Text: S.3052 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in Senate (03/01/2010)

2d Session
S. 3052

To address the establishment and maintenance of the Systemic Resolution Fund of the Federal Deposit Insurance Corporation, and for other purposes.


March 1, 2010

Mr. Menendez introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs


To address the establishment and maintenance of the Systemic Resolution Fund of the Federal Deposit Insurance Corporation, 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 “Ending Taxpayer Bailouts by Making Wall Street Pay Act of 2010”.

SEC. 2. Definitions.

In this Act—

(1) the term “Corporation” means the Federal Deposit Insurance Corporation;

(2) the term “Fund” means the Systemic Resolution Fund established under this Act;

(3) the terms “financial company” and “covered financial company” have the same meanings as in section 2 of the Restoring American Financial Stability Act of 2010; and

(4) the term “off-balance-sheet activity” includes—

(A) any contractual arrangement to which an unconsolidated entity is a party, under which the registrant has—

(i) any obligation under certain guarantee contracts;

(ii) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity, or market risk support to that entity for such assets;

(iii) any obligation under certain derivative instruments; and

(iv) any obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the registrant, or engages in leasing, hedging, or research and development services with the registrant; and

(B) transactions that are or involve—

(i) direct credit substitutes, in which a bank substitutes its own credit for a third party, including standby letters of credit;

(ii) irrevocable letters of credit that guarantee repayment of commercial paper or tax-exempt securities;

(iii) risk participations in bankers' acceptances;

(iv) sale and repurchase agreements;

(v) asset sales with recourse against the seller;

(vi) interest rate swaps;

(vii) credit swaps;

(viii) commodity contracts;

(ix) forward contracts;

(x) securities contracts;

(xi) lease obligations, including obligations from synthetic leases;

(xii) obligations existing in an investment accounted for by the equity method;

(xiii) obligations arising from structured investment vehicles; and

(xiv) such other activities or transactions as the Agency may, by rule, define.

SEC. 3. Systemic resolution fund.

(a) Establishment.—There is established the Systemic Resolution Fund, which the Corporation shall—

(1) maintain and administer;

(2) use to facilitate the resolution of a covered financial company, as provided in subsection (b), or take such other actions as are authorized for the Corporation; and

(3) invest in accordance with section 13(a) of the Federal Deposit Insurance Act.

(b) Uses of the fund.—The Fund shall be available to the Corporation for use with respect to a covered financial company—

(1) to cover the costs incurred by the Corporation, including as receiver, in exercising its rights, authorities, and powers and fulfilling its obligations and responsibilities;

(2) to repay initial capitalization appropriations under this section; and

(3) to cover the costs of systemic stabilization purposes.

(c) Prohibitions.—Notwithstanding any other provision of law amounts in the Fund may not be used to convert or maintain a financial company that is insolvent or in receivership, except to the extent necessary to insure systemic stabilization in the resolution of such financial company.

(d) Deposits to the fund.—All amounts assessed against a financial company under this section shall be deposited into the Fund.

SEC. 4. Assessments.

(a) Minimum size of the fund.—The Corporation shall, by rule, establish the minimum size of the Fund, consistent with subsections (a) and (b), but amounts maintained in the Fund shall in no case exceed an amount equal to 1 percent of the gross domestic product of the United States.

(b) Assessments To maintain fund.—The Corporation shall impose assessments on financial companies in such amounts and in such manner, and subject to such terms and conditions as the Corporation, by regulation, determines are necessary for the amount in the Fund to be maintained at not less than the minimum size established pursuant to subsection (a).

(c) Assessments To replenish the fund.—If the Fund falls below the minimum size established pursuant to subsection (a) the Corporation shall impose assessments on financial companies, in such amounts and such manner, and subject to consideration of the factors set forth in subsection (e), as are necessary for the Fund to meet or exceed the minimum size established pursuant to subsection (a) before the end of the 8-year period beginning on the date on which the Fund first fell below the minimum amount (or such longer period as the Corporation may determine to be necessary due to extraordinary circumstances).

(d) Minimum assessment threshold.—The Corporation may not impose an assessment under this subsection on any financial company that the Corporation determines does not pose a systemic risk to the United States financial system.

(e) Reallocation required.—The Corporation shall, by rule, establish a mechanism whereby the systemic risk regulator reallocates the assessments for the fund annually among all the systemically risky financial companies, to include the authority to refund contributions, as necessary or appropriate in the determination of the Corporation.

(f) Factors for consideration.—In taking actions and making determinations under this subsection, the Corporation shall seek to prevent sharp swings in the assessment rates for financial companies, and shall take into account—

(1) the actual or expected risk of losses to the Fund;

(2) economic conditions generally affecting financial companies, so as to allow assessments and the Fund to increase during more favorable conditions and to decrease during less favorable economic conditions;

(3) any assessments imposed on a financial company or a subsidiary or affiliate of a financial company that is—

(A) an insured depository institution, subject to assessments under section 7 or 13(c)(4)(G) of the Federal Deposit Insurance Act;

(B) a member of the Securities Investor Protection Corporation, subject to assessments under section 4 of the Securities Investor Protection Act of 1970; or

(C) an insurance company, subject to assessments pursuant to applicable State law to cover (or reimburse payments made to cover) the costs of the rehabilitation, liquidation, or other State insolvency proceeding with respect to one or more insurance companies;

(4) the risks presented by the financial company to the financial system and the extent to which the financial company has, or likely would, benefit from the resolution of a financial company;

(5) any off-balance-sheet activities of the financial company; and

(6) such other factors as the Corporation may determine to be appropriate.

(g) Permissible distinctions for assessments.—In establishing the assessment system for the Fund, the Corporation, by regulation, may differentiate among financial companies based on size, complexity of operations or organization, relationships, transactions, direct or indirect activities, and any other factors that the Corporation may deem appropriate.

(h) Initial capitalization.—There are authorized to be appropriated to the Secretary, for fiscal years 2010 and 2011, such sums as may be necessary to initially capitalize the Fund in accordance with this section.