12 USC 1814. Insured depository institutions
TITLE 12 -- BANKS AND BANKING
(a) Continuation of insurance
(1) Banks
Each bank, which is an insured depository institution on September
21, 1950, shall be and continue to be, without application or approval,
an insured depository institution and shall be subject to the provisions
of this chapter.
(2) Savings associations
Each savings association the accounts of which were insured by the
Federal Savings and Loan Insurance Corporation on the day before August
9, 1989, shall be, without application or approval, an insured
depository institution.
(b) Continuation of insurance upon becoming a member bank
In the case of an insured bank which is admitted to membership in the
Federal Reserve System or an insured State bank which is converted into
a national member bank, the bank shall continue as an insured bank.
(c) Continuation of insurance after conversion
Subject to section 1815(d) of this title --
(1) any State depository institution which results from the
conversion of any insured Federal depository institution; and
(2) any Federal depository institution which results from the
conversion of any insured State depository institution,
shall continue as an insured depository institution.
(d) Continuation of insurance after merger or consolidation
Any State depository institution or any Federal depository
institution which results from the merger or consolidation of insured
depository institutions, or from the merger or consolidation of a
noninsured depository institution with an insured depository
institution, shall continue as an insured depository institution.
(Sept. 21, 1950, ch. 967, 2(4), 64 Stat. 875; Oct. 15, 1982, Pub.
L. 97-320, title I, 113(c), 96 Stat. 1473; Aug. 9, 1989, Pub. L.
101-73, title II, 201(a), 205, 103 Stat. 187, 194; Dec. 19, 1991, Pub.
L. 102-242, title I, 115(b), 105 Stat. 2249.)
Section is derived from subsec. (e) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (b). Pub. L. 102-242 amended subsec. (b) generally,
substituting present provisions for provisions which related to
certification by other banking agencies.
1989 -- Pub. L. 101-73, 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing.
Subsec. (a). Pub. L. 101-73, 205(1), inserted heading, designated
existing provisions as par. (1), inserted par. (1) heading, and
substituted ''Each bank'' for ''Every bank'', and added par. (2).
Subsec. (b). Pub. L. 101-73, 205(2)(A), (B), inserted after first
sentence ''Any application or notice for membership or to commence or
resume business shall be promptly provided by the appropriate Federal
banking agency to the Corporation and the Corporation shall have a
reasonable period of time to provide comments on such application or
notice. Any comments submitted by the Corporation to the appropriate
Federal banking agency shall be considered by such agency.'' and struck
out at end ''A State bank, resulting from the conversion of an insured
national bank, shall continue as an insured bank. A State bank,
resulting from the merger or consolidation of insured banks, or from the
merger or consolidation of a noninsured bank or institution with an
insured State bank, shall continue as an insured bank.''
Pub. L. 101-73, 205(2)(C), which directed the amendment of subsec.
(b) by substituting ''(b) Certification by Other Banking Agencies. --
Every national bank'' for ''(b) Every national bank'' could not be
executed literally because the original read ''(b) Every national member
bank'', but was executed by inserting the heading without changing the
text to reflect the probable intent of Congress.
Subsec. (c). Pub. L. 101-73, 205(3), amended subsec. (c) generally.
Prior to amendment, subsec. (c) read as follows: ''Every Federal
savings bank which is chartered pursuant to section 1464(o) of this
title, and which is engaged in the business of receiving deposits other
than trust funds, shall be an insured bank from the time it is
authorized to commence business, until such time as its accounts are
insured by the Federal Savings and Loan Insurance Corporation.''
Subsec. (d). Pub. L. 101-73, 205(3), added subsec. (d).
1982 -- Subsec. (c). Pub. L. 97-320 added subsec. (c).
12 USC 1815. Deposit insurance
TITLE 12 -- BANKS AND BANKING
(a) Application to Corporation required
(1) In general
Except as provided in paragraphs (2) and (3), any depository
institution which is engaged in the business of receiving deposits other
than trust funds (as defined in section 1813(p) of this title), upon
application to and examination by the Corporation and approval by the
Board of Directors, may become an insured depository institution.
(2) Interim depository institutions
In the case of any interim Federal depository institution that is
chartered by the appropriate Federal banking agency and will not open
for business, the depository institution shall be an insured depository
institution upon the issuance of the institution's charter by the
agency.
(3) Application and approval not required in cases of continued
insurance
Paragraph (1) shall not apply in the case of any depository
institution whose insured status is continued pursuant to section 1814
of this title.
(4) Review requirements
In reviewing any application under this subsection, the Board of
Directors shall consider the factors described in section 1816 of this
title in determining whether to approve the application for insurance.
(5) Notice of denial of application for insurance
If the Board of Directors votes to deny any application for insurance
by any depository institution, the Board of Directors shall promptly
notify the appropriate Federal banking agency and, in the case of any
State depository institution, the appropriate State banking supervisor
of the denial of such application, giving specific reasons in writing
for the Board of Directors' determination with reference to the factors
described in section 1816 of this title.
(6) Nondelegation requirement
The authority of the Board of Directors to make any determination to
deny any application under this subsection may not be delegated by the
Board of Directors.
(b) Foreign branch nonmember banks; matters considered
Subject to the provisions of this chapter and to such terms and
conditions as the Board of Directors may impose, any branch of a foreign
bank, upon application by the bank to the Corporation, and examination
by the Corporation of the branch, and approval by the Board of
Directors, may become an insured branch. Before approving any such
application, the Board of Directors shall give consideration to --
(1) the financial history and condition of the bank,
(2) the adequacy of its capital structure,
(3) its future earnings prospects,
(4) the general character and fitness of its management, including
but not limited to the management of the branch proposed to be insured,
(5) the risk presented to the Bank Insurance Fund or the Savings
Association Insurance Fund; /1/
(6) the convenience and needs of the community to be served by the
branch,
(7) whether or not its corporate powers, insofar as they will be
exercised through the proposed insured branch, are consistent with the
purposes of this chapter, and
(8) the probable adequacy and reliability of information supplied and
to be supplied by the bank to the Corporation to enable it to carry out
its functions under this chapter.
(c) Protection to deposit insurance fund; surety bond, pledge of
assets, etc.; injunction
(1) Before any branch of a foreign bank becomes an insured branch,
the bank shall deliver to the Corporation or as the Corporation may
direct a surety bond, a pledge of assets, or both, in such amounts and
of such types as the Corporation may require or approve, for the purpose
set forth in paragraph (4) of this subsection.
(2) After any branch of a foreign bank becomes an insured branch, the
bank shall maintain on deposit with the Corporation, or as the
Corporation may direct, surety bonds or assets or both, in such amounts
and of such types as shall be determined from time to time in accordance
with such regulations as the Board of Directors may prescribe. Such
regulations may impose differing requirements on the basis of any
factors which in the judgment of the Board of Directors are reasonably
related to the purpose set forth in paragraph (4).
(3) The Corporation may require of any given bank larger deposits of
bonds and assets than required under paragraph (2) of this subsection
if, in the judgment of the Corporation, the situation of that bank or
any branch thereof is or becomes such that the deposits of bonds and
assets otherwise required under this section would not adequately
fulfill the purpose set forth in paragraph (4). The imposition of any
such additional requirements may be without notice or opportunity for
hearing, but the Corporation shall afford an opportunity to any such
bank to apply for a reduction or removal of any such additional
requirements so imposed.
(4) The purpose of the surety bonds and pledges of assets required
under this subsection is to provide protection to the deposit insurance
fund against the risks entailed in insuring the domestic deposits of a
foreign bank whose activities, assets, and personnel are in large part
outside the jurisdiction of the United States. In the implementation of
its authority under this subsection, however, the Corporation shall
endeavor to avoid imposing requirements on such banks which would
unnecessarily place them at a competitive disadvantage in relation to
domestically incorporated banks.
(5) In the case of any failure or threatened failure of a foreign
bank to comply with any requirement imposed under this subsection (c),
the Corporation, in addition to all other administrative and judicial
remedies, may apply to any United States district court, or United
States court of any territory, within the jurisdiction of which any
branch of the bank is located, for an injunction to compel such bank and
any officer, employee, or agent thereof, or any other person having
custody or control of any of its assets, to deliver to the Corporation
such assets as may be necessary to meet such requirement, and to take
any other action necessary to vest the Corporation with control of
assets so delivered. If the court shall determine that there has been
any such failure or threatened failure to comply with any such
requirement, it shall be the duty of the court to issue such injunction.
The propriety of the requirement may be litigated only as provided in
chapter 7 of title 5, and may not be made an issue in an action for an
injunction under this paragraph.
(d) Insurance fees
(1) Uninsured institutions
(A) In general
Any institution that becomes insured by the Corporation, and any
noninsured branch that becomes insured by the Corporation, shall pay the
Corporation any fee which the Corporation may by regulation prescribe,
after giving due consideration to the need to establish and maintain
reserve ratios in the Bank Insurance Fund and the Savings Association
Insurance Fund as required by section 1817 of this title.
(B) Fee credited to appropriate fund
The fee paid by the depository institution shall be credited to the
Bank Insurance Fund if the depository institution becomes a Bank
Insurance Fund member, and to the Savings Association Insurance Fund if
the depository institution becomes a Savings Association Insurance Fund
member.
(C) Exception for certain depository institutions
Any depository institution that becomes an insured depository
institution by operation of section 1814(a) of this title shall not pay
any fee.
(2) Conversions
(A) In general
(i) Prior approval required
No insured depository institution may participate in a conversion
transaction without the prior approval of the Corporation.
(ii) 5-year moratorium on conversions
Except as provided in subparagraph (C), the Corporation may not
approve any conversion transaction before the end of the 5-year period
beginning on August 9, 1989.
(B) ''Conversion transaction'' defined
For purposes of this paragraph, the term ''conversion transaction''
means --
(i) the change of status of an insured depository institution from a
Bank Insurance Fund member to a Savings Association Insurance Fund
member or from a Savings Association Insurance Fund member to a Bank
Insurance Fund member;
(ii) the merger or consolidation of a Bank Insurance Fund member with
a Savings Association Insurance Fund member;
(iii) the assumption of any liability by --
(I) any Bank Insurance Fund member to pay any deposits of a Savings
Association Insurance Fund member; or
(II) any Savings Association Insurance Fund member to pay any
deposits of a Bank Insurance Fund member;
(iv) the transfer of assets of --
(I) any Bank Insurance Fund member to any Savings Association
Insurance Fund member in consideration of the assumption of liabilities
for any portion of the deposits of such Bank Insurance Fund member; or
(II) any Savings Association Insurance Fund member to any Bank
Insurance Fund member in consideration of the assumption of liabilities
for any portion of the deposits of such Savings Association Insurance
Fund member.
(C) Approval during moratorium
The Corporation may approve a conversion transaction at any time if
--
(i) the conversion transaction affects an insubstantial portion, as
determined by the Corporation, of the total deposits of each depository
institution participating in the conversion transaction;
(ii) the conversion occurs in connection with the acquisition of a
Savings Association Insurance Fund member in default or in danger of
default, and the Corporation determines that the estimated financial
benefits to the Savings Association Insurance Fund or Resolution Trust
Corporation equal or exceed the Corporation's estimate of loss of
assessment income to such insurance fund over the remaining balance of
the 5-year period referred to in subparagraph (A), and the Resolution
Trust Corporation concurs in the Corporation's determination; or
(iii) the conversion occurs in connection with the acquisition of a
Bank Insurance Fund member in default or in danger of default and the
Corporation determines that the estimated financial benefits to the Bank
Insurance Fund equal or exceed the Corporation's estimate of the loss of
assessment income to the insurance fund over the remaining balance of
the 5-year period referred to in subparagraph (A).
(D) Certain transfers deemed to affect insubstantial portion of total
deposits
For purposes of subparagraph (C)(i), any conversion transaction shall
be deemed to affect an insubstantial portion of the total deposits of an
insured depository institution, to the extent the aggregate amount of
the total deposits transferred in such transaction and in all conversion
transactions occurring after August 9, 1989, does not exceed 35 percent
of the lesser of --
(i) the amount which is equal to the sum of --
(I) the total deposits of such insured depository institution on May
1, 1989; and
(II) the total amount of net interest credited to the depository
institution's deposits during the period beginning on May 1, 1989, and
ending on the date of the transfer of deposits in connection with such
transaction; or
(ii) the amount which is equal to the total deposits of such insured
depository institution on the date of the transfer of deposits in
connection with such transaction.
(E) Exit and entrance fees
Each insured depository institution participating in a conversion
transaction shall pay --
(i) in the case of a conversion transaction in which the resulting or
acquiring depository institution is not a Savings Association Insurance
Fund member, an exit fee (in an amount to be determined and assessed in
accordance with subparagraph (F)) which --
(I) shall be deposited in the Savings Association Insurance Fund; or
(II) shall be paid to the Financing Corporation, if the Secretary of
the Treasury determines that the Financing Corporation has exhausted all
other sources of funding for interest payments on the obligations of the
Financing Corporation and orders that such fees be paid to the Financing
Corporation;
(ii) in the case of a conversion transaction in which the resulting
or acquiring depository institution is not a Bank Insurance Fund member,
an exit fee in an amount to be determined by the Corporation (and
assessed in accordance with subparagraph (F)(ii)) which shall be
deposited in the Bank Insurance Fund; and
(iii) an entrance fee in an amount to be determined by the
Corporation (and assessed in accordance with subparagraph (F)(ii)),
except that --
(I) in the case of a conversion transaction in which the resulting or
acquiring depository institution is a Bank Insurance Fund member, the
fee shall be the approximate amount which the Corporation calculates as
necessary to prevent dilution of the Bank Insurance Fund, and shall be
paid to the Bank Insurance Fund; and
(II) in the case of a conversion transaction in which the resulting
or acquiring depository institution is a Savings Association Insurance
Fund member, the fee shall be the approximate amount which the
Corporation calculates as necessary to prevent dilution of the Savings
Association Insurance Fund, and shall be paid to the Savings Association
Insurance Fund.
(F) Assessment of exit and entrance fees
(i) Determination of amount of exit fees
In the case of any exit fee assessed under subparagraph (E)(i) for
any conversion transaction consummated before January 1, 1997, the
amount of such fee shall be determined jointly by the Corporation and
the Secretary of the Treasury.
In the case of any exit fee assessed under subparagraph (E)(i) for
any conversion transaction consummated after December 31, 1996, the
amount of such fee shall be determined by the Corporation.
(ii) Procedures
The Corporation shall prescribe, by regulation, procedures for
assessing any exit or entrance fee under subparagraph (E).
(G) Charter conversion of SAIF members
This subsection shall not be construed as prohibiting any savings
association which is a Savings Association Insurance Fund member from
converting to a bank charter during the period described in subparagraph
(A)(ii) if the resulting bank remains a Savings Association Insurance
Fund member.
(3) Optional conversions subject to special rules on deposit
insurance payments
(A) Conversions allowed
(i) In general
Notwithstanding paragraph (2)(A) and subject to the requirements of
this paragraph, any insured depository institution may participate in a
transaction described in clause (ii), (iii), or (iv) of paragraph (2)(
B) with the prior written approval of the responsible agency under
section 1828(c)(2) of this title.
(ii) Holding company subsidiaries
If, in connection with any transaction referred to in clause (i), the
acquiring, assuming, or resulting depository institution is a Bank
Insurance Fund member which is a subsidiary of a bank holding company,
the prior written approval of the Board shall be required for such
transaction in addition to the approval of any agency referred to in
clause (i).
(B) Assessments on deposits attributable to former depository
institution
(i) Assessments by SAIF
In the case of any acquiring, assuming, or resulting depository
institution which is a Bank Insurance Fund member, that portion of the
average assessment base of such member for any semiannual period which
is equal to the adjusted attributable deposit amount (determined under
subparagraph (C) with respect to the transaction) shall --
(I) be subject to assessment at the assessment rate applicable under
section 1817 of this title for Savings Association Insurance Fund
members;
(II) not be taken into account for purposes of any assessment under
section 1817 of this title for Bank Insurance Fund members; and
(III) be treated as deposits which are insured by the Savings
Association Insurance Fund.
(ii) Assessments by BIF
In the case of any acquiring, assuming, or resulting depository
institution which is a Savings Association Insurance Fund member, that
portion of the average assessment base of such member for any semiannual
period which is equal to the adjusted attributable deposit amount
(determined under subparagraph (C) with respect to the transaction)
shall --
(I) be subject to assessment at the assessment rate applicable under
section 1817 of this title for Bank Insurance Fund members;
(II) not be taken into account for purposes of any assessment under
section 1817 of this title for Savings Association Insurance Fund
members; and
(III) be treated as deposits which are insured by the Bank Insurance
Fund.
(C) Determination of adjusted attributable deposit amount
The adjusted attributable deposit amount which shall be taken into
account for purposes of determining the amount of the assessment under
subparagraph (B) for any semiannual period by any acquiring, assuming,
or resulting depository institution in connection with a transaction
under subparagraph (A) is the amount which is equal to the sum of --
(i) the amount of any deposits acquired by the institution in
connection with the transaction (as determined at the time of such
transaction);
(ii) the total of the amounts determined under clause (iii) for
semiannual periods preceding the semiannual period for which the
determination is being made under this subparagraph; and
(iii) the amount by which the sum of the amounts described in clauses
(i) and (ii) would have increased during the preceding semiannual period
(other than any semiannual period beginning before the date of such
transaction) if such increase occurred at a rate equal to the annual
rate of growth of deposits of the acquiring, assuming, or resulting
depository institution minus the amount of any deposits acquired through
the acquisition, in whole or in part, of another insured depository
institution.
(D) Deposit of assessment
That portion of any assessment under section 1817 of this title which
--
(i) is determined in accordance with subparagraph (B)(i) shall be
deposited in the Savings Association Insurance Fund; and
(ii) is determined in accordance with subparagraph (B)(ii) shall be
deposited in the Bank Insurance Fund.
(E) Conditions for approval, generally
(i) Factors to be considered; approval process
In reviewing any application for a proposed transaction under
subparagraph (A), the responsible agency (and, in the event the
acquiring, assuming, or resulting depository institution is a Bank
Insurance Fund member which is a subsidiary of a bank holding company,
the Board) shall follow the procedures and consider the factors set
forth in section 1828(c) of this title.
(ii) Information required
An application to engage in any transaction under this paragraph
shall contain such information relating to the factors to be considered
for approval as the responsible agency or Board may require, by
regulation or by specific request, in connection with any particular
application.
(iii) No transfer of deposit insurance permitted
This paragraph shall not be construed as authorizing transactions
which result in the transfer of any insured depository institution's
Federal deposit insurance from 1 Federal deposit insurance fund to the
other Federal deposit insurance fund.
(iv) Minimum capital
The responsible agency, and the appropriate Federal banking agency
for any depository institution holding company, shall disapprove any
application for any transaction under this paragraph unless each such
agency determines that the acquiring, assuming, or resulting depository
institution, and any depository institution holding company which
controls such institution, will meet all applicable capital requirements
upon consummation of the transaction.
(F) Certain interstate transactions
The Board may not approve any transaction under subparagraph (A) in
which the acquiring, assuming, or resulting depository institution is a
Bank Insurance Fund member which is a subsidiary of a bank holding
company unless the Board determines that the transaction would comply
with the requirements of section 1842(d) of this title if, at the time
of such transaction, the Savings Association Insurance Fund member
involved in such transaction was a State bank that the bank holding
company was applying to acquire.
(G) Expedited approval of acquisitions
(i) In general
Any application by a State nonmember insured bank to acquire another
insured depository institution that is required to be filed with the
Corporation by subparagraph (A) or any other applicable law or
regulation shall be approved or disapproved in writing by the
Corporation before the end of the 60-day period beginning on the date
such application is filed with the Corporation.
(ii) Extensions of period
The period for approval or disapproval referred to in clause (i) may
be extended for an additional 30-day period if the Corporation
determines that --
(I) an applicant has not furnished all of the information required to
be submitted; or
(II) in the Corporation's judgment, any material information
submitted is substantially inaccurate or incomplete.
(H) Allocation of costs in event of default
If any acquiring, assuming, or resulting depository institution is in
default or danger of default at any time before this paragraph ceases to
apply, any loss incurred by the Corporation shall be allocated between
the Bank Insurance Fund and the Savings Association Insurance Fund, in
amounts reflecting the amount of insured deposits of such acquiring,
assuming, or resulting depository institution assessed by the Bank
Insurance Fund and the Savings Association Insurance Fund, respectively,
under subparagraph (B).
(I) Subsequent approval of conversion transaction
This paragraph shall cease to apply if --
(i) after the end of the 5-year period referred to in paragraph (2)(
A), the Corporation approves an application by any acquiring, assuming,
or resulting depository institution to treat the transaction described
in subparagraph (A) as a conversion transaction; and
(ii) the acquiring, assuming, or resulting depository institution
pays the amount of any exit and entrance fee assessed by the Corporation
under subparagraph (E) of paragraph (2) with respect to such
transaction.
(J) Acquiring, assuming, or resulting depository institution defined
For purposes of this paragraph, the term ''acquiring, assuming, or
resulting depository institution'' means any insured depository
institution which --
(i) results from any transaction described in paragraph (2)(B)(ii)
and approved under this paragraph;
(ii) in connection with a transaction described in paragraph (2)(B)(
iii) and approved under this paragraph, assumes any liability to pay
deposits of another insured depository institution; or
(iii) in connection with a transaction described in paragraph (2)(
B)(iv) and approved under this paragraph, acquires assets from any
insured depository institution in consideration of the assumption of
liability for any deposits of such institution.
(e) Liability of commonly controlled depository institutions
(1) In general
(A) Liability established
Any insured depository institution shall be liable for any loss
incurred by the Corporation, or any loss which the Corporation
reasonably anticipates incurring, after August 9, 1989, in connection
with --
(i) the default of a commonly controlled insured depository
institution; or
(ii) any assistance provided by the Corporation to any commonly
controlled insured depository institution in danger of default.
(B) Payment upon notice
An insured depository institution shall pay the amount of any
liability to the Corporation under subparagraph (A) upon receipt of
written notice by the Corporation in accordance with this subsection.
(C) Notice required to be provided within 2 years of loss
No insured depository institution shall be liable to the Corporation
under subparagraph (A) if written notice with respect to such liability
is not received by such institution before the end of the 2-year period
beginning on the date the Corporation incurred the loss.
(2) Amount of compensation; procedures
(A) Use of estimates
When an insured depository institution is in default or requires
assistance to prevent default, the Corporation shall --
(i) in good faith, estimate the amount of the loss the Corporation
will incur from such default or assistance;
(ii) if, with respect to such insured depository institution, there
is more than 1 commonly controlled insured depository institution,
estimate the amount of each such commonly controlled depository
institution's share of such liability; and
(iii) advise each commonly controlled depository institution of the
Corporation's estimate of the amount of such institution's liability for
such losses.
(B) Procedures; immediate payment
The Corporation, after consultation with the appropriate Federal
banking agency and the appropriate State chartering agency, shall --
(i) on a case-by-case basis, establish the procedures and schedule
under which any insured depository institution shall reimburse the
Corporation for such institution's liability under paragraph (1) in
connection with any commonly controlled insured depository institution;
or
(ii) require any insured depository institution to make immediate
payment of the amount of such institution's liability under paragraph
(1) in connection with any commonly controlled insured depository
institution.
(C) Priority
The liability of any insured depository institution under this
subsection shall have priority with respect to other obligations and
liabilities as follows:
(i) Superiority
The liability shall be superior to the following obligations and
liabilities of the depository institution:
(I) Any obligation to shareholders arising as a result of their
status as shareholders (including any depository institution holding
company or any shareholder or creditor of such company).
(II) Any obligation or liability owed to any affiliate of the
depository institution (including any other insured depository
institution), other than any secured obligation which was secured as of
May 1, 1989.
(ii) Subordination
The liability shall be subordinate in right and payment to the
following obligations and liabilities of the depository institution:
(I) Any deposit liability (which is not a liability described in
clause (i)(II)).
(II) Any secured obligation, other than any obligation owed to any
affiliate of the depository institution (including any other insured
depository institution) which was secured after May 1, 1989.
(III) Any other general or senior liability (which is not a liability
described in clause (i)).
(IV) Any obligation subordinated to depositors or other general
creditors (which is not an obligation described in clause (i)).
(D) Adjustment of estimated payment
(i) Overpayment
If the amount of compensation estimated by and paid to the
Corporation by 1 or more such commonly controlled depository
institutions is greater than the actual loss incurred by the
Corporation, the Corporation shall reimburse each such commonly
controlled depository institution its pro rata share of any overpayment.
(ii) Underpayment
If the amount of compensation estimated by and paid to the
Corporation by 1 or more such commonly controlled depository
institutions is less than the actual loss incurred by the Corporation,
the Corporation shall redetermine in its discretion the liability of
each such commonly controlled depository institution to the Corporation
and shall require each such commonly controlled depository institution
to make payment of any additional liability to the Corporation.
(3) Review
(A) Judicial
Actions of the Corporation shall be reviewable pursuant to chapter 7
of title 5.
(B) Administrative
The Corporation shall prescribe regulations and establish
administrative procedures which provide for a hearing on the record for
the review of --
(i) the amount of any loss incurred by the Corporation in connection
with any insured depository institution;
(ii) the liability of individual commonly controlled depository
institutions for the amount of such loss; and
(iii) the schedule of payments to be made by such commonly controlled
depository institutions.
(4) Limitation on rights of private parties
To the extent the exercise of any right or power of any person would
impair the ability of any insured depository institution to perform such
institution's obligations under this subsection --
(i) the obligations of such insured depository institution shall
supersede such right or power; and
(ii) no court may give effect to such right or power with respect to
such insured depository institution.
(5) Waiver authority
(A) In general
The Corporation, in its discretion, may exempt any insured depository
institution from the provisions of this subsection if the Corporation
determines that such exemption is in the best interests of the Bank
Insurance Fund or the Savings Association Insurance Fund.
(B) Condition
During the period any exemption granted to any insured depository
institution under subparagraph (A) or (C) is in effect, such insured
depository institution and all other insured depository institution
affiliates of such depository institution shall comply fully with the
restrictions of sections 371c and 371c-1 of this title without regard to
section 371c(d)(1) of this title.
(C) Limited partnerships
(i) In general
The Corporation may, in its discretion, exempt any limited
partnership and any affiliate of any limited partnership (other than any
insured depository institution which is a majority owned subsidiary of
such partnership) from the provisions of this subsection if such limited
partnership or affiliate has filed a registration statement with the
Securities and Exchange Commission on or before April 10, 1989,
indicating that as of the date of such filing such partnership intended
to acquire 1 or more insured depository institutions.
(ii) Review and notice
Within 10 business days after the date of submission of any request
for an exemption under this subparagraph together with such information
as shall be reasonably requested by the Corporation, the Corporation
shall make a determination on the request and shall so advise the
applicant.
(6) 5-year transition rule
During the 5-year period beginning on August 9, 1989 --
(A) no Savings Association Insurance Fund member shall have any
liability to the Corporation under this subsection arising out of
assistance provided by the Corporation or any loss incurred by the
Corporation as a result of the default of a Bank Insurance Fund member
which was acquired by such Savings Association Insurance Fund member or
any affiliate of such member before August 9, 1989; and
(B) no Bank Insurance Fund member shall have such liability with
respect to assistance provided by or loss incurred by the Corporation as
a result of the default of a Savings Association Insurance Fund member
which was acquired by such Bank Insurance Fund member or any affiliate
of such member before August 9, 1989.
(7) Exclusion for institutions acquired in debt collections
Any depository institution shall not be treated as commonly
controlled, for purposes of this subsection, during the 5-year period
beginning on the date of an acquisition described in subparagraph (A) or
such longer period as the Corporation may determine after written
application by the acquirer, if --
(A) 1 depository institution controls another by virtue of ownership
of voting shares acquired in securing or collecting a debt previously
contracted in good faith; and
(B) during the period beginning on August 9, 1989, and ending upon
the expiration of the exclusion, the controlling bank and all other
insured depository institution affiliates of such controlling bank
comply fully with the restrictions of sections 371c and 371c-1 of this
title, without regard to section 371c(d)(1) of this title, in
transactions with the acquired insured depository institution.
(8) Exception for certain FSLIC assisted institutions
No depository institution shall have any liability to the Corporation
under this subsection as the result of the default of, or assistance
provided with respect to, an insured depository institution which is an
affiliate of such depository institution if --
(A) such affiliate was receiving cash payments from the Federal
Savings and Loan Insurance Corporation under an assistance agreement or
note entered into before August 9, 1989;
(B) the Federal Savings and Loan Insurance Corporation, or such other
entity which has succeeded to the payment obligations of such
Corporation with respect to such assistance agreement or note, is unable
to continue such payments; and
(C) such affiliate --
(i) is in default or in need of assistance solely as a result of the
failure to meet the payment obligations referred to in subparagraph (B);
and
(ii) is not otherwise in breach of the terms of any assistance
agreement or note which would authorize the Federal Savings and Loan
Insurance Corporation or such other successor entity, pursuant to the
terms of such assistance agreement or note, to refuse to make such
payments.
(9) Commonly controlled defined
For purposes of this subsection, depository institutions are commonly
controlled if --
(A) such institutions are controlled by the same depository
institution holding company (including any company required to file
reports pursuant to section 1843(f)(6) of this title); or
(B) 1 depository institution is controlled by another depository
institution.
(Sept. 21, 1950, ch. 967, 2(5), 64 Stat. 876; Sept. 17, 1978, Pub.
L. 95-369, 6(c)(7), 92 Stat. 616; Oct. 15, 1982, Pub. L. 97-320, title
VII, 703(c), 96 Stat. 1539; Aug. 9, 1989, Pub. L. 101-73, title II,
201(a), 206(a), 103 Stat. 187, 195; Dec. 19, 1991, Pub. L. 102-242,
title I, 115(a), title III, 302(e)(1), title V, 501(a), 105 Stat. 2249,
2349, 2388.)
Pub. L. 102-242, title III, 302(e)(1), (g), Dec. 19, 1991, 105 Stat.
2349, provided that, effective on the earlier of 180 days after the
date on which the final regulations promulgated in accordance with
section 302(c) of Pub. L. 102-242, set out as a note under section 1817
of this title, become effective or Jan. 1, 1994, subsection (d)( 3)(B)
is amended by substituting ''deposits'' for ''average assessment base''
and by striking out ''shall -- '' and all that follows through ''(iii)
shall be treated'' and inserting ''shall be treated''.
Section is derived from subsec. (f)(2) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Pub. L. 102-242, 115(a), amended section catchline.
Subsec. (a). Pub. L. 102-242, 115(a), added subsec. (a) consisting
of pars. (1) to (6) and struck out former subsec. (a) relating to
application for insurance, which consisted of pars. (1) to (7).
Subsec. (d)(3). Pub. L. 102-242, 501(a), amended par. (3) generally,
substituting present provisions consisting of subpars. (A) to (J) for
provisions related to optional conversion through merger, which
consisted of subpars. (A) to (G).
1989 -- Pub. L. 101-73, 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing.
Subsec. (a). Pub. L. 101-73, 206(a)(1)-(4), inserted heading,
designated existing provisions as par. (1), inserted par. (1) heading,
and substituted ''Any'' for ''Subject to the provisions of this chapter,
any'', inserted ''and State savings association'' after ''any State
nonmember bank'' and after ''such State nonmember bank'', ''or savings
association'' after ''such bank'', and ''or savings association, and in
the case of an application by a State savings association, the
Corporation shall notify the Director of the Office of Thrift
Supervision of the Corporation's approval of such application'' after
''books of the bank'', and added pars. (2) to (7).
Subsec. (b)(4). Pub. L. 101-73, 206(a)(5), inserted ''and fitness''
after ''character''.
Subsec. (b)(5) to (8). Pub. L. 101-73, 206(a)(6), added par. (5) and
redesignated former pars. (5) to (7) as (6) to (8), respectively.
Subsecs. (d), (e). Pub. L. 101-73, 206(a)(7), added subsecs. (d) and
(e).
1982 -- Subsec. (a). Pub. L. 97-320 inserted provision relating to
the determination before the application of an industrial bank or
similar institution is approved that it is chartered and operating under
provisions substantially comparable to those applicable to banks
operating in the same State.
1978 -- Pub. L. 95-369 designated existing provision as subsec. (a)
and added subsecs. (b) and (c).
Amendment by section 302(e)(1) of Pub. L. 102-242 effective on
earlier of 180 days after date on which final regulations promulgated in
accordance with section 302(c) of Pub. L. 102-242, set out as a note
under section 1817 of this title, become effective or Jan. 1, 1994, see
section 302(g) of Pub. L. 102-242, set out as a note under section 1817
of this title.
Section 501(b) of Pub. L. 102-242 provided that: ''The amendment
made by subsection (a) to section 5(d)(3)(C) of the Federal Deposit
Insurance Act (12 U.S.C. 1815(d)(3)(C)) shall apply with respect to
semiannual periods beginning after the date of the enactment of this Act
(Dec. 19, 1991).''
Section 206(b) of Pub. L. 101-73 provided that: ''Any insured
depository institution (as defined in section 3(c)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(c)(2)), as added by section 204(
c) of this Act) --
''(1) which was an insured institution (as defined in section 401(a)
of the National Housing Act (12 U.S.C. 1724(a)), as in effect before the
date of the enactment of this Act (Aug. 9, 1989)) on the day before the
date of the enactment of this Act;
''(2) the board of directors of which determined, before April 1,
1987, to terminate such association's status as an insured institution
(as so defined) as evidenced in sworn minutes of the board of directors
meeting held before such date;
''(3) had insured deposits of less than $11,000,000 on April 1, 1987;
and
''(4) was an insured institution (as so defined) for less than 1 year
as of April 1, 1987,
may cease to be a Savings Association Insurance Fund member and
become a Bank Insurance Fund member at any time during the 2-year period
beginning on the date of the enactment of this Act without the approval
of the Federal Deposit Insurance Corporation under section 5( d)(2) of
the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(2)) (as added by
subsection (a) of this section) and without incurring any liability for
any exit or entrance fee imposed under such section 5(d)( 2).''
/1/ So in original. The semicolon probably should be a comma.
12 USC 1816. Factors to be considered
TITLE 12 -- BANKS AND BANKING
The factors that are required, under section 1814 of this title, to
be considered in connection with, and enumerated in, any certificate
issued pursuant to section 1814 of this title and that are required,
under section 1815 of this title, to be considered by the Board of
Directors in connection with any determination by such Board pursuant to
section 1815 of this title are the following:
(1) The financial history and condition of the depository
institution.
(2) The adequacy of the depository institution's capital structure.
(3) The future earnings prospects of the depository institution.
(4) The general character and fitness of the management of the
depository institution.
(5) The risk presented by such depository institution to the Bank
Insurance Fund or the Savings Association Insurance Fund.
(6) The convenience and needs of the community to be served by such
depository institution.
(7) Whether the depository institution's corporate powers are
consistent with the purposes of this chapter.
(Sept. 21, 1950, ch. 967, 2(6), 64 Stat. 876; Aug. 9, 1989, Pub. L.
101-73, title II, 207, 103 Stat. 206.)
Section is derived from subsec. (g) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1989 -- Pub. L. 101-73 amended section generally. Prior to
amendment, section read as follows: ''The factors to be enumerated in
the certificate required under section 1814 of this title and to be
considered by the Board of Directors under section 1815 of this title
shall be the following: The financial history and condition of the
bank, the adequacy of its capital structure, its future earnings
prospects, the general character of its management, the convenience and
needs of the community to be served by the bank, and whether or not its
corporate powers are consistent with the purposes of this chapter.''
12 USC 1817. Assessments
TITLE 12 -- BANKS AND BANKING
(a) Reports of condition; access to reports
(1) Each insured State nonmember bank (except a District bank) and
each foreign bank having an insured branch which is not a Federal branch
shall make to the Corporation reports of condition which shall be in
such form and shall contain such information as the Board of Directors
may require. Such reports shall be made to the Corporation on the dates
selected as provided in paragraph (3) of this subsection and the deposit
liabilities shall be reported therein in accordance with and pursuant to
paragraphs (4) and (5) of this subsection. The Board of Directors may
call for additional reports of condition on dates to be fixed by it and
may call for such other reports as the Board may from time to time
require. The Board of Directors may require reports of condition to be
published in such manner, not inconsistent with any applicable law, as
it may direct. Any such bank which (A) maintains procedures reasonably
adapted to avoid any inadvertent error and, unintentionally and as a
result of such an error, fails to make or publish any report required
under this paragraph, within the period of time specified by the
Corporation, or submits or publishes any false or misleading report or
information, or (B) inadvertently transmits or publishes any report
which is minimally late, shall be subject to a penalty of not more than
$2,000 for each day during which such failure continues or such false or
misleading information is not corrected. Such bank shall have the
burden of proving that an error was inadvertent and that a report was
inadvertently transmitted or published late. Any such bank which fails
to make or publish any report required under this paragraph, within the
period of time specified by the Corporation, or submits or publishes any
false or misleading report or information, in a manner not described in
the 2nd preceding sentence shall be subject to a penalty of not more
than $20,000 for each day during which such failure continues or such
false or misleading information is not corrected. Notwithstanding the
preceding sentence, if any such bank knowingly or with reckless
disregard for the accuracy of any information or report described in
such sentence submits or publishes any false or misleading report or
information, the Corporation may assess a penalty of not more than
$1,000,000 or 1 percent of total assets of such bank, whichever is less,
per day for each day during which such failure continues or such false
or misleading information is not corrected. Any penalty imposed under
any of the 4 preceding sentences shall be assessed and collected by the
Corporation in the manner provided in subparagraphs (E), (F), (G), and
(I) of section 1818(i)(2) of this title (for penalties imposed under
such section) and any such assessment (including the determination of
the amount of the penalty) shall be subject to the provisions of such
section. Any such bank against which any penalty is assessed under this
subsection shall be afforded an agency hearing if such bank submits a
request for such hearing within 20 days after the issuance of the notice
of assessment. Section 1818(h) of this title shall apply to any
proceeding under this paragraph.
(2)(A) The Corporation shall have access to reports of examination
made by, and reports of condition made to, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the Federal
Housing Finance Board, any Federal home loan bank, or any Federal
Reserve bank and to all revisions of reports of condition made to any of
them, and they shall promptly advise the Corporation of any revisions or
changes in respect to deposit liabilities made or required to be made in
any report of condition. The Corporation may accept any report made by
or to any commission, board, or authority having supervision of a
depository institution, and may furnish to the Comptroller of the
Currency, the /1/ Director of the Office of Thrift Supervision, the /1/
Federal Housing Finance Board, any /1/ Federal home loan bank, to any
Federal Reserve bank, and to any such commission, board, or authority,
reports of examinations made on behalf of, and reports of condition made
to, the Corporation.
(B) Additional reports. -- The Board of Directors may from time to
time require any insured depository institution to file such additional
reports as the Corporation, after agreement with the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, and the
Director of the Office of Thrift Supervision, as appropriate, may deem
advisable for insurance purposes.
(3) Each insured depository institution shall make to the appropriate
Federal banking agency 4 reports of condition annually upon dates which
shall be selected by the Chairman of the Board of Directors, the
Comptroller of the Currency, and the Chairman of the Board of Governors
of the Federal Reserve System, and the Chairman of the /2/ Director of
the Office of Thrift Supervision. The dates selected shall be the same
for all insured depository institutions, except that when any of said
reporting dates is a nonbusiness day for any depository institution, the
preceding business day shall be its reporting date. Two dates shall be
selected within the semiannual period of January to June inclusive, and
the reports on such dates shall be the basis for the certified statement
to be filed in July pursuant to subsection (c) of this section, and two
dates shall be selected within the semiannual period of July to December
inclusive, and the reports on such dates shall be the basis for the
certified statement to be filed in January pursuant to subsection (c) of
this section. The deposit liabilities shall be reported in said reports
of conditions in accordance with and pursuant to paragraphs (4) and (5)
of this subsection, and such other information shall be reported therein
as may be required by the respective agencies. Each said report of
condition shall contain a declaration by the president, a vice
president, the cashier or the treasurer, or by any other officer
designated by the board of directors or trustees of the reporting
depository institution to make such declaration, that the report is true
and correct to the best of his knowledge and belief. The correctness of
said report of condition shall be attested by the signatures of at least
two directors or trustees of the reporting depository institution other
than the officer making such declaration, with a declaration that the
report has been examined by them and to the best of their knowledge and
belief is true and correct. At the time of making said reports of
condition each insured depository institution shall furnish to the
Corporation a copy thereof containing such signed declaration and
attestations. Nothing herein shall preclude any of the foregoing
agencies from requiring the banks or savings associations under its
jurisdiction to make additional reports of condition at any time.
(4) In the reports of condition required to be made by paragraph (3)
of this subsection, each insured depository institution shall report the
total amount of the liability of the depository institution for deposits
in the main office and in any branch located in any State of the United
States, the District of Columbia, any Territory of the United States,
Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific
Islands, or the Virgin Islands, according to the definition of the term
''deposit'' in and pursuant to subsection (l) of section 1813 of this
title without any deduction for indebtedness of depositors or creditors
or any deduction for cash items in the process of collection drawn on
others than the reporting depository institution: Provided, That the
depository institution in reporting such deposits may (i) subtract from
the deposit balance due to any depository institution the deposit
balance due from the same depository institution (other than trust funds
deposited by either depository institution) and any cash items in the
process of collection due from or due to such depository institutions
shall be included in determining such net balance, except that balances
of time deposits of any depository institution and any balances standing
to the credit of private depository institutions, of depository
institutions in foreign countries, of foreign branches of other American
depository institutions, and of American branches of foreign banks shall
be reported gross without any such subtraction, and (ii) exclude any
deposits received in any office of the depository institution for
deposit in any other office of the depository institution: And provided
further, That outstanding drafts (including advices and authorizations
to charge depository institution's balance in another depository
institution) drawn in the regular course of business by the reporting
depository institution on depository institutions need not be reported
as deposit liabilities. The amount of trust funds held in the
depository institution's own trust department, which the reporting
depository institution keeps segregated and apart from its general
assets and does not use in the conduct of its business, shall not be
included in the total deposits in such reports, but shall be separately
stated in such reports. Deposits which are accumulated for the payment
of personal loans and are assigned or pledged to assure payment of loans
at maturity shall not be included in the total deposits in such reports,
but shall be deducted from the loans for which such deposits are
assigned or pledged to assure repayment.
(5) The deposits to be reported on such reports of condition shall be
segregated between (i) time and savings deposits and (ii) demand
deposits. For this purpose and for the computation of assessments
provided in subsection (b) of this section, the time and savings
deposits shall consist of time certificates of deposit, time
deposits-open account, and savings deposits; and demand deposits shall
consist of all deposits other than time and savings deposits.
(6) Lifeline account deposits. -- In the reports of condition
required to be reported under this subsection, the deposits in lifeline
accounts (as defined in section 1834(a)(3)(C) of this title) shall be
reported separately.
(7) The Board of Directors, after consultation with the Comptroller
of the Currency, the Director of the Office of Thrift Supervision, and
the Board of Governors of the Federal Reserve System, may by regulation
define the terms ''cash items'' and ''process of collection'', and shall
classify deposits as ''time'', ''savings'', and ''demand'' deposits, for
the purposes of this section.
(8) In respect of any report required or authorized to be supplied or
published pursuant to this subsection or any other provision of law, the
Board of Directors or the Comptroller of the Currency, as the case may
be, may differentiate between domestic banks and foreign banks to such
extent as, in their judgment, may be reasonably required to avoid
hardship and can be done without substantial compromise of insurance
risk or supervisory and regulatory effectiveness.
(9) Data collections. -- In addition to or in connection with any
other report required under this subsection, the Corporation shall take
such action as may be necessary to ensure that --
(A) each insured depository institution maintains; and
(B) the Corporation receives on a regular basis from such
institution,
information on the total amount of all insured deposits, preferred
deposits, and uninsured deposits at the institution.
(9) /3/ A Federal banking agency may not, by regulation or otherwise,
designate, or require an insured institution or an affiliate to
designate, a corporation as highly leveraged or a transaction with a
corporation as a highly leveraged transaction solely because such
corporation is or has been a debtor or bankrupt under title 11, if,
after confirmation of a plan of reorganization, such corporation would
not otherwise be highly leveraged.
(b) Computation of assessments; rate and amount; base; additions
and deductions; records; definitions
(1) Assessment rates. --
(A) Assessment rates prescribed. --
(i) Authority to set rates. -- Subject to clause (iii), the
Corporation shall set assessment rates for insured depository
institutions at such times as the Corporation, in its sole discretion,
determines to be appropriate.
(ii) Rate for each fund to be set independently. -- The Corporation
shall fix the assessment rate of Bank Insurance Fund members
independently from the assessment rate for Savings Association Insurance
Fund members.
(iii) Rate changes. -- The Corporation shall notify each insured
depository institution of that institution's semiannual assessment. The
Corporation may establish and, from time to time, adjust the assessment
rates for such institutions.
(B) Designated reserve ratio defined. --
(i) The designated reserve ratio of the Bank Insurance Fund for each
year shall be --
(I) 1.25 percent of estimated insured deposits; or
(II) such higher percentage of estimated insured deposits as the
Board of Directors determines for that year to be justified by
circumstances that raise a significant risk of substantial future losses
to the Bank Insurance Fund.
(ii) The designated reserve ratio of the Savings Association
Insurance Fund for each year shall be --
(I) 1.25 percent of estimated insured deposits; or
(II) such higher percentage of estimated insured deposits as the
Board of Directors determines for that year to be justified by
circumstances that raise a significant risk of substantial future losses
to the Savings Association Insurance Fund.
(iii) The Board of Directors shall --
(I) maintain reserves in the Bank Insurance Fund received pursuant to
clause (i)(II) as Supplemental Reserves in the Bank Insurance Fund; and
(II) distribute such Supplemental Reserves to Bank Insurance Fund
members if and to the extent the Corporation determines that such
Supplemental Reserves are not needed to satisfy the projected designated
reserve ratio for the next succeeding calendar year.
(iv) The Board of Directors shall --
(I) maintain reserves in the Savings Association Insurance Fund
received pursuant to clause (ii)(II) as Supplemental Reserves in the
Savings Association Insurance Fund; and
(II) distribute such Supplemental Reserves to Savings Association
Insurance Fund members if and to the extent the Corporation determines
that such Supplemental Reserves are not needed to satisfy the projected
designated reserve ratio for the next succeeding calendar year.
(C) Assessment rate for bank insurance fund members. --
(i) In general. -- If the reserve ratio of the Bank Insurance Fund
equals or exceeds the fund's designated reserve ratio under subparagraph
(B), the Board of Directors shall set semiannual assessment rates for
members of that fund as appropriate to maintain the reserve ratio at the
designated reserve ratio.
(ii) Special rules for recapitalizing undercapitalized fund. -- If
the reserve ratio of the Bank Insurance Fund is less than the designated
reserve ratio under subparagraph (B), the Board of Directors shall set
semiannual assessment rates for members of that fund --
(I) that are sufficient to increase the reserve ratio for that fund
to the designated reserve ratio not later than 1 year after such rates
are set; or
(II) in accordance with a schedule promulgated by the Corporation
under clause (iii).
(iii) Recapitalization schedules. -- For purposes of clause (ii)(
II), the Corporation shall, by regulation, promulgate a schedule that
specifies, at semiannual intervals, target reserve ratios for the Bank
Insurance Fund, culminating in a reserve ratio that is equal to the
designated reserve ratio no later than 15 years after the date on which
the schedule becomes effective.
(iv) Amending schedule. -- The Corporation may, by regulation, amend
a schedule promulgated under clause (iii), but such an amendment may not
extend the date for achieving the designated reserve ratio.
(D) Assessment rate for savings association insurance fund members.
--
(i) In general. -- The assessment rate for Savings Association
Insurance Fund members shall be the greater of 0.15 percent or such rate
as the Board of Directors, in its sole discretion, determines to be
appropriate --
(I) to maintain the reserve ratio at the designated reserve ratio;
or
(II) if the reserve ratio is less than the designated reserve ratio,
to increase the reserve ratio to the designated reserve ratio within a
reasonable period of time.
(ii) Factors to be considered. -- In making any determination under
clause (i), the Board of Directors shall consider the Savings
Association Insurance Fund's expected operating expenses, case
resolution expenditures, and income, the effect of the assessment rate
on members' earnings and capital, and such other factors as the Board of
Directors may deem appropriate.
(iii) Minimum assessment. -- Notwithstanding clause (i), the
assessment shall not be less than $1,000 for each member in each year.
(iv) Transition rule. -- Until December 31, 1997, the assessment rate
for Savings Association Insurance Fund members shall not be less than
the following:
(I) From January 1, 1990, through December 31, 1990, 0.208 percent.
(II) From January 1, 1991, through December 31, 1993, 0.23 percent.
(III) From January 1, 1994, through December 31, 1997, 0.18 percent.
(E) Financing corporation and funding corporation assessments. --
Notwithstanding any other provision of this paragraph, amounts assessed
by the Financing Corporation and the Funding Corporation under sections
1441 and 1441b, respectively, of this title against Savings Association
Insurance Fund members, shall be subtracted from the amounts authorized
to be assessed by the Corporation under this paragraph.
(F) Special rule to allow continuing assessments by the financing
corporation and the funding corporation during premium year adjustments.
-- In order to ensure that the Financing Corporation and the Resolution
Funding Corporation obtain sufficient funds for interest payments on
obligations of such corporations, the Corporation, in coordination with
the Financing Corporation and the Secretary of the Treasury, may
prescribe such regulations as may be necessary to allow the Financing
Corporation and the Resolution Funding Corporation to impose assessments
against Savings Association Insurance Fund members pursuant to sections
1441 and 1441b, respectively, of this title during the period required
to change such members' premium year from the 1-year period applicable
under section 404(b) /4/ of the National Housing Act (12 U.S.C. 1727(b))
(as in effect before August 9, 1989) to a calendar year basis.
(2) Assessment procedures. --
(A) Semiannual assessments. -- Except as provided in subsection (c)(
2) of this section or subparagraph (C)(iii) or (D)(iii) of subsection
(b)(1) of this section --
(i) the semiannual assessment due from any Bank Insurance Fund member
for any semiannual period shall be the greater of $500 or an amount
equal to the product of --
(I) 1/2 the assessment rate applicable to such Bank Insurance Fund
member during that semiannual period; and
(II) such Bank Insurance Fund member's average assessment base for
the immediately preceding semiannual period (minus any amount taken into
account under clause (iii) with respect to lifeline account deposits);
and /5/
(ii) the semiannual assessment due from any Savings Association
Insurance Fund member for any semiannual period shall be the greater of
$500 or an amount equal to the product of --
(I) 1/2 the assessment rate applicable to such Savings Association
Insurance Fund member during that semiannual period; and
(II) such Savings Association Insurance Fund member's average
assessment base for the immediately preceding semiannual period (minus
any amount taken into account under clause (iii) with respect to
lifeline account deposits); and
(iii) the semiannual assessment due from any Bank Insurance Fund
member or Savings Association Insurance Fund member with respect to
lifeline account deposits for any semiannual assessment period shall be
the product of --
(I) 1/2 the assessment rate applicable with respect to such deposits
pursuant to paragraph (10) during that semiannual assessment period;
and
(II) the portion of such member's average assessment base for the
immediately preceding semiannual period which is attributable to
deposits in lifeline accounts (as reported in the institution's reports
of condition pursuant to subsection (a)(6) of this section).
(B) ''Semiannual period'' defined. -- For purposes of this section,
the term ''semiannual period'' means a period beginning on January 1 of
any calendar year and ending on June 30 of the same year, or a period
beginning on July 1 of any calendar year and ending on December 31 of
the same year.
(3) A depository institution's average assessment base for any
semiannual period shall be the average of such depository institution's
assessment bases for the two dates, falling within such semiannual
period, for which the depository institution is required to submit
reports of condition pursuant to paragraph (3) of subsection (a) of this
section (referred to hereafter in this section as ''reports of
condition'').
(4)(A) Except as provided in subparagraph (B) of this paragraph, a
depository institution's assessment base for any date shall be equal to
the depository institution's liability for deposits (including the
deposits of any other depository institution for which it has assumed
liability) as reported in its report of condition for such date, plus
the assessment base additions set forth in paragraph (5), and less the
assessment base deductions set forth in paragraph (6).
(B) In determining the assessment base and assessment base additions
and deductions of a foreign bank having an insured branch, such
adjustments shall be made as the Board of Directors may by regulation
prescribe in order to provide equitable treatment for domestic and
foreign banks.
(5) The assessment base additions shall be the amounts of --
(A) uninvested trust funds required to be separately stated in the
depository institution's report of condition; and
(B) any deposits received in any office of the depository institution
for deposit in any other office of the depository institution located in
the United States, the District of Columbia, Puerto Rico, Guam, American
Samoa, the Trust Territory of the Pacific Islands, or the Virgin
Islands, except those which have been included in deposits in the report
of condition or which have been offset in the report of condition by an
equal amount of cash items in its possession drawn on itself (on the
same type of deposit as those offset) and not charged against deposit
liabilities at the close of business on the date as of which the report
of condition is made, either in their actual amount as shown on the
books of the depository institution, or, if not so shown, in an amount
determined by means of an experience factor pursuant to regulations
prescribed by the Board of Directors.
(6) The assessment base deductions shall be the amounts of --
(A) cash items in the depository institution's possession, drawn on
itself, which have not been charged against deposit liabilities at the
close of business on the date as of which the report of condition is
made, either in their actual amount as shown on the books of the
depository institution, or, if not so shown, in an amount determined by
means of an experience factor pursuant to regulations prescribed by the
Board of Directors;
(B) 1 per centum of the depository institution's adjusted time and
savings deposits (as defined in paragraph (7)); and
(C) 16 2/3 per centum of the depository institution's adjusted demand
deposits (as defined in paragraph (8)).
Each insured depository institution, as a condition to the right to
make any such deduction in determining its assessment base, shall
maintain such records as will readily permit verification of the
correctness of its assessment base. No insured depository institution
shall be required to retain such records for such purpose for a period
in excess of five years from the date of the filing of any certified
statement, except that when there is a dispute between the insured
depository institution and the Corporation over the amount of any
assessment the depository institution shall retain such records until
final determination of the issue.
(7) Emergency special assessments. -- In addition to the other
assessments imposed on insured depository institutions under this
subsection, the Corporation may impose 1 or more special assessments on
insured depository institutions in an amount determined by the
Corporation if the amount of any such assessment --
(A) is necessary --
(i) to provide sufficient assessment income to repay amounts borrowed
from the Secretary of the Treasury under section 1824(a) of this title
in accordance with the repayment schedule in effect under section
1824(c) of this title during the period with respect to which such
assessment is imposed;
(ii) to provide sufficient assessment income to repay obligations
issued to and other amounts borrowed from Bank Insurance Fund members
under section 1824(d) of this title; or
(iii) for any other purpose the Corporation may deem necessary; and
(B) is allocated between Bank Insurance Fund members and Savings
Association Insurance Fund members in amounts which reflect the degree
to which the proceeds of the amounts borrowed are to be used for the
benefit of the respective insurance funds.
(8) The term ''the depository institution's adjusted time and savings
deposits'' means the amount of the depository institution's time and
savings deposits as reported in its report of condition, as adjusted --
(A) either by adding the amount of all deposits of the type described
in subparagraph (5)(B) or, if the depository institution elects to
ascertain the respective amounts of such deposits creditable to time and
savings deposits and to demand deposits, by adding the amount creditable
to time and savings deposits;
(B) by subtracting, if the depository institution elects to ascertain
the respective amounts of its items of the type described in
subparagraph (6)(A) chargeable against time and savings deposits and
against demand deposits, the amount chargeable against time and savings
deposits; and
(C) by subtracting the amount of all deposits of the type described
in subparagraph (6)(B).
(9) The term ''the depository institution's adjusted demand
deposits'' means the amount of the depository institution's demand
deposits as reported in its report of condition, as adjusted --
(A) by adding the amount of all deposits of the type described in
subparagraph (5)(A);
(B) by adding, if the depository institution elects to ascertain the
respective amounts of its deposits of the type described in subparagraph
(5)(B) creditable to time and savings deposits and to demand deposits,
the amount creditable to demand deposits; and
(C) either by subtracting the amount of all items of the type
described in subparagraph (6)(A), or, if the depository institution
elects to ascertain the respective amounts of such items chargeable
against time and savings deposits and against demand deposits, by
subtracting the amount chargeable against demand deposits.
(10) Assessment rate for lifeline account deposits. --
Notwithstanding any other provision of this subsection, that portion of
the average assessment base of any insured depository institution which
is attributable to deposits in lifeline accounts (as reported in the
institution's reports of condition pursuant to subsection (a)(6) of this
section) shall be subject to assessment at the assessment rate of 1/2
the maximum rate.
(11) Apportionment. -- Notwithstanding any other provision of law,
amounts received pursuant to any assessment under this section or
section 1820(e) of this title and any other amounts received by the
Corporation shall not be subject to apportionment for the purpose of
chapter 15 of title 31 or under any other authority.
(c) Filing of certified statements of assessment base and average
assessment base and amounts due; payments; form, contents,
certification of statements; rules and regulations
(1) On or before the last day of the first month following each
semiannual period, each insured depository institution which became
insured prior to the beginning of such period shall file with the
Corporation a certified statement showing its average assessment base
for such period, and the amount of the semiannual assessment due to the
Corporation for the semiannual period which begins with such month.
Each such depository institution shall pay to the Corporation the amount
of the semiannual assessment it is required to certify.
(2) A depository institution shall not be required to pay any
assessment for the semiannual period in which it becomes an insured
depository institution. On or before the last day of the first month
following the semiannual period during which any depository institution
becomes an insured depository institution, such depository institution
shall --
(A) file with the Corporation a certified statement showing, as its
assessment base for such period, its assessment base for the last date,
if any, within such period for which it was required to submit a report
of condition, or
(B) if such depository institution became an insured depository
institution after the last date in such period for which a report of
condition was required, such depository institution shall make a special
report of condition as of the last day of such semiannual period, and
shall file with the Corporation a certified statement showing, as its
assessment base for such period, its assessment base for the date of
such special report.
The semiannual assessment due from such depository institution for
the semiannual period which begins with such month shall be equal to
one-half the annual assessment rate multiplied by the assessment base
computed pursuant to subparagraph (A) or (B) of this paragraph, and the
amount of such assessment shall be shown on such certified statement.
Each such depository institution shall pay to the Corporation the amount
of the semiannual assessment it is required to certify.
(3) The certified statements required to be filed with the
Corporation under paragraphs (1) and (2) of this subsection shall be in
such form and set forth such supporting information as the Board of
Directors shall prescribe and shall be certified by the president of the
depository institution or any other officer designated by its board of
directors or trustees that to the best of his knowledge and belief the
statement is true, correct and complete and in accordance with this
chapter and regulations issued thereunder. The assessment payments
required from insured depository institutions under paragraphs (1) and
(2) of this subsection shall be made in such manner and at such time or
times as the Board of Directors shall prescribe, provided the time or
times so prescribed shall not be later than sixty days after filing the
certified statement setting forth the amount of assessment.
(4) Except as otherwise provided in this section, the Board of
Directors shall prescribe all needful rules and regulations for the
enforcement of this section. The Board of Directors may limit the
retroactive effect, if any, of any of its rules or regulations.
(5) Penalty for failure to make accurate certified statement. --
(A) First tier. -- Any insured depository institution which --
(i) maintains procedures reasonably adapted to avoid any inadvertent
error and, unintentionally and as a result of such an error, fails to
submit the certified statement under paragraph (1) or (2) within the
period of time required under paragraph (1) or (2) or submits a false or
misleading certified statement; or
(ii) submits the statement at a time which is minimally after the
time required in such paragraph,
shall be subject to a penalty of not more than $2,000 for each day
during which such failure continues or such false and misleading
information is not corrected. The institution shall have the burden of
proving that an error was inadvertent or that a statement was
inadvertently submitted late.
(B) Second tier. -- Any insured depository institution which fails to
submit the certified statement under paragraph (1) or (2) within the
period of time required under paragraph (1) or (2) or submits a false or
misleading certified statement in a manner not described in subparagraph
(A) shall be subject to a penalty of not more than $20,000 for each day
during which such failure continues or such false and misleading
information is not corrected.
(C) Third tier. -- Notwithstanding subparagraphs (A) and (B), if any
insured depository institution knowingly or with reckless disregard for
the accuracy of any certified statement described in paragraph (1) or
(2) submits a false or misleading certified statement under paragraph
(1) or (2), the Corporation may assess a penalty of not more than
$1,000,000 or not more than 1 percent of the total assets of the
institution, whichever is less, per day for each day during which the
failure continues or the false or misleading information in such
statement is not corrected.
(D) Assessment procedure. -- Any penalty imposed under this paragraph
shall be assessed and collected by the Corporation in the manner
provided in subparagraphs (E), (F), (G), and (I) of section 1818(i)(2)
of this title (for penalties imposed under such section) and any such
assessment (including the determination of the amount of the penalty)
shall be subject to the provisions of such section.
(E) Hearing. -- Any insured depository institution against which any
penalty is assessed under this paragraph shall be afforded an agency
hearing if the institution submits a request for such hearing within 20
days after the issuance of the notice of the assessment. Section 1818(
h) of this title shall apply to any proceeding under this subparagraph.
(d) Assessment credits
(1) In general
(A) The Corporation shall prescribe and publish the aggregate amount
to be credited (other than credits allowed pursuant to paragraph (4)) to
insured depository institutions --
(i) in the semiannual period beginning on January 1 and ending on
June 30, not later than the preceding November 1; and
(ii) in the semiannual period beginning on July 1 and ending on
December 31, not later than the preceding May 1.
(B) Each insured depository institution shall be notified by the
Corporation of the percentage by which the assessment rate should be
reduced (taking into account any assessment credit allowed pursuant to
paragraph (4)) in computing its net premium.
(C) Any outstanding obligations owed to the Corporation by an
individual insured depository institution shall be deducted from any
assessment credit to be credited to such depository institution.
(2) Assessment credit for insured banks
(A) Credit barred
The Board of Directors shall not prescribe an assessment credit to
Bank Insurance Fund members if the Board of Directors determines that
the Bank Insurance Fund reserve ratio is expected to be equal to or less
than the designated reserve ratio in the coming year after taking into
consideration such Fund's expected expenses and income.
(B) Credit authorized
If the Board of Directors determines, after taking into consideration
the Bank Insurance Fund's expected operating expenses, case resolution
expenditures, investment income, and assessment income, that the Bank
Insurance Fund reserve ratio is expected to exceed the designated
reserve ratio in the succeeding year, the Board of Directors shall
prescribe an assessment credit to Bank Insurance Fund members in such
succeeding calendar year equal to the lesser of --
(i) the amount necessary to reduce the Bank Insurance Fund reserve
ratio to the designated reserve ratio; or
(ii) 100 percent of the net assessment income to be received from
Bank Insurance Fund members in such succeeding year.
(3) Assessment credit for insured savings associations
(A) Credit barred
The Board of Directors shall not prescribe an assessment credit to
Savings Association Insurance Fund members if the Board of Directors
determines that the Savings Association Insurance Fund reserve ratio is
expected to be equal to or less than the designated reserve ratio in the
coming year after taking into consideration such Fund's expected
expenses and income.
(B) Credit authorized
If the Board of Directors determines, after taking into consideration
the Savings Association Insurance Fund's expected expenses and income,
that the Savings Association Insurance Fund reserve ratio is expected to
exceed the designated reserve ratio in the succeeding year, the Board of
Directors shall prescribe an assessment credit to Savings Association
Insurance Fund members in such succeeding calendar year equal to the
lesser of --
(i) the amount necessary to reduce the Savings Association Insurance
Fund reserve ratio to the designated reserve ratio; or
(ii) 100 percent of the net assessment income to be received from
Savings Association Insurance Fund members in such succeeding year.
(4) Community enterprise assessment credits
Notwithstanding paragraphs (2)(A) and (3)(A) and in addition to any
assessment credit authorized under paragraph (2)(B) or (3)(B), the
Corporation shall allow an assessment credit for any semiannual
assessment period to any Bank Insurance Fund member or Savings
Association Insurance Fund member satisfying the requirements of the
Community Enterprise Assessment Credit Board under section 1834a(a)(1)
of this title in the amount determined by such Board through regulation
for such period pursuant to such section.
(5) Maximum amount of credit
The total amount of assessment credits allowed under this subsection
(including community enterprise assessment credits pursuant to paragraph
(4)) for any insured depository institution for any semiannual period
shall not exceed the amount which is equal to 20 percent, in the case of
an institution which does not meet the community development
organization requirements under section 1834b /6/ of this title, and 50
percent, in the case of an institution which meets such requirements, of
the assessment imposed on such institution for the semiannual period.
(6) ''Net assessment income'' defined
For purposes of this subsection --
(A) In general
The term ''net assessment income'' means --
(i) with respect to the Bank Insurance Fund, the Bank Insurance Fund
net assessment income (as defined in subparagraph (B)); and
(ii) with respect to the Savings Association Insurance Fund, the
Savings Association Insurance Fund net assessment income (as defined in
subparagraph (C)).
(B) Bank Insurance Fund net assessment income
(i) In general
The term ''Bank Insurance Fund net assessment income'' means --
(I) the total assessments which become due during the calendar year
with respect to members of such Fund, minus
(II) the sum of the amount of the operating costs and expenses
described in clause (ii) and the amount by which the Bank Insurance
Fund's insurance costs described in clause (iii) exceed its investment
income for the calendar year.
(ii) Operating cost and expenses
For the purposes of this subparagraph, the operating costs and
expenses to be deducted from assessments include the operating costs and
expenses of --
(I) the Corporation for the calendar year directly attributable to
the Bank Insurance Fund; and
(II) the Bank Insurance Fund.
(iii) Insurance costs
For purposes of this subparagraph, the insurance costs include --
(I) additions to the Bank Insurance Fund's reserve to provide for
insurance losses during the calendar year, excluding any adjustments to
such reserve which result in a reduction of such reserve; and
(II) the insurance losses sustained in such calendar year.
(C) Savings Association Insurance Fund net assessment income
(i) In general
The term ''Savings Association Insurance Fund net assessment income''
means --
(I) the total assessments which become due during the calendar year
with respect to members of such Fund, minus
(II) the sum of the amount of the operating costs and expenses
described in clause (ii) and the amount by which the Savings Association
Insurance Fund's insurance costs described in clause (iii) exceed its
investment income for the calendar year.
(ii) Operating cost and expenses
For purposes of this subparagraph, the operating costs and expenses
to be deducted from assessments include the operating costs and expenses
of --
(I) the Corporation for the calendar year directly attributable to
the Savings Association Insurance Fund; and
(II) the Savings Association Insurance Fund.
(iii) Insurance costs
For the purposes of this subparagraph, the insurance costs include --
(I) additions to the Savings Association Insurance Fund's reserve to
provide for insurance losses during the calendar year, excluding any
adjustments to such reserve which result in a reduction of such reserve;
and
(II) the insurance losses sustained in such calendar year.
(7) ''Investment income'' defined
For purposes of this subsection, the term ''investment income'' means
--
(A) for the Bank Insurance Fund, interest, dividends, and net market
gains earned on investments of the Bank Insurance Fund; and
(B) for the Savings Association Insurance Fund, interest, dividends,
and net market gains earned on investments of the Savings Association
Insurance Fund.
(e) Refunds to insured depository institutions
The Corporation (1) may refund to an insured depository institution
any payment of assessment in excess of the amount due to the Corporation
or (2) may credit such excess toward the payment of the assessment next
becoming due from such depository institution and upon succeeding
assessments until the credit is exhausted.
(f) Action against depository institutions failing to file certified
statements
Any insured depository institution which fails to make any report of
condition under subsection (a) of this section or to file any certified
statement required to be filed by it in connection with determining the
amount of any assessment payable by the depository institution to the
Corporation may be compelled to make such report or file such statement
by mandatory injunction or other appropriate remedy in a suit brought
for such purpose by the Corporation against the depository institution
and any officer or officers thereof in any court of the United States of
competent jurisdiction in the District or Territory in which such
depository institution is located.
(g) Action by Corporation to recover assessments
The Corporation, in a suit brought at law or in equity in any court
of competent jurisdiction, shall be entitled to recover from any insured
depository institution the amount of any unpaid assessment lawfully
payable by such insured depository institution to the Corporation,
whether or not such depository institution shall have made any such
report of condition under subsection (a) of this section or filed any
such certified statement and whether or not suit shall have been brought
to compel the depository institution to make any such report or file any
such statement. No action or proceeding shall be brought for the
recovery of any assessment due to the Corporation, or for the recovery
of any amount paid to the Corporation in excess of the amount due to it,
unless such action or proceeding shall have been brought within five
years after the right accrued for which the claim is made, except where
the insured depository institution has made or filed with the
Corporation a false or fraudulent certified statement with the intent to
evade, in whole or in part, the payment of assessment, in which case the
claim shall not be deemed to have accrued until the discovery by the
Corporation that the certified statement is false or fraudulent:
Provided, however, That where a cause of action has already accrued, and
the period herein prescribed within which an action may be brought has
expired, or will expire within one year from September 21, 1950, an
action may be brought on such cause of action within one year from
September 21, 1950: And provided further, That no action or proceeding
shall be brought for the recovery of any assessment on deposits alleged
to have been omitted from the assessment base of any insured depository
institution for any year prior to 1945 except that any claim of the
Corporation for the payment of any assessment may be offset by it
against any claim of the depository institution for the overpayment of
any assessment.
(h) Forfeiture of rights for failure to comply with law
Should any national member bank or any insured national nonmember
bank fail to make any report of condition under subsection (a) of this
section or to file any certified statement required to be filed by such
bank under any provision of this section, or fail to pay any assessment
required to be paid by such bank under any provision of this chapter,
and should the bank not correct such failure within thirty days after
written notice has been given by the Corporation to an officer of the
bank, citing this subsection, and stating that the bank has failed to
make any report of condition under subsection (a) of this section or to
file or pay as required by law, all the rights, privileges, and
franchises of the bank granted to it under the National Bank Act, as
amended (12 U.S.C. 21 et seq.), the Federal Reserve Act, as amended (12
U.S.C. 221 et seq.), or this chapter, shall be thereby forfeited.
Whether or not the penalty provided in this subsection has been incurred
shall be determined and adjudged in the manner provided in the sixth
paragraph of section 2 of the Federal Reserve Act, as amended (12 U.S.C.
501a). The remedies provided in this subsection and in subsections (f)
and (g) of this section shall not be construed as limiting any other
remedies against any insured depository institution, but shall be in
addition thereto.
(i) Insurance of trust funds
Except with respect to trust funds which are owned by a depositor
referred to in paragraph (2) of section 1821(a) of this title, trust
funds held by an insured depository institution in a fiduciary capacity
whether held in its trust department or held or deposited in any other
department of the fiduciary depository institution shall be insured in
an amount not to exceed $100,000 for each trust estate, and when
deposited by the fiduciary depository institution in another insured
depository institution such trust fund shall be similarly insured to the
fiduciary depository institution according to the trust estates
represented. Notwithstanding any other provision of this chapter, such
insurance shall be separate from and additional to that covering other
deposits of the owners of such trust funds or the beneficiaries of such
trust estates. The Board of Directors shall have power by regulation to
prescribe the manner of reporting and of depositing such trust funds.
(j) Change in control of insured depository institutions
(1) No person, acting directly or indirectly or through or in concert
with one or more other persons, shall acquire control of any insured
depository institution through a purchase, assignment, transfer, pledge,
or other disposition of voting stock of such insured depository
institution unless the appropriate Federal banking agency has been given
sixty days' prior written notice of such proposed acquisition and within
that time period the agency has not issued a notice disapproving the
proposed acquisition or, in the discretion of the agency, extending for
an additional 30 days the period during which such a disapproval may
issue. The period for disapproval under the preceding sentence may be
extended not to exceed 2 additional times for not more than 45 days each
time if --
(A) the agency determines that any acquiring party has not furnished
all the information required under paragraph (6);
(B) in the agency's judgment, any material information submitted is
substantially inaccurate;
(C) the agency has been unable to complete the investigation of an
acquiring party under paragraph (2)(B) because of any delay caused by,
or the inadequate cooperation of, such acquiring party; or
(D) the agency determines that additional time is needed to
investigate and determine that no acquiring party has a record of
failing to comply with the requirements of subchapter II of chapter 53
of title 31.
An acquisition may be made prior to expiration of the disapproval
period if the agency issues written notice of its intent not to
disapprove the action.
(2)(A) Notice to State Agency. -- Upon receiving any notice under
this subsection, the appropriate Federal banking agency shall forward a
copy thereof to the appropriate State depository institution supervisory
agency if the depository institution the voting shares of which are
sought to be acquired is a State depository institution, and shall allow
thirty days within which the views and recommendations of such State
depository institution supervisory agency may be submitted. The
appropriate Federal banking agency shall give due consideration to the
views and recommendations of such State agency in determining whether to
disapprove any proposed acquisition. Notwithstanding the provisions of
this paragraph, if the appropriate Federal banking agency determines
that it must act immediately upon any notice of a proposed acquisition
in order to prevent the probable default of the depository institution
involved in the proposed acquisition, such Federal banking agency may
dispense with the requirements of this paragraph or, if a copy of the
notice is forwarded to the State depository institution supervisory
agency, such Federal banking agency may request that the views and
recommendations of such State depository institution supervisory agency
be submitted immediately in any form or by any means acceptable to such
Federal banking agency.
(B) Investigation of Principals Required. -- Upon receiving any
notice under this subsection, the appropriate Federal banking agency
shall --
(i) conduct an investigation of the competence, experience,
integrity, and financial ability of each person named in a notice of a
proposed acquisition as a person by whom or for whom such acquisition is
to be made; and
(ii) make an independent determination of the accuracy and
completeness of any information described in paragraph (6) with respect
to such person.
(C) Report. -- The appropriate Federal banking agency shall prepare a
written report of any investigation under subparagraph (B) which shall
contain, at a minimum, a summary of the results of such investigation.
The agency shall retain such written report as a record of the agency.
(D) Public Comment. -- Upon receiving notice of a proposed
acquisition, the appropriate Federal banking agency shall, unless such
agency determines that an emergency exists, within a reasonable period
of time --
(i) publish the name of the insured depository institution proposed
to be acquired and the name of each person identified in such notice as
a person by whom or for whom such acquisition is to be made; and
(ii) solicit public comment on such proposed acquisition,
particularly from persons in the geographic area where the bank /7/
proposed to be acquired is located, before final consideration of such
notice by the agency,
unless the agency determines in writing that such disclosure or
solicitation would seriously threaten the safety or soundness of such
bank. /7/
(3) Within three days after its decision to disapprove any proposed
acquisition, the appropriate Federal banking agency shall notify the
acquiring party in writing of the disapproval. Such notice shall
provide a statement of the basis for the disapproval.
(4) Within ten days of receipt of such notice of disapproval, the
acquiring party may request an agency hearing on the proposed
acquisition. In such hearing all issues shall be determined on the
record pursuant to section 554 of title 5. The length of the hearing
shall be determined by the appropriate Federal banking agency. At the
conclusion thereof, the appropriate Federal banking agency shall by
order approve or disapprove the proposed acquisition on the basis of the
record made at such hearing.
(5) Any person whose proposed acquisition is disapproved after agency
hearings under this subsection may obtain review by the United States
court of appeals for the circuit in which the home office of the bank
/7/ to be acquired is located, or the United States Court of Appeals for
the District of Columbia Circuit, by filing a notice of appeal in such
court within ten days from the date of such order, and simultaneously
sending a copy of such notice by registered or certified mail to the
appropriate Federal banking agency. The appropriate Federal banking
agency shall promptly certify and file in such court the record upon
which the disapproval was based. The findings of the appropriate
Federal banking agency shall be set aside if found to be arbitrary or
capricious or if found to violate procedures established by this
subsection.
(6) Except as otherwise provided by regulation of the appropriate
Federal banking agency, a notice filed pursuant to this subsection shall
contain the following information:
(A) The identity, personal history, business background and
experience of each person by whom or on whose behalf the acquisition is
to be made, including his material business activities and affiliations
during the past five years, and a description of any material pending
legal or administrative proceedings in which he is a party and any
criminal indictment or conviction of such person by a State or Federal
court.
(B) A statement of the assets and liabilities of each person by whom
or on whose behalf the acquisition is to be made, as of the end of the
fiscal year for each of the five fiscal years immediately preceding the
date of the notice, together with related statements of income and
source and application of funds for each of the fiscal years then
concluded, all prepared in accordance with generally accepted accounting
principles consistently applied, and an interim statement of the assets
and liabilities for each such person, together with related statements
of income and source and application of funds, as of a date not more
than ninety days prior to the date of the filing of the notice.
(C) The terms and conditions of the proposed acquisition and the
manner in which the acquisition is to be made.
(D) The identity, source and amount of the funds or other
consideration used or to be used in making the acquisition, and if any
part of these funds or other consideration has been or is to be borrowed
or otherwise obtained for the purpose of making the acquisition, a
description of the transaction, the names of the parties, and any
arrangements, agreements, or understandings with such persons.
(E) Any plans or proposals which any acquiring party making the
acquisition may have to liquidate the bank, /7/ to sell its assets or
merge it with any company or to make any other major change in its
business or corporate structure or management.
(F) The identification of any person employed, retained, or to be
compensated by the acquiring party, or by any person on his behalf, to
make solicitations or recommendations to stockholders for the purpose of
assisting in the acquisition, and a brief description of the terms of
such employment, retainer, or arrangement for compensation.
(G) Copies of all invitations or tenders or advertisements making a
tender offer to stockholders for purchase of their stock to be used in
connection with the proposed acquisition.
(H) Any additional relevant information in such form as the
appropriate Federal banking agency may require by regulation or by
specific request in connection with any particular notice.
(7) The appropriate Federal banking agency may disapprove any
proposed acquisition if --
(A) the proposed acquisition of control would result in a monopoly or
would be in furtherance of any combination or conspiracy to monoplize
/8/ to attempt to monopolize the business of banking in any part of the
United States;
(B) the effect of the proposed acquisition of control in any section
of the country may be substantially to lessen competition or to tend to
create a monopoly or the proposed acquisition of control would in any
other manner be in restraint of trade, and the anticompetitive effects
of the proposed acquisition of control are not clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the community to be served;
(C) the financial condition of any acquiring person is such as might
jeopardize the financial stability of the bank /7/ or prejudice the
interests of the depositors of the bank; /7/
(D) the competence, experience, or integrity of any acquiring person
or of any of the proposed management personnel indicates that it would
not be in the interest of the depositors of the bank, or in the interest
of the public to permit such person to control the bank; /7/
(E) any acquiring person neglects, fails, or refuses to furnish the
appropriate Federal banking agency all the information required by the
appropriate Federal banking agency; or
(F) the appropriate Federal banking agency determines that the
proposed transaction would result in an adverse effect on the Bank
Insurance Fund or the Savings Association Insurance Fund.
(8) For the purposes of this subsection, the term --
(A) ''person'' means an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, or any other form of entity not
specifically listed herein; and
(B) ''control'' means the power, directly or indirectly, to direct
the management or policies of an insured depository institution or to
vote 25 per centum or more of any class of voting securities of an
insured depository institution.
(9) Reporting of stock loans. --
(A) Report required. -- Any financial institution and any affiliate
of any financial institution that has credit outstanding to any person
or group of persons which is secured, directly or indirectly, by shares
of an insured depository institution shall file a consolidated report
with the appropriate Federal banking agency for such insured depository
institution if the extensions of credit by the financial institution and
such institution's affiliates, in the aggregate, are secured, directly
or indirectly, by 25 percent or more of any class of shares of the same
insured depository institution.
(B) Definitions. -- For purposes of this paragraph --
(i) Financial institution. -- The term ''financial institution''
means any insured depository institution and any foreign bank that is
subject to the provisions of the Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.) by virtue of section 3106(a) of this title.
(ii) Credit outstanding. -- The term ''credit outstanding'' includes
--
(I) any loan or extension of credit,
(II) the issuance of a guarantee, acceptance, or letter of credit,
including an endorsement or standby letter of credit, and
(III) any other type of transaction that extends credit or financing
to the person or group of persons.
(iii) Group of persons. -- The term ''group of persons'' includes any
number of persons that the financial institution reasonably believes --
(I) are acting together, in concert, or with one another to acquire
or control shares of the same insured depository institution, including
an acquisition of shares of the same insured depository institution at
approximately the same time under substantially the same terms; or
(II) have made, or propose to make, a joint filing under section 78m
of title 15 regarding ownership of the shares of the same insured
depository institution.
(C) Inclusion of shares held by the financial institution. -- Any
shares of the insured depository institution held by the financial
institution or any of its affiliates as principal shall be included in
the calculation of the number of shares in which the financial
institution or its affiliates has a security interest for purposes of
subparagraph (A).
(D) Report requirements. --
(i) Timing of report. -- The report required under this paragraph
shall be a consolidated report on behalf of the financial institution
and all affiliates of the institution, and shall be filed in writing
within 30 days of the date on which the financial institution or any
such affiliate first believes that the security for any outstanding
credit consists of 25 percent or more of any class of shares of an
insured depository institution.
(ii) Content of report. -- The report under this paragraph shall
indicate the number and percentage of shares securing each applicable
extension of credit, the identity of the borrower, and the number of
shares held as principal by the financial institution and any affiliate
of such institution.
(iii) Copy to other agencies. -- A copy of any report under this
paragraph shall be filed with the appropriate Federal banking agency for
the financial institution (if other than the agency receiving the report
under this paragraph).
(iv) Other information. -- Each appropriate Federal banking agency
may require any additional information necessary to carry out the
agency's supervisory responsibilities.
(E) Exceptions. --
(i) Exception where information provided by borrower. --
Notwithstanding subparagraph (A), a financial institution and the
affiliates of such institution shall not be required to report a
transaction under this paragraph if the person or group of persons
referred to in such subparagraph has disclosed the amount borrowed from
such institution or affiliate and the security interest of the
institution or affiliate to the appropriate Federal banking agency for
the insured depository institution in connection with a notice filed
under this subsection, an application filed under the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.), section 1467a of this
title, or any other application filed with the appropriate Federal
banking agency for the insured depository institution as a substitute
for a notice under this subsection, such as an application for deposit
insurance, membership in the Federal Reserve System, or a national bank
charter.
(ii) Exception for shares owned for more than 1 year. --
Notwithstanding subparagraph (A), a financial institution and any
affiliate of such institution shall not be required to report a
transaction involving --
(I) a person or group of persons that has been the owner or owners of
record of the stock for a period of 1 year or more; or
(II) stock issued by a newly chartered bank before the bank's
opening.
(10) The reports required by paragraph (9) of this subsection shall
contain such of the information referred to in paragraph (6) of this
subsection, and such other relevant information, as the appropriate
Federal banking agency may require by regulation or by specific request
in connection with any particular report.
(11) The Federal banking agency receiving a notice or report filed
pursuant to paragraph (1) or (9) shall immediately furnish to the other
Federal banking agencies a copy of such notice or report.
(12) Whenever such a change in control occurs, each insured
depository institution shall report promptly to the appropriate Federal
banking agency any changes or replacement of its chief executive officer
or of any director occurring in the next twelve-month period, including
in its report a statement of the past and current business and
professional affiliations of the new chief executive officer or
directors.
(13) The appropriate Federal banking agencies are authorized to issue
rules and regulations to carry out this subsection.
(14) Within two years after the effective date of the Change in Bank
Control Act of 1978, and each year thereafter in each appropriate
Federal banking agency's annual report to the Congress, the appropriate
Federal banking agency shall report to the Congress the results of the
administration of this subsection, and make any recommendations as to
changes in the law which in the opinion of the appropriate Federal
banking agency would be desirable.
(15) Investigative and Enforcement Authority. --
(A) Investigations. -- The appropriate Federal banking agency may
exercise any authority vested in such agency under section 1818(n) of
this title in the course of conducting any investigation under paragraph
(2)(B) or any other investigation which the agency, in its discretion,
determines is necessary to determine whether any person has filed
inaccurate, incomplete, or misleading information under this subsection
or otherwise is violating, has violated, or is about to violate any
provision of this subsection or any regulation prescribed under this
subsection.
(B) Enforcement. -- Whenever it appears to the appropriate Federal
banking agency that any person is violating, has violated, or is about
to violate any provision of this subsection or any regulation prescribed
under this subsection, the agency may, in its discretion, apply to the
appropriate district court of the United States or the United States
court of any territory for --
(i) a temporary or permanent injunction or restraining order
enjoining such person from violating this subsection or any regulation
prescribed under this subsection; or
(ii) such other equitable relief as may be necessary to prevent any
such violation (including divestiture).
(C) Jurisdiction. --
(i) The district courts of the United States and the United States
courts in any territory shall have the same jurisdiction and power in
connection with any exercise of any authority by the appropriate Federal
banking agency under subparagraph (A) as such courts have under section
1818(n) of this title.
(ii) The district courts of the United States and the United States
courts of any territory shall have jurisdiction and power to issue any
injunction or restraining order or grant any equitable relief described
in subparagraph (B). When appropriate, any injunction, order, or other
equitable relief granted under this paragraph shall be granted without
requiring the posting of any bond.
The resignation, termination of employment or participation,
divestiture of control, or separation of or by an institution-affiliated
party (including a separation caused by the closing of a depository
institution) shall not affect the jurisdiction and authority of the
appropriate Federal banking agency to issue any notice and proceed under
this subsection against any such party, if such notice is served before
the end of the 6-year period beginning on the date such party ceased to
be such a party with respect to such depository institution (whether
such date occurs before, on, or after August 9, 1989).
(16) Civil money penalty. --
(A) First tier. -- Any person who violates any provision of this
subsection, or any regulation or order issued by the appropriate Federal
banking agency under this subsection, shall forfeit and pay a civil
penalty of not more than $5,000 for each day during which such violation
continues.
(B) Second tier. -- Notwithstanding subparagraph (A), any person who
--
(i)(I) commits any violation described in any clause of subparagraph
(A);
(II) recklessly engages in an unsafe or unsound practice in
conducting the affairs of a depository institution; or
(III) breaches any fiduciary duty;
(ii) which violation, practice, or breach --
(I) is part of a pattern of misconduct;
(II) causes or is likely to cause more than a minimal loss to such
institution; or
(III) results in pecuniary gain or other benefit to such person,
shall forfeit and pay a civil penalty of not more than $25,000 for
each day during which such violation, practice, or breach continues.
(C) Third tier. -- Notwithstanding subparagraphs (A) and (B), any
person who --
(i) knowingly --
(I) commits any violation described in any clause of subparagraph
(A);
(II) engages in any unsafe or unsound practice in conducting the
affairs of a depository institution; or
(III) breaches any fiduciary duty; and
(ii) knowingly or recklessly causes a substantial loss to such
institution or a substantial pecuniary gain or other benefit to such
person by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the
applicable maximum amount determined under subparagraph (D) for each day
during which such violation, practice, or breach continues.
(D) Maximum amounts of penalties for any violation described in
subparagraph (c). -- The maximum daily amount of any civil penalty which
may be assessed pursuant to subparagraph (C) for any violation,
practice, or breach described in such subparagraph is --
(i) in the case of any person other than a depository institution, an
amount to not exceed $1,000,000; and
(ii) in the case of a depository institution, an amount not to exceed
the lesser of --
(I) $1,000,000; or
(II) 1 percent of the total assets of such institution.
(E) Assessment; etc. -- Any penalty imposed under subparagraph (A),
(B), or (C) shall be assessed and collected by the appropriate Federal
banking agency in the manner provided in subparagraphs (E), (F), (G),
and (I) of section 1818(i)(2) of this title for penalties imposed (under
such section) and any such assessment shall be subject to the provisions
of such section.
(F) Hearing. -- The depository institution or other person against
whom any penalty is assessed under this paragraph shall be afforded an
agency hearing if such institution or other person submits a request for
such hearing within 20 days after the issuance of the notice of
assessment. Section 1818(h) of this title shall apply to any proceeding
under this paragraph.
(G) Disbursement. -- All penalties collected under authority of this
paragraph shall be deposited into the Treasury.
(17) Exceptions. -- This subsection shall not apply with respect to a
transaction which is subject to --
(A) section 1842 of this title;
(B) section 1828(c) of this title; or
(C) section 1467a of this title.
(18) Applicability of change in control provisions to other
institutions. -- For purposes of this subsection, the term ''insured
depository institution'' includes --
(A) any depository institution holding company; and
(B) any other company which controls an insured depository
institution and is not a depository institution holding company.
(k) Federal banking agency rules and regulations for reports and
public disclosure by banks of extension of credit to executive officers
or principal shareholders or the related interests of such persons
The appropriate Federal banking agencies are authorized to issue
rules and regulations, including definitions of terms, to require the
reporting and public disclosure of information by a bank or any
executive officer or principal shareholder thereof concerning extensions
of credit by the bank to any of its executive officers or principal
shareholders, or the related interests of such persons.
(l) Designation of fund membership for newly insured depository
institutions; definitions
For purposes of this section:
(1) Bank Insurance Fund
Any institution which --
(A) becomes an insured depository institution; and
(B) does not become a Savings Association Insurance Fund member
pursuant to paragraph (2),
shall be a Bank Insurance Fund member.
(2) Savings Association Insurance Fund
Any savings association, other than any Federal savings bank
chartered pursuant to section 1464(o) of this title, which becomes an
insured depository institution shall be a Savings Association Insurance
Fund member.
(3) Transition provision
(A) Bank Insurance Fund
Any depository institution the deposits of which were insured by the
Federal Deposit Insurance Corporation on the day before August 9, 1989,
including --
(i) any Federal savings bank chartered pursuant to section 1464(o) of
this title; and
(ii) any cooperative bank,
shall be a Bank Insurance Fund member as of August 9, 1989.
(B) Savings Association Insurance Fund
Any savings association which is an insured depository institution by
operation of section 1814(a)(2) of this title shall be a Savings
Association Insurance Fund member as of August 9, 1989.
(4) Bank Insurance Fund member
The term ''Bank Insurance Fund member'' means any depository
institution the deposits of which are insured by the Bank Insurance
Fund.
(5) Savings Association Insurance Fund member
The term ''Savings Association Insurance Fund member'' means any
depository institution the deposits of which are insured by the Savings
Association Insurance Fund.
(6) Bank Insurance Fund reserve ratio
The term ''Bank Insurance Fund reserve ratio'' means the ratio of the
net worth of the Bank Insurance Fund to the value of the aggregate
estimated insured deposits held in all Bank Insurance Fund members.
(7) Savings Association Insurance Fund reserve ratio
The term ''Savings Association Insurance Fund reserve ratio'' means
the ratio of the value of the net worth of the Savings Association
Insurance Fund to the value of the aggregate estimated insured deposits
held in all Savings Association Insurance Fund members.
(m) Secondary reserve offsets against premiums
(1) Offsets in calendar years beginning before 1993
Subject to the maximum amount limitation contained in paragraph (2)
and notwithstanding any other provision of law, any insured savings
association may offset such association's pro rata share of the
statutorily prescribed amount against any premium assessed against such
association under subsection (b) of this section for any calendar year
beginning before 1993.
(2) Annual maximum amount limitation
The amount of any offset allowed for any savings association under
paragraph (1) for any calendar year beginning before 1993 shall not
exceed an amount which is equal to 20 percent of such association's pro
rata share of the statutorily prescribed amount (as computed for such
calendar year).
(3) Offsets in calendar years beginning after 1992
Notwithstanding any other provision of law, a savings association may
offset such association's pro rata share of the statutorily prescribed
amount against any premium assessed against such association under
subsection (b) of this section for any calendar year beginning after
1992.
(4) Transferability
No right, title, or interest of any insured depository institution in
or with respect to its pro rata share of the secondary reserve shall be
assignable or transferable whether by operation of law or otherwise,
except to the extent that the Corporation may provide for transfer of
such pro rata share in cases of merger or consolidation, transfer of
bulk assets or assumption of liabilities, and similar transactions, as
defined by the Corporation for purposes of this paragraph.
(5) Pro rata distribution on termination of insured status
If --
(A) the status of any savings association as an insured depository
institution is terminated pursuant to any provision of section 1818 of
this title or the insurance of accounts of any savings association
institution is otherwise terminated;
(B) a receiver or other legal custodian is appointed for the purpose
of liquidation or winding up the affairs of any savings association; or
(C) the Corporation makes a determination that for the purposes of
this subsection any savings association has otherwise gone into
liquidation,
the Corporation shall pay in cash to such institution its pro rata
share of the secondary reserve, in accordance with such terms and
conditions as the Corporation may prescribe, or, at the option of the
Corporation, the Corporation may apply the whole or any part of the
amount which would otherwise be paid in cash toward the payment of any
indebtedness or obligation, whether matured or not, of such institution
to the Corporation, existing or arising before such payment in cash.
Such payment or such application need not be made to the extent that the
provisions of the exception in paragraph (4) are applicable.
(6) ''Statutorily prescribed amount'' defined
For purposes of this subsection, the term ''statutorily prescribed
amount'' means, with respect to any calendar year which ends after
August 9, 1989 --
(A) $823,705,000, minus
(B) the sum of --
(i) the aggregate amount of offsets made before August 9, 1989, by
all insured institutions under section 404(e)(2) /9/ of the National
Housing Act (12 U.S.C. 1727(e)(2)) (as in effect before August 9, 1989);
and
(ii) the aggregate amount of offsets made by all savings associations
under this subsection before the beginning of such calendar year.
(7) Savings association's pro rata amount
For purposes of this subsection, any savings association's pro rata
share of the statutorily prescribed amount is the percentage which is
equal to such association's share of the secondary reserve as determined
under section 404(e) /9/ of the National Housing Act on the day before
the date on which Federal Savings and Loan Insurance Corporation ceased
to recognize the secondary reserve (as such Act (12 U.S.C. 1701 et seq.)
was in effect on the day before such date).
(8) Year of enactment rule
With respect to the calendar year in which the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 is enacted, the
Corporation shall make such adjustments as may be necessary --
(A) in the computation of the statutorily prescribed amount which
shall be applicable for the remainder of such calendar year after taking
into account the aggregate amount of offsets by all insured institutions
under section 404(e)(2) /9/ of the National Housing Act (12 U.S.C.
1727(e)(2)) (as in effect before August 9, 1989) after the beginning of
such calendar year and before August 9, 1989; and
(B) in the computation of the maximum amount of any savings
association's offset for such calendar year under paragraph (1) after
taking into account --
(i) the amount of any offset by such savings association under
section 404(e)(2) /9/ of the National Housing Act (as in effect before
August 9, 1989) after the beginning of such calendar year and before
August 9, 1989; and
(ii) the change of such association's premium year from the 1-year
period applicable under section 404(b) /9/ of the National Housing Act
(as in effect before August 9, 1989) to a calendar year basis.
(n) Collections on behalf of Director of Office of Thrift Supervision
When requested by the Director of the Office of Thrift Supervision,
the Corporation shall collect on behalf of the Director assessments on
savings associations levied by the Director under section 1467 of this
title. The Corporation shall be reimbursed for its actual costs for the
collection of such assessments. Any such assessments by the Director
shall be in addition to any amounts assessed by the Corporation, the
Financing Corporation, and the Resolution Funding Corporation.
(Sept. 21, 1950, ch. 967, 2(7), 64 Stat. 876; July 14, 1960, Pub.
L. 86-671, 2, 3, 74 Stat. 547-551; Sept. 12, 1964, Pub. L. 88-593, 78
Stat. 940; Oct. 16, 1966, Pub. L. 89-695, title II, 201, title III,
301(b), 80 Stat. 1046, 1055; Dec. 23, 1969, Pub. L. 91-151, 7( a)(2),
83 Stat. 375; Dec. 31, 1970, Pub. L. 91-609, title IX, 910(g), (h), 84
Stat. 1812; Oct. 28, 1974, Pub. L. 93-495, title I, 101(a)( 2),
102(a)(2), 88 Stat. 1500, 1502; Sept. 17, 1978, Pub. L. 95-369,
6(c)(8)-(13), 92 Stat. 617, 618; Nov. 10, 1978, Pub. L. 95-630, title
III, 302, 310, title VI, 602, title IX, 901, 92 Stat. 3676, 3678, 3683,
3693; Mar. 31, 1980, Pub. L. 96-221, title III, 308(a)(1)(B), (d), 94
Stat. 147, 148; Dec. 26, 1981, Pub. L. 97-110, title I, 103( b), 95
Stat. 1514; Oct. 15, 1982, Pub. L. 97-320, title I, 113(d)-( f), (q),
117, title IV, 429, 96 Stat. 1473, 1475, 1479, 1527; Oct. 27, 1986,
Pub. L. 99-570, title I, 1360, 100 Stat. 3207-29; Aug. 10, 1987, Pub.
L. 100-86, title V, 505(a), 101 Stat. 633; Aug. 9, 1989, Pub. L.
101-73, title II, 201, 208, title IX, 905(c), 907(d), 911( c), 931(a),
103 Stat. 187, 206, 460, 468, 479, 493; Nov. 5, 1990, Pub. L. 101-508,
title II, 2002-2004, 104 Stat. 1388-14 -- 1388-16; Dec. 19, 1991, Pub.
L. 102-242, title I, 103(b), 104, 113(c)(1), 141(c), title II, 205,
232(b), 233(c), title III, 302(a), (b), (e)(2), (3), 311(a)(2), (b)(3),
313(a), title IV, 474, 105 Stat. 2238, 2247, 2277, 2292, 2310, 2314,
2345, 2348, 2349, 2363, 2365, 2368, 2386.)
Pub. L. 102-242, title III, 302(a), (e)(2), (g), Dec. 19, 1991, 105
Stat. 2345, 2349, provided that, effective on the earlier of 180 days
after the date on which final regulations promulgated in accordance with
section 302(c) of Pub. L. 102-242, set out as a note below, become
effective or Jan. 1, 1994, subsection (a)(5) is amended by striking out
''and for the computation of assessments provided in subsection (b) of
this section'', and subsection (b) is amended to read as follows:
(b) Assessments
(1) Risk-based assessment system
(A) Risk-based assessment system required
The Board of Directors shall, by regulation, establish a risk-based
assessment system for insured depository institutions.
(B) Private reinsurance authorized
In carrying out this paragraph, the Corporation may --
(i) obtain private reinsurance covering not more than 10 percent of
any loss the Corporation incurs with respect to an insured depository
institution; and
(ii) base that institution's semiannual assessment (in whole or in
part) on the cost of the reinsurance.
(C) Risk-based assessment system defined
For purposes of this paragraph, the term ''risk-based assessment
system'' means a system for calculating a depository institution's
semiannual assessment based on --
(i) the probability that the deposit insurance fund will incur a loss
with respect to the institution, taking into consideration the risks
attributable to --
(I) different categories and concentrations of assets;
(II) different categories and concentrations of liabilities, both
insured and uninsured, contingent and noncontingent; and
(III) any other factors the Corporation determines are relevant to
assessing such probability;
(ii) the likely amount of any such loss; and
(iii) the revenue needs of the deposit insurance fund.
(D) Separate assessment systems
The Board of Directors may establish separate risk-based assessment
systems for large and small members of each deposit insurance fund.
(2) Setting assessments
(A) Achieving and maintaining designated reserve ratio
(i) In general
The Board of Directors shall set semiannual assessments for insured
depository institutions --
(I) to maintain the reserve ratio of each deposit insurance fund at
the designated reserve ratio; or
(II) if the reserve ratio is less than the designated reserve ratio,
to increase the reserve ratio to the designated reserve ratio as
provided in paragraph (3).
(ii) Factors to be considered
In carrying out clause (i), the Board of Directors shall consider the
deposit insurance fund's --
(I) expected operating expenses,
(II) case resolution expenditures and income,
(III) the effect of assessments on members' earnings and capital, and
(IV) any other factors that the Board of Directors may deem
appropriate.
(iii) Minimum assessment
The semiannual assessment for each member of a deposit insurance fund
shall be not less than $1,000.
(iv) Designated reserve ratio defined
The designated reserve ratio of each deposit insurance fund for each
year shall be --
(I) 1.25 percent of estimated insured deposits; or
(II) a higher percentage of estimated insured deposits that the Board
of Directors determines to be justified for that year by circumstances
raising a significant risk of substantial future losses to the fund.
(B) Independent treatment of funds
The Board of Directors shall --
(i) set semiannual assessments for members of each deposit insurance
fund independently from semiannual assessments for members of any other
deposit insurance fund; and
(ii) set the designated reserve ratio of each deposit insurance fund
independently from the designated reserve ratio of any other deposit
insurance fund.
(C) Notice of assessments
The Corporation shall notify each insured depository institution of
that institution's semiannual assessment.
(D) Priority of Financing Corporation and Funding Corporation
assessments
Notwithstanding any other provision of this paragraph, amounts
assessed by the Financing Corporation under section 1441 of this title
against Savings Association Insurance Fund members, shall be subtracted
from the amounts authorized to be assessed by the Corporation under this
paragraph.
(E) Minimum assessments
The Corporation shall design the risk-based assessment system for any
deposit insurance fund so that, if the Corporation has borrowings
outstanding under section 1824 of this title on behalf of that fund or
the reserve ratio of that fund remains below the designated reserve
ratio, the total amount raised by semiannual assessments on members of
that fund shall be not less than the total amount that would have been
raised if --
(i) this subsection as in effect on July 15, 1991 remained in effect;
and
(ii) the assessment rate in effect on July 15, 1991 remained in
effect.
(F) Transition rule for Savings Association Insurance Fund
With respect to the Savings Association Insurance Fund, during the
period beginning on the effective date of the amendments made by section
302(a) of the Federal Deposit Insurance Corporation Improvement Act of
1991 and ending on December 31, 1997 --
(i) subparagraph (A)(i)(II) shall apply as if such subparagraph did
not include ''as provided in paragraph (3)''; and
(ii) subparagraph (E) shall be applied by substituting ''if this
subsection as in effect on July 15, 1991 remained in effect.'' for ''if
-- '' and all that follows through clause (ii).
(G) Special rule until the insurance funds achieve the designated
reserve ratio
Until a deposit insurance fund achieves the designated reserve ratio,
the Corporation may limit the maximum assessment on insured depository
institutions under the risk-based assessment system authorized under
paragraph (1) to not less than 10 basis points above the average
assessment on insured depository institutions under that system.
(3) Special rule for recapitalizing undercapitalized funds
(A) In general
Except as provided in paragraph (2)(F), if the reserve ratio of any
deposit insurance fund is less than the designated reserve ratio under
paragraph (2)(A)(iv), the Board of Directors shall set semiannual
assessment rates for members of that fund --
(i) that are sufficient to increase the reserve ratio for that fund
to the designated reserve ratio not later than 1 year after such rates
are set; or
(ii) in accordance with a schedule promulgated by the Corporation
under subparagraph (B).
(B) Recapitalization schedules
For purposes of subparagraph (A)(ii), the Corporation shall by
regulation promulgate a schedule that specifies, at semiannual
intervals, target reserve ratios for that fund, culminating in a reserve
ratio that is equal to the designated reserve ratio not later than 15
years after the date on which the schedule is implemented.
(C) Amending schedule
The Corporation may, by regulation, amend a schedule promulgated
under subparagraph (B), but such amendments may not extend the date
specified in subparagraph (B).
(D) Application to SAIF members
This paragraph shall become applicable to Savings Association
Insurance Fund members on January 1, 1998.
(4) Semiannual period defined
For purposes of this section, the term ''semiannual period'' means a
period beginning on January 1 of any calendar year and ending on June 30
of the same year, or a period beginning on July 1 of any calendar year
and ending on December 31 of the same year.
(5) Records to be maintained
Each insured depository institution shall maintain all records that
the Corporation may require for verifying the correctness of the
institution's semiannual assessments. No insured depository institution
shall be required to retain those records for that purpose for a period
of more than 5 years from the date of the filing of any certified
statement, except that when there is a dispute between the insured
depository institution and the Corporation over the amount of any
assessment, the depository institution shall retain the records until
final determination of the issue.
Pub. L. 102-242, title III, 311(a)(2), (c)(1), Dec. 19, 1991, 105
Stat. 2363, 2366, provided that, effective at the end of the 2-year
period beginning on Dec. 19, 1991, subsection (b)(6) is amended by
striking ''and'' at the end of subparagraph (B), striking the period at
the end of subparagraph (C) and inserting ''; and'', and adding at the
end the following new subparagraph:
(D) any liability of the insured depository institution which is not
treated as an insured deposit pursuant to section 1821(a)(8) of this
title.
Pub. L. 102-242, title III, 302(b), (e)(3), (g), Dec. 19, 1991, 105
Stat. 2348, 2349, provided that, effective on the earlier of 180 days
after the date on which final regulations promulgated in accordance with
section 302(c) of Pub. L. 102-242, set out as a note below, become
effective or Jan. 1, 1994, subsections (c) and (d) are amended to read
as follows:
(c) Certified statements; payments
(1) Certified statements required
(A) In general
Each insured depository institution shall file with the Corporation a
certified statement containing such information as the Corporation may
require for determining the institution's semiannual assessment.
(B) Form of certification
The certified statement required under subparagraph (A) shall --
(i) be in such form and set forth such supporting information as the
Board of Directors shall prescribe; and
(ii) be certified by the president of the depository institution or
any other officer designated by its board of directors or trustees that
to the best of his or her knowledge and belief, the statement is true,
correct and complete, and in accordance with this chapter and
regulations issued hereunder.
(2) Payments required
(A) In general
Each insured depository institution shall pay to the Corporation the
semiannual assessment imposed under subsection (b) of this section.
(B) Form of payment
The payments required under subparagraph (A) shall be made in such
manner and at such time or times as the Board of Directors shall
prescribe by regulation.
(3) Newly insured institutions
To facilitate the administration of this section, the Board of
Directors may waive the requirements of paragraphs (1) and (2) for the
semiannual period in which a depository institution becomes insured.
(d) Corporation exempt from apportionment
Notwithstanding any other provision of law, amounts received pursuant
to any assessment under this section and any other amounts received by
the Corporation shall not be subject to apportionment for the purposes
of chapter 15 of title 31 or under any other authority.
Pub. L. 102-242, title III, 311(b)(3), (c)(1), Dec. 19, 1991, 105
Stat. 2365, 2366, provided that, effective at the end of the 2-year
period beginning on Dec. 19, 1991, subsection (i) is amended to read as
follows:
(i) Insurance of trust funds
(1) In general
Trust funds held on deposit by an insured depository institution in a
fiduciary capacity as trustee pursuant to any irrevocable trust
established pursuant to any statute or written trust agreement shall be
insured in an amount not to exceed $100,000 for each trust estate.
(2) Interbank deposits
Trust funds described in paragraph (1) which are deposited by the
fiduciary depository institution in another insured depository
institution shall be similarly insured to the fiduciary depository
institution according to the trust estates represented.
(3) Regulations
The Board of Directors may prescribe such regulations as may be
necessary to clarify the insurance coverage under this subsection and to
prescribe the manner of reporting and depositing such trust funds.
The National Housing Act, referred to in subsecs. (b)(1)(E) and
(m)(6) to (8), is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to chapter 13 ( 1701 et seq.)
of this title. Section 404 of the National Housing Act, is section 1727
of this title, as such section was in effect prior to repeal by Pub. L.
101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363. For complete
classification of this Act to the Code, see section 1701 of this title
and Tables.
Section 1834b of this title, referred to in subsec. (d)(5), was in
the original ''section 235 of the Bank Enterprise Act of 1991'', which
was translated as meaning section 234 of that Act to reflect the
probable intent of Congress, because the Act did not contain a section
235 and because section 234 relates to community development
organizations.
The National Bank Act, referred to in subsec. (h), is act June 3,
1864, ch. 106, 13 Stat. 99, as amended, which is classified
principally to chapter 2 ( 21 et seq.) of this title. For complete
classification of this Act to the Code, see References in Text note set
out under section 38 of this title.
The Federal Reserve Act, referred to in subsec. (h), is act Dec.
23, 1913, ch. 6, 38 Stat. 251, as amended, which is classified
principally to chapter 3 ( 221 et seq.) of this title. For complete
classification of this Act to the Code, see References in Text note set
out under section 226 of this title and Tables.
The Bank Holding Company Act of 1956, referred to in subsec. (j)(9)(
B)(i), (E)(i), is act May 9, 1956, ch. 240, 70 Stat. 133, as amended,
which is classified principally to chapter 17 ( 1841 et seq.) of this
title. For complete classification of this Act to the Code, see Short
Title note set out under section 1841 of this title and Tables.
For effective date of the Change in Bank Control Act of 1978 (title
VI of Pub. L. 95-630), referred to in subsec. (j)(14), see section 2101
of Pub. L. 95-630, set out as an Effective Date note under section 375b
of this title.
The calendar year in which the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 is enacted, referred to in subsec.
(m)(8), means the calendar year in which Pub. L. 101-73 was enacted.
Such Act was approved Aug. 9, 1989.
Section is derived from subsec. (h) of former section 264 of this
title. See Codification note under section 1811 of this title.
1991 -- Subsec. (a). Pub. L. 102-242, 232(b)(1), which added par.
(6) and redesignated former pars. (6) to (10) as (7) to (11),
respectively, was executed by adding par. (6) and redesignating former
pars. (6) to (8) as (7) to (9), respectively, to reflect the probable
intent of Congress, because subsec. (a) did not contain a par. (9) or
(10) prior to this amendment.
Subsec. (a)(8). Pub. L. 102-242, 141(c), amended par. (8) generally,
substituting provisions relating to data collections for provisions
which required that the reports of conditions made by depository
institutions be provided to auditors which had made independent audits
of insured depository institutions within the past two years and that
such reports also include specified additional information. Par. (8)
was subsequently redesignated (9).
Pub. L. 102-242, 474, added par. (9) relating to designation of
debtor or bankrupt corporation or transaction with such a corporation as
highly leveraged.
Subsec. (b)(1)(A)(iii). Pub. L. 102-242, 104(b), added cl. (iii) and
struck out former cl. (iii) which read as follows: ''Deadline for
announcing rate changes. -- The Corporation shall announce any change in
assessment rates. --
''(I) for the semiannual period beginning on January 1 and ending on
June 30, not later than the preceding November 1; and
''(II) for the semiannual period beginning on July 1 and ending on
December 31, not later than the preceding May 1.''
Subsec. (b)(1)(C). Pub. L. 102-242, 104(a), amended subpar. (C)
generally. Prior to amendment, subpar. (C) read as follows:
''Assessment rate for bank insurance fund members. --
''(i) In general. -- The assessment rate for Bank Insurance Fund
members shall be the greater of 0.15 percent or such rate as the Board
of Directors, in its sole discretion, determines to be appropriate --
''(I) to maintain the reserve ratio at the designated reserve ratio;
or
''(II) if the reserve ratio is less than the designated reserve
ratio, to increase the reserve ratio to the designated reserve ratio
within a reasonable period of time.
''(ii) Factors to be considered. -- In making any determination under
clause (i), the Board of Directors shall consider the Bank Insurance
Fund's expected operating expenses, case resolution expenditures, and
income, the effect of the assessment rate on members' earnings and
capital, and such other factors as the Board of Directors may deem
appropriate.
''(iii) Minimum assessment. -- Notwithstanding clause (i), the
assessment shall not be less than $1,000 for each member in each year.''
Subsec. (b)(2)(A)(i)(II). Pub. L. 102-242, 232(b)(3)(A), added subcl.
(II) and struck out former subcl. (II) which read as follows: ''such
Bank Insurance Fund member's average assessment base for the immediately
preceding semiannual period; and''.
Subsec. (b)(2)(A)(ii)(II). Pub. L. 102-242, 232(b)(3)(B), added
subcl. (II) and struck out former subcl. (II) which read as follows:
''such Savings Association Insurance Fund member's average assessment
base for the immediately preceding semiannual period.''
Subsec. (b)(2)(A)(iii). Pub. L. 102-242, 232(b)(3)(C), added cl.
(iii).
Subsec. (b)(7) to (9). Pub. L. 102-242, 103(b), added par. (7) and
redesignated former pars. (7) and (8) as (8) and (9), respectively.
Former par. (9) redesignated (10).
Subsec. (b)(10). Pub. L. 102-242, 232(b)(2), added par. (10) and
redesignated former par. (10) as (11).
Pub. L. 102-242, 113(c)(1), inserted ''or section 1820(e) of this
title'' after ''under this section''.
Pub. L. 102-242, 103(b)(1), redesignated par. (9) as (10).
Subsec. (b)(11). Pub. L. 102-242, 232(b)(2), redesignated par. (10)
as (11).
Subsec. (c)(5). Pub. L. 102-242, 313(a), added par. (5).
Subsec. (d)(1)(A). Pub. L. 102-242, 233(c)(2)(A), inserted ''(other
than credits allowed pursuant to paragraph (4))'' after ''amount to be
credited''.
Subsec. (d)(1)(B). Pub. L. 102-242, 233(c)(2)(B), inserted ''(taking
into account any assessment credit allowed pursuant to paragraph (4))''
after ''should be reduced''.
Subsec. (d)(4) to (7). Pub. L. 102-242, 233(c)(1), added pars. (4)
and (5) and redesignated former pars. (4) and (5) as (6) and (7),
respectively.
Subsec. (j)(9). Pub. L. 102-242, 205, amended par. (9) generally.
Prior to amendment, par. (9) read as follows: ''Whenever any insured
depository institution makes a loan or loans, secured, or to be secured,
by 25 per centum or more of the outstanding voting stock of an insured
depository institution, the president or other chief executive officer
of the lending bank shall promptly report such fact to the appropriate
Federal banking agency of the bank whose stock secures the loan or loans
upon obtaining knowledge of such loan or loans, except that no report
need be made in those cases where the borrower has been the owner of
record of the stock for a period of one year or more or where the stock
is that of the newly organized bank prior to its opening.''
1990 -- Subsec. (b)(1)(A). Pub. L. 101-508, 2003(a), amended subpar.
(A) generally. Prior to amendment, subpar. (A) read as follows:
''(A) Annual assessment rates prescribed. --
''(i) The Corporation shall set assessment rates for insured
depository institutions annually.
''(ii) The Corporation shall fix the annual assessment rate of Bank
Insurance Fund members independently from the annual assessment rate for
Savings Association Insurance Fund members.
''(iii) The Corporation shall, by September 30 of each year, announce
the assessment rates for the succeeding calendar year.''
Subsec. (b)(1)(B)(i)(II), (ii)(II). Pub. L. 101-508, 2004(1), struck
out '', not exceeding 1.50 percent,'' after ''insured deposits''.
Subsec. (b)(1)(B)(iii). Pub. L. 101-508, 2004(2), inserted ''and''
after ''Fund;'' in subcl. (I), redesignated subcl. (IV) as (II) and
struck out former subcls. (II) and (III) which read as follows:
''(II) allocate each calendar quarter to an Earnings Participation
Account in the Bank Insurance Fund the investment income earned by the
Bank Insurance Fund on such Supplemental Reserves in the preceding
calendar quarter;
''(III) distribute such Earnings Participation Account at the
conclusion of each calendar year to Bank Insurance Fund members; and''.
Subsec. (b)(1)(B)(iv). Pub. L. 101-508, 2004(3), inserted ''and''
after ''Fund;'' in subcl. (I), redesignated subcl. (IV) as (II), and
struck out former subcls. (II) and (III) which read as follows:
''(II) allocate each calendar quarter to an Earnings Participation
Account in the Savings Association Insurance Fund the investment income
earned by the Savings Association Insurance Fund on such Supplemental
Reserves in the preceding calendar quarter;
''(III) distribute such Earnings Participation Account at the
conclusion of each calendar year to Savings Association Insurance Fund
members; and''.
Subsec. (b)(1)(C). Pub. L. 101-508, 2002(a), amended subpar. (C)
generally. Prior to amendment, subpar. (C) read as follows:
''Assessment rate for bank insurance fund members. -- The annual
assessment rate for Bank Insurance Fund members shall be --
''(i) until December 31, 1989, 1/12 of 1 percent;
''(ii) from January 1, 1990, through December 31, 1990, 0.12 percent;
''(iii) on and after January 1, 1991, 0.15 percent;
''(iv) on January 1 of a calendar year in which the reserve ratio of
the Bank Insurance Fund is expected to be less than the designated
reserve ratio by determination of the Board of Directors, such rate
determined by the Board of Directors to be appropriate to restore the
reserve ratio to the designated reserve ratio within a reasonable period
of time, after taking into consideration the expected operating
expenses, case resolution expenditures, and investment income of the
Bank Insurance Fund, and the impact on insured bank earnings and
capitalization, except that --
''(I) from August 9, 1989, until the earlier of January 1, 1995, or
January 1 of the calendar year in which the Bank Insurance Fund reserve
ratio is expected to first attain the designated reserve ratio, the rate
shall be as specified in clauses (i), (ii), and (iii) of this
subparagraph so long as the Bank Insurance Fund reserve ratio is
increasing on a calendar year basis;
''(II) the rate shall not exceed 0.325 percent; and
''(III) the increase in the rate in any 1 year shall not exceed 0.075
percent; and
''(v) sufficient to ensure that for each member in each year the
assessment shall not be less than $1,000.''
Subsec. (b)(1)(D). Pub. L. 101-508, 2002(b), amended subpar. (D)
generally. Prior to amendment, subpar. (D) read as follows:
''Assessment rate for savings association insurance fund members. -- The
annual assessment rate for Savings Association Insurance Fund members
shall be --
''(i) until December 31, 1990, 0.208 percent;
''(ii) from January 1, 1991, through December 31, 1993, 0.23 percent;
''(iii) from January 1, 1994, through December 31, 1997, 0.18
percent;
''(iv) on and after January 1, 1998, 0.15 percent;
''(v) on January 1 of a calendar year in which the reserve ratio of
the Savings Association Insurance Fund is expected to be less than the
designated reserve ratio by determination of the Board of Directors,
such rate determined by the Board of Directors to be appropriate to
restore the reserve ratio to the designated reserve ratio within a
reasonable period of time, after taking into consideration the expected
expenses and income of the Savings Association Insurance Fund, and the
effect on insured savings association earnings and capitalization,
except that --
''(I) from August 9, 1989, through December 31, 1994, the rate shall
be as specified in clauses (i), (ii), and (iii) above;
''(II) the rate shall not exceed 0.325 percent; and
''(III) the increase in the rate in any one year shall not exceed
0.075 percent; and
''(vi) sufficient to ensure that for each member in each year the
assessment shall not be less than $1,000.''
Subsec. (b)(2)(A). Pub. L. 101-508, 2002(c)(1), inserted ''or
subparagraph (C)(iii) or (D)(iii) of subsection (b)(1) of this section''
after ''subsection (c)(2) of this section'' in introductory provisions.
Subsec. (b)(2)(A)(i). Pub. L. 101-508, 2002(c)(2), inserted ''the
greater of $500 or an amount'' before ''equal to the product of'' in
introductory provisions.
Subsec. (b)(2)(A)(i)(I). Pub. L. 101-508, 2003(b)(1), (2), struck out
''annual'' before ''assessment'' and inserted ''during that semiannual
period'' after ''member''.
Subsec. (b)(2)(A)(ii). Pub. L. 101-508, 2002(c)(2), inserted ''the
greater of $500 or an amount'' before ''equal to the product of'' in
introductory provisions.
Subsec. (b)(2)(A)(ii)(I). Pub. L. 101-508, 2003(b)(1), (3), struck
out ''annual'' before ''assessment'' and inserted ''during that
semiannual period'' after ''member''.
Subsec. (d)(1)(A). Pub. L. 101-508, 2003(c), amended subpar. (A)
generally. Prior to amendment, subpar. (A) read as follows: ''By
September 30 of each calendar year, the Corporation shall prescribe and
publish the aggregate amount to be credited to insured depository
institutions in the succeeding calendar year.''
1989 -- Pub. L. 101-73, 201, substituted references to insured
depository institutions for references to insured banks wherever
appearing in this section and references to Director of the Office of
Thrift Supervision for references to Federal Home Loan Bank Board
wherever appearing in this section.
Subsec. (a)(1). Pub. L. 101-73, 911(c), substituted provisions for
different and increasing levels of penalties, and provisions regarding
assessment and collection of penalties and agency hearings, for
provision at end that every such bank which failed to make or publish
any such report within 10 days would be subject to a penalty of not more
than $100 for each day of such failure recoverable by the Corporation
for its use.
Subsec. (a)(2)(A). Pub. L. 101-73, 208(1)(A)-(C), (E), inserted
references to Director of Office of Thrift Supervision, Federal Housing
Finance Board, and any Federal home loan bank in two places, substituted
''any of them'' for ''either of them'', and substituted ''depository
institution, and may furnish'' for ''State nonmember bank (except a
District bank), and may furnish''.
Pub. L. 101-73, 208(1)(D), which directed the amendment of last
sentence of subpar. (A) by inserting ''or savings associations'' after
''banks'' could not be executed, because ''banks'' does not appear in
text.
Subsec. (a)(2)(B). Pub. L. 101-73, 208(1)(F), added subpar. (B) and
struck out former subpar. (B) which read as follows: ''The Corporation
shall have access to reports of examination made by, and reports of
condition made to, the Federal Home Loan Bank Board or any Federal Home
Loan Bank, respecting any insured Federal savings bank, and the
Corporation shall have access to all revisions of reports of condition
made to either such agency. Such agency shall promptly advise the
Corporation of any revisions or changes in respect to deposit
liabilities made or required to be made in any report of condition.''
Subsec. (a)(3). Pub. L. 101-73, 208(2)(A), substituted ''Each insured
depository institution shall make to the appropriate Federal banking
agency 4 reports'' for ''Each insured State nonmember bank (except a
District bank) and each foreign bank having an insured branch (other
than a Federal branch) shall make to the Corporation, each insured
national bank, each foreign bank having an insured branch which is a
Federal branch, and each insured District bank shall make to the
Comptroller of the Currency, each insured State member bank shall make
to the Federal Reserve bank of which it is a member, and each insured
Federal savings bank shall make to the Federal Home Loan Bank Board,
four reports''.
Pub. L. 101-73, 208(2)(B)-(D), substituted ''depository institution,
the preceding'' for ''bank, the preceding'', ''depository institution to
make such'' for ''bank to make such'', ''depository institution other
than the officer'' for ''bank other than the officer'', ''insured
depository institution shall furnish to the Corporation'' for ''insured
national, District and State member bank shall furnish to the
Corporation'', and ''banks or savings associations under its
jurisdiction'' for ''banks under its jurisdiction''.
Subsec. (a)(4). Pub. L. 101-73, 208(3), which directed the
substitution of references to depository institutions for references to
banks, except where ''foreign bank'' appeared, was executed as directed,
except that the exception was made for ''foreign banks'' rather than
''foreign bank'', as the probable intent of Congress.
Subsec. (a)(8). Pub. L. 101-73, 931(a), added par. (8).
Subsec. (b)(1). Pub. L. 101-73, 208(4), added par. (1) and struck
out former par. (1) which read as follows: ''The annual assessment
rate shall be one-twelfth of 1 per centum. Except as provided in
subsection (c)(2) of this section, the semiannual assessment due from
any insured bank for any semiannual period shall be equal to one-half
the annual assessment rate multiplied by such bank's average assessment
base for the immediately preceding semiannual period.''
Subsec. (b)(2). Pub. L. 101-73, 208(4), added par. (2) and struck
out former par. (2) which read as follows: ''For the purposes of this
section the term 'semiannual period' means a period beginning on January
1 of any calendar year and ending on June 30 of the same year, or a
period beginning on July 1 of any calendar year and ending on December
31 of the same year.''
Subsec. (b)(3) to (8). Pub. L. 101-73, 208(6), substituted
references to depository institutions for references to banks wherever
appearing.
Subsec. (c)(1) to (3). Pub. L. 101-73, 208(7), substituted
''depository institution'' for ''bank'' wherever appearing.
Subsec. (d). Pub. L. 101-73, 208(5), amended subpar. (d) generally,
substituting provisions relating to computation, applicability,
definitions, etc., respecting assessment credits, for provisions
relating to transfer of net assessment income of Corporation to capital
account, pro rata credit to insured banks, and adjustment of transferred
income.
Subsecs. (e) to (g), (i). Pub. L. 101-73, 208(7), substituted
''depository institution'' for ''bank'' wherever appearing.
Subsec. (j)(1). Pub. L. 101-73, 208(8), struck out at end ''For
purposes of this subsection, the term 'insured bank' shall include any
'bank holding company', as that term is defined in section 1841 of this
title, which has control of any such insured bank, and the appropriate
Federal banking agency in the case of bank holding companies shall be
the Board of Governors of the Federal Reserve System.''
Subsec. (j)(2)(A). Pub. L. 101-73, 208(9), substituted ''depository
institution'' for ''bank'' wherever appearing, and substituted
''default'' for ''failure''.
Subsec. (j)(2)(D). Pub. L. 101-73, 208(10), inserted ''unless such
agency determines that an emergency exists,'' after ''banking agency
shall,''.
Subsec. (j)(7)(F). Pub. L. 101-73, 208(11), added subpar. (F).
Subsec. (j)(15). Pub. L. 101-73, 905(c), inserted at end ''The
resignation, termination of employment or participation, divestiture of
control, or separation of or by an institution-affiliated party
(including a separation caused by the closing of a depository
institution) shall not affect the jurisdiction and authority of the
appropriate Federal banking agency to issue any notice and proceed under
this subsection against any such party, if such notice is served before
the end of the 6-year period beginning on the date such party ceased to
be such a party with respect to such depository institution (whether
such date occurs before, on, or after the date of the enactment of this
sentence).''
Subsec. (j)(16). Pub. L. 101-73, 907(d), amended par. (16)
generally. Prior to amendment, par. (16) read as follows: ''Any
person who willfully violates any provision of this subsection, or any
regulation or order issued by the appropriate Federal banking agency
pursuant thereto, shall forfeit and pay a civil penalty of not more than
$10,000 per day for each day during which such violation continues. The
appropriate Federal banking agency shall have authority to assess such a
civil penalty, after giving notice and an opportunity to the person to
submit data, views, and arguments, and after giving due consideration to
the appropriateness of the penalty with respect to the size of financial
resources and good faith of the person charged, the gravity of the
violation, and any data, views, and arguments submitted. The agency may
collect such civil penalty by agreement with the person or by bringing
an action in the appropriate United States district court, except that
in any such action, the person against whom the penalty has been
assessed shall have a right to trial de novo.''
Subsec. (j)(17). Pub. L. 101-73, 208(12), amended par. (17)
generally. Prior to amendment, par. (17) read as follows: ''This
subsection shall not apply to a transaction subject to section 1842 or
section 1828 of this title. This subsection shall not apply to an
insured Federal savings bank.''
Subsec. (j)(18). Pub. L. 101-73, 208(13), added par. (18).
Subsec. (l). Pub. L. 101-73, 208(14), added subsec. (l).
Subsecs. (m), (n). Pub. L. 101-73, 208(15), added subsecs. (m) and
(n).
1987 -- Subsec. (b)(9). Pub. L. 100-86 added par. (9).
1986 -- Subsec. (j)(1). Pub. L. 99-570, 1360(a), substituted ''or,
in the discretion of the agency, extending for an additional 30 days''
for ''or extending for up to another thirty days'' in first sentence,
notwithstanding directory language that new wording be substituted for
''or extending up to another thirty days'', and amended second sentence
generally. Prior to amendment, second sentence read as follows: ''The
period for disapproval may be further extended only if the agency
determines that any acquiring party has not furnished all the
information required under paragraph (6) of this subsection or that in
its judgment any material information submitted is substantially
inaccurate''.
Subsec. (j)(2). Pub. L. 99-570, 1360(b), (c), designated existing
provisions as subpar. (A) and added subpars. (B) to (D).
Subsec. (j)(15) to (16). Pub. L. 99-570, 1360(d), added par. (15)
and redesignated former pars. (15) and (16) as (16) and (17),
respectively.
1982 -- Subsec. (a)(2). Pub. L. 97-320, 113(d), designated existing
provisions as subpar. (A) and added subpar. (B).
Subsec. (a)(3). Pub. L. 97-320, 113(e), inserted the reporting
requirement for each insured Federal savings bank, added the Chairman of
the Federal Home Loan Bank Board to the group designated to decide upon
which dates the reports will be made, and struck out alternative
provision that such decision would be made by a majority of such group.
Subsec. (a)(6). Pub. L. 97-320, 113(f), inserted '', the Federal Home
Loan Bank Board,'' after ''Comptroller of the Currency''.
Subsec. (d)(1)(4). Pub. L. 97-320, 117, added cl. (4).
Subsec. (j)(16). Pub. L. 97-320, 113(q), inserted provision that this
subsection shall not apply to an insured Federal savings bank.
Subsec. (k). Pub. L. 97-320, 429, substituted requirement that
Federal banking agencies issue rules and regulations for reports and
public disclosure by banks of extensions of credits to its executive
officers or principal shareholders or the relative interests of such
persons for prior provisions: covering annual reports of insured banks
to Federal banking agencies containing information respecting preceding
calendar year listing names of stockholders of record owning,
controlling, or having more than a 10 per centum voting control of any
class of voting securities of the bank and also listing names of
executive officers and controlling stockholders and aggregate amount of
extensions of credit to such persons, any company controlled by such
persons, and any political or campaign committee the funds or services
of which will benefit such persons, or which is controlled by such
persons; defining an executive officer as one meant under section 375a
of this title; authorizing Federal banking agencies to issue rules and
regulations to require filed information to be included in any required
reports to be made available to the public upon request; and requiring
copies of any reports to be made publicly available upon request.
1981 -- Subsec. (a)(4). Pub. L. 97-110, 103(b)(1), inserted ''the
Trust Territory of the Pacific Islands,'' after ''American Samoa,''.
Subsec. (b)(5)(B). Pub. L. 97-110, 103(b)(2), inserted ''the Trust
Territory of the Pacific Islands,'' after ''American Samoa,''.
1980 -- Subsec. (d). Pub. L. 96-221, 308(d), designated existing
provisions as par. (1), substituted ''1980'' for ''1961'' and ''40''
for ''33 1/3'', and added par. (2).
Subsec. (i). Pub. L. 96-221, 308(a)(1)(B), substituted ''$100,000''
for ''$40,000''.
1978 -- Subsec. (a)(1). Pub. L. 95-369, 6(c)(8), inserted ''and each
foreign bank having an insured branch which is not a Federal branch''
after ''(except a District bank)''.
Subsec. (a)(3). Pub. L. 95-630, 302, substituted ''the signatures of
at least two directors or trustees of the reporting bank other than the
officer making such declaration'' for ''the signatures of at least three
of the directors or trustees of the reporting bank other than the
officer making such declaration, or by at least two if there are not
more than three directors or trustees''.
Pub. L. 95-369, 6(c)(9), inserted ''and each foreign bank having an
insured branch (other than a Federal branch)'' after ''(except a
District Bank)'' and ''each foreign bank having an insured branch which
is a Federal branch'' after ''each insured national bank''.
Subsec. (a)(4). Pub. L. 95-630, 310(a), inserted provision that
deposits which are accumulated for the payment of personal loans and are
assigned or pledged to assure payment of loans at maturity not be
included in the total deposits in such reports, but shall be deducted
from the loans for which such deposits are assigned or pledged to assure
repayment.
Subsec. (a)(5). Pub. L. 95-630, 310(b), struck out ''deposits
accumulated for the payment of personal loans,'' after ''deposit-open
account,''.
Subsec. (a)(7). Pub. L. 95-369, 6(c)(10), added par. (7).
Subsec. (b)(4). Pub. L. 95-369, 6(c)(11), designated existing
provisions as subpar. (A), substituted ''Except as provided in
subparagraph (B) of this paragraph, a bank's assessment base'' for ''A
bank's assessment base'', and added subpar. (B).
Subsec. (b)(6). Pub. L. 95-630, 310(c), redesignated subpars. (C) and
(D) as (B) and (C) and struck out former subpar. (B) which related to
deposits included in reported deposit liabilities which are accumulated
for the payment of personal loans and are assigned or pledged to assure
repayment of the loans at maturity.
Subsec. (j). Pub. L. 95-630, 602, substituted provisions relating to
the requirement that no person shall acquire control of any insured bank
unless the appropriate Federal agency is notified 60 days prior to such
transfer and authorizing the appropriate Federal agency to approve or
disapprove such transfer for provisions relating to the requirement that
notification of a transfer of control of an insured bank be given to the
appropriate Federal agency after such transfer.
Subsec. (j)(1). Pub. L. 95-369, 6(c)(12), designated existing
provision as subpar. (A), substituted ''Except as provided in
subparagraph (B) of this paragraph, whenever'' for ''Whenever'', and
added subpar. (B).
Subsec. (j)(2). Pub. L. 95-369, 6(c)(13), designated existing
provisions as subpar. (A), substituted ''Except as provided in
subparagraph (B) of this paragraph, whenever'' for ''Whenever'', and
added subpars. (B) and (C).
Subsec. (k). Pub. L. 95-630, 901, added subsec. (k).
1974 -- Subsec. (i). Pub. L. 93-495 inserted exception relating to
trust funds owned by a depositor referred to par. (2) of section 1821(
a) of this title, and substituted ''$40,000'' for ''$20,000''.
1970 -- Pub. L. 91-609 inserted reference to American Samoa in
subsecs. (a)(4) and (b)(5)(B), respectively.
1969 -- Subsec. (i). Pub. L. 91-151 substituted $20,000 for $15,000
in first sentence.
1966 -- Subsec. (i). Pub. L. 89-695, 301(b), substituted ''$15,000''
for ''$10,000'' in first sentence.
Subsec. (j)(6). Pub. L. 89-695, 201, repealed par. (6) definition of
''appropriate Federal banking agency'', now incorporated in section
1813(q) of this title.
1964 -- Subsec. (j). Pub. L. 88-593 added subsec. (j).
1960 -- Subsec. (a). Pub. L. 86-671, 2, amended subsec. (a)
generally, and among other changes, provided for reports of condition,
the form, contents, date of making, number, and publication of the
reports of condition, declaration and attestation of officers,
penalties, access to reports, computation of deposit liabilities,
segregation and classification of deposits and definitions. Former
provisions of the subsection relating to rate and amount of assessment,
assessment base and deductions therefrom, form and contents of certified
statements, and payment of assessments, are either covered or superseded
by provisions incorporated in subsecs. (b)(1), (3), (4), (6) including
the last paragraph, and (c)(3) of this section.
Subsec. (b). Pub. L. 86-671, 2, amended subsec. (b) generally, and
among other changes, provided for the computation of assessments, the
rate and amount, the base, additions and deductions, records and
definition. Former provisions of the subsection relating to filing of
certified statements of assessment base and amounts due and payment
thereof are incorporated in subsec. (c)(1) of this section.
Subsec. (c). Pub. L. 86-671, 2, inserted provisions of pars. (1) and
(3), incorporated in par. (2) the provisions of former subsec. (c)
relating to exemption from payment of assessment for semiannual period
in which bank became an insured bank and amount of first semiannual
assessment due, omitted therefrom the provision for inclusion in the
assessment base of the assumed liabilities for deposits of other banks,
and required the filing of certified statement of the assessment base or
the making of a special report of condition.
Subsec. (d). Pub. L. 86-671, 3, substituted ''December 31, 1961'' and
''33 1/3'' for ''December 31, 1960'' and ''40'', respectively.
Subsec. (f). Pub. L. 86-671, 3, substituted ''fails to make any
report of condition under subsection (a) of this section or to file''
for ''fails to file'' and inserted ''make such report or'' before ''file
such statement''.
Subsec. (g). Pub. L. 86-671, 3, substituted ''made any such report of
condition under subsection (a) of this section or filed'' for ''filed''
and ''to make any such report or file'' for ''to file'' in first
sentence.
Subsec. (h). Pub. L. 86-671, 3, inserted ''to make any report of
condition under subsection (a) of this section or'' before ''to file''.
Subsec. (i). Pub. L. 86-671, 3, substituted ''in its trust department
or held or deposited in any other department of the fiduciary bank'' for
''in its trust or deposited in any other department or in another bank''
in first sentence and deleted proviso respecting deposit liability of
insured bank in which trust funds are deposited rather than deposit
liability of depositing fiduciary bank from second sentence.
Section 302(g) of Pub. L. 102-242 provided that: ''The amendments
made by this section (amending this section and sections 1815, 1818, and
1820 of this title) shall become effective on the earlier of --
''(1) 180 days after the date on which final regulations promulgated
in accordance with subsection (c) (set out below) become effective; or
''(2) January 1, 1994.''
Amendment by section 311(a)(2), (b)(3) of Pub. L. 102-242 effective
at end of 2-year period beginning Dec. 19, 1991, but not applicable to
any time deposit which was made before Dec. 19, 1991, and matures after
end of 2-year period beginning on Dec. 19, 1991, with rollovers and
renewals treated as new deposits, see section 311(c)(1), (2) of Pub. L.
102-242, set out as a note under section 1821 of this title.
Amendment by section 907(d) of Pub. L. 101-73 applicable to conduct
engaged in after Aug. 9, 1989, except that increased maximum penalties
of $5,000 and $25,000 may apply to conduct engaged in before such date
if such conduct is not already subject to a notice issued by the
appropriate agency and occurred after completion of the last report of
the examination of the institution by the appropriate agency occurring
before Aug. 9, 1989, see section 907(l) of Pub. L. 101-73, set out as
a note under section 93 of this title.
Amendment by section 911(c) of Pub. L. 101-73 applicable with
respect to reports filed or required to be filed after Aug. 9, 1989,
see section 911(i) of Pub. L. 101-73, set out as a note under section
161 of this title.
Section 1364(f) of Pub. L. 99-570 provided that: ''The amendments
made by sections 1360 and 1361 (amending this section and section 1730
of this title) shall apply with respect to notices of proposed
acquisitions filed after the date of the enactment of this Act (Oct.
27, 1986).''
Section 430 of Pub. L. 97-320 provided that: ''The provision of law
amended by section 428(b) (amending section 1972 of this title) and
section 429 (amending this section) shall remain in effect until the
regulations referred to in such amendments become effective.''
Section 308(e) of Pub. L. 96-221 provided that: ''The amendments
made by this section (amending this section and sections 1724, 1728,
1787, 1813, and 1821 of this title) shall take effect on the date of
enactment of this Act (Mar. 31, 1980).''
Amendment by section 308(a)(1)(B) of Pub. L. 96-221 not applicable
to any claim arising out of the closing of a bank prior to the effective
date of section 308 of Pub. L. 96-221, Mar. 31, 1980, see section
308(a)(2) of Pub. L. 96-221, set out as a note under section 1813 of
this title.
Amendment by Pub. L. 95-630 effective upon expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
For effective date of amendment by section 101(a)(2) of Pub. L.
93-495, see section 101(g) of Pub. L. 93-495, set out as a note under
section 1813 of this title.
For effective date of amendment by section 102(a)(2) of Pub. L.
93-495, see section 102(b), (c) of Pub. L. 93-495, set out as a note
under section 1813 of this title.
For effective date of amendment by Pub. L. 91-151, see section 7(b)
of Pub. L. 91-151, set out as a note under section 1813 of this title.
For effective date of amendment by section 301(b) of Pub. L.
89-695, see section 301(e) of Pub. L. 89-695, set out as a note under
section 1813 of this title.
Pub. L. 91-609, title IX, 908, Dec. 31, 1970, 84 Stat. 1811,
repealed section 401 of Pub. L. 89-695 which had provided that: ''The
provisions of titles I and II of this Act (amending this section and
sections 1464, 1730, 1813, 1818 to 1820 of this title, repealing section
77 of this title, and enacting provisions set out as notes under
sections 1464, 1730, and 1813 of this title) and any provisions of law
enacted by said titles shall be effective only during the period ending
at the close of June 30, 1972. Effective upon the expiration of such
period, each provision of law amended by either of such titles is
further amended to read as it did immediately prior to the enactment of
this Act (Oct. 16, 1966) and each provision of law repealed by either of
such titles is reenacted.''
Section 7 of Pub. L. 86-671 provided that: ''The amendments made by
this Act (amending this section and sections 161, 1813, 1820 and
repealing section 162 of this title) shall take effect on January 1,
1961, except that the certified statements covering the semiannual
period ending December 31, 1960, and the determination and payment of
assessments (for the semiannual period ending June 30, 1961) required to
be certified in such statements, shall be made as if such amendments
were not in effect.''
For short title of title VI of Pub. L. 95-630 as the ''Change in
Bank Control Act of 1978'', see section 601 of Pub. L. 95-630, set out
as a note under section 1811 of this title.
Section 302(c) of Pub. L. 102-242 provided that: ''To implement the
risk-based assessment system required under section 7(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)) (as amended by subsection
(a)), the Federal Deposit Insurance Corporation shall --
''(1) provide notice of proposed regulations in the Federal Register,
not later than December 31, 1992, with an opportunity for comment on the
proposal of not less than 120 days; and
''(2) promulgate final regulations not later than July 1, 1993.''
Section 302(f) of Pub. L. 102-242 provided that: ''To carry out the
amendments made by this section (amending this section and sections
1815, 1818, and 1820 of this title), the Corporation may promulgate
regulations governing the transition from the assessment system in
effect on the date of enactment of this Act (Dec. 19, 1991) to the
assessment system required under the amendments made by this section.''
Section 122 of Pub. L. 102-242 provided that:
''(a) In General. -- Before the end of the 180-day period beginning
on the date of the enactment of this Act (Dec. 19, 1991), the
appropriate Federal banking agency shall prescribe regulations requiring
insured depository institutions to annually submit information on small
businesses and small farm lending in their reports of condition.
''(b) Credit Availability. -- The regulations prescribed under
subsection (a) shall require insured depository institutions to submit
such information as the agency may need to assess the availability of
credit to small businesses and small farms.
''(d)((c)) Contents. -- The information required under subsection (a)
may include information regarding the following:
''(1) The total number and aggregate dollar amount of commercial
loans and commercial mortgage loans to small businesses.
''(2) Charge-offs, interest, and interest fee income on commercial
loans and commercial mortgage loans to small businesses.
''(3) Agricultural loans to small farms.''
Nothing contained in section 201 of Pub. L. 89-695, which amended
this section, to be construed as repealing, modifying, or affecting
section 1829 of this title, see section 206 of Pub. L. 89-695, set out
as a note under section 1813 of this title.
Penalties for making or inviting reliance on false, forged, or
counterfeit statement, document, or thing, to influence action of
Federal Deposit Insurance Corporation, see section 1007 of Title 18,
Crimes and Criminal Procedure.
78o-5, 78q.
/1/ So in original. Probably should be preceded by ''to''.
/2/ So in original. The words ''Chairman of the'' probably should
not appear.
/3/ So in original. Probably should be ''(10)''.
/4/ See References in Text note below.
/5/ So in original. The word ''and'' probably should not appear.
/6/ See References in Text note below.
/7/ So in original. Probably should be ''depository institution''.
/8/ So in original. Probably should be ''monopolize''.
/9/ See References in Text note below.
12 USC 1818. Termination of status as insured depository institution
TITLE 12 -- BANKS AND BANKING
(a) Termination of insurance
(1) Voluntary termination
Any insured depository institution which is not --
(A) a national member bank;
(B) a State member bank;
(C) a Federal branch;
(D) a Federal savings association; or
(E) an insured branch which is required to be insured under
subsection (a) or (b) of section 3104 of this title,
may terminate such depository institution's status as an insured
depository institution if such insured institution provides written
notice to the Corporation of the institution's intent to terminate such
status not less than 90 days before the effective date of such
termination.
(2) Involuntary termination
(A) Notice to primary regulator
If the Board of Directors determines that --
(i) an insured depository institution or the directors or trustees of
an insured depository institution have engaged or are engaging in unsafe
or unsound practices in conducting the business of the depository
institution;
(ii) an insured depository institution is in an unsafe or unsound
condition to continue operations as an insured institution; or
(iii) an insured depository institution or the directors or trustees
of the insured institution have violated any applicable law, regulation,
order, condition imposed in writing by the Corporation in connection
with the approval of any application or other request by the insured
depository institution, or written agreement entered into between the
insured depository institution and the Corporation,
the Board of Directors shall notify the appropriate Federal banking
agency with respect to such institution (if other than the Corporation)
or the State banking supervisor of such institution (if the Corporation
is the appropriate Federal banking agency) of the Board's determination
and the facts and circumstances on which such determination is based for
the purpose of securing the correction of such practice, condition, or
violation. Such notice shall be given to the appropriate Federal
banking agency not less than 30 days before the notice required by
subparagraph (B), except that this period for notice to the appropriate
Federal banking agency may be reduced or eliminated with the agreement
of such agency.
(B) Notice of intention to terminate insurance
If, after giving the notice required under subparagraph (A) with
respect to an insured depository institution, the Board of Directors
determines that any unsafe or unsound practice or condition or any
violation specified in such notice requires the termination of the
insured status of the insured depository institution, the Board shall --
(i) serve written notice to the insured depository institution of the
Board's intention to terminate the insured status of the institution;
(ii) provide the insured depository institution with a statement of
the charges on the basis of which the determination to terminate such
institution's insured status was made (or a copy of the notice under
subparagraph (A)); and
(iii) notify the insured depository institution of the date (not less
than 30 days after notice under this subparagraph) and place for a
hearing before the Board of Directors (or any person designated by the
Board) with respect to the termination of the institution's insured
status.
(3) Hearing; termination
If, on the basis of the evidence presented at a hearing before the
Board of Directors (or any person designated by the Board for such
purpose), in which all issues shall be determined on the record pursuant
to section 554 of title 5 and the written findings of the Board of
Directors (or such person) with respect to such evidence (which shall be
conclusive), the Board of Directors finds that any unsafe or unsound
practice or condition or any violation specified in the notice to an
insured depository institution under subparagraph (B) has been
established, the Board of Directors may issue an order terminating the
insured status of such depository institution effective as of a date
subsequent to such finding.
(4) Appearance; consent to termination
Unless the depository institution shall appear at the hearing by a
duly authorized representative, it shall be deemed to have consented to
the termination of its status as an insured depository institution and
termination of such status thereupon may be ordered.
(5) Judicial review
Any insured depository institution whose insured status has been
terminated by order of the Board of Directors under this subsection
shall have the right of judicial review of such order only to the same
extent as provided for the review of orders under subsection (h) of this
section.
(6) Publication of notice of termination
The Corporation may publish notice of such termination and the
depository institution shall give notice of such termination to each of
its depositors at his last address of record on the books of the
depository institution, in such manner and at such time as the Board of
Directors may find to be necessary and may order for the protection of
depositors.
(7) Temporary insurance of deposits insured as of termination
After the termination of the insured status of any depository
institution under the provisions of this subsection, the insured
deposits of each depositor in the depository institution on the date of
such termination, less all subsequent withdrawals from any deposits of
such depositor, shall continue for a period of at least 6 months or up
to 2 years, within the discretion of the Board of Directors /1/ to be
insured, and the depository institution shall continue to pay to the
Corporation assessments as in the case of an insured depository
institution during such period. No additions to any such deposits and
no new deposits in such depository institution made after the date of
such termination shall be insured by the Corporation, and the depository
institution shall not advertise or hold itself out as having insured
deposits unless in the same connection it shall also state with equal
prominence that such additions to deposits and new deposits made after
such date are not so insured. Such depository institution shall, in all
other respects, be subject to the duties and obligations of an insured
depository institution for the period the period /2/ referred to in the
1st sentence from the date of such termination, and in the event that
such depository institution shall be closed on account of inability to
meet the demands of its depositors within such period, the Corporation
shall have the same powers and rights with respect to such depository
institution as in case of an insured depository institution.
(8) Temporary suspension of insurance
(A) In general
If the Board of Directors initiates a termination proceeding under
paragraph (2), and the Board of Directors, after consultation with the
appropriate Federal banking agency, finds that an insured depository
institution (other than a savings association to which subparagraph (B)
applies) has no tangible capital under the capital guidelines or
regulations of the appropriate Federal banking agency, the Corporation
may issue a temporary order suspending deposit insurance on all deposits
received by the institution.
(B) Special rule for certain savings institutions
(i) Certain goodwill included in tangible capital
In determining the tangible capital of a savings association for
purposes of this paragraph, the Board of Directors shall include
goodwill to the extent it is considered a component of capital under
section 1464(t) of this title. Any savings association which would be
subject to a suspension order under subparagraph (A) but for the
operation of this subparagraph, shall be considered by the Corporation
to be a ''special supervisory association''.
(ii) Suspension order
The Corporation may issue a temporary order suspending deposit
insurance on all deposits received by a special supervisory association
whenever the Board of Directors determines that --
(I) the capital of such association, as computed utilizing applicable
accounting standards, has suffered a material decline;
(II) that such association (or its directors or officers) is engaging
in an unsafe or unsound practice in conducting the business of the
association;
(III) that such association is in an unsafe or unsound condition to
continue operating as an insured association; or
(IV) that such association (or its directors or officers) has
violated any applicable law, rule, regulation, or order, or any
condition imposed in writing by a Federal banking agency, or any written
agreement including a capital improvement plan entered into with any
Federal banking agency, or that the association has failed to enter into
a capital improvement plan which is acceptable to the Corporation within
the time period set forth in section 1464(t) of this title.
Nothing in this paragraph limits the right of the Corporation or
the Director of the Office of Thrift Supervision to enforce a
contractual provision which authorizes the Corporation or the Director
of the Office of Thrift Supervision, as a successor to the Federal
Savings and Loan Insurance Corporation or the Federal Home Loan Bank
Board, to require a savings association to write down or amortize
goodwill at a faster rate than otherwise required under this chapter or
under applicable accounting standards.
(C) Effective period of temporary order
Any order issued under subparagraph (A) shall become effective not
earlier than 10 days from the date of service upon the institution and,
unless set aside, limited, or suspended by a court in proceedings
authorized hereunder, such temporary order shall remain effective and
enforceable until an order of the Board under paragraph (3) becomes
final or until the Corporation dismisses the proceedings under paragraph
(3).
(D) Judicial review
Before the close of the 10-day period beginning on the date any
temporary order has been served upon an insured depository institution
under subparagraph (A), such institution may apply to the United States
District Court for the District of Columbia, or the United States
district court for the judicial district in which the home office of the
institution is located, for an injunction setting aside, limiting, or
suspending the enforcement, operation, or effectiveness of such order,
and such court shall have jurisdiction to issue such injunction.
(E) Continuation of insurance for prior deposits
The insured deposits of each depositor in such depository institution
on the effective date of the order issued under this paragraph, minus
all subsequent withdrawals from any deposits of such depositor, shall
continue to be insured, subject to the administrative proceedings as
provided in this chapter.
(F) Publication of order
The depository institution shall give notice of such order to each of
its depositors in such manner and at such times as the Board of
Directors may find to be necessary and may order for the protection of
depositors.
(G) Notice by Corporation
If the Corporation determines that the depository institution has not
substantially complied with the notice to depositors required by the
Board of Directors, the Corporation may provide such notice in such
manner as the Board of Directors may find to be necessary and
appropriate.
(H) Lack of notice
Notwithstanding subparagraph (A), any deposit made after the
effective date of a suspension order issued under this paragraph shall
remain insured to the extent that the depositor establishes that --
(i) such deposit consists of additions made by automatic deposit the
depositor was unable to prevent; or
(ii) such depositor did not have actual knowledge of the suspension
of insurance.
(9) Final decisions to terminate insurance
Any decision by the Board of Directors to --
(A) issue a temporary order terminating deposit insurance; or
(B) issue a final order terminating deposit insurance (other than
under subsection (p) or (q) of this section);
shall be made by the Board of Directors and may not be delegated.
(10) Low- to moderate-income housing lender
In making any determination regarding the termination of insurance of
a solvent savings association, the Corporation may consider the extent
of the association's low- to moderate-income housing loans.
(b) Cease-and-desist proceedings
(1) If, in the opinion of the appropriate Federal banking agency, any
insured depository institution, depository institution which has insured
deposits, or any institution-affiliated party is engaging or has
engaged, or the agency has reasonable cause to believe that the
depository institution or any institution-affiliated party is about to
engage, in an unsafe or unsound practice in conducting the business of
such depository institution, or is violating or has violated, or the
agency has reasonable cause to believe that the depository institution
or any institution-affiliated party is about to violate, a law, rule, or
regulation, or any condition imposed in writing by the agency in
connection with the granting of any application or other request by the
depository institution or any written agreement entered into with the
agency, the agency may issue and serve upon the depository institution
or such party a notice of charges in respect thereof. The notice shall
contain a statement of the facts constituting the alleged violation or
violations or the unsafe or unsound practice or practices, and shall fix
a time and place at which a hearing will be held to determine whether an
order to cease and desist therefrom should issue against the depository
institution or the institution-affiliated party. Such hearing shall be
fixed for a date not earlier than thirty days nor later than sixty days
after service of such notice unless an earlier or a later date is set by
the agency at the request of any party so served. Unless the party or
parties so served shall appear at the hearing personally or by a duly
authorized representative, they shall be deemed to have consented to the
issuance of the cease-and-desist order. In the event of such consent,
or if upon the record made at any such hearing, the agency shall find
that any violation or unsafe or unsound practice specified in the notice
of charges has been established, the agency may issue and serve upon the
depository institution or the institution-affiliated party an order to
cease and desist from any such violation or practice. Such order may,
by provisions which may be mandatory or otherwise, require the
depository institution or its institution-affiliated parties to cease
and desist from the same, and, further, to take affirmative action to
correct the conditions resulting from any such violation or practice.
(2) A cease-and-desist order shall become effective at the expiration
of thirty days after the service of such order upon the depository
institution or other person concerned (except in the case of a
cease-and-desist order issued upon consent, which shall become effective
at the time specified therein), and shall remain effective and
enforceable as provided therein, except to such extent as it is stayed,
modified, terminated, or set aside by action of the agency or a
reviewing court.
(3) This subsection and subsections (c) through (s) and subsection
(u) of this section shall apply to any bank holding company, and to any
subsidiary (other than a bank) of a bank holding company, as those terms
are defined in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.), and to any organization organized and operated under section
25(a) /3/ of the Federal Reserve Act (12 U.S.C. 611 et seq.) or
operating under section 25 of the Federal Reserve Act (12 U.S.C. 601 et
seq.), in the same manner as they apply to a State member insured bank.
Nothing in this subsection or in subsection (c) of this section shall
authorize any Federal banking agency, other than the Board of Governors
of the Federal Reserve System, to issue a notice of charges or
cease-and-desist order against a bank holding company or any subsidiary
thereof (other than a bank or subsidiary of that bank).
(4) This subsection and subsections (c) through (s) and subsection
(u) of this section shall apply to any foreign bank or company to which
subsection (a) of section 3106 of this title applies and to any
subsidiary (other than a bank) of any such foreign bank or company in
the same manner as they apply to a bank holding company and any
subsidiary thereof (other than a bank) under subparagraph /4/ (3) of
this subsection. For the purposes of this paragraph, the term
''subsidiary'' shall have the meaning assigned to it in section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C. 1841).
(5) This section shall apply, in the same manner as it applies to any
insured depository institution for which the appropriate Federal banking
agency is the Comptroller of the Currency, to any national banking
association chartered by the Comptroller of the Currency, including an
uninsured association.
(6) Affirmative action to correct conditions resulting from
violations or practices. -- The authority to issue an order under this
subsection and subsection (c) of this section which requires an insured
depository institution or any institution-affiliated party to take
affirmative action to correct or remedy any conditions resulting from
any violation or practice with respect to which such order is issued
includes the authority to require such depository institution or such
party to --
(A) make restitution or provide reimbursement, indemnification, or
guarantee against loss if --
(i) such depository institution or such party was unjustly enriched
in connection with such violation or practice; or
(ii) the violation or practice involved a reckless disregard for the
law or any applicable regulations or prior order of the appropriate
Federal banking agency;
(B) restrict the growth of the institution;
(C) dispose of any loan or asset involved;
(D) rescind agreements or contracts; and
(E) employ qualified officers or employees (who may be subject to
approval by the appropriate Federal banking agency at the direction of
such agency); and
(F) take such other action as the banking agency determines to be
appropriate.
(7) Authority to limit activities. -- The authority to issue an order
under this subsection or subsection (c) of this section includes the
authority to place limitations on the activities or functions of an
insured depository institution or any institution-affiliated party.
(8) Unsatisfactory asset quality, management, earnings, or liquidity
as unsafe or unsound practice. -- If an insured depository institution
receives, in its most recent report of examination, a
less-than-satisfactory rating for asset quality, management, earnings,
or liquidity, the appropriate Federal banking agency may (if the
deficiency is not corrected) deem the institution to be engaging in an
unsafe or unsound practice for purposes of this subsection.
(9) Expansion of authority to savings and loan affiliates and
entities. -- Subsections (a) through (s) of this section and subsection
(u) of this section shall apply to any savings and loan holding company
and to any subsidiary (other than a bank or subsidiary of that bank) of
a savings and loan holding company, to any service corporation of a
savings association and to any subsidiary of such service corporation,
whether wholly or partly owned, in the same manner as such subsections
apply to a savings association.
(c) Temporary cease-and-desist orders
(1) Whenever the appropriate Federal banking agency shall determine
that the violation or threatened violation or the unsafe or unsound
practice or practices, specified in the notice of charges served upon
the depository institution or any institution-affiliated party pursuant
to paragraph (1) of subsection (b) of this section, or the continuation
thereof, is likely to cause insolvency or significant dissipation of
assets or earnings of the depository institution, or is likely to weaken
the condition of the depository institution or otherwise prejudice the
interests of its depositors prior to the completion of the proceedings
conducted pursuant to paragraph (1) of subsection (b) of this section,
the agency may issue a temporary order requiring the depository
institution or such party to cease and desist from any such violation or
practice and to take affirmative action to prevent or remedy such
insolvency, dissipation, condition, or prejudice pending completion of
such proceedings. Such order may include any requirement authorized
under subsection (b)(6) of this section. Such order shall become
effective upon service upon the depository institution or such
institution-affiliated party and, unless set aside, limited, or
suspended by a court in proceedings authorized by paragraph (2) of this
subsection, shall remain effective and enforceable pending the
completion of the administrative proceedings pursuant to such notice and
until such time as the agency shall dismiss the charges specified in
such notice, or if a cease-and-desist order is issued against the
depository institution or such party, until the effective date of such
order.
(2) Within ten days after the depository institution concerned or any
institution-affiliated party has been served with a temporary
cease-and-desist order, the depository institution or such party may
apply to the United States district court for the judicial district in
which the home office of the depository institution is located, or the
United States District Court for the District of Columbia, for an
injuction /5/ setting aside, limiting, or suspending the enforcement,
operation, or effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges served upon
the depository institution or such party under paragraph (1) of
subsection (b) of this section, and such court shall have jurisdiction
to issue such injunction.
(3) Incomplete or inaccurate records. --
(A) Temporary order. -- If a notice of charges served under
subsection (b)(1) of this section specifies, on the basis of particular
facts and circumstances, that an insured depository institution's books
and records are so incomplete or inaccurate that the appropriate Federal
banking agency is unable, through the normal supervisory process, to
determine the financial condition of that depository institution or the
details or purpose of any transaction or transactions that may have a
material effect on the financial condition of that depository
institution, the agency may issue a temporary order requiring --
(i) the cessation of any activity or practice which gave rise,
whether in whole or in part, to the incomplete or inaccurate state of
the books or records; or
(ii) affirmative action to restore such books or records to a
complete and accurate state, until the completion of the proceedings
under subsection (b)(1) of this section.
(B) Effective period. -- Any temporary order issued under
subparagraph (A) --
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a court in
proceedings under paragraph (2), shall remain in effect and enforceable
until the earlier of --
(I) the completion of the proceeding initiated under subsection (b)(
1) of this section in connection with the notice of charges; or
(II) the date the appropriate Federal banking agency determines, by
examination or otherwise, that the insured depository institution's
books and records are accurate and reflect the financial condition of
the depository institution.
(d) Temporary cease-and-desist orders; enforcement
In the case of violation or threatened violation of, or failure to
obey, a temporary cease-and-desist order issued pursuant to paragraph
(1) of subsection (c) of this section, the appropriate Federal banking
agency may apply to the United States district court, or the United
States court of any territory, within the jurisdiction of which the home
office of the depository institution is located, for an injunction to
enforce such order, and, if the court shall determine that there has
been such violation or threatened violation or failure to obey, it shall
be the duty of the court to issue such injunction.
(e) Removal and prohibition authority
(1) Authority to issue order. -- Whenever the appropriate Federal
banking agency determines that --
(A) any institution-affiliated party has, directly or indirectly --
(i) violated --
(I) any law or regulation;
(II) any cease-and-desist order which has become final;
(III) any condition imposed in writing by the appropriate Federal
banking agency in connection with the grant of any application or other
request by such depository institution; or
(IV) any written agreement between such depository institution and
such agency;
(ii) engaged or participated in any unsafe or unsound practice in
connection with any insured depository institution or business
institution; or
(iii) committed or engaged in any act, omission, or practice which
constitutes a breach of such party's fiduciary duty;
(B) by reason of the violation, practice, or breach described in any
clause of subparagraph (A) --
(i) such insured depository institution or business institution has
suffered or will probably suffer financial loss or other damage;
(ii) the interests of the insured depository institution's depositors
have been or could be prejudiced; or
(iii) such party has received financial gain or other benefit by
reason of such violation, practice, or breach; and
(C) such violation, practice, or breach --
(i) involves personal dishonesty on the part of such party; or
(ii) demonstrates willful or continuing disregard by such party for
the safety or soundness of such insured depository institution or
business institution,
the agency may serve upon such party a written notice of the agency's
intention to remove such party from office or to prohibit any further
participation by such party, in any manner, in the conduct of the
affairs of any insured depository institution.
(2) Whenever, in the opinion of the appropriate Federal banking
agency, any director or officer of an insured depository institution has
committed any violation of the Depository Institution Management
Interlocks Act (12 U.S.C. 3201 et seq.), the agency may serve upon such
director or officer a written notice of its intention to remove him from
office.
(3) Suspension order. --
(A) Suspension or prohibition authorized. -- If the appropriate
Federal banking agency serves written notice under paragraph (1) or (2)
to any institution-affiliated party of such agency's intention to issue
an order under such paragraph, the appropriate Federal banking agency
may suspend such party from office or prohibit such party from further
participation in any manner in the conduct of the affairs of the
depository institution, if the agency --
(i) determines that such action is necessary for the protection of
the depository institution or the interests of the depository
institution's depositors; and
(ii) serves such party with written notice of the suspension order.
(B) Effective period. -- Any suspension order issued under
subparagraph (A) --
(i) shall become effective upon service; and
(ii) unless a court issues a stay of such order under subsection (f)
of this section, shall remain in effect and enforceable until --
(I) the date the appropriate Federal banking agency dismisses the
charges contained in the notice served under paragraph (1) or (2) with
respect to such party; or
(II) the effective date of an order issued by the agency to such
party under paragraph (1) or (2).
(C) Copy of order. -- If an appropriate Federal banking agency issues
a suspension order under subparagraph (A) to any institution-affiliated
party, the agency shall serve a copy of such order on any insured
depository institution with which such party is associated at the time
such order is issued.
(4) A notice of intention to remove an institution-affiliated party
from office or to prohibit such party from participating in the conduct
of the affairs of an insured depository institution, shall contain a
statement of the facts constituting grounds therefor, and shall fix a
time and place at which a hearing will be held thereon. Such hearing
shall be fixed for a date not earlier than thirty days nor later than
sixty days after the date of service of such notice, unless an earlier
or a later date is set by the agency at the request of (A) such party,
and for good cause shown, or (B) the Attorney General of the United
States. Unless such party shall appear at the hearing in person or by a
duly authorized representative, such party shall be deemed to have
consented to the issuance of an order of such removal or prohibition.
In the event of such consent, or if upon the record made at any such
hearing the agency shall find that any of the grounds specified in such
notice have been established, the agency may issue such orders of
suspension or removal from office, or prohibition from participation in
the conduct of the affairs of the depository institution, as it may deem
appropriate. In any action brought under this section by the
Comptroller of the Currency in respect to any such party with respect to
a national banking association or a District depository institution, the
findings and conclusions of the Administrative Law Judge shall be
certified to the Board of Governors of the Federal Reserve System for
the determination of whether any order shall issue. Any such order
shall become effective at the expiration of thirty days after service
upon such depository institution and such party concerned (except in the
case of an order issued upon consent, which shall become effective at
the time specified therein). Such order shall remain effective and
enforceable except to such extent as it is stayed, modified, terminated,
or set aside by action of the agency or a reviewing court.
(5) For the purpose of enforcing any law, rule, regulation, or
cease-and-desist order in connection with an interlocking relationship,
the term ''officer'' within the term ''institution-affiliated party'' as
used in this subsection means an employee or officer with management
functions, and the term ''director'' within the term
''institution-affiliated party'' as used in this subsection includes an
advisory or honorary director, a trustee of a depository institution
under the control of trustees, or any person who has a representative or
nominee serving in any such capacity.
(6) Prohibition of certain specific activities. -- Any person subject
to an order issued under this subsection shall not --
(A) participate in any manner in the conduct of the affairs of any
institution or agency specified in paragraph (7)(A);
(B) solicit, procure, transfer, attempt to transfer, vote, or attempt
to vote any proxy, consent, or authorization with respect to any voting
rights in any institution described in subparagraph (A);
(C) violate any voting agreement previously approved by the
appropriate Federal banking agency; or
(D) vote for a director, or serve or act as an institution-affiliated
party.
(7) Industrywide Prohibition. --
(A) In general. -- Except as provided in subparagraph (B), any person
who, pursuant to an order issued under this subsection or subsection (g)
of this section, has been removed or suspended from office in an insured
depository institution or prohibited from participating in the conduct
of the affairs of an insured depository institution may not, while such
order is in effect, continue or commence to hold any office in, or
participate in any manner in the conduct of the affairs of --
(i) any insured depository institution;
(ii) any institution treated as an insured bank under subsection
(b)(3) or (b)(4) of this section, or as a savings association under
subsection (b)(8) of this section;
(iii) any insured credit union under the Federal Credit Union Act (12
U.S.C. 1751 et seq.);
(iv) any institution chartered under the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.);
(v) any appropriate Federal depository institution regulatory agency;
(vi) the Federal Housing Finance Board and any Federal home loan
bank; and
(vii) the Resolution Trust Corporation.
(B) Exception if agency provides written consent. -- If, on or after
the date an order is issued under this subsection which removes or
suspends from office any institution-affiliated party or prohibits such
party from participating in the conduct of the affairs of an insured
depository institution, such party receives the written consent of --
(i) the agency that issued such order; and
(ii) the appropriate Federal financial institutions regulatory agency
of the institution described in any clause of subparagraph (A) with
respect to which such party proposes to become an institution-affiliated
party,
subparagraph (A) shall, to the extent of such consent, cease to apply
to such party with respect to the institution described in each written
consent. Any agency that grants such a written consent shall report
such action to the Corporation and publicly disclose such consent.
(C) Violation of paragraph treated as violation of order. -- Any
violation of subparagraph (A) by any person who is subject to an order
described in such subparagraph shall be treated as a violation of the
order.
(D) ''Appropriate federal financial institutions regulatory agency''
defined. -- For purposes of this paragraph and subsection (j) of this
section, the term ''appropriate Federal financial institutions
regulatory agency'' means --
(i) the appropriate Federal banking agency, in the case of an insured
depository institution;
(ii) the Farm Credit Administration, in the case of an institution
chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.);
(iii) the National Credit Union Administration Board, in the case of
an insured credit union (as defined in section 101(7) of the Federal
Credit Union Act (12 U.S.C. 1752(7)));
(iv) the Secretary of the Treasury, in the case of the Federal
Housing Finance Board and any Federal home loan bank; and
(v) the Thrift Depositor Protection Oversight Board, in the case of
the Resolution Trust Corporation.
(E) Consultation between agencies. -- The agencies referred to in
clauses (i) and (ii) of subparagraph (B) shall consult with each other
before providing any written consent described in subparagraph (B).
(F) Applicability. -- This paragraph shall only apply to a person who
is an individual, unless the appropriate Federal banking agency
specifically finds that it should apply to a corporation, firm, or other
business enterprise.
(f) Stay of suspension and/or prohibition of institution-affiliated
party
Within ten days after any institution-affiliated party has been
suspended from office and/or prohibited from participation in the
conduct of the affairs of an insured depository institution under
subsection (e)(3) of this section, such party may apply to the United
States district court for the judicial district in which the home office
of the depository institution is located, or the United States District
Court for the District of Columbia, for a stay of such suspension and/or
prohibition pending the completion of the administrative proceedings
pursuant to the notice served upon such party under subsection (e)(1) or
(e)(2) of this section, and such court shall have jurisdiction to stay
such suspension and/or prohibition.
(g) Suspension or removal of institution-affiliated party charged
with felony
(1) Whenever any institution-affiliated party, /6/ is charged in any
information, indictment, or complaint, with the commission of or
participation in a crime involving dishonesty or breach of trust which
is punishable by imprisonment for a term exceeding one year under State
or Federal law, the appropriate Federal banking agency may, if continued
service or participation by such party may pose a threat to the
interests of the bank's /7/ depositors or may threaten to impair public
confidence in the depository institution, by written notice served upon
such party, suspend such party from office or prohibit such party from
further participation in any manner in the conduct of the affairs of the
depository institution. A copy of such notice shall also be served upon
the depository institution. Such suspension or prohibition shall remain
in effect until such information, indictment, or complaint is finally
disposed of or until terminated by the agency. In the event that a
judgment of conviction or an agreement to enter a pre-trial diversion or
other similar program is entered against such party, and at such time as
such judgment is not subject to further appellate review, the agency
may, if continued service or participation by such party may pose a
threat to the interests of the bank's /7/ depositors or may threaten to
impair public confidence in the depository institution, issue and serve
upon such party an order removing such party from office or prohibiting
such party from further participation in any manner in the conduct of
the affairs of the depository institution except with the consent of the
appropriate agency. A copy of such order shall also be served upon such
depository institution, whereupon such party (if a director or an
officer) shall cease to be a director or officer of such depository
institution. A finding of not guilty or other disposition of the charge
shall not preclude the agency from thereafter instituting proceedings to
remove such party from office or to prohibit further participation in
depository institution affairs, pursuant to paragraph (1), (2), or (3)
of subsection (e) of this section. Any notice of suspension or order of
removal issued under this paragraph shall remain effective and
outstanding until the completion of any hearing or appeal authorized
under paragraph (3) hereof unless terminated by the agency.
(2) If at any time, because of the suspension of one or more
directors pursuant to this section, there shall be on the board of
directors of a national depository institution less than a quorum of
directors not so suspended, all powers and functions vested in or
exercisable by such board shall vest in and be exercisable by the
director or directors on the board not so suspended, until such time as
there shall be a quorum of the board of directors. In the event all of
the directors of a national depository institution are suspended
pursuant to this section, the Comptroller of the Currency shall appoint
persons to serve temporarily as directors in their place and stead
pending the termination of such suspensions, or until such time as those
who have been suspended, cease to be directors of the depository
institution and their respective successors take office.
(3) Within thirty days from service of any notice of suspension or
order of removal issued pursuant to paragraph (1) of this subsection,
the institution-affiliated party concerned may request in writing an
opportunity to appear before the agency to show that the continued
service to or participation in the conduct of the affairs of the
depository institution by such party does not, or is not likely to, pose
a threat to the interests of the bank's /7/ depositors or threaten to
impair public confidence in the depository institution. Upon receipt of
any such request, the appropriate Federal banking agency shall fix a
time (not more than thirty days after receipt of such request, unless
extended at the request of such party) and place at which such party may
appear, personally or through counsel, before one or more members of the
agency or designated employees of the agency to submit written materials
(or, at the discretion of the agency, oral testimony) and oral argument.
Within sixty days of such hearing, the agency shall notify such party
whether the suspension or prohibition from participation in any manner
in the conduct of the affairs of the depository institution will be
continued, terminated, or otherwise modified, or whether the order
removing such party from office or prohibiting such party from further
participation in any manner in the conduct of the affairs of the
depository institution will be rescinded or otherwise modified. Such
notification shall contain a statement of the basis for the agency's
decision, if adverse to such party. The Federal banking agencies are
authorized to prescribe such rules as may be necessary to effectuate the
purposes of this subsection.
(h) Hearings and judicial review
(1) Any hearing provided for in this section (other than the hearing
provided for in subsection (g)(3) of this section) shall be held in the
Federal judicial district or in the territory in which the home office
of the depository institution is located unless the party afforded the
hearing consents to another place, and shall be conducted in accordance
with the provisions of chapter 5 of title 5. After such hearing, and
within ninety days after the appropriate Federal banking agency or Board
of Governors of the Federal Reserve System has notified the parties that
the case has been submitted to it for final decision, it shall render
its decision (which shall include findings of fact upon which its
decision is predicated) and shall issue and serve upon each party to the
proceeding an order or orders consistent with the provisions of this
section. Judicial review of any such order shall be exclusively as
provided in this subsection (h). Unless a petition for review is timely
filed in a court of appeals of the United States, as hereinafter
provided in paragraph (2) of this subsection, and thereafter until the
record in the proceeding has been filed as so provided, the issuing
agency may at any time, upon such notice and in such manner as it shall
deem proper, modify, terminate, or set aside any such order. Upon such
filing of the record, the agency may modify, terminate, or set aside any
such order with permission of the court.
(2) Any party to any proceeding under paragraph (1) may obtain a
review of any order served pursuant to paragraph (1) of this subsection
(other than an order issued with the consent of the depository
institution or the institution-affiliated party concerned, or an order
issued under paragraph (1) of subsection (g) of this section) by the
filing in the court of appeals of the United States for the circuit in
which the home office of the depository institution is located, or in
the United States Court of Appeals for the District of Columbia Circuit,
within thirty days after the date of service of such order, a written
petition praying that the order of the agency be modified, terminated,
or set aside. A copy of such petition shall be forthwith transmitted by
the clerk of the court to the agency, and thereupon the agency shall
file in the court the record in the proceeding, as provided in section
2112 of title 28. Upon the filing of such petition, such court shall
have jurisdiction, which upon the filing of the record shall except as
provided in the last sentence of said paragraph (1) be exclusive, to
affirm, modify, terminate, or set aside, in whole or in part, the order
of the agency. Review of such proceedings shall be had as provided in
chapter 7 of title 5. The judgment and decree of the court shall be
final, except that the same shall be subject to review by the Supreme
Court upon certiorari, as provided in section 1254 of title 28.
(3) The commencement of proceedings for judicial review under
paragraph (2) of this subsection shall not, unless specifically ordered
by the court, operate as a stay of any order issued by the agency.
(i) Jurisdiction and enforcement; penalty
(1) The appropriate Federal banking agency may in its discretion
apply to the United States district court, or the United States court of
any territory, within the jurisdiction of which the home office of the
depository institution is located, for the enforcement of any effective
and outstanding notice or order issued under this section or under
section 1831o of this title, and such courts shall have jurisdiction and
power to order and require compliance herewith; but except as otherwise
provided in this section no court shall have jurisdiction to affect by
injunction or otherwise the issuance or enforcement of any notice or
order under this section, or to review, modify, suspend, terminate, or
set aside any such notice or order.
(2) Civil money penalty. --
(A) First tier. -- Any insured depository institution which, and any
institution-affiliated party who --
(i) violates any law or regulation;
(ii) violates any final order or temporary order issued pursuant to
subsection (b), (c), (e), (g), or (s) of this section, or final order
under section 1831o of this title;
(iii) violates any condition imposed in writing by the appropriate
Federal banking agency in connection with the grant of any application
or other request by such depository institution; or
(iv) violates any written agreement between such depository
institution and such agency,
shall forfeit and pay a civil penalty of not more than $5,000 for
each day during which such violation continues.
(B) Second tier. -- Notwithstanding subparagraph (A), any insured
depository institution which, and any institution-affiliated party who
--
(i)(I) commits any violation described in any clause of subparagraph
(A);
(II) recklessly engages in an unsafe or unsound practice in
conducting the affairs of such insured depository institution; or
(III) breaches any fiduciary duty;
(ii) which violation, practice, or breach --
(I) is part of a pattern of misconduct;
(II) causes or is likely to cause more than a minimal loss to such
depository institution; or
(III) results in pecuniary gain or other benefit to such party,
shall forfeit and pay a civil penalty of not more than $25,000 for
each day during which such violation, practice, or breach continues.
(C) Third tier. -- Notwithstanding subparagraphs (A) and (B), any
insured depository institution which, and any institution-affiliated
party who --
(i) knowingly --
(I) commits any violation described in any clause of subparagraph
(A);
(II) engages in any unsafe or unsound practice in conducting the
affairs of such depository institution; or
(III) breaches any fiduciary duty; and
(ii) knowingly or recklessly causes a substantial loss to such
depository institution or a substantial pecuniary gain or other benefit
to such party by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the
applicable maximum amount determined under subparagraph (D) for each day
during which such violation, practice, or breach continues.
(D) Maximum amounts of penalties for any violation described in
subparagraph (c). -- The maximum daily amount of any civil penalty which
may be assessed pursuant to subparagraph (C) for any violation,
practice, or breach described in such subparagraph is --
(i) in the case of any person other than an insured depository
institution, an amount to not exceed $1,000,000; and
(ii) in the case of any insured depository institution, an amount not
to exceed the lesser of --
(I) $1,000,000; or
(II) 1 percent of the total assets of such institution.
(E) Assessment. --
(i) Written notice. -- Any penalty imposed under subparagraph (A),
(B), or (C) may be assessed and collected by the appropriate Federal
banking agency by written notice.
(ii) Finality of assessment. -- If, with respect to any assessment
under clause (i), a hearing is not requested pursuant to subparagraph
(H) within the period of time allowed under such subparagraph, the
assessment shall constitute a final and unappealable order.
(F) Authority to modify or remit penalty. -- Any appropriate Federal
banking agency may compromise, modify, or remit any penalty which such
agency may assess or had already assessed under subparagraph (A), (B),
or (C).
(G) Mitigating factors. -- In determining the amount of any penalty
imposed under subparagraph (A), (B), or (C), the appropriate agency
shall take into account the appropriateness of the penalty with respect
to --
(i) the size of financial resources and good faith of the insured
depository institution or other person charged;
(ii) the gravity of the violation;
(iii) the history of previous violations; and
(iv) such other matters as justice may require.
(H) Hearing. -- The insured depository institution or other person
against whom any penalty is assessed under this paragraph shall be
afforded an agency hearing if such institution or person submits a
request for such hearing within 20 days after the issuance of the notice
of assessment.
(I) Collection. --
(i) Referral. -- If any insured depository institution or other
person fails to pay an assessment after any penalty assessed under this
paragraph has become final, the agency that imposed the penalty shall
recover the amount assessed by action in the appropriate United States
district court.
(ii) Appropriateness of penalty not reviewable. -- In any civil
action under clause (i), the validity and appropriateness of the penalty
shall not be subject to review.
(J) Disbursement. -- All penalties collected under authority of this
paragraph shall be deposited into the Treasury.
(K) Regulations. -- Each appropriate Federal banking agency shall
prescribe regulations establishing such procedures as may be necessary
to carry out this paragraph.
(3) Notice under this section after separation from service. -- The
resignation, termination of employment or participation, or separation
of a institution-affiliated party (including a separation caused by the
closing of an insured depository institution) shall not affect the
jurisdiction and authority of the appropriate Federal banking agency to
issue any notice and proceed under this section against any such party,
if such notice is served before the end of the 6-year period beginning
on the date such party ceased to be such a party with respect to such
depository institution (whether such date occurs before, on, or after
August 9, 1989).
(4) Prejudgment attachment. --
(A) In general. -- In any action brought by an appropriate Federal
banking agency (excluding the Corporation when acting in a manner
described in section 1821(d)(18) of this title) pursuant to this
section, or in actions brought in aid of, or to enforce an order in, any
administrative or other civil action for money damages, restitution, or
civil money penalties brought by such agency, the court may, upon
application of the agency, issue a restraining order that --
(i) prohibits any person subject to the proceeding from withdrawing,
transferring, removing, dissipating, or disposing of any funds, assets
or other property; and
(ii) appoints a temporary receiver to administer the restraining
order.
(B) Standard. -- A permanent or temporary injunction or restraining
order shall be granted without bond upon a prima facie showing that
money damages, restitution, or civil money penalties, as sought by such
agency, is appropriate.
(j) Criminal penalty
Whoever, being subject to an order in effect under subsection (e) or
(g) of this section, without the prior written approval of the
appropriate Federal financial institutions regulatory agency, knowingly
participates, directly or indirectly, in any manner (including by
engaging in an activity specifically prohibited in such an order or in
subsection (e)(6) of this section) in the conduct of the affairs of --
(1) any insured depository institution;
(2) any institution treated as an insured bank under subsection (b)(
3) or (b)(4) of this section, or as a savings association under
subsection (b)(8) of this section;
(3) any insured credit union (as defined in section 101(7) of the
Federal Credit Union Act (12 U.S.C. 1752(7)));
(4) any institution chartered under the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.); or
(5) the Resolution Trust Corporation,
shall be fined not more than $1,000,000, imprisoned for not more than
5 years, or both.
(k) Repealed. Pub. L. 101-73, title IX, 920(c), Aug. 9, 1989, 103
Stat. 488
(l) Notice of service
Any service required or authorized to be made by the appropriate
Federal banking agency under this section may be made by registered
mail, or in such other manner reasonably calculated to give actual
notice as the agency may by regulation or otherwise provide. Copies of
any notice or order served by the agency upon any State depository
institution or any institution-affiliated party, pursuant to the
provisions of this section, shall also be sent to the appropriate State
supervisory authority.
(m) Notice to State authorities
In connection with any proceeding under subsection (b), (c)(1), or
(e) of this section involving an insured State bank or any
institution-affiliated party, the appropriate Federal banking agency
shall provide the appropriate State supervisory authority with notice of
the agency's intent to institute such a proceeding and the grounds
therefor. Unless within such time as the Federal banking agency deems
appropriate in the light of the circumstances of the case (which time
must be specified in the notice prescribed in the preceding sentence)
satisfactory corrective action is effectuated by action of the State
supervisory authority, the agency may proceed as provided in this
section. No bank or other party who is the subject of any notice or
order issued by the agency under this section shall have standing to
raise the requirements of this subsection as ground for attacking the
validity of any such notice or order.
(n) Ancillary provisions; subpena power, etc.
In the course of or in connection with any proceeding under this
section, or in connection with any claim for insured deposits or any
examination or investigation under section 1820(c) of this title, the
agency conducting the proceeding, examination, or investigation or
considering the claim for insured deposits, or any member or designated
representative thereof, including any person designated to conduct any
hearing under this section, shall have the power to administer oaths and
affirmations, to take or cause to be taken depositions, and to issue,
revoke, quash, or modify subpenas and subpenas duces tecum; and such
agency is empowered to make rules and regulations with respect to any
such proceedings, claims, examinations, or investigations. The
attendance of witnesses and the production of documents provided for in
this subsection may be required from any place in any State or in any
territory or other place subject to the jurisdiction of the United
States at any designated place where such proceeding is being conducted.
Any such agency or any party to proceedings under this section may
apply to the United States District Court for the District of Columbia,
or the United States district court for the judicial district or the
United States court in any territory in which such proceeding is being
conducted, or where the witness resides or carries on business, for
enforcement of any subpena or subpena duces tecum issued pursuant to
this subsection, and such courts shall have jurisdiction and power to
order and require compliance therewith. Witnesses subpenaed under this
subsection shall be paid the same fees and mileage that are paid
witnesses in the district courts of the United States. Any court having
jurisdiction of any proceeding instituted under this section by an
insured depository institution or a director or officer thereof, may
allow to any such party such reasonable expenses and attorneys' fees as
it deems just and proper; and such expenses and fees shall be paid by
the depository institution or from its assets. Any person who willfully
shall fail or refuse to attend and testify or to answer any lawful
inquiry or to produce books, papers, correspondence, memoranda,
contracts, agreements, or other records, if in such person's power so to
do, in obedience to the subpoena of the appropriate Federal banking
agency, shall be guilty of a misdemeanor and, upon conviction, shall be
subject to a fine of not more than $1,000 or to imprisonment for a term
of not more than one year or both.
(o) Termination of membership of State bank in Federal Reserve System
Whenever the insured status of a State member bank shall be
terminated by action of the Board of Directors, the Board of Governors
of the Federal Reserve System shall terminate its membership in the
Federal Reserve System in accordance with the provisions of subchapter
VIII of chapter 3 of this title, and whenever the insured status of a
national member bank shall be so terminated the Comptroller of the
Currency shall appoint a receiver for the bank, which shall be the
Corporation. Except as provided in subsection (b) of section 1814 of
this title, whenever a member bank shall cease to be a member of the
Federal Reserve System, its status as an insured depository institution
shall, without notice or other action by the board of directors,
terminate on the date the bank shall cease to be a member of the Federal
Reserve System, with like effect as if its insured status had been
terminated on said date by the board of directors after proceedings
under subsection (a) of this section. Whenever the insured status of an
insured Federal savings bank shall be terminated by action of the Board
of Directors, the Director of the Office of Thrift Supervision shall
appoint a receiver for the bank, which shall be the Corporation.
(p) Banks not receiving deposits
Notwithstanding any other provision of law, whenever the Board of
Directors shall determine that an insured banking institution is not
engaged in the business of receiving deposits, other than trust funds as
herein defined, the Corporation shall notify the banking institution
that its insured status will terminate at the expiration of the first
full semiannual assessment period following such notice. A finding by
the Board of Directors that a banking institution is not engaged in the
business of receiving deposits, other than such trust funds, shall be
conclusive. The Board of Directors shall prescribe the notice to be
given by the banking institution of such termination and the Corporation
may publish notice thereof. Upon the termination of the insured status
of any such banking institution, its deposits shall thereupon cease to
be insured and the banking institution shall thereafter be relieved of
all future obligations to the Corporation, including the obligation to
pay future assessments.
(q) Assumption of liabilities
Whenever the liabilities of an insured depository institution for
deposits shall have been assumed by another insured depository
institution or depository institutions, whether by way of merger,
consolidation, or other statutory assumption, or pursuant to contract
(1) the insured status of the depository institution whose liabilities
are so assumed shall terminate on the date of receipt by the Corporation
of satisfactory evidence of such assumption; (2) the separate insurance
of all deposits so assumed shall terminate at the end of six months from
the date such assumption takes effect or, in the case of any time
deposit, the earliest maturity date after the six-month period. Where
the deposits of an insured depository institution are assumed by a newly
insured depository institution, the depository institution whose
deposits are assumed shall not be required to pay any assessment upon
the deposits which have been so assumed after the semiannual period in
which the assumption takes effect.
(r) Action or proceeding against foreign bank; basis; removal of
officer or other person; venue; service of process
(1) Except as otherwise specifically provided in this section, the
provisions of this section shall be applied to foreign banks in
accordance with this subsection.
(2) An act or practice outside the United States on the part of a
foreign bank or any officer, director, employee, or agent therof /8/
may not constitute the basis for any action by any officer or agency
of the United States under this section, unless --
(A) such officer or agency alleges a belief that such act or practice
has been, is, or is likely to be a cause of or carried on in connection
with or in furtherance of an act or practice within any one or more
States which, in and of itself, would constitute an appropriate basis
for action by a Federal officer or agency under this section; or
(B) the alleged act or practice is one which, if proven, would, in
the judgment of the Board of Directors, adversely affect the insurance
risk assumed by the Corporation.
(3) In any case in which any action or proceeding is brought pursuant
to an allegation under paragraph (2) of this subsection for the
suspension or removal of any officer, director, or other person
associated with a foreign bank, and such person fails to appear promptly
as a party to such action or proceeding and to comply with any effective
order or judgment therein, any failure by the foreign bank to secure his
removal from any office he holds in such bank and from any further
participation in its affairs shall, in and of itself, constitute grounds
for termination of the insurance of the deposits in any branch of the
bank.
(4) Where the venue of any judicial or administrative proceeding
under this section is to be determined by reference to the location of
the home office of a bank, the venue of such a proceeding with respect
to a foreign bank having one or more branches or agencies in not more
than one judicial district or other relevant jurisdiction shall be
within such jurisdiction. Where such a bank has branches or agencies in
more than one such jurisdiction, the venue shall be in the jurisdiction
within which the branch or branches or agency or agencies involved in
the proceeding are located, and if there is more than one such
jurisdiction, the venue shall be proper in any such jurisdiction in
which the proceeding is brought or to which it may appropriately be
transferred.
(5) Any service required or authorized to be made on a foreign bank
may be made on any branch or agency located within any State, but if
such service is in connection with an action or proceeding involving one
or more branches or one or more agencies located in any State, service
shall be made on at least one branch or agency so involved.
(s) Compliance with monetary transaction recordkeeping and report
requirements
(1) Compliance procedures required
Each appropriate Federal banking agency shall prescribe regulations
requiring insured depository institutions to establish and maintain
procedures reasonably designed to assure and monitor the compliance of
such depository institutions with the requirements of subchapter II of
chapter 53 of title 31.
(2) Examinations of depository institution to include review of
compliance procedures
(A) In general
Each examination of an insured depository institution by the
appropriate Federal banking agency shall include a review of the
procedures required to be established and maintained under paragraph
(1).
(B) Exam report requirement
The report of examination shall describe any problem with the
procedures maintained by the insured depository institution.
(3) Order to comply with requirements
If the appropriate Federal banking agency determines that an insured
depository institution --
(A) has failed to establish and maintain the procedures described in
paragraph (1); or
(B) has failed to correct any problem with the procedures maintained
by such depository institution which was previously reported to the
depository institution by such agency,
the agency shall issue an order in the manner prescribed in
subsection (b) or (c) of this section requiring such depository
institution to cease and desist from its violation of this subsection or
regulations prescribed under this subsection.
(t) Authority of FDIC to take enforcement action against insured
depository institutions and institution-affiliated parties
(1) Recommending action by appropriate Federal banking agency
The Corporation, based on an examination of an insured depository
institution by the Corporation or by the appropriate Federal banking
agency or on other information, may recommend in writing to the
appropriate Federal banking agency that the agency take any enforcement
action authorized under section 1817(j) of this title, this section, or
section 1828(j) of this title with respect to any insured depository
institution or any institution-affiliated party. The recommendation
shall be accompanied by a written explanation of the concerns giving
rise to the recommendation.
(2) FDIC's authority to act if appropriate Federal banking agency
fails to follow recommendation
If the appropriate Federal banking agency does not, before the end of
the 60-day period beginning on the date on which the agency receives the
recommendation under paragraph (1), take the enforcement action
recommended by the Corporation or provide a plan acceptable to the
Corporation for responding to the Corporation's concerns, the
Corporation may take the recommended enforcement action if the Board of
Directors determines, upon a vote of its members, that --
(A) the insured depository institution is in an unsafe or unsound
condition;
(B) the institution is engaging in unsafe or unsound practices, and
the recommended enforcement action will prevent the institution from
continuing such practices; or
(C) the institution's conduct or threatened conduct (including any
acts or omissions) poses a risk to the deposit insurance fund, or may
prejudice the interests of the institution's depositors.
(3) Effect of exigent circumstances
(A) Authority to act
The Corporation may, upon a vote of the Board of Directors, and after
notice to the appropriate Federal banking agency, exercise its authority
under paragraph (2) in exigent circumstances without regard to the time
period set forth in paragraph (2).
(B) Agreement on exigent circumstances
The Corporation shall, by agreement with the appropriate Federal
banking agency, set forth those exigent circumstances in which the
Corporation may act under subparagraph (A).
(4) Corporation's powers; institution's duties
For purposes of this subsection --
(A) the Corporation shall have the same powers with respect to any
insured depository institution and its affiliates as the appropriate
Federal banking agency has with respect to the institution and its
affiliates; and
(B) the institution and its affiliates shall have the same duties and
obligations with respect to the Corporation as the institution and its
affiliates have with respect to the appropriate Federal banking agency.
(5) Requests for formal actions and investigations
(A) Submission of requests
A regional office of an appropriate Federal banking agency (including
a Federal Reserve bank) that requests a formal investigation of or civil
enforcement action against an insured depository institution shall
submit the request concurrently to the chief officer of the appropriate
Federal banking agency and to the Corporation.
(B) Agencies required to report on requests
Each appropriate Federal banking agency shall report semiannually to
the Corporation on the status or disposition of all requests under
subparagraph (A), including the reasons for any decision by the agency
to approve or deny such requests.
(u) Public disclosures of final orders and agreements
(1) In general
The appropriate Federal banking agency shall publish and make
available to the public on a monthly basis --
(A) any written agreement or other written statement for which a
violation may be enforced by the appropriate Federal banking agency,
unless the appropriate Federal banking agency, in its discretion,
determines that publication would be contrary to the public interest;
(B) any final order issued with respect to any administrative
enforcement proceeding initiated by such agency under this section or
any other law; and
(C) any modification to or termination of any order or agreement made
public pursuant to this paragraph.
(2) Hearings
All hearings on the record with respect to any notice of charges
issued by a Federal banking agency shall be open to the public, unless
the agency, in its discretion, determines that holding an open hearing
would be contrary to the public interest.
(3) Reports to Congress
A written report shall be made part of a determination not to hold a
public hearing pursuant to paragraph (2) or not to publish a document
pursuant to paragraph (1)(A). At the end of each calendar quarter, all
such reports shall be transmitted to the Congress.
(4) Transcript of hearing
A transcript that includes all testimony and other documentary
evidence shall be prepared for all hearings commenced pursuant to
subsection (i) of this section. A transcript of public hearings shall
be made available to the public pursuant to section 552 of title 5.
(5) Delay of publication under exceptional circumstances
If the appropriate Federal banking agency makes a determination in
writing that the publication of a final order pursuant to paragraph
(1)(B) would seriously threaten the safety and soundness of an insured
depository institution, the agency may delay the publication of the
document for a reasonable time.
(6) Documents filed under seal in public enforcement hearings
The appropriate Federal banking agency may file any document or part
of a document under seal in any administrative enforcement hearing
commenced by the agency if disclosure of the document would be contrary
to the public interest. A written report shall be made part of any
determination to withhold any part of a document from the transcript of
the hearing required by paragraph (2).
(7) Retention of documents
Each Federal banking agency shall keep and maintain a record, for a
period of at least 6 years, of all documents described in paragraph (1)
and all informal enforcement agreements and other supervisory actions
and supporting documents issued with respect to or in connection with
any administrative enforcement proceeding initiated by such agency under
this section or any other laws.
(8) Disclosures to Congress
No provision of this subsection may be construed to authorize the
withholding, or to prohibit the disclosure, of any information to the
Congress or any committee or subcommittee of the Congress.
(v) Foreign investigations
(1) Requesting assistance from foreign banking authorities
In conducting any investigation, examination, or enforcement action
under this chapter, the appropriate Federal banking agency may --
(A) request the assistance of any foreign banking authority; and
(B) maintain an office outside the United States.
(2) Providing assistance to foreign banking authorities
(A) In general
Any appropriate Federal banking agency may, at the request of any
foreign banking authority, assist such authority if such authority
states that the requesting authority is conducting an investigation to
determine whether any person has violated, is violating, or is about to
violate any law or regulation relating to banking matters or currency
transactions administered or enforced by the requesting authority.
