[House Report 119-474]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
2nd Session } { 119-474
======================================================================
LEAST COST EXCEPTION ACT
_______
February 2, 2026.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 6547]
The Committee on Financial Services, to whom was referred
the bill (H.R. 6547) to amend the Federal Deposit Insurance Act
to provide an exception to the least-cost resolution
requirement, and for other purposes, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Committee Consideration.......................................... 4
Related Hearings................................................. 4
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 7
Performance Goals and Objectives................................. 7
Committee Cost Estimate.......................................... 7
New Budget Authority and CBO Cost Estimate....................... 7
Unfunded Mandates Statement...................................... 7
Earmark Statement................................................ 7
Federal Advisory Committee Act Statement......................... 8
Applicability to the Legislative Branch.......................... 8
Duplication of Federal Programs.................................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Least Cost Exception Act''.
SEC. 2. LEAST COST RESOLUTION EXCEPTION TO AVOID FURTHER CONCENTRATION
AMONG GLOBAL SYSTEMICALLY IMPORTANT BANKING
ORGANIZATIONS.
(a) In General.--Section 13(c)(4) of the Federal Deposit Insurance
Act (12 U.S.C. 1823(c)(4)) is amended--
(1) in subparagraph (A)(ii), by inserting ``except as
provided in subparagraph (I),'' before ``the total amount'';
(2) in subparagraph (E)(i), by inserting ``and except as
provided in subparagraph (I),'' after ``appropriate,''; and
(3) by adding at the end the following:
``(I) Least cost resolution exception.--
``(i) In general.--With respect to an
exercise of authority by the Corporation
described in subparagraph (A), the Corporation
may, at the discretion of the Corporation,
select an alternative method of exercising such
authority that is not the least costly to the
Deposit Insurance Fund, if--
``(I) the Corporation determines that
the selected alternative complies with
the requirements of clause (iii); and
``(II) the Corporation and the Board
of Governors of the Federal Reserve
System, after consultation with the
Secretary of the Treasury, determine
that the potential additional risks to
the Deposit Insurance Fund of the
selected alternative are outweighed by
the reasonably expected benefits of
limiting further concentration of the
United States banking system in global
systemically important banking
organizations.
``(ii) Maximum cost to the deposit insurance
fund.--Not later than 1 year after the date of
enactment of this subparagraph, the
Corporation, by rule, shall establish criteria
for determining on a case-by-case basis the
maximum allowable cost against the net worth of
the Deposit Insurance Fund that may be utilized
to account for any determination under clause
(i).
``(iii) Requirements described.--The
requirements for the selected alternative
described in clause (i) are as follows:
``(I) The selected alternative is
least costly to the Deposit Insurance
Fund of all alternatives that do not
involve a transaction with a global
systemically important banking
organization and that do not exceed the
cost of liquidating the insured
depository institution.
``(II) The difference between the
cost of the selected alternative and
the cost of a covered alternative is
less than the maximum cost to the
Deposit Insurance Fund specified
pursuant to the rule adopted under
clause (ii).
``(III) In the case of a selected
alternative that involves another
person purchasing assets of the insured
depository institution or assuming
deposit liabilities of the insured
depository institution, such person
agrees to pay an assessment to the
Corporation comprised of payments--
``(aa) made over a period to
be determined by the
Corporation, but which may not
be less than 5 years; and
``(bb) in an amount that
takes into account, on a case-
by-case basis, criteria the
Corporation, by rule, shall
establish, including a
realistic discount rate, the
aggregate amount equal to the
difference calculated in
subclause (II), and any bid
inconsistent with the purposes
of this Act, with such rule to
be established by the
Corporation not later than 1
year after the date of
enactment of this subparagraph.
``(iv) Report to congress.--Not later than 30
days after selecting an alternative described
in clause (i), the Corporation shall issue a
report to the Committee on Financial Services
of the House of Representatives and the
Committee on Banking, Housing, and Urban
Affairs of the Senate containing an analysis of
the economic difference between the cost to the
Deposit Insurance Fund of the selected
alternative and the cost to the Deposit
Insurance Fund of the least costly alternative
that would have been selected absent the
application of this subparagraph.
``(v) Cost determinations.--All cost
determinations required under this subparagraph
shall be made in accordance with subparagraphs
(B) and (C).
``(vi) Definitions.--In this subparagraph:
``(I) Covered alternative.--The term
`covered alternative' means a method of
exercising authority described in
subparagraph (A) that is the least
costly to the Deposit Insurance Fund of
all such methods that involve a sale of
all or substantially all assets of the
insured depository institution to, and
assumption of all or substantially all
deposit liabilities of the insured
depository institution by, a global
systemically important banking
organization.
``(II) Global systemically important
banking organization.--The term `global
systemically important banking
organization' means a global
systemically important BHC (as such
term is defined in section 217.402 of
title 12, Code of Federal Regulations,
or any successor thereto) and any
affiliate thereof.''.
(b) Rule of Construction.--Section 13(c)(4)(H) of the Federal Deposit
Insurance Act (12 U.S.C. 1823(c)(4)(H)) does not apply to the
amendments made by subsection (a).
Purpose and Summary
H.R. 6547, the Least Cost Exception Act, was introduced on
December 10, 2025, by Republican Representative Mike Flood (NE-
01). H.R. 6547 amends the Federal Deposit Insurance Act to
allow the Federal Deposit Insurance Corporation (FDIC) to waive
the least cost resolution if the FDIC determines certain
conditions are met.
Background and Need for Legislation
The FDIC's least cost resolution (LCR) mandate was
established by the Federal Deposit Insurance Corporation
Improvement Act of 1991, which requires the FDIC to resolve
failing banks by choosing the method that costs the Deposit
Insurance Fund (DIF) the least.\1\ This replaced the prior,
more flexible approach where the FDIC could protect uninsured
depositors if it was less costly than a full payout and
liquidation. Under the law, the FDIC must compare the costs of
different resolution methods, such as purchase and assumption
transactions with an acquirer or deposit payoffs, to determine
the least costly option. Prior to the 1991 law, the FDIC had a
policy to protect all depositors, even uninsured ones, by
finding an acquiring institution to assume all deposits when
feasible. The primary goal was to avoid bank runs, but this
meant the FDIC might not always choose the absolute least
costly option to the DIF.\2\
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\1\12 CFR Sec. 360.1.
\2\Fed. Deposit Ins. Corp., A Brief History of Deposit Insurance in
the United States 55 (1998), https://www.fdic.gov/resources/
publications/brief-history-of-deposit-insurance/book/brief-history-
deposit-insurance-7.pdf.
