Federal Savings and Loan Insurance Corporation and Financial Regulations Act

(Measure passed Senate, amended)

Federal Savings and Loan Insurance Corporation and Financial Regulations Act - Title I: Emergency Acquisitions - Financial Institutions Emergency Acquisitions Amendments of 1986 - Amends the Garn-St Germain Depository Institutions Act of 1982 to extend until June 30, 1987, the Deposit Insurance Flexibility Act.

Amends the Federal Deposit Insurance Act to revise provisions governing interstate acquisitions of troubled banks involving Federal Deposit Insurance Corporation (FDIC) financial assistance. Reduces from $500,000,000 to $250,000,000 the minimum total asset requirement of a closed bank or a bank in danger of closing (as certified by the appropriate Federal or State chartering authority) which may be acquired by an out-of-State bank holding company. Authorizes an out-of-State bank or holding company to: (1) acquire a holding company that controls insured bank subsidiaries which hold assets equal to at least $250,000,000, represent a third or more of the total assets of all bank subsidiaries of such holding company, and are in danger of closing; (2) acquire such subsidiaries and affiliated banks; or (3) establish newly chartered banks in the State where such subsidiaries are chartered to merge with or purchase the assets and assume the liabilities of such subsidiaries and affiliated banks. Permits the FDIC to assist a merger or acquisition of an insured bank only at the request of the bank's directors or trustees. Provides that a bank which receives FDIC troubled bank assistance when it is eligible to be acquired by an out-of-State bank or holding company shall remain eligible for such acquisition so long as such assistance remains outstanding.

Permits an out-of-State bank to make such an extraordinary acquisition under the Federal Deposit Insurance Act only if such ownership is otherwise specifically authorized. Provides that an out-of-State bank holding company which makes such an acquisition shall, two years after such acquisition, have the same rights to make additional acquisitions and to establish branches as an in-State bank holding company. Prohibits any holding company which makes such an acquisition from being required under State law to divest any other bank or from being prevented from acquiring any other bank or holding company by reason of such acquisition.

Restructures priorities for FDIC authorization of such extraordinary acquisitions to be, in descending order, transactions between: (1) minority-controlled banks; (2) depository institutions of the same type within the same State; (3) institutions of the same type in different States which have reciprocal arrangements authorizing such acquisitions or, if no such arrangements exist, which are contiguous; (4) institutions of the same type in other different States; (5) different types of institutions in the same State; (6) different types of institutions in different States which have reciprocal arrangements authorizing such acquisitions or, if no such arrangements exist, which are contiguous; and (7) different types of institutions in other different States.

Permits the FDIC to assist in the interstate acquisition of an open or closed bank where such acquisition is authorized under applicable State law. Prohibits the FDIC from providing acquisition assistance to a holding company subsidiary that is not an insured bank.

Requires the FDIC to transmit to specified congressional committees an annual report describing extraordinary acquisitions during the preceding year and identifying the number of FDIC-assisted acquisitions.

Amends the Bank Holding Company Act of 1956 to: (1) authorize the Federal Reserve Board to dispense with notice and hearing requirements for the acquisition by a bank holding company of a bank in danger of closing; (2) require the Board to publish in the Federal Register the order approving the acquisition and identifying any nonbanking activities involved in the acquisition; and (3) authorize the Board to reduce the post-approval waiting period to five days or eliminate such period with the concurrence of the Attorney General if the Board finds that immediate action is necessary to prevent the probable failure of a bank in danger of closing as certified by the appropriate Federal or State chartering authority.

Authorizes the FDIC to organize a bridge bank to assume the deposits of, assume the liabilities of, purchase the assets of, and temporarily perform the functions of one or more closed insured banks if the FDIC Board of Directors determines that: (1) the amount necessary to operate the bridge bank will not exceed the cost of liquidating the closed banks; (2) continued operation of the insured banks is essential to the community; or (3) continued operation of the insured banks is in the interest of the depositors of the closed banks and the public. Provides that the bridge bank shall be a national bank, shall have all corporate powers of a national bank, with specified conditions, and shall be insured from the time of its organization. Requires the FDIC, at the direction of its Board of Directors, to: (1) make available sufficient funds for the bridge bank to operate; and (2) cause capital stock to be offered for sale in an amount sufficient to make possible the conduct of business of the bridge bank on a sound basis. Provides for the acquisition of the bridge bank by an out-of-State bank or holding company or 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. Directs the FDIC to wind up the affairs of the bridge bank by voluntary dissolution or by the appointment of a receiver, unless the capital stock of the bridge bank is sold or its assets are taken over and its deposits assumed by another insured bank within two years from the date of its organization. Authorizes the FDIC, in order to facilitate the sale or merger of the bridge bank with another insured depository institution, to: (1) make loans or contributions to, make deposits in, purchase assets or securities of, or assume the liabilities of, such bank or the acquiring company; or (2) guarantee the bridge bank or the acquiring company against loss by reason of such sale or merger.

