Depositor Protection Act of 2023
This bill expands Federal Deposit Insurance Corporation (FDIC) protections and the actions the FDIC is allowed to take, including in the event of an institutional failure.
First, the bill expands for two years FDIC deposit insurance for an amount up to $100,000,000 that a depositor maintains at an insured depository institution in a noninterest-bearing transaction account. (Currently, the FDIC insures deposits up to $250,000.)
The bill also increases the reciprocal deposit limit applicable to depository institutions. (Reciprocal deposits are used by institutions to increase the availability of deposit insurance by splitting large deposits using a reciprocal network of institutions.)
For 90 days after the date of enactment, the bill allows for the acquisition of distressed banks by a bank holding company without regulatory approval under certain circumstances.
The bill also allows the FDIC to facilitate a merger, sale, assumption of liabilities, or stock acquisition involving the failure of a large institution using an adjusted least-cost resolution calculation.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1572 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 1572
To amend the Federal Deposit Insurance Act to address transaction
account guarantees, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 11, 2023
Mr. Hagerty introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Federal Deposit Insurance Act to address transaction
account guarantees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Depositor Protection Act of 2023''.
SEC. 2. TRANSACTION ACCOUNT GUARANTEES.
(a) In General.--Section 11(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(1)) is amended--
(1) in subparagraph (B)--
(A) by striking ``The net amount'' and inserting
the following:
``(i) In general.--Subject to clause (ii),
the net amount''; and
(B) by adding at the end the following:
``(ii) Insurance for noninterest-bearing
transaction accounts.--
``(I) In general.--Notwithstanding
clause (i), and subject to subclause
(II) of this clause, the Corporation
shall insure the net amount, in an
amount that is not more than
$100,000,000, that any depositor at an
insured depository institution
maintains in a noninterest-bearing
transaction account. Such amount shall
not be taken into account when
computing the net amount due to such
depositor under clause (i).
``(II) Ability of certain insured
depository institutions to opt-out.--
``(aa) In general.--An
insured depository institution
that has less than
$250,000,000,000 in total
consolidated assets may elect
not to participate with respect
to the increased amount of
insurance made available under
subclause (I).
``(bb) Limitation on
assessment of fee.--The
Corporation may not assess a
fee on any insured depository
institution that elects not to
participate with respect to the
increased amount of insurance
made available under subclause
(I).
``(III) Definition.--In this
clause, the term `noninterest-bearing
transaction account' means a deposit or
account maintained at an insured
depository institution--
``(aa) with respect to
which interest is neither
accrued nor paid;
``(bb) on which the
depositor or account holder is
permitted to make withdrawals
by negotiable or transferable
instrument, payment orders of
withdrawal, telephone or other
electronic media transfers, or
other similar items for the
purpose of making payments or
transfers to third parties or
others; and
``(cc) on which the insured
depository institution does not
reserve the right to require
advance notice of an intended
withdrawal.''; and
(2) in subparagraph (C), by striking ``subparagraph (B)''
and inserting ``subparagraph (B)(i)''.
(b) Reversion.--On the date that is 2 years after the date of
enactment of this Act, section 11(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
(1) by amending subparagraph (B) to read as follows:
``(B) Net amount of insured deposit.--The net
amount to any depositor at an insured depository
institution shall not exceed the standard maximum
deposit insurance amount as determined in accordance
with subparagraphs (C), (D), (E), and (F) and paragraph
(3).''; and
(2) in subparagraph (C), by striking ``subparagraph
(B)(i)'' and inserting ``subparagraph (B)''.
SEC. 3. RECIPROCAL DEPOSITS.
Section 29(i)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1831f(i)(1)) is amended--
(1) in subparagraph (A), by striking ``$5,000,000,000'' and
inserting ``$10,000,000,000''; and
(2) in subparagraph (B), by striking ``20 percent'' and
inserting ``25 percent''.
SEC. 4. ADJUSTED LEAST COST RESOLUTION.
Section 13(c)(4) of the Federal Deposit Insurance Act (12 U.S.C.