---------------------------------------------------------------------------
The FDIC's mandated adherence to the LCR can be problematic
because it often has led to increased instability and
concentration in the U.S. banking sector. Specifically, the LCR
mandate overemphasizes losses to the DIF, which is not
taxpayer-funded. Rather, FDIC-insured banks pay insurance
premiums determined by the risk the institution poses to the
fund. The FDIC, in turn, invests money in the DIF into U.S.
government securities, and the interest earned from these
investments is added to the DIF.\3\
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\3\Fed. Deposit Ins. Corp, Understanding Deposit Insurance (Apr. 1,
2024), https://www.fdic.gov/resources/deposit-insurance/understanding-
deposit-insurance.
---------------------------------------------------------------------------
When the FDIC has an overly rigid mandate to resolve failed
banks under the LCR, it risks reinforcing the trend toward
greater market concentration and missing valuable opportunities
to approve transactions that could strengthen competition and
stimulate economic activity in the U.S. Allowing the FDIC
greater flexibility to consider a broader set of costs would
better align its bid evaluations with the full economic impact
of these transactions, rather than limiting the analysis to a
narrow focus on costs to the DIF alone.
Committee Consideration
119TH CONGRESS
On December 10, 2025, Representative Flood introduced H.R.
6547, the Least Cost Exception Act. Representatives Bill Foster
(D-IL), John Rose (R-TN), Jared Moskowitz (D-FL), and Mike
Lawler (R-NY) were added subsequently as cosponsors.
The bill was referred solely to the Committee on Financial
Services. Discussion draft versions of H.R. 6547 were attached
to the September 9, 2025, hearing titled ``Promoting the Health
of the Banking Sector: Reforming Resolution and Broadening
Funding Access for Long-Term Resilience'' and the November 18,
2025, hearing titled, ``The Future of Deposit Insurance:
Exploring the Coverage, Costs, and Depositor Confidence.''
On December 16, 2025, the Committee on Financial Services
met in open session to consider, among others, H.R. 6547. The
Committee ordered H.R. 6547, as amended, to be favorably
reported to the House of Representatives.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearings were used to
develop H.R. 6547:
On September 9, 2025, the Subcommittee on Financial
Institutions held a hearing titled, ``Promoting the Health of
the Banking Sector: Reforming Resolution and Broadening Funding
Access for Long-Term Resilience.'' The Subcommittee heard
testimony from: Mr. Dory Wiley, President and CEO, Commerce
Street Holdings; Mr. James B. Barresi, Partner, Squire Patton
Boggs; Mr. Hugh Carney, Executive Vice President of Financial
Institution Policy and Regulatory Affairs, American Bankers
Association; Dr. Norbert Michel, Vice President and Director,
Cato Institute Center for Monetary and Financial Alternatives;
Mr. Robert James, President and CEO, Carver Financial
Corporation, on behalf of National Bankers Association.
On November 18, 2025, the Committee on Financial Services
held a hearing titled, ``The Future of Deposit Insurance:
Exploring the Coverage, Costs, and Depositor Confidence.'' The
Committee heard testimony from: Mr. James ``Jim'' Ryan,
Chairman and CEO, Old National Bancorp; Mrs. Jill Castilla,
President and CEO, Citizens Bank of Edmond; Mr. Chris Furlow,
President and CEO, Texas Bankers Association; Mr. Grover
Norquist, Founder and President, Americans for Tax Reform; and
Mr. Jarryd E. Anderson, Partner and Co-Chair, Financial
Services Group, Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On December 16, 2025, the Committee ordered H.R. 6547, as
amended, to be reported favorably to the House by a recorded
vote of 50 yeas and 0 nays, a quorum being present. (Record
Vote No. FC-208).
Before the question to report was called, the Committee
adopted an amendment in the nature of a substitute offered by
Representative Flood, designated FLOOD_028, which made minor
edits and technical changes. The amendment was adopted by voice
vote.
Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 6547 is to limit
further concentration of the U.S. banking system by allowing
the FDIC to waive the least cost resolution mandate if it
determines certain conditions are met.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 6547. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the 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.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Least Cost
Exception Act.''
Section 2. Least cost resolution exception to avoid further
concentration among global systemically important banking
organizations
Section 2 provides the FDIC with the authority, at their
discretion, to exercise an alternative method of the agency's
least cost resolution authority if: (1) the alternative is the
least costly to the DIF of all alternatives that do not involve
a transaction with a global systemically important banking
organization and do not exceed the cost of liquidating the
institution; (2) the difference between the cost of the
selected alternative and a ``covered alternative'' (a sale to a
G-SIB) is less than a ``maximum allowable cost'' limit
established by the FDIC via rule within one year of enactment;
and (3) in the case of a selected alternative, the person
purchasing assets or assuming liabilities agrees to pay an
assessment to the Corporation comprised of payments over time
determined by the FDIC, but which may not be less than five
years, and an amount that takes into account, on a case-by-case
basis, criteria the Corporation establishes by rule within one
year of enactment, including a realistic discount rate, the
aggregate amount equal to the difference between the cost of
the selected alternative and the cost of the covered
alternative, and any bid inconsistent with the purposes of this
Act.
The FDIC and the Board of Governors of the Federal Reserve
System, in consultation with the Secretary of the Treasury,
must determine that the potential additional risks to the DIF
of the selected alternative are outweighed by the reasonably
expected benefits of limiting further concentration of the U.S.
banking system in global systemically important banking
organizations.
The FDIC must submit a report to Congress within 30 days of
selecting an alternative bid containing an analysis of the
economic difference between the cost to the DIF of the selected
alternative and the cost to the DIF of the least costly
alternative that would have been selected absent the
application of this Act.
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 italics and existing law in which no change is
proposed is shown in roman):
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 13. (a) Investment of Corporation's Funds.--
(1) Authority.--Funds held in the Deposit Insurance
Fund or the FSLIC Resolution Fund, that are not
otherwise employed shall be invested in obligations of
the United States or in obligations guaranteed as to
principal and interest by the United States.
(2) Limitation.--The Corporation shall not sell or
purchase any obligations described in paragraph (1) for
its own account, at any one time aggregating in excess
of $100,000, without the approval of the Secretary of
the Treasury. The Secretary may approve a transaction
or class of transactions subject to the provisions of
this paragraph under such conditions as the Secretary
may determine.
(b) The depository accounts of the Corporation shall be kept
with the Treasurer of the United States, or, with the approval
of the Secretary of the Treasury, with a Federal Reserve bank,
or with a depository institution designated as a depositary or
fiscal agent of the United States: Provided, That the Secretary
of the Treasury may waive the requirements of this subsection
under such conditions as he may determine: And provided
further, That this subsection shall not apply to the
establishment and maintenance in any depository institution for
temporary purposes of depository accounts not in excess of
$50,000 in any one depository institution, or to the
establishment and maintenance in any depository institution of
any depository accounts to facilitate the payment of insured
desposits, or the making of loans to, or the purchase of assets
of, insured depository institutions. When designated for that
purpose by the Secretary of the Treasury, the Corporation shall
be a depositary of public moneys, except receipts from customs,
under such regulations as may be prescribed by the said
Secretary, and may also be employed as a financial agent of the
Government. It shall perform all such reasonable duties as
depositary of public moneys and financial agent of the
Government as may be required of it.
