H. Rpt. 119-558 accompanies financial services legislation titled "Community Bank Regulatory Tailoring Act". Financial bills regulate banks, securities markets, consumer finance, insurance, housing finance, cryptocurrency, or anti-money-laundering. The Financial Services Committee's report explains the financial regulatory changes, the problems they address, the compliance implications for institutions, and potential effects on consumers and markets. Financial services reports often balance industry concerns against consumer protection goals.
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House Report 119-558 - COMMUNITY BANK REGULATORY TAILORING ACT
[House Report 119-558]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-558
=======================================================================
COMMUNITY BANK REGULATORY TAILORING ACT
----------------
March 19, 2026.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
----------------
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 7056]
The Committee on Financial Services, to whom was referred
the bill (H.R. 7056) to index statutory thresholds, and for
other purposes, having considered the same, reports favorably
thereon with an amendment and recommends that the bill as
amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 4
Background and Need for Legislation.............................. 4
Committee Consideration.......................................... 5
Related Hearings................................................. 5
Committee Votes.................................................. 6
Committee Oversight Findings..................................... 8
Performance Goals and Objectives................................. 8
Committee Cost Estimate.......................................... 8
New Budget Authority and CBO Cost Estimate....................... 8
Unfunded Mandates Statement...................................... 8
Earmark Statement................................................ 8
Federal Advisory Committee Act Statement......................... 9
Applicability to the Legislative Branch.......................... 9
Duplication of Federal Programs.................................. 9
Section-by-Section Analysis of the Legislation................... 9
Changes in Existing Law Made by the Bill, as Reported............ 12
Documents Included by Unanimous Consent.......................... 279
Minority Views................................................... 291
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Community Bank Regulatory Tailoring
Act''.
SEC. 2. THRESHOLD ADJUSTMENTS TO ACCOUNT FOR HISTORICAL INCREASES IN
CURRENT-DOLLAR UNITED STATES GROSS DOMESTIC PRODUCT.
(a) Bank Holding Company Act of 1956.--The Bank Holding Company Act
of 1956 (12 U.S.C. 1841 et seq.) is amended--
(1) in section 5(c)(3)(C)(ii) (12 U.S.C. 1844(c)(3)(C)(ii)),
by striking ``$1,000,000'' and inserting ``$3,000,000''; and
(2) in section 13(h)(1)(B)(i) (12 U.S.C. 1851(h)(1)(B)(i)),
by striking ``$10,000,000,000'' and inserting
``$15,000,000,000''.
(b) Community Reinvestment Act of 1977.--Section 809(a) of the
Community Reinvestment Act of 1977 (12 U.S.C. 2908(a)) is amended by
striking ``$250,000,000'' and inserting ``$800,000,000''.
(c) Depository Institution Management Interlocks Act.--The Depository
Institution Management Interlocks Act (12 U.S.C. 3201 et seq.) is
amended--
(1) in section 202(4) (12 U.S.C. 3201(4)), by striking
``$100,000,000'' and inserting ``$600,000,000'';
(2) in section 203(1) (12 U.S.C. 3202(1)), by striking
``$50,000,000'' and inserting ``$110,000,000''; and
(3) in section 204 (12 U.S.C. 3203)--
(A) by striking ``$2,500,000,000'' and inserting
``$10,000,000,000''; and
(B) by striking ``$1,500,000,000'' and inserting
``$10,000,000,000''.
(d) Dodd-Frank Wall Street Reform and Consumer Protection Act.--The
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C.
5301 et seq.) is amended--
(1) in section 210 (12 U.S.C. 5390)--
(A) in subsection (o), by striking
``$50,000,000,000'' in each place it appears and
inserting ``$105,000,000,000''; and
(B) in subsection (r), by striking ``$1,000,000'' and
inserting ``$5,000,000''; and
(2) in section 956(f) (12 U.S.C. 5641(f)), by striking
``$1,000,000,000'' and inserting ``$3,000,000,000''.
(e) Federal Credit Union Act.--The Federal Credit Union Act (12
U.S.C. 1751 et seq.) is amended--
(1) in section 202 (12 U.S.C. 1782)--
(A) in subsection (a)(6)(C)(iii)--
(i) in the heading, by striking ``De
minimus'' and inserting ``De minimis''; and
(ii) by striking ``$10,000,000'' and
inserting ``$34,000,000'';
(B) in subsection (a)(6)(D)--
(i) by striking ``$500,000,000'' and
inserting ``$2,000,000,000''; and
(ii) by striking ``$10,000,000'' and
inserting ``$34,000,000'';
(C) in subsection (b)(1)(A), by striking
``$50,000,000'' each place that term appears and
inserting ``$170,000,000''; and
(D) in subsection (c)(1)(A)(iii), by striking
``$50,000,000'' each place that term appears and
inserting ``$170,000,000''; and
(2) in section 216 (12 U.S.C. 1790d)--
(A) in subsection (f)(2), by striking ``$10,000,000''
and inserting ``$34,000,000'';
(B) in subsection (i)(4)(B), by striking
``$5,000,000'' and inserting ``$17,000,000'';
(C) in subsection (j)(2)(A), by striking
``$25,000,000'' and inserting ``$51,000,000''; and
(D) in subsection (o)(4), by striking ``$10,000,000''
and inserting ``$34,000,000''.
(f) Federal Deposit Insurance Act.--The Federal Deposit Insurance Act
(12 U.S.C. 1811 et seq.) is amended--
(1) in section 7(a)(12) (12 U.S.C. 1817(a)(12)), by striking
``$5,000,000,000'' and inserting ``$8,000,000,000'';
(2) in section 11(p)(1)(A)(i) (12 U.S.C. 1821(p)(1)(A)(i)),
by striking ``$1,000,000'' and inserting ``$5,000,000'';
(3) in section 36 (12 U.S.C. 1831m)--
(A) in subsection (i), by striking ``$5,000,000,000''
each place that term appears and inserting
``$21,000,000,000''; and
(B) in subsection (j), by striking ``$150,000,000''
each place that term appears and inserting
``$800,000,000''; and
(4) in section 38 (12 U.S.C. 1831o)--
(A) in subsection (b), by striking ``$300,000,000''
and inserting ``$2,000,000,000''; and
(B) in subsection (k)--
(i) by striking ``$50,000,000'' and inserting
``$110,000,000''; and
(ii) by striking ``$75,000,000'' and
inserting ``$150,000,000''.
(g) Federal Home Loan Bank Act.--Section 2(10) of the Federal Home
Loan Bank Act (12 U.S.C. 1422(10)) is amended by striking
``$1,000,000,000'' each place that term appears and inserting
``$3,000,000,000''.
(h) Federal Reserve Act.--The Federal Reserve Act (12 U.S.C. 221 et
seq.) is amended--
(1) in section 7(a)(1) (12 U.S.C. 289) by striking
``$10,000,000,000'' each place that term appears and inserting
``$17,000,000,000''; and
(2) in section 22(h)(5)(C) (12 U.S.C. 375b(h)(5)(C)) by
striking ``$100,000,000'' and inserting ``$500,000,000''.
(i) Home Mortgage Disclosure Act of 1975.--The Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2801 et seq.) is amended--
(1) in the second paragraph (3) of section 304(i) (12 U.S.C.
2803(i)(3)); relating to ``Exemption from certain disclosure
requirements''), by striking ``$30,000,000'' and inserting
``$160,000,000''; and
(2) in section 309(a) (12 U.S.C. 2808(a)), by striking
``$10,000,000'' and inserting ``$180,000,000''.
(j) Home Owners' Loan Act.--Section 5(u) of the Home Owners' Loan Act
(12 U.S.C. 1464(u)) is amended--
(1) in paragraph (2)(A)(i), by striking ``$500,000'' and
inserting ``$3,000,000''; and
(2) in paragraph (2)(A)(ii), by striking ``$30,000,000'' and
inserting ``$160,000,000''.
(k) International Lending Supervision Act of 1983.--Section 909(a)(1)
of the International Lending Supervision Act of 1983 (12 U.S.C.
3908(a)(1)) is amended by striking ``$20,000,000'' and inserting
``$160,000,000''.
(l) Real Estate Settlement Procedures Act of 1974.--Section
3(1)(B)(iv) of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2602(1)(B)(iv)) is amended by striking ``$1,000,000'' and
inserting ``$19,000,000''.
(m) Revised Statutes of the United States.--Section
5136A(a)(2)(D)(ii) of the Revised Statutes of the United States (12
U.S.C. 24a(a)(2)(D)(ii)) is amended by striking ``$50,000,000,000'' and
inserting ``$175,000,000,000''.
(n) Truth in Lending Act.--Section 129C(b)(2)(F)(i) of the Truth in
Lending Act (15 U.S.C. 1639c(b)(2)(F)(i)) is amended by striking
``$10,000,000,000'' and inserting ``$15,000,000,000''.
SEC. 3. PERIODIC ADJUSTMENTS TO THRESHOLDS TO ACCOUNT FOR FUTURE
INCREASES IN CURRENT-DOLLAR UNITED STATES GROSS DOMESTIC
PRODUCT.
(a) In General.--By April 1, 2031, and the 1st day of each subsequent
5-year period, the Board of Governors of the Federal Reserve System
shall prescribe the amount by which each dollar amount described in
section 2 of this Act shall be increased by the ratio, if greater than
1, of the annual value of current-dollar United States gross domestic
product, published by the Department of Commerce, for the calendar year
preceding the year in which the adjustment is calculated under this
section, to the published annual value of current-dollar United States
gross domestic product for the calendar year preceding April 1, 2026.
(b) Currency of Information.--The values used in the calculation
under subsection (a) shall be, as of the date of the calculation, the
values most recently published by the Department of Commerce.
(c) Rounding.--
(1) If any amount equal to or greater than $100,000,000,000
determined under subsection (a) for any period is not a
multiple of $50,000,000,000, the amount shall be rounded up to
the nearest $50,000,000,000.
(2) If any amount less than $100,000,000,000 but equal to or
greater than $10,000,000,000 determined under subsection (a)
for any period is not a multiple of $5,000,000,000, the amount
shall be rounded up to the nearest $5,000,000,000.
(3) If any amount less than $10,000,000,000 but equal to or
greater than $1,000,000,000 determined under subsection (a) for
any period is not a multiple of $500,000,000, the amount shall
be rounded up to the nearest $500,000,000.
(4) If any amount less than $1,000,000,000 but equal to or
greater than $100,000,000 determined under subsection (a) for
any period is not a multiple of $50,000,000, the amount shall
be rounded up to the nearest $50,000,000.
(5) If any amount less than $100,000,000 but equal to or
greater than $10,000,000 determined under subsection (a) for
any period is not a multiple of $5,000,000, the amount shall be
rounded up to the nearest $5,000,000.
(6) If any amount less than $10,000,000 but equal to or
greater than $1,000,000 determined under subsection (a) for any
period is not a multiple of $500,000, the amount shall be
rounded up to the nearest $500,000.
(7) If any amount less than $1,000,000 but equal to or
greater than $100,000 determined under subsection (a) for any
period is not a multiple of $50,000, the amount shall be
rounded up to the nearest $50,000.
(8) If any amount less than $100,000 but equal to or greater
than $10,000 determined under subsection (a) for any period is
not a multiple of $5,000, the amount shall be rounded up to the
nearest $5,000.
(9) If any amount less than $10,000 but equal to or greater
than $1,000 determined under subsection (a) for any period is
not a multiple of $500, the amount shall be rounded up to the
nearest $500.
(10) If any amount less than $1,000 but equal to or greater
than $100 determined under subsection (a) for any period is not
a multiple of $50, the amount shall be rounded up to the
nearest $50.
(11) If any amount less than $100 but equal to or greater
than $10 determined under subsection (a) for any period is not
a multiple of $5, the amount shall be rounded up to the nearest
$5.
(12) If any amount less than $10 but equal to or greater than
$1 determined under subsection (a) for any period is not a
multiple of $0.50, the amount shall be rounded up to the
nearest $0.50.
(d) Publication.--Not later than April 5 of any calendar year in
which an adjustment is required to be calculated under subsection (a),
the Board of Governors of the Federal Reserve System shall publish in
the Federal Register the dollar amounts as so calculated.
(e) Implementation Period.--The increase in the dollar amounts shall
take effect on January 1 of the year immediately succeeding any
calendar year in which an adjustment is required to be calculated under
subsection (a).
Purpose and Summary
H.R. 7056, the Community Bank Regulatory Tailoring Act, was
introduced on January 14, 2026, by Republican Representative
Andy Barr (KY-06). This bill indexes various asset-based
thresholds for bank regulations to nominal GDP for community
banks and small credit unions. Thresholds raised under this
bill include the qualified mortgage rule, Volcker rule, and
additional thresholds related to annual independent audit
requirements for small banks.
Background and Need for Legislation
Federal financial regulators typically use asset-size
thresholds to determine when specific compliance requirements
apply, with the goal of directing the most rigorous supervision
towards the largest and most complex institutions while
conserving resources for small institutions. However, these
thresholds are often set as static dollar figures that do not
change as the economy and covered institutions change and grow.
While fixed thresholds offer institutions predictability
regarding their regulatory obligations, their rigid nature
creates significant market distortions. Without indexing these
regulations, institutions are subject to ``bracket creep.'' As
the economy expands and inflation rises, the nominal value of
bank assets rises despite being the same size relative to the
wider economy in real inflation-adjusted terms. Under the
current framework, community banks and small credit unions are
being pushed into higher regulatory classifications not because
they have become riskier or more complex, but because they have
grown organically. This misalignment results in a misallocation
of supervisory resources by capturing institutions that have
only grown on paper and diverts the focus of real risks while
imposing unwarranted compliance costs on small, noncomplex
financial institutions.
H.R. 7056 adjusts thresholds for community banks and small
credit unions to account for the effects of economic growth and
inflation that have occurred since the threshold was initially
set. Additionally, this bill codifies automatic adjustments on
a permanent basis by indexing the new thresholds to nominal
GDP.
Committee Consideration
119TH CONGRESS
On January 14, 2026, Representative Barr introduced H.R.
7056, the Community Bank Regulatory Tailoring Act.
Representatives Josh Gottheimer (D-NJ) and Dan Meuser (R-PA)
were added subsequently as cosponsors.
The bill was referred solely to the Committee on Financial
Services. The bill was attached to the January 21, 2026,
hearing titled ``Oversight of the Department of Housing and
Urban Development and the Federal Housing Administration.''
On January 22, 2026, the Committee on Financial Services
met in open session to consider, among others, H.R. 7056. The
Committee ordered H.R. 7056, as amended, to be reported with a
favorable recommendation to the House of Representatives.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearings were used to
develop H.R. 7056:
On April 29, 2025, the Subcommittee on Financial
Institutions of the Committee on Financial Services held a
hearing titled, ``Regulatory Overreach: The Price Tag on
American Prosperity.'' The Subcommittee heard testimony from:
Ms. Sarah Christine Flowers, Senior Vice President, Associate
General Counsel, Bank Policy Institute; Mr. J. Michael
Radcliffe, Chairman and Chief Executive Officer, Community
Financial Services Bank; Mrs. Margaret E. Tahyar, Partner, Head
of Financial Institutions Group, Davis Polk & Wardwell LLP; and
The Honorable Graham Steele, Academic Fellow, Rock Center for
Corporate Governance, Stanford Law School.
On May 14, 2025, the Subcommittee on Financial Institutions
of the Committee on Financial Services held a hearing titled,
``Enhancing Competition: Shaping the Future of Bank Mergers and
De Novo Formation.'' The Subcommittee heard testimony from: Mr.
Keith Costello, President and Chief Executive Officer, Locality
Bank; Ms. Mary Usategui, President and Chief Executive Officer,
BankMiami; Ms. Amanda Allexon, Partner, Simpson Thacher &
Bartlett LLP; Mr. John Berlau, Senior Fellow and Director of
Finance Policy, Competitive Enterprise Institute; and Mrs.
ReShonda Young, Founder, Jabez Inc.
On December 11, 2025, the Subcommittee on Financial
Institutions of the Committee on Financial Services held a
hearing titled, ``Right-Sizing the U.S. Bank Capital Framework:
A Return to Tailoring, Economic Growth, and Competitiveness.''
The Subcommittee heard testimony from: Mrs. Margaret Tahyar,
Head of Financial Institutions, Davis Polk & Wardwell LLP; Mrs.
Amanda Eversole, President and Chief Executive Officer,
Financial Services Forum; Mr. Andrew Olmem, Managing Partner
and Co-Leader of the Financial Services Group, Mayer Brown; Mr.
Mike Flood, Head of Center for Capital Markets Competitiveness,
U.S. Chamber of Commerce; and Mr. Simon Johnson, Professor of
Entrepreneurship, MIT Sloan School of Management.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On January 22, 2026, the Committee ordered H.R. 7056, as
amended, to be reported with a favorable recommendation to the
House by a recorded vote of 33 yeas and 21 nays, a quorum being
present. (Record Vote No. FC-236).
The Committee considered the following amendments to H.R.
7056:
Representative Barr offered an amendment in
the nature of a substitute, which made technical
changes. This amendment was adopted by a voice vote.
Ranking Member Maxine Waters (D-CA) offered
an amendment (No. 3), designated HR7056_03. This
amendment caps the annual percentage rate applicable to
an extension of credit obtained by use of a credit card
at 10 percentage points. This amendment was ruled not
germane.
Ranking Member Waters offered an amendment
(No. 4), designated WATERS_136. This amendment
increases the FDIC deposit insurance limit and NCUA
share insurance limit to $550,000 per account. The
amendment also prohibits the sale of assets of a failed
bank by the FDIC to a person who has previously
defaulted on an obligation owed to the FDIC. This
amendment was defeated by a voice vote.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 7056 is to index
various asset-based regulatory thresholds to nominal GDP for
community banks and credit unions.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 7056. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Community Bank
Regulatory Tailoring Act''.
Section 2. Threshold adjustments to account for historical increases in
current-dollar United States gross domestic product
Section 2 provides numerous amendments to thresholds
applicable to financial institutions:
Section 2(a) increases two thresholds in the Bank Holding
Company Act of 1956:
(1) in section 5(c)(3)(C)(ii) (12 U.S.C. 1844(c)(3)(C)(ii))
from $1,000,000 to $3,000,000 the maximum market value of
shares in an investment company that a bank holding company may
own and have the activities of that investment company be
exempt from capital adequacy rules, guidance, standards, or
requirements; and
(2) in section 13(h)(1)(B)(i) (the Volcker Rule, 12 U.S.C.
1851(h)(1)(B)(i)) from $10,000,000 to $15,000,000 the maximum
total consolidated assets which a Bank Holding Company of an
insured depository institution may hold and be exempted from
the definition of a ``banking entity'' under the Volcker Rule.
Section 2(b) amends section 809(a) of the Community
Reinvestment Act of 1977 (12 U.S.C. 2908(a)), the bill strikes
the current threshold of $250,000,000 and inserts $800,000,000,
thereby increasing the asset-size threshold that defines which
financial institutions are subject to certain CRA regulatory
requirements and examinations.
Section 2(c) adjusts three statutory thresholds in the
Depository Institution Management Interlocks Act regarding when
executives or directors of depository institutions may serve at
two competing institutions simultaneously:
(1) In section 202(4) (12 U.S.C. 3201(4)), the asset-size
threshold defining when management interlock restrictions apply
is increased from $100,000,000 to $600,000,000.
(2) In section 203(1) (12 U.S.C. 3202(1)), the smaller
asset threshold used for certain monitoring or notification
requirements is raised from $50,000,000 to $110,000,000.
(3) In section 204 (12 U.S.C. 3203), two large-institution
thresholds are both amended: the former $2,500,000,000 and
$1,500,000,000 asset levels each become $10,000,000,000.
Section 2(d) increases several Dodd-Frank Act thresholds:
(1) In section 210 (12 U.S.C. 5390(o)), raises the asset
threshold used in Title II (orderly liquidation authority) for
covered financial companies from $50,000,000,000 to
$105,000,000,000.
(2) In section 210(r) (12 U.S.C. 5390(r)), the maximum
amount a person may have defaulted on an obligation increases
from $1,000,000 to $5,000,000 and still purchase assets of a
covered financial company.
(3) In section 956(f) (12 U.S.C. 5641(f)), raises from
$1,000,000,000 to $3,000,000,000 the exemption from incentive-
based compensation provisions.
Section 2(e) updates multiple asset thresholds in the
Federal Credit Union Act (12 U.S.C. 1751 et seq.; 12 U.S.C.
1790d), which determines when credit unions become subject to
enhanced supervisory, audit, governance, and prompt-corrective-
action requirements:
(1) Section 202(a)(6)(C)(iii) (12 U.S.C.
1782(a)(6)(C)(iii))--by increasing the de minimis asset
threshold from $10,000,000 to $34,000,000, the bill expands the
number of very small credit unions eligible for lighter
regulatory treatment and statutory exemptions tied to minimal
asset size.
(2) Section 202(a)(6)(D) (12 U.S.C. 1782(a)(6)(D))--by
raising the large-credit-union threshold from $500,000,000 to
$2,000,000,000, the bill limits heightened audit, reporting,
and supervisory obligations to substantially larger
institutions.
(3) Sections 202(b)(1)(A) (12 U.S.C. 1782(b)(1)(A)) and
202(c)(1)(A)(iii) (12 U.S.C. 1782(c)(1)(A)(iii))--by increasing
asset triggers from $50,000,000 to $170,000,000, the bill
raises the level at which a federally insured credit union
becomes subject to: (1) expanded financial reporting
requirements to the NCUA Board regarding its condition and
operations; and (2) specified Share Insurance Fund assessment
calculations or contribution requirements that apply to larger
insured credit unions.
(4) Section 216 (12 U.S.C. 1790d)--by raising several
prompt-corrective-action and capital-related thresholds: (1)
$10,000,000 to $34,000,000; (2) $5,000,000 to $17,000,000; and
(3) $25,000,000 to $51,000,000. The bill recalibrates when
capital restoration plans, restrictions on activities, and
supervisory interventions apply to smaller credit unions,
thereby reducing regulatory burden at lower asset levels while
preserving the PCA framework for larger institutions.
Section 2(f) amends multiple thresholds in the Federal
Deposit Insurance Act (12 U.S.C. 1811 et seq.) that determine
when insured depository institutions become subject to enhanced
supervisory, reporting, assessment, and prompt-corrective-
action requirements administered by the FDIC:
(1) Section 7(a)(12) (12 U.S.C. 1817(a)(12))--by increasing
the deposit-insurance-related asset threshold from
$5,000,000,000 to $8,000,000,000, the bill raises the level at
which certain statutory definitions and insurance-fund
calculations apply.
(2) Section 11(p)(1)(A)(i) (12 U.S.C. 1821(p)(1)(A)(i))--by
raising the threshold from $1,000,000 to $5,000,000, the bill
updates the maximum amount a person may have defaulted on an
obligation increases from $1,000,000 to $5,000,000 and still
purchase assets of a failed institution.
(3) Section 36 (12 U.S.C. 1831m)--by increasing two asset-
size thresholds from $5,000,000,000 to $21,000,000,000 and from
$150,000,000 to $800,000,000, the bill adjusts when
institutions become subject to the FDIC's independent audit-
committee and internal-control reporting requirements
applicable to large insured depository institutions.
(4) Section 38 (12 U.S.C. 1831o)--by raising several
prompt-corrective-action and supervisory-category thresholds
from $300,000,000 to $2,000,000,000, $50,000,000 to
$110,000,000, and $75,000,000 to $150,000,000, the bill adjusts
when certain supervisory restrictions, capital-restoration
obligations, and activity limitations attach to troubled
institutions.
Section 2(g) amends section 2(10) (12 U.S.C. 1422(10)) to
replace $1,000,000,000 with $3,000,000,000 wherever that term
appears in the Act. This substitution raises the statutory
asset or requirement limit within the Federal Home Loan Bank
system, which can affect membership criteria or transaction
caps tied to Home Loan Banks.
Section 2(h) updates two Federal Reserve Act thresholds (12
U.S.C. 221 et seq. and 12 U.S.C. 375b):
(1) In section 7(a)(1) (12 U.S.C. 289)--The $10,000,000,000
asset threshold is increased to $17,000,000,000 which raises
the point at which a stockholder's dividends are capped at the
10-year Treasury note.
(2) In section 22(h)(5)(C) (12 U.S.C. 375b(h)(5)(C))--The
bill raises from $100,000,000 to $500,000,000 the dollar amount
at which additional quantitative limits and Federal Reserve
restrictions on loans and extensions of credit to executive
officers, directors, and principal shareholders apply.
Section 2(i) amends two thresholds in the Home Mortgage
Disclosure Act (12 U.S.C. 2801 et seq.) that determine when
depository institutions and mortgage lenders must collect,
report, and publicly disclose detailed mortgage-lending data:
(1) Section 304(i)(3) (12 U.S.C. 2803(i)(3))--by increasing
the exemption threshold from $30,000,000 to $160,000,000, the
bill expands the class of smaller depository institutions that
are exempt from HMDA data-collection and reporting
requirements.
(2) Section 309(a) (12 U.S.C. 2808(a))--by increasing the
reporting trigger from $10,000,000 to $180,000,000, the bill
raises the asset-size level at which institutions become
subject to HMDA-related reporting or recordkeeping obligations
administered by the CFPB and Federal banking agencies.
Section 2(j) amends sections 5(u)(2)(A)(i) and (ii) of the
Home Owners' Loan Act (12 U.S.C. 1464(u))--by increasing the
threshold in paragraph (2)(A)(i) from $500,000 to $3,000,000
and in paragraph (2)(A)(ii) from $30,000,000 to $160,000,000,
the bill raises the asset-size levels that determine when
certain statutory conditions related to the origination and
servicing of Federal savings and loan charters apply, including
eligibility criteria and exemption points for regulatory
requirements governing savings associations.
Section 2(k) amends section 909(a)(1) of the International
Lending Supervision Act of 1983 (12 U.S.C. 3908(a)(1))--by
striking $20,000,000 and inserting $160,000,000, the bill
raises the size threshold for when certain international
lending supervisory provisions apply to banks and financial
institutions engaged in cross-border credit activities.
Section 2(l) amends Section 3(1)(B)(iv) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2602(1)(B)(iv))--
by increasing the monetary threshold from $1,000,000 to
$19,000,000, the bill raises the point at which a mortgage loan
is subject to the provisions of the Real Estate Settlement
Procedures Act.
Section 2(m) amends Section 5136A(a)(2)(D)(ii) of the
Revised Statutes of the United States (12 U.S.C.
24a(a)(2)(D)(ii))--by striking $50,000,000,000 and inserting
$175,000,000,000, the bill raises the maximum consolidated
total assets of all financial subsidiaries a national bank may
control or hold interest in.
Section 2(n) amends Section 129C(b)(2)(F)(i) of the Truth
in Lending Act (15 U.S.C. 1639c(b)(2)(F)(i))--by striking
$10,000,000,000 and inserting $15,000,000,000, the bill raises
the total asset threshold used to define larger mortgage
lenders or servicers for certain Truth in Lending Act mortgage
servicing and disclosure obligations.
Section 3. Periodic adjustments to thresholds to account for future
increases in current-dollar United States gross domestic
product
Section 3 establishes an automatic mechanism for
periodically increasing every dollar threshold amended in
Section 2 of the Act so that those amounts keep pace with
growth in the U.S. economy, rather than remaining fixed in
nominal terms over time. The adjustments begin April 1, 2031,
and adjust every five years thereafter. The adjustments must
increase based on the ratio, if greater than one, of the annual
value of current-dollar U.S. gross domestic product as compared
to the published annual GDP for the year preceding April 1,
2026. The section also provides certain rounding rules for such
determinations, a publication requirement, and implementation
requirement.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
BANK HOLDING COMPANY ACT OF 1956
* * * * * * *
administration
Sec. 5. (a) Within one hundred and eighty days after the date
of enactment of this Act, or within one hundred and eighty days
after becoming a bank holding company, whichever is later, each
bank holding company shall register with the Board on forms
prescribed by the Board, which shall include such information
with respect to the financial condition and operations,
management, and intercompany relationships of the bank holding
company and its subsidiaries, and related matters, as the Board
may deem necessary or appropriate to carry about the purposes
of this Act. The Board may, in its discretion, extend the time
within which a bank holding company shall register and file the
requisite information. A declaration filed in accordance with
section 4(l)(1)(C) shall satisfy the requirements of this
subsection with regard to the registration of a bank holding
company but not any requirement to file an application to
acquire a bank pursuant to section 3.
(b) The Board is authorized to issue such regulations and
orders, including regulations and orders relating to the
capital requirements for bank holding companies, as may be
necessary to enable it to administer and carry out the purposes
of this Act and prevent evasions thereof. In establishing
capital regulations pursuant to this subsection, the Board
shall seek to make such requirements countercyclical, so that
the amount of capital required to be maintained by a company
increases in times of economic expansion and decreases in times
of economic contraction, consistent with the safety and
soundness of the company.
(c) Reports and Examinations.--
(1) Reports.--
(A) In general.--The Board, from time to
time, may require a bank holding company and
any subsidiary of such company to submit
reports under oath to keep the Board informed
as to--
(i) its financial condition, systems
for monitoring and controlling
financial and operating risks, and
transactions with depository
institution subsidiaries of the bank
holding company; and
(ii) compliance by the bank holding
company or subsidiary with--
(I) this Act;
(II) Federal laws that the
Board has specific jurisdiction
to enforce against the company
or subsidiary; and
(III) other than in the case
of an insured depository
institution or functionally
regulated subsidiary, any other
applicable provision of Federal
law.
(B) Use of existing reports and other
supervisory information.--The Board shall, to
the fullest extent possible, use--
(i) reports and other supervisory
information that the bank holding
company or any subsidiary thereof has
been required to provide to other
Federal or State regulatory agencies;
(ii) externally audited financial
statements of the bank holding company
or subsidiary;
(iii) information otherwise available
from Federal or State regulatory
agencies; and
(iv) information that is otherwise
required to be reported publicly.
(C) Availability.--Upon the request of the
Board, the bank holding company or a subsidiary
of the bank holding company shall promptly
provide to the Board any information described
in clauses (i) through (iii) of subparagraph
(B).
(2) Examinations.--
(A) In general.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the
Board may make examinations of a bank holding
company and each subsidiary of a bank holding
company in order to--
(i) inform the Board of--
(I) the nature of the
operations and financial
condition of the bank holding
company and the subsidiary;
(II) the financial,
operational, and other risks
within the bank holding company
system that may pose a threat
to--
(aa) the safety and
soundness of the bank
holding company or of
any depository
institution subsidiary
of the bank holding
company; or
(bb) the stability of
the financial system of
the United States; and
(III) the systems of the bank
holding company for monitoring
and controlling the risks
described in subclause (II);
and
(ii) monitor the compliance of the
bank holding company and the subsidiary
with--
(I) this Act;
(II) Federal laws that the
Board has specific jurisdiction
to enforce against the company
or subsidiary; and
(III) other than in the case
of an insured depository
institution or functionally
regulated subsidiary, any other
applicable provisions of
Federal law.
(B) Use of reports to reduce examinations.--
For purposes of this paragraph, the Board
shall, to the fullest extent possible, rely
on--
(i) examination reports made by other
Federal or State regulatory agencies
relating to a bank holding company and
any subsidiary of a bank holding
company; and
(ii) the reports and other
information required under paragraph
(1).
(C) Coordination with other regulators.--The
Board shall--
(i) provide reasonable notice to, and
consult with, the appropriate Federal
banking agency, the Securities and
Exchange Commission, the Commodity
Futures Trading Commission, or State
regulatory agency, as appropriate, for
a subsidiary that is a depository
institution or a functionally regulated
subsidiary of a bank holding company
before commencing an examination of the
subsidiary under this section; and
(ii) to the fullest extent possible,
avoid duplication of examination
activities, reporting requirements, and
requests for information.
(3) Capital.--
(A) In general.--The Board may not, by
regulation, guideline, order, or otherwise,
prescribe or impose any capital or capital
adequacy rules, guidelines, standards, or
requirements on any functionally regulated
subsidiary of a bank holding company that--
(i) is not a depository institution;
and
(ii) is--
(I) in compliance with the
applicable capital requirements
of its Federal regulatory
authority (including the
Securities and Exchange
Commission) or State insurance
authority;
(II) properly registered as
an investment adviser under the
Investment Advisers Act of
1940, or with any State; or
(III) is licensed as an
insurance agent with the
appropriate State insurance
authority.
(B) Rule of construction.--Subparagraph (A)
shall not be construed as preventing the Board
from imposing capital or capital adequacy
rules, guidelines, standards, or requirements
with respect to--
(i) activities of a registered
investment adviser other than with
respect to investment advisory
activities or activities incidental to
investment advisory activities; or
(ii) activities of a licensed
insurance agent other than insurance
agency activities or activities
incidental to insurance agency
activities.
(C) Limitations on indirect action.--In
developing, establishing, or assessing bank
holding company capital or capital adequacy
rules, guidelines, standards, or requirements
for purposes of this paragraph, the Board may
not take into account the activities,
operations, or investments of an affiliated
investment company registered under the
Investment Company Act of 1940, unless the
investment company is--
(i) a bank holding company; or
(ii) controlled by a bank holding
company by reason of ownership by the
bank holding company (including through
all of its affiliates) of 25 percent or
more of the shares of the investment
company, and the shares owned by the
bank holding company have a market
value equal to more than [$1,000,000]
$3,000,000.
(4) Functional regulation of securities and insurance
activities.--
(A) Securities activities.--Securities
activities conducted in a functionally
regulated subsidiary of a depository
institution shall be subject to regulation by
the Securities and Exchange Commission, and by
relevant State securities authorities, as
appropriate, subject to section 104 of the
Gramm-Leach-Bliley Act, to the same extent as
if they were conducted in a nondepository
institution subsidiary of a bank holding
company.
(B) Insurance activities.--Subject to section
104 of the Gramm-Leach-Bliley Act, insurance
agency and brokerage activities and activities
as principal conducted in a functionally
regulated subsidiary of a depository
institution shall be subject to regulation by a
State insurance authority to the same extent as
if they were conducted in a nondepository
institution subsidiary of a bank holding
company.
(5) Definition.--For purposes of this subsection, the
term ``functionally regulated subsidiary'' means any
company--
(A) that is not a bank holding company or a
depository institution; and
(B) that is--
(i) a broker or dealer that is
registered under the Securities
Exchange Act of 1934;
(ii) a registered investment adviser,
properly registered by or on behalf of
either the Securities and Exchange
Commission or any State, with respect
to the investment advisory activities
of such investment adviser and
activities incidental to such
investment advisory activities;
(iii) an investment company that is
registered under the Investment Company
Act of 1940;
(iv) an insurance company, with
respect to insurance activities of the
insurance company and activities
incidental to such insurance
activities, that is subject to
supervision by a State insurance
regulator; or
(v) an entity that is subject to
regulation by, or registration with,
the Commodity Futures Trading
Commission, with respect to activities
conducted as a futures commission
merchant, commodity trading adviser,
commodity pool, commodity pool
operator, swap execution facility, swap
data repository, swap dealer, major
swap participant, and activities that
are incidental to such commodities and
swaps activities.
(d) Before the expiration of two years following the date of
enactment of this Act, and each year thereafter in the Board's
annual report to the Congress, the Board shall report to the
Congress the results of the administration of this Act, stating
what, if any, substantial difficulties have been encountered in
carrying out the purposes of this Act, and any recommendations
as to changes in the law which in the opinion of the Board
would be desirable.
(e)(1) Notwithstanding any other provision of this Act, the
Board may, whenever it has reasonable cause to believe that the
continuation by a bank holding company of any activity or of
ownership or control of any of its nonbank subsidiaries, other
than a nonbank subsidiary of a bank, constitutes a serious risk
to the financial safety, soundness, or stability of a bank
holding company subsidiary bank and is inconsistent with sound
banking principles or with the purposes of this Act or with the
Financial Institutions Supervisory Act of 1966, at the election
of the bank holding company--
(A) order the bank holding company or any such
nonbank subsidiaries, after due notice and opportunity
for hearing, and after considering the views of the
bank's primary supervisor, which shall be the
Comptroller of the Currency in the case of a national
bank or the Federal Deposit Insurance Corporation and
the appropriate State supervisory authority in the case
of an insured nonmember bank, to terminate such
activities or to terminate (within one hundred and
twenty days or such longer period as the Board may
direct in unusual circumstances) its ownership or
control of any such subsidiary either by sale or by
distribution of the shares of the subsidiary to the
shareholders of the bank holding company; or
(B) order the bank holding company, after due notice
and opportunity for hearing, and after consultation
with the primary supervisor for the bank, which shall
be the Comptroller of the Currency in the case of a
national bank, and the Federal Deposit Insurance
Corporation and the appropriate State supervisor in the
case of an insured nonmember bank, to terminate (within
120 days or such longer period as the Board may direct)
the ownership or control of any such bank by such
company.
The distribution referred to in subparagraph (A) shall be pro
rata with respect to all of the shareholders of the
distributing bank holding company, and the holding company
shall not make any charge to its shareholders arising out of
such a distribution.
(2) The Board may in its discretion apply to the United
States district court within the jurisdiction of which the
principal office of the holding 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, but except as
provided in section 9 of this Act, 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.
(f) In the course of or in connection with an application,
examination, investigation or other proceeding under this Act,
the Board, or any member or designated representative thereof,
including any person designated to conduct any hearing under
this Act, shall have the power to administer oaths and
affirmations, to take or cause to be taken depositions, and to
issue, revoke, quash, or modify subpoenas and subpoenas duces
tecum; and the Board is empowered to make rules and regulations
to effectuate the purposes of this subsection. The attendance
of witnesses and the production of documents provided for in
this subsection may be required from any place in any State or
in any territory or other place subject to the jurisdiction of
the United States at any designated place where such proceeding
is being conducted. Any party to proceedings under this Act 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 the enforcement of any subpoena or
subpoena duces tecum issued pursuant to this subsection, and
such courts shall have jurisdiction and power to order and
require compliance therewith. Witnesses subpoenaed under this
subsection shall be paid the same fees and mileage that are
paid witnesses in the district courts of the United States. Any
service required under this subsection may be made by
registered mail, or in such other manner reasonably calculated
to give actual notice as the Board may by regulation or
otherwise provide. Any court having jurisdiction of any
proceeding instituted under this subsection may allow to any
such party such reasonable expenses and attorneys' fees as it
deems just and proper. Any person who willfully shall fail or
refuse to attend and testify or to answer any lawful inquiry or
to produce books, papers, correspondence, memoranda, contracts,
agreements, or other records, if in such person's power so to
do, in obedience to the subpoena of the Board, shall be guilty
of a misdemeanor and, upon conviction, shall be subject to a
fine of not more than $1,000 or to imprisonment for a term of
not more than one year or both.
(g) Authority of State Insurance Regulator and the Securities
and Exchange Commission.--
(1) In general.--Notwithstanding any other provision
of law, any regulation, order, or other action of the
Board that requires a bank holding company to provide
funds or other assets to a subsidiary depository
institution shall not be effective nor enforceable with
respect to an entity described in subparagraph (A) if--
(A) such funds or assets are to be provided
by--
(i) a bank holding company that is an
insurance company, a broker or dealer
registered under the Securities
Exchange Act of 1934, an investment
company registered under the Investment
Company Act of 1940, or an investment
adviser registered by or on behalf of
either the Securities and Exchange
Commission or any State; or
(ii) an affiliate of the depository
institution that is an insurance
company or a broker or dealer
registered under the Securities
Exchange Act of 1934, an investment
company registered under the Investment
Company Act of 1940, or an investment
adviser registered by or on behalf of
either the Securities and Exchange
Commission or any State; and
(B) the State insurance authority for the
insurance company or the Securities and
Exchange Commission for the registered broker,
dealer, investment adviser (solely with respect
to investment advisory activities or activities
incidental thereto), or investment company, as
the case may be, determines in writing sent to
the holding company and the Board that the
holding company shall not provide such funds or
assets because such action would have a
material adverse effect on the financial
condition of the insurance company or the
broker, dealer, investment company, or
investment adviser, as the case may be.
(2) Notice to state insurance authority or sec
required.--If the Board requires a bank holding
company, or an affiliate of a bank holding company,
that is an insurance company or a broker, dealer,
investment company, or investment adviser described in
paragraph (1)(A) to provide funds or assets to a
depository institution subsidiary of the holding
company pursuant to any regulation, order, or other
action of the Board referred to in paragraph (1), the
Board shall promptly notify the State insurance
authority for the insurance company, the Securities and
Exchange Commission, or State securities regulator, as
the case may be, of such requirement.
(3) Divestiture in lieu of other action.--If the
Board receives a notice described in paragraph (1)(B)
from a State insurance authority or the Securities and
Exchange Commission with regard to a bank holding
company or affiliate referred to in that paragraph, the
Board may order the bank holding company to divest the
depository institution not later than 180 days after
receiving the notice, or such longer period as the
Board determines consistent with the safe and sound
operation of the depository institution.
(4) Conditions before divestiture.--During the period
beginning on the date an order to divest is issued by
the Board under paragraph (3) to a bank holding company
and ending on the date the divestiture is completed,
the Board may impose any conditions or restrictions on
the holding company's ownership or operation of the
depository institution, including restricting or
prohibiting transactions between the depository
institution and any affiliate of the institution, as
are appropriate under the circumstances.
(5) Rule of construction.--No provision of this
subsection may be construed as limiting or otherwise
affecting, except to the extent specifically provided
in this subsection, the regulatory authority, including
the scope of the authority, of any Federal agency or
department with regard to any entity that is within the
jurisdiction of such agency or department.
(h) Data Standards.--
(1) Requirement.--The Board shall adopt data
standards for all information that, through a
collection of information, is regularly filed with or
submitted to the Board by any bank holding company in a
report under subsection (c).
(2) Consistency.--The data standards required under
paragraph (1) shall incorporate, and ensure
compatibility with (to the extent feasible), all
applicable data standards established in the rules
promulgated under section 124 of the Financial
Stability Act of 2010, including, to the extent
practicable, by having the characteristics described in
clauses (i) through (vi) of subsection (c)(1)(B) of
such section 124.
* * * * * * *
SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS
WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.
(a) In General.--
(1) Prohibition.--Unless otherwise provided in this
section, a banking entity shall not--
(A) engage in proprietary trading; or
(B) acquire or retain any equity,
partnership, or other ownership interest in or
sponsor a hedge fund or a private equity fund.
(2) Nonbank financial companies supervised by the
board.--Any nonbank financial company supervised by the
Board that engages in proprietary trading or takes or
retains any equity, partnership, or other ownership
interest in or sponsors a hedge fund or a private
equity fund shall be subject, by rule, as provided in
subsection (b)(2), to additional capital requirements
for and additional quantitative limits with regards to
such proprietary trading and taking or retaining any
equity, partnership, or other ownership interest in or
sponsorship of a hedge fund or a private equity fund,
except that permitted activities as described in
subsection (d) shall not be subject to the additional
capital and additional quantitative limits except as
provided in subsection (d)(3), as if the nonbank
financial company supervised by the Board were a
banking entity.
(b) Study and Rulemaking.--
(1) Study.--Not later than 6 months after the date of
enactment of this section, the Financial Stability
Oversight Council shall study and make recommendations
on implementing the provisions of this section so as
to--
(A) promote and enhance the safety and
soundness of banking entities;
(B) protect taxpayers and consumers and
enhance financial stability by minimizing the
risk that insured depository institutions and
the affiliates of insured depository
institutions will engage in unsafe and unsound
activities;
(C) limit the inappropriate transfer of
Federal subsidies from institutions that
benefit from deposit insurance and liquidity
facilities of the Federal Government to
unregulated entities;
(D) reduce conflicts of interest between the
self-interest of banking entities and nonbank
financial companies supervised by the Board,
and the interests of the customers of such
entities and companies;
(E) limit activities that have caused undue
risk or loss in banking entities and nonbank
financial companies supervised by the Board, or
that might reasonably be expected to create
undue risk or loss in such banking entities and
nonbank financial companies supervised by the
Board;
(F) appropriately accommodate the business of
insurance within an insurance company, subject
to regulation in accordance with the relevant
insurance company investment laws, while
protecting the safety and soundness of any
banking entity with which such insurance
company is affiliated and of the United States
financial system; and
(G) appropriately time the divestiture of
illiquid assets that are affected by the
implementation of the prohibitions under
subsection (a).
(2) Rulemaking.--
(A) In general.--Unless otherwise provided in
this section, not later than 9 months after the
completion of the study under paragraph (1),
the appropriate Federal banking agencies, the
Securities and Exchange Commission, and the
Commodity Futures Trading Commission, shall
consider the findings of the study under
paragraph (1) and adopt rules to carry out this
section, as provided in subparagraph (B).
(B) Coordinated rulemaking.--
(i) Regulatory authority.--The
regulations issued under this paragraph
shall be issued by--
(I) the appropriate Federal
banking agencies, jointly, with
respect to insured depository
institutions;
(II) the Board, with respect
to any company that controls an
insured depository institution,
or that is treated as a bank
holding company for purposes of
section 8 of the International
Banking Act, any nonbank
financial company supervised by
the Board, and any subsidiary
of any of the foregoing (other
than a subsidiary for which an
agency described in subclause
(I), (III), or (IV) is the
primary financial regulatory
agency);
(III) the Commodity Futures
Trading Commission, with
respect to any entity for which
the Commodity Futures Trading
Commission is the primary
financial regulatory agency, as
defined in section 2 of the
Dodd-Frank Wall Street Reform
and Consumer Protection Act;
and
(IV) the Securities and
Exchange Commission, with
respect to any entity for which
the Securities and Exchange
Commission is the primary
financial regulatory agency, as
defined in section 2 of the
Dodd-Frank Wall Street Reform
and Consumer Protection Act.
(ii) Coordination, consistency, and
comparability.--In developing and
issuing regulations pursuant to this
section, the appropriate Federal
banking agencies, the Securities and
Exchange Commission, and the Commodity
Futures Trading Commission shall
consult and coordinate with each other,
as appropriate, for the purposes of
assuring, to the extent possible, that
such regulations are comparable and
provide for consistent application and
implementation of the applicable
provisions of this section to avoid
providing advantages or imposing
disadvantages to the companies affected
by this subsection and to protect the
safety and soundness of banking
entities and nonbank financial
companies supervised by the Board.
(iii) Council role.--The Chairperson
of the Financial Stability Oversight
Council shall be responsible for
coordination of the regulations issued
under this section.
(c) Effective Date.--
(1) In general.--Except as provided in paragraphs (2)
and (3), this section shall take effect on the earlier
of--
(A) 12 months after the date of the issuance
of final rules under subsection (b); or
(B) 2 years after the date of enactment of
this section.
(2) Conformance period for divestiture.--A banking
entity or nonbank financial company supervised by the
Board shall bring its activities and investments into
compliance with the requirements of this section not
later than 2 years after the date on which the
requirements become effective pursuant to this section
or 2 years after the date on which the entity or
company becomes a nonbank financial company supervised
by the Board. The Board may, by rule or order, extend
this two-year period for not more than one year at a
time, if, in the judgment of the Board, such an
extension is consistent with the purposes of this
section and would not be detrimental to the public
interest. The extensions made by the Board under the
preceding sentence may not exceed an aggregate of 3
years.
(3) Extended transition for illiquid funds.--
(A) Application.--The Board may, upon the
application of a banking entity, extend the
period during which the banking entity, to the
extent necessary to fulfill a contractual
obligation that was in effect on May 1, 2010,
may take or retain its equity, partnership, or
other ownership interest in, or otherwise
provide additional capital to, an illiquid
fund.
(B) Time limit on approval.--The Board may
grant 1 extension under subparagraph (A), which
may not exceed 5 years.
(4) Divestiture required.--Except as otherwise
provided in subsection (d)(1)(G), a banking entity may
not engage in any activity prohibited under subsection
(a)(1)(B) after the earlier of--
(A) the date on which the contractual
obligation to invest in the illiquid fund
terminates; and
(B) the date on which any extensions granted
by the Board under paragraph (3) expire.
(5) Additional capital during transition period.--
Notwithstanding paragraph (2), on the date on which the
rules are issued under subsection (b)(2), the
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission shall issue rules, as provided in
subsection (b)(2), to impose additional capital
requirements, and any other restrictions, as
appropriate, on any equity, partnership, or ownership
interest in or sponsorship of a hedge fund or private
equity fund by a banking entity.
(6) Special rulemaking.--Not later than 6 months
after the date of enactment of this section, the Board
shall issues rules to implement paragraphs (2) and (3).
(d) Permitted Activities.--
(1) In general.--Notwithstanding the restrictions
under subsection (a), to the extent permitted by any
other provision of Federal or State law, and subject to
the limitations under paragraph (2) and any
restrictions or limitations that the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission, may determine, the following activities (in
this section referred to as ``permitted activities'')
are permitted:
(A) The purchase, sale, acquisition, or
disposition of obligations of the United States
or any agency thereof, obligations,
participations, or other instruments of or
issued by the Government National Mortgage
Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage
Corporation, a Federal Home Loan Bank, the
Federal Agricultural Mortgage Corporation, or a
Farm Credit System institution chartered under
and subject to the provisions of the Farm
Credit Act of 1971 (12 U.S.C. 2001 et seq.),
and obligations of any State or of any
political subdivision thereof.
(B) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) in connection
with underwriting or market-making-related
activities, to the extent that any such
activities permitted by this subparagraph are
designed not to exceed the reasonably expected
near term demands of clients, customers, or
counterparties.
(C) Risk-mitigating hedging activities in
connection with and related to individual or
aggregated positions, contracts, or other
holdings of a banking entity that are designed
to reduce the specific risks to the banking
entity in connection with and related to such
positions, contracts, or other holdings.
(D) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) on behalf of
customers.
(E) Investments in one or more small business
investment companies, as defined in section 102
of the Small Business Investment Act of 1958
(15 U.S.C. 662), investments designed primarily
to promote the public welfare, of the type
permitted under paragraph (11) of section 5136
of the Revised Statutes of the United States
(12 U.S.C. 24), or investments that are
qualified rehabilitation expenditures with
respect to a qualified rehabilitated building
or certified historic structure, as such terms
are defined in section 47 of the Internal
Revenue Code of 1986 or a similar State
historic tax credit program.
(F) The purchase, sale, acquisition, or
disposition of securities and other instruments
described in subsection (h)(4) by a regulated
insurance company directly engaged in the
business of insurance for the general account
of the company and by any affiliate of such
regulated insurance company, provided that such
activities by any affiliate are solely for the
general account of the regulated insurance
company, if--
(i) the purchase, sale, acquisition,
or disposition is conducted in
compliance with, and subject to, the
insurance company investment laws,
regulations, and written guidance of
the State or jurisdiction in which each
such insurance company is domiciled;
and
(ii) the appropriate Federal banking
agencies, after consultation with the
Financial Stability Oversight Council
and the relevant insurance
commissioners of the States and
territories of the United States, have
not jointly determined, after notice
and comment, that a particular law,
regulation, or written guidance
described in clause (i) is insufficient
to protect the safety and soundness of
the banking entity, or of the financial
stability of the United States.
(G) Organizing and offering a private equity
or hedge fund, including serving as a general
partner, managing member, or trustee of the
fund and in any manner selecting or controlling
(or having employees, officers, directors, or
agents who constitute) a majority of the
directors, trustees, or management of the fund,
including any necessary expenses for the
foregoing, only if--
(i) the banking entity provides bona
fide trust, fiduciary, or investment
advisory services;
(ii) the fund is organized and
offered only in connection with the
provision of bona fide trust,
fiduciary, or investment advisory
services and only to persons that are
customers of such services of the
banking entity;
(iii) the banking entity does not
acquire or retain an equity interest,
partnership interest, or other
ownership interest in the funds except
for a de minimis investment subject to
and in compliance with paragraph (4);
(iv) the banking entity complies with
the restrictions under paragraphs (1)
and (2) of subparagraph (f);
(v) the banking entity does not,
directly or indirectly, guarantee,
assume, or otherwise insure the
obligations or performance of the hedge
fund or private equity fund or of any
hedge fund or private equity fund in
which such hedge fund or private equity
fund invests;
(vi) the banking entity does not
share with the hedge fund or private
equity fund, for corporate, marketing,
promotional, or other purposes, the
same name or a variation of the same
name, except that the hedge fund or
private equity fund may share the same
name or a variation of the same name as
a banking entity that is an investment
adviser to the hedge fund or private
equity fund, if--
(I) such investment adviser
is not an insured depository
institution, a company that
controls an insured depository
institution, or a company that
is treated as a bank holding
company for purposes of section
8 of the International Banking
Act of 1978 (12 U.S.C. 3106);
(II) such investment adviser
does not share the same name or
a variation of the same name as
an insured depository
institution, any company that
controls an insured depository
institution, or any company
that is treated as a bank
holding company for purposes of
section 8 of the International
Banking Act of 1978 (12 U.S.C.
3106); and
(III) such name does not
contain the word ``bank'';
(vii) no director or employee of the
banking entity takes or retains an
equity interest, partnership interest,
or other ownership interest in the
hedge fund or private equity fund,
except for any director or employee of
the banking entity who is directly
engaged in providing investment
advisory or other services to the hedge
fund or private equity fund; and
(viii) the banking entity discloses
to prospective and actual investors in
the fund, in writing, that any losses
in such hedge fund or private equity
fund are borne solely by investors in
the fund and not by the banking entity,
and otherwise complies with any
additional rules of the appropriate
Federal banking agencies, the
Securities and Exchange Commission, or
the Commodity Futures Trading
Commission, as provided in subsection
(b)(2), designed to ensure that losses
in such hedge fund or private equity
fund are borne solely by investors in
the fund and not by the banking entity.
(H) Proprietary trading conducted by a
banking entity pursuant to paragraph (9) or
(13) of section 4(c), provided that the trading
occurs solely outside of the United States and
that the banking entity is not directly or
indirectly controlled by a banking entity that
is organized under the laws of the United
States or of one or more States.
(I) The acquisition or retention of any
equity, partnership, or other ownership
interest in, or the sponsorship of, a hedge
fund or a private equity fund by a banking
entity pursuant to paragraph (9) or (13) of
section 4(c) solely outside of the United
States, provided that no ownership interest in
such hedge fund or private equity fund is
offered for sale or sold to a resident of the
United States and that the banking entity is
not directly or indirectly controlled by a
banking entity that is organized under the laws
of the United States or of one or more States.
(J) Such other activity as the appropriate
Federal banking agencies, the Securities and
Exchange Commission, and the Commodity Futures
Trading Commission determine, by rule, as
provided in subsection (b)(2), would promote
and protect the safety and soundness of the
banking entity and the financial stability of
the United States.
(2) Limitation on permitted activities.--
(A) In general.--No transaction, class of
transactions, or activity may be deemed a
permitted activity under paragraph (1) if the
transaction, class of transactions, or
activity--
(i) would involve or result in a
material conflict of interest (as such
term shall be defined by rule as
provided in subsection (b)(2)) between
the banking entity and its clients,
customers, or counterparties;
(ii) would result, directly or
indirectly, in a material exposure by
the banking entity to high-risk assets
or high-risk trading strategies (as
such terms shall be defined by rule as
provided in subsection (b)(2));
(iii) would pose a threat to the
safety and soundness of such banking
entity; or
(iv) would pose a threat to the
financial stability of the United
States.
(B) Rulemaking.--The appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission shall issue regulations to implement
subparagraph (A), as part of the regulations
issued under subsection (b)(2).
(3) Capital and quantitative limitations.--The
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission shall, as provided in subsection
(b)(2), adopt rules imposing additional capital
requirements and quantitative limitations, including
diversification requirements, regarding the activities
permitted under this section if the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission determine that additional capital and
quantitative limitations are appropriate to protect the
safety and soundness of banking entities engaged in
such activities.
(4) De minimis investment.--
(A) In general.--A banking entity may make
and retain an investment in a hedge fund or
private equity fund that the banking entity
organizes and offers, subject to the
limitations and restrictions in subparagraph
(B) for the purposes of--
(i) establishing the fund and
providing the fund with sufficient
initial equity for investment to permit
the fund to attract unaffiliated
investors; or
(ii) making a de minimis investment.
(B) Limitations and restrictions on
investments.--
(i) Requirement to seek other
investors.--A banking entity shall
actively seek unaffiliated investors to
reduce or dilute the investment of the
banking entity to the amount permitted
under clause (ii).
(ii) Limitations on size of
investments.--Notwithstanding any other
provision of law, investments by a
banking entity in a hedge fund or
private equity fund shall--
(I) not later than 1 year
after the date of establishment
of the fund, be reduced through
redemption, sale, or dilution
to an amount that is not more
than 3 percent of the total
ownership interests of the
fund;
(II) be immaterial to the
banking entity, as defined, by
rule, pursuant to subsection
(b)(2), but in no case may the
aggregate of all of the
interests of the banking entity
in all such funds exceed 3
percent of the Tier 1 capital
of the banking entity.
(iii) Capital.--For purposes of
determining compliance with applicable
capital standards under paragraph (3),
the aggregate amount of the outstanding
investments by a banking entity under
this paragraph, including retained
earnings, shall be deducted from the
assets and tangible equity of the
banking entity, and the amount of the
deduction shall increase commensurate
with the leverage of the hedge fund or
private equity fund.
(C) Extension.--Upon an application by a
banking entity, the Board may extend the period
of time to meet the requirements under
subparagraph (B)(ii)(I) for 2 additional years,
if the Board finds that an extension would be
consistent with safety and soundness and in the
public interest.
(e) Anti-evasion.--
(1) Rulemaking.--The appropriate Federal banking
agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission shall issue
regulations, as part of the rulemaking provided for in
subsection (b)(2), regarding internal controls and
recordkeeping, in order to insure compliance with this
section.
(2) Termination of activities or investment.--
Notwithstanding any other provision of law, whenever an
appropriate Federal banking agency, the Securities and
Exchange Commission, or the Commodity Futures Trading
Commission, as appropriate, has reasonable cause to
believe that a banking entity or nonbank financial
company supervised by the Board under the respective
agency's jurisdiction has made an investment or engaged
in an activity in a manner that functions as an evasion
of the requirements of this section (including through
an abuse of any permitted activity) or otherwise
violates the restrictions under this section, the
appropriate Federal banking agency, the Securities and
Exchange Commission, or the Commodity Futures Trading
Commission, as appropriate, shall order, after due
notice and opportunity for hearing, the banking entity
or nonbank financial company supervised by the Board to
terminate the activity and, as relevant, dispose of the
investment. Nothing in this paragraph shall be
construed to limit the inherent authority of any
Federal agency or State regulatory authority to further
restrict any investments or activities under otherwise
applicable provisions of law.
(f) Limitations on Relationships With Hedge Funds and Private
Equity Funds.--
(1) In general.--No banking entity that serves,
directly or indirectly, as the investment manager,
investment adviser, or sponsor to a hedge fund or
private equity fund, or that organizes and offers a
hedge fund or private equity fund pursuant to paragraph
(d)(1)(G), and no affiliate of such entity, may enter
into a transaction with the fund, or with any other
hedge fund or private equity fund that is controlled by
such fund, that would be a covered transaction, as
defined in section 23A of the Federal Reserve Act (12
U.S.C. 371c), with the hedge fund or private equity
fund, as if such banking entity and the affiliate
thereof were a member bank and the hedge fund or
private equity fund were an affiliate thereof.
(2) Treatment as member bank.--A banking entity that
serves, directly or indirectly, as the investment
manager, investment adviser, or sponsor to a hedge fund
or private equity fund, or that organizes and offers a
hedge fund or private equity fund pursuant to paragraph
(d)(1)(G), shall be subject to section 23B of the
Federal Reserve Act (12 U.S.C. 371c-1), as if such
banking entity were a member bank and such hedge fund
or private equity fund were an affiliate thereof.
(3) Permitted services.--
(A) In general.--Notwithstanding paragraph
(1), the Board may permit a banking entity to
enter into any prime brokerage transaction with
any hedge fund or private equity fund in which
a hedge fund or private equity fund managed,
sponsored, or advised by such banking entity
has taken an equity, partnership, or other
ownership interest, if--
(i) the banking entity is in
compliance with each of the limitations
set forth in subsection (d)(1)(G) with
regard to a hedge fund or private
equity fund organized and offered by
such banking entity;
(ii) the chief executive officer (or
equivalent officer) of the banking
entity certifies in writing annually
(with a duty to update the
certification if the information in the
certification materially changes) that
the conditions specified in subsection
(d)(1)(g)(v) are satisfied; and
(iii) the Board has determined that
such transaction is consistent with the
safe and sound operation and condition
of the banking entity.
(B) Treatment of prime brokerage
transactions.--For purposes of subparagraph
(A), a prime brokerage transaction described in
subparagraph (A) shall be subject to section
23B of the Federal Reserve Act (12 U.S.C. 371c-
1) as if the counterparty were an affiliate of
the banking entity.
(4) Application to nonbank financial companies
supervised by the board.--The appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission shall adopt rules, as provided in subsection
(b)(2), imposing additional capital charges or other
restrictions for nonbank financial companies supervised
by the Board to address the risks to and conflicts of
interest of banking entities described in paragraphs
(1), (2), and (3) of this subsection.
(g) Rules of Construction.--
(1) Limitation on contrary authority.--Except as
provided in this section, notwithstanding any other
provision of law, the prohibitions and restrictions
under this section shall apply to activities of a
banking entity or nonbank financial company supervised
by the Board, even if such activities are authorized
for a banking entity or nonbank financial company
supervised by the Board.
(2) Sale or securitization of loans.--Nothing in this
section shall be construed to limit or restrict the
ability of a banking entity or nonbank financial
company supervised by the Board to sell or securitize
loans in a manner otherwise permitted by law.
(3) Authority of federal agencies and state
regulatory authorities.--Nothing in this section shall
be construed to limit the inherent authority of any
Federal agency or State regulatory authority under
otherwise applicable provisions of law.
(h) Definitions.--In this section, the following definitions
shall apply:
(1) Banking entity.--The term ``banking entity''
means any insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)), any company that controls an insured
depository institution, or that is treated as a bank
holding company for purposes of section 8 of the
International Banking Act of 1978, and any affiliate or
subsidiary of any such entity. For purposes of this
paragraph, the term ``insured depository institution''
does not include an institution--
(A) that functions solely in a trust or
fiduciarycapacity, if--
(i) all or substantially all of the
deposits of such institution are in
trust funds and are received in a bona
fide fiduciary capacity;
(ii) no deposits of such institution
which are insured by the Federal
Deposit Insurance Corporation are
offered or marketed by or through an
affiliate of such institution;
(iii) such institution does not
accept demand deposits or deposits that
the depositor may withdraw by check or
similar means for payment to third
parties or others or make commercial
loans; and
(iv) such institution does not--
(I) obtain payment or payment
related services from any
Federal Reserve bank, including
any service referred to in
section 11A of the Federal
Reserve Act (12 U.S.C. 248a);
or
(II) exercise discount or
borrowing privileges pursuant
to section 19(b)(7) of the
Federal Reserve Act (12 U.S.C.
461(b)(7)); or
(B) that does not have and is not controlled
by a company that has--
(i) more than [$10,000,000,000]
$15,000,000,000 in total consolidated
assets; and
(ii) total trading assets and trading
liabilities, as reported on the most
recent applicable regulatory filing
filed by the institution, that are more
than 5 percent of total consolidated
assets.
(2) Hedge fund; private equity fund.--The terms
``hedge fund'' and ``private equity fund'' mean an
issuer that would be an investment company, as defined
in the Investment Company Act of 1940 (15 U.S.C. 80a-1
et seq.), but for section 3(c)(1) or 3(c)(7) of that
Act, or such similar funds as the appropriate Federal
banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission may, by rule, as provided in subsection
(b)(2), determine.
(3) Nonbank financial company supervised by the
board.--The term ``nonbank financial company supervised
by the Board'' means a nonbank financial company
supervised by the Board of Governors, as defined in
section 102 of the Financial Stability Act of 2010.
(4) Proprietary trading.--The term ``proprietary
trading'', when used with respect to a banking entity
or nonbank financial company supervised by the Board,
means engaging as a principal for the trading account
of the banking entity or nonbank financial company
supervised by the Board in any transaction to purchase
or sell, or otherwise acquire or dispose of, any
security, any derivative, any contract of sale of a
commodity for future delivery, any option on any such
security, derivative, or contract, or any other
security or financial instrument that the appropriate
Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission may, by rule as provided in subsection
(b)(2), determine.
(5) Sponsor.--The term to ``sponsor'' a fund means--
(A) to serve as a general partner, managing
member, or trustee of a fund;
(B) in any manner to select or to control (or
to have employees, officers, or directors, or
agents who constitute) a majority of the
directors, trustees, or management of a fund;
or
(C) to share with a fund, for corporate,
marketing, promotional, or other purposes, the
same name or a variation of the same name,
except as permitted under subsection
(d)(1)(G)(vi).
(6) Trading account.--The term ``trading account''
means any account used for acquiring or taking
positions in the securities and instruments described
in paragraph (4) principally for the purpose of selling
in the near term (or otherwise with the intent to
resell in order to profit from short-term price
movements), and any such other accounts as the
appropriate Federal banking agencies, the Securities
and Exchange Commission, and the Commodity Futures
Trading Commission may, by rule as provided in
subsection (b)(2), determine.
(7) Illiquid fund.--
(A) In general.--The term ``illiquid fund''
means a hedge fund or private equity fund
that--
(i) as of May 1, 2010, was
principally invested in, or was
invested and contractually committed to
principally invest in, illiquid assets,
such as portfolio companies, real
estate investments, and venture capital
investments; and
(ii) makes all investments pursuant
to, and consistent with, an investment
strategy to principally invest in
illiquid assets. In issuing rules
regarding this subparagraph, the Board
shall take into consideration the terms
of investment for the hedge fund or
private equity fund, including
contractual obligations, the ability of
the fund to divest of assets held by
the fund, and any other factors that
the Board determines are appropriate.
(B) Hedge fund.--For the purposes of this
paragraph, the term ``hedge fund'' means any
fund identified under subsection (h)(2), and
does not include a private equity fund, as such
term is used in section 203(m) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(m)).
* * * * * * *
----------
COMMUNITY REINVESTMENT ACT OF 1977
TITLE VIII--COMMUNITY REINVESTMENT
* * * * * * *
SEC. 809. SMALL BANK REGULATORY RELIEF.
(a) In General.--Except as provided in subsections (b) and
(c), any regulated financial institution with aggregate assets
of not more than [$250,000,000] $800,000,000 shall be subject
to routine examination under this title--
(1) not more than once every 60 months for an
institution that has achieved a rating of ``outstanding
record of meeting community credit needs'' at its most
recent examination under section 804;
(2) not more than once every 48 months for an
institution that has received a rating of
``satisfactory record of meeting community credit
needs'' at its most recent examination under section
804; and
(3) as deemed necessary by the appropriate Federal
financial supervisory agency, for an institution that
has received a rating of less than ``satisfactory
record of meeting community credit needs'' at its most
recent examination under section 804.
(b) No Exception From CRA Examinations in Connection With
Applications for Deposit Facilities.--A regulated financial
institution described in subsection (a) shall remain subject to
examination under this title in connection with an application
for a deposit facility.
(c) Discretion.--A regulated financial institution described
in subsection (a) may be subject to more frequent or less
frequent examinations for reasonable cause under such
circumstances as may be determined by the appropriate Federal
financial supervisory agency.
----------
DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT
* * * * * * *
TITLE II--INTERLOCKING DIRECTORS
* * * * * * *
Sec. 202. As used in this title--
(1) the term ``depository institution'' means a
commercial bank, a savings bank, a trust company, a
savings and loan association, a building and loan
association, a homestead association, a cooperative
bank, an industrial bank, or a credit union;
(2) the term ``depository holding company'' means a
bank holding company as defined in section 2(a) of the
Bank Holding Company Act of 1956, a company which would
be a bank holding company as defined in section 2(a) of
the Bank Holding Company Act of 1956 but for the
exemption contained in section 2(a)(5)(F) thereof, or a
savings and loan holding company as defined in section
408(a)(1)(I) of the National Housing Act;
(3) the characterization of any corporation
(including depository institutions and depository
holding companies), as an ``affiliate of,'' or as
``affiliated'' with any other corporation means that--
(A) one of the corporations is a depository
holding company and the other is a subsidiary
thereof, or both corporations are subsidiary of
the same depository holding company, as the
term ``subsidiary'' is defined in either
section 2(d) of the Bank Holding Company Act of
1956 in the case of a bank holding company or
section 408(a)(1)(II) of the National Housing
Act in the case of a savings and loan holding
company; or
(B) more than 25 percent of the voting stock
of one corporation is beneficially owned in the
aggregate by one or more persons who also
beneficially own in the aggregate more than 25
percent of the voting stock of the other
corporation; or
(C) one of the corporations is a trust
company all of the stock of which, except for
directors qualifying shares, was owned by one
or more mutual savings banks on the date of
enactment of this Act, and the other
corporation is a mutual savings bank; or
(D) one of the corporations is a bank,
insured by the Federal Deposit Insurance
Corporation and chartered under State law, and
is a bankers' bank, described in Paragraph
Seventh of section 5136 of the Revised
Statutes; or
(E) one of the corporations is a bank,
chartered under State law and insured by the
Federal Deposit Insurance Corporation, the
voting securities of which are held only by
persons who are officers of other banks, as
permitted by State law, and which bank is
primarily engaged in providing banking services
for other banks and not the public: Provided,
however, That in no case shall the voting
securities of such corporation be held by such
officers of other banks in excess of 6 per
centum of the paid-in capital and 6 per centum
of the surplus of such a bank.
(4) the term ``management official'' means an
employee or officer with management functions, a
director (including an advisory or honorary director,
except in the case of a depository institution with
total assets of less than [$100,000,000] $600,000,000),
a trustee of a business organization under the control
of trustee, or any person who has a representative or
nominee serving in any such capacity: Provided, That if
a corporator, trustee, director, or other officer of a
State-chartered savings bank or cooperative bank in
specifically authorized under the laws of the State in
which said institution is located to serve as a
trustee, director, or other officer of a State-
chartered trust company which does not make real estate
mortgage loans and does not accept savings from natural
persons, then, for the purposes of this title, such
corporator, trustee, director, or other officer shall
not be deemed to be a management official of such trust
company; And provided further, That if a management
official of a State-chartered trust company which does
not make real estate mortgage loans and does not accept
savings deposits from natural persons is specifically
authorized under the laws of the State in which said
institution is located to serve as a corporator,
trustee, director, or other officer of a State-
chartered savings bank or cooperative bank, then, for
the purposes of this title, such management official
shall not be deemed to be a management official of any
such savings bank or cooperative bank;
(5) the term ``office'' used with reference to a
depository institution means either a principal office
or a branch; and
(6) the term ``appropriate Federal depository
institutions regulatory agency'' means, with respect to
any depository institution or depository holding
company, the agency referred to in section 209 in
connection with such institution or company.
Sec. 203. A management official of a depository institution
or a depository holding company may not serve as a management
official of any other depository institution or depository
holding company not affiliated therewith if an office of one of
the institutions or any depository institution that is an
affiliate of such institutions is located within either--
(1) the same primary metropolitan statistical area,
the same metropolitan statistical area, or the same
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan
statistical areas as defined by the Office of
Management and Budget, except in the case of depository
institutions with less than [$50,000,000] $110,000,000
in assets in which case the provision of paragraph (2)
shall apply, as that in which an office of the other
institution or any depository institution that is an
affiliate of such institution is located, or
(2) the same city, town, or village as that in which
an office of the other institution or any depository
institution that is an affiliate of such other
institution is located, or in any city, town, or
village contiguous or adjacent thereto.
Sec. 204. If a depository institution or a depository holding
company has total assets exceeding [$2,500,000,000]
$10,000,000,000, a management official of such institution or
any affiliate thereof may not serve as a management official of
any other nonaffiliated depository institution or depository
holding company having total assets exceeding [$1,500,000,000]
$10,000,000,000 or as a management official of any affiliate of
such other institution. In order to allow for inflation or
market changes, the appropriate Federal depository institutions
regulatory agencies may, by regulation, adjust, as necessary,
the amount of total assets required for depository institutions
or depository holding companies under this section.
* * * * * * *
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DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
* * * * * * *
TITLE II--ORDERLY LIQUIDATION AUTHORITY
* * * * * * *
SEC. 210. POWERS AND DUTIES OF THE CORPORATION.
(a) Powers and Authorities.--
(1) General powers.--
(A) Successor to covered financial company.--
The Corporation shall, upon appointment as
receiver for a covered financial company under
this title, succeed to--
(i) all rights, titles, powers, and
privileges of the covered financial
company and its assets, and of any
stockholder, member, officer, or
director of such company; and
(ii) title to the books, records, and
assets of any previous receiver or
other legal custodian of such covered
financial company.
(B) Operation of the covered financial
company during the period of orderly
liquidation.--The Corporation, as receiver for
a covered financial company, may--
(i) take over the assets of and
operate the covered financial company
with all of the powers of the members
or shareholders, the directors, and the
officers of the covered financial
company, and conduct all business of
the covered financial company;
(ii) collect all obligations and
money owed to the covered financial
company;
(iii) perform all functions of the
covered financial company, in the name
of the covered financial company;
(iv) manage the assets and property
of the covered financial company,
consistent with maximization of the
value of the assets in the context of
the orderly liquidation; and
(v) provide by contract for
assistance in fulfilling any function,
activity, action, or duty of the
Corporation as receiver.
(C) Functions of covered financial company
officers, directors, and shareholders.--The
Corporation may provide for the exercise of any
function by any member or stockholder,
director, or officer of any covered financial
company for which the Corporation has been
appointed as receiver under this title.
(D) Additional powers as receiver.--The
Corporation shall, as receiver for a covered
financial company, and subject to all legally
enforceable and perfected security interests
and all legally enforceable security
entitlements in respect of assets held by the
covered financial company, liquidate, and wind-
up the affairs of a covered financial company,
including taking steps to realize upon the
assets of the covered financial company, in
such manner as the Corporation deems
appropriate, including through the sale of
assets, the transfer of assets to a bridge
financial company established under subsection
(h), or the exercise of any other rights or
privileges granted to the receiver under this
section.
(E) Additional powers with respect to failing
subsidiaries of a covered financial company.--
(i) In general.--In any case in which
a receiver is appointed for a covered
financial company under section 202,
the Corporation may appoint itself as
receiver of any covered subsidiary of
the covered financial company that is
organized under Federal law or the laws
of any State, if the Corporation and
the Secretary jointly determine that--
(I) the covered subsidiary is
in default or in danger of
default;
(II) such action would avoid
or mitigate serious adverse
effects on the financial
stability or economic
conditions of the United
States; and
(III) such action would
facilitate the orderly
liquidation of the covered
financial company.
(ii) Treatment as covered financial
company.--If the Corporation is
appointed as receiver of a covered
subsidiary of a covered financial
company under clause (i), the covered
subsidiary shall thereafter be
considered a covered financial company
under this title, and the Corporation
shall thereafter have all the powers
and rights with respect to that covered
subsidiary as it has with respect to a
covered financial company under this
title.
