[House Report 109-326]
[From the U.S. Government Publishing Office]
109th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 109-326
======================================================================
HURRICANE CHECK CASHING RELIEF ACT OF 2005
_______
December 6, 2005.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 3909]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 3909) to provide emergency authority for the Federal
Deposit Insurance Corporation and the National Credit Union
Administration, in accordance with guidance issued by the Board
of Governors of the Federal Reserve System, to guarantee checks
cashed by insured depository institutions and insured credit
unions for the benefit of noncustomers who are victims of
certain 2005 hurricanes, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 4
Background and Need for Legislation.............................. 4
Hearings......................................................... 5
Committee Consideration.......................................... 6
Committee Votes.................................................. 6
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 7
New Budget Authority, Entitlement Authority, and Tax Expenditures 7
Committee Cost Estimate.......................................... 7
Congressional Budget Office Estimate............................. 7
Federal Mandates Statement....................................... 11
Advisory Committee Statement..................................... 11
Constitutional Authority Statement............................... 11
Applicability to Legislative Branch.............................. 11
Section-by-Section Analysis of the Legislation................... 11
Changes in Existing Law Made by the Bill, as Reported............ 12
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE, PURPOSE.
(a) Short Title.--This Act may be cited as the ``Hurricane Check
Cashing Relief Act of 2005''.
(b) Purpose.--The purpose of this Act is to reduce the suffering and
financial difficulties of victims of 2005 hurricanes--
(1) whose home insured depository institutions and insured
credit unions, or the insured depository institution or insured
credit union on which any check or share draft payable to any
such victim is drawn, are closed, or whose records are
otherwise inaccessible, due to certain 2005 hurricanes;
(2) who lack access to operating automated teller machines
for whatever reason as a result of any such hurricane,
including inoperable payment networks;
(3) who lack some or all of the requisite forms of
identification necessary to cash their own or a third-party
check or share draft; or
(4) who are otherwise unable, by reason of any such
hurricane, to access amounts on deposit at an insured
depository institution or insured credit union.
SEC. 2. EMERGENCY AUTHORITY TO GUARANTEE CHECKS CASHED FOR VICTIMS OF
CERTAIN 2005 HURRICANES.
(a) FDIC.--
(1) In general.--Subject to subsection (d), the Federal
Deposit Insurance Corporation shall establish, in accordance
with emergency guidance issued by the Board of Governors of the
Federal Reserve System under subsection (d)(1), an emergency
program under which an insured depository institution may
obtain, subject to subsection (d)(2), a commitment from the
Corporation to indemnify the insured depository institution for
any loss suffered by the institution through cashing a check or
share draft that--
(A) is presented for payment by any individual who,
as of August 25, 2005, resided in the State of Florida,
Alabama, Mississippi, Louisiana, or Texas in an area in
which the President, pursuant to section 401 of the
Robert T. Stafford Disaster Relief and Emergency
Assistance Act, determined, on or after August 25,
2005, that a major disaster exists; and
(B) is subsequently uncollectible,
in an amount not to exceed $2,000 for each such check or share
draft.
(2) Source of funds for payments.--Any payments required to
be made by the Corporation pursuant to a commitment under
paragraph (1) to an insured depository institution shall be
drawn from funds available for such purposes under subsection
(c).
(b) NCUA.--
(1) In general.--Subject to subsection (d), the National
Credit Union Administration shall establish, in accordance with
emergency guidance issued by the Board under subsection (d)(1),
an emergency program under which an insured credit union may
obtain, subject to subsection (d)(2), a commitment from the
Administration to indemnify the insured credit union for any
loss suffered by the credit union through cashing a share draft
or check that--
(A) is presented for payment by any individual who,
as of August 25, 2005, resided in the State of Florida,
Alabama, Mississippi, Louisiana, or Texas in an area in
which the President, pursuant to section 401 of the
Robert T. Stafford Disaster Relief and Emergency
Assistance Act, determined, on or after August 25,
2005, that a major disaster exists; and
(B) is subsequently uncollectible,
in an amount not to exceed $2,000 for each such check or share
draft
(2) Source of funds for payments.--Any payments required to
be made by the National Credit Union Administration pursuant to
a commitment under paragraph (1) to an insured credit union
shall be drawn from funds available for such purposes under
subsection (c).
