12 U.S.C. § 1828 : US Code - Section 1828: Regulations governing insured depository institutions

Search 12 U.S.C. § 1828 : US Code - Section 1828: Regulations governing insured depository institutions

(a) Insurance logo
(1) Insured depository institutions
(A) In general
Each insured depository institution shall display at each
place of business maintained by that institution a sign or
signs relating to the insurance of the deposits of the
institution, in accordance with regulations to be prescribed by
the Corporation.
(B) Statement to be included
Each sign required under subparagraph (A) shall include a
statement that insured deposits are backed by the full faith
and credit of the United States Government.
(2) Regulations
The Corporation shall prescribe regulations to carry out this
subsection, including regulations governing the substance of
signs required by paragraph (1) and the manner of display or use
of such signs.
(3) Penalties
For each day that an insured depository institution continues
to violate this subsection or any regulation issued under this
subsection, 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 the
insured depository institution deposits 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; money laundering;
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; or
(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;
(B) the Board of Governors of the Federal Reserve System if the
acquiring, assuming, or resulting bank is to be a State member
bank;
(C) the Corporation if the acquiring, assuming, or resulting
bank is to be a State nonmember insured bank (except 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) Reports on competitive factors. -
(A) Request for report. - In the interests of uniform standards
and subject to subparagraph (B), before acting on any application
for approval of a merger transaction, the responsible agency
shall -
(i) request a report on the competitive factors involved from
the Attorney General of the United States; and
(ii) provide a copy of the request to the Corporation (when
the Corporation is not the responsible agency).
(B) Furnishing of report. - The report requested under
subparagraph (A) shall be furnished by the Attorney General to
the responsible agency -
(i) not later than 30 calendar days after the date on which
the Attorney General received the request; or
(ii) not later than 10 calendar days after such date, if the
requesting agency advises the Attorney General that an
emergency exists requiring expeditious action.
(C) Exceptions. - A responsible agency may not be required to
request a report under subparagraph (A) if -
(i) the responsible agency finds that it must act immediately
in order to prevent the probable failure of 1 of the insured
depository institutions involved in the merger transaction; or
(ii) the merger transaction involves solely an insured
depository institution and 1 or more of the affiliates of such
depository institution.
(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
insured depository institutions involved, or if the proposed merger
transaction is solely between an insured depository institution and
1 or more of its affiliates, and the report on the competitive
factors has been dispensed with, the transaction may be consummated
immediately upon approval by the agency. If the agency has advised
the Attorney General under paragraph (4)(B)(ii) of the existence of
an emergency requiring expeditious action and has requested a
report on the competitive factors within 10 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 consummated before the thirtieth calendar day after the date
of approval by the agency or, if the agency has not received any
adverse comment from the Attorney General of the United States
relating to competitive factors, such shorter period of time as may
be prescribed by the agency with the concurrence of the Attorney
General, but in no event less than 15 calendar days after the date
of approval.
(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 antitrust 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 -

(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) Money laundering. - In every case, the responsible agency,
shall take into consideration the effectiveness of any insured
depository institution involved in the proposed merger transaction
in combatting money laundering activities, including in overseas
branches.
(12) 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 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
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.
(3) Exclusive authority for additional branches. -
(A) In general. - Effective June 1, 1997, a State nonmember
bank may not acquire, establish, or operate a branch in any State
other than the bank's home State (as defined in section
1831u(f)(4) (!1) of this title) or a State in which the bank
already has a branch unless the acquisition, establishment, or
operation of a branch in such State by a State nonmember bank is
authorized under this subsection or section 1823(f), 1823(k), or
1831u of this title.
(B) Retention of branches. - In the case of a State nonmember
bank which relocates the main office of such bank from 1 State to
another State after May 31, 1997, the bank may retain and operate
branches within the State which was the bank's home State (as
defined in section 1831u(f)(4) (!1) of this title) before the
relocation of such office only to the extent the bank would be
authorized, under this section or any other provision of law
referred to in subparagraph (A), to acquire, establish, or
commence to operate a branch in such State if -
(i) the bank had no branches in such State; or
(ii) the branch resulted from -
(I) an interstate merger transaction approved pursuant to
section 1831u of this title; or
(II) a transaction after May 31, 1997, pursuant to which
the bank received assistance from the Corporation under
section 1823(c) of this title.
(4) State "opt-in" election to permit interstate branching
through de novo branches. -
(A) In general. - Subject to subparagraph (B), the Corporation
may approve an application by an insured State nonmember bank to
establish and operate a de novo branch in a State (other than the
bank's home State) in which the bank does not maintain a branch
if -
(i) there is in effect in the host State a law that -
(I) applies equally to all banks; and
(II) expressly permits all out-of-State banks to establish
de novo branches in such State; and
(ii) the conditions established in, or made applicable to
this paragraph by, subparagraph (B) are met.
