12 U.S.C. § 3904 : US Code - Section 3904: Reserves

Search 12 U.S.C. § 3904 : US Code - Section 3904: Reserves

(a) Establishment and maintenance of special reserves
(1) Each appropriate Federal banking agency shall require a
banking institution to establish and maintain a special reserve
whenever, in the judgment of such appropriate Federal banking
agency -
(A) the quality of such banking institution's assets has been
impaired by a protracted inability of public or private borrowers
in a foreign country to make payments on their external
indebtedness as indicated by such factors, among others, as -
(i) a failure by such public or private borrowers to make
full interest payments on external indebtedness;
(ii) a failure to comply with the terms of any restructured
indebtedness; or
(iii) a failure by the foreign country to comply with any
International Monetary Fund or other suitable adjustment
program; or
(B) no definite prospects exist for the orderly restoration of
debt service.
(2) Such reserves shall be charged against current income and
shall not be considered as part of capital and surplus or
allowances for possible loan losses for regulatory, supervisory, or
disclosure purposes.
(b) Accommodation of potential losses on foreign loans by United
States banks
The appropriate Federal banking agencies shall analyze the
results of foreign loan rescheduling negotiations, assess the loan
loss risk reflected in rescheduling agreements, and, using the
powers set forth in section 3907 of this title (regarding capital
adequacy), ensure that the capital and reserve positions of United
States banks are adequate to accommodate potential losses on their
foreign loans.
(c) Regulations and orders of Federal banking agencies
The appropriate Federal banking agencies shall promulgate
regulations or orders necessary to implement this section within
one hundred and twenty days after November 30, 1983.