Asset Growth Restriction Act of 2020

II 116TH CONGRESS 2D SESSION S. 3962 To amend the Federal Deposit Insurance Act to remove restrictions on brokered deposits, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 15, 2020 Mr. MORAN 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 remove restrictions on brokered deposits, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Asset Growth Restric- 4 tion Act of 2020’’. 5 SEC. 2. FINDINGS AND PURPOSE. 6 (a) FINDINGS.—The Congress finds that— 7 (1) restrictions on the acceptance of brokered 8 deposits were enacted in 1989 in order to prevent 9 VerDate Sep 11 2014 21:18 Jul 02, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3962.IS S3962 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 3962 IS the abuse of the deposit insurance system by trou- 1 bled depository institutions; 2 (2) since the enactment of the restrictions de- 3 scribed in paragraph (1), technological and demo- 4 graphic developments have changed the way in which 5 depository institutions seek and source deposits, and, 6 as a result, many deposits that are classified as bro- 7 kered pose little, if any, risk to the deposit insurance 8 system; and 9 (3) in today’s economy, the greatest risk to the 10 deposit insurance system is asset growth by deposi- 11 tory institutions that are less than well capitalized. 12 (b) PURPOSE.—The purpose of this Act is to remove 13 the current restrictions on brokered deposits and to au- 14 thorize the Federal Deposit Insurance Corporation to 15 issue regulations that restrict asset growth by depository 16 institutions that are less than well capitalized. 17 SEC. 3. ASSET GROWTH RESTRICTION. 18 (a) ASSET GROWTH RESTRICTION.—Section 29 of 19 the Federal Deposit Insurance Act (12 U.S.C. 1831f) is 20 amended— 21 (1) in the section heading, by striking ‘‘BRO- 22 KERED DEPOSITS’’ and inserting ‘‘ASSET 23 GROWTH RESTRICTIONS’’; and 24 VerDate Sep 11 2014 21:18 Jul 02, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3962.IS S3962 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 3962 IS (2) by striking subsections (a) through (i), and 1 inserting the following: 2 ‘‘(a) DEFINITIONS.—In this section, the terms ‘aver- 3 age’, ‘critically undercapitalized’, and ‘well capitalized’ 4 have the meanings given the terms in section 38(b). 5 ‘‘(b) REGULATIONS REQUIRED.—Not later than 18 6 months after enactment of the Asset Growth Restriction 7 Act of 2020, the Corporation, in consultation with the 8 Board of Governors of the Federal Reserve System and 9 the Comptroller of the Currency, shall promulgate regula- 10 tions imposing a restriction on average total asset growth 11 for insured depository institutions that are less than well 12 capitalized to maintain safety and soundness and minimize 13 risk to the Deposit Insurance Fund. 14 ‘‘(c) MAXIMUM LEVEL OF GROWTH.—As part of the 15 regulations described in subsection (b), the Corporation 16 shall— 17 ‘‘(1) establish a framework to impose one or 18 more maximum levels of growth in average total as- 19 sets that an insured depository institution that is 20 less than well capitalized may not exceed, and pro- 21 vide appropriate adjustments for growth resulting 22 from corporate restructuring such as acquisitions or 23 mergers; and 24 VerDate Sep 11 2014 21:18 Jul 02, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3962.IS S3962 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 3962 IS ‘‘(2) establish a waiver process to enable the 1 Corporation to waive the maximum level established 2 in paragraph (1) upon application by an insured de- 3 pository institution that is not critically under- 4 capitalized, based on conditions set by the Corpora- 5 tion. 6 ‘‘(d) EXEMPTIONS AND ADDITIONAL RESTRIC- 7 TIONS.—As part of the regulations described in subsection 8 (b), the Corporation may— 9 ‘‘(1) exempt specified classes of assets from the 10 asset growth restriction if the Corporation, in its 11 discretion, determines that growth in such assets 12 does not present risks to the safety and soundness 13 of an insured depository institution; and 14 ‘‘(2) impose additional restrictions on insured 15 depository institutions to prevent circumvention or 16 evasion of this section by an insured depository in- 17 stitution resulting from actions taken by the insured 18 depository institution by, or through, its affiliates. 19 ‘‘(e) ORDERS.—The Corporation may, by order— 20 ‘‘(1) establish a less restrictive level of growth 21 restriction for a particular insured depository insti- 22 tution that is less than well capitalized, or a group 23 of insured depository institutions that are less than 24 well capitalized, if the Corporation finds that such a 25 VerDate Sep 11 2014 21:18 Jul 02, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3962.IS S3962 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 3962 IS level will not pose an undue risk to the Deposit In- 1 surance Fund; and 2 ‘‘(2) establish a more restrictive level of growth 3 restriction for a particular insured depository insti- 4 tution that is less than well capitalized, or a group 5 of insured depository institutions that are less than 6 well capitalized, if the Corporation finds that such a 7 level is necessary to protect the Deposit Insurance 8 Fund. 9 ‘‘(f) CONFORMING REGULATIONS.—The Corporation 10 shall revise its existing regulations to ensure that they con- 11 form to this section.’’. 12 (b) RULE OF CONSTRUCTION.—An insured deposi- 13 tory institution that is in compliance with the regulations 14 or orders issued pursuant to section 29 of the Federal De- 15 posit Insurance Act (12 U.S.C. 1831f), as amended by 16 subsection (a) of this section, shall be deemed to be in 17 compliance with the asset growth standard established 18 pursuant to section 39 of that Act (12 U.S.C. 1831p–1). 19 Æ VerDate Sep 11 2014 21:18 Jul 02, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S3962.IS S3962 pamtmann on DSKBC07HB2PROD with BILLS