(3) Limited extension of check cashing services.--
Notwithstanding any limitation in section 107(12) of the
Federal Credit Union Act with regard to field of membership, an
insured credit union may cash any check presented for payment
by any individual described in paragraph (1)(A).
(c) Reimbursement From Federal Reserve Surpluses.--Section 7(b) of
the Federal Reserve Act (12 U.S.C. 289(b)) is amended by adding at the
end the following new paragraph:
``(4) Additional transfers to cover certain relief efforts
resulting from hurricanes of 2005.--
``(A) In general.--Subject to subparagraph (C), from
the surplus funds of the Federal reserve banks
maintained pursuant to subsection (a)(2), the Federal
reserve banks shall transfer to the Board of Governors
of the Federal Reserve System for transfer to the
Federal Deposit Insurance Corporation and the National
Credit Union Administration, such sums as are necessary
to meet any payments required under subsection (a)(1)
or (b)(1) of section 2 of the Hurricane Check Cashing
Relief Act. In the event that the total amount of
requests for indemnification received by the Federal
Deposit Insurance Corporation and the National Credit
Union Administration exceed the maximum amount
specified under subparagraph (C), the sums transferred
to the Federal Deposit Insurance Corporation and the
National Credit Union Administration, respectively,
shall be in proportion to the amount of payments
required under subsection (a)(1) and (b)(1) of section
2 of the Hurricane Check Cashing Relief Act of 2005,
respectively.
``(B) Allocation by federal reserve board.--Of the
total amount required to be paid by the Federal reserve
banks, the Board of Governors of the Federal Reserve
System shall determine the amount each such bank shall
pay.
``(C) Maximum amount.--The total amount transferred
under subparagraph (A) from all Federal reserve banks
shall not exceed $200,000,000.
``(D) Replenishment of surplus fund prohibited.--No
Federal reserve bank may replenish such bank's surplus
fund by the amount of any transfer by such bank under
subparagraph (A).''.
(d) Emergency Guidance and Limitations.--
(1) In general.--The Board, after consulting the Federal
Deposit Insurance Corporation and the National Credit Union
Administration, shall, upon the enactment of this Act, promptly
issue appropriate guidance--
(A) to carry out the purposes of this section and
administer the programs established in accordance with
this section;
(B) to reduce the incidence of fraud and any other
cause of loss to the greatest extent possible,
consistent with the purpose of this Act;
(C) to require insured depository institutions and
insured credit unions to exercise due diligence in
determining the eligibility of any check presented by
any individual for indemnification under this section,
including such measures as verification of Social
Security numbers and other identifying information as
the Board may determine to be practicable;
(D) to provide insured depository institutions and
insured credit unions with reasonable guidance, in
light of the emergency circumstances presented by
certain 2005 hurricanes, so as to meet the requirements
for indemnification under this section, including the
sharing of information on checks that have been
presented for indemnification; and
(E) notwithstanding any Federal or State law, to
provide for the right of the Board of Governors of the
Federal Reserve System, on behalf of the Federal
reserve banks and through the Federal Deposit Insurance
Corporation and the National Credit Union
Administration, to recover from any insured depository
institution or insured credit union the amount of any
indemnification paid to such depository institution or
credit union with respect to any check, to the extent
of the amount so paid, if the insured depository
institution or insured credit union collects on the
check.
(2) Compliance with guidance condition.--The emergency
guidance issued under paragraph (1) shall require any insured
depository institution or insured credit union seeking a
commitment under subsection (a)(1) or (b)(1) to demonstrate
that the institution or credit union is in compliance with the
guidance in such manner as the Board determines to be
appropriate and practicable.
(3) Per individual per institution limitation.--No specific
insured depository institution or insured credit union may be
indemnified for losses in excess of $2,000 with respect to
checks and share drafts presented by any one individual.
