12 U.S.C. § 1467a : US Code - Section 1467A: Regulation of holding companies

Search 12 U.S.C. § 1467a : US Code - Section 1467A: Regulation of holding companies

(a) Definitions
(1) In general
As used in this section, unless the context otherwise requires -

(A) Savings association
The term "savings association" includes a savings bank or
cooperative bank which is deemed by the Director to be a
savings association under subsection (l) of this section.
(B) Uninsured institution
The term "uninsured institution" means any depository
institution the deposits of which are not insured by the
Federal Deposit Insurance Corporation.
(C) Company
The term "company" means any corporation, partnership, trust,
joint-stock company, or similar organization, but does not
include the Federal Deposit Insurance Corporation, the
Resolution Trust Corporation, any Federal home loan bank, or
any company the majority of the shares of which is owned by the
United States or any State, or by an instrumentality of the
United States or any State.
(D) Savings and loan holding company
(i) In general
Except as provided in clause (ii), the term "savings and
loan holding company" means any company that directly or
indirectly controls a savings association or that controls
any other company that is a savings and loan holding company.
(ii) Exclusion
The term "savings and loan holding company" does not
include a bank holding company that is registered under, and
subject to, the Bank Holding Company Act of 1956 [12 U.S.C.
1841 et seq.], or to any company directly or indirectly
controlled by such company (other than a savings
association).
(E) Multiple savings and loan holding company
The term "multiple savings and loan holding company" means
any savings and loan holding company which directly or
indirectly controls 2 or more savings associations.
(F) Diversified savings and loan holding company
The term "diversified savings and loan holding company" means
any savings and loan holding company whose subsidiary savings
association and related activities as permitted under paragraph
(2) of subsection (c) of this section represented, on either an
actual or a pro forma basis, less than 50 percent of its
consolidated net worth at the close of its preceding fiscal
year and of its consolidated net earnings for such fiscal year,
as determined in accordance with regulations issued by the
Director.
(G) Subsidiary
The term "subsidiary" has the same meaning as in section 1813
of this title.
(H) Affiliate
The term "affiliate" of a savings association means any
person which controls, is controlled by, or is under common
control with, such savings association.
(I) Bank holding company
The terms "bank holding company" and "bank" have the meanings
given to such terms in section 2 of the Bank Holding Company
Act of 1956 [12 U.S.C. 1841].
(J) Acquire
The term "acquire" has the meaning given to such term in
section 1823(f)(8) of this title.
(2) Control
For purposes of this section, a person shall be deemed to have
control of -
(A) a savings association if the person directly or
indirectly or acting in concert with one or more other persons,
or through one or more subsidiaries, owns, controls, or holds
with power to vote, or holds proxies representing, more than 25
percent of the voting shares of such savings association, or
controls in any manner the election of a majority of the
directors of such association;
(B) any other company if the person directly or indirectly or
acting in concert with one or more other persons, or through
one or more subsidiaries, owns, controls, or holds with power
to vote, or holds proxies representing, more than 25 percent of
the voting shares or rights of such other company, or controls
in any manner the election or appointment of a majority of the
directors or trustees of such other company, or is a general
partner in or has contributed more than 25 percent of the
capital of such other company;
(C) a trust if the person is a trustee thereof; or
(D) a savings association or any other company if the
Director determines, after reasonable notice and opportunity
for hearing, that such person directly or indirectly exercises
a controlling influence over the management or policies of such
association or other company.
(3) Exclusions
Notwithstanding any other provision of this subsection, the
term "savings and loan holding company" does not include -
(A) any company by virtue of its ownership or control of
voting shares of a savings association or a savings and loan
holding company acquired in connection with the underwriting of
securities if such shares are held only for such period of time
(not exceeding 120 days unless extended by the Director) as
will permit the sale thereof on a reasonable basis; and
(B) any trust (other than a pension, profit-sharing,
shareholders', voting, or business trust) which controls a
savings association or a savings and loan holding company if
such trust by its terms must terminate within 25 years or not
later than 21 years and 10 months after the death of
individuals living on the effective date of the trust, and is
(i) in existence on June 26, 1967, or (ii) a testamentary trust
created on or after June 26, 1967.
(4) Special rule relating to qualified stock issuance
No savings and loan holding company shall be deemed to control
a savings association solely by reason of the purchase by such
savings and loan holding company of shares issued by such savings
association, or issued by any savings and loan holding company
(other than a bank holding company) which controls such savings
association, in connection with a qualified stock issuance if
such purchase is approved by the Director under subsection
(q)(1)(D) of this section, unless the acquiring savings and loan
holding company, directly or indirectly, or acting in concert
with 1 or more other persons, or through 1 or more subsidiaries,
owns, controls, or holds with power to vote, or holds proxies
representing, more than 15 percent of the voting shares of such
savings association or holding company.
(b) Registration and examination
(1) In general
Within 90 days after becoming a savings and loan holding
company, each savings and loan holding company shall register
with the Director on forms prescribed by the Director, which
shall include such information, under oath or otherwise, with
respect to the financial condition, ownership, operations,
management, and intercompany relationships of such holding
company and its subsidiaries, and related matters, as the
Director may deem necessary or appropriate to carry out the
purposes of this section. Upon application, the Director may
extend the time within which a savings and loan holding company
shall register and file the requisite information.
(2) Reports
Each savings and loan holding company and each subsidiary
thereof, other than a savings association, shall file with the
Director, and the regional office of the Director of the district
in which its principal office is located, such reports as may be
required by the Director. Such reports shall be made under oath
or otherwise, and shall be in such form and for such periods, as
the Director may prescribe. Each report shall contain such
information concerning the operations of such savings and loan
holding company and its subsidiaries as the Director may require.
(3) Books and records
Each savings and loan holding company shall maintain such books
and records as may be prescribed by the Director.
(4) Examinations
Each savings and loan holding company and each subsidiary
thereof (other than a bank) shall be subject to such examinations
as the Director may prescribe. The cost of such examinations
shall be assessed against and paid by such holding company.
Examination and other reports may be furnished by the Director to
the appropriate State supervisory authority. The Director shall,
to the extent deemed feasible, use for the purposes of this
subsection reports filed with or examinations made by other
Federal agencies or the appropriate State supervisory authority.
(5) Agent for service of process
The Director may require any savings and loan holding company,
or persons connected therewith if it is not a corporation, to
execute and file a prescribed form of irrevocable appointment of
agent for service of process.
(6) Release from registration
The Director may at any time, upon the Director's own motion or
upon application, release a registered savings and loan holding
company from any registration theretofore made by such company,
if the Director determines that such company no longer has
control of any savings association.
(c) Holding company activities
(1) Prohibited activities
Except as otherwise provided in this subsection, no savings and
loan holding company and no subsidiary which is not a savings
association shall -
(A) engage in any activity or render any service for or on
behalf of a savings association subsidiary for the purpose or
with the effect of evading any law or regulation applicable to
such savings association;
(B) commence any business activity, other than the activities
described in paragraph (2); or
(C) continue any business activity, other than the activities
described in paragraph (2), after the end of the 2-year period
beginning on the date on which such company received approval
under subsection (e) of this section to become a savings and
loan holding company subject to the limitations contained in
this subparagraph.
(2) Exempt activities
The prohibitions of subparagraphs (B) and (C) of paragraph (1)
shall not apply to the following business activities of any
savings and loan holding company or any subsidiary (of such
company) which is not a savings association:
(A) Furnishing or performing management services for a
savings association subsidiary of such company.
(B) Conducting an insurance agency or escrow business.
(C) Holding, managing, or liquidating assets owned or
acquired from a savings association subsidiary of such company.
(D) Holding or managing properties used or occupied by a
savings association subsidiary of such company.
(E) Acting as trustee under deed of trust.
