SEC. 508. PROHIBITION AGAINST HIGHLY LEVERAGED FINANCING.
The Federal Deposit Insurance Act is amended by inserting after section 41 (as added by section 512 of this Act) the following:
SEC. 42. PROHIBITION AGAINST HIGHLY LEVERAGED FINANCING.
"(a) PROHIBITION.-No insured depository institution and no affiliate of any insured depository institution may make any loan, extend any credit, or make any investment in connection with any highly leveraged financing transaction.
"(b) HIGHLY LEVERAGED FINANCING TRANSACTION DEFINED.
"(1) IN GENERAL.-For purposes of this section, the term 'highly leveraged financing transaction' means any transaction
"(A) which involves the buyout, acquisition, or recapitalization of any business; and "(B) which
"(i) results in the business having a liabilities to assets ratio exceeding 0.75;
"(ii) increases the liabilities of the business by at least 100 percent, and results in the business having a liabilities to assets ratio exceeding 0.50; or
"(iii) has been designated by an appropriate Federal banking agency as a highly leveraged financing transaction.
"(2) DE MINIMUS EXCEPTION.-For purposes of this section, the term 'highly leveraged financing transaction' does not include any transaction involving loans and investments not exceeding $20,000,000 in the aggregate.".
It was decided in the negative
Rogers
Rohrabacher
Ros-Lehtinen
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So the amendment was not agreed to. After some further time,
The SPEAKER pro tempore, Mr. HOYER, assumed the Chair.
When Mr. CARR, Chairman, pursuant to House Resolution 266 reported the bill back to the House with an amendment adopted by the Committee.
The previous question having been ordered by said resolution.
The following amendment, reported from the Committee of the Whole House on the state of the Union, was agreed to:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Strike out all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.-This Act may be cited as the "Financial Institutions Safety and Consumer Choice Act of 1991".
(b) TABLE OF CONTENTS.
Sec. 1. Short title; table of contents.
TITLE I-SAFETY AND SOUNDNESS
Sec. 100. Short title.
Subtitle A-Deposit Insurance Funds Sec. 101. Funding for the Federal Deposit Insurance Funds.
Sec. 102. Limitation on outstanding borrowing.
Sec. 103. Repayment schedule.
Sec. 104. Borrowing for BIF from BIF members.
Subtitle B-Supervisory Reforms
Sec. 111. Improved examinations.
Sec. 112. Independent annual audits of in-
sured depository institutions.
Sec. 113. Assessments required to cover
costs of examinations.
Sec. 114. Application to FDIC required for
insurance.
Sec. 115. Regulatory requirements study.
Subtitle C-Accounting Reforms
Sec. 121. Accounting objectives, standards,
and requirements.
Sec. 122. Small business loan data required
in reports of condition. Sec. 123. Reports of financial condition by large institutions engaged in interstate banking.
Subtitle D-Prompt Regulatory Action
Sec. 131. Prompt regulatory action.
Sec. 132. Appointment of conservator or receiver for insured State depository institutions.
Subtitle E-Least-Cost Resolution
Sec. 141. Least-cost resolution.
Sec. 142. Limitation on use of liquidity lending for deposit insurance fund purposes.
Sec. 143. No assistance to troubled institution without removing management and repudiating shareholders claims.
Subtitle F-Federal Insurance for State
Chartered Depository Institutions
Sec. 151. Short title.
Sec. 152. Federal deposit insurance required for State chartered banks, savings associations, and credit. unions.
Subtitle G-Management and Conflict of
Sec. 161. Short title.
Sec. 162. Definitions.
Sec. 163. Dual service of outside counsel and accountants on board of direc
pendent public accountant shall determine and report whether the financial statements of the institution
"(A) are presented fairly in accordance with generally accepted accounting principles; and
"(B) comply with such other disclosure requirements as the Corporation and the appropriate Federal banking agency may prescribe.