(e) Definitions.--For purposes of this Act, the following definitions
shall apply:
(1) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System.
(2) Insured credit union.--The term ``insured credit union''
has the same meaning as in section 101 of the Federal Credit
Union Act.
(3) Insured depository institution.--The term ``insured
depository institution'' has the same meaning as in section 3
of the Federal Deposit Insurance Act.
(f) Rule of Construction.--No provision of this section shall be
construed as affecting any right or obligation of an insured depository
institution or insured credit union to take any action against any
person in connection with a fraudulent check, a fraudulent negotiation
of a check, or any other intentional act of a fraudulent or deceptive
nature.
(g) Effective Date.--
(1) In general.--Subject to paragraph (2), the provisions of
this section shall apply to checks or share drafts presented to
an insured depository institution or an insured credit union
during the period beginning on August 25, 2005, and ending
November 15, 2005.
(2) Limited extension.--The period described in paragraph (2)
may be extended once for an additional 60 days if--
(A) the Board, after consulting with the Federal
Deposit Insurance Corporation and the National Credit
Union Administration, determines that the continuing
impact of the 2005 hurricane disasters on financial
intermediation between consumers and financial
institutions, on payment networks, and on other forms
of communication require an extension of the programs
established under this section in order to continue to
meet the immediate needs of victims of the disaster;
and
(B) notice of such determination is published in the
Federal Register at least 5 days before the end of the
period described in paragraph (1).
Purpose and Summary
H.R. 3909, The Hurricane Check Cashing Relief Act, as
amended, will provide emergency authority for the Federal
Deposit Insurance Corporation and the National Credit Union
Administration, in accordance with guidance issued by the Board
of Governors of the Federal Reserve System, to guarantee checks
or share drafts cashed by insured depository institutions and
insured credit unions for the benefit of customers who are
victims of certain 2005 hurricanes. Specifically, H.R. 3909, as
amended, provides certain financial institutions the incentive
to continue their work with the victims of the recent
hurricanes by indemnifying federally insured banks and credit
unions that cash fraudulent or non-sufficient fund checks or
share drafts. Institutions must continue to use due diligence
in ensuring that checks or share drafts are legitimate and are
collectable.
The bill, as amended, provides that up to $200 million from
the Federal Reserve Bank's surplus fund is available to
indemnify federally insured financial institutions that may
receive up to $2,000 for any check or share draft presented by
any one individual who has resided in the areas affected by
Hurricanes Katrina, Rita and Wilma, that is subsequently
uncollectible between August 25, 2005, and November 15, 2005.
Background and Need for Legislation
In 2005, numerous hurricanes have resulted in tremendous
harm and damage to Alabama, Florida, Louisiana, Mississippi,
and Texas. It has been estimated that over one million people
have been displaced because of these hurricanes and
approximately 500,000 individuals may have lost their jobs.
While the economic impact is still being estimated, the
displacement of people and the large number of affected insured
credit unions and insured depository institutions have made
access to cash, credit, social security checks and other
financial services very difficult. The situation has been
further complicated by the victim's loss of their personal
identification and financial records.
In early September, 2005, the House Financial Services
Committee held a briefing for members by the financial services
industry and Federal financial regulators in the aftermath of
Hurricane Katrina to provide an outline of relief efforts. The
Committee also held two hearings in response to Hurricane
Katrina in September, 2005. The Financial Institutions and
Consumer Credit Subcommittee held a hearing on September 14,
2005, that focused on the financial services response to
Hurricane Katrina and regulatory and legislative relief
recommendations to facilitate their efforts. The Housing and
Community Opportunity Subcommittee held a hearing on September
15, 2005, that focused on the critical housing needs in the
aftermath of Hurricane Katrina industry's relief efforts. Many
recommendations were provided to the Committee at these
hearings and H.R. 3909 addresses some of these suggestions.