(F) Any other activity -
(i) which the Board of Governors of the Federal Reserve
System, by regulation, has determined to be permissible for
bank holding companies under section 4(c) of the Bank Holding
Company Act of 1956 [12 U.S.C. 1843(c)], unless the Director,
by regulation, prohibits or limits any such activity for
savings and loan holding companies; or
(ii) in which multiple savings and loan holding companies
were authorized (by regulation) to directly engage on March
5, 1987.
(G) In the case of a savings and loan holding company,
purchasing, holding, or disposing of stock acquired in
connection with a qualified stock issuance if the purchase of
such stock by such savings and loan holding company is approved
by the Director pursuant to subsection (q)(1)(D) of this
section.
(3) Certain limitations on activities not applicable to certain
holding companies
Notwithstanding paragraphs (4) and (6) of this subsection, the
limitations contained in subparagraphs (B) and (C) of paragraph
(1) shall not apply to any savings and loan holding company (or
any subsidiary of such company) which controls -
(A) only 1 savings association, if the savings association
subsidiary of such company is a qualified thrift lender (as
determined under subsection (m) of this section); or
(B) more than 1 savings association, if -
(i) all, or all but 1, of the savings association
subsidiaries of such company were initially acquired by the
company or by an individual who would be deemed to control
such company if such individual were a company -
(I) pursuant to an acquisition under section 1823(c) or
1823(k) of this title or section 408(m) (!1) of the
National Housing Act [12 U.S.C. 1730a(m)]; or
(II) pursuant to an acquisition in which assistance was
continued to a savings association under section 1823(i) of
this title; and
(ii) all of the savings association subsidiaries of such
company are qualified thrift lenders (as determined under
subsection (m) of this section).
(4) Prior approval of certain new activities required
(A) In general
No savings and loan holding company and no subsidiary which
is not a savings association shall commence, either de novo or
by an acquisition (in whole or in part) of a going concern, any
activity described in paragraph (2)(F)(i) of this subsection
without the prior approval of the Director.
(B) Factors to be considered by Director
In considering any application under subparagraph (A) by any
savings and loan holding company or any subsidiary of any such
company which is not a savings association, the Director shall
consider -
(i) whether the performance of the activity described in
such application by the company or the subsidiary 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 of such
activity (such as undue concentration of resources, decreased
or unfair competition, conflicts of interest, or unsound
financial practices);
(ii) the managerial resources of the companies involved;
and
(iii) the adequacy of the financial resources, including
capital, of the companies involved.
(C) Director may differentiate between new and ongoing
activities
In prescribing any regulation or considering any application
under this paragraph, the Director may differentiate between
activities commenced de novo and activities commenced by the
acquisition, in whole or in part, of a going concern.
(D) Approval or disapproval by order
The approval or disapproval of any application under this
paragraph by the Director shall be made in an order issued by
the Director containing the reasons for such approval or
disapproval.
(5) Grace period to achieve compliance
If any savings association referred to in paragraph (3) fails
to maintain the status of such association as a qualified thrift
lender, the Director may allow, for good cause shown, any company
that controls such association (or any subsidiary of such company
which is not a savings association) up to 3 years to comply with
the limitations contained in paragraph (1)(C).
(6) Special provisions relating to certain companies affected by
1987 amendments
(A) Exception to 2-year grace period for achieving compliance
Notwithstanding paragraph (1)(C), any company which received
approval under subsection (e) of this section to acquire
control of a savings association between March 5, 1987, and
August 10, 1987, shall not continue any business activity other
than an activity described in paragraph (2) after August 10,
1987.
(B) Exemption for activities lawfully engaged in before March
5, 1987
Notwithstanding paragraph (1)(C) and subject to subparagraphs
(C) and (D), any savings and loan holding company which
received approval, before March 5, 1987, under subsection (e)
of this section to acquire control of a savings association may
engage, directly or through any subsidiary (other than a
savings association subsidiary of such company), in any
activity in which such company or such subsidiary was lawfully
engaged on such date.
(C) Termination of subparagraph (B) exemption
The exemption provided under subparagraph (B) for activities
engaged in by any savings and loan holding company or a
subsidiary of such company (which is not a savings association)
which would otherwise be prohibited under paragraph (1)(C)
shall terminate with respect to such activities of such company
or subsidiary upon the occurrence (after August 10, 1987) of
any of the following:
(i) The savings and loan holding company acquires control
of a bank or an additional savings association (other than a
savings association acquired pursuant to section 1823(c) or
1823(k) of this title or section 406(f) or 408(m) (!1) of the
National Housing Act [12 U.S.C. 1729(f) or 1730a(m)]).
(ii) Any savings association subsidiary of the savings and
loan holding company fails to qualify as a domestic building
and loan association under section 7701(a)(19) of the
Internal Revenue Code of 1986 [26 U.S.C. 7701(a)(19)].
(iii) The savings and loan holding company engages in any
business activity -
(I) which is not described in paragraph (2); and
(II) in which it was not engaged on March 5, 1987.
(iv) Any savings association subsidiary of the savings and
loan holding company increases the number of locations from
which such savings association conducts business after March
5, 1987 (other than an increase which occurs in connection
with a transaction under section 1823(c) or (k) of this title
or section 408(m) (!2) of the National Housing Act.
(v) Any savings association subsidiary of the savings and
loan holding company permits any overdraft (including an
intraday overdraft), or incurs any such overdraft in its
account at a Federal Reserve bank, on behalf of an affiliate,
unless such overdraft is the result of an inadvertent
computer or accounting error that is beyond the control of
both the savings association subsidiary and the affiliate.
(D) Order by Director to terminate subparagraph (B) activity
Any activity described in subparagraph (B) may also be
terminated by the Director, after opportunity for hearing, if
the Director determines, having due regard for the purposes of
this chapter, that such action is necessary to prevent
conflicts of interest or unsound practices or is in the public
interest.
(7) Foreign savings and loan holding company
Notwithstanding any other provision of this section, any
savings and loan holding company organized under the laws of a
foreign country as of June 1, 1984 (including any subsidiary
thereof which is not a savings association), which controls a
single savings association on August 10, 1987, shall not be
subject to this subsection with respect to any activities of such
holding company which are conducted exclusively in a foreign
country.
(8) Exemption for bank holding companies
Except for paragraph (1)(A), this subsection shall not apply to
any company that is treated as a bank holding company for
purposes of section 4 of the Bank Holding Company Act of 1956 [12
U.S.C. 1843], or any of its subsidiaries.
(9) Prevention of new affiliations between S&L holding companies
and commercial firms
(A) In general
Notwithstanding paragraph (3), no company may directly or
indirectly, including through any merger, consolidation, or
other type of business combination, acquire control of a
savings association after May 4, 1999, unless the company is
engaged, directly or indirectly (including through a subsidiary
other than a savings association), only in activities that are
permitted -
(i) under paragraph (1)(C) or (2) of this subsection; or
(ii) for financial holding companies under section 4(k) of
the Bank Holding Company Act of 1956 [12 U.S.C. 1843(k)].
(B) Prevention of new commercial affiliations
Notwithstanding paragraph (3), no savings and loan holding
company may engage directly or indirectly (including through a
subsidiary other than a savings association) in any activity
other than as described in clauses (i) and (ii) of subparagraph
(A).
(C) Preservation of authority of existing unitary S&L holding
companies
Subparagraphs (A) and (B) do not apply with respect to any
company that was a savings and loan holding company on May 4,
1999, or that becomes a savings and loan holding company
pursuant to an application pending before the Office on or
before that date, and that -
(i) meets and continues to meet the requirements of
paragraph (3); and
(ii) continues to control not fewer than 1 savings
association that it controlled on May 4, 1999, or that it
acquired pursuant to an application pending before the Office
on or before that date, or the successor to such savings
association.