(B) Investigation by Federal banking agency
Any appropriate Federal banking agency may, in such agency's
discretion, investigate and collect information and evidence pertinent
to a request for assistance under subparagraph (A). Any such
investigation shall comply with the laws of the United States and the
policies and procedures of the appropriate Federal banking agency.
(C) Factors to consider
In deciding whether to provide assistance under this paragraph, the
appropriate Federal banking agency shall consider --
(i) whether the requesting authority has agreed to provide reciprocal
assistance with respect to banking matters within the jurisdiction of
any appropriate Federal banking agency; and
(ii) whether compliance with the request would prejudice the public
interest of the United States.
(D) Treatment of foreign banking authority
For purposes of any Federal law or appropriate Federal banking agency
regulation relating to the collection or transfer of information by any
appropriate Federal banking agency, the foreign banking authority shall
be treated as another appropriate Federal banking agency.
(3) Rule of construction
Paragraphs (1) and (2) shall not be construed to limit the authority
of an appropriate Federal banking agency or any other Federal agency to
provide or receive assistance or information to or from any foreign
authority with respect to any matter.
(Sept. 21, 1950, ch. 967, 2(8), 64 Stat. 879; Oct. 16, 1966, Pub.
L. 89-695, title II, 202, 204, 80 Stat. 1046, 1054; Oct. 28, 1974, Pub.
L. 93-495, title I, 110, 88 Stat. 1506; Sept. 17, 1978, Pub. L.
95-369, 6(c)(14), (15), 11, 92 Stat. 618, 624; Nov. 10, 1978, Pub. L.
95-630, title I, 107(a)(1), (b), (c)(1), (d)(1), (e)(1), 111(a), title
II, 208(a), title III, 303, 304, 92 Stat. 3649, 3653, 3654, 3656, 3660,
3665, 3674, 3676; Oct. 15, 1982, Pub. L. 97-320, title I, 113(g), (h),
title IV, 404(c), 424(c), (d)(6), (e), 425(b), (c), 427(d), 433(a), 96
Stat. 1473, 1474, 1512, 1523-1527; Oct. 27, 1986, Pub. L. 99-570, title
I, 1359(a), 100 Stat. 3207-27; Aug. 9, 1989, Pub. L. 101-73, title II,
201, title IX, 901(b)(1), (d), 902(a), 903(a), 904(a), 905(a), 906(a),
907(a), 908(a), 912, 913(a), 920(a), (c), 926, 103 Stat. 187, 446, 450,
453, 457, 459, 462, 477, 482, 483, 488; Nov. 29, 1990, Pub. L. 101-647,
title XXV, 2521(b)(1), 2532(a), 2547(a)(1), (2), 2596(a), (b), 104 Stat.
4864, 4880, 4886, 4887, 4908; Dec. 12, 1991, Pub. L. 102-233, title
III, 302(a), 105 Stat. 1767; Dec. 19, 1991, Pub. L. 102-242, title I,
131(c)(1), (2), title III,
302(e)(4), 307, 105 Stat. 2266, 2349, 2360.)
Pub. L. 102-242, title III, 302(e)(4), (g), Dec. 19, 1991, 105 Stat.
2349, provided that, effective on the earlier of 180 days after the
date on which final regulations promulgated in accordance with section
302(c) of Pub. L. 102-242, set out as a note under section 1817 of this
title, become effective or Jan. 1, 1994, subsection (q) is amended by
substituting ''with respect to'' for ''upon''.
The Bank Holding Company Act of 1956, referred to in subsec. (b)(3),
is act May 9, 1956, ch. 240, 70 Stat. 133, as amended, which is
classified principally to chapter 17 ( 1841 et seq.) of this title. For
complete classification of this Act to the Code, see Short Title note
set out under section 1841 of this title and Tables.
Section 25(a) of the Federal Reserve Act, referred to in subsec.
(b)(3), which is classified to subchapter II ( 611 et seq.) of chapter 6
of this title, was renumbered section 25A of that Act by Pub. L.
102-242, title I, 142(e)(2), Dec. 19, 1991, 105 Stat. 2281. Section 25
of the Federal Reserve Act is classified to subchapter I ( 601 et seq.)
of chapter 6 of this title.
The Depository Institution Management Interlocks Act, referred to in
subsec. (e)(2), is title II of Pub. L. 95-630, Nov. 10, 1978, 92
Stat. 3672, as amended, which is classified principally to chapter 33 (
3201 et seq.) of this title. For complete classification of this Act to
the Code, see Short Title note set out under section 3201 of this title
and Tables.
The Federal Credit Union Act, referred to in subsec. (e)(7)(A)(iii),
is act June 26, 1934, ch. 750, 48 Stat. 1216, as amended, which is
classified generally to chapter 14 ( 1751 et seq.) of this title. For
complete classification of this Act to the Code, see section 1751 of
this title and Tables.
The Farm Credit Act of 1971, referred to in subsecs. (e)(7)(A)(iv),
(D)(ii) and (j)(4), is Pub. L. 92-181, Dec. 10, 1971, 85 Stat. 583,
as amended, which is classified generally to chapter 23 ( 2001 et seq.)
of this title. For complete classification of this Act to the Code, see
Short Title note set out under section 2001 of this title and Tables.
Subchapter VIII of chapter 3 of this title, referred to in subsec.
(o), was in the original ''section 9 of the Federal Reserve Act'',
meaning section 9 of act Dec. 23, 1913, ch. 6, 38 Stat. 251, as
amended, which is classified generally to subchapter VIII ( 321 et seq.)
of chapter 3 of this title.
Section is derived from subsec. (i) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (b)(8), (9). Pub. L. 102-242, 131(c)(1), added par.
(8) and redesignated former par. (8) as (9).
Subsec. (i)(1). Pub. L. 102-242, 131(c)(2)(A), inserted ''or under
section 1831o of this title'' after ''section'' in first sentence.
Subsec. (i)(2)(A)(ii). Pub. L. 102-242, 131(c)(2)(B), inserted '', or
final order under section 1831o of this title'' after ''section''.
Subsec. (t). Pub. L. 102-242, 307, amended subsec. (t) generally,
substituting present provisions for provisions relating to authority of
Board to take enforcement action against savings associations.
1990 -- Subsec. (b)(4). Pub. L. 101-647, 2596(a)(2), substituted
''subsections (c) through (s) and subsection (u) of this section'' for
''subsections (c), (d), (h), (i), (k), (l), (m), and (n) of this
section''.
Subsec. (b)(6). Pub. L. 101-647, 2596(a)(1), inserted ''or remedy''
after ''to correct''.
Subsec. (c)(1). Pub. L. 101-647, 2596(b), inserted ''or remedy''
after ''to prevent'' and substituted ''(b)(6)'' for ''(b)(6)(B)''.
Subsec. (h)(1). Pub. L. 101-647, 2547(a)(2), struck out after first
sentence ''Such hearing shall be private, unless the appropriate Federal
banking agency, in its discretion, after fully considering the views of
the party afforded the hearing, determines that a public hearing is
necessary to protect the public interest.''
Subsec. (i)(4). Pub. L. 101-647, 2521(b)(1), added par. (4).
Subsec. (u). Pub. L. 101-647, 2547(a)(1), amended subsec. (u)
generally. Prior to amendment, subsec. (u) read as follows:
''(1) In general. -- The appropriate Federal banking agency shall
publish and make available to the public --
''(A) any final order issued with respect to any administrative
enforcement proceeding initiated by such agency under this section or
any other provision of law; and
''(B) any modification to or termination of any final order described
in subparagraph (A) of this paragraph.
''(2) Delay of publication under exceptional circumstances. -- If the
appropriate Federal banking agency makes a determination in writing that
the publication of any final order pursuant to paragraph (1) would
seriously threaten the safety or soundness of an insured depository
institution, such agency may delay the publication of such order for a
reasonable time.''
Subsec. (v). Pub. L. 101-647, 2532(a), added subsec. (v).
1989 -- Pub. L. 101-73, 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing in this section.
Subsec. (a). Pub. L. 101-73, 926(1), inserted heading.
Subsec. (a)(1) to (3). Pub. L. 101-73, 926(1), added pars. (1) to
(3) and struck out first four sentences which read as follows: ''Any
insured bank (except a national member bank, a foreign bank having an
insured branch which is a Federal branch, a foreign bank having an
insured branch which is required to be insured under section 3104(a) or
(b) of this title, or State member bank) may, upon not less than ninety
days' written notice to the Corporation, terminate its status as an
insured bank. Whenever the Board of Directors shall find that an
insured bank or its directors or trustees have engaged or are engaging
in unsafe or unsound practices in conducting the business of such bank,
or is in an unsafe or unsound condition to continue operations as an
insured bank, or violated an applicable law, rule, regulation or order,
or any condition imposed in writing by the Corporation in connection
with the granting of any application or other request by the bank, or
any written agreement entered into with the Corporation the Board of
Directors shall first give to the Comptroller of the Currency in the
case of a national bank or a district bank, to the Federal Home Loan
Bank Board in the case of an insured Federal savings bank, to the
authority having supervision of the bank in the case of a State bank,
and to the Board of Governors of the Federal Reserve System in the case
of a State member bank, a statement with respect to such practices or
violations for the purpose of securing the correction thereof and shall
give a copy thereof to the bank. Unless such correction shall be made
within one hundred and twenty days, or such shorter period not less than
twenty days fixed by the Corporation in any case where the Board of
Directors in its discretion has determined that the insurance risk of
the Corporation is unduly jeopardized, or fixed by the Comptroller of
the Currency in the case of a national bank, or the Federal Home Loan
Bank Board in the case of an insured Federal savings bank, or the State
authority in the case of a State bank, or Board of Governors of the
Federal Reserve System in the case of a State member bank as the case
may be, the Board of Directors, if it shall determine to proceed
further, shall give to the bank not less than thirty days' written
notice of intention to terminate the status of the bank as an insured
bank, and shall fix a time and place for a hearing before the Board of
Directors or before a person designated by it to conduct such hearing,
at which evidence may be produced, and upon such evidence the Board of
Directors shall make written findings which shall be conclusive. If the
Board of Directors shall find that any unsafe or unsound practice or
condition or violation specified in such statement has been established
and has not been corrected within the time above prescribed in which to
make such corrections, the Board of Directors may order that the insured
status of the bank be terminated on a date subsequent to such finding
and to the expiration of the time specified in such notice of
intention.''
Subsec. (a)(4). Pub. L. 101-73, 926(2), designated fifth sentence as
par. (4) and inserted heading.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank''.
Subsec. (a)(5). Pub. L. 101-73, 926(3), designated sixth sentence as
par. (5), inserted heading, and substituted ''Any insured depository
institution whose insured status'' for ''Any insured bank whose insured
status''.
Subsec. (a)(6). Pub. L. 101-73, 926(4), designated seventh sentence
as par. (6) and inserted heading.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank'' wherever appearing.
Subsec. (a)(7). Pub. L. 101-73, 926(5), (6), designated last three
sentences as par. (7), inserted heading, substituted ''of at least 6
months or up to 2 years, within the discretion of the Board of
Directors'' for first reference to ''of two years'', and ''the period
referred to in the 1st sentence'' for second reference to ''of two
years'', and struck out ''of two years'' after ''within such period''.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank'' wherever appearing.
Subsec. (a)(8) to (10). Pub. L. 101-73, 926(7), added pars. (8) to
(10).
Subsec. (b)(1). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank'' wherever appearing.
Pub. L. 101-73, 901(b)(1)(A)(i), (B), substituted references to
institution-affiliated parties for references to directors, officers,
employees, agents, or other persons participating in the conduct of
banks.
Pub. L. 101-73, 901(b)(1)(A)(ii), which directed that
''institution-affiliated parties'' be substituted for ''directors,
officers, employees, agents, or other persons participating in the
conduct of the affairs of such bank'', was executed by making the
substitution for ''directors, officers, employees, agents, and other
persons participating in the conduct of the affairs of such bank'', as
the probable intent of Congress.
Subsec. (b)(2). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank''.
Subsec. (b)(3). Pub. L. 101-73, 902(a)(1)(A), substituted
''subsections (c) through (s) and subsection (u)'' for ''subsections (c)
through (f) and (h) through (n)''.
Subsec. (b)(4). Pub. L. 101-73, 902(a)(1)(B), which directed the
substitution of ''subsections (c) through (s) and subsection (u)'' for
''subsections (c) through (f) and (h) through (n)'', could not be
executed because the words ''subsections (c) through (f) and (h) through
(n)'' did not appear. See 1990 Amendment note above.
Subsec. (b)(6) to (8). Pub. L. 101-73, 902(a)(1)(C), added pars.
(6) to (8).
Subsec. (c)(1). Pub. L. 101-73, 902(a)(2)(A), substituted
''insolvency or significant dissipation'' for ''insolvency or
substantial dissipation'', struck out ''seriously'' before ''weaken the
condition of'' and before ''prejudice the interests of'', and inserted
after first sentence ''Such order may include any requirement authorized
under subsection (b)(6)(B) of this section''.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank'' wherever appearing.
Pub. L. 101-73, 901(b)(1)(B), substituted references to
institution-affiliated parties for references to directors, officers,
employees, agents or other persons participating in the conduct of the
affairs of banks.
Subsec. (c)(2). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank'' wherever appearing.
Pub. L. 101-73, 901(b)(1)(B), substituted references to
institution-affiliated parties for references to directors, officers,
employees, agents or other persons participating in the conduct of the
affairs of banks.
Subsec. (c)(3). Pub. L. 101-73, 902(a)(2)(B), added par. (3).
Subsec. (d). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank''.
Subsec. (e)(1). Pub. L. 101-73, 903(a)(1), amended par. (1)
generally, by, among other changes, giving existing provisions subpar.
designations, and by adding as conditions for removal of a party a
violation of any condition imposed by writing in connection with a grant
of any application or request, and violation of any written agreement
between such depository institution and agency.
Subsec. (e)(2). Pub. L. 101-73, 903(a)(2), redesignated par. (3) as
(2) and struck out former par. (2) which read as follows: ''Whenever,
in the opinion of the appropriate Federal banking agency, any director
or officer of an insured bank, by conduct or practice with respect to
another insured bank or other business institution which resulted in
substantial financial loss or other damage, has evidenced either his
personal dishonesty or a willful or continuing disregard for its safety
and soundness, and, in addition, has evidenced his unfitness to continue
as a director or officer and, whenever, in the opinion of the
appropriate Federal banking agency, any other person participating in
the conduct of the affairs of an insured bank, by conduct or practice
with respect to such bank or other insured bank or other business
institution which resulted in substantial financial loss or other
damage, has evidenced either his personal dishonesty or a willful or
continuing disregard for its safety and soundness, and, in addition, has
evidenced his unfitness to participate in the conduct of the affairs of
such insured bank, the agency may serve upon such director, officer, or
other person a written notice of its intention to remove him from office
or to prohibit his further participation in any manner in the conduct of
the affairs of the bank.''
Subsec. (e)(3). Pub. L. 101-73, 903(a)(2), added par. (3). Former
par. (3) redesignated (2).
Subsec. (e)(4). Pub. L. 101-73, 903(a)(2), redesignated par. (5) as
(4) and struck out former par. (4) which read as follows: ''In respect
to any director or officer of an insured bank or any other person
referred to in paragraph (1), (2), or (3) of this subsection, the
appropriate Federal banking agency may, if it deems it necessary for the
protection of the bank or the interests of its depositors, by written
notice to such effect served upon such director, officer, or other
person, suspend him from office or prohibit him from further
participation in any manner in the conduct of the affairs of the bank.
Such suspension or prohibition shall become effective upon service of
such notice and, unless stayed by a court in proceedings authorized by
subsection (f) of this section, shall remain in effect pending the
completion of the administrative proceedings pursuant to the notice
served under paragraph (1), (2), or (3) of this subsection and until
such time as the agency shall dismiss the charges specified in such
notice, or, if an order of removal or prohibition is issued against the
director or officer or other person, until the effective date of any
such order. Copies of any such notice shall also be served upon the
bank of which he is a director or officer or in the conduct of whose
affairs he has participated.''
Pub. L. 101-73, 901(b)(1)(C), substituted references to
institution-affiliated parties for references to directors, officers, or
other persons.
Pub. L. 101-73, 901(d), substituted reference to depository
institutions for reference to banks.
Subsec. (e)(5). Pub. L. 101-73, 903(a)(2), redesignated par. (6) as
(5). Former par. (5) redesignated (4).
Pub. L. 101-73, 901(b)(1)(D), inserted ''within the term
'institution-affiliated party''' after ''the term 'officer''', and
inserted ''within the term 'institution-affiliated party' as used in
this subsection'' after ''the term 'director'''.
Pub. L. 101-73, 901(d), substituted reference to depository
institution for reference to bank.
Subsec. (e)(6). Pub. L. 101-73, 903(a)(2), (3), added par. (6) and
redesignated former par. (6) as (5).
Subsec. (e)(7). Pub. L. 101-73, 904(a), added par. (7).
Subsec. (f). Pub. L. 101-73, 903(a)(4)(A), substituted ''(e)(3)'' for
''(e)(4)'' and ''(e)(1) or (e)(2)'' for ''(e)(1), (e)(2), or (e)( 3)''.
Pub. L. 101-73, 901(b)(1)(E), substituted ''any
institution-affiliated party'' and ''such party'' for ''any director,
officer, or other person'' and ''such director, officer, or other
person'', respectively, wherever appearing.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank''.
Subsec. (g)(1). Pub. L. 101-73, 906(a), struck out ''authorized by a
United States attorney'' after ''information, indictment, or
complaint'', and substituted ''or an agreement to enter a pre-trial
diversion or other similar program'' for ''with respect to such crime''.
Pub. L. 101-73, 903(a)(4)(B), substituted ''(1), (2), or (3)'' for
''(1), (2), (3), or (4)''.
Pub. L. 101-73, 901(d), substituted references to depository
institutions for references to banks wherever appearing.
Pub. L. 101-73, 901(b)(1)(F)(i), substituted ''institution-affiliated
party'' for ''director or officer of an insured bank, or other person
participating in the conduct of the affairs of such bank''.
Pub. L. 101-73, 901(b)(1)(F)(v), which directed the substitution of
''party'' for ''director, officer or other person'', could not be
executed, because the phrase did not appear.
Pub. L. 101-73, 901(b)(1)(F)(ii)-(iv), (vi), substituted ''such
party'' for ''the individual'' wherever appearing, ''such party'' for
''such director, officer, or other person'' wherever appearing, ''such
party'' for ''him'' wherever appearing, and ''whereupon such party (if a
director or an officer)'' for ''whereupon such director or officer''.
Subsec. (g)(2). Pub. L. 101-73, 901(d), substituted references to
depository institutions for references to banks wherever appearing.
Subsec. (g)(3). Pub. L. 101-73, 901(d), substituted references to
depository institutions for references to banks wherever appearing.
Pub. L. 101-73, 901(b)(1)(G), substituted ''the
institution-affiliated party concerned'' for ''the director, officer, or
other person concerned'' and substituted ''such party'' for ''such
individual'', for ''the concerned director, officer, or other person'',
and for any other reference to the director, officer or other person.
Subsec. (h)(1). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank''.
Subsec. (h)(2). Pub. L. 101-73, 920(a), substituted ''Any party to
any proceeding under paragraph (1)'' for ''Any party to the proceeding,
or any person required by an order issued under this section to cease
and desist from any of the violations or practices stated therein,''.
Pub. L. 101-73, 901(d), substituted ''depository institution'' for
''bank'' wherever appearing.
Pub. L. 101-73, 901(b)(1)(H), substituted ''institution-affiliated
party'' for ''director or officer or other person''.
Subsec. (i)(1). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank''.
Subsec. (i)(2). Pub. L. 101-73, 907(a), amended par. (2) generally,
revising and restating as subpars. (A) to (K) provisions of former cls.
(i) to (vii).
Subsec. (i)(3). Pub. L. 101-73, 905(a), added par. (3).
Subsec. (j). Pub. L. 101-73, 908(a), amended subsec. (j) generally.
Prior to amendment, subsec. (j) read as follows: ''Any director or
officer, or former director or officer of an insured bank, or any other
person, against whom there is outstanding and effective any notice or
order (which is an order which has become final) served upon such
director, officer, or other person under subsections (e)(4), (e)(5), or
(g) of this section, and who (i) participates in any manner in the
conduct of the affairs of the bank involved, or directly or indirectly
solicits or procures, or transfers or attempts to transfer, or votes or
attempts to vote, any proxies, consents, or authorizations in respect of
any voting rights in such bank, or (ii) without the prior written
approval of the appropriate Federal banking agency, votes for a
director, serves or acts as a director, officer, or employee of any
bank, shall upon conviction be fined not more than $5,000 or imprisoned
for not more than one year, or both.''
Subsec. (k). Pub. L. 101-73, 920(c), struck out subsec. (k) which
defined the terms ''cease-and-desist order which has become final'',
''order which has become final'', and ''violation'', as those terms were
used in this section.
Subsec. (l). Pub. L. 101-73, 901(d), substituted ''State depository
institution'' for ''State bank''.
Pub. L. 101-73, 901(b)(1)(I), substituted ''institution-affiliated
party'' for ''director or officer thereof or other person participating
in the conduct of its affairs''.
Subsec. (m). Pub. L. 101-73, 901(b)(1)(J), substituted
''institution-affiliated party'' for ''director or officer or other
person participating in the conduct of its affairs''.
Subsec. (n). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank''.
Subsec. (o). Pub. L. 101-73, 201(b), substituted ''Director of the
Office of Thrift Supervision'' for ''Federal Home Loan Bank Board''.
Subsec. (q). Pub. L. 101-73, 901(d), substituted ''depository
institution'' for ''bank'' wherever appearing and ''depository
institutions'' for ''banks''.
Subsec. (s). Pub. L. 101-73, 901(d), substituted references to
depository institutions for references to banks wherever appearing.
Subsec. (t). Pub. L. 101-73, 912, added subsec. (t).
Subsec. (u). Pub. L. 101-73, 913(a), added subsec. (u).
1986 -- Subsec. (i)(2)(i). Pub. L. 99-570, 1359(a)(2), inserted
reference to subsec. (s) of this section.
Subsec. (s). Pub. L. 99-570, 1359(a)(1), added subsec. (s).
1982 -- Subsec. (a). Pub. L. 97-320, 113(g), inserted ''to the
Federal Home Loan Bank Board in the case of an insured Federal savings
bank,'' after ''national bank or a district bank,'' and ''or the Federal
Home Loan Bank Board in the case of an insured Federal savings bank,''
after ''Currency in the case of a national bank,''.
Subsec. (b)(3). Pub. L. 97-320, 425(b), substituted ''25(a)'' for
''25A''.
Subsec. (b)(4). Pub. L. 97-320, 425(c), which directed the amendment
of subsec. (b) by adding a new par. (4) at end, was executed (as the
probable intent of Congress) as a general amendment of existing par.
(4), as added by Pub. L. 95-369, the two pars. (4) being identical
except that the new par. (4) refers to ''purposes of this paragraph''
rather than ''purposes of this subparagraph''.
Subsec. (b)(5). Pub. L. 97-320, 404(c), added par. (5).
Subsec. (e)(3). Pub. L. 97-320, 427(d)(1)(A), added par. (3).
Former par. (3) redesignated (4).
Subsec. (e)(4). Pub. L. 97-320, 427(d)(1)(A), (B), redesignated
former par. (3) as (4) and inserted references to par. (3) of this
subsection in two places. Former par. (4) redesignated (5).
Subsec. (e)(5), (6). Pub. L. 97-320, 427(d)(1)(A), redesignated
former pars. (4) and (5) as (5) and (6), respectively.
Subsec. (f). Pub. L. 97-320, 427(d)(2), substituted references to
''subsection (e)(4)'' for ''subsection (e)(5) or (e)(7)'' and
''subsection (e)(1), (e)(2), or (e)(3)'' for ''subsection (e)(1), (e)(
3), or (e)(7)''.
Subsec. (g)(1). Pub. L. 97-320, 427(d)(3), in penultimate sentence,
included reference to par. (4) of subsec. (e) of this section.
Subsec. (i)(2)(i). Pub. L. 97-320, 424(c), (d)(6), inserted proviso
giving agency discretionary authority to compromise, etc., any civil
money penalty imposed under such authority, and substituted ''may be
assessed'' for ''shall be assessed''.
Subsec. (i)(2)(iv). Pub. L. 97-424(e) substituted ''twenty days from
the service'' for ''ten days from the date''.
Subsec. (j). Pub. L. 97-320, 427(d)(4), struck out reference to
subsec. (e)(3) and included reference to subsec. (e)(5) of this
section.
Subsec. (o). Pub. L. 97-320, 113(h), inserted provision that whenever
the insured status of an insured Federal savings bank shall be
terminated by action of the Board of Directors, the Federal Home Loan
Bank Board shall appoint a receiver for the bank, which shall be the
Corporation.
Subsec. (q). Pub. L. 97-320, 433(a), struck out item (3) provisions
requiring the assuming or resulting bank to give notice of an assumption
to each of the depositors of the bank whose liabilities are assumed
within thirty days after such assumption takes effect.
1978 -- Subsec. (a). Pub. L. 95-369, 6(c)(14), inserted ''a foreign
bank having an insured branch which is a Federal branch, a foreign bank
having an insured branch which is required to be insured under section
3104(a) or (b) of this title'' after ''(except a national member bank''.
Subsec. (b)(1), (2). Pub. L. 95-630, 107(a)(1), extended coverage of
par. (1) to include directors, officers, employees, agents, or other
persons participating in the conduct of the affairs of an insured bank
or a bank which has insured deposits, and reenacted par. (2) without
change.
Subsec. (b)(3). Pub. L. 95-630, 107(b), substituted ''subsections (c)
through (f) and (h) through (n) of this section'' for ''subsections (c),
(d), (h), (i), (k), (l), (m), and (n) of this section'' and inserted
provisions relating to any organization organized and operated under
section 25A of the Federal Reserve Act or operating under section 25 of
the Federal Reserve Act and provisions relating to the issuance of a
notice of charges or cease-and-desist order against a bank holding
company or subsidiary by any Federal banking agency other than the Board
of Governors of the Federal Reserve System.
Subsec. (b)(4). Pub. L. 95-369, 11, added par. (4).
Subsec. (c). Pub. L. 95-630, 107(c)(1), in pars. (1) and (2)
inserted references to any director, officer, employee, agent, or other
person participating in the conduct of the affairs of the bank and in
par. (1) inserted ''prior to the completion of the proceedings
conducted pursuant to paragraph (1) of subsection (b) of this section''
after ''interests of its depositors'' and ''and to take affirmative
action to prevent such insolvency, dissipation, condition, or prejudice
pending completion of such proceedings'' after ''violation or
practice''.
Subsec. (e). Pub. L. 95-630, 107(d)(1), 208(a), generally revised and
condensed the provisions relating to the suspension and removal of bank
directors and officers, consolidated procedures relating to the
certification of facts to the Board of Governors of the Federal Reserve
System by the Comptroller of the Currency, substituted references to
insured banks for references to insured State banks (other than a
District Bank), and inserted provisions defining ''officer'' and
''director'' for the purpose of enforcing any law, rule, etc., in
connection with an interlocking relationship.
Subsec. (g). Pub. L. 95-630, 111(a)(1), among other changes, inserted
in par. (1) '', if continued service or participation by the individual
may pose a threat to the interests of the bank's depositors or may
threaten to impair public confidence in the bank'' after ''agency may''
in two places, inserted provision that any notice of suspension or order
of removal issued under this paragraph remain effective and outstanding
until the completion of any hearing or appeal authorized under paragraph
(3) hereof unless terminated by the agency, and added par. (3).
Subsec. (h)(1). Pub. L. 95-630, 111(a)(2), inserted ''(other than the
hearing provided for in subsection (g)(3) of this section)'' after
''provided for in this section''.
Subsec. (i). Pub. L. 95-630, 107(e)(1), designated existing
provisions as par. (1) and added par. (2).
Subsec. (j). Pub. L. 95-630, 111(a)(3), substituted ''subsections
(e)(3), (e)(4)'' for ''subsections (e)(5), (e)(7), (e)(8)''.
Subsec. (k). Pub. L. 95-630, 111(a)(4), substituted ''paragraph (1)
or (3) of subsection (g)'' for ''paragraph (1) of subsection (g)''.
Subsec. (n). Pub. L. 95-630, 111(a)(5), inserted provision creating a
criminal penalty for a willful failure or refusal to attend and testify
or to answer any lawful inquiry or to produce books, papers, etc. in
obedience to the subpoena of the appropriate Federal banking agency.
Pub. L. 95-630, 303, inserted ''or in connection with any claim for
insured deposits or any examination or investigation under section
1820(c) of this title,'' after ''proceeding under this section,'',
''examination, or investigation or considering the claim for insured
deposits,'' after ''conducting the proceeding,'', and ''such agency or
any'' before ''party to proceedings'' and substituted ''any such
proceedings, claims, examinations, or investigations'' for ''any such
proceedings'' and ''subpenaed under this subsection'' for ''subpenaed
under this section''.
Subsec. (q). Pub. L. 95-630, 304, among other changes, substituted
provisions requiring the assuming or resulting bank to give notice of an
assumption to each of the depositors of the bank whose liabilities are
so assumed within thirty days after such assumption takes effect for
provisions requiring the bank whose liabilities are being assumed to
give notice of such assumption to its depositors within thirty days
after such assumption takes effect, by publication or by any reasonable
means, in accordance with regulations to be prescribed by the Board of
Directors.
Subsec. (r). Pub. L. 95-369, 6(c)(15), added subsec. (r).
1974 -- Subsec. (b)(3). Pub. L. 93-495 added par. (3).
1966 -- Subsec. (a). Pub. L. 89-695, 204, enlarged the authority of
the Corporation to institute involuntary termination proceedings against
an insured bank which had engaged in or whose directors or trustees had
engaged in, rather than merely continued unsafe or unsound practices, or
was in an unsafe or unsound condition to continue operations as an
insured bank, or had violated any law, rule, regulation or order, or any
condition imposed in writing by the Corporation or any written agreement
entered into with the Corporation; made it clear that the Corporation
would be required to give the State authority a copy of the statement
dealing the practices or violations where the State bank involved was a
State member bank; provided for an alternative and shortened correction
period of not less than twenty days in those cases where the Board of
Directors of the Corporation on its discretion determined that the
insurance risk of the Corporation was unduly jeopardized; provided the
State authority with power to shorten the correction period in those
cases involving State banks whether member or nonmember banks;
transposed the position of the fourth and fifth sentences; and provided
a bank whose insured status had been terminated with right of judicial
review to the extent provided in subsec. (h) of this section.
Subsecs. (b) to (q). Pub. L. 89-695, 202, added subsecs. (b) to (n)
and redesignated former subsecs. (b) to (d) as (o) to (q),
respectively.
Oversight Board redesignated Thrift Depositor Protection Oversight
Board, effective Feb. 1, 1992, see section 302(a) of Pub. L. 102-233,
set out as a note under section 1441a of this title.
Amendment by section 131(c)(1), (2) of Pub. L. 102-242 effective 1
year after Dec. 19, 1991, see section 131(f) of Pub. L. 102-242, set
out as a note under section 1464 of this title.
Amendment by section 302(e)(4) of Pub. L. 102-242 effective on
earlier of 180 days after date on which final regulations promulgated in
accordance with section 302(c) of Pub. L. 102-242, set out as a note
under section 1817 of this title, become effective or Jan. 1, 1994, see
section 302(g) of Pub. L. 102-242, set out as a note under section 1817
of this title.
Section 2547(a)(3) of Pub. L. 101-647 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply with
respect to all written agreements which are entered into and all written
statements which become effective after the date of the enactment of
this Act (Nov. 29, 1990).''
Amendment by section 903(a) of Pub. L. 101-73 applicable with
respect to violations committed and activities engaged in after Aug. 9,
1989, see section 903(e) of Pub. L. 101-73, set out as a note under
section 1786 of this title.
Amendment by section 907(a) of Pub. L. 101-73 applicable to conduct
engaged in after Aug. 9, 1989, except that increased maximum penalties
of $5,000 and $25,000 may apply to conduct engaged in before such date
if such conduct is not already subject to a notice issued by the
appropriate agency and occurred after completion of the last report of
the examination of the institution by the appropriate agency occurring
before Aug. 9, 1989, see section 907(l) of Pub. L. 101-73, set out as
a note under section 93 of this title.
The regulations required to be prescribed under amendment by Pub. L.
99-570 effective at end of 3-month period beginning on Oct. 27, 1986,
see section 1364(e) of Pub. L. 99-570, set out as a note under section
1464 of this title.
Amendment by Pub. L. 95-630, except for amendment by section 107(
e)(1), effective upon expiration of 120 days after Nov. 10, 1978, see
section 2101 of Pub. L. 95-630, set out as an Effective Date note under
section 375b of this title.
Amendment by section 107(e)(1) of Pub. L. 95-630, relating to
imposition of civil penalties, applicable to violations occurring or
continuing after Nov. 10, 1978, see section 109 of Pub. L. 95-630, set
out as a note under section 93 of this title.
Pub. L. 91-609, title IX, 908, Dec. 31, 1970, 84 Stat. 1811,
repealed section 401 of Pub. L. 89-695 which had provided that: ''The
provisions of titles I and II of this Act (amending sections 1464, 1730,
1813, 1817 to 1820 and repealing section 77 of this title and enacting
provisions set out as notes under sections 1464, 1730, and 1813 of this
title) and any provisions of law enacted by said titles shall be
effective only during the period ending at the close of June 30, 1972.
Effective upon the expiration of such period, each provision of law
amended by either of such titles is further amended to read as it did
immediately prior to the enactment of this Act (Oct. 16, 1966) and each
provision of law repealed by either of such titles is reenacted.''
Section 916 of Pub. L. 101-73 provided that before close of 24-month
period beginning on Aug. 9, 1989, appropriate Federal banking agencies
(as defined in section 3(q) of the Federal Deposit Insurance Act (12
U.S.C. 1813(q))) and National Credit Union Administration Board jointly
establish their own pool of administrative law judges and develop a set
of uniform rules and procedures for administrative hearings, including
provisions for summary judgment rulings where there are no disputes as
to material facts of the case.
Section 917 of Pub. L. 101-73 required appropriate Federal banking
agencies (as defined in section 1813(q) of this title and National
Credit Union Administration Board to create a joint task force to study
desirability and feasibility of delegating investigation and enforcement
authority to their regional or district offices or banks, provided for
composition of task force, and required that not later than Sept. 30,
1990, task force report to Congress its findings and recommendations,
together with responses of Comptroller of the Currency, Director of
Office of Thrift Supervision, Chairperson of Federal Deposit Insurance
Corporation, Chairman of Board of Governors of Federal Reserve System,
and Chairman of National Credit Union Administration.
Section 1205 of Pub. L. 101-73, as amended by Pub. L. 102-242,
title IV, 422, Dec. 19, 1991, 105 Stat. 2377, provided that:
''(a) Establishment. -- There is hereby established the Credit
Standards Advisory Committee (in this section referred to as the
'Committee').
''(b) Membership. --
''(1) Appointment. -- The Committee shall consist of 11 members, as
follows:
''(A) The Chairman of the Board of Governors of the Federal Reserve
System, or the Chairman's designee.
''(B) The Director of the Office of Thrift Supervision, or the
Director's designee.
''(C) The Chairperson of the Federal Deposit Insurance Corporation,
or the Chairperson's designee.
''(D) The Comptroller of the Currency, or the Comptroller's designee.
''(E) The Chairman of the National Credit Union Administration, or
the Chairman's designee.
''(F) 6 members of the public appointed by the President who are
knowledgeable with the credit standards and lending practices of insured
depository institutions, no more than 3 of whom shall be from the same
political party.
''(2) Terms. -- Each member appointed under paragraph (1)(F) shall
serve for the life of the Committee.
''(3) Chairperson. -- The Chairperson of the Committee shall be
designated by the President from among the members appointed under
paragraph (1)(F).
''(4) Vacancies. -- Any vacancy on the Committee shall be filled in
the manner in which the original appointment was made.
''(5) Pay and expenses. -- Members of the Committee shall serve
without pay but each member of the Committee shall be reimbursed for
expenses incurred in connection with attendance of such members at
meetings of the Committee. All expenses of the Committee shall be
shared on a pro rata basis, based upon each agency's total budget for
the preceding year by the Federal financial regulators specified in
subparagraphs (A) through (E) of paragraph (1).
''(6) Meetings. -- The Committee shall meet, not less frequently than
quarterly, at the call of the chairperson or a majority of the members.
''(c) Duties of the Committee. -- The Committee shall do the
following:
''(1) Review credit standards, lending practices, and supervision by
federal regulators. -- Review the credit standards and lending practices
of insured depository institutions and the supervision of such standards
and practices by the Federal financial regulators.
''(2) Prepare recommendations. -- Prepare written comments and
recommendations for the Federal financial regulators to ensure that
insured depository institutions adhere to prudential credit standards
and lending practices that are consistent for all insured depository
institutions, to the maximum extent possible.
''(3) Monitor credit standards, lending practices, and supervision by
federal regulators. -- Monitor the credit standards and lending
practices of insured depository institutions, and the supervision of
such standards and practices by the Federal financial regulators, to
ensure that insured depository institutions can meet the demands of a
modern and globally competitive financial world.
''(d) Annual Report. --
''(1) Required. -- Not later than January 30 of each year, the
Committee shall submit a report to the Committee on Banking, Finance and
Urban Affairs of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
''(2) Contents. -- The report required by paragraph (1) shall
describe the activities of the Committee during the preceding year and
the reports and recommendations made by the Committee to the Federal
financial regulators.
''(e) Conflict of Interest Guidelines. -- The Committee shall
prescribe such guidelines as the Committee determines to be appropriate
to avoid conflicts of interest with respect to the disclosure to and use
by members of the Committee of information relating to insured
depository institutions and the Federal financial regulators.
''(f) Federal Advisory Committee Act Does not Apply. -- The Federal
Advisory Committee Act (5 App. U.S.C.) shall not apply with respect to
the Committee.''
Nothing contained in sections 202 and 204 of Pub. L. 89-695 amending
this section to be construed as repealing, modifying, or affecting
section 1829 of this title, see section 206 of Pub. L. 89-695, set out
as a note under section 1813 of this title.
Section 6(a) of Reorg. Plan No. 1 of 1957, eff. June 30, 1957, 22
F.R. 4633, 71 Stat. 647, set out as a note under section 601 of Title
15, Commerce and Trade, abolished the Reconstruction Finance
Corporation.
Enforcement under this section of consumer credit disclosure
requirements imposed under section 1601 et seq. of Title 15, Commerce
and Trade, see section 1607 of Title 15.
57a, 78o-4, 78o-5, 78q-1, 1607, 1681s, 1691c, 1692l,
1693o; title 18 section 981; title 31 sections 3121,
9110.
/1/ So in original. Probably should be followed by a comma.
/2/ So in original.
/3/ See References in Text note below.
/4/ So in original. Probably should be ''paragraph''.
/5/ So in original. Probably should be ''injunction''.
/6/ So in original. The comma probably should not appear.
/7/ So in original. Probably should be ''depository institution's''.
/8/ So in original. Probably should be ''thereof''.
12 USC 1819. Corporate powers
TITLE 12 -- BANKS AND BANKING
(a) In general
Upon June 16, 1933, the Corporation shall become a body corporate and
as such shall have power --
First. To adopt and use a corporate seal.
Second. To have succession until dissolved by an Act of Congress.
Third. To make contracts.
Fourth. To sue and be sued, and complain and defend, in any court of
law or equity, State or Federal.
Fifth. To appoint by its Board of Directors such officers and
employees as are not otherwise provided for in this chapter, to define
their duties, fix their compensation, require bonds of them and fix the
penalty thereof, and to dismiss at pleasure such officers or employees.
Nothing in this chapter or any other Act shall be construed to prevent
the appointment and compensation as an officer or employee of the
Corporation of any officer or employee of the United States in any
board, commission, independent establishment, or executive department
thereof.
Sixth. To prescribe, by its Board of Directors, bylaws not
inconsistent with law, regulating the manner in which its general
business may be conducted, and the privileges granted to it by law may
be exercised and enjoyed.
Seventh. To exercise by its Board of Directors, or duly authorized
officers or agents, all powers specifically granted by the provisions of
this chapter, and such incidental powers as shall be necessary to carry
out the powers so granted.
Eighth. To make examinations of and to require information and
reports from depository institutions, as provided in this chapter.
Ninth. To act as receiver.
Tenth. To prescribe by its Board of Directors such rules and
regulations as it may deem necessary to carry out the provisions of this
chapter or of any other law which it has the responsibility of
administering or enforcing (except to the extent that authority to issue
such rules and regulations has been expressly and exclusively granted to
any other regulatory agency).
(b) Agency authority
(1) Status
The Corporation, in any capacity, shall be an agency of the United
States for purposes of section 1345 of title 28 without regard to
whether the Corporation commenced the action.
(2) Federal court jurisdiction
(A) In general
Except as provided in subparagraph (D), all suits of a civil nature
at common law or in equity to which the Corporation, in any capacity, is
a party shall be deemed to arise under the laws of the United States.
(B) Removal
Except as provided in subparagraph (D), the Corporation may, without
bond or security, remove any action, suit, or proceeding from a State
court to the appropriate United States district court before the end of
the 90-day period beginning on the date the action, suit, or proceeding
is filed against the Corporation or the Corporation is substituted as a
party.
(C) Appeal of remand
The Corporation may appeal any order of remand entered by any United
States district court.
(D) State actions
Except as provided in subparagraph (E), any action --
(i) to which the Corporation, in the Corporation's capacity as
receiver of a State insured depository institution by the exclusive
appointment by State authorities, is a party other than as a plaintiff;
(ii) which involves only the preclosing rights against the State
insured depository institution, or obligations owing to, depositors,
creditors, or stockholders by the State insured depository institution;
and
(iii) in which only the interpretation of the law of such State is
necessary,
shall not be deemed to arise under the laws of the United States.
(E) Rule of construction
Subparagraph (D) shall not be construed as limiting the right of the
Corporation to invoke the jurisdiction of any United States district
court in any action described in such subparagraph if the institution of
which the Corporation has been appointed receiver could have invoked the
jurisdiction of such court.
(3) Service of process
The Board of Directors shall designate agents upon whom service of
process may be made in any State, territory, or jurisdiction in which
any insured depository institution is located.
(4) Bonds or fees
The Corporation shall not be required to post any bond to pursue any
appeal and shall not be subject to payments of any filing fees in United
States district courts or courts of appeal.
(Sept. 21, 1950, ch. 967, 2(9), 64 Stat. 881; Oct. 16, 1966, Pub.
L. 89-695, title II, 205, 80 Stat. 1055; Nov. 10, 1978, Pub. L.
95-630, title III, 309, 92 Stat. 3677; Aug. 9, 1989, Pub. L. 101-73,
title II, 209, 103 Stat. 216; Dec. 19, 1991, Pub. L. 102-242, title I,
161(d), 105 Stat. 2286.)
Section is derived from subsec. (j) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (b)(2)(B). Pub. L. 102-242 inserted ''before the end
of the 90-day period beginning on the date the action, suit, or
proceeding is filed against the Corporation or the Corporation is
substituted as a party'' before period at end.
1989 -- Subsec. (a). Pub. L. 101-73, 209(2), designated existing
provisions as subsec. (a) and inserted heading.
Pub. L. 101-73, 209(3), amended fourth par. generally. Prior to
amendment, fourth par. read as follows: ''Fourth. To sue and be sued,
complain and defend, in any court of law or equity, State or Federal.
All suits of a civil nature at common law or in equity to which the
Corporation shall be a party shall be deemed to arise under the laws of
the United States, and the United States district courts shall have
original jurisdiction thereof, without regard to the amount in
controversy; and the Corporation may, without bond or security, remove
any such action, suit, or proceeding from a State court to the United
States district court for the district or division embracing the place
where the same is pending by following any procedure for removal now or
hereafter in effect, except that any such suit to which the Corporation
is a party in its capacity as receiver of a State bank and which
involves only the rights or obligations of depositors, creditors,
stockholders, and such State bank under State law shall not be deemed to
arise under the laws of the United States. No attachment or execution
shall be issued against the Corporation or its property before final
judgment in any suit, action, or proceeding in any State, county,
municipal, or United States court. The Board of Directors shall
designate an agent upon whom service of process may be made in any
State, Territory, or jurisdiction in which any insured bank is
located.''
Pub. L. 101-73, 209(1), in eighth par., substituted reference to
depository institutions for reference to banks.
Subsec. (b). Pub. L. 101-73, 209(4), added subsec. (b).
1978 -- Pub. L. 95-630 in par. Tenth inserted ''or of any other law
which it has the responsibility of administering or enforcing (except to
the extent that authority to issue such rules and regulations has been
expressly and exclusively granted to any other regulatory agency)''
after ''provisions of this chapter''.
1966 -- Pub. L. 89-695 in par. Fourth vested United States district
courts, without regard to the amount in controversy, with original
jurisdiction over any action to which the Corporation is a party and
authorized the removal of such actions to the Federal courts.
Amendment effective upon expiration of 120 days after Nov. 10, 1978,
see section 2101 of Pub. L. 95-630, set out as an Effective Date note
under section 375b of this title.
Pub. L. 91-609, title IX, 908, Dec. 31, 1970, 84 Stat. 1811,
repealed section 401 of Pub. L. 89-695 which provided that: ''The
provisions of titles I and II of this Act (amending sections 1464, 1730,
1813, 1817 to 1820 and repealing section 77 of this title and enacting
provisions set out as notes under sections 1464, 1730, and 1813 of this
title) and any provisions of law enacted by said titles shall be
effective only during the period ending at the close of June 30, 1972.
Effective upon the expiration of such period, each provision of law
amended by either of such titles is further amended to read as it did
immediately prior to the enactment of this Act (Oct. 16, 1966) and each
provision of law repealed by either of such titles is reenacted.''
Nothing contained in section 205 of Pub. L. 89-695 amending subsec.
Fourth of this section to be construed as repealing, modifying, or
affecting section 1829 of this title, see section 206 of Pub. L.
89-695, set out as a note under section 1813 of this title.
12 USC 1820. Administration of Corporation
TITLE 12 -- BANKS AND BANKING
(a) Board of Directors; use of mails; cooperation with other
Federal agencies
The Board of Directors shall administer the affairs of the
Corporation fairly and impartially and without discrimination. The
Board of Directors of the Corporation shall determine and prescribe the
manner in which its obligations shall be incurred and its expenses
allowed and paid. The Corporation shall be entitled to the free use of
the United States mails in the same manner as the executive departments
of the Government. The Corporation with the consent of any Federal
Reserve bank or of any board, commission, independent establishment, or
executive department of the Government, including any field service
thereof, may avail itself of the use of information, services, and
facilities thereof in carrying out the provisions of this chapter.
(b) Examinations
(1) Appointment of examiners and claims /1/ agents
The Board of Directors shall appoint examiners and claim agents.
(2) Regular examinations
Any examiner appointed under paragraph (1) shall have power, on
behalf of the Corporation, to examine --
(A) any insured State nonmember bank (except a District bank) or
insured State branch of any foreign bank;
(B) any depository institution which files an application with the
Corporation to become an insured depository institution; /2/
(C) any insured depository institution in default,
whenever the Board of Directors determines an examination of any such
depository institution is necessary.
(3) Special examination of any insured depository institution
In addition to the examinations authorized under paragraph (2), any
examiner appointed under paragraph (1) shall have power, on behalf of
the Corporation, to make any special examination of any insured
depository institution whenever the Board of Directors determines a
special examination of any such depository institution is necessary to
determine the condition of such depository institution for insurance
purposes.
(4) Examination of affiliates
(A) In general
In making any examination under paragraph (2) or (3), any examiner
appointed under paragraph (1) shall have power, on behalf of the
Corporation, to make such examinations of the affairs of any affiliate
of any depository institution as may be necessary to disclose fully --
(i) the relationship between such depository institution and any such
affiliate; and
(ii) the effect of such relationship on the depository institution.
(B) Commitment by foreign banks to allow examinations of affiliates
No branch or depository institution subsidiary of a foreign bank may
become an insured depository institution unless such foreign bank
submits a written binding commitment to the Board of Directors to permit
any examination of any affiliate of such branch or depository
institution subsidiary pursuant to subparagraph (A) to the extent
determined by the Board of Directors to be necessary to carry out the
purposes of this chapter.
(5) Examination of insured State branches
The Board of Directors shall --
(A) coordinate examinations of insured State branches of foreign
banks with examinations conducted by the Board of Governors of the
Federal Reserve System under section 3105(c)(1) of this title; and
(B) to the extent possible, participate in any simultaneous
examination of the United States operations of a foreign bank requested
by the Board under such section.
(6) Power and duty of examiners
Each examiner appointed under paragraph (1) shall --
(A) have power to make a thorough examination of any insured
depository institution or affiliate under paragraph (2), (3), (4), or
(5); and
(B) shall make a full and detailed report of condition of any insured
depository institution or affiliate examined to the Corporation.
(7) Power of claim agents
Each claim agent appointed under paragraph (1) shall have power to
investigate and examine all claims for insured deposits.
(c) Administration of oaths and affirmations; evidence; subpena
powers
In connection with examinations of insured depository institutions
and any State nonmember bank, savings association, or other institution
making application to become insured depository institutions, and
affiliates thereof, or with other types of investigations to determine
compliance with applicable law and regulations, the appropriate Federal
banking agency, or its designated representatives, are authorized to
administer oaths and affirmations, and to examine and to take and
preserve testimony under oath as to any matter in respect to the affairs
or ownership of any such bank or institution or affiliate thereof, and
to exercise such other powers as are set forth in section 1818(n) of
this title.
(d) Annual on-site examinations of all insured depository
institutions required
(1) In general
The appropriate Federal banking agency shall, not less than once
during each 12-month period, conduct a full-scope, on-site examination
of each insured depository institution.
(2) Examinations by Corporation
Paragraph (1) shall not apply during any 12-month period in which the
Corporation has conducted a full-scope, on-site examination of the
insured depository institution.
(3) State examinations acceptable
The examinations required by paragraph (1) may be conducted in
alternate 12-month periods, as appropriate, if the appropriate Federal
banking agency determines that an examination of the insured depository
institution conducted by the State during the intervening 12-month
period carries out the purpose of this subsection.
(4) 18-month rule for certain small institutions
Paragraphs (1), (2), and (3) shall apply with ''18-month''
substituted for ''12-month'' if --
(A) the insured depository institution has total assets of less than
$100,000,000;
(B) the institution is well capitalized, as defined in section 1831o
of this title;
(C) when the institution was most recently examined, it was found to
be well managed, and its composite condition was found to be
outstanding; and
(D) no person acquired control of the institution during the 12-month
period in which a full-scope, on-site examination would be required but
for this paragraph.
(5) Certain Government-controlled institutions exempted
Paragraph (1) does not apply to --
(A) any institution for which the Corporation is conservator; or
(B) any bridge bank none of the voting securities of which are owned
by a person or agency other than the Corporation.
(6) Consumer compliance examinations excluded
For purposes of this subsection, the term ''full-scope, on-site
examination'' does not include a consumer compliance examination, as
defined in section 41(b). /3/
(e) Examination fees
(1) Regular and special examinations of depository institutions
The cost of conducting any regular examination or special examination
of any depository institution under subsection (b)(2), (b)( 3), or (d)
of this section may be assessed by the Corporation against the
institution to meet the Corporation's expenses in carrying out such
examinations.
(2) Examination of affiliates
The cost of conducting any examination of any affiliate of any
insured depository institution under subsection (b)(4) of this section
may be assessed by the Corporation against each affiliate which is
examined to meet the Corporation's expenses in carrying out such
examination.
(3) Assessment against depository institution in case of affiliate's
refusal to pay
(A) In general
Subject to subparagraph (B), if any affiliate of any insured
depository institution --
(i) refuses to pay any assessment under paragraph (2); or
(ii) fails to pay any such assessment before the end of the 60-day
period beginning on the date the affiliate receives notice of the
assessment,
the Corporation may assess such cost against, and collect such cost
from, the depository institution.
(B) Affiliate of more than 1 depository institution
If any affiliate referred to in subparagraph (A) is an affiliate of
more than 1 insured depository institution, the assessment under
subparagraph (A) may be assessed against the depository institutions in
such proportions as the Corporation determines to be appropriate.
(4) Civil money penalty for affiliate's refusal to cooperate
(A) Penalty imposed
If any affiliate of any insured depository institution --
(i) refuses to permit an examiner appointed by the Board of Directors
under subsection (b)(1) of this section to conduct an examination; or
(ii) refuses to provide any information required to be disclosed in
the course of any examination,
the depository institution shall forfeit and pay a penalty of not
more than $5,000 for each day that any such refusal continues.
(B) Assessment and collection
Any penalty imposed under subparagraph (A) shall be assessed and
collected by the Corporation in the manner provided in section 1818(i)(
2) of this title.
(5) Deposits of examination assessment
Amounts received by the Corporation under this subsection (other than
paragraph (4)) may be deposited in the manner provided in section 1823
of this title.
(f) Preservation of records by photography; admissibility as
evidence
The Corporation may cause any and all records, papers, or documents
kept by it or in its possession or custody to be photographed or
microphotographed or otherwise reproduced upon film, which photographic
film shall comply with the minimum standards of quality approved for
permanent photographic records by the National Institute of Standards
and Technology. Such photographs, microphotographs, or photographic
film or copies thereof shall be deemed to be an original record for all
purposes, including introduction in evidence in all State and Federal
courts or administrative agencies and shall be admissible to prove any
act, transaction, occurrence, or event therein recorded. Such
photographs, microphotographs, or reproduction shall be preserved in
such manner as the Board of Directors of the Corporation shall prescribe
and the original records, papers, or documents may be destroyed or
otherwise disposed of as the Board shall direct.
(f) /4/ Authority to prescribe regulations and definitions
Except to the extent that authority under this chapter is conferred
on any of the Federal banking agencies other than the Corporation, the
Corporation may --
(1) prescribe regulations to carry out this chapter; and
(2) by regulation define terms as necessary to carry out this
chapter.
(Sept. 21, 1950, ch. 967, 2(10), 64 Stat. 882; July 14, 1960, Pub.
L. 86-671, 4, 74 Stat. 551; Oct. 16, 1966, Pub. L. 89-695, title II,
203, 80 Stat. 1053; Oct. 15, 1970, Pub. L. 91-452, title II, 208, 84
Stat. 929; Sept. 17, 1978, Pub. L. 95-369, 6(c)(16), 92 Stat. 619;
Nov. 10, 1978, Pub. L. 95-630, title III, 305, 92 Stat. 3677; Oct. 15,
1982, Pub. L. 97-320, title I, 113(i), title IV, 410(g), 96 Stat. 1474,
1520; Aug. 23, 1988, Pub. L. 100-418, title V, 5115(c), 102 Stat. 1433;
Aug. 9, 1989, Pub. L. 101-73, title II, 201(a), 210, 103 Stat. 187,
217; Dec. 19, 1991, Pub. L. 102-242, title I, 111(a), 113(a), (b),
(c)(2), title II, 203(c), title III, 302(d), 105 Stat. 2240, 2246-2248,
2292, 2349.)
Section 41(b), referred to in subsec. (d)(6), probably means a
reference to a section 41(b) of the Federal Deposit Insurance Act which
defined ''consumer compliance examination'' and which was contained in
an earlier version of S. 543 but was not included in the final version
which became Pub. L. 102-242. Section 41 of the Federal Deposit
Insurance Act, act Sept. 21, 1950, ch. 967, 2(41), as added by section
312 of Pub. L. 102-242, is classified to section 1831r of this title
and prohibits payments on foreign deposits.
Subsecs. (a), (b), (former) (e), and (former) (f) are derived from
subsec. (k) of former section 264 of this title. See Codification note
set out under section 1811 of this title.
1991 -- Subsec. (b)(2)(B). Pub. L. 102-242, 113(b), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows: ''any
savings association, State nonmember bank, or State branch of a foreign
bank, or other depository institution which files an application with
the Corporation to become an insured depository institution; and''.
Subsec. (b)(4)(A). Pub. L. 102-242, 113(c)(2), struck out ''insured''
before ''depository institution'' in three places.
Subsec. (b)(5) to (7). Pub. L. 102-242, 203(c), added par. (5),
redesignated former par. (5) as (6) and substituted ''(4), or (5)'' for
''or (4)'', and redesignated former par. (6) as (7).
Subsec. (d). Pub. L. 102-242, 111(a), added subsec. (d).
Subsec. (e). Pub. L. 102-242, 113(a)(2), added subsec. (e). Former
subsec. (e) redesignated (f).
Subsec. (f). Pub. L. 102-242, 302(d), added subsec. (f) relating to
authority to prescribe regulations and definitions.
Pub. L. 102-242, 113(a)(1), redesignated subsec. (e), relating to
preservation of records by photography, as (f).
1989 -- Subsec. (b). Pub. L. 101-73, 210(a), amended subsec. (b)
generally, revising and restating as pars. (1) to (6) provisions
formerly contained in a single unnumbered paragraph.
Subsec. (c). Pub. L. 101-73, 210(b)(1), substituted ''and any State
nonmember bank, savings association, or other institution'' for '',
State nonmember banks or other institutions''.
Pub. L. 101-73, 201(a), substituted ''insured depository
institutions'' for ''insured banks'' wherever appearing.
Subsec. (d). Pub. L. 101-73, 210(b)(2), struck out subsec. (d) which
defined ''affiliate'' and ''member bank'' for purposes of this section.
1988 -- Subsec. (e). Pub. L. 100-418 substituted ''National
Institute of Standards and Technology'' for ''National Bureau of
Standards''.
1982 -- Subsec. (b). Pub. L. 97-320, 113(i), inserted ''or any
insured Federal savings bank,'' after ''foreign bank, or District
bank,''.
Subsec. (d). Pub. L. 97-320, 410(g), inserted ''as in section 221a(
b) of this title and''.
1978 -- Subsec. (b). Pub. L. 95-630, 305(a), inserted ''or other
institution'' after ''any State nonmember bank'' and struck out
provisions that each claim agent have power to administer oaths and
affirmations and to examine and to take and preserve testimony under
oath as to any matter in respect to claims for insured deposits, and to
issue subpenas and subpenas duces tecum, and, for the enforcement
thereof, to apply to the United States district court for the judicial
district or the United States court in any territory in which the main
office of the bank or affiliate thereof is located, or in which the
witness resides or carriers on business and that such courts have
jurisdiction and power to order and require compliance with any such
subpena.
Pub. L. 95-369 inserted ''any insured State branch of a foreign bank,
any State branch of a foreign bank making application to become an
insured bank'' after ''(except a District bank)'', inserted ''or
branch'' after ''and any closed insured bank'', substituted ''any
national bank, insured Federal branch of a foreign bank, or District
bank'' for ''any national bank or District bank'' and inserted ''and in
the case of a foreign bank, a binding commitment by such bank to permit
such examination to the extent determined by the Board of Directors to
be necessary to carry out the purposes of this chapter shall be required
as a condition to the insurance of any deposits'' after ''effect of such
relations upon such banks''.
Subsec. (c). Pub. L. 95-630, 305(b), among other changes, inserted
references to State nonmember banks, other institutions making
application to become insured banks, and investigations to determine
compliance with applicable law and regulations and struck out provisions
defining ''affiliate'' and ''member bank''.
Subsec. (d). Pub. L. 95-630, 305(b), substituted provisions defining
the terms ''affiliate'' and ''member bank'' for provisions relating to
the enforcement of subpenas and orders.
1970 -- Subsec. (d). Pub. L. 91-452 struck out provisions which
granted immunity from prosecution for any individual compelled to
testify or produce evidence, documentary or otherwise, after claiming
his privilege against self-incrimination.
1966 -- Subsec. (b). Pub. L. 89-695 empowered Corporation examiners
making examinations of insured banks to make such examinations of the
affairs of all affiliates of such banks as shall be necessary to
disclose fully the relations between such banks and their affiliates and
the effect of such relations upon such banks, authorized Corporation
claim agents to issue subpenas and subpenas duces tecum in connection
with investigation and examination of claims for insured deposits and to
apply to the proper United States district court for the enforcement of
such subpenas and provided such courts with jurisdiction and power to
order and require compliance with any such subpena.
Subsec. (c). Pub. L. 89-695 provided that in connection with
examinations of insured banks and affiliates thereof, the appropriate
Federal banking agency, or its designated representatives, could
administer oaths and affirmations, take and preserve testimony under
oath as to any matter in respect of the affairs or ownership of such
bank or affiliate thereof, issue subpenas and subpenas duces tecum, and
apply to the proper United States district court for the enforcement of
such subpenas, provided such courts with jurisdiction and power to order
and require compliance with any such subpena, and defined ''affiliate''
and ''member bank''.
1960 -- Subsecs. (e) to (g). Pub. L. 86-671 struck out subsecs.
(e) and (f) which related to reports of condition by insured nonmember
State banks and access by Corporation to information of other bank
supervisory authorities, and redesignated subsec. (g) as (e). See
section 1817(a)(1) and (2) of this title.
Section 111(b) of Pub. L. 102-242 provided that: ''The amendment
made by subsection (a) (amending this section) shall become effective 1
year after the date of enactment of this Act (Dec. 19, 1991).''
Amendment by section 302(d) of Pub. L. 102-242 effective on earlier
of 180 days after date on which final regulations promulgated in
accordance with section 302(c) of Pub. L. 102-242, set out as a note
under section 1817 of this title, become effective or Jan. 1, 1994, see
section 302(g) of Pub. L. 102-242, set out as a note under section 1817
of this title.
Amendment by Pub. L. 95-630 effective upon expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
Amendment by Pub. L. 91-452 effective on sixtieth day following Oct.
15, 1970, not to affect any immunity to which any individual is
entitled under this section by reason of any testimony given before
sixtieth day following Oct. 15, 1970, see section 260 of Pub. L.
91-452, set out as an Effective Date; Savings Provision note under
section 6001 of Title 18, Crimes and Criminal Procedure.
Pub. L. 91-609, title IX, 908, Dec. 31, 1970, 84 Stat. 1811,
repealed section 401 of Pub. L. 89-695 which had provided that: ''The
provisions of titles I and II of this Act (amending sections 1464, 1730,
1813, 1817 to 1820 and repealing section 77 of this title and enacting
provisions set out as notes under sections 1464, 1730, and 1813 of this
title) and any provisions of law enacted by said titles shall be
effective only during the period ending at the close of June 30, 1972.
Effective upon the expiration of such period, each provision of law
amended by either of such titles is further amended to read as it did
immediately prior to the enactment of this Act (Oct. 16, 1966) and each
provision of law repealed by either of such titles is reenacted.''
Amendment by Pub. L. 86-671 effective Jan. 1, 1961, see section 7
of Pub. L. 86-671, set out as a note under section 1817 of this title.
Section 111(c) of Pub. L. 102-242 provided that: ''Notwithstanding
section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d))
(as added by subsection (a)), during the period beginning on the date of
enactment of this Act (Dec. 19, 1991) and ending on December 31, 1993, a
full-scope, on-site examination of an insured depository institution is
not required more often than once during every 18-month period, unless
--
''(1) the institution, when most recently examined, was found to be
in a less than satisfactory condition; or
''(2) 1 or more persons acquired control of the institution.''
Nothing contained in section 203 of Pub. L. 89-695 amending subsecs.
(b) and (c) of this section to be construed as repealing, modifying, or
affecting section 1829 of this title, see section 206 of Pub. L.
89-695, set out as a note under section 1813 of this title.
Immunity of witnesses, see section 6001 et seq. of Title 18, Crimes
and Criminal Procedure.
Independence of financial regulatory agencies with respect to
submission of views to Congress, see section 250 of this title.
Jurisdiction of district court of the United States of action for
penalty, see section 1355 of Title 28, Judiciary and Judicial Procedure.
Per diem and mileage fees of witnesses, see section 1821 of Title 28.
Punishment for false bank entries, see section 1005 of Title 18,
Crimes and Criminal Procedure.
Punishment for performing other services by Federal Deposit Insurance
Corporation examiner, see section 1909 of Title 18.
Punishment for perjury, see section 1621 of Title 18.
4204, 4224 of this title; title 18 section 3059A.
/1/ So in original. Probably should be ''claim''.
/2/ So in original. Probably should be followed by ''and''.
/3/ See References in Text note below.
/4/ So in original. Probably should be ''(g)''.
12 USC 1821. Insurance Funds
TITLE 12 -- BANKS AND BANKING
(a) Deposit insurance
(1) Insured amounts payable. --
(A) In general. -- The Corporation shall insure the deposits of all
insured depository institutions as provided in this chapter.
(B) Net amount of insured deposit. -- The net amount due to any
depositor at an insured depository institution shall not exceed $100,000
as determined in accordance with subparagraphs (C) and (D).
(C) Aggregation of deposits. -- For the purpose of determining the
net amount due to any depositor under subparagraph (B), the Corporation
shall aggregate the amounts of all deposits in the insured depository
institution which are maintained by a depositor in the same capacity and
the same right for the benefit of the depositor either in the name of
the depositor or in the name of any other person, other than any amount
in a trust fund described in section 1817(i)(1) of this title.
(D) Coverage on pro rata or ''pass-through'' basis. --
(i) In general. -- Except as provided in clause (ii), for the purpose
of determining the amount of insurance due under subparagraph (B), the
Corporation shall provide deposit insurance coverage with respect to
deposits accepted by any insured depository institution on a pro rata or
''pass-through'' basis to a participant in or beneficiary of an employee
benefit plan (as defined in subsection (a)(8)(B)(ii) of this section),
including any eligible deferred compensation plan described in section
457 of title 26.
(ii) Exception. -- After the end of the 1-year period beginning on
December 19, 1991, the Corporation shall not provide insurance coverage
on a pro rata or ''pass-through'' basis pursuant to clause (i) with
respect to deposits accepted by any insured depository institution
which, at the time such deposits are accepted, may not accept brokered
deposits under section 1831f of this title.
(iii) Coverage under certain circumstances. -- Clause (ii) shall not
apply with respect to any deposit accepted by an insured depository
institution described in such clause if, at the time the deposit is
accepted --
(I) the institution meets each applicable capital standard; and
(II) the depositor receives a written statement from the institution
that such deposits at such institution are eligible for insurance
coverage on a pro rata or ''pass-through'' basis.
(2)(A) Notwithstanding any limitation in this chapter or in any other
provision of law relating to the amount of deposit insurance available
for the account of any one depositor, in the case of a depositor who is
--
(i) an officer, employee, or agent of the United States having
official custody of public funds and lawfully investing or depositing
the same in time and savings deposits in an insured depository
institution;
(ii) an officer, employee, or agent of any State of the United
States, or of any county, municipality, or political subdivision thereof
having official custody of public funds and lawfully investing or
depositing the same in time and savings deposits in an insured
depository institution in such State;
(iii) an officer, employee, or agent of the District of Columbia
having official custody of public funds and lawfully investing or
depositing the same in time and savings deposits in an insured
depository institution in the District of Columbia;
(iv) an officer, employee, or agent of the Commonwealth of Puerto
Rico, of the Virgin Islands, of American Samoa, of the Trust Territory
of the Pacific Islands, or of Guam, or of any county, municipality, or
political subdivision thereof having official custody of public funds
and lawfully investing or depositing the same in time and savings
deposits in an insured depository institution in the Commonwealth of
Puerto Rico, the Virgin Islands, American Samoa, the Trust Territory of
the Pacific Islands, or Guam, respectively; or
(v) an officer, employee, or agent of any Indian tribe (as defined in
section 1452(c) of title 25) or agency thereof having official custody
of tribal funds and lawfully investing or depositing the same in time
and savings deposits in an insured depository institution;
such depositor shall, for the purpose of determining the amount of
insured deposits under this subsection, be deemed a depositor in such
custodial capacity separate and distinct from any other officer,
employee, or agent of the United States or any public unit referred to
in clause (ii), (iii), (iv), or (v) and the deposit of any such
depositor shall be insured in an amount not to exceed $100,000 per
account in an amount not to exceed $100,000 per account. /1/
(B) The Corporation may limit the aggregate amount of funds that may
be invested or deposited in deposits in any insured depository
institution by any depositor referred to in subparagraph (A) of this
paragraph on the basis of the size of any such bank /2/ in terms of its
assets: Provided, however, such limitation may be exceeded by the
pledging of acceptable securities to the depositor referred to in
subparagraph (A) of this paragraph when and where required.
(3) Notwithstanding any limitation in this chapter or in any other
provision of law relating to the amount of deposit insurance available
for the account of any one depositor, time and savings deposits in an
insured depository institution made pursuant to a pension or
profit-sharing plan described in section 401(d) of title 26, or made in
the form of individual retirement accounts as described in section 408(
a) of title 26, shall be insured in the amount of $100,000 per account.
As to any plan qualifying under section 401(d) or section 408(a) of
title 26, the term ''per account'' means the present vested and
ascertainable interest of each beneficiary under the plan, excluding any
remainder interest created by, or as a result of, the plan.
(4) General provision relating to funds. -- The Bank Insurance Fund
established under paragraph (5) and the Savings Association Insurance
Fund established under paragraph (6) shall each be --
(A) maintained and administered by the Corporation;
(B) maintained separately and not commingled; and
(C) used by the Corporation to carry out its insurance purposes in
the manner provided in this subsection.
(5) Bank insurance fund. --
(A) Establishment. -- There is established a fund to be known as the
Bank Insurance Fund.
(B) Transfer to fund. -- On August 9, 1989, the Permanent Insurance
Fund shall be dissolved and all assets and liabilities of the Permanent
Insurance Fund shall be transferred to the Bank Insurance Fund.
(C) Uses. -- The Bank Insurance Fund shall be available to the
Corporation for use with respect to Bank Insurance Fund members.
(D) Deposits. -- All amounts assessed against Bank Insurance Fund
members by the Corporation shall be deposited into the Bank Insurance
Fund.
(6) Savings association insurance fund. --
(A) Establishment. -- There is established a fund to be known as the
Savings Association Insurance Fund.
(B) Uses. -- The Savings Association Insurance Fund shall be
available to the Corporation for use with respect to Savings Association
Insurance Fund members.
(C) Deposits. -- All amounts assessed against Savings Association
Insurance Fund members which are not required for the Financing
Corporation, the Resolution Funding Corporation, or the FSLIC Resolution
Fund shall be deposited in the Savings Association Insurance Fund.
(D) Availability of funds for administrative expenses. --
(i) In general. -- The FSLIC Resolution Fund shall deposit in the
Savings Association Insurance Fund such amounts as the Corporation
determines are needed during the period beginning on August 9, 1989, and
ending on September 30, 1991, to pay the administrative and supervisory
expenses of such Fund.
(ii) Priority. -- The Savings Association Insurance Fund shall have
priority over other obligations of the FSLIC Resolution Fund with
respect to such amounts.
(E) Treasury payments to fund. -- To provide sufficient funding for
the Savings Association Insurance Fund to carry out the purposes of this
chapter, the Secretary of the Treasury shall pay to such Fund, for each
of the fiscal years 1993 through 2000, the amount, if any, by which
$2,000,000,000 exceeds the amount deposited in such Fund (during such
fiscal year) pursuant to subparagraph (C).
(F) Treasury payments to maintain net worth of fund. -- The Secretary
of the Treasury shall pay to the Savings Association Insurance Fund, for
each fiscal year described in the following table, any additional amount
which may be necessary, as determined by the Corporation and the
Secretary of the Treasury to ensure that such Fund has the minimum net
worth referred to in such table throughout each such fiscal year:
lThe amount of
For the fiscal yearlminimum net worth
beginning October 1 of: l(in billions):
1991 0.0 1992 1.0 1993 2.1 1994 3.2 1995 4.3 1996 5.4 1997 6.5
1998 7.6 1999 8.8
(G) Exception to subparagraphs (e) and (f). -- Notwithstanding
subparagraphs (E) and (F), no payment may be made pursuant to such
subparagraphs after the Savings Association Insurance Fund achieves a
reserve ratio of 1.25 percent.
(H) Discretionary rtc payments. -- If amounts available to the
Savings Association Insurance Fund for purposes other than the payment
of administrative expenses are insufficient for the Savings Association
Insurance Fund to carry out the purposes of this chapter, the
Corporation may request the Resolution Trust Corporation to provide, and
the Thrift Depositor Protection Oversight Board of the Resolution Trust
Corporation (in the discretion of the Thrift Depositor Protection
Oversight Board) may pay, such amount as may be needed for such
purposes.
(I) Borrowing authority. --
(i) In general. -- The Corporation may borrow from the Federal home
loan banks, with the concurrence of the Federal Housing Finance Board,
such funds as the Corporation considers necessary for the use of the
Savings Association Insurance Fund.
(ii) Terms and conditions. -- Any loan from any Federal home loan
bank under clause (i) to the Savings Association Insurance Fund shall --
(I) bear a rate of interest of not less than such bank's current
marginal cost of funds, taking into account the maturities involved;
(II) be adequately secured, as determined by the Federal Housing
Finance Board;
(III) be a direct liability of such Fund; and
(IV) be subject to the limitations of section 1825(c) of this title.
(J) Authorization of appropriations. -- There are authorized to be
appropriated to the Secretary of the Treasury, such sums as may be
necessary to carry out the provisions of this paragraph, except that --
(i) the annual amount appropriated under subparagraph (F) shall not
exceed $2,000,000,000 in either fiscal year 1992 or fiscal year 1993;
and
(ii) the cumulative amount appropriated under subparagraph (F) for
fiscal years 1992 through 2000 shall not exceed $16,000,000,000.
(7) Provisions applicable to maintenance of accounts. --
(A) Corporation's authority. -- Any provision of this chapter
forbidding the commingling of the Bank Insurance Fund with the Savings
Association Insurance Fund, or requiring the separate maintenance of the
Bank Insurance Fund and the Savings Association Insurance Fund, is not
intended --
(i) to limit or impair the authority of the Corporation to use the
same facilities and resources in the course of conducting supervisory,
regulatory, conservatorship, receivership, or liquidation functions with
respect to banks and savings associations, or to integrate such
functions; or
(ii) to limit or impair the Corporation's power to combine assets or
liabilities belonging to banks and savings associations in
conservatorship or receivership for managerial purposes, or to limit or
impair the Corporation's power to dispose of such assets or liabilities
on an aggregate basis.
(B) Accounting requirements. --
(i) Accounting for use of facilities and resources. -- The
Corporation shall keep a full and complete accounting of all costs and
expenses associated with the use of any facility or resource used in the
course of any function specified in subparagraph (A)(i) and shall
allocate, in the manner provided in subparagraph (C), any such costs and
expenses incurred by the Corporation --
(I) with respect to Bank Insurance Fund members to the Bank Insurance
Fund; and
(II) with respect to Savings Association Insurance Fund members to
the Savings Association Insurance Fund.
(ii) Accounting for holding and managing assets and liabilities. --
The Corporation shall keep a full and complete accounting of all costs
and expenses associated with the holding and management of any asset or
liability specified in subparagraph (A)(ii).
(iii) Accounting for disposition of assets and liabilities. -- The
Corporation shall keep a full and complete accounting of all expenses
and receipts associated with the disposition of any asset or liability
specified in subparagraph (A)(ii).
(iv) Allocation of cost, expenses and receipts. -- The Corporation
shall allocate any cost, expense, and receipt described in clause (ii)
or clause (iii) which is associated with any asset or liability
belonging to --
(I) any Bank Insurance Fund member to the Bank Insurance Fund; and
(II) any Savings Association Insurance Fund member to the Savings
Association Insurance Fund.
(C) Allocation of administrative expenses. -- Any personnel,
administrative, or other overhead expense of the Corporation shall be
allocated --
(i) fully to the Bank Insurance Fund, if the expense was incurred
directly as a result of the Corporation's responsibilities solely with
respect to Bank Insurance Fund members;
(ii) fully to the Savings Association Insurance Fund, if the expense
was incurred directly as a result of the Corporation's responsibilities
solely with respect to Savings Association Insurance Fund members;
(iii) between the Bank Insurance Fund and the Savings Association
Insurance Fund, in amounts reflecting the relative degree to which the
expense was incurred as a result of the activities of Bank Insurance
Fund and Savings Association Insurance Fund members; or
(iv) between the Bank Insurance Fund and the Savings Association
Insurance Fund, in amounts reflecting the relative total assets as of
the end of the preceding calendar year of Bank Insurance Fund members
and Savings Association Insurance Fund members, to the extent that the
Board of Directors is unable to make a determination under clause (i),
(ii), or (iii).
(b) Liquidation as closing of depository institution
For the purposes of this chapter an insured depository institution
shall be deemed to have been closed on account of inability to meet the
demands of its depositors in any case in which it has been closed for
the purpose of liquidation without adequate provision being made for
payment of its depositors.
(c) Appointment of Corporation as conservator or receiver
(1) In general
Notwithstanding any other provision of Federal law, the law of any
State, or the constitution of any State, the Corporation may accept
appointment and act as conservator or receiver for any insured
depository institution upon appointment in the manner provided in
paragraph (2) or (3).
(2) Federal depository institutions
(A) Appointment
(i) Conservator
The Corporation may, at the discretion of the supervisory authority,
be appointed conservator of any insured Federal depository institution
or District bank and the Corporation may accept such appointment.
(ii) Receiver
The Corporation shall be appointed receiver, and shall accept such
appointment, whenever a receiver is appointed for the purpose of
liquidation or winding up the affairs of an insured Federal depository
institution or District bank by the appropriate Federal banking agency,
notwithstanding any other provision of Federal law (other than section
1441a of this title) or the code of law for the District of Columbia.
(B) Additional powers
In addition to and not in derogation of the powers conferred and the
duties imposed by this section on the Corporation as conservator or
receiver, the Corporation, to the extent not inconsistent with such
powers and duties, shall have any other power conferred on or any duty
(which is related to the exercise of such power) imposed on a
conservator or receiver for any Federal depository institution under any
other provision of law.
(C) Corporation not subject to any other agency
When acting as conservator or receiver pursuant to an appointment
described in subparagraph (A), the Corporation shall not be subject to
the direction or supervision of any other agency or department of the
United States or any State in the exercise of the Corporation's rights,
powers, and privileges.
(D) Depository institution in conservatorship subject to banking
agency supervision
Notwithstanding subparagraph (C), any Federal depository institution
for which the Corporation has been appointed conservator shall remain
subject to the supervision of the appropriate Federal banking agency.
(3) Insured State depository institutions
(A) Appointment by appropriate State supervisor
Whenever the authority having supervision of any insured State
depository institution (other than a District depository institution)
appoints a conservator or receiver for such institution and tenders
appointment to the Corporation, the Corporation may accept such
appointment.
(B) Additional powers
In addition to the powers conferred and the duties related to the
exercise of such powers imposed by State law on any conservator or
receiver appointed under the law of such State for an insured State
depository institution, the Corporation, as conservator or receiver
pursuant to an appointment described in subparagraph (A), shall have the
powers conferred and the duties imposed by this section on the
Corporation as conservator or receiver.
(C) Corporation not subject to any other agency
When acting as conservator or receiver pursuant to an appointment
described in subparagraph (A), the Corporation shall not be subject to
the direction or supervision of any other agency or department of the
United States or any State in the exercise of its rights, powers, and
privileges.
(D) Depository institution in conservatorship subject to banking
agency supervision
Notwithstanding subparagraph (C), any insured State depository
institution for which the Corporation has been appointed conservator
shall remain subject to the supervision of the appropriate State bank or
savings association supervisor.
(4) Appointment of Corporation by the Corporation
Except as otherwise provided in section 1441a of this title and
notwithstanding any other provision of Federal law, the law of any
State, or the constitution of any State, the Corporation may appoint
itself as sole conservator or receiver of any insured State depository
institution if --
(A) the Corporation determines --
(i) that --
(I) a conservator, receiver, or other legal custodian has been
appointed for such institution;
(II) such institution has been subject to the appointment of any such
conservator, receiver, or custodian for a period of at least 15
consecutive days; and
(III) 1 or more of the depositors in such institution is unable to
withdraw any amount of any insured deposit; or
(ii) that such institution has been closed by or under the laws of
any State; and
(B) the Corporation determines that 1 or more of the grounds
specified in paragraph (5) --
(i) existed with respect to such institution at the time --
(I) the conservator, receiver, or other legal custodian was
appointed; or
(II) such institution was closed; or
(ii) exist at any time --
(I) during the appointment of the conservator, receiver, or other
legal custodian; or
(II) while such institution is closed.
(5) Grounds for appointing conservator or receiver
The grounds for appointing a conservator or receiver (which may be
the Corporation) for any insured depository institution are as follows:
(A) Assets insufficient for obligations. -- The institution's assets
are less than the institution's obligations to its creditors and others,
including members of the institution.
(B) Substantial dissipation. -- Substantial dissipation of assets or
earnings due to --
(i) any violation of any statute or regulation; or
(ii) any unsafe or unsound practice.
(C) Unsafe or unsound condition. -- An unsafe or unsound condition to
transact business.
(D) Cease and desist orders. -- Any willful violation of a
cease-and-desist order which has become final.
(E) Concealment. -- Any concealment of the institution's books,
papers, records, or assets, or any refusal to submit the institution's
books, papers, records, or affairs for inspection to any examiner or to
any lawful agent of the appropriate Federal banking agency or State bank
or savings association supervisor.
(F) Inability to meet obligations. -- The institution is likely to be
unable to pay its obligations or meet its depositors' demands in the
normal course of business.
(G) Losses. -- The institution has incurred or is likely to incur
losses that will deplete all or substantially all of its capital, and
there is no reasonable prospect for the institution to become adequately
capitalized (as defined in section 1831o(b) of this title) without
Federal assistance.
(H) Violations of law. -- Any violation of any law or regulation, or
any unsafe or unsound practice or condition that is likely to --
(i) cause insolvency or substantial dissipation of assets or
earnings;
(ii) weaken the institution's condition; or
(iii) otherwise seriously prejudice the interests of the
institution's depositors or the deposit insurance fund.
(I) Consent. -- The institution, by resolution of its board of
directors or its shareholders or members, consents to the appointment.
(J) Cessation of insured status. -- The institution ceases to be an
insured institution.
(K) Undercapitalization. -- The institution is undercapitalized (as
defined in section 1831o(b) of this title), and --
(i) has no reasonable prospect of becoming adequately capitalized (as
defined in that section);
(ii) fails to become adequately capitalized when required to do so
under section 1831o(f)(2)(A) of this title;
(iii) fails to submit a capital restoration plan acceptable to that
agency within the time prescribed under section 1831o(e)(2)(D) of this
title; or
(iv) materially fails to implement a capital restoration plan
submitted and accepted under section 1831o(e)(2) of this title.
(L) The institution --
(i) is critically undercapitalized, as defined in section 1831o(b) of
this title; or
(ii) otherwise has substantially insufficient capital.
(6) Appointment by Director of the Office of Thrift Supervision
(A) Conservator
The Corporation or the Resolution Trust Corporation may, at the
discretion of the Director of the Office of Thrift Supervision, be
appointed conservator and the Corporation may accept any such
appointment.
(B) Receiver
Whenever the Director of the Office of Thrift Supervision appoints a
receiver under the provisions of section 1464(d)(2)(C) /3/ of this title
for the purpose of liquidation or winding up any savings association's
affairs --
(i) before October 1, 1993, the Resolution Trust Corporation shall be
appointed;
(ii) after September 30, 1993, the Resolution Trust Corporation shall
be appointed if the Resolution Trust Corporation had been placed in
control of the depository institution at any time on or before such
date; and
(iii) after September 30, 1993, the Corporation shall be appointed
unless the Resolution Trust Corporation is required to be appointed
under clause (ii).
(7) Judicial review
If the Corporation appoints itself as conservator or receiver under
paragraph (4), the insured State depository institution may, within 30
days thereafter, bring an action in the United States district court for
the judicial district in which the home office of such institution is
located, or in the United States District Court for the District of
Columbia, for an order requiring the Corporation to remove itself as
such conservator or receiver, and the court shall, upon the merits,
dismiss such action or direct the Corporation to remove itself as such
conservator or receiver.
(8) Replacement of conservator of State depository institution
(A) In general
In the case of any insured State depository institution for which the
Corporation appointed itself as conservator pursuant to paragraph (4),
the Corporation may, without any requirement of notice, hearing, or
other action, replace itself as conservator with itself as receiver of
such institution.
(B) Replacement treated as removal of incumbent
The replacement of a conservator with a receiver under subparagraph
(A) shall be treated as the removal of the Corporation as conservator.
(C) Right of review of original appointment not affected
The replacement of a conservator with a receiver under subparagraph
(A) shall not affect any right of the insured State depository
institution to obtain review, pursuant to paragraph (7), of the original
appointment of the conservator.
(9) Appropriate Federal banking agency may appoint Corporation as
conservator or receiver for insured State depository institution to
carry out section 1831o
(A) In general
The appropriate Federal banking agency may appoint the Corporation as
sole receiver (or, subject to paragraph (11), sole conservator) of any
insured State depository institution, after consultation with the
appropriate State supervisor, if the appropriate Federal banking agency
determines that --
(i) 1 or more of the grounds specified in subparagraphs (K) and (L)
of paragraph (5) exist with respect to that institution; and
(ii) the appointment is necessary to carry out the purpose of section
1831o of this title.
(B) Nondelegation
The appropriate Federal banking agency shall not delegate any action
under subparagraph (A).
(10) Corporation may appoint itself as conservator or receiver for
insured depository institution to prevent loss to deposit insurance fund
The Board of Directors may appoint the Corporation as sole
conservator or receiver of an insured depository institution, after
consultation with the appropriate Federal banking agency and the
appropriate State supervisor (if any), if the Board of Directors
determines that --
(A) 1 or more of the grounds specified in any subparagraph of
paragraph (5) exist with respect to the institution; and
(B) the appointment is necessary to reduce --
(i) the risk that the deposit insurance fund would incur a loss with
respect to the insured depository institution, or
(ii) any loss that the deposit insurance fund is expected to incur
with respect to that institution.
(11) Appropriate Federal banking agency shall not appoint conservator
under certain provisions without giving Corporation opportunity to
appoint receiver
The appropriate Federal banking agency shall not appoint a
conservator for an insured depository institution under subparagraph (K)
or (L) of paragraph (5) without the Corporation's consent unless the
agency has given the Corporation 48 hours notice of the agency's
intention to appoint the conservator and the grounds for the
appointment.
(12) Directors not liable for acquiescing in appointment of
conservator or receiver
The members of the board of directors of an insured depository
institution shall not be liable to the institution's shareholders or
creditors for acquiescing in or consenting in good faith to --
(A) the appointment of the Corporation or the Resolution Trust
Corporation as conservator or receiver for that institution; or
(B) an acquisition or combination under section 1831o(f)(2)(A)(iii)
of this title.
(13) Additional powers
In any case in which the Corporation is appointed conservator or
receiver under paragraph (4), (6), (9), or (10) for any insured State
depository institution --
(A) subject to subparagraph (B), this section shall apply to the
Corporation as conservator or receiver in the same manner and to the
same extent as if that institution were a Federal depository institution
for which the Corporation had been appointed conservator or receiver;
(B) the Corporation shall apply the law of the State in which the
institution is chartered insofar as that law gives the claims of
depositors priority over those of other creditors or claimants; and
(C) the Corporation as receiver of the institution may --
(i) liquidate the institution in an orderly manner; and
(ii) make any other disposition of any matter concerning the
institution, as the Corporation determines is in the best interests of
the institution, the depositors of the institution, and the Corporation.
(d) Powers and duties of Corporation as conservator or receiver
(1) Rulemaking authority of Corporation
The Corporation may prescribe such regulations as the Corporation
determines to be appropriate regarding the conduct of conservatorships
or receiverships.
(2) General powers
(A) Successor to institution
The Corporation shall, as conservator or receiver, and by operation
of law, succeed to --
(i) all rights, titles, powers, and privileges of the insured
depository institution, and of any stockholder, member, accountholder,
depositor, officer, or director of such institution with respect to the
institution and the assets of the institution; and
(ii) title to the books, records, and assets of any previous
conservator or other legal custodian of such institution.
(B) Operate the institution
The Corporation may (subject to the provisions of section 1831q /4/
of this title), as conservator or receiver --
(i) take over the assets of and operate the insured depository
institution with all the powers of the members or shareholders, the
directors, and the officers of the institution and conduct all business
of the institution;
(ii) collect all obligations and money due the institution;
(iii) perform all functions of the institution in the name of the
institution which is consistent with the appointment as conservator or
receiver; and
(iv) preserve and conserve the assets and property of such
institution.
(C) Functions of institution's officers, directors, and shareholders
The Corporation may, by regulation or order, provide for the exercise
of any function by any member or stockholder, director, or officer of
any insured depository institution for which the Corporation has been
appointed conservator or receiver.
(D) Powers as conservator
The Corporation may, as conservator, take such action as may be --
(i) necessary to put the insured depository institution in a sound
and solvent condition; and
(ii) appropriate to carry on the business of the institution and
preserve and conserve the assets and property of the institution.
(E) Additional powers as receiver
The Corporation may (subject to the provisions of section 1831q /4/
of this title), as receiver, place the insured depository institution in
liquidation and proceed to realize upon the assets of the institution,
having due regard to the conditions of credit in the locality.
(F) Organization of new institutions
The Corporation may, as receiver --
(i) with respect to savings associations and by application to the
Director of the Office of Thrift Supervision, organize a new Federal
savings association to take over such assets or such liabilities as the
Corporation may determine to be appropriate; and
(ii) with respect to any insured bank, organize a new national bank
under subsection (m) of this section or a bridge bank under subsection
(n) of this section.
(G) Merger; transfer of assets and liabilities
(i) In general
The Corporation may, as conservator or receiver --
(I) merge the insured depository institution with another insured
depository institution; or
(II) subject to clause (ii), transfer any asset or liability of the
institution in default (including assets and liabilities associated with
any trust business) without any approval, assignment, or consent with
respect to such transfer.
(ii) Approval by appropriate Federal banking agency
No transfer described in clause (i)(II) may be made to another
depository institution (other than a new bank or a bridge bank
established pursuant to subsection (m) or (n) of this section) without
the approval of the appropriate Federal banking agency for such
institution.
(H) Payment of valid obligations
The Corporation, as conservator or receiver, shall pay all valid
obligations of the insured depository institution in accordance with the
prescriptions and limitations of this chapter.
(I) Subpoena authority
(i) In general
The Corporation may, as conservator, receiver, or exclusive manager
and for purposes of carrying out any power, authority, or duty with
respect to an insured depository institution (including determining any
claim against the institution and determining and realizing upon any
asset of any person in the course of collecting money due the
institution), exercise any power established under section 1818(n) of
this title, and the provisions of such section shall apply with respect
to the exercise of any such power under this subparagraph in the same
manner as such provisions apply under such section.
(ii) Authority of Board of Directors
A subpoena or subpoena duces tecum may be issued under clause (i)
only by, or with the written approval of, the Board of Directors or
their designees (or, in the case of a subpoena or subpoena duces tecum
issued by the Resolution Trust Corporation under this subparagraph and
section 1441a(b)(4) /5/ of this title, only by, or with the written
approval of, the Board of Directors of such Corporation or their
designees).
(iii) Rule of construction
This subsection shall not be construed as limiting any rights that
the Corporation, in any capacity, might otherwise have under section
1820(c) of this title.
(J) Incidental powers
The Corporation may, as conservator or receiver --
(i) exercise all powers and authorities specifically granted to
conservators or receivers, respectively, under this chapter and such
incidental powers as shall be necessary to carry out such powers; and
(ii) take any action authorized by this chapter,
which the Corporation determines is in the best interests of the
depository institution, its depositors, or the Corporation.
(K) Utilization of private sector
In carrying out its responsibilities in the management and
disposition of assets from insured depository institutions, as
conservator, receiver, or in its corporate capacity, the Corporation
shall utilize the services of private persons, including real estate and
loan portfolio asset management, property management, auction marketing,
and brokerage services, if such services are available in the private
sector and the Corporation determines utilization of such services is
practicable, efficient, and cost effective.
(3) Authority of receiver to determine claims
(A) In general
The Corporation may, as receiver, determine claims in accordance with
the requirements of this subsection and regulations prescribed under
paragraph (4).
(B) Notice requirements
The receiver, in any case involving the liquidation or winding up of
the affairs of a closed depository institution, shall --
(i) promptly publish a notice to the depository institution's
creditors to present their claims, together with proof, to the receiver
by a date specified in the notice which shall be not less than 90 days
after the publication of such notice; and
(ii) republish such notice approximately 1 month and 2 months,
respectively, after the publication under clause (i).
(C) Mailing required
The receiver shall mail a notice similar to the notice published
under subparagraph (B)(i) at the time of such publication to any
creditor shown on the institution's books --
(i) at the creditor's last address appearing in such books; or
(ii) upon discovery of the name and address of a claimant not
appearing on the institution's books within 30 days after the discovery
of such name and address.
(4) Rulemaking authority relating to determination of claims
(A) In general
The Corporation may prescribe regulations regarding the allowance or
disallowance of claims by the receiver and providing for administrative
determinations of claims and review of such determination.
(B) Final settlement payment procedure
(i) In general
In the handling of receiverships of insured depository institutions,
to maintain essential liquidity and to prevent financial disruption, the
Corporation may, after the declaration of an institution's insolvency,
settle all uninsured and unsecured claims on the receivership with a
final settlement payment which shall constitute full payment and
disposition of the Corporation's obligations to such claimants.
(ii) Final settlement payment
For purposes of clause (i), a final settlement payment shall be
payment of an amount equal to the product of the final settlement
payment rate and the amount of the uninsured and unsecured claim on the
receivership; and
(iii) Final settlement payment rate
For purposes of clause (ii), the final settlement payment rate shall
be a percentage rate reflecting an average of the Corporation's
receivership recovery experience, determined by the Corporation in such
a way that over such time period as the Corporation may deem
appropriate, the Corporation in total will receive no more or less than
it would have received in total as a general creditor standing in the
place of insured depositors in each specific receivership.
(iv) Corporation authority
The Corporation may undertake such supervisory actions and promulgate
such regulations as may be necessary to assure that the requirements of
this section can be implemented with respect to each insured depository
institution in the event of its insolvency.
(5) Procedures for determination of claims
(A) Determination period
(i) In general
Before the end of the 180-day period beginning on the date any claim
against a depository institution is filed with the Corporation as
receiver, the Corporation shall determine whether to allow or disallow
the claim and shall notify the claimant of any determination with
respect to such claim.
(ii) Extension of time
The period described in clause (i) may be extended by a written
agreement between the claimant and the Corporation.
(iii) Mailing of notice sufficient
The requirements of clause (i) shall be deemed to be satisfied if the
notice of any determination with respect to any claim is mailed to the
last address of the claimant which appears --
(I) on the depository institution's books;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowance
If any claim filed under clause (i) is disallowed, the notice to the
claimant shall contain --
(I) a statement of each reason for the disallowance; and
(II) the procedures available for obtaining agency review of the
determination to disallow the claim or judicial determination of the
claim.
(B) Allowance of proven claims
The receiver shall allow any claim received on or before the date
specified in the notice published under paragraph (3)(B)(i) by the
receiver from any claimant which is proved to the satisfaction of the
receiver.
(C) Disallowance of claims filed after end of filing period
(i) In general
Except as provided in clause (ii), claims filed after the date
specified in the notice published under paragraph (3)(B)(i) shall be
disallowed and such disallowance shall be final.
(ii) Certain exceptions
Clause (i) shall not apply with respect to any claim filed by any
claimant after the date specified in the notice published under
paragraph (3)(B)(i) and such claim may be considered by the receiver if
--
(I) the claimant did not receive notice of the appointment of the
receiver in time to file such claim before such date; and
(II) such claim is filed in time to permit payment of such claim.
(D) Authority to disallow claims
(i) In general
The receiver may disallow any portion of any claim by a creditor or
claim of security, preference, or priority which is not proved to the
satisfaction of the receiver.
(ii) Payments to less than fully secured creditors
In the case of a claim of a creditor against an insured depository
institution which is secured by any property or other asset of such
institution, any receiver appointed for any insured depository
institution --
(I) may treat the portion of such claim which exceeds an amount equal
to the fair market value of such property or other asset as an unsecured
claim against the institution; and
(II) may not make any payment with respect to such unsecured portion
of the claim other than in connection with the disposition of all claims
of unsecured creditors of the institution.
(iii) Exceptions
No provision of this paragraph shall apply with respect to --
(I) any extension of credit from any Federal home loan bank or
Federal Reserve bank to any institution described in paragraph (3)(A);
or
(II) any security interest in the assets of the institution securing
any such extension of credit.
(E) No judicial review of determination pursuant to subparagraph (D)
No court may review the Corporation's determination pursuant to
subparagraph (D) to disallow a claim.
(F) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of
a claim with the receiver shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue any action
which was filed before the appointment of the receiver.
(6) Provision for agency review or judicial determination of claims
(A) In general
Before the end of the 60-day period beginning on the earlier of --
(i) the end of the period described in paragraph (5)(A)(i) with
respect to any claim against a depository institution for which the
Corporation is receiver; or
(ii) the date of any notice of disallowance of such claim pursuant to
paragraph (5)(A)(i),
the claimant may request administrative review of the claim in
accordance with subparagraph (A) or (B) of paragraph (7) or file suit on
such claim (or continue an action commenced before the appointment of
the receiver) in the district or territorial court of the United States
for the district within which the depository institution's principal
place of business is located or the United States District Court for the
District of Columbia (and such court shall have jurisdiction to hear
such claim).
(B) Statute of limitations
If any claimant fails to --
(i) request administrative review of any claim in accordance with
subparagraph (A) or (B) of paragraph (7); or
(ii) file suit on such claim (or continue an action commenced before
the appointment of the receiver),
before the end of the 60-day period described in subparagraph (A),
the claim shall be deemed to be disallowed (other than any portion of
such claim which was allowed by the receiver) as of the end of such
period, such disallowance shall be final, and the claimant shall have no
further rights or remedies with respect to such claim.
(7) Review of claims
(A) Administrative hearing
If any claimant requests review under this subparagraph in lieu of
filing or continuing any action under paragraph (6) and the Corporation
agrees to such request, the Corporation shall consider the claim after
opportunity for a hearing on the record. The final determination of the
Corporation with respect to such claim shall be subject to judicial
review under chapter 7 of title 5.
(B) Other review procedures
(i) In general
The Corporation shall also establish such alternative dispute
resolution processes as may be appropriate for the resolution of claims
filed under paragraph (5)(A)(i).
(ii) Criteria
In establishing alternative dispute resolution processes, the
Corporation shall strive for procedures which are expeditious, fair,
independent, and low cost.
(iii) Voluntary binding or nonbinding procedures
The Corporation may establish both binding and nonbinding processes,
which may be conducted by any government or private party, but all
parties, including the claimant and the Corporation, must agree to the
use of the process in a particular case.
(iv) Consideration of incentives
The Corporation shall seek to develop incentives for claimants to
participate in the alternative dispute resolution process.
(8) Expedited determination of claims
(A) Establishment required
The Corporation shall establish a procedure for expedited relief
outside of the routine claims process established under paragraph (5)
for claimants who --
(i) allege the existence of legally valid and enforceable or
perfected security interests in assets of any depository institution for
which the Corporation has been appointed receiver; and
(ii) allege that irreparable injury will occur if the routine claims
procedure is followed.
(B) Determination period
Before the end of the 90-day period beginning on the date any claim
is filed in accordance with the procedures established pursuant to
subparagraph (A), the Corporation shall --
(i) determine --
(I) whether to allow or disallow such claim; or
(II) whether such claim should be determined pursuant to the
procedures established pursuant to paragraph (5); and
(ii) notify the claimant of the determination, and if the claim is
disallowed, a statement of each reason for the disallowance and the
procedure for obtaining agency review or judicial determination.
(C) Period for filing or renewing suit
Any claimant who files a request for expedited relief shall be
permitted to file a suit, or to continue a suit filed before the
appointment of the receiver, seeking a determination of the claimant's
rights with respect to such security interest after the earlier of --
(i) the end of the 90-day period beginning on the date of the filing
of a request for expedited relief; or
(ii) the date the Corporation denies the claim.
(D) Statute of limitations
If an action described in subparagraph (C) is not filed, or the
motion to renew a previously filed suit is not made, before the end of
the 30-day period beginning on the date on which such action or motion
may be filed in accordance with subparagraph (B), the claim shall be
deemed to be disallowed as of the end of such period (other than any
portion of such claim which was allowed by the receiver), such
disallowance shall be final, and the claimant shall have no further
rights or remedies with respect to such claim.
(E) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of
a claim with the receiver shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue any action
which was filed before the appointment of the receiver.
(9) Agreement as basis of claim
(A) Requirements
Except as provided in subparagraph (B), any agreement which does not
meet the requirements set forth in section 1823(e) of this title shall
not form the basis of, or substantially comprise, a claim against the
receiver or the Corporation.
(B) Exception to contemporaneous execution requirement
Notwithstanding section 1823(e)(2) of this title, any agreement
relating to an extension of credit between a Federal home loan bank or
Federal Reserve bank and any insured depository institution which was
executed before the extension of credit by such bank to such institution
shall be treated as having been executed contemporaneously with such
extension of credit for purposes of subparagraph (A).
(10) Payment of claims
(A) In general
The receiver may, in the receiver's discretion and to the extent
funds are available, pay creditor claims which are allowed by the
receiver, approved by the Corporation pursuant to a final determination
pursuant to paragraph (7) or (8), or determined by the final judgment of
any court of competent jurisdiction in such manner and amounts as are
authorized under this chapter.
(B) Payment of dividends on claims
The receiver may, in the receiver's sole discretion, pay dividends on
proved claims at any time, and no liability shall attach to the
Corporation (in such Corporation's corporate capacity or as receiver),
by reason of any such payment, for failure to pay dividends to a
claimant whose claim is not proved at the time of any such payment.
(11) Distribution of assets
(A) Subrogated claims; claims of uninsured depositors and other
creditors
The receiver shall --
(i) retain for the account of the Corporation such portion of the
amounts realized from any liquidation as the Corporation may be entitled
to receive in connection with the subrogation of the claims of
depositors; and
(ii) pay to depositors and other creditors the net amounts available
for distribution to them.
(B) Distribution to shareholders of amounts remaining after payment
of all other claims and expenses
In any case in which funds remain after all depositors, creditors,
other claimants, and administrative expenses are paid, the receiver
shall distribute such funds to the depository institution's shareholders
or members together with the accounting report required under paragraph
(15)(B).
(12) Suspension of legal actions
(A) In general
After the appointment of a conservator or receiver for an insured
depository institution, the conservator or receiver may request a stay
for a period not to exceed --
(i) 45 days, in the case of any conservator; and
(ii) 90 days, in the case of any receiver,
in any judicial action or proceeding to which such institution is or
becomes a party.
(B) Grant of stay by all courts required
Upon receipt of a request by any conservator or receiver pursuant to
subparagraph (A) for a stay of any judicial action or proceeding in any
court with jurisdiction of such action or proceeding, the court shall
grant such stay as to all parties.
(13) Additional rights and duties
(A) Prior final adjudication
The Corporation shall abide by any final unappealable judgment of any
court of competent jurisdiction which was rendered before the
appointment of the Corporation as conservator or receiver.
(B) Rights and remedies of conservator or receiver
In the event of any appealable judgment, the Corporation as
conservator or receiver shall --
(i) have all the rights and remedies available to the insured
depository institution (before the appointment of such conservator or
receiver) and the Corporation in its corporate capacity, including
removal to Federal court and all appellate rights; and
(ii) not be required to post any bond in order to pursue such
remedies.
(C) No attachment or execution
No attachment or execution may issue by any court upon assets in the
possession of the receiver.
(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have
jurisdiction over --
(i) any claim or action for payment from, or any action seeking a
determination of rights with respect to, the assets of any depository
institution for which the Corporation has been appointed receiver,
including assets which the Corporation may acquire from itself as such
receiver; or
(ii) any claim relating to any act or omission of such institution or
the Corporation as receiver.
(E) Disposition of assets
In exercising any right, power, privilege, or authority as
conservator or receiver in connection with any sale or disposition of
assets of any insured depository institution for which the Corporation
has been appointed conservator or receiver, including any sale or
disposition of assets acquired by the Corporation under section 1823(
d)(1) of this title, the Corporation shall conduct its operations in a
manner which --
(i) maximizes the net present value return from the sale or
disposition of such assets;
(ii) minimizes the amount of any loss realized in the resolution of
cases;
(iii) ensures adequate competition and fair and consistent treatment
of offerors;
(iv) prohibits discrimination on the basis of race, sex, or ethnic
groups in the solicitation and consideration of offers; and
(v) maximizes the preservation of the availability and affordability
of residential real property for low- and moderate-income individuals.
(14) Statute of limitations for actions brought by conservator or
receiver
(A) In general
Notwithstanding any provision of any contract, the applicable statute
of limitations with regard to any action brought by the Corporation as
conservator or receiver shall be --
(i) in the case of any contract claim, the longer of --
(I) the 6-year period beginning on the date the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of --
(I) the 3-year period beginning on the date the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of
limitation begins to run on any claim described in such subparagraph
shall be the later of --
(i) the date of the appointment of the Corporation as conservator or
receiver; or
(ii) the date on which the cause of action accrues.
(15) Accounting and recordkeeping requirements
(A) In general
The Corporation as conservator or receiver shall, consistent with the
accounting and reporting practices and procedures established by the
Corporation, maintain a full accounting of each conservatorship and
receivership or other disposition of institutions in default.
(B) Annual accounting or report
With respect to each conservatorship or receivership to which the
Corporation was appointed, the Corporation shall make an annual
accounting or report, as appropriate, available to the Secretary of the
Treasury, the Comptroller General of the United States, and the
authority which appointed the Corporation as conservator or receiver.
(C) Availability of reports
Any report prepared pursuant to subparagraph (B) shall be made
available by the Corporation upon request to any shareholder of the
depository institution for which the Corporation was appointed
conservator or receiver or any other member of the public.
(D) Recordkeeping requirement
After the end of the 6-year period beginning on the date the
Corporation is appointed as receiver of an insured depository
institution, the Corporation may destroy any records of such institution
which the Corporation, in the Corporation's discretion, determines to be
unnecessary unless directed not to do so by a court of competent
jurisdiction or governmental agency, or prohibited by law.
(16) Contracts with State housing finance authorities
(A) In general
The Corporation may enter into contracts with any State housing
finance authority for the sale of mortgage-related assets (as such terms
are defined in section 1441a-1 of this title) of any depository
institution in default (including assets and liabilities associated with
any trust business), such contracts to be effective in accordance with
their terms without any further approval, assignment, or consent with
respect thereto.
(B) Factors to consider
In evaluating the disposition of mortgage related assets to any State
housing finance authority the Corporation shall consider --
(i) the State housing finance authority's ability to acquire and
service current, delinquent, and defaulted mortgage related assets;
(ii) the State housing finance authority's ability to further
national housing policies;
(iii) the State housing finance authority's sensitivity to the impact
of the sale of mortgage related assets upon the State and local
communities;
(iv) the costs to the Federal Government associated with alternative
ownership or dispositions of the mortgage related assets;
(v) the minimization of future guaranties which may be required of
the Federal Government;
(vi) the maximization of mortgage related asset values; and
(vii) the utilization of institutions currently established in
mortgage related asset market activities.
(17) Fraudulent transfers
(A) In general
The Corporation, as conservator or receiver for any insured
depository institution, and any conservator appointed by the Comptroller
of the Currency or the Director of the Office of Thrift Supervision may
avoid a transfer of any interest of an institution-affiliated party, or
any person who the Corporation or conservator determines is a debtor of
the institution, in property, or any obligation incurred by such party
or person, that was made within 5 years of the date on which the
Corporation or conservator was appointed conservator or receiver if such
party or person voluntarily or involuntarily made such transfer or
incurred such liability with the intent to hinder, delay, or defraud the
insured depository institution, the Corporation or other conservator, or
any other appropriate Federal banking agency.
(B) Right of recovery
To the extent a transfer is avoided under subparagraph (A), the
Corporation or any conservator described in such subparagraph may
recover, for the benefit of the insured depository institution, the
property transferred, or, if a court so orders, the value of such
property (at the time of such transfer) from --
(i) the initial transferee of such transfer or the
institution-affiliated party or person for whose benefit such transfer
was made; or
(ii) any immediate or mediate transferee of any such initial
transferee.
(C) Rights of transferee or obligee
The Corporation or any conservator described in subparagraph (A) may
not recover under subparagraph (B) from --
(i) any transferee that takes for value, including satisfaction or
securing of a present or antecedent debt, in good faith; or
(ii) any immediate or mediate good faith transferee of such
transferee.
(D) Rights under this paragraph
The rights under this paragraph of the Corporation and any
conservator described in subparagraph (A) shall be superior to any
rights of a trustee or any other party (other than any party which is a
Federal agency) under title 11.
(18) Attachment of assets and other injunctive relief
Subject to paragraph (19), any court of competent jurisdiction may,
at the request of --
(A) the Corporation (in the Corporation's capacity as conservator or
receiver for any insured depository institution or in the Corporation's
corporate capacity with respect to any asset acquired or liability
assumed by the Corporation under this section or section 1822 or 1823 of
this title); or
(B) any conservator appointed by the Comptroller of the Currency or
the Director of the Office of Thrift Supervision,
issue an order in accordance with Rule 65 of the Federal Rules of
Civil Procedure, including an order placing the assets of any person
designated by the Corporation or such conservator under the control of
the court and appointing a trustee to hold such assets.
(19) Standards
(A) Showing
Rule 65 of the Federal Rules of Civil Procedure shall apply with
respect to any proceeding under paragraph (18) without regard to the
requirement of such rule that the applicant show that the injury, loss,
or damage is irreparable and immediate.
(B) State proceeding
If, in the case of any proceeding in a State court, the court
determines that rules of civil procedure available under the laws of
such State provide substantially similar protections to such party's
right to due process as Rule 65 (as modified with respect to such
proceeding by subparagraph (A)), the relief sought by the Corporation or
a conservator pursuant to paragraph (18) may be requested under the laws
of such State.
(e) Provisions relating to contracts entered into before appointment
of conservator or receiver
(1) Authority to repudiate contracts
In addition to any other rights a conservator or receiver may have,
the conservator or receiver for any insured depository institution may
disaffirm or repudiate any contract or lease --
(A) to which such institution is a party;
(B) the performance of which the conservator or receiver, in the
conservator's or receiver's discretion, determines to be burdensome;
and
(C) the disaffirmance or repudiation of which the conservator or
receiver determines, in the conservator's or receiver's discretion, will
promote the orderly administration of the institution's affairs.
(2) Timing of repudiation
The conservator or receiver appointed for any insured depository
institution in accordance with subsection (c) of this section shall
determine whether or not to exercise the rights of repudiation under
this subsection within a reasonable period following such appointment.
(3) Claims for damages for repudiation
(A) In general
Except as otherwise provided in subparagraph (C) and paragraphs (4),
(5), and (6), the liability of the conservator or receiver for the
disaffirmance or repudiation of any contract pursuant to paragraph (1)
shall be --
(i) limited to actual direct compensatory damages; and
(ii) determined as of --
(I) the date of the appointment of the conservator or receiver; or
(II) in the case of any contract or agreement referred to in
paragraph (8), the date of the disaffirmance or repudiation of such
contract or agreement.
(B) No liability for other damages
For purposes of subparagraph (A), the term ''actual direct
compensatory damages'' does not include --
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of financial contracts
In the case of any qualified financial contract or agreement to which
paragraph (8) applies, compensatory damages shall be --
(i) deemed to include normal and reasonable costs of cover or other
reasonable measures of damages utilized in the industries for such
contract and agreement claims; and
(ii) paid in accordance with this subsection and subsection (i) of
this section except as otherwise specifically provided in this section.
(4) Leases under which the institution is the lessee
(A) In general
If the conservator or receiver disaffirms or repudiates a lease under
which the insured depository institution was the lessee, the conservator
or receiver shall not be liable for any damages (other than damages
determined pursuant to subparagraph (B)) for the disaffirmance or
repudiation of such lease.
(B) Payments of rent
Notwithstanding subparagraph (A), the lessor under a lease to which
such subparagraph applies shall --
(i) be entitled to the contractual rent accruing before the later of
the date --
(I) the notice of disaffirmance or repudiation is mailed; or
(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of the
lease;
(ii) have no claim for damages under any acceleration clause or other
penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all appropriate
offsets and defenses, due as of the date of the appointment which shall
be paid in accordance with this subsection and subsection (i) of this
section.
(5) Leases under which the institution is the lessor
(A) In general
If the conservator or receiver repudiates an unexpired written lease
of real property of the insured depository institution under which the
institution is the lessor and the lessee is not, as of the date of such
repudiation, in default, the lessee under such lease may either --
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest for the balance
of the term of the lease unless the lessee defaults under the terms of
the lease after the date of such repudiation.
(B) Provisions applicable to lessee remaining in possession
If any lessee under a lease described in subparagraph (A) remains in
possession of a leasehold interest pursuant to clause (ii) of such
subparagraph --
(i) the lessee --
(I) shall continue to pay the contractual rent pursuant to the terms
of the lease after the date of the repudiation of such lease;
(II) may offset against any rent payment which accrues after the date
of the repudiation of the lease, any damages which accrue after such
date due to the nonperformance of any obligation of the insured
depository institution under the lease after such date; and
(ii) the conservator or receiver shall not be liable to the lessee
for any damages arising after such date as a result of the repudiation
other than the amount of any offset allowed under clause (i)(II).
(6) Contracts for the sale of real property
(A) In general
If the conservator or receiver repudiates any contract (which meets
the requirements of each paragraph of section 1823(e) of this title) for
the sale of real property and the purchaser of such real property under
such contract is in possession and is not, as of the date of such
repudiation, in default, such purchaser may either --
(i) treat the contract as terminated by such repudiation; or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in possession
If any purchaser of real property under any contract described in
subparagraph (A) remains in possession of such property pursuant to
clause (ii) of such subparagraph --
(i) the purchaser --
(I) shall continue to make all payments due under the contract after
the date of the repudiation of the contract; and
(II) may offset against any such payments any damages which accrue
after such date due to the nonperformance (after such date) of any
obligation of the depository institution under the contract; and
(ii) the conservator or receiver shall --
(I) not be liable to the purchaser for any damages arising after such
date as a result of the repudiation other than the amount of any offset
allowed under clause (i)(II);
(II) deliver title to the purchaser in accordance with the provisions
of the contract; and
(III) have no obligation under the contract other than the
performance required under subclause (II).
(C) Assignment and sale allowed
(i) In general
No provision of this paragraph shall be construed as limiting the
right of the conservator or receiver to assign the contract described in
subparagraph (A) and sell the property subject to the contract and the
provisions of this paragraph.
(ii) No liability after assignment and sale
If an assignment and sale described in clause (i) is consummated, the
conservator or receiver shall have no further liability under the
contract described in subparagraph (A) or with respect to the real
property which was the subject of such contract.
(7) Provisions applicable to service contracts
(A) Services performed before appointment
In the case of any contract for services between any person and any
insured depository institution for which the Corporation has been
appointed conservator or receiver, any claim of such person for services
performed before the appointment of the conservator or the receiver
shall be --
(i) a claim to be paid in accordance with subsections (d) and (i) of
this section; and
(ii) deemed to have arisen as of the date the conservator or receiver
was appointed.
(B) Services performed after appointment and prior to repudiation
If, in the case of any contract for services described in
subparagraph (A), the conservator or receiver accepts performance by the
other person before the conservator or receiver makes any determination
to exercise the right of repudiation of such contract under this section
--
(i) the other party shall be paid under the terms of the contract for
the services performed; and
(ii) the amount of such payment shall be treated as an administrative
expense of the conservatorship or receivership.
(C) Acceptance of performance no bar to subsequent repudiation
The acceptance by any conservator or receiver of services referred to
in subparagraph (B) in connection with a contract described in such
subparagraph shall not affect the right of the conservator or receiver
to repudiate such contract under this section at any time after such
performance.
(8) Certain qualified financial contracts
(A) Rights of parties to contracts
Subject to paragraph (10) of this subsection and notwithstanding any
other provision of this chapter (other than subsection (d)(9) of this
section and section 1823(e) of this title), any other Federal law, or
the law of any State, no person shall be stayed or prohibited from
exercising --
(i) any right to cause the termination or liquidation of any
qualified financial contract with an insured depository institution
which arises upon the appointment of the Corporation as receiver for
such institution at any time after such appointment;
(ii) any right under any security arrangement relating to any
contract or agreement described in clause (i); or
(iii) any right to offset or net out any termination value, payment
amount, or other transfer obligation arising under or in connection with
1 or more contracts and agreements described in clause (i), including
any master agreement for such contracts or agreements.
(B) Applicability of other provisions
Subsection (d)(12) of this section shall apply in the case of any
judicial action or proceeding brought against any receiver referred to
in subparagraph (A), or the insured depository institution for which
such receiver was appointed, by any party to a contract or agreement
described in subparagraph (A)(i) with such institution.
(C) Certain transfers not avoidable
(i) In general
Notwithstanding paragraph (11), the Corporation, whether acting as
such or as conservator or receiver of an insured depository institution,
may not avoid any transfer of money or other property in connection with
any qualified financial contract with an insured depository institution.
(ii) Exception for certain transfers
Clause (i) shall not apply to any transfer of money or other property
in connection with any qualified financial contract with an insured
depository institution if the Corporation determines that the transferee
had actual intent to hinder, delay, or defraud such institution, the
creditors of such institution, or any conservator or receiver appointed
for such institution.
(D) Certain contracts and agreements defined
For purposes of this subsection --
(i) Qualified financial contract
The term ''qualified financial contract'' means any securities
contract, commodity contract, forward contract, repurchase agreement,
swap agreement, and any similar agreement that the Corporation
determines by regulation to be a qualified financial contract for
purposes of this paragraph.
(ii) Securities contract
The term ''securities contract'' --
(I) has the meaning given to such term in section 741(7) of title 11,
except that the term ''security'' (as used in such section) shall be
deemed to include any mortgage loan, any mortgage-related security (as
defined in section 78c(a)(41) of title 15), and any interest in any
mortgage loan or mortgage-related security; and
(II) does not include any participation in a commercial mortgage loan
unless the Corporation determines by regulation, resolution, or order to
include any such participation within the meaning of such term.
(iii) Commodity contract
The term ''commodity contract'' has the meaning given to such term in
section 761(4) of title 11.
(iv) Forward contract
The term ''forward contract'' has the meaning given to such term in
section 101(24) /6/ of title 11.
(v) Repurchase agreement
The term ''repurchase agreement'' --
(I) has the meaning given to such term in section 101(41) /6/ of
title 11, except that the items (as described in such section) which may
be subject to any such agreement shall be deemed to include
mortgage-related securities (as such term is defined in section 78c(a)(
41) of title 15, /7/ any mortgage loan, and any interest in any mortgage
loan; and
(II) does not include any participation in a commercial mortgage loan
unless the Corporation determines by regulation, resolution, or order to
include any such participation within the meaning of such term.
(vi) Swap agreement
The term ''swap agreement'' --
(I) means any agreement, including the terms and conditions
incorporated by reference in any such agreement, which is a rate swap
agreement, basis swap, commodity swap, forward rate agreement, interest
rate future, interest rate option purchased, forward foreign exchange
agreement, rate cap agreement, rate floor agreement, rate collar
agreement, currency swap agreement, cross-currency rate swap agreement,
currency future, or currency option purchased or any other similar
agreement, and
(II) includes any combination of such agreements and any option to
enter into any such agreement.
(vii) Treatment of master agreement as 1 swap agreement
Any master agreement for any agreements described in clause (vi)(I)
together with all supplements to such master agreement shall be treated
as 1 swap agreement.
(viii) Transfer
The term ''transfer'' has the meaning given to such term in section
101(50) /8/ of title 11.
(E) Certain protections in event of appointment of conservator
Notwithstanding any other provision of this chapter (other than
paragraph (12) of this subsection, subsection (d)(9) of this section,
and section 1823(e) of this title), any other Federal law, or the law of
any State, no person shall be stayed or prohibited from exercising --
(i) any right such person has to cause the termination, liquidation,
or acceleration of any qualified financial contract with a depository
institution in a conservatorship based upon a default under such
financial contract which is enforceable under applicable noninsolvency
law;
(ii) any right under any security arrangement relating to such
qualified financial contracts; or
(iii) any right to offset or net out any termination values, payment
amounts, or other transfer obligations arising under or in connection
with such qualified financial contracts.
(9) Transfer of qualified financial contracts
In making any transfer of assets or liabilities of a depository
institution in default which includes any qualified financial contract,
the conservator or receiver for such depository institution shall either
--
(A) transfer to 1 depository institution (other than a depository
institution in default) --
(i) all qualified financial contracts between --
(I) any person or any affiliate of such person; and
(II) the depository institution in default;
(ii) all claims of such person or any affiliate of such person
against such depository institution under any such contract (other than
any claim which, under the terms of any such contract, is subordinated
to the claims of general unsecured creditors of such institution);
(iii) all claims of such depository institution against such person
or any affiliate of such person under any such contract; and
(iv) all property securing any claim described in clause (ii) or
(iii) under any such contract; or
(B) transfer none of the financial contracts, claims, or property
referred to in subparagraph (A) (with respect to such person and any
affiliate of such person).
(10) Notification of transfer
(A) In general
If --
(i) the conservator or receiver for an insured depository institution
in default makes any transfer of the assets and liabilities of such
institution; and
(ii) the transfer includes any qualified financial contract,
the conservator or receiver shall use such conservator's or
receiver's best efforts to notify any person who is a party to any such
contract of such transfer by 12:00, noon (local time) on the business
day following such transfer.
(B) ''Business day'' defined
For purposes of this paragraph, the term ''business day'' means any
day other than any Saturday, Sunday, or any day on which either the New
York Stock Exchange or the Federal Reserve Bank of New York is closed.
(11) Certain security interests not avoidable
No provision of this subsection shall be construed as permitting the
avoidance of any legally enforceable or perfected security interest in
any of the assets of any depository institution except where such an
interest is taken in contemplation of the institution's insolvency or
with the intent to hinder, delay, or defraud the institution or the
creditors of such institution.
(12) Authority to enforce contracts
(A) In general
The conservator or receiver may enforce any contract, other than a
director's or officer's liability insurance contract or a depository
institution bond, entered into by the depository institution
notwithstanding any provision of the contract providing for termination,
default, acceleration, or exercise of rights upon, or solely by reason
of, insolvency or the appointment of a conservator or receiver.
(B) Certain rights not affected
No provision of this paragraph may be construed as impairing or
affecting any right of the conservator or receiver to enforce or recover
under a directors or officers liability insurance contract or depository
institution bond under other applicable law.
(13) Exception for Federal Reserve and Federal home loan banks
No provision of this subsection shall apply with respect to --
(A) any extension of credit from any Federal home loan bank or
Federal Reserve bank to any insured depository institution; or
(B) any security interest in the assets of the institution securing
any such extension of credit.
(f) Payment of insured deposits
(1) In general
In case of the liquidation of, or other closing or winding up of the
affairs of, any insured depository institution, payment of the insured
deposits in such institution shall be made by the Corporation as soon as
possible, subject to the provisions of subsection (g) of this section,
either by cash or by making available to each depositor a transferred
deposit in a new insured depository institution in the same community or
in another insured depository institution in an amount equal to the
insured deposit of such depositor, except that --
(A) all payments made pursuant to this section on account of a closed
Bank Insurance Fund member shall be made only from the Bank Insurance
Fund, and
(B) all payments made pursuant to this section on account of a closed
Savings Association Insurance Fund member shall be made only from the
Savings Association Insurance Fund.
(2) Proof of claims
The Corporation, in its discretion, may require proof of claims to be
filed and may approve or reject such claims for insured deposits.
(3) Resolution of disputes
(A) Resolutions in accordance to Corporation regulations
In the case of any disputed claim relating to any insured deposit or
any determination of insurance coverage with respect to any deposit, the
Corporation may resolve such disputed claim in accordance with
regulations prescribed by the Corporation establishing procedures for
resolving such claims.
(B) Adjudication of claims
If the Corporation has not prescribed regulations establishing
procedures for resolving disputed claims, the Corporation may require
the final determination of a court of competent jurisdiction before
paying any such claim.
(4) Review of Corporation's determination
Final determination made by the Corporation shall be reviewable in
accordance with chapter 7 of title 5 by the United States Court of
Appeals for the District of Columbia or the court of appeals for the
Federal judicial circuit where the principal place of business of the
depository institution is located.
(5) Statute of limitations
Any request for review of a final determination by the Corporation
shall be filed with the appropriate circuit court of appeals not later
than 60 days after such determination is ordered.
(g) Subrogation of Corporation
(1) In general
Notwithstanding any other provision of Federal law, the law of any
State, or the constitution of any State, the Corporation, upon the
payment to any depositor as provided in subsection (f) of this section
in connection with any insured depository institution or insured branch
described in such subsection or the assumption of any deposit in such
institution or branch by another insured depository institution pursuant
to this section or section 1823 of this title, shall be subrogated to
all rights of the depositor against such institution or branch to the
extent of such payment or assumption.
(2) Dividends on subrogated amounts
The subrogation of the Corporation under paragraph (1) with respect
to any insured depository institution shall include the right on the
part of the Corporation to receive the same dividends from the proceeds
of the assets of such institution and recoveries on account of
stockholders' liability as would have been payable to the depositor on a
claim for the insured deposit, but such depositor shall retain such
claim for any uninsured or unassumed portion of the deposit.
(3) Waiver of certain claims
With respect to any bank which closes after May 25, 1938, the
Corporation shall waive, in favor only of any person against whom
stockholders' individual liability may be asserted, any claim on account
of such liability in excess of the liability, if any, to the bank or its
creditors, for the amount unpaid upon such stock in such bank; but any
such waiver shall be effected in such manner and on such terms and
conditions as will not increase recoveries or dividends on account of
claims to which the Corporation is not subrogated.
(4) Applicability of State law
If the Corporation is appointed pursuant to subsection (c)(3) of this
section, or determines not to invoke the authority conferred in
subsection (c)(4) of this section, the rights of depositors and other
creditors of any State depository institution shall be determined in
accordance with the applicable provisions of State law.
(h) Conditions applicable to resolution proceedings
(1) Consideration of local economic impact required
The Corporation shall fully consider the adverse economic impact on
local communities, including businesses and farms, of actions to be
taken by it during the administration and liquidation of loans of a
depository institution in default.
(2) Actions to alleviate adverse economic impact to be considered
The actions which the Corporation shall consider include the release
of proceeds from the sale of products and services for family living and
business expenses and shortening the undue length of the decisionmaking
process for the acceptance of offers of settlement contingent upon third
party financing.
(3) Guidelines required
The Corporation shall adopt and publish procedures and guidelines to
minimize adverse economic effects caused by its actions on individual
debtors in the community.
(4) Financial services industry impact analysis
After the appointment of the Corporation as conservator or receiver
for any insured depository institution and before taking any action
under this section or section 1823 of this title in connection with the
resolution of such institution, the Corporation shall --
(A) evaluate the likely impact of the means of resolution, and any
action which the Corporation may take in connection with such
resolution, on the viability of other insured depository institutions in
the same community; and
(B) take such evaluation into account in determining the means for
resolving the institution and establishing the terms and conditions for
any such action.
(i) Valuation of claims in default
(1) In general
Notwithstanding any other provision of Federal law or the law of any
State and regardless of the method which the Corporation determines to
utilize with respect to an insured depository institution in default or
in danger of default, including transactions authorized under subsection
(n) of this section and section 1823(c) of this title, this subsection
shall govern the rights of the creditors (other than insured depositors)
of such institution.
(2) Maximum liability
The maximum liability of the Corporation, acting as receiver or in
any other capacity, to any person having a claim against the receiver or
the insured depository institution for which such receiver is appointed
shall equal the amount such claimant would have received if the
Corporation had liquidated the assets and liabilities of such
institution without exercising the Corporation's authority under
subsection (n) of this section or section 1823 of this title.
(3) Additional payments authorized
(A) In general
The Corporation may, in its discretion and in the interests of
minimizing its losses, use its own resources to make additional payments
or credit additional amounts to or with respect to or for the account of
any claimant or category of claimants. Notwithstanding any other
provision of Federal or State law, or the constitution of any State, the
Corporation shall not be obligated, as a result of having made any such
payment or credited any such amount to or with respect to or for the
account of any claimant or category of claimants, to make payments to
any other claimant or category or /9/ claimants.
(B) Source of funds
If the depository institution in default is a Bank Insurance Fund
member, the Corporation may only make such payments out of funds held in
the Bank Insurance Fund. If the depository institution in default is a
Savings Association Insurance Fund member, the Corporation may only make
such payments out of funds held in the Savings Association Insurance
Fund.
(C) Manner of payment
The Corporation may make the payments or credit the amounts specified
in subparagraphs (A) and (B) directly to the claimants or may make such
payments or credit such amounts to an open insured depository
institution to induce such institution to accept liability for such
claims.
(j) Limitation on court action
Except as provided in this section, no court may take any action,
except at the request of the Board of Directors by regulation or order,
to restrain or affect the exercise of powers or functions of the
Corporation as a conservator or a receiver.
(k) Liability of directors and officers
A director or officer of an insured depository institution may be
held personally liable for monetary damages in any civil action by, on
behalf of, or at the request or direction of the Corporation, which
action is prosecuted wholly or partially for the benefit of the
Corporation --
(1) acting as conservator or receiver of such institution,
(2) acting based upon a suit, claim, or cause of action purchased
from, assigned by, or otherwise conveyed by such receiver or
conservator, or
(3) acting based upon a suit, claim, or cause of action purchased
from, assigned by, or otherwise conveyed in whole or in part by an
insured depository institution or its affiliate in connection with
assistance provided under section 1823 of this title,
for gross negligence, including any similar conduct or conduct that
demonstrates a greater disregard of a duty of care (than gross
negligence) including intentional tortious conduct, as such terms are
defined and determined under applicable State law. Nothing in this
paragraph shall impair or affect any right of the Corporation under
other applicable law.
(l) Damages
In any proceeding related to any claim against an insured depository
institution's director, officer, employee, agent, attorney, accountant,
appraiser, or any other party employed by or providing services to an
insured depository institution, recoverable damages determined to result
from the improvident or otherwise improper use or investment of any
insured depository institution's assets shall include principal losses
and appropriate interest.
(m) New banks
(1) Organization authorized
As soon as possible after the default of an insured bank, the
Corporation, if it finds that it is advisable and in the interest of the
depositors of the insured bank in default or the public shall organize a
new national bank in the same community as the bank in default to assume
the insured deposits of such bank in default and otherwise to perform
temporarily the functions hereinafter provided for.
(2) Articles of association
The articles of association and the organization certificate of the
new bank shall be executed by representatives designated by the
Corporation.
(3) Capital stock
No capital stock need be paid in by the Corporation.
(4) Executive officer
The new bank shall not have a board of directors, but shall be
managed by an executive officer appointed by the Board of Directors of
the Corporation who shall be subject to its directions.
(5) Subject to laws relating to national banks
In all other respects the new bank shall be organized in accordance
with the then existing provisions of law relating to the organization of
national banking associations.
(6) New deposits
The new bank may, with the approval of the Corporation, accept new
deposits which shall be subject to withdrawal on demand and which,
except where the new bank is the only bank in the community, shall not
exceed $100,000 from any depositor.
(7) Insured status
The new bank, without application to or approval by the Corporation,
shall be an insured depository institution and shall maintain on deposit
with the Federal Reserve bank of its district reserves in the amount
required by law for member banks, but it shall not be required to
subscribe for stock of the Federal Reserve bank.
(8) Investments
Funds of the new bank shall be kept on hand in cash, invested in
obligations of the United States or obligations guaranteed as to
principal and interest by the United States, or deposited with the
Corporation, any Federal Reserve bank, or, to the extent of the
insurance coverage on any such deposit, an insured depository
institution.
(9) Conduct of business
The new bank, unless otherwise authorized by the Comptroller of the
Currency, shall transact business only as authorized by this chapter and
as may be incidental to its organization.
(10) Exempt status
Notwithstanding any other provision of Federal or State law, the new
bank, its franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by any
territory, dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority.
(11) Transfer of deposits
(A) Upon the organization of a new bank, the Corporation shall
promptly make available to it an amount equal to the estimated insured
deposits of such bank in default plus the estimated amount of the
expenses of operating the new bank, and shall determine as soon as
possible the amount due each depositor for the depositor's insured
deposit in the bank in default, and the total expenses of operation of
the new bank.
(B) Upon such determination, the amounts so estimated and made
available shall be adjusted to conform to the amounts so determined.
(12) Earnings
Earnings of the new bank shall be paid over or credited to the
Corporation in such adjustment.
(13) Losses
If any new bank, during the period it continues its status as such,
sustains any losses with respect to which it is not effectively
protected except by reason of being an insured bank, the Corporation
shall furnish to it additional funds in the amount of such losses.
(14) Payment of insured deposits
(A) The new bank shall assume as transferred deposits the payment of
the insured deposits of such bank in default to each of its depositors.
(B) Of the amounts so made available, the Corporation shall transfer
to the new bank, in cash, such sums as may be necessary to enable it to
meet its expenses of operation and immediate cash demands on such
transferred deposits, and the remainder of such amounts shall be subject
to withdrawal by the new bank on demand.
(15) Issuance of stock
(A) Whenever in the judgment of the Board of Directors it is
desirable to do so, the Corporation shall cause capital stock of the new
bank to be offered for sale on such terms and conditions as the Board of
Directors shall deem advisable in an amount sufficient, in the opinion
of the Board of Directors, to make possible the conduct of the business
of the new bank on a sound basis, but in no event less than that
required by section 51 of this title for the organization of a national
bank in the place where such new bank is located.
(B) The stockholders of the insured bank in default shall be given
the first opportunity to purchase any shares of common stock so offered.
(16) Issuance of certificate
Upon proof that an adequate amount of capital stock in the new bank
has been subscribed and paid for in cash, the Comptroller of the
Currency shall require the articles of association and the organization
certificate to be amended to conform to the requirements for the
organization of a national bank, and thereafter, when the requirements
of law with respect to the organization of a national bank have been
complied with, the Comptroller of the Currency shall issue to the bank a
certificate of authority to commence business, and thereupon the bank
shall cease to have the status of a new bank, shall be managed by
directors elected by its own shareholders, may exercise all the powers
granted by law, and shall be subject to all provisions of law relating
to national banks. Such bank shall thereafter be an insured national
bank, without certification to or approval by the Corporation.
(17) Transfer to other institution
If the capital stock of the new bank is not offered for sale, or if
an adequate amount of capital for such new bank is not subscribed and
paid for, the Board of Directors may offer to transfer its business to
any insured depository institution in the same community which will take
over its assets, assume its liabilities, and pay to the Corporation for
such business such amount as the Board of Directors may deem adequate;
or the Board of Directors in its discretion may change the location of
the new bank to the office of the Corporation or to some other place or
may at any time wind up its affairs as herein provided.
(18) Winding up
Unless the capital stock of the new bank is sold or its assets are
taken over and its liabilities are assumed by an insured depository
institution as above provided within 2 years after the date of its
organization, the Corporation shall wind up the affairs of such bank,
after giving such notice, if any, as the Comptroller of the Currency may
require, and shall certify to the Comptroller of the Currency the
termination of the new bank. Thereafter the Corporation shall be liable
for the obligations of such bank and shall be the owner of its assets.
(19) Applicability of certain laws
The provisions of sections 181 and 182 of this title shall not apply
to a new bank under this subsection.
(n) Bridge banks
(1) Organization
(A) Purpose
When 1 or more insured banks are in default, or when the Corporation
anticipates that 1 or more insured banks may become in default, the
Corporation may, in its discretion, organize, and the Office of the
Comptroller of the Currency shall charter, 1 or more national banks with
respect thereto with the powers and attributes of national banking
associations, subject to the provisions of this subsection, to be
referred to as bridge banks.
(B) Authorities
Upon the granting of a charter to a bridge bank, the bridge bank may
--
(i) assume such deposits of such insured bank or banks that is or are
in default or in danger of default as the Corporation may, in its
discretion, determine to be appropriate, except that if any insured
deposits of a bank are assumed, all insured deposits of that bank shall
be assumed by the bridge bank or another insured depository institution;
(ii) assume such other liabilities (including liabilities associated
with any trust business) of such insured bank or banks that is or are in
default or in danger of default as the Corporation may, in its
discretion, determine to be appropriate;
(iii) purchase such assets (including assets associated with any
trust business) of such insured bank or banks that is or are in default
or in danger of default as the Corporation may, in its discretion,
determine to be appropriate; and
(iv) perform any other temporary function which the Corporation may,
in its discretion, prescribe in accordance with this chapter.
(C) Articles of association
The articles of association and organization certificate of a bridge
bank as approved by the Corporation shall be executed by 3
representatives designated by the Corporation.
(D) Interim directors
A bridge bank shall have an interim board of directors consisting of
not fewer than 5 nor more than 10 members appointed by the Corporation.
(E) National bank
A bridge bank shall be organized as a national bank.
(2) Chartering
(A) Conditions
A national bank may be chartered by the Comptroller of the Currency
as a bridge bank only if the Board of Directors determines that --
(i) the amount which is reasonably necessary to operate such bridge
bank will not exceed the amount which is reasonably necessary to save
the cost of liquidating, including paying the insured accounts of, 1 or
more insured banks in default or in danger of default with respect to
which the bridge bank is chartered;
(ii) the continued operation of such insured bank or banks in default
or in danger of default with respect to which the bridge bank is
chartered is essential to provide adequate banking services in the
community where each such bank in default or in danger of default is
located; or
(iii) the continued operation of such insured bank or banks in
default or in danger of default with respect to which the bridge bank is
chartered is in the best interest of the depositors of such bank or
banks in default or in danger of default or the public.
(B) Insured national bank
A bridge bank shall be an insured bank from the time it is chartered
as a national bank.
(C) Bridge bank treated as being in default for certain purposes
A bridge bank shall be treated as an insured bank in default at such
times and for such purposes as the Corporation may, in its discretion,
determine.
(D) Management
A bridge bank, upon the granting of its charter, shall be under the
management of a board of directors consisting of not fewer than 5 nor
more than 10 members appointed by the Corporation.
(E) Bylaws
The board of directors of a bridge bank shall adopt such bylaws as
may be approved by the Corporation.
(3) Transfer of assets and liabilities
(A) In general
(i) Transfer upon grant of charter
Upon the granting of a charter to a bridge bank pursuant to this
subsection, the Corporation, as receiver, or any other receiver
appointed with respect to any insured bank in default with respect to
which the bridge bank is chartered may transfer any assets and
liabilities of such bank in default to the bridge bank in accordance
with paragraph (1).
(ii) Subsequent transfers
At any time after a charter is granted to a bridge bank, the
Corporation, as receiver, or any other receiver appointed with respect
to an insured bank in default may transfer any assets and liabilities of
such insured bank in default as the Corporation may, in its discretion,
determine to be appropriate in accordance with paragraph (1).
(iii) Treatment of trust business
For purposes of this paragraph, the trust business, including
fiduciary appointments, of any insured bank in default is included among
its assets and liabilities.
(iv) Effective without approval
The transfer of any assets or liabilities, including those associated
with any trust business, of an insured bank in default transferred to a
bridge bank shall be effective without any further approval under
Federal or State law, assignment, or consent with respect thereto.
(B) Intent of Congress regarding continuing operations
It is the intent of the Congress that, in order to prevent
unnecessary hardship or losses to the customers of any insured bank in
default with respect to which a bridge bank is chartered, especially
creditworthy farmers, small businesses, and households, the Corporation
should --
(i) continue to honor commitments made by the bank in default to
creditworthy customers, and
(ii) not interrupt or terminate adequately secured loans which are
transferred under subparagraph (A) and are being repaid by the debtor in
accordance with the terms of the loan instrument.
(4) Powers of bridge banks
Each bridge bank chartered under this subsection shall have all
corporate powers of, and be subject to the same provisions of law as, a
national bank, except that --
(A) the Corporation may --
(i) remove the interim directors and directors of a bridge bank;
(ii) fix the compensation of members of the interim board of
directors and the board of directors and senior management, as
determined by the Corporation in its discretion, of a bridge bank; and
(iii) waive any requirement established under section 71, 72, 73, 74,
or 75 of this title (relating to directors of national banks) or section
71a of this title which would otherwise be applicable with respect to
directors of a bridge bank by operation of paragraph (2)(B);
(B) the Corporation may indemnify the representatives for purposes of
paragraph (1)(B) and the interim directors, directors, officers,
employees, and agents of a bridge bank on such terms as the Corporation
determines to be appropriate;
(C) no requirement under section 51 of this title or any other
provision of law relating to the capital of a national bank shall apply
with respect to a bridge bank;
(D) the Comptroller of the Currency may establish a limitation on the
extent to which any person may become indebted to a bridge bank without
regard to the amount of the bridge bank's capital or surplus;
(E)(i) the board of directors of a bridge bank shall elect a
chairperson who may also serve in the position of chief executive
officer, except that such person shall not serve either as chairperson
or as chief executive officer without the prior approval of the
Corporation;
(ii) the board of directors of a bridge bank may appoint a chief
executive officer who is not also the chairperson, except that such
person shall not serve as chief executive officer without the prior
approval of the Corporation;
(F) a bridge bank shall not be required to purchase stock of any
Federal Reserve bank;
(G) the Comptroller of the Currency shall waive any requirement for a
fidelity bond with respect to a bridge bank at the request of the
Corporation;
(H) any judicial action to which a bridge bank becomes a party by
virtue of its acquisition of any assets or assumption of any liabilities
of a bank in default shall be stayed from further proceedings for a
period of up to 45 days at the request of the bridge bank;
(I) no agreement which tends to diminish or defeat the right, title
or interest of a bridge bank in any asset of an insured bank in default
acquired by it shall be valid against the bridge bank unless such
agreement --
(i) is in writing,
(ii) was executed by such insured bank in default and the person or
persons claiming an adverse interest thereunder, including the obligor,
contemporaneously with the acquisition of the asset by such insured bank
in default,
(iii) was approved by the board of directors of such insured bank in
default or its loan committee, which approval shall be reflected in the
minutes of said board or committee, and
(iv) has been, continuously from the time of its execution, an
official record of such insured bank in default;
(J) notwithstanding section 1823(e)(2) of this title, any agreement
relating to an extension of credit between a Federal home loan bank or
Federal Reserve bank and any insured depository institution which was
executed before the extension of credit by such bank to such depository
institution shall be treated as having been executed contemporaneously
with such extension of credit for purposes of subparagraph (I); and
(K) except with the prior approval of the Corporation, a bridge bank
may not, in any transaction or series of transactions, issue capital
stock or be a party to any merger, consolidation, disposition of assets
or liabilities, sale or exchange of capital stock, or similar
transaction, or change its charter.
(5) Capital
(A) No capital required
The Corporation shall not be required to --
(i) issue any capital stock on behalf of a bridge bank chartered
under this subsection; or
(ii) purchase any capital stock of a bridge bank, except that
notwithstanding any other provision of Federal or State law, the
Corporation may purchase and retain capital stock of a bridge bank in
such amounts and on such terms as the Corporation, in its discretion,
determines to be appropriate.
(B) Operating funds in lieu of capital
Upon the organization of a bridge bank, and thereafter, as the Board
of Directors may, in its discretion, determine to be necessary or
advisable, the Corporation may make available to the bridge bank, upon
such terms and conditions and in such form and amounts as the
Corporation may in its discretion determine, funds for the operation of
the bridge bank in lieu of capital.
(C) Authority to issue capital stock
Whenever the Board of Directors determines it is advisable to do so,
the Corporation shall cause capital stock of a bridge bank to be issued
and offered for sale in such amounts and on such terms and conditions as
the Corporation may, in its discretion, determine.
(6) No Federal status
(A) Agency status
A bridge bank is not an agency, establishment, or instrumentality of
the United States.
(B) Employee status
Representatives for purposes of paragraph (1)(B), interim directors,
directors, officers, employees, or agents of a bridge bank are not,
solely by virtue of service in any such capacity, officers or employees
of the United States. Any employee of the Corporation or of any Federal
instrumentality who serves at the request of the Corporation as a
representative for purposes of paragraph (1)(B), interim director,
director, officer, employee, or agent of a bridge bank shall not --
(i) solely by virtue of service in any such capacity lose any
existing status as an officer or employee of the United States for
purposes of title 5 or any other provision of law, or
(ii) receive any salary or benefits for service in any such capacity
with respect to a bridge bank in addition to such salary or benefits as
are obtained through employment with the Corporation or such Federal
instrumentality.
(7) Assistance authorized
The Corporation may, in its discretion, provide assistance under
section 1823(c) of this title to facilitate any transaction described in
clause (i), (ii), or (iii) of paragraph (10)(A) with respect to any
bridge bank in the same manner and to the same extent as such assistance
may be provided under such section with respect to an insured bank in
default, or to facilitate a bridge bank's acquisition of any assets or
the assumption of any liabilities of an insured bank in default.
(8) Acquisition
(A) In general
The responsible agency shall notify the Attorney General of any
transaction involving the merger or sale of a bridge bank requiring
approval under section 1828(c) of this title and if a report on
competitive factors is requested within 10 days, such transaction may
not be consummated before the 5th calendar day after the date of
approval by the responsible agency with respect thereto. If the
responsible agency has found that it must act immediately to prevent the
probable failure of 1 of the banks involved, the preceding sentence does
not apply and the transaction may be consummated immediately upon
approval by the agency.
(B) By out-of-State holding company
Any depository institution, including an out-of-State depository
institution, or any out-of-State depository institution holding company
may acquire and retain the capital stock or assets of, or otherwise
acquire and retain a bridge bank if the bridge bank at any time had
assets aggregating $500,000,000 or more, as determined by the
Corporation on the basis of the bridge bank's reports of condition or on
the basis of the last available reports of condition of any insured bank
in default, which institution has been acquired, or whose assets have
been acquired, by the bridge bank. The acquiring entity may acquire the
bridge bank only in the same manner and to the same extent as such
entity may acquire an insured bank in default under section 1823(f)(2)
of this title.
(9) Duration of bridge bank
Subject to paragraphs (11) and (12), the status of a bridge bank as
such shall terminate at the end of the 2-year period following the date
it was granted a charter. The Board of Directors may, in its
discretion, extend the status of the bridge bank as such for 3
additional 1-year periods.
(10) Termination of bridge bank status
The status of any bridge bank as such shall terminate upon the
earliest of --
(A) the merger or consolidation of the bridge bank with a depository
institution that is not a bridge bank;
(B) at the election of the Corporation, the sale of a majority of the
capital stock of the bridge bank to an entity other than the Corporation
and other than another bridge bank;
(C) the sale of 80 percent, or more, of the capital stock of the
bridge bank to an entity other than the Corporation and other than
another bridge bank;
(D) at the election of the Corporation, either the assumption of all
or substantially all of the deposits and other liabilities of the bridge
bank by a depository institution holding company or a depository
institution that is not a bridge bank, or the acquisition of all or
substantially all of the assets of the bridge bank by a depository
institution holding company, a depository institution that is not a
bridge bank, or other entity as permitted under applicable law; and
(E) the expiration of the period provided in paragraph (9), or the
earlier dissolution of the bridge bank as provided in paragraph (12).
(11) Effect of termination events
(A) Merger or consolidation
A bridge bank that participates in a merger or consolidation as
provided in paragraph (10)(A) shall be for all purposes a national bank
with all the rights, powers, and privileges thereof, and such merger or
consolidation shall be conducted in accordance with, and shall have the
effect provided in, the provisions of applicable law.
(B) Charter conversion
Following the sale of a majority of the capital stock of the bridge
bank as provided in paragraph (10)(B), the Corporation may amend the
charter of the bridge bank to reflect the termination of the status of
the bridge bank as such, whereupon the bank shall remain a national
bank, with all of the rights, powers, and privileges thereof, subject to
all laws and regulations applicable thereto.
(C) Sale of stock
Following the sale of 80 percent or more of the capital stock of a
bridge bank as provided in paragraph (10)(C), the bank shall remain a
national bank, with all of the rights, powers, and privileges thereof,
subject to all laws and regulations applicable thereto.
(D) Assumption of liabilities and sale of assets
Following the assumption of all or substantially all of the
liabilities of the bridge bank, or the sale of all or substantially all
of the assets of the bridge bank, as provided in paragraph (10)(D), at
the election of the Corporation the bridge bank may retain its status as
such for the period provided in paragraph (9).
(E) Effect on holding companies
A depository institution holding company acquiring a bridge bank
under section 1823(f) of this title, paragraph (8)(B) (or any
predecessor provision), or both provisions, shall not be impaired or
adversely affected by the termination of the status of a bridge bank as
a result of subparagraph (A), (B), (C), or (D) of paragraph (10), and
shall be entitled to the rights and privileges provided in section
1823(f) of this title.
(F) Amendments to charter
Following the consummation of a transaction described in subparagraph
(A), (B), (C), or (D) of paragraph (10), the charter of the resulting
institution shall be amended to reflect the termination of bridge bank
status, if appropriate.
(12) Dissolution of bridge bank
(A) In general
Notwithstanding any other provision of State or Federal law, if the
bridge bank's status as such has not previously been terminated by the
occurrence of an event specified in subparagraphs /10/ (A), (B), (C), or
(D) of paragraph (10) --
(i) the Board of Directors may, in its discretion, dissolve a bridge
bank in accordance with this paragraph at any time; and
(ii) the Board of Directors shall promptly commence dissolution
proceedings in accordance with this paragraph upon the expiration of the
2-year period following the date the bridge bank was chartered, or any
extension thereof, as provided in paragraph (9).
(B) Procedures
The Comptroller of the Currency shall appoint the Corporation
receiver for a bridge bank upon certification by the Board of Directors
to the Comptroller of the Currency of its determination to dissolve the
bridge bank. The Corporation as such receiver shall wind up the affairs
of the bridge bank in conformity with the provisions of law relating to
the liquidation of closed national banks. With respect to any such
bridge bank, the Corporation as such receiver shall have all the rights,
powers, and privileges and shall perform the duties related to the
exercise of such rights, powers, or privileges granted by law to a
receiver of any insured depository institution and notwithstanding any
other provision of law in the exercise of such rights, powers, and
privileges the Corporation shall not be subject to the direction or
supervision of any State agency or other Federal agency.
(13) Multiple bridge banks
Subject to paragraph (1)(B)(i), the Corporation may, in the
Corporation's discretion, organize 2 or more bridge banks under this
subsection to assume any deposits of, assume any other liabilities of,
and purchase any assets of a single bank in default.
(o) Supervisory records
In addition to the requirements of section 1817(a)(2) of this title
to provide to the Corporation copies of reports of examination and
reports of condition, whenever the Corporation has been appointed as
receiver for an insured depository institution, the appropriate Federal
banking agency shall make available all supervisory records to the
receiver which may be used by the receiver in any manner the receiver
determines to be appropriate.
(p) Certain convicted debtors prohibited from purchasing assets
(1) Convicted debtors
Except as provided in paragraph (2), any individual who --
(A) has been convicted of an offense under section 215, 656, 657,
1005, 1006, 1007, 1008, /11/ 1014, 1032, 1341, 1343, or 1344 of title 18
or of conspiring to commit such an offense, affecting any insured
depository institution for which any conservator or receiver has been
appointed; and
(B) is in default on any loan or other extension of credit from such
insured depository institution which, if not paid, will cause
substantial loss to the institution, any deposit insurance fund, the
Corporation, the FSLIC Resolution Fund, or the Resolution Trust
Corporation,
may not purchase any asset of such institution from the conservator
or receiver.
(2) Settlement of claims
Paragraph (1) shall not apply to the sale or transfer by the
Corporation of any asset of any insured depository institution to any
individual if the sale or transfer of the asset resolves or settles, or
is part of the resolution or settlement, of --
(A) 1 or more claims that have been, or could have been, asserted by
the Corporation against the individual; or
(B) obligations owed by the individual to any insured depository
institution, the FSLIC Resolution Fund, the Resolution Trust
Corporation, or the Corporation.
(q) Expedited procedures for certain claims
(1) Time for filing notice of appeal
The notice of appeal of any order, whether interlocutory or final,
entered in any case brought by the Corporation against an insured
depository institution's director, officer, employee, agent, attorney,
accountant, or appraiser or any other person employed by or providing
services to an insured depository institution shall be filed not later
than 30 days after the date of entry of the order. The hearing of the
appeal shall be decided not later than 120 days after the date of the
notice of appeal. The appeal shall be decided not later than 180 days
after the date of the notice of appeal.
(2) Scheduling
Consistent with section 1657 of title 18, /12/ a court of the United
States shall expedite the consideration of any case brought by the
Corporation against an insured depository institution's director,
officer, employee, agent, attorney, accountant, or appraiser or any
other person employed by or providing services to an insured depository
institution. As far as practicable the court shall give such case
priority on its docket.
(3) Judicial discretion
The court may modify the schedule and limitations stated in
paragraphs (1) and (2) in a particular case, based on a specific finding
that the ends of justice that would be served by making such a
modification would outweigh the best interest of the public in having
the case resolved expeditiously.
(r) Foreign investigations
The Corporation and the Resolution Trust Corporation, as conservator
or receiver of any insured depository institution and for purposes of
carrying out any power, authority, or duty with respect to an insured
depository institution --
(1) may request the assistance of any foreign banking authority and
provide assistance to any foreign banking authority in accordance with
section 1818(v) of this title; and
(2) may each maintain an office to coordinate foreign investigations
or investigations on behalf of foreign banking authorities.
(s) Prohibition on entering secrecy agreements and protective orders
The Corporation may not enter into any agreement or approve any
protective order which prohibits the Corporation from disclosing the
terms of any settlement of an administrative or other action for damages
or restitution brought by the Corporation in its capacity as conservator
or receiver for an insured depository institution.
(Sept. 21, 1950, ch. 967, 2(11), 64 Stat. 884; Oct. 16, 1966, Pub.
L. 89-695, title III, 301(c), (d), 80 Stat. 1055; Dec. 23, 1969, Pub.
L. 91-151, title I, 7(a)(3), (4), 83 Stat. 375; Oct. 28, 1974, Pub. L.
93-495, title I, 101(a)(3), 102(a)(3), (4), 88 Stat. 1500, 1502; Sept.
17, 1978, Pub. L. 95-369, 6(c)(17)-(22), 92 Stat. 619; Nov. 10, 1978,
Pub. L. 95-630, title XIV, 1401(a), 92 Stat. 3712; Dec. 21, 1979, Pub.
L. 96-153, title III, 323(a), 93 Stat. 1120; Mar. 31, 1980, Pub. L.
96-221, title III, 308(a)(1)(C), (D), 94 Stat. 147; Dec. 26, 1981, Pub.
L. 97-110, title I, 103(c), 95 Stat. 1514; Oct. 15, 1982, Pub. L.
97-320, title I, 113(j), (k), 96 Stat. 1474; Oct. 22, 1986, Pub. L.
99-514, 2, 100 Stat. 2095; Aug. 10, 1987, Pub. L. 100-86, title V,
503(a), 507, 101 Stat. 629, 634; Aug. 9, 1989, Pub. L. 101-73, title
II, 201(a), 211-214, title IX, 909, 103 Stat. 187, 218-246, 477; Nov.
29, 1990, Pub. L. 101-647, title XXV, 2521(a)(1), 2526(a), 2527(a),
2528(a), 2532(b), 2534(a), 104 Stat. 4863, 4875, 4877, 4880, 4882; Dec.
12, 1991, Pub. L. 102-233, title I, 102, title II, 202(a), (b), title
III, 302(a), 105 Stat. 1761, 1766, 1767; Dec. 19, 1991, Pub. L.
102-242, title I, 123(a), 133(a), (e), 141(b), (d), 161(a), (e), title
II, 241(c)(1), title III, 311(a)(1), (b)(1), (2), (5)(B), (C), title IV,
416, 426, 446, 105 Stat. 2252, 2270, 2272, 2277, 2285, 2286, 2331, 2363,
2364, 2366, 2376, 2378, 2382.)
Pub. L. 102-242, title III, 311(b)(2), (c)(1), (3), Dec. 19, 1991,
105 Stat. 2364, 2366, provided that, effective at the end of the 2-year
period beginning on Dec. 19, 1991, with certain exceptions and
qualifications, subsection (a)(3) is amended to read as follows:
(3) Certain retirement accounts. --
(A) In general. -- Notwithstanding any limitation in this chapter
relating to the amount of deposit insurance available for the account of
any 1 depositor, deposits in an insured depository institution made in
connection with --
(i) any individual retirement account described in section 408(a) of
title 26;
(ii) subject to the exception contained in paragraph (1)(D)(ii), any
eligible deferred compensation plan described in section 457 of title
26; and
(iii) any individual account plan defined in section 1002(34) of
title 29, and any plan described in section 401(d) of title 26, to the
extent that participants and beneficiaries under such plan have the
right to direct the investment of assets held in individual accounts
maintained on their behalf by the plan,
shall be aggregated and insured in an amount not to exceed $100,000
per participant per insured depository institution.
(B) Amounts taken into account. -- For purposes of subparagraph (A),
the amount aggregated for insurance coverage under this paragraph shall
consist of the present vested and ascertainable interest of each
participant under the plan, excluding any remainder interest created by,
or as a result of, the plan.
Pub. L. 102-242, title III, 311(a)(1), (c)(1), Dec. 19, 1991, 105
Stat. 2363, 2366, provided that, effective at the end of the 2-year
period beginning on Dec. 19, 1991, subsection (a) is amended by adding
at the end a new paragraph (8) reading as follows:
(8) Certain investment contracts not treated as insured deposits. --
(A) In general. -- A liability of an insured depository institution
shall not be treated as an insured deposit if the liability arises under
any insured depository institution investment contract between any
insured depository institution and any employee benefit plan which
expressly permits benefit-responsive withdrawals or transfers.
(B) Definitions. -- For purposes of subparagraph (A) --
(i) Benefit-responsive withdrawals or transfers. -- The term
''benefit-responsive withdrawals or transfers'' means any withdrawal or
transfer of funds (consisting of any portion of the principal and any
interest credited at a rate guaranteed by the insured depository
institution investment contract) during the period in which any
guaranteed rate is in effect, without substantial penalty or adjustment,
to pay benefits provided by the employee benefit plan or to permit a
plan participant or beneficiary to redirect the investment of his or her
account balance.
(ii) Employee benefit plan. -- The term ''employee benefit plan'' --
(I) has the meaning given to such term in section 1002(3) of title
29; and
(II) includes any plan described in section 401(d) of title 26.
Section 1464(d)(2)(C) of this title, referred to in subsec. (c)(6)(
B), was repealed by Pub. L. 102-242, title I, 133(d), Dec. 19, 1991,
105 Stat. 2271, and former section 1464(d)(2)(F) was redesignated
section 1464(d)(2)(C).
Section 1831q of this title, referred to in subsec. (d)(2)(B), (E),
was in the original ''section 42'' meaning section 42 of the Federal
Deposit Insurance Act, which was translated as meaning section 40 of
that Act to reflect the probable intent of Congress, because no section
42 of that Act has been enacted.
Section 1441a(b)(4) of this title, referred to in subsec. (d)(2)(I)(
ii), was in the original ''section 21A(b)(4)'', which has been
translated as reading ''section 21A(b)(4) of the Federal Home Loan Bank
Act'', to reflect the probable intent of Congress.
The Federal Rules of Civil Procedure, referred to in subsec. (d)(
18), (19), are set out in the Appendix to Title 28, Judiciary and
Judicial Procedure.
Section 101 of title 11, referred to in subsec. (e)(8)(D)(iv), (v)(
I), and (viii), was subsequently amended, and pars. (24), (41), and
(50) of section 101 no longer define the terms ''forward contract'',
''repurchase agreement'', and ''transfer''. However, such terms are
defined elsewhere in that section.
Section 1008 of title 18, referred to in subsec. (p)(1)(A), was
repealed by Pub. L. 101-73, title IX, 961(g)(1), Aug. 9, 1989, 103
Stat. 500.
Section is derived from subsec. (l) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (a)(1). Pub. L. 102-242, 311(b)(1), added par. (1)
and struck out former par. (1) which read as follows: ''The
Corporation shall insure the deposits of all insured depository
institutions as provided in this chapter. The maximum amount of the
insured deposit of any depositor shall be $100,000.''
Subsec. (a)(2)(A). Pub. L. 102-242, 311(b)(5)(B), in closing
provisions, substituted ''such depositor shall, for the purpose of
determining the amount of insured deposits under this subsection, be
deemed a depositor in such custodial capacity separate and distinct from
any other officer, employee, or agent of the United States or any public
unit referred to in clause (ii), (iii), (iv), or (v) and the deposit of
any such depositor shall be insured in an amount not to exceed $100,000
per account'' for ''his deposit shall be insured'' before ''in an amount
not to exceed $100,000 per account.''.
Subsec. (a)(2)(B). Pub. L. 102-242, 311(b)(5)(C), substituted ''(B)''
for ''(b)'' as subpar. designation.
Subsec. (a)(6)(E). Pub. L. 102-233, 202(a), substituted ''1993'' for
''1992'' and ''2000'' for ''1999''.
Subsec. (a)(6)(J). Pub. L. 102-233, 202(b), substituted ''1992'' for
''1991'' and ''1993'' for ''1992'' in cl. (i), and ''1992'' for
''1991'' and ''2000'' for ''1999'' in cl. (ii).
Subsec. (c)(5). Pub. L. 102-242, 133(a), amended par. (5) generally,
revising and restating as subpars. (A) to (L) provisions of former
subpars. (A) to (H).
Subsec. (c)(6)(B). Pub. L. 102-233, 102, amended subpar. (B)
generally. Prior to amendment, subpar. (B) read as follows:
''Whenever the Director of the Office of Thrift Supervision appoints a
receiver under the provisions of section 1464(d)(2)(C) of this title for
the purpose of liquidation or winding up any savings association's
affairs --
''(i) during the 3-year period beginning on August 9, 1989, the
Resolution Trust Corporation shall be appointed; and
''(ii) after the end of the 3-year period referred to in clause (i),
the Corporation shall be appointed.''
Subsec. (c)(9). Pub. L. 102-242, 133(e), amended par. (9) generally.
Prior to amendment, par. (9) read as follows: ''In any case in which
the Corporation is appointed conservator or receiver pursuant to
paragraph (4) or (6) --
''(A) the provisions of this section shall be applicable to the
Corporation, as conservator or receiver of any insured State depository
institution in the same manner and to the same extent as if such
institution were a Federal depository institution for which the
Corporation had been appointed conservator or receiver; and
''(B) the Corporation as receiver of any insured State depository
institution may --
''(i) liquidate such institution in an orderly manner; and
''(ii) make such other disposition of any matter concerning such
institution as the Corporation determines is in the best interests of
the institution, the depositors of such institution, and the
Corporation.''
Subsec. (c)(10) to (13). Pub. L. 102-242, 133(e), added pars. (10)
to (13).
Subsec. (d)(2)(B). Pub. L. 102-242, 241(c)(1)(A), inserted ''(subject
to the provisions of section 1831q of this title)'' before comma in
introductory provisions.
Subsec. (d)(2)(E). Pub. L. 102-242, 241(c)(1)(B), inserted ''(subject
to the provisions of section 1831q of this title)'' before first comma.
Subsec. (d)(2)(K). Pub. L. 102-242, 426, added subpar. (K).
Subsec. (d)(3)(A). Pub. L. 102-242, 161(a)(1), substituted
''paragraph (4)'' for ''paragraph (4)(A)''.
Subsec. (d)(4). Pub. L. 102-242, 416, amended par. (4) generally.
Prior to amendment, par. (4) read as follows: ''The Corporation may
prescribe regulations regarding the allowance or disallowance of claims
by the receiver and providing for administrative determination of claims
and review of such determination.''
Subsec. (d)(5)(D). Pub. L. 102-242, 141(b), amended subpar. (D)
generally. Prior to amendment, subpar. (D) read as follows: ''The
receiver may disallow any portion of any claim by a creditor or claim of
security, preference, or priority which is not proved to the
satisfaction of the receiver.''
Subsec. (d)(11)(B). Pub. L. 102-242, 161(a)(2), substituted
''paragraph (15)(B)'' for ''paragraph (14)(C)''.
Subsec. (d)(13)(E). Pub. L. 102-242, 123(a), added subpar. (E).
Subsec. (e)(3)(C)(ii), (4)(B)(iii). Pub. L. 102-242, 161(a)(3), (4),
substituted ''subsection (i)'' for ''subsection (k)''.
Subsec. (e)(8)(A), (E). Pub. L. 102-242, 161(a)(5), substituted
''subsection (d)(9) of this section'' for ''subsections (d)(9) and (i)(
4)(I) of this section''.
Subsec. (h). Pub. L. 102-242, 141(d)(2), substituted ''resolution''
for ''liquidation'' in heading.
Subsec. (h)(4). Pub. L. 102-242, 141(d)(1), added par. (4).
Subsec. (i)(3)(A). Pub. L. 102-242, 161(e), substituted
''Notwithstanding any other provision of Federal or State law, or the
constitution of any State, the'' for ''The''.
Subsec. (n)(9). Pub. L. 102-242, 161(a)(6), substituted ''paragraphs
(11) and (12)'' for ''paragraphs (11) and (13)''.
Subsec. (n)(11)(D). Pub. L. 102-242, 161(a)(7), substituted
''paragraph (9)'' for ''paragraph (8)''.
Subsec. (s). Pub. L. 102-242, 446, added subsec. (s).
1990 -- Subsec. (d)(2)(I), (J). Pub. L. 101-647, 2534(a), added
subpar. (I) and redesignated former subpar. (I) as (J).
Subsec. (d)(17). Pub. L. 101-647, 2528(a), added par. (17).
Subsec. (d)(18), (19). Pub. L. 101-647, 2521(a)(1), added pars.
(18) and (19).
Subsec. (p). Pub. L. 101-647, 2526(a), added subsec. (p).
Subsec. (q). Pub. L. 101-647, 2527, added subsec. (q).
Subsec. (r). Pub. L. 101-647, 2532(b), added subsec. (r).
1989 -- Subsec. (a)(1). Pub. L. 101-73, 211(1), added par. (1) and
struck out former par. (1) which read as follows: ''The Temporary
Federal Deposit Insurance Fund and the Fund for Mutuals heretofore
created pursuant to the provisions of section 12B of the Federal Reserve
Act, as amended, are consolidated into a Permanent Insurance Fund for
insuring deposits, and the assets therein shall be held by the
Corporation for the uses and purposes of the Corporation: Provided,
That the obligations to and rights of the Corporation, depositors,
banks, and other persons arising out of any event or transaction prior
to September 21, 1950, shall remain unimpaired. On and after August 23,
1935, the Corporation shall insure the deposits of all insured banks as
provided in this chapter: Provided further, That the insurance shall
apply only to deposits of insured banks which have been made available
since March 10, 1933, for withdrawal in the usual course of the banking
business: Provided further, That if any insured bank shall, without the
consent of the Corporation, release or modify restrictions on or
deferments of deposits which had not been made available for withdrawal
in the usual course of the banking business on or before August 23,
1935, such deposits shall not be insured. Except as provided in
paragraph (2), the maximum amount of the insured deposit of any
depositor shall be $100,000.''
Subsec. (a)(2)(A). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank'' wherever appearing.
Subsec. (a)(2)(B). Pub. L. 101-73, 211(2), struck out ''time and
savings'' after ''deposited in''.
Pub. L. 101-73, 201(a), substituted ''insured depository
institution'' for ''insured bank''.
Subsec. (a)(3). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank''.
Subsec. (a)(4) to (7). Pub. L. 101-73, 211(3), added pars. (4) to
(7).
Subsec. (b). Pub. L. 101-73, 201(a), substituted ''insured depository
institution'' for ''insured bank''.
Subsec. (c). Pub. L. 101-73, 212(a), added subsec. (c) and struck
out former subsec. (c) which related to Corporation as receiver.
Subsec. (d). Pub. L. 101-73, 212(a), added subsec. (d) and struck
out former subsec. (d) which related to powers and duties of
Corporation as receiver.
Subsec. (e). Pub. L. 101-73, 212(a), added subsec. (e) and struck
out former subsec. (e) which related to Corporation as receiver of
State banks.
Subsec. (f). Pub. L. 101-73, 212(a), added subsec. (f) and struck
out former subsec. (f) which related to payment of insured deposits of
closed insured bank or insured branch of a foreign bank.
Subsec. (g). Pub. L. 101-73, 212(a), added subsec. (g) and struck
out former subsec. (g) which related to subrogation rights of
Corporation in the case of a closed national bank, insured branch of a
foreign bank, District bank, or closed insured Federal savings bank.
Subsec. (h). Pub. L. 101-73, 212(a), added subsec. (h) and struck
out former subsec. (h) which related to organization, etc., of new
national banks upon closing of insured banks. See subsec. (m) of this
section.
Subsec. (i). Pub. L. 101-73, 212(a), added subsec. (i) and struck
out former subsec. (i) which related to establishment, etc., of bridge
banks. See subsec. (n) of this section.
Subsec. (j). Pub. L. 101-73, 212(a), added subsec. (j) and struck
out former subsec. (j) which related to conditions applicable to
liquidation proceedings.
Subsecs. (k), (l). Pub. L. 101-73, 212(a), added subsecs. (k) and
(l).
Subsec. (m). Pub. L. 101-73, 213, added subsec. (m).
Subsec. (n). Pub. L. 101-73, 214, added subsec. (n).
Subsec. (o). Pub. L. 101-73, 909, added subsec. (o).
1987 -- Subsec. (h). Pub. L. 100-86, 503(a)(1), (2), designated
existing provisions as par. (1) and redesignated former subsecs. (i)
to (l) as pars. (2) to (5), respectively.
Subsec. (i). Pub. L. 100-86, 503(a)(2), (3), added subsec. (i).
Former subsec. (i) redesignated subsec. (h)(2) of this section.
Subsec. (j). Pub. L. 100-86, 503(a)(2), 507, added subsec. (j).
Former subsec. (j) redesignated subsec. (h)(3) of this section.
Subsecs. (k), (l). Pub. L. 100-86, 503(a)(2), redesignated subsecs.
(k) and (l) as pars. (4) and (5), respectively, of subsec. (h).
1986 -- Subsec. (a)(3). Pub. L. 99-514 substituted ''Internal
Revenue Code of 1986'' for ''Internal Revenue Code of 1954'' wherever
appearing, which for purposes of codification was translated as ''title
26'' thus requiring no change in text.
1982 -- Subsec. (c). Pub. L. 97-320, 113(j), inserted provision
relating to appointment of Corporation as receiver for an insured
Federal savings bank by Federal Home Loan Bank Board.
Subsec. (g). Pub. L. 97-320, 113(k), inserted ''or closed insured
Federal savings bank,'' after ''foreign bank, or District bank,''.
1981 -- Subsec. (a)(2)(A)(iv). Pub. L. 97-110 inserted ''the Trust
Territory of the Pacific Islands,'' after ''Virgin Islands, American
Samoa,'' and ''of the Trust Territory of the Pacific Islands,'' after
''of American Samoa,''.
1980 -- Subsec. (a)(1). Pub. L. 96-221, 308(a)(1)(C), substituted
''$100,000'' for ''$40,000''.
Subsec. (i). Pub. L. 96-221, 308(a)(1)(D), substituted ''$100,000''
for ''$40,000''.
1979 -- Subsec. (a)(2)(A)(v). Pub. L. 96-153 added cl. (v).
1978 -- Subsec. (a)(3). Pub. L. 95-630 added par. (3).
Subsec. (c). Pub. L. 95-369, 6(c)(17), inserted ''insured Federal
branch of a foreign bank'' after ''any insured national bank''.
Subsec. (e). Pub. L. 95-369, 6(c)(18), (19), inserted ''or any
insured branch (other than a Federal branch) of a foreign bank'' after
''(except a District bank)'', and substituted ''such insured State bank
or insured branch of a foreign bank'' for ''such insured State bank''.
Subsec. (f). Pub. L. 95-369, 6(c)(20), inserted ''or insured branch
of a foreign bank'' after ''Whenever an insured bank''.
Subsec. (g). Pub. L. 95-369, 6(c)(21), (22), inserted ''insured
branch of a foreign bank'' after ''In the case of a closed national
bank'', and substituted ''In the case of any closed insured bank or
closed insured branch of a foreign bank, such subrogation'' for ''In the
case of any closed insured bank, such subrogation''.
1974 -- Subsec. (a). Pub. L. 93-495, 101(a)(3), 102(a)(3),
redesignated existing provisions as par. (1), inserted exception
relating to applicability of par. (2), substituted ''$40,000'' for
''$20,000', and added par. (2).
Subsec. (i). Pub. L. 93-495, 102(a)(4), substituted ''$40,000'' for
''$20,000''.
1969 -- Subsec. (a). Pub. L. 91-151, 7(a)(3), substituted $20,000
for $15,000 in last sentence.
Subsec. (i). Pub. L. 91-151, 7(a)(4), substituted $20,000 for $15,000
in fifth sentence.
1966 -- Subsec. (a). Pub. L. 89-695, 301(c), substituted in last
sentence ''$15,000'' for ''$10,000'' and struck out '': And provided
further, That in the case of banks closing prior to September 21, 1950,
the maximum amount of the insured deposit of any depositor shall be
$5,000''.
Subsec. (i). Pub. L. 89-695, 301(d), substituted ''$15,000'' for
''$10,000'' in fifth sentence.
Oversight Board redesignated Thrift Depositor Protection Oversight
Board, effective Feb. 1, 1992, see section 302(a) of Pub. L. 102-233,
set out as a note under section 1441a of this title.
Amendment by section 133(a), (e) of Pub. L. 102-242 effective 1 year
after Dec. 19, 1991, see section 133(g) of Pub. L. 102-242, set out as
a note under section 191 of this title.
Section 311(c) of Pub. L. 102-242 provided that:
''(1) In general. -- Except as provided in paragraph (2), the
amendments made by subsection (a) and paragraphs (2) and (3) of
subsection (b) (amending this section and section 1817 of this title)
shall take effect at the end of the 2-year period beginning on the date
of the enactment of this Act (Dec. 19, 1991).
''(2) Application to time deposits. --
''(A) Certain deposits excluded. -- Except with respect to the
amendment referred to in paragraph (3), the amendments made by
subsections (a) and (b) (amending this section and sections 1813 and
1817 of this title) shall not apply to any time deposit which --
''(i) was made before the date of enactment of this Act (Dec. 19,
1991); and
''(ii) matures after the end of the 2-year period referred to in
paragraph (1).
''(B) Rollovers and renewals treated as new deposit. -- Any renewal
or rollover of a time deposit described in subparagraph (A) after the
date of the enactment of this Act shall be treated as a new deposit
which is not described in such subparagraph.
''(3) Effective date for amendment relating to certain employee
plans. --
''(A) Section 11(a)(1)(B) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)(1)(B)) (as amended by subsection (b)(1) of this section)
shall take effect on the earlier of --
''(i) the date of the enactment of this Act (Dec. 19, 1991); or
''(ii) January 1, 1992.
''(B) Section 11(a)(3)(A) of the Federal Deposit Insurance Act (as
amended by subsection (b)(2) of this section) shall take effect on the
earlier of the dates described in clauses (i) and (ii) of subparagraph
(A) with respect to plans described in clause (ii) of such section.''
Amendment by Pub. L. 96-221 effective Mar. 31, 1980, see section
308(e) of Pub. L. 96-221, set out as a note under section 1817 of this
title.
Amendment by section 308(a)(1) of Pub. L. 96-221 not applicable to
any claim arising out of the closing of a bank prior to the effective
date of section 308 of Pub L. 96-221, see section 308(a)(2) of Pub. L.
96-221, set out as a note under section 1813 of this title.
Amendment by Pub. L. 96-153 applicable only to claims arising after
Dec. 21, 1979, with respect to a closing of a bank, etc., see section
323(e) of Pub. L. 96-153, set out as an Effective and Termination Dates
of 1979 Amendment note under section 1757 of this title.
Amendment by Pub. L. 95-630 effective Nov. 10, 1978, see section
1402 of Pub. L. 95-630, set out as a note under section 1787 of this
title.
Amendment by sections 101(a)(3) and 102(a)(3), (4) of Pub. L.
93-495 effective on thirtieth day beginning after Oct. 28, 1974, and
amendment by section 102(a)(3), (4) of Pub. L. 93-495 not applicable to
any claim arising out of the closing of any bank prior to such effective
date, see sections 101(g) and 102(a)(3), (4) of Pub. L. 93-495, set
out as a note under section 1813 of this title.
Amendment by Pub. L. 91-151 not applicable to any claim arising out
of the closing of a bank where such closing took place prior to Dec.
23, 1969, see section 7(b) of Pub. L. 91-151, set out as a note under
section 1813 of this title.
Amendment by Pub. L. 89-695 not applicable to any claim arising out
of the closing of a bank where such closing is prior to Oct. 16, 1966,
see section 301(e) of Pub. L. 89-695, set out as a note under section
1813 of this title.
Section 311(b)(4) of Pub. L. 102-242 provided that:
''(A) Review of coverage. -- For the purpose of prescribing
regulations, during the 1-year period beginning on the date of the
enactment of this Act (Dec. 19, 1991), the Board of Directors shall
review the capacities and rights in which deposit accounts are
maintained and for which deposit insurance coverage is provided by the
Corporation.
''(B) Regulations. -- After the end of the 1-year period referred to
in subparagraph (A), the Board of Directors may prescribe regulations
that provide for separate insurance coverage for the different
capacities and rights in which deposit accounts are maintained if a
determination is made by the Board of Directors that such separate
insurance coverage is consistent with --
''(i) the purpose of protecting small depositors and limiting the
undue expansion of deposit insurance coverage; and
''(ii) the insurance provisions of the Federal Deposit Insurance Act
(12 U.S.C. 1811 et seq.).
''(C) Delayed effective date for regulations. -- No regulation
prescribed under subparagraph (B) may take effect before the 2-year
period beginning on the date of the enactment of this Act (Dec. 19,
1991).''
Section 311(d) of Pub. L. 102-242 provided that:
''(1) In general. -- The Federal Deposit Insurance Corporation, in
conjunction with such consultants and technical experts as the
Corporation determines to be appropriate, shall conduct a study of the
cost and feasibility of tracking the insured and uninsured deposits of
any individual and the exposure, under any Act of Congress or any
regulation of any appropriate Federal banking agency, of the Federal
Government with respect to all insured depository institutions.
''(2) Analysis of costs and benefits. -- The study under paragraph
(1) shall include detailed, technical analysis of the costs and benefits
associated with the least expensive way to implement the system.
''(3) Specific factors to be studied. -- As part of the study under
paragraph (1), the Corporation shall investigate, review, and evaluate
--
''(A) the data systems that would be required to track deposits in
all insured depository institutions;
''(B) the reporting burdens of such tracking on individual depository
institutions;
''(C) the systems which exist or which would be required to be
developed to aggregate such data on an accurate basis;
''(D) the implications such tracking would have for individual
privacy; and
''(E) the manner in which systems would be administered and enforced.
''(4) Federal reserve board survey. -- As part of the informational
study required under paragraph (1), the Board of Governors of the
Federal Reserve System shall conduct, in conjunction with other Federal
departments and agencies as necessary, a survey of the ownership of
deposits held by individuals including the dollar amount of deposits
held, the type of deposit accounts held, and the type of financial
institutions in which the deposit accounts are held.
''(5) Analysis by fdic. -- The results of the survey under paragraph
(4) shall be provided to the Federal Deposit Insurance Corporation
before the end of the 1-year period beginning on the date of the
enactment of this Act (Dec. 19, 1991) for analysis and inclusion in the
informational study.
''(6) Report to congress. -- Before the end of the 18-month period
beginning on the date of the enactment of this Act, the Federal Deposit
Insurance Corporation shall submit to the Congress a report containing a
detailed statement of findings made and conclusions drawn from the study
conducted under this section, including such recommendations for
administrative and legislative action as the Corporation determines to
be appropriate.''
Section 451 of Pub. L. 102-242 provided that:
''(a) Continuation Coverage. -- The Federal Deposit Insurance
Corporation --
''(1) shall, in its capacity as a successor of a failed depository
institution (whether acting directly or through any bridge bank), have
the same obligation to provide a group health plan meeting the
requirements of section 602 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1162) (relating to continuation coverage
requirements of group health plans) with respect to former employees of
such institution as such institution would have had but for its failure,
and
''(2) shall require that any successor described in subsection (b)(
1)(B)(iii) provide a group health plan with respect to former employees
of such institution in the same manner as the failed depository
institution would have been required to provide but for its failure.
''(b) Definitions. -- For purposes of this section --
''(1) Successor. -- An entity is a successor of a failed depository
institution during any period if --
''(A) such entity holds substantially all of the assets or
liabilities of such institution, and
''(B) such entity is --
''(i) the Federal Deposit Insurance Corporation,
''(ii) any bridge bank, or
''(iii) an entity that acquires such assets or liabilities from the
Federal Deposit Insurance Corporation or a bridge bank.
''(2) Failed depository institution. -- The term 'failed depository
institution' means any depository institution (as defined in section 3(
c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c))) for which a
receiver has been appointed.
''(3) Bridge bank. -- The term 'bridge bank' has the meaning given
such term by section 11(i)((n)) of the Federal Deposit Insurance Act (12
U.S.C. 1821(i)((n))).
''(c) No premium costs imposed on fdic. -- Subsection (a) shall not
be construed as requiring the Federal Deposit Insurance Corporation to
incur, by reason of this section, any obligation for any premium under
any group health plan referred to in such subsection.
''(d) Effective Date. -- This section shall apply to plan years
beginning on or after the date of the enactment of this Act (Dec. 19,
1991), regardless of whether the qualifying event under section 603 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1163)
occurred before, on, or after such date.''
Security not required from depositories in bankruptcy on insured
deposits, see section 345 of Title 11, Bankruptcy.
597.
/1/ So in original. The second occurrence of the phrase ''in an
amount not to exceed $100,000 per account'' probably should not appear.
/2/ So in original. Probably should be ''depository institution''.
/3/ See References in Text note below.
/4/ See References in Text note below.
/5/ See References in Text note below.
/6/ See References in Text note below.
/7/ So in original. A close parenthesis probably should precede the
comma.
/8/ See References in Text note below.
/9/ So in original. Probably should be ''of''.
/10/ So in original. Probably should be ''subparagraph''.
/11/ See References in Text note below.
/12/ So in original. Probably should be ''title 28,''.
12 USC 1821a. FSLIC Resolution Fund
TITLE 12 -- BANKS AND BANKING
(a) Established
(1) In general
There is established a separate fund to be designated as the FSLIC
Resolution Fund which shall be managed by the Corporation and separately
maintained and not commingled.
(2) Transfer of FSLIC assets and liabilities
(A) In general
Except as provided in section 1441a of this title, all assets and
liabilities of the Federal Savings and Loan Insurance Corporation on the
day before August 9, 1989, shall be transferred to the FSLIC Resolution
Fund.
(B) Additional claims on assets
The FSLIC Resolution Fund shall pay to the Savings Association
Insurance Fund such amounts as are needed for administrative and
supervisory expenses from August 9, 1989, through September 30, 1992.
(3) Separate holding
Assets and liabilities transferred to the FSLIC Resolution Fund shall
be the assets and liabilities of the Fund and not of the Corporation and
shall not be consolidated with the assets and liabilities of the Bank
Insurance Fund, the Savings Association Insurance Fund, or the
Corporation for accounting, reporting, or any other purpose.
(4) Rights, powers, and duties
Effective August 10, 1989, the Corporation shall have all rights,
powers, and duties to carry out the Corporation's duties with respect to
the assets and liabilities of the FSLIC Resolution Fund that the
Corporation otherwise has under this chapter.
(5) Corporation as conservator or receiver
(A) In general
Effective August 10, 1989, the Corporation shall succeed the Federal
Savings and Loan Insurance Corporation as conservator or receiver with
respect to any depository institution --
(i) the accounts of which were insured before August 10, 1989 by the
Federal Savings and Loan Insurance Corporation; and
(ii) for which a conservator or receiver was appointed before January
1, 1989.
(B) Rights, powers, and duties
When acting as conservator or receiver with respect to any depository
institution described in subparagraph (A), the Corporation shall have
all rights, powers, and duties that the Corporation otherwise has as
conservator or receiver under this chapter.
(b) Source of funds
The FSLIC Resolution Fund shall be funded from the following sources
to the extent funds are needed in the listed priority:
(1) Income earned on assets of the FSLIC Resolution Fund.
(2) Liquidating dividends and payments made on claims received by the
FSLIC Resolution Fund from receiverships to the extent such funds are
not required by the Resolution Funding Corporation pursuant to section
1441b of this title or the Financing Corporation pursuant to section
1441 of this title.
(3) Amounts borrowed by the Financing Corporation pursuant to section
1441 of this title.
(4) During the period beginning on August 9, 1989, and ending on
December 31, 1992, amounts assessed against Savings Association
Insurance Fund members by the Corporation pursuant to section 1817 of
this title which are not required by the Financing Corporation pursuant
to section 1441 of this title or by the Resolution Funding Corporation
pursuant to section 1441b of this title.
(c) Treasury backup
(1) In general
If the funds described in subsections (a) and (b) of this section are
insufficient to satisfy the liabilities of the FSLIC Resolution Fund,
the Secretary of the Treasury shall pay to the Fund such amounts as may
be necessary, as determined by the Corporation and the Secretary, for
FSLIC Resolution Fund purposes.
(2) Authorization of appropriations
There are authorized to be appropriated to the Secretary of the
Treasury, without fiscal year limitation, such sums as may be necessary
to carry out this section.
(d) Legal proceedings
Any judgment resulting from a proceeding to which the Federal Savings
and Loan Insurance Corporation was a party prior to its dissolution or
which is initiated against the Corporation with respect to the Federal
Savings and Loan Insurance Corporation or with respect to the FSLIC
Resolution Fund shall be limited to the assets of the FSLIC Resolution
Fund.
(e) Transfer of net proceeds from sale of RTC assets
The FSLIC Resolution Fund shall transfer to the Resolution Funding
Corporation any net proceeds from the sale of assets acquired from the
Resolution Trust Corporation upon the termination of such Corporation
pursuant to section 1441a of this title.
(f) Dissolution
The FSLIC Resolution Fund shall be dissolved upon satisfaction of all
debts and liabilities and sale of all assets. Upon dissolution any
remaining funds shall be paid into the Treasury. Any administrative
facilities and supplies, including offices and office supplies, shall be
transferred to the Corporation for use by and to be held as assets of
the Savings Association Insurance Fund.
(Sept. 21, 1950, ch. 967, 2(11A), as added Aug. 9, 1989, Pub. L.
101-73, title II, 215, 103 Stat. 252, and amended Dec. 12, 1991, Pub.
L. 102-233, title II, 202(c), (d), 105 Stat. 1767; Dec. 19, 1991, Pub.
L. 102-242, title I, 161(b), 105 Stat. 2285.)
1991 -- Subsec. (a)(2)(B). Pub. L. 102-233, 202(c), substituted
''1992'' for ''1991''.
Subsec. (a)(4), (5). Pub. L. 102-242 added pars. (4) and (5).
Subsec. (b)(4). Pub. L. 102-233, 202(d), substituted ''1992'' for
''1991''.
12 USC 1822. Corporation as receiver
TITLE 12 -- BANKS AND BANKING
(a) Bond not required; agents; fee
The Corporation as receiver of an insured depository institution or
branch of a foreign bank shall not be required to furnish bond and may
appoint an agent or agents to assist it in its duties as such receiver.
All fees, compensation, and expenses of liquidation and administration
shall be fixed by the Corporation, and may be paid by it out of funds
coming into its possession as such receiver.
(b) Payment of insured deposit as discharge from liability
Payment of an insured deposit to any person by the Corporation shall
discharge the Corporation, and payment of a transferred deposit to any
person by the new bank or by an insured depository institution in which
a transferred deposit has been made available shall discharge the
Corporation and such new bank or other insured depository institution,
to the same extent that payment to such person by the depository
institution in default would have discharged it from liability for the
insured deposit.
(c) Recognition of claimant not on depository institution records
Except as otherwise prescribed by the Board of Directors, neither the
Corporation nor such new bank or other insured depository institution
shall be required to recognize as the owner of any portion of a deposit
appearing on the records of the depository institution in default under
a name other than that of the claimant, any person whose name or
interest as such owner is not disclosed on the records of such
depository institution in default as part owner of said deposit, if such
recognition would increase the aggregate amount of the insured deposits
in such depository institution in default.
(d) Withholding payments to meet liability to depository institution
The Corporation may withhold payment of such portion of the insured
deposit of any depositor in a depository institution in default as may
be required to provide for the payment of any liability of such
depositor to the depository institution in default or its receiver,
which is not offset against a claim due from such depository
institution, pending the determination and payment of such liability by
such depositor or any other person liable therefor.
(e) Unclaimed deposits
If, after the Corporation shall have given at least three months'
notice to the depositor by mailing a copy thereof to his last-known
address appearing on the records of the depository institution in
default, any depositor in the depository institution in default shall
fail to claim his insured deposit from the Corporation within eighteen
months after the appointment of the receiver for the depository
institution in default, or shall fail within such period to claim or
arrange to continue the transferred deposit with the new bank or with
the other insured depository institution which assumes liability
therefor, all rights of the depositor against the Corporation with
respect to the insured deposit, and against the new bank and such other
insured depository institution with respect to the transferred deposit,
shall be barred, and all rights of the depositor against the depository
institution in default and its shareholders, or the receivership estate
to which the Corporation may have become subrogated, shall thereupon
revert to the depositor. The amount of any transferred deposits not
claimed within such eighteen months' period, shall be refunded to the
Corporation.
(Sept. 21, 1950, ch. 967, 2(12), 64 Stat. 887; Sept. 17, 1978, Pub.
L. 95-369, 6(c)(23), 92 Stat. 619; Oct. 15, 1982, Pub. L. 97-320,
title I, 113(l), 96 Stat. 1474; Aug. 9, 1989, Pub. L. 101-73, title II,
201(a), 216, 103 Stat. 187, 254.)
Section is derived from subsec. (m) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1989 -- Pub. L. 101-73, 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing in this section.
Subsec. (a). Pub. L. 101-73, 216(2), inserted heading and text of
subsec. (a), and struck out former subsec. (a) which read as follows:
''Notwithstanding any other provision of law, the Corporation as
receiver of a closed national bank, branch of a foreign bank, insured
Federal savings bank, or District bank shall not be required to furnish
bond and shall have the right to appoint an agent or agents to assist it
in its duties as such receiver, and all fees, compensation, and expenses
of liquidation and administration thereof shall be fixed by the
Corporation, and may be paid by it out of funds coming into its
possession as such receiver.''
Subsecs. (b), (c). Pub. L. 101-73, 216(1), substituted ''depository
institution in default'' for ''closed bank'' wherever appearing.
Subsec. (d). Pub. L. 101-73, 216(1), (3), substituted ''depository
institution in default'' for ''closed bank'' in three places, struck out
''as a stockholder of the depository institution in default, or of any
liability of such depositor'' after ''payment of any liability of such
depositor'', and substituted ''such depository institution'' for ''such
bank''.
Subsec. (e). Pub. L. 101-73, 216(1), substituted ''depository
institution in default'' for ''closed bank'' wherever appearing.
1982 -- Subsec. (a). Pub. L. 97-320 inserted ''insured Federal
savings bank,'' after ''foreign bank,''.
1978 -- Subsec. (a). Pub. L. 95-369 inserted '', branch of a foreign
bank,'' after ''a closed national bank''.
12 USC 1823. Corporation monies
TITLE 12 -- BANKS AND BANKING
(a) Investment of Corporation's funds
(1) Authority
Funds held in the Bank Insurance Fund, the Savings Association
Insurance Fund, or the FSLIC Resolution Fund, that are not otherwise
employed shall be invested in obligations of the United States or in
obligations guaranteed as to principal and interest by the United
States.
(2) Limitation
The Corporation shall not sell or purchase any obligations described
in paragraph (1) for its own account, at any one time aggregating in
excess of $100,000, without the approval of the Secretary of the
Treasury. The Secretary may approve a transaction or class of
transactions subject to the provisions of this paragraph under such
conditions as the Secretary may determine.
(b) Depository accounts
The depository accounts of the Corporation shall be kept with the
Treasurer of the United States, or, with the approval of the Secretary
of the Treasury, with a Federal Reserve bank, or with a depository
institution designated as a depository or fiscal agent of the United
States: Provided, That the Secretary of the Treasury may waive the
requirements of this subsection under such conditions as he may
determine: And provided further, That this subsection shall not apply
to the establishment and maintenance in any depository institution for
temporary purposes of depository accounts not in excess of $50,000 in
any one depository institution, or to the establishment and maintenance
in any depository institution of any depository accounts to facilitate
the payment of insured deposits, or the making of loans to, or the
purchase of assets of, insured depository institutions. When designated
for that purpose by the Secretary of the Treasury, the Corporation shall
be a depositary of public moneys, except receipts from customs, under
such regulations as may be prescribed by the said Secretary, and may
also be employed as a financial agent of the Government. It shall
perform all such reasonable duties as depositary of public moneys and
financial agent of the Government as may be required of it.
(c) Assistance to insured depository institutions
(1) The Corporation is authorized, in its sole discretion and upon
such terms and conditions as the Board of Directors may prescribe, to
make loans to, to make deposits in, to purchase the assets or securities
of, to assume the liabilities of, or to make contributions to, any
insured depository institution --
(A) if such action is taken to prevent the default of such insured
depository institution;
(B) /1/ if, with respect to an insured depository institution in
default, such action is taken to restore such insured depository
institution in default to normal operation; or
(C) if, when severe financial conditions exist which threaten the
stability of a significant number of insured depository institutions or
of insured depository institutions possessing significant financial
resources, such action is taken in order to lessen the risk to the
Corporation posed by such insured depository institution under such
threat of instability.
(2)(A) /1/ In order to facilitate a merger or consolidation of an
insured depository institution described in subparagraph (B) with
another insured depository institution or the sale of any or all of the
assets of such insured depository institution or the assumption of any
or all of such insured depository institution's liabilities by another
insured depository institution, or the acquisition of the stock of such
insured depository institution, the Corporation is authorized, in its
sole discretion and upon such terms and conditions as the Board of
Directors may prescribe --
(i) to purchase any such assets or assume any such liabilities;
(ii) to make loans or contributions to, or deposits in, or purchase
the securities of, such other insured depository institution or the
company which controls or will acquire control of such other insured
depository institution;
(iii) to guarantee such other insured depository institution or the
company which controls or will acquire control of such other insured
depository institution against loss by reason of such insured
institution's merging or consolidating with or assuming the liabilities
and purchasing the assets of such insured depository institution or by
reason of such company acquiring control of such insured depository
institution; or
(iv) to take any combination of the actions referred to in
subparagraphs (i) through (iii).
