GARN-ST GERMAIN DEPOSITORY 96 STAT. 1544 PUBLIC LAW 97-320-OCT. 15, 1982 NEWMIBOR|1000 REINVESTMENT CORPORATION Ser. 710. (a) Section 604 of the Neighborhood Reinvestment Corporation Art (Public Law 95-557) is amended (1) by redesignating subsections (f), (g), and thì as subsections 'g), ch', and til, respectively, and by inserting aflei subsection iẹ) the following. "In A director who is necessarily absent from a meeting of the board, or of a committee of the board, may participate in such meeting through a July designated representative who is nerving, pursuant to appointment by the President of the United States, by and with the advier and consent of the Senate, in the same department, agency, corporation, or instrumentality so the absent director, or in the case of the Comptroller of the Currency. through a duly designated Deputy Comptroller."; and (2) by inserting in wetion Gillig), as redesignated, aller "members" a comme and the words "or their representatives as provided in subsection '0.". ibi Section 60brck3, of such Act is amended by inserung ́funda,” alter provide". 101 STAT. 1938 42 USC 3103 HOUSING AND COMMUNITY PUBLIC LAW 100-242-FEB. 3; 1988 SEC. 328. NEIGHBORHOOD REINVESTMENT CORPORATION. (a) COMPOSITION OF BOARD.-Section 504 of the Neighbortions Reinvestment Corporation Act is amended (1) by inserting before the semicolon in subsection (841) the following: "or a member of the Federal Home Loan Bank Board to be designated by the Chairman '; 12 by striking out subsection (13) and inserting in lieu theree the following 3) the Chairman of the Board of Gov. ernors of the Federal Reserve System, or a member of the Board of Governors of the Federal Reserve System to be designated by the Chairman:"; (3) by inserting before the semicolon in subsection (114) the following "or the appointive member of the Board of Directors of the Federal Deposit Insurance Corporation if so designated by the Chairman"; and (4) by striking out "Administrator" in subsection (816) and inserting in lieu thereof the word "Chairman"; and by inserting after "Administration” the following. "or a member of the Beard of the National Credit Union Administration to be designated by the Chairman.". CRANSTON-GONZALEZ NATIONAL PUBLIC LAW 101-625-OCT. 25, 1990 SEC. 917. NEIGHBORHOOD REINVESTMENT CORPORATION (c) AUTHORIZATION OF APPROPRIATIONS.-Section 608(a) of the Neighborhood Reinvestment Corporation Act (42 U.S.C. 8107(a)) is amended to read as follows: "aX1) There are authorized to be appropriated to the corporation to carry out this title $35.000.000 for fiscal year 1991 and $36,500,000 for fiscal year 1992. Not more than 15 percent of any amount appropriated under this paragraph for any fiscal year may be used for administrative expenses. "(2) of the amount appropriated pursuant to this subsection_for each of the fiscal years 1991 and 1992, amounts appropriated in excess of the amount necessary to continue existing services of the Neighborhood Reinvestment Corporation in revitalizing declining neighborhoods shall be available A) to expand the national neighborhood housing services network and to assist network capacity development, including expansion of rental housing resources; "B) to expand the loan purchase capacity of the national neighborhood housing services secondary market operated by Neighborhood Housing Services of America: " to make grants to provide incentives to extend lowincome housing use in connection with properties subject to prepayment pursuant to the Low-Income Housing Preservation and Resident Ownership Act of 1990; "D) to increase the resources available to the national neighborhood housing services network programs for the purchase of multifamily and single-family properties owned by the Secretary of Housing and Urban Development for rehabilitation (if neces sary) and sale to low and moderate-income families; and E to provide matching capital grants, operating subsidies. and technical services to mutual housing associations for the development, acquisition and rehabilitation of multifamily and single-family properties (including properties owned by the Secretary of Housing and Urban Development) to ensure afford. ability by low- and moderate-income families.". 104 STAT. 4079 42 USC. 8107 WEDNESDAY, MARCH 1, 1995. FEDERAL DEPOSIT INSURANCE CORPORATION WITNESSES RICKI TIGERT HELFER, CHAIRMAN, FDIC STEVE SEELIG, DIRECTOR, DIVISION OF FINANCE, FDIC JOHN BOVENZI, DIRECTOR, DIVISION OF DEPOSITOR AND ASSET SERVICES, FDIC GERALD STANTON, ASSISTANT DIRECTOR, DIVISION OF RESOLU TIONS, FDIC N. JACK TAYLOR, JR., SENIOR LIQUIDATION SPECIALIST, OFFICE OF AFFORDABLE HOUSING, FDIC WILLIAM R. WATSON, DIRECTOR, DIVISION OF RESEARCH AND STATISTICS, FDIC OPENING REMARKS Mr. LEWIS. Good morning. Today's hearing, I am pleased to introduce and welcome Ms. Ricki Tigert Helfer, FDIC. Ms. Helfer, would you like to introduce your associates, and from there, you can read all of your remarks, summarize them, we will put them in the record for sure and spend as much time as we can on the questions. Welcome. MS. HELFER'S SUMMARY REMARKS MS. HELFER. Thank you very much. This is Steve Seelig who is the Director of the Division of Finance of the Corporation. And John Bovenzi who is the Director of the Division of Depositor and Asset Services. I have some other colleagues including Roger Watson, who is the Director of the Division of Research and Statistics. And they will also help, if necessary, in responding to questions. Mr. Chairman and Congressman Stokes, I am pleased to have the opportunity to address the current status of the areas of responsibility of the Federal Deposit Insurance Corporation that involve appropriated funds, the Federal Savings and Loan Insurance Resolution Fund and the Affordable Housing Program. I have prepared a detailed written statement for the record. But in the interest of time, I would like to submit my written statement and talk more briefly about three important points: Point number one, we are requesting no new appropriations at this time. Point number two, we may again have to request appropriations in the future, depending on the demands upon the Savings Association Insurance Fund once the FDIC begins resolving thrift failures from the SAIF on July 1st. Point number three, we have made