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U.S. Code as of:
01/19/04
Section 1464. 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 Director is authorized, under such regulations as the
Director 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
Director, 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 -
(i) pay interest on a demand account; or
(ii) 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 Director, 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 Director 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 Director. Except as authorized in writing by
the Director, 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 Director
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 Director.
(2) Other liabilities
To such extent as the Director may authorize in writing, a
Federal savings association may borrow, may give security, may be
surety as defined by the Director 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 Director 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) of this section 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 Director, 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)
of this section to the extent permitted by the Director. The
issuance of certificates under this paragraph does not constitute
a change of control or ownership under this chapter 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 Director, 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 [12 U.S.C. 1454 or 1455].
(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 [12 U.S.C. 1721(g)].
(G) Deposits
Investments in accounts of any insured depository
institution, as defined in section 3 of the Federal Deposit
Insurance Act [12 U.S.C. 1813].
(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
[12 U.S.C. 1701 et seq.], the Servicemen's Readjustment Act of
1944, or chapter 37 of title 38.
(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
[12 U.S.C. 1715z-5].
(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 Director, 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 [42 U.S.C. 3931 et seq.], and
investments in any partnership, limited partnership, or joint
venture formed pursuant to section 907(a) or 907(c) of such Act
[42 U.S.C. 3937(a) or (c)].
(O) Certain HUD insured or guaranteed investments
Loans that are secured by mortgages -
(i) insured under title X of the National Housing Act [12
U.S.C. 1749aa et seq.],(!1) 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 [42 U.S.C.
4511 et seq.], or under section 802 of the Housing and
Community Development Act of 1974 [42 U.S.C. 1440].
(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 [12 U.S.C. 1701 et seq.], 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 [15
U.S.C. 80a-1 et seq.], 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 [15 U.S.C. 77d(5)]; or
(ii) are mortgage related securities (as defined in section
3(a)(41) of the Securities Exchange Act of 1934) [15 U.S.C.
78c(a)(41)],
subject to such regulations as the Director 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 78c(a)(53) of title 15), subject to such regulations
as the Director 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 Director.
(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) of this section.
(ii) Exception
The Director may permit a savings association to exceed the
limitation set forth in clause (i) if the Director 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 Director permits any increased authority pursuant to
clause (ii), the Director 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 Director. 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 [42 U.S.C. 5301 et seq.]. 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) of this
section may invest in, lend to, or to (!2) 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 [22 U.S.C. 2181] or loans having the benefit of any
guarantee under section 224 of such Act [22 U.S.C. 2184],(!3)
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 [22 U.S.C. 2181 or 2182]. 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) (!3) of
the Small Business Investment Act of 1958 [15 U.S.C. 681(d)]
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 24 of this title or in section
27(b) of this title, 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 689 of title 15, 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 [12 U.S.C. 1815(d)(3)], a savings association acquires all
or substantially all of the assets of a bank that is a member
of the Bank Insurance Fund, the Director 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 Director 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 Director determines
that the extension is consistent with the purposes of this
chapter.
(6) Definitions
As used in this subsection -
(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 Director) 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 Director shall have power to enforce this section,
section 8 of the Federal Deposit Insurance Act [12 U.S.C.
1818], 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 Director is a party or
in which the Director is interested, and in the administration
of conservatorships and receiverships, the Director may act in
the Director's own name and through the Director's own
attorneys. Except as otherwise provided, the Director 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
Director 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 Director 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 [12 U.S.C. 221a(b)], 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 Director, 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 Director 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 Director 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 Director may -
(I) administer oaths and affirmations and examine and to
(!4) 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 subpenas 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 subpena.