The bill is intended to reduce the suffering and financial
difficulties for those victims of the 2005 hurricanes who are
unable to access their home insured depository institutions or
insured credit unions, who cannot utilize their ATMs, who lack
some or all of the requisite forms of identification to cash
checks or share drafts, and who cannot access their deposits at
an insured depository institution or insured credit union by
guaranteeing their ability to cash checks or insured share
drafts up to $2,000 at insured depository institutions and
insured credit unions.
Hearings
The Subcommittee on Financial Institutions and Consumer
Credit held a hearing on September 14, 2005, on ``Hurricane
Katrina: The Financial Institutions' Response.'' The following
witnesses testified:
Mr. McKinley W. ``Mac'' Deaver, Executive Director,
Mississippi Bankers Association, representing American
Bankers Association;
Mr. Ken Bordelon, President and CEO, E Federal Credit
Union (LA), representing National Association of
Federal Credit Unions;
Mr. C. R. ``Rusty'' Cloutier, President and CEO,
MidSouth Bank, N.A. (LA), representing Independent
Community Bankers of America;
Mr. Charles Elliott, President and CEO, Mississippi
Credit Union Association, representing Credit Union
National Association;
Ms. Diane Casey-Landry, President and CEO, America's
Community Bankers;
Mr. David Gibbons, Senior Executive Vice President
and Chief Risk Officer, HSBC North America (IL),
representing American Financial Services Association;
and
Mr. Hilary Shelton, Director, Washington Bureau,
NAACP.
The Subcommittee on Housing and Community Opportunity held
a hearing on September 15, 2005, on ``Emergency Housing Needs
in the Aftermath of Hurricane Katrina.'' The following
witnesses testified:
Mr. Henry A. Alvarez III, President and CEO, San
Antonio Housing Authority, San Antonio, TX, testifying
on behalf of National Association of Housing and
Redevelopment Officials;
Ms. Sharon M. Daly, Senior Advisor for Public Policy,
Catholic Charities USA;
Ms. J. K. Huey, Senior Vice President, IndyMac Bank,
Pasadena, CA, testifying of behalf of the Mortgage
Bankers Association;
Ms. Kay Miller, President, T.A. Miller, Inc. and Tra-
Dor, Inc.; Management, Shreveport, LA, testifying on
behalf of the Council for Affordable and Rural Housing;
Mr. David A. Roberson, President and CEO, Cavalier
Homes, Inc., Addison, AL, testifying on behalf of
Manufactured Housing Institute and the Manufactured
Housing Association for Regulatory Reform;
Ms. Nan P. Roman, President, National Alliance to End
Homelessness;
Ms. Barbara Thompson, Executive Director, National
Council of State Housing Agencies;
Mr. David F. Wilson, Homebuilder, Ketchum, ID,
President, National Association of Home Builders;
Mr. Clanton Beamon, Executive Director, Delta Housing
Development Corporation, Indianola, MS, testifying on
behalf of the National Rural Housing Coalition;
Mr. Jeffrey I. Brodsky, President, Related Management
Company, LLC, New York City, NY, testifying on behalf
of the National Multi Housing Council and National
Leased Housing Association;
Ms. Judith A. Kennedy, President and CEO, National
Association of Affordable Housing Lenders;
Ms. Michelle Norris, Senior Vice President of
Development, National Church Residences, testifying on
behalf of the American Association of Homes and
Services for the Aging;
Ms. Ellen Lee, Deputy Executive Assistant for
Neighborhood Development, City of New Orleans, LA,
testifying on behalf of the National Community
Development Association (submitted for the record); and
National Association of Realtors (submitted for the
record).
