12 U.S.C. § 1972 : US Code - Section 1972: Certain tying arrangements prohibited; correspondent accounts

Search 12 U.S.C. § 1972 : US Code - Section 1972: Certain tying arrangements prohibited; correspondent accounts

(1) A bank shall not in any manner extend credit, lease or sell
property of any kind, or furnish any service, or fix or vary the
consideration for any of the foregoing, on the condition or
requirement -
(A) that the customer shall obtain some additional credit,
property, or service from such bank other than a loan, discount,
deposit, or trust service;
(B) that the customer shall obtain some additional credit,
property, or service from a bank holding company of such bank, or
from any other subsidiary of such bank holding company;
(C) that the customer provide some additional credit, property,
or service to such bank, other than those related to and usually
provided in connection with a loan, discount, deposit, or trust
service;
(D) that the customer provide some additional credit, property,
or service to a bank holding company of such bank, or to any
other subsidiary of such bank holding company; or
(E) that the customer shall not obtain some other credit,
property, or service from a competitor of such bank, a bank
holding company of such bank, or any subsidiary of such bank
holding company, other than a condition or requirement that such
bank shall reasonably impose in a credit transaction to assure
the soundness of the credit.
The Board may by regulation or order permit such exceptions to the
foregoing prohibition and the prohibitions of section 1843(f)(9)
and 1843(h)(2) of this title as it considers will not be contrary
to the purposes of this chapter.
(2)(A) No bank which maintains a correspondent account in the
name of another bank shall make an extension of credit to an
executive officer or director of, or to any person who directly or
indirectly or acting through or in concert with one or more persons
owns, controls, or has the power to vote more than 10 per centum of
any class of voting securities of, such other bank or to any
related interest of such person unless such extension of credit is
made on substantially the same terms, including interest rates and
collateral as those prevailing at the time for comparable
transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.
(B) No bank shall open a correspondent account at another bank
while such bank has outstanding an extension of credit to an
executive officer or director of, or other person who directly or
indirectly or acting through or in concert with one or more persons
owns, controls, or has the power to vote more than 10 per centum of
any class of voting securities of, the bank desiring to open the
account or to any related interest of such person, unless such
extension of credit was made on substantially the same terms,
including interest rates and collateral as those prevailing at the
time for comparable transactions with other persons and does not
involve more than the normal risk of repayment or present other
unfavorable features.
(C) No bank which maintains a correspondent account at another
bank shall make an extension of credit to an executive officer or
director of, or to any person who directly or indirectly acting
through or in concert with one or more persons owns, controls, or
has the power to vote more than 10 per centum of any class of
voting securities of, such other bank or to any related interest of
such person, unless such extension of credit is made on
substantially the same terms, including interest rates and
collateral as those prevailing at the time for comparable
transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.
(D) No bank which has outstanding an extension of credit to an
executive officer or director of, or to any person who directly or
indirectly or acting through or in concert with one or more persons
owns, controls, or has the power to vote more than 10 per centum of
any class of voting securities of, another bank or to any related
interest of such person shall open a correspondent account at such
other bank, unless such extension of credit was made on
substantially the same terms, including interest rates and
collateral as those prevailing at the time for comparable
transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.
(E) For purposes of this paragraph, the term "extension of
credit" shall have the meaning prescribed by the Board pursuant to
section 375b of this title, and the term "executive officer" shall
have the same meaning given it under section 375a of this title.
(F) Civil money penalty. -
(i) First tier. - Any bank which, and any institution-
affiliated party (within the meaning of section 1813(u) of this
title) with respect to such bank who, violates any provision of
this paragraph shall forfeit and pay a civil penalty of not more
than $5,000 for each day during which such violation continues.