(D) Corporate reorganizations permitted
This paragraph does not prevent a transaction that -
(i) involves solely a company under common control with a
savings and loan holding company from acquiring, directly or
indirectly, control of the savings and loan holding company
or any savings association that is already a subsidiary of
the savings and loan holding company; or
(ii) involves solely a merger, consolidation, or other type
of business combination as a result of which a company under
common control with the savings and loan holding company
acquires, directly or indirectly, control of the savings and
loan holding company or any savings association that is
already a subsidiary of the savings and loan holding company.
(E) Authority to prevent evasions
The Director may issue interpretations, regulations, or
orders that the Director determines necessary to administer and
carry out the purpose and prevent evasions of this paragraph,
including a determination that, notwithstanding the form of a
transaction, the transaction would in substance result in a
company acquiring control of a savings association.
(F) Preservation of authority for family trusts
Subparagraphs (A) and (B) do not apply with respect to any
trust that becomes a savings and loan holding company with
respect to a savings association, if -
(i) not less than 85 percent of the beneficial ownership
interests in the trust are continuously owned, directly or
indirectly, by or for the benefit of members of the same
family, or their spouses, who are lineal descendants of
common ancestors who controlled, directly or indirectly, such
savings association on May 4, 1999, or a subsequent date,
pursuant to an application pending before the Office on or
before May 4, 1999; and
(ii) at the time at which such trust becomes a savings and
loan holding company, such ancestors or lineal descendants,
or spouses of such descendants, have directly or indirectly
controlled the savings association continuously since May 4,
1999, or a subsequent date, pursuant to an application
pending before the Office on or before May 4, 1999.
(d) Transactions with affiliates
Transactions between any subsidiary savings association of a
savings and loan holding company and any affiliate (of such savings
association subsidiary) shall be subject to the limitations and
prohibitions specified in section 1468 of this title.
(e) Acquisitions
(1) In general
It shall be unlawful for -
(A) any savings and loan holding company directly or
indirectly, or through one or more subsidiaries or through one
or more transactions -
(i) to acquire, except with the prior written approval of
the Director, the control of a savings association or a
savings and loan holding company, or to retain the control of
such an association or holding company acquired or retained
in violation of this section as heretofore or hereafter in
effect;
(ii) to acquire, except with the prior written approval of
the Director, by the process of merger, consolidation, or
purchase of assets, another savings association or a savings
and loan holding company, or all or substantially all of the
assets of any such association or holding company;
(iii) to acquire, by purchase or otherwise, or to retain,
except with the prior written approval of the Director, more
than 5 percent of the voting shares of a savings association
not a subsidiary, or of a savings and loan holding company
not a subsidiary, or in the case of a multiple savings and
loan holding company (other than a company described in
subsection (c)(8) of this section), to acquire or retain, and
the Director may not authorize acquisition or retention of,
more than 5 percent of the voting shares of any company not a
subsidiary which is engaged in any business activity other
than the activities specified in subsection (c)(2) of this
section. This clause shall not apply to shares of a savings
association or of a savings and loan holding company -
(I) held as a bona fide fiduciary (whether with or
without the sole discretion to vote such shares);
(II) held temporarily pursuant to an underwriting
commitment in the normal course of an underwriting
business;
(III) held in an account solely for trading purposes;
(IV) over which no control is held other than control of
voting rights acquired in the normal course of a proxy
solicitation;
(V) 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 Director may
permit if the Director determines that such an extension
will not be detrimental to the public interest;
(VI) acquired under section 408(m) (!3) of the National
Housing Act [12 U.S.C. 1730a(m)] or section 1823(k) of this
title;
(VII) held by any insurance company, as defined in
section 2(a)(17) of the Investment Company Act of 1940 [15
U.S.C. 80a-2(a)(17)], except as provided in paragraph (6);
or
(VIII) acquired pursuant to a qualified stock issuance if
such purchase is approved by the Director under subsection
(q)(1)(D) of this section;
except that the aggregate amount of shares held under this
clause (other than under subclauses (I), (II), (III), (IV),
and (VI)) may not exceed 15 percent of all outstanding shares
or of the voting power of a savings association or savings
and loan holding company; or
(iv) to acquire the control of an uninsured institution, or
to retain for more than one year after February 14, 1968, or
from the date on which such control was acquired, whichever
is later, except that the Director may upon application by
such company extend such one-year period from year to year,
for an additional period not exceeding 3 years, if the
Director finds such extension is warranted and is not
detrimental to the public interest; and
(B) any other company, without the prior written approval of
the Director, directly or indirectly, or through one or more
subsidiaries or through one or more transactions, to acquire
the control of one or more savings associations, except that
such approval shall not be required in connection with the
control of a savings association, (i) acquired by devise under
the terms of a will creating a trust which is excluded from the
definition of "savings and loan holding company" under
subsection (a) of this section, (ii) acquired in connection
with a reorganization in which a person or group of persons,
having had control of a savings association for more than 3
years, vests control of that association in a newly formed
holding company subject to the control of the same person or
group of persons, or (iii) acquired by a bank holding company
that is registered under, and subject to, the Bank Holding
Company Act of 1956 [12 U.S.C. 1841 et seq.], or any company
controlled by such bank holding company. The Director shall
approve an acquisition of a savings association under this
subparagraph unless the Director finds the financial and
managerial resources and future prospects of the company and
association involved to be such that the acquisition would be
detrimental to the association or the insurance risk of the
Deposit Insurance Fund, and shall render a decision within 90
days after submission to the Director of the complete record on
the application.
Consideration of the managerial resources of a company or savings
association under subparagraph (B) shall include consideration of
the competence, experience, and integrity of the officers,
directors, and principal shareholders of the company or
association.
(2) Factors to be considered
The Director shall not approve any acquisition under
subparagraph (A)(i) or (A)(ii), or of more than one savings
association under subparagraph (B) of paragraph (1) of this
subsection, any acquisition of stock in connection with a
qualified stock issuance, any acquisition under paragraph (4)(A),
or any transaction under section 1823(k) of this title, except in
accordance with this paragraph. In every case, the Director shall
take into consideration the financial and managerial resources
and future prospects of the company and association involved, the
effect of the acquisition on the association, the insurance risk
to the Deposit Insurance Fund, and the convenience and needs of
the community to be served, and shall render a decision within 90
days after submission to the Director of the complete record on
the application. Consideration of the managerial resources of a
company or savings association shall include consideration of the
competence, experience, and integrity of the officers, directors,
and principal shareholders of the company or association. Before
approving any such acquisition, except a transaction under
section 1823(k) of this title, the Director shall request from
the Attorney General and consider any report rendered within 30
days on the competitive factors involved. The Director shall not
approve any proposed acquisition -
(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 savings and loan business in any
part of the United States,
(B) the effect of which in any section of the country may be
substantially to lessen competition, or 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 acquisition are clearly outweighed in the public
interest by the probable effect of the acquisition in meeting
the convenience and needs of the community to be served,
(C) if the company fails to provide adequate assurances to
the Director that the company will make available to the
Director such information on the operations or activities of
the company, and any affiliate of the company, as the Director
determines to be appropriate to determine and enforce
compliance with this chapter, or
(D) in the case of an application involving a foreign bank,
if 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.
(3) Interstate acquisitions
No acquisition shall be approved by the Director under this
subsection which will result in the formation by any company,
through one or more subsidiaries or through one or more
transactions, of a multiple savings and loan holding company
controlling savings associations in more than one State, unless -

(A) such company, or a savings association subsidiary of such
company, is authorized to acquire control of a savings
association subsidiary, or to operate a home or branch office,
in the additional State or States pursuant to section 1823(k)
of this title;
(B) such company controls a savings association subsidiary
which operated a home or branch office in the additional State
or States as of March 5, 1987; or
(C) the statutes of the State in which the savings
association to be acquired is located permit a savings
association chartered by such State to be acquired by a savings
association chartered by the State where the acquiring savings
association or savings and loan holding company is located or
by a holding company that controls such a State chartered
savings association, and such statutes specifically authorize
such an acquisition by language to that effect and not merely
by implication.
