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United States · Law · S

S. 543 (102nd)

Federal Deposit Insurance Corporation Improvement Act of 1991

enactedUnited States· United States Congress· EN

Introduced

5 March 1991

Last action

—

Status

Became Public Law No: 102-242.

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Subjects

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Source updated

14 January 2025

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Summary

Comprehensive Deposit Insurance Reform and Taxpayer Protection Act of 1991 - Requires Federal banking agencies to take specified steps to strengthen capital standards for insured depository institutions, including: (1) requiring enough capital to facilitate prompt corrective action to prevent loss to the Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF); and (2) improving risk-based standards and controlling interest-rate and concentration of credit risk. Amends the Federal Deposit Insurance Act to direct the Securities and Exchange Commission to facilitate the development of accounting principles for insured depository institutions that: (1) accurately reflect the economic condition of such institutions; and (2) facilitate effective supervision and prompt corrective action to resolve troubled institutions' problems at no cost to the BIF or SAIF. Requires that the accounting principles applicable to insured depository institutions be no less conservative than generally accepted accounting principles (GAAP). Permits the banking agencies to prescribe more conservative accounting principles than GAAP to meet the purposes of this Act. Requires each appropriate Federal banking agency to conduct an annual on-site examination of each insured depository institution under its jurisdiction. Exempts from such requirement institutions for which a conservator has been appointed, or which have been examined by the FDIC during the past 12-month period. Mandates that each appropriate Federal banking agency take prompt corrective action to ensure that problems of ensured depository institutions are resolved at no cost to either the BIF or the SAIF. Prohibits an insured depository institution from making any capital distribution if it would be undercapitalized as a result. Requires banking agencies to monitor: (1) undercapitalized insured depository institutions; and (2) compliance with capital-restoration plans and restrictions (including period reviews). Requires an undercapitalized insured depository institution to submit a capital restoration plan within the time-frame established by the appropriate Federal banking agency. Specifies plan contents. Prohibits a Federal banking agency from accepting a capital restoration plan unless each company having control of the insured depository institution guarantees its compliance with the plan until the capital standards have been satisfied for 12 consecutive months and the institution provides appropriate assurances of performance. Mandates the establishment of deadlines by Federal banking agencies for plan submission and review. Prohibits an undercapitalized insured depository institution from increasing its total assets. Sets forth asset growth restriction guidelines. Authorizes banking agencies to set forth certain restrictions upon an undercapitalized insured depository institution that fails to submit an acceptable capital restoration plan within agency-set limits (or that fails in any material respect to implement a plan accepted by the agency). Prohibits an undercapitalized insured depository institution from making certain compensation or bonus payments to its executive officers if it fails to: (1) submit an acceptable capital-restoration plan within agency-set deadlines; or (2) implement a capital-restoration plan accepted by the banking agency. Mandates that Federal banking agencies specify by regulation "critical capital levels" so that problems of insured depository institutions can be resolved at no cost to the BIF or SAIF when the institution's capital falls below such a level. Requires the concurrence of the Federal Deposit Insurance Corporation (FDIC) for any critical capital level that is less stringent than that specified by the FDIC for State nonmember insured banks. Prohibits an insured depository institution from making any payments of principal or interest on its subordinated debt unless it has capital sufficient to meet the critical capital level after making such payment. Mandates that the appropriate Federal banking agency: (1) appoint a conservator or receiver within 30 days after an institution's capital falls below the requisite critical level; and (2) place specified restrictions upon such institution's activities. Exempts from such restrictions institutions for which a conservator or receiver has been appointed. Requires the inspector general of the appropriate Federal banking agency to report to the Comptroller General and the FDIC with respect to: (1) the agency's supervision of an insured depository institution which has caused a loss to either the BIF or the SAIF; and (2) why the agency failed to resolve the institution's problems at no cost to either insurance fund. Requires public disclosure of such report. Amends the Federal Deposit Insurance Act, the Bank Conservation Act, and the Home Owners' Loan Act to cite as additional