(B) For the purpose of subparagraph (A), the insured depository
institution must be an insured depository institution --
(i) which is in default;
(ii) which, in the judgment of the Board of Directors, is in danger
of default; or
(iii) which, when severe financial conditions exist which threaten
the stability of a significant number of insured depository institutions
or of insured depository institutions possessing significant financial
resources, is determined by the Corporation, in its sole discretion, to
require assistance under subparagraph (A) in order to lessen the risk to
the Corporation posed by such insured depository institution under such
threat of instability.
(C) Any action to which the Corporation is or becomes a party by
acquiring any asset or exercising any other authority set forth in this
section shall be stayed for a period of 60 days at the request of the
Corporation.
(3) The Corporation may provide any person acquiring control of,
merging with, consolidating with or acquiring the assets of an insured
depository institution under subsection (f) or (k) of this section with
such financial assistance as it could provide an insured institution
under this subsection.
(4) Least-cost resolution required. --
(A) In general. -- Notwithstanding any other provision of this
chapter, the Corporation may not exercise any authority under this
subsection or subsection (d), (f), (h), (i), or (k) of this section with
respect to any insured depository institution unless --
(i) the Corporation determines that the exercise of such authority is
necessary to meet the obligation of the Corporation to provide insurance
coverage for the insured deposits in such institution; and
(ii) the total amount of the expenditures by the Corporation and
obligations incurred by the Corporation (including any immediate and
long-term obligation of the Corporation and any direct or contingent
liability for future payment by the Corporation) in connection with the
exercise of any such authority with respect to such institution is the
least costly to the deposit insurance fund of all possible methods for
meeting the Corporation's obligation under this section.
(B) Determining least costly approach. -- In determining how to
satisfy the Corporation's obligations to an institution's insured
depositors at the least possible cost to the deposit insurance fund, the
Corporation shall comply with the following provisions:
(i) Present-value analysis; documentation required. -- The
Corporation shall --
(I) evaluate alternatives on a present-value basis, using a realistic
discount rate;
(II) document that evaluation and the assumptions on which the
evaluation is based, including any assumptions with regard to interest
rates, asset recovery rates, asset holding costs, and payment of
contingent liabilities; and
(III) retain the documentation for not less than 5 years.
(ii) Foregone tax revenues. -- Federal tax revenues that the
Government would forego as the result of a proposed transaction, to the
extent reasonably ascertainable, shall be treated as if they were
revenues foregone by the deposit insurance fund.
(C) Time of determination. --
(i) General rule. -- For purposes of this subsection, the
determination of the costs of providing any assistance under paragraph
(1) or (2) or any other provision of this section with respect to any
depository institution shall be made as of the date on which the
Corporation makes the determination to provide such assistance to the
institution under this section.
(ii) Rule for liquidations. -- For purposes of this subsection, the
determination of the costs of liquidation of any depository institution
shall be made as of the earliest of --
(I) the date on which a conservator is appointed for such
institution;
(II) the date on which a receiver is appointed for such institution;
or
(III) the date on which the Corporation makes any determination to
provide any assistance under this section with respect to such
institution.
(D) Liquidation costs. -- In determining the cost of liquidating any
depository institution for the purpose of comparing the costs under
subparagraph (A) (with respect to such institution), the amount of such
cost may not exceed the amount which is equal to the sum of the insured
deposits of such institution as of the earliest of the dates described
in subparagraph (C), minus the present value of the total net amount the
Corporation reasonably expects to receive from the disposition of the
assets of such institution in connection with such liquidation.
(E) Deposit insurance funds available for intended purpose only. --
(i) In general. -- After December 31, 1994, or at such earlier time
as the Corporation determines to be appropriate, the Corporation may not
take any action, directly or indirectly, with respect to any insured
depository institution that would have the effect of increasing losses
to any insurance fund by protecting --
(I) depositors for more than the insured portion of deposits
(determined without regard to whether such institution is liquidated);
or
(II) creditors other than depositors.
(ii) Deadline for regulations. -- The Corporation shall prescribe
regulations to implement clause (i) not later than January 1, 1994, and
the regulations shall take effect not later than January 1, 1995.
(iii) Purchase and assumption transactions. -- No provision of this
subparagraph shall be construed as prohibiting the Corporation from
allowing any person who acquires any assets or assumes any liabilities
of any insured depository institution for which the Corporation has been
appointed conservator or receiver to acquire uninsured deposit
liabilities of such institution so long as the insurance fund does not
incur any loss with respect to such deposit liabilities in an amount
greater than the loss which would have been incurred with respect to
such liabilities if the institution had been liquidated.
(F) Discretionary determinations. -- Any determination which the
Corporation may make under this paragraph shall be made in the sole
discretion of the Corporation.
(G) Systemic risk. --
(i) Emergency determination by secretary of the treasury. --
Notwithstanding subparagraphs (A) and (E), if, upon the written
recommendation of the Board of Directors (upon a vote of not less than
two-thirds of the members of the Board of Directors) and the Board of
Governors of the Federal Reserve System (upon a vote of not less than
two-thirds of the members of such Board), the Secretary of the Treasury
(in consultation with the President) determines that --
(I) the Corporation's compliance with subparagraphs (A) and (E) with
respect to an insured depository institution would have serious adverse
effects on economic conditions or financial stability; and
(II) any action or assistance under this subparagraph would avoid or
mitigate such adverse effects,
the Corporation may take other action or provide assistance under
this section as necessary to avoid or mitigate such effects.
(ii) Repayment of loss. -- The Corporation shall recover the loss to
the appropriate insurance fund arising from any action taken or
assistance provided with respect to an insured depository institution
under clause (i) expeditiously from 1 or more emergency special
assessments on the members of the insurance fund (of which such
institution is a member) equal to the product of --
(I) an assessment rate established by the Corporation; and
(II) the amount of each member's average total assets during the
semiannual period, minus the sum of the amount of the member's average
total tangible equity and the amount of the member's average total
subordinated debt.
(iii) Documentation required. -- The Secretary of the Treasury shall
--
(I) document any determination under clause (i); and
(II) retain the documentation for review under clause (iv).
(iv) GAO review. -- The Comptroller General of the United States
shall review and report to the Congress on any determination under
clause (i), including --
(I) the basis for the determination;
(II) the purpose for which any action was taken pursuant to such
clause; and
(III) the likely effect of the determination and such action on the
incentives and conduct of insured depository institutions and uninsured
depositors.
(v) Notice. --
(I) In general. -- The Secretary of the Treasury shall provide
written notice of any determination under clause (i) to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Banking, Finance and Urban Affairs of the House of Representatives.
(II) Description of basis of determination. -- The notice under
subclause (I) shall include a description of the basis for any
determination under clause (i).
(H) Rule of construction. -- No provision of law shall be construed
as permitting the Corporation to take any action prohibited by paragraph
(4) unless such provision expressly provides, by direct reference to
this paragraph, that this paragraph shall not apply with respect to such
action.
(5) The Corporation may not use its authority under this subsection
to purchase the voting or common stock of an insured depository
institution. Nothing in the preceding sentence shall be construed to
limit the ability of the Corporation to enter into and enforce covenants
and agreements that it determines to be necessary to protect its
financial interest.
(6)(A) During any period in which an insured depository institution
has received assistance under this subsection and such assistance is
still outstanding, such insured depository institution may defer the
payment of any State or local tax which is determined on the basis of
the deposits held by such insured depository institution or of the
interest or dividends paid on such deposits.
(B) When such insured depository institution no longer has any
outstanding assistance, such insured depository institution shall pay
all taxes which were deferred under subparagraph (A). Such payments
shall be made in accordance with a payment plan established by the
Corporation, after consultation with the applicable State and local
taxing authorities.
(7) The transfer of any assets or liabilities associated with any
trust business of an insured depository institution in default under
subparagraph (2)(A) shall be effective without any State or Federal
approval, assignment, or consent with respect thereto.
(8) Assistance before appointment of conservator or receiver. --
(A) In general. -- Subject to the least-cost provisions of paragraph
(4), the Corporation shall consider providing direct financial
assistance under this section for depository institutions before the
appointment of a conservator or receiver for such institution only under
the following circumstances:
(i) Troubled condition criteria. -- The Corporation determines --
(I) grounds for the appointment of a conservator or receiver exist or
likely will exist in the future unless the depository institution's
capital levels are increased; and
(II) it is unlikely that the institution can meet all currently
applicable capital standards without assistance.
(ii) Other criteria. -- The depository institution meets the
following criteria:
(I) The appropriate Federal banking agency and the Corporation have
determined that, during such period of time preceding the date of such
determination as the agency or the Corporation considers to be relevant,
the institution's management has been competent and has complied with
applicable laws, rules, and supervisory directives and orders.
(II) The institution's management did not engage in any insider
dealing, speculative practice, or other abusive activity.
(B) Public disclosure. -- Any determination under this paragraph to
provide assistance under this section shall be made in writing and
published in the Federal Register.
(9) Any assistance provided under this subsection may be in
subordination to the rights of depositors and other creditors.
(10) In its annual report to the Congress, the Corporation shall
report the total amount it has saved, or estimates it has saved, by
exercising the authority provided in this subsection.
(11) Payments made under this subsection shall be made --
(A) from the Bank Insurance Fund in the case of payments to or on
behalf of a member of such Fund; or
(B) from the Savings Association Insurance Fund or from funds made
available by the Resolution Trust Corporation in the case of payments to
or on behalf of any Savings Association Insurance Fund member.
(d) Sale of assets to Corporation
(1) In general
Any conservator, receiver, or liquidator appointed for any insured
depository institution in default, including the Corporation acting in
such capacity, shall be entitled to offer the assets of such depository
institutions for sale to the Corporation or as security for loans from
the Corporation.
(2) Proceeds
The proceeds of every sale or loan of assets to the Corporation shall
be utilized for the same purposes and in the same manner as other funds
realized from the liquidation of the assets of such depository
institutions.
(3) Rights and powers of Corporation
(A) In general
With respect to any asset acquired or liability assumed pursuant to
this section, the Corporation shall have all of the rights, powers,
privileges, and authorities of the Corporation as receiver under
sections 1821 and 1825(b) of this title.
(B) Rule of construction
Such rights, powers, privileges, and authorities shall be in addition
to and not in derogation of any rights, powers, privileges, and
authorities otherwise applicable to the Corporation.
(C) Fiduciary responsibility
In exercising any right, power, privilege, or authority described in
subparagraph (A), the Corporation shall continue to be subject to the
fiduciary duties and obligations of the Corporation as receiver to
claimants against the insured depository institution in receivership.
(D) Disposition of assets
In exercising any right, power, privilege, or authority described in
subparagraph (A) regarding the sale or disposition of assets sold to the
Corporation pursuant to paragraph (1), the Corporation shall conduct its
operations in a manner which --
(i) maximizes the net present value return from the sale or
disposition of such assets;
(ii) minimizes the amount of any loss realized in the resolution of
cases;
(iii) ensures adequate competition and fair and consistent treatment
of offerors;
(iv) prohibits discrimination on the basis of race, sex, or ethnic
groups in the solicitation and consideration of offers; and
(v) maximizes the preservation of the availability and affordability
of residential real property for low- and moderate-income individuals.
(4) Loans
The Corporation, in its discretion, may make loans on the security of
or may purchase and liquidate or sell any part of the assets of an
insured depository institution which is now or may hereafter be in
default.
(e) Agreements against interests of Corporation
No agreement which tends to diminish or defeat the interest of the
Corporation in any asset acquired by it under this section or section
1821 of this title, either as security for a loan or by purchase or as
receiver of any insured depository institution, shall be valid against
the Corporation unless such agreement --
(1) is in writing,
(2) was executed by the depository institution and any person
claiming an adverse interest thereunder, including the obligor,
contemporaneously with the acquisition of the asset by the depository
institution,
(3) was approved by the board of directors of the depository
institution or its loan committee, which approval shall be reflected in
the minutes of said board or committee, and
(4) has been, continuously, from the time of its execution, an
official record of the depository institution.
(f) Assisted emergency interstate acquisitions
(1) This subsection shall apply only to an acquisition of an insured
bank or a holding company by an out-of-State bank /2/ savings
association or out-of-State holding company for which the Corporation
provides assistance under subsection (c) of this section.
(2)(A) Whenever an insured bank with total assets of $500,000,000 or
more (as determined from its most recent report of condition) is in
default, the Corporation, as receiver, may, in its discretion and upon
such terms and conditions as the Corporation may determine, arrange the
sale of assets of the bank in default and the assumption of the
liabilities of the bank in default, including the sale of such assets to
and the assumption of such liabilities by an insured depository
institution located in the State where the bank in default was chartered
but established by an out-of-State bank or holding company. Where
otherwise lawfully required, a transaction under this subsection must be
approved by the primary Federal or State supervisor of all parties
thereto.
(B)(i) Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State bank
supervisor of the State in which the in default insured bank /3/ was
chartered.
(ii) The State bank supervisor shall be given a reasonable
opportunity, and in no event less than forty-eight hours, to object to
the use of the provisions of this paragraph. Such notice may be
provided by the Corporation prior to its appointment as receiver, but in
anticipation of an impending appointment.
(iii) If the State supervisor objects during such period, the
Corporation may use the authority of this paragraph only by a vote of 75
percent of of /4/ the Board of Directors. The Board of Directors shall
provide to the State supervisor, as soon as practicable, a written
certification of its determination.
(3) Emergency Interstate Acquisitions of Insured Banks in Danger of
Default. --
(A) Acquisition of insured banks in danger of default. -- One or more
out-of-State banks or out-of-State holding companies may acquire and
retain all or part of the shares or assets of, or otherwise acquire and
retain --
(i) an insured bank in danger of default which has total assets of
$500,000,000 or more; or
(ii) 2 or more affiliated insured banks in danger of default which
have aggregate total assets of $500,000,000 or more, if the aggregate
total assets of such banks is equal to or greater than 33 percent of the
aggregate total assets of all affiliated insured banks.
(B) Acquisition of a holding company or other bank affiliate. -- If
one or more out-of-State banks or out-of-State holding companies acquire
1 or more affiliated insured banks under subparagraph (A) the aggregate
total assets of which is equal to or greater than 33 percent of the
aggregate total assets of all affiliated insured banks, any such
out-of-State bank or out-of-State holding company may also, as part of
the same transaction, acquire and retain the shares or assets of, or
otherwise acquire and retain --
(i) the holding company which controls the affiliated insured banks
so acquired; or
(ii) any other affiliated insured bank.
(C) Request for assistance by corporate board of directors. -- The
Corporation may assist an acquisition or merger authorized under
subparagraph (A) only if the board of directors or trustees of each
insured bank in danger of default which is being acquired has requested
in writing that the Corporation assist the acquisition or merger.
(D) Certain acquisitions authorized after assistance is provided. --
Notwithstanding paragraph (1), if --
(i) at any time after August 10, 1987, the Corporation provides any
assistance under subsection (c) of this section to an insured bank; and
(ii) at the time such assistance is granted, the insured bank, the
holding company which controls the insured bank (if any), or any
affiliated insured bank is eligible to be acquired by an out-of-State
bank or out-of-State holding company under this paragraph,
the insured bank, the holding company, and such other affiliated
insured bank shall remain eligible, subject to such terms and conditions
as the Corporation (in the Corporation's discretion) may impose, to be
acquired by an out-of-State bank or out-of-State holding company under
this paragraph as long as any portion of such assistance remains
outstanding.
(E) State bank supervisor approval. -- The Corporation may take no
final action in connection with any acquisition under this paragraph
unless the State bank supervisor of the State in which the bank in
danger of default is located approves the acquisition.
(F) Other requirements not affected. -- This paragraph does not
affect any other requirement under Federal or State law for regulatory
approval of an acquisition under this paragraph.
(G) Acquisition may be conditioned on receipt of consideration for
corporation's assistance. -- Any acquisition described in subparagraph
(D) may be conditioned on the receipt of such consideration for the
Corporation's assistance as the Board of Directors deems appropriate.
(4)(A) Acquisitions Not Subject to Certain Other Laws. -- Section
1842(d) of this title, any provision of State law, and section 1730a(
e)(3) /5/ of this title shall not apply to prohibit any acquisition
under paragraph (2) or (3), except that an out-of-State bank may make
such an acquisition only if such ownership is otherwise specifically
authorized.
(B) Any subsidiary created by operation of this subsection may retain
and operate any existing branch or branches of the institution merged
with or acquired under paragraph (2) or (3), but otherwise shall be
subject to the conditions upon which a national bank may establish and
operate branches in the State in which such insured institution is
located.
(C) No insured institution acquired under this subsection shall after
it is acquired move its principal office or any branch office which it
would be prohibited from moving if the institution were a national bank.
(D) Subsequent Nonemergency Interstate Acquisitions Subject to State
Law. --
(i) In general. -- Any out-of-State bank holding company which
acquires control of an insured bank in any State under paragraph (2) or
(3) may acquire any other insured bank and establish branches in such
State to the same extent as a bank holding company whose insured bank
subsidiaries' operations are principally conducted in such State may
acquire any other insured bank or establish branches.
(ii) Delayed date of applicability. -- Clause (i) shall not apply
with respect to any out-of-State bank holding company referred to in
such clause before the earlier of --
(I) the end of the 2-year period beginning on the date the
acquisition referred to in such clause with respect to such company is
consummated; or
(II) the end of any period established under State law during which
such out-of-State bank holding company may not be treated as a bank
holding company whose insured bank subsidiaries' operations are
principally conducted in such State for purposes of acquiring other
insured banks or establishing bank branches.
(iii) Determination of principally conducted. -- For purposes of this
subparagraph, the State in which the operations of a holding company's
insured bank subsidiaries are principally conducted is the State
determined under section 1842(d) of this title with respect to such
holding company.
(E) Certain State Interstate Banking Laws Inapplicable. -- Any
holding company which acquires control of any insured bank or holding
company under paragraph (2) or (3) or subparagraph (D) of this paragraph
shall not, by reason of such acquisition, be required under the law of
any State to divest any other insured bank or be prevented from
acquiring any other bank or holding company.
(5) In determining whether to arrange a sale of assets and assumption
of liabilities or an acquisition or a merger under the authority of
paragraph (2) or (3), the Corporation may solicit such offers or
proposals as are practicable from any prospective purchasers or merger
partners it determines, in its sole discretion, are both qualified and
capable of acquiring the assets and liabilities of the bank in default
or the bank in danger of default.
(6)(A) If, after receiving offers, the offer presenting the lowest
expense to the Corporation, that is in a form and with conditions
acceptable to the Corporation (hereinafter referred to as the ''lowest
acceptable offer''), is from an offeror that is not an existing in-State
bank of the same type as the bank that has /6/ in default or is in
danger of default (or, where the bank is an insured bank other than a
mutual savings bank, the lowest acceptable offer is not from an in-State
holding company), the Corporation shall permit the offeror which made
the initial lowest acceptable offer and each offeror who made an offer
the estimated cost of which to the Corporation was within 15 per centum
or $15,000,000, whichever is less, of the initial lowest acceptable
offer to submit a new offer.
(B) In considering authorizations under this subsection, the
Corporation shall give consideration to the need to minimize the cost of
financial assistance and to the maintenance of specialized depository
institutions. The Corporation shall authorize transactions under this
subsection considering the following priorities:
(i) First, between depository institutions of the same type within
the same State; /7/
(ii) Second, between depository institutions of the same type --
(I) in different States which by statute specifically authorize such
acquisitions; or
(II) in the absence of such statutes, in different States which are
contiguous.
(iii) Third, between depository institutions of the same type in
different States other than the States described in clause (ii).
(iv) Fourth, between depository institutions of different types in
the same State.
(v) Fifth, between depository institutions of different types --
(I) in different States which by statute specifically authorize such
acquisitions; or
(II) in the absence of such statutes, in different States which are
contiguous.
(vi) Sixth, between depository institutions of different types in
different States other than the States described in clause (v).
(C) Minority Bank Priority. -- In the case of a minority-controlled
bank, the Corporation shall seek an offer from other minority-controlled
banks before proceeding with the bidding priorities set forth in
subparagraph (B).
(D) In determining the cost of offers and reoffers, the Corporation's
calculations and estimations shall be determinative. The Corporation may
set reasonable time limits on offers and reoffers.
(7) No sale may be made under the provisions of paragraph (2) or (3)
--
(A) which would result in a monopoly, or which would be in
furtherance of any combination or conspiracy to monopolize or to attempt
to monopolize the business of banking in any part of the United States;
or /8/
(B) whose effect in any section of the country may be substantially
to lessen competition, or to tend to create a monopoly, or which in any
other manner would be in restraint of trade, unless the Corporation
finds that the anticompetitive effects of the proposed transactions are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the community to be
served. /9/
(C) if in the opinion of the Corporation the acquisition threatens
the safety and soundness of the acquirer or does not result in the
future viability of the resulting depository institution.
(8) As used in this subsection --
(A) the term ''in-State depository institution or in-State holding
company'' means an existing insured depository institution currently
operating in the State in which the bank in default or the bank in
danger of default is chartered or a company that is operating an insured
depository institution subsidiary in the State in which the bank in
default or the bank in danger of default is chartered;
(B) the term ''acquire'' means to acquire, directly or indirectly,
ownership or control through --
(i) an acquisition of shares;
(ii) an acquisition of assets or assumption of liabilities;
(iii) a merger or consolidation; or
(iv) any similar transaction;
(C) the term ''affiliated insured bank'' means --
(i) when used in connection with a reference to a holding company, an
insured bank which is a subsidiary of such holding company; and
(ii) when used in connection with a reference to 2 or more insured
banks, insured banks which are subsidiaries of the same holding company;
and
(D) the term ''subsidiary'' has the meaning given to such term in
section 1841(d) of this title.
(9) No Assistance Authorized for Certain Subsidiaries of Holding
Companies. --
(A) In general. -- The Corporation shall not provide any assistance
to a subsidiary, other than a subsidiary that is an insured depository
institution, of a holding company in connection with any acquisition
under this subsection.
(B) Intermediate holding company permitted. -- This paragraph does
not prohibit an intermediate holding company or an affiliate of an
insured depository institution from being a conduit for assistance
ultimately intended for an insured bank.
(10) Annual Report. --
(A) Required. -- In its annual report to Congress the Corporation
shall include a report on the acquisitions under this subsection during
the preceding year.
(B) Contents. -- The report required under subparagraph (A) shall
contain the following information:
(i) The number of acquisitions under this subsection.
(ii) A brief description of each such acquisition and the
circumstances under which such acquisition occurred.
(11) Determination of Total Assets. -- For purposes of this
subsection, the total assets of any insured bank shall be determined on
the basis of the most recent report of condition of such bank which is
available at the time of such determination.
(12) Acquisition of minority bank by minority bank holding company
without regard to asset size. --
(A) In general. -- For the purpose of ensuring continued minority
control of a minority-controlled bank, paragraphs (2) and (3) shall
apply with respect to the acquisition of a minority-controlled bank by
an out-of-State minority-controlled depository institution or depository
institution holding company without regard to the fact that the total
assets of such minority-controlled bank is less than $500,000,000.
(B) Definitions. -- For purposes of this paragraph:
(i) Minority bank. -- The term ''minority bank'' means any depository
institution described in clause (i), (ii), or (iii) of section
461(b)(1)(A) of this title --
(I) more than 50 percent of the ownership or control of which is held
by one or more minority individuals; and
(II) more than 50 percent of the net profit or loss of which accrues
to minority individuals.
(ii) Minority. -- The term ''minority'' means any Black American,
Native American, Hispanic American, or Asian American.
(g) Payment of interest on stock subscriptions
Prior to July 1, 1951, the Corporation shall pay out of its capital
account to the Secretary of the Treasury an amount equal to 2 per centum
simple interest per annum on amounts advanced to the Corporation on
stock subscriptions by the Secretary of the Treasury and the Federal
Reserve banks, from the time of such advances until the amounts thereof
were repaid. The amount payable hereunder shall be paid in two equal
installments, the first installment to be paid prior to December 31,
1950.
(h) Reopening or aversion of closing of insured branch of foreign
bank
The powers conferred on the Board of Directors and the Corporation by
this section to take action to reopen an insured depository institution
in default or to avert the default of an insured depository institution
may be used with respect to an insured branch of a foreign bank if, in
the judgment of the Board of Directors, the public interest in avoiding
the default of such branch substantially outweighs any additional risk
of loss to the Bank Insurance Fund which the exercise of such powers
would entail.
(i) Repealed. Pub. L. 97-320, title II, 206, Oct. 15, 1982, 96
Stat. 1496
(j) Loan loss amortization for certain banks
(1) Eligibility
The appropriate Federal banking agency shall permit an agricultural
bank to take the actions referred to in paragraph (2) if it finds that
--
(A) there is no evidence that fraud or criminal abuse on the part of
the bank led to the losses referred to in paragraph (2); and
(B) the agricultural bank has a plan to restore its capital, not
later than the close of the amortization period established under
paragraph (2), to a level prescribed by the appropriate Federal banking
agency.
(2) Seven-year loss amortization
(A) Any loss on any qualified agricultural loan that an agricultural
bank would otherwise be required to show on its annual financial
statement for any year between December 31, 1983, and January 1, 1992,
may be amortized on its financial statements over a period of not to
exceed 7 years, as provided in regulations issued by the appropriate
Federal banking agency.
(B) An agricultural bank may reappraise any real estate or other
property, real or personal, that it acquired coincident to the making of
a qualified agricultural loan and that it owned on January 1, 1983, and
any such additional property that it acquires prior to January 1, 1992.
Any loss that such bank would otherwise be required to show on its
annual financial statements as the result of any such reappraisal may be
amortized on its financial statements over a period of not to exceed 7
years, as provided in regulations issued by the appropriate Federal
banking agency.
(3) Regulations
Not later than 90 days after August 10, 1987, the appropriate Federal
banking agency shall issue regulations implementing this subsection with
respect to banks that it supervises, including regulations implementing
the capital restoration requirement of paragraph (1)(B).
(4) Definitions
As used in this subsection --
(A) the term ''agricultural bank'' means a bank --
(i) the deposits of which are insured by the Federal Deposit
Insurance Corporation;
(ii) which is located in an area the economy of which is dependent on
agriculture;
(iii) which has assets of $100,000,000 or less; and
(iv) which has --
(I) at least 25 percent of its total loans in qualified agricultural
loans; or
(II) fewer than 25 percent of its total loans in qualified
agricultural loans but which the appropriate Federal banking agency or
State bank commissioner recommends to the Corporation for eligibility
under this section, or which the Corporation, on its motion, deems
eligible; and
(B) the term ''qualified agricultural loan'' means a loan made to
finance the production of agricultural products or livestock in the
United States, a loan secured by farmland or farm machinery, or such
other category of loans as the appropriate Federal banking agency may
deem eligible.
(5) Maintenance of portfolio
As a condition of eligibility under this subsection, the agricultural
bank must agree to maintain in its loan portfolio a percentage of
agricultural loans which is not lower than the percentage of such loans
in its loan portfolio on January 1, 1986.
(k) Emergency acquisitions
(1) In general
(A) Acquisitions authorized
(i) Transactions described
Notwithstanding any provision of State law, upon determining that
severe financial conditions threaten the stability of a significant
number of savings associations, or of savings associations possessing
significant financial resources, the Corporation, in its discretion and
if it determines such authorization would lessen the risk to the
Corporation, may authorize --
(I) a savings association that is eligible for assistance pursuant to
subsection (c) of this section to merge or consolidate with, or to
transfer its assets and liabilities to, any other savings association or
any insured bank,
(II) any other savings association to acquire control of such savings
association, or
(III) any company to acquire control of such savings association or
to acquire the assets or assume the liabilities thereof.
The Corporation may not authorize any transaction under this
subsection unless the Corporation determines that the authorization will
not present a substantial risk to the safety or soundness of the savings
association to be acquired or any acquiring entity.
(ii) Terms of transactions
Mergers, consolidations, transfers, and acquisitions under this
subsection shall be on such terms as the Corporation shall provide.
(iii) Approval by appropriate agency
Where otherwise required by law, transactions under this subsection
must be approved by the appropriate Federal banking agency of every
party thereto.
(iv) Acquisitions by savings associations
Any Federal savings association that acquires another savings
association pursuant to clause (i) may, with the concurrence of the
Director of the Office of Thrift Supervision, hold that savings
association as a subsidiary notwithstanding the percentage limitations
of section 1464(c)(4)(B) of this title.
(v) Dual service
Dual service by a management official that would otherwise be
prohibited under the Depository Institution Management Interlocks Act
(12 U.S.C. 3201 et seq.) may, with the approval of the Corporation,
continue for up to 10 years.
(vi) Continued applicability of certain State restrictions
Nothing in this subsection overrides or supersedes State laws
restricting or limiting the activities of a savings association on
behalf of another entity.
(B) Consultation with State official
(i) Consultation required
Before making a determination to take any action under subparagraph
(A), the Corporation shall consult the State official having
jurisdiction of the acquired institution.
(ii) Period for State response
The official shall be given a reasonable opportunity, and in no event
less than 48 hours, to object to the use of the provisions of this
paragraph. Such notice may be provided by the Corporation prior to its
appointment as receiver, but in anticipation of an impending
appointment.
(iii) Approval over objection of State official
If the official objects during such period, the Corporation may use
the authority of this paragraph only by a vote of 75 percent or more of
the voting members of the Board of Directors. The Corporation shall
provide to the official, as soon as practicable, a written certification
of its determination.
(2) Solicitation of offers
(A) In general
In considering authorizations under this subsection, the Corporation
may solicit such offers or proposals as are practicable from any
prospective purchasers or merger partners it determines, in its sole
discretion, are both qualified and capable of acquiring the assets and
liabilities of the savings association.
(B) Minority-controlled institutions
In the case of a minority-controlled depository institution, the
Corporation shall seek an offer from other minority-controlled
depository institutions before seeking an offer from other persons or
entities.
(3) Determination of costs
In determining the cost of offers under this subsection, the
Corporation's calculations and estimations shall be determinative. The
Corporation may set reasonable time limits on offers.
(4) Branching provisions
(A) In general
If a merger, consolidation, transfer, or acquisition under this
subsection involves a savings association eligible for assistance and a
bank or bank holding company, a savings association may retain and
operate any existing branch or branches or any other existing
facilities. If the savings association continues to exist as a separate
entity, it may establish and operate new branches to the same extent as
any savings association that is not affiliated with a bank holding
company and the home office of which is located in the same State.
(B) Restrictions
(i) In general
Notwithstanding subparagraph (A), if --
(I) a savings association described in such subparagraph does not
have its home office in the State of the bank holding company bank
subsidiary, and
(II) such association does not qualify as a domestic building and
loan association under section 7701(a)(19) of title 26, or does not meet
the asset composition test imposed by subparagraph (C) of that section
on institutions seeking so to qualify,
such savings association shall be subject to the conditions upon
which a bank may retain, operate, and establish branches in the State in
which the Savings Association Insurance Fund member is located.
(ii) Transition period
The Corporation, for good cause shown, may allow a savings
association up to 2 years to comply with the requirements of clause (i).
(5) Assistance before appointment of conservator or receiver
(A) Assistance proposals
The Corporation shall consider proposals by Savings Association
Insurance Fund members for assistance pursuant to subsection (c) of this
section before grounds exist for appointment of a conservator or
receiver for such member under the following circumstances:
(i) Troubled condition criteria
The Corporation determines --
(I) that grounds for appointment of a conservator or receiver exist
or likely will exist in the future unless the member's tangible capital
is increased;
(II) that it is unlikely that the member can achieve positive
tangible capital without assistance; and
(III) that providing assistance pursuant to the member's proposal
would be likely to lessen the risk to the Corporation.
(ii) Other criteria
The member meets the following criteria:
(I) Before August 9, 1989, the member was solvent under applicable
regulatory accounting principles but had negative tangible capital.
(II) The member's negative tangible capital position is substantially
attributable to its participation in acquisition and merger transactions
that were instituted by the Federal Home Loan Bank Board or the Federal
Savings and Loan Insurance Corporation for supervisory reasons.
(III) The member is a qualified thrift lender (as defined in section
1467a(m) of this title) or would be a qualified thrift lender if
commercial real estate owned and nonperforming commercial loans acquired
in acquisition and merger transactions that were instituted by the
Federal Home Loan Bank Board or the Federal Savings and Loan Insurance
Corporation for supervisory reasons were excluded from the member's
total assets.
(IV) The appropriate Federal banking agency has determined that the
member's management is competent and has complied with applicable laws,
rules, and supervisory directives and orders.
(V) The member's management did not engage in insider dealing or
speculative practices or other activities that jeopardized the member's
safety and soundness or contributed to its impaired capital position.
(VI) The member's offices are located in an economically depressed
region.
(B) Corporation consideration of assistance proposal
If a member meets the requirements of clauses (i) and (ii) of
subparagraph (A), the Corporation shall consider providing direct
financial assistance.
(C) ''Economically depressed region'' defined
For purposes of this paragraph, the term ''economically depressed
region'' means any geographical region which the Corporation determines
by regulation to be a region within which real estate values have
suffered serious decline due to severe economic conditions, such as a
decline in energy or agricultural values or prices.
(Sept. 21, 1950, ch. 967, 2(13), 64 Stat. 888; Sept. 17, 1978, Pub.
L. 95-369, 6(c)(24), 92 Stat. 619; Oct. 15, 1982, Pub. L. 97-320,
title I, 111, 113(m), 116, 141(a)(1), (3), title II, 203, 206, 96 Stat.
1469, 1474, 1476, 1488, 1489, 1492, 1496; Jan. 12, 1983, Pub. L.
97-457, 1(a), 4, 10(a), 96 Stat. 2507, 2508; May 16, 1983, Pub. L.
98-29, 1(a), 97 Stat. 189; Aug. 10, 1987, Pub. L. 100-86, title V,
502(a)-(g), (i), 509(a), title VIII, 801, 101 Stat. 623-627, 629, 635,
656; Aug. 9, 1989, Pub. L. 101-73, title II, 201( a), 217, 103 Stat.
187, 254; Dec. 19, 1991, Pub. L. 102-242, title I,
123(b), 141(a)(1), (e), 105 Stat. 2252, 2273, 2278.)
Section 1730a of this title, referred to in subsec. (f)(4)(A), was
repealed by Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat.
363.
The Depository Institution Management Interlocks Act, referred to in
subsec. (k)(1)(A)(v), is title II of Pub. L. 95-630, Nov. 10, 1978,
92 Stat. 3672, as amended, which is classified principally to chapter
33 ( 3201 et seq.) of this title. For complete classification of this
Act to the Code, see Short Title note set out under section 3201 of this
title and Tables.
Section is derived from subsec. (n) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (c)(4) to (10). Pub. L. 102-242, 141(a)(1), (e),
redesignated former pars. (5) to (9) as (6) to (10), respectively,
redesignated subpar. (B) of par. (4) as par. (5), amended par. (4)(
A) generally and redesignated it as par. (4), further redesignated
pars. (8) to (10) as (9) to (11), respectively, and added par. (8).
Prior to amendment, par. (4)(A) read as follows: ''No assistance shall
be provided under this subsection in an amount in excess of that amount
which the Corporation determines to be reasonably necessary to save the
cost of liquidating, including paying the insured accounts of, such
insured depository institution, except that such restriction shall not
apply in any case in which the Corporation determines that the continued
operation of such insured depository institution is essential to provide
adequate depository services in its community. In calculating the cost
of assistance, the Corporation shall include (i) the immediate and
long-term obligations of the Corporation with respect to such
assistance, including contingent liabilities, and (ii) the Federal tax
revenues foregone by the Government, to the extent reasonably
ascertainable.''
Subsec. (d)(3)(D). Pub. L. 102-242, 123(b), added subpar. (D).
1989 -- Subsec. (a). Pub. L. 101-73, 217(1), added heading and text
of subsec. (a) and struck out former subsec. (a) which read as
follows: ''Money of the Corporation not otherwise employed shall be
invested in obligations of the United States or in obligations
guaranteed as to principal and interest by the United States: Provided,
That thd Corporation shall not sell or purchase any such obligations for
its own account and in its own right and interest, at any one time
aggregating in excess of $100,000, without the approval of the Secretary
of the Treasury: And provided further, That the Secretary of the
Treasury may waive the requirement of his approval with respect to any
transaction or classes of transactions subject to the provisions of this
subsection for such period of time and under such conditions as he may
determine.''
Subsec. (b). Pub. L. 101-73, 217(2), substituted ''depository
accounts of the Corporation'', ''temporary purposes of depository
accounts'', and ''depository accounts to facilitate'' for ''banking or
checking accounts of the Corporation'', ''temporary purposes of banking
and checking accounts'', and ''banking and checking accounts to
facilitate'', respectively, and substituted ''depository institution''
for ''bank'' in four places.
Pub. L. 101-73, 201(a), substituted ''insured depository
institutions'' for ''insured banks''.
Subsec. (c)(1). Pub. L. 101-73, 201(a), substituted reference to
insured depository institution for reference to insured bank in
introductory provisions.
Subsec. (c)(1)(A). Pub. L. 101-73, 217(3)(A), substituted ''default''
for ''closing''.
Pub. L. 101-73, 201(a), substituted reference to insured depository
institution for reference to insured bank.
Subsec. (c)(1)(B). Pub. L. 101-73, 217(3)(C), which directed the
amendment of subsec. (c) by substituting ''insured depository
institution in default'' for ''in default insured depository
institution'' wherever appearing, was executed to par. (1)(B) by making
the substitution for ''in default insured bank'' to reflect the probable
intent of Congress and the fact that Pub. L. 101-73, 201(a), amended
this chapter by substituting references to insured depository
institutions for references to insured banks wherever appearing, but
excluded par. (1)(B) from such amendment.
Pub. L. 101-73, 217(3)(B), which directed the amendment of subsec.
(c) by substituting ''a'' for ''an'' wherever appearing before ''closed
insured bank'', was executed by substituting ''an'' for ''a'' to reflect
the probable intent of Congress.
Pub. L. 101-73, 217(3)(A), substituted ''in default'' for ''closed''
in two places.
Subsec. (c)(1)(C). Pub. L. 101-73, 201(a), substituted references to
insured depository institutions for references to insured banks wherever
appearing.
Subsec. (c)(2)(A). Pub. L. 101-73, 217(3)(D)(i), substituted ''such
other insured depository institution'' for ''such insured institution''
wherever appearing in cls. (ii) and (iii) and directed the substitution
of ''another insured depository institution'' for ''an insured
depository institution'' which was executed by making the substitution
for ''an insured institution'' in two places in introductory provisions
to reflect the probable intent of Congress.
Pub. L. 101-73, 217(3)(D)(ii), (iii), in introductory provisions,
substituted ''the sale of any or all of the assets'' for ''the sale of
assets'' and ''or the assumption of any or all'' for ''and the
assumption''.
Pub. L. 101-73, 201(a), substituted references to insured depository
institutions for references to insured banks wherever appearing.
Subsec. (c)(2)(B). Pub. L. 101-73, 217(3)(A), substituted ''in
default'' for ''closed'' in cl. (i) and ''default'' for ''closing'' in
cl. (ii).
Pub. L. 101-73, 201(a), substituted references to insured depository
institutions for references to insured banks wherever appearing.
Subsec. (c)(2)(C). Pub. L. 101-73, 217(3)(E), added subpar. (C).
Subsec. (c)(3). Pub. L. 101-73, 217(3)(F), substituted ''subsection
(f) or (k) of this section'' for ''subsection (f) of this section''.
Pub. L. 101-73, 201(a), substituted reference to insured depository
institution for reference to insured bank.
Subsec. (c)(4)(A). Pub. L. 101-73, 217(3)(G), substituted
''depository services'' for ''banking services'' and inserted sentence
at end relating to calculation of the cost of assistance.
Pub. L. 101-73, 201(a), substituted references to insured depository
institutions for references to insured banks wherever appearing.
Subsec. (c)(4)(B). Pub. L. 101-73, 201(a), substituted reference to
insured depository institution for reference to insured bank.
Subsec. (c)(5). Pub. L. 101-73, 201(a), substituted references to
insured depository institutions for references to insured banks wherever
appearing.
Subsec. (c)(6). Pub. L. 101-73, 217(3)(J), added par. (6). Former
par. (6) redesignated (7).
Subsec. (c)(7). Pub. L. 101-73, 217(3)(I), redesignated par. (6) as
(7). Former par. (7) redesignated (8).
Subsec. (c)(8). Pub. L. 101-73, 217(3)(H), (I), redesignated par.
(7) as (8) and struck out former par. (8) which read as follows: ''For
purposes of this subsection, the term 'insured institution' means an
insured bank as defined in section 1813 of this title or an insured
institution as defined in section 1724 of this title.''
Subsec. (c)(9). Pub. L. 101-73, 217(3)(K), added par. (9).
Subsec. (d). Pub. L. 101-73, 217(4), added subsec. (d) and struck
out former subsec. (d), changing the structure of the subsection from a
single unnumbered paragraph to one consisting of four numbered
paragraphs.
Subsec. (e). Pub. L. 101-73, 217(4), added subsec. (e) and struck
out former subsec. (e) which read as follows: ''No agreement which
tends to diminish or defeat the right, title or interest of the
Corporation in any asset acquired by it under this section, either as
security for a loan or by purchase, shall be valid against the
Corporation unless such agreement (1) shall be in writing, (2) shall
have been executed by the bank and the person or persons claiming an
adverse interest thereunder, including the obligor, contemporaneously
with the acquisition of the asset by the bank, (3) shall have been
approved by the board of directors of the bank or its loan committee,
which approval shall be reflected in the minutes of said board or
committee, and (4) shall have been, continuously, from the time of its
execution, an official record of the bank.''
Subsec. (f)(1). Pub. L. 101-73, 217(5)(C), inserted ''savings
association'' after ''out-of-State bank''.
Subsec. (f)(2)(A). Pub. L. 101-73, 217(5)(A), (B), substituted ''is
in default'' for ''is closed'', and ''bank in default'' for ''closed
bank'' in three places.
Subsec. (f)(2)(B). Pub. L. 101-73, 217(5)(A), (D), substituted ''in
default insured bank'' for ''closed insured bank'' in cl. (i), and ''a
vote of 75 percent of'' for ''a unanimous vote'' in cl. (iii).
Subsec. (f)(3). Pub. L. 101-73, 217(5)(A), substituted ''danger of
default'' for ''danger of closing'' in headings for par. (3) and
subpar. (A) and in subpars. (A)(i), (ii), (C), and (E).
Subsec. (f)(4)(A). Pub. L. 101-73, 217(5)(E), struck out ''the
constitution of any State,'' after ''State law,''.
Subsec. (f)(5). Pub. L. 101-73, 217(5)(A), (B), substituted ''danger
of default'' for ''danger of closing'' and ''bank in default'' for
''closed bank''.
Subsec. (f)(6)(A). Pub. L. 101-73, 217(5)(A), (F), substituted ''the
bank that has in default or is in danger of default'' for ''the bank
that has closed or is in danger of closing'' and ''the Corporation shall
permit the offeror which made the initial lowest acceptable offer and''
for ''the Corporation shall permit''.
Subsec. (f)(7)(C). Pub. L. 101-73, 217(5)(G), added subpar. (C).
Subsec. (f)(8)(A). Pub. L. 101-73, 217(5)(H), redesignated subpar.
(C) as (A) and struck out former subpar. (A) which read as follows:
''the term 'receiver' means the Corporation when it has been appointed
the receiver of a closed insured bank;''.
Pub. L. 101-73, 217(5)(A), (B), substituted ''danger of default'' for
''danger of closing'' in two places and ''bank in default'' for ''closed
bank'' in two places.
Subsec. (f)(8)(B). Pub. L. 101-73, 217(5)(H), redesignated subpar.
(E) as (B) and struck out former subpar. (B) which read as follows:
''the term 'insured depository institution' means an insured bank or an
association or savings bank insured by the Federal Savings and Loan
Insurance Corporation;''.
Subsec. (f)(8)(C). Pub. L. 101-73, 217(5)(H), redesignated subpar.
(F) as (C). Former subpar. (C) redesignated (A).
Subsec. (f)(8)(D). Pub. L. 101-73, 217(5)(H), redesignated subpar.
(G) as (D) and struck out former subpar. (D) which read as follows:
''the term 'bank in danger of closing' means an insured bank with
respect to which the appropriate Federal or State chartering authority
certifies in writing that --
''(i)(I) the bank is not likely to be able to meet the demands of
such bank's depositors or pay the obligations of the bank in the normal
course of business, and
''(II) there is no reasonable prospect that the bank will be able to
meet such demands or pay such obligations without Federal assistance;
or
''(ii)(I) the bank has incurred or is likely to incur losses that
will deplete all or substantially all of the capital of the bank, and
''(II) there is no reasonable prospect for the replenishment of the
bank's capital without Federal assistance;''.
Subsec. (f)(8)(E) to (G). Pub. L. 101-73, 217(5)(H), redesignated
subpars. (E) to (G) as (B) to (D), respectively.
Subsec. (f)(9). Pub. L. 101-73, 217(5)(I), substituted ''certain
subsidiaries'' for ''nonbank subsidiaries'' in heading, ''subsidiary,
other than a subsidiary that is an insured depository institution,'' for
''subsidiary'' and ''holding company'' for ''holding company which is
not an insured bank'' in subpar. (A), and ''intermediate holding
company or an affiliate of an insured depository institution'' for
''intermediate holding company'' in subpar. (B).
Subsec. (f)(12). Pub. L. 101-73, 217(5)(J), added par. (12).
Subsec. (h). Pub. L. 101-73, 217(6), substituted ''an insured
depository institution in default'' for ''a closed insured depository
institution'', ''default'' for ''closing'', and ''Bank Insurance Fund''
for ''insurance fund''.
Pub. L. 101-73, 201(a), substituted ''insured depository
institution'' for ''insured bank'' wherever appearing.
Subsec. (i)(1)(A). Pub. L. 101-73, 217(7)(A), inserted ''depository''
before ''institution'' in three places.
Subsec. (i)(1)(C). Pub. L. 101-73, 217(7)(B), substituted
''Corporation'' for ''corporation'' where first appearing, ''chartered
depository institution'' for ''chartered bank'', ''State member bank, a
savings association,'' for ''State member bank'', and ''Federal Reserve
System or the Director of the Office of Thrift Supervision'' for
''Federal Reserve System''.
Subsec. (i)(1)(D). Pub. L. 101-73, 217(7)(A), inserted ''depository''
before ''institution'' in two places.
Subsec. (i)(2). Pub. L. 101-73, 217(7)(A), (C), inserted
''depository'' before ''institution'' in two places, and struck out ''or
insured or guaranteed under State law'' after ''insured under this
chapter''.
Subsec. (i)(3) to (9). Pub. L. 101-73, 217(7)(A), inserted
''depository'' before ''institution'' wherever appearing.
Subsec. (i)(10). Pub. L. 101-73, 217(7)(D), struck out par. (10)
which read as follows: ''Notwithstanding any other Federal or State
law, net worth certificates purchased by the Corporation under this
subsection shall be deemed to be net worth for statutory and regulatory
purposes.''
Subsec. (i)(11). Pub. L. 101-73, 217(7)(A), inserted ''depository''
before ''institution''.
Subsec. (i)(12). Pub. L. 101-73, 217(7)(D), struck out par. (12)
which read as follows: ''The Corporation may provide assistance to a
qualified institution which is not an insured institution only if the
State fund which insures or guarantees the deposits of such qualified
institution enters into an agreement with the Corporation which provides
that --
''(A) the State fund will indemnify the Corporation for any losses
which the Corporation may incur as a result of providing assistance
under this subsection to such qualified institution; and
''(B) during any period when such qualified institution has
outstanding capital instruments issued in accordance with this
subsection, the State insurance fund maintains a level of assessments on
its members which results in costs to its members which are at least
equivalent to the premium assessments paid to the Corporation by insured
institutions during such period.''
Subsec. (i)(13). Pub. L. 101-73, 217(7)(A), inserted ''depository''
before ''institution'' in two places.
Subsec. (k). Pub. L. 101-73, 217(8), added subsec. (k).
1987 -- Pub. L. 100-86, 509(a), repealed Pub. L. 97-320, 141. See
1982 Amendment notes below.
Subsec. (f)(1). Pub. L. 100-86, 502(a), amended par. (1) generally.
Prior to amendment, par. (1) read as follows: ''Nothing contained in
paragraph (2) or (3) shall be construed to limit the Corporation's
powers in subsection (c) of this section to assist a transaction under
paragraph (2) or (3).''
Subsec. (f)(3). Pub. L. 100-86, 502(b), amended par. (3) generally,
substituting subpars. (A) to (G) relating to emergency interstate
acquisitions of insured banks in danger of closing for former subpars.
(A) to (C) which authorized merger, purchase of assets, or assumption of
liabilities of insured bank organized in mutual form with total assets
of $500,000,000 or more upon Corporation's determination it was in
danger of closing.
Subsec. (f)(4). Pub. L. 100-86, 502(c)(1), redesignated cls. (i) to
(iii) as subpars. (A) to (C), amended subpar. (A) generally, and added
subpars. (D) and (E). Prior to amendment, subpar. (A), as so
redesignated, read as follows: ''Notwithstanding section 1842(d) of
this title or any other provision of law, State or Federal, or the
constitution of any State, an institution that merges with or acquires
an insured bank under paragraph (2) or (3) is authorized to be and shall
be operated as a subsidiary of an out-of-State bank or bank holding
company, except that an out-of-State bank may operate the resulting
institution as a subsidiary only if such ownership is otherwise
specifically authorized.''
Subsec. (f)(5). Pub. L. 100-86, 502(i)(1), struck out ''to permit''
before ''an acquisition''.
Subsec. (f)(6)(A). Pub. L. 100-86, 502(i)(2), substituted ''where the
bank'' for ''where the closed bank'' and ''in-State holding company''
for ''in-State bank holding company''.
Subsec. (f)(6)(B). Pub. L. 100-86, 502(c)(2)(A), added cls. (ii) to
(vi) and struck out former cls. (ii) to (iv) which read as follows:
''(ii) Second, between depository institutions of the same type in
different States;
''(iii) Third, between depository institutions of different types in
the same State; and
''(iv) Fourth, between depository institutions of different types in
different States.''
Subsec. (f)(6)(C). Pub. L. 100-86, 502(c)(2)(B), amended subpar. (C)
generally. Prior to amendment, subpar. (C) read as follows: ''In
considering offers from different States, the Corporation shall give a
priority to offers from adjoining States.''
Subsec. (f)(8)(D) to (G). Pub. L. 100-86, 502(d)-(g), added subpars.
(D) to (G).
Subsec. (f)(9) to (11). Pub. L. 100-86, 502(c)(3)-(5), added pars.
(9) to (11).
Subsec. (j). Pub. L. 100-86, 801, added subsec. (j).
1983 -- Subsec. (i)(1)(D). Pub. L. 98-29 inserted provision that
issuance of net worth certificates in accordance with this subsection
shall not constitute a default under the terms of any debt obligations
subordinated to the claims of general creditors which were outstanding
when such net worth certificates were issued.
1983 -- Subsec. (c)(5)(A). Pub. L. 97-457, 1(a), inserted ''or
dividends'' after ''interest''.
Subsec. (f)(1). Pub. L. 97-457, 4, substituted ''paragraph'' for
''paragraphs'' wherever appearing.
Subsec. (i)(9). Pub. L. 97-457, 10, inserted ''or dividends'' after
''interest''.
1982 -- Subsec. (c). Pub. L. 97-320, 111, substituted provisions
contained in numbered pars. (1) through (8) relating to the
Corporation's authority to assist insured banks for prior provisions
contained in a single undesignated paragraph authorizing the
Corporation, in order to reopen a closed insured bank or, when the
Corporation had determined that an insured bank was in danger of
closing, in order to prevent such closing, in the discretion of its
Board of Directors, to make loans to, or purchase the assets of, or make
deposits in, such insured bank, upon such terms and conditions as the
Board of Directors might prescribe, when in the opinion of the Board of
Directors the continued operation of such bank was essential to provide
adequate banking service in the community, with such loans and deposits
to be in subordination to the rights of depositors and other creditors.
Pub. L. 97-320, 141(a)(1), which directed the repeal of par. (5)
effective Oct. 13, 1986, was repealed by Pub. L. 100-86, 509(a). See
Effective and Termination Dates of 1982 Amendment note and Extension of
Emergency Acquisition and Net Worth Guarantee Provisions of Pub. L.
97-320 note set out under section 1464 of this title.
Subsec. (e). Pub. L. 97-320, 113(m)(2), inserted ''(e)'' before ''No
agreement'' and struck out provision authorizing the Board of Directors,
for the purpose of averting loss to the Corporation and facilitating a
merger of an insured bank or facilitating the sale of an insured bank's
assets and assumption of its liabilities by another insured bank, to
make secured loans or to purchase the insured bank's assets or to
guarantee another insured bank against loss by reason of its assuming
the liabilities and purchasing the assets of an insured bank, and
authorizing national or District banks or the Corporation as receiver
thereof to contract for such sales or loans and to pledge assets to
secure such loans.
Subsecs. (f) to (h). Pub. L. 97-320, 113(m)(1), 116, added subsec.
(f) and redesignated former subsecs. (f) and (g) as (g) and (h),
respectively.
Pub. L. 97-320, 141(a)(3), which directed that, effective Oct. 13,
1986, the provisions of law amended by section 116 of Pub. L. 97-320
shall be amended to read as they would without such amendment, was
repealed by Pub. L. 100-86, 509(a). See Effective and Termination
Dates of 1982 Amendment note and Extension of Emergency Acquisition and
Net Worth Guarantee Provisions of Pub. L. 97-320 note set out under
section 1464 of this title.
Subsec. (i). Pub. L. 97-320, 203, 206, added subsec. (i), relating
to net worth certificates, and provided for its prospective repeal. See
Effective Date of 1982 Amendment note below.
1978 -- Subsec. (g). Pub. L. 95-369 added subsec. (g).
Section 1(b) of Pub. L. 98-29 provided that: ''The amendment made
by subsection (a) (amending this section) shall be deemed to have taken
effect on the date of enactment of the Garn-St Germain Depository
Institutions Act of 1982 (Oct. 15, 1982).''
Section 1(b) of Pub. L. 97-457 provided that: ''The amendment made
by subsection (a) (amending this section) shall be deemed to have taken
effect upon the enactment of Public Law 97-320 (Oct. 15, 1982).''
Section 10(b) of Pub. L. 97-457 provided that: ''The amendment made
by subsection (a) (amending this section) shall be deemed to have taken
effect upon the enactment of Public Law 97-320 (Oct. 15, 1982).''
Section 206 of Pub. L. 97-320, as amended by Pub. L. 97-457, 11,
Jan. 12, 1983, 96 Stat. 2508; Pub. L. 99-120, 6(b), Oct. 8, 1985, 99
Stat. 504; Pub. L. 99-278, 1(b), Apr. 24, 1986, 100 Stat. 397; Pub.
L. 99-400, 1(b), Aug. 27, 1986, 100 Stat. 902; Pub. L. 99-452, 1(b),
Oct. 8, 1986, 100 Stat. 1140; Pub. L. 100-86, title V, 509( b), Aug.
10, 1987, 101 Stat. 635, provided that:
''(a) On October 13, 1991, section 406(f)(5) of the National Housing
Act (12 U.S.C. 1729(f)(5)) and section 13(i) of the Federal Deposit
Insurance Act (12 U.S.C. 1823(i)) are repealed.
''(b) The repeal by subsection (a) shall have no effect on any action
taken or authorized pursuant to the amendments made by this title (see
Short Title of 1982 Amendments note set out under section 1811 of this
title) by or for a qualified institution while such amendments were in
effect and while net worth certificates issued pursuant to these
amendments are outstanding.''
Section 141(a)(2) of Pub. L. 102-242 provided that: ''The
Comptroller General of the United States shall annually audit the
Federal Deposit Insurance Corporation and the Resolution Trust
Corporation to determine the extent to which such corporations are
complying with section 13(c)(4) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)(4)).''
Section 143 of Pub. L. 102-242 provided that:
''(a) In General. -- It is the sense of the Congress that the Federal
banking agencies should facilitate early resolution of troubled insured
depository institutions whenever feasible if early resolution would have
the least possible long-term cost to the deposit insurance fund,
consistent with the least-cost and prompt corrective action provisions
of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).
''(b) General Principles. -- In encouraging the Federal banking
agencies to pursue early resolution strategies, the Congress
contemplates that any resolution transaction under section 13(c) of that
Act (12 U.S.C. 1823(c)) would observe the following general principles:
''(1) Competitive negotiation. -- The transaction should be
negotiated competitively, taking into account the value of expediting
the process.
''(2) Resulting institution adequately capitalized. -- Any insured
depository institution created or assisted in the transaction (hereafter
the 'resulting institution') and any institution acquiring the troubled
institution should meet all applicable minimum capital standards.
''(3) Substantial private investment. -- The transaction should
involve substantial private investment.
''(4) Concessions. -- Preexisting owners and debtholders of any
troubled institution or its holding company should make substantial
concessions.
''(5) Qualified management. -- Directors and senior management of the
resulting institution should be qualified to perform their duties, and
should not include individuals substantially responsible for the
troubled institution's problems.
''(6) FDIC's participation. -- The transaction should give the
Federal Deposit Insurance Corporation an opportunity to participate in
the success of the resulting institution.
''(7) Structure of transaction. -- The transaction should, insofar as
practical, be structured so that --
''(A) the Federal Deposit Insurance Corporation --
''(i) does not acquire a significant proportion of the troubled
institution's problem assets;
''(ii) succeeds to the interests of the troubled institution's
preexisting owners and debtholders in proportion to the assistance the
Corporation provides; and
''(iii) limits the Corporation's assistance in term and amount; and
''(B) new investors share risk with the Corporation.
''(c) Report. -- Two years after the date of enactment of this Act
(Dec. 19, 1991), the Federal Deposit Insurance Corporation shall submit
a report to Congress analyzing the effect of early resolution on the
deposit insurance funds.''
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, or section 206(a) of Pub. L.
97-320, set out as a note above, as in effect before Aug. 10, 1987, to
any other provision of law to be deemed to have taken effect before such
date and any such provision of law to be in effect as if no such
amendment had been made before such date, see section 509(c) of Pub. L.
100-86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) or section 206(a) of Pub. L.
97-320, set out as notes under sections 1464 and 1729 of this title,
respectively, as in effect on the day before Oct. 8, 1986, to any other
provision of law to be deemed to have taken effect before such date and
any such provision of law to be in effect as if no such amendment had
taken effect before such date, see section 1(c) of Pub. L. 99-452, set
out as a note under section 1464 of this title.
Sections 141(a) and 206(a) of Pub. L. 97-320, which are set out as
notes under sections 1464 and 1729 of this title, as such sections were
in effect on the day after Aug. 27, 1986, applicable as if such
sections had been included in Pub. L. 97-320 on Oct. 15, 1982, with no
amendment made by any such section to any other provision of law to be
deemed to have taken effect before Aug. 27, 1986, and any such
provision of law to be in effect as if no such amendment had taken
effect before Aug. 27, 1986, see section 1(c) of Pub. L. 99-400, set
out as a note under section 1464 of this title.
Section 204 of Pub. L. 97-320 provided that: ''The Federal Home
Loan Bank Board and the Board of Directors of the Federal Deposit
Insurance Corporation shall each transmit an annual report to each House
of the Congress specifying the types and amounts of net worth
certificates purchased from each depository institution and the
conditions imposed on each such depository institution.''
Section 205 of Pub. L. 97-320 provided that: ''The Comptroller
General of the United States shall conduct on a semiannual basis an
audit of the net worth certificate programs of the Federal Deposit
Insurance Corporation and the Federal Home Loan Bank Board. A report on
each such audit shall be transmitted to each House of the Congress.''
title 26 section 597.
/1/ See 1989 Amendment note below.
/2/ So in original. Probably should be followed by ''or''.
/3/ So in original. Probably should be ''insured bank in default''.
/4/ So in original.
/5/ See References in Text note below.
/6/ So in original. Probably should be ''is''.
/7/ So in original. The semicolon probably should be a period.
/8/ So in original. The word ''or'' probably should not appear.
/9/ So in original. The period probably should be ''; or''.
12 USC 1824. Borrowing authority
TITLE 12 -- BANKS AND BANKING
(a) Borrowing from Treasury
The Corporation is authorized to borrow from the Treasury, and the
Secretary of the Treasury is authorized and directed to loan to the
Corporation on such terms as may be fixed by the Corporation and the
Secretary, such funds as in the judgment of the Board of Directors of
the Corporation are from time to time required for insurance purposes,
not exceeding in the aggregate $30,000,000,000 outstanding at any one
time, subject to the approval of the Secretary of the Treasury:
Provided, That the rate of interest to be charged in connection with any
loan made pursuant to this subsection shall not be less than an amount
determined by the Secretary of the Treasury, taking into consideration
current market yields on outstanding marketable obligations of the
United States of comparable maturities. For such purpose the Secretary
of the Treasury is authorized to use as a public-debt transaction the
proceeds of the sale of any securities hereafter issued under chapter 31
of title 31, and the purposes for which securities may be issued under
chapter 31 of title 31 are extended to include such loans. Any such
loan shall be used by the Corporation solely in carrying out its
functions with respect to such insurance. All loans and repayments
under this subsection shall be treated as public-debt transactions of
the United States. The Corporation may employ any funds obtained under
this section for purposes of the Bank Insurance Fund or the Savings
Association Insurance Fund and the borrowing shall become a liability of
each such fund to the extent funds are employed therefor. There are
hereby appropriated to the Secretary, for fiscal year 1989 and each
fiscal year thereafter, such sums as may be necessary to carry out this
subsection.
(b) Borrowing from Federal Financing Bank
The Corporation is authorized to issue and sell the Corporation's
obligations, on behalf of the Bank Insurance Fund or Savings Association
Insurance Fund, to the Federal Financing Bank established by the Federal
Financing Bank Act of 1973 (12 U.S.C. 2281 et seq.). The Federal
Financing Bank is authorized to purchase and sell the Corporation's
obligations on terms and conditions determined by the Federal Financing
Bank. Any such borrowings shall be obligations subject to the
obligation limitation of section 1825(c) of this title. This subsection
does not affect the eligibility of any other entity to borrow from the
Federal Financing Bank.
(c) Repayment schedules required for any borrowing
(1) In general
No amount may be provided by the Secretary of the Treasury to the
Corporation under subsection (a) of this section unless an agreement is
in effect between the Secretary and the Corporation which --
(A) provides a schedule for the repayment of the outstanding amount
of any borrowing under such subsection; and
(B) demonstrates that income to the Corporation from assessments
under this chapter will be sufficient to amortize the outstanding
balance within the period established in the repayment schedule and pay
the interest accruing on such balance.
(2) Consultation with and report to Congress
The Secretary of the Treasury and the Corporation shall --
(A) consult with the Committee on Banking, Finance and Urban Affairs
of the House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate on the terms of any repayment schedule
agreement described in paragraph (1) relating to repayment, including
terms relating to any emergency special assessment under section 1817(
b)(7) of this title; and
(B) submit a copy of each repayment schedule agreement entered into
under paragraph (1) to the Committee on Banking, Finance and Urban
Affairs of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate before the end of the 30-day
period beginning on the date any amount is provided by the Secretary of
the Treasury to the Corporation under subsection (a) of this section.
(d) Borrowing for BIF from BIF members
(1) Borrowing authority
The Corporation may issue obligations to Bank Insurance Fund members,
and may borrow from Bank Insurance Fund members and give security for
any amount borrowed, and may pay interest on (and any redemption premium
with respect to) any such obligation or amount to the extent --
(A) the proceeds of any such obligation or amount are used by the
Corporation solely for purposes of carrying out the Corporation's
functions with respect to the Bank Insurance Fund; and
(B) the terms of the obligation or instrument limit the liability of
the Corporation or the Bank Insurance Fund for the payment of interest
and the repayment of principal to the amount which is equal to the
amount of assessment income received by the Fund from assessments under
section 1817 of this title.
(2) Limitations on borrowing
(A) Applicability of public debt limit
For purposes of the public debt limit established in section 3101(b)
of title 31, any obligation issued, or amount borrowed, by the
Corporation under paragraph (1) shall be considered to be an obligation
to which such limit applies.
(B) Applicability of FDIC borrowing limit
For purposes of the dollar amount limitation established in
subsection (a) of this section, any obligation issued, or amount
borrowed, by the Corporation under paragraph (1) shall be considered to
be an amount borrowed from the Treasury under such subsection.
(C) Interest rate limit
The rate of interest payable in connection with any obligation
issued, or amount borrowed, by the Corporation under paragraph (1) shall
not exceed an amount determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding marketable
obligations of the United States of comparable maturities.
(D) Obligations to be held only by BIF members
The terms of any obligation issued by the Corporation under paragraph
(1) shall provide that the obligation will be valid only if held by a
Bank Insurance Fund Member. /1/
(3) Liability of BIF
Any obligation issued or amount borrowed under paragraph (1) shall be
a liability of the Bank Insurance Fund.
(4) Terms and conditions
Subject to paragraphs (1) and (2), the Corporation shall establish
the terms and conditions for obligations issued or amounts borrowed
under paragraph (1), including interest rates and terms to maturity.
(5) Investment by BIF members
(A) Authority to invest
Subject to subparagraph (B) and notwithstanding any other provision
of Federal law or the law of any State, any Bank Insurance Fund member
may purchase and hold for investment any obligation issued by the
Corporation under paragraph (1) without limitation, other than any
limitation the appropriate Federal banking agency may impose
specifically with respect to such obligations.
(B) Investment only from capital and retained earnings
Any Bank Insurance Fund member may purchase obligations or make loans
to the Corporation under paragraph (1) only to the extent the purchase
money or the money loaned is derived from the member's capital or
retained earnings.
(6) Accounting treatment
In accounting for any investment in an obligation purchased from, or
any loan made to, the Corporation for purposes of determining compliance
with any capital standard and preparing any report required pursuant to
section 1817(a) of this title, the amount of such investment or loan
shall be treated as an asset.
(Sept. 21, 1950, ch. 967, 2(14), 64 Stat. 890; Aug. 9, 1989, Pub.
L. 101-73, title II, 218, 103 Stat. 261; Nov. 5, 1990, Pub. L.
101-508, title II, 2005, 104 Stat. 1388-16; Dec. 19, 1991, Pub. L.
102-242, title I, 101, 103(a), 105, 105 Stat. 2236, 2237, 2239.)
The Federal Financing Bank Act of 1973, referred to in subsec. (b),
is Pub. L. 93-224, Dec. 29, 1973, 87 Stat. 937, as amended, which is
classified generally to chapter 24 ( 2281 et seq.) of this title. For
complete classification of this Act to the Code, see Short Title note
set out under section 2281 of this title and Tables.
''Chapter 31 of title 31'' substituted in subsec. (a) for ''the
Second Liberty Bond Act, as amended'' on authority of Pub. L. 97-258,
4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which
enacted Title 31, Money and Finance.
Section is derived from subsec. (o) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (a). Pub. L. 102-242, 101, substituted
''$30,000,000,000'' for ''$5,000,000,000''.
Subsec. (c). Pub. L. 102-242, 103(a), added subsec. (c).
Subsec. (d). Pub. L. 102-242, 105, added subsec. (d).
1990 -- Pub. L. 101-508 inserted section catchline, designated
existing provisions as subsec. (a), inserted heading, substituted
''this subsection'' for ''this section'' wherever appearing, substituted
''The Corporation may employ any funds obtained under this section'' for
''The Corporation may employ such funds'', and added subsec. (b).
1989 -- Pub. L. 101-73 substituted ''$5,000,000,000 outstanding at
any one time, subject to the approval of the Secretary of the Treasury''
for ''$3,000,000,000 outstanding at any one time'', substituted ''an
amount determined by the Secretary of the Treasury, taking into
consideration current market yields on outstanding marketable
obligations of the United States of comparable maturities'' for ''the
current average rate on outstanding marketable and nonmarketable
obligations of the United States as of the last day of the month
preceding the making of such loan'', and inserted at end ''The
Corporation may employ such funds for purposes of the Bank Insurance
Fund or the Savings Association Insurance Fund and the borrowing shall
become a liability of each such fund to the extent funds are employed
therefor. There are hereby appropriated to the Secretary, for fiscal
year 1989 and each fiscal year thereafter, such sums as may be necessary
to carry out this section.''
of Capital and Surplus to Secretary of the Treasury
Section 1 of act Aug. 5, 1947, ch. 492, 61 Stat. 773, directed the
Federal Deposit Insurance Corporation to retire its capital stock by
paying the amount received therefor (whether received from the Secretary
of the Treasury or the Federal Reserve banks) to the Secretary of the
Treasury, to be covered into the Treasury as miscellaneous receipts,
with the Corporation to pay to the Secretary so much of its capital and
surplus as is in excess of $1,000,000,000, the balance of the amount to
be paid to the Secretary in units of $10,000,000 except that the last
unit to be paid could be less than $10,000,000.
/1/ So in original. Probably should not be capitalized.
12 USC 1825. Issuance of notes, debentures, bonds, and other
obligations; exemption from taxation
TITLE 12 -- BANKS AND BANKING
(a) General rule
All notes, debentures, bonds, or other such obligations issued by the
Corporation shall be exempt, both as to principal and interest, from all
taxation (except estate and inheritance taxes) now or hereafter imposed
by the United States, by any Territory, dependency, or possession
thereof, or by any State, county, municipality, or local taxing
authority: Provided, That interest upon or any income from any such
obligations and gain from the sale or other disposition of such
obligations shall not have any exemption, as such, and loss from the
sale or other disposition of such obligations shall not have any special
treatment, as such, under the Internal Revenue Code, or laws amendatory
or supplementary thereto. The Corporation, including its franchise, its
capital, reserves, and surplus, and its income, shall be exempt from all
taxation now or hereafter imposed by the United States, by any
Territory, dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority, except that any real property
of the Corporation shall be subject to State, Territorial, county,
municipal, or local taxation to the same extent according to its value
as other real property is taxed.
(b) Other exemptions
When acting as a receiver, the following provisions shall apply with
respect to the Corporation:
(1) The Corporation including its franchise, its capital, reserves,
and surplus, and its income, shall be exempt from all taxation imposed
by any State, county, municipality, or local taxing authority, except
that any real property of the Corporation shall be subject to State,
territorial, county, municipal, or local taxation to the same extent
according to its value as other real property is taxed, except that,
notwithstanding the failure of any person to challenge an assessment
under State law of such property's value, such value, and the tax
thereon, shall be determined as of the period for which such tax is
imposed.
(2) No property of the Corporation shall be subject to levy,
attachment, garnishment, foreclosure, or sale without the consent of the
Corporation, nor shall any involuntary lien attach to the property of
the Corporation.
(3) The Corporation shall not be liable for any amounts in the nature
of penalties or fines, including those arising from the failure of any
person to pay any real property, personal property, probate, or
recording tax or any recording or filing fees when due.
This subsection shall not apply with respect to any tax imposed (or
other amount arising) under the Internal Revenue Code of 1986.
(c) Limitation on borrowing
(1) Cost estimate for outstanding obligations liabilities
As soon as practicable after August 9, 1989, the Corporation shall
estimate the aggregate cost to the Corporation for all outstanding
obligations and guarantees of the Corporation which were issued, and all
outstanding liabilities which were incurred, by the Corporation before
August 9, 1989.
(2) Estimate of notes and other obligations required
Before issuing an obligation or making a guarantee, the Corporation
shall estimate the cost of such obligations or guarantees.
(3) Inclusion of estimates in financial statements
The Corporation shall --
(A) reflect in its financial statements the estimates made by the
Corporation under paragraphs (1) and (2) of the aggregate amount of the
costs to the Corporation for outstanding obligations and other
liabilities, and
(B) make such adjustments as are appropriate in the estimate of such
aggregate amount not less frequently than quarterly.
(4) Estimate of other assets required
The Corporation shall --
(A) estimate the market value of assets held by it as a result of
case resolution activities, with a reduction for expenses expected to be
incurred by the Corporation in connection with the management and sale
of such assets;
(B) reflect the amounts so estimated in its financial statements;
and
(C) make such adjustments as are appropriate of such market value not
less than quarterly.
(5) Maximum amount limitation on outstanding obligations
Notwithstanding any other provisions of this chapter, the Corporation
may not issue or incur any obligation, if, after issuing or incurring
the obligation, the aggregate amount of obligations of the Bank
Insurance Fund or Savings Association Insurance Fund, respectively,
outstanding would exceed the sum of --
(A) the amount of cash or the equivalent of cash held by the Bank
Insurance Fund or Savings Association Insurance Fund, respectively;
(B) the amount which is equal to 90 percent of the Corporation's
estimate of the fair market value of assets held by the Bank Insurance
Fund or the Savings Association Insurance Fund, respectively, other than
assets described in subparagraph (A); and
(C) the total of the amounts authorized to be borrowed from the
Secretary of the Treasury pursuant to section 1824(a) of this title.
(6) ''Obligation'' defined
(A) In general
For purposes of paragraph (5), the term ''obligation'' includes --
(i) any guarantee issued by the Corporation, other than deposit
guarantees;
(ii) any amount borrowed pursuant to section 1824 of this title; and
(iii) any other obligation for which the Corporation has a direct or
contingent liability to pay any amount.
(B) Valuation of contingent liabilities
The Corporation shall value any contingent liability at its expected
cost to the Corporation.
(d) Full faith and credit
The full faith and credit of the United States is pledged to the
payment of any obligation issued after August 9, 1989, by the
Corporation, with respect to both principal and interest, if --
(1) the principal amount of such obligation is stated in the
obligation; and
(2) the term to maturity or the date of maturity of such obligation
is stated in the obligation.
(Sept. 21, 1950, ch. 967, 2(15), 64 Stat. 890; Aug. 9, 1989, Pub.
L. 101-73, title II, 219, 103 Stat. 261; Dec. 19, 1991, Pub. L.
102-242, title I, 102(a), (c), 105 Stat. 2236, 2237.)
The Internal Revenue Code, referred to in subsecs. (a) and (b), is
classified to Title 26, Internal Revenue Code.
Section is derived from subsec. (p) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1991 -- Subsec. (c)(5), (6). Pub. L. 102-242, 102(a), added pars.
(5) and (6) and struck out former par. (5) which provided for a
10-percent-minimum net worth requirement for Bank Insurance Fund or
Savings Association Insurance Fund and former par. (6) which provided
exception for up to $5,000,000,000 in additional liabilities beyond
limitations of par. (5).
Subsec. (c)(7). Pub. L. 102-242, 102(c), struck out par. (7) which
provided for calculation of net worth and asset valuation of Bank
Insurance Fund and the Savings Association Insurance Fund for purposes
of par. (5).
1989 -- Subsec. (a). Pub. L. 101-73 designated existing provision as
subsec. (a), inserted heading, and added subsecs. (b) to (d).
Section 102(b) of Pub. L. 102-242 provided that:
''(1) Quarterly reporting. -- The Comptroller General of the United
States shall submit a report each calendar quarter on the Federal
Deposit Insurance Corporation's compliance with section 15(c)(5) of the
Federal Deposit Insurance Act (12 U.S.C. 1825(c)(5)) for the preceding
quarter to the Committee on Banking, Finance and Urban Affairs of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate.
''(2) Analyses to be included. -- Each report submitted under
paragraph (1) shall include --
''(A) an analysis of the performance of the Federal Deposit Insurance
Corporation in meeting any repayment schedule under section 14(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1824(c)) (as added by section
103 of this Act); and
''(B) an analysis of the actual recovery on asset sales compared to
the estimated fair market value of the assets as determined for the
purposes of section 15(c)(5)(B) of such Act (12 U.S.C. 1825(c)(5)(
B)).''
12 USC 1826. Forms of obligations; preparation by Secretary of the
Treasury
TITLE 12 -- BANKS AND BANKING
In order that the Corporation may be supplied with such forms of
notes, debentures, bonds, or other such obligations as it may need for
issuance under this chapter, the Secretary of the Treasury is authorized
to prepare such forms as shall be suitable and approved by the
Corporation, to be held in the Treasury subject to delivery, upon order
of the Corporation. The engraved plates, dies, bed pieces, and other
material executed in connection therewith shall remain in the custody of
the Secretary of the Treasury. The Corporation shall reimburse the
Secretary of the Treasury for any expenses incurred in the preparation,
custody, and delivery of such notes, debentures, bonds, or other such
obligations.
(Sept. 21, 1950, ch. 967, 2(16), 64 Stat. 890.)
Section is derived from subsec. (q) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
12 USC 1827. Reports by Corporation; audit of financial transactions;
report on audits; employment of certified public accountants for audits
TITLE 12 -- BANKS AND BANKING
(a) Annual reports on BIF, SAIF, and the FSLIC Resolution Fund
(1) In general
The Corporation shall annually submit a full report of its
operations, activities, budget, receipts, and expenditures for the
preceding 12-month period. The report shall include, with respect to
the Bank Insurance Fund, the Savings Association Insurance Fund, and the
FSLIC Resolution Fund, an analysis by the Corporation of --
(A) the current financial condition of each such fund;
(B) the purpose, effect, and estimated cost of each resolution action
taken for an insured depository institution during the preceding year;
(C) the extent to which the actual costs of assistance provided to,
or for the benefit of, an insured depository institution during the
preceding year exceeded the estimated costs of such assistance reported
in a previous year under paragraph (A);
(D) the exposure of each insurance fund to changes in those economic
factors most likely to affect the condition of that fund;
(E) a current estimate of the resources needed for the Bank Insurance
Fund, the Savings Association Insurance Fund, or the FSLIC Resolution
Fund to achieve the purposes of this chapter; and
(F) any findings, conclusions, and recommendations for legislative
and administrative actions considered appropriate to future resolution
activities by the Corporation.
(2) Manner of submission
Such report shall be submitted to the President of the Senate and the
Speaker of the House of Representatives, who shall cause the same to be
printed for the information of Congress, and the President as soon as
practicable after the first day of January each year.
(b) Quarterly reports to Treasury
(1) Financial operating plans and forecasts
Before the beginning of each fiscal quarter, the Corporation shall
provide to the Secretary of the Treasury a copy of the Corporation's
financial operating plans and forecasts.
(2) Financial condition and reports of operations
As soon as practicable after the end of each fiscal quarter, the
Corporation shall submit to the Secretary of the Treasury a copy of the
report of the Corporation's financial condition as of the end of such
fiscal quarter and the results of the Corporation's operations during
such fiscal quarter.
(3) Items to be included
The plans, forecasts, and reports required under this subsection
shall reflect the estimates required to be made under section 1825(b) of
this title of the liabilities and obligations of the Corporation
described in such section.
(4) Rule of construction
The requirement to provide plans, forecasts, and reports to the
Secretary of the Treasury under this subsection may not be construed as
implying any obligation on the part of the Corporation to obtain the
consent or approval of such Secretary with respect to such plans,
forecasts, and reports.
(c) Reports to OMB
(1) Financial information
The Corporation shall continue to provide to the Director of the
Office of Management and Budget financial information consistent with
that contained in the reports that were being provided to the Director
immediately prior to the effective date of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989.
(2) Financial operating plans and forecasts
The Corporation shall also provide to the Director copies of the
Corporation's financial operating plans and forecasts as prepared by the
Corporation in the ordinary course of its operations, and copies of the
quarterly reports of the Corporation's financial condition and results
of operations as prepared by the Corporation in the ordinary course of
its operations.
(3) Rule of construction
This subsection may not be construed as implying any obligation on
the part of the Corporation to consult with or obtain the consent or
approval of the Director with respect to any reports, plans, forecasts,
or other information referred to in paragraph (1) or (2) or any
jurisdiction or oversight over the affairs or operations of the
Corporation.
(d) Audit
(1) Audit required
The Comptroller General shall audit annually the financial
transactions of the Corporation, the Bank Insurance Fund, the Savings
Association Insurance Fund, and the FSLIC Resolution Fund in accordance
with generally accepted government auditing standards.
(2) Access to books and records
All books, records, accounts, reports, files, and property belonging
to or used by the Corporation, the Bank Insurance Fund, the Savings
Association Insurance Fund, and the FSLIC Resolution Fund, or by an
independent certified public accountant retained to audit the Fund's
financial statements, shall be made available to the Comptroller
General.
(e) Audit of Corporation
The financial transactions of the Corporation shall be audited by the
General Accounting Office in accordance with the principles and
procedures applicable to commercial corporate transactions and under
such rules and regulations as may be prescribed by the Comptroller
General of the United States. The audit shall be conducted at the place
or places where accounts of the Corporation are normally kept. The
representatives of the General Accounting Office shall have access to
all books, accounts, records, reports, files, and all other papers,
things, or property belonging to or in use by the Corporation pertaining
to its financial transactions and necessary to facilitate the audit, and
they shall be afforded full facilities for verifying transactions with
the balances or securities held by depositaries, fiscal agents, and
custodians. All such books, accounts, records, reports, files, papers,
and property of the Corporation shall remain in possession and custody
of the Corporation. The audit shall begin with financial transactions
occurring on and after August 31, 1948. The Corporation shall be audited
at least once in every three years.
(f) Report of audit
A report of each audit conducted under subsection (b) of this section
shall be made by the Comptroller General to the Congress not later than
six and one-half months following the close of the last year covered by
such audit. The report to the Congress shall set forth the scope of the
audit and shall include a statement of assets and liabilities and
surplus or deficit; a statement of surplus or deficit analysis; a
statement of income and expenses; a statement of sources and
application of funds and such comments and information as may be deemed
necessary to inform Congress of the financial operations and condition
of the Corporation, together with such recommendations with respect
thereto as the Comptroller General may deem advisable. The report shall
also show specifically any program, expenditure, or other financial
transaction or undertaking observed in the course of the audit, which,
in the opinion of the Comptroller General, has been carried on or made
without authority of law. A copy of each report shall be furnished to
the President, to the Secretary of the Treasury, and to the Corporation
at the time submitted to the Congress.
(g) Assistance in audit; costs
For the purpose of conducting such audit the Comptroller General is
authorized in his discretion to employ by contract, without regard to
section 5 of title 41, professional services of firms and organizations
of certified public accountants, with the concurrence of the
Corporation, for temporary periods or for special purposes. The
Corporation shall reimburse the General Accounting Office for the cost
of any such audit as billed therefor by the Comptroller General, and the
General Accounting Office shall deposit the sums so reimbursed into the
Treasury as miscellaneous receipts.
(h) Additional reports
(1) In general
In addition to the reports required under subsections (a), (b), and
(c) of this section, the Corporation shall submit to Congress not later
than April 30 and October 31 of each year, a semiannual report on the
activities and efforts of the Corporation for the 6-month period ending
on the last day of the month prior to the month in which such report is
required to be submitted.
(2) Contents of report
Each semiannual report required under this subsection shall include
the following information with respect to the Corporation's assets and
liabilities and the assets and liabilities of institutions for which the
Corporation serves as a conservator or receiver:
(A) A statement of the total book value of all assets held or managed
by the Corporation at the beginning and end of the reporting period.
(B) A statement of the total book value of such assets which are
under contract to be managed by private persons and entities at the
beginning and end of the reporting period.
(C) The number of employees of the Corporation at the beginning and
end of the reporting period.
(D) A statement of the total amount expended on private contractors
for the management of such assets.
(E) A statement of the efforts of the Corporation to maximize the
efficient utilization of the resources of the private sector during the
reporting period and in future reporting periods and a description of
the policies and procedures adopted to ensure adequate competition and
fair and consistent treatment of qualified third parties seeking to
provide services to the Corporation.
(Sept. 21, 1950, ch. 967, 2(17), 64 Stat. 890; Jan. 2, 1975, Pub.
L. 93-604, title VI, 602, 88 Stat. 1963; Aug. 9, 1989, Pub. L. 101-73,
title II, 220(a), 103 Stat. 263; Dec. 19, 1991, Pub. L. 102-242, title
IV, 427, 105 Stat. 2378.)
The effective date of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, referred to in subsec. (c)(1), probably
means the date of enactment of Pub. L. 101-73, which was approved Aug.
9, 1989.
Subsec. (a) is derived from subsec. (r) of former section 264 of
this title. See Codification note set out under section 1811 of this
title.
1991 -- Subsec. (h). Pub. L. 102-242 added subsec. (h).
1989 -- Subsec. (a). Pub. L. 101-73, 220(a)(1), added heading and
text and struck out former subsec. (a) which read as follows: ''The
Corporation shall annually make a report of its operations to the
Congress as soon as practicable after the 1st day of January in each
year.''
Subsecs. (b) to (g). Pub. L. 101-73, 220(a)(2), (3), added subsecs.
(b) to (d) and redesignated former subsecs. (b) to (d) as (e) to (g),
respectively.
1975 -- Subsec. (b). Pub. L. 93-604, 602(a), inserted provisions
that the Corporation shall be audited at least once in every three
years.
Subsec. (c). Pub. L. 93-604, 602(b), substituted provisions that a
report of each audit conducted under subsec. (b) of this section shall
be made by the Comptroller General to the Congress not later than six
and one-half months following the close of previous year covered by such
audit, for provisions that a report of the audit for each fiscal year
ending on June 30 shall be made by the Comptroller General to the
Congress not later than Jan. 15 following the close of such fiscal
year.
Section 220(b)(1) of Pub. L. 101-73 directed Federal Deposit
Insurance Corporation to study establishment of premium assessment
categories related to types of risk to insurance funds and report its
recommendations to Congress not later than Jan. 1, 1991; if
Corporation recommended establishment of such a risk-based assessment
plan, it was to provide a timetable and plan for implementation; and
not later than 180 days after receipt of report and accompanying plan
and timetable, Congress was to make a recommendation to Chairperson of
Board of Directors regarding disposition of such plan and timetable.
12 USC 1828. Regulations governing insured depository institutions
TITLE 12 -- BANKS AND BANKING
(a) Insurance logo
(1) Insured savings associations
Each insured savings association shall display at each place of
business maintained by such association a sign containing only the
following items:
(A) A statement that insured deposits are backed by the full faith
and credit of the United States Government.
(B) A statement that deposits are federally insured to $100,000.
(C) The symbol of an eagle.
The sign shall not contain any reference to a Government agency and
shall accord each item substantially equal prominence.
(2) Insured banks
Not later than 30 days after August 9, 1989, each insured bank shall
display at each place of business maintained by such bank one of the
following:
(A) The sign required to be displayed by insured banks under
regulations prescribed by the Corporation in effect on January 1, 1989.
(B) The sign prescribed under paragraph (1).
(3) Regulations
The Corporation shall prescribe regulations to carry out the purposes
of this subsection, including regulations governing the manner of
display or use of such signs, except that the size of the sign
prescribed under paragraph (1) shall be similar to that prescribed under
paragraph (2)(A). Initial regulations under this subsection shall be
prescribed on August 9, 1989.
For each day an insured depository institution continues to violate
any provisions of this subsection or any lawful provisions of said
regulations, it shall be subject to a penalty of not more than $100,
which the Corporation may recover for its use.
(b) Payment of dividends by defaulting depository institutions
No insured depository institution shall pay any dividends on its
capital stock or interest on its capital notes or debentures (if such
interest is required to be paid only out of net profits) or distribute
any of its capital assets while it remains in default in the payment of
any assessment due to the Corporation; and any director or officer of
any insured depository institution who participates in the declaration
or payment of any such dividend or interest or in any such distribution
shall, upon conviction, be fined not more than $1,000 or imprisoned not
more than one year, or both: Provided, That, if such default is due to
a dispute between the insured depository institution and the Corporation
over the amount of such assessment, this subsection shall not apply, if
such bank /1/ shall deposit security satisfactory to the Corporation for
payment upon final determination of the issue.
(c) Merger transactions; consent of banking agencies; emergency
approval; notice; uniform standards; antitrust actions; review de
novo; limitations; report to Congress; applicability
(1) Except with the prior written approval of the responsible agency,
which shall in every case referred to in this paragraph be the
Corporation, no insured depository institution shall --
(A) merge or consolidate with any noninsured bank or institution;
(B) assume liability to pay any deposits (including liabilities which
would be ''deposits'' except for the proviso in section 1813(l)( 5) of
this title) made in, or similar liabilities of, any noninsured bank or
institution;
(C) transfer assets to any noninsured bank or institution in
consideration of the assumption of liabilities for any portion of the
deposits made in such insured depository institution.
(2) No insured depository institution shall merge or consolidate with
any other insured depository institution or, either directly or
indirectly, acquire the assets of, or assume liability to pay any
deposits made in, any other insured depository institution except with
the prior written approval of the responsible agency, which shall be --
(A) the Comptroller of the Currency if the acquiring, assuming, or
resulting bank is to be a national bank or a District bank;
(B) the Board of Governors of the Federal Reserve System if the
acquiring, assuming, or resulting bank is to be a State member bank
(except a District bank);
(C) the Corporation if the acquiring, assuming, or resulting bank is
to be a State nonmember insured bank (except a District bank or a
savings bank supervised by the Director of the Office of Thrift
Supervision); and
(D) the Director of the Office of Thrift Supervision if the
acquiring, assuming, or resulting institution is to be a savings
association.
(3) Notice of any proposed transaction for which approval is required
under paragraph (1) or (2) (referred to hereafter in this subsection as
a ''merger transaction'') shall, unless the responsible agency finds
that it must act immediately in order to prevent the probable default of
one of the banks or savings associations involved, be published --
(A) prior to the granting of approval of such transaction,
(B) in a form approved by the responsible agency,
(C) at appropriate intervals during a period at least as long as the
period allowed for furnishing reports under paragraph (4) of this
subsection, and
(D) in a newspaper of general circulation in the community or
communities where the main offices of the banks or savings associations
involved are located, or, if there is no such newspaper in any such
community, then in the newspaper of general circulation published
nearest thereto.
(4) In the interests of uniform standards, before acting on any
application for approval of a merger transaction, the responsible
agency, unless it finds that it must act immediately in order to prevent
the probable failure of one of the banks or savings associations
involved, shall request reports on the competitive factors involved from
the Attorney General and the other two banking agencies referred to in
this subsection. The reports shall be furnished within thirty calendar
days of the date on which they are requested, or within ten calendar
days of such date if the requesting agency advises the Attorney General
and the other two banking agencies that an emergency exists requiring
expeditious action.
(5) The responsible agency shall not approve --
(A) any proposed merger transaction which would result in a monopoly,
or which would be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any
part of the United States, or
(B) any other proposed merger transaction whose effect in any section
of the country may be substantially to lessen competition, or to tend to
create a monopoly, or which in any other manner would be in restraint of
trade, unless it finds that the anticompetitive effects of the proposed
transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs
of the community to be served.
In every case, the responsible agency shall take into consideration
the financial and managerial resources and future prospects of the
existing and proposed institutions, and the convenience and needs of the
community to be served.
(6) The responsible agency shall immediately notify the Attorney
General of any approval by it pursuant to this subsection of a proposed
merger transaction. If the agency has found that it must act
immediately to prevent the probable failure of one of the banks or
savings associations involved and reports on the competitive factors
have been dispensed with, the transaction may be consummated immediately
upon approval by the agency. If the agency has advised the Attorney
General and the other two banking agencies of the existence of an
emergency requiring expeditious actions and has requested reports on the
competitive factors within ten days, the transaction may not be
consummated before the fifth calendar day after the date of approval by
the agency. In all other cases, the transaction may not be consumated
before the thirtieth calendar day after the date of approval by the
agency.
(7)(A) Any action brought under the antitrust laws arising out of a
merger transaction shall be commenced prior to the earliest time under
paragraph (6) at which a merger transaction approved under paragraph (5)
might be consummated. The commencement of such an action shall stay the
effectiveness of the agency's approval unless the court shall otherwise
specifically order. In any such action, the court shall review de novo
the issues presented.
(B) In any judicial proceeding attacking a merger transaction
approved under paragraph (5) on the ground that the merger transaction
alone and of itself constituted a violation of any antitrust laws other
than section 2 of title 15, the standards applied by the court shall be
identical with those that the banking agencies are directed to apply
under paragraph (5).
(C) Upon the consummation of a merger transaction in compliance with
this subsection and after the termination of any antitrust litigation
commenced within the period prescribed in this paragraph, or upon the
termination of such period if no such litigation is commenced therein,
the transaction may not thereafter be attacked in any judicial
proceeding on the ground that it alone and of itself constituted a
violation of any antirust laws other than section 2 of title 15, but
nothing in this subsection shall exempt any bank or savings association
resulting from a merger transaction from complying with the antitrust
laws after the consummation of such transaction.
(D) In any action brought under the antitrust laws arising out of a
merger transaction approved by a Federal supervisory agency pursuant to
this subsection, such agency, and any State banking supervisory agency
having jurisdiction within the State involved, may appear as a part of
its own motion and as of right, and be represented by its counsel.
(8) For the purposes of this subsection, the term ''antitrust laws''
means the Act of July 2, 1890 (the Sherman Antitrust Act), the Act of
October 15, 1914 (the Clayton Act), and any other Acts in pari materia.
(9) Each of the responsible agencies shall include in its annual
report to the Congress a description of each merger transaction approved
by it during the period covered by the report, along with the following
information:
(A) the name and total resources of each bank or savings association
involved;
(B) whether a report was submitted by the Attorney General under
paragraph (4), and, if so, a summary by the Attorney General of the
substance of such report; and
(C) a statement by the responsible agency of the basis for its
approval.
(10) Until June 30, 1976, the responsible agency shall not grant any
approval required by law which has the practical effect of permitting a
conversion from the mutual to the stock form of organization, including
approval of any application pending on the date of enactment of this
subsection, except that this sentence shall not be deemed to limit now
or hereafter the authority of the responsible agency to grant approvals
in cases where the responsible agency finds that it must act in order to
maintain the safety, soundness, and stability of an insured depository
institution. The responsible agency may by rule, regulation, or
otherwise and under such civil penalties (which shall be cumulative to
any other remedies) as it may prescribe take whatever action it deems
necessary or appropriate to implement or enforce this subsection.
(11) The provisions of this subsection do not apply to any merger
transaction involving a foreign bank if no party to the transaction is
principally engaged in business in the United States.
(d) Branch banks
(1) No State nonmember insured bank (except a District bank) shall
establish and operate any new domestic branch unless it shall have the
prior written consent of the Corporation, and no State nonmember insured
bank (except a District bank) shall move its main office or any such
branch from one location to another without such consent. No foreign
bank may move any insured branch from one location to another without
such consent. The factors to be considered in granting or withholding
the consent of the Corporation under this subsection shall be those
enumerated in section 1816 of this title.
(2) No State nonmember insured bank shall establish or operate any
foreign branch, except with the prior written consent of the Corporation
and upon such conditions and pursuant to such regulations as the
Corporation may prescribe from time to time.
(e) Indemnity insurance
The Corporation may require any insured depository institution to
provide protection and indemnity against burglary, defalcation, and
other similar insurable losses. Whenever any insured depository
institution refuses to comply with any such requirement the Corporation
may contract for such protection and indemnity and add the cost thereof
to the assessment otherwise payable by such bank. /2/
(f) Publication of reports
Whenever any insured depository institution (except a national bank
or a District bank), after written notice of the recommendations of the
Corporation based on a report of examination of such bank /2/
by an examiner of the Corporation, shall fail to comply with such
recommendations within one hundred and twenty days after such notice,
the Corporation shall have the power, and is authorized, to publish only
such part of such report of examination as relates to any recommendation
not complied with: Provided, That notice of intention to make such
publication shall be given to the bank /2/ at least ninety days before
such publication is made.
(g) Interest or dividend on demand deposits; definitions;
regulation of interest rates
(1) The Board of Directors shall by regulation prohibit the payment
of interest or dividends on demand deposits in insured nonmember banks
and in insured branches of foreign banks and for such purpose it may
define the term ''demand deposits''; but such exceptions from this
prohibition shall be made as are now or may hereafter be prescribed with
respect to deposits payable on demand in member banks by section 19 of
the Federal Reserve Act, as amended, or by regulation of the Board of
Governors of the Federal Reserve System. The Board of Directors may from
time to time, after consulting with the Board of Governors of the
Federal Reserve System and the Director of the Office of Thrift
Supervision, prescribe rules governing the advertisement of interest or
dividends on deposits by insured nonmember banks (including insured
mutual savings banks) on time and savings deposits. The Board of
Directors is authorized for the purposes of this subsection to define
the terms ''time deposits'' and ''savings deposits'', to determine what
shall be deemed a payment of interest, and to prescribe such regulations
as it may deem necessary to effectuate the purposes of this subsection
and to prevent evasions thereof. The provisions of this subsection and
of regulations issued thereunder shall also apply, in the discretion of
the Board of Directors, to obligations other than deposits that are
undertaken by insured nonmember banks or their affiliates. As used in
this subsection, the term ''affiliate'' has the same meaning as when
used in section 221a(b) of this title, except that the term ''member
bank'', as used in such section 221a(b), shall be deemed to refer to an
insured nonmember bank. During the period commencing on October 15,
1962, and ending on October 15, 1968, the provisions of this subsection
shall not apply to the rate of interest which may be paid by insured
nonmember banks on time deposits of foreign governments, monetary and
financial authorities of foreign governments when acting as such, or
international financial institutions of which the United States is a
member. The authority conferred by this subsection shall also apply to
noninsured banks in any State if the total amount of time and savings
deposits held in all such banks in the State, plus the total amount of
deposits, shares, and withdrawable accounts held in all building and
loan, savings and loan, and homestead associations (including
cooperative banks) in the State which are not members of a Federal home
loan bank, is more than 20 per centum of the total amount of such
deposits, shares, and withdrawable accounts held in all banks, and
building and loan, savings and loan, and homestead associations
(including cooperative banks) in the State. Such authority shall only
be exercised by the Board of Directors with respect to such noninsured
banks prior to July 31, 1970, to limit the rates of interest or
dividends which such banks may pay on time and savings deposits to
maximum rates not lower than 5 1/2 per centum per annum. Whenever it
shall appear to the Board of Directors that any noninsured bank or any
affiliate thereof is engaged or has engaged or is about to engage in any
acts or practices which constitute or will constitute a violation of the
provisions of this subsection or of any regulations thereunder, the
Board of Directors may, in its discretion, bring an action in the United
States district court for the judicial district in which the principal
office of the noninsured bank or affiliate thereof is located to enjoin
such acts or practices, to enforce compliance with this subsection or
any regulations thereunder, or for a combination of the foregoing, and
such courts shall have jurisdiction of such actions, and, upon a proper
showing, an injunction, restraining order, or other appropriate order
may be granted without bond.
(2) Notwithstanding the provisions of paragraph (1), an insured
nonmember bank may permit withdrawals to be made automatically from a
savings deposit that consists only of funds in which the entire
beneficial interest is held by one or more individuals through payment
to the bank itself or through transfer of credit to a demand deposit or
other account pursuant to written authorization from the depositor to
make such payments or transfers in connection with checks or drafts
drawn upon the bank, pursuant to terms and conditions prescribed by the
Board of Directors.
(h) Penalties
Any insured depository institution which willfully fails or refuses
to file any certified statement or pay any assessment required under
this chapter shall be subject to a penalty of not more than $100 for
each day that such violations continue, which penalty the Corporation
may recover for its use: Provided, That this subsection shall not be
applicable under the circumstances stated in the proviso of subsection
(b) of this section.
(i) Reduction or retirement of capital stock, notes, or debentures;
conversion of insured Federal depository institutions to insured State
banks or noninsured institutions; consent of banking agencies;
applicability
(1) No insured State nonmember bank (except a District bank) shall,
without the prior consent of the Corporation, reduce the amount or
retire any part of its common or preferred capital stock, or retire any
part of its capital notes or debentures.
(2) No insured Federal depository institution shall convert into an
insured State depository institution if its capital stock or its surplus
will be less than the capital stock or surplus, respectively, of the
converting bank at the time of the shareholder's meeting approving such
conversion, without the prior written consent of --
(A) the Comptroller of the Currency if the resulting bank is to be a
District bank;
(B) the Board of Governors of the Federal Reserve System if the
resulting bank is to be a State member bank (except a District bank);
(C) the Corporation if the resulting bank is to be a State nonmember
insured bank (except a District bank); and
(D) the Director of the Office of Thrift Supervision if the resulting
institution is to be an insured State savings association.
(3) Without the prior written consent of the Corporation, no insured
depository institution shall convert into a noninsured bank or
institution.
(4) In granting or withholding consent under this subsection, the
responsible agency shall consider --
(A) the financial history and condition of the bank,
(B) the adequacy of its capital structure,
(C) its future earnings prospects,
(D) the general character and fitness of its management,
(E) the convenience and needs of the community to be served, and
(F) whether or not its corporate powers are consistent with the
purposes of this chapter.
(j) Restrictions on transactions with affiliates and insiders
(1) Transactions with affiliates
(A) In general
Sections 371c and 371c-1 of this title shall apply with respect to
every nonmember insured bank in the same manner and to the same extent
as if the nonmember insured bank were a member bank.
(B) ''Affiliate'' defined
For the purpose of subparagraph (A), any company that would be an
affiliate (as defined in sections 371c and 371c-1 of this title) of a
nonmember insured bank if the nonmember insured bank were a member bank
shall be deemed to be an affiliate of that nonmember insured bank.
(2) Extensions of credit to officers, directors, and principal
shareholders
Sections 375a and 375b of this title shall apply with respect to
every nonmember insured bank in the same manner and to the same extent
as if the nonmember insured bank were a member bank.
(3) Avoiding extraterritorial application to foreign banks
(A) Transactions with affiliates
Paragraph (1) shall not apply with respect to a foreign bank solely
because the foreign bank has an insured branch.
(B) Extensions of credit to officers, directors, and principal
shareholders
Paragraph (2) shall not apply with respect to a foreign bank solely
because the foreign bank has an insured branch, but shall apply with
respect to the insured branch.
(C) ''Foreign bank'' defined
For purposes of this paragraph, the term ''foreign bank'' has the
same meaning as in section 3101(7) of this title.
(k) Authority to regulate or prohibit certain forms of benefits to
institution-affiliated parties
(1) Golden parachutes and indemnification payments
The Corporation may prohibit or limit, by regulation or order, any
golden parachute payment or indemnification payment.
(2) Factors to be taken into account
The Corporation shall prescribe, by regulation, the factors to be
considered by the Corporation in taking any action pursuant to paragraph
(1) which may include such factors as the following:
(A) Whether there is a reasonable basis to believe that the
institution-affiliated party has committed any fraudulent act or
omission, breach of trust or fiduciary duty, or insider abuse with
regard to the depository institution or depository institution holding
company that has had a material affect on the financial condition of the
institution.
(B) Whether there is a reasonable basis to believe that the
institution-affiliated party is substantially responsible for the
insolvency of the depository institution or depository institution
holding company, the appointment of a conservator or receiver for the
depository institution, or the depository institution's troubled
condition (as defined in the regulations prescribed pursuant to section
1831i(f) of this title).
(C) Whether there is a reasonable basis to believe that the
institution-affiliated party has materially violated any applicable
Federal or State banking law or regulation that has had a material
affect on the financial condition of the institution.
(D) Whether there is a reasonable basis to believe that the
institution-affiliated party has violated or conspired to violate --
(i) section 215, 656, 657, 1005, 1006, 1007, 1014, 1032, or 1344 of
title 18; or
(ii) section 1341 or 1343 of such title affecting a federally insured
financial institution.
(E) Whether the institution-affiliated party was in a position of
managerial or fiduciary responsibility.
(F) The length of time the party was affiliated with the insured
depository institution or depository institution holding company and the
degree to which --
(i) the payment reasonably reflects compensation earned over the
period of employment; and
(ii) the compensation involved represents a reasonable payment for
services rendered.
(3) Certain payments prohibited
No insured depository institution or depository institution holding
company may prepay the salary or any liability or legal expense of any
institution-affiliated party if such payment is made --
(A) in contemplation of the insolvency of such institution or holding
company or after the commission of an act of insolvency; and
(B) with a view to, or has the result of --
(i) preventing the proper application of the assets of the
institution to creditors; or
(ii) preferring one creditor over another.
(4) ''Golden parachute payment'' defined
For purposes of this subsection --
(A) In general
The term ''golden parachute payment'' means any payment (or any
agreement to make any payment) in the nature of compensation by any
insured depository institution or depository institution holding company
for the benefit of any institution-affiliated party pursuant to an
obligation of such institution or holding company that --
(i) is contingent on the termination of such party's affiliation with
the institution or holding company; and
(ii) is received on or after the date on which --
(I) the insured depository institution or depository institution
holding company, or any insured depository institution subsidiary of
such holding company, is insolvent;
(II) any conservator or receiver is appointed for such institution;
or
(III) the institution's appropriate Federal banking agency determines
that the insured depository institution is in a troubled condition (as
defined in the regulations prescribed pursuant to section 1831i(f) of
this title);
(IV) the insured depository institution has been assigned a composite
rating by the appropriate Federal banking agency or the Corporation of 4
or 5 under the Uniform Financial Institutions Rating System; or
(V) the insured depository institution is subject to a proceeding
initiated by the Corporation to terminate or suspend deposit insurance
for such institution.
(B) Certain payments in contemplation of an event
Any payment which would be a golden parachute payment but for the
fact that such payment was made before the date referred to in
subparagraph (A)(ii) shall be treated as a golden parachute payment if
the payment was made in contemplation of the occurrence of an event
described in any subclause of such subparagraph.
(C) Certain payments not included
The term ''golden parachute payment'' shall not include --
(i) any payment made pursuant to a retirement plan which is qualified
(or is intended to be qualified) under section 401 of title 26 or other
nondiscriminatory benefit plan;
(ii) any payment made pursuant to a bona fide deferred compensation
plan or arrangement which the Board determines, by regulation or order,
to be permissible; or
(iii) any payment made by reason of the death or disability of an
institution-affiliated party.
(5) Other definitions
For purposes of this subsection --
(A) Indemnification payment
Subject to paragraph (6), the term ''indemnification payment'' means
any payment (or any agreement to make any payment) by any insured
depository institution or depository institution holding company for the
benefit of any person who is or was an institution-affiliated party, to
pay or reimburse such person for any liability or legal expense with
regard to any administrative proceeding or civil action instituted by
the appropriate Federal banking agency which results in a final order
under which such person --
(i) is assessed a civil money penalty;
(ii) is removed or prohibited from participating in conduct of the
affairs of the insured depository institution; or
(iii) is required to take any affirmative action described in section
1818(b)(6) of this title with respect to such institution.
(B) Liability or legal expense
The term ''liability or legal expense'' means --
(i) any legal or other professional expense incurred in connection
with any claim, proceeding, or action;
(ii) the amount of, and any cost incurred in connection with, any
settlement of any claim, proceeding, or action; and
(iii) the amount of, and any cost incurred in connection with, any
judgment or penalty imposed with respect to any claim, proceeding, or
action.
(C) Payment
The term ''payment'' includes --
(i) any direct or indirect transfer of any funds or any asset; and
(ii) any segregation of any funds or assets for the purpose of
making, or pursuant to an agreement to make, any payment after the date
on which such funds or assets are segregated, without regard to whether
the obligation to make such payment is contingent on --
(I) the determination, after such date, of the liability for the
payment of such amount; or
(II) the liquidation, after such date, of the amount of such payment.
(6) Certain commercial insurance coverage not treated as covered
benefit payment
No provision of this subsection shall be construed as prohibiting any
insured depository institution or depository institution holding company
from purchasing any commercial insurance policy or fidelity bond, except
that, subject to any requirement described in paragraph (5)(A)(iii),
such insurance policy or bond shall not cover any legal or liability
expense of the institution or holding company which is described in
paragraph (5)(A).
(l) Aquisition of foreign banks or entities
When authorized by State law, a State nonmember insured bank may, but
only with the prior written consent of the Corporation and upon such
conditions and under such regulations as the Corporation may prescribe
from time to time, acquire and hold, directly or indirectly, stock or
other evidences of ownership in one or more banks or other entities
organized under the law of a foreign country or a dependency or insular
possession of the United States and not engaged, directly or indirectly,
in any activity in the United States except as, in the judgment of the
Board of Directors, shall be incidental to the international or foreign
business of such foreign bank or entity; and, notwithstanding the
provisions of subsection (j) of this section, such State nonmember
insured bank may, as to such foreign bank or entity, engage in
transactions that would otherwise be covered thereby, but only in the
manner and within the limit prescribed by the Corporation by general or
specific regulation or ruling.
(m) Activities of savings associations and their subsidiaries
(1) Procedures
When an insured savings association establishes or acquires a
subsidiary or when an insured savings association elects to conduct any
new activity through a subsidiary that the insured savings association
controls, the insured savings association --
(A) shall notify the Corporation and the Director of the Office of
Thrift Supervision not less than 30 days prior to the establishment, or
acquisition, of any such subsidiary, and not less than 30 days prior to
the commencement of any such activity, and in either case shall provide
at that time such information as each such agency may, by regulation,
require; and
(B) shall conduct the activities of the subsidiary in accordance with
regulations and orders of the Director of the Office of Thrift
Supervision.
(2) Enforcement powers
With respect to any subsidiary of an insured savings association:
(A) the Corporation and the Director of the Office of Thrift
Supervision shall each have, with respect to such subsidiary, the
respective powers that each has with respect to the insured savings
association pursuant to this section or section 1818 of this title; and
(B) the Director of the Office of Thrift Supervision may determine,
after notice and opportunity for hearing, that the continuation by the
insured savings association of its ownership or control of, or its
relationship to, the subsidiary --
(i) constitutes a serious risk to the safety, soundness, or stability
of the insured savings association, or
(ii) is inconsistent with sound banking principles or with the
purposes of this chapter.
Upon making any such determination, the Corporation or the Director
of the Office of Thrift Supervision shall have authority to order the
insured savings association to divest itself of control of the
subsidiary. The Director of the Office of Thrift Supervision may take
any other corrective measures with respect to the subsidiary, including
the authority to require the subsidiary to terminate the activities or
operations posing such risks, as the Director may deem appropriate.
(3) Activities incompatible with deposit insurance
(A) In general
The Corporation may determine by regulation or order that any
specific activity poses a serious threat to the Savings Association
Insurance Fund. Prior to adopting any such regulation, the Corporation
shall consult with the Director of the Office of Thrift Supervision and
shall provide appropriate State supervisors the opportunity to comment
thereon, and the Corporation shall specifically take such comments into
consideration. Any such regulation shall be issued in accordance with
section 553 of title 5. If the Board of Directors makes such a
determination with respect to an activity, the Corporation shall have
authority to order that no Savings Association Insurance Fund member may
engage in the activity directly.
(B) Authority of Director
This section does not limit the authority of the Office of Thrift
Supervision to issue regulations to promote safety and soundness or to
enforce compliance with other applicable laws.
(C) Additional authority of FDIC to prevent serious risks to
insurance fund
Notwithstanding subparagraph (A), the Corporation may prescribe and
enforce such regulations and issue such orders as the Corporation
determines to be necessary to prevent actions or practices of savings
associations that pose a serious threat to the Savings Association
Insurance Fund or the Bank Insurance Fund.
(4) ''Subsidiary'' defined
As used in this subsection, the term ''subsidiary'' does not include
an insured depository institution.
(5) Applicability to certain savings banks
Subparagraphs (A) and (B) of paragraph (1) of this subsection do not
apply to --
(A) any Federal savings bank that was chartered prior to October 15,
1982, as a savings bank under State law, or
(B) a savings association that acquired its principal assets from an
institution that was chartered prior to October 15, 1982, as a savings
bank under State law.
(n) Calculation of capital
No appropriate Federal banking agency shall allow any insured
depository institution to include an unidentifiable intangible asset in
its calculation of compliance with the appropriate capital standard, if
such unidentifiable intangible asset was acquired after April 12, 1989,
except to the extent permitted under section 1464(t) of this title.
(o) Real estate lending
(1) Uniform regulations
Not more than 9 months after December 19, 1991, each appropriate
Federal banking agency shall adopt uniform regulations prescribing
standards for extensions of credit that are --
(A) secured by liens on interests in real estate; or
(B) made for the purpose of financing the construction of a building
or other improvements to real estate.
(2) Standards
(A) Criteria
In prescribing standards under paragraph (1), the agencies shall
consider --
(i) the risk posed to the deposit insurance funds by such extensions
of credit;
(ii) the need for safe and sound operation of insured depository
institutions; and
(iii) the availability of credit.
(B) Variations permitted
In prescribing standards under paragraph (1), the appropriate Federal
banking agencies may differentiate among types of loans --
(i) as may be required by Federal statute;
(ii) as may be warranted, based on the risk to the deposit insurance
fund; or
(iii) as may be warranted, based on the safety and soundness of the
institutions.
(3) Loan evaluation standard
No appropriate Federal banking agency shall adversely evaluate an
investment or a loan made by an insured depository institution, or
consider such a loan to be nonperforming, solely because the loan is
made to or the investment is in commercial, residential, or industrial
property, unless such investment or loan may affect the institution's
safety and soundness.
(4) Effective date
The regulations adopted under paragraph (1) shall become effective
not later than 15 months after December 19, 1991. Such regulations
shall continue in effect except as uniformly amended by the appropriate
Federal banking agencies, acting in concert.
(o) /3/ Periodic review of capital standards
Each appropriate Federal banking agency shall, in consultation with
the other Federal banking agencies, biennially review its capital
standards for insured depository institutions to determine whether those
standards require sufficient capital to facilitate prompt corrective
action to prevent or minimize loss to the deposit insurance funds,
consistent with section 1831o of this title.
(Sept. 21, 1950, ch. 967, 2(18), 64 Stat. 891; May 13, 1960, Pub.
L. 86-463, 74 Stat. 129; Oct. 15, 1962, Pub. L. 87-827, 2, 76 Stat.
953; July 21, 1965, Pub. L. 89-79, 2, 79 Stat. 244; Feb. 21, 1966,
Pub. L. 89-356, 1, 80 Stat. 7; July 1, 1966, Pub. L. 89-485, 12(c), 80
Stat. 242; Sept. 21, 1966, Pub. L. 89-597, 3, 80 Stat. 824; Sept. 21,
1968, Pub. L. 90-505, 2(b), 82 Stat. 856; Dec. 23, 1969, Pub. L.
91-151, title I, 2(a), 4(b), (c), 83 Stat. 372, 374, 375; Aug. 16,
1973, Pub. L. 93-100, 3, 87 Stat. 342; Oct. 28, 1974, Pub. L. 93-495,
title I, 106, 88 Stat. 1505; Oct. 29, 1974, Pub. L. 93-501, title I,
102(a), title III, 302, 88 Stat. 1558, 1560; Sept. 17, 1978, Pub. L.
95-369, 6(c)(25)-(28), 92 Stat. 620; Nov. 10, 1978, Pub. L. 95-630,
title I, 108, title III, 301(b), (c), 306, 92 Stat. 3664, 3675, 3677;
Nov. 5, 1979, Pub. L. 96-104, title II, 202, 93 Stat. 792; Dec. 28,
1979, Pub. L. 96-161, title I, 101(b), title II, 209, 93 Stat. 1233,
1239; Mar. 31, 1980, Pub. L. 96-221, title II, 207(b)(2), (3), title
III, 302(b), 307, title V, 529, 94 Stat. 144, 146, 147, 168; Oct. 15,
1982, Pub. L. 97-320, title I, 113(n), (o), title IV,
410(d), 423, 424(b), (d)(10), (e), 96 Stat. 1474, 1520, 1522, 1523;
Aug. 10, 1987, Pub. L. 100-86, title I, 102(b), 103, title V, 504( b),
101 Stat. 566, 632; Aug. 9, 1989, Pub. L. 101-73, title II, 201, 221,
title IX, 905(d), 907(c), 103 Stat. 187, 266, 460, 466; Nov. 29, 1990,
Pub. L. 101-647, title XXV, 2523(a), 104 Stat. 4868; Dec. 19, 1991,
Pub. L. 102-242, title III, 304(a), 305(a), 306(k), 105 Stat. 2354,
2359.)
Act of July 2, 1890 (the Sherman Antitrust Act), referred to in
subsec. (c)(8), is classified to sections 1 to 7 of Title 15, Commerce
and Trade. For complete classification of the Act to the Code, see
Short Title note set out under section 1 of Title 15 and Tables.
Act of October 15, 1914 (the Clayton Act), referred to in subsec.
(c)(8), is act Oct. 15, 1914, ch. 323, 38 Stat. 730, as amended,
which is classified generally to sections 12, 13, 14 to 19, 20, 21, and
22 to 27 of Title 15, and sections 52 and 53 of Title 29, Labor. For
further details and complete classification of this Act to the Code, see
References in Text note set out under section 12 of Title 15 and Tables.
The date of enactment of this subsection, referred to in subsec.
(c)(10), probably means the date of enactment of Pub. L. 93-495, which
was approved Oct. 28, 1974.
Section 19 of the Federal Reserve Act, as amended, referred to in
subsec. (g)(1), is classified to sections 142, 371a, 371b, 371b-1, 374,
374a, 461, 463 to 466, 505, and 506 of this title. For provisions of
section 19 relating to payment of interest on demand deposits, see
section 371a of this title.
Section 202 of Pub. L. 96-104, cited as a credit to this section,
was repealed by section 212 of Pub. L. 96-161, effective at the close
of Dec. 27, 1979. The amendment of this section by that repealed
provision, described in the 1979 Amendment note set out under this
section, shall continue in effect for limited purposes pursuant to
section 212 of Pub. L. 96-161. See Savings Provisions note, describing
the provisions of section 212 of Pub. L. 96-161, set out under section
85 of this title.
Section 302 of Pub. L. 93-501, cited as a credit to this section,
was repealed by Pub. L. 96-104, 1, Nov. 5, 1979, 93 Stat. 789. The
amendment of this section by that repealed provision, described in the
1974 Amendment note set out under this section, shall continue in effect
for limited purposes pursuant to section 1 of Pub. L. 96-104. See
Savings Provisions note, describing the provisions of section 1 of Pub.
L. 96-104, set out under section 85 of this title.
Subsecs. (a) to (g) are derived from subsec (v)(2) to (8) of former
section 264 of this title. See Codification note set out under section
1811 of this title.
1991 -- Subsec. (j). Pub. L. 102-242, 306(k), amended subsec. (j)
generally, revising and restating as pars. (1) to (3) provisions of
former pars. (1) to (6).
Subsec. (o). Pub. L. 102-242, 305(a), added subsec. (o) relating to
periodic review of capital standards.
Pub. L. 102-242, 304(a), added subsec. (o) relating to real estate
lending.
1990 -- Subsec. (k). Pub. L. 101-647 added subsec. (k).
1989 -- Subsec. (a). Pub. L. 101-73, 221(1), substituted heading and
pars. (1) to (3) for first two sentences which read as follows:
''Every insured bank shall display at each place of business maintained
by it a sign or signs, and shall include a statement to the effect that
its deposits are insured by the Corporation in all of its
advertisements: Provided, That the Board of Directors may exempt from
this requirement advertisements which do not relate to deposits or when
it is impractical to include such statement therein. The Board of
Directors shall prescribe by regulation the forms of such signs and the
manner of display and the substance of such statements and the manner of
use.''
Pub. L. 101-73, 201(a), substituted ''insured depository
institution'' for ''insured bank''.
Subsecs. (b), (c)(1), (2). Pub. L. 101-73, 201(a), substituted
''insured depository institution'' for ''insured bank'' wherever
appearing.
Subsec. (c)(2)(C), (D). Pub. L. 101-73, 221(2)(A), added subpars.
(C) and (D) and struck out former subpar. (C) which read as follows:
''the Corporation if the acquiring, assuming or resulting bank is to be
a nonmember insured bank (except a District bank).''
Subsec. (c)(3). Pub. L. 101-73, 221(2)(C), (D), substituted ''banks
or savings associations'' for ''banks'' wherever appearing and
''default'' for ''failure''.
Subsec. (c)(4), (6). Pub. L. 101-73, 221(2)(C), substituted ''banks
or savings associations'' for ''banks''.
Subsec. (c)(7)(C), (9)(A). Pub. L. 101-73, 221(2)(C), substituted
''bank or savings association'' for ''bank''.
Subsec. (c)(10). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank''.
Subsec. (c)(12). Pub. L. 101-73, 221(2)(B), struck out par. (12)
which read as follows: ''The provisions of this subsection shall not
apply to any transaction where the acquiring, assuming, or resulting
institution is an insured Federal savings bank or an institution insured
by the Federal Savings and Loan Insurance Corporation, except that any
insured bank involved in the transaction shall notify the Corporation in
writing at least 30 days prior to consummation of the transaction and,
if any approval by the Federal Home Loan Bank Board or the Federal
Savings and Loan Insurance Corporation is required in connection
therewith, such approving authority shall provide the Corporation with
notification of the application for approval, shall consult with the
Corporation before disposing of the application, and shall provide
notification to the Corporation of the determination with respect to
said application.''
Subsecs. (e), (f). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank'' wherever appearing.
Subsec. (g)(1). Pub. L. 101-73, 201(b), substituted ''Director of the
Office of Thrift Supervision'' for ''Federal Home Loan Bank Board''.
Subsec. (h). Pub. L. 101-73, 201(a), substituted ''insured depository
institution'' for ''insured bank''.
Subsec. (i)(2). Pub. L. 101-73, 221(3)(A), (B), substituted ''insured
Federal depository institution'' and ''insured State depository
institution'' for ''insured bank'' and ''insured State bank'',
respectively.
Subsec. (i)(2)(D). Pub. L. 101-73, 221(3)(C), (D), added subpar.
(D).
Subsec. (i)(3). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank''.
Subsec. (i)(4)(D). Pub. L. 101-73, 221(3)(E), which directed the
amendment of subsec. (i)(2) by inserting ''and fitness'' after
''character'' in par. (4)(D), was executed to par. (4)(D) as the
probable intent of Congress.
Subsec. (i)(5). Pub. L. 101-73, 221(3)(F), which directed the
amendment of subsec. (i)(2) by striking out par. (5), was executed to
par. (5) as the probable intent of Congress. Prior to amendment, par.
(5) read as follows: ''Nothing in this subsection shall apply to a
conversion of an insured bank to an insured institution pursuant to
section 1726(e) of this title.''
Subsec. (j)(3)(D). Pub. L. 101-73, 201(a), substituted ''insured
depository institution'' for ''insured bank''.
Subsec. (j)(4), (5). Pub. L. 101-73, 907(c), amended pars. (4) and
(5) generally. Prior to amendment, pars. (4) and (5) read as follows:
''(4)(A) Any nonmember insured bank which violates or any officer,
director, employee, agent, or other person participating in the conduct
of the affairs of such nonmember insured bank who violates any provision
of section 371c, 371c-1, or 375b of this title, or any lawful regulation
issued pursuant thereto, or any provision of section 377 of this title,
shall forfeit and pay a civil penalty of not more than $1,000 per day
for each day during which such violation continues: Provided, That the
Corporation may, in its discretion, compromise, modify, or remit any
civil money penalty which is subject to imposition or has been imposed
under authority of this subsection. The penalty may be assessed and
collected by the Corporation by written notice. As used in this
section, the term 'violates' includes without any limitation any action
(alone or with another or others) for or toward causing, bringing about,
participating in, counseling, or aiding or abetting a violation.
''(B) In determining the amount of the penalty the Corporation shall
take into account the appropriateness of the penalty with respect to the
size of financial resources and good faith of the member bank or person
charged, the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
''(C) The nonmember insured bank or person charged shall be afforded
an opportunity for agency hearing, upon request made within ten days
after issuance of the notice of assessment. In such hearing all issues
shall be determined on the record pursuant to section 554 of title 5.
The agency determination shall be made by final order which may be
reviewed only as provided in subparagraph (D). If no hearing is
requested as herein provided the assessment shall constitute a final and
unappealable order.
''(D) Any nonmember insured bank or person against whom an order
imposing a civil money penalty has been entered after agency hearing
under this section may obtain review by the United States court of
appeals for the circuit in which the home office of the member bank is
located, or the United States Court of Appeals for the District of
Columbia Circuit, by filing a notice of appeal in such court within
twenty days from the service of such order, and simultaneously sending a
copy of such notice by registered or certified mail to the Corporation.
The Corporation shall promptly certify and file in such court the record
upon which the penalty was imposed, as provided in section 2112 of title
28. The findings of the Corporation shall be set aside if found to be
unsupported by substantial evidence as provided by section 706(2)(E) of
title 5.
''(E) If any nonmember insured bank or person fails to pay an
assessment after it has become a final and unappealable order, or after
the court of appeals has entered final judgment in favor of the agency,
the Corporation shall refer the matter to the Attorney General, who
shall recover the amount assessed by action in the appropriate United
States district court. In such action the validity and appropriateness
of the final order imposing the penalty shall not be subject to review.
''(F) The Corporation shall promulgate regulations establishing
procedures necessary to implement this paragraph.
''(G) All penalties collected under the authority of this paragraph
shall be covered into the Treasury of the United States.
''(5) The provisions of this subsection shall not apply to an insured
Federal savings bank.''
Subsec. (j)(6). Pub. L. 101-73, 905(d), added par. (6).
Subsecs. (m), (n). Pub. L. 101-73, 221(4), added subsecs. (m) and
(n).
1987 -- Subsec. (c)(12). Pub. L. 100-86, 504(b)(1), amended par.
(12) generally. Prior to amendment, par. (12) read as follows: ''The
provisions of this subsection shall not apply to any merger transaction
involving an insured Federal savings bank unless the resulting
institution will be an insured bank other than an insured Federal
savings bank.''
Subsec. (i)(5). Pub. L. 100-86, 504(b)(2), added par. (5).
Subsec. (j)(1). Pub. L. 100-86, 102(b)(1), inserted reference to
section 371c-1 of this title in two places.
Subsec. (j)(3). Pub. L. 100-86, 103(a), added par. (3) and
redesignated former par. (3) as (4).
Subsec. (j)(4). Pub. L. 100-86, 102(b)(2), 103, redesignated former
par. (3) as (4) and in subpar. (A) inserted '', 371c-1,'' and ''or any
provision of section 377 of this title,''.
Subsec. (j)(5). Pub. L. 100-86, 103(a), redesignated former par. (4)
as (5).
1982 -- Subsec. (c)(12). Pub. L. 97-320, 113(n), added par. (12).
Subsec. (j)(1). Pub. L. 97-320, 410(d), struck out ''within the
meaning of section 221a of this title and'' after ''of a nonmember
insured bank,''.
Subsec. (j)(2). Pub. L. 97-320, 423, inserted provisions relating to
the applicability of this subsection to any foreign bank as defined in
section 3101(7) of this title and its branch in the United States.
Subsec. (j)(3)(A). Pub. L. 97-320, 424(b), (d)(10), inserted proviso
giving the Corporation discretionary authority to compromise, etc., any
civil money penalty imposed under this subsection, and substituted ''may
be assessed'' for ''shall be assessed''.
Subsec. (j)(3)(D). Pub. L. 97-424(e), substituted ''twenty days from
the service'' for ''ten days from the date''.
Subsec. (j)(4). Pub. L. 97-320, 113(o), added par. (4).
1980 -- Subsec. (g). Pub. L. 96-221, 302(b), 307, inserted
provisions identical to provisions inserted by section 101(b) of Pub.
L. 96-161, designating existing provisions as par. (1) and adding par.
(2), and repealing the amendment made by Pub. L. 96-161. See Repeals
and Effective Date of 1980 Amendment notes below.
Pub. L. 96-221, 207(b)(2), (3), provided for the future amendment of
subsec. (g)(1) by striking out ''payment and'' and '', including
limitations on the rates of interest or dividends that may be paid'' in
second sentence, and by striking out third, fifth, and eighth sentences
which read as follows: ''The Board of Directors may prescribe different
rate limitations for different classes of deposits, for deposits of
different amounts or with different maturities or subject to different
conditions regarding withdrawal or repayment, according to the nature or
location of insured nonmember banks or their depositors, or according to
such other reasonable bases as the Board of Directors may deem desirable
in the public interest. Such regulations shall prohibit any insured
nonmember bank from paying any time deposit before its maturity except
upon such conditions and in accordance with such rules and regulations
as may be prescribed by the Board of Directors, and from waiving any
requirement of notice before payment of any savings deposit except as to
all savings deposits having the same requirement. For each violation of
any provision of this subsection or any lawful provision of such
regulations relating to the payment of interest or dividends on deposits
or to withdrawal of deposits, the offending bank shall be subject to a
penalty of not more than $100, which the Corporation may recover for its
use.'' See Effective Date of 1980 Amendment note below.
Subsec. (k). Pub. L. 96-221, 529, repealed Pub. L. 96-104 and title
II of Pub. L. 96-161, resulting in the striking out of subsec. (k)
which had provided that no insured nonmember bank or affiliate, or any
successor, assignee, endorser, guarantor, or surety thereof, could plead
or claim, directly or otherwise, with respect to any deposit or
obligation of such bank or affiliate, any defense, right, or benefit
under any provision of a State or territory of the United States, or the
District of Columbia, regulating or limiting the rate of interest which
could be charged or received, etc. and any such provision was
preempted, and no civil or criminal penalty which would otherwise be
applicable under such provision would apply to such bank or affiliate or
any other person.
1979 -- Subsec. (g). Pub. L. 96-161, 101(b), designated existing
provisions as par. (1) and added par. (2).
Subsec. (k). Pub. L. 96-161, 209, added subsec. (k). A prior subsec.
(k), added by Pub. L. 96-104 and identical to the subsec. (k) added by
Pub. L. 96-161, was repealed by section 212 of Pub. L. 96-161. See
Codification note above.
Pub. L. 96-104 added subsec. (k). A prior subsec. (k), which also
related to the inapplicability of State usury ceilings to certain
obligations issued by insured nonmember banks and affiliates, was
repealed by section 1 of Pub. L. 96-104.
1978 -- Subsec. (c)(1)(B). Pub. L. 95-630, 306, inserted
''(including liabilities which would be 'deposits' except for the
proviso in section 1813(l)(5) of this title)'' after ''pay any
deposits''.
Subsec. (c)(11). Pub. L. 95-369, 6(c)(25), added par. (11).
Subsec. (d). Pub. L. 95-630, 301(b), designated existing provisions
as par. (1) and, inserted ''domestic'' after ''operate any new'' and
''such'' after ''main office or any'', and added par. (2).
Pub. L. 95-369, 6(c)(26), inserted provision prohibiting a foreign
bank from moving any insured branch from one location to another without
the consent of the Corporation.
Subsec. (g). Pub. L. 95-369, 6(c)(27), inserted ''and in insured
branches of foreign banks'' after ''in insured nonmember banks''.
Subsec. (j). Pub. L. 95-630, 108, designated existing provisions as
par. (1) and added pars. (2) and (3).
Pub. L. 95-369, 6(c)(28), inserted at end ''The provisions of this
subsection shall not apply to any foreign bank having an insured branch
with respect to dealings between such bank and any affiliate thereof.''
Subsec. (l). Pub. L. 95-630, 301(c), added subsec. (l).
1974 -- Subsec. (c)(10). Pub. L. 93-495 added par. (10).
Subsec. (g). Pub. L. 93-501, 102(a), struck out requirement that
obligations other than deposits undertaken by insured non-member banks
be for the purpose of obtaining funds to be used in the banking business
in provisions relating to applicability of this subsection and of
regulations under the subsection to such obligations.
Subsec. (k). Pub. L. 93-501, 302, added subsec. (k).
1973 -- Subsec. (g). Pub. L. 93-100 extended rulemaking authority of
Board of Directors to payment and advertisement of dividends on deposits
and in the provisions relating to the applicability of the subsection to
noninsured banks in the States, eliminated clause designation and struck
out provisions of former cl. (2).
1969 -- Subsec. (g). Pub. L. 91-151 extended the authority of the
Board under this subsection to noninsured banks in the States where
uninsured savings deposits exceed 20 per cent of the total savings
deposits, and, where State laws do not provide for such regulations,
empowered the Board up to July 31, 1970, to prevent the rates paid by
such noninsured institutions from exceeding 5 1/2 per cent, and further
authorized the Board to bring actions in federal courts for compliance,
authorized the Board to determine what could be deemed a payment of
interest and provided for the promulgation of regulations necessary for
the enforcement of the subsection, made the subsection and the
regulations thereunder applicable to obligations other than deposits
undertaken by insured nonmember banks and their affiliates and extended
the regulatory power of the Board to include ''dividends''.
1968 -- Subsec. (g). Pub. L. 90-505 gave the Board power to
prescribe rules governing the payment and advertisement of interest on
deposits.
1966 -- Subsec. (c). Pub. L. 89-356, 1(a), laid down more definite
guidelines for dealing with the antitrust aspects of bank mergers by
prohibiting monopoly bank mergers in all cases, forbidding
anticompetitive mergers except in cases where a clear showing is made
that a given merger is so beneficial that its allowance is in the public
interest, and requiring the uniform application of the law by both
judicial and administrative bodies, inserted provisions to delay the
effectiveness of agency approval of merger transactions except in
emergency situations, imposed a special statute of limitations for
antitrust actions arising out of agency-approved merger transactions
thereby precluding antitrust actions when the agency has acted
immediately to prevent probable failure of a bank, provided for the
automatic staying of the effectiveness of agency action by the
commencement of an antitrust action unless the court orders otherwise,
called for de novo court review, permitted federal bank agencies which
approved a subsequently challenged merger to appear in the suit by its
own counsel, allowed state banking agencies to present their views, and
inserted a definition of ''antitrust laws'' which would include the
Sherman Act, the Clayton Act, and any other Acts in pari materia.
Subsec. (g). Pub. L. 89-597 made the authority of the FDIC Board to
prescribe maximum permissible rates of interest that may be paid by
member banks on time and savings deposits discretionary rather than
mandatory, included such payments by insured mutual savings banks,
required prior consultations with the Board of Governors of the FRS and
the FHLB Board, authorized different rate limitations for different
classes of deposits, for deposits of different amounts, or according to
such other reasonable bases as the Board may deem desirable in the
public interest, and eliminate provision for rate limitation according
to the varying discount rates of member banks in the several Federal
Reserve districts.
Subsec. (i). Pub. L. 89-356, 1(b), added subsec. (i).
Subsec. (j). Pub. L. 89-485 added subsec. (j).
1965 -- Subsec. (g). Pub. L. 89-79 extended until Oct. 15, 1968,
the period during which the provisions of this subsection should not
apply to the rate of interest which may be paid by insured nonmember
banks on time deposits of foreign governments, monetary and financial
authorities of foreign governments when acting as such, or international
financial institutions of which the United States is a member.
1962 -- Subsec. (g). Pub. L. 87-827 inserted sentence making the
subsection inapplicable, during the period commencing on Oct. 15, 1962,
and ending upon the expiration of three years after such date, to the
rate of interest which may be paid by insured nonmember banks on time
deposits of foreign governments, monetary and financial authorities of
foreign governments when acting as such, or international financial
institutions of which the United States is a member.
1960 -- Subsec. (c). Pub. L. 86-463 prohibited merger or
consolidation of any insured bank with any other insured bank, or
acquisition of assets of, or assumption of liability to pay any deposits
made in, any other insured bank without prior written consent, required
publication of notice of any proposed merger, consolidation, acquisition
of assets, or assumption of liabilities, enumerated specific items
required to be considered before consent may be granted or withheld,
directed the agency involved to request a report on competitive factors
involved from the Attorney General and the other two banking agencies
referred to in this subsection, and provided for inclusion in the annual
report of the Comptroller, the Board and the Corporation of each merger,
consolidation, acquisition of assets, or assumption of liabilities
approved.
Amendment by section 306(k) of Pub. L. 102-242 effective upon
earlier of date on which final regulations under section 306(m)(1) of
Pub. L. 102-242 become effective or 150 days after Dec. 19, 1991, see
section 306(l) of Pub. L. 102-242, set out as a note under section 375b
of this title.
Amendment by section 907(c) of Pub. L. 101-73 applicable to conduct
engaged in after Aug. 9, 1989, except that increased maximum penalties
of $5,000 and $25,000 may apply to conduct engaged in before such date
if such conduct is not already subject to a notice issued by the
appropriate agency and occurred after completion of the last report of
the examination of the institution by the appropriate agency occurring
before Aug. 9, 1989, see section 907(l) of Pub. L. 101-73, set out as
a note under section 93 of this title.
Amendment by section 207(b)(2), (3) of Pub. L. 96-221 effective 6
years after Mar. 31, 1980, see section 207(b) of Pub. L. 96-221, set
out as section 3506(b) of this title.
Amendment by section 302(b) of Pub. L. 96-221 effective at the close
of Mar. 31, 1980, see section 306 of Pub. L. 96-221, set out as a note
under section 371a of this title.
Section 529 of Pub. L. 96-221 provided that the amendment made by
that section is effective at the close of Mar. 31, 1980.
Amendment by section 101(b) of Pub. L. 96-161 effective Dec. 31,
1979, with that amendment to remain in effect until the close of Mar.
31, 1980, see section 104 of Pub. L. 96-161, set out as a note under
section 371a of this title.
Amendment by section 209 of Pub. L. 96-161 applicable only with
respect to deposits made or obligations issued in any State during the
period beginning on Dec. 28, 1979, and ending on the earliest of (1) in
the case of a State statute, July 1, 1980; (2) the date, after Dec.
28, 1979, on which such State adopts a law stating in substance that
such State does not want the amendment made by Pub. L. 96-161 to apply
with respect to such deposits and obligations; or (3) the date on which
such State certifies that the voters of such State, after Dec. 28,
1979, have voted in favor of, or to retain, any law, provision of the
constitution of such State, or amendment of the constitution of such
State which limits the amount of interest which may be charged in
connection with such deposits and obligations, see section 211 of Pub.
L. 96-161, set out as an Effective Date of 1979 Amendment note under
section 371b-1 of this title.
Amendment by Pub. L. 96-104 applicable to deposits made or
obligations issued in any State during the period beginning on Nov. 5,
1979, and ending on the earlier of July 1, 1981, the date after Nov. 5,
1979, on which such State adopts a law stating in substance that such
State does not want the amendment of this section to apply with respect
to such deposits and obligations, or the date on which such State
certifies that the voters of such State have voted in favor of, or to
retain, any law, provision of the constitution of such State, or
amendment of the constitution of such State, which limits the amount of
interest which may be charged in connection with such deposits and
obligations, see section 204 of Pub. L. 96-104, set out as an Effective
Date of 1979 Amendment note under section 371b-1 of this title.
Amendment by section 108 of Pub. L. 95-630, relating to imposition
of civil penalties, applicable to violations occurring or continuing
after Nov. 10, 1978, see section 109 of Pub. L. 95-630, set out as a
note under section 93 of this title.
Amendment by sections 301(c) and 306 of Pub. L. 95-630 effective on
the expiration of 120 days after Nov. 10, 1978, see section 2101 of
Pub. L. 95-630, set out as an Effective Date note under section 375b of
this title.
Section 102(b) of Pub. L. 93-501 provided that: ''The amendment
made by subsection (a) (amending this section) shall not apply to any
bank holding company which has filed prior to the date of enactment of
this Act (Oct. 29, 1974) an irrevocable declaration with the Board of
Governors of the Federal Reserve System to divest itself of all of its
banks under section 4 of the Bank Holding Company Act (section 1843 of
this title), or to any debt obligation which is an exempted security
under section 3(a)(3) of the Securities Act of 1933 (section 77c(a)(3)
of Title 15, Commerce and Trade).''
Amendment by section 302 of Pub. L. 93-501 applicable to deposits
made or obligations issued in any state after Oct. 29, 1974, but prior
to the earlier of July 1, 1977 or the date of enactment by the state of
a law limiting the amount of interest which may be charged in connection
with such deposits or obligations, see section 304 of Pub. L. 93-501,
set out as a note under section 371b-1 of this title.
Amendment by Pub. L. 93-100 effective on thirtieth day after Aug.
16, 1973, see section 8 of Pub. L. 93-100, set out as an Effective Date
note under section 1469 of this title.
Section 7 of Pub. L. 89-597, as amended, formerly set out as an
Effective and Termination Dates of 1966 Amendment note under section 461
of this title (which provided in part that amendment of subsec. (g) of
this section by addition of three sentences at the end thereof by
section 2(a) of Pub. L. 91-151 to be effective only to Dec. 15, 1980,
and that on Dec 15, 1980, such three sentences were to be repealed) was
repealed by section 3506(a) of this title.
Section 7 of Pub. L. 89-597, as amended, formerly set out as an
Effective and Termination Dates of 1966 Amendment note under section 461
of this title (which provided in part that amendment of the second and
third sentences of subsec. (g) of this section by section 3 of Pub. L.
89-597 was effective only to Dec. 15, 1980, and that on Dec. 15, 1980,
such sentences were to be amended to read as they would without the
amendment by section 3 of Pub. L. 89-597), was repealed by section
3506(a) of this title.
Amendment by section 101 of Pub. L. 96-161, cited as a credit to
this section, was repealed at the close of Mar. 31, 1980, by section
307 of Pub. L. 96-221, and substantially identical provisions were
enacted by section 302 of Pub. L. 96-221, such amendments to take
effect at the close of Mar. 31, 1980.
Section 529 of Pub. L. 96-221 provided in part that, notwithstanding
the repeal of Pub. L. 96-104 and title II of Pub. L. 96-161, the
provisions of subsec. (k) of this section (which had been added to this
section by those repealed laws) shall continue to apply to any loan
made, any deposit made, or any obligation issued to any State during any
period when those provisions were in effect in such State.
Section 305(b) of Pub. L. 102-242 provided that:
''(1) In general. -- Each appropriate Federal banking agency shall
revise its risk-based capital standards for insured depository
institutions to ensure that those standards --
''(A) take adequate account of --
''(i) interest-rate risk;
''(ii) concentration of credit risk; and
''(iii) the risks of nontraditional activities; and
''(B) reflect the actual performance and expected risk of loss of
multifamily mortgages.
''(2) International discussions. -- The Federal banking agencies
shall discuss the development of comparable standards with members of
the supervisory committee of the Bank for International Settlements.
''(3) Deadline for prescribing revised standards. -- Each appropriate
Federal banking agency shall --
''(A) publish final regulations in the Federal Register to implement
paragraph (1) not later than 18 months after the date of enactment of
this Act (Dec. 19, 1991); and
''(B) establish reasonable transition rules to facilitate compliance
with those regulations.
''(4) Definitions. -- For purposes of this subsection, the terms
'appropriate Federal banking agency', 'Federal banking agency' and
'insured depository institution' have the same meanings as in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).''
Section 475 of Pub. L. 102-242 provided that:
''(a) In General. -- Notwithstanding section 5(t)(4) of the Home
Owners' Loan Act (12 U.S.C. 1464(t)(4)), each appropriate Federal
banking agency shall determine, with respect to insured depository
institutions for which it is the appropriate Federal regulator, the
amount of readily marketable purchased mortgage servicing rights that
may be included in calculating such institution's tangible capital,
risk-based capital, or leverage limit, if --
''(1) such servicing rights are valued at not more than 90 percent of
their fair market value; and
''(2) the fair market value of such servicing rights is determined
not less often than quarterly.
''(b) Definition. -- For purposes of this section, the terms
'appropriate Federal banking agency' and 'insured depository
institution' have the same meanings as in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
''(c) Effective Date. -- The amendments made by this Act (probably
means 'This section') shall take effect at the end of the 60-day period
beginning on the date of the enactment of this Act (Dec. 19, 1991).''
Section 213 of Pub. L. 96-161 provided that the provisions of title
II of Pub. L. 96-161, which enacted subsec. (k) of this section and
repealed provisions which had formerly amended this section, to continue
to apply until July 1, 1981, in the case of any State having a
constitutional provision regarding maximum interest rates.
Reduction of interest rates to maximum extent feasible in light of
prevailing money market and general economic conditions, see section 1
of Pub. L. 89-597, set out as a note under section 461 of this title.
Section 3 of Pub. L. 89-356 provided that: ''Any application for
approval of a merger transaction (as the term 'merged transaction' is
used in section 18(c) of the Federal Deposit Insurance Act) (subsec.
(c) of this section) which was made before the date of enactment of this
Act (Feb. 21, 1966), but was withdrawn or abandoned as a result of any
objections made or any suit brought by the Attorney General, may be
reinstituted and shall be acted upon in accordance with the provisions
of this Act without prejudice by such withdrawal, abandonment,
objections, or judicial proceedings.''
Section 2 of Pub. L. 89-356 provided that:
''(a) Any merger, consolidation, acquisition of assets, or assumption
of liabilities involving an insured bank which was consummated prior to
June 17, 1963, the bank resulting from which has not been dissolved or
divided and has not effected a sale or distribution of assets and has
not taken any other similar action pursuant to a final judgment under
the antitrust laws prior to the enactment of this Act (Feb. 21, 1966),
shall be conclusively presumed to have not been in violation of any
antitrust laws other than section 2 of the Act of July 2, 1890 (section
2 of the Sherman Antitrust Act, 15 U.S.C. 2).
''(b) No merger, consolidation, acquisition of assets, or assumption
of liabilities involving an insured bank which was consummated after
June 16, 1963, and prior to the date of enactment of this Act (Feb. 21,
1966) and as to which no litigation was initiated by the Attorney
General prior to the date of enactment of this Act (Feb. 21, 1966) may
be attacked after such date in any judicial proceeding on the ground
that it alone and of itself constituted a violation of any antitrust
laws other than section 2 of the Act of July 2, 1890 (section 2 of the
Sherman Antitrust Act, 15 U.S.C. 2).
''(c) Any court having pending before it on or after the date of
enactment of this Act (Feb. 21, 1966) any litigation initiated under the
antitrust laws by the Attorney General after June 16, 1963 with respect
to the merger, consolidation, acquisition of assets, or assumption of
liabilities of an insured bank consummated after June 16, 1963, shall
apply the substantive rule of law set forth in section 18( c)(5) of the
Federal Deposit Insurance Act (subsec. (c)(5) of this section), as
amended by this Act.
''(d) For the purposes of this section, the term 'antitrust laws'
means the Act of July 2, 1890 (the Sherman Antitrust Act, 15 U.S.C.
1-7), the Act of October 15, 1914 (the Clayton Act, 15 U.S.C. 12-27),
and any other Acts in pari materia.''
Embezzlement from Federal Deposit Insurance Corporation, see section
657 of Title 18, Crimes and Criminal Procedure.
False advertising of deposit insurance, see section 709 of Title 18.
Jurisdiction of district court of the United States of action for
penalty, see section 1355 of Title 28, Judiciary and Judicial Procedure.
/1/ So in original. Probably should be ''such depository
institution''.
/2/ So in original. Probably should be ''depository institution''.
/3/ So in original. Probably should be ''(p)''.
12 USC 1829. Penalty for unauthorized participation by convicted
individual
TITLE 12 -- BANKS AND BANKING
(a) Prohibition
(1) In general
Except with the prior written consent of the Corporation --
(A) any person who has been convicted of any criminal offense
involving dishonesty or a breach of trust, or has agreed to enter into a
pretrial diversion or similar program in connection with a prosecution
for such offense, may not --
(i) become, or continue as, an institution-affiliated party with
respect to any insured depository institution;
(ii) own or control, directly or indirectly, any insured depository
institution; or
(iii) otherwise participate, directly or indirectly, in the conduct
of the affairs of any insured depository institution; and
(B) any insured depository institution may not permit any person
referred to in subparagraph (A) to engage in any conduct or continue any
relationship prohibited under such subparagraph.
(2) Minimum 10-year prohibition period for certain offenses
(A) In general
If the offense referred to in paragraph (1)(A) in connection with any
person referred to in such paragraph is --
(i) an offense under --
(I) section 215, 656, 657, 1005, 1006, 1007, 1008, /1/ 1014, 1032,
1344, or 1956 of title 18; or
(II) section 1341 or 1343 of such title which affects any financial
institution (as defined in section 20 of such title); or
(ii) the offense of conspiring to commit any such offense,
the Corporation may not consent to any exception to the application
of paragraph (1) to such person during the 10-year period beginning on
the date the conviction or the agreement of the person becomes final.
(B) Exception by order of sentencing court
(i) In general
On motion of the Corporation, the court in which the conviction or
the agreement of a person referred to in subparagraph (A) has been
entered may grant an exception to the application of paragraph (1) to
such person if granting the exception is in the interest of justice.
(ii) Period for filing
A motion may be filed under clause (i) at any time during the 10-year
period described in subparagraph (A) with regard to the person on whose
behalf such motion is made.
(b) Penalty
Whoever knowingly violates subsection (a) of this section shall be
fined not more than $1,000,000 for each day such prohibition is violated
or imprisoned for not more than 5 years, or both.
(Sept. 21, 1950, ch. 967, 2(19), 64 Stat. 893; Aug. 9, 1989, Pub.
L. 101-73, title IX, 910(a), 103 Stat. 477; Nov. 29, 1990, Pub. L.
101-647, title XXV, 2502(a), 104 Stat. 4860.)
Section 1008 of title 18, referred to in subsec. (a)(2)(A)(i)(I),
was repealed by Pub. L. 101-73, title IX, 961(g)(1), Aug. 9, 1989, 103
Stat. 500.
1990 -- Subsec. (a). Pub. L. 101-647 amended subsec. (a) generally.
Prior to amendment, subsec. (a) read as follows: ''Except with the
prior written consent of the Corporation --
''(1) any person who has been convicted of any criminal offense
involving dishonesty or a breach of trust may not participate, directly
or indirectly, in any manner in the conduct of the affairs of an insured
depository institution; and
''(2) an insured depository institution may not permit such
participation.''
1989 -- Pub. L. 101-73 amended section generally. Prior to
amendment, section read as follows: ''Except with the written consent
of the Corporation, no person shall serve as a director, officer, or
employee of an insured bank who has been convicted, or who is hereafter
convicted, of any criminal offense involving dishonesty or a breach of
trust. For each willful violation of this prohibition, the bank
involved shall be subject to a penalty of not more than $100 for each
day this prohibition is violated, which the Corporation may recover for
its use.''
Nothing contained in sections 201 to 205 and 207 of Pub. L. 89-695
amending sections 1813 and 1817 to 1820 and repealing section 77 of this
title to be construed as repealing, modifying, or affecting this
section, see section 206 of Pub. L. 89-695, set out as a note under
section 1813 of this title.
Jurisdiction of District Court of the United States of action for
penalty, see section 1355 of Title 28, Judiciary and Judicial Procedure.
/1/ See References in Text note below.
12 USC 1829a. Participation by State nonmember insured banks in
lotteries and related activities
TITLE 12 -- BANKS AND BANKING
(a) Prohibited activities
A State nonmember insured bank may not --
(1) deal in lottery tickets;
(2) deal in bets used as a means or substitute for participation in a
lottery;
(3) announce, advertise, or publicize the existence of any lottery;
(4) announce, advertise, or publicize the existence or identity of
any participant or winner, as such, in a lottery.
(b) Use of banking premises prohibited
A State nonmember insured bank may not permit --
(1) the use of any part of any of its banking offices by any person
for any purpose forbidden to the bank under subsection (a) of this
section, or
(2) direct access by the public from any of its banking offices to
any premises used by any person for any purpose forbidden to the bank
under subsection (a) of this section.
(c) Definitions
As used in this section --
(1) The term ''deal in'' includes making, taking, buying, selling,
redeeming, or collecting.
(2) The term ''lottery'' includes any arrangement whereby three or
more persons (the ''participants'') advance money or credit to another
in exchange for the possibility or expectation that one or more but not
all of the participants (the ''winners'') will receive by reason of
their advances more than the amounts they have advanced, the identity of
the winners being determined by any means which includes --
(A) a random selection;
(B) a game, race, or contest; or
(C) any record or tabulation of the result of one or more events in
which any participant has no interest except for its bearing upon the
possibility that he may become a winner.
(3) The term ''lottery ticket'' includes any right, privilege, or
possibility (and any ticket, receipt, record, or other evidence of any
such right, privilege, or possibility), of becoming a winner in a
lottery.
(d) Lawful banking services connected with operation of lottery
Nothing contained in this section prohibits a State nonmember insured
bank from accepting deposits or cashing or otherwise handling checks or
other negotiable instruments, or performing other lawful banking
services for a State operating a lottery, or for an officer or employee
of that State who is charged with the administration of the lottery.
(e) Regulations; enforcement
The Board of Directors shall prescribe such regulations as may be
necessary to the strict enforcement of this section and the prevention
of evasions thereof.
(Sept. 21, 1950, ch. 967, 2(20), as added Dec. 15, 1967, Pub. L.
90-203, 3, 81 Stat. 610.)
Section effective Apr. 1, 1968, see section 6 of Pub. L. 90-203,
set out as a note under section 25a of this title.
12 USC 1829b. Retention of records by insured depository institutions
TITLE 12 -- BANKS AND BANKING
(a) Congressional findings and declaration of purpose
(1) The Congress finds that adequate records maintained by insured
depository institutions have a high degree of usefulness in criminal,
tax, and regulatory investigations and proceedings. The Congress
further finds that microfilm or other reproductions and other records
made by banks /1/ of checks, as well as records kept by banks /1/
of the identity of persons maintaining or authorized to act with
respect to accounts therein, have been of particular value in this
respect.
(2) It is the purpose of this section to require the maintenance of
appropriate types of records by insured depository institutions in the
United States where such records have a high degree of usefulness in
criminal, tax, or regulatory investigations or proceedings.
(b) Rules and regulations
Where the Secretary of the Treasury (referred to in this section as
the ''Secretary'') determines that the maintenance of appropriate types
of records and other evidence by insured depository institutions has a
high degree of usefulness in criminal, tax, or regulatory investigations
or proceedings, he shall prescribe regulations to carry out the purposes
of this section.
(c) Identity of persons having accounts and persons authorized to act
with respect to such accounts; exemptions
Each insured depository institution shall maintain such records and
other evidence, in such form as the Secretary shall require, of the
identity of each person having an account in the United States with the
bank /2/ and of each individual authorized to sign checks, make
withdrawals, or otherwise act with respect to any such account. The
Secretary may make such exemptions from any requirement otherwise
imposed under this subsection as are consistent with the purposes of
this section.
(d) Reproduction of checks, drafts, and other instruments; record of
transactions; identity of party
Each insured depository institution shall make, to the extent that
the regulations of the Secretary so require --
(1) a microfilm or other reproduction of each check, draft, or
similar instrument drawn on it and presented to it for payment; and
(2) a record of each check, draft, or similar instrument received by
it for deposit or collection, together with an identification of the
party for whose account it is to be deposited or collected, unless the
bank /2/ has already made a record of the party's identity pursuant to
subsection (c) of this section.
(e) Identity of persons making reportable currency and foreign
transactions
Whenever any individual engages (whether as principal, agent, or
bailee) in any transaction with an insured depository institution which
is required to be reported or recorded under subchapter II of chapter 53
of title 31, the bank /2/ shall require and retain such evidence of the
identity of that individual as the Secretary may prescribe as
appropriate under the circumstances.
(f) Additions to or substitutes for required records
In addition to or in lieu of the records and evidence otherwise
referred to in this section, each insured depository institution shall
maintain such records and evidence as the Secretary may prescribe to
carry out the purposes of this section.
(g) Retention period
Any type of record or evidence required under this section shall be
retained for such period as the Secretary may prescribe for the type in
question. Any period so prescribed shall not exceed six years unless
the Secretary determines, having regard for the purposes of this
section, that a longer period is necessary in the case of a particular
type of record or evidence.
(h) Report to Congress by Secretary of the Treasury
The Secretary shall include in his annual report to the Congress
information on his implementation of the authority conferred by this
section and any similar authority with respect to recordkeeping or
reporting requirements conferred by other provisions of law.
(i) Application of provisions to foreign banks
The provisions of this section shall not apply to any foreign bank
except with respect to the transactions and records of any insured
branch of such a bank.
(j) Civil penalties
(1) Penalty imposed
Any insured depository institution and any director, officer, or
employee of an insured depository institution who willfully or through
gross negligence violates any regulation prescribed under subsection (b)
of this section shall be liable to the United States for a civil penalty
of not more than $10,000.
(2) Treatment of continuing violation
A separate violation of any regulation prescribed under subsection
(b) of this section occurs for each day the violation continues and at
each office, branch, or place of business at which such violation
occurs.
(3) Assessment
Any penalty imposed under paragraph (1) shall be assessed, mitigated,
and collected in the manner provided in subsections (b) and (c) of
section 5321 of title 31.
(Sept. 21, 1950, ch. 967, 2(21), as added Oct. 26, 1970, Pub. L.
91-508, title I, 101, 84 Stat. 1114, and amended Sept. 17, 1978, Pub.
L. 95-369, 6(c)(29), 92 Stat. 620; Nov. 18, 1988, Pub. L. 100-690,
title VI, 6185(d)(1), 102 Stat. 4356; Aug. 9, 1989, Pub. L. 101-73,
title II, 201(a), 103 Stat. 187.)
In subsec. (e), ''subchapter II of chapter 53 of title 31'' was
substituted for ''the Currency and Foreign Transactions Reporting Act
(31 U.S.C. 1051 et seq.)'' on authority of Pub. L. 97-258, 4(b), Sept.
13, 1982, 96 Stat. 1067, the first section of which enacted Title 31,
Money and Finance.
1989 -- Pub. L. 101-73 substituted references to insured depository
institutions for references to insured banks wherever appearing in this
section.
1988 -- Subsec. (j). Pub. L. 100-690 added subsec. (j).
1978 -- Subsec. (i). Pub. L. 95-369 added subsec. (i).
Section effective on first day of seventh calendar month which begins
after Oct. 26, 1970, except that the Secretary of the Treasury may, by
regulation, provide that this section be effective on any date not
earlier than the publication of such regulations in the Federal Register
and not later than first day of thirteenth calendar month which begins
after Oct. 26, 1970, see section 401(a), (b) of Pub. L. 91-508, set
out as a note under section 1951 of this title.
Willful violation of regulations under this section punishable by
fine of not more than $10,000 or imprisonment of not more than five
years, or both, when such willful violation is committed in furtherance
of the commission of any violation of federal law punishable by
imprisonment of more than one year, see section 1957 of this title.
Administrative procedure and judicial review provisions of subchapter
II ( 551 et seq.) of chapter 5 and chapter 7 ( 701 et seq.) of Title 5,
Government Organization and Employees, applicable to all proceedings
under this section, see section 1959 of this title.
Responsibility for the Secretary of the Treasury to assure compliance
with requirements of this section, and Secretary's authority to delegate
such responsibility to the appropriate bank supervisory agency, or other
supervisory agency, see section 1958 of this title.
/1/ So in original. Probably should be ''financial institutions''.
/2/ So in original. Probably should be ''depository institution''.
12 USC 1830. Nondiscrimination
TITLE 12 -- BANKS AND BANKING
It is not the purpose of this chapter to discriminate in any manner
against State nonmember banks or State savings associations and in favor
of national or member banks or Federal savings associations,
respectively. It is the purpose of this chapter to provide all banks
and savings associations with the same opportunity to obtain and enjoy
the benefits of this chapter.
(Sept. 21, 1950, ch. 967, 2(22), formerly 2(20), 64 Stat. 893;
renumbered 2(21), Dec. 15, 1967, Pub. L. 90-203, 3, 81 Stat. 610;
renumbered 2(22), Oct. 26, 1970, Pub. L. 91-508, title I, 101, 84 Stat.
1114; amended Aug. 9, 1989, Pub. L. 101-73, title II, 223, 103 Stat.
273.)
Section is derived from subsec. (y) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
1989 -- Pub. L. 101-73 amended section generally. Prior to
amendment, section read as follows: ''It is not the purpose of this
chapter to discriminate in any manner against State nonmember banks and
in favor of national or member banks; but the purpose is to provide all
banks with the same opportunity to obtain and enjoy the benefits of this
chapter. No bank shall be discriminated against because its capital
stock is less than the amount required for eligibility for admission
into the Federal Reserve System.''
12 USC 1831. Separability of certain provisions of this chapter
TITLE 12 -- BANKS AND BANKING
The provisions of this chapter limiting the insurance of the deposits
of any depositor to a maximum less than the full amount shall be
independent and separable from each and all of the provisions of this
chapter.
(Sept. 21, 1950, ch. 967, 2(23), formerly 2(21), 64 Stat. 894;
renumbered 2(22), Dec. 15, 1967, Pub. L. 90-203, 3, 81 Stat. 610;
renumbered 2(23), Oct. 26, 1970, Pub. L. 91-508, title I, 101, 84 Stat.
1114.)
Section is derived from subsec. (z) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
12 USC 1831a. Activities of insured State banks
TITLE 12 -- BANKS AND BANKING
(a) In general
After the end of the 1-year period beginning on December 19, 1991, an
insured State bank may not engage as principal in any type of activity
that is not permissible for a national bank unless --
(1) the Corporation has determined that the activity would pose no
significant risk to the appropriate deposit insurance fund; and
(2) the State bank is, and continues to be, in compliance with
applicable capital standards prescribed by the appropriate Federal
banking agency.
(b) Insurance underwriting
(1) In general
Notwithstanding subsection (a) of this section, an insured State bank
may not engage in insurance underwriting except to the extent that
activity is permissible for national banks.
(2) Exception for certain federally reinsured crop insurance
Notwithstanding any other provision of law, an insured State bank or
any of its subsidiaries that provided insurance on or before September
30, 1991, which was reinsured in whole or in part by the Federal Crop
Insurance Corporation may continue to provide such insurance.
(c) Equity investments by insured State banks
(1) In general
An insured State bank may not, directly or indirectly, acquire or
retain any equity investment of a type that is not permissible for a
national bank.
(2) Exception for certain subsidiaries
Paragraph (1) shall not prohibit an insured State bank from acquiring
or retaining an equity investment in a subsidiary of which the insured
State bank is a majority owner.
(3) Exception for qualified housing projects
(A) Exception
Notwithstanding any other provision of this subsection, an insured
State bank may invest as a limited partner in a partnership, the sole
purpose of which is direct or indirect investment in the acquisition,
rehabilitation, or new construction of a qualified housing project.
(B) Limitation
The aggregate of the investments of any insured State bank pursuant
to this paragraph shall not exceed 2 percent of the total assets of the
bank.
(C) Qualified housing project defined
As used in this paragraph --
(i) Qualified housing project
The term ''qualified housing project'' means residential real estate
that is intended to primarily benefit lower income people throughout the
period of the investment.
(ii) Lower income
The term ''lower income'' means income that is less than or equal to
the median income based on statistics from State or Federal sources.
(4) Transition rule
(A) In general
The Corporation shall require any insured State bank to divest any
equity investment the retention of which is not permissible under this
subsection as quickly as can be prudently done, and in any event before
the end of the 5-year period beginning on December 19, 1991.
(B) Treatment of noncompliance during divestment
With respect to any equity investment held by any insured State bank
on December 19, 1991, which was lawfully acquired before December 19,
1991, the bank shall be deemed not to be in violation of the prohibition
in this subsection on retaining such investment so long as the bank
complies with the applicable requirements established by the Corporation
for divesting such investments.
(d) Subsidiaries of insured State banks
(1) In general
After the end of the 1-year period beginning on December 19, 1991, a
subsidiary of an insured State bank may not engage as principal in any
type of activity that is not permissible for a subsidiary of a national
bank unless --
(A) the Corporation has determined that the activity poses no
significant risk to the appropriate deposit insurance fund; and
(B) the bank is, and continues to be, in compliance with applicable
capital standards prescribed by the appropriate Federal banking agency.
(2) Insurance underwriting prohibited
(A) Prohibition
Notwithstanding paragraph (1), no subsidiary of an insured State bank
may engage in insurance underwriting except to the extent such
activities are permissible for national banks.
(B) Continuation of existing activities
Notwithstanding subparagraph (A), a well-capitalized insured State
bank or any of its subsidiaries that was lawfully providing insurance as
principal in a State on November 21, 1991, may continue to provide, as
principal, insurance of the same type to residents of the State
(including companies or partnerships incorporated in, organized under
the laws of, licensed to do business in, or having an office in the
State, but only on behalf of their employees resident in or property
located in the State), individuals employed in the State, and any other
person to whom the bank or subsidiary has provided insurance as
principal, without interruption, since such person resided in or was
employed in such State.
(C) Exception
Subparagraph (A) does not apply to a subsidiary of an insured State
bank if --
(i) the insured State bank was required, before June 1, 1991, to
provide title insurance as a condition of the bank's initial chartering
under State law; and
(ii) control of the insured State bank has not changed since that
date.
(e) Savings bank life insurance
(1) In general
No provision of this chapter shall be construed as prohibiting or
impairing the sale or underwriting of savings bank life insurance, or
the ownership of stock in a savings bank life insurance company, by any
insured bank which --
(A) is located in the Commonwealth of Massachusetts or the State of
New York or Connecticut; and
(B) meets the consumer disclosure requirements under section 1828(k)
of this title with respect to such insurance.
(2) FDIC finding and action regarding risk
(A) Finding
Before the end of the 1-year period beginning on December 19, 1991,
the Corporation shall make a finding whether savings bank life insurance
activities of insured banks pose or may pose any significant risk to the
insurance fund of which such banks are members.
(B) Actions
(i) In general
The Corporation shall, pursuant to any finding made under
subparagraph (A), take appropriate actions to address any risk that
exists or may subsequently develop with respect to insured banks
described in paragraph (1)(A).
(ii) Authorized actions
Actions the Corporation may take under this subparagraph include
requiring the modification, suspension, or termination of insurance
activities conducted by any insured bank if the Corporation finds that
the activities pose a significant risk to any insured bank described in
paragraph (1)(A) or to the insurance fund of which such bank is a
member.
(f) Common and preferred stock investment
(1) In general
An insured State bank shall not acquire or retain, directly or
indirectly, any equity investment of a type or in an amount that is not
permissible for a national bank or is not otherwise permitted under this
section.
(2) Exception for banks in certain States
Notwithstanding paragraph (1), an insured State bank may, to the
extent permitted by the Corporation, acquire and retain ownership of
securities described in paragraph (1) to the extent the aggregate amount
of such investment does not exceed an amount equal to 100 percent of the
bank's capital if such bank --
(A) is located in a State that permitted, as of September 30, 1991,
investment in common or preferred stock listed on a national securities
exchange or shares of an investment company registered under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); and
(B) made or maintained an investment in such securities during the
period beginning on September 30, 1990, and ending on November 26, 1991.
(3) Exception for certain types of institutions
Notwithstanding paragraph (1), an insured State bank may --
(A) acquire not more than 10 percent of a corporation that only --
(i) provides directors', trustees', and officers' liability insurance
coverage or bankers' blanket bond group insurance coverage for insured
depository institutions; or
(ii) reinsures such policies; and
(B) acquire or retain shares of a depository institution if --
(i) the institution engages only in activities permissible for
national banks;
(ii) the institution is subject to examination and regulation by a
State bank supervisor;
(iii) 20 or more depository institutions own shares of the
institution and none of those institutions owns more than 15 percent of
the institution's shares; and
(iv) the institution's shares (other than directors' qualifying
shares or shares held under or initially acquired through a plan
established for the benefit of the institution's officers and employees)
are owned only by the institution.
(4) Transition period for common and preferred stock investments
(A) In general
During each year in the 3-year period beginning on December 19, 1991,
each insured State bank shall reduce by not less than 1/3 of its shares
(as of December 19, 1991) the bank's ownership of securities in excess
of the amount equal to 100 percent of the capital of such bank.
(B) Compliance at end of period
By the end of the 3-year period referred to in subparagraph (A), each
insured State bank and each subsidiary of a State bank shall be in
compliance with the maximum amount limitations on investments referred
to in paragraph (1).
(5) Loss of exception upon acquisition
Any exception applicable under paragraph (2) with respect to any
insured State bank shall cease to apply with respect to such bank upon
any change in control of such bank or any conversion of the charter of
such bank.
(6) Notice and approval
An insured State bank may only engage in any investment pursuant to
paragraph (2) if --
(A) the bank has filed a 1-time notice of the bank's intention to
acquire and retain investments described in paragraph (1); and
(B) the Corporation has determined, within 60 days of receiving such
notice, that acquiring or retaining such investments does not pose a
significant risk to the insurance fund of which such bank is a member.
(7) Divestiture
(A) In general
The Corporation may require divestiture by an insured State bank of
any investment permitted under this subsection if thd Corporation
determines that such investment will have an adverse effect on the
safety and soundness of the bank.
(B) Reasonable standard
The Corporation shall not require divestiture by any bank pursuant to
subparagraph (A) without reason to believe that such investment will
have an adverse effect on the safety and soundness of the bank.
(g) Determinations
The Corporation shall make determinations under this section by
regulation or order.
(h) ''Activity'' defined
For purposes of this section, the term ''activity'' includes
acquiring or retaining any investment.
(i) Other authority not affected
This section shall not be construed as limiting the authority of any
appropriate Federal banking agency or any State supervisory authority to
impose more stringent restrictions.
(Sept. 21, 1950, ch. 967, 2(24), as added Dec. 19, 1991, Pub. L.
102-242, title III, 303(a), 105 Stat. 2349.)
The Investment Company Act of 1940, referred to in subsec. (f)(2)(
A), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as
amended, which is classified generally to subchapter I ( 80a-1 et seq.)
of chapter 2D of Title 15, Commerce and Trade. For complete
classification of this Act to the Code, see section 80a-51 of Title 15
and Tables.
A prior section 1831a, act Sept. 21, 1950, ch. 967, 2(24), as added
Dec. 28, 1979, Pub. L. 96-161, title II, 202, 93 Stat. 1235, which
provided that if the applicable rate prescribed in subsec. (a) exceeded
the rate a State bank would be permitted to charge in absence of that
subsection, that State bank could for a business or agricultural loan of
$25,000 or more, notwithstanding State law, take or charge on any
evidence of debt, interest of not more than 5 per centum in excess of
the discount rate in effect at the Federal Reserve Bank in the district
where the bank was located, that the taking or charging of interest at a
greater rate than that prescribed by subsec. (a), if knowingly done,
would be deemed a forfeit of the entire interest on that particular
evidence of debt, and that if such greater rate of interest had already
been paid, the payor could recover twice the amount of such payment in a
civil action commenced within two years of such payment, was repealed by
Pub. L. 96-221, title V, 529, Mar. 31, 1980, 94 Stat. 168, effective
at close of Mar. 31, 1980.
Another prior section 1831a, act Sept. 21, 1950, ch. 967, 2(24), as
added Nov. 5, 1979, Pub. L. 96-104, title I, 102, 93 Stat. 789,
identical to this section as added by Pub. L. 96-161, was repealed by
section 212 of Pub. L. 96-161, effective at the close of Dec. 27,
1979, except that its provisions would continue to apply to any loan
made in any State on or after Nov. 5, 1979, but prior to such repeal.
Another prior section 1831a, act Sept. 21, 1950, ch. 967, 2(24), as
added Oct. 29, 1974, Pub. L. 93-501, title II, 202, 88 Stat. 1558,
identical to this section as added by Pub. L. 96-104, was repealed by
section 1 of Pub. L. 96-104 except that its provisions shall continue
to apply to any loan made in any State during the period specified in
section 206 of Pub. L. 93-501, set out as an Effective and Termination
Dates of 1974 Amendment note below.
12 USC 1831b. Disclosures with respect to certain federally related
mortgage loans
TITLE 12 -- BANKS AND BANKING
(a) Identity of beneficiary interest as condition for a loan; report
to Corporation
No insured depository institution, insured branch of a foreign bank,
or mutual savings or cooperative bank which is not an insured depository
institution, shall make any federally related mortgage loan to any
agent, trustee, nominee, or other person acting in a fiduciary capacity
without the prior condition that the identity of the person receiving
the beneficial interest of such loan shall at all times be revealed to
the bank. /1/ At the request of the Corporation, the bank /1/ shall
report to the Corporation on the identity of such person and the nature
and amount of the loan, discount, or other extension of credit.
(b) Enforcement; bank status
In addition to other available remedies, this section may be enforced
with respect to mutual savings and cooperative banks which are not
insured depository institutions in accordance with section 1818 of this
title, and for such purpose such mutual savings and cooperative banks
shall be held and considered to be State nonmember insured banks and the
appropriate Federal agency with respect to such mutual savings and
cooperative banks shall be the Federal Deposit Insurance Corporation.
(Sept. 21, 1950, ch. 967, 2(25), as added Dec. 22, 1974, Pub. L.
93-533, 11(a), 88 Stat. 1729, and amended Sept. 17, 1978, Pub. L.
95-369, 6(c)(30), 92 Stat. 620; Aug. 9, 1989, Pub. L. 101-73, title II,
201(a), 103 Stat. 187.)
1989 -- Pub. L. 101-73 substituted references to insured depository
institutions for references to insured banks wherever appearing in this
section.
1978 -- Subsec. (a). Pub. L. 95-369 inserted ''insured branch of a
foreign bank'' after ''No insured bank''.
Section effective 180 days after Dec. 22, 1974, see section 20 of
Pub. L. 93-533, set out as a note under section 2601 of this title.
Section 11(c) of Pub. L. 93-533 provided that: ''The Federal
Deposit Insurance Corporation or the Federal Home Loan Bank Board as
appropriate may by regulation exempt classes or types of transactions
from the provisions added by this section (enacting this section and
section 1730f of this title) if the Corporation or the Board determines
that the purposes of such provisions would not be advanced materially by
their application to such transactions.''
/1/ So in original. Probably should be ''depository institution or
bank''.
12 USC 1831c. Conversion of mutual savings banks
TITLE 12 -- BANKS AND BANKING
(a) Indemnification and effective date
With respect to any State-chartered insured mutual savings bank which
converts into a Federal savings bank or merges or consolidates into a
Federal savings bank or a savings bank which is (or within sixty days
after the merger or consolidation becomes) an insured institution within
the meaning of section 1724 /1/ of this title, the Corporation shall
indemnify the Federal Savings and Loan Insurance Corporation against any
losses incurred by it which arise out of losses incurred by the
converting bank prior to conversion as follows: One hundred per centum
of such losses incurred by the Federal Savings and Loan Insurance
Corporation during the first two years after conversion, 75 per centum
during the third year, 50 per centum during the fourth year, and 25 per
centum during the fifth year. The Corporation and the Federal Savings
and Loan Insurance Corporation shall, within six months after November
10, 1978, mutually agree on what shall be treated as ''losses incurred
by it which arise out of losses incurred by the converting bank prior to
conversion'' for purposes hereof and, failing such agreement, the
General Accounting Office shall prescribe the meaning of those terms.
Any conversion, merger, or consolidation covered by this section shall
not be deemed a termination of insured status under section 1818(a) of
this title. The provisions of this subsection shall apply only to
mergers, consolidations, or conversions consummated and effective prior
to October 15, 1982, or mergers, consolidations, or conversions for
which applications have been received at a regional Federal Home Loan
Bank prior to such date.
(b) Retention of insured status
No transaction involving a change of deposit insurance agencies from
the Corporation to the Federal Savings and Loan Insurance Corporation
shall be deemed a termination of insured status under section 1818(a) of
this title.
(Sept. 21, 1950, ch. 967, 2(26), as added Nov. 10, 1978, Pub. L.
95-630, title XII, 1205, 92 Stat. 3711, and amended Oct. 15, 1982, Pub.
L. 97-320, title I, 113(p), 96 Stat. 1474; Jan. 12, 1983, Pub. L.
97-457, 3, 96 Stat. 2507.)
Section 1724 of this title, referred to in subsec. (a), was repealed
by Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363.
1983 -- Subsec. (a). Pub. L. 97-457, 3, substituted reference to the
effective date of the Garn-St Germain Depository Institutions Act of
1982 for reference to the effective date of the Depository Institutions
Amendments, which reference was translated as ''Oct. 15, 1982''.
1982 -- Subsec. (a). Pub. L. 97-320, 113(p)(1), (2), inserted
designation ''(a)'' before ''With respect'' and added qualification that
this subsec. applies only to mergers, consolidations, or conversions
consummated and effective, or, such transactions for which applications
have been received, prior to Oct. 15, 1982.
Subsec. (b). Pub. L. 97-320, 113(p)(3), added subsec. (b).
Section effective on expiration of 120 days after Nov. 10, 1978, see
section 2101 of Pub. L. 95-630, set out as a note under section 375b of
this title.
Federal Savings and Loan Insurance Corporation abolished and
functions transferred, see sections 401 to 406 of Pub. L. 101-73, set
out as a note under section 1437 of this title.
/1/ See References in Text note below.
12 USC 1831d. State-chartered insured depository institutions and
insured branches of foreign banks
TITLE 12 -- BANKS AND BANKING
(a) Interest rates
In order to prevent discrimination against State-chartered insured
depository institutions, including insured savings banks, or insured
branches of foreign banks with respect to interest rates, if the
applicable rate prescribed in this subsection exceeds the rate such
State bank or insured branch of a foreign bank would be permitted to
charge in the absence of this subsection, such State bank or such
insured branch of a foreign bank may, notwithstanding any State
constitution or statute which is hereby preempted for the purposes of
this section, take, receive, reserve, and charge on any loan or discount
made, or upon any note, bill of exchange, or other evidence of debt,
interest at a rate of not more than 1 per centum in excess of the
discount rate on ninety-day commercial paper in effect at the Federal
Reserve bank in the Federal Reserve district where such State bank or
such insured branch of a foreign bank is located or at the rate allowed
by the laws of the State, territory, or district where the bank is
located, whichever may be greater.
(b) Interest overcharge; forfeiture; interest payment recovery
If the rate prescribed in subsection (a) of this section exceeds the
rate such State bank or such insured branch of a foreign bank would be
permitted to charge in the absence of this section, and such State fixed
rate is thereby preempted by the rate described in subsection (a) of
this section, the taking, receiving, reserving, or charging a greater
rate of interest than is allowed by subsection (a) of this section, when
knowingly done, shall be deemed a forfeiture of the entire interest
which the note, bill, or other evidence of debt carries with it, or
which has been agreed to be paid thereon. If such greater rate of
interest has been paid, the person who paid it may recover in a civil
action commenced in a court of appropriate jurisdiction not later than
two years after the date of such payment, an amount equal to twice the
amount of the interest paid from such State bank or such insured branch
of a foreign bank taking, receiving, reserving, or charging such
interest.
(Sept. 21, 1950, ch. 967, 2(27), as added Mar. 31, 1980, Pub. L.
96-221, title V, 521, 94 Stat. 164, and amended Aug. 10, 1987, Pub. L.
100-86, title I, 101(g)(2), 101 Stat. 563; Aug. 9, 1989, Pub. L.
101-73, title II, 201(a), 103 Stat. 187.)
Provisions similar to this section were contained in section 1831a of
this title prior to its repeal by Pub. L. 96-221.
1989 -- Subsec. (a). Pub. L. 101-73 substituted ''insured depository
institutions'' for ''insured banks''.
1987 -- Subsec. (a). Pub. L. 100-86 struck out ''and insured mutual
savings banks'' after ''insured savings banks''.
Section applicable only with respect to loans made in any State
during the period beginning on April 1, 1980, and ending on the date, on
or after April 1, 1980, on which such State adopts a law or certifies
that the voters of such State have voted in favor of any provision,
constitutional or otherwise, which states explicitly and by its terms
that such State does not want this section to apply with respect to
loans made in such State, except that this section shall apply to a loan
made on or after the date such law is adopted or such certification is
made if such loan is made pursuant to a commitment to make such loan
which was entered into on or after April 1, 1980, and prior to the date
on which such law is adopted or such certification is made, see section
525 of Pub. L. 96-221, set out as an Effective Date of 1980 Amendment
note under section 1785 of this title.
In any case in which one or more provisions of, or amendments made
by, title V of Pub. L. 96-221, section 1735f-7 of this title, or any
other provisions of law, including section 85 of this title, apply with
respect to the same loan, mortgage, credit sale, or advance, such loan,
mortgage, credit sale, or advance may be made at the highest applicable
rate, see section 528 of Pub. L. 96-221, set out as a note under
section 1735f-7a of this title.
For purposes of this section, the term ''State'' to include the
several States, the Commonwealth of Puerto Rico, the District of
Columbia, Guam, the Trust Territories of the Pacific Islands, the
Northern Mariana Islands, and the Virgin Islands, see section 527 of
Pub. L. 96-221, set out as a note under section 1735f-7a of this title.
12 USC 1831e. Activities of savings associations
TITLE 12 -- BANKS AND BANKING
(a) In general
On and after January 1, 1990, a savings association chartered under
State law may not engage as principal in any type of activity, or in any
activity in an amount, that is not permissible for a Federal savings
association unless --
(1) the Corporation has determined that the activity would pose no
significant risk to the affected deposit insurance fund; and
(2) the savings association is and continues to be in compliance with
the fully phased-in capital standards prescribed under section 1464(t)
of this title.
(b) Differences of magnitude between State and Federal powers
Notwithstanding subsection (a)(1) of this section, if an activity
(other than an activity described in section 1464(c)(2)(B) of this
title) is permissible for a Federal savings association, a savings
association chartered under State law may engage as principal in that
activity in an amount greater than the amount permissible for a Federal
savings association if --
(1) the Corporation has not determined that engaging in that amount
of the activity poses any significant risk to the affected deposit
insurance fund; and
(2) the savings association chartered under State law is and
continues to be in compliance with the fully phased-in capital standards
prescribed under section 1464(t) of this title.
(c) Equity investments by State savings associations
(1) In general
Notwithstanding subsections (a) and (b) of this section, a savings
association chartered under State law may not directly acquire or retain
any equity investment of a type or in an amount that is not permissible
for a Federal savings association.
(2) Exception for service corporations
Paragraph (1) does not prohibit a savings association from acquiring
or retaining shares of one or more service corporations if --
(A) the Corporation has determined that no significant risk to the
affected deposit insurance fund is posed by --
(i) the amount that the association proposes to acquire or retain, or
(ii) the activities in which the service corporation engages; and
(B) the savings association is and continues to be in compliance with
the fully phased-in capital standards prescribed under section 1464(t)
of this title.
(3) Transition rule
(A) In general
The Corporation shall require any savings association to divest any
equity investment the retention of which is not permissible under
paragraph (1) or (2) as quickly as can be prudently done, and in any
event not later than July 1, 1994.
(B) Treatment of noncompliance during divestment
With respect to any equity investment held by any savings association
on May 1, 1989, the savings association shall be deemed not to be in
violation of the prohibition in paragraph (1) or (2) on retaining such
investment so long as the savings association complies with any
applicable requirement established by the Corporation pursuant to
subparagraph (A) for divesting such investments.
(d) Corporate debt securities not of investment grade
(1) In general
No savings association may, directly or through a subsidiary, acquire
or retain any corporate debt security not of investment grade.
(2) Exception for securities held by qualified affiliate
Paragraph (1) shall not apply with respect to any corporate debt
security not of investment grade which is acquired and retained by any
qualified affiliate of a savings association.
(3) Transition rule
(A) In general
The Corporation shall require any savings association or any
subsidiary of any savings association to divest any corporate debt
security not of investment grade the retention of which is not
permissible under paragraph (1) as quickly as can be prudently done, and
in any event not later than July 1, 1994.
(B) Treatment of noncompliance during divestment
With respect to any corporate debt security not of investment grade
held by any savings association or subsidiary on August 9, 1989, the
savings association or subsidiary shall be deemed not to be in violation
of the prohibition in paragraph (1) on retaining such investment so long
as the association or subsidiary complies with any applicable
requirement established by the Corporation pursuant to subparagraph (A)
for divesting such securities.
(4) Definitions
For purposes of this section --
(A) Investment grade
Any corporate debt security is not of ''investment grade'' unless
that security, when acquired by the savings association or subsidiary,
was rated in one of the 4 highest rating categories by at least one
nationally recognized statistical rating organization.
(B) Qualified affiliate
The term ''qualified affiliate'' means --
(i) in the case of a stock savings association, an affiliate other
than a subsidiary or an insured depository institution; and
(ii) in the case of a mutual savings association, a subsidiary other
than an insured depository institution, so long as all of the savings
association's investments in and extensions of credit to the subsidiary
are deducted from the savings association's capital.
(C) Certain securities not included
The term ''corporate debt security not of investment grade'' does not
include any obligation issued or guaranteed by a corporation that may be
held by a Federal savings association without limitation as to
percentage of assets under subparagraphs /1/ (D), (E), or (F) of section
1464(c)(1) of this title.
(e) Transfer of corporate debt security not of investment grade in
exchange for a qualified note
(1) Acquisition of note
Notwithstanding subsections (a), (b), and (c) of section 1464 /2/
of this title and any other provision of Federal or State law
governing extensions of credit by savings associations, any insured
savings association, and any subsidiary of any insured savings
association, that, on August 9, 1989, holds any corporate debt security
not of investment grade may acquire a qualified note in exchange for the
transfer of such security to --
(A) any holding company which controls 80 percent or more of the
shares of such insured savings association; or
(B) any company other than an insured savings association, or any
subsidiary of any insured savings association, 80 percent or more of the
shares of which are controlled by such holding company,
if the conditions of paragraph (2) are met.
(2) Conditions for exchange of security for qualified note
The conditions of this paragraph are met if --
(A) the insured savings association was in compliance with applicable
capital requirements on December 31, 1988, and the insured savings
association after such date --
(i) remains in compliance with applicable capital requirements; or
(ii) adopts and complies with a capital plan acceptable to the
Director of the Office of Thrift Supervision;
(B) the company to which the corporate debt security not of
investment grade is transferred is not a bank holding company, an
insured savings association, or a direct or indirect subsidiary of such
holding company or insured savings association;
(C) before the end of the 90-day period beginning on August 9, 1989,
the insured savings association notifies the Director of the Office of
Thrift Supervision of such association's intention to transfer the
corporate debt security not of investment grade to the savings and loan
holding company or the subsidiary of such holding company;
(D) the transfer of the corporate debt security not of investment
grade is completed --
(i) before the end of the 1-year period beginning on August 9, 1989,
in the case of an insured savings association that, as of August 9,
1989, is controlled by a savings and loan holding company; or
(ii) before the end of the 2-year period beginning on August 9, 1989,
in the case of a savings association that is not, as of August 9, 1989,
a subsidiary of a savings and loan holding company;
(E) the insured savings association receives in exchange for the
corporate debt security not of investment grade the fair market value of
such security;
(F) the Director of the Office of Thrift Supervision has --
(i) approved the transaction; and
(ii) determined that the transfer represents a complete and effective
divestiture of the corporate debt security not of investment grade and
is in compliance with the provisions of this subsection; and
(G) any gain on the sale of the corporate debt security not of
investment grade is recognized, and included for applicable regulatory
capital requirements, by the insured savings association only at such
time and to the extent that the insured savings association receives
payment of principal on the note in cash in excess of the fair market
value of the transferred corporate debt security not of investment grade
as carried on the accounts of the insured savings association
immediately prior to the transfer.
(3) ''Qualified note'' defined
The term ''qualified note'' means any note that --
(A) is at all times fully secured by the corporate debt security not
of investment grade transferred in exchange for the note, or by other
collateral of at least equivalent value that is acceptable to the
Director of the Office of Thrift Supervision;
(B) contains provisions acceptable to the Director of the Office of
Thrift Supervision that would --
(i) prevent any action to encumber or impair the value of the
collateral referred to in subparagraph (A); and
(ii) allow the sale of the corporate debt security not of investment
grade if the proceeds of the sale are reinvested in assets of equivalent
value;
(C) is on market terms, including interest rate, which must in all
cases be above the insured savings association's borrowing rate for
similar term funds;
(D) is fully repayable over a period of time not to exceed 5 years
from the date of transfer;
(E) is repaid with annual principal payments at least as large as
would be necessary to repay the note within 5 years if it were on a
level payment amortization schedule and the interest rate for the first
year of repayment were fixed throughout the amortization period;
(F) is fully guaranteed by each holding company of the insured
savings association that acquires such note; and
(G) is repaid in full in cash in accordance with its terms and this
subsection.
(4) Failure to repay on schedule
The exemption provided by this subsection from subsections (a), (b),
and (c) of section 1468 of this title any /3/ other applicable provision
of Federal or State law shall terminate immediately if the insured
savings association or any affiliate of such association fails to comply
with the terms of the qualified note or this subsection.
(f) Determinations
The Corporation shall make determinations under this section by
regulation or order.
(g) ''Activity'' defined
For purposes of subsections (a) and (b) of this section --
(1) In general
The term ''activity'' includes acquiring or retaining any investment.
(2) Divestiture of certain assets
Notwithstanding paragraph (1), subsections (a) and (b) of this
section shall not be construed to require a savings association to
divest itself of any assets acquired before August 9, 1989.
(h) Other authority not affected
This section may not be construed as limiting --
(1) any other authority of the Corporation; or
(2) any authority of the Director of the Office of Thrift Supervision
or of a State to impose more stringent restrictions.
(Sept. 21, 1950, ch. 967, 2(28), as added Aug. 9, 1989, Pub. L.
101-73, title II, 222, 103 Stat. 269, and amended Dec. 19, 1991, Pub.
L. 102-242, title I, 151(a)(3), 105 Stat. 2284.)
1991 -- Subsecs. (h), (i). Pub. L. 102-242 redesignated subsec.
(i) as (h) and struck out former subsec. (h) which required that all
savings associations with uninsured deposits disclose in clear and
conspicuous statements that its deposits were not insured.
Section 151(a)(3) of Pub. L. 102-242 provided that the amendment
made by that section is effective 1 year after Dec. 19, 1991.
/1/ So in original. Probably should be section ''subparagraph''.
/2/ So in original. Probably should be section ''1468''.
/3/ So in original. Probably should be ''and any''.
12 USC 1831f. Brokered deposits
TITLE 12 -- BANKS AND BANKING
(a) In general
A /1/ insured depository institution that is not well capitalized may
not accept funds obtained, directly or indirectly, by or through any
deposit broker for deposit into 1 or more deposit accounts.
(b) Renewals and rollovers treated as acceptance of funds
Any renewal of an account in any troubled institution and any
rollover of any amount on deposit in any such account shall be treated
as an acceptance of funds by such troubled institution for purposes of
subsection (a) of this section.
(c) Waiver authority
The Corporation may, on a case-by-case basis and upon application by
an insured depository institution which is adequately capitalized, waive
the applicability of subsection (a) of this section upon a finding that
the acceptance of such deposits does not constitute an unsafe or unsound
practice with respect to such institution.
(d) Limited exception for certain conservatorships
In the case of any insured depository institution for which the
Corporation has been appointed as conservator, subsection (a) of this
section shall not apply to the acceptance of deposits (described in such
subsection) by such institution if the Corporation determines that the
acceptance of such deposits --
(1) is not an unsafe or unsound practice;
(2) is necessary to enable the institution to meet the demands of its
depositors or pay its obligations in the ordinary course of business;
and
(3) is consistent with the conservator's fiduciary duty to minimize
the institution's losses.
Effective 90 days after the date on which the institution was placed
in conservatorship, the institution may not accept such deposits.
(e) Restriction on interest rate paid
Any insured depository institution which, under subsection (c) or (d)
of this section, accepts funds obtained, directly or indirectly, by or
through a deposit broker, may not pay a rate of interest on such funds
which, at the time that such funds are accepted, significantly exceeds
--
(1) the rate paid on deposits of similar maturity in such
institution's normal market area for deposits accepted in the
institution's normal market area; or
(2) the national rate paid on deposits of comparable maturity, as
established by the Corporation, for deposits accepted outside the
institution's normal market area.
(f) Additional restrictions
The Corporation may impose, by regulation or order, such additional
restrictions on the acceptance of brokered deposits by any institution
as the Corporation may determine to be appropriate.
(g) Definitions relating to deposit broker
(1) Deposit broker
The term ''deposit broker'' means --
(A) any person engaged in the business of placing deposits, or
facilitating the placement of deposits, of third parties with insured
depository institutions or the business of placing deposits with insured
depository institutions for the purpose of selling interests in those
deposits to third parties; and
(B) an agent or trustee who establishes a deposit account to
facilitate a business arrangement with an insured depository institution
to use the proceeds of the account to fund a prearranged loan.
(2) Exclusions
The term ''deposit broker'' does not include --
(A) an insured depository institution, with respect to funds placed
with that depository institution;
(B) an employee of an insured depository institution, with respect to
funds placed with the employing depository institution;
(C) a trust department of an insured depository institution, if the
trust in question has not been established for the primary purpose of
placing funds with insured depository institutions;
(D) the trustee of a pension or other employee benefit plan, with
respect to funds of the plan;
(E) a person acting as a plan administrator or an investment adviser
in connection with a pension plan or other employee benefit plan
provided that that person is performing managerial functions with
respect to the plan;
(F) the trustee of a testamentary account;
(G) the trustee of an irrevocable trust (other than one described in
paragraph (1)(B)), as long as the trust in question has not been
established for the primary purpose of placing funds with insured
depository institutions;
(H) a trustee or custodian of a pension or profitsharing plan
qualified under section 401(d) or 403(a) of title 26; or
(I) an agent or nominee whose primary purpose is not the placement of
funds with depository institutions.
(3) Inclusion of depository institutions engaging in certain
activities
Notwithstanding paragraph (2), the term ''deposit broker'' includes
any insured depository institution, and any employee of any insured
depository institution, which engages, directly or indirectly, in the
solicitation of deposits by offering rates of interest (with respect to
such deposits) which are significantly higher than the prevailing rates
of interest on deposits offered by other insured depository institutions
having the same type of charter in such depository institution's normal
market area.
(4) Employee
For purposes of this subsection, the term ''employee'' means any
employee --
(A) who is employed exclusively by the insured depository
institution;
(B) whose compensation is primarily in the form of a salary;
(C) who does not share such employee's compensation with a deposit
broker; and
(D) whose office space or place of business is used exclusively for
the benefit of the insured depository institution which employs such
individual.
(h) Deposit solicitation restricted
An insured depository institution that is undercapitalized, as
defined in section 1831o of this title, shall not solicit deposits by
offering rates of interest that are significantly higher than the
prevailing rates of interest on insured deposits --
(1) in such institution's normal market areas; or
(2) in the market area in which such deposits would otherwise be
accepted.
(Sept. 21, 1950, ch. 967, 2(29), as added Aug. 9, 1989, Pub. L.
101-73, title II, 224(a), 103 Stat. 273, and amended Dec. 19, 1991, Pub.
L. 102-242, title III, 301(a), (c), 105 Stat. 2343, 2345.)
1991 -- Subsec. (a). Pub. L. 102-242, 301(a)(1), substituted
''insured depository institution that is not well capitalized'' for
''troubled institution''.
Subsec. (c). Pub. L. 102-242, 301(a)(2), substituted ''insured
depository institution which is adequately capitalized'' for ''insured
depositary institution''.
Subsec. (d). Pub. L. 102-242, 301(a)(3), added pars. (2) and (3) and
closing provisions, struck out ''and'' at end of par. (1), and struck
out former par. (2) which read as follows: ''either --
''(A) is necessary to enable the institution to meet the demands of
its depositors or pay its obligations in the ordinary course of
business; or
''(B) is consistent with the conservator's fiduciary duty to minimize
the losses of the institution.''