(4) Acquisitions by certain individuals
(A) In general
Notwithstanding subsection (h)(2) of this section, any
director or officer of a savings and loan holding company, or
any individual who owns, controls, or holds with power to vote
(or holds proxies representing) more than 25 percent of the
voting shares of such holding company, may acquire control of
any savings association not a subsidiary of such savings and
loan holding company with the prior written approval of the
Director.
(B) Treatment of certain holding companies
If any individual referred to in subparagraph (A) controls
more than 1 savings and loan holding company or more than 1
savings association, any savings and loan holding company
controlled by such individual shall be subject to the
activities limitations contained in subsection (c) of this
section to the same extent such limitations apply to multiple
savings and loan holding companies, unless all or all but 1 of
the savings associations (including any institution deemed to
be a savings association under subsection (l) of this section)
controlled directly or indirectly by such individual was
acquired pursuant to an acquisition described in subclause (I)
or (II) of subsection (c)(3)(B)(i) of this section.
(5) Acquisitions pursuant to certain security interests
This subsection and subsection (c)(2) of this section do not
apply to any savings and loan holding company which acquired the
control of a savings association or of a savings and loan holding
company pursuant to a pledge or hypothecation to secure a loan,
or in connection with the liquidation of a loan, made in the
ordinary course of business. It shall be unlawful for any such
company to retain such control for more than one year after
February 14, 1968, or from the date on which such control was
acquired, whichever is later, except that the Director may upon
application by such company extend such one-year period from year
to year, for an additional period not exceeding 3 years, if the
Director finds such extension is warranted and would not be
detrimental to the public interest.
(6) Shares held by insurance affiliates
Shares described in clause (iii)(VII) of paragraph (1)(A) shall
not be excluded for purposes of clause (iii) of such paragraph if
-
(A) all shares held under such clause (iii)(VII) by all
insurance company affiliates of such savings association or
savings and loan holding company in the aggregate exceed 5
percent of all outstanding shares or of the voting power of the
savings association or savings and loan holding company; or
(B) such shares are acquired or retained with a view to
acquiring, exercising, or transferring control of the savings
association or savings and loan holding company.
(f) Declaration of dividend
Every subsidiary savings association of a savings and loan
holding company shall give the Director not less than 30 days'
advance notice of the proposed declaration by its directors of any
dividend on its guaranty, permanent, or other nonwithdrawable
stock. Such notice period shall commence to run from the date of
receipt of such notice by the Director. Any such dividend declared
within such period, or without the giving of such notice to the
Director, shall be invalid and shall confer no rights or benefits
upon the holder of any such stock.
(g) Administration and enforcement
(1) In general
The Director is authorized to issue such regulations and orders
as the Director deems necessary or appropriate to enable the
Director to administer and carry out the purposes of this
section, and to require compliance therewith and prevent evasions
thereof.
(2) Investigations
The Director may make such investigations as the Director deems
necessary or appropriate to determine whether the provisions of
this section, and regulations and orders thereunder, are being
and have been complied with by savings and loan holding companies
and subsidiaries and affiliates thereof. For the purpose of any
investigation under this section, the Director may administer
oaths and affirmations, issue subpenas, take evidence, and
require the production of any books, papers, correspondence,
memorandums, or other records which may be relevant or material
to the inquiry. The attendance of witnesses and the production of
any such records may be required from any place in any State. The
Director may apply to the United States district court for the
judicial district (or the United States court in any territory)
in which any witness or company subpenaed resides or carries on
business, for enforcement of any subpena issued pursuant to this
paragraph, and such courts shall have jurisdiction and power to
order and require compliance.
(3) Proceedings
(A) In any proceeding under subsection (a)(2)(D) of this
section or under paragraph (5) of this subsection, the Director
may administer oaths and affirmations, take or cause to be taken
depositions, and issue subpenas. The Director may make
regulations with respect to any such proceedings. The attendance
of witnesses and the production of documents provided for in this
paragraph may be required from any place in any State or in any
territory at any designated place where such proceeding is being
conducted. Any party to such proceedings 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 issued pursuant to this paragraph,
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.
(B) Any hearing provided for in subsection (a)(2)(D) of this
section or under paragraph (5) of this section (!4) shall be held
in the Federal judicial district or in the territory in which the
principal office of the association or other company 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.
(4) Injunctions
Whenever it appears to the Director that any person 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 section or of any regulation or order thereunder, the
Director may bring an action in the proper United States district
court, or the United States court of any territory or other place
subject to the jurisdiction of the United States, to enjoin such
acts or practices, to enforce compliance with this section or any
regulation or order, or to require the divestiture of any
acquisition in violation of this section, or for any combination
of the foregoing, and such courts shall have jurisdiction of such
actions. Upon a proper showing an injunction, decree, restraining
order, order of divestiture, or other appropriate order shall be
granted without bond.
(5) Cease and desist orders
(A) Notwithstanding any other provision of this section, the
Director may, whenever the Director has reasonable cause to
believe that the continuation by a savings and loan holding
company of any activity or of ownership or control of any of its
noninsured subsidiaries constitutes a serious risk to the
financial safety, soundness, or stability of a savings and loan
holding company's subsidiary savings association and is
inconsistent with the sound operation of a savings association or
with the purposes of this section or section 1818 of this title,
order the savings and loan holding company or any of its
subsidiaries, after due notice and opportunity for hearing, to
terminate such activities or to terminate (within 120 days or
such longer period as the Director directs in unusual
circumstances) its ownership or control of any such noninsured
subsidiary either by sale or by distribution of the shares of the
subsidiary to the shareholders of the savings and loan holding
company. Such distribution shall be pro rata with respect to all
of the shareholders of the distributing savings and loan holding
company, and the holding company shall not make any charge to its
shareholders arising out of such a distribution.
(B) The Director may in the Director's discretion apply to the
United States district court within the jurisdiction of which the
principal office of the 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. Except as provided in subsection
(j) of 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.
(h) Prohibited acts
It shall be unlawful for -
(1) any savings and loan holding company or subsidiary thereof,
or any director, officer, employee, or person owning,
controlling, or holding with power to vote, or holding proxies
representing, more than 25 percent of the voting shares, of such
holding company or subsidiary, to hold, solicit, or exercise any
proxies in respect of any voting rights in a savings association
which is a mutual association;
(2) any director or officer of a savings and loan holding
company, or any individual who owns, controls, or holds with
power to vote (or holds proxies representing) more than 25
percent of the voting shares of such holding company, to acquire
control of any savings association not a subsidiary of such
savings and loan holding company, unless such acquisition is
approved by the Director pursuant to subsection (e)(4) of this
section; or
(3) any individual, except with the prior approval of the
Director, to serve or act as a director, officer, or trustee of,
or become a partner in, any savings and loan holding company
after having been convicted of any criminal offense involving
dishonesty or breach of trust.
(i) Penalties
(1) Criminal penalty
(A) Whoever knowingly violates any provision of this section or
being a company, violates any regulation or order issued by the
Director under this section, 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.
(B) Whoever, with the intent to deceive, defraud, or profit
significantly, knowingly violates any provision of this section
shall be fined not more than $1,000,000 per day for each day
during which the violation continues, imprisoned not more than 5
years, or both.
(2) (!5) Civil money penalty
(A) Penalty
Any company which violates, and any person who participates
in a violation of, any provision of this section, 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.
(B) Assessment
Any penalty imposed under subparagraph (A) may be assessed
and collected by the Director 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.
