Federal Savings and Loan Insurance Corporation Recapitalization Act of 1986

Summary

Federal Savings and Loan Insurance Corporation Recapitalization Act of 1986 - Amends the Federal Home Loan Bank Act to require the Federal Home Loan Bank Board (FHLBB) to charter the Financing Corporation. Requires the Corporation to be under the management of a Directorate consisting of the Director of Finance of the Federal Home Loan Banks (Banks) and two other members selected by the Board from presidents of the Banks. Empowers the Corporation to borrow, to issue stock to Banks, to invest in Federal Savings and Loan Insurance Corporation (FSLIC) securities, to issue obligations the proceeds of which shall be invested in the FSLIC, and to make semiannual assessments of insured institutions to provide for the issuance costs, interest, and custodian fees of such obligations. Limits the aggregate amount of such obligations that may be outstanding at any time. Provides that such obligations shall be treated by the Securities and Exchange Commission as exempt securities, shall be tax-exempt (excluding interest), and shall not be guaranteed by the FSLIC, the Banks, or the United States. Requires each Bank to invest in nonvoting capital stock of the Corporation. Limits the cumulative investment of all Banks to $3,000,000,000 and of each Bank to the sum of specified required reserves plus undivided profits, as prescribed by this Act. Sets forth a formula for determining the prorated portion of funds to be invested by each Bank. Restricts dividend payments by a Bank for which other Banks must invest a required amount. Limits the use and disposition of Corporation assets not invested in the FSLIC. Prohibits the Corporation from making any net new borrowing after December 31, 1996. Creates a Federal Savings and Loan Insurance Corporation Industry Advisory Committee. Directs the Committee to: (1) review, and confer with the FHLBB regarding quarterly reports and budgets on the activities, receipts, and expenditures of the FSLIC; and (2) submit an annual report to specified congressional committee chairmen on its activities and its reports and recommendations to the FHLBB and the FSLIC. Terminates the Committee and the Corporation as soon as practicable after the earlier of: (1) the date by which all FSLIC stock purchased by the Corporation has been retired; or (2) December 31, 2026. Amends the Government Corporations Control Act to establish the Corporation as a mixed ownership Government corporation. Amends the National Housing Act to authorize the FSLIC to issue nonredeemable capital certificates and redeemable nonvoting capital stock which shall be sold only to the Corporation, shall pay no dividends, and the proceeds of which shall be considered part of the FSLIC's primary reserve. Directs the FSLIC to establish and maintain an equity return account until all such certificates and stock have been paid off and retired. Sets forth formulae for calculating the FSLIC's annual contributions to such account beginning in 1997 based on the fraction of the aggregate amount of all accounts of all insured members equal to FSLIC reserves. Authorizes the FSLIC to invest amounts accumulated in such account as it determines appropriate. Directs the FSLIC to use only amounts accumulated in such account to payoff and retire its stock. Provides that certain statutorily prescribed suspensions or reductions of FSLIC premiums based on the FSLIC's primary and secondary reserve levels shall not apply as long as shares of its capital stock are outstanding. Reduces the total premiums paid by an insured institution to the FSLIC by the amount of any assessments paid to the Corporation during the same period. Amends the Federal Home Loan Bank Act to allow the FHLBB to authorize a Bank to declare and pay dividends out of its undivided profits or legal reserves, only after such Bank has reduced all other reserves to zero, if: (1) the Bank incurs a charge-off or expense related to its investment in the Corporation; and (2) the FHLBB determines that there is an extraordinary need for such Bank's member institutions to receive dividends. Directs the FSLIC to: (1) complete quarterly reports and budgets explaining its activities, receipts, and expenditures, including the activities, receipts, and expenditures of the Federal Asset Disposition Association, for the current and preceding quarters; and (2) submit to specified congressional committee chairmen semiannual reports and budgets on its activities, receipts, and expenditures for the preceding semiannual period.

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1 official file

• Introduced in Senate

  summary · EN · 6 January 1987

  Open at official source

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