1823(c)(4)) is amended--
(1) by redesignating subparagraph (H) as subparagraph (I);
and
(2) by inserting after subparagraph (G) the following:
``(H) Non-systemic secondary cost to the deposit
insurance fund.--
``(i) Definitions.--In this subparagraph:
``(I) Large insured depository
institution.--The term `large insured
depository institution' means an
insured depository institution with
total consolidated assets of not less
than $100,000,000,000.
``(II) Non-systemic secondary cost
to the deposit insurance fund.--The
term `non-systemic secondary cost to
the Deposit Insurance Fund' means a
cost to the Deposit Insurance Fund
from--
``(aa) the appointment of
the Corporation as a receiver
for a second or additional
insured depository institution
as a direct and contemporaneous
result of the compliance by the
Corporation with subparagraphs
(A) and (E) with respect to a
large insured depository
institution, including the cost
of liquidating any such second
or additional insured
depository institution in
compliance with subparagraphs
(A) and (E);
``(bb) a reduction in the
price of an asset as a direct
and contemporaneous result of
the liquidation by the
Corporation of a large insured
depository institution in
compliance with subparagraphs
(A) and (E); or
``(cc) any other direct and
contemporaneous result of the
compliance by the Corporation
with subparagraphs (A) and (E)
with respect to a large insured
depository institution (other
than any such loss that arises
from serious adverse effects on
economic conditions or
financial stability within the
meaning of subparagraph (G)).
``(ii) Action permitted upon determination
by the board of directors.--
``(I) In general.--Notwithstanding
subparagraphs (A) and (E), if the Board
of Directors (upon a vote of not less
than two-thirds of the members of the
Board of Directors) makes a
determination described in subclause
(II), the Corporation may take action
or assistance under paragraph (2) for
the purpose of facilitating--
``(aa) a merger or
consolidation of the applicable
large insured depository
institution with another
insured depository institution;
``(bb) the sale of any or
all of the assets of the
applicable large insured
depository institution;
``(cc) the assumption of
any or all of the liabilities
of the applicable large insured
depository institution by
another insured depository
institution; or
``(dd) the acquisition of
the stock of the applicable
large insured depository
institution.
``(II) Determination described.--A
determination described in this
subclause is a determination that--
``(aa) the compliance by
the Corporation with
subparagraphs (A) and (E) with
respect to a large insured
depository institution for
which the Corporation has been
appointed receiver would result
in a non-systemic secondary
cost to the Deposit Insurance
Fund; and
``(bb) any action or
assistance under this
subparagraph would avoid or
mitigate the non-systemic
secondary cost to the Deposit
Insurance Fund described in
item (aa).
``(iii) Adjusted least-cost resolution
requirement.--The Corporation may not take any
action or provide any assistance under this
subparagraph unless 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 taking of
that action or provision of that assistance
with respect to an insured depository
institution is the least costly to the Deposit
Insurance Fund, taking into account the non-
systemic secondary costs to the Deposit
Insurance Fund that would result without the
taking of that action or the provision of that
assistance, of all possible methods for meeting
the obligations of the Corporation under this
section.
``(iv) Documentation required.--The
Chairperson of the Board of Directors shall--
``(I) document any determination
under clause (ii); and
``(II) retain the documentation for
review under clause (v).
``(v) GAO review.--The Comptroller General
of the United States shall review and report to
Congress on any determination under clause
(ii), 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.
``(vi) Notice.--
``(I) In general.--Not later than 3
days after making a determination under
clause (ii), the Secretary of the
Treasury shall provide written notice
of any determination under clause (ii)
to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the
Committee on Financial Services 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 (ii).''.
SEC. 5. ACQUISITIONS OF DISTRESSED BANKS.
(a) Definitions.--In this section:
(1) Appropriate federal banking agency; insured bank.--The
terms ``appropriate Federal banking agency'' and ``insured
bank'' have the meanings given the terms in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
(2) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System.
(3) Bank holding company; control; subsidiary.--The terms
``bank holding company'', ``control'', and ``subsidiary'' have
the meanings given the terms in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841).