(C) Hearing
The company or other person against whom any civil penalty is
assessed under this paragraph shall be afforded a hearing if
such company 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 paragraph.
(D) Disbursement
All penalties collected under authority of this paragraph
shall be deposited into the Treasury.
(E) "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.
(F) Regulations
The Director shall prescribe regulations establishing such
procedures as may be necessary to carry out this paragraph.
(3) (!5) Civil money penalty
(A) Penalty
Any company which violates, and any person who participates
in a violation of, any provision of this section, 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.
(B) Assessment; etc.
Any penalty imposed under subparagraph (A) may be assessed
and collected by the Director 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.
(C) Hearing
The company or other person against whom any penalty is
assessed under this paragraph shall be afforded an agency
hearing if such company 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 paragraph.
(D) Disbursement
All penalties collected under authority of this paragraph
shall be deposited into the Treasury.
(E) "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.
(F) Regulations
The Director shall prescribe regulations establishing such
procedures as may be necessary to carry out this paragraph.
(4) 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 savings and
loan holding company or subsidiary thereof (including a
separation caused by the deregistration of such a company or such
a subsidiary) shall not affect the jurisdiction and authority of
the Director 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 or its
subsidiary (whether such date occurs before, on, or after August
9, 1989).
(j) Judicial review
Any party aggrieved by an order of the Director under this
section may obtain a review of such order by filing in the court of
appeals of the United States for the circuit in which the principal
office of such party is located, or in the United States Court of
Appeals for the District of Columbia Circuit, within 30 days after
the date of service of such order, a written petition praying that
the order of the Director be modified, terminated, or set aside. A
copy of the petition shall be forthwith transmitted by the clerk of
the court to the Director, and thereupon the Director 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 be
exclusive, to affirm, modify, terminate, or set aside, in whole or
in part, the order of the Director. 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.
(k) Savings clause
Nothing contained in this section, other than any transaction
approved under subsection (e)(2) of this section or section 1823 of
this title, 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 act, action, or conduct in violation
of the antitrust laws.
(l) Treatment of FDIC insured State savings banks and cooperative
banks as savings associations
(1) In general
Notwithstanding any other provision of law, a savings bank (as
defined in section 1813(g) of this title) and a cooperative bank
that is an insured bank (as defined in section 1813(h) of this
title) upon application shall be deemed to be a savings
association for the purpose of this section, if the Director
determines that such bank is a qualified thrift lender (as
determined under subsection (m) of this section).
(2) Failure to maintain qualified thrift lender status
If any savings bank which is deemed to be a savings association
under paragraph (1) subsequently fails to maintain its status as
a qualified thrift lender, as determined by the Director, such
bank may not thereafter be a qualified thrift lender for a period
of 5 years.
(m) Qualified thrift lender test
(1) In general
Except as provided in paragraphs (2) and (7), any savings
association is a qualified thrift lender if -
(A) the savings association qualifies as a domestic building
and loan association, as such term is defined in section
7701(a)(19) of title 26; or
(B)(i) the savings association's qualified thrift investments
equal or exceed 65 percent of the savings association's
portfolio assets; and
(ii) the savings association's qualified thrift investments
continue to equal or exceed 65 percent of the savings
association's portfolio assets on a monthly average basis in 9
out of every 12 months.
(2) Exceptions granted by Director
Notwithstanding paragraph (1), the Director may grant such
temporary and limited exceptions from the minimum actual thrift
investment percentage requirement contained in such paragraph as
the Director deems necessary if -
(A) the Director determines that extraordinary circumstances
exist, such as when the effects of high interest rates reduce
mortgage demand to such a degree that an insufficient
opportunity exists for a savings association to meet such
investment requirements; or
(B) the Director determines that -
(i) the grant of any such exception will significantly
facilitate an acquisition under section 1823(c) or 1823(k) of
this title;
(ii) the acquired association will comply with the
transition requirements of paragraph (7)(B), as if the date
of the exemption were the starting date for the transition
period described in that paragraph; and
(iii) the Director determines that the exemption will not
have an undue adverse effect on competing savings
associations in the relevant market and will further the
purposes of this subsection.
(3) Failure to become and remain a qualified thrift lender
(A) In general
A savings association that fails to become or remain a
qualified thrift lender shall either become one or more banks
(other than a savings bank) or be subject to subparagraph (B),
except as provided in subparagraph (D).
(B) Restrictions applicable to savings associations that are
not qualified thrift lenders
(i) Restrictions effective immediately
The following restrictions shall apply to a savings
association beginning on the date on which the savings
association should have become or ceases to be a qualified
thrift lender:
(I) Activities
The savings association shall not make any new investment
(including an investment in a subsidiary) or engage,
directly or indirectly, in any other new activity unless
that investment or activity would be permissible for the
savings association if it were a national bank, and is also
permissible for the savings association as a savings
association.
(II) Branching
The savings association shall not establish any new
branch office at any location at which a national bank
located in the savings association's home State may not
establish a branch office. For purposes of this subclause,
a savings association's home State is the State in which
the savings association's total deposits were largest on
the date on which the savings association should have
become or ceased to be a qualified thrift lender.
(III) Dividends
The savings association shall be subject to all statutes
and regulations governing the payment of dividends by a
national bank in the same manner and to the same extent as
if the savings association were a national bank.
(ii) Additional restrictions effective after 3 years
Beginning 3 years after the date on which a savings
association should have become a qualified thrift lender, or
the date on which the savings association ceases to be a
qualified thrift lender, as applicable, the savings
association shall not retain any investment (including an
investment in any subsidiary) or engage, directly or
indirectly, in any activity, unless that investment or
activity -
(I) would be permissible for the savings association if
it were a national bank; and
(II) is permissible for the savings association as a
savings association.
(C) Holding company regulation
Any company that controls a savings association that is
subject to any provision of subparagraph (B) shall, within one
year after the date on which the savings association should
have become or ceases to be a qualified thrift lender, register
as and be deemed to be a bank holding company subject to all of
the provisions of the Bank Holding Company Act of 1956 [12
U.S.C. 1841 et seq.], section 1818 of this title, and other
statutes applicable to bank holding companies, in the same
manner and to the same extent as if the company were a bank
holding company and the savings association were a bank, as
those terms are defined in the Bank Holding Company Act of
1956.
(D) Requalification
A savings association that should have become or ceases to be
a qualified thrift lender shall not be subject to subparagraph
(B) or (C) if the savings association becomes a qualified
thrift lender by meeting the qualified thrift lender
requirement in paragraph (1) on a monthly average basis in 9
out of the preceding 12 months and remains a qualified thrift
lender. If the savings association (or any savings association
that acquired all or substantially all of its assets from that
savings association) at any time thereafter ceases to be a
qualified thrift lender, it shall immediately be subject to all
provisions of subparagraphs (B) and (C) as if all the periods
described in subparagraphs (B)(ii) and (C) had expired.
(E) Exemption for specialized savings associations serving
certain military personnel
Subparagraph (A) shall not apply to a savings association
subsidiary of a savings and loan holding company if at least 90
percent of the customers of the savings and loan holding
company and its subsidiaries and affiliates are active or
former members in the United States military services or the
widows, widowers, divorced spouses, or current or former
dependents of such members.
(F) Exemption for certain Federal savings associations
This paragraph shall not apply to any Federal savings
association in existence as a Federal savings association on
August 9, 1989 -
(i) that was chartered before October 15, 1982, as a
savings bank or a cooperative bank under State law; or
(ii) that acquired its principal assets from an association
that was chartered before October 15, 1982, as a savings bank
or a cooperative bank under State law.
(G) No circumvention of exit moratorium
Subparagraph (A) of this paragraph shall not be construed as
permitting any insured depository institution to engage in any
conversion transaction prohibited under section 1815(d) (!6) of
this title.