(B) Conditions on establishment and operation of interstate
branch. -
(i) Establishment. - An application by an insured State
nonmember bank to establish and operate a de novo branch in a
host State shall be subject to the same requirements and
conditions to which an application for a merger transaction is
subject under paragraphs (1), (3), and (4) of section 1831u(b)
of this title.
(ii) Operation. - Subsections (c) and (d)(2) of section 1831u
of this title shall apply with respect to each branch of an
insured State nonmember bank which is established and operated
pursuant to an application approved under this paragraph in the
same manner and to the same extent such provisions of such
section apply to a branch of a State bank which resulted from a
merger transaction under such section 1831u of this title.
(C) "De novo branch" defined. - For purposes of this paragraph,
the term "de novo branch" means a branch of a State bank which -
(i) is originally established by the State bank as a branch;
and
(ii) does not become a branch of such bank as a result of -
(I) the acquisition by the bank of an insured depository
institution or a branch of an insured depository institution;
or
(II) the conversion, merger, or consolidation of any such
institution or branch.
(D) "Home state" defined. - The term "home State" means the
State by which a State bank is chartered.
(E) "Host state" defined. - The term "host State" means, with
respect to a bank, a State, other than the home State of the
bank, in which the bank maintains, or seeks to establish and
maintain, a branch.
(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), after written notice of the recommendations of the
Corporation based on a report of examination of such insured
depository institution 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 insured depository institution 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) Penalty for failure to timely pay assessments
(1) In general
Subject to paragraph (3), any insured depository institution
which fails or refuses to pay any assessment shall be subject to
a penalty in an amount of not more than 1 percent of the amount
of the assessment due for each day that such violation continues.
(2) Exception in case of dispute
Paragraph (1) shall not apply if -
(A) the failure to pay an assessment is due to a dispute
between the insured depository institution and the Corporation
over the amount of such assessment; and
(B) the insured depository institution deposits security
satisfactory to the Corporation for payment upon final
determination of the issue.
(3) Special rule for small assessment amounts
If the amount of the assessment which an insured depository
institution fails or refuses to pay is less than $10,000 at the
time of such failure or refusal, the amount of any penalty to
which such institution is subject under paragraph (1) shall not
exceed $100 for each day that such violation continues.
(4) Authority to modify or remit penalty
The Corporation, in the sole discretion of the Corporation, may
compromise, modify or remit any penalty which the Corporation may
assess or has already assessed under paragraph (1) upon a finding
that good cause prevented the timely payment of an assessment.
(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 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 Board of Governors of the Federal Reserve System if the
resulting bank is to be a State member bank;
(B) the Corporation if the resulting bank is to be a State
nonmember insured bank; and
(C) 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 covered
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 -

(i) the insolvency of the depository institution or covered
company;
(ii) the appointment of a conservator or receiver for the
depository institution; or
(iii) the troubled condition of the depository institution
(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 covered 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 covered 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
covered 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 covered company for the
benefit of any institution-affiliated party pursuant to an
obligation of such institution or covered company that -
(i) is contingent on the termination of such party's
affiliation with the institution or covered company; and
(ii) is received on or after the date on which -
(I) the insured depository institution or covered
company, or any insured depository institution subsidiary
of such covered company, is insolvent;
(II) any conservator or receiver is appointed for such
institution;
(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 covered 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.
(D) Covered company
The term "covered company" means any depository institution
holding company (including any company required to file a
report under section 1843(f)(6) of this title), or any other
company that controls an insured depository institution.
(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 covered
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
covered company which is described in paragraph (5)(A).
(l) Acquisition 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 Deposit
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 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 Deposit 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 Fund 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.
(p) 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 Fund, consistent with section 1831o of this title.
(q) Sovereign risk
Section 633 of this title shall apply to every nonmember insured
bank in the same manner and to the same extent as if the nonmember
insured bank were a member bank.
(r) Subsidiary depository institutions as agents for certain
affiliates
(1) In general
Any bank subsidiary of a bank holding company may receive
deposits, renew time deposits, close loans, service loans, and
receive payments on loans and other obligations as an agent for a
depository institution affiliate.
(2) Bank acting as agent is not a branch
Notwithstanding any other provision of law, a bank acting as an
agent in accordance with paragraph (1) for a depository
institution affiliate shall not be considered to be a branch of
the affiliate.
(3) Prohibitions on activities
A depository institution may not -
(A) conduct any activity as an agent under paragraph (1) or
(6) which such institution is prohibited from conducting as a
principal under any applicable Federal or State law; or
(B) as a principal, have an agent conduct any activity under
paragraph (1) or (6) which the institution is prohibited from
conducting under any applicable Federal or State law.