(F) Organization of bridge companies.--The
Corporation, as receiver for a covered
financial company, may organize a bridge
financial company under subsection (h).
(G) Merger; transfer of assets and
liabilities.--
(i) In general.--Subject to clauses
(ii) and (iii), the Corporation, as
receiver for a covered financial
company, may--
(I) merge the covered
financial company with another
company; or
(II) transfer any asset or
liability of the covered
financial company (including
any assets and liabilities held
by the covered financial
company for security
entitlement holders, any
customer property, or any
assets and liabilities
associated with any trust or
custody business) without
obtaining any approval,
assignment, or consent with
respect to such transfer.
(ii) Federal agency approval;
antitrust review.--With respect to a
transaction described in clause (i)(I)
that requires approval by a Federal
agency--
(I) the transaction may not
be consummated before the 5th
calendar day after the date of
approval by the Federal agency
responsible for such approval;
(II) if, in connection with
any such approval, a report on
competitive factors is
required, the Federal agency
responsible for such approval
shall promptly notify the
Attorney General of the United
States of the proposed
transaction, and the Attorney
General shall provide the
required report not later than
10 days after the date of the
request; and
(III) if notification under
section 7A of the Clayton Act
is required with respect to
such transaction, then the
required waiting period shall
end on the 15th day after the
date on which the Attorney
General and the Federal Trade
Commission receive such
notification, unless the
waiting period is terminated
earlier under subsection (b)(2)
of such section 7A, or is
extended pursuant to subsection
(e)(2) of such section 7A.
(iii) Setoff.--Subject to the other
provisions of this title, any
transferee of assets from a receiver,
including a bridge financial company,
shall be subject to such claims or
rights as would prevail over the rights
of such transferee in such assets under
applicable noninsolvency law.
(H) Payment of valid obligations.--The
Corporation, as receiver for a covered
financial company, shall, to the extent that
funds are available, pay all valid obligations
of the covered financial company that are due
and payable at the time of the appointment of
the Corporation as receiver, in accordance with
the prescriptions and limitations of this
title.
(I) Applicable noninsolvency law.--Except as
may otherwise be provided in this title, the
applicable noninsolvency law shall be
determined by the noninsolvency choice of law
rules otherwise applicable to the claims,
rights, titles, persons, or entities at issue.
(J) Subpoena authority.--
(i) In general.--The Corporation, as
receiver for a covered financial
company, may, for purposes of carrying
out any power, authority, or duty with
respect to the covered financial
company (including determining any
claim against the covered financial
company and determining and realizing
upon any asset of any person in the
course of collecting money due the
covered financial company), exercise
any power established under section
8(n) of the Federal Deposit Insurance
Act, as if the Corporation were the
appropriate Federal banking agency for
the covered financial company, and the
covered financial company were an
insured depository institution.
(ii) Rule of construction.--This
subparagraph may not be construed as
limiting any rights that the
Corporation, in any capacity, might
otherwise have to exercise any powers
described in clause (i) or under any
other provision of law.
(K) Incidental powers.--The Corporation, as
receiver for a covered financial company, may
exercise all powers and authorities
specifically granted to receivers under this
title, and such incidental powers as shall be
necessary to carry out such powers under this
title.
(L) Utilization of private sector.--In
carrying out its responsibilities in the
management and disposition of assets from the
covered financial company, the Corporation, as
receiver for a covered financial company, may
utilize the services of private persons,
including real estate and loan portfolio asset
management, property management, auction
marketing, legal, and brokerage services, if
such services are available in the private
sector, and the Corporation determines that
utilization of such services is practicable,
efficient, and cost effective.
(M) Shareholders and creditors of covered
financial company.--Notwithstanding any other
provision of law, the Corporation, as receiver
for a covered financial company, shall succeed
by operation of law to the rights, titles,
powers, and privileges described in
subparagraph (A), and shall terminate all
rights and claims that the stockholders and
creditors of the covered financial company may
have against the assets of the covered
financial company or the Corporation arising
out of their status as stockholders or
creditors, except for their right to payment,
resolution, or other satisfaction of their
claims, as permitted under this section. The
Corporation shall ensure that shareholders and
unsecured creditors bear losses, consistent
with the priority of claims provisions under
this section.
(N) Coordination with foreign financial
authorities.--The Corporation, as receiver for
a covered financial company, shall coordinate,
to the maximum extent possible, with the
appropriate foreign financial authorities
regarding the orderly liquidation of any
covered financial company that has assets or
operations in a country other than the United
States.
(O) Restriction on transfers.--
(i) Selection of accounts for
transfer.--If the Corporation
establishes one or more bridge
financial companies with respect to a
covered broker or dealer, the
Corporation shall transfer to one of
such bridge financial companies, all
customer accounts of the covered broker
or dealer, and all associated customer
name securities and customer property,
unless the Corporation, after
consulting with the Commission and
SIPC, determines that--
(I) the customer accounts,
customer name securities, and
customer property are likely to
be promptly transferred to
another broker or dealer that
is registered with the
Commission under section 15(b)
of the Securities Exchange Act
of 1934 (15 U.S.C. 73o(b)) and
is a member of SIPC; or
(II) the transfer of the
accounts to a bridge financial
company would materially
interfere with the ability of
the Corporation to avoid or
mitigate serious adverse
effects on financial stability
or economic conditions in the
United States.
(ii) Transfer of property.--SIPC, as
trustee for the liquidation of the
covered broker or dealer, and the
Commission shall provide any and all
reasonable assistance necessary to
complete such transfers by the
Corporation.
(iii) Customer consent and court
approval not required.--Neither
customer consent nor court approval
shall be required to transfer any
customer accounts or associated
customer name securities or customer
property to a bridge financial company
in accordance with this section.
(iv) Notification of sipc and sharing
of information.--The Corporation shall
identify to SIPC the customer accounts
and associated customer name securities
and customer property transferred to
the bridge financial company. The
Corporation and SIPC shall cooperate in
the sharing of any information
necessary for each entity to discharge
its obligations under this title and
under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa
et seq.) including by providing access
to the books and records of the covered
financial company and any bridge
financial company established in
accordance with this title.
(2) Determination of claims.--
(A) In general.--The Corporation, as receiver
for a covered financial company, shall report
on claims, as set forth in section 203(c)(3).
Subject to paragraph (4) of this subsection,
the Corporation, as receiver for a covered
financial company, shall determine claims in
accordance with the requirements of this
subsection and regulations prescribed under
section 209.
(B) Notice requirements.--The Corporation, as
receiver for a covered financial company, in
any case involving the liquidation or winding
up of the affairs of a covered financial
company, shall--
(i) promptly publish a notice to the
creditors of the covered financial
company to present their claims,
together with proof, to the receiver by
a date specified in the notice, which
shall be not earlier than 90 days after
the date of publication of such notice;
and
(ii) republish such notice 1 month
and 2 months, respectively, after the
date of publication under clause (i).
(C) Mailing required.--The Corporation as
receiver shall mail a notice similar to the
notice published under clause (i) or (ii) of
subparagraph (B), at the time of such
publication, to any creditor shown on the books
and records of the covered financial company--
(i) at the last address of the
creditor appearing in such books;
(ii) in any claim filed by the
claimant; or
(iii) upon discovery of the name and
address of a claimant not appearing on
the books and records of the covered
financial company, not later than 30
days after the date of the discovery of
such name and address.
(3) Procedures for resolution of claims.--
(A) Decision period.--
(i) In general.--Prior to the 180th
day after the date on which a claim
against a covered financial company is
filed with the Corporation as receiver,
or such later date as may be agreed as
provided in clause (ii), the
Corporation shall notify the claimant
whether it allows or disallows the
claim, in accordance with subparagraphs
(B), (C), and (D).
(ii) Extension of time.--By written
agreement executed not later than 180
days after the date on which a claim
against a covered financial company is
filed with the Corporation, the period
described in clause (i) may be extended
by written agreement between the
claimant and the Corporation. Failure
to notify the claimant of any
disallowance within the time period set
forth in clause (i), as it may be
extended by agreement under this
clause, shall be deemed to be a
disallowance of such claim, and the
claimant may file or continue an action
in court, as provided in paragraph (4).
(iii) Mailing of notice sufficient.--
The requirements of clause (i) shall be
deemed to be satisfied if the notice of
any decision with respect to any claim
is mailed to the last address of the
claimant which appears--
(I) on the books, records, or
both of the covered financial
company;
(II) in the claim filed by
the claimant; or
(III) in documents submitted
in proof of the claim.
(iv) Contents of notice of
disallowance.--If the Corporation as
receiver disallows any claim filed
under clause (i), the notice to the
claimant shall contain--
(I) a statement of each
reason for the disallowance;
and
(II) the procedures required
to file or continue an action
in court, as provided in
paragraph (4).
(B) Allowance of proven claim.--The receiver
shall allow any claim received by the receiver
on or before the date specified in the notice
under paragraph (2)(B)(i), which is proved to
the satisfaction of the receiver.
(C) Disallowance of claims filed after end of
filing period.--
(i) In general.--Except as provided
in clause (ii), claims filed after the
date specified in the notice published
under paragraph (2)(B)(i) shall be
disallowed, and such disallowance shall
be final.
(ii) Certain exceptions.--Clause (i)
shall not apply with respect to any
claim filed by a claimant after the
date specified in the notice published
under paragraph (2)(B)(i), and such
claim may be considered by the receiver
under subparagraph (B), if--
(I) the claimant did not
receive notice of the
appointment of the receiver in
time to file such claim before
such date; and
(II) such claim is filed in
time to permit payment of such
claim.
(D) Authority to disallow claims.--
(i) In general.--The Corporation may
disallow any portion of any claim by a
creditor or claim of a security,
preference, setoff, or priority which
is not proved to the satisfaction of
the Corporation.
(ii) Payments to undersecured
creditors.--In the case of a claim
against a covered financial company
that is secured by any property or
other asset of such covered financial
company, the receiver--
(I) may treat the portion of
such claim which exceeds an
amount equal to the fair market
value of such property or other
asset as an unsecured claim;
and
(II) may not make any payment
with respect to such unsecured
portion of the claim, other
than in connection with the
disposition of all claims of
unsecured creditors of the
covered financial company.
(iii) Exceptions.--No provision of
this paragraph shall apply with respect
to--
(I) any extension of credit
from any Federal reserve bank,
or the Corporation, to any
covered financial company; or
(II) subject to clause (ii),
any legally enforceable and
perfected security interest in
the assets of the covered
financial company securing any
such extension of credit.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--
For purposes of any applicable statute
of limitations, the filing of a claim
with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions.--
Subject to paragraph (8), the filing of
a claim with the receiver shall not
prejudice any right of the claimant to
continue any action which was filed
before the date of appointment of the
receiver for the covered financial
company.
(4) Judicial determination of claims.--
(A) In general.--Subject to subparagraph (B),
a claimant may file suit on a claim (or
continue an action commenced before the date of
appointment of the Corporation as receiver) in
the district or territorial court of the United
States for the district within which the
principal place of business of the covered
financial company is located (and such court
shall have jurisdiction to hear such claim).
(B) Timing.--A claim under subparagraph (A)
may be filed before the end of the 60-day
period beginning on the earlier of--
(i) the end of the period described
in paragraph (3)(A)(i) (or, if extended
by agreement of the Corporation and the
claimant, the period described in
paragraph (3)(A)(ii)) with respect to
any claim against a covered financial
company for which the Corporation is
receiver; or
(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (3)(A)(i).
(C) Statute of limitations.--If any claimant
fails to file suit on such claim (or to
continue an action on such claim commenced
before the date of appointment of the
Corporation as receiver) prior to the end of
the 60-day period described in subparagraph
(B), the claim shall be deemed to be disallowed
(other than any portion of such claim which was
allowed by the receiver) as of the end of such
period, such disallowance shall be final, and
the claimant shall have no further rights or
remedies with respect to such claim.
(5) Expedited determination of claims.--
(A) Procedure required.--The Corporation
shall establish a procedure for expedited
relief outside of the claims process
established under paragraph (3), for any
claimant that alleges--
(i) having a legally valid and
enforceable or perfected security
interest in property of a covered
financial company or control of any
legally valid and enforceable security
entitlement in respect of any asset
held by the covered financial company
for which the Corporation has been
appointed receiver; and
(ii) that irreparable injury will
occur if the claims procedure
established under paragraph (3) is
followed.
(B) Determination period.--Prior to the end
of the 90-day period beginning on the date on
which a claim is filed in accordance with the
procedures established pursuant to subparagraph
(A), the Corporation shall--
(i) determine--
(I) whether to allow or
disallow such claim, or any
portion thereof; or
(II) whether such claim
should be determined pursuant
to the procedures established
pursuant to paragraph (3);
(ii) notify the claimant of the
determination; and
(iii) if the claim is disallowed,
provide a statement of each reason for
the disallowance and the procedure for
obtaining a judicial determination.
(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited
relief shall be permitted to file suit (or
continue a suit filed before the date of
appointment of the Corporation as receiver
seeking a determination of the rights of the
claimant with respect to such security interest
(or such security entitlement) after the
earlier of--
(i) the end of the 90-day period
beginning on the date of the filing of
a request for expedited relief; or
(ii) the date on which the
Corporation denies the claim or a
portion thereof.
(D) Statute of limitations.--If an action
described in subparagraph (C) is not filed, or
the motion to renew a previously filed suit is
not made, before the end of the 30-day period
beginning on the date on which such action or
motion may be filed in accordance with
subparagraph (C), the claim shall be deemed to
be disallowed as of the end of such period
(other than any portion of such claim which was
allowed by the receiver), such disallowance
shall be final, and the claimant shall have no
further rights or remedies with respect to such
claim.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--
For purposes of any applicable statute
of limitations, the filing of a claim
with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions.--
Subject to paragraph (8), the filing of
a claim with the receiver shall not
prejudice any right of the claimant to
continue any action which was filed
before the appointment of the
Corporation as receiver for the covered
financial company.
(6) Agreements against interest of the receiver.--No
agreement that tends to diminish or defeat the interest
of the Corporation as receiver in any asset acquired by
the receiver under this section shall be valid against
the receiver, unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial
company, or confirmed in the ordinary course of
business by the covered financial company; and
(C) has been, since the time of its
execution, an official record of the company or
the party claiming under the agreement provides
documentation, acceptable to the receiver, of
such agreement and its authorized execution or
confirmation by the covered financial company.
(7) Payment of claims.--
(A) In general.--Subject to subparagraph (B),
the Corporation as receiver may, in its
discretion and to the extent that funds are
available, pay creditor claims, in such manner
and amounts as are authorized under this
section, which are--
(i) allowed by the receiver;
(ii) approved by the receiver
pursuant to a final determination
pursuant to paragraph (3) or (5), as
applicable; or
(iii) determined by the final
judgment of a court of competent
jurisdiction.
(B) Limitation.--A creditor shall, in no
event, receive less than the amount that the
creditor is entitled to receive under
paragraphs (2) and (3) of subsection (d), as
applicable.
(C) Payment of dividends on claims.--The
Corporation as receiver may, in its sole
discretion, and to the extent otherwise
permitted by this section, pay dividends on
proven claims at any time, and no liability
shall attach to the Corporation as receiver, by
reason of any such payment or for failure to
pay dividends to a claimant whose claim is not
proved at the time of any such payment.
(D) Rulemaking by the corporation.--The
Corporation may prescribe such rules, including
definitions of terms, as the Corporation deems
appropriate to establish an interest rate for
or to make payments of post-insolvency interest
to creditors holding proven claims against the
receivership estate of a covered financial
company, except that no such interest shall be
paid until the Corporation as receiver has
satisfied the principal amount of all creditor
claims.
(8) Suspension of legal actions.--
(A) In general.--After the appointment of the
Corporation as receiver for a covered financial
company, the Corporation may request a stay in
any judicial action or proceeding in which such
covered financial company is or becomes a
party, for a period of not to exceed 90 days.
(B) Grant of stay by all courts required.--
Upon receipt of a request by the Corporation
pursuant to subparagraph (A), the court shall
grant such stay as to all parties.
(9) Additional rights and duties.--
(A) Prior final adjudication.--The
Corporation shall abide by any final, non-
appealable judgment of any court of competent
jurisdiction that was rendered before the
appointment of the Corporation as receiver.
(B) Rights and remedies of receiver.--In the
event of any appealable judgment, the
Corporation as receiver shall--
(i) have all the rights and remedies
available to the covered financial
company (before the date of appointment
of the Corporation as receiver under
section 202) and the Corporation,
including removal to Federal court and
all appellate rights; and
(ii) not be required to post any bond
in order to pursue such remedies.
(C) No attachment or execution.--No
attachment or execution may be issued by any
court upon assets in the possession of the
Corporation as receiver for a covered financial
company.
(D) Limitation on judicial review.--Except as
otherwise provided in this title, no court
shall have jurisdiction over--
(i) any claim or action for payment
from, or any action seeking a
determination of rights with respect
to, the assets of any covered financial
company for which the Corporation has
been appointed receiver, including any
assets which the Corporation may
acquire from itself as such receiver;
or
(E) Disposition of assets.--In exercising any
right, power, privilege, or authority as
receiver in connection with any covered
financial company for which the Corporation is
acting as receiver under this section, the
Corporation shall, to the greatest extent
practicable, conduct its operations in a manner
that--
(i) maximizes the net present value
return from the sale or disposition of
such assets;
(ii) minimizes the amount of any loss
realized in the resolution of cases;
(iii) mitigates the potential for
serious adverse effects to the
financial system;
(iv) ensures timely and adequate
competition and fair and consistent
treatment of offerors; and
(v) prohibits discrimination on the
basis of race, sex, or ethnic group in
the solicitation and consideration of
offers.
(10) Statute of limitations for actions brought by
receiver.--
(A) In general.--Notwithstanding any
provision of any contract, the applicable
statute of limitations with regard to any
action brought by the Corporation as receiver
for a covered financial company shall be--
(i) in the case of any contract
claim, the longer of--
(I) the 6-year period
beginning on the date on which
the claim accrues; or
(II) the period applicable
under State law; and
(ii) in the case of any tort claim,
the longer of--
(I) the 3-year period
beginning on the date on which
the claim accrues; or
(II) the period applicable
under State law.
(B) Date on which a claim accrues.--For
purposes of subparagraph (A), the date on which
the statute of limitations begins to run on any
claim described in subparagraph (A) shall be
the later of--
(i) the date of the appointment of
the Corporation as receiver under this
title; or
(ii) the date on which the cause of
action accrues.
(C) Revival of expired state causes of
action.--
(i) In general.--In the case of any
tort claim described in clause (ii) for
which the applicable statute of
limitations under State law has expired
not more than 5 years before the date
of appointment of the Corporation as
receiver for a covered financial
company, the Corporation may bring an
action as receiver on such claim
without regard to the expiration of the
statute of limitations.
(ii) Claims described.--A tort claim
referred to in clause (i) is a claim
arising from fraud, intentional
misconduct resulting in unjust
enrichment, or intentional misconduct
resulting in substantial loss to the
covered financial company.
(11) Avoidable transfers.--
(A) Fraudulent transfers.--The Corporation,
as receiver for any covered financial company,
may avoid a transfer of any interest of the
covered financial company in property, or any
obligation incurred by the covered financial
company, that was made or incurred at or within
2 years before the date on which the
Corporation was appointed receiver, if--
(i) the covered financial company
voluntarily or involuntarily--
(I) made such transfer or
incurred such obligation with
actual intent to hinder, delay,
or defraud any entity to which
the covered financial company
was or became, on or after the
date on which such transfer was
made or such obligation was
incurred, indebted; or
(II) received less than a
reasonably equivalent value in
exchange for such transferor
obligation; and
(ii) the covered financial company
voluntarily or involuntarily--
(I) was insolvent on the date
that such transfer was made or
such obligation was incurred,
or became insolvent as a result
of such transfer or obligation;
(II) was engaged in business
or a transaction, or was about
to engage in business or a
transaction, for which any
property remaining with the
covered financial company was
an unreasonably small capital;
(III) intended to incur, or
believed that the covered
financial company would incur,
debts that would be beyond the
ability of the covered
financial company to pay as
such debts matured; or
(IV) made such transfer to or
for the benefit of an insider,
or incurred such obligation to
or for the benefit of an
insider, under an employment
contract and not in the
ordinary course of business.
(B) Preferential transfers.--The Corporation
as receiver for any covered financial company
may avoid a transfer of an interest of the
covered financial company in property--
(i) to or for the benefit of a
creditor;
(ii) for or on account of an
antecedent debt that was owed by the
covered financial company before the
transfer was made;
(iii) that was made while the covered
financial company was insolvent;
(iv) that was made--
(I) 90 days or less before
the date on which the
Corporation was appointed
receiver; or
(II) more than 90 days, but
less than 1 year before the
date on which the Corporation
was appointed receiver, if such
creditor at the time of the
transfer was an insider; and
(v) that enables the creditor to
receive more than the creditor would
receive if--
(I) the covered financial
company had been liquidated
under chapter 7 of the
Bankruptcy Code;
(II) the transfer had not
been made; and
(III) the creditor received
payment of such debt to the
extent provided by the
provisions of chapter 7 of the
Bankruptcy Code.
(C) Post-receivership transactions.--The
Corporation as receiver for any covered
financial company may avoid a transfer of
property of the receivership that occurred
after the Corporation was appointed receiver
that was not authorized under this title by the
Corporation as receiver.
(D) Right of recovery.--To the extent that a
transfer is avoided under subparagraph (A),
(B), or (C), the Corporation may recover, for
the benefit of the covered financial company,
the property transferred or, if a court so
orders, the value of such property (at the time
of such transfer) from--
(i) the initial transferee of such
transfer or the person for whose
benefit such transfer was made; or
(ii) any immediate or mediate
transferee of any such initial
transferee.
(E) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph
(D)(ii) from--
(i) any transferee that takes for
value, including in satisfaction of or
to secure a present or antecedent debt,
in good faith, and without knowledge of
the voidability of the transfer
avoided; or
(ii) any immediate or mediate good
faith transferee of such transferee.
(F) Defenses.--Subject to the other
provisions of this title--
(i) a transferee or obligee from
which the Corporation seeks to recover
a transfer or to avoid an obligation
under subparagraph (A), (B), (C), or
(D) shall have the same defenses
available to a transferee or obligee
from which a trustee seeks to recover a
transfer or avoid an obligation under
sections 547, 548, and 549 of the
Bankruptcy Code; and
(ii) the authority of the Corporation
to recover a transfer or avoid an
obligation shall be subject to
subsections (b) and (c) of section 546,
section 547(c), and section 548(c) of
the Bankruptcy Code.
(G) Rights under this section.--The rights of
the Corporation as receiver under this section
shall be superior to any rights of a trustee or
any other party (other than a Federal agency)
under the Bankruptcy Code.
(H) Rules of construction; definitions.--For
purposes of--
(i) subparagraphs (A) and (B)--
(I) the term ``insider'' has
the same meaning as in section
101(31) of the Bankruptcy Code;
(II) a transfer is made when
such transfer is so perfected
that a bona fide purchaser from
the covered financial company
against whom applicable law
permits such transfer to be
perfected cannot acquire an
interest in the property
transferred that is superior to
the interest in such property
of the transferee, but if such
transfer is not so perfected
before the date on which the
Corporation is appointed as
receiver for the covered
financial company, such
transfer is made immediately
before the date of such
appointment; and
(III) the term ``value''
means property, or satisfaction
or securing of a present or
antecedent debt of the covered
financial company, but does not
include an unperformed promise
to furnish support to the
covered financial company; and
(ii) subparagraph (B)--
(I) the covered financial
company is presumed to have
been insolvent on and during
the 90-day period immediately
preceding the date of
appointment of the Corporation
as receiver; and
(II) the term ``insolvent''
has the same meaning as in
section 101(32) of the
Bankruptcy Code.
(12) Setoff.--
(A) Generally.--Except as otherwise provided
in this title, any right of a creditor to
offset a mutual debt owed by the creditor to
any covered financial company that arose before
the Corporation was appointed as receiver for
the covered financial company against a claim
of such creditor may be asserted if enforceable
under applicable noninsolvency law, except to
the extent that--
(i) the claim of the creditor against
the covered financial company is
disallowed;
(ii) the claim was transferred, by an
entity other than the covered financial
company, to the creditor--
(I) after the Corporation was
appointed as receiver of the
covered financial company; or
(II)(aa) after the 90-day
period preceding the date on
which the Corporation was
appointed as receiver for the
covered financial company; and
(bb) while the covered
financial company was insolvent
(except for a setoff in
connection with a qualified
financial contract); or
(iii) the debt owed to the covered
financial company was incurred by the
covered financial company--
(I) after the 90-day period
preceding the date on which the
Corporation was appointed as
receiver for the covered
financial company;
(II) while the covered
financial company was
insolvent; and
(III) for the purpose of
obtaining a right of setoff
against the covered financial
company (except for a setoff in
connection with a qualified
financial contract).
(B) Insufficiency.--
(i) In general.--Except with respect
to a setoff in connection with a
qualified financial contract, if a
creditor offsets a mutual debt owed to
the covered financial company against a
claim of the covered financial company
on or within the 90-day period
preceding the date on which the
Corporation is appointed as receiver
for the covered financial company, the
Corporation may recover from the
creditor the amount so offset, to the
extent that any insufficiency on the
date of such setoff is less than the
insufficiency on the later of--
(I) the date that is 90 days
before the date on which the
Corporation is appointed as
receiver for the covered
financial company; or
(II) the first day on which
there is an insufficiency
during the 90-day period
preceding the date on which the
Corporation is appointed as
receiver for the covered
financial company.
(ii) Definition of insufficiency.--In
this subparagraph, the term
``insufficiency'' means the amount, if
any, by which a claim against the
covered financial company exceeds a
mutual debt owed to the covered
financial company by the holder of such
claim.
(C) Insolvency.--The term ``insolvent'' has
the same meaning as in section 101(32) of the
Bankruptcy Code.
(D) Presumption of insolvency.--For purposes
of this paragraph, the covered financial
company is presumed to have been insolvent on
and during the 90-day period preceding the date
of appointment of the Corporation as receiver.
(E) Limitation.--Nothing in this paragraph
(12) shall be the basis for any right of setoff
where no such right exists under applicable
noninsolvency law.
(F) Priority claim.--Except as otherwise
provided in this title, the Corporation as
receiver for the covered financial company may
sell or transfer any assets free and clear of
the setoff rights of any party, except that
such party shall be entitled to a claim,
subordinate to the claims payable under
subparagraphs (A), (B), (C), and (D) of
subsection (b)(1), but senior to all other
unsecured liabilities defined in subsection
(b)(1)(E), in an amount equal to the value of
such setoff rights.
(13) Attachment of assets and other injunctive
relief.--Subject to paragraph (14), any court of
competent jurisdiction may, at the request of the
Corporation as receiver for a covered financial
company, issue an order in accordance with Rule 65 of
the Federal Rules of Civil Procedure, including an
order placing the assets of any person designated by
the Corporation under the control of the court and
appointing a trustee to hold such assets.
(14) Standards.--
(A) Showing.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any
proceeding under paragraph (13), without regard
to the requirement that the applicant show that
the injury, loss, or damage is irreparable and
immediate.
(B) State proceeding.--If, in the case of any
proceeding in a State court, the court
determines that rules of civil procedure
available under the laws of the State provide
substantially similar protections of the right
of the parties to due process as provided under
Rule 65 (as modified with respect to such
proceeding by subparagraph (A)), the relief
sought by the Corporation pursuant to paragraph
(14) may be requested under the laws of such
State.
(15) Treatment of claims arising from breach of
contracts executed by the corporation as receiver.--
Notwithstanding any other provision of this title, any
final and non-appealable judgment for monetary damages
entered against the Corporation as receiver for a
covered financial company for the breach of an
agreement executed or approved by the Corporation after
the date of its appointment shall be paid as an
administrative expense of the receiver. Nothing in this
paragraph shall be construed to limit the power of a
receiver to exercise any rights under contract or law,
including to terminate, breach, cancel, or otherwise
discontinue such agreement.
(16) Accounting and recordkeeping requirements.--
(A) In general.--The Corporation as receiver
for a covered financial company shall,
consistent with the accounting and reporting
practices and procedures established by the
Corporation, maintain a full accounting of each
receivership or other disposition of any
covered financial company.
(B) Annual accounting or report.--With
respect to each receivership to which the
Corporation is appointed, the Corporation shall
make an annual accounting or report, as
appropriate, available to the Secretary and the
Comptroller General of the United States.
(C) Availability of reports.--Any report
prepared pursuant to subparagraph (B) and
section 203(c)(3) shall be made available to
the public by the Corporation.
(D) Recordkeeping requirement.--
(i) In general.--The Corporation
shall prescribe such regulations and
establish such retention schedules as
are necessary to maintain the documents
and records of the Corporation
generated in exercising the authorities
of this title and the records of a
covered financial company for which the
Corporation is appointed receiver, with
due regard for--
(I) the avoidance of
duplicative record retention;
and
(II) the expected evidentiary
needs of the Corporation as
receiver for a covered
financial company and the
public regarding the records of
covered financial companies.
(ii) Retention of records.--Unless
otherwise required by applicable
Federal law or court order, the
Corporation may not, at any time,
destroy any records that are subject to
clause (i).
(iii) Records defined.--As used in
this subparagraph, the terms
``records'' and ``records of a covered
financial company'' mean any document,
book, paper, map, photograph,
microfiche, microfilm, computer or
electronically-created record generated
or maintained by the covered financial
company in the course of and necessary
to its transaction of business.
(b) Priority of Expenses and Unsecured Claims.--
(1) In general.--Unsecured claims against a covered
financial company, or the Corporation as receiver for
such covered financial company under this section, that
are proven to the satisfaction of the receiver shall
have priority in the following order:
(A) Administrative expenses of the receiver.
(B) Any amounts owed to the United States,
unless the United States agrees or consents
otherwise.
(C) Wages, salaries, or commissions,
including vacation, severance, and sick leave
pay earned by an individual (other than an
individual described in subparagraph (G)), but
only to the extent of 11,725 for each
individual (as indexed for inflation, by
regulation of the Corporation) earned not later
than 180 days before the date of appointment of
the Corporation as receiver.
(D) Contributions owed to employee benefit
plans arising from services rendered not later
than 180 days before the date of appointment of
the Corporation as receiver, to the extent of
the number of employees covered by each such
plan, multiplied by 11,725 (as indexed for
inflation, by regulation of the Corporation),
less the aggregate amount paid to such
employees under subparagraph (C), plus the
aggregate amount paid by the receivership on
behalf of such employees to any other employee
benefit plan.
(E) Any other general or senior liability of
the covered financial company (which is not a
liability described under subparagraph (F),
(G), or (H)).
(F) Any obligation subordinated to general
creditors (which is not an obligation described
under subparagraph (G) or (H)).
(G) Any wages, salaries, or commissions,
including vacation, severance, and sick leave
pay earned, owed to senior executives and
directors of the covered financial company.
(H) Any obligation to shareholders, members,
general partners, limited partners, or other
persons, with interests in the equity of the
covered financial company arising as a result
of their status as shareholders, members,
general partners, limited partners, or other
persons with interests in the equity of the
covered financial company.
(2) Post-receivership financing priority.--In the
event that the Corporation, as receiver for a covered
financial company, is unable to obtain unsecured credit
for the covered financial company from commercial
sources, the Corporation as receiver may obtain credit
or incur debt on the part of the covered financial
company, which shall have priority over any or all
administrative expenses of the receiver under paragraph
(1)(A).
(3) Claims of the united states.--Unsecured claims of
the United States shall, at a minimum, have a higher
priority than liabilities of the covered financial
company that count as regulatory capital.
(4) Creditors similarly situated.--All claimants of a
covered financial company that are similarly situated
under paragraph (1) shall be treated in a similar
manner, except that the Corporation may take any action
(including making payments, subject to subsection
(o)(1)(D)(i)) that does not comply with this
subsection, if--
(A) the Corporation determines that such
action is necessary--
(i) to maximize the value of the
assets of the covered financial
company;
(ii) to initiate and continue
operations essential to implementation
of the receivership or any bridge
financial company;
(iii) to maximize the present value
return from the sale or other
disposition of the assets of the
covered financial company; or
(iv) to minimize the amount of any
loss realized upon the sale or other
disposition of the assets of the
covered financial company; and
(B) all claimants that are similarly situated
under paragraph (1) receive not less than the
amount provided in paragraphs (2) and (3) of
subsection (d).
(5) Secured claims unaffected.--This section shall
not affect secured claims or security entitlements in
respect of assets or property held by the covered
financial company, except to the extent that the
security is insufficient to satisfy the claim, and then
only with regard to the difference between the claim
and the amount realized from the security.
(6) Priority of expenses and unsecured claims in the
orderly liquidation of sipc member.--Where the
Corporation is appointed as receiver for a covered
broker or dealer, unsecured claims against such covered
broker or dealer, or the Corporation as receiver for
such covered broker or dealer under this section, that
are proven to the satisfaction of the receiver under
section 205(e), shall have the priority prescribed in
paragraph (1), except that--
(A) SIPC shall be entitled to recover
administrative expenses incurred in performing
its responsibilities under section 205 on an
equal basis with the Corporation, in accordance
with paragraph (1)(A);
(B) the Corporation shall be entitled to
recover any amounts paid to customers or to
SIPC pursuant to section 205(f), in accordance
with paragraph (1)(B);
(C) SIPC shall be entitled to recover any
amounts paid out of the SIPC Fund to meet its
obligations under section 205 and under the
Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), which claim shall be
subordinate to the claims payable under
subparagraphs (A) and (B) of paragraph (1), but
senior to all other claims; and
(D) the Corporation may, after paying any
proven claims to customers under section 205
and the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.), and as provided
above, pay dividends on other proven claims, in
its discretion, and to the extent that funds
are available, in accordance with the
priorities set forth in paragraph (1).
(c) Provisions Relating to Contracts Entered Into Before
Appointment of Receiver.--
(1) Authority to repudiate contracts.--In addition to
any other rights that a receiver may have, the
Corporation as receiver for any covered financial
company may disaffirm or repudiate any contract or
lease--
(A) to which the covered financial company is
a party;
(B) the performance of which the Corporation
as receiver, in the discretion of the
Corporation, determines to be burdensome; and
(C) the disaffirmance or repudiation of which
the Corporation as receiver determines, in the
discretion of the Corporation, will promote the
orderly administration of the affairs of the
covered financial company.
(2) Timing of repudiation.--The Corporation, as
receiver for any covered financial company, shall
determine whether or not to exercise the rights of
repudiation under this section within a reasonable
period of time.
(3) Claims for damages for repudiation.--
(A) In general.--Except as provided in
paragraphs (4), (5), and (6) and in
subparagraphs (C), (D), and (E) of this
paragraph, the liability of the Corporation as
receiver for a covered financial company for
the disaffirmance or repudiation of any
contract pursuant to paragraph (1) shall be--
(i) limited to actual direct
compensatory damages; and
(ii) determined as of--
(I) the date of the
appointment of the Corporation
as receiver; or
(II) in the case of any
contract or agreement referred
to in paragraph (8), the date
of the disaffirmance or
repudiation of such contract or
agreement.
(B) No liability for other damages.--For
purposes of subparagraph (A), the term ``actual
direct compensatory damages'' does not
include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or
opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of
qualified financial contracts.--In the case of
any qualified financial contract or agreement
to which paragraph (8) applies, compensatory
damages shall be--
(i) deemed to include normal and
reasonable costs of cover or other
reasonable measures of damages utilized
in the industries for such contract and
agreement claims; and
(ii) paid in accordance with this
paragraph and subsection (d), except as
otherwise specifically provided in this
subsection.
(D) Measure of damages for repudiation or
disaffirmance of debt obligation.--In the case
of any debt for borrowed money or evidenced by
a security, actual direct compensatory damages
shall be no less than the amount lent plus
accrued interest plus any accreted original
issue discount as of the date the Corporation
was appointed receiver of the covered financial
company and, to the extent that an allowed
secured claim is secured by property the value
of which is greater than the amount of such
claim and any accrued interest through the date
of repudiation or disaffirmance, such accrued
interest pursuant to paragraph (1).
(E) Measure of damages for repudiation or
disaffirmance of contingent obligation.--In the
case of any contingent obligation of a covered
financial company consisting of any obligation
under a guarantee, letter of credit, loan
commitment, or similar credit obligation, the
Corporation may, by rule or regulation,
prescribe that actual direct compensatory
damages shall be no less than the estimated
value of the claim as of the date the
Corporation was appointed receiver of the
covered financial company, as such value is
measured based on the likelihood that such
contingent claim would become fixed and the
probable magnitude thereof.
(4) Leases under which the covered financial company
is the lessee.--
(A) In general.--If the Corporation as
receiver disaffirms or repudiates a lease under
which the covered financial company is the
lessee, the receiver shall not be liable for
any damages (other than damages determined
pursuant to subparagraph (B)) for the
disaffirmance or repudiation of such lease.
(B) Payments of rent.--Notwithstanding
subparagraph (A), the lessor under a lease to
which subparagraph (A) would otherwise apply
shall--
(i) be entitled to the contractual
rent accruing before the later of the
date on which--
(I) the notice of
disaffirmance or repudiation is
mailed; or
(II) the disaffirmance or
repudiation becomes effective,
unless the lessor is in default
or breach of the terms of the
lease;
(ii) have no claim for damages under
any acceleration clause or other
penalty provision in the lease; and
(iii) have a claim for any unpaid
rent, subject to all appropriate
offsets and defenses, due as of the
date of the appointment which shall be
paid in accordance with this paragraph
and subsection (d).
(5) Leases under which the covered financial company
is the lessor.--
(A) In general.--If the Corporation as
receiver for a covered financial company
repudiates an unexpired written lease of real
property of the covered financial company under
which the covered financial company is the
lessor and the lessee is not, as of the date of
such repudiation, in default, the lessee under
such lease may either--
(i) treat the lease as terminated by
such repudiation; or
(ii) remain in possession of the
leasehold interest for the balance of
the term of the lease, unless the
lessee defaults under the terms of the
lease after the date of such
repudiation.
(B) Provisions applicable to lessee remaining
in possession.--If any lessee under a lease
described in subparagraph (A) remains in
possession of a leasehold interest pursuant to
clause (ii) of subparagraph (A)--
(i) the lessee--
(I) shall continue to pay the
contractual rent pursuant to
the terms of the lease after
the date of the repudiation of
such lease; and
(II) may offset against any
rent payment which accrues
after the date of the
repudiation of the lease, any
damages which accrue after such
date due to the nonperformance
of any obligation of the
covered financial company under
the lease after such date; and
(ii) the Corporation as receiver
shall not be liable to the lessee for
any damages arising after such date as
a result of the repudiation, other than
the amount of any offset allowed under
clause (i)(II).
(6) Contracts for the sale of real property.--
(A) In general.--If the receiver repudiates
any contract (which meets the requirements of
subsection (a)(6)) for the sale of real
property, and the purchaser of such real
property under such contract is in possession
and is not, as of the date of such repudiation,
in default, such purchaser may either--
(i) treat the contract as terminated
by such repudiation; or
(ii) remain in possession of such
real property.
(B) Provisions applicable to purchaser
remaining in possession.--If any purchaser of
real property under any contract described in
subparagraph (A) remains in possession of such
property pursuant to clause (ii) of
subparagraph (A)--
(i) the purchaser--
(I) shall continue to make
all payments due under the
contract after the date of the
repudiation of the contract;
and
(II) may offset against any
such payments any damages which
accrue after such date due to
the nonperformance (after such
date) of any obligation of the
covered financial company under
the contract; and
(ii) the Corporation as receiver
shall--
(I) not be liable to the
purchaser for any damages
arising after such date as a
result of the repudiation,
other than the amount of any
offset allowed under clause
(i)(II);
(II) deliver title to the
purchaser in accordance with
the provisions of the contract;
and
(III) have no obligation
under the contract other than
the performance required under
subclause (II).
(C) Assignment and sale allowed.--
(i) In general.--No provision of this
paragraph shall be construed as
limiting the right of the Corporation
as receiver to assign the contract
described in subparagraph (A) and sell
the property, subject to the contract
and the provisions of this paragraph.
(ii) No liability after assignment
and sale.--If an assignment and sale
described in clause (i) is consummated,
the Corporation as receiver shall have
no further liability under the contract
described in subparagraph (A) or with
respect to the real property which was
the subject of such contract.
(7) Provisions applicable to service contracts.--
(A) Services performed before appointment.--
In the case of any contract for services
between any person and any covered financial
company for which the Corporation has been
appointed receiver, any claim of such person
for services performed before the date of
appointment shall be--
(i) a claim to be paid in accordance
with subsections (a), (b), and (d); and
(ii) deemed to have arisen as of the
date on which the receiver was
appointed.
(B) Services performed after appointment and
prior to repudiation.--If, in the case of any
contract for services described in subparagraph
(A), the Corporation as receiver accepts
performance by the other person before making
any determination to exercise the right of
repudiation of such contract under this
section--
(i) the other party shall be paid
under the terms of the contract for the
services performed; and
(ii) the amount of such payment shall
be treated as an administrative expense
of the receivership.
(C) Acceptance of performance no bar to
subsequent repudiation.--The acceptance by the
Corporation as receiver for services referred
to in subparagraph (B) in connection with a
contract described in subparagraph (B) shall
not affect the right of the Corporation as
receiver to repudiate such contract under this
section at any time after such performance.
(8) Certain qualified financial contracts.--
(A) Rights of parties to contracts.--Subject
to subsection (a)(8) and paragraphs (9) and
(10) of this subsection, and notwithstanding
any other provision of this section, any other
provision of Federal law, or the law of any
State, no person shall be stayed or prohibited
from exercising--
(i) any right that such person has to
cause the termination, liquidation, or
acceleration of any qualified financial
contract with a covered financial
company which arises upon the date of
appointment of the Corporation as
receiver for such covered financial
company or at any time after such
appointment;
(ii) any right under any security
agreement or arrangement or other
credit enhancement related to one or
more qualified financial contracts
described in clause (i); or
(iii) any right to offset or net out
any termination value, payment amount,
or other transfer obligation arising
under or in connection with 1 or more
contracts or agreements described in
clause (i), including any master
agreement for such contracts or
agreements.
(B) Applicability of other provisions.--
Subsection (a)(8) shall apply in the case of
any judicial action or proceeding brought
against the Corporation as receiver referred to
in subparagraph (A), or the subject covered
financial company, by any party to a contract
or agreement described in subparagraph (A)(i)
with such covered financial company.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding
subsection (a)(11), (a)(12), or
(c)(12), section 5242 of the Revised
Statutes of the United States, or any
other provision of Federal or State law
relating to the avoidance of
preferential or fraudulent transfers,
the Corporation, whether acting as the
Corporation or as receiver for a
covered financial company, may not
avoid any transfer of money or other
property in connection with any
qualified financial contract with a
covered financial company.
(ii) Exception for certain
transfers.--Clause (i) shall not apply
to any transfer of money or other
property in connection with any
qualified financial contract with a
covered financial company if the
transferee had actual intent to hinder,
delay, or defraud such company, the
creditors of such company, or the
Corporation as receiver appointed for
such company.
(D) Certain contracts and agreements
defined.--For purposes of this subsection, the
following definitions shall apply:
(i) Qualified financial contract.--
The term ``qualified financial
contract'' means any securities
contract, commodity contract, forward
contract, repurchase agreement, swap
agreement, and any similar agreement
that the Corporation determines by
regulation, resolution, or order to be
a qualified financial contract for
purposes of this paragraph.
(ii) Securities contract.--The term
``securities contract''--
(I) means a contract for the
purchase, sale, or loan of a
security, a certificate of
deposit, a mortgage loan, any
interest in a mortgage loan, a
group or index of securities,
certificates of deposit, or
mortgage loans or interests
therein (including any interest
therein or based on the value
thereof), or any option on any
of the foregoing, including any
option to purchase or sell any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option, and including any
repurchase or reverse
repurchase transaction on any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option (whether or not such
repurchase or reverse
repurchase transaction is a
``repurchase agreement'', as
defined in clause (v));
(II) does not include any
purchase, sale, or repurchase
obligation under a
participation in a commercial
mortgage loan unless the
Corporation determines by
regulation, resolution, or
order to include any such
agreement within the meaning of
such term;
(III) means any option
entered into on a national
securities exchange relating to
foreign currencies;
(IV) means the guarantee
(including by novation) by or
to any securities clearing
agency of any settlement of
cash, securities, certificates
of deposit, mortgage loans or
interests therein, group or
index of securities,
certificates of deposit or
mortgage loans or interests
therein (including any interest
therein or based on the value
thereof) or an option on any of
the foregoing, including any
option to purchase or sell any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option (whether or not such
settlement is in connection
with any agreement or
transaction referred to in
subclauses (I) through (XII)
(other than subclause (II)));
(V) means any margin loan;
(VI) means any extension of
credit for the clearance or
settlement of securities
transactions;
(VII) means any loan
transaction coupled with a
securities collar transaction,
any prepaid securities forward
transaction, or any total
return swap transaction coupled
with a securities sale
transaction;
(VIII) means any other
agreement or transaction that
is similar to any agreement or
transaction referred to in this
clause;
(IX) means any combination of
the agreements or transactions
referred to in this clause;
(X) means any option to enter
into any agreement or
transaction referred to in this
clause;
(XI) means a master agreement
that provides for an agreement
or transaction referred to in
any of subclauses (I) through
(X), other than subclause (II),
together with all supplements
to any such master agreement,
without regard to whether the
master agreement provides for
an agreement or transaction
that is not a securities
contract under this clause,
except that the master
agreement shall be considered
to be a securities contract
under this clause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in any of subclauses (I)
through (X), other than
subclause (II); and
(XII) means any security
agreement or arrangement or
other credit enhancement
related to any agreement or
transaction referred to in this
clause, including any guarantee
or reimbursement obligation in
connection with any agreement
or transaction referred to in
this clause.
(iii) Commodity contract.--The term
``commodity contract'' means--
(I) with respect to a futures
commission merchant, a contract
for the purchase or sale of a
commodity for future delivery
on, or subject to the rules of,
a contract market or board of
trade;
(II) with respect to a
foreign futures commission
merchant, a foreign future;
(III) with respect to a
leverage transaction merchant,
a leverage transaction;
(IV) with respect to a
clearing organization, a
contract for the purchase or
sale of a commodity for future
delivery on, or subject to the
rules of, a contract market or
board of trade that is cleared
by such clearing organization,
or commodity option traded on,
or subject to the rules of, a
contract market or board of
trade that is cleared by such
clearing organization;
(V) with respect to a
commodity options dealer, a
commodity option;
(VI) any other agreement or
transaction that is similar to
any agreement or transaction
referred to in this clause;
(VII) any combination of the
agreements or transactions
referred to in this clause;
(VIII) any option to enter
into any agreement or
transaction referred to in this
clause;
(IX) a master agreement that
provides for an agreement or
transaction referred to in any
of subclauses (I) through
(VIII), together with all
supplements to any such master
agreement, without regard to
whether the master agreement
provides for an agreement or
transaction that is not a
commodity contract under this
clause, except that the master
agreement shall be considered
to be a commodity contract
under this clause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in any of subclauses (I)
through (VIII); or
(X) any security agreement or
arrangement or other credit
enhancement related to any
agreement or transaction
referred to in this clause,
including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
this clause.
(iv) Forward contract.--The term
``forward contract'' means--
(I) a contract (other than a
commodity contract) for the
purchase, sale, or transfer of
a commodity or any similar
good, article, service, right,
or interest which is presently
or in the future becomes the
subject of dealing in the
forward contract trade, or
product or byproduct thereof,
with a maturity date that is
more than 2 days after the date
on which the contract is
entered into, including a
repurchase or reverse
repurchase transaction (whether
or not such repurchase or
reverse repurchase transaction
is a ``repurchase agreement'',
as defined in clause (v)),
consignment, lease, swap, hedge
transaction, deposit, loan,
option, allocated transaction,
unallocated transaction, or any
other similar agreement;
(II) any combination of
agreements or transactions
referred to in subclauses (I)
and (III);
(III) any option to enter
into any agreement or
transaction referred to in
subclause (I) or (II);
(IV) a master agreement that
provides for an agreement or
transaction referred to in
subclause (I), (II), or (III),
together with all supplements
to any such master agreement,
without regard to whether the
master agreement provides for
an agreement or transaction
that is not a forward contract
under this clause, except that
the master agreement shall be
considered to be a forward
contract under this clause only
with respect to each agreement
or transaction under the master
agreement that is referred to
in subclause (I), (II), or
(III); or
(V) any security agreement or
arrangement or other credit
enhancement related to any
agreement or transaction
referred to in subclause (I),
(II), (III), or (IV), including
any guarantee or reimbursement
obligation in connection with
any agreement or transaction
referred to in any such
subclause.
(v) Repurchase agreement.--The term
``repurchase agreement'' (which
definition also applies to a reverse
repurchase agreement)--
(I) means an agreement,
including related terms, which
provides for the transfer of
one or more certificates of
deposit, mortgage related
securities (as such term is
defined in section 3 of the
Securities Exchange Act of
1934), mortgage loans,
interests in mortgage-related
securities or mortgage loans,
eligible bankers' acceptances,
qualified foreign government
securities (which, for purposes
of this clause, means a
security that is a direct
obligation of, or that is fully
guaranteed by, the central
government of a member of the
Organization for Economic
Cooperation and Development, as
determined by regulation or
order adopted by the Board of
Governors), or securities that
are direct obligations of, or
that are fully guaranteed by,
the United States or any agency
of the United States against
the transfer of funds by the
transferee of such certificates
of deposit, eligible bankers'
acceptances, securities,
mortgage loans, or interests
with a simultaneous agreement
by such transferee to transfer
to the transferor thereof
certificates of deposit,
eligible bankers' acceptances,
securities, mortgage loans, or
interests as described above,
at a date certain not later
than 1 year after such
transfers or on demand, against
the transfer of funds, or any
other similar agreement;
(II) does not include any
repurchase obligation under a
participation in a commercial
mortgage loan, unless the
Corporation determines, by
regulation, resolution, or
order to include any such
participation within the
meaning of such term;
(III) means any combination
of agreements or transactions
referred to in subclauses (I)
and (IV);
(IV) means any option to
enter into any agreement or
transaction referred to in
subclause (I) or (III);
(V) means a master agreement
that provides for an agreement
or transaction referred to in
subclause (I), (III), or (IV),
together with all supplements
to any such master agreement,
without regard to whether the
master agreement provides for
an agreement or transaction
that is not a repurchase
agreement under this clause,
except that the master
agreement shall be considered
to be a repurchase agreement
under this subclause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (III), or
(IV); and
(VI) means any security
agreement or arrangement or
other credit enhancement
related to any agreement or
transaction referred to in
subclause (I), (III), (IV), or
(V), including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
any such subclause.
(vi) Swap agreement.--The term ``swap
agreement'' means--
(I) any agreement, including
the terms and conditions
incorporated by reference in
any such agreement, which is an
interest rate swap, option,
future, or forward agreement,
including a rate floor, rate
cap, rate collar, cross-
currency rate swap, and basis
swap; a spot, same day-
tomorrow, tomorrow-next,
forward, or other foreign
exchange, precious metals, or
other commodity agreement; a
currency swap, option, future,
or forward agreement; an equity
index or equity swap, option,
future, or forward agreement; a
debt index or debt swap,
option, future, or forward
agreement; a total return,
credit spread or credit swap,
option, future, or forward
agreement; a commodity index or
commodity swap, option, future,
or forward agreement; weather
swap, option, future, or
forward agreement; an emissions
swap, option, future, or
forward agreement; or an
inflation swap, option, future,
or forward agreement;
(II) any agreement or
transaction that is similar to
any other agreement or
transaction referred to in this
clause and that is of a type
that has been, is presently, or
in the future becomes, the
subject of recurrent dealings
in the swap or other
derivatives markets (including
terms and conditions
incorporated by reference in
such agreement) and that is a
forward, swap, future, option,
or spot transaction on one or
more rates, currencies,
commodities, equity securities
or other equity instruments,
debt securities or other debt
instruments, quantitative
measures associated with an
occurrence, extent of an
occurrence, or contingency
associated with a financial,
commercial, or economic
consequence, or economic or
financial indices or measures
of economic or financial risk
or value;
(III) any combination of
agreements or transactions
referred to in this clause;
(IV) any option to enter into
any agreement or transaction
referred to in this clause;
(V) a master agreement that
provides for an agreement or
transaction referred to in
subclause (I), (II), (III), or
(IV), together with all
supplements to any such master
agreement, without regard to
whether the master agreement
contains an agreement or
transaction that is not a swap
agreement under this clause,
except that the master
agreement shall be considered
to be a swap agreement under
this clause only with respect
to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (II), (III),
or (IV); and
(VI) any security agreement
or arrangement or other credit
enhancement related to any
agreement or transaction
referred to in any of
subclauses (I) through (V),
including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
any such clause.
(vii) Definitions relating to
default.--When used in this paragraph
and paragraphs (9) and (10)--
(I) the term ``default''
means, with respect to a
covered financial company, any
adjudication or other official
decision by any court of
competent jurisdiction, or
other public authority pursuant
to which the Corporation has
been appointed receiver; and
(II) the term ``in danger of
default'' means a covered
financial company with respect
to which the Corporation or
appropriate State authority has
determined that--
(aa) in the opinion
of the Corporation or
such authority--
(AA) the
covered
financial
company is not
likely to be
able to pay its
obligations in
the normal
course of
business; and
(BB) there is
no reasonable
prospect that
the covered
financial
company will be
able to pay
such
obligations
without Federal
assistance; or
(bb) in the opinion
of the Corporation or
such authority--
(AA) the
covered
financial
company has
incurred or is
likely to incur
losses that
will deplete
all or
substantially
all of its
capital; and
(BB) there is
no reasonable
prospect that
the capital
will be
replenished
without Federal
assistance.
(viii) Treatment of master agreement
as one agreement.--Any master agreement
for any contract or agreement described
in any of clauses (i) through (vi) (or
any master agreement for such master
agreement or agreements), together with
all supplements to such master
agreement, shall be treated as a single
agreement and a single qualified
financial contact. If a master
agreement contains provisions relating
to agreements or transactions that are
not themselves qualified financial
contracts, the master agreement shall
be deemed to be a qualified financial
contract only with respect to those
transactions that are themselves
qualified financial contracts.
(ix) Transfer.--The term ``transfer''
means every mode, direct or indirect,
absolute or conditional, voluntary or
involuntary, of disposing of or parting
with property or with an interest in
property, including retention of title
as a security interest and foreclosure
of the equity of redemption of the
covered financial company.
(x) Person.--The term ``person''
includes any governmental entity in
addition to any entity included in the
definition of such term in section 1,
title 1, United States Code.
(E) Clarification.--No provision of law shall
be construed as limiting the right or power of
the Corporation, or authorizing any court or
agency to limit or delay, in any manner, the
right or power of the Corporation to transfer
any qualified financial contract or to
disaffirm or repudiate any such contract in
accordance with this subsection.
(F) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the
provisions of subparagraph (A) of this
paragraph and sections 403 and 404 of
the Federal Deposit Insurance
Corporation Improvement Act of 1991, no
walkaway clause shall be enforceable in
a qualified financial contract of a
covered financial company in default.
(ii) Limited suspension of certain
obligations.--In the case of a
qualified financial contract referred
to in clause (i), any payment or
delivery obligations otherwise due from
a party pursuant to the qualified
financial contract shall be suspended
from the time at which the Corporation
is appointed as receiver until the
earlier of--
(I) the time at which such
party receives notice that such
contract has been transferred
pursuant to paragraph (10)(A);
or
(II) 5:00 p.m. (eastern time)
on the business day following
the date of the appointment of
the Corporation as receiver.
(iii) Walkaway clause defined.--For
purposes of this subparagraph, the term
``walkaway clause'' means any provision
in a qualified financial contract that
suspends, conditions, or extinguishes a
payment obligation of a party, in whole
or in part, or does not create a
payment obligation of a party that
would otherwise exist, solely because
of the status of such party as a
nondefaulting party in connection with
the insolvency of a covered financial
company that is a party to the contract
or the appointment of or the exercise
of rights or powers by the Corporation
as receiver for such covered financial
company, and not as a result of the
exercise by a party of any right to
offset, setoff, or net obligations that
exist under the contract, any other
contract between those parties, or
applicable law.
(G) Certain obligations to clearing
organizations.--In the event that the
Corporation has been appointed as receiver for
a covered financial company which is a party to
any qualified financial contract cleared by or
subject to the rules of a clearing organization
(as defined in paragraph (9)(D)), the receiver
shall use its best efforts to meet all margin,
collateral, and settlement obligations of the
covered financial company that arise under
qualified financial contracts (other than any
margin, collateral, or settlement obligation
that is not enforceable against the receiver
under paragraph (8)(F)(i) or paragraph
(10)(B)), as required by the rules of the
clearing organization when due. Notwithstanding
any other provision of this title, if the
receiver fails to satisfy any such margin,
collateral, or settlement obligations under the
rules of the clearing organization, the
clearing organization shall have the immediate
right to exercise, and shall not be stayed from
exercising, all of its rights and remedies
under its rules and applicable law with respect
to any qualified financial contract of the
covered financial company, including, without
limitation, the right to liquidate all
positions and collateral of such covered
financial company under the company's qualified
financial contracts, and suspend or cease to
act for such covered financial company, all in
accordance with the rules of the clearing
organization.
(H) Recordkeeping.--
(i) Joint rulemaking.--The Federal
primary financial regulatory agencies
shall jointly prescribe regulations
requiring that financial companies
maintain such records with respect to
qualified financial contracts
(including market valuations) that the
Federal primary financial regulatory
agencies determine to be necessary or
appropriate in order to assist the
Corporation as receiver for a covered
financial company in being able to
exercise its rights and fulfill its
obligations under this paragraph or
paragraph (9) or (10).
(ii) Time frame.--The Federal primary
financial regulatory agencies shall
prescribe joint final or interim final
regulations not later than 24 months
after the date of enactment of this
Act.
(iii) Back-up rulemaking authority.--
If the Federal primary financial
regulatory agencies do not prescribe
joint final or interim final
regulations within the time frame in
clause (ii), the Chairperson of the
Council shall prescribe, in
consultation with the Corporation, the
regulations required by clause (i).
(iv) Categorization and tiering.--The
joint regulations prescribed under
clause (i) shall, as appropriate,
differentiate among financial companies
by taking into consideration their
size, risk, complexity, leverage,
frequency and dollar amount of
qualified financial contracts,
interconnectedness to the financial
system, and any other factors deemed
appropriate.
(9) Transfer of qualified financial contracts.--
(A) In general.--In making any transfer of
assets or liabilities of a covered financial
company in default, which includes any
qualified financial contract, the Corporation
as receiver for such covered financial company
shall either--
(i) transfer to one financial
institution, other than a financial
institution for which a conservator,
receiver, trustee in bankruptcy, or
other legal custodian has been
appointed or which is otherwise the
subject of a bankruptcy or insolvency
proceeding--
(I) all qualified financial
contracts between any person or
any affiliate of such person
and the covered financial
company in default;
(II) all claims of such
person or any affiliate of such
person against such covered
financial company under any
such contract (other than any
claim which, under the terms of
any such contract, is
subordinated to the claims of
general unsecured creditors of
such company);
(III) all claims of such
covered financial company
against such person or any
affiliate of such person under
any such contract; and
(IV) all property securing or
any other credit enhancement
for any contract described in
subclause (I) or any claim
described in subclause (II) or
(III) under any such contract;
or
(ii) transfer none of the qualified
financial contracts, claims, property
or other credit enhancement referred to
in clause (i) (with respect to such
person and any affiliate of such
person).
(B) Transfer to foreign bank, financial
institution, or branch or agency thereof.--In
transferring any qualified financial contracts
and related claims and property under
subparagraph (A)(i), the Corporation as
receiver for the covered financial company
shall not make such transfer to a foreign bank,
financial institution organized under the laws
of a foreign country, or a branch or agency of
a foreign bank or financial institution unless,
under the law applicable to such bank,
financial institution, branch or agency, to the
qualified financial contracts, and to any
netting contract, any security agreement or
arrangement or other credit enhancement related
to one or more qualified financial contracts,
the contractual rights of the parties to such
qualified financial contracts, netting
contracts, security agreements or arrangements,
or other credit enhancements are enforceable
substantially to the same extent as permitted
under this section.
(C) Transfer of contracts subject to the
rules of a clearing organization.--In the event
that the Corporation as receiver for a
financial institution transfers any qualified
financial contract and related claims,
property, or credit enhancement pursuant to
subparagraph (A)(i) and such contract is
cleared by or subject to the rules of a
clearing organization, the clearing
organization shall not be required to accept
the transferee as a member by virtue of the
transfer.
(D) Definitions.--For purposes of this
paragraph--
(i) the term ``financial
institution'' means a broker or dealer,
a depository institution, a futures
commission merchant, a bridge financial
company, or any other institution
determined by the Corporation, by
regulation, to be a financial
institution; and
(ii) the term ``clearing
organization'' has the same meaning as
in section 402 of the Federal Deposit
Insurance Corporation Improvement Act
of 1991.
(10) Notification of transfer.--
(A) In general.--
(i) Notice.--The Corporation shall
provide notice in accordance with
clause (ii), if--
(I) the Corporation as
receiver for a covered
financial company in default or
in danger of default transfers
any assets or liabilities of
the covered financial company;
and
(II) the transfer includes
any qualified financial
contract.
(ii) Timing.--The Corporation as
receiver for a covered financial
company shall notify any person who is
a party to any contract described in
clause (i) of such transfer not later
than 5:00 p.m. (eastern time) on the
business day following the date of the
appointment of the Corporation as
receiver.
(B) Certain rights not enforceable.--
(i) Receivership.--A person who is a
party to a qualified financial contract
with a covered financial company may
not exercise any right that such person
has to terminate, liquidate, or net
such contract under paragraph (8)(A)
solely by reason of or incidental to
the appointment under this section of
the Corporation as receiver for the
covered financial company (or the
insolvency or financial condition of
the covered financial company for which
the Corporation has been appointed as
receiver)--
(I) until 5:00 p.m. (eastern
time) on the business day
following the date of the
appointment; or
(II) after the person has
received notice that the
contract has been transferred
pursuant to paragraph (9)(A).
(ii) Notice.--For purposes of this
paragraph, the Corporation as receiver
for a covered financial company shall
be deemed to have notified a person who
is a party to a qualified financial
contract with such covered financial
company, if the Corporation has taken
steps reasonably calculated to provide
notice to such person by the time
specified in subparagraph (A).
(C) Treatment of bridge financial company.--
For purposes of paragraph (9), a bridge
financial company shall not be considered to be
a financial institution for which a
conservator, receiver, trustee in bankruptcy,
or other legal custodian has been appointed, or
which is otherwise the subject of a bankruptcy
or insolvency proceeding.
(D) Business day defined.--For purposes of
this paragraph, the term ``business day'' means
any day other than any Saturday, Sunday, or any
day on which either the New York Stock Exchange
or the Federal Reserve Bank of New York is
closed.
(11) Disaffirmance or repudiation of qualified
financial contracts.--In exercising the rights of
disaffirmance or repudiation of the Corporation as
receiver with respect to any qualified financial
contract to which a covered financial company is a
party, the Corporation shall either--
(A) disaffirm or repudiate all qualified
financial contracts between--
(i) any person or any affiliate of
such person; and
(ii) the covered financial company in
default; or
(B) disaffirm or repudiate none of the
qualified financial contracts referred to in
subparagraph (A) (with respect to such person
or any affiliate of such person).
(12) Certain security and customer interests not
avoidable.--No provision of this subsection shall be
construed as permitting the avoidance of any--
(A) legally enforceable or perfected security
interest in any of the assets of any covered
financial company, except in accordance with
subsection (a)(11); or
(B) legally enforceable interest in customer
property, security entitlements in respect of
assets or property held by the covered
financial company for any security entitlement
holder.
(13) Authority to enforce contracts.--
(A) In general.--The Corporation, as receiver
for a covered financial company, may enforce
any contract, other than a liability insurance
contract of a director or officer, a financial
institution bond entered into by the covered
financial company, notwithstanding any
provision of the contract providing for
termination, default, acceleration, or exercise
of rights upon, or solely by reason of,
insolvency, the appointment of or the exercise
of rights or powers by the Corporation as
receiver, the filing of the petition pursuant
to section 202(a)(1), or the issuance of the
recommendations or determination, or any
actions or events occurring in connection
therewith or as a result thereof, pursuant to
section 203.
(B) Certain rights not affected.--No
provision of this paragraph may be construed as
impairing or affecting any right of the
Corporation as receiver to enforce or recover
under a liability insurance contract of a
director or officer or financial institution
bond under other applicable law.
(C) Consent requirement and ipso facto
clauses.--
(i) In general.--Except as otherwise
provided by this section, no person may
exercise any right or power to
terminate, accelerate, or declare a
default under any contract to which the
covered financial company is a party
(and no provision in any such contract
providing for such default,
termination, or acceleration shall be
enforceable), or to obtain possession
of or exercise control over any
property of the covered financial
company or affect any contractual
rights of the covered financial
company, without the consent of the
Corporation as receiver for the covered
financial company during the 90 day
period beginning from the appointment
of the Corporation as receiver.
(ii) Exceptions.--No provision of
this subparagraph shall apply to a
director or officer liability insurance
contract or a financial institution
bond, to the rights of parties to
certain qualified financial contracts
pursuant to paragraph (8), or to the
rights of parties to netting contracts
pursuant to subtitle A of title IV of
the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12
U.S.C. 4401 et seq.), or shall be
construed as permitting the Corporation
as receiver to fail to comply with
otherwise enforceable provisions of
such contract.
(D) Contracts to extend credit.--
Notwithstanding any other provision in this
title, if the Corporation as receiver enforces
any contract to extend credit to the covered
financial company or bridge financial company,
any valid and enforceable obligation to repay
such debt shall be paid by the Corporation as
receiver, as an administrative expense of the
receivership.
(14) Exception for federal reserve banks and
corporation security interest.--No provision of this
subsection shall apply with respect to--
(A) any extension of credit from any Federal
reserve bank or the Corporation to any covered
financial company; or
(B) any security interest in the assets of
the covered financial company securing any such
extension of credit.
(15) Savings clause.--The meanings of terms used in
this subsection are applicable for purposes of this
subsection only, and shall not be construed or applied
so as to challenge or affect the characterization,
definition, or treatment of any similar terms under any
other statute, regulation, or rule, including the
Gramm-Leach-Bliley Act, the Legal Certainty for Bank
Products Act of 2000, the securities laws (as that term
is defined in section 3(a)(47) of the Securities
Exchange Act of 1934), and the Commodity Exchange Act.
(16) Enforcement of contracts guaranteed by the
covered financial company.--
(A) In general.--The Corporation, as receiver
for a covered financial company or as receiver
for a subsidiary of a covered financial company
(including an insured depository institution)
shall have the power to enforce contracts of
subsidiaries or affiliates of the covered
financial company, the obligations under which
are guaranteed or otherwise supported by or
linked to the covered financial company,
notwithstanding any contractual right to cause
the termination, liquidation, or acceleration
of such contracts based solely on the
insolvency, financial condition, or
receivership of the covered financial company,
if--
(i) such guaranty or other support
and all related assets and liabilities
are transferred to and assumed by a
bridge financial company or a third
party (other than a third party for
which a conservator, receiver, trustee
in bankruptcy, or other legal custodian
has been appointed, or which is
otherwise the subject of a bankruptcy
or insolvency proceeding) within the
same period of time as the Corporation
is entitled to transfer the qualified
financial contracts of such covered
financial company; or
(ii) the Corporation, as receiver,
otherwise provides adequate protection
with respect to such obligations.
(B) Rule of construction.--For purposes of
this paragraph, a bridge financial company
shall not be considered to be a third party for
which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been
appointed, or which is otherwise the subject of
a bankruptcy or insolvency proceeding.
(d) Valuation of Claims in Default.--
(1) In general.--Notwithstanding any other provision
of Federal law or the law of any State, and regardless
of the method utilized by the Corporation for a covered
financial company, including transactions authorized
under subsection (h), this subsection shall govern the
rights of the creditors of any such covered financial
company.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver for a covered financial
company or in any other capacity, to any person having
a claim against the Corporation as receiver or the
covered financial company for which the Corporation is
appointed shall equal the amount that such claimant
would have received if--
(A) the Corporation had not been appointed
receiver with respect to the covered financial
company; and
(B) the covered financial company had been
liquidated under chapter 7 of the Bankruptcy
Code, or any similar provision of State
insolvency law applicable to the covered
financial company.
(3) Special provision for orderly liquidation by
sipc.--The maximum liability of the Corporation, acting
as receiver or in its corporate capacity for any
covered broker or dealer to any customer of such
covered broker or dealer, with respect to customer
property of such customer, shall be--
(A) equal to the amount that such customer
would have received with respect to such
customer property in a case initiated by SIPC
under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.); and
(B) determined as of the close of business on
the date on which the Corporation is appointed
as receiver.
(4) Additional payments authorized.--
(A) In general.--Subject to subsection
(o)(1)(D)(i), the Corporation, with the
approval of the Secretary, may make additional
payments or credit additional amounts to or
with respect to or for the account of any
claimant or category of claimants of the
covered financial company, if the Corporation
determines that such payments or credits are
necessary or appropriate to minimize losses to
the Corporation as receiver from the orderly
liquidation of the covered financial company
under this section.
(B) Limitations.--
(i) Prohibition.--The Corporation
shall not make any payments or credit
amounts to any claimant or category of
claimants that would result in any
claimant receiving more than the face
value amount of any claim that is
proven to the satisfaction of the
Corporation.
(ii) No obligation.--Notwithstanding
any other provision of Federal or State
law, or the Constitution of any State,
the Corporation shall not be obligated,
as a result of having made any payment
under subparagraph (A) or credited any
amount described in subparagraph (A) to
or with respect to, or for the account,
of any claimant or category of
claimants, to make payments to any
other claimant or category of
claimants.
(C) Manner of payment.--The Corporation may
make payments or credit amounts under
subparagraph (A) directly to the claimants or
may make such payments or credit such amounts
to a company other than a covered financial
company or a bridge financial company
established with respect thereto in order to
induce such other company to accept liability
for such claims.
(e) Limitation on Court Action.--Except as provided in this
title, no court may take any action to restrain or affect the
exercise of powers or functions of the receiver hereunder, and
any remedy against the Corporation or receiver shall be limited
to money damages determined in accordance with this title.
(f) Liability of Directors and Officers.--
(1) In general.--A director or officer of a covered
financial company may be held personally liable for
monetary damages in any civil action described in
paragraph (2) by, on behalf of, or at the request or
direction of the Corporation, which action is
prosecuted wholly or partially for the benefit of the
Corporation--
(A) acting as receiver for such covered
financial company;
(B) acting based upon a suit, claim, or cause
of action purchased from, assigned by, or
otherwise conveyed by the Corporation as
receiver; or
(C) acting based upon a suit, claim, or cause
of action purchased from, assigned by, or
otherwise conveyed in whole or in part by a
covered financial company or its affiliate in
connection with assistance provided under this
title.
(2) Actions covered.--Paragraph (1) shall apply with
respect to actions for gross negligence, including any
similar conduct or conduct that demonstrates a greater
disregard of a duty of care (than gross negligence)
including intentional tortious conduct, as such terms
are defined and determined under applicable State law.
(3) Savings clause.--Nothing in this subsection shall
impair or affect any right of the Corporation under
other applicable law.
(g) Damages.--In any proceeding related to any claim against
a director, officer, employee, agent, attorney, accountant, or
appraiser of a covered financial company, or any other party
employed by or providing services to a covered financial
company, recoverable damages determined to result from the
improvident or otherwise improper use or investment of any
assets of the covered financial company shall include principal
losses and appropriate interest.
(h) Bridge Financial Companies.--
(1) Organization.--
(A) Purpose.--The Corporation, as receiver
for one or more covered financial companies or
in anticipation of being appointed receiver for
one or more covered financial companies, may
organize one or more bridge financial companies
in accordance with this subsection.
(B) Authorities.--Upon the creation of a
bridge financial company under subparagraph (A)
with respect to a covered financial company,
such bridge financial company may--
(i) assume such liabilities
(including liabilities associated with
any trust or custody business, but
excluding any liabilities that count as
regulatory capital) of such covered
financial company as the Corporation
may, in its discretion, determine to be
appropriate;
(ii) purchase such assets (including
assets associated with any trust or
custody business) of such covered
financial company as the Corporation
may, in its discretion, determine to be
appropriate; and
(iii) perform any other temporary
function which the Corporation may, in
its discretion, prescribe in accordance
with this section.
(2) Charter and establishment.--
(A) Establishment.--Except as provided in
subparagraph (H), where the covered financial
company is a covered broker or dealer, the
Corporation, as receiver for a covered
financial company, may grant a Federal charter
to and approve articles of association for one
or more bridge financial company or companies,
with respect to such covered financial company
which shall, by operation of law and
immediately upon issuance of its charter and
approval of its articles of association, be
established and operate in accordance with, and
subject to, such charter, articles, and this
section.
(B) Management.--Upon its establishment, a
bridge financial company shall be under the
management of a board of directors appointed by
the Corporation.
(C) Articles of association.--The articles of
association and organization certificate of a
bridge financial company shall have such terms
as the Corporation may provide, and shall be
executed by such representatives as the
Corporation may designate.
(D) Terms of charter; rights and
privileges.--Subject to and in accordance with
the provisions of this subsection, the
Corporation shall--
(i) establish the terms of the
charter of a bridge financial company
and the rights, powers, authorities,
and privileges of a bridge financial
company granted by the charter or as an
incident thereto; and
(ii) provide for, and establish the
terms and conditions governing, the
management (including the bylaws and
the number of directors of the board of
directors) and operations of the bridge
financial company.
(E) Transfer of rights and privileges of
covered financial company.--
(i) In general.--Notwithstanding any
other provision of Federal or State
law, the Corporation may provide for a
bridge financial company to succeed to
and assume any rights, powers,
authorities, or privileges of the
covered financial company with respect
to which the bridge financial company
was established and, upon such
determination by the Corporation, the
bridge financial company shall
immediately and by operation of law
succeed to and assume such rights,
powers, authorities, and privileges.
(ii) Effective without approval.--Any
succession to or assumption by a bridge
financial company of rights, powers,
authorities, or privileges of a covered
financial company under clause (i) or
otherwise shall be effective without
any further approval under Federal or
State law, assignment, or consent with
respect thereto.
(F) Corporate governance and election and
designation of body of law.--To the extent
permitted by the Corporation and consistent
with this section and any rules, regulations,
or directives issued by the Corporation under
this section, a bridge financial company may
elect to follow the corporate governance
practices and procedures that are applicable to
a corporation incorporated under the general
corporation law of the State of Delaware, or
the State of incorporation or organization of
the covered financial company with respect to
which the bridge financial company was
established, as such law may be amended from
time to time.