(4) Definitions
For purposes of this subsection, the following definitions
shall apply:
(A) Actual thrift investment percentage
The term "actual thrift investment percentage" means the
percentage determined by dividing -
(i) the amount of a savings association's qualified thrift
investments, by
(ii) the amount of the savings association's portfolio
assets.
(B) Portfolio assets
The term "portfolio assets" means, with respect to any
savings association, the total assets of the savings
association, minus the sum of -
(i) goodwill and other intangible assets;
(ii) the value of property used by the savings association
to conduct its business; and
(iii) liquid assets of the type required to be maintained
under section 1465 of this title, as in effect on the day
before December 27, 2000, in an amount not exceeding the
amount equal to 20 percent of the savings association's total
assets.
(C) Qualified thrift investments
(i) In general
The term "qualified thrift investments" means, with respect
to any savings association, the assets of the savings
association that are described in clauses (ii) and (iii).
(ii) Assets includible without limit
The following assets are described in this clause for
purposes of clause (i):
(I) The aggregate amount of loans held by the savings
association that were made to purchase, refinance,
construct, improve, or repair domestic residential housing
or manufactured housing.
(II) Home-equity loans.
(III) Securities backed by or representing an interest in
mortgages on domestic residential housing or manufactured
housing.
(IV) Existing obligations of deposit insurance agencies. -
Direct or indirect obligations of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan
Insurance Corporation issued in accordance with the terms
of agreements entered into prior to July 1, 1989, for the
10-year period beginning on the date of issuance of such
obligations.
(V) New obligations of deposit insurance agencies. -
Obligations of the Federal Deposit Insurance Corporation,
the Federal Savings and Loan Insurance Corporation, the
FSLIC Resolution Fund, and the Resolution Trust Corporation
issued in accordance with the terms of agreements entered
into on or after July 1, 1989, for the 5-year period
beginning on the date of issuance of such obligations.
(VI) Shares of stock issued by any Federal home loan
bank.
(VII) Loans for educational purposes, loans to small
businesses, and loans made through credit cards or credit
card accounts.
(iii) Assets includible subject to percentage restriction
The following assets are described in this clause for
purposes of clause (i):
(I) 50 percent of the dollar amount of the residential
mortgage loans originated by such savings association and
sold within 90 days of origination.
(II) Investments in the capital stock or obligations of,
and any other security issued by, any service corporation
if such service corporation derives at least 80 percent of
its annual gross revenues from activities directly related
to purchasing, refinancing, constructing, improving, or
repairing domestic residential real estate or manufactured
housing.
(III) 200 percent of the dollar amount of loans and
investments made to acquire, develop, and construct 1- to 4-
family residences the purchase price of which is or is
guaranteed to be not greater than 60 percent of the median
value of comparable newly constructed 1- to 4-family
residences within the local community in which such real
estate is located, except that not more than 25 percent of
the amount included under this subclause may consist of
commercial properties related to the development if those
properties are directly related to providing services to
residents of the development.
(IV) 200 percent of the dollar amount of loans for the
acquisition or improvement of residential real property,
churches, schools, and nursing homes located within, and
loans for any other purpose to any small businesses located
within any area which has been identified by the Director,
in connection with any review or examination of community
reinvestment practices, as a geographic area or
neighborhood in which the credit needs of the low- and
moderate-income residents of such area or neighborhood are
not being adequately met.
(V) Loans for the purchase or construction of churches,
schools, nursing homes, and hospitals, other than those
qualifying under clause (IV), and loans for the improvement
and upkeep of such properties.
(VI) Loans for personal, family, or household purposes
(other than loans for personal, family, or household
purposes described in clause (ii)(VII)).
(VII) Shares of stock issued by the Federal Home Loan
Mortgage Corporation or the Federal National Mortgage
Association.
(iv) Percentage restriction applicable to certain assets
The aggregate amount of the assets described in clause
(iii) which may be taken into account in determining the
amount of the qualified thrift investments of any savings
association shall not exceed the amount which is equal to 20
percent of a savings association's portfolio assets.
(v) Qualified thrift investments
The term "qualified thrift investments" excludes -
(I) except for home equity loans, that portion of any
loan or investment that is used for any purpose other than
those expressly qualifying under any subparagraph of clause
(ii) or (iii); or
(II) goodwill or any other intangible asset.
(D) Credit card
The Director shall issue such regulations as may be necessary
to define the term "credit card".
(E) Small business
The Director shall issue such regulations as may be necessary
to define the term "small business".
(5) Consistent accounting required
(A) In determining the amount of a savings association's
portfolio assets, the assets of any subsidiary of the savings
association shall be consolidated with the assets of the savings
association if -
(i) Assets of the subsidiary are consolidated with the assets
of the savings association in determining the savings
association's qualified thrift investments; or
(ii) Residential mortgage loans originated by the subsidiary
are included pursuant to paragraph (4)(C)(iii)(I) in
determining the savings association's qualified thrift
investments.
(B) In determining the amount of a savings association's
portfolio assets and qualified thrift investments, consistent
accounting principles shall be applied.
(6) Special rules for Puerto Rico and Virgin Islands savings
associations
(A) Puerto Rico savings associations
With respect to any savings association headquartered and
operating primarily in Puerto Rico -
(i) the term "qualified thrift investments" includes, in
addition to the items specified in paragraph (4) -
(I) the aggregate amount of loans for personal, family,
educational, or household purposes made to persons residing
or domiciled in the Commonwealth of Puerto Rico; and
(II) the aggregate amount of loans for the acquisition or
improvement of churches, schools, or nursing homes, and of
loans to small businesses, located within the Commonwealth
of Puerto Rico; and
(ii) the aggregate amount of loans related to the purchase,
acquisition, development and construction of 1- to 4-family
residential real estate -
(I) which is located within the Commonwealth of Puerto
Rico; and
(II) the value of which (at the time of acquisition or
upon completion of the development and construction) is
below the median value of newly constructed 1- to 4-family
residences in the Commonwealth of Puerto Rico, which may be
taken into account in determining the amount of the
qualified thrift investments and of such savings
association shall be doubled.
(B) Virgin Islands savings associations
With respect to any savings association headquartered and
operating primarily in the Virgin Islands -
(i) the term "qualified thrift investments" includes, in
addition to the items specified in paragraph (4) -
(I) the aggregate amount of loans for personal, family,
educational, or household purposes made to persons residing
or domiciled in the Virgin Islands; and
(II) the aggregate amount of loans for the acquisition or
improvement of churches, schools, or nursing homes, and of
loans to small businesses, located within the Virgin
Islands; and
(ii) the aggregate amount of loans related to the purchase,
acquisition, development and construction of 1- to 4-family
residential real estate -
(I) which is located within the Virgin Islands; and
(II) the value of which (at the time of acquisition or
upon completion of the development and construction) is
below the median value of newly constructed 1- to 4-family
residences in the Virgin Islands, which may be taken into
account in determining the amount of the qualified thrift
investments and of such savings association shall be
doubled.
(7) Transitional rule for certain savings associations
(A) In general
If any Federal savings association in existence as a Federal
savings association on August 9, 1989 -
(i) that was chartered as a savings bank or a cooperative
bank under State law before October 15, 1982; or
(ii) that acquired its principal assets from an association
that was chartered before October 15, 1982, as a savings bank
or a cooperative bank under State law,
meets the requirements of subparagraph (B), such savings
association shall be treated as a qualified thrift lender
during the period ending on September 30, 1995.