Committee Consideration
The Committee on Financial Services met in open session on
October 27, 2005, and ordered H.R. 3909, the Hurricane Check
Cashing Relief Act of 2005, favorably reported to the House
with an amendment by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken with in conjunction with the
consideration of this legislation. An amendment in the nature
of a substitute offered by Mr. Bachus, No. 1,making various
technical and substantive changes to the bill, was agreed to by voice
vote. A motion by Mr. Oxley to report the bill, as amended, to the
House with a favorable recommendation was agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held hearings and made
findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
This bill provides emergency authority for regulators to
guarantee checks cashed by insured depository institutions and
credit unions for the benefit of individuals who resided in the
areas affected by Hurricanes Katrina, Rita, and Wilma as of
August 25, 2005, in order to assist in the recovery from the
destructive hurricanes of 2005.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 30, 2005.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3909, the
Hurricane Check Cashing Relief Act of 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Kathleen
Gramp (for federal costs) and Barbara Edwards (for federal
revenues).
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 3909--Hurricane Check Cashing Relief Act of 2005
Summary: H.R. 3909 would direct the Federal Deposit
Insurance Corporation (FDIC) and National Credit Union
Administration (NCUA) to idemnify insured financial
institutions for any losses resulting from certain
uncollectible checks presented by individuals who resided in
areas designated as disaster areas after August 25, 2005. This
idemnification would apply to checks presented to those
institutions from August 25, 2005, through November 15, 2005.
Indemnification would be limited to $2,000 per individual.
Under the bill, the Federal Reserve would be required to
transfer up to $200 million from its surplus to cover the
indemnification payments.
CBO estimates that enacting this bill would increase direct
spending for indemnification payments by about $120 million
over the 2006-2007 period. Those outlays would be initially
offset by a transfer of $120 million from the Federal Reserve.
Such transfers are recorded in the budget as an increase in
revenues. However, monies transferred from the surplus of the
Federal Reserve would no longer be invested in securities and
would no longer earn interest that otherwise would be
transferred to the Treasury--as the Federal Reserve routinely
does each year. CBO estimates that the interest earnings
forgone would reduce revenues by about $1 million in 2006, $3
million in 2007, and $6 million each year thereafter.
Therefore, CBO estimates that net revenues over the 2006-2015
period would increase by $68 million. Thus, enacting this bill
would result in a net increase in federal deficits of about $52
million over the 2006-2015 period, with additional revenue
losses of about $6 million a year continuing indefinitely
thereafter.
H.R. 3909 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates
that the mandate would result in no costs to state, local, or
tribal governments. Hence, the mandate would not have costs
that exceed the threshold established in that act ($62 million
in 2005, adjusted annually for inflation). H.R. 3909 contains
no new private-sector mandates as defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3909 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
FDIC and NCUA...................
Estimated Budget Authority.. 30 90 0 0 0 0 0 0 0 0
Estimated Outlays........... 30 90 0 0 0 0 0 0 0 0
CHANGES IN REVENUES
Estimated Revenues.............. 29 87 -6 -6 -6 -6 -6 -6 -6 -6
----------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted before the end of calendar year 2005. We
assume that any insured institution in the country could seek
reimbursement for uncollectible checks issued by individuals
from areas in the states of Alabama, Florida, Louisiana,
Mississippi, and Texas that have been declared eligible for any
type of disaster assistance since August 25, 2005.
Direct spending
The amounts paid to indemnify insured depository
institutions and credit unions would depend on the volume of
uncollectible checks submitted for reimbursement. CBO expects
that requests for indemnification would equal the normal volume
of uncollectible checks for the portion of the population
covered by the bill, plus any extraordinary losses that may
have occurred in the wake of Hurricanes Katrina, Rita, and
Wilma. Based on industry surveys of check fraud, CBO estimates
that indemnification payments could range from $40 million to
$200 million, with a midpoint of about $120 million. Given the
time needed to issue regulations and process requests, CBO
assumes that most of the payments would be made in fiscal year
2007.
CBO expects that insured financial institutions would
normally expect to lose about $40 million from bad checks
issued over a three-month period from the affected areas. That
estimate is based on a 2004 survey by the American Bankers
Association on check fraud experienced by banks and savings
associations (the data did not include credit unions). The
study found that attempted check fraud totaled about $5.5
billion in 2003, but actual losses were less than $700 million
(or 13 percent of the attempted fraud) because of various
controls and detection measures. Prorating those losses by
population--17 percent of the country's population resided in
the areas covered by the bill--suggests that the normal level
of annual losses for this group totaled about $120 million in
2003. Assuming losses occur evenly throughout the year, losses
for a three-month period would have totaled about $30 million
in 2003. Adjusting those figures to include credit unions and
possible growth in the level of losses from 2003 through 2005
suggests that the normal losses covered by the bill would total
about $40 million.