(vi) In any proceeding under this section, the Director may
administer oaths and affirmations, take depositions, and issue
subpenas. The Director 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 subpena
issued pursuant to this subsection or section 10(c) of the
Federal Deposit Insurance Act [12 U.S.C. 1820(c)], and such
courts shall have jurisdiction and power to order and require
compliance therewith. Witnesses subpenaed 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 Director 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 Director of the Office of Thrift Supervision may appoint
a conservator or receiver for any insured savings association
if the Director determines, in the Director's discretion, that
1 or more of the grounds specified in section 11(c)(5) of the
Federal Deposit Insurance Act [12 U.S.C. 1821(c)(5)] exists.
(B) Power of appointment; judicial review
The Director shall have exclusive power and jurisdiction to
appoint a conservator or receiver for a Federal savings
association. If, in the opinion of the Director, a ground for
the appointment of a conservator or receiver for a savings
association exists, the Director 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 Director to remove such conservator or
receiver, and the court shall upon the merits dismiss such
action or direct the Director 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 Director 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 Director, 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 Director.
(ii) FDIC or RTC as conservator or receiver
Except as provided in section 21A of the Federal Home Loan
Bank Act [12 U.S.C. 1441a], the Director, at the Director's
discretion, may appoint the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation, as
appropriate, as conservator for a savings association. The
Director shall appoint only the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation, as
appropriate, 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 [12 U.S.C. 1811 et seq.], and (when not
inconsistent therewith) any other rights, powers, and
privileges possessed by conservators or receivers, as
appropriate, of savings associations under this chapter 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 Director 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 Director
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 or RTC as conservator or receiver
In any case where the Federal Deposit Insurance Corporation
or the Resolution Trust Corporation is the conservator or
receiver, any regulations prescribed by the Director shall be
consistent with any regulations prescribed by the Federal
Deposit Insurance Corporation pursuant to the Federal Deposit
Insurance Act [12 U.S.C. 1811 et seq.].
(4) Refusal to comply with demand
Whenever a conservator or receiver appointed by the Director
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) "Savings association" defined
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 Director 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.
(B) Examinations of savings associations to include review of
compliance procedures
(i) In general
Each examination of a savings association by the Director
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 Director 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 Director,
the Director shall issue an order under section 8 of the
Federal Deposit Insurance Act [12 U.S.C. 1818] 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 Director to the same extent as that
savings association.
(B) Examination by other banking agencies
The Director 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 [12 U.S.C.
1818] as if the service company or subsidiary were an insured
depository institution. In any such case, the Director shall be
deemed to be the appropriate Federal banking agency, pursuant
to section 3(q) of the Federal Deposit Insurance Act [12 U.S.C.
1813(q)].
(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 [12 U.S.C. 1818(b)(9)], that is regularly
examined or subject to examination by the Director, causes to
be performed for itself, by contract or otherwise, any service
authorized under this chapter 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 Director 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 Director 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 Director
The Director may issue such regulations and orders, including
those issued pursuant to section 8 of the Federal Deposit
Insurance Act [12 U.S.C. 1818], as may be necessary to enable
the Director 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 chapter 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 chapter 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 [12 U.S.C. 1813]) 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 Director 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 November 12,
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
[12 U.S.C. 1421 et seq.].
(g) Preferred shares
[Repealed.]
(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 Director 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 chapter.
(2) Authority of Director
(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 Director.
(B) Any aggrieved person may obtain review of a final action of
the Director which approves or disapproves a plan of conversion
pursuant to this subsection only by complying with the provisions
of section 1467a(j) of this title 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 Director, 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 Director 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 chapter 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 Director
may impose under this chapter.
(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 Director 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 Director, but subject to
section 18(m)(3) of the Federal Deposit Insurance Act [12 U.S.C.
1828(m)(3)] -
(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 August 9, 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 November 12, 1999, with branches in operation before
November 12, 1999, in 1 or more States, may convert, at its
option, with the approval of the Comptroller of the Currency or
the appropriate State bank supervisor, 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
November 12, 1999, in 1 or more States, but only if each
resulting national or State bank will meet all financial,
management, and capital requirements applicable to the
resulting national or State bank.
