National Service Reauthorization Act

Floor Speech

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Mr. CRAPO. Mr. President, today we face very difficult economic threats in our financial industries. It is important that we consider the possibility that our regulatory authorities do not have sufficient authority necessary to deal with potential financial institution failures. As a result, this is not an acknowledgment that anything like that will happen, but there is certainly the threat and concern in our financial markets as to whether we need to have additional protective authorities.

The Federal Deposit Insurance Corporation protects against the loss of insured deposits if a federally insured bank or savings institution fails. It is important to note, though, that depositors who have deposits at these institutions are protected by Federal guarantees, and these guarantees are, in the event of a bank failure, immediately protected by the FDIC. It is not the taxpayers but fees and assessments paid by the depository institutions themselves that cover the cost of this protection. However, the level of borrowing authority the FDIC has to provide this protection has not increased since 1991. At that time, the amount was set at $30 billion. The assets in the banking industry under protection have tripled since that time from $4.5 trillion to $13.6 trillion. Yet the borrowing authority of the FDIC has not been increased.

This legislation does two significant things. It increases the borrowing authority of the FDIC from $30 billion to $100 billion, approximating the percentage increase of the assets under protection and the growth in the assets under protection since the original level was set in 1991. The bill also authorizes a temporary increase in borrowing authority from that $100 billion increased level up to but not to exceed $500 billion based on a process that would require the concurrence of the FDIC, the Federal Reserve Board, and the Treasury Department, in consultation with the President. The reason for this additional authority is because of the extreme difficulties we are facing in our economy now, and we need to ensure that the FDIC has the necessary capacity to deal with any such threats.

This legislation is very important and urgent. The reason I bring it forth on this national service legislation is because we don't have time to wait to consider this legislation. It exists in a freestanding bill form on a bipartisan basis, with Republicans and Democrats in strong support of the legislation. I believe there is strong agreement throughout the financial industries that this kind of increased borrowing authority for the FDIC is helpful and an important piece of the solution to the problems we face today.

As a matter of fact, one of the reasons it is urgent is not only because we need to be sure the FDIC is properly protected or in a position to properly protect depositors and financial institutions but also because in order to deal with this needed fund, the FDIC is currently considering significant increases in assessments to our Nation's banks. These increased assessments in many cases, in some of our smaller and midsize communities, are creating a terrific financial threat to the banks, which, in turn, then reduces the potential of these banks to engage in lending authority, the type of credit activity we want to see happening. So while Congress waits, we see credit being further restricted by the failure of Congress to take this action and free up the FDIC authority.

Again, another one of the reasons I bring the amendment today is because this legislation, even though it is supported on a broad, bipartisan basis, is being caught up with other issues in the Senate that could delay its consideration and result in the imposition of significantly increased assessments on our Nation's banks. That is the cram-down legislation in terms of bankruptcy proposals that have been put forward.

Everyone in this body and throughout Congress and the country recognizes that we are having a difficult time dealing with very controversial proposals about our bankruptcy laws which have become known as the cram-down provisions that may or may not gain support in this Senate for passage. I personally think it is unlikely that the cram-down legislation will ultimately gain sufficient support in the Senate to be passed, but regardless of whether that happens, it is a difficult, controversial issue. This legislation, which is not difficult and not controversial, is being slowed down by being tied with the bankruptcy cram-down provisions. Because of that, it is imperative that we move forward as expeditiously as possible, consider the amendment, and move forward with this piece of the important reforms necessary for us to properly address the credit crisis and the financial threats our Nation faces today.

I yield the floor.

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