(c)(1) The Corporation is authorized, in its sole discretion
and upon such terms and conditions as the Board of Directors
may prescribe, to make loans to, to make deposits in, to
purchase the assets or securities of, to assume the liabilities
of, or to make contributions to, any insured depository
institution--
(A) if such action is taken to prevent the default of
such insured depository institution;
(B) if, with respect to an insured bank in default,
such action is taken to restore such insured bank to
normal operation; or
(C) if, when severe financial conditions exist which
threaten the stability of a significant number of
insured depository institutions or of insured
depository institutions possessing significant
financial resources, such action is taken in order to
lessen the risk to the Corporation posed by such
insured depository institution under such threat of
instability.
(2)(A) In order to facilitate a merger or consolidation of
another insured depository institution described in
subparagraph (B) with another insured depository institution or
the sale of any or all of the assets of such insured depository
institution or the assumption of any or all of such insured
depository institution's liabilities by another insured
depository institution, or the acquisition of the stock of such
insured depository institution, the Corporation is authorized,
in its sole discretion and upon such terms and conditions as
the Board of Directors may prescribe--
(i) to purchase any such assets or assume any such
liabilities;
(ii) to make loans or contributions to, or deposits
in, or purchase the securities of, such insured
institution or the company which controls or will
acquire control of such insured institution;
(iii) to guarantee such insured institution or the
company which controls or will acquire control of such
insured institution against loss by reason of such
insured institution's merging or consolidating with or
assuming the liabilities and purchasing the assets of
such insured depository institution or by reason of
such company acquiring control of such insured
depository institution; or
(iv) to take any combination of the actions referred
to in subparagraphs (i) through (iii).
(B) For the purpose of subparagraph (A), the insured
depository institution must be an insured depository
institution--
(i) which is in default;
(ii) which, in the judgment of the Board of
Directors, is in danger of default; or
(iii) which, when severe financial conditions exist
which threaten the stability of a significant number of
insured depository institutions or of insured
depository institutions possessing significant
financial resources, is determined by the Corporation,
in its sole discretion, to require assistance under
subparagraph (A) in order to lessen the risk to the
Corporation posed by such insured depository
institution under such threat of instability.
(C) Any action to which the Corporation is or becomes
a party by acquiring any asset or exercising any other
authority set forth in this section shall be stayed for
a period of 60 days at the request of the Corporation.
(3) The Corporation may provide any person acquiring control
of, merging with, consolidating with or acquiring the assets of
an insured depository institution under subsection (f) or (k)
of this section with such financial assistance as it could
provide an insured institution under this subsection.
(4) Least-cost resolution required.--
(A) In general.--Notwithstanding any other
provision of this Act, the Corporation may not
exercise any authority under this subsection or
subsection (d), (f), (h), (i), or (k) with
respect to any insured depository institution
unless--
(i) the Corporation determines that
the exercise of such authority is
necessary to meet the obligation of the
Corporation to provide insurance
coverage for the insured deposits in
such institution; and
(ii) except as provided in
subparagraph (I), the total amount of
the expenditures by the Corporation and
obligations incurred by the Corporation
(including any immediate and long-term
obligation of the Corporation and any
direct or contingent liability for
future payment by the Corporation) in
connection with the exercise of any
such authority with respect to such
institution is the least costly to the
Deposit Insurance Fund of all possible
methods for meeting the Corporation's
obligation under this section.
(B) Determining least costly approach.--In
determining how to satisfy the Corporation's
obligations to an institution's insured
depositors at the least possible cost to the
Deposit Insurance Fund, the Corporation shall
comply with the following provisions:
(i) Present-value analysis;
documentation required.--The
Corporation shall--
(I) evaluate alternatives on
a present-value basis, using a
realistic discount rate;
(II) document that evaluation
and the assumptions on which
the evaluation is based,
including any assumptions with
regard to interest rates, asset
recovery rates, asset holding
costs, and payment of
contingent liabilities; and
(III) retain the
documentation for not less than
5 years.
(ii) Foregone tax revenues.--Federal
tax revenues that the Government would
forego as the result of a proposed
transaction, to the extent reasonably
ascertainable, shall be treated as if
they were revenues foregone by the
Deposit Insurance Fund.
(C) Time of determination.--
(i) General rule.--For purposes of
this subsection, the determination of
the costs of providing any assistance
under paragraph (1) or (2) or any other
provision of this section with respect
to any depository institution shall be
made as of the date on which the
Corporation makes the determination to
provide such assistance to the
institution under this section.
(ii) Rule for liquidations.--For
purposes of this subsection, the
determination of the costs of
liquidation of any depository
institution shall be made as of the
earliest of--
(I) the date on which a
conservator is appointed for
such institution;
(II) the date on which a
receiver is appointed for such
institution; or
(III) the date on which the
Corporation makes any
determination to provide any
assistance under this section
with respect to such
institution.
(D) Liquidation costs.--In determining the
cost of liquidating any depository institution
for the purpose of comparing the costs under
subparagraph (A) (with respect to such
institution), the amount of such cost may not
exceed the amount which is equal to the sum of
the insured deposits of such institution as of
the earliest of the dates described in
subparagraph (C), minus the present value of
the total net amount the Corporation reasonably
expects to receive from the disposition of the
assets of such institution in connection with
such liquidation.
(E) Deposit insurance fund available for
intended purpose only.--
(i) In general.--After December 31,
1994, or at such earlier time as the
Corporation determines to be
appropriate, and except as provided in
subparagraph (I), the Corporation may
not take any action, directly or
indirectly, with respect to any insured
depository institution that would have
the effect of increasing losses to the
Deposit Insurance Fund by protecting--
(I) depositors for more than
the insured portion of deposits
(determined without regard to
whether such institution is
liquidated); or
(II) creditors other than
depositors.
(ii) Deadline for regulations.--The
Corporation shall prescribe regulations
to implement clause (i) not later than
January 1, 1994, and the regulations
shall take effect not later than
January 1, 1995.
(iii) Purchase and assumption
transactions.--No provision of this
subparagraph shall be construed as
prohibiting the Corporation from
allowing any person who acquires any
assets or assumes any liabilities of
any insured depository institution for
which the Corporation has been
appointed conservator or receiver to
acquire uninsured deposit liabilities
of such institution so long as the
insurance fund does not incur any loss
with respect to such deposit
liabilities in an amount greater than
the loss which would have been incurred
with respect to such liabilities if the
institution had been liquidated.
(F) Discretionary determinations.--Any
determination which the Corporation may make
under this paragraph shall be made in the sole
discretion of the Corporation.