(B) Definitions
For purposes of this paragraph, the terms "State bank" and
"State bank supervisor" have the meanings given those terms in
section 3 of the Federal Deposit Insurance Act [12 U.S.C.
1813].
(j) Subscription for shares
[Repealed.]
(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 [26 U.S.C. 401(d)] and
to act as trustee or custodian of an individual retirement account
within the meaning of section 408 of such Code [26 U.S.C. 408] 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) "Branch" defined
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 Director, 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 Director as a branch within
the meaning of such sentence.
(n) Trusts
(1) Permits
The Director 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
Director, 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 Director 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 Director.
(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 Director 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 Director 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 Director 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 Director, 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 Director,
such Federal savings association (i) shall no longer be subject
to the provisions of this section or the regulations of the
Director 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 Director 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 Director, 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 Director 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) of this section, 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 Director 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 Director shall find that any
allegation specified in the notice of charges has been
established, the Director 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 Director or a reviewing court.
(o) Conversion of State savings banks
(1) Subject to the provisions of this subsection and under
regulations of the Director, the Director may authorize the
conversion of a State-chartered savings bank that is a Bank
Insurance Fund member 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 a Bank Insurance Fund member until
such time as it changes its status to a Savings Association
Insurance Fund member.
(B) The Director shall notify the Corporation of any application
under this chapter 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 Director's determination 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 Director, 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 Director with a
certificate of such determination, the reasons therefor in
conformance with the requirements of this chapter, and the bank
shall be converted or chartered by the Director, 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 chapter.
(p) Conversions
(1) Notwithstanding any other provision of law, and consistent
with the purposes of this chapter, the Director 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 Director.
(2) Authorizations under this subsection may be made only -
(A) if the Director 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 [12 U.S.C. 1823], 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 chapter, 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 Director 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 Director may, by regulation or order,
permit such exceptions to the prohibitions of this subsection as
the Director considers will not be contrary to the purposes of this
subsection and which conform to exceptions granted by the Board of
Governors of the Federal Reserve System pursuant to section 1972 of
this title.
(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 [26 U.S.C.
7701(a)(19)] 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 1467a(m) of this title. 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
1467a(m) of this title, 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 [12 U.S.C.
1823(k)];
(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 Director, 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 [12 U.S.C. 3907]
and the capital requirements established pursuant to such section
by the appropriate Federal banking agencies (as defined in
section 903(1) of such Act [12 U.S.C. 3902(1)]), the Director
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 Director determines to be
appropriate.
(2) Minimum capital levels may be determined by Director
case-by-case
The Director may, consistent with subsection (t) of this
section, establish the minimum level of capital for a savings
association at such amount or at such ratio of capital-to-assets
as the Director 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 Director's discretion, the Director may treat the
failure of any savings association to maintain capital at or
above the minimum level required by the Director under this
subsection or subsection (t) of this section 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 Director may issue a directive requiring any
savings association which fails to maintain capital at or above
the minimum level required by the Director to submit and adhere
to a plan for increasing capital which is acceptable to the
Director.
(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 [12 U.S.C. 1818] 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 Director 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 Director's approval
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 Director; and
(B) disapprove any proposal referred to in subparagraph (A)
if the Director 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 Director 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.
(D) Deadline for regulations
The Director shall promulgate final regulations under this
paragraph not later than 90 days after August 9, 1989, and
those regulations shall become effective not later than 120
days after August 9, 1989.
(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.
(3) Transition rule
(A) Certain qualifying supervisory goodwill included in
calculating core capital
Notwithstanding paragraph (9)(A), an eligible savings
association may include qualifying supervisory goodwill in
calculating core capital. The amount of qualifying supervisory
goodwill that may be included may not exceed the applicable
percentage of total assets set forth in the following table:
For the following The applicable
period: percentage is:
Prior to January 1, 1992 1.500 percent
January 1, 1992-December 31, 1992 1.000 percent
January 1, 1993-December 31, 1993 0.750 percent
January 1, 1994-December 31, 1994 0.375 percent
Thereafter 0 percent
(B) Eligible savings associations
For purposes of subparagraph (A), a savings association is an
eligible savings association so long as the Director determines
that -
(i) the savings association's management is competent;
(ii) the savings association is in substantial compliance
with all applicable statutes, regulations, orders, and
supervisory agreements and directives; and
(iii) 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.