(G) Capital.--
(i) Capital not required.--
Notwithstanding any other provision of
Federal or State law, a bridge
financial company may, if permitted by
the Corporation, operate without any
capital or surplus, or with such
capital or surplus as the Corporation
may in its discretion determine to be
appropriate.
(ii) No contribution by the
corporation required.--The Corporation
is not required to pay capital into a
bridge financial company or to issue
any capital stock on behalf of a bridge
financial company established under
this subsection.
(iii) Authority.--If the Corporation
determines that such action is
advisable, the Corporation may cause
capital stock or other securities of a
bridge financial company established
with respect to a covered financial
company to be issued and offered for
sale in such amounts and on such terms
and conditions as the Corporation may,
in its discretion, determine.
(iv) Operating funds in lieu of
capital and implementation plan.--Upon
the organization of a bridge financial
company, and thereafter as the
Corporation may, in its discretion,
determine to be necessary or advisable,
the Corporation may make available to
the bridge financial company, subject
to the plan described in subsection
(n)(9), funds for the operation of the
bridge financial company in lieu of
capital.
(H) Bridge brokers or dealers.--
(i) In general.--The Corporation, as
receiver for a covered broker or
dealer, may approve articles of
association for one or more bridge
financial companies with respect to
such covered broker or dealer, which
bridge financial company or companies
shall, by operation of law and
immediately upon approval of its
articles of association--
(I) be established and deemed
registered with the Commission
under the Securities Exchange
Act of 1934 and a member of
SIPC;
(II) operate in accordance
with such articles and this
section; and
(III) succeed to any and all
registrations and memberships
of the covered financial
company with or in any self-
regulatory organizations.
(ii) Other requirements.--Except as
provided in clause (i), and
notwithstanding any other provision of
this section, the bridge financial
company shall be subject to the Federal
securities laws and all requirements
with respect to being a member of a
self-regulatory organization, unless
exempted from any such requirements by
the Commission, as is necessary or
appropriate in the public interest or
for the protection of investors.
(iii) Treatment of customers.--Except
as otherwise provided by this title,
any customer of the covered broker or
dealer whose account is transferred to
a bridge financial company shall have
all the rights, privileges, and
protections under section 205(f) and
under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa
et seq.), that such customer would have
had if the account were not transferred
from the covered financial company
under this subparagraph.
(iv) Operation of bridge brokers or
dealers.--Notwithstanding any other
provision of this title, the
Corporation shall not operate any
bridge financial company created by the
Corporation under this title with
respect to a covered broker or dealer
in such a manner as to adversely affect
the ability of customers to promptly
access their customer property in
accordance with applicable law.
(3) Interests in and assets and obligations of
covered financial company.--Notwithstanding paragraph
(1) or (2) or any other provision of law--
(A) a bridge financial company shall assume,
acquire, or succeed to the assets or
liabilities of a covered financial company
(including the assets or liabilities associated
with any trust or custody business) only to the
extent that such assets or liabilities are
transferred by the Corporation to the bridge
financial company in accordance with, and
subject to the restrictions set forth in,
paragraph (1)(B); and
(B) a bridge financial company shall not
assume, acquire, or succeed to any obligation
that a covered financial company for which the
Corporation has been appointed receiver may
have to any shareholder, member, general
partner, limited partner, or other person with
an interest in the equity of the covered
financial company that arises as a result of
the status of that person having an equity
claim in the covered financial company.
(4) Bridge financial company treated as being in
default for certain purposes.--A bridge financial
company shall be treated as a covered financial company
in default at such times and for such purposes as the
Corporation may, in its discretion, determine.
(5) Transfer of assets and liabilities.--
(A) Authority of corporation.--The
Corporation, as receiver for a covered
financial company, may transfer any assets and
liabilities of a covered financial company
(including any assets or liabilities associated
with any trust or custody business) to one or
more bridge financial companies, in accordance
with and subject to the restrictions of
paragraph (1).
(B) Subsequent transfers.--At any time after
the establishment of a bridge financial company
with respect to a covered financial company,
the Corporation, as receiver, may transfer any
assets and liabilities of such covered
financial company as the Corporation may, in
its discretion, determine to be appropriate in
accordance with and subject to the restrictions
of paragraph (1).
(C) Treatment of trust or custody business.--
For purposes of this paragraph, the trust or
custody business, including fiduciary
appointments, held by any covered financial
company is included among its assets and
liabilities.
(D) Effective without approval.--The transfer
of any assets or liabilities, including those
associated with any trust or custody business
of a covered financial company, to a bridge
financial company shall be effective without
any further approval under Federal or State
law, assignment, or consent with respect
thereto.
(E) Equitable treatment of similarly situated
creditors.--The Corporation shall treat all
creditors of a covered financial company that
are similarly situated under subsection (b)(1),
in a similar manner in exercising the authority
of the Corporation under this subsection to
transfer any assets or liabilities of the
covered financial company to one or more bridge
financial companies established with respect to
such covered financial company, except that the
Corporation may take any action (including
making payments, subject to subsection
(o)(1)(D)(i)) that does not comply with this
subparagraph, if--
(i) the Corporation determines that
such action is necessary--
(I) to maximize the value of
the assets of the covered
financial company;
(II) to maximize the present
value return from the sale or
other disposition of the assets
of the covered financial
company; or
(III) to minimize the amount
of any loss realized upon the
sale or other disposition of
the assets of the covered
financial company; and
(ii) all creditors that are similarly
situated under subsection (b)(1)
receive not less than the amount
provided under paragraphs (2) and (3)
of subsection (d).
(F) Limitation on transfer of liabilities.--
Notwithstanding any other provision of law, the
aggregate amount of liabilities of a covered
financial company that are transferred to, or
assumed by, a bridge financial company from a
covered financial company may not exceed the
aggregate amount of the assets of the covered
financial company that are transferred to, or
purchased by, the bridge financial company from
the covered financial company.
(6) Stay of judicial action.--Any judicial action to
which a bridge financial company becomes a party by
virtue of its acquisition of any assets or assumption
of any liabilities of a covered financial company shall
be stayed from further proceedings for a period of not
longer than 45 days (or such longer period as may be
agreed to upon the consent of all parties) at the
request of the bridge financial company.
(7) Agreements against interest of the bridge
financial company.--No agreement that tends to diminish
or defeat the interest of the bridge financial company
in any asset of a covered financial company acquired by
the bridge financial company shall be valid against the
bridge financial company, unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial company
or confirmed in the ordinary course of business
by the covered financial company; and
(C) has been on the official record of the
company, since the time of its execution, or
with which, the party claiming under the
agreement provides documentation of such
agreement and its authorized execution or
confirmation by the covered financial company
that is acceptable to the receiver.
(8) No federal status.--
(A) Agency status.--A bridge financial
company is not an agency, establishment, or
instrumentality of the United States.
(B) Employee status.--Representatives for
purposes of paragraph (1)(B), directors,
officers, employees, or agents of a bridge
financial company are not, solely by virtue of
service in any such capacity, officers or
employees of the United States. Any employee of
the Corporation or of any Federal
instrumentality who serves at the request of
the Corporation as a representative for
purposes of paragraph (1)(B), director,
officer, employee, or agent of a bridge
financial company shall not--
(i) solely by virtue of service in
any such capacity lose any existing
status as an officer or employee of the
United States for purposes of title 5,
United States Code, or any other
provision of law; or
(ii) receive any salary or benefits
for service in any such capacity with
respect to a bridge financial company
in addition to such salary or benefits
as are obtained through employment with
the Corporation or such Federal
instrumentality.
(9) Funding authorized.--The Corporation may, subject
to the plan described in subsection (n)(9), provide
funding to facilitate any transaction described in
subparagraph (A), (B), (C), or (D) of paragraph (13)
with respect to any bridge financial company, or
facilitate the acquisition by a bridge financial
company of any assets, or the assumption of any
liabilities, of a covered financial company for which
the Corporation has been appointed receiver.
(10) Exempt tax status.--Notwithstanding any other
provision of Federal or State law, a bridge financial
company, its franchise, property, and income shall be
exempt from all taxation now or hereafter imposed by
the United States, by any territory, dependency, or
possession thereof, or by any State, county,
municipality, or local taxing authority.
(11) Federal agency approval; antitrust review.--If a
transaction involving the merger or sale of a bridge
financial company requires approval by a Federal
agency, the transaction may not be consummated before
the 5th calendar day after the date of approval by the
Federal agency responsible for such approval with
respect thereto. If, in connection with any such
approval a report on competitive factors from the
Attorney General is required, the Federal agency
responsible for such approval shall promptly notify the
Attorney General of the proposed transaction and the
Attorney General shall provide the required report
within 10 days of the request. If a notification is
required under section 7A of the Clayton Act with
respect to such transaction, the required waiting
period shall end on the 15th day after the date on
which the Attorney General and the Federal Trade
Commission receive such notification, unless the
waiting period is terminated earlier under section
7A(b)(2) of the Clayton Act, or extended under section
7A(e)(2) of that Act.
(12) Duration of bridge financial company.--Subject
to paragraphs (13) and (14), the status of a bridge
financial company as such shall terminate at the end of
the 2-year period following the date on which it was
granted a charter. The Corporation may, in its
discretion, extend the status of the bridge financial
company as such for no more than 3 additional 1-year
periods.
(13) Termination of bridge financial company
status.--The status of any bridge financial company as
such shall terminate upon the earliest of--
(A) the date of the merger or consolidation
of the bridge financial company with a company
that is not a bridge financial company;
(B) at the election of the Corporation, the
sale of a majority of the capital stock of the
bridge financial company to a company other
than the Corporation and other than another
bridge financial company;
(C) the sale of 80 percent, or more, of the
capital stock of the bridge financial company
to a person other than the Corporation and
other than another bridge financial company;
(D) at the election of the Corporation,
either the assumption of all or substantially
all of the liabilities of the bridge financial
company by a company that is not a bridge
financial company, or the acquisition of all or
substantially all of the assets of the bridge
financial company by a company that is not a
bridge financial company, or other entity as
permitted under applicable law; and
(E) the expiration of the period provided in
paragraph (12), or the earlier dissolution of
the bridge financial company, as provided in
paragraph (15).
(14) Effect of termination events.--
(A) Merger or consolidation.--A merger or
consolidation, described in paragraph (13)(A)
shall be conducted in accordance with, and
shall have the effect provided in, the
provisions of applicable law. For the purpose
of effecting such a merger or consolidation,
the bridge financial company shall be treated
as a corporation organized under the laws of
the State of Delaware (unless the law of
another State has been selected by the bridge
financial company in accordance with paragraph
(2)(F)), and the Corporation shall be treated
as the sole shareholder thereof,
notwithstanding any other provision of State or
Federal law.
(B) Charter conversion.--Following the sale
of a majority of the capital stock of the
bridge financial company, as provided in
paragraph (13)(B), the Corporation may amend
the charter of the bridge financial company to
reflect the termination of the status of the
bridge financial company as such, whereupon the
company shall have all of the rights, powers,
and privileges under its constituent documents
and applicable Federal or State law. In
connection therewith, the Corporation may take
such steps as may be necessary or convenient to
reincorporate the bridge financial company
under the laws of a State and, notwithstanding
any provisions of Federal or State law, such
State-chartered corporation shall be deemed to
succeed by operation of law to such rights,
titles, powers, and interests of the bridge
financial company as the Corporation may
provide, with the same effect as if the bridge
financial company had merged with the State-
chartered corporation under provisions of the
corporate laws of such State.
(C) Sale of stock.--Following the sale of 80
percent or more of the capital stock of a
bridge financial company, as provided in
paragraph (13)(C), the company shall have all
of the rights, powers, and privileges under its
constituent documents and applicable Federal or
State law. In connection therewith, the
Corporation may take such steps as may be
necessary or convenient to reincorporate the
bridge financial company under the laws of a
State and, notwithstanding any provisions of
Federal or State law, the State-chartered
corporation shall be deemed to succeed by
operation of law to such rights, titles, powers
and interests of the bridge financial company
as the Corporation may provide, with the same
effect as if the bridge financial company had
merged with the State-chartered corporation
under provisions of the corporate laws of such
State.
(D) Assumption of liabilities and sale of
assets.--Following the assumption of all or
substantially all of the liabilities of the
bridge financial company, or the sale of all or
substantially all of the assets of the bridge
financial company, as provided in paragraph
(13)(D), at the election of the Corporation,
the bridge financial company may retain its
status as such for the period provided in
paragraph (12) or may be dissolved at the
election of the Corporation.
(E) Amendments to charter.--Following the
consummation of a transaction described in
subparagraph (A), (B), (C), or (D) of paragraph
(13), the charter of the resulting company
shall be amended to reflect the termination of
bridge financial company status, if
appropriate.
(15) Dissolution of bridge financial company.--
(A) In general.--Notwithstanding any other
provision of Federal or State law, if the
status of a bridge financial company as such
has not previously been terminated by the
occurrence of an event specified in
subparagraph (A), (B), (C), or (D) of paragraph
(13)--
(i) the Corporation may, in its
discretion, dissolve the bridge
financial company in accordance with
this paragraph at any time; and
(ii) the Corporation shall promptly
commence dissolution proceedings in
accordance with this paragraph upon the
expiration of the 2-year period
following the date on which the bridge
financial company was chartered, or any
extension thereof, as provided in
paragraph (12).
(B) Procedures.--The Corporation shall remain
the receiver for a bridge financial company for
the purpose of dissolving the bridge financial
company. The Corporation as receiver for a
bridge financial company shall wind up the
affairs of the bridge financial company in
conformity with the provisions of law relating
to the liquidation of covered financial
companies under this title. With respect to any
such bridge financial company, the Corporation
as receiver shall have all the rights, powers,
and privileges and shall perform the duties
related to the exercise of such rights, powers,
or privileges granted by law to the Corporation
as receiver for a covered financial company
under this title and, notwithstanding any other
provision of law, in the exercise of such
rights, powers, and privileges, the Corporation
shall not be subject to the direction or
supervision of any State agency or other
Federal agency.
(16) Authority to obtain credit.--
(A) In general.--A bridge financial company
may obtain unsecured credit and issue unsecured
debt.
(B) Inability to obtain credit.--If a bridge
financial company is unable to obtain unsecured
credit or issue unsecured debt, the Corporation
may authorize the obtaining of credit or the
issuance of debt by the bridge financial
company--
(i) with priority over any or all of
the obligations of the bridge financial
company;
(ii) secured by a lien on property of
the bridge financial company that is
not otherwise subject to a lien; or
(iii) secured by a junior lien on
property of the bridge financial
company that is subject to a lien.
(C) Limitations.--
(i) In general.--The Corporation,
after notice and a hearing, may
authorize the obtaining of credit or
the issuance of debt by a bridge
financial company that is secured by a
senior or equal lien on property of the
bridge financial company that is
subject to a lien, only if--
(I) the bridge financial
company is unable to otherwise
obtain such credit or issue
such debt; and
(II) there is adequate
protection of the interest of
the holder of the lien on the
property with respect to which
such senior or equal lien is
proposed to be granted.
(ii) Hearing.--The hearing required
pursuant to this subparagraph shall be
before a court of the United States,
which shall have jurisdiction to
conduct such hearing and to authorize a
bridge financial company to obtain
secured credit under clause (i).
(D) Burden of proof.--In any hearing under
this paragraph, the Corporation has the burden
of proof on the issue of adequate protection.
(E) Qualified financial contracts.--No credit
or debt obtained or issued by a bridge
financial company may contain terms that impair
the rights of a counterparty to a qualified
financial contract upon a default by the bridge
financial company, other than the priority of
such counterparty's unsecured claim (after the
exercise of rights) relative to the priority of
the bridge financial company's obligations in
respect of such credit or debt, unless such
counterparty consents in writing to any such
impairment.
(17) Effect on debts and liens.--The reversal or
modification on appeal of an authorization under this
subsection to obtain credit or issue debt, or of a
grant under this section of a priority or a lien, does
not affect the validity of any debt so issued, or any
priority or lien so granted, to an entity that extended
such credit in good faith, whether or not such entity
knew of the pendency of the appeal, unless such
authorization and the issuance of such debt, or the
granting of such priority or lien, were stayed pending
appeal.
(i) Sharing Records.--If the Corporation has been appointed
as receiver for a covered financial company, other Federal
regulators shall make all records relating to the covered
financial company available to the Corporation, which may be
used by the Corporation in any manner that the Corporation
determines to be appropriate.
(j) Expedited Procedures for Certain Claims.--
(1) Time for filing notice of appeal.--The notice of
appeal of any order, whether interlocutory or final,
entered in any case brought by the Corporation against
a director, officer, employee, agent, attorney,
accountant, or appraiser of the covered financial
company, or any other person employed by or providing
services to a covered financial company, shall be filed
not later than 30 days after the date of entry of the
order. The hearing of the appeal shall be held not
later than 120 days after the date of the notice of
appeal. The appeal shall be decided not later than 180
days after the date of the notice of appeal.
(2) Scheduling.--The court shall expedite the
consideration of any case brought by the Corporation
against a director, officer, employee, agent, attorney,
accountant, or appraiser of a covered financial company
or any other person employed by or providing services
to a covered financial company. As far as practicable,
the court shall give such case priority on its docket.
(3) Judicial discretion.--The court may modify the
schedule and limitations stated in paragraphs (1) and
(2) in a particular case, based on a specific finding
that the ends of justice that would be served by making
such a modification would outweigh the best interest of
the public in having the case resolved expeditiously.
(k) Foreign Investigations.--The Corporation, as receiver for
any covered financial company, and for purposes of carrying out
any power, authority, or duty with respect to a covered
financial company--
(1) may request the assistance of any foreign
financial authority and provide assistance to any
foreign financial authority in accordance with section
8(v) of the Federal Deposit Insurance Act, as if the
covered financial company were an insured depository
institution, the Corporation were the appropriate
Federal banking agency for the company, and any foreign
financial authority were the foreign banking authority;
and
(2) may maintain an office to coordinate foreign
investigations or investigations on behalf of foreign
financial authorities.
(l) Prohibition on Entering Secrecy Agreements and Protective
Orders.--The Corporation may not enter into any agreement or
approve any protective order which prohibits the Corporation
from disclosing the terms of any settlement of an
administrative or other action for damages or restitution
brought by the Corporation in its capacity as receiver for a
covered financial company.
(m) Liquidation of Certain Covered Financial Companies or
Bridge Financial Companies.--
(1) In general.--Except as specifically provided in
this section, and notwithstanding any other provision
of law, the Corporation, in connection with the
liquidation of any covered financial company or bridge
financial company with respect to which the Corporation
has been appointed as receiver, shall--
(A) in the case of any covered financial
company or bridge financial company that is a
stockbroker, but is not a member of the
Securities Investor Protection Corporation,
apply the provisions of subchapter III of
chapter 7 of the Bankruptcy Code, in respect of
the distribution to any customer of all
customer name security and customer property
and member property, as if such covered
financial company or bridge financial company
were a debtor for purposes of such subchapter;
or
(B) in the case of any covered financial
company or bridge financial company that is a
commodity broker, apply the provisions of
subchapter IV of chapter 7 the Bankruptcy Code,
in respect of the distribution to any customer
of all customer property and member property,
as if such covered financial company or bridge
financial company were a debtor for purposes of
such subchapter.
(2) Definitions.--For purposes of this subsection--
(A) the terms ``customer'', ``customer name
security'', and ``customer property and member
property'' have the same meanings as in
sections 741 and 761 of title 11, United States
Code; and
(B) the terms ``commodity broker'' and
``stockbroker'' have the same meanings as in
section 101 of the Bankruptcy Code.
(n) Orderly Liquidation Fund.--
(1) Establishment.--There is established in the
Treasury of the United States a separate fund to be
known as the ``Orderly Liquidation Fund'', which shall
be available to the Corporation to carry out the
authorities contained in this title, for the cost of
actions authorized by this title, including the orderly
liquidation of covered financial companies, payment of
administrative expenses, the payment of principal and
interest by the Corporation on obligations issued under
paragraph (5), and the exercise of the authorities of
the Corporation under this title.
(2) Proceeds.--Amounts received by the Corporation,
including assessments received under subsection (o),
proceeds of obligations issued under paragraph (5),
interest and other earnings from investments, and
repayments to the Corporation by covered financial
companies, shall be deposited into the Fund.
(3) Management.--The Corporation shall manage the
Fund in accordance with this subsection and the
policies and procedures established under section
203(d).
(4) Investments.--At the request of the Corporation,
the Secretary may invest such portion of amounts held
in the Fund that are not, in the judgment of the
Corporation, required to meet the current needs of the
Corporation, in obligations of the United States having
suitable maturities, as determined by the Corporation.
The interest on and the proceeds from the sale or
redemption of such obligations shall be credited to the
Fund.
(5) Authority to issue obligations.--
(A) Corporation authorized to issue
obligations.--Upon appointment by the Secretary
of the Corporation as receiver for a covered
financial company, the Corporation is
authorized to issue obligations to the
Secretary.
(B) Secretary authorized to purchase
obligations.--The Secretary may, under such
terms and conditions as the Secretary may
require, purchase or agree to purchase any
obligations issued under subparagraph (A), and
for such purpose, the Secretary is authorized
to use as a public debt transaction the
proceeds of the sale of any securities issued
under chapter 31 of title 31, United States
Code, and the purposes for which securities may
be issued under chapter 31 of title 31, United
States Code, are extended to include such
purchases.
(C) Interest rate.--Each purchase of
obligations by the Secretary under this
paragraph shall be upon such terms and
conditions as to yield a return at a rate
determined by the Secretary, taking into
consideration the current average yield on
outstanding marketable obligations of the
United States of comparable maturity, plus an
interest rate surcharge to be determined by the
Secretary, which shall be greater than the
difference between--
(i) the current average rate on an
index of corporate obligations of
comparable maturity; and
(ii) the current average rate on
outstanding marketable obligations of
the United States of comparable
maturity.
(D) Secretary authorized to sell
obligations.--The Secretary may sell, upon such
terms and conditions as the Secretary shall
determine, any of the obligations acquired
under this paragraph.
(E) Public debt transactions.--All purchases
and sales by the Secretary of such obligations
under this paragraph shall be treated as public
debt transactions of the United States, and the
proceeds from the sale of any obligations
acquired by the Secretary under this paragraph
shall be deposited into the Treasury of the
United States as miscellaneous receipts.
(6) Maximum obligation limitation.--The Corporation
may not, in connection with the orderly liquidation of
a covered financial company, issue or incur any
obligation, if, after issuing or incurring the
obligation, the aggregate amount of such obligations
outstanding under this subsection for each covered
financial company would exceed--
(A) an amount that is equal to 10 percent of
the total consolidated assets of the covered
financial company, based on the most recent
financial statement available, during the 30-
day period immediately following the date of
appointment of the Corporation as receiver (or
a shorter time period if the Corporation has
calculated the amount described under
subparagraph (B)); and
(B) the amount that is equal to 90 percent of
the fair value of the total consolidated assets
of each covered financial company that are
available for repayment, after the time period
described in subparagraph (A).
(7) Rulemaking.--The Corporation and the Secretary
shall jointly, in consultation with the Council,
prescribe regulations governing the calculation of the
maximum obligation limitation defined in this
paragraph.
(8) Rule of construction.--
(A) In general.--Nothing in this section
shall be construed to affect the authority of
the Corporation under subsection (a) or (b) of
section 14 or section 15(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1824,
1825(c)(5)), the management of the Deposit
Insurance Fund by the Corporation, or the
resolution of insured depository institutions,
provided that--
(i) the authorities of the
Corporation contained in this title
shall not be used to assist the Deposit
Insurance Fund or to assist any
financial company under applicable law
other than this Act;
(ii) the authorities of the
Corporation relating to the Deposit
Insurance Fund, or any other
responsibilities of the Corporation
under applicable law other than this
title, shall not be used to assist a
covered financial company pursuant to
this title; and
(iii) the Deposit Insurance Fund may
not be used in any manner to otherwise
circumvent the purposes of this title.
(B) Valuation.--For purposes of determining
the amount of obligations under this
subsection--
(i) the Corporation shall include as
an obligation any contingent liability
of the Corporation pursuant to this
title; and
(ii) the Corporation shall value any
contingent liability at its expected
cost to the Corporation.
(9) Orderly liquidation and repayment plans.--
(A) Orderly liquidation plan.--Amounts in the
Fund shall be available to the Corporation with
regard to a covered financial company for which
the Corporation is appointed receiver after the
Corporation has developed an orderly
liquidation plan that is acceptable to the
Secretary with regard to such covered financial
company, including the provision and use of
funds, including taking any actions specified
under section 204(d) and subsection
(h)(2)(G)(iv) and (h)(9) of this section, and
payments to third parties. The orderly
liquidation plan shall take into account
actions to avoid or mitigate potential adverse
effects on low income, minority, or underserved
communities affected by the failure of the
covered financial company, and shall provide
for coordination with the primary financial
regulatory agencies, as appropriate, to ensure
that such actions are taken. The Corporation
may, at any time, amend any orderly liquidation
plan approved by the Secretary with the
concurrence of the Secretary.
(B) Mandatory repayment plan.--
(i) In general.--No amount authorized
under paragraph (6)(B) may be provided
by the Secretary to the Corporation
under paragraph (5), unless an
agreement is in effect between the
Secretary and the Corporation that--
(I) provides a specific plan
and schedule to achieve the
repayment of the outstanding
amount of any borrowing under
paragraph (5); and
(II) demonstrates that income
to the Corporation from the
liquidated assets of the
covered financial company and
assessments under subsection
(o) will be sufficient to
amortize the outstanding
balance within the period
established in the repayment
schedule and pay the interest
accruing on such balance within
the time provided in subsection
(o)(1)(B).
(ii) Consultation with and report to
congress.--The Secretary and the
Corporation shall--
(I) consult with the
Committee on Banking, Housing,
and Urban Affairs of the Senate
and the Committee on Financial
Services of the House of
Representatives on the terms of
any repayment schedule
agreement; and
(II) submit a copy of the
repayment schedule agreement to
the Committees described in
subclause (I) before the end of
the 30-day period beginning on
the date on which any amount is
provided by the Secretary to
the Corporation under paragraph
(5).
(10) Implementation expenses.--
(A) In general.--Reasonable implementation
expenses of the Corporation incurred after the
date of enactment of this Act shall be treated
as expenses of the Council.
(B) Requests for reimbursement.--The
Corporation shall periodically submit a request
for reimbursement for implementation expenses
to the Chairperson of the Council, who shall
arrange for prompt reimbursement to the
Corporation of reasonable implementation
expenses.
(C) Definition.--As used in this paragraph,
the term ``implementation expenses''--
(i) means costs incurred by the
Corporation beginning on the date of
enactment of this Act, as part of its
efforts to implement this title that do
not relate to a particular covered
financial company; and
(ii) includes the costs incurred in
connection with the development of
policies, procedures, rules, and
regulations and other planning
activities of the Corporation
consistent with carrying out this
title.
(o) Assessments.--
(1) Risk-based assessments.--
(A) Eligible financial companies defined.--
For purposes of this subsection, the term
``eligible financial company'' means any bank
holding company with total consolidated assets
equal to or greater than [$50,000,000,000]
$105,000,000,000 and any nonbank financial
company supervised by the Board of Governors.
(B) Assessments.--The Corporation shall
charge one or more risk-based assessments in
accordance with the provisions of subparagraph
(D), if such assessments are necessary to pay
in full the obligations issued by the
Corporation to the Secretary under this title
within 60 months of the date of issuance of
such obligations.
(C) Extensions authorized.--The Corporation
may, with the approval of the Secretary, extend
the time period under subparagraph (B), if the
Corporation determines that an extension is
necessary to avoid a serious adverse effect on
the financial system of the United States.
(D) Application of assessments.--To meet the
requirements of subparagraph (B), the
Corporation shall--
(i) impose assessments, as soon as
practicable, on any claimant that
received additional payments or amounts
from the Corporation pursuant to
subsection (b)(4), (d)(4), or
(h)(5)(E), except for payments or
amounts necessary to initiate and
continue operations essential to
implementation of the receivership or
any bridge financial company, to
recover on a cumulative basis, the
entire difference between--
(I) the aggregate value the
claimant received from the
Corporation on a claim pursuant
to this title (including
pursuant to subsection (b)(4),
(d)(4), and (h)(5)(E)), as of
the date on which such value
was received; and
(II) the value the claimant
was entitled to receive from
the Corporation on such claim
solely from the proceeds of the
liquidation of the covered
financial company under this
title; and
(ii) if the amounts to be recovered
on a cumulative basis under clause (i)
are insufficient to meet the
requirements of subparagraph (B), after
taking into account the considerations
set forth in paragraph (4), impose
assessments on--
(I) eligible financial
companies; and
(II) financial companies with
total consolidated assets equal
to or greater than
[$50,000,000,000]
$105,000,000,000 that are not
eligible financial companies.
(E) Provision of financing.--Payments or
amounts necessary to initiate and continue
operations essential to implementation of the
receivership or any bridge financial company
described in subparagraph (D)(i) shall not
include the provision of financing, as defined
by rule of the Corporation, to third parties.
(2) Graduated assessment rate.--The Corporation shall
impose assessments on a graduated basis, with financial
companies having greater assets and risk being assessed
at a higher rate.
(3) Notification and payment.--The Corporation shall
notify each financial company of that company's
assessment under this subsection. Any financial company
subject to assessment under this subsection shall pay
such assessment in accordance with the regulations
prescribed pursuant to paragraph (6).
(4) Risk-based assessment considerations.--In
imposing assessments under paragraph (1)(D)(ii), the
Corporation shall use a risk matrix. The Council shall
make a recommendation to the Corporation on the risk
matrix to be used in imposing such assessments, and the
Corporation shall take into account any such
recommendation in the establishment of the risk matrix
to be used to impose such assessments. In recommending
or establishing such risk matrix, the Council and the
Corporation, respectively, shall take into account--
(A) economic conditions generally affecting
financial companies so as to allow assessments
to increase during more favorable economic
conditions and to decrease during less
favorable economic conditions;
(B) any assessments imposed on a financial
company or an affiliate of a financial company
that--
(i) is an insured depository
institution, assessed pursuant to
section 7 or 13(c)(4)(G) of the Federal
Deposit Insurance Act;
(ii) is a member of the Securities
Investor Protection Corporation,
assessed pursuant to section 4 of the
Securities Investor Protection Act of
1970 (15 U.S.C. 78ddd);
(iii) is an insured credit union,
assessed pursuant to section
202(c)(1)(A)(i) of the Federal Credit
Union Act (12 U.S.C. 1782(c)(1)(A)(i));
or
(iv) is an insurance company,
assessed pursuant to applicable State
law to cover (or reimburse payments
made to cover) the costs of the
rehabilitation, liquidation, or other
State insolvency proceeding with
respect to 1 or more insurance
companies;
(C) the risks presented by the financial
company to the financial system and the extent
to which the financial company has benefitted,
or likely would benefit, from the orderly
liquidation of a financial company under this
title, including--
(i) the amount, different categories,
and concentrations of assets of the
financial company and its affiliates,
including both on-balance sheet and
off-balance sheet assets;
(ii) the activities of the financial
company and its affiliates;
(iii) the relevant market share of
the financial company and its
affiliates;
(iv) the extent to which the
financial company is leveraged;
(v) the potential exposure to sudden
calls on liquidity precipitated by
economic distress;
(vi) the amount, maturity,
volatility, and stability of the
company's financial obligations to, and
relationship with, other financial
companies;
(vii) the amount, maturity,
volatility, and stability of the
liabilities of the company, including
the degree of reliance on short-term
funding, taking into consideration
existing systems for measuring a
company's risk-based capital;
(viii) the stability and variety of
the company's sources of funding;
(ix) the company's importance as a
source of credit for households,
businesses, and State and local
governments and as a source of
liquidity for the financial system;
(x) the extent to which assets are
simply managed and not owned by the
financial company and the extent to
which ownership of assets under
management is diffuse; and
(xi) the amount, different
categories, and concentrations of
liabilities, both insured and
uninsured, contingent and
noncontingent, including both on-
balance sheet and off-balance sheet
liabilities, of the financial company
and its affiliates;
(D) any risks presented by the financial
company during the 10-year period immediately
prior to the appointment of the Corporation as
receiver for the covered financial company that
contributed to the failure of the covered
financial company; and
(E) such other risk-related factors as the
Corporation, or the Council, as applicable, may
determine to be appropriate.
(5) Collection of information.--The Corporation may
impose on covered financial companies such collection
of information requirements as the Corporation deems
necessary to carry out this subsection after the
appointment of the Corporation as receiver under this
title.
(6) Rulemaking.--
(A) In general.--The Corporation shall
prescribe regulations to carry out this
subsection. The Corporation shall consult with
the Secretary in the development and
finalization of such regulations.
(B) Equitable treatment.--The regulations
prescribed under subparagraph (A) shall take
into account the differences in risks posed to
the financial stability of the United States by
financial companies, the differences in the
liability structures of financial companies,
and the different bases for other assessments
that such financial companies may be required
to pay, to ensure that assessed financial
companies are treated equitably and that
assessments under this subsection reflect such
differences.
(p) Unenforceability of Certain Agreements.--
(1) In general.--No provision described in paragraph
(2) shall be enforceable against or impose any
liability on any person, as such enforcement or
liability shall be contrary to public policy.
(2) Prohibited provisions.--A provision described in
this paragraph is any term contained in any existing or
future standstill, confidentiality, or other agreement
that, directly or indirectly--
(A) affects, restricts, or limits the ability
of any person to offer to acquire or acquire;
(B) prohibits any person from offering to
acquire or acquiring; or
(C) prohibits any person from using any
previously disclosed information in connection
with any such offer to acquire or acquisition
of,
all or part of any covered financial company, including
any liabilities, assets, or interest therein, in
connection with any transaction in which the
Corporation exercises its authority under this title.
(q) Other Exemptions.--
(1) In general.--When acting as a receiver under this
title--
(A) the Corporation, including its franchise,
its capital, reserves and surplus, and its
income, shall be exempt from all taxation
imposed by any State, county, municipality, or
local taxing authority, except that any real
property of the Corporation shall be subject to
State, territorial, county, municipal, or local
taxation to the same extent according to its
value as other real property is taxed, except
that, notwithstanding the failure of any person
to challenge an assessment under State law of
the value of such property, such value, and the
tax thereon, shall be determined as of the
period for which such tax is imposed;
(B) no property of the Corporation shall be
subject to levy, attachment, garnishment,
foreclosure, or sale without the consent of the
Corporation, nor shall any involuntary lien
attach to the property of the Corporation; and
(C) the Corporation shall not be liable for
any amounts in the nature of penalties or
fines, including those arising from the failure
of any person to pay any real property,
personal property, probate, or recording tax or
any recording or filing fees when due; and
(D) the Corporation shall be exempt from all
prosecution by the United States or any State,
county, municipality, or local authority for
any criminal offense arising under Federal,
State, county, municipal, or local law, which
was allegedly committed by the covered
financial company, or persons acting on behalf
of the covered financial company, prior to the
appointment of the Corporation as receiver.
(2) Limitation.--Paragraph (1) shall not apply with
respect to any tax imposed (or other amount arising)
under the Internal Revenue Code of 1986.
(r) Certain Sales of Assets Prohibited.--
(1) Persons who engaged in improper conduct with, or
caused losses to, covered financial companies.--The
Corporation shall prescribe regulations which, at a
minimum, shall prohibit the sale of assets of a covered
financial company by the Corporation to--
(A) any person who--
(i) has defaulted, or was a member of
a partnership or an officer or director
of a corporation that has defaulted, on
1 or more obligations, the aggregate
amount of which exceeds [$1,000,000]
$5,000,000, to such covered financial
company;
(ii) has been found to have engaged
in fraudulent activity in connection
with any obligation referred to in
clause (i); and
(iii) proposes to purchase any such
asset in whole or in part through the
use of the proceeds of a loan or
advance of credit from the Corporation
or from any covered financial company;
(B) any person who participated, as an
officer or director of such covered financial
company or of any affiliate of such company, in
a material way in any transaction that resulted
in a substantial loss to such covered financial
company; or
(C) any person who has demonstrated a pattern
or practice of defalcation regarding
obligations to such covered financial company.
(2) Convicted debtors.--Except as provided in
paragraph (3), a person may not purchase any asset of
such institution from the receiver, if that person--
(A) has been convicted of an offense under
section 215, 656, 657, 1005, 1006, 1007, 1008,
1014, 1032, 1341, 1343, or 1344 of title 18,
United States Code, or of conspiring to commit
such an offense, affecting any covered
financial company; and
(B) is in default on any loan or other
extension of credit from such covered financial
company which, if not paid, will cause
substantial loss to the Fund or the
Corporation.
(3) Settlement of claims.--Paragraphs (1) and (2)
shall not apply to the sale or transfer by the
Corporation of any asset of any covered financial
company to any person, if the sale or transfer of the
asset resolves or settles, or is part of the resolution
or settlement, of 1 or more claims that have been, or
could have been, asserted by the Corporation against
the person.
(4) Definition of default.--For purposes of this
subsection, the term ``default'' means a failure to
comply with the terms of a loan or other obligation to
such an extent that the property securing the
obligation is foreclosed upon.
(s) Recoupment of Compensation From Senior Executives and
Directors.--
(1) In general.--The Corporation, as receiver of a
covered financial company, may recover from any current
or former senior executive or director substantially
responsible for the failed condition of the covered
financial company any compensation received during the
2-year period preceding the date on which the
Corporation was appointed as the receiver of the
covered financial company, except that, in the case of
fraud, no time limit shall apply.
(2) Cost considerations.--In seeking to recover any
such compensation, the Corporation shall weigh the
financial and deterrent benefits of such recovery
against the cost of executing the recovery.
(3) Rulemaking.--The Corporation shall promulgate
regulations to implement the requirements of this
subsection, including defining the term
``compensation'' to mean any financial remuneration,
including salary, bonuses, incentives, benefits,
severance, deferred compensation, or golden parachute
benefits, and any profits realized from the sale of the
securities of the covered financial company.
* * * * * * *
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
* * * * * * *
Subtitle E--Accountability and Executive Compensation
* * * * * * *
SEC. 956. ENHANCED COMPENSATION STRUCTURE REPORTING.
(a) Enhanced Disclosure and Reporting of Compensation
Arrangements.--
(1) In general.--Not later than 9 months after the
date of enactment of this title, the appropriate
Federal regulators jointly shall prescribe regulations
or guidelines to require each covered financial
institution to disclose to the appropriate Federal
regulator the structures of all incentive-based
compensation arrangements offered by such covered
financial institutions sufficient to determine whether
the compensation structure--
(A) provides an executive officer, employee,
director, or principal shareholder of the
covered financial institution with excessive
compensation, fees, or benefits; or
(B) could lead to material financial loss to
the covered financial institution.
(2) Rules of construction.--Nothing in this section
shall be construed as requiring the reporting of the
actual compensation of particular individuals. Nothing
in this section shall be construed to require a covered
financial institution that does not have an incentive-
based payment arrangement to make the disclosures
required under this subsection.
(b) Prohibition on Certain Compensation Arrangements.--Not
later than 9 months after the date of enactment of this title,
the appropriate Federal regulators shall jointly prescribe
regulations or guidelines that prohibit any types of incentive-
based payment arrangement, or any feature of any such
arrangement, that the regulators determine encourages
inappropriate risks by covered financial institutions--
(1) by providing an executive officer, employee,
director, or principal shareholder of the covered
financial institution with excessive compensation,
fees, or benefits; or
(2) that could lead to material financial loss to the
covered financial institution.
(c) Standards.--The appropriate Federal regulators shall--
(1) ensure that any standards for compensation
established under subsections (a) or (b) are comparable
to the standards established under section of the
Federal Deposit Insurance Act (12 U.S.C. 2 1831p-1) for
insured depository institutions; and
(2) in establishing such standards under such
subsections, take into consideration the compensation
standards described in section 39(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1831p- 9 1(c)).
(d) Enforcement.--The provisions of this section and the
regulations issued under this section shall be enforced under
section 505 of the Gramm-Leach-Bliley Act and, for purposes of
such section, a violation of this section or such regulations
shall be treated as a violation of subtitle A of title V of
such Act.
(e) Definitions.--As used in this section--
(1) the term ``appropriate Federal regulator'' means
the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the
Board of Directors of the Federal Deposit Insurance
Corporation, the Director of the Office of Thrift
Supervision, the National Credit Union Administration
Board, the Securities and Exchange Commission, the
Federal Housing Finance Agency; and
(2) the term ``covered financial institution''
means--
(A) a depository institution or depository
institution holding company, as such terms are
defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813);
(B) a broker-dealer registered under section
15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o);
(C) a credit union, as described in section
19(b)(1)(A)(iv) of the Federal Reserve Act;
(D) an investment advisor, as such term is
defined in section 202(a)(11) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11));
(E) the Federal National Mortgage
Association;
(F) the Federal Home Loan Mortgage
Corporation; and
(G) any other financial institution that the
appropriate Federal regulators, jointly, by
rule, determine should be treated as a covered
financial institution for purposes of this
section.
(f) Exemption for Certain Financial Institutions.--The
requirements of this section shall not apply to covered
financial institutions with assets of less than
[$1,000,000,000] $3,000,000,000.
* * * * * * *
----------
FEDERAL CREDIT UNION ACT
* * * * * * *
TITLE II--SHARE INSURANCE
* * * * * * *
reports of condition; certified statements; premiums for insurance
Sec. 202. (a)(1) Each insured credit union shall make reports
of condition to the Board upon dates which shall be selected by
them. Such reports of condition shall be in such form and shall
contain such information as the Board may require. The
reporting dates selected for reports of condition shall be the
same for all insured credit unions except that when any of said
reporting dates is a nonbusiness day for any credit union the
preceding business day shall be its reporting date. The total
amount of the member accounts of each insured credit union as
of each reporting date shall be reported in such reports of
condition in accordance with regulations prescribed by the
Board. Each report of condition shall contain a declaration by
the president, by a vice president, by the treasurer, or by any
other officer designated by the board of directors of the
reporting credit union to make such declaration, that the
report is true and correct to the best of such officer's
knowledge and belief. Unless such requirement is waived by the
Board, the correctness of each report of condition shall be
attested by the signatures of three of the officers of the
reporting credit union with the declaration that the report has
been examined by them and to the best of their knowledge and
belief is true and correct.
(2) The Board may call for such other reports as it may from
time to time require.
(3) The Board may require reports of condition to be
published in such manner, not inconsistent with any applicable
law, as it may direct. Any insured credit union which maintains
procedures reasonably adapted to avoid any inadvertent error
and, unintentionally and as a result of such an error, fails to
submit or publish any report required under this subsection or
section 106, within the period of time specified by the Board,
or submits or publishes any false or misleading report or
information, or 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. The insured credit union shall have the burden of
proving that an error was inadvertent and that a report was
inadvertently transmitted or published late. Any insured credit
union which fails to submit or publish any report required
under this subsection or section 106, within the period of time
specified by the Board, or submits or publishes any false or
misleading report or information, in a manner not described in
the 2nd preceding sentence 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. Notwithstanding the preceding sentence, if any
insured credit union knowingly or with reckless disregard for
the accuracy of any information or report described in such
sentence submits or publishes any false or misleading report or
information, the Board may assess a penalty of not more than
$1,000,000 or 1 percent of total assets of such credit union,
whichever is less, per day for each day during which such
failure continues or such false or misleading information is
not corrected. Any penalty imposed under any of the 4 preceding
sentences shall be assessed and collected by the Board in the
manner provided in section 206(k)(2) (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 section. Any insured credit union
against which any penalty is assessed under this subsection
shall be afforded an agency hearing if such insured credit
union submits a request for such hearing within 20 days after
the issuance of the notice of assessment. Section 206(j) shall
apply to any proceeding under this subsection.
(4) The Board may accept any report of condition made to any
commission, board, or authority having supervision of a State-
chartered credit union and may furnish to any such commission,
board, or authority reports of condition made to the Board.
(5) Reports required under title I of this Act shall be so
prepared that they can be used for share insurance purposes. To
the maximum extent feasible, the Board shall use for insurance
purposes reports submitted to State regulatory agencies by
State-chartered credit unions.
(6) Audit requirement.--
(A) In general.--Before the end of the 120-
day period beginning on the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 and
notwithstanding any other provision of Federal
or State law, the Board shall prescribe, by
regulation, audit standards which require an
outside, independent audit of any insured
credit union by a certified public accountant
for any fiscal year (of such credit union)--
(i) for which such credit union has
not conducted an annual supervisory
committee audit;
(ii) for which such credit union has
not received a complete and
satisfactory supervisory committee
audit; or
(iii) during which such credit union
has experienced persistent and serious
recordkeeping deficiencies, as
determined by the Board.
(B) Unsafe or unsound practice.--The Board
may treat the failure of any insured credit
union to obtain an outside, independent audit
for any fiscal year for which such audit is
required under subparagraph (A) or (D) as an
unsafe or unsound practice within the meaning
of section 206(b).
(C) Accounting principles.--
(i) In general.--Accounting
principles applicable to reports or
statements required to be filed with
the Board by each insured credit union
shall be uniform and consistent with
generally accepted accounting
principles.
(ii) Board determination.--If the
Board determines that the application
of any generally accepted accounting
principle to any insured credit union
is not appropriate, the Board may
prescribe an accounting principle for
application to the credit union that is
no less stringent than generally
accepted accounting principles.
(iii) [De minimus] De minimis
exception.--This subparagraph shall not
apply to any insured credit union, the
total assets of which are less than
[$10,000,000] $34,000,000, unless
prescribed by the Board or an
appropriate State credit union
supervisor.
(D) Large credit union audit requirement.--
(i) In general.--Each insured credit
union having total assets of
[$500,000,000] $2,000,000,000 or more
shall have an annual independent audit
of the financial statements of the
credit union, performed in accordance
with generally accepted auditing
standards by an independent certified
public accountant or public accountant
licensed by the appropriate State or
jurisdiction to perform those services.
(ii) Voluntary audits.--If a Federal
credit union that is not required to
conduct an audit under clause (i), and
that has total assets of more than
[$10,000,000] $34,000,000 conducts such
an audit for any purpose, using an
independent auditor who is compensated
for his or her audit services with
respect to that audit, the audit shall
be performed consistent with the
accountancy laws of the appropriate
State or jurisdiction, including
licensing requirements.
(7) Report to independent auditor.--
(A) In general.--Each insured credit union
which has engaged the services of an
independent auditor to audit such depository
institution within the past 2 years shall
transmit to such auditor a copy of the most
recent report of condition made by such credit
union (pursuant to this Act or any other
provision of law) and a copy of the most recent
report of examination received by such credit
union.
(B) Additional information.--In addition to
the copies of the reports required to be
provided to an auditor under subparagraph (A),
each insured credit union shall provide such
auditor with--
(i) a copy of any supervisory
memorandum of understanding with such
credit union and any written agreement
between the Board or a State regulatory
agency and the credit union which is in
effect during the period covered by the
audit; and
(ii) a report of any action initiated
or taken by the Board during such
period under subsection (e), (f), (g),
(i), (l), or (q) of section 206, or any
similar action taken by a State
regulatory dagency under State law, or
any other civil money penalty assessed
by the Board under this Act, with
respect to--
(I) the credit union; or
(II) any institution-
affiliated party.
(8) Data sharing with other agencies and persons.--In
addition to reports of examination, reports of
condition, and other reports required to be regularly
provided to the Board (with respect to all insured
credit unions, including a credit union for which the
Corporation has been appointed conservator or
liquidating agent) or an appropriate State commission,
board, or authority having supervision of a State-
chartered credit union, the Board may, in the
discretion of the Board, furnish any report of
examination or other confidential supervisory
information concerning any credit union or other entity
examined by the Board under authority of any Federal
law, to--
(A) any other Federal or State agency or
authority with supervisory or regulatory
authority over the credit union or other
entity;
(B) any officer, director, or receiver of
such credit union or entity; and
(C) any other person that the Board
determines to be appropriate.
(b) Certified Statement.--
(1) Statement required.--
(A) In general.--For each calendar year, in
the case of an insured credit union with total
assets of not more than [$50,000,000]
$170,000,000, and for each semi-annual period
in the case of an insured credit union with
total assets of [$50,000,000] $170,000,000 or
more, an insured credit union shall file with
the Board, at such time as the Board
prescribes, a certified statement showing the
total amount of insured shares in the credit
union at the close of the relevant period and
both the amount of its deposit or adjustment of
deposit and the amount of the insurance charge
due to the Fund for that period, both as
computed under subsection (c).
(B) Exception for newly insured credit
union.--Subparagraph (A) shall not apply with
respect to a credit union that became insured
during the reporting period.
(2) Form.--The certified statements required to be
filed with the Board pursuant to this subsection shall
be in such form and shall set forth such supporting
information as the Board shall require.
(3) Certification.--The president of the credit union
or any officer designated by the board of directors
shall certify, with respect to each statement required
to be filed with the Board pursuant to this subsection,
that to the best of his or her knowledge and belief the
statement is true, correct, complete, and in accordance
with this title and the regulations issued under this
title.
(c)(1)(A)(i) Each insured credit union shall pay to and
maintain with the National Credit Union Share Insurance Fund a
deposit in an amount equaling 1 per centum of the credit
union's insured shares.
(ii) The Board may, in its discretion, authorize insured
credit unions to initially fund such deposit over a period of
time in excess of one year if necessary to avoid adverse
effects on the condition of insured credit unions.
(iii) Periodic adjustment.--The
amount of each insured credit union's
deposit shall be adjusted as follows,
in accordance with procedures
determined by the Board, to reflect
changes in the credit union's insured
shares:
(I) annually, in the case of
an insured credit union with
total assets of not more than
[$50,000,000] $170,000,000; and
(II) semi-annually, in the
case of an insured credit union
with total assets of
[$50,000,000] $170,000,000 or
more.
(B)(i) The deposit shall be returned to an insured credit
union in the event that its insurance coverage is terminated,
it converts to insurance coverage from another source, or in
the event the operations of the fund are transferred from the
National Credit Union Administration Board.
(ii) The deposit shall be returned in accordance with
procedures and valuation methods determined by the Board, but
in no event shall the deposit be returned any later than one
year after the final date on which no shares of the credit
union are insured by the Board.
(iii) The deposit shall not be returned in the event of
liquidation on account of bankruptcy or insolvency.
(iv) The deposit funds may be used by the fund if necessary
to meet its expenses, in which case the amount so used shall be
expensed and shall be replenished by insured credit unions in
accordance with procedures established by the Board.
(2) Insurance premium charges.--
(A) In general.--Each insured credit union
shall, at such times as the Board prescribes
(but not more than twice in any calendar year),
pay to the Fund a premium charge for insurance
in an amount stated as a percentage of insured
shares (which shall be the same for all insured
credit unions).
(B) Relation of premium charge to equity
ratio of fund.--The Board may assess a premium
charge only if--
(i) the Fund's equity ratio is less
than 1.3 percent; and
(ii) the premium charge does not
exceed the amount necessary to restore
the equity ratio to 1.3 percent.
(C) Premium charge required if equity ratio
falls below 1.2 percent.--If the Fund's equity
ratio is less than 1.2 percent, the Board
shall, subject to subparagraph (B), assess a
premium charge in such an amount as the Board
determines to be necessary to restore the
equity ratio to, and maintain that ratio at,
1.2 percent.
(D) Fund restoration plans.--
(i) In general.--Whenever--
(I) the Board projects that
the equity ratio of the Fund
will, within 6 months of such
determination, fall below the
minimum amount specified in
subparagraph (C); or
(II) the equity ratio of the
Fund actually falls below the
minimum amount specified in
subparagraph (C) without any
determination under sub-clause
(I) having been made,
the Board shall establish and implement
a restoration plan within 90 days that
meets the requirements of clause (ii)
and such other conditions as the Board
determines to be appropriate.
(ii) Requirements of restoration
plan.--A restoration plan meets the
requirements of this clause if the plan
provides that the equity ratio of the
Fund will meet or exceed the minimum
amount specified in subparagraph (C)
before the end of the 8-year period
beginning upon the implementation of
the plan (or such longer period as the
Board may determine to be necessary due
to extraordinary circumstances).
(iii) Transparency.--Not more than 30
days after the Board establishes and
implements a restoration plan under
clause (i), the Board shall publish in
the Federal Register a detailed
analysis of the factors considered and
the basis for the actions taken with
regard to the plan.
(3) Distributions from fund required.--
(A) In general.--The Board shall, subject to
the requirements of section 217(e), effect a
pro rata distribution to insured credit unions
after each calendar year if, as of the end of
that calendar year--
(i) any loans to the Fund from the
Federal Government, and any interest on
those loans, have been repaid;
(ii) the Fund's equity ratio exceeds
the normal operating level; and
(iii) the Fund's available assets
ratio exceeds 1.0 percent.
(B) Amount of distribution.--The Board shall
distribute under subparagraph (A) the maximum
possible amount that--
(i) does not reduce the Fund's equity
ratio below the normal operating level;
and
(ii) does not reduce the Fund's
available assets ratio below 1.0
percent.
(C) Calculation based on certified
statements.--In calculating the Fund's equity
ratio and available assets ratio for purposes
of this paragraph, the Board shall determine
the aggregate amount of the insured shares in
all insured credit unions from insured credit
unions certified statements under subsection
(b) for the final reporting period of the
calendar year referred to in subparagraph (A).
(4) Timeliness and accuracy of data.--In calculating
the available assets ratio and equity ratio of the
Fund, the Board shall use the most current and accurate
data reasonably available.
(d)
(1) If, in the judgment of the Board, a loan to the
insurance fund, or to the stabilization fund described
in section 217 of this title, is required at any time
for purposes of this subchapter, the Secretary of the
Treasury shall make the loan, but loans under this
paragraph shall not exceed in the aggregate
$6,000,000,000 outstanding at any one time. Except as
otherwise provided in this subsection, section 217, and
in subsection (e) of this section, each loan under this
paragraph shall be made on such terms as may be fixed
by agreement between the Board and the Secretary of the
Treasury.
(2) Penalty for failure to make accurate certified
statement or to pay deposit or premium.--
(A) First tier.--Any insured credit union
which--
(i) maintains procedures reasonably
adapted to avoid any inadvertent error
and, unintentionally and as a result of
such an error, fails to submit any
certified statement under subsection
(b)(1) within the period of time
required or submits a false or
misleading certified statement under
such subsection; or
(ii) submits the statement at a time
which is minimally after the time
required,
shall be subject to a penalty of not more than
$2,000 for each day during which such failure
continues or such false and misleading
information is not corrected. The insured
credit union shall have the burden of proving
that an error was inadvertent or that a
statement was inadvertently submitted late.
(B) Second tier.--Any insured credit union
which--
(i) fails to submit any certified
statement under subsection (b)(1)
within the period of time required or
submits a false or misleading certified
statement in a manner not described in
subparagraph (A); or
(ii) fails or refuses to pay any
deposit or premium for insurance
required under this title,
shall be subject to a penalty of not more than
$20,000 for each day during which such failure
continues, such false and misleading
information is not corrected, or such deposit
or premium is not paid.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), if any insured
credit union knowingly or with reckless
disregard for the accuracy of any certified
statement under subsection (b)(1) submits a
false or misleading certified statement under
such subsection, the Board may assess a penalty
of not more than $1,000,000 or not more than 1
percent of the total assets of the credit
union, whichever is less, per day for each day
during which the failure continues or the false
or misleading information in such statement is
not corrected.
(D) Assessment procedure.--Any penalty
imposed under this paragraph shall be assessed
and collected by the Board in the manner
provided in section 206(k)(2) (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 section.
(E) Hearing.--Any insured credit union
against which any penalty is assessed under
this paragraph shall be afforded an agency
hearing if the credit union submits a request
for such hearing within 20 days after the
issuance of the notice of the assessment.
Section 206(j) shall apply to any proceeding
under this subparagraph.
(F) Special rule for disputed payments.--No
penalty may be assessed for the failure of any
insured credit union to pay any deposit or
premium for insurance if--
(i) the failure is due to a dispute
between the credit union and the Board
over the amount of the deposit or
premium which is due from the credit
union; and
(ii) the credit union deposits
security satisfactory to the Board for
payment of the deposit or insurance
premium upon final determination of the
dispute.
(3) No insured credit union shall pay any dividends on its
insured shares or distribute any of its assets while it remains
in default in the payment of its deposit or any premium charge
for insurance due to the fund. Any director or officer of any
insured credit union who knowingly participates in the
declaration or payment of any such dividend or in any such
distribution shall, upon conviction, be fined not more than
$1,000 or imprisoned not more than one year, or both. The
provisions of this paragraph shall not be applicable in any
case in which the default is due to a dispute between the
credit union and the Board over the amount of its deposit or
the premium charge due to the fund if the credit union deposits
security satisfactory to the Board for payment of its deposit
or the premium charge upon final determination of the issue.
(4) Temporary increases authorized.--
(A) Recommendations for increase.--During the
period beginning on the date of enactment of
this paragraph and ending on December 31, 2010,
if, upon the written recommendation of the
Board (upon a vote of not less than two-thirds
of the members of the Board) and the Board of
Governors of the Federal Reserve System (upon a
vote of not less than two-thirds of the members
of such Board), the Secretary of the Treasury
(in consultation with the President) determines
that additional amounts above the
$6,000,000,000 amount specified in paragraph
(1) are necessary, such amount shall be
increased to the amount so determined to be
necessary, not to exceed $30,000,000,000.
(B) Report required.--If the borrowing
authority of the Board is increased above
$6,000,000,000 pursuant to subparagraph (A),
the Board shall promptly submit a report to the
Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on
Financial Services of the House of
Representatives describing the reasons and need
for the additional borrowing authority and its
intended uses.
(e) The Board, in a suit brought at law or in equity in any
court of competent jurisdiction, shall be entitled to recover
from any insured credit union the amount of any unpaid deposit
or premium charge for insurance lawfully payable by the credit
union to the fund, whether or not such credit union shall have
made any report of condition under subsection (a) of this
section or filed any certified statement required under
subsection (b) of this section and whether or not suit shall
have been brought to compel the credit union to make any such
report or to file any such statement. No action or proceeding
shall be brought for the recovery of any deposit or premium
charge due to the fund, or for the recovery of any amount paid
to the fund in excess of the amount due it, unless such action
or proceeding shall have been brought within five years after
the right accrued for which the claim is made. Where the
insured credit union has made or filed with the Board a false
or fraudulent certified statement with the intent to evade, in
whole or in part, the payment of its deposit or any premium
charge, the claim shall not be deemed to have accrued until the
discovery by the Board of the fact that the certified statement
is false or fraudulent.
(f) Should any Federal credit union fail to make any report
of condition under subsection (a) of this section or to file
any certified statement required to be filed under subsection
(b) of this section or to pay its deposit or any premium charge
for insurance required to be paid under any provision of this
title, and should the credit union fail to correct such failure
within thirty days after written notice has been given by the
Board to an officer of the credit union, citing this subsection
and stating that the credit union has failed to make any such
report or file any such statement or pay any such deposit or
premium charge as required by law, all the rights, privileges,
and franchises of the credit union granted to it under title I
of this Act shall be thereby forfeited. Whether or not the
penalty provided in this subsection has been incurred shall be
determined and adjudged by any court of the United States of
competent jurisdiction in a suit brought for that purpose in
the district or territory in which the principal office of such
credit union is located, under direction of and by the Board in
its own name, before the credit union shall be declared
dissolved. The remedies provided in this subsection and in
subsections (d) and (e) of this section shall not be construed
as limiting any other remedies against any insured credit union
but shall be in addition thereto.
(g) Each insured credit union shall maintain such records as
will readily permit verification of the correctness of its
reports of condition, certified statements, and deposit and
premium charges for insurance. However, no insured credit union
shall be required to retain such records for such purpose for a
period in excess of five years from the date of the making of
any such report, the filing of any such statement, or the
payment of any deposit or adjustment thereof or any premium
charge, except that when there is a dispute between the insured
credit union and the Board over the amount of any deposit or
adjustment thereof or any premium charge for insurance the
credit union shall retain such records until final
determination of the issue.
(h) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Available assets ratio.--The term ``available
assets ratio'', when applied to the Fund, means the
ratio of--
(A) the amount determined by subtracting--
(i) direct liabilities of the Fund
and contingent liabilities for which no
provision for losses has been made,
from
(ii) the sum of cash and the market
value of unencumbered investments
authorized under section 203(c), to
(B) the aggregate amount of the insured
shares in all insured credit unions.
(2) Equity ratio.--The term ``equity ratio'', which
shall be calculated using the financial statements of
the Fund alone, without any consolidation or
combination with the financial statements of any other
fund or entity, means the ratio of--
(A) the amount of Fund capitalization,
including insured credit unions' 1 percent
capitalization deposits and the retained
earnings balance of the Fund (net of direct
liabilities of the Fund and contingent
liabilities for which no provision for losses
has been made); to
(B) the aggregate amount of the insured
shares in all insured credit unions.
(3) Insured shares.--The term ``insured shares'',
when applied to this section, includes share, share
draft, share certificate, and other similar accounts as
determined by the Board, but does not include amounts
exceeding the insured account limit set forth in
section 207(k)(1).
(4) Normal operating level.--The term ``normal
operating level'', when applied to the Fund, means an
equity ratio specified by the Board, which shall be not
less than 1.2 percent and not more than 1.5 percent.
* * * * * * *
SEC. 216. PROMPT CORRECTIVE ACTION.
(a) Resolving Problems To Protect Fund.--
(1) Purpose.--The purpose of this section is to
resolve the problems of insured credit unions at the
least possible long-term loss to the Fund.
(2) Prompt corrective action required.--The Board
shall carry out the purpose of this section by taking
prompt corrective action to resolve the problems of
insured credit unions.
(b) Regulations Required.--
(1) Insured credit unions.--
(A) In general.--The Board shall, by
regulation, prescribe a system of prompt
corrective action for insured credit unions
that is--
(i) consistent with this section; and
(ii) comparable to section 38 of the
Federal Deposit Insurance Act.
(B) Cooperative character of credit unions.--
The Board shall design the system required
under subparagraph (A) to take into account
that credit unions are not-for-profit
cooperatives that--
(i) do not issue capital stock;
(ii) must rely on retained earnings
to build net worth; and
(iii) have boards of directors that
consist primarily of volunteers.
(2) New credit unions.--
(A) In general.--In addition to regulations
under paragraph (1), the Board shall, by
regulation, prescribe a system of prompt
corrective action that shall apply to new
credit unions in lieu of this section and the
regulations prescribed under paragraph (1).
(B) Criteria for alternative system.--The
Board shall design the system prescribed under
subparagraph (A)--
(i) to carry out the purpose of this
section;
(ii) to recognize that credit unions
(as cooperatives that do not issue
capital stock) initially have no net
worth, and give new credit unions
reasonable time to accumulate net
worth;
(iii) to create adequate incentives
for new credit unions to become
adequately capitalized by the time that
they either--
(I) have been in operation
for more than 10 years; or
(II) have more than
$10,000,000 in total assets;
(iv) to impose appropriate
restrictions and requirements on new
credit unions that do not make
sufficient progress toward becoming
adequately capitalized; and
(v) to prevent evasion of the purpose
of this section.
(c) Net Worth Categories.--
(1) In general.--For purposes of this section the
following definitions shall apply:
(A) Well capitalized.--An insured credit
union is ``well capitalized'' if--
(i) it has a net worth ratio of not
less than 7 percent; and
(ii) it meets any applicable risk-
based net worth requirement under
subsection (d).
(B) Adequately capitalized.--An insured
credit union is ``adequately capitalized'' if--
(i) it has a net worth ratio of not
less than 6 percent; and
(ii) it meets any applicable risk-
based net worth requirement under
subsection (d).
(C) Undercapitalized.--An insured credit
union is ``undercapitalized'' if--
(i) it has a net worth ratio of less
than 6 percent; or
(ii) it fails to meet any applicable
risk-based net worth requirement under
subsection (d).
(D) Significantly undercapitalized.--An
insured credit union is ``significantly
undercapitalized''--
(i) if it has a net worth ratio of
less than 4 percent; or
(ii) if--
(I) it has a net worth ratio
of less than 5 percent; and
(II) it--
(aa) fails to submit
an acceptable net worth
restoration plan within
the time allowed under
subsection (f); or
(bb) materially fails
to implement a net
worth restoration plan
accepted by the Board.
(E) Critically undercapitalized.--An insured
credit union is ``critically undercapitalized''
if it has a net worth ratio of less than 2
percent (or such higher net worth ratio, not to
exceed 3 percent, as the Board may specify by
regulation).
(2) Adjusting net worth levels.--
(A) In general.--If, for purposes of section
38(c) of the Federal Deposit Insurance Act, the
Federal banking agencies increase or decrease
the required minimum level for the leverage
limit (as those terms are used in section 38),
the Board may, by regulation, and subject to
subparagraph (B) of this paragraph,
correspondingly increase or decrease 1 or more
of the net worth ratios specified in
subparagraphs (A) through (D) of paragraph (1)
of this subsection in an amount that is equal
to not more than the difference between the
required minimum level most recently
established by the Federal banking agencies and
4 percent of total assets (with respect to
institutions regulated by those agencies).
(B) Determinations required.--The Board may
increase or decrease net worth ratios under
subparagraph (A) only if the Board--
(i) determines, in consultation with
the Federal banking agencies, that the
reason for the increase or decrease in
the required minimum level for the
leverage limit also justifies the
adjustment in net worth ratios; and
(ii) determines that the resulting
net worth ratios are sufficient to
carry out the purpose of this section.
(C) Transition period required.--If the Board
increases any net worth ratio under this
paragraph, the Board shall give insured credit
unions a reasonable period of time to meet the
increased ratio.
(d) Risk-Based Net Worth Requirement for Complex Credit
Unions.--
(1) In general.--The regulations required under
subsection (b)(1) shall include a risk-based net worth
requirement for insured credit unions that are complex,
as defined by the Board based on the portfolios of
assets and liabilities of credit unions.
(2) Standard.--The Board shall design the risk-based
net worth requirement to take account of any material
risks against which the net worth ratio required for an
insured credit union to be adequately capitalized may
not provide adequate protection.
(e) Earnings-Retention Requirement Applicable to Credit
Unions That Are Not Well Capitalized.--
(1) In general.--An insured credit union that is not
well capitalized shall annually set aside as net worth
an amount equal to not less than 0.4 percent of its
total assets.
(2) Board's authority to decrease earnings-retention
requirement.--
(A) In general.--The Board may, by order,
decrease the 0.4 percent requirement in
paragraph (1) with respect to a credit union to
the extent that the Board determines that the
decrease--
(i) is necessary to avoid a
significant redemption of shares; and
(ii) would further the purpose of
this section.
(B) Periodic review required.--The Board
shall periodically review any order issued
under subparagraph (A).
(f) Net Worth Restoration Plan Required.--
(1) In general.--Each insured credit union that is
undercapitalized shall submit an acceptable net worth
restoration plan to the Board within the time allowed
under this subsection.
(2) Assistance to small credit unions.--The Board (or
the staff of the Board) shall, upon timely request by
an insured credit union with total assets of less than
[$10,000,000] $34,000,000, and subject to such
regulations or guidelines as the Board may prescribe,
assist that credit union in preparing a net worth
restoration plan.
(3) Deadlines for submission and review of plans.--
The Board shall, by regulation, establish deadlines for
submission of net worth restoration plans under this
subsection that--
(A) provide insured credit unions with
reasonable time to submit net worth restoration
plans; and
(B) require the Board to act on net worth
restoration plans expeditiously.
(4) Failure to submit acceptable plan within time
allowed.--
(A) Failure to submit any plan.--If an
insured credit union fails to submit a net
worth restoration plan within the time allowed
under paragraph (3), the Board shall--
(i) promptly notify the credit union
of that failure; and
(ii) give the credit union a
reasonable opportunity to submit a net
worth restoration plan.
(B) Submission of unacceptable plan.--If an
insured credit union submits a net worth
restoration plan within the time allowed under
paragraph (3), and the Board determines that
the plan is not acceptable, the Board shall--
(i) promptly notify the credit union
of why the plan is not acceptable; and
(ii) give the credit union a
reasonable opportunity to submit a
revised plan.
(5) Accepting plan.--The Board may accept a net worth
restoration plan only if the Board determines that the
plan is based on realistic assumptions and is likely to
succeed in restoring the net worth of the credit union.
(g) Restrictions on Undercapitalized Credit Unions.--
(1) Restriction on asset growth.--An insured credit
union that is undercapitalized shall not generally
permit its average total assets to increase, unless--
is--
(A) the Board has accepted the net worth
restoration plan of the credit union for that
action;
(B) any increase in total assets is
consistent with the net worth restoration plan;
and
(C) the net worth ratio of the credit union
increases at a rate that is consistent with the
net worth restoration plan.
(2) Restriction on member business loans.--
Notwithstanding section 107A(a), an insured credit
union that is undercapitalized may not make any
increase in the total amount of member business loans
(as defined in section 107A(c)) outstanding at that
credit union at any one time, until such time as the
credit union becomes adequately capitalized.
(h) More Stringent Treatment Based on Other Supervisory
Criteria.--With respect to the exercise of authority by the
Board under regulations comparable to section 38(g) of the
Federal Deposit Insurance Act--
(1) the Board may not reclassify an insured credit
union into a lower net worth category, or treat an
insured credit union as if it were in a lower net worth
category, for reasons not pertaining to the safety and
soundness of that credit union; and
(2) the Board may not delegate its authority to
reclassify an insured credit union into a lower net
worth category or to treat an insured credit union as
if it were in a lower net worth category.
(i) Action Required Regarding Critically Undercapitalized
Credit Unions.--
(1) In general.--The Board shall, not later than 90
days after the date on which an insured credit union
becomes critically undercapitalized--
(A) appoint a conservator or liquidating
agent for the credit union; or
(B) take such other action as the Board
determines would better achieve the purpose of
this section, after documenting why the action
would better achieve that purpose.
(2) Periodic redeterminations required.--Any
determination by the Board under paragraph (1)(B) to
take any action with respect to an insured credit union
in lieu of appointing a conservator or liquidating
agent shall cease to be effective not later than the
end of the 180-day period beginning on the date on
which the determination is made, and a conservator or
liquidating agent shall be appointed for that credit
union under paragraph (1)(A), unless the Board makes a
new determination under paragraph (1)(B) before the end
of the effective period of the prior determination.
(3) Appointment of liquidating agent required if
other action fails to restore net worth.--
(A) In general.--Notwithstanding paragraphs
(1) and (2), the Board shall appoint a
liquidating agent for an insured credit union
if the credit union is critically
undercapitalized on average during the calendar
quarter beginning 18 months after the date on
which the credit union became critically
undercapitalized.
(B) Exception.--Notwithstanding subparagraph
(A), the Board may continue to take such other
action as the Board determines to be
appropriate in lieu of appointment of a
liquidating agent if--
(i) the Board determines that--
(I) the insured credit union
has been in substantial
compliance with an approved net
worth restoration plan that
requires consistent improvement
in the net worth of the credit
union since the date of the
approval of the plan; and
(II) the insured credit union
has positive net income or has
an upward trend in earnings
that the Board projects as
sustainable; and
(ii) the Board certifies that the
credit union is viable and not expected
to fail.
(4) Nondelegation.--
(A) In general.--Except as provided in
subparagraph (B), the Board may not delegate
the authority of the Board under this
subsection.
(B) Exception.--The Board may delegate the
authority of the Board under this subsection
with respect to an insured credit union that
has less than [$5,000,000] $17,000,000 in total
assets, if the Board permits the credit union
to appeal any adverse action to the Board.
(j) Reviews Required When Share Insurance Fund Experiences
Losses.--
(1) In general.--If the Fund incurs a material loss
with respect to an insured credit union, the Inspector
General of the Board shall--
(A) submit to the Board a written report
reviewing the supervision of the credit union
by the Administration (including the
implementation of this section by the
Administration), which shall include--
(i) a description of the reasons why
the problems of the credit union
resulted in a material loss to the
Fund; and
(ii) recommendations for preventing
any such loss in the future; and
(B) submit a copy of the report under
subparagraph (A) to--
(i) the Comptroller General of the
United States;
(ii) the Corporation;
(iii) in the case of a report
relating to a State credit union, the
appropriate State supervisor; and
(iv) to any Member of Congress, upon
request.
(2) Material loss defined.--For purposes of
determining whether the Fund has incurred a material
loss with respect to an insured credit union, a loss is
material if it exceeds the sum of--
(A) [$25,000,000] $51,000,000; and
(B) an amount equal to 10 percent of the
total assets of the credit union on the date on
which the Board initiated assistance under
section 208 or was appointed liquidating agent.
(3) Public disclosure required.--
(A) In general.--The Board shall disclose a
report under this subsection, upon request
under section 552 of title 5, United States
Code, without excising--
(i) any portion under section
552(b)(5) of title 5, United States
Code; or
(ii) any information about the
insured credit union (other than trade
secrets) under section 552(b)(8) of
title 5, United States Code.
(B) Rule of construction.--Subparagraph (A)
may not be construed as requiring the agency to
disclose the name of any customer of the
insured credit union (other than an
institution-affiliated party), or information
from which the identity of such customer could
reasonably be ascertained.
(4) Losses that are not material.--
(A) Semiannual report.--For the 6-month
period ending on March 31, 2010, and each 6-
month period thereafter, the Inspector General
of the Board shall--
(i) identify any losses that the
Inspector General estimates were
incurred by the Fund during such 6-
month period, with respect to insured
credit unions;
(ii) for each loss to the Fund that
is not a material loss, determine--
(I) the grounds identified by
the Board or the State official
having jurisdiction over a
State credit union for
appointing the Board as the
liquidating agent for any
Federal or State credit union;
and
(II) whether any unusual
circumstances exist that might
warrant an in-depth review of
the loss; and
(iii) prepare and submit a written
report to the Board and to Congress on
the results of the determinations of
the Inspector General that includes--
(I) an identification of any
loss that warrants an in-depth
review, and the reasons such
review is warranted, or if the
Inspector General determines
that no review is warranted, an
explanation of such
determination; and
(II) for each loss identified
in subclause (I) that warrants
an in-depth review, the date by
which such review, and a report
on the review prepared in a
manner consistent with reports
under paragraph (1)(A), will be
completed.
(B) Deadline for semiannual report.--The
Inspector General of the Board shall--
(i) submit each report required under
subparagraph (A) expeditiously, and not
later than 90 days after the end of the
6-month period covered by the report;
and
(ii) provide a copy of the report
required under subparagraph (A) to any
Member of Congress, upon request.
(5) GAO review.--The Comptroller General of the
United States shall, under such conditions as the
Comptroller General determines to be appropriate--
(A) review each report made under paragraph
(1), including the extent to which the
Inspector General of the Board complied with
the requirements under section 419 of title 5,
United States Code, with respect to each such
report; and
(B) recommend improvements to the supervision
of insured credit unions (including
improvements relating to the implementation of
this section).
(k) Appeals Process.--Material supervisory determinations,
including decisions to require prompt corrective action, made
pursuant to this section by Administration officials other than
the Board may be appealed to the Board pursuant to the
independent appellate process required by section 309 of the
Riegle Community Development and Regulatory Improvement Act of
1994 (or, if the Board so specifies, pursuant to separate
procedures prescribed by regulation).
