State-
chartered and are regulated by both State and Federal regulators in 
various ways. This bill will allow better coordination between State 
and Federal regulators. It will give the regulators the discretion, not 
the mandate, to be more flexible in the timing of regulations.
  It is an example of how we should make regulation appropriate, not 
unduly burdensome, and therefore, I am glad to join with the gentleman 
from Texas in urging passage of this bill.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  I want to conclude and say again, I very much thank the ranking 
member for coming to the floor personally to urge passage of this 
legislation and to also, on a personal note, congratulate him as he 
will soon become the chairman of our Financial Institutions Committee.
  As a Republican, I did not look forward to Democrat control of this 
House, but if I have to be stuck with somebody, I cannot think of one I 
respect more than the gentleman from Massachusetts who brings 
unparalleled wisdom and wit to the committee. I have no doubt that the 
great tradition of bipartisanship that Chairman Oxley established in 
this committee will be further carried out under his leadership.
  Mr. FRANK of Massachusetts. Mr. Speaker, will the gentleman yield?
  Mr. HENSARLING. I yield to the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Speaker, that is very gracious of the 
gentleman from Texas. I guess I should note that this may be the first 
of many collaborations between myself as chairman and his role, and I 
congratulate him as the new chairman of the Republican Study Committee, 
but he is absolutely right.
  The parting chairman, the gentleman from Ohio (Mr. Oxley), set a very 
good tone for this committee of bipartisan cooperation. As I have said 
often, bipartisan cooperation does not mean that legitimate differences 
between the parties disappear. It means that we pursue those where they 
exist in a civil manner so that differences there do not poison our 
ability to work together on areas where there is no partisan difference 
as this one.
  The gentleman from Texas has been a part of that tradition and I look 
forward to working with him and the other Members in that way, and I 
appreciate very much his kind remarks.
  Mr. HENSARLING. Mr. Speaker, I thank the gentleman for his gracious 
comments as well.
  Mr. Speaker, I urge passage of the bill and yield back the balance of 
my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Texas (Mr. Hensarling) that the House suspend the rules 
and pass the bill, H.R. 6345.
  The question was taken; and (two-thirds of those voting having 
responded in the affirmative) the rules were suspended and the bill was 
passed.
  A motion to reconsider was laid on the table.

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