How Hurricane Katrina and other disasters affected the
level of attempted fraud and institutions' ability to prevent
it are very uncertain. So too is the effect of having a federal
indemnification program, which could reduce institutions'
incentives to investigate and prosecute check fraud. There are
no data available at this time to determine whether costs would
reach the $200 million limit in the bill for the Federal
Reserve's coverage of agency costs; that amount is five times
higher than CBO's estimate of normal losses but lower than
CBO's estimate of the region's proportionate share of the
routine level of attempted fraud (about $300 million, after
adjusting for credit unions and possible growth in attempted
fraud). Thus, the agencies' indemnification payments could
reach the cap in the bill if there was a significant drop in
institutions' ability to stem attempted fraud by individuals
from the disaster areas over the designated period.
Revenues
This bill would direct the Federal Reserve banks to
transfer up to $200 million from their surplus funds to the
FDIC and NCUA to cover the indemnification payments for
uncollectible checks or share drafts presented to them by
insured banks or credit unions. Transfers from the Federal
Reserve System to the Treasury are classified as revenues.
Thus, anything that affects the size of the transfers affects
federal revenues.
Such transfers originate with the net income of the Federal
Reserve System. The Federal Reserve possesses a portfolio of
assets that generates a large amount of interest income. Net
income of the system represents the amount of the system's
earnings less its expenses of operation. Out of its annual net
income, the Federal Reserve pays a fixed dividend to its member
banks, retains monies for its surplus fund, and voluntarily
remits the remaining profits to the U.S. Treasury. The system's
surplus fund is a stock of retained earnings accumulated over
time and is set by the Federal Reserve each year at a level
equal to the paid-in capital of its member banks. The surplus
is invested in interest-earning assets and generates some of
the income that is in turn remitted to the Treasury in
subsequent years.
H.R. 3909 specifies that the amount to be remitted (to
cover the indemnification payments) would be paid from the
Federal Reserve surplus. The bill also would prohibit the
Federal Reserve from replenishing its surplus. Thus, any
remittances would be in addition to the amount that CBO has
estimated as regular annual transfers of the Federal Reserve's
net income to the U.S. Treasury, after payment of dividends and
retention of monies for its surplus fund.
CBO estimates that the additional transfer under the bill
would increase revenues by $30 million in fiscal year 2006 and
$90 million in fiscal year 2007. However, the permanent
reduction in the surplus of the Federal Reserve would lead to a
decrease in investments of the Federal Reserve. This permanent
decrease in investments would cause a drop in the investment
income that is earned by the Federal Reserve and subsequently
sent to the Treasury as revenues. CBO estimates that the
revenues from the Federal Reserve would thereby be lowered by
$1 million in fiscal year 2006, $3 million in 2007, and $6
million each year thereafter. Thus, CBO estimates that these
forgone interest earnings would total $52 million over the
2006-2015 period, and an additional $6 million a year after
2015.
Overall impact for revenue transferred from the Federal Reserve surplus
H.R. 3909's provisions for transferring the Federal Reserve
surplus give the appearance of financing the additional outlays
of the FDIC and NCUA. This initial outcome is attributable to
the fact that the Federal Reserve is treated as a
nongovernmental entity for budgetary purposes, with its
transfers to the Treasury counted as revenues. The proposal
would also reduce future Federal Reserve transfers to the
Treasury by an amount equal to the interest earned on the
initial $120 million transfer. Over time, the reduction in
these remissions would equal the value of the transfer to the
FDIC and NCUA (in present value terms). But much of the loss of
Federal Reserve payments occurs outside the budget window of 10
years so that the initial costs of the legislation appear to be
partially paid for. In economic terms, however, H.R. 3909 does
not provide any new resources to the federal government to pay
for the outlays called for by the legislation.
