§ 1844. — Administration.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1844]
TITLE 12--BANKS AND BANKING
CHAPTER 17--BANK HOLDING COMPANIES
Sec. 1844. Administration
(a) Registration of bank holding company
Within one hundred and eighty days after May 9, 1956, or within one
hundred and eighty days after becoming a bank holding company, whichever
is later, each bank holding company shall register with the Board on
forms prescribed by the Board, which shall include such information with
respect to the financial condition and operations, management, and
intercompany relationships of the bank holding company and its
subsidiaries, and related matters, as the Board may deem necessary or
appropriate to carry out the purposes of this chapter. The Board may, in
its discretion, extend the time within which a bank holding company
shall register and file the requisite information. A declaration filed
in accordance with section 1843(l)(1)(C) of this title shall satisfy the
requirements of this subsection with regard to the registration of a
bank holding company but not any requirement to file an application to
acquire a bank pursuant to section 1842 of this title.
(b) Regulations and orders
The Board is authorized to issue such regulations and orders as may
be necessary to enable it to administer and carry out the purposes of
this chapter and prevent evasions thereof.
(c) Reports and examinations
(1) Reports
(A) In general
The Board, from time to time, may require a bank holding
company and any subsidiary of such company to submit reports
under oath to keep the Board informed as to--
(i) its financial condition, systems for monitoring and
controlling financial and operating risks, and transactions
with depository institution subsidiaries of the bank holding
company; and
(ii) compliance by the company or subsidiary with
applicable provisions of this chapter or any other Federal
law that the Board has specific jurisdiction to enforce
against such company or subsidiary.
(B) Use of existing reports
(i) In general
For purposes of compliance with this paragraph, the
Board shall, to the fullest extent possible, accept--
(I) reports that a bank holding company or any
subsidiary of such company has provided or been required
to provide to other Federal or State supervisors or to
appropriate self-regulatory organizations;
(II) information that is otherwise required to be
reported publicly; and
(III) externally audited financial statements.
(ii) Availability
A bank holding company or a subsidiary of such company
shall provide to the Board, at the request of the Board, a
report referred to in clause (i).
(iii) Reports filed with other agencies
(I) In general
In the event that the Board requires a report under
this subsection from a functionally regulated subsidiary
of a bank holding company of a kind that is not required
by another Federal or State regulatory authority or an
appropriate self-regulatory organization, the Board
shall first request that the appropriate regulatory
authority or self-regulatory organization obtain such
report.
(II) Availability from other subsidiary
If the report is not made available to the Board,
and the report is necessary to assess a material risk to
the bank holding company or any of its depository
institution subsidiaries or compliance with this chapter
or any other Federal law that the Board has specific
jurisdiction to enforce against such company or
subsidiary or the systems described in paragraph
(2)(A)(ii)(II), the Board may require such functionally
regulated subsidiary to provide such a report to the
Board.
(2) Examinations
(A) Examination authority for bank holding companies and
subsidiaries
Subject to subparagraph (B), the Board may make examinations
of each bank holding company and each subsidiary of such holding
company in order--
(i) to inform the Board of the nature of the operations
and financial condition of the holding company and such
subsidiaries;
(ii) to inform the Board of--
(I) the financial and operational risks within the
holding company system that may pose a threat to the
safety and soundness of any depository institution
subsidiary of such holding company; and
(II) the systems for monitoring and controlling such
risks; and
(iii) to monitor compliance with the provisions of this
chapter or any other Federal law that the Board has specific
jurisdiction to enforce against such company or subsidiary
and those governing transactions and relationships between
any depository institution subsidiary and its affiliates.
(B) Functionally regulated subsidiaries
Notwithstanding subparagraph (A), the Board may make
examinations of a functionally regulated subsidiary of a bank
holding company only if--
(i) the Board has reasonable cause to believe that such
subsidiary is engaged in activities that pose a material
risk to an affiliated depository institution;
(ii) the Board reasonably determines, after reviewing
relevant reports, that examination of the subsidiary is
necessary to adequately inform the Board of the systems
described in subparagraph (A)(ii)(II); or
(iii) based on reports and other available information,
the Board has reasonable cause to believe that a subsidiary
is not in compliance with this chapter or any other Federal
law that the Board has specific jurisdiction to enforce
against such subsidiary, including provisions relating to
transactions with an affiliated depository institution, and
the Board cannot make such determination through examination
of the affiliated depository institution or the bank holding
company.