signifi(709) cant progress toward concluding the financial affairs of the defunct Federal Savings and Loan Insurance Corporation. Mr. Chairman, our current projections indicate that the $827 million appropriated by this subcommittee last year will be sufficient to fund the activities of the FRF, for fiscal year 1996, provided that the appropriation remains available until expended. At this time, the FDIC is also not requesting any appropriations for the SAIF for fiscal year 1996. The Resolution Trust Corporation Completion Act of 1993 authorizes an $8 billion appropriation for the SAIF to be used to cover insurance losses, subject to certain specific certifications regarding the capacity of the thrift industry to support higher assessment payments. The authorization runs through fiscal year 1998. In addition, that legislation provides that unexpended RTC funding at the time of the RTC's termination at the end of this year will be available for the SAIF for two years, subject to the same certifications. In both cases, the funds will be unavailable to capitalize the SAIF except in fairly extreme circumstances under those certifications. Current estimates indicate that the resources of the SAIF are adequate to meet near-term demands. However, the financial condition of the fund is weak. It has a balance of only $1.8 billion. For it to reach the capitalization level mandated by the Congress of $1.25 per $100 in insured deposits, we would need an additional $6.7 billion. Assessment income from SAIF members has only been available to the fund since 1993. Previous to that, the Financial Institutions Reform Recovery and Enforcement Act, or FIRREA, enacted in 1989, mandated that assessment revenue be diverted to the Financing Corporation, the Resolution Funding Corporation and the FRF to address the thrift crisis. Although the savings and loan industry, I am very happy to say, is relatively healthy, the SAIF is undercapitalized and remains vulnerable in the short run to the failure of a large institution or to several medium-sized failures, or to any significant unanticipated increases in losses. The SAIF will continue to be underfunded in the immediate future because of the continuing drain on assessments from the FICO obligation. In accordance with statutory requirements, approximately 45 percent, or $780 million of assessment income this year, actually will be diverted to pay interest on the FICO bonds. It was approximately that amount last year as well. These bonds were issued in an unsuccessful attempt to recapitalize the old FSLIC. If the FICO obligation were eliminated later in 1995, the SAIF would be capitalized by 1999. Although the SAIF is currently solvent, the FDIC remains concerned about its stability. As I noted before, Mr. Chairman, the FDIC and the RTC have made significant progress toward concluding the financial affairs of the defunct FSLIC. Current obligations have been met and where savings could be realized, assistance agreements were renegotiated, restructured or terminated. /The FDIC and RTC have attempted to negotiate voluntary early términations of assistance agreements in cases where there was a potential for additional savings, and that activity continues today. This subcommittee's willingness to provide substantial funds in support of these renegotiations was directly responsible for enabling the RTC and the FDIC to successfully renegotiate and restructure these agreements. I commend the subcommittee for your support here. The renegotiation of these agreements achieved a considerable savings for the American taxpayer of between $1.6 billion and $3.2 billion to the government as a whole, depending upon whether the acquirers used or did not use the tax benefits in the original agreements. The FRF began operation in 1989 with 202 assistance agreements covering 338 institutions with assets of about $151 billion. The initial cost of the 202 agreements was estimated at around $69.7 billion. During the five-year period ending on September 30th, of last year, 136 of these agreements have been renegotiated, restructured or terminated through the combined efforts of the FDIC and RTC, leaving a total of $2.5 billion in future projected costs for the 66 remaining open agreements. The overall cost estimate for resolving assistance agreements has been reduced from $69.7 billion to $62.6 billion. Covered assets have been reduced by 98 percent from $61.1 billion on December 31st, 1988, to $1.2 billion on September 30, 1994. We believe the anticipated revenue from FRF operations and the $827 million multiyear appropriation will be sufficient to complete the work of the FRF in resolving the old FSLIC assets. The FDIC has continued the prepayment of FRF promissory notes at the earliest opportunity to reduce the interest cost to the FRF and the taxpayer. Notes payable have been reduced by $22.8 billion. The FRF has two promissory note obligations remaining to one institution in the amount of $189.4 million. Scheduled prepayments on the notes to this institution will continue through fiscal year 1998. Finally, the FDIC in conjunction with the FRF assumed from the former FSLIC, roughly, $14 billion in receivership and corporateowned assets resulting from failed savings and loans. Through FDIC liquidation efforts, such assets held by the FRF have been reduced from $14 billion to approximately $2 billion at the end of September last year. Mr. Chairman, my written testimony also addresses issues related to the assets and obligations of the Resolution Trust Corporation that will be absorbed by the FRF upon the termination of RTC during fiscal year 1996, and the importance of accurately establishing reserves for these assets to avoid the need for future appropriations for the FRF. In addition, it discusses the potential impact of recent litigation on the FRF. My written statement also discusses the FDIC Affordable Housing program. I understand that this subcommittee voted last week to rescind fiscal year 1995 appropriations for that program. Although the program has had a number of notable achievements, we continue to defer to the judgment of Congress regarding funding for it. Mr. Chairman, it has been a pleasure addressing you and I look forward to responding to your questions. [The information follows:] |