(4) Special rules for purchased mortgage servicing rights
(A) In general
Notwithstanding paragraphs (1)(C) and (9), the standards
prescribed under paragraph (1) may permit a savings association
to include in calculating capital for the purpose of the
leverage limit and risk-based capital requirement prescribed
under paragraph (1), on terms no less stringent than under both
the capital standards applicable to State nonmember banks and
(except as to the amount that may be included in calculating
capital) the capital standards applicable to national banks, 90
percent of the fair market value of readily marketable
purchased mortgage servicing rights.
(B) Tangible capital requirement
Notwithstanding paragraphs (1)(C) and (9)(C), the standards
prescribed under paragraph (1) may permit a savings association
to include in calculating capital for the purpose of the
tangible capital requirement prescribed under paragraph (1), on
terms no less stringent than under both the capital standards
applicable to State nonmember banks and (except as to the
amount that may be included in calculating capital) the capital
standards applicable to national banks, 90 percent of the fair
market value of readily marketable purchased mortgage servicing
rights.
(C) Percentage limitation prescribed by FDIC
Notwithstanding paragraph (1)(C) and subparagraphs (A) and
(B) of this paragraph -
(i) for the purpose of subparagraph (A), the maximum amount
of purchased mortgage servicing rights that may be included
in calculating capital under the leverage limit and the
risk-based capital requirement prescribed under paragraph (1)
may not exceed the amount that could be included if the
savings association were an insured State nonmember bank; and
(ii) for the purpose of subparagraph (B), the Corporation
shall prescribe a maximum percentage of the tangible capital
requirement that savings associations may satisfy by
including purchased mortgage servicing rights in calculating
such capital.
(D) Quarterly valuation
The fair market value of purchased mortgage servicing rights
shall be determined not less often than quarterly.
(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 Corporation, in its
sole discretion, 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 August 9, 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.
(D) Transition rule
(i) Inclusion in capital
Notwithstanding subparagraph (A), if a savings
association's subsidiary was, as of April 12, 1989, engaged
in activities not permissible for a national bank, the
savings association may include in calculating capital the
applicable percentage (set forth in clause (ii)) of the
lesser of -
(I) the savings association's investments in and
extensions of credit to the subsidiary on April 12, 1989;
or
(II) the savings association's investments in and
extensions of credit to the subsidiary on the date as of
which the savings association's capital is being
determined.
(ii) Applicable percentage
For purposes of clause (i), the applicable percentage is as
follows:
For the following The applicable
period: percentage is:
Prior to July 1, 1990 100 percent
July 1, 1990-June 30, 1991 90 percent
July 1, 1991-October 31, 1992 75 percent
November 1, 1992-June 30, 1993 60 percent
July 1, 1993-June 30, 1994 40 percent
Thereafter 0 percent
(iii) Agency discretion to prescribe greater percentage
Subject to clauses (iv), (v), and (vi), the Director may
prescribe by order, with respect to a particular qualified
savings association, an applicable percentage greater than
that provided in clause (ii) if the Director determines, in
the Director's sole discretion, that the use of the greater
percentage, under the circumstances -
(I) would not constitute an unsafe or unsound practice;
(II) would not increase the risk to the affected deposit
insurance fund; and
(III) would not be likely to result in the association's
being in an unsafe or unsound condition.
(iv) Substantial compliance with approved capital plan
In the case of a savings association which is subject to a
plan submitted under paragraph (7)(D) of this subsection or
an order issued under this subsection, a directive issued or
plan approved under subsection (s) of this section, or a
capital restoration plan approved or order issued under
section 38 or 39 of the Federal Deposit Insurance Act [12
U.S.C. 1831o, 1831p-1], an order issued under clause (iii)
with respect to the association shall be effective only so
long as the association is in substantial compliance with
such plan, directive, or order.
