[House Report 111-18]
[From the U.S. Government Publishing Office]



111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     111-18

======================================================================



 
TO MAKE PERMANENT THE TEMPORARY INCREASE IN DEPOSIT INSURANCE COVERAGE, 
                         AND FOR OTHER PURPOSES

                                _______
                                

 February 23, 2009.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 786]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 786) to make permanent the temporary increase in 
deposit insurance coverage, 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..............................................     3
Background and Need for Legislation..............................     4
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    11
Constitutional Authority Statement...............................    11
Applicability to Legislative Branch..............................    11
Earmark Identification...........................................    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. PERMANENT INCREASE IN DEPOSIT INSURANCE.

    (a) Amendments to Federal Deposit Insurance Act.--Effective upon 
the date of the enactment of this Act, section 11(a) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)) is amended--
         (1) in paragraph (1)(E), by striking ``$100,000'' and 
        inserting ``$250,000'';
         (2) in paragraph (1)(F)(i), by striking ``2010'' and inserting 
        ``2015'';
         (3) in subclause (I) of paragraph (1)(F)(i), by striking 
        ``$100,000'' and inserting ``$250,000'';
         (4) in subclause (II) of paragraph (1)(F)(i), by striking 
        ``the calendar year preceding the date this subparagraph takes 
        effect under the Federal Deposit Insurance Reform Act of 2005'' 
        and inserting ``calendar year 2008''; and
         (5) in paragraph (3)(A), by striking ``, except that $250,000 
        shall be substituted for $100,000 wherever such term appears in 
        such paragraph''.
    (b) Amendment to Federal Credit Union Act.--Section 207(k) of the 
Federal Credit Union Act (12 U.S.C. 1787(k)) is amended--
         (1) in paragraph (3)--
                 (A) by striking the opening quotation mark before 
                ``$250,000'';
                 (B) by striking ``, except that $250,000 shall be 
                substituted for $100,000 wherever such term appears in 
                such section''; and
                 (C) by striking the closing quotation mark after the 
                closing parenthesis; and
         (2) in paragraph (5), by striking ``$100,000'' and inserting 
        ``$250,000''.
    (c) Rule of Construction.--No provision of law, other than a 
provision of the Federal Deposit Insurance Act (with respect to the 
Federal Deposit Insurance Corporation and insured depository 
institutions) or the Federal Credit Union Act (with respect to the 
National Credit Union Administration and insured credit unions), may be 
construed as limiting the authority of--
         (1) the Board of Directors of the Federal Deposit Insurance 
        Corporation to set assessments under section 7(b)(2) of the 
        Federal Deposit Insurance Act or to make any inflation 
        adjustment under section 11(a)(1)(F) of such Act; or
         (2) the National Credit Union Administration Board to 
        periodically adjust the amount of an insured credit union's 
        deposit under section 202(c)(1) of the Federal Credit Union 
        Act, set the insurance premium charge under section 202(c)(2) 
        of such Act, or to make any inflation adjustment pursuant to 
        section 207(k)(5) of such Act.

SEC. 2. EXTENSION OF RESTORATION PLAN PERIOD.

    Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12 
U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ``5-year period'' and 
inserting ``8-year period''.

SEC. 3. FDIC AND NCUA BORROWING AUTHORITY.

    (a) FDIC.--Section 14(a) of the Federal Deposit Insurance Act (12 
U.S.C. 1824(a)) is amended by striking ``$30,000,000,000'' and 
inserting ``$100,000,000,000''.
    (b) NCUA.--Section 203(d)(1) of the Federal Credit Union Act (12 
U.S.C. 1783(d)(1)) is amended by striking ``$100,000,000'' and 
inserting ``$6,000,000,000''.

SEC. 4. EXPANDING SYSTEMIC RISK SPECIAL ASSESSMENTS.

    Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12 
U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:
                         ``(ii) Repayment of loss.--
                                 ``(I) In general.--The Corporation 
                                shall recover the loss to the Deposit 
                                Insurance Fund arising from any action 
                                taken or assistance provided with 
                                respect to an insured depository 
                                institution under clause (i) from 1 or 
                                more special assessments on insured 
                                depository institutions, depository 
                                institution holding companies (with the 
                                concurrence of the Secretary of the 
                                Treasury with respect to holding 
                                companies), or both, as the Corporation 
                                determines to be appropriate.
                                 ``(II) Treatment of depository 
                                institution holding companies.--For 
                                purposes of this clause, sections 
                                7(c)(2) and 18(h) shall apply to 
                                depository institution holding 
                                companies as if they were insured 
                                depository institutions.
                                 ``(III) Regulations.--The Corporation 
                                shall prescribe such regulations as it 
                                deems necessary to implement this 
                                clause. In prescribing such 
                                regulations, defining terms, and 
                                setting the appropriate assessment rate 
                                or rates, the Corporation shall 
                                establish rates sufficient to cover the 
                                losses incurred as a result of the 
                                actions of the Corporation under clause 
                                (i) and shall consider: the types of 
                                entities that benefit from any action 
                                taken or assistance provided under this 
                                subparagraph; economic conditions, the 
                                effects on the industry, and such other 
                                factors as the Corporation deems 
                                appropriate and relevant to the action 
                                taken or the assistance provided. Any 
                                funds so collected that exceed actual 
                                losses shall be placed in the Deposit 
                                Insurance Fund.''.

SEC. 5. ESTABLISHMENT OF A NATIONAL CREDIT UNION SHARE INSURANCE FUND 
                    RESTORATION PLAN PERIOD.

    Section 202(c)(2) of the Federal Credit Union Act (12 U.S.C. 
1782(c)(2)) is amended by adding at the end the following new 
subparagraph:
                 ``(D) Fund restoration plans.--
                         ``(i) In general.--Whenever--
                                 ``(I) the Board projects that the 
                                equity ratio of the Fund will, within 6 
                                months of such determination, fall 
                                below the minimum amount specified in 
                                subparagraph (C) for the designated 
                                equity ratio; or
                                 ``(II) the equity ratio of the Fund 
                                actually falls below the minimum amount 
                                specified in subparagraph (C) for the 
                                equity ratio without any determination 
                                under sub-clause (I) having been made, 
                                the Board shall establish and implement 
                                a Share Insurance Fund restoration plan 
                                within 90 days that meets the 
                                requirements of clause (ii) and such 
                                other conditions as the Board 
                                determines to be appropriate.
                         ``(ii) Requirements of restoration plan.--A 
                        Share Insurance Fund restoration plan meets the 
                        requirements of this clause if the plan 
                        provides that the equity ratio of the Fund will 
                        meet or exceed the minimum amount specified in 
                        subparagraph (C) for the designated equity 
                        ratio before the end of the 5-year period 
                        beginning upon the implementation of the plan 
                        (or such longer period as the Board may 
                        determine to be necessary due to extraordinary 
                        circumstances).
                         ``(iii) Transparency.--Not more than 30 days 
                        after the Board establishes and implements a 
                        restoration plan under clause (i), the Board 
                        shall publish in the Federal Register a 
                        detailed analysis of the factors considered and 
                        the basis for the actions taken with regard to 
                        the plan.''.

                          Purpose and Summary

    H.R. 786, a bill to make permanent the temporary increase 
in deposit insurance coverage, is intended to improve liquidity 
at insured depository institutions and credit unions and to 
maintain a robust and flexible deposit insurance system.
    H.R. 786 would make permanent the temporary increase in 
deposit insurance coverage for both the Federal Deposit 
Insurance Corporation (FDIC) Deposit Insurance Fund and the 
National Credit Union Administration (NCUA) Share Insurance 
Fund to $250,000 (the temporary increase is currently scheduled 
to sunset on December 31, 2009); extend the time limit for an 
FDIC restoration plan to rebuild the reserve ratio of the 
Deposit Insurance Fund from 5 years to 8 years; increase the 
FDIC's borrowing authority from the Treasury Department from 
$30 billion to $100 billion and the Share Insurance Fund's 
borrowing authority from $100 million to $6 billion; clarify 
the FDIC's ability to charge systemic risk special assessments; 
and establish a five-year restoration plan period for the NCUA, 
which is currently required to restore the equity ratio of the 
Share Insurance Fund within one year.