(B) Subparagraph (B) requirements
A savings association meets the requirements of this
subparagraph if, in the determination of the Director -
(i) the actual thrift investment percentage of such
association does not, after August 9, 1989, decrease below
the actual thrift investment percentage of such association
on July 15, 1989; and
(ii) the amount by which -
(I) the actual thrift investment percentage of such
association at the end of each period described in the
following table, exceeds
(II) the actual thrift investment percentage of such
association on July 15, 1989,
is equal to or greater than the applicable percentage (as
determined under the following table) of the amount by which
70 percent exceeds the actual thrift investment percentage of
such association on August 9, 1989:
For the following The applicable
period: percentage is:
July 1, 1991-September 30, 1992 25 percent
October 1, 1992-March 31, 1994 50 percent
April 1, 1994-September 30, 1995 75 percent
Thereafter 100 percent
(C) Actual thrift investment percentage
For purposes of this paragraph, the actual thrift investment
percentage of an association on July 15, 1989, shall be
determined by applying the definition of "actual thrift
investment percentage" that takes effect on July 1, 1991.
(n) Tying restrictions
A savings and loan holding company and any of its affiliates
shall be subject to section 1464(q) of this title and regulations
prescribed under such section, in connection with transactions
involving the products or services of such company or affiliate and
those of an affiliated savings association as if such company or
affiliate were a savings association.
(o) Mutual holding companies
(1) In general
A savings association operating in mutual form may reorganize
so as to become a holding company by -
(A) chartering an interim savings association, the stock of
which is to be wholly owned, except as otherwise provided in
this section, by the mutual association; and
(B) transferring the substantial part of its assets and
liabilities, including all of its insured liabilities, to the
interim savings association.
(2) Directors and certain account holders' approval of plan
required
A reorganization is not authorized under this subsection unless
-
(A) a plan providing for such reorganization has been
approved by a majority of the board of directors of the mutual
savings association; and
(B) in the case of an association in which holders of
accounts and obligors exercise voting rights, such plan has
been submitted to and approved by a majority of such
individuals at a meeting held at the call of the directors in
accordance with the procedures prescribed by the association's
charter and bylaws.
(3) Notice to the Director; disapproval period
(A) Notice required
At least 60 days prior to taking any action described in
paragraph (1), a savings association seeking to establish a
mutual holding company shall provide written notice to the
Director. The notice shall contain such relevant information as
the Director shall require by regulation or by specific request
in connection with any particular notice.
(B) Transaction allowed if not disapproved
Unless the Director within such 60-day notice period
disapproves the proposed holding company formation, or extends
for another 30 days the period during which such disapproval
may be issued, the savings association providing such notice
may proceed with the transaction, if the requirements of
paragraph (2) have been met.
(C) Grounds for disapproval
The Director may disapprove any proposed holding company
formation only if -
(i) such disapproval is necessary to prevent unsafe or
unsound practices;
(ii) the financial or management resources of the savings
association involved warrant disapproval;
(iii) the savings association fails to furnish the
information required under subparagraph (A); or
(iv) the savings association fails to comply with the
requirement of paragraph (2).
(D) Retention of capital assets
In connection with the transaction described in paragraph
(1), a savings association may, subject to the approval of the
Director, retain capital assets at the holding company level to
the extent that such capital exceeds the association's capital
requirement established by the Director pursuant to subsections
(s) and (t) of section 1464 of this title.
(4) Ownership
(A) In general
Persons having ownership rights in the mutual association
pursuant to section 1464(b)(1)(B) of this title or State law
shall have the same ownership rights with respect to the mutual
holding company.
(B) Holders of certain accounts
Holders of savings, demand or other accounts of -
(i) a savings association chartered as part of a
transaction described in paragraph (1); or
(ii) a mutual savings association acquired pursuant to
paragraph (5)(B),
shall have the same ownership rights with respect to the mutual
holding company as persons described in subparagraph (A) of
this paragraph.
(5) Permitted activities
A mutual holding company may engage only in the following
activities:
(A) Investing in the stock of a savings association.
(B) Acquiring a mutual association through the merger of such
association into a savings association subsidiary of such
holding company or an interim savings association subsidiary of
such holding company.
(C) Subject to paragraph (6), merging with or acquiring
another holding company, one of whose subsidiaries is a savings
association.
(D) Investing in a corporation the capital stock of which is
available for purchase by a savings association under Federal
law or under the law of any State where the subsidiary savings
association or associations have their home offices.
(E) Engaging in the activities described in subsection (c)(2)
or (c)(9)(A)(ii) of this section.
(6) Limitations on certain activities of acquired holding
companies
(A) New activities
If a mutual holding company acquires or merges with another
holding company under paragraph (5)(C), the holding company
acquired or the holding company resulting from such merger or
acquisition may only invest in assets and engage in activities
which are authorized under paragraph (5).
(B) Grace period for divesting prohibited assets or
discontinuing prohibited activities
Not later than 2 years following a merger or acquisition
described in paragraph (5)(C), the acquired holding company or
the holding company resulting from such merger or acquisition
shall -
(i) dispose of any asset which is an asset in which a
mutual holding company may not invest under paragraph (5);
and
(ii) cease any activity which is an activity in which a
mutual holding company may not engage under paragraph (5).
(7) Regulation
A mutual holding company shall be chartered by the Director and
shall be subject to such regulations as the Director may
prescribe. Unless the context otherwise requires, a mutual
holding company shall be subject to the other requirements of
this section regarding regulation of holding companies.
(8) Capital improvement
(A) Pledge of stock of savings association subsidiary
This section shall not prohibit a mutual holding company from
pledging all or a portion of the stock of a savings association
chartered as part of a transaction described in paragraph (1)
to raise capital for such savings association.
(B) Issuance of nonvoting shares
This section shall not prohibit a savings association
chartered as part of a transaction described in paragraph (1)
from issuing any nonvoting shares or less than 50 percent of
the voting shares of such association to any person other than
the mutual holding company.
(9) Insolvency and liquidation
(A) In general
Notwithstanding any provision of law, upon -
(i) the default of any savings association -
(I) the stock of which is owned by any mutual holding
company; and
(II) which was chartered in a transaction described in
paragraph (1);
(ii) the default of a mutual holding company; or
(iii) a foreclosure on a pledge by a mutual holding company
described in paragraph (8)(A),
a trustee shall be appointed receiver of such mutual holding
company and such trustee shall have the authority to liquidate
the assets of, and satisfy the liabilities of, such mutual
holding company pursuant to title 11.
(B) Distribution of net proceeds
Except as provided in subparagraph (C), the net proceeds of
any liquidation of any mutual holding company pursuant to
subparagraph (A) shall be transferred to persons who hold
ownership interests in such mutual holding company.
(C) Recovery by Corporation
If the Corporation incurs a loss as a result of the default
of any savings association subsidiary of a mutual holding
company which is liquidated pursuant to subparagraph (A), the
Corporation shall succeed to the ownership interests of the
depositors of such savings association in the mutual holding
company, to the extent of the Corporation's loss.
(10) Definitions
For purposes of this subsection -
(A) Mutual holding company
The term "mutual holding company" means a corporation
organized as a holding company under this subsection.
(B) Mutual association
The term "mutual association" means a savings association
which is operating in mutual form.
(C) Default
The term "default" means an adjudication or other official
determination of a court of competent jurisdiction or other
public authority pursuant to which a conservator, receiver, or
other legal custodian is appointed.
(p) Holding company activities constituting serious risk to
subsidiary savings association
(1) Determination and imposition of restrictions
If the Director determines that there is reasonable cause to
believe that the continuation by a savings and loan holding
company of any activity constitutes a serious risk to the
financial safety, soundness, or stability of a savings and loan
holding company's subsidiary savings association, the Director
may impose such restrictions as the Director determines to be
necessary to address such risk. Such restrictions shall be issued
in the form of a directive to the holding company and any of its
subsidiaries, limiting -
(A) the payment of dividends by the savings association;
(B) transactions between the savings association, the holding
company, and the subsidiaries or affiliates of either; and
(C) any activities of the savings association that might
create a serious risk that the liabilities of the holding
company and its other affiliates may be imposed on the savings
association.
