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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-282

======================================================================
 
    HURRICANES RITA AND WILMA FINANCIAL SERVICES RELIEF ACT OF 2005

                                _______
                                

 November 10, 2005.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4146]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4146) to facilitate recovery from the effects of 
Hurricane Rita and Hurricane Wilma by providing greater 
flexibility for, and temporary waivers of certain requirements 
and fees imposed on, depository institutions, credit unions, 
and Federal regulatory agencies, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Section-by-Section Analysis of the Legislation...................     6

                          PURPOSE AND SUMMARY

H.R. 4146--Hurricanes Rita and Wilma Financial Services Relief Act of 
        2005

    H.R. 4146 ensures that existing law governing the 
regulation of insured depository institutions and insured 
credit unions does not further complicate the recovery from the 
damage caused by Hurricanes Rita and Wilma. The legislation 
provides three key points of short-term and measured regulatory 
relief to facilitate the stabilization of the financial 
services industry in the disaster declared areas:
    Capital and Net Worth Flexibility.--H.R. 4146 authorizes 
federal financial regulators to offer flexibility from prompt 
corrective action under limited circumstances if the regulator 
determines an institution, if provided such flexibility, can 
successfully execute a capital or net worth recovery plan in a 
manner consistent with safe and sound regulation.
    Short-term Increase in Deposits and Assets.--H.R. 4146 
authorizes federal financial regulators to offer flexibility 
from leverage limit and reserve requirements if an institution 
experiences a short-term significant increase in deposits due 
to the payment of customer insurance claims or federal disaster 
benefits. The institution is only granted such flexibility if 
the regulator approves the institution's plan to accommodate 
the short-term increase in its assets and deposits that is 
consistent with safe and sound regulation.
    Waiver of Federal Reserve Wire Transfer Fees.--H.R. 4146 
requires the Federal Reserve System to waive, for a period of 
180 days from the date the major disasters were declared for 
Hurricanes Rita and Wilma. One 30-day discretionary extension 
is provided. Federal financial regulators have strongly 
encouraged all financial institutions to waive most fees 
associated with the cost of business; including any wire 
transfer service charge a financial institution may assess its 
customers. By waiving Federal Reserve wire transfer fees for 
180 days, H.R. 4146 ensures financial institutions already 
under duress are not forced to continue a needed service at a 
loss.

                  BACKGROUND AND NEED FOR LEGISLATION

    In early September 2005, the House Financial Services 
Committee held a briefing for members by the financial services 
industry and Federal financial regulators in the aftermath of 
Hurricane Katrina to provide an outline of relief efforts. The 
Committee also held two hearings in response to Hurricane 
Katrina in September 2005. The Financial Institutions and 
Consumer Credit Subcommittee held a hearing on September 14, 
2005, that focused on the financial services response to 
Hurricane Katrina and regulatory and legislative relief 
recommendations to facilitate their efforts. The Housing and 
Community Opportunity Subcommittee held a hearing on September 
15, 2005, that focused on the industry's relief efforts to 
provide for critical housing needs in the aftermath of 
Hurricane Katrina. Many recommendations were provided to the 
Committee at these hearings and H.R. 4146 addresses some of 
these hurricane relief suggestions.
    After Hurricane Katrina, Hurricanes Rita and Wilma 
continued to wreak havoc in the Gulf States. This devastation 
has significantly harmed the regional economy by dislocating 
homeowners, businesses and financial institutions. The area's 
economic recovery will require long-term efforts, which will 
require local lenders to be present to meet the liquidity needs 
of borrowers affected by these hurricanes.
    This bill is similar to H.R. 3945, the Hurricane Katrina 
Financial Services Relief Act of 2005, which passed the House 
on October 27, 2005, under suspension of the rules by a vote of 
411-0.

