RECAPITALIZATION OF FSLIC.

SEC. 304. RECAPITALIZATION OF FSLIC. Section 402(b) of the National Housing Act (12 U.S.C. 1725(b)) is amended to read as follows: “(b) Issuance and Sale of Capital Certificates and Stock to Financing Corporation.— “(1) Authorization to issue.— “(A) In general.— Notwithstanding any other provision of law, the Corporation may issue— “(i) nonredeemable capital certificates; and “(ii) redeemable non voting capital stock. “(B) Requirement relating to amount of stock.— The aggregate amount of stock issued by the Corporation under subparagraph (A)(ii) shall be equal to the aggregate amount of the investments made by the Federal Home Loan Banks in the capital stock of the Financing Corporation under section 21 of the Federal Home Loan Bank Act. “(C) Certificates and stock may be sold only to financing corporation.— Capital certificates and stock issued under subparagraph (A) may be sold only to the Financing Corporation in the manner and to the extent provided in section 21 of the Federal Home Loan Bank Act and this subsection. “(D) Proceeds of sale are part of primary reserve.— The proceeds of any sale of capital certificates or stock under this paragraph shall be considered part of the pri-101 STAT. 598mary reserve established by the Corporation pursuant to section 404(a). “(E) No dividends.— The Corporation shall pay no dividends on any capital certificates or stock issued under this paragraph. “(2) Equity return account.— “(A) In general.— The Corporation shall establish and maintain (until all capital stock issued under subparagraph (A)(ii) of paragraph (1) has been paid off and retired) an equity return account— “(i) which shall consist only of amounts contributed in accordance with the requirements of subparagraph (B); “(ii) which shall not be treated as reserves of the Corporation; and “(iii) the earnings accruing in which shall be transferred in the manner provided in subparagraph (D). “(B) Contributions to account.— “(i) No contribution if reserves-to-accounts ratio is less than 0.5 percent.— No contribution shall be made to the equity reserve account established pursuant to subparagraph (A) in any year in which the reserves-to-accounts ratio is less than 0.5 percent. “(ii) Annual contributions required.— Except as provided in clause (i), the Corporation shall make contributions to the equity reserve account established pursuant to subparagraph (A)— “(I) at the end of each year beginning after 1996 through the final payoff year (as defined in clause (vii)); and “(II) in amounts determined under clauses (iii), (iv), (v), and (vi) of this subparagraph. “(iii) Amount of primary contribution.— The primary contribution to the equity return account for any year for which a contribution is required to be made shall be the amount determined by dividing— “(I) the aggregate amount of capital stock issued by the Corporation and purchased by the Financing Corporation under paragraph (1)(A); by “(II) the number of years between the first year beginning after 1996 in which the reserves-to-accounts ratio is equal to or greater than 0.5 percent and the final payoff year (taking into account the first and last year described). “(iv) Amount of additional contribution allowed if reserves-to-accounts ratio does not exceed 1.25 percent.— In any year in which the reserves-to-accounts ratio is equal to or greater than 1 percent but less than 1.25 percent, the Federal Home Loan Bank Board may require the Corporation to make an additional contribution of an amount not to exceed the amount determined by dividing— “(I) the investment return amount (as defined in clause (viii)) computed at an annual compound rate not to exceed 6 percent; by “(II) the number of years between the first year beginning after 1996 in which the reserves-to-101 STAT. 599accounts ratio was equal to or greater than 1 percent and the final payoff year (taking into account the first and last year described). “(v) Amount of additional contribution allowed if reserves-to-accounts ratio does not exceed 1.75 percent.— In any year in which the reserves-to-accounts ratio is equal to or greater than 1.25 percent but less than 1.75 percent, the Federal Home Loan Bank Board may require the Corporation to make an additional contribution of an amount not to exceed the amount determined by dividing— “(I) the investment return amount computed at an annual compound rate not to exceed 8 percent, minus the sum of any amounts contributed under clause (iv); by “(II) the number of years between the first year beginning after 1996 in which the reserves-to-accounts ratio was equal to or greater than 1.25 percent and the final payoff year (taking into account the first and last year described). “(vi) Amount of additional contribution allowed if reserves-to-accounts ratio exceeds 1.75 percent.— In any year in which the reserves-to-accounts ratio is equal to or greater than 1.75 percent, the Federal Home Loan Bank Board may require the Corporation to make an additional contribution of an amount not to exceed the amount determined by dividing— “(I) the investment return amount computed at an annual compound rate not to exceed 10 percent, minus the sum of any amounts contributed under clause (iv) or (v); by “(II) the number of years between the first year beginning after 1996 in which the reserves-to-accounts ratio was equal to or greater than 1.75 percent and the final payoff year (taking into account the first and last year described). “(vii) Final payoff year defined.— For purposes of this subparagraph, the term ‘final payoff year’ means the year of maturity of the last maturing obligation of the Financing Corporation (which was issued under section 21 of the Federal Home Loan Bank Act and matures before January 1, 2027). “(viii) Investment return amount.— For purposes of clauses (iv), (v), and (vi), the term ‘investment return amount’ means the amount which would be realized on the aggregate amount invested by the Financing Corporation in capital stock issued by the Corporation under paragraph (1) over the period of the investment if the return on the investment is computed at the rate described in subclause (I) of the respective clauses. “(C) Investment of amounts in account.— Amounts accumulating in the equity return account may be invested in such manner as the Corporation determines. “(D) Transfer of earnings to primary reserve.— Earnings accruing on any investment (under subparagraph (C)) of amounts in the equity return account shall be transferred to the primary reserve account of the Corporation 101 STAT. 600established pursuant to section 404(aj as such earnings are realized by the Corporation and shall not be treated as amounts in the account. “(E) Retirement of capital stock using balance in account.— Upon maturity of all obligations of the Financing Corporation under section 21 of the Federal Home Loan Bank Act, the Corporation shall pay off and retire any capital stock issued under paragraph (1)(A)(ii) using only amounts accumulated in the equity return account. “(F) Reserves-to-accounts ratio defined.— For purposes of this paragraph, the term ‘reserves-to-accounts ratio’ means, with respect to any year, the amount determined by dividing— “(i) the amount of reserves of the Corporation (determined as of December 31 of the preceding year); by “(ii) the aggregate amount of all accounts of all of its insured members (determined as of such date). “(3) Financing corporation defined.— For purposes of this subsection, the term ‘Financing Corporation’ means the Financing Corporation established under section 21 of the Federal Home Loan Bank Act. “(4) No reduction or suspension of insurance premiums while stock is outstanding.— Notwithstanding any other provision of law, the provisions of subsections (b)(2) and (g) of section 404 shall not apply as long as any share of capital stock issued under paragraph (1)(A)(ii) is outstanding.”.