(v) Limitation on investments taken into account
In prescribing the amount by which an applicable percentage
under clause (iii) may exceed the applicable percentage under
clause (ii) with respect to a particular qualified savings
association, the Director may take into account only the sum
of -
(I) the association's investments in, and extensions of
credit to, the subsidiary that were made on or before April
12, 1989; and
(II) the association's investments in, and extensions of
credit to, the subsidiary that were made after April 12,
1989, and were necessary to complete projects initiated
before April 12, 1989.
(vi) Limit
The applicable percentage limit allowed by the Director in
an order under clause (iii) shall not exceed the following
limits:
For the following period: The limit is:
Prior to July 1, 1994 75 percent
July 1, 1994 through June 30, 1995 60 percent
July 1, 1995 through June 30, 1996 40 percent
After June 30, 1996 0 percent
(vii) Critically undercapitalized institution
In the case of a savings association that becomes
critically undercapitalized (as defined in section 38 of the
Federal Deposit Insurance Act [12 U.S.C. 1831o]) as
determined under this subparagraph without applying clause
(iii), clauses (iii) through (v) shall be applied by
substituting "Corporation" for "Director" each place such
term appears.
(viii) "Qualified savings association" defined
For purposes of clause (iii), the term "qualified savings
association" means an eligible savings association (as
defined in paragraph (3)(B)) which is subject to this
paragraph solely because of the real estate investments or
other real estate activities of the association's subsidiary,
and -
(I) is adequately capitalized (as defined in section 38
of the Federal Deposit Insurance Act [12 U.S.C. 1831o]); or
(II) is in compliance with an approved capital
restoration plan meeting the requirements of section 38 of
the Federal Deposit Insurance Act [12 U.S.C. 1831o], and is
not critically undercapitalized (as defined in such
section).
(ix) FDIC's discretion to prescribe lesser percentage
The Corporation may prescribe by order, with respect to a
particular savings association, an applicable percentage less
than that provided in clause (ii) or prescribed under clause
(iii) if the Corporation determines, in its sole discretion,
that the use of a greater percentage would, under the
circumstances, constitute an unsafe or unsound practice or be
likely to result in the association's being in an unsafe or
unsound condition.
(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
(A) Prior to January 1, 1991
Prior to January 1, 1991, the Director -
(i) may restrict the asset growth of any savings
association not in compliance with capital standards; and
(ii) shall, beginning 60 days following the promulgation of
final regulations under this subsection, require any savings
association not in compliance with capital standards to
submit a plan under subsection (s)(4)(A) of this section that
-
(I) addresses the savings association's need for
increased capital;
(II) describes the manner in which the savings
association will increase its capital so as to achieve
compliance with capital standards;
(III) specifies the types and levels of activities in
which the savings association will engage;
(IV) requires any increase in assets to be accompanied by
an increase in tangible capital not less in percentage
amount than the leverage limit then applicable;
(V) requires any increase in assets to be accompanied by
an increase in capital not less in percentage amount than
required under the risk-based capital standard then
applicable; and
(VI) is acceptable to the Director.
(B) On or after January 1, 1991
On or after January 1, 1991, the Director -
(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 Director (which may include such
restrictions, including restrictions on the payment of
dividends and on compensation, as the Director determines to
be appropriate).
(C) Limited growth exception
The Director 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 Director's prior
approval;
(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 Director's discretion 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 Director may restrict the asset growth of any savings
association that the Director determines is taking excessive
risks or paying excessive rates for deposits.
(E) Failure to comply with plan, regulation, or order
The Director shall 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 Director
under other provisions 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
Director for an exemption from any applicable sanction or
penalty for noncompliance which the Director may impose under
this chapter.