(l) Consultation and Cooperation With State Credit Union
Supervisors.--
(1) In general.--In implementing this section, the
Board shall consult and seek to work cooperatively with
State officials having jurisdiction over State-
chartered insured credit unions.
(2) Evaluating net worth restoration plan.--In
evaluating any net worth restoration plan submitted by
a State-chartered insured credit union, the Board shall
seek the views of the State official having
jurisdiction over the credit union.
(3) Deciding whether to appoint conservator or
liquidating agent.--With respect to any decision by the
Board on whether to appoint a conservator or
liquidating agent for a State-chartered insured credit
union--
(A) the Board shall--
(i) seek the views of the State
official having jurisdiction over the
credit union; and
(ii) give that official an
opportunity to take the proposed
action;
(B) the Board shall, upon timely request of
an official referred to in subparagraph (A),
promptly provide the official with--
(i) a written statement of the
reasons for the proposed action; and
(ii) reasonable time to respond to
that statement;
(C) if the official referred to in
subparagraph (A) makes a timely written
response that disagrees with the proposed
action and gives reasons for that disagreement,
the Board shall not appoint a conservator or
liquidating agent for the credit union, unless
the Board, after considering the views of the
official, has determined that--
(i) the Fund faces a significant risk
of loss with respect to the credit
union if a conservator or liquidating
agent is not appointed; and
(ii) the appointment is necessary to
reduce--
(I) the risk that the Fund
would incur a loss with respect
to the credit union; or
(II) any loss that the Fund
is expected to incur with
respect to the credit union;
and
(D) the Board may not delegate any
determination under subparagraph (C).
(m) Corporate Credit Unions Exempted.--This section does not
apply to any insured credit union that--
(1) operates primarily for the purpose of serving
credit unions; and
(2) permits individuals to be members of the credit
union only to the extent that applicable law requires
that such persons own shares.
(n) Other Authority Not Affected.--This section does not
limit any authority of the Board or a State to take action in
addition to (but not in derogation of) any action that is
required under this section.
(o) Definitions.--For purposes of this section the following
definitions shall apply:
(1) Federal banking agency.--The term ``Federal
banking agency'' has the same meaning as in section 3
of the Federal Deposit Insurance Act.
(2) Net worth.--The term ``net worth''--
(A) with respect to any insured credit union,
means the retained earnings balance of the
credit union, as determined under generally
accepted accounting principles, together with
any amounts that were previously retained
earnings of any other credit union with which
the credit union has combined;
(B) with respect to any insured credit union,
includes, at the Board's discretion and subject
to rules and regulations established by the
Board, assistance provided under section 208 to
facilitate a least-cost resolution consistent
with the best interests of the credit union
system; and
(C) with respect to a low-income credit
union, includes secondary capital accounts that
are--
(i) uninsured; and
(ii) subordinate to all other claims
against the credit union, including the
claims of creditors, shareholders, and
the Fund.
(3) Net worth ratio.--The term ``net worth ratio''
means, with respect to a credit union, the ratio of the
net worth of the credit union to the total assets of
the credit union.
(4) New credit union.--The term ``new credit union''
means an insured credit union that--
(A) has been in operation for less than 10
years; and
(B) has not more than [$10,000,000]
$34,000,000 in total assets.
* * * * * * *
----------
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 7. (a)(1) Each insured State nonmember bank and each
foreign bank having an insured branch which is not a Federal
branch shall make to the Corporation reports of condition which
shall be in such form and shall contain such information as the
Board of Directors may require. Such reports shall be made to
the Corporation on the dates selected as provided in paragraph
(3) of this subsection and the deposit liabilities shall be
reported therein in accordance with and pursuant to paragraphs
(4) and (5) of this subsection. The Board of Directors may call
for additional reports of condition on dates to be fixed by it
and may call for such other reports as the Board may from time
to time require. Any such bank which (A) maintains procedures
reasonably adapted to avoid any inadvertent error and,
unintentionally and as a result of such an error, fails to make
or publish any report required under this paragraph, within the
period of time specified by the Corporation, or 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 bank
shall have the burden of proving that an error was inadvertent
and that a report was inadvertently transmitted or published
late. Any such bank which fails to make or publish any report
required under this paragraph, within the period of time
specified by the Corporation, or submits or publishes any false
or misleading report or information, in a manner not described
in the 2nd preceding sentence 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. Notwithstanding the preceding sentence, if any such
bank knowingly or with reckless disregard for the accuracy of
any information or report described in such sentence submits or
publishes any false or misleading report or information, the
Corporation may assess a penalty of not more than $1,000,000 or
1 percent of total assets of such bank, whichever is less, per
day for each day during which such failure continues or such
false or misleading information is not corrected. Any penalty
imposed under any of the 4 preceding sentences shall be
assessed and collected by the Corporation in the manner
provided in subparagraphs (E), (F), (G), and (I) of section
8(i)(2) (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 section.
Any such bank against which any penalty is assessed under this
subsection shall be afforded an agency hearing if such bank
submits a request for such hearing within 20 days after the
issuance of the notice of assessment. Section 8(h) shall apply
to any proceeding under this paragraph.
(2)(A) The Corporation and, with respect to any State
depository institution, any appropriate State bank supervisor
for such institution, shall have access to reports of
examination made by, and reports of condition made to, the
Comptroller of the Currency, the Federal Housing Finance
Agency, any Federal home loan bank, or any Federal Reserve bank
and to all revisions of reports of condition made to any of
them, and they shall promptly advise the Corporation of any
revisons or changes in respect to deposit liabilities made or
required to be made in any report of condition. The Corporation
may accept any report made by or to any commission, board, or
authority having supervision of a depository institution, and
may furnish to the Comptroller of the Currency, to the Federal
Housing Finance Agency, to any Federal home loan bank, to any
Federal Reserve bank, and to any such commission, board, or
authority, reports of examinations made on behalf of, and
reports of condition made to, the Corporation.
(B) Additional reports.--The Board of Directors may
from time to time require any insured depository
institution to file such additional reports as the
Corporation, after consultation with the Comptroller of
the Currency and the Board of Governors of the Federal
Reserve System, as appropriate, may deem advisable for
insurance purposes.
(C) Data sharing with other agencies and persons.--In
addition to reports of examination, reports of
condition, and other reports required to be regularly
provided to the Corporation (with respect to all
insured depository institutions, including a depository
institution for which the Corporation has been
appointed conservator or receiver) or an appropriate
State bank supervisor (with respect to a State
depository institution) under subparagraph (A) or (B),
a Federal banking agency may, in the discretion of the
agency, furnish any report of examination or other
confidential supervisory information concerning any
depository institution or other entity examined by such
agency under authority of any Federal law, to--
(i) any other Federal or State agency or
authority with supervisory or regulatory
authority over the depository institution or
other entity;
(ii) any officer, director, or receiver of
such depository institution or entity; and
(iii) any other person that the Federal
banking agency determines to be appropriate.
(3) Each insured depository institution shall make to the
appropriate Federal banking agency 4 reports of condition
annually upon dates which shall be selected by the Chairman of
the Board of Directors, the Comptroller of the Currency, and
the Chairman of the Board of Governors of the Federal Reserve
System. The dates selected shall be the same for all insured
depository institutions, except that when any of said reporting
dates is a nonbusiness day for any depository institution, the
preceding business day shall be its reporting date. Such
reports of condition shall be the basis for the certified
statements to be filed pursuant to subsection (c). The deposit
liabilities shall be reported in said reports of condition in
accordance with and pursuant to paragraphs (4) and (5) of this
subsection, and such other information shall be reported
therein as may be required by the respective agencies. Each
said report of condition shall contain a declaration by the
president, a vice president, the cashier or the treasurer, or
by any other officer designated by the board of directors or
trustees of the reporting depository institution to make such
declaration, that the report is true and correct to the best of
his knowledge and belief. The correctness of said report of
conditions shall be attested by the signatures of at least two
directors or trustees of the reporting depository institution
other than the officer making such declaration, with a
declaration that the report has been examined by them and to
the best of their knowledge and belief is true and correct. At
the time of making said reports of condition each insured
depository institution shall furnish to the Corporation a copy
thereof containing such signed declaration and attestations.
Nothing herein shall preclude any of the foregoing agencies
from requiring the banks or savings associations under its
jurisdiction to make additional reports of condition at any
time.
(4) In the reports of condition required to be made by
paragraph (3) of this subsection, each insured depository
institution shall report the total amount of the liability of
the depository institution for deposits in the main office and
in any branch located in any State of the United States, the
District of Columbia, any Territory of the United States,
Puerto Rico, Guam, American Samoa, the Trust Territory of the
Pacific Islands, or the Virgin Islands, according to the
definition of the term ``deposit'' in and pursuant to
subsection (1) of section 3 of this Act, without any deduction
for indebtedness of depositors or creditors or any deduction
for cash items in the process of collection drawn on others
than the reporting depository institution: Provided, That the
depository institution in reporting such deposits may (i)
subtract from the deposit balance due to any depository
institution the deposit balance due from the same depository
institution (other than trust funds deposited by either
depository institution) and any cash items in the process of
collection due from or due to such depository institutions
shall be included in determining such net balance, except that
balances of time deposits of any depository institution and any
balances standing to the credit of private depository
institutions, of depository institutions in foreign countries,
of foreign branches of other American depository institutions,
and of American branches of foreign banks shall be reported
gross without any such subtraction, and (ii) exclude any
deposits received in any office of the depository institution
for deposit in any other office of the depository institution:
And provided further, That outstanding drafts (including
advices and authorizations to charge depository institution's
balance in another depository institution) drawn in the regular
course of business by the reporting depository institution on
depository institutions need not be reported as deposit
liabilities. The amount of trust funds held in the depository
institution's own trust department, which the reporting
depository institution keeps segregated and apart from its
general assets and does not use in the conduct of its business,
shall not be included in the total deposits in such reports,
but shall be separately stated in such reports. Deposits which
are accumulated for the payment of personal loans and are
assigned or pledged to assure payment of loans at maturity
shall not be included in the total deposits in such reports,
but shall be deducted from the loans for which such deposits
are assigned or pledged to assure repayment.
(5) The deposits to be reported on such reports of condition
shall be segregated between (i) time and savings deposits and
(ii) demand deposits. For this purpose, the time and savings
deposits shall consist of time certificates of deposit, time
deposits-open account and savings deposits; and demand deposits
shall consist of all deposits other than time and savings
deposits.
(6) Lifeline account deposits.--In the reports of
condition required to be reported under this
subsection, the deposits in lifeline accounts (as
defined in section 232(a)(3)(D) of the Bank Enterprise
Act of 1991) shall be reported separately.
(7) The Board of Directors, after consultation with the
Comptroller of the Currency and the Board of Governors of the
Federal Reserve System, may by regulation define the terms
``cash items'' and ``process of collection'', and shall
classify deposits as ``time,''``savings,'' and ``demand''
deposits, for the purposes of this section.
(8) In respect of any report required or authorized to be
supplied or published pursuant to this subsection or any other
provision of law, the Board of Directors or the Comptroller of
the Currency, as the case may be, may differentiate between
domestic banks and foreign banks to such extent as, in their
judgment, may be reasonably required to avoid hardship and can
be done without substantial compromise of insurance risk or
supervisory and regulatory effectiveness.
(9) Data collections.--In addition to or in
connection with any other report required under this
subsection, the Corporation shall take such action as
may be necessary to ensure that--
(A) each insured depository institution
maintains; and
(B) the Corporation receives on a regular
basis from such institution,
information on the total amount of all insured
deposits, preferred deposits, and uninsured deposits at
the institution. In prescribing reporting and other
requirements for the collection of actual and accurate
information pursuant to this paragraph, the Corporation
shall minimize the regulatory burden imposed upon
insured depository institutions that are well
capitalized (as defined in section 38) while taking
into account the benefit of the information to the
Corporation, including the use of the information to
enable the Corporation to more accurately determine the
total amount of insured deposits in each insured
depository institution for purposes of compliance with
this Act.
(10) A Federal banking agency may not, by regulation
or otherwise, designate, or require an insured
institution or an affiliate to designate, a corporation
as highly leveraged or a transaction with a corporation
as a highly leveraged transaction solely because such
corporation is or has been a debtor or bankrupt under
title 11, United States Code, if, after confirmation of
a plan of reorganization, such corporation would not
otherwise be highly leveraged.
(11) Streamlining reports of condition.--
(A) Review of information and schedules.--
Before the end of the 1-year period beginning
on the date of enactment of the Financial
Services Regulatory Relief Act of 2006 and
before the end of each 5-year period
thereafter, each Federal banking agency shall,
in conjunction with the other relevant Federal
banking agencies, review the information and
schedules that are required to be filed by an
insured depository institution in a report of
condition required under paragraph (3).
(B) Reduction or elimination of information
found to be unnecessary.--After completing the
review required by subparagraph (A), a Federal
banking agency, in conjunction with the other
relevant Federal banking agencies, shall reduce
or eliminate any requirement to file
information or schedules under paragraph (3)
(other than information or schedules that are
otherwise required by law) if the agency
determines that the continued collection of
such information or schedules is no longer
necessary or appropriate.
(12) Short form reporting.--
(A) In general.--The appropriate Federal
banking agencies shall issue regulations that
allow for a reduced reporting requirement for a
covered depository institution when the
institution makes the first and third report of
condition for a year, as required under
paragraph (3).
(B) Definition.--In this paragraph, the term
``covered depository institution'' means an
insured depository institution that--
(i) has less than [$5,000,000,000]
$8,000,000,000 in total consolidated
assets; and
(ii) satisfies such other criteria as
the appropriate Federal banking
agencies determine appropriate.
(b) Assessments.--
(1) Risk-based assessment system.--
(A) Risk-based assessment system required.--
The Board of Directors shall, by regulation,
establish a risk-based assessment system for
insured depository institutions.
(B) Private reinsurance authorized.--In
carrying out this paragraph, the Corporation
may--
(i) obtain private reinsurance
covering not more than 10 percent of
any loss the Corporation incurs with
respect to an insured depository
institution; and
(ii) base that institution's
assessment (in whole or in part) on the
cost of the reinsurance.
(C) Risk-based assessment system defined.--
For purposes of this paragraph, the term
``risk-based assessment system'' means a system
for calculating a depository institution's
assessment based on--
(i) the probability that the Deposit
Insurance Fund will incur a loss with
respect to the institution, taking into
consideration the risks attributable
to--
(I) different categories and
concentrations of assets;
(II) different categories and
concentrations of liabilities,
both insured and uninsured,
contingent and noncontingent;
and
(III) any other factors the
Corporation determines are
relevant to assessing such
probability;
(ii) the likely amount of any such
loss; and
(iii) the revenue needs of the
Deposit Insurance Fund.
(D) Separate assessment systems.--The Board
of Directors may establish separate risk-based
assessment systems for large and small members
of the Deposit Insurance Fund.
(E) Information concerning risk of loss and
economic conditions.--
(i) Sources of information.--For
purposes of determining risk of losses
at insured depository institutions and
economic conditions generally affecting
depository institutions, the
Corporation shall collect information,
as appropriate, from all sources the
Board of Directors considers
appropriate, including reports of
condition, inspection reports, and
other information from all Federal
banking agencies, any information
available from State bank supervisors,
State insurance and securities
regulators, the Securities and Exchange
Commission (including information
described in section 35), the Secretary
of the Treasury, the Commodity Futures
Trading Commission, the Farm Credit
Administration, the Federal Trade
Commission, any Federal reserve bank or
Federal home loan bank, and other
regulators of financial institutions,
and any information available from
private economic, credit, or business
analysts.
(ii) Consultation with federal
banking agencies.--
(I) In general.--Except as
provided in subclause (II), in
assessing the risk of loss to
the Deposit Insurance Fund with
respect to any insured
depository institution, the
Corporation shall consult with
the appropriate Federal banking
agency of such institution.
(II) Treatment on aggregate
basis.--In the case of insured
depository institutions that
are well capitalized (as
defined in section 38) and, in
the most recent examination,
were found to be well managed,
the consultation under
subclause (I) concerning the
assessment of the risk of loss
posed by such institutions may
be made on an aggregate basis.
(iii) Rule of construction.--No
provision of this paragraph shall be
construed as providing any new
authority for the Corporation to
require submission of information by
insured depository institutions to the
Corporation.
(F) Modifications to the risk-based
assessment system allowed only after notice and
comment.--In revising or modifying the risk-
based assessment system at any time after the
date of the enactment of the Federal Deposit
Insurance Reform Act of 2005, the Board of
Directors may implement such revisions or
modification in final form only after notice
and opportunity for comment.
(2) Setting assessments.--
(A) In general.--The Board of Directors shall
set assessments for insured depository
institutions in such amounts as the Board of
Directors may determine to be necessary or
appropriate, subject to subparagraph (D).
(B) Factors to be considered.--In setting
assessments under subparagraph (A), the Board
of Directors shall consider the following
factors:
(i) The estimated operating expenses
of the Deposit Insurance Fund.
(ii) The estimated case resolution
expenses and income of the Deposit
Insurance Fund.
(iii) The projected effects of the
payment of assessments on the capital
and earnings of insured depository
institutions.
(iv) The risk factors and other
factors taken into account pursuant to
paragraph (1) under the risk-based
assessment system, including the
requirement under such paragraph to
maintain a risk-based system.
(v) Any other factors the Board of
Directors may determine to be
appropriate.
(D) Notice of assessments.--The Corporation
shall notify each insured depository
institution of that institution's assessment.
(E) Bank enterprise act requirement.--The
Corporation shall design the risk-based
assessment system so that, insofar as the
system bases assessments, directly or
indirectly, on deposits, the portion of the
deposits of any insured depository institution
which are attributable to lifeline accounts
established in accordance with the Bank
Enterprise Act of 1991 shall be subject to
assessment at a rate determined in accordance
with such Act.
(3) Designated reserve ratio.--
(A) Establishment.--
(i) In general.--Before the beginning
of each calendar year, the Board of
Directors shall designate the reserve
ratio applicable with respect to the
Deposit Insurance Fund and publish the
reserve ratio so designated.
(ii) Rulemaking requirement.--Any
change to the designated reserve ratio
shall be made by the Board of Directors
by regulation after notice and
opportunity for comment.
(B) Minimum reserve ratio.--The reserve ratio
designated by the Board of Directors for any
year may not be less than 1.35 percent of
estimated insured deposits, or the comparable
percentage of the assessment base set forth in
paragraph (2)(C).
(C) Factors.--In designating a reserve ratio
for any year, the Board of Directors shall--
(i) take into account the risk of
losses to the Deposit Insurance Fund in
such year and future years, including
historic experience and potential and
estimated losses from insured
depository institutions;
(ii) take into account economic
conditions generally affecting insured
depository institutions so as to allow
the designated reserve ratio to
increase during more favorable economic
conditions and to decrease during less
favorable economic conditions,
notwithstanding the increased risks of
loss that may exist during such less
favorable conditions, as determined to
be appropriate by the Board of
Directors;
(iii) seek to prevent sharp swings in
the assessment rates for insured
depository institutions; and
(iv) take into account such other
factors as the Board of Directors may
determine to be appropriate, consistent
with the requirements of this
subparagraph.
(D) Publication of proposed change in
ratio.--In soliciting comment on any proposed
change in the designated reserve ratio in
accordance with subparagraph (A), the Board of
Directors shall include in the published
proposal a thorough analysis of the data and
projections on which the proposal is based.
(E) DIF restoration plans.--
(i) In general.--Whenever--
(I) the Corporation projects
that the reserve ratio of the
Deposit Insurance Fund will,
within 6 months of such
determination, fall below the
minimum amount specified in
subparagraph (B)(ii) for the
designated reserve ratio; or
(II) the reserve ratio of the
Deposit Insurance Fund actually
falls below the minimum amount
specified in subparagraph
(B)(ii) for the designated
reserve ratio without any
determination under subclause
(I) having been made,
the Corporation shall establish and
implement a Deposit Insurance Fund
restoration plan within 90 days that
meets the requirements of clause (ii)
and such other conditions as the
Corporation determines to be
appropriate.
(ii) Requirements of restoration
plan.--A Deposit Insurance Fund
restoration plan meets the requirements
of this clause if the plan provides
that the reserve ratio of the Fund will
meet or exceed the minimum amount
specified in subparagraph (B)(ii) for
the designated reserve ratio before the
end of the 8-year period beginning upon
the implementation of the plan (or such
longer period as the Corporation may
determine to be necessary due to
extraordinary circumstances).
(iii) Restriction on assessment
credits.--As part of any restoration
plan under this subparagraph, the
Corporation may elect to restrict the
application of assessment credits
provided under subsection (e)(3) for
any period that the plan is in effect.
(iv) Limitation on restriction.--
Notwithstanding clause (iii), while any
restoration plan under this
subparagraph is in effect, the
Corporation shall apply credits
provided to an insured depository
institution under subsection (e)(3)
against any assessment imposed on the
institution for any assessment period
in an amount equal to the lesser of--
(I) the amount of the
assessment; or
(II) the amount equal to 3
basis points of the
institution's assessment base.
(v) Transparency.--Not more than 30
days after the Corporation establishes
and implements a restoration plan under
clause (i), the Corporation shall
publish in the Federal Register a
detailed analysis of the factors
considered and the basis for the
actions taken with regard to the plan.
(4) Depository institution required to maintain
assessment-related records.--Each insured depository
institution shall maintain all records that the
Corporation may require for verifying the correctness
of any assessment on the insured depository institution
under this subsection until the later of--
(A) the end of the 3-year period beginning on
the due date of the assessment; or
(B) in the case of a dispute between the
insured depository institution and the
Corporation with respect to such assessment,
the date of a final determination of any such
dispute.
(5) Emergency special assessments.--In addition to
the other assessments imposed on insured depository
institutions under this subsection, the Corporation may
impose 1 or more special assessments on insured
depository institutions in an amount determined by the
Corporation if the amount of any such assessment is
necessary--
(A) to provide sufficient assessment income
to repay amounts borrowed from the Secretary of
the Treasury under section 14(a) in accordance
with the repayment schedule in effect under
section 14(c) during the period with respect to
which such assessment is imposed;
(B) to provide sufficient assessment income
to repay obligations issued to and other
amounts borrowed from insured depository
institutions under section 14(d); or
(C) for any other purpose that the
Corporation may deem necessary.
(6) Community enterprise credits.--The Corporation
shall allow a credit against any semiannual assessment
to any insured depository institution which satisfies
the requirements of the Community Enterprise Assessment
Credit Board under section 233(a)(1) of the Bank
Enterprise Act of 1991 in the amount determined by such
Board by regulation.
(c) Certified Statements; Payments.--
(1) Certified statements required.--
(A) In general.--Each insured depository
institution shall file with the Corporation a
certified statement containing such information
as the Corporation may require for determining
the institution's assessment.
(B) Form of certification.--The certified
statement required under subparagraph (A)
shall--
(i) be in such form and set forth
such supporting information as the
Board of Directors shall prescribe; and
(ii) be certified by the president of
the depository institution or any other
officer designated by its board of
directors or trustees that to the best
of his or her knowledge and belief, the
statement is true, correct and
complete, and in accordance with this
Act and regulations issued hereunder.
(2) Payments required.--
(A) In general.--Each insured depository
institution shall pay to the Corporation the
assessment imposed under subsection (b).
(B) Form of payment.--The payments required
under subparagraph (A) shall be made in such
manner and at such time or times as the Board
of Directors shall prescribe by regulation.
(3) Newly insured institutions.--To facilitate the
administration of this section, the Board of Directors
may waive the requirements of paragraphs (1) and (2)
for the initial assessment period in which a depository
institution becomes insured.
(4) Penalty for failure to make accurate certified
statement.--
(A) First tier.--Any insured depository
institution which--
(i) maintains procedures reasonably
adapted to avoid any inadvertent error
and, unintentionally and as a result of
such an error, fails to submit the
certified statement under paragraph (1)
within the period of time required
under paragraph (1) or submits a false
or misleading certified statement; or
(ii) submits the statement at a time
which is minimally after the time
required in such paragraph,
shall be subject to a penalty of not more than
$2,000 for each day during which such failure
continues or such false and misleading
information is not corrected. The institution
shall have the burden of proving that an error
was inadvertent or that a statement was
inadvertently submitted late.
(B) Second tier.--Any insured depository
institution which fails to submit the certified
statement under paragraph (1) within the period
of time required under paragraph (1) or submits
a false or misleading certified statement in a
manner not described in subparagraph (A) shall
be subject to a penalty of not more than
$20,000 for each day during which such failure
continues or such false and misleading
information is not corrected.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), if any insured
depository institution knowingly or with
reckless disregard for the accuracy of any
certified statement described in paragraph (1)
submits a false or misleading certified
statement under paragraph (1), the Corporation
may assess a penalty of not more than
$1,000,000 or not more than 1 percent of the
total assets of the institution, whichever is
less, per day for each day during which the
failure continues or the false or misleading
information in such statement is not corrected.
(D) Assessment procedure.--Any penalty
imposed under this paragraph shall be assessed
and collected by the Corporation in the manner
provided in subparagraphs (E), (F), (G), and
(I) of section 8(i)(2) (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 section.
(E) Hearing.--Any insured depository
institution against which any penalty is
assessed under this paragraph shall be afforded
an agency hearing if the institution submits a
request for such hearing within 20 days after
the issuance of the notice of the assessment.
Section 8(h) shall apply to any proceeding
under this subparagraph.
(d) Corporation Exempt From Apportionment.--Notwithstanding
any other provision of law, amounts received pursuant to any
assessment under this section and any other amounts received by
the Corporation shall not be subject to apportionment for the
purposes of chapter 15 of title 31, United States Code, or
under any other authority.
(e) Refunds, Dividends, and Credits.--
(1) Refunds of overpayments.--In the case of any
payment of an assessment by an insured depository
institution in excess of the amount due to the
Corporation, the Corporation may--
(A) refund the amount of the excess payment
to the insured depository institution; or
(B) credit such excess amount toward the
payment of subsequent assessments until such
credit is exhausted.
(2) Dividends from excess amounts in deposit
insurance fund.--
(A) Reserve ratio in excess of 1.5 percent of
estimated insured deposits.--If, at the end of
a calendar year, the reserve ratio of the
Deposit Insurance Fund exceeds 1.5 percent of
estimated insured deposits, the Corporation
shall declare the amount in the Fund in excess
of the amount required to maintain the reserve
ratio at 1.5 percent of estimated insured
deposits, as dividends to be paid to insured
depository institutions.
(B) Limitation.--The Board of Directors may,
in its sole discretion, suspend or limit the
declaration of payment of dividends under
subparagraph (A).
(C) Notice and opportunity for comment.--The
Corporation shall prescribe, by regulation,
after notice and opportunity for comment, the
method for the declaration, calculation,
distribution, and payment of dividends under
this paragraph
(3) One-time credit based on total assessment base at
year-end 1996.--
(A) In general.--Before the end of the 270-
day period beginning on the date of the
enactment of the Federal Deposit Insurance
Reform Act of 2005, the Board of Directors
shall, by regulation after notice and
opportunity for comment, provide for a credit
to each eligible insured depository institution
(or a successor insured depository
institution), based on the assessment base of
the institution on December 31, 1996, as
compared to the combined aggregate assessment
base of all eligible insured depository
institutions, taking into account such factors
as the Board of Directors may determine to be
appropriate.
(B) Credit limit.--The aggregate amount of
credits available under subparagraph (A) to all
eligible insured depository institutions shall
equal the amount that the Corporation could
collect if the Corporation imposed an
assessment of 10.5 basis points on the combined
assessment base of the Bank Insurance Fund and
the Savings Association Insurance Fund as of
December 31, 2001.
(C) Eligible insured depository institution
defined.--For purposes of this paragraph, the
term ``eligible insured depository
institution'' means any insured depository
institution that--
(i) was in existence on December 31,
1996, and paid a deposit insurance
assessment prior to that date; or
(ii) is a successor to any insured
depository institution described in
clause (i).
(D) Application of credits.--
(i) In general.--Subject to clause
(ii), the amount of a credit to any
eligible insured depository institution
under this paragraph shall be applied
by the Corporation, subject to
subsection (b)(3)(E), to the
assessments imposed on such institution
under subsection (b) that become due
for assessment periods beginning after
the effective date of regulations
prescribed under subparagraph (A).
(ii) Temporary restriction on use of
credits.--The amount of a credit to any
eligible insured depository institution
under this paragraph may not be applied
to more than 90 percent of the
assessments imposed on such institution
under subsection (b) that become due
for assessment periods beginning in
fiscal years 2008, 2009, and 2010.
(iii) Regulations.--The regulations
prescribed under subparagraph (A) shall
establish the qualifications and
procedures governing the application of
assessment credits pursuant to clause
(i).
(E) Limitation on amount of credit for
certain depository institutions.--In the case
of an insured depository institution that
exhibits financial, operational, or compliance
weaknesses ranging from moderately severe to
unsatisfactory, or is not adequately
capitalized (as defined in section 38) at the
beginning of an assessment period, the amount
of any credit allowed under this paragraph
against the assessment on that depository
institution for such period may not exceed the
amount calculated by applying to that
depository institution the average assessment
rate on all insured depository institutions for
such assessment period.
(F) Successor defined.--The Corporation shall
define the term ``successor'' for purposes of
this paragraph, by regulation, and may consider
any factors as the Board may deem appropriate.
(4) Administrative review.--
(A) In general.--The regulations prescribed
under paragraphs (2) and (3) shall include
provisions allowing an insured depository
institution a reasonable opportunity to
challenge administratively the amount of the
credit or dividend determined under paragraph
(2) or (3) for such institution.
(B) Administrative review.--Any review under
subparagraph (A) of any determination of the
Corporation under paragraph (2) or (3) shall be
final and not subject to judicial review.
(f) Any insured depository institution which fails to make
any report of condition under subsection (a) of this section or
to file any certified statement required to be filed by it in
connection with determining the amount of any assessment
payable by the depository institution to the Corporation may be
compelled to make such report or file such statement by
mandatory injunction or other appropriate remedy in a suit
brought for such purpose by the Corporation against the
depository institution and any officer or officers thereof in
any court of the United States of competent jurisdiction in the
District or Territory in which such depository institution is
located.
(g) Assessment Actions.--
(1) In general.--The Corporation, in any court of
competent jurisdiction, shall be entitled to recover
from any insured depository institution the amount of
any unpaid assessment lawfully payable by such insured
depository institution.
(2) Statute of limitations.--The following provisions
shall apply to actions relating to assessments,
notwithstanding any other provision in Federal law, or
the law of any State:
(A) Any action by an insured depository
institution to recover from the Corporation the
overpaid amount of any assessment shall be
brought within 3 years after the date the
assessment payment was due, subject to the
exception in subparagraph (E).
(B) Any action by the Corporation to recover
from an insured depository institution the
underpaid amount of any assessment shall be
brought within 3 years after the date the
assessment payment was due, subject to the
exceptions in subparagraphs (C) and (E).
(C) If an insured depository institution has
made a false or fraudulent statement with
intent to evade any or all of its assessment,
the Corporation shall have until 3 years after
the date of discovery of the false or
fraudulent statement in which to bring an
action to recover the underpaid amount.
(D) Except as provided in subparagraph (C),
assessment deposit information contained in
records no longer required to be maintained
pursuant to subsection (b)(4) shall be
considered conclusive and not subject to
change.
(E) Any action for the underpaid or overpaid
amount of any assessment that became due before
the amendment to this subsection under the
Federal Deposit Insurance Reform Act of 2005
took effect shall be subject to the statute of
limitations for assessments in effect at the
time the assessment became due.
(h) Should any national member bank or any insured national
nonmember bank fail to make any report of condition under
subsection (a) of this section or to file any certified
statement required to be filed by such bank under any provision
of this section, or fail to pay any assessment required to be
paid by such bank under any provision of this Act, and should
the bank not correct such failure within thirty days after
written notice has been given by the Corporation to an officer
of the bank, citing this subsection, and stating that the bank
has failed to make any report of condition under subsection (a)
of this section or to file or pay as required by law, all the
rights, privileges, and franchises of the bank granted to it
under the National Bank Act, as amended, the Federal Reserve
Act, as amended, or this Act, shall be thereby forfeited.
Whether or not the penalty provided in this subsection has been
incurred shall be determined and adjudged in the manner
provided in the sixth paragraph of section 2 of the Federal
Reserve Act, as amended. The remedies provided in this
subsection and in the two preceding subsections shall not be
construed as limiting any other remedies against any insured
depository institution, but shall be in addition thereto.
(i) Insurance of Trust Funds.--
(1) In general.--Trust funds held on deposit by an
insured depository institution in a fiduciary capacity
as trustee pursuant to any irrevocable trust
established pursuant to any statute or written trust
agreement shall be insured in an amount not to exceed
the standard maximum deposit insurance amount (as
determined under section 11(a)(1)) for each trust
estate.
(2) Interbank deposits.--Trust funds described in
paragraph (1) which are deposited by the fiduciary
depository institution in another insured depository
institution shall be similarly insured to the fiduciary
depository institution according to the trust estates
represented.
(3) Bank deposit financial assistance program.--
Notwithstanding paragraph (1), funds deposited by an
insured depository institution pursuant to the Bank
Deposit Financial Assistance Program of the Department
of Energy shall be separately insured in an amount not
to exceed the standard maximum deposit insurance amount
(as determined under section 11(a)(1)) for each insured
depository institution depositing such funds.
(4) Regulations.--The Board of Directors may
prescribe such regulations as may be necessary to
clarify the insurance coverage under this subsection
and to prescribe the manner of reporting and depositing
such trust funds.
(j)(1) No person, acting directly or indirectly or through or
in concert with one or more other persons, shall acquire
control of any insured depository institution through a
purchase, assignment, transfer, pledge, or other disposition of
voting stock of such insured depository institution unless the
appropriate Federal banking agency has been given sixty days'
prior written notice of such proposed acquisition and within
that time period the agency has not issued a notice
disapproving the proposed acquisition or, in the discretion of
the agency, extending for an additional 30 days the period
during which such a disapproval may issue.The period for
disapproval under the preceding sentence may be extended not to
exceed 2 additional times for not more than 45 days each time
if--
(A) the agency determines that any acquiring party
has not furnished all the information required under
paragraph (6);
(B) in the agency's judgment, any material
information submitted is substantially inaccurate;
(C) the agency has been unable to complete the
investigation of an acquiring party under paragraph
(2)(B) because of any delay caused by, or the
inadequate cooperation of, such acquiring party; or
(D) the agency determines that additional time is
needed--
(i) to investigate and determine that no
acquiring party has a record of failing to
comply with the requirements of subchapter II
of chapter 53 of title 31, United States Code;
or
(ii) to analyze the safety and soundness of
any plans or proposals described in paragraph
(6)(E) or the future prospects of the
institution.
An acquisition may be made prior to expiration of the
disapproval period if the agency issues written notice of its
intent not to disapprove the action.
(2)(A) Notice to State Agency.--Upon receiving any notice
under this subsection, the appropriate Federal banking agency
shall forward a copy thereof to the appropriate State
depository institution supervisory agency if the depository
institution the voting shares of which are sought to be
acquired is a State depository institution, and shall allow
thirty days within which the views and recommendations of such
State depository institution supervisory agency may be
submitted. The appropriate Federal banking agency shall give
due consideration to the views and recommendations of such
State agency in determining whether to disapprove any proposed
acquisition. Notwithstanding the provisions of this paragraph,
if the appropriate Federal banking agency determines that it
must act immediately upon any notice of a proposed acquisition
in order to prevent the probable default of the depository
institution involved in the proposed acquisition, such Federal
banking agency may dispense with the requirements of this
paragraph or, if a copy of the notice is forwarded to the State
depository institution supervisory agency, such Federal banking
agency may request that the views and recommendations of such
State depository institution supervisory agency be submitted
immediately in any form or by any means acceptable to such
Federal banking agency.
(B) Investigation of Principals Required.--Upon receiving any
notice under this subsection, the appropriate Federal banking
agency shall--
(i) conduct an investigation of the competence,
experience, integrity, and financial ability of each
person named in a notice of a proposed acquisition as a
person by whom or for whom such acquisition is to be
made; and
(ii) make an independent determination of the
accuracy and completeness of any information described
in paragraph (6) with respect to such person.
(C) Report.--The appropriate Federal banking agency shall
prepare a written report of any investigation under
subparagraph (B) which shall contain, at a minimum, a summary
of the results of such investigation. The agency shall retain
such written report as a record of the agency.
(D) Public Comment.--Upon receiving notice of a proposed
acquisition, the appropriate Federal banking agency shall,
unless such agency determines that an emergency exists, within
a reasonable period of time--
(i) publish the name of the insured depository
institution proposed to be acquired and the name of
each person identified in such notice as a person by
whom or for whom such acquisition is to be made; and
(ii) solicit public comment on such proposed
acquisition, particularly from persons in the
geographic area where the bank proposed to be acquired
is located, before final consideration of such notice
by the agency,
unless the agency determines in writing that such disclosure or
solicitation would seriously threaten the safety or soundness
of such bank.
(3) Within three days after its decision to disapprove any
proposed acquisition, the appropriate Federal banking agency
shall notify the acquiring party in writing of the disapproval.
Such notice shall provide a statement of the basis for the
disapproval.
(4) Within ten days of receipt of such notice of disapproval,
the acquiring party may request an agency hearing on the
proposed acquisition. In such hearing all issues shall be
determined on the record pursuant to section 554 of title 5,
United States Code. The length of the hearing shall be
determined by the appropriate Federal banking agency. At the
conclusion thereof, the appropriate Federal banking agency
shall by order approve or disapprove the proposed acquisition
on the basis of the record made at such hearing.
(5) Any person whose proposed acquisition is disapproved
after agency hearings under this subsection may obtain review
by the United States court of appeals for the circuit in which
the home office of the bank to be acquired is located, or the
United States Court of Appeals for the District of Columbia
Circuit, by filing a notice of appeal in such court within ten
days from the date of such order, and simultaneously sending a
copy of such notice by registered or certified mail to the
appropriate Federal banking agency. The appropriate Federal
banking agency shall promptly certify and file in such court
the record upon which the disapproval was based. The findings
of the appropriate Federal banking agency shall be set aside if
found to be arbitrary or capricious or if found to violate
procedures established by this subsection.
(6) Except as otherwise provided by regulation of the
appropriate Federal banking agency, a notice filed pursuant to
this subsection shall contain the following information:
(A) The identity, personal history, business
background and experience of each person by whom or on
whose behalf the acquisition is to be made, including
his material business activities and affiliations
during the past five years, and a description of any
material pending legal or administrative proceedings in
which he is a party and any criminal indictment or
conviction of such person by a State or Federal court.
(B) A statement of the assets and liabilities of each
person by whom or on whose behalf the acquisition is to
be made, as of the end of the fiscal year for each of
five fiscal years immediately preceding the date of the
notice, together with related statements of income and
source and application of funds for each of the fiscal
years then concluded, all prepared in accordance with
generally accepted accounting principles consistently
applied, and an interim statement of the assets and
liabilities for each such person, together with related
statements of income and source and application of
funds, as of a date not more than ninety days prior to
the date of the filing of the notice.
(C) The terms and conditions of the proposed
acquisition and the manner in which the acquisition is
to be made.
(D) The identity, source and amount of the funds or
other consideration used or to be used in making the
acquisition, and if any part of these funds or other
consideration has been or is to be borrowed or
otherwise obtained for the purpose of making the
acquisition, a description of the transaction, the
names of the parties, and any arrangements, agreements,
or understandings with such persons.
(E) Any plans or proposals which any acquiring party
making the acquisition may have to liquidate the bank,
to sell its assets or merge it with any company or to
make any other major change in its business or
corporate structure or management.
(F) The identification of any person employed,
retained, or to be compensated by the acquiring party,
or by any person on his behalf, to make solicitations
or recommendations to stockholders for the purpose of
assisting in the acquisition, and a brief description
of the terms of such employment, retainer, or
arrangement for compensation.
(G) Copies of all invitations or tenders or
advertisements making a tender offer to stockholders
for purchase of their stock to be used in connection
with the proposed acquisition.
(H) Any additional relevant information in such form
as the appropriate Federal banking agency may require
by regulation or by specific request in connection with
any particular notice.
(7) The appropriate Federal banking agency may disapprove any
proposed acquisition if--
(A) the proposed acquisition of control would result
in a monopoly or 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;
(B) the effect of the proposed acquisition of control
in any section of the country may be substantially to
lessen competition or to tend to create a monopoly or
the proposed acquisition of control would in any other
manner be in restraint of trade, and the
anticompetitive effects of the proposed acquisition of
control are not 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;
(C) either the financial condition of any acquiring
person or the future prospects of the institution is
such as might jeopardize the financial stability of the
bank or prejudice the interests of the depositors of
the bank;
(D) the competence, experience, or integrity of any
acquiring person or of any of the proposed management
personnel indicates that it would not be in the
interest of the depositors of the bank, or in the
interest of the public to permit such person to control
the bank;
(E) any acquiring person neglects, fails, or refuses
to furnish the appropriate Federal banking agency all
the information required by the appropriate Federal
banking agency; or
(F) the appropriate Federal banking agency determines
that the proposed transaction would result in an
adverse effect on the Deposit Insurance Fund.
(8) For the purposes of this subsection, the term--
(A) ``person'' means an individual or a corporation,
partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated
organization, or any other form of entity not
specifically listed herein; and
(B) ``control'' means the power, directly or
indirectly, to direct the management or policies of an
insured depository institution or to vote 25 per centum
or more of any class of voting securities of an insured
depository institution.
(9) Reporting of stock loans.--
(A) Report required.--Any foreign bank, or
any affiliate thereof, that has credit
outstanding to any person or group of persons
which is secured, directly or indirectly, by
shares of an insured depository institution
shall file a consolidated report with the
appropriate Federal banking agency for such
insured depository institution if the
extensions of credit by the foreign bank or any
affiliate thereof, in the aggregate, are
secured, directly or indirectly, by 25 percent
or more of any class of shares of the same
insured depository institution.
(B) Definitions.--For purposes of this
paragraph, the following definitions shall
apply:
(i) Foreign bank.--The terms
``foreign bank'' and ``affiliate'' have
the same meanings as in section 1 of
the International Banking Act of 1978.
(ii) Credit outstanding.--The term
``credit outstanding'' includes--
(I) any loan or extension of
credit,
(II) the issuance of a
guarantee, acceptance, or
letter of credit, including an
endorsement or standby letter
of credit, and
(III) any other type of
transaction that extends credit
or financing to the person or
group of persons.
(iii) Group of persons.--The term
``group of persons'' includes any
number of persons that the foreign bank
or any affiliate thereof reasonably
believes--
(I) are acting together, in
concert, or with one another to
acquire or control shares of
the same insured depository
institution, including an
acquisition of shares of the
same insured depository
institution at approximately
the same time under
substantially the same terms;
or
(II) have made, or propose to
make, a joint filing under
section 13 of the Securities
Exchange Act of 1934 regarding
ownership of the shares of the
same insured depository
institution.
(C) Inclusion of shares held by the financial
institution.--Any shares of the insured
depository institution held by the foreign bank
or any affiliate thereof as principal shall be
included in the calculation of the number of
shares in which the foreign bank or any
affiliate thereof has a security interest for
purposes of subparagraph (A).
(D) Report requirements.--
(i) Timing of report.--The report
required under this paragraph shall be
a consolidated report on behalf of the
foreign bank and all affiliates
thereof, and shall be filed in writing
within 30 days of the date on which the
foreign bank or affiliate thereof first
believes that the security for any
outstanding credit consists of 25
percent or more of any class of shares
of an insured depository institution.
(ii) Content of report.--The report
under this paragraph shall indicate the
number and percentage of shares
securing each applicable extension of
credit, the identity of the borrower,
and the number of shares held as
principal by the foreign bank and any
affiliate thereof.
(iii) Copy to other agencies.--A copy
of any report under this paragraph
shall be filed with the appropriate
Federal banking agency for the foreign
bank or any affiliate thereof (if other
than the agency receiving the report
under this paragraph).
(iv) Other information.--Each
appropriate Federal banking agency may
require any additional information
necessary to carry out the agency's
supervisory responsibilities.
(E) Exceptions.--
(i) Exception where information
provided by borrower.--Notwithstanding
subparagraph (A), a foreign bank or any
affiliate thereof shall not be required
to report a transaction under this
paragraph if the person or group of
persons referred to in such
subparagraph has disclosed the amount
borrowed from such foreign bank or any
affiliate thereof and the security
interest of the foreign bank or any
affiliate thereof to the appropriate
Federal banking agency for the insured
depository institution in connection
with a notice filed under this
subsection, an application filed under
the Bank Holding Company Act of 1956,
section 10 of the Home Owners' Loan
Act, or any other application filed
with the appropriate Federal banking
agency for the insured depository
institution as a substitute for a
notice under this subsection, such as
an application for deposit insurance,
membership in the Federal Reserve
System, or a national bank charter.
(ii) Exception for shares owned for
more than 1 year.--Notwithstanding
subparagraph (A), a foreign bank and
any affiliate thereof shall not be
required to report a transaction
involving--
(I) a person or group of
persons that has been the owner
or owners of record of the
stock for a period of 1 year or
more; or
(II) stock issued by a newly
chartered bank before the
bank's opening.
(10) The reports required by paragraph (9) of this subsection
shall contain such of the information referred to in paragraph
(6) of this subsection, and such other relevant information, as
the appropriate Federal banking agency may require by
regulation or by specific request in connection with any
particular report.
(11) The Federal banking agency receiving a notice or report
filed pursuant to paragraph (1) or (9) shall immediately
furnish to the other Federal banking agencies a copy of such
notice or report.
(12) Whenever such a change in control occurs, each insured
depository institution shall report promptly to the appropriate
Federal banking agency any changes or replacement of its chief
executive officer or of any director occurring in the next
twelve-month period, including in its report a statement of the
past and current business and professional affiliations of the
new chief executive officer or directors.
(13) The appropriate Federal banking agencies are authorized
to issue rules and regulations to carry out this subsection.
(14) Within two years after the effective date of the Change
in Bank Control Act of 1978, and each year thereafter in each
appropriate Federal banking agency's annual report to the
Congress, the appropriate Federal banking agency shall report
to the Congress the results of the administration of this
subsection, and make any recommendations as to changes in the
law which in the opinion of the appropriate Federal banking
agency would be desirable.
(15) Investigative and Enforcement Authority.--
(A) Investigations.--The appropriate Federal banking
agency may exercise any authority vested in such agency
under section 8(n) in the course of conducting any
investigation under paragraph (2)(B) or any other
investigation which the agency, in its discretion,
determines is necessary to determine whether any person
has filed inaccurate, incomplete, or misleading
information under this subsection or otherwise is
violating, has violated, or is about to violate any
provision of this subsection or any regulation
prescribed under this subsection.
(B) Enforcement.--Whenever it appears to the
appropriate Federal banking agency that any person is
violating, has violated, or is about to violate any
provision of this subsection or any regulation
prescribed under this subsection, the agency may, in
its discretion, apply to the appropriate district court
of the United States or the United States court of any
territory for--
(i) a temporary or permanent injunction or
restraining order enjoining such person from
violating this subsection or any regulation
prescribed under this subsection; or
(ii) such other equitable relief as may be
necessary to prevent any such violation
(including divestiture).
(C) Jurisdiction.--
(i) The district courts of the United States
and the United States courts in any territory
shall have the same jurisdiction and power in
connection with any exercise of any authority
by the appropriate Federal banking agency under
subparagraph (A) as such courts have under
section 8(n).
(ii) The district courts of the United States
and the United States courts of any territory
shall have jurisdiction and power to issue any
injunction or restraining order or grant any
equitable relief described in subparagraph (B).
When appropriate, any injunction, order, or
other equitable relief granted under this
paragraph shall be granted without requiring
the posting of any bond. The resignation,
termination of employment or participation,
divestiture of control, or separation of or by
an institution-affiliated party (including a
separation caused by the closing of a
depository institution) shall not affect the
jurisdiction and authority of the appropriate
Federal banking agency to issue any notice and
proceed under this subsection 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 depository institution (whether such date
occurs before, on, or after the date of the
enactment of this sentence).
(16) Civil money penalty.--
(A) First tier.--Any person who violates any
provision of this subsection, or any regulation
or order issued by the appropriate Federal
banking agency under this subsection, shall
forfeit and pay a civil penalty of not more
than $5,000 for each day during which such
violation continues.
(B) Second tier.--Notwithstanding
subparagraph (A), any person who--
(i)(I) commits any violation
described in any clause of subparagraph
(A);
(II) recklessly engages in an unsafe
or unsound practice in conducting the
affairs of a depository institution; or
(III) breaches any fiduciary duty;
(ii) which violation, practice, or
breach--
(I) is part of a pattern of
misconduct;
(II) causes or is likely to
cause more than a minimal loss
to such institution; or
(III) results in pecuniary
gain or other benefit to such
person,
shall forfeit and pay a civil penalty of not
more than $25,000 for each day during which
such violation, practice, or breach continues.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), any person who--
(i) knowingly--
(I) commits any violation
described in any clause of
subparagraph (A);
(II) engages in any unsafe or
unsound practice in conducting
the affairs of a depository
institution; or
(III) breaches any fiduciary
duty; and
(ii) knowingly or recklessly causes a
substantial loss to such institution or
a substantial pecuniary gain or other
benefit to such person 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 subparagraph (D) for
each day during which such violation, practice,
or breach continues.
(D) Maximum amounts of penalties for any
violation described in subparagraph (c).--The
maximum daily amount of any civil penalty which
may be assessed pursuant to subparagraph (C)
for any violation, practice, or breach
described in such subparagraph is--
(i) in the case of any person other
than a depository institution, an
amount to not exceed $1,000,000; and
(ii) in the case of a depository
institution, an amount not to exceed
the lesser of--
(I) $1,000,000; or
(II) 1 percent of the total
assets of such institution.
(E) Assessment; etc.--Any penalty imposed
under subparagraph (A), (B), or (C) shall be
assessed and collected by the appropriate
Federal banking agency in the manner provided
in subparagraphs (E), (F), (G), and (I) of
section 8(i)(2) for penalties imposed (under
such section) and any such assessment shall be
subject to the provisions of such section.
(F) Hearing.--The depository institution or
other person against whom any penalty is
assessed under this paragraph shall be afforded
an agency hearing if such institution or other
person submits a request for such hearing
within 20 days after the issuance of the notice
of assessment. Section 8(h) shall apply to any
proceeding under this paragraph.
(G) Disbursement.--All penalties collected
under authority of this paragraph shall be
deposited into the Treasury.
(17) Exceptions.--This subsection shall not apply
with respect to a transaction which is subject to--
(A) section 3 of the Bank Holding Company Act
of 1956;
(B) section 18(c) of this Act; or
(C) section 10 of the Home Owners' Loan Act.
(18) Applicability of change in control provisions to
other institutions.--For purposes of this subsection,
the term ``insured depository institution'' includes--
(A) any depository institution holding
company; and
(B) any other company which controls an
insured depository institution and is not a
depository institution holding company.
(k) The appropriate Federal banking agencies are authorized
to issue rules and regulations, including definitions of terms,
to require the reporting and public disclosure of information
by a bank or any executive officer or prinicipal shareholder
thereof concerning extensions of credit by the bank to any of
its executive officers or principal shareholders, or the
related interests of such persons.
(l) Designation of Fund Membership for Newly Insured
Depository Institutions; Definitions.--For purposes of this
section:
(1) Bank insurance fund.--Any institution which--
(A) becomes an insured depository
institution; and
(B) does not become a Savings Association
Insurance Fund member pursuant to paragraph
(2),
shall be a Bank Insurance Fund member.
(2) Savings association insurance fund.--Any savings
association, other than any Federal savings bank
chartered pursuant to section 5(o) of the Home Owners'
Loan Act, which becomes an insured depository
institution shall be a Savings Association Insurance
Fund member.
(3) Transition provision.--
(A) Bank insurance fund.--Any depository
institution the deposits of which were insured
by the Federal Deposit Insurance Corporation on
the day before the date of the enactment of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, including--
(i) any Federal savings bank
chartered pursuant to section 5(o) of
the Home Owners' Loan Act; and
(ii) any cooperative bank,
shall be a Bank Insurance Fund member as of
such date of enactment.
(B) Savings association insurance fund.--Any
savings association which is an insured
depository institution by operation of section
4(a)(2) shall be a Savings Association
Insurance Fund member as of the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
(4) Bank insurance fund member.--The term ``Bank
Insurance Fund member'' means any depository
institution the deposits of which are insured by the
Bank Insurance Fund.
(5) Savings association insurance fund member.--The
term ``Savings Association Insurance Fund member''
means any depository institution the deposits of which
are insured by the Savings Association Insurance Fund.
(6) Bank insurance fund reserve ratio.--The term
``Bank Insurance Fund reserve ratio'' means the ratio
of the net worth of the Bank Insurance Fund to the
value of the aggregate estimated insured deposits held
in all Bank Insurance Fund members.
(7) Savings association insurance fund reserve
ratio.--The term ``Savings Association Insurance Fund
reserve ratio'' means the ratio of the net worth of the
Savings Association Insurance Fund to the value of the
aggregate estimated insured deposits held in all
Savings Association Insurance Fund members.
(m) Secondary Reserve Offsets Against Premiums.--
(1) Offsets in calendar years beginning before
1993.--Subject to the maximum amount limitation
contained in paragraph (2) and notwithstanding any
other provision of law, any insured savings association
may offset such association's pro rata share of the
statutorily prescribed amount against any premium
assessed against such association under subsection (b)
of this section for any calendar year beginning before
1993.
(2) Annual maximum amount limitation.--The amount of
any offset allowed for any savings association under
paragraph (1) for any calendar year beginning before
1993 shall not exceed an amount which is equal to 20
percent of such association's pro rata share of the
statutorily prescribed amount (as computed for such
calendar year).
(3) Offsets in calendar years beginning after 1992.--
Notwithstanding any other provision of law, a savings
association may offset such association's pro rata
share of the statutorily prescribed amount against any
premium assessed against such association under
subsection (b) for any calendar year beginning after
1992.
(4) Transferability.--No right, title, or interest of
any insured depository institution in or with respect
to its pro rata share of the secondary reserve shall be
assignable or transferable whether by operation of law
or otherwise, except to the extent that the Corporation
may provide for transfer of such pro rata share in
cases of merger or consolidation, transfer of bulk
assets or assumption of liabilities, and similar
transactions, as defined by the Corporation for
purposes of this paragraph.
(5) Pro rata distribution on termination of insured
status.--If--
(A) the status of any savings association as
an insured depository institution is terminated
pursuant to any provision of section 8 or the
insurance of accounts of any such institution
is otherwise terminated;
(B) a receiver or other legal custodian is
appointed for the purpose of liquidation or
winding up the affairs of any savings
association; or
(C) the Corporation makes a determination
that for the purposes of this subsection any
savings association has otherwise gone into
liquidation,
the Corporation shall pay in cash to such institution
its pro rata share of the secondary reserve, in
accordance with such terms and conditions as the
Corporation may prescribe, or, at the option of the
Corporation, the Corporation may apply the whole or any
part of the amount which would otherwise be paid in
cash toward the payment of any indebtedness or
obligation, whether matured or not, of such institution
to the Corporation, existing or arising before such
payment in cash. Such payment or such application need
not be made to the extent that the provisions of the
exception in paragraph (4) are applicable.
(6) Statutorily prescribed amount defined.--For
purposes of this subsection, the term ``statutorily
prescribed amount'' means, with respect to any calendar
year which ends after the date of the enactment of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989--
(A) $823,705,000, minus
(B) the sum of--
(i) the aggregate amount of offsets
made before such date of enactment by
all insured institutions under section
404(e)(2) of the National Housing Act
(as in effect before such date of
enactment); and
(ii) the aggregate amount of offsets
made by all savings associations under
this subsection before the beginning of
such calendar year.
(7) Savings association's pro rata amount.--For
purposes of this subsection, any savings association's
pro rata share of the statutorily prescribed amount is
the percentage which is equal to such association's
share of the secondary reserve as determined under
section 404(e) of the National Housing Act on the day
before the date on which the Federal Savings and Loan
Insurance Corporation ceased to recognize the secondary
reserve (as such Act was in effect on the day before
such date).
(8) Year of enactment rule.--With respect to the
calendar year in which the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 is
enacted, the Corporation shall make such adjustments as
may be necessary--
(A) in the computation of the statutorily
prescribed amount which shall be applicable for
the remainder of such calendar year after
taking into account the aggregate amount of
offsets by all insured institutions under
section 404(e)(2) of the National Housing Act
(as in effect before the date of the enactment
of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989) after the
beginning of such calendar year and before such
date of enactment; and
(B) in the computation of the maximum amount
of any savings association's offset for such
calendar year under paragraph (1) after taking
into account--
(i) the amount of any offset by such
savings association under section
404(e)(2) of the National Housing Act
(as in effect before such date of
enactment) after the beginning of such
calendar year and before such date of
enactment; and
(ii) the change of such association's
premium year from the 1-year period
applicable under section 404(b) of the
National Housing Act (as in effect
before such date of enactment) to a
calendar year basis.
(n) Collections on Behalf of the Comptroller of the
Currency.--When requested by the Comptroller of the Currency,
the Corporation shall collect on behalf of the Comptroller
assessments on Federal savings associations levied by the
Comptroller under section 9 of the Home Owners' Loan Act. The
Corporation shall be reimbursed for its actual costs for the
collection of such assessments. Any such assessments by the
Comptroller shall be in addition to any amounts assessed by the
Corporation.
* * * * * * *
Sec. 11. (a) Deposit Insurance.--
(1) Insured amounts payable.--
(A) In general.--The Corporation shall insure
the deposits of all insured depository
institutions as provided in this Act.
(B) Net amount of insured deposit.--The net
amount to any depositor at an insured
depository institution shall not exceed the
standard maximum deposit insurance amount as
determined in accordance with subparagraphs
(C), (D), (E) and (F) and paragraph (3).
(C) Aggregation of deposits.--For the purpose
of determining the net amount due to any
depositor under subparagraph (B), the
Corporation shall aggregate the amounts of all
deposits in the insured depository institution
which are maintained by a depositor in the same
capacity and the same right for the benefit of
the depositor either in the name of the
depositor or in the name of any other person,
other than any amount in a trust fund described
in paragraph (1) or (2) of section 7(i) or any
funds described in section 7(i)(3).
(D) Coverage for certain employee benefit
plan deposits.--
(i) Pass-through insurance.--The
Corporation shall provide pass-through
deposit insurance for the deposits of
any employee benefit plan.
(ii) Prohibition on acceptance of
benefit plan deposits.--An insured
depository institution that is not well
capitalized or adequately capitalized
may not accept employee benefit plan
deposits.
(iii) Definitions.--For purposes of
this subparagraph, the following
definitions shall apply:
(I) Capital standards.--The
terms ``well capitalized'' and
``adequately capitalized'' have
the same meanings as in section
38.
(II) Employee benefit plan.--
The term ``employee benefit
plan'' has the same meaning as
in paragraph (5)(B)(ii), and
includes any eligible deferred
compensation plan described in
section 457 of the Internal
Revenue Code of 1986.
(III) Pass-through deposit
insurance.--The term ``pass-
through deposit insurance''
means, with respect to an
employee benefit plan, deposit
insurance coverage based on the
interest of each participant,
in accordance with regulations
issued by the Corporation.
(E) Standard maximum deposit insurance amount
defined.--For purposes of this Act, the term
``standard maximum deposit insurance amount''
means $250,000, adjusted as provided under
subparagraph (F) after March 31, 2010.
Notwithstanding any other provision of law, the
increase in the standard maximum deposit
insurance amount to $250,000 shall apply to
depositors in any institution for which the
Corporation was appointed as receiver or
conservator on or after January 1, 2008, and
before October 3, 2008. The Corporation shall
take such actions as are necessary to carry out
the requirements of this section with respect
to such depositors, without regard to any time
limitations under this Act. In implementing
this and the preceding 2 sentences, any payment
on a deposit claim made by the Corporation as
receiver or conservator to a depositor above
the standard maximum deposit insurance amount
in effect at the time of the appointment of the
Corporation as receiver or conservator shall be
deemed to be part of the net amount due to the
depositor under subparagraph (B).
(F) Inflation adjustment.--
(i) In general.--By April 1 of 2010,
and the 1st day of each subsequent 5-
year period, the Board of Directors and
the National Credit Union
Administration Board shall jointly
consider the factors set forth under
clause (v), and, upon determining that
an inflation adjustment is appropriate,
shall jointly prescribe the amount by
which the standard maximum deposit
insurance amount and the standard
maximum share insurance amount (as
defined in section 207(k) of the
Federal Credit Union Act) applicable to
any depositor at an insured depository
institution shall be increased by
calculating the product of--
(I) $100,000; and
(II) the ratio of the
published annual value of the
Personal Consumption
Expenditures Chain-Type Price
Index (or any successor index
thereto), published by the
Department of Commerce, for the
calendar year preceding the
year in which the adjustment is
calculated under this clause,
to the published annual value
of such index for the calendar
year preceding the date this
subparagraph takes effect under
the Federal Deposit Insurance
Reform Act of 2005.
The values used in the calculation
under subclause (II) shall be, as of
the date of the calculation, the values
most recently published by the
Department of Commerce.
(ii) Rounding.--If the amount
determined under clause (ii) for any
period is not a multiple of $10,000,
the amount so determined shall be
rounded down to the nearest $10,000.
(iii) Publication and report to the
congress.--Not later than April 5 of
any calendar year in which an
adjustment is required to be calculated
under clause (i) to the standard
maximum deposit insurance amount and
the standard maximum share insurance
amount under such clause, the Board of
Directors and the National Credit Union
Administration Board shall--
(I) publish in the Federal
Register the standard maximum
deposit insurance amount, the
standard maximum share
insurance amount, and the
amount of coverage under
paragraph (3)(A) and section
207(k)(3) of the Federal Credit
Union Act, as so calculated;
and
(II) jointly submit a report
to the Congress containing the
amounts described in subclause
(I).
(iv) 6-month implementation
period.--Unless an Act of Congress
enacted before July 1 of the calendar
year in which an adjustment is required
to be calculated under clause (i)
provides otherwise, the increase in the
standard maximum deposit insurance
amount and the standard maximum share
insurance amount shall take effect on
January 1 of the year immediately
succeeding such calendar year.
(v) Inflation adjustment
consideration.--In making any
determination under clause (i) to
increase the standard maximum deposit
insurance amount and the standard
maximum share insurance amount, the
Board of Directors and the National
Credit Union Administration Board shall
jointly consider--
(I) the overall state of the
Deposit Insurance Fund and the
economic conditions affecting
insured depository
institutions;
(II) potential problems
affecting insured depository
institutions; or
(III) whether the increase
will cause the reserve ratio of
the fund to fall below 1.15
percent of estimated insured
deposits.
(2) Government depositors.--
(A) In general.--Notwithstanding any
limitation in this Act or in any other
provision of law relating to the amount of
deposit insurance available to any 1
depositor--
(i) a government depositor shall, for
the purpose of determining the amount
of insured deposits under this
subsection, be deemed to be a depositor
separate and distinct from any other
officer, employee, or agent of the
United States or any public unit
referred to in subparagraph (B); and
(ii) except as provided in
subparagraph (C), the deposits of a
government depositor shall be insured
in an amount equal to the standard
maximum deposit insurance amount (as
determined under paragraph (1)).
(B) Government depositor.--In this paragraph,
the term ``government depositor'' means a
depositor that
is--
(i) an officer, employee, or agent of
the United States having official
custody of public funds and lawfully
investing or depositing the same in
time and savings deposits in an insured
depository institution;
(ii) an officer, employee, or agent
of any State of the United States, or
of any county, municipality, or
political subdivision thereof having
official custody of public funds and
lawfully investing or depositing the
same in time and savings deposits in an
insured depository institution in such
State;
(iii) an officer, employee, or agent
of the District of Columbia having
official custody of public funds and
lawfully investing or depositing the
same in time and savings deposits in an
insured depository institution in the
District of Columbia;
(iv) an officer, employee, or agent
of the Commonwealth of Puerto Rico, of
the Virgin Islands, of American Samoa,
of the Trust Territory of the Pacific
Islands, or of Guam, or of any county,
municipality, or political subdivision
thereof having official custody of
public funds and lawfully investing or
depositing the same in time and savings
deposits in an insured depository
institution in the Commonwealth of
Puerto Rico, the Virgin Islands,
American Samoa, the Trust Territory of
the Pacific Islands, or Guam,
respectively; or
(v) an officer, employee, or agent of
any Indian tribe (as defined in section
3(c) of the Indian Financing Act of
1974) or agency thereof having official
custody of tribal funds and lawfully
investing or depositing the same in
time and savings deposits in an insured
depository institution.
(C) Authority to limit deposits.--The
Corporation may limit the aggregate amount of
funds that may be invested or deposited in
deposits in any insured depository institution
by any government depositor on the basis of the
size of any such bank in terms of its assets:
Provided, however, such limitation may be
exceeded by the pledging of acceptable
securities to the government depositor when and
where required.
(3) Certain retirement accounts.--
(A) In general.--Notwithstanding any
limitation in this Act relating to the amount
of deposit insurance available for the account
of any 1 depositor, deposits in an insured
depository institution made in connection
with--
(i) any individual retirement account
described in section 408(a) of the
Internal Revenue Code of 1986;
(ii) subject to the exception
contained in paragraph (1)(D)(ii), any
eligible deferred compensation plan
described in section 457 of such Code;
and
(iii) any individual account plan
defined in section 3(34) of the
Employee Retirement Income Security
Act, and any plan described in section
401(d) of the Internal Revenue Code of
1986, to the extent that participants
and beneficiaries under such plan have
the right to direct the investment of
assets held in individual accounts
maintained on their behalf by the plan,
shall be aggregated and insured in an amount
not to exceed $250,000 (which amount shall be
subject to inflation adjustments as provided in
paragraph (1)(F), except that $250,000 shall be
substituted for $100,000 wherever such term
appears in such paragraph) per participant per
insured depository institution.
(B) Amounts taken into account.--For purposes
of subparagraph (A), the amount aggregated for
insurance coverage under this paragraph shall
consist of the present vested and ascertainable
interest of each participant under the plan,
excluding any remainder interest created by, or
as a result of, the plan.
(4) Deposit insurance fund.--
(A) Establishment.--There is established the
Deposit Insurance Fund, which the Corporation
shall--
(i) maintain and administer;
(ii) use to carry out its insurance
purposes, in the manner provided by
this subsection; and
(iii) invest in accordance with
section 13(a).
(B) Uses.--The Deposit Insurance Fund shall
be available to the Corporation for use with
respect to insured depository institutions the
deposits of which are insured by the Deposit
Insurance Fund.
(C) Limitation on use.--Notwithstanding any
provision of law other than section
13(c)(4)(G), the Deposit Insurance Fund shall
not be used in any manner to benefit any
shareholder or affiliate (other than an insured
depository institution that receives assistance
in accordance with the provisions of this Act)
of--
(i) any insured depository
institution for which the Corporation
has been appointed conservator or
receiver, in connection with any type
of resolution by the Corporation;
(ii) any other insured depository
institution in default or in danger of
default, in connection with any type of
resolution by the Corporation; or
(iii) any insured depository
institution, in connection with the
provision of assistance under this
section or section 13 with respect to
such institution, except that this
clause shall not prohibit any
assistance to any insured depository
institution that is not in default, or
that is not in danger of default, that
is acquiring (as defined in section
13(f)(8)(B)) another insured depository
institution.
(D) Deposits.--All amounts assessed against
insured depository institutions by the
Corporation shall be deposited into the Deposit
Insurance Fund.
(5) Certain investment contracts not treated as
insured deposits.--
(A) In general.--A liability of an insured
depository institution shall not be treated as
an insured deposit if the liability arises
under any insured depository institution
investment contract between any insured
depository institution and any employee benefit
plan which expressly permits benefit-responsive
withdrawals or transfers.
(B) Definitions.--For purposes of
subparagraph (A)--
(i) Benefit-responsive withdrawals or
transfers.--The term ``benefit-
responsive withdrawals or transfers''
means any withdrawal or transfer of
funds (consisting of any portion of the
principal and any interest credited at
a rate guaranteed by the insured
depository institution investment
contract) during the period in which
any guaranteed rate is in effect,
without substantial penalty or
adjustment, to pay benefits provided by
the employee benefit plan or to permit
a plan participant or beneficiary to
redirect the investment of his or her
account balance.
(ii) Employee benefit plan.--The term
``employee benefit plan''--
(I) has the meaning given to
such term in section 3(3) of
the Employee Retirement Income
Security Act of 1974; and
(II) includes any plan
described in section 401(d) of
the Internal Revenue Code of
1986.
(b) For the purposes of this Act an insured depository
institution shall be deemed to have been closed on account of
inability to meet the demands of its depositors in any case in
which it has been closed for the purpose of liquidation without
adequate provision being made for payment of its depositors.
(c) Appointment of Corporation as Conservator or Receiver.--
(1) In general.--Notwithstanding any other provision
of Federal law, the law of any State, or the
constitution of any State, the Corporation may accept
appointment and act as conservator or receiver for any
insured depository institution upon appointment in the
manner provided in paragraph (2) or (3).
(2) Federal depository institutions.--
(A) Appointment.--
(i) Conservator.--The Corporation
may, at the discretion of the
supervisory authority, be appointed
conservator of any insured Federal
depository institution and the
Corporation may accept such
appointment.
(ii) Receiver.--The Corporation shall
be appointed receiver, and shall accept
such appointment, whenever a receiver
is appointed for the purpose of
liquidation or winding up the affairs
of an insured Federal depository
institution by the appropriate Federal
banking agency, notwithstanding any
other provision of Federal law.
(B) Additional powers.--In addition to and
not in derogation of the powers conferred and
the duties imposed by this section on the
Corporation as conservator or receiver, the
Corporation, to the extent not inconsistent
with such powers and duties, shall have any
other power conferred on or any duty (which is
related to the exercise of such power) imposed
on a conservator or receiver for any Federal
depository institution under any other
provision of law.
(C) Corporation not subject to any other
agency.--When acting as conservator or receiver
pursuant to an appointment described in
subparagraph (A), the Corporation shall not be
subject to the direction or supervision of any
other agency or department of the United States
or any State in the exercise of the
Corporation's rights, powers, and privileges.
(D) Depository institution in conservatorship
subject to banking agency supervision.--
Notwithstanding subparagraph (C), any Federal
depository institution for which the
Corporation has been appointed conservator
shall remain subject to the supervision of the
appropriate Federal banking agency.
(3) Insured state depository institutions.--
(A) Appointment by appropriate state
supervisor.--Whenever the authority having
supervision of any insured State depository
institution appoints a conservator or receiver
for such institution and tenders appointment to
the Corporation, the Corporation may accept
such appointment.
(B) Additional powers.--In addition to the
powers conferred and the duties related to the
exercise of such powers imposed by State law on
any conservator or receiver appointed under the
law of such State for an insured State
depository institution, the Corporation, as
conservator or receiver pursuant to an
appointment described in subparagraph (A),
shall have the powers conferred and the duties
imposed by this section on the Corporation as
conservator or receiver.
(C) Corporation not subject to any other
agency.--When acting as conservator or receiver
pursuant to an appointment described in
subparagraph (A), the Corporation shall not be
subject to the direction or supervision of any
other agency or department of the United States
or any State in the exercise of its rights,
powers, and privileges.
(D) Depository institution in conservatorship
subject to banking agency supervision.--
Notwithstanding subparagraph (C), any insured
State depository institution for which the
Corporation has been appointed conservator
shall remain subject to the supervision of the
appropriate State bank or savings association
supervisor.
(4) Appointment of corporation by the corporation.--
Notwithstanding any other provision of Federal law, the
law of any State, or the constitution of any State, the
Corporation may appoint itself as sole conservator or
receiver of any insured State depository institution
if--
(A) the Corporation determines--
(i) that--
(I) a conservator, receiver,
or other legal custodian has
been appointed for such
institution;
(II) such institution has
been subject to the appointment
of any such conservator,
receiver, or custodian for a
period of at least 15
consecutive days; and
(III) 1 or more of the
depositors in such institution
is unable to withdraw any
amount of any insured deposit;
or
(ii) that such institution has been
closed by or under the laws of any
State; and
(B) the Corporation determines that 1 or more
of the grounds specified in paragraph (5)--
(i) existed with respect to such
institution at the time--
(I) the conservator,
receiver, or other legal
custodian was appointed; or
(II) such institution was
closed; or
(ii) exist at any time--
(I) during the appointment of
the conservator, receiver, or
other legal custodian; or
(II) while such institution
is closed.
(5) Grounds for appointing conservator or receiver.--
The grounds for appointing a conservator or receiver
(which may be the Corporation) for any insured
depository institution are as follows:
(A) Assets insufficient for obligations.--The
institution's assets are less than the
institution's obligations to its creditors and
others, including members of the institution.
(B) Substantial dissipation.--Substantial
dissipation of assets or earnings due to--
(i) any violation of any statute or
regulation; or
(ii) any unsafe or unsound practice.
(C) Unsafe or unsound condition.--An unsafe
or unsound condition to transact business.
(D) Cease and desist orders.--Any willful
violation of a cease-and-desist order which has
become final.
(E) Concealment.--Any concealment of the
institution's books, papers, records, or
assets, or any refusal to submit the
institution's books, papers, records, or
affairs for inspection to any examiner or to
any lawful agent of the appropriate Federal
banking agency or State bank or savings
association supervisor.
(F) Inability to meet obligations.--The
institution is likely to be unable to pay its
obligations or meet its depositors' demands in
the normal course of business.
(G) Losses.--The institution has incurred or
is likely to incur losses that will deplete all
or substantially all of its capital, and there
is no reasonable prospect for the institution
to become adequately capitalized (as defined in
section 38(b)) without Federal assistance.
(H) Violations of law.--Any violation of any
law or regulation, or any unsafe or unsound
practice or condition that is likely to--
(i) cause insolvency or substantial
dissipation of assets or earnings;
(ii) weaken the institution's
condition; or
(iii) otherwise seriously prejudice
the interests of the institution's
depositors or the Deposit Insurance
Fund.
(I) Consent.--The institution, by resolution
of its board of directors or its shareholders
or members, consents to the appointment.
(J) Cessation of insured status.--The
institution ceases to be an insured
institution.
(K) Undercapitalization.--The institution is
undercapitalized (as defined in section 38(b)),
and--
(i) has no reasonable prospect of
becoming adequately capitalized (as
defined in that section);
(ii) fails to become adequately
capitalized when required to do so
under section 38(f)(2)(A);
(iii) fails to submit a capital
restoration plan acceptable to that
agency within the time prescribed under
section 38(e)(2)(D); or
(iv) materially fails to implement a
capital restoration plan submitted and
accepted under section 38(e)(2).
(L) The institution--
(i) is critically undercapitalized,
as defined in section 38(b); or
(ii) otherwise has substantially
insufficient capital.