(G) Systemic risk.--
(i) Emergency determination by
secretary of the treasury.--
Notwithstanding subparagraphs (A) and
(E), if, upon the written
recommendation of the Board of
Directors (upon a vote of not less than
two-thirds of the members of the Board
of Directors) and the Board of
Governors of the Federal Reserve System
(upon a vote of not less than two-
thirds of the members of such Board),
the Secretary of the Treasury (in
consultation with the President)
determines that--
(I) the Corporation's
compliance with subparagraphs
(A) and (E) with respect to an
insured depository institution
for which the Corporation has
been appointed receiver would
have serious adverse effects on
economic conditions or
financial stability; and
(II) any action or assistance
under this subparagraph would
avoid or mitigate such adverse
effects,
the Corporation may take other action
or provide assistance under this
section for the purpose of winding up
the insured depository institution for
which the Corporation has been
appointed receiver as necessary to
avoid or mitigate such effects.
(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.
(iii) Documentation required.--The
Secretary of the Treasury shall--
(I) document any
determination under clause (i);
and
(II) retain the documentation
for review under clause (iv).
(iv) GAO review.--The Comptroller
General of the United States shall
review and report to the Congress on
any determination under clause (i),
including--
(I) the basis for the
determination;
(II) the purpose for which
any action was taken pursuant
to such clause; and
(III) the likely effect of
the determination and such
action on the incentives and
conduct of insured depository
institutions and uninsured
depositors.
(v) Notice.--
(I) In general.--Not later
than 3 days after making a
determination under clause (i),
the Secretary of the Treasury
shall provide written notice of
any determination under clause
(i) to the Committee on
Banking, Housing, and Urban
Affairs of the Senate and the
Committee on Banking, Finance
and Urban Affairs of the House
of Representatives.
(II) Description of basis of
determination.--The notice
under subclause (I) shall
include a description of the
basis for any determination
under clause (i).
(H) Rule of construction.--No
provision of law shall be construed as
permitting the Corporation to take any
action prohibited by paragraph (4)
unless such provision expressly
provides, by direct reference to this
paragraph, that this paragraph shall
not apply with respect to such action.
(I) Least cost resolution exception.--
(i) In general.--With respect to an
exercise of authority by the
Corporation described in subparagraph
(A), the Corporation may, at the
discretion of the Corporation, select
an alternative method of exercising
such authority that is not the least
costly to the Deposit Insurance Fund,
if--
(I) the Corporation
determines that the selected
alternative complies with the
requirements of clause (iii);
and
(II) the Corporation and the
Board of Governors of the
Federal Reserve System, after
consultation with the Secretary
of the Treasury, determine that
the potential additional risks
to the Deposit Insurance Fund
of the selected alternative are
outweighed by the reasonably
expected benefits of limiting
further concentration of the
United States banking system in
global systemically important
banking organizations.
(ii) Maximum cost to the deposit
insurance fund.--Not later than 1 year
after the date of enactment of this
subparagraph, the Corporation, by rule,
shall establish criteria for
determining on a case-by-case basis the
maximum allowable cost against the net
worth of the Deposit Insurance Fund
that may be utilized to account for any
determination under clause (i).
(iii) Requirements described.--The
requirements for the selected
alternative described in clause (i) are
as follows:
(I) The selected alternative
is least costly to the Deposit
Insurance Fund of all
alternatives that do not
involve a transaction with a
global systemically important
banking organization and that
do not exceed the cost of
liquidating the insured
depository institution.
(II) The difference between
the cost of the selected
alternative and the cost of a
covered alternative is less
than the maximum cost to the
Deposit Insurance Fund
specified pursuant to the rule
adopted under clause (ii).
(III) In the case of a
selected alternative that
involves another person
purchasing assets of the
insured depository institution
or assuming deposit liabilities
of the insured depository
institution, such person agrees
to pay an assessment to the
Corporation comprised of
payments--
(aa) made over a
period to be determined
by the Corporation, but
which may not be less
than 5 years; and
(bb) in an amount
that takes into
account, on a case-by-
case basis, criteria
the Corporation, by
rule, shall establish,
including a realistic
discount rate, the
aggregate amount equal
to the difference
calculated in subclause
(II), and any bid
inconsistent with the
purposes of this Act,
with such rule to be
established by the
Corporation not later
than 1 year after the
date of enactment of
this subparagraph.
(iv) Report to congress.--Not later
than 30 days after selecting an
alternative described in clause (i),
the Corporation shall issue a report to
the Committee on Financial Services of
the House of Representatives and the
Committee on Banking, Housing, and
Urban Affairs of the Senate containing
an analysis of the economic difference
between the cost to the Deposit
Insurance Fund of the selected
alternative and the cost to the Deposit
Insurance Fund of the least costly
alternative that would have been
selected absent the application of this
subparagraph.
(v) Cost determinations.--All cost
determinations required under this
subparagraph shall be made in
accordance with subparagraphs (B) and
(C).
(vi) Definitions.--In this
subparagraph:
(I) Covered alternative.--The
term ``covered alternative''
means a method of exercising
authority described in
subparagraph (A) that is the
least costly to the Deposit
Insurance Fund of all such
methods that involve a sale of
all or substantially all assets
of the insured depository
institution to, and assumption
of all or substantially all
deposit liabilities of the
insured depository institution
by, a global systemically
important banking organization.
(II) Global systemically
important banking
organization.--The term
``global systemically important
banking organization'' means a
global systemically important
BHC (as such term is defined in
section 217.402 of title 12,
Code of Federal Regulations, or
any successor thereto) and any
affiliate thereof.
(5) The Corporation may not use its authority under this
subsection to purchase the voting or common stock of an insured
depository institution. Nothing in the preceding sentence shall
be construed to limit the ability of the Corporation to enter
into and enforce covenants and agreements that it determines to
be necessary to protect its financial interest.
(6)(A) During any period in which an insured depository
institution has received assistance under this subsection and
such assistance is still outstanding, such insured depository
institution may defer the payment of any State or local tax
which is determined on the basis of the deposits held by such
insured depository institution or of the interest or dividends
paid on such deposits.
(B) When such insured depository institution no longer has
any outstanding assistance, such insured depository institution
shall pay all taxes which were deferred under subparagraph (A).
Such payments shall be made in accordance with a payment plan
established by the Corporation, after consultation with the
applicable State and local taxing authorities.
(7) The transfer of any assets or liabilities associated with
any trust business of an insured depository institution in
default under subparagraph (2)(A) shall be effective without
any State or Federal approval, assignment, or consent with
respect thereto.
(8) Assistance before appointment of conservator or
receiver.--
(A) In general.--Subject to the least-cost
provisions of paragraph (4), the Corporation
shall consider providing direct financial
assistance under this section for depository
institutions before the appointment of a
conservator or receiver for such institution
only under the following circumstances:
(i) Troubled condition criteria.--The
Corporation determines--
(I) grounds for the
appointment of a conservator or
receiver exist or likely will
exist in the future unless the
depository institution's
capital levels are increased;
and
(II) it is unlikely that the
institution can meet all
currently applicable capital
standards without assistance.