"(3) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING COMPANIES.-The requirements for an independent audit under subsection (d) may be satisfied for insured depository institutions that are subsidiaries of a holding company by an independent audit of the holding company.
(e) DETECTING AND REPORTING VIOLATIONS OF LAWS AND REGULATIONS.
"(1) IN GENERAL.-An independent public accountant shall apply procedures agreed upon by the Corporation to objectively determine the extent of the compliance of any insured depository institution or depository institution holding company with laws and regulations designated by the Corporation, in consultation with the appropriate Federal banking agencies.
"(2) ATTESTATION REQUIREMENTS.-Any attestation pursuant to paragraph (1) shall be made in accordance with generally accepted standards for attestation engagements.
"(f) FORM AND CONTENT OF REPORTS AND AUDITING STANDARDS.—
"(1) IN GENERAL.-The scope of each report by an independent public accountant pursuant to this section, and the procedures followed in preparing such report, shall meet or exceed the scope and procedures required by generally accepted auditing standards and other applicable standards recognized by the Corporation.
"(2) CONSULTATION.-The Corporation shall consult with the other appropriate Federal banking agencies in implementing this subsection.
"(g) IMPROVED ACCOUNTABILITY.— "(1) INDEPENDENT AUDIT COMMITTEE.— "(A) ESTABLISHMENT.-Each insured depository institution (to which this section applies) shall have an independent audit committee entirely made up of outside directors who are independent of management of the institution, and who satisfy any specific requirements the Corporation may establish.
"(B) DUTIES.-An independent audit committee's duties shall include reviewing with management and the independent public accountant the basis for the reports issued under subsections (b)(2), (c), and (d).
"(C) CRITERIA APPLICABLE TO COMMITTEES OF LARGE INSURED DEPOSITORY INSTITUTIONS.-In the case of each insured depository institution which the Corporation determines to be a large institution, the audit committee required by subparagraph (A) shall
"(i) include members with banking or related financial management expertise;
"(ii) have access to the committee's own outside counsel; and
"(iii) not include any large customers of the institution.
"(2) REVIEW OF QUARTERLY REPORTS OF LARGE INSURED DEPOSITORY INSTITUTIONS.—
"(A) IN GENERAL.-In the case of any insured depository institution which the Corporation has determined to be a large institution, the Corporation may require the independent public accountant retained by such institution to perform reviews of the institution's quarterly financial reports in accordance with procedures agreed upon by the Corporation.
"(B) REPORT TO AUDIT COMMITTEE.-The independent public accountant referred to in subparagraph (A) shall provide the audit committee of the insured depository institution with reports on the reviews under such
subparagraph and the audit committee shall provide such reports to the Corporation, any appropriate Federal banking agency, and any appropriate State bank supervisor.
"(C) LIMITATION ON NOTICE.-Reports provided under subparagraph (B) shall be only for the information and use of the insured depository institution, the Corporation, any appropriate Federal banking agency, and any State bank supervisor which received the report.
“(3) QUALIFICATIONS OF INDEPENDENT PUBLIC
"(A) IN GENERAL.-All audit services required by this section shall be performed only by an independent public accountant who
"(i) has agreed to provide related working papers, policies, and procedures to the Corporation, an appropriate Federal banking agency, and any State bank supervisor, if requested; and
"(ii) has received a peer review that meets guidelines acceptable to the Corporation.
"(B) REPORTS ON PEER REVIEWS.-Reports on peer reviews shall be filed with the Corporation and made available for public inspection.
"(4) ENFORCEMENT ACTIONS.
"(A) IN GENERAL.-In addition to any authority contained in section 8, the Corporation or an appropriate Federal banking agency may remove, suspend, or bar an independent public accountant, upon a showing of good cause, from performing audit services required by this section.
"(B) JOINT RULEMAKING.-The appropriate Federal banking agencies shall jointly issue rules of practice to implement this paragraph.