(M) Money laundering offense.--The Attorney
General notifies the appropriate Federal
banking agency or the Corporation in writing
that the insured depository institution has
been found guilty of a criminal offense under
section 1956 or 1957 of title 18, United States
Code, or section 5322 or 5324 of title 31,
United States Code.
(6) Appointment by comptroller of the currency.--
(A) Conservator.--The Corporation may, at the
discretion of the Comptroller of the Currency,
be appointed conservator and the Corporation
may accept any such appointment.
(B) Receiver.--The Corporation may, at the
discretion of the Comptroller of the Currency,
be appointed receiver and the Corporation may
accept any such appointment.
(7) Judicial review.--If the Corporation is appointed
(including the appointment of the Corporation as
receiver by the Board of Directors) as conservator or
receiver of a depository institution under paragraph
(4), (9), or (10), the depository institution may, not
later than 30 days thereafter, bring an action in the
United States district court for the judicial district
in which the home office of such depository institution
is located, or in the United States District Court for
the District of Columbia, for an order requiring the
Corporation to be removed as the conservator or
receiver (regardless of how such appointment was made),
and the court shall, upon the merits, dismiss such
action or direct the Corporation to be removed as the
conservator or receiver.
(8) Replacement of conservator of state depository
institution.--
(A) In general.--In the case of any insured
State depository institution for which the
Corporation appointed itself as conservator
pursuant to paragraph (4), the Corporation may,
without any requirement of notice, hearing, or
other action, replace itself as conservator
with itself as receiver of such institution.
(B) Replacement treated as removal of
incumbent.--The replacement of a conservator
with a receiver under subparagraph (A) shall be
treated as the removal of the Corporation as
conservator.
(C) Right of review of original appointment
not affected.--The replacement of a conservator
with a receiver under subparagraph (A) shall
not affect any right of the insured State
depository institution to obtain review,
pursuant to paragraph (7), of the original
appointment of the conservator.
(9) Appropriate federal banking agency may appoint
corporation as conservator or receiver for insured
state depository institution to carry out section 38.--
(A) In general.--The appropriate Federal
banking agency may appoint the Corporation as
sole receiver (or, subject to paragraph (11),
sole conservator) of any insured State
depository institution, after consultation with
the appropriate State supervisor, if the
appropriate Federal banking agency determines
that--
(i) 1 or more of the grounds
specified in subparagraphs (K) and (L)
of paragraph (5) exist with respect to
that institution; and
(ii) the appointment is necessary to
carry out the purpose of section 38.
(B) Nondelegation.--The appropriate Federal
banking agency shall not delegate any action
under subparagraph (A).
(10) Corporation may appoint itself as conservator or
receiver for insured depository institution to prevent
loss to deposit insurance fund.--The Board of Directors
may appoint the Corporation as sole conservator or
receiver of an insured depository institution, after
consultation with the appropriate Federal banking
agency and the appropriate State supervisor (if any),
if the Board of Directors determines that--
(A) 1 or more of the grounds specified in any
subparagraph of paragraph (5) exist with
respect to the institution; and
(B) the appointment is necessary to reduce--
(i) the risk that the Deposit
Insurance Fund would incur a loss with
respect to the insured depository
institution, or
(ii) any loss that the Deposit
Insurance Fund is expected to incur
with respect to that institution.
(11) Appropriate federal banking agency shall not
appoint conservator under certain provisions without
giving corporation opportunity to appoint receiver.--
The appropriate Federal banking agency shall not
appoint a conservator for an insured depository
institution under subparagraph (K) or (L) of paragraph
(5) without the Corporation's consent unless the agency
has given the Corporation 48 hours notice of the
agency's intention to appoint the conservator and the
grounds for the appointment.
(12) Directors not liable for acquiescing in
appointment of conservator or receiver.--The members of
the board of directors of an insured depository
institution shall not be liable to the institution's
shareholders or creditors for acquiescing in or
consenting in good faith to--
(A) the appointment of the Corporation as
conservator or receiver for that institution;
or
(B) an acquisition or combination under
section 38(f)(2)(A)(iii).
(13) Additional powers.--In any case in which the
Corporation is appointed conservator or receiver under
paragraph (4), (6), (9), or (10) for any insured State
depository institution--
(A) this section shall apply to the
Corporation as conservator or receiver in the
same manner and to the same extent as if that
institution were a Federal depository
institution for which the Corporation had been
appointed conservator or receiver; and
(B) the Corporation as receiver of the
institution may--
(i) liquidate the institution in an
orderly manner; and
(ii) make any other disposition of
any matter concerning the institution,
as the Corporation determines is in the
best interests of the institution, the
depositors of the institution, and the
Corporation.
(d) Powers and Duties of Corporation as Conservator or
Receiver.--
(1) Rulemaking authority of corporation.--The
Corporation may prescribe such regulations as the
Corporation determines to be appropriate regarding the
conduct of conservatorships or receiverships.
(2) General powers.--
(A) Successor to institution.--The
Corporation shall, as conservator or receiver,
and by operation of law, succeed to--
(i) all rights, titles, powers, and
privileges of the insured depository
institution, and of any stockholder,
member, accountholder, depositor,
officer, or director of such
institution with respect to the
institution and the assets of the
institution; and
(ii) title to the books, records, and
assets of any previous conservator or
other legal custodian of such
institution.
(B) Operate the institution.--The Corporation
may (subject to the provisions of section 40),
as conservator or receiver--
(i) take over the assets of and
operate the insured depository
institution with all the powers of the
members or shareholders, the directors,
and the officers of the institution and
conduct all business of the
institution;
(ii) collect all obligations and
money due the institution;
(iii) perform all functions of the
institution in the name of the
institution which are consistent with
the appointment as conservator or
receiver; and
(iv) preserve and conserve the assets
and property of such institution.
(C) Functions of institution's officers,
directors, and shareholders.--The Corporation
may, by regulation or order, provide for the
exercise of any function by any member or
stockholder, director, or officer of any
insured depository institution for which the
Corporation has been appointed conservator or
receiver.
(D) Powers as conservator.--The Corporation
may, as conservator, take such action as may
be--
(i) necessary to put the insured
depository institution in a sound and
solvent condition; and
(ii) appropriate to carry on the
business of the institution and
preserve and conserve the assets and
property of the institution.
(E) Additional powers as receiver.--The
Corporation may (subject to the provisions of
section 40), as receiver, place the insured
depository institution in liquidation and
proceed to realize upon the assets of the
institution, having due regard to the
conditions of credit in the locality.
(F) Organization of new institutions.--The
Corporation may, as receiver, with respect to
any insured depository institution, organize a
new depository institution under subsection (m)
or a bridge depository institution under
subsection (n).
(G) Merger; Transfer of assets and
liabilities.--
(i) In general.--The Corporation may,
as conservator or receiver--
(I) merge the insured
depository institution with
another insured depository
institution; or
(II) subject to clause (ii),
transfer any asset or liability
of the institution in default
(including assets and
liabilities associated with any
trust business) without any
approval, assignment, or
consent with respect to such
transfer.
(ii) Approval by appropriate federal
banking agency.--No transfer described
in clause (i)(II) may be made to
another depository institution (other
than a new depository institution or a
bridge depository institution
established pursuant to subsection (m)
or (n)) without the approval of the
appropriate Federal banking agency for
such institution.
(H) Payment of valid obligations.--The
Corporation, as conservator or receiver, shall
pay all valid obligations of the insured
depository institution in accordance with the
prescriptions and limitations of this Act.
(I) Subpoena authority.--
(i) In general.--The Corporation may,
as conservator, receiver, or exclusive
manager and for purposes of carrying
out any power, authority, or duty with
respect to an insured depository
institution (including determining any
claim against the institution and
determining and realizing upon any
asset of any person in the course of
collecting money due the institution),
exercise any power established under
section 8(n), and the provisions of
such section shall apply with respect
to the exercise of any such power under
this subparagraph in the same manner as
such provisions apply under such
section.
(ii) Authority of board of
directors.--A subpoena or subpoena
duces tecum may be issued under clause
(i) only by, or with the written
approval of, the Board of Directors or
their designees (or, in the case of a
subpoena or subpoena duces tecum issued
by the Resolution Trust Corporation
under this subparagraph and section
21A(b)(4), only by, or with the written
approval of, the Board of Directors of
such Corporation or their designees).
(iii) Rule of construction.--This
subsection shall not be construed as
limiting any rights that the
Corporation, in any capacity, might
otherwise have under section 10(c) of
this Act.
(J) Incidental powers.--The Corporation may,
as conservator or receiver--
(i) exercise all powers and
authorities specifically granted to
conservators or receivers,
respectively, under this Act and such
incidental powers as shall be necessary
to carry out such powers; and
(ii) take any action authorized by
this Act,
which the Corporation determines is in the best
interests of the depository institution, its
depositors, or the Corporation.
(K) Utilization of private sector.--In
carrying out its responsibilities in the
management and disposition of assets from
insured depository institutions, as
conservator, receiver, or in its corporate
capacity, the Corporation shall utilize the
services of private persons, including real
estate and loan portfolio asset management,
property management, auction marketing, legal,
and brokerage services, only if such services
are available in the private sector and the
Corporation determines utilization of such
services is the most practicable, efficient,
and cost effective.
(3) Authority of receiver to determine claims.--
(A) In general.--The Corporation may, as
receiver, determine claims in accordance with
the requirements of this subsection and
regulations prescribed under paragraph (4).
(B) Notice requirements.--The receiver, in
any case involving the liquidation or winding
up of the affairs of a closed depository
institution, shall--
(i) promptly publish a notice to the
depository institution's creditors to
present their claims, together with
proof, to the receiver by a date
specified in the notice which shall be
not less than 90 days after the
publication of such notice; and
(ii) republish such notice
approximately 1 month and 2 months,
respectively, after the publication
under clause (i).
(C) Mailing required.--The receiver shall
mail a notice similar to the notice published
under subparagraph (B)(i) at the time of such
publication to any creditor shown on the
institution's books--
(i) at the creditor's last address
appearing in such books; or
(ii) upon discovery of the name and
address of a claimant not appearing on
the institution's books within 30 days
after the discovery of such name and
address.
(4) Rulemaking authority relating to determination of
claims.--
(A) In general.--The Corporation may
prescribe regulations regarding the allowance
or disallowance of claims by the receiver and
providing for administrative determination of
claims and review of such determination.
(B) Final settlement payment procedure.--
(i) In general.--In the handling of
receiverships of insured depository
institutions, to maintain essential
liquidity and to prevent financial
disruption, the Corporation may, after
the declaration of an institution's
insolvency, settle all uninsured and
unsecured claims on the receivership
with a final settlement payment which
shall constitute full payment and
disposition of the Corporation's
obligations to such claimants.
(ii) Final settlement payment.--For
purposes of clause (i), a final
settlement payment shall be payment of
an amount equal to the product of the
final settlement payment rate and the
amount of the uninsured and unsecured
claim on the receivership; and
(iii) Final settlement payment
rate.--For purposes of clause (ii), the
final settlement payment rate shall be
a percentage rate reflecting an average
of the Corporation's receivership
recovery experience, determined by the
Corporation in such a way that over
such time period as the Corporation may
deem appropriate, the Corporation in
total will receive no more or less than
it would have received in total as a
general creditor standing in the place
of insured depositors in each specific
receivership.
(iv) Corporation authority.--The
Corporation may undertake such
supervisory actions and promulgate such
regulations as may be necessary to
assure that the requirements of this
section can be implemented with respect
to each insured depository institution
in the event of its insolvency.
(5) Procedures for determination of claims.--
(A) Determination period.--
(i) In general.--Before the end of
the 180-day period beginning on the
date any claim against a depository
institution is filed with the
Corporation as receiver, the
Corporation shall determine whether to
allow or disallow the claim and shall
notify the claimant of any
determination with respect to such
claim.
(ii) Extension of time.--The period
described in clause (i) may be extended
by a written agreement between the
claimant and the Corporation.
(iii) Mailing of notice sufficient.--
The requirements of clause (i) shall be
deemed to be satisfied if the notice of
any determination with respect to any
claim is mailed to the last address of
the claimant which appears--
(I) on the depository
institution's books;
(II) in the claim filed by
the claimant; or
(III) in documents submitted
in proof of the claim.
(iv) Contents of notice of
disallowance.--If any claim filed under
clause (i) is disallowed, the notice to
the claimant shall contain--
(I) a statement of each
reason for the disallowance;
and
(II) the procedures available
for obtaining agency review of
the determination to disallow
the claim or judicial
determination of the claim.
(B) Allowance of proven claims.--The receiver
shall allow any claim received on or before the
date specified in the notice published under
paragraph (3)(B)(i) by the receiver from any
claimant which is proved to the satisfaction of
the receiver.
(C) Disallowance of claims filed after end of
filing period.--
(i) In general.--Except as provided
in clause (ii), claims filed after the
date specified in the notice published
under paragraph (3)(B)(i) shall be
disallowed and such disallowance shall
be final.
(ii) Certain exceptions.--Clause (i)
shall not apply with respect to any
claim filed by any claimant after the
date specified in the notice published
under paragraph (3)(B)(i) and such
claim may be considered by the receiver
if--
(I) the claimant did not
receive notice of the
appointment of the receiver in
time to file such claim before
such date; and
(II) such claim is filed in
time to permit payment of such
claim.
(D) Authority to disallow claims.--
(i) In general.--The receiver may
disallow any portion of any claim by a
creditor or claim of security,
preference, or priority which is not
proved to the satisfaction of the
receiver.
(ii) Payments to less than fully
secured creditors.--In the case of a
claim of a creditor against an insured
depository institution which is secured
by any property or other asset of such
institution, any receiver appointed for
any insured depository institution--
(I) may treat the portion of
such claim which exceeds an
amount equal to the fair market
value of such property or other
asset as an unsecured claim
against the institution; and
(II) may not make any payment
with respect to such unsecured
portion of the claim other than
in connection with the
disposition of all claims of
unsecured creditors of the
institution.
(iii) Exceptions.--No provision of
this paragraph shall apply with respect
to--
(I) any extension of credit
from any Federal home loan bank
or Federal Reserve bank to any
insured depository institution;
or
(II) any security interest in
the assets of the institution
securing any such extension of
credit.
(E) No judicial review of determination
pursuant to subparagraph (d).--No court may
review the Corporation's determination pursuant
to subparagraph (D) to disallow a claim.
(F) Legal effect of filing.--
(i) Statute of limitation tolled.--
For purposes of any applicable statute
of limitations, the filing of a claim
with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions.--
Subject to paragraph (12), the filing
of a claim with the receiver shall not
prejudice any right of the claimant to
continue any action which was filed
before the appointment of the receiver.
(6) Provision for agency review or judicial
determination of claims.--
(A) In general.--Before the end of the 60-day
period beginning on the earlier of--
(i) the end of the period described
in paragraph (5)(A)(i) with respect to
any claim against a depository
institution for which the Corporation
is receiver; or
(ii) the date of any notice of
disallowance of such claim pursuant to
paragraph (5)(A)(i),
the claimant may request administrative review
of the claim in accordance with subparagraph
(A) or (B) of paragraph (7) or file suit on
such claim (or continue an action commenced
before the appointment of the receiver) in the
district or territorial court of the United
States for the district within which the
depository institution's principal place of
business is located or the United States
District Court for the District of Columbia
(and such court shall have jurisdiction to hear
such claim).
(B) Statute of limitations.--If any claimant
fails to--
(i) request administrative review of
any claim in accordance with
subparagraph (A) or (B) of paragraph
(7); or
(ii) file suit on such claim (or
continue an action commenced before the
appointment of the receiver),
before the end of the 60-day period described
in subparagraph (A), the claim shall be deemed
to be disallowed (other than any portion of
such claim which was allowed by the receiver)
as of the end of such period, such disallowance
shall be final, and the claimant shall have no
further rights or remedies with respect to such
claim.
(7) Review of claims.--
(A) Administrative hearing.--If any claimant
requests review under this subparagraph in lieu
of filing or continuing any action under
paragraph (6) and the Corporation agrees to
such request, the Corporation shall consider
the claim after opportunity for a hearing on
the record. The final determination of the
Corporation with respect to such claim shall be
subject to judicial review under chapter 7 of
title 5, United States Code.
(B) Other review procedures.--
(i) In general.--The Corporation shall also
establish such alternative dispute resolution
processes as may be appropriate for the
resolution of claims filed under paragraph
(5)(A)(i).
(ii) Criteria.--In establishing alternative
dispute resolution processes, the Corporation
shall strive for procedures which are
expeditious, fair, independent, and low cost.
(iii) Voluntary binding or nonbinding
procedures.--The Corporation may establish both
binding and nonbinding processes, which may be
conducted by any government or private party,
but all parties, including the claimant and the
Corporation, must agree to the use of the
process in a particular case.
(iv) Consideration of incentives.--The
Corporation shall seek to develop incentives
for claimants to participate in the alternative
dispute resolution process.
(8) Expedited determination of claims.--
(A) Establishment required.--The Corporation
shall establish a procedure for expedited
relief outside of the routine claims process
established under paragraph (5) for claimants
who--
(i) allege the existence of legally
valid and enforceable or perfected
security interests in assets of any
depository institution for which the
Corporation has been appointed
receiver; and
(ii) allege that irreparable injury
will occur if the routine claims
procedure is followed.
(B) Determination period.--Before the end of
the 90-day period beginning on the date any
claim is filed in accordance with the
procedures established pursuant to subparagraph
(A), the Corporation shall--
(i) determine--
(I) whether to allow or
disallow such claim; or
(II) whether such claim
should be determined pursuant
to the procedures established
pursuant to paragraph (5); and
(ii) notify the claimant of the
determination, and if the claim is
disallowed, provide a statement of each
reason for the disallowance and the
procedure for obtaining agency review
or judicial determination.
(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited
relief shall be permitted to file a suit, or to
continue a suit filed before the appointment of
the receiver, seeking a determination of the
claimant's rights with respect to such security
interest after the earlier of--
(i) the end of the 90-day period
beginning on the date of the filing of
a request for expedited relief; or
(ii) the date the Corporation denies
the claim.
(D) Statute of limitations.--If an action
described in subparagraph (C) is not filed, or
the motion to renew a previously filed suit is
not made, before the end of the 30-day period
beginning on the date on which such action or
motion may be filed in accordance with
subparagraph (B), the claim shall be deemed to
be disallowed as of the end of such period
(other than any portion of such claim which was
allowed by the receiver), such disallowance
shall be final, and the claimant shall have no
further rights or remedies with respect to such
claim.
(E) Legal effect of filing.--
(i) Statute of limitation tolled.--
For purposes of any applicable statute
of limitations, the filing of a claim
with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions.--
Subject to paragraph (12), the filing
of a claim with the receiver shall not
prejudice any right of the claimant to
continue any action which was filed
before the appointment of the receiver.
(9) Agreement as basis of claim.--
(A) Requirements.--Except as provided in
subparagraph (B), any agreement which does not
meet the requirements set forth in section
13(e) shall not form the basis of, or
substantially comprise, a claim against the
receiver or the Corporation.
(B) Exception to contemporaneous execution
requirement.--Notwithstanding section 13(e)(2),
any agreement relating to an extension of
credit between a Federal home loan bank or
Federal Reserve bank and any insured depository
institution which was executed before the
extension of credit by such bank to such
institution shall be treated as having been
executed contemporaneously with such extension
of credit for purposes of subparagraph (A).
(10) Payment of claims.--
(A) In general.--The receiver may, in the
receiver's discretion and to the extent funds
are available, pay creditor claims which are
allowed by the receiver, approved by the
Corporation pursuant to a final determination
pursuant to paragraph (7) or (8), or determined
by the final judgment of any court of competent
jurisdiction in such manner and amounts as are
authorized under this Act.
(B) Payment of dividends on claims.--The
receiver may, in the receiver's sole
discretion, pay dividends on proved claims at
any time, and no liability shall attach to the
Corporation (in such Corporation's corporate
capacity or as receiver), by reason of any such
payment, for failure to pay dividends to a
claimant whose claim is not proved at the time
of any such payment.
(C) Rulemaking authority of corporation.--The
Corporation may prescribe such rules, including
definitions of terms, as it deems appropriate
to establish a single uniform interest rate for
or to make payments of post insolvency interest
to creditors holding proven claims against the
receivership estates of insured Federal or
State depository institutions following
satisfaction by the receiver of the principal
amount of all creditor claims.
(11) Depositor preference.--
(A) In general.--Subject to section
5(e)(2)(C), amounts realized from the
liquidation or other resolution of any insured
depository institution by any receiver
appointed for such institution shall be
distributed to pay claims (other than secured
claims to the extent of any such security) in
the following order of priority:
(i) Administrative expenses of the
receiver.
(ii) Any deposit liability of the
institution.
(iii) Any other general or senior
liability of the institution (which is
not a liability described in clause
(iv) or (v)).
(iv) Any obligation subordinated to
depositors or general creditors (which
is not an obligation described in
clause (v)).
(v) Any obligation to shareholders or
members arising as a result of their
status as shareholders or members
(including any depository institution
holding company or any shareholder or
creditor of such company).
(B) Effect on state law.--
(i) In general.--The provisions of
subparagraph (A) shall not supersede
the law of any State except to the
extent such law is inconsistent with
the provisions of such subparagraph,
and then only to the extent of the
inconsistency.
(ii) Procedure for determination of
inconsistency.--Upon the Corporation's
own motion or upon the request of any
person with a claim described in
subparagraph (A) or any State which is
submitted to the Corporation in
accordance with procedures which the
Corporation shall prescribe, the
Corporation shall determine whether any
provision of the law of any State is
inconsistent with any provision of
subparagraph (A) and the extent of any
such inconsistency.
(iii) Judicial review.--The final
determination of the Corporation under
clause (ii) shall be subject to
judicial review under chapter 7 of
title 5, United States Code.
(C) Accounting report.--Any distribution by
the Corporation in connection with any claim
described in subparagraph (A)(v) shall be
accompanied by the accounting report required
under paragraph (15)(B).
(12) Suspension of legal actions.--
(A) In general.--After the appointment of a
conservator or receiver for an insured
depository institution, the conservator or
receiver may request a stay for a period not to
exceed--
(i) 45 days, in the case of any
conservator; and
(ii) 90 days, in the case of any
receiver,
in any judicial action or proceeding to which
such institution is or becomes a party.
(B) Grant of stay by all courts required.--
Upon receipt of a request by any conservator or
receiver pursuant to subparagraph (A) for a
stay of any judicial action or proceeding in
any court with jurisdiction of such action or
proceeding, the court shall grant such stay as
to all parties.
(13) Additional rights and duties.--
(A) Prior final adjudication.--The
Corporation shall abide by any final
unappealable judgment of any court of competent
jurisdiction which was rendered before the
appointment of the Corporation as conservator
or receiver.
(B) Rights and remedies of conservator or
receiver.--In the event of any appealable
judgment, the Corporation as conservator or
receiver shall--
(i) have all the rights and remedies
available to the insured depository
institution (before the appointment of
such conservator or receiver) and the
Corporation in its corporate capacity,
including removal to Federal court and
all appellate rights; and
(ii) not be required to post any bond
in order to pursue such remedies.
(C) No attachment or execution.--No
attachment or execution may issue by any court
upon assets in the possession of the receiver.
(D) Limitation on judicial review.--Except as
otherwise provided in this subsection, no court
shall have jurisdiction over--
(i) any claim or action for payment
from, or any action seeking a
determination of rights with respect
to, the assets of any depository
institution for which the Corporation
has been appointed receiver, including
assets which the Corporation may
acquire from itself as such receiver;
or
(ii) any claim relating to any act or
omission of such institution or the
Corporation as receiver.
(E) Disposition of assets.--In exercising any
right, power, privilege, or authority as
conservator or receiver in connection with any
sale or disposition of assets of any insured
depository institution for which the
Corporation has been appointed conservator or
receiver, including any sale or disposition of
assets acquired by the Corporation under
section 13(d)(1), the Corporation shall conduct
its operations in a manner which--
(i) maximizes the net present value
return from the sale or disposition of
such assets;
(ii) minimizes the amount of any loss
realized in the resolution of cases;
(iii) ensures adequate competition
and fair and consistent treatment of
offerors;
(iv) prohibits discrimination on the
basis of race, sex, or ethnic groups in
the solicitation and consideration of
offers; and
(v) maximizes the preservation of the
availability and affordability of
residential real property for low- and
moderate-income individuals.
(14) Statute of limitations for actions brought by
conservator or receiver.--
(A) In general.--Notwithstanding any
provision of any contract, the applicable
statute of limitations with regard to any
action brought by the Corporation as
conservator or receiver shall be--
(i) in the case of any contract
claim, the longer of--
(I) the 6-year period
beginning on the date the claim
accrues; or
(II) the period applicable
under State law; and
(ii) in the case of any tort claim
(other than a claim which is subject to
section 21A(b)(14) of the Federal Home
Loan Bank Act), the longer of--
(I) the 3-year period
beginning on the date the claim
accrues; or
(II) the period applicable
under State law.
(B) Determination of the date on which a
claim accrues.--For purposes of subparagraph
(A), the date on which the statute of
limitations begins to run on any claim
described in such subparagraph shall be the
later of--
(i) the date of the appointment of
the Corporation as conservator or
receiver; or
(ii) the date on which the cause of
action accrues.
(C) Revival of expired state causes of
action.--
(i) In general.--In the case of any
tort claim described in clause (ii) for
which the statute of limitation
applicable under State law with respect
to such claim has expired not more than
5 years before the appointment of the
Corporation as conservator or receiver,
the Corporation may bring an action as
conservator or receiver on such claim
without regard to the expiration of the
statute of limitation applicable under
State law.
(ii) Claims described.--A tort claim
referred to in clause (i) is a claim
arising from fraud, intentional
misconduct resulting in unjust
enrichment, or intentional misconduct
resulting in substantial loss to the
institution.
(15) Accounting and recordkeeping requirements.--
(A) In general.--The Corporation as
conservator or receiver shall, consistent with
the accounting and reporting practices and
procedures established by the Corporation,
maintain a full accounting of each
conservatorship and receivership or other
disposition of institutions in default.
(B) Annual accounting or report.--With
respect to each conservatorship or receivership
to which the Corporation was appointed, the
Corporation shall make an annual accounting or
report, as appropriate, available to the
Secretary of the Treasury, the Comptroller
General of the United States, and the authority
which appointed the Corporation as conservator
or receiver.
(C) Availability of reports.--Any report
prepared pursuant to subparagraph (B) shall be
made available by the Corporation upon request
to any shareholder of the depository
institution for which the Corporation was
appointed conservator or receiver or any other
member of the public.
(D) Recordkeeping requirement.--
(i) In general.--Except as provided
in clause (ii), after the end of the 6-
year period beginning on the date the
Corporation is appointed as receiver of
an insured depository institution, the
Corporation may destroy any records of
such institution which the Corporation,
in the Corporation's discretion,
determines to be unnecessary unless
directed not to do so by a court of
competent jurisdiction or governmental
agency, or prohibited by law.
(ii) Old records.--Notwithstanding
clause (i), the Corporation may destroy
records of an insured depository
institution which are at least 10 years
old as of the date on which the
Corporation is appointed as the
receiver of such depository institution
in accordance with clause (i) at any
time after such appointment is final,
without regard to the 6-year period of
limitation contained in clause (i).
(16) Contracts with state housing finance
authorities.--
(A) In general.--The Corporation may enter
into contracts with any State housing finance
authority for the sale of mortgage-related
assets (as such terms are defined in section
1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989) of any
depository institution in default (including
assets and liabilities associated with any
trust business), such contracts to be effective
in accordance with their terms without any
further approval, assignment, or consent with
respect thereto.
(B) Factors to consider.--In evaluating the
disposition of mortgage related assets to any
State housing finance authority the Corporation
shall consider--
(i) the State housing finance
authority's ability to acquire and
service current, delinquent, and
defaulted mortgage related assets;
(ii) the State housing finance
authority's ability to further national
housing policies;
(iii) the State housing finance
authority's sensitivity to the impact
of the sale of mortgage related assets
upon the State and local communities;
(iv) the costs to the Federal
Government associated with alternative
ownership or disposition of the
mortgage related assets;
(v) the minimization of future
guaranties which may be required of the
Federal Government;
(vi) the maximization of mortgage
related asset values; and
(vii) the utilization of institutions
currently established in mortgage
related asset market activities.
(17) Fraudulent transfers.--
(A) In general.--The Corporation, as
conservator or receiver for any insured
depository institution, and any conservator
appointed by the Comptroller of the Currency
may avoid a transfer of any interest of an
institution-affiliated party, or any person who
the Corporation or conservator determines is a
debtor of the institution, in property, or any
obligation incurred by such party or person,
that was made within 5 years of the date on
which the Corporation or conservator was
appointed conservator or receiver if such party
or person voluntarily or involuntarily made
such transfer or incurred such liability with
the intent to hinder, delay, or defraud the
insured depository institution, the Corporation
or other conservator, or any other appropriate
Federal banking agency.
(B) Right of recovery.--To the extent a
transfer is avoided under subparagraph (A), the
Corporation or any conservator described in
such subparagraph may recover, for the benefit
of the insured depository institution, the
property transferred, or, if a court so orders,
the value of such property (at the time of such
transfer) from--
(i) the initial transferee of such
transfer or the institution-affiliated
party or person for whose benefit such
transfer was made; or
(ii) any immediate or mediate
transferee of any such initial
transferee.
(C) Rights of transferee or obligee.--The
Corporation or any conservator described in
subparagraph (A) may not recover under
subparagraph (B) from--
(i) any transferee that takes for
value, including satisfaction or
securing of a present or antecedent
debt, in good faith; or
(ii) any immediate or mediate good
faith transferee of such transferee.
(D) Rights under this paragraph.--The rights
under this paragraph of the Corporation and any
conservator described in subparagraph (A) shall
be superior to any rights of a trustee or any
other party (other than any party which is a
Federal agency) under title 11, United States
Code.
(18) Attachment of assets and other injunctive
relief.--Subject to paragraph (19), any court of
competent jurisdiction may, at the request of--
(A) the Corporation (in the Corporation's
capacity as conservator or receiver for any
insured depository institution or in the
Corporation's corporate capacity with respect
to any asset acquired or liability assumed by
the Corporation under section 11, 12, or 13);
or
(B) any conservator appointed by the
Comptroller of the Currency,
issue an order in accordance with Rule 65 of the
Federal Rules of Civil Procedure, including an order
placing the assets of any person designated by the
Corporation or such conservator under the control of
the court and appointing a trustee to hold such assets.
(19) Standards.--
(A) Showing.--Rule 65 of the Federal Rules of
Civil Procedure shall apply with respect to any
proceeding under paragraph (18) without regard
to the requirement of such rule that the
applicant show that the injury, loss, or damage
is irreparable and immediate.
(B) State proceeding.--If, in the case of any
proceeding in a State court, the court
determines that rules of civil procedure
available under the laws of such State provide
substantially similar protections to such
party's right to due process as Rule 65 (as
modified with respect to such proceeding by
subparagraph (A)), the relief sought by the
Corporation or a conservator pursuant to
paragraph (18) may be requested under the laws
of such State.
(20) Treatment of claims arising from breach of
contracts executed by the receiver or conservator.--
Notwithstanding any other provision of this subsection,
any final and unappealable judgment for monetary
damages entered against a receiver or conservator for
an insured depository institution for the breach of an
agreement executed or approved by such receiver or
conservator after the date of its appointment shall be
paid as an administrative expense of the receiver or
conservator. Nothing in this paragraph shall be
construed to limit the power of a receiver or
conservator to exercise any rights under contract or
law, including to terminate, breach, cancel, or
otherwise discontinue such agreement.
(e) Provisions Relating to Contracts Entered Into Before
Appointment of Conservator or Receiver.--
(1) Authority to repudiate contracts.--In addition to
any other rights a conservator or receiver may have,
the conservator or receiver for any insured depository
institution may disaffirm or repudiate any contract or
lease--
(A) to which such institution is a party;
(B) the performance of which the conservator
or receiver, in the conservator's or receiver's
discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which
the conservator or receiver determines, in the
conservator's or receiver's discretion, will
promote the orderly administration of the
institution's affairs.
(2) Timing of repudiation.--The conservator or
receiver appointed for any insured depository
institution in accordance with subsection (c) shall
determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable
period following such appointment.
(3) Claims for damages for repudiation.--
(A) In general.--Except as otherwise provided
in subparagraph (C) and paragraphs (4), (5),
and (6), the liability of the conservator or
receiver for the disaffirmance or repudiation
of any contract pursuant to paragraph (1) shall
be--
(i) limited to actual direct
compensatory damages; and
(ii) determined as of--
(I) the date of the
appointment of the conservator
or receiver; or
(II) in the case of any
contract or agreement referred
to in paragraph (8), the date
of the disaffirmance or
repudiation of such contract or
agreement.
(B) No liability for other damages.--For
purposes of subparagraph (A), the term ``actual
direct compensatory damages'' does not
include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or
opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of
financial contracts.--In the case of any
qualified financial contract or agreement to
which paragraph (8) applies, compensatory
damages shall be--
(i) deemed to include normal and
reasonable costs of cover or other
reasonable measures of damages utilized
in the industries for such contract and
agreement claims; and
(ii) paid in accordance with this
subsection and subsection (i) except as
otherwise specifically provided in this
section.
(4) Leases under which the institution is the
lessee.--
(A) In general.--If the conservator or
receiver disaffirms or repudiates a lease under
which the insured depository institution was
the lessee, the conservator or receiver shall
not be liable for any damages (other than
damages determined pursuant to subparagraph
(B)) for the disaffirmance or repudiation of
such lease.
(B) Payments of rent.--Notwithstanding
subparagraph (A), the lessor under a lease to
which such subparagraph applies shall--
(i) be entitled to the contractual
rent accruing before the later of the
date--
(I) the notice of
disaffirmance or repudiation is
mailed; or
(II) the disaffirmance or
repudiation becomes effective,
unless the lessor is in default or
breach of the terms of the lease;
(ii) have no claim for damages under
any acceleration clause or other
penalty provision in the lease; and
(iii) have a claim for any unpaid
rent, subject to all appropriate
offsets and defenses, due as of the
date of the appointment which shall be
paid in accordance with this subsection
and subsection (i).
(5) Leases under which the institution is the
lessor.--
(A) In general.--If the conservator or
receiver repudiates an unexpired written lease
of real property of the insured depository
institution under which the institution is the
lessor and the lessee is not, as of the date of
such repudiation, in default, the lessee under
such lease may either--
(i) treat the lease as terminated by
such repudiation; or
(ii) remain in possession of the
leasehold interest for the balance of
the term of the lease unless the lessee
defaults under the terms of the lease
after the date of such repudiation.
(B) Provisions applicable to lessee remaining
in possession.--If any lessee under a lease
described in subparagraph (A) remains in
possession of a leasehold interest pursuant to
clause (ii) of such subparagraph--
(i) the lessee--
(I) shall continue to pay the
contractual rent pursuant to
the terms of the lease after
the date of the repudiation of
such lease;
(II) may offset against any
rent payment which accrues
after the date of the
repudiation of the lease, any
damages which accrue after such
date due to the nonperformance
of any obligation of the
insured depository institution
under the lease after such
date; and
(ii) the conservator or receiver
shall not be liable to the lessee for
any damages arising after such date as
a result of the repudiation other than
the amount of any offset allowed under
clause (i)(II).
(6) Contracts for the sale of real property.--
(A) In general.--If the conservator or
receiver repudiates any contract (which meets
the requirements of each paragraph of section
13(e)) for the sale of real property and the
purchaser of such real property under such
contract is in possession and is not, as of the
date of such repudiation, in default, such
purchaser may either--
(i) treat the contract as terminated
by such repudiation; or
(ii) remain in possession of such
real property.
(B) Provisions applicable to purchaser
remaining in possession.--If any purchaser of
real property under any contract described in
subparagraph (A) remains in possession of such
property pursuant to clause (ii) of such
subparagraph--
(i) the purchaser--
(I) shall continue to make
all payments due under the
contract after the date of the
repudiation of the contract;
and
(II) may offset against any
such payments any damages which
accrue after such date due to
the nonperformance (after such
date) of any obligation of the
depository institution under
the contract; and
(ii) the conservator or receiver
shall--
(I) not be liable to the
purchaser for any damages
arising after such date as a
result of the repudiation other
than the amount of any offset
allowed under clause (i)(II);
(II) deliver title to the
purchaser in accordance with
the provisions of the contract;
and
(III) have no obligation
under the contract other than
the performance required under
subclause (II).
(C) Assignment and sale allowed.--
(i) In general.--No provision of this
paragraph shall be construed as
limiting the right of the conservator
or receiver to assign the contract
described in subparagraph (A) and sell
the property subject to the contract
and the provisions of this paragraph.
(ii) No liability after assignment
and sale.--If an assignment and sale
described in clause (i) is consummated,
the conservator or receiver shall have
no further liability under the contract
described in subparagraph (A) or with
respect to the real property which was
the subject of such contract.
(7) Provisions applicable to service contracts.--
(A) Services performed before appointment.--
In the case of any contract for services
between any person and any insured depository
institution for which the Corporation has been
appointed conservator or receiver, any claim of
such person for services performed before the
appointment of the conservator or the receiver
shall be--
(i) a claim to be paid in accordance
with subsections (d) and (i); and
(ii) deemed to have arisen as of the
date the conservator or receiver was
appointed.
(B) Services performed after appointment and
prior to repudiation.--If, in the case of any
contract for services described in subparagraph
(A), the conservator or receiver accepts
performance by the other person before the
conservator or receiver makes any determination
to exercise the right of repudiation of such
contract under this section--
(i) the other party shall be paid
under the terms of the contract for the
services performed; and
(ii) the amount of such payment shall
be treated as an administrative expense
of the conservatorship or receivership.
(C) Acceptance of performance no bar to
subsequent repudiation.--The acceptance by any
conservator or receiver of services referred to
in subparagraph (B) in connection with a
contract described in such subparagraph shall
not affect the right of the conservator or
receiver to repudiate such contract under this
section at any time after such performance.
(8) Certain qualified financial contracts.--
(A) Rights of parties to contracts.--Subject
to paragraphs (9) and (10) of this subsection
and notwithstanding any other provision of this
Act (other than subsection (d)(9) of this
section and section 13(e)), any other Federal
law, or the law of any State, no person shall
be stayed or prohibited from exercising--
(i) any right such person has to
cause the termination, liquidation, or
acceleration of any qualified financial
contract with an insured depository
institution which arises upon the
appointment of the Corporation as
receiver for such institution at any
time after such appointment;
(ii) any right under any security
agreement or arrangement or other
credit enhancement related to one or
more qualified financial contracts
described in clause (i);
(iii) any right to offset or net out
any termination value, payment amount,
or other transfer obligation arising
under or in connection with 1 or more
contracts and agreements described in
clause (i), including any master
agreement for such contracts or
agreements.
(B) Applicability of other provisions.--
Subsection (d)(12) shall apply in the case of
any judicial action or proceeding brought
against any receiver referred to in
subparagraph (A), or the insured depository
institution for which such receiver was
appointed, by any party to a contract or
agreement described in subparagraph (A)(i) with
such institution.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding
paragraph (11), section 5242 of the
Revised Statutes of the United States
or any other Federal or State law
relating to the avoidance of
preferential or fraudulent transfers,
the Corporation, whether acting as such
or as conservator or receiver of an
insured depository institution, may not
avoid any transfer of money or other
property in connection with any
qualified financial contract with an
insured depository institution.
(ii) Exception for certain
transfers.--Clause (i) shall not apply
to any transfer of money or other
property in connection with any
qualified financial contract with an
insured depository institution if the
Corporation determines that the
transferee had actual intent to hinder,
delay, or defraud such institution, the
creditors of such institution, or any
conservator or receiver appointed for
such institution.
(D) Certain contracts and agreements
defined.--For purposes of this subsection, the
following definitions shall apply:
(i) Qualified financial contract.--
The term ``qualified financial
contract'' means any securities
contract, commodity contract, forward
contract, repurchase agreement, swap
agreement, and any similar agreement
that the Corporation determines by
regulation, resolution, or order to be
a qualified financial contract for
purposes of this paragraph.
(ii) Securities contract.--The term
``securities contract''--
(I) means a contract for the
purchase, sale, or loan of a
security, a certificate of
deposit, a mortgage loan, any
interest in a mortgage loan, a
group or index of securities,
certificates of deposit, or
mortgage loans or interests
therein (including any interest
therein or based on the value
thereof) or any option on any
of the foregoing, including any
option to purchase or sell any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option, and including any
repurchase or reverse
repurchase transaction on any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option (whether or not such
repurchase or reverse
repurchase transaction is a
``repurchase agreement'', as
defined in clause (v));
(II) does not include any
purchase, sale, or repurchase
obligation under a
participation in a commercial
mortgage loan unless the
Corporation determines by
regulation, resolution, or
order to include any such
agreement within the meaning of
such term;
(III) means any option
entered into on a national
securities exchange relating to
foreign currencies;
(IV) means the guarantee
(including by novation) by or
to any securities clearing
agency of any settlement of
cash, securities, certificates
of deposit, mortgage loans or
interests therein, group or
index of securities,
certificates of deposit, or
mortgage loans or interests
therein (including any interest
therein or based on the value
thereof) or option on any of
the foregoing, including any
option to purchase or sell any
such security, certificate of
deposit, mortgage loan,
interest, group or index, or
option (whether or not such
settlement is in connection
with any agreement or
transaction referred to in
subclauses (I) through (XII)
(other than subclause (II));
(V) means any margin loan;
(VI) means any extension of
credit for the clearance or
settlement of securities
transactions;
(VII) means any loan
transaction coupled with a
securities collar transaction,
any prepaid securities forward
transaction, or any total
return swap transaction coupled
with a securities sale
transaction;
(VIII) means any other
agreement or transaction that
is similar to any agreement or
transaction referred to in this
clause;
(IX) means any combination of
the agreements or transactions
referred to in this clause;
(X) means any option to enter
into any agreement or
transaction referred to in this
clause;
(XI) means a master agreement
that provides for an agreement
or transaction referred to in
subclause (I), (III), (IV),
(V), (VI), (VII), (VIII), (IX),
or (X), together with all
supplements to any such master
agreement, without regard to
whether the master agreement
provides for an agreement or
transaction that is not a
securities contract under this
clause, except that the master
agreement shall be considered
to be a securities contract
under this clause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (III), (IV),
(V), (VI), (VII), (VIII), (IX),
or (X); and
(XII) means any security
agreement or arrangement or
other credit enhancement
related to any agreement or
transaction referred to in this
clause, including any guarantee
or reimbursement obligation in
connection with any agreement
or transaction referred to in
this clause.
(iii) Commodity contract.--The term
``commodity contract'' means--
(I) with respect to a futures
commission merchant, a contract
for the purchase or sale of a
commodity for future delivery
on, or subject to the rules of,
a contract market or board of
trade;
(II) with respect to a
foreign futures commission
merchant, a foreign future;
(III) with respect to a
leverage transaction merchant,
a leverage transaction;
(IV) with respect to a
clearing organization, a
contract for the purchase or
sale of a commodity for future
delivery on, or subject to the
rules of, a contract market or
board of trade that is cleared
by such clearing organization,
or commodity option traded on,
or subject to the rules of, a
contract market or board of
trade that is cleared by such
clearing organization;
(V) with respect to a
commodity options dealer, a
commodity option;
(VI) any other agreement or
transaction that is similar to
any agreement or transaction
referred to in this clause;
(VII) any combination of the
agreements or transactions
referred to in this clause;
(VIII) any option to enter
into any agreement or
transaction referred to in this
clause;
(IX) a master agreement that
provides for an agreement or
transaction referred to in
subclause (I), (II), (III),
(IV), (V), (VI), (VII), or
(VIII), together with all
supplements to any such master
agreement, without regard to
whether the master agreement
provides for an agreement or
transaction that is not a
commodity contract under this
clause, except that the master
agreement shall be considered
to be a commodity contract
under this clause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (II), (III),
(IV), (V), (VI), (VII), or
(VIII); or
(X) any security agreement or
arrangement or other credit
enhancement related to any
agreement or transaction
referred to in this clause,
including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
this clause.
(iv) Forward contract.--The term
``forward contract'' means--
(I) a contract (other than a
commodity contract) for the
purchase, sale, or transfer of
a commodity or any similar
good, article, service, right,
or interest which is presently
or in the future becomes the
subject of dealing in the
forward contract trade, or
product or byproduct thereof,
with a maturity date more than
2 days after the date the
contract is entered into,
including, a repurchase or
reverse repurchase transaction
(whether or not such repurchase
or reverse repurchase
transaction is a ``repurchase
agreement'', as defined in
clause (v)), consignment,
lease, swap, hedge transaction,
deposit, loan, option,
allocated transaction,
unallocated transaction, or any
other similar agreement;
(II) any combination of
agreements or transactions
referred to in subclauses (I)
and (III);
(III) any option to enter
into any agreement or
transaction referred to in
subclause (I) or (II);
(IV) a master agreement that
provides for an agreement or
transaction referred to in
subclauses (I), (II), or (III),
together with all supplements
to any such master agreement,
without regard to whether the
master agreement provides for
an agreement or transaction
that is not a forward contract
under this clause, except that
the master agreement shall be
considered to be a forward
contract under this clause only
with respect to each agreement
or transaction under the master
agreement that is referred to
in subclause (I), (II), or
(III); or
(V) any security agreement or
arrangement or other credit
enhancement related to any
agreement or transaction
referred to in subclause (I),
(II), (III), or (IV), including
any guarantee or reimbursement
obligation in connection with
any agreement or transaction
referred to in any such
subclause.
(v) Repurchase agreement.--The term
``repurchase agreement'' (which
definition also applies to a reverse
repurchase agreement)--
(I) means an agreement,
including related terms, which
provides for the transfer of
one or more certificates of
deposit, mortgage-related
securities (as such term is
defined in the Securities
Exchange Act of 1934), mortgage
loans, interests in mortgage-
related securities or mortgage
loans, eligible bankers'
acceptances, qualified foreign
government securities or
securities that are direct
obligations of, or that are
fully guaranteed by, the United
States or any agency of the
United States against the
transfer of funds by the
transferee of such certificates
of deposit, eligible bankers'
acceptances, securities,
mortgage loans, or interests
with a simultaneous agreement
by such transferee to transfer
to the transferor thereof
certificates of deposit,
eligible bankers' acceptances,
securities, mortgage loans, or
interests as described above,
at a date certain not later
than 1 year after such
transfers or on demand, against
the transfer of funds, or any
other similar agreement;
(II) does not include any
repurchase obligation under a
participation in a commercial
mortgage loan unless the
Corporation determines by
regulation, resolution, or
order to include any such
participation within the
meaning of such term;
(III) means any combination
of agreements or transactions
referred to in subclauses (I)
and (IV);
(IV) means any option to
enter into any agreement or
transaction referred to in
subclause (I) or (III);
(V) means a master agreement
that provides for an agreement
or transaction referred to in
subclause (I), (III), or (IV),
together with all supplements
to any such master agreement,
without regard to whether the
master agreement provides for
an agreement or transaction
that is not a repurchase
agreement under this clause,
except that the master
agreement shall be considered
to be a repurchase agreement
under this subclause only with
respect to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (III), or
(IV); and
(VI) means any security
agreement or arrangement or
other credit enhancement
related to any agreement or
transaction referred to in
subclause (I), (III), (IV), or
(V), including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
any such subclause.
For purposes of this clause, the term
``qualified foreign government
security'' means a security that is a
direct obligation of, or that is fully
guaranteed by, the central government
of a member of the Organization for
Economic Cooperation and Development
(as determined by regulation or order
adopted by the appropriate Federal
banking authority).
(vi) Swap agreement.--The term ``swap
agreement'' means--
(I) any agreement, including
the terms and conditions
incorporated by reference in
any such agreement, which is an
interest rate swap, option,
future, or forward agreement,
including a rate floor, rate
cap, rate collar, cross-
currency rate swap, and basis
swap; a spot, same day-
tomorrow, tomorrow-next,
forward, or other foreign
exchange, precious metals, or
other commodity agreement; a
currency swap, option, future,
or forward agreement; an equity
index or equity swap, option,
future, or forward agreement; a
debt index or debt swap,
option, future, or forward
agreement; a total return,
credit spread or credit swap,
option, future, or forward
agreement; a commodity index or
commodity swap, option, future,
or forward agreement; weather
swap, option, future, or
forward agreement; an emissions
swap, option, future, or
forward agreement; or an
inflation swap, option, future,
or forward agreement;
(II) any agreement or
transaction that is similar to
any other agreement or
transaction referred to in this
clause and that is of a type
that has been, is presently, or
in the future becomes, the
subject of recurrent dealings
in the swap or other
derivatives markets (including
terms and conditions
incorporated by reference in
such agreement) and that is a
forward, swap, future, option,
or spot transaction on one or
more rates, currencies,
commodities, equity securities
or other equity instruments,
debt securities or other debt
instruments, quantitative
measures associated with an
occurrence, extent of an
occurrence, or contingency
associated with a financial,
commercial, or economic
consequence, or economic or
financial indices or measures
of economic or financial risk
or value;
(III) any combination of
agreements or transactions
referred to in this clause;
(IV) any option to enter into
any agreement or transaction
referred to in this clause;
(V) a master agreement that
provides for an agreement or
transaction referred to in
subclause (I), (II), (III), or
(IV), together with all
supplements to any such master
agreement, without regard to
whether the master agreement
contains an agreement or
transaction that is not a swap
agreement under this clause,
except that the master
agreement shall be considered
to be a swap agreement under
this clause only with respect
to each agreement or
transaction under the master
agreement that is referred to
in subclause (I), (II), (III),
or (IV); and
(VI) any security agreement
or arrangement or other credit
enhancement related to any
agreements or transactions
referred to in subclause (I),
(II), (III), (IV), or (V),
including any guarantee or
reimbursement obligation in
connection with any agreement
or transaction referred to in
any such subclause.
Such term is applicable for purposes of
this subsection only and shall not be
construed or applied so as to challenge
or affect the characterization,
definition, or treatment of any swap
agreement under any other statute,
regulation, or rule, including the
Gramm-Leach-Bliley Act, the Legal
Certainty for Bank Products Act of
2000, the securities laws (as such term
is defined in section 3(a)(47) of the
Securities Exchange Act of 1934) and
the Commodity Exchange Act.
(vii) Treatment of master agreement
as one agreement.--Any master agreement
for any contract or agreement described
in any preceding clause of this
subparagraph (or any master agreement
for such master agreement or
agreements), together with all
supplements to such master agreement,
shall be treated as a single agreement
and a single qualified financial
contract. If a master agreement
contains provisions relating to
agreements or transactions that are not
themselves qualified financial
contracts, the master agreement shall
be deemed to be a qualified financial
contract only with respect to those
transactions that are themselves
qualified financial contracts.
(viii) Transfer.--The term
``transfer'' means every mode, direct
or indirect, absolute or conditional,
voluntary or involuntary, of disposing
of or parting with property or with an
interest in property, including
retention of title as a security
interest and foreclosure of the
depository institution's equity of
redemption.
(ix) Person.--The term ``person'' includes
any governmental entity in addition to any
entity included in the definition of such term
in section 1 of title 1, United States Code.
(E) Certain protections in event of
appointment of conservator.--Notwithstanding
any other provision of this Act (other than
subsections (d)(9) and (e)(10) of this section,
and section 13(e) of this Act), any other
Federal law, or the law of any State, no person
shall be stayed or prohibited from exercising--
(i) any right such person has to
cause the termination, liquidation, or
acceleration of any qualified financial
contract with a depository institution
in a conservatorship based upon a
default under such financial contract
which is enforceable under applicable
noninsolvency law;
(ii) any right under any security
agreement or arrangement or other
credit enhancement related to one or
more qualified financial contracts
described in clause (i);
(iii) any right to offset or net out
any termination values, payment
amounts, or other transfer obligations
arising under or in connection with
such qualified financial contracts.
(F) Clarification.--No provision of law shall
be construed as limiting the right or power of
the Corporation, or authorizing any court or
agency to limit or delay, in any manner, the
right or power of the Corporation to transfer
any qualified financial contract in accordance
with paragraphs (9) and (10) of this subsection
or to disaffirm or repudiate any such contract
in accordance with subsection (e)(1) of this
section.
(G) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the
provisions of subparagraphs (A) and
(E), and sections 403 and 404 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991, no walkaway
clause shall be enforceable in a
qualified financial contract of an
insured depository institution in
default.
(ii) Limited suspension of certain
obligations.--In the case of a
qualified financial contract referred
to in clause (i), any payment or
delivery obligations otherwise due from
a party pursuant to the qualified
financial contract shall be suspended
from the time the receiver is appointed
until the earlier of--
(I) the time such party
receives notice that such
contract has been transferred
pursuant to subparagraph (A);
or
(II) 5:00 p.m. (eastern time)
on the business day following
the date of the appointment of
the receiver.
(iii) Walkaway clause defined.--For
purposes of this subparagraph, the term
``walkaway clause'' means any provision
in a qualified financial contract that
suspends, conditions, or extinguishes a
payment obligation of a party, in whole
or in part, or does not create a
payment obligation of a party that
would otherwise exist, solely because
of such party's status as a
nondefaulting party in connection with
the insolvency of an insured depository
institution that is a party to the
contract or the appointment of or the
exercise of rights or powers by a
conservator or receiver of such
depository institution, and not as a
result of a party's exercise of any
right to offset, setoff, or net
obligations that exist under the
contract, any other contract between
those parties, or applicable law.
(H) Recordkeeping requirements.--The
Corporation, in consultation with the
appropriate Federal banking agencies, may
prescribe regulations requiring more detailed
recordkeeping by any insured depository
institution with respect to qualified financial
contracts (including market valuations) only if
such insured depository institution is in a
troubled condition (as such term is defined by
the Corporation pursuant to section 32).
(9) Transfer of qualified financial contracts.--
(A) In general.--In making any transfer of
assets or liabilities of a depository
institution in default which includes any
qualified financial contract, the conservator
or receiver for such depository institution
shall either--
(i) transfer to one financial
institution, other than a financial
institution for which a conservator,
receiver, trustee in bankruptcy, or
other legal custodian has been
appointed or which is otherwise the
subject of a bankruptcy or insolvency
proceeding--
(I) all qualified financial
contracts between any person or
any affiliate of such person
and the depository institution
in default;
(II) all claims of such
person or any affiliate of such
person against such depository
institution under any such
contract (other than any claim
which, under the terms of any
such contract, is subordinated
to the claims of general
unsecured creditors of such
institution);
(III) all claims of such
depository institution against
such person or any affiliate of
such person under any such
contract; and
(IV) all property securing or
any other credit enhancement
for any contract described in
subclause (I) or any claim
described in subclause (II) or
(III) under any such contract;
or
(ii) transfer none of the qualified
financial contracts, claims, property
or other credit enhancement referred to
in clause (i) (with respect to such
person and any affiliate of such
person).
(B) Transfer to foreign bank, foreign
financial institution, or branch or agency of a
foreign bank or financial institution.--In
transferring any qualified financial contracts
and related claims and property under
subparagraph (A)(i), the conservator or
receiver for the depository institution shall
not make such transfer to a foreign bank,
financial institution organized under the laws
of a foreign country, or a branch or agency of
a foreign bank or financial institution unless,
under the law applicable to such bank,
financial institution, branch or agency, to the
qualified financial contracts, and to any
netting contract, any security agreement or
arrangement or other credit enhancement related
to one or more qualified financial contracts,
the contractual rights of the parties to such
qualified financial contracts, netting
contracts, security agreements or arrangements,
or other credit enhancements are enforceable
substantially to the same extent as permitted
under this section.
(C) Transfer of contracts subject to the
rules of a clearing organization.--In the event
that a conservator or receiver transfers any
qualified financial contract and related
claims, property, and credit enhancements
pursuant to subparagraph (A)(i) and such
contract is cleared by or subject to the rules
of a clearing organization, the clearing
organization shall not be required to accept
the transferee as a member by virtue of the
transfer.
(D) Definitions.--For purposes of this
paragraph, the term ``financial institution''
means a broker or dealer, a depository
institution, a futures commission merchant, or
any other institution, as determined by the
Corporation by regulation to be a financial
institution, and the term ``clearing
organization'' has the same meaning as in
section 402 of the Federal Deposit Insurance
Corporation Improvement Act of 1991.
(10) Notification of transfer.--
(A) In general.--If--
(i) the conservator or receiver for
an insured depository institution in
default makes any transfer of the
assets and liabilities of such
institution; and
(ii) the transfer includes any
qualified financial contract,
the conservator or receiver shall notify any
person who is a party to any such contract of
such transfer by 5:00 p.m. (eastern time) on
the business day following the date of the
appointment of the receiver in the case of a
receivership, or the business day following
such transfer in the case of a conservatorship.
(B) Certain rights not enforceable.--
(i) Receivership.--A person who is a
party to a qualified financial contract
with an insured depository institution
may not exercise any right that such
person has to terminate, liquidate, or
net such contract under paragraph
(8)(A) of this subsection or section
403 or 404 of the Federal Deposit
Insurance Corporation Improvement Act
of 1991, solely by reason of or
incidental to the appointment of a
receiver for the depository institution
(or the insolvency or financial
condition of the depository institution
for which the receiver has been
appointed)--
(I) until 5:00 p.m. (eastern
time) on the business day
following the date of the
appointment of the receiver; or
(II) after the person has
received notice that the
contract has been transferred
pursuant to paragraph (9)(A).
(ii) Conservatorship.--A person who
is a party to a qualified financial
contract with an insured depository
institution may not exercise any right
that such person has to terminate,
liquidate, or net such contract under
paragraph (8)(E) of this subsection or
section 403 or 404 of the Federal
Deposit Insurance Corporation
Improvement Act of 1991, solely by
reason of or incidental to the
appointment of a conservator for the
depository institution (or the
insolvency or financial condition of
the depository institution for which
the conservator has been appointed).
(iii) Notice.--For purposes of this
paragraph, the Corporation as receiver
or conservator of an insured depository
institution shall be deemed to have
notified a person who is a party to a
qualified financial contract with such
depository institution if the
Corporation has taken steps reasonably
calculated to provide notice to such
person by the time specified in
subparagraph (A).
(C) Treatment of Bridge Depository
Institutions.--The following institutions shall
not be considered to be a financial institution
for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been
appointed or which is otherwise the subject of
a bankruptcy or insolvency proceeding for
purposes of paragraph (9):
(i) A bridge depository institution.
(ii) A depository institution
organized by the Corporation, for which
a conservator is appointed either--
(I) immediately upon the
organization of the
institution; or
(II) at the time of a
purchase and assumption
transaction between the
depository institution and the
Corporation as receiver for a
depository institution in
default.
(D) Business day defined.--For purposes of
this paragraph, the term ``business day'' means
any day other than any Saturday, Sunday, or any
day on which either the New York Stock Exchange
or the Federal Reserve Bank of New York is
closed.
(11) Disaffirmance or repudiation of qualified
financial contracts.--In exercising the rights of
disaffirmance or repudiation of a conservator or
receiver with respect to any qualified financial
contract to which an insured depository institution is
a party, the conservator or receiver for such
institution shall either--
(A) disaffirm or repudiate all qualified
financial contracts between--
(i) any person or any affiliate of
such person; and
(ii) the depository institution in
default; or
(B) disaffirm or repudiate none of the
qualified financial contracts referred to in
subparagraph (A) (with respect to such person
or any affiliate of such person).
(12) Certain security interests not avoidable.--No
provision of this subsection shall be construed as
permitting the avoidance of any legally enforceable or
perfected security interest in any of the assets of any
depository institution except where such an interest is
taken in contemplation of the institution's insolvency
or with the intent to hinder, delay, or defraud the
institution or the creditors of such institution.
(13) Authority to enforce contracts.--
(A) In general.--The conservator or receiver
may enforce any contract, other than a
director's or officer's liability insurance
contract or a depository institution bond,
entered into by the depository institution
notwithstanding any provision of the contract
providing for termination, default,
acceleration, or exercise of rights upon, or
solely by reason of, insolvency or the
appointment of or the exercise of rights or
powers by a conservator or receiver.
(B) Certain rights not affected.--No
provision of this paragraph may be construed as
impairing or affecting any right of the
conservator or receiver to enforce or recover
under a director's or officer's liability
insurance contract or depository institution
bond under other applicable law.
(C) Consent requirement.--
(i) In general.--Except as otherwise
provided by this section or section 15,
no person may exercise any right or
power to terminate, accelerate, or
declare a default under any contract to
which the depository institution is a
party, or to obtain possession of or
exercise control over any property of
the institution or affect any
contractual rights of the institution,
without the consent of the conservator
or receiver, as appropriate, during the
45-day period beginning on the date of
the appointment of the conservator, or
during the 90-day period beginning on
the date of the appointment of the
receiver, as applicable.
(ii) Certain exceptions.--No
provision of this subparagraph shall
apply to a director or officer
liability insurance contract or a
depository institution bond, to the
rights of parties to certain qualified
financial contracts pursuant to
paragraph (8), or to the rights of
parties to netting contracts pursuant
to subtitle A of title IV of the
Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4401
et seq.), or shall be construed as
permitting the conservator or receiver
to fail to comply with otherwise
enforceable provisions of such
contract.
(iii) Rule of construction.--Nothing
in this subparagraph shall be construed
to limit or otherwise affect the
applicability of title 11, United
States Code.
(14) Exception for federal reserve and federal home
loan banks.--No provision of this subsection shall
apply with respect to--
(A) any extension of credit from any Federal
home loan bank or Federal Reserve bank to any
insured depository institution; or
(B) any security interest in the assets of
the institution securing any such extension of
credit.
(15) Selling credit card accounts receivable.--
(A) Notification required.--An
undercapitalized insured depository institution
(as defined in section 38) shall notify the
Corporation in writing before entering into an
agreement to sell credit card accounts
receivable.
(B) Waiver by corporation.--The Corporation
may at any time, in its sole discretion and
upon such terms as it may prescribe, waive its
right to repudiate an agreement to sell credit
card accounts receivable if the Corporation--
(i) determines that the waiver is in
the best interests of the Deposit
Insurance Fund; and
(ii) provides a written waiver to the
selling institution.
(C) Effect of waiver on successors.--
(i) In general.--If, under
subparagraph (B), the Corporation has
waived its right to repudiate an
agreement to sell credit card accounts
receivable--
(I) any provision of the
agreement that restricts
solicitation of a credit card
customer of the selling
institution, or the use of a
credit card customer list of
the institution, shall bind any
receiver or conservator of the
institution; and
(II) the Corporation shall
require any acquirer of the
selling institution, or of
substantially all of the
selling institution's assets or
liabilities, to agree to be
bound by a provision described
in subclause (I) as if the
acquirer were the selling
institution.
(ii) Exception.--Clause (i)(II) does
not--
(I) restrict the acquirer's
authority to offer any product
or service to any person
identified without using a list
of the selling institution's
customers in violation of the
agreement;
(II) require the acquirer to
restrict any preexisting
relationship between the
acquirer and a customer; or
(III) apply to any
transaction in which the
acquirer acquires only insured
deposits.
(D) Waiver not actionable.--The Corporation
shall not, in any capacity, be liable to any
person for damages resulting from the waiver of
or failure to waive the Corporation's right
under this section to repudiate any contract or
lease, including an agreement to sell credit
card accounts receivable. No court shall issue
any order affecting any such waiver or failure
to waive.
(E) Other authority not affected.--This
paragraph does not limit any other authority of
the Corporation to waive the Corporation's
right to repudiate an agreement or lease under
this section.
(16) Certain credit card customer lists protected.--
(A) In general.--If any insured depository
institution sells credit card accounts
receivable under an agreement negotiated at
arm's length that provides for the sale of the
institution's credit card customer list, the
Corporation shall prohibit any party to a
transaction with respect to the institution
under this section or section 13 from using the
list, except as permitted under the agreement.
(B) Fraudulent transactions excluded.--
Subparagraph (A) does not limit the
Corporation's authority to repudiate any
agreement entered into with the intent to
hinder, delay, or defraud the institution, the
institution's creditors, or the Corporation.
(17) Savings clause.--The meanings of terms used in
this subsection are applicable for purposes of this
subsection only, and shall not be construed or applied
so as to challenge or affect the characterization,
definition, or treatment of any similar terms under any
other statute, regulation, or rule, including the
Gramm-Leach-Bliley Act, the Legal Certainty for Bank
Products Act of 2000, the securities laws (as that term
is defined in section 3(a)(47) of the Securities
Exchange Act of 1934), and the Commodity Exchange Act.
(f) Payment of Insured Deposits.--
(1) In general.--In case of the liquidation of, or
other closing or winding up of the affairs of, any
insured depository institution, payment of the insured
deposits in such institution shall be made by the
Corporation as soon as possible, subject to the
provisions of subsection (g), either by cash or by
making available to each depositor a transferred
deposit in a new insured depository institution in the
same community or in another insured depository
institution in an amount equal to the insured deposit
of such depositor.
(2) Proof of claims.--The Corporation, in its
discretion, may require proof of claims to be filed and
may approve or reject such claims for insured deposits.
(3) Resolution of disputes.--A determination by the
Corporation regarding any claim for insurance coverage
shall be treated as a final determination for purposes
of this section. In its discretion, the Corporation may
promulgate regulations prescribing procedures for
resolving any disputed claim relating to any insured
deposit or any determination of insurance coverage with
respect to any deposit.
(4) Review of corporation determination.--A final
determination made by the Corporation regarding any
claim for insurance coverage shall be a final agency
action reviewable in accordance with chapter 7 of title
5, United States Code, by the United States district
court for the Federal judicial district where the
principal place of business of the depository
institution is located.
(5) Statute of limitations.--Any request for review
of a final determination by the Corporation regarding
any claim for insurance coverage shall be filed with
the appropriate United States district court not later
than 60 days after the date on which such determination
is issued.
(g) Subrogation of corporation.--
(1) In general.--Notwithstanding any other provision
of Federal law, the law of any State, or the
constitution of any State, the Corporation, upon the
payment to any depositor as provided in subsection (f)
in connection with any insured depository institution
or insured branch described in such subsection or the
assumption of any deposit in such institution or branch
by another insured depository institution pursuant to
this section or section 13, shall be subrogated to all
rights of the depositor against such institution or
branch to the extent of such payment or assumption.
(2) Dividends on subrogated amounts.--The subrogation
of the Corporation under paragraph (1) with respect to
any insured depository institution shall include the
right on the part of the Corporation to receive the
same dividends from the proceeds of the assets of such
institution and recoveries on account of stockholders'
liability as would have been payable to the depositor
on a claim for the insured deposit, but such depositor
shall retain such claim for any uninsured or unassumed
portion of the deposit.
(3) Waiver of certain claims.--With respect to any
bank which closes after May 25, 1938, the Corporation
shall waive, in favor only of any person against whom
stockholders' individual liability may be asserted, any
claim on account of such liability in excess of the
liability, if any, to the bank or its creditors, for
the amount unpaid upon such stock in such bank; but any
such waiver shall be effected in such manner and on
such terms and conditions as will not increase
recoveries or dividends on account of claims to which
the Corporation is not subrogated.
(4) Applicability of state law.--Subject to
subsection (d)(11), if the Corporation is appointed
pursuant to subsection (c)(3), or determines not to
invoke the authority conferred in subsection (c)(4),
the rights of depositors and other creditors of any
State depository institution shall be determined in
accordance with the applicable provisions of State law.
(h) Conditions Applicable To Resolution Proceedings.--
(1) Consideration of local economic impact
required.--The Corporation shall fully consider the
adverse economic impact on local communities, including
businesses and farms, of actions to be taken by it
during the administration and liquidation of loans of a
depository institution in default.
(2) Actions to alleviate adverse economic impact to
be considered.--The actions which the Corporation shall
consider include the release of proceeds from the sale
of products and services for family living and business
expenses and shortening the undue length of the
decisionmaking process for the acceptance of offers of
settlement contingent upon third party financing.
(3) Guidelines required.--The Corporation shall adopt
and publish procedures and guidelines to minimize
adverse economic effects caused by its actions on
individual debtors in the community.
(4) Financial services industry impact analysis.--
After the appointment of the Corporation as conservator
or receiver for any insured depository institution and
before taking any action under this section or section
13 in connection with the resolution of such
institution, the Corporation shall--
(A) evaluate the likely impact of the means
of resolution, and any action which the
Corporation may take in connection with such
resolution, on the viability of other insured
depository institutions in the same community;
and
(B) take such evaluation into account in
determining the means for resolving the
institution and establishing the terms and
conditions for any such action.
(i) Valuation of Claims in Default.--
(1) In general.--Notwithstanding any other provision
of Federal law or the law of any State and regardless
of the method which the Corporation determines to
utilize with respect to an insured depository
institution in default or in danger of default,
including transactions authorized under subsection (n)
and section 13(c), this subsection shall govern the
rights of the creditors (other than insured depositors)
of such institution.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver or in any other
capacity, to any person having a claim against the
receiver or the insured depository institution for
which such receiver is appointed shall equal the amount
such claimant would have received if the Corporation
had liquidated the assets and liabilities of such
institution without exercising the Corporation's
authority under subsection (n) of this section or
section 13.
(3) Additional payments authorized.--
(A) In general.--The Corporation may, in its
discretion and in the interests of minimizing
its losses, use its own resources to make
additional payments or credit additional
amounts to or with respect to or for the
account of any claimant or category of
claimants. Notwithstanding any other provision
of Federal or State law, or the constitution of
any State, the Corporation shall not be
obligated, as a result of having made any such
payment or credited any such amount to or with
respect to or for the account of any claimant
or category of claimants, to make payments to
any other claimant or category of claimants.
(B) Manner of payment.--The Corporation may
make the payments or credit the amounts
specified in subparagraph (A) directly to the
claimants or may make such payments or credit
such amounts to an open insured depository
institution to induce such institution to
accept liability for such claims.
(j) Limitation on court action.--Except as provided in this
section, no court may take any action, except at the request of
the Board of Directors by regulation or order, to restrain or
affect the exercise of powers or functions of the Corporation
as a conservator or a receiver.
(k) Liability of directors and officers.--A director or
officer of an insured depository institution may be held
personally liable for monetary damages in any civil action by,
on behalf of, or at the request or direction of the
Corporation, which action is prosecuted wholly or partially for
the benefit of the Corporation--
(1) acting as conservator or receiver of such
institution,
(2) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by such receiver or conservator, or
(3) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed in whole or in part by an insured depository
institution or its affiliate in connection with
assistance provided under section 13,
for gross negligence, including any similar conduct or conduct
that demonstrates a greater disregard of a duty of care (than
gross negligence) including intentional tortious conduct, as
such terms are defined and determined under applicable State
law. Nothing in this paragraph shall impair or affect any right
of the Corporation under other applicable law.
(l) Damages.--In any proceeding related to any claim against
an insured depository institution's director, officer,
employee, agent, attorney, accountant, appraiser, or any other
party employed by or providing services to an insured
depository institution, recoverable damages determined to
result from the improvident or otherwise improper use or
investment of any insured depository institution's assets shall
include principal losses and appropriate interest.
(m) New Depository Institutions.--
(1) Organization authorized.--As soon as possible
after the default of an insured depository institution,
the Corporation, if it finds that it is advisable and
in the interest of the depositors of the insured
depository institution in default or the public shall
organize a new national bank or Federal savings
association in the same community as the insured
depository institution in default to assume the insured
deposits of such depository institution in default and
otherwise to perform temporarily the functions
hereinafter provided for.
(2) Articles of association.--The articles of
association and the organization certificate of the new
depository institution shall be executed by
representatives designated by the Corporation.
(3) Capital stock.--No capital stock need be paid in
by the Corporation.
(4) Executive officer.--The new depository
institution shall not have a board of directors, but
shall be managed by an executive officer appointed by
the Board of Directors of the Corporation who shall be
subject to its directions.
(5) Subject to laws relating to national banks.--In
all other respects the new depository institution shall
be organized in accordance with the then existing
provisions of law relating to the organization of
national banking associations.
(6) New deposits.--The new depository institution
may, with the approval of the Corporation, accept new
deposits which shall be subject to withdrawal on demand
and which, except where the new depository institution
is the only depository institution in the community,
shall not exceed an amount equal to the standard
maximum deposit insurance amount from any depositor.
(7) Insured status.--The new depository institution,
without application to or approval by the Corporation,
shall be an insured depository institution and shall
maintain on deposit with the Federal Reserve bank of
its district reserves in the amount required by law for
member banks, but it shall not be required to subscribe
for stock of the Federal Reserve bank.
(8) Investments.--Funds of the new depository
institution shall be kept on hand in cash, invested in
obligations of the United States or obligations
guaranteed as to principal and interest by the United
States, or deposited with the Corporation, any Federal
Reserve bank, or, to the extent of the insurance
coverage on any such deposit, an insured depository
institution.
(9) Conduct of business.--The new depository
institution, unless otherwise authorized by the
Comptroller of the Currency, shall transact business
only as authorized by this Act and as may be incidental
to its organization.
(10) Exempt status.--Notwithstanding any other
provision of Federal or State law, the new depository
institution, its franchise, property, and income shall
be exempt from all taxation now or hereafter imposed by
the United States, by any territory, dependency, or
possession thereof, or by any State, county,
municipality, or local taxing authority.
(11) Transfer of deposits.--(A) Upon the organization
of a new depository institution, the Corporation shall
promptly make available to it an amount equal to the
estimated insured deposits of such depository
institution in default plus the estimated amount of the
expenses of operating the new depository institution,
and shall determine as soon as possible the amount due
each depositor for the depositor's insured deposit in
the insured depository institution in default, and the
total expenses of operation of the new depository
institution.
(12) Earnings.--Earnings of the new depository
institution shall be paid over or credited to the
Corporation in such adjustment.
(13) Losses.--If any new depository institution,
during the period it continues its status as such,
sustains any losses with respect to which it is not
effectively protected except by reason of being an
insured depository institution, the Corporation shall
furnish to it additional funds in the amount of such
losses.
(14) Payment of insured deposits.--(A) The new
depository institution shall assume as transferred
deposits the payment of the insured deposits of such
depository institution in default to each of its
depositors.
(B) Of the amounts so made available, the Corporation
shall transfer to the new depository institution, in
cash, such sums as may be necessary to enable it to
meet its expenses of operation and immediate cash
demands on such transferred deposits, and the remainder
of such amounts shall be subject to withdrawal by the
new depository institution on demand.
(15) Issuance of stock.--(A) Whenever in the judgment
of the Board of Directors it is desirable to do so, the
Corporation shall cause capital stock of the new
depository institution to be offered for sale on such
terms and conditions as the Board of Directors shall
deem advisable in an amount sufficient, in the opinion
of the Board of Directors, to make possible the conduct
of the business of the new depository institution on a
sound basis.
(B) The stockholders of the insured depository
institution in default shall be given the first
opportunity to purchase any shares of common stock so
offered.