(ii) Other criteria.--The depository
institution meets the following
criteria:
(I) The appropriate Federal
banking agency and the
Corporation have determined
that, during such period of
time preceding the date of such
determination as the agency or
the Corporation considers to be
relevant, the institution's
management has been competent
and has complied with
applicable laws, rules, and
supervisory directives and
orders.
(II) The institution's
management did not engage in
any insider dealing,
speculative practice, or other
abusive activity.
(B) Public disclosure.--Any determination
under this paragraph to provide assistance
under this section shall be made in writing and
published in the Federal Register.
(9) Any assistance provided under this subsection may be in
subordination to the rights of depositors and other creditors.
(10) In its annual report to the Congress, the Corporation
shall report the total amount it has saved, or estimates it has
saved, by exercising the authority provided in this subsection.
(11) Unenforceability of certain agreements.--No
provision contained in any existing or future
standstill, confidentiality, or other agreement that,
directly or indirectly--
(A) affects, restricts, or limits the ability
of any person to offer to acquire or acquire,
(B) prohibits any person from offering to
acquire or acquiring, or
(C) prohibits any person from using any
previously disclosed information in connection
with any such offer to acquire or acquisition
of,
all or part of any insured depository institution,
including any liabilities, assets, or interest therein,
in connection with any transaction in which the
Corporation exercises its authority under section 11 or
13, shall be enforceable against or impose any
liability on such person, as such enforcement or
liability shall be contrary to public policy.
(d) Sale of Assets to Corporation.--
(1) In general.-Any conservator, receiver, or
liquidator appointed for any insured depository
institution in default, including the Corporation
acting in such capacity, shall be entitled to offer the
assets of such depository institutions for sale to the
Corporation or as security for loans from the
Corporation.
(2) Proceeds.--The proceeds of every sale or loan of
assets to the Corporation shall be utilized for the
same purposes and in the same manner as other funds
realized from the liquidation of the assets of such
depository institutions.
(3) Rights and powers of corporation.--
(A) In general.--With respect to any asset
acquired or liability assumed pursuant to this
section, the Corporation shall have all of the
rights, powers, privileges, and authorities of
the Corporation as receiver under sections 11
and 15(b).
(B) Rule of construction.--Such rights,
powers, privileges, and authorities shall be in
addition to and not in derogation of any
rights, powers, privileges, and authorities
otherwise applicable to the Corporation.
(C) Fiduciary responsibility.--In exercising
any right, power, privilege, or authority
described in subparagraph (A), the Corporation
shall continue to be subject to the fiduciary
duties and obligations of the Corporation as
receiver to claimants against the insured
depository institution in receivership.
(D) Disposition of assets.--In exercising any
right, power, privilege, or authority described
in subparagraph (A) regarding the sale or
disposition of assets sold to the Corporation
pursuant to paragraph (1), the Corporation
shall conduct its operations in a manner
which--
(i) maximizes the net present value
return from the sale or disposition of
such assets;
(ii) minimizes the amount of any loss
realized in the resolution of cases;
(iii) ensures adequate competition
and fair and consistent treatment of
offerors;
(iv) prohibits discrimination on the
basis of race, sex, or ethnic groups in
the solicitation and consideration of
offers; and
(v) maximizes the preservation of the
availability and affordability of
residential real property for low- and
moderate-income individuals.
(4) Loans.--The Corporation, in its discretion, may
make loans on the security of or may purchase and
liquidate or sell any part of the assets of an insured
depository institution which is now or may hereafter be
in default.
(e) Agreements Against Interests of Corporation.--
(1) In general.--No agreement which tends to diminish
or defeat the interest of the Corporation in any asset
acquired by it under this section or section 11, either
as security for a loan or by purchase or as receiver of
any insured depository institution, shall be valid
against the Corporation unless such agreement--
(A) is in writing,
(B) was executed by the depository
institution and any person claiming an adverse
interest thereunder, including the obligor,
contemporaneously with the acquisition of the
asset by the depository institution,
(C) was approved by the board of directors of
the depository institution or its loan
committee, which approval shall be reflected in
the minutes of said board or committee, and
(D) has been, continuously, from the time of
its execution, an official record of the
depository institution.
(2) Exemptions from contemporaneous execution
requirement.--An agreement to provide for the lawful
collateralization of--
(A) deposits of, or other credit extension
by, a Federal, State, or local governmental
entity, or of any depositor referred to in
section 11(a)(2), including an agreement to
provide collateral in lieu of a surety bond;
(B) bankruptcy estate funds pursuant to
section 345(b)(2) of title 11, United States
Code;
(C) extensions of credit, including any
overdraft, from a Federal reserve bank or
Federal home loan bank; or
(D) one or more qualified financial
contracts, as defined in section 11(e)(8)(D),
shall not be deemed invalid pursuant to paragraph
(1)(B) solely because such agreement was not executed
contemporaneously with the acquisition of the
collateral or because of pledges, delivery, or
substitution of the collateral made in accordance with
such agreement.
(f) Assisted Emergency Interstate Acquisitions.--(1) This
subsection shall apply only to an acquisition of an insured
bank or a holding company by an out-of-State bank savings
association or out-of-State holding company for which the
Corporation provides assistance under subsection (c).
(2)(A) Whenever an insured bank with total assets of
$500,000,000 or more (as determined from its most recent report
of condition) is in default, the Corporation, as receiver, may,
in its discretion and upon such terms and conditions as the
Corporation may determine, arrange the sale of assets of the
closed bank and the assumption of the liabilities of the closed
bank, including the sale of such assets to and the assumption
of such liabilities by an insured depository institution
located in the State where the closed bank was chartered but
established by an out-of-State bank or holding company. Where
otherwise lawfully required, a transaction under this
subsection must be approved by the primary Federal or State
supervisor of all parties thereto.
(B)(i) Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State bank
supervisor of the State in which the insured bank in default
was chartered.
(ii) The State bank supervisor shall be given a reasonable
opportunity, and in no event less than forty-eight hours, to
object to the use of the provisions of this paragraph. Such
notice may be provided by the Corporation prior to its
appointment as receiver, but in anticipation of an impending
appointment.
(iii) If the State supervisor objects during such period, the
Corporation may use the authority of this paragraph only by a
vote of 75 percent of the Board of Directors. The Board of
Directors shall provide to the State supervisor, as soon as
practicable, a written certification of its determination.
(3) Emergency Interstate Acquisitions of Insured Banks in
Danger of Default.--
(A) Acquisition of insured banks in danger of
default.--One or more out-of-State banks or out-of-
State holding companies may acquire and retain all or
part of the shares or assets of, or otherwise acquire
and retain--
(i) an insured bank in danger of default
which has total assets of $500,000,000 or more;
or
(ii) 2 or more affiliated insured banks in
danger of default which have aggregate total
assets of $500,000,000 or more, if the
aggregate total assets of such banks is equal
to or greater than 33 percent of the aggregate
total assets of all affiliated insured banks.