Subsecs. (e) to (h). Pub. L. 102-242, 301(a)(4)-(6), (c), added
subsec. (e), redesignated former subsec. (e) as (f) and struck out
''troubled'' before ''institution as the'', redesignated former subsecs.
(f) and (g) as (g) and (h), respectively, added subsec. (h), and struck
out former subsec. (h), as previously redesignated, which defined
''troubled institution''.
Section 224(b) of Pub. L. 101-73 provided that: ''The amendment
made by subsection (a) (enacting this section) shall apply to deposits
accepted after the end of the 120-day period beginning on the date of
the enactment of this Act (Aug. 9, 1989).''
Section 301(d) of Pub. L. 102-242 provided that: ''The Corporation
shall promulgate final regulations to carry out the amendments made
under subsections (a), (b), and (c) (enacting section 1831f-1 of this
title and amending this section) not later than 150 days after the date
of enactment of this Act (Dec. 19, 1991), and those regulations shall
become effective not later than 180 days after that date of enactment,
except that such regulations shall not apply to any specific time
deposit made before that date of enactment until the stated maturity of
the time deposit.''
/1/ So in original. Probably should be ''An''.
12 USC 1831f-1. Deposit broker notification and recordkeeping
TITLE 12 -- BANKS AND BANKING
(a) Notification
(1) In general
A deposit broker, as defined in section 1831f(g) of this title, shall
not solicit or place any deposit with an insured depository institution,
unless such deposit broker has provided the Corporation with written
notice that it is a deposit broker.
(2) Termination of deposit broker status
When a deposit broker referred to in paragraph (1) ceases to act as a
deposit broker it shall provide the Corporation with a written notice
that it is no longer acting as a deposit broker.
(3) Form and content
The notices required by paragraphs (1) and (2) shall be in such form
and contain such information concerning the deposit solicitation and
placement activities of a deposit broker as the Corporation may
prescribe as necessary or appropriate to carry out the purposes of this
subsection.
(b) Records
The Corporation may prescribe regulations requiring each deposit
broker that has filed a notice under subsection (a)(1) of this section
to maintain separate records relating to the total amounts and
maturities of the deposits placed by such broker for each insured
depository institution during specified time periods. Such regulations
shall specify the format in which and the period for which such records
shall be preserved, as well as the time period within which the deposit
broker shall furnish to the Corporation copies of such records (or
designated portions thereof) as the Corporation may request.
(c) Periodic reports
(1) In general
The Corporation may prescribe regulations requiring each deposit
broker that has filed a notice under subsection (a)(1) of this section
to file with the Corporation separate quarterly reports relating to the
total amounts and maturities of the deposits placed by such broker for
each depository institution during the applicable quarter. Such
regulations shall specify the form and content of such reports, as well
as the applicable reporting period.
(2) Designated agent
The Corporation may designate another entity as its agent for the
purpose of receiving and maintaining reports under this subsection. If
the Corporation designates such an agent the Corporation may, through
its agent, prescribe and collect an appropriate quarterly fee from each
deposit broker that filed reports with the agent during the applicable
quarter, in an amount sufficient to defray the Corporation's cost of
retaining the agent and to reflect the proportionate amount of the
deposits placed with insured depository institutions by each broker
during the applicable quarter.
(Sept. 21, 1950, ch. 967, 2(29A), as added Dec. 19, 1991, Pub. L.
102-242, title III, 301(b), 105 Stat. 2344.)
Corporation to promulgate final regulations to carry out this section
not later than 150 days after Dec. 19, 1991, to become effective not
later than 180 days after Dec. 19, 1991, except that such regulations
not to apply to any specific time deposit made before Dec. 19, 1991,
until the stated maturity of the time deposit, see section 301(d) of
Pub. L. 102-242, set out as a note under section 1831f of this title.
12 USC 1831g. Contracts between depository institutions and persons
providing goods, products, or services
TITLE 12 -- BANKS AND BANKING
(a) In general
An insured depository institution may not enter into a written or
oral contract with any person to provide goods, products, or services to
or for the benefit of such depository institution if the performance of
such contract would adversely affect the safety or soundness of the
institution.
(b) Rulemaking
The Corporation shall prescribe such regulations and issue such
orders, including definitions consistent with this section, as may be
necessary to administer and carry out the purposes of, and prevent
evasions of, this section.
(c) Enforcement
Any action taken by any appropriate Federal banking agency under
section 1818 of this title to enforce compliance on the part of any
insured depository institution with the requirements of this section may
include a requirement that such institution properly reflect the
transaction on its books and records.
(d) No private right of action
This section may not be construed as creating any private right of
action.
(e) Study
(1) In general
The Attorney General and the Comptroller General of the United States
shall jointly conduct a study on the extent to which --
(A) insured depository institutions are entering into contracts with
vendors under which venders agree to purchase stock or assets from
insured depository institutions or to invest capital in or make deposits
in such institutions; and
(B) if such practices occur, the extent to which such practices are
having an anticompetitive effect and should be prohibited.
(2) Report to Congress
Before the end of the 1-year period beginning on August 9, 1989, the
Attorney General and the Comptroller General shall submit a report to
the Congress on the results of the study conducted pursuant to paragraph
(1).
(Sept. 21, 1950, ch. 967, 2(30), as added Aug. 9, 1989, Pub. L.
101-73, title II, 225, 103 Stat. 275.)
12 USC 1831h. Savings Association Insurance Fund Industry Advisory
Committee
TITLE 12 -- BANKS AND BANKING
(a) Establishment
There is hereby established the Savings Association Insurance Fund
Industry Advisory Committee (hereinafter referred to in this section as
the ''Committee'').
(b) Membership
The Committee shall consist of 18 members, appointed as follows:
(1) 1 member elected from each Federal home loan bank district (by
the members of the Board of Directors of each such bank who were elected
by the members of such bank) from among individuals residing therein who
are officers of insured depository institutions that are Savings
Association Insurance Fund members.
(2) 6 members appointed by the Corporation from among individuals who
shall represent the public interest.
(c) Vacancies
Any vacancy on the Committee shall be filled in the same manner in
which the original appointment was made.
(d) Pay and expenses
Members of the Committee shall serve without pay, but each member
shall be reimbursed, in such manner as the Corporation shall prescribe
by regulation, for expenses incurred in connection with attendance of
such members at meetings of the Committee.
(e) Terms
Members shall be appointed or elected for terms of 1 year.
(f) Authority of Committee
The Committee may select its Chairperson, Vice Chairperson, and
Secretary, and adopt methods of procedure, and shall have power --
(1) to confer with the Board of Directors on general and special
business conditions and regulatory and other matters affecting insured
financial institutions that are members of the Savings Association
Insurance Fund; and
(2) to request information, and to make recommendations, with respect
to matters within the jurisdiction of the Corporation.
(g) Meetings
The Committee shall meet 4 times each year, and more frequently if
requested by the Corporation.
(h) Reports
The Committee shall submit a semiannual written report to the
Committee on Banking, Finance and Urban Affairs of the House and to the
Committee on Banking, Housing, and Urban Affairs of the Senate. Such
report shall describe the activities of the Committee for such
semiannual period and contain such recommendations as the Committee
considers appropriate.
(i) Provision of staff and other resources
The Corporation shall provide the Committee with the use of such
resources, including staff, as the Committee reasonably shall require to
carry out its duties, including the preparation and submission of
reports to Congress, under this section.
(j) Federal Advisory Committee Act does not apply
The Federal Advisory Committee Act shall not apply to the Committee.
(k) Sunset
The Committee shall cease to exist 10 years after August 9, 1989.
(Sept. 21, 1950, ch. 967, 2(31), as added Aug. 9, 1989, Pub. L.
101-73, title II, 226, 103 Stat. 276.)
The Federal Advisory Committee Act, referred to in subsec. (j), is
Pub. L. 92-463, Oct. 6, 1972, 86 Stat. 770, as amended, which is set
out in the Appendix to Title 5, Government Organization and Employees.
12 USC 1831i. Agency disapproval of directors and senior executive
officers of insured depository institutions or depository institution
holding companies
TITLE 12 -- BANKS AND BANKING
(a) Prior notice required
An insured depository institution or depository institution holding
company shall notify the appropriate Federal banking agency of the
proposed addition of any individual to the board of directors or the
employment of any individual as a senior executive officer of such
institution or holding company at least 30 days before such addition or
employment becomes effective, if the insured depository institution or
depository institution holding company --
(1) has been chartered less than 2 years in the case of an insured
depository institution;
(2) has undergone a change in control within the preceding 2 years;
or
(3) is not in compliance with the minimum capital requirement
applicable to such institution or is otherwise in a troubled condition,
as determined by such agency on the basis of such institution's or
holding company's most recent report of condition or report of
examination or inspection.
(b) Disapproval by agency
An insured depository institution or depository institution holding
company may not add any individual to the board of directors or employ
any individual as a senior executive officer if the appropriate Federal
banking agency issues a notice of disapproval of such addition or
employment before the end of the 30-day period beginning on the date the
agency receives notice of the proposed action pursuant to subsection (a)
of this section.
(c) Exception in extraordinary circumstances
(1) In general
Each appropriate Federal banking agency may prescribe by regulation
conditions under which the prior notice requirement of subsection (a) of
this section may be waived in the event of extraordinary circumstances.
(2) No effect on disapproval authority of agency
Such waivers shall not affect the authority of each agency to issue
notices of disapproval of such additions or employment of such
individuals within 30 days after each such waiver.
(d) Additional information
Any notice submitted to an appropriate Federal banking agency with
respect to an individual by any insured depository institution or
depository institution holding company pursuant to subsection (a) of
this section shall include --
(1) the information described in section 1817(j)(6)(A) of this title
about the individual; and
(2) such other information as the agency may prescribe by regulation.
(e) Standard for disapproval
The appropriate Federal banking agency shall issue a notice of
disapproval with respect to a notice submitted pursuant to subsection
(a) of this section if the competence, experience, character, or
integrity of the individual with respect to whom such notice is
submitted indicates that it would not be in the best interests of the
depositors of the depository institution or in the best interests of the
public to permit the individual to be employed by, or associated with,
the depository institution or depository institution holding company.
(f) Definition regulations
Each appropriate Federal banking agency shall prescribe by regulation
a definition for the terms ''troubled condition'' and ''senior executive
officer'' for purposes of subsection (a) of this section.
(Sept. 21, 1950, ch. 967, 2(32), as added Aug. 9, 1989, Pub. L.
101-73, title IX, 914(a), 103 Stat. 484.)
12 USC 1831j. Depository institution employee protection remedy
TITLE 12 -- BANKS AND BANKING
(a) In general
(1) Employees of depository institutions
No insured depository institution may discharge or otherwise
discriminate against any employee with respect to compensation, terms,
conditions, or privileges of employment because the employee (or any
person acting pursuant to the request of the employee) provided
information to any Federal banking agency or to the Attorney General
regarding any possible violation of any law or regulation by the
depository institution or any director, officer, or employee of the
institution.
(2) Employees of banking agencies
No Federal banking agency, Federal home loan bank, or Federal Reserve
bank may discharge or otherwise discriminate against any employee with
respect to compensation, terms, conditions, or privileges of employment
because the employee (or any person acting pursuant to the request of
the employee) provided information to any such agency or bank or to the
Attorney General regarding any possible violation of any law or
regulation by --
(A) any depository institution or any such bank or agency;
(B) any director, officer, or employee of any depository institution
or any such bank; or
(C) any officer or employee of the agency which employs such
employee.
(b) Enforcement
Any employee or former employee who believes he has been discharged
or discriminated against in violation of subsection (a) of this section
may file a civil action in the appropriate United States district court
before the close of the 2-year period beginning on the date of such
discharge or discrimination. The complainant shall also file a copy of
the complaint initiating such action with the appropriate Federal
banking agency.
(c) Remedies
If the district court determines that a violation of subsection (a)
of this section has occurred, it may order the depository institution,
Federal home loan bank, Federal Reserve bank, or Federal banking agency
which committed the violation --
(1) to reinstate the employee to his former position, /1/
(2) to pay compensatory damages; or
(3) take other appropriate actions to remedy any past discrimination.
(d) Limitation
The protections of this section shall not apply to any employee who
--
(1) deliberately causes or participates in the alleged violation of
law or regulation; or
(2) knowingly or recklessly provides substantially false information
to such an agency or the Attorney General.
(e) ''Federal banking agency'' defined
For purposes of subsections (a) and (c) of this section, the term
''Federal banking agency'' means the Corporation, the Board of Governors
of the Federal Reserve System, the Federal Housing Finance Board, the
Comptroller of the Currency, and the Director of the Office of Thrift
Supervision.
(Sept. 21, 1950, ch. 967, 2(33), as added Aug. 9, 1989, Pub. L.
101-73, title IX, 932(a), 103 Stat. 494, and amended Dec. 19, 1991, Pub.
L. 102-242, title II, 251(a)(1)-(3), 105 Stat. 2331, 2332.)
1991 -- Subsec. (a). Pub. L. 102-242, 251(a)(1), amended subsec.
(a) generally. Prior to amendment, subsec. (a) read as follows: ''No
federally insured depository institution may discharge or otherwise
discriminate against any employee with respect to compensation, terms,
conditions, or privileges of employment because the employee (or any
person acting pursuant to the request of the employee) provided
information to any Federal banking agency or to the Attorney General
regarding a possible violation of any law or regulation by the
depository institution or any of its officers, directors, or
employees.''
Subsec. (c). Pub. L. 102-242, 251(a)(2), inserted '', Federal home
loan bank, Federal Reserve bank, or Federal banking agency''.
Subsec. (e). Pub. L. 102-242, 251(a)(3), added subsec. (e).
Section 251(a)(4) of Pub. L. 102-242 provided that: ''Paragraph (2)
of section 33(a) of the Federal Deposit Insurance Act (12 U.S.C.
1831j(a)(2)) (as added under the amendment made by paragraph (1)) shall
be treated as having taken effect on January 1, 1987, and for purposes
of any cause of action arising under such paragraph (as so effective)
before the date of the enactment of this Act (Dec. 19, 1991), the 2-year
period referred to in section 33(b) of such Act shall be deemed to begin
on such date of enactment.''
/1/ So in original. The comma probably should be a semicolon.
12 USC 1831k. Reward for information leading to recoveries or civil
penalties
TITLE 12 -- BANKS AND BANKING
(a) In general
An appropriate Federal banking agency, with the concurrence of the
Attorney General, may pay a reward to a person who provides original
information which leads to --
(1) recovery of a criminal fine, restitution, or civil penalty --
(A) under --
(i) this chapter;
(ii) the Federal Credit Union Act (12 U.S.C. 1751 et seq.);
(iii) sections 93(b), 164, and 481 to 485 of this title;
(iv) the Federal Reserve Act (12 U.S.C. 221 et seq.);
(v) the Bank Holding Company Act Amendments of 1970;
(vi) the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.);
(vii) the Home Owners' Loan Act (12 U.S.C. 1461 et seq.); or
(viii) section 3663 of title 18 pursuant to a conviction for an
offense referred to in subparagraph (B) of this paragraph,
(B) pursuant to a conviction for an offense under section 215, 656,
657, 1005, 1006, 1007, 1014, 1341, 1343, or 1344 of title 18 affecting a
depository institution insured by the Federal Deposit Insurance
Corporation, or for a conspiracy to commit such an offense; or
(C) under section 1833a of this title; or
(2) a forfeiture under section 981 or 982 of title 18 that arises in
connection with a depository institution insured by the Federal Deposit
Insurance Corporation /1/
(b) Percentage limitation
An appropriate Federal banking agency may not pay a reward under
subsection (a) of this section of more than 25 percent of the amount of
the fine, penalty, restitution, or forfeiture or $100,000, whichever is
less.
(c) Officials and persons ineligible
An appropriate Federal banking agency may not pay a reward under
subsection (a) of this section to --
(1) an officer or employee of the United States or of a State or
local government who provides information described in subsection (a) of
this section, obtained in the performance of official duties; or
(2) a person who --
(A) deliberately causes or participates in the alleged violation of
law or regulation, or
(B) knowingly or recklessly provides substantially false information
to such an agency or the Attorney General.
(d) Nonreviewability
Any agency decision under this section is final and not reviewable by
any court.
(Sept. 21, 1950, ch. 967, 2(34), as added Aug. 9, 1989, Pub. L.
101-73, title IX, 933(a), 103 Stat. 495, and amended Nov. 29, 1990, Pub.
L. 101-647, title XXV, 2586, 104 Stat. 4903.)
The Federal Credit Union Act, referred to in subsec. (a)(1)(A)(ii),
is act June 26, 1934, ch. 750, 48 Stat. 1216, as amended, which is
classified generally to chapter 14 ( 1751 et seq.) of this title. For
complete classification of this Act to the Code, see section 1751 of
this title and Tables.
The Federal Reserve Act, referred to in subsec. (a)(1)(A)(iv), is
act Dec. 23, 1913, ch. 6, 38 Stat. 251, as amended, which is
classified principally to chapter 3 ( 221 et seq.) of this title. For
complete classification of this Act to the Code, see References in Text
note set out under section 226 of this title and Tables.
The Bank Holding Company Act Amendments of 1970, referred to in
subsec. (a)(1)(A)(v), is Pub. L. 91-607, Dec. 31, 1970, 84 Stat.
1760, as amended. For complete classification of this Act to the Code,
see Short Title of 1970 Amendment note set out under section 1841 of
this title and Tables.
The Bank Holding Company Act of 1956, referred to in subsec. (a)(1)(
A)(vi), is act May 9, 1956, ch. 240, 70 Stat. 133, as amended, which
is classified principally to chapter 17 ( 1841 et seq.) of this title.
For complete classification of this Act to the Code, see Short Title
note set out under section 1841 of this title and Tables.
The Home Owners' Loan Act, referred to in subsec. (a)(1)(A)(vii), is
act June 13, 1933, ch. 64, 48 Stat. 128, as amended, which is
classified generally to chapter 12 ( 1461 et seq.) of this title. For
complete classification of this Act to the Code, see section 1461 of
this title and Tables.
1990 -- Subsec. (a)(1). Pub. L. 101-647, 2586(1), struck out '', in
an amount that exceeds $50,000,'' after ''recovery'' in introductory
provisions.
Subsec. (a)(2). Pub. L. 101-647, 2586(2), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ''a
forfeiture under section 981 or 982 of title 18 that --
''(A) arises in connection with a depository institution insured by
the Federal Deposit Insurance Corporation; and
''(B) exceeds $50,000.''
/1/ So in original. Probably should be followed by a period.
12 USC 1831l. Coordination of risk analysis between SEC and Federal
banking agencies
TITLE 12 -- BANKS AND BANKING
Any appropriate Federal banking agency shall notify the Securities
and Exchange Commission of any concerns of the agency regarding
significant financial or operational risks to any registered broker or
dealer, or any registered municipal securities dealer, government
securities broker, or government securities dealer for which the
Commission is the appropriate regulatory agency (as defined in section
78c of title 15), resulting from the activities of any insured
depository institution, any depository institution holding company, or
any affiliate of any such institution or company if such broker, dealer,
municipal securities dealer, government securities broker, or government
securities dealer is an affiliate of any such institution, company, or
affiliate.
(Sept. 21, 1950, ch. 967, 2(35), as added Oct. 16, 1990, Pub. L.
101-432, 7, 104 Stat. 975.)
12 USC 1831m. Early identification of needed improvements in financial
management
TITLE 12 -- BANKS AND BANKING
(a) Annual report on financial condition and management
(1) Report required
Each insured depository institution shall submit an annual report to
the Corporation, the appropriate Federal banking agency, and any
appropriate State bank supervisor (including any State bank supervisor
of a host State).
(2) Contents of report
Any annual report required under paragraph (1) shall contain --
(A) the information required to be provided by --
(i) the institution's management under subsection (b) of this
section; and
(ii) an independent public accountant under subsections (c) and (d)
of this section; and
(B) such other information as the Corporation and the appropriate
Federal banking agency may determine to be necessary to assess the
financial condition and management of the institution.
(3) Public availability
Any annual report required under paragraph (1) shall be available for
public inspection.
(b) Management responsibility for financial statements and internal
controls
Each insured depository institution shall prepare --
(1) annual financial statements in accordance with generally accepted
accounting principles and such other disclosure requirements as the
Corporation and the appropriate Federal banking agency may prescribe;
and
(2) a report signed by the chief executive officer and the chief
accounting or financial officer of the institution which contains --
(A) a statement of the management's responsibilities for --
(i) preparing financial statements;
(ii) establishing and maintaining an adequate internal control
structure and procedures for financial reporting; and
(iii) complying with the laws and regulations relating to safety and
soundness which are designated by the Corporation or the appropriate
Federal banking agency; and
(B) an assessment, as of the end of the institution's most recent
fiscal year, of --
(i) the effectiveness of such internal control structure and
procedures; and
(ii) the institution's compliance with the laws and regulations
relating to safety and soundness which are designated by the Corporation
and the appropriate Federal banking agency.
(c) Internal control evaluation and reporting requirements for
independent public accountants
(1) In general
With respect to any internal control report required by subsection
(b)(2) of this section of any institution, the institution's independent
public accountant shall attest to, and report separately on, the
assertions of the institution's management contained in such report.
(2) Attestation requirements
Any attestation pursuant to paragraph (1) shall be made in accordance
with generally accepted standards for attestation engagements.
(d) Annual independent audits of financial statements
(1) Audits required
The Corporation, in consultation with the appropriate Federal banking
agencies, shall prescribe regulations requiring that each insured
depository institution shall have an annual independent audit made of
the institution's financial statements by an independent public
accountant in accordance with generally accepted auditing standards and
section 1831n of this title.
(2) Scope of audit
In connection with any audit under this subsection, the independent
public accountant shall determine and report whether the financial
statements of the institution --
(A) are presented fairly in accordance with generally accepted
accounting principles; and
(B) comply with such other disclosure requirements as the Corporation
and the appropriate Federal banking agency may prescribe.
(3) Requirements for insured subsidiaries of holding companies
The requirements for an independent audit under this subsection may
be satisfied for insured depository institutions that are subsidiaries
of a holding company by an independent audit of the holding company.
(e) Detecting and reporting violations of laws and regulations
(1) In general
An independent public accountant shall apply procedures agreed upon
by the Corporation to objectively determine the extent of the compliance
of any insured depository institution or depository institution holding
company with laws and regulations designated by the Corporation, in
consultation with the appropriate Federal banking agencies.
(2) Attestation requirements
Any attestation pursuant to paragraph (1) shall be made in accordance
with generally accepted standards for attestation engagements.
(f) Form and content of reports and auditing standards
(1) In general
The scope of each report by an independent public accountant pursuant
to this section, and the procedures followed in preparing such report,
shall meet or exceed the scope and procedures required by generally
accepted auditing standards and other applicable standards recognized by
the Corporation.
(2) Consultation
The Corporation shall consult with the other appropriate Federal
banking agencies in implementing this subsection.
(g) Improved accountability
(1) Independent audit committee
(A) Establishment
Each insured depository institution (to which this section applies)
shall have an independent audit committee entirely made up of outside
directors who are independent of management of the institution, and who
satisfy any specific requirements the Corporation may establish.
(B) Duties
An independent audit committee's duties shall include reviewing with
management and the independent public accountant the basis for the
reports issued under subsections (b)(2), (c), and (d) of this section.
(C) Criteria applicable to committees of large insured depository
institutions
In the case of each insured depository institution which the
Corporation determines to be a large institution, the audit committee
required by subparagraph (A) shall --
(i) include members with banking or related financial management
expertise;
(ii) have access to the committee's own outside counsel; and
(iii) not include any large customers of the institution.
(2) Review of quarterly reports of large insured depository
institutions
(A) In general
In the case of any insured depository institution which the
Corporation has determined to be a large institution, the Corporation
may require the independent public accountant retained by such
institution to perform reviews of the institution's quarterly financial
reports in accordance with procedures agreed upon by the Corporation.
(B) Report to audit committee
The independent public accountant referred to in subparagraph (A)
shall provide the audit committee of the insured depository institution
with reports on the reviews under such subparagraph and the audit
committee shall provide such reports to the Corporation, any appropriate
Federal banking agency, and any appropriate State bank supervisor.
(C) Limitation on notice
Reports provided under subparagraph (B) shall be only for the
information and use of the insured depository institution, the
Corporation, any appropriate Federal banking agency, and any State bank
supervisor that received the report.
(3) Qualifications of independent public accountants
(A) In general
All audit services required by this section shall be performed only
by an independent public accountant who --
(i) has agreed to provide related working papers, policies, and
procedures to the Corporation, an appropriate Federal banking agency,
and any State bank supervisor, if requested; and
(ii) has received a peer review that meets guidelines acceptable to
the Corporation.
(B) Reports on peer reviews
Reports on peer reviews shall be filed with the Corporation and made
available for public inspection.
(4) Enforcement actions
(A) In general
In addition to any authority contained in section 1818 of this title,
the Corporation or an appropriate Federal banking agency may remove,
suspend, or bar an independent public accountant, upon a showing of good
cause, from performing audit services required by this section.
(B) Joint rulemaking
The appropriate Federal banking agencies shall jointly issue rules of
practice to implement this paragraph.
(5) Notice by accountant of termination of services
Any independent public accountant performing an audit under this
section who subsequently ceases to be the accountant for the institution
shall promptly notify the Corporation pursuant to such rules as the
Corporation shall prescribe.
(h) Exchange of reports and information
(1) Report to the independent auditor
(A) In general
Each insured depository institution which has engaged the services of
an independent auditor to audit such institution shall transmit to the
auditor a copy of the most recent report of condition made by the
institution (pursuant to this chapter or any other provision of law) and
a copy of the most recent report of examination received by the
institution.
(B) Additional information
In addition to the copies of the reports required to be provided
under subparagraph (A), each insured depository institution shall
provide the auditor with --
(i) a copy of any supervisory memorandum of understanding with such
institution and any written agreement between such institution and any
appropriate Federal banking agency or any appropriate State bank
supervisor which is in effect during the period covered by the audit;
and
(ii) a report of --
(I) any action initiated or taken by the appropriate Federal banking
agency or the Corporation during such period under subsection (a), (b),
(c), (e), (g), (i), (s), or (t) of section 1818 of this title;
(II) any action taken by any appropriate State bank supervisor under
State law which is similar to any action referred to in subclause (I);
or
(III) any assessment of any civil money penalty under any other
provision of law with respect to the institution or any
institution-affiliated party.
(2) Reports to banking agencies
(A) Independent auditor reports
Each insured depository institution shall provide to the Corporation,
any appropriate Federal banking agency, and any appropriate State bank
supervisor, a copy of each audit report and any qualification to such
report, any management letter, and any other report within 15 days of
receipt of any such report, qualification, or letter from the
institution's independent auditors.
(B) Notice of change of auditor
Each insured depository institution shall provide written
notification to the Corporation, the appropriate Federal banking agency,
and any appropriate State bank supervisor of the resignation or
dismissal of the institution's independent auditor or the engagement of
a new independent auditor by the institution, including a statement of
the reasons for such change within 15 calendar days of the occurrence of
the event.
(i) Requirements for insured subsidiaries of holding companies
Except with respect to any audit requirements established under or
pursuant to subsection (d) of this section, the requirements of this
section may be satisfied for insured depository institutions that are
subsidiaries of a holding company, if --
(1) services and functions comparable to those required under this
section are provided at the holding company level; and
(2) either --
(A) the institution has total assets, as of the beginning of such
fiscal year, of less than $5,000,000,000; or
(B) the institution --
(i) has total assets, as of the beginning of such fiscal year, of
more than $5,000,000,000 and less than $9,000,000,000; and
(ii) has a CAMEL composite rating of 1 or 2 under the Uniform
Financial Institutions Rating System (or an equivalent rating by any
such agency under a comparable rating system) as of the most recent
examination of such institution by the Corporation or the appropriate
Federal banking agency.
(j) Exemption for small depository institutions
This section shall not apply with respect to any fiscal year of any
insured depository institution the total assets of which, as of the
beginning of such fiscal year, are less than the greater of --
(1) $150,000,000; or
(2) such amount (in excess of $150,000,000) as the Corporation may
prescribe by regulation.
(Sept. 21, 1950, ch. 967, 2(36), as added Dec. 19, 1991, Pub. L.
102-242, title I, 112(a), 105 Stat. 2242.)
Section 112(b) of Pub. L. 102-242 provided that: ''The requirements
established by the amendment made by subsection (a) (enacting this
section) shall apply with respect to fiscal years of insured depository
institutions which begin after December 31, 1992.''
12 USC 1831n. Accounting objectives, standards, and requirements
TITLE 12 -- BANKS AND BANKING
(a) In general
(1) Objectives
Accounting principles applicable to reports or statements required to
be filed with Federal banking agencies by insured depository
institutions should --
(A) result in financial statements and reports of condition that
accurately reflect the capital of such institutions;
(B) facilitate effective supervision of the institutions; and
(C) facilitate prompt corrective action to resolve the institutions
at the least cost to the insurance funds.
(2) Standards
(A) Uniform accounting principles consistent with GAAP
Subject to the requirements of this chapter and any other provision
of Federal law, the accounting principles applicable to reports or
statements required to be filed with Federal banking agencies by all
insured depository institutions shall be uniform and consistent with
generally accepted accounting principles.
(B) Stringency
If the appropriate Federal banking agency or the Corporation
determines that the application of any generally accepted accounting
principle to any insured depository institution is inconsistent with the
objectives described in paragraph (1), the agency or the Corporation
may, with respect to reports or statements required to be filed with
such agency or Corporation, prescribe an accounting principle which is
applicable to such institutions which is no less stringent than
generally accepted accounting principles.
(3) Review and implementation of accounting principles required
Before the end of the 1-year period beginning on December 19, 1991,
each appropriate Federal banking agency shall take the following
actions:
(A) Review of accounting principles
Review --
(i) all accounting principles used by depository institutions with
respect to reports or statements required to be filed with a Federal
banking agency;
(ii) all requirements established by the agency with respect to such
accounting procedures; and
(iii) the procedures and format for reports to the agency, including
reports of condition.
(B) Modification of noncomplying measures
Modify or eliminate any accounting principle or reporting requirement
of such Federal agency which the agency determines fails to comply with
the objectives and standards established under paragraphs (1) and (2).
(C) Inclusion of ''off balance sheet'' items
Develop and prescribe regulations which require that all assets and
liabilities, including contingent assets and liabilities, of insured
depository institutions be reported in, or otherwise taken into account
in the preparation of any balance sheet, financial statement, report of
condition, or other report of such institution, required to be filed
with a Federal banking agency.
(D) Market value disclosure
Develop jointly with the other appropriate Federal banking agencies a
method for insured depository institutions to provide supplemental
disclosure of the estimated fair market value of assets and liabilities,
to the extent feasible and practicable, in any balance sheet, financial
statement, report of condition, or other report of any insured
depository institution required to be filed with a Federal banking
agency.
(b) Uniform accounting of capital standards
(1) In general
Each appropriate Federal banking agency shall maintain uniform
accounting standards to be used for determining compliance with
statutory or regulatory requirements of depository institutions.
(2) Transition provision
Any standards in effect on December 19, 1991, under section 1833d /1/
of this title shall continue in effect after December 19, 1991, until
amended by the appropriate Federal banking agency under paragraph (1).
(c) Reports to banking committees
(1) Annual reports required
Each appropriate Federal banking agency shall annually submit a
report to the Committee on Banking, Finance and Urban Affairs of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing a description of any difference
between any accounting or capital standard used by such agency and any
accounting or capital standard used by any other agency.
(2) Explanation of reasons for discrepancy
Each report submitted under paragraph (1) shall contain an
explanation of the reasons for any discrepancy between any accounting or
capital standard used by such agency and any accounting or capital
standard used by any other agency.
(3) Publication
Each report under this subsection shall be published in the Federal
Register.
(Sept. 21, 1950, ch. 967, 2(37), as added Dec. 19, 1991, Pub. L.
102-242, title I, 121(a), 105 Stat. 2250.)
Section 1833d, referred to in subsec. (b)(2), was repealed by Pub.
L. 102-242, title I, 121(b), Dec. 19, 1991, 105 Stat. 2251.
Pub. L. 102-233, title VI, 618, Dec. 12, 1991, 105 Stat. 1789,
provided that:
''(a) Single Family Housing Loans. --
''(1) 50 percent risk-weighted classification. --
''(a)((A)) In general. -- To provide consistent regulatory treatment
of loans made for the construction of single family housing, not later
than the expiration of the 120-day period beginning on the date of this
Act (probably means date of enactment, Dec. 12, 1991) each Federal
banking agency shall amend the regulations and guidelines of the agency
establishing minimum acceptable capital levels to provide that any
single family residence construction loan described under subparagraph
(B) shall be considered as a loan within the 50 percent risk-weighted
category.
''(B) Requirements. -- Subparagraph (A) shall apply to any
construction loan --
''(i) made for the construction of a residence consisting of 1 to 4
dwelling units;
''(ii) under which the lender has acquired from the lender
originating the mortgage loan for purchase of the residence, before the
making of the construction loan --
''(I) documentation demonstrating that the buyer of the
residence intends to purchase the residence and has the ability to
obtain a mortgage loan sufficient to purchase the residence; and
''(II) any other documentation from the mortgage lender that
the appropriate Federal banking agency may consider appropriate to
provide assurance of the buyer's intent to purchase the property
(including written commitments and letters of intent);
''(iii) under which the borrower requires the buyer of the residence
to make a nonrefundable deposit to the borrower in an amount (as
determined by the appropriate Federal banking agency) of not less than 1
percent of the principal amount of mortgage loan obtained by the
borrower for purchase of the residence, for use in defraying costs
relating to any cancellation of the purchase contract of the buyer; and
''(iv) that meets any other underwriting characteristics that the
appropriate Federal banking agency may establish, consistent with the
purposes of the minimum acceptable capital requirements to maintain the
safety and soundness of financial institutions.
''(2) 100 percent risk-weighted classification. -- Not later than the
expiration of the 120-day period beginning on the date of this Act (Dec.
12, 1991) each Federal banking agency shall amend the regulations and
guidelines of the agency establishing minimum acceptable capital levels
to provide that --
''(A) any single family residence construction loan for a residence
for which the purchase contract is canceled shall be considered as a
loan within the 100 percent risk-weighted category; and
''(B) the lender of any single family residence construction loan
shall promptly notify the appropriate Federal banking agency of any such
cancellation.
''(b) Multifamily Housing Loans. --
''(1) 50 percent risk-weighted classification. --
''(A) In general. -- To provide consistent regulatory treatment of
loans made for the purchase of multifamily rental and homeowner
properties, not later than the expiration of the 120-day period
beginning on the date of this Act (Dec. 12, 1991) each Federal banking
agency shall amend the regulations and guidelines of the agency
establishing minimum acceptable capital levels to provide that any
multifamily housing loan described under subparagraph (B) and any
security collateralized by such a loan shall be considered as a loan or
security within the 50 percent risk-weighted category.
''(B) Requirements. -- Subparagraph (A) shall apply to any loan --
''(i) secured by a first lien on a residence consisting of more than
4 dwelling units;
''(ii) under which --
''(I) the rate of interest does not change over the term of
the loan, (b) the principal obligation does not exceed 80 percent of the
appraised value of the property, and (c) the ratio of annual net
operating income generated by the property (before payment of any debt
service on the loan) to annual debt service on the loan is not less than
120 percent; or
''(II) the rate of interest changes over the term of the
loan, (b) the principal obligation does not exceed 75 percent of the
appraised value of the property, and (c) the ratio of annual net
operating income generated by the property (before payment of any debt
service on the loan) to annual debt service on the loan is not less than
115 percent;
''(iii) under which --
''(I) amortization of principal and interest occurs over a
period of not more than 30 years;
''(II) the minimum maturity for repayment of principal is not
less than 7 years; and
''(III) timely payment of all principal and interest, in
accordance with the terms of the loan, occurs for a period of not less
than 1 year; and
''(iv) that meets any other underwriting characteristics that the
appropriate Federal banking agency may establish, consistent with the
purposes of the minimum acceptable capital requirements to maintain the
safety and soundness of financial institutions.
''(2) Sale pursuant to pro rata loss sharing arrangements. -- Not
later than the expiration of the 120-day period beginning on the date of
this Act (Dec. 12, 1991), each Federal banking agency shall amend the
regulations and guidelines of the agency establishing minimum acceptable
capital levels to provide that any loan fully secured by a first lien on
a multifamily housing property that is sold subject to a pro rata loss
sharing arrangement by an institution subject to the jurisdiction of the
agency shall be treated as sold to the extent that loss is incurred by
the purchaser of the loan. For purposes of this paragraph, the term
'pro rata loss sharing arrangement' means an agreement providing that
the purchaser of a loan shares in any loss incurred on the loan with the
selling institution on a pro rata basis.
''(3) Sale pursuant to other arrangements for loss. -- Not later than
the expiration of the 180-day period beginning on the date of the
enactment of this Act (Dec. 12, 1991), each Federal banking agency shall
amend the regulations and guidelines of the agency establishing minimum
acceptable capital levels to take into account other loss sharing
arrangements, in connection with the sale by an institution subject to
the jurisdiction of the agency of any loan that is fully secured by a
first lien on multifamily housing property, for purposes of determining
the extent to which such loans shall be treated as sold. For purposes
of this paragraph, the term 'other loss sharing arrangement' means an
agreement providing that the purchaser of a loan shares in any loss
incurred on the loan with the selling institution on other than a pro
rata basis.
''(c) Appropriate Federal Banking Agency. -- For purposes of this
section, the term 'Federal banking agency' means the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, and the Director of the
Office of Thrift Supervision.''
/1/ See References in Text note below.
12 USC 1831o. Prompt corrective action
TITLE 12 -- BANKS AND BANKING
(a) Resolving problems to protect deposit insurance funds
(1) Purpose
The purpose of this section is to resolve the problems of insured
depository institutions at the least possible long-term loss to the
deposit insurance fund.
(2) Prompt corrective action required
Each appropriate Federal banking agency and the Corporation (acting
in the Corporation's capacity as the insurer of depository institutions
under this chapter) shall carry out the purpose of this section by
taking prompt corrective action to resolve the problems of insured
depository institutions.
(b) Definitions
For purposes of this section:
(1) Capital categories
(A) Well capitalized
An insured depository institution is ''well capitalized'' if it
significantly exceeds the required minimum level for each relevant
capital measure.
(B) Adequately capitalized
An insured depository institution is ''adequately capitalized'' if it
meets the required minimum level for each relevant capital measure.
(C) Undercapitalized
An insured depository institution is ''undercapitalized'' if it fails
to meet the required minimum level for any relevant capital measure.
(D) Significantly undercapitalized
An insured depository institution is ''significantly
undercapitalized'' if it is significantly below the required minimum
level for any relevant capital measure.
(E) Critically undercapitalized
An insured depository institution is ''critically undercapitalized''
if it fails to meet any level specified under subsection (c)(3)(A) of
this section.
(2) Other definitions
(A) Average
(i) In general
The ''average'' of an accounting item (such as total assets or
tangible equity) during a given period means the sum of that item at the
close of business on each business day during that period divided by the
total number of business days in that period.
(ii) Agency may permit weekly averaging for certain institutions
In the case of insured depository institutions that have total assets
of less than $300,000,000 and normally file reports of condition
reflecting weekly (rather than daily) averages of accounting items, the
appropriate Federal banking agency may provide that the ''average'' of
an accounting item during a given period means the sum of that item at
the close of business on the relevant business day each week during that
period divided by the total number of weeks in that period.
(B) Capital distribution
The term ''capital distribution'' means --
(i) a distribution of cash or other property by any insured
depository institution or company to its owners made on account of that
ownership, but not including --
(I) any dividend consisting only of shares of the institution or
company or rights to purchase such shares; or
(II) any amount paid on the deposits of a mutual or cooperative
institution that the appropriate Federal banking agency determines is
not a distribution for purposes of this section;
(ii) a payment by an insured depository institution or company to
repurchase, redeem, retire, or otherwise acquire any of its shares or
other ownership interests, including any extension of credit to finance
an affiliated company's acquisition of those shares or interests; or
(iii) a transaction that the appropriate Federal banking agency or
the Corporation determines, by order or regulation, to be in substance a
distribution of capital to the owners of the insured depository
institution or company.
(C) Capital restoration plan
The term ''capital restoration plan'' means a plan submitted under
subsection (e)(2) of this section.
(D) Company
The term ''company'' has the same meaning as in section 1841 of this
title.
(E) Compensation
The term ''compensation'' includes any payment of money or provision
of any other thing of value in consideration of employment.
(F) Relevant capital measure
The term ''relevant capital measure'' means the measures described in
subsection (c) of this section.
(G) Required minimum level
The term ''required minimum level'' means, with respect to each
relevant capital measure, the minimum acceptable capital level specified
by the appropriate Federal banking agency by regulation.
(H) Senior executive officer
The term ''senior executive officer'' has the same meaning as the
term ''executive officer'' in section 375b of this title.
(I) Subordinated debt
The term ''subordinated debt'' means debt subordinated to the claims
of general creditors.
(c) Capital standards
(1) Relevant capital measures
(A) In general
Except as provided in subparagraph (B)(ii), the capital standards
prescribed by each appropriate Federal banking agency shall include --
(i) a leverage limit; and
(ii) a risk-based capital requirement.
(B) Other capital measures
An appropriate Federal banking agency may, by regulation --
(i) establish any additional relevant capital measures to carry out
the purpose of this section; or
(ii) rescind any relevant capital measure required under subparagraph
(A) upon determining (with the concurrence of the other Federal banking
agencies) that the measure is no longer an appropriate means for
carrying out the purpose of this section.
(2) Capital categories generally
Each appropriate Federal banking agency shall, by regulation, specify
for each relevant capital measure the levels at which an insured
depository institution is well capitalized, adequately capitalized,
undercapitalized, and significantly undercapitalized.
(3) Critical capital
(A) Agency to specify level
(i) Leverage limit
Each appropriate Federal banking agency shall, by regulation, in
consultation with the Corporation, specify the ratio of tangible equity
to total assets at which an insured depository institution is critically
undercapitalized.
(ii) Other relevant capital measures
The agency may, by regulation, specify for 1 or more other relevant
capital measures, the level at which an insured depository institution
is critically undercapitalized.
(B) Leverage limit range
The level specified under subparagraph (A)(i) shall require tangible
equity in an amount --
(i) not less than 2 percent of total assets; and
(ii) except as provided in clause (i), not more than 65 percent of
the required minimum level of capital under the leverage limit.
(C) FDIC's concurrence required
The appropriate Federal banking agency shall not, without the
concurrence of the Corporation, specify a level under subparagraph (A)(
i) lower than that specified by the Corporation for State nonmember
insured banks.
(d) Provisions applicable to all institutions
(1) Capital distributions restricted
(A) In general
An insured depository institution shall make no capital distribution
if, after making the distribution, the institution would be
undercapitalized.
(B) Exception
Notwithstanding subparagraph (A), the appropriate Federal banking
agency may permit, after consultation with the Corporation, an insured
depository institution to repurchase, redeem, retire, or otherwise
acquire shares or ownership interests if the repurchase, redemption,
retirement, or other acquisition --
(i) is made in connection with the issuance of additional shares or
obligations of the institution in at least an equivalent amount; and
(ii) will reduce the institution's financial obligations or otherwise
improve the institution's financial condition.
(2) Management fees restricted
An insured depository institution shall pay no management fee to any
person having control of that institution if, after making the payment,
the institution would be undercapitalized.
(e) Provisions applicable to undercapitalized institutions
(1) Monitoring required
Each appropriate Federal banking agency shall --
(A) closely monitor the condition of any undercapitalized insured
depository institution;
(B) closely monitor compliance with capital restoration plans,
restrictions, and requirements imposed under this section; and
(C) periodically review the plan, restrictions, and requirements
applicable to any undercapitalized insured depository institution to
determine whether the plan, restrictions, and requirements are achieving
the purpose of this section.
(2) Capital restoration plan required
(A) In general
Any undercapitalized insured depository institution shall submit an
acceptable capital restoration plan to the appropriate Federal banking
agency within the time allowed by the agency under subparagraph (D).
(B) Contents of plan
The capital restoration plan shall --
(i) specify --
(I) the steps the insured depository institution will take to become
adequately capitalized;
(II) the levels of capital to be attained during each year in which
the plan will be in effect;
(III) how the institution will comply with the restrictions or
requirements then in effect under this section; and
(IV) the types and levels of activities in which the institution will
engage; and
(ii) contain such other information as the appropriate Federal
banking agency may require.
(C) Criteria for accepting plan
The appropriate Federal banking agency shall not accept a capital
restoration plan unless the agency determines that --
(i) the plan --
(I) complies with subparagraph (B);
(II) is based on realistic assumptions, and is likely to succeed in
restoring the institution's capital; and
(III) would not appreciably increase the risk (including credit risk,
interest-rate risk, and other types of risk) to which the institution is
exposed; and
(ii) if the insured depository institution is undercapitalized, each
company having control of the institution has --
(I) guaranteed that the institution will comply with the plan until
the institution has been adequately capitalized on average during each
of 4 consecutive calendar quarters; and
(II) provided appropriate assurances of performance.
(D) Deadlines for submission and review of plans
The appropriate Federal banking agency shall by regulation establish
deadlines that --
(i) provide insured depository institutions with reasonable time to
submit capital restoration plans, and generally require an institution
to submit a plan not later than 45 days after the institution becomes
undercapitalized; and
(ii) require the agency to act on capital restoration plans
expeditiously, and generally not later than 60 days after the plan is
submitted; and
(iii) require the agency to submit a copy of any plan approved by the
agency to the Corporation before the end of the 45-day period beginning
on the date such approval is granted.
(E) Guarantee liability limited
(i) In general
The aggregate liability under subparagraph (C)(ii) of all companies
having control of an insured depository institution shall be the lesser
of --
(I) an amount equal to 5 percent of the institution's total assets at
the time the institution became undercapitalized; or
(II) the amount which is necessary (or would have been necessary) to
bring the institution into compliance with all capital standards
applicable with respect to such institution as of the time the
institution fails to comply with a plan under this subsection.
(ii) Certain affiliates not affected
This paragraph may not be construed as --
(I) requiring any company not having control of an undercapitalized
insured depository institution to guarantee, or otherwise be liable on,
a capital restoration plan;
(II) requiring any person other than an insured depository
institution to submit a capital restoration plan; or
(III) affecting compliance by brokers, dealers, government securities
brokers, and government securities dealers with the financial
responsibility requirements of the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) and regulations and orders thereunder.
(3) Asset growth restricted
An undercapitalized insured depository institution shall not permit
its average total assets during any calendar quarter to exceed its
average total assets during the preceding calendar quarter unless --
(A) the appropriate Federal banking agency has accepted the
institution's capital restoration plan;
(B) any increase in total assets is consistent with the plan; and
(C) the institution's ratio of tangible equity to assets increases
during the calendar quarter at a rate sufficient to enable the
institution to become adequately capitalized within a reasonable time.
(4) Prior approval required for acquisitions, branching, and new
lines of business
An undercapitalized insured depository institution shall not,
directly or indirectly, acquire any interest in any company or insured
depository institution, establish or acquire any additional branch
office, or engage in any new line of business unless --
(A) the appropriate Federal banking agency has accepted the insured
depository institution's capital restoration plan, the institution is
implementing the plan, and the agency determines that the proposed
action is consistent with and will further the achievement of the plan;
or
(B) the Board of Directors determines that the proposed action will
further the purpose of this section.
(5) Discretionary safeguards
The appropriate Federal banking agency may, with respect to any
undercapitalized insured depository institution, take actions described
in any subparagraph of subsection (f)(2) of this section if the agency
determines that those actions are necessary to carry out the purpose of
this section.
(f) Provisions applicable to significantly undercapitalized
institutions and undercapitalized institutions that fail to submit and
implement capital restoration plans
(1) In general
This subsection shall apply with respect to any insured depository
institution that --
(A) is significantly undercapitalized; or
(B) is undercapitalized and --
(i) fails to submit an acceptable capital restoration plan within the
time allowed by the appropriate Federal banking agency under subsection
(e)(2)(D) of this section; or
(ii) fails in any material respect to implement a plan accepted by
the agency.
(2) Specific actions authorized
The appropriate Federal banking agency shall carry out this section
by taking 1 or more of the following actions:
(A) Requiring recapitalization
Doing 1 or more of the following:
(i) Requiring the institution to sell enough shares or obligations of
the institution so that the institution will be adequately capitalized
after the sale.
(ii) Further requiring that instruments sold under clause (i) be
voting shares.
(iii) Requiring the institution to be acquired by a depository
institution holding company, or to combine with another insured
depository institution, if 1 or more grounds exist for appointing a
conservator or receiver for the institution.
(B) Restricting transactions with affiliates
(i) Requiring the institution to comply with section 371c of this
title as if subsection (d)(1) of that section (exempting transactions
with certain affiliated institutions) did not apply.
(ii) Further restricting the institution's transactions with
affiliates.
(C) Restricting interest rates paid
(i) In general
Restricting the interest rates that the institution pays on deposits
to the prevailing rates of interest on deposits of comparable amounts
and maturities in the region where the institution is located, as
determined by the agency.
(ii) Retroactive restrictions prohibited
This subparagraph does not authorize the agency to restrict interest
rates paid on time deposits made before (and not renewed or renegotiated
after) the agency acted under this subparagraph.
(D) Restricting asset growth
Restricting the institution's asset growth more stringently than
subsection (e)(3) of this section, or requiring the institution to
reduce its total assets.
(E) Restricting activities
Requiring the institution or any of its subsidiaries to alter,
reduce, or terminate any activity that the agency determines poses
excessive risk to the institution.
(F) Improving management
Doing 1 or more of the following:
(i) New election of directors
Ordering a new election for the institution's board of directors.
(ii) Dismissing directors or senior executive officers
Requiring the institution to dismiss from office any director or
senior executive officer who had held office for more than 180 days
immediately before the institution became undercapitalized. Dismissal
under this clause shall not be construed to be a removal under section
1818 of this title.
(iii) Employing qualified senior executive officers
Requiring the institution to employ qualified senior executive
officers (who, if the agency so specifies, shall be subject to approval
by the agency).
(G) Prohibiting deposits from correspondent banks
Prohibiting the acceptance by the institution of deposits from
correspondent depository institutions, including renewals and rollovers
of prior deposits.
(H) Requiring prior approval for capital distributions by bank
holding company
Prohibiting any bank holding company having control of the insured
depository institution from making any capital distribution without the
prior approval of the Board of Governors of the Federal Reserve System.
(I) Requiring divestiture
Doing one or more of the following:
(i) Divestiture by the institution
Requiring the institution to divest itself of or liquidate any
subsidiary if the agency determines that the subsidiary is in danger of
becoming insolvent and poses a significant risk to the institution, or
is likely to cause a significant dissipation of the institution's assets
or earnings.
(ii) Divestiture by parent company of nondepository affiliate
Requiring any company having control of the institution to divest
itself of or liquidate any affiliate other than an insured depository
institution if the appropriate Federal banking agency for that company
determines that the affiliate is in danger of becoming insolvent and
poses a significant risk to the institution, or is likely to cause a
significant dissipation of the institution's assets or earnings.
(iii) Divestiture of institution
Requiring any company having control of the institution to divest
itself of the institution if the appropriate Federal banking agency for
that company determines that divestiture would improve the institution's
financial condition and future prospects.
(J) Requiring other action
Requiring the institution to take any other action that the agency
determines will better carry out the purpose of this section than any of
the actions described in this paragraph.
(3) Presumption in favor of certain actions
In complying with paragraph (2), the agency shall take the following
actions, unless the agency determines that the actions would not further
the purpose of this section:
(A) The action described in clause (i) or (iii) of paragraph (2)(A)
(relating to requiring the sale of shares or obligations, or requiring
the institution to be acquired by or combine with another institution).
(B) The action described in paragraph (2)(B)(i) (relating to
restricting transactions with affiliates).
(C) The action described in paragraph (2)(C) (relating to restricting
interest rates).
(4) Senior executive officers' compensation restricted
(A) In general
The insured depository institution shall not do any of the following
without the prior written approval of the appropriate Federal banking
agency:
(i) Pay any bonus to any senior executive officer.
(ii) Provide compensation to any senior executive officer at a rate
exceeding that officer's average rate of compensation (excluding
bonuses, stock options, and profit-sharing) during the 12 calendar
months preceding the calendar month in which the institution became
undercapitalized.
(B) Failing to submit plan
The appropriate Federal banking agency shall not grant any approval
under subparagraph (A) with respect to an institution that has failed to
submit an acceptable capital restoration plan.
(5) Discretion to impose certain additional restrictions
The agency may impose 1 or more of the restrictions prescribed by
regulation under subsection (i) of this section if the agency determines
that those restrictions are necessary to carry out the purpose of this
section.
(6) Consultation with functional regulators
Before the agency or Corporation makes a determination under
paragraph (2)(I) with respect to an affiliate that is a broker, dealer,
government securities broker, government securities dealer, investment
company, or investment adviser, the agency or Corporation shall consult
with the Securities and Exchange Commisssion /1/ and, in the case of any
other affiliate which is subject to any financial responsibility or
capital requirement, any other functional regulator (as defined in
section 1841(s) of this title) of such affiliate with respect to the
proposed determination of the agency or the Corporation and actions
pursuant to such determination.
(g) More stringent treatment based on other supervisory criteria
(1) In general
If the appropriate Federal banking agency determines (after notice
and an opportunity for hearing) that an insured depository institution
is in an unsafe or unsound condition or, pursuant to section 1818(b)(8)
of this title, deems the institution to be engaging in an unsafe or
unsound practice, the agency may --
(A) if the institution is well capitalized, reclassify the
institution as adequately capitalized;
(B) if the institution is adequately capitalized, require the
institution to comply with 1 or more provisions of subsections (d) and
(e) of this section, as if the institution were undercapitalized; or
(C) if the institution is undercapitalized, take any 1 or more
actions authorized under subsection (f)(2) of this section as if the
institution were significantly undercapitalized.
(2) Contents of plan
Any plan required under paragraph (1) shall specify the steps that
the insured depository institution will take to correct the unsafe or
unsound condition or practice. Capital restoration plans shall not be
required under paragraph (1)(B).
(h) Provisions applicable to critically undercapitalized institutions
(1) Activities restricted
Any critically undercapitalized insured depository institution shall
comply with restrictions prescribed by the Corporation under subsection
(i) of this section.
(2) Payments on subordinated debt prohibited
(A) In general
A critically undercapitalized insured depository institution shall
not, beginning 60 days after becoming critically undercapitalized, make
any payment of principal or interest on the institution's subordinated
debt.
(B) Exceptions
The Corporation may make exceptions to subparagraph (A) if --
(i) the appropriate Federal banking agency has taken action with
respect to the insured depository institution under paragraph (3)(A)(
ii); and
(ii) the Corporation determines that the exception would further the
purpose of this section.
(C) Limited exemption for certain subordinated debt
Until July 15, 1996, subparagraph (A) shall not apply with respect to
any subordinated debt outstanding on July 15, 1991, and not extended or
otherwise renegotiated after July 15, 1991.
(D) Accrual of interest
Subparagraph (A) does not prevent unpaid interest from accruing on
subordinated debt under the terms of that debt, to the extent otherwise
permitted by law.
(3) Conservatorship, receivership, or other action required
(A) In general
The appropriate Federal banking agency shall, not later than 90 days
after an insured depository institution becomes critically
undercapitalized --
(i) appoint a receiver (or, with the concurrence of the Corporation,
a conservator) for the institution; or
(ii) take such other action as the agency determines, with the
concurrence of the Corporation, would better achieve the purpose of this
section, after documenting why the action would better achieve that
purpose.
(B) Periodic redeterminations required
Any determination by an appropriate Federal banking agency under
subparagraph (A)(ii) to take any action with respect to an insured
depository institution in lieu of appointing a conservator or receiver
shall cease to be effective not later than the end of the 90-day period
beginning on the date that the determination is made and a conservator
or receiver shall be appointed for that institution under subparagraph
(A)(i) unless the agency makes a new determination under subparagraph
(A)(ii) at the end of the effective period of the prior determination.
(C) Appointment of receiver required if other action fails to restore
capital
(i) In general
Notwithstanding subparagraphs (A) and (B), the appropriate Federal
banking agency shall appoint a receiver for the insured depository
institution if the institution is critically undercapitalized on average
during the calendar quarter beginning 270 days after the date on which
the institution became critically undercapitalized.
(ii) Exception
Notwithstanding clause (i), the appropriate Federal banking agency
may continue to take such other action as the agency determines to be
appropriate in lieu of such appointment if --
(I) the agency determines, with the concurrence of the Corporation,
that (aa) the insured depository institution has positive net worth,
(bb) the insured depository institution has been in substantial
compliance with an approved capital restoration plan which requires
consistent improvement in the institution's capital since the date of
the approval of the plan, (cc) the insured depository institution is
profitable or has an upward trend in earnings the agency projects as
sustainable, and (dd) the insured depository institution is reducing the
ratio of nonperforming loans to total loans; and
(II) the head of the appropriate Federal banking agency and the
Chairperson of the Board of Directors both certify that the institution
is viable and not expected to fail.
(i) Restricting activities of critically undercapitalized
institutions
To carry out the purpose of this section, the Corporation shall, by
regulation or order --
(1) restrict the activities of any critically undercapitalized
insured depository institution; and
(2) at a minimum, prohibit any such institution from doing any of the
following without the Corporation's prior written approval:
(A) Entering into any material transaction other than in the usual
course of business, including any investment, expansion, acquisition,
sale of assets, or other similar action with respect to which the
depository institution is required to provide notice to the appropriate
Federal banking agency.
(B) Extending credit for any highly leveraged transaction.
(C) Amending the institution's charter or bylaws, except to the
extent necessary to carry out any other requirement of any law,
regulation, or order.
(D) Making any material change in accounting methods.
(E) Engaging in any covered transaction (as defined in section 371c(
b) of this title).
(F) Paying excessive compensation or bonuses.
(G) Paying interest on new or renewed liabilities at a rate that
would increase the institution's weighted average cost of funds to a
level significantly exceeding the prevailing rates of interest on
insured deposits in the institution's normal market areas.
(j) Certain Government-controlled institutions exempted
Subsections (e) through (i) of this section (other than paragraph (3)
of subsection (e) of this section) shall not apply --
(1) to an insured depository institution for which the Corporation or
the Resolution Trust Corporation is conservator; or
(2) to a bridge bank, none of the voting securities of which are
owned by a person or agency other than the Corporation or the Resolution
Trust Corporation.
(k) Review required when deposit insurance fund incurs material loss
(1) In general
If a deposit insurance fund incurs a material loss with respect to an
insured depository institution on or after July 1, 1993, the inspector
general of the appropriate Federal banking agency shall --
(A) make a written report to that agency reviewing the agency's
supervision of the institution (including the agency's implementation of
this section), which shall --
(i) ascertain why the institution's problems resulted in a material
loss to the deposit insurance fund; and
(ii) make recommendations for preventing any such loss in the future;
and
(B) provide a copy of the report to --
(i) the Comptroller General of the United States;
(ii) the Corporation (if the agency is not the Corporation);
(iii) in the case of a State depository institution, the appropriate
State banking supervisor; and
(iv) upon request by any Member of Congress, to that Member.
(2) Material loss incurred
For purposes of this subsection:
(A) Loss incurred
A deposit insurance fund incurs a loss with respect to an insured
depository institution --
(i) if the Corporation provides any assistance under section 1823(c)
of this title with respect to that institution; and --
(I) it is not substantially certain that the assistance will be fully
repaid not later than 24 months after the date on which the Corporation
initiated the assistance; or
(II) the institution ceases to repay the assistance in accordance
with its terms; or
(ii) if the Corporation is appointed receiver of the institution, and
it is or becomes apparent that the present value of the deposit
insurance fund's outlays with respect to that institution will exceed
the present value of receivership dividends or other payments on the
claims held by the Corporation.
(B) Material loss
A loss is material if it exceeds the greater of --
(i) $25,000,000; or
(ii) 2 percent of the institution's total assets at the time the
Corporation initiated assistance under section 1823(c) of this title or
was appointed receiver.
(3) Deadline for report
The inspector general of the appropriate Federal banking agency shall
comply with paragraph (1) expeditiously, and in any event (except with
respect to paragraph (1)(B)(iv)) as follows:
(A) If the institution is described in paragraph (2)(A)(i), during
the 6-month period beginning on the earlier of --
(i) the date on which the institution ceases to repay assistance
under section 1823(c) of this title in accordance with its terms, or
(ii) the date on which it becomes apparent that the assistance will
not be fully repaid during the 24-month period described in paragraph
(2)(A)(i).
(B) If the institution is described in paragraph (2)(A)(ii), during
the 6-month period beginning on the date on which it becomes apparent
that the present value of the deposit insurance fund's outlays with
respect to that institution will exceed the present value of
receivership dividends or other payments on the claims held by the
Corporation.
(4) Public disclosure required
(A) In general
The appropriate Federal banking agency shall disclose the report upon
request under section 552 of title 5 without excising --
(i) any portion under section 552(b)(5) of that title; or
(ii) any information about the insured depository institution under
paragraph (4) (other than trade secrets) or paragraph (8) of section
552(b) of that title.
(B) Exception
Subparagraph (A) does not require the agency to disclose the name of
any customer of the insured depository institution (other than an
institution-affiliated party), or information from which such a person's
identity could reasonably be ascertained.
(5) GAO review
The General Accounting Office shall annually --
(A) review reports made under paragraph (1) and recommend
improvements in the supervision of insured depository institutions
(including the implementation of this section); and
(B) verify the accuracy of 1 or more of those reports.
(6) Transition rule
During the period beginning on July 1, 1993, and ending on June 30,
1997, a loss incurred by the Corporation with respect to an insured
depository institution --
(A) with respect to which the Corporation initiates assistance under
section 1823(c) of this title during the period in question, or
(B) for which the Corporation was appointed receiver during the
period in question,
is material for purposes of this subsection only if that loss exceeds
the greater of $25,000,000 or the applicable percentage of the
institution's total assets at that time, set forth in the following
table:
The applicable For the following period: percentage is: July 1,
1993-June 30, 1994 7 percent July 1, 1994-June 30, 1995 5 percent
July 1, 1995-June 30, 1996 4 percent July 1, 1996-June 30, 1997 3
percent.
(l) Implementation
(1) Regulations and other actions
Each appropriate Federal banking agency shall prescribe such
regulations (in consultation with the other Federal banking agencies),
issue such orders, and take such other actions as are necessary to carry
out this section.
(2) Written determination and concurrence required
Any determination or concurrence by an appropriate Federal banking
agency or the Corporation required under this section shall be written.
(m) Other authority not affected
This section does not limit any authority of an appropriate Federal
banking agency, the Corporation, or a State to take action in addition
to (but not in derogation of) that required under this section.
(n) Administrative review of dismissal orders
(1) Timely petition required
A director or senior executive officer dismissed pursuant to an order
under subsection (f)(2)(F)(ii) of this section may obtain review of that
order by filing a written petition for reinstatement with the
appropriate Federal banking agency not later than 10 days after
receiving notice of the dismissal.
(2) Procedure
(A) Hearing required
The agency shall give the petitioner an opportunity to --
(i) submit written materials in support of the petition; and
(ii) appear, personally or through counsel, before 1 or more members
of the agency or designated employees of the agency.
(B) Deadline for hearing
The agency shall --
(i) schedule the hearing referred to in subparagraph (A)(ii) promptly
after the petition is filed; and
(ii) hold the hearing not later than 30 days after the petition is
filed, unless the petitioner requests that the hearing be held at a
later time.
(C) Deadline for decision
Not later than 60 days after the date of the hearing, the agency
shall --
(i) by order, grant or deny the petition;
(ii) if the order is adverse to the petitioner, set forth the basis
for the order; and
(iii) notify the petitioner of the order.
(3) Standard for review of dismissal orders
The petitioner shall bear the burden of proving that the petitioner's
continued employment would materially strengthen the insured depository
institution's ability --
(A) to become adequately capitalized, to the extent that the order is
based on the institution's capital level or failure to submit or
implement a capital restoration plan; and
(B) to correct the unsafe or unsound condition or unsafe or unsound
practice, to the extent that the order is based on subsection (g)(1) of
this section.
(o) Transition rules for savings associations
(1) RTC's role does not diminish care required of OTS
(A) In general
In implementing this section, the appropriate Federal banking agency
(and, to the extent applicable, the Corporation) shall exercise the same
care as if the Savings Association Insurance Fund (rather than the
Resolution Trust Corporation) bore the cost of resolving the problems of
insured savings associations described in clauses (i) and (ii)(II) of
section 1441a(b)(3)(A) of this title.
(B) Reports
Subparagraph (A) does not require reports under subsection (k) of
this section.
(2) Additional flexibility for certain savings associations
Subsections (e)(2), (f), and (h) of this section shall not apply
before July 1, 1994, to any insured savings association if --
(A) before December 19, 1991 --
(i) the savings association had submitted a plan meeting the
requirements of section 1464(t)(6)(A)(ii) of this title; and
(ii) the Director of the Office of Thrift Supervision had accepted
the plan;
(B) the plan remains in effect; and
(C) the savings association remains in compliance with the plan or is
operating under a written agreement with the appropriate Federal banking
agency.
(Sept. 21, 1950, ch. 967, 2(38), as added Dec. 19, 1991, Pub. L.
102-242, title I, 131(a), 105 Stat. 2253.)
The Securities Exchange Act of 1934, referred to in subsec. (e)(2)(
E)(ii)(III), is act June 6, 1934, ch. 404, 48 Stat. 881, as amended,
which is classified principally to chapter 2B ( 78a et seq.) of Title
15, Commerce and Trade. For complete classification of this Act to the
Code, see section 78a of Title 15 and Tables.
Section effective 1 year after Dec. 19, 1991, see section 131(f) of
Pub. L. 102-242, set out as an Effective Date of 1991 Amendment note
under section 1464 of this title.
Section 131(b) of Pub. L. 102-242 provided that: ''Each appropriate
Federal banking agency (as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)) (and the Corporation, acting in the
Corporation's capacity as insurer of depository institutions under that
Act (12 U.S.C. 1811 et seq.)) shall, after notice and opportunity for
comment, promulgate final regulations under section 38 of the Federal
Deposit Insurance Act (12 U.S.C. 1831o) (as added by subsection (a)) not
later than 9 months after the date of enactment of this Act (Dec. 19,
1991), and those regulations shall become effective not later than 1
year after that date of enactment.''
Section 131(e) of Pub. L. 102-242 provided that:
''(1) Dismissal from office. -- Section 38(f)(2)(F)(ii) of the
Federal Deposit Insurance Act (12 U.S.C. 1831o(f)(2)(F)(ii)) (as added
by subsection (a)) shall not apply with respect to --
''(A) any director whose current term as a director commenced on or
before the date of enactment of this Act (Dec. 19, 1991) and has not
been extended --
''(i) after that date of enactment, or
''(ii) to evade section 38(f)(2)(F)(ii); or
''(B) any senior executive officer who accepted employment in his or
her current position on or before the d'te of enactment of this Act and
whose contract of employment has not been renewed or renegotiated --
''(i) after that date of enactment, or
''(ii) to evade section 38(f)(2)(F)(ii).
''(2) Restricting compensation. -- Section 38(f)(4) of the Federal
Deposit Insurance Act (12 U.S.C. 1831o(f)(4)) (as added by subsection
(a)) shall not apply with respect to any senior executive officer who
accepted employment in his or her current position on or before the date
of enactment of this Act (Dec. 19, 1991) and whose contract of
employment has not been renewed or renegotiated --
''(A) after that date of enactment, or
''(B) to evade section 38(f)(4).''
/1/ So in original. Probably should be ''Commission''.
12 USC 1831p. Notice of branch closure
TITLE 12 -- BANKS AND BANKING
(a) Notice to appropriate Federal banking agency
(1) In general
An insured depository institution which proposes to close any branch
shall submit a notice of the proposed closing to the appropriate Federal
banking agency not later than the first day of the 90-day period ending
on the date proposed for the closing.
(2) Contents of notice
A notice under paragraph (1) shall include --
(A) a detailed statement of the reasons for the decision to close the
branch; and
(B) statistical or other information in support of such reasons.
(b) Notice to customers
(1) In general
An insured depository institution which proposes to close a branch
shall provide notice of the proposed closing to its customers.
(2) Contents of notice
Notice under paragraph (1) shall consist of --
(A) posting of a notice in a conspicuous manner on the premises of
the branch proposed to be closed during not less than the 30-day period
ending on the date proposed for that closing; and
(B) inclusion of a notice in --
(i) at least one of any regular account statements mailed to
customers of the branch proposed to be closed, or
(ii) in a separate mailing,
by not later than the beginning of the 90-day period ending on the
date proposed for that closing.
(c) Adoption of policies
Each insured depository institution shall adopt policies for closings
of branches of the institution.
(Sept. 21, 1950, ch. 967, 2(39), as added Dec. 19, 1991, Pub. L.
102-242, title II, 228, 105 Stat. 2308.)
Another section 2(39) of act Sept. 21, 1950, ch. 967, was added by
section 132(a) of Pub. L. 102-242, and is classified to section 1831s
of this title.
12 USC 1831q. FDIC affordable housing program
TITLE 12 -- BANKS AND BANKING
(a) Purpose
The purpose of this section is to provide homeownership and rental
housing opportunities for very low-income, low-income, and
moderate-income families.
(b) Funding and limitations of program
(1) Duration of program
The provisions of this section shall be effective, subject to the
provisions of paragraph (2), only during the 3-year period beginning
upon the commencement of the first fiscal year for which amounts are
provided pursuant to paragraph (2)(A).
(2) Annual fiscal limitations
(A) In general
In each fiscal year during the 3-year period referred to in paragraph
(1), the provisions of this section shall apply only --
(i) to such extent or in such amounts as are provided in
appropriations Acts for any losses resulting during the fiscal year from
the sale of properties under this section, except that such amounts for
losses may not exceed $30,000,000 in any fiscal year; and
(ii) to the extent that amounts are provided in appropriations Acts
pursuant to subparagraph (C) for any other costs relating to the program
under this section.
(B) Definition of losses
For purposes of this paragraph, the amount of losses resulting from
the sale of properties under this section during any fiscal year shall
be the amount equal to the sum of any affordable housing discounts
reasonably anticipated to accrue during the fiscal year.
(C) Authorization of appropriations
There are authorized to be appropriated, for each fiscal year during
the 3-year period referred to in paragraph (1), such sums as may be
necessary for any costs of the program under this section other than
losses resulting from the sale of properties under this section.
(D) Other definitions
For purposes of this paragraph:
(i) Affordable housing discount
The term ''affordable housing discount'' means, with respect to any
eligible residential or eligible condominium property transferred under
this section by the Corporation, the difference (if any) between the
realizable disposition value of the property and the actual sale price
of the property under this section.
(ii) Realizable disposition value
The term ''realizable disposition value'' means the estimated sale
price that the Corporation reasonably would be able to obtain upon the
sale of a property by the Corporation under the provisions of this
chapter, not including this section, and any other applicable laws. Not
later than the expiration of the 120-day period beginning upon the
commencement of the first fiscal year for which amounts are provided
pursuant to paragraph (2)(A), the Corporation shall establish, and
publish in the Federal Register, procedures for determining the
realizable disposition value of a property transferred under this
section, which shall take into consideration such factors as the
Corporation considers appropriate, including the actual sale prices of
properties disposed of by the Resolution Trust Corporation under section
1441a(c) of this title, the prices of other properties sold under
similar programs, and the appraised value of the property transferred
under this section. Until such procedures are established, the
Corporation may consider the realizable disposition value of any
eligible residential or condominium property to be equal to the
appraised value of the property.
(3) Existing contracts
The provisions of this section shall not apply to any eligible
residential property or any eligible condominium property that is
subject to an agreement entered into by the Corporation before the
commencement of the first fiscal year for which amounts are provided
pursuant to paragraph (2)(A) that provides for any other disposition of
the property.
(c) Rules governing disposition of eligible single family properties
(1) Notice to clearinghouses
Within a reasonable period of time after acquiring title to an
eligible single family property, the Corporation shall provide written
notice to clearinghouses. Such notice shall contain basic information
about the property, including but not limited to location, condition,
and information relating to the estimated fair market value of the
property. Each clearinghouse shall make such information available,
upon request, to other public agencies, other nonprofit organizations,
and qualifying households. The Corporation shall allow public agencies,
nonprofit organizations, and qualifying households reasonable access to
eligible single family property for purposes of inspection.
(2) Offers to sell to nonprofit organizations, public agencies, and
qualifying households
During the 180-day period beginning on the date on which the
Corporation makes an eligible single family property available for sale,
the Corporation shall offer to sell the property to --
(A) qualifying households (including qualifying households with
members who are veterans); or
(B) public agencies or nonprofit organizations that agree to (i) make
the property available for occupancy by and maintain it as affordable
for low-income families (including low-income families with members who
are veterans) for the remaining useful life of such property, or (ii)
make the property available for purchase by any such family who, except
as provided in paragraph (4), agrees to occupy the property as a
principal residence for at least 12 months and certifies in writing that
the family intends to occupy the property for at least 12 months.
The restrictions described in clause (i) of subparagraph (B) shall be
contained in the deed or other recorded instrument. If, upon the
expiration of such 180-day period, no qualifying household, public
agency, or nonprofit organization has made a bona fide offer to purchase
the property, the Corporation may offer to sell the property to any
purchaser. The Corporation shall actively market eligible single family
properties for sale to low-income families and to low-income families
with members who are veterans.
(3) Recapture of profits from resale
Except as provided in paragraph (4), if any eligible single family
property sold (A) to a qualifying household, or (B) to a low-income
family pursuant to paragraph (2)(B)(ii), subsection (j)(3)(A) of this
section, or subsection (k)(2) of this section, is resold by the
qualifying household or low-income family during the 1-year period
beginning upon initial acquisition by the household or low-income
family, the Corporation shall recapture 75 percent of the amount of any
proceeds from the resale that exceed the sum of (i) the original sale
price for the acquisition of the property by the qualifying household or
low-income family, (ii) the costs of any improvements to the property
made after the date of the acquisition, and (iii) any closing costs in
connection with the acquisition.
(4) Exceptions to recapture requirement
(A) Relocation
The Corporation may in its discretion waive the applicability (i) to
any qualifying household of the requirement under paragraph (3) and the
requirements relating to residency of a qualifying household under
subsections /1/ (p)(12)(B) and (C) of this section, and (ii) to any
low-income family of the requirement under paragraph (3) and the
residency requirements under paragraph (2)(B)(ii). The Corporation may
grant any such waiver only for good cause shown, including any necessary
relocation of the qualifying household or low-income family.
(B) Other recapture provisions
The requirement under paragraph (3) shall not apply to any eligible
single family property for which, upon resale by the qualifying
household or low-income family during the 1-year period beginning upon
initial acquisition by the household or family, a portion of the sale
proceeds or any subsidy provided in connection with the acquisition of
the property by the household or family is required to be recaptured or
repaid under any other Federal, State, or local law (including section
143(m) of title 26) or regulation or under any sale agreement.
(5) Exception to avoid displacement of existing residents
Notwithstanding the first sentence of paragraph (2), during the
180-day period following the date on which the Corporation makes an
eligible single family property available for sale, the Corporation may
sell the property to the household residing in the property, but only if
(A) such household was residing in the property at the time notice
regarding the property was provided to clearinghouses under paragraph
(1), (B) such sale is necessary to avoid the displacement of, and
unnecessary hardship to, the resident household, (C) the resident
household intends to occupy the property as a principal residence for at
least 12 months, and (D) the resident household certifies in writing
that the household intends to occupy the property for at least 12
months.
(d) Rules governing disposition of eligible multifamily housing
properties
(1) Notice to clearinghouses
Within a reasonable period of time after acquiring title to an
eligible multifamily housing property, the Corporation shall provide
written notice to clearinghouses. Such notice shall contain basic
information about the property, including but not limited to location,
number of units (identified by number of bedrooms), and information
relating to the estimated fair market value of the property. Each
clearinghouse shall make such information available, upon request, to
qualifying multifamily purchasers. The Corporation shall allow
qualifying multifamily purchasers reasonable access to eligible
multifamily housing properties for purposes of inspection.
(2) Expression of serious interest
Qualifying multifamily purchasers may give written notice of serious
interest in a property during a period ending 90 days after the time the
Corporation provides notice under paragraph (1). The notice of serious
interest shall be in such form and include such information as the
Corporation may prescribe.
(3) Notice of readiness for sale
Upon the expiration of the period referred to in paragraph (2) for a
property, the Corporation shall provide written notice to any qualifying
multifamily purchaser that has expressed serious interest in the
property. Such notice shall specify the minimum terms and conditions
for sale of the property.
(4) Offers by qualifying multifamily purchasers
A qualifying multifamily purchaser receiving notice in accordance
with paragraph (3) shall have 45 days (from the date notice is received)
to make a bona fide offer to purchase the property. The Corporation
shall accept an offer that complies with the terms and conditions
established by the Corporation. If, before the expiration of such
45-day period, any offer to purchase a property initially accepted by
the Corporation is subsequently rejected or fails (for any reason), the
Corporation shall accept another offer to purchase the property made
during such period that complies with the terms and conditions
established by the Corporation (if such another offer is made). The
preceding sentence may not be construed to require a qualifying
multifamily purchaser whose offer is accepted during the 45-day period
to purchase the property before the expiration of the period.
(5) Extension of restricted offer periods
The Corporation may provide notice to clearinghouses regarding, and
offer for sale under the provisions of paragraphs (1) through (4), any
eligible multifamily housing property --
(A) in which no qualifying multifamily purchaser has expressed
serious interest during the period referred to in paragraph (2), or
(B) for which no qualifying multifamily purchaser has made a bona
fide offer before the expiration of the period referred to in paragraph
(4),
except that the Corporation may, in the discretion of the
Corporation, alter the duration of the periods referred to in paragraphs
(2) and (4) in offering any property for sale under this paragraph.
(6) Sale of multifamily properties to other purchasers
(A) Timing
If, upon the expiration of the period referred to in paragraph (2),
no qualifying multifamily purchaser has expressed serious interest in a
property, the Corporation may offer to sell the property, individually
or in combination with other properties, to any purchaser.
(B) Limitation on combination sales
The Corporation may not sell in combination with other properties any
property for which a qualifying multifamily purchaser has expressed
serious interest in purchasing individually.
(C) Expiration of offer period
If, upon the expiration of the period referred to in paragraph (4),
no qualifying multifamily purchaser has made an offer to purchase a
property, the Corporation may offer to sell the property, individually
or in combination with other properties, to any purchaser.
(7) Low-income occupancy requirements
(A) Single property purchases
With respect to any purchase of a single eligible multifamily housing
property by a qualifying multifamily purchaser under paragraph (4) or
(5) --
(i) not less than 35 percent of all dwelling units purchased shall be
made available for occupancy by and maintained as affordable for
low-income and very low-income families during the remaining useful life
of the property in which the units are located; provided that
(ii) not less than 20 percent of all dwelling units purchased shall
be made available for occupancy by and maintained as affordable for very
low-income families during the remaining useful life of the property in
which the units are located.
(B) Aggregation requirements for multiproperty purchases
With respect to any purchase under paragraph (4) or (5) by a
qualifying multifamily purchaser involving more than one eligible
multifamily housing property as a part of the same negotiation, with
respect to which the purchaser intends to aggregate the low-income
occupancy required under this paragraph over the total number of units
so purchased --
(i) not less than 40 percent of the aggregate number of all dwelling
units purchased shall be made available for occupancy by and maintained
as affordable for low-income and very low-income families during the
remaining useful life of the building or structure in which the units
are located; provided that
(ii) not less than 20 percent of the aggregate number of all dwelling
units purchased shall be made available for occupancy by and maintained
as affordable for very low-income families during the remaining useful
life of the building or structure in which the units are located; and
further provided that
(iii) not less than 10 percent of the dwelling units in each separate
property purchased shall be made available for occupancy by and
maintained as affordable for low-income families during the remaining
useful life of the property in which the units are located.
The requirements of this paragraph shall be contained in the deed or
other recorded instrument.
(8) Exemptions
(A) Continued occupancy of current residents
No purchaser of an eligible multifamily property may terminate the
occupancy of any person residing in the property on the date of purchase
for purposes of meeting /1/ low-income occupancy requirement applicable
to the property under paragraph (7). The purchaser shall be considered
to be in compliance with this subsection if each newly vacant dwelling
unit is reserved for low-income occupancy until the low-income occupancy
requirement is met.
(B) Financial infeasibility
The Secretary or the State housing finance agency for the State in
which an eligible multifamily housing property is located may
temporarily reduce the low-income occupancy requirements under paragraph
(7) applicable to the property, if the Secretary or such agency
determines that an owner's compliance with such requirements is no
longer financially feasible. The owner of the property shall make a
good-faith effort to return low-income occupancy to the level required
under paragraph (7), and the Secretary or the State housing finance
agency, as appropriate, shall review the reduction annually to determine
whether financial infeasibility continues to exist.
(e) Rent limitations
(1) In general
With respect to properties under paragraph (2), rents charged to
tenants for units made available for occupancy by very low-income
families shall not exceed 30 percent of the adjusted income of a family
whose income equals 50 percent of the median income for the area, as
determined by the Secretary, with adjustment for family size. Rents
charged to tenants for units made available for occupancy by low-income
families other than very low-income families shall not exceed 30 percent
of the adjusted income of a family whose income equals 65 percent of the
median income for the area, as determined by the Secretary, with
adjustment for family size.
(2) Applicability
The rent limitations under this subsection shall apply to any
eligible single family property sold pursuant to subsection (c)(2)(B)(
i) of this section and to any eligible multifamily housing property sold
pursuant to subsection (d) of this section.
(f) Preferences for sales
(1) In general
In selling any eligible multifamily housing property or combinations
of eligible residential properties, the Corporation shall give
preference, among substantially similar offers, to the offer that would
reserve the highest percentage of dwelling units for occupancy or
purchase by very low-income and low-income families and would retain
such affordability for the longest term.
(2) Multiproperty purchases
The Corporation shall give preference, among substantially similar
offers made under paragraph (4) or (5) of subsection (d) of this section
to purchase more than one eligible multifamily housing property as a
part of the same negotiation, to offers made by purchasers who agree to
maintain low-income occupancy in each separate property purchased in
compliance with the levels required for properties under subsection
(d)(7)(A) of this section.
(3) Definition of substantially similar offers
For purposes of this subsection, a given offer to purchase eligible
multifamily housing property or combinations of such properties shall be
considered to be substantially similar to another offer if the purchase
price under such given offer is not less than 85 percent of the purchase
price under the other offer.
(g) Financing sales
(1) Assistance by Corporation
(A) Sale price
The Corporation shall establish a market value for each eligible
multifamily housing property. The Corporation shall sell eligible
multifamily housing property at the net realizable market value, except
that the Corporation may agree to sell eligible multifamily housing
property at a price below the net realizable market value to the extent
necessary to facilitate an expedited sale of such property and enable a
public agency or nonprofit organization to comply with the low-income
occupancy requirements applicable to such property under subsection
(d)(7) of this section. The Corporation may sell eligible single family
property or eligible condominium property to qualifying households,
nonprofit organizations, and public agencies without regard to any
minimum sale price.
(B) Purchase loan
The Corporation may provide a loan at market interest rates to any
purchaser of eligible residential property for all or a portion of the
purchase price, which loan shall be secured by a first or second
mortgage on the property. The Corporation may provide the loan at below
market interest rates to the extent necessary to facilitate an expedited
sale of eligible residential property and permit (i) a low-income family
to purchase an eligible single family property under subsection (c) of
this section, or (ii) a public agency or nonprofit organization to
comply with the low-income occupancy requirements applicable to the
purchase of an eligible residential property under subsection (c) or (d)
of this section. The Corporation shall provide loans under this
subparagraph in a form permitting sale or transfer of the loan to a
subsequent holder. In providing financing for combinations of eligible
multifamily housing properties under this section, the Corporation may
hold a participating share, including a subordinate participation.
(2) Assistance by HUD
The Secretary shall take such action as may be necessary to expedite
the processing of applications for assistance under section 202 of the
Housing Act of 1959 (12 U.S.C. 1701q), the United States Housing Act of
1937 (42 U.S.C. 1437 et seq.), title IV of the Stewart B. McKinney
Homeless Assistance Act (42 U.S.C. 11361 et seq.), and the National
Housing Act (12 U.S.C. 1701 et seq.), to enable any organization or
individual to purchase eligible residential property.
(3) Assistance by FMHA
The Secretary of Agriculture shall take such action as may be
necessary to expedite the processing of applications for assistance
under title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) to
enable any organization or individual to purchase eligible residential
property.
(4) Exception to disposition rules
Notwithstanding the requirements under paragraphs (1), (2), (3), (4),
(6), and (8) of subsection (d) of this section, the Corporation may
provide for the disposition of eligible multifamily housing properties
as necessary to facilitate purchase of such properties for use in
connection with section 202 of the Housing Act of 1959 (12 U.S. C.
1701q).
(5) Bulk acquisitions under Home Investment Partnerships Act
(A) Purchase price
In providing for bulk acquisition of eligible single family
properties by participating jurisdictions for inclusion in affordable
housing activities under title II of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12721 et seq.), the Corporation shall
agree to an amount to be paid for acquisition of such properties. The
acquisition price shall include discounts for bulk purchase and for
holding of the property such that the acquisition price for each
property shall not exceed the fair market value of the property, as
valued individually.
(B) Exemptions
To the extent necessary to facilitate sale of properties under this
paragraph, the requirements of subsections (c) and (f) of this section
and of paragraph (1) of this subsection shall not apply to such
transactions and properties involved in such transactions.
(C) Inventories
To facilitate acquisitions by such participating jurisdictions, the
Corporation shall provide the participating jurisdictions with
inventories of eligible single family properties not less than 4 times
each year.
(h) Coordination with other programs
(1) Use of secondary market agencies
In the disposition of eligible residential properties, the
Corporation (in consultation with the Secretary) shall explore
opportunities to work with secondary market entities to provide housing
for low- and moderate-income families.
(2) Credit enhancement
(A) In general
With respect to such properties, the Secretary may, consistent with
statutory authorities, work through the Federal Housing Administration,
the Government National Mortgage Association, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, and
other secondary market entities to develop risk-sharing structures,
mortgage insurance, and other credit enhancements to assist in the
provision of property ownership, rental, and cooperative housing
opportunities for low- and moderate-income families.
(B) Certain tax-exempt bonds
The Corporation may provide credit enhancements with respect to
tax-exempt bonds issued on behalf of nonprofit organizations pursuant to
section 103, and subpart A of part IV of subchapter A of chapter 1, of
title 26, with respect to the disposition of eligible residential
properties for the purposes described in subparagraph (A).
(3) National Affordable Housing Act
The Corporation shall coordinate the disposition of eligible
residential property under this section with appropriate programs and
provisions of, and amendments made by, the Cranston-Gonzalez National
Affordable Housing Act, including titles II (42 U.S.C. 12721 et seq.)
and IV of such Act.
(i) Exemption for certain transactions with insured depository
institutions
The provisions of this section shall not apply with respect to any
eligible residential property after thd date the Corporation enters into
a contract to sell such property to an insured depository institution
(as defined in section 1813 of this title), including any sale in
connection with a transfer of all or substantially all of the assets of
a closed insured depository institution (including such property) to
another insured depository institution.
(j) Transfer of certain eligible residential properties to State
housing agencies for disposition
Notwithstanding subsections (c), (d), (f), and (g) of this section,
the Corporation may transfer eligible residential properties to the
State housing finance agency or any other State housing agency for the
State in which the property is located, or to any local housing agency
in whose jurisdiction the property is located. Transfers of eligible
residential properties under this subsection may be conducted by direct
sale, consignment sale, or any other method the Corporation considers
appropriate and shall be subject to the following requirements:
(1) Individual or bulk transfer
The Corporation may transfer such properties individually or in bulk,
as agreed to by the Corporation and the State housing finance agency or
State or local housing agency.
(2) Acquisition price
The acquisition price paid by the State housing finance agency or
State or local housing agency to the Corporation for properties
transferred under this subsection shall be an amount agreed to by the
Corporation and the transferee agency.
(3) Low-income use
Any State housing finance agency or State or local housing agency
acquiring properties under this subsection shall offer to sell or
transfer the properties only as follows:
(A) Eligible single family properties
For eligible single family properties --
(i) to purchasers described under subparagraphs (A) and (B) of
subsection (c)(2) of this section;
(ii) if the purchaser is a purchaser described under subsection (c)(
2)(B)(i) of this section, subject to the rent limitations under
subsection (e)(1) of this section;
(iii) subject to the requirement in the second sentence of subsection
(c)(2) of this section; and
(iv) subject to recapture by the Corporation of excess proceeds from
resale of the properties under paragraphs (3) and (4) of subsection (c)
of this section.
(B) Eligible multifamily housing properties
For eligible multifamily housing properties --
(i) to qualifying multifamily purchasers;
(ii) subject to the low-income occupancy requirements under
subsection (d)(7) of this section;
(iii) subject to the provisions of subsection (d)(8) of this section;
(iv) subject to a preference, among financially acceptable offers, to
the offer that would reserve the highest percentage of dwelling units
for occupancy or purchase by very low- and low-income families and would
retain such affordability for the longest term; and
(v) subject to the rent limitations under subsection (e)(1) of this
section.
(4) Affordability
The State housing finance agency or State or local housing agency
shall endeavor to make the properties transferred under this subsection
more affordable to low-income families based upon the extent to which
the acquisition price of a property under paragraph (2) is less than the
market value of the property.
(k) Exception for sales to nonprofit organizations and public
agencies
(1) Suspension of offer periods
With respect to any eligible residential property, the Corporation
may (in the discretion of the Corporation) suspend any of the
requirements of paragraphs (1) and (2) of subsection (c) of this section
and paragraphs (1) through (4) of subsection (d) of this section, as
applicable, but only to the extent that for the duration of the
suspension the Corporation negotiates the sale of the property to a
nonprofit organization or public agency. If the property is not sold
pursuant to such negotiations, the requirements of any provisions
suspended shall apply upon the termination of the suspension. Any time
period referred to in such subsections shall toll for the duration of
any suspension under this paragraph.
(2) Use restrictions
(A) Eligible single family property
Any eligible single family property sold under this subsection shall
be (i) made available for occupancy by and maintained as affordable for
low-income families for the remaining useful life of the property, or
made available for purchase by such families, (ii) subject to the rent
limitations under subsection (e)(1) of this section, (iii) subject to
the requirements relating to residency of a qualifying household under
subsection (p)(12) of this section and to residency of a low-income
family under subsection (c)(2)(B) of this section, and (iv) subject to
recapture by the Corporation of excess proceeds from resale of the
property under paragraphs (3) and (4) of subsection (c) of this section.
(B) Eligible multifamily housing property
Any eligible multifamily housing property sold under this subsection
shall comply with the low-income occupancy requirements under subsection
(d)(7) of this section and shall be subject to the rent limitations
under subsection (e)(1) of this section.
(l) Rules governing disposition of eligible condominium property
(1) Notice to clearinghouses
Within a reasonable period of time after acquiring title to an
eligible condominium property, the Corporation shall provide written
notice to clearinghouses. Such notice shall contain basic information
about the property. Each clearinghouse shall make such information
available, upon request, to purchasers described in subparagraphs (A)
through (D) of paragraph (2). The Corporation shall allow such
purchasers reasonable access to an eligible condominium property for
purposes of inspection.
(2) Offers to sell
For the 180-day period following the date on which the Corporation
makes an eligible condominium property available for sale, the
Corporation may offer to sell the property, at the discretion of the
Corporation, to 1 or more of the following purchasers:
(A) Qualifying households.
(B) Nonprofit organizations.
(C) Public agencies.
(D) For-profit entities.
(3) Low-income occupancy requirements
(A) In general
Except as provided in subparagraph (B), any nonprofit organization,
public agency, or for-profit entity that purchases an eligible
condominium property shall (i) make the property available for occupancy
by and maintain it as affordable for low-income families for the
remaining useful life of the property, or (ii) make the property
available for purchase by any such family who, except as provided in
paragraph (5), agrees to occupy the property as a principal residence
for at least 12 months and certifies in writing that the family intends
to occupy the property for at least 12 months. The restriction described
in clause (i) of the preceding sentence shall be contained in the deed
or other recorded instrument.
(B) Multiple-unit purchases
If any nonprofit organization, public agency, or for-profit entity
purchases more than 1 eligible condominium property as a part of the
same negotiation or purchase, the Corporation may (in the discretion of
the Corporation) waive the requirement under subparagraph (A) and
provide instead that not less than 35 percent of all eligible
condominium properties purchased shall be (i) made available for
occupancy by and maintained as affordable for low-income families for
the remaining useful life of the property, or (ii) made available for
purchase by any such family who, except as provided in paragraph (5),
agrees to occupy the property as a principal residence for at least 12
months and certifies in writing that the family intends to occupy the
property for at least 12 months. The restriction described in clause
(i) of the preceding sentence shall be contained in the deed or other
recorded instrument.
(C) Sale to other purchasers
If, upon the expiration of the 180-day period referred to in
paragraph (2), no purchaser described in subparagraphs (A) through (D)
of paragraph (2) has made a bona fide offer to purchase the property,
the Corporation may offer to sell the property to any other purchaser.
(4) Recapture of profits from resale
Except as provided in paragraph (5), if any eligible condominium
property sold (A) to a qualifying household, or (B) to a low-income
family pursuant to paragraph (3)(A)(ii) or (3)(B)(ii), is resold by the
qualifying household or low-income family during the 1-year period
beginning upon initial acquisition by the household or family, the
Corporation shall recapture 75 percent of the amount of any proceeds
from the resale that exceed the sum of (i) the original sale price for
the acquisition of the property by the qualifying household or
low-income family, (ii) the costs of any improvements to the property
made after the date of the acquisition, and (iii) any closing costs in
connection with the acquisition.
(5) Exception to recapture requirement
The Corporation (or its successor) may in its discretion waive the
applicability to any qualifying household or low-income family of the
requirement under paragraph (4) and the requirements relating to
residency of a qualifying household or low-income family (under
subsection (p)(12) of this section and paragraph (3) of this subsection,
respectively). The Corporation may grant any such a waiver only for
good cause shown, including any necessary relocation of the qualifying
household or low-income family.
(6) Limitations on multiple unit purchases
The Corporation may not sell or offer to sell as part of the same
negotiation or purchase any eligible condominium properties that are not
located in the same condominium project (as such term is defined in
section 3603 of title 15). The preceding sentence may not be construed
to require all eligible condominium properties offered or sold as part
of the same negotiation or purchase to be located in the same structure.
(7) Rent limitations
Rents charged to tenants of eligible condominium properties made
available for occupancy by very low-income families shall not exceed 30
percent of the adjusted income of a family whose income equals 50
percent of the median income for the area, as determined by the
Secretary, with adjustment for family size. Rents charged to tenants of
eligible condominium properties made available for occupancy by
low-income families other than very low-income families shall not exceed
30 percent of the adjusted income of a family whose income equals 65
percent of the median income for the area, as determined by the
Secretary, with adjustment for family size.
(m) Liability provisions
(1) In general
The provisions of this section, or any failure by the Corporation to
comply with such provisions, may not be used by any person to attack or
defeat any title to property after it is conveyed by the Corporation.
(2) Low-income occupancy
The low-income occupancy requirements under subsections (c), (d),
(j)(3), (k)(2), and (l)(3) of this section shall be judicially
enforceable against purchasers of property under this section and their
successors in interest by affected very low- and low-income families,
State housing finance agencies, and any agency, corporation, or
authority of the United States. The parties specified in the preceding
sentence shall be entitled to reasonable attorney fees upon prevailing
in any such judicial action.
(3) Clearinghouses
A clearinghouse shall not be subject to suit for its failure to
comply with the requirements of this section.
(4) Corporation
The Corporation shall not be liable to any depositor, creditor, or
shareholder of any insured depository institution for which the
Corporation has been appointed receiver, or any claimant against such an
institution, because the disposition of assets of the institution under
this section affects the amount of return from the assets.
(n) Affordable Housing Program Office
The Corporation shall establish an Affordable Housing Program Office
within the Corporation to carry out the provisions of this section and
shall dedicate certain staff of the Corporation to the office.
(o) Report
To the extent applicable, in the annual report submitted by the
Secretary to the Congress under section 3536 of title 42, the Secretary
shall include a detailed description of any activities under this
section, including recommendations for any additional authority the
Secretary considers necessary to implement the provisions of this
section.
(p) Definitions
For purposes of this section:
(1) Adjusted income and income
The terms ''adjusted income'' and ''income'' shall have the meaning
given such terms in section 3(b) of the United States Housing Act of
1937 (42 U.S.C. 1437a(b)).
(2) Clearinghouse
The term ''clearinghouse'' means --
(A) the State housing finance agency for the State in which an
eligible residential property or eligible condominium property is
located;
(B) the Office of Community Investment (or other comparable division)
within the Federal Housing Finance Board; and
(C) any national nonprofit organizations (including any nonprofit
entity established by the corporation established under title IX of the
Housing and Community Development Act of 1968 (42 U.S.C. 3931 et seq.))
that the Corporation determines has the capacity to act as a
clearinghouse for information.
(3) Corporation
The term ''Corporation'' means the Federal Deposit Insurance
Corporation acting in its corporate capacity or its capacity as
receiver.
(4) Eligible condominium property
The term ''eligible condominium property'' means a condominium unit,
as such term is defined in section 3603 of title 15 --
(A) to which such Corporation acquires title; and
(B) that has an appraised value that does not exceed the applicable
dollar amount set forth in the first sentence of section 203(b)(2) of
the National Housing Act (12 U.S.C. 1709(b)(2)) (which may, in the
discretion of the Corporation, take into consideration any increase of
such amount for high-cost areas).
(5) Eligible multifamily housing property
The term ''eligible multifamily housing property'' means a property
consisting of more than 4 dwelling units --
(A) to which the Corporation acquires title; and
(B) that has an appraised value that does not exceed the applicable
dollar amount set forth in section 221(d)(3)(ii) of the National Housing
Act (12 U.S.C. 1715l(d)(3)(ii)) for elevator-type structures (which may,
in the discretion of the Corporation, take into consideration any
increase of such amount for high-cost areas).
(6) Eligible residential property
The term ''eligible residential property'' includes eligible single
family properties and eligible multifamily housing properties.
(7) Eligible single family property
The term ''eligible single family property'' means a 1- to 4-family
residence (including a manufactured home) --
(A) to which the Corporation acquires title; and
(B) that has an appraised value that does not exceed the applicable
dollar amount set forth in the first sentence of section 203(b)(2) of
the National Housing Act (12 U.S.C. 1709(b)(2)) (which may, in the
discretion of the Corporation, take into consideration any increase of
such amount for high-cost areas).
(8) Low-income families
The term ''low-income families'' means families and individuals whose
incomes do not exceed 80 percent of the median income of the area
involved, as determined by the Secretary, with adjustment for family
size.
(9) Net realizable market value
The term ''net realizable market value'' means a price below the
market value that takes into account (A) any reductions in holding costs
resulting from the expedited sale of a property, including foregone real
estate taxes, insurance, maintenance costs, security costs, and loss of
use of funds, and (B) the avoidance, if applicable, of fees paid to real
estate brokers, auctioneers, or other individuals or organizations
involved in the sale of property owned by the Corporation.
(10) Nonprofit organization
The term ''nonprofit organization'' means a private organization
(including a limited equity cooperative) --
(A) no part of the earnings of which inures to the benefit of any
member, shareholder, founder, contributor, or individual; and
(B) that is approved by the Corporation as to financial
responsibility.
(11) Public agency
The term ''public agency'' means any Federal, State, local, or other
governmental entity, and includes any public housing agency.
(12) Qualifying household
The term ''qualifying household'' means a household --
(A) who intends to occupy eligible single family property as a
principal residence;
(B) who agrees to occupy the property as a principal residence for at
least 12 months;
(C) who certifies in writing that the household intends to occupy the
property as a principal residence for at least 12 months; and
(D) whose income does not exceed 115 percent of the median income for
the area, as determined by the Secretary, with adjustment for family
size.
(13) Qualifying multifamily purchaser
The term ''qualifying multifamily purchaser'' means --
(A) a public agency;
(B) a nonprofit organization; or
(C) a for-profit entity, which makes a commitment (for itself or any
related entity) to comply with the low-income occupancy requirements
under subsection (d)(7) of this section for any eligible multifamily
housing property for which an offer to purchase is made during or after
the periods specified under subsection (d) of this section.
(14) Secretary
The term ''Secretary'' means the Secretary of Housing and Urban
Development.
(15) State housing finance agency
The term ''State housing finance agency'' means the public agency,
authority, corporation, or other instrumentality of a State that has the
authority to provide residential mortgage loan financing throughout the
State.
(16) Very low-income families
The term ''very low-income families'' means families and individuals
whose incomes do not exceed 50 percent of the median income of the area
involved, as determined by the Secretary, with adjustment for family
size.
(Sept. 21, 1950, ch. 967, 2(40), as added Dec. 19, 1991, Pub. L.
102-242, title II, 241(a), 105 Stat. 2317.)
The United States Housing Act of 1937, referred to in subsec. (g)(
2), is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L.
93-383, title II, Aug. 22, 1974, 88 Stat. 653, which is classified
generally to chapter 8 ( 1437 et seq.) of Title 42, The Public Health
and Welfare. For complete classification of this Act to the Code, see
Short Title note set out under section 1437 of Title 42 and Tables.
The Stewart B. McKinney Homeless Assistance Act, referred to in
subsec. (g)(2), is Pub. L. 100-77, July 22, 1987, 101 Stat. 482, as
amended. Title IV of the Act is classified principally to subchapter IV
( 11361 et seq.) of chapter 119 of Title 42. For complete
classification of this Act to the Code, see Short Title note set out
under section 11301 of Title 42 and Tables.
The National Housing Act, referred to in subsec. (g)(2), is act June
27, 1934, ch. 847, 48 Stat. 1246, as amended, which is classified
principally to chapter 13 ( 1701 et seq.) of this title. For complete
classification of this Act to the Code, see section 1701 of this title
and Tables.
The Housing Act of 1949, referred to in subsec. (g)(3), is act July
15, 1949, ch. 338, 63 Stat. 413, as amended. Title V of the Act is
classified generally to subchapter III ( 1471 et seq.) of chapter 8A of
Title 42. For complete classification of this Act to the Code, see
Short Title note set out under section 1441 of Title 42 and Tables.
The Cranston-Gonzalez National Affordable Housing Act, referred to in
subsecs. (g)(5)(A) and (h)(3), is Pub. L. 101-625, Nov. 28, 1990, 104
Stat. 4079. Title II of the Act, also known as the ''HOME Investment
Partnerships Act'', is classified principally to subchapter II ( 12721
et seq.) of chapter 130 of Title 42. Title IV of the Act, also known as
the ''Homeownership and Opportunity Through HOPE Act'', enacted
subchapter II-A ( 1437aaa et seq.) of chapter 8 of Title 42 and
subchapter IV ( 12871 et seq.) of chapter 130 of Title 42, amended
sections 1437c, 1437f, 1437l, 1437p, 1437r, and 1437s of Title 42 and
section 1709 of this title, and enacted provisions set out as notes
under sections 1437c, 1437aa, and 1437aaa of Title 42. For complete
classification of this Act to the Code, see Short Title note set out
under section 12701 of Title 42 and Tables.
The Housing and Community Development Act of 1968, referred to in
subsec. (p)(2)(C), probably means the Housing and Urban Development Act
of 1968, Pub. L. 90-448, Aug. 1, 1968, 82 Stat. 476, as amended.
Title IX of the Act is classified principally to chapter 49 ( 3931 et
seq.) of Title 42. For complete classification of this Act to the Code,
see Short Title of 1968 Amendments note set out under section 1701 of
this title and Tables.
Another section 2(40) of act Sept. 21, 1950, ch. 967, was added by
section 151(a)(1) of Pub. L. 102-242, and is classified to section
1831t of this title.
Section 241(b) of Pub. L. 102-242 provided that: ''The Federal
Deposit Insurance Corporation and the Resolution Trust Corporation shall
consult and coordinate with each other in carrying out their respective
responsibilities under the affordable housing programs under section 42
of the Federal Deposit Insurance Act (probably should be ''section 40'',
which is classified to this section) and section 21A(c) of the Federal
Home Loan Bank Act (12 U.S.C. 1441a(c)). Such corporations shall develop
any procedures, and may enter into any agreements, necessary to provide
for the coordinated, efficient, and effective operation of such
programs.''
/1/ So in original. Probably should be ''subsection''.
/1/ So in original. Probably should be ''meeting the''.
12 USC 1831r. Payments on foreign deposits prohibited
TITLE 12 -- BANKS AND BANKING
(a) In general
Notwithstanding any other provision of law, the Corporation, the
Board of Governors of the Federal Reserve System, the Resolution Trust
Corporation, any other agency, department, and instrumentality of the
United States, and any corporation owned or controlled by the United
States may not, directly or indirectly, make any payment or provide any
assistance, guarantee, or transfer under this chapter or any other
provision of law in connection with any insured depository institution
which would have the direct or indirect effect of satisfying, in whole
or in part, any claim against the institution for obligations of the
institution which would constitute deposits as defined in section 1813(
l) of this title but for subparagraphs (A) and (B) of section 1813(l)(
5) of this title.
(b) Exception
Subsection (a) of this section shall not apply to any payment,
assistance, guarantee, or transfer made or provided by the Corporation
if the Board of Directors determines in writing that such action is not
inconsistent with any requirement of section 1823(c) of this title.
(c) Discount window lending
No provision of this section shall be construed as prohibiting any
Federal Reserve bank from making advances or otherwise extending credit
pursuant to the Federal Reserve Act (12 U.S.C. 221 et seq.) to any
insured depository institution to the extent that such advance or
extension of credit is consistent with the conditions and limitations
imposed under section 10B of such Act (12 U.S.C. 347b).
(Sept. 21, 1950, ch. 967, 2(41), as added Dec. 19, 1991, Pub. L.
102-242, title III, 312, 105 Stat. 2367.)
The Federal Reserve Act, referred to in subsec. (c), is act Dec.
23, 1913, ch. 6, 38 Stat. 251, as amended, which is classified
principally to chapter 3 ( 221 et seq.) of this title. For complete
classification of this Act to the Code, see References in Text note set
out under section 226 of this title and Tables.
12 USC 1831s. Standards for safety and soundness
TITLE 12 -- BANKS AND BANKING
(a) Operational and managerial standards
Each appropriate Federal banking agency shall, for all insured
depository institutions and depository institution holding companies,
prescribe --
(1) standards relating to --
(A) internal controls, information systems, and internal audit
systems, in accordance with section 1831m of this title;
(B) loan documentation;
(C) credit underwriting;
(D) interest rate exposure;
(E) asset growth; and
(F) compensation, fees, and benefits, in accordance with subsection
(c) of this section; and
(2) such other operational and managerial standards as the agency
determines to be appropriate.
(b) Asset quality, earnings, and stock valuation standards
Each appropriate Federal banking agency shall, for all insured
depository institutions and depository institution holding companies,
prescribe --
(1) standards specifying --
(A) a maximum ratio of classified assets to capital;
(B) minimum earnings sufficient to absorb losses without impairing
capital; and
(C) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of the institution or company; and
(2) such other standards relating to asset quality, earnings, and
valuation as the agency determines to be appropriate.
(c) Compensation standards
Each appropriate Federal banking agency shall, for all insured
depository institutions, prescribe --
(1) standards prohibiting as an unsafe and unsound practice any
employment contract, compensation or benefit agreement, fee arrangement,
perquisite, stock option plan, postemployment benefit, or other
compensatory arrangement that --
(A) would provide any executive officer, employee, director, or
principal shareholder of the institution with excessive compensation,
fees or benefits; or
(B) could lead to material financial loss to the institution;
(2) standards specifying when compensation, fees, or benefits
referred to in paragraph (1) are excessive, which shall require the
agency to determine whether the amounts are unreasonable or
disproportionate to the services actually performed by the individual by
considering --
(A) the combined value of all cash and noncash benefits provided to
the individual;
(B) the compensation history of the individual and other individuals
with comparable expertise at the institution;
(C) the financial condition of the institution;
(D) comparable compensation practices at comparable institutions,
based upon such factors as asset size, geographic location, and the
complexity of the loan portfolio or other assets;
(E) for postemployment benefits, the projected total cost and benefit
to the institution;
(F) any connection between the individual and any fraudulent act or
omission, breach of trust or fiduciary duty, or insider abuse with
regard to the institution; and
(G) other factors that the agency determines to be relevant; and
(3) such other standards relating to compensation, fees, and benefits
as the agency determines to be appropriate.
(d) Standards to be prescribed by regulation
Standards under subsections (a), (b), and (c) of this section shall
be prescribed by regulation.
(e) Failure to meet standards
(1) Plan required
(A) In general
If the appropriate Federal banking agency determines that an insured
depository institution or depository institution holding company fails
to meet any standard prescribed under subsection (a), (b), or (c) of
this section the agency shall require the institution or company to
submit an acceptable plan to the agency within the time allowed by the
agency under subparagraph (C).
(B) Contents of plan
Any plan required under subparagraph (A) shall specify the steps that
the institution or company will take to correct the deficiency. If the
institution is undercapitalized, the plan may be part of a capital
restoration plan.
(C) Deadlines for submission and review of plans
The appropriate Federal banking agency shall by regulation establish
deadlines that --
(i) provide institutions and companies with reasonable time to submit
plans required under subparagraph (A), and generally require the
institution or company to submit a plan not later than 30 days after the
agency determines that the institution or company fails to meet any
standard prescribed under subsection (a), (b), or (c) of this section;
and
(ii) require the agency to act on plans expeditiously, and generally
not later than 30 days after the plan is submitted.
(2) Order required if institution or company fails to submit or
implement plan
If an insured depository institution or depository institution
holding company fails to submit an acceptable plan within the time
allowed under paragraph (1)(C), or fails in any material respect to
implement a plan accepted by the appropriate Federal banking agency, the
agency, by order --
(A) shall require the institution or company to correct the
deficiency; and
(B) may do 1 or more of the following until the deficiency has been
corrected:
(i) Prohibit the institution or company from permitting its average
total assets during any calendar quarter to exceed its average total
assets during the preceding calendar quarter, or restrict the rate at
which the average total assets of the institution or company may
increase from one calendar quarter to another.
(ii) Require the institution or company to increase its ratio of
tangible equity to assets.
(iii) Take the action described in section 1831o(f)(2)(C) of this
title.
(iv) Require the institution or company to take any other action that
the agency determines will better carry out the purpose of section 1831o
of this title than any of the actions described in this subparagraph.
(3) Restrictions mandatory for certain institutions
In complying with paragraph (2), the appropriate Federal banking
agency shall take 1 or more of the actions described in clauses (i)
through (iii) of paragraph (2)(B) if --
(A) the agency determines that the insured depository institution
fails to meet any standard prescribed under subsection (a)(1) or (b)(1)
of this section;
(B) the institution has not corrected the deficiency; and
(C) either --
(i) during the 24-month period before the date on which the
institution first failed to meet the standard --
(I) the institution commenced operations; or
(II) 1 or more persons acquired control of the institution; or
(ii) during the 18-month period before the date on which the
institution first failed to meet the standard, the institution underwent
extraordinary growth, as defined by the agency.
(f) Definitions
For purposes of this section, the terms ''average'' and ''capital
restoration plan'' have the same meanings as in section 1831o of this
title.
(g) Other authority not affected
The authority granted by this section is in addition to any other
authority of the Federal banking agencies.
(Sept. 21, 1950, ch. 967, 2(39), as added Dec. 19, 1991, Pub. L.
102-242, title I, 132(a), 105 Stat. 2267.)
Another section 2(39) of act Sept. 21, 1950, ch. 967, was added by
section 228 of Pub. L. 102-242, and is classified to section 1831p of
this title.
Section 132(c) of Pub. L. 102-242 provided that: ''The amendment
made by subsection (a) (enacting this section) shall become effective on
the earlier of --
''(1) the date on which final regulations promulgated in accordance
with subsection (b) (set out below) become effective; or
''(2) December 1, 1993.''
Section 132(b) of Pub. L. 102-242 provided that: ''Each appropriate
Federal banking agency (as defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)) shall promulgate final regulations under
section 39 of the Federal Deposit Insurance Act (12 U.S.C. 1831s) (as
added by subsection (a)) not later than August 1, 1993.''
12 USC 1831t. Depository institutions lacking Federal deposit insurance
TITLE 12 -- BANKS AND BANKING
(a) Annual independent audit of private deposit insurers
(1) Audit required
Any private deposit insurer shall obtain an annual audit from an
independent auditor using generally accepted auditing standards. The
audit shall include a determination of whether the private deposit
insurer follows generally accepted accounting principles and has set
aside sufficient reserves for losses.
(2) Providing copies of audit report
(A) Private deposit insurer
The private deposit insurer shall provide a copy of the audit report
--
(i) to each depository institution the deposits of which are insured
by the private deposit insurer, not later than 14 days after the audit
is completed; and
(ii) to the appropriate supervisory agency of each State in which
such an institution receives deposits, not later than 7 days after the
audit is completed.
(B) Depository institution
Any depository institution the deposits of which are insured by the
private deposit insurer shall provide a copy of the audit report, upon
request, to any current or prospective customer of the institution.
(b) Disclosure required
Any depository institution lacking Federal deposit insurance shall,
within the United States, do the following:
(1) Periodic statements; account records
Include conspicuously in all periodic statements of account, on each
signature card, and on each passbook, certificate of deposit, or similar
instrument evidencing a deposit a notice that the institution is not
federally insured, and that if the institution fails, the Federal
Government does not guarantee that depositors will get back their money.
(2) Advertising; premises
Include conspicuously in all advertising and at each place where
deposits are normally received a notice that the institution is not
federally insured.
(3) Acknowledgment of risk
Receive deposits only for the account of persons who have signed a
written acknowledgment that the institution is not federally insured,
and that if the institution fails, the Federal Government does not
guarantee that they will get back their money.
(c) Manner and content of disclosure
To ensure that current and prospective customers understand the risks
involved in foregoing Federal deposit insurance, the Federal Trade
Commission, by regulation or order, shall prescribe the manner and
content of disclosure required under this section.
(d) Exceptions for institutions not receiving retail deposits
The Federal Trade Commission may, by regulation or order, make
exceptions to subsection (b) of this section for any depository
institution that, within the United States, does not receive initial
deposits of less than $100,000 from individuals who are citizens or
residents of the United States, other than money received in connection
with any draft or similar instrument issued to transmit money.
(e) Eligibility for Federal deposit insurance
(1) In general
Except as permitted by the Federal Trade Commission, in consultation
with the Federal Deposit Insurance Corporation, no depository
institution (other than a bank, including an unincorporated bank)
lacking Federal deposit insurance may use the mails or any
instrumentality of interstate commerce to receive or facilitate
receiving deposits, unless the appropriate supervisor of the State in
which the institution is chartered has determined that the institution
meets all eligibility requirements for Federal deposit insurance,
including --
(A) in the case of an institution described in section 461(b)(1)(A)(
iv) of this title, all eligibility requirements set forth in the Federal
Credit Union Act (12 U.S.C. 1751 et seq.) and regulations of the
National Credit Union Administration; and
(B) in the case of any other institution, all eligibility
requirements set forth in this chapter and regulations of the
Corporation.
(2) Authority of FDIC and NCUA not affected
No determination under paragraph (1) shall bind, or otherwise affect
the authority of, the National Credit Union Administration or the
Corporation.
(f) Definitions
For purposes of this section:
(1) Appropriate supervisor
The ''appropriate supervisor'' of a depository institution means the
agency primarily responsible for supervising the institution.
(2) Depository institution
The term ''depository institution'' includes --
(A) any entity described in section 461(b)(1)(A)(iv) of this title;
and
(B) any entity that, as determined by the Federal Trade Commission --
(i) is engaged in the business of receiving deposits; and
(ii) could reasonably be mistaken for a depository institution by the
entity's current or prospective customers.
(3) Lacking Federal deposit insurance
A depository institution lacks Federal deposit insurance if the
institution is not either --
(A) an insured depository institution; or
(B) an insured credit union, as defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(4) Private deposit insurer
The term ''private deposit insurer'' means any entity insuring the
deposits of any depository institution lacking Federal deposit
insurance.
(g) Enforcement
Compliance with the requirements of this section, and any regulation
prescribed or order issued under this section, shall be enforced under
the Federal Trade Commission Act (15 U.S.C. 41 et seq.) by the Federal
Trade Commission.
(Sept. 21, 1950, ch. 967, 2(40), as added Dec. 19, 1991, Pub. L.
102-242, title I, 151(a)(1), 105 Stat. 2282.)
The Federal Credit Union Act, referred to in subsec. (e)(1)(A), is
act June 26, 1934, ch. 750, 48 Stat. 1216, as amended, which is
classified generally to chapter 14 ( 1751 et seq.) of this title. For
complete classification of this Act to the Code, see section 1751 of
this title and Tables.
The Federal Trade Commission Act, referred to in subsec. (g), is act
Sept. 26, 1914, ch. 311, 38 Stat. 717, as amended, which is
classified generally to subchapter I ( 41 et seq.) of chapter 2 of Title
15, Commerce and Trade. For complete classification of this Act to the
Code, see section 58 of Title 15 and Tables.
Another section 2(40) of act Sept. 21, 1950, ch. 967, was added by
section 241(a) of Pub. L. 102-242, and is classified to section 1831q
of this title.
Section 151(a)(2) of Pub. L. 102-242 provided that: ''Section 40 of
the Federal Deposit Insurance Act (12 U.S.C. 1831t) (as added by
paragraph (1)) shall become effective on the date of enactment of this
Act (Dec. 19, 1991), except that --
''(A) paragraphs (1) and (2) of subsection (b) shall become effective
1 year after the date of enactment of this Act;
''(B) during the period beginning 1 year after that date of enactment
of this Act and ending 30 months after that date of enactment,
subsection (b)(1) shall apply with ', and that if the institution fails,
the Federal Government does not guarantee that depositors will get back
their money' omitted;
''(C) subsection (e) shall become effective 2 years after that date
of enactment; and
''(D) subsection (b)(3) shall become effective 30 months after that
date of enactment.''
Section 151(b) of Pub. L. 102-242 provided that:
''(1) Deadline for initial independent audit. -- The initial annual
audit under section 40(a)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1831t(a)(1)) (as added by subsection (a)) shall be completed not
later than 120 days after the date of enactment of this Act (Dec. 19,
1991).
''(2) Business plan required. -- Not later than 240 days after the
date of enactment of this Act (Dec. 19, 1991), any private deposit
insurer shall provide a business plan to each appropriate supervisor of
each State in which deposits are received by any depository institution
lacking Federal deposit insurance the deposits of which are insured by a
private deposit insurer. The business plan shall explain in detail why
the private deposit insurer is viable, and shall, at a minimum --
''(A) describe the insurer's --
''(i) underwriting standards;
''(ii) resources, including trends in and forecasts of assets,
income, and expenses;
''(iii) risk-management program, including examination and
supervision, problem case resolution, and remedies; and
''(B) include, for the preceding 5 years, copies of annual audits,
annual reports, and annual meeting agendas and minutes.
''(3) Definitions. -- For purposes of this subsection, the terms
'appropriate supervisor', 'deposit', 'depository institution', and
'lacking Federal deposit insurance' have the same meaning as in section
40(f) of the Federal Deposit Insurance Act (12 U.S.C. 1831t(f)) (as
added by subsection (a)).''
12 USC 1832. Withdrawals by negotiable or transferable instruments for
transfers to third parties
TITLE 12 -- BANKS AND BANKING
(a) Authority of depository institution; applicability
(1) Notwithstanding any other provision of law but subject to
paragraph (2), a depository institution is authorized to permit the
owner of a deposit or account on which interest or dividends are paid to
make withdrawals by negotiable or transferable instruments for the
purpose of making transfers to third parties.
(2) Paragraph (1) shall apply only with respect to deposits or
accounts which consist solely of funds in which the entire beneficial
interest is held by one or more individuals or by an organization which
is operated primarily for religious, philanthropic, charitable,
educational, political, or other similar purposes and which is not
operated for profit, and with respect to deposits of public funds by an
officer, employee, or agent of the United States, any State, county,
municipality, or political subdivision thereof, the District of
Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any
territory or possession of the United States, or any political
subdivision thereof.
(b) ''Depository institution'' defined
For purposes of this section, the term ''depository institution''
means --
(1) any insured bank as defined in section 1813 of this title;
(2) any State bank as defined in section 1813 of this title;
(3) any mutual savings bank as defined in section 1813 of this title;
(4) any savings bank as defined in section 1813 of this title;
(5) any insured institution as defined in section 1724 /1/ of this
title; and
(6) any building and loan association or savings and loan association
organized and operated according to the laws of the State in which it is
chartered or organized; and, for purposes of this paragraph, the term
''State'' means any State of the United States, the District of
Columbia, any territory of the United States, Puerto Rico, Guam,
American Samoa, or the Virgin Islands.
(c) Fine
Any depository institution which violates this section shall be fined
$1,000 for each violation.
(Pub. L. 93-100, 2, Aug. 16, 1973, 87 Stat. 342; Pub. L. 94-222, 2,
Feb. 27, 1976, 90 Stat. 197; Pub. L. 95-630, title XIII, 1301, Nov. 10,
1978, 92 Stat. 3712; Pub. L. 96-161, title I, 106, Dec. 28, 1979, 93
Stat. 1235; Pub. L. 96-221, title III, 303, Mar. 31, 1980, 94 Stat.
146; Pub. L. 97-320, title VII, 706(a), Oct. 15, 1982, 96 Stat. 1540;
Pub. L. 100-86, title I, 109, Aug. 10, 1987, 101 Stat. 579.)
Section 1724 of this title, referred to in subsec. (b)(5), was
repealed by Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat.
363.
Section was not enacted as part of the Federal Deposit Insurance Act
which comprises this chapter.
1987 -- Subsec. (a)(2). Pub. L. 100-86 inserted ''political,'' after
''educational,''.
1982 -- Subsec. (a)(2). Pub. L. 97-320 inserted provisions relating
to deposits of public funds.
1980 -- Subsec. (a). Pub. L. 96-221 designated existing provisions
as par. (1) inserted provisions expanding authorization for withdrawals
from selected States to the entire United States, and added par. (2).
1979 -- Subsec. (a). Pub. L. 96-161 inserted ''New Jersey,'' after
''New York,''.
1978 -- Subsec. (a). Pub. L. 95-630 inserted ''New York,'' after
''Vermont,''.
1976 -- Subsec. (a). Pub. L. 94-222 authorized withdrawals by
negotiable or transferable instruments in the States of Connecticut,
Rhode Island, Maine, and Vermont.
Amendment by Pub. L. 96-221 effective Dec. 31, 1980, see section
306 of Pub. L. 96-221, set out as a note under section 371a of this
title.
Section 1302 of title XIII of Pub. L. 95-630 provided that: ''This
title (amending this section) shall take effect upon enactment (Nov.
10, 1978).''
Section effective on thirtieth day after Aug. 16, 1973, see section
8 of Pub. L. 93-100, set out as a note under section 1469 of this
title.
/1/ See References in Text note below.
12 USC 1833. Annual report to Congress
TITLE 12 -- BANKS AND BANKING
(a) In general
Each agency described in subsection (b) of this section shall submit
an annual report to the Congress which shall contain the following
information with respect to the 12-month period for which such report is
made:
(1) The number of formal and informal supervisory, administrative,
and civil enforcement actions initiated by such agency during such
12-month period, and the number of such actions completed by such agency
during such 12-month period, including actions initiated or taken with
respect to memoranda of understanding, written agreements, cease and
desist orders (including temporary orders), suspension orders, removal
or prohibition orders, and civil money penalty assessments.
(2) The number of individuals and institutions against whom civil
money penalties were assessed by such agency during such 12-month
period, the amount of each such penalty, the total amount of all such
penalties, and data on uncollected penalties for such period and prior
years.
(3) A description of all other enforcement efforts and initiatives
relating to unsafe and unsound practices, criminal misconduct, and
insider abuse which were undertaken by such agency during such 12-month
period.
(4) The number of criminal referrals made to the Department of
Justice.
(5) With respect to the criminal referrals received by the Department
of Justice and with respect to investigations of similar matters
initiated without such a referral, the number and status of grand jury
investigations and investigations being conducted by the Federal Bureau
of Investigation, and the number and disposition of prosecutions and
civil actions commenced by the Attorney General.
(6) Recommendations concerning the need for additional legislation or
financial resources.
(b) Agencies required to submit reports
The agencies referred to in subsection (a) of this section are as
follows:
(1) The Comptroller of the Currency.
(2) The Board of Governors of the Federal Reserve System.
(3) The Federal Deposit Insurance Corporation.
(4) The Federal Housing Finance Board.
(5) The Office of Thrift Supervision.
(6) The National Credit Union Administration.
(7) The Attorney General of the United States.
(Pub. L. 101-73, title IX, 918, Aug. 9, 1989, 103 Stat. 487.)
Section was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
12 USC 1833a. Civil penalties
TITLE 12 -- BANKS AND BANKING
(a) In general
Whoever violates any provision of law to which this section is made
applicable by subsection (c) of this section shall be subject to a civil
penalty in an amount assessed by the court in a civil action under this
section.
(b) Maximum amount of penalty
(1) Generally
The amount of the civil penalty shall not exceed $1,000,000.
(2) Special rule for continuing violations
In the case of a continuing violation, the amount of the civil
penalty may exceed the amount described in paragraph (1) but may not
exceed the lesser of $1,000,000 per day or $5,000,000.
(3) Special rule for violations creating gain or loss
(A) If any person derives pecuniary gain from the violation, or if
the violation results in pecuniary loss to a person other than the
violator, the amount of the civil penalty may exceed the amounts
described in paragraphs (1) and (2) but may not exceed the amount of
such gain or loss.
(B) As used in this paragraph, the term ''person'' includes the Bank
Insurance Fund, the Savings Association Insurance Fund, and the National
Credit Union Share Insurance Fund.
(c) Violations to which penalty is applicable
This section applies to a violation of, or a conspiracy to violate --
(1) section 215, 656, 657, 1005, 1006, 1007, 1014, or 1344 of title
18; or
(2) section 287, 1001, 1032, /1/ 1341 or 1343 of title 18 affecting a
federally insured financial institution.
This section shall apply to violations occurring on or after August
10, 1984.
(d) Attorney General to bring action
A civil action to recover a civil penalty under this section shall be
commenced by the Attorney General.
(e) Burden of proof
In a civil action to recover a civil penalty under this section, the
Attorney General must establish the right to recovery by a preponderance
of the evidence.
(f) Administrative subpoenas
(1) In general
For the purpose of conducting a civil investigation in contemplation
of a civil proceeding under this section, the Attorney General may --
(A) administer oaths and affirmations;
(B) take evidence; and
(C) by subpoena, summon witnesses and require the production of any
books, papers, correspondence, memoranda, or other records which the
Attorney General deems relevant or material to the inquiry. Such
subpoena may require the attendance of witnesses and the production of
any such records from any place in the United States at any place in the
United States designated by the Attorney General.
(2) Procedures applicable
The same procedures and limitations as are provided with respect to
civil investigative demands in subsections (g), (h), and (j) of section
1968 of title 18 apply with respect to a subpoena issued under this
subsection. Process required by such subsections to be served upon the
custodian shall be served on the Attorney General. Failure to comply
with an order of the court to enforce such subpoena shall be punishable
as contempt.
(3) Limitation
In the case of a subpoena for which the return date is less than 5
days after the date of service, no person shall be found in contempt for
failure to comply by the return date if such person files a petition
under paragraph (2) not later than 5 days after the date of service.
(g) Statute of limitations
A civil action under this section may not be commenced later than 10
years after the cause of action accrues.
(Pub. L. 101-73, title IX, 951, Aug. 9, 1989, 103 Stat. 498; Pub.
L. 101-647, title XXV, 2533, 2596(d), Nov. 29, 1990, 104 Stat. 4882,
4908.)
Section was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
1990 -- Subsec. (c). Pub. L. 101-647, 2596(d)(2), which directed
amendment of subsec. (c)(1) by adding at the end thereof a flush
sentence ''This section shall apply to violations occurring on or after
August 10, 1984.'', was executed by making the insertion after par.
(2), to reflect the probable intent of Congress.
Subsec. (c)(2). Pub. L. 101-647, 2596(d)(1), which directed amendment
of subsec. (c)(1) by inserting ''287, 1001, 1032,'' before ''1341;'',
was executed by making the insertion before ''1341 or 1343'' in subsec.
(c)(2), to reflect the probable intent of Congress.
Subsec. (g). Pub. L. 101-647, 2533, added subsec. (g).
3322.
/1/ See 1990 Amendment note below.
12 USC 1833b. Comparability in compensation schedules
TITLE 12 -- BANKS AND BANKING
The Federal Deposit Insurance Corporation, the Comptroller of the
Currency, the National Credit Union Administration Board, the Federal
Housing Finance Board, the Thrift Depositor Protection Oversight Board
of the Resolution Trust Corporation, the Farm Credit Administration, and
the Office of Thrift Supervision, in establishing and adjusting
schedules of compensation and benefits which are to be determined solely
by each agency under applicable provisions of law, shall inform the
heads of the other agencies and the Congress of such compensation and
benefits and shall seek to maintain comparability regarding compensation
and benefits.
(Pub. L. 101-73, title XII, 1206, Aug. 9, 1989, 103 Stat. 523; Pub.
L. 102-233, title III, 302(a), Dec. 12, 1991, 105 Stat. 1767.)
Section was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
Oversight Board redesignated Thrift Depositor Protection Oversight
Board, effective Feb. 1, 1992, see section 302(a) of Pub. L. 102-233,
set out as a note under section 1441a of this title.
12 USC 1833c. Comptroller General audit and access to records
TITLE 12 -- BANKS AND BANKING
(a) Audit of agencies or other persons performing functions under
banking laws
(1) In general
Except as provided in paragraph (2), all agencies, corporations,
organizations, and other persons of any description which perform any
function or activity under this Act, or any other Act which is amended
by this Act, shall be subject to audit by the Comptroller General of the
United States with respect to such function or activity.
(2) Exceptions
Paragraph (1) shall not apply to --
(A) any function or activity of the Board of Governors of the Federal
Reserve System or the Federal Reserve banks that is described in any
paragraph of section 714(b) of title 31; and
(B) any function or activity of the Federal National Mortgage
Association, except as provided in section 1723a(j) of this title.
(b) Audit of persons providing certain goods or services
All persons and organizations which, by contract, grant, or
otherwise, provide goods or services to, or receive financial assistance
from, any agency or other person performing functions or activities
under this Act shall be subject to audit by the Comptroller General with
respect to such provision of goods or services or receipt of financial
assistance.
(c) Provisions applicable to audits under this section
(1) Nature and scope of audit
The Comptroller General shall determine the nature, scope, and terms
and conditions of audits conducted under this section.
(2) Coordination with other provisions of law
The authority of the Comptroller General under this section shall be
in addition to any audit authority available to the Comptroller General
under other provisions of this Act or any other law.
(3) Rights of access, examination, and copying
The Comptroller General, and any duly authorized representative of
the Comptroller General, shall have access to, and the right to examine
and copy, all records and other recorded information in any form, and to
examine any property, within the possession or control of any agency or
person which is subject to audit under this section which the
Comptroller General deems relevant to an audit conducted under this
section.
(4) Enforcement of right of access
The Comptroller General's right of access to information under this
section shall be enforceable pursuant to section 716 of title 31.
(5) Maintenance of confidential records
The provisions of section 716(e) of title 31 shall apply to
information obtained by the Comptroller General under this section.
(Pub. L. 101-73, title XII, 1213, Aug. 9, 1989, 103 Stat. 528.)
This Act, referred to in subsecs. (a)(1), (b), and (c)(2), is Pub.
L. 101-73, Aug. 9, 1989, 103 Stat. 183, known as the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989. For
complete classification of this Act to the Code, see Short Title of 1989
Amendment note set out under section 1811 of this title and Tables.
Section was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
12 USC 1833d. Repealed. Pub. L. 102-242, title I, 121(b), Dec. 19,
1991, 105 Stat. 2251
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 101-73, title XII, 1215, Aug. 9, 1989, 103 Stat.
529, related to establishment of uniform capital and accounting
standards for federally-insured depository institutions. See section
1831n of this title.
12 USC 1833e. Equal opportunity
TITLE 12 -- BANKS AND BANKING
(a) In general
For purposes of this Act, Executive Order Numbered 11478, providing
for equal employment opportunity in the Federal Government, shall apply
to --
(1) the Comptroller of the Currency;
(2) the Director of the Office of Thrift Supervision;
(3) the Federal home loan banks;
(4) the Federal Deposit Insurance Corporation;
(5) the Thrift Depositor Protection Oversight Board of the Resolution
Trust Corporation; and
(6) the Resolution Trust Corporation.
(b) Affirmative program for equal employment opportunity
For purposes of this Act, sections 1 and 2 of Executive Order
Numbered 11478, providing for the adoption and implementation of equal
employment opportunity, shall apply to the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation.
(c) Solicitation of contracts
The Federal Deposit Insurance Corporation, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the Federal
Housing Finance Board, the Thrift Depositor Protection Oversight Board
of the Resolution Trust Corporation, and the Resolution Trust
Corporation shall each prescribe regulations to establish and oversee a
minority outreach program within each such agency to ensure inclusion,
to the maximum extent possible, of minorities and women, and entities
owned by minorities and women, including financial institutions,
investment banking firms, underwriters, accountants, and providers of
legal services, in all contracts entered into by the agency with such
persons or entities, public and private, in order to manage the
institutions and their assets for which the agency is responsible or to
perform such other functions authorized under any law applicable to such
agency.
(d) Report to Congress
Before the end of the 180-day period beginning on August 9, 1989 --
(1) the Federal Deposit Insurance Corporation;
(2) the Comptroller of the Currency;
(3) the Director of the Office of Thrift Supervision;
(4) the Federal Housing Finance Board;
(5) the Thrift Depositor Protection Oversight Board of the Resolution
Trust Corporation;
(6) the Resolution Trust Corporation;
(7) the Federal Home Loan Mortgage Corporation; and
(8) the Federal National Mortgage Association,
shall each submit to the Congress a report containing a complete
description of the actions taken by such agency pursuant to subsections
(a) and (b) of this section and such recommendations for administrative
and legislative action as each such agency may determine to be
appropriate to carry out the purposes of such subsection.
(Pub. L. 101-73, title XII, 1216, Aug. 9, 1989, 103 Stat. 529; Pub.
L. 102-233, title III, 302(a), Dec. 12, 1991, 105 Stat. 1767.)
This Act, referred to in subsecs. (a) and (b), is Pub. L. 101-73,
Aug. 9, 1989, 103 Stat. 183, known as the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989. For complete
classification of this Act to the Code, see Short Title of 1989
Amendment note set out under section 1811 of this title and Tables.
Executive Order Numbered 11478, referred to in subsecs. (a) and (b),
is set out as a note under section 2000e of Title 42, The Public Health
and Welfare.
Section was enacted as part of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
Oversight Board redesignated Thrift Depositor Protection Oversight
Board, effective Feb. 1, 1992, see section 302(a) of Pub. L. 102-233,
set out as a note under section 1441a of this title.
12 USC 1834. Reduced assessment rate for deposits attributable to
lifeline accounts
TITLE 12 -- BANKS AND BANKING
(a) Qualification of lifeline accounts by Federal Reserve Board
(1) In general
The Board of Governors of the Federal Reserve System, and the Federal
Deposit Insurance Corporation shall establish minimum requirements for
accounts providing basic transaction services for consumers at insured
depository institutions in order for such accounts to qualify as
lifeline accounts for purposes of this section and section 1817(b)(10)
of this title.
(2) Factors to be considered
In determining the minimum requirements under paragraph (1) for
lifeline accounts at insured depository institutions, the Board and the
Corporation shall consider the following factors:
(A) Whether the account is available to provide basic transaction
services for individuals who maintain a balance of less than $1,000 or
such other amount which the Board may determine to be appropriate.
(B) Whether any service charges or fees to which the account is
subject, if any, for routine transactions do not exceed a minimal
amount.
(C) Whether any minimum balance or minimum opening requirement to
which the account is subject, if any, is not more than a minimal amount.
(D) Whether checks, negotiable orders of withdrawal, or similar
instruments for making payments or other transfers to third parties may
be drawn on the account.
(E) Whether the depositor is permitted to make more than a minimal
number of withdrawals from the account each month by any means described
in subparagraph (D) or any other means.
(F) Whether a monthly statement itemizing all transactions for the
monthly reporting period is made available to the depositor with respect
to such account or a passbook is provided in which all transactions with
respect to such account are recorded.
(G) Whether depositors are permitted access to tellers at the
institution for conducting transactions with respect to such account.
(H) Whether other account relationships with the institution are
required in order to open any such account.
(I) Whether individuals are required to meet any prerequisite which
discriminates against low-income individuals in order to open such
account.
(J) Such other factors as the Board may determine to be appropriate.
(3) Definitions
For purposes of this subsection --
(A) Board
The term ''Board'' means the Board of Governors of the Federal
Reserve System.
(B) Insured depository institution
The term ''insured depository institution'' has the meaning given to
such term in section 1813(c)(2) of this title.
(C) Lifeline account
The term ''lifeline account'' means any transaction account (as
defined in section 461(b)(1)(C) of this title) which meets the minimum
requirements established by the Board under this subsection.
(b) Omitted
(c) Availability of funds
The provisions of this section shall not take effect until
appropriations are specifically provided in advance. There are hereby
authorized to be appropriated such sums as may be necessary to carry out
the provisions of this section.
(Pub. L. 102-242, title II, 232, Dec. 19, 1991, 105 Stat. 2308.)
Section was enacted as part of the Bank Enterprise Act of 1991, and
also as part of the Foreign Bank Supervision Enhancement Act of 1991 and
as part of the Federal Deposit Insurance Corporation Improvement Act of
1991, and not as part of the Federal Deposit Insurance Act which
comprises this chapter.
Section is comprised of section 232 of Pub. L. 102-242. Subsec. (b)
of section 232 of Pub. L. 102-242 amended section 1817 of this title.
12 USC 1834a. Assessment credits for qualifying activities relating to
distressed communities
TITLE 12 -- BANKS AND BANKING
(a) Determination of credits for increases in community enterprise
activities
(1) In general
The Community Enterprise Assessment Credit Board established under
subsection (d) of this section shall issue guidelines for insured
depository institutions eligible under this subsection for any community
enterprise assessment credit with respect to any semiannual period.
Such guidelines shall --
(A) designate the eligibility requirements for any institution
meeting applicable capital standards to receive an assessment credit
under section 1817(d)(4) of this title; and
(B) determine the community enterprise assessment credit available to
any eligible institution under paragraph (3).
(2) Qualifying activities
An insured depository institution shall be eligible for any community
enterprise assessment credit for any semiannual period for --
(A) any increase during such period in the amount of new originations
of qualified loans and other financial assistance provided for low- and
moderate-income persons in distressed communities, or enterprises
integrally involved with such neighborhoods, which the Board determines
are qualified to be taken into account for purposes of this subsection;
and
(B) any increase during such period in the amount of deposits
accepted from persons domiciled in the distressed community, at any
office of the institution (including any branch) located in any
qualified distressed community, and any increase during such period in
the amount of new originations of loans and other financial assistance
made within that community, except that in no case shall the credit for
increased deposits at any institution or branch exceed the credit for
increased loan and other financial assistance by the bank or branch in
the distressed community.
(3) Amount of assessment credit
The amount of any community enterprise assessment credit available
under section 1817(d)(4) of this title for any insured depository
institution, or a qualified portion thereof, for any semiannual period
shall be the amount which is equal to 5 percent, in the case of an
institution which does not meet the community development organization
requirements under section 1834b /1/ of this title, and 15 percent, in
the case of an institution, or a qualified portion thereof, which meets
such requirements (or any percentage designated under paragraph (5)) of
the sum of --
(A) the amounts of assets described in paragraph (2)(A); and
(B) the amounts of deposits, loans, and other extensions of credit
described in paragraph (2)(B).
(4) Determination of qualified loans and other financial assistance
Except as provided in paragraph (6), the types of loans and other
financial assistance which the Board may determine to be qualified to be
taken into account under paragraph (2)(A) for purposes of the community
enterprise assessment credit, may include the following:
(A) Loans insured or guaranteed by the Secretary of Housing and Urban
Development, the Secretary of the Department of Veterans Affairs, the
Administrator of the Small Business Administration, and the Secretary of
Agriculture.
(B) Loans or financing provided in connection with activities
assisted by the Administrator of the Small Business Administration or
any small business investment company and investments in small business
investment companies.
(C) Loans or financing provided in connection with any neighborhood
housing service program assisted under the Neighborhood Reinvestment
Corporation Act (42 U.S.C. 8101 et seq.).
(D) Loans or financing provided in connection with any activities
assisted under the community development block grant program under title
I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301
et seq.).
(E) Loans or financing provided in connection with activities
assisted under title II of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12721 et seq.).
(F) Loans or financing provided in connection with a homeownership
program assisted under title III of the United States Housing Act of
1937 (42 U.S.C. 1437aaa et seq.) or subtitle B or C of title IV of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12871 et
seq., 12891 et seq.).
(G) Financial assistance provided through community development
corporations.
(H) Federal and State programs providing interest rate assistance for
homeowners.
(I) Extensions of credit to nonprofit developers or purchasers of
low-income housing and small business developments.
(J) In the case of members of any Federal home loan bank,
participation in the community investment fund program established by
the Federal home loan banks.
(K) Conventional mortgages targeted to low- or moderate-income
persons.
(5) Adjustment of percentage
The Board may increase or decrease the percentage referred to in
paragraph (3) for determining the amount of any community enterprise
assessment credit pursuant to such paragraph, except that the percentage
established for insured depository institutions which meet the community
development organization requirements under section 1834b /1/ of this
title shall not be less than 3 times the amount of the percentage
applicable for insured depository institutions which do not meet such
requirements.
(6) Certain investments not eligible to be taken into account
Investments by any insured depository institution in loans and
securities that are not the result of originations by the institution
shall not be taken into account for purposes of determining the amount
of any credit pursuant to this subsection.
(b) ''Qualified distressed community'' defined
(1) In general
For purposes of this section, the term ''qualified distressed
community'' means any neighborhood or community which --
(A) meets the minimum area requirements under paragraph (3) and the
eligibility requirements of paragraph (4); and
(B) is designated as a distressed community by any insured depository
institution in accordance with paragraph (2) and such designation is not
disapproved under such paragraph.
(2) Designation requirements
(A) Notice of designation
(i) Notice to agency
Upon designating an area as a qualified distressed community, an
insured depository institution shall notify the appropriate Federal
banking agency of the designation.
(ii) Public notice
Upon the effective date of any designation of an area as a qualified
distressed community, an insured depository institution shall publish a
notice of such designation in major newspapers and other community
publications which serve such area.
(B) Agency duties relating to designations
(i) Providing information
At the request of any insured depository institution, the appropriate
Federal banking agency shall provide to the institution appropriate
information to assist the institution to identify and designate a
qualified distressed community.
(ii) Period for disapproval
Any notice received by the appropriate Federal banking agency from
any insured depository institution under subparagraph (A)(i) shall take
effect at the end of the 90-day period beginning on the date such notice
is received unless written notice of the approval or disapproval of the
application by the agency is provided to the institution before the end
of such period.
(3) Minimum area requirements
For purposes of this subsection, an area meets the requirements of
this paragraph if --
(A) the area is within the jurisdiction of 1 unit of general local
government;
(B) the boundary of the area is contiguous; and
(C) the area --
(i) has a population, as determined by the most recent census data
available, of not less than --
(I) 4,000, if any portion of such area is located within a
metropolitan statistical area (as designated by the Director of the
Office of Management and Budget) with a population of 50,000 or more;
or
(II) 1,000, in any other case; or
(ii) is entirely within an Indian reservation (as determined by the
Secretary of the Interior).
(4) Eligibility requirements
For purposes of this subsection, an area meets the requirements of
this paragraph if at least 2 of the following criteria are met:
(A) Income
At least 70 percent of the families and unrelated individuals
residing in the area have incomes of less than 80 percent of the median
income of the area.
(B) Poverty
At least 20 percent of the residents residing in the area have
incomes which are less than the national poverty level (as determined
pursuant to criteria established by the Director of the Office of
Management and Budget).
(C) Unemployment
The unemployment rate for the area is one and one-half times greater
than the national average (as determined by the Bureau of Labor
Statistic's /2/ most recent figures).
(c) Omitted
(d) Community Enterprise Assessment Credit Board
(1) Establishment
There is hereby established the ''Community Enterprise Assessment
Credit Board''.
(2) Number and appointment
The Board shall be composed of 5 members as follows:
(A) The Secretary of the Treasury or a designee of the Secretary.
(B) The Secretary of Housing and Urban Development or a designee of
the Secretary.
(C) The Chairperson of the Federal Deposit Insurance Corporation or a
designee of the Chairperson.
(D) 2 individuals appointed by the President from among individuals
who represent community organizations.
(3) Terms
(A) Appointed members
Each appointed member shall be appointed for a term of 5 years.
(B) Interim appointment
Any member appointed to fill a vacancy occurring before the
expiration of the term to which such member's predecessor was appointed
shall be appointed only for the remainder of such term.
(C) Continuation of service
Each appointed member may continue to serve after the expiration of
the period to which such member was appointed until a successor has been
appointed.
(4) Chairperson
The Secretary of the Treasury shall serve as the Chairperson of the
Board.
(5) No pay
No members of the Commission may receive any pay for service on the
Board.
(6) Travel expenses
Each member shall receive travel expenses, including per diem in lieu
of subsistence, in accordance with sections 5702 and 5703 of title 5.
(7) Meetings
The Board shall meet at the call of the Chairperson or a majority of
the Board's members.
(e) Duties of Board
(1) Procedure for determining community enterprise assessment credits
The Board shall establish procedures for accepting and considering
applications by insured depository institutions under subsection (a)(1)
of this section for community enterprise assessment credits and making
determinations with respect to such applications.
(2) Notice to FDIC
The Board shall notify the applicant and the Federal Deposit
Insurance Corporation of any determination of the Board with respect to
any application referred to in paragraph (1) in sufficient time for the
Corporation to include the amount of such credit in the computation made
for purposes of the notification required under section 1817(d)( 1)(B)
of this title.
(f) Availability of funds
The provisions of this section shall not take effect until
appropriations are specifically provided in advance. There are hereby
authorized to be appropriated such sums as may be necessary to carry out
the provisions of this section.
(g) Definitions
For purposes of this section --
(1) Appropriate Federal banking agency
The term ''appropriate Federal banking agency'' has the meaning given
to such term in section 1813(q) of this title.
(2) Board
The term ''Board'' means the Community Enterprise Assessment Credit
Board established under the amendment made /3/ by subsection (d) of this
section.
(3) Insured depository institution
The term ''insured depository institution'' has the meaning given to
such term in section 1813(c)(2) of this title.
(Pub. L. 102-242, title II, 233, Dec. 19, 1991, 105 Stat. 2311.)
Section 1834b of this title, referred to in subsec. (a)(3), (5), was
in the original ''section 235'' meaning section 235 of the Bank
Enterprise Act of 1991, which was translated as meaning section 234 of
that Act to reflect the probable intent of Congress, because that Act
did not contain a section 235 and because section 234 relates to
community development organizations.
The Neighborhood Reinvestment Corporation Act, referred to in subsec.
(a)(4)(C), is title VI of Pub. L. 95-557, Oct. 31, 1978, 92 Stat.
2115, which is classified to subchapter I ( 8101 et seq.) of chapter 90
of Title 42, The Public Health and Welfare. For complete classification
of this Act to the Code, see section 601 of Pub. L. 95-557, set out as
a Short Title note under section 8101 of Title 42 and Tables.
The Housing and Community Development Act of 1974, referred to in
subsec. (a)(4)(D), is Pub. L. 93-383, Aug. 22, 1974, 88 Stat. 633,
as amended. Title I of the Act is classified principally to chapter 69
( 5301 et seq.) of Title 42. For complete classification of this Act to
the Code, see Short Title note set out under section 5301 of Title 42
and Tables.
The Cranston-Gonzalez National Affordable Housing Act, referred to in
subsec. (a)(4)(E), (F), is Pub. L. 101-625, Nov. 28, 1990, 104 Stat.
4079. Title II of the Act, also known as the ''HOME Investment
Partnerships Act'', is classified principally to subchapter II ( 12721
et seq.) of chapter 130 of Title 42. Subtitles B and C of title IV of
the Act are classified respectively to parts A ( 12871 et seq.) and B (
12891 et seq.) of subchapter IV of chapter 130 of Title 42. For
complete classification of this Act to the Code, see Short Title note
set out under section 12701 of Title 42 and Tables.
The United States Housing Act of 1937, referred to in subsec. (a)(
4)(F), is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L.
93-383, title II, 201(a), Aug. 22, 1974, 88 Stat. 653. Title III of
the Act is classified generally to subchapter II-A ( 1437aaa et seq.) of
Title 42. For complete classification of this Act to the Code, see
Short Title note set out under section 1437 of Title 42 and Tables.
Section was enacted as part of the Bank Enterprise Act of 1991, and
also as part of the Foreign Bank Supervision Enhancement Act of 1991 and
as part of the Federal Deposit Insurance Corporation Improvement Act of
1991, and not as part of the Federal Deposit Insurance Act which
comprises this chapter.
Section is comprised of section 233 of Pub. L. 102-242. Subsec. (c)
of section 233 of Pub. L. 102-242 amended section 1817 of this title.
/1/ See References in Text note below.
/2/ So in original. Probably should be ''Statistics'''.
/3/ So in original. The words ''under the amendment made'' probably
should not appear.
12 USC 1834b. Community development organizations
TITLE 12 -- BANKS AND BANKING
(a) Community development organizations described
For purposes of this subtitle, any insured depository institution, or
a qualified portion thereof, shall be treated as meeting the community
development organization requirements of this section if --
(1) the institution --
(A) is a community development bank, or controls any community
development bank, which meets the requirements of subsection (b) of this
section;
(B) controls any community development corporation, or maintains any
community development unit within the institution, which meets the
requirements of subsection (c) of this section;
(C) invests in accounts in any community development credit union
designated as a low-income credit union, subject to restrictions
established for such credit unions by the National Credit Union
Administration Board; or
(D) invests in a community development organization jointly
controlled by two or more institutions;
(2) except in the case of an institution which is a community
development bank, the amount of the capital invested, in the form of
debt or equity, by the institution in the community development
organization referred to in paragraph (1) (or, in the case of any
community development unit, the amount which the institution irrevocably
makes available to such unit for the purposes described in paragraph
(3)) is not less than the greater of --
(A) 1/2 of 1 percent of the capital, as defined by generally accepted
accounting principles, of the institution; or
(B) the sum of the amounts invested in such community development
organization; and
(3) the community development organization provides loans for
residential mortgages, home improvement, and community development and
other financial services, other than financing for the purchase of
automobiles or extension of credit under any open-end credit plan (as
defined in section 1602(i) of title 15), to low- and moderate-income
persons, nonprofit organizations, and small businesses located in
qualified distressed communities in a manner consistent with the intent
of this subtitle.
(b) Community development bank requirements
A community development bank meets the requirements of this
subsection if --
(1) the community development bank has a 15-member advisory board
designated as the ''Community Investment Board'' and consisting entirely
of community leaders who --
(A) shall be appointed initially by the board of directors of the
community development bank and thereafter by the Community Investment
Board from nominations received from the community; and
(B) are appointed for a single term of 2 years, except that, of the
initial members appointed to the Community Investment Board, 1/3 shall
be appointed for a term of 8 months, 1/3 shall be appointed for a term
of 16 months, and 1/3 shall be appointed for a term of 24 months, as
designated by the board of directors of the community development bank
at the time of the appointment;
(2) 1/3 of the members of the community development bank's board of
directors are appointed from among individuals nominated by the
Community Investment Board; and
(3) the bylaws of the community development bank require that the
board of directors of the bank meet with the Community Investment Board
at least once every 3 months.
(c) Community development corporation requirements
Any community development corporation, or community development unit
within any insured depository institution meets the requirements of this
subsection if the corporation or unit provides the same or greater, as
determined by the appropriate Federal banking agency, community
participation in the activities of such corporation or unit as would be
provided by a Community Investment Board under subsection (b) of this
section if such corporation or unit were a community development bank.
(d) Adequate dispersal requirement
The appropriate Federal banking agency may approve the establishment
of a community development organization under this subtitle only upon
finding that the distressed community is not adequately served by an
existing community development organization.
(e) Definitions
For purposes of this section --
(1) Community development bank
The term ''community development bank'' means any depository
institution (as defined in section 1813(c)(1) of this title).
(2) Community development organization
The term ''community development organization'' means any community
development bank, community development corporation, community
development unit within any insured depository institution, or community
development credit union.
(3) Low- and moderate-income persons
The term ''low- and moderate-income persons'' has the meaning given
such term in section 5302(a)(20) of title 42.
(4) Nonprofit organization; small business
The terms ''nonprofit organization'' and ''small business'' have the
meanings given to such terms by regulations which the appropriate
Federal banking agency shall prescribe for purposes of this section.
(5) Qualified distressed community
The term ''qualified distressed community'' has the meaning given to
such term in section 1834a(b) of this title.
(Pub. L. 102-242, title II, 234, Dec. 19, 1991, 105 Stat. 2315.)
This subtitle, referred to in subsecs. (a) and (d), is subtitle C (
231-234) of title II of Pub. L. 102-242, Dec. 19, 1991, 105 Stat.
2308, known as the Bank Enterprise Act of 1991, which enacted this
section and sections 1834 and 1834a of this title, amended section 1817
of this title, and enacted provisions set out as a note under section
1811 of this title. For complete classification of subtitle C to the
Code, see section 231 of Pub. L. 102-242, set out as a Short Title of
1991 Amendment note under section 1811 of this title and Tables.
Section was enacted as part of the Bank Enterprise Act of 1991, and
also as part of the Foreign Bank Supervision Enhancement Act of 1991 and
as part of the Federal Deposit Insurance Corporation Improvement Act of
1991, and not as part of the Federal Deposit Insurance Act which
comprises this chapter.
12 USC CHAPTER 17 -- BANK HOLDING COMPANIES
TITLE 12 -- BANKS AND BANKING
Sec.
1841. Definitions.
1842. Acquisition of bank shares or assets.
(a) Prior approval of Board as necessary; exceptions; disposition,
time extension; subsequent approval or disposition upon disapproval.
(b) Application for approval; notice to Comptroller of Currency or
State authority; views and recommendations; disapproval; hearing;
order of Board; nonaction deemed grant of application; procedure in
emergencies or probable failures requiring immediate Board action and
orders.
(c) Factors for consideration by Board.
(d) Limitation by State boundaries.
(e) Insured depository institution.
(f) Savings bank subsidiaries of bank holding companies.
(g) Mutual bank holding company.
1843. Interests in nonbanking organizations.
(a) Ownership or control of voting shares of any company not a bank;
engagement in activities other than banking.
(b) Statement purporting to represent shares of any company except a
bank or bank holding company.
(c) Exemptions.
(d) Exemption of company controlling one bank prior to July 1, 1968.
(e) Divestiture of nonexempt shares.
(f) Certain companies not treated as bank holding companies.
(g) Limitations on certain banks.
(h) Tying provisions.
(i) Acquisition of savings associations.
1844. Administration.
(a) Registration of bank holding company.
(b) Regulations and orders.
(c) Reports required by Board; examinations; cost of examination.
(d) Reports to the Congress; recommendations.
(e) Termination of activities or ownership or control of nonbank
subsidiaries constituting serious risk.
(f) Powers of Board respecting applications, examinations, or other
proceedings.
1845. Repealed.
1846. Reservation of rights to States.
1847. Penalties.
(a) Criminal penalty.
(b) Civil money penalty.
(c) Notice under this section after separation from service.
(d) Penalty for failure to make reports.
1848. Judicial review.
1849. Saving provision.
(a) General rule.
(b) Antitrust review.
(c) Antitrust proceedings; Board and State banking agency as party;
representation by counsel.
(d) Treatment of merger transactions consummated prior or subsequent
to May 9, 1956, and not in litigation prior to July 1, 1966.
(e) Antitrust litigation; substantive law applicable to proceedings
pending on or after July 1, 1966, with respect to merger transactions.
(f) ''Antitrust laws'' defined.
1850. Acquisition of subsidiary, nonbanking activity or business,
and tying arrangement: Federal Reserve Board proceedings; application
for authorization; competitor as party in interest and person
aggrieved; judicial review.
15 section 80b-2; title 26 section 246A.
12 USC 1841. Definitions
TITLE 12 -- BANKS AND BANKING
(a)(1) Except as provided in paragraph (5) of this subsection, ''bank
holding company'' means any company which has control over any bank or
over any company that is or becomes a bank holding company by virtue of
this chapter.
(2) Any company has control over a bank or over any company if --
(A) the company directly or indirectly or acting through one or more
other persons owns, controls, or has power to vote 25 per centum or more
of any class of voting securities of the bank or company;
(B) the company controls in any manner the election of a majority of
the directors or trustees of the bank or company; or
(C) the Board determines, after notice and opportunity for hearing,
that the company directly or indirectly exercises a controlling
influence over the management or policies of the bank or company.
(3) For the purposes of any proceeding under paragraph (2)(C) of this
subsection, there is a presumption that any company which directly or
indirectly owns, controls, or has power to vote less than 5 per centum
of any class of voting securities of a given bank or company does not
have control over that bank or company.
(4) In any administrative or judicial proceeding under this chapter,
other than a proceeding under paragraph (2)(C) of this subsection, a
company may not be held to have had control over any given bank or
company at any given time unless that company, at the time in question,
directly or indirectly owned, controlled, or had power to vote 5 per
centum or more of any class of voting securities of the bank or company,
or had already been found to have control in a proceeding under
paragraph (2)(C).
(5) Notwithstanding any other provision of this subsection --
(A) No bank and no company owning or controlling voting shares of a
bank is a bank holding company by virtue of its ownership or control of
shares in a fiduciary capacity, except as provided in paragraphs (2) and
(3) of subsection (g) of this section. For the purpose of the preceding
sentence, bank shares shall not be deemed to have been acquired in a
fiduciary capacity if the acquiring bank or company has sole
discretionary authority to exercise voting rights with respect thereto;
except that this limitation is applicable in the case of a bank or
company acquiring such shares prior to December 31, 1970, only if the
bank or company has the right consistent with its obligations under the
instrument, agreement, or other arrangement establishing the fiduciary
relationship to divest itself of such voting rights and fails to
exercise that right to divest within a reasonable period not to exceed
one year after December 31, 1970.
(B) No company is a bank holding company by virtue of its ownership
or control of shares acquired by it in connection with its underwriting
of securities if such shares are held only for such period of time as
will permit the sale thereof on a reasonable basis.
(C) No company formed for the sole purpose of participating in a
proxy solicitation is a bank holding company by virtue of its control of
voting rights of shares acquired in the course of such solicitation.
(D) No company is a bank holding company by virtue of its ownership
or control of shares acquired in securing or collecting a debt
previously contracted in good faith, until two years after the date of
acquisition. The Board is authorized upon application by a company to
extend, from time to time for not more than one year at a time, the
two-year period referred to herein for disposing of any shares acquired
by a company in the regular course of securing or collecting a debt
previously contracted in good faith, if, in the Board's judgment, such
an extension would not be detrimental to the public interest, but no
such extension shall in the aggregate exceed three years.
(E) No company is a bank holding company by virtue of its ownership
or control of any State-chartered bank or trust company which --
(i) is wholly owned by thrift institutions or savings banks; and
(ii) is restricted to accepting --
(I) deposits from thrift institutions or savings banks;
(II) deposits arising out of the corporate business of the thrift
institutions or savings banks that own the bank or trust company; or
(III) deposits of public moneys.
(F) No trust company or mutual savings bank which is an insured bank
under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is a
bank holding company by virtue of its direct or indirect ownership or
control of one bank located in the same State, if (i) such ownership or
control existed on December 31, 1970, authorized by applicable State
law, and (ii) the trust company or mutual savings bank does not after
that date acquire an interest in any company that, together with any
other interest it holds in that company, will exceed 5 per centum of any
class of the voting shares of that company, except that this limitation
shall not be applicable to investments of the trust company or mutual
savings bank, direct and indirect, which are otherwise in accordance
with the limitations applicable to national banks under section 24 of
this title.
(6) For the purposes of this chapter, any successor to a bank holding
company shall be deemed to be a bank holding company from the date on
which the predecessor company became a bank holding company.
(b) ''Company'' means any corporation, partnership, business trust,
association, or similar organization, or any other trust unless by its
terms it must terminate within twenty-five years or not later than
twenty-one years and ten months after the death of individuals living on
the effective date of the trust but shall not include any corporation
the majority of the shares of which are owned by the United States or by
any State. ''Company covered in 1970'' means a company which becomes a
bank holding company as a result of the enactment of the Bank Holding
Company Act Amendments of 1970 and which would have been a bank holding
company on June 30, 1968, if those amendments had been enacted on that
date.
(c) Bank Defined. -- For purposes of this chapter --
(1) In general. -- Except as provided in paragraph (2), the term
''bank'' means any of the following:
(A) An insured bank as defined in section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)).
(B) An institution organized under the laws of the United States, any
State of the United States, the District of Columbia, any territory of
the United States, Puerto Rico, Guam, American Samoa, or the Virgin
Islands which both --
(i) accepts demand deposits or deposits that the depositor may
withdraw by check or similar means for payment to third parties or
others; and
(ii) is engaged in the business of making commercial loans.
(2) Exceptions. -- The term ''bank'' does not include any of the
following:
(A) A foreign bank which would be a bank within the meaning of
paragraph (1) solely because such bank has an insured or uninsured
branch in the United States.
(B) An insured institution (as defined in subsection (j) of this
section).
(C) An organization that does not do business in the United States
except as an incident to its activities outside the United States.
(D) An institution that functions solely in a trust or fiduciary
capacity, if --
(i) all or substantially all of the deposits of such institution are
in trust funds and are received in a bona fide fiduciary capacity;
(ii) no deposits of such institution which are insured by the Federal
Deposit Insurance Corporation are offered or marketed by or through an
affiliate of such institution;
(iii) such institution does not accept demand deposits or deposits
that the depositor may withdraw by check or similar means for payment to
third parties or others or make commercial loans; and
(iv) such institution does not --
(I) obtain payment or payment related services from any Federal
Reserve bank, including any service referred to in section 11A of the
Federal Reserve Act (12 U.S.C. 248a); or
(II) exercise discount or borrowing privileges pursuant to section
19(b)(7) of the Federal Reserve Act (12 U.S.C. 461(b)(7)).
(E) A credit union (as described in section 19(b)(1)(A)(iv) of the
Federal Reserve Act (12 U.S.C. 461(b)(1)(A)(iv))).
(F) An institution which --
(i) engages only in credit card operations;
(ii) does not accept demand deposits or deposits that the depositor
may withdraw by check or similar means for payment to third parties or
others;
(iii) does not accept any savings or time deposit of less than
$100,000;
(iv) maintains only one office that accepts deposits; and
(v) does not engage in the business of making commercial loans.
(G) An organization operating under section 25 or section 25(a) /1/
of the Federal Reserve Act.
(H) An industrial loan company, industrial bank, or other similar
institution which is --
(i) an institution organized under the laws of a State which, on
March 5, 1987, had in effect or had under consideration in such State's
legislature a statute which required or would require such institution
to obtain insurance under the Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) --
(I) which does not accept demand deposits that the depositor may
withdraw by check or similar means for payment to third parties;
(II) which has total assets of less than $100,000,000; or
(III) the control of which is not acquired by any company after
August 10, 1987; or
(ii) an institution which does not, directly, indirectly, or through
an affiliate, engage in any activity in which it was not lawfully
engaged as of March 5, 1987,
except that this subparagraph shall cease to apply to any institution
which permits any overdraft (including any intraday overdraft), or which
incurs any such overdraft in such institution's account at a Federal
Reserve bank, on behalf of an affiliate if such overdraft is not the
result of an inadvertent computer or accounting error that is beyond the
control of both the institution and the affiliate.
(I) The Investors Fiduciary Trust Company, located in Kansas City,
Missouri, so long as such institution --
(i) engages only in trust, fiduciary, and agency activities in which
it was lawfully engaged on March 5, 1987;
(ii) engages in such activities only at the same number of locations
at which such activities were conducted on such date;
(iii) does not accept demand deposits other than demand deposits
which are maintained by such institution in --
(I) a trust or fiduciary capacity;
(II) the institution's capacity as a custodian or as a paying,
transfer, shareholder servicing, securities clearing, escrow, or
dividend disbursing agent; or
(III) any capacity which is incidental to the trust or fiduciary
activities of the institution;
(iv) does not engage in the business of making commercial loans;
(v) does not exercise discount or borrowing privileges pursuant to
section 19(b)(7) of the Federal Reserve Act (12 U.S.C. 461(b)(7)); and
(vi) is not directly or indirectly controlled by any company other
than a company which directly or indirectly controlled such institution
on March 5, 1987.
(J) A savings bank (as defined in section 3(g) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(g))) which --
(i) is an insured bank (as defined in section 3(h) of such Act (12
U.S.C. 1813(h)));
(ii) is a subsidiary of the Great Western Financial Corporation as a
result of an approval in writing by the State bank supervisor of the
State of New York before June 30, 1987;
(iii) meets or exceeds the investment requirements which an insured
institution must meet in order to be a qualified thrift lender under
section 1730a(o) /1/ of this title; and
(iv) does not, directly, or through insurance products such savings
bank receives from or provides to the Great Western Financial
Corporation, engage in the sale or underwriting of insurance,
except that this subparagraph shall cease to apply with respect to
such savings bank or any successor institution if any deposits of any
other subsidiary or affiliate of the Great Western Financial Corporation
which are subject to an assessment of an insurance premium under
subsection (b) or (c) of section 1727 /1/ of this title are, directly or
indirectly by any device whatsoever, transferred to or acquired by such
savings bank or any successor institution which would have the effect of
materially reducing such premium assessments. The exemption provided by
this subparagraph shall cease to apply if Great Western Financial
Corporation uses such savings bank or any successor institution as a
vehicle to move such Corporation from Federal Savings and Loan Insurance
Corporation insurance to Federal Deposit Insurance Corporation
insurance.
(3) District bank. -- The term ''District bank'' means any bank
operating under the Code of Law for the District of Columbia.
(d) ''Subsidiary'', with respect to a specified bank holding company,
means (1) any company 25 per centum or more of whose voting shares
(excluding shares owned by the United States or by any company wholly
owned by the United States) is directly or indirectly owned or
controlled by such bank holding company, or is held by it with power to
vote; (2) any company the election of a majority of whose directors is
controlled in any manner by such bank holding company; or (3) any
company with respect to the management of policies of which such bank
holding company has the power, directly or indirectly, to exercise a
controlling influence, as determined by the Board, after notice and
opportunity for hearing.
(e) The term ''successor'' shall include any company which acquires
directly or indirectly from a bank holding company shares of any bank,
when and if the relationship between such company and the bank holding
company is such that the transaction effects no substantial change in
the control of the bank or beneficial ownership of such shares of such
bank. The Board may, by regulation, further define the term
''successor'' to the extent necessary to prevent evasion of the purposes
of this chapter.
(f) ''Board'' means the Board of Governors of the Federal Reserve
System.
(g) For the purposes of this chapter --
(1) shares owned or controlled by any subsidiary of a bank holding
company shall be deemed to be indirectly owned or controlled by such
bank holding company;
(2) shares held or controlled directly or indirectly by trustees for
the benefit of (A) a company, (B) the shareholders or members of a
company, or (C) the employees (whether exclusively or not) of a company,
shall be deemed to be controlled by such company; and
(3) shares transferred after January 1, 1966, by any bank holding
company (or by any company which, but for such transfer, would be a bank
holding company) directly or indirectly to any transferee that is
indebted to the transferor, or has one or more officers, directors,
trustees, or beneficiaries in common with or subject to control by the
transferor, shall be deemed to be indirectly owned or controlled by the
transferor unless the Board, after opportunity for hearing, determines
that the transferor is not in fact capable of controlling the
transferee.
(h)(1) Except as provided by paragraph (2), the application of this
chapter and of section 371c of this title shall not be affected by the
fact that a transaction takes place wholly or partly outside the United
States or that a company is organized or operates outside the United
States.
(2) Except as provided in paragraph (3), the prohibitions of section
1843 of this title shall not apply to shares of any company organized
under the laws of a foreign country (or to shares held by such company
in any company engaged in the same general line of business as the
investor company or in a business related to the business of the
investor company) that is principally engaged in business outside the
United States if such shares are held or acquired by a bank holding
company organized under the laws of a foreign country that is
principally engaged in the banking business outside the United States.
For the purpose of this subsection, the term ''section 2(h)(2) company''
means any company whose shares are held pursuant to this paragraph.
(3) Nothing in paragraph (2) authorizes a section 2(h)(2) company to
engage in (or acquire or hold more than 5 percent of the outstanding
shares of any class of voting securities of a company engaged in) any
banking, securities, insurance, or other financial activities, as
defined by the Board, in the United States. This paragraph does not
prohibit a section 2(h)(2) company from holding shares that were
lawfully acquired before August 10, 1987.
(4) No domestic office or subsidiary of a bank holding company or
subsidiary thereof holding shares of a section 2(h)(2) company may
extend credit to a domestic office or subsidiary of such section 2(h)(
2) company on terms more favorable than those afforded similar borrowers
in the United States.
(5) No domestic banking office or bank subsidiary of a bank holding
company that controls a section 2(h)(2) company may offer or market
products or services of such section 2(h)(2) company, or permit its
products or services to be offered or marketed by or through such
section 2(h)(2) company, unless such products or services were being so
offered or marketed as of March 5, 1987, and then only in the same
manner in which they were being offered or marketed as of that date.
(i) Thrift Institution. -- For purposes of this chapter, the term
''thrift institution'' means --
(1) any domestic building and loan or savings and loan association;
(2) any cooperative bank without capital stock organized and operated
for mutual purposes and without profit;
(3) any Federal savings bank; and
(4) any State-chartered savings bank the holding company of which is
registered pursuant to section 1730a /2/ of this title.
(j) Definition of Savings Associations and Related Term. -- The term
''savings association'' or ''insured institution'' means --
(1) any Federal savings association or Federal savings bank;
(2) any building and loan association, savings and loan association,
homestead association, or cooperative bank if such association or
cooperative bank is a member of the Savings Association Insurance Fund;
and
(3) any savings bank or cooperative bank which is deemed by the
Director of the Office of Thrift Supervision to be a savings association
under section 1467a(l) of this title.
(k) Affiliate. -- For purposes of this chapter, the term
''affiliate'' means any company that controls, is controlled by, or is
under common control with another company.
(l) Savings Bank Holding Company. -- For purposes of this chapter,
the term ''savings bank holding company'' means any company which
controls one or more qualified savings banks if the aggregate total
assets of such savings banks constitute, upon formation of the holding
company and at all times thereafter, at least 70 percent of the total
assets of such company.
(m) Qualified Savings Bank. -- For purposes of this chapter, the term
''qualified savings bank'' --
(1) means any savings bank (as defined in section 3(g) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(g))) which was organized on or
before March 5, 1987; and
(2) includes any cooperative bank that is an insured bank (as defined
in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C.
1813(h))) and any interim savings bank that is established to facilitate
a corporate reorganization, or the formation of a holding company,
involving a savings bank described in paragraph (1).
(May 9, 1956, ch. 240, 2, 70 Stat. 133; July 1, 1966, Pub. L.
89-485, 1-6, 80 Stat. 236, 237; Dec. 31, 1970, Pub. L. 91-607, title I,
101, 84 Stat. 1760; Nov. 16, 1977, Pub. L. 95-188, title III, 301(b),
91 Stat. 1389; Sept. 17, 1978, Pub. L. 95-369, 8(e), 92 Stat. 623;
Oct. 15, 1982, Pub. L. 97-320, title I, 118(b), title III, 333, title
IV, 404(d)(1), 96 Stat. 1479, 1504, 1512; Aug. 10, 1987, Pub. L.
100-86, title I, 101(a), (e), title II, 205(a), 101 Stat. 554, 562,
584; Aug. 9, 1989, Pub. L. 101-73, title VI, 602(a), 103 Stat. 409.)
This chapter, referred to in subsecs. (a)(1), (4), (c), and (g) to
(m), was in the original ''this Act'', meaning act May 9, 1956, ch.
240, 70 Stat. 133, as amended, known as the Bank Holding Company Act of
1956, which enacted this chapter and sections 1101 to 1103 of Title 26,
Internal Revenue Code, and enacted provisions set out as notes under
this section. For complete classification of this Act to the Code, see
Short Title note set out below and Tables.
The Federal Deposit Insurance Act, referred to in subsecs. (a)(5)(F)
and (c)(2)(H)(i), is act Sept. 21, 1950, ch. 967, 2, 64 Stat. 873, as
amended, which is classified generally to chapter 16 ( 1811 et seq.) of
this title. For complete classification of this Act to the Code, see
Short Title note set out under section 1811 of this title and Tables.
Enactment of the Bank Holding Company Act Amendments of 1970,
referred to in subsec. (b), means enactment of Pub. L. 91-607, on Dec.
31, 1970. For classification of Pub. L. 91-607, see Short Title of
1970 Amendment note below.
Section 25 of the Federal Reserve Act, referred to in subsec. (c)(
2)(G), is classified to subchapter I ( 601 et seq.) of chapter 6 of this
title. Section 25(a) of the Federal Reserve Act, which is classified to
subchapter II ( 611 et seq.) of chapter 6 of this title, was renumbered
section 25A of that act by Pub. L. 102-242, title I, 142(e)(2), Dec.
19, 1991, 105 Stat. 2281.
Sections 1727 and 1730a of this title, referred to in subsecs. (c)(
2)(J) and (i)(4), were repealed by Pub. L. 101-73, title IV, 407, Aug.
9, 1989, 103 Stat. 363.
A section 2(h)(2) company, referred to in subsec. (h)(3) to (5), is
defined in subsec. (h)(2) of this section.
1989 -- Subsec. (j). Pub. L. 101-73 amended subsec. (j) generally,
substituting provisions defining ''saving association'' or ''insured
institution'' for provisions defining ''insured institution''.
1987 -- Subsec. (a)(5)(E). Pub. L. 100-86, 101(e), amended subpar.
(E) generally. Prior to amendment, subpar. (E) read as follows: ''No
company is a bank holding company by virtue of its ownership or control
of any State chartered bank or trust company which is wholly owned by
thrift institutions and which restricts itself to the acceptance of
deposits from thrift institutions, deposits arising out of the corporate
business of its owners, and deposits of public moneys.''
Subsec. (c). Pub. L. 100-86, 101(a)(1), amended subsec. (c)
generally. Prior to amendment, subsec. (c) read as follows: '''Bank'
means any institution organized under the laws of the United States, any
State of the United States, the District of Columbia, any territory of
the United States, Puerto Rico, Guam, American Samoa, or the Virgin
Islands, except an institution the accounts of which are insured by the
Federal Savings and Loan Insurance Corporation or an institution
chartered by the Federal Home Loan Bank Board, which (1) accepts
deposits that the depositor has a legal right to withdraw on demand, and
(2) engages in the business of making commercial loans. Such term does
not include any organization operating under section 25 or section 25
(a) of the Federal Reserve Act, or any organization which does not do
business within the United States except as an incident to its
activities outside the United States. 'District bank' means any bank
organized or operating under the Code of Law for the District of
Columbia. The term 'bank' also includes a State chartered bank or a
national banking association which is owned exclusively (except to the
extent directors' qualifying shares are required by law) by other
depository institutions or by a bank holding company which is owned
exclusively by other depository institutions and is organized to engage
exclusively in providing services for other depository institutions and
their officers, directors, and employees.''
Subsec. (h)(2). Pub. L. 100-86, 205(a), added par. (2) and struck
out former par. (2) which read as follows: ''The prohibitions of
section 1843 of this title shall not apply to shares of any company
organized under the laws of a foreign country (or to shares held by such
company in any company engaged in the same general line of business as
the investor company or in a business related to the business of the
investor company) that is principally engaged in business outside the
United States if such shares are held or acquired by a bank holding
company organized under the laws of a foreign country that is
principally engaged in the banking business outside the United States,
except that (1) such exempt foreign company (A) may engage in or hold
shares of a company engaged in the business of underwriting, selling or
distributing securities in the United States only to the extent that a
bank holding company may do so under this chapter and under regulations
or orders issued by the Board under this chapter, and (B) may engage in
the United States in any banking or financial operations or types of
activities permitted under section 1843(c)(8) of this title or in any
order or regulation issued by the Board under such section only with the
Board's prior approval under that section, and (2) no domestic office or
subsidiary of a bank holding company or subsidiary thereof holding
shares of such company may extend credit to a domestic office or
subsidiary of such exempt company on terms more favorable than those
afforded similar borrowers in the United States.''
Subsec. (h)(3) to (5). Pub. L. 100-86, 205(a), added pars. (3) to
(5).
Subsec. (i). Pub. L. 100-86, 101(a)(2), amended subsec. (i)
generally. Prior to amendment, subsec. (i) read as follows: ''The
term 'thrift institution' means (1) a domestic building and loan or
savings and loan association, (2) a cooperative bank without capital
stock organized and operated for mutual purposes and without profit, (3)
a mutual savings bank not having capital stock represented by shares or
(4) a Federal savings bank.''
Subsecs. (j) to (m). Pub. L. 100-86, 101(a)(3), added subsecs. (j)
to (m).
1982 -- Subsec. (c). Pub. L. 97-320, 404(d)(1), inserted references
to State chartered banks and national banking associations as being
included in definition of ''bank''.
Pub. L. 97-320, 333, excepted from term ''bank'' an institution the
accounts of which are insured by the Federal Savings and Loan Insurance
Corporation or an institution chartered by the Federal Home Loan Bank
Board.
Subsec. (i)(4). Pub. L. 97-320, 118(b), added cl. (4).
1978 -- Subsec. (h). Pub. L. 95-369 designated existing provisions
as par. (1), substituted ''Except as provided by paragraph (2), the
application'' for ''The application''; struck out a proviso holding the
prohibitions of section 1843 not applicable to shares of any company
organized under the laws of a foreign country not doing business within
the United States, if such shares are held or acquired by a bank holding
company principally engaged in banking business outside the United
States; and added par. (2).
1977 -- Subsec. (a)(5)(D). Pub. L. 95-188 authorized the Board to
extend the time for disposition of acquired shares for not more than one
year at a time and three years in the aggregate.
1970 -- Subsec. (a). Pub. L. 91-607, 101(a), in revising the
provisions, added par. (1) definition of bank holding company;
incorporated provisions of former cl. (1) in provisions designated as
par. (2)(A), inserting text respecting company acting through one or
more other persons, substituting ''power to vote'' for ''holds with
power to vote'' and provision for voting of any class of voting
securities of the bank or company for prior provision for voting of
voting shares of each of two or more banks; incorporated former
provisions of former cl. (2) in provisions designated as par. (2)(B),
providing for election of trustees and substituting bank or company for
directors of each of two or more banks designated cl. (A) as par.
(5)(A), inserting provision that acquisition of shares shall not be
deemed acquisition of shares in a fiduciary capacity if the banks or
company has sole discretionary authority to exercise voting rights with
respect thereto, and making such limitation applicable to bank or
company acquiring the shares prior to Dec. 31, 1970, where there is
right of divestiture of voting rights and there is a failure to exercise
that right within reasonable time not exceeding one year after Dec. 31,
1970; incorporated former cls. (B) and (C) in provisions designated as
pars. (5)(B) and (C); added par. (5)(D) to (F); and designated
concluding part of first sentence as par. (6), substituting ''from the
date on which'' for ''from the date as of which''.
Subsec. (b). Pub. L. 91-607, 101(b), redefined term ''company'' to
include ''partnership'', which has been expressly excluded, and inserted
definition of ''company covered in 1970''.
Subsec. (c). Pub. L. 91-607, 101(c), redefined term ''bank'' to mean
any institution organized under Federal, State, District of Columbia,
etc., laws, designated existing provisions as cl. (1), added cl. (2),
and excepted from exclusion from such term an organization which does
business within the United States as an incident to its activities
outside the United States.
Subsec. (d)(3). Pub. L. 91-607, 101(d), added cl. (3).
Subsec. (i). Pub. L. 91-607, 101(e), added subsec. (i).
1966 -- Subsec. (a). Pub. L. 89-485, 1, struck out provision placing
within the classification of bank holding company any company for the
benefit of whose shareholders or members 25 per centum or more of the
voting shares of each of two or more banks or a bank holding company is
held by trustees, struck out provision exempting from classification as
bank holding companies any companies that are registered under the
Investment Company Act of 1940, and were so registered prior to May 15,
1955 (or which is affiliated with any such company in such manner as to
constitute an affiliated company within the meaning of that Act), unless
that company (or affiliated company), as the case may be, directly owns
25 per centum or more of the voting shares of each of two or more banks,
struck out provision exempting from classification as bank holding
companies any companies having 80 per centum or more of their total
assets composed of holdings in the field of agriculture, substituted
voting shares for shares in the description of the securities the
ownership or control of which, in a fiduciary capacity, would be
exempted from causing the formation of a bank holding company, added
''company'' to ''bank'' as the business entities eligible for the
fiduciary ownership exemption, and inserted reference in the fiduciary
ownership exemption to pars. (2) and (3) of subsec. (g) of this
section.
Subsec. (b). Pub. L. 89-485, 2, exempted from definition of
''company'' any trust which by its terms must terminate within
twenty-five years or not later than twenty-one years and ten months
after the death of individuals living on the effective date of the
trust, and struck out the exemption formerly granted to nonprofit
religious, charitable, and educational organizations.
Subsec. (c). Pub. L. 89-485, 3, substituted ''any institution that
accepts deposits that the depositor has a legal right to withdraw on
demand'' for ''any national banking institution or any state bank,
savings bank, or trust company'' in the definition of ''bank'' and
extended the exemption for foreign banking corporations to include
''agreement'' foreign banking corporations under section 25 of the
Federal Reserve Act.
Subsec. (d). Pub. L. 89-485, 4, inserted provision relating to
indirect ownership or control and the holding of power to vote to direct
ownership or control as the methods by which the holding of 25 per
centum or more of voting shares in a company will qualify that company
as a subsidiary, and struck out provisions under which any company 25
per centum or more of whose voting shares are held by trustees for the
benefit of the shareholders or members of a bank holding company
qualifies as a subsidiary.
Subsec. (g). Pub. L. 89-485, 5, 6, substituted provisions setting out
treatment to be accorded shares owned or controlled by subsidiaries of
bank holding companies, shares held or controlled by trustees for the
benefit of companies, shareholders or members of companies, and
employees of companies, and shares transferred after January 1, 1966, by
bank holding companies to transferees that are indebted to the
transferor or have one or more officers, directors, trustees, or
beneficiaries in common with the transferor for provisions defining
''agriculture''.
Subsec. (h). Pub. L. 89-485, 6, added subsec. (h).
Pub. L. 100-418, title III, 3401, Aug. 23, 1988, 102 Stat. 1384,
provided that: ''This subtitle (subtitle E ( 3401, 3402) of title III
of Pub. L. 100-418, amending section 1843 of this title) may be cited as
the 'Export Trading Company Act Amendments of 1988'.''
Pub. L. 97-290, title II, 201, Oct. 8, 1982, 96 Stat. 1235,
provided that: ''This title (enacting section 635a-4 of this title,
amending sections 372 and 1843 of this title, and enacting provisions
set out as notes under section 1843 of this title) may be cited as the
'Bank Export Services Act'.''
Section 1 of Pub. L. 91-607 provided: ''That this Act (enacting
chapter 22 ( 1971 et seq.) and section 1850 of this title and sections
324b and 324c of former Title 31, Money and Finance, amending sections
1841 to 1843 and 1849 of this title and sections 324, 391 of former
Title 31, repealing sections 316 and 458 of former Title 31, enacting
provisions set out as notes under sections 317e and 391 of former Title
31, and amending provisions set out as a note under section 405a-1 of
former Title 31) may be cited as the 'Bank Holding Company Act
Amendments of 1970'.''
Section 1 of act May 9, 1956, provided: ''That this Act (enacting
this chapter and sections 1101 to 1103 of Title 26, Internal Revenue
Code) may be cited as the 'Bank Holding Company Act of 1956'.''
Section 12 of act May 9, 1956, provided that: ''If any provision of
this Act (enacting this chapter and sections 1101 to 1103 of Title 26,
Internal Revenue Code), or the application of such provision to any
person or circumstance, shall be held invalid, the remainder of the Act,
and the application of such provision to persons or circumstances other
than those to which it is held invalid, shall not be affected thereby.''
Federal Savings and Loan Insurance Corporation abolished and
functions transferred, see sections 401 to 406 of Pub. L. 101-73, set
out as a note under section 1437 of this title.
Section 101(h) of Pub. L. 100-86 provided that:
''(1) Delay in application of amendment to certain institutions. --
If --
''(A) on March 5, 1987, an institution was not a bank (as defined in
section 2(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(
c))), as in effect on such date; and
''(B) any person which had a controlling interest in such institution
on March 5, 1987, made a public announcement before such date that the
transfer or other disposition of such person's controlling interest in
such institution was being considered,
the institution shall not become a bank (for purposes of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.)) due to the
amendment made to such section 2(c) by this section before the date on
which such institution fails to meet any requirement of paragraph (2).
''(2) Requirements for application of subsection. -- This subsection
shall not apply with respect to any institution described in paragraph
(1) unless --
''(A) the transfer or other disposition of the controlling interest
referred to in such paragraph is completed, or an agreement to make such
transfer or other disposition is in effect (or is subject only to final
approval by the appropriate Federal and State regulatory agencies),
before the end of the 180-day period beginning on the date of the
enactment of this title (Aug. 10, 1987);
''(B) a written notice by the person acquiring a controlling interest
in such institution (pursuant to the transfer or other disposition
described in subparagraph (A)) of such person's intention to operate
such institution as an institution described in section 2( c)(2)(F) of
the Bank Holding Company Act of 1956, as in effect after the enactment
of this title is filed with the Board before the end of the 7-day period
beginning on the later of the date of such transfer (or other
disposition) or the date of the enactment of this title; and
''(C) the operation of such institution as an institution described
in such section 2(c)(2)(F) begins before the end of the 180-day period
beginning on the date the transfer (or other disposition) described in
subparagraph (A) is completed.
''(3) Controlling interest. -- For purposes of this subsection, a
person has a controlling interest in any institution if such person
controls --
''(A) such institution; or
''(B) any company which controls such institution,
as determined in accordance with the provisions of subsections (b)
and (g) of section 2 of the Bank Holding Company Act of 1956.''
Pub. L. 100-86, title II, 201-203, Aug. 10, 1987, 101 Stat.
581-584, provided for the period of Mar. 6, 1987, to Mar. 1, 1988, a
moratorium on certain nonbanking activities, including expansion of
activities of foreign banks and authority of Federal banking agencies to
authorize or allow certain security, insurance, or real estate
activities.
section 78c; title 26 sections 304, 864.
/1/ See References in Text note below.
/2/ See References in Text note below.
12 USC 1842. Acquisition of bank shares or assets
TITLE 12 -- BANKS AND BANKING
(a) Prior approval of Board as necessary; exceptions; disposition,
time extension; subsequent approval or disposition upon disapproval
It shall be unlawful, except with the prior approval of the Board,
(1) for any action to be taken that causes any company to become a bank
holding company; (2) for any action to be taken that causes a bank to
become a subsidiary of a bank holding company; (3) for any bank holding
company to acquire direct or indirect ownership or control of any voting
shares of any bank if, after such acquisition, such company will
directly or indirectly own or control more than 5 per centum of the
voting shares of such bank; (4) for any bank holding company or
subsidiary thereof, other than a bank, to acquire all or substantially
all of the assets of a bank; or (5) for any bank holding company to
merge or consolidate with any other bank holding company.
Notwithstanding the foregoing this prohibition shall not apply to (A)
shares acquired by a bank, (i) in good faith in a fiduciary capacity,
except where such shares are held under a trust that constitutes a
company as defined in section 1841(b) of this title and except as
provided in paragraphs (2) and (3) of section 1841(g) of this title, or
(ii) in the regular course of securing or collecting a debt previously
contracted in good faith, but any shares acquired after May 9, 1956, in
securing or collecting any such previously contracted debt shall be
disposed of within a period of two years from the date on which they
were acquired; or (B) additional shares acquired by a bank holding
company in a bank in which such bank holding company owned or controlled
a majority of the voting shares prior to such acquisition. The Board is
authorized upon application by a bank to extend, from time to time for
not more than one year at a time, the two-year period referred to above
for disposing of any shares acquired by a bank in the regular course of
securing or collecting a debt previously contracted in good faith, if,
in the Board's judgment, such an extension would not be detrimental to
the public interest, but no such extension shall in the aggregate exceed
three years. For the purpose of the preceding sentence, bank shares
acquired after December 31, 1970, shall not be deemed to have been
acquired in good faith in a fiduciary capacity if the acquiring bank or
company has sole discretionary authority to exercise voting rights with
respect thereto, but in such instances acquisitions may be made without
prior approval of the Board if the Board, upon application filed within
ninety days after the shares are acquired, approves retention or, if
retention is disapproved, the acquiring bank disposes of the shares or
its sole discretionary voting rights within two years after issuance of
the order of disapproval.
(b) Application for approval; notice to Comptroller of Currency or
State authority; views and recommendations; disapproval; hearing;
order of Board; nonaction deemed grant of application; procedure in
emergencies or probable failures requiring immediate Board action and
orders
(1) Notice and hearing requirements
Upon receiving from a company any application for approval under this
section, the Board shall give notice to the Comptroller of the Currency,
if the applicant company or any bank the voting shares or assets of
which are sought to be required /1/ is a national banking association or
a District bank, or to the appropriate supervisory authority of the
interested State, if the applicant company or any bank the voting shares
or assets of which are sought to be acquired is a State bank, in order
to provide for the submission of the views and recommendations of the
Comptroller of the Currency or the State supervisory authority, as the
case may be. The views and recommendations shall be submitted within
thirty calendar days of the date on which notice is given, or within ten
calendar days of such date if the Board advises the Comptroller of the
Currency or the State supervisory authority that an emergency exists
requiring expeditious action. If the thirty-day notice period applies
and if the Comptroller of the Currency or the State supervisory
authority so notified by the Board disapproves the application in
writing within this period, the Board shall forthwith give written
notice of that fact to the applicant. Within three days after giving
such notice to the applicant, the Board shall notify in writing the
applicant and the disapproving authority of the date for commencement of
a hearing by it on such application. Any such hearing shall be
commenced not less than ten nor more than thirty days after the Board
has given written notice to the applicant of the action of the
disapproving authority. The length of any such hearing shall be
determined by the Board, but it shall afford all interested parties a
reasonable opportunity to testify at such hearing. At the conclusion
thereof, the Board shall, by order, grant or deny the application on the
basis of the record made at such hearing. In the event of the failure
of the Board to act on any application for approval under this section
within the ninety-one-day period which begins on the date of submission
to the Board of the complete record on that application, the application
shall be deemed to have been granted. Notwithstanding any other
provision of this subsection, if the Board finds that it must act
immediately on any application for approval under this section in order
to prevent the probable failure of a bank or bank holding company
involved in a proposed acquisition, merger, or consolidation
transaction, the Board may dispense with the notice requirements of this
subsection, and if notice is given, the Board may request that the views
and recommendations of the Comptroller of the Currency or the State
supervisory authority, as the case may be, be submitted immediately in
any form or by any means acceptable to the Board. If the Board has
found pursuant to this subsection either that an emergency exists
requiring expeditious action or that it must act immediately to prevent
probable failure, the Board may grant or deny any such application
without a hearing notwithstanding any recommended disapproval by the
appropriate supervisory authority.
(2) Waiver in case of bank in danger of closing
If the Board receives a certification described in section 1823(f)(
8)(D) /2/ of this title from the appropriate Federal or State chartering
authority that a bank is in danger of closing, the Board may dispense
with the notice and hearing requirements of paragraph (1) with respect
to any application received by the Board relating to the acquisition of
such bank, the bank holding company which controls such bank, or any
other affiliated bank.
(c) Factors for consideration by Board
(1) Competitive factors
The Board shall not approve --
(A) any acquisition or merger or consolidation under this section
which would result in a monopoly, or which would be in furtherance of
any combination or conspiracy to monopolize or to attempt to monopolize
the business of banking in any part of the United States, or
(B) any other proposed acquisition or merger or consolidation under
this section whose effect in any section of the country may be
substantially to lessen competition, or to tend to create a monopoly, or
which in any other manner would be in restraint or /3/ trade, unless it
finds that the anticompetitive effects of the proposed transaction are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the community to be
served.
(2) Banking and community factors
In every case, the Board shall take into consideration the financial
and managerial resources and future prospects of the company or
companies and the banks concerned, and the convenience and needs of the
community to be served.
(3) Supervisory factors
The Board shall disapprove any application under this section by any
company if --
(A) the company fails to provide the Board with adequate assurances
that the company will make available to the Board such information on
the operations or activities of the company, and any affiliate of the
company, as the Board determines to be appropriate to determine and
enforce compliance with this chapter; or
(B) in the case of an application involving a foreign bank, the
foreign bank is not subject to comprehensive supervision or regulation
on a consolidated basis by the appropriate authorities in the bank's
home country.
(4) Treatment of certain bank stock loans
Notwithstanding any other provision of law, the Board shall not
follow any practice or policy in the consideration of any application
for the formation of a one-bank holding company if following such
practice or policy would result in the rejection of such application
solely because the transaction to form such one-bank holding company
involves a bank stock loan which is for a period of not more than
twenty-five years. The previous sentence shall not be construed to
prohibit the Board from rejecting any application solely because the
other financial arrangements are considered unsatisfactory. The Board
shall consider transactions involving bank stock loans for the formation
of a one-bank holding company having a maturity of twelve years or more
on a case by case basis and no such transaction shall be approved if the
Board believes the safety or soundness of the bank may be jeopardized.
(5) Managerial resources
Consideration of the managerial resources of a company or bank under
paragraph (2) shall include consideration of the competence, experience,
and integrity of the officers, directors, and principal shareholders of
the company or bank.
(d) Limitation by State boundaries
Notwithstanding any other provision of this section, no application
(except an application filed as a result of a transaction authorized
under section 1823(f) of this title) shall be approved under this
section which will permit any bank holding company or any subsidiary
thereof to acquire, directly or indirectly, any voting shares of,
interest in, or all or substantially all of the assets of any additional
bank located outside the State in which the operations of such bank
holding company's banking subsidiaries were principally conducted on
July 1, 1966, or the date on which such company became a bank holding
company, whichever is later, unless the acquisition of such shares or
assets of a State bank by an out-of-State bank holding company is
specifically authorized by the statute laws of the State in which such
bank is located, by language to that effect and not merely by
implication. For the purposes of this section, the State in which the
operations of a bank holding company's subsidiaries are principally
conducted is that State in which total deposits of all such banking
subsidiaries are largest.