                  Background and Need for Legislation

    In an effort to address what has been described as 
potentially the worst economic crisis since the Great 
Depression, Congress in October 2008 enacted the Emergency 
Economic Stabilization Act (EESA) (Public Law 110-343). While 
EESA focused mainly on providing the Secretary of Treasury with 
authority and facilities to restore liquidity and stability to 
the financial system of the United States, EESA also provided a 
temporary increase in the deposit insurance coverage for FDIC-
insured banks as well as credit unions from $100,000 to 
$250,000. Currently under EESA, this temporary increase would 
expire on December 31, 2009, and revert to $100,000. H.R. 786 
would, among other measures, make permanent this increase and 
maintain deposit insurance coverage at $250,000.
    Deposit insurance plays a crucial role in maintaining the 
stability of the financial system by ensuring the security of 
deposits, the critical source of funding available to financial 
institutions to fuel lending to consumers and businesses and 
generate economic activity and growth. Making permanent the 
temporary increase in deposit insurance coverage would offer 
reassurance to consumers that their deposits will remain safe 
and bolster consumer confidence in the financial system. It 
would also address a concern expressed by some consumers who 
have purchased long-term certificates of deposit based in part 
on the higher coverage that their deposits would no longer be 
insured once the temporary increase expires. Overall, consumers 
would be encouraged to keep their money in financial 
institutions, providing much needed liquidity to promote 
lending and unlock the credit markets.
    To backstop the deposit insurance system, existing laws 
provide the FDIC and the NCUA with borrowing authority from the 
Treasury Department. In its testimony at a February 3, 2009 
hearing before the Committee on Financial Services, the FDIC 
stated that assets in the banking system have tripled since 
1991 when the borrowing authority was last increased, and that 
it would be appropriate to make a proportional adjustment to 
the borrowing authority. The NCUA subsequently made a similar 
request that its borrowing authority, unchanged since 1971, be 
increased proportionate to asset size in the credit union 
system. H.R. 786 would increase the borrowing authority of the 
FDIC and the NCUA to further strengthen the deposit insurance 
guarantee and the public's confidence in it.
    In October 2008, the FDIC for the first time exercised its 
authority to take action in circumstances involving systemic 
risk to the banking industry and established the Temporary 
Liquidity Guarantee Program to, among other purposes, guarantee 
the debt of banks and their holding companies. The FDIC is 
authorized under existing law to recoup the costs incurred in 
its exercise of the systemic risk authority from banks, but not 
their holding companies. In its testimony at the February 3 
hearing, the FDIC recommended amending current law to allow 
recoupment from holding companies as well as banks since 
holding companies also have benefited from the FDIC's actions 
under the systemic risk authority. H.R. 786 would allow the 
FDIC to charge special assessments on banks and, with the 
concurrence of the Secretary of Treasury, their holding 
companies, to cover the costs of actions taken under the 
systemic risk authority.
    When the reserve ratio of the Deposit Insurance Fund falls 
below a specified minimum level, current law requires the FDIC 
to establish a restoration plan to meet or exceed the minimum 
ratio within five years. Because permanently increasing the 
level of deposit insurance coverage would have the effect of 
reducing the reserve ratio, the FDIC in its February 3 
testimony stated that it would be appropriate to extend the 
time period for restoring the Deposit Insurance Fund. H.R. 786 
accordingly would extend the FDIC's restoration plan period 
from the current five years to eight years. H.R. 786 also 
establishes a similar five-year restoration plan period for the 
NCUA, which is currently required to restore the equity ratio 
of the Share Insurance Fund within one year.

                                Hearings

    The Committee on Financial Services held a hearing on 
February 3, 2009, entitled ``Promoting Liquidity and Lending 
Through Deposit Insurance, Hope for Homeowners, and Other 
Enhancements.'' The following witnesses testified: Mr. John 
Bovenzi, Chief Operating Officer, Federal Deposit Insurance 
Corporation; Ms. Meg Burns, Director of the Office of Single 
Family Program Development, U.S. Department of Housing and 
Urban Development; Mr. Edward L. Yingling, President and Chief 
Executive Officer, American Bankers Association; Mr. R. Michael 
S. Menzies, Sr., President and Chief Executive Officer, Easton 
Bank and Trust Company, on behalf of The Independent Community 
Bankers of America; Mr. John Taylor, President and Chief 
Executive, National Community Reinvestment Coalition; Mr. John 
A. Courson, President and Chief Executive Officer, Mortgage 
Bankers Association; Mr. Mike Calhoun, President and Chief 
Operating Officer, Center for Responsible Lending; Mrs. Robin 
Staudt; and Mr. Edward R. Morrison, Professor of Law, Columbia 
Law School.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
February 4, 2009, and ordered H.R. 786, to make permanent the 
temporary increase in deposit insurance coverage, as amended, 
favorably reported to the House by a 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. A motion by Mr. Frank to 
report the bill, as amended, to the House with a favorable 
recommendation was agreed to by a voice vote.
    During the consideration of the bill, the following 
amendments were considered:
    An amendment Mr. Kanjorski, No. 1, establishing a Share 
Insurance Fund restoration period, was agreed to by a voice 
vote.
    An amendment by Mr. Gutierrez, No. 2, increasing NCUA 
borrowing authority, was agreed to by a voice vote.
    An amendment by Mr. Frank, No. 3, striking additional FDIC 
borrowing authority, 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 a hearing 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:
    H.R. 786, a bill to make permanent the temporary increase 
in deposit insurance coverage, is intended to improve liquidity 
at insured depository institutions and credit unions and to 
maintain a robust and flexible deposit insurance system.