(C) Restricted focus of examinations
The Board shall, to the fullest extent possible, limit the
focus and scope of any examination of a bank holding company
to--
(i) the bank holding company; and
(ii) any subsidiary of the bank holding company that
could have a materially adverse effect on the safety and
soundness of any depository institution subsidiary of the
holding company due to--
(I) the size, condition, or activities of the
subsidiary; or
(II) the nature or size of transactions between the
subsidiary and any depository institution that is also a
subsidiary of the bank holding company.
(D) Deference to bank examinations
The Board shall, to the fullest extent possible, for the
purposes of this paragraph, use the reports of examinations of
depository institutions made by the appropriate Federal and
State depository institution supervisory authority.
(E) Deference to other examinations
The Board shall, to the fullest extent possible, forego an
examination by the Board under this paragraph and instead review
the reports of examination made of--
(i) any registered broker or dealer by or on behalf of
the Securities and Exchange Commission;
(ii) any registered investment adviser properly
registered by or on behalf of either the Securities and
Exchange Commission or any State;
(iii) any licensed insurance company by or on behalf of
any State regulatory authority responsible for the
supervision of insurance companies; and
(iv) any other subsidiary that the Board finds to be
comprehensively supervised by a Federal or State authority.
(3) Capital
(A) In general
The Board may not, by regulation, guideline, order, or
otherwise, prescribe or impose any capital or capital adequacy
rules, guidelines, standards, or requirements on any
functionally regulated subsidiary of a bank holding company
that--
(i) is not a depository institution; and
(ii) is--
(I) in compliance with the applicable capital
requirements of its Federal regulatory authority
(including the Securities and Exchange Commission) or
State insurance authority;
(II) properly registered as an investment adviser
under the Investment Advisers Act of 1940 [15 U.S.C.
80b-1 et seq.], or with any State; or
(III) is licensed as an insurance agent with the
appropriate State insurance authority.
(B) Rule of construction
Subparagraph (A) shall not be construed as preventing the
Board from imposing capital or capital adequacy rules,
guidelines, standards, or requirements with respect to--
(i) activities of a registered investment adviser other
than with respect to investment advisory activities or
activities incidental to investment advisory activities; or
(ii) activities of a licensed insurance agent other than
insurance agency activities or activities incidental to
insurance agency activities.
(C) Limitations on indirect action
In developing, establishing, or assessing bank holding
company capital or capital adequacy rules, guidelines,
standards, or requirements for purposes of this paragraph, the
Board may not take into account the activities, operations, or
investments of an affiliated investment company registered under
the Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.],
unless the investment company is--
(i) a bank holding company; or
(ii) controlled by a bank holding company by reason of
ownership by the bank holding company (including through all
of its affiliates) of 25 percent or more of the shares of
the investment company, and the shares owned by the bank
holding company have a market value equal to more than
$1,000,000.
(4) Functional regulation of securities and insurance
activities
(A) Securities activities
Securities activities conducted in a functionally regulated
subsidiary of a depository institution shall be subject to
regulation by the Securities and Exchange Commission, and by
relevant State securities authorities, as appropriate, subject
to section 6701 of title 15, to the same extent as if they were
conducted in a nondepository institution subsidiary of a bank
holding company.
(B) Insurance activities
Subject to section 6701 of title 15, insurance agency and
brokerage activities and activities as principal conducted in a
functionally regulated subsidiary of a depository institution
shall be subject to regulation by a State insurance authority to
the same extent as if they were conducted in a nondepository
institution subsidiary of a bank holding company.
(5) Definition
For purposes of this subsection, the term ``functionally
regulated subsidiary'' means any company--
(A) that is not a bank holding company or a depository
institution; and
(B) that is--
(i) a broker or dealer that is registered under the
Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.];
(ii) a registered investment adviser, properly
registered by or on behalf of either the Securities and
Exchange Commission or any State, with respect to the
investment advisory activities of such investment adviser
and activities incidental to such investment advisory
activities;
(iii) an investment company that is registered under the
Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.];
(iv) an insurance company, with respect to insurance
activities of the insurance company and activities
incidental to such insurance activities, that is subject to
supervision by a State insurance regulator; or
(v) an entity that is subject to regulation by the
Commodity Futures Trading Commission, with respect to the
commodities activities of such entity and activities
incidental to such commodities activities.
(d) Reports to the Congress; recommendations
Before the expiration of two years following May 9, 1956, and each
year thereafter in the Board's annual report to the Congress, the Board
shall report to the Congress the results of the administration of this
chapter, stating what, if any, substantial difficulties have been
encountered in carrying out the purposes of this chapter, and any
recommendations as to changes in the law which in the opinion of the
Board would be desirable.