(16) Issuance of certificate.--Upon proof that an
adequate amount of capital stock in the new depository
institution has been subscribed and paid for in cash,
the Comptroller of the Currency, shall require the
articles of association and the organization
certificate to be amended to conform to the
requirements for the organization of a national bank or
Federal savings association, and thereafter, when the
requirements of law with respect to the organization of
a national bank or Federal savings association have
been complied with, the Comptroller of the Currency,
shall issue to the depository institution a certificate
of authority to commence business, and thereupon the
depository institution shall cease to have the status
of a new depository institution, shall be managed by
directors elected by its own shareholders, may exercise
all the powers granted by law, and shall be subject to
all provisions of law relating to national banks or
Federal savings associations. Such depository
institution shall thereafter be an insured national
bank or Federal savings association, without
certification to or approval by the Corporation.
(17) Transfer to other institution.--If the capital
stock of the new depository institution is not offered
for sale, or if an adequate amount of capital for such
new depository institution is not subscribed and paid
for, the Board of Directors may offer to transfer its
business to any insured depository institution in the
same community which will take over its assets, assume
its liabilities, and pay to the Corporation for such
business such amount as the Board of Directors may deem
adequate; or the Board of Directors in its discretion
may change the location of the new depository
institution to the office of the Corporation or to some
other place or may at any time wind up its affairs as
herein provided.
(18) Winding up.--Unless the capital stock of the new
depository institution is sold or its assets are taken
over and its liabilities are assumed by an insured
depository institution as above provided within 2 years
after the date of its organization, the Corporation
shall wind up the affairs of such depository
institution, after giving such notice, if any, as the
Comptroller of the Currency, may require, and shall
certify to the Comptroller of the Currency, the
termination of the new depository institution.
Thereafter the Corporation shall be liable for the
obligations of such depository institution and shall be
the owner of its assets.
(19) Applicability of certain laws.--The provisions
of sections 5220 and 5221 of the Revised Statutes shall
not apply to a new depository institution under this
subsection.
(n) Bridge Depository Institutions.--
(1) Organization.--
(A) Purpose.--When 1 or more insured
depository institutions are in default, or when
the Corporation anticipates that 1 or more
insured depository institutions may become in
default, the Corporation may, in its
discretion, organize, and the Office of the
Comptroller of the Currency, with respect to 1
or more insured depository institutions or 1 or
more insured savings associations, shall
charter, 1 or more national banks or Federal
savings associations, as appropriate, with
respect thereto with the powers and attributes
of national banking associations or Federal
savings associations, as applicable, subject to
the provisions of this subsection, to be
referred to as ``bridge depository
institutions''.
(B) Authorities.--Upon the granting of a
charter to a bridge depository institution, the
bridge depository institution may--
(i) assume such deposits of such
insured depository institution or banks
that is or are in default or in danger
of default as the Corporation may, in
its discretion, determine to be
appropriate;
(ii) assume such other liabilities
(including liabilities associated with
any trust business) of such insured
depository institution or banks that is
or are in default or in danger of
default as the Corporation may, in its
discretion, determine to be
appropriate;
(iii) purchase such assets (including
assets associated with any trust
business) of such insured depository
institution or banks that is or are in
default or in danger of default as the
Corporation may, in its discretion,
determine to be appropriate; and
(iv) perform any other temporary
function which the Corporation may, in
its discretion, prescribe in accordance
with this Act.
(C) Articles of association.--The articles of
association and organization certificate of a
bridge depository institution as approved by
the Corporation shall be executed by 3
representatives designated by the Corporation.
(D) Interim directors.--A bridge depository
institution shall have an interim board of
directors consisting of not fewer than 5 nor
more than 10 members appointed by the
Corporation.
(E) National bank or federal savings
association.--A bridge depository institution
shall be organized as a national bank, in the
case of 1 or more insured depository
institutions, and as a Federal savings
association, in the case of 1 or more insured
savings associations.
(2) Chartering.--
(A) Conditions.--A national bank or Federal
savings association may be chartered by the
Comptroller of the Currency as a bridge
depository institution only if the Board of
Directors determines that--
(i) the amount which is reasonably
necessary to operate such bridge
depository institution will not exceed
the amount which is reasonably
necessary to save the cost of
liquidating, including paying the
insured accounts of, 1 or more insured
depository institutions in default or
in danger of default with respect to
which the bridge depository institution
is chartered;
(ii) the continued operation of such
insured depository institution or banks
in default or in danger of default with
respect to which the bridge depository
institution is chartered is essential
to provide adequate banking services in
the community where each such
depository institution in default or in
danger of default is located; or
(iii) the continued operation of such
insured depository institution or banks
in default or in danger of default with
respect to which the bridge depository
institution is chartered is in the best
interest of the depositors of such
depository institution or banks in
default or in danger of default or the
public.
(B) Insured national bank or federal savings
association.--A bridge depository institution
shall be an insured depository institution from
the time it is chartered as a national bank or
Federal savings association.
(C) Bridge bank treated as being in default
for certain purposes.--A bridge depository
institution shall be treated as an insured
depository institution in default at such times
and for such purposes as the Corporation may,
in its discretion, determine.
(D) Management.--A bridge depository
institution, upon the granting of its charter,
shall be under the management of a board of
directors consisting of not fewer than 5 nor
more than 10 members appointed by the
Corporation.
(E) Bylaws.--The board of directors of a
bridge depository institution shall adopt such
bylaws as may be approved by the Corporation.
(3) Transfer of assets and liabilities.--
(A) In general.--
(i) Transfer upon grant of charter.--
Upon the granting of a charter to a
bridge depository institution pursuant
to this subsection, the Corporation, as
receiver, or any other receiver
appointed with respect to any insured
depository institution in default with
respect to which the bridge depository
institution is chartered may transfer
any assets and liabilities of such
depository institution in default to
the bridge depository institution in
accordance with paragraph (1).
(ii) Subsequent transfers.--At any
time after a charter is granted to a
bridge depository institution, the
Corporation, as receiver, or any other
receiver appointed with respect to an
insured depository institution in
default may transfer any assets and
liabilities of such insured depository
institution in default as the
Corporation may, in its discretion,
determine to be appropriate in
accordance with paragraph (1).
(iii) Treatment of trust business.--
For purposes of this paragraph, the
trust business, including fiduciary
appointments, of any insured depository
institution in default is included
among its assets and liabilities.
(iv) Effective without approval.--The
transfer of any assets or liabilities,
including those associated with any
trust business, of an insured
depository institution in default
transferred to a bridge depository
institution shall be effective without
any further approval under Federal or
State law, assignment, or consent with
respect thereto.
(B) Intent of congress regarding continuing
operations.--It is the intent of the Congress
that, in order to prevent unnecessary hardship
or losses to the customers of any insured
depository institution in default with respect
to which a bridge depository institution is
chartered, especially creditworthy farmers,
small businesses, and households, the
Corporation should--
(i) continue to honor commitments
made by the depository institution in
default to creditworthy customers, and
(ii) not interrupt or terminate
adequately secured loans which are
transferred under subparagraph (A) and
are being repaid by the debtor in
accordance with the terms of the loan
instrument.
(4) Powers of bridge banks.--Each bridge depository
institution chartered under this subsection shall have
all corporate powers of, and be subject to the same
provisions of law as, a national bank or Federal
savings association, as appropriate, except that--
(A) the Corporation may--
(i) remove the interim directors and
directors of a bridge depository
institution;
(ii) fix the compensation of members
of the interim board of directors and
the board of directors and senior
management, as determined by the
Corporation in its discretion, of a
bridge depository institution; and
(iii) waive any requirement
established under section 5145, 5146,
5147, 5148, or 5149 of the Revised
Statutes (relating to directors of
national banks) or section 31 of the
Banking Act of 1933 which would
otherwise be applicable with respect to
directors of a bridge depository
institution by operation of paragraph
(2)(B);
(B) the Corporation may indemnify the
representatives for purposes of paragraph
(1)(B) and the interim directors, directors,
officers, employees, and agents of a bridge
depository institution on such terms as the
Corporation determines to be appropriate;
(C) no requirement under any provision of law
relating to the capital of a national bank
shall apply with respect to a bridge depository
institution;
(D) the Comptroller of the Currency may
establish a limitation on the extent to which
any person may become indebted to a bridge
depository institution without regard to the
amount of the bridge depository institution's
capital or surplus;
(E)(i) the board of directors of a bridge
depository institution shall elect a
chairperson who may also serve in the position
of chief executive officer, except that such
person shall not serve either as chairperson or
as chief executive officer without the prior
approval of the Corporation; and
(ii) the board of directors of a bridge depository
institution may appoint a chief executive officer who
is not also the chairperson, except that such person
shall not serve as chief executive officer without the
prior approval of the Corporation;
(F) a bridge depository institution shall not
be required to purchase stock of any Federal
Reserve bank;
(G) the Comptroller of the Currency shall
waive any requirement for a fidelity bond with
respect to a bridge depository institution at
the request of the Corporation;
(H) any judicial action to which a bridge
depository institution becomes a party by
virtue of its acquisition of any assets or
assumption of any liabilities of a depository
institution in default shall be stayed from
further proceedings for a period of up to 45
days at the request of the bridge depository
institution;
(I) no agreement which tends to diminish or
defeat the right, title or interest of a bridge
depository institution in any asset of an
insured depository institution in default
acquired by it shall be valid against the
bridge depository institution unless such
agreement--
(i) is in writing,
(ii) was executed by such insured
depository institution in default and
the person or persons claiming an
adverse interest thereunder, including
the obligor, contemporaneously with the
acquisition of the asset by such
insured depository institution in
default,
(iii) was approved by the board of
directors of such insured depository
institution in default or its loan
committee, which approval shall be
reflected in the minutes of said board
or committee, and
(iv) has been, continuously from the
time of its execution, an official
record of such insured depository
institution in default;
(J) notwithstanding section 13(e)(2), any
agreement relating to an extension of credit
between a Federal home loan bank or Federal
Reserve bank and any insured depository
institution which was executed before the
extension of credit by such bank to such
depository institution shall be treated as
having been executed contemporaneously with
such extension of credit for purposes of
subparagraph (I); and
(K) except with the prior approval of the
Corporation, a bridge depository institution
may not, in any transaction or series of
transactions, issue capital stock or be a party
to any merger, consolidation, disposition of
assets or liabilities, sale or exchange of
capital stock, or similar transaction, or
change its charter.
(5) Capital.--
(A) No capital required.--The Corporation
shall not be required to--
(i) issue any capital stock on behalf
of a bridge depository institution
chartered under this subsection; or
(ii) purchase any capital stock of a
bridge depository institution, except
that notwithstanding any other
provision of Federal or State law, the
Corporation may purchase and retain
capital stock of a bridge depository
institution in such amounts and on such
terms as the Corporation, in its
discretion, determines to be
appropriate.
(B) Operating funds in lieu of capital.--Upon
the organization of a bridge depository
institution, and thereafter, as the Board of
Directors may, in its discretion, determine to
be necessary or advisable, the Corporation may
make available to the bridge depository
institution, upon such terms and conditions and
in such form and amounts as the Corporation may
in its discretion determine, funds for the
operation of the bridge depository institution
in lieu of capital.
(C) Authority to issue capital stock.--
Whenever the Board of Directors determines it
is advisable to do so, the Corporation shall
cause capital stock of a bridge depository
institution to be issued and offered for sale
in such amounts and on such terms and
conditions as the Corporation may, in its
discretion, determine.
(D) Capital levels.--A bridge depository
institution shall not be considered an
undercapitalized depository institution or a
critically undercapitalized depository
institution for purposes of section 10B(b) of
the Federal Reserve Act.
(6) No federal status.--
(A) Agency status.--A bridge depository
institution is not an agency, establishment, or
instrumentality of the United States.
(B) Employee status.--Representatives for
purposes of paragraph (1)(B), interim
directors, directors, officers, employees, or
agents of a bridge depository institution are
not, solely by virtue of service in any such
capacity, officers or employees of the United
States. Any employee of the Corporation or of
any Federal instrumentality who serves at the
request of the Corporation as a representative
for purposes of paragraph (1)(B), interim
director, director, officer, employee, or agent
of a bridge depository institution shall not--
(i) solely by virtue of service in
any such capacity lose any existing
status as an officer or employee of the
United States for purposes of title 5,
United States Code, or any other
provision of law, or
(ii) receive any salary or benefits
for service in any such capacity with
respect to a bridge depository
institution in addition to such salary
or benefits as are obtained through
employment with the Corporation or such
Federal instrumentality.
(7) Assistance authorized.--The Corporation may, in
its discretion, provide assistance under section 13(c)
to facilitate any transaction described in clause (i),
(ii), or (iii) of paragraph (10)(A) with respect to any
bridge depository institution in the same manner and to
the same extent as such assistance may be provided
under such section with respect to an insured
depository institution in default, or to facilitate a
bridge depository institution's acquisition of any
assets or the assumption of any liabilities of an
insured depository institution in default.
(8) Acquisition.--
(A) In general.--The responsible agency shall
notify the Attorney General of any transaction
involving the merger or sale of a bridge
depository institution requiring approval under
section 18(c) and if a report on competitive
factors is requested within 10 days, such
transaction may not be consummated before the
5th calendar day after the date of approval by
the responsible agency with respect thereto. If
the responsible agency has found that it must
act immediately to prevent the probable failure
of 1 of the depository institutions involved,
the preceding sentence does not apply and the
transaction may be consummated immediately upon
approval by the agency.
(B) By out-of-state holding company.--Any
depository institution, including an out-of-
State depository institution, or any out-of-
State depository institution holding company
may acquire and retain the capital stock or
assets of, or otherwise acquire and retain a
bridge depository institution if the bridge
depository institution at any time had assets
aggregating $500,000,000 or more, as determined
by the Corporation on the basis of the bridge
depository institution's reports of condition
or on the basis of the last available reports
of condition of any insured depository
institution in default, which institution has
been acquired, or whose assets have been
acquired, by the bridge depository institution.
The acquiring entity may acquire the bridge
depository institution only in the same manner
and to the same extent as such entity may
acquire an insured depository institution in
default under section 13(f)(2).
(9) Duration of bridge depository institution.--
Subject to paragraphs (11) and (12), the status of a
bridge depository institution as such shall terminate
at the end of the 2-year period following the date it
was granted a charter. The Board of Directors may, in
its discretion, extend the status of the bridge
depository institution as such for 3 additional 1-year
periods.
(10) Termination of bridge depository institution
status.--The status of any bridge depository
institution as such shall terminate upon the earliest
of--
(A) the merger or consolidation of the bridge
depository institution with a depository
institution that is not a bridge depository
institution;
(B) at the election of the Corporation, the
sale of a majority of the capital stock of the
bridge depository institution to an entity
other than the Corporation and other than
another bridge depository institution;
(C) the sale of 80 percent, or more, of the
capital stock of the bridge depository
institution to an entity other than the
Corporation and other than another bridge
depository institution;
(D) at the election of the Corporation,
either the assumption of all or substantially
all of the deposits and other liabilities of
the bridge depository institution by a
depository institution holding company or a
depository institution that is not a bridge
depository institution, or the acquisition of
all or substantially all of the assets of the
bridge depository institution by a depository
institution holding company, a depository
institution that is not a bridge depository
institution, or other entity as permitted under
applicable law; and
(E) the expiration of the period provided in
paragraph (9), or the earlier dissolution of
the bridge depository institution as provided
in paragraph (12).
(11) Effect of termination events.--
(A) Merger or consolidation.--A bridge
depository institution that participates in a
merger or consolidation as provided in
paragraph (10)(A) shall be for all purposes a
national bank or a Federal savings association,
as the case may be, with all the rights,
powers, and privileges thereof, and such merger
or consolidation shall be conducted in
accordance with, and shall have the effect
provided in, the provisions of applicable law.
(B) Charter conversion.--Following the sale
of a majority of the capital stock of the
bridge depository institution as provided in
paragraph (10)(B), the Corporation may amend
the charter of the bridge depository
institution to reflect the termination of the
status of the bridge depository institution as
such, whereupon the depository institution
shall remain a national bank or a Federal
savings association, as the case may be,, with
all of the rights, powers, and privileges
thereof, subject to all laws and regulations
applicable thereto.
(C) Sale of stock.--Following the sale of 80
percent or more of the capital stock of a
bridge depository institution as provided in
paragraph (10)(C), the depository institution
shall remain a national bank or a Federal
savings association, as the case may be,, with
all of the rights, powers, and privileges
thereof, subject to all laws and regulations
applicable thereto.
(D) Assumption of liabilities and sale of
assets.--Following the assumption of all or
substantially all of the liabilities of the
bridge depository institution, or the sale of
all or substantially all of the assets of the
bridge depository institution, as provided in
paragraph (10)(D), at the election of the
Corporation the bridge depository institution
may retain its status as such for the period
provided in paragraph (9).
(E) Effect on holding companies.--A
depository institution holding company
acquiring a bridge depository institution under
section 13(f), paragraph (8)(B) (or any
predecessor provision), or both provisions,
shall not be impaired or adversely affected by
the termination of the status of a bridge
depository institution as a result of
subparagraph (A), (B), (C), or (D) of paragraph
(10), and shall be entitled to the rights and
privileges provided in section 13(f).
(F) Amendments to charter.--Following the
consummation of a transaction described in
subparagraph (A), (B), (C), or (D) of paragraph
(10), the charter of the resulting institution
shall be amended to reflect the termination of
bridge depository institution status, if
appropriate.
(12) Dissolution of bridge depository institution.--
(A) In general.--Notwithstanding any other
provision of State or Federal law, if the
bridge depository institution's status as such
has not previously been terminated by the
occurrence of an event specified in
subparagraph (A), (B), (C), or (D) of paragraph
(10)--
(i) the Board of Directors may, in
its discretion, dissolve a bridge
depository institution in accordance
with this paragraph at any time; and
(ii) the Board of Directors shall
promptly commence dissolution
proceedings in accordance with this
paragraph upon the expiration of the 2-
year period following the date the
bridge depository institution was
chartered, or any extension thereof, as
provided in paragraph (9).
(B) Procedures.--The Comptroller of the
Currency shall appoint the Corporation as
receiver for a bridge depository institution
upon certification by the Board of Directors to
the Comptroller of the Currency of its
determination to dissolve the bridge depository
institution. The Corporation as such receiver
shall wind up the affairs of the bridge
depository institution in conformity with the
provisions of law relating to the liquidation
of closed national banks or Federal savings
associations, as appropriate. With respect to
any such bridge depository institution, the
Corporation as such receiver shall have all the
rights, powers, and privileges and shall
perform the duties related to the exercise of
such rights, powers, or privileges granted by
law to a receiver of any insured depository
institution and notwithstanding any other
provision of law in the exercise of such
rights, powers, and privileges the Corporation
shall not be subject to the direction or
supervision of any State agency or other
Federal agency.
(13) Multiple bridge depository institutions.--
Subject to paragraph (1)(B)(i), the Corporation may, in
the Corporation's discretion, organize 2 or more bridge
depository institutions under this subsection to assume
any deposits of, assume any other liabilities of, and
purchase any assets of a single depository institution
in default.
(o) Supervisory Records.--In addition to the requirements of
section 7(a)(2) to provide to the Corporation copies of reports
of examination and reports of condition, whenever the
Corporation has been appointed as receiver for an insured
depository institution, the appropriate Federal banking agency
shall make available all supervisory records to the receiver
which may be used by the receiver in any manner the receiver
determines to be appropriate.
(p) Certain Sales of Assets Prohibited.--
(1) Persons who engaged in improper conduct with, or
caused losses to, depository institutions.--The
Corporation shall prescribe regulations which, at a
minimum, shall prohibit the sale of assets of a failed
institution by the Corporation to--
(A) any person who--
(i) has defaulted, or was a member of
a partnership or an officer or director
of a corporation that has defaulted, on
1 or more obligations the aggregate
amount of which exceed [$1,000,000]
$5,000,000, to such failed institution;
(ii) has been found to have engaged
in fraudulent activity in connection
with any obligation referred to in
clause (i); and
(iii) proposes to purchase any such
asset in whole or in part through the
use of the proceeds of a loan or
advance of credit from the Corporation
or from any institution for which the
Corporation has been appointed as
conservator or receiver;
(B) any person who participated, as an
officer or director of such failed institution
or of any affiliate of such institution, in a
material way in transactions that resulted in a
substantial loss to such failed institution;
(C) any person who has been removed from, or
prohibited from participating in the affairs
of, such failed institution pursuant to any
final enforcement action by an appropriate
Federal banking agency; or
(D) any person who has demonstrated a pattern
or practice of defalcation regarding
obligations to such failed institution.
(2) Convicted debtors.--Except as provided in
paragraph (3), any person who--
(A) has been convicted of an offense under
section 215, 656, 657, 1005, 1006, 1007, 1008,
1014, 1032, 1341, 1343, or 1344 of title 18,
United States Code, or of conspiring to commit
such an offense, affecting any insured
depository institution for which any
conservator or receiver has been appointed; and
(B) is in default on any loan or other
extension of credit from such insured
depository institution which, if not paid, will
cause substantial loss to the institution, the
Deposit Insurance Fund, or the Corporation,
may not purchase any asset of such institution from the
conservator or receiver.
(3) Settlement of claims.--Paragraphs (1) and (2)
shall not apply to the sale or transfer by the
Corporation of any asset of any insured depository
institution to any person if the sale or transfer of
the asset resolves or settles, or is part of the
resolution or settlement, of--
(A) 1 or more claims that have been, or could
have been, asserted by the Corporation against
the person; or
(B) obligations owed by the person to any
insured depository institution or the
Corporation.
(4) Definition of default.--For purposes of this
subsection, the term ``default'' means a failure to
comply with the terms of a loan or other obligation to
such an extent that the property securing the
obligation is foreclosed upon.
(q) Expedited Procedures for Certain Claims.--
(1) Time for filing notice of appeal.--The notice of
appeal of any order, whether interlocutory or final,
entered in any case brought by the Corporation against
an insured depository institution's director, officer,
employee, agent, attorney, accountant, or appraiser or
any other person employed by or providing services to
an insured depository institution shall be filed not
later than 30 days after the date of entry of the
order. The hearing of the appeal shall be held not
later than 120 days after the date of the notice of
appeal. The appeal shall be decided not later than 180
days after the date of the notice of appeal.
(2) Scheduling.--Consistent with section 1657 of
title 18, United States Code, a court of the United
States shall expedite the consideration of any case
brought by the Corporation against an insured
depository institution's director, officer, employee,
agent, attorney, accountant, or appraiser or any other
person employed by or providing services to an insured
depository institution. As far as practicable the court
shall give such case priority on its docket.
(3) Judicial discretion.--The court may modify the
schedule and limitations stated in paragraphs (1) and
(2) in a particular case, based on a specific finding
that the ends of justice that would be served by making
such a modification would outweigh the best interest of
the public in having the case resolved expeditiously.
(r) Foreign Investigations.--The Corporation, as conservator
or receiver of any insured depository institution and for
purposes of carrying out any power, authority, or duty with
respect to an insured depository institution--
(1) may request the assistance of any foreign banking
authority and provide assistance to any foreign banking
authority in accordance with section 8(v); and
(2) may each maintain an office to coordinate foreign
investigations or investigations on behalf of foreign
banking authorities.
(s) Prohibition on Entering Secrecy Agreements and Protective
Orders.--The Corporation may not enter into any agreement or
approve any protective order which prohibits the Corporation
from disclosing the terms of any settlement of an
administrative or other action for damages or restitution
brought by the Corporation in its capacity as conservator or
receiver for an insured depository institution.
(t) Agencies May Share Information Without Waiving
Privilege.--
(1) In general.--A covered agency, in any capacity,
shall not be deemed to have waived any privilege
applicable to any information by transferring that
information to or permitting that information to be
used by--
(A) any other covered agency, in any
capacity; or
(B) any other agency of the Federal
Government (as defined in section 6 of title
18, United States Code).
(2) Definitions.--For purposes of this subsection:
(A) Covered agency.--The term ``covered
agency'' means any of the following:
(i) Any Federal banking agency.
(ii) The Farm Credit Administration.
(iii) The Farm Credit System
Insurance Corporation.
(iv) The National Credit Union
Administration.
(v) The General Accounting Office.
(vi) The Bureau of Consumer Financial
Protection.
(vii) Federal Housing Finance Agency.
(B) Privilege.--The term ``privilege''
includes any work-product, attorney-client, or
other privilege recognized under Federal or
State law.
(3) Rule of construction.--Paragraph (1) shall not be
construed as implying that any person waives any
privilege applicable to any information because
paragraph (1) does not apply to the transfer or use of
that information.
(u) Purchase Rights of Tenants.--
(1) Notice.--Except as provided in paragraph (3), the
Corporation may make available for sale a 1- to 4-
family residence (including a manufactured home) to
which the Corporation acquires title only after the
Corporation has provided the household residing in the
property notice (in writing and mailed to the property)
of the availability of such property and the preference
afforded such household under paragraph (2).
(2) Preference.--In selling such a property, the
Corporation shall give preference to any bona fide
offer made by the household residing in the property,
if--
(A) such offer is substantially similar in
amount to other offers made within such period
(or expected by the Corporation to be made
within such period);
(B) such offer is made during the period
beginning upon the Corporation making such
property available and of a reasonable
duration, as determined by the Corporation
based on the normal period for sale of such
properties; and
(C) the household making the offer complies
with any other requirements applicable to
purchasers of such property, including any
downpayment and credit requirements.
(3) Exceptions.--Paragraphs (1) and (2) shall not
apply to--
(A) any residence transferred in connection
with the transfer of substantially all of the
assets of an insured depository institution for
which the Corporation has been appointed
conservator or receiver;
(B) any eligible single family property (as
such term is defined in section 40(p)); or
(C) any residence for which the household
occupying the residence was the mortgagor under
a mortgage on such residence and to which the
Corporation acquired title pursuant to default
on such mortgage.
(v) Preference for Sales for Homeless Families.--Subject to
subsection (u), in selling any real property (other than
eligible residential property and eligible condominium
property, as such terms are defined in section 40(p)) to which
the Corporation acquires title, the Corporation shall give
preference among offers to purchase the property that will
result in the same net present value proceeds, to any offer
that would provide for the property to be used, during the
remaining useful life of the property, to provide housing or
shelter for homeless persons (as such term is defined in
section 103 of the Stewart B. McKinney Homeless Assistance Act)
or homeless families.
(w) Preferences for Sales of Certain Commercial Real
Properties.--
(1) Authority.--In selling any eligible commercial
real properties of the Corporation, the Corporation
shall give preference, among offers to purchase the
property that will result in the same net present value
proceeds, to any offer--
(A) that is made by a public agency or
nonprofit organization; and
(B) under which the purchaser agrees that the
property shall be used, during the remaining
useful life of the property, for offices and
administrative purposes of the purchaser to
carry out a program to acquire residential
properties to provide (i) homeownership and
rental housing opportunities for very-low-,
low-, and moderate-income families, or (ii)
housing or shelter for homeless persons (as
such term is defined in section 103 of the
Stewart B. McKinney Homeless Assistance Act) or
homeless families.
(2) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Eligible commercial real property.--The
term ``eligible commercial real property''
means any property (i) to which the Corporation
acquires title, and (ii) that the Corporation,
in the discretion of the Corporation,
determines is suitable for use for the location
of offices or other administrative functions
involved with carrying out a program referred
to in paragraph (1)(B).
(B) Nonprofit organization and public
agency.--The terms ``nonprofit organization''
and ``public agency'' have the same meanings as
in section 40(p).
* * * * * * *
SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN FINANCIAL
MANAGEMENT.
(a) Annual Report on Financial Condition and Management.--
(1) Report required.--Each insured depository
institution shall submit an annual report to the
Corporation, the appropriate Federal banking agency,
and any appropriate State bank supervisor (including
any State bank supervisor of a host State).
(2) Contents of report.--Any annual report required
under paragraph (1) shall contain--
(A) the information required to be provided
by--
(i) the institution's management
under subsection (b); and
(ii) an independent public accountant
under subsections (c) and (d); and
(B) such other information as the Corporation
and the appropriate Federal banking agency may
determine to be necessary to assess the
financial condition and management of the
institution.
(3) Public availability.--Any annual report required
under paragraph (1) shall be available for public
inspection. Notwithstanding the preceding sentence, the
Corporation and the appropriate Federal banking
agencies may designate certain information as
privileged and confidential and not available to the
public.
(b) Management Responsibility for Financial Statements and
Internal Controls.--Each insured depository institution shall
prepare--
(1) annual financial statements in accordance with
generally accepted accounting principles and such other
disclosure requirements as the Corporation and the
appropriate Federal banking agency may prescribe; and
(2) a report signed by the chief executive officer
and the chief accounting or financial officer of the
institution which contains--
(A) a statement of the management's
responsibilities for--
(i) preparing financial statements;
(ii) establishing and maintaining an
adequate internal control structure and
procedures for financial reporting; and
(iii) complying with the laws and
regulations relating to safety and
soundness which are designated by the
Corporation and the appropriate Federal
banking agency; and
(B) an assessment, as of the end of the
institution's most recent fiscal year, of--
(i) the effectiveness of such
internal control structure and
procedures; and
(ii) the institution's compliance
with the laws and regulations relating
to safety and soundness which are
designated by the Corporation and the
appropriate Federal banking agency.
(c) Internal Control Evaluation and Reporting Requirements
for Independent Public Accountants.--
(1) In general.--With respect to any internal control
report required by subsection (b)(2) of any
institution, the institution's independent public
accountant shall attest to, and report separately on,
the assertions of the institution's management
contained in such report.
(2) Attestation requirements.--Any attestation
pursuant to paragraph (1) shall be made in accordance
with generally accepted standards for attestation
engagements.
(d) Annual Independent Audits of Financial Statements.--
(1) Audits required.--The Corporation, in
consultation with the appropriate Federal banking
agencies, shall prescribe regulations requiring that
each insured depository institution shall have an
annual independent audit made of the institution's
financial statements by an independent public
accountant in accordance with generally accepted
auditing standards and section 37.
(2) Scope of audit.--In connection with any audit
under this subsection, the independent public
accountant shall determine and report whether the
financial statements of the institution--
(A) are presented fairly in accordance with
generally accepted accounting principles; and
(B) comply with such other disclosure
requirements as the Corporation and the
appropriate Federal banking agency may
prescribe.
(3) Requirements for insured subsidiaries of holding
companies.--The requirements for an independent audit
under this subsection may be satisfied for insured
depository institutions that are subsidiaries of a
holding company by an independent audit of the holding
company.
(f) Form and Content of Reports and Auditing Standards.--
(1) In general.--The scope of each report by an
independent public accountant pursuant to this section,
and the procedures followed in preparing such report,
shall meet or exceed the scope and procedures required
by generally accepted auditing standards and other
applicable standards recognized by the Corporation.
(2) Consultation.--The Corporation shall consult with
the other appropriate Federal banking agencies in
implementing this subsection.
(g) Improved Accountability.--
(1) Independent audit committee.--
(A) Establishment.--Each insured depository
institution (to which this section applies)
shall have an independent audit committee
entirely made up of outside directors who are
independent of management of the institution,
except as provided in subparagraph (D), and who
satisfy any specific requirements the
Corporation may establish.
(B) Duties.--An independent audit committee's
duties shall include reviewing with management
and the independent public accountant the basis
for the reports issued under subsections
(b)(2), (c), and (d).
(C) Criteria applicable to committees of
large insured depository institutions.--In the
case of each insured depository institution
which the Corporation determines to be a large
institution, the audit committee required by
subparagraph (A) shall--
(i) include members with banking or
related financial management expertise;
(ii) have access to the committee's
own outside counsel; and
(iii) not include any large customers
of the institution.
(D) Exemption authority.--
(i) In general.--An appropriate
Federal banking agency may, by order or
regulation, permit the independent
audit committee of an insured
depository institution to be made up of
less than all, but no fewer than a
majority of, outside directors, if the
agency determines that the institution
has encountered hardships in retaining
and recruiting a sufficient number of
competent outside directors to serve on
the internal audit committee of the
institution.
(ii) Factors to be considered.--In
determining whether an insured
depository institution has encountered
hardships referred to in clause (i),
the appropriate Federal banking agency
shall consider factors such as the size
of the institution, and whether the
institution has made a good faith
effort to elect or name additional
competent outside directors to the
board of directors of the institution
who may serve on the internal audit
committee.
(2) Review of quarterly reports of large insured
depository institutions.--
(A) In general.--In the case of any insured
depository institution which the Corporation
has determined to be a large institution, the
Corporation may require the independent public
accountant retained by such institution to
perform reviews of the institution's quarterly
financial reports in accordance with procedures
agreed upon by the Corporation.
(B) Report to audit committee.--The
independent public accountant referred to in
subparagraph (A) shall provide the audit
committee of the insured depository institution
with reports on the reviews under such
subparagraph and the audit committee shall
provide such reports to the Corporation, any
appropriate Federal banking agency, and any
appropriate State bank supervisor.
(C) Limitation on notice.--Reports provided
under subparagraph (B) shall be only for the
information and use of the insured depository
institution, the Corporation, any appropriate
Federal banking agency, and any State bank
supervisor that received the report.
(D) Notice to institution.--The Corporation
shall promptly notify an insured depository
institution, in writing, of a determination
pursuant to subparagraph (A) to require a
review of such institution's quarterly
financial reports.
(3) Qualifications of independent public
accountants.--
(A) In general.--All audit services required
by this section shall be performed only by an
independent public accountant who--
(i) has agreed to provide related
working papers, policies, and
procedures to the Corporation, any
appropriate Federal banking agency, and
any State bank supervisor, if
requested; and
(ii) has received a peer review that
meets guidelines acceptable to the
Corporation.
(B) Reports on peer reviews.--Reports on peer
reviews shall be filed with the Corporation and
made available for public inspection.
(4) Enforcement actions.--
(A) In general.--In addition to any authority
contained in section 8, the Corporation or an
appropriate Federal banking agency may remove,
suspend, or bar an independent public
accountant, upon a showing of good cause, from
performing audit services required by this
section.
(B) Joint rulemaking.--The appropriate
Federal banking agencies shall jointly issue
rules of practice to implement this paragraph.
(5) Notice by accountant of termination of
services.--Any independent public accountant performing
an audit under this section who subsequently ceases to
be the accountant for the institution shall promptly
notify the Corporation and each appropriate Federal
banking agency pursuant to such rules as the
Corporation and each appropriate Federal banking agency
shall prescribe.
(h) Exchange of Reports and Information.--
(1) Report to the independent auditor.--
(A) In general.--Each insured depository
institution which has engaged the services of
an independent auditor to audit such
institution shall transmit to the auditor a
copy of the most recent report of condition
made by the institution (pursuant to this Act
or any other provision of law) and a copy of
the most recent report of examination received
by the institution.
(B) Additional information.--In addition to
the copies of the reports required to be
provided under subparagraph (A), each insured
depository institution shall provide the
auditor with--
(i) a copy of any supervisory
memorandum of understanding with such
institution and any written agreement
between such institution and any
appropriate Federal banking agency or
any appropriate State bank supervisor
which is in effect during the period
covered by the audit; and
(ii) a report of--
(I) any action initiated or
taken by the appropriate
Federal banking agency or the
Corporation during such period
under subsection (a), (b), (c),
(e), (g), (i), (s), or (t) of
section 8;
(II) any action taken by any
appropriate State bank
supervisor under State law
which is similar to any action
referred to in subclause (I);
or
(III) any assessment of any
civil money penalty under any
other provision of law with
respect to the institution or
any institution-affiliated
party.
(2) Reports to banking agencies.--
(A) Independent auditor reports.--Each
insured depository institution shall provide to
the Corporation, any appropriate Federal
banking agency, and any appropriate State bank
supervisor, a copy of each audit report and any
qualification to such report, any management
letter, and any other report within 15 days of
receipt of any such report, qualification, or
letter from the institution's independent
auditors.
(B) Notice of change of auditor.--Each
insured depository institution shall provide
written notification to the Corporation, the
appropriate Federal banking agency, and any
appropriate State bank supervisor of the
resignation or dismissal of the institution's
independent auditor or the engagement of a new
independent auditor by the institution,
including a statement of the reasons for such
change within 15 calendar days of the
occurrence of the event.
(i) Requirements for Insured Subsidiaries of Holding
Companies.--
(1) In general.--Except with respect to any audit
requirements established under or pursuant to
subsection (d), the requirements of this section may be
satisfied for insured depository institutions that are
subsidiaries of a holding company, if--
(A) services and functions comparable to
those required under this section are provided
at the holding company level; and
(B) the institution--
(i) has total assets, as of the
beginning of such fiscal year, of less
than [$5,000,000,000] $21,000,000,000;
or
(ii) has--
(I) total assets, as of the
beginning of such fiscal year,
of [$5,000,000,000]
$21,000,000,000, or more; and
(II) a CAMEL composite rating
of 1 or 2 under the Uniform
Financial Institutions Rating
System (or an equivalent rating
by any such agency under a
comparable rating system) as of
the most recent examination of
such institution by the
Corporation or the appropriate
Federal banking agency.
(2) Large institutions.--For purposes of this
subsection, in the case of an insured depository
institution described in paragraph (1)(B)(ii) that the
Corporation determines to be a large institution, the
audit committee of the holding company of such an
institution shall not include any large customers of
the institution.
(3) Applicability based on risk to fund.--The
appropriate Federal banking agency may require an
institution with total assets in excess of
$9,000,000,000 to comply with this section,
notwithstanding the exemption provided by this
subsection, if it determines that such exemption would
create a significant risk to the Deposit Insurance Fund
if applied to that institution.
(j) Exemption for Small Depository Institutions.--This
section shall not apply with respect to any fiscal year of any
insured depository institution the total assets of which, as of
the beginning of such fiscal year, are less than the greater
of--
(1) [$150,000,000] $800,000,000; or
(2) such amount (in excess of [$150,000,000]
$800,000,000) as the Corporation may prescribe by
regulation.
* * * * * * *
SEC. 38. PROMPT CORRECTIVE ACTION.
(a) Resolving Problems To Protect Deposit Insurance Fund.--
(1) Purpose.--The purpose of this section is to
resolve the problems of insured depository institutions
at the least possible long-term loss to the Deposit
Insurance Fund.
(2) Prompt corrective action required.--Each
appropriate Federal banking agency and the Corporation
(acting in the Corporation's capacity as the insurer of
depository institutions under this Act) shall carry out
the purpose of this section by taking prompt corrective
action to resolve the problems of insured depository
institutions.
(b) Definitions.--For purposes of this section:
(1) Capital categories.--
(A) Well capitalized.--An insured depository
institution is ``well capitalized'' if it
significantly exceeds the required minimum
level for each relevant capital measure.
(B) Adequately capitalized.--An insured
depository institution is ``adequately
capitalized'' if it meets the required minimum
level for each relevant capital measure.
(C) Undercapitalized.--An insured depository
institution is ``undercapitalized'' if it fails
to meet the required minimum level for any
relevant capital measure.
(D) Significantly undercapitalized.--An
insured depository institution is
``significantly undercapitalized'' if it is
significantly below the required minimum level
for any relevant capital measure.
(E) Critically undercapitalized.--An insured
depository institution is ``critically
undercapitalized'' if it fails to meet any
level specified under subsection (c)(3)(A).
(2) Other definitions.--
(A) Average.--
(i) In general.--The ``average'' of
an accounting item (such as total
assets or tangible equity) during a
given period means the sum of that item
at the close of business on each
business day during that period divided
by the total number of business days in
that period.
(ii) Agency may permit weekly
averaging for certain institutions.--In
the case of insured depository
institutions that have total assets of
less than [$300,000,000] $2,000,000,000
and normally file reports of condition
reflecting weekly (rather than daily)
averages of accounting items, the
appropriate Federal banking agency may
provide that the ``average'' of an
accounting item during a given period
means the sum of that item at the close
of business on the relevant business
day each week during that period
divided by the total number of weeks in
that period.
(B) Capital distribution.--The term ``capital
distribution'' means--
(i) a distribution of cash or other
property by any insured depository
institution or company to its owners
made on account of that ownership, but
not including--
(I) any dividend consisting
only of shares of the
institution or company or
rights to purchase such shares;
or
(II) any amount paid on the
deposits of a mutual or
cooperative institution that
the appropriate Federal banking
agency determines is not a
distribution for purposes of
this section;
(ii) a payment by an insured
depository institution or company to
repurchase, redeem, retire, or
otherwise acquire any of its shares or
other ownership interests, including
any extension of credit to finance an
affiliated company's acquisition of
those shares or interests; or
(iii) a transaction that the
appropriate Federal banking agency or
the Corporation determines, by order or
regulation, to be in substance a
distribution of capital to the owners
of the insured depository institution
or company.
(C) Capital restoration plan.--The term
``capital restoration plan'' means a plan
submitted under subsection (e)(2).
(D) Company.--The term ``company'' has the
same meaning as in section 2 of the Bank
Holding Company Act of 1956.
(E) Compensation.--The term ``compensation''
includes any payment of money or provision of
any other thing of value in consideration of
employment.
(F) Relevant capital measure.--The term
``relevant capital measure'' means the measures
described in subsection (c).
(G) Required minimum level.--The term
``required minimum level'' means, with respect
to each relevant capital measure, the minimum
acceptable capital level specified by the
appropriate Federal banking agency by
regulation.
(H) Senior executive officer.--The term
``senior executive officer'' has the same
meaning as the term ``executive officer'' in
section 22(h) of the Federal Reserve Act.
(I) Subordinated debt.--The term
``subordinated debt'' means debt subordinated
to the claims of general creditors.
(c) Capital Standards.--
(1) Relevant capital measures.--
(A) In general.--Except as provided in
subparagraph (B)(ii), the capital standards
prescribed by each appropriate Federal banking
agency shall include--
(i) a leverage limit; and
(ii) a risk-based capital
requirement.
(B) Other capital measures.--An appropriate
Federal banking agency may, by regulation--
(i) establish any additional relevant
capital measures to carry out the
purpose of this section; or
(ii) rescind any relevant capital
measure required under subparagraph (A)
upon determining (with the concurrence
of the other Federal banking agencies)
that the measure is no longer an
appropriate means for carrying out the
purpose of this section.
(2) Capital categories generally.--Each appropriate
Federal banking agency shall, by regulation, specify
for each relevant capital measure the levels at which
an insured depository institution is well capitalized,
adequately capitalized, undercapitalized, and
significantly undercapitalized.
(3) Critical capital.--
(A) Agency to specify level.--
(i) Leverage limit.--Each appropriate
Federal banking agency shall, by
regulation, in consultation with the
Corporation, specify the ratio of
tangible equity to total assets at
which an insured depository institution
is critically undercapitalized.
(ii) Other relevant capital
measures.--The agency may, by
regulation, specify for 1 or more other
relevant capital measures, the level at
which an insured depository institution
is critically undercapitalized.
(B) Leverage limit range.--The level
specified under subparagraph (A)(i) shall
require tangible equity in an amount--
(i) not less than 2 percent of total
assets; and
(ii) except as provided in clause
(i), not more than 65 percent of the
required minimum level of capital under
the leverage limit.
(C) FDIC's concurrence required.--The
appropriate Federal banking agency shall not,
without the concurrence of the Corporation,
specify a level under subparagraph (A)(i) lower
than that specified by the Corporation for
State nonmember insured banks.
(d) Provisions Applicable to All Institutions.--
(1) Capital distributions restricted.--
(A) In general.--An insured depository
institution shall make no capital distribution
if, after making the distribution, the
institution would be undercapitalized.
(B) Exception.--Notwithstanding subparagraph
(A), the appropriate Federal banking agency may
permit, after consultation with the
Corporation, an insured depository institution
to repurchase, redeem, retire, or otherwise
acquire shares or ownership interests if the
repurchase, redemption, retirement, or other
acquisition--
(i) is made in connection with the
issuance of additional shares or
obligations of the institution in at
least an equivalent amount; and
(ii) will reduce the institution's
financial obligations or otherwise
improve the institution's financial
condition.
(2) Management fees restricted.--An insured
depository institution shall pay no management fee to
any person having control of that institution if, after
making the payment, the institution would be
undercapitalized.
(e) Provisions Applicable to Undercapitalized Institutions.--
(1) Monitoring required.--Each appropriate Federal
banking agency shall--
(A) closely monitor the condition of any
undercapitalized insured depository
institution;
(B) closely monitor compliance with capital
restoration plans, restrictions, and
requirements imposed under this section; and
(C) periodically review the plan,
restrictions, and requirements applicable to
any undercapitalized insured depository
institution to determine whether the plan,
restrictions, and requirements are achieving
the purpose of this section.
(2) Capital restoration plan required.--
(A) In general.--Any undercapitalized insured
depository institution shall submit an
acceptable capital restoration plan to the
appropriate Federal banking agency within the
time allowed by the agency under subparagraph
(D).
(B) Contents of plan.--The capital
restoration plan shall--
(i) specify--
(I) the steps the insured
depository institution will
take to become adequately
capitalized;
(II) the levels of capital to
be attained during each year in
which the plan will be in
effect;
(III) how the institution
will comply with the
restrictions or requirements
then in effect under this
section; and
(IV) the types and levels of
activities in which the
institution will engage; and
(ii) contain such other information
as the appropriate Federal banking
agency may require.
(C) Criteria for accepting plan.--The
appropriate Federal banking agency shall not
accept a capital restoration plan unless the
agency determines that--
(i) the plan--
(I) complies with
subparagraph (B);
(II) is based on realistic
assumptions, and is likely to
succeed in restoring the
institution's capital; and
(III) would not appreciably
increase the risk (including
credit risk, interest-rate
risk, and other types of risk)
to which the institution is
exposed; and
(ii) if the insured depository
institution is undercapitalized, each
company having control of the
institution has--
(I) guaranteed that the
institution will comply with
the plan until the institution
has been adequately capitalized
on average during each of 4
consecutive calendar quarters;
and
(II) provided appropriate
assurances of performance.
(D) Deadlines for submission and review of
plans.--The appropriate Federal banking agency
shall by regulation establish deadlines that--
(i) provide insured depository
institutions with reasonable time to
submit capital restoration plans, and
generally require an institution to
submit a plan not later than 45 days
after the institution becomes
undercapitalized;
(ii) require the agency to act on
capital restoration plans
expeditiously, and generally not later
than 60 days after the plan is
submitted; and
(iii) require the agency to submit a
copy of any plan approved by the agency
to the Corporation before the end of
the 45-day period beginning on the date
such approval is granted.
(E) Guarantee liability limited.--
(i) In general.--The aggregate
liability under subparagraph (C)(ii) of
all companies having control of an
insured depository institution shall be
the lesser of--
(I) an amount equal to 5
percent of the institution's
total assets at the time the
institution became
undercapitalized; or
(II) the amount which is
necessary (or would have been
necessary) to bring the
institution into compliance
with all capital standards
applicable with respect to such
institution as of the time the
institution fails to comply
with a plan under this
subsection.
(ii) Certain affiliates not
affected.--This paragraph may not be
construed as--
(I) requiring any company not
having control of an
undercapitalized insured
depository institution to
guarantee, or otherwise be
liable on, a capital
restoration plan;
(II) requiring any person
other than an insured
depository institution to
submit a capital restoration
plan; or
(III) affecting compliance by
brokers, dealers, government
securities brokers, and
government securities dealers
with the financial
responsibility requirements of
the Securities Exchange Act of
1934 and regulations and orders
thereunder.
(3) Asset growth restricted.--An undercapitalized
insured depository institution shall not permit its
average total assets during any calendar quarter to
exceed its average total assets during the preceding
calendar quarter unless--
(A) the appropriate Federal banking agency
has accepted the institution's capital
restoration plan;
(B) any increase in total assets is
consistent with the plan; and
(C) the institution's ratio of tangible
equity to assets increases during the calendar
quarter at a rate sufficient to enable the
institution to become adequately capitalized
within a reasonable time.
(4) Prior approval required for acquisitions,
branching, and new lines of business.--An
undercapitalized insured depository institution shall
not, directly or indirectly, acquire any interest in
any company or insured depository institution,
establish or acquire any additional branch office, or
engage in any new line of business unless--
(A) the appropriate Federal banking agency
has accepted the insured depository
institution's capital restoration plan, the
institution is implementing the plan, and the
agency determines that the proposed action is
consistent with and will further the
achievement of the plan; or
(B) the Board of Directors determines that
the proposed action will further the purpose of
this section.
(5) Discretionary safeguards.--The appropriate
Federal banking agency may, with respect to any
undercapitalized insured depository institution, take
actions described in any subparagraph of subsection
(f)(2) if the agency determines that those actions are
necessary to carry out the purpose of this section.
(f) Provisions Applicable to Significantly Undercapitalized
Institutions and Undercapitalized Institutions That Fail To
Submit and Implement Capital Restoration Plans.--
(1) In general.--This subsection shall apply with
respect to any insured depository institution that--
(A) is significantly undercapitalized; or
(B) is undercapitalized and--
(i) fails to submit an acceptable
capital restoration plan within the
time allowed by the appropriate Federal
banking agency under subsection
(e)(2)(D); or
(ii) fails in any material respect to
implement a plan accepted by the
agency.
(2) Specific actions authorized.--The appropriate
Federal banking agency shall carry out this section by
taking 1 or more of the following actions:
(A) Requiring recapitalization.--Doing 1 or
more of the following:
(i) Requiring the institution to sell
enough shares or obligations of the
institution so that the institution
will be adequately capitalized after
the sale.
(ii) Further requiring that
instruments sold under clause (i) be
voting shares.
(iii) Requiring the institution to be
acquired by a depository institution
holding company, or to combine with
another insured depository institution,
if 1 or more grounds exist for
appointing a conservator or receiver
for the institution.
(B) Restricting transactions with
affiliates.--
(i) Requiring the institution to
comply with section 23A of the Federal
Reserve Act as if subsection (d)(1) of
that section (exempting transactions
with certain affiliated institutions)
did not apply.
(ii) Further restricting the
institution's transactions with
affiliates.
(C) Restricting interest rates paid.--
(i) In general.--Restricting the
interest rates that the institution
pays on deposits to the prevailing
rates of interest on deposits of
comparable amounts and maturities in
the region where the institution is
located, as determined by the agency.
(ii) Retroactive restrictions
prohibited.--This subparagraph does not
authorize the agency to restrict
interest rates paid on time deposits
made before (and not renewed or
renegotiated after) the agency acted
under this subparagraph.
(D) Restricting asset growth.--Restricting
the institution's asset growth more stringently
than subsection (e)(3), or requiring the
institution to reduce its total assets.
(E) Restricting activities.--Requiring the
institution or any of its subsidiaries to
alter, reduce, or terminate any activity that
the agency determines poses excessive risk to
the institution.
(F) Improving management.--Doing 1 or more of
the following:
(i) New election of directors.--
Ordering a new election for the
institution's board of directors.
(ii) Dismissing directors or senior
executive officers.--Requiring the
institution to dismiss from office any
director or senior executive officer
who had held office for more than 180
days immediately before the institution
became undercapitalized. Dismissal
under this clause shall not be
construed to be a removal under section
8.
(iii) Employing qualified senior
executive officers.--Requiring the
institution to employ qualified senior
executive officers (who, if the agency
so specifies, shall be subject to
approval by the agency).
(G) Prohibiting deposits from correspondent
banks.--Prohibiting the acceptance by the
institution of deposits from correspondent
depository institutions, including renewals and
rollovers of prior deposits.
(H) Requiring prior approval for capital
distributions by bank holding company.--
Prohibiting any bank holding company having
control of the insured depository institution
from making any capital distribution without
the prior approval of the Board of Governors of
the Federal Reserve System.
(I) Requiring divestiture.--Doing one or more
of the following:
(i) Divestiture by the institution.--
Requiring the institution to divest
itself of or liquidate any subsidiary
if the agency determines that the
subsidiary is in danger of becoming
insolvent and poses a significant risk
to the institution, or is likely to
cause a significant dissipation of the
institution's assets or earnings.
(ii) Divestiture by parent company of
nondepository affiliate.--Requiring any
company having control of the
institution to divest itself of or
liquidate any affiliate other than an
insured depository institution if the
appropriate Federal banking agency for
that company determines that the
affiliate is in danger of becoming
insolvent and poses a significant risk
to the institution, or is likely to
cause a significant dissipation of the
institution's assets or earnings.
(iii) Divestiture of institution.--
Requiring any company having control of
the institution to divest itself of the
institution if the appropriate Federal
banking agency for that company
determines that divestiture would
improve the institution's financial
condition and future prospects.
(J) Requiring other action.--Requiring the
institution to take any other action that the
agency determines will better carry out the
purpose of this section than any of the actions
described in this paragraph.
(3) Presumption in favor of certain actions.--In
complying with paragraph (2), the agency shall take the
following actions, unless the agency determines that
the actions would not further the purpose of this
section:
(A) The action described in clause (i) or
(iii) of paragraph (2)(A) (relating to
requiring the sale of shares or obligations, or
requiring the institution to be acquired by or
combine with another institution).
(B) The action described in paragraph
(2)(B)(i) (relating to restricting transactions
with affiliates).
(C) The action described in paragraph (2)(C)
(relating to restricting interest rates).
(4) Senior executive officers' compensation
restricted.--
(A) In general.--The insured depository
institution shall not do any of the following
without the prior written approval of the
appropriate Federal banking agency:
(i) Pay any bonus to any senior
executive officer.
(ii) Provide compensation to any
senior executive officer at a rate
exceeding that officer's average rate
of compensation (excluding bonuses,
stock options, and profit-sharing)
during the 12 calendar months preceding
the calendar month in which the
institution became undercapitalized.
(B) Failing to submit plan.--The appropriate
Federal banking agency shall not grant any
approval under subparagraph (A) with respect to
an institution that has failed to submit an
acceptable capital restoration plan.
(5) Discretion to impose certain additional
restrictions.--The agency may impose 1 or more of the
restrictions prescribed by regulation under subsection
(i) if the agency determines that those restrictions
are necessary to carry out the purpose of this section.
(6) Consultation with other regulators.--Before the
agency or Corporation makes a determination under
paragraph (2)(I) with respect to an affiliate that is a
broker, dealer, government securities broker,
government securities dealer, investment company, or
investment adviser, the agency or Corporation shall
consult with the Securities and Exchange Commission
and, in the case of any other affiliate which is
subject to any financial responsibility or capital
requirement, any other appropriate regulator of such
affiliate with respect to the proposed determination of
the agency or the Corporation and actions pursuant to
such determination.
(g) More Stringent Treatment Based on Other Supervisory
Criteria.--
(1) In general.--If the appropriate Federal banking
agency determines (after notice and an opportunity for
hearing) that an insured depository institution is in
an unsafe or unsound condition or, pursuant to section
8(b)(8), deems the institution to be engaging in an
unsafe or unsound practice, the agency may--
(A) if the institution is well capitalized,
reclassify the institution as adequately
capitalized;
(B) if the institution is adequately
capitalized (but not well capitalized), require
the institution to comply with 1 or more
provisions of subsections (d) and (e), as if
the institution were undercapitalized; or
(C) if the institution is undercapitalized,
take any 1 or more actions authorized under
subsection (f)(2) as if the institution were
significantly undercapitalized.
(2) Contents of plan.--Any plan required under
paragraph (1) shall specify the steps that the insured
depository institution will take to correct the unsafe
or unsound condition or practice. Capital restoration
plans shall not be required under paragraph (1)(B).
(h) Provisions Applicable to Critically Undercapitalized
Institutions.--
(1) Activities restricted.--Any critically
undercapitalized insured depository institution shall
comply with restrictions prescribed by the Corporation
under subsection (i).
(2) Payments on subordinated debt prohibited.--
(A) In general.--A critically
undercapitalized insured depository institution
shall not, beginning 60 days after becoming
critically undercapitalized, make any payment
of principal or interest on the institution's
subordinated debt.
(B) Exceptions.--The Corporation may make
exceptions to subparagraph (A) if--
(i) the appropriate Federal banking
agency has taken action with respect to
the insured depository institution
under paragraph (3)(A)(ii); and
(ii) the Corporation determines that
the exception would further the purpose
of this section.
(C) Limited exemption for certain
subordinated debt.--Until July 15, 1996,
subparagraph (A) shall not apply with respect
to any subordinated debt outstanding on July
15, 1991, and not extended or otherwise
renegotiated after July 15, 1991.
(D) Accrual of interest.--Subparagraph (A)
does not prevent unpaid interest from accruing
on subordinated debt under the terms of that
debt, to the extent otherwise permitted by law.
(3) Conservatorship, receivership, or other action
required.--
(A) In general.--The appropriate Federal
banking agency shall, not later than 90 days
after an insured depository institution becomes
critically undercapitalized--
(i) appoint a receiver (or, with the
concurrence of the Corporation, a
conservator) for the institution; or
(ii) take such other action as the
agency determines, with the concurrence
of the Corporation, would better
achieve the purpose of this section,
after documenting why the action would
better achieve that purpose.
(B) Periodic redeterminations required.--Any
determination by an appropriate Federal banking
agency under subparagraph (A)(ii) to take any
action with respect to an insured depository
institution in lieu of appointing a conservator
or receiver shall cease to be effective not
later than the end of the 90-day period
beginning on the date that the determination is
made and a conservator or receiver shall be
appointed for that institution under
subparagraph (A)(i) unless the agency makes a
new determination under subparagraph (A)(ii) at
the end of the effective period of the prior
determination.
(C) Appointment of receiver required if other
action fails to restore capital.--
(i) In general.--Notwithstanding
subparagraphs (A) and (B), the
appropriate Federal banking agency
shall appoint a receiver for the
insured depository institution if the
institution is critically
undercapitalized on average during the
calendar quarter beginning 270 days
after the date on which the institution
became critically undercapitalized.
(ii) Exception.--Notwithstanding
clause (i), the appropriate Federal
banking agency may continue to take
such other action as the agency
determines to be appropriate in lieu of
such appointment if--
(I) the agency determines,
with the concurrence of the
Corporation, that (aa) the
insured depository institution
has positive net worth, (bb)
the insured depository
institution has been in
substantial compliance with an
approved capital restoration
plan which requires consistent
improvement in the
institution's capital since the
date of the approval of the
plan, (cc) the insured
depository institution is
profitable or has an upward
trend in earnings the agency
projects as sustainable, and
(dd) the insured depository
institution is reducing the
ratio of nonperforming loans to
total loans; and
(II) the head of the
appropriate Federal banking
agency and the Chairperson of
the Board of Directors both
certify that the institution is
viable and not expected to
fail.
(i) Restricting Activities of Critically Undercapitalized
Institutions.--To carry out the purpose of this section, the
Corporation shall, by regulation or order--
(1) restrict the activities of any critically
undercapitalized insured depository institution; and
(2) at a minimum, prohibit any such institution from
doing any of the following without the Corporation's
prior written approval:
(A) Entering into any material transaction
other than in the usual course of business,
including any investment, expansion,
acquisition, sale of assets, or other similar
action with respect to which the depository
institution is required to provide notice to
the appropriate Federal banking agency.
(B) Extending credit for any highly leveraged
transaction.
(C) Amending the institution's charter or
bylaws, except to the extent necessary to carry
out any other requirement of any law,
regulation, or order.
(D) Making any material change in accounting
methods.
(E) Engaging in any covered transaction (as
defined in section 23A(b) of the Federal
Reserve Act).
(F) Paying excessive compensation or bonuses.
(G) Paying interest on new or renewed
liabilities at a rate that would increase the
institution's weighted average cost of funds to
a level significantly exceeding the prevailing
rates of interest on insured deposits in the
institution's normal market areas.
(j) Certain Government-Controlled Institutions Exempted.--
Subsections (e) through (i) (other than paragraph (3) of
subsection (e)) shall not apply--
(1) to an insured depository institution for which
the Corporation or the Resolution Trust Corporation is
conservator; or
(2) to a bridge depository institution, none of the
voting securities of which are owned by a person or
agency other than the Corporation or the Resolution
Trust Corporation.
(k) Reviews Required When Deposit Insurance Fund Incurs
Losses.--
(1) In general.--If the Deposit Insurance Fund incurs
a material loss with respect to an insured depository
institution on or after July 1, 1993, the inspector
general of the appropriate Federal banking agency
shall--
(A) make a written report to that agency
reviewing the agency's supervision of the
institution (including the agency's
implementation of this section), which shall--
(i) ascertain why the institution's
problems resulted in a material loss to
the Deposit Insurance Fund; and
(ii) make recommendations for
preventing any such loss in the future;
and
(B) provide a copy of the report to--
(i) the Comptroller General of the
United States;
(ii) the Corporation (if the agency
is not the Corporation);
(iii) in the case of a State
depository institution, the appropriate
State banking supervisor; and
(iv) upon request by any Member of
Congress, to that Member.
(2) Material loss incurred.--For purposes of this
subsection:
(A) Loss incurred.--The Deposit Insurance
Fund incurs a loss with respect to an insured
depository institution--
(i) if the Corporation provides any
assistance under section 13(c) with
respect to that institution; and--
(I) it is not substantially
certain that the assistance
will be fully repaid not later
than 24 months after the date
on which the Corporation
initiated the assistance; or
(II) the institution ceases
to repay the assistance in
accordance with its terms; or
(ii) if the Corporation is appointed
receiver of the institution, and it is
or becomes apparent that the present
value of the outlays of the Deposit
Insurance Fund with respect to that
institution will exceed the present
value of receivership dividends or
other payments on the claims held by
the Corporation.
(B) Material loss defined.--The term
``material loss'' means any estimated loss in
excess of--
(i) $200,000,000, if the loss occurs
during the period beginning on January
1, 2010, and ending on December 31,
2011;
(ii) $150,000,000, if the loss occurs
during the period beginning on January
1, 2012, and ending on December 31,
2013; and
(iii) [$50,000,000] $110,000,000, if
the loss occurs on or after January 1,
2014, provided that if the inspector
general of a Federal banking agency
certifies to the Committee on Banking,
Housing, and Urban Affairs of the
Senate and the Committee on Financial
Services of the House of
Representatives that the number of
projected failures of depository
institutions that would require
material loss reviews for the following
12 months will be greater than 30 and
would hinder the effectiveness of its
oversight functions, then the
definition of ``material loss'' shall
be [$75,000,000] $150,000,000 for a
duration of 1 year from the date of the
certification.
(3) Deadline for report.--The inspector general of
the appropriate Federal banking agency shall comply
with paragraph (1) expeditiously, and in any event
(except with respect to paragraph (1)(B)(iv)) as
follows:
(A) If the institution is described in
paragraph (2)(A)(i), during the 6-month period
beginning on the earlier of--
(i) the date on which the institution
ceases to repay assistance under
section 13(c) in accordance with its
terms, or
(ii) the date on which it becomes
apparent that the assistance will not
be fully repaid during the 24-month
period described in paragraph
(2)(A)(i).
(B) If the institution is described in
paragraph (2)(A)(ii), during the 6-month period
beginning on the date on which it becomes
apparent that the present value of the outlays
of the Deposit Insurance Fund with respect to
that institution will exceed the present value
of receivership dividends or other payments on
the claims held by the Corporation.
(4) Public disclosure required.--
(A) In general.--The appropriate Federal
banking agency shall disclose any report on
losses required under this subsection, upon
request under section 552 of title 5, United
States Code, without excising--
(i) any portion under section
552(b)(5) of that title; or
(ii) any information about the
insured depository institution under
paragraph (4) (other than trade
secrets) or paragraph (8) of section
552(b) of that title.
(B) Exception.--Subparagraph (A) does not
require the agency to disclose the name of any
customer of the insured depository institution
(other than an institution-affiliated party),
or information from which such a person's
identity could reasonably be ascertained.
(5) Losses that are not material.--
(A) Semiannual report.--For the 6-month
period ending on March 31, 2010, and each 6-
month period thereafter, the Inspector General
of each Federal banking agency shall--
(i) identify losses that the
Inspector General estimates have been
incurred by the Deposit Insurance Fund
during that 6-month period, with
respect to the insured depository
institutions supervised by the Federal
banking agency;
(ii) for each loss incurred by the
Deposit Insurance Fund that is not a
material loss, determine--
(I) the grounds identified by
the Federal banking agency or
State bank supervisor for
appointing the Corporation as
receiver under section
11(c)(5); and
(II) whether any unusual
circumstances exist that might
warrant an in-depth review of
the loss; and
(iii) prepare and submit a written
report to the appropriate Federal
banking agency and to Congress on the
results of any determination by the
Inspector General, including--
(I) an identification of any
loss that warrants an in-depth
review, together with the
reasons why such review is
warranted, or, if the Inspector
General determines that no
review is warranted, an
explanation of such
determination; and
(II) for each loss identified
under subclause (I) that
warrants an in-depth review,
the date by which such review,
and a report on such review
prepared in a manner consistent
with reports under paragraph
(1)(A), will be completed and
submitted to the Federal
banking agency and Congress.
(B) Deadline for semiannual report.--The
Inspector General of each Federal banking
agency shall--
(i) submit each report required under
paragraph (A) expeditiously, and not
later than 90 days after the end of the
6-month period covered by the report;
and
(ii) provide a copy of the report
required under paragraph (A) to any
Member of Congress, upon request.
(6) GAO review.--The Comptroller General of the
United States shall, under such conditions as the
Comptroller General determines to be appropriate,
review reports made under paragraph (1) and recommend
improvements in the supervision of insured depository
institutions (including the implementation of this
section).
(l) Implementation.--
(1) Regulations and other actions.--Each appropriate
Federal banking agency shall prescribe such regulations
(in consultation with the other Federal banking
agencies), issue such orders, and take such other
actions as are necessary to carry out this section.
(2) Written determination and concurrence required.--
Any determination or concurrence by an appropriate
Federal banking agency or the Corporation required
under this section shall be written.
(m) Other Authority Not Affected.--This section does not
limit any authority of an appropriate Federal banking agency,
the Corporation, or a State to take action in addition to (but
not in derogation of) that required under this section.
(n) Administrative Review of Dismissal Orders.--
(1) Timely petition required.--A director or senior
executive officer dismissed pursuant to an order under
subsection (f)(2)(F)(ii) may obtain review of that
order by filing a written petition for reinstatement
with the appropriate Federal banking agency not later
than 10 days after receiving notice of the dismissal.
(2) Procedure.--
(A) Hearing required.--The agency shall give
the petitioner an opportunity to--
(i) submit written materials in
support of the petition; and
(ii) appear, personally or through
counsel, before 1 or more members of
the agency or designated employees of
the agency.
(B) Deadline for hearing.--The agency shall--
(i) schedule the hearing referred to
in subparagraph (A)(ii) promptly after
the petition is filed; and
(ii) hold the hearing not later than
30 days after the petition is filed,
unless the petitioner requests that the
hearing be held at a later time.
(C) Deadline for decision.--Not later than 60
days after the date of the hearing, the agency
shall--
(i) by order, grant or deny the
petition;
(ii) if the order is adverse to the
petitioner, set forth the basis for the
order; and
(iii) notify the petitioner of the
order.
(3) Standard for review of dismissal orders.--The
petitioner shall bear the burden of proving that the
petitioner's continued employment would materially
strengthen the insured depository institution's
ability--
(A) to become adequately capitalized, to the
extent that the order is based on the
institution's capital level or failure to
submit or implement a capital restoration plan;
and
(B) to correct the unsafe or unsound
condition or unsafe or unsound practice, to the
extent that the order is based on subsection
(g)(1).
(o) Transition Rules for Savings Associations.--Subsections
(e)(2), (f), and (h) shall not apply before July 1, 1994, to
any insured savings association if--
(1) before the date of enactment of the Federal
Deposit Insurance Corporation Improvement Act of 1991--
(A) the savings association had submitted a
plan meeting the requirements of section
5(t)(6)(A)(ii) of the Home Owners' Loan Act;
and
(B) the Director of the Office of Thrift
Supervision had accepted the plan;
(2) the plan remains in effect; and
(3) the savings association remains in compliance
with the plan or is operating under a written agreement
with the appropriate Federal banking agency.
* * * * * * *
----------
FEDERAL HOME LOAN BANK ACT
* * * * * * *
definitions
Sec. 2. As used in this Act--
(1)(A) Bank.--The term ``Federal Home Loan Bank'' or
``Bank'' means a bank established under the authority
of the Federal Home Loan Bank Act.
(B) Bank system.--The term ``Federal Home Loan Bank
System'' means the Federal Home Loan Banks under the
supervision of the Director.
(2) State.--The term ``State'', in addition to the
States of the United States, includes the District of
Columbia, Guam, Puerto Rico, the United States Virgin
Islands, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
(3) The term ``member'' means any institution which has
subscribed for the stock of a Federal Home Loan Bank.
(4) The term ``home mortgage loan'' means a loan made by a
member upon the security of a home mortgage.
(5) The term ``home mortgage'' means a mortgage upon real
estate, in fee simple, or on a leasehold (1) under a lease for
not less than ninety-nine years which is renewable or (2) under
a lease having a period of not less than fifty years to run
from the date the mortgage was executed, upon which is located,
or which comprises or includes, one or more homes or other
dwelling units, all of which may be defined by the Director,
and shall include, in addition to first mortgages, such classes
of first liens as are commonly given to secure advances on real
estate by institutions authorized under this Act to become
members, under the laws of the State in which the real estate
is located, together with the credit instruments, if any,
secured thereby.
(6) The term ``unpaid principal,'' when used in respect of a
loan secured by a home mortgage means the principal thereof
less the sum of (1) payments made on such principal, and (2) in
cases where shares or stock are pledged as security for the
loan, the payments made on such shares or stock plus earnings
or dividends apportioned or credited thereon.
(7) An ``amortized'' or ``installment'' home mortgage loan
shall, for the purposes of this Act, be a home mortgage loan to
be repaid or liquidated in not less than eight years by means
of regular weekly, monthly, or quarterly payments made directly
in reduction of the debt or upon stock or shares pledged as
collateral for the repayment of such loan.
(8) Savings association.--The term ``savings
association'' has the meaning given to such term in
section 3 of the Federal Deposit Insurance Act.
(9) Insured depository institution.--The term
``insured depository institution'' means--
(A) an insured depository institution (as
defined in section 3 of the Federal Deposit
Insurance Act), and
(B) except as used in sections 21A and 21B,
an insured credit union (as defined in section
101 of the Federal Credit Union Act).
(10) Community financial institution.--
(A) In general.--The term ``community
financial institution'' means a member--
(i) the deposits of which are insured
under the Federal Deposit Insurance
Act; and
(ii) that has, as of the date of the
transaction at issue, less than
[$1,000,000,000] $3,000,000,000 in
average total assets, based on an
average of total assets over the 3
years preceding that date.
(B) Adjustments.--The [$1,000,000,000]
$3,000,000,000 limit referred to in
subparagraph (A)(ii) shall be adjusted annually
by the Director, based on the annual percentage
increase, if any, in the Consumer Price Index
for all urban consumers, as published by the
Department of Labor.
(11) Director.--The term ``Director'' means the
Director of the Federal Housing Finance Agency.
(12) Agency.--The term ``Agency'' means the Federal
Housing Finance Agency, established under section 1311
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992.
* * * * * * *
----------
FEDERAL RESERVE ACT
* * * * * * *
division of earnings.
Sec. 7. (a) Dividends and Surplus Funds of Reserve Banks.--
(1) Stockholder dividends.--
(A) Dividend amount.--After all necessary
expenses of a Federal reserve bank have been
paid or provided for, the stockholders of the
bank shall be entitled to receive an annual
dividend on paid-in capital stock of--
(i) in the case of a stockholder with
total consolidated assets of more than
[$10,000,000,000] $17,000,000,000, the
smaller of--
(I) the rate equal to the
high yield of the 10-year
Treasury note auctioned at the
last auction held prior to the
payment of such dividend; and
(II) 6 percent; and
(ii) in the case of a stockholder
with total consolidated assets of
[$10,000,000,000] $17,000,000,000 or
less, 6 percent.
(B) Dividend cumulative.--The entitlement to
dividends under subparagraph (A) shall be
cumulative.
(C) Inflation adjustment.--The Board of
Governors of the Federal Reserve System shall
annually adjust the dollar amounts of total
consolidated assets specified under
subparagraph (A) to reflect the change in the
Gross Domestic Product Price Index, published
by the Bureau of Economic Analysis.
(2) Deposit of net earnings in surplus fund.--That
portion of net earnings of each Federal reserve bank
which remains after dividend claims under paragraph
(1)(A) have been fully met shall be deposited in the
surplus fund of the bank.
(3) Limitation on surplus funds.--
(A) In general.--The aggregate amount of the
surplus funds of the Federal reserve banks may
not exceed $6,825,000,000.
(B) Transfer to the general fund.--Any
amounts of the surplus funds of the Federal
reserve banks that exceed, or would exceed, the
limitation under subparagraph (A) shall be
transferred to the Board of Governors of the
Federal Reserve System for transfer to the
Secretary of the Treasury for deposit in the
general fund of the Treasury.
(b) Transfer For Fiscal Year 2000.--
(1) In general.--The Federal reserve banks shall
transfer from the surplus funds of such banks to the
Board of Governors of the Federal Reserve System for
transfer to the Secretary of the Treasury for deposit
in the general fund of the Treasury, a total amount of
$3,752,000,000 in fiscal year 2000.
(2) Allocated by fed.--Of the total amount required
to be paid by the Federal reserve banks under paragraph
(1) for fiscal year 2000, the Board shall determine the
amount each such bank shall pay in such fiscal year.
(3) Replenishment of surplus fund prohibited.--During
fiscal year 2000, no Federal reserve bank may replenish
such bank's surplus fund by the amount of any transfer
by such bank under paragraph (1).
(b) Use of Earnings Transferred to the Treasury.--The net
earnings derived by the United States from Federal reserve
banks shall, in the discretion of the Secretary, be used to
supplement the gold reserve held against outstanding United
States notes, or shall be applied to the reduction of the
outstanding bonded indebtedness of the United States under
regulations to be prescribed by the Secretary of the Treasury.
Should a Federal reserve bank be dissolved or go into
liquidation, any surplus remaining, after the payment of all
debts, dividend requirements as hereinbefore provided, and the
par value of the stock, shall be paid to and become the
property of the United States and shall be similarly applied.
(c) Exemption From Taxation.--Federal reserve banks,
including the capital stock and surplus therein, and the income
derived therefrom shall be exempt from Federal, State, and
local taxation, except taxes upon real estate.
* * * * * * *
Sec. 22.
(d) [Reserved]
(e) No member bank shall pay to any director, officer,
attorney, or employee a greater rate of interest on the
deposits of such director, officer, attorney, or employee than
that paid to other depositors on similar deposits with such
member bank.
(f) If the directors or officers of any member bank shall
knowingly violate or permit any of the agents, officers, or
directors of any member bank to violate any of the provisions
of this section or regulations of the board made under
authority thereof, or any of the provisions of sections 217,
218, 219, 220, 655, 1005, 1014, 1906, or 1909 of Title 18,
United States Code, every director and officer participating in
or assenting to such violation shall be held liable in his
personal and individual capacity for all damages which the
member bank, its shareholders, or any other persons shall have
sustained in consequence of such violation.