                                HEARINGS

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on September 14, 2005, on ``Hurricane 
Katrina: The Financial Institutions' Response.'' The following 
witnesses testified:
          Mr. McKinley W. ``Mac'' Deaver, Executive Director, 
        Mississippi Bankers Association, representing American 
        Bankers Association;
          Mr. Ken Bordelon, President and CEO, E Federal Credit 
        Union (LA), representing National Association of 
        Federal Credit Unions;
          Mr. C. R. ``Rusty'' Cloutier, President and CEO, 
        MidSouth Bank, N.A. (LA), representing Independent 
        Community Bankers of America;
          Mr. Charles Elliott, President and CEO, Mississippi 
        Credit Union Association, representing Credit Union 
        National Association;
          Ms. Diane Casey-Landry, President and CEO, America's 
        Community Bankers;
          Mr. David Gibbons, Senior Executive Vice President 
        and Chief Risk Officer, HSBC North America (IL), 
        representing American Financial Services Association; 
        and
          Mr. Hilary Shelton, Director, Washington Bureau, 
        NAACP.
    The Subcommittee on Housing and Community Opportunity held 
a hearing on September 15, 2005, on ``Emergency Housing Needs 
in the Aftermath of Hurricane Katrina.'' The following 
witnesses testified:
          Mr. Henry A. Alvarez III, President and CEO, San 
        Antonio Housing Authority, San Antonio, TX, testifying 
        on behalf of National Association of Housing and 
        Redevelopment Officials;
          Ms. Sharon M. Daly, Senior Advisor for Public Policy, 
        Catholic Charities USA;
          Ms. J. K. Huey, Senior Vice President, IndyMac Bank, 
        Pasadena, CA, testifying of behalf of the Mortgage 
        Bankers Association;
          Ms. Kay Miller, President, T.A. Miller, Inc. and Tra-
        Dor, Inc.; Management, Shreveport, LA, testifying on 
        behalf of the Council for Affordable and Rural Housing;
          Mr. David A. Roberson, President and CEO, Cavalier 
        Homes, Inc., Addison, AL, testifying on behalf of 
        Manufactured Housing Institute and the Manufactured 
        Housing Association for Regulatory Reform;
          Ms. Nan P. Roman, President, National Alliance to End 
        Homelessness;
          Ms. Barbara Thompson, Executive Director, National 
        Council of State Housing Agencies;
          Mr. David F. Wilson, Homebuilder, Ketchum, ID, 
        President, National Association of Home Builders;
          Mr. Clanton Beamon, Executive Director, Delta Housing 
        Development Corporation, Indianola, MS, testifying on 
        behalf of the National Rural Housing Coalition;
          Mr. Jeffrey I. Brodsky, President, Related Management 
        Company, LLC, New York City, NY, testifying on behalf 
        of the National Multi Housing Council and National 
        Leased Housing Association;
          Ms. Judith A. Kennedy, President and CEO, National 
        Association of Affordable Housing Lenders;
          Ms. Michelle Norris, Senior Vice President of 
        Development, National Church Residences, testifying on 
        behalf of the American Association of Homes and 
        Services for the Aging;
          Ms. Ellen Lee, Deputy Executive Assistant for 
        Neighborhood Development, City of New Orleans, LA, 
        testifying on behalf of the National Community 
        Development Association (submitted for the record); and
          National Association of Realtors (submitted for the 
        record).

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
October 27, 2005, and ordered reported H.R. 4146, Hurricanes 
Rita and Wilma Financial Services Relief Act of 2005, favorably 
reported to the House by voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. No amendments were 
considered. A motion by Mr. Oxley to report the bill to the 
House with a favorable recommendation was agreed to by a voice 
vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee previously held 
hearings and made findings that are reflected in this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The temporary waivers of certain regulatory requirements 
and fees imposed on depository institutions and credit unions 
will facilitate recovery from the effects of Hurricanes Rita 
and Wilma.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                  November 9, 2005.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4146, the 
Hurricanes Rita and Wilma Financial Services Relief Act of 
2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Barbara 
Edwards (for federal revenues and Kathleen Gramp (for federal 
costs).
            Sincerely,
                                               Douglas Holtz-Eakin.
    Enclosure.

