12 U.S.C. § 1831t : US Code - Section 1831T: Depository institutions lacking Federal deposit insurance

Search 12 U.S.C. § 1831t : US Code - Section 1831T: Depository institutions lacking Federal deposit insurance

(a) Annual independent audit of private deposit insurers
(1) Audit required
Any private deposit insurer shall obtain an annual audit from
an independent auditor using generally accepted auditing
standards. The audit shall include a determination of whether the
private deposit insurer follows generally accepted accounting
principles and has set aside sufficient reserves for losses.
(2) Providing copies of audit report
(A) Private deposit insurer
The private deposit insurer shall provide a copy of the audit
report -
(i) to each depository institution the deposits of which
are insured by the private deposit insurer, not later than 14
days after the audit is completed; and
(ii) to the appropriate supervisory agency of each State in
which such an institution receives deposits, not later than 7
days after the audit is completed.
(B) Depository institution
Any depository institution the deposits of which are insured
by the private deposit insurer shall provide a copy of the
audit report, upon request, to any current or prospective
customer of the institution.
(3) Enforcement by appropriate State supervisor
Any appropriate State supervisor of a private deposit insurer,
and any appropriate State supervisor of a depository institution
which receives deposits that are insured by a private deposit
insurer, may examine and enforce compliance with this subsection
under the applicable regulatory authority of such supervisor.
(b) Disclosure required
Any depository institution lacking Federal deposit insurance
shall, within the United States, do the following:
(1) Periodic statements; account records
Include conspicuously in all periodic statements of account, on
each signature card, and on each passbook, certificate of
deposit, or share certificate.(!1) a notice that the institution
is not federally insured, and that if the institution fails, the
Federal Government does not guarantee that depositors will get
back their money.
(2) Advertising; premises
(A) In general
Include clearly and conspicuously in all advertising, except
as provided in subparagraph (B); and at each station or window
where deposits are normally received, its principal place of
business and all its branches where it accepts deposits or
opens accounts (excluding automated teller machines or point of
sale terminals), and on its main Internet page, a notice that
the institution is not federally insured.
(B) Exceptions
The following need not include a notice that the institution
is not federally insured:
(i) Any sign, document, or other item that contains the
name of the depository institution, its logo, or its contact
information, but only if the sign, document, or item does not
include any information about the institution's products or
services or information otherwise promoting the institution.
(ii) Small utilitarian items that do not mention deposit
products or insurance if inclusion of the notice would be
impractical.
(3) Acknowledgment of disclosure
(A) New depositors obtained other than through a conversion or
merger
With respect to any depositor who was not a depositor at the
depository institution before October 13, 2006, and who is not
a depositor as described in subparagraph (B), receive any
deposit for the account of such depositor only if the depositor
has signed a written acknowledgement that -
(i) the institution is not federally insured; and
(ii) if the institution fails, the Federal Government does
not guarantee that the depositor will get back the
depositor's money.
(B) New depositors obtained through a conversion or merger
With respect to a depositor at a federally insured depository
institution that converts to, or merges into, a depository
institution lacking federal insurance after October 13, 2006,
receive any deposit for the account of such depositor only if -

(i) the depositor has signed a written acknowledgement
described in subparagraph (A); or
(ii) the institution makes an attempt, as described in
subparagraph (D) and sent by mail no later than 45 days after
the effective date of the conversion or merger, to obtain the
acknowledgment.
(C) Current depositors
Receive any deposit after October 13, 2006, for the account
of any depositor who was a depositor on that date only if -
(i) the depositor has signed a written acknowledgement
described in subparagraph (A); or
(ii) the institution has complied with the provisions of
subparagraph (E) which are applicable as of the date of the
deposit.
(D) Alternative provision of notice to new depositors obtained
through a conversion or merger
(i) (!2) In general
Transmit to each depositor who has not signed a written
acknowledgement described in subparagraph (A) -
(I) a conspicuous card containing the information
described in clauses (i) and (ii) of subparagraph (A), and
a line for the signature of the depositor; and
(II) accompanying materials requesting the depositor to
sign the card, and return the signed card to the
institution.
(E) Alternative provision of notice to current depositors
(i) In general
Transmit to each depositor who was a depositor before
October 13, 2006, and has not signed a written
acknowledgement described in subparagraph (A) -
(I) a conspicuous card containing the information
described in clauses (i) and (ii) of subparagraph (A), and
a line for the signature of the depositor; and
(II) accompanying materials requesting the depositor to
sign the card, and return the signed card to the
institution.
(ii) Manner and timing of notice
(I) First notice
Make the transmission described in clause (i) via mail
not later than three months after October 13, 2006.
(II) Second notice
Make a second transmission described in clause (i) via
mail not less than 30 days and not more than three months
after a transmission to the depositor in accordance with
subclause (I), if the institution has not, by the date of
such mailing, received from the depositor a card referred
to in clause (i) which has been signed by the depositor.
(c) Manner and content of disclosure
To ensure that current and prospective customers understand the
risks involved in foregoing Federal deposit insurance, the Federal
Trade Commission, by regulation or order, shall prescribe the
manner and content of disclosure required under this section, which
shall be presented in such format and in such type size and manner
as to be simple and easy to understand.
(d) Exceptions for institutions not receiving retail deposits
The Federal Trade Commission may, by regulation or order, make
exceptions to subsection (b) of this section for any depository
institution that, within the United States, does not receive
initial deposits of less than an amount equal to the standard
maximum deposit insurance amount from individuals who are citizens
or residents of the United States, other than money received in
connection with any draft or similar instrument issued to transmit
money.
(e) Definitions
For purposes of this section:
(1) Appropriate supervisor
The "appropriate supervisor" of a depository institution means
the agency primarily responsible for supervising the institution.
(2) Depository institution
The term "depository institution" includes -
(A) any entity described in section 461(b)(1)(A)(iv) of this
title; and
(B) any entity that, as determined by the Federal Trade
Commission -
(i) is engaged in the business of receiving deposits; and
(ii) could reasonably be mistaken for a depository
institution by the entity's current or prospective customers.
(3) Lacking Federal deposit insurance
A depository institution lacks Federal deposit insurance if the
institution is not either -
(A) an insured depository institution; or
(B) an insured credit union, as defined in section 101 of the
Federal Credit Union Act [12 U.S.C. 1752].
(4) Private deposit insurer
The term "private deposit insurer" means any entity insuring
the deposits of any depository institution lacking Federal
deposit insurance.
(f) Enforcement
(1) Limited FTC enforcement authority
Compliance with the requirements of subsections (b), (c) and
(e), and any regulation prescribed or order issued under any such
subsection, shall be enforced under the Federal Trade Commission
Act [15 U.S.C. 41 et seq.] by the Federal Trade Commission.
(2) Broad State enforcement authority
(A) In general
Subject to subparagraph (C), an appropriate State supervisor
of a depository institution lacking Federal deposit insurance
may examine and enforce compliance with the requirements of
this section, and any regulation prescribed under this section.
(B) State powers
For purposes of bringing any action to enforce compliance
with this section, no provision of this section shall be
construed as preventing an appropriate State supervisor of a
depository institution lacking Federal deposit insurance from
exercising any powers conferred on such official by the laws of
such State.
(C) Limitation on State action while Federal action pending
If the Federal Trade Commission has instituted an enforcement
action for a violation of this section, no appropriate State
supervisor may, during the pendency of such action, bring an
action under this section against any defendant named in the
complaint of the Commission for any violation of this section
that is alleged in that complaint.