(e) Termination of activities or ownership or control of nonbank
subsidiaries constituting serious risk
(1) Notwithstanding any other provision of this chapter, the Board
may, whenever it has reasonable cause to believe that the continuation
by a bank holding company of any activity or of ownership or control of
any of its nonbank subsidiaries, other than a nonbank subsidiary of a
bank, constitutes a serious risk to the financial safety, soundness, or
stability of a bank holding company subsidiary bank and is inconsistent
with sound banking principles or with the purposes of this chapter or
with the Financial Institutions Supervisory Act of 1966, at the election
of the bank holding company--
(A) order the bank holding company or any such nonbank
subsidiaries, after due notice and opportunity for hearing, and
after considering the views of the bank's primary supervisor, which
shall be the Comptroller of the Currency in the case of a national
bank or the Federal Deposit Insurance Corporation and the
appropriate State supervisory authority in the case of an insured
nonmember bank, to terminate such activities or to terminate (within
one hundred and twenty days or such longer period as the Board may
direct in unusual circumstances) its ownership or control of any
such subsidiary either by sale or by distribution of the shares of
the subsidiary to the shareholders of the bank holding company; or
(B) order the bank holding company, after due notice and
opportunity for hearing, and after consultation with the primary
supervisor for the bank, which shall be the Comptroller of the
Currency in the case of a national bank, and the Federal Deposit
Insurance Corporation and the appropriate State supervisor in the
case of an insured nonmember bank, to terminate (within 120 days or
such longer period as the Board may direct) the ownership or control
of any such bank by such company.
The distribution referred to in subparagraph (A) shall be pro rata with
respect to all of the shareholders of the distributing bank holding
company, and the holding company shall not make any charge to its
shareholders arising out of such a distribution.
(2) The Board may in its discretion apply to the United States
district court within the jurisdiction of which the principal office of
the holding company is located, for the enforcement of any effective and
outstanding order issued under this section, and such court shall have
jurisdiction and power to order and require compliance therewith, but
except as provided in section 1848 of this title, no court shall have
jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under this section, or to review,
modify, suspend, terminate, or set aside any such notice or order.
(f) Powers of Board respecting applications, examinations, or other
proceedings
In the course of or in connection with an application, examination,
investigation or other proceeding under this chapter, the Board, or any
member or designated representative thereof, including any person
designated to conduct any hearing under this chapter, shall have the
power to administer oaths and affirmations, to take or cause to be taken
depositions, and to issue, revoke, quash, or modify subpenas and
subpenas duces tecum; and the Board is empowered to make rules and
regulations to effectuate the purposes of this subsection. The
attendance of witnesses and the production of documents provided for in
this subsection may be required from any place in any State or in any
territory or other place subject to the jurisdiction of the United
States at any designated place where such proceeding is being conducted.
Any party to proceedings under this chapter may apply to the United
States District Court for the District of Columbia, or the United States
district court for the judicial district or the United States court in
any territory in which such proceeding is being conducted or where the
witness resides or carries on business, for the enforcement of any
subpena or subpena duces tecum issued pursuant to this subsection, and
such courts shall have jurisdiction and power to order and require
compliance therewith. Witnesses subpenaed under this subsection shall be
paid the same fees and mileage that are paid witnesses in the district
courts of the United States. Any service required under this subsection
may be made by registered mail, or in such other manner reasonably
calculated to give actual notice as the Board may by regulation or
otherwise provide. Any court having jurisdiction of any proceeding
instituted under this subsection may allow to any such party such
reasonable expenses and attorneys' fees as it deems just and proper. Any
person who willfully shall fail or refuse to attend and testify or to
answer any lawful inquiry or to produce books, papers, correspondence,
memoranda, contracts, agreements, or other records, if in such person's
power so to do, in obedience to the subpena of the Board, shall be
guilty of a misdemeanor and, upon conviction, shall be subject to a fine
of not more than $1,000 or to imprisonment for a term of not more than
one year or both.
(g) Authority of State insurance regulator and the Securities and
Exchange Commission
(1) In general
Notwithstanding any other provision of law, any regulation,
order, or other action of the Board that requires a bank holding
company to provide funds or other assets to a subsidiary depository
institution shall not be effective nor enforceable with respect to
an entity described in subparagraph (A) if--
(A) such funds or assets are to be provided by--
(i) a bank holding company that is an insurance company,
a broker or dealer registered under the Securities Exchange
Act of 1934 [15 U.S.C. 78a et seq.], an investment company
registered under the Investment Company Act of 1940 [15
U.S.C. 80a-1 et seq.], or an investment adviser registered
by or on behalf of either the Securities and Exchange
Commission or any State; or
(ii) an affiliate of the depository institution that is
an insurance company or a broker or dealer registered under
the Securities Exchange Act of 1934, an investment company
registered under the Investment Company Act of 1940, or an
investment adviser registered by or on behalf of either the
Securities and Exchange Commission or any State; and
(B) the State insurance authority for the insurance company
or the Securities and Exchange Commission for the registered
broker, dealer, investment adviser (solely with respect to
investment advisory activities or activities incidental
thereto), or investment company, as the case may be, determines
in writing sent to the holding company and the Board that the
holding company shall not provide such funds or assets because
such action would have a material \1\ adverse effect on the
financial condition of the insurance company or the broker,
dealer, investment company, or investment adviser, as the case
may be.