(4) Existing authority not affected
No provision of this subsection shall be construed as affecting
-
(A) the authority of any depository institution to act as an
agent on behalf of any other depository institution under any
other provision of law; or
(B) whether a depository institution which conducts any
activity as an agent on behalf of any other depository
institution under any other provision of law shall be
considered to be a branch of such other institution.
(5) Agency relationship required to be consistent with safe and
sound banking practices
An agency relationship between depository institutions under
paragraph (1) or (6) shall be on terms that are consistent with
safe and sound banking practices and all applicable regulations
of any appropriate Federal banking agency.
(6) Affiliated insured savings associations
An insured savings association which was an affiliate of a bank
on July 1, 1994, may conduct activities as an agent on behalf of
such bank in the same manner as an insured bank affiliate of such
bank may act as agent for such bank under this subsection to the
extent such activities are conducted only in -
(A) any State in which -
(i) the bank is not prohibited from operating a branch
under any provision of Federal or State law; and
(ii) the savings association maintained an office or branch
and conducted business as of July 1, 1994; or
(B) any State in which -
(i) the bank is not expressly prohibited from operating a
branch under a State law described in section 1831u(a)(2) of
this title; and
(ii) the savings association maintained a main office and
conducted business as of July 1, 1994.
(s) Prohibition on certain affiliations
(1) In general
No depository institution may be an affiliate of, be sponsored
by, or accept financial support, directly or indirectly, from any
Government-sponsored enterprise.
(2) Exception for members of a Federal home loan bank
Paragraph (1) shall not apply with respect to the membership of
a depository institution in a Federal home loan bank.
(3) Routine business financing
Paragraph (1) shall not apply with respect to advances or other
forms of financial assistance provided by a Government-sponsored
enterprise pursuant to the statutes governing such enterprise.
(4) Student loans
(A) In general
This subsection shall not apply to any arrangement between
the Holding Company (or any subsidiary of the Holding Company
other than the Student Loan Marketing Association) and a
depository institution, if the Secretary approves the
affiliation and determines that -
(i) the reorganization of such Association in accordance
with section 1087-3 of title 20 will not be adversely
affected by the arrangement;
(ii) the dissolution of the Association pursuant to such
reorganization will occur before the end of the 2-year period
beginning on the date on which such arrangement is
consummated or on such earlier date as the Secretary deems
appropriate: Provided, That the Secretary may extend this
period for not more than 1 year at a time if the Secretary
determines that such extension is in the public interest and
is appropriate to achieve an orderly reorganization of the
Association or to prevent market disruptions in connection
with such reorganization, but no such extensions shall in the
aggregate exceed 2 years;
(iii) the Association will not purchase or extend credit
to, or guarantee or provide credit enhancement to, any
obligation of the depository institution;
(iv) the operations of the Association will be separate
from the operations of the depository institution; and
(v) until the "dissolution date" (as that term is defined
in section 1087-3 of title 20) has occurred, such depository
institution will not use the trade name or service mark
"Sallie Mae" in connection with any product or service it
offers if the appropriate Federal banking agency for such
depository institution determines that -
(I) the depository institution is the only institution
offering such product or service using the "Sallie Mae"
name; and
(II) such use would result in the depository institution
having an unfair competitive advantage over other
depository institutions.
(B) Terms and conditions
In approving any arrangement referred to in subparagraph (A)
the Secretary may impose any terms and conditions on such an
arrangement that the Secretary considers appropriate, including
-
(i) imposing additional restrictions on the issuance of
debt obligations by the Association; or
(ii) restricting the use of proceeds from the issuance of
such debt.
(C) Additional limitations
In the event that the Holding Company (or any subsidiary of
the Holding Company) enters into such an arrangement, the value
of the Association's "investment portfolio" shall not at any
time exceed the lesser of -
(i) the value of such portfolio on the date of the
enactment of this subsection; or
(ii) the value of such portfolio on the date such an
arrangement is consummated. The term "investment portfolio"
shall mean all investments shown on the consolidated balance
sheet of the Association other than -
(I) any instrument or assets described in section 1087-
2(d) of title 20;
(II) any direct noncallable obligations of the United
States or any agency thereof for which the full faith and
credit of the United States is pledged; or
(III) cash or cash equivalents.
(D) Enforcement
The terms and conditions imposed under subparagraph (B) may
be enforced by the Secretary in accordance with section 1087-3
of title 20.
(E) Definitions
For purposes of this paragraph, the following definition
shall apply -
(i) Association; Holding Company
Notwithstanding any provision in section 1813 of this
title, the terms "Association" and "Holding Company" have the
same meanings as in section 1087-3(i) of title 20.
(ii) Secretary
The term "Secretary" means the Secretary of the Treasury.