"(5) NOTICE BY ACCOUNTANT OF TERMINATION OF SERVICES.-Any independent public accountant performing an audit under this section who subsequently ceases to be the accountant for the institution shall promptly notify the Corporation pursuant to such rules as the Corporation shall prescribe.
"(h) EXCHANGE OF REPORTS AND INFORMATION.
"(1) REPORT TO THE INDEPENDENT AUDITOR.
"(A) IN GENERAL.-Each insured depository institution which has engaged the services of an independent auditor to audit such institution shall transmit to the auditor a copy of the most recent report of condition made by the institution (pursuant to this Act or any other provision of law) and a copy of the most recent report of examination received by the institution.
"(B) ADDITIONAL INFORMATION.—In addition to the copies of the reports required to be provided under paragraph (1), each insured depository institution shall provide the auditor with
"(i) a copy of any supervisory memorandum of understanding with such institution and any written agreement between such institution and any appropriate Federal banking agency or any appropriate State bank supervisor which is in effect during the period covered by the audit; and
"(I) any action initiated or taken by the appropriate Federal banking agency or the Corporation during such period under subsection (a), (b), (c), (e), (g), (i), (s), or (t) of section 8;
"(II) any action taken by any appropriate State bank supervisor under State law which is similar to any action referred to in subclause (I); or
"(III) any assessment of any civil money penalty under any other provision of law with respect to the institution or any institution-affiliated party.
"(2) REPORTS TO BANKING AGENCIES."(A) INDEPENDENT AUDITOR REPORTS.-Each insured depository institution shall provide
to the Corporation, any appropriate Federal banking agency, and any appropriate State bank supervisor, a copy of each audit report and any qualification to such report, any management letter, and any other report within 15 days of receipt of any such report, qualification, or letter from the institution's independent auditors.
"(B) NOTICE OF CHANGE OF AUDITOR.-Each insured depository institution shall provide written notification to the Corporation, the appropriate Federal banking agency, and any appropriate State bank supervisor of the resignation or dismissal of the institution's independent auditor or the engagement of a new independent auditor by the institution, including a statement of the reasons for such change within 15 calendar days of the occurrence of the event.
"(i) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING COMPANIES.-Except with respect to any audit requirements established under or pursuant to subsection (d), the requirements of this section may be satisfied for insured depository institutions that are subsidiaries of a holding company, if
"(1) services and functions comparable to those required under this section are provided at the holding company level; and "(2) either
"(A) the institution has total assets, as of the beginning of such fiscal year, of less than $5,000,000,000; or
"(i) has total assets, as of the beginning of such fiscal year, of more than $5,000,000,000 and less than $9,000,000,000; and
"(ii) has a CAMEL composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution by the Corporation or the appropriate Federal banking agency.
"(j) EXEMPTION FOR SMALL DEPOSITORY INSTITUTIONS.-This section shall not apply with respect to any fiscal year of any insured depository institution the total assets of which, as of the beginning of such fiscal year, are less than the greater of
"(2) such amount (in excess of $150,000,000) as the Corporation may prescribe by regulation.".
(b) EFFECTIVE DATE.-The requirements established by the amendment made by subsection (a) shall apply with respect to fiscal years of insured depository institutions which begin after December 31, 1992. SEC. 113. ASSESSMENTS REQUIRED TO COVER COSTS OF EXAMINATIONS.
(a) IN GENERAL.-Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) (as added by section 111(a)(1) of this subtitle) the following new subsection: "(e) EXAMINATION FEES.
"(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY INSTITUTIONS.-The cost of conducting any regular examination or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) may be assessed by the Corporation against the institution in proportion to the assets or resources of the institution.
"(2) EXAMINATION OF AFFILIATES.-The cost of conducting any examination of any affiliate of any insured depository institution under subsection (b)(4) may be assessed by the Corporation against each affiliate which is examined in proportion to the assets or resources held by the affiliate on the date of the examination.
"(3) ASSESSMENT AGAINST DEPOSITORY INSTITUTION IN CASE OF AFFILIATE'S REFUSAL TO PAY.