Amends the Garn-St Germain Depository Institutions Act of 1982 to repeal the termination date for the NCUA conservatorship and emergency merger authorities.

Amends the Federal Credit Union Act to authorize the NCUA Board to impose conservatorship over an insured credit union if: (1) there is a willful violation of a final cease-and-desist order; or (2) there is concealment of documents or assets or refusal to submit documents of the credit union for inspection to any examiner or lawful agent of NCUA Board. Provides that the NCUA Board, as a conservator, has all the powers of the members, directors, officers, and committees of the credit union.

Title II: Federal Savings and Loan Insurance Corporation Recapitalization - 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 directed and operated by a Directorate consisting of the Director of the Office of Finance of the Federal Home Loan Banks (Banks) and two other members selected by the Chairman of the Board from presidents of the Banks or their successors.

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 its required reserves plus its 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 until it invests its required amount.

Empowers the Corporation to borrow, to issue stock to Banks, to invest in Federal Savings and Loan Insurance Corporation (FSLIC) securities, to issue debt the proceeds of which shall be invested in the FSLIC, and to make semiannual assessments ot insured institutions to make interest payments on its obligations. Provides that the Corporation shall have no employees. Authorizes the Directorate to authorize Bank and FHLBB employees to act on behalf of the Corporation. Authorizes Federal Reserve banks to act as depositaries, custodians, and fiscal agents for the Corporation. Provides that the Corporation shall be exclusively liable for its obligations which shall be lawful investments and exempt securities under laws administered by the Securities and Exchange Commission. Prohibits the Corporation from making any net new borrowings after December 31, 1987. Provides that General Accounting Office audits of the Corporation shall not be limited to periods during which Government capital has been invested therein. Limits the aggregate amount of obligations that the Corporation may issue.

Provides that Corporation assets not invested in the FSLIC may be used for interest payments on, or issuance costs of, Corporation obligations or shall be invested in the obligations in which Banks are permitted to invest reserves. Limits Corporation investments in non-interest bearing securities purchased at a discount whose face value would equal the Corporation's obligations.

Requires the liquidation of the Corporation and the retirement of its obligations by December 31, 2026.

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 reports and recommendations to the FHLBB and the FSLIC.

Amends the Government Corporations Control Act to establish the Financing Corporation as a mixed ownership Government corporation.

Authorizes the FSLIC to issue nonredeemable capital certificates and redeemable nonvoting capital stock which shall be invested in by the Corporation, shall be included as part of the primary reserve of the FSLIC, and shall pay no dividends.

Amends the National Housing Act to authorize the FSLIC to use accumulated contributions to its equity return account to pay off and retire its capital stock upon the maturity of all Corporation obligations. 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. Provides that certain statutorily prescribed actions regarding the FSLIC's primary and secondary reserves shall not apply as long as shares of its capital stock are outstanding.

Allows 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.

Provides that provisions concerning retirement of the FSLIC's capital stock shall not apply to FSLIC stock issued to the Corporation under this Act.

Repeals provisions which authorize the FSLIC, under extraordinary financial conditions, to terminate distribution of shares of its secondary reserve and use such reserve on the same basis as its primary reserve.

Reduces the total premiums paid by an insured institution to the FSLIC by the amount of any assessments paid to the Financing Corporation during the same period. Limits the total annual assessment that may be imposed on an insured institution by the FSLIC and the Financing Corporation.

Directs the FSLIC to: (1) complete quarterly reports and budgets explaining its activities, receipts, and expenditures 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 two quarters.

Amends the Federal Home Loan Bank Act to entitle any security interest granted to a Federal Home Loan Bank by any member or any affiliate of any member to priority over the claims and rights of any party having rights of a lien creditor, other than the claims of parties that are secured by actual perfected security interests that would be entitled to priority under otherwise applicable law.

Amends the National Housing Act to limit the amounts of additional premiums which may be assessed by the FSLIC during 1987 through 1991, unless the FHLBB determines that severe pressures necessitate additional funds.

Exempts FDIC-insured banks from certain prohibitions and restrictions governing the conversion into, or merger with, an FSLIC-insured institution.

Directs the FSLIC to require any independent contractor, consultant, or counsel it employs for the management or liquidation of an insured institution to fully disclose to all parties with which it deals the extent of its authority to obligate or legally bind, or to make representations on behalf of, the FSLIC.

Authorizes the President, on behalf of the Congress, to present gold medals to Jan Scruggs, Robert Doubek, and John Wheeler in recognition of their efforts to give the Vietnam Veterans Memorial to the Nation. Authorizes appropriations.

Authorizes the Secretary of the Treasury to provide for the sale of bronze duplicates of the medal.