(4) Covered entity.--The term ``covered entity'' means--
(A) after a transaction described in subsection
(b)(1)(A), the bank holding company of which the
applicable distressed insured bank has become a
subsidiary;
(B) after a transaction described in subsection
(b)(1)(B), the bank holding company that has acquired
the direct or indirect ownership or control described
in that provision; and
(C) after a merger or consolidation described in
subsection (b)(1)(C), the bank holding company that
results because of that merger or consolidation.
(5) Distressed insured bank.--The term ``distressed insured
bank'' means an insured bank that has a class of equity
securities, or is controlled, directly or indirectly, by a
company that has a class of equity securities--
(A) registered pursuant to section 12(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78l(b)); and
(B) the price of which on a national securities
exchange has declined not less than 20 percent at any
time on or after March 1, 2023, as compared with the
highest price of those securities on that exchange on
or after March 1, 2023.
(6) Equity security; exchange.--The terms ``equity
security'' and ``exchange'' have the meanings given the terms
in section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)).
(7) National securities exchange.--The term ``national
securities exchange'' means an exchange that is registered in
accordance with section 6 of the Securities Exchange Act of
1934 (15 U.S.C. 78f).
(8) Total consolidated assets.--The term ``total
consolidated assets'' means, with respect to an entity, the
total consolidated assets of that entity, as determined
pursuant to the instructions of Form FR Y-9C of the Board.
(b) Temporary Waiver of Regulatory Approvals for Acquisitions of
Distressed Banks.--
(1) In general.--Subject to paragraphs (2) and (3), except
as provided in paragraph (4), and notwithstanding any
requirement or restriction relating to notification, approval,
or other matter under section 3 or 4 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842, 1843), section 7(j) or
18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1817(j),
1828(c)), or any other Federal or State law, after written
notice to the Board--
(A) a distressed insured bank may become a
subsidiary of a bank holding company;
(B) a bank holding company may acquire direct or
indirect ownership or control of any voting shares of
any distressed insured bank or any company that
controls a distressed insured bank; and
(C) a bank holding company may merge or consolidate
with a bank holding company that has a subsidiary that
is a distressed insured bank.
(2) Conditions.--Paragraph (1) shall apply only if--
(A) after the applicable transaction or other
action under that paragraph--
(i) the applicable covered entity would
meet the required capital levels for well
capitalized bank holding companies established
by the Board; or
(ii) in the case of a transaction or other
action described in subparagraph (A) or (B) of
that paragraph, the total consolidated assets
of the applicable covered entity would be not
more than 2 times the amount of the total
consolidated assets (as measured immediately
before the transaction or other action) of--
(I) in the case of an action
described in subparagraph (A) of that
paragraph, the bank holding company of
which the distressed insured bank is
becoming a subsidiary as a result of
that action; or
(II) in the case of an acquisition
described in subparagraph (B) of that
paragraph, the bank holding company
that is acquiring direct or indirect
ownership or control of any voting
shares of the distressed insured bank
or the company that controls a
distressed insured bank; and
(B) each insured bank controlled by the applicable
covered entity--
(i) has a composite rating, as determined
by the appropriate Federal banking agency in
the most recent report of examination of the
applicable insured bank, of 1 or 2 under the
Uniform Financial Institution Rating System;
and
(ii) has been assigned by the appropriate
Federal banking agency a rating of
``outstanding'' or ``satisfactory'' in the most
recent Community Reinvestment Act examination
of the applicable insured bank.
(3) Expiration.--A transaction or other action to which
paragraph (1) applies shall be consummated not later than 90
days after the date of enactment of this Act.
(4) Exceptions.--Paragraph (1) shall not apply to--
(A) any action that would cause a distressed
insured bank to become a subsidiary of an insured bank;
(B) any acquisition of direct or indirect ownership
or control by an insured bank of any voting shares of
any distressed insured bank or any company that
controls a distressed insured bank; or
(C) any merger, consolidation, acquisition of
assets, or other acquisition of control, of another
company that would be subject to section 14 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1852).
(c) No Premerger Notification and Waiting Period.--A transaction
under subsection (b) shall be exempt from the requirements of section
7A of the Clayton Act (15 U.S.C. 18a).
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Committee on Banking, Housing, and Urban Affairs. Hearings held.
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