[Congressional Record (Bound Edition), Volume 156 (2010), Part 4]
[House]
[Pages 5815-5818]
[From the U.S. 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 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.

[[Page 5816]]

  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

[[Page 5817]]

     passing of H.R. 3599, the Deposit Restricted Qualified 
     Tuition Programs Act of 2009, which the House of 
     Representatives will take 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

[[Page 5818]]

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 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.

                          ____________________