THRIFT INSTITUTION ACCOUNTING, APPRAISAL, AND RESERVE STANDARDS.

SEC. 402. THRIFT INSTITUTION ACCOUNTING, APPRAISAL, AND RESERVE STANDARDS. (a) Federally Chartered Thrifts.— The Home Owners’ Loan Act of 1933 (12 U.S.C. 1461 et seq.) is amended by redesignating section 9 as section 11 and by inserting after section 8 the following new section: “SEC. 9. ACCOUNTING PRINCIPLES AND OTHER STANDARDS AND REQUIREMENTS. “(a) In General.— The Board shall prescribe regulations which make the following provisions applicable to associations for regulatory purposes: “(1) Asset classification system.— An asset classification system shall be established which is consistent with the asset classification system established by the Federal banking agencies, except that such system shall provide that the principal supervisory agent of the Board for each Federal home loan bank district may, in such agent’s discretion— “(A) require an association to create additional general loss reserves on the basis of an evaluation of such institution’s assets; or “(B) determine whether a restructured loan asset which is in a nonperforming status or with respect to which the borrowers have otherwise failed to remain in compliance with the repayment terms at the time of such restructuring shall be classified. “(2) Appraisal standard.— An appraisal standard shall be established which is consistent with the appraisal standard established by the Federal banking agencies. “(3) Reappraisal upon foreclosure.— Generally accepted accounting principles shall apply to any reappraisal of the value of property securing any loan or other extension of credit upon any foreclosure on such property by an association (or any other action by the association in lieu of foreclosure). “(4) Authorizing use of fasb is for troubled debt restructuring.— If— “(A) an association engages in troubled debt restructuring with respect to any loan by the association; and “(B) the troubled debt restructuring complies with Statement of Financial Accounting Standards Numbered 5 and Statement of Financial Accounting Standards Numbered 15 (as issued by the Financial Accounting Standards Board), regulatory accounting principles shall allow the association to account for the effects of the troubled debt restructuring and to account for such association’s investment in the original debt instrument (or other agreement which is subject to such restructuring) in the manner provided in such statements. “(5) Certain loan loss reserves treated as capital for certain purposes.— Any amount which an association holds in any account as a general loss reserve may be treated, at the option of the association, as capital of the association for purposes of determining regulatory capital or regulatory net worth with respect to such association, to the extent such treatment is consistent with the procedures established by the Federal banking agencies. “(b) Uniform GAAP Accounting Standards Required.— 101 STAT. 606 “(1) In general.— Except as otherwise provided in this section, the Board shall prescribe, by regulation, uniformly applicable accounting standards to be used by all associations for the purpose of determining compliance with any rule or regulation issued by the Board or the Federal Savings and Loan Insurance Corporation to the same degree that generally accepted accounting principles are used to determine compliance with rules and regulations of the Federal banking agencies. “(2) Exception for certain institutions and transactions.— Notwithstanding the requirement contained in paragraph (1)(A), the Board may suspend the application of any such standard with respect to any association or transaction if— “(A) the application of such standard to an association and a company that controls such association would result in such association and company being treated differently than a bank and such bank’s holding company considered on a consolidated basis; and “(B) the transaction was consistent with generally accepted accounting principles when such transaction was completed. “(c) Asset Evaluations.— The Board may not require an association to establish reserves against, or write down the value of, any asset in an amount in excess of the amount which would result from an evaluation of such asset which is consistent with generally accepted accounting principles, except that evaluations which are consistent with the practice of the Federal banking agencies may be used for supervisory purposes. “(d) Accounting for Subordinated Debt and Goodwill.— No provision of this section shall affect the authority of the Board to authorize associations to utilize subordinated debt and goodwill in meeting reserve and other regulatory requirements. “(e) Loss Deferrals.— Notwithstanding any other provision of this section— “(1) associations may continue, for purposes of determining regulatory net worth and capital, to defer and amortize gains and losses from the disposition of assets pursuant to regulations of the Board in effect before the enactment of the Thrift Industry Recovery Act; and “(2) the use of such deferrals and amortizations, consistently with the regulations referred to in paragraph (1), shall not reduce the ability of an association to comply with any other rule issued or regulation prescribed by the Board. “(f) Federal Banking Agency Defined.— For purposes of this section, the term ‘Federal banking agency’ means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.”. (b) State Chartered, Federally Insured Thrifts.— Title IV of the National Housing Act (12 U.S.C. 1724 et seq.) is amended by adding at the end thereof the following new section: “SEC. 415. ACCOUNTING PRINCIPLES AND OTHER STANDARDS AND REQUIREMENTS. “(a) In General.— The Corporation shall prescribe regulations which make the following provisions applicable to insured institutions for regulatory purposes: 101 STAT. 607 “(1) Asset classification system.— An asset classification system shall be established which is consistent with the asset classification system established by the Federal banking agencies, except that such system shall provide the principal supervisory agent of the Federal Home Loan Bank Board for each Federal home loan bank district may, in such agent’s discretion— “(A) require an insured institution to create additional general loss reserves on the basis of an evaluation of such institution’s assets; or “(B) determine whether a restructured loan asset which is in a nonperforming status or with respect to which the borrowers have otherwise failed to remain in compliance with the repayment terms at the time of such restructuring shall be classified. “(2) Appraisal standard.