Congress recapitalizes thrift fund.
Federal Deposit Insurance 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 (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.
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 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.
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|Title Annotation:||Savings Association Insurance Fund|
|Publication:||Journal of Accountancy|
|Article Type:||Brief Article|
|Date:||Dec 1, 1996|
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