We believe that is the preferred solution if possible. If not possible, as in Continental Illinois, then we are trying to set up again a vehicle that can handle the Continental Illinois situation in a more efficient manner than they were able to do with what they had at that time. Mr. WYLIE. Thank you. Thank you, Mr. Chairman. Chairman ST GERMAIN. Gentlemen, I did send down to you a question related-this is to Mr. Seidman and Mr. Clarke. Mr. Sexton has made a number of recommendations for changes in H.R. 4701, and I ask that you provide us with your reaction to each of them. Now, in the case of No. 2, the $250 million size limit should be eliminated, I believe, Mr. Sexton, that you have told staff that that should read "for failed banks" and not "for failing banks," is that correct? Mr. SEXTON. That is correct, sir. I think the issues are very different between failed and failing. Under failed, you are just looking for a way to handle a deal. Under failing, you are looking for a more orderly way to transfer ownership of institutions. So I think it is more important that the size criteria be eliminated for failed banks. Chairman ST GERMAIN. Right. And so I would say to you gentlemen, if you would be good enough to address yourselves to the four questions propounded under No. 3 that I sent down to you. I would like that for the record so that you can have the benefit of staff assistance as well to address these questions. Gentlemen, we thank you. Mr. WORTLEY. Mr. Chairman? Chairman ST GERMAIN. Well, is it real quick, because we have to vote? Mr. WORTLEY. Mr. Chairman, may I just get a quick up-and-down answer from Mr. Gould and the three regulators? Should bank regulators whose agencies are self-financed through assessments and premiums and not taxpayer funded, be exempt from the Budget Act and Gramm-Rudman? Yes or no, Mr. Gould. Mr. GOULD. Yes or no, I cannot do. I would say that, as I have testified before this chairman before, we would be happy to cooperate with the Congress if the Congress felt in its wisdom that Gramm-Rudman was not intended to apply to the bank regulators. Mr. WORTLEY. Mr. Gray, yes or no? Chairman ST GERMAIN. Mr. Gray doesn't have that problem any longer. Mr. WORTLEY. Yes, that is right. Well, he is part of the Budget Act. Mr. GRAY. We have the Gramm-Rudman problem, yes. Chairman ST GERMAIN. You do? Mr. GRAY. I would like to see relief from that. Mr. WORTLEY. OK, Mr. Seidman. Mr. SEIDMAN. Yes. Mr. WORTLEY. Yes, OK. Mr. Clarke? Mr. CLARKE. Yes. Mr. WORTLEY. Thank you very much, gentlemen. The subcommittee stands adjourned to the call of the Chair. [Whereupon, at 12:30 p.m., the subcommittee was adjourned, subject to the call of the Chair.] [Letters of invitation to witnesses, prepared statements of this day's hearing and material received by the subcommittee for inclusion in the record follow:] To assist this Subcommittee in the discharge of its responsibilities, you are requested to appear on Thursday, May 8, 1986, in Room 2128 Rayburn House Office Building at 10:00 a.m., to provide testimony to the Subcommittee on the Administration's proposal for recapitalizing the Federal Savings and Loan Insurance Corporation, and the Administration's position on proposed enhancements of the Federal Home Loan Bank Board supervisory powers and on H.R. 4701, the Financial Institutions Emergency Acquisitions Amendments of 1986, legislation proposed by the Federal bank regulatory agencies. In accordance with Committee Rules, please deliver 175 copies of your prepared statement to Room B303 Rayburn House Office Building twenty-four hours in advance of your scheduled appearance. Your statement in its entirety will be included in the hearing record and, if delivered as requested, the statement will be made available to all Subcommittee Members in advance of the hearing. Το provide all Subcommittee Members with sufficient time for questioning, the oral presentation of your prepared statement must be limited to ten minutes. FJSTG:dTv Sincerely, Ja Juman Persand J. St Germain To assist this Subcommittee in the discharge of its responsibilities, you are requested to appear on Thursday, May 8, 1986, in Room 2128 Rayburn House Office Building at 10:00 a.m., to provide testimony to the Subcommittee on H.R. 4701, the Financial Institutions Emergency Acquisitions Amendments of 1986, legislation proposed by the Federal regulatory agencies, and on related issues. More specifically, you are asked to testify on the following matters of concern to the Subcommittee: 1. H.R. 4701, the Financial Institutions Emergency Acquisitions Amendments Please provide the Subcommittee with estimates on the number of institutions presently qualifying under the legislation's definition of "in danger of closing," the location on a state-by-state basis of these institutions, and the asset size levels of these institutions. 2. Is it possible for a nonfinancial institution to avail itself of any of the provisions of H.R. 4701 in order to acquire an insured bank? 3. Section 2 of H.R. 4701 confirms the FDIC's powers under section 13(c) of a. From 1982 to the present, provide an annual compilation of the FDIC's assistance under section 13(c), with a breakdown of the total number of institutions assisted each year, including assistance to those persons acquiring control of insured banks under 13(f) as it is currently written, together with the name and location of each assisted institution or acquiring person, and an indication as to whether the action was taken to prevent the closing of an insured bank, to restore an insured closed bank to normal operation, or if such assistance was accorded to lessen the risk to the FDIC posed by the threat of instability due to severe financial conditions. Please include the amount of 13(c) assistance given in each transaction, broken down by the amount of loans to, deposits in, purchases of the assets of, or securities of, assumption of the liabilities of, or contributions made to insured banks or persons under section 13(c). b. Please state the level of FDIC assistance under section 13(c) currently outstanding, including an identical breakdown as specified above. c. Please estimate the level of assistance anticipated under section 13(c) for the remainder of 1986, and for 1987, including separate estimates on the anticipated levels of assistance for transactions under the provisions in H.R. 4701 to amend section 13(f). 4. H.R. 4701 would preserve the eligibility of insured banks (or their parent holding company or affiliated banks) to be acquired by an out-of-state bank or bank holding company, even after FDIC assistance has been granted under section 13(c) of the Federal Deposit Insurance Act, provided such assistance was initially granted after April 15, 1986 and remains outstanding. Should out-of-state banks and bank holding companies continue to be allowed to acquire institutions receiving FDIC assistance, even after those institutions may no longer be in danger of closing or when the severe financial conditions which precipitated the assistance have subsided? In accordance with Committee Rules, please deliver 175 copies of your prepared statement to Room B303 Rayburn House Office Building twenty-four hours in advance of your scheduled appearance. Your statement in its entirety will be included in the hearing record and, if delivered as requested, the statement will be made available to all Subcommittee Members in advance of the hearing. To provide all Subcommittee Members with sufficient time for questioning, the oral presentation of your prepared statement must be limited to ten minutes. Sincerely, FJStG:dTv Ternand J. St Germain |