(B) Acquisition of a holding company or other bank
affiliate.--If one or more out-of-State banks or out-
of-State holding companies acquire 1 or more affiliated
insured banks under subparagraph (A) the aggregate
total assets of which is equal to or greater than 33
percent of the aggregate total assets of all affiliated
insured banks, any such out-of-State bank or out-of-
State holding company may also, as part of the same
transaction, acquire and retain the shares or assets
of, or otherwise acquire and retain--
(i) the holding company which controls the
affiliated insured banks so acquired; or
(ii) any other affiliated insured bank.
(C) Request for assistance by corporate board of
directors.--The Corporation may assist an acquisition
or merger authorized under subparagraph (A) only if the
board of directors or trustees of each insured bank in
danger of default which is being acquired has requested
in writing that the Corporation assist the acquisition
or merger.
(D) Certain acquisitions authorized after assistance
is provided.--Notwithstanding paragraph (1), if--
(i) at any time after the date of the
enactment of the Financial Institutions
Emergency Acquisitions Amendments of 1987, the
Corporation provides any assistance under
subsection (c) to an insured bank; and
(ii) at the time such assistance is granted,
the insured bank, the holding company which
controls the insured bank (if any), or any
affiliated insured bank is eligible to be
acquired by an out-of-State bank or out-of-
State holding company under this paragraph,
the insured bank, the holding company, and such other
affiliated insured bank shall remain eligible, subject
to such terms and conditions as the Corporation (in the
Corporation's discretion) may impose, to be acquired by
an out-of-State bank or out-of-State holding company
under this paragraph as long as any portion of such
assistance remains outstanding.
(E) State bank supervisor approval.--The Corporation
may take no final action in connection with any
acquisition under this paragraph unless the State bank
supervisor of the State in which the bank in danger of
default is located approves the acquisition.
(F) Other requirements not affected.--This paragraph
does not affect any other requirement under Federal or
State law for regulatory approval of an acquisition
under this paragraph.
(G) Acquisition may be conditioned on receipt of
consideration for corporation's assistance.--Any
acquisition described in subparagraph (D) may be
conditioned on the receipt of such consideration for
the Corporation's assistance as the Board of Directors
deems appropriate.
(4)(A) Acquisitions Not Subject to Certain Other Laws.--
Section 3(d) of the Bank Holding Company Act of 1956, any
provision of State law, and section 408(e)(3) of the National
Housing Act shall not apply to prohibit any acquisition under
paragraph (2) or (3), except that an out-of-State bank may make
such an acquisition only if such ownership is otherwise
specifically authorized.
(B) Any subsidiary created by operation of this subsection
may retain and operate any existing branch or branches of the
institution merged with or acquired under paragraph (2) or (3),
but otherwise shall be subject to the conditions upon which a
national bank may establish and operate branches in the State
in which such insured institution is located.
(C) No insured institution acquired under this subsection
shall after it is acquired move its principal office or any
branch office which it would be prohibited from moving if the
institution were a national bank.
(D) Subsequent Nonemergency Interstate Acquisitions Subject
to State Law.--
(i) In general.--Any out-of-State bank holding
company which acquires control of an insured bank in
any State under paragraph (2) or (3) may acquire any
other insured bank and establish branches in such State
to the same extent as a bank holding company whose
insured bank subsidiaries' operations are principally
conducted in such State may acquire any other insured
bank or establish branches.
(ii) Delayed date of applicability.--Clause (i) shall
not apply with respect to any out-of-State bank holding
company referred to in such clause before the earlier
of--
(I) the end of the 2-year period beginning on
the date the acquisition referred to in such
clause with respect to such company is
consummated; or
(II) the end of any period established under
State law during which such out-of-State bank
holding company may not be treated as a bank
holding company whose insured bank
subsidiaries' operations are principally
conducted in such State for purposes of
acquiring other insured banks or establishing
bank branches.
(iii) Determination of principally conducted.--For
purposes of this subparagraph, the State in which the
operations of a holding company's insured bank
subsidiaries are principally conducted is the State
determined under section 3(d) of the Bank Holding
Company Act of 1956 with respect to such holding
company.
(E) Certain State Interstate Banking Laws Inapplicable.--Any
holding company which acquires control of any insured bank or
holding company under paragraph (2) or (3) or subparagraph (D)
of this paragraph shall not, by reason of such acquisition, be
required under the law of any State to divest any other insured
bank or be prevented from acquiring any other bank or holding
company.
(5) In determining whether to arrange a sale of assets and
assumption of liabilities or an acquisition or a merger under
the authority of paragraph (2) or (3), the Corporation may
solicit such offers or proposals as are practicable from any
prospective purchasers or merger partners it determines, in its
sole discretion, are both qualified and capable of acquiring
the assets and liabilities of the bank in default or the bank
in danger of default.
(6)(A) If, after receiving offers, the offer presenting the
lowest expense to the Corporation, that is in a form and with
conditions acceptable to the Corporation (hereinafter referred
to as the ``lowest acceptable offer''), is from an offeror that
is not an existing in-State bank of the same type as the bank
that is in default or is in danger of default (or, where the
bank is an insured bank other than a mutual savings bank, the
lowest acceptable offer is not from an in-State holding
company), the Corporation shall permit the offeror which made
the initial lowest acceptable offer and each offeror who made
an offer the estimated cost of which to the Corporation was
within 15 per centum or $15,000,000, whichever is less, of the
initial lowest acceptable offer to submit a new offer.
(B) In considering authorizations under this subsection, the
Corporation shall give consideration to the need to minimize
the cost of financial assistance and to the maintenance of
specialized depository institutions. The Corporation shall
authorize transactions under this subsection considering the
following priorities:
(i) First, between depository institutions of the
same type within the same State.
(ii) Second, between depository institutions of the
same type--
(I) in different States which by statute
specifically authorize such acquisitions; or
(II) in the absence of such statutes, in
different States which are contiguous.
(iii) Third, between depository institutions of the
same type in different States other than the States
described in clause (ii).
(iv) Fourth, between depository institutions of
different types in the same State.
(v) Fifth, between depository institutions of
different types--
(I) in different States which by statute
specifically authorize such acquisitions; or
(II) in the absence of such statutes, in
different States which are contiguous.
(vi) Sixth, between depository institutions of
different types in different States other than the
States described in clause (v).
(C) Minority Bank Priority.--In the case of a minority-
controlled bank, the Corporation shall seek an offer from other
minority-controlled banks before proceeding with the bidding
priorities set forth in subparagraph (B).
(D) In determining the cost of offers and reoffers, the
Corporation's calculations and estimations shall be
determinative. The Corporation may set reasonable time limits
on offers and reoffers.