(e) Insured depository institution
Every bank that is a holding company and every bank that is a
subsidiary of such a company shall become and remain an insured
depository institution as defined in section 1813 of this title. This
subsection does not apply to a bank described in the last sentence of
section 1841(c) of this title.
(f) Savings bank subsidiaries of bank holding companies
(1) In general
Notwithstanding any other provision of this chapter (other than
paragraphs (2) and (3)), any qualified savings bank which is a
subsidiary of a bank holding company may engage, directly or through a
subsidiary, in any activity in which such savings bank may engage (as a
State chartered savings bank) pursuant to express, incidental, or
implied powers under any statute or regulation, or under any judicial
interpretation of any law, of the State in which such savings bank is
located.
(2) Insurance activities
Except as provided in paragraph (3), any insurance activities of any
qualified savings bank which is a subsidiary of a bank holding company
shall be limited to insurance activities allowed under section 1843(c)(
8) of this title.
(3) Savings bank life insurance
Any qualified savings bank permitted, as of March 5, 1987, to engage
in the sale or underwriting of savings bank life insurance may sell or
underwrite such insurance after such savings bank is a subsidiary of a
bank holding company if --
(A) the savings bank is located in the State of Connecticut,
Massachusetts, or New York;
(B) such activity is expressly authorized by the law of the State in
which such savings bank is located;
(C) the savings bank retains its character as a savings bank;
(D) such activity is carried out by the savings bank directly and not
by --
(i) any subsidiary or affiliate of the savings bank; or
(ii) the bank holding company which controls such savings bank;
(E) such activity is carried out by the savings bank in accordance
with any residency or employment limitations set forth in the savings
bank life insurance statute in effect on March 5, 1987, in the State in
which such bank is located; and
(F) such activity is otherwise carried out in the same manner as
savings bank life insurance activity is carried out in the State in
which such bank is located by savings banks which are not subsidiaries
of any bank holding company registered under this chapter.
(4) Subsection shall cease to apply under certain circumstances
If any company which is not a savings bank or a savings bank holding
company acquires control of a qualified savings bank, such savings bank
shall cease to engage in any activity authorized under paragraph (1) or
(3) before the end of the 2-year period beginning on the date such
company acquires control, unless such activity is otherwise authorized
pursuant to this chapter.
(5) Special asset aggregation rule for purposes of paragraph (3)
For the sole purpose of determining whether a qualified savings bank
may continue to sell and underwrite savings bank life insurance in
accordance with this subsection after control of such savings bank is
acquired by a bank holding company, the assets of any other bank
affiliated with, or under contract to affiliate with, such savings bank
as of March 5, 1987, shall be treated as assets of the savings bank in
determining whether such bank holding company is a savings bank holding
company.
(g) Mutual bank holding company
(1) Establishment
Notwithstanding any provision of Federal law other than this chapter,
a savings bank or cooperative bank operating in mutual form may
reorganize so as to form a holding company.
(2) Regulation
A corporation organized as a holding company under this subsection
shall be regulated on the same terms and be subject to the same
limitations as any other holding company which controls a savings bank.
(May 9, 1956, ch. 240, 3, 70 Stat. 134; July 1, 1966, Pub. L.
89-485, 7, 80 Stat. 237; Dec. 31, 1970, Pub. L. 91-607, title I, 102,
84 Stat. 1763; Nov. 16, 1977, Pub. L. 95-188, title III, 301( a), 302,
91 Stat. 1388, 1389; Mar. 31, 1980, Pub. L. 96-221, title VII, 712(b),
(c), 713, 94 Stat. 189, 190; Oct. 15, 1982, Pub. L. 97-320, title I,
118(c), 141(a)(4), title IV, 404(d)(2), 96 Stat. 1479, 1489, 1512;
Aug. 10, 1987, Pub. L. 100-86, title I, 101(d), 107(b), title V,
502(h)(1), 509(a), 101 Stat. 561, 579, 628, 635; Aug. 9, 1989, Pub. L.
101-73, title VI, 602(b), 103 Stat. 409; Dec. 19, 1991, Pub. L.
102-242, title II, 202(d), 210, 105 Stat. 2290, 2298.)
Section 1823(f)(8)(D) of this title, referred to in subsec. (b)(2),
which defined ''bank in danger of closing'', was repealed by Pub. L.
101-73, title II, 217(5)(H), Aug. 9, 1989, 103 Stat. 257.
1991 -- Subsec. (c). Pub. L. 102-242, 202(d), inserted heading,
inserted par. (1) designation and heading, redesignated former pars.
(1) and (2) as subpars. (A) and (B), respectively, inserted par. (2)
designation and heading, added par. (3), and inserted par. (4)
designation and heading.
Subsec. (c)(5). Pub. L. 102-242, 210, added par. (5).
1989 -- Subsec. (e). Pub. L. 101-73, which directed the substitution
of ''an insured depository institution as defined in section 1813 of
this title'' for ''an insured bank as defined in section 1813(h) of this
title'', was executed by making the substitution for ''an insured bank
as such term is defined in section 1813(h) of this title'', as the
probable intent of Congress.
1987 -- Pub. L. 100-86, 509(a), repealed Pub. L. 97-320, 141. See
1982 Amendment note below.
Subsec. (b). Pub. L. 100-86, 502(h)(1), designated existing
provisions as par. (1) and added par. (2).
Subsec. (f). Pub. L. 100-86, 101(d), added subsec. (f).
Subsec. (g). Pub. L. 100-86, 107(b), added subsec. (g).
1982 -- Subsec. (d). Pub. L. 97-320, 118(c), inserted ''(except an
application filed as a result of a transaction authorized under section
1823(f) of this title)'' after ''no application''.
Pub. L. 97-320, 141(a)(4), which directed that, effective Oct. 13,
1986, the provisions of law amended by section 118 of Pub. L. 97-320
shall be amended to read as they would without such amendment, was
repealed by Pub. L. 100-86, 509(a). See Effective and Termination
Dates of 1982 Amendment note and Extension of Emergency Acquisition and
Net Worth Guarantee Provisions of Pub. L. 97-320 note set out under
section 1464 of this title.
Subsec. (e). Pub. L. 97-320, 404(d)(2), inserted ''This subsection
does not apply to a bank described in the last sentence of section
1841(c) of this title.''
1980 -- Subsec. (c). Pub. L. 96-221, 713, inserted provisions
relating to applications for the formation of one-bank holding
companies.
Subsec. (d). Pub. L. 96-221, 712(b), (c), temporarily designated
existing provisions as par. (1) and added par. (2). See Termination
Date of 1980 Amendment note set out below.
1977 -- Subsec. (a). Pub. L. 95-188, 301(a), authorized the Board to
extend the time for disposition of acquired shares for not more than one
year at a time and three years in the aggregate.
Subsec. (b). Pub. L. 95-188, 302, inserted provision for alternative
submission of views and recommendations within ten calendar days of the
date on which notice is given if the Board advises the appropriate
supervisory authority that an emergency exists requiring expeditious
action, substituted ''shall, by order,'' for ''shall by order'' and
inserted provisions respecting procedure in emergencies or probable
failures requiring immediate Board action and orders.
1970 -- Subsec. (a). Pub. L. 91-607, 102(1), inserted provision
deeming acquisition of bank shares after Dec. 31, 1970, as not being in
good faith in a fiduciary capacity if acquiring bank or company has sole
discretionary authority to exercise voting rights with respect thereto,
and provision for subsequent approval of retention of acquired shares
upon application filed within 90 days of acquisition and disposition of
shares or sole discretionary voting rights within two years after order
in an event of disapproval.
Subsec. (b). Pub. L. 91-607, 102(2), inserted provision deeming an
application for approval as granted where Board has not acted on
application within 91 day period beginning on date of submission to
Board of complete record on application.
Subsec. (e). Pub. L. 91-607, 102(3), added subsec. (e).
1966 -- Subsec. (a). Pub. L. 89-485, 7(a), (b), expanded the list of
acts requiring prior approval of the Board by including therein any
action that causes a bank to become a subsidiary of a bank holding
company and substituted provisions excepting shares that are held under
a trust that constitutes a company as defined in section 1841(b) of this
title and excepting shares as provided in pars. (2) and (3) of section
1841(g) of this title from the effect of the clause lifting the
requirements of prior Board approved in the case of shares acquired by a
bank in good faith in a fiduciary capacity for provisions excepting
shares held for the benefit of the shareholders of a bank from the
effect of the clause.
Subsec. (c). Pub. L. 89-485, 7(c), inserted provision prohibiting any
acquisition, merger, or consolidation that would result in a monopoly or
would further any combination or conspiracy to monopolize the banking
business in any part of the United States or would substantially lessen
competition or in any manner be in restraint of trade unless the public
interest clearly outweighed the anticompetitive effects and substituted
provisions requiring the Board to take into consideration the financial
and managerial resources and future prospects of the company or bank
concerned and the convenience and needs of the community to be served
for provisions requiring the Board to take into consideration the
financial history of the company or bank concerned, its prospects, the
character of its management, the needs of the community, and the public
interest.
Subsec. (d). Pub. L. 89-485, 7(d), substituted provisions restricting
expansion to state in which the operations of the bank holding company's
banking subsidiaries were principally conducted, defined, as that state
in which total deposits of all such banking subsidiaries were largest,
on July 1, 1966, or the date on which the company became a bank holding
company, whichever is later, for provisions restricting expansion to
state in which the holding company maintains its principal office and
place of business or in which it conducts its principal operations.
Amendment by Pub. L. 96-221 repealed on Oct. 1, 1981, see section
712(c) of Pub. L. 96-221, set out as a note under section 27 of this
title.
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect before Aug. 10,
1987, to any other provision of law to be deemed to have taken effect
before such date and any such provision of law to be in effect as if no
such amendment had been made before such date, see section 509(c) of
Pub. L. 100-86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect on the day before
Oct. 8, 1986, to any other provision of law to be deemed to have taken
effect before such date and any such provision of law to be in effect as
if no such amendment had taken effect before such date, see section 1(c)
of Pub. L. 99-452, set out as a note under section 1464 of this title.
Section 141(a) of Pub. L. 97-320, set out as a note under section
1464 of this title, as in effect on the day after Aug. 27, 1986,
applicable as if included in Pub. L. 97-320 on Oct. 15, 1982, with no
amendment made by such section to any other provision of law to be
deemed to have taken effect before Aug. 27, 1986, and any such
provision of law to be in effect as if no such amendment had taken
effect before Aug. 27, 1986, see section 1(c) of Pub. L. 99-400, set
out as a note under section 1464 of this title.
/1/ So in original. Probably should be ''acquired''.
/2/ See References in Text note below.
/3/ So in original. Probably should be ''of''.
12 USC 1843. Interests in nonbanking organizations
TITLE 12 -- BANKS AND BANKING
(a) Ownership or control of voting shares of any company not a bank;
engagement in activities other than banking
Except as otherwise provided in this chapter, no bank holding company
shall --
(1) after May 9, 1956, acquire direct or indirect ownership or
control of any voting shares of any company which is not a bank, or
(2) after two years from the date as of which it becomes a bank
holding company, or in the case of a company which has been continuously
affiliated since May 15, 1955, with a company which was registered under
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), prior to
May 15, 1955, in such a manner as to constitute an affiliated company
within the meaning of that Act, after December 31, 1978, or, in the case
of any company which becomes, as a result of the enactment of the Bank
Holding Company Act Amendments of 1970, a bank holding company on
December 31, 1970, after December 31, 1980, retain direct or indirect
ownership or control of any voting shares of any company which is not a
bank or bank holding company or engage in any activities other than (A)
those of banking or of managing or controlling banks and other
subsidiaries authorized under this chapter or of furnishing services to
or performing services for its subsidiaries, and (B) those permitted
under paragraph (8) of subsection (c) of this section subject to all the
conditions specified in such paragraph or in any order or regulation
issued by the Board under such paragraph: Provided, That a company
covered in 1970 may also engage in those activities in which directly or
through a subsidiary (i) it was lawfully engaged on June 30, 1968 (or on
a date subsequent to June 30, 1968 in the case of activities carried on
as the result of the acquisition by such company or subsidiary, pursuant
to a binding written contract entered into on or before June 30, 1968,
of another company engaged in such activities at the time of the
acquisition), and (ii) it has been continuously engaged since June 30,
1968 (or such subsequent date). The Board by order, after opportunity
for hearing, may terminate the authority conferred by the preceding
proviso on any company to engage directly or through a subsidiary in any
activity otherwise permitted by that proviso if it determines, having
due regard to the purposes of this chapter, that such action is
necessary to prevent undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices;
and in the case of any such company controlling a bank having bank
assets in excess of $60,000,000 on or after December 31, 1970, the Board
shall determine, within two years after such date (or, if later, within
two years after the date on which the bank assets first exceed
$60,000,000), whether the authority conferred by the preceding proviso
with respect to such company should be terminated as provided in this
sentence. Nothing in this paragraph shall be construed to authorize any
bank holding company referred to in the preceding proviso, or any
subsidiary thereof, to engage in activities authorized by that proviso
through the acquisition, pursuant to a contract entered into after June
30, 1968, of any interest in or the assets of a going concern engaged in
such activities. Any company which is authorized to engage in any
activity pursuant to the preceding proviso or subsection (d) of this
section but, as a result of action of the Board, is required to
terminate such activity may (notwithstanding any otherwise applicable
time limit prescribed in this paragraph) retain the ownership or control
of shares in any company carrying on such activity for a period of ten
years from the date on which its authority was so terminated by the
Board. Notwithstanding any other provision of this paragraph, if any
company that became a bank holding company as a result of the enactment
of the Competitive Equality Amendments of 1987 acquired, between March
5, 1987, and August 10, 1987, an institution that became a bank as a
result of the enactment of such Amendments, that company shall, upon
enactment of such Amendments, immediately come into compliance with the
requirements of this chapter.
The Board is authorized, upon application by a bank holding company,
to extend the two year period referred to in paragraph (2) above from
time to time as to such bank holding company for not more than one year
at a time, if, in its judgment, such an extension would not be
detrimental to the public interest, but no such extensions shall in the
aggregate exceed three years. Notwithstanding any other provision of
this chapter, the period ending December 31, 1980, referred to in
paragraph (2) above, may be extended by the Board of Governors to
December 31, 1984, but only for the divestiture by a bank holding
company of real estate or interests in real estate lawfully acquired for
investment or development. In making its decision whether to grant such
extension, the Board shall consider whether the company has made a good
faith effort to divest such interests and whether such extension is
necessary to avert substantial loss to the company.
(b) Statement purporting to represent shares of any company except a
bank or bank holding company
After two years from May 9, 1956, no certificate evidencing shares of
any bank holding company shall bear any statement purporting to
represent shares of any other company except a bank or a bank holding
company, nor shall the ownership, sale, or transfer of shares of any
bank holding company be conditioned in any manner whatsoever upon the
ownership, sale, or transfer of shares of any other company except a
bank or a bank holding company.
(c) Exemptions
The prohibitions in this section shall not apply to (i) any company
that was on January 4, 1977, both a bank holding company and a labor,
agricultural, or horticultural organization exempt from taxation under
section 501 of title 26, or to any labor, agricultural, or horticultural
organization to which all or substantially all of the assets of such
company are hereafter transferred, or (ii) a company covered in 1970
more than 85 per centum of the voting stock of which was collectively
owned on June 30, 1968, and continuously thereafter, directly or
indirectly, by or for members of the same family, or their spouses, who
are lineal descendants of common ancestors; and such prohibitions shall
not, with respect to any other bank holding company, apply to --
(1) shares of any company engaged or to be engaged solely in one or
more of the following activities: (A) holding or operating properties
used wholly or substantially by any banking subsidiary of such bank
holding company in the operations of such banking subsidiary or acquired
for such future use; or (B) conducting a safe deposit business; or (C)
furnishing services to or performing services for such bank holding
company or its banking subsidiaries; or (D) liquidating assets acquired
from such bank holding company or its banking subsidiaries or acquired
from any other source prior to May 9, 1956, or the date on which such
company became a bank holding company, whichever is later;
(2) shares acquired by a bank holding company or any of its
subsidiaries in satisfaction of a debt previously contracted in good
faith, but such shares shall be disposed of within a period of two years
from the date on which they were acquired, except that the Board is
authorized upon application by such bank holding company to extend such
period of two years from time to time as to such holding company for not
more than one year at a time if, in its judgment, such an extension
would not be detrimental to the public interest, but no such extensions
shall extend beyond a date five years after the date on which such
shares were acquired;
(3) shares acquired by such bank holding company from any of its
subsidiaries which subsidiary has been requested to dispose of such
shares by any Federal or State authority having statutory power to
examine such subsidiary, but such bank holding company shall dispose of
such shares within a period of two years from the date on which they
were acquired;
(4) shares held or acquired by a bank in good faith in a fiduciary
capacity, except where such shares are held under a trust that
constitutes a company as defined in section 1841(b) of this title and
except as provided in paragraphs (2) and (3) of section 1841(g) of this
title;
(5) shares which are of the kinds and amounts eligible for investment
by national banking associations under the provisions of section 24 of
this title;
(6) shares of any company which do not include more than 5 per centum
of the outstanding voting shares of such company;
(7) shares of an investment company which is not a bank holding
company and which is not engaged in any business other than investing in
securities, which securities do not include more than 5 per centum of
the outstanding voting shares of any company;
(8) shares of any company the activities of which the Board after due
notice and opportunity for hearing has determined (by order or
regulation) to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto, but for purposes
of this subsection it is not closely related to banking or managing or
controlling banks for a bank holding company to provide insurance as a
principal, agent, or broker except (A) where the insurance is limited to
assuring repayment of the outstanding balance due on a specific
extension of credit by a bank holding company or its subsidiary in the
event of the death, disability, or involuntary unemployment of the
debtor; (B) in the case of a finance company which is a subsidiary of a
bank holding company, where the insurance is also limited to assuring
repayment of the outstanding balance on an extension of credit in the
event of loss or damage to any property used as collateral on such
extention /1/ of credit and, during the period beginning on October 15,
1982, and ending on December 31, 1982, such extension of credit is not
more than $10,000 ($25,000 in the case of an extension of credit which
is made to finance the purchase of a residential manufactured home and
which is secured by such residential manufactured home) and for any
given year after 1982, such extension of credit is not more than an
amount equal to $10,000 ($25,000 in the case of an extension of credit
which is made to finance the purchase of a residential manufactured home
and which is secured by such residential manufactured home) increased by
the percentage increase in the Consumer Price Index for Urban Wage
Earners and Clerical Workers published monthly by the Bureau of Labor
Statistics for the period beginning on January 1, 1982, and ending on
December 31 of the year preceding the year in which such extension of
credit is made; (C) any insurance agency activity in a place that (i)
has a population not exceeding five thousand (as shown by the last
preceding decennial census), or (ii) the bank holding company, after
notice and opportunity for a hearing, demonstrates has inadequate
insurance agency facilities; (D) any insurance agency activity which
was engaged in by the bank holding company or any of its subsidiaries on
May 1, 1982, or which the Board approved for such company or any of its
subsidiaries on or before May 1, 1982, including (i) sales of insurance
at new locations of the same bank holding company or the same subsidiary
or subsidiaries with respect to which insurance was sold on May 1, 1982,
or approved to be sold on or before May 1, 1982, if such new locations
are confined to the State in which the principal place of business of
the bank holding company is located, any State or States immediately
adjacent to such State, and any State or States in which insurance
activities were conducted by the bank holding company or any of its
subsidiaries on May 1, 1982, or were approved to be conducted by the
bank holding company or any of its subsidiaries on or before May 1,
1982, and (ii) sales of insurance coverages which may become available
after May 1, 1982, so long as those coverages insure against the same
types of risks as, or are otherwise functionally equivalent to,
coverages sold on May 1, 1982, or approved to be sold on or before May
1, 1982 (for purposes of this subparagraph, activities engaged in or
approved by the Board on May 1, 1982, shall include activities carried
on subsequent to that date as the result of an application to engage in
such activities pending on May 1, 1982, and approved subsequent to that
date or of the acquisition by such company pursuant to a binding written
contract entered into on or before May 1, 1982, of another company
engaged in such activities at the time of the acquisition); (E) any
insurance activity where the activity is limited solely to supervising
on behalf of insurance underwriters the activities of retail insurance
agents who sell (i) fidelity insurance and property and casualty
insurance on the real and personal property used in the operations of
the bank holding company or any of its subsidiaries, and (ii) group
insurance that protects the employees of the bank holding company or any
of its subsidiaries; (F) any insurance agency activity engaged in by a
bank holding company, or any of its subsidiaries, which bank holding
company has total assets of $50,000,000 or less: Provided, however,
That such a bank holding company and its subsidiaries may not engage in
the sale of life insurance or annuities except as provided in
subparagraph (A), (B), or (C); or (G) where the activity is performed,
or shares of the company involved are owned, directly, or indirectly, by
a bank holding company which is registered with the Board of Governors
of the Federal Reserve System and which, prior to January 1, 1971, was
engaged, directly or indirectly, in insurance agency activities as a
consequence of approval by the Board prior to January 1, 1971. In
determining whether a particular activity is a proper incident to
banking or managing or controlling banks the Board shall consider
whether its performance by an affiliate of a holding company can
reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices. In orders and regulations under this
subsection, the Board may differentiate between activities commenced de
novo and activities commenced by the acquisition, in whole or in part,
of a going concern. Notwithstanding any other provision of this
chapter, if the Board finds that an emergency exists which requires the
Board to act immediately on any application under this subsection
involving a thrift institution, and the primary Federal regulator of
such institution concurs in such finding, the Board may dispense with
the notice and hearing requirement of this subsection and the Board may
approve or deny any such application without notice or hearing. If an
application is filed under this paragraph in connection with an
application to make an acquisition pursuant to section 13(f) of the
Federal Deposit Insurance Act (12 U.S. C. 1823(f)), the Board may
dispense with the notice and hearing requirement of this paragraph and
the Board may approve or deny the application under this paragraph
without notice or hearing. If an application described in the preceding
sentence is approved, the Board shall publish in the Federal Register,
not later than 7 days after such approval is granted, the order
approving the application and a description of the nonbanking activities
involved in the acquisition;
(9) shares held or activities conducted by any company organized
under the laws of a foreign country the greater part of whose business
is conducted outside the United States, if the Board by regulation or
order determines that, under the circumstances and subject to the
conditions set forth in the regulation or order, the exemption would not
be substantially at variance with the purposes of this chapter and would
be in the public interest;
(10) shares lawfully acquired and owned prior to May 9, 1956, by a
bank which is a bank holding company, or by any of its wholly owned
subsidiaries;
(11) shares owned directly or indirectly by a company covered in 1970
in a company which does not engage in any activities other than those in
which the bank holding company, or its subsidiaries, may engage by
virtue of this section, but nothing in this paragraph authorizes any
bank holding company, or subsidiary thereof, to acquire any interest in
or the assets of any going concern (except pursuant to a binding written
contract entered into before June 30, 1968, or pursuant to another
provision of this chapter) other than one which was a subsidiary on June
30, 1968;
(12) shares retained or acquired, or activities engaged in, by any
company which becomes, as a result of the enactment of the Bank Holding
Company Act Amendments of 1970, a bank holding company on December 31,
1970, or by any subsidiary thereof, if such company --
(A) within the applicable time limits prescribed in subsection (a)(
2) of this section (i) ceases to be a bank holding company, or (ii)
ceases to retain direct or indirect ownership or control of those shares
and to engage in those activities not authorized under this section;
and
(B) complies with such other conditions as the Board may by
regulation or order prescribe;
(13) shares of, or activities conducted by, any company which does no
business in the United States except as an incident to its international
or foreign business, if the Board by regulation or order determines
that, under the circumstances and subject to the conditions set forth in
the regulation or order, the exemption would not be substantially at
variance with the purposes of this chapter and would be in the public
interest; or
(14) shares of any company which is an export trading company whose
acquisition (including each acquisition of shares) or formation by a
bank holding company has not been disapproved by the Board pursuant to
this paragraph, except that such investments, whether direct or
indirect, in such shares shall not exceed 5 per centum of the bank
holding company's consolidated capital and surplus.
(A)(i) No bank holding company shall invest in an export trading
company under this paragraph unless the Board has been given sixty days'
prior written notice of such proposed investment and within such period
has not issued a notice disapproving the proposed investment or
extending for up to another thirty days the period during which such
disapproval may be issued.
(ii) The period for disapproval may be extended for such additional
thirty-day period only if the Board determines that a bank holding
company proposing to invest in an export trading company has not
furnished all the information required to be submitted or that in the
Board's judgment any material information submitted is substantially
inaccurate.
(iii) The notice required to be filed by a bank holding company shall
contain such relevant information as the Board shall require by
regulation or by specific request in connection with any particular
notice.
(iv) The Board may disapprove any proposed investment only if --
(I) such disapproval is necessary to prevent unsafe or unsound
banking practices, undue concentration of resources, decreased or unfair
competition, or conflicts of interest;
(II) the Board finds that such investment would affect the financial
or managerial resources of a bank holding company to an extent which is
likely to have a materially adverse effect on the safety and soundness
of any subsidiary bank of such bank holding company, or
(III) the bank holding company fails to furnish the information
required under clause (iii).
(v) Leverage. -- The Board may not disapprove any proposed investment
solely on the basis of the anticipated or proposed asset-to-equity ratio
of the export trading company with respect to which such investment is
proposed, unless the anticipated or proposed annual average
asset-to-equity ratio is greater than 20-to-1.
(vi) Within three days after a decision to disapprove an investment,
the Board shall notify the bank holding company in writing of the
disapproval and shall provide a written statement of the basis for the
disapproval.
(vii) A proposed investment may be made prior to the expiration of
the disapproval period if the Board issues written notice of its intent
not to disapprove the investment.
(B)(i) The total amount of extensions of credit by a bank holding
company which invests in an export trading company, when combined with
all such extensions of credit by all the subsidiaries of such bank
holding company, to an export trading company shall not exceed at any
one time 10 per centum of the bank holding company's consolidated
capital and surplus. For purposes of the preceding sentence, an
extension of credit shall not be deemed to include any amount invested
by a bank holding company in the shares of an export trading company.
(ii) No provision of any other Federal law in effect on October 1,
1982, relating specifically to collateral requirements shall apply with
respect to any such extension of credit.
(iii) No bank holding company or subsidiary of such company which
invests in an export trading company may extend credit to such export
trading company or to customers of such export trading company on terms
more favorable than those afforded similar borrowers in similar
circumstances, and such extension of credit shall not involve more than
the normal risk of repayment or present other unfavorable features.
(C) For purposes of this paragraph, an export trading company --
(i) may engage in or hold shares of a company engaged in the business
of underwriting, selling, or distributing securities in the United
States only to the extent that any bank holding company which invests in
such export trading company may do so under applicable Federal and State
banking laws and regulations; and
(ii) may not engage in agricultural production activities or in
manufacturing, except for such incidental product modification including
repackaging, reassembling or extracting byproducts, as is necessary to
enable United States goods or services to conform with requirements of a
foreign country and to facilitate their sale in foreign countries.
(D) A bank holding company which invests in an export trading company
may be required, by the Board, to terminate its investment or may be
made subject to such limitations or conditions as may be imposed by the
Board, if the Board determines that the export trading company has taken
positions in commodities or commodity contracts, in securities, or in
foreign exchange, other than as may be necessary in the course of the
export trading company's business operations.
(E) Notwithstanding any other provision of law, an Edge Act
corporation, organized under section 25(a) /2/ of the Federal Reserve
Act (12 U.S.C. 611-631), which is a subsidiary of a bank holding
company, or an agreement corporation, operating subject to section 25 of
the Federal Reserve Act (12 U.S.C. 601 et seq.), which is a subsidiary
of a bank holding company, may invest directly and indirectly in the
aggregate up to 5 per centum of its consolidated capital and surplus (25
per centum in the case of a corporation not engaged in banking) in the
voting stock of other evidences of ownership in one or more export
trading companies.
(F) For purposes of this paragraph --
(i) the term ''export trading company'' means a company which does
business under the laws of the United States or any State, which is
exclusively engaged in activities related to international trade, and
which is organized and operated principally for purposes of exporting
goods or services produced in the United States or for purposes of
facilitating the exportation of goods or services produced in the United
States by unaffiliated persons by providing one or more export trade
services. /3/
(ii) the term ''export trade services'' includes, but is not limited
to, consulting, international market research, advertising, marketing,
insurance (other than acting as principal, agent or broker in the sale
of insurance on risks resident or located, or activities performed, in
the United States, except for insurance covering the transportation of
cargo from any point of origin in the United States to a point of final
destination outside the United States), product research and design,
legal assistance, transportation, including trade documentation and
freight forwarding, communication and processing of foreign orders to
and for exporters and foreign purchasers, warehousing, foreign exchange,
financing, and taking title to goods, when provided in order to
facilitate the export of goods or services produced in the United
States;
(iii) the term ''bank holding company'' shall include a bank which
(I) is organized solely to do business with other banks and their
officers, directors, or employees; (II) is owned primarily by the banks
with which it does business; and (III) does not do business with the
general public. No such other bank, owning stock in a bank described in
this clause that invests in an export trading company, shall extend
credit to an export trading company in an amount exceeding at any one
time 10 per centum of such other bank's capital and surplus; and
(iv) the term ''extension of credit'' shall have the same meaning
given such term in the fourth paragraph of section 371c of this title.
(G) Determination of status as export trading company. --
(i) Time period requirements. -- For purposes of determining whether
an export trading company is operated principally for the purposes
described in subparagraph (F)(i) --
(I) the operations of such company during the 2-year period beginning
on the date such company commences operations shall not be taken into
account in making any such determination; and
(II) not less than 4 consecutive years of operations of such company
(not including any portion of the period referred to in subclause (I))
shall be taken into account in making any such determination.
(ii) Export revenue requirements. -- A company shall not be treated
as operated principally for the purposes described in subparagraph (F)(
i) unless --
(I) the revenues of such company from the export, or facilitating the
export, of goods or services produced in the United States exceed the
revenues of such company from the import, or facilitating the import,
into the United States of goods or services produced outside the United
States; and
(II) at least 1/3 of such company's total revenues are revenues from
the export, or facilitating the export, of goods or services produced in
the United States by persons not affiliated with such company.
(H) Inventory. --
(i) No general limitation. -- The Board may not prescribe by
regulation any maximum dollar amount limitation on the value of goods
which an export trading company may maintain in inventory at any time.
(ii) Specific limitation by order. -- Notwithstanding clause (i), the
Board may issue an order establishing a maximum dollar amount limitation
on the value of goods which a particular export trading company may
maintain in inventory at any time (after such company has been operating
for a reasonable period of time) if the Board finds that, under the
facts and circumstances, such limitation is necessary to prevent risks
that would affect the financial or managerial resources of an investor
bank holding company to an extent which would be likely to have a
materially adverse effect on the safety and soundness of any subsidiary
bank of such bank holding company.
In the event of the failure of the Board to act on any application
for an order under paragraph (8) of this subsection within the
ninety-one-day period which begins on the date of submission to the
Board of the complete record on that application, the application shall
be deemed to have been granted. The Board shall include in its annual
report to the Congress a description and a statement of the reasons for
approval of each activity approved by it by order or regulation under
such paragraph during the period covered by the report.
(d) Exemption of company controlling one bank prior to July 1, 1968
To the extent that such action would not be substantially at variance
with the purposes of this chapter and subject to such conditions as it
considers necessary to protect the public interest, the Board by order,
after opportunity for hearing, may grant exemptions from the provisions
of this section to any bank holding company which controlled one bank
prior to July 1, 1968, and has not thereafter acquired the control of
any other bank in order (1) to avoid disrupting business relationships
that have existed over a long period of years without adversely
affecting the banks or communities involved, or (2) to avoid forced
sales of small locally owned banks to purchasers not similarly
representative of community interests, or (3) to allow retention of
banks that are so small in relation to the holding company's total
interests and so small in relation to the banking market to be served as
to minimize the likelihood that the bank's powers to grant or deny
credit may be influenced by a desire to further the holding company's
other interests.
(e) Divestiture of nonexempt shares
With respect to shares which were not subject to the prohibitions of
this section as originally enacted by reason of any exemption with
respect thereto but which were made subject to such prohibitions by the
subsequent repeal of such exemption, no bank holding company shall
retain direct or indirect ownership or control of such shares after five
years from the date of the repeal of such exemption, except as provided
in paragraph (2) of subsection (a) of this section. Any bank holding
company subject to such five-year limitation on the retention of
nonbanking assets shall endeavor to divest itself of such shares
promptly and such bank holding company shall report its progress in such
divestiture to the Board two years after repeal of the exemption
applicable to it and annually thereafter.
(f) Certain companies not treated as bank holding companies
(1) In general
Except as provided in paragraph (9), any company which --
(A) on March 5, 1987, controlled an institution which became a bank
as a result of the enactment of the Competitive Equality Amendments of
1987; and
(B) was not a bank holding company on the day before August 10, 1987,
shall not be treated as a bank holding company for purposes of this
chapter solely by virtue of such company's control of such institution.
(2) Loss of exemption
Paragraph (1) shall cease to apply to any company described in such
paragraph if --
(A) such company directly or indirectly --
(i) acquires control of an additional bank or an insured institution
(other than an insured institution described in paragraph (10) or (12)
of this subsection) after March 5, 1987; or
(ii) acquires control of more than 5 percent of the shares or assets
of an additional bank or a savings association other than --
(I) shares held as a bona fide fiduciary (whether with or without the
sole discretion to vote such shares);
(II) shares held by any person as a bona fide fiduciary solely for
the benefit of employees of either the company described in paragraph
(1) or any subsidiary of that company and the beneficiaries of those
employees;
(III) shares held temporarily pursuant to an underwriting commitment
in the normal course of an underwriting business;
(IV) shares held in an account solely for trading purposes;
(V) shares over which no control is held other than control of voting
rights acquired in the normal course of a proxy solicitation;
(VI) loans or other accounts receivable acquired in the normal course
of business;
(VII) shares or assets acquired in securing or collecting a debt
previously contracted in good faith, during the 2-year period beginning
on the date of such acquisition or for such additional time (not
exceeding 3 years) as the Board may permit if the Board determines that
such an extension will not be detrimental to the public interest;
(VIII) shares or assets of a savings association described in
paragraph (10) or (12) of this subsection;
(IX) shares of a savings association held by any insurance company,
as defined in section 80a-2(a)(17) of title 15, except as provided in
paragraph (11); and
(X) shares issued in a qualified stock issuance under section 1467a(
q) of this title;
except that the aggregate amount of shares held under this clause
(other than under subclauses (I), (II), (III), (IV), (V), and (VIII))
may not exceed 15 percent of all outstanding shares or of the voting
power of a savings association; or
(B) any bank subsidiary of such company fails to comply with the
restrictions contained in paragraph (3)(B).
(3) Limitation on banks controlled by paragraph (1) companies
(A) Findings
The Congress finds that banks controlled by companies referred to in
paragraph (1) may, because of relationships with affiliates, be involved
in conflicts of interest, concentration of resources, or other effects
adverse to bank safety and soundness, and may also be able to compete
unfairly against banks controlled by bank holding companies by combining
banking services with financial services not permissible for bank
holding companies. The purpose of this paragraph is to minimize any
such potential adverse effects or inequities by temporarily restricting
the activities of banks controlled by companies referred to in paragraph
(1) until such time as the Congress has enacted proposals to allow, with
appropriate safeguards, all banks or bank holding companies to compete
on a more equal basis with banks controlled by companies referred to in
paragraph (1) or, alternatively, proposals to permanently restrict the
activities of banks controlled by companies referred to in paragraph
(1).
(B) Limitations
Until such time as the Congress has taken action pursuant to
subparagraph (A), a bank controlled by a company described in paragraph
(1) shall not --
(i) engage in any activity in which such bank was not lawfully
engaged as of March 5, 1987;
(ii) offer or market products or services of an affiliate that are
not permissible for bank holding companies to provide under subsection
(c)(8) of this section, or permit its products or services to be offered
or marketed in connection with products and services of an affiliate,
unless --
(I) the Board, by regulation, has determined such products and
services are permissible for bank holding companies to provide under
subsection (c)(8) of this section;
(II) such products and services are described in section 377 of this
title and the Board, by regulation, has permitted bank holding companies
to offer or market such products or services, but has prohibited bank
holding companies and their affiliates from principally engaging in the
offering or marketing of such products or services; or
(III) such products or services were being so offered or marketed as
of March 5, 1987, and then only in the same manner in which they were
being offered or marketed as of that date;
(iii) after August 10, 1987, permit any overdraft (including an
intraday overdraft), or incur any such overdraft in such bank's account
at a Federal Reserve bank, on behalf of an affiliate, other than an
overdraft described in subparagraph (C); or
(iv) increase its assets at an annual rate of more than 7 percent
during any 12-month period beginning after the end of the 1-year period
beginning on August 10, 1987.
(C) Permissible overdrafts described
For purposes of subparagraph (B)(iii), an overdraft is described in
this subparagraph if --
(i) such overdraft results from an inadvertent computer or accounting
error that is beyond the control of both the bank and the affiliate; or
(ii) such overdraft --
(I) is permitted or incurred on behalf of an affiliate which is
monitored by, reports to, and is recognized as a primary dealer by the
Federal Reserve Bank of New York; and
(II) is fully secured, as required by the Board, by bonds, notes, or
other obligations which are direct obligations of the United States or
on which the principal and interest are fully guaranteed by the United
States or by securities and obligations eligible for settlement on the
Federal Reserve book entry system.
(4) Divestiture in case of loss of exemption
If any company described in paragraph (1) loses the exemption
provided under such paragraph by operation of paragraph (2), such
company shall divest control of each bank it controls within 180 days
after such company becomes a bank holding company due to the loss of
such exemption.
(5) Subsection ceases to apply under certain circumstances
This subsection shall cease to apply to any company described in
paragraph (1) if such company --
(A) registers as a bank holding company under section 1844(a) of this
title;
(B) immediately upon such registration, complies with all of the
requirements of this chapter, and regulations prescribed by the Board
pursuant to this chapter, including the nonbanking restrictions of this
section; and
(C) does not, at the time of such registration, control banks in more
than one State, the acquisition of which would be prohibited by section
1842(d) of this title if an application for such acquisition by such
company were filed under section 1842(a) of this title.
(6) Information requirement
Each company described in paragraph (1) shall, within 60 days after
August 10, 1987, provide the Board with the name and address of such
company, the name and address of each bank such company controls, and a
description of each such bank's activities.
(7) Examination
The Board may, from time to time, examine a company described in
paragraph (1), or a bank controlled by such company, or require reports
under oath from appropriate officers or directors of such company or
bank solely for purposes of assuring compliance with the provisions of
this subsection and enforcing such compliance.
(8) Enforcement
(A) In general
In addition to any other power of the Board, the Board may enforce
compliance with the provisions of this chapter which are applicable to
any company described in paragraph (1), and any bank controlled by such
company, under section 8 of the Federal Deposit Insurance Act (12 U.S.
C. 1818) and such company or bank shall be subject to such section (for
such purposes) in the same manner and to the same extent as if such
company or bank were a State member insured bank.
(B) Application of other act
Any violation of this chapter by any company described in paragraph
(1), and any bank controlled by such company, may also be treated as a
violation of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.)
for purposes of subparagraph (A).
(C) No effect on other authority
No provision of this paragraph shall be construed as limiting any
authority of the Comptroller of the Currency or the Federal Deposit
Insurance Corporation.
(9) Tying provisions
A company described in paragraph (1) shall be --
(A) treated as a bank holding company for purposes of section 106 of
the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1971 et seq.)
and section 22(h) of the Federal Reserve Act (12 U.S.C. 375b) and any
regulation prescribed under any such section; and
(B) subject to the restrictions of section 106 of the Bank Holding
Company Act Amendments of 1970 (12 U.S.C. 1971 et seq.), in connection
with any transaction involving the products or services of such company
or affiliate and those of a bank affiliate, as if such company or
affiliate were a bank and such bank were a subsidiary of a bank holding
company.
(10) Exemption unaffected by certain emergency acquisitions
For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A), an
insured institution is described in this paragraph if --
(A) the insured institution was acquired (or any shares or assets of
such institution were acquired) by a company described in paragraph (1)
in an acquisition under section 1730a(m) /4/ of this title or section
13(k) of the Federal Deposit Insurance Act (12 U.S.C. 1823(k)); and
(B) either --
(i) the insured institution is located in a State in which such
company controlled a bank on March 5, 1987; or
(ii) the insured institution has total assets of $500,000,000 or more
at the time of such acquisition.
(11) Shares held by insurance affiliates
Shares described in clause (ii)(IX) of paragraph (2)(A) shall not be
excluded for purposes of clause (ii) of such paragraph if --
(A) all shares held under such clause (ii)(IX) by all insurance
company affiliates of such savings association in the aggregate exceed 5
percent of all outstanding shares or of the voting power of the savings
association; or
(B) such shares are acquired or retained with a view to acquiring,
exercising, or transferring control of the savings association.
(12) Exemption unaffected by certain other acquisitions
For purposes of clauses (i) and (ii)(VIII) of paragraph (2)(A), an
insured institution is described in this paragraph if the insured
institution was acquired (or any shares or assets of such institution
were acquired) by a company described in paragraph (1) --
(A) from the Resolution Trust Corporation, the Federal Deposit
Insurance Corporation, or the Director of the Office of Thrift
Supervision, in any capacity; or
(B) in an acquisition in which the insured institution has been found
to be in danger of default (as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813)) by the appropriate Federal or
State authority.
(13) Special rule relating to shares acquired in a qualified stock
issuance
A company described in paragraph (1) that holds shares issued in a
qualified stock issuance pursuant to section 1467a(q) of this title by
any savings association or savings and loan holding company (neither of
which is a subsidiary) shall not be deemed to control such savings
association or savings and loan holding company solely because such
company holds such shares unless --
(A) the company fails to comply with any requirement or condition
imposed by paragraph (2)(A)(ii)(X) or section 1467a(q) of this title
with respect to such shares; or
(B) the shares are acquired or retained with a view to acquiring,
exercising, or transferring control of the savings association or
savings and loan holding company.
(g) Limitations on certain banks
(1) In general
Notwithstanding any other provision of this section (other than the
last sentence of subsection (a)(2) of this section), a bank holding
company which controls an institution that became a bank as a result of
the enactment of the Competitive Equality Amendments of 1987 may retain
control of such institution if such institution does not --
(A) engage in any activity after August 10, 1987, which would have
caused such institution to be a bank (as defined in section 1841(c) of
this title, as in effect before such date) if such activities had been
engaged in before such date; or
(B) increase the number of locations from which such institution
conducts business after March 5, 1987.
(2) Limitations cease to apply under certain circumstances
The limitations contained in paragraph (1) shall cease to apply to a
bank described in such paragraph at such time as the acquisition of such
bank, by the bank holding company referred to in such paragraph, would
not be prohibited under section 1842(d) of this title if --
(A) an application for such acquisition were filed under section
1842(a) of this title; and
(B) such bank were treated as an additional bank (under section
1842(d) of this title).
(h) Tying provisions
(1) Applicable to certain exempt institutions and parent companies
An institution described in subparagraph (D), (F), (G), (H), (I), or
(J) of section 1841(c)(2) of this title shall be treated as a bank, and
a company that controls such an institution shall be treated as a bank
holding company, for purposes of section 106 of the Bank Holding Company
Act Amendments of 1970 (12 U.S.C. 1971 et seq.) and section 22( h) of
the Federal Reserve Act (12 U.S.C. 375b) and any regulation prescribed
under any such section.
(2) Applicable with respect to certain transactions
A company that controls an institution described in subparagraph (D),
(F), (G), (H), (I), or (J) of section 1841(c)(2) of this title and any
of such company's other affiliates, shall be subject to the tying
restrictions of section 106 of the Bank Holding Company Act Amendments
of 1970 (12 U.S.C. 1971 et seq.) in connection with any transaction
involving the products or services of such company or affiliate and
those of such institution, as if such company or affiliate were a bank
and such institution were a subsidiary of a bank holding company.
(i) Acquisition of savings associations
(1) In general
The Board may approve an application by any bank holding company
under subsection (c)(8) of this section to acquire any savings
association in accordance with the requirements and limitations of this
section.
(2) Prohibition on tandem restrictions
In approving an application by a bank holding company to acquire a
savings association, the Board shall not impose any restriction on
transactions between the savings association and its holding company
affiliates, except as required under sections 371c and 371c-1 of this
title or any other applicable law.
(3) Acquisition of insolvent savings associations
(A) In general
Notwithstanding any other provision of this chapter, any qualified
savings association which became a federally chartered stock company in
December of 1986 and which is acquired by any bank holding company
without Federal financial assistance after June 1, 1991, and before
March 1, 1992, and any subsidiary of any such association, may after
such acquisition continue to engage within the home State of the
qualified savings association in insurance agency activities in which
any Federal savings association (or any subsidiary thereof) may engage
in accordance with the Home Owners' Loan Act (12 U.S.C. 1461 et seq.)
and regulations pursuant to such Act if the qualified savings
association or subsidiary thereof was continuously engaged in such
activity from June 1, 1991, to the date of the acquisition.
(B) ''Qualified savings association'' defined
For purposes of this paragraph, the term ''qualified savings
association'' means any savings association that --
(i) was chartered or organized as a savings association before June
1, 1991;
(ii) had, immediately before the acquisition of such association by
the bank holding company referred to in subparagraph (A), negative
tangible capital and total insured deposits in excess of $3,000,000,000;
and
(iii) will meet all applicable regulatory capital requirements as a
result of such acquisition.
(May 9, 1956, ch. 240, 4, 70 Stat. 135; July 1, 1966, Pub. L.
89-485, 8, 80 Stat. 238; Dec. 31, 1970, Pub. L. 91-607, title I, 103,
84 Stat. 1763; Nov. 16, 1977, Pub. L. 95-188, title III, 301( c), 91
Stat. 1389; Nov. 10, 1978, Pub. L. 95-630, title I, 112, 92 Stat. 3671;
Mar. 31, 1980, Pub. L. 96-221, title VII, 701(b), 94 Stat. 186; Oct.
8, 1982, Pub. L. 97-290, title II, 203, 96 Stat. 1236; Oct. 15, 1982,
Pub. L. 97-320, title I, 118(a), 141(a)(4), title IV, 433(b), title VI,
601, 96 Stat. 1479, 1489, 1527, 1536; Jan. 12, 1983, Pub. L. 97-457,
30, 96 Stat. 2511; Oct. 22, 1986, Pub. L. 99-514, 2, 100 Stat. 2095;
Aug. 10, 1987, Pub. L. 100-86, title I, 101(b), (c), title V, 502(h)(2),
509(a), 101 Stat. 557, 628, 635; Aug. 23, 1988, Pub. L. 100-418, title
III, 3402, 102 Stat. 1384; Aug. 9, 1989, Pub. L. 101-73, title VI,
601(a), 603, 604(b), title XII, 1219, 103 Stat. 408, 409, 411, 546;
Dec. 19, 1991, Pub. L. 102-242, title IV, 461, 105 Stat. 2384.)
The Investment Company Act of 1940, referred to in subsec. (a)(2), is
title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended,
which is classified generally to subchapter I ( 80a-1 et seq.) of
chapter 2D of Title 15, Commerce and Trade. For complete classification
of this Act to the Code, see section 80a-51 of Title 15 and Tables.
Enactment of the Bank Holding Company Act Amendments of 1970,
referred to in subsecs. (a)(2) and (c)(12), means enactment of Pub. L.
91-607 on Dec. 31, 1970. For classification of Pub. L. 91-607, see
Short Title of 1970 Amendment note set out under section 1841 of this
title.
Enactment of the Competitive Equality Amendments of 1987, referred to
in subsecs. (a)(2), (f)(1)(A), and (g)(1), means enactment of title I
of Pub. L. 100-86, Aug. 10, 1987, 101 Stat. 554. For classification
of title I of Pub. L. 100-86, see Short Title of 1987 Amendment note
set out under section 226 of this title and Tables.
Section 25(a) of the Federal Reserve Act (12 U.S.C. 611-631),
referred to in subsec. (c)(14)(E), which is popularly known as the Edge
Act, and which is classified to subchapter II ( 611 et seq.) of chapter
6 of this title, was renumbered section 25A of that act by Pub. L.
102-242, title I, 142(e)(2), Dec. 19, 1991, 105 Stat. 2281. Section 25
of the Federal Reserve Act is classified to subchapter I ( 601 et seq.)
of chapter 6 of this title.
The Federal Deposit Insurance Act, referred to in subsec. (f)(8)(B),
is act Sept. 21, 1950, ch. 967, 2, 64 Stat. 873, as amended, which is
classified generally to chapter 16 ( 1811 et seq.) of this title. For
complete classification of this Act to the Code, see Short Title note
set out under section 1811 of this title and Tables.
Section 106 of the Bank Holding Company Act Amendments of 1970,
referred to in subsecs. (f)(9)(A) and (h), is Pub. L. 91-607, title I,
106, Dec. 31, 1970, 84 Stat. 1766, as amended, which is classified
generally to chapter 22 ( 1971 et seq.) of this title.
Section 1730a of this title, referred to in subsec. (f)(10)(A), was
repealed by Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat.
363.
The Home Owners' Loan Act, referred to in subsec. (i)(3)(A), is act
June 13, 1933, ch. 64, 48 Stat. 128, as amended, which is classified
generally to chapter 12 ( 1461 et seq.) of this title. For complete
classification of this Act to the Code, see section 1461 of this title
and Tables.
1991 -- Subsec. (i)(3). Pub. L. 102-242 added par. (3).
1989 -- Subsec. (f)(2)(A)(i). Pub. L. 101-73, 604(b)(2), inserted
reference to par. (12).
Subsec. (f)(2)(A)(ii). Pub. L. 101-73, 603(a), amended cl. (ii)
generally. Prior to amendment, cl. (ii) read as follows: ''acquires
control of more than 5 percent of the shares or assets of an additional
bank or an insured institution other than --
''(I) shares acquired in a bona fide fiduciary capacity;
''(II) shares held temporarily pursuant to an underwriting commitment
in the normal course of an underwriting business;
''(III) shares held in an account solely for trading purposes;
''(IV) loans or other accounts receivable acquired in the normal
course of business; and
''(V) shares or assets of an insured institution described in
paragraph (10) of this subsection; or''.
Subsec. (f)(3)(B)(ii). Pub. L. 101-73, 1219, added cl. (ii) and
struck out former cl. (ii) which read as follows: ''offer or market
products or services of an affiliate that are not permissible for bank
holding companies to provide under subsection (c)(8) of this section, or
permit its products or services to be offered or marketed by or through
an affiliate (other than an affiliate that engages only in activities
permissible for bank holding companies under subsection (c)( 8) of this
section), unless such products or services were being so offered or
marketed as of March 5, 1987, and then only in the same manner in which
they were being offered or marketed as of that date;''.
Subsec. (f)(10). Pub. L. 101-73, 603(b)(1), substituted ''and (ii)(
VIII)'' for ''and (ii)(V)'', and in subpar. (A) inserted reference to
section 13(k) of the Federal Deposit Insurance Act.
Subsec. (f)(11). Pub. L. 101-73, 603(b)(2), added par. (11).
Subsec. (f)(12), (13). Pub. L. 101-73, 604(b)(1), added pars. (12)
and (13).
Subsec. (i). Pub. L. 101-73, 601(a), added subsec. (i).
1988 -- Subsec. (c)(14)(A). Pub. L. 100-418, 3402(b), added cl. (v)
and redesignated former cls. (v) and (vi) as (vi) and (vii),
respectively.
Subsec. (c)(14)(G). Pub. L. 100-418, 3402(a), added subpar. (G).
Subsec. (c)(14)(H). Pub. L. 100-418, 3402(c), added subpar. (H).
1987 -- Pub. L. 100-86, 509(a), repealed Pub. L. 97-320, 141. See
1982 Amendment note below.
Subsec. (a)(2). Pub. L. 100-86, 101(b), inserted at end
''Notwithstanding any other provision of this paragraph, if any company
that became a bank holding company as a result of the enactment of the
Competitive Equality Amendments of 1987 acquired, between March 5, 1987,
and August 10, 1987, an institution that became a bank as a result of
the enactment of such Amendments, that company shall, upon enactment of
such Amendments, immediately come into compliance with the requirements
of this chapter.''
Subsec. (c)(8). Pub. L. 100-86, 502(h)(2), struck out semicolon at
end and substituted a period and following sentences: ''If an
application is filed under this paragraph in connection with an
application to make an acquisition pursuant to section 13(f) of the
Federal Deposit Insurance Act, the Board may dispense with the notice
and hearing requirement of this paragraph and the Board may approve or
deny the application under this paragraph without notice or hearing. If
an application described in the preceding sentence is approved, the
Board shall publish in the Federal Register, not later than 7 days after
such approval is granted, the order approving the application and a
description of the nonbanking activities involved in the acquisition;''.
Subsecs. (f) to (h). Pub. L. 100-86, 101(c), added subsecs. (f) to
(h).
1986 -- Subsec. (c). Pub. L. 99-514 substituted ''Internal Revenue
Code of 1986'' for ''Internal Revenue Code of 1954'', which for purposes
of codification was translated as ''title 26'' thus requiring no change
in text.
1983 -- Subsec. (c)(8)(F). Pub. L. 97-457, 30(1), inserted proviso
that such a bank holding company and its subsidiaries may not engage in
sale of life insurance or annuities except as provided in subparagraph
(A), (B), or (C).
Subsec. (c)(8)(G). Pub. L. 97-457, 30(2), struck out proviso that
such bank holding company and its subsidiaries may not engage in sale of
life insurance or annuities except as provided in subparagraph (A), (B),
or (C).
1982 -- Subsec. (a). Pub. L. 97-320, 433(b), substituted ''December
31, 1984'' for ''December 31, 1982''.
Subsec. (c)(8). Pub. L. 97-320, 118(a), 601, inserted specification
that providing insurance is not being closely related to banking or
managing or controlling banks for purposes of this subsection,
exceptions thereto in cls. (A) through (G), and the subsequent proviso
relating to the sale of life insurance or annuities, and inserted
provisions relating to dispensation from the notice and hearing
requirement in the event of an emergency.
Pub. L. 97-320, 141(a)(4), which directed that, effective Oct. 13,
1986, the provisions of law amended by section 118 of Pub. L. 97-320
shall be amended to read as they would without such amendment, was
repealed by Pub. L. 100-86, 509(a). See Effective and Termination
Dates of 1982 Amendment note and Extension of Emergency Acquisition and
Net Worth Guarantee Provisions of Pub. L. 97-320 note set out under
section 1464 of this title.
Subsec. (c)(14). Pub. L. 97-290 added par. (14).
1980 -- Subsec. (a). Pub. L. 96-221 inserted provisions relating to
extension of period ending Dec. 31, 1980, to Dec. 31, 1982.
1978 -- Subsec. (c). Pub. L. 95-630 substituted ''The prohibitions
in this section shall not apply to (i) any company that was on January
4, 1977, both a bank holding company and a labor, agricultural, or
horticultural organization exempt from taxation under section 501 of
title 26, or to any labor, agricultural, or horticultural organization
to which all or substantially all of the assets of such company are
hereafter transferred'' for ''The prohibitions in this section shall not
apply to any bank holding company which is (i) a labor, agricultural, or
horticultural organization and which is exempt from taxation under
section 501 of title 26''.
1977 -- Subsec. (c)(2). Pub. L. 95-188 substituted ''shares acquired
by a bank holding company or any of its subsidiaries in satisfaction of
a debt previously contracted in good faith, but such shares shall be
disposed of within a period of two years'' for ''shares acquired by a
bank in satisfaction of a debt previously contracted in good faith, but
such bank shall dispose of such shares within a period of two years''.
1970 -- Subsec. (a). Pub. L. 91-607, 103(1), (2), in par. (2) of
first sentence, inserted provision respecting prohibition in the case of
a company which becomes, as a result of the enactment of the Bank
Holding Company Act Amendments of 1970, a bank holding company on the
date of such enactment, after Dec. 31, 1980, substituted ''engage in
any activities'' for ''engage in any business'', designated existing
provisions as cl. (A), substituting therein ''and other subsidiaries
authorized under this chapter or of furnishing services to or performing
services for its subsidiaries'' for ''or of furnishing services to or
performing services for any bank of which it owns or controls 25 per
centum or more of the voting shares'', added cl. (B) and provisions
respecting activities of a company covered in 1970, and termination of
authority for engaging in the activities, authorization of bank holding
company to engage in activities through acquisition of interest in or
assets of a going concern engaged in the activities, and retention for
period of ten years ownership or control of shares in a company carrying
on the activity, where the activity of the company has been terminated;
and, in second sentence substituted ''two year period'' for ''period'',
respectively.
Subsec. (c). Pub. L. 91-607, 103(3), (6), designated existing
provisions of text preceding par. (1) as cl. (i) and added cl. (2),
and inserted concluding text following par. (13) deeming an application
under par. (8) as granted upon failure of Board to act within
prescribed period and requiring the Board in the report to Congress to
include a description and a statement of reasons for approval of each
activity under par. (8), respectively.
Subsec. (c)(8). Pub. L. 91-607, 103(4), inserted provisions
respecting criteria to be used for determining whether particular
activity is proper incident to banking and provision for differentiation
by orders and regulations between de novo activities and going concern
activities, deleted description of company activities as being of a
financial, fiduciary, or insurance nature, specific language respecting
determination on basis of record made at the hearing, and provision
respecting the close relationship of the activities making it
unnecessary for prohibitions of this section to apply in order to carry
out the purposes of this chapter, substituted ''opportunity for
hearing'' for ''hearing'', and provided for determination by regulation.
Subsec. (c)(9). Pub. L. 91-607, 103(5), extended exemption to company
activities, substituted provision respecting conduct of greater part of
company's business; outside the United States for prior provision
respecting engaging principally in the banking business outside the
United States, and conditioned exemption on Board determination by
regulation or order that the exemption would not be substantially at
variance with the purposes of this chapter and would be in the public
interest.
Subsec. (c)(11) to (13). Pub. L. 91-607, 103(6), added pars. (11) to
(13).
Subsecs. (d), (e). Pub. L. 91-607, 103(7), added subsec. (d) and
redesignated former subsec. (d) as (e).
1966 -- Subsec. (a). Pub. L. 89-485, 8(a), extended until December
31, 1978, the deadline for divestiture by bank holding companies of
their nonbanking interests in the case of any company that has been
continuously affiliated since May 15, 1955, with a company which was
registered under the Investment Company Act of 1940, prior to May 15,
1955, in such a manner as to constitute an affiliated company within the
meaning of that Act.
Subsec. (c). Pub. L. 89-485, 8(b), limited the exception granted
companies engaged in liquidating assets acquired by the bank holding
company by requiring that, to qualify for the exception, the company be
engaged solely in liquidating assets acquired from the holding company
and its banks or from another source before it became subject to this
chapter and not merely engaged in the general liquidating business with
only a part of its operations performed for the holding company system,
authorized the grant of one year extensions up to a total of three years
to the two year period allowed for the disposal of shares acquired by a
bank in satisfaction of a debt previously contracted in good faith,
substituted reference, in par. (4), to shares held under a trust that
constitutes a company as defined in section 1841(b) and except as
provided in pars. (2) and (3) of section 1841(g) of this title for
reference to shares held for the benefit of the shareholders of a bank
holding company or any of its subsidiaries, and eliminated the
requirement that, in order to qualify for the exemption allowing a bank
holding company to hold shares in a nonbanking company, the shares do
not exceed 5 per centum of the holding company's assets in value.
Subsec. (d). Pub. L. 89-485, 8(c), added subsec. (d).
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
For short title of title II of Pub. L. 97-290 as the ''Bank Export
Services Act'', see Short Title of 1982 Amendment note set out under
section 1841 of this title.
Section 601(b) of Pub. L. 101-73 provided that: ''If the Board of
Governors of the Federal Reserve System, in approving an application by
a bank holding company to acquire a savings association, imposed any
restriction that would have been prohibited under section 4(i)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1843(i)(2)) (as added by
subsection (a) of this section) if that section had been in effect when
the application was approved, the Board shall modify that approval in a
manner consistent with that section.''
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect before Aug. 10,
1987, to any other provision of law to be deemed to have taken effect
before such date and any such provision of law to be in effect as if no
such amendment had been made before such date, see section 509(c) of
Pub. L. 100-86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, as in effect on the day before
Oct. 8, 1986, to any other provision of law to be deemed to have taken
effect before such date and any such provision of law to be in effect as
if no such amendment had taken effect before such date, see section 1(c)
of Pub. L. 99-452, set out as a note under section 1464 of this title.
Section 141(a) of Pub. L. 97-320, set out as a note under section
1464 of this title, as in effect on the day after Aug. 27, 1986,
applicable as if included in Pub. L. 97-320 on Oct. 15, 1982, with no
amendment made by such section to any other provision of law to be
deemed to have taken effect before Aug. 27, 1986, and any such
provision of law to be in effect as if no such amendment had taken
effect before Aug. 27, 1986, see section 1(c) of Pub. L. 99-400, set
out as a note under section 1464 of this title.
Section 202 of Pub. L. 97-290 provided that: ''The Congress hereby
declares that it is the purpose of this title (enacting section 635a-4
of this title, amending sections 372 and 1843 of this title, and
enacting provisions set out as notes under section 1843 of this title)
to provide for meaningful and effective participation by bank holding
companies, bankers' banks, and Edge Act (12 U.S.C. 611 et seq.)
corporations, in the financing and development of export trading
companies in the United States. In furtherance of such purpose, the
Congress intends that, in implementing its authority under section 4(
c)(14) of the Bank Holding Company Act of 1956 (subsec. (c)(14) of this
section) the Board of Governors of the Federal Reserve System should
pursue regulatory policies that --
''(1) provide for the establishment of export trading companies with
powers sufficiently broad to enable them to complete with similar
foreign-owned institutions in the United States and abroad;
''(2) afford to United States commerce, industry, and agriculture,
especially small- and medium-size firms, a means of exporting at all
times;
''(3) foster the participation by regional and smaller banks in the
development of export trading companies; and
''(4) facilitate the formation of joint venture export trading
companies between bank holding companies and nonbank firms that provide
for the efficient combination of complementary trade and financing
services designed to create export trading companies that can handle all
of an exporting company's needs.''
Section 205 of Pub. L. 97-290 required Federal Reserve Board, within
two years after Oct. 8, 1982, to report to Congress its recommendations
with respect to implementation of this section, on any changes in United
States law to facilitate financing of United States exports, and on
effects of ownership of United States banks by foreign banking
organizations affiliated with trading companies doing business in United
States.
/1/ So in original. Probably should be ''extension''.
/2/ See References in Text note below.
/3/ So in original. The period probably should be a semicolon.
/4/ See References in Text note below.
12 USC 1844. Administration
TITLE 12 -- BANKS AND BANKING
(a) Registration of bank holding company
Within one hundred and eighty days after May 9, 1956, or within one
hundred and eighty days after becoming a bank holding company, whichever
is later, each bank holding company shall register with the Board on
forms prescribed by the Board, which shall include such information with
respect to the financial condition and operations, management, and
intercompany relationships of the bank holding company and its
subsidiaries, and related matters, as the Board may deem necessary or
appropriate to carry out the purposes of this chapter. The Board may, in
its discretion, extend the time within which a bank holding company
shall register and file the requisite information.
(b) Regulations and orders
The Board is authorized to issue such regulations and orders as may
be necessary to enable it to administer and carry out the purposes of
this chapter and prevent evasions thereof.
(c) Reports required by Board; examinations; cost of examination
The Board from time to time may require reports under oath to keep it
informed as to whether the provisions of this chapter and such
regulations and orders issued thereunder have been complied with; and
the Board may make examinations of each bank holding company and each
subsidiary thereof, the cost of which shall be assessed against, and
paid by, such holding company. The Board shall, as far as possible, use
the report of examinations made by the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the appropriate State bank
supervisory authority for the purposes of this section.
(d) Reports to the Congress; recommendations
Before the expiration of two years following May 9, 1956, and each
year thereafter in the Board's annual report to the Congress, the Board
shall report to the Congress the results of the administration of this
chapter, stating what, if any, substantial difficulties have been
encountered in carrying out the purposes of this chapter, and any
recommendations as to changes in the law which in the opinion of the
Board would be desirable.
(e) Termination of activities or ownership or control of nonbank
subsidiaries constituting serious risk
(1) Notwithstanding any other provision of this chapter, the Board
may, whenever it has reasonable cause to believe that the continuation
by a bank holding company of any activity or of ownership or control of
any of its nonbank subsidiaries, other than a nonbank subsidiary of a
bank, constitutes a serious risk to the financial safety, soundness, or
stability of a bank holding company subsidiary bank and is inconsistent
with sound banking principles or with the purposes of this chapter or
with the Financial Institutions Supervisory Act of 1966, order the bank
holding company or any such nonbank subsidiaries, after due notice and
opportunity for hearing, and after considering the views of the bank's
primary supervisor, which shall be the Comptroller of the Currency in
the case of a national bank or the Federal Deposit Insurance Corporation
and the appropriate State supervisory authority in the case of an
insured nonmember bank, to terminate such activities or to terminate
(within one hundred and twenty days or such longer period as the Board
may direct in unusual circumstances) its ownership or control of any
such subsidiary either by sale or by distribution of the shares of the
subsidiary to the shareholders of the bank holding company. Such
distribution shall be pro rata with respect to all of the shareholders
of the distributing bank holding company, and the holding company shall
not make any charge to its shareholders arising out of such a
distribution.
(2) The Board may in its discretion apply to the United States
district court within the jurisdiction of which the principal office of
the holding company is located, for the enforcement of any effective and
outstanding order issued under this section, and such court shall have
jurisdiction and power to order and require compliance therewith, but
except as provided in section 1848 of this title, no court shall have
jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under this section, or to review,
modify, suspend, terminate, or set aside any such notice or order.
(f) Powers of Board respecting applications, examinations, or other
proceedings
In the course of or in connection with an application, examination,
investigation or other proceeding under this chapter, the Board, or any
member or designated representative thereof, including any person
designated to conduct any hearing under this chapter, shall have the
power to administer oaths and affirmations, to take or cause to be taken
depositions, and to issue, revoke, quash, or modify subpenas and
subpenas duces tecum; and the Board is empowered to make rules and
regulations to effectuate the purposes of this subsection. The
attendance of witnesses and the production of documents provided for in
this subsection may be required from any place in any State or in any
territory or other place subject to the jurisdiction of the United
States at any designated place where such proceeding is being conducted.
Any party to proceedings under this chapter may apply to the United
States District Court for the District of Columbia, or the United States
district court for the judicial district or the United States court in
any territory in which such proceeding is being conducted or where the
witness resides or carries on business, for the enforcement of any
subpena or subpena duces tecum issued pursuant to this subsection, and
such courts shall have jurisdiction and power to order and require
compliance therewith. Witnesses subpenaed under this subsection shall
be paid the same fees and mileage that are paid witnesses in the
district courts of the United States. Any service required under this
subsection may be made by registered mail, or in such other manner
reasonably calculated to give actual notice as the Board may by
regulation or otherwise provide. Any court having jurisdiction of any
proceeding instituted under this subsection may allow to any such party
such reasonable expenses and attorneys' fees as it deems just and
proper. Any person who willfully shall fail or refuse to attend and
testify or to answer any lawful inquiry or to produce books, papers,
correspondence, memoranda, contracts, agreements, or other records, if
in such person's power so to do, in obedience to the subpena of the
Board, shall be guilty of a misdemeanor and, upon conviction, shall be
subject to a fine of not more than $1,000 or to imprisonment for a term
of not more than one year or both.
(May 9, 1956, ch. 240, 5, 70 Stat. 137; Nov. 10, 1978, Pub. L.
95-630, title I, 105(a), 106(b), 92 Stat. 3646, 3648.)
The Financial Institutions Supervisory Act of 1966, referred to in
subsec. (e), is Pub. L. 89-695, Oct. 16, 1966, 80 Stat. 1028. For
complete classification of this Act to the Code, see Short Title note
set out under section 1464 of this title and Tables.
1978 -- Subsec. (e). Pub. L. 95-630, 105(a), added subsec. (e).
Subsec. (f). Pub. L. 95-630, 106(b), added subsec. (f).
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
12 USC 1845. Repealed. Pub. L. 89-485, 9, July 1, 1966, 80 Stat. 240
TITLE 12 -- BANKS AND BANKING
Section, act May 9, 1956, ch. 240, 6, 70 Stat. 137, prohibited any
subsidiary bank from lending to or investing in its parent holding
company or a fellow subsidiary bank. See section 371c of this title.
12 USC 1846. Reservation of rights to States
TITLE 12 -- BANKS AND BANKING
No provision of this chapter shall be construed as preventing any
State from exercising such powers and jurisdiction which it now has or
may hereafter have with respect to companies, banks, bank holding
companies, and subsidiaries thereof.
(May 9, 1956, ch. 240, 7, 70 Stat. 138; Aug. 10, 1987, Pub. L.
100-86, title I, 101(f), 101 Stat. 563.)
1987 -- Pub. L. 100-86 substituted ''No provision of this chapter
shall'' for ''The enactment by the Congress of this chapter shall not''
and inserted ''companies,'' before ''banks,''.
12 USC 1847. Penalties
TITLE 12 -- BANKS AND BANKING
(a) Criminal penalty
(1) Whoever knowingly violates any provision of this chapter or,
being a company, violates any regulation or order issued by the Board
under this chapter, shall be imprisoned not more than 1 year, fined not
more than $100,000 per day for each day during which the violation
continues, or both.
(2) Whoever, with the intent to deceive, defraud, or profit
significantly, knowingly violates any provision of this chapter shall be
imprisoned not more than 5 years, fined not more than $1,000,000 per day
for each day during which the violation continues, or both.
Every officer, director, agent, and employee of a bank holding
company shall be subject to the same penalties for false entries in any
book, report, or statement of such bank holding company as are
applicable to officers, directors, agents, and employees of member banks
for false entries in any books, reports, or statements of member banks
under section 1005 of title 18.
(b) Civil money penalty
(1) Penalty
Any company which violates, and any individual who participates in a
violation of, any provision of this chapter, or any regulation or order
issued pursuant thereto, shall forfeit and pay a civil penalty of not
more than $25,000 for each day during which such violation continues.
(2) Assessment; etc.
Any penalty imposed under paragraph (1) may be assessed and collected
by the Board in the manner provided in subparagraphs (E), (F), (G), and
(I) of section 1818(i)(2) of this title for penalties imposed (under
such section) and any such assessment shall be subject to the provisions
of such section.
(3) Hearing
The company or other person against whom any penalty is assessed
under this subsection shall be afforded an agency hearing if such
association or person submits a request for such hearing within 20 days
after the issuance of the notice of assessment. Section 1818(h) of this
title shall apply to any proceeding under this subsection.
(4) Disbursement
All penalties collected under authority of this subsection shall be
deposited into the Treasury.
(5) ''Violate'' defined
For purposes of this section, the term ''violate'' includes any
action (alone or with another or others) for or toward causing, bringing
about, participating in, counseling, or aiding or abetting a violation.
(6) Regulations
The Board shall prescribe regulations establishing such procedures as
may be necessary to carry out this subsection.
(c) Notice under this section after separation from service
The resignation, termination of employment or participation, or
separation of an institution-affiliated party (within the meaning of
section 1813(u) of this title) with respect to a bank holding company
(including a separation caused by the deregistration of such a company)
shall not affect the jurisdiction and authority of the Board to issue
any notice and proceed under this section against any such party, if
such notice is served before the end of the 6-year period beginning on
the date such party ceased to be such a party with respect to such
holding company (whether such date occurs before, on, or after August 9,
1989).
(d) Penalty for failure to make reports
(1) First tier
Any company which --
(A) maintains procedures reasonably adapted to avoid any inadvertent
error and, unintentionally and as a result of such an error --
(i) fails to make, submit, or publish such reports or information as
may be required under this chapter or under regulations prescribed by
the Board pursuant to this chapter, within the period of time specified
by the Board; or
(ii) submits or publishes any false or misleading report or
information; or
(B) inadvertently transmits or publishes any report which is
minimally late,
shall be subject to a penalty of not more than $2,000 for each day
during which such failure continues or such false or misleading
information is not corrected. The company shall have the burden of
proving that an error was inadvertent and that a report was
inadvertently transmitted or published late.
(2) Second tier
Any company which --
(A) fails to make, submit, or publish such reports or information as
may be required under this chapter or under regulations prescribed by
the Board pursuant to this chapter, within the period of time specified
by the Board; or
(B) submits or publishes any false or misleading report or
information,
in a manner not described in paragraph (1) shall be subject to a
penalty of not more than $20,000 for each day during which such failure
continues or such false or misleading information is not corrected.
(3) Third tier
Notwithstanding paragraph (2), if any company knowingly or with
reckless disregard for the accuracy of any information or report
described in paragraph (2) submits or publishes any false or misleading
report or information, the Board may, in its discretion, assess a
penalty of not more than $1,000,000 or 1 percent of total assets of such
company, whichever is less, per day for each day during which such
failure continues or such false or misleading information is not
corrected.
(4) Assessment; etc.
Any penalty imposed under paragraph (1), (2), or (3) shall be
assessed and collected by the Board in the manner provided in subsection
(b) of this section (for penalties imposed under such subsection) and
any such assessment (including the determination of the amount of the
penalty) shall be subject to the provisions of such subsection.
(5) Hearing
Any company against which any penalty is assessed under this
subsection shall be afforded an agency hearing if such company submits a
request for such hearing within 20 days after the issuance of the notice
of assessment. Section 1818(h) of this title shall apply to any
proceeding under this subsection.
(May 9, 1956, ch. 240, 8, 70 Stat. 138; Nov. 10, 1978, Pub. L.
95-630, title I, 106(a), 92 Stat. 3647; Oct. 15, 1982, Pub. L. 97-320,
title IV, 424(a), (d)(4), 96 Stat. 1522, 1523; Aug. 9, 1989, Pub. L.
101-73, title IX, 905(i), 907(j), 911(e), 103 Stat. 461, 475, 481.)
1989 -- Subsec. (a). Pub. L. 101-73, 907(j)(1), substituted heading
and pars. (1) and (2) for first two sentences which read as follows:
''Any company which willfully violates any provision of this chapter, or
any regulation or order issued by the Board pursuant thereto, shall upon
conviction be fined not more than $1,000 for each day during which the
violation continues. Any individual who willfully participates in a
violation of any provision of this chapter shall upon conviction be
fined not more than $10,000 or imprisoned not more than one year, or
both.''
Subsec. (b). Pub. L. 101-73, 907(j)(2), added headings and amended
text generally. Prior to amendment, subsec. (b) read as follows:
''(1) Any company which violates or any individual who participates
in a violation of any provision of this chapter, or any regulation or
order issued pursuant thereto, shall forfeit and pay a civil penalty of
not more than $1,000 per day for each day during which such violation
continues: Provided, That the Board may, in its discretion, compromise,
modify, or remit any civil money penalty which is subject to imposition
or has been imposed under authority of this subsection. The penalty may
be assessed and collected by the Board by written notice. As used in
the section, the term 'violates' includes without any limitation any
action (alone or with another or others) for or toward causing, bringing
about, participating in, counseling, or aiding or abetting a violation.
''(2) In determining the amount of the penalty the Board shall take
into account the appropriateness of the penalty with respect to the size
of financial resources and good faith of the company or person charged,
the gravity of the violation, the history of previous violations, and
such other matters as justice may require.
''(3) The company or person assessed shall be afforded an opportunity
for agency hearing, upon request made within ten days after issuance of
the notice of assessment. In such hearing all issues shall be
determined on the record pursuant to section 554 of title 5. The agency
determination shall be made by final order which may be reviewed only as
provided in section 1848 of this title. If no hearing is requested as
herein provided, the assessment shall constitute a final and
unappealable order.
''(4) If any company or person fails to pay an assessment after it
has become a final and unappealable order, or after the court of appeals
has entered final judgment in favor of the Board, the Board shall refer
the matter to the Attorney General, who shall recover the amount
assessed by action in the appropriate United States district court. In
such action the validity and appropriateness of the final order imposing
the penalty shall not be subject to review.
''(5) The Board shall promulgate regulations establishing procedures
necessary to implement this subsection.
''(6) All penalties collected under authority of this subsection
shall be covered into the Treasury of the United States.''
Subsec. (c). Pub. L. 101-73, 905(i), added subsec. (c).
Subsec. (d). Pub. L. 101-73, 911(e), added subsec. (d).
1982 -- Subsec. (b)(1). Pub. L. 97-320 inserted proviso giving the
Board discretionary authority to compromise, etc., any civil money
penalty imposed under this subsection, and substituted ''may be
assessed'' for ''shall be assessed''.
1978 -- Pub. L. 95-630 designated existing provisions as subsec.
(a) and added subsec. (b).
Amendment by section 907(j) of Pub. L. 101-73 applicable to conduct
engaged in after Aug. 9, 1989, except that increased maximum penalties
of $5,000 and $25,000 may apply to conduct engaged in before such date
if such conduct is not already subject to a notice issued by the
appropriate agency and occurred after completion of the last report of
the examination of the institution by the appropriate agency occurring
before Aug. 9, 1989, see section 907(l) of Pub. L. 101-73, set out as
a note under section 93 of this title.
Amendment by section 911(e) of Pub. L. 101-73 applicable with
respect to reports filed or required to be filed after Aug. 9, 1989,
see section 911(i) of Pub. L. 101-73, set out as a note under section
161 of this title.
Amendment by Pub. L. 95-630, relating to imposition of civil
penalties, applicable to violations occurring or continuing after Nov.
10, 1978, see section 109 of Pub. L. 95-630, set out as a note under
section 93 of this title.
12 USC 1848. Judicial review
TITLE 12 -- BANKS AND BANKING
Any party aggrieved by an order of the Board under this chapter may
obtain a review of such order in the United States Court of Appeals
within any circuit wherein such party has its principal place of
business or in the Court of Appeals in the District of Columbia, by
filing in the court, within thirty days after the entry of the Board's
order, a petition praying that the order of the Board be set aside. A
copy of such petition shall be forthwith transmitted to the Board by the
clerk of the court, and thereupon the Board shall file in the court the
record made before the Board, as provided in section 2112 of title 28.
Upon the filing of such petition the court shall have the jurisdiction
to affirm, set aside, or modify the order of the Board and to require
the Board to take such action with regard to the matter under review as
the court deems proper. The findings of the Board as to the facts, if
supported by substantial evidence, shall be conclusive.
(May 9, 1956, ch. 240, 9, 70 Stat. 138; Aug. 28, 1958, Pub. L.
85-791, 34, 72 Stat. 951; July 1, 1966, Pub. L. 89-485, 10, 80 Stat.
240.)
1966 -- Pub. L. 89-485 reduced from 60 to 30 days the period allowed
for the filing of a petition to obtain judicial review of a Board order.
1958 -- Pub. L. 85-791 substituted, in second sentence,
''transmitted to the Board by the clerk of the court, and thereupon the
Board shall file in the court the record made before the Board, as
provided in section 2112 of title 28'' for ''served upon the Board, and
thereupon the Board shall certify and file in the court a transcript of
the record made before the Board'', and in third sentence, ''such
petition'' for ''the transcript''.
12 USC 1849. Saving provision
TITLE 12 -- BANKS AND BANKING
(a) General rule
Nothing herein contained shall be interpreted or construed as
approving any act, action, or conduct which is or has been or may be in
violation of existing law, nor shall anything herein contained
constitute a defense to any action, suit, or proceeding pending or
hereafter instituted on account of any prohibited antitrust or
monopolistic act, action, or conduct, except as specifically provided in
this section.
(b) Antitrust review
(1) In general
The Board shall immediately notify the Attorney General of any
approval by it pursuant to section 1842 of this title of a proposed
acquisition, merger, or consolidation transaction. If the Board has
found that it must act immediately in order to prevent the probable
failure of a bank or bank holding company involved in any such
transaction, the transaction may be consummated immediately upon
approval by the Board. If the Board has advised the Comptroller of the
Currency or the State supervisory authority, as the case may be, of the
existence of an emergency requiring expeditious action and has required
the submission of views and recommendations within ten days, the
transaction may not be consummated before the fifth calendar day after
the date of approval by the Board. In all other cases, the transaction
may not be consummated before the thirtieth calendar day after the date
of approval by the Board. Any action brought under the antitrust laws
arising out of an acquisition, merger, or consolidation transaction
approved under section 1842 of this title shall be commenced prior to
the earliest time under this subsection at which the transaction
approval under section 1842 of this title might be consummated. The
commencement of such an action shall stay the effectiveness of the
Board's approval unless the court shall otherwise specifically order.
In any such action, the court shall review de novo the issues presented.
In any judicial proceeding attacking any acquisition, merger, or
consolidation transaction approved pursuant to section 1842 of this
title on the ground that such transaction alone and of itself
constituted a violation of any antitrust laws other than section 2 of
title 15, the standards applied by the court shall be identical with
those that the Board is directed to apply under section 1842 of this
title. Upon the consummation of an acquisition, merger, or
consolidation transaction approved under section 1842 of this title in
compliance with this chapter and after the termination of any antitrust
litigation commenced within the period prescribed in this section, or
upon the termination of such period if no such litigation is commenced
therein, the transaction may not thereafter be attacked in any judicial
proceeding on the ground that it alone and of itself constituted a
violation of any antitrust laws other than section 2 of title 15, but
nothing in this chapter shall exempt any bank holding company involved
in such a transaction from complying with the antitrust laws after the
consummation of such transaction.
(2) Section 1823(f) cases
(A) If --
(i) the Federal Deposit Insurance Corporation learns that a bank
insured by such Corporation is in danger of closing; and
(ii) the Corporation is considering assisting the acquisition of such
bank and its affiliated banks by another bank or holding company under
section 1823(f) of this title and such acquisition is subject to the
approval of the Board under section 1842 of this title;
the Corporation shall immediately notify the Board of such facts.
(B) Upon receipt of notice from the Federal Deposit Insurance
Corporation under subparagraph (A) or at such earlier time as deemed
appropriate by the Board, the Board shall immediately notify the
Attorney General of the United States of the facts concerning the
possible acquisition.
(C) Within 5 days of receiving notice under subparagraph (B), the
Attorney General shall notify the Board in writing of the Attorney
General's preliminary finding as to the consistency of the possible
acquisition with the antitrust laws.
(D) The Board may reduce or eliminate the post-approval waiting
period established under paragraph (1) for an acquisition to which this
paragraph applies, except that such period may not be eliminated or
reduced to less than 5 days without the concurrence of the Attorney
General.
(c) Antitrust proceedings; Board and State banking agency as party;
representation by counsel
In any action brought under the antitrust laws arising out of any
acquisition, merger, or consolidation transaction approved by the Board
under section 1842 of this title, the Board and any State banking
supervisory agency having jurisdiction within the State involved, may
appear as a party of its own motion and as of right, and be represented
by its counsel.
(d) Treatment of merger transactions consummated prior or subsequent
to May 9, 1956, and not in litigation prior to July 1, 1966
Any acquisition, merger, or consolidation of the kind described in
section 1842(a) of this title which was consummated at any time prior or
subsequent to May 9, 1956, and as to which no litigation was initiated
by the Attorney General prior to July 1, 1966, shall be conclusively
presumed not to have been in violation of any antitrust laws other than
section 2 of title 15.
(e) Antitrust litigation; substantive law applicable to proceedings
pending on or after July 1, 1966, with respect to merger transactions
Any court having pending before it on or after July 1, 1966, any
litigation initiated under the antitrust laws by the Attorney General
with respect to any acquisition, merger, or consolidation of the kind
described in section 1842(a) of this title shall apply the substantive
rule of law set forth in section 1842 of this title.
(f) ''Antitrust laws'' defined
For the purposes of this section, the term ''antitrust laws'' means
the Act of July 2, 1890 (the Sherman Antitrust Act), the Act of October
15, 1914 (the Clayton Act), and any other Acts in pari materia.
(May 9, 1956, ch. 240, 11, 70 Stat. 146; July 1, 1966, Pub. L.
89-485, 11, 80 Stat. 240; Dec. 31, 1970, Pub. L. 91-607, title I, 104,
84 Stat. 1766; Nov. 16, 1977, Pub. L. 95-188, title III, 303, 91 Stat.
1390; Aug. 10, 1987, Pub. L. 100-86, title V, 502(h)(3), 101 Stat.
628.)
Act of July 2, 1890 (the Sherman Antitrust Act), referred to in
subsec. (f), is classified to sections 1 to 7 of Title 15, Commerce and
Trade. For complete classification of this Act to the Code, see Short
Title note set out under section 1 of Title 15 and Tables.
Act of October 15, 1914 (the Clayton Act), referred to in subsec.
(f), is act Oct. 15, 1914, ch. 323, 38 Stat. 730, as amended, which
is classified generally to sections 12, 13, 14 to 19, 20, 21, and 22 to
27 of Title 15, and sections 52 and 53 of Title 29, Labor. For further
details and complete classification of this Act to the Code, see
References in Text note set out under section 12 of Title 15 and Tables.
1987 -- Subsec. (b). Pub. L. 100-86 designated existing provisions
as par. (1) and added par. (2).
1977 -- Subsec. (b). Pub. L. 95-188 authorized a proposed
acquisition, merger, or consolidation transaction to be consummated
immediately upon approval by the Board where the Board has found that it
must act immediately in order to prevent the probable failure of a bank
or bank holding company involved in any such transaction; prohibited a
transaction from being consummated before the fifth calendar day after
the date of approval by the Board where the Board has advised the
Comptroller of the Currency or the State supervisory authority, as the
case may be, of the existence of an emergency requiring expeditious
action and has required the submission of views and recommendations
within ten days; continued for all other cases the thirty day waiting
period after date of approval by the Board for consummation of the
transaction; and substituted provision for commencement of stay actions
prior to the earliest time at which the transaction approval under
section 1842 of this title might be consummated for prior provision for
commencement of such stay actions within the thirty-day waiting period.
1970 -- Subsec. (b). Pub. L. 91-607, 104(a), substituted ''section
1842 of this title'' for ''this chapter'' where appearing first two
times, and inserted ''approved under section 1842 of this title'' in
second sentence before ''shall be commended'' and in last sentence
before ''in compliance with this chapter''.
Subsec. (c). Pub. L. 91-607, 104(b), substituted ''under section 1842
of this title'' for ''pursuant to this chapter''.
1966 -- Pub. L. 89-485 designated existing provisions as subsec.
(a), inserted ''except as specifically provided in this section'', and
added subsecs. (b) to (f).
12 USC 1850. Acquisition of subsidiary, nonbanking activity or
business, and tying arrangement: Federal Reserve Board proceedings;
application for authorization; competitor as party in interest and
person aggrieved; judicial review
TITLE 12 -- BANKS AND BANKING
With respect to any proceeding before the Federal Reserve Board
wherein an applicant seeks authority to acquire a subsidiary which is a
bank under section 1842 of his title, to engage directly or indirectly
in a nonbanking activity pursuant to section 1843 of this title, or to
engage in an activity otherwise prohibited under chapter 22 of this
title, a party who would become a competitor of the applicant or
subsidiary thereof by virtue of the applicant's or its subsidiary's
acquisition, entry into the business involved, or activity, shall have
the right to be a party in interest in the proceeding and, in the event
of an adverse order of the Board, shall have the right as an aggrieved
party to obtain judicial review thereof as provided in section 1848 of
this title or as otherwise provided by law.
(Pub. L. 91-607, title I, 105, Dec. 31, 1970, 84 Stat. 1766.)
Section was enacted as part of the Bank Holding Company Act
Amendments of 1970, and not as part of the Bank Holding Company Act of
1956 which comprises this chapter.
12 USC CHAPTER 18 -- BANK SERVICE CORPORATIONS
TITLE 12 -- BANKS AND BANKING
Sec.
1861. Short title and definitions.
1862. Amount of investment in bank service corporation.
1863. Permissible bank service corporation activities for depository
institutions.
1864. Permissible bank service corporation activities for other
persons.
(a) Services permissible other than taking deposits.
(b) Services to be performed in State where shareholders are located.
(c) Performance where State bank is shareholder.
(d) Performance where national bank is shareholder.
(e) Performance where State bank and national bank are shareholders.
(f) Geographic location.
1865. Prior approval for investments in bank service corporations.
(a) Approval of Federal banking agency.
(b) Approval of Board.
(c) Considerations in determining approval.
(d) Failure to act on application for approval.
1866. Services to nonstockholders.
1867. Regulation and examination of bank service corporations.
(a) Principal investor.
(b) Applicability of section 1818 of this title.
(c) Services performed by contract or otherwise.
(d) Issuance of regulations and orders.
12 USC 1861. Short title and definitions
TITLE 12 -- BANKS AND BANKING
(a) This chapter may be cited as the ''Bank Service Corporation
Act''.
(b) For the purpose of this chapter --
(1) the term ''appropriate Federal banking agency'' shall have the
meaning provided in section 1813(q) of this title;
(2) the term ''bank service corporation'' means a corporation
organized to perform services authorized by this chapter, all of the
capital stock of which is owned by one or more insured banks;
(3) the term ''Board'' means the Board of Governors of the Federal
Reserve System;
(4) the term ''depository institution'' means an insured bank,
financial institution subject to examination by the Federal Home Loan
Bank Board or the National Credit Union Administration Board, or a
financial institution the accounts or deposits of which are insured or
guaranteed under State law and are eligible to be insured by the Federal
Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration Board;
(5) the term ''insured bank'' shall have the meaning provided in
section 1813(h) of this title;
(6) the term ''invest'' includes any advance of funds to a bank
service corporation, whether by the purchase of stock, the making of a
loan, or otherwise, except a payment for rent earned, goods sold and
delivered, or services rendered prior to the making of such payment;
and
(7) the term ''principal investor'' means the insured bank that has
the largest dollar amount invested in the capital stock of a bank
service corporation. In any case where two or more insured banks have
equal dollar amounts invested in a bank service corporation, the
corporation shall, prior to commencing operations, select one of the
insured banks as its principal investor and shall notify the bank's
appropriate Federal banking agency of that choice within 5 business days
of its selection.
(Pub. L. 87-856, 1, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97-320,
title VII, 709, Oct. 15, 1982, 96 Stat. 1540; Pub. L. 97-457, 32(a),
Jan. 12, 1983, 96 Stat. 2511.)
1983 -- Subsec. (b)(4). Pub. L. 97-457 substituted ''a'' for ''or
another'' after ''insured bank,'' and inserted reference to a financial
institution insured by State law and eligible to be insured by certain
Federal agencies.
1982 -- Subsec. (a). Pub. L. 97-320 substituted provision that this
chapter may be cited as the ''Bank Service Corporation Act'' for
provision that term ''Federal supervisory agency'' meant the Comptroller
of the Currency, the Board of Governors of the Federal Reserve System,
or the Board of Directors of the Federal Deposit Insurance Corporation.
Subsec. (b). Pub. L. 97-320 substituted definitions of ''appropriate
Federal banking agency'', ''bank service corporation'', ''Board'',
''depository institution'', ''insured bank'', ''invest'', and
''principal investor'' for provision that term ''bank services'' meant
services such as check and deposit sorting and posting, computation and
posting of interest and other credits and charges, preparation and
mailing of checks, statements, notices, and similar items, or any other
clerical, bookkeeping, accounting, statistical, or similar functions
performed for a bank.
Subsec. (c). Pub. L. 97-320 redesignated provisions of subsec. (c)
defining ''bank service corporation'' as (b)(2), and revised definition.
Subsec. (d). Pub. L. 97-320 redesignated provisions of subsec. (d) as
(b)(6).
Federal Home Loan Bank Board and Federal Savings and Loan Insurance
Corporation abolished and functions transferred, see sections 401 to 406
of Pub. L. 101-73, set out as a note under section 1437 of this title.
12 USC 1862. Amount of investment in bank service corporation
TITLE 12 -- BANKS AND BANKING
Notwithstanding any limitation or prohibition otherwise imposed by
any provision of law exclusively relating to banks, an insured bank may
invest not more than 10 per centum of paid-in and unimpaired capital and
unimpaired surplus in a bank service corporation. No insured bank shall
invest more than 5 per centum of its total assets in bank service
corporations.
(Pub. L. 87-856, 2, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97-320,
title VII, 709, Oct. 15, 1982, 96 Stat. 1541.)
1982 -- Pub. L. 97-320 substituted provisions relating to the
maximum permissible amount of investment in a bank service corporation
by an insured bank for provisions which read as follows:
''(a) No limitation or prohibition otherwise imposed by any provision
of Federal law exclusively relating to banks shall prevent any two or
more banks from investing not more than 10 per centum of the paid-in and
unimpaired capital and unimpaired surplus of each of them in a bank
service corporation.
''(b) If stock in a bank service corporation has been held by two
banks, and one of such banks ceases to utilize the services of the
corporation and ceases to hold stock in it, and leaves the other as the
sole stockholding bank, the corporation may nevertheless continue to
function as such and the other bank may continue to hold stock in it.''
12 USC 1863. Permissible bank service corporation activities for
depository institutions
TITLE 12 -- BANKS AND BANKING
Without regard to the provisions of sections 1864 and 1865 of this
title, an insured bank may invest in a bank service corporation that
performs, and a bank service corporation may perform, the following
services only for depository institutions: check and deposit sorting
and posting, computation and posting of interest and other credits and
charges, preparation and mailing of checks, statements, notices, and
similar items, or any other clerical, bookkeeping, accounting,
statistical, or similar functions performed for a depository
institution.
(Pub. L. 87-856, 3, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97-320,
title VII, 709, Oct. 15, 1982, 96 Stat. 1541.)
1982 -- Pub. L. 97-320 substituted provisions relating to
permissible bank service corporation activities for depository
institutions for provisions that a bank service corporation must provide
bank services to a bank that applied for them if the applying bank
competed with a bank which held stock in the corporation unless
comparable services were available elsewhere at competitive cost or
furnishing the services would be beyond the practical capacity of the
corporation.
12 USC 1864. Permissible bank service corporation activities for other
persons
TITLE 12 -- BANKS AND BANKING
(a) Services permissible other than taking deposits
A bank service corporation may provide to any person any service
authorized by this section, except that a bank service corporation shall
not take deposits.
(b) Services to be performed in State where shareholders are located
Except with the prior approval of the Board under section 1865(b) of
this title in accordance with subsection (f) of this section --
(1) a bank service corporation shall not perform the services
authorized by this section in any State other than that State in which
its shareholders are located; and
(2) all insured bank shareholders of a bank service corporation shall
be located in the same State.
(c) Performance where State bank is shareholder
A bank service corporation in which a State bank is a shareholder
shall perform only those services that such State bank shareholder is
authorized to perform under the law of the State in which such State
bank operates and shall perform such services only at locations in the
State in which such State bank shareholder could be authorized to
perform such services.
(d) Performance where national bank is shareholder
A bank service corporation in which a national bank is a shareholder
shall perform only those services that such national bank shareholder is
authorized to perform under the law of the United States and shall
perform such services only at locations in the State at which such
national bank shareholder could be authorized to perform such services.
(e) Performance where State bank and national bank are shareholders
A bank service corporation that has both national bank and State bank
shareholders shall perform only those services that may lawfully be
performed by both its national bank shareholder or shareholders under
the law of the United States and its State bank shareholder or
shareholders under the law of the State in which such State bank or
banks operate and shall perform such services only at locations in the
State at which both its State bank and national bank shareholders could
be authorized to perform such services.
(f) Geographic location
Notwithstanding the other provisions of this section or any other
provision of law, other than the provisions of Federal and State
branching law regulating the geographic location of banks to the extent
that those laws are applicable to an activity authorized by this
subsection, a bank service corporation may perform at any geographic
location any service, other than deposit taking, that the Board has
determined, by regulation, to be permissible for a bank holding company
under section 1843(c)(8) of this title.
(Pub. L. 87-856, 4, Oct. 23, 1962, 76 Stat. 1132; Pub. L. 97-320,
title VII, 709, Oct. 15, 1982, 96 Stat. 1542; Pub. L. 97-457, 32(b)(
2), Jan. 12, 1983, 96 Stat. 2511.)
1983 -- Subsecs. (d), (e). Pub. L. 97-457 substituted ''under the
law of the United States'' for ''under this chapter''.
1982 -- Pub. L. 97-320 substituted provisions relating to bank
service corporation activities for other persons for provisions which
read: ''No bank service corporation may engage in any activity other
than the performance of bank services for banks.''
12 USC 1865. Prior approval for investments in bank service
corporations
TITLE 12 -- BANKS AND BANKING
(a) Approval of Federal banking agency
No insured bank shall invest in the capital stock of a bank service
corporation that performs any service under authority of subsection (c),
(d), or (e) of section 1864 of this title without the prior approval of
the bank's appropriate Federal banking agency.
(b) Approval of Board
No insured bank shall invest in the capital stock of a bank service
corporation that performs any service under authority of section 1864(
f) of this title and no bank service corporation shall perform any
activity under section 1864(f) of this title without the prior approval
of the Board.
(c) Considerations in determining approval
In determining whether to approve or deny any application for prior
approval under this section, the Board or the appropriate Federal
banking agency, as the case may be, is authorized to consider the
financial and managerial resources and future prospects of the bank or
banks and bank service corporation involved, including the financial
capability of the bank to make a proposed investment under this chapter,
and possible adverse effects such as undue concentration of resources,
unfair or decreased competition, conflicts of interest, or unsafe or
unsound banking practices.
(d) Failure to act on application for approval
In the event the Board or the appropriate Federal banking agency, as
the case may be, fails to act on any application under this section
within ninety days of the submission of a complete application to the
agency, the application shall be deemed approved.
(Pub. L. 87-856, 5, Oct. 23, 1962, 76 Stat. 1133; Pub. L. 95-630,
title III, 308, Nov. 10, 1978, 92 Stat. 3677; Pub. L. 97-320, title
VII, 709, Oct. 15, 1982, 96 Stat. 1542.)
1982 -- Pub. L. 97-320 substituted provisions relating to prior
approval for investments in bank service corporations for provisions
relating to regulation and examination of bank services for a regularly
examined bank or its subsidiary or affiliate whether performed on or off
its premises. See section 1867(c) of this title.
1978 -- Pub. L. 95-630 among other changes, substituted provisions
requiring banks regularly examined by a Federal supervisory agency,
which cause to be performed, by contract or otherwise, any bank service
for itself, to notify such supervisory agency of the existence of a
service relationship within 30 days after making such service contract
or performance of service, whichever occurs first for provisions
requiring that no bank subject to examination by a Federal supervisory
agency may cause to be performed, by contract or otherwise, any bank
service for itself unless satisfactory assurances are furnished to such
supervisory agency by both the bank and the party performing such
services that the performances thereof will be subject to regulation and
examination by such agency to the same extent as if such services were
being performed by the bank itself.
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
12 USC 1866. Services to nonstockholders
TITLE 12 -- BANKS AND BANKING
No bank service corporation shall unreasonably discriminate in the
provision of any services authorized under this chapter to any
depository institution that does not own stock in the service
corporation on the basis of the fact that the nonstockholding
institution is in competition with an institution that owns stock in the
bank service corporation, except that --
(1) it shall not be considered unreasonable discrimination for a bank
service corporation to provide services to a nonstockholding institution
only at a price that fully reflects all of the costs of offering those
services, including the cost of capital and a reasonable return thereon;
and
(2) a bank service corporation may refuse to provide services to a
nonstockholding institution if comparable services are available from
another source at competitive overall costs, or if the providing of
services would be beyond the practical capacity of the service
corporation.
(Pub. L. 87-856, 6, Oct. 23, 1962, as added Pub. L. 97-320, title
VII, 709, Oct. 15, 1982, 96 Stat. 1543.)
12 USC 1867. Regulation and examination of bank service corporations
TITLE 12 -- BANKS AND BANKING
(a) Principal investor
A bank service corporation shall be subject to examination and
regulation by the appropriate Federal banking agency of its principal
investor to the same extent as its principal investor. The appropriate
Federal banking agency of the principal shareholder of such a bank
service corporation may authorize any other Federal banking agency that
supervises any other shareholder of the bank service corporation to make
such an examination.
(b) Applicability of section 1818 of this title
A bank service corporation shall be subject to the provisions of
section 1818 of this title as if the bank service corporation were an
insured bank. For this purpose, the appropriate Federal banking agency
shall be the appropriate Federal banking agency of the principal
investor of the bank service corporation.
(c) Services performed by contract or otherwise
Notwithstanding subsection (a) of this section, whenever a bank that
is regularly examined by an appropriate Federal banking agency, or any
subsidiary or affiliate of such a bank that is subject to examination by
that agency, causes to be performed for itself, by contract or
otherwise, any services authorized under this chapter, whether on or off
its premises --
(1) such performance shall be subject to regulation and examination
by such agency to the same extent as if such services were being
performed by the bank itself on its own premises, and
(2) the bank shall notify such agency of the existence of the service
relationship within thirty days after the making of such service
contract or the performance of the service, whichever occurs first.
(d) Issuance of regulations and orders
The Board and the appropriate Federal banking agencies are authorized
to issue such regulations and orders as may be necessary to enable them
to administer and to carry out the purposes of this chapter and to
prevent evasions thereof.
(Pub. L. 87-856, 7, Oct. 23, 1962, as added Pub. L. 97-320, title
VII, 709, Oct. 15, 1982, 96 Stat. 1543, and amended Pub. L. 97-457,
32(b)(1), Jan. 12, 1983, 96 Stat. 2511.)
1983 -- Subsec. (b). Pub. L. 97-457 substituted reference to section
1818 of this title for reference to the Financial Institutions
Supervisory Act of 1966 (12 U.S.C. 1818(b) et seq.).
12 USC CHAPTER 19 -- SECURITY MEASURES FOR BANKS AND SAVINGS
ASSOCIATIONS
TITLE 12 -- BANKS AND BANKING
Sec.
1881. ''Federal supervisory agency'' defined.
1882. Security measures.
(a) Rules for installation, maintenance, and operation of security
devices and procedures.
(b) Time for compliance with standards.
1883. Insurance rates; report to Congress.
1884. Penalties for violations.
12 USC 1881. ''Federal supervisory agency'' defined
TITLE 12 -- BANKS AND BANKING
As used in this chapter the term ''Federal supervisory agency'' means
--
(1) The Comptroller of the Currency with respect to national banks
and district banks,
(2) The Board of Governors of the Federal Reserve System with respect
to Federal Reserve banks and State banks which are members of the
Federal Reserve System,
(3) The Federal Deposit Insurance Corporation with respect to State
banks which are not members of the Federal Reserve System but the
deposits of which are insured by the Federal Deposit Insurance
Corporation and State savings associations, and
(4) The Director of the Office of Thrift Supervision with respect to
Federal savings. /1/
(Pub. L. 90-389, 2, July 7, 1968, 82 Stat. 294; Pub. L. 101-73,
title VII, 744(h), Aug. 9, 1989, 103 Stat. 439.)
1989 -- Par. (3). Pub. L. 101-73, 744(h)(2), inserted reference to
State savings associations.
Par. (4). Pub. L. 101-73, 744(h)(1), substituted ''Director of the
Office of Thrift Supervision'' for ''Federal Home Loan Bank Board'',
struck out ''and loan'' after ''Federal savings'', and struck out
''associations, and institutions the accounts of which are insured by
the Federal Savings and Loan Insurance Corporation'' before period at
end.
Section 1 of Pub. L. 90-389 provided: ''That this Act (enacting
this chapter and amending section 1729 of this title) may be cited as
the 'Bank Protection Act of 1968'.''
/1/ So in original. Probably should be ''Federal savings
associations.''
12 USC 1882. Security measures
TITLE 12 -- BANKS AND BANKING
(a) Rules for installation, maintenance, and operation of security
devices and procedures
Within six months from July 7, 1968, each Federal supervisory agency
shall promulgate rules establishing minimum standards with which each
bank or savings and loan association must comply with respect to the
installation, maintenance, and operation of security devices and
procedures, reasonable in cost, to discourage robberies, burglaries, and
larcenies and to assist in the identification and apprehension of
persons who commit such acts.
(b) Time for compliance with standards
The rules shall establish the time limits within which banks and
savings and loan associations shall comply with the standards.
(Pub. L. 90-389, 3, July 7, 1968, 82 Stat. 295; Pub. L. 101-73,
title IX, 911(a), Aug. 9, 1989, 103 Stat. 478.)
1989 -- Subsec. (b). Pub. L. 101-73 struck out ''and shall require
the submission of periodic reports with respect to the installation,
maintenance, and operation of security devices and procedures'' before
period at end.
Amendment by Pub. L. 101-73 applicable with respect to reports filed
or required to be filed after Aug. 9, 1989, see section 911(i) of Pub.
L. 101-73, set out as a note under section 161 of this title.
12 USC 1883. Insurance rates; report to Congress
TITLE 12 -- BANKS AND BANKING
The Federal supervisory agencies shall consult with
(1) insurers furnishing insurance protection against losses resulting
from robberies, burglaries, and larcenies committed against financial
institutions referred to in section 1881 of this title, and
(2) State agencies having supervisory or regulatory responsibilities
with respect to such insurers
to determine the feasibility and desirability of premium rate
differentials based on the installation, maintenance, and operation of
security devices and procedures. The Federal supervisory agencies shall
report to the Congress the results of their consultations pursuant to
this section not later than two years after July 7, 1968.
(Pub. L. 90-389, 4, July 7, 1968, 82 Stat. 295.)
12 USC 1884. Penalties for violations
TITLE 12 -- BANKS AND BANKING
A bank or savings and loan association which violates a rule
promulgated pursuant to this chapter shall be subject to a civil penalty
which shall not exceed $100 for each day of the violation.
(Pub. L. 90-389, 5, July 7, 1968, 82 Stat. 295.)
12 USC CHAPTER 20 -- CREDIT CONTROL
TITLE 12 -- BANKS AND BANKING
Sec.
1901. Definitions.
1902. Rules and regulations by the Board of Governors of the Federal
Reserve System.
1903. Interest.
1904. Credit controls.
1905. Extent of control.
1906. Reports; production of records.
1907. Injunctions for compliance.
1908. Civil penalties.
1909. Criminal penalty.
1910. Termination of authority.
12 USC 1901. Definitions
TITLE 12 -- BANKS AND BANKING
(a) The definitions and rules of construction set forth in this
section apply to the provisions of this chapter.
(b) The term ''Board'' refers to the Board of Governors of the
Federal Reserve System.
(c) The term ''organization'' means a corporation, government or
governmental subdivision or agency, trust, estate, partnership,
cooperative, or association.
(d) The term ''person'' means a natural person or an organization.
(e) The term ''credit'' means the right granted by a creditor to a
debtor to defer payment of debt or to incur debt and defer its payment.
(f) The term ''creditor'' refers to any person who extends, or
arranges for the extension of, credit, whether in connection with a
loan, a sale of property or services, or otherwise.
(g) The term ''credit sale'' refers to any sale with respect to which
credit is extended or arranged by the seller. The term includes any
rental-purchase contract and any contract or arrangement for the bailing
or leasing of property when used as a financing device.
(h) The terms ''extension of credit'' and ''credit transaction''
include loans, credit sales, the supplying of funds through the
underwriting, distribution, or acquisition of securities, the making or
assisting in the making of a direct placement, or otherwise
participating in the offering, distribution, or acquisition of
securities.
(i) The term ''borrower'' includes any person to whom credit is
extended.
(j) The term ''loan'' includes any type of credit, including credit
extended in connection with a credit sale.
(k) The term ''State'' refers to any State, the Commonwealth of
Puerto Rico, the District of Columbia, and any territory or possession
of the United States.
(l) Any reference to any requirement imposed under this chapter of
any provision thereof includes reference to the regulations of the Board
under this chapter or the provision thereof in question.
(Pub. L. 91-151, title II, 202, Dec. 23, 1969, 83 Stat. 376.)
Section 201 of title II of Pub. L. 91-151 provided that: ''This
title (enacting this chapter) may be cited as the 'Credit Control
Act'.''
12 USC 1902. Rules and regulations by the Board of Governors of the
Federal Reserve System
TITLE 12 -- BANKS AND BANKING
The Board shall prescribe regulations to carry out the purposes of
this chapter. These regulations may contain such classifications,
differentiations, or other provisions, and may provide for such
adjustments and exceptions for any class of transactions, as in the
judgement of the Board are necessary or proper to effectuate the
purposes of this chapter, to prevent circumvention or evasion thereof,
or to facilitate compliance therewith.
(Pub. L. 91-151, title II, 203, Dec. 23, 1969, 83 Stat. 376.)
12 USC 1903. Interest
TITLE 12 -- BANKS AND BANKING
Except as otherwise provided by the Board, the amount of the interest
charge in connection with any credit transaction shall be determined
under the regulations of the Board as the sum of all charges payable
directly or indirectly to the person by whom the credit is extended in
consideration of the extension of credit.
(Pub. L. 91-151, title II, 204, Dec. 23, 1969, 83 Stat. 377.)
12 USC 1904. Credit controls
TITLE 12 -- BANKS AND BANKING
(a) Whenever the President determines that such action is necessary
or appropriate for the purpose of preventing or controlling inflation
generated by the extension of credit in an excessive volume, the
President may authorize the Board to regulate and control any or all
extensions of credit.
(b) The Board may, in administering this Act, utilize the services of
the Federal Reserve banks, and any other agencies, Federal or State,
which are available and appropriate.
(Pub. L. 91-151, title II, 205, Dec. 23, 1969, 83 Stat. 377.)
This Act, referred to in subsec. (b), is Pub. L. 91-151, Dec. 23,
1969, 83 Stat. 377, as amended, which is classified principally to this
chapter. For complete classification of this Act to the Code, see
Tables.
Pub. L. 93-387, Aug. 24, 1974, 88 Stat. 750, as amended by Pub. L.
93-449, 4(e), Oct. 18, 1974, 88 Stat. 1367; Pub. L. 94-78, 2-7, Aug.
9, 1975, 89 Stat. 411, 412; Pub. L. 95-121, 1-6, Oct. 6, 1977, 91
Stat. 1091; Pub. L. 96-10, 1-5, May 10, 1979, 96 Stat. 23; Pub. L.
96-508, 1-8, Dec. 8, 1980, 94 Stat. 2748, 2749; Pub. L. 97-35, title
III, 383, Aug. 13, 1981, 95 Stat. 432, known as the ''Council on Wage
and Price Stability Act'', provided for the establishment of a Council
on Wage and Price Stability and the appointment and compensation of
members, chairman, director, and employees; authorized cooperation with
other agencies; specified the powers and duties of the Council;
directed the establishment and duties of an Office of Productivity;
specified that the Act did not authorize the continuation or imposition
of economic controls or affect the Emergency Petroleum Allocation Act of
1973 (15 U.S.C. 751 et seq.); provided for the disclosure of
information; required annual reports; authorized appropriations; and
terminated the authority granted by the Act on Sept. 30, 1981.
Title II of Pub. L. 91-379, Aug. 15, 1970, 84 Stat. 799, as
amended by Pub. L. 91-558, title II, 201, Dec. 17, 1970, 84 Stat.
1468; Pub. L. 92-8, 2, Mar. 31, 1971, 85 Stat. 13; Pub. L. 92-15, 3,
May 18, 1971, 85 Stat. 38; Pub. L. 92-210, 2, Dec. 22, 1971, 85 Stat.
743; Pub. L. 93-28, 1-8, Apr. 30, 1973, 87 Stat. 27-29, known as the
''Economic Stabilization Act of 1970'', authorized the President, within
an established procedural framework, to stabilize prices, rents, wages,
salaries, interest rates, dividends and similar transfers, and establish
priorities for use and allocation of supplies of petroleum products,
including crude oil, and to issue standards to serve as a guide for
determining levels of wages, prices, etc., which would allow for
adjustments, exceptions and variations to prevent inequities, taking
into account changes in productivity, cost of living and other pertinent
factors. The Act provided for limitations on the exercise of
Presidential authority and allowed delegation of the performance of any
of the President's functions to appropriate officers, departments and
agencies of the United States or to entities composed of members
appointed to represent different sectors of the economy and the general
public. The Act provided for disclosure of information, subpena power,
administrative procedure, criminal and civil sanctions, injunctions and
suits for damages and other relief. The Act specified original
jurisdiction for judicial review of cases or controversies arising under
the Act or regulations issued thereunder in the district courts of the
United States, and created a Temporary Emergency Court of Appeals with
exclusive jurisdiction to hear appeals from district courts in such
cases. The Act made specific provision for small business and mass
transportation systems, required the President to issue periodic reports
to Congress, authorized appropriations, and provided for its expiration
on April 30, 1974.
Pub. L. 93-153, title IV, 406, Nov. 16, 1973, 87 Stat. 590, which
provided that the first sale of crude oil and natural gas liquids
produced from any lease whose average daily production did not exceed
ten barrels per well not be subject to price restraints or any
allocation program established pursuant to any Federal law, was repealed
by Pub. L. 94-163, title IV, 401(b)(4), Dec. 22, 1975, 89 Stat. 946.
For effective date of repeal of section 406 of Pub. L. 93-153, see
section 401(b)(5) of Pub. L. 94-163.
Ex. Ord. No. 11615, Aug. 15, 1971, 36 F.R. 15727, as amended by Ex.
Ord. No. 11617, Sept. 2, 1971, 36 F.R. 17813, which related to the
stabilization of prices, rents, wages, and salaries, and the
establishment of the Cost of Living Council, was superseded by Ex. Ord.
No. 11627, Oct. 15, 1971, 36 F.R. 20139, formerly set out below.
Ex. Ord. No. 11627, Oct. 15, 1971, 36 F.R. 20139, as amended by Ex.
Ord. No. 11630, Oct. 30, 1971, 36 F.R. 21023; Ex. Ord. No. 11632, Nov.
22, 1971, 36 F.R. 22221, which related to the stabilization of the
economy, was revoked by Ex. Ord. No. 11788, June 18, 1974, 39 F.R.
22113, formerly set out below.
Ex. Ord. No. 11640, Jan. 26, 1972, 37 F.R. 1213, as amended by Ex.
Ord. No. 11660, Mar. 23, 1972, 37 F.R. 6175; Ex. Ord. No. 11674, June
29, 1972, 37 F.R. 12913, which related to the stabilization of the
economy, was revoked by Ex. Ord. No. 11788, June 18, 1974, 39 F.R.
22113, formerly set out below.
Ex. Ord. No. 11695, Jan. 11, 1973, 38 F.R. 1473, which provided for
the stabilization of the economy, was revoked by Ex. Ord. No. 11788,
June 18, 1974, 39 F.R. 22113, formerly set out below.
Ex. Ord. No. 11723, June 13, 1973, 38 F.R. 15765, which established a
freeze on prices for a maximum period of 60 days, was revoked by Ex.
Ord. No. 11788, June 18, 1974, 39 F.R. 22113, formerly set out below.
Ex. Ord. No. 11730, July 18, 1973, 38 F.R. 19345, which provided for
further stabilization of the economy, was revoked by Ex. Ord. No.
11788, June 18, 1974, 39 F.R. 22113, formerly set out below.
Ex. Ord. No. 11788, June 18, 1974, 39 F.R. 22113, which terminated
the Economic Stabilization Program and established the President's
Committee on Food, was revoked by Ex. Ord. No. 12553, Feb. 25, 1986,
51 F.R. 7237.
Ex. Ord. No. 11821, Nov. 27, 1974, 39 F.R. 41501, as amended by Ex.
Ord. No. 11949, Dec. 31, 1976, 42 F.R. 1017, which related to economic
impact statements, expired pursuant to section 5 thereof, on Dec. 31,
1977.
Ex. Ord. No. 12201, Mar. 14, 1980, 45 F.R. 17123, as amended by Ex.
Ord. No. 12225, July 3, 1980, 45 F.R. 45571, which authorized the Board
of Governors of the Federal Reserve System to exercise authority under
this chapter to regulate and control certain credit for the purpose of
preventing and controlling inflation was revoked by Ex. Ord. No. 12225.
Ex. Ord. No. 12288, Jan. 29, 1981, 46 F.R. 10135, provided:
By the authority vested in me as President and as Commander in Chief
of the Armed Forces by the Constitution and laws of the United States of
America, including Sections 2(c) and 3(a) of the Council on Wage and
Price Stability Act, as amended (12 U.S.C. 1904 note), and Section 205(
a) of the Federal Property and Administrative Services Act of 1949, as
amended (40 U.S.C. 486(a)), and in order to terminate the regulatory
burdens of the current wage and price program, it is hereby ordered as
follows:
Section 1. Executive Order No. 12092, as amended, is revoked.
Sec. 2. The head of each Executive agency and military department,
including the Council on Wage and Price Stability and the Office of
Federal Procurement Policy, is authorized to take appropriate steps to
terminate actions adopted in response to Executive Order No. 12092, as
amended.
Ronald Reagan.
12 USC 1905. Extent of control
TITLE 12 -- BANKS AND BANKING
The Board, upon being authorized by the President under section 1904
of this title and for such period of time as he may determine, may by
regulation
(1) require transactions or persons or classes of either to be
registered or licensed.
(2) prescribe appropriate limitations, terms, and conditions for any
such registration or license.
(3) provide for suspension of any such registration or license for
violation of any provision thereof or of any regulation, rule, or order
prescribed under this Act.
(4) prescribe appropriate requirements as to the keeping of records
and as to the form, contents, or substantive provisions of contracts,
liens, or any relevant documents.
(5) prohibit solicitations by creditors which would encourage evasion
or avoidance of the requirements of any regulation, license, or
registration under this Act.
(6) prescribe the maximum amount of credit which may be extended on,
or in connection with, any loan, purchase, or other extension of credit.
(7) prescribe the maximum rate of interest, maximum maturity, minimum
periodic payment, maximum period between payments, and any other
specification or limitation of the terms and conditions of any extension
of credit.
(8) prescribe the methods of determining purchase prices or market
values or other bases for computing permissible extensions of credit or
required downpayment.
(9) prescribe special or different terms, conditions, or exemptions
with respect to new or used goods, minimum original cash payments,
temporary credits which are merely incidental to cash purchases, payment
or deposits usable to liquidate credits, and other adjustments or
special situations.
(10) prescribe maximum ratios, applicable to any class of either
creditors or borrowers or both, of loans, of one or more types or of all
types.
(A) to deposits of one or more types or of all types.
(B) to assets of one or more types or of all types.
(11) prohibit or limit any extensions of credit under any
circumstances the Board deems appropriate.
(Pub. L. 91-151, title II, 206, Dec. 23, 1969, 83 Stat. 377.)
This Act, referred to in pars. (3) and (5), is Pub. L. 91-151, Dec.
23, 1969, 83 Stat. 377, as amended, which is classified principally to
this chapter. For complete classification of this Act to the Code, see
Tables.
12 USC 1906. Reports; production of records
TITLE 12 -- BANKS AND BANKING
Reports concerning the kinds, amounts, and characteristics of any
extensions of credit subject to this chapter, or concerning
circumstances related to such extensions of credit, shall be filed on
such forms, under oath or otherwise, at such times and from time to
time, and by such persons, as the Board may prescribe by regulation or
order as necessary or appropriate for enabling the Board to perform its
functions under this chapter. The Board may require any person to
furnish, under oath or otherwise, complete information relative to any
transaction within the scope of this chapter including the production of
any books of account, contracts, letters, or other papers, in connection
therewith in the custody or control of such person.
(Pub. L. 91-151, title II, 207, Dec. 23, 1969, 83 Stat. 378.)
12 USC 1907. Injunctions for compliance
TITLE 12 -- BANKS AND BANKING
Whenever it appears to the Board that any person has engaged, is
engaged, or is about to engage in any acts or practices constituting a
violation of any regulation under this chapter, it may in its discretion
bring an action, in the proper district court of the United States or
the proper United States court of any territory or other place subject
to the jurisdiction of the United States, to enjoin such acts or
practices, and upon a proper showing a permanent or temporary injunction
or restraining order shall be granted without bond. Upon application of
the Board, any such court may also issue mandatory injunctions
commanding any person to comply with any regulation of the Board under
this chapter.
(Pub. L. 91-151, title II, 208, Dec. 23, 1969, 83 Stat. 378.)
12 USC 1908. Civil penalties
TITLE 12 -- BANKS AND BANKING
(a) For each willful violation of any regulation under this chapter,
the Board may assess upon any person to which the regulation applies,
and upon any partner, director, officer, or employee thereof who
willfully participates in the violation, a civil penalty not exceeding
$1,000.
(b) In the event of the failure of any person to pay any penalty
assessed under this section, a civil action for the recovery thereof
may, in the discretion of the Board, be brought in the name of the
United States.
(Pub. L. 91-151, title II, 209, Dec. 23, 1969, 83 Stat. 378.)
12 USC 1909. Criminal penalty
TITLE 12 -- BANKS AND BANKING
Whoever willfully violates any regulation under this chapter shall be
fined not more than $1,000 or imprisoned not more than one year, or
both.
(Pub. L. 91-151, title II, 210, Dec. 23, 1969, 83 Stat. 378.)
12 USC 1910. Termination of authority
TITLE 12 -- BANKS AND BANKING
The authority conferred by this chapter expires at the close of June
30, 1982.
(Pub. L. 91-151, title II, 211, as added Pub. L. 96-508, 9, Dec. 8,
1980, 94 Stat. 2749.)
12 USC CHAPTER 21 -- FINANCIAL RECORDKEEPING
TITLE 12 -- BANKS AND BANKING
Sec.
1951. Congressional findings and declaration of purpose.
1952. Reports on ownership and control.
1953. Recordkeeping and procedures.
1954. Injunctions.
1955. Civil penalties
1956. Criminal penalty.
1957. Additional criminal penalty in certain cases.
1958. Compliance.
1959. Administrative procedure.
12 USC 1951. Congressional findings and declaration of purpose
TITLE 12 -- BANKS AND BANKING
(a) The Congress finds that certain records maintained by businesses
engaged in the functions described in section 1953(b) of this title have
a high degree of usefulness in criminal, tax, and regulatory
investigations and proceedings. The Congress further finds that the
power to require reports of changes in the ownership, control, and
managements of types of financial institutions referred to in section
1952 of this title may be necessary for the same purpose.
(b) It is the purpose of this chapter to require the maintenance of
appropriate types of records and the making of appropriate reports by
such businesses in the United States where such records or reports have
a high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings.
(Pub. L. 91-508, title I, 121, Oct. 26, 1970, 84 Stat. 1116.)
Section 401(a), (b) of Pub. L. 91-508 provided that:
''(a) Except as otherwise provided in this section, titles I, II, and
III of this Act and the amendments made thereby (enacting this chapter
and sections 1730d and 1829b of this title and section 1051 et seq. of
former Title 31, Money and Finance, amending section 78g of Title 15,
Commerce and Trade, and enacting provisions set out as notes under
section 78g of Title 15 and section 1051 of former Title 31) take effect
on the first day of the seventh calendar month which begins after the
date of enactment (Oct. 26, 1970).
''(b) The Secretary of the Treasury may by regulation provide that
any provision of title I or II or any amendment made thereby (enacting
this chapter and sections 1730d and 1829b of this title) shall be
effective on any date not earlier than the publication of the regulation
in the Federal Register and not later than the first day of the
thirteenth calendar month which begins after the date of enactment (Oct.
26, 1970).''
12 USC 1952. Reports on ownership and control
TITLE 12 -- BANKS AND BANKING
Where the Secretary determines that the making of appropriate reports
by uninsured banks or uninsured institutions of any type with respect to
their ownership, control, and managements and any changes therein has a
high degree of usefulness in criminal, tax, or regulatory investigations
or proceedings, he may by regulation require such banks or institutions
to make such reports as he determines in respect of such ownership,
control, and managements and changes therein.
(Pub. L. 91-508, title I, 122, Oct. 26, 1970, 84 Stat. 1116.)
12 USC 1953. Recordkeeping and procedures
TITLE 12 -- BANKS AND BANKING
(a) Where the Secretary determines that the maintenance of
appropriate records and procedures by any uninsured bank or uninsured
institution, or any person engaging in the business of carrying on in
the United States any of the functions referred to in subsection (b) of
this section, has a high degree of usefulness in criminal, tax, or
regulatory investigations or proceedings, he may by regulation require
such bank, institution, or person --
(1) to require, retain, or maintain, with respect to its functions as
an uninsured bank or uninsured institution or its functions referred to
in subsection (b) of this section, any records or evidence of any type
which the Secretary is authorized under section 1829b of this title to
require insured banks to require, retain, or maintain; and
(2) to maintain procedures to assure compliance with requirements
imposed under this chapter. For the purposes of any civil or criminal
penalty, a separate violation of any requirement under this paragraph
occurs with respect to each day and each separate office, branch, or
place of business in which the violation occurs or continues.
(b) Institutions Subject to Recordkeeping Requirements. -- The
authority of the Secretary of the Treasury under subsection (a) of this
section extends to any financial institution (as defined in section
5312(a)(2) of title 31), other than any insured bank (as defined in
section 1813(h) of this title) and any insured institution (as defined
in section 1724(a) /1/ of this title), and any partner, officer,
director, or employee of any such financial institution.
(Pub. L. 91-508, title I, 123, Oct. 26, 1970, 84 Stat. 1116; Pub.
L. 100-690, title VI, 6185(d)(3)(A), Nov. 18, 1988, 102 Stat. 4357.)
Section 1724 of this title, referred to in subsec. (b), was repealed
by Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363.
1988 -- Subsec. (b). Pub. L. 100-690 amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: ''The authority of
the Secretary under this section extends to any person engaging in the
business of carrying on any of the following functions:
''(1) Issuing or redeeming checks, money orders, travelers' checks,
or similar instruments, except as an incident to the conduct of its own
nonfinancial business.
''(2) Transferring funds or credits domestically or internationally.
''(3) Operating a currency exchange or otherwise dealing in foreign
currencies or credits.
''(4) Operating a credit card system.
''(5) Performing such similar, related, or substitute functions for
any of the foregoing or for banking as may be specified by the Secretary
in regulations.''
/1/ See References in Text note below.
12 USC 1954. Injunctions
TITLE 12 -- BANKS AND BANKING
Whenever it appears to the Secretary that any person has engaged, is
engaged, or is about to engage in any acts or practices constituting a
violation of any regulation under this chapter, he may in his discretion
bring an action, in the proper district court of the United States or
the proper United States court of any territory or other place subject
to the jurisdiction of the United States, to enjoin such acts or
practices, and upon a proper showing a permanent or temporary injunction
or restraining order shall be granted without bond. Upon application of
the Secretary, any such court may also issue mandatory injunctions
commanding any person to comply with any regulation of the Secretary
under this chapter.
(Pub. L. 91-508, title I, 124, Oct. 26, 1970, 84 Stat. 1117.)
12 USC 1955. Civil penalties
TITLE 12 -- BANKS AND BANKING
(a) For each willful or grossly negligent violation of any regulation
under this chapter, the Secretary may assess upon any person to which
the regulation applies, and, if such person is a partnership,
corporation, or other entity, upon any partner, director, officer, or
employee thereof who willfully or through gross negligence participates
in the violation, a civil penalty not exceeding $10,000.
(b) In the event of the failure of any person to pay any penalty
assessed under this section, a civil action for the recovery thereof
may, in the discretion of the Secretary, be brought in the name of the
United States.
(Pub. L. 91-508, title I, 125, Oct. 26, 1970, 84 Stat. 1117; Pub.
L. 100-690, title VI, 6185(d)(3)(B), Nov. 18, 1988, 102 Stat. 4357.)
1988 -- Subsec. (a). Pub. L. 100-690 inserted ''or grossly
negligent'' after ''willful'' and ''or through gross negligence'' after
''willfully'' and substituted ''$10,000'' for ''$1,000''.
12 USC 1956. Criminal penalty
TITLE 12 -- BANKS AND BANKING
Whoever willfully violates any regulation under this chapter shall be
fined not more than $1,000 or imprisoned not more than one year, or
both.
(Pub. L. 91-508, title I, 126, Oct. 26, 1970, 84 Stat. 1118.)
12 USC 1957. Additional criminal penalty in certain cases
TITLE 12 -- BANKS AND BANKING
Whoever willfully violates any regulation under this chapter, section
1829b of this title, or section 1730d /1/ of this title, where the
violation is committed in furtherance of the commission of any violation
of Federal law punishable by imprisonment for more than one year, shall
be fined not more than $10,000 or imprisoned not more than five years,
or both.
(Pub. L. 91-508, title I, 127, Oct. 26, 1970, 84 Stat. 1118.)
Section 1730d of this title, referred to in text, was repealed by
Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363.
/1/ See References in Text note below.
12 USC 1958. Compliance
TITLE 12 -- BANKS AND BANKING
The Secretary shall have the responsibility to assure compliance with
the requirements of this chapter and sections 1730d /1/ and 1829b of
this title and may delegate such responsibility to the appropriate bank
supervisory agency, or other supervisory agency.
(Pub. L. 91-508, title I, 128, Oct. 26, 1970, 84 Stat. 1118.)
Section 1730d of this title, referred to in text, was repealed by
Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363.
/1/ See References in Text note below.
12 USC 1959. Administrative procedure
TITLE 12 -- BANKS AND BANKING
The administrative procedure and judicial review provisions of
subchapter II of chapter 5 and chapter 7 of title 5 shall apply to all
proceedings under this chapter, section 1829b of this title, and section
1730d /1/ of this title.
(Pub. L. 91-508, title I, 129, Oct. 26, 1970, 84 Stat. 1118.)
Section 1730d of this title, referred to in text, was repealed by
Pub. L. 101-73, title IV, 407, Aug. 9, 1989, 103 Stat. 363.
/1/ See References in Text note below.
12 USC CHAPTER 22 -- TYING ARRANGEMENTS
TITLE 12 -- BANKS AND BANKING
Sec.
1971. Definitions.
1972. Certain tying arrangements prohibited; correspondent
accounts.
1973. Jurisdiction of courts; duty of United States attorneys;
equitable proceedings; petition; expedition of cases; temporary
restraining orders; bringing in additional parties; subpenas.
1974. Actions by United States; subpenas for witnesses.
1975. Civil actions by persons injured; jurisdiction and venue;
amount of recovery.
1976. Injunctive relief for persons against threatened loss or
damages; equitable proceedings; preliminary injunctions.
1977. Limitation of actions; suspension of limitations.
1978. Actions under other Federal or State laws unaffected;
regulations or orders barred as a defense.
12 USC 1971. Definitions
TITLE 12 -- BANKS AND BANKING
As used in this chapter, the terms ''bank'', ''bank holding
company'', ''subsidiary'', and ''Board'' have the meaning ascribed to
such terms in section 1841 of this title. For purposes of this chapter
only, the term ''company'', as used in section 1841 of this title, means
any person, estate, trust, partnership, corporation, association, or
similar organization, but does not include any corporation the majority
of the shares of which are owned by the United States or by any State.
The term ''trust service'' means any service customarily performed by a
bank trust department.
(Pub. L. 91-607, title I, 106(a), Dec. 31, 1970, 84 Stat. 1766.)
12 USC 1972. Certain tying arrangements prohibited; correspondent
accounts
TITLE 12 -- BANKS AND BANKING
(1) A bank shall not in any manner extend credit, lease or sell
property of any kind, or furnish any service, or fix or vary the
consideration for any of the foregoing, on the condition or requirement
--
(A) that the customer shall obtain some additional credit, property,
or service from such bank other than a loan, discount, deposit, or trust
service;
(B) that the customer shall obtain some additional credit, property,
or service from a bank holding company of such bank, or from any other
subsidiary of such bank holding company;
(C) that the customer provide some additional credit, property, or
service to such bank, other than those related to and usually provided
in connection with a loan, discount, deposit, or trust service;
(D) that the customer provide some additional credit, property, or
service to a bank holding company of such bank, or to any other
subsidiary of such bank holding company; or
(E) that the customer shall not obtain some other credit, property,
or service from a competitor of such bank, a bank holding company of
such bank, or any subsidiary of such bank holding company, other than a
condition or requirement that such bank shall reasonably impose in a
credit transaction to assure the soundness of the credit.
The Board may by regulation or order permit such exceptions to the
foregoing prohibition as it considers will not be contrary to the
purposes of this chapter.
(2)(A) No bank which maintains a correspondent account in the name of
another bank shall make an extension of credit to an executive officer
or director of, or to any person who directly or indirectly or acting
through or in concert with one or more persons owns, controls, or has
the power to vote more than 10 per centum of any class of voting
securities of, such other bank or to any related interest of such person
unless such extension of credit is made on substantially the same terms,
including interest rates and collateral as those prevailing at the time
for comparable transactions with other persons and does not involve more
than the normal risk of repayment or present other unfavorable features.
(B) No bank shall open a correspondent account at another bank while
such bank has outstanding an extension of credit to an executive officer
or director of, or other person who directly or indirectly or acting
through or in concert with one or more persons owns, controls, or has
the power to vote more than 10 per centum of any class of voting
securities of, the bank desiring to open the account or to any related
interest of such person, unless such extension of credit was made on
substantially the same terms, including interest rates and collateral as
those prevailing at the time for comparable transactions with other
persons and does not involve more than the normal risk of repayment or
present other unfavorable features.
(C) No bank which maintains a correspondent account at another bank
shall make an extension of credit to an executive officer or director
of, or to any person who directly or indirectly acting through or in
concert with one or more persons owns, controls, or has the power to
vote more than 10 per centum of any class of voting securities of, such
other bank or to any related interest of such person, unless such
extension of credit is made on substantially the same terms, including
interest rates and collateral as those prevailing at the time for
comparable transactions with other persons and does not involve more
than the normal risk of repayment or present other unfavorable features.
(D) No bank which has outstanding an extension of credit to an
executive officer or director of, or to any person who directly or
indirectly or acting through or in concert with one or more persons
owns, controls, or has the power to vote more than 10 per centum of any
class of voting securities of, another bank or to any related interest
of such person shall open a correspondent account at such other bank,
unless such extension of credit was made on substantially the same
terms, including interest rates and collateral as those prevailing at
the time for comparable transactions with other persons and does not
involve more than the normal risk of repayment or present other
unfavorable features.
(E) For purposes of this paragraph, the term ''extension of credit''
shall have the meaning prescribed by the Board pursuant to section 375b
of this title, and the term ''executive officer'' shall have the same
meaning given it under section 375a of this title.
(F) Civil money penalty. --
(i) First tier. -- Any bank which, and any institution-affiliated
party (within the meaning of section 1813(u) of this title) with respect
to such bank who, violates any provision of this paragraph shall forfeit
and pay a civil penalty of not more than $5,000 for each day during
which such violation continues.
(ii) Second tier. -- Notwithstanding clause (i), any bank which, and
any institution-affiliated party (within the meaning of section 1813(u)
of this title) with respect to such bank who --
(I)(aa) commits any violation described in clause (i);
(bb) recklessly engages in an unsafe or unsound practice in
conducting the affairs of such bank; or
(cc) breaches any fiduciary duty;
(II) which violation, practice, or breach --
(aa) is part of a pattern of misconduct;
(bb) causes or is likely to cause more than a minimal loss to such
bank; or
(cc) results in pecuniary gain or other benefit to such party,
shall forfeit and pay a civil penalty of not more than $25,000 for
each day during which such violation, practice, or breach continues.
(iii) Third tier. -- Notwithstanding clauses (i) and (ii), any bank
which, and any institution-affiliated party (within the meaning of
section 1813(u) of this title) with respect to such bank who --
(I) knowingly --
(aa) commits any violation described in clause (i);
(bb) engages in any unsafe or unsound practice in conducting the
affairs of such bank; or
(cc) breaches any fiduciary duty; and
(II) knowingly or recklessly causes a substantial loss to such bank
or a substantial pecuniary gain or other benefit to such party by reason
of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed the
applicable maximum amount determined under clause (iv) for each day
during which such violation, practice, or breach continues.
(iv) Maximum amounts of penalties for any violation described in
clause (iii). -- The maximum daily amount of any civil penalty which may
be assessed pursuant to clause (iii) for any violation, practice, or
breach described in such clause is --
(I) in the case of any person other than a bank, an amount to not
exceed $1,000,000; and
(II) in the case of a bank, an amount not to exceed the lesser of --
(aa) $1,000,000; or
(bb) 1 percent of the total assets of such bank.
(v) Assessment; etc. -- Any penalty imposed under clause (i), (ii),
or (iii) may be assessed and collected --
(I) in the case of a national bank, by the Comptroller of the
Currency;
(II) in the case of a State member bank, by the Board; and
(III) in the case of an insured nonmember State bank, by the Federal
Deposit Insurance Corporation,
in the manner provided in subparagraphs (E), (F), (G), and (I) of
section 1818(i)(2) of this title for penalties imposed (under such
section) and any such assessment shall be subject to the provisions of
such section.
(vi) Hearing. -- The bank or other person against whom any penalty is
assessed under this subparagraph shall be afforded an agency hearing if
such bank or person submits a request for such hearing within 20 days
after the issuance of the notice of assessment. Section 1818(h) of this
title shall apply to any proceeding under this subparagraph.
(vii) Disbursement. -- All penalties collected under authority of
this subsection shall be deposited into the Treasury.
(viii) ''Violate'' defined. -- For purposes of this paragraph, the
term ''violate'' includes any action (alone or with another or others)
for or toward causing, bringing about, participating in, counseling, or
aiding or abetting a violation.
(ix) Regulations. -- The Comptroller of the Currency, the Board, and
the Federal Deposit Insurance Corporation shall prescribe regulations
establishing such procedures as may be necessary to carry out this
subparagraph.
(G)(i) Each executive officer and each stockholder of record who
directly or indirectly owns, controls, or has the power to vote more
than 10 per centum of any class of voting securities of an insured bank
shall make a written report to the board of directors of such bank for
any year during which such executive officer or shareholder has
outstanding an extension of credit from a bank which maintains a
corresponding account in the name of such bank. Such report shall
include the following information:
(1) the maximum amount of indebtedness to the bank maintaining the
correspondent account during such year of (a) such executive officer or
stockholder of record, (b) each company controlled by such executive
officer or stockholder, or (c) each political or campaign committee the
funds or services of which will benefit such executive officer or
stockholder, or which is controlled by such executive officer or
stockholder;
(2) the amount of indebtedness to the bank maintaining the
correspondent account outstanding as of a date not more than ten days
prior to the date of filing of such report of (a) such executive officer
or stockholder of record, (b) each company controlled by such executive
officer or stockholder, or (c) each political or campaign committee the
funds or services of which will benefit such executive officer or
stockholder;
(3) the range of interest rates charged on such indebtedness of such
executive officer or stockholder of record; and
(4) the terms and conditions of such indebtedness of such executive
officer or stockholder of record.
(ii) The appropriate Federal banking agencies are authorized to issue
rules and regulations, including definitions of terms, to require the
reporting and public disclosure of information by any bank or executive
officer or principal shareholder thereof concerning any extension of
credit by a correspondent bank to the reporting bank's executive
officers or principal shareholders, or the related interests of such
persons.
(H) For the purpose of this paragraph --
(i) the term ''bank'' includes a mutual savings bank, a savings bank,
and a savings association (as those terms are defined in section 1813 of
this title);
(ii) the term ''related interests of such persons'' includes any
company controlled by such executive officer, director, or person, or
any political or campaign committee the funds or services of which will
benefit such executive officer, director, or person or which is
controlled by such executive officer, director, or person; and
(iii) the terms ''control of a company'' and ''company'' have the
same meaning as under section 375b of this title.
(I) Notice Under This Section After Separation From Service. -- The
resignation, termination of employment or participation, or separation
of an institution-affiliated party (within the meaning of section 1813(
u) of this title) with respect to such a bank (including a separation
caused by the closing of such a bank) shall not affect the jurisdiction
and authority of the appropriate Federal banking agency to issue any
notice and proceed under this section against any such party, if such
notice is served before the end of the 6-year period beginning on the
date such party ceased to be such a party with respect to such bank
(whether such date occurs before, on, or after August 9, 1989).
(Pub. L. 91-607, title I, 106(b), Dec. 31, 1970, 84 Stat. 1766; Pub.
L. 95-630, title VIII, 801, Nov. 10, 1978, 92 Stat. 3690; Pub. L.
97-320, title IV, 410(f), 424(c), (d)(11), (e), 428, Oct. 15, 1982, 96
Stat. 1520, 1523, 1526; Pub. L. 101-73, title IX, 905(h), 907(i), Aug.
9, 1989, 103 Stat. 461, 473; Pub. L. 102-242, title III, 306(j), Dec.
19, 1991, 105 Stat. 2359.)
1991 -- Par. (2)(H)(i). Pub. L. 102-242 inserted before semicolon at
end '', a savings bank, and a savings association (as those terms are
defined in section 1813 of this title)''.
1989 -- Par. (2)(F). Pub. L. 101-73, 907(i), amended subpar. (F)
generally, revising and restating as cls. (i) to (ix) provisions of
former cls. (i) to (vii).
Par. (2)(I). Pub. L. 101-73, 905(h), added subpar. (I).
1982 -- Par. (2)(A) to (D). Pub. L. 97-320, 428(a)(1)-(4), inserted
''or to any related interest of such person'' after ''such other bank''
in subpar. (A), ''desiring to open the account'' in subpar. (B),
''such other bank'' in subpar. (C), and ''another bank'' in subpar.
(D).
Par. (2)(E). Pub. L. 97-320, 410(f), substituted ''the meaning
prescribed by the Board pursuant to section 375b of this title'' for
''the same meaning given it in section 371c of this title''.
Par. (2)(F)(i). Pub. L. 97-320, 424(c), (d)(11), inserted proviso
giving agency discretionary authority to compromise, etc., any civil
money penalty imposed under such authority, and substituted ''may be
assessed'' for ''shall be assessed''.
Par. (2)(F)(iv). Pub. L. 97-320, 424(e), substituted ''twenty days
from the service'' for ''ten days from the date''.
Par. (2)(G)(ii). Pub. L. 97-320, 428(b)(1), substituted ''(ii) The
appropriate Federal banking agencies are authorized to issue rules and
regulations, including definitions of terms, to require the reporting
and public disclosure of information by any bank or executive officer or
principal shareholder thereof concerning any extension of credit by a
correspondent bank to the reporting bank's executive officers or
principal shareholders, or the related interests of such persons.'' for
''(ii) Each insured bank shall compile the reports filed pursuant to
subparagraph (G)(i) and forward such compilation to the Comptroller of
the Currency in the case of a national bank, the Board in the case of a
State member bank, and the Federal Deposit Insurance Corporation in the
case of an insured nonmember State bank.''
Par. (2)(G)(iii). Pub. L. 97-320, 428(b)(2), struck out cl. (iii)
which required insured banks to include in their section 1817(k)(1)
report a list of names of executive officers or stockholders of record
owning, controlling, or having more than a 10 per centum voting control
of any class of voting securities of the bank who file information
required by subpar. (G)(i) and aggregate amount of extensions of credit
by correspondent banks to such executive officers or stockholders of
record, any company controlled by such persons, and any political or
campaign committee the funds or services of which will benefit such
persons, or which is controlled by such persons.
Par. (2)(H). Pub. L. 97-320, 428(c), added subpar. (H).
1978 -- Pub. L. 95-630 designated existing provisions as par. (1),
redesignated former pars. (1) to (5) as subpars. (A) to (E), and added
par. (2).
Amendment by Pub. L. 102-242 effective upon earlier of date on which
final regulations under section 306(m)(1) of Pub. L. 102-242 become
effective or 150 days after Dec. 19, 1991, see section 306(l) of Pub.
L. 102-242, set out as a note under section 375b of this title.
Amendment by section 907(i) of Pub. L. 101-73 applicable to conduct
engaged in after Aug. 9, 1989, except that increased maximum penalties
of $5,000 and $25,000 may apply to conduct engaged in before such date
if such conduct is not already subject to a notice issued by the
appropriate agency and occurred after completion of the last report of
the examination of the institution by the appropriate agency occurring
before Aug. 9, 1989, see section 907(l) of Pub. L. 101-73, set out as
a note under section 93 of this title.
Amendment by section 428(b) of Pub. L. 97-320 effective when
regulations referred to in the amendment become effective as provided in
section 430 of Pub. L. 97-320, set out as a note under section 1817 of
this title.
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
12 USC 1973. Jurisdiction of courts; duty of United States attorneys;
equitable proceedings; petition; expedition of cases; temporary
restraining orders; bringing in additional parties; subpenas
TITLE 12 -- BANKS AND BANKING
The district courts of the United States have jurisdiction to prevent
and restrain violations of section 1972 of this title and it is the duty
of the United States attorneys, under the direction of the Attorney
General, to institute proceedings in equity to prevent and restrain such
violations. The proceedings may be by way of a petition setting forth
the case and praying that the violation be enjoined or otherwise
prohibited. When the parties complained of have been duly notified of
the petition, the court shall proceed, as soon as possible, to the
hearing and determination of the case. While the petition is pending,
and before final decree, the court may at any time make such temporary
restraining order or prohibition as it deems just. Whenever it appears
to the court that the ends of justice require that other parties be
brought before it, the court may cause them to be summoned whether or
not they reside in the district in which the court is held, and subpenas
to that end may be served in any district by the marshal thereof.
(Pub. L. 91-607, title I, 106(c), Dec. 31, 1970, 84 Stat. 1767.)
12 USC 1974. Actions by United States; subpenas for witnesses
TITLE 12 -- BANKS AND BANKING
In any action brought by or on behalf of the United States under
section 1972 of this title, subpenas for witnesses may run into any
district, but no writ of subpena may issue for witnesses living out of
the district in which the court is held at a greater distance than one
hundred miles from the place of holding the same without the prior
permission of the trial court upon proper application and cause shown.
(Pub. L. 91-607, title I, 106(d), Dec. 31, 1970, 84 Stat. 1767.)
12 USC 1975. Civil actions by persons injured; jurisdiction and venue;
amount of recovery
TITLE 12 -- BANKS AND BANKING
Any person who is injured in his business or property by reason of
anything forbidden in section 1972 of this title may sue therefor in any
district court of the United States in which the defendant resides or is
found or has an agent, without regard to the amount in controversy, and
shall be entitled to recover three times the amount of the damages
sustained by him, and the cost of suit, including a reasonable
attorney's fee.
(Pub. L. 91-607, title I, 106(e), Dec. 31, 1970, 84 Stat. 1767.)
12 USC 1976. Injunctive relief for persons against threatened loss or
damages; equitable proceedings; preliminary injunctions
TITLE 12 -- BANKS AND BANKING
Any person may sue for and have injunctive relief, in any court of
the United States having jurisdiction over the parties, against
threatened loss or damage by reason of a violation of section 1972 of
this title, under the same conditions and principles as injunctive
relief against threatened conduct that will cause loss or damage is
granted by courts of equity and under the rules governing such
proceedings. Upon the execution of proper bond against damages for an
injunction improvidently granted and a showing that the danger of
irreparable loss or damage is immediate, a preliminary injunction may
issue.
(Pub. L. 91-607, title I, 106(f), Dec. 31, 1970, 84 Stat. 1767.)
12 USC 1977. Limitation of actions; suspension of limitations
TITLE 12 -- BANKS AND BANKING
(1) Subject to paragraph (2) of this section, any action to enforce
any cause of action under this chapter shall be forever barred unless
commenced within four years after the cause of action accrued.
(2) Whenever any enforcement action is instituted by or on behalf of
the United States with respect to any matter which is or could be the
subject of a private right of action under this chapter, the running of
the statute of limitations in respect of every private right of action
arising under this chapter and based in whole or in part on such matter
shall be suspended during the pendency of the enforcement action so
instituted and for one year thereafter: Provided, That whenever the
running of the statute of limitations in respect of a cause of action
arising under this chapter is suspended under this paragraph, any action
to enforce such cause of action shall be forever barred unless commenced
either within the period of suspension or within the four-year period
referred to in paragraph (1) of this section.
(Pub. L. 91-607, title I, 106(g), Dec. 31, 1970, 84 Stat. 1768.)
12 USC 1978. Actions under other Federal or State laws unaffected;
regulations or orders barred as a defense
TITLE 12 -- BANKS AND BANKING
Nothing contained in this chapter shall be construed as affecting in
any manner the right of the United States or any other party to bring an
action under any other law of the United States or of any State,
including any right which may exist in addition to specific statutory
authority, challenging the legality of any act or practice which may be
proscribed by this chapter. No regulation or order issued by the Board
under this chapter shall in any manner constitute a defense to such
action.
(Pub. L. 91-607, title I, 106(h), Dec. 31, 1970, 84 Stat. 1768.)
12 USC
TITLE 12 -- BANKS AND BANKING
12 USC CHAPTER 23 -- FARM CREDIT SYSTEM
TITLE 12 -- BANKS AND BANKING
Sec.
2001.
Congressional declaration of policy and objectives.
2002.
Farm Credit System.
(a)
Composition.
(b)
Farm credit districts.
2011.
Establishment, charters, titles, branches.
(a)
Establishment.
(b)
Charters.
(c)
Title.
(d)
Branches.
2012.
Board of directors.
2013.
General corporate powers.
2014.
Farm Credit Bank capitalization.
2015.
Lending authority.
(a)
Real estate loans and related assistance.
(b)
Intermediate credit.
2016.
Interest rates and other charges.
(a)
In general.
(b)
Setting rates and charges.
2017.
Eligibility.
2018.
Security; terms.
(a)
Real estate loans.
(b)
Intermediate credit.
2019.
Purposes for extensions of credit.
(a)
Agricultural or aquatic purposes.
(b)
Rural housing financing.
(c)
Farm-related services.
2020.
Related services.
(a)
In general.
(b)
Authority to pass along cost of insurance premiums.
2021.
Loans through associations or agents.
(a)
In general.
(b)
No active association.
(c)
Purchase of stock required.
2022.
Liens on stock.
2023.
Taxation.
2071.
Organization and charters.
(a)
Charter.
(b)
Organization.
2072.
Board of directors.
2073.
General corporate powers.
2074.
Production credit association capitalization.
(a)
In general.
(b)
Application of earnings.
(c)
Patronage.
2075.
Short- and intermediate-term loans; participation; other financial
assistance; terms; conditions; interest; security.
(a)
Short- and intermediate-term loans.
(b)
Rural housing.
(c)
Interest rates and charges.
(d)
Special district rule.
2076.
Other services.
2076a.
Liens on stock.
2077.
Taxation.
2091.
Organizations; articles; charters; powers of the Farm Credit
Administration.
(a)
Charter.
(b)
Organizations.
(c)
FCA authority on organization.
2092.
Board of directors.
2093.
General corporate powers.
2094.
Federal land bank association capitalization.
2095.
Repealed.
2096.
Agreements for sharing gains or losses.
2097.
Liens on stock.
2098.
Taxation.
2121.
Establishment; titles; branches.
2122.
Corporate existence; general corporate powers.
2123.
Board of directors.
2124.
Stock of banks for cooperatives.
(a)
Amount.
(b)
Value.
(c)
Eligible holders of voting stock.
(d)
Entitlement to vote.
(e)
Nonvoting investment stock.
(f)
Participation certificates.
2125.
Dividends.
2126.
Retirement of stock.
2127.
Guaranty fund subscriptions in lieu of stock.
2128.
Loans, commitments, and technical and financial assistance.
(a)
Authorities.
(b)
Additional authorities.
(c)
Applicable policies.
(d)
Regulatory limitations.
(e)
Speculative futures transactions.
(f)
Installation, expansion, or improvement of water and waste disposal
facilities.
2129.
Eligibility.
2130.
Ownership of stock by borrowers.
2131.
Loans.
(a)
Interest rates and charges.
(b)
Security.
(c)
Lien.
(d)
Cancellation; application on indebtedness.
2132.
Earnings and reserves; application of savings.
(a)
Application of savings.
(b)
Patronage refunds.
(c)
Savings of Central Bank for Cooperatives.
(d)
Loss carryover.
(e)
Charge of unrecognized costs or expenses to reserve, surplus, or
patronage allocations.
(f)
Payment of patronage refunds in cash.
2133.
Distribution of assets on liquidation or dissolution.
2134.
Taxation.
2141.
Charter, powers, and operation.
(a)
Charter.
(b)
Powers.
(c)
Operation.
2142.
Board of directors provisions.
(a)
Initial board of directors.
(b)
Permanent board of directors.
(c)
Modification of board of directors provisions.
2143.
Credit delivery office.
2144.
Consolidation of functions.
2145.
Exchange of ownership interests.
2146.
Capitalization.
2147.
Patronage pools.
2148.
Transactions to accomplish merger.
2149.
Lending limits.
2149a.
Reports by merged banks for cooperatives.
2151.
Revolving fund.
2152.
Repealed.
2153.
Power to borrow; issuance of notes, bonds, debentures, and other
obligations.
2154.
Capital adequacy of banks and institutions.
(a)
Minimum levels of capital.
(b)
Failure to maintain minimum levels; directives; plans for achieving
minimum levels; proposals affecting compliance.
(c)
Enhancement of capital adequacy of banks.
2154a.
Capitalization of System institutions.
(a)
Definitions.
(b)
Adoption of bylaws.
(c)
Requirements of bylaws.
(d)
Reduction of capital.
(e)
Compliance.
(f)
Construction.
(g)
Controlling authority.
2155.
Liability of banks; United States not liable.
(a)
Joint and several liability of banks.
(b)
Resolutions as to liability; execution of obligations.
(c)
United States liability.
(d)
Insurance Fund called on before invoking joint and several liability.
2156.
Repealed.
2157.
Bonds as investments.
2158.
Purchase and sale by Federal Reserve System.
2159.
Purchase and sale of obligations; additional powers.
2160.
Federal Farm Credit Banks Funding Corporation.
(a)
Establishment.
(b)
Duties.
(c)
Officers and committees.
(d)
Board of directors.
(e)
Transitional authority.
(f)
Succession.
2161.
Repealed.
2162.
Protection of borrower stock.
(a)
Retirement of stock.
(b)
Certain powers not affected.
(c)
Inability to retire stock at par value.
(d)
Definitions.
2181, 2182.
Repealed.
2183.
Dissolution; voluntary or involuntary liquidation; mergers;
receiverships or conservators.
(a)
Voluntary liquidation; consent of Farm Credit Administration; rules
and regulations; minimization of adverse effect; voluntary merger;
mandatory merger on failure to comply or meet obligations.
(b)
Appointment of conservator or receiver; grounds; action for
removal; stay of actions or proceedings.
(c)
Involuntary liquidation; rules and regulations; minimization of
adverse effect.
2184.
Communications with stockholders.
(a)
Provision of stockholder lists.
(b)
Alternative communications.
2199.
Disclosure.
(a)
In general.
(b)
Differential interest rates.
2200.
Access to documents and information.
2201.
Notice of action on application.
(a)
Loan applications.
(b)
Distressed loans.
2202.
Reconsideration of actions.
(a)
Credit review committees.
(b)
Review of decisions.
(c)
Personal appearance.
(d)
Independent appraisal.
(e)
Notification of applicant.
2202a.
Restructuring distressed loans.
(a)
Definitions.
(b)
Notice.
(c)
Meetings.
(d)
Consideration of applications.
(e)
Restructuring.
(f)
Least cost alternative.
(g)
Restructuring policy.
(h)
Reports.
(i)
Compliance.
(j)
Permitted foreclosures.
(k)
Application of section.
(l)
Assistance in restructuring.
2202b.
Effect of restructuring on borrower stock.
(a)
Farm Credit Bank.
(b)
Production credit association.
(c)
Retention of stock.
2202c.
Review of restructuring denials.
(a)
Requirements for restructuring by System institutions.
(b)
Special asset groups.
(c)
National Special Asset Council.
(d)
Report.
(e)
Restructuring factors.
2202d.
Protection of borrowers who meet all loan obligations.
(a)
Foreclosure prohibited.
(b)
Prohibition against required principal reduction.
(c)
Nonenforcement.
(d)
Placing loans in nonaccrual status.
2202e.
Waiver of mediation rights by borrowers.
2203.
Nomination of association directors; representative selection of
nominees.
2204.
Tax-exempt guarantees prohibited.
2205.
Interest rates.
2206.
Participation loans.
2207.
Young, beginning, and small farmers and ranchers.
2208.
Prohibition against use of signed ballots.
2209.
Compensation of directors.
2211.
Establishment.
2212.
Powers of Farm Credit Administration.
2213.
Regulation and examination.
2214.
State laws.
2216 to 2216k.
Repealed.
2218.
Lines of insurance.
(a)
Regulatory authorization.
(b)
Contents of regulations.
(c)
Continuation of existing coverage.
2219.
Limitation on separate sale.
2219a.
Right of first refusal.
(a)
General rule.
(b)
Application of right of first refusal to sale of property.
(c)
Application of right of first refusal to leasing of property.
(d)
Public offerings.
(e)
Term or condition.
(f)
Financing.
(g)
Mailing of notice.
(h)
State laws.
(i)
Applicability.
2219b.
Application of uninsured accounts.
(a)
In general.
(b)
Regulations.
2219c.
Affirmative action.
2219d.
Encouragement of conservation practices.
2221 to 2227.
Transferred or Repealed.
2241.
Farm Credit Administration.
2242.
Farm Credit Administration Board.
(a)
Appointment.
(b)
Terms of office.
(c)
Organization.
(d)
Compensation.
2243.
Powers of Board.
2244.
Chairman; responsibilities; governing standards.
(a)
Chairman of Farm Credit Administration Board; power and authority.
(b)
Governing standards.
(c)
Enforcement of rules, regulations, and orders of Board; civil
proceedings; representation by attorneys.
2245.
Organization of Farm Credit Administration.
(a)
Policies of Board.
(b)
Appointments.
(c)
Personnel.
(d)
Funding.
2246.
Advisory committees.
2247.
Repealed.
2248.
Seal of the Farm Credit Administration.
2249.
Administrative expenses.
2250.
Farm Credit Administration operating expenses fund.
(a)
Determinations required.
(b)
Deposits into fund.
2251.
Quarters and facilities for the Farm Credit Administration.
2252.
Powers and duties.
(a)
Enumerated powers.
(b)
Exclusions.
(c)
Proposed and final regulations; procedures applicable.
(d)
Legislative veto of regulations; procedures applicable.
2253.
Prior delegations.
2254.
Examinations.
(a)
Scope and frequency of examinations; power, authority, and liability
of examiners.
(b)
Annual report of condition.
(c)
Report of examination of noncomplying institution; publication;
notice of intention.
2255.
Conditions of other banks and lending institutions.
2256.
Consent to the availability of reports and to examinations.
2257.
Reports on conditions of institutions receiving loans or deposits.
2257a.
Uniform financial reporting instructions.
(a)
In general.
(b)
Computerized system.
(c)
Submission of proposal.
2258.
Jurisdiction.
2259.
State legislation.
2260.
Transferred.
2261.
Cease and desist proceedings.
2262.
Temporary cease and desist orders.
2263.
Enforcement of temporary cease and desist orders.
2264.
Suspension or removal of director or officer.
(a)
Written notice of intention to remove; violation of law, rule,
regulation, or final cease and desist order; unsafe or unsound
practice; breach of fiduciary duty.
(b)
Written notice of intention to remove or suspend director, officer or
other person; personal dishonesty; willful or continuing disregard;
unfitness to continue in office or to participate in affairs of
institution.
(c)
Suspension from office; prohibition from further participation in
conduct of affairs of institution; service of notice.
(d)
Statement of grounds for removal or prohibition; notice and hearing;
order of suspension, removal or prohibition; service of order.
(e)
Stay of suspension or prohibition.
2265.
Suspension or removal of director or officer charged with felony.
2266.
Hearings and judicial review.
(a)
Venue; closed hearings; decisions and findings of fact; orders;
modification or other action by Farm Credit Administration; judicial
review.
(b)
Judicial review; commencement of proceedings; filing of petition
and record; exclusive jurisdiction; finality of judgment and decree.
(c)
Proceedings operating as stays of orders.
2267.
Jurisdiction and enforcement.
2268.
Penalty.
(a)
Forfeiture and payment; compromise, modification, or remitting by
Farm Credit Administration; assessment and collection by written
notice.
(b)
Factors determining amount.
(c)
Notice and hearing; final orders.
(d)
Judicial review.
(e)
Action by Attorney General to recover amount assessed.
(f)
Rules and regulations.
(g)
Payment into Treasury.
(h)
Directives as final orders.
2269.
Further penalties.
2270.
Replacement of suspended or removed directors.
2271.
Definitions.
2272.
Notice of service.
2273.
Ancillary provisions; subpena power; etc.
2274.
Power to remove directors and officers.
2275.
General Accounting Office audit; report to Congress.
2275a.
Transition rules relating to amendment of certain FCA approval
authorities.
(a)
In general.
(b)
Authority to issue regulations.
(c)
Effect of section.
2276.
Access to and examination by Comptroller General of books, documents,
etc., of farm credit system banks and institutions.
2277a.
Definitions.
2277a-1.
Establishment of Farm Credit System Insurance Corporation.
2277a-2.
Board of Directors.
(a)
Establishment.
(b)
Chairman.
2277a-3.
Commencement of insurance.
2277a-4.
Premiums.
(a)
Amount in Fund not exceeding secure base amount.
(b)
Amount in Fund exceeding secure base amount.
(c)
Secure base amount.
(d)
Determination of principal outstanding.
2277a-5.
Certification of premiums.
(a)
Filing certified statement.
(b)
Contents and form of statement.
(c)
Initial premium payment.
(d)
Subsequent premium payments.
(e)
Regulations.
2277a-6.
Overpayment and underpayment of premiums; remedies.
(a)
Overpayments.
(b)
Underpayments.
(c)
Failure to file statement or pay premium.
(d)
Effect on other remedies.
2277a-7.
General corporate powers.
2277a-8.
Conduct of corporate affairs; examination of insured System banks.
(a)
Conduct of corporate affairs.
(b)
Examination of insured System banks.
(c)
Oath, affirmations, and testimony.
(d)
Cooperation with FCA examiners.
2277a-9.
Insurance Fund.
(a)
Establishment.
(b)
Amounts in Fund.
(c)
Uses of Fund.
2277a-10.
Powers of Corporation with respect to troubled insured System banks.
(a)
Authority to provide assistance.
(b)
Authority to pledge or sell assets.
(c)
Subrogation.
(d)
Right to assets.
(e)
Insured System bank.
(f)
Effective date.
2277a-11.
Investment of funds.
2277a-12.
Exemption from taxation.
2277a-13.
Reports.
(a)
In general.
(b)
Contents.
2277a-14.
Prohibitions.
(a)
Corporate name.
(b)
Payments or distributions while in default.
(c)
Failure to file statement or pay premium.
(d)
Employment of persons convicted of criminal offenses.
2278a.
Establishment of Board.
(a)
Charters.
(b)
Use of Capital Corporation staff.
2278a-1.
Purposes.
2278a-2.
Board of Directors.
(a)
Membership.
(b)
Chairman.
(c)
Terms of office, succession, and vacancies.
(d)
Compensation of Board members.
(e)
Rules and records.
(f)
Quorum required.
(g)
Chief executive officer.
2278a-3.
Corporate powers.
(a)
In general.
(b)
Power to remove; jurisdiction.
2278a-4.
Certification of eligibility to issue preferred stock.
(a)
Book value less than par value of stock and equities.
(b)
Book value less than 75 percent of par value of stock and equities.
(c)
Mandatory determination of eligibility.
(d)
Implementation.
(e)
''Other similar equities'' defined.
2278a-5.
Assistance.
(a)
In general.
(b)
''High-cost debt'' defined.
(c)
Minimum equity value.
(d)
Limitation.
2278a-6.
Special powers.
(a)
In general.
(b)
Suspension of assistance.
(c)
Undated letters of resignation.
(d)
Reports.
2278a-7.
Administration.
(a)
Expenses.
(b)
Interim funding.
(c)
Assistance operations.
(d)
Access to FCA documents.
2278a-8.
Limitation of powers.
(a)
Purposes.
(b)
Prohibition.
2278a-9.
Succession.
(a)
Assets and liabilities.
(b)
Contracts.
(c)
Adjustment of assessments.
(d)
Surplus funds.
(e)
Preservation agreements.
2278a-10.
Effect of regulations; audits.
(a)
Issuance.
(b)
Regulation by Farm Credit Administration.
(c)
Audits.
2278a-11.
Exemption from taxation.
2278a-12.
Termination.
2278a-13.
Transitional provisions.
(a)
Exercise of powers.
(b)
Limitation on assistance.
(c)
Issuance of stock.
(d)
Repayment.
2278b.
Establishment of Corporation.
2278b-1.
Purpose.
2278b-2.
Board of Directors.
(a)
Board of Directors.
(b)
Rules and records.
(c)
Quorum required.
(d)
Chief executive officer.
2278b-3.
Stock.
2278b-4.
Corporate powers.
(a)
In general.
(b)
Power to remove, and jurisdiction.
2278b-5.
Accounts.
(a)
Farm Credit Assistance Fund.
(b)
Financial Assistance Corporation Trust Fund.
2278b-6.
Debt obligations.
(a)
Issuance.
(b)
Conditions.
(c)
Interest payments.
(d)
Refinancing and payment of principal; defaults.
2278b-7.
Preferred stock.
(a)
Issuance.
(b)
Purchase.
2278b-8.
Payments.
(a)
In general.
(b)
Repayment of interest paid by Secretary of the Treasury.
(c)
Authorization of appropriations.
2278b-9.
One-time stock purchase.
(a)
Amount of stock purchase.
(b)
Computations.
(c)
Notice.
(d)
Institution requirements after notice.
(e)
Jurisdiction over actions.
2278b-10.
Exemption from taxation.
(a)
Assets.
(b)
Obligations.
2278b-11.
Termination.
(a)
Financial Assistance Corporation.
(b)
Accounts.
2279a.
Power to merge.
2279a-1.
Board of directors.
2279a-2.
Powers of merged banks.
(a)
In general.
(b)
Regulations.
2279a-3.
Capitalization.
2279a-4, 2279a-5. Repealed or Transferred.
2279b.
Transfer of lending authority.
(a)
Voluntary transfers.
(b)
Direct loans and financial assistance.
(c)
Regulations.
(d)
Mandatory transfer.
2279c.
Transferred.
2279c-1.
Merger of associations.
(a)
In general.
(b)
Powers, obligations, and consolidation.
(c)
Stock issuance.
2279c-2.
Reconsideration.
(a)
Period.
(b)
Reconsideration.
(c)
Special reconsideration.
2279d.
Termination of System institution status.
(a)
Conditions.
(b)
Effect.
2279e.
Approval of disclosure information and issuance of charters.
(a)
Disclosure of information.
(b)
Notice of reasons for disapproval.
(c)
Federal charter.
2279f.
Merger of similar banks.
(a)
In general.
(b)
Powers and capitalization.
(c)
Board of directors.
2279f-1.
Merger of similar associations.
(a)
In general.
(b)
Procedures.
2279g.
Transactions to accomplish mergers exempt from certain State taxes.
2279aa.
Definitions.
2279aa-1.
Federal Agricultural Mortgage Corporation.
(a)
Establishment.
(b)
Duties.
2279aa-2.
Board of directors.
(a)
Interim board.
(b)
Permanent board.
(c)
Officers and staff.
2279aa-3.
Powers and duties of Corporation and Board.
(a)
Guarantees.
(b)
Duties of Board.
(c)
Powers of Corporation.
(d)
Federal Reserve banks as depositaries and fiscal agents.
(e)
Access to book-entry system.
2279aa-4.
Stock issuance.
(a)
Voting common stock.
(b)
Required capital contributions.
(c)
Dividends.
(d)
Nonvoting common stock.
(e)
Preferred stock.
2279aa-5.
Certification of agricultural mortgage marketing facilities.
(a)
Eligibility standards.
(b)
Certification by Corporation.
(c)
Maximum time period for certification.
(d)
Revocation.
(e)
Affiliation of FCS institutions with facility.
2279aa-6.
Guarantee of qualified loans.
(a)
Guarantee authorized for certified facilities.
(b)
Reserve or subordinated participation requirements.
(c)
Standards requiring diversified pools.
(d)
Other responsibilities of and limitations on certified facilities.
(e)
Additional authority of Board.
(f)
Aggregate principal amounts of qualified loans.
(g)
Purchase of guaranteed securities.
2279aa-7.
Reserves and subordinated participation interests of certified
facilities.
(a)
Cash contributions.
(b)
Retention of subordinated participation interests.
(c)
Additional requirements relating to section 2279aa-6(b)(2) reserves.
(d)
Authority of Board to establish other policies and procedures.
2279aa-8.
Standards for qualified loans.
(a)
Standards.
(b)
Minimum criteria.
(c)
Loan amount limitation.
(d)
Congressional review.
(e)
Nondiscrimination requirement.
2279aa-9.
Exemption from restructuring and borrowers rights provisions for
pooled loans.
(a)
Restructuring.
(b)
Borrowers rights.
2279aa-10.
Funding for guarantee; reserves of Corporation.
(a)
Guarantee.
(b)
Guarantee fees.
(c)
Corporation reserve against guarantees losses required.
(d)
Fees to cover administrative costs authorized.
2279aa-11.
Supervision, examination, and report of condition.
(a)
Regulation.
(b)
Examinations and audits.
(c)
Annual report of condition.
(d)
FCA assessments to cover costs.
(e)
''Affiliate'' defined.
(f)
Employees and personnel.
2279aa-12.
Securities in credit enhanced pools.
(a)
Federal laws.
(b)
State securities laws.
(c)
Authorized investments.
(d)
State usury laws superseded.
2279aa-13.
Authority to issue obligations to cover guarantee losses of
Corporation.
(a)
Sale of obligations to Treasury.
(b)
Expeditious transaction required.
(c)
Limitation on amount of outstanding obligations.
(d)
Terms of obligation.
(e)
Coordination with title 31.
(f)
Authorization of appropriations.
2279aa-14.
Federal jurisdiction.
2279bb.
Definitions.
2279bb-1.
Risk-based capital levels.
(a)
Risk-based capital test.
(b)
Considerations.
(c)
Risk-based capital level.
(d)
Specified contents.
(e)
Availability of model.
2279bb-2.
Minimum capital level.
(a)
In general.
(b)
18-month transition.
(c)
Linked portfolio assets.
2279bb-3.
Critical capital level.
2279bb-4.
Enforcement levels.
(a)
In general.
(b)
Discretionary classification.
(c)
Quarterly determination.
(d)
Notice.
(e)
Implementation.
2279bb-5.
Mandatory actions applicable to level II.
(a)
Capital restoration plan.
(b)
Restriction on dividends.
(c)
Reclassification from level II to level III.
(d)
Effective date.
2279bb-6.
Supervisory actions applicable to level III.
(a)
Mandatory supervisory actions.
(b)
Discretionary supervisory actions.
(c)
Effective date.
section 1030.
12 USC 2001. Congressional declaration of policy and objectives
TITLE 12 -- BANKS AND BANKING
(a) It is declared to be the policy of the Congress, recognizing that
a prosperous, productive agriculture is essential to a free nation and
recognizing the growing need for credit in rural areas, that the
farmer-owned cooperative Farm Credit System be designed to accomplish
the objective of improving the income and well-being of American farmers
and ranchers by furnishing sound, adequate, and constructive credit and
closely related services to them, their cooperatives, and to selected
farm-related businesses necessary for efficient farm operations.
(b) It is the objective of this chapter to continue to encourage
farmer- and rancher-borrowers participation in the management, control,
and ownership of a permanent system of credit for agriculture which will
be responsive to the credit needs of all types of agricultural producers
having a basis for credit, and to modernize and improve the
authorizations and means for furnishing such credit and credit for
housing in rural areas made available through the institutions
constituting the Farm Credit System as herein provided.
(c) It is declared to be the policy of Congress that the credit needs
of farmers, ranchers, and their cooperatives are best served if the
institutions of the Farm Credit System provide equitable and competitive
interest rates to eligible borrowers, taking into consideration the
creditworthiness and access to alternative sources of credit for
borrowers, the cost of funds, including any costs of defeasance under
section 2159(b) of this title, the operating costs of the institution,
including the costs of any loan loss amortization under section 2254(b)
of this title, the cost of servicing loans, the need to retain earnings
to protect borrowers' stock, and the volume of net new borrowing.
Further, it is declared to be the policy of Congress that Farm Credit
System institutions take action in accordance with the Farm Credit Act
Amendments of 1986 in such manner that borrowers from the institutions
derive the greatest benefit practicable from that Act: Provided, That
in no case is any borrower to be charged a rate of interest that is
below competitive market rates for similar loans made by private lenders
to borrowers of equivalent creditworthiness and access to alternative
credit.
(Pub. L. 92-181, 1.1, Dec. 10, 1971, 85 Stat. 583; Pub. L. 99-509,
title I, 1032, Oct. 21, 1986, 100 Stat. 1877.)
The Farm Credit Act Amendments of 1986, referred to in subsec. (c),
is subtitle D of Pub. L. 99-509, title I, 1031-1037, Oct. 21, 1986,
100 Stat. 1877, which amended sections 2001, 2015, 2075, 2131, 2159,
2205, 2252, and 2254 of this title and enacted provisions set out as a
note below. For complete classification of this Act to the Code, see
Short Title of 1986 Amendment note below and Tables.
1986 -- Subsec. (c). Pub. L. 99-509 added subsec. (c).
Pub. L. 99-205, title IV, 401, Dec. 23, 1985, 99 Stat. 1709,
provided that: ''The provisions of titles I, II, III, and VI of this
Act (enacting sections 2152, 2161, 2199, 2200, 2216 to 2216k, 2219,
2219a, 2253, 2261 to 2273 of this title and provisions set out as notes
under section 2001 of this title, amending sections 2002, 2012, 2013,
2031, 2033, 2034, 2051, 2052, 2054, 2072 to 2074, 2077, 2078, 2091, 2093
to 2096, 2098, 2122 to 2126, 2132 to 2134, 2151, 2153 to 2156, 2182,
2183, 2201, 2202, 2205, 2206, 2211 to 2213, 2221 to 2223, 2227, 2241 to
2246, 2248 to 2252, and 2254 of this title, and repealing sections 2152,
2247, and 2253 of this title) shall become effective thirty days after
enactment (Dec. 23, 1985).''
Pub. L. 100-399, 1, Aug. 17, 1988, 102 Stat. 989, provided that:
''This Act (see Tables for classification) may be cited as the
'Agricultural Credit Technical Corrections Act of 1988'.''
Pub. L. 100-233, 1(a), Jan. 6, 1988, 101 Stat. 1568, provided that:
''This Act (see Tables for classification) may be cited as the
'Agricultural Credit Act of 1987'.''
Section 1031 of title I of Pub. L. 99-509 provided that: ''This
subtitle (subtitle D ( 1031-1037) of title I of Pub. L. 99-509, amending
sections 2001, 2015, 2075, 2131, 2159, 2205, 2252, and 2254 of this
title) may be cited as the 'Farm Credit Act Amendments of 1986'.''
Pub. L. 99-205, 1, Dec. 23, 1985, 99 Stat. 1678, provided: ''That
this Act (enacting sections 2152, 2161, 2199, 2200, 2216 to 2216k, 2219,
2219a, 2253, 2261 to 2273 of this title and provisions set out as notes
under sections 2001 and 2241 of this title, amending sections 2002,
2012, 2013, 2031, 2033, 2034, 2051, 2052, 2054, 2072 to 2074, 2077,
2078, 2091, 2093 to 2096, 2098, 2122 to 2126, 2132 to 2134, 2151, 2153
to 2156, 2182, 2183, 2201, 2202, 2205, 2206, 2211 to 2213, 2221 to 2223,
2227, 2241 to 2246, 2248 to 2252, and 2254 of this titld, and repealing
sections 2152, 2247, and 2253 of this title) may be cited as the 'Farm
Credit Amendments Act of 1985'.''
Pub. L. 96-592, 1, Dec. 24, 1980, 94 Stat. 3437, provided: ''That
this Act (enacting sections 2205 to 2208, 2211 to 2214, 2218, and 2260
of this title and amending sections 1141b, 2012 to 2020, 2033, 2034,
2051 to 2054, 2072 to 2077, 2091, 2093, 2094, 2096, 2097, 2122, 2124,
2126, 2128 to 2132, 2156, 2181, 2221, 2223, 2242, 2244, 2249, 2251, and
2252 of this title and section 3802 of Title 7, Agriculture) may be
cited as the 'Farm Credit Act Amendments of 1980'.''
Section 1 of Pub. L. 92-181 provided: ''That this Act (enacting
this chapter and provisions set out as notes under this section,
amending sections 5314 and 5315 of Title 5, Government Organization and
Employees, and section 393 of this title, and repealing section 636 et
seq. of this title) may be cited as the 'Farm Credit Act of 1971'.''
Pub. L. 92-181, which enacted this chapter, represents a complete
rewriting of the farm credit laws and a fundamental reworking of the
statutory basis for the farm credit system. In connection with such
reworking of material, the existing statutory provisions covering this
area were repealed and their substance revised, reenacted, and expanded
by Pub. L. 92-181.
The repealed provisions constituted the bulk of chapter 7 of this
title. Section 5.40(a), formerly 5.26(a), of Pub. L. 92-181, as
renumbered by Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99
Stat. 1703, enumerated the repealed statutes as follows: The Federal
Farm Loan Act, as amended; section 2 of the Act of March 10, 1924
(Public Numbered 35, Sixty-eighth Congress, 43 Stat. 17), as amended;
section 6 of the Act of January 23, 1932 (Public Numbered 3,
Seventy-second Congress, 47 Stat. 14), as amended; the Farm Credit Act
of 1933, as amended; sections 29 and 40 of the Emergency Farm Mortgage
Act of 1933; Act of June 18, 1934 (Public Numbered 381, Seventy-third
Congress, 48 Stat. 983); Act of June 4, 1936 (Public Numbered 644,
Seventy-fourth Congress, 49 Stat. 1461), as amended; sections 5, 6, 20,
25(b) and 39 of the Farm Credit Act of 1937, as amended; sections 601
and 602 of the Act of September 21, 1944 (Public Law 425, Seventy-eighth
Congress, 58 Stat. 740, 741), as amended; sections 1, 2, 3, 4, 5, 6, 7,
8, 16, and 17(b) of the Farm Credit Act of 1953, as amended; sections
2, 101, and 201(b) of the Farm Credit Act of 1956.
Section 5.40(b), formerly 5.26(b), of Pub. L. 92-181, as renumbered
by Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99 Stat. 1703,
provided that: ''All regulations of the Farm Credit Administration or
the institutions of the System and all charters, bylaws, resolutions,
stock classifications, and policy directives issued or approved by the
Farm Credit Administration, and all elections held and appointments made
under the Acts repealed by subsection (a) of this section (see Repeals
note above) shall be continuing and remain valid until superseded,
modified, or replaced under the authority of this Act (this chapter).
All stock, notes, bonds, debentures, and other obligations issued under
the repealed acts shall be valid and enforceable upon the terms and
conditions under which they were issued, including the pledge of
collateral against which they were issued, and all loans made and
security or collateral therefor held by, and all contracts entered into
by, institutions of the System shall remain enforceable according to
their terms unless and until modified in accordance with the provisions
of this Act; it being the purpose of this subsection to avoid
disruption in the effective operation of the System by reason of said
repeals.''
Section 5.42, formerly 5.28, of Pub. L. 92-181, as renumbered by
Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99 Stat. 1703,
provided that: ''If any provision of this Act (this chapter), or the
application thereof to any persons or in any circumstances, is held
invalid, the remainder of this Act and the application of such provision
to other persons or in other circumstances shall not be affected
thereby.''
Section 5.40(a), formerly 5.26(a), of Pub. L. 92-181, as renumbered
by Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99 Stat. 1703,
provided in part that: ''All references in other legislation, State or
Federal, rules and regulations of any agency, stock, contracts, deeds,
security instruments, bonds, debentures, notes, mortgages and other
documents of the institutions of the System, to the Acts repealed hereby
(see Repeals note above), shall be deemed to refer to comparable
provisions of this Act (this chapter).''
Section 5.43, formerly 5.29, of Pub. L. 92-181, as renumbered by
Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99 Stat. 1703,
provided that: ''The right to alter, amend, or repeal any provision or
all of this Act (this chapter) is expressly reserved.''
Pub. L. 101-624, title XVIII, 1842, Nov. 28, 1990, 104 Stat. 3835,
provided that:
''(a) Study. -- The Comptroller General of the United States shall
conduct a study of certain matters related to the cost and availability
of credit in rural America, including a study of --
''(1) the relationship of the role and lending volume of the Farm
Credit System to the ability of the System to repay the assistance
provided under the Agricultural Credit Act of 1987 (Public Law 100-233)
(see Tables for classification) and amendments made by such Act;
''(2) the ability of Farm Credit System institutions to be
competitive taking into consideration the costs of rebuilding capital,
repaying assistance, and capitalizing the Farm Credit Insurance Fund
established under section 5.60 of the Farm Credit Act of 1971 (12 U.S.
C. 2277a-9);
''(3) the rates Farm Credit Banks charge for credit and the rates
prevailing in the market for credit of comparable risk and maturity;
''(4) the potential for credit pricing practices of rural lending
institutions to adversely affect the financial soundness of other
lending institutions that provide agricultural credit;
''(5) the pricing practices of commercial lending and insurance
institutions and whether the practices adequately address the level of
risk in agricultural lending;
''(6) whether the assistance authorized under the Agricultural Credit
Act of 1987 and the amendments made by such Act, is being utilized in
accordance with the purposes intended by Congress;
''(7) the availability and adequacy of credit in rural America for
the purpose of financing agricultural production, infrastructure
development (including development of roads, bridges, and water
systems), and rural development;
''(8) the prudence and desirability for commercial lenders and Farm
Credit System institutions who serve primarily agriculture to broaden
lending activity to provide diversity in their portfolios;
''(9) the level of competitiveness among the major sector lenders in
agriculture, whether competition among such lenders has increased or
decreased in the last 5 years, and whether American producers have
benefited from the competitive situation; and
''(10) the level of farm lending activity, in relation to the total
asset level, of agricultural lending institutions in rural America and
the level of investment by the institutions outside of the rural
community or area in which the lending institutions are located.
''(b) Report. -- Not later than 2 years after the date of enactment
of this Act (Nov. 28, 1990), the Comptroller General shall submit a
report on the study conducted under subsection (a) (including any
related recommendations) to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate.''
Pub. L. 100-233, title IX, 901, Jan. 6, 1988, 101 Stat. 1717, as
amended by Pub. L. 100-399, title VIII, 801, Aug. 17, 1988, 102 Stat.
1006, provided that:
''(a) Issuance of Regulations. --
''(1) Authority. -- The Farm Credit Administration Board shall issue
such regulations as the Board considers necessary for the orderly and
efficient implementation of the provisions of, and the amendments made
by, this Act (see Tables for classification) relating to the Farm Credit
Act of 1971 (12 U.S.C. 2001 et seq.).
''(2) Timing. -- To the extent the Farm Credit Administration is
required to issue regulations to implement this Act and the amendments
made by this Act, the Farm Credit Administration shall issue such
regulations as expeditiously as possible, and, except as otherwise
provided in this Act, not later than 180 days after the date of the
enactment of this Act (Jan. 6, 1988).
''(b) Temporary Retention of Certain Regulations. --
''(1) In general. -- Except as otherwise provided in this subsection,
the regulations issued by the Farm Credit Administration before the date
of the enactment of this Act (Jan. 6, 1988) under provisions amended by
this Act shall remain in effect, notwithstanding such amendments, until
the Farm Credit Administration issues regulations to implement such
amendments, but in no event later than 180 days after such date of
enactment.
''(2) Certain regulations relating to borrowers' rights. -- The
regulations implementing, interpreting, or applying part C of title IV
(12 U.S.C. 2201 et seq.) (12 U.S.C. 2199 et seq.) (other than section
4.13(a) (12 U.S.C. 2199(a))) (in effect immediately before the date of
the enactment of this Act), to the extent that such regulations are not
contrary to this Act and the amendments made by this Act, shall remain
in effect until January 1, 1989.
''(3) Regulations relating to disclosure by banks and associations.
-- Any regulation issued or approved by the Farm Credit Administration
that implements, interprets, or applies section 4.13(a) (12 U.S.C.
2201(a) (12 U.S.C. 2199(a))) (in effect immediately before the date of
the enactment of this Act) shall remain in effect for 120 days after
such date of enactment.''
Pub. L. 100-71, title V, 519(b), July 11, 1987, 101 Stat. 475,
authorized and appropriated (1) for National Commission on Agricultural
Finance established under section 501 of Pub. L. 99-205, $100,000, to
remain available until expended, and (2) for National Commission on
Agriculture and Rural Development (Policy) established under section
5002 of this title, $100,000, to remain available until expended.
Pub. L. 99-205, title III, 307, Dec. 23, 1985, 99 Stat. 1709,
required each local lending institution of Farm Credit System
established under this chapter to (1) review each loan that had been
placed in non-accrual status by such institution to determine whether
such loan could be restructured based on changes in circumstances of
such institution as the result of this Act and the amendments made by
this Act, and (2) notify in writing borrower of each such loan of
provisions of this section.
Pub. L. 99-205, title V, 501, Dec. 23, 1985, 99 Stat. 1710,
directed President to appoint a National Commission on Agricultural
Finance, comprised of 15 members, representing the financial community,
the agricultural sector, and government, to conduct a study of methods
to ensure availability of adequate credit to agricultural producers and
agribusiness, taking into account long-term financing needs of
agricultural economy, roles of commercial banks, Farm Credit System, and
Farmers Home Administration in meeting those financial needs, with the
Commission, in conducting such study, to (1) evaluate financial
circumstances relative to both lenders and borrowers of farm credit, (2)
evaluate structure, performance, and conduct of private lenders --
commercial bankers and Farm Credit System -- and public lenders, (3)
explore need for long-term assistance in stabilizing value of
agricultural assets, and (4) evaluate effect on suppliers, producers,
processors, and local communities when financial institutions fail, and
not later than Dec. 23, 1986, to submit to Congress a report containing
results of study, together with comments and recommendations for
legislation providing for a sound, reasonable, and primarily
self-supporting credit program for farmers and ranchers as Commission
considers appropriate.
12 USC 2002. Farm Credit System
TITLE 12 -- BANKS AND BANKING
(a) Composition
The Farm Credit System shall include the the /1/ Farm Credit Banks,
the Federal land bank associations, the production credit associations,
the banks for cooperatives, and such other institutions as may be made a
part of the System, all of which shall be chartered by and subject to
regulation by the Farm Credit Administration.
(b) Farm credit districts
There shall be not more than twelve farm credit districts in the
United States, which may be designated by number, one of which districts
shall include the Commonwealth of Puerto Rico and one of which districts
may, if authorized by the Farm Credit Administration, include the Virgin
Islands of the United States: Provided, That the extension of credit
and other services authorized by this chapter in the Virgin Islands of
the United States shall be undertaken only if determined to be feasible
under regulations of the Farm Credit Administration. The boundaries of
the twelve farm credit districts existing on December 10, 1971, may be
readjusted from time to time by the Farm Credit Administration, with the
concurrence of the boards of the banks in each district involved. Two
or more districts may be merged as provided in section 2252(a)(2) of
this title.
(Pub. L. 92-181, 1.2, formerly 1.2, 5.0, Dec. 10, 1971, 85 Stat.
583, 614; Pub. L. 96-592, title V, 501, Dec. 24, 1980, 94 Stat. 3448;
Pub. L. 99-205, title II, 205(c), (g)(1), Dec. 23, 1985, 99 Stat. 1703,
1706; Pub. L. 100-233, title IV, 434, title VIII, 805(a), (v), Jan. 6,
1988, 101 Stat. 1662, 1715, 1716; Pub. L. 100-399, title IX,
901(q)-(s), Aug. 17, 1988, 102 Stat. 1008.)
Pub. L. 100-399, 901(r), transferred section 5.0 of Pub. L. 92-181,
which was classified to section 2221 of this title, to subsec. (b) of
this section.
1988 -- Subsec. (a). Pub. L. 100-399, 901(s), designated existing
provisions as subsec. (a), inserted heading, and substituted
''regulation'' for ''the regulation''.
Pub. L. 100-233, 434, amended provisions generally. Prior to
amendment, provisions read as follows: ''The Farm Credit System shall
include the Federal land banks, the Federal land bank associations, the
Federal intermediate credit banks, the production credit associations,
the banks for cooperatives, and such other institutions as may be made a
part of the System, all of which shall be chartered by and subject to
regulation by the Farm Credit Administration.''
Pub. L. 100-233, 805(a), substituted ''subject to regulation'' for
''subject to the regulation''.
Subsec. (b). Pub. L. 100-399, 901(q), (r), designated section 2221 of
this title as subsec. (b), inserted heading, and substituted ''boards
of the banks in each district'' for ''district boards''.
Pub. L. 100-233, 805(v), substituted ''section 2252(a)(2) of this
title'' for ''section 2252(2) of this title''.
1985 -- Subsec. (a). Pub. L. 99-205, 205(c), substituted
''regulation by'' for ''supervision of''.
Subsec. (b). Pub. L. 99-205, 205(g)(1), substituted ''Farm Credit
Administration'' for ''Federal Farm Credit Board'' in first and second
sentences, and made a technical amendment to reference to section 2252(
2) of this title to reflect the renumbering of the corresponding section
of the original act.
1980 -- Subsec. (b). Pub. L. 96-592 inserted provisions relating to
Virgin Islands of the United States.
Section 1001 of Pub. L. 100-399 provided that:
''(a) General Rule. -- Except as provided in subsection (b), the
amendments made by this Act (see Tables for classification) shall take
effect as if enacted immediately after the enactment of the 1987 Act
(Pub. L. 100-233, which was enacted Jan. 6, 1988).
''(b) Exceptions. -- The amendments made by sections 102(b), 102(f),
102(g), 102(h), 201(q), 302(c), 302(d), 302(e), 401, 402(b), 409(d),
411, 414, and 901 (other than by subsections (a), (b), (c), (e), (f),
and (g) thereof) of this Act (see Tables for classification) shall take
effect immediately after the amendment made by section 401 of the 1987
Act takes effect (section 401 of Pub. L. 100-233, effective 6 months
after Jan. 6, 1988).''
Section 434 of Pub. L. 100-233 provided in part that the amendment
of this section by section 434 of Pub. L. 100-233 is effective 6 months
after Jan. 6, 1988.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Section 412 of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 404, Aug. 17, 1988, 102 Stat. 999, provided that:
''(a) Submission of Proposal. --
''(1) Special committee. --
''(A) In general. -- Not later than 6 months after the date of the
enactment of this section (Jan. 6, 1988), a special committee shall be
selected pursuant to regulations of the Farm Credit Administration for
the purpose of developing a proposal for the consolidation of Farm
Credit System districts.
''(B) Composition. -- The special committee selected under
subparagraph (A) shall be composed of one representative from each Farm
Credit Bank board and the members of the Board of Directors of the
Assistance Board.
''(2) Development of proposal. -- Not later than 6 months after the
formation of the special committee, the committee shall develop a
proposal to consolidate the Farm Credit Banks into no less than six
financially viable Farm Credit Banks through inter-district mergers.
''(3) Report. -- Not later than the end of each calendar quarter
beginning at least 6 months after the selection of the special
committee, such committee shall prepare and submit, to the Committee on
Agriculture of the House of Representatives, and the Committee on
Agriculture, Nutrition, and Forestry of the Senate, a report on the
progress of the committee in developing a proposal under this
subsection.
''(b) Prerequisites to Consolidation. --
''(1) FCA review of proposal. -- Prior to the submission of the
proposal developed under subsection (a)(2) to the stockholders under
paragraph (3), the proposal together with all information to be
presented to the stockholders, shall be submitted to the Farm Credit
Administration for approval.
''(2) Prerequisites. -- The proposal developed under subsection (a)(
2) shall not be submitted to stockholders under paragraph (3) unless the
proposal is approved by --
''(A) a majority of the members of the Board of Directors of the
Assistance Board; and
''(B) the members of the special committee that represent the
districts affected by the terms of the proposal.
''(3) Submission to stockholders. -- Not later than the end of the
18-month period after the date of enactment of this Act (Jan. 6, 1988),
each Farm Credit Bank involved, in consultation with the special
committee, shall submit the proposed merger affecting such bank to the
voting stockholders of each such bank.
''(4) Stockholder vote. -- Each association shall be entitled to cast
a number of votes equal to the number of voting stockholders of such
association.''
/1/ So in original.
12 USC SUBCHAPTER I -- FARM CREDIT BANKS
TITLE 12 -- BANKS AND BANKING
Title I of the Farm Credit Act of 1971, comprising this subchapter,
was originally enacted by Pub. L. 92-181, title I, Dec. 10, 1971, 85
Stat. 583, and amended by Pub. L. 96-592, Dec. 24, 1980, 94 Stat.
3437; Pub. L. 99-205, Dec. 23, 1985, 99 Stat. 1678; Pub. L. 99-509,
Oct. 21, 1986, 100 Stat. 1874; Pub. L. 100-233, Jan. 6, 1988, 101
Stat. 1568. Such title is shown herein, however, as having been added
by Pub. L. 100-233, title IV, 401, Jan. 6, 1988, 101 Stat. 1622,
without reference to such intervening amendments because of the
extensive revision of the title's provisions by Pub. L. 100-233.
12 USC 2011. Establishment, charters, titles, branches
TITLE 12 -- BANKS AND BANKING
(a) Establishment
The banks established pursuant to the merger of each District Federal
Intermediate Credit Bank and Federal Land Bank (hereinafter referred to
in this subchapter as ''Farm Credit Banks''), as provided in section 410
of the Agricultural Credit Act of 1987, shall be Federally chartered
instrumentalities of the United States.
(b) Charters
The Farm Credit Administration shall, consistent with this chapter,
issue charters for, and approve amendments to charters of, the Farm
Credit Banks.
(c) Title
Each Farm Credit Bank may include in its title the name of the city
in which it is located or other geographical designation.
(d) Branches
Each Farm Credit Bank may establish such branches or other offices as
may be appropriate for the effective operation of its business.
(Pub. L. 92-181, title I, 1.3, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1622, and amended Pub. L. 100-399, title
IV, 401(a), (b), Aug. 17, 1988, 102 Stat. 995.)
Section 410 of the Agricultural Credit Act of 1987, referred to in
subsec. (a), is section 410 of Pub. L. 100-233, which is set out as a
note below.
A prior section 2011, Pub. L. 92-181, title I, 1.3, Dec. 10, 1971,
85 Stat. 583; Pub. L. 100-233, title VIII, 802(a), Jan. 6, 1988, 101
Stat. 1710, related to establishment, title, and branches of Federal
land banks prior to the general amendment of this subchapter by Pub. L.
100-233, 401.
1988 -- Subsec. (a). Pub. L. 100-399, 401(a), inserted '', as
provided in section 410 of the Agricultural Credit Act of 1987,'' before
''shall''.
Subsec. (b). Pub. L. 100-399, 401(b), amended subsec. (b) generally.