Estimated impact on state, local, and tribal governments:
H.R. 3909 contains an intergovenmental mandate as defined in
UMRA. Section 2(d)(1)(E) would preempt any state laws that
restrict the ability of the FDIC and the NCUA to recover
certain funds. CBO is unaware of any state that has such a law.
We estimate that this mandate would result in no costs to
state, local, or tribal governments.
Estimated impact on the private sector: This bill contains
no new private-sector mandates as defined in UMRA.
Estimate prepared by: Federal Spending: Kathleen Gramp;
Federal Revenues: Barbara Edwards; Impact on State, Local, and
Tribal Governments: Sarah Puro; Impact on the Private Sector:
Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis; G. Thomas Woodward, Assistant
Director for Tax Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title, purpose
This section establishes the short title of the bill, the
``Hurricane Check Cashing Relief Act of 2005.'' This section
also specifies the Congressional purposes of the Act.
Section 2. Emergency authority to guarantee checks cashed for victims
of certain 2005 hurricanes
This section directs the Federal Deposit Insurance
Corporation (FDIC) and the National Credit Union Administration
(NCUA) to establish, in accordance with emergency guidance
issued by the Board of Governors of the Federal Reserve System
(Board), an emergency program under which an insured depository
institution and insured credit union may obtain an
indemnification commitment from the FDIC for loss it has
suffered (up to $2,000 for any one individual) through cashing
a check or share draft between August 25, 2005, and November
15, 2005, that: (1) is presented for payment by any individual
who, as of August 25, 2005, resided in Florida, Alabama,
Mississippi, Louisiana, or Texas in a Presidentially declared
major disaster area; and (2) is subsequently uncollectible.
This section also amends the Federal Reserve Act to direct
the Federal Reserve banks to transfer from their surplus funds
to the Board for the transfer to the Corporation or
Administrator, up to $200 million to meet the indemnification
requirements of this Act. This section also directs the Board
to issue emergency guidance and limitations for the Corporation
and Administration to implement the provisions of this section.
The Board, in consultation with the Corporation and
Administration, may extend for 60 days the provisions of this
section after appropriate notice is published in the Federal
Register of this limited extension.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 7 OF THE FEDERAL RESERVE ACT
division of earnings
Sec. 7. (a) * * *
(b) Transfer for Fiscal Year 2000.--
(1) * * *
* * * * * * *
(4) Additional transfers to cover certain relief
efforts resulting from hurricanes of 2005.--
(A) In general.--Subject to subparagraph (C),
from the surplus funds of the Federal reserve
banks maintained pursuant to subsection (a)(2),
the Federal reserve banks shall transfer to the
Board of Governors of the Federal Reserve
System for transfer to the Federal Deposit
Insurance Corporation and the National Credit
Union Administration, such sums as are
necessary to meet any payments required under
subsection (a)(1) or (b)(1) of section 2 of the
Hurricane Check Cashing Relief Act. In the
event that the total amount of requests for
indemnification received by the Federal Deposit
Insurance Corporation and the National Credit
Union Administration exceed the maximum amount
specified under subparagraph (C), the sums
transferred to the Federal Deposit Insurance
Corporation and the National Credit Union
Administration, respectively, shall be in
proportion to the amount of payments required
under subsection (a)(1) and (b)(1) of section 2
of the Hurricane Check Cashing Relief Act of
2005, respectively.
(B) Allocation by federal reserve board.--Of
the total amount required to be paid by the
Federal reserve banks, the Board of Governors
of the Federal Reserve System shall determine
the amount each such bank shall pay.
(C) Maximum amount.--The total amount
transferred under subparagraph (A) from all
Federal reserve banks shall not exceed
$200,000,000.
(D) Replenishment of surplus fund
prohibited.--No Federal reserve bank may
replenish such bank's surplus fund by the
amount of any transfer by such bank under
subparagraph (A).
* * * * * * *