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Congress recapitalizes thrift fund.


The omnibus appropriations bill of 1996, approved by Congress and President Clinton on September 30, recapitalizes the Savings Association Insurance Fund (SAIF
SAIF
See: Savings Association Insurance Fund
) through a special assessment on SAIF-insured institutions. The special assessment results in a $0.657 fee for every $100 of thrift deposits held on March 31, 1995, or $4.7 billion. Banks and savings institutions had to report the special assessment, which was due November 29, 1996, as a third-quarter expense. The money is expected to recapitalize the SAIF to prepare it for a merger with the Bank Insurance Fund (BIF BIF - Balance in Full
BIF - Bali International Finance
BIF - Banded Iron Formation (geology)
BIF - Bandwidth of Intermediate Frequency
BIF - Bank Insurance Fund
BIF - Banking Insurance Fund
BIF - Basis in Fact
BIF - Bayesian Interchange Format
BIF - Before I Forget
BIF - Benchmark Interchange Format
BIF - Benchmark Interface Format
BIF - Benevolence International Foundation, Inc.
) by 1999.

Federal Deposit Insurance
Deposit insurance
See: FDIC: Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
 Corporation (FDIC) Chairman Ricki Heller said the legislation was good for both banks and depositors. "By recapitalizing the SAlE Congress has fixed a structural defect in the deposit insurance system that threatened not only the SAIF but the strength of the deposit insurance system as well," she said.

Also under the BIF-SAIF provisions in the appropriations act. banks and savings institutions must contribute to paying off the $780 million annual interest payments on $8 billion of Financing Corporation
Financing Corporation (FICO)
A government agency chartered in 1987 to bail out the Federal Savings and Loan Insurance Corporation (FSLIC) by issuing bonds.
 (FICO) bonds that were issued in the late 1980s to bail out the savings and loan industry by recapitalizing the defunct Federal Savings and Loan Insurance Corporation. Beginning January 1, 1997, banks insured by the BIF will pay $322 million annually and SAIF-insured institutions will pay $458 million annually toward FICO interest. Payments are due through 1999.

The new law calls for the merger of the two insurance funds only after the BIF and SAIF charters are combined. The Treasury Department has until March 31, 1997, to deliver a report to Congress on merging the BIF and SAIF charters.

Regulation relief

The appropriations bill repeals certain provisions governing the scope and mechanics of the audits for insured depository institutions. The new law eliminates the independent auditor attestation
Attestation
The act of witnessing the signing of a document and then also signing it to verify that it was properly signed by those bound by its contents.

Notes:
Ideally the person acting as the witness to the signing of a document is an independent third party. Most often people will attest for a will or power of attorney.
See also: Estate, Estate Planning, Power of Attorney, Will
 requirement for compliance with designated sound and safety. laws and regulations and, in the case of hardship, gives certain agencies the discretion to waive the requirement that all members be outside directors. Jean M. Joy, CPA, partner of Wolf & Co. in Boston, said that the hours spent complying with the laws and regulations attestation requirement were insignificant in relation to the total hours spent auditing the institution. However, Joy said it was in banks' and thrifts' best interest, from an efficiency standpoint, to "continue to include these audit procedures in the regulatory examination process and not have them done separately by the external audit firm."

The new law does not repeal a requirement for management of insured depository institutions to report publicly on internal controls over financial reporting, even though earlier drafts of the legislation called for its repeal. The American Institute of CPAs had strongly opposed dropping the requirement from the bill.

More information on the special assessment rates, as well as FDIC press releases and other documents, is available on the World Wide Web at www.fdic.gov or by calling the FDIC's public information center at 202-416-6940.
COPYRIGHT 1996 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Article Details
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Title Annotation:Savings Association Insurance Fund
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Dec 1, 1996
Words:493
Previous Article:Congress does not repeal limited-scope pension audits.(Brief Article)
Next Article:GAO appoints yellow book advisory council. (General Accounting Office "Government Auditing Standards")(Brief Article)
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