   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 of 1974.

                        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:

                                                 February 23, 2009.
Hon. Barney Frank,
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. 786, a bill to 
make permanent the temporary increase in deposit insurance 
coverage, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 786--A bill to make permanent the temporary increase in deposit 
        insurance coverage, and for other purposes

    Summary: H.R. 786 would permanently increase the amount of 
deposits insured by the Federal Deposit Insurance Corporation 
(FDIC) and National Credit Union Administration (NCUA) from 
$100,000 to $250,000 and modify other terms of both deposit 
insurance programs. It would allow those agencies to replenish 
the insurance funds over a longer period of time and increase 
the amounts each agency can borrow from the Department of the 
Treasury.
    The legislation's affect on direct spending and revenues 
over the 2009-2013 and 2009-2018 periods are relevant for 
enforcing pay-as-you-go rules under the current budget 
resolution. CBO estimates that enacting this legislation would 
increase deficits by $14.0 billion over the five-year period 
from 2009 through 2013, but would reduce deficits by $14.3 
billion over the 2009-2018 period. (In total, CBO estimates 
that the legislation would reduce deficits by $14.9 billion 
through 2019.) Implementing H.R. 786 would not affect revenues 
or spending subject to appropriation.
    H.R. 786 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 786 contains private-sector mandates, as defined in 
UMRA, on depository institutions and certain bank holding 
companies. The bill would impose a mandate by requiring certain 
depository institutions to pay higher insurance premiums as a 
result of the permanent increase in deposit insurance coverage. 
In addition, the bill would authorize the FDIC to make 
assessments on holding companies for depository institutions 
when necessary to replenish the insurance fund. CBO expects 
that the direct cost of the mandates would well exceed the 
annual threshold established in UMRA for private-sector 
mandates ($139 million in 2009, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
impact of enacting H.R. 786 is shown in the following table. 
The budgetary effects of this legislation fall within budget 
function 370 (commerce and housing credit).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          By fiscal year, in billions of dollars--
                                   ---------------------------------------------------------------------------------------------------------------------
                                     2009    2010     2011     2012     2013     2014     2015     2016     2017    2018    2019    2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority........      0      0        0        0        0        0        0        0        0        0       0          0          0
Estimated Outlays.................      0      2.3      5.2      4.5      2.0     -6.4     -9.0     -6.8     -6.1      *      -0.6        7.6      -14.9 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: *=between -$50 million and zero.