(ii) Second tier. - Notwithstanding clause (i), any bank which,
and any institution-affiliated party (within the meaning of
section 1813(u) of this title) with respect to such bank who -
(I)(aa) commits any violation described in clause (i);
(bb) recklessly engages in an unsafe or unsound practice in
conducting the affairs of such bank; or
(cc) breaches any fiduciary duty;
(II) which violation, practice, or breach -
(aa) is part of a pattern of misconduct;
(bb) causes or is likely to cause more than a minimal loss
to such bank; or
(cc) results in pecuniary gain or other benefit to such
party,
shall forfeit and pay a civil penalty of not more than $25,000
for each day during which such violation, practice, or breach
continues.
(iii) Third tier. - Notwithstanding clauses (i) and (ii), any
bank which, and any institution-affiliated party (within the
meaning of section 1813(u) of this title) with respect to such
bank who -
(I) knowingly -
(aa) commits any violation described in clause (i);
(bb) engages in any unsafe or unsound practice in
conducting the affairs of such bank; or
(cc) breaches any fiduciary duty; and
(II) knowingly or recklessly causes a substantial loss to
such bank or a substantial pecuniary gain or other benefit to
such party by reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not to exceed
the applicable maximum amount determined under clause (iv) for
each day during which such violation, practice, or breach
continues.
(iv) Maximum amounts of penalties for any violation described
in clause (iii). - The maximum daily amount of any civil penalty
which may be assessed pursuant to clause (iii) for any violation,
practice, or breach described in such clause is -
(I) in the case of any person other than a bank, an amount to
not exceed $1,000,000; and
(II) in the case of a bank, an amount not to exceed the
lesser of -
(aa) $1,000,000; or
(bb) 1 percent of the total assets of such bank.
(v) Assessment; etc. - Any penalty imposed under clause (i),
(ii), or (iii) may be assessed and collected -
(I) in the case of a national bank, by the Comptroller of the
Currency;
(II) in the case of a State member bank, by the Board; and
(III) in the case of an insured nonmember State bank, by the
Federal Deposit Insurance Corporation,
in the manner provided in subparagraphs (E), (F), (G), and (I) of
section 1818(i)(2) of this title for penalties imposed (under
such section) and any such assessment shall be subject to the
provisions of such section.
(vi) Hearing. - The bank or other person against whom any
penalty is assessed under this subparagraph shall be afforded an
agency hearing if such bank or person submits a request for such
hearing within 20 days after the issuance of the notice of
assessment. Section 1818(h) of this title shall apply to any
proceeding under this subparagraph.
(vii) Disbursement. - All penalties collected under authority
of this subsection shall be deposited into the Treasury.
(viii) "Violate" defined. - For purposes of this paragraph, the
term "violate" includes any action (alone or with another or
others) for or toward causing, bringing about, participating in,
counseling, or aiding or abetting a violation.
(ix) Regulations. - The Comptroller of the Currency, the Board,
and the Federal Deposit Insurance Corporation shall prescribe
regulations establishing such procedures as may be necessary to
carry out this subparagraph.
(G) For the purpose of this paragraph -
(i) the term "bank" includes a mutual savings bank, a savings
bank, and a savings association (as those terms are defined in
section 1813 of this title);
(ii) the term "related interests of such persons" includes any
company controlled by such executive officer, director, or
person, or any political or campaign committee the funds or
services of which will benefit such executive officer, director,
or person or which is controlled by such executive officer,
director, or person; and
(iii) the terms "control of a company" and "company" have the
same meaning as under section 375b of this title.
(H) Notice Under This Section After Separation From Service. -
The resignation, termination of employment or participation, or
separation of an institution-affiliated party (within the meaning
of section 1813(u) of this title) with respect to such a bank
(including a separation caused by the closing of such a bank) shall
not affect the jurisdiction and authority of the appropriate
Federal banking agency to issue any notice and proceed under this
section against any such party, if such notice is served before the
end of the 6-year period beginning on the date such party ceased to
be such a party with respect to such bank (whether such date occurs
before, on, or after August 9, 1989).