(g)(1) Except as authorized under this subsection, no member
bank may extend credit in any manner to any of its own
executive officers. No executive officer of any member bank may
become indebted to that member bank except by means of an
extension of credit which the bank is authorized to make under
this subsection. Any extension of credit under this subsection
shall be promptly reported to the board of directors of the
bank, and may be made only if--
(A) the bank would be authorized to make it to
borrowers other than its officers;
(B) it is on terms not more favorable than those
afforded other borrowers;
(C) the officer has submitted a detailed current
financial statement; and
(D) it is on condition that it shall become due and
payable on demand of the bank at any time when the
officer is indebted to any other bank or banks on
account of extensions of credit of any one of the three
categories respectively referred to in paragraphs (2),
(3), and (4) in an aggregate amount greater than the
amount of credit of the same category that could be
extended to him by the bank of which he is an officer.
(2) A member bank may make a loan to any executive officer of
the bank if, at the time the loan is made--
(A) it is secured by a first lien on a dwelling which
is expected, after the making of the loan, to be owned
by the officer and used by him as his residence, and
(B) no other loan by the bank to the officer under
authority of this paragraph is outstanding.
(3) A member bank may make extensions of credit to any
executive officer of the bank to finance the education of the
children of the officer.
(4) A member bank may make extensions of credit not otherwise
specifically authorized under this subsection to any executive
officer of the bank in an amount prescribed in a regulation of
the member bank's appropriate Federal banking agency.
(5) Except to the extent permitted under paragraph (4), a
member bank may not extend credit to a partnership in which one
or more of its executive officers are partners having either
individually or together a majority interest. For the purposes
of paragraph (4), the full amount of any credit so extended
shall be considered to have been extended to each officer of
the bank who is a member of the partnership.
(6) This subsection does not prohibit any executive officer
of a member bank from endorsing or guaranteeing for the
protection of the bank any loan or other asset previously
acquired by the bank in good faith or from incurring any
indebtedness to the bank for the purpose of protecting the bank
against loss or giving financial assistance to it.
(7) Each day that any extension of credit in violation of
this subsection exists is a continuation of the violation for
the purposes of section 8 of the Federal Deposit Insurance Act.
(8) The Board of Governors of the Federal Reserve System may
prescribe such rules and regulations, including definitions of
terms, as it deems necessary to effectuate the purposes and to
prevent evasions of this subsection.
(h) Extensions of Credit to Executive Officers, Directors,
and Principal Shareholders of Member Banks.--
(1) In general.--No member bank may extend credit to
any of its executive officers, directors, or principal
shareholders, or to any related interest of such a
person, except to the extent permitted under paragraphs
(2), (3), (4), (5), and (6).
(2) Preferential terms prohibited.--
(A) In general.--A member bank may extend
credit to its executive officers, directors, or
principal shareholders, or to any related
interest of such a person, only if the
extension of credit--
(i) is made on substantially the same
terms, including interest rates and
collateral, as those prevailing at the
time for comparable transactions by the
bank with persons who are not executive
officers, directors, principal
shareholders, or employees of the bank;
(ii) does not involve more than the
normal risk of repayment or present
other unfavorable features; and
(iii) the bank follows credit
underwriting procedures that are not
less stringent than those applicable to
comparable transactions by the bank
with persons who are not executive
officers, directors, principal
shareholders, or employees of the bank.
(B) Exception.--Nothing in this paragraph
shall prohibit any extension of credit made
pursuant to a benefit or compensation program--
(i) that is widely available to
employees of the member bank; and
(ii) that does not give preference to
any officer, director, or principal
shareholder of the member bank, or to
any related interest of such person,
over other employees of the member
bank.
(3) Prior approval required.--A member bank may
extend credit to a person described in paragraph (1) in
an amount that, when aggregated with the amount of all
other outstanding extensions of credit by that bank to
each such person and that person's related interests,
would exceed an amount prescribed by regulation of the
appropriate Federal banking agency (as defined in
section 3 of the Federal Deposit Insurance Act) only
if--
(A) the extension of credit has been approved
in advance by a majority vote of that bank's
entire board of directors; and
(B) the interested party has abstained from
participating, directly or indirectly, in the
deliberations or voting on the extension of
credit.
(4) Aggregate limit on extensions of credit to any
executive officer, director, or principal
shareholder.--A member bank may extend credit to any
executive officer, director, or principal shareholder,
or to any related interest of such a person, only if
the extension of credit is in an amount that, when
aggregated with the amount of all outstanding
extensions of credit by that bank to that person and
that person's related interests, would not exceed the
limits on loans to a single borrower established by
section 5200 of the Revised Statutes. For purposes of
this paragraph, section 5200 of the Revised Statutes
shall be deemed to apply to a State member bank as if
the State member bank were a national banking
association.
(5) Aggregate limit on extensions of credit to all
executive officers, directors, and principal
shareholders.--
(A) In general.--A member bank may extend
credit to any executive officer, director, or
principal shareholder, or to any related
interest of such a person, if the extension of
credit is in an amount that, when aggregated
with the amount of all outstanding extensions
of credit by that bank to its executive
officers, directors, principal shareholders,
and those persons' related interests would not
exceed the bank's unimpaired capital and
unimpaired surplus.
(B) More stringent limit authorized.--The
Board may, by regulation, prescribe a limit
that is more stringent than that contained in
subparagraph (A).
(C) Board may make exceptions for certain
banks.--The Board may, by regulation, make
exceptions to subparagraph (A) for member banks
with less than [$100,000,000] $500,000,000 in
deposits if the Board determines that the
exceptions are important to avoid constricting
the availability of credit in small communities
or to attract directors to such banks. In no
case may the aggregate amount of all
outstanding extensions of credit to a bank's
executive officers, directors, principal
shareholders, and those persons' related
interests be more than 2 times the bank's
unimpaired capital and unimpaired surplus.
(6) Overdrafts by executive officers and directors
prohibited.--
(A) In general.--If any executive officer or
director has an account at the member bank, the
bank may not pay on behalf of that person an
amount exceeding the funds on deposit in the
account.
(B) Exceptions.--Subparagraph (A) does not
prohibit a member bank from paying funds in
accordance with--
(i) a written preauthorized,
interest-bearing extension of credit
specifying a method of repayment; or
(ii) a written preauthorized transfer
of funds from another account of the
executive officer or director at that
bank.
(7) Prohibition on knowingly receiving unauthorized
extension of credit.--No executive officer, director,
or principal shareholder shall knowingly receive (or
knowingly permit any of that person's related interests
to receive) from a member bank, directly or indirectly,
any extension of credit not authorized under this
subsection.
(8) Executive officer, director, or principal
shareholder of certain affiliates treated as executive
officer, director, or principal shareholder of member
bank.--
(A) In general.--For purposes of this
subsection, any executive officer, director, or
principal shareholder (as the case may be) of
any company of which the member bank is a
subsidiary, or of any other subsidiary of that
company, shall be deemed to be an executive
officer, director, or principal shareholder (as
the case may be) of the member bank.
(B) Exception.--The Board may, by regulation,
make exceptions to subparagraph (A) for any
executive officer or director of a subsidiary
of a company that controls the member bank if--
(i) the executive officer or director
does not have authority to participate,
and does not participate, in major
policymaking functions of the member
bank; and
(ii) the assets of such subsidiary do
not exceed 10 percent of the
consolidated assets of a company that
controls the member bank and such
subsidiary (and is not controlled by
any other company).
(9) Definitions.--For purposes of this subsection:
(A) Company.--
(i) In general.--Except as provided
in clause (ii), the term ``company''
means any corporation, partnership,
business or other trust, association,
joint venture, pool syndicate, sole
proprietorship, unincorporated
organization, or other business entity.
(ii) Exceptions.--The term
``company'' does not include--
(I) an insured depository
institution (as defined in
section 3 of the Federal
Deposit Insurance Act); or
(II) a corporation the
majority of the shares of which
are owned by the United States
or by any State.
(B) Control.--A person controls a company or
bank if that person, directly or indirectly, or
acting through or in concert with 1 or more
persons--
(i) owns, controls, or has the power
to vote 25 percent or more of any class
of the company's voting securities;
(ii) controls in any manner the
election of a majority of the company's
directors; or
(iii) has the power to exercise a
controlling influence over the
company's management or policies.
(C) Executive officer.--A person is an
``executive officer'' of a company or bank if
that person participates or has authority to
participate (other than as a director) in major
policymaking functions of the company or bank.
(D) Extension of credit.--
(i) In general.--A member bank
extends credit to a person by--
(I) making or renewing any
loan, granting a line of
credit, or entering into any
similar transaction as a result
of which the person becomes
obligated (directly or
indirectly, or by any means
whatsoever) to pay money or its
equivalent to the bank; or
(II) having credit exposure
to the person arising from a
derivative transaction (as
defined in section 5200(b) of
the Revised Statutes of the
United States (12 U.S.C.
84(b))), repurchase agreement,
reverse repurchase agreement,
securities lending transaction,
or securities borrowing
transaction between the member
bank and the person.
(ii) Exceptions.--The Board may, by
regulation, make exceptions to clause
(i) for transactions that the Board
determines pose minimal risk.
(E) Member bank.--The term ``member bank'' includes
any subsidiary of a member bank.
(F) Principal shareholder.--The term
``principal shareholder''--
(i) means any person that 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 percent of any class of voting
securities of a member bank or company;
and
(ii) does not include a company of
which a member bank is a subsidiary.
(G) Related interest.--A ``related interest''
of a person is--
(i) any company controlled by that
person; and
(ii) any political or campaign
committee that is controlled by that
person or the funds or services of
which will benefit that person.
(H) Subsidiary.--The term ``subsidiary'' has
the same meaning as in section 2 of the Bank
Holding Company Act of 1956.
(10) Board's rulemaking authority.--The Board of
Governors of the Federal Reserve System may prescribe
such regulations, including definitions of terms, as it
determines to be necessary to effectuate the purposes
and prevent evasions of this subsection.
* * * * * * *
----------
HOME MORTGAGE DISCLOSURE ACT OF 1975
TITLE III--HOME MORTGAGE DISCLOSURE
* * * * * * *
maintenance of records and public disclosure
Sec. 304. (a)(1) Each depository institution which has a home
office or branch office located within a primary metropolitan
statistical area, metropolitan statistical area, or
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan statistical areas,
as defined by the Department of Commerce shall compile and make
available, in accordance with regulations of the Board, to the
public for inspection and copying at the home office, and at
least one branch office within each primary metropolitan
statistical area, metropolitan statistical area, or
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan statistical areas
in which the depository institution has an office the number
and total dollar amount of mortgage loans which were (A)
originated (or for which the institution received completed
applications), or (B) purchased by that institution during each
fiscal year (beginning with the last full fiscal year of that
institution which immediately preceded the effective date of
this title).
(2) The information required to be maintained and made
available under paragraph (1) shall also be itemized in order
to clearly and conspicuously disclose the following:
(A) The number and dollar amount for each item
referred to in paragraph (1), by census tracts for
mortgage loans secured by property located within any
county with a population of more than 30,000, within
that primary metropolitan statistical area,
metropolitan statistical area, or consolidated
metropolitan statistical area that is not comprised of
designated primary metropolitan statistical areas,
otherwise, by county, for mortgage loans secured by
property located within any other county within that
standard metropolitan statistical area.
(B) The number and dollar amount for each item
referred to in paragraph (1) for all such mortgage
loans which are secured by property located outside
that primary metropolitan statistical area,
metropolitan statistical area, or consolidated
metropolitan statistical area that is not comprised of
designated primary metropolitan statistical areas.
For the purpose of this paragraph, a depository institution
which maintains offices in more than one primary metropolitan
statistical area, metropolitan statistical area, or
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan statistical areas
shall be required to make the information required by this
paragraph available at any such office only to the extent that
such information relates to mortgage loans which were
originated or purchased (or for which completed applications
were received) by an office of that depository institution
located in the primary metropolitan statistical area,
metropolitan statistical area, or consolidated metropolitan
statistical area that is not comprised of designated primary
metropolitan statistical areas in which the office making such
information available is located. For purposes of this
paragraph, other lending institutions shall be deemed to have a
home office or branch office within a primary metropolitan
statistical area, metropolitan statistical area, or
consolidated metropolitan statistical area that is not
comprised of designated primary metropolitan statistical areas
if such institutions have originated or purchased or received
completed applications for at least 5 mortgage loans in such
area in the preceding calendar year.
(b) Any item of information relating to mortgage loans
required to be maintained under subsection (a) shall be further
itemized in order to disclose for each such item--
(1) the number and dollar amount of mortgage loans
which are insured under title II of the National
Housing Act or under title V of the Housing Act of 1949
or which are guaranteed under chapter 37 of title 38,
United States Code;
(2) the number and dollar amount of mortgage loans
made to mortgagors who did not, at the time of
execution of the mortgage, intend to reside in the
property securing the mortgage loan;
(3) the number and dollar amount of home improvement
loans;
(4) the number and dollar amount of mortgage loans
and completed applications involving mortgagors or
mortgage applicants grouped according to census tract,
income level, racial characteristics, age, and gender;
(5) the number and dollar amount of mortgage loans
grouped according to measurements of--
(A) the total points and fees payable at
origination in connection with the mortgage as
determined by the Bureau, taking into account
15 U.S.C. 1602(aa)(4);
(B) the difference between the annual
percentage rate associated with the loan and a
benchmark rate or rates for all loans;
(C) the term in months of any prepayment
penalty or other fee or charge payable on
repayment of some portion of principal or the
entire principal in advance of scheduled
payments; and
(D) such other information as the Bureau may
require; and
(6) the number and dollar amount of mortgage loans
and completed applications grouped according to
measurements of--
(A) the value of the real property pledged or
proposed to be pledged as collateral;
(B) the actual or proposed term in months of
any introductory period after which the rate of
interest may change;
(C) the presence of contractual terms or
proposed contractual terms that would allow the
mortgagor or applicant to make payments other
than fully amortizing payments during any
portion of the loan term;
(D) the actual or proposed term in months of
the mortgage loan;
(E) the channel through which application was
made, including retail, broker, and other
relevant categories;
(F) as the Bureau may determine to be
appropriate, a unique identifier that
identifies the loan originator as set forth in
section 1503 of the S.A.F.E. Mortgage Licensing
Act of 2008;
(G) as the Bureau may determine to be
appropriate, a universal loan identifier;
(H) as the Bureau may determine to be
appropriate, the parcel number that corresponds
to the real property pledged or proposed to be
pledged as collateral;
(I) the credit score of mortgage applicants
and mortgagors, in such form as the Bureau may
prescribe; and
(J) such other information as the Bureau may
require.
(c) Any information required to be compiled and made
available under this section, other than loan application
register information under subsection (j), shall be maintained
and made available for a period of five years after the close
of the first year during which such information is required to
be maintained and made available.
(d) Notwithstanding the provisions of subsection (a)(1), data
required to be disclosed under this section for 1980 and
thereafter shall be disclosed for each calendar year. Any
depository institution which is required to make disclosures
under this section but which has been making disclosures on
some basis other than a calendar year basis shall make
available a separate disclosure statement containing data for
any period prior to calendar year 1980 which is not covered by
the last full year report prior to the 1980 calendar year
report.
(e) Subject to subsection (h), the Bureau shall prescribe a
standard format for the disclosures required under this
section.
(f) The Federal Financial Institutions Examination Council,
in consultation with the Secretary, shall implement a system to
facilitate access to data required to be disclosed under this
section. Such system shall include arrangements for a central
depository of data in each primary metropolitan statistical
area, metropolitan statistical area, or consolidated
metropolitan statistical area that is not comprised of
designated primary metropolitan statistical areas. Disclosure
statements shall be made available to the public for inspection
and copying at such central depository of data for all
depository institutions which are required to disclose
information under this section (or which are exempted pursuant
to section 306(b)) and which have a home office or branch
office within such primary metropolitan statistical area,
metropolitan statistical area, or consolidated metropolitan
statistical area that is not comprised of designated primary
metropolitan statistical areas.
(g) The requirements of subsections (a) and (b) shall not
apply with respect to mortgage loans that are--
(1) made (or for which completed applications are
received) by any mortgage banking subsidiary of a bank
holding company or savings and loan holding company or
by any savings and loan service corporation that
originates or purchases mortgage loans; and
(2) approved (or for which completed applications are
received) by the Secretary for insurance under title I
or II of the National Housing Act.
(h) Submission to Agencies.--
(1) In general.--The data required to be disclosed
under subsection (b) shall be submitted to the Bureau
or to the appropriate agency for the institution
reporting under this title, in accordance with rules
prescribed by the Bureau. Notwithstanding the
requirement of subsection (a)(2)(A) for disclosure by
census tract, the Bureau, in consultation with other
appropriate agencies described in paragraph (2) and,
after notice and comment, shall develop regulations
that--
(A) prescribe the format for such
disclosures, the method for submission of the
data to the appropriate agency, and the
procedures for disclosing the information to
the public;
(B) require the collection of data required
to be disclosed under subsection (b) with
respect to loans sold by each institution
reporting under this title;
(C) require disclosure of the class of the
purchaser of such loans;
(D) permit any reporting institution to
submit in writing to the Bureau or to the
appropriate agency such additional data or
explanations as it deems relevant to the
decision to originate or purchase mortgage
loans; and
(E) modify or require modification of
itemized information, for the purpose of
protecting the privacy interests of the
mortgage applicants or mortgagors, that is or
will be available to the public.
(2) Other appropriate agencies.--The appropriate
agencies described in this paragraph are--
(A) the appropriate Federal banking agencies,
as defined in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q)), with
respect to the entities that are subject to the
jurisdiction of each such agency, respectively;
(B) the Federal Deposit Insurance Corporation
for banks insured by the Federal Deposit
Insurance Corporation (other than members of
the Federal Reserve System), mutual savings
banks, insured State branches of foreign banks,
and any other depository institution described
in section 303(2)(A) which is not otherwise
referred to in this paragraph;
(C) the National Credit Union Administration
Board with respect to credit unions; and
(D) the Secretary of Housing and Urban
Development with respect to other lending
institutions not regulated by the agencies
referred to in subparagraph (A) or (B).
(3) Rules for modifications under paragraph (1).--
(A) Application.--A modification under
paragraph (1)(E) shall apply to information
concerning--
(i) credit score data described in
subsection (b)(6)(I), in a manner that
is consistent with the purpose
described in paragraph (1)(E); and
(ii) age or any other category of
data described in paragraph (5) or (6)
of subsection (b), as the Bureau
determines to be necessary to satisfy
the purpose described in paragraph
(1)(E), and in a manner consistent with
that purpose.
(B) Standards.--The Bureau shall prescribe
standards for any modification under paragraph
(1)(E) to effectuate the purposes of this
title, in light of the privacy interests of
mortgage applicants or mortgagors. Where
necessary to protect the privacy interests of
mortgage applicants or mortgagors, the Bureau
shall provide for the disclosure of information
described in subparagraph (A) in aggregate or
other reasonably modified form, in order to
effectuate the purposes of this title.
(i) Exemptions.--
(1) Closed-end mortgage loans.--With respect to an
insured depository institution or insured credit union,
the requirements of paragraphs (5) and (6) of
subsection (b) shall not apply with respect to closed-
end mortgage loans if the insured depository
institution or insured credit union originated fewer
than 500 closed-end mortgage loans in each of the 2
preceding calendar years.
(2) Open-end lines of credit.--With respect to an
insured depository institution or insured credit union,
the requirements of paragraphs (5) and (6) of
subsection (b) shall not apply with respect to open-end
lines of credit if the insured depository institution
or insured credit union originated fewer than 500 open-
end lines of credit in each of the 2 preceding calendar
years.
(3) Required compliance.--Notwithstanding paragraphs
(1) and (2), an insured depository institution shall
comply with paragraphs (5) and (6) of subsection (b) if
the insured depository institution has received a
rating of ``needs to improve record of meeting
community credit needs'' during each of its 2 most
recent examinations or a rating of ``substantial
noncompliance in meeting community credit needs'' on
its most recent examination under section 807(b)(2) of
the Community Reinvestment Act of 1977 (12 U.S.C.
2906(b)(2)).
(3) Exemption from certain disclosure requirements.--
The requirements of subsections (b)(4), (b)(5), and
(b)(6) shall not apply with respect to any depository
institution described in section 303(3)(A) which has
total assets, as of the most recent full fiscal year of
such institution, of [$30,000,000] $160,000,000 or
less.
(j) Loan Application Register Information.--
(1) In general.--In addition to the information
required to be disclosed under subsections (a) and (b),
any depository institution which is required to make
disclosures under this section shall make available to
the public, upon request, loan application register
information (as defined by the Bureau by regulation) in
the form required under regulations prescribed by the
Board.
(2) Format of disclosure.--
(A) Unedited format.--Subject to subparagraph
(B), the loan application register information
described in paragraph (1) may be disclosed by
a depository institution without editing or
compilation and in such formats as the Bureau
may require.
(B) Protection of applicant's privacy
interest.--The Bureau shall require, by
regulation, such deletions as the Bureau may
determine to be appropriate to protect--
(i) any privacy interest of any
applicant, including the deletion of
the applicant's name and identification
number, the date of the application,
and the date of any determination by
the institution with respect to such
application; and
(ii) a depository institution from
liability under any Federal or State
privacy law.
(C) Census tract format encouraged.--It is
the sense of the Congress that a depository
institution should provide loan register
information under this section in a format
based on the census tract in which the property
is located.
(3) Change of form not required.--A depository
institution meets the disclosure requirement of
paragraph (1) if the institution provides the
information required under such paragraph in such
formats as the Bureau may require
(4) Reasonable charge for information.--Any
depository institution which provides information under
this subsection may impose a reasonable fee for any
cost incurred in reproducing such information.
(5) Time of disclosure.--The disclosure of the loan
application register information described in paragraph
(1) for any year pursuant to a request under paragraph
(1) shall be made--
(A) in the case of a request made on or
before March 1 of the succeeding year, before
April 1 of the succeeding year; and
(B) in the case of a request made after March
1 of the succeeding year, before the end of the
30-day period beginning on the date the request
is made.
(6) Retention of information.--Notwithstanding
subsection (c), the loan application register
information described in paragraph (1) for any year
shall be maintained and made available, upon request,
for 3 years after the close of the 1st year during
which such information is required to be maintained and
made available.
(7) Minimizing compliance costs.--In prescribing
regulations under this subsection, the Bureau shall
make every effort to minimize the costs incurred by a
depository institution in complying with this
subsection and such regulations.
(k) Disclosure of Statements by Depository Institutions.--
(1) In general.--In accordance with procedures
established by the Bureau pursuant to this section, any
depository institution required to make disclosures
under this section--
(A) shall make a disclosure statement
available, upon request, to the public no later
than 3 business days after the institution
receives the statement from the Federal
Financial Institutions Examination Council; and
(B) may make such statement available on a
floppy disc which may be used with a personal
computer or in any other media which is not
prohibited under regulations prescribed by the
Board.
(2) Notice that data is subject to correction after
final review.--Any disclosure statement provided
pursuant to paragraph (1) shall be accompanied by a
clear and conspicuous notice that the statement is
subject to final review and revision, if necessary.
(3) Reasonable charge for information.--Any
depository institution which provides a disclosure
statement pursuant to paragraph (1) may impose a
reasonable fee for any cost incurred in providing or
reproducing such statement.
(l) Prompt Disclosures.--
(1) In general.--Any disclosure of information
pursuant to this section or section 310 shall be made
as promptly as possible.
(2) Maximum disclosure period.--
(A) 6- and 9-month maximum periods.--Except
as provided in subsections (j)(5) and (k)(1)
and regulations prescribed by the Bureau and
subject to subparagraph (B), any information
required to be disclosed for any year beginning
after December 31, 1992, under--
(i) this section shall be made
available to the public before
September 1 of the succeeding year; and
(ii) section 310 shall be made
available to the public before December
1 of the succeeding year.
(B) Shorter periods encouraged after 1994.--
With respect to disclosures of information
under this section or section 310 for any year
beginning after December 31, 1993, every effort
shall be made--
(i) to make information disclosed
under this section available to the
public before July 1 of the succeeding
year; and
(ii) to make information required to
be disclosed under section 310
available to the public before
September 1 of the succeeding year.
(3) Improved procedure.--The Federal Financial
Institutions Examination Council shall make such
changes in the system established pursuant to
subsection (f) as may be necessary to carry out the
requirements of this subsection.
(m) Opportunity To Reduce Compliance Burden.--
(1) In general.--
(A) Satisfaction of public availability
requirements.--A depository institution shall
be deemed to have satisfied the public
availability requirements of subsection (a) if
the institution compiles the information
required under that subsection at the home
office of the institution and provides notice
at the branch locations specified in subsection
(a) that such information is available from the
home office of the institution upon written
request.
(B) Provision of information upon request.--
Not later than 15 days after the receipt of a
written request for any information required to
be compiled under subsection (a), the home
office of the depository institution receiving
the request shall provide the information
pertinent to the location of the branch in
question to the person requesting the
information.
(2) Form of information.--In complying with paragraph
(1), a depository institution shall provide the person
requesting the information with a copy of the
information requested in such formats as the Bureau may
require.
(n) Timing of Certain Disclosures.--The data required to be
disclosed under subsection (b) shall be submitted to the Bureau
or to the appropriate agency for any institution reporting
under this title, in accordance with regulations prescribed by
the Bureau. Institutions shall not be required to report new
data under paragraph (5) or (6) of subsection (b) before the
first January 1 that occurs after the end of the 9-month period
beginning on the date on which regulations are issued by the
Bureau in final form with respect to such disclosures.
(o) Definitions.--In this section--
(1) the term ``insured credit union'' has the meaning
given the term in section 101 of the Federal Credit
Union Act (12 U.S.C. 1752); and
(2) the term ``insured depository institution'' has
the meaning given the term in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
* * * * * * *
effective date
Sec. 309. (a) In General.--This title shall take effect on
the one hundred and eightieth day beginning after the date of
its enactment. Any institution specified in section 303(2)(A)
which has total assets as of its last full fiscal year of
[$10,000,000] $180,000,000 or less is exempt from the
provisions of this title. The Board, in consultation with the
Secretary, may exempt institutions described in section
303(2)(B) that are comparable within their respective
industries to institutions that are exempt under the preceding
sentence (as determined without regard to the adjustment made
by subsection (b)).
(b) CPI Adjustments.--
(1) In general.--Subject to paragraph (2), the dollar
amount applicable with respect to institutions
described in section 303(2)(A) under the 2d sentence of
subsection (a) shall be adjusted annually after
December 31, 1996, by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor
Statistics.
(2) 1-time adjustment for prior inflation.--The
first adjustment made under paragraph (1) after the
date of the enactment of the Economic Growth and
Regulatory Paperwork Reduction Act of 1996 shall be the
percentage by which--
(A) the Consumer Price Index described in
such paragraph for the calendar year 1996,
exceeds
(B) such Consumer Price Index for the
calendar year 1975.
(3) Rounding.--The dollar amount applicable under
paragraph (1) for any calendar year shall be the amount
determined in accordance with subparagraphs (A) and (B)
of paragraph (2) and rounded to the nearest multiple of
$1,000,000.
* * * * * * *
----------
HOME OWNERS' LOAN ACT
* * * * * * *
SEC. 5. FEDERAL SAVINGS ASSOCIATIONS.
(a) In General.--In order to provide thrift institutions for
the deposit of funds and for the extension of credit for homes
and other goods and services, the Comptroller of the Currency
is authorized, under such regulations as the Comptroller of the
Currency may prescribe--
(1) to provide for the organization, incorporation,
examination, operation, and regulation of associations
to be known as Federal savings associations (including
Federal savings banks), and
(2) to issue charters therefor,
giving primary consideration of the best practices of thrift
institutions in the United States. The lending and investment
powers conferred by this section are intended to encourage such
institutions to provide credit for housing safely and soundly.
(b) Deposits and Related Powers.--
(1) Deposit accounts.--
(A) Subject to the terms of its charter and
regulations of the Comptroller of the Currency,
a Federal savings association may--
(i) raise funds through such deposit,
share, or other accounts, including
demand deposit accounts (hereafter in
this section referred to as
``accounts''); and
(ii) issue passbooks, certificates,
or other evidence of accounts.
(B) A Federal savings association may not
permit any overdraft (including an intraday
overdraft) on behalf of an affiliate, or incur
any such overdraft in such savings
association's account at a Federal reserve bank
or Federal home loan bank on behalf of an
affiliate.
All savings accounts and demand accounts shall
have the same priority upon liquidation.
Holders of accounts and obligors of a Federal
savings association shall, to such extent as
may be provided by its charter or by
regulations of the Comptroller of the Currency,
be members of the savings association, and
shall have such voting rights and such other
rights as are thereby provided.
(C) A Federal savings association may require
not less than 14 days notice prior to payment
of savings accounts if the charter of the
savings association or the regulations of the
Comptroller of the Currency so provide.
(D) If a Federal savings association does not
pay all withdrawals in full (subject to the
right of the association, where applicable, to
require notice), the payment of withdrawals
from accounts shall be subject to such rules
and procedures as may be prescribed by the
savings association's charter or by regulation
of the Comptroller of the Currency. Except as
authorized in writing by the Comptroller of the
Currency, any Federal savings association that
fails to make full payment of any withdrawal
when due shall be deemed to be in an unsafe or
unsound condition.
(E) Accounts may be subject to check or to
withdrawal or transfer on negotiable or
transferable or other order or authorization to
the Federal savings association, as the
Comptroller of the Currency may by regulation
provide.
(F) A Federal savings association may
establish remote service units for the purpose
of crediting savings or demand accounts,
debiting such accounts, crediting payments on
loans, and the disposition of related financial
transactions, as provided in regulations
prescribed by the Comptroller of the Currency.
(2) Other liabilities.--To such extent as the
Comptroller of the Currency may authorize in writing, a
Federal savings association may borrow, may give
security, may be surety as defined by the Comptroller
of the Currency and may issue such notes, bonds,
debentures, or other obligations, or other securities,
including capital stock.
(3) Loans from state housing finance agencies.--
(A) In general.--Subject to regulation by the
Comptroller of the Currency but without regard
to any other provision of this subsection, any
Federal savings association that is in
compliance with the capital standards in effect
under subsection (t) may borrow funds from a
State mortgage finance agency of the State in
which the head office of such savings
association is situated to the same extent as
State law authorizes a savings association
organized under the laws of such State to
borrow from the State mortgage finance agency.
(B) Interest rate.--A Federal savings
association may not make any loan of funds
borrowed under subparagraph (A) at an interest
rate which exceeds by more than 1\3/4\ percent
per annum the interest rate paid to the State
mortgage finance agency on the obligations
issued to obtain the funds so borrowed.
(4) Mutual capital certificates.--In accordance with
regulations issued by the Comptroller of the Currency,
mutual capital certificates may be issued and sold
directly to subscribers or through underwriters. Such
certificates may be included in calculating capital for
the purpose of subsection (t) to the extent permitted
by the Comptroller of the Currency. The issuance of
certificates under this paragraph does not constitute a
change of control or ownership under this Act or any
other law unless there is in fact a change in control
or reorganization. Regulations relating to the issuance
and sale of mutual capital certificates shall provide
that such certificates--
(A) are subordinate to all savings accounts,
savings certificates, and debt obligations;
(B) constitute a claim in liquidation on the
general reserves, surplus, and undivided
profits of the Federal savings association
remaining after the payment in full of all
savings accounts, savings certificates, and
debt obligations;
(C) are entitled to the payment of dividends;
and
(D) may have a fixed or variable dividend
rate.
(c) Loans and Investments.--To the extent specified in
regulations of the Comptroller, a Federal savings association
may invest in, sell, or otherwise deal in the following loans
and other investments:
(1) Loans or investments without percentage of assets
limitation.--Without limitation as a percentage of
assets, the following are permitted:
(A) Account loans.--Loans on the security of
its savings accounts and loans specifically
related to transaction accounts.
(B) Residential real property loans.--Loans
on the security of liens upon residential real
property.
(C) United states government securities.--
Investments in obligations of, or fully
guaranteed as to principal and interest by, the
United States.
(D) Federal home loan bank and federal
national mortgage association securities.--
Investments in the stock or bonds of a Federal
home loan bank or in the stock of the Federal
National Mortgage Association.
(E) Federal home loan mortgage corporation
instruments.--Investments in mortgages,
obligations, or other securities which are or
have been sold by the Federal Home Loan
Mortgage Corporation pursuant to section 305 or
306 of the Federal Home Loan Mortgage
Corporation Act.
(F) Other government securities.--Investments
in obligations, participations, securities, or
other instruments issued by, or fully
guaranteed as to principal and interest by, the
Federal National Mortgage Association, the
Student Loan Marketing Association, the
Government National Mortgage Association, or
any agency of the United States. A savings
association may issue and sell securities which
are guaranteed pursuant to section 306(g) of
the National Housing Act.
(G) Deposits.--Investments in accounts of any
insured depository institution, as defined in
section 3 of the Federal Deposit Insurance Act.
(H) State securities.--Investments in
obligations issued by any State or political
subdivision thereof (including any agency,
corporation, or instrumentality of a State or
political subdivision). A Federal savings
association may not invest more than 10 percent
of its capital in obligations of any one
issuer, exclusive of investments in general
obligations of any issuer.
(I) Purchase of insured loans.--Purchase of
loans secured by liens on improved real estate
which are insured or guaranteed under the
National Housing Act, the Servicemen's
Readjustment Act of 1944, or chapter 37 of
title 38, United States Code.
(J) Home improvement and manufactured home
loans.--Loans made to repair, equip, alter, or
improve any residential real property, and
loans made for manufactured home financing.
(K) Insured loans to finance the purchase of
fee simple.--Loans insured under section 240 of
the National Housing Act.
(L) Loans to financial institutions, brokers,
and dealers.--Loans to--
(i) financial institutions with
respect to which the United States or
an agency or instrumentality thereof
has any function of examination or
supervision, or
(ii) any broker or dealer registered
with the Securities and Exchange
Commission,
which are secured by loans, obligations, or
investments in which the Federal savings
association has the statutory authority to
invest directly.
(M) Liquidity investments.--Investments
(other than equity investments), identified by
the Comptroller, for liquidity purposes,
including cash, funds on deposit at a Federal
reserve bank or a Federal home loan bank, or
bankers' acceptances.
(N) Investment in the national housing
partnership corporation, partnerships, and
joint ventures.--Investments in shares of stock
issued by a corporation authorized to be
created pursuant to title IX of the Housing and
Urban Development Act of 1968, and investments
in any partnership, limited partnership, or
joint venture formed pursuant to section 907(a)
or 907(c) of such Act.
(O) Certain hud insured or guaranteed
investments.--Loans that are secured by
mortgages--
(i) insured under title X of the
National Housing Act, or
(ii) guaranteed under title IV of the
Housing and Urban Development Act of
1968, under part B of the National
Urban Policy and New Community
Development Act of 1970, or under
section 802 of the Housing and
Community Development Act of 1974.
(P) State housing corporation investments.--
Obligations of and loans to any State housing
corporation, if--
(i) such obligations or loans are
secured directly, or indirectly through
an agent or fiduciary, by a first lien
on improved real estate which is
insured under the provisions of the
National Housing Act, and
(ii) in the event of default, the
holder of the obligations or loans has
the right directly, or indirectly
through an agent or fiduciary, to cause
to be subject to the satisfaction of
such obligations or loans the real
estate described in the first lien or
the insurance proceeds under the
National Housing Act.
(Q) Investment companies.--A Federal savings
association may invest in, redeem, or hold
shares or certificates issued by any open-end
management investment company which--
(i) is registered with the Securities
and Exchange Commission under the
Investment Company Act of 1940, and
(ii) the portfolio of which is
restricted by such management company's
investment policy (changeable only if
authorized by shareholder vote) solely
to investments that a Federal savings
association by law or regulation may,
without limitation as to percentage of
assets, invest in, sell, redeem, hold,
or otherwise deal in.
(R) Mortgage-backed securities.--Investments
in securities that--
(i) are offered and sold pursuant to
section 4(5) of the Securities Act of
1933; or
(ii) are mortgage related securities
(as defined in section 3(a)(41) of the
Securities Exchange Act of 1934),
subject to such regulations as the Comptroller
may prescribe, including regulations
prescribing minimum size of the issue (at the
time of initial distribution) or minimum
aggregate sales price, or both.
(S) Small business related securities.--
Investments in small business related
securities (as defined in section 3(a)(53) of
the Securities Exchange Act of 1934), subject
to such regulations as the Comptroller may
prescribe, including regulations concerning the
minimum size of the issue (at the time of the
initial distribution), the minimum aggregate
sales price, or both.
(T) Credit card loans.--Loans made through
credit cards or credit card accounts.
(U) Educational loans.--Loans made for the
payment of educational expenses.
(2) Loans or investments limited to a percentage of
assets or capital.--The following loans or investments
are permitted, but only to the extent specified:
(A) Commercial and other loans.--Secured or
unsecured loans for commercial, corporate,
business, or agricultural purposes. The
aggregate amount of loans made under this
subparagraph may not exceed 20 percent of the
total assets of the Federal savings
association, and amounts in excess of 10
percent of such total assets may be used under
this subparagraph only for small business
loans, as that term is defined by the
Comptroller.
(B) Nonresidential real property loans.--
(i) In general.--Loans on the
security of liens upon nonresidential
real property. Except as provided in
clause (ii), the aggregate amount of
such loans shall not exceed 400 percent
of the Federal savings association's
capital, as determined under subsection
(t).
(ii) Exception.--The Comptroller may
permit a savings association to exceed
the limitation set forth in clause (i)
if the Comptroller determines that the
increased authority--
(I) poses no significant risk
to the safe and sound operation
of the association, and
(II) is consistent with
prudent operating practices.
(iii) Monitoring.--If the Comptroller
permits any increased authority
pursuant to clause (ii), the
Comptroller shall closely monitor the
Federal savings association's condition
and lending activities to ensure that
the savings association carries out all
authority under this paragraph in a
safe and sound manner and complies with
this subparagraph and all relevant laws
and regulations.
(C) Investments in personal property.--
Investments in tangible personal property,
including vehicles, manufactured homes,
machinery, equipment, or furniture, for rental
or sale. Investments under this subparagraph
may not exceed 10 percent of the assets of the
Federal savings association.
(D) Consumer loans and certain securities.--A
Federal savings association may make loans for
personal, family, or household purposes,
including loans reasonably incident to
providing such credit, and may invest in, sell,
or hold commercial paper and corporate debt
securities, as defined and approved by the
Comptroller. Loans and other investments under
this subparagraph may not exceed 35 percent of
the assets of the Federal savings association,
except that amounts in excess of 30 percent of
the assets may be invested only in loans which
are made by the association directly to the
original obligor and with respect to which the
association does not pay any finder, referral,
or other fee, directly or indirectly, to any
third party.
(3) Loans or investments limited to 5 percent of
assets.--The following loans or investments are
permitted, but not to exceed 5 percent of assets of a
Federal savings association for each subparagraph:
(A) Community development investments.--
Investments in real property and obligations
secured by liens on real property located
within a geographic area or neighborhood
receiving concentrated development assistance
by a local government under title I of the
Housing and Community Development Act of 1974.
No investment under this subparagraph in such
real property may exceed an aggregate of 2
percent of the assets of the Federal savings
association.
(B) Nonconforming loans.--Loans upon the
security of or respecting real property or
interests therein used for primarily
residential or farm purposes that do not comply
with the limitations of this subsection.
(C) Construction loans without security.--
Loans--
(i) the principal purpose of which is
to provide financing with respect to
what is or is expected to become
primarily residential real estate; and
(ii) with respect to which the
association--
(I) relies substantially on
the borrower's general credit
standing and projected future
income for repayment, without
other security; or
(II) relies on other
assurances for repayment,
including a guarantee or
similar obligation of a third
party.
The aggregate amount of such investments shall
not exceed the greater of the Federal savings
association's capital or 5 percent of its
assets.
(4) Other loans and investments.--The following
additional loans and other investments to the extent
authorized below:
(A) Business development credit
corporations.--A Federal savings association
that is in compliance with the capital
standards prescribed under subsection (t) may
invest in, lend to, or to commit itself to lend
to, any business development credit corporation
incorporated in the State in which the home
office of the association is located in the
same manner and to the same extent as savings
associations chartered by such State are
authorized. The aggregate amount of such
investments, loans, and commitments of any such
Federal savings association shall not exceed
one-half of 1 percent of the association's
total outstanding loans or $250,000, whichever
is less.
(B) Service corporations.--Investments in the
capital stock, obligations, or other securities
of any corporation organized under the laws of
the State in which the Federal savings
association's home office is located, if such
corporation's entire capital stock is available
for purchase only by savings associations of
such State and by Federal associations having
their home offices in such State. No Federal
savings association may make any investment
under this subparagraph if the association's
aggregate outstanding investment under this
subparagraph would exceed 3 percent of the
association's assets. Not less than one-half of
the investment permitted under this
subparagraph which exceeds 1 percent of the
association's assets shall be used primarily
for community, inner-city, and community
development purposes.
(C) Foreign assistance investments.--
Investments in housing project loans having the
benefit of any guaranty under section 221 of
the Foreign Assistance Act of 1961 or loans
having the benefit of any guarantee under
section 224 of such Act, or any commitment or
agreement with respect to such loans made
pursuant to either of such sections and in the
share capital and capital reserve of the Inter-
American Savings and Loan Bank. This authority
extends to the acquisition, holding, and
disposition of loans guaranteed under section
221 or 222 of such Act. Investments under this
subparagraph shall not exceed 1 percent of the
Federal savings association's assets.
(D) Small business investment companies.--A
Federal savings association may invest in
stock, obligations, or other securities of any
small business investment company formed
pursuant to section 301(d) of the Small
Business Investment Act of 1958 for the purpose
of aiding members of a Federal home loan bank.
A Federal savings association may not make any
investment under this subparagraph if its
aggregate outstanding investment under this
subparagraph would exceed 1 percent of the
assets of such savings association.
(E) Bankers' banks.--A Federal savings
association may purchase for its own account
shares of stock of a bankers' bank, described
in Paragraph Seventh of section 5136 of the
Revised Statutes or in section 5169(b) of the
Revised Statutes, on the same terms and
conditions as a national bank may purchase such
shares.
(F) New markets venture capital companies.--A
Federal savings association may invest in
stock, obligations, or other securities of any
New Markets Venture Capital company as defined
in section 351 of the Small Business Investment
Act of 1958, except that a Federal savings
association may not make any investment under
this subparagraph if its aggregate outstanding
investment under this subparagraph would exceed
5 percent of the capital and surplus of such
savings association.
(5) Transition rule for savings associations
acquiring banks.--
(A) In general.--If, under section 5(d)(3) of
the Federal Deposit Insurance Act, a savings
association acquires all or substantially all
of the assets of a bank, the appropriate
Federal banking agency may permit the savings
association to retain any such asset during the
2-year period beginning on the date of the
acquisition.
(B) Extension.--The appropriate Federal
banking agency may extend the 2-year period
described in subparagraph (A) for not more than
1 year at a time and not more than 2 years in
the aggregate, if the appropriate Federal
banking agency determines that the extension is
consistent with the purposes of this Act.
(6) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Residential property.--The terms
``residential real property'' or ``residential
real estate'' mean leaseholds, homes (including
condominiums and cooperatives, except that in
connection with loans on individual cooperative
units, such loans shall be adequately secured
as defined by the Comptroller) and,
combinations of homes or dwelling units and
business property, involving only minor or
incidental business use, or property to be
improved by construction of such structures.
(B) Loans.--The term ``loans'' includes
obligations and extensions or advances of
credit; and any reference to a loan or
investment includes an interest in such a loan
or investment.
(d) Regulatory Authority.--
(1) In general.--
(A) Enforcement.--The appropriate Federal
banking agency shall have power to enforce this
section, section 8 of the Federal Deposit
Insurance Act, and regulations prescribed
hereunder. In enforcing any provision of this
section, regulations prescribed under this
section, or any other law or regulation, or in
any other action, suit, or proceeding to which
the appropriate Federal banking agency is a
party or in which the appropriate Federal
banking agency is interested, and in the
administration of conservatorships and
receiverships, the appropriate Federal banking
agency may act in the name of the appropriate
Federal banking agency and through the
attorneys of the appropriate Federal banking
agency. Except as otherwise provided, the
Comptroller shall be subject to suit (other
than suits on claims for money damages) by any
Federal savings association or director or
officer thereof with respect to any matter
under this section or any other applicable law,
or regulation thereunder, in the United States
district court for the judicial district in
which the savings association's home office is
located, or in the United States District Court
for the District of Columbia, and the
Comptroller may be served with process in the
manner prescribed by the Federal Rules of Civil
Procedure.
(B) Ancillary provisions.--(i) In making
examinations of savings associations, examiners
appointed by the appropriate Federal banking
agency shall have power to make such
examinations of the affairs of all affiliates
of such savings associations as shall be
necessary to disclose fully the relations
between such savings associations and their
affiliates and the effect of such relations
upon such savings associations. For purposes of
this subsection, the term ``affiliate'' has the
same meaning as in section 2(b) of the Banking
Act of 1933, except that the term ``member
bank'' in section 2(b) shall be deemed to refer
to a savings association.
(ii) In the course of any examination of any
savings association, upon request by the
appropriate Federal banking agency, prompt and
complete access shall be given to all savings
association officers, directors, employees, and
agents, and to all relevant books, records, or
documents of any type.
(iii) Upon request made in the course of
supervision or oversight of any savings
association, for the purpose of acting on any
application or determining the condition of any
savings association, including whether
operations are being conducted safely, soundly,
or in compliance with charters, laws,
regulations, directives, written agreements, or
conditions imposed in writing in connection
with the granting of an application or other
request, the appropriate Federal banking agency
shall be given prompt and complete access to
all savings association officers, directors,
employees, and agents, and to all relevant
books, records, or documents of any type.
(iv) If prompt and complete access upon
request is not given as required in this
subsection, the appropriate Federal banking
agency may apply to the United States district
court for the judicial district (or the United
States court in any territory) in which the
principal office of the institution is located,
or in which the person denying such access
resides or carries on business, for an order
requiring that such information be promptly
provided.
(v) In connection with examinations of
savings associations and affiliates thereof,
the appropriate Federal banking agency may--
(I) administer oaths and affirmations
and examine and to take and preserve
testimony under oath as to any matter
in respect of the affairs or ownership
of any such savings association or
affiliate, and
(II) issue subpoenas and, for the
enforcement thereof, apply to the
United States district court for the
judicial district (or the United States
court in any territory) in which the
principal office of the savings
association or affiliate is located, or
in which the witness resides or carries
on business.
Such courts shall have jurisdiction and power
to order and require compliance with any such
subpoena.
(vi) In any proceeding under this section,
the appropriate Federal banking agency may
administer oaths and affirmations, take
depositions, and issue subpenas. The
Comptroller may prescribe regulations with
respect to any such proceedings. The attendance
of witnesses and the production of documents
provided for in this subsection may be required
from any place in any State or in any territory
at any designated place where such proceeding
is being conducted.
(vii) Any party to a proceeding under this
section 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
subpoena issued pursuant to this subsection or
section 10(c) of the Federal Deposit Insurance
Act, and such courts shall have jurisdiction
and power to order and require compliance
therewith. Witnesses subpoenaed under this
section shall be paid the same fees and mileage
that are paid witnesses in the district courts
of the United States. All expenses of the
appropriate Federal banking agency in
connection with this section shall be
considered as nonadministrative expenses. Any
court having jurisdiction of any proceeding
instituted under this section by a savings
association, or a director or officer thereof,
may allow to any such party reasonable expenses
and attorneys' fees. Such expenses and fees
shall be paid by the savings association.
(2) Conservatorships and receiverships.--
(A) Grounds for appointing conservator or
receiver for insured savings association.--The
appropriate Federal banking agency may appoint
a conservator or receiver for an insured
savings association if the appropriate Federal
banking agency determines, in the discretion of
the appropriate Federal banking agency, that 1
or more of the grounds specified in section
11(c)(5) of the Federal Deposit Insurance Act
exists.
(B) Power of appointment; judicial review.--
The appropriate Federal banking agency shall
have exclusive power and jurisdiction to
appoint a conservator or receiver for a Federal
savings association. If, in the opinion of the
appropriate Federal banking agency, a ground
for the appointment of a conservator or
receiver for a savings association exists, the
appropriate Federal banking agency is
authorized to appoint ex parte and without
notice a conservator or receiver for the
savings association. In the event of such
appointment, the association may, within 30
days thereafter, bring an action in the United
States district court for the judicial district
in which the home office of such association is
located, or in the United States District Court
for the District of Columbia, for an order
requiring the appropriate Federal banking
agency to remove such conservator or receiver,
and the court shall upon the merits dismiss
such action or direct the appropriate Federal
banking agency to remove such conservator or
receiver. Upon the commencement of such an
action, the court having jurisdiction of any
other action or proceeding authorized under
this subsection to which the association is a
party shall stay such action or proceeding
during the pendency of the action for removal
of the conservator or receiver.
(C) Replacement.--The appropriate Federal
banking agency may, without any prior notice,
hearing, or other action, replace a conservator
with another conservator or with a receiver,
but such replacement shall not affect any right
which the association may have to obtain
judicial review of the original appointment,
except that any removal under this subparagraph
shall be removal of the conservator or receiver
in office at the time of such removal.
(D) Court action.--Except as otherwise
provided in this subsection, no court may take
any action for or toward the removal of any
conservator or receiver or, except at the
request of the appropriate Federal banking
agency, to restrain or affect the exercise of
powers or functions of a conservator or
receiver.
(E) Powers.--
(i) In general.--A conservator shall
have all the powers of the members, the
stockholders, the directors, and the
officers of the association and shall
be authorized to operate the
association in its own name or to
conserve its assets in the manner and
to the extent authorized by the
appropriate Federal banking agency.
(ii) FDIC as conservator or
receiver.--Except as provided in
section 21A of the Federal Home Loan
Bank Act, the appropriate Federal
banking agency, at the Director's
discretion, may appoint the Federal
Deposit Insurance Corporation as
conservator for a savings association.
The appropriate Federal banking agency
shall appoint only the Federal Deposit
Insurance Corporation as receiver for a
savings association for the purpose of
liquidation or winding up the affairs
of such savings association. The
conservator or receiver so appointed
shall, as such, have power to buy at
its own sale. The Federal Deposit
Insurance Corporation, as such
conservator or receiver, shall have all
the powers of a conservator or
receiver, as appropriate, granted under
the Federal Deposit Insurance Act, and
(when not inconsistent therewith) any
other rights, powers, and privileges
possessed by conservators or receivers,
as appropriate, of savings associations
under this Act and any other provisions
of law.
(F) Disclosure requirement for those acting
on behalf of conservator.--A conservator shall
require that any independent contractor,
consultant, or counsel employed by the
conservator in connection with the
conservatorship of a savings association
pursuant to this section shall fully disclose
to all parties with which such contractor,
consultant, or counsel is negotiating, any
limitation on the authority of such contractor,
consultant, or counsel to make legally binding
representations on behalf of the conservator.
(3) Regulations.--
(A) In general.--The Comptroller may
prescribe regulations for the reorganization,
consolidation, liquidation, and dissolution of
savings associations, for the merger of insured
savings associations with insured savings
associations, for savings associations in
conservatorship and receivership, and for the
conduct of conservatorships and receiverships.
The Comptroller may, by regulation or
otherwise, provide for the exercise of
functions by members, stockholders, directors,
or officers of a savings association during
conservatorship and receivership.
(B) FDIC as conservator or receiver.--In any
case where the Federal Deposit Insurance
Corporation is the conservator or receiver, any
regulations prescribed by the Comptroller shall
be consistent with any regulations prescribed
by the Federal Deposit Insurance Corporation
pursuant to the Federal Deposit Insurance Act.
(4) Refusal to comply with demand.--Whenever a
conservator or receiver appointed by the appropriate
Federal banking agency demands possession of the
property, business, and assets of any savings
association, or of any part thereof, the refusal by any
director, officer, employee, or agent of such
association to comply with the demand shall be
punishable by a fine of not more than $5,000 or
imprisonment for not more than one year, or both.
(5) Definitions.--As used in this subsection, the
term ``savings association'' includes any savings
association or former savings association that retains
deposits insured by the Corporation, notwithstanding
termination of its status as an institution insured by
the Corporation.
(6) Compliance with monetary transaction
recordkeeping and report requirements.--
(A) Compliance procedures required.--The
Comptroller shall prescribe regulations
requiring savings associations to establish and
maintain procedures reasonably designed to
assure and monitor the compliance of such
associations with the requirements of
subchapter II of chapter 53 of title 31, United
States Code.
(B) Examinations of savings associations to
include review of compliance procedures.--
(i) In general.--Each examination of
a savings association by the
appropriate Federal banking agency
shall include a review of the
procedures required to be established
and maintained under subparagraph (A).
(ii) Exam report requirement.--The
report of examination shall describe
any problem with the procedures
maintained by the association.
(C) Order to comply with requirements.--If
the appropriate Federal banking agency
determines that a savings association--
(i) has failed to establish and
maintain the procedures described in
subparagraph (A); or
(ii) has failed to correct any
problem with the procedures maintained
by such association which was
previously reported to the association
by the appropriate Federal banking
agency,
the appropriate Federal banking agency shall
issue an order under section 8 of the Federal
Deposit Insurance Act requiring such
association to cease and desist from its
violation of this paragraph or regulations
prescribed under this paragraph.
(7) Regulation and examination of savings association
service companies, subsidiaries, and service
providers.--
(A) General examination and regulatory
authority.--A service company or subsidiary
that is owned in whole or in part by a savings
association shall be subject to examination and
regulation by the appropriate Federal banking
agency to the same extent as that savings
association.
(B) Examination by other banking agencies.--
The appropriate Federal banking agency may
authorize any other Federal banking agency that
supervises any other owner of part of the
service company or subsidiary to perform an
examination described in subparagraph (A).
(C) Applicability of section 8 of the federal
deposit insurance act.--A service company or
subsidiary that is owned in whole or in part by
a saving association shall be subject to the
provisions of section 8 of the Federal Deposit
Insurance Act as if the service company or
subsidiary were an insured depository
institution. In any such case, the Federal
Deposit Insurance Corporation or the
Comptroller, as appropriate, shall be deemed to
be the appropriate Federal banking agency,
pursuant to section 3(q) of the Federal Deposit
Insurance Act.
(D) Service performed by contract or
otherwise.--Notwithstanding subparagraph (A),
if a savings association, a subsidiary thereof,
or any savings and loan affiliate or entity, as
identified by section 8(b)(9) of the Federal
Deposit Insurance Act, that is regularly
examined or subject to examination by the
appropriate Federal banking agency, causes to
be performed for itself, by contract or
otherwise, any service authorized under this
Act or, in the case of a State savings
association, any applicable State law, whether
on or off its premises--
(i) such performance shall be subject
to regulation and examination by the
appropriate Federal banking agency to
the same extent as if such services
were being performed by the savings
association on its own premises; and
(ii) the savings association shall
notify the appropriate Federal banking
agency of the existence of the service
relationship not later than 30 days
after the earlier of--
(I) the date on which the
contract is entered into; or
(II) the date on which the
performance of the service is
initiated.
(E) Administration by the comptroller and the
corporation.--The Comptroller may issue such
regulations, and the appropriate Federal
banking agency may issue such orders, including
those issued pursuant to section 8 of the
Federal Deposit Insurance Act, as may be
necessary to administer and carry out this
paragraph and to prevent evasion of this
paragraph.
(8) Definitions.--For purposes of this section--
(A) the term ``service company'' means--
(i) any corporation--
(I) that is organized to
perform services authorized by
this Act or, in the case of a
corporation owned in part by a
State savings association,
authorized by applicable State
law; and
(II) all of the capital stock
of which is owned by 1 or more
insured savings associations;
and
(ii) any limited liability company--
(I) that is organized to
perform services authorized by
this Act or, in the case of a
company, 1 of the members of
which is a State savings
association, authorized by
applicable State law; and
(II) all of the members of
which are 1 or more insured
savings associations;
(B) the term ``limited liability company''
means any company, partnership, trust, or
similar business entity organized under the law
of a State (as defined in section 3 of the
Federal Deposit Insurance Act) that provides
that a member or manager of such company is not
personally liable for a debt, obligation, or
liability of the company solely by reason of
being, or acting as, a member or manager of
such company; and
(C) the terms ``State savings association''
and ``subsidiary'' have the same meanings as in
section 3 of the Federal Deposit Insurance Act.
(e) Character and Responsibility.--A charter may be granted
only--
(1) to persons of good character and responsibility,
(2) if in the judgment of the Comptroller a necessity
exists for such an institution in the community to be
served,
(3) if there is a reasonable probability of its
usefulness and success, and
(4) if the association can be established without
undue injury to properly conducted existing local
thrift and home financing institutions.
(f) Federal Home Loan Bank Membership.--After the end of the
6-month period beginning on the date of the enactment of the
Federal Home Loan Bank System Modernization Act of 1999, a
Federal savings association may become a member of the Federal
Home Loan Bank System, and shall qualify for such membership in
the manner provided by the Federal Home Loan Bank Act.
(h) Discriminatory State and Local Taxation Prohibited.--No
State, county, municipal, or local taxing authority may impose
any tax on Federal savings associations or their franchise,
capital, reserves, surplus, loans, or income greater than that
imposed by such authority on other similar local mutual or
cooperative thrift and home financing institutions.
(i) Conversions.--
(1) In general.--Any savings association which is, or
is eligible to become, a member of a Federal home loan
bank may convert into a Federal savings association
(and in so doing may change directly from the mutual
form to the stock form, or from the stock form to the
mutual form). Such conversion shall be subject to such
regulations as the Comptroller shall prescribe.
Thereafter such Federal savings association shall be
entitled to all the benefits of this section and shall
be subject to examination and regulation to the same
extent as other associations incorporated pursuant to
this Act.
(2) Authority of Comptroller.--(A) No savings
association may convert from the mutual to the stock
form, or from the stock form to the mutual form, except
in accordance with the regulations of the Comptroller.
(B) Any aggrieved person may obtain review of a final
action of the Comptroller which approves or disapproves
a plan of conversion pursuant to this subsection only
by complying with the provisions of section 10(j) of
this Act within the time limit and in the manner
therein prescribed, which provisions shall apply in all
respects as if such final action were an order the
review of which is therein provided for, except that
such time limit shall commence upon publication of
notice of such final action in the Federal Register or
upon the giving of such general notice of such final
action as is required by or approved under regulations
of the Comptroller, whichever is later.
(C) Any Federal savings association may change its
designation from a Federal savings association to a
Federal savings bank, or the reverse.
(3) Conversion to state association.--(A) Any Federal
savings association may convert itself into a savings
association or savings bank organized pursuant to the
laws of the State in which the principal office of such
Federal savings association is located if--
(i) the State permits the conversion of any
savings association or savings bank of such
State into a Federal savings association;
(ii) such conversion of a Federal savings
association into such a State savings
association is determined--
(I) upon the vote in favor of such
conversion cast in person or by proxy
at a special meeting of members or
stockholders called to consider such
action, specified by the law of the
State in which the home office of the
Federal savings association is located,
as required by such law for a State-
chartered institution to convert itself
into a Federal savings association, but
in no event upon a vote of less than 51
percent of all the votes cast at such
meeting, and
(II) upon compliance with other
requirements reciprocally equivalent to
the requirements of such State law for
the conversion of a State-chartered
institution into a Federal savings
association;
(iii) notice of the meeting to vote on
conversion shall be given as herein provided
and no other notice thereof shall be necessary;
the notice shall expressly state that such
meeting is called to vote thereon, as well as
the time and place thereof; and such notice
shall be mailed, postage prepaid, at least 30
and not more than 60 days prior to the date of
the meeting, to the Comptroller and to each
member or stockholder of record of the Federal
savings association at the member's or
stockholder's last address as shown on the
books of the Federal savings association;
(iv) when a mutual savings association is
dissolved after conversion, the members or
shareholders of the savings association will
share on a mutual basis in the assets of the
association in exact proportion to their
relative share or account credits;
(v) when a stock savings association is
dissolved after conversion, the stockholders
will share on an equitable basis in the assets
of the association; and
(vi) such conversion shall be effective upon
the date that all the provisions of this Act
shall have been fully complied with and upon
the issuance of a new charter by the State
wherein the savings association is located.
(B)(i) The act of conversion constitutes consent by
the institution to be bound by all the requirements
that the Comptroller may impose under this Act.
(ii) The savings association shall upon conversion
and thereafter be authorized to issue securities in any
form currently approved at the time of issue by the
Comptroller for issuance by similar savings
associations in such State.
(iii) If the insurance of accounts is terminated in
connection with such conversion, the notice and other
action shall be taken as provided by law and
regulations for the termination of insurance of
accounts.
(4) Savings bank activities.--(A) To the extent
authorized by the Comptroller, but subject to section
18(m)(3) of the Federal Deposit Insurance Act--
(i) any Federal savings bank chartered as
such prior to October 15, 1982, may continue to
make any investment or engage in any activity
not otherwise authorized under this section, to
the degree it was permitted to do so as a
Federal savings bank prior to October 15, 1982;
and
(ii) any Federal savings bank in existence on
the date of the enactment of the Financial
Institutions Reform, Recovery, and Enforcement
Act of 1989 and formerly organized as a mutual
savings bank under State law may continue to
make any investment or engage in any activity
not otherwise authorized under this section, to
the degree it was authorized to do so as a
mutual savings bank under State law.
(B) The authority conferred by this paragraph may be
utilized by any Federal savings association that
acquires, by merger or consolidation, a Federal savings
bank enjoying grandfather rights hereunder.
(5) Conversion to national or state bank.--
(A) In general.--Any Federal savings
association chartered and in operation before
the date of enactment of the Gramm-Leach-Bliley
Act, with branches in operation before such
date of enactment in 1 or more States, may
convert, at its option, with the approval of
the Comptroller for each national bank, and
with the approval of the appropriate State bank
supervisor and the appropriate Federal banking
agency for each State bank, into 1 or more
national or State banks, each of which may
encompass 1 or more of the branches of the
Federal savings association in operation before
such date of enactment in 1 or more States
subject to subparagraph (B).
(B) Conditions of conversion.--The authority
in subparagraph (A) shall apply only if each
resulting national or State bank--
(i) will meet all financial,
management, and capital requirements
applicable to the resulting national or
State bank; and
(ii) if more than 1 national or State
bank results from a conversion under
this subparagraph, has received
approval from the Federal Deposit
Insurance Corporation under section
5(a) of the Federal Deposit Insurance
Act.
(C) No merger application under fdia
required.--No application under section 18(c)
of the Federal Deposit Insurance Act shall be
required for a conversion under this paragraph.
(D) Definitions.--For purposes of this
paragraph, the terms ``State bank'' and ``State
bank supervisor'' have the same meanings as in
section 3 of the Federal Deposit Insurance Act.
(6) Limitation on certain conversions by federal
savings associations.--A Federal savings association
may not convert to a State bank or State savings
association during any period in which the Federal
savings association is subject to a cease and desist
order (or other formal enforcement order) issued by, or
a memorandum of understanding entered into with, the
Office of Thrift Supervision or the Comptroller of the
Currency with respect to a significant supervisory
matter.
(k) Depository of Public Money.--When designated for that
purpose by the Secretary of the Treasury, a savings association
the deposits of which are insured by the Corporation shall be a
depository of public money and may be employed as fiscal agent
of the Government under such regulations as may be prescribed
by the Secretary and shall perform all such reasonable duties
as fiscal agent of the Government as may be required of it. A
savings association the deposits of which are insured by the
Corporation may act as agent for any other instrumentality of
the United States when designated for that purpose by such
instrumentality, including services in connection with the
collection of taxes and other obligations owed the United
States, and the Secretary of the Treasury may deposit public
money in any such savings association, and shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection.
(l) Retirement Accounts.--A Federal savings association is
authorized to act as trustee of any trust created or organized
in the United States and forming part of a stock bonus,
pension, or profit-sharing plan which qualifies or qualified
for specific tax treatment under section 401(d) of the Internal
Revenue Code of 1986 and to act as trustee or custodian of an
individual retirement account within the meaning of section 408
of such Code if the funds of such trust or account are invested
only in savings accounts or deposits in such Federal savings
association or in obligations or securities issued by such
Federal savings association. All funds held in such fiduciary
capacity by any Federal savings association may be commingled
for appropriate purposes of investment, but individual records
shall be kept by the fiduciary for each participant and shall
show in proper detail all transactions engaged in under this
paragraph.
(m) Branching.--
(1) In general.--
(A) No savings association incorporated under
the laws of the District of Columbia or
organized in the District or doing business in
the District shall establish any branch or move
its principal office or any branch without the
Director's prior written approval.
(B) No savings association shall establish
any branch in the District of Columbia or move
its principal office or any branch in the
District without the Director's prior written
approval.
(2) Definition.--For purposes of this subsection the
term ``branch'' means any office, place of business, or
facility, other than the principal office as defined by
the Comptroller, of a savings association at which
accounts are opened or payments are received or
withdrawals are made, or any other office, place of
business, or facility of a savings association defined
by the Comptroller as a branch within the meaning of
such sentence.
(n) Trusts.--
(1) Permits.--The Comptroller may grant by special
permit to a Federal savings association applying
therefor the right to act as trustee, executor,
administrator, guardian, or in any other fiduciary
capacity in which State banks, trust companies, or
other corporations which compete with Federal savings
associations are permitted to act under the laws of the
State in which the Federal savings association is
located. Subject to the regulations of the Comptroller,
service corporations may invest in State or federally
chartered corporations which are located in the State
in which the home office of the Federal savings
association is located and which are engaged in trust
activities.
(2) Segregation of assets.--A Federal savings
association exercising any or all of the powers
enumerated in this section shall segregate all assets
held in any fiduciary capacity from the general assets
of the association and shall keep a separate set of
books and records showing in proper detail all
transactions engaged in under this subsection. The
State banking authority involved may have access to
reports of examination made by the Comptroller insofar
as such reports relate to the trust department of such
association but nothing in this subsection shall be
construed as authorizing such State banking authority
to examine the books, records, and assets of such
associations.
(3) Prohibitions.--No Federal savings association
shall receive in its trust department deposits of
current funds subject to check or the deposit of
checks, drafts, bills of exchange, or other items for
collection or exchange purposes. Funds deposited or
held in trust by the association awaiting investment
shall be carried in a separate account and shall not be
used by the association in the conduct of its business
unless it shall first set aside in the trust department
United States bonds or other securities approved by the
Comptroller.
(4) Separate lien.--In the event of the failure of a
Federal savings association, the owners of the funds
held in trust for investment shall have a lien on the
bonds or other securities so set apart in addition to
their claim against the estate of the association.
(5) Deposits.--Whenever the laws of a State require
corporations acting in a fiduciary capacity to deposit
securities with the State authorities for the
protection of private or court trusts, Federal savings
associations so acting shall be required to make
similar deposits. Securities so deposited shall be held
for the protection of private or court trusts, as
provided by the State law. Federal savings associations
in such cases shall not be required to execute the bond
usually required of individuals if State corporations
under similar circumstances are exempt from this
requirement. Federal savings associations shall have
power to execute such bond when so required by the laws
of the State involved.
(6) Oaths and affidavits.--In any case in which the
laws of a State require that a corporation acting as
trustee, executor, administrator, or in any capacity
specified in this section, shall take an oath or make
an affidavit, the president, vice president, cashier,
or trust officer of such association may take the
necessary oath or execute the necessary affidavit.
(7) Certain loans prohibited.--It shall be unlawful
for any Federal savings association to lend any
officer, director, or employee any funds held in trust
under the powers conferred by this section. Any
officer, director, or employee making such loan, or to
whom such loan is made, may be fined not more than
$50,000 or twice the amount of that person's gain from
the loan, whichever is greater, or may be imprisoned
not more than 5 years, or may be both fined and
imprisoned, in the discretion of the court.
(8) Factors to be considered.--In reviewing
applications for permission to exercise the powers
enumerated in this section, the Comptroller may
consider--
(A) the amount of capital of the applying
Federal savings association,
(B) whether or not such capital is sufficient
under the circumstances of the case,
(C) the needs of the community to be served,
and
(D) any other facts and circumstances that
seem to it proper.
The Comptroller may grant or refuse the application
accordingly, except that no permit shall be issued to
any association having capital less than the capital
required by State law of State banks, trust companies,
and corporations exercising such powers.
(9) Surrender of charter.--(A) Any Federal savings
association may surrender its right to exercise the
powers granted under this subsection, and have returned
to it any securities which it may have deposited with
the State authorities, by filing with the Comptroller a
certified copy of a resolution of its board of
directors indicating its intention to surrender its
right.
(B) Upon receipt of such resolution, the Comptroller,
if satisfied that such Federal savings association has
been relieved in accordance with State law of all
duties as trustee, executor, administrator, guardian or
other fiduciary, may in the Director's discretion,
issue to such association a certificate that such
association is no longer authorized to exercise the
powers granted by this subsection.
(C) Upon the issuance of such a certificate by the
Comptroller, such Federal savings association (i) shall
no longer be subject to the provisions of this section
or the regulations of the Comptroller made pursuant
thereto, (ii) shall be entitled to have returned to it
any securities which it may have deposited with State
authorities, and (iii) shall not exercise thereafter
any of the powers granted by this section without first
applying for and obtaining a new permit to exercise
such powers pursuant to the provisions of this section.
(D) The Comptroller may prescribe regulations
necessary to enforce compliance with the provisions of
this subsection.
(10) Revocation.--(A) In addition to the authority
conferred by other law, if, in the opinion of the
Comptroller, a Federal savings association is
unlawfully or unsoundly exercising, or has unlawfully
or unsoundly exercised, or has failed for a period of 5
consecutive years to exercise, the powers granted by
this subsection or otherwise fails or has failed to
comply with the requirements of this subsection, the
Comptroller may issue and serve upon the association a
notice of intent to revoke the authority of the
association to exercise the powers granted by this
subsection. The notice shall contain a statement of the
facts constituting the alleged unlawful or unsound
exercise of powers, or failure to exercise powers, or
failure to comply, and shall fix a time and place at
which a hearing will be held to determine whether an
order revoking authority to exercise such powers should
issue against the association.
(B) Such hearing shall be conducted in accordance
with the provisions of subsection (d)(1)(B), and
subject to judicial review as therein provided, and
shall be fixed for a date not earlier than 30 days and
not later than 60 days after service of such notice
unless the Comptroller sets an earlier or later date at
the request of any Federal savings association so
served.
(C) Unless the Federal savings association so served
shall appear at the hearing by a duly authorized
representative, it shall be deemed to have consented to
the issuance of the revocation order. In the event of
such consent, or if upon the record made at any such
hearing, the Comptroller shall find that any allegation
specified in the notice of charges has been
established, the Comptroller may issue and serve upon
the association an order prohibiting it from accepting
any new or additional trust accounts and revoking
authority to exercise any and all powers granted by
this subsection, except that such order shall permit
the association to continue to service all previously
accepted trust accounts pending their expeditious
divestiture or termination.
(D) A revocation order shall become effective not
earlier than the expiration of 30 days after service of
such order upon the association so served (except in
the case of a revocation order issued upon consent,
which shall become effective at the time specified
therein), and shall remain effective and enforceable,
except to such extent as it is stayed, modified,
terminated, or set aside by action of the Comptroller
or a reviewing court.
(o) Conversion of State Savings Banks.--(1) Subject to the
provisions of this subsection and under regulations of the
Comptroller, the Comptroller may authorize the conversion of a
State-chartered savings bank into a Federal savings bank, if
such conversion is not in contravention of State law, and
provide for the organization, incorporation, operation,
examination, and regulation of such institution.
(2)(A) Any Federal savings bank chartered pursuant to this
subsection shall continue to be insured by the Deposit
Insurance Fund.
(B) The Comptroller shall notify the Corporation of any
application under this Act for conversion to a Federal charter
by an institution insured by the Corporation, shall consult
with the Corporation before disposing of the application, and
shall notify the Corporation of the determination of the
Comptroller with respect to such application.
(C) Notwithstanding any other provision of law, if the
Corporation determines that conversion into a Federal stock
savings bank or the chartering of a Federal stock savings bank
is necessary to prevent the default of a savings bank it
insures or to reopen a savings bank in default that it insured,
or if the Corporation determines, with the concurrence of the
Comptroller, that severe financial conditions exist that
threaten the stability of a savings bank insured by the
Corporation and that such a conversion or charter is likely to
improve the financial condition of such savings bank, the
Corporation shall provide the Comptroller with a certificate of
such determination, the reasons therefor in conformance with
the requirements of this Act, and the bank shall be converted
or chartered by the Comptroller, pursuant to the regulations
thereof, from the time the Corporation issues the certificate.
(D) A bank may be converted under subparagraph (C) only if
the board of trustees of the bank--
(i) has specified in writing that the bank is in
danger of closing or is closed, or that severe
financial conditions exist that threaten the stability
of the bank and a conversion is likely to improve the
financial condition of the bank; and
(ii) has requested in writing that the Corporation
use the authority of subparagraph (C).
(E)(i) Before making a determination under subparagraph (D),
the Corporation shall consult the State bank supervisor of the
State in which the bank in danger of closing is chartered. The
State bank supervisor shall be given a reasonable opportunity,
and in no event less than 48 hours, to object to the use of the
provisions of subparagraph (D).
(ii) If the State supervisor objects during such period, the
Corporation may use the authority of subparagraph (D) only by
an affirmative vote of three-fourths of the Board of Directors.
The Board of Directors shall provide the State supervisor, as
soon as practicable, with a written certification of its
determination.
(3) A Federal savings bank chartered under this subsection
shall have the same authority with respect to investments,
operations, and activities, and shall be subject to the same
restrictions, including those applicable to branching and
discrimination, as would apply to it if it were chartered as a
Federal savings bank under any other provision of this Act.
(p) Conversions.--(1) Notwithstanding any other provision of
law, and consistent with the purposes of this Act, the
Comptroller may authorize (or in the case of a Federal savings
association, require) the conversion of any mutual savings
association or Federal mutual savings bank that is insured by
the Corporation into a Federal stock savings association or
Federal stock savings bank, or charter a Federal stock savings
association or Federal stock savings bank to acquire the assets
of, or merge with such a mutual institution under the
regulations of the Comptroller.
(2) Authorizations under this subsection may be made only--
(A) if the Comptroller has determined that severe
financial conditions exist which threaten the stability
of an association and that such authorization is likely
to improve the financial condition of the association,
(B) when the Corporation has contracted to provide
assistance to such association under section 13 of the
Federal Deposit Insurance Act, or
(C) to assist an institution in receivership.
(3) A Federal savings bank chartered under this subsection
shall have the same authority with respect to investments,
operations and activities, and shall be subject to the same
restrictions, including those applicable to branching and
discrimination, as would apply to it if it were chartered as a
Federal savings bank under any other provision of this Act, and
may engage in any investment, activity, or operation that the
institution it acquired was engaged in if that institution was
a Federal savings bank, or would have been authorized to engage
in had that institution converted to a Federal charter.