grounds for appointment of a conservator or receiver of a depository institution: (1) inability to achieve capital compliance standards by selling shares or obligations; (2) non-compliance with capital standards; (3) failure to submit an acceptable capital-restoration plan within the prescribed time-frame; (4) material failure to implement a capital-restoration plan; and (5) failure to achieve prescribed critical capital levels. Authorizes the Comptroller of the Currency to appoint a receiver for national banks on the same non-compliance grounds. Amends the Federal Deposit Insurance Act to authorize: (1) a banking agency to appoint the FDIC as sole conservator or receiver of any insured State depository institution; and (2) the FDIC to appoint itself as conservator or receiver for insured depository institutions to prevent loss to the affected deposit insurance fund. Provides that commitments made to specified regulatory agencies to maintain the capital of an insured depository institution may be enforced under this Act. Requires all deposits at insured depository institutions to be registered under a taxpayer or employer identification number. Sets forth guidelines for the calculation of the amount of deposit insurance providing that the maximum amount of any depositor's insured deposit at any insured depository institution shall be: (1) $100,000; and (2) an additional $100,000 for certain pension accounts established under profit-sharing plans, and individual retirement arrangements. Directs the FDIC to aggregate the amounts of all deposits in an institution registered under the depositor's taxpayer identification and to deduct any offsets. Prohibits deposits from being insured on a pro-rata or pass-through basis except for certain tax-exempt trusts and individual retirement arrangements. Prohibits an insured depository institution from accepting deposits from intermediaries (brokered deposits) unless: (1) it is in compliance with prescribed capital standards; and (2) it does not pay interest rates significantly exceeding those paid on deposits not made by or through intermediaries. Authorizes the FDIC to: (1) prohibit insured depository institutions from accepting deposits through any intermediary; and (2) establish terms under which such institutions may accept deposits from or through intermediaries. Directs the FDIC to: (1) exercise its authority so as to prevent insured depository institutions' acceptance of brokered deposits from posing any significant risk to the BIF, the SAIF, or the Resolution Trust Corporation (RTC); and (2) prescribe regulations prohibiting, except in certain circumstances, any insured depository institution that accepts brokered deposits from rapidly increasing its assets or permitting brokered deposits to increase at a rate exceeding the rate of increase of its total deposits, unless the FDIC permits. Directs the FDIC to satisfy its obligations to an institution's insured depositors according to guidelines for the least possible long-term cost to the affected deposit insurance fund. Provides that an affiliate of an insured depository institution shall be liable to the FDIC for up to a specified maximum of such institution's assets if the FDIC either: (1) incurs a loss in connection with such institution; or (2) provides assistance to an institution in danger of default. Directs the FDIC to establish a risk-based assessment system for insured depository institutions. Authorizes the FDIC to: (1) obtain private reinsurance covering not more than ten percent of any loss incurred by the FDIC with respect to such an institution, and base that institution's assessment rate on the cost of such reinsurance; and (2) establish separate risk-based assessment systems for BIF and SAIF members. Prescribes guidelines for such assessment system, including maintenance of designated reserve ratios. Makes assessments semiannual. Directs the FDIC to set the designated reserve ratio of the BIF separately from that of the SAIF. Sets forth recordkeeping requirements for assessment purposes. Authorizes the FDIC to restrict any activity of insured banks that poses a significant risk to the affected deposit insurance fund. Prohibits an insured State bank and its subsidiaries from engaging as principal in any activity that is impermissible for a national bank and its subsidiaries, unless specified conditions have been met. Prohibits State banks or their subsidiaries from directly acquiring any equity investment of a type or amount that is impermissible for a national bank or its subsidiaries. Exempts community development investments from this prohibition if the bank is in compliance with federally prescribed capital standards. Prohibits an insured bank from acquiring, directly or through a subsidiary, any corporate debt security that is not of investment grade. Amends the Federal Reserve Act to apply to subsidiaries as well as member banks the prohibition against making loans or extending credit (including assets purchases) in excess of established limits to executive officers or other specified insiders. Amends the Home Owner's Loan Act to apply the same prohibition to savings associations. Amends the Bank Holding Company Act Amendments of 1970 to apply to savings banks and savings associations certain prohibitions against tying arrangements and specified restrictions on