Prior to amendment, subsec. (b) read as follows: ''The charters or
organization certificates of Farm Credit Banks may be modified from time
to time by the Farm Credit Administration Board, not inconsistent with
the provisions of this subchapter, as may be necessary or expedient to
implement this chapter.''
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Section 401 of Pub. L. 100-233 provided that this subchapter is
effective 6 months after Jan. 6, 1988.
Section 401 of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 402, Aug. 17, 1988, 102 Stat. 999, provided that:
''(a) In General. -- Not later than 6 months after the date of the
enactment of this section (Jan. 6, 1988), the Federal land bank and the
Federal intermediate credit bank of each Farm Credit System district
shall merge into a Farm Credit Bank in such district pursuant to a plan
of merger agreed on by the Boards of Directors of such banks and
approved by the Farm Credit Administration, or if such banks fail to
agree, a plan of merger prescribed by the Farm Credit Administration.
The mergers required by this section shall be implemented without regard
to title VII (enacting sections 2279aa to 2279aa-14 of this title,
amending sections 2012, 2033, 2072, and 2093 of this title, section 1988
of Title 7, Agriculture, and section 9105 of Title 31, Money and
Finance, and enacting provisions set out as notes under section 2279aa
of this title and section 1988 of Title 7).
''(b) Capital Stock. -- Notwithstanding section 1.6 (as added by
section 401 of this Act) (12 U.S.C. 2014), the number of shares of
capital stock issued by a Farm Credit Bank to stockholders and other
owners of the institution involved in the merger, and the rights and
privileges of such shares (including voting power, redemption rights,
preferences on liquidation, and the right to dividends) shall be
determined by the plan of merger adopted by the merging banks, and shall
be consistent with section 4.3A (12 U.S.C. 2154a) and the regulations
issued by the Farm Credit Administration.
''(c) Assistance. -- The Assistance Board established under section
6.0 (12 U.S.C. 2278a) shall direct the Financial Assistance Corporation
established under section 6.20 (12 U.S.C. 2278b) to provide any Farm
Credit Bank with that amount of financial assistance as is necessary to
ensure that the stock of the Farm Credit Bank, upon implementation of
the merger, has a book value equal to 75 percent of par, and such Farm
Credit Bank shall be subject to all of the requirements of title VI of
the Farm Credit Act of 1971 (12 U.S.C. 2278a et seq.).
''(d) Initial Board. -- Notwithstanding section 1.4 (as added by
section 401 of this Act) (12 U.S.C. 2012), the initial board of each
Farm Credit Bank shall be composed of the members of the district board
(which is dissolved upon the creation of such bank) elected by the
production credit associations, Federal land bank associations, and
stockholders at large. Such initial board shall operate for such term
as is agreed to by the members of the board, except that such period
shall not exceed two years. Thereafter the board shall be elected and
serve in accordance with the provisions of section 1.4 of the Farm
Credit Act of 1971 (12 U.S.C. 2012).''
12 USC 2012. Board of directors
TITLE 12 -- BANKS AND BANKING
Each Farm Credit Bank shall elect a board of directors of such
number, for such term, in such manner, and with such qualifications, as
may be required in its bylaws, except that, at least one member shall be
elected by the other directors, which member shall not be a director,
officer, employee, or stockholder of a System institution.
(Pub. L. 92-181, title I, 1.4, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1622, and amended Pub. L. 100-399, title
IV, 401(c), Aug. 17, 1988, 102 Stat. 995.)
A prior section 2012, Pub. L. 92-181, title I, 1.4, Dec. 10, 1971,
85 Stat. 584; Pub. L. 96-592, title I, 101, Dec. 24, 1980, 94 Stat.
3437; Pub. L. 99-205, title II, 205(d)(1), Dec. 23, 1985, 99 Stat.
1703; Pub. L. 100-233, title VII, 705(a), title VIII, 802(b), Jan. 6,
1988, 101 Stat. 1706, 1710; Pub. L. 100-399, title VI, 604, Aug. 17,
1988, 102 Stat. 1006, related to corporate existence and general
corporate powers, prior to the general amendment of this subchapter by
Pub. L. 100-233, 401.
1988 -- Pub. L. 100-399 struck out ''from its voting stockholders''
after ''shall elect''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2013. General corporate powers
TITLE 12 -- BANKS AND BANKING
Each Farm Credit Bank shall be a body corporate and, subject to
regulation by the Farm Credit Administration, shall have power to --
(1) adopt and use a corporate seal;
(2) have succession until dissolved under the provisions of this
chapter or other Act of Congress;
(3) make contracts;
(4) sue and be sued;
(5) acquire, hold, dispose, and otherwise exercise all the usual
incidents of ownership of real and personal property necessary or
convenient to its business;
(6) make, participate in, and discount loans, make commitments for
credit, accept advance payments, and provide services as authorized in
this chapter, and charge fees for such;
(7) operate under the direction of its board of directors;
(8) provide by its board of directors for a president, one or more
vice presidents, a secretary, a treasurer, and provide for such other
officers, employees, and agents as may be necessary, as provided in this
chapter, define their duties, and require surety bonds or make other
provision against losses occasioned by employees;
(9) prescribe, by its board of directors, its bylaws that shall be
consistent with law, and that shall provide for --
(A) the classes of its stock and the manner in which such stock shall
be issued, transferred, and retired; and
(B) the manner in which it is to --
(i) select officers, employees, and agents;
(ii) acquire, hold, and transfer property;
(iii) make loans and discounts;
(iv) conduct general business; and
(v) exercise and enjoy the privileges granted to it by law;
(10) borrow money and issue notes, bonds, debentures, or other
obligations individually, or in concert with one or more other banks of
the System, of such character, terms, conditions, and rates of interest
as may be determined as provided for in this chapter;
(11) purchase nonvoting stock in, or pay in surplus to, and accept
deposits of securities or funds from associations in its district, and
pay interest on such funds;
(12) participate with --
(A) one or more other Farm Credit Banks in loans under this
subchapter on such terms as may be agreed on among such banks;
(B) one or more other Farm Credit System institutions in loans made
under this subchapter or other subchapters of this chapter on the basis
prescribed in section 2206 of this title; and
(C) lenders that are not Farm Credit System institutions in loans
that the bank is authorized to make under this subchapter;
(13) approve the salary scale of the officers and employees of the
associations in its district, and the appointment and compensation of
the chief executive officer thereof, and supervise the exercise by such
associations of the functions vested in or delegated to them;
(14) deposit the securities and current funds of the bank with any
member bank of the Federal Reserve System or any insured State nonmember
bank (within the meaning of section 1813 of this title) and pay fees and
receive interest on such as may be agreed, and when designated for that
purpose by the Secretary of the Treasury, such bank --
(A) shall be a depository of public money, except receipts from
customs, under such regulations as may be prescribed by the Secretary;
(B) may be employed as a fiscal agent of the Government; and
(C) shall perform all such reasonable duties as a depository of
public money or financial agent of the Government as may be required of
such bank;
except that no Government funds deposited under the provisions of
this paragraph shall be invested in loans or bonds or other obligations
of the bank;
(15) buy and sell obligations of, or insured by, the United States or
any agency thereof, or securities backed by the full faith and credit of
any such agency, and make other investments as may be authorized under
regulations issued by the Farm Credit Administration;
(16) sell to lenders that are not Farm Credit System institutions
interests in loans, and buy from and sell to Farm Credit System
institutions interests in loans and other extensions of credit, and
nonvoting stock as may be authorized under regulations issued by the
Farm Credit Administration;
(17) conduct studies and make and adopt standards for lending;
(18) delegate to associations such functions as the bank determines
appropriate;
(19) amend and modify loan contracts, documents, and payment
schedules, and release, subordinate, or substitute security for any of
such items;
(20) for loans made by the bank, require associations to endorse
notes and other obligations of borrowers from the bank;
(21) exercise through the board of directors or authorized officers,
employees, or agents of the bank, all such incidental powers as may be
necessary or expedient to carry on the business of the bank;
(22) accept contributions to the capital of the bank from
associations and account for such in accordance with generally accepted
accounting principles, except as may be authorized by the Farm Credit
Administration;
(23) as may be authorized by the board of directors of the bank,
agree with other Farm Credit System institutions to share loan and other
losses, whether to protect against capital impairment or for any other
purpose; and
(24) operate as an originator and become certified as a certified
facility under subchapter VIII of this chapter.
(Pub. L. 92-181, title I, 1.5, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1623, and amended Pub. L. 100-399, title
IV, 401(d), Aug. 17, 1988, 102 Stat. 995.)
A prior section 2013, Pub. L. 92-181, title I, 1.5, Dec. 10, 1971,
85 Stat. 585; Pub. L. 96-592, title I, 102, Dec. 24, 1980, 94 Stat.
3437; Pub. L. 99-205, title II, 205(d)(2), (3), title VI, 601, Dec.
23, 1985, 99 Stat. 1703, 1711; Pub. L. 100-233, title VIII, 802(c),
Jan. 6, 1988, 101 Stat. 1710, related to land bank stock, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
1988 -- Par. (9). Pub. L. 100-399, 401(d)(1), amended par. (9)
generally. Prior to amendment, par. (9) read as follows: ''prescribe
by its board of directors --
''(A) the bylaws of such bank that shall not be inconsistent with
law, providing for the classes of the stock of the bank and the manner
in which such stock shall be issued, transferred, and retired;
''(B) the officers, employees, and agents of the bank as provided
for;
''(C) the property of the bank acquired, held, and transferred;
''(D) the loans and discounts made by the bank;
''(E) the general business conducted by the bank; and
''(F) the privileges granted to the bank by law exercised and
enjoyed;''.
Par. (11). Pub. L. 100-399, 401(d)(2), substituted ''of securities
or'' for ''or securities of''.
Par. (12)(B), (C). Pub. L. 100-399, 401(d)(3), struck out
''participate with'' before ''one or more'' in subpar. (B) and
''participate with'' before ''lenders that'' in subpar. (C).
Par. (14). Pub. L. 100-399, 401(d)(4), substituted ''(within the
meaning of section 1813 of this title)'' for ''as defined in section
1813 of this title''.
Par. (18). Pub. L. 100-399, 401(d)(5), struck out ''Federal land
bank'' after ''delegate to''.
Par. (22). Pub. L. 100-399, 401(d)(6), substituted ''in accordance
with generally accepted accounting principles, except as may be
authorized by the Farm Credit Administration;'' for ''as authorized by
the Farm Credit Administration; and''.
Par. (23). Pub. L. 100-399, 401(d)(7), struck out ''and approved by
the Farm Credit Administration Board'' after ''of the bank'' and
substituted ''purpose; and'' for ''purpose.''
Par. (24). Pub. L. 100-399, 401(d)(8), added par. (24).
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2014. Farm Credit Bank capitalization
TITLE 12 -- BANKS AND BANKING
In accordance with section 2154a of this title, the Farm Credit Banks
shall provide, through bylaws and subject to Farm Credit Administration
regulations, for the capitalization of the bank and the manner in which
bank stock shall be issued, held, transferred, and retired and bank
earnings distributed.
(Pub. L. 92-181, title I, 1.6, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1624.)
A prior section 2014, Pub. L. 92-181, title I, 1.6, Dec. 10, 1971,
85 Stat. 585; Pub. L. 96-592, title I, 103, Dec. 24, 1980, 94 Stat.
3438, related to real estate mortgage loans, prior to the general
amendment of this subchapter by Pub. L. 100-233, 401.
12 USC 2015. Lending authority
TITLE 12 -- BANKS AND BANKING
(a) Real estate loans and related assistance
(1) Real estate loans
The Farm Credit Banks may make or participate with other lenders in
long-term real estate mortgage loans in rural areas, as defined by the
Farm Credit Administration, or to producers or harvesters of aquatic
products, and make continuing commitments to make such loans under
specified circumstances, for a term of not less than 5 nor more than 40
years.
(2) Financial assistance
The Farm Credit Banks may provide and extend financial assistance to,
and discount for, or purchase from, a Federal land bank association any
note, draft, or other obligation with the endorsement or guarantee of
the association, the proceeds of which have been advanced to persons
eligible and for purposes of financing by the association, as authorized
under section 2279b(a) of this title.
(b) Intermediate credit
(1) In general
The Farm Credit Banks are authorized to make loans and extend other
similar financial assistance to and to discount for or purchase from --
(A) any production credit association, or
(B) any national bank, State bank, trust company, agricultural credit
corporation, incorporated livestock loan company, savings institution,
credit union, or any association of agricultural producers engaged in
the making of loans to farmers and ranchers, and any corporation engaged
in the making of loans to producers or harvesters of aquatic products,
any note, draft, or other obligation with the institution's
endorsement or guarantee, the proceeds of which note, draft, or other
obligation have been advanced to persons and for purposes eligible for
financing by production credit associations as authorized by this
chapter.
(2) Participation with other entities
The Farm Credit Banks may participate with one or more production
credit associations or other Farm Credit Banks in the making of loans to
eligible borrowers and may participate with one or more other Farm
Credit System institutions in loans made under this subchapter or other
subchapters of this chapter on the basis prescribed in section 2206 of
this title.
(3) Limitations on extension of financial services
(A) General rule
No paper shall be purchased from or discounted for, and no loans
shall be made or other similar financial assistance extended by a Farm
Credit Bank to any entity identified in paragraph (1)(B) of this
subsection if the amount of such paper added to the aggregate
liabilities of such entity, whether direct or contingent (other than
bona fide deposit liabilities), exceeds ten times the paid-in and
unimpaired capital and surplus of such entity or the amount of such
liabilities permitted under the laws of the jurisdiction creating such
institution, whichever is the lesser.
(B) Limitation on national bank
It shall be unlawful for any national bank which is indebted to any
Farm Credit Bank, on paper discounted or purchased under paragraph (1),
to incur any additional indebtedness, if by virtue of such additional
indebtedness its aggregate liabilities direct or contingent, will exceed
the limitation described in subparagraph (A).
(4) FCA regulations
(A) In general
All of the loans, financial assistance, discounts and purchases
authorized by this subsection shall be subject to regulations of the
Farm Credit Administration and shall be secured by collateral, if any,
as may be required in such regulations.
(B) Requirement of regulations
The regulations shall assure that such loans, financial assistance,
discounts, and purchases are available on a reasonable basis to any
financing institution authorized to receive such services under
paragraph (1)(B) of this subsection, and that --
(i) is significantly involved in lending for agricultural or aquatic
purposes;
(ii) demonstrates a continuing need for supplementary sources of
funds to meet the credit requirements of its agricultural or aquatic
borrowers;
(iii) has limited access to national or regional capital markets;
and
(iv) does not use such services to expand its financing activities to
persons and for purposes other than those authorized under subchapter II
of this chapter.
(C) Fees
The regulations may authorize a Farm Credit Bank to charge reasonable
fees for any commitment to extend service under this section to such a
financing institution.
(D) Subsidiaries and affiliates
For purposes of this subsection, a financing institution together
with the subsidiaries and affiliates of such may be considered as one,
but such determination to consider such institution together with the
subsidiaries and affiliates of such as one shall be made in the first
instance by the bank and in the event of a denial by the bank of its
services to a financial institution, then by the Farm Credit
Administration on a case-by-case basis with due regard to the total
relationship of the financing institution, its subsidiaries, and
affiliates.
(5) Effective date
Nothing in this section shall require termination of discount
relationships in existence on December 24, 1980.
(Pub. L. 92-181, title I, 1.7, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1625, and amended Pub. L. 100-399, title
IV, 401(e), (f), Aug. 17, 1988, 102 Stat. 995, 996.)
In subsec. (b)(5), ''December 24, 1980'' substituted for ''the
effective date of the Farm Credit Act Amendments of 1980''.
A prior section 2015, Pub. L. 92-181, title I, 1.7, Dec. 10, 1971,
85 Stat. 585; Pub. L. 96-592, title I, 104, Dec. 24, 1980, 94 Stat.
3438; Pub. L. 99-509, title I, 1033(a), Oct. 21, 1986, 100 Stat.
1877, related to interest rates and other charges, prior to the general
amendment of this subchapter by Pub. L. 100-233, 401.
1988 -- Subsec. (a). Pub. L. 100-399, 401(e), inserted in heading
''and related assistance'' and amended text generally. Prior to
amendment, text read as follows: ''The Farm Credit Banks are authorized
to make or participate with other lenders in long-term real estate
mortgage loans in rural areas, as defined by the Farm Credit
Administration, or to producers or harvesters of aquatic products, and
make continuing commitments to make such loans under specified
circumstances, for a term of not less than 5 nor more than 40 years.''
Subsec. (b)(2). Pub. L. 100-399, 401(f)(1), struck out provision that
banks may own and lease or lease with an option to purchase to persons
eligible for assistance under this subchapter, equipment needed in the
operations of such persons.
Subsec. (b)(3). Pub. L. 100-399, 401(f)(2), substituted in heading
''services'' for ''assistance'' and in subpar. (B) ''described in
subparagraph (A)'' for ''herein contained''.
Subsec. (b)(4)(A). Pub. L. 100-399, 401(f)(3), substituted
''subsection'' for ''section''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2016. Interest rates and other charges
TITLE 12 -- BANKS AND BANKING
(a) In general
Loans and discounts made by a Farm Credit Bank shall bear such rate
or rates of interest or discount, and be on such terms and conditions,
as may be determined by the board of directors of the bank from time to
time.
(b) Setting rates and charges
In setting rates and charges, it shall be the objective to provide
the types of credit needed by eligible borrowers at the lowest
reasonable costs on a sound business basis taking into consideration the
cost of money to the bank, necessary reserve and expenses of the bank
and associations, and providing services to members. The loan documents
or discounting and financing agreements, may provide for the interest
rate or rates to vary from time to time during the repayment period of
the loan or agreement.
(Pub. L. 92-181, title I, 1.8, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1626, and amended Pub. L. 100-399, title
IV, 401(g), Aug. 17, 1988, 102 Stat. 996.)
A prior section 2016, Pub. L. 92-181, title I, 1.8, Dec. 10, 1971,
85 Stat. 586; Pub. L. 96-592, title I, 105, Dec. 24, 1980, 94 Stat.
3438, related to eligibility, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
1988 -- Subsec. (a). Pub. L. 100-399 substituted ''such rate or
rates of interest or discount, and be'' for ''interest at a rate or
rates, and''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2017. Eligibility
TITLE 12 -- BANKS AND BANKING
The credit and financial services authorized in this subchapter may
be made available to persons who are or become stockholders or members
of the bank or associations in the district, and who are --
(1) bona fide farmers, ranchers, or producers or harvesters of
aquatic products;
(2) persons furnishing to farmers and ranchers farm-related services
directly related to their on-farm operating needs; or
(3) owners of rural homes.
(Pub. L. 92-181, title I, 1.9, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1626.)
A prior section 2017, Pub. L. 92-181, title I, 1.9, Dec. 10, 1971,
85 Stat. 586; Pub. L. 96-592, title I, 106, Dec. 24, 1980, 94 Stat.
3438; Pub. L. 100-233, title IV, 426, title VIII, 802(d), Jan. 6,
1988, 101 Stat. 1657, 1710; Pub. L. 100-399, title IV, 412, title VII,
701, Aug. 17, 1988, 102 Stat. 1004, 1006, related to security, prior
to the general amendment of this subchapter by Pub. L. 100-233, 401.
12 USC 2018. Security; terms
TITLE 12 -- BANKS AND BANKING
(a) Real estate loans
(1) Maximum level of loans
(A) In general
Real estate mortgage loans originated by a Farm Credit Bank, or in
which a Farm Credit Bank participates in with a lender that is not a
System institution, shall not exceed 85 percent of the appraised value
of the real estate security, except as provided for in paragraphs (2)
and (3).
(B) Regulation
The Farm Credit Administration may, by regulation, require that loans
not exceed 75 percent of the appraised value of the real estate
security.
(C) Guaranteed loans
If the loan is guaranteed by Federal, State, or other governmental
agencies, the loan may not exceed 97 percent of the appraised value of
the real estate security, as may be authorized under regulations of the
Farm Credit Administration.
(2) Security
All loans originated or participated in by a bank under this section
shall be secured by first liens on interests in real estate of such
classes as may be prescribed by regulations of the Farm Credit
Administration.
(3) Value of security
To adequately secure the loan, the value of security shall be
determined by appraisal under standards prescribed by the bank in
accordance with regulations of the Farm Credit Administration.
(4) Additional security
Additional security for any loan may be required by the bank to
supplement real estate security. Credit factors, other than the ratio
between the amount of the loan and the security value, shall be given
due consideration.
(5) Financial statement
Each Farm Credit Bank shall require a financial statement from each
borrower at least once every 3 years, or during such shorter period of
time as may be required under regulations of the Farm Credit
Administration.
(b) Intermediate credit
Loans, other than real estate loans, and discounts made under the
provisions of this subchapter shall be repayable in not more than 7
years (15 years if made to producers or harvesters of aquatic products)
from the time that such are made or discounted by the Farm Credit Bank,
except that the Board of Directors, under regulations of the Farm Credit
Administration, may approve policies permitting loans, advances, or
discounts (other than those made to producers or harvesters of aquatic
products) to be repayable in not more than 10 years from the time that
such are made or discounted by such bank.
(Pub. L. 92-181, title I, 1.10, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1627, and amended Pub. L. 100-399, title
IV, 401(h), (i), Aug. 17, 1988, 102 Stat. 996.)
A prior section 2018, Pub. L. 92-181, title I, 1.10, Dec. 10, 1971,
85 Stat. 586; Pub. L. 96-592, title I, 107, Dec. 24, 1980, 94 Stat.
3438, related to purposes, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
1988 -- Subsec. (a)(2). Pub. L. 100-399, 401(h)(1), substituted
''prescribed by regulations of'' for ''approved by''.
Subsec. (a)(3). Pub. L. 100-399, 401(h)(2), substituted ''under
standards'' for ''under appraisal standards'' and ''in accordance with
regulations of'' for ''and approved by''.
Subsec. (b). Pub. L. 100-399, 401(i), substituted ''harvesters of
aquatic products) from'' for ''harvester of aquatic products) from''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2019. Purposes for extensions of credit
TITLE 12 -- BANKS AND BANKING
(a) Agricultural or aquatic purposes
(1) In general
Loans made by a Farm Credit Bank to farmers, ranchers, and producers
or harvesters of aquatic products may be for any agricultural or aquatic
purpose and other credit needs of the applicant, including financing for
basic processing and marketing directly related to the applicant's
operations and those of other eligible farmers, ranchers, and producers
or harvesters of aquatic products, except that the operations of the
applicant shall supply some portion of the total processing or marketing
for which financing is extended.
(2) Limitation on loans for basic processing and marketing operations
The aggregate of the financing provided by any Farm Credit Bank for
basic processing and marketing directly related to the operations of
farmers, ranchers, and producers or harvesters of aquatic products, if
the operations of the applicant supply less than 20 percent of the total
processing or marketing for which financing is extended, shall not
exceed 15 percent of the total of all outstanding loans of such bank.
(b) Rural housing financing
(1) In general
Loans and discounts may be made to rural residents for rural housing
financing under regulations of the Farm Credit Administration.
(2) Limitations
Rural housing financed under this subchapter shall be for
single-family, moderate-priced dwellings and their appurtenances not
inconsistent with the general quality and standards of housing existing
in, or planned or recommended for, the rural area where it is located,
except that a Farm Credit Bank may not at any one time have a total
amount of loans outstanding for such rural housing to persons other than
farmers or ranchers in amounts exceeding 15 percent of the total of all
loans outstanding in such bank.
(3) Rural areas
For rural housing purposes under this section the term ''rural
areas'' shall not be defined to include any city or village having a
population in excess of 2,500 inhabitants.
(c) Farm-related services
(1) In general
Loans to persons furnishing farm-related services to farmers and
ranchers directly related to their on-farm operating needs may be made
for the necessary capital structures and equipment and initial working
capital for such services.
(2) Facilities
The banks may own and lease, or lease with option to purchase, to
persons eligible for credit under this subchapter or subchapter II of
this chapter, equipment or facilities needed in the operations of such
persons.
(Pub. L. 92-181, title I, 1.11, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1627, and amended Pub. L. 100-399, title
IV, 401(j), Aug. 17, 1988, 102 Stat. 996; Pub. L. 101-624, title XVIII,
1832(a), Nov. 28, 1990, 104 Stat. 3832; Pub. L. 102-237, title V,
502(a), Dec. 13, 1991, 105 Stat. 1868.)
A prior section 2019, Pub. L. 92-181, title I, 1.11, Dec. 10, 1971,
85 Stat. 586; Pub. L. 96-592, title I, 108, Dec. 24, 1980, 94 Stat.
3438, related to services related to borrower's operations, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
1991 -- Subsec. (a). Pub. L. 102-237 made technical amendments to
headings of subsec. (a) and pars. (1) and (2).
1990 -- Subsec. (a). Pub. L. 101-624 designated existing provisions
as par. (1), inserted heading, substituted ''some portion'' for ''at
least 20 percent, or such larger percent as may be required by the board
of directors of the bank under regulations of the Farm Credit
Administration,'', and added par. (2).
1988 -- Subsec. (c)(2). Pub. L. 100-399 substituted ''this
subchapter or subchapter II of this chapter, equipment or facilities''
for ''this subchapter, facilities''.
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2020. Related services
TITLE 12 -- BANKS AND BANKING
(a) In general
The Farm Credit Banks may provide technical assistance to borrowers,
members, and applicants from the bank and associations in the district,
including persons obligated on paper discounted by the bank, and may
make available to them at their option such financial related services
appropriate to their on-farm and aquatic operations as determined to be
feasible by the board of directors of the bank, under regulations of the
Farm Credit Administration.
(b) Authority to pass along cost of insurance premiums
Each Farm Credit Bank may assess each production credit association,
other association making direct loans under the authority provided under
section 2279b of this title, and other financing institution described
in section 2015(b)(1)(B) of this title in the district in which the bank
is located to cover the costs of making premium payments under part E of
subchapter V of this chapter. The assessment on any such association or
other financing institution for any calendar year shall be computed on
the same basis as is used to compute the premium payment and shall not
exceed the sum of --
(1) the annual average principal outstanding for such year on loans
made by the association, or on loans made by the other financing
institution and funded by or discounted with the Farm Credit Bank, that
are in accrual status, excluding the guaranteed portions of
government-guaranteed loans provided for in paragraph (3), multiplied by
0.0015;
(2) the annual average principal outstanding for such year on loans
made by the association, or on loans made by the other financing
institution and funded by or discounted with the Farm Credit Bank, that
are in nonaccrual status, multiplied by 0.0025; and
(3)(A) the annual average principal outstanding for such year on the
guaranteed portions of Federal government-guaranteed loans made by the
association, or by the other financing institution and funded by or
discounted with the Farm Credit Bank, that are in accrual status,
multiplied by 0.00015; and
(B) the annual average principal outstanding for such year on the
guaranteed portions of State government-guaranteed loans made by the
association, or by the other financing institution and funded by or
discounted with the Farm Credit Bank, that are in accrual status,
multiplied by 0.0003.
(Pub. L. 92-181, title I, 1.12, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1628, and amended Pub. L. 100-399, title
IV, 401(k), Aug. 17, 1988, 102 Stat. 996; Pub. L. 101-220, 6(b)(1),
(2), Dec. 12, 1989, 103 Stat. 1880.)
A prior section 2020, Pub. L. 92-181, title I, 1.12, Dec. 10, 1971,
85 Stat. 586; Pub. L. 96-592, title I, 109, Dec. 24, 1980, 94 Stat.
3439, related to loans through associations or agents, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
1989 -- Subsec. (b). Pub. L. 101-220, 6(b)(1), inserted '', other
association making direct loans under the authority provided under
section 2279b of this title,'' after ''production credit association''.
Subsec. (b)(1). Pub. L. 101-220, 6(b)(2)(A), inserted ''funded by
or'' before ''discounted with'' and ''excluding the guaranteed portions
of government-guaranteed loans provided for in paragraph (3),'' and
struck out ''and'' after ''multiplied by 0.0015;''.
Subsec. (b)(2). Pub. L. 101-220, 6(b)(2)(B), inserted ''funded by
or'' before ''discounted with'' and substituted ''0.0025; and'' for
''0.0025.''.
Subsec. (b)(3). Pub. L. 101-220, 6(b)(2)(C), added par. (3).
1988 -- Subsec. (a). Pub. L. 100-399 designated existing provision
as subsec. (a), inserted heading, substituted ''directors of the bank''
for ''directors of each district bank'', and added subsec. (b).
Section 6(c) of Pub. L. 101-220 provided that: ''The amendments
made by subsections (a) and (b) (amending sections 2020, 2277a-4,
2277a-8, and 2277a-10 of this title) shall be effective for insurance
premiums due to the Farm Credit System Insurance Corporation under the
Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) on or after January 1,
1990, based on the loan volume of each bank for each calendar year
beginning with calendar year 1989, and shall be effective for the
calculation of the initial premium payment required under section 5.56(
c) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-5(c)).''
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2021. Loans through associations or agents
TITLE 12 -- BANKS AND BANKING
(a) In general
The Farm Credit Banks shall, except as otherwise herein provided,
make loans of the type authorized under section 2015(a) of this title
through a Federal land bank association chartered to serve the territory
in which the real estate of the borrower is located.
(b) No active association
If there is no active association chartered to serve territory where
the real estate is located, the bank may make the loan directly or
through such bank or trust company or savings or other financial
institution as such bank may designate.
(c) Purchase of stock required
When the loan is not made through a Federal land bank association,
the applicant shall purchase stock in the bank in accordance with the
capitalization requirements provided for in the bylaws of the bank.
(Pub. L. 92-181, title I, 1.13, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1628.)
A prior section 1.13 of Pub. L. 92-181 was classified to section
2031 of this title prior to the general amendment of this subchapter by
Pub. L. 100-233, 401.
12 USC 2022. Liens on stock
TITLE 12 -- BANKS AND BANKING
The Farm Credit Banks shall have a first lien on the stock or
participation certificates it issues for the payment of any liability of
the stockholders to the bank.
(Pub. L. 92-181, title I, 1.14, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1629.)
A prior section 1.14 of Pub. L. 92-181 was classified to section
2032 of this title prior to the general amendment of this subchapter by
Pub. L. 100-233, 401.
12 USC 2023. Taxation
TITLE 12 -- BANKS AND BANKING
The Farm Credit Banks and the capital, reserves, and surplus thereof,
and the income derived therefrom, shall be exempt from Federal, State,
municipal, and local taxation, except taxes on real estate held by a
Farm Credit Bank to the same extent, according to its value, as other
similar property held by other persons is taxed. The mortgages held by
the Farm Credit Banks and the notes, bonds, debentures, and other
obligations issued by the banks shall be considered and held to be
instrumentalities of the United States and, as such, they and the income
therefrom shall be exempt from all Federal, State, municipal, and local
taxation, other than Federal income tax liability of the holder thereof
under the Public Debt Act of 1941 (31 U.S.C. 3124).
(Pub. L. 92-181, title I, 1.15, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1629, and amended Pub. L. 100-399, title
IV, 401(l), Aug. 17, 1988, 102 Stat. 997.)
A prior section 1.15 of Pub. L. 92-181 was classified to section
2033 of this title prior to the general amendment of this subchapter by
Pub. L. 100-233, 401.
A prior section 2031, Pub. L. 92-181, title I, 1.13, Dec. 10, 1971,
85 Stat. 587; Pub. L. 99-205, title II, 205(d)(4), Dec. 23, 1985, 99
Stat. 1703; Pub. L. 100-233, title VIII, 802(e), Jan. 6, 1988, 101
Stat. 1710, related to organizations, articles, and charters of Federal
land bank associations, and powers of Farm Credit Administration, prior
to the general amendment of this subchapter by Pub. L. 100-233, 401.
See section 2011 of this title.
A prior section 2032, Pub. L. 92-181, title I, 1.14, Dec. 10, 1971,
85 Stat. 587, related to board of directors, prior to the general
amendment of this subchapter by Pub. L. 100-233, 401. See section 2012
of this title.
A prior section 2033, Pub. L. 92-181, title I, 1.15, Dec. 10, 1971,
85 Stat. 587; Pub. L. 96-592, title I, 110, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title II, 205(d)(5), Dec. 23, 1985, 99 Stat.
1704; Pub. L. 100-233, title VII, 705(b), title VIII, 805(b), Jan. 6,
1988, 101 Stat. 1707, 1715; Pub. L. 100-399, title VI, 604, title VII,
702(a), Aug. 17, 1988, 102 Stat. 1006, related to general corporate
powers, prior to the general amendment of this subchapter by Pub. L.
100-233, 401. See section 2013 of this title.
A prior section 2034, Pub. L. 92-181, title I, 1.16, Dec. 10, 1971,
85 Stat. 589; Pub. L. 96-592, title I, 111, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title III, 304(a), Dec. 23, 1985, 99 Stat.
1708, related to association stock, value of shares, voting, and
purchase, prior to the general amendment of this subchapter by Pub. L.
100-233, 401.
A prior section 2051, Pub. L. 92-181, title I, 1.17, Dec. 10, 1971,
85 Stat. 589; Pub. L. 96-592, title I, 112, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title II, 205(d)(6), title VI, 602, Dec. 23,
1985, 99 Stat. 1704, 1711; Pub. L. 100-233, title VIII, 802(f), Jan.
6, 1988, 101 Stat. 1711, related to land bank reserves, dividends, and
patronage refunds, prior to the general amendment of this subchapter by
Pub. L. 100-233, 401.
A prior section 2052, Pub. L. 92-181, title I, 1.18, Dec. 10, 1971,
85 Stat. 589; Pub. L. 96-592, title I, 113, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title VI, 603, Dec. 23, 1985, 99 Stat. 1711;
Pub. L. 100-233, title VIII, 802(g), Jan. 6, 1988, 101 Stat. 1711,
related to association reserves, dividends, and patronage refunds, prior
to the general amendment of this subchapter by Pub. L. 100-233, 401.
A prior section 2053, Pub. L. 92-181, title I, 1.19, Dec. 10, 1971,
85 Stat. 590; Pub. L. 96-592, title I, 114, Dec. 24, 1980, 94 Stat.
3439, related to agreements for sharing gains or losses, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
A prior section 2054, Pub. L. 92-181, title I, 1.20, Dec. 10, 1971,
85 Stat. 590; Pub. L. 96-592, title I, 115, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title II, 205(d)(7), Dec. 23, 1985, 99 Stat.
1704; Pub. L. 100-233, title VIII, 805(c), Jan. 6, 1988, 101 Stat.
1715, related to liens on stock and participation certificates, prior to
the general amendment of this subchapter by Pub. L. 100-233, 401.
A prior section 2055, Pub. L. 92-181, title I, 1.21, Dec. 10, 1971,
85 Stat. 590; Pub. L. 100-399, title IX, 901(a), Aug. 17, 1988, 102
Stat. 1007, related to tax exempt status, prior to the general
amendment of this subchapter by Pub. L. 100-233, 401. See section 2023
of this title.
1988 -- Pub. L. 100-399 inserted a comma after ''therefrom'' and
substituted ''3124'' for ''742(a)''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC SUBCHAPTER II -- FARM CREDIT ASSOCIATIONS
TITLE 12 -- BANKS AND BANKING
Title II of the Farm Credit Act of 1971, comprising this subchapter,
was originally enacted by Pub. L. 92-181, title II, Dec. 10, 1971, 85
Stat. 590, and amended by Pub. L. 95-443, Oct. 10, 1978, 92 Stat.
1066; Pub. L. 96-592, Dec. 24, 1980, 94 Stat. 3437; Pub. L. 99-205,
Dec. 23, 1985, 99 Stat. 1678; Pub. L. 99-509, Oct. 21, 1986, 100
Stat. 1874; Pub. L. 100-233, Jan. 6, 1988, 101 Stat. 1568. Such title
is shown herein, however, as having been added by Pub. L. 100-233,
title IV, 401, Jan. 6, 1988, 101 Stat. 1622, without reference to such
intervening amendments because of the extensive revision of the title's
provisions by Pub. L. 100-233.
12 USC Part A -- Production Credit Associations
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title IV, 401, Jan. 6, 1988, 101 Stat.
1629, substituted ''Farm Credit Associations'' for ''Federal
Intermediate Credit Banks and Production Credit Associations'' as
subchapter heading, and substituted ''Production Credit Associations''
for ''Federal Intermediate Credit Banks'' as heading for part A.
12 USC 2071. Organization and charters
TITLE 12 -- BANKS AND BANKING
(a) Charter
Each production credit association shall continue as a Federally
chartered instrumentality of the United States.
(b) Organization
(1) In general
Production credit associations may be organized by 10 or more farmers
or ranchers or producers or harvesters of aquatic products desiring to
borrow money under the provisions of this part.
(2) Articles of association
The proposed articles of association shall be forwarded to the Farm
Credit Bank for the district accompanied by an agreement to subscribe on
behalf of the association for stock in the bank in such amounts as may
be required by the bank.
(3) Contents of articles
The articles shall specify in general terms the --
(A) objects for which the association is formed;
(B) powers to be exercised by the association in carrying out the
functions authorized by this part; and
(C) territory the association proposes to serve.
(4) Signatures
The articles shall be signed by persons desiring to form such an
association and shall be accompanied by a statement signed by each such
person establishing eligibility to borrow from the association in which
such person will become a stockholder.
(5) Copy to FCA
A copy of the articles of association shall be forwarded to the Farm
Credit Administration with the recommendations of the bank concerning
the need for such an association in order to adequately serve the credit
needs of eligible persons in the proposed territory and whether that
territory includes any area described in the charter of another
production credit association.
(6) Denial of charter
The Farm Credit Administration for good cause shown may deny the
charter.
(7) Approval of articles
On approval of the proposed articles by the Farm Credit
Administration, and on the issuance of a charter, the association shall
become as of such date a federally chartered body corporate and an
instrumentality of the United States.
(8) Powers of FCA
The Farm Credit Administration shall have the power, under rules and
regulations prescribed by the Farm Credit Administration or by
prescribing in the terms of the charter, to --
(A) provide for the organization of the association;
(B) provide for the initial amount of stock of the association;
(C) provide for the territory within which the association's
operations may be carried on; and
(D) approve amendments to the charter of the association.
(Pub. L. 92-181, title II, 2.0, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1629, and amended Pub. L. 100-399, title
IV, 401(m), Aug. 17, 1988, 102 Stat. 997; Pub. L. 102-237, title V,
502(b), Dec. 13, 1991, 105 Stat. 1868.)
A prior section 2071, Pub. L. 92-181, title II, 2.0, Dec. 10, 1971,
85 Stat. 590; Pub. L. 100-233, title VIII, 802(h), Jan. 6, 1988, 101
Stat. 1711, related to establishment and branches of Federal
intermediate credit banks, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
1991 -- Subsec. (b)(8). Pub. L. 102-237 substituted ''charter, to''
for ''charter to'' in introductory provisions.
1988 -- Subsec. (b)(1). Pub. L. 100-399, 401(m)(1), substituted
''this part'' for ''this subchapter''.
Subsec. (b)(3)(B). Pub. L. 100-399, 401(m)(2), (3), struck out
''the'' before ''powers'' and substituted ''this subtitle'' for ''this
part'', both of which for purposes of codification were translated as
''this part'', requiring no change in text.
Subsec. (b)(3)(C). Pub. L. 100-399, 401(m)(3), struck out ''the''
before ''territory''.
Subsec. (b)(8). Pub. L. 100-399, 401(m)(4), struck out in
introductory provision ''or by approval of bylaws of the association''
after ''the charter'' and amended subpar. (D) generally. Prior to
amendment, subpar. (D) read as follows: ''direct at any time such
changes in the charter as the Farm Credit Administration finds necessary
for the accomplishment of the purposes of this chapter''.
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Section 401 of Pub. L. 100-233 provided in part that this subchapter
is effective 6 months after Jan. 6, 1988.
Section 411 of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 403, Aug. 17, 1988, 102 Stat. 999, provided that:
''(a) Submission of Proposal. -- Not later than 6 months after the
date of the merger of the Federal land bank and the Federal intermediate
credit bank in a district, the Boards of Directors of each Federal land
bank association and each production credit association in such
district, that share substantially the same geographical territory with
each other, shall submit to the voting stockholders of each such
association for their approval, a plan, approved by the supervising bank
and the Farm Credit Administration, for merging such associations.
''(b) Prerequisites to Merger. --
''(1) Stockholder vote. -- The stockholder vote required for approval
of a merger under subsection (a) shall be a majority of the voting
stockholders of each association voting, in person or by written proxy,
at a duly authorized stockholders meeting.
''(2) Submission to fca. -- Not later than 60 days prior to the end
of the 12-month period beginning on the date of the enactment of this
section (Jan. 6, 1988), the plan of merger under subsection (a),
together with all information to be presented to the stockholders, shall
be submitted to the Farm Credit Administration.
''(3) Expedited consideration by fca. -- The Farm Credit
Administration shall expedite its consideration of the plan and
accompanying information submitted under paragraph (2) so that review
and approval of such plan and information shall be completed by the
Administration so as to enable a stockholder vote to occur within the
12-month period referred to in paragraph (2).
''(c) Direct Lenders. -- On approval of a merger under this
subsection, the resulting association shall be a direct lender in the
same manner as applies to production credit associations.''
Section 433 of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 417, Aug. 17, 1988, 102 Stat. 1004, provided that:
''(a) Petition of Bank. -- Notwithstanding any other provision of
law, effective for the 12-month period beginning on the date of
enactment of this Act (Jan. 6, 1988), each Federal land bank association
or production credit association, whose chartered territory adjoins the
territory of another district, may petition the Farm Credit
Administration to amend the charters of the association and the
adjoining district bank to provide that the territory of the association
is part of the adjoining district.
''(b) Requirements of Petition. -- To be considered under this
section, the petition must be signed by not less than 15 percent of the
stockholders of the association. Only one such petition may be filed by
an association under this section.
''(c) FCA Action. -- The Farm Credit Administration shall take any
action necessary --
''(1) to amend the charters of the association and the district bank;
and
''(2) to incorporate the petitioning association into the adjoining
district if the reassignment is approved by --
''(A) a majority of the stockholders of the association voting, in
person or by proxy, at a duly authorized stockholders' meeting held for
such purpose;
''(B) the board of directors of the adjoining district bank;
''(C) the Farm Credit System Assistance Board; and
''(D) the Farm Credit Administration Board.''
12 USC 2072. Board of directors
TITLE 12 -- BANKS AND BANKING
Each production credit association shall elect from the voting
members of such association, a board of directors of such number, for
such terms, with such qualifications, and in such manner as may be
required by the bylaws of the association, except that at least one
member shall be elected by the other directors, which member shall not
be a director, officer, employee, stockholder, or agent of a System
institution.
(Pub. L. 92-181, title II, 2.1, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1630, and amended Pub. L. 100-399, title
IV, 401(n), Aug. 17, 1988, 102 Stat. 997; Pub. L. 102-237, title V,
502(c), Dec. 13, 1991, 105 Stat. 1868.)
A prior section 2072, Pub. L. 92-181, title II, 2.1, Dec. 10, 1971,
85 Stat. 591; Pub. L. 96-592, title II, 201, Dec. 24, 1980, 94 Stat.
3439; Pub. L. 99-205, title II, 205(e)(1), Dec. 23, 1985, 99 Stat.
1704; Pub. L. 100-233, title VII, 705(c), title VIII,
802(i), 805(d), Jan. 6, 1988, 101 Stat. 1707, 1711, 1715; Pub. L.
100-399, title VI, 604, title IX, 901(b), Aug. 17, 1988, 102 Stat.
1006, 1007, related to corporate existence and general corporate powers,
prior to the general amendment of this subchapter by Pub. L. 100-233,
401.
1991 -- Pub. L. 102-237 substituted ''stockholder, or agent'' for
''or stockholder''.
1988 -- Pub. L. 100-399 struck out the comma after ''except that''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2073. General corporate powers
TITLE 12 -- BANKS AND BANKING
Each production credit association shall be a body corporate and,
subject to supervision by the Farm Credit Bank for the district and
regulation by the Farm Credit Administration, shall have the power to --
(1) have succession until terminated in accordance with this chapter
or any other Act of Congress;
(2) adopt and use a corporate seal;
(3) make contracts;
(4) sue and be sued;
(5) acquire, hold, dispose, and otherwise exercise all of the usual
incidents of ownership of real and personal property necessary or
convenient to the business of the association;
(6) operate under the direction of the board of directors of the
association in accordance with the provisions of this chapter;
(7) subscribe to stock of the bank;
(8) purchase stock of the bank held by other production credit
associations and stock of other production credit associations;
(9) contribute to the capital of the bank or other production credit
associations;
(10) invest funds of the association as may be approved by the Farm
Credit Bank under regulations of the Farm Credit Administration and
deposit the current funds and securities of such with the Farm Credit
Bank, a member bank of the Federal Reserve System, or any bank insured
under the Federal Deposit Insurance Corporation, and may pay fees
therefor and receive interest thereon as may be agreed;
(11) buy and sell obligations of or insured by the United States or
of any agency thereof or of any banks of the Farm Credit System and buy
from and sell to such banks, interests in loans and in other financial
assistance extended and nonvoting stock, as may be authorized by the
Farm Credit Bank in accordance with regulations of the Farm Credit
Administration;
(12) borrow money from the Farm Credit Bank, and with the approval of
such bank, borrow from and issue notes or other obligations to any
commercial bank or other financial institution;
(13) make and participate in loans, accept advance payments, and
provide services and other assistance as authorized in this part and
charge fees therefor, and when authorized by the bank participate with
one or more other Farm Credit System institutions in loans made under
this subchapter or other subchapters of this chapter on the basis
prescribed in section 2206 of this title;
(14) endorse and become liable on loans discounted or pledged to the
Farm Credit Bank;
(15) as may be authorized by the Farm Credit Bank in accordance with
regulations of the Farm Credit Administration, agree with other Farm
Credit System institutions to share loan or other losses, whether to
protect against capital impairment or for any other purpose;
(16) prescribe, by its board of directors, its bylaws that shall be
consistent with law, and that shall provide for --
(A) the classes of its stock and the manner in which such stock shall
be issued, transferred, and retired; and
(B) the manner in which it is to --
(i) select officers and employees;
(ii) acquire, hold, and transfer property;
(iii) conduct general business; and
(iv) exercise and enjoy the privileges granted to it by law;
(17) provide by its board of directors for a manager or other chief
executive officer, and provide for such other officers or employees as
may be necessary, including joint employees as provided in this chapter,
define their duties, and require surety bonds or make other provisions
against losses occasioned by employees, but no director shall, within
one year after the date when such director ceases to be a member of the
board, serve as a salaried employee of the association on the board of
which he served;
(18) elect by the board of directors of the association a loan
committee with power to approve applications for membership in the
association and loans or participations or, with the approval of the
bank, delegate the approval of applications for membership and loans or
participations within specified limits to other committees or to
authorized officers and employees of the association;
(19) perform any functions delegated to the association by the bank;
(20) exercise by the board of directors or authorized officers or
employees of the association, all such incidental powers as may be
necessary or expedient to carry on the business of the association; and
(21) operate as an originator and become certified as a certified
facility under subchapter VIII of this chapter.
(Pub. L. 92-181, title II, 2.2, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1630, and amended Pub. L. 100-399, title
IV, 401(o), Aug. 17, 1988, 102 Stat. 997.)
A prior section 2073, Pub. L. 92-181, title II, 2.2, Dec. 10, 1971,
85 Stat. 592; Pub. L. 96-592, title II, 202, Dec. 24, 1980, 94 Stat.
3440; Pub. L. 99-205, title II, 205(e)(2)-(5), title VI, 604, Dec. 23,
1985, 99 Stat. 1704, 1711; Pub. L. 100-233, title VIII, 802(j),
805(e), Jan. 6, 1988, 101 Stat. 1711, 1715, related to Federal
intermediate credit bank stock, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
1988 -- Par. (16). Pub. L. 100-399, 401(o)(1), amended par. (16)
generally. Prior to amendment, par. (16) read as follows: ''prescribe
by the board of directors of the association the bylaws not inconsistent
with law providing for --
''(A) the classes of association stock and the manner in which the
stock shall be issued, transferred, and retired;
''(B) the officers and employees elected or provided for;
''(C) the property acquired, held, and transferred by the
association; and
''(D) the general business conducted, and the privileges granted to
the association by law exercised and enjoyed;''.
Par. (17). Pub. L. 100-399, 401(o)(2), substituted ''provide by its
board of directors for'' for ''elect by the board of directors of the
association'' and ''serve as'' for ''be elected or designated''.
Par. (21). Pub. L. 100-399, 401(o)(3)-(5), added par. (21).
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2074. Production credit association capitalization
TITLE 12 -- BANKS AND BANKING
(a) In general
In accordance with section 2154a of this title, each production
credit association shall provide, through its bylaws and subject to Farm
Credit Administration regulations, for its capitalization and the manner
in which its stock shall be issued, held, transferred, and retired and,
except as provided in subsection (b) of this section, its earnings
distributed.
(b) Application of earnings
Each production credit association at the end of each fiscal year
shall apply the amount of the earnings of the association for such year
in excess of the operating expenses of the association (including
provision for valuation reserves against loan assets in an amount equal
to one-half of 1 percent of the loans outstanding at the end of the
fiscal year to the extent that such earnings in such year in excess of
other operating expenses permit, or in such greater amounts as are
deemed necessary under generally accepted accounting principles, until
such reserves equal or exceed 3 1/2 percent of the loans outstanding at
the end of the fiscal year, beyond which 3 1/2 percent further additions
to such reserves may be made, if deemed necessary under generally
accepted accounting principles) first to the restoration of the
impairment, if any, of capital, and second, to the establishment and
maintenance of the surplus accounts, the minimum aggregate amount of
which shall be prescribed by the Farm Credit Bank.
(c) Patronage
When the bylaws of an association so provide and subject to the
general directions of the Farm Credit Administration, available net
earnings at the end of any fiscal year may be distributed on a patronage
basis in stock, participation certificates, or in cash. Any part of the
earnings of the fiscal year in excess of the operating expenses for such
year held in the surplus account may be allocated to patrons on a
patronage basis.
(Pub. L. 92-181, title II, 2.3, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1632.)
A prior section 2074, Pub. L. 92-181, title II, 2.3, Dec. 10, 1971,
85 Stat. 593; Pub. L. 96-592, title II, 203, Dec. 24, 1980, 94 Stat.
3440; Pub. L. 99-205, title II, 205(e)(6), Dec. 23, 1985, 99 Stat.
1704, related to loans, discounts, participation, and leasing, prior to
the general amendment of this subchapter by Pub. L. 100-233, 401.
12 USC 2075. Short- and intermediate-term loans; participation; other
financial assistance; terms; conditions; interest; security
TITLE 12 -- BANKS AND BANKING
(a) Short- and intermediate-term loans
Each production credit association, under standards prescribed by the
board of directors of the Farm Credit Bank of the district, may make,
guarantee, or participate with other lenders in short- and
intermediate-term loans and other similar financial assistance to --
(1) bona fide farmers and ranchers and the producers or harvesters of
aquatic products, for agricultural or aquatic purposes and other
requirements of such borrowers, including financing for basic processing
and marketing directly related to the operations of the borrower and
those of other eligible farmers, ranchers, and producers or harvesters
of aquatic products, except that the operations of the borrower shall
supply some portion of the total processing or marketing for which
financing is extended, except that the aggregate of the financing
provided by any association for basic processing and marketing directly
related to the operations of farmers, ranchers, and producers or
harvesters of aquatic products, if the operations of the applicant
supply less than 20 percent of the total processing or marketing for
which financing is extended, shall not exceed 15 percent of the total of
all outstanding loans of all associations in the district at the end of
its preceding fiscal year;
(2) rural residents for housing financing in rural areas, under
regulations of the Farm Credit Administration; and
(3) persons furnishing to farmers and ranchers farm-related services
directly related to their on-farm operating needs.
(b) Rural housing
(1) In general
Rural housing financed under this part shall be for single-family,
moderate-priced dwellings and the appurtenances of such not inconsistent
with the general quality and standards of housing existing in, or
planned or recommended for, the rural area where it is located.
(2) Limitation
The aggregate of such housing loans in an association to persons
other than farmers or ranchers shall not exceed 15 percent of the
outstanding loans at the end of its preceding fiscal year except on
prior approval by the Farm Credit Bank of the district. The aggregate
of such housing loans in any farm credit district shall not exceed 15
percent of the outstanding loans of all associations in the district at
the end of the preceding fiscal year.
(3) Rural areas
For rural housing purposes under this section the term ''rural
areas'' shall not be defined to include any city or village having a
population in excess of 2,500 inhabitants.
(4) Equipment
Each association may own and lease, or lease with option to purchase,
to stockholders of the association equipment needed in the operations of
the stockholder.
(c) Interest rates and charges
(1) In general
Loans authorized in subsection (a) of this section shall bear such
rate or rates of interest as are determined under standards prescribed
by the board of the bank subject to the provisions of section 2205 of
this title, and shall be made upon such terms, conditions, and upon such
security, if any, as shall be authorized in such standards.
(2) Setting of rates
In setting rates and charges, it shall be the objective to provide
the types of credit needed by eligible borrowers, at the lowest
reasonable cost on a sound business basis, taking into account the cost
of money to the association, necessary reserves and expenses of the
association, and services provided to borrowers and members.
(3) Varying rates
The loan documents may provide for the interest rate or rates to vary
from time to time during the repayment period of the loan in accordance
with the rate or rates currently being charged by the association.
(4) Prior approval
Such standards may require prior approval of the bank on certain
classes of loans, and may authorize a continuing commitment to a
borrower of a line of credit.
(d) Special district rule
(1) Provision of credit and technical assistance outside service
territory
Notwithstanding any territorial limitation in the charter of a
production credit association located in a district in which there are
only two such associations, the Farm Credit Administration Board, on
request of such association, may permit such association to provide
credit and technical assistance to any borrower who is denied credit by
the other production credit association in the district if the Board
determines that such other production credit association in the district
is unduly restrictive in the application of credit standards.
(2) Timing of determination
If the Farm Credit Administration Board approves the extension of
credit and technical assistance under paragraph (1), the association
shall approve or deny the application for credit within 90 days after
receipt of the application from the borrower.
(Pub. L. 92-181, title II, 2.4, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1632, and amended Pub. L. 100-399, title
IV, 401(p), (q), Aug. 17, 1988, 102 Stat. 997; Pub. L. 101-624, title
XVIII, 1832(b), Nov. 28, 1990, 104 Stat. 3832.)
A prior section 2075, Pub. L. 92-181, title II, 2.4, Dec. 10, 1971,
85 Stat. 594; Pub. L. 95-443, Oct. 10, 1978, 92 Stat. 1066; Pub. L.
96-592, title II, 204, Dec. 24, 1980, 94 Stat. 3441; Pub. L. 99-509,
title I, 1033(b), Oct. 21, 1986, 100 Stat. 1877, related to terms,
prior to the general amendment of this subchapter by Pub. L. 100-233,
401.
1990 -- Subsec. (a)(1). Pub. L. 101-624 substituted ''some portion
of the total processing or marketing for which financing is extended,
except that the aggregate of the financing provided by any association
for basic processing and marketing directly related to the operations of
farmers, ranchers, and producers or harvesters of aquatic products, if
the operations of the applicant supply less than 20 percent of the total
processing or marketing for which financing is extended, shall not
exceed 15 percent of the total of all outstanding loans of all
associations in the district at the end of its preceding fiscal year''
for ''at least 20 percent, or such larger percent as is required by the
supervising bank under regulations of the Farm Credit Administration, of
the total processing or marketing for which financing is extended''.
1988 -- Subsec. (b)(1). Pub. L. 100-399, 401(p), substituted ''this
part'' for ''this subchapter'' and substituted ''or planned'' for
''planned''.
Subsec. (d). Pub. L. 100-399, 401(q), added subsec. (d).
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2076. Other services
TITLE 12 -- BANKS AND BANKING
Each production credit association may provide technical assistance
to borrowers, applicants, and members and may make available to them at
their option such financial related services appropriate to their
on-farm and aquatic operations as is determined feasible by the board of
directors of each Farm Credit Bank, under regulations prescribed by the
Farm Credit Administration.
(Pub. L. 92-181, title II, 2.5, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1633.)
A prior section 2076, Pub. L. 92-181, title II, 2.5, Dec. 10, 1971,
85 Stat. 595; Pub. L. 96-592, title II, 205, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 100-233, title III, 305, Jan. 6, 1988, 101 Stat. 1621,
related to services related to borrowers' operations, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
12 USC 2076a. Liens on stock
TITLE 12 -- BANKS AND BANKING
Except with regard to stock or participation certificates held by
other Farm Credit System institutions, each production credit
association shall have a first lien on stock and participation
certificates the association issues, on allocated surplus, and on
investments in equity reserve, for any indebtedness of the holder of the
capital investments and, in the case of equity reserves, for charges for
association losses in excess of reserves and surpluses.
(Pub. L. 92-181, title II, 2.6, as added Pub. L. 101-624, title
XVIII, 1833(2), Nov. 28, 1990, 104 Stat. 3832.)
A prior section 2.6 of Pub. L. 92-181 was renumbered section 2.7 and
is classified to section 2077 of this title.
Section effective Jan. 7, 1988, see section 1861(d) of Pub. L.
101-624, set out as an Effective Date of 1990 Amendment note under
section 2001 of Title 7, Agriculture.
12 USC 2077. Taxation
TITLE 12 -- BANKS AND BANKING
Each production credit association and its obligations are
instrumentalities of the United States and as such any and all notes,
debentures, and other obligations issued by such associations shall be
exempt, both as to principal and interest, from all taxation (except
surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed
by the United States or any State, territorial, or local taxing
authority, except that interest on such obligations shall be subject to
Federal income taxation in the hands of the holder.
(Pub. L. 92-181, title II, 2.7, formerly 2.6, as added Pub. L.
100-233, title IV, 401, Jan. 6, 1988, 101 Stat. 1633, and amended Pub.
L. 100-399, title IV, 401(r), Aug. 17, 1988, 102 Stat. 998; renumbered
2.7, Pub. L. 101-624, title XVIII, 1833(1), Nov. 28, 1990, 104 Stat.
3832.)
A prior section 2077, Pub. L. 92-181, title II, 2.6, Dec. 10, 1971,
85 Stat. 595; Pub. L. 96-592, title II, 206, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 99-205, title II, 205(e)(7), (8), Dec. 23, 1985, 99
Stat. 1704; Pub. L. 100-233, title VIII, 802(k), 805(f), Jan. 6,
1988, 101 Stat. 1711, 1715, related to net earnings, prior to the
general amendment of this subchapter by Pub. L. 100-233, 401.
A prior section 2078, Pub. L. 92-181, title II, 2.7, Dec. 10, 1971,
85 Stat. 597; Pub. L. 99-205, title II, 205(e)(9), Dec. 23, 1985, 99
Stat. 1704, related to distribution of assets on liquidation, prior to
the general amendment of this subchapter by Pub. L. 100-233, 401.
A prior section 2079, Pub. L. 92-181, title II, 2.8, Dec. 10, 1971,
85 Stat. 597; Pub. L. 100-399, title IX, 901(a), Aug. 17, 1988, 102
Stat. 1007, related to taxation, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
1988 -- Pub. L. 100-399 substituted ''interest,'' for ''interest''
and inserted '', except that interest on such obligations shall be
subject to Federal income taxation in the hands of the holder''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC Part B -- Federal Land Bank Associations
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title IV, 401, Jan. 6, 1988, 101 Stat.
1634, substituted ''Federal Land Bank Associations'' for ''Production
Credit Associations'' as heading for part B.
12 USC 2091. Organizations; articles; charters; powers of the Farm
Credit Administration
TITLE 12 -- BANKS AND BANKING
(a) Charter
Each Federal land bank association shall continue as a federally
chartered instrumentality of the United States.
(b) Organization
(1) In general
A Federal land bank association may be organized by any group of 10
or more persons desiring to borrow money from a Farm Credit Bank under
section 2015(a) of this title, including persons to whom the Farm Credit
Bank has made a loan directly or through an agent and has taken as
security real estate located in the territory proposed to be served by
the association.
(2) Articles of association
(A) Description of territory
The articles of association shall describe the territory within which
the association proposes to carry on its operations.
(B) Submission to FCB
Proposed articles shall be forwarded to the Farm Credit Bank for the
district, accompanied by an agreement to subscribe on behalf of the
association for stock in accordance with the bylaws of the Farm Credit
Bank.
(C) Stock purchase
Association stock may be paid for by surrendering for cancellation
stock in the bank held by a borrower and the issuance of an equivalent
amount of stock to such borrower in the association.
(D) Statement
The articles shall be accompanied by a statement signed by each of
the members of the proposed association establishing --
(i) the individual's eligibility and request for a Farm Credit Bank
loan;
(ii) that the real estate with respect to which the individual
desires the loan for is not being served by another Federal land bank
association; and
(iii) that the individual is or will become a stockholder in the
proposed association.
(E) Submission to FCA
A copy of the articles of association shall be forwarded to the Farm
Credit Administration with the recommendations of the bank concerning
the need for the proposed association in order to adequately serve the
credit needs of eligible persons in the proposed territory and a
statement as to whether or not the territory includes any territory
described in the charter of another Federal land bank association.
(3) Denials of charters
The Farm Credit Administration for good cause shown may deny the
charter applied for.
(4) Approval of articles
On the approval of the proposed articles by the Farm Credit
Administration and the issuance of such charter, the association shall
become as of such date a federally chartered body corporate and an
instrumentality of the United States.
(c) FCA authority on organization
The Farm Credit Administration shall have power, in the terms of the
charter, under rules and regulations prescribed by the Farm Credit
Administration --
(1) to provide for the organization of the association;
(2) to provide for the initial amount of stock of the association;
(3) to provide for the territory within which the association may
carry on its operations; and
(4) to approve amendments to the charter of such association.
(Pub. L. 92-181, title II, 2.10, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1634, and amended Pub. L. 100-399, title
IV, 401(s), (t), Aug. 17, 1988, 102 Stat. 998.)
A prior section 2091, Pub. L. 92-181, title II, 2.10, Dec. 10, 1971,
85 Stat. 597; Pub. L. 96-592, title II, 207, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 99-205, title II, 205(e)(10), Dec. 23, 1985, 99 Stat.
1704; Pub. L. 100-233, title VIII, 802(l), 805(g), Jan. 6, 1988, 101
Stat. 1711, 1715, related to organization and charters of production
credit associations, prior to the general amendment of this subchapter
by Pub. L. 100-233, 401.
1988 -- Subsec. (b)(1). Pub. L. 100-399, 401(s)(1), inserted ''under
section 2015(a) of this title'' after ''a Farm Credit Bank''.
Subsec. (b)(2)(D)(i). Pub. L. 100-399, 401(s)(2), amended cl. (i)
generally. Prior to amendment, cl. (i) read as follows: ''the
individual's eligibility for, and request or need of the individual of a
Farm Credit Bank loan;''.
Subsec. (c). Pub. L. 100-399, 401(t), amended subsec. (c) generally.
Prior to amendment, subsec. (c) read as follows: ''The Farm Credit
Administration shall have power, in the terms of the charter, under
rules and regulations prescribed by the Farm Credit Administration or by
approving the bylaws of the association, to provide for the --
''(1) organization of the association;
''(2) the initial amount of stock of such association;
''(3) the territory within which the operations of the association
may be carried on; and
''(4) to direct at any time changes in the charter of such
association as the Farm Credit Administration finds necessary in
accomplishing the purposes of this chapter.''
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2092. Board of directors
TITLE 12 -- BANKS AND BANKING
Each Federal land bank association shall elect from its voting
shareholders a board of directors of such number, for such terms, in
such manner, and with such qualifications as may be required by its
bylaws except that, at least one member shall be elected by the other
directors, which member shall not be a director, officer, employee,
stockholder, or agent of a System institution.
(Pub. L. 92-181, title II, 2.11, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1635, and amended Pub. L. 102-237, title V,
502(d), Dec. 13, 1991, 105 Stat. 1868.)
A prior section 2092, Pub. L. 92-181, title II, 2.11, Dec. 10, 1971,
85 Stat. 598, related to board of directors, prior to the general
amendment of this subchapter by Pub. L. 100-233, 401.
1991 -- Pub. L. 102-237 substituted ''stockholder, or agent'' for
''or stockholder''.
12 USC 2093. General corporate powers
TITLE 12 -- BANKS AND BANKING
Each Federal land bank association shall be a body corporate and,
subject to supervision of the Farm Credit Bank for the district and the
regulation of the Farm Credit Administration, shall have the power to --
(1) adopt and use a corporate seal;
(2) have succession until dissolved under the provisions of this
chapter or other Act of Congress;
(3) make contracts;
(4) sue and be sued;
(5) acquire, hold, dispose, and otherwise exercise all of the usual
incidents of ownership of real estate and personal property necessary or
convenient to the business of the association;
(6) operate under the direction of the board of directors of the
association in accordance with this chapter;
(7) provide by its board of directors for a manager or other chief
executive officer, and provide for such other officers or employees as
may be necessary, including joint employees as provided in this chapter,
define the duties of such, and require surety bonds or make other
provision against losses occasioned by employees, except that no
director shall, within one year after the date when such director ceases
to be a member of the board, serve as a salaried employee of the
association on the board of which such director served;
(8) prescribe, by its board of directors, its bylaws that shall be
consistent with law, and that shall provide for --
(A) the classes of its stock and the manner in which such stock shall
be issued, transferred, and retired; and
(B) the manner in which it is to --
(i) select officers and employees;
(ii) acquire, hold, and transfer property;
(iii) conduct general business; and
(iv) exercise and enjoy the privileges granted to it by law;
(9) accept applications for Farm Credit Bank loans and receive from
such bank and disburse to the borrowers the proceeds of such loans;
(10) subscribe to stock of the Farm Credit Bank of the district;
(11) elect by its board of directors a loan committee with power to
elect applicants for membership in the association and recommend loans
to the Farm Credit Bank, or with the approval of the Farm Credit Bank,
delegate the election of applicants for membership and the approval of
loans within specified limits to other committees or to authorized
employees of the association;
(12) on agreement with the bank, take such additional actions with
respect to applications and loans and perform such functions as are
vested by law in the Farm Credit Banks as may be agreed to by the
association;
(13) endorse and become liable to the bank on loans it makes to
association members;
(14) receive such compensation and deduct such sums from loan
proceeds with respect to each loan as may be agreed between the
association and the bank and make such other charges for services as may
be approved by the bank;
(15) provide technical assistance to members, borrowers, applicants,
and other eligible persons and make available to them, at their option,
such financial related services appropriate to their operations as it
determines, with Farm Credit Bank approval, are feasible, under
regulations of the Farm Credit Administration;
(16) borrow money from the bank and, with the approval of such bank,
borrow from and issue association notes or other obligations to any
commercial bank or other financial institution;
(17) buy and sell obligations of or insured by the United States or
any agency thereof or of any banks of the Farm Credit System;
(18) invest association funds in such obligations as may be
authorized in regulations of the Farm Credit Administration and approved
by the bank and deposit securities and current funds of the association
with any member bank of the Federal Reserve System, with the Farm Credit
Bank, or with any bank insured by the Federal Deposit Insurance
Corporation, and pay fees therefor and receive interest thereon as may
be agreed;
(19) perform such other function delegated to the association by the
Farm Credit Bank of the district;
(20) exercise by its board of directors or authorized officers or
agents all such incidental powers as may be necessary or expedient in
the conduct of its business;
(21) contribute to the capital of the bank; and
(22) operate as an originator and become certified as a certified
facility under subchapter VIII of this chapter.
(Pub. L. 92-181, title II, 2.12, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1635, and amended Pub. L. 100-399, title
IV, 401(u), Aug. 17, 1988, 102 Stat. 998.)
A prior section 2093, Pub. L. 92-181, title II, 2.12, Dec. 10, 1971,
85 Stat. 598; Pub. L. 96-592, title II, 208, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 99-205, title II, 205(e)(11), Dec. 23, 1985, 99 Stat.
1704; Pub. L. 100-233, title VII, 705(d), Jan. 6, 1988, 101 Stat.
1707; Pub. L. 100-399, title VI, 604, Aug. 17, 1988, 102 Stat. 1006,
related to general corporate powers, prior to the general amendment of
this subchapter by Pub. L. 100-233, 401.
1988 -- Par. (7). Pub. L. 100-399, 401(u)(1), substituted ''provide
by its board of directors for'' for ''elect by its board of directors''
and ''serve as'' for ''be elected or designated''.
Par. (8). Pub. L. 100-399, 401(u)(2), amended par. (8) generally.
Prior to amendment, par. (8) read as follows: ''prescribe by its board
of directors, association bylaws, not inconsistent with law, providing
for the classes of association stock and the manner in which such stock
shall be issued, transferred, and retired; the officers and employees
of the association elected or provided for, the property of the
association that is acquired, held, and transferred, the general
business of the association conducted, and the privileges granted to the
association by law exercised and enjoyed;''.
Par. (12). Pub. L. 100-399, 401(u)(3), substituted ''agreed to by''
for ''agreed to or delegated to''.
Par. (22). Pub. L. 100-399, 401(u)(4)-(6), added par. (22).
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2094. Federal land bank association capitalization
TITLE 12 -- BANKS AND BANKING
In accordance with section 2154a of this title, the Federal land bank
association shall provide, through its bylaws and subject to Farm Credit
Administration regulations, for its capitalization and the manner in
which its stock shall be issued, held, transferred, and retired and its
earnings distributed.
(Pub. L. 92-181, title II, 2.13, as added Pub. L. 100-233, title IV,
401, Jan. 6, 1988, 101 Stat. 1636.)
A prior section 2094, Pub. L. 92-181, title II, 2.13, Dec. 10, 1971,
85 Stat. 599; Pub. L. 96-592, title II, 209, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 99-205, title II, 205(e)(12)-(14), title III, 304(b),
Dec. 23, 1985, 99 Stat. 1705, 1708; Pub. L. 100-233, title VIII,
805(h), Jan. 6, 1988, 101 Stat. 1715, related to stock and
participation certificates, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
12 USC 2095. Repealed. Pub. L. 100-399, title IV, 401(v), Aug. 17,
1988, 102 Stat. 999
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title II, 2.14, as added Pub. L. 100-233,
title IV, 401, Jan. 6, 1988, 101 Stat. 1636, provided that whenever
any Federal land bank association was liquidated, a sum equal to its
reserve account as required in this chapter was to be paid and become
the property of the bank in which such association was a shareholder.
A prior section 2095, Pub. L. 92-181, title II, 2.14, Dec. 10, 1971,
85 Stat. 600; Pub. L. 99-205, title II, 205(e)(15), title VI, 605,
Dec. 23, 1985, 99 Stat. 1705, 1711, related to application of
earnings, restoration of capital impairment, and surplus account, prior
to the general amendment of this subchapter by Pub. L. 100-233, 401.
Section 401(v) of Pub. L. 100-399 repealed this section and provided
that this chapter be applied and administered as if this section had not
been enacted.
12 USC 2096. Agreements for sharing gains or losses
TITLE 12 -- BANKS AND BANKING
Each Farm Credit Bank may enter into agreements with Federal land
bank associations in its district for sharing the gain or losses on
loans or on security held therefor or acquired in liquidation thereof,
and associations are authorized to enter into any such agreements and
also, subject to bank approval, agreements with other associations in
the district for sharing the risk of loss on loans endorsed by each such
association. As may be authorized by the bank in accordance with
regulations of the Farm Credit Administration, associations also may
enter into agreements with other Farm Credit System institutions to
share loan and other losses, whether to protect against capital
impairment or for any other purpose.
(Pub. L. 92-181, title II, 2.14, formerly 2.15, as added Pub. L.
100-233, title IV, 401, Jan. 6, 1988, 101 Stat. 1636, and renumbered
2.14, Pub. L. 100-399, title IV, 401(w), Aug. 17, 1988, 102 Stat. 999.)
A prior section 2096, Pub. L. 92-181, title II, 2.15, Dec. 10, 1971,
85 Stat. 601; Pub. L. 96-592, title II, 210, Dec. 24, 1980, 94 Stat.
3442; Pub. L. 99-205, title II, 205(b), Dec. 23, 1985, 99 Stat. 1703;
Pub. L. 100-233, title IV, 431(f), title VIII, 805(i), Jan. 6, 1988,
101 Stat. 1660, 1715; Pub. L. 100-399, title IV, 415( b), Aug. 17,
1988, 102 Stat. 1004, related to short- and intermediate-term loans,
participation, other financial assistance, terms, conditions, interest,
and security, prior to the general amendment of this subchapter by Pub.
L. 100-233, 401.
A prior section 2.14 of Pub. L. 92-181 was classified to section
2095 of this title and was repealed by Pub. L. 100-399, 401(v).
12 USC 2097. Liens on stock
TITLE 12 -- BANKS AND BANKING
Each Federal land bank association shall have a first lien on the
stock and participation certificates it issues, except on stock or
participation certificates held by other Farm Credit System
institutions, for the payment of any liability of the stockholder to the
association or to the bank, or to both of them.
(Pub. L. 92-181, title II, 2.15, formerly 2.16, as added Pub. L.
100-233, title IV, 401, Jan. 6, 1988, 101 Stat. 1637, and renumbered
2.15, Pub. L. 100-399, title IV, 401(w), Aug. 17, 1988, 102 Stat. 999.)
A prior section 2097, Pub. L. 92-181, title II, 2.16, Dec. 10, 1971,
85 Stat. 602; Pub. L. 96-592, title II, 211, Dec. 24, 1980, 94 Stat.
3443, related to other services, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
A prior section 2.15 of Pub. L. 92-181 was renumbered section 2.14
and is classified to section 2096 of this title.
12 USC 2098. Taxation
TITLE 12 -- BANKS AND BANKING
Each Federal land bank association and the capital, reserves, and
surplus thereof, and the income derived therefrom, shall be exempt from
Federal, State, municipal, and local taxation, except taxes on real
estate held by a Federal land bank association to the same extent,
according to its value, as other similar property held by other persons
is taxed. The mortgages held by the Federal land bank associations and
the notes, bonds, debentures, and other obligations issued by the
associations shall be considered and held to be instrumentalities of the
United States and, as such, they and the income therefrom shall be
exempt from all Federal, State, municipal, and local taxation, other
than Federal income tax liability of the holder thereof under the Public
Debt Act of 1941 (31 U.S.C. 3124).
(Pub. L. 92-181, title II, 2.16, formerly 2.17, as added Pub. L.
100-233, title IV, 401, Jan. 6, 1988, 101 Stat. 1637; renumbered 2.16
and amended Pub. L. 100-399, title IV, 401(w), (x), Aug. 17, 1988, 102
Stat. 999.)
A prior section 2098, Pub. L. 92-181, title II, 2.17, Dec. 10, 1971,
85 Stat. 602; Pub. L. 99-205, title II, 205(e)(16), Dec. 23, 1985, 99
Stat. 1705; Pub. L. 100-233, title VIII, 805(j), Jan. 6, 1988, 101
Stat. 1715, related to taxation, prior to the general amendment of this
subchapter by Pub. L. 100-233, 401.
A prior section 2.16 of Pub. L. 92-181 was renumbered section 2.15
and is classified to section 2097 of this title.
1988 -- Pub. L. 100-399, 401(x), substituted ''derived therefrom,
shall'' for ''derived therefrom shall'', ''by the associations'' for
''by the banks'', and ''3124'' for ''742(a)''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC SUBCHAPTER III -- BANKS FOR COOPERATIVES
TITLE 12 -- BANKS AND BANKING
12 USC Part A -- Banks for Cooperatives
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title IV, 415(1), Jan. 6, 1988, 101 Stat.
1642, inserted part A heading.
12 USC 2121. Establishment; titles; branches
TITLE 12 -- BANKS AND BANKING
The banks for cooperatives established pursuant to sections 2 and 30
of the Farm Credit Act of 1933, as amended, shall continue as federally
chartered instrumentalities of the United States. The Farm Credit
Administration shall approve amendments consistent with this chapter to
charters and organizational certificates of banks for cooperatives.
Unless an existing bank for cooperatives is merged with another bank,
there shall be a bank for cooperatives in each farm credit district and
a Central Bank for Cooperatives. A bank for cooperatives may include in
its title the name of the city in which it is located or other
geographical designation. The Central Bank for Cooperatives may be
located in such place as its board of directors may determine with the
approval of the Farm Credit Administration. When authorized by the Farm
Credit Administration each bank for cooperatives may establish such
branches or other offices as may be appropriate for the effective
operation of its business.
(Pub. L. 92-181, title III, 3.0, Dec. 10, 1971, 85 Stat. 602; Pub.
L. 100-233, title IV, 414(b), title VIII, 802(m), Jan. 6, 1988, 101
Stat. 1641, 1711; Pub. L. 100-399, title IV, 406(b), title IX, 901( c),
Aug. 17, 1988, 102 Stat. 1000, 1007.)
Sections 2 and 30 of the Farm Credit Act of 1933, as amended,
referred to in text, were classified to sections 1134 and 1134f,
respectively, of this title prior to their repeal by section 5.26 of
Pub. L. 92-181, which enacted this chapter.
1988 -- Pub. L. 100-399, 901(c), substituted ''merged with another
bank'' for ''merged with one or more other such banks under section 2181
of this title''.
Pub. L. 100-233, 802(m), substituted ''The Farm Credit Administration
shall approve amendments consistent with this chapter to charters and
organizational certificates of banks for cooperatives'' for ''Their
charters or organization certificates may be modified from time to time
by the Farm Credit Administration, not inconsistent with the provisions
of this subchapter, as may be necessary or expedient to implement this
chapter''.
Pub. L. 100-233, 414(b), which designated existing provisions as
subsec. (a), and added subsec. (b) reading ''Each bank for
cooperatives shall elect from its voting stockholders a board of
directors of such number, for such term, in such manner, and with such
qualifications as may be required in its bylaws, except that, at least
one member shall be elected by the other directors, which member shall
not be a director, officer, employee, or stockholder of a System
institution.'', was repealed by section 406(b) of Pub. L. 100-399. See
Construction of 1988 Amendment note below.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Section 406(b) of Pub. L. 100-399 provided that section 414(b) of
Pub. L. 100-233, cited as a credit to this section, is repealed and
that the Agricultural Credit Act of 1987 (Pub. L. 100-233) and this
chapter shall be applied and administered as if such section had not
been enacted.
Section 413 of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 405, Aug. 17, 1988, 102 Stat. 1000, provided that:
''(a) Submission of Proposal. --
''(1) Special committee. --
''(A) In general. -- Not later than 15 days after the date of the
enactment of this section (Jan. 6, 1988), a special committee shall be
selected pursuant to subparagraph (B), for the purpose of developing a
proposal for the voluntary merger of the banks for cooperatives.
''(B) Composition. -- The special committee selected under
subparagraph (A) shall be composed of --
''(i) one member of each district board elected by the voting
stockholders of the bank for cooperatives in the district; and
''(ii) one member chosen from the board of directors of the Central
Bank for Cooperatives by the board of such Bank.
''(C) Development of plan. -- Not later than 75 days after the date
of the enactment of this section (Jan. 6, 1988), the special committee
shall develop a plan of merger for all such banks and the Central Bank
for Cooperatives into a National Bank for Cooperatives.
''(2) Prerequisites to merger. --
''(A) Submission to fca. -- On completion of the plan of merger
pursuant to paragraph (1)(C), the special committee shall submit the
proposed plan, together with all information that is to be distributed
to the stockholders concerning such plan, to the Farm Credit
Administration for approval.
''(B) Expedited review. -- Not later than 30 days after the Farm
Credit Administration receives the plan of merger, the Administration
shall promptly review such plan and advise the special committee
concerning any required changes that are necessary to the plan.
''(3) Submission to stockholders. -- On approval of the plan by the
Farm Credit Administration, the special committee shall, under such
procedures as may be established by the committee, submit the plan and
recommendations to all voting stockholders of the district banks for
cooperatives and the Central Bank for Cooperatives.
''(b) Voting Requirements. --
''(1) Majority vote required. -- An approval of the plan of merger
developed and submitted under subsection (a) shall --
''(A) require a majority vote of the stockholders of each district
bank for cooperatives voting, in person or by proxy, at a duly
authorized stockholders' meeting, computed both --
''(i) in accordance with the requirement that, except as provided in
section 3.3(d) (12 U.S.C. 2124(d)), each cooperative that is the holder
of voting stock in the bank for cooperatives shall be entitled to cast
one vote; and
''(ii) on the basis of the total equity interests in the bank
(including allocated, but not unallocated, surplus and reserves) held by
such stockholders;
''(B) require a majority vote of the voting stockholders of the
Central Bank for Cooperatives voting on a one-bank-one-vote basis;
''(C) take place not later than 180 days after the date of the
enactment of this section (Jan. 6, 1988); and
''(D) take place prior to any other merger vote involving a bank for
cooperatives.
''(2) Approval by all banks for cooperatives. -- If the stockholders
of all of the banks for cooperatives approve the merger, the merger
shall take place.
''(3) Effect of lesser vote. -- If the stockholders of more than one
but fewer than all of the banks approve the plan, each such bank whose
stockholders voted to approve the merger shall be merged into a single
bank for cooperatives, as provided in paragraphs (4) or (5).
''(4) National bank for cooperatives. --
''(A) Creation. -- If the stockholders of eight or more of the
district banks for cooperatives approve the merger, such banks, and the
Central Bank for Cooperatives, shall be merged into a single bank, which
shall be referred to as the 'National Bank for Cooperatives'.
''(B) Services provided. -- The National Bank for Cooperatives may
offer credit and related services to eligible borrowers located within
any territory that may be served by Farm Credit System institutions
under section 5.0 (12 U.S.C. 2221), or to any borrower otherwise
eligible under section 3.7(b) (12 U.S.C. 2128(b)).
''(5) United Bank for Cooperatives. --
''(A) Creation. -- If the stockholders of more than one but fewer
than eight of the district banks approve the plan, each such bank, and
the Central Bank for Cooperatives (if approved by a numerical majority
of its stockholders), shall be merged into a single bank, which shall be
referred to as the 'United Bank for Cooperatives'.
''(B) Services provided. -- The United Bank for Cooperatives shall
offer credit and related services only in the territory included, as of
the date of the enactment of this section (Jan. 6, 1988), within the
boundaries of the districts that had been served by the constituent
banks of the United Bank for Cooperatives, and to any borrower otherwise
eligible under section 3.7(b) (12 U.S.C. 2128(b)).
''(6) Nonconsenting banks. --
''(A) In general. --
''(i) National bank for cooperatives. -- Any of the district banks
whose stockholders did not approve the plan of merger may offer credit
and related services to any eligible borrowers within any territory or
area that may be served by the National Bank.
''(ii) United bank for cooperatives. -- Any of the district banks
whose stockholders did not approve the plan of merger shall continue as
district banks for cooperatives and shall continue to serve only the
territory within the boundaries of the district that such banks served
as of the date of the enactment of this section (Jan. 6, 1988).
''(B) Nondiscrimination. -- Any district bank whose stockholders did
not approve the plan of merger shall be entitled to the availability,
from the National Bank for Cooperatives or the United Bank for
Cooperatives, as the case may be, of the same credit and related
services now provided by the Central Bank for Cooperatives as of the
date of the enactment of this section (Jan. 6, 1988), regardless of the
decision not to merge.
''(C) Subsequent mergers. -- Any district bank referred to in
subparagraph (A) may subsequently merge with the National Bank for
Cooperatives or the United Bank for Cooperatives, as the case may be, on
the approval of the voting stockholders of both banks proposing to merge
based on the voting requirement of subsection (b)(1).
''(c) References. -- References in this section to voting
stockholders shall include subscribers to the guaranty fund.''
Section 414(a) of Pub. L. 100-233, as amended by Pub. L. 100-399,
title IV, 406(a), Aug. 17, 1988, 102 Stat. 1000, provided that:
''Notwithstanding section 3.2 (probably means section 3.2 of Pub. L.
92-181, 12 U.S.C. 2123), the initial board of each district bank for
cooperatives shall be composed of the members of the district board
(which is dissolved upon the creation of the district Farm Credit Bank)
elected by the stockholders of the bank for cooperatives and one member
elected by the other two members, which member shall not be a director,
officer, employee, or stockholder of a System institution. The initial
board shall operate for such term as is agreed to by the members of the
board, except that such period shall not exceed two years. Thereafter,
the board shall be elected and serve in accordance with section 3.0 of
the Farm Credit Act of 1971 (12 U.S.C. 2121).''
12 USC 2122. Corporate existence; general corporate powers
TITLE 12 -- BANKS AND BANKING
Each bank for cooperatives shall be a body corporate and, subject to
regulation by the Farm Credit Administration, shall have power to --
(1) Adopt and use a corporate seal.
(2) Have succession until dissolved under the provisions of this
chapter or other Act of Congress.
(3) Make contracts.
(4) Sue and be sued.
(5) Acquire, hold, dispose, and otherwise exercise all of the usual
incidents of ownership of real and personal property necessary or
convenient to its business.
(6) Make loans and commitments for credit, provide services and other
assistance as authorized in this chapter, and charge fees therefor.
(7) Operate under the direction of its board of directors.
(8) Elect by its board of directors a president, any vice presidents,
a secretary, a treasurer, and provide for such other officers,
employees, and agents as may be necessary, including joint employees as
provided in this chapter, define their duties and require surety bonds
or make other provisions against losses occasioned by employees.
(9) Prescribe by its board of directors its bylaws not inconsistent
with law providing for the classes of its stock and the manner in which
its stock shall be issued, transferred, and retired; its officers,
employees, or agents elected or provided for; its property acquired,
held, and transferred; its loans made; its general business conducted;
and the privileges granted it by law exercised and enjoyed.
(10) Borrow money and issue notes, bonds, debentures, or other
obligations individually or in concert with one or more other banks of
the System, of such character, and such terms, conditions, and rates of
interest as may be determined.
(11) Participate in loans under this subchapter with one or more
other banks for cooperatives and with commercial banks and other
financial institutions upon such terms as may be agreed among them, and
participate with one or more other Farm Credit System institutions in
loans made under this subchapter or other subchapters of this chapter on
the basis prescribed in section 2206 of this title.
(12) Deposit its securities and its current funds with any member
bank of the Federal Reserve System or any insured State nonmember bank
(within the meaning of section 1813 of this title) or, to the extent
necessary to facilitate transactions which may be financed under section
2128(b) of this title, any other financial organization, domestic or
foreign, as may be authorized by its board of directors, and pay fees
therefor and receive interest thereon as may be agreed. When designated
for that purpose by the Secretary of the Treasury, it shall be a
depository of public money, except receipts from customs, under such
regulations as may be prescribed by the Secretary; may be employed as a
fiscal agent of the Government, and shall perform all such reasonable
duties as a depository of public money or financial agent of the
Government as may be required of it. No Government funds deposited
under the provisions of this subsection shall be invested in loans or
bonds or other obligations of the bank.
(13)(A) Buy and sell obligations of or insured by the United States
or of any agency thereof, or securities backed by the full faith and
credit of any such agency and make such other investments as may be
authorized under regulations issued by the Farm Credit Administration.
(B) As may be authorized by its board of directors, buy from and sell
to Farm Credit System institutions interests in loans and in other
financial assistance extended and nonvoting stock.
(C) As may be authorized by its board of directors, and solely for
the purposes of obtaining credit information and other services needed
to facilitate transactions which may be financed under section 2128(b)
of this title, invest in ownership interests in foreign business
entities that are principally engaged in providing credit information to
and performing such servicing functions for their members in connection
with the members' international activities.
(14) Conduct studies and adopt standards for lending.
(15) Amend and modify loan contracts, documents, and payment
schedules, and release, subordinate, or substitute security for any of
them.
(16) Exercise by its board of directors or authorized officers,
employees, or agents all such incidental powers as may be necessary or
expedient to carry on the business of the bank.
(17) As may be authorized by the board of directors, maintain credit
balances and pay or receive fees or interest thereon, for the purpose of
assisting in the transfer of funds to or from parties to transactions
that may be financed under section 2128(b) of this title: Provided,
however, That nothing herein shall authorize the banks for cooperatives
to engage in the business of accepting domestic deposits.
(18) As may be authorized by its board of directors, agree with other
Farm Credit System institutions to share loan or other losses, whether
to protect against capital impairment or for any other purpose.
(Pub. L. 92-181, title III, 3.1, Dec. 10, 1971, 85 Stat. 602; Pub.
L. 96-592, title III, 301, Dec. 24, 1980, 94 Stat. 3443; Pub. L.
99-205, title II, 205(e)(1), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-233, title VIII, 802(n), Jan. 6, 1988, 101 Stat. 1712; Pub. L.
100-399, title IX, 901(b), Aug. 17, 1988, 102 Stat. 1007.)
1988 -- Par. (12). Pub. L. 100-399 substituted ''(within the meaning
of section 1813 of this title)'' for ''as defined in section 1812 of
this title.''
Pars. (12), (13)(B), (C), (17), (18). Pub. L. 100-233 struck out
''and approved by the Farm Credit Administration'' after ''board of
directors''.
1985 -- Pub. L. 99-205 substituted ''regulation'' for
''supervision'' in provision preceding par. (1).
Par. (13)(A). Pub. L. 99-205 inserted ''under regulations issued''
after ''authorized''.
Pars. (16) to (19). Pub. L. 99-205 struck out par. (16) respecting
power of bank for cooperatives to perform any function delegated to it
by the Farm Credit Administration, and redesignated pars. (17) to (19)
as (16) to (18), respectively.
1980 -- Par. (11). Pub. L. 96-592, 301(1), inserted provisions
respecting participation with one or more other Farm Credit System
institutions in loans.
Par. (12). Pub. L. 96-592, 301(2), inserted applicability to any
insured State nonmember bank and to other domestic or foreign financial
organizations.
Par. (13). Pub. L. 96-592, 301(3), designated existing provisions as
subpar. (A) and added subpars. (B) and (C).
Pars. (18), (19). Pub. L. 96-592, 301(4), added pars. (18) and
(19).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2123. Board of directors
TITLE 12 -- BANKS AND BANKING
(a) Each bank for cooperatives not merged into the United Bank for
Cooperatives or the National Bank for Cooperatives shall elect a board
of directors of such number, for such term, in such manner, and with
such qualifications as may be required in its bylaws, except that at
least one member shall be elected by the other directors, which member
shall not be a director, officer, employee, or stockholder of a System
institution.
(b) The board of directors of the Central Bank for Cooperatives shall
consist of one member elected by the board of each bank for
cooperatives, including the United Bank for Cooperatives if the Central
Bank for Cooperatives is not merged into such bank, and one member
appointed by the Farm Credit Administration.
(Pub. L. 92-181, title III, 3.2, Dec. 10, 1971, 85 Stat. 603; Pub.
L. 99-205, title II, 205(e)(2), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-399, title IX, 901(d), Aug. 17, 1988, 102 Stat. 1007.)
1988 -- Subsec. (a). Pub. L. 100-399 amended subsec. (a) generally.
Prior to amendment, subsec. (a) read as follows: ''In the case of a
district bank for cooperatives, the board of directors shall be the farm
credit district board and in the case of the Central Bank for
Cooperatives shall be a separate board of not more than thirteen
members, one from each farm credit district and one at large. One
district director of the Central Bank Board shall be elected by each
district farm credit board and the member at large shall be appointed by
the Farm Credit Administration.''
Subsec. (b). Pub. L. 100-399 amended subsec. (b) generally. Prior to
amendment, subsec. (b) read as follows: ''For the purposes of this
section the provisions of sections 2222(b) and (c), 2225, 2226, and 2227
of this title shall apply to and shall be the authority of the Central
Bank for Cooperatives the same as though it were a district bank.''
1985 -- Subsec. (a). Pub. L. 99-205 substituted ''Farm Credit
Administration'' for ''Governor with the advice and consent of the
Federal Farm Credit Board''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2124. Stock of banks for cooperatives
TITLE 12 -- BANKS AND BANKING
(a) Amount
The Capital stock of each bank for cooperatives shall be in such
amount as its board determines is required for the purpose of providing
adequate capital to permit the bank to meet the credit needs of
borrowers from the bank and such amounts may be increased or decreased
from time to time in accordance with such needs.
(b) Value
The capital stock of each bank shall be divided into shares of par
value of $100 each and may be of such classes as the board may
determine. Such stock may be issued in fractional shares.
(c) Eligible holders of voting stock
Voting stock may be issued or transferred to and held only by (i)
cooperative associations eligible to borrow from the banks and (ii)
other banks for cooperatives, and shall not be otherwise transferred,
pledged, or hypothecated except as consented to by the issuing bank
under regulations of the Farm Credit Administration.
(d) Entitlement to vote
Each holder of one or more shares of voting stock which is eligible
to borrow from a bank for cooperatives shall be entitled only to one
vote and only in the affairs of the bank in the district in which its
principal office is located unless otherwise authorized under
regulations issued by the Farm Credit Administration, except that if
such holder has not been a borrower from the bank in which it holds such
stock within a period of two years next preceding the date fixed by the
Farm Credit Administration prior to the commencement of voting, it shall
not be entitled to vote.
(e) Nonvoting investment stock
Nonvoting investment stock may be issued in such series and in such
amounts as may be determined by the board and may be exchanged for
voting stock or sold or transferred to any person subject to the
approval of the issuing bank.
(f) Participation certificates
Participation certificates may be issued to parties to whom voting
stock may not be issued.
(Pub. L. 92-181, title III, 3.3, Dec. 10, 1971, 85 Stat. 603; Pub.
L. 96-592, title III, 302, Dec. 24, 1980, 94 Stat. 3443; Pub. L.
99-205, title II, 205(e)(3), (4), Dec. 23, 1985, 99 Stat. 1705; Pub.
L. 100-233, title VIII, 802(o), 805(k), Jan. 6, 1988, 101 Stat. 1712,
1715.)
1988 -- Subsec. (a). Pub. L. 100-233, 802(o)(1), struck out '', with
the approval of Farm Credit Administration,'' after ''board
determines''.
Subsec. (b). Pub. L. 100-233, 802(o)(2), struck out ''with the
approval of the Farm Credit Administration'' after ''board may
determine''.
Subsec. (d). Pub. L. 100-233, 805(k), substituted ''by'' for ''by
by'' after ''regulations issued''.
Subsec. (e). Pub. L. 100-233, 802(o)(3), struck out ''and approved by
the Farm Credit Administration'' after ''Board''.
1985 -- Subsec. (d). Pub. L. 99-205, 205(e)(3), inserted ''under
regulations issued by'' after ''authorized''.
Subsec. (e). Pub. L. 99-205, 205(e)(4), struck out '', except for
stock held by the Governor,'' before ''may be exchanged''.
1980 -- Subsec. (f). Pub. L. 96-592 added subsec. (f).
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2125. Dividends
TITLE 12 -- BANKS AND BANKING
Dividends may be payable only on nonvoting investment stock, if
declared by the board of directors of the bank, subject to the general
direction of the Farm Credit Administration.
(Pub. L. 92-181, title III, 3.4, Dec. 10, 1971, 85 Stat. 604; Pub.
L. 99-205, title II, 205(e)(5), title VI, 606, Dec. 23, 1985, 99 Stat.
1705, 1711; Pub. L. 100-233, title VIII, 805(l), Jan. 6, 1988, 101
Stat. 1715.)
1988 -- Pub. L. 100-233 struck out ''other than stock held by the
Farm Credit Administration,'' after ''investment stock,''.
1985 -- Pub. L. 99-205 struck out ''the Governor of'' before ''the
Farm Credit Administration'' and inserted '', subject to the general
direction of the Farm Credit Administration''.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2126. Retirement of stock
TITLE 12 -- BANKS AND BANKING
Nonvoting investment stock and participation certificates may be
called for retirement at par. With the approval of the issuing bank,
the holder may elect not to have the called stock or participation
certificates retired in response to a call, reserving the right to have
such stock or participation certificates included in the next call for
retirement. Voting stock may also be retired at par, on call or on such
revolving basis as the board may determine with due regard for its total
capital needs: Provided, however, That all equities in the district
banks issued or allocated with respect to 1971 and prior years shall be
retired on a revolving basis according to the year of issue with the
oldest outstanding equities being first retired. Equities issued for
subsequent years shall not be called or retired until equities described
in the preceding sentence of this proviso have been retired.
(Pub. L. 92-181, title III, 3.5, Dec. 10, 1971, 85 Stat. 604; Pub.
L. 96-592, title III, 303, Dec. 24, 1980, 94 Stat. 3444; Pub. L.
99-205, title II, 205(e)(6), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-233, title VIII, 802(p), Jan. 6, 1988, 101 Stat. 1712.)
1988 -- Pub. L. 100-233 struck out ''with approval of the Farm
Credit Administration'' after ''board may determine''.
1985 -- Pub. L. 99-205 substituted ''Nonvoting investment stock''
for ''Any nonvoting stock held by the Governor of the Farm Credit
Administration shall be retired to the extent required by section 2151(
b) of this title before any other outstanding voting or nonvoting stock
or participation certificates shall be retired except as may be
otherwise authorized by the Farm Credit Administration. When those
requirements have been satisfied, nonvoting investment stock'', and
substituted ''Voting'' for ''When the requirements of section 2151(b) of
this title have been met, voting''.
1980 -- Pub. L. 96-592 inserted provisions respecting applicability
to participation certificates and struck out provisions relating to
maximum amount of fair book value at retirement.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2127. Guaranty fund subscriptions in lieu of stock
TITLE 12 -- BANKS AND BANKING
If any cooperative association is not authorized under the laws of
the State in which it is organized to take and hold stock in a bank for
cooperatives, the bank shall, in lieu of any requirement for stock
purchase, require the association to pay into or have on deposit in a
guaranty fund, or the bank may retain out of the amount of the loan and
credit to the guaranty fund account of the borrower, a sum equal to the
amount of stock which the association would otherwise be required to
own. Each reference to stock of the banks for cooperatives in this
chapter shall include such guaranty fund equivalents. The holder of the
guaranty fund equivalent and the bank shall each be entitled to the same
rights and obligations with respect thereto as the rights and
obligations associated with the class or classes of stock involved.
(Pub. L. 92-181, title III, 3.6, Dec. 10, 1971, 85 Stat. 604.)
12 USC 2128. Loans, commitments, and technical and financial assistance
TITLE 12 -- BANKS AND BANKING
(a) Authorities
The banks for cooperatives are authorized to make loans and
commitments to eligible cooperative associations and to extend to them
other technical and financial assistance, including but not limited to
discounting notes and other obligations, guarantees, currency exchange
necessary to service individual transactions that may be financed under
subsection (b) of this section, collateral custody, or participation
with other banks for cooperatives and commercial banks or other
financial institutions in loans to eligible cooperatives, under such
terms and conditions as may be determined to be feasible by the board of
directors of each bank for cooperatives under regulations of the Farm
Credit Administration. Such regulations may include provisions for
avoiding duplication between the Central Bank and district banks for
cooperatives. Each bank may own and lease, or lease with option to
purchase, to stockholders eligible to borrow from the bank equipment
needed in the operations of the stockholder and may make or participate
in loans or commitments and extend other technical and financial
assistance to other domestic parties for the acquisition of equipment
and facilities to be leased to such stockholders for use in their
operations in the United States.
(b) Additional authorities
(1) A bank for cooperatives is authorized to make or participate in
loans and commitments to, and to extend other technical and financial
assistance to (A) a domestic or foreign party with respect to its
transactions with an association that is a voting stockholder of the
bank for the export or import of agricultural commodities or products
thereof, farm supplies, or aquatic products through purchases, sales or
exchanges, and (B) a domestic or foreign party in which such an
association has at least the minimum ownership interest approved under
regulations of the Farm Credit Administration for the purpose of
facilitating the association's export or import operations of the type
described in subparagraph (A): Provided, That a bank for cooperatives
determines, under regulations of the Farm Credit Administration, that
the voting stockholder will benefit substantially as a result of such
loan, commitment, or assistance.
(2) A bank for cooperatives is authorized to make or participate in
loans and commitments, and to extend other technical and financial
assistance, to any domestic or foreign entity that is eligible for a
guarantee or insurance as described in subparagraphs (A) and (B) with
respect to transactions involving the Soviet Union (its successor
entities or any of the individual republics of the Soviet Union) or an
emerging democracy (as defined in section 1542(f) of the Food,
Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5622 note))
for the export of agricultural commodities and products thereof from the
United States, including (where applicable) the cost of freight, if in
each case --
(A) the loan involved is unconditionally guaranteed or insured by a
department, agency, bureau, board, commission, or establishment of the
United States or any corporation wholly owned directly or indirectly by
the United States; and
(B) the guarantee or insurance --
(i) covers at least 95 percent of the amount loaned for the purchase
of the commodities or products; and
(ii) is issued on or before September 30, 1995.
(3) A bank for cooperatives is authorized to provide such services as
may be customary and normal in maintaining relationships with domestic
or foreign entities to facilitate the activities specified in paragraphs
(1) and (2), consistent with this chapter.
(c) Applicable policies
Loans, commitments, and assistance authorized by subsection (b) of
this section shall be extended in accordance with policies adopted by
the board of directors of the bank under regulations of the Farm Credit
Administration.
(d) Regulatory limitations
The regulations of the Farm Credit Administration implementing
subsection (b) of this section and other provisions of this subchapter
relating to the authority under subsection (b) of this section may not
confer upon the banks for cooperatives powers and authorities greater
than those specified in this subchapter. The Farm Credit Administration
shall, during the formulation of such regulations, closely consult on a
continuing basis with the Board of Governors of the Federal Reserve
System to insure that such regulations conform to national banking
policies, objectives, and limitations.
(e) Speculative futures transactions
Notwithstanding any other provision of this subchapter, the banks for
cooperatives shall not make or participate in loans or commitments for
the purpose of financing speculative futures transactions by eligible
borrowers in foreign currencies.
(f) Installation, expansion, or improvement of water and waste
disposal facilities
The banks for cooperatives may, for the purpose of the installation,
expansion, or improvement of water and waste disposal facilities in
rural areas, make and participate in loans and commitments and to extend
other technical and financial assistance to --
(1) cooperatives formed specifically for the purpose of establishing
or operating such facilities; and
(2) public and quasi-public agencies and bodies, and other public and
private entities that, under authority of State or local law, establish
or operate such facilities.
For purposes of this subsection, the term ''rural area'' means all
territory of a State that is not within the outer boundary of any city
or town having a population of more than 20,000 based on the latest
decennial census of the United States.
(Pub. L. 92-181, title III, 3.7, Dec. 10, 1971, 85 Stat. 605; Pub.
L. 96-592, title III, 304, Dec. 24, 1980, 94 Stat. 3444; Pub. L.
101-624, title XXIII, 2323(a), Nov. 28, 1990, 104 Stat. 4013; Pub. L.
102-237, title V, 502(e)(1), Dec. 13, 1991, 105 Stat. 1868.)
Section 1542(f) of the Food, Agriculture, Conservation, and Trade Act
of 1990, referred to in subsec. (b)(2), is section 1542 of Pub. L.
101-624, which is set out as a note under section 5622 of Title 7,
Agriculture.
1991 -- Subsec. (b). Pub. L. 102-237 designated existing provisions
as par. (1), redesignated cl. (1) as (A) and inserted ''or products
thereof'' after ''commodities'', redesignated cl. (2) as (B) and
substituted ''subparagraph (A)'' for ''clause (1) of this subsection'',
and added pars. (2) and (3).
1990 -- Subsec. (f). Pub. L. 101-624 added subsec. (f).
1980 -- Pub. L. 96-592 designated existing provisions as subsec.
(a), inserted provisions relating to currency exchanges and provisions
relating to loans, etc., to domestic parties, and added subsecs. (b) to
(e).
12 USC 2129. Eligibility
TITLE 12 -- BANKS AND BANKING
(a) Any association of farmers, producers or harvesters of aquatic
products, or any federation of such associations, which is operated on a
cooperative basis, and has the powers for processing, preparing for
market, handling, or marketing farm or aquatic products; or for
purchasing, testing, grading, processing, distributing, or furnishing
farm or aquatic supplies or furnishing farm or aquatic business services
or services to eligible cooperatives and conforms to either of the two
following requirements:
(1) no member of the association is allowed more than one vote
because of the amount of stock or membership capital he may own therein;
or
(2) does not pay dividends on stock or membership capital in excess
of such per centum per annum as may be approved under regulations of the
Farm Credit Administration; and in any case
(3) does not deal in farm products or aquatic products, or products
processed therefrom, farm or aquatic supplies, farm or aquatic business
services, or services to eligible cooperatives with or for nonmembers in
an amount greater in value than the total amount of such business
transacted by it with or for members, excluding from the total of member
and nonmember business transactions with the United States or any agency
or instrumentality thereof or services or supplies furnished as a public
utility; and
(4) a percentage of the voting control of the association not less
than 80 per centum (60 per centum (A) in the case of rural electric,
telephone, public utility, and service cooperatives; (B) in the case of
local farm supply cooperatives that have historically served needs of
the community that would not adequately be served by other suppliers and
have experienced a reduction in the percentage of farmer membership due
to changed circumstances beyond their control such as, but not limited
to, urbanization of the community; and (C) in the case of local farm
supply cooperatives that provide or will provide needed services to a
community and that are or will be in competition with a cooperative
specified in paragraph (B)) or, with respect to any type of association
or cooperative, such higher percentage as established by the bank board,
is held by farmers, producers or harvesters of aquatic products, or
eligible cooperative associations as defined herein;
shall be eligible to borrow from a bank for cooperatives.
(b) Notwithstanding any other provision of this section:
(1) The following entities shall also be eligible to borrow from a
bank for cooperatives:
(A) Cooperatives and other entities that have received a loan, loan
commitment, or loan guarantee from the Rural Electrification
Administration, or a loan or loan commitment from the Rural Telephone
Bank, or that have been certified by the Administrator of the Rural
Electrification Administration to be eligible for such a loan, loan
commitment, or loan guarantee, and subsidiaries of such cooperatives or
other entities.
(B) Any legal entity more than 50 percent of the voting control of
which is held by one or more associations or other entities that are
eligible to borrow from a bank for cooperatives under subsection (a) of
this section or subparagraph (A) of this paragraph, except that any such
legal entity, when considered together with one or more such
associations or other entities that hold such control, meet the
requirement of subsection (a)(3) of this section.
(C) Any legal entity that (i) holds more than 50 percent of the
voting control of an association or other entity that is eligible to
borrow from a bank for cooperatives under subsection (a) of this section
or subparagraph (A) of this paragraph, and (ii) borrows for the purpose
of making funds available to that association or entity, and makes funds
available to that association or entity under the same terms and
conditions that the funds are borrowed from a bank for cooperatives.
(D) Any cooperative or other entity described in subsection (b) or
(f) of section 2128 of this title.
(2) Notwithstanding the provisions of section 2130 of this title, the
board of directors of a bank for cooperatives may determine that, with
respect to a loan to any borrower eligible to borrow from a bank under
paragraph (1)(A) that is fully guaranteed by the United States, no stock
purchase requirement shall apply, other than the requirement that a
borrower eligible to own voting stock shall purchase one share of such
stock.
(3) Each association and other entity eligible to borrow from a bank
for cooperatives under this subsection, for purposes of section 2128(a)
of this title, shall be treated as an eligible cooperative association
and a stockholder eligible to borrow from the bank.
(4) Nothing in this subsection shall be construed to adversely affect
the eligibility, as it existed on January 6, 1988, of cooperatives and
other entities for any other credit assistance under Federal law.
(Pub. L. 92-181, title III, 3.8, Dec. 10, 1971, 85 Stat. 605; Pub.
L. 94-184, 1(a), Dec. 31, 1975, 89 Stat. 1060; Pub. L. 96-592, title
III, 305, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 99-198, title XIII,
1322, Dec. 23, 1985, 99 Stat. 1534; Pub. L. 100-233, title IV, 421,
title VIII, 805(m), Jan. 6, 1988, 101 Stat. 1654, 1715; Pub. L.
100-399, title IV, 410, title IX, 901(e), Aug. 17, 1988, 102 Stat.
1003, 1007; Pub. L. 101-624, title XXIII, 2323(b), Nov. 28, 1990, 104
Stat. 4013; Pub. L. 102-237, title V, 502(e)(2), (f), Dec. 13, 1991,
105 Stat. 1869.)
1991 -- Subsec. (a)(4). Pub. L. 102-237, 502(f)(1), substituted ''a
percentage'' for ''A percentage''.
Subsec. (b)(1)(D). Pub. L. 102-237, 502(e)(2), (f)(2), substituted
''subsection (b) or (f) of section 2128 of this title'' for ''section
2128(f) of this title'' and realigned margin of subpar. (D).
1990 -- Subsec. (b)(1)(D). Pub. L. 101-624 added subpar. (D).
1988 -- Pub. L. 100-399, 901(e), substituted ''bank board'' for
''district board'' in subsec. (a)(4).
Pub. L. 100-399, 410, substituted ''makes'' for ''make'' in subsec.
(b)(1)(C).
Pub. L. 100-233, 805(m), redesignated subsec. (1) as subsec. (a) and
pars. (a) to (d) as pars. (1) to (4), respectively, in par. (4)
redesignated cls. (1) to (3) as (A) to (C), respectively, and in cl.
(C) substituted ''paragraph (B)'' for ''paragraph (2)''.
Pub. L. 100-233, 421, added subsec. (b) and struck out former
subsec. (2) which read as follows: ''Notwithstanding any other
provision of this subchapter, cooperatives and other entities that have
received a loan, loan commitment, or loan guarantee from the Rural
Electrification Administration, or a loan or loan commitment from the
Rural Telephone Bank, or that have been certified by the Administrator
of the Rural Electrification Administration to be eligible for such a
loan, loan commitment, or loan guarantee, and subsidiaries of such
cooperatives or other entities, shall also be eligible to borrow from a
bank for cooperatives.''
1985 -- Pub. L. 99-198, 1322(1), designated existing provisions as
subsec. (1) and added subsec. (2).
1980 -- Pub. L. 96-592, 305(1), inserted reference to aquatic
business in introductory text.
Subsec. (c). Pub. L. 96-592, 305(2), inserted reference to aquatic
business services or services to eligible cooperatives.
Subsec. (d). Pub. L. 96-592, 305(3), substituted ''60'' for ''70'',
and designated former parenthetical material as item (1), and added
items (2) and (3) and limitation with respect to any type of association
or cooperative.
1975 -- Subsec. (d). Pub. L. 94-184 inserted provision relating to
70 per centum of voting control in the case of rural electric,
telephone, and public utility cooperatives.
Amendment by section 502(f) of Pub. L. 102-237 effective as if
included in the provision of the Food, Agriculture, Conservation, and
Trade Act of 1990, Pub. L. 101-624, to which the amendment relates, see
section 1101(b)(4) of Pub. L. 102-237, set out as a note under section
1421 of Title 7, Agriculture.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2130. Ownership of stock by borrowers
TITLE 12 -- BANKS AND BANKING
(a) Each borrower entitled to hold voting stock shall, at the time a
loan is made by a bank for cooperatives, own at least one share of
voting stock and shall be required by the bank to invest in additional
voting stock or nonvoting investment stock at that time, or from time to
time, as the lending bank may determine, but the requirement for
investment in stock at the time the loan is closed shall not exceed an
amount equal to 10 per centum of the face amount of the loan. Such
additional ownership requirements may be based on the face amount of the
loan, the outstanding loan balance or on a percentage of the interest
payable by the borrower during any year or during any quarter thereof,
or upon such other basis as the bank determines will provide adequate
capital for the operation of the bank and equitable ownership thereof
among borrowers. In the case of a direct loan by the Central Bank, the
borrower shall be required to own or invest in the necessary stock in a
district bank or banks and such district bank shall be required to own a
corresponding amount of stock in the Central Bank, but voting stock
shall be in the one district bank, designated by the Farm Credit
Administration.
(b) Notwithstanding the provisions of subsection (a) of this section,
the purchase of stock need not be required with respect to that part of
any loan made by a bank for cooperatives which it sells to or makes in
participation with financial institutions other than any of the banks
for cooperatives. In such cases the distribution of earnings of the
bank for cooperatives shall be on the basis of the interest in the loan
retained by such bank.
(Pub. L. 92-181 title III, 3.9, Dec. 10, 1971, 85 Stat. 605; Pub.
L. 96-592, title III, 306, Dec. 24, 1980, 94 Stat. 3445; Pub. L.
100-233, title VIII, 802(q), Jan. 6, 1988, 101 Stat. 1712.)
1988 -- Subsec. (a). Pub. L. 100-233 substituted ''by the bank to
invest'' for ''by the bank with the approval of the Farm Credit
Administration to invest'', ''or upon such other basis as the bank
determines'' for ''or upon such other basis as the bank, with the
approval of the Farm Credit Adminsitration, determines'', and ''in a
district bank or banks and such district bank shall be required'' for
''in a district bank or banks as may be approved by the Farm Credit
Administration and such district bank shall be required''.
1980 -- Subsec. (a). Pub. L. 96-592 inserted provisions respecting
entitlement to hold voting stock.
12 USC 2131. Loans
TITLE 12 -- BANKS AND BANKING
(a) Interest rates and charges
Loans made by a bank for cooperatives shall bear interest at a rate
or rates determined by the board of directors of the bank from time to
time. In setting rates and charges, it shall be the objective to
provide the types of credit needed by eligible borrowers at the lowest
reasonable cost on a sound business basis, taking into account the net
cost of money to the bank, necessary reserves and expenses of the bank,
and services provided. The loan documents may provide for the interest
rate or rates to vary from time to time during the repayment period of
the loan, in accordance with the rate or rates currently being charged
by the bank.
(b) Security
Loans shall be made upon such terms, conditions, and security, if
any, as may be determined by the bank in accordance with regulations of
the Farm Credit Administration.
(c) Lien
Each bank for cooperatives shall have a first lien on all stock or
other equities in the bank as collateral for the payment of any
indebtedness of the owner thereof to the bank. In the case of a direct
loan to an eligible cooperative by the Central Bank, the Central Bank
shall have a first lien on the stock and equities of the borrower in the
district bank and the district bank shall have a lien thereon junior
only to the lien of the Central Bank.
(d) Cancellation; application on indebtedness
In any case where the debt of a borrower is in default, or in any
case of liquidation or dissolution of a present or former borrower from
a bank for cooperatives, the bank may, but shall not be required to,
retire and cancel all or a part of the stock, allocated surplus or
contingency reserves, or any other equity in the bank owned by or
allocated to such borrower, at the fair market value thereof not
exceeding par, and, to the extent required in such cases, corresponding
shares and allocations and other equity interests held by a district
bank in another district bank on account of such indebtedness, shall be
retired or equitably adjusted. In no event shall the bank's equities be
retired or canceled if the retirement or cancellation would adversely
affect the bank's capital structure, as determined by the Farm Credit
Administration.
(Pub. L. 92-181, title III, 3.10, Dec. 10, 1971, 85 Stat. 606; Pub.
L. 96-592, title III, 307, Dec. 24, 1980, 94 Stat. 3445; Pub. L.
99-509, title I, 1033(c), Oct. 21, 1986, 100 Stat. 1877.)
1986 -- Subsec. (a). Pub. L. 99-509 struck out '', with the approval
of the Farm Credit Administration as provided in section 2205 of this
title'' after ''from time to time''.
1980 -- Subsec. (a). Pub. L. 96-592, 307(1), inserted reference to
section 2205 of this title.
Subsec. (d). Pub. L. 96-592, 307(2), substituted ''market'' for
''book'' and inserted provisions respecting retirement or cancellation
of equities as affected by the capital structure.
12 USC 2132. Earnings and reserves; application of savings
TITLE 12 -- BANKS AND BANKING
(a) Application of savings
At the end of each fiscal year, the net savings shall, under
regulations prescribed by the Farm Credit Administration, continue to be
applied on a cooperative basis with provision for sound, adequate
capitalization to meet the changing financing needs of eligible
cooperative borrowers and prudent corporate fiscal management, to the
end that current year's patrons carry their fair share of the
capitalization, ultimate expenses, and reserves related to the year's
operations and the remaining net savings shall be distributed as
patronage refunds as provided in subsections (b) and (c) of this
section. Such regulations may provide for application of net savings to
the restoration or maintenance of an allocated surplus account,
reasonable additions to unallocated surplus, or to unallocated reserves
after payment of operating expenses, and provide for allocations to
patrons not qualified under title 26, or payment of such per centum of
patronage refunds in cash, as the board may determine.
(b) Patronage refunds
The net savings of each district bank for cooperatives, after the
earnings for the fiscal year have been applied in accordance with
subsection (a) of this section shall be paid in stock, participation
certificates, or cash, or in any of them, as determined by its board, as
patronage refunds to borrowers to whom such refunds are payable who are
borrowers of the fiscal year for which such patronage refunds are
distributed. Except as provided in subsection (c) below, all patronage
refunds shall be paid in proportion that the amount of interest and
service fees on the loans to each borrower during the year bears to the
interest and service fees on the loans of all borrowers during the year
or on such other proportionate patronage basis as may be approved by the
board of directors.
(c) Savings of Central Bank for Cooperatives
The net savings of the Central Bank for Cooperatives after the
earnings for the fiscal year have been applied in accordance with
subsection (a) of this section shall be paid in stock or cash, or both,
as determined by the board, as patronage refunds to the district banks
on the basis of interests held by the Central Bank in loans made by the
district banks and upon any direct loans made by the Central Bank to
cooperative associations, or on such other proportionate patronage basis
as may be approved by the board of directors. In cases of direct loans,
such refund shall be paid to the district bank or banks which issued
their stock to the borrower incident to such loans, and the district
bank or banks shall issue a like amount of patronage refunds to the
borrower.
(d) Loss carryover
In the event of a net loss in any fiscal year after providing for all
operating expenses (including reasonable valuation reserves and losses
in excess of any applicable reserves), such loss may be carried forward
or carried back, if appropriate, or otherwise shall be absorbed by
charges to unallocated reserve or surplus accounts established after
December 10, 1971; charges to allocated contingency reserve account;
charges to allocated surplus accounts; charges to other contingency
reserve and surplus accounts; the impairment of voting stock; or the
impairment of all other stock.
(e) Charge of unrecognized costs or expenses to reserve, surplus, or
patronage allocations
Notwithstanding any other provisions of this section any costs or
expenses attributable to a prior year or years but not recognized in
determining the net savings for such year or years may be charged to
reserves or surplus of the bank or to patronage allocations for such
years, as may be determined by the board of directors.
(f) Payment of patronage refunds in cash
A bank for cooperatives may pay in cash such portion of its patronage
refunds as will permit its taxable income to be determined without
taking into account savings applied as allocated surplus, allocated
contingency reserves, and patronage refunds under subsection (a) of this
section.
(Pub. L. 92-181, title III, 3.11, Dec. 10, 1971, 85 Stat. 606; Pub.
L. 96-592, title III, 308, Dec. 24, 1980, 94 Stat. 3445; Pub. L.
99-205, title II, 205(e)(7), (8), Dec. 23, 1985, 99 Stat. 1705; Pub.
L. 100-233, title VIII, 802(r), 805(n), Jan. 6, 1988, 101 Stat. 1712,
1716.)
1988 -- Subsec. (a). Pub. L. 100-233, 802(r)(1), 805(n)(1), (5),
redesignated subsec. (b) as (a), substituted ''(b) and (c)'' for ''(c)
and (d)'', struck out ''as may be approved by the Farm Credit
Administration'' after ''payment of operating expenses'', and struck out
at end ''If during the fiscal year but not at the end thereof a bank
shall have had outstanding capital stock held by the United States,
provision will be made for payment of franchise taxes required in
section 2151 of this title.''
Subsec. (b). Pub. L. 100-233, 802(r)(2), 805(n)(2), (5), redesignated
subsec. (c) as (b) and substituted ''(a) of this section'' for ''(b) of
this section, whichever is applicable,'', ''(c) below'' for ''(d)
below'', and ''may be approved by the board of directors'' for ''the
Farm Credit Administration may approve''. Former subsec. (b)
redesignated (a).
Subsec. (c). Pub. L. 100-233, 802(r)(3), 805(n)(3), (5), redesignated
subsec. (d) as (c) and substituted ''(a) of this section'' for ''(b) of
this section whichever is applicable,'' and ''may be approved by the
board of directors'' for ''the Farm Credit Administration may approve''.
Former subsec. (c) redesignated (b).
Subsecs. (d), (e). Pub. L. 100-233, 805(n)(5), redesignated subsecs.
(e) and (f) as (d) and (e), respectively. Former subsec. (d)
redesignated (c).
Subsecs. (f), (g). Pub. L. 100-233, 805(n)(4), (5), redesignated
subsec. (g) as (f), substituted ''A bank for cooperatives'' for ''For
any year that a bank for cooperatives is subject to Federal income tax,
it'', and struck out ''or (b)'' after ''subsection (a)''. Former
subsec. (f) redesignated (e).
1985 -- Subsec. (a). Pub. L. 99-205, 205(e)(7), struck out subsec.
(a) which provided for application of savings when bank for cooperatives
has outstanding stock held by the Governor.
Subsec. (b). Pub. L. 99-205, 205(e)(8)(A), substituted ''At the end
of each fiscal year, the net'' for ''Whenever at the end of any fiscal
year a bank for cooperatives shall have no outstanding capital stock
held by the Governor of the Farm Credit Administration, the net''.
Subsecs. (c), (d). Pub. L. 99-205, 205(e)(8)(B), substituted
''subsection (b) of this section'' for ''subsection (a) or (b) of this
section''.
1980 -- Subsec. (b). Pub. L. 96-592, 308(1), struck out provisions
relating to 25 per centum requirement for net savings.
Subsec. (c). Pub. L. 96-592, 308(2), inserted applicability to
participation certificates and to borrowers to whom refunds are payable.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2133. Distribution of assets on liquidation or dissolution
TITLE 12 -- BANKS AND BANKING
In the case of liquidation or dissolution of any bank for
cooperatives, after payment or retirement, first, of all liabilities;
second, of all capital stock issued before January 1, 1956, at par, and
all nonvoting stock at par; and third, all voting stock at par; any
surplus and reserves existing on January 1, 1956, shall be paid to the
holders of stock issued before that date, and voting stock pro rata;
and any remaining allocated surplus and reserves shall be distributed to
those entities to which they are allocated on the books of the bank, and
any other remaining surplus shall be paid to the holders of outstanding
voting stock. If it should become necessary to use any surplus or
reserves to pay any liabilities or to retire any capital stock,
unallocated reserves or surplus, allocated reserves and surplus shall be
exhausted in accordance with rules prescribed by the Farm Credit
Administration.
(Pub. L. 92-181, title III, 3.12, Dec. 10, 1971, 85 Stat. 608; Pub.
L. 99-205, title II, 205(e)(9), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-233, title VIII, 805(o), Jan. 6, 1988, 101 Stat. 1716.)
1988 -- Pub. L. 100-233 inserted ''the'' before ''Farm Credit
Administration''.
1985 -- Pub. L. 99-205 struck out '', any stock held by the Governor
of the Farm Credit Administration at par'' before '', and all nonvoting
stock at par'', and struck out ''stock held by the Governor of the Farm
Credit Administration,'' before ''and voting stock pro rata'' in first
sentence.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2134. Taxation
TITLE 12 -- BANKS AND BANKING
Each bank for cooperatives and its obligations are instrumentalities
of the United States and as such any and all notes, debentures, and
other obligations issued by such bank shall be exempt, both as to
principal and interest from all taxation (except surtaxes, estate,
inheritance, and gift taxes) now or hereafter imposed by the United
States or any State, territorial, or local taxing authority, except that
interest on such obligations shall be subject to Federal income taxation
in the hands of the holder.
(Pub. L. 92-181, title III, 3.13, Dec. 10, 1971, 85 Stat. 608; Pub.
L. 99-205, title II, 205(e)(10), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-233, title VIII, 805(p), Jan. 6, 1988, 101 Stat. 1716.)
1988 -- Pub. L. 100-233 inserted before period at end '', except
that interest on such obligations shall be subject to Federal income
taxation in the hands of the holder''.
1985 -- Pub. L. 99-205 struck out last two sentences relating to
exemption of banks for cooperatives and their property, franchises,
capital, reserves, surplus, other funds, and income from Federal and
non-Federal taxation except for Federal income taxation of interest on
obligations of such banks and for Federal and non-Federal taxation of
real and tangible personal property of such banks to same extent as
similar property is taxed, and making such exemption provisions
applicable only for any year or part thereof in which stock in such
banks was held by the Governor of the Farm Credit Administration.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC Part B -- United and National Banks for Cooperatives
TITLE 12 -- BANKS AND BANKING
12 USC 2141. Charter, powers, and operation
TITLE 12 -- BANKS AND BANKING
(a) Charter
The National Bank for Cooperatives or the United Bank for
Cooperatives, as the case may be (hereinafter in this part referred to
as the ''consolidated bank''), established under section 413 of the
Agricultural Credit Act of 1987, shall be a federally chartered
instrumentality of the United States and an institution of the Farm
Credit System.
(b) Powers
The consolidated bank and the board of directors of such bank shall
have all of the powers, rights, responsibilities, and obligations of the
district banks for cooperatives and the Central Bank for Cooperatives
and the boards of directors of such banks, except as otherwise provided
for in this chapter.
(c) Operation
The consolidated bank shall be organized and operated on a
cooperative basis.
(Pub. L. 92-181, title III, 3.20, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1642, and amended Pub. L. 100-399, title
IV, 407(a), (b), Aug. 17, 1988, 102 Stat. 1000.)
Section 413 of the Agricultural Credit Act of 1987, referred to in
subsec. (a), is section 413 of Pub. L. 100-233, as amended, which is
set out as a note under section 2121 of this title.
1988 -- Subsec. (a). Pub. L. 100-399, 407(a), struck out ''in this
section'' after ''referred to'' and inserted '', established under
section 413 of the Agricultural Credit Act of 1987,'' before ''shall''.
Subsec. (b). Pub. L. 100-399, 407(b), inserted ''except'' before ''as
otherwise''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2142. Board of directors provisions
TITLE 12 -- BANKS AND BANKING
(a) Initial board of directors
The initial board of directors of a consolidated bank shall include
the members of the boards of directors of the farm credit districts who
were elected by voting stockholders of the constituent district banks
for cooperatives (as such banks existed on January 6, 1988) and who
shall serve out the terms for which they were elected.
(b) Permanent board of directors
(1) Composition
The permanent board of directors of a consolidated bank shall consist
of --
(A) three members, elected by the voting stockholders of the
consolidated bank, from each of the farm credit districts that had been
served by constituent banks, as such districts existed on January 6,
1988, at least one of whom, from each such district, shall be a farmer;
(B) one member elected by the voting stockholders of each district
bank for cooperatives that is not a constituent of the consolidated
bank; and
(C) one member appointed by the members chosen under subparagraphs
(A) and (B) who shall not be a stockholder or borrower of a System
institution or an officer or director of any such stockholder or
borrower.
(2) Nomination and election
For purposes of nominating and electing members of the board of
directors under paragraph (1)(A):
(A) First member
The nomination and election of the first member from each district
shall be carried out on the basis provided for in section 2124(d) of
this title.
(B) Second member
(i) In general
The nomination and election of the second member from each district
shall be carried out with each voting stockholder of the consolidated
bank located in the district having one vote, plus a number of votes (or
fractional part thereof) equal to the number of stockholders eligible to
vote in that district multiplied by the percentage (or fractional part
thereof) of the total equity interest (including allocated, but not
unallocated, surplus and reserves) in the consolidated bank of all such
stockholders located in that district held by the individual voting
stockholder --
(I) at the close of the immediately preceding fiscal year of the
consolidated bank; or
(II) with respect to the first election held under this subsection,
as of such date as the Farm Credit Administration shall prescribe.
(ii) Total number of votes
The total number of votes for each district under this subparagraph
shall be the number of voting stockholders of the consolidated bank
located in the district multiplied by two.
(C) Third member
The nomination and election of the third member from each district
shall be carried out in accordance with procedures prescribed in the
bylaws of the consolidated bank.
(3) Terms
(A) In general
The members of the board of directors of the consolidated bank shall
serve for a term of 3 years.
(B) Timing of elections
Procedures for electing members of the board of directors of the
consolidated bank under this subsection shall ensure that the beginning
of the terms of such members coincide with the expiration of the terms
of members of the interim board of directors of the bank under
subsection (a) of this section.
(4) FCA regulations
The nomination and election of the members of the board of directors
of the consolidated bank under this subsection shall be carried out in
accordance with regulations issued by the Farm Credit Administration.
(c) Modification of board of directors provisions
The provisions of subsection (b) of this section relating to the
board of directors of the consolidated bank, other than the provisions
relating to the initial composition, nomination, and election of the
members of the board, may be modified on an affirmative vote of at least
two-thirds of the voting stockholders of the bank, with each such
stockholder to have, for such purposes, only one vote. Any proposals
for modifying such provisions shall be submitted for a vote by such
stockholders in accordance with procedures prescribed by the Farm Credit
Administration.
(Pub. L. 92-181, title III, 3.21, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1642, and amended Pub. L. 100-399, title
IV, 407(c), (d), Aug. 17, 1988, 102 Stat. 1000.)
1988 -- Subsec. (b)(2)(B)(i)(I). Pub. L. 100-399, 407(d), amended
subcl. (I) generally. Prior to amendment, subcl. (I) read as follows:
''as of the final date of the fiscal year of the consolidated bank;
or''.
Subsec. (b)(2)(C). Pub. L. 100-399, 407(c), added subpar. (C).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2143. Credit delivery office
TITLE 12 -- BANKS AND BANKING
On a determination by the board of directors of the consolidated bank
that the bank's loan portfolio is concentrated in any one district or
districts (according to the district boundaries in effect immediately
prior to the effective date of the establishment of the bank under
section 413 of the Agricultural Credit Act of 1987), the bank may
consider the creation of regional service centers to accommodate such
loan concentrations.
(Pub. L. 92-181, title III, 3.22, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1643, and amended Pub. L. 100-399, title
IV, 407(e), Aug. 17, 1988, 102 Stat. 1000.)
Section 413 of the Agricultural Credit Act of 1987, referred to in
text, is section 413 of Pub. L. 100-233, as amended, which is set out
as a note under section 2121 of this title.
1988 -- Pub. L. 100-399 substituted ''consolidated bank'' for
''United Bank for Cooperatives or the National Bank for Cooperatives''
and ''establishment of the bank under section 413 of the Agricultural
Credit Act of 1987'' for ''merger''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2144. Consolidation of functions
TITLE 12 -- BANKS AND BANKING
Subject to section 2143 of this title, to the greatest extent
practicable, the functions of the consolidated bank shall be
consolidated in the central office of the bank.
(Pub. L. 92-181, title III, 3.23, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644.)
12 USC 2145. Exchange of ownership interests
TITLE 12 -- BANKS AND BANKING
On the establishment of the consolidated bank, ownership interests of
the stockholders and subscribers to the guaranty funds of the
constituent district banks for cooperatives (including stock,
participation certificates, and allocated equities) shall be exchanged
for like ownership interests in the consolidated bank on a book value
basis.
(Pub. L. 92-181, title III, 3.24, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644.)
12 USC 2146. Capitalization
TITLE 12 -- BANKS AND BANKING
In accordance with section 2154a of this title, each consolidated
bank shall provide, through bylaws and subject to Farm Credit
Administration regulations, for the capitalization of the bank and the
manner in which bank stock shall be issued, held, transferred, and
retired and bank earnings distributed.
(Pub. L. 92-181, title III, 3.25, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644, and amended Pub. L. 100-399, title
IV, 407(f), Aug. 17, 1988, 102 Stat. 1000.)
1988 -- Pub. L. 100-399 amended section generally. Prior to
amendment, section read as follows: ''The board of directors of the
consolidated bank shall provide for the capitalization of such bank in
accordance with the provisions of section 2154a of this title.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2147. Patronage pools
TITLE 12 -- BANKS AND BANKING
Under such terms and conditions as may be determined by its board of
directors, the consolidated bank may --
(1) for a period of at least 3 years following January 6, 1988,
establish separate patronage pools consisting of loans to eligible
borrowers located in each constituent farm credit district (as such
district existed on January 6, 1988); and
(2) allocate revenues, expenses, and net savings among such pools on
an equitable basis.
(Pub. L. 92-181, title III, 3.26, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644.)
12 USC 2148. Transactions to accomplish merger
TITLE 12 -- BANKS AND BANKING
The receipt of assets or assumption of liabilities by the
consolidated bank, the exchange of stock, equities, or other ownership
interests, and any other transaction carried out in accomplishing the
merger of the banks for cooperatives shall not be treated as a taxable
event under the laws of the United States or of any State or political
subdivision thereof. The preceding sentence shall also apply to the
receipt of assets and liabilities by a cooperative to the extent that
the net amount of the distribution is immediately reinvested in stock of
a consolidated bank (and in such case the basis of such stock shall be
appropriately reduced by the amount of gain not recognized by reason of
this sentence).
(Pub. L. 92-181, title III, 3.27, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644, and amended Pub. L. 100-399, title
IV, 407(g), Aug. 17, 1988, 102 Stat. 1001.)
1988 -- Pub. L. 100-399 substituted ''cooperative'' for ''taxable
institution''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2149. Lending limits
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration may not establish lending limits for
the consolidated bank with respect to any loans or borrowers that are
more restrictive than the combined lending limits that were previously
established by the Farm Credit Administration for a district bank for
cooperatives and the Central Bank for Cooperatives with respect to such
loans or borrowers.
(Pub. L. 92-181, title III, 3.28, as added Pub. L. 100-233, title IV,
415(2), Jan. 6, 1988, 101 Stat. 1644.)
12 USC 2149a. Reports by merged banks for cooperatives
TITLE 12 -- BANKS AND BANKING
(a) In general
When two or more banks for cooperatives merge, the resulting bank
shall, not later than December 31 of each year of the succeeding 5 years
following the date of the merger, file an annual report with the Farm
Credit Administration that --
(1) analyzes the effect of the merger;
(2) includes a breakdown of loans outstanding according to the size
of the cooperative stockholders of the bank; and
(3) describes the adequacy of credit and other assistance services
provided to smaller cooperatives.
(b) Availability
A copy of the report required in subsection (a) of this section shall
be made available to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate.
(Pub. L. 92-181, title III, 3.29, formerly title VII, 7.5, as added
Pub. L. 100-233, title IV, 416, Jan. 6, 1988, 101 Stat. 1646, and
renumbered 3.29, Pub. L. 100-399, title IV, 408(e), Aug. 17, 1988, 102
Stat. 1001.)
Section was classified to section 2279a-5 of this title prior to
renumbering by Pub. L. 100-399.
12 USC SUBCHAPTER IV -- PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF
INSTITUTIONS OF THE SYSTEM
TITLE 12 -- BANKS AND BANKING
12 USC Part A -- Funding
TITLE 12 -- BANKS AND BANKING
12 USC 2151. Revolving fund
TITLE 12 -- BANKS AND BANKING
The revolving fund established by this section (in effect immediately
before January 6, 1988) shall be available to the Farm Credit
Administration and the Assistance Board during the periods, and for the
purposes, provided for in sections 2278a-13 and 2278a-7 of this title,
respectively.
(Pub. L. 92-181, title IV, 4.0, Dec. 10, 1971, 85 Stat. 609; Pub.
L. 99-205, title I, 101(1), Dec. 23, 1985, 99 Stat. 1678; Pub. L.
100-233, title II, 202, Jan. 6, 1988, 101 Stat. 1605; Pub. L. 100-399,
title II, 202, Aug. 17, 1988, 102 Stat. 992.)
For explanation of the revolving fund established by this section (in
effect immediately before January 6, 1988), referred to in text, see
Revolving Funds note below.
1988 -- Pub. L. 100-399 amended section generally. Prior to
amendment, section read as follows:
''(a) Revolving Fund. -- The revolving fund established by this
section (in effect immediately before January 6, 1988) shall be
available to the Farm Credit Administration during the period, and for
the purposes provided for, in sections 2278a-7(b) and 2278a-13 of this
title.
''(b) Farm Credit Insurance Fund. -- On the date the first premium is
due and payable under section 2277a-5(c) of this title, any funds
remaining in the revolving fund shall be transferred to the Farm Credit
Insurance Fund in accordance with the terms and conditions established
by the Farm Credit Administration.''
Pub. L. 100-233 amended section generally. Prior to amendment,
section read as follows: ''The revolving fund established by Public Law
87-343, 75 Stat. 758, as amended, and the revolving fund established by
Public Law 87-494, 76 Stat. 109, as amended, and continued by Public
Law 96-592, shall be merged and shall be available to the Farm Credit
Administration for the purchase, on behalf of the United States, of
capital stock of the Capital Corporation. The Farm Credit
Administration may make such purchases of stock as the Farm Credit
Administration determines, in its discretion, are necessary to achieve
the purposes of this chapter.''
1985 -- Pub. L. 99-205 substituted provisions relating to revolving
funds and investments for provisions respecting stock purchased by the
Governor for the Farm Credit Administration, retirement, and franchise
tax.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
The revolving fund established by this section (in effect immediately
before January 6, 1988), referred to in text, means the revolving fund
created by former provisions of this section, which merged the revolving
fund established by Public Law 87-343, 75 Stat. 758, as amended
(described below as ''first fund''), with the revolving fund established
by Public Law 87-494, 76 Stat. 109, as amended (described below as
''second fund''), which was regarded as continued by Pub. L. 96-592.
At the time of enactment of former section 2152 of this title (see
second par. of note under former section 2152 of this title) by Pub. L.
92-181 funds for temporary investment by the Governor of the Farm Credit
Administration in the farm credit system were available from two
revolving funds.
The first fund, providing moneys for investment in production credit
associations and intermediate credit banks, was covered by former
section 1131i of this title. Such fund was itself the result of an
earlier merger of two revolving funds, the first having been created by
the Farm Credit Act of 1933 and the second having been created by the
Federal Farm Mortgage Corporation Act of 1934. These two were combined
into a single fund pursuant to Pub. L. 87-343, 2(1), Oct. 3, 1961, 75
Stat. 758. Each of the statutory steps in the establishment of such
fund was cast in the form of an amendment to the Farm Credit Act of
1933. Since such Farm Credit Act of 1933 has been repealed by section
5.26 of Pub. L. 92-181, section 1131i of this title is carried as
repealed. Notwithstanding such apparent repeal, statements of
Congressional intent indicate an intention to retain the fund using as
its statutory base the law (Pub. L. 87-343) which had effected the
consolidation in 1961.
The second fund, providing moneys for investment in banks for
cooperatives, is covered by section 1141d of this title. Although the
basic authority for such fund would be the Agricultural Marketing Act of
1929, a more updated authority for such fund is the Agricultural
Marketing Act Amendment of 1962, Pub. L. 87-494, June 25, 1962, 76
Stat. 109, under which the fund was reduced to $150,000,000 and the
amount in such fund in excess of such figure was returned to the
Treasury as miscellaneous receipts.
Pub. L. 96-592, referred to above as continuing the revolving fund
established by Pub. L. 87-494, is the Farm Credit Act Amendment of
1980, Pub. L. 96-592, Dec. 24, 1980, 94 Stat. 3437. For complete
classification of this Act to the Code, see Short Title of 1980
Amendment note set out under section 2001 of this title and Tables.
12 USC 2152. Repealed. Pub. L. 100-233, title II, 207(a)(1), Jan. 6,
1988, 101 Stat. 1607
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title IV, 4.1, as added Pub. L. 99-205,
title I, 104, Dec. 23, 1985, 99 Stat. 1687, contained requirements for
purchase of stock and payment of assessments and contribution of capital
to Capital Corporation.
A prior section 2152, Pub. L. 92-181, title IV, 4.1, Dec. 10, 1971,
85 Stat. 609, relating to revolving funds and government deposits, was
repealed, effective thirty days after Dec. 23, 1985, by Pub. L.
99-205, title I, 101(2), Dec. 23, 1985, 99 Stat. 1678. See section
2151 of this title.
Section 207(b) of Pub. L. 100-233 provided that: ''The repeals made
by subsection (a) (repealing this section and sections 2216 to 2216k,
and 2252(a)(8) of this title) shall take effect 15 days after the date
of the enactment of this Act (Jan. 6, 1988).''
12 USC 2153. Power to borrow; issuance of notes, bonds, debentures,
and other obligations
TITLE 12 -- BANKS AND BANKING
Each of the banks of the System, in order to obtain funds for its
authorized purposes, shall have power, subject to regulation by the Farm
Credit Administration, and subject to the limitations of paragraph (e)
of this section, to --
(a) Borrow money from or loan to any other institution of the System,
borrow from any commercial bank or other lending institution, issue its
notes or other evidence of debt on its own individual responsibility and
full faith and credit, and invest its excess funds in such sums, at such
times, and on such terms and conditions as it may determine.
(b) Issue its own notes, bonds, debentures, or other similar
obligations, fully collateralized as provided in section 2154(c) of this
title by the notes, mortgages, and security instruments it holds in the
performance of its functions under this chapter in such sums,
maturities, rates of interest, and terms and conditions of each issue as
it may determine with approval of the Farm Credit Administration.
(c) Join with any or all banks organized and operating under the same
subchapter of this chapter in borrowing or in issuance of consolidated
notes, bonds, debentures, or other obligations as may be agreed with
approval of the Farm Credit Administration.
(d) Join with other banks of the System in issuance of System-wide
notes, bonds, debentures, and other obligations in the manner, form,
amounts, and on such terms and conditions as may be agreed upon with
approval of the Farm Credit Administration. Such System-wide issue by
the participating banks and such participations by each bank shall not
exceed the limits to which each such bank is subject in the issuance of
its individual or consolidated obligations and each such issue shall be
subject to approval of the Farm Credit Administration: Provided,
however, There shall be no issues of System-wide obligations without the
concurrence of the boards of directors of each bank and the approval of
the Farm Credit Administration for such issues shall be conditioned on
and be evidence of the compliance with this provision.
(e) No bank or banks shall issue notes, bonds, debentures, or other
obligations individually or in concert with one or more banks of the
System other than through the Federal Farm Credit Banks Funding
Corporation under any provision of this chapter except under subsection
(a) of this section: Provided, That any bank or banks may issue
investment bonds or like obligations other than through the Federal Farm
Credit Banks Funding Corporation if the interest rate is not in excess
of the interest allowable on savings deposits of commercial banks of
comparable amounts and maturities under Federal Reserve regulation on
its member banks.
(Pub. L. 92-181, title IV, 4.2, Dec. 10, 1971, 85 Stat. 610; Pub.
L. 99-205, title II, 205(f)(1), Dec. 23, 1985, 99 Stat. 1705; Pub. L.
100-233, title IV, 418(b), formerly 415(b), Jan. 6, 1988, 101 Stat.
1653, renumbered 418(b), Pub. L. 100-399, title IV, 409(a), Aug. 17,
1988, 102 Stat. 1003; Pub. L. 100-399, title II, 203(e), Aug. 17, 1988,
102 Stat. 993.)
1988 -- Subsec. (d). Pub. L. 100-233 substituted ''the boards of
directors of each bank'' for ''the boards of directors of each of the 12
districts and the Central Bank for Cooperatives''.
Subsec. (e). Pub. L. 100-399, 203(e), substituted ''System other than
through the'' for ''System other than through their'', and substituted
''Federal Farm Credit Banks Funding Corporation'' for ''fiscal agent''
in two places.
1985 -- Pub. L. 99-205 substituted ''regulation by'' for
''supervision of'' in provision preceding subsec. (a).
Subsec. (b). Pub. L. 99-205 substituted references to section
''2154(c)'' for ''2154(b)'' and ''Farm Credit Administration'' for
''Governor''.
Subsecs. (c), (d). Pub. L. 99-205 substituted ''Farm Credit
Administration'' for ''Governor'' wherever appearing.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2154. Capital adequacy of banks and institutions
TITLE 12 -- BANKS AND BANKING
(a) Minimum levels of capital
The Farm Credit Administration shall cause System institutions to
achieve and maintain adequate capital by establishing minimum levels of
capital for such System institutions and by using such other methods as
the Farm Credit Administration deems appropriate. The Farm Credit
Administration may establish such minimum level of capital for a System
institution as the Farm Credit Administration, in its discretion, deems
to be necessary or appropriate in light of the particular circumstances
of the System institution.
(b) Failure to maintain minimum levels; directives; plans for
achieving minimum levels; proposals affecting compliance
(1) Failure of a System institution to maintain capital at or above
its minimum level as established under subsection (a) of this section
may be deemed by the Farm Credit Administration, in its discretion, to
constitute an unsafe and unsound practice within the meaning of this
chapter.
(2) In addition to, or in lieu of, any other action authorized by
law, including paragraph (1), the Farm Credit Administration may issue a
directive to a System institution that fails to maintain capital at or
above its required level as established under subsection (a) of this
section. Such directive may require the System institution to submit
and adhere to a plan acceptable to the Farm Credit Administration
describing the means and timing by which the System institution shall
achieve its required capital level, but may not require merger or
consolidation without a majority vote of the voting stockholders or the
contributors to the guaranty fund of the institution.
(3) The Farm Credit Administration may consider such System
institution's progress in adhering to any plan required under paragraph
(2) whenever such System institution, or an affiliate thereof, seeks the
requisite approval of the Farm Credit Administration for any proposal
that would divert earnings, diminish capital, or otherwise impede such
System institution's progress in achieving its minimum capital level.
The Farm Credit Administration may deny such approval where it
determines that such proposal would adversely affect the ability of the
System institution to comply with such plan.
(c) Enhancement of capital adequacy of banks
Each bank shall have on hand at the time of issuance of any note,
bond, debenture, or other similar obligation and at all times thereafter
maintain, free from any lien or other pledge, notes and other
obligations representing loans made under this chapter or real or
personal property acquired in connection with loans made under this
chapter, obligations of the United States or any agency thereof direct
or fully guaranteed, other bank assets (including marketable securities)
approved by the Farm Credit Administration, or cash, in an aggregate
value equal to the total amount of notes, bonds, debentures, or other
similar obligations outstanding for which the bank is primarily liable.
(Pub. L. 92-181, title IV, 4.3, Dec. 10, 1971, 85 Stat. 611; Pub.
L. 99-205, title I, 101(3), Dec. 23, 1985, 99 Stat. 1678; Pub. L.
100-233, title III, 304, title VIII, 804(a)(3), 805(q), Jan. 6, 1988,
101 Stat. 1621, 1715, 1716; Pub. L. 100-399, title VII, 702(b), Aug.
17, 1988, 102 Stat. 1006.)
1988 -- Subsec. (b)(2). Pub. L. 100-233, 804(a)(3), struck out
subpar. (A) designation and struck out subpar. (B) which read as
follows: ''Any directive issued under this paragraph, including plans
submitted pursuant thereto, shall be enforceable under the provisions of
section 2267 of this title to the same extent as an effective and
outstanding order issued under section 2261 of this title that has
become final.''
Subsec. (c). Pub. L. 100-233, 805(q), which directed the amendment of
subsec. (c) by substituting ''direct or fully guaranteed'' for ''direct
of fully guaranteed'' was repealed by Pub. L. 100-399, 702( b). See
Construction of 1988 Amendment note below.
Pub. L. 100-233, 304, amended subsec. (c) generally. Prior to
amendment, subsec. (c) read as follows: ''Each bank shall have on hand
at the time of issuance of any long-term notes, bonds, debentures, or
other similar obligations and at all times thereafter maintain, free
from any lien or other pledge, notes and other obligations representing
loans made under the authority of this chapter, obligations of the
United States or any agency thereof direct or fully guaranteed, other
readily marketable securities approved by the Farm Credit
Administration, or cash, in an aggregate value equal to the total amount
of long-term notes, bonds, debentures, or other similar obligations
outstanding for which the bank is primarily liable.''
1985 -- Pub. L. 99-205 substituted ''Capital adequacy of banks and
associations'' for ''Aggregate of obligations; collateral'' in section
catchline.
Subsec. (a). Pub. L. 99-205 amended subsec. (a) generally. Prior to
amendment, subsec. (a) read as follows: ''No issue of long-term notes,
bonds, debentures, or other similar obligations by a bank or banks shall
be approved in an amount which, together with the amount of other bonds,
debentures, long-term notes, or other similar obligations issued and
outstanding, exceeds twenty times the capital and surplus of all the
banks which will be primarily liable on the proposed issue, or such
lesser amount as the Farm Credit Administration shall establish by
regulation.''
Subsecs. (b), (c). Pub. L. 99-205 added subsec. (b) and
redesignated former subsec. (b) as (c).
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Section 702(b) of Pub. L. 100-399 provided that section 805(q) of
Pub. L. 100-233, cited as a credit to this section, is repealed and
that subsec. (c) of this section shall be applied and administered as
if such section had not been enacted.
Section 301(a) of Pub. L. 100-233, as amended by Pub. L. 100-399,
title III, 301(a), Aug. 17, 1988, 102 Stat. 993, provided that:
''(1) In general. --
''(A) Establishment. -- Within 120 days after the date of the
enactment of this Act (Jan. 6, 1988), the Farm Credit Administration
shall issue regulations under section 4.3(a) of the Farm Credit Act of
1971 (12 U.S.C. 2154(c) (12 U.S.C. 2154(a))) that establish minimum
permanent capital adequacy standards for Farm Credit System
institutions.
''(B) Basis for establishment. -- The standards established under
subparagraph (A) shall apply to an institution based on the financial
statements of the institution prepared in accordance with generally
accepted accounting principles.
''(C) Ratio of capital to assets. -- The standards established under
subparagraph (A) shall specify fixed percentages representing the ratio
of permanent capital of the institution to the assets of the
institution, taking into consideration relative risk factors as
determined by the Farm Credit Administration.
''(D) Phase-in period. -- The standards established under
subparagraph (A) shall be phased in during the 5-year period beginning
on the date of the enactment of this Act (Jan. 6, 1988).
''(2) Emergency power not available. -- The Farm Credit
Administration shall not invoke the emergency provisions of section
5.17(c)(2) of the Farm Credit Act of 1971 (12 U.S.C. 2251(c)(2) (12 U.
S.C. 2252(c)(2))) with respect to the issuance of the regulations
required under paragraph (1)(A).
''(3) Prohibitions during transition period. -- During the 5-year
period specified in paragraph (1)(D), the Farm Credit Administration
shall not initiate any receivership, conservatorship, liquidation, or
enforcement action against any System institution certified to issue
preferred stock under section 6.27 of the Farm Credit Act of 1971 (as
added by section 201 of this Act) (12 U.S.C. 2278b-7), solely because of
the failure of such institution to meet minimum permanent capital
adequacy standards unless such action is recommended or concurred in by
the Farm Credit System Assistance Board established under section 6.0 of
such Act (as added by section 201 of this Act) (12 U.S.C. 2278a).
''(4) Permanent capital. -- For purposes of this subsection, the term
'permanent capital' has the same meaning given that term in section
4.3A(a)(1) of the Farm Credit Act of 1971 (12 U.S.C. 2154a(a)( 1)).''
12 USC 2154a. Capitalization of System institutions
TITLE 12 -- BANKS AND BANKING
(a) Definitions
As used in this section:
(1) Permanent capital
The term ''permanent capital'' means current year retained earnings,
allocated and unallocated earnings, all surplus (less allowances for
losses), and stock issued by a System institution, except stock that --
(A) may be retired by the holder thereof on repayment of the holder's
loan, or otherwise at the option or request of the holder; or
(B) is protected under section 2162 of this title or is otherwise not
at risk.
(2) Stock
The term ''stock'' means voting and nonvoting stock (including
preferred stock), equivalent contributions to a guaranty fund,
participation certificates, allocated equities, and other forms and
types of equities.
(b) Adoption of bylaws
Subject to approval by shareholders under subsection (c)(2) of this
section, each bank and association shall adopt bylaws, developed by its
board of directors, that provide for the capitalization of the
institution in accordance with subsection (c)(1) of this section.
(c) Requirements of bylaws
(1) In general
Notwithstanding any other provision of this chapter, the bylaws
adopted under subsection (b) of this section --
(A) shall provide for such classes, par value, and amounts of the
stock of the institution, the manner in which such stock shall be
issued, transferred, and retired, and the payment of dividends and
patronage refunds, as determined appropriate by the Board of Directors,
subject to this section;
(B) may provide for the charging of loan origination fees as
determined appropriate by the Board of Directors;
(C) shall enable the institution to meet the capital adequacy
standards established under the regulations issued under section 2154(
a) of this title;
(D) shall provide for the issuance of voting stock, which may only be
held by --
(i) borrowers who are farmers, ranchers, or producers or harvesters
of aquatic products, and cooperative associations eligible to borrow
from System institutions under this chapter;
(ii) in the case of a Central Bank for Cooperatives, other banks for
cooperatives; and
(iii) in the case of banks other than banks for cooperatives, System
associations;
(E) shall require that --
(i) as a condition of borrowing from or through the institution, any
borrower who is entitled to hold voting stock or participation
certificates shall, at the time a loan is made, acquire voting stock or
participation certificates in an amount not less than $1,000 or 2
percent of the amount of the loan, whichever is less; and
(ii) within 2 years after the loan of a borrower is repaid in full,
any voting stock held by the borrower be converted to nonvoting stock;
(F) may provide that persons who are not borrowers from the
institution may hold nonvoting stock of the institution;
(G) shall require that any holder of voting stock issued before the
adoption of bylaws under this section exchange a portion of such stock
for new voting stock;
(H) do not need to provide for maximum or minimum standards of
borrower stock ownership based on a percentage of the loan of the
borrower, except as otherwise provided in this section;
(I) shall permit the retirement of stock at the discretion of the
institution if the institution meets the capital adequacy standards
established under section 2154(a) of this title; and
(J) shall permit stock to be transferable.
(2) Effective date
The bylaws adopted by the board of directors of a System institution
under subsection (b) of this section shall take effect only on approval
of a majority of the stockholders of such institution present and
voting, or voting by written proxy, at a duly authorized stockholders'
meeting.
(d) Reduction of capital
(1) General rule
Except as provided in paragraph (2), the board of directors of a
System institution may not reduce the permanent capital of the
institution through the payment of patronage refunds or dividends, or
the retirement of stock if, after or due to such action, the permanent
capital of the institution would thereafter fail to meet the minimum
capital adequacy standards established under section 2154(a) of this
title.
(2) Exceptions
Paragraph (1) shall not apply to the payment of noncash patronage
refunds by any institution exempt from Federal income tax if the entire
refund paid qualifies as permanent capital. Notwithstanding paragraph
(1), any System institution subject to Federal income tax may pay
patronage refunds partially in cash as long as the cash portion of the
refund is the minimum amount required to qualify the refund as a
deductible patronage distribution for Federal income tax purposes and
the remaining portion of the refund paid qualifies as permanent capital.
(e) Compliance
The Farm Credit Administration may issue a directive that requires
compliance with subsection (d) of this section, to the board of
directors of any System institution that fails to comply therewith.
(f) Construction
This section shall not be construed to affect the provisions of this
chapter that confer on System institutions a lien on borrower stock or
other equities and the privilege to retire or cancel such stock or other
equities for application against the indebtedness on a defaulted or
restructured loan.
(g) Controlling authority
To the extent that any provision of this section is inconsistent with
any other provision of this chapter (other than section 2162 of this
title), the provision of this section shall control.
(Pub. L. 92-181, title IV, 4.3A, as added Pub. L. 100-233, title III,
301(b), Jan. 6, 1988, 101 Stat. 1608, and amended Pub. L. 100-399,
title III, 301(b)-(f), Aug. 17, 1988, 102 Stat. 994.)
1988 -- Subsec. (a)(1)(B). Pub. L. 100-399, 301(b), substituted
''section 2162 of this title'' for ''section 4.9B''.
Subsec. (c)(1)(D)(i). Pub. L. 100-399, 301(c)(1), substituted
''producers or'' for ''producers, or''.
Subsec. (c)(1)(G). Pub. L. 100-399, 301(c)(2), substituted ''voting
stock issued'' for ''stock issued''.
Subsec. (c)(1)(H). Pub. L. 100-399, 301(d), inserted '', except as
otherwise provided in this section'' after ''the borrower''.
Subsec. (c)(1)(I). Pub. L. 100-399, 301(e), struck out ''standards
issued under'' after ''established under''.
Subsec. (d)(1). Pub. L. 100-399, 301(f), struck out ''and in section
2162 of this title'' after ''paragraph (2)'' and ''or allocated
equities'' after ''retirement of stock''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2155. Liability of banks; United States not liable
TITLE 12 -- BANKS AND BANKING
(a) Joint and several liability of banks
(1) Each bank of the System shall be fully liable on notes, bonds,
debentures, or other obligations issued by it individually, and shall be
liable for the interest payments on long-term notes, bonds, debentures,
or other obligations issued by other banks operating under the same
subchapter of this chapter.
(2)(A) Each bank shall also be primarily liable for the portion of
any issue of consolidated or System-wide obligations made on its behalf
and be jointly and severally liable for the payment of any additional
sums as called upon by the Farm Credit Administration in order to make
payments of interest or principal which any bank primarily liable
therefor shall be unable to make.
(B) Such calls first shall be made on all nondefaulting banks in
proportion to each such bank's proportionate share of the aggregate
available collateral held by all such banks.
(C) For purposes of this paragraph, the term ''available collateral''
means the amount (determined at the close of the last calendar quarter
ending before such call) by which a bank's collateral as described in
section 2154 of this title exceeds the collateral required to support
the bank's outstanding notes, bonds, debentures, and other similar
obligations.
(D) If the Farm Credit Administration makes any such call and the
available collateral of all such banks does not fully satisfy the
liability necessitating such calls, such calls shall be made on all
nondefaulting banks in proportion to each such bank's remaining assets.
(E) Any System bank that, pursuant to a call by the Farm Credit
Administration, makes a payment of principal or interest to the holder
of any consolidated or System-wide obligation issued on behalf of
another System bank shall be subrogated to all rights of the holder
against such other bank to the extent of such payment.
(F) On making such a call with respect to obligations issued on
behalf of a System bank, the Farm Credit Administration shall appoint a
receiver for the bank, which shall expeditiously liquidate or otherwise
wind up the affairs of the bank.
(b) Resolutions as to liability; execution of obligations
Each bank participating in an issue shall by appropriate resolution
undertake such responsibility as provided in subsection (a) of this
section, and in the case of consolidated or System-wide obligations
shall authorize the execution of such long-term notes, bonds,
debentures, or other obligations on its behalf. When a consolidated or
System-wide issue is approved, the notes, bonds, debentures, or other
obligations shall be executed and the banks shall be liable thereon as
provided herein.
(c) United States liability
The United States shall not be liable or assume any liability
directly or indirectly thereon.
(d) Insurance Fund called on before invoking joint and several
liability
Beginning 5 years after January 6, 1988, the Farm Credit
Administration shall not call on any System institution to satisfy the
liability of the institution on any joint, consolidated, or System-wide
obligation participated in by the institution or with respect to which
the institution is primarily, or jointly and severally, liable, before
the Farm Credit Insurance Fund is exhausted, even if the Fund is only
able to make a partial payment because of insufficient amounts in the
Fund.
(Pub. L. 92-181, title IV, 4.4, Dec. 10, 1971, 85 Stat. 611; Pub.
L. 99-205, title I, 101(4), title II, 205(f)(2), Dec. 23, 1985, 99 Stat.
1679, 1706; Pub. L. 100-233, title II, 207(c), title III, 303, Jan. 6,
1988, 101 Stat. 1608, 1620; Pub. L. 100-399, title III, 303, Aug. 17,
1988, 102 Stat. 995.)
1988 -- Subsec. (a). Pub. L. 100-233, 303(a), amended subsec. (a)
generally. Prior to amendment, subsec. (a) read as follows: ''Each
bank of the System shall be fully liable on notes, bonds, debentures, or
other obligations issued by it individually, and shall be liable for the
interest payments on long-term notes, bonds, debentures, or other
obligations issued by other banks operating under the same subchapter of
this chapter. Each bank shall also be primarily liable for the portion
of any issue of consolidated or System-wide obligations made on its
behalf and be jointly and severally liable for the payment of any
additional sums as called upon by the Farm Credit Administration in
order to make payments of interest or principal which any bank primarily
liable therefor shall be unable to make. Such calls shall be made first
upon the other banks operating under the same subchapter of this chapter
as the defaulting bank, and second upon banks operating under other
subchapters of this chapter, taking into consideration the capital,
surplus, bonds, debentures, or other obligations which each may have
outstanding at the time of such assessment.''
Subsec. (c). Pub. L. 100-233, 207(c), redesignated subsec. (d) as
(c), and struck out former subsec. (c) which provided that for purposes
of this part, the term ''bank'' included the Capital Corporation.
Subsec. (d). Pub. L. 100-399 redesignated subsec. (e) as (d).
Pub. L. 100-233, 207(c), redesignated subsec. (d) as (c).
Subsec. (e). Pub. L. 100-399 redesignated subsec. (e) as (d).
Pub. L. 100-233, 303(b), added subsec. (e).
1985 -- Subsec. (b). Pub. L. 99-205, 205(f)(2), substituted
''execution of'' for ''Governor to execute'' in first sentence and
struck out ''by the Governor'' after ''shall be executed'' in second
sentence.
Subsecs. (c), (d). Pub. L. 99-205, 101(4), added subsec. (c) and
redesignated former subsec. (c) as (d).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2156. Repealed. Pub. L. 100-233, title II, 204(b), Jan. 6, 1988,
101 Stat. 1607
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title IV, 4.5, Dec. 10, 1971, 85 Stat.
611; Pub. L. 96-592, title IV, 401, Dec. 24, 1980, 94 Stat. 3446;
Pub. L. 99-205, title II, 205(f)(3), Dec. 23, 1985, 99 Stat. 1706,
provided for establishment of a finance committee for banks organized
and operated under subchapters I, II, and III of this chapter. See
section 2160 of this title.
12 USC 2157. Bonds as investments
TITLE 12 -- BANKS AND BANKING
The bonds, debentures, and other similar obligations issued under the
authority of this chapter shall be lawful investments for all fiduciary
and trust funds and may be accepted as security for all public deposits.
(Pub. L. 92-181, title IV, 4.6, Dec. 10, 1971, 85 Stat. 612.)
12 USC 2158. Purchase and sale by Federal Reserve System
TITLE 12 -- BANKS AND BANKING
Any member of the Federal Reserve System may buy and sell bonds,
debentures, or other similar obligations issued under the authority of
this chapter and any Federal Reserve bank may buy and sell such
obligations to the same extent and subject to the same limitations
placed upon the purchase and sale by said banks of State, county,
district, and municipal bonds under section 355 of this title.
(Pub. L. 92-181, title IV, 4.7, Dec. 10, 1971, 85 Stat. 612.)
12 USC 2159. Purchase and sale of obligations; additional powers
TITLE 12 -- BANKS AND BANKING
(a) Each bank of the System may purchase its own obligations and the
obligations of other banks of the System and may provide for the sale of
obligations issued by it, consolidated obligations, or Systemwide
obligations through a fiscal agent or agents, by negotiation, offer,
bid, syndicate sale, and to deliver such obligations by book entry, wire
transfer, or such other means as may be appropriate.
(b) Through December 31, 1992, each bank of the System, in addition
to purchasing obligations as authorized by this chapter, may, with the
prior approval of the Farm Credit Administration and subject to such
conditions as it may establish, (1) reduce the cost of its borrowings by
doing one or more of the following: (A) contracting with a third party,
or an entity that is established as a limited purpose System institution
under section 2211 of this title and that is not to be included in the
combined financial statements of other System institutions, with respect
to the payment of interest on the bank's obligations and the obligations
of other banks incurred before January 1, 1985, in consideration of the
payment of market interest rates on such obligations, plus a premium, or
(B) for the period July 1, 1986, through December 31, 1992, capitalizing
interest costs on obligations incurred before January 1, 1985, in excess
of the estimated interest costs on an equivalent amount of Farm Credit
System obligations at prevailing market rates on such obligations of
similar maturities as of October 21, 1986, or (C) taking other similar
action; and (2) amortize, over a period of not to exceed 20 years, the
capitalization of the premium, capitalization of interest expense, or
like costs of any action taken under clause (1).
(Pub. L. 92-181, title IV, 4.8, Dec. 10, 1971, 85 Stat. 612; Pub.
L. 99-509, title I, 1034, Oct. 21, 1986, 100 Stat. 1878; Pub. L.
100-233, title II, 205(a), Jan. 6, 1988, 101 Stat. 1607.)
1988 -- Subsec. (b). Pub. L. 100-233 substituted ''December 31,
1992'' for ''December 31, 1988'' in two places.
1986 -- Pub. L. 99-509 designated existing provisions as subsec.
(a) and added subsec. (b).
12 USC 2160. Federal Farm Credit Banks Funding Corporation
TITLE 12 -- BANKS AND BANKING
(a) Establishment
There is hereby established the Federal Farm Credit Banks Funding
Corporation (hereinafter in this section referred to as the
''Corporation''), which shall be an institution of the Farm Credit
System.
(b) Duties
The Corporation --
(1) shall issue, market, and handle the obligations of the banks of
the Farm Credit System, and interbank or intersystem flow of funds as
may from time to time be required;
(2) acting for the banks of the Farm Credit System, subject to
approval of the Farm Credit Administration, shall determine the amount,
maturities, rates of interest, terms, and conditions of participation by
the several banks in each issue of joint, consolidated, or System-wide
obligations; and
(3) shall exercise such other powers as were provided to the
predecessor Federal Farm Credit Banks Funding Corporation in accordance
with its charter issued under section 2211 of this title, in effect
immediately before January 6, 1988.
(c) Officers and committees
(1) Designation
The board of directors may designate such officers and committees for
such terms and such purposes as may be agreed on by the board.
(2) Issuance of obligations
When appropriate to the board's functions under this section, a
committee of the board of directors of the Corporation, or
representatives thereof, may act on behalf of the board in connection
with the issuance of joint, consolidated, and System-wide obligations.
(d) Board of directors
(1) Composition
The board of directors shall be composed of nine voting members and
one nonvoting member, as follows:
(A) Four voting members shall be current or former directors of the
System banks elected by the shareholders of the Corporation.
(B) Three voting members shall be chief executive officers or
presidents of System banks elected by the shareholders of the
Corporation.
(C) Two voting members shall be appointed by the members elected
under subparagraphs (A) and (B) after the elected members have received
recommendations for such appointments from, and consulted with, the
Secretary of the Treasury and the Chairman of the Board of Governors of
the Federal Reserve System. The appointed members shall be selected
from United States citizens --
(i) who are not borrowers from, shareholders in, or employees or
agents of any System institution, who are not affiliated with the Farm
Credit Administration, and who are not actively engaged with a bank or
investment organization that is a member of the Corporation's selling
group for System-wide securities; and
(ii) who are experienced or knowledgeable in corporate and public
finance, agricultural economics, and financial reporting and disclosure.
(D) The president of the Corporation shall serve as a nonvoting
member of the board.
In selecting candidates under subparagraphs (A) and (B), due
consideration shall be given to choosing individuals knowledgeable in
agricultural economics, public and corporate finance, and financial
reporting and disclosure.
(2) Nonvoting representatives
(A) Assistance Board
During the period in which the Assistance Board is in existence, the
board of directors of the Assistance Board shall designate one of its
directors to serve as a nonvoting representative to the board of
directors of the Corporation.
(B) Insurance Corporation
After such period, the board of directors of the Farm Credit System
Insurance Corporation may designate one of its directors to serve as a
nonvoting representative to the board of directors of the Corporation.
(C) Meetings
The persons so designated by the Assistance Board and by the Farm
Credit System Insurance Corporation may attend and participate in all
deliberations of the board of directors of the Corporation.
(e) Transitional authority
Until a majority of the voting members of the board of directors of
the Corporation is elected, which shall occur as soon as is practicable
after January 6, 1988 --
(1) the finance committee established under section 2156 /1/ of this
title in effect before January 6, 1988, and the fiscal agency
established under section 2160 /1/ of this title in effect before
January 6, 1988, shall continue to operate as if this section had not
been enacted; and
(2) the board of directors of the predecessor Federal Farm Credit
Banks Funding Corporation shall be the board of directors of the
Financial Assistance Corporation.
(f) Succession
(1) Assets and liabilities
The Corporation shall, by operation of law and without any further
action by the Farm Credit Administration, the predecessor Federal Farm
Credit Banks Funding Corporation (hereinafter referred to in this
subsection as ''the predecessor corporation'') chartered under this
chapter, or any court, succeed to the assets of and assume all debts,
obligations, contracts, and other liabilities of the predecessor
corporation, matured or unmatured, accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance
sheets, books of account, or records of the predecessor corporation.
(2) Contracts
The existing contractual obligations, security instruments, and title
instruments of the predecessor corporation shall, by operation of law
and without any further action by the Farm Credit Administration, the
predecessor corporation, or any court, become and be converted into
obligations, entitlements, and instruments of the Corporation.
(3) Stock
The stock of the predecessor corporation issued before January 6,
1988, shall, by operation of law and without any further action by the
Farm Credit Administration, the predecessor corporation, or any court,
become and be converted into stock of the Corporation established by
this section.
(4) Taxation
The succession to assets, assumption of liabilities, conversion of
obligations, instruments, and stock, and effectuation of any other
transaction by the Corporation to carry out this subsection shall not be
treated as a taxable event under the laws of any State or political
subdivision thereof.
(Pub. L. 92-181, title IV, 4.9, Dec. 10, 1971, 85 Stat. 612; Pub.
L. 100-233, title II, 204(a), Jan. 6, 1988, 101 Stat. 1605; Pub. L.
100-399, title II, 203(a)-(d), Aug. 17, 1988, 102 Stat. 992, 993.)
January 6, 1988, referred to in subsecs. (e) and (f)(3), was in the
original ''the enactment of this section'', ''the date of the enactment
of this section'', and ''such date of enactment'', which were translated
as meaning the date of enactment of Pub. L. 100-233, which amended this
section generally, to reflect the probable intent of Congress.
Section 2156 of this title, referred to in subsec. (e)(1), was
repealed by Pub. L. 100-233, title II, 204(b), Jan. 6, 1988, 101 Stat.
1607.
For text of section 2160 of this title in effect before January 6,
1988, referred to in subsec. (e)(1), see 1988 Amendment note below.
1988 -- Pub. L. 100-233 amended section generally. Prior to
amendment, section read as follows: ''A fiscal agency shall be
established by the banks for such of their functions relating to the
issuance, marketing, and handling of their obligations, and interbank or
intersystem flow of funds as may from time to time be required.''
Subsec. (b)(3). Pub. L. 100-399, 203(b), inserted ''predecessor
Federal Farm Credit Banks'' before ''Funding Corporation''.
Subsec. (d)(2)(B), (C). Pub. L. 100-399, 203(c), substituted
''directors of the Corporation'' for ''directors of the Federal Farm
Credit Banks Funding Corporation''.
Subsec. (e). Pub. L. 100-399, 203(d), amended subsec. (e) generally.
Prior to amendment, subsec. (e) read as follows: ''Until a quorum of
the board of directors of the Corporation is elected or appointed, the
finance committee established under section 2156 of this title in effect
before January 6, 1988, and the fiscal agency established under section
2160 of this title in effect before January 6, 1988, shall continue to
operate as if this section had not been enacted.''
Subsec. (f). Pub. L. 100-399, 203(a), added subsec. (f).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
/1/ See References in Text note below.
12 USC 2161. Repealed. Pub. L. 100-399, title I, 101(a), Aug. 17, 1988,
102 Stat. 989
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title IV, 4.9A, as added Pub. L. 99-205,
title I, 105, Dec. 23, 1985, 99 Stat. 1687, authorized a central
reserve for Farm Credit System.
Repeal effective immediately after enactment of Pub. L. 100-233,
which was approved Jan. 6, 1988, see section 1001(a) of Pub. L.
100-399, set out as a note under section 2002 of this title.
12 USC 2162. Protection of borrower stock
TITLE 12 -- BANKS AND BANKING
(a) Retirement of stock
Notwithstanding any other section of this chapter, each institution
of the Farm Credit System, when retiring eligible borrower stock in
accordance with this chapter, shall retire such stock at par value.
(b) Certain powers not affected
This section does not affect the authority of any institution of the
Farm Credit System --
(1) to retire or cancel borrower stock at par value for application
against a loan in default;
(2) to cancel borrower stock at par value under section 2202b of this
title; or
(3) to apply, against any outstanding indebtedness to a System
association arising out of or in connection with a liquidation referred
to in subsection (d)(2) of this section, the par value of borrower stock
frozen in such liquidation.
(c) Inability to retire stock at par value
If an institution is unable to retire eligible borrower stock at par
value due to the liquidation of the institution, the receiver of the
institution shall retire such stock at par value as would have been
retired in the ordinary course of business of the institution, and --
(1) during the 5-year period beginning on January 6, 1988, the
Assistance Board shall direct the Financial Assistance Corporation to
provide the receiver with sufficient funds to enable the receiver to
carry out this subsection; and
(2) after such 5-year period, the Farm Credit System Insurance
Corporation shall provide the receiver with sufficient funds from the
Farm Credit Insurance Fund to enable the receiver to carry out this
subsection.
(d) Definitions
For purposes of this section:
(1) Borrower stock
The term ''borrower stock'' means voting and nonvoting stock,
equivalent contributions to a guaranty fund, participation certificates,
allocated equities, and other similar equities that are subject to
retirement under a revolving cycle issued by any System institution and
held by any person other than any System institution.
(2) Eligible borrower stock
The term ''eligible borrower stock'' means borrower stock that --
(A) is outstanding on January 6, 1988;
(B) is issued or allocated after January 6, 1988, but prior to the
earlier of --
(i) in the case of each bank and association, the date of approval,
by the stockholders of such bank or association, of the capitalization
requirements of the institution in accordance with section 2154a of this
title; or
(ii) the date that is 9 months after January 6, 1988;
(C) was, after January 1, 1983, but before January 6, 1988, frozen by
an institution that was placed in liquidation; or
(D) was retired at less than par value by an institution that was
placed in liquidation after January 1, 1983, but before January 6, 1988.
(3) Institution
The term ''institution'' means a bank or association chartered under
this chapter.
(4) Par value
The term ''par value'' means --
(A) in the case of stock, par value;
(B) in the case of participation certificates and other equities and
interests not described in subparagraph (C), face or equivalent value;
or
(C) in the case of participation certificates and allocated equities
subject to retirement under a revolving cycle but that a System
institution elects to retire out of order for application against a loan
in default or otherwise as provided in this chapter, par or face value
discounted, at a rate determined by the institution, to reflect the
present value of the equity or interest as of the date of such
retirement.
(Pub. L. 92-181, title IV, 4.9A, as added Pub. L. 100-233, title I,
101, Jan. 6, 1988, 101 Stat. 1572, and amended Pub. L. 100-399, title I,
101(b)-(d), Aug. 17, 1988, 102 Stat. 989.)
A prior section 4.9A of Pub. L. 92-181, which authorized a central
reserve for Farm Credit System, was classified to section 2161 of this
title and was repealed by Pub. L. 100-399, 101(a).
1988 -- Subsec. (a). Pub. L. 100-399, 101(b), struck out provision
that an institution whose capital stock is impaired coordinate
retirement of stock under this section with the activities of the
Assistance Board and the Financial Assistance Corporation.
Subsec. (c). Pub. L. 100-399, 101(c), inserted ''stock'' in subsec.
heading and amended text generally. Prior to amendment, text read as
follows: ''If an institution is unable to retire eligible borrower
stock at par value due to the freezing of such stock during a
liquidation of the institution, the receiver of the institution shall
retire such stock at par value as would have been retired in the
ordinary course of business of the institution and the Financial
Assistance Corporation, on request of the Assistance Board, shall
provide the receiver with sufficient funds to enable the receiver to
carry out this subsection.''
Subsec. (d)(2)(B). Pub. L. 100-399, 101(d), in introductory provision
substituted ''issued or allocated'' for ''required to be purchased, and
is purchased, as a condition of obtaining a loan made'' and in cl. (i)
substituted ''section 2154a of this title'' for ''section 4.9B''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC Part B -- Dissolution
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title IV, 418(a)(1), formerly 415(a)(1),
Jan. 6, 1988, 101 Stat. 1653, renumbered 418(a)(1), Pub. L. 100-399,
title IV, 409(a), Aug. 17, 1988, 102 Stat. 1003, substituted
''Dissolution'' for ''Dissolution and merger'' as part B heading.
12 USC 2181, 2182. Repealed. Pub. L. 100-233, title IV, 418(a)(2), (3),
formerly 415(a)(2), (3), Jan. 6, 1988, 101 Stat. 1653, renumbered
418(a)(2), (3), Pub. L. 100-399, title IV, 409(a), Aug. 17, 1988, 102
Stat. 1003
TITLE 12 -- BANKS AND BANKING
Section 2181, Pub. L. 92-181, title IV, 4.10, Dec. 10, 1971, 85
Stat. 612; Pub. L. 96-592, title IV, 402, Dec. 24, 1980, 94 Stat.
3446, related to merger of similar banks.
Section 2182, Pub. L. 92-181, title IV, 4.11, Dec. 10, 1971, 85
Stat. 612; Pub. L. 99-205, title II, 205(f)(4), Dec. 23, 1985, 99
Stat. 1706, related to board of directors for merged bank.
12 USC 2183. Dissolution; voluntary or involuntary liquidation;
mergers; receiverships or conservators
TITLE 12 -- BANKS AND BANKING
(a) Voluntary liquidation; consent of Farm Credit Administration;
rules and regulations; minimization of adverse effect; voluntary
merger; mandatory merger on failure to comply or meet obligations
No institution of the System shall go into voluntary liquidation
without the consent of the Farm Credit Administration and with such
consent may liquidate only in accordance with regulations prescribed by
the Farm Credit Administration. In the case of a voluntary liquidation
of an association, such regulations, among other things, shall direct
the supervising bank to institute such measures as it deems appropriate
to minimize the adverse effect of the liquidation on those borrowers
whose loans are purchased by or otherwise transferred to another System
institution. The Farm Credit Administration Board may require an
association to merge with another association whenever it determines,
with the concurrence of the board of the supervising bank, that an
association has failed to meet its outstanding obligations or failed to
conduct its operations in accordance with this chapter.
(b) Appointment of conservator or receiver; grounds; action for
removal; stay of actions or proceedings
The Farm Credit Administration Board may appoint a conservator or
receiver for any System institution on the determination by the Farm
Credit Administration Board that one or more of the following exists, or
is occurring, with respect to the institution: (1) insolvency, in that
the assets of the institution are less than its obligations to its
creditors and others, including its members; (2) substantial
dissipation of assets or earnings due to any violation of law, rules, or
regulations, or to any unsafe or unsound practice; (3) an unsafe or
unsound condition to transact business; (4) willful violation of a
cease and desist order that has become final; (5) concealment of books,
papers, records, or assets of the institution or refusal to submit
books, papers, records, or other material relating to the affairs of the
institution for inspection to any examiner or to any lawful agent of the
Farm Credit Administration; (6) the institution is unable to timely pay
principal or interest on any insured obligation (as defined in section
2277a(3) of this title) issued by the institution. The Farm Credit
Administration Board shall have exclusive power and jurisdiction to
appoint a conservator or receiver, and such receiver or conservator,
after the 5-year period beginning on January 6, 1988, shall be the Farm
Credit System Insurance Corporation. If the Farm Credit Administration
Board determines that a ground for the appointment of a conservator or
receiver as herein provided exists, the Farm Credit Administration Board
may appoint ex parte and without notice a conservator or receiver for
the institution. In the event of such appointment, the institution,
within thirty days thereafter, may bring an action in the United States
district court for the judicial district in which the home office of
such institution is located, or in the United States District Court for
the District of Columbia, for an order requiring the Farm Credit
Administration Board to remove such conservator or receiver, and the
court shall on the merits, dismiss such action or direct the Farm Credit
Administration Board to remove such conservator or receiver. On the
commencement of such an action, the court having jurisdiction of any
other action or enforcement proceeding authorized under this chapter to
which the institution is a party shall stay such action or proceeding
during the pendency of the action for removal of the conservator or
receiver.
(c) Involuntary liquidation; rules and regulations; minimization of
adverse effect
In the case of an involuntary liquidation of an association,
regulations of the Farm Credit Administration, among other things, shall
direct the supervising bank to institute such measures as it deems
appropriate to minimize the adverse effect of the liquidation on those
borrowers whose loans are purchased by or otherwise transferred to
another System institution.
(Pub. L. 92-181, title IV, 4.12, Dec. 10, 1971, 85 Stat. 612; Pub.
L. 99-205, title I, 102, title II, 205(f)(5), title III, 305, Dec. 23,
1985, 99 Stat. 1679, 1706, 1708; Pub. L. 100-233, title III, 306, title
IV, 418(a)(4), formerly 415(a)(4), 431(g), title VIII, 805( r), Jan. 6,
1988, 101 Stat. 1622, 1653, 1660, 1716, renumbered 418(a)( 4), Pub. L.
100-399, title IV, 409(a), Aug. 17, 1988, 102 Stat. 1003; Pub. L.
100-399, title IX, 901(f), Aug. 17, 1988, 102 Stat. 1007.)
1988 -- Subsec. (a). Pub. L. 100-399, 901(f), substituted ''board of
the supervising bank'' for ''district board''.
Pub. L. 100-233, 415(a)(4), struck out third sentence which provided
that Associations may voluntarily merge with other like associations
upon the vote of a majority of each of their stockholders present and
voting or voting by written proxy at duly authorized meetings, and with
the approval of the supervising bank and the Farm Credit Administration,
and substituted ''Board may require an association to merge with another
association'' for ''may require such merger'' in fourth sentence.
Subsec. (b). Pub. L. 100-233, 431(g), substituted ''Farm Credit
Administration Board'' for ''Farm Credit Administration'' wherever
appearing other than in cl. (5).
Pub. L. 100-233, 306, added cl. (6) and inserted '', and such
receiver or conservator, after the 5-year period beginning on January 6,
1988, shall be the Farm Credit System Insurance Corporation'' before the
period at end of second sentence.
Pub. L. 100-233, 805(r), substituted ''court shall'' for ''court,
shall''.
1985 -- Subsec. (a). Pub. L. 99-205, 205(f)(5), substituted ''Farm
Credit Administration'' for ''Federal Farm Credit Board'' in last
sentence.
Pub. L. 99-205, 305(a), inserted after first sentence a sentence
requiring the regulations, in the case of a voluntary liquidation of an
association, to direct the supervising bank to institute appropriate
measures to minimize the adverse effect of the liquidation on borrowers
whose loans are purchased by or otherwise transferred to another System
institution.
Subsec. (b). Pub. L. 99-205, 102, in revising subsec. (b),
substituted expanded provisions respecting appointment of conservator or
receiver for former provision, which read as follows: ''Upon default of
any obligation by any institution of the System, such institution may be
declared insolvent and placed in the hands of a conservator or a
receiver appointed by the Governor and the proceedings thereon shall be
in accordance with regulations of the Farm Credit Administration
regarding such insolvencies.''
Subsec. (c). Pub. L. 99-205, 305(b), added subsec. (c).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2184. Communications with stockholders
TITLE 12 -- BANKS AND BANKING
(a) Provision of stockholder lists
(1) In general
Within 7 days after receipt of a written request by a stockholder, a
bank for cooperatives, Federal land bank association, or production
credit association shall provide a current list of its stockholders to
such requesting stockholder.
(2) Conditions
As a condition of providing a stockholder list under paragraph (1),
the bank or association may require that the stockholder agree and
certify in writing that the stockholder will --
(A) use the list exclusively for communicating with stockholders for
permissible purposes; and
(B) not make the list available to any person, other than the
stockholder's attorney or accountant, without first obtaining the
written consent of the institution.
(b) Alternative communications
(1) Request to issue
As an alternative to receiving a list of stockholders, a stockholder
may request the institution to mail or otherwise furnish to each
stockholder a communication for a permissible purpose on behalf of the
requesting stockholder.
(2) When permissible
Alternative communications may be used, at the discretion of the
requesting stockholder, if the requester agrees to defray the reasonable
costs of the communication. If the requester decides to exercise this
option, the institution shall provide the requester with a written
estimate of the costs of handling and mailing the communication as soon
as is practicable after receipt of the stockholder's request to furnish
the communication.
(Pub. L. 92-181, title IV, 4.12A, as added Pub. L. 100-233, title IV,
420, Jan. 6, 1988, 101 Stat. 1653.)
12 USC Part C -- Rights of Borrowers; Loan Restructuring
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title VIII, 804(b), Jan. 6, 1988, 101
Stat. 1715, substituted ''Rights of Borrowers; Loan Restructuring''
for ''Rights of Applicants'' as part C heading.
12 USC 2199. Disclosure
TITLE 12 -- BANKS AND BANKING
(a) In general
In accordance with regulations of the Farm Credit Administration,
qualified lenders shall provide to borrowers, for all loans that are not
subject to the Truth in Lending Act (15 U.S.C. 1601 et seq.), meaningful
and timely disclosure not later than the time of the loan closing, of --
(1) the current rate of interest on the loan;
(2) in the case of an adjustable or variable rate loan, the amount
and frequency by which the interest rate can be increased during the
term of the loan or, if there are no such limitations, a statement to
that effect, and the factors (including the cost of funds, operating
expenses, and provision for loan losses) that will be taken into account
by the qualified lender in determining adjustments to the interest rate;
(3) the effect, as shown by a representative example or examples, of
any loan origination charges or purchases of stock or participation
certificates on the effective rate of interest;
(4) any change in the interest rate applicable to the borrower's
loan;
(5) except with respect to stock guaranteed under section 2162 of
this title, a statement indicating that stock that is purchased is at
risk; and
(6) a statement indicating the various types of loan options
available to borrowers, with an explanation of the terms and borrowers'
rights that apply to each type of loan.
(b) Differential interest rates
A qualified lender offering more than one rate of interest to
borrowers shall, at the request of a borrower of a loan --
(1) provide a review of the loan to determine if the proper interest
rate has been established;
(2) explain to the borrower in writing the basis for the interest
rate charged; and
(3) explain to the borrower in writing how the credit status of the
borrower may be improved to receive a lower interest rate on the loan.
(Pub. L. 92-181, title IV, 4.13, as added Pub. L. 99-205, title III,
301(b), Dec. 23, 1985, 99 Stat. 1707, and amended Pub. L. 100-233,
title I, 103, 109, Jan. 6, 1988, 101 Stat. 1579, 1584.)
The Truth in Lending Act, referred to in subsec. (a), is title I of
Pub. L. 90-321, May 29, 1968, 82 Stat. 146, as amended, which is
classified generally to subchapter I ( 1601 et seq.) of chapter 41 of
Title 15, Commerce and Trade. For complete classification of this Act
to the Code, see Short Title note set out under section 1601 of Title 15
and Tables.
A prior section 4.13 of Pub. L. 92-181, title IV, Dec. 10, 1971, 85
Stat. 613, which was renumbered section 4.13B by Pub. L. 99-205, title
III, 301(a), Dec. 23, 1985, 99 Stat. 1707, is classified to section
2201 of this title.
1988 -- Pub. L. 100-233, 109, designated existing provisions as
subsec. (a), inserted heading, and added subsec. (b).
Pub. L. 100-233, 103, amended section generally, substituting
introductory provisions and cls. (1) to (6) for former subsecs. (a)
and (b).
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2200. Access to documents and information
TITLE 12 -- BANKS AND BANKING
In accordance with regulations of the Farm Credit Administration,
qualified lenders shall provide their borrowers, at the time of
execution of loans, copies of all documents signed by the borrower and
at any time thereafter, on a borrower's request, copies of all documents
signed or delivered by the borrower and at any time, on request, a copy
of the institution's articles of incorporation or charter and bylaws and
copies of each appraisal of the borrower's assets made or used by the
qualified lender.
(Pub. L. 92-181, title IV, 4.13A, as added Pub. L. 99-205, title III,
301(b), Dec. 23, 1985, 99 Stat. 1707, and amended Pub. L. 100-233,
title I, 104, Jan. 6, 1988, 101 Stat. 1579.)
1988 -- Pub. L. 100-233 substituted ''qualified lenders'' for
''System institutions'' and inserted ''and copies of each appraisal of
the borrower's assets made or used by the qualified lender'' before
period at end.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2201. Notice of action on application
TITLE 12 -- BANKS AND BANKING
(a) Loan applications
Each qualified lender to which a person has applied for a loan shall
provide the person with prompt written notice of --
(1) the action on the application;
(2) if the loan applied for is reduced or denied, the reasons for
such action; and
(3) the applicant's right to review under section 2202 of this title.
(b) Distressed loans
Each qualified lender that has a distressed loan outstanding that is
subject to restructuring requirements under this chapter shall provide,
in accordance with regulations prescribed by the Farm Credit
Administration, the borrower with prompt written notice of --
(1) any action taken with respect to restructuring the loan under
section 2202a of this title;
(2) if restructuring is denied, the reasons for such action; and
(3) the borrower's right to review under section 2202 of this title.
(Pub. L. 92-181, title IV, 4.13B, formerly 4.13, Dec. 10, 1971, 85
Stat. 613, renumbered 4.13B and amended Pub. L. 99-205, title III,
301(a), 302, Dec. 23, 1985, 99 Stat. 1707, 1708; Pub. L. 100-233,
title I, 105, Jan. 6, 1988, 101 Stat. 1579.)
1988 -- Pub. L. 100-233 amended section generally. Prior to
amendment, section read as follows: ''Every applicant for a loan from
an institution of the System shall be entitled to prompt written notice
of action on his application, and, if the loan applied for is reduced or
denied, the reason for such action, and of the applicant's right to
review under section 2202 of this title.''
1985 -- Pub. L. 99-205, 302, provided for a ''written'' notice and
for the applicant's right to review under section 2202 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2202. Reconsideration of actions
TITLE 12 -- BANKS AND BANKING
(a) Credit review committees
(1) In general
The board of directors of each qualified lender shall establish one
or more credit review committees, which shall include farmer board
representation.
(2) Membership
In no case shall a loan officer involved in the initial decision on a
loan serve on the credit review committee when the committee reviews
such loan.
(b) Review of decisions
(1) Denials or reductions
Any applicant for a loan from a qualified lender that has received a
written notice issued under section 2201 of this title of a decision to
deny or reduce the loan applied for may submit a written request, not
later than 30 days after receiving a notice denying or reducing the
amount of the loan application, to obtain a review of the decision
before the credit review committee.
(2) Denials of restructuring
A borrower of a loan from a qualified lender that has received
notice, under section 2201 of this title, of a decision to deny loan
restructuring with respect to a loan made to the borrower, if the
borrower so requests in writing within 7 days after receiving such
notice, may obtain a review of such decision in person before the credit
review committee.
(c) Personal appearance
An applicant for a loan or for restructuring, who is entitled to and
has requested a review under this section, may appear in person before
the credit review committee, and may be accompanied by counsel or by any
other representative of such person's choice, to seek a reversal of the
decision on the application under review.
(d) Independent appraisal
(1) In general
An appeal filed with a credit review committee under this section may
include, as a part of the request for a review of the decision filed
under subsection (b)(1) or (2) of this section, a request for an
independent appraisal, by an accredited appraiser, of any interests in
property securing the loan (other than the stock or participation
certificates of the qualified lender held by the borrower).
(2) Arrangement and cost
Within 30 days after a request for an appraisal under paragraph (1),
the credit review committee shall present the borrower with a list of
three appraisers approved by the appropriate qualified lender from which
the borrower shall select an appraiser to conduct the appraisal the cost
of which shall be borne by the borrower, and shall consider the results
of such appraisal in any final determination with respect to the loan.
(3) Copy to borrower
A copy of any appraisal made under this subsection shall be provided
to the borrower.
(4) Additional collateral
An independent appraisal shall be permitted if additional collateral
for a loan is demanded by the qualified lender when determining whether
to restructure the loan.
(e) Notification of applicant
Promptly after a review by the credit review committee, the committee
shall notify the applicant or borrower, as the case may be, in writing
of the decision of the committee and the reasons for the decision.
(Pub. L. 92-181, title IV, 4.14, Dec. 10, 1971, 85 Stat. 613; Pub.
L. 99-205, title III, 303, Dec. 23, 1985, 99 Stat. 1708; Pub. L.
100-233, title I, 106, title VIII, 805(s), Jan. 6, 1988, 101 Stat.
1580, 1716; Pub. L. 100-399, title I, 103, title VII, 702(b), Aug. 17,
1988, 102 Stat. 990, 1006.)
1988 -- Pub. L. 100-233, 805(s), which directed amendment of this
section by substituting ''committees'' for ''committee(s)'', ''2201''
for ''2199'', and ''review'' for ''reviews'', was repealed by Pub. L.
100-399, 702(b). See Construction of 1988 Amendment note below.
Pub. L. 100-233, 106, amended section generally. Prior to amendment,
section read as follows: ''The board of directors of each Farm Credit
System institution shall establish one or more credit review
committee(s), which shall include farmer board respresentation. Any
loan applicant who has received written notice, under section 2199 of
this title, of a decision to deny or reduce the loan applied for, if the
applicant so requests in writing within thirty days after receiving such
notice, may obtain a review of such decision in person before the credit
review committee. When a loan applicant requests review of an adverse
credit decision, a majority of persons serving on such reviews committee
must be persons who were not involved in making the adverse decision.
Promptly after any such review, the applicant shall be notified in
writing of the credit review committee's decision and the reasons
therefor.''
Subsec. (b)(1). Pub. L. 100-399, 103(a), substituted ''before the''
for ''by a''.
Subsec. (d)(1). Pub. L. 100-399, 103(b), inserted ''or (2)''.
1985 -- Pub. L. 99-205, in amending section generally, substituted
provisions respecting reconsideration of action on loan application for
prior reconsideration provisions which read as follows: ''Any applicant
who has reason to believe that the action on his application by an
association failed to take into account facts pertinent to his
application, or has misinterpreted or failed to properly apply the
applicable law or rules and regulations governing his application, may,
if he so requests in writing within thirty days of the date of that
notice, request an informal hearing on his application and the action of
the association in reduction or denial thereof, or the reason for such
action, in person before the loan committee or officer or employee
thereof authorized to act on applications under section 2033(11) or
2093(18) of this title. Promptly after such a hearing, he shall be
notified of the decision upon reconsideration and the reasons
therefor.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Section 702(b) of Pub. L. 100-399 provided that section 805(s) of
Pub. L. 100-233, cited as a credit to this section, is repealed and
that this section shall be applied and administered as if such section
had not been enacted.
12 USC 2202a. Restructuring distressed loans
TITLE 12 -- BANKS AND BANKING
(a) Definitions
As used in this part:
(1) Application for restructuring
The term ''application for restructuring'' means a written request --
(A) from a borrower for the restructuring of a distressed loan in
accordance with a preliminary restructuring plan proposed by the
borrower as a part of the application;
(B) submitted on the appropriate forms prescribed by the qualified
lender; and
(C) accompanied by sufficient financial information and repayment
projections, where appropriate, as required by the qualified lender to
support a sound credit decision.
