Summary: H.R.1063 — 100th Congress (1987-1988)All Information (Except Text)

There is one summary for H.R.1063. Bill summaries are authored by CRS.

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Introduced in House (02/10/1987)

Thrift Forbearance and Supervisory Reform Act - Amends the Home Owners' Loan Act of 1933 to authorize a qualified Federal savings and loan association to amortize on its financial statements over five to ten years any loss it would otherwise be required to reflect in its financial statement for a calendar year through 1991. Defines a "qualified association" as any association: (1) that is located in a region which the Federal Home Loan Bank Board has designated as economically depressed; or (2) if a significant portion of all the loans held by such association are loans to borrowers in such regions or loans secured by real property in such regions.

Directs the Board to allow an association which engages in troubled debt restructuring involving only modification of the terms of the original debt instrument, under certain conditions and to the extent consistent with generally accepted accounting principles, to: (1) account for the effects of the debt restructuring prospectively; and (2) continue to account for such association's investment in the original debt instrument in the amount recorded before such restructuring. Requires the Board to prescribe regulations that: (1) require accurate disclosure of the status of such troubled debt restructuring in the association's reports of condition; and (2) may provide for the classification of restructured assets as "Restructured and in Compliance with Modified Terms."

Provides that any Board regulation which prescribes procedures and standards for appraising the value of association loans for accounting purposes, classifying association loans, or establishing reserves or allowances for possible losses on association loans shall not be effective to the extent it is inconsistent with generally accepted accounting principles. Prohibits the Board from implementing or enforcing any such standard or procedure not promulgated by regulation.

Requires any amount which an association holds as a general or unallocated reserve or allowance for possible loan losses to be treated as capital for purposes of determining regulatory capital and regulatory net worth for such association.

Amends the National Housing Act to make the same amendments with respect to the Federal Savings and Loan Insurance Corporation (FSLIC) and FSLIC-insured institutions.

Amends the Federal Home Loan Bank Act to direct the Board to establish a procedure under which and association, insured institution, or member institution may appeal for and obtain a review by the principal supervisory agent for its Federal home loan bank district of any determination by any examiner or other employee of the Board, the FSLIC, or the Federal Home Loan Bank for such district concerning the appraisal of an association's or institution's loan, the classification of a loan, or any requirement to establish or add to a reserve or allowance for a possible loss on any loan. Requires such procedures to provide for the appointment by the supervisory agent, at the request of the association or institution, of a panel of independent arbiters who shall review the appealed determination and report its recommendations to the supervisory agent. Requires the requesting association or institution to pay all panel expenses.

Requires the Board to establish procedures for periodically reviewing the regulations prescribed by the Board and the FSLIC and the regulatory responsibilities shared by the Board, the FSLIC, and the Federal Home Loan Banks to ensure that the Board's overall regulatory structure remains responsive and sufficiently coordinated under changing conditions. Directs the Board to ensure that: (1) associations and institutions have the flexibility to renegotiate acquisition, development, and construction loans without incurring unnecessary regulatory delays in receiving approval or having such renegotiated loans treated as new loans for regulatory purposes if such treatment would not be required under generally accepted accounting principles; (2) examiners and other employees of the Board, the FSLIC, and the Federal Home Loan banks have sufficient flexibility in classifying loans held by the institutions they supervise to take into account differences in the types of institutions, the types of loans examined, and local economic conditions; and (3) such examiners and employees have sufficient flexibility to take into account other sources of credit of a borrower, in addition to the financial assets pledged to secure a loan, in classifying the assets of the institution holding the loan.

Authorizes the Board to allow such supervisory agents to waive the requirement that any loan renegotiation be approved by such an agent, if a supervisory agreement between the appropriate Federal Home Loan Bank and the association or institution, which provides adequate guidelines for such renegotiations, is in effect at the time of the renegotiation.

Directs the Board to establish guidelines for determining when a reappraisal of property shall be required upon any foreclosure on such property by an association or institution.

Requires the Board to prohibit the amount of any association or institution loan, secured by real property, for the acquisition, development, or construction of commercial real estate, from exceeding the lesser of: (1) the sum of the appraised value of such property at the time the loan is made and the expected value of improvements to be financed by the loan; or (2) the sum of the purchase price of the property, the aggregate amount of expenditures incurred by the borrower for property improvements as of the time the loan is made, and the expected aggregate amount of expenditures to be incurred for improvements and financed with loan proceeds. Provides for the waiver of such limitation for certain property.

Provides that the estimated expenditures and receipts of the FSLIC included in the annual Federal budget submitted to the Congress by the President shall be submitted to the President before October 16 of each year and included in the President's budget without change. Exempts the FSLIC, the Financial Institutions Examination Council, the Federal Reserve Board, Federal reserve banks, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency from fiscal, budget, appropriation, and fund apportionment requirements.

Excludes the FSLIC and its officers and employees from coverage under the civil service laws.

Amends the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act) to exempt FSLIC funds from reduction under any sequestration order.

Provides that the number of employees of the FSLIC shall not be subject to any limitation imposed by any executive branch officer outside such agency.

Directs the FSLIC to: (1) establish a procedure for transferring officers or employees out of the civil service in response to changes made by this Act and for compensating such employees for resulting losses in rights or benefits; and (2) take appropriate steps to establish health, welfare, retirement, and other benefit programs for employees and their dependents.

Subjects the FSLIC to audits by the Comptroller General. Establishes the FSLIC as a mixed-ownership Government corporation (currently listed as a wholly-owned Government corporation).

Directs the Board to: (1) study the feasibility of establishing an asset acquisition corporation as a subsidiary of the Federal Assets Disposition Association to relieve thrift institutions of the burden of holding and maintaining real estate assets by acquiring such assets in exchange for debt securities; and (2) report its findings and appropriate legislative recommendations to specified congressional committees within four months after enactment of this Act.