(5) "Government-sponsored enterprise" defined
For purposes of this subsection, the term "Government-sponsored
enterprise" has the meaning given to such term in section
1404(e)(1)(A) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
(t) Recordkeeping requirements
(1) Requirements
Each appropriate Federal banking agency, after consultation
with and consideration of the views of the Commission, shall
establish recordkeeping requirements for banks relying on
exceptions contained in paragraphs (4) and (5) of section 78c(a)
of title 15. Such recordkeeping requirements shall be sufficient
to demonstrate compliance with the terms of such exceptions and
be designed to facilitate compliance with such exceptions.
(2) Availability to Commission; confidentiality
Each appropriate Federal banking agency shall make any
information required under paragraph (1) available to the
Commission upon request. Notwithstanding any other provision of
law, the Commission shall not be compelled to disclose any such
information. Nothing in this paragraph shall authorize the
Commission to withhold information from Congress, or prevent the
Commission from complying with a request for information from any
other Federal department or agency or any self-regulatory
organization requesting the information for purposes within the
scope of its jurisdiction, or complying with an order of a court
of the United States in an action brought by the United States or
the Commission. For purposes of section 552 of title 5, this
paragraph shall be considered a statute described in subsection
(b)(3)(B) of such section 552.
(3) Definition
As used in this subsection the term "Commission" means the
Securities and Exchange Commission.
(u) Limitation on claims
(1) In general
No person may bring a claim against any Federal banking agency
(including in its capacity as conservator or receiver) for the
return of assets of an affiliate or controlling shareholder of
the insured depository institution transferred to, or for the
benefit of, an insured depository institution by such affiliate
or controlling shareholder of the insured depository institution,
or a claim against such Federal banking agency for monetary
damages or other legal or equitable relief in connection with
such transfer, if at the time of the transfer -
(A) the insured depository institution is subject to any
direction issued in writing by a Federal banking agency to
increase its capital; and
(B) for that portion of the transfer that is made by an
entity covered by section 1844(g) of this title or section
1831v of this title, the Federal banking agency has followed
the procedure set forth in such section.
(2) Definition of claim
For purposes of paragraph (1), the term "claim" -
(A) means a cause of action based on Federal or State law
that -
(i) provides for the avoidance of preferential or
fraudulent transfers or conveyances; or
(ii) provides similar remedies for preferential or
fraudulent transfers or conveyances; and
(B) does not include any claim based on actual intent to
hinder, delay, or defraud pursuant to such a fraudulent
transfer or conveyance law.
(v) Loans by insured institutions on their own stock
(1) General prohibition
No insured depository institution may make any loan or discount
on the security of the shares of its own capital stock.
(2) Exclusion
For purposes of this subsection, an insured depository
institution shall not be deemed to be making a loan or discount
on the security of the shares of its own capital stock if it
acquires the stock to prevent loss upon a debt previously
contracted for in good faith.
(w) Written employment references may contain suspicions of
involvement in illegal activity
(1) Authority to disclose information
Notwithstanding any other provision of law, any insured
depository institution, and any director, officer, employee, or
agent of such institution, may disclose in any written employment
reference relating to a current or former institution-affiliated
party of such institution which is provided to another insured
depository institution in response to a request from such other
institution, information concerning the possible involvement of
such institution-affiliated party in potentially unlawful
activity.
(2) Information not required
Nothing in paragraph (1) shall be construed, by itself, to
create any affirmative duty to include any information described
in paragraph (1) in any employment reference referred to in
paragraph (1).
(3) Malicious intent
Notwithstanding any other provision of this subsection,
voluntary disclosure made by an insured depository institution,
and any director, officer, employee, or agent of such
institution, under this subsection concerning potentially
unlawful activity that is made with malicious intent, shall not
be shielded from liability from the person identified in the
disclosure.
(4) Definition
For purposes of this subsection, the term "insured depository
institution" includes any uninsured branch or agency of a foreign
bank.
(x) Privileges not affected by disclosure to banking agency or
supervisor
(1) In general
The submission by any person of any information to any Federal
banking agency, State bank supervisor, or foreign banking
authority for any purpose in the course of any supervisory or
regulatory process of such agency, supervisor, or authority shall
not be construed as waiving, destroying, or otherwise affecting
any privilege such person may claim with respect to such
information under Federal or State law as to any person or entity
other than such agency, supervisor, or authority.
(2) Rule of construction
No provision of paragraph (1) may be construed as implying or
establishing that -
(A) any person waives any privilege applicable to information
that is submitted or transferred under any circumstance to
which paragraph (1) does not apply; or
(B) any person would waive any privilege applicable to any
information by submitting the information to any Federal
banking agency, State bank supervisor, or foreign banking
authority, but for this subsection.