(q) Tying Arrangements.--(1) A savings association may 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 additional credit,
property, or service from such savings association, or
from any service corporation or affiliate of such
association, other than a loan, discount, deposit, or
trust service;
(B) that the customer provide additional credit,
property, or service to such association, or to any
service corporation or affiliate of such association,
other than those related to and usually provided in
connection with a similar loan, discount, deposit, or
trust service; and
(C) that the customer shall not obtain some other
credit, property, or service from a competitor of such
association, or from a competitor of any service
corporation or affiliate of such association, other
than a condition or requirement that such association
shall reasonably impose in connection with credit
transactions to assure the soundness of credit.
(2)(A) Any person may sue for and have injunctive relief, in
any court of the United States having jurisdiction over the
parties, against threatened loss or damage by reason of a
violation of paragraph (1), under the same conditions and
principles as injunctive relief against threatened conduct that
will cause loss or damage is granted by courts of equity and
under the rules governing such proceedings.
(B) Upon the execution of proper bond against damages for an
injunction improvidently granted and a showing that the danger
of irreparable loss or damage is immediate, a preliminary
injunction may issue.
(3) Any person injured by a violation of paragraph (1) may
bring an action in any district court of the United States in
which the defendant resides or is found or has an agent,
without regard to the amount in controversy, or in any other
court of competent jurisdiction, and shall be entitled to
recover three times the amount of the damages sustained, and
the cost of suit, including a reasonable attorney's fee. Any
such action shall be brought within 4 years from the date of
the occurrence of the violation.
(4) Nothing contained in this subsection affects in any
manner the right of the United States or any other party to
bring an action under any other law of the United States or of
any State, including any right which may exist in addition to
specific statutory authority, challenging the legality of any
act or practice which may be proscribed by this subsection. No
regulation or order issued by the Board under this subsection
shall in any manner constitute a defense to such action.
(5) For purposes of this subsection, the term ``loan''
includes obligations and extensions or advances of credit.
(6) Exceptions.--The Board may, by regulation or
order, permit such exceptions to the prohibitions of
this subsection as the Board in consultation with the
Comptroller and the Corporation, considers will not be
contrary to the purposes of this subsection and which
conform to exceptions granted by the Board pursuant to
section 106(b) of the Bank Holding Company Act
Amendments of 1970.
(r) Out-of-State Branches.--(1) No Federal savings
association may establish, retain, or operate a branch outside
the State in which the Federal savings association has its home
office, unless the association qualifies as a domestic building
and loan association under section 7701(a)(19) of the Internal
Revenue Code of 1986 or meets the asset composition test
imposed by subparagraph (C) of that section on institutions
seeking so to qualify, or qualifies as a qualified thrift
lender, as determined under section 10(m) of this Act. No out-
of-State branch so established shall be retained or operated
unless the total assets of the Federal savings association
attributable to all branches of the Federal savings association
in that State would qualify the branches as a whole, were they
otherwise eligible, for treatment as a domestic building and
loan association under section 7701(a)(19) or as a qualified
thrift lender, as determined under section 10(m) of this Act,
as applicable.
(2) The limitations of paragraph (1) shall not apply if--
(A) the branch results from a transaction authorized
under section 13(k) of the Federal Deposit Insurance
Act;
(B) the branch was authorized for the Federal savings
association prior to October 15, 1982;
(C) the law of the State where the branch is located,
or is to be located, would permit establishment of the
branch if the association was a savings association or
savings bank chartered by the State in which its home
office is located; or
(D) the branch was operated lawfully as a branch
under State law prior to the association's conversion
to a Federal charter.
(3) The Comptroller of the Currency, for good cause shown,
may allow Federal savings associations up to 2 years to comply
with the requirements of this subsection.
(s) Minimum Capital Requirements.--
(1) In general.--Consistent with the purposes of
section 908 of the International Lending Supervision
Act of 1983 and the capital requirements established
pursuant to such section by the appropriate Federal
banking agencies (as defined in section 903(1) of such
Act), the Comptroller of the Currency shall require all
savings associations to achieve and maintain adequate
capital by--
(A) establishing minimum levels of capital
for savings associations; and
(B) using such other methods as the
Comptroller of the Currency determines to be
appropriate.
(2) Minimum capital levels may be determined by
director case-by-case.--The Comptroller of the Currency
may, consistent with subsection (t), establish the
minimum level of capital for a savings association at
such amount or at such ratio of capital-to-assets as
the Comptroller of the Currency determines to be
necessary or appropriate for such association in light
of the particular circumstances of the association.
(3) Unsafe or unsound practice.--In the discretion of
the appropriate Federal banking agency, the appropriate
Federal banking agency, may treat the failure of any
savings association to maintain capital at or above the
minimum level required by the Comptroller under this
subsection or subsection (t) as an unsafe or unsound
practice.
(4) Directive to increase capital.--
(A) Plan may be required.--In addition to any
other action authorized by law, including
paragraph (3), the appropriate Federal banking
agency may issue a directive requiring any
savings association which fails to maintain
capital at or above the minimum level required
by the appropriate Federal banking agency to
submit and adhere to a plan for increasing
capital which is acceptable to the appropriate
Federal banking agency.
(B) Enforcement of plan.--Any directive
issued and plan approved under subparagraph (A)
shall be enforceable under section 8 of the
Federal Deposit Insurance Act to the same
extent and in the same manner as an outstanding
order which was issued under section 8 of the
Federal Deposit Insurance Act and has become
final.
(5) Plan taken into account in other proceedings.--
The appropriate Federal banking agency may--
(A) consider a savings association's progress
in adhering to any plan required under
paragraph (4) whenever such association or any
affiliate of such association (including any
company which controls such association) seeks
the approval of the appropriate Federal banking
agency for any proposal which would have the
effect of diverting earnings, diminishing
capital, or otherwise impeding such
association's progress in meeting the minimum
level of capital required by the appropriate
Federal banking agency; and
(B) disapprove any proposal referred to in
subparagraph (A) if the appropriate Federal
banking agency determines that the proposal
would adversely affect the ability of the
association to comply with such plan.
(t) Capital Standards.--
(1) In general.--
(A) Requirement for standards to be
prescribed.--The appropriate Federal banking
agency shall, by regulation, prescribe and
maintain uniformly applicable capital standards
for savings associations. Those standards shall
include--
(i) a leverage limit;
(ii) a tangible capital requirement;
and
(iii) a risk-based capital
requirement.
(B) Compliance.--A savings association is not
in compliance with capital standards for
purposes of this subsection unless it complies
with all capital standards prescribed under
this paragraph.
(C) Stringency.--The standards prescribed
under this paragraph shall be no less stringent
than the capital standards applicable to
national banks.
(2) Content of standards.--
(A) Leverage limit.--The leverage limit
prescribed under paragraph (1) shall require a
savings association to maintain core capital in
an amount not less than 3 percent of the
savings association's total assets.
(B) Tangible capital requirement.--The
tangible capital requirement prescribed under
paragraph (1) shall require a savings
association to maintain tangible capital in an
amount not less than 1.5 percent of the savings
association's total assets.
(C) Risk-based capital requirement.--
Notwithstanding paragraph (1)(C), the risk-
based capital requirement prescribed under
paragraph (1) may deviate from the risk-based
capital standards applicable to national banks
to reflect interest-rate risk or other risks,
but such deviations shall not, in the
aggregate, result in materially lower levels of
capital being required of savings associations
under the risk-based capital requirement than
would be required under the risk-based capital
standards applicable to national banks.
(5) Separate capitalization required for certain
subsidiaries.--
(A) In general.--In determining compliance
with capital standards prescribed under
paragraph (1), all of a savings association's
investments in and extensions of credit to any
subsidiary engaged in activities not
permissible for a national bank shall be
deducted from the savings association's
capital.
(B) Exception for agency activities.--
Subparagraph (A) shall not apply with respect
to a subsidiary engaged, solely as agent for
its customers, in activities not permissible
for a national bank unless the appropriate
Federal banking agency, in the sole discretion
of the appropriate Federal banking agency,
determines that, in the interests of safety and
soundness, this subparagraph should cease to
apply to that subsidiary.
(C) Other exceptions.--Subparagraph (A) shall
not apply with respect to any of the following:
(i) Mortgage banking subsidiaries.--A
savings association's investments in
and extensions of credit to a
subsidiary engaged solely in mortgage-
banking activities.
(ii) Subsidiary insured depository
institutions.--A savings association's
investments in and extensions of credit
to a subsidiary--
(I) that is itself an insured
depository institution or a
company the sole investment of
which is an insured depository
institution, and
(II) that was acquired by the
parent insured depository
institution prior to May 1,
1989.
(iii) Certain federal savings
banks.--Any Federal savings association
existing as a Federal savings
association on the date of enactment of
the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989--
(I) that was chartered prior
to 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
prior to October 15, 1982, as a
savings bank or a cooperative
bank under State law.
(E) Consolidation of subsidiaries not
separately capitalized.--In determining
compliance with capital standards prescribed
under paragraph (1), the assets and liabilities
of each of a savings association's subsidiaries
(other than any subsidiary described in
subparagraph (C)(ii)) shall be consolidated
with the savings association's assets and
liabilities, unless all of the savings
association's investments in and extensions of
credit to the subsidiary are deducted from the
savings association's capital pursuant to
subparagraph (A).
(6) Consequences of failing to comply with capital
standards.--
(B) On or after january 1, 1991.--On or after
January 1, 1991, the appropriate Federal
banking agency--
(i) shall prohibit any asset growth
by any savings association not in
compliance with capital standards,
except as provided in subparagraph (C);
and
(ii) shall require any savings
association not in compliance with
capital standards to comply with a
capital directive issued by the
appropriate Federal banking agency
(which may include such restrictions,
including restrictions on the payment
of dividends and on compensation, as
the appropriate Federal banking agency
determines to be appropriate).
(C) Limited growth exception.--The
appropriate Federal banking agency may permit
any savings association that is subject to
subparagraph (B) to increase its assets in an
amount not exceeding the amount of net interest
credited to the savings association's deposit
liabilities if--
(i) the savings association obtains
the prior approval of the appropriate
Federal banking agency;
(ii) any increase in assets is
accompanied by an increase in tangible
capital in an amount not less than 6
percent of the increase in assets (or,
in the discretion of the appropriate
Federal banking agency if the leverage
limit then applicable is less than 6
percent, in an amount equal to the
increase in assets multiplied by the
percentage amount of the leverage
limit);
(iii) any increase in assets is
accompanied by an increase in capital
not less in percentage amount than
required under the risk-based capital
standard then applicable;
(iv) any increase in assets is
invested in low-risk assets, such as
first mortgage loans secured by 1- to
4-family residences and fully secured
consumer loans; and
(v) the savings association's ratio
of core capital to total assets is not
less than the ratio existing on January
1, 1991.
(D) Additional restrictions in case of
excessive risks or rates.--The appropriate
Federal banking agency may restrict the asset
growth of any savings association that the
appropriate Federal banking agency determines
is taking excessive risks or paying excessive
rates for deposits.
(E) Failure to comply with plan, regulation,
or order.--The appropriate Federal banking
agency may treat as an unsafe and unsound
practice any material failure by a savings
association to comply with any plan,
regulation, or order under this paragraph.
(F) Effect on other regulatory authority.--
This paragraph does not limit any authority of
the appropriate Federal banking agency under
this Act or any other provision of law.
(7) Exemption from certain sanctions.--
(A) Application for exemption.--Any savings
association not in compliance with the capital
standards prescribed under paragraph (1) may
apply to the appropriate Federal banking agency
for an exemption from any applicable sanction
or penalty for noncompliance which the
appropriate Federal banking agency may impose
under this Act.
(B) Effect of grant of exemption.--If the
appropriate Federal banking agency approves any
savings association's application under
subparagraph (A), the only sanction or penalty
to be imposed by the appropriate Federal
banking agency under this Act for the savings
association's failure to comply with the
capital standards prescribed under paragraph
(1) is the growth limitation contained in
paragraph (6)(B) or paragraph (6)(C), whichever
is applicable.
(C) Standards for approval or disapproval.--
(i) Approval.--The appropriate
Federal banking agency may approve an
application for an exemption if the
appropriate Federal banking agency
determines that--
(I) such exemption would pose
no significant risk to the
Deposit Insurance Fund;
(II) the savings
association's management is
competent;
(III) the savings association
is in substantial compliance
with all applicable statutes,
regulations, orders, and
supervisory agreements and
directives; and
(IV) the savings
association's management has
not engaged in insider dealing,
speculative practices, or any
other activities that have
jeopardized the association's
safety and soundness or
contributed to impairing the
association's capital.
(ii) Denial or revocation of
approval.--The appropriate Federal
banking agency shall deny any
application submitted under clause (i)
and revoke any prior approval granted
with respect to any such application if
the appropriate Federal banking agency
determines that the association's
failure to meet any capital standards
prescribed under paragraph (1) is
accompanied by--
(I) a pattern of consistent
losses;
(II) substantial dissipation
of assets;
(III) evidence of imprudent
management or business
behavior;
(IV) a material violation of
any Federal law, any law of any
State to which such association
is subject, or any applicable
regulation; or
(V) any other unsafe or
unsound condition or activity,
other than the failure to meet
such capital standards.
(D) Submission of plan required.--Any
application submitted under subparagraph (A)
shall be accompanied by a plan which--
(i) meets the requirements of
paragraph (6)(A)(ii); and
(ii) is acceptable to the appropriate
Federal banking agency.
(E) Failure to comply with plan.--The
appropriate Federal banking agency shall treat
as an unsafe and unsound practice any material
failure by any savings association which has
been granted an exemption under this paragraph
to comply with the provisions of any plan
submitted by such association under
subparagraph (D).
(F) Exemption not available with respect to
unsafe or unsound practices.--This paragraph
does not limit any authority of the appropriate
Federal banking agency under any other
provision of law, including section 8 of the
Federal Deposit Insurance Act, to take any
appropriate action with respect to any unsafe
or unsound practice or condition of any savings
association, other than the failure of such
savings association to comply with the capital
standards prescribed under paragraph (1).
(9) Definitions.--For purposes of this subsection--
(A) Core capital.--Unless the Comptroller
prescribes a more stringent definition, the
term ``core capital'' means core capital as
defined by the Comptroller of the Currency for
national banks, less any unidentifiable
intangible assets.
(B) Tangible capital.--The term ``tangible
capital'' means core capital minus any
intangible assets (as intangible assets are
defined by the Comptroller for national banks).
(C) Total assets.--The term ``total assets''
means total assets (as total assets are defined
by the Comptroller of the Currency for national
banks) adjusted in the same manner as total
assets would be adjusted in determining
compliance with the leverage limit applicable
to national banks if the savings association
were a national bank.
(10) Use of comptroller's definitions.--
(A) In general.--The standards prescribed
under paragraph (1) shall include all relevant
substantive definitions established by the
Comptroller of the Currency for national banks.
(B) Special rule.--If the Comptroller of the
Currency has not made effective regulations
defining core capital or establishing a risk-
based capital standard, the appropriate Federal
banking agency shall use the definition and
standard contained in the Comptroller's most
recently published final regulations.
(u) Limits on Loans to One Borrower.--
(1) In general.--Section 5200 of the Revised Statutes
shall apply to savings associations in the same manner
and to the same extent as it applies to national banks.
(2) Special rules.--
(A) Notwithstanding paragraph (1), a savings
association may make loans to one borrower
under one of the following clauses:
(i) For any purpose, not to exceed
[$500,000] $3,000,000.
(ii) To develop domestic residential
housing units, not to exceed the lesser
of [$30,000,000] $160,000,000 or 30
percent of the savings association's
unimpaired capital and unimpaired
surplus, if--
(I) the savings association
is and continues to be in
compliance with the fully
phased-in capital standards
prescribed under subsection
(t);
(II) the appropriate Federal
banking agency, by order,
permits the savings association
to avail itself of the higher
limit provided by this clause;
(III) loans made under this
clause to all borrowers do not,
in aggregate, exceed 150
percent of the savings
association's unimpaired
capital and unimpaired surplus;
and
(IV) such loans comply with
all applicable loan-to-value
requirements.
(B) A savings association's loans to one
borrower to finance the sale of real property
acquired in satisfaction of debts previously
contracted in good faith shall not exceed 50
percent of the savings association's unimpaired
capital and unimpaired surplus.
(3) Authority to impose more stringent
restrictions.--The appropriate Federal banking agency
may impose more stringent restrictions on a savings
association's loans to one borrower if the appropriate
Federal banking agency determines that such
restrictions are necessary to protect the safety and
soundness of the savings association.
(v) Reports of Condition.--
(1) In general.--Each association shall make reports
of conditions to the appropriate Federal banking agency
which shall be in a form prescribed by the appropriate
Federal banking agency and shall contain--
(A) information sufficient to allow the
identification of potential interest rate and
credit risk;
(B) a description of any assistance being
received by the association, including the type
and monetary value of such assistance;
(C) the identity of all subsidiaries and
affiliates of the association;
(D) the identity, value, type, and sector of
investment of all equity investments of the
associations and subsidiaries; and
(E) other information that the appropriate
Federal banking agency may prescribe.
(2) Public disclosure.--
(A) Reports required under paragraph (1) and
all information contained therein shall be
available to the public upon request, unless
the appropriate Federal banking agency
determines--
(i) that a particular item or
classification of information should
not be made public in order to protect
the safety or soundness of the
institution concerned or institutions
concerned, or the Deposit Insurance
Fund; or
(ii) that public disclosure would not
otherwise be in the public interest.
(B) Any determination made by the appropriate
Federal banking agency under subparagraph (A)
not to permit the public disclosure of
information shall be made in writing, and if
the appropriate Federal banking agency
restricts any item of information for savings
institutions generally, the appropriate Federal
banking agency shall disclose the reason in
detail in the Federal Register.
(C) The determinations of the appropriate
Federal banking agency under subparagraph (A)
shall not be subject to judicial review.
(3) Access by certain parties.--
(A) Notwithstanding paragraph (2), the
persons described in subparagraph (B) shall not
be denied access to any information contained
in a report of condition, subject to reasonable
requirements of confidentiality. Those
requirements shall not prevent such information
from being transmitted to the Comptroller
General of the United States for analysis.
(B) The following persons are described in
this subparagraph for purposes of subparagraph
(A):
(i) the Chairman and ranking minority
member of the Committee on Banking,
Housing, and Urban Affairs of the
Senate and their designees; and
(ii) the Chairman and ranking
minority member of the Committee on
Banking, Finance and Urban Affairs of
the House of Representatives and their
designees.
(4) First tier penalties.--Any savings association
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 by the
appropriate Federal banking agency
under paragraph (1) or (2), within the
period of time specified by the
appropriate Federal banking agency; 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.
The savings association shall have the burden of
proving by a preponderence of the evidence that an
error was inadvertent and unintentional and that a
report was inadvertently transmitted or published late.
(5) Second tier penalties.--Any savings association
which--
(A) fails to submit or publish any report or
information required by the appropriate Federal
banking agency under paragraph (1) or (2),
within the period of time specified by the
appropriate Federal banking agency; or
(B) submits or publishes any false or
misleading report or information,
in a manner not described in paragraph (4) 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.
(6) Third tier penalties.--If any savings association
knowingly or with reckless disregard for the accuracy
of any information or report described in paragraph (5)
submits or publishes any false or misleading report or
information, the appropriate Federal banking agency may
assess a penalty of not more than $1,000,000 or 1
percent of total assets, whichever is less, per day for
each day during which such failure continues or such
false or misleading information is not corrected.
(7) Assessment.--Any penalty imposed under paragraph
(4), (5), or (6) shall be assessed and collected by the
appropriate Federal banking agency in the manner
provided in subparagraphs (E), (F), (G), and (I) of
section 8(i)(2) of the Federal Deposit Insurance Act
(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.
(8) Hearing.--Any savings association against which
any penalty is assessed under this subsection shall be
afforded a hearing if such savings association submits
a request for such hearing within 20 days after the
issuance of the notice of assessment. Section 8(h) of
the Federal Deposit Insurance Act shall apply to any
proceeding under this subsection.
(w) Forfeiture of Franchise for Money Laundering or Cash
Transaction Reporting Offenses.--
(1) In general.--
(A) Conviction of title 18 offense.--
(I) Duty to notify.--If a Federal
savings association has been convicted
of any criminal offense under section
1956 or 1957 of title 18, United States
Code, the Attorney General shall
provide to the Comptroller a written
notification of the conviction and
shall include a certified copy of the
order of conviction from the court
rendering the decision.
(II) Notice of termination;
pretermination hearing.--After
receiving written notification from the
Attorney General of such a conviction,
the Comptroller shall issue to the
savings association a notice of the
intention of the Comptroller to
terminate all rights, privileges, and
franchises of the savings association
and schedule a pretermination hearing.
(B) Conviction of title 31 offenses.--If a
Federal savings association is convicted of any
criminal offense under section 5322 or 5324 of
title 31, United States Code, after receiving
written notification from the Attorney General,
the Comptroller may issue to the savings
association a notice of the intention of the
Comptroller to terminate all rights,
privileges, and franchises of the savings
association and schedule a pretermination
hearing.
(C) Judicial review.--Subsection
(d)(1)(B)(vii) shall apply to any proceeding
under this subsection.
(2) Factors to be considered.--In determining whether
a franchise shall be forfeited under paragraph (1), the
Comptroller shall take into account the following
factors:
(A) The extent to which directors or senior
executive officers of the savings association
knew of, were involved in, the commission of
the money laundering offense of which the
association was found guilty.
(B) The extent to which the offense occurred
despite the existence of policies and
procedures within the savings association which
were designed to prevent the occurrence of any
such offense.
(C) The extent to which the savings
association has fully cooperated with law
enforcement authorities with respect to the
investigation of the money laundering offense
of which the association was found guilty.
(D) The extent to which the savings
association has implemented additional internal
controls (since the commission of the offense
of which the savings association was found
guilty) to prevent the occurrence of any other
money laundering offense.
(E) The extent to which the interest of the
local community in having adequate deposit and
credit services available would be threatened
by the forfeiture of the franchise.
(3) Successor liability.--This subsection shall not
apply to a successor to the interests of, or a person
who acquires, a savings association that violated a
provision of law described in paragraph (1), if the
successor succeeds to the interests of the violator, or
the acquisition is made, in good faith and not for
purposes of evading this subsection or regulations
prescribed under this subsection.
(4) Definition.--The term ``senior executive
officer'' has the same meaning as in regulations
prescribed under section 32(f) of the Federal Deposit
Insurance Act.
(x) Home State Citizenship.--In determining whether a Federal
court has diversity jurisdiction over a case in which a Federal
savings association is a party, the Federal savings association
shall be considered to be a citizen only of the State in which
such savings association has its home office.
* * * * * * *
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INTERNATIONAL LENDING SUPERVISION ACT OF 1983
* * * * * * *
TITLE IX--INTERNATIONAL LENDING SUPERVISION
* * * * * * *
foreign loan evaluations
Sec. 909. (a)(1) In any case in which one or more banking
institutions extend credit, whether by loan, lease, guarantee,
or otherwise, which individually or in the aggregate exceeds
[$20,000,000] $160,000,000, to finance any project which has as
a major objective the construction or operation of any mining
operation, any metal or mineral primary processing operation,
any fabricating facility or operation, or any metal-making
operations (semi and finished) located outside the United
States or its territories and possessions, a written economic
feasibility evaluation of such foreign project shall be
prepared and approved in writing by a senior official of the
banking institution, or, if more than one banking institution
is involved, the lead banking institution, prior to the
extension of such credit.
(2) Such evaluation shall--
(A) take into account the profit potential of the
project, the impact of the project on world markets,
the inherent competitive advantages and disadvantages
of the project over the entire life of the project, and
the likely effect of the project upon the overall long-
term economic development of the country in which the
project is located; and
(B) consider whether the extension of credit can
reasonably be expected to be repaid from revenues
generated by such foreign project without regard to any
subsidy, as defined in international agreements,
provided by the government involved or any
instrumentality of any country.
(b) Such economic feasibility evaluations shall be reviewed
by representatives of the appropriate Federal banking agencies
whenever an examination by such appropriate Federal banking
agency is conducted.
(c)(1) The authorities of the Federal banking agencies
contained in section 8 of the Federal Deposit Insurance Act and
in section 910 of this Act, except those contained in section
910(d), shall be applicable to this section.
(2) No private right of action or claim for relief may be
predicated upon this section.
* * * * * * *
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REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
* * * * * * *
definitions
Sec. 3. For purposes of this Act--
(1) the term ``federally related mortgage loan''
includes any loan (other than temporary financing such
as a construction loan) which--
(A) is secured by a first or subordinate lien
on residential real property (including
individual units of condominiums and
cooperatives) designed principally for the
occupancy of from one to four families,
including any such secured loan, the proceeds
of which are used to prepay or pay off an
existing loan secured by the same property; and
(B)(i) is made in whole or in part by any
lender the deposits or accounts of which are
insured by any agency of the Federal
Government, or is made in whole or in part by
any lender which is regulated by any agency of
the Federal Government; or
(ii) is made in whole or in part, or insured,
guaranteed, supplemented, or assisted in any
way, by the Secretary or any other officer or
agency of the Federal Government or under or in
connection with a housing or urban development
program administered by the Secretary or a
housing or related program administered by any
other such officer or agency; or
(iii) is intended to be sold by the
originating lender to the Federal National
Mortgage Association, the Government National
Mortgage Association, the Federal Home Loan
Mortgage Corporation, or a financial
institution from which it is to be purchased by
the Federal Home Loan Mortgage Corporation; or
(iv) is made in whole or in part by any
``creditor'', as defined in section 103(f) of
the Consumer Credit Protection Act (15 U.S.C.
1602(f)), who makes or invests in residential
real estate loans aggregating more than
[$1,000,000] $19,000,000 per year, except that
for the purpose of this Act, the term
``creditor'' does not include any agency or
instrumentality of any state;
(2) the term ``thing of value'' includes any payment,
advance, funds, loan, service, or other consideration;
(3) the term ``settlement services'' includes any
service provided in connection with a real estate
settlement including, but not limited to, the
following: title searchers, title examinations, the
provision of title certificates, title insurance,
services rendered by an attorney, the preparation of
documents, property surveys, the rendering of credit
reports or appraisals, pest and fungus inspections,
services rendered by a real estate agent or broker, the
origination of a federally related mortgage loan
(including, but not limited to, the taking of loan
applications, loan processing, and the underwriting and
funding of loans), and the handling of the processing,
and closing or settlement;
(4) the term ``title company'' means any institution
which is qualified to issue title insurance, directly
or through its agents, and also refers to any duly
authorized agent of a title company;
(5) the term ``person'' includes individuals,
corporations, associations, partnerships, and trusts;
(6) the term ``Secretary'' means the Secretary of
Housing and Urban Development;
(7) the term ``affiliated business arrangement''
means an arrangement in which (A) a person who is in a
position to refer business incident to or a part of a
real estate settlement service involving a federally
related mortgage loan, or an associate of such person,
has either an affiliate relationship with or a direct
or beneficial ownership interest of more than 1 percent
in a provider of settlement services; and (B) either of
such persons directly or indirectly refers such
business to that provider or affirmately influences the
selection of that provider;
(8) the term ``associate'' means one who has one or
more of the following relationships with a person in a
position to refer settlement business: (A) a spouse,
parent, or child of such person; (B) a corporation or
business entity that controls, is controlled by, or is
under common control with such person; (C) an employer,
officer, director, partner, franchisor, or franchisee
of such person; or (D) anyone who has an agreement,
arrangement, or understanding, with such person, the
purpose or substantial effect of which is to enable the
person in a position to refer settlement business to
benefit financially from the referals of such business;
and
(9) the term ``Bureau'' means the Bureau of Consumer
Financial Protection.
* * * * * * *
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REVISED STATUTES OF THE UNITED STATES
* * * * * * *
TITLE LXII--NATIONAL BANKS.
CHAPTER ONE--ORGANIZATION AND POWERS.
* * * * * * *
SEC. 5136A. FINANCIAL SUBSIDIARIES OF NATIONAL BANKS.
(a) Authorization To Conduct in Subsidiaries Certain
Activities That are Financial in Nature.--
(1) In general.--Subject to paragraph (2), a national
bank may control a financial subsidiary, or hold an
interest in a financial subsidiary.
(2) Conditions and requirements.--A national bank may
control a financial subsidiary, or hold an interest in
a financial subsidiary, only if--
(A) the financial subsidiary engages only
in--
(i) activities that are financial in
nature or incidental to a financial
activity pursuant to subsection (b);
and
(ii) activities that are permitted
for national banks to engage in
directly (subject to the same terms and
conditions that govern the conduct of
the activities by a national bank);
(B) the activities engaged in by the
financial subsidiary as a principal do not
include--
(i) insuring, guaranteeing, or
indemnifying against loss, harm,
damage, illness, disability, or death
(except to the extent permitted under
section 302 or 303(c) of the Gramm-
Leach-Bliley Act) or providing or
issuing annuities the income of which
is subject to tax treatment under
section 72 of the Internal Revenue Code
of 1986;
(ii) real estate development or real
estate investment activities, unless
otherwise expressly authorized by law;
or
(iii) any activity permitted in
subparagraph (H) or (I) of section
4(k)(4) of the Bank Holding Company Act
of 1956, except activities described in
section 4(k)(4)(H) that may be
permitted in accordance with section
122 of the Gramm-Leach-Bliley Act;
(C) the national bank and each depository
institution affiliate of the national bank are
well capitalized and well managed;
(D) the aggregate consolidated total assets
of all financial subsidiaries of the national
bank do not exceed the lesser of--
(i) 45 percent of the consolidated
total assets of the parent bank; or
(ii) [$50,000,000,000]
$175,000,000,000;
(E) except as provided in paragraph (4), the
national bank meets standards of credit-
worthiness established by the Comptroller of
the Currency or other requirement set forth in
paragraph (3); and
(F) the national bank has received the
approval of the Comptroller of the Currency for
the financial subsidiary to engage in such
activities, which approval shall be based
solely upon the factors set forth in this
section.
(3) Requirement.--
(A) In general.--A national bank meets the
requirements of this paragraph if the bank is
one of the 100 largest insured banks and has
not fewer than 1 issue of outstanding debt that
meets standards of credit-worthiness or other
criteria as the Secretary of the Treasury and
the Board of Governors of the Federal Reserve
System may jointly establish.
(B) Consolidated total assets.--For purposes
of this paragraph, the size of an insured bank
shall be determined on the basis of the
consolidated total assets of the bank as of the
end of each calendar year.
(4) Financial agency subsidiary.--The requirement in
paragraph (2)(E) shall not apply with respect to the
ownership or control of a financial subsidiary that
engages in activities described in subsection (b)(1)
solely as agent and not directly or indirectly as
principal.
(5) Regulations required.--Before the end of the 270-
day period beginning on the date of the enactment of
the Gramm-Leach-Bliley Act, the Comptroller of the
Currency shall, by regulation, prescribe procedures to
implement this section.
(6) Indexed asset limit.--The dollar amount contained
in paragraph (2)(D) shall be adjusted according to an
indexing mechanism jointly established by regulation by
the Secretary of the Treasury and the Board of
Governors of the Federal Reserve System.
(7) Coordination with section 4(l)(2) of the bank
holding company act of 1956.--Section 4(l)(2) of the
Bank Holding Company Act of 1956 applies to a national
bank that controls a financial subsidiary in the manner
provided in that section.
(b) Activities That Are Financial in Nature.--
(1) Financial activities.--
(A) In general.--An activity shall be
financial in nature or incidental to such
financial activity only if--
(i) such activity has been defined to
be financial in nature or incidental to
a financial activity for bank holding
companies pursuant to section 4(k)(4)
of the Bank Holding Company Act of
1956; or
(ii) the Secretary of the Treasury
determines the activity is financial in
nature or incidental to a financial
activity in accordance with
subparagraph (B).
(B) Coordination between the board and the
secretary of the treasury.--
(i) Proposals raised before the
secretary of the treasury.--
(I) Consultation.--The
Secretary of the Treasury shall
notify the Board of, and
consult with the Board
concerning, any request,
proposal, or application under
this section for a
determination of whether an
activity is financial in nature
or incidental to a financial
activity.
(II) Board view.--The
Secretary of the Treasury shall
not determine that any activity
is financial in nature or
incidental to a financial
activity under this section if
the Board notifies the
Secretary in writing, not later
than 30 days after the date of
receipt of the notice described
in subclause (I) (or such
longer period as the Secretary
determines to be appropriate
under the circumstances) that
the Board believes that the
activity is not financial in
nature or incidental to a
financial activity or is not
otherwise permissible under
this section.
(ii) Proposals raised by the board.--
(I) Board recommendation.--
The Board may, at any time,
recommend in writing that the
Secretary of the Treasury find
an activity to be financial in
nature or incidental to a
financial activity for purposes
of this section.
(II) Time period for
secretarial action.--Not later
than 30 days after the date of
receipt of a written
recommendation from the Board
under subclause (I) (or such
longer period as the Secretary
of the Treasury and the Board
determine to be appropriate
under the circumstances), the
Secretary shall determine
whether to initiate a public
rulemaking proposing that the
subject recommended activity be
found to be financial in nature
or incidental to a financial
activity under this section,
and shall notify the Board in
writing of the determination of
the Secretary and, in the event
that the Secretary determines
not to seek public comment on
the proposal, the reasons for
that determination.
(2) Factors to be considered.--In determining whether
an activity is financial in nature or incidental to a
financial activity, the Secretary shall take into
account--
(A) the purposes of this Act and the Gramm-
Leach-Bliley Act;
(B) changes or reasonably expected changes in
the marketplace in which banks compete;
(C) changes or reasonably expected changes in
the technology for delivering financial
services; and
(D) whether such activity is necessary or
appropriate to allow a bank and the
subsidiaries of a bank to--
(i) compete effectively with any
company seeking to provide financial
services in the United States;
(ii) efficiently deliver information
and services that are financial in
nature through the use of technological
means, including any application
necessary to protect the security or
efficacy of systems for the
transmission of data or financial
transactions; and
(iii) offer customers any available
or emerging technological means for
using financial services or for the
document imaging of data.
(3) Authorization of new financial activities.--The
Secretary of the Treasury shall, by regulation or order
and in accordance with paragraph (1)(B), define,
consistent with the purposes of this Act and the Gramm-
Leach-Bliley Act, the following activities as, and the
extent to which such activities are, financial in
nature or incidental to a financial activity:
(A) Lending, exchanging, transferring,
investing for others, or safeguarding financial
assets other than money or securities.
(B) Providing any device or other
instrumentality for transferring money or other
financial assets.
(C) Arranging, effecting, or facilitating
financial transactions for the account of third
parties.
(c) Capital Deduction.--
(1) Capital deduction required.--In determining
compliance with applicable capital standards--
(A) the aggregate amount of the outstanding
equity investment, including retained earnings,
of a national bank in all financial
subsidiaries shall be deducted from the assets
and tangible equity of the national bank; and
(B) the assets and liabilities of the
financial subsidiaries shall not be
consolidated with those of the national bank.
(2) Financial statement disclosure of capital
deduction.--Any published financial statement of a
national bank that controls a financial subsidiary
shall, in addition to providing information prepared in
accordance with generally accepted accounting
principles, separately present financial information
for the bank in the manner provided in paragraph (1).
(d) Safeguards for the Bank.--A national bank that
establishes or maintains a financial subsidiary shall assure
that--
(1) the procedures of the national bank for
identifying and managing financial and operational
risks within the national bank and the financial
subsidiary adequately protect the national bank from
such risks;
(2) the national bank has, for the protection of the
bank, reasonable policies and procedures to preserve
the separate corporate identity and limited liability
of the national bank and the financial subsidiaries of
the national bank; and
(3) the national bank is in compliance with this
section.
(e) Provisions Applicable to National Banks That Fail To
Continue To Meet Certain Requirements.--
(1) In general.--If a national bank or insured
depository institution affiliate does not continue to
meet the requirements of subsection (a)(2)(C) or
subsection (d), the Comptroller of the Currency shall
promptly give notice to the national bank to that
effect describing the conditions giving rise to the
notice.
(2) Agreement to correct conditions.--Not later than
45 days after the date of receipt by a national bank of
a notice given under paragraph (1) (or such additional
period as the Comptroller of the Currency may permit),
the national bank shall execute an agreement with the
Comptroller of the Currency and any relevant insured
depository institution affiliate shall execute an
agreement with its appropriate Federal banking agency
to comply with the requirements of subsection (a)(2)(C)
and subsection (d).
(3) Imposition of conditions.--Until the conditions
described in a notice under paragraph (1) are
corrected--
(A) the Comptroller of the Currency may
impose such limitations on the conduct or
activities of the national bank or any
subsidiary of the national bank as the
Comptroller of the Currency determines to be
appropriate under the circumstances and
consistent with the purposes of this section;
and
(B) the appropriate Federal banking agency
may impose such limitations on the conduct or
activities of any relevant insured depository
institution affiliate or any subsidiary of the
institution as such agency determines to be
appropriate under the circumstances and
consistent with the purposes of this section.
(4) Failure to correct.--If the conditions described
in a notice to a national bank under paragraph (1) are
not corrected within 180 days after the date of receipt
by the national bank of the notice, the Comptroller of
the Currency may require the national bank, under such
terms and conditions as may be imposed by the
Comptroller and subject to such extension of time as
may be granted in the discretion of the Comptroller, to
divest control of any financial subsidiary.
(5) Consultation.--In taking any action under this
subsection, the Comptroller shall consult with all
relevant Federal and State regulatory agencies and
authorities.
(f) Failure To Meet Standards of Credit-worthiness Meet
Applicable Criteria.--
(1) In general.--A national bank that does not
continue to meet standards of credit-worthiness
established by the Comptroller of the Currency or other
requirement of subsection (a)(2)(E) after acquiring or
establishing a financial subsidiary shall not, directly
or through a subsidiary, purchase or acquire any
additional equity capital of any financial subsidiary
until the bank meets such requirements.
(2) Equity capital.--For purposes of this subsection,
the term ``equity capital'' includes, in addition to
any equity instrument, any debt instrument issued by a
financial subsidiary, if the instrument qualifies as
capital of the subsidiary under any Federal or State
law, regulation, or interpretation applicable to the
subsidiary.
(g) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Affiliate, company, control, and subsidiary.--The
terms ``affiliate'', ``company'', ``control'', and
``subsidiary'' have the meanings given those terms in
section 2 of the Bank Holding Company Act of 1956.
(2) Appropriate federal banking agency, depository
institution, insured bank, and insured depository
institution.--The terms ``appropriate Federal banking
agency'', ``depository institution'', ``insured bank'',
and ``insured depository institution'' have the
meanings given those terms in section 3 of the Federal
Deposit Insurance Act.
(3) Financial subsidiary.--The term ``financial
subsidiary'' means any company that is controlled by 1
or more insured depository institutions other than a
subsidiary that--
(A) engages solely in activities that
national banks are permitted to engage in
directly and are conducted subject to the same
terms and conditions that govern the conduct of
such activities by national banks; or
(B) a national bank is specifically
authorized by the express terms of a Federal
statute (other than this section), and not by
implication or interpretation, to control, such
as by section 25 or 25A of the Federal Reserve
Act or the Bank Service Company Act.
(4) Eligible debt.--The term ``eligible debt'' means
unsecured long-term debt that--
(A) is not supported by any form of credit
enhancement, including a guarantee or standby
letter of credit; and
(B) is not held in whole or in any
significant part by any affiliate, officer,
director, principal shareholder, or employee of
the bank or any other person acting on behalf
of or with funds from the bank or an affiliate
of the bank.
(5) Well capitalized.--The term ``well capitalized''
has the meaning given the term in section 38 of the
Federal Deposit Insurance Act.
(6) Well managed.--The term ``well managed'' means--
(A) in the case of a depository institution
that has been examined, unless otherwise
determined in writing by the appropriate
Federal banking agency--
(i) the achievement of a composite
rating of 1 or 2 under the Uniform
Financial Institutions Rating System
(or an equivalent rating under an
equivalent rating system) in connection
with the most recent examination or
subsequent review of the depository
institution; and
(ii) at least a rating of 2 for
management, if such rating is given; or
(B) in the case of any depository institution
that has not been examined, the existence and
use of managerial resources that the
appropriate Federal banking agency determines
are satisfactory.
* * * * * * *
----------
TRUTH IN LENDING ACT
* * * * * * *
TITLE I--CONSUMER CREDIT COST DISCLOSURE
* * * * * * *
CHAPTER 2--CREDIT TRANSACTIONS
* * * * * * *
Sec. 129C. Minimum standards for residential mortgage loans
(a) Ability To Repay.--
(1) In general.--In accordance with regulations
prescribed by the Board, no creditor may make a
residential mortgage loan unless the creditor makes a
reasonable and good faith determination based on
verified and documented information that, at the time
the loan is consummated, the consumer has a reasonable
ability to repay the loan, according to its terms, and
all applicable taxes, insurance (including mortgage
guarantee insurance), and assessments.
(2) Multiple loans.--If the creditor knows, or has
reason to know, that 1 or more residential mortgage
loans secured by the same dwelling will be made to the
same consumer, the creditor shall make a reasonable and
good faith determination, based on verified and
documented information, that the consumer has a
reasonable ability to repay the combined payments of
all loans on the same dwelling according to the terms
of those loans and all applicable taxes, insurance
(including mortgage guarantee insurance), and
assessments.
(3) Basis for determination.--A determination under
this subsection of a consumer's ability to repay a
residential mortgage loan shall include consideration
of the consumer's credit history, current income,
expected income the consumer is reasonably assured of
receiving, current obligations, debt-to-income ratio or
the residual income the consumer will have after paying
non-mortgage debt and mortgage-related obligations,
employment status, and other financial resources other
than the consumer's equity in the dwelling or real
property that secures repayment of the loan. A creditor
shall determine the ability of the consumer to repay
using a payment schedule that fully amortizes the loan
over the term of the loan.
(4) Income verification.--A creditor making a
residential mortgage loan shall verify amounts of
income or assets that such creditor relies on to
determine repayment ability, including expected income
or assets, by reviewing the consumer's Internal Revenue
Service Form W-2, tax returns, payroll receipts,
financial institution records, or other third-party
documents that provide reasonably reliable evidence of
the consumer's income or assets. In order to safeguard
against fraudulent reporting, any consideration of a
consumer's income history in making a determination
under this subsection shall include the verification of
such income by the use of--
(A) Internal Revenue Service transcripts of
tax returns; or
(B) a method that quickly and effectively
verifies income documentation by a third party
subject to rules prescribed by the Board.
(5) Exemption.--With respect to loans made,
guaranteed, or insured by Federal departments or
agencies identified in subsection (b)(3)(B)(ii), such
departments or agencies may exempt refinancings under a
streamlined refinancing from this income verification
requirement as long as the following conditions are
met:
(A) The consumer is not 30 days or more past
due on the prior existing residential mortgage
loan.
(B) The refinancing does not increase the
principal balance outstanding on the prior
existing residential mortgage loan, except to
the extent of fees and charges allowed by the
department or agency making, guaranteeing, or
insuring the refinancing.
(C) Total points and fees (as defined in
section 103(aa)(4), other than bona fide third
party charges not retained by the mortgage
originator, creditor, or an affiliate of the
creditor or mortgage originator) payable in
connection with the refinancing do not exceed 3
percent of the total new loan amount.
(D) The interest rate on the refinanced loan
is lower than the interest rate of the original
loan, unless the borrower is refinancing from
an adjustable rate to a fixed-rate loan, under
guidelines that the department or agency shall
establish for loans they make, guarantee, or
issue.
(E) The refinancing is subject to a payment
schedule that will fully amortize the
refinancing in accordance with the regulations
prescribed by the department or agency making,
guaranteeing, or insuring the refinancing.
(F) The terms of the refinancing do not
result in a balloon payment, as defined in
subsection (b)(2)(A)(ii).
(G) Both the residential mortgage loan being
refinanced and the refinancing satisfy all
requirements of the department or agency
making, guaranteeing, or insuring the
refinancing.
(6) Nonstandard loans.--
(A) Variable rate loans that defer repayment
of any principal or interest.--For purposes of
determining, under this subsection, a
consumer's ability to repay a variable rate
residential mortgage loan that allows or
requires the consumer to defer the repayment of
any principal or interest, the creditor shall
use a fully amortizing repayment schedule.
(B) Interest-only loans.--For purposes of
determining, under this subsection, a
consumer's ability to repay a residential
mortgage loan that permits or requires the
payment of interest only, the creditor shall
use the payment amount required to amortize the
loan by its final maturity.
(C) Calculation for negative amortization.--
In making any determination under this
subsection, a creditor shall also take into
consideration any balance increase that may
accrue from any negative amortization
provision.
(D) Calculation process.--For purposes of
making any determination under this subsection,
a creditor shall calculate the monthly payment
amount for principal and interest on any
residential mortgage loan by assuming--
(i) the loan proceeds are fully
disbursed on the date of the
consummation of the loan;
(ii) the loan is to be repaid in
substantially equal monthly amortizing
payments for principal and interest
over the entire term of the loan with
no balloon payment, unless the loan
contract requires more rapid repayment
(including balloon payment), in which
case the calculation shall be made (I)
in accordance with regulations
prescribed by the Board, with respect
to any loan which has an annual
percentage rate that does not exceed
the average prime offer rate for a
comparable transaction, as of the date
the interest rate is set, by 1.5 or
more percentage points for a first lien
residential mortgage loan; and by 3.5
or more percentage points for a
subordinate lien residential mortgage
loan; or (II) using the contract's
repayment schedule, with respect to a
loan which has an annual percentage
rate, as of the date the interest rate
is set, that is at least 1.5 percentage
points above the average prime offer
rate for a first lien residential
mortgage loan; and 3.5 percentage
points above the average prime offer
rate for a subordinate lien residential
mortgage loan; and
(iii) the interest rate over the
entire term of the loan is a fixed rate
equal to the fully indexed rate at the
time of the loan closing, without
considering the introductory rate.
(E) Refinance of hybrid loans with current
lender.--In considering any application for
refinancing an existing hybrid loan by the
creditor into a standard loan to be made by the
same creditor in any case in which there would
be a reduction in monthly payment and the
mortgagor has not been delinquent on any
payment on the existing hybrid loan, the
creditor may--
(i) consider the mortgagor's good
standing on the existing mortgage;
(ii) consider if the extension of new
credit would prevent a likely default
should the original mortgage reset and
give such concerns a higher priority as
an acceptable underwriting practice;
and
(iii) offer rate discounts and other
favorable terms to such mortgagor that
would be available to new customers
with high credit ratings based on such
underwriting practice.
(7) Fully-indexed rate defined.--For purposes of this
subsection, the term ``fully indexed rate'' means the
index rate prevailing on a residential mortgage loan at
the time the loan is made plus the margin that will
apply after the expiration of any introductory interest
rates.
(8) Reverse mortgages and bridge loans.--This
subsection shall not apply with respect to any reverse
mortgage or temporary or bridge loan with a term of 12
months or less, including to any loan to purchase a new
dwelling where the consumer plans to sell a different
dwelling within 12 months.
(9) Seasonal income.--If documented income, including
income from a small business, is a repayment source for
a residential mortgage loan, a creditor may consider
the seasonality and irregularity of such income in the
underwriting of and scheduling of payments for such
credit.
(b) Presumption of Ability To Repay.--
(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee of such
loan subject to liability under this title, may presume
that the loan has met the requirements of subsection
(a), if the loan is a qualified mortgage.
(2) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Qualified mortgage.--The term ``qualified
mortgage'' means any residential mortgage
loan--
(i) for which the regular periodic
payments for the loan may not--
(I) result in an increase of
the principal balance; or
(II) except as provided in
subparagraph (E), allow the
consumer to defer repayment of
principal;
(ii) except as provided in
subparagraph (E), the terms of which do
not result in a balloon payment, where
a ``balloon payment'' is a scheduled
payment that is more than twice as
large as the average of earlier
scheduled payments;
(iii) for which the income and
financial resources relied upon to
qualify the obligors on the loan are
verified and documented;
(iv) in the case of a fixed rate
loan, for which the underwriting
process is based on a payment schedule
that fully amortizes the loan over the
loan term and takes into account all
applicable taxes, insurance, and
assessments;
(v) in the case of an adjustable rate
loan, for which the underwriting is
based on the maximum rate permitted
under the loan during the first 5
years, and a payment schedule that
fully amortizes the loan over the loan
term and takes into account all
applicable taxes, insurance, and
assessments;
(vi) that complies with any
guidelines or regulations established
by the Board relating to ratios of
total monthly debt to monthly income or
alternative measures of ability to pay
regular expenses after payment of total
monthly debt, taking into account the
income levels of the borrower and such
other factors as the Board may
determine relevant and consistent with
the purposes described in paragraph
(3)(B)(i);
(vii) for which the total points and
fees (as defined in subparagraph (C))
payable in connection with the loan do
not exceed 3 percent of the total loan
amount;
(viii) for which the term of the loan
does not exceed 30 years, except as
such term may be extended under
paragraph (3), such as in high-cost
areas; and
(ix) in the case of a reverse
mortgage (except for the purposes of
subsection (a) of section 129C, to the
extent that such mortgages are exempt
altogether from those requirements), a
reverse mortgage which meets the
standards for a qualified mortgage, as
set by the Board in rules that are
consistent with the purposes of this
subsection.
(B) Average prime offer rate.--The term
``average prime offer rate'' means the average
prime offer rate for a comparable transaction
as of the date on which the interest rate for
the transaction is set, as published by the
Board..
(C) Points and fees.--
(i) In general.--For purposes of
subparagraph (A), the term ``points and
fees'' means points and fees as defined
by section 103(aa)(4) (other than bona
fide third party charges not retained
by the mortgage originator, creditor,
or an affiliate of the creditor or
mortgage originator).
(ii) Computation.--For purposes of
computing the total points and fees
under this subparagraph, the total
points and fees shall exclude either of
the amounts described in the following
subclauses, but not both:
(I) Up to and including 2
bona fide discount points
payable by the consumer in
connection with the mortgage,
but only if the interest rate
from which the mortgage's
interest rate will be
discounted does not exceed by
more than 1 percentage point
the average prime offer rate.
(II) Unless 2 bona fide
discount points have been
excluded under subclause (I),
up to and including 1 bona fide
discount point payable by the
consumer in connection with the
mortgage, but only if the
interest rate from which the
mortgage's interest rate will
be discounted does not exceed
by more than 2 percentage
points the average prime offer
rate.
(iii) Bona fide discount points
defined.--For purposes of clause (ii),
the term ``bona fide discount points''
means loan discount points which are
knowingly paid by the consumer for the
purpose of reducing, and which in fact
result in a bona fide reduction of, the
interest rate or time-price
differential applicable to the
mortgage.
(iv) Interest rate reduction.--
Subclauses (I) and (II) of clause (ii)
shall not apply to discount points used
to purchase an interest rate reduction
unless the amount of the interest rate
reduction purchased is reasonably
consistent with established industry
norms and practices for secondary
mortgage market transactions.
(D) Smaller loans.--The Board shall prescribe
rules adjusting the criteria under subparagraph
(A)(vii) in order to permit lenders that extend
smaller loans to meet the requirements of the
presumption of compliance under paragraph (1).
In prescribing such rules, the Board shall
consider the potential impact of such rules on
rural areas and other areas where home values
are lower.
(E) Balloon loans.--The Board may, by
regulation, provide that the term ``qualified
mortgage'' includes a balloon loan--
(i) that meets all of the criteria
for a qualified mortgage under
subparagraph (A) (except clauses
(i)(II), (ii), (iv), and (v) of such
subparagraph);
(ii) for which the creditor makes a
determination that the consumer is able
to make all scheduled payments, except
the balloon payment, out of income or
assets other than the collateral;
(iii) for which the underwriting is
based on a payment schedule that fully
amortizes the loan over a period of not
more than 30 years and takes into
account all applicable taxes,
insurance, and assessments; and
(iv) that is extended by a creditor
that--
(I) operates in rural or
underserved areas;
(II) together with all
affiliates, has total annual
residential mortgage loan
originations that do not exceed
a limit set by the Board;
(III) retains the balloon
loans in portfolio; and
(IV) meets any asset size
threshold and any other
criteria as the Board may
establish, consistent with the
purposes of this subtitle.
(F) Safe harbor.--
(i) Definitions.--In this
subparagraph--
(I) the term ``covered
institution'' means an insured
depository institution or an
insured credit union that,
together with its affiliates,
has less than [$10,000,000,000]
$15,000,000,000 in total
consolidated assets;
(II) the term ``insured
credit union'' has the meaning
given the term in section 101
of the Federal Credit Union Act
(12 U.S.C. 1752);
(III) the term ``insured
depository institution'' has
the meaning given the term in
section 3 of the Federal
Deposit Insurance Act (12
U.S.C. 1813);
(IV) the term ``interest-
only'' means that, under the
terms of the legal obligation,
one or more of the periodic
payments may be applied solely
to accrued interest and not to
loan principal; and
(V) the term ``negative
amortization'' means payment of
periodic payments that will
result in an increase in the
principal balance under the
terms of the legal obligation.
(ii) Safe harbor.--In this section--
(I) the term``qualified
mortgage'' includes any
residential mortgage loan--
(aa) that is
originated and retained
in portfolio by a
covered institution;
(bb) that is in
compliance with the
limitations with
respect to prepayment
penalties described in
subsections (c)(1) and
(c)(3);
(cc) that is in
compliance with the
requirements of clause
(vii) of subparagraph
(A);
(dd) that does not
have negative
amortization or
interest-only features;
and
(ee) for which the
covered institution
considers and documents
the debt, income, and
financial resources of
the consumer in
accordance with clause
(iv); and
(II) a residential mortgage
loan described in subclause (I)
shall be deemed to meet the
requirements of subsection (a).
(iii) Exception for certain
transfers.--A residential mortgage loan
described in clause (ii)(I) shall not
qualify for the safe harbor under
clause (ii) if the legal title to the
residential mortgage loan is sold,
assigned, or otherwise transferred to
another person unless the residential
mortgage loan is sold, assigned, or
otherwise transferred--
(I) to another person by
reason of the bankruptcy or
failure of a covered
institution;
(II) to a covered institution
so long as the loan is retained
in portfolio by the covered
institution to which the loan
is sold, assigned, or otherwise
transferred;
(III) pursuant to a merger of
a covered institution with
another person or the
acquisition of a covered
institution by another person
or of another person by a
covered institution, so long as
the loan is retained in
portfolio by the person to whom
the loan is sold, assigned, or
otherwise transferred; or
(IV) to a wholly owned
subsidiary of a covered
institution, provided that,
after the sale, assignment, or
transfer, the residential
mortgage loan is considered to
be an asset of the covered
institution for regulatory
accounting purposes.
(iv) Consideration and documentation
requirements.--The consideration and
documentation requirements described in
clause (ii)(I)(ee) shall--
(I) not be construed to
require compliance with, or
documentation in accordance
with, appendix Q to part 1026
of title 12, Code of Federal
Regulations, or any successor
regulation; and
(II) be construed to permit
multiple methods of
documentation.
(3) Regulations.--
(A) In general.--The Board shall prescribe
regulations to carry out the purposes of this
subsection.
(B) Revision of safe harbor criteria.--
(i) In general.--The Board may
prescribe regulations that revise, add
to, or subtract from the criteria that
define a qualified mortgage upon a
finding that such regulations are
necessary or proper to ensure that
responsible, affordable mortgage credit
remains available to consumers in a
manner consistent with the purposes of
this section, necessary and appropriate
to effectuate the purposes of this
section and section 129B, to prevent
circumvention or evasion thereof, or to
facilitate compliance with such
sections.
(ii) Loan definition.--The following
agencies shall, in consultation with
the Board, prescribe rules defining the
types of loans they insure, guarantee,
or administer, as the case may be, that
are qualified mortgages for purposes of
paragraph (2)(A), and such rules may
revise, add to, or subtract from the
criteria used to define a qualified
mortgage under paragraph (2)(A), upon a
finding that such rules are consistent
with the purposes of this section and
section 129B, to prevent circumvention
or evasion thereof, or to facilitate
compliance with such sections:
(I) The Department of Housing
and Urban Development, with
regard to mortgages insured
under the National Housing Act
(12 U.S.C. 1707 et seq.).
(II) The Department of
Veterans Affairs, with regard
to a loan made or guaranteed by
the Secretary of Veterans
Affairs.
(III) The Department of
Agriculture, with regard loans
guaranteed by the Secretary of
Agriculture pursuant to 42
U.S.C. 1472(h).
(IV) The Rural Housing
Service, with regard to loans
insured by the Rural Housing
Service.
(C) Consideration of underwriting
requirements for property assessed clean energy
financing.--
(i) Definition.--In this
subparagraph, the term ``Property
Assessed Clean Energy financing'' means
financing to cover the costs of home
improvements that results in a tax
assessment on the real property of the
consumer.
(ii) Regulations.--The Bureau shall
prescribe regulations that carry out
the purposes of subsection (a) and
apply section 130 with respect to
violations under subsection (a) of this
section with respect to Property
Assessed Clean Energy financing, which
shall account for the unique nature of
Property Assessed Clean Energy
financing.
(iii) Collection of information and
consultation.--In prescribing the
regulations under this subparagraph,
the Bureau--
(I) may collect such
information and data that the
Bureau determines is necessary;
and
(II) shall consult with State
and local governments and bond-
issuing authorities.
(c) Prohibition on Certain Prepayment Penalties.--
(1) Prohibited on certain loans.--
(A) In general.--A residential mortgage loan
that is not a ``qualified mortgage'', as
defined under subsection (b)(2), may not
contain terms under which a consumer must pay a
prepayment penalty for paying all or part of
the principal after the loan is consummated.
(B) Exclusions.--For purposes of this
subsection, a ``qualified mortgage'' may not
include a residential mortgage loan that--
(i) has an adjustable rate; or
(ii) has an annual percentage rate
that exceeds the average prime offer
rate for a comparable transaction, as
of the date the interest rate is set--
(I) by 1.5 or more percentage
points, in the case of a first
lien residential mortgage loan
having a original principal
obligation amount that is equal
to or less than the amount of
the maximum limitation on the
original principal obligation
of mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the 6th sentence of section
305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12
U.S.C. 1454(a)(2));
(II) by 2.5 or more
percentage points, in the case
of a first lien residential
mortgage loan having a original
principal obligation amount
that is more than the amount of
the maximum limitation on the
original principal obligation
of mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the 6th sentence of section
305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12
U.S.C. 1454(a)(2)); and
(III) by 3.5 or more
percentage points, in the case
of a subordinate lien
residential mortgage loan.
(2) Publication of average prime offer rate and apr
thresholds.--The Board--
(A) shall publish, and update at least
weekly, average prime offer rates;
(B) may publish multiple rates based on
varying types of mortgage transactions; and
(C) shall adjust the thresholds established
under subclause (I), (II), and (III) of
paragraph (1)(B)(ii) as necessary to reflect
significant changes in market conditions and to
effectuate the purposes of the Mortgage Reform
and Anti-Predatory Lending Act.
(3) Phased-out penalties on qualified mortgages.--A
qualified mortgage (as defined in subsection (b)(2))
may not contain terms under which a consumer must pay a
prepayment penalty for paying all or part of the
principal after the loan is consummated in excess of
the following limitations:
(A) During the 1-year period beginning on the
date the loan is consummated, the prepayment
penalty shall not exceed an amount equal to 3
percent of the outstanding balance on the loan.
(B) During the 1-year period beginning after
the period described in subparagraph (A), the
prepayment penalty shall not exceed an amount
equal to 2 percent of the outstanding balance
on the loan.
(C) During the 1-year period beginning after
the 1-year period described in subparagraph
(B), the prepayment penalty shall not exceed an
amount equal to 1 percent of the outstanding
balance on the loan.
(D) After the end of the 3-year period
beginning on the date the loan is consummated,
no prepayment penalty may be imposed on a
qualified mortgage.
(4) Option for no prepayment penalty required.--A
creditor may not offer a consumer a residential
mortgage loan product that has a prepayment penalty for
paying all or part of the principal after the loan is
consummated as a term of the loan without offering the
consumer a residential mortgage loan product that does
not have a prepayment penalty as a term of the loan.
(d) Single Premium Credit Insurance Prohibited.--No creditor
may finance, directly or indirectly, in connection with any
residential mortgage loan or with any extension of credit under
an open end consumer credit plan secured by the principal
dwelling of the consumer, any credit life, credit disability,
credit unemployment, or credit property insurance, or any other
accident, loss-of-income, life, or health insurance, or any
payments directly or indirectly for any debt cancellation or
suspension agreement or contract, except that--
(1) insurance premiums or debt cancellation or
suspension fees calculated and paid in full on a
monthly basis shall not be considered financed by the
creditor; and
(2) this subsection shall not apply to credit
unemployment insurance for which the unemployment
insurance premiums are reasonable, the creditor
receives no direct or indirect compensation in
connection with the unemployment insurance premiums,
and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to
an affiliate of the creditor.
(e) Arbitration.--
(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer
may include terms which require arbitration or any
other nonjudicial procedure as the method for resolving
any controversy or settling any claims arising out of
the transaction.
(2) Post-controversy agreements.--Subject to
paragraph (3), paragraph (1) shall not be construed as
limiting the right of the consumer and the creditor or
any assignee to agree to arbitration or any other
nonjudicial procedure as the method for resolving any
controversy at any time after a dispute or claim under
the transaction arises.
(3) No waiver of statutory cause of action.--No
provision of any residential mortgage loan or of any
extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer,
and no other agreement between the consumer and the
creditor relating to the residential mortgage loan or
extension of credit referred to in paragraph (1), shall
be applied or interpreted so as to bar a consumer from
bringing an action in an appropriate district court of
the United States, or any other court of competent
jurisdiction, pursuant to section 130 or any other
provision of law, for damages or other relief in
connection with any alleged violation of this section,
any other provision of this title, or any other Federal
law.
(f) Mortgages With Negative Amortization.--No creditor may
extend credit to a borrower in connection with a consumer
credit transaction under an open or closed end consumer credit
plan secured by a dwelling or residential real property that
includes a dwelling, other than a reverse mortgage, that
provides or permits a payment plan that may, at any time over
the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
(1) the creditor provides the consumer with a
statement that--
(A) the pending transaction will or may, as
the case may be, result in negative
amortization;
(B) describes negative amortization in such
manner as the Board shall prescribe;
(C) negative amortization increases the
outstanding principal balance of the account;
and
(D) negative amortization reduces the
consumer's equity in the dwelling or real
property; and
(2) in the case of a first-time borrower with respect
to a residential mortgage loan that is not a qualified
mortgage, the first-time borrower provides the creditor
with sufficient documentation to demonstrate that the
consumer received homeownership counseling from
organizations or counselors certified by the Secretary
of Housing and Urban Development as competent to
provide such counseling.
(g) Protection Against Loss of Anti-deficiency Protection.--
(1) Definition.--For purposes of this subsection, the
term ``anti-deficiency law'' means the law of any State
which provides that, in the event of foreclosure on the
residential property of a consumer securing a mortgage,
the consumer is not liable, in accordance with the
terms and limitations of such State law, for any
deficiency between the sale price obtained on such
property through foreclosure and the outstanding
balance of the mortgage.
(2) Notice at time of consummation.--In the case of
any residential mortgage loan that is, or upon
consummation will be, subject to protection under an
anti-deficiency law, the creditor or mortgage
originator shall provide a written notice to the
consumer describing the protection provided by the
anti-deficiency law and the significance for the
consumer of the loss of such protection before such
loan is consummated.
(3) Notice before refinancing that would cause loss
of protection.--In the case of any residential mortgage
loan that is subject to protection under an anti-
deficiency law, if a creditor or mortgage originator
provides an application to a consumer, or receives an
application from a consumer, for any type of
refinancing for such loan that would cause the loan to
lose the protection of such anti-deficiency law, the
creditor or mortgage originator shall provide a written
notice to the consumer describing the protection
provided by the anti-deficiency law and the
significance for the consumer of the loss of such
protection before any agreement for any such
refinancing is consummated.
(h) Policy Regarding Acceptance of Partial Payment.--In the
case of any residential mortgage loan, a creditor shall
disclose prior to settlement or, in the case of a person
becoming a creditor with respect to an existing residential
mortgage loan, at the time such person becomes a creditor--
(1) the creditor's policy regarding the acceptance of
partial payments; and
(2) if partial payments are accepted, how such
payments will be applied to such mortgage and if such
payments will be placed in escrow.
(i) Timeshare Plans.--This section and any regulations
promulgated under this section do not apply to an extension of
credit relating to a plan described in section 101(53D) of
title 11, United States Code.
* * * * * * *
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
MINORITY VIEWS
The bill increases 37 different regulatory thresholds for
financial institutions regarding a wide range of topics,
including capital, mortgage disclosures and ability-to-repay
consumer protections, community reinvestment exams, Volcker
Rule's prohibition on proprietary trading, executive
compensation, GAAP accounting, annual independent audits,
material loss reviews, Orderly Liquidation Authority, Federal
Reserve dividends, and more.\1\ Furthermore, these thresholds
would rapidly increase based on nominal Gross Domestic Product
(GDP), an indexing approach that the FDIC run by Trump
appointees recently rejected when they adopted a less
aggressive inflation-based index for some of these thresholds.
Moreover, the bill does not include any flexibility for
regulators to make adjustments in the opposite direction that
might promote safety, soundness, and consumer protection.
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\1\Specifically, H.R. 7056 would modify thresholds across many
important financial laws, including the Bank Holding Company Act of
1956 (``BHCA''), Community Reinvestment Act of 1977 (``CRA''),
Depository Institution Management Interlocks Act (``DIMIA''), Dodd-
Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank''),
Federal Credit Union Act, Federal Deposit Insurance Act (``FDI Act''),
Federal Home Loan Bank Act of 1932 (``FHLB Act''), Federal Reserve Act,
Home Mortgage Disclosure Act of 1975 (``HMDA''), Home Owners' Loan Act
(``HOLA''), International Lending Supervision Act of 1983, Real Estate
Settlement Procedures Act of 1974 (``RESPA''), Revised Statutes of the
United States (which includes the National Bank Act), and Truth in
Lending Act (``TILA'').
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While Committee Democrats are open to a more targeted
approach focused on helping community banks and credit unions,
several of the bill threshold increases would benefit large
banks with up to $175 billion in assets. H.R. 7056 also omits
an overdue increase to the deposit insurance limit that would
benefit bank customers, and instead weakens several key laws
that help promote fair access to financial products and
services. Furthermore, Committee Democrats are open to
considering ways to make the use of regulatory thresholds more
dynamic and refined based on the policy objective, and also
considering ways to mitigate cliff effects associated with some
of these thresholds, the Committee has failed to hold a hearing
on this bill where experts could discuss the pros and cons with
this approach, and there has not been any study or analysis to
justify making all of these changes.
Proponents of indexing thresholds with nominal GDP argue
that using nominal GDP will capture both inflation and economic
growth, and ensure these thresholds evolve over time to make
the application of various regulatory criteria more dynamic.\2\
That said, nominal GDP does not capture industry growth (which
may differ from economic growth), institution complexity,
consumer impacts, or other factors that may be relevant in
setting a threshold to include or exclude different entities
from the application of certain obligations. Moreover, using
nominal GDP will lead to more rapid increases to thresholds
compared to inflation, exempting institutions that Congress may
not have intended to exempt when it first enacted the law. Over
the last ten years, nominal GDP grew by nearly 70% compared to
a modest 37% increase based on Consumer Price Index for Urban
Wage Earners and Clerical Workers (``CPI-W'').\3\ Over the past
three decades, nominal GDP increased by 299% compared to a 111%
increase in CPI-W.\4\ While lobbyists for large banks have
advocated for the use of a nominal GDP growth,\5\ other
stakeholders have suggested Congress consider inflation-based
metrics or even more nuanced thresholds that are not based
solely on asset size.\6\
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\2\See Bank Policy Institute (BPI), Adjusting Regulatory Thresholds
for Economic Growth (Sep. 9, 2024); BPI, The Economy Evolves Over
Time--So Should Bank Regulations (Sep. 26, 2025).
\3\FRED, Nominal Gross Domestic Product for United States (accessed
Jan. 19, 2026); and FRED, Consumer Price Index for All Urban Wage
Earners and Clerical Workers: All Items in U.S. City Average (accessed
Jan. 19, 2026).
\4\Federal Register, FDIC Final Rule: Adjusting and Indexing
Certain Regulatory Thresholds (Dec. 4, 2025).
\5\See Bank Policy Institute (BPI), Adjusting Regulatory Thresholds
for Economic Growth (Sep. 9, 2024); BPI, The Economy Evolves Over
Time--So Should Bank Regulations (Sep. 26, 2025).
\6\Better Markets, Letter to the House Financial Services Committee
re Making Community Banking Great Again Principles (Feb. 20, 2025). For
example, the FDIC developed a nuanced definition of community banking
organizations that take into account a bank's business lines, foreign
assets, deposit base, and geographic footprint, among other criteria
that could provide a more tailored regulatory application than a blunt
asset-size threshold. See FDIC, Community Banking Study (Dec. 2012),
page 1-2.
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Additionally, the use of nominal GDP as an indexing metric
appears to be novel and untested in banking law; to the extent
thresholds utilize an index, they often utilize inflation-based
metrics. For example, the dollar threshold for exempting
certain large-dollar consumer credit transactions from TILA is
adjusted annually based on CPI W. Regulation CC, implementing
the Expedited Funds Availability Act (``EFAA'') modifies
thresholds relating to check hold periods utilizing CPI W every
5 years. Indeed, the approach in H.R. 7056 is more aggressive
than what Trump's banking regulators have recently adopted. The
FDIC recently adopted a final rule that changed numerous
regulatory thresholds relating to bank filing procedures,
audits, reporting requirements, Orderly Liquidation Authority,
and more, however they based the changes on inflation instead
of nominal GDP.\7\ In the final rule, the FDIC rejected
industry arguments that nominal GDP should be used and
explained:
\7\Federal Register, FDIC Final Rule: Adjusting and Indexing
Certain Regulatory Thresholds (Dec. 4, 2025).
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``[T]here are several downsides to using GDP for
threshold adjustments. GDP is subject to business cycle
fluctuations that may not always correspond with price
level changes, such as in a ``stagflationary''
environment where stagnant economic growth occurs
simultaneously with inflation. Relatedly, GDP in
certain cases may grow fast for a period of years,
followed by a downturn marked by slow or negative
growth. Additionally, GDP is a lagging indicator that
is frequently revised, which may limit the accuracy and
durability of threshold adjustments. Finally, the
intent behind many rules that use asset-based
thresholds is to target banks of a certain size, rather
than a size relative to the broader economy; thus, if
the banking industry is growing quickly in real terms
alongside a rapidly growing economy, banks are still
growing for purposes of the relevant regulations.''
Furthermore, not all of the threshold changes are focused
on community financial institutions. Some of the increases are
sizable and would benefit larger banks (e.g. one $50 billion
threshold is more than doubled to $105 billion, and another is
more than tripled to $175 billion). For context, roughly 97% of
all banks have less than $10 billion in assets,\8\ and only 26
banks of the roughly 4,400 banks have more than $100 billion in
assets.\9\
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\8\See FDIC, Quarterly Banking Profile (3rd Quarter, 2025).
\9\Federal Reserve, Large Commercial Banks (Sep. 30, 2025).
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To underscore the bill's sweeping scope, it is worth noting
that H.R. 7056 rolls back several consumer protection
obligations relating to mortgage rules and HMDA reporting at a
time when the Trump Administration has largely shut down the
Consumer Financial Protection Bureau (CFPB). Even a modest
reduction in HMDA reporting would arguably curb efforts to
promote a competitive housing market and lending opportunities
in rural and other underserved communities.\10\ The bill also
reduces Community Reinvestment Act exams while Trump's
regulators are rolling back anti-discrimination and CRA rules
while reducing bank exam staff.
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\10\See Mayer Brown, NCRC Files Suit Against CFPB over HMDA
Reporting Thresholds (Aug. 11, 2020); NCRC, NCRC And Co-Plaintiffs'
Legal Victory Means Mortgage Lenders Must Comply With More Robust Fair
Lending Reporting Requirements (Dec. 7, 2022).
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Finally, the bill has the potential to undermine regulatory
agency efforts to establish tailored risk-based thresholds that
are phased in to mitigate cliff effects that can happen with
asset-based thresholds. This potential impact is evident in the
context of the post-financial crisis prohibition on banking
entities engaging in proprietary trading and hedge fund
ownership, commonly known as the Volcker Rule. In July 2019,
regulators finalized a rule to exempt banks from the Volcker
prohibition firms that have less than $10 billion total assets
and total trading assets and liabilities equal to five percent
or less of total consolidated assets.\11\ In November 2019, the
agencies further tailored Volcker rule implementation to ``make
the scale of compliance activity required . . . commensurate
with a banking entity's size and level of trading
activity.''\12\ The November 2019 tailoring revisions
established three categories based on a firms' level of trading
activity and tailored compliance requirements that gradually
phased in obligations based on new compliance tiers.\13\ The
November 2019 tiering amendments set a floor of $20 billion in
gross trading assets and liabilities for the full suite of
Volcker rule compliance requirements.\14\ In July 2020, Trump's
banking regulators further rolled back Volcker rule
implementation to simplify compliance and permit additional
fund activities.\15\ These rollbacks arguably contributed to a
stronger linkage between banks and private credit, which last
year experienced turmoil that affected several large banks,
including JPMorgan Chase.\16\ The bank's CEO, Jamie Dimon,
warned, ``When you see one cockroach, there are probably
more.''\17\ Given these growing concerns, it would be prudent
to be cautious about exempting more banks from the Volcker
Rule. Even setting aside those concerns, the bill's proposed
statutory revisions to Volcker based on nominal GDP would
arguably be disruptive to the more tailored, phased-in approach
that the regulatory agencies have developed with input from the
public through the notice and comment rulemaking process.
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\11\See OCC, Fed, FDIC, SEC, CFTC, 84 Fed. Reg. 35008 (Jul. 22,
2019).
\12\See OCC, Fed, FDIC, SEC, CFTC, 84 Fed. Reg. 61975 (Nov. 14,
2019).
\13\Id.
\14\Id.
\15\See OCC, FED, FDIC, SEC, CFTC, 85 Fed. Reg. 46422 (Jul. 13,
2020).
\16\WSJ, Private-Credit Growth Fueled by Banks May Pose Risks (May
21, 2025); Natasha Sarin, How Bad Is Finance's Cockroach Problem? We
Are About to Find Out., New York Times (Oct. 27, 2025); and Bloomberg,
Cracks in the Credit Market Could Be a Warning for Wall Street (Oct.
31, 2025).
\17\Id.
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A number of consumer and advocacy groups are opposed to the
bill, including Americans for Financial Reform (``AFR''),
Center for Responsible Lending (``CRL''), Consumer Federation
of America (``CFA''), National Community Reinvestment Coalition
(``NCRC''), National Consumer Law Center (on behalf of its low-
income clients) (``NCLC''), and Public Citizen.
For these reasons, we oppose H.R. 7056.
Sincerely,
Maxine Waters,
Ranking Member.
Stephen F. Lynch,
Al Green,
Joyce Beatty,
Rashida Tlaib,
Sylvia R. Garcia,
Nikema Williams,
Members of Congress.
[all]