(2) Cost of foreclosure
The term ''cost of foreclosure'' includes --
(A) the difference between the outstanding balance due on a loan made
by a qualified lender and the liquidation value of the loan, taking into
consideration the borrower's repayment capacity and the liquidation
value of the collateral used to secure the loan;
(B) the estimated cost of maintaining a loan as a nonperforming
asset;
(C) the estimated cost of administrative and legal actions necessary
to foreclose a loan and dispose of property acquired as the result of
the foreclosure, including attorneys' fees and court costs;
(D) the estimated cost of changes in the value of collateral used to
secure a loan during the period beginning on the date of the initiation
of an action to foreclose or liquidate the loan and ending on the date
of the disposition of the collateral; and
(E) all other costs incurred as the result of the foreclosure or
liquidation of a loan.
(3) Distressed loan
The term ''distressed loan'' means a loan that the borrower does not
have the financial capacity to pay according to its terms and that
exhibits one or more of the following characteristics:
(A) The borrower is demonstrating adverse financial and repayment
trends.
(B) The loan is delinquent or past due under the terms of the loan
contract.
(C) One or both of the factors listed in subparagraphs (A) and (B),
together with inadequate collateralization, present a high probability
of loss to the lender.
(4) Foreclosure proceeding
The term ''foreclosure proceeding'' means --
(A) a foreclosure or similar legal proceeding to enforce a lien on
property, whether real or personal, that secures a nonaccrual or
distressed loan; or
(B) the seizing of and realizing on nonreal property collateral,
other than collateral subject to a statutory lien arising under
subchapter I or II of this chapter, to effect collection of a nonaccrual
or distressed loan.
(5) Loan
The term ''loan'' means a loan made to a farmer, rancher, or producer
or harvester of aquatic products, for any agricultural or aquatic
purpose and other credit needs of the borrower, including financing for
basic processing and marketing directly related to the borrower's
operations and those of other eligible farmers, ranchers, and producers
or harvesters of aquatic products.
(6) Qualified lender
The term ''qualified lender'' means --
(A) a System institution that makes loans (as defined in paragraph
(5)) except a bank for cooperatives; and
(B) each bank, institution, corporation, company, union, and
association described in section 2015(b)(1)(B) of this title but only
with respect to loans discounted or pledged under section 2015(b)(1) of
this title.
(7) Restructure and restructuring
The terms ''restructure'' and ''restructuring'' include rescheduling,
reamortization, renewal, deferral of principal or interest, monetary
concessions, and the taking of any other action to modify the terms of,
or forbear on, a loan in any way that will make it probable that the
operations of the borrower will become financially viable.
(b) Notice
(1) In general
On a determination by a qualified lender that a loan made by the
lender is or has become a distressed loan, the lender shall provide
written notice to the borrower that the loan may be suitable for
restructuring, and include with such notice --
(A) a copy of the policy of the lender established under subsection
(g) of this section that governs the treatment of distressed loans; and
(B) all materials necessary to enable the borrower to submit an
application for restructuring on the loan.
(2) Notice before foreclosure
Not later than 45 days before any qualified lender begins foreclosure
proceedings with respect to a loan outstanding to any borrower, the
lender shall notify the borrower that the loan may be suitable for
restructuring and that the lender will review any such suitable loan for
restructuring, and shall include with such notice a copy of the policy
and the materials described in paragraph (1).
(3) Limitation on foreclosure
No qualified lender may foreclose or continue any foreclosure
proceeding with respect to any distressed loan before the lender has
completed any pending consideration of the loan for restructuring under
this section.
(c) Meetings
On determination by a qualified lender that a loan made by the lender
is or has become a distressed loan, the lender shall provide a
reasonable opportunity for the borrower thereof to personally meet with
a representative of the lender --
(1) to review the status of the loan, the financial condition of the
borrower, and the suitability of the loan for restructuring; and
(2) with respect to a loan that is in nonaccrual status, to develop a
plan for restructuring the loan if the loan is suitable for
restructuring.
(d) Consideration of applications
(1) In general
When a qualified lender receives an application for restructuring
from a borrower, the qualified lender shall determine whether or not to
restructure the loan, taking into consideration --
(A) whether the cost to the lender of restructuring the loan is equal
to or less than the cost of foreclosure;
(B) whether the borrower is applying all income over and above
necessary and reasonable living and operating expenses to the payment of
primary obligations;
(C) whether the borrower has the financial capacity and the
management skills to protect the collateral from diversion, dissipation,
or deterioration;
(D) whether the borrower is capable of working out existing financial
difficulties, reestablishing a viable operation, and repaying the loan
on a rescheduled basis; and
(E) in the case of a distressed loan that is not delinquent, whether
restructuring consistent with sound lending practices may be taken to
reasonably ensure that the loan will not become a loan that it is
necessary to place in nonaccrual status.
(2) Applications not required for restructuring plans
This section shall not prevent a qualified lender from proposing a
restructuring plan for an individual borrower in the absence of an
application for restructuring from the borrower.
(e) Restructuring
(1) In general
If a qualified lender determines that the potential cost to such
qualified lender of restructuring the loan in accordance with a proposed
restructuring plan is less than or equal to the potential cost of
foreclosure, the qualified lender shall restructure the loan in
accordance with the plan.
(2) Computation of cost of restructuring
In determining whether the potential cost to the qualified lender of
restructuring a distressed loan is less than or equal to the potential
cost of foreclosure, a qualified lender shall consider all relevant
factors, including --
(A) the present value of interest income and principal forgone by the
lender in carrying out the restructuring plan;
(B) reasonable and necessary administrative expenses involved in
working with the borrower to finalize and implement the restructuring
plan;
(C) whether the borrower has presented a preliminary restructuring
plan and cash-flow analysis taking into account income from all sources
to be applied to the debt and all assets to be pledged, showing a
reasonable probability that orderly debt retirement will occur as a
result of the proposed restructuring; and
(D) whether the borrower has furnished or is willing to furnish
complete and current financial statements in a form acceptable to the
institution.
(f) Least cost alternative
If two or more restructuring alternatives are available to a
qualified lender under this section with respect to a distressed loan,
the lender shall restructure the loan in conformity with the alternative
that results in the least cost to the lender.
(g) Restructuring policy
(1) Establishment
Each bank board of directors shall develop a policy within 60 days
after January 6, 1988, that is consistent with this section, to govern
the restructuring of distressed loans. Such policy shall constitute the
restructuring policy of each qualified lender within the district.
(2) Contents of policy
The policy established under paragraph (1) shall include an
explanation of --
(A) the procedure for submitting an application for restructuring;
and
(B) the right of borrowers with distressed loans to seek review by a
credit review committee in accordance with section 2202 of this title of
a denial of an application for restructuring.
(3) Submission of policy to FCA
Each bank board shall submit the policy of the district governing the
treatment of distressed loans under this section to the Farm Credit
Administration. Notwithstanding the duty imposed by the preceding
sentence, the other duties imposed by this section shall take effect on
January 6, 1988.
(h) Reports
During the 5-year period beginning on January 6, 1988, each qualified
lender shall submit semiannual reports to the Farm Credit Administration
containing --
(1) the results of the review of distressed loans of the lender; and
(2) the financial effect of loan restructurings and liquidations on
the lender.
(i) Compliance
The Farm Credit Administration may issue a directive requiring
compliance with any provision of this section to any qualified lender
that fails to comply with such provision.
(j) Permitted foreclosures
This section shall not be construed to prevent any qualified lender
from enforcing any contractual provision that allows the lender to
foreclose a loan, or from taking such other lawful action as the lender
deems appropriate, if the lender has reasonable grounds to believe that
the loan collateral will be destroyed, dissipated, consumed, concealed,
or permanently removed from the State in which the collateral is
located.
(k) Application of section
The time limitation prescribed in subsection (b)(2) of this section,
and the requirements of subsection (c) of this section, shall not apply
to a loan that became a distressed loan before January 6, 1988, if the
borrower and lender of the loan are in the process of negotiating loan
restructuring with respect to the loan.
(l) Assistance in restructuring
Each Farm Credit Bank, on request of any production credit
association, may assist the association in restructuring loans under
this section.
(Pub. L. 92-181, title IV, 4.14A, as added Pub. L. 100-233, title I,
102(a), Jan. 6, 1988, 101 Stat. 1574, and amended Pub. L. 100-399, title
I, 102(a)-(f), Aug. 17, 1988, 102 Stat. 990.)
1988 -- Subsec. (a). Pub. L. 100-399, 102(a), struck out ''(other
than in sections 2205 and 2206 of this title)'' after ''in this part''.
Subsec. (a)(6)(B). Pub. L. 100-399, 102(b), substituted ''section
2015(b)(1)(B) of this title'' for ''section 2074(a)(2) of this title''
and ''section 2015(b)(1) of this title'' for ''section 2074(a) of this
title''.
Subsec. (e)(1). Pub. L. 100-399, 102(c), substituted ''cost to such
qualified'' for ''cost to a qualified''.
Subsec. (g)(1). Pub. L. 100-399, 102(d), substituted ''bank'' for
''farm credit district''.
Subsec. (g)(3). Pub. L. 100-399, 102(e), substituted ''bank board''
for ''district board''.
Subsec. (l). Pub. L. 100-399, 102(f), substituted ''Farm Credit
Bank'' for ''Federal intermediate credit bank''.
Amendment by section 102(b), (f) of Pub. L. 100-399 effective
immediately after amendment made by section 401 of Pub. L. 100-233,
which was effective 6 months after Jan. 6, 1988, and amendment by
section 102(a), (c)-(e) of Pub. L. 100-399 effective as if enacted
immediately after enactment of Pub. L. 100-233, which was approved Jan.
6, 1988, see section 1001 of Pub. L. 100-399, set out as a note under
section 2002 of this title.
Section 102(b) of Pub. L. 100-233 provided that: ''It is the sense
of Congress that the banks and associations (except banks for
cooperatives) operating under the Farm Credit Act of 1971 (12 U.S.C.
2001 et seq.) should administer distressed loans to farmers with the
objective of using the loan guarantee programs of the Farmers Home
Administration and other loan restructuring measures, including
participation in interest rate buy-down programs that are Federally or
State funded, and other Federal and State sponsored financial assistance
programs that offer relief to financially distressed farmers, as
alternatives to foreclosure, considering the availability and
appropriateness of such programs on a case-by-case basis.''
12 USC 2202b. Effect of restructuring on borrower stock
TITLE 12 -- BANKS AND BANKING
(a) Farm Credit Bank
If a Farm Credit Bank forgives and writes off, under section 2202a of
this title, any of the principal outstanding on a loan made to any
borrower, the Federal land bank association of which the borrower is a
member and stockholder shall cancel the same dollar amount of borrower
stock held by the borrower in respect of the loan, up to the total
amount of such stock, and, to the extent provided for in the bylaws of
the bank relating to its capitalization, the bank shall retire an equal
amount of stock owned by the Federal land bank association.
(b) Production credit association
If a production credit association forgives and writes off, under
section 2202a of this title, any of the principal outstanding on a loan
made to any borrower, the association shall cancel the same dollar
amount of borrower stock held by the borrower in respect of the loan, up
to the total amount of such stock.
(c) Retention of stock
Notwithstanding subsections (a) and (b) of this section, the borrower
shall be entitled to retain at least one share of stock to maintain the
borrower's membership and voting interest in the association.
(Pub. L. 92-181, title IV, 4.14B, as added Pub. L. 100-233, title I,
102(a), Jan. 6, 1988, 101 Stat. 1577, and amended Pub. L. 100-399, title
I, 102(g), Aug. 17, 1988, 102 Stat. 990.)
1988 -- Subsec. (a). Pub. L. 100-399 substituted in subsec. heading
''Farm Credit Bank'' for ''Federal land bank'' and in text ''a Farm
Credit Bank'' for ''a Federal land bank'' and '', to the extent provided
for in the bylaws of the bank relating to capitalization, the bank
shall'' for ''the Federal land bank shall''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2202c. Review of restructuring denials
TITLE 12 -- BANKS AND BANKING
(a) Requirements for restructuring by System institutions
(1) Existing nonaccrual loans
Within 9 months after a qualified lender is certified under section
2278a-4 of this title, such lender shall review each loan that has not
been previously restructured and that is in nonaccrual status on the
date the lender is certified, and determine whether to restructure the
loan.
(2) New nonaccrual loans
Within 6 months after a loan made by a certified lender is placed in
nonaccrual status, the lender shall determine whether to restructure the
loan.
(b) Special asset groups
(1) Establishment
Within 30 days after a qualified lender in a district is certified to
issue preferred stock under section 2278b-7 of this title, the Farm
Credit Bank board shall establish a special asset group that shall
review each determination by the lender not to restructure a loan.
(2) Restructuring plan
If a special asset group determines under paragraph (1) that a loan
under review should be restructured, the group shall prescribe a
restructuring plan for the loan that the qualified lender shall
implement.
(c) National Special Asset Council
(1) Establishment
A National Special Asset Council shall be established by the
Assistance Board to --
(A) monitor compliance with the restructuring requirements of this
section by qualified lenders certified to issue preferred stock under
section 2278b-7 of this title, and by special asset groups established
under subsection (b) of this section; and
(B) review a sample of determinations made by each special asset
group that a loan will not be restructured.
(2) Review of determination
The National Special Asset Council shall review a sufficient number
of determinations made by each special asset group to foreclose on any
loan to assure the Council that such group is complying with this
section. With regard to each determination reviewed, the Council shall
make an independent judgment on the merits of the decision to foreclose
rather than restructure the loan.
(3) Noncompliance
If the National Special Asset Council determines that any special
asset group is not in substantial compliance with this section, the
Council shall notify the group of the determination, and may take such
other action as the Council considers necessary to ensure that such
group complies with this section.
(d) Report
With respect to determinations by a special asset group that a loan
will not be restructured, the special asset group shall submit to the
National Special Asset Council a report evaluating the loan and the
basis for the determination that the loan should not be restructured.
(e) Restructuring factors
In determining whether a loan is to be restructured, the National
Special Asset Council, each special asset group, and each qualified
lender certified under section 2278a-4 of this title shall take into
consideration the factors specified in section 2202a(d)(1) of this
title.
(Pub. L. 92-181, title IV, 4.14C, as added Pub. L. 100-233, title I,
102(a), Jan. 6, 1988, 101 Stat. 1578, and amended Pub. L. 100-399, title
I, 102(h), Aug. 17, 1988, 102 Stat. 990.)
1988 -- Subsec. (b)(1). Pub. L. 100-399 substituted ''Farm Credit
Bank board'' for ''district board of such district''.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2202d. Protection of borrowers who meet all loan obligations
TITLE 12 -- BANKS AND BANKING
(a) Foreclosure prohibited
A qualified lender may not foreclose on any loan because of the
failure of the borrower thereof to post additional collateral, if the
borrower has made all accrued payments of principal, interest, and
penalties with respect to the loan.
(b) Prohibition against required principal reduction
A qualified lender may not require any borrower to reduce the
outstanding principal balance of any loan made to the borrower by any
amount that exceeds the regularly scheduled principal installment
payment (when due and payable), unless --
(1) the borrower sells or otherwise disposes of part or all of the
collateral; or
(2) the parties agree otherwise in a written agreement entered into
by the parties.
(c) Nonenforcement
After a borrower has made all accrued payments of principal,
interest, and penalties with respect to a loan made by a qualified
lender, the lender shall not enforce acceleration of the borrower's
repayment schedule due to the borrower having not timely made one or
more principal or interest payments.
(d) Placing loans in nonaccrual status
(1) Notification
If a qualified lender places any loan in nonaccrual status, the
lender shall document such change of status and promptly notify the
borrower thereof in writing of such action and the reasons therefor.
(2) Review of denial
If the borrower was not delinquent in any principal or interest
payment under the loan at the time of such action and the borrower's
request to have the loan placed back into accrual status is denied, the
borrower may obtain a review of such denial before the appropriate
credit review committee under section 2202 of this title.
(3) Application
This subsection shall only apply if a loan being placed in nonaccrual
status results in an adverse action being taken against the borrower.
(Pub. L. 92-181, title IV, 4.14D, as added Pub. L. 100-233, title I,
107, Jan. 6, 1988, 101 Stat. 1581.)
12 USC 2202e. Waiver of mediation rights by borrowers
TITLE 12 -- BANKS AND BANKING
No System institution may make a loan secured by a mortgage or lien
on agricultural property to a borrower on the condition that the
borrower waive any right under the agricultural loan mediation program
of any State.
(Pub. L. 92-181, title IV, 4.14E, as added Pub. L. 100-233, title V,
511, Jan. 6, 1988, 101 Stat. 1664.)
12 USC Part D -- Activities of Institutions of the System
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title VIII, 805(t)(1), Jan. 6, 1988, 101
Stat. 1716, added heading for part D.
12 USC 2203. Nomination of association directors; representative
selection of nominees
TITLE 12 -- BANKS AND BANKING
Each production credit association and each Federal land bank
association shall elect a nominating committee by vote of the
stockholders at the annual meeting to serve for the following year.
Each nominating committee shall review lists of farmers from the
association territory, determine their willingness to serve, and submit
for election a slate of eligible candidates which shall include at least
two nominees for each elective office to be filled. In doing so, the
committee shall endeavor to assure representation to all sections of the
association territory and as nearly as possible to all types of
agriculture practiced within the area. Employees of the association
shall not be eligible to be nominated, elected, or serve as a member of
the board. Nominations shall also be accepted from the floor. Members
of the board are not eligible to serve on the nominating committee.
Regulations of the Farm Credit Administration governing the election of
bank directors shall similarly assure a choice of two nominees for each
elective office to be filled and that the bank board represent as nearly
as possible all types of agriculture in the district.
(Pub. L. 92-181, title IV, 4.15, Dec. 10, 1971, 85 Stat. 613; Pub.
L. 100-399, title IX, 901(g), Aug. 17, 1988, 102 Stat. 1007.)
1988 -- Pub. L. 100-399 substituted ''bank directors'' for
''district directors'' and ''bank board'' for ''district board''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2204. Tax-exempt guarantees prohibited
TITLE 12 -- BANKS AND BANKING
Notwithstanding any other provision of this chapter, no guarantee
shall be made on any instrument of indebtedness the income from which is
exempt in whole or in part from Federal taxation.
(Pub. L. 92-181, title IV, 4.16, Dec. 10, 1971, 85 Stat. 613.)
12 USC 2205. Interest rates
TITLE 12 -- BANKS AND BANKING
Interest rates on loans from institutions of the Farm Credit System
shall not be subject to any interest rate limitation imposed by any
State constitution or statute or other laws. Such limitation is
preempted for purposes of this chapter. Interest rates on loans made by
agricultural credit corporations organized in conjunction with
cooperative associations for the purpose of financing the ordinary crop
operations of the members of such associations or other producers and
eligible to discount with the Federal intermediate credit banks and Farm
Credit Banks shall be exempt from any interest rate limitation imposed
by any State constitution or statute or other laws which are hereby
preempted for purposes of this chapter.
(Pub. L. 92-181, title IV, 4.17, as added Pub. L. 96-592, title IV,
403, Dec. 24, 1980, 94 Stat. 3446, and amended Pub. L. 99-205, title II,
205(f)(6), Dec. 23, 1985, 99 Stat. 1706; Pub. L. 99-509, title I, 1035,
Oct. 21, 1986, 100 Stat. 1878; Pub. L. 100-399, title IX, 901( h), Aug.
17, 1988, 102 Stat. 1007.)
1988 -- Pub. L. 100-399 substituted ''and Farm Credit Banks'' for
''pursuant to section 2074 of this title''.
1986 -- Pub. L. 99-509 substituted first two sentences for former
first sentence which read as follows: ''Interest rates on loans from
institutions of the Farm Credit System shall be determined with the
approval of, as provided in section 2252(a)(5) of this title, the Farm
Credit Administration as provided in this chapter, notwithstanding any
interest rate limitation imposed by any State constitution or statute or
other laws which are hereby preempted for purposes of this chapter.''
1985 -- Pub. L. 99-205 inserted '', as provided in section 2252(a)(
5) of this title,'' after ''with the approval of'' in first sentence.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2206. Participation loans
TITLE 12 -- BANKS AND BANKING
Notwithstanding any other provisions of this chapter, the terms of
any loan participated in by two or more Farm Credit System institutions
operating under different subchapters of this chapter, including
provisions for capitalization of the portion of the loan participated in
by each institution, shall be as may be agreed upon among such
institutions and authorized under regulations issued by the Farm Credit
Administration, except that for purposes of determining borrower
eligibility, membership, term, amount, loan security, and purchase of
stock or participation certificates by the borrower, the provisions of
law applicable to the loan shall be the provisions in the subchapter
under which the institution that originates the loan operates.
(Pub. L. 92-181, title IV, 4.18, as added Pub. L. 96-592, title IV,
403, Dec. 24, 1980, 94 Stat. 3446, and amended Pub. L. 99-205, title II,
205(f)(7), Dec. 23, 1985, 99 Stat. 1706.)
1985 -- Pub. L. 98-205 inserted ''under regulations issued'' after
''authorized''.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2207. Young, beginning, and small farmers and ranchers
TITLE 12 -- BANKS AND BANKING
(a) Under policies of the district Farm Credit Bank board, each
Federal land bank association and production credit association shall
prepare a program for furnishing sound and constructive credit and
related services to young, beginning, and small farmers and ranchers.
Such programs shall assure that such credit and services are available
in coordination with other units of the Farm Credit System serving the
territory and with other governmental and private sources of credit.
Each program shall be subject to review and approval by the supervising
bank.
(b) The Farm Credit Bank for each district shall annually obtain from
associations under its supervision reports of activities under programs
developed pursuant to subsection (a) of this section and progress toward
program objectives. On the basis of such reports, the bank shall
provide to the Farm Credit Administration an annual report summarizing
the operations and achievements in its district under such programs.
(Pub. L. 92-181, title IV, 4.19, as added Pub. L. 96-592, title IV,
403, Dec. 24, 1980, 94 Stat. 3446, and amended Pub. L. 100-399, title
IX, 901(i), (j), Aug. 17, 1988, 102 Stat. 1007.)
1988 -- Subsec. (a). Pub. L. 100-399, 901(i), inserted ''Farm Credit
Bank'' after ''district''.
Subsec. (b). Pub. L. 100-399, 901(j)(1), (2), (4), (5), substituted
''The Farm Credit Bank for each district'' for ''The Federal land bank
and the Federal intermediate credit bank for each district'', ''under
its supervision'' for ''under their supervision'', ''the bank shall''
for ''the banks shall'', ''an annual report'' for ''a joint annual
report'', and ''achievements in its district'' for ''achievements in
their district''.
Pub. L. 100-399, 901(j)(3), substituted ''subsection (a)'' for
''subsection (a) of this section'', which for purposes of codification
was translated as ''subsection (a) of this section'', requiring no
change in text.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2208. Prohibition against use of signed ballots
TITLE 12 -- BANKS AND BANKING
In any election or merger vote, or other proceeding subject to a vote
of the stockholders (or subscribers to the guaranty fund of a bank for
cooperatives), conducted by a lending institution of the Farm Credit
System, the institution --
(1) may not use signed ballots; and
(2) shall implement measures to safeguard the voting process for the
protection of the right of stockholders (or subscribers) to a secret
ballot.
(Pub. L. 92-181, title IV, 4.20, as added Pub. L. 96-592, title IV,
403, Dec. 24, 1980, 94 Stat. 3447, and amended Pub. L. 100-233, title
IV, 425, Jan. 6, 1988, 101 Stat. 1657.)
1988 -- Pub. L. 100-233 amended section generally. Prior to
amendment, section read as follows: ''The provisions of (1) section
2074 of this title authorizing the Federal intermediate credit banks to
lend to or discount paper for other financial institutions, and (2)
section 2128(b) of this title authorizing the financing of certain
domestic or foreign entities in connection with the import or export
activities of cooperatives which are borrowers from the banks for
cooperatives, shall expire on September 30, 1990, unless extended by Act
of Congress prior to that date. Any contract or agreement entered into
under the authority of either provision prior to its expiration shall
remain in full force and effect notwithstanding such expiration.''
12 USC 2209. Compensation of directors
TITLE 12 -- BANKS AND BANKING
No member of the board of directors of a System bank may receive more
than $15,000 per year under this chapter as compensation for serving as
a director of such bank.
(Pub. L. 92-181, title IV, 4.21, as added Pub. L. 100-399, title IV,
414, Aug. 17, 1988, 102 Stat. 1004.)
Section effective immediately after amendment made by section 401 of
Pub. L. 100-233, which was effective 6 months after Jan. 6, 1988, see
section 1001(b) of Pub. L. 100-399, set out as an Effective Date of
1988 Amendment note under section 2002 of this title.
12 USC Part E -- Service Organizations
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-233, title VIII, 805(t)(2), Jan. 6, 1988, 101
Stat. 1716, redesignated part D as E.
12 USC 2211. Establishment
TITLE 12 -- BANKS AND BANKING
Any bank of the Farm Credit System, or two or more of such banks
acting together, may organize a corporation or corporations for the
purpose of performing functions and services for or on behalf of the
organizing bank or banks that the bank or banks may perform pursuant to
this chapter: Provided, That a corporation so organized shall have no
authority either to extend credit or provide insurance services for
borrowers from Farm Credit System institutions, nor shall it have any
greater authority with respect to functions and services than the
organizing bank or banks possess under this chapter. The organizing
bank or banks shall apply for a Federal charter for the corporation by
forwarding to the Farm Credit Administration a statement of the need for
the corporation and proposed articles specifying in general terms the
objectives for which the corporation is formed, the powers to be
exercised by it in carrying out the functions and services, and the
territory it is to serve. The Farm Credit Administration for good cause
may deny the charter applied for. Upon the approval of articles by the
Farm Credit Administration and the issuance of a charter, the
corporation shall become as of such date a federally chartered body
corporate and an instrumentality of the United States.
(Pub. L. 92-181, title IV, 4.25, as added Pub. L. 96-592, title IV,
404, Dec. 24, 1980, 94 Stat. 3447, and amended Pub. L. 99-205, title II,
205(f)(8), Dec. 23, 1985, 99 Stat. 1706.)
1985 -- Pub. L. 99-205 struck out ''the Governor of'' before ''the
Farm Credit Administration'' in second sentence and substituted ''Farm
Credit Administration'' for ''Governor'' in third and fourth sentences.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2212. Powers of Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration shall have power, under rules and
regulations prescribed by the Farm Credit Administration, to provide for
the organization of any corporation chartered under this part and the
territory within which its operations may be carried on, and to approve
amendments consistent with this chapter to charters or articles of
service corporations.
(Pub. L. 92-181, title IV, 4.26, as added Pub. L. 96-592, title IV,
404, Dec. 24, 1980, 94 Stat. 3447, and amended Pub. L. 99-205, title II,
205(f)(9), Dec. 23, 1985, 99 Stat. 1706; Pub. L. 100-233, title VIII,
802(s), Jan. 6, 1988, 101 Stat. 1712.)
1988 -- Pub. L. 100-233 struck out ''or by prescribing in the terms
of the charter or by approval of the bylaws of the corporation'' after
second reference to Farm Credit Administration, substituted ''approve
amendments consistent with this chapter to charters or articles of
service corporations'' for ''direct at any time such changes in its
charter as the Farm Credit Administration finds necessary for the
accomplishment of the purposes of this chapter'', and struck out last
sentence which read as follows: ''The powers of the Farm Credit
Administration to provide for the organization of any corporation
chartered under this part include, but are not limited to approval of --
''(1) corporate title;
''(2) general corporate powers;
''(3) eligibility for membership on, and the powers, composition,
selection, terms, and compensation of the board of directors;
''(4) classes, issuance, value, and retirement of stock;
''(5) sources of operating funds;
''(6) dissolution, liquidation, and distribution of assets on
liquidation; and
''(7) application and distribution of earnings.''
1985 -- Pub. L. 99-205 substituted ''Farm Credit Administration''
for ''Governor'' in heading and wherever appearing in text, and
substituted ''the Federal Credit Administration'' for ''he'' before
''finds necessary'' in first sentence.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2213. Regulation and examination
TITLE 12 -- BANKS AND BANKING
The corporations organized under this part shall be institutions of
the Farm Credit System and shall be subject to the same regulation and
examination by the Farm Credit Administration as are the organizing bank
or banks under this chapter.
(Pub. L. 92-181, title IV, 4.27, as added Pub. L. 96-592, title IV,
404, Dec. 24, 1980, 94 Stat. 3447, and amended Pub. L. 99-205, title II,
205(f)(10), Dec. 23, 1985, 99 Stat. 1706; Pub. L. 100-233, title VIII,
802(t), Jan. 6, 1988, 101 Stat. 1712.)
1988 -- Pub. L. 100-233 substituted ''Regulation'' for
''Supervision'' in section catchline.
1985 -- Pub. L. 99-205 substituted ''regulation'' for
''supervision''.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2214. State laws
TITLE 12 -- BANKS AND BANKING
State and other laws shall apply to corporations organized pursuant
to this part to the same extent such laws would apply to the organizing
banks engaged in the same activity in the same jurisdiction: Provided,
however, That to the extent that sections 2023, 2098, and 2134 of this
title may exempt banks or associations of the Farm Credit System from
taxation, such exemptions, other than with respect to franchise taxes,
shall not extend to corporations organized pursuant to this part.
(Pub. L. 92-181, title IV, 4.28, as added Pub. L. 96-592, title IV,
404, Dec. 24, 1980, 94 Stat. 3448, and amended Pub. L. 100-399, title
IX, 901(k), Aug. 17, 1988, 102 Stat. 1007; Pub. L. 102-237, title V,
502(g), Dec. 13, 1991, 105 Stat. 1869.)
1991 -- Pub. L. 102-237 made technical amendment to reference to
section 2098 of this title to reflect change in reference to
corresponding section of original act.
1988 -- Pub. L. 100-399 inserted ''or associations'' and substituted
''2023, 2098,'' for ''2055, 2079,''.
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC Part D1 -- Farm Credit System Capital Corporation
TITLE 12 -- BANKS AND BANKING
12 USC 2216 to 2216k. Repealed. Pub. L. 100-233, title II, 207(a)( 3),
Jan. 6, 1988, 101 Stat. 1607
TITLE 12 -- BANKS AND BANKING
Section 2216, Pub. L. 92-181, title IV, 4.28A, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1680, provided for
chartering of Farm Credit System Capital Corporation by Farm Credit
Administration and revoked charter of Farm Credit System Capital
Corporation which had been issued under part D of this subchapter. See
sections 2278a et seq. and 2278b et seq. of this title.
Section 2216a, Pub. L. 92-181, title IV, 4.28B, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1680, set out purposes
of Capital Corporation. See sections 2278a-1 and 2278b-1 of this title.
Section 2216b, Pub. L. 92-181, title IV, 4.28C, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1680, provided for Board
of Directors of Capital Corporation. See sections 2278a-2 and 2278b-2
of this title.
Section 2216c, Pub. L. 92-181, title IV, 4.28D, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1682, provided for
compensation of members of Board of Directors of Capital Corporation.
See sections 2278a-2 and 2278b-2 of this title.
Section 2216d, Pub. L. 92-181, title IV, 4.28E, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1682, authorized Board
of Directors of Capital Corporation to adopt rules. See sections
2278a-2 and 2278b-2 of this title.
Section 2216e, Pub. L. 92-181, title IV, 4.28F, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1682, provided for
selection of chief executive officer of Capital Corporation. See
sections 2278a-2 and 2278b-2 of this title.
Section 2216f, Pub. L. 92-181, title IV, 4.28G, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1682, enumerated
corporate powers of Capital Corporation. See sections 2278a-3 and
2278b-4 of this title.
Section 2216g, Pub. L. 92-181, title IV, 4.28H, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1685, provided for
succession of Capital Corporation. See section 2278a-9 of this title.
Section 2216h, Pub. L. 92-181, title IV, 4.28I, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1685, set out provisions
limiting powers of Capital Corporation. See section 2278a-8 of this
title.
Section 2216i, Pub. L. 92-181, title IV, 4.28J, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1686, set out authority
of Secretary of the Treasury. See section 2278b-6 of this title.
Section 2216j, Pub. L. 92-181, title IV, 4.28K, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1687, provided for
initial capitalization of Capital Corporation.
Section 2216k, Pub. L. 92-181, title IV, 4.28L, as added Pub. L.
99-205, title I, 103, Dec. 23, 1985, 99 Stat. 1687, provided for tax
status of consolidated obligations. See sections 2278a-11 and 2278b-10
of this title.
Repeal effective 15 days after Jan. 6, 1988, see section 207(b) of
Pub. L. 100-233, set out as a note under section 2152 of this title.
12 USC Part F -- Sale of Insurance
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-399, title VII, 702(c), Aug. 17, 1988, 102
Stat. 1006, redesignated part G as F.
Pub. L. 100-233, title VIII, 805(u), Jan. 6, 1988, 101 Stat. 1716,
redesignated part E as G.
12 USC 2218. Lines of insurance
TITLE 12 -- BANKS AND BANKING
(a) Regulatory authorization
(1) The regulations of the Farm Credit Administration governing
financially related services that the banks and associations of the Farm
Credit System may provide under subchapters I and II of this chapter may
authorize the sale to any member of or borrower from any such bank or
association, on an optional basis, of credit or term life and credit
disability insurance appropriate to protect the loan commitment in the
event of death or disability of the debtors and other insurance
necessary to protect the member's farm or aquatic unit, but limited to,
hail and multiple-peril crop insurance, title insurance, and insurance
to protect the facilities and equipment of aquatic borrowers. A member
or borrower shall have the option, without coercion from the bank or
association of such member or borrower, to accept or reject such
insurance.
(2) In making insurance available through private insurers, the banks
shall approve the programs of more than two insurers for each type of
insurance offered in the district, if more than two insurers for each
type of insurance have proposed programs to a bank that will, in all
likelihood, have long-term viability and meet the requirements of
subsection (b)(2)(D) of this section. The banks may provide comparative
information relating to costs and quality of approved programs and the
financial conditions of approved companies. Associations shall offer at
least two insurers for each program from among those approved by the
Farm Credit Banks, if at least two insurers have been approved in
accordance with this paragraph.
(b) Contents of regulations
Such regulations shall provide that --
(1) in any case in which insurance is required as a condition for a
loan or other financial assistance from a bank or association, notice be
given that it is not necessary to purchase the insurance from the bank
or association and that the borrower has the option of obtaining the
insurance elsewhere;
(2) such insurance services may be offered only if --
(A) the bank or association has the capacity to render insurance
service under this chapter in an effective and efficient manner;
(B) there exists the probability that any insurance program under
this chapter will generate sufficient revenue to cover all costs;
(C) rendering insurance service will not have an adverse effect on
the bank's or association's credit or other operations;
(D) the insurance program has been approved by the bank or
association from among specific programs made available to it by
insurers --
(i) meeting reasonable financial and quality of service standards;
and
(ii) licensed under State law to do business in the State; and
(E) in making insurance available through approved insurers, the
board of directors of the association or bank selects and offers at
least two approved insurers for each type of insurance made available to
the members and borrowers, if at least two insurers have been approved
in accordance with subsection (a)(2) of this section; and
(3) no bank or association shall directly or indirectly discriminate
in any manner against any agent, broker, or insurer that is not
affiliated with such bank or association, or against any party who
purchases insurance through any such nonaffiliated insurance agent,
broker, or insurer.
(c) Continuation of existing coverage
Notwithstanding any provision of this section to the contrary, any
bank or association that on December 24, 1980, is offering insurance
coverages not authorized by this section may continue to sell such
coverages for a period of not more than one year from such date and may
continue to service such coverages until their expiration.
(Pub. L. 92-181, title IV, 4.29, as added Pub. L. 96-592, title IV,
404, Dec. 24, 1980, 94 Stat. 3448, and amended Pub. L. 100-233, title
IV, 422(a), Jan. 6, 1988, 101 Stat. 1655; Pub. L. 100-399, title IV,
411, Aug. 17, 1988, 102 Stat. 1003; Pub. L. 101-624, title XVIII, 1834,
Nov. 28, 1990, 104 Stat. 3833.)
1990 -- Subsec. (a)(2). Pub. L. 101-624, 1834(1), inserted '', if
more than two insurers for each type of insurance have proposed programs
to a bank that will, in all likelihood, have long-term viability and
meet the requirements of subsection (b)(2)(D) of this section'' before
period at end of first sentence, and '', if at least two insurers have
been approved in accordance with this paragraph'' before period at end
of third sentence.
Subsec. (b)(2)(E). Pub. L. 101-624, 1834(2), inserted before
semicolon at end '', if at least two insurers have been approved in
accordance with subsection (a)(2) of this section''.
1988 -- Subsec. (a). Pub. L. 100-233, 422(a)(1), designated existing
provisions as par. (1), struck out ''of this Act'' to conform to style
of original enactment, resulting in no change in text, inserted ''or
borrower from'' before ''any such bank'', inserted provision at end
giving a member or borrower the option, without coercion from the bank
or association of such member or borrower, to accept or reject such
insurance, and added par. (2).
Subsec. (a)(1). Pub. L. 100-399, 411(a), substituted ''subchapters I
and II of this chapter'' for ''sections 2019, 2033, 2076, and 2097 of
this title''.
Subsec. (a)(2). Pub. L. 100-399, 411(b), substituted ''Farm Credit
Banks'' for ''Federal intermediate credit banks''.
Subsec. (b)(2). Pub. L. 100-233, 422(a)(2), redesignated cls. (i) to
(iii) as subpars. (A) to (C), respectively, and added subpars. (D) and
(E).
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Section 422(b) of Pub. L. 100-233 provided that: ''Notwithstanding
the amendments made to section 4.29 (12 U.S.C. 2218) by subsection (a),
any insurance program offered by any bank or association of the Farm
Credit System on the date of the enactment of this Act (Jan. 6, 1988)
that does not meet the requirements of section 4.29, as so amended, may
be continued until July 1, 1988.''
12 USC Part G -- Miscellaneous
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-399, title VII, 702(c), Aug. 17, 1988, 102
Stat. 1006, redesignated part H as G.
Pub. L. 100-233, title VIII, 805(u), Jan. 6, 1988, 101 Stat. 1716,
redesignated part F as H.
12 USC 2219. Limitation on separate sale
TITLE 12 -- BANKS AND BANKING
If real property is acquired by any institution of the Farm Credit
System through foreclosure, no institution of the Farm Credit System
shall sell the surface rights to that real property to any person unless
the institution also sells all mineral rights to that real property to
that person.
(Pub. L. 92-181, title IV, 4.35, as added Pub. L. 99-205, title III,
306, Dec. 23, 1985, 99 Stat. 1709.)
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2219a. Right of first refusal
TITLE 12 -- BANKS AND BANKING
(a) General rule
Agricultural real estate that is acquired by an institution of the
System as a result of a loan foreclosure or a voluntary conveyance by a
borrower (hereinafter in this section referred to as the ''previous
owner'') who, as determined by the institution, does not have the
financial resources to avoid foreclosure (hereinafter in this section
referred to as ''acquired real estate'') shall be subject to the right
of first refusal of the previous owner to repurchase or lease the
property, as provided in this section.
(b) Application of right of first refusal to sale of property
(1) Election to sell and notification
Within 15 days after an institution of the System first elects to
sell acquired real estate, or any portion of such real estate, the
institution shall notify the previous owner by certified mail of the
owner's right --
(A) to purchase the property at the appraised fair market value of
the property, as established by an accredited appraiser; or
(B) to offer to purchase the property at a price less than the
appraised value.
(2) Eligibility to purchase
To be eligible to purchase the property under paragraph (1), the
previous owner must, within 30 days after receiving the notice required
by such paragraph, submit an offer to purchase the property.
(3) Mandatory sale
An institution of the System receiving an offer from the previous
owner to purchase the property at the appraised value shall, within 15
days after the receipt of such offer, accept such offer and sell the
property to the previous owner.
(4) Permissive sale
An institution of the System receiving an offer from the previous
owner to purchase the property at a price less than the appraised value
may accept such offer and sell the property to the previous owner.
Notice shall be provided to the previous owner of the acceptance or
rejection of such offer within 15 days after the receipt of such offer.
(5) Rejection of offer of previous owner
(A) Duties of institution
An institution of the System that rejects an offer from the previous
owner to purchase the property at a price less than the appraised value
may not sell the property to any other person --
(i) at a price equal to, or less than, that offered by the previous
owner; or
(ii) on different terms and conditions than those that were extended
to the previous owner,
without first affording the previous owner an opportunity to purchase
the property at such price or under such terms and conditions.
(B) Notice
Notice of the opportunity in subparagraph (A) shall be provided to
the previous owner by certified mail, and the previous owner shall have
15 days in which to submit an offer to purchase the property at such
price or under such terms and conditions.
(c) Application of right of first refusal to leasing of property
(1) Election to lease and notification
Within 15 days after an institution of the System first elects to
lease acquired real estate, or any portion of such real estate, the
institution shall notify the previous owner by certified mail of the
owner's right --
(A) to lease the property at a rate equivalent to the appraised
rental value of the property, as established by an accredited appraiser;
or
(B) to offer to lease the property at a rate that is less than the
appraised rental value of the property.
(2) Eligibility to lease
To be eligible to lease the property under paragraph (1), the
previous owner must, within 15 days after receiving the notice required
by such paragraph, submit an offer to lease the property.
(3) Mandatory lease
An institution of the System receiving an offer from the previous
owner to lease the property at a rate equivalent to the appraised rental
value of the property shall, within 15 days after the receipt of such
offer, accept such offer and lease the property to the previous owner
unless the institution determines that the previous owner --
(A) does not have the resources available to conduct a successful
farming or ranching operation; or
(B) cannot meet all of the payments, terms, and conditions of such
lease.
(4) Permissive lease
An institution of the System receiving an offer from the previous
owner to lease the property at a rate that is less than the appraised
rental value of the property may accept such offer and lease the
property to the previous owner.
(5) Notice to previous owner
An institution of the System receiving an offer from the previous
owner to lease the property at a rate less than the appraised rental
value of the property shall notify the previous owner of its acceptance
or rejection of the offer within 15 days after the receipt of such
offer.
(6) Rejection of offer of previous owner
(A) Duties of institution
An institution of the System rejecting an offer from the previous
owner to lease the property at a rate less than the appraised rental
value of the property may not lease the property to any other person --
(i) at a rate equal to or less than that offered by the previous
owner; or
(ii) on different terms and conditions than those that were extended
to the previous owner,
without first affording the previous owner an opportunity to lease
the property at such rate or under such terms and conditions.
(B) Notice
Notice of the opportunity described in subparagraph (A) shall be
given to the previous owner by certified mail, and the previous owner
shall have 15 days after the receipt of such notice in which to agree to
lease the property at such rate or under such terms and conditions.
(d) Public offerings
(1) Notification of previous owner
If an institution of the System elects to sell or lease acquired
property or a portion thereof through a public auction, competitive
bidding process, or other similar public offering, the institution shall
notify the previous owner, by certified mail, of the availability of the
property. Such notice shall contain the minimum amount, if any,
required to qualify a bid as acceptable to the institution and any terms
and conditions to which such sale or lease will be subject.
(2) Priority
If two or more qualified bids in the same amount are received by the
institution under paragraph (1), such bids are the highest received, and
one of the qualified bids is offered by the previous owner, the
institution shall accept the offer by the previous owner.
(3) Nondiscrimination
No institution of the System may discriminate against a previous
owner in any public auction, competitive bidding process, or other
similar public offering of property acquired by the institution from
such person.
(e) Term or condition
For the purposes of this section, financing by a System institution
shall not be considered to be a term or condition of a sale of acquired
real estate.
(f) Financing
Notwithstanding any other provision of this section, a System
institution shall not be required to provide financing to the previous
owner in connection with the sale of acquired real estate.
(g) Mailing of notice
Notwithstanding any other provision of this section, each certified
mail notice requirement in this section shall be fully satisfied by
mailing one certified mail notice to the last known address of the
previous owner.
(h) State laws
The rights provided in this section shall not diminish any such right
of first refusal under the law of the State in which the property is
located.
(i) Applicability
This section shall not apply to a bank for cooperatives.
(Pub. L. 92-181, title IV, 4.36, as added Pub. L. 99-205, title III,
306, Dec. 23, 1985, 99 Stat. 1709, and amended Pub. L. 100-233, title I,
108, Jan. 6, 1988, 101 Stat. 1582; Pub. L. 100-399, title I, 104, Aug.
17, 1988, 102 Stat. 990.)
1988 -- Pub. L. 100-233 amended section generally. Prior to
amendment, section read as follows: ''No institution of the Farm Credit
System shall sell any real property that previously served as security
for a loan in a tract larger than a normal family size farm in the
vicinity of the property for less than the amount it can receive from
the Capital Corporation.''
Subsec. (b)(2). Pub. L. 100-399, 104(a), substituted ''30'' for
''15''.
Subsec. (b)(3). Pub. L. 100-399, 104(b), substituted ''15'' for
''30''.
Subsec. (g). Pub. L. 100-399, 104(c), substituted ''previous owner''
for ''former borrower''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2219b. Application of uninsured accounts
TITLE 12 -- BANKS AND BANKING
(a) In general
Money of a borrower held by a Farm Credit System institution in an
uninsured voluntary or involuntary account as authorized under
regulations issued by the Farm Credit Administration (as in effect
immediately before January 6, 1988), including all such other accounts
known as ''advanced payment accounts'' or ''future prepayment accounts''
shall, in the event the institution is placed in liquidation, be
immediately applied as payment against the indebtedness of any
outstanding loans of such borrower.
(b) Regulations
The Farm Credit Administration shall promulgate regulations --
(1) that define the term ''uninsured voluntary or involuntary
account''; and
(2) to otherwise effectively carry out this section.
(Pub. L. 92-181, title IV, 4.37, as added Pub. L. 100-233, title I,
110, Jan. 6, 1988, 101 Stat. 1585.)
Another section 4.37 of Pub. L. 92-181 was renumbered section 4.38
and is classified to section 2219c of this title.
12 USC 2219c. Affirmative action
TITLE 12 -- BANKS AND BANKING
The Assistance Board established under section 2278a of this title
and all institutions of the Farm Credit System with more than 20
employees shall establish and maintain an affirmative action program
plan that applies the affirmative action standards otherwise applied to
contractors of the Federal Government.
(Pub. L. 92-181, title IV, 4.38, formerly 4.37, as added Pub. L.
100-233, title IV, 427, Jan. 6, 1988, 101 Stat. 1657, and renumbered
4.38, Pub. L. 100-399, title IV, 413, Aug. 17, 1988, 102 Stat. 1004.)
12 USC 2219d. Encouragement of conservation practices
TITLE 12 -- BANKS AND BANKING
At the time a System institution or an agricultural mortgage loan
originator (as defined in section 2279aa(7) of this title) approves a
loan made to a borrower that, in the opinion of the institution or
originator, would be ineligible for a loan made, insured, or guaranteed
under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et
seq.) by reason of subtitle B or C of title XII of the Food Security Act
of 1985 (16 U.S.C. 3811 et seq.), the institution or originator, as the
case may be, shall encourage the borrower to contact the Department of
Agriculture Soil Conservation Service to obtain information about soil
conservation methods and practices.
(Pub. L. 92-181, title IV, 4.39, formerly 4.38, as added Pub. L.
100-233, title IV, 428, Jan. 6, 1988, 101 Stat. 1658, and renumbered
4.39, Pub. L. 100-399, title IV, 413, Aug. 17, 1988, 102 Stat. 1004.)
The Consolidated Farm and Rural Development Act, referred to in text,
is title III of Pub. L. 87-128, Aug. 8, 1961, 75 Stat. 307, as
amended, which is classified principally to chapter 50 ( 1921 et seq.)
of Title 7, Agriculture. For complete classification of this Act to the
Code, see Short Title note set out under section 1921 of Title 7 and
Tables.
The Food Security Act of 1985, referred to in text, is Pub. L.
99-198, Dec. 23, 1985, 99 Stat. 1354, as amended. Subtitles B and C
of title XII of the Food Security Act are classified generally to
subchapters II ( 3811 et seq.) and III ( 3821 et seq.), respectively, of
chapter 58 of Title 16, Conservation. For complete classification of
this Act to the Code, see Short Title of 1985 Amendment note set out
under section 1281 of Title 7 and Tables.
12 USC SUBCHAPTER V -- FARM CREDIT ADMINISTRATION ORGANIZATION
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-399, title IX, 901(o), (p), Aug. 17, 1988, 102
Stat. 1008, struck out ''DISTRICT AND'' before ''FARM'' in subchapter
heading and struck out part A heading ''District Organization''.
12 USC (Part A -- Repealed)
TITLE 12 -- BANKS AND BANKING
12 USC 2221. Transferred
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title V, 5.0, Dec. 10, 1971, 85 Stat. 614;
Pub. L. 96-592, title V, 501, Dec. 24, 1980, 94 Stat. 3448; Pub. L.
99-205, title II, 205(g)(1), Dec. 23, 1985, 99 Stat. 1706; Pub. L.
100-233, title VIII, 805(v), Jan. 6, 1988, 101 Stat. 1716; Pub. L.
100-399, title IX, 901(q), (r), Aug. 17, 1988, 102 Stat. 1008, which
related to creation of districts, was transferred to section 1.2(b) of
Pub. L. 92-181 by section 901(r) of Pub. L. 100-399 and is classified
to section 2002(b) of this title.
12 USC 2222 to 2227. Repealed. Pub. L. 100-399, title IV, 409(d), Aug.
17, 1988, 102 Stat. 1003
TITLE 12 -- BANKS AND BANKING
Sections 2222 to 2227 were directed to be repealed by Pub. L.
100-233, title IV, 418(c), formerly 415(c), Jan. 6, 1988, 101 Stat.
1653, renumbered 418(c), Pub. L. 100-399, title IV, 409(a), Aug. 17,
1988, 102 Stat. 1003, which was repealed by section 409(c) of Pub. L.
100-399, title IV, Aug. 17, 1988, 102 Stat. 1003.
Section 409(c) of Pub. L. 100-399 provided in part that section
418(c) of Pub. L. 100-233 is repealed and that this chapter shall be
applied and administered, and the amendments by sections 430 and 802(u)
of Pub. L. 100-233 (amending sections 2226 and 2223, respectively, of
this title) shall take effect, as if such section 418(c) had not been
enacted.
Section 2222, Pub. L. 92-181, title V, 5.1, Dec. 10, 1971, 85 Stat.
614; Pub. L. 99-205, title II, 205(g)(2), Dec. 23, 1985, 99 Stat.
1707, related to district boards of directors, membership, eligibility,
and terms.
Section 2223, Pub. L. 92-181, title V, 5.2, Dec. 10, 1971, 85 Stat.
614; Pub. L. 96-592, title V, 502, Dec. 24, 1980, 94 Stat. 3449;
Pub. L. 99-205, title II, 205(g)(3), (4), title VI, 607, Dec. 23, 1985,
99 Stat. 1707, 1712; Pub. L. 100-233, title VIII, 802(u), Jan. 6,
1988, 101 Stat. 1712, related to nomination and election of district
directors.
Section 2224, Pub. L. 92-181, title V, 5.3, Dec. 10, 1971, 85 Stat.
615, related to functions of district directors.
Section 2225, Pub. L. 92-181, title V, 5.4, Dec. 10, 1971, 85 Stat.
615, related to district board officers.
Section 2226, Pub. L. 92-181, title V, 5.5, Dec. 10, 1971, 85 Stat.
616; Pub. L. 100-233, title IV, 430, Jan. 6, 1988, 101 Stat. 1658,
related to compensation of district boards.
Section 2227, Pub. L. 92-181, title V, 5.6, Dec. 10, 1971, 85 Stat.
616; 1978 Reorg. Plan No. 2, 102, 43 F.R. 36037, 92 Stat. 3784;
Pub. L. 99-205, title II, 205(g)(5), Dec. 23, 1985, 99 Stat. 1707,
related to powers of district farm credit board.
Repeal effective immediately after amendments made by section 401 of
Pub. L. 100-233, which were effective 6 months after Jan. 6, 1988, see
section 1001(b) of Pub. L. 100-399, set out as an Effective Date of
1988 Amendment note under section 2002 of this title.
12 USC Part B -- Farm Credit Administration Organization
TITLE 12 -- BANKS AND BANKING
Ex. Ord. No. 6084, Mar. 27, 1933, provided in part: . . . it is
hereby ordered that:
(1) The functions of the Secretary of Agriculture as a member of the
Federal Farm Board, and the offices of the appointed members of the
Federal Farm Board, except the office of the member designated as
chairman thereof, are abolished.
(2) The name of the Federal Farm Board is changed to the Farm Credit
Administration.
(3) The name of the office of Chairman of the Federal Farm Board is
changed to Governor of the Farm Credit Administration, and he is vested
with all the powers and duties of the Federal Farm Board.
(4) The functions of the Secretary of the Treasury as a member of the
Federal Farm Loan Board, and the offices of the appointed members of the
Federal Farm Loan Board, except the office of the member designated as
farm loan commissioner, are abolished, and all the powers and functions
of the Federal Farm Loan Board, are transferred to and vested in the
Farm Loan Commissioner, subject to the jurisdiction and control of the
Farm Credit Administration as herein provided.
(5) There are transferred to the jurisdiction and control of the Farm
Credit Administration:
(a) The Federal Farm Loan Bureau and the functions thereof; together
with the functions of the Federal Farm Loan Board, including the
functions of the Farm Loan Commissioner;
(b) The functions of the Treasury Department and the Department of
Agriculture, and the Secretaries thereof, under Executive authorizations
to give aid to farmers, dated July 26, 1918, and any extensions or
amendments thereof;
(c) The functions of the Secretary of Agriculture under all
provisions of law relating to the making of advances or loans to
farmers, fruit growers, producers and owners of livestock and crops, and
to individuals for the purpose of assisting in forming or increasing the
capital stock of agricultural-credit corporations, livestock-loan
companies, or like organizations, except Public Resolution No. 74,
Seventieth Congress, approved December 21, 1928, providing for the
Puerto Rican Hurricane Relief Commission;
(d) The Crop Production Loan Office and the Seed Loan Office of the
Department of Agriculture, and the functions thereof;
(e) The functions of the Reconstruction Finance Corporation and its
Board of Directors relating to the appointment of officers and agents to
manage regional agricultural credit corporations formed under section
201(e) of the Emergency Relief and Construction Act of 1932 (section
1148 of this title); relating to the establishment of rules and
regulations for such management; and relating to the approval of loans
and advances made by such corporations and of the terms and conditions
thereof.
(6) The functions vested in the Federal Farm Board by section 9 of
the Agricultural Marketing Act (section 1141g of this title) are
abolished except that such functions shall continue to be exercised to
such extent and for such time as may be necessary to permit the orderly
winding up of the activities of stabilization corporations heretofore
recognized under authority of such section, and the governor of the Farm
Credit Administration shall take appropriate action for winding up at
the earliest practicable date the activities of such corporations and
all affairs related to the exercise of such functions.
(7) The records, property (including office equipment), and personnel
used and employed in the execution of the functions hereinbefore
transferred are transferred to the jurisdiction and control of the Farm
Credit Administration.
(8) The sum of $2,000,000 of the unexpended balances of
appropriations made to the Federal Farm Board by Public Resolutions No.
43 and No. 51 of the Seventy-second Congress shall be impounded and
returned to the Treasury, which sum shall be in addition to the other
savings to be effected by the Farm Credit Administration as a result of
this order.
(9) The unexpended balances of appropriations to the Secretary of
Agriculture, the Federal Farm Loan Bureau, and the Federal Farm Board
for salaries, expenses, and all other administrative expenditures in the
execution of the functions herein vested in the Farm Credit
Administration shall be transferred to and vested in the Farm Credit
Administration as a single fund for its use for salaries, expenses, and
all other administrative expenditures for the execution of any or all of
such functions without restriction as to the particular functions for
the execution of which the same were originally appropriated. All other
appropriations, allotments, and other funds available for use in
connection with the functions and executive agencies hereby transferred
and consolidated are hereby transferred to and vested in the Farm Credit
Administration, and shall be available for use by it, for the same
purposes as if the Farm Credit Administration were named in the law or
authority providing such appropriations, allotments, or other funds.
(10) All power, authority, and duties conferred by law upon any
officer, executive agency, or head thereof, from which or from whom
transfer is hereinbefore made, in relation to the executive agency or
function transferred, are transferred to and vested in the Governor of
the Farm Credit Administration.
(11) The Governor of the Farm Credit Administration is directed to
dismiss, furlough, transfer, or make other appropriate disposition of
such of the officers and employees under his jurisdiction and control as
are not required for the proper execution of the functions of the Farm
Credit Administration.
(12) The Governor of the Farm Credit Administration is authorized to
execute any and all functions and perform any and all duties vested in
him through such persons as he shall by order designate or employ.
(13) The Governor of the Farm Credit Administration, by order or
rules and regulations, may consolidate, regroup, and transfer offices,
bureaus, activities, and functions in the Farm Credit Administration, so
far as may be required to carry out the purposes to which this order is
directed, and may fix or change the names of such offices, bureaus, and
activities and the duties, powers, and titles of their executive heads.
This order shall take effect upon the sixty-first calendar day after
its transmission to Congress unless otherwise determined in accordance
with the provisions of section 407 of the act cited above, as amended.
(All functions, powers and duties of the Governor of the Farm Credit
Administration which relate to the making, administration, and
liquidation of all loans identified or referred to in pars. 5(b), 5(c),
and 5(d) of this Executive Order were abolished by act Aug. 14, 1946,
ch. 964, 2(a)(2), 60 Stat. 1062, set out as a note under sections 1001
to 1006 of Title 7, Agriculture.)
12 USC 2241. Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration shall be an independent agency in the
executive branch of the Government. It shall be composed of the Farm
Credit Administration Board and such other personnel as are employed in
carrying out the functions, powers, and duties vested in the Farm Credit
Administration by this chapter.
(Pub. L. 92-181, title V, 5.7, Dec. 10, 1971, 85 Stat. 617; Pub. L.
99-205, title II, 201(1), Dec. 23, 1985, 99 Stat. 1688.)
1985 -- Pub. L. 99-205 amended section generally, substituting
''Farm Credit Administration Board and such other personnel'' for
''Federal Farm Credit Board, the Governor of the Farm Credit
Administration, and such other personnel''.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Section 402 of Pub. L. 99-205 provided that:
''(a) Until the Chairman of the Farm Credit Administration Board
provided for under the amendment made by section 201(1) of this Act (see
section 2242 of this title) is appointed by the President and confirmed
by the Senate, the Governor of the Farm Credit Administration, under the
Farm Credit Act of 1971 (this chapter) as in effect on the day before
the date of enactment of this Act (Dec. 23, 1985), shall perform the
functions of the Chairman prescribed for the Chairman by this Act (Pub.
L. 99-205, see Short Title of 1985 Amendment note set out under section
2001 of this title).
''(b)(1) Except as provided in paragraph (2), until at least two
members of the Farm Credit Administration Board provided under the
amendment made by section 201(1) of this Act (see section 2242 of this
title) are appointed by the President and confirmed by the Senate, the
Governor of the Farm Credit Administration, under the Farm Credit Act of
1971 (this chapter) as in effect on the day before the date of enactment
of this Act (Dec. 23, 1985), shall perform the functions of the Farm
Credit Administration Board prescribed for such Board by this Act (Pub.
L. 99-205, see Short Title of 1985 Amendment note set out under section
2001 of this title).
''(2) When the Chairman of such Board is so appointed and confirmed,
the Chairman shall assume any responsibilities and powers of the Board
being exercised by the Governor under this subsection.
''(c) In carrying out the duties and functions specified in
subsections (a) and (b), the Governor of the Farm Credit Administration
shall serve at the pleasure of the President.
''(d) All regulations of the Farm Credit Administration or the
institutions of the System, and all charters, bylaws, resolutions, stock
classifications, and policy directives issued or approved by the Farm
Credit Administration, and all elections held and appointments made
under the Farm Credit Act of 1971 (this chapter), before the date of
enactment of this Act (Dec. 23, 1985), shall be continuing and remain
valid until superseded, modified, or replaced under the authority of
this Act (Pub. L. 99-205, see Short Title of 1985 Amendment note set out
under section 2001 of this title).''
12 USC 2242. Farm Credit Administration Board
TITLE 12 -- BANKS AND BANKING
(a) Appointment
The management of the Farm Credit Administration shall be vested in a
Farm Credit Administration Board (referred to in this part as ''the
Board''). The Board shall consist of three members, who shall be
citizens of the United States and broadly representative of the public
interest. Members of the Board shall be appointed by the President, by
and with the advice and consent of the Senate. Not more than two
members of the Board shall be members of the same political party. Of
the persons thus appointed, one shall be designated by the President to
serve as Chairman of the Board for the duration of the member's term.
The members of the Board shall be ineligible during the time they are in
office and for two years thereafter to hold any office, position, or
employment in any institution of the Farm Credit System.
(b) Terms of office
The term of office of each member of the Board shall be six years,
except that the terms of the two members, other than the Chairman, first
appointed under subsection (a) of this section shall expire, one on the
expiration of two years after the date of appointment, and one on the
expiration of four years after the date of appointment. Members of the
Board shall not be appointed to succeed themselves, except that the
members first appointed under subsection (a) of this section for a term
of less than six years may be reappointed for a full six-year term and
members appointed to fill unexpired terms of three years or less may be
reappointed for a full six-year term. Any vacancy shall be filled for
the unexpired term on like appointment. Any member of the Board shall
continue to serve as such after the expiration of the member's term
until a successor has been appointed and qualified.
(c) Organization
Each member of the Board, within fifteen days after notice of
appointment, shall subscribe to the oath of office. The Board may
transact business if a vacancy exists, provided a quorum is present. A
quorum shall consist of two members of the Board. The Board shall hold
at least one meeting each month and such additional meetings at such
times and places as it may fix and determine. Such meetings shall be
held on the call of the Chairman or any two Board members. The Board
shall adopt such rules as it deems appropriate for the transaction of
business by the Board, and shall keep permanent and accurate records and
minutes of the actions and proceedings of the Board.
(d) Compensation
The members of the Board shall devote their full time and attention
to the business of the Board. The Chairman of the Board shall receive
compensation at the rate prescribed for level III of the Executive
Schedule under section 5314 of title 5. Each of the other members of
the Board shall receive compensation at the rate prescribed for level IV
of the Executive Schedule under section 5315 of title 5. Each member of
the Board shall be reimbursed for necessary travel, subsistence, and
other expenses in the discharge of the member's official duties without
regard to other laws with respect to allowance for travel and
subsistence of officers and employees of the United States. This
subsection shall be subject to the provisions of section 2245 of this
title.
(Pub. L. 92-181, title V, 5.8, Dec. 10, 1971, 85 Stat. 617; Pub. L.
96-592, title V, 503, Dec. 24, 1980, 94 Stat. 3449; Pub. L. 99-205,
title II, 201(1), Dec. 23, 1985, 99 Stat. 1688; Pub. L. 100-233, title
IV, 431(a), Jan. 6, 1988, 101 Stat. 1658.)
1988 -- Subsec. (c). Pub. L. 100-233 amended last sentence
generally, substituting ''business by the Board,'' for ''its business''
and ''the actions and proceedings of the Board'' for ''its acts and
proceedings''.
1985 -- Pub. L. 99-205 amended section generally, substituting
provisions of subsecs. (a) to (d) relating to the Farm Credit
Administration Board for provisions of former subsecs. (a) to (i) which
related to the Federal Farm Credit Board.
1980 -- Subsec. (h). Pub. L. 96-592 substituted provisions relating
to applicability of compensation under section 5332 of title 5, for
provisions setting forth compensation at the rate of $100 a day.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
For provisions authorizing interim implementation by Governor of Farm
Credit Administration of amendments to this section by Pub. L. 99-205,
see section 402 of Pub. L. 99-205, set out as a note under section 2241
of this title.
12 USC 2243. Powers of Board
TITLE 12 -- BANKS AND BANKING
The Board shall manage and administer, and establish policies for,
the Farm Credit Administration. It --
(1) shall approve the rules and regulations for the implementation of
this chapter not inconsistent with its provisions;
(2) shall provide for the examination of the condition of, and
general regulation of the performance of the powers, functions, and
duties vested in, each institution of the Farm Credit System;
(3) shall provide for the performance of all the powers and duties
vested in the Farm Credit Administration; and
(4) may require such reports as it deems necessary from the
institutions of the Farm Credit System.
(Pub. L. 92-181, title V, 5.9, Dec. 10, 1971, 85 Stat. 619; Pub. L.
99-205, title II, 201(1), Dec. 23, 1985, 99 Stat. 1689; Pub. L.
100-233, title VIII, 805(w), Jan. 6, 1988, 101 Stat. 1716.)
1988 -- Pub. L. 100-233 struck out ''; civil proceedings'' in
section catchline.
1985 -- Pub. L. 99-205 substituted requirement that the Board manage
and administer, and establish policies for, the Farm Credit
Administration for former requirement that the Federal Farm Credit Board
establish the general policy for the guidance of the Farm Credit
Administration, including matters of broad and general supervisory,
advisory, or policy nature; incorporated existing text in provisions
designated cls. (1) to (4); substituted in cl. (2) ''general
regulation'' for ''general supervision''; and struck out last sentence
which read as follows: ''The Board shall function as a unit without
delegating any of its functions to individual members, but may appoint
committees and subcommittees for studies and reports for consideration
by the Board. It shall not operate in an administrative capacity.''
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
For provisions authorizing interim implementation by Governor of Farm
Credit Administration of amendments to this section by Pub. L. 99-205,
see section 402 of Pub. L. 99-205, set out as a note under section 2241
of this title.
12 USC 2244. Chairman; responsibilities; governing standards
TITLE 12 -- BANKS AND BANKING
(a) Chairman of Farm Credit Administration Board; power and
authority
(1) The Chairman of the Board shall be the chief executive officer of
the Farm Credit Administration.
(2) In carrying out the responsibilities of the chief executive
officer, the Chairman shall be responsible for directing the
implementation of policies and regulations adopted by the Board and,
after consultation with the Board, the execution of the administrative
functions and duties of the Farm Credit Administration.
(3) In carrying out policies as directed by the Board, the Chairman
shall act as spokesperson for the Board and represent the Board and the
Farm Credit Administration in their official relations within the
Federal Government.
(4) Under policies adopted by the Board, the Chairman shall consult
on a regular basis with --
(A) the Secretary of the Treasury concerning the exercise, by the
System, of the powers conferred under section 2153 of this title;
(B) the Board of Governors of the Federal Reserve System concerning
the effect of System lending activities on national monetary policy;
and
(C) the Secretary of Agriculture concerning the effect of System
policies on farmers, ranchers, and the agricultural economy.
(b) Governing standards
In carrying out responsibilities under this chapter, the Chairman of
the Board shall be governed by general policies adopted by the Board and
by such regulatory decisions, findings, and determinations as the Board
may by law be authorized to make and, as to third persons, all acts of
the Chairman of the Board shall be conclusively presumed to be in
compliance with such general policies and regulatory decisions,
findings, and determinations.
(c) Enforcement of rules, regulations, and orders of Board; civil
proceedings; representation by attorneys
The Chairman of the Board shall enforce the rules, regulations, and
orders of the Board. Except as provided in section 518 of title 28,
relating to litigation before the Supreme Court, attorneys designated by
the Chairman shall represent the Farm Credit Administration in any civil
proceeding or civil action brought in connection with the administration
of conservatorships and receiverships. Attorneys designated by the
Chairman may represent the Farm Credit Administration in any other civil
proceedings or civil action when so authorized by the Attorney General
under provisions of title 28.
(Pub. L. 92-181, title V, 5.10, Dec. 10, 1971, 85 Stat. 619; Pub.
L. 96-592, title V, 504, Dec. 24, 1980, 94 Stat. 3449; Pub. L. 99-205,
title II, 201(1), Dec. 23, 1985, 99 Stat. 1689; Pub. L. 100-233, title
IV, 431(b), Jan. 6, 1988, 101 Stat. 1658.)
1988 -- Subsec. (a). Pub. L. 100-233 amended subsec. (a) generally.
Prior to amendment, subsec. (a) read as follows: ''The Chairman of
the Board shall be the executive officer of the Board and the chief
executive officer of the Farm Credit Administration. The Chairman shall
be responsible for directing the implementation of the policies and
regulations adopted by the Board and the execution of all of the
administrative functions and duties of the Farm Credit Administration.
The Chairman shall be the spokesman for the Board and the Farm Credit
Administration and shall represent the Board and the Farm Credit
Administration in their official relations within the Government. Under
policies adopted by the Board, the Chairman shall consult on a regular
basis with the Secretary of the Treasury in connection with the exercise
by the System of the powers conferred under section 2153 of this title,
with the Board of Governors of the Federal Reserve System in connection
with the effect of System lending activities on national monetary
policy, and with the Secretary of Agriculture in connection with the
effect of System policies on farmers and the agricultural economy.''
1985 -- Pub. L. 99-205 substituted provisions relating to the
Chairman of the Board, his responsibilities, and governing standards for
provisions relating to the Governor of the Farm Credit Administration.
1980 -- Pub. L. 96-592 inserted provisions relating to requirements
of the Governor to consult with the Secretary of the Treasury and the
Governors of the Federal Reserve System.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
For provisions authorizing interim implementation by Governor of Farm
Credit Administration of amendments to this section by Pub. L. 99-205,
see section 402 of Pub. L. 99-205, set out as a note under section 2241
of this title.
12 USC 2245. Organization of Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
(a) Policies of Board
The Chairman of the Farm Credit Administration Board, in carrying out
the powers and duties vested in the Chairman by this chapter, and Acts
supplementary thereto, shall be governed by policies of the Board and by
such regulatory decisions, findings, and determinations as the Board may
by law be authorized to make.
(b) Appointments
The Chairman of the Board shall appoint such personnel as may be
necessary to carry out the functions of the Farm Credit Administration.
The appointment by the Chairman of the heads of major administrative
divisions under the Board shall be subject to the approval of the Board.
(c) Personnel
(1) Appointments by Board members
Personnel employed regularly and full-time in the immediate offices
of Board members shall be appointed by each such Board member.
(2) Officers and employees
(A) Appointment, compensation, and benefits
The Chairman shall fix the compensation and number of, and appoint
and direct, employees of the Administration. The Chairman may set and
adjust the rates of basic pay for employees of the Administration
without regard to the provisions of chapter 51, or subchapter III of
chapter 53, of title 5. The Chairman may provide such additional
compensation and benefits to employees of the Administration as is
necessary to maintain comparability with the total amount of
compensation and benefits provided by other Federal bank regulatory
agencies. In setting and adjusting the total amount of compensation and
benefits for employees of the Administration, the Chairman shall consult
with, and seek to maintain comparability with, other Federal bank
regulatory agencies.
(B) ''Other Federal bank regulatory agencies'' defined
For purposes of this subsection, the term ''other Federal bank
regulatory agencies'' has the same meaning given to the term
''appropriate Federal banking agency'' in section 1813(q) of this title.
(C) Ethics in Government
The officers and employees of the agency shall be --
(i) subject to the Ethics in Government Act of 1978; and
(ii) considered officers or employees of the United States for the
purposes of sections 201 through 203, and sections 205 through 209, of
title 18.
(3) Delegation
The powers of the Chairman as chief executive officer necessary for
day to day management may be exercised and performed by the Chairman
through such other officers and employees of the Administration as the
Chairman shall designate, except that the Chairman may not delegate
powers specifically reserved to the Chairman by this chapter without
Board approval.
(d) Funding
The operations of the Farm Credit Administration, and the salaries of
members of the Board and employees of the Administration, shall be
funded and paid for from the fund created under section 2250 of this
title.
(Pub. L. 92-181, title V, 5.11, Dec. 10, 1971, 85 Stat. 620; Pub.
L. 99-205, title II, 201(1), Dec. 23, 1985, 99 Stat. 1690; Pub. L.
100-233, title IV, 431(c), title VIII, 805(x), Jan. 6, 1988, 101 Stat.
1659, 1716; Pub. L. 100-399, title IV, 415(a), title VII, 702( b), Aug.
17, 1988, 102 Stat. 1004, 1006; Pub. L. 101-73, title XII, 1210, Aug.
9, 1989, 103 Stat. 523.)
The Ethics in Government Act of 1978, referred to in subsec. (c)(2)(
C)(i), is Pub. L. 95-521, Oct. 26, 1978, 92 Stat. 1824, as amended.
For complete classification of this Act to the Code, see Short Title
note set out under section 101 of Pub. L. 95-521 in the Appendix to
Title 5, Government Organization and Employees, and Tables.
1989 -- Subsec. (c)(2). Pub. L. 101-73 amended par. (2) generally.
Prior to amendment, par. (2) read as follows: ''The officers and
employees of the agency shall be --
''(A) subject to the Ethics in Government Act of 1978 (2 U.S.C. 701
et seq.);
''(B) considered officers or employees of the United States for the
purposes of sections 201 through 203, and sections 205 through 209, of
title 18; and
''(C) subject to section 5373 of title 5.''
1988 -- Pub. L. 100-233, 805(x), which directed the amendment of
this section by striking out the last sentence, was repealed by Pub. L.
100-399, 702(b). See Construction of 1988 Amendment note below.
Pub. L. 100-233, 431(c), amended section generally, substituting
subsecs. (a) to (d) for former text consisting of single undesignated
paragraph.
Subsec. (c)(2)(C). Pub. L. 100-399, 415(a), substituted ''5373'' for
''5315''.
1985 -- Pub. L. 99-205 substituted provisions respecting
organization of the Farm Credit Administration for provisions relating
to compensation and expense allowance of the Governor of the Farm Credit
Administration.
Amendment by section 415(a) of Pub. L. 100-399 effective as if
enacted immediately after enactment of Pub. L. 100-233, which was
approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100-399, set out
as a note under section 2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Section 702(b) of Pub. L. 100-399 provided that section 805(x) of
Pub. L. 100-233, cited as a credit to this section, is repealed and
that this section shall be applied and administered as if such section
had not been enacted.
For provisions authorizing interim implementation by Governor of Farm
Credit Administration of amendments to this section by Pub. L. 99-205,
see section 402 of Pub. L. 99-205, set out as a note under section 2241
of this title.
12 USC 2246. Advisory committees
TITLE 12 -- BANKS AND BANKING
The Chairman of the Board, subject to the approval of the Board, may
establish one or more advisory committees in accordance with the Federal
Advisory Committee Act and may appoint to such committee or committees
individuals who are members of the Federal Farm Credit Board when such
Board is terminated by the Farm Credit Amendments Act of 1985.
(Pub. L. 92-181, title V, 5.12, Dec. 10, 1971, 85 Stat. 620; Pub.
L. 99-205, title II, 201(1), Dec. 23, 1985, 99 Stat. 1690; Pub. L.
100-233, title IV, 431(d), Jan. 6, 1988, 101 Stat. 1660.)
The Federal Advisory Committee Act, referred to in text, is Pub. L.
92-463, Oct. 6, 1972, 86 Stat. 770, as amended, which is set out in
the Appendix to Title 5, Government Organization and Employees.
The Farm Credit Amendments Act of 1985, referred to in text, is Pub.
L. 99-205, Dec. 23, 1985, 99 Stat. 1678. For complete classification
of this Act to the Code, see Short Title of 1985 Amendment note set out
under section 2001 of this title and Tables.
1988 -- Pub. L. 100-233 inserted '', subject to the approval of the
Board,'' after ''Chairman of the Board''.
1985 -- Pub. L. 99-205 substituted provisions respecting advisory
committees for provisions respecting compliance by the Governor with
orders of the Federal Farm Credit Board.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
For provisions authorizing interim implementation by Governor of Farm
Credit Administration of amendments to this section by Pub. L. 99-205,
see section 402 of Pub. L. 99-205, set out as a note under section 2241
of this title.
12 USC 2247. Repealed. Pub. L. 99-205, title II, 201(2), Dec. 23, 1985,
99 Stat. 1690
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title V, 5.13, Dec. 10, 1971, 85 Stat.
620, related to authority of Governor of the Farm Credit Administration
to fix powers and duties of divisions and instrumentalities of the
Administration.
Repeal effective thirty days after Dec. 23, 1985, see section 401 of
Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2248. Seal of the Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration shall have a seal, as adopted by the
Board, which shall be judicially noted.
(Pub. L. 92-181, title V, 5.13, formerly 5.14, Dec. 10, 1971, 85
Stat. 620; renumbered 5.13 and amended Pub. L. 99-205, title II,
201(3), Dec. 23, 1985, 99 Stat. 1690.)
A prior section 5.13 of Pub. L. 92-181 was classified to section
2247 of this title and was repealed by Pub. L. 99-205, title II, 201(
2), Dec. 23, 1985, 99 Stat. 1690.
1985 -- Pub. L. 99-205 substituted ''Board'' for ''Governor''.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2249. Administrative expenses
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration may, within the limits of funds
available therefor, make necessary expenditures for personnel services
and rent at the seat of Government and elsewhere; contract stenographic
reporting services; purchase and exchange lawbooks, books of reference,
periodicals, newspapers, expenses of attendance at meetings and
conferences; purchase, operation, and maintenance at the seat of
Government and elsewhere of motor-propelled passenger-carrying vehicles
and other vehicles; printing and binding; and for such other
facilities and services, including temporary employment by contract or
otherwise, as it may from time to time find necessary for the proper
administration of this chapter. The Farm Credit Administration may
dispose of property so acquired and any amounts collected from the
disposition of such property shall be deposited in the special fund
provided for in section 2250(b) of this title and shall be available to
the Administration in the same manner and for the same purposes as the
funds collected under section 2250(a) of this title.
(Pub. L. 92-181, title V, 5.14, formerly 5.15, Dec. 10, 1971, 85
Stat. 620; Pub. L. 96-592, title V, 505, Dec. 24, 1980, 94 Stat. 3449;
renumbered 5.14 and amended Pub. L. 99-205, title II, 201(4), Dec. 23,
1985, 99 Stat. 1690.)
A prior section 5.14 of Pub. L. 92-181 was renumbered section 5.13
and is classified to section 2248 of this title.
1985 -- Pub. L. 99-205 made technical amendments to the references
to sections 2250(b) and 2250(a) of this title appearing in second
sentence to reflect the renumbering of the corresponding section of the
original act.
1980 -- Pub. L. 96-592 inserted provisions relating to disposal of
property and deposit of amounts from such disposal.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2250. Farm Credit Administration operating expenses fund
TITLE 12 -- BANKS AND BANKING
(a) Determinations required
(1) Generally
Prior to the first day of each fiscal year, the Farm Credit
Administration shall determine --
(A) the cost of administering this chapter for the subsequent fiscal
year, including expenses for official functions;
(B) the amount of assessments that will be required to pay such
administrative expenses, taking into consideration the funds contained
in the Administrative Expense Account, and maintain a necessary reserve;
and
(C) the amount of assessments that will be required to pay the costs
of supervising and examining the Mortgage Corporation established under
subchapter VIII of this chapter.
(2) Apportionments
On the basis of the determinations made under paragraph (1), the Farm
Credit Administration shall --
(A) apportion the amount of the assessment described in paragraph
(1)(B) among the System institutions on a basis that is determined to be
equitable by the Farm Credit Administration;
(B) assess and collect such apportioned amounts from time to time
during the fiscal year as determined necessary by the Farm Credit
Administration; and
(C) assess and collect from the Mortgage Corporation, from time to
time during the fiscal year, the amount described in paragraph (1)(C).
(b) Deposits into fund
(1) Treasury fund
The amounts collected under subsection (a) of this section shall be
deposited in the Farm Credit Administration Administrative Expense
Account. The Expense Account shall be maintained in the Treasury of the
United States and shall be available, without regard to the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.)
or any other law, to pay the expenses of the Farm Credit Administration.
(2) Nongovernment funds
The funds contained in the Expense Account shall not be construed to
be Federal Government funds or appropriated moneys.
(3) Investment
(A) Authority
On request of the Farm Credit Administration, the Secretary of the
Treasury shall invest and reinvest such amounts contained in the Expense
Account as, in the determination of the Farm Credit Administration, are
in excess of the amounts necessary for current expenses of the Farm
Credit Administration.
(B) Returns
All income earned from such investments and reinvestments shall be
deposited in the Expense Account.
(C) Type
Such investments shall be made in public debt securities with
maturities suitable to the needs of the Expense Account, as determined
by the Farm Credit Administration, and bearing interest at rates
determined by the Secretary of the Treasury, taking into consideration
current market yields on outstanding marketable obligations of the
United States of comparable maturities.
(Pub. L. 92-181, title V, 5.15, formerly 5.16, Dec. 10, 1971, 85
Stat. 620; renumbered 5.15 and amended Pub. L. 99-205, title II,
201(5), 205(g)(6), Dec. 23, 1985, 99 Stat. 1690, 1707; Pub. L.
100-233, title IV, 432(a), Jan. 6, 1988, 101 Stat. 1660; Pub. L.
100-399, title IV, 416(a), (b), Aug. 17, 1988, 102 Stat. 1004.)
The Balanced Budget and Emergency Deficit Control Act of 1985,
referred to in subsec. (b)(1), is title II of Pub. L. 99-177, Dec.
12, 1985, 99 Stat. 1038, which enacted chapter 20 ( 900 et seq.) and
sections 654 to 656 of Title 2, The Congress, amended sections 602, 622,
631 to 642, and 651 to 653 of Title 2, sections 1104 to 1106, and 1109
of Title 31, Money and Finance, and section 911 of Title 42, The Public
Health and Welfare, repealed section 661 of Title 2, enacted provisions
set out as notes under section 900 of Title 2 and section 911 of Title
42, and amended provisions set out as a note under section 621 of Title
2. For complete classification of this Act to the Code, see Short Title
note set out under section 900 of Title 2 and Tables.
A prior section 5.15 of Pub. L. 92-181 was renumbered section 5.14
and is classified to section 2249 of this title.
1988 -- Pub. L. 100-233 amended section generally. Prior to
amendment, section read as follows:
''(a) The Farm Credit Administration shall prior to the first day of
each fiscal year estimate the cost of administrative expenses for the
ensuing fiscal year in administering this chapter, including official
functions, and shall apportion the amount so determined among the
institutions of the System on such equitable basis as the Farm Credit
Administration shall determine, and shall assess against and collect in
advance the amounts so apportioned from the institutions among which the
apportionment is made.
''(b) The amounts collected pursuant to subsection (a) of this
section shall be covered into the Treasury, and credited to a special
fund and, without regard to other law, shall be available to the Farm
Credit Administration for expenditure during each fiscal year for
salaries and expenses of the Farm Credit Administration. As soon as
practicable after the end of each such fiscal year, the Farm Credit
Administration shall determine, on a fair and reasonable basis, the cost
of operation of the Farm Credit Administration and the part thereof
which fairly and equitably should be allocated to each bank and
association as its share of the cost during the fiscal year of the Farm
Credit Administration. If the amount so allocated is greater than the
amount collected from the bank or other institutions, the difference
shall be collected from such bank or other institutions, and, if less,
shall be refunded from the special fund to the bank or other
institutions entitled thereto or credited in the special fund to such
bank or other institutions for use for the same purposes in future
fiscal years.''
Subsec. (a)(2)(A). Pub. L. 100-399, 416(a), substituted ''the
assessment described in paragraph (1)(B)'' for ''such assessment''.
Subsec. (a)(2)(C). Pub. L. 100-399, 416(b), substituted ''described''
for ''specified''.
1985 -- Subsec. (b). Pub. L. 99-205, 205(g)(6), substituted ''the
Farm Credit Administration'' for ''said Administration'' twice in first
sentence, and for ''the Administration'' and ''such Administration'' in
second sentence.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2251. Quarters and facilities for the Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
As an alternate to the rental of quarters under section 2249 of this
title, and without regard to any other provision of law, the banks of
the System, with the concurrence of two-thirds of the bank boards, are
hereby authorized --
(1) To lease or acquire real property in the District of Columbia or
elsewhere for quarters of the Farm Credit Administration.
(2) To construct, develop, furnish, and equip such building thereon
and such facilities appurtenant thereto as in their judgment may be
appropriate to provide, to the extent the Board may deem advisable,
suitable, and adequate quarters and facilities for the Farm Credit
Administration.
(3) To enlarge, remodel, or reconstruct the same.
(4) To make or enter into contracts for any of the foregoing.
(5) To sell or otherwise dispose of any interest in property leased
or acquired under the foregoing if authorized by the Board.
The Board may require of the respective banks of the System, and they
shall make to the Farm Credit Administration, such advances of funds for
the purposes set out in this section as in the sole judgment of the
Board may from time to time be advisable for the purposes of this
section. Such advances shall be in addition to and kept in a separate
fund from the assessments authorized in section 2250 of this title and
shall be apportioned by the Board among the banks in proportion to the
total assets of the respective banks, and determined in such manner and
at such times as the Board may prescribe. The powers of the banks of
the System and purposes for which obligations may be issued by such
banks are hereby enlarged to include the purpose of obtaining funds to
permit the making of advances required by this section. The plans and
decisions for such building and facilities and for the enlargement,
remodeling, or reconstruction thereof shall be such as is approved in
the sole discretion of the Board. In actions undertaken by the banks
pursuant to the foregoing provisions of this section, the Farm Credit
Administration may act as agent for the banks.
(Pub. L. 92-181, title V, 5.16, formerly 5.17, Dec. 10, 1971, 85
Stat. 621; Pub. L. 96-592, title V, 506, Dec. 24, 1980, 94 Stat. 3449;
renumbered 5.16 and amended Pub. L. 99-205, title II, 201(6), Dec. 23,
1985, 99 Stat. 1690; Pub. L. 100-233, title VIII, 805(y), Jan. 6, 1988,
101 Stat. 1717; Pub. L. 100-399, title IX, 901(l), Aug. 17, 1988, 102
Stat. 1008.)
A prior section 5.16 of Pub. L. 92-181 was renumbered section 5.15
and is classified to section 2250 of this title.
1988 -- Pub. L. 100-399 substituted ''bank boards'' for ''district
boards'' in introductory provisions.
Pub. L. 100-233 transferred undesignated provisions following par.
(4) consisting of four sentences relating to advances of funds for
purposes set out in this section as in the sole judgment of the Board
may from time to time be advisable for purposes of this section, to a
position immediately before last sentence of this section which provides
for agency status of Administration for the banks.
1985 -- Pub. L. 99-205, 201(6)(A)-(C), made technical amendments to
the references to sections 2249 and 2250 of this title in first and
third sentences to reflect the renumbering of the corresponding sections
of the original act, and struck out ''Federal Farm Credit'' before
''Board'' in par. (2) of first sentence.
1980 -- Pub. L. 96-592 added par. (5) and provisions respecting
agency status of Administration for the banks.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
12 USC 2252. Powers and duties
TITLE 12 -- BANKS AND BANKING
(a) Enumerated powers
The Farm Credit Administration shall have the following powers,
functions, and responsibilities in connection with the institutions of
the Farm Credit System and the administration of this chapter:
(1) Modify the boundaries of farm credit districts, with due regard
for the farm credit needs of the country, as approved by the Board, with
the concurrence of the district banks involved.
(2) Where necessary or appropriate to carry out the policy and
objectives of this chapter, issue and approve amendments to Federal
charters of institutions of the System; approve change in names of
banks operating under this chapter; approve the merger of districts
when agreed to by the district bank boards involved and by a majority
vote of the voting stockholders and contributors to the guaranty funds
of each bank for each of such districts, voting in the same manner as is
provided in section 2279a of this title; approve mergers and any
related activities as provided for in subchapter VII of this chapter;
and approve the consolidation or division of the territories of
institutions when agreed to by a majority vote of the voting
stockholders or contributors to the guaranty fund of each of the
institutions involved; and approve consolidations of boards of
directors or management agreements when agreed to by a majority vote of
the voting stockholders or contributors to the guaranty fund of each of
the institutions involved. In issuing charters and certificates of
territory for district-wide mergers of associations where stockholders
of one or more associations did not approve the merger, the charter of
the new or merged association shall not include the territory of the
disagreeing association or associations; charters issued during
calendar year 1985 for district-wide new or merged associations which
included the territory of a disagreeing association shall be revoked and
reissued to exclude such territory, unless subsequently agreed to by the
board of directors of such association or associations. The Farm Credit
Administration Board shall ensure that disapproving associations (A)
shall not be charged any assessment under this chapter at a rate higher
than that charged other like associations in the district, and (B) shall
be provided with financial services and assistance on the same basis as
other like associations in the district (including, but not limited to,
access to credit and rates of interest on loans and discounts) by a
district Farm Credit bank to the association and its member-borrowers.
The Farm Credit Administration Board, after consultation with the
respective boards of directors of the affected banks, may require two or
more banks operating under the same or different titles to merge if the
Board determines that one of such banks has failed to meet its
outstanding obligations.
(3) Make annual reports directly to Congress on the condition of the
System and its institutions, based on the examinations carried out under
section 2254 of this title, and on the manner and extent to which the
purposes and objectives of this chapter are being carried out and, from
time to time, recommend directly legislative changes. The annual reports
shall include a summary and analysis of the reports submitted to the
Farm Credit Administration by the Farm Credit Banks under section
2207(b) of this title relating to programs for serving young, beginning,
and small farmers and ranchers.
(4) Approve the issuance of obligations of the System under
subsections (c) and (d) of section 2153 of this title for the purpose of
funding the authorized operations of the institutions of the System, and
prescribe collateral therefor.
(5) Grant approvals provided for under this chapter either on a
case-by-case basis or through regulations that confer approval on
actions of Farm Credit System institutions.
(6) Establish standards for the System institutions with respect to
loan security requirements and regulate the borrowing, repayment, and
transfer of funds and equities between institutions of the System.
(7) Conduct loan and collateral security review.
(8) Regulate the preparation by System institutions and the
dissemination to stockholders and investors of information on the
financial condition and operations of such institutions, except that the
Farm Credit Administration may not require any System institution to
disclose in any report to stockholders information concerning the
condition or classification of a loan --
(A) to a director of the institution --
(i) who has resigned before the time for filing the applicable report
with the Farm Credit Administration; or
(ii) whose term of office will expire no later than the date of the
meeting of stockholders to which the report relates; or
(B) to a member of the immediate family of a director of the
institution unless --
(i) the family member resides in the same household as the director;
or
(ii) the director has a material financial or legal interest in the
loan or business operation of the family member.
(9) Prescribe rules and regulations necessary or appropriate for
carrying out this chapter.
(10) Exercise the powers conferred on it under part C of this
subchapter for the purpose of ensuring the safety and soundness of
System institutions.
(11) Exercise such incidental powers as may be necessary or
appropriate to fulfill its duties and carry out the purposes of this
chapter.
(12) Require surety bonds or other provisions for protection of the
assets of the institutions of the System against losses occasioned by
employees.
(b) Exclusions
The Farm Credit Administration shall not have authority, either
direct or indirect, to approve bylaws, or any amendments or
modifications or changes to bylaws, of System institutions.
(c) Proposed and final regulations; procedures applicable
(1) At least thirty days prior to publishing any proposed regulation
in the Federal Register, the Farm Credit Administration shall transmit a
copy of the regulation to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate. The Farm Credit Administration shall also
transmit to such committees a copy of any final regulation prior to its
publication in the Federal Register. Except as provided in paragraph (2)
of this subsection, no final regulation of the Farm Credit
Administration shall become effective prior to the expiration of thirty
calendar days after it is published in the Federal Register during which
either or both Houses of the Congress are in session.
(2) In the case of an emergency, a final regulation of the Farm
Credit Administration may become effective without regard to the last
sentence of paragraph (1) of this subsection if the Farm Credit
Administration notifies in writing the Committee on Agriculture of the
House of Representatives and the Committee on Agriculture, Nutrition,
and Forestry of the Senate setting forth the reasons why it is necessary
to make the regulation effective prior to the expiration of the
thirty-day period.
(d) Legislative veto of regulations; procedures applicable
(1) If there are any unresolved differences between the Farm Credit
Administration and the Board of Governors of the Federal Reserve System
as to whether any regulation implementing section 2128(b) of this title
or the other provisions of subchapter III relating to the authority
under section 2128(b) of this title conforms to national banking
policies, objectives and limitations, simultaneously with promulgation
of any such regulation under this chapter, and simultaneously with
promulgation of any regulation implementing section 2015(b) of this
title, the Farm Credit Administration shall transmit a copy thereof to
the Secretary of the Senate and the Clerk of the House of
Representatives. Except as provided in paragraph (2), the regulation
shall not become effective if, within ninety calendar days of continuous
session of Congress after the date of promulgation, both Houses of
Congress adopt a concurrent resolution, the matter after the resolving
clause of which is as follows: ''That Congress disapproves the
regulations promulgated by the Farm Credit Administration dealing with
the matter of , which regulation was transmitted to Congress on '', the
blank spaces therein being appropriately filled.
(2) If at the end of sixty calendar days of continuous session of
Congress after the date of promulgation of a regulation, no committee of
either House of Congress has reported or been discharged from further
consideration of a concurrent resolution disapproving the regulation,
and neither House has adopted such a resolution, the regulation may go
into effect immediately. If, within such sixty calendar days, such a
committee has reported or been discharged from further consideration of
such a resolution, or either House has adopted such a resolution, the
regulation may go into effect not sooner than ninety calendar days of
continuous session of Congress after its promulgation unless disapproved
as provided in paragraph (1).
(3) For the purposes of paragraphs (1) and (2) of this subsection --
(i) continuity of session is broken only by an adjournment of
Congress sine die; and
(ii) the days on which either House is not in session because of an
adjournment of more than three days to a day certain are excluded in the
computation of sixty and ninety calendar days of continuous session of
Congress.
(4) Congressional inaction on or rejection of a resolution of
disapproval shall not be deemed an expression of approval of such
regulation.
(Pub. L. 92-181, title V, 5.17, formerly 5.18, Dec. 10, 1971, 85
Stat. 621; Pub. L. 96-592, title V, 507, 508, Dec. 24, 1980, 94 Stat.
3449; renumbered 5.17 and amended Pub. L. 99-205, title II, 201(7),
Dec. 23, 1985, 99 Stat. 1691; Pub. L. 99-509, title I, 1036, Oct. 21,
1986, 100 Stat. 1878; Pub. L. 100-233, title II, 207(a)(2), title IV,
417, formerly 414, 418(d), formerly 415(d), 424(a), 431(e), title VIII,
802(v), 805(z), Jan. 6, 1988, 101 Stat. 1607, 1653, 1656, 1660, 1713,
1717, renumbered 417, 418(d), Pub. L. 100-399, title IV, 409(a), Aug.
17, 1988, 102 Stat. 1003; Pub. L. 100-399, title II, 205, title IV,
409(e), title IX, 901(m), (n), Aug. 17, 1988, 102 Stat. 993, 1003, 1008;
Pub. L. 101-624, title XVIII, 1843(a)(1), Nov. 28, 1990, 104 Stat.
3836; Pub. L. 102-237, title V, 502(h), Dec. 13, 1991, 105 Stat. 1869.)
A prior section 5.17 of Pub. L. 92-181 was renumbered section 5.16
and is classified to section 2251 of this title.
1991 -- Subsec. (a)(8)(B)(ii). Pub. L. 102-237 struck out second
period at end.
1990 -- Subsec. (a)(13). Pub. L. 101-624 struck out par. (13) which
read as follows: ''Except for associations, approve the salary scale
for employees of the institutions of the System, and approve the
compensation of the chief executive officer of such institutions:
Provided, That no salary scale or rate of compensation shall be approved
under this provision unless determined by the Board to be fair and
reasonable. The Board may not delegate its responsibilities under this
paragraph.''
1988 -- Subsec. (a)(1). Pub. L. 100-399, 901(m)(1), substituted
''district banks'' for ''district boards''.
Subsec. (a)(2). Pub. L. 100-399, 901(m)(2), substituted ''district
bank boards'' for ''boards of the districts''.
Pub. L. 100-399, 409(e), substituted ''approve the consolidation or
division of the territories of institutions when agreed to'' for ''the
consolidation or division of the territories that they serve when agreed
to''.
Pub. L. 100-233, 802(v)(1)(A), substituted ''approve amendments to''
for ''amend or modify''.
Pub. L. 100-233, 415(d), substituted ''section 2279a of this title''
for ''section 2181 of this title'' and ''approve mergers and any related
activities as provided for in subchapter VII of this chapter; and'' for
''; approve mergers of banks operating under the same subchapter of
this chapter, merger of Federal land bank associations, merger of
production credit associations, and''.
Pub. L. 100-233, 414, substituted ''. The Farm Credit Administration
Board shall ensure that disapproving associations (A) shall not be
charged any assessment under this chapter at a rate higher than that
charged other like associations in the district, and (B) shall be
provided with financial services and assistance on the same basis as
other like associations in the district'' for ''; and the Farm Credit
Administration shall ensure that the board of directors of district
banks does not discriminate against the disapproving associations in
exercising its supervisory authorities. Such associations shall not be
(i) charged any assessment under this chapter at a rate higher than that
charged other like associations in the district or (ii) discriminated
against in the provision of any financial service and assistance''.
Pub. L. 100-233, 431(e)(1), substituted ''The Farm Credit
Administration Board, after consultation with the respective boards of
directors of the affected banks, may require two or more banks operating
under the same or different titles to merge if the Board determines that
one of such banks has failed to meet its outstanding obligations'' for
''The Chairman of the Farm Credit Administration Board, after
consultation with the respective district board or boards and the board
of directors of the Capital Corporation may require two or more banks of
the Farm Credit System (other than Central Banks for Cooperatives)
operating under the same subchapter to merge if the Chairman determines
that one of such banks has failed to meet outstanding obligations of
such bank.''
Subsec. (a)(3). Pub. L. 100-399, 901(m)(3), substituted ''Farm Credit
Banks under section 2207(b) of this title'' for ''Federal land banks and
Federal intermediate credit banks under section 2207(b) of this title''.
Subsec. (a)(5). Pub. L. 100-233, 802(v)(1)(B), struck out ''that meet
standards and criteria established by the Farm Credit Administration,
including standards and criteria with respect to (A) interest rates on
obligations of Farm Credit System institutions, and (B) the payment of
dividends or patronage refunds by Farm Credit System institutions''
after ''Farm Credit institutions''.
Subsec. (a)(8). Pub. L. 100-399, 205, redesignated par. (9) as (8).
Pub. L. 100-233, 207(a)(2), struck out par. (8) which read as
follows: ''Make investments in stock of the Capital Corporation out of
the revolving fund referred to in section 2151 of this title, and
require the retirement of such stock.''
Subsec. (a)(9). Pub. L. 100-399, 205, redesignated par. (10) as (9).
Former par. (9) redesignated (8).
Pub. L. 100-233, 424(a), inserted provisions limiting Farm Credit
Administration from requiring System institutions to disclose in reports
to stockholders certain information concerning condition or
classification of loans to certain directors or members of immediate
family of certain directors.
Subsec. (a)(10) to (12). Pub. L. 100-399, 205, redesignated pars.
(11) to (13) as (10) to (12), respectively. Former par. (10)
redesignated (9).
Subsec. (a)(13). Pub. L. 100-399, 205, redesignated par. (14) as
(13). Former par. (13) redesignated (12).
Pub. L. 100-233, 805(z), redesignated par. (14) as (13), and struck
out former par. (13) which read as follows: ''Sue and be sued,
complain and defend in any court of law or equity, State or Federal.
All suits of a civil nature at common law or in equity to which the Farm
Credit Administration shall be a party shall be deemed to arise under
the laws of the United States, and the United States district courts
shall have original jurisdiction thereof, without regard to the amount
of the controversy; and the Farm Credit Administration may, without
bond or security, remove any such action, suit, or proceeding from a
State court to the United States district court for the district or
division embracing the place where the same is pending by following any
procedure for removal now or hereafter in effect. Service of process on
the Farm Credit Administration shall be in accordance with provisions of
title 28 and rules adopted under title 28 for suits in which an agency
of the United States is a party. The Farm Credit Administration shall
designate an agent at its principal office to accept service of
process.''
Subsec. (a)(14). Pub. L. 100-399, 205, redesignated par. (14) as
(13).
Pub. L. 100-233, 431(e)(2), 805(z), redesignated par. (15) as (14)
and inserted ''by the Board'' and ''The Board may not delegate its
responsibilities under this paragraph.'' Former subsec. (14)
redesignated (13).
Subsec. (a)(15). Pub. L. 100-233, 805(z), redesignated par. (15) as
(14).
Subsecs. (b), (c). Pub. L. 100-233, 802(v)(2), added subsec. (b) and
redesignated former subsec. (b) as (c). Former subsec. (c)
redesignated (d).
Subsec. (d). Pub. L. 100-233, 802(v)(2), redesignated subsec. (c) as
(d).
Subsec. (d)(1). Pub. L. 100-399, 901(n)(1), made technical amendment
to reference to sections 2015(b) and 2128(b) of this title involving
underlying provisions of original act and requiring no change in text.
Pub. L. 100-399, 901(n), substituted ''section 2015(b) of this
title'' for ''section 2074 of this title''.
1986 -- Subsec. (a)(5)(A). Pub. L. 99-509 struck out ''and on loans
made or discounted by such institutions'' after ''Farm Credit System
institutions''.
1985 -- Subsec. (a). Pub. L. 99-205 amended subsec. (a) generally,
revising and reorganizing the enumerated powers of the Farm Credit
Administration by substituting pars. (1) to (15) for former pars. (1)
to (17).
1980 -- Pub. L. 96-592 designated existing provisions as subsec.
(a), in par. (3) inserted provisions relating to summary and analysis
of reports, and added subsecs. (b) and (c).
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
Amendment by sections 205 and 409(a), (e) of Pub. L. 100-399
effective as if enacted immediately after enactment of Pub. L.
100-233, which was approved Jan. 6, 1988, and amendment by section
901(m), (n) of Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001 of Pub. L. 100-399, set out as a
note under section 2002 of this title.
Amendment by section 207(a)(2) of Pub. L. 100-233 effective 15 days
after Jan. 6, 1988, see section 207(b) of Pub. L. 100-233 set out as
an Effective Date of Repeal note under section 2152 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Credit Administration
Pub. L. 100-387, title III, 313(b), Aug. 11, 1988, 102 Stat. 950,
provided that: ''It further is the sense of Congress that the Farm
Credit Administration should in its oversight of Farm Credit System
institutions, with respect to farmers and ranchers who suffer major
losses due to drought, hail, excessive moisture, or related condition in
1988 --
''(1) ensure that Farm Credit System institutions exercise
forbearance in the collection of principal and interest on loans
outstanding to such farmers and ranchers;
''(2) expedite the use of credit restructuring and other credit
relief mechanisms authorized under the Agricultural Credit Act of 1987
(Pub. L. 100-233, Jan. 6, 1988, 101 Stat. 1568, see Tables for
classification) and related provisions of law for such farmers and
ranchers; and
''(3) encourage other lenders participating with Farm Credit System
institutions in mutual loan agreements to exercise forbearance before
declaring loans to such farmers and ranchers in default.''
Section 424(b) of Pub. L. 100-233 provided that: ''Within 30 days
after the date of the enactment of this Act (Jan. 6, 1988), the Farm
Credit Administration shall amend its regulations as necessary to
implement the amendment made by subsection (a) (amending this
section).''
12 USC 2253. Prior delegations
TITLE 12 -- BANKS AND BANKING
Any delegations by the Farm Credit Administration and redelegations
thereof made in accordance with section 5.19 of the Farm Credit Act of
1971 as in effect prior to the effective date of the Farm Credit
Amendments Act of 1985 may continue in full force and effect, at the
discretion of the Farm Credit Administration, for the period ending
twelve months after December 23, 1985.
(Pub. L. 92-181, title V, 5.18, as added Pub. L. 99-205, title II,
202(b), Dec. 23, 1985, 99 Stat. 1693.)
Section 5.19 of the Farm Credit Act of 1971 as in effect prior to the
effective date of the Farm Credit Amendments Act of 1985, referred to in
text, is section 5.19 of Pub. L. 92-181 which was classified to this
section prior to its repeal by section 202(a) of Pub. L. 99-205, known
as the Farm Credit Amendments Act of 1985. See Prior Provisions and
Effective Date notes below.
A prior section 2253, Pub. L. 92-181, title V, 5.19, Dec. 10, 1971,
85 Stat. 622, which related to delegation of duties and powers to
financial institutions, was repealed, effective thirty days after Dec.
23, 1985, by Pub. L. 99-205, title II, 202(a), Dec. 23, 1985, 99 Stat.
1693.
A prior section 5.18 of Pub. L. 92-181 was renumbered section 5.17
and is classified to section 2252 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2254. Examinations
TITLE 12 -- BANKS AND BANKING
(a) Scope and frequency of examinations; power, authority, and
liability of examiners
Except for Federal land bank associations, each institution of the
System shall be examined by Farm Credit Administration examiners at such
times as the Board may determine, but in no event less than once each
year. Each Federal land bank association shall be examined by Farm
Credit Administration examiners at such times as the Farm Credit
Administration Board may determine, except that each such association
shall be examined at least once every three years. Such examinations
shall include, but are not limited to, an analysis of credit and
collateral quality and capitalization of the institution, and appraisals
of the effectiveness of the institution's management and application of
policies governing the carrying out of this chapter and regulations of
the Farm Credit Administration and servicing all eligible borrowers.
Examination of banks shall include an analysis of the compensation paid
to the chief executive officer and the salary scales of the employees of
the bank. At the direction of the Board, Farm Credit Administration
examiners also shall make examinations of the condition of any
organization, other than federally regulated financial institutions, to,
for, or with which any institution of the System contemplates making a
loan or discounting paper. For the purposes of this chapter, examiners
of the Farm Credit Administration shall be subject to the same
requirements, responsibilities, and penalties as are applicable to
examiners under the National Bank Act (12 U.S.C. 21 et seq.), the
Federal Reserve Act (12 U.S.C. 221 et seq.), and Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.), and other provisions of law and
shall have the same powers and privileges as are vested in such
examiners by law.
(b) Annual report of condition
(1) Each institution of the System shall make and publish an annual
report of condition as prescribed by the Farm Credit Administration.
Each such report shall contain financial statements prepared in
accordance with generally accepted accounting principles, except with
respect to any actions taken by any banks of the System under section
2159(b) of this title, and contain such additional information as the
Farm Credit Administration by regulation may require. Notwithstanding
the provisions of the preceding sentence and any other provision of this
chapter, for the period July 1, 1986, through December 31, 1988, the
institutions of the Farm Credit System may, on the prior approval of the
Farm Credit Administration and subject to such conditions as it may
establish, capitalize annually their provision for losses that is in
excess of one-half of 1 percent of loans outstanding and amortize such
capitalized amounts over a period not to exceed 20 years. Such
financial statements of System institutions shall be audited by an
independent public accountant.
(2) In accordance with the regulations of the Farm Credit
Administration, for the period ending December 31, 1992, System
institutions are authorized to use the authorities contained in the
third sentence of paragraph (1) except as otherwise provided in section
2278a-6 of this title.
(3) Any preferred stock issued under section 2278b-7 of this title
shall be subordinated to, and impaired before, other stock or equities
of the institution.
(c) Report of examination of noncomplying institution; publication;
notice of intention
The Farm Credit Administration may publish the report of examination
of any System institution that does not, before the end of the 120th day
after the date of notification of the recommendations and suggestions of
the Farm Credit Administration, based on such examination, comply with
such recommendations and suggestions to the satisfaction of the Farm
Credit Administration. The Farm Credit Administration shall give notice
of intention to publish in the event of such noncompliance at least 90
days before such publication. Such notice of intention may be given any
time after such notification of recommendations and suggestions.
(Pub. L. 92-181, title V, 5.19, formerly 5.20, Dec. 10, 1971, 85
Stat. 623; renumbered 5.19 and amended Pub. L. 99-205, title II,
203(a), Dec. 23, 1985, 99 Stat. 1693; Pub. L. 99-509, title I, 1037,
Oct. 21, 1986, 100 Stat. 1878; Pub. L. 100-233, title II, 205(b), title
IV, 432(b), Jan. 6, 1988, 101 Stat. 1607, 1661; Pub. L. 100-399, title
II, 204, title IV, 416(c), Aug. 17, 1988, 102 Stat. 993, 1004; Pub. L.
101-624, title XVIII, 1843(b), Nov. 28, 1990, 104 Stat. 3836.)
A prior section 5.19 of Pub. L. 92-181 was classified to section
2253 of this title and was repealed by Pub. L. 99-205, title II, 202(
a), Dec. 23, 1985, 99 Stat. 1693.
The National Bank Act, referred to in subsec. (a), is act June 3,
1864, ch. 106, 13 Stat. 99, as amended, which is classified
principally to chapter 2 ( 21 et seq.) of this title. For complete
classification of this Act to the Code, see References in Text note set
out under section 38 of this title.
The Federal Reserve Act, referred to in subsec. (a), is act Dec.
23, 1913, ch. 6, 38 Stat. 251, as amended, which is classified
principally to chapter 3 ( 221 et seq.) of this title. For complete
classification of this Act to the Code, see References in Text note set
out under section 226 of this title and Tables.
The Federal Deposit Insurance Act, referred to in subsec. (a), is
act Sept. 21, 1950, ch. 967, 2, 64 Stat. 873, as amended, which is
classified generally to chapter 16 ( 1811 et seq.) of this title. For
complete classification of this Act to the Code, see Short Title note
set out under section 1811 of this title and Tables.
1990 -- Subsec. (a). Pub. L. 101-624 inserted after third sentence
''Examination of banks shall include an analysis of the compensation
paid to the chief executive officer and the salary scales of the
employees of the bank.''
1988 -- Subsec. (a). Pub. L. 100-399, 416(c), substituted ''at least
once every three years'' for ''at least once every 5 years''.
Pub. L. 100-233, 432(b), substituted ''Except for Federal land bank
associations, each'' for ''Each'', substituted ''the Board'' for ''the
Chairman of the Board'' in two places, and inserted after first sentence
''Each Federal land bank association shall be examined by Farm Credit
Administration examiners at such times as the Farm Credit Administration
Board may determine, except that each such association shall be examined
at least once every 5 years.''
Subsec. (b). Pub. L. 100-233, 205(b), designated existing provisions
as par. (1) and added pars. (2) and (3).
Subsec. (b)(2). Pub. L. 100-399, 204, substituted ''the third
sentence of paragraph (1)'' for ''this section''.
1986 -- Subsec. (b). Pub. L. 99-509 substituted second and third
sentences for former second sentence which read as follows: ''Each such
report shall contain financial statements prepared in accordance with
generally accepted accounting principles and contain such additional
information as the Farm Credit Administration by regulation may
require.''
1985 -- Pub. L. 99-205 in amending section generally, revised and
restated existing provisions in subsec. (a) and added subsecs. (b) and
(c). Prior to amendment, section read as follows: ''Except as provided
herein, each institution of the System, and each of their agents, at
such times as the Governor of the Farm Credit Administration may
determine, shall be examined and audited by farm credit examiners under
the direction of an independent chief Farm Credit Administration
examiner, but each bank and each production credit association shall be
examined and audited not less frequently than once each year. Such
examinations shall include objective appraisals of the effectiveness of
management and application of policies in carrying out the provisions of
this chapter and in servicing all eligible borrowers. If the Governor
determines it to be necessary or appropriate, the required examinations
and audits may be made by independent certified public accountants,
certified by a regulatory authority of a State, and in accordance with
generally accepted auditing standards. Upon request of the Governor or
any bank of the System, farm credit examiners shall also make
examinations and written reports of the condition of any organization,
other than national banks, to which, or with which, any institution of
the System contemplates making a loan or discounting paper of such
organization. For the purposes of this chapter, examiners of the Farm
Credit Administration shall be subject to the same requirements,
responsibilities, and penalties as are applicable to examiners under the
National Bank Act (12 U.S.C. 21 et seq.), the Federal Reserve Act (12
U.S.C. 221 et seq.), the Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.), and other provisions of law and shall have the same powers and
privileges as are vested in such examiners by law.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,
1985, see section 401 of Pub. L. 99-205, set out as a note under
section 2001 of this title.
Pub. L. 99-198, title XIII, 1326, Dec. 23, 1985, 99 Stat. 1540,
provided that:
''(a) Congress finds and declares that --
''(1) high production costs and low commodity prices have combined to
reduce farm income to the lowest levels since the depths of the
Depression in the 1930's, to subject many agricultural producers,
through no fault of their own, to severe economic hardship, and in many
cases temporarily but seriously to impair producers' ability to meet
loan repayment schedules in a timely fashion; and
''(2) a policy of adverse classification of agricultural loans by
bank examiners under these circumstances will trigger a wave of
foreclosures and similar actions on the part of banks, thereby
depressing land values and prices for agricultural facilities and
equipment and having a devastating effect on farmers and the banking
industry, and upon rural areas of the United States in general.
''(b) It is therefore the sense of Congress that the Federal bank
regulatory agencies should ensure, in their examination procedures, that
examiners exercise caution and restraint and give due consideration not
only to the current cash flow of agricultural borrowers under financial
stress, but to factors such as their loan collateral and ultimate
ability to repay as well, for so long as the adverse economic effects of
the cost-price squeeze of recent years continue to impair the ability of
these borrowers to meet scheduled repayments on their loans.''
12 USC 2255. Conditions of other banks and lending institutions
TITLE 12 -- BANKS AND BANKING
The Comptroller of the Currency is authorized and directed, upon
request of the Farm Credit Administration to furnish for confidential
use of an institution of the System such reports, records, and other
information as he may have available relating to the financial condition
of national banks through, for, or with which such institution of the
System has made or contemplates making discounts or loans and to make
such further examination, as may be agreed, of organizations through,
for, or with which such institution of the Farm Credit System has made
or contemplates making discounts or loans.
(Pub. L. 92-181, title V, 5.20, formerly 5.21, Dec. 10, 1971, 85
Stat. 623; renumbered 5.20, Pub. L. 99-205, title II, 203(b), Dec. 23,
1985, 99 Stat. 1694.)
A prior section 5.20 of Pub. L. 92-181 was renumbered section 5.19
and is classified to section 2254 of this title.
12 USC 2256. Consent to the availability of reports and to examinations
TITLE 12 -- BANKS AND BANKING
Any organization other than State banks, trust companies, and savings
associations shall, as a condition precedent to securing discount
privileges with a bank of the Farm Credit System, file with such bank
its written consent to examination by farm credit examiners as may be
directed by the Farm Credit Administration; and State banks, trust
companies, and savings associations may be required in like manner to
file a written consent that reports of their examination by constituted
State authorities may be furnished by such authorities upon the request
of the Farm Credit Administration.
(Pub. L. 92-181, title V, 5.21, formerly 5.22, Dec. 10, 1971, 85
Stat. 623; renumbered 5.21, Pub. L. 99-205, title II, 203(b), Dec. 23,
1985, 99 Stat. 1694.)
A prior section 5.21 of Pub. L. 92-181 was renumbered section 5.20
and is classified to section 2255 of this title.
12 USC 2257. Reports on conditions of institutions receiving loans or
deposits
TITLE 12 -- BANKS AND BANKING
The executive departments, boards, commissions, and independent
establishments of the Government of the United States, the Federal
Deposit Insurance Corporation, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, and the Federal
Reserve banks are severally authorized under such conditions as they may
prescribe, upon request of the Farm Credit Administration, to make
available to it or to any institution of the System in confidence all
reports, records, or other information relating to the condition of any
organization to which such institution of the System has made or
contemplates making loan or for which it has or contemplates discounting
paper, or which it is using or contemplates using as a custodian of
securities or other credit instruments, or a depository. The Federal
Reserve banks in their capacity as depositories, agents, and custodians
for bonds, debentures, and other obligations issued by the banks of the
System or book entries thereof are also authorized and directed, upon
request of the Farm Credit Administration, to make available for audit
by farm credit examiners all appropriate books, accounts, financial
records, files, and other papers.
(Pub. L. 92-181, title V, 5.22, formerly 5.23, Dec. 10, 1971, 85
Stat. 624; renumbered 5.22, Pub. L. 99-205, title II, 203(b), Dec. 23,
1985, 99 Stat. 1694.)
A prior section 5.22 of Pub. L. 92-181 was renumbered section 5.21
and is classified to section 2256 of this title.
12 USC 2257a. Uniform financial reporting instructions
TITLE 12 -- BANKS AND BANKING
(a) In general
Each System institution shall comply with uniform financial reporting
instructions required by the Farm Credit Administration, to standardize
and facilitate the reporting of System data.
(b) Computerized system
If the financial reports are maintained by a computer system, each
System institution may develop an internal computer system or it may
contract out to a vendor under open competitive bidding any or all
aspects of the computerized system.
(c) Submission of proposal
Within 6 months of January 6, 1988, each System institution shall
submit to the Farm Credit Administration a report on the plan of that
institution to bring the operations of the institution into compliance
with the uniform financial reporting instructions required by the Farm
Credit Administration.
(Pub. L. 92-181, title V, 5.22A, as added Pub. L. 100-233, title IV,
429, Jan. 6, 1988, 101 Stat. 1658.)
12 USC 2258. Jurisdiction
TITLE 12 -- BANKS AND BANKING
Each institution of the System shall for the purposes of jurisdiction
be deemed to be a citizen of the State, commonwealth, or District of
Columbia in which its principal office is located.
(Pub. L. 92-181, title V, 5.23, formerly 5.24, Dec. 10, 1971, 85
Stat. 624; Pub. L. 94-184, 1(b), Dec. 31, 1975, 89 Stat. 1060;
renumbered 5.23, Pub. L. 99-205, title II, 203(b), Dec. 23, 1985, 99
Stat. 1694.)
A prior section 5.23 of Pub. L. 92-181 was renumbered section 5.22
and is classified to section 2257 of this title.
1975 -- Pub. L. 94-184 struck out provisions prohibiting district
court jurisdiction on the basis of incorporation under this Act or prior
Federal law, and prohibiting jurisdiction except in cases by or against
the United States or one of its officers, or against a person over whom
State courts have no jurisdiction and except in cases by or against a
receiver or conservator appointed under this chapter.
12 USC 2259. State legislation
TITLE 12 -- BANKS AND BANKING
Whenever it is determined by the Farm Credit Administration, or by
judicial decision, that a State law is applicable to the obligations and
securities authorized to be held by the institutions of the System under
this chapter, which law would provide insufficient protection or
inadequate safeguards against loss in the event of default, the Farm
Credit Administration may declare such obligations or securities to be
ineligible as collateral for the issuance of new notes, bonds,
debentures, and other obligations under this chapter.
(Pub. L. 92-181, title V, 5.24, formerly 5.25, Dec. 10, 1971, 85
Stat. 624; renumbered 5.24, Pub. L. 99-205, title II, 203(b), Dec. 23,
1985, 99 Stat. 1694.)
A prior section 5.24 of Pub. L. 92-181 was renumbered section 5.23
and is classified to section 2258 of this title.
12 USC 2260. Transferred
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title V, 5.30, as added Pub. L. 96-592,
title V, 509, Dec. 24, 1980, 94 Stat. 3450, which related to audit and
report to Congress by the Comptroller General, was renumbered section
5.44 of Pub. L. 92-181 by, Pub. L. 99-205, title II, 205(a)( 2), Dec.
23, 1985, 99 Stat. 1703, and was transferred to section 2275 of this
title.
12 USC Part C -- Enforcement Powers of Farm Credit Administration
TITLE 12 -- BANKS AND BANKING
12 USC 2261. Cease and desist proceedings
TITLE 12 -- BANKS AND BANKING
(a) If, in the opinion of the Farm Credit Administration, any
institution in the Farm Credit System, or any director, officer,
employee, agent, or other person participating in the conduct of the
affairs of such an institution is engaging or has engaged, or the Farm
Credit Administration has reasonable cause to believe that the
institution or any director, officer, employee, agent, or other person
participating in the conduct of the affairs of such institution is about
to engage, in an unsafe or unsound practice in conducting the business
of such institution, or is violating or has violated, or the Farm Credit
Administration has reasonable cause to believe that the institution or
any director, officer, employee, agent, or other person participating in
the conduct of the affairs of such institution is about to violate, a
law, rule, or regulation, or any condition imposed in writing by the
Farm Credit Administration in connection with the granting of any
application or other request by the institution or any written agreement
entered into with the Farm Credit Administration, the Farm Credit
Administration may issue and serve upon the institution or such
director, officer, employee, agent, or other person a notice of charges
in respect thereof. The notice shall contain a statement of the facts
constituting the alleged violation or violations or the unsafe or
unsound practice or practices, and shall fix a time and place at which a
hearing will be held to determine whether an order to cease and desist
therefrom should issue against the institution or the director, officer,
employee, agent, or other person participating in the conduct of the
affairs of such institution. Such hearing shall be fixed for a date not
earlier than thirty days nor later than sixty days after service of such
notice unless an earlier or a later date is set by the Farm Credit
Administration at the request of any party so served. Unless the party
or parties so served shall appear at the hearing personally or by a duly
authorized representative, they shall be deemed to have consented to the
issuance of the cease and desist order. In the event of such consent,
or if upon the record made at any such hearing, the Farm Credit
Administration shall find that any violation or unsafe or unsound
practice specified in the notice of charges has been established, the
Farm Credit Administration may issue and serve upon the institution or
the director, officer, employee, agent, or other person participating in
the conduct of the affairs of such institution an order to cease and
desist from any such violation or practice. Such order may, by
provisions that may be mandatory or otherwise, require the institution
or its directors, officers, employees, agents, and other persons
participating in the conduct of the affairs of such institution to cease
and desist from the same, and, further, to take affirmative action to
correct the conditions resulting from any such violation or practice.
(b) A cease and desist order shall become effective at the expiration
of thirty days after the service of such order upon the institution or
other person concerned (except in the case of a cease and desist order
issued upon consent, which shall become effective at the time specified
therein), and shall remain effective and enforceable as provided therein
except to such extent as it is stayed, modified, terminated, or set
aside by action of the Farm Credit Administration or a reviewing court.
(Pub. L. 92-181, title V, 5.25, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1694.)
A prior section 5.25 of Pub. L. 92-181 was renumbered section 5.24
and is classified to section 2259 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2262. Temporary cease and desist orders
TITLE 12 -- BANKS AND BANKING
(a) Whenever the Farm Credit Administration shall determine that the
violation or threatened violation or the unsafe or unsound practice or
practices, specified in the notice of charges served upon the
institution or any director, officer, employee, agent, or other person
participating in the conduct of the affairs of such institution under
section 2261 of this title, or the continuation thereof, is likely to
cause insolvency or substantial dissipation of assets or earnings of the
institution, or is likely to seriously weaken the condition of the
institution or otherwise seriously prejudice the interests of the
investors in Farm Credit System obligations or shareholders in the
institution prior to the completion of the proceedings conducted under
section 2261 of this title, the Farm Credit Administration may issue a
temporary order requiring the institution or such director, officer,
employee, agent, or other person to cease and desist from any such
violation or practice and to take affirmative action to prevent such
insolvency, dissipation, condition, or prejudice pending completion of
such proceedings. Such order shall become effective upon service upon
the institution or such director, officer, employee, agent, or other
person participating in the conduct of the affairs of such institution
and, unless set aside, limited, or suspended by a court in proceedings
authorized by subsection (b) of this section, shall remain effective and
enforceable pending the completion of the administrative proceedings
pursuant to such notice and until such time as the Farm Credit
Administration shall dismiss the charges specified in such notice, or if
a cease and desist order is issued against the institution or such
director, officer, employee, agent, or other person, until effective
date of such order.
(b) Within ten days after the institution concerned or any director,
officer, employee, agent, or other person participating in the conduct
of the affairs of such institution has been served with a temporary
cease and desist order, the institution or such director, officer,
employee, agent, or other person may apply to the United States district
court for the judicial district in which the home office of the
institution is located, or the United States district court for the
District of Columbia, for an injunction setting aside, limiting, or
suspending the enforcement, operation, or effectiveness of such order
pending the completion of the administrative proceedings pursuant to the
notice of charges served upon the institution or such director, officer,
employee, agent, or other person under section 2261 of this title, and
such court shall have jurisdiction to issue such injunction.
(Pub. L. 92-181, title V, 5.26, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1695.)
A prior section 5.26 of Pub. L. 92-181 was renumbered section 5.40
and is set out in part as notes under section 2001 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2263. Enforcement of temporary cease and desist orders
TITLE 12 -- BANKS AND BANKING
In the case of violation or threatened violation of, or failure to
obey, a temporary cease and desist order issued under section 2262 of
this title, the Farm Credit Administration may apply to the United
States district court, or the United States court of any territory,
within the jurisdiction of which the home office of the institution is
located, for an injunction to enforce such order, and, if the court
shall determine that there has been such violation or threatened
violation or failure to obey, it shall be the duty of the court to issue
such injunction.
(Pub. L. 92-181, title V, 5.27, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1696.)
A prior section 5.27 of Pub. L. 92-181, which amended section 393 of
this title and sections 5314 and 5315 of Title 5, Government
Organization and Employees, was renumbered section 5.41.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2264. Suspension or removal of director or officer
TITLE 12 -- BANKS AND BANKING
(a) Written notice of intention to remove; violation of law, rule,
regulation, or final cease and desist order; unsafe or unsound
practice; breach of fiduciary duty
Whenever, in the opinion of the Farm Credit Administration, any
director or officer of any institution in the Farm Credit System has
committed any violation of law, rule, or regulation or of a cease and
desist order that has become final, or has engaged or participated in
any unsafe or unsound practice in connection with the institution, or
has committed or engaged in any act, omission, or practice which
constitutes a breach of a fiduciary duty as such director or officer,
and the Farm Credit Administration determines that the institution has
suffered or will probably suffer substantial financial loss or other
damage or that the interests of its shareholders or investors in Farm
Credit System obligations could be seriously prejudiced by reason of
such violation or practice or breach of fiduciary duty, or that the
director or officer has received financial gain by reason of such
violation or practice or breach of fiduciary duty, and that such
violation or practice or breach of fiduciary duty is one involving
personal dishonesty on the part of such director or officer, or one that
demonstrates a willful or continuing disregard for the safety or
soundness of the System institution, the Farm Credit Administration may
serve upon such director or officer a written notice of its intention to
remove him from office.
(b) Written notice of intention to remove or suspend director,
officer or other person; personal dishonesty; willful or continuing
disregard; unfitness to continue in office or to participate in affairs
of institution
Whenever, in the opinion of the Farm Credit Administration, any
director or officer of an institution in the Farm Credit System, by
conduct or practice with respect to another institution in the Farm
Credit System or other business institution that resulted in substantial
financial loss or other damage, has evidenced either his personal
dishonesty or a willful or continuing disregard for its safety and
soundness and, in addition, has evidenced his unfitness to continue as a
director or officer, and whenever, in the opinion of the Farm Credit
Administration, any other person participating in the conduct of the
affairs of an institution in the Farm Credit System, by the conduct or
practice with respect to such institution or other institution in the
Farm Credit System or other business institution that resulted in
substantial financial loss or other damage, has evidenced either
personal dishonesty or a willful or continuing disregard for its safety
and soundness and, in addition, has evidenced his unfitness to
participate in the conduct of the affairs of such institution, the Farm
Credit Administration may serve upon such director, officer, or other
person a written notice of its intention to remove that director,
officer, or other person from office or to prohibit his further
participation in any manner in the conduct of the affairs of the
institution.
(c) Suspension from office; prohibition from further participation
in conduct of affairs of institution; service of notice
In respect to any director or officer of an institution in the Farm
Credit System or any other person referred to in subsection (a) or (b)
of this section, the Farm Credit Administration may, if it deems it
necessary for the protection of the institution or the interests of its
shareholders and the investors in the Farm Credit System obligations, by
written notice to such effect served upon such director, officer, or
other person, suspend such director, officer, or other person from
office or prohibit such director, officer, or other person from further
participation in any manner in the conduct of the affairs of the
institution. Such suspension or prohibition shall become effective upon
service of such notice and, unless stayed by a court in proceedings
authorized by subsection (e) of this section, shall remain in effect
pending the completion of the administrative proceedings pursuant to the
notice served under subsection (a) or (b) of this section and until such
time as the Farm Credit Administration shall dismiss the charges
specified in such notice, or, if an order of removal or prohibition is
issued against the director or officer or other person, until the
effective date of any such order. Copies of any such notice shall also
be served upon the institution of which the person is a director or
officer or in the conduct of whose affairs the person has participated.
(d) Statement of grounds for removal or prohibition; notice and
hearing; order of suspension, removal or prohibition; service of order
A notice of intention to remove a director, officer, or other person
from office or to prohibit such director's, officer's, or other person's
participation in the conduct of the affairs of an institution in the
Farm Credit System, shall contain a statement of the facts constituting
grounds therefor, and shall fix a time and place at which a hearing will
be held thereon. Such hearing shall be fixed for a date not earlier
than thirty days nor later than sixty days after the date of service of
such notice, unless an earlier or a later date is set by the Farm Credit
Administration at the request of (1) such director or officer or other
person, and for good cause shown, or (2) the Attorney General of the
United States. Unless such director, officer, or other person shall
appear at the hearing in person or by a duly authorized representative,
such director, officer, or other person shall be deemed to have
consented to the issuance of an order of such removal or prohibition.
In the event of such consent, or if upon the record made at any such
hearing the Farm Credit Administration shall find that any of the
grounds specified in such notice have been established, the Farm Credit
Administration may issue such orders of suspension or removal from
office, or prohibition from participation in the conduct of the affairs
of the institution, as it may deem appropriate. A copy of an order
issued under this subsection shall be served upon the institution
concerned. Any such order shall become effective at the expiration of
thirty days after service upon such institution and the director,
officer, or other person concerned (except in the case of an order
issued upon consent, which shall become effective at the time specified
therein). Such order shall remain effective and enforceable except to
such extent as it is stayed, modified, terminated, or set aside by
action of the agency or a reviewing court.
(e) Stay of suspension or prohibition
Within ten days after any director, officer, or other person has been
suspended from office or prohibited from participation in the conduct of
the affairs of a System institution under subsection (c) of this
section, such director, officer, or other person may apply to the United
States district court for the judicial district in which the home office
of the institution is located, or the United States district court for
the District of Columbia, for a stay of either such suspension or
prohibition, or both, pending the completion of the administrative
proceedings pursuant to the notice served upon such director, officer,
or other person under subsection (a) or (b) of this section, and such
court shall have jurisdiction to stay either such suspension or
prohibition, or both.
(Pub. L. 92-181, title V, 5.28, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1696, and amended Pub. L. 100-233, title
VIII, 805(aa), Jan. 6, 1988, 101 Stat. 1717; Pub. L. 100-399, title
VII, 702(d), Aug. 17, 1988, 102 Stat. 1006.)
A prior section 5.28 of Pub. L. 92-181 was renumbered section 5.42
and is set out as a note under section 2001 of this title.
1988 -- Subsec. (a). Pub. L. 100-233, 805(aa)(1), designated
provisions preceding subsec. (b) as subsec. (a).
Subsec. (e). Pub. L. 100-399 substituted ''subsection (c)'' for
''subsection (d)''.
Pub. L. 100-233, 805(aa)(2), substituted ''subsection (d) of this
section'' for ''subsection (d)(3) of this section''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2265. Suspension or removal of director or officer charged with
felony
TITLE 12 -- BANKS AND BANKING
(a) Whenever any director or officer of an institution in the Farm
Credit System, or other person participating in the conduct of the
affairs of such institution, is charged in any information, indictment,
or complaint authorized by a United States attorney, with the commission
of or participation in a crime involving dishonesty or breach of trust
that is punishable by imprisonment for a term exceeding one year under
State or Federal law, the Farm Credit Administration may, if continued
service or participation by the individual may pose a threat to the
interests of the institution's shareholders or investors in Farm Credit
System obligations or threaten to impair public confidence in the
institution or the Farm Credit System, by written notice served upon
such director, officer, or other person, suspend such director, officer,
or other person from office or prohibit such director, officer, or other
person from further participation in any manner in the conduct of the
affairs of the institution. A copy of such notice shall also be served
upon the institution. Such suspension or prohibition shall remain in
effect until such information, indictment, or complaint is finally
disposed of or until terminated by the Farm Credit Administration. In
the event that a judgment of conviction with respect to such crime is
entered against such director, officer, or other person, and at such
time as such judgment is not subject to further appellate review, the
Farm Credit Administration may, if continued service or participation by
the individual may pose a threat to the interests of the institution's
shareholders or the investors in Farm Credit System obligations or may
threaten to impair public confidence in the institution or the Farm
Credit System, issue and serve upon such director, officer, or other
person an order removing such director, officer, or other person from
office or prohibiting such director, officer, or other person from
further participation in any manner in the conduct of the affairs of the
institution except with the consent of the Farm Credit Administration.
A copy of such order shall also be served upon such institution,
whereupon such director or officer shall cease to be a director or
officer of such institution. A finding of not guilty or other
disposition of the charge shall not preclude the Farm Credit
Administration from thereafter instituting proceedings to remove such
director, officer, or other person from office or to prohibit further
participation in Farm Credit System affairs under section 2264 of this
title. Any notice of suspension or order of removal issued under this
paragraph shall remain effective and outstanding until the completion of
any hearing or appeal authorized under subsection (b) of this section
unless terminated by the Farm Credit Administration.
(b) Within thirty days from service of any notice of suspension or
order of removal issued under subsection (a) of this section, the
director, officer, or other person concerned may request in writing an
opportunity to appear before the Farm Credit Administration to show that
the continued service to or participation in the conduct of the affairs
of the institution by such individual does not, or is not likely to,
pose a threat to the interest of the institution's shareholders or the
investors in Farm Credit System obligations or threaten to impair public
confidence in the institution or the Farm Credit System. Upon receipt
of any such request, the Farm Credit Administration shall fix a time
(not more than thirty days after receipt of such request, unless
extended at the request of the concerned director, officer, or other
person) and place at which the director, officer, or other person may
appear, personally or through counsel, before the Chairman of the Farm
Credit Administration or designated employees of the Farm Credit
Administration to submit written materials (or, at the discretion of the
Farm Credit Administration, oral testimony) and oral argument. Within
sixty days of such hearing, the Farm Credit Administration shall notify
the director, officer, or other person whether the suspension or
prohibition from participation in any manner in the conduct of the
affairs of the institution will be continued, terminated, or otherwise
modified, or whether the order removing such director, officer, or other
person from office or prohibiting such individual from further
participation in any manner in the conduct of the affairs of the
institution will be rescinded or otherwise modified. Such notification
shall contain a statement of the basis for the Farm Credit
Administration's decision, if adverse to the director, officer, or other
person. The Farm Credit Administration may prescribe such rules as may
be necessary to effectuate the purposes of this subsection.
(Pub. L. 92-181, title V, 5.29, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1698, and amended Pub. L. 100-233, title
VIII, 805(bb), Jan. 6, 1988, 101 Stat. 1717; Pub. L. 100-399, title
VII, 702(e), Aug. 17, 1988, 102 Stat. 1006.)
A prior section 5.29 of Pub. L. 92-181 was renumbered section 5.43
and is set out as a note under section 2001 of this title.
1988 -- Subsec. (a). Pub. L. 100-233, 805(bb)(1), substituted ''may
pose a threat to the interests of the institution's shareholders or
investors in Farm Credit System obligations or may threaten to impair
public confidence in the institution or the Farm Credit System'' for
''may pose a threat to the interest of the institution's shareholders or
the investors in the Farm Credit System obligations or may threaten to
impair public confidence in the institution or Farm Credit System''.
Subsec. (b). Pub. L. 100-233 struck out ''may'' before ''threaten to
impair public confidence''.
Pub. L. 100-233, 805(bb)(2), substituted ''of the institution's
shareholders or the investors in Farm Credit System obligations or may
threaten to impair public confidence in the institution or the Farm
Credit System'' for ''in Farm Credit System obligations''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2266. Hearings and judicial review
TITLE 12 -- BANKS AND BANKING
(a) Venue; closed hearings; decisions and findings of fact;
orders; modification or other action by Farm Credit Administration;
judicial review
Any hearing provided for in this part (other than the hearing
provided for in section 2265 of this title) shall be held in the Federal
judicial district or in the territory in which the home office of the
institution is located unless the party afforded the hearing consents to
another place, and shall be conducted in accordance with the provisions
of chapter 5 of title 5. Such hearing shall be private, unless the Farm
Credit Administration, in its discretion, after fully considering the
views of the party afforded the hearing, determines that a public
hearing is necessary to protect the public interest. After such
hearing, and within ninety days after the Farm Credit Administration has
notified the parties that the case has been submitted to it for final
decision, it shall render its decision (which shall include findings of
fact upon which its decision is predicated) and shall issue and serve
upon each party to the proceeding an order or orders consistent with the
provisions of this part. Judicial review of any such order shall be
exclusively as provided in this section. Unless a petition for review
is timely filed in a court of appeals of the United States, as
hereinafter provided in subsection (b) of this section, and thereafter
until the record in the proceeding has been filed as so provided, the
Farm Credit Administration may at any time, upon such notice and in such
manner as it shall deem proper, modify, terminate, or set aside any such
order. Upon such filing of the record, the Farm Credit Administration
may modify, terminate, or set aside any such order with permission of
the court.
(b) Judicial review; commencement of proceedings; filing of
petition and record; exclusive jurisdiction; finality of judgment and
decree
Any party to the proceeding, or any person required by an order
issued under this part to cease and desist from any of the violations or
practices stated therein, may obtain a review of any order served under
subsection (a) of this section (other than an order issued with the
consent of the System institution or the director or officer or other
person concerned, or an order issued under section 2265 of this title)
by the filing in the court of appeals of the United States for the
circuit in which the home office of the institution is located, or in
the United States Court of Appeals for the District of Columbia Circuit,
within thirty days after the date of service of such order, a written
petition praying that the order of the Farm Credit Administration be
modified, terminated, or set aside. A copy of such petition shall be
forthwith transmitted by the clerk of the court to the Farm Credit
Administration, and thereupon the Farm Credit Administration shall file
in the court the record in the proceeding, as provided in section 2112
of title 28. Upon the filing of such petition, such court shall have
jurisdiction, which upon the filing of the record shall except as
provided in the last sentence of subsection (a) of this section be
exclusive, to affirm, modify, terminate, or set aside, in whole or in
part, the order of the Farm Credit Administration. Review of such
proceedings shall be had as provided in chapter 7 of title 5. The
judgment and decree of the court shall be final, except that the same
shall be subject to review by the Supreme Court upon certiorari, as
provided in section 1254 of title 28.
(c) Proceedings operating as stays of orders
The commencement of proceedings for judicial review under subsection
(b) of this section shall not, unless specifically ordered by the court,
operate as a stay of any order issued by the Farm Credit Administration.
(Pub. L. 92-181, title V, 5.30, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1699, and amended Pub. L. 100-233, title
VIII, 805(cc), Jan. 6, 1988, 101 Stat. 1717.)
A prior section 5.30 of Pub. L. 92-181 was renumbered section 5.44
and transferred from section 2260 to section 2275 of this title.
1988 -- Subsec. (a). Pub. L. 100-233 substituted ''this section''
for ''this subsection (g)''.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2267. Jurisdiction and enforcement
TITLE 12 -- BANKS AND BANKING
The Farm Credit Administration may in its discretion apply to the
United States district court, or the United States court of any
territory, within the jurisdiction of which the home office of the
institution is located, for the enforcement of any effective and
outstanding notice or order issued under this part, and such courts
shall have jurisdiction and power to order and require compliance
herewith; but except as otherwise provided in this part no court shall
have jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under this part, or to review,
modify, suspend, terminate, or set aside any such notice or order. For
purposes of this section, any directive issued under section 2154(b)(
2), 2154a(e), or 2202a(i) of this title shall be treated as an effective
and outstanding order issued under section 2261 of this title that has
become final.
(Pub. L. 92-181, title V, 5.31, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1700, and amended Pub. L. 100-233, title
VIII, 804(a)(1), Jan. 6, 1988, 101 Stat. 1714.)
1988 -- Pub. L. 100-233 inserted at end ''For purposes of this
section, any directive issued under section 2154(b)(2), 2154a(e), or
2202a(i) of this title shall be treated as an effective and outstanding
order issued under section 2261 of this title that has become final.''
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2268. Penalty
TITLE 12 -- BANKS AND BANKING
(a) Forfeiture and payment; compromise, modification, or remitting
by Farm Credit Administration; assessment and collection by written
notice
Any institution in the System that violates or any officer, director,
employee, agent, or other person participating in the conduct of the
affairs of such an institution who violates the terms of any order that
has become final and was issued under section 2261 or 2262 of this
title, shall forfeit and pay a civil penalty of not more than $1,000 per
day for each day during which such violation continues. Any such
institution or person who violates any provision of this chapter or any
regulation issued under this chapter shall forfeit and pay a civil
penalty of not more than $500 per day for each day during which such
violation continues. Notwithstanding the preceding sentences, the Farm
Credit Administration may, in its discretion, compromise, modify, or
remit any civil money penalty that is subject to imposition or has been
imposed under such authority. The penalty may be assessed and collected
by the Farm Credit Administration by written notice.
(b) Factors determining amount
Before determining whether to assess a civil money penalty and
determining the amount of such penalty, the Farm Credit Administration
shall notify the institution or person to be assessed of the violation
or violations alleged to have occurred or to be occurring, and shall
solicit the views of the institution or person regarding the imposition
of such penalty. In determining the amount of the penalty, the Farm
Credit Administration shall take into account the appropriateness of the
penalty with respect to the size of financial resources and good faith
of the System institution or person charged, the gravity of the
violation, the history of previous violations, and such other matters as
justice may require.
(c) Notice and hearing; final orders
The System institution or person assessed shall be afforded an
opportunity for a hearing by the Farm Credit Administration, upon
request made within ten days after issuance of the notice of assessment.
In such hearing all issues shall be determined on the record pursuant
to section 554 of title 5. The Farm Credit Administration determination
shall be made by final order which may be reviewed only as provided in
subsection (d) of this section. If no hearing is requested as herein
provided, the assessment shall constitute a final and unappealable
order.
(d) Judicial review
Any System institution or person against whom an order imposing a
civil money penalty has been entered after a Farm Credit Administration
hearing under this section may obtain review by the United States court
of appeals for the circuit in which the home office of the System
institution is located, or the United States Court of Appeals for the
District of Columbia Circuit, by filing a notice of appeal in such court
within twenty days after the service of such order, and simultaneously
sending a copy of such notice by registered or certified mail to the
Farm Credit Administration. The Farm Credit Administration shall
promptly certify and file in such Court the record upon which the
penalty was imposed, as provided in section 2112 of title 28. Final
orders of the Farm Credit Administration issued under subsection (c) of
this section shall be reviewable under chapter 7 of title 5.
(e) Action by Attorney General to recover amount assessed
If any System institution or person fails to pay an assessment after
it has become a final and unappealable order, or after the court of
appeals has entered final judgment in favor of the Farm Credit
Administration, the Farm Credit Administration shall refer the matter to
the Attorney General, who shall recover the amount assessed by action in
the appropriate United States district court. In such action, the
validity and appropriateness of the final order imposing the penalty
shall not be subject to review.
(f) Rules and regulations
The Farm Credit Administration shall promulgate regulations
establishing procedures necessary to implement section 2267 of this
title and this section.
(g) Payment into Treasury
All penalties collected under authority of this section shall be
covered into the Treasury of the United States.
(h) Directives as final orders
For purposes of this section, any directive issued under section
2154(b)(2), 2154a(e), or 2202a(i) of this title shall be treated as an
order that has become final and was issued under section 2261 of this
title.
(Pub. L. 92-181, title V, 5.32, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1700, and amended Pub. L. 100-233, title
IV, 423, title VIII, 804(a)(2), 805(dd), Jan. 6, 1988, 101 Stat. 1656,
1714, 1717.)
1988 -- Subsec. (a). Pub. L. 100-233, 423(a), substituted
''continues. Any such institution or person who violates any provision
of this chapter or any regulation issued under this chapter shall
forfeit and pay a civil penalty of not more than $500 per day for each
day during which such violation continues. Notwithstanding the
preceding sentences,'' for ''continues, but''.
Subsec. (b). Pub. L. 100-233, 423(b), inserted ''Before determining
whether to assess a civil money penalty and determining the amount of
such penalty, the Farm Credit Administration shall notify the
institution or person to be assessed of the violation or violations
alleged to have occurred or to be occurring, and shall solicit the views
of the institution or person regarding the imposition of such penalty.''
Subsec. (d). Pub. L. 100-233, 423(c), substituted ''Final orders of
the Farm Credit Administration issued under subsection (c) of this
section shall be reviewable under chapter 7 of title 5'' for ''The
findings of the Farm Credit Administration shall be set aside if found
to be unsupported by substantial evidence as provided by section 706(
2)(E) of title 5''.
Subsec. (f). Pub. L. 100-233, 805(dd), substituted ''section 2267 of
this title and this section'' for ''sections 2267 and 2268 of this
title''.
Subsec. (h). Pub. L. 100-233, 804(a)(2), added subsec. (h).
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2269. Further penalties
TITLE 12 -- BANKS AND BANKING
Any director or officer, or former director or officer of a System
institution, or any other person, against whom there is outstanding and
effective any notice or order (which is an order which has become final)
served upon such director, officer, or other person under section 2264
or 2265 of this title, and who (1) participates in any manner in the
conduct of the affairs of the institution involved, or directly or
indirectly solicits or procures, or transfers or attempts to transfer,
or votes or attempts to vote, any proxies, consents, or authorizations
in respect of any voting rights in such institution, or (2) without the
prior written approval of the Farm Credit Administration, votes for a
director, serves or acts as a director, officer, or employee of any
System institution, shall upon conviction be fined not more than $5,000
or imprisoned for not more than one year, or both.
(Pub. L. 92-181, title V, 5.33, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1701.)
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2270. Replacement of suspended or removed directors
TITLE 12 -- BANKS AND BANKING
If at any time, because of the suspension or removal of one or more
directors pursuant to section 2264 or 2265 of this title, there shall be
on the board of directors of a System institution less than a quorum of
directors not so suspended, the Chairman shall appoint persons to serve
temporarily as directors in their place and stead so as to establish a
quorum until such time as those who have been removed are reinstated or
their respective successors are duly elected and take office.
(Pub. L. 92-181, title V, 5.34, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1701.)
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2271. Definitions
TITLE 12 -- BANKS AND BANKING
As used in this part --
(1) the terms ''cease and desist order that has become final'' and
''order which has become final'' mean a cease and desist order, or an
order, issued by the Farm Credit Administration with the consent of the
System institution or the director or officer or other person concerned,
or with respect to which no petition for review of the action of the
Farm Credit Administration has been filed and perfected in a court of
appeals as specified in section 2266(b) of this title, or with respect
to which the action of the court in which such petition is so filed is
not subject to further review by the Supreme Court of the United States
in proceedings provided for in section 2266(b) of this title, or an
order issued under section 2265 of this title;
(2) the term ''violation'' includes without limitation any action
(alone or with another or others) for or toward causing, bringing about,
participating in, counseling, or aiding or abetting a violation;
(3) the terms ''institution in the System'', ''System institution'',
and ''institution'' mean all institutions enumerated in section 2002 of
this title, any service organization chartered under part E of
subchapter IV of this chapter, and the Financial Assistance Corporation;
and
(4) the term ''unsafe or unsound practice'' shall --
(A) have the meaning given to it by the Farm Credit Administration by
regulation, rule, or order; and
(B) during the period beginning on January 6, 1988, and ending
December 31, 1992, mean any noncompliance by a System institution, as
determined by the Farm Credit Administration in consultation with the
Assistance Board, with any term or condition imposed on the institution
by the Assistance Board under section 2278a-6 of this title.
(Pub. L. 92-181, title V, 5.35, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1701, and amended Pub. L. 100-233, title
II, 203, 207(d), Jan. 6, 1988, 101 Stat. 1605, 1608; Pub. L. 102-237,
title V, 502(i), Dec. 13, 1991, 105 Stat. 1869.)
January 6, 1988, referred to in par. (4)(B), was in the original
''the date of the enactment of this paragraph'' which was translated as
meaning the date of enactment of Pub. L. 100-233, which amended par.
(4) generally, to reflect the probable intent of Congress.
1991 -- Par. (3). Pub. L. 102-237 substituted ''part E'' for ''part
D''.
1988 -- Par. (3). Pub. L. 100-233, 207(d), substituted ''Financial
Assistance Corporation'' for ''Capital Corporation''.
Par. (4). Pub. L. 100-233, 203, amended par. (4) generally. Prior to
amendment, par. (4) read as follows: ''the term 'unsafe or unsound
practice' shall have the meaning given to it by the Farm Credit
Administration by regulations, rule, or order.''
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2272. Notice of service
TITLE 12 -- BANKS AND BANKING
Any service required or authorized to be made by the Farm Credit
Administration under this section may be made by registered mail, or in
such other manner reasonably calculated to give actual notice as the
Farm Credit Administration may by regulation or otherwise provide. Any
such service by mail is complete upon mailing. Copies of any notice or
order served by the Farm Credit Administration on any association or any
director or officer thereof or other person participating in the conduct
of its affairs, under the provisions of this part, shall also be sent to
the supervisory bank.
(Pub. L. 92-181, title V, 5.36, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1702.)
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2273. Ancillary provisions; subpena power; etc.
TITLE 12 -- BANKS AND BANKING
In the course of or in connection with any proceeding under this part
or any examination or investigation under this chapter, the Farm Credit
Administration or any designated representative thereof, including any
person designated to conduct any hearing under this part, shall have the
power to administer oaths and affirmations, to take or cause to be taken
depositions, and to issue, revoke, quash, or modify subpenas and
subpenas duces tecum; and the Farm Credit Administration is empowered
to make rules and regulations with respect to any such proceedings,
examinations, or investigations. The attendance of witnesses and the
production of documents provided for in this section may be required
from any place in any State or in any territory or other place subject
to the jurisdiction of the United States at any designated place where
such proceeding is being conducted. The Farm Credit Administration or
any party to proceedings under this part may apply to the United States
District Court for the District of Columbia, or the United States
district court for the judicial district or the United States court in
any territory in which such proceeding is being conducted, or where the
witness resides or carries on business, for enforcement of any subpena
or subpena duces tecum issued pursuant to this part, and such courts
shall have jurisdiction and power to order and require compliance
therewith. Witnesses subpenaed under this section shall be paid the same
fees and mileage that are paid witnesses in the district courts of the
United States. Any court having jurisdiction of any proceeding
instituted under this part by a System institution or a director or
officer thereof, may allow to any such party such reasonable expenses
and attorneys' fees as it deems just and proper; and such expenses and
fees shall be paid by the System institution or from its assets. Any
person who willfully shall fail or refuse to attend or testify or to
answer any lawful inquiry or to produce books, papers, correspondence,
memoranda, contracts, agreements, or other records, if in such person's
power so to do, in obedience to the subpena of the Farm Credit
Administration, shall be guilty of a misdemeanor and, upon conviction,
shall be subject to a fine of not more than $1,000 or to imprisonment
for a term of not more than one year or both.
(Pub. L. 92-181, title V, 5.37, as added Pub. L. 99-205, title II,
204, Dec. 23, 1985, 99 Stat. 1702, and amended Pub. L. 100-233, title
VIII, 805(ee), Jan. 6, 1988, 101 Stat. 1717.)
1988 -- Pub. L. 100-233 substituted ''proceedings, examinations, or
investigations'' for ''proceedings, claims, examinations, or
investigations''.
Section effective thirty days after Dec. 23, 1985, see section 401
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note
under section 2001 of this title.
12 USC 2274. Power to remove directors and officers
TITLE 12 -- BANKS AND BANKING
Notwithstanding any other provision of this chapter, a farm credit
district board, bank board, or bank officer or employee shall not remove
any director or officer of any production credit association or Federal
land bank association.
(Pub. L. 92-181, title V, 5.38, as added Pub. L. 100-233, title IV,
432(c), Jan. 6, 1988, 101 Stat. 1661.)
12 USC Part D -- Miscellaneous
TITLE 12 -- BANKS AND BANKING
12 USC 2275. General Accounting Office audit; report to Congress
TITLE 12 -- BANKS AND BANKING
(a) The Comptroller General shall conduct an evaluation of the
programs and activities authorized under the 1980 amendments to this
chapter, and shall make an interim report to the Congress no later than
December 31, 1982, and a final report to the Congress no later than
December 31, 1984. The Comptroller General shall include in such
evaluation the effect that this chapter, as amended, will have on
agricultural credit services provided by the Farm Credit System, Federal
agencies, and other entities. The Comptroller General may make such
interim reports to the Congress on the programs and activities under
these amendments as the Comptroller General deems necessary or as
requested by Members of Congress.
(b) For the purpose of conducting program evaluations required in
subsection (a) of this section, the Comptroller General or his duly
authorized representatives shall have access to and the right to examine
all books, documents, papers, records, or other recorded information
within the possession or control of the Federal land banks and Federal
land bank associations, Federal intermediate credit banks and production
credit associations and banks for cooperatives.
(Pub. L. 92-181, title V, 5.44, formerly 5.30, as added Pub. L.
96-592, title V, 509, Dec. 24, 1980, 94 Stat. 3450, and renumbered 544,
Pub. L. 99-205, title II, 205(a)(2), Dec. 23, 1985, 99 Stat. 1703.)
The 1980 amendments to this chapter and these amendments, referred to
in subsec. (a), are the amendments made to this chapter by the Farm
Credit Act Amendment of 1980, Pub. L. 96-592, Dec. 24, 1980, 94 Stat.
3437. For complete classification of this Act to the Code, see Short
Title of 1980 Amendment note set out under section 2001 of this title
and Tables.
Section was formerly classified to section 2260 of this title.
Similar provisions relating to general powers of the Comptroller
General with respect to access and examination of books, documents,
etc., are set out in section 2276 of this title.
12 USC 2275a. Transition rules relating to amendment of certain FCA
approval authorities
TITLE 12 -- BANKS AND BANKING
(a) In general
Any approvals granted by the Farm Credit Administration before
January 6, 1988, shall remain in effect on and after such date.
(b) Authority to issue regulations
(1) In general
Any approval authority of the Farm Credit Administration that, under
the amendments made by section 802 of the Agricultural Credit Act of
1987, became an authority to issue regulations may be exercised only
until the earlier of the date the Farm Credit Administration issues
final regulations under such authority, or 1 year after January 6, 1988.
(2) Enforcement actions
At the close of the 1-year period referred to in paragraph (1), the
Farm Credit Administration shall not take any enforcement action against
any System institution with respect to any provision so amended, until
the Farm Credit Administration issues final regulations under such
provision.
(c) Effect of section
This section shall not affect the authority of the Farm Credit
Administration to exercise any other approval authority either on a
case-by-case basis or through regulation, as provided in section 2252(
a)(5) of this title.
(Pub. L. 92-181, title V, 5.45, as added Pub. L. 100-233, title VIII,
802(w), Jan. 6, 1988, 101 Stat. 1713.)
The amendments made by section 802 of the Agricultural Credit Act of
1987, referred to in subsec. (b)(1), are the amendments made by section
802 of Pub. L. 100-233, title VIII, Jan. 6, 1988, 101 Stat. 1710,
which enacted section 2275a of this title and amended sections 2011 to
2013, 2017, 2031, 2051, 2052, 2071 to 2073, 2077, 2091, 2121, 2122,
2124, 2126, 2130, 2132, 2212, 2213, 2223, and 2252 of this title. For
complete classification of section 802 to the Code, see Tables.
12 USC 2276. Access to and examination by Comptroller General of books,
documents, etc., of farm credit system banks and institutions
TITLE 12 -- BANKS AND BANKING
On and after December 19, 1985, the Comptroller General or his duly
authorized representatives shall have access to and the right to examine
all books, documents, papers, records, or other recorded information
within the possession or control of the Federal land banks and Federal
land bank associations, Federal intermediate credit banks and production
credit associations and banks for cooperatives.
(Pub. L. 99-190, 107, Dec. 19, 1985, 99 Stat. 1316.)
Section was not enacted as part of the Farm Credit Act of 1971 which
comprises this chapter.
Similar provisions relating to powers of the Comptroller General with
respect to access and examination of books, documents, etc., for
purposes of conducting program evaluations under section 2275(a) of this
title, are set out in section 2275(b) of this title.
12 USC Part E -- Farm Credit System Insurance Corporation
TITLE 12 -- BANKS AND BANKING
12 USC 2277a. Definitions
TITLE 12 -- BANKS AND BANKING
As used in this part:
(1) Board of Directors
The term ''Board of Directors'' means the Board of Directors of the
Corporation.
(2) Corporation
The term ''Corporation'' means the Farm Credit System Insurance
Corporation established in section 2277a-1 of this title.
(3) Insured obligation
The term ''insured obligation'' means any note, bond, debenture, or
other obligation issued under subsection (c) or (d) of section 2153 of
this title --
(A) on or before January 5, 1989, on behalf of any System bank; and
(B) after such date, which, when issued, is issued on behalf of any
insured System bank.
(4) Insured System bank
The term ''insured System bank'' means any System bank whose
participation in notes, bonds, debentures, and other obligations issued
under subsection (c) or (d) of section 2153 of this title is insured
under this part.
(5) Receiver
The term ''receiver'' means a receiver or conservator appointed by
the Farm Credit Administration for a System institution.
(6) State
The term ''State'' means any of the 50 States, the District of
Columbia, any Territory of the United States, Puerto Rico, Guam,
American Samoa, the Trust Territory of the Pacific Islands, or the
Virgin Islands.
(Pub. L. 92-181, title V, 5.51, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1611, and amended Pub. L. 100-399, title
III, 302(a), (b), Aug. 17, 1988, 102 Stat. 994.)
1988 -- Par. (3)(A), (B). Pub. L. 100-399, 302(a), amended subpars.
(A) and (B) generally. Prior to amendment, subpars. (A) and (B) read
as follows:
''(A) on or before January 6, 1988, on behalf of any System bank;
and
''(B) after such date, on behalf of any insured System bank.''
Par. (5). Pub. L. 100-399, 302(b), substituted ''for'' for ''to
liquidate''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2277a-1. Establishment of Farm Credit System Insurance
Corporation
TITLE 12 -- BANKS AND BANKING
There is hereby established the Farm Credit System Insurance
Corporation which shall insure, in accordance with this part, the timely
payment of principal and interest on notes, bonds, debentures, and other
obligations issued under subsection (c) or (d) of section 2153 of this
title on behalf of one or more System banks all of which are entitled to
the benefits of insurance under this part.
(Pub. L. 92-181, title V, 5.52, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1611.)
12 USC 2277a-2. Board of Directors
TITLE 12 -- BANKS AND BANKING
(a) Establishment
The Corporation shall be managed by a Board of Directors that shall
consist of the members of the Farm Credit Administration Board.
(b) Chairman
The Board of Directors shall be chaired by any Board member other
than the Chairman of the Farm Credit Administration Board.
(Pub. L. 92-181, title V, 5.53, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1611.)
12 USC 2277a-3. Commencement of insurance
TITLE 12 -- BANKS AND BANKING
Effective beginning on January 1, 1989, or 12 months after January 6,
1988, whichever is later, each System bank shall be an insured System
bank and shall be subject to this part. Each System bank that is
authorized to commence or resume operations under a subchapter of this
chapter shall be an insured System bank from the time of such
authorization. A bank resulting from the merger or consolidation of
insured System banks shall be an insured System bank.
(Pub. L. 92-181, title V, 5.54, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1611.)
12 USC 2277a-4. Premiums
TITLE 12 -- BANKS AND BANKING
(a) Amount in Fund not exceeding secure base amount
(1) In general
Until the aggregate of amounts in the Farm Credit Insurance Fund
exceeds the secure base amount, the annual premium due from any insured
System bank for any calendar year shall be equal to the sum of --
(A) the annual average principal outstanding for such year on loans
made by the bank that are in accrual status, excluding the guaranteed
portions of government-guaranteed loans provided for in subparagraph
(C), multiplied by 0.0015;
(B) the annual average principal outstanding for such year on loans
made by the bank that are in nonaccrual status, multiplied by 0.0025;
and
(C)(i) the annual average principal outstanding for such year on the
guaranteed portions of Federal Government-guaranteed loans made by the
bank that are in accrual status, multiplied by 0.00015; and
(ii) the annual average principal outstanding for such year on the
guaranteed portions of State government-guaranteed loans made by the
bank that are in accrual status, multiplied by 0.0003.
(2) ''Government-guaranteed loans'' defined
As used in this section and section 2020(b) of this title, the term
''government-guaranteed loans'' means loans or credits, or portions of
loans or credits, that are guaranteed --
(A) by the full faith and credit of the United States Government or
any State government;
(B) by an agency or other entity of the United States Government
whose obligations are explicitly guaranteed by the United States
Government; or
(C) by an agency or other entity of a State government whose
obligations are explicitly guaranteed by such State government.
(b) Amount in Fund exceeding secure base amount
At any time the aggregate of amounts in the Insurance Fund exceeds
the secure base amount, the Corporation shall reduce the annual premium
due from each insured System bank for the following calendar year, as
determined under subsection (a) of this section, by a percentage
determined by the Corporation so that the aggregate of the premiums
payable by all System banks is sufficient to ensure that the aggregate
of amounts in the Insurance Fund after such premiums are paid is not
less than the secure base amount at such time.
(c) Secure base amount
For purposes of this part, the term ''secure base amount'' means,
with respect to any point in time, 2 percent of the aggregate
outstanding insured obligations of all insured System banks at such time
(adjusted downward to exclude an amount equal to the sum of (1) 90
percent of the guaranteed portions of principal outstanding on Federal
Government-guaranteed loans in accrual status made by such banks and (2)
80 percent of the guaranteed portions of principal outstanding on State
government-guaranteed loans in accrual status made by such banks, as
determined by the Corporation), or such other percentage of the
aggregate amount as the Corporation in its sole discretion determines is
actuarially sound to maintain in the Insurance Fund taking into account
the risk of insuring outstanding insured obligations.
(d) Determination of principal outstanding
For the purpose of subsections (a) and (c) of this section, the
principal outstanding on all loans made by a Farm Credit Bank shall be
determined based on all loans made --
(1) by any production credit association, or any other association
making direct loans under authority provided under section 2279b of this
title, that is able to make such loans because such association is
receiving, or has received, funds provided through the Farm Credit Bank;
(2) by any bank, company, institution, corporation, union, or
association described in section 2015(b)(1)(B) of this title, that is
able to make such loans because such entity is receiving, or has
received, funds provided through the Farm Credit Bank; and
(3) by such Farm Credit Bank (other than loans made to any party
described in paragraph (1) or (2)).
(Pub. L. 92-181, title V, 5.55, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1612, and amended Pub. L. 100-399, title
III, 302(c)-(e), Aug. 17, 1988, 102 Stat. 994; Pub. L. 101-220, 6(a),
Dec. 12, 1989, 103 Stat. 1879.)
1989 -- Subsec. (a). Pub. L. 101-220, 6(a)(1), added subsec. (a) and
struck out former subsec. (a) which read as follows: ''Until the
aggregate of amounts in the Farm Credit Insurance Fund exceeds the
secure base amount, the annual premium due from any insured System bank
for any calendar year shall be equal to the sum of --
''(1) the annual average principal outstanding for such year on loans
made by the bank that are in accrual status, multiplied by 0.0015; and
''(2) the annual average principal outstanding for such year on loans
made by the bank that are in nonaccrual status, multiplied by 0.0025.''
Subsec. (b). Pub. L. 101-220, 6(a)(2), inserted '', as determined
under subsection (a) of this section,'' after ''calendar year''.
Subsec. (c). Pub. L. 101-220, 6(a)(3), inserted ''(adjusted downward
to exclude an amount equal to the sum of (1) 90 percent of the
guaranteed portions of principal outstanding on Federal
Government-guaranteed loans in accrual status made by such banks and (2)
80 percent of the guaranteed portions of principal outstanding on State
government-guaranteed loans in accrual status made by such banks, as
determined by the Corporation)'' after ''such time''.
Subsec. (d). Pub. L. 101-220, 6(a)(4), in introductory provisions,
substituted ''subsections (a) and (c) of this section'' for ''subsection
(a) of this section'' and struck out ''intermediate term'' after
''outstanding on all'', inserted par. (1), and struck out former par.
(1) which read as follows: ''by the production credit associations in
the district in which such bank is located;''.
1988 -- Subsec. (d). Pub. L. 100-399, 302(c), substituted in
introductory provisions ''intermediate term loans made by a Farm Credit
Bank'' for ''loans made by a Federal intermediate credit bank''.
Subsec. (d)(2). Pub. L. 100-399, 302(d), (e), substituted ''section
2015(b)(1)(B) of this title'' for ''section 2074(a)(2) of this title''
and ''Farm Credit Bank'' for ''Federal intermediate credit bank''.
Subsec. (d)(3). Pub. L. 100-399, 302(e), substituted ''Farm Credit
Bank'' for ''Federal intermediate credit bank''.
Amendment by Pub. L. 101-220 effective for insurance premiums due to
the Farm Credit System Insurance Corporation under this chapter on or
after Jan. 1, 1990, based on the loan volume of each bank for each
calendar year beginning with calendar year 1989, and effective for the
calculation of the initial premium payment required under section
2277a-5(c) of this title, see section 6(c) of Pub. L. 101-220, set out
as a note under section 2020 of this title.
Amendment by Pub. L. 100-399 effective immediately after amendment
made by section 401 of Pub. L. 100-233, which was effective 6 months
after Jan. 6, 1988, see section 1001(b) of Pub. L. 100-399, set out as
a note under section 2002 of this title.
12 USC 2277a-5. Certification of premiums
TITLE 12 -- BANKS AND BANKING
(a) Filing certified statement
Annually, on a date to be determined in the sole discretion of the
Board of Directors, each insured System bank that became insured before
the beginning of the year shall file with the Corporation a certified
statement showing --
(1) the annual average principal outstanding on loans made by the
bank that are in accrual status, including the nonguaranteed portions of
government-guaranteed loans;
(2) the annual average principal outstanding on the guaranteed
portion of Federal Government-guaranteed loans (as defined in section
2277a-4(a)(2) of this title) that are in accrual status;
(3) the annual average principal outstanding on State
government-guaranteed loans (as defined in section 2277a-4(a)(2) of this
title) that are in accrual status;
(4) the annual average principal outstanding on loans that are in
nonaccrual status; and
(5) the amount of the premium due the Corporation from the bank for
the year.
(b) Contents and form of statement
The certified statement required to be filed with the Corporation
under subsection (a) of this section shall be in such form and set forth
such supporting information as the Board of Directors shall prescribe,
and shall be certified by the president of the bank or any other officer
designated by its board of directors that to the best of the person's
knowledge and belief the statement is true, correct, complete, and has
been prepared in accordance with this part and all regulations issued
thereunder.
(c) Initial premium payment
Each System bank shall pay to the Corporation the amount of the
initial premium it is required to certify under subsection (a) of this
section as soon as practicable after January 1, 1990, based on the
application of section 2277a-4 of this title to the accruing loan volume
of the bank for calendar year 1989.
(d) Subsequent premium payments
The premium payments required from insured System banks under
subsection (a) of this section shall be made not less frequently than
annually in such manner and at such time or times as the Board of
Directors shall prescribe, except that the amount of the premium shall
be established not later than 60 days after filing the certified
statement setting forth the amount of the premium.
(e) Regulations
The Board of Directors shall prescribe all rules and regulations
necessary for the enforcement of this section. The Board of Directors
may limit the retroactive effect, if any, of any of its rules or
regulations.
(Pub. L. 92-181, title V, 5.56, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1612, and amended Pub. L. 100-399, title
III, 302(f), Aug. 17, 1988, 102 Stat. 994; Pub. L. 101-624, title
XVIII, 1835, Nov. 28, 1990, 104 Stat. 3833.)
1990 -- Subsec. (a). Pub. L. 101-624 amended subsec. (a) generally.
Prior to amendment, subsec. (a) read as follows: ''Annually, on a
date to be determined in the sole discretion of the Board of Directors,
each insured System bank that became insured before the beginning of the
year shall file with the Corporation a certified statement showing the
annual average principal outstanding on loans made by the bank that are
in accrual status, the annual average principal outstanding on loans
that are in nonaccrual status, and the amount of the premium due the
Corporation from the bank for such year.''
1988 -- Subsec. (a). Pub. L. 100-399 substituted ''of the year'' for
''of such year''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2277a-6. Overpayment and underpayment of premiums; remedies
TITLE 12 -- BANKS AND BANKING
(a) Overpayments
The Corporation may refund to any insured System bank any premium
payment made by the bank exceeding the amount due the Corporation.
(b) Underpayments
(1) Recovery
The Corporation, in a suit brought at law or in equity in any court
of competent jurisdiction, may recover from any insured System bank the
amount of any unpaid premium lawfully payable by the bank to the
Corporation, whether or not the bank has filed any certified statement
under section 2277a-5 of this title, and whether or not suit has been
brought to compel the bank to file any such statement.
(2) Limitation
Any action or proceeding for the recovery of any premium due the
Corporation under paragraph (1), or for the recovery of any amount paid
to the Corporation exceeding the amount due the Corporation, shall be
brought within 5 years after the right accrued for which the claim is
made. If an insured System bank has filed with the Corporation a false
or fraudulent certified statement with the intent to evade, in whole or
in part, the payment of a premium, the claim shall not be deemed to have
accrued until the Corporation discovers that the certified statement is
false or fraudulent.
(c) Failure to file statement or pay premium
(1) Forfeiture of rights
If any insured System bank fails to file any certified statement
required to be filed by such bank under section 2277a-5 of this title or
fails to pay any premium required to be paid by such bank under any
provision of this part, and if the bank does not correct such failure
within 30 days after the Corporation gives written notice to an officer
of the bank, citing this subsection and stating that the bank has failed
to so file or pay as required by law, all the rights, privileges, and
franchises of the bank granted to it under this chapter shall be thereby
forfeited.
(2) Enforcement
The Corporation may bring an action to enforce this subsection
against any such bank in any court of competent jurisdiction for the
judicial district in which the bank is located.
(3) Liability of directors
Every director who participated in or assented to a failure
(described in paragraph (1)) shall be held personally liable for all
consequential damages.
(d) Effect on other remedies
The remedies provided in subsections (b) and (c) of this section
shall not be construed as limiting any other remedies against any
insured System bank, but shall be in addition thereto.
(Pub. L. 92-181, title V, 5.57, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1613, and amended Pub. L. 100-399, title
III, 302(g), (h), Aug. 17, 1988, 102 Stat. 994.)
1988 -- Subsec. (b)(1). Pub. L. 100-399, 302(g), struck out ''made
any report of condition required under section 2277a-4 of this title
or'' after ''bank has'' and ''make any such report or'' after ''bank
to''.
Subsec. (b)(2). Pub. L. 100-399, 302(h), substituted ''bank has
filed'' for ''bank has made or filed''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2277a-7. General corporate powers
TITLE 12 -- BANKS AND BANKING
On January 6, 1988, the Corporation shall become a body corporate and
as such shall have the following powers:
(1) Seal
The Corporation may adopt and use a corporate seal.
(2) Succession
The Corporation may have succession until dissolved by an Act of
Congress.
(3) Contracts
The Corporation may make contracts.
(4) Legal actions
(A) In general
The Corporation may sue and be sued, complain and defend, in any
court of law or equity, State or Federal.
(B) Jurisdiction
All suits of a civil nature at common law or in equity to which the
Corporation shall be a party shall be deemed to arise under the laws of
the United States, and the United States district courts shall have
original jurisdiction thereof, without regard to the amount in
controversy, and the Corporation, in any capacity, without bond or
security, may remove any such action, suit, or proceeding from a State
court to the United States district court for the district or division
embracing the place where the same is pending by following any procedure
for removal then in effect.
(C) Attachment and execution
No attachment or execution may be issued against the Corporation or
its property before final judgment in any suit, action, or proceeding in
any State, county, municipal, or United States court.
(D) Agent for service of process
The Board of Directors shall designate an agent on whom service of
process may be made in any State or jurisdiction in which any insured
System bank is located.
(5) Officers and employees
(A) In general
The Corporation may appoint by its Board of Directors such officers
and employees as are not otherwise provided for in this part, define
their duties, fix their compensation, and require bonds of them and fix
the penalty thereof, and dismiss at pleasure such officers or employees.
(B) Employees of the United States
Nothing in this chapter or any other Act shall be construed to
prevent the appointment and compensation, as an officer or employee of
the Corporation, of any officer or employee of the United States in any
board, commission, independent establishment, or executive department
thereof.
(6) Bylaws
The Corporation may prescribe, by its Board of Directors, bylaws not
inconsistent with law, regulating the manner in which its general
business may be conducted, and the privileges granted to it by law may
be exercised and enjoyed.
(7) Incidental powers
The Corporation may exercise by its Board of Directors, or duly
authorized officers or agents, all powers specifically granted by the
provisions of this part, and such incidental powers as shall be
necessary to carry out the powers so granted.
(8) Information
The Corporation may, when necessary, make examinations of, and
require information and reports from, System institutions, as provided
in this part.
(9) Receiver
The Corporation may act as receiver.
(10) Rules and regulations
The Corporation may prescribe by its Board of Directors such rules
and regulations as it considers necessary to carry out this part (except
to the extent that authority to issue such rules and regulations has
been expressly and exclusively granted to any other regulatory agency).
(Pub. L. 92-181, title V, 5.58, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1614, and amended Pub. L. 100-399, title
III, 302(i), Aug. 17, 1988, 102 Stat. 994; Pub. L. 102-237, title V,
502(j), Dec. 13, 1991, 105 Stat. 1869.)
1991 -- Par. (4)(B). Pub. L. 102-237 inserted ''in any capacity,''
after ''and the Corporation,''.
1988 -- Par. (5)(A). Pub. L. 100-399 struck out ''to'' before
''define'' and ''dismiss''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2277a-8. Conduct of corporate affairs; examination of insured
System banks
TITLE 12 -- BANKS AND BANKING
(a) Conduct of corporate affairs
(1) Fair administration
The Board of Directors shall administer the affairs of the
Corporation fairly and impartially and without discrimination.
(2) Obligations and expenses
The Board of Directors shall determine and prescribe the manner in
which the obligations of the Corporation may be incurred and the
expenses of the Corporation may be allowed and paid.
(3) Use of mails
The Corporation may use the United States mails in the same manner
and under the same conditions as the executive departments of the
Federal Government.
(4) Use of information
The Corporation, with the consent of any board, commission,
independent establishment, or executive department of the Federal
Government, including any field service thereof, may avail itself of the
use of information, services, and facilities thereof in carrying out
this part.
(b) Examination of insured System banks
(1) Appointment of examiners
The Board of Directors may appoint examiners who may, on behalf of
the Corporation, examine any insured System bank, any production credit
association, any other association making direct loans under authority
provided under section 2279b of this title, and any System institution
in receivership, if in the judgment of the Board of Directors an
examination of the institution is necessary.
(2) Powers and report
Each examiner may make a thorough examination of all affairs of the
institution, and shall make a full and detailed report of the condition
of the institution to the Corporation.
(3) Appointment of claim agents
The Board of Directors, in like manner, shall appoint claim agents
who may investigate and examine all claims for insured obligations.
(c) Oath, affirmations, and testimony
In connection with examinations under this section, the Corporation
or its designated representatives may administer oaths and affirmations,
and may examine, take, and preserve testimony under oath, as to any
matter with respect to the affairs of any such institution.
(d) Cooperation with FCA examiners
The examiners appointed by the Board of Directors shall cooperate to
the maximum extent possible with examiners of the Farm Credit
Administration to minimize duplication of effort and minimize costs.
(Pub. L. 92-181, title V, 5.59, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1615, and amended Pub. L. 101-220, 6(b)(3),
Dec. 12, 1989, 103 Stat. 1880.)
1989 -- Subsec. (b)(1). Pub. L. 101-220 inserted ''any other
association making direct loans under authority provided under section
2279b of this title,'' after ''any production credit association,''.
Amendment by Pub. L. 101-220 effective for insurance premiums due to
the Farm Credit System Insurance Corporation under this chapter on or
after Jan. 1, 1990, based on the loan volume of each bank for each
calendar year beginning with calendar year 1989, and effective for the
calculation of the initial premium payment required under section
2277a-5(c) of this title, see section 6(c) of Pub. L. 101-220, set out
as a note under section 2020 of this title.
12 USC 2277a-9. Insurance Fund
TITLE 12 -- BANKS AND BANKING
(a) Establishment
There is hereby established a Farm Credit Insurance Fund (hereinafter
referred to in this section as the ''Insurance Fund'') for insuring the
timely payment of principal and interest on insured obligations. The
assets in the Fund shall be held by the Corporation for the uses and
purposes of the Corporation.
(b) Amounts in Fund
(1) Revolving fund
All amounts in the revolving fund established by section 2151 of this
title shall be transferred into the Farm Credit Insurance Fund on
January 1, 1989, or 12 months after January 6, 1988, whichever is later,
except that the obligations to, and rights of, any person in such
revolving fund arising out of any event or transaction before January 6,
1988, shall remain unimpaired.
(2) Deposit of premiums
The Corporation shall deposit in the Insurance Fund all premium
payments received by the Corporation under this part.
(c) Uses of Fund
(1) Mandatory use
Beginning January 1, 1993, the Corporation shall expend amounts in
the Insurance Fund to the extent necessary to insure the timely payment
of interest and principal on insured obligations.
(2) Other mandatory uses
Beginning January 1, 1993, the Corporation shall use amounts in the
Insurance Fund to --
(A) satisfy System institution defaults through the purchase of
preferred stock or other payments as provided for in section 2278b-6(
d)(3) of this title; and
(B) ensure the retirement of eligible borrower stock at par value
under section 2162 of this title.
(3) Permissive uses
The Corporation may expend amounts in the Insurance Fund to carry out
section 2277a-10 of this title and to cover the operating costs of the
Corporation.
(4) Corporate payment or refunds
The Corporation shall make all payments and refunds required to be
made by the Corporation under this part from amounts in the Insurance
Fund.
(Pub. L. 92-181, title V, 5.60, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1616, and amended Pub. L. 100-399, title
III, 302(j)-(l), Aug. 17, 1988, 102 Stat. 994; Pub. L. 101-624, title
XVIII, 1836(a), Nov. 28, 1990, 104 Stat. 3833.)
1990 -- Subsec. (c)(1), (2). Pub. L. 101-624 substituted ''January
1, 1993'' for ''5 years after the date of the enactment of this part''
in par. (1) and for ''5 years after the date of enactment of this
part'' in par. (2).
1988 -- Subsec. (b)(1). Pub. L. 100-399, 302(j), struck out ''(in
effect immediately before January 6, 1988)'' after ''section 2151 of
this title''.
Subsec. (b)(2). Pub. L. 100-399, 302(k), substituted ''The'' for
''Beginning 5 years after January 6, 1988, the''.
Subsec. (c)(2)(B). Pub. L. 100-399, 302(l), amended subpar. (B)
generally. Prior to amendment, subpar. (B) read as follows: ''ensure
the retirement of borrower stock at par value and participation
certificates or other similar equities at face value as provided for
under section 2162(c)(2) of this title.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2277a-10. Powers of Corporation with respect to troubled insured
System banks
TITLE 12 -- BANKS AND BANKING
(a) Authority to provide assistance
(1) In general
The Corporation, in its sole discretion and on such terms and
conditions as the Board of Directors may prescribe, may make loans to,
purchase the assets or securities of, assume the liabilities of, or make
contributions to, any insured System bank if such action is taken --
(A) to prevent the placing of the bank in receivership;
(B) to restore the bank to normal operation; or
(C) to reduce the risk to the Corporation posed by the bank when
severe financial conditions threaten the stability of a significant
number of insured System banks or of insured System banks possessing
significant financial resources.
(2) Enumerated powers
(A) Facilitation of mergers or consolidation
To facilitate a merger or consolidation of a qualifying insured
System bank, the sale of assets of such insured System bank to another
insured System bank, the assumption of such insured System bank's
liabilities by such other insured System bank, or the acquisition of the
stock of such insured System bank by such other insured System bank, the
Corporation, in its sole discretion and on such terms and conditions as
the Board of Directors may prescribe, may --
(i) purchase any such assets or assume any such liabilities;
(ii) make loans or contributions to, or purchase debt securities of,
such other insured System bank;
(iii) guarantee such other insured System bank against loss by reason
of such other insured System bank's merging or consolidating with, or
assuming the liabilities and purchasing the assets of, such insured
System bank; or
(iv) take any combination of the actions referred to in the preceding
clauses.
(B) Qualifying insured System bank
For purposes of subparagraph (A), the term ''qualifying insured
System bank'' means any insured System bank that --
(i) is in receivership;
(ii) is, in the judgment of the Board of Directors, in danger of
being placed in receivership; or
(iii) is, in the sole discretion of the Corporation, an insured
System bank that, when severe financial conditions exist that threaten
the stability of a significant number of insured System banks or of
insured System banks possessing significant financial resources,
requires assistance under subparagraph (A) to lessen the risk to the
Corporation posed by such insured System bank under such threat of
instability.
(3) Limitation
(A) Cost of liquidation
Assistance shall not be provided to an insured System bank under this
subsection if the amount of such assistance exceeds an amount determined
by the Corporation to be the cost of liquidating the bank (including
paying the insured obligations issued on behalf of the bank). This
subparagraph shall not apply to the provision of assistance to a bank if
the Corporation determines that the continued operation of the bank is
essential to provide adequate agricultural credit services in the area
of operations of the bank.
(B) Purchase of stock
The Corporation may not use its authority under this subsection to
purchase any stock of an insured System bank. The preceding sentence
shall not be construed to limit the ability of the Corporation to enter
into and enforce covenants and agreements that it determines to be
necessary to protect the financial interests of the Corporation.
(4) Subordination
Any assistance provided under this subsection may be in subordination
to the rights of owners of obligations and other creditors.
(5) Reports
The Corporation, in its annual report to Congress, shall report the
total amount saved, or it estimates to be saved, by the Corporation
exercising the authority provided to the Corporation in this subsection.
(b) Authority to pledge or sell assets
The Corporation, in its discretion, may make loans on the security
of, or may purchase, and liquidate or sell, any part of the assets of,
any insured System bank that is placed in receivership because of the
inability of the bank to pay principal or interest on any of its notes,
bonds, debentures, or other obligations in a timely manner.
(c) Subrogation
(1) In general
On the payment to an owner of an insured obligation issued on behalf
of an insured System bank in receivership, the Corporation shall be
subrogated to all rights of the owner against the bank to the extent of
the payment.
(2) Receipt of dividends
Subrogation under paragraph (1) shall include the right on the part
of the Corporation to receive the same dividends from the proceeds of
the assets of the bank as would have been payable to the owner on a
claim for the insured obligation.
(d) Right to assets
Any agreement that shall diminish or defeat the right, title, or
interest of the Corporation in any asset acquired by such Corporation
under this section, either as security for a loan or by purchase, shall
not be valid against the Corporation unless the agreement --
(1) is in writing;
(2) is executed by the bank and the person or persons claiming an
adverse interest thereunder, including the obligor, contemporaneously
with the acquisition of the asset by the bank;
(3) has been approved by the board of directors of the bank or its
loan committee, which approval shall be reflected in the minutes of the
board or committee; and
(4) has been, continuously, from the time of its execution, an
official record of the bank.
(e) Insured System bank
As used in this section, the terms ''insured System bank'' and
''bank'' include each production credit association and other
association making direct loans under the authority provided under
section 2279b of this title.
(f) Effective date
The Corporation shall not exercise any authority under this section
during the 5-year period prior to January 1, 1993.
(Pub. L. 92-181, title V, 5.61, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1616, and amended Pub. L. 101-220, 6(b)(4),
Dec. 12, 1989, 103 Stat. 1880; Pub. L. 101-624, title XVIII, 1836(b),
Nov. 28, 1990, 104 Stat. 3833.)
1990 -- Subsec. (f). Pub. L. 101-624 substituted ''prior to January
1, 1993'' for ''beginning on the date of the enactment of this part''.
1989 -- Subsec. (e). Pub. L. 101-220 inserted ''and other
association making direct loans under the authority provided under
section 2279b of this title,'' after ''production credit association''.
Amendment by Pub. L. 101-220 effective for insurance premiums due to
the Farm Credit System Insurance Corporation under this chapter on or
after Jan. 1, 1990, based on the loan volume of each bank for each
calendar year beginning with calendar year 1989, and effective for the
calculation of the initial premium payment required under section
2277a-5(c) of this title, see section 6(c) of Pub. L. 101-220, set out
as a note under section 2020 of this title.
12 USC 2277a-11. Investment of funds
TITLE 12 -- BANKS AND BANKING
Money of the Corporation not otherwise employed shall be invested in
obligations of the United States or in obligations guaranteed as to
principal and interest by the United States.
(Pub. L. 92-181, title V, 5.62, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1618.)
12 USC 2277a-12. Exemption from taxation
TITLE 12 -- BANKS AND BANKING
Notwithstanding any other provision of law, the Corporation,
including its franchise, and its capital, reserves, surplus, and income,
shall be exempt from all taxation imposed by the United States, or by
any State, county, municipality, or local taxing authority, except that
any real property of the Corporation shall be subject to State, county,
municipal, and local taxation to the same extent according to its value
as other real property is taxed.
(Pub. L. 92-181, title V, 5.63, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1618.)
12 USC 2277a-13. Reports
TITLE 12 -- BANKS AND BANKING
(a) In general
The Corporation annually shall prepare and submit to Congress a
report of the operations of the Corporation, as soon as practicable
after the first day of January in each calendar year.
(b) Contents
Reports submitted under subsection (a) of this section shall include
information concerning the --
(1) aggregate amount in the Insurance Fund at the close of the
preceding calendar year;
(2) projections of the costs to be incurred by the Corporation during
the calendar year; and
(3) estimates of the aggregate amount to be collected as premiums
during the calendar year.
(Pub. L. 92-181, title V, 5.64, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1619.)
12 USC 2277a-14. Prohibitions
TITLE 12 -- BANKS AND BANKING
(a) Corporate name
(1) Use of corporate name
It shall be unlawful for any person or entity to use the words ''Farm
Credit System Insurance Corporation'' or any combination of such words
that would have the effect of leading the public to believe that there
is any connection between such person or entity and the Corporation, by
virtue of the name under which such person or entity does business.
(2) False representation
(A) By outside person or entities
It shall be unlawful for any person or entity to falsely represent by
any device, that the notes, bonds, debentures, or other obligations of
the person or entity are insured or in any way guaranteed by the
Corporation.
(B) System banks
It shall be unlawful for any insured System bank or person that
markets insured obligations to falsely represent the extent to which or
the manner in which such obligations are insured by the Corporation.
(3) Penalty
Any person or entity that willfully violates any provision of this
subsection shall be fined not more than $1,000, imprisoned for not more
than 1 year, or both.
(b) Payments or distributions while in default
(1) In general
It shall be unlawful for any insured System bank to pay any dividends
on bank stock or participation certificates or interest on the capital
notes or debentures of such bank (if such interest is required to be
paid only out of net profits) or distribute any of the capital assets of
such bank while the bank remains in default in the payment of any
premium due to the Corporation.
(2) Liability of directors
Each director or officer of any insured System bank who willfully
participates in the declaration or payment of any dividend or interest
or in any distribution in violation of this subsection shall be fined
not more than $1,000, imprisoned not more than 1 year, or both.
(3) Applicability
This subsection shall not apply to any default that is due to a
dispute between the insured System bank and the Corporation over the
amount of such premium if such bank deposits security satisfactory to
the Corporation for payment on final determination of the issue.
(c) Failure to file statement or pay premium
(1) In general
Any insured System bank that willfully fails or refuses to file any
certified statement or pay any premium required under this part shall be
subject to a penalty of not more than $100 for each day that such
violations continue, which penalty the Corporation may recover for its
use.
(2) Applicability
This subsection shall not apply to conduct with respect to any
default that is due to a dispute between the insured System bank and the
Corporation over the amount of such premium if such bank deposits
security satisfactory to the Corporation for payment on final
determination of the issue.
(d) Employment of persons convicted of criminal offenses
(1) In general
Except with the prior written consent of the Farm Credit
Administration, it shall be unlawful for any person convicted of any
criminal offense involving dishonesty or a breach of trust to serve as a
director, officer, or employee of any System institution.
(2) Penalty
For each willful violation of paragraph (1), the institution involved
shall be subject to a penalty of not more than $100 for each day during
which the violation continues, which the Corporation may recover for its
use.
(Pub. L. 92-181, title V, 5.65, as added Pub. L. 100-233, title III,
302, Jan. 6, 1988, 101 Stat. 1619, and amended Pub. L. 101-624, title
XVIII, 1837, Nov. 28, 1990, 104 Stat. 3834; Pub. L. 102-237, title V,
502(k), Dec. 13, 1991, 105 Stat. 1869.)
1991 -- Subsec. (d)(1). Pub. L. 102-237 struck out ''insured''
before ''System''.
1990 -- Subsec. (d)(1). Pub. L. 101-624, 1837(1), substituted
''insured System institution'' for ''insured System bank''.
Subsec. (d)(2). Pub. L. 101-624, 1837(2), substituted ''institution''
for ''bank''.
12 USC SUBCHAPTER VI -- ASSISTANCE TO FARM CREDIT SYSTEM
TITLE 12 -- BANKS AND BANKING
12 USC Part A -- Assistance Board
TITLE 12 -- BANKS AND BANKING
12 USC 2278a. Establishment of Board
TITLE 12 -- BANKS AND BANKING
(a) Charters
On the date which is 15 days after January 6, 1988, the Farm Credit
Administration shall revoke the charter of the Farm Credit System
Capital Corporation (hereinafter referred to in this subchapter as the
''Capital Corporation'') and shall charter the Farm Credit System
Assistance Board (hereinafter referred to in this chapter as the
''Assistance Board'') that, subject to this part, shall be a Federally
chartered instrumentality of the United States.
(b) Use of Capital Corporation staff
During the 90-day period beginning on the date of the revocation of
the charter of the Capital Corporation, the Assistance Board may
temporarily employ, by contract or otherwise under reasonable and
necessary terms and conditions, such staff of the Capital Corporation as
is necessary to facilitate and effectuate an orderly transition to, and
commencement of, the Assistance Board, and the termination of the
affairs of the Capital Corporation.
(Pub. L. 92-181, title VI, 6.0, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1585.)
12 USC 2278a-1. Purposes
TITLE 12 -- BANKS AND BANKING
The purposes of the Assistance Board shall be to carry out a program
to provide assistance to, and protect the stock of borrowers of, the
institutions of the Farm Credit System, and to assist in restoring
System institutions to economic viability and permitting such
institutions to continue to provide credit to farmers, ranchers, and the
cooperatives of such, at reasonable and competitive rates.
(Pub. L. 92-181, title VI, 6.1, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1585.)
12 USC 2278a-2. Board of Directors
TITLE 12 -- BANKS AND BANKING
(a) Membership
The Board of Directors of the Assistance Board (hereinafter referred
to in this part as the ''Board of Directors'') shall consist of three
members --
(1) one of which shall be the Secretary of the Treasury;
(2) one of which shall be the Secretary of Agriculture; and
(3) one of which shall be an agricultural producer experienced in
financial matters, and appointed by the President, by and with the
advice and consent of the Senate.
(b) Chairman
The Board of Directors shall elect annually a Chairman from among the
members of the Board.
(c) Terms of office, succession, and vacancies
(1) Terms of office and succession
The term of each member of the Board of Directors shall expire when
the Assistance Board is terminated.
(2) Vacancies
Vacancies on the Board of Directors shall be filled in the same
manner as the vacant position was previously filled.
(d) Compensation of Board members
Members of the Board of Directors --
(1) appointed under paragraphs (1) and (2) of subsection (a) of this
section shall receive reasonable allowances for necessary expenses of
travel, lodging, and subsistence incurred in attending meetings and
other activities of the Assistance Board, as set forth in the bylaws
issued by the Board of Directors, except that such level shall not
exceed the maximum fixed by subchapter I of chapter 57 of title 5 for
officers and employees of the United States; and
(2) appointed under paragraph (3) of subsection (a) of this section
shall receive compensation for the time devoted to meetings and other
activities at a daily rate not to exceed the daily rate of compensation
prescribed for Level III of the Executive Schedule under section 5314 of
title 5 and reasonable allowances for necessary expenses of travel,
lodging, and subsistence incurred in attending meetings and other
activities of the Assistance Board, as set forth in the bylaws issued by
the Board of Directors, except that such level shall not exceed the
maximum fixed by subchapter I of chapter 57 of title 5 for officers and
employees of the United States.
(e) Rules and records
The Board of Directors of the Assistance Board shall adopt such rules
as it may deem appropriate for the transaction of the business of the
Assistance Board, and shall keep permanent and accurate records and
minutes of its acts and proceedings.
(f) Quorum required
A quorum shall consist of two members of the Board of Directors. All
decisions of the Board shall require an affirmative vote of at least a
majority of the members voting.
(g) Chief executive officer
A chief executive officer of the Assistance Board shall be selected
by the Board of Directors of the Assistance Board and shall serve at the
pleasure of the Board.
(Pub. L. 92-181, title VI, 6.2, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1586, and amended Pub. L. 102-237, title V,
502(l), Dec. 13, 1991, 105 Stat. 1869.)
1991 -- Subsec. (d)(1), (2). Pub. L. 102-237 substituted
''subchapter I'' for ''subchapter 1''.
Amendment by Pub. L. 102-237 effective as if included in the
provision of the Food, Agriculture, Conservation, and Trade Act of 1990,
Pub. L. 101-624, to which the amendment relates, see section 1101(b)(4)
of Pub. L. 102-237, set out as a note under section 1421 of Title 7,
Agriculture.
12 USC 2278a-3. Corporate powers
TITLE 12 -- BANKS AND BANKING
(a) In general
The Assistance Board shall be a body corporate that shall have the
power to --
(1) operate under the direction of its Board of Directors;
(2) adopt, alter, and use a corporate seal, which shall be judicially
noted;
(3) provide for one or more vice presidents, a secretary, a
treasurer, and such other officers, employees, and agents, as may be
necessary, define their duties, and require surety bonds or make other
provisions against losses occasioned by acts of such persons;
(4) hire, promote, compensate, and discharge officers and employees
of the Assistance Board, without regard to title 5, except that no such
officer or employee shall receive an annual rate of basic pay in excess
of the rate prescribed for Level III of the Executive Schedule under
section 5314 of title 5;
(5) prescribe by its Board of Directors its bylaws, that shall be
consistent with law, and that shall provide for the manner in which --
(A) its officers, employees, and agents are selected;
(B) its property is acquired, held, and transferred;
(C) its general operations are to be conducted; and
(D) the privileges granted by law are exercised and enjoyed;
(6) with the consent of any executive department or independent
agency, use the information, services, staff, and facilities of such in
carrying out this subchapter;
(7) enter into contracts and make advance, progress, or other
payments with respect to such contracts;
(8) sue and be sued in its corporate name, and complain and defend in
courts of competent jurisdiction;
(9) acquire, hold, lease, mortgage, or dispose of, at public or
private sale, real and personal property, and otherwise exercise all the
usual incidents of ownership of property necessary and convenient to its
operations;
(10) obtain insurance against loss;
(11) modify or consent to the modification of any contract or
agreement to which it is a party or in which it has an interest under
this subchapter;
(12) deposit its securities and its current funds with any member
bank of the Federal Reserve System or any insured State nonmember bank
(within the meaning of section 1813 of this title) and pay fees therefor
and receive interest thereon as may be agreed; and
(13) exercise other powers as set forth in this subchapter, and such
other incidental powers as are necessary to carry out its powers,
duties, and functions in accordance with this subchapter.