— An appraisal standard shall be established which is consistent with the appraisal standard established by the Federal banking agencies. “(3) Reappraisal upon foreclosure.— Generally accepted accounting principles shall apply to any reappraisal of the value of property securing any loan or other extension of credit upon any foreclosure on such property by an insured institution (or any other action by the insured institution in lieu of fore-closure). “(4) Authorizing use of fasb 15 for troubled debt restructuring.— If— “(A) an insured institution engages in troubled debt restructuring with respect to any loan by the insured institution; and “(B) the troubled debt restructuring complies with Statement of Financial Accounting Standards Numbered 5 and Statement of Financial Accounting Standards Numbered 15 (as issued by the Financial Accounting Standards Board), regulatory accounting principles shall allow the insured institution to account for the effects of the troubled debt restructuring and to account for such insured institution’s investment in the original debt instrument (or other agreement which is subject to such restructuring) in the manner provided in such statements. “(5) Certain loan loss reserves treated as capital for certain purposes.— Any amount which an insured institution holds in any account as a general loss reserve may be treated, at the option of the insured institution, as capital of the insured institution for purposes of determining regulatory capital or regulatory net worth with respect to such insured institution, to the extent such treatment is consistent with the procedures established by the Federal banking agencies. “(b) Uniform GAAP Accounting Standards Required.— “(1) In general.— Except as otherwise provided in this section, the Corporation shall prescribe, by regulation, uniformly applicable accounting standards to be used by all insured institutions for the purpose of determining compliance with any rule or regulation issued by the Corporation or the Federal Home Loan Bank Board to the same degree that generally accepted accounting principles are used to determine compliance with rules and regulations of the Federal banking agencies. 101 STAT. 608 “(2) Exception for certain institutions and transactions.— Notwithstanding the requirement contained in paragraph (1)(A), the Corporation may suspend the application of any such standard with respect to any insured institution or any transaction if— “(A) the application of such standard to an insured institution and a company that controls such insured institution would result in such insured institution and company being treated differently than a bank and such bank’s holding company considered on a consolidated basis; and “(B) the transaction was consistent with generally accepted accounting principles when such transaction was completed. “(c) Asset Evaluations.— The Corporation may not require an insured institution to establish reserves against, or write down the value of, any asset in an amount in excess of the amount which would result from an evaluation of such asset which is consistent with generally accepted accounting principles, except that evaluations which are consistent with the practice of the Federal banking agencies may be used for supervisory purposes. “(d) Accounting for Subordinated Debt and Goodwill.— No provision of this section shall affect the authority of the Corporation to authorize insured institutions to utilize subordinated debt and goodwill in meeting reserve and other regulatory requirements. “(e) Loss Deferrals.— Notwithstanding any other provision of this section— “(1) insured institutions may continue, for purposes of determining regulatory net worth and capital, to defer and amortize gains and losses from the disposition of assets pursuant to regulations of the Corporation in effect before the enactment of the Thrift Industry Recovery Act; and “(2) the use of such deferrals and amortizations, consistently with the regulations referred to in paragraph (1), shall not reduce the ability of an insured institution to comply with any other rule issued or regulation prescribed by the Corporation. “(f) Federal Banking Agency Defined.— For purposes of this section, the term ‘Federal banking agency’ means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.”. (c) Report to Congress.— Not later than the end of the 90-day period beginning on the date of the enactment of this Act— (1) the Federal Home Loan Bank Board shall submit a copy of the proposed regulations required to be prescribed under the amendment made by subsection (a) to the Congress; and (2) the Federal Savings and Loan Insurance Corporation shall submit a copy of the proposed regulations required to be prescribed under the amendment made by subsection (b) to the Congress. (d) Effective Date of Regulations.— (1) In general.— Except as provided in paragraph (2), any regulation required to be prescribed under the amendment made by subsections (a) and (b) shall be implemented not later than the end of the 150-day period beginning on the date of the enactment of this Act. (2) Uniform gaap accounting standards.— 101 STAT. 609 (A) In general.— Except as provided in subparagraph (B), the regulations required to be prescribed pursuant to subsection (b) of the amendments made by subsections (a) and (b) of this section shall take effect on December 31, 1987. (B) Compliance at a later date.— If any association or insured institution demonstrates to the satisfaction of the Home Loan Bank Board or the Federal Savings and Loan Insurance Corporation, as the case may be, that it is not feasible for such association or institution to achieve compliance with the regulations referred to in subparagraph (A) by the date contained in such subparagraph, the Board or Corporation may approve a plan submitted by an association or insured institution which allows such association or institution to comply with such regulations at a later date to the extent such later date is the earlier of— (i) the date by which, in the determination of the Board or Corporation, it is feasible for such association or insured institution to achieve compliance with such regulations; or (ii) December 31, 1993.