    Basis of Estimate: H.R. 786 would increase the amount of 
federal deposit insurance coverage and make other changes to 
the FDIC's and NCUA's programs. Assuming enactment by the end 
of fiscal year 2009, CBO estimates that enacting this bill 
would increase direct spending by $7.6 billion over the 2009-
2014 period but reduce net direct spending by $14.9 billion 
over the 2009-2019 period. Specifically, the bill would:
           Permanently increase the amount of deposits 
        insured by the FDIC and NCUA from $100,000 to $250,000 
        (the Emergency Economic Stabilization Act of 2008 
        raised the limit to $250,000 through December 31, 
        2009);
           Adjust the limit on insured deposits for 
        inflation beginning in 2015 instead of 2010;
           Allow both agencies to replenish the 
        insurance funds over longer periods of time, extending 
        the restoration period for the FDIC's Deposit Insurance 
        Fund (DIF) from five years to eight years and for 
        NCUA's Share Insurance Fund (SIF) from one year to five 
        years;
           Modify how the FDIC recovers costs resulting 
        from actions taken to reduce systemic risks; and
           Increase the amounts the agencies can borrow 
        from the Treasury, raising the FDIC's limit from $30 
        billion to $100 billion and the NCUA's limit from $100 
        million to $6 billion.
    Raising the limit on insured deposits would increase the 
FDIC's and NCUA's liabilities for failed institutions, but the 
cost of any additional losses would be offset over time by 
higher insurance premiums. In addition, depository institutions 
would pay higher premiums to cover the newly insured deposits. 
CBO expects that this change, coupled with provisions giving 
the agencies more time to restore depleted fund balances, would 
increase their net outlays over the 2009-2013 period because of 
higher losses and lower collections but would significantly 
reduce outlays by the end of the 2009-2019 period because of 
the additional premiums paid to offset losses and to cover new 
deposits.
    CBO estimates that raising the coverage limit would 
increase outlays for failed institutions by an estimated $5.7 
billion over the next five years, and extending the recovery 
period for the DIF and SIF would lower net premiums by about 
$1.9 billion. Those costs would be offset in subsequent years, 
however, assuming the agencies would charge premiums sufficient 
to restore the DIF and the SIF to the levels currently 
specified in agency regulations (1.25 percent and 1.2 percent, 
respectively) within the respective restoration periods 
specified in the bill. Based on information from the FDIC and 
NCUA, CBO estimates that raising deposit insurance coverage 
from $100,000 to $250,000 would increase insured deposits by 15 
percent and 10 percent, respectively. Applying those increases 
to CBO's January baseline projections for deposit growth, we 
estimate that enacting this legislation would increase deposits 
insured by the FDIC by about $1.1 trillion by 2019 and by the 
NCUA by almost $100 billion. Thus, CBO estimates that enacting 
this bill would reduce net outlays by about $14.9 billion over 
the 2009-2019 period.
    Finally, increasing the agencies' borrowing limits should 
result no net cost to the government over time but could affect 
their annual cash flows. For example, raising the borrowing 
limit could increase the likelihood of agency actions aimed at 
easing the financial pressures facing insured institutions, 
such as maintaining the balances in the DIF and SIF at the 
lower end of the allowable ranges or providing different forms 
of systemic assistance to financial institutions. The net 
budgetary impact of increasing borrowing limits over the next 
10 years would largely depend on whether the FDIC and NCUA 
would recoup any borrowing-related expenses by 2019. Assuming 
the agencies restore the insurance funds to the levels 
designated in their current regulations by 2019, CBO estimates 
that providing the additional borrowing authority would have no 
significant net effect on direct spending in 2009 or in 
aggregate over the next 10 years.
    Estimated impact on state, local, and tribal governments: 
H.R. 786 contains no intergovernmental mandates as defined in 
UMRA and would not affect the budgets of state, local, or 
tribal governments.
    Estimated impact on the private sector: H.R. 786 contains 
private-sector mandates, as defined in UMRA, on depository 
institutions and certain bank holding companies. By making 
permanent the increase in deposit insurance coverage, the bill 
would cause depository institutions to pay higher premiums. 
Most depository institutions (commercial banks, savings 
associations, and most credit unions) are required by law to 
have federal deposit insurance. CBO, therefore, considers 
changes in the federal deposit insurance system that increase 
requirements imposed on those institutions to be private-sector 
mandates. In addition, the bill would expand the requirement 
for depository institutions to pay special assessments to 
include bank holding companies.
    The cost of the mandates would be the net increase in 
premiums. CBO estimates that the net increase in premiums for 
depository institutions would amount to more than $6 billion in 
2014 and thus would well exceed the annual threshold 
established in UMRA for private-sector mandates ($139 million 
in 2009, adjusted annually for inflation).
    Previous CBO estimate: On January 13, 2009, CBO transmitted 
a cost estimate for H.R. 384, the TARP Reform and 
Accountability Act, as introduced on January 9, 2009, which 
included provisions similar to those in H.R. 786. Differences 
between this estimate and the estimate for title VII of H.R. 
384 reflect changes in the financial condition of the NCUA's 
Share Insurance Fund since January and the effect of provisions 
in H.R. 786 extending the time period for restoring the NCUA's 
fund to statutorily designated levels.
    Estimate prepared by: Federal Costs: Kathleen Gramp; Impact 
on State, Local, and Tribal Governments: Elizabeth Cove 
Delisle; Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget 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.