correspondent accounts with respect to preferential loans. Amends the Federal Deposit Insurance Act with respect to nonmember insured banks and prohibitions against loans to executive officers and preferential loans to insiders, as well as proscriptions against extensions of credit to officers, directors and principal shareholders. Applies the credit extension proscription to any insured branch of a foreign bank, but not to the foreign bank itself solely because it has an insured branch. Amends the Federal Reserve Act to direct the Board of Governors of the Federal Reserve System (the Board) to limit, by regulation, an insured depository institution's exposure to any depository institution. Prohibits a depository institution from accepting deposits for the account of any insured depository institution unless the accepting institution has: (1) capital exceeding currently prescribed capital standards; and (2) such additional capital as the Board determines necessary to implement the purposes of this Act. Amends the Federal Deposit Insurance Act to direct the FDIC to satisfy its obligations to an institution's insured depositors according to guidelines for the least possible long-term cost to the affected deposit insurance fund. Provides that an affiliate of an insured depository institution shall be liable to the FDIC for up to a specified maximum of such institution's assets if the FDIC either: (1) incurs a loss in connection with such institution; or (2) provides assistance to an institution in danger of default. Sets forth guidelines for the certification as insured depository institutions of noninsured national non-member banks and State banks which became Federal Reserve members. Mandates that the financial status reports required of insured depository institutions with certain assets include: (1) estimates of the aggregate market value of assets and liabilities and the resulting estimated net worth and supporting data and assumptions used in preparing the estimates; and (2) disaggregated reports of assets, including participation in highly-leveraged transactions, holdings of noninvestment grade securities, commercial and industrial loans by sector, and other assets as specified by the appropriate Federal banking agency. Requires each depository institution to submit reports to the appropriate banking agency regarding: (1) the names of holders of more than five percent of the insured institution's equity securities and the maximum amount of securities held by each such holder during the preceding quarter; and (2) a description of activities conducted by the institution and its subsidiaries that are not permitted for national banks or for bank holding companies, with data on the magnitude of the activity. Makes such reports available to the public. Mandates that Federal banking agencies report annually to the Congress regarding: (1) the estimated number and aggregate assets of insured depository institutions likely to fail in the ensuing two years; (2) how insured depository institutions and their subsidiaries conduct activities not permitted for national banks or for bank holding companies; (3) the number and assets of insured depository institutions in various stages of solvency and capitalization; and (4) the extent of compliance with cease-and-desist orders, supervisory agreements, and capital restoration plans. Requires the FDIC to include in its annual status report to the Congress certain information pertaining to failed depository institutions and institutions which are either on the problem bank list or likely to be on it. Sets forth guidelines for confidential access by the Congressional Budget Office to a banking agency's: (1) internal rating list of institutions; and (2) list of troubled institutions. Directs the Comptroller General to: (1) review the oversight by the Federal banking agencies with respect to required reports of conditions; and (2) audit the failure estimates contained in specified reports. Directs the Securities and Exchange Commission to facilitate the development of: (1) disclosure guidelines for the purpose of accurate financial status disclosure and prompt corrective action to resolve troubled institutions' problems at no cost to the BIF or the SAIF; and (2) interpretive guidelines of accounting standards for the early disclosure of problem loans, and to prevent delay in recognizing losses that may result in loss to the BIF or the SAIF. Amends the Home Owner's Loan Act to repeal the conditions placed upon public disclosure of the reports of conditions supplied to the Director of the Office of Thrift Supervision with respect to Federal savings associations. Amends the Federal Deposit Insurance Act to provide that by becoming insured under the Act a depository institution consents to be bound by Federal statutes relating to the safety and soundness of insured depository institutions. Requires an uninsured depository institution to disclose its uninsured status clearly and conspicuously on signature cards, passbooks, periodic statements of account, and in all advertising according to specified guidelines. Exempts from the disclosure requirements certain institutions not accepting retail deposits. Authorizes the National Credit Union Administration to enforce the same disclosure by uninsured credit unions.

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