Such directive shall be effective as a cease and desist order
that has become final.
(2) Review of directive
(A) Administrative review
After a directive referred to in paragraph (1) is issued, the
savings and loan holding company, or any subsidiary of such
holding company subject to the directive, may object and
present in writing its reasons why the directive should be
modified or rescinded. Unless within 10 days after receipt of
such response the Director affirms, modifies, or rescinds the
directive, such directive shall automatically lapse.
(B) Judicial review
If the Director affirms or modifies a directive pursuant to
subparagraph (A), any affected party may immediately thereafter
petition the United States district court for the district in
which the savings and loan holding company has its main office
or in the United States District Court for the District of
Columbia to stay, modify, terminate or set aside the directive.
Upon a showing of extraordinary cause, the savings and loan
holding company, or any subsidiary of such holding company
subject to a directive, may petition a United States district
court for relief without first pursuing or exhausting the
administrative remedies set forth in this paragraph.
(q) Qualified stock issuance by undercapitalized savings
associations or holding companies
(1) In general
For purposes of this section, any issue of shares of stock
shall be treated as a qualified stock issuance if the following
conditions are met:
(A) The shares of stock are issued by -
(i) an undercapitalized savings association; or
(ii) a savings and loan holding company which is not a bank
holding company but which controls an undercapitalized
savings association if, at the time of issuance, the savings
and loan holding company is legally obligated to contribute
the net proceeds from the issuance of such stock to the
capital of an undercapitalized savings association subsidiary
of such holding company.
(B) All shares of stock issued consist of previously unissued
stock or treasury shares.
(C) All shares of stock issued are purchased by a savings and
loan holding company that is registered, as of the date of
purchase, with the Director in accordance with the provisions
of subsection (b)(1) of this section.
(D) Subject to paragraph (2), the Director approved the
purchase of the shares of stock by the acquiring savings and
loan holding company.
(E) The entire consideration for the stock issued is paid in
cash by the acquiring savings and loan holding company.
(F) At the time of the stock issuance, each savings
association subsidiary of the acquiring savings and loan
holding company (other than an association acquired in a
transaction pursuant to subsection (c) or (k) of section 1823
of this title or section 408(m) (!7) of the National Housing
Act [12 U.S.C. 1730a(m)]) has capital (after deducting any
subordinated debt, intangible assets, and deferred, unamortized
gains or losses) of not less than 6 1/2 percent of the total
assets of such savings association.
(G) Immediately after the stock issuance, the acquiring
savings and loan holding company holds not more than 15 percent
of the outstanding voting stock of the issuing undercapitalized
savings association or savings and loan holding company.
(H) Not more than one of the directors of the issuing
association or company is an officer, director, employee, or
other representative of the acquiring company or any of its
affiliates.
(I) Transactions between the savings association or savings
and loan holding company that issues the shares pursuant to
this section and the acquiring company and any of its
affiliates shall be subject to the provisions of section 1468
of this title.
(2) Approval of acquisitions
(A) Additional capital commitments not required
The Director shall not disapprove any application for the
purchase of stock in connection with a qualified stock issuance
on the grounds that the acquiring savings and loan holding
company has failed to undertake to make subsequent additional
capital contributions to maintain the capital of the
undercapitalized savings association at or above the minimum
level required by the Director or any other Federal agency
having jurisdiction.
(B) Other conditions
Notwithstanding subsection (a)(4) of this section, the
Director may impose such conditions on any approval of an
application for the purchase of stock in connection with a
qualified stock issuance as the Director determines to be
appropriate, including -
(i) a requirement that any savings association subsidiary
of the acquiring savings and loan holding company limit
dividends paid to such holding company for such period of
time as the Director may require; and
(ii) such other conditions as the Director deems necessary
or appropriate to prevent evasions of this section.
(C) Application deemed approved if not disapproved within 90
days
An application for approval of a purchase of stock in
connection with a qualified stock issuance shall be deemed to
have been approved by the Director if such application has not
been disapproved by the Director before the end of the 90-day
period beginning on the date such application has been deemed
sufficient under regulations issued by the Director.
(3) No limitation on class of stock issued
The shares of stock issued in connection with a qualified stock
issuance may be shares of any class.
(4) "Undercapitalized savings association" defined
For purposes of this subsection, the term "undercapitalized
savings association" means any savings association -
(A) the assets of which exceed the liabilities of such
association; and
(B) which does not comply with one or more of the capital
standards in effect under section 1464(t) of this title.
(r) Penalty for failure to provide timely and accurate reports
(1) First tier
Any savings and loan holding company, and any subsidiary of
such holding company, which -
(A) maintains procedures reasonably adapted to avoid any
inadvertent and unintentional error and, as a result of such an
error -
(i) fails to submit or publish any report or information
required under this section or regulations prescribed by the
Director, within the period of time specified by the
Director; 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. Such holding company or
subsidiary shall have the burden of proving by a preponderence
(!8) of the evidence that an error was inadvertent and
unintentional and that a report was inadvertently transmitted or
published late.
(2) Second tier
Any savings and loan holding company, and any subsidiary of
such holding company, which -
(A) fails to submit or publish any report or information
required under this section or under regulations prescribed by
the Director, within the period of time specified by the
Director; 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
If any savings and loan holding company or any subsidiary of
such a holding 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 Director may assess a penalty of not more than
$1,000,000 or 1 percent of total assets of such company or
subsidiary, whichever is less, per day for each day during which
such failure continues or such false or misleading information is
not corrected.
(4) Assessment
Any penalty imposed under paragraph (1), (2), or (3) shall be
assessed and collected by the Director 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 subsection.
(5) Hearing
Any savings and loan holding company or any subsidiary of such
a holding company against which any penalty is assessed under
this subsection shall be afforded a hearing if such savings and
loan holding company or such subsidiary, as the case may be,
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.
(s) Mergers, consolidations, and other acquisitions authorized
(1) In general
Subject to sections 1815(d)(3) (!7) and 1828(c) of this title
and all other applicable laws, any Federal savings association
may acquire or be acquired by any insured depository institution.
(2) Expedited approval of acquisitions
(A) In general
Any application by a savings association to acquire or be
acquired by another insured depository institution which is
required to be filed with the Director under any applicable law
or regulation shall be approved or disapproved in writing by
the Director before the end of the 60-day period beginning on
the date such application is filed with the agency.
(B) Extension of period
The period for approval or disapproval referred to in
subparagraph (A) may be extended for an additional 30-day
period if the Director determines that -
(i) an applicant has not furnished all of the information
required to be submitted; or
(ii) in the Director's judgment, any material information
submitted is substantially inaccurate or incomplete.
(3) "Acquire" defined
For purposes of this subsection, the term "acquire" means to
acquire, directly or indirectly, ownership or control through a
merger or consolidation or an acquisition of assets or assumption
of liabilities, provided that following such merger,
consolidation, or acquisition, an acquiring insured depository
institution may not own the shares of the acquired insured
depository institution.
(4) Regulations
(A) Required
The Director shall prescribe such regulations as may be
necessary to carry out paragraph (1).
(B) Effective date
The regulations required under subparagraph (A) shall -
(i) be prescribed in final form before the end of the 90-
day period beginning on December 19, 1991; and
(ii) take effect before the end of the 120-day period
beginning on December 19, 1991.
(5) Limitation
No provision of this section shall be construed to authorize a
national bank or any subsidiary thereof to engage in any activity
not otherwise authorized under the National Bank Act [12 U.S.C.
21 et seq.] or any other law governing the powers of a national
bank.
(t) Exemption for bank holding companies
This section shall not apply to a bank holding company that is
subject to the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et
seq.], or any company controlled by such bank holding company.