                         Earmark Identification

    H.R. 786 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Permanent increase in deposit insurance

    This section increases the deposit insurance limit from 
$100,000 to $250,000 for both the Deposit Insurance Fund of the 
FDIC and the Share Insurance Fund of the NCUA, provides for 
inflation adjustment starting in 2015, and adds a rule of 
construction clarifying the authority to set assessments.

Section 2. Extension of restoration period

    This section extends the time limit for an FDIC restoration 
plan to rebuild the reserve ratio of the Deposit Insurance Fund 
from 5 years to 8 years.

Section 3. FDIC and NCUA borrowing authority

    This section increases the FDIC's borrowing authority from 
the Treasury Department from $30 billion to $100 billion and 
the Share Insurance Fund's borrowing authority from the 
Treasury Department from $100 million to $6 billion.

Section 4. Expanding systemic risk special assessments

    This section allows the FDIC to charge systemic risk 
special assessments by rulemaking, on both insured depository 
institutions and depository institution holding companies. For 
holding company assessments, the concurrence of the Secretary 
of the Treasury would be required.

Section 5. Establishment of a national credit union share insurance 
        fund restoration plan period

    This section requires the NCUA to establish a restoration 
plan to rebuild the Share Insurance Fund within 5 years (or 
longer as the NCUA may determine to be necessary due to 
extraordinary circumstances) if the equity ratio falls below 
certain minimum amount, and to publish a detailed analysis of 
the factors considered and the basis for the actions taken with 
regard to the restoration plan.

         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 (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

FEDERAL DEPOSIT INSURANCE ACT

           *       *       *       *       *       *       *


  Sec. 7. (a) * * *
  (b) Assessments.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Designated reserve ratio.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) DIF restoration plans.--
                          (i) * * *
                          (ii) Requirements of restoration 
                        plan.--A Deposit Insurance Fund 
                        restoration plan meets the requirements 
                        of this clause if the plan provides 
                        that the reserve ratio of the Fund will 
                        meet or exceed the minimum amount 
                        specified in subparagraph (B)(ii) for 
                        the designated reserve ratio before the 
                        end of the [5-year period] 8-year 
                        period beginning upon the 
                        implementation of the plan (or such 
                        longer period as the Corporation may 
                        determine to be necessary due to 
                        extraordinary circumstances).

           *       *       *       *       *       *       *

  Sec. 11. (a) Deposit Insurance.--
          (1) Insured amounts payable.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) Standard maximum deposit insurance amount 
                defined.--For purposes of this Act, the term 
                ``standard maximum deposit insurance amount'' 
                means [$100,000] $250,000, adjusted as provided 
                under subparagraph (F) after March 31, 2010.
                  (F) Inflation adjustment.--
                          (i) In general.--By April 1 of [2010] 
                        2015, and the 1st day of each 
                        subsequent 5-year period, the Board of 
                        Directors and the National Credit Union 
                        Administration Board shall jointly 
                        consider the factors set forth under 
                        clause (v), and, upon determining that 
                        an inflation adjustment is appropriate, 
                        shall jointly prescribe the amount by 
                        which the standard maximum deposit 
                        insurance amount and the standard 
                        maximum share insurance amount (as 
                        defined in section 207(k) of the 
                        Federal Credit Union Act) applicable to 
                        any depositor at an insured depository 
                        institution shall be increased by 
                        calculating the product of--
                                  (I) [$100,000] $250,000; and
                                  (II) the ratio of the 
                                published annual value of the 
                                Personal Consumption 
                                Expenditures Chain-Type Price 
                                Index (or any successor index 
                                thereto), published by the 
                                Department of Commerce, for the 
                                calendar year preceding the 
                                year in which the adjustment is 
                                calculated under this clause, 
                                to the published annual value 
                                of such index for [the calendar 
                                year preceding the date this 
                                subparagraph takes effect under 
                                the Federal Deposit Insurance 
                                Reform Act of 2005] calendar 
                                year 2008.