(B) Effect of grant of exemption
If the Director approves any savings association's
application under subparagraph (A), the only sanction or
penalty to be imposed by the Director under this chapter 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 Director may approve an application for an exemption if
the Director determines that -
(I) such exemption would pose no significant risk to the
affected 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 Director shall deny any application submitted under
clause (i) and revoke any prior approval granted with respect
to any such application if the Director 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 Director.
(E) Failure to comply with plan
The Director 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 Director
under any other provision of law, including section 8 of the
Federal Deposit Insurance Act [12 U.S.C. 1818], 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).
(8) Temporary authority to make exceptions for eligible savings
associations
(A) In general
Notwithstanding paragraph (1)(C), the Director may, by order,
make exceptions to the capital standards prescribed under
paragraph (1) for eligible savings associations. No exception
under this paragraph shall be effective after January 1, 1991.
(B) Standards for approval or disapproval
In determining whether to grant an exception under
subparagraph (A), the Director shall apply the same standards
as apply to determinations under paragraph (7)(C).
(9) Definitions
For purposes of this subsection -
(A) Core capital
Unless the Director 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, plus any purchased mortgage
servicing rights excluded from the Comptroller's definition of
capital but included in calculating the core capital of savings
associations pursuant to paragraph (4).
(B) Qualifying supervisory goodwill
The term "qualifying supervisory goodwill" means supervisory
goodwill existing on April 12, 1989, amortized on a
straightline basis over the shorter of -
(i) 20 years, or
(ii) the remaining period for amortization in effect on
April 12, 1989.
(C) Tangible capital
The term "tangible capital" means core capital minus any
intangible assets (as intangible assets are defined by the
Comptroller of the Currency for national banks).
(D) 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 Director 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 [12 U.S.C. 84] 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; or
(ii) to develop domestic residential housing units, not to
exceed the lesser of $30,000,000 or 30 percent of the savings
association's unimpaired capital and unimpaired surplus, if -
(I) the purchase price of each single family dwelling unit
the development of which is financed under this clause does
not exceed $500,000;
(II) the savings association is and continues to be in
compliance with the fully phased-in capital standards
prescribed under subsection (t) of this section;
(III) the Director, by order, permits the savings
association to avail itself of the higher limit provided by
this clause;
(IV) 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
(V) 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 Director may impose more stringent restrictions on a
savings association's loans to one borrower if the Director
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
Director which shall be in a form prescribed by the Director 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 Director 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 Director 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, the Savings Association Insurance Fund; or
(ii) that public disclosure would not otherwise be in the
public interest.
(B) Any determination made by the Director under subparagraph
(A) not to permit the public disclosure of information shall be
made in writing, and if the Director restricts any item of
information for savings institutions generally, the Director
shall disclose the reason in detail in the Federal Register.
(C) The Director's determinations 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 Director under paragraph (1) or (2), within
the period of time specified by the Director; 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 (!5) 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 Director under paragraph (1) or (2), within the
period of time specified by the Director; 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 Director 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 Director in the manner provided in
subparagraphs (E), (F), (G), and (I) of section 8(i)(2) of the
Federal Deposit Insurance Act [12 U.S.C. 1818(i)(2)(E), (F), (G),
(I)] (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 [12 U.S.C. 1818(h)] 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, the
Attorney General shall provide to the Director 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 Director shall issue to the
savings association a notice of the Director's intention 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 after receiving
written notification from the Attorney General, the Director
may issue to the savings association a notice of the Director's
intention to terminate all rights, privileges, and franchises
of the savings association and schedule a pretermination
hearing.
(C) Judicial review
Subsection (d)(1)(B)(vii) of this section 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 Director shall take into account the following
factors:
(A) The extent to which directors or senior executive
officers of the savings association knew of, were (!6) 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) "Senior executive officer" defined
The term "senior executive officer" has the same meaning as in
regulations prescribed under section 32(f) of the Federal Deposit
Insurance Act [12 U.S.C. 1831i(f)].
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