(b) Power to remove; jurisdiction
Notwithstanding any other provision of law, any civil action, suit,
or proceeding to which the Assistance Board is a party shall be deemed
to arise under the laws of the United States, and the United States
District Court for the District of Columbia shall have exclusive
jurisdiction over such. The Assistance Board may, without bond or
security, remove any such action, suit, or proceeding from a State court
to the United States District Court for the District of Columbia.
(Pub. L. 92-181, title VI, 6.3, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1587, and amended Pub. L. 100-399, title
II, 201(a), (b), Aug. 17, 1988, 102 Stat. 990.)
1988 -- Subsec. (a)(12). Pub. L. 100-399, 201(a), substituted
''(within the meaning of section 1813 of this title)'' for ''(as defined
in section 1813(b) of this title)''.
Subsec. (b). Pub. L. 100-399, 201(b), substituted ''exclusive'' for
''original''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Pub. L. 102-142, title VI, Oct. 28, 1991, 105 Stat. 910, provided:
''That officers and employees of the Farm Credit System Assistance Board
shall be hired, promoted, compensated, and discharged in accordance with
title 5, United States Code.''
Similar provisions were contained in the following prior
appropriation acts:
Pub. L. 101-506, title V, Nov. 5, 1990, 104 Stat. 1345.
Pub. L. 101-161, title V, Nov. 21, 1989, 103 Stat. 981.
Pub. L. 100-460, title V, Oct. 1, 1988, 102 Stat. 2259.
12 USC 2278a-4. Certification of eligibility to issue preferred stock
TITLE 12 -- BANKS AND BANKING
(a) Book value less than par value of stock and equities
If the book value of the stock, participation certificates, and other
similar equities of a System institution, based on generally accepted
accounting principles, is less than the par value of the stock or the
face value of the certificates or equities --
(1) the Farm Credit Administration shall notify the Assistance Board
of such impairment;
(2) the Assistance Board shall monitor the financial condition,
business plans, and operations of the institution; and
(3) the institution may request the Assistance Board to grant
certification to issue preferred stock under section 2278b-7(a) of this
title.
(b) Book value less than 75 percent of par value of stock and
equities
If the book value of the stock, participation certificates, and other
similar equities of a System institution, based on generally accepted
accounting principles, is less than 75 percent of the par value of the
stock or the face value of the certificates or equities, the institution
shall request the Assistance Board to grant certification to issue
preferred stock under section 2278b-7(a) of this title.
(c) Mandatory determination of eligibility
(1) In general
The Assistance Board shall determine whether to certify a System
institution as eligible to issue preferred stock under section 2278b-7
of this title, if --
(A) the institution requests such certification;
(B) the book value of the stock, participation certificates, and
other similar equities of the institution, based on generally accepted
accounting principles, has declined to 75 percent of the par value of
the stock or the face value of the certificates or equities; and
(C) the institution agrees to meet the terms and conditions specified
by the Assistance Board pursuant to section 2278a-6 of this title.
(2) Effective date of certification
If the determination of the Assistance Board is to certify the
institution under paragraph (1), such certification shall be effective
at the time of such determination.
(d) Implementation
As soon as practicable after January 6, 1988, the Assistance Board
shall take such actions as are necessary to carry out this section.
(e) ''Other similar equities'' defined
Except where otherwise provided in this chapter, the term ''other
similar equities'' includes allocated equities.
(Pub. L. 92-181, title VI, 6.4, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1588, and amended Pub. L. 100-399, title
II, 201(c), Aug. 17, 1988, 102 Stat. 991.)
1988 -- Subsecs. (c) to (e). Pub. L. 100-399 redesignated second
subsec. (c) and subsec. (d) as (d) and (e), respectively.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278a-5. Assistance
TITLE 12 -- BANKS AND BANKING
(a) In general
The Assistance Board shall assist an institution that has been
certified under section 2278a-4 of this title by --
(1) authorizing the institution to issue preferred stock under
section 2278b-7 of this title, in amounts necessary to maintain the book
value of stock, participation certificates, and other similar equities
of the institution, at the level provided for in subsection (c) of this
section;
(2) in the case of high-cost debt for which the institution is
primarily liable, authorizing the institution to issue preferred stock
under section 2278b-7 of this title, in an amount equal to the premium
that would be required by the holder of the debt for the institution to
retire the debt at the then current market value;
(3) on a request by the institution, authorizing the issuance of
preferred stock under section 2278b-7 of this title to facilitate the
merger of the requesting institution with one or more other System
institutions; or
(4) providing assistance by such other methods as the Assistance
Board determines appropriate.
(b) ''High-cost debt'' defined
For purposes of subsection (a)(2) of this section, the term
''high-cost debt'' means securities or similar obligations issued before
January 1, 1986, that mature on or after December 31, 1987, and bear a
rate of interest in excess of the then current market rate for similar
securities or obligations.
(c) Minimum equity value
The Assistance Board shall authorize a certified institution to issue
amounts of preferred stock under section 2278b-7 of this title
sufficient to --
(1) maintain the value of stock, participation certificates and other
similar equities at no less than 75 percent of the par value of the
stock or the face value of the certificates or equities, as determined
under generally accepted accounting principles; and
(2) strengthen the institution to a point where it is economically
viable, and capable of delivering credit at reasonable and competitive
rates.
(d) Limitation
Except as provided in section 410(c) of the Agricultural Credit Act
of 1987, no assistance shall be provided in connection with a merger
until the stockholders and the institutions involved have approved the
merger and the Farm Credit Administration has given final approval to
the merger plan.
(Pub. L. 92-181, title VI, 6.5, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1588, and amended Pub. L. 100-399, title
II, 201(d), (e), Aug. 17, 1988, 102 Stat. 991.)
Section 410(c) of the Agricultural Credit Act of 1987, referred to in
subsec. (d), is section 410(c) of Pub. L. 100-233, which is set out as
a note under section 2011 of this title.
1988 -- Subsecs. (a)(1) to (3), (c). Pub. L. 100-399, 201(e),
struck out ''the appropriate provision of'' after ''under'' wherever
appearing.
Subsec. (d). Pub. L. 100-399, 201(d), substituted ''Except as
provided in section 410(c) of the Agricultural Credit Act of 1987, no''
for ''No''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278a-6. Special powers
TITLE 12 -- BANKS AND BANKING
(a) In general
In the case of a System institution that requests certification under
section 2278a-4 of this title, the Assistance Board may --
(1) require the institution to obtain approval from the Assistance
Board before implementing business, operating, and investment plans and
policies;
(2) if one or more of the conditions described in section 2183(b) of
this title are met, as determined by the Farm Credit Administration,
direct the Farm Credit Administration Board to appoint a conservator for
the institution, in accordance with such section, and to instruct the
conservator to evaluate the operations of the institution and report to
the Farm Credit Administration Board and the Assistance Board on the
possibility of restoring the institution to sound financial condition;
(3) request that the Farm Credit Administration Board or the Farm
Credit Administration, as appropriate --
(A) approve or require a merger or consolidation of the institution
to the extent authorized under this chapter;
(B) initiate action to appoint a receiver under section 2183(b) of
this title; or
(C) exercise any enforcement power authorized under this chapter;
(4) require the institution to obtain approval from the Assistance
Board before setting the terms and conditions of any debt issuances of
the institution;
(5) require the institution to obtain approval from the Assistance
Board before setting the policy on credit standards to be used, and the
policy on rates of interest to be charged on loans, by the institution,
including requiring that --
(A) the institution set interest rates at levels necessary to ensure
that the cost of money to the institution reflects the marginal cost to
the institution of borrowing an additional amount of money at the time a
new loan is made; and
(B) loans primarily secured by real estate mortgages not exceed 85
percent of the appraised agricultural value of the real estate security,
or 75 percent of the then current market value of the real estate
security, whichever is greater;
(6) require the institution to obtain approval from the Assistance
Board for the design of management information and accounting systems at
the institution, and of the continued use by the institution of
regulatory accounting practices in accordance with sections 2159(b) and
2254(b) of this title;
(7) require that the plans and policies of the institution resulting
from the merger of System banks reduce the overhead costs of such
institution, to the maximum extent practicable, with respect to the
delivery of services to, and performance of duties for, System
associations in the district;
(8) require the institution to obtain approval from the Assistance
Board of --
(A) the hiring policies of the institution;
(B) the compensation and retirement benefits of the chief executive
officer, other managers, and directors of the institution;
(C) any change in the management of the institution; and
(D) policy decisions regarding continued employment and promotion of
the officials referred to in subparagraph (B);
(9) suspend for any period of time, or terminate, any certification
granted to an institution under section 2278a-4 of this title if the
Farm Credit Administration notifies the Assistance Board that the
institution has substantially deviated from the institution's business
plan or has failed to comply with a term or condition governing the use
of any financial assistance provided to the institution under this
subchapter; and
(10) take such other action as the Assistance Board determines may be
necessary to establish prudent operating practices at the institution
and to return the institution to a sound financial condition.
(b) Suspension of assistance
(1) Notification
The Assistance Board shall promptly notify the Farm Credit
Administration of any action taken by the Assistance Board under
subsection (a)(9) of this section.
(2) Enforcement
The Farm Credit Administration may use any of its enforcement powers,
with respect to any institution to which the Assistance Board has
provided assistance or has certified the institution to issue preferred
stock under section 2278b-7 of this title, to obtain the compliance of
the institution with the terms or conditions governing the use of
financial assistance provided under this subchapter.
(c) Undated letters of resignation
The Assistance Board shall not, for any reason, request or require
any member of the board of directors of any System institution to submit
to the Assistance Board an undated letter of resignation. Immediately
after January 6, 1988, the Assistance Board shall destroy all such
letters over which it has control.
(d) Reports
During the 5-year period beginning on January 6, 1988, the Assistance
Board, in coordination with the Financial Assistance Corporation, shall
report annually to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition, and
Forestry of the Senate on the extent to which System institutions
translate the savings in the cost of the operations of such institutions
due to the Federal assistance provided to the System under this
subchapter into lower interest rates charged to System borrowers or
enhanced financial solvency of such institutions.
(Pub. L. 92-181, title VI, 6.6, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1589, and amended Pub. L. 100-399, title
II, 201(f)-(i), Aug. 17, 1988, 102 Stat. 991; Pub. L. 101-624, title
XVIII, 1843(a)(2), Nov. 28, 1990, 104 Stat. 3836.)
1990 -- Subsec. (a)(8)(B). Pub. L. 101-624 struck out before
semicolon at end ''notwithstanding the authority of the Farm Credit
Administration to approve such matters''.
1988 -- Subsec. (a)(8)(B). Pub. L. 100-399, 201(f), struck out
''under sections 2226 and 2252(a)(15) of this title'' after ''such
matters''.
Subsec. (a)(9). Pub. L. 100-399, 201(g), struck out ''may'' before
''suspend''.
Subsec. (b)(1). Pub. L. 100-399, 201(h), substituted ''(a)(9)'' for
''(a)(8)''.
Subsec. (b)(2). Pub. L. 100-399, 201(i), struck out ''the appropriate
provision of'' after ''stock under''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278a-7. Administration
TITLE 12 -- BANKS AND BANKING
(a) Expenses
The Financial Assistance Corporation shall pay the necessary and
reasonable administrative expenses of the Assistance Board from funds in
the Assistance Fund established in section 2278b-5 of this title.
(b) Interim funding
Before the availability of funding from the Assistance Fund, the
Assistance Board may use the revolving fund established under section
2151 of this title. Such amounts used shall be repaid to the revolving
fund out of the Assistance Fund within the same fiscal year that such
funds were received by the Assistance Board.
(c) Assistance operations
The Farm Credit Administration shall provide such personnel and
facilities to the Assistance Board as the Farm Credit Administration
considers are necessary to avoid unnecessary duplication and waste.
(d) Access to FCA documents
The Assistance Board shall have access to all reports of examination
and supervisory documents of the Farm Credit Administration, and
relevant supporting material, for the purpose of carrying out the
special powers of the Assistance Board under section 2278a-6 of this
title, under such terms and conditions, acceptable to the Farm Credit
Administration Board, as are necessary and appropriate to protect the
confidentiality of the documents and materials.
(Pub. L. 92-181, title VI, 6.7, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1591, and amended Pub. L. 100-399, title
II, 201(j), Aug. 17, 1988, 102 Stat. 991.)
1988 -- Subsec. (d). Pub. L. 100-399 substituted ''material,'' for
''material'' and ''under such terms and conditions, acceptable'' for
''under terms and conditions that are acceptable''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278a-8. Limitation of powers
TITLE 12 -- BANKS AND BANKING
(a) Purposes
The powers of the Assistance Board under this subchapter shall be
exercised only for the purposes specified in this subchapter and shall
not be exercised in a manner that would result in the Assistance Board
supplanting the Farm Credit System lending institutions as the primary
providers of credit and other financial services to farmers, ranchers,
and the cooperatives of such.
(b) Prohibition
The powers of the Assistance Board under this subchapter shall not
include the management, administration, or disposition of any loans or
other assets owned by other System institutions, or the providing of
technical assistance or other related services to other System
institutions in connection with the administration of loans owned by
such other institutions.
(Pub. L. 92-181, title VI, 6.8, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1591.)
12 USC 2278a-9. Succession
TITLE 12 -- BANKS AND BANKING
(a) Assets and liabilities
On the issuance by the Farm Credit Administration of the charter for
the Assistance Board under this part, the Assistance Board shall succeed
to the assets of and assume all debts, obligations, contracts, and other
liabilities of the Capital Corporation, matured or unmatured, accrued,
absolute, contingent or otherwise, and whether or not reflected or
reserved against on balance sheets, books of account, or records of the
Capital Corporation.
(b) Contracts
The existing contractual obligations, security instruments, and title
instruments of the Capital Corporation shall, by operation of law and
without any further action by the Farm Credit Administration, the
Capital Corporation, or any court, become and be converted into
obligations, entitlements, and instruments of the Assistance Board
chartered under this part.
(c) Adjustment of assessments
Not later than 15 days after the issuance of the charter of the
Assistance Board, the Board shall retire all debt and equity obligations
issued to any System institution under section 2216f(a)(14) or 2216g /1/
of this title (as in effect immediately before January 6, 1988) at the
book value of such obligations (determined as of January 6, 1988) and
shall pay such amounts to the holders of such debt and equity
obligations.
(d) Surplus funds
To the extent that, on the extinguishing of liabilities assumed by
the Assistance Board under this section, and on full performance or
other final disposition of contract obligations of the Assistance Board,
there remain surplus funds attributable to such obligations or
contracts, the Assistance Board shall distribute such surplus funds
among the System institutions that contributed funds to the Capital
Corporation on the basis of the relative amount of funds so contributed
by each institution.
(e) Preservation agreements
(1) Transfer of obligations
Notwithstanding any other provision of this chapter or the terms and
conditions of the Thirty-Seven Banks Capital Preservation Agreement, the
Federal Land Banks Capital Preservation Agreement, the Federal
Intermediate Credit Banks Capital Preservation Agreement, and the Banks
for Cooperatives Loss Sharing Agreement --
(A) at the time the receiving bank receives funds from the Financial
Assistance Corporation in an equal and equivalent amount in accordance
with this subsection, any amounts received by, or that remain accrued
to, any System bank in accordance with the activation of any such
agreement for the calendar quarter ending on September 30, 1986, shall
be --
(i) repaid to the contributing bank by the bank that received such
payments; or
(ii) cancelled;
(B) on the date the Financial Assistance Corporation is chartered,
the accounts payable of each contributing bank under such agreements for
the calendar quarter ending on September 30, 1986, shall, by operation
of law and without any further action by such contributing bank, any
other bank, or any court, become and be converted into accounts payable
of the Financial Assistance Corporation to each receiving bank under
such agreement for such calendar quarter in the same amounts as
previously carried on the books of each such receiving bank; and
(C) on the date the Financial Assistance Corporation is chartered,
the accounts receivable of each receiving bank under such agreements for
the calendar quarter ending September 30, 1986, shall, by operation of
law and without any further action by such receiving bank or any other
bank, or any court, become and be converted into accounts receivable to
such receiving bank from the Financial Assistance Corporation, in the
same amount as previously carried on the books of such receiving bank
and such receivables shall, for all financial reporting purposes, be
accounted for as an asset on the books of such receiving bank in
accordance with generally accepted accounting practices.
(2) Payments to receiving banks
(A) Not later than 30 days after the first issuance of obligations by
the Financial Assistance Corporation in accordance with section 2278b-6
of this title, the Corporation shall pay to each receiving bank such
sums as are necessary to permit each receiving bank to repay, in
accordance with paragraph (1), the amounts each such receiving bank
received under any such agreement.
(B) The accruals shall be paid by the Corporation to each receiving
bank for the actual net loan charge-offs recorded on the books of each
such bank before January 1, 1993, not previously paid by the
contributing banks.
(3) Debt obligations
(A) Issuance
For the purpose of obtaining funds to carry out this subsection, the
Financial Assistance Corporation shall issue debt obligations under
section 2278b-6 of this title. Such obligations shall be subject to the
terms and conditions of such section, except as provided for in this
paragraph.
(B) Payment of interest
During each year of the 15-year period of such obligation issued
pursuant to subparagraph (A), the banks operating under this chapter
shall pay to the Financial Assistance Corporation, at such times as the
Corporation shall determine, an amount equal to the entire amount of
interest due on such obligation. Each bank shall pay a proportion of
such interest equal to --
(i) the average accruing loan volume of the bank during the year
preceding the year of such payment; divided by
(ii) the average accruing loan volume of all of the banks of the
System for the same period.
(C) Payment of principal
After the end of the 15-year period beginning on the date of the
issuance of any obligation issued to carry out this subsection, the
banks operating under this chapter shall pay to the Financial Assistance
Corporation, on demand, an amount equal to the outstanding principal of
such obligation. Each bank shall pay a proportion of such principal
equal to --
(i) the average accruing loan volume of the bank for the preceding 15
years; divided by
(ii) the average accruing loan volume of all banks of the System for
the same period.
(D) Financial reporting
Until each obligation issued in accordance with this subsection
reaches maturity, for all financial reporting purposes, such obligation
shall be considered to be the sole obligation of the Financial
Assistance Corporation and shall not be considered a liability of any
System bank.
(4) Funds not considered financial assistance
The funds made available to each bank, whether through the issuance
of stock or otherwise, by the Financial Assistance Corporation to meet
obligations under any agreement referred to in paragraph (1) or to meet
any obligations of the contributing banks under any such agreement, as
required by this subsection, shall not be considered financial
assistance under this chapter.
(5) Suspension of preservation agreements
During the 5-year period beginning on January 6, 1988, and thereafter
whenever funds from the Farm Credit System Insurance Fund are available
for use in assisting System institutions to meet their obligations on
their debt instruments, activation of the Thirty-Seven Banks Capital
Preservation Agreement, the Federal Land Banks Capital Preservation
Agreement, the Federal Intermediate Credit Banks Capital Preservation
Agreement, and the Banks for Cooperatives Loss Sharing Agreement shall
be suspended, in exchange for the benefits flowing to the signatories to
such agreements under the Agricultural Credit Act of 1987.
(Pub. L. 92-181, title VI, 6.9, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1591, and amended Pub. L. 100-399, title
II, 201(k), (l), Aug. 17, 1988, 102 Stat. 991.)
Sections 2216f and 2216g of this title, referred to in subsec. (c),
were repealed by Pub. L. 100-233, title II, 207(a)(3), Jan. 6, 1988,
101 Stat. 1607, effective 15 days after Jan. 6, 1988.
The Agricultural Credit Act of 1987, referred to in subsec. (e)(5),
is Pub. L. 100-233, Jan. 6, 1988, 101 Stat. 1568, as amended. For
complete classification of this Act to the Code see Short Title of 1988
Amendment note set out under section 2001 of this title and Tables.
1988 -- Subsec. (a). Pub. L. 100-399, 201(k), inserted in heading
''Assets and''.
Subsec. (e)(5). Pub. L. 100-399, 201(l), inserted ''activation of''
after ''instruments,'' and struck out closing quotation mark and
following period, which for purposes of codification had been previously
struck out requiring no change in text.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
/1/ See References in Text note below.
12 USC 2278a-10. Effect of regulations; audits
TITLE 12 -- BANKS AND BANKING
(a) Issuance
The Assistance Board may issue such regulations, policies,
procedures, guidelines, or statements as the Board considers necessary
or appropriate to carry out this subchapter, all of which shall be
promulgated and enforced without regard to subchapter II of chapter 5 of
title 5.
(b) Regulation by Farm Credit Administration
The Assistance Board shall not be subject to regulation by the Farm
Credit Administration.
(c) Audits
The Assistance Board shall not require an audit or examination of a
System institution that would be duplicative of an audit or examination
that is conducted under other provisions of law.
(Pub. L. 92-181, title VI, 6.10, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1594.)
12 USC 2278a-11. Exemption from taxation
TITLE 12 -- BANKS AND BANKING
The Assistance Board, the capital, reserves, and surplus thereof, and
the income derived therefrom, shall be exempt from Federal, State,
municipal, and local taxation, except taxes on real estate held by the
Assistance Board to the same extent, according to its value, as other
similar property held by other persons is taxed.
(Pub. L. 92-181, title VI, 6.11, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1594.)
12 USC 2278a-12. Termination
TITLE 12 -- BANKS AND BANKING
The Assistance Board and the authority provided to the Assistance
Board by this part shall terminate on December 31, 1992.
(Pub. L. 92-181, title VI, 6.12, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1594, and amended Pub. L. 100-399, title
II, 201(m), Aug. 17, 1988, 102 Stat. 991.)
1988 -- Pub. L. 100-399 inserted ''to the Assistance Board'' after
''provided''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278a-13. Transitional provisions
TITLE 12 -- BANKS AND BANKING
(a) Exercise of powers
The powers of the Assistance Board under this subchapter shall be
exercised by the Farm Credit Administration Board until the issuance of
the charter of the Assistance Board, or such later date not to exceed 30
days thereafter, as may be requested by the Assistance Board.
(b) Limitation on assistance
Any assistance provided to System institutions by the Farm Credit
Administration in accordance with this section shall be provided from,
and shall not exceed, the amounts contained in the revolving fund
established under section 2151 of this title.
(c) Issuance of stock
Each institution that receives assistance from the Farm Credit
Administration during the interim period specified in subsection (a) of
this section, in consideration thereof, shall issue preferred stock to
the Financial Assistance Corporation in an amount equal to the amount of
such assistance. Payments by the Financial Assistance Corporation under
subsection (d) of this section shall be considered to be payments to
each such institution for such stock.
(d) Repayment
The Financial Assistance Corporation shall pay to the Farm Credit
Administration, for return to the revolving fund established under
section 2151 of this title, the full amount of all financial assistance
provided by the Farm Credit Administration in accordance with this
section, from the proceeds from the sale of the first issue of
obligations by the Financial Assistance Corporation in accordance with
section 2278b-6 of this title.
(Pub. L. 92-181, title VI, 6.13, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1594, and amended Pub. L. 100-399, title
II, 201(n), Aug. 17, 1988, 102 Stat. 991.)
1988 -- Subsec. (d). Pub. L. 100-399 inserted '', for return to the
revolving fund established under section 2151 of this title,'' before
''the full''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC Part B -- Financial Assistance Corporation
TITLE 12 -- BANKS AND BANKING
12 USC 2278b. Establishment of Corporation
TITLE 12 -- BANKS AND BANKING
Not later than 5 days after January 6, 1988, the Farm Credit
Administration shall charter the Farm Credit System Financial Assistance
Corporation (hereinafter referred to in this chapter as the ''Financial
Assistance Corporation'') which shall be --
(1) an institution of the Farm Credit System; and
(2) a Federally chartered instrumentality of the United States.
(Pub. L. 92-181, title VI, 6.20, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1595.)
Section 206 of Pub. L. 100-233 provided that: ''During the period
beginning September 30, 2001, and ending December 31, 2001, the Farm
Credit Administration shall review and evaluate the financial condition
of the Farm Credit System and report to the Secretary of the Treasury
and the appropriate committees of Congress on --
''(1) the general financial condition of each System institution;
''(2) the total outstanding principal of debt obligations issued
under section 6.26 of the Farm Credit Act of 1971 (as added by section
201 of this Act) (12 U.S.C. 2278b-6); and
''(3) the ability of each System institution to retire, at par value,
preferred stock issued by the institution in accordance with section
6.27 of the Farm Credit Act of 1971 (as added by section 201 of this
Act) (12 U.S.C. 2278b-7).''
12 USC 2278b-1. Purpose
TITLE 12 -- BANKS AND BANKING
The purpose of the Financial Assistance Corporation shall be to carry
out a program to provide capital to institutions of the Farm Credit
System that are experiencing financial difficulty.
(Pub. L. 92-181, title VI, 6.21, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1595.)
12 USC 2278b-2. Board of Directors
TITLE 12 -- BANKS AND BANKING
(a) Board of Directors
(1) Composition
The Board of Directors of the Financial Assistance Corporation
(hereinafter referred to in this part as the ''Board of Directors'')
shall consist of the Board of Directors of the Federal Farm Credit Banks
Funding Corporation.
(2) Chairman
The Board of Directors shall elect annually a Chairman from among the
members of the Board.
(3) Compensation
The members of the Board of Directors shall receive compensation for
the time devoted to meetings and other activities of the Board and
reasonable allowances for necessary expenses of travel, lodging, and
subsistence incurred in attending meetings and other activities of the
Board of Directors in amounts not exceeding levels set by the Farm
Credit Administration Board.
(b) Rules and records
The Board of Directors shall adopt such rules as it may deem
appropriate for the transaction of its business and shall keep permanent
and accurate records and minutes of its acts and proceedings.
(c) Quorum required
No business may be conducted at a meeting of the Board of Directors
unless a quorum of the members of the Board is present, and a vote to
approve an action requires a majority vote of the members voting.
(d) Chief executive officer
A chief executive officer of the Financial Assistance Corporation
shall be selected by the Board of Directors and shall serve at the
pleasure of the Board.
(Pub. L. 92-181, title VI, 6.22, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1595, and amended Pub. L. 100-399, title
II, 201(o), Aug. 17, 1988, 102 Stat. 991.)
1988 -- Subsec. (a)(1). Pub. L. 100-399 substituted ''part'' for
''chapter''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278b-3. Stock
TITLE 12 -- BANKS AND BANKING
The Financial Assistance Corporation shall issue stock with a par
value of $5 to System institutions, as provided for in this part, and
such stock shall not be transferable, except in the event of a
restructuring or liquidation to a successor System institution.
(Pub. L. 92-181, title VI, 6.23, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1595, and amended Pub. L. 102-237, title V,
502(m), Dec. 13, 1991, 105 Stat. 1869.)
1991 -- Pub. L. 102-237 inserted before period at end '', except in
the event of a restructuring or liquidation to a successor System
institution''.
12 USC 2278b-4. Corporate powers
TITLE 12 -- BANKS AND BANKING
(a) In general
The Financial Assistance Corporation shall have the power to --
(1) operate under the direction of its Board of Directors;
(2) adopt, alter, and use a corporate seal, which shall be judicially
noted;
(3) provide for such officers, employees, and agents, including joint
employees with the Funding Corporation, as may be necessary, define
their duties, and require surety bonds or make other provisions against
losses occasioned by acts of such persons;
(4) adopt a salary scale for officers and employees of the Financial
Assistance Corporation, in accordance with the directives of the Board
of Directors;
(5) prescribe by its Board of Directors bylaws, that are not
inconsistent with law, and that shall provide for the manner in which --
(A) its officers, employees, and agents are selected;
(B) its property is acquired, held, and transferred;
(C) its general business is conducted; and
(D) the privileges granted by law are exercised and enjoyed;
(6) enter into contracts and make advance, progress, or other
payments with respect to such contracts;
(7) sue and be sued in its corporate name and complain and defend in
courts of competent jurisdiction;
(8) acquire, hold, lease, mortgage, or dispose of, at public or
private sale, real and personal property, and otherwise exercise all the
usual incidents of ownership of property necessary and convenient to its
business;
(9) obtain insurance against loss;
(10) modify or consent to the modification of any contract or
agreement to which it is a party or in which it has an interest under
this part;
(11) borrow from any commercial bank on its own individual
responsibility and on such terms and conditions as it may determine with
the approval of the Farm Credit Administration;
(12) deposit its securities and its current funds with any member
bank of the Federal Reserve System or any insured State nonmember bank
(within the meaning of section 1813 of this title) and pay fees therefor
and receive interest thereon as may be agreed; and
(13) exercise such other incidental powers as are necessary to carry
out its powers, duties, and functions in accordance with its charter and
this part.
(b) Power to remove, and jurisdiction
Notwithstanding any other provision of law, any civil action, suit,
or proceeding to which the Financial Assistance Corporation is a party
shall be deemed to arise under the laws of the United States, and the
United States District Court for the District of Columbia shall have
exclusive jurisdiction over such. The Financial Assistance Corporation
may, without bond or security, remove any such action, suit, or
proceeding from a State court to the United States District Court for
the District of Columbia.
(Pub. L. 92-181, title VI, 6.24, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1596, and amended Pub. L. 100-399, title
II, 201(a), (b), Aug. 17, 1988, 102 Stat. 990.)
1988 -- Subsec. (a)(12). Pub. L. 100-399, 201(a), substituted
''(within the meaning of section 1813 of this title)'' for ''(as defined
in section 1813(b) of this title)''.
Subsec. (b). Pub. L. 100-399, 201(b), substituted ''exclusive'' for
''original''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278b-5. Accounts
TITLE 12 -- BANKS AND BANKING
(a) Farm Credit Assistance Fund
(1) Establishment
The Financial Assistance Corporation shall establish an account
called the Farm Credit Assistance Fund (referred to in this chapter as
the ''Assistance Fund'') which shall be available to the Financial
Assistance Corporation as a revolving fund to carry out this part. The
moneys of such Assistance Fund shall be invested in direct obligations
of the United States or obligations guaranteed by the United States or
an agency thereof.
(2) Funding
The Assistance Fund shall be funded through the issuance of debt
obligations and payments, as provided in section 2278b-6 of this title,
and payments, as provided in section 2278b-8 of this title.
(b) Financial Assistance Corporation Trust Fund
The Financial Assistance Corporation shall establish an account
called the Financial Assistance Corporation Trust Fund (hereinafter
referred to in this chapter as the ''Trust Fund'') that shall consist of
securities of the United States Treasury purchased by the Financial
Assistance Corporation with the funds received from the purchase of
stock by System institutions from the Financial Assistance Corporation
under section 2278b-9 of this title.
(Pub. L. 92-181, title VI, 6.25, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1597.)
12 USC 2278b-6. Debt obligations
TITLE 12 -- BANKS AND BANKING
(a) Issuance
During the period beginning 61 days after January 6, 1988, and ending
September 30, 1992, the Financial Assistance Corporation, subject to the
approval of the Assistance Board, may issue uncollateralized bonds,
notes, debentures, and similar obligations, guaranteed as to the timely
payment of principal and interest by the Secretary of the Treasury as
set forth in subsection (d) of this section, with semiannual interest
coupon payments and a maturity period of 15 years --
(1) in an aggregate amount not to exceed $2,800,000,000; and
(2) beginning January 1, 1989, in an additional amount, not to exceed
$1,200,000,000, if --
(A) debt obligations have been issued by the Corporation to the full
extent authorized under paragraph (1);
(B) the Assistance Board determines that such additional funds are
needed to carry out this subchapter; and
(C) at least 90 days before the issuance of any debt obligations
under this paragraph, the Assistance Board submits a report to Congress
that sets forth the determination of the Assistance Board that such
additional debt obligations should be issued, and that contains a
detailed evaluation supporting the determination.
(b) Conditions
The debt obligations shall be in such forms and denominations, bear
such rates of interest, be subject to such conditions, be issued in such
manner, and be sold at such prices as may be prescribed by the Financial
Assistance Corporation.
(c) Interest payments
(1) Payment of interest during first 5-year period
During each year of the first 5-year period of the 10-year period
beginning on the date of issuance of each obligation under subsection
(a) of this section, the Financial Assistance Corporation shall pay,
without recourse to System institutions, other than that described in
paragraph (5), all of the interest due on such obligation.
(2) Payment of interest during second 5-year period
(A) In general
During each year of the second 5-year period of the 10-year period
beginning on the date of issuance of each obligation under subsection
(a) of this section, the Financial Assistance Corporation shall pay all
of the interest due on such obligation.
(B) Payment by System institutions to Financial Assistance
Corporation
During each year of the second 5-year period, System institutions
shall pay to the Financial Assistance Corporation 50 percent of the
interest due on the obligations, except that System institutions shall
pay an additional 10 percent of the interest expense for each 1 percent
that the unallocated retained earnings of the System (as determined
under generally accepted accounting principles) exceed 5 percent of net
assets (total assets less allowance for loan losses) based on a year-end
financial statement for the preceding year.
(C) Allocation
During each year of the second 5-year period, each System institution
shall pay to the Financial Assistance Corporation a proportion of the
interest due from System institutions under this paragraph equal to --
(i) the amount of the performing loan volume of the institution
(based on the average loan volume for the preceding year); divided by
(ii) the total performing loan volume of the System for the preceding
year.
(D) Special rule
For purposes of determining the average loan volume of Farm Credit
Banks, loan volume shall consist of loans made by such banks with the
exception of loans made to associations.
(3) Payments by Treasury
The Secretary of the Treasury, in accordance with section 2278b-8 of
this title, shall pay to the Financial Assistance Corporation, in a
timely manner, the balance of each interest payment not made by the
System institutions.
(4) Payment of interest after first 10-year period
During each year of the third 5-year period of the 15-year period
beginning on the date of the issuance of each obligation under
subsection (a) of this section, the Financial Assistance Corporation
shall pay all of the interest due on such obligation. During each year
of such 5-year period, System institutions shall pay the entire amount
of interest due on the obligation allocated in the same manner as under
paragraph (2)(C). Such payments shall be made to the Financial
Assistance Corporation at such times as the Financial Assistance
Corporation shall determine.
(5) Repayment by System institutions
(A) In general
Subject to the other provisions of this paragraph, the institutions
of the Farm Credit System shall, on a fair and equitable basis, repay to
the Secretary of the Treasury the total amount of any annual interest
charges on debt obligations issued under subsection (a) of this section
that such institutions have not previously paid, and such institutions
shall not be required to pay any additional interest charges on such
payments.
(B) Time of payment
The institutions of the Farm Credit System shall begin making
payments under this paragraph when the Farm Credit Administration, in
consultation with the Secretary of the Treasury, determines that such
institutions possess the financial viability to make such payments,
except that such institutions shall not be required to begin making such
payments until the obligations referred to in subsection (d)(1)(E) of
this section have been fully repaid.
(C) Terms of payments
(i) In general
The institutions of the Farm Credit System shall make payments under
this paragraph at such levels, and on such dates, as the Farm Credit
Administration determines appropriate, except that the Farm Credit
Administration shall not set payment levels or dates that would
jeopardize the financial viability of any such institution.
(ii) Limitations
The institutions of the Farm Credit System shall not be required to
make such repayments in a manner that --
(I) impairs the stock of such institution; or
(II) jeopardizes the minimum capital requirements of the institution.
(iii) Uncollateralized obligation
Obligations to make repayments under this paragraph shall not be
required to be collateralized.
(d) Refinancing and payment of principal; defaults
(1) In general
(A) Time of repayment
On maturity of an obligation issued under subsection (a) of this
section, the obligation shall be repaid by the Financial Assistance
Corporation.
(B) Payments by institutions
Except as provided in subparagraph (C), in order to enable the
Financial Assistance Corporation to repay the obligation referred to in
subparagraph (A), each institution that issued preferred stock under
section 2278b-7(a) of this title with respect to such obligation (or the
successor thereto) shall pay to the Financial Assistance Corporation,
before the maturity date of such obligation, an amount equal to the par
value of such stock outstanding for such institution.
(C) Systemwide repayment
In order to enable the Financial Assistance Corporation to repay the
obligations issued to provide assistance under section 410(c) of the
Agricultural Credit Act of 1987 and section 2162(c) of this title, or
issued to provide funds to cover the expenses of the Assistance Board
under section 2278a-7(a) of this title, each System institution shall
pay to the Financial Assistance Corporation a proportion of such
obligation equal to --
(i) the average performing loan volume of the institution for the
preceding 15 years; divided by
(ii) the average performing loan volume of all of the System
institutions for the same period.
(D) Special rule
For purposes of determining the average loan volume of Farm Credit
Banks, loan volume shall consist of loans made by such banks with the
exception of loans made to associations.
(E) Funds for payments
Payments under subparagraphs (B) and (C) shall be made by each such
institution from the funds of the institution or from funds raised by
the institution through the issuance of debt obligations, which may be
issued without a collateral requirement and without any guarantee by the
Secretary of the Treasury.
(2) Refinanced obligations
The refinanced obligations issued under paragraph (1) shall be solely
the obligations of the institutions refinancing such, and sections 2154
and 2155 of this title shall not apply to such obligations.
(3) Defaults
(A) Interest
(i) Payment by Corporation
If a System institution defaults on the payment of interest due under
subsection (c) of this section during the first 15 years after an
obligation is issued under subsection (a) of this section, the Financial
Assistance Corporation shall pay the amount of the interest due by the
System institution out of the Trust Fund, and shall recover the amount
of the interest due from the defaulting System institution, and such
amount shall be paid to the Trust Fund.
(ii) Payment by Insurance Fund
If the Financial Assistance Corporation has not recovered the full
amount of interest due from a defaulting institution by the end of the
12-month period beginning on the date of default, such uncollected
interest shall be paid to the Trust Fund from the Insurance Fund
established under section 2277a-9 of this title, to the full extent of
funds available in the Insurance Fund as of the date the Financial
Assistance Corporation notified the Farm Credit System Insurance
Corporation of amounts due under this section.
(iii) Payment by remaining institutions
To the extent that the payment from the Insurance Fund is
insufficient to reimburse the Trust Fund, the remaining balance shall be
added to the amount of interest due from remaining System institutions,
under subsection (c) of this section, and each remaining System
institution, subject to the special rule provided in subsection
(c)(2)(D) of this section, shall pay to the Trust Fund a proportion of
the uncollected interest equal to --
(I) the amount of the performing loan volume of the institution
(based on the average loan volume for the preceding year); divided by
(II) the total performing loan volume of the System.
(B) Principal
(i) Evaluation
Not later than 90 days before the maturity of any obligation issued
under subsection (a) of this section, the Farm Credit Administration
shall complete an evaluation of the general financial condition of each
System institution that issued preferred stock under section 2278b-7(a)
of this title with respect to such obligation to determine whether such
System institution will be able to redeem such stock at par value on the
maturity of the obligation, and remain a viable institution capable of
providing credit to eligible borrowers at equitable and competitive
interest rates.
(ii) Availability of evaluation
A copy of the evaluation required under clause (i) shall be furnished
to the Secretary of the Treasury and the appropriate committees of
Congress.
(iii) Redemption by institution; purchase by Secretary of the
Treasury
If the Farm Credit Administration determines, in consultation with
the Secretary of the Treasury, on the basis of the evaluation required
under clause (i), that the redemption of such stock at par value would
impair the other stock or equities of such institution or render such
institution incapable of meeting its capital adequacy standards, the
institution shall be prohibited from redeeming the preferred stock it
issued under section 2278b-7 of this title with respect to the maturing
obligation. If the Farm Credit Administration determines, in
consultation with the Secretary of the Treasury, on the basis of the
evaluation required under clause (i), that such institution will be able
to redeem, in a timely manner and at par value, the preferred stock it
issued under section 2278b-7 of this title with respect to the maturing
obligation, and remain a viable and competitive institution, such
institution shall have the option of redeeming or not redeeming such
stock. If such institution is prohibited from redeeming or elects not
to redeem such stock, the Financial Assistance Corporation shall
withdraw funds from the Trust Fund in an amount equal to the par value
of the preferred stock issued by such institution under section 2278b-7
of this title so as to enable the Financial Assistance Corporation to
pay the principal of the maturing obligation. Simultaneously with such
withdrawal of funds from the Trust Fund, the Financial Assistance
Corporation shall transfer to the Insurance Fund an equal amount, at par
value, of preferred stock of such institution. To the extent that the
Trust Fund is insufficient to enable the Financial Assistance
Corporation to pay the full principal of the maturing obligation, the
Insurance Fund shall be used by the Farm Credit System Insurance
Corporation to purchase, at par value, the preferred stock issued by
such institution under section 2278b-7(a) of this title to enable the
Financial Assistance Corporation to pay the principal of the maturing
obligation. To the extent that the Insurance Fund is insufficient to
enable the Financial Assistance Corporation to pay the full principal of
the maturing obligation, the Secretary of the Treasury shall purchase,
at par value, the remaining quantity of the preferred stock issued by
such institution to enable the Financial Assistance Corporation to make
such full payment. For that purpose, the Secretary of the Treasury may
use, as a public debt transaction, the proceeds from the sale of any
securities issued under chapter 31 of title 31. The purposes for which
such securities may be issued under such chapter are extended to include
such purchases of stock. Any preferred stock transferred to, or
purchased by, the Farm Credit System Insurance Corporation under this
clause shall be retired by the issuing institution at such times and
under such terms and conditions as are agreed to between the Insurance
Corporation and such institution.
(C) Recourse by other System institutions
A defaulting institution shall be liable to the remaining System
institutions for the amount of any interest paid by the remaining
institutions under this paragraph.
(4) Payment by United States
(A) Inability to pay
Notwithstanding any other provision of this chapter, if the Financial
Assistance Corporation is unable to pay the principal or interest of any
obligation issued under subsection (a) of this section, the Secretary of
the Treasury shall pay to the Financial Assistance Corporation the
amount due which shall be used by the Financial Assistance Corporation
to pay the obligation.
(B) Recovery
(i) Interest payments
In each instance in which the Secretary of the Treasury is required
to make a payment under subparagraph (A) to the Financial Assistance
Corporation as a result of a default made by a System institution on
interest due from such System institution under subsection (c) of this
section, the Secretary of the Treasury shall recover the amount of the
payments the Secretary made, with respect to each defaulting
institution, from such defaulting institution. If the Secretary has not
recovered the full amount due from the defaulting institution by the end
of the 12-month period beginning on the date of payment by the
Secretary, the uncollected amount shall be paid to the Secretary from
the Insurance Fund established under section 2277a-9 of this title.
(ii) Principal payments
In each instance in which the Secretary of the Treasury is required
under paragraph (3)(B)(iii) to purchase preferred stock issued by a
System institution under section 2278b-7(a) of this title, the Farm
Credit System Insurance Corporation shall use funds deposited in the
Insurance Fund to repurchase, at par value, from the Secretary of the
Treasury such stock required to be purchased under paragraph (3)(B)(
iii) as funds become available for such repurchase.
(iii) Priority
Notwithstanding any other provision of this chapter except for
section 2277a-9(c)(2)(B) of this title, during any year in which
payments are due to the Secretary of the Treasury from the Insurance
Fund under clause (i), or preferred stock held by the Secretary is due
to be repurchased by the Insurance Fund under clause (ii), the funds in
such Fund, and all funds deposited in such Fund during such year, shall
be used first for the purposes specified in clauses (i) and (ii).
(Pub. L. 92-181, title VI, 6.26, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1597, and amended Pub. L. 100-399, title
II, 201(p)-(x), Aug. 17, 1988, 102 Stat. 991, 992.)
Section 410(c) of the Agricultural Credit Act of 1987, referred to in
subsec. (d)(1)(C), is section 410(c) of Pub. L. 100-233, which is set
out as a note under section 2011 of this title.
1988 -- Subsec. (c)(2)(D). Pub. L. 100-399, 201(q), substituted
''Farm Credit Banks'' for ''Federal intermediate credit banks and
Federal land banks''.
Pub. L. 100-399, 201(p), inserted ''and Federal land banks'' after
''credit banks'' and struck out ''production credit'' before
''associations''.
Subsec. (c)(5)(B). Pub. L. 100-399, 201(r)(1), substituted ''payments
under this paragraph'' for ''interest payments''.
Pub. L. 100-399, 201(r)(2), substituted ''referred to in subsection
(d)(1)(E)'' for ''issued under subsection (d)(1)(C)''.
Subsec. (c)(5)(C)(i). Pub. L. 100-399, 201(r)(1), substituted
''payments under this paragraph'' for ''interest payments''.
Subsec. (d). Pub. L. 100-399, 201(s), inserted ''; defaults'' after
''principal'' in heading.
Subsec. (d)(1)(C). Pub. L. 100-399, 201(t), in introductory
provisions substituted ''issued to provide assistance under section
410(c) of the Agricultural Credit Act of 1987 and section 2162(c) of
this title, or issued to provide funds to cover the expenses of the
Assistance Board under section 2278a-7(a) of this title,'' for
''referred to in section 410(c) of the Agricultural Credit Act of
1987,'' and ''such obligation'' for ''such principal'', in cl. (i)
substituted ''institution'' for ''bank'', and in cl. (ii) substituted
''institutions'' for ''banks''.
Subsec. (d)(1)(D). Pub. L. 100-399, 201(q), substituted ''Farm Credit
banks'' for ''Federal intermediate credit banks and Federal land
banks''.
Pub. L. 100-399, 201(p), inserted ''and Federal land banks'' after
''credit banks'' and struck out ''production credit'' before
''associations''.
Subsec. (d)(1)(E). Pub. L. 100-399, 201(u), substituted
''subparagraphs (B) and (C)'' for ''subparagraph (B)''.
Subsec. (d)(3)(A)(i), (iii). Pub. L. 100-399, 201(v), substituted
''subsection (c) of this section'' for ''this subsection''.
Subsec. (d)(3)(B)(iii). Pub. L. 100-399, 201(w), inserted ''is
prohibited from redeeming or'' after ''If such institution''.
Subsec. (d)(4)(B)(iii). Pub. L. 100-399, 201(x), substituted
''section 2277a-9(c)(2)(B) of this title'' for ''section 2277a-9 of this
title''.
Amendment by section 201(q) of Pub. L. 100-399 effective immediately
after amendment made by section 401 of Pub. L. 100-233, which was
effective 6 months after Jan. 6, 1988, and amendment by section 201(p),
(r)-(x) of Pub. L. 100-399 effective as if enacted immediately after
enactment of Pub. L. 100-233, which was approved Jan. 6, 1988, see
section 1001 of Pub. L. 100-399, set out as a note under section 2002
of this title.
12 USC 2278b-7. Preferred stock
TITLE 12 -- BANKS AND BANKING
(a) Issuance
(1) In general
Each System institution that is certified under section 2278a-4 of
this title may issue a special class of preferred stock only in an
amount, and subject to such terms and conditions, as authorized by the
Assistance Board.
(2) Dividends
(A) In general
Except as provided in subparagraph (B), dividends shall not be
payable on stock issued under this section.
(B) Exception
Stock issued under this section shall be issued under such terms and
conditions as to enable the Secretary of the Treasury, with respect to
any of such stock the Secretary purchases under section 2278b-6(d)(3)(
B)(iii) of this title, and the Farm Credit System Insurance Corporation,
with respect to any of such stock that the Insurance Corporation
purchases or otherwise acquires under section 2278b-6(d)( 3)(B)(iii) of
this title or section 2278b-6(d)(4)(B)(ii) of this title, to establish
for such stock a stated dividend rate equal to the current market yield
on outstanding, marketable obligations of the United States with
maturities of 30 years, plus a premium to reflect the cost of capital
for institutions in financial distress.
(3) Voting rights
A holder of stock issued under this subsection shall have no voting
rights with respect to the stock.
(b) Purchase
The Financial Assistance Corporation shall purchase shares of stock
issued by certified System institutions under subsection (a) of this
section to the extent that the issuance of such stock is approved by the
Assistance Board.
(Pub. L. 92-181, title VI, 6.27, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1602, and amended Pub. L. 100-399, title
II, 201(y)-(aa), Aug. 17, 1988, 102 Stat. 992.)
1988 -- Subsec. (a)(1). Pub. L. 100-399, 201(y), struck out ''(a) or
(b)'' after ''section 2278a-4''.
Subsec. (a)(2)(B). Pub. L. 100-399, 201(z), substituted ''Farm Credit
System Insurance Corporation'' for ''Reserve Account Board'' and
''Insurance Corporation purchases'' for ''Board purchases''.
Subsec. (b). Pub. L. 100-399, 201(aa), substituted ''subsection (a)''
for ''subsections (a) and (b)''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
section 1999.
12 USC 2278b-8. Payments
TITLE 12 -- BANKS AND BANKING
(a) In general
Beginning in fiscal year 1989, the Secretary of the Treasury shall
reimburse the Financial Assistance Corporation for any amounts such
Corporation pays in interest charges under section 2278b-6(c) of this
title during fiscal year 1988, and thereafter the Secretary shall pay
the Financial Assistance Corporation any amounts due from the Secretary
to such Corporation under section 2278b-6(c) of this title.
(b) Repayment of interest paid by Secretary of the Treasury
(1) In general
Any amounts paid into the Assistance Fund by the Secretary of the
Treasury pursuant to subsection (a) of this section exceeding
$2,000,000,000 shall be repaid by System institutions in accordance with
a schedule to be established by the Farm Credit Administration Board.
(2) Allocation
Until such repayment is completed, each System institution shall pay
a proportionate share of the amount due under paragraph (1) equal to --
(A) the amount of the performing loan volume of the institution,
determined in accordance with section 2278b-6(c)(2)(D) of this title
(based on the average loan volume for the preceding year); divided by
(B) the total performing loan volume of the System for the preceding
year.
(c) Authorization of appropriations
There is authorized to be appropriated to the Secretary of the
Treasury such sums on an annual basis as may be necessary to carry out
this part.
(Pub. L. 92-181, title VI, 6.28, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1603, and amended Pub. L. 100-399, title
II, 201(bb), Aug. 17, 1988, 102 Stat. 992.)
1988 -- Subsec. (b)(2). Pub. L. 100-399 in introductory provision
substituted ''paragraph (1) equal'' for ''this paragraph'' and in
subpar. (A) substituted ''section 2278b-6(c)(2)(D) of this title'' for
''subsection (c)(1)(D) of this section''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2278b-9. One-time stock purchase
TITLE 12 -- BANKS AND BANKING
(a) Amount of stock purchase
(1) In general
Except as provided in paragraphs (2) and (3), for the purpose of
obtaining funds for the Trust Fund, each System institution shall
purchase from the Financial Assistance Corporation stock issued in
accordance with section 2278b-3 of this title in an amount equal to the
amount by which the unallocated retained earnings of the institution
(after taking into account any funds received by the institution under
section 2278a-9(c) of this title) exceeds --
(A) in the case of a System bank, 5 percent of assets; or
(B) in the case of a production credit association or a Federal land
bank association, 13 percent of assets.
(2) Reallocation
The district board of a district, subject to the unanimous consent of
the bank and associations in the district that would be affected by the
reallocation, may reallocate the amount of stock required to be
purchased by banks and associations in the district under paragraph (1)
to equitably reflect the ability of the banks and associations to pay,
except that --
(A) the total amount of stock purchased by banks and associations in
the district under this paragraph shall equal the total amount of stock
required to be purchased by the banks and associations under paragraph
(1); and
(B) the board may not impair the stock of an association in carrying
out this paragraph; and
(C) a district board's authority to reallocate stock purchases under
this paragraph shall be limited to reallocation among like associations
of the amount of stock required to be purchased by such associations;
reallocation of the amount of stock required to be purchased by
production credit associations among such associations and the district
Federal intermediate credit bank; and reallocation of the amount of
stock required to be purchased by Federal land bank associations among
such associations and the district Federal land bank. Other
reallocations than those enumerated above shall not be permitted.
(3) Periodic purchases
(A) Notwithstanding any other provision of this section, the
Financial Assistance Corporation shall establish a program under which
System institutions shall purchase, as debt obligations are issued under
section 2278b-6(a) of this title, stock of the Corporation in amounts
described in this paragraph.
(B) The program shall provide, with respect to each issuance of debt
obligations under section 2278b-6(a) of this title, that each System
institution originally required to purchase stock under paragraph (1),
or the successor thereto, shall purchase Corporation stock in an amount
determined by multiplying the amount of stock such institution was
originally required to purchase under that paragraph by a percentage
equal to the percentage which the amount of the issuance bears to
$4,000,000,000.
(C) The Financial Assistance Corporation shall promptly rescind
purchases of stock of the Corporation made under paragraph (1) or (2) by
System institutions and refund to such institutions, or their
successors, the purchase price for the stock, except that, with respect
to each issuance of debt obligations that occurs before October 1, 1988,
the Corporation shall deduct from any refund due any System institution,
and retain, the amount payable by such institution.
(b) Computations
For purposes of subsection (a) of this section, the unallocated
retained earnings and assets of a System institution shall be computed
in accordance with generally accepted accounting principles on the basis
of the financial statement of the institution on December 31, 1986.
(c) Notice
(1) Within 15 days after the retirement of the obligations of the
Capital Corporation under section 2278a-9 of this title --
(A) the Financial Assistance Corporation shall notify each System
institution of the amount of stock such institution is required to
purchase under subsection (a) of this section; or
(B) in the case of a district in which the district board has
reallocated the stock purchase requirement in accordance with subsection
(a)(2) of this section, the district board shall notify each System
institution in the district of the amount of stock such institution is
required to purchase under subsection (a) of this section.
(2) Not later than 15 days before each issuance of debt obligations
under section 2278b-6(a) of this title occurring after September 30,
1988, the Financial Assistance Corporation shall notify each System
institution required to purchase Corporation stock under subsection
(a)(3) of this section of the amount of the stock it is required to
purchase.
(d) Institution requirements after notice
Within 15 days after a System institution is notified of the amounts
due under subsection (c) of this section, the institution shall purchase
from the Financial Assistance Corporation the amount of stock required
to be purchased by the institution under this section. No further stock
purchases, obligations, or assessments shall be required beyond that
provided in section 2278b-6 of this title and this section.
(e) Jurisdiction over actions
Notwithstanding any other provision of law, the United States
district court for the District of Columbia shall have exclusive
jurisdiction over any action brought under or arising out of this
section. No suit or proceeding shall be maintained for the recovery of
any amount of stock alleged to have been erroneously or illegally
purchased, and no suit or proceeding shall be maintained to enjoin or
otherwise prevent or impede the giving of notice or the purchase of
stock required under this section, unless the amount of stock required
to be purchased under this section has been purchased and paid for in
full.
(Pub. L. 92-181, title VI, 6.29, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1603, and amended Pub. L. 100-460, title
VI, 646, Oct. 1, 1988, 102 Stat. 2266.)
For delay in effective date of amendment by Pub. L. 100-460, see
Effective Date of 1988 Amendments note below.
1988 -- Subsec. (a)(1). Pub. L. 100-460, 646(1), substituted
''paragraphs (2) and (3)'' for ''paragraph (2)'' in introductory
provisions.
Subsec. (a)(3). Pub. L. 100-460, 646(2), added par. (3).
Subsec. (c). Pub. L. 100-460, 646(3), (4), designated existing
provisions as par. (1), redesignated former pars. (1) and (2) as
subpars. (A) and (B), respectively, and added par. (2).
Pub. L. 101-220, 7(a), Dec. 12, 1989, 103 Stat. 1881, and Pub. L.
101-239, title I, 1006(a), Dec. 19, 1989, 103 Stat. 2109, provided
that: ''Notwithstanding any other provision of law, the amendments to
section 6.29 of the Farm Credit Act of 1971 (12 U.S.C. 2278b-9) made by
section 646 of the Rural Development, Agriculture, and Related Agencies
Appropriations Act, 1989 (Public Law 100-460; 102 Stat. 2266) shall be
effective on October 1, 1992.''
Section 646 of Pub. L. 100-460 provided that the amendment made by
that section is effective Oct. 1, 1989.
Pub. L. 101-239, title I, 1006(b), Dec. 19, 1989, 103 Stat. 2109,
provided that:
''(1) Four annual payments. -- Notwithstanding any other provision of
law, the Financial Assistance Corporation shall pay, out of the
Financial Assistance Corporation Trust Fund (hereinafter in this section
referred to as the 'Trust Fund') established under section 6.25(b) of
the Farm Credit Act of 1971 (12 U.S.C. 2278b-5(b)), to each of the
institutions of the Farm Credit System that purchased stock in the
Financial Assistance Corporation under section 6.29 of the Farm Credit
Act of 1971 (12 U.S.C. 2278b-9), four annual payments as provided in
this subsection.
''(2) Timing of payments. -- The annual payments provided for by this
subsection shall be made available as soon as practicable after October
1 of each of the calendar years 1989 through 1992.
''(3) Calculation of first payment. -- The first annual payment made
available under this subsection shall be in an amount equal to --
''(A) a percentage equal to 1.5 times the average rate of interest
received by the Financial Assistance Corporation on assets of the Trust
Fund from March 30, 1988, through September 30, 1989; times
''(B) the difference between $177,000,000 and 4.4 percent of the
cumulative amount of the bonds issued by the Financial Assistance
Corporation through September 30, 1989.
''(4) Calculation of remaining payments. -- The second, third, and
fourth annual payments made available under this subsection shall be in
an amount equal to --
''(A) a percentage equal to the average rate of interest received by
the Financial Assistance Corporation on assets of the Trust Fund during
each of the fiscal years 1990 through 1992; times
''(B) the difference between $177,000,000 and 4.4 percent of the
cumulative amount of the bonds issued by the Financial Assistance
Corporation through September 30 of each of such fiscal years.
''(5) Distribution of annual payments. -- Annual payments due under
this subsection shall be made available to each institution described in
paragraph (1) in an amount equal to the total amount of annual payments
to be made available times the ratio of the amount of stock each
institution purchased divided by $177,000,000.''
Similar provisions were contained in Pub. L. 101-220, 7(b), Dec.
12, 1989, 103 Stat. 1881.
12 USC 2278b-10. Exemption from taxation
TITLE 12 -- BANKS AND BANKING
(a) Assets
The Financial Assistance Corporation, and the capital, reserves, and
surplus thereof, and the income derived therefrom, shall be exempt from
Federal, State, municipal, and local taxation, except taxes on real
estate held by the Financial Assistance Corporation to the same extent,
according to its value, as other similar property held by other persons
is taxed.
(b) Obligations
The notes, bonds, debentures, and other obligations issued by the
Financial Assistance Corporation shall be accorded the same tax
treatment as System-wide obligations.
(Pub. L. 92-181, title VI, 6.30, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1604.)
12 USC 2278b-11. Termination
TITLE 12 -- BANKS AND BANKING
(a) Financial Assistance Corporation
The Financial Assistance Corporation and the authority provided to
such Corporation by this part shall terminate on the maturity and full
payment of all debt obligations issued under section 2278b-6(a) of this
title.
(b) Accounts
Simultaneously with the termination of the Financial Assistance
Corporation as provided in subsection (a) of this section, any funds in
the accounts established under section 2278b-5 of this title shall be
transferred to the Insurance Fund established under section 2277a-9 of
this title.
(Pub. L. 92-181, title VI, 6.31, as added Pub. L. 100-233, title II,
201, Jan. 6, 1988, 101 Stat. 1605.)
12 USC SUBCHAPTER VII -- RESTRUCTURING OF SYSTEM INSTITUTIONS
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-399, title IV, 408(a), Aug. 17, 1988, 102 Stat.
1001, substituted ''RESTRUCTURING OF'' for ''MERGERS OF'' in subchapter
heading.
12 USC Part A -- Merger of Banks Within a District
TITLE 12 -- BANKS AND BANKING
12 USC 2279a. Power to merge
TITLE 12 -- BANKS AND BANKING
The banks within a district may merge into a single entity
(hereinafter in this subchapter referred to as a ''merged bank'') if the
plan of merger is approved by --
(1) the Farm Credit Administration Board;
(2) the respective boards of directors of the banks involved;
(3) a majority of the stockholders of each bank voting, in person or
by proxy, at a duly authorized stockholders' meeting with each
association entitled to cast a number of votes equal to the number of
its voting stockholders; and
(4) in the case of a bank for cooperatives, a majority of the total
equity interests in such merging bank for cooperatives (including
allocated, but not unallocated, surplus and reserves) held by those
stockholders or subscribers to the guaranty fund of the bank voting.
(Pub. L. 92-181, title VII, 7.0, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1645, and amended Pub. L. 100-399, title
IV, 408(b), Aug. 17, 1988, 102 Stat. 1001.)
1988 -- Pub. L. 100-399 substituted ''The banks'' for ''Two or more
banks'' in introductory provisions, and in par. (3) substituted ''with
each association entitled to cast a number of votes equal to the number
of its voting'' for ''in accordance with the provisions of section
2223(c) of this title relating to the casting of votes by''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279a-1. Board of directors
TITLE 12 -- BANKS AND BANKING
Each merged bank shall elect a board of directors of such number, for
such term, in such manner, and with such qualifications, as may be
required in its bylaws, except that at least one member shall be elected
by the other directors, which member shall not be a director, officer,
employee, or stockholder of a System institution.
(Pub. L. 92-181, title VII, 7.1, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1645, and amended Pub. L. 100-399, title
IV, 408(c), Aug. 17, 1988, 102 Stat. 1001.)
1988 -- Pub. L. 100-399 struck out ''for the district'' in section
catchline and amended text generally, revising and restating as a single
unlettered paragraph provisions of former subsecs. (a) and (b).
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279a-2. Powers of merged banks
TITLE 12 -- BANKS AND BANKING
(a) In general
Except as otherwise provided in this subchapter, a merged bank shall
have all of the powers granted to, and shall be subject to all of the
obligations imposed on, any of the constituent entities of the merged
bank.
(b) Regulations
The Farm Credit Administration shall issue regulations that establish
the manner in which the powers and obligations of the banks that form
the merged bank are consolidated, and to the extent necessary,
reconciled in the merged bank.
(Pub. L. 92-181, title VII, 7.2, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1645.)
12 USC 2279a-3. Capitalization
TITLE 12 -- BANKS AND BANKING
In accordance with section 2154a of this title, each merged bank
shall provide, through bylaws and subject to Farm Credit Administration
regulations, for the capitalization of the bank and the manner in which
bank stock shall be issued, held, transferred, and retired and bank
earnings distributed.
(Pub. L. 92-181, title VII, 7.3, as added Pub. L. 100-399, title IV,
408(d), Aug. 17, 1988, 102 Stat. 1001.)
A prior section 2279a-3, Pub. L. 92-181, title VII, 7.3, as added
Pub. L. 100-233, title IV, 416, Jan. 6, 1988, 101 Stat. 1645, which
related to issuance of shares of capital stock, was repealed by Pub. L.
100-399, title IV, 408(d), Aug. 17, 1988, 102 Stat. 1001.
Section effective as if enacted immediately after enactment of Pub.
L. 100-233, which was approved Jan. 6, 1988, see section 1001(a) of
Pub. L. 100-399, set out as an Effective Date of 1988 Amendment note
under section 2002 of this title.
12 USC 2279a-4. Repealed. Pub. L. 100-399, title IV, 408(d), Aug. 17,
1988, 102 Stat. 1001
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title VII, 7.4, as added Pub. L. 100-233,
title IV, 416, Jan. 6, 1988, 101 Stat. 1646, related to earnings,
reserves, and distributions with regard to merged banks. See section
2279a-3 of this title.
Repeal effective as if repealing provisions had been enacted
immediately after enactment of Pub. L. 100-233, which was approved Jan.
6, 1988, see section 1001(a) of Pub. L. 100-399, set out as an
Effective Date of 1988 Amendment note under section 2002 of this title.
12 USC 2279a-5. Transferred
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title VII, 7.5, as added Pub. L. 100-233,
title IV, 416, Jan. 6, 1988, 101 Stat. 1646, which required reports by
merged banks for cooperatives, was renumbered section 3.29 of title III
of Pub. L. 92-181 by Pub. L. 100-399, title IV, 408(e), Aug. 17,
1988, 102 Stat. 1001, and is classified to section 2149a of this title.
12 USC Part B -- Mergers, Transfers of Assets, and Powers of
Associations Within a District
TITLE 12 -- BANKS AND BANKING
12 USC subpart 1 -- transfers by federal land banks to federal land bank
associations
TITLE 12 -- BANKS AND BANKING
12 USC 2279b. Transfer of lending authority
TITLE 12 -- BANKS AND BANKING
(a) Voluntary transfers
A Federal land bank or a merged bank having a Federal land bank as
one of its constituents, may transfer to a Federal land bank
association, and the association may assume, the authority of the
transferring bank in the territorial area served by the association, to
make and participate in long-term real estate mortgage loans under this
chapter if the transfer is approved by --
(1) the Farm Credit Administration Board;
(2) the Board of Directors of both institutions; and
(3) a majority of the stockholders of the bank and of the
association, in accordance with the voting provisions of sections 2279a
and 2279c-1 of this title, respectively.
(b) Direct loans and financial assistance
After a transfer described in subsection (a) or (d) of this section
--
(1) the Federal land bank association shall possess all of the direct
long-term real estate mortgage loan authority, formerly possessed by the
transferring bank, in the territory served by the association; and
(2) the bank may provide and extend financial assistance to, and
discount for, or purchase from, the transferee Federal land bank
association any note, draft, or other obligation with the endorsement or
guarantee of the association, the proceeds of which have been advanced
to persons eligible and for purposes of financing by the association
under subsection (a) of this section.
(c) Regulations
The Farm Credit Administration shall issue regulations that establish
the manner in which the powers and obligations of the banks that make
transfers are consolidated and, to the extent necessary, reconciled in
the association referred to in subsection (a) of this section.
(d) Mandatory transfer
On the merger of one or more production credit associations with one
or more Federal land bank associations, the bank supervising the Federal
land bank association shall transfer all of the direct lending authority
of the bank in the territory served by such Federal land bank
association to such merged association.
(Pub. L. 92-181, title VII, 7.6, formerly 7.6, 7.7, as added Pub. L.
100-233, title IV, 416, Jan. 6, 1988, 101 Stat. 1647, and amended Pub.
L. 100-399, title IV, 408(f)-(j), Aug. 17, 1988, 102 Stat. 1001, 1002.)
Pub. L. 100-399, 408(j), transferred section 7.7 of Pub. L. 92-181,
which was classified to section 2279c of this title, to subsec. (d) of
this section.
1988 -- Subsec. (a). Pub. L. 100-399, 408(f), substituted
''Voluntary transfers'' for ''Assignments'' as subsection heading, and
in text substituted ''may transfer'' for ''may assign'', ''this
chapter'' for ''sections 2014 through 2017 of this title'', and
''transfer is approved'' for ''assignment is approved'' in introductory
provisions, and ''sections 2279a and 2279c-1 of this title,
respectively'' for ''sections 2279a and 2279b of this title'' in par.
(3).
Subsec. (b). Pub. L. 100-399, 408(g), substituted ''a transfer
described in subsection (a) or (d)'' for ''an assignment described in
subsection (a)'' in introductory provisions and ''the bank may provide''
for ''the Federal land bank may provide'' in par. (2).
Subsec. (c). Pub. L. 100-399, 408(h), struck out ''assignments or''
before ''transfers are consolidated'' and struck out second sentence,
which provided that, following a transfer or assignment under subsection
(a) of this section, the provisions of section 2154a of this title were
to be applicable to the association.
Subsec. (d). Pub. L. 100-399, 408(i), (j), transferred section 2279c
of this title to subsec. (d) of this section, substituted heading for
former section heading, and amended text generally. Prior to amendment,
text read as follows: ''On the merger of one or more production credit
associations with one or more Federal land bank associations, the bank
supervising the Federal land bank association shall transfer all of its
direct lending authority of the bank to such association under section
2279c-1 of this title.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC subpart 2 -- merger of like and unlike associations
TITLE 12 -- BANKS AND BANKING
12 USC 2279c. Transferred
TITLE 12 -- BANKS AND BANKING
Section, Pub. L. 92-181, title VII, 7.7, as added Pub. L. 100-233,
title IV, 416, Jan. 6, 1988, 101 Stat. 1647, and amended Pub. L.
100-399, title IV, 408(i), (j), Aug. 17, 1988, 102 Stat. 1002, which
related to mergers of unlike associations, was transferred to section
7.6(d) of Pub. L. 92-181 by section 408(j) of Pub. L. 100-399 and is
classified to section 2279b(d) of this title.
12 USC 2279c-1. Merger of associations
TITLE 12 -- BANKS AND BANKING
(a) In general
Two or more associations within the same district, whether or not
organized under the same subchapter of this chapter, may merge into a
single entity (hereinafter in this subchapter referred to as a ''merged
association'') if the plan of merger is approved by --
(1) the Farm Credit Administration Board;
(2) the boards of directors of the associations;
(3) a majority of the shareholders of each association voting, in
person or by proxy, at a duly authorized stockholders' meeting; and
(4) the Farm Credit Bank.
(b) Powers, obligations, and consolidation
(1) Powers and obligations
Except as otherwise provided by this subchapter, a merged association
shall --
(A) possess all powers granted under this chapter to the associations
forming the merged association; and
(B) be subject to all of the obligations imposed under this chapter
on the associations forming the merged association.
(2) Consolidation
The Farm Credit Administration shall issue regulations that establish
the manner in which the powers and obligations of the associations that
form the merged association are consolidated and, to the extent
necessary, reconciled in the merged association.
(c) Stock issuance
(1) Plan of merger
Subject to section 2154a of this title, the number of shares of
capital stock issued by a merged association to the stockholders of any
association forming such merged association, and the rights and
privileges of such shares (including voting power, preferences on
liquidation, and the right to dividends), shall be determined by the
plan of merger adopted by the merged associations.
(2) Capitalization
In accordance with section 2154a of this title, each merged
association shall provide, through bylaws and subject to Farm Credit
Administration regulations, for the capitalization of the association
and the manner in which association stock shall be issued, held,
transferred, and retired, and association earnings shall be distributed.
(Pub. L. 92-181, title VII, 7.8, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1647, and amended Pub. L. 100-399, title
IV, 408(k), (l), Aug. 17, 1988, 102 Stat. 1002.)
1988 -- Subsec. (b)(2). Pub. L. 100-399, 408(k), struck out second
sentence, which directed that, following a merger under subsection (a)
of this section, the provisions of section 2154a of this title were to
be applicable to the merged association.
Subsec. (c)(2). Pub. L. 100-399, 408(l), substituted
''Capitalization'' for ''Plan of capitalization'' as par. (2) heading
and amended text generally. Prior to amendment, text read as follows:
''The number of shares of capital stock, and the rights and privileges
thereof, issued by a merged association after a merger shall be
determined by the Board of Directors of the merged association, with the
approval of the supervising bank, and shall be consistent with section
2154a of this title and the regulations issued by the Farm Credit
Administration.''
Subsec. (c)(3). Pub. L. 100-399, 408(l), struck out par. (3) which
read as follows: ''Voting stock of a merged association shall be issued
to and held by farmers, ranchers, or producers or harvesters of aquatic
products who are or were, immediately prior to the merger, direct
borrowers from one of the associations forming the merged association or
the supervising bank of such merged association.''
Subsec. (d). Pub. L. 100-399, 408(l), struck out subsec. (d) which
read as follows: ''The plan of merger shall provide for the issuance,
transfer, and retirement of stock and the distribution of earnings in
accordance with the provisions of section 2154a of this title.''
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC subpart 3 -- reconsideration
TITLE 12 -- BANKS AND BANKING
12 USC 2279c-2. Reconsideration
TITLE 12 -- BANKS AND BANKING
(a) Period
A stockholder vote in favor of --
(1) the merger of districts under this chapter;
(2) the merger of banks within a district under section 2279a of this
title;
(3) the transfer of the lending authority of a Federal land bank or a
merged bank having a Federal land bank as one of its constituents, under
section 2279b of this title;
(4) the merger of two or more associations under section 2279c-1 or
2279f-1 of this title;
(5) the termination of the status of an institution as a System
institution under section 2279d of this title; or
(6) the merger of similar banks under section 2279f of this title;
shall not take effect except in accordance with subsection (b) of
this section.
(b) Reconsideration
(1) Notice
Not later than 30 days after a stockholder vote in favor of any of
the actions described in subsection (a) of this section, the officer or
employee that records such vote shall ensure that all stockholders of
the voting entity receive notice of the final results of the vote.
(2) Effective date
A voluntary merger, transfer, or termination that is approved by a
vote of the stockholders of two or more banks or associations shall not
take effect until the expiration of 30 days after the date on which the
stockholders of such banks or associations are notified of the final
result of the vote in accordance with paragraph (1).
(3) Petition filed
If a petition for reconsideration of a merger, transfer, or
termination vote, signed by at least 15 percent of the stockholders of
one or more of the affected banks or associations, is presented to the
Farm Credit Administration within 30 days after the date of the
notification required under paragraph (1) --
(A) a voluntary merger, transfer, or termination shall not take
effect until the expiration of 60 days after the date on which the
stockholders were notified of the final result of the vote; and
(B) a special meeting of the stockholders of the affected banks or
associations shall be held during the period referred to in subparagraph
(A) to reconsider the vote.
(4) Vote on reconsideration
If a majority of stockholders of any one of the affected banks or
associations voting, in person or by written proxy, at a duly authorized
stockholders' meeting, vote against the proposed merger, transfer, or
termination, such action shall not take place.
(5) Failure to file petition
If a petition for reconsideration of such vote is either not filed
prior to the 60th day after the vote or, if timely filed, is not signed
by at least 15 percent of the stockholders, the merger, transfer, or
termination shall become effective in accordance with the plan of
merger, transfer, or termination.
(c) Special reconsideration
(1) Issuance of regulations
Notwithstanding any other provision of this chapter, the Farm Credit
Administration shall issue regulations under which the stockholders of
any association that voluntarily merged with one or more associations
after December 23, 1985, and before January 6, 1988, may petition for
the opportunity to organize as a separate association.
(2) Requirements
The regulations issued by the Farm Credit Administration shall
require that --
(A) the petition be filed within 1 year after the date of the
implementation of such regulations;
(B) the petition be signed by at least 15 percent of the stockholders
of any one of the associations that merged during the period;
(C) the petition describe the territory in which the proposed
separate association will operate;
(D) if the petition is approved --
(i) the loans of the members of the new association will be
transferred from the current association to such new association;
(ii) the stock, participation certificates, and other similar
equities of the current association held by members of the new
association will be retired at book value and the proceeds of such will
be transferred to the new association, and an equivalent amount of
stock, participation certificates, and other similar equities will be
issued to the members by the new association; and
(iii) the other assets of the current association will be distributed
equitably among the current association and any resulting new
association.
(3) Notification
(A) In general
Not later than 30 days after the filing of the petition for
organization, the current association shall notify its stockholders that
a petition to establish the separate association has been filed.
(B) Contents
The notification required under this paragraph shall contain --
(i) the date of a special stockholders' meeting to consider the
petition for organization; and
(ii) an enumerated statement of the anticipated benefits and the
potential disadvantages to such stockholders if the new association is
established.
(C) FCA approval
(i) In general
All notifications under this paragraph shall be submitted to the Farm
Credit Administration Board for approval prior to being distributed to
the stockholders.
(ii) Amending notification
The Farm Credit Administration Board shall require that, prior to the
distribution of the notification to the stockholders, the notification
be amended as determined necessary by the Board to provide accurate
information to the stockholders that will enable such stockholders to
make an informed decision as to the advisability of establishing a new
association.
(D) Special stockholders' meeting
(i) Timing of meeting
The special stockholders' meeting to consider the petition shall be
held within 60 days after the filing of the petition.
(ii) Approval
If, at the special stockholders' meeting, a majority of the
stockholders of the current association who would be served by the new
association approve, by voting in person or by proxy, the establishment
of the separate association, the Farm Credit Administration shall,
within 30 days of such vote, issue a charter to the new association and
amend the charter of the current association to reflect the territory to
be served by the new association.
(Pub. L. 92-181, title VII, 7.9, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1648, and amended Pub. L. 100-399, title
IV, 408(n), (o), Aug. 17, 1988, 102 Stat. 1002.)
1988 -- Subsec. (a)(1). Pub. L. 100-399, 408(n)(1), substituted
''this chapter'' for ''section 2252(a)(2) of this title''.
Subsec. (a)(4). Pub. L. 100-399, 408(n)(5), redesignated par. (5) as
(4).
Pub. L. 100-399, 408(n)(2), inserted reference to section 2279f-1 of
this title.
Subsec. (a)(5). Pub. L. 100-399, 408(n)(5), redesignated par. (6) as
(5). Former par. (5) redesignated (4).
Pub. L. 100-399, 408(n)(3), substituted ''or'' for ''and''.
Subsec. (a)(6). Pub. L. 100-399, 408(n)(5), redesignated par. (7) as
(6). Former par. (6) redesignated (5).
Pub. L. 100-399, 408(n)(4), substituted ''section 2279f'' for
''section 2279f-1''.
Subsec. (a)(7). Pub. L. 100-399, 408(n)(5), redesignated par. (7) as
(6).
Subsec. (b)(2). Pub. L. 100-399, 408(o), struck out comma before
''shall not take effect'' and substituted ''such banks or'' for
''such''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC subpart 4 -- termination and dissolution of institutions
TITLE 12 -- BANKS AND BANKING
1988 -- Pub. L. 100-399, title IV, 408(m), Aug. 17, 1988, 102 Stat.
1002, redesignated subpart 3 as 4.
12 USC 2279d. Termination of System institution status
TITLE 12 -- BANKS AND BANKING
(a) Conditions
A System institution may terminate the status of the institution as a
System institution if --
(1) the institution provides written notice to the Farm Credit
Administration Board not later than 90 days prior to the proposed
termination date;
(2) the termination is approved by the Farm Credit Administration
Board;
(3) the appropriate Federal or State authority grants approval to
charter the institution as a bank, savings and loan association, or
other financial institution;
(4) the institution pays to the Farm Credit Assistance Fund, as
created under section 2278b-5 of this title, if the termination is prior
to January 1, 1992, or pays to the Farm Credit Insurance Fund, if the
termination is after such date, the amount by which the total capital of
the institution exceeds, 6 percent of the assets;
(5) the institution pays or makes adequate provision for payment of
all outstanding debt obligations of the institution;
(6) the termination is approved by a majority of the stockholders of
the institution voting, in person or by written proxy, at a duly
authorized stockholders' meeting, held prior to giving notice to the
Farm Credit Administration Board; and
(7) the institution meets such other conditions as the Farm Credit
Administration Board by regulation considers appropriate.
(b) Effect
On termination of its status as a System institution --
(1) the Farm Credit Administration Board shall revoke the charter of
the institution; and
(2) the institution shall no longer be an instrumentality of the
United States under this chapter.
(Pub. L. 92-181, title VII, 7.10, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1650.)
12 USC Part C -- Approval of Disclosure Information and Issuance of
Charters by the Farm Credit Administration Board
TITLE 12 -- BANKS AND BANKING
12 USC 2279e. Approval of disclosure information and issuance of
charters
TITLE 12 -- BANKS AND BANKING
(a) Disclosure of information
(1) Approval of plan
With respect to any plan of merger, transfer of lending authority,
dissolution, or termination, prior to submission to the voters (voting
stockholders and, where required, contributors to guaranty funds) of the
institutions involved, such plan shall be submitted to the Farm Credit
Administration Board, together with all information that is to be
distributed to the voters with respect to the contemplated action,
including an enumerated statement of the anticipated benefits and
potential disadvantages of such action.
(2) Notice of approval
On notification that the Farm Credit Administration Board has
approved such plan for submission to the stockholders, or after 60 days
of no action on the plan by the Board, the submitting institutions may
submit the plan, together with the disclosure information, to the voters
for the prescribed vote.
(b) Notice of reasons for disapproval
If the Farm Credit Administration Board disapproves the plan for
submission to the stockholders, notification to the submitting
institutions shall specify the reasons for the determination by the
Board. If such plan is determined to be inadequate, it shall not be
submitted to the voters for a vote.
(c) Federal charter
Each plan of merger or transfer of lending authority may include a
proposed new or revised Federal charter for the merged or transferee
entity. The Farm Credit Administration Board shall issue such charter
on the approval of the plan, as prescribed in this subchapter, unless
the Board determines that the charter submitted is not consistent with
this chapter.
(Pub. L. 92-181, title VII, 7.11, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1651, and amended Pub. L. 100-399, title
IV, 408(p), Aug. 17, 1988, 102 Stat. 1002; Pub. L. 102-237, title V,
502(n), Dec. 13, 1991, 105 Stat. 1870.)
1991 -- Subsec. (a)(2). Pub. L. 102-237 substituted ''60 days'' for
''30 days''.
1988 -- Subsec. (a)(1). Pub. L. 100-399 substituted ''transfer of
lending authority'' for ''transfer or assignment of lending authority''
and ''the institutions involved'' for ''such institutions''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC Part D -- Mergers of Like Entities
TITLE 12 -- BANKS AND BANKING
12 USC 2279f. Merger of similar banks
TITLE 12 -- BANKS AND BANKING
(a) In general
Banks organized or operating under this chapter may merge with banks
in other districts operating under the same subchapter if the plan of
merger is approved by --
(1) the Farm Credit Administration Board;
(2) the respective Boards of Directors of the banks involved;
(3) a majority vote of the stockholders of each bank voting, in
person or by proxy, at a duly authorized stockholders' meeting, with
each association having a number of votes equal to the number of such
association's voting stockholders; and
(4) in the case of a bank for cooperatives, a majority of the total
equity interests in such merging bank for cooperatives (including
allocated, but not unallocated, surplus and reserves) held by those
stockholders or subscribers to the guaranty fund of the bank voting.
(b) Powers and capitalization
Sections 2279a-2 and 2279a-3 of this title shall apply to banks
merged under this section.
(c) Board of directors
(1) In general
After a merger under subsection (a) of this section, a board of
directors shall be created for the resulting bank.
(2) Composition
The board shall be composed of --
(A) two directors elected by each of the bank boards, with at least
one such director from each bank being elected by the eligible
stockholders of, or subscribers to, the guaranty fund of the merging
banks; and
(B) one outside director elected by the directors elected under
subparagraph (A).
(3) Outside director
(A) Qualifications
The outside director elected under paragraph (2)(B) shall be
experienced in financial services and credit, and within the 2-year
period prior to such election, shall not have been a borrower from,
shareholder in, or director, officer, employee, or agent of any
institution of the Farm Credit System.
(B) Failure to elect
If the other members of the board fail to elect an outside director,
the Farm Credit Administration Board shall appoint a qualified person to
serve on the board of directors until such member is so elected.
(4) Bylaws
Notwithstanding paragraph (2), the bylaws of the merged bank may,
with the approval of the Farm Credit Administration, provide for a
different number of directors to be selected in a different manner,
except that the bylaws shall provide for at least one outside director.
(Pub. L. 92-181, title VII, 7.12, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1652, and amended Pub. L. 100-399, title
IV, 408(q), (r), Aug. 17, 1988, 102 Stat. 1002, 1003.)
1988 -- Subsec. (b). Pub. L. 100-399, 408(q), substituted ''Powers
and capitalization'' for ''Procedures'' in heading and, in amending text
generally, substituted ''Sections 2279a-2 and 2279a-3 of this title''
for ''The provisions of sections 2279a-2 through 2279a-4 of this
title''.
Subsec. (c)(2)(B). Pub. L. 100-399, 408(r), substituted ''directors''
for ''members''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279f-1. Merger of similar associations
TITLE 12 -- BANKS AND BANKING
(a) In general
Associations may voluntarily merge with other like associations if
the plan of merger is approved by --
(1) the Farm Credit Administration Board;
(2) the respective Boards of Directors of the associations involved;
(3) a majority vote of the stockholders of each association voting,
in person or by proxy, at a duly authorized stockholders' meeting; and
(4) the Farm Credit Banks involved.
(b) Procedures
The provisions of subsections (b) and (c) of section 2279c-1 of this
title shall apply to associations merged under this section.
(Pub. L. 92-181, title VII, 7.13, as added Pub. L. 100-233, title IV,
416, Jan. 6, 1988, 101 Stat. 1653, and amended Pub. L. 100-399, title
IV, 408(s), (t), Aug. 17, 1988, 102 Stat. 1003.)
1988 -- Subsec. (a)(4). Pub. L. 100-399, 408(s), substituted ''the
Farm Credit Banks involved'' for ''the Farm Credit Bank''.
Subsec. (b). Pub. L. 100-399, 408(t), substituted ''subsections (b)
and (c)'' for ''subsections (b), (c), and (d)''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC Part E -- Taxation of Merger Transactions
TITLE 12 -- BANKS AND BANKING
12 USC 2279g. Transactions to accomplish mergers exempt from certain
State taxes
TITLE 12 -- BANKS AND BANKING
No State or political subdivision thereof may treat the merger or
consolidation of two or more institutions of the Farm Credit System
under this subchapter or title IV of the Agricultural Credit Act of 1987
as resulting in a change of ownership of any property owned by any of
such merging or consolidating institutions, for purposes of any law of
such State or political subdivision providing for reassessment of
property on the occurrence of a change of ownership or imposing a tax on
the ownership or transfer of property.
(Pub. L. 92-181, title VII, 7.14, as added Pub. L. 100-399, title IV,
408(u), Aug. 17, 1988, 102 Stat. 1003.)
The Agricultural Credit Act of 1987, referred to in text, is Pub. L.
100-233, Jan. 6, 1988, 101 Stat. 1568, as amended. Title IV of that
Act amended this chapter. For complete classification of this Act to
the Code see Short Title of 1988 Amendment note set out under section
2001 of this title and Tables.
Section effective as if enacted immediately after enactment of Pub.
L. 100-233, which was approved Jan. 6, 1988, see section 1001(a) of
Pub. L. 100-399, set out as an Effective Date of 1988 Amendment note
under section 2002 of this title.
12 USC SUBCHAPTER VIII -- AGRICULTURAL MORTGAGE SECONDARY MARKET
TITLE 12 -- BANKS AND BANKING
12 USC 2279aa. Definitions
TITLE 12 -- BANKS AND BANKING
For purposes of this subchapter:
(1) Agricultural real estate
The term ''agricultural real estate'' means --
(A) a parcel or parcels of land, or a building or structure affixed
to the parcel or parcels, that --
(i) is used for the production of one or more agricultural
commodities or products; and
(ii) consists of a minimum acreage or is used in producing minimum
annual receipts, as determined by the Corporation; or
(B) a principal residence that is a single family, moderate-priced
residential dwelling located in a rural area, excluding --
(i) any community having a population in excess of 2,500 inhabitants;
and
(ii) any dwelling with a purchase price exceeding $100,000 (as
adjusted for inflation).
(2) Board
The term ''Board'' means --
(A) the interim board of directors established in section 2279aa-2(
a) of this title; and
(B) the permanent board of directors established in section
2279aa-2(b) of this title;
as the case may be.
(3) Certified facility
The term ''certified facility'' means --
(A) a secondary marketing agricultural loan facility that is
certified under section 2279aa-5 of this title; or
(B) the Corporation and any affiliate thereof, but only with respect
to qualified loans described in paragraph (9)(B).
(4) Corporation
The term ''Corporation'' means the Federal Agricultural Mortgage
Corporation established in section 2279aa-1 of this title.
(5) Guarantee
The term ''guarantee'' means the guarantee of timely payment of the
principal and interest on securities representing interests in, or
obligations backed by, pools of qualified loans, in accordance with this
subchapter.
(6) Interim board
The term ''interim board'' means the interim board of directors
established in section 2279aa-2(a) of this title.
(7) Originator
The term ''originator'' means any Farm Credit System institution,
bank, insurance company, business and industrial development company,
savings and loan association, association of agricultural producers,
agricultural cooperative, commercial finance company, trust company,
credit union, or other entity that originates and services agricultural
mortgage loans.
(8) Permanent board
The term ''permanent board'' means the permanent board of directors
established in section 2279aa-2(b) of this title.
(9) Qualified loan
The term ''qualified loan'' means an obligation --
(A)(i) that is secured by a fee-simple or leasehold mortgage with
status as a first lien, on agricultural real estate located in the
United States that is not subject to any legal or equitable claims
deriving from a preceding fee-simple or leasehold mortgage;
(ii) of --
(I) a citizen or national of the United States or an alien lawfully
admitted for permanent residence in the United States; or
(II) a private corporation or partnership whose members,
stockholders, or partners holding a majority interest in the corporation
or partnership are individuals described in subclause (I); and
(iii) of a person, corporation, or partnership that has training or
farming experience that, under criteria established by the Corporation,
is sufficient to ensure a reasonable likelihood that the loan will be
repaid according to its terms; or
(B) that is the portion of a loan guaranteed by the Secretary of
Agriculture pursuant to the Consolidated Farm and Rural Development Act
(7 U.S.C. 1921 et seq.), except that --
(i) subsections (b) through (f) of section 2279aa-6 of this title,
and sections 2279aa-7, 2279aa-8, and 2279aa-9 of this title, shall not
apply to the portion of a loan guaranteed by the Secretary or to an
obligation, pool, or security representing an interest in or obligation
backed by a pool of obligations relating to the portion of a loan
guaranteed by the Secretary; and
(ii) the portion of a loan guaranteed by the Secretary shall be
considered to meet all standards for qualified loans for all purposes
under this chapter.
(10) State
The term ''State'' has the meaning given such term in section 2277a
of this title.
(Pub. L. 92-181, title VIII, 8.0, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1686, and amended Pub. L. 100-399,
title VI, 601(a), Aug. 17, 1988, 102 Stat. 1005; Pub. L. 101-624, title
XVIII, 1839, Nov. 28, 1990, 104 Stat. 3834.)
The Consolidated Farm and Rural Development Act, referred to in par.
(9)(B), is title III of Pub. L. 87-128, Aug. 8, 1961, 75 Stat. 307, as
amended, which is classified principally to chapter 50 ( 1921 et seq.)
of Title 7, Agriculture. For complete classification of this Act to the
Code, see Short Title note set out under section 1921 of Title 7 and
Tables.
1990 -- Par. (3). Pub. L. 101-624, 1839(a), amended par. (3)
generally. Prior to amendment, par. (3) read as follows: ''The term
'certified facility' means a secondary marketing agricultural loan
facility that is certified under section 2279aa-5 of this title.''
Par. (9). Pub. L. 101-624, 1839(b), amended par. (9) generally.
Prior to amendment, par. (9) read as follows: ''The term 'qualified
loan' means an obligation that --
''(A) is secured by a fee-simple or leasehold mortgage with status as
a first lien on agricultural real estate located in the United States
that is not subject to any legal or equitable claims deriving from a
preceding fee-simple or leasehold mortgage;
''(B) is an obligation of --
''(i) a citizen or national of the United States or an alien lawfully
admitted for permanent residence in the United States; or
''(ii) a private corporation or partnership whose members,
stockholders, or partners holding a majority interest in the corporation
or partnership are individuals described in clause (i); and
''(C) is an obligation of a person, corporation, or partnership that
has training or farming experience that, under criteria established by
the Corporation, is sufficient to ensure a reasonable likelihood that
the loan will be repaid according to its terms.''
1988 -- Par. (9)(B)(ii). Pub. L. 100-399 substituted ''holding'' for
''hold'' and struck out ''and'' before ''are''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
Section 701 of subtitle A ( 701-705) of title VII of Pub. L.
100-233 provided that: ''It is the purpose of this subtitle (enacting
this subchapter, amending sections 2012, 2033, 2072, and 2093 of this
title and section 9105 of Title 31, Money and Finance, and enacting
provisions set out as a note below) --
''(1) to establish a corporation chartered by the Federal Government;
''(2) to authorize the certification of agricultural mortgage
marketing facilities by the corporation;
''(3) to provide for a secondary marketing arrangement for
agricultural real estate mortgages that meet the underwriting standards
of the corporation --
''(A) to increase the availability of long-term credit to farmers and
ranchers at stable interest rates;
''(B) to provide greater liquidity and lending capacity in extending
credit to farmers and ranchers; and
''(C) to provide an arrangement for new lending to facilitate capital
market investments in providing long-term agricultural funding,
including funds at fixed rates of interest; and
''(4) to enhance the ability of individuals in small rural
communities to obtain financing for moderate-priced homes.''
Section 704 of subtitle A ( 701-705) of title VII of Pub. L.
100-233, as amended by Pub. L. 100-399, title VI, 603, Aug. 17, 1988,
102 Stat. 1006, required Comptroller General of United States to
conduct studies of (1) implementation of amendments made by subtitle A
of title VII of Pub. L. 100-233 (which enacted this subchapter and
amended sections 2012, 2033, 2072, and 2093 of this title and section
9105 of Title 31, Money and Finance) by Federal Agricultural Mortgage
Corporation and effect of operations of Corporation on producers, Farm
Credit System, and other lenders, and capital markets, (2) feasibility
and appropriateness of promoting establishment of a secondary market for
securities representing interests in, or obligations backed by, pools of
agricultural real estate loans for which a guarantee had not been
provided by Federal Agricultural Mortgage Corporation, and (3)
feasibility of expanding authority granted under amendments made by such
subtitle A to authorize sale of securities based on or backed by a trust
or pool consisting of loans made to farm-related and rural small
businesses, and required, not later than Jan. 6, 1990, Comptroller
General to transmit to Congress a report on the studies, including
therein such recommendations for administrative action and legislation
as might be appropriate.
12 USC Part A -- Establishment and Activities of Federal Agricultural
Mortgage Corporation
TITLE 12 -- BANKS AND BANKING
12 USC 2279aa-1. Federal Agricultural Mortgage Corporation
TITLE 12 -- BANKS AND BANKING
(a) Establishment
(1) In general
There is hereby established a corporation to be known as the Federal
Agricultural Mortgage Corporation, which shall be a federally chartered
instrumentality of the United States.
(2) Institution within Farm Credit System
The Corporation shall be an institution of the Farm Credit System.
(3) Liability
(A) Corporation
The Corporation shall not be liable for any debt or obligation of any
other institution of the Farm Credit System.
(B) System institutions
The Farm Credit System and System institutions (other than the
Corporation) shall not be liable for any debt or obligation of the
Corporation.
(b) Duties
The Corporation shall --
(1) in consultation with originators, develop uniform underwriting,
security appraisal, and repayment standards for qualified loans;
(2) determine the eligibility of agricultural mortgage marketing
facilities to contract with the Corporation for the provision of
guarantees for specific mortgage pools; and
(3) provide guarantees for the timely repayment of principal and
interest on securities representing interests in, or obligations backed
by, pools of qualified loans.
(Pub. L. 92-181, title VIII, 8.1, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1687.)
12 USC 2279aa-2. Board of directors
TITLE 12 -- BANKS AND BANKING
(a) Interim board
(1) Number and appointment
Until the permanent board of directors established in subsection (b)
of this section first meets with a quorum of its members present, the
Corporation shall be under the management of an interim board of
directors composed of 9 members appointed by the President within 90
days after January 6, 1988, as follows:
(A) 3 members appointed from among persons who are representatives of
banks, other financial institutions or entities, and insurance
companies.
(B) 3 members appointed from among persons who are representatives of
the Farm Credit System institutions.
(C) 2 members appointed from among persons who are farmers or
ranchers who are not serving, and have not served, as directors or
officers of any financial institution or entity, of which not more than
1 may be a stockholder of any Farm Credit System institution.
(D) 1 member appointed from among persons who represent the interests
of the general public and are not serving, and have not served, as
directors or officers of any financial institution or entity.
(2) Political affiliation
Not more than 5 members of the interim board shall be of the same
political party.
(3) Vacancy
A vacancy in the interim board shall be filled in the manner in which
the original appointment was made.
(4) Continuation of membership
If --
(A) any member of the interim board who was appointed to such board
from among persons who are representatives of banks, other financial
institutions or entities, insurance companies, or Farm Credit System
institutions ceases to be such a representative; or
(B) any member who was appointed from among persons who are not or
have not been directors or officers of any financial institution or
entity becomes a director or an officer of any financial institution or
entity;
such member may continue as a member for not longer than the 45-day
period beginning on the date such member ceases to be such a
representative or becomes such a director or officer, as the case may
be.
(5) Terms
The members of the interim board shall be appointed for the life of
such board.
(6) Quorum
5 members of the interim board shall constitute a quorum.
(7) Chairperson
The President shall designate 1 of the members of the interim board
as the chairperson of the interim board.
(8) Meetings
The interim board shall meet at the call of the chairperson or a
majority of its members.
(9) Voting common stock
(A) Initial offering
Upon the appointment of sufficient members of the interim board to
convene a meeting with a quorum present, the interim board shall arrange
for an initial offering of common stock and shall take whatever other
actions are necessary to proceed with the operations of the Corporation.
(B) Purchasers
Subject to subparagraph (C), the voting common stock shall be offered
to banks, other financial entities, insurance companies, and System
institutions under such terms and conditions as the interim board may
adopt.
(C) Distribution
The voting stock shall be fairly and broadly offered to ensure that
no institution or institutions acquire a disproportionate amount of the
total amount of voting common stock outstanding of a class and that
capital contributions and issuances of voting common stock for the
contributions are fairly distributed between entities eligible to hold
class A and class B stock, as provided under section 2279aa-4 of this
title.
(10) Termination
The interim board shall terminate when the permanent board of
directors established in subsection (b) of this section first meets with
a quorum present.
(b) Permanent board
(1) Establishment
Immediately after the date that banks, other financial institutions
or entities, insurance companies, and System institutions have
subscribed and fully paid for at least $20,000,000 of common stock of
the Corporation, the Corporation shall arrange for the election and
appointment of a permanent board of directors. After the termination of
the interim board, the Corporation shall be under the management of the
permanent board.
(2) Composition
The permanent board shall consist of 15 members, of which --
(A) 5 members shall be elected by holders of common stock that are
insurance companies, banks, or other financial institutions or entities;
(B) 5 members shall be elected by holders of common stock that are
Farm Credit System institutions; and
(C) 5 members shall be appointed by the President, by and with the
advice and consent of the Senate --
(i) which members shall not be, or have been, officers or directors
of any financial institutions or entities;
(ii) which members shall be representatives of the general public;
(iii) of which members not more than 3 shall be members of the same
political party; and
(iv) of which members at least 2 shall be experienced in farming or
ranching.
(3) Presidential appointees
The President shall appoint the members of the permanent board
referred to in paragraph (2)(C) not later than the later of --
(A) the date referred to in paragraph (1); or
(B) the expiration of the 270-day period beginning on January 6,
1988.
(4) Vacancy
(A) Elected members
Subject to paragraph (6), a vacancy among the members elected to the
permanent board in the manner described in subparagraph (A) or (B) of
paragraph (2) shall be filled by the permanent board from among persons
eligible for election to the position for which the vacancy exists.
(B) Appointed members
A vacancy among the members appointed to the permanent board under
paragraph (2)(C) shall be filled in the manner in which the original
appointment was made.
(5) Continuation of membership
If --
(A) any member of the permanent board who was appointed or elected to
the permanent board from among persons who are representatives of banks,
other financial institutions or entities, insurance companies, or Farm
Credit System institutions ceases to be such a representative; or
(B) any member who was appointed from persons who are not or have not
been directors or officers of any financial institution or entity
becomes a director or an officer of any financial institution or entity;
such member may continue as a member for not longer than the 45-day
period beginning on the date such member ceases to be such a
representative, officer, or employee or becomes such a director or
officer, as the case may be.
(6) Terms
(A) Appointed members
The members appointed by the President shall serve at the pleasure of
the President.
(B) Elected members
The members elected under subparagraphs (A) and (B) of subsection
(b)(2) of this section shall each be elected annually for a term ending
on the date of the next annual meeting of the common stockholders of the
Corporation and shall serve until their successors are elected and
qualified. Any seat on the permanent board that becomes vacant after
the annual election of the directors shall be filled by the members of
the permanent board from the same category of directors, but only for
the unexpired portion of the term.
(C) Vacancy appointment
Any member appointed to fill a vacancy occurring before the
expiration of the term for which the predecessor of the member was
appointed shall be appointed only for the remainder of such term.
(D) Service after expiration of term
A member may serve after the expiration of the term of the member
until the successor of the member has taken office.
(7) Quorum
8 members of the permanent board shall constitute a quorum.
(8) No additional pay for Federal officers or employees
Members of the permanent board who are fulltime officers or employees
of the United States shall receive no additional pay by reason of
service on the permanent board.
(9) Chairperson
The President shall designate 1 of the members of the permanent board
who are appointed by the President as the chairperson of the permanent
board.
(10) Meetings
The permanent board shall meet at the call of the chairperson or a
majority of its members.
(c) Officers and staff
The Board may appoint, employ, fix the pay of, and provide other
allowances and benefits for such officers and employees of the
Corporation as the Board determines to be appropriate.
(Pub. L. 92-181, title VIII, 8.2, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1688, and amended Pub. L. 100-399,
title VI, 601(b), Aug. 17, 1988, 102 Stat. 1005.)
1988 -- Subsecs. (a)(1), (b)(3)(B). Pub. L. 100-399 substituted
''date of the enactment'' for ''effective date'', both of which for
purposes of codification were translated as ''January 6, 1988,''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279aa-3. Powers and duties of Corporation and Board
TITLE 12 -- BANKS AND BANKING
(a) Guarantees
After the Board has been duly constituted, subject to the other
provisions of this subchapter and other commitments and requirements
established pursuant to law, the Corporation may provide guarantees on
terms and conditions determined by the Corporation of securities issued
on the security of, or in participation in, pooled interests in
qualified loans.
(b) Duties of Board
(1) In general
The Board shall --
(A) determine the general policies that shall govern the operations
of the Corporation;
(B) select, appoint, and determine the compensation of qualified
persons to fill such offices as may be provided for in the bylaws of the
Corporation; and
(C) assign to such persons such executive functions, powers, and
duties as may be prescribed by the bylaws of the Corporation or by the
Board.
(2) Executive officers and functions
The persons elected or appointed under paragraph (1)(B) shall be the
executive officers of the Corporation and shall discharge the executive
functions, powers, and duties of the Corporation.
(c) Powers of Corporation
The Corporation shall be a body corporate and shall have the
following powers:
(1) To operate under the direction of its Board.
(2) To issue stock in the manner provided in section 2279aa-4 of this
title.
(3) To adopt, alter, and use a corporate seal, which shall be
judicially noted.
(4) To provide for a president, 1 or more vice presidents, secretary,
treasurer, and such other officers, employees, and agents, as may be
necessary, define their duties and compensation levels, all without
regard to title 5, and require surety bonds or make other provisions
against losses occasioned by acts of such persons.
(5) To provide guarantees in the manner provided under section
2279aa-6 of this title.
(6) To have succession until dissolved by a law enacted by the
Congress.
(7) To prescribe bylaws, through the Board, not inconsistent with
law, that shall provide for --
(A) the classes of the stock of the Corporation; and
(B) the manner in which --
(i) the stock shall be issued, transferred, and retired;
(ii) the officers, employees, and agents of the Corporation are
selected;
(iii) the property of the Corporation is acquired, held, and
transferred;
(iv) the commitmdnts and other financial assistance of the
Corporation are made;
(v) the general business of the Corporation is conducted; and
(vi) the privileges granted by law to the Corporation are exercised
and enjoyed;
(8) To prescribe such standards as may be necessary to carry out this
subchapter.
(9) To enter into contracts and make payments with respect to the
contracts.
(10) To sue and be sued in its corporate capacity and to complain and
defend in any action brought by or against the Corporation in any State
or Federal court of competent jurisdiction.
(11) To make and perform contracts, agreements, and commitments with
persons and entities both inside and outside of the Farm Credit System.
(12) To acquire, hold, lease, mortgage or dispose of, at public or
private sale, real and personal property, purchase or sell any
securities or obligations, and otherwise exercise all the usual
incidents of ownership of property necessary and convenient to the
business of the Corporation.
(13) To establish, acquire, and maintain affiliates (as such term is
defined in section 2279aa-11(g) /1/ of this title) under applicable
State laws to carry out any activities that otherwise would be performed
directly by the Corporation under this subchapter.
(14) To exercise such other incidental powers as are necessary to
carry out the powers, duties, and functions of the Corporation in
accordance with this subchapter.
(d) Federal Reserve banks as depositaries and fiscal agents
The Federal Reserve banks may act as depositaries for, or as fiscal
agents or custodians of, the Corporation.
(e) Access to book-entry system
The Secretary of the Treasury may authorize the Corporation to use
the book-entry system of the Federal Reserve System.
(Pub. L. 92-181, title VIII, 8.3, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1691, and amended Pub. L. 100-399,
title VI, 601(c), Aug. 17, 1988, 102 Stat. 1005; Pub. L. 102-237, title
V, 503(c), Dec. 13, 1991, 105 Stat. 1877.)
1991 -- Subsec. (c)(13), (14). Pub. L. 102-237 added par. (13) and
redesignated former par. (13) as (14).
1988 -- Subsec. (c)(4). Pub. L. 100-399 substituted ''such persons''
for ''the persons''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
/1/ So in original. Probably should be section ''2279aa-11(e)''.
12 USC 2279aa-4. Stock issuance
TITLE 12 -- BANKS AND BANKING
(a) Voting common stock
(1) Issue
The Corporation shall issue voting common stock having such par value
as may be fixed by the Board from time to time. Each share of voting
common stock shall be entitled to one vote with rights of cumulative
voting at all elections of directors. Voting shall be by classes as
described in section 2279aa-2(a)(9) of this title. The stock shall be
divided into two classes with the same par value per share. Class A
stock may be held only by entities that are not Farm Credit System
institutions and that are entitled to vote for directors specified in
section 2279aa-2(b)(2)(A) of this title, including national banking
associations (which shall be allowed to purchase and hold such stock).
Class B stock may be held only by Farm Credit System institutions that
are entitled to vote for directors specified in section
2279aa-2(b)(2)(B) of this title.
(2) Limitation on issue
After the date the permanent board first meets with a quorum of its
members present, voting common stock of the Corporation may be issued
only to originators and certified facilities.
(3) Authority of Board to establish terms and procedures
The Board shall adopt such terms, conditions, and procedures with
regard to the issue of stock under this section as may be necessary,
including the establishment of a maximum amount limitation on the number
of shares of voting common stock that may be outstanding at any time.
(4) Transferability
Subject to such limitations as the Board may impose, any share of any
class of voting common stock issued under this section shall be
transferable among the institutions or entities to which shares of such
class of common stock may be offered under paragraph (1), except that,
as to the Corporation, such shares shall be transferable only on the
books of the Corporation.
(5) Maximum number of shares
No stockholder, other than a holder of class B stock, may own,
directly or indirectly, more than 33 percent of the outstanding shares
of such class of the voting common stock of the Corporation.
(b) Required capital contributions
(1) In general
The Corporation may require each originator and each certified
facility to make, or commit to make, such nonrefundable capital
contributions to the Corporation as are reasonable and necessary to meet
the administrative expenses of the Corporation.
(2) Stock issued as consideration for contribution
The Corporation, from time to time, shall issue to each originator or
certified facility voting common stock evidencing any capital
contributions made pursuant to this subsection.
(c) Dividends
(1) In general
Such dividends as may be declared by the Board, in the discretion of
the Board, shall be paid by the Corporation to the holders of the voting
common stock of the Corporation pro rata based on the total number of
shares of both classes of stock outstanding.
(2) Reserves requirement
No dividend may be declared or paid by the Board under this section
unless the Board determines that adequate provision has been made for
the reserve required under section 2279aa-10(c)(1) of this title.
(3) Dividends prohibited while obligations are outstanding
No dividend may be declared or paid by the Board under this section
while any obligation issued by the Corporation to the Secretary of the
Treasury under section 2279aa-13 of this title remains outstanding.
(d) Nonvoting common stock
The Corporation is authorized to issue nonvoting common stock having
such par value as may be fixed by the Board from time to time. Such
nonvoting common stock shall be freely transferable, except that, as to
the Corporation, such stock shall be transferable only on the books of
the Corporation. Such dividends as may be declared by the Board, in the
discretion of the Board, may be paid by the Corporation to the holders
of the nonvoting common stock of the Corporation, subject to paragraphs
(2) and (3) of subsection (c) of this section.
(e) Preferred stock
(1) Authority of Board
The Corporation is authorized to issue nonvoting preferred stock
having such par value as may be fixed by the Board from time to time.
Such preferred stock issued shall be freely transferable, except that,
as to the Corporation, such stock shall be transferred only on the books
of the Corporation.
(2) Rights of preferred stock
Subject to paragraphs (2) and (3) of subsection (c) of this section,
the holders of the preferred stock shall be entitled to such rate of
cumulative dividends, and such holders shall be subject to such
redemption or other conversion provisions, as may be provided for at the
time of issuance. No dividends shall be payable on any share of common
stock at any time when any dividend is due on any share of preferred
stock and has not been paid.
(3) Preference on termination of business
In the event of any liquidation, dissolution, or winding up of the
business of the Corporation, the holders of the preferred shares of
stock shall be paid in full at the par value thereof, plus all accrued
dividends, before the holders of the common shares receive any payment.
(Pub. L. 92-181, title VIII, 8.4, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1692, and amended Pub. L. 100-399,
title VI, 601(d), (e), Aug. 17, 1988, 102 Stat. 1005.)
1988 -- Subsec. (a)(1). Pub. L. 100-399, 601(d), in penultimate
sentence, inserted ''and'' after ''institutions'' and inserted '',
including national banking associations (which shall be allowed to
purchase and hold such stock)'' before period at end.
Subsec. (e)(1). Pub. L. 100-399, 601(e), substituted ''books of the
Corporation'' for ''books of the Association''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279aa-5. Certification of agricultural mortgage marketing
facilities
TITLE 12 -- BANKS AND BANKING
(a) Eligibility standards
(1) Establishment required
Within 120 days after the date on which the permanent board first
meets with a quorum present, the Corporation shall issue standards for
the certification of agricultural mortgage marketing facilities,
including eligibility standards in accordance with paragraph (2).
(2) Minimum requirements
To be eligible to be certified under the standards referred to in
paragraph (1), an agricultural mortgage marketing facility shall --
(A) be an institution of the Farm Credit System or a corporation,
association, or trust organized under the laws of the United States or
of any State;
(B) meet or exceed capital standards established by the Board;
(C) have as one of the purposes of the facility, the sale or resale
of securities representing interests in, or obligations backed by, pools
of qualified loans that have been provided guarantees by the
Corporation;
(D) demonstrate managerial ability with respect to agricultural
mortgage loan underwriting, servicing, and marketing that is acceptable
to the Corporation;
(E) adopt appropriate agricultural mortgage loan underwriting,
appraisal, and servicing standards and procedures that meet or exceed
the standards established by the Board;
(F) for purposes of enabling the Corporation to examine the facility,
agree to allow officers or employees of the Corporation to have access
to all books, accounts, financial records, reports, files, and all other
papers, things, or property, of any type whatsoever, belonging to or
used by the Corporation that are necessary to facilitate an examination
of the operations of the facility in connection with securities, and the
pools of qualified loans that back securities, for which the Corporation
has provided guarantees; and
(G) adopt appropriate minimum standards and procedures relating to
loan administration and disclosure to borrowers concerning the terms and
rights applicable to loans for which guarantee is provided, in
conformity with uniform standards established by the Corporation.
(3) Nondiscrimination requirement
The standards established under this subsection shall not
discriminate between or against Farm Credit System and non-Farm Credit
System applicants.
(b) Certification by Corporation
Within 60 days after receiving an application for certification under
this section, the Corporation shall certify the facility if the facility
meets the standards established by the Corporation under subsection
(a)(1) of this section.
(c) Maximum time period for certification
Any certification by the Corporation of an agricultural mortgage
marketing facility shall be effective for a period determined by the
Corporation of not to exceed 5 years.
(d) Revocation
(1) In general
After notice and an opportunity for a hearing, the Corporation may
revoke the certification of an agricultural mortgage marketing facility
if the Corporation determines that the facility no longer meets the
standards referred to in subsection (a) of this section.
(2) Effect of revocation
Revocation of a certification shall not affect any pool guarantee
that has been issued by the Corporation.
(e) Affiliation of FCS institutions with facility
(1) Establishment of affiliate authorized
Notwithstanding any other provision of this chapter, any Farm Credit
System institution (other than the Corporation), acting for such
institution alone or in conjunction with one or more other such
institutions, may establish and operate, as an affiliate, an
agricultural mortgage marketing facility if, within a reasonable time
after such establishment, such facility obtains and thereafter retains
certification under subsection (b) of this section as a certified
facility.
(2) Exclusive agency agreement authorized
Any number of Farm Credit System institutions (other than the
Corporation) may enter into an agreement with any certified facility
(including an affiliate established under paragraph (1)) to sell the
qualified loans of such institutions exclusively to or through the
facility.
(Pub. L. 92-181, title VIII, 8.5, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1694.)
12 USC 2279aa-6. Guarantee of qualified loans
TITLE 12 -- BANKS AND BANKING
(a) Guarantee authorized for certified facilities
(1) In general
Subject to the requirements of this section and on such other terms
and conditions as the Corporation shall consider appropriate, the
Corporation shall guarantee the timely payment of principal and interest
on the securities issued by a certified facility that represents
interests solely in, or obligations fully backed by, any pool consisting
solely of qualified loans which meet the standards established under
section 2279aa-8 of this title and which are held by such facility.
(2) Inability of facility to pay
If the facility is unable to make any payment of principal or
interest on any security for which a guarantee has been provided by the
Corporation under paragraph (1), subject to the provisions of subsection
(b) of this section the Corporation shall make such payment as and when
due in cash, and on such payment shall be subrogated fully to the rights
satisfied by such payment.
(3) Power of Corporation
Notwithstanding any other provision of law, the Corporation is
empowered, in connection with any guarantee under this subsection,
whether before or after any default, to provide by contract with the
facility for the extinguishment, on default by the facility, of any
redemption, equitable, legal, or other right, title, or interest of the
facility in any mortgage or mortgages constituting the pool against
which the guaranteed securities are issued. With respect to any issue
of guaranteed securities, in the event of default and pursuant otherwise
to the terms of the contract, the mortgages that constitute such pool
shall become the absolute property of the Corporation subject only to
the unsatisfied rights of the holders of the securities based on and
backed by such pool.
(b) Reserve or subordinated participation requirements
In the case of any pool referred to in subsection (a) of this
section, the Corporation shall --
(1) provide a guarantee only with respect to an individual pool of
qualified loans on application of a certified facility;
(2) provide a guarantee only if a reserve, or retained subordinated
participating interests, in an amount equal to at least 10 percent of
the outstanding principal amount of the loans constituting the pool has
been established in accordance with this subchapter;
(3) require that full recourse be taken against reserves and retained
subordinated participating interests before any demand be made by the
certified facility with respect to the guarantee of the Corporation;
and
(4) ensure the timely receipt of principal and interest due to
security or obligation holders only after full recourse has been taken
against such reserves and retained subordinated participating interests.
(c) Standards requiring diversified pools
(1) In general
To reduce the risks incurred by the Corporation in providing
guarantees under this section and to further the purposes of this
subchapter, the Board shall establish standards governing the
composition of each pool of qualified loans (in connection with which
such guarantees are provided) over the period during which the
commitment to provide guarantees is effective.
(2) Minimum criteria
The standards established by the Board pursuant to paragraph (1) for
pools of qualified loans shall, at a minimum --
(A) require that each pool consist of loans that --
(i) are secured by agricultural real estate that is widely
distributed geographically;
(ii) vary widely in terms of amounts of principal; and
(iii) in the case of land used in the production of agricultural
commodities, are secured by agricultural real estate that, in the
aggregate, is used to produce a wide range of agricultural commodities;
(B) prohibit the inclusion in any such pool of --
(i) any loan the principal amount of which exceeds 3.5 percent of the
aggregate amount of principal of all loans in such pool; and
(ii) 2 or more loans to related borrowers; and
(C) require that each pool consist of not less than 50 loans.
(3) Small farms and family farmers
In establishing the standards described in paragraph (2)(A)(ii), the
Board shall include provisions that promote and encourage the inclusion
of loans for small farms and family farmers in pools of qualified loans.
(4) Congressional review
No standard prescribed under this subsection shall take effect before
the later of --
(A) the end of a period consisting of 30 legislative days and
beginning on the date such standards are submitted to Congress; or
(B) the end of a period consisting of 90 calendar days and beginning
on such date.
(d) Other responsibilities of and limitations on certified facilities
As a condition for providing any guarantees under this section for
securities issued by a certified facility that represent interests in,
or obligations backed by, any pool of qualified loans, the Corporation
shall require such facility to agree to comply with the following
requirements:
(1) Loan default resolution
The facility shall act in accordance with the standards of a prudent
institutional lender to resolve loan defaults.
(2) Subrogation of United States and Corporation to interests of
facility
The proceeds of any collateral, judgments, settlements, or guarantees
received by the facility with respect to any loan in such pool, shall be
applied, after payment of costs of collection --
(A) first, to reduce the amount of any principal outstanding on any
obligation of the Corporation that was purchased by the Secretary of the
Treasury under section 2279aa-13 of this title to the extent the
proceeds of such obligation were used to make guarantees in connection
with such securities; and
(B) second, to reimburse the Corporation for any such guarantee
payments.
(3) Loan servicing
The originator of any loan in such pool shall be permitted to retain
the right to service the loan.
(4) Loans with recourse to originator prohibited
Each loan in the pool shall have been sold to the certified facility
without recourse to the originator of such loan (other than recourse to
any interest of such originator in a reserve established in connection
with such loan or any subordinated participation interest of such
originator in such loan).
(5) Compliance with diversified pool standards
The facility shall comply with the standards adopted by the Board
under subsection (c) of this section in establishing and maintaining the
pool.
(6) Minority participation in public offerings
The facility shall take such steps as may be necessary to ensure that
minority owned or controlled investment banking firms, underwriters, and
bond counsels throughout the United States have an opportunity to
participate to a significant degree in any public offering of
securities.
(7) No discrimination against States with borrowers rights
The facility may not refuse to purchase qualified loans originating
in States that have established borrowers rights laws either by statute
or under the constitution of such States, except that the facility may
require discounts or charge fees reasonably related to costs and
expenses arising from such statutes or constitutional provisions.
(e) Additional authority of Board
To ensure the liquidity of securities for which guarantees have been
provided under this section, the Board shall adopt appropriate standards
regarding --
(1) the characteristics of any pool of qualified loans serving as
collateral for such securities; and
(2) transfer requirements.
(f) Aggregate principal amounts of qualified loans
(1) Initial year
During the first year after January 6, 1988, the Corporation may not
provide guarantees for securities representing interests in, or
obligations backed by, qualified loans (other than loans which back
securities issued by Farm Credit System institutions for which the
Corporation provides a guarantee) in an aggregate principal amount in
excess of 2 percent of the total agricultural real estate debt
outstanding at the close of the prior calendar year (as published by the
Board of Governors of the Federal Reserve System), less all Farmers Home
Administration agricultural real estate debt.
(2) Second year
During the year following the year referred to in paragraph (1), the
Corporation may not provide guarantees for securities representing
interests in, or obligations backed by, qualified loans (other than
loans which back securities issued by Farm Credit System institutions
for which the Corporation provides a guarantee) in an additional
principal amount in excess of 4 percent of the total agricultural real
estate debt outstanding at the close of the prior calendar year, less
all Farmers Home Administration agricultural real estate debt.
(3) Third year
During the year following the year referred to in paragraph (2), the
Corporation may not provide guarantees for securities representing
interests in, or obligations backed by, qualified loans (other than
loans which back securities issued by Farm Credit System institutions
for which the Corporation provides a guarantee) in an additional
principal amount in excess of 8 percent of the total agricultural real
estate debt outstanding at the close of the prior calendar year, less
all Farmers Home Administration agricultural real estate debt.
(4) Subsequent years
In years subsequent to the year referred to in paragraph (3), the
Corporation may provide guarantees without regard to the principal
amount of the qualified loans guaranteed.
(g) Purchase of guaranteed securities
(1) Purchase authority
The Corporation (and affiliates) may purchase, hold, and sell any
securities guaranteed under this section by the Corporation that
represent interests in, or obligations backed by, pools of qualified
loans. Securities issued under this section shall have maturities and
bear rates of interest as determined by the Corporation.
(2) Issuance of debt obligations
The Corporation (and affiliates) may issue debt obligations solely
for the purpose of obtaining amounts for the purchase of any securities
under paragraph (1), for the purchase of qualified loans (as defined in
section 2279aa(9)(B) of this title), and for maintaining reasonable
amounts for business operations (including adequate liquidity) relating
to activities under this subsection.
(3) Terms and limitations
(A) Terms
The obligations issued under this subsection shall have maturities
and bear rates of interest as determined by the Corporation, and may be
redeemable at the option of the Corporation before maturity in the
manner stipulated in the obligations.
(B) Requirement
Each obligation shall clearly indicate that the obligation is not an
obligation of, and is not guaranteed as to principal and interest by,
the Farm Credit Administration, the United States, or any other agency
or instrumentality of the United States (other than the Corporation).
(C) Authority
The Corporation may not issue obligations pursuant to paragraph (2)
under this subsection while any obligation issued by the Corporation
under section 2279aa-13(a) of this title remains outstanding.
(Pub. L. 92-181, title VIII, 8.6, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1695, and amended Pub. L. 100-399,
title VI, 601(f)-(h), Aug. 17, 1988, 102 Stat. 1005; Pub. L. 102-237,
title V, 503(d), Dec. 13, 1991, 105 Stat. 1877.)
1991 -- Subsec. (g). Pub. L. 102-237 added subsec. (g).
1988 -- Subsec. (a)(1). Pub. L. 100-399, 601(f), substituted
''represents interests solely in, or obligations fully backed by, any
pool consisting solely of qualified loans which meet the standards
established under section 2279aa-8 of this title and which are'' for
''represents interests in, or obligations backed by, any pool of
qualified loans''.
Subsec. (e). Pub. L. 100-399, 601(g), redesignated par. (3) as (2)
and struck out former par. (2) which read as follows: ''registration
requirements (if any) with respect to such securities; and''.
Subsec. (f)(1). Pub. L. 100-399, 601(h), substituted ''date of the
enactment'' for ''effective date'', both of which for purposes of
codification were translated as ''January 6, 1988,''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279aa-7. Reserves and subordinated participation interests of
certified facilities
TITLE 12 -- BANKS AND BANKING
(a) Cash contributions
(1) Contributions by originators
For each pool of loans, a certified facility and the participating
originators may each contribute a share of the minimum reserve required
under section 2279aa-6(b)(2) of this title.
(2) Composition of reserves
The reserves required under this section, other than retained
subordinated participation interests, shall be held in the form of
United States Treasury securities or other securities issued,
guaranteed, or insured by an agency or instrumentality of the United
States Government.
(3) Use and disposition of assets in reserve
Subject to the requirements of subsection (c) of this section, any
certified facility that establishes a reserve pursuant to this
subsection shall be required by the Corporation to maintain such reserve
as a segregated account consisting of the amounts contributed (but not
the earnings accruing on such amounts) to ensure the repayment of
principal of, and the payment of interest on, the securities
representing an interest in, or obligations backed by, the pool of
qualified loans with respect to which such reserve is established.
(b) Retention of subordinated participation interests
(1) In general
A certified facility may meet the requirements of section 2279aa-6(
b)(2) of this title with respect to any pool of qualified loans by
retaining a subordinated participation interest in each loan included in
each such pool in an amount not less than the amount that is equal to 10
percent of the principal amount of such loan.
(2) Retention of such interests by loan originators
Under the terms of the sale of any qualified loan by the originator
of such loan to a certified facility, the originator of such loan may
agree to retain a subordinated participation interest in such loan and
the amount of the subordinated interest so retained by such loan
originator shall be attributed to the facility for purposes of
determining whether the requirements of paragraph (1) have been met.
(3) Distribution rights of holders of subordinated interests
The rights of the holders of the subordinated participation interests
to receive distributions with respect to the loans constituting the pool
shall be subordinated as prescribed by the Corporation to enhance the
likelihood of regular receipt by the other holders of interests in such
pool of the full amount of scheduled payments of principal and interest
on loans constituting the pool.
(c) Additional requirements relating to section 2279aa-6(b)(2)
reserves
(1) Distribution of earnings accruing in section 2279aa-6(b)(2)
reserves
In the case of each applicable loan pool, a certified facility shall
distribute to originators, at least semiannually, any earnings on the
contributions of the originators to the reserve.
(2) Exception for withdrawals that would decrease reserve levels
below reserve requirement
No withdrawal and distribution authorized under paragraph (1) may be
made to the extent such withdrawal would cause the reserve to fall below
the amount required to be held in such reserve under section
2279aa-6(b)(2) of this title.
(3) Separate loan loss accounting
Any certified facility that maintains a reserve (pursuant to section
2279aa-6(b)(2) of this title) to which any originator has contributed
shall maintain separate loan loss accounting for each loan for which a
contribution was made by such originator to such reserve.
(4) Loan loss attribution rule
Except for that portion of losses absorbed by a contribution of a
certified facility to the reserve as provided in subsection (a)(1) of
this section, each originator participating in the pool shall absorb any
losses on loans originated up to the total amount the originator has
contributed to the reserve before the losses are absorbed by the
contributions of other originators who are participating in the pool.
(d) Authority of Board to establish other policies and procedures
The Board may establish such other policies and procedures with
respect to --
(1) the establishment of reserves and the retention of subordinated
participation interests under this section; and
(2) the manner in which such reserves or interests shall be available
to make payments of interest on, and repayments of principal of,
securities for which the Corporation has provided guarantees, as the
Board determines to be necessary or appropriate to carry out the
purposes of this subchapter.
(Pub. L. 92-181, title VIII, 8.7, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1698.)
12 USC 2279aa-8. Standards for qualified loans
TITLE 12 -- BANKS AND BANKING
(a) Standards
Not later than 120 days after the appointment and election of the
permanent Board, the Corporation, in consultation with originators,
shall establish uniform underwriting, security appraisal, and repayment
standards for qualified loans. In establishing standards for qualified
loans, the Corporation shall confine corporate operations, so far as
practicable, to mortgage loans that are deemed by the Board to be of
such quality so as to meet, substantially and generally, the purchase
standards imposed by private institutional mortgage investors.
(b) Minimum criteria
To further the purpose of this subchapter to provide a new source of
long-term fixed rate financing to assist farmers and ranchers to
purchase agricultural real estate, the standards established by the
Board pursuant to subsection (a) of this section shall, at a minimum --
(1) provide that no agricultural mortgage loan with a loan-to-value
ratio in excess of 80 percent may be treated as a qualified loan;
(2) require each borrower to demonstrate sufficient cash-flow to
adequately service the agricultural mortgage loan;
(3) contain sufficient documentation standards;
(4) contain adequate standards to protect the integrity of the
appraisal process with respect to any agricultural mortgage loans;
(5) contain adequate standards to ensure that the borrower is or will
be actively engaged in agricultural production, and require the borrower
to certify to the originator that the borrower intends to continue
agricultural production on the site involved;
(6) minimize speculation in agricultural real estate for
nonagricultural purposes; and
(7) in establishing the value of agricultural real estate, consider
the purpose for which the real estate is taxed.
(c) Loan amount limitation
(1) In general
A loan may not be treated as a qualified loan if the principal amount
of such loan exceeds $2,500,000, adjusted for inflation, except as
provided in paragraph (2).
(2) Acreage exception
Paragraph (1) shall not apply with respect to any agricultural
mortgage loan described in such paragraph if such loan is secured by
agricultural real estate that, in the aggregate, comprises not more than
1,000 acres.
(d) Congressional review
No standard prescribed under subsection (a) of this section shall
take effect before the later of --
(1) the end of a period consisting of 30 legislative days and
beginning on the date such standards are submitted to the Congress; or
(2) the end of a period consisting of 90 calendar days and beginning
on such date.
(e) Nondiscrimination requirement
The standards established under subsection (a) of this section shall
not discriminate against small originators or small agricultural
mortgage loans that are at least $50,000.
(Pub. L. 92-181, title VIII, 8.8, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1700, and amended Pub. L. 100-399,
title VI, 601(i), Aug. 17, 1988, 102 Stat. 1005.)
1988 -- Subsec. (a). Pub. L. 100-399 inserted ''permanent'' after
''appointment and election of the''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279aa-9. Exemption from restructuring and borrowers rights
provisions for pooled loans
TITLE 12 -- BANKS AND BANKING
(a) Restructuring
Notwithstanding any other provision of law, sections 2202, 2202a,
2202b, 2202c, 2202d, and 2219a of this title shall not apply to any loan
included in a pool of qualified loans backing securities or obligations
for which the Corporation provides guarantee. The loan servicing
standards established by the Corporation shall be patterned after
similar standards adopted by other federally sponsored secondary market
facilities.
(b) Borrowers rights
At the time of application for a loan, originators that are Farm
Credit System institutions shall give written notice to each applicant
of the terms and conditions of the loan, setting forth separately terms
and conditions for pooled loans and loans that are not pooled. This
notice shall include a statement, if applicable, that the loan may be
pooled and that, if pooled, sections 2202, 2202a, 2202b, 2202c, 2202d,
and 2219a of this title shall not apply. This notice also shall inform
the applicant that he or she has the right not to have the loan pooled.
Within 3 days from the time of commitment, an applicant has the right to
refuse to allow the loan to be pooled, thereby retaining rights under
sections 2202, 2202a, 2202b, 2202c, 2202d, and 2219a of this title, if
applicable.
(Pub. L. 92-181, title VIII, 8.9, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1701, and amended Pub. L. 100-399,
title VI, 601(j), Aug. 17, 1988, 102 Stat. 1005.)
1988 -- Subsecs. (a), (b). Pub. L. 100-399 substituted ''2202d, and
2219a'' for ''and 2219b'' wherever appearing.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
12 USC 2279aa-10. Funding for guarantee; reserves of Corporation
TITLE 12 -- BANKS AND BANKING
(a) Guarantee
The Corporation shall provide guarantees for securities representing
interests in, or obligations backed by, pools of qualified loans through
commitments issued by the Corporation providing for guarantees.
(b) Guarantee fees
(1) Initial fee
At the time a guarantee is issued by the Corporation, the Corporation
shall assess the certified facility a fee of not more than 1/2 of 1
percent of the initial principal amount of each pool of qualified loans.
(2) Annual fees
Beginning in the second year after the date the guarantee is issued
under paragraph (1), the Corporation may, at the end of each year,
assess the certified facility an annual fee of not more than 1/2 of 1
percent of the principal amount of the loans then constituting the pool.
(3) Determination of amount
The Corporation shall establish such fees on the amount of risk
incurred by the Corporation in providing the guarantees with respect to
which such fee is assessed, as determined by the Corporation. Fees
assessed under paragraphs (1) and (2) shall be established on an
actuarially sound basis.
(4) Annual review by GAO
The Comptroller General of the United States shall annually review,
and submit to the Congress a report regarding, the actuarial soundness
and reasonableness of the fees established by the Corporation under this
subsection.
(c) Corporation reserve against guarantees losses required
(1) In general
So much of the fees assessed under this section as the Board
determines to be necessary shall be set aside by the Corporation in a
segregated account as a reserve against losses arising out of the
guarantee activities of the Corporation.
(2) Exhaustion of reserve required
The Corporation may not issue obligations to the Secretary of the
Treasury under section 2279aa-13 of this title in order to meet the
obligations of the Corporation with respect to any guarantees provided
under this subchapter until the reserve established under paragraph (1)
has been exhausted.
(d) Fees to cover administrative costs authorized
The Corporation may impose charges or fees in reasonable amounts in
connection with the administration of its activities under this
subchapter to recover its costs for performing such administration.
(Pub. L. 92-181, title VIII, 8.10, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1701.)
12 USC 2279aa-11. Supervision, examination, and report of condition
TITLE 12 -- BANKS AND BANKING
(a) Regulation
(1) Authority
Notwithstanding any other provision of this chapter, the Farm Credit
Administration shall have the authority to provide, acting through the
Office of Secondary Market Oversight --
(A) for the examination of the Corporation and its affiliates; and
(B) for the general supervision of the safe and sound performance of
the powers, functions, and duties vested in the Corporation and its
affiliates by this subchapter, including through the use of the
authorities granted to the Farm Credit Administration under --
(i) part C of subchapter V of this chapter; and
(ii) beginning 6 months after December 13, 1991, section 2252(a)(9)
of this title.
(2) Considerations
In exercising its authority pursuant to this section, the Farm Credit
Administration shall consider --
(A) the purposes for which the Corporation was created;
(B) the practices appropriate to the conduct of secondary markets in
agricultural loans; and
(C) the reduced levels of risk associated with appropriately
structured secondary market transactions.
(3) Office of Secondary Market Oversight
(A) Not later than 180 days after December 13, 1991, the Farm Credit
Administration Board shall establish within the Farm Credit
Administration the Office of Secondary Market Oversight.
(B) The Farm Credit Administration Board shall carry out the
authority set forth in this section through the Office of Secondary
Market Oversight.
(C) The Office of Secondary Market Oversight shall be managed by a
full-time Director who shall be selected by and report to the Farm
Credit Administration Board.
(b) Examinations and audits
(1) In general
The financial transactions of the Corporation shall be examined by
examiners of the Farm Credit Administration in accordance with the
principles and procedures applicable to commercial corporate
transactions under such rules and regulations as may be prescribed by
the Administration.
(2) Frequency
The examinations shall occur at such times as the Farm Credit
Administration Board may determine, but in no event less than once each
year.
(3) Access
The examiners shall --
(A) have access to all books, accounts, financial records, reports,
files, and all other papers, things, or property belonging to or in use
by the Corporation and necessary to facilitate the audit; and
(B) be afforded full access for verifying transactions with certified
facilities and other entities with whom the Corporation conducts
transactions.
(c) Annual report of condition
The Corporation shall make and publish an annual report of condition
as prescribed by the Farm Credit Administration. Each report shall
contain financial statements prepared in accordance with generally
accepted accounting principles and contain such additional information
as the Farm Credit Administration may by regulation prescribe. The
financial statements of the Corporation shall be audited by an
independent public accountant.
(d) FCA assessments to cover costs
The Farm Credit Administration shall assess the Corporation for the
cost to the Administration of any regulatory activities conducted under
this section, including the cost of any examination.
(e) ''Affiliate'' defined
As used in this subchapter, the term ''affiliate'' shall mean an
entity effectively controlled or owned by the Corporation, except that
such term shall not include a certified facility or an originator (as
defined in paragraphs (3) and (7), respectively, of section 2279aa of
this title).
(f) Employees and personnel
The Farm Credit Administration Board shall ensure that --
(1) the Office of Secondary Market Oversight has access to a
sufficient number of qualified and trained employees to adequately
supervise the secondary market activities of the Corporation; and
(2) the supervision of the powers, functions, and duties of the
Corporation is performed, to the extent practicable, by personnel who
are not responsible for the supervision of the banks and associations of
the Farm Credit System.
(Pub. L. 92-181, title VIII, 8.11, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1702, and amended Pub. L. 101-624,
title XVIII, 1840, Nov. 28, 1990, 104 Stat. 3835; Pub. L. 102-237,
title V, 503(a), Dec. 13, 1991, 105 Stat. 1870.)
December 13, 1991, referred to in subsec. (a)(1)(B)(ii), was in the
original ''the date of enactment of this section'', and was translated
as meaning the date of enactment of Pub. L. 102-237, which amended
subsec. (a)(1) generally, to reflect the probable intent of Congress.
1991 -- Subsec. (a)(1). Pub. L. 102-237, 503(a)(1), amended par.
(1) generally. Prior to amendment, par. (1) read as follows:
''Notwithstanding any other provision of this chapter, the Farm Credit
Administration shall have the authority to --
''(A) provide for the examination of the condition of the Corporation
and its affiliates; and
''(B) provide for the general supervision of the safe and sound
performance of the powers, functions, and duties vested in the
Corporation and its affiliates by this subchapter, including through the
use of the enforcement powers of the Farm Credit Administration under
part C of subchapter V of this chapter.''
Subsec. (a)(3). Pub. L. 102-237, 503(a)(2), added par. (3).
Subsec. (f). Pub. L. 102-237, 503(a)(3), added subsec. (f).
1990 -- Subsec. (a)(1). Pub. L. 101-624, 1840(1), amended par. (1)
generally. Prior to amendment, par. (1) read as follows:
''Notwithstanding any other provision of this chapter, the regulatory
authority of the Farm Credit Administration with respect to the
Corporation shall be confined to --
''(A) providing for the examination of the condition of the
Corporation; and
''(B) providing for the general supervision of the safe and sound
performance of the powers, functions, and duties vested in the
Corporation by this subchapter, including through the use of the
enforcement powers of the Farm Credit Administration under part C of
subchapter V of this chapter.''
Subsec. (e). Pub. L. 101-624, 1840(2), added subsec. (e).
12 USC 2279aa-12. Securities in credit enhanced pools
TITLE 12 -- BANKS AND BANKING
(a) Federal laws
(1) Applicability of certain Federal securities laws
For purposes of section 77c(a)(2) of title 15, no security
representing an interest in, or obligations backed by, a pool of
qualified loans for which guarantees have been provided by the
Corporation shall be deemed to be a security issued or guaranteed by a
person controlled or supervised by, or acting as an instrumentality of,
the Government of the United States. No such security shall be deemed
to be a ''government security'' for purposes of the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.) or for purposes of the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(2) No full faith and credit of the United States
Each security for which credit enhancement has been provided by the
Corporation shall clearly indicate that the security is not an
obligation of, and is not guaranteed as to principal or interest by, the
Farm Credit Administration, the United States, or any other agency or
instrumentality of the United States (other than the Corporation).
(b) State securities laws
(1) General exemption
Any security or obligation that has been provided a guarantee by the
Corporation shall be exempt from any law of any State with respect to or
requiring registration or qualification of securities or real estate to
the same extent as any obligation issued by, or guaranteed as to
principal and interest by, the United States or any agency or
instrumentality of the United States.
(2) State override
The provisions of paragraph (1) shall not be applicable to any State
that, during the 8-year period beginning on January 6, 1988, enacts a
law that --
(A) specifically refers to this subsection; and
(B) expressly provides that paragraph (1) shall not apply to the
State.
(c) Authorized investments
(1) In general
Securities representing an interest in, or obligations backed by,
pools of qualified loans with respect to which the Corporation has
provided a guarantee shall be authorized investments of any person,
trust, corporation, partnership, association, business trust, or
business entity created pursuant to or existing under the laws of the
United States or any State to the same extent that the person, trust,
corporation, partnership, association, business trust, or business
entity is authorized under any applicable law to purchase, hold, or
invest in obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality of the
United States. Such securities or obligations may be accepted as
security for all fiduciary, trust, and public funds, the investment or
deposits of which shall be under the authority and control of the United
States or any State or any officers of either.
(2) State limitations on purchase, holding, or investment
If State law limits the purchase, holding, or investment in
obligations issued by the United States by the person, trust,
corporation, partnership, association, business trust, or business
entity, securities or obligations of a certified facility issued on
which the Corporation has provided a guarantee shall be considered to be
obligations issued by the United States for purposes of the limitation.
(3) Nonapplicability of provisions
(A) Subsequent State law
Paragraphs (1) and (2) shall not apply with respect to a particular
person, trust, corporation, partnership, association, business trust, or
business entity, or class thereof, in any State that, prior to the
expiration of the 8-year period beginning on January 6, 1988, enacts a
law that specifically refers to this section and either prohibits or
provides for a more limited authority to purchase, hold, or invest in
the securities by any person, trust, corporation, partnership,
association, business trust, or business entity, or class thereof, than
is provided in paragraphs (1) and (2).
(B) Effect of subsequent State law
The enactment by any State of a law of the type described in
subparagraph (A) shall not affect the validity of any contractual
commitment to purchase, hold, or invest that was made prior to the
effective date of the law and shall not require the sale or other
disposition of any securities acquired prior to the effective date of
the law.
(d) State usury laws superseded
Any provision of the constitution or law of any State which expressly
limits the rate or amount of interest, discount points, finance charges,
or other charges that may be charged, taken, received, or reserved by
agricultural lenders or certified facilities shall not apply to any
agricultural loan made by an originator or a certified facility in
accordance with this subchapter that is included in a pool for which the
Corporation has provided a guarantee.
(Pub. L. 92-181, title VIII, 8.12, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1703, and amended Pub. L. 100-399,
title VI, 601(k), (l), Aug. 17, 1988, 102 Stat. 1006.)
1988 -- Subsec. (a)(1). Pub. L. 100-399, 601(k), inserted '', or
obligations backed by,'' before ''a pool''.
Subsec. (b)(2). Pub. L. 100-399, 601(l), substituted ''date of the
enactment'' for ''effective date'' both of which for purposes of
codification was translated as ''January 6, 1988,''.
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988,
see section 1001(a) of Pub. L. 100-399, set out as a note under section
2002 of this title.
The Securities Exchange Act of 1934, referred to in subsec. (a)(1),
is act June 6, 1934, ch. 404, 48 Stat. 881, as amended, which is
classified principally to chapter 2B ( 78a et seq.) of Title 15,
Commerce and Trade. For complete classification of this Act to the
Code, see section 78a of Title 15 and Tables.
The Investment Company Act of 1940, referred to in subsec. (a)(1), is
title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended,
which is classified generally to subchapter I ( 80a-1 et seq.) of
chapter 2D of Title 15. For complete classification of this Act to the
Code, see section 80a-51 of Title 15 and Tables.
12 USC 2279aa-13. Authority to issue obligations to cover guarantee
losses of Corporation
TITLE 12 -- BANKS AND BANKING
(a) Sale of obligations to Treasury
(1) In general
Subject to the limitations contained in sections 2279aa-6(b) and
2279aa-10(c) of this title and the requirement of paragraph (2), the
Corporation may issue obligations to the Secretary of the Treasury the
proceeds of which may be used by the Corporation solely for the purpose
of fulfilling the obligations of the Corporation under any guarantee
provided by the Corporation under this subchapter.
(2) Certification
The Secretary of the Treasury may purchase obligations of the
Corporation under paragraph (1) only if the Corporation certifies to the
Secretary that --
(A) the requirements of sections 2279aa-6(b) and 2279aa-10(c) of this
title have been fulfilled; and
(B) the proceeds of the sale of such obligations are needed to
fulfill the obligations of the Corporation under any guarantee provided
by the Corporation under this subchapter.
(b) Expeditious transaction required
Not later than 10 business days after receipt by the Secretary of the
Treasury of any certification by the Corporation under subsection (a)(2)
of this section, the Secretary of the Treasury shall purchase
obligations issued by the Corporation in an amount determined by the
Corporation to be sufficient to meet the guarantee liabilities of the
Corporation.
(c) Limitation on amount of outstanding obligations
The aggregate amount of obligations issued by the Corporation under
subsection (a)(1) of this section which may be held by the Secretary of
the Treasury at any time (as determined by the Secretary) shall not
exceed $1,500,000,000.
(d) Terms of obligation
(1) Interest
Each obligation purchased by the Secretary of the Treasury shall bear
interest at a rate determined by the Secretary, taking into
consideration the average rate on outstanding marketable obligations of
the United States as of the last day of the last calendar month ending
before the date of the purchase of such obligation.
(2) Redemption
The Secretary of the Treasury shall require that such obligations be
repurchased by the Corporation within a reasonable time.
(e) Coordination with title 31
(1) Authority to use proceeds from sale of Treasury securities
For the purpose of purchasing obligations of the Corporation, the
Secretary of the Treasury may use as a public debt transaction the
proceeds from the sale by the Secretary of any securities issued under
chapter 31 of title 31, and the purposes for which securities may be
issued under such chapter are extended to include such purchases.
(2) Treatment of transactions
All purchases and sales by the Secretary of the Treasury of
obligations issued by the Corporation under this section shall be
treated as public debt transactions of the United States.
(f) Authorization of appropriations
There is authorized to be appropriated to the Secretary of the
Treasury $1,500,000,000, without fiscal year limitation, to carry out
the purposes of this subchapter.
(Pub. L. 92-181, title VIII, 8.13, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1704.)
12 USC 2279aa-14. Federal jurisdiction
TITLE 12 -- BANKS AND BANKING
Notwithstanding section 1349 of title 28 or any other provision of
law:
(1) The Corporation shall be considered an agency under sections 1345
and 1442 of such title.
(2) All civil actions to which the Corporation is a party shall be
deemed to arise under the laws of the United States and, to the extent
applicable, shall be deemed to be governed by Federal common law. The
district courts of the United States shall have original jurisdiction of
all such actions, without regard to amount of value.
(3) Any civil or other action, case, or controversy in a court of a
State or any court, other than a district court of the United States, to
which the Corporation is a party may at any time before trial be removed
by the Corporation, without the giving of any bond or security --
(A) to the District Court of the United States for the district and
division embracing the place where the same is pending; or
(B) if there is no such district court, to the District Court of the
United States for the district in which the principal office of the
Corporation is located;
by following any procedure for removal for causes in effect at the
time of such removal.
(4) No attachment or execution shall be issued against the
Corporation or any of the property of the Corporation before final
judgment in any Federal, State, or other court.
(Pub. L. 92-181, title VIII, 8.14, as added Pub. L. 100-233, title
VII, 702, Jan. 6, 1988, 101 Stat. 1705.)
12 USC Part B -- Regulation of Financial Safety and Soundness of Federal
Agricultural Mortgage Corporation
TITLE 12 -- BANKS AND BANKING
12 USC 2279bb. Definitions
TITLE 12 -- BANKS AND BANKING
For purposes of this part:
(1) Compensation
The term ''compensation'' means any payment of money or the provision
of any other thing of current or potential value in connection with
employment.
(2) Core capital
The term ''core capital'' means, with respect to the Corporation, the
sum of the following (as determined in accordance with generally
accepted accounting principles):
(A) The par value of outstanding common stock.
(B) The par value of outstanding preferred stock.
(C) Paid-in capital.
(D) Retained earnings.
(3) Director
The term ''Director'' means the Director of the Office of Secondary
Market Oversight of the Farm Credit Administration, selected under
section 2279aa-11(a)(3) of this title.
(4) Office
The term ''Office'' means the Office of Secondary Market Oversight of
the Farm Credit Administration, established in section 2279aa-11(a) of
this title.
(5) Regulatory capital
The term ''regulatory capital'' means, with respect to the
Corporation, the core capital of the Corporation plus an allowance for
losses and guarantee claims, as determined in accordance with generally
accepted accounting principles.
(6) State
The term ''State'' means the States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth
of the Northern Mariana Islands, Guam, the Virgin Islands, American
Samoa, the Trust Territory of the Pacific Islands, and any other
territory or possession of the United States.
(Pub. L. 92-181, title VIII, 8.31, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1871.)
12 USC 2279bb-1. Risk-based capital levels
TITLE 12 -- BANKS AND BANKING
(a) Risk-based capital test
Not later than the expiration of the 2-year period beginning on
December 13, 1991, the Director of the Office of Secondary Market
Oversight shall, by regulation, establish a risk-based capital test
under this section for the Corporation. When applied to the
Corporation, the risk-based capital test shall determine the amount of
regulatory capital for the Corporation that is sufficient for the
Corporation to maintain positive capital during a 10-year period in
which both of the following circumstances occur:
(1) Credit risk
With respect to securities representing an interest in, or
obligations backed by, a pool of qualified loans owned or guaranteed by
the Corporation and other obligations of the Corporation, losses on the
underlying qualified loans occur throughout the United States at a rate
of default and severity (based on any measurements of default reasonably
related to prevailing industry practice in determining capital adequacy)
reasonably related to the rate and severity that occurred in contiguous
areas of the United States containing an aggregate of not less than 5
percent of the total population of the United States that, for a period
of not less than 2 years (as established by the Director), experienced
the highest rates of default and severity of agricultural mortgage
losses, in comparison with such rates of default and severity of
agricultural mortgage losses in other such areas for any period of such
duration, as determined by the Director.
(2) Interest rate risk
Interest rates on Treasury obligations of varying terms increase or
decrease over the first 12 months of such 10-year period by not more
than the lesser of (A) 50 percent (with respect to the average interest
rates on such obligations during the 12-month period preceding the
10-year period), or (B) 600 basis points, and remain at such level for
the remainder of the period. This paragraph may not be construed to
require the Director to determine interest rate risk under this
paragraph based on the interest rates for various long-term and
short-term obligations all increasing or all decreasing concurrently.
(b) Considerations
(1) Establishment of test
In establishing the risk-based capital test under subsection (a) of
this section --
(A) the Director shall take into account appropriate distinctions
based on various types of agricultural mortgage products, varying terms
of Treasury obligations, and any other factors the Director considers
appropriate;
(B) the Director shall conform loan data used in determining credit
risk to the minimum geographic and commodity diversification standards
applicable to pools of qualified loans eligible for guarantee;
(C) the Director shall take into account retained subordinated
participating interests under section 2279aa-6(b)(2) of this title;
(D) the Director may take into account other methods or tests to
determine credit risk developed by the Corporation before December 13,
1991; and
(E) the Director shall consider any other information submitted by
the Corporation in writing during the 180-day period beginning on
December 13, 1991.
(2) Revising test
Upon the expiration of the 5-year period beginning on December 13,
1991, the Director shall examine the risk-based capital test under
subsection (a) of this section and may revise the test. In making
examinations and revisions under this paragraph, the Director shall take
into account that, before December 13, 1991, the Corporation has not
issued guarantees for pools of qualified loans. To the extent that the
revision of the risk-based capital test causes a change in the
classification of the Corporation within the enforcement levels
established under section 2279bb-4 of this title, the Director shall
waive the applicability of any additional enforcement actions available
because of such change for a reasonable period of time, to permit the
Corporation to increase the amount of regulatory capital of the
Corporation accordingly.
(c) Risk-based capital level
For purposes of this part, the risk-based capital level for the
Corporation shall be equal to the sum of the following amounts:
(1) Credit and interest rate risk
The amount of regulatory capital determined by applying the
risk-based capital test under subsection (a) of this section to the
Corporation, adjusted to account for foreign exchange risk.
(2) Management and operations risk
To provide for management and operations risk, 30 percent of the
amount of regulatory capital determined by applying the risk-based
capital test under subsection (a) of this section to the Corporation.
(d) Specified contents
The regulations establishing the risk-based capital test under this
section shall contain specific requirements, definitions, methods,
variables, and parameters used under the risk-based capital test and in
implementing the test (such as loan loss severity, float income,
loan-to-value ratios, taxes, yield curve slopes, default experience,
prepayment rates, and performance of pools of qualified loans). The
regulations shall be sufficiently specific to permit an individual other
than the Director to apply the test in the same manner as the Director.
(e) Availability of model
The Director shall make copies of the statistical model or models
used to implement the risk-based capital test under this section
available for public acquisition and may charge a reasonable fee for
such copies.
(Pub. L. 92-181, title VIII, 8.32, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1871.)
December 13, 1991, referred to in subsec. (b)(1)(E), was in the
original ''the date of the enactment of such Act'', and was translated
as reading ''the date of the enactment of this section'', meaning the
date of enactment of Pub. L. 102-237, to reflect the probable intent of
Congress.
12 USC 2279bb-2. Minimum capital level
TITLE 12 -- BANKS AND BANKING
(a) In general
Except as provided in subsection (b) of this section, for purposes of
this part, the minimum capital level for the Corporation shall be an
amount of core capital equal to the sum of --
(1) 2.50 percent of the aggregate on-balance sheet assets of the
Corporation (other than assets referred to in paragraph (3)), as
determined in accordance with generally accepted accounting principles;
(2) 0.45 percent of the unpaid principal balance of outstanding
securities guaranteed by the Corporation and backed by pools of
qualified loans and substantially equivalent instruments issued or
guaranteed by the Corporation, and other off-balance sheet obligations
of the Corporation; and
(3) the percentage of the aggregate assets of the Corporation
acquired pursuant to the linked portfolio option under section
2279aa-6(g) of this title that is determined under subsection (c) of
this section.
(b) 18-month transition
During the 18-month period beginning upon December 13, 1991, for
purposes of this part, the minimum capital level for the Corporation
shall be an amount of core capital equal to the sum of --
(1) 1.50 percent of the aggregate on-balance sheet assets of the
Corporation (other than assets referred to in paragraph (3)), as
determined in accordance with generally accepted accounting principles;
(2) 0.40 percent of the unpaid principal balance of outstanding
securities guaranteed by the Corporation and backed by pools of
qualified loans and substantially equivalent instruments issued or
guaranteed by the Corporation, and other off-balance sheet obligations
of the Corporation; and
(3) the percentage of the aggregate assets of the Corporation
acquired pursuant to the linked portfolio option under section
2279aa-6(g) of this title that is determined under subsection (c) of
this section.
(c) Linked portfolio assets
The percentage of any aggregate assets of the Corporation acquired
pursuant to the linked portfolio option under section 2279aa-6(g) of
this title that is referred to in subsections (a)(3) and (b)(3) of this
section (and in section 2279bb-3(3)(A) of this title) shall be --
(1) during the 5-year period beginning on December 13, 1991 --
(A) 0.45 percent of any such assets not exceeding $1,000,000,000;
(B) 0.75 percent of any such assets in excess of $1,000,000,000 but
not exceeding $2,000,000,000;
(C) 1.00 percent of any such assets in excess of $2,000,000,000 but
not exceeding $3,000,000,000;
(D) 1.25 percent of any such assets in excess of $3,000,000,000 but
not exceeding $4,000,000,000;
(E) 1.50 percent of any such assets in excess of $4,000,000,000 but
not exceeding $5,000,000,000; and
(F) 2.50 percent of any such assets in excess of $5,000,000,000; and
(2) after the expiration of such 5-year period, 2.50 percent of any
such aggregate assets.
(Pub. L. 92-181, title VIII, 8.33, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1873.)
12 USC 2279bb-3. Critical capital level
TITLE 12 -- BANKS AND BANKING
For purposes of this part, the critical capital level for the
Corporation shall be an amount of core capital equal to the sum of --
(1) 1.25 percent of the aggregate on-balance sheet assets of the
Corporation (other than assets referred to in paragraph (3)), as
determined in accordance with generally accepted accounting principles;
(2) 0.25 percent of the unpaid principal balance of outstanding
securities guaranteed by the Corporation and backed by pools of
qualified loans and substantially equivalent instruments issued or
guaranteed by the Corporation, and other off-balance sheet obligations
of the Corporation; and
(3) a percentage of any aggregate assets of the Corporation acquired
pursuant to the linked portfolio option under section 2279aa-6(g) of
this title, which shall be --
(A) during the 5-year period beginning on December 13, 1991, one-half
of the percentage that is determined under section 2279bb-2( c)(1) of
this title; and
(B) after the expiration of such 5-year period, 1.25 percent of any
such aggregate assets.
(Pub. L. 92-181, title VIII, 8.34, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1874.)
12 USC 2279bb-4. Enforcement levels
TITLE 12 -- BANKS AND BANKING
(a) In general
The Director shall classify the Corporation, for purposes of this
part, according to the following enforcement levels:
(1) Level I
The Corporation shall be classified as within level I if the
Corporation --
(A) maintains an amount of regulatory capital that is equal to or
exceeds the risk-based capital level established under section 2279bb-1
of this title; and
(B) equals or exceeds the minimum capital level established under
section 2279bb-2 of this title.
(2) Level II
The Corporation shall be classified as within level II if --
(A) the Corporation --
(i) maintains an amount of regulatory capital that is less than the
risk-based capital level; and
(ii) equals or exceeds the minimum capital level; or
(B) the Corporation is otherwise classified as within level II under
subsection (b) of this section.
(3) Level III
The Corporation shall be classified as within level III if --
(A) the Corporation --
(i) does not equal or exceed the minimum capital level; and
(ii) equals or exceeds the critical capital level established under
section 2279bb-3 of this title; or
(B) the Corporation is otherwise classified as within level III under
subsection (b) of this section.
(4) Level IV
The Corporation shall be classified as within level IV if the
Corporation --
(A) does not equal or exceed the critical capital level; or
(B) is otherwise classified as within level IV under subsection (b)
of this section.
(b) Discretionary classification
If at any time the Director determines in writing (and provides
written notification to the Corporation and the Farm Credit
Administration) that the Corporation is taking any action not approved
by the Director that could result in a rapid depletion of core capital
or that the value of the property subject to mortgages securitized by
the Corporation or property underlying securities guaranteed by the
Corporation, has decreased significantly, the Director may classify the
Corporation --
(1) as within level II, if the Corporation is otherwise within level
I;
(2) as within level III, if the Corporation is otherwise within level
II; or
(3) as within level IV, if the Corporation is otherwise within level
III.
(c) Quarterly determination
The Director shall determine the classification of the Corporation
for purposes of this part on not less than a quarterly basis (and as
appropriate under subsection (b) of this section). The first such
determination shall be made for the quarter ending March 31, 1992.
(d) Notice
Upon determining under subsection (b) or (c) of this section that the
Corporation is within level II or III, the Director shall provide
written notice to the Congress and to the Corporation --
(1) that the Corporation is within such level;
(2) that the Corporation is subject to the provisions of section
2279bb-5 or 2279bb-6 of this title, as applicable; and
(3) stating the reasons for the classification of the Corporation
within such level.
(e) Implementation
Notwithstanding paragraphs (1) and (2) of subsection (a) of this
section, during the 30-month period beginning on December 13, 1991, the
Corporation shall be classified as within level I if the Corporation
equals or exceeds the minimum capital level established under section
2279bb-2 of this title.
(Pub. L. 92-181, title VIII, 8.35, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1874.)
12 USC 2279bb-5. Mandatory actions applicable to level II
TITLE 12 -- BANKS AND BANKING
(a) Capital restoration plan
If the Corporation is classified as within level II, the Corporation
shall, within the time period determined by the Director, submit to the
Director a capital restoration plan and, after approval, carry out the
plan.
(b) Restriction on dividends
If the Corporation is classified as within level II, the Corporation
may not make any payment of dividends that would result in the
Corporation being reclassified as within level III or IV.
(c) Reclassification from level II to level III
The Director shall immediately reclassify the Corporation as within
level III (and the Corporation shall be subject to the provisions of
section 2279bb-6 of this title), if --
(1) the Corporation is within level II; and
(2)(A) the Corporation does not submit a capital restoration plan
that is approved by the Director; or
(B) the Director determines that the Corporation has failed to make,
in good faith, reasonable efforts necessary to comply with such a
capital restoration plan and fulfill the schedule for the plan approved
by the Director.
(d) Effective date
This section shall take effect upon the expiration of the 30-month
period beginning on December 13, 1991.
(Pub. L. 92-181, title VIII, 8.36, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1876.)
12 USC 2279bb-6. Supervisory actions applicable to level III
TITLE 12 -- BANKS AND BANKING
(a) Mandatory supervisory actions
(1) Capital restoration plan
If the Corporation is classified as within level III, the Corporation
shall, within the time period determined by the Director, submit to the
Director a capital restoration plan and, after approval, carry out the
plan.
(2) Restrictions on dividends
(A) Prior approval
If the Corporation is classified as within level III, the Corporation
--
(i) may not make any payment of dividends that would result in the
Corporation being reclassified as within level IV; and
(ii) may make any other payment of dividends only if the Director
approves the payment before the payment.
(B) Standard for approval
If the Corporation is classified as within level III, the Director
may approve a payment of dividends by the Corporation only if the
Director determines that the payment (i) will enhance the ability of the
Corporation to meet the risk-based capital level and the minimum capital
level promptly, (ii) will contribute to the long-term safety and
soundness of the Corporation, or (iii) is otherwise in the public
interest.
(3) Reclassification from level III to level IV
The Director shall immediately reclassify the Corporation as within
level IV if --
(A) the Corporation is classified as within level III; and
(B)(i) the Corporation does not submit a capital restoration plan
that is approved by the Director; or
(ii) the Director determines that the Corporation has failed to make,
in good faith, reasonable efforts necessary to comply with such a
capital restoration plan and fulfill the schedule for the plan approved
by the Director.
(b) Discretionary supervisory actions
In addition to any other actions taken by the Director (including
actions under subsection (a) of this section), the Director may, at any
time, take any of the following actions if the Corporation is classified
as within level III:
(1) Limitation on increase in obligations
Limit any increase in, or order the reduction of, any obligations of
the Corporation, including off-balance sheet obligations.
(2) Limitation on growth
Limit or prohibit the growth of the assets of the Corporation or
require contraction of the assets of the Corporation.
(3) Prohibition on dividends
Prohibit the Corporation from making any payment of dividends.
(4) Acquisition of new capital
Require the Corporation to acquire new capital in any form and in any
amount sufficient to provide for the reclassification of the Corporation
as within level II.
(5) Restriction of activities
Require the Corporation to terminate, reduce, or modify any activity
that the Director determines creates excessive risk to the Corporation.
(6) Conservatorship
Appoint a conservator for the Corporation consistent with this
chapter.
(c) Effective date
This section shall take effect on January 1, 1992.
(Pub. L. 92-181, title VIII, 8.37, as added Pub. L. 102-237, title V,
503(b)(2), Dec. 13, 1991, 105 Stat. 1876.)
12 USC CHAPTER 24 -- FEDERAL FINANCING BANK
TITLE 12 -- BANKS AND BANKING
Sec.
2281. Congressional findings and declaration of purpose.
2282. Definitions.
2283. Creation of Federal Financing Bank.
2284. Board of Directors.
2285. Functions.
(a) Purchase and sale of obligations issued, sold, or guaranteed by
Federal agencies.
(b) Yield.
(c) Fees.
2285a. Acquisition of obligations involving loan guarantees for New
York City.
2286. Approval of financing plans by Secretary of the Treasury.
(a) Method, source, timing, terms, and conditions of sale of
obligations issued or sold by Federal agencies.
(b) Grant or denial of approval by Secretary.
(c) Time and form for submission of financing plans.
2287. Initial capital.
2288. Bank obligations.
(a) Maximum amount of obligations issued publicly and outstanding at
any one time.
(b) Purchase and sale of obligations of Federal Financing Bank by
Secretary of the Treasury as public debt transactions.
(c) Authority of Federal Financing Bank to require Secretary of the
Treasury to purchase obligations of the Bank.
(d) Bank obligations as lawful investments.
2289. General powers.
2290. Exemptions.
(a) Federal, State, and local taxes.
(b) Exempt securities.
(c) Budget status of Federal agencies; restrictions.
2291. Preparation of obligations.
2292. Annual report to the President and Congress.
2293. Budget and audit provisions of Government corporation control
law applicable.
2294. Payments on behalf of public bodies.
2294a. Contracts for periodic payments to offset costs of purchase
of obligations of local public housing agencies.
2295. Authority or responsibility under other provisions of law not
to be affected or impaired.
2296. Increase not authorized in amounts of obligations issued,
sold, or guaranteed by Federal agencies.
12 USC 2281. Congressional findings and declaration of purpose
TITLE 12 -- BANKS AND BANKING
The Congress finds that demands for funds through Federal and
federally assisted borrowing programs are increasing faster than the
total supply of credit and that such borrowings are not adequately
coordinated with overall Federal fiscal and debt management policies.
The purpose of this chapter is to assure coordination of these programs
with the overall economic and fiscal policies of the Government, to
reduce the cost of Federal and federally assisted borrowings from the
public, and to assure that such borrowings are financed in a manner
least disruptive of private financial markets and institutions.
(Pub. L. 93-224, 2, Dec. 29, 1973, 87 Stat. 937.)
Section 20 of Pub. L. 93-224 provided that: ''This Act (enacting
this chapter and amending section 24 of this title) becomes effective
upon the date of its enactment (Dec. 29, 1973), except that section 7
(section 2286 of this title) becomes effective upon the expiration of
thirty days after such date (Dec. 29, 1973).''
Section 1 of Pub. L. 93-224 provided: ''That this Act (enacting
this chapter and amending section 24 of this title) may be cited as the
'Federal Financing Bank Act of 1973'.''
Section 19 of Pub. L. 93-224 provided that: ''If any provision of
this Act (enacting this chapter and amending section 24 of this title),
or the application thereof to any person or circumstance, is held
invalid, the validity of the remainder of the Act (this chapter), and
the application of such provisions to other persons or circumstances,
shall not be affected.''
Ex. Ord. No. 11782, May 6, 1974, 39 F.R. 15991, which established the
Federal Financing Bank Advisory Council and provided for its membership,
functions, etc., was revoked by Ex. Ord. No. 12379, 15, Aug. 17, 1982,
47 F.R. 36099, set out as a note under section 14 of the Federal
Advisory Committee Act in the Appendix to Title 5, Government
Organization and Employees.
Advisory councils established after Jan. 5, 1973, to terminate not
later than the expiration of the 2-year period beginning on the date of
their establishment, unless, in the case of a council established by the
President or an officer of the Federal Government, such council is
renewed by appropriate action prior to the expiration of such 2-year
period, or in the case of a council established by the Congress, its
duration is otherwise provided for by law. See sections 3(2) and 14 of
Pub. L. 92-463, Oct. 6, 1972, 86 Stat. 770, 776, set out in the
Appendix to Title 5, Government Organization and Employees.
12 USC 2282. Definitions
TITLE 12 -- BANKS AND BANKING
For the purposes of this chapter --
(1) The term ''Federal agency'' means an executive department, an
independent Federal establishment, or a corporation or other entity
established by the Congress which is owned in whole or in part by the
United States.
(2) The term ''obligation'' means any note, bond, debenture, or other
evidence of indebtedness, but does not include Federal Reserve notes or
stock evidencing an ownership interest in the issuing Federal agency.
(3) The term ''guarantee'' means any guarantee, insurance, or other
pledge with respect to the payment of all or part of the principal or
interest on any obligation, but does not include the insurance of
deposits, shares, or other withdrawable accounts in financial
institutions, or any guarantee or pledge arising out of a statutory
obligation to insure such deposits, shares, or other withdrawable
accounts.
(4) The term ''Bank'' means the Federal Financing Bank established by
section 2283 of this title.
(Pub. L. 93-224, 3, Dec. 29, 1973, 87 Stat. 937.)
12 USC 2283. Creation of Federal Financing Bank
TITLE 12 -- BANKS AND BANKING
There is hereby created a body corporate to be known as the Federal
Financing Bank, which shall have succession until dissolved by an Act of
Congress. The Bank shall be subject to the general supervision and
direction of the Secretary of the Treasury. The Bank shall be an
instrumentality of the United States Government and shall maintain such
offices as may be necessary or appropriate in the conduct of its
business.
(Pub. L. 93-224, 4, Dec. 29, 1973, 87 Stat. 937.)
12 USC 2284. Board of Directors
TITLE 12 -- BANKS AND BANKING
(a) The Bank shall have a Board of Directors consisting of five
persons, one of whom shall be the Secretary of the Treasury as Chairman
of the Board, and four of whom shall be appointed by the President from
among the officers or employees of the Bank or of any Federal agency.
The Chairman and each other member of the Board may designate some other
officer or employee of the Government to serve in his place.
(b) The Board of Directors shall meet at the call of its Chairman.
The Board shall determine the general policies which shall govern the
operations of the Bank. The Chairman of the Board shall select and
effect the appointment of qualified persons to fill such offices as may
be provided for in the bylaws, and such persons shall be the executive
officers of the Bank and shall discharge such executive functions,
powers, and duties as may be provided for in the bylaws or by the Board
of Directors. The members of the Board and their designees shall not
receive compensation for their services on the Board.
(Pub. L. 93-224, 5, Dec. 29, 1973, 87 Stat. 937.)
12 USC 2285. Functions
TITLE 12 -- BANKS AND BANKING
(a) Purchase and sale of obligations issued, sold, or guaranteed by
Federal agencies
The Bank is authorized to make commitments to purchase and sell, and
to purchase and sell on terms and conditions determined by the Bank, any
obligation which is issued, sold, or guaranteed by a Federal agency.
Any Federal agency which is authorized to issue, sell, or guarantee any
obligation is authorized to issue or sell such obligations directly to
the Bank.
(b) Yield
Any purchase by the Bank shall be upon such terms and conditions as
to yield a return at a rate not less than a rate determined by the
Secretary of the Treasury taking into consideration (1) the current
average yield on outstanding marketable obligations of the United States
of comparable maturity, or (2) whenever the Bank's own obligations
outstanding are sufficient, the current average yield on outstanding
obligations of the Bank of comparable maturity.
(c) Fees
The Bank is authorized to charge fees for its commitments and other
services adequate to cover all expenses and to provide for the
accumulation of reasonable contingency reserves.
(Pub. L. 93-224, 6, Dec. 29, 1973, 87 Stat. 938.)
12 USC 2285a. Acquisition of obligations involving loan guarantees for
New York City
TITLE 12 -- BANKS AND BANKING
Nothing in any provision of law shall be construed to authorize the
Federal Financing Bank to acquire any obligation the payment of interest
or principal of which has at any time been guaranteed in whole or in
part under title I of the New York City Loan Guarantee Act of 1978.
(Pub. L. 95-339, title II, 201(b), Aug. 8, 1978, 92 Stat. 467.)
Title I of the New York City Loan Guarantee Act of 1978, referred to
in text, is title I of Pub. L. 95-339, Aug. 8, 1978, 92 Stat. 460, as
amended, which was classified generally to subchapter II ( 1521 et seq.)
of chapter 27 of former Title 31, and was omitted from the Code in the
general revision and reenactment of Title 31, Money and Finance, by Pub.
L. 97-258, Sept. 13, 1982, 96 Stat. 877.
Section was enacted as part of the New York City Loan Guarantee Act
of 1978, and not as part of the Federal Financing Bank Act of 1973 which
comprises this chapter.
12 USC 2286. Approval of financing plans by Secretary of the Treasury
TITLE 12 -- BANKS AND BANKING
(a) Method, source, timing, terms, and conditions of sale of
obligations issued or sold by Federal agencies
To insure the orderly and coordinated marketing of Treasury and
Federal agency obligations and appropriate financing planning with
respect thereto, and to facilitate the effective financing of programs
authorized by law subject to the applicable provisions of such law, the
prior approval of the Secretary of the Treasury shall be required with
respect to --
(1) the method of financing,
(2) the source of financing,
(3) the timing of financing in relation to market conditions and
financing by other Federal agencies, and
(4) the financing terms and conditions, including rates of interest
and maturities,
of obligations issued or sold by any Federal agency; except that the
approval of the Secretary of the Treasury shall not be required with
respect to (A) obligations issued or sold pursuant to an Act of Congress
which expressly prohibits any guarantee of such obligations by the
United States, and (B) obligations issued or sold by the Farmers Home
Administration.
(b) Grant or denial of approval by Secretary
Upon receipt of a request from a Federal agency for his approval
under subsection (a) of this section, the Secretary of the Treasury
shall act promptly either to grant his approval or to advise the agency
of the reasons for withholding his approval. In no case shall the
Secretary of the Treasury withhold such approval for a period longer
than sixty days unless, prior to the end of such period, he submits to
the Congress a detailed explanation of his reasons for so doing. In no
case shall the Secretary withhold such approval for a period longer than
one hundred and twenty days. To the maximum extent practicable,
withholdings of approval shall be made in a manner which is not
disproportionately detrimental to the functioning of any particular type
of Federal program. Expedited treatment shall be accorded in any case
in which the Federal agency advises the Secretary of the Treasury that
unusual circumstances require such treatment.
(c) Time and form for submission of financing plans
Federal agencies subject to this section shall submit financing plans
to the Secretary of the Treasury at such times and in such forms as he
shall prescribe.
(Pub. L. 93-224, 7, Dec. 29, 1973, 87 Stat. 938.)
Section effective on expiration of 30 days after Dec. 29, 1973, see
section 20 of Pub. L. 93-224, set out as a note under section 2281 of
this title.
12 USC 2287. Initial capital
TITLE 12 -- BANKS AND BANKING
The Secretary of the Treasury is authorized to advance the funds
necessary to provide initial capital to the Bank. Each such advance
shall be upon such terms and conditions as to yield a return at a rate
not less than a rate determined by the Secretary of the Treasury, taking
into consideration the current average yield on outstanding marketable
obligations of the United States of comparable maturity. Interest
payments on such advances may be deferred, at the discretion of the
Secretary, but any such deferred payments shall themselves bear interest
at the rate specified in this section. There is authorized to be
appropriated not to exceed $100,000,000, which shall be available for
the purposes of this section without fiscal year limitation.
(Pub. L. 93-224, 8, Dec. 29, 1973, 87 Stat. 939.)
12 USC 2288. Bank obligations
TITLE 12 -- BANKS AND BANKING
(a) Maximum amount of obligations issued publicly and outstanding at
any one time
The Bank is authorized, with the approval of the Secretary of the
Treasury, to issue publicly and have outstanding at any one time not in
excess of $15,000,000,000, or such additional amounts as may be
authorized in appropriations Acts, of obligations having such maturities
and bearing such rate or rates of interest as may be determined by the
Bank. Such obligations may be redeemable at the option of the Bank
before maturity in such manner as may be stipulated therein. So far as
is feasible, the debt structure of the Bank shall be commensurate with
its asset structure.
(b) Purchase and sale of obligations of Federal Financing Bank by
Secretary of the Treasury as public debt transactions
The Bank is also authorized to issue its obligations to the Secretary
of the Treasury and the Secretary of the Treasury may in his discretion
purchase or agree to purchase any such obligations, and for such purpose
the Secretary of the Treasury is authorized to use as a public debt
transaction the proceeds of the sale of any securities hereafter issued
under chapter 31 of title 31, and the purposes for which securities may
be issued under chapter 31 of title 31 are extended to include such
purchases. Each purchase of obligations by the Secretary of the
Treasury under this subsection shall be upon such terms and conditions
as to yield a return at a rate not less than a rate determined by the
Secretary of the Treasury, taking into consideration the current average
yield on outstanding marketable obligations of the United States of
comparable maturity. The Secretary of the Treasury may sell, upon such
terms and conditions and at such price or prices as he shall determine,
any of the obligations acquired by him under this subsection. All
purchases and sales by the Secretary of the Treasury of such obligations
under this subsection shall be treated as public debt transactions of
the United States.
(c) Authority of Federal Financing Bank to require Secretary of the
Treasury to purchase obligations of the Bank
The Bank may require the Secretary of the Treasury to purchase
obligations of the Bank issued pursuant to subsection (b) of this
section in such amounts as will not cause the holding by the Secretary
of the Treasury resulting from such required purchases to exceed
$5,000,000,000 at any one time. This subsection shall not be construed
as limiting the authority of the Secretary to purchase obligations of
the Bank in excess of such amount.
(d) Bank obligations as lawful investments
Obligations of the Bank issued pursuant to this section shall be
lawful investments, and may be accepted as security for all fiduciary,
trust, and public funds, the investment or deposit of which shall be
under the authority or control of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
possession of the United States, or any agency or instrumentality of any
of the foregoing, or any officer or officers thereof.
(Pub. L. 93-224, 9, Dec. 29, 1973, 87 Stat. 939.)
In subsec. (b), ''chapter 31 of title 31'' substituted for ''the
Second Liberty Bond Act'' on authority of Pub. L. 97-258, 4(b), Sept.
13, 1982, 96 Stat. 1067, the first section of which enacted Title 31,
Money and Finance.
12 USC 2289. General powers
TITLE 12 -- BANKS AND BANKING
The Bank shall have power --
(1) to sue and be sued, complain, and defend, in its corporate name;
(2) to adopt, alter, and use a corporate seal, which shall be
judicially noticed;
(3) to adopt, amend, and repeal bylaws, rules, and regulations as may
be necessary for the conduct of its business;
(4) to conduct its business, carry on its operations, and have
offices and exercise the powers granted by this chapter in any State
without regard to any qualification or similar statute in any State;
(5) to lease, purchase, or otherwise acquire, own, hold, improve,
use, or otherwise deal in and with any property, real, personal, or
mixed, or any interest therein, wherever situated;
(6) to accept gifts or donations of services, or of property, real,
personal, or mixed, tangible or intangible, in aid of any of the
purposes of the Bank;
(7) to sell, convey, mortgage, pledge, lease, exchange, and otherwise
dispose of its property and assets;
(8) to appoint such officers, attorneys, employees, and agents as may
be required, to define their duties, to fix and to pay such compensation
for their services as may be determined, subject to the civil service
and classification laws, to require bonds for them and pay the premium
thereof;
(9) to enter into contracts, to execute instruments to incur
liabilities, and to do all things as are necessary or incidental to the
proper management of its affairs and the proper conduct of its business;
(10) to act through any corporate or other agency or instrumentality
of the United States, and to utilize the services thereof on a
reimbursable basis, and any such agency or instrumentality is authorized
to provide services as requested by the Bank; and
(11) to determine the character of and the necessity for its
obligations and expenditures, and the manner in which they shall be
incurred, allowed, and paid, subject to provisions of law specifically
applicable to Government corporations.
(Pub. L. 93-224, 10, Dec. 29, 1973, 87 Stat. 940.)
The civil service laws, referred to in par. (8), are set forth in
Title 5, Government Organization and Employees. See, particularly,
section 3301 et seq. of Title 5.
The classification laws, referred to in par. (8), are classified to
chapter 51 ( 5101 et seq.) and subchapter III ( 5331 et seq.) of chapter
53 of Title 5.
12 USC 2290. Exemptions
TITLE 12 -- BANKS AND BANKING
(a) Federal, State, and local taxes
The Bank, its property, its franchise, capital, reserves, surplus,
security holdings, and other funds, and its income shall be exempt from
all taxation now or hereafter imposed by the United States or by any
State or local taxing authority; except that (1) any real property and
any tangible personal property of the Bank shall be subject to Federal,
State, and local taxation to the same extent according to its value as
other such property is taxed, and (2) any obligations issued by the Bank
shall be subject to Federal taxation to the same extent as the
obligations of private corporations are taxed.
(b) Exempt securities
All obligations issued by the Bank pursuant to this chapter shall be
deemed to be exempted securities within the meaning of sections 77c(a)(
2), 77ddd(a)(4), and 78c(a)(12) of title 15.
(c) Budget status of Federal agencies; restrictions
Nothing herein shall affect the budget status of the Federal agencies
selling obligations to the Bank under section 2285(a) of this title, or
the method of budget accounting for their transactions. The receipts
and disbursements of the Bank in the discharge of its functions shall
not be included in the totals of the budget of the United States
Government and shall be exempt from any general limitation imposed by
statute on expenditures and net lending (budget outlays) of the United
States.
(Pub. L. 93-224, 11, Dec. 29, 1973, 87 Stat. 940.)
12 USC 2291. Preparation of obligations
TITLE 12 -- BANKS AND BANKING
In order to furnish obligations for delivery by the Bank, the
Secretary of the Treasury is authorized to prepare such obligations in
such form as the Bank may approve, such obligations when prepared to be
held in the Treasury subject to delivery upon order by the Bank. The
engraved plates, dies, bed pieces, and other material executed in
connection therewith, shall remain in the custody of the Secretary of
the Treasury. The Bank shall reimburse the Secretary of the Treasury
for any expenditures made in preparation, custody, and delivery of such
obligations.
(Pub. L. 93-224, 12, Dec. 29, 1973, 87 Stat. 941.)
12 USC 2292. Annual report to the President and Congress
TITLE 12 -- BANKS AND BANKING
The Bank shall, as soon as practicable after the end of each fiscal
year, transmit to the President and the Congress an annual report of its
operations and activities.
(Pub. L. 93-224, 13, Dec. 29, 1973, 87 Stat. 941.)
12 USC 2293. Budget and audit provisions of Government corporation
control law applicable
TITLE 12 -- BANKS AND BANKING
The budget and audit provisions of chapter 91 of title 31 shall be
applicable to the Federal Financing Bank in the same manner as they are
applied to the wholly owned Government corporations named in section
9101(3) of title 31.
(Pub. L. 93-224, 15, Dec. 29, 1973, 87 Stat. 941.)
''Chapter 91 of title 31'' and ''section 9101(3) of title 31''
substituted in text for ''the Government Corporation Control Act (31 U.
S.C. 841 et seq.)'' and ''section 101 of such Act (31 U.S.C. 846)'',
respectively, on authority of Pub. L. 97-258, 4(b), Sept. 13, 1982, 96
Stat. 1067, the first section of which enacted Title 31, Money and
Finance.
12 USC 2294. Payments on behalf of public bodies
TITLE 12 -- BANKS AND BANKING
(a) Notwithstanding any other provision of this chapter, the purchase
by the Bank of the obligations of any local public body or agency within
the United States shall be made upon such terms and conditions as may be
necessary to avoid an increase in borrowing costs to such local public
body or agency as a result of the purchase by the Bank of its
obligations. The head of the Federal agency guaranteeing such
obligations, in consultation with the Secretary of the Treasury, shall
estimate the borrowing costs that would be incurred by the local public
body or agency if its obligations were not sold to the Bank.
(b) The Federal agency guaranteeing obligations purchased by the Bank
may contract to make periodic payments to the Bank which shall be
sufficient to offset the costs to the Bank of purchasing obligations of
local public bodies or agencies upon terms and conditions as prescribed
in this section rather than as prescribed by section 2285 of this title.
Such contracts may be made in advance of appropriations therefor, and
appropriations for making payments under such contracts are hereby
authorized.
(Pub. L. 93-224, 16, Dec. 29, 1973, 87 Stat. 941.)
12 USC 2294a. Contracts for periodic payments to offset costs of
purchase of obligations of local public housing agencies
TITLE 12 -- BANKS AND BANKING
In addition to any authority provided before October 1, 1981, the
Secretary of Housing and Urban Development may, on and after October 1,
1981, enter into contracts for periodic payments to the Federal
Financing Bank to offset the costs to the Bank of purchasing obligations
(as described in the first sentence of section 2294(b) of this title)
issued by local public housing agencies for purposes of financing public
housing projects authorized by section 1437c(c) of title 42.
Notwithstanding any other provision of law, such contracts may be
entered into only to the extent approved in appropriation Acts, and the
aggregate amount which may be obligated over the duration of such
contracts may not exceed $400,000,000. There are hereby authorized to
be appropriated any amounts necessary to provide for such payments. The
authority to enter into contracts under this subsection shall be in lieu
of any authority (except for authority provided specifically to the
Secretary before October 1, 1981) of the Secretary to enter into
contracts for such purposes under section 2294(b) of this title.
(Pub. L. 97-35, title III, 329E, Aug. 13, 1981, 95 Stat. 410.)
Section was enacted as part of the Housing and Community Development
Amendments of 1981 and also as part of the Omnibus Budget Reconciliation
Act of 1981, and not as part of the Federal Financing Bank Act of 1973
which comprises this chapter.
Section effective Oct. 1, 1981, see section 371 of Pub. L. 97-35,
set out as a note under section 3701 of this title.
12 USC 2295. Authority or responsibility under other provisions of law
not to be affected or impaired
TITLE 12 -- BANKS AND BANKING
Nothing in this chapter shall be construed as impairing any authority
or responsibility of the President or the Secretary of the Treasury
under any other provision of law, nor shall anything in this chapter
affect in any manner any provision of law concerning the right of any
Federal agency to sell obligations to the Secretary of the Treasury or
the authority or responsibility of the Secretary of the Treasury to
purchase such obligations.
(Pub. L. 93-224, 17, Dec. 29, 1973, 87 Stat. 942.)
12 USC 2296. Increase not authorized in amounts of obligations issued,
sold, or guaranteed by Federal agencies
TITLE 12 -- BANKS AND BANKING
Nothing in this chapter shall be construed as authorizing an increase
in the amounts of obligations issued, sold, or guaranteed by any Federal
agency which issues, sells, or guarantees obligations purchased by the
Bank.
(Pub. L. 93-224, 18, Dec. 29, 1973, 87 Stat. 942.)
12 USC CHAPTER 25 -- NATIONAL COMMISSION ON ELECTRONIC FUND TRANSFERS
TITLE 12 -- BANKS AND BANKING
Sec.
2401. Establishment of Commission.
2402. Membership of Commission.
(a) Composition.
(b) Designation of Chairperson.
(c) Vacancies.
2403. Functions of Commission.
(a) Study, investigation, and recommendations; considerations.
(b) Interim and final reports; submission dates; transmittal of
final report to President and Congress; contents; availability to
public; termination date of Commission.
(c) Clearance by Federal agencies prior to transmittal of interim or
final report.
2404. Powers of Commission.
(a) Hearings; administration of oaths.
(b) Implementation authority of members or agents of Commission.
(c) Request for information from other Federal departments or
agencies.
(d) Issuance of subpenas for attendance of witnesses and production
of evidence; refusal to obey; contempt proceedings; manner of service
of subpenas; service of process.
2405. Executive Director and additional staff personnel;
appointment and compensation; experts and consultants; employment and
compensation; audits by Comptroller General.
2406. Compensation of members of Commission.
2407. Cooperation and assistance of other Federal departments,
agencies, and instrumentalities.
2408. Authorization of appropriations.
12 USC 2401. Establishment of Commission
TITLE 12 -- BANKS AND BANKING
There is established the National Commission on Electronic Fund
Transfers (hereinafter referred to as the ''Commission'') which shall be
an independent instrumentality of the United States.
(Pub. L. 93-495, title II, 201, Oct. 28, 1974, 88 Stat. 1508.)
12 USC 2402. Membership of Commission
TITLE 12 -- BANKS AND BANKING
(a) Composition
The Commission shall be composed of twenty-six members as follows:
(1) the Chairman of the Board of Governors of the Federal Reserve
System or his delegate;
(2) the Attorney General or his delegate;
(3) the Comptroller of the Currency or his delegate;
(4) the Chairman of the Federal Home Loan Bank Board or his delegate;
(5) the Administrator of the National Credit Union Administration or
his delegate;
(6) the Chairman of the Board of Directors of the Federal Deposit
Insurance Corporation or his delegate;
(7) the Chairman of the Federal Communications Commission or his
delegate;
(8) the Postmaster General or his delegate;
(9) the Secretary of the Treasury or his delegate;
(10) the Chairman of the Federal Trade Commission or his delegate;
(11) two individuals, appointed by the President, one of whom is an
official of a State agency which regulates banking, or similar financial
institutions, and one of whom is an official of a State agency which
regulates thrift or similar financial institutions;
(12) seven individuals, appointed by the President, who are officers
or employees of, or who otherwise represent banking, thrift, or other
business entities, including one representative each of commercial
banks, mutual savings banks, savings and loan associations, credit
unions, retailers, nonbanking institutions offering credit card
services, and organizations providing interchange services for credit
cards issued by banks;
(13) five individuals, appointed by the President, from private life
who are not affiliated with, do not represent and have no substantial
interest in any banking, thrift, or other financial institution,
including but not limited to credit unions, retailers, and insurance
companies;
(14) the Comptroller General of the United States or his delegate;
and
(15) the Director of the Office of Technology Assessment.
(b) Designation of Chairperson
The Chairperson shall be designated by the President at the time of
his appointment from among the members of the Commission and such
selection shall be by and with the advice and consent of the Senate
unless the appointee holds an office to which he was appointed by and
with the advice and consent of the Senate.
(c) Vacancies
A vacancy in the Commission shall be filled in the manner in which
the original appointment was made.
(Pub. L. 93-495, title II, 202, Oct. 28, 1974, 88 Stat. 1508.)
Federal Home Loan Bank Board abolished and functions transferred, see
sections 401 to 406 of Pub. L. 101-73, set out as a note under section
1437 of this title.
12 USC 2403. Functions of Commission
TITLE 12 -- BANKS AND BANKING
(a) Study, investigation, and recommendations; considerations
The Commission shall conduct a thorough study and investigation and
recommend appropriate administrative action and legislation necessary in
connection with the possible development of public or private electronic
fund transfer systems, taking into account, among other things --
(1) the need to preserve competition among the financial institutions
and other business enterprises using such a system;
(2) the need to promote competition among financial institutions and
to assure Government regulation and involvement or participation in a
system competitive with the private sector be kept to a minimum;
(3) the need to prevent unfair or discriminatory practices by any
financial institution or business enterprise using or desiring to use
such a system;
(4) the need to afford maximum user and consumer convenience;
(5) the need to afford maximum user and consumer rights to privacy
and confidentiality;
(6) the impact of such a system on economic and monetary policy;
(7) the implications of such a system on the availability of credit;
(8) the implications of such a system expanding internationally and
into other forms of electronic communications; and
(9) the need to protect the legal rights of users and consumers.
(b) Interim and final reports; submission dates; transmittal of
final report to President and Congress; contents; availability to
public; termination date of Commission
The Commission shall make an interim report within one year of the
date of the confirmation by the Senate of the Chairperson or the
appointment by the President of an acting Chairperson and at such other
times as it deems advisable and shall transmit to the President and to
the Congress not later than two years after the date of the confirmation
by the Senate of the Chairperson or the appointment by the President of
an acting Chairperson, a final report of its findings and
recommendations. Any such report shall include all hearing transcripts,
staff studies, and other material used in preparation of the report.
The interim and final reports shall be made available to the public upon
transmittal. Sixty days after transmission of its final report the
Commission shall cease to exist.
(c) Clearance by Federal agencies prior to transmittal of interim or
final report
The Commission shall not be required to obtain the clearance of any
Federal agency prior to the transmittal of any interim or final report.
(Pub. L. 93-495, title II, 203, Oct. 28, 1974, 88 Stat. 1508; Pub.
L. 94-200, title II, 201, Dec. 31, 1975, 89 Stat. 1124.)
1975 -- Subsec. (b). Pub. L. 94-200 changed the time for submission
of interim and final reports from one year of the Commission's findings
and recommendations and two years after Oct. 28, 1974, to one year and
two years respectively after the confirmation by the Senate of the
Chairperson or the appointment by the President of an acting
Chairperson.
12 USC 2404. Powers of Commission
TITLE 12 -- BANKS AND BANKING
(a) Hearings; administration of oaths
The Commission may for the purpose of carrying out this chapter hold
such hearings, sit and act at such times and places, take such
testimony, and receive such evidence, as the Commission may deem
advisable. The Commission may administer oaths of /1/ affirmations to
witnesses appearing before it.
(b) Implementation authority of members or agents of Commission
When so authorized by the Commission, any member or agent of the
Commission may take any action which the Commission is authorized to
take by this section.
(c) Request for information from other Federal departments or
agencies
The Commission may secure directly from any department or agency of
the United States information necessary to enable it to carry out this
chapter. Upon request of the Chairperson of the Commission, the head of
such department or agency shall furnish such information to the
Commission.
(d) Issuance of subpenas for attendance of witnesses and production
of evidence; refusal to obey; contempt proceedings; manner of service
of subpenas; service of process
(1) The Commission shall have power to issue subpenas requiring the
attendance and testimony of witnesses and the production of any evidence
that relates to any matter under investigation by the Commission. Such
attendance of witnesses and the production of such evidence may be
required from any place within the United States at any designated place
of hearing within the United States.
(2) If a person issued a subpena under paragraph (1) refuses to obey
such subpena or is guilty of contumacy, any court of the United States
within the judicial district within which the hearing is conducted or
within the judicial district within which such person is found or
resides or transacts business may (upon application by the Commission)
order such person to appear before the Commission to produce evidence or
to give testimony touching the matter under investigation. Any failure
to obey such order of the court may be punished by such court as a
contempt thereof.
(3) The subpenas of the Commission shall be served in the manner
provided for subpenas issued by a United States district court under the
Federal Rules of Civil Procedure for the United States district courts.
(4) All process of any court to which application may be made under
this section may be served in the judicial district wherein the person
required to be served resides or may be found.
(Pub. L. 93-495, title II, 204, Oct. 28, 1974, 88 Stat. 1509.)
This chapter, referred to in subsecs. (a) and (c), was in the
original ''this Act'', meaning Pub. L. 93-495, which enacted this
chapter ( 2401 et seq.). For complete classification of this Act to the
Code, see Tables.
/1/ So in original. Probably should be ''or''.
12 USC 2405. Executive Director and additional staff personnel;
appointment and compensation; experts and consultants; employment and
compensation; audits by Comptroller General
TITLE 12 -- BANKS AND BANKING
(a) The Commission --
(1) may appoint with the advice and consent of the Senate and fix the
compensation of an Executive Director, and such additional staff
personnel as he deems necessary, without regard to the provisions of
title 5 governing appointments in the competitive service, and without
regard to chapter 51 and subchapter III of chapter 53 of such title
relating to classification and General Schedule pay rates, but at rates
not in excess of the maximum rate for GS-18 of the General Schedule
under section 5332 of such title; and
(2) may procure temporary and intermittent services to the same
extent as is authorized by section 3109 of title 5, but at rates not to
exceed $150 a day for individuals.
(b) The Comptroller General is authorized to make detailed audits of
the books and records of the Commission, and shall report the results of
any such audit to the Commission and to the Congress.
(Pub. L. 93-495, title II, 205, Oct. 28, 1974, 88 Stat. 1510.)
References in laws to the rates of pay for GS-16, 17, or 18, or to
maximum rates of pay under the General Schedule, to be considered
references to rates payable under specified sections of Title 5,
Government Organization and Employees, see section 529 (title I, 101(
c)(1)) of Pub. L. 101-509, set out in a note under section 5376 of
Title 5.
12 USC 2406. Compensation of members of Commission
TITLE 12 -- BANKS AND BANKING
(a) A member of the Commission who is an officer or employee of the
United States shall serve as a member of the Commission without
additional compensation, but shall be entitled to reimbursement for
travel, subsistence, and other necessary expenses incurred in the
performance of his duties as a member of the Commission.
(b) A member of the Commission who is not otherwise an officer or
employee of the United States shall be compensated at a rate of $150 per
day when engaged in the performance of his duties as a member of the
Commission, and shall also be reimbursed for travel, subsistence, and
other necessary expenses incurred in the performance of his duties as a
member of the Commission.
(Pub. L. 93-495, title II, 206, Oct. 28, 1974, 88 Stat. 1510.)
12 USC 2407. Cooperation and assistance of other Federal departments,
agencies, and instrumentalities
TITLE 12 -- BANKS AND BANKING
(a) Each department, agency, and instrumentality of the executive
branch of the Government, including independent agencies, is authorized
and directed to furnish to the Commission, upon request, such data,
reports, and other information as the Commission deems necessary to
carry out its functions under this chapter.
(b) The head of any department, agency, or instrumentality of the
United States may detail such personnel and may furnish such services,
with or without reimbursement, as the Commission may request to assist
it in carrying out its functions.
(Pub. L. 93-495, title II, 207, Oct. 28, 1974, 88 Stat. 1510.)
12 USC 2408. Authorization of appropriations
TITLE 12 -- BANKS AND BANKING
There are authorized to be appropriated without fiscal year
limitations such sums, not to exceed $2,000,000, as may be necessary to
carry out the provisions of this chapter.
(Pub. L. 93-495, title II, 208, Oct. 28, 1974, 88 Stat. 1511.)
12 USC CHAPTER 26 -- DISPOSITION OF ABANDONED MONEY ORDERS AND
TRAVELER'S CHECKS
TITLE 12 -- BANKS AND BANKING
Sec.
2501. Congressional findings and declaration of purpose.
2502. Definitions.
2503. State entitlement to escheat or custody.