H.R. 4146--Hurricanes Rita and Wilma Financial Services Relief Act of 
        2005

    H.R. 4146 would provide certain forms of relief to 
financial institutions whose deposits are largely derived from 
residents and businesses located in areas designated as 
disaster areas after Hurricanes Rita and Wilma. It would direct 
the Federal Reserve to waive or rebate transaction fees for 
wire transfer services that otherwise would be due from 
eligible institutions. The waiver would be in effect for at 
least 180 days after enactment; it could be extended for an 
additional 30 days by an action of the Board of Governors of 
the Federal Reserve System. Other provisions in the bill would 
authorize the Federal Deposit Insurance Corporation (FDIC) and 
National Credit Union Administration (NCUA) to temporarily use 
different criteria when evaluating the financial condition of 
institutions in those disaster areas if doing so would 
facilitate their recovery and be consistent with safe and sound 
practices.
    Based on information from the Federal Reserve, CBO 
estimates that enacting this bill would reduce federal revenues 
by $2 million in fiscal year 2006. The Federal Reserve remits 
its net income to the Treasury, and those payments are 
classified as governmental receipts, or revenues, in the 
federal budget. Any additional income or costs to the Federal 
Reserve, therefore, can affect revenues. In this instance, CBO 
estimates that waiving fees for wire services for eligible 
institutions would reduce the Federal Reserve's profits by 
about $2 million, reducing federal revenues by a corresponding 
amount. CBO estimates that enacting this bill would have no 
significant effect on direct spending by the FDIC or the NCUA.
    H.R. 4146 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contacts for this estimate are Barbara 
Edwards (for federal revenues) and Kathleen Gramp (for federal 
costs). This estimate was approved by G. Thomas Woodward, 
Assistant Director for Tax Analysis, and Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    This section establishes the short title of the bill, the 
``Hurricanes Rita and Wilma Financial Services Relief Act of 
2005.''

Section 2. Definitions

    This section establishes definitions for the terms 
appropriate federal banking agency, insured depository 
institution, insured credit union and qualified disaster area.

Section 3. Sense of the Congress on cashing of government checks

    This section expresses the sense of the Congress that 
financial institutions continue to provide financial services 
to victims of Hurricanes Rita and Wilma and encourages the 
Secretary of the Treasury and the Federal financial regulators 
to educate insured depository institutions and insured credit 
unions on the application of the guidance the Treasury 
Department published in the Federal Register.

Section 4. Waiver of Federal Reserve Board fees for certain services

    This section waives fees charged by the Board of Governors 
to affected financial institutions for wire transfer services.

Section 5. Flexibility in capital and net worth standards for affected 
        institutions

    This section allows federal financial regulators to waive 
prompt corrective action requirements for affected financial 
institutions if (1) the institution derives more than 50 
percent of its total deposits from within the disaster area, 
(2) the institution was at least adequately capitalized prior 
to the date of disaster, (3) the reduction in capital or net 
worth is the direct result of the disaster, and (4) the waiver 
would facilitate the institution's recovery in a safe and sound 
manner. The section has an 18-month effective date.

Section 6. Deposit of insurance proceeds

    This section authorizes federal financial regulators to 
allow financial institutions to subtract from their total 
assets the amount equal to insurance and government payments 
deposited in the institution when determining leverage limits. 
The waiver authority applies to those institutions where (1) 
the institution derives more than 50 percent of its deposits 
within the disaster area, (2) the institution was at least 
adequately capitalized prior to the disaster, and (3) the 
institution has an acceptable plan to manage the increase in 
its assets and deposits. The section has an 18-month effective 
date.

Section 7. Effective period

    The provisions of the Act, except Section 3(2), Section 
5(a), and Section 6(a), are effective for a period of 180 days, 
beginning on the date of enactment. One 30-day extension may be 
granted by the Federal Reserve with respect to Section 4.