(7) No sale may be made under the provisions of paragraph (2)
or (3)--
(A) which would result in a monopoly, or which would
be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of
banking in any part of the United States;
(B) whose effect in any section of the country may be
substantially to lessen competition, or to tend to
create a monopoly, or which in any other manner would
be in restraint of trade, unless the Corporation finds
that the anticompetitive effects of the proposed
transactions are clearly outweighed in the public
interest by the probable effect of the transaction in
meeting the convenience and needs of the community to
be served; or
(C) if in the opinion of the Corporation the
acquisition threatens the safety and soundness of the
acquirer or does not result in the future viability of
the resulting depository institution.
(8) As used in this subsection--
(A) the term ``in-State depository institution or in-
State holding company'' means an existing insured
depository institution currently operating in the State
in which the bank in default or the bank in danger of
default is chartered or a company that is operating an
insured depository institution subsidiary in the State
in which the bank in default or the bank in danger of
default is chartered;
(B) the term ``acquire'' means to acquire, directly
or indirectly, ownership or control through--
(i) an acquisition of shares;
(ii) an acquisition of assets or assumption
of liabilities;
(iii) a merger or consolidation; or
(iv) any similar transaction;
(C) the term ``affiliated insured bank'' means--
(i) when used in connection with a reference
to a holding company, an insured bank which is
a subsidiary of such holding company; and
(ii) when used in connection with a reference
to 2 or more insured banks, insured banks which
are subsidiaries of the same holding company;
and
(D) the term ``subsidiary'' has the meaning given to
such term in section 2(d) of the Bank Holding Company
Act of 1956.
(9) No Assistance Authorized for Certain Subsidiaries of
Holding Companies.--
(A) In general.--The Corporation shall not provide
any assistance to a subsidiary, other than a subsidiary
that is an insured depository institution, of a holding
company in connection with any acquisition under this
subsection.
(B) Intermediate holding company permitted.--This
paragraph does not prohibit an intermediate holding
company or an affiliate of an insured depository
institution from being a conduit for assistance
ultimately intended for an insured bank.
(10) Annual Report.--
(A) Required.--In its annual report to Congress the
Corporation shall include a report on the acquisitions
under this subsection during the preceding year.
(B) Contents.--The report required under subparagraph
(A) shall contain the following information:
(i) The number of acquisitions under this
subsection.
(ii) A brief description of each such
acquisition and the circumstances under which
such acquisition occurred.
(11) Determination of Total Assets.--For purposes of this
subsection, the total assets of any insured bank shall be
determined on the basis of the most recent report of condition
of such bank which is available at the time of such
determination.
(12) Acquisition of minority bank by minority bank
holding company without regard to asset size.--
(A) In general.--For the purpose of ensuring
continued minority control of a minority-
controlled bank, paragraphs (2) and (3) shall
apply with respect to the acquisition of a
minority-controlled bank by an out-of-State
minority-controlled depository institution or
depository institution holding company without
regard to the fact that the total assets of
such minority-controlled bank are less than
$500,000,000.
(B) Definitions.--For purposes of this
paragraph:
(i) Minority bank.--The term
``minority bank'' means any depository
institution described in clause (i),
(ii), or (iii) of section 19(b)(1)(A)
of the Federal Reserve Act--
(I) more than 50 percent of
the ownership or control of
which is held by one or more
minority individuals; and
(II) more than 50 percent of
the net profit or loss of which
accrues to minority
individuals.
(ii) Minority.--The term ``minority''
means any Black American, Native
American, Hispanic American, or Asian
American.
(g) Prior to July 1, 1951, the Corporation shall pay out of
its capital account to the Secretary of the Treasury an amount
equal to 2 per centum simple interest per annum on amounts
advanced to the Corporation on stock subscriptions by the
Secretary of the Treasury and the Federal Reserve banks, from
the time of such advances until the amounts thereof were
repaid. The amount payable hereunder shall be paid in two equal
installments, the first installment to be paid prior to
December 31, 1950.
(h) The powers conferred on the Board of Directors and the
Corporation by this section to take action to reopen an insured
depository institution in default or to avert the default of an
insured depository institution may be used with respect to an
insured branch of a foreign bank if, in the judgment of the
Board of Directors, the public interest in avoiding the closing
of such branch substantially outweighs any additional risk of
loss to the Deposit Insurance Fund which the exercise of such
powers would entail.
(j) Loan Loss Amortization for Certain Banks.--
(1) Eligibility.--The appropriate Federal banking
agency shall permit an agricultural bank to take the
actions referred to in paragraph (2) if it finds that--
(A) there is no evidence that fraud or
criminal abuse on the part of the bank led to
the losses referred to in paragraph (2); and
(B) the agricultural bank has a plan to
restore its capital, not later than the close
of the amortization period established under
paragraph (2), to a level prescribed by the
appropriate Federal banking agency.
(2) Seven-year loss amortization.--(A) Any loss on
any qualified agricultural loan that an agricultural
bank would otherwise be required to show on its annual
financial statement for any year between December 31,
1983, and January 1, 1992, may be amortized on its
financial statements over a period of not to exceed 7
years, as provided in regulations issued by the
appropriate Federal banking agency.
(B) An agricultural bank may reappraise any real
estate or other property, real or personal, that it
acquired coincident to the making of a qualified
agricultural loan and that it owned on January 1, 1983,
and any such additional property that it acquires prior
to January 1, 1992. Any loss that such bank would
otherwise be required to show on its annual financial
statements as the result of any such reappraisal may be
amortized on its financial statements over a period of
not to exceed 7 years, as provided in regulations
issued by the appropriate Federal banking agency.
(3) Regulations.--Not later than 90 days after the
date of enactment of this subsection, the appropriate
Federal banking agency shall issue regulations
implementing this subsection with respect to banks that
it supervises, including regulations implementing the
capital restoration requirement of paragraph (1)(B).
(4) Definitions.--As used in this subsection--
(A) the term ``agricultural bank'' means a
bank--
(i) the deposits of which are insured
by the Federal Deposit Insurance
Corporation;
(ii) which is located in an area the
economy of which is dependent on
agriculture;
(iii) which has assets of
$100,000,000 or less; and
(iv) which has--
(I) at least 25 percent of
its total loans in qualified
agricultural loans; or
(II) fewer than 25 percent of
its total loans in qualified
agricultural loans but which
the appropriate Federal banking
agency or State bank
commissioner recommends to the
Corporation for eligibility
under this section, or which
the Corporation, on its motion,
deems eligible; and
(B) the term ``qualified agricultural loan''
means a loan made to finance the production of
agricultural products or livestock in the
United States, a loan secured by farmland or
farm machinery, or such other category of loans
as the appropriate Federal banking agency may
deem eligible.
(5) Maintenance of portfolio.--As a condition of
eligibility under this subsection, the agricultural
bank must agree to maintain in its loan portfolio a
percentage of agricultural loans which is not lower
than the percentage of such loans in its loan portfolio
on January 1, 1986.