           *       *       *       *       *       *       *

          (3) Certain retirement accounts.--
                  (A) In general.--Notwithstanding any 
                limitation in this Act relating to the amount 
                of deposit insurance available for the account 
                of any 1 depositor, deposits in an insured 
                depository institution made in connection 
                with--
                          (i)  * * *

           *       *       *       *       *       *       *

                shall be aggregated and insured in an amount 
                not to exceed $250,000 (which amount shall be 
                subject to inflation adjustments as provided in 
                paragraph (1)(F)[, except that $250,000 shall 
                be substituted for $100,000 wherever such term 
                appears in such paragraph]) per participant per 
                insured depository institution.

           *       *       *       *       *       *       *

  Sec. 13. (a) * * *

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

          (4) Least-cost resolution required.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) Systemic risk.--
                          (i) * * *
                          [(ii) Repayment of loss.--The 
                        Corporation shall recover the loss to 
                        the Deposit Insurance Fund arising from 
                        any action taken or assistance provided 
                        with respect to an insured depository 
                        institution under clause (i) 
                        expeditiously from 1 or more emergency 
                        special assessments on insured 
                        depository institutions equal to the 
                        product of--
                                  [(I) an assessment rate 
                                established by the Corporation; 
                                and
                                  [(II) the amount of each 
                                insured depository 
                                institution's average total 
                                assets during the assessment 
                                period, minus the sum of the 
                                amount of the institution's 
                                average total tangible equity 
                                and the amount of the 
                                institution's average total 
                                subordinated debt.]
          (ii) Repayment of loss.--
                  (I) In general.--The Corporation shall 
                recover the loss to the Deposit Insurance Fund 
                arising from any action taken or assistance 
                provided with respect to an insured depository 
                institution under clause (i) from 1 or more 
                special assessments on insured depository 
                institutions, depository institution holding 
                companies (with the concurrence of the 
                Secretary of the Treasury with respect to 
                holding companies), or both, as the Corporation 
                determines to be appropriate.
                  (II) Treatment of depository institution 
                holding companies.--For purposes of this 
                clause, sections 7(c)(2) and 18(h) shall apply 
                to depository institution holding companies as 
                if they were insured depository institutions.
                  (III) Regulations.--The Corporation shall 
                prescribe such regulations as it deems 
                necessary to implement this clause. In 
                prescribing such regulations, defining terms, 
                and setting the appropriate assessment rate or 
                rates, the Corporation shall establish rates 
                sufficient to cover the losses incurred as a 
                result of the actions of the Corporation under 
                clause (i) and shall consider: the types of 
                entities that benefit from any action taken or 
                assistance provided under this subparagraph; 
                economic conditions, the effects on the 
                industry, and such other factors as the 
                Corporation deems appropriate and relevant to 
                the action taken or the assistance provided. 
                Any funds so collected that exceed actual 
                losses shall be placed in the Deposit Insurance 
                Fund.

           *       *       *       *       *       *       *


SEC. 14. BORROWING AUTHORITY.

  (a) Borrowing From Treasury.--The Corporation is authorized 
to borrow from the Treasury, and the Secretary of the Treasury 
is authorized and directed to loan to the Corporation on such 
terms as may be fixed by the Corporation and the Secretary, 
such funds as in the judgment of the Board of Directors of the 
Corporation are from time to time required for insurance 
purposes, not exceeding in the aggregate [$30,000,000,000] 
$100,000,000,000 outstanding at any one time, subject to the 
approval of the Secretary of the Treasury: Provided, That the 
rate of interest to be charged in connection with any loan made 
pursuant to this subsection shall not be less than an amount 
determined by the Secretary of the Treasury, taking into 
consideration current market yields on outstanding marketable 
obligations of the United States of comparable maturities. For 
such purpose the Secretary of the Treasury is authorized to use 
as a public-debt transaction the proceeds of the sale of any 
securities hereafter issued under the Second Liberty Bond Act, 
as amended, and the purposes for which securities may be issued 
under the Second Liberty Bond Act, as amended, are extended to 
include such loans. Any such loan shall be used by the 
Corporation solely in carrying out its functions with respect 
to such insurance. All loans and repayments under this 
subsection shall be treated as public-debt transactions of the 
United States. The Corporation may employ any funds obtained 
under this section for purposes of the Deposit Insurance Fund 
and the borrowing shall become a liability of the Deposit 
Insurance Fund to the extent funds are employed therefor. There 
are hereby appropriated to the Secretary, for fiscal year 1989 
and each fiscal year thereafter, such sums as may be necessary 
to carry out this subsection.

           *       *       *       *       *       *       *

                              ----------                              


FEDERAL CREDIT UNION ACT

           *       *       *       *       *       *       *


TITLE II--SHARE INSURANCE

           *       *       *       *       *       *       *


   REPORTS OF CONDITION; CERTIFIED STATEMENTS; PREMIUMS FOR INSURANCE

  Sec. 202. (a) * * *

           *       *       *       *       *       *       *

  (c)(1) * * *
          (2) Insurance premium charges.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) Fund restoration plans.--
                          (i) In general.--Whenever--
                                  (I) the Board projects that 
                                the equity ratio of the Fund 
                                will, within 6 months of such 
                                determination, fall below the 
                                minimum amount specified in 
                                subparagraph (C) for the 
                                designated equity ratio; or
                                  (II) the equity ratio of the 
                                Fund actually falls below the 
                                minimum amount specified in 
                                subparagraph (C) for the equity 
                                ratio without any determination 
                                under sub-clause (I) having 
                                been made,
                        the Board shall establish and implement 
                        a Share Insurance Fund restoration plan 
                        within 90 days that meets the 
                        requirements of clause (ii) and such 
                        other conditions as the Board 
                        determines to be appropriate.
                          (ii) Requirements of restoration 
                        plan.--A Share Insurance Fund 
                        restoration plan meets the requirements 
                        of this clause if the plan provides 
                        that the equity ratio of the Fund will 
                        meet or exceed the minimum amount 
                        specified in subparagraph (C) for the 
                        designated equity ratio before the end 
                        of the 5-year period beginning upon the 
                        implementation of the plan (or such 
                        longer period as the Board may 
                        determine to be necessary due to 
                        extraordinary circumstances).
                  (iii) Transparency.--Not more than 30 days 
                after the Board establishes and implements a 
                restoration plan under clause (i), the Board 
                shall publish in the Federal Register a 
                detailed analysis of the factors considered and 
                the basis for the actions taken with regard to 
                the plan.

           *       *       *       *       *       *       *


               NATIONAL CREDIT UNION SHARE INSURANCE FUND

  Sec. 203. (a) * * *

           *       *       *       *       *       *       *

  (d)(1) If, in the judgment of the Board, a loan to the fund 
is required at any time for carrying out the purposes of this 
title, the Secretary of the Treasury shall make the loan, but 
loans under this paragraph shall not exceed in the aggregate 
[$100,000,000] $6,000,000,000 outstanding at any one time. 
Except as otherwise provided in this subsection and in 
subsection (e) of this section, each loan under this paragraph 
shall be made on such terms as may be fixed by agreement 
between the Board and the Secretary of the Treasury.

           *       *       *       *       *       *       *


                          PAYMENT OF INSURANCE

  Sec. 207. (a) * * *

           *       *       *       *       *       *       *

  (k) Insured Amounts Payable.--
          (1) * * *

           *       *       *       *       *       *       *

  (3) Notwithstanding any limitation in this title or in any 
other provision of law relating to the amount of insurance 
available for the account of any one depositor or member, funds 
invested in a credit union insured in accordance with this 
title pursuant to a pension or profit-sharing plan described in 
section 401(d) of the Internal Revenue Code of 1954, as 
amended, and funds invested in such an insured credit union in 
the form of individual retirement accounts as described in 
section 408(a) of the Internal Revenue Code of 1954, as 
amended, shall be insured in the amount of [``]$250,000 (which 
amount shall be subject to inflation adjustments as provided 
under section 11(a)(1)(F) of the Federal Deposit Insurance 
Act[, except that $250,000 shall be substituted for $100,000 
wherever such term appears in such section])[''] per account. 
As to any plan qualifying under section 401(d) or section 
408(a) of the Internal Revenue Code of 1954, the term ``per 
account'' means the present vested and ascertainable interest 
of each beneficiary under the plan, excluding any remainder 
interest created by, or as a result of, the plan.

           *       *       *       *       *       *       *

          (5) Standard maximum share insurance amount 
        defined.--For purposes of this Act, the term ``standard 
        maximum share insurance amount'' means [$100,000] 
        $250,000, adjusted as provided under section 
        11(a)(1)(F) of the Federal Deposit Insurance Act.

           *       *       *       *       *       *       *


                                  
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