(k) Emergency Acquisitions.--
(1) In general.--
(A) Acquisitions authorized.--
(i) Transactions described.--
Notwithstanding any provision of State
law, upon determining that severe
financial conditions threaten the
stability of a significant number of
savings associations, or of savings
associations possessing significant
financial resources, the Corporation,
in its discretion and if it determines
such authorization would lessen the
risk to the Corporation, may
authorize--
(I) a savings association
that is eligible for assistance
pursuant to subsection (c) to
merge or consolidate with, or
to transfer its assets and
liabilities to, any other
savings association or any
insured bank,
(II) any other savings
association to acquire control
of such savings association, or
(III) any company to acquire
control of such savings
association or to acquire the
assets or assume the
liabilities thereof.
The Corporation may not authorize any
transaction under this subsection
unless the Corporation determines that
the authorization will not present a
substantial risk to the safety or
soundness of the savings association to
be acquired or any acquiring entity.
(ii) Terms of transactions.--Mergers,
consolidations, transfers, and
acquisitions under this subsection
shall be on such terms as the
Corporation shall provide.
(iii) Approval by appropriate
agency.--Where otherwise required by
law, transactions under this subsection
must be approved by the appropriate
Federal banking agency of every party
thereto.
(iv) Acquisitions by savings
associations.--Any Federal savings
association that acquires another
savings association pursuant to clause
(i) may, with the concurrence of the
Comptroller of the Currency, hold that
savings association as a subsidiary
notwithstanding the percentage
limitations of section 5(c)(4)(B) of
the Home Owners' Loan Act.S
(v) Dual service.--Dual service by a
management official that would
otherwise be prohibited under the
Depository Institution Management
Interlocks Act may, with the approval
of the Corporation, continue for up to
10 years.
(vi) Continued applicability of
certain state restrictions.--Nothing in
this subsection overrides or supersedes
State laws restricting or limiting the
activities of a savings association on
behalf of another entity.
(B) Consultation with state official.--
(i) Consultation required.--Before
making a determination to take any
action under subparagraph (A), the
Corporation shall consult the State
official having jurisdiction of the
acquired institution.
(ii) Period for state response.--The
official shall be given a reasonable
opportunity, and in no event less than
48 hours, to object to the use of the
provisions of this paragraph. Such
notice may be provided by the
Corporation prior to its appointment as
receiver, but in anticipation of an
impending appointment.
(iii) Approval over objection of
state official.--If the official
objects during such period, the
Corporation may use the authority of
this paragraph only by a vote of 75
percent or more of the voting members
of the Board of Directors. The
Corporation shall provide to the
official, as soon as practicable, a
written certification of its
determination.
(2) Solicitation of offers.--
(A) In general.--In considering
authorizations under this subsection, the
Corporation may solicit such offers or
proposals as are practicable from any
prospective purchasers or merger partners it
determines, in its sole discretion, are both
qualified and capable of acquiring the assets
and liabilities of the savings association.
(B) Minority-controlled institutions.--In the
case of a minority-controlled depository
institution, the Corporation shall seek an
offer from other minority-controlled depository
institutions before seeking an offer from other
persons or entities.
(3) Determination of costs.--In determining the cost
of offers under this subsection, the Corporation's
calculations and estimations shall be determinative.
The Corporation may set reasonable time limits on
offers.
(4) Branching provisions.--
(A) In general.--If a merger, consolidation,
transfer, or acquisition under this subsection
involves a savings association eligible for
assistance and a bank or bank holding company,
a savings association may retain and operate
any existing branch or branches or any other
existing facilities. If the savings association
continues to exist as a separate entity, it may
establish and operate new branches to the same
extent as any savings association that is not
affiliated with a bank holding company and the
home office of which is located in the same
State.
(B) Restrictions.--
(i) In general.--Notwithstanding
subparagraph (A), if--
(I) a savings association
described in such subparagraph
does not have its home office
in the State of the bank
holding company bank
subsidiary, and
(II) such association does
not qualify as a domestic
building and loan association
under section 7701(a)(19) of
the Internal Revenue Code of
1986, or does not meet the
asset composition test imposed
by subparagraph (C) of that
section on institutions seeking
so to qualify,
such savings association shall be
subject to the conditions upon which a
bank may retain, operate, and establish
branches in the State in which the
savings association is located.
(ii) Transition period.--The
Corporation, for good cause shown, may
allow a savings association up to 2
years to comply with the requirements
of clause (i).
(5) Assistance before appointment of conservator or
receiver.--
(A) Assistance proposals.--The Corporation
shall consider proposals by savings
associations for assistance pursuant to
subsection (c) before grounds exist for
appointment of a conservator or receiver for
such member under the following circumstances:
(i) Troubled condition criteria.--The
Corporation determines--
(I) that grounds for
appointment of a conservator or
receiver exist or likely will
exist in the future unless the
member's tangible capital is
increased;
(II) that it is unlikely that
the member can achieve positive
tangible capital without
assistance; and
(III) that providing
assistance pursuant to the
member's proposal would be
likely to lessen the risk to
the Corporation.
(ii) Other criteria.--The member
meets the following criteria:
(I) Before enactment of the
Financial Institutions Reform,
Recovery, and Enforcement Act
of 1989, the member was solvent
under applicable regulatory
accounting principles but had
negative tangible capital.
(II) The member's negative
tangible capital position is
substantially attributable to
its participation in
acquisition and merger
transactions that were
instituted by the Federal Home
Loan Bank Board or the Federal
Savings and Loan Insurance
Corporation for supervisory
reasons.
(III) The member is a
qualified thrift lender (as
defined in section 10(m) of the
Home Owners' Loan Act) or would
be a qualified thrift lender if
commercial real estate owned
and nonperforming commercial
loans acquired in acquisition
and merger transactions that
were instituted by the Federal
Home Loan Bank Board or the
Federal Savings and Loan
Insurance Corporation for
supervisory reasons were
excluded from the member's
total assets.
(IV) The appropriate Federal
banking agency has determined
that the member's management is
competent and has complied with
applicable laws, rules, and
supervisory directives and
orders.
(V) The member's management
did not engage in insider
dealing or speculative
practices or other activities
that jeopardized the member's
safety and soundness or
contributed to its impaired
capital position.
(VI) The member's offices are
located in an economically
depressed region.
(B) Corporation consideration of assistance
proposal.--If a member meets the requirements
of clauses (i) and (ii) of subparagraph (A),
the Corporation shall consider providing direct
financial assistance.
(C) Economically depressed region defined.--
For purposes of this paragraph, the term
``economically depressed region'' means any
geographical region which the Corporation
determines by regulation to be a region within
which real estate values have suffered serious
decline due to severe economic conditions, such
as a decline in energy or agricultural values
or prices.
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