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\1\ So in original. Probably should be ``materially''.
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(2) Notice to State insurance authority or SEC required
If the Board requires a bank holding company, or an affiliate of
a bank holding company, that is an insurance company or a broker,
dealer, investment company, or investment adviser described in
paragraph (1)(A) to provide funds or assets to a depository
institution subsidiary of the holding company pursuant to any
regulation, order, or other action of the Board referred to in
paragraph (1), the Board shall promptly notify the State insurance
authority for the insurance company, the Securities and Exchange
Commission, or State securities regulator, as the case may be, of
such requirement.
(3) Divestiture in lieu of other action
If the Board receives a notice described in paragraph (1)(B)
from a State insurance authority or the Securities and Exchange
Commission with regard to a bank holding company or affiliate
referred to in that paragraph, the Board may order the bank holding
company to divest the depository institution not later than 180 days
after receiving the notice, or such longer period as the Board
determines consistent with the safe and sound operation of the
depository institution.
(4) Conditions before divestiture
During the period beginning on the date an order to divest is
issued by the Board under paragraph (3) to a bank holding company
and ending on the date the divestiture is completed, the Board may
impose any conditions or restrictions on the holding company's
ownership or operation of the depository institution, including
restricting or prohibiting transactions between the depository
institution and any affiliate of the institution, as are appropriate
under the circumstances.
(5) Rule of construction
No provision of this subsection may be construed as limiting or
otherwise affecting, except to the extent specifically provided in
this subsection, the regulatory authority, including the scope of
the authority, of any Federal agency or department with regard to
any entity that is within the jurisdiction of such agency or
department.
(May 9, 1956, ch. 240, Sec. 5, 70 Stat. 137; Pub. L. 95-630, title I,
Secs. 105(a), 106(b), Nov. 10, 1978, 92 Stat. 3646, 3648; Pub. L. 106-
102, title I, Secs. 111, 112(a), 116, Nov. 12, 1999, 113 Stat. 1362,
1366, 1372.)
References in Text
The Investment Advisers Act of 1940, referred to in subsec.
(c)(3)(A)(ii)(II), is title II of act Aug. 22, 1940, ch. 686, 54 Stat.
847, as amended, which is classified generally to subchapter II
(Sec. 80b-1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For
complete classification of this Act to the Code, see section 80b-20 of
Title 15 and Tables.
The Investment Company Act of 1940, referred to in subsecs.
(c)(3)(C), (5)(B)(iii) and (g)(1)(A), is title I of act Aug. 22, 1940,
ch. 686, 54 Stat. 789, as amended, which is classified generally to
subchapter I (Sec. 80a-1 et seq.) of chapter 2D of Title 15, Commerce
and Trade. For complete classification of this Act to the Code, see
section 80a-51 of Title 15 and Tables.
The Securities Exchange Act of 1934, referred to in subsecs.
(c)(5)(B)(i) and (g)(1)(A), is act June 6, 1934, ch. 404, 48 Stat. 881,
as amended, which is classified principally to chapter 2B (Sec. 78a et
seq.) of Title 15, Commerce and Trade. For complete classification of
this Act to the Code, see section 78a of Title 15 and Tables.
The Financial Institutions Supervisory Act of 1966, referred to in
subsec. (e)(1), is Pub. L. 89-695, Oct. 16, 1966, 80 Stat. 1028. For
complete classification of this Act to the Code, see Short Title of 1966
Amendment note set out under section 1464 of this title and Tables.
Amendments
1999--Subsec. (a). Pub. L. 106-102, Sec. 116(a), inserted at end ``A
declaration filed in accordance with section 1843(l)(1)(C) of this title
shall satisfy the requirements of this subsection with regard to the
registration of a bank holding company but not any requirement to file
an application to acquire a bank pursuant to section 1842 of this
title.''
Subsec. (c). Pub. L. 106-102, Sec. 111, inserted heading and amended
text of subsec. (c) generally. Prior to amendment, text read as follows:
``The Board from time to time may require reports under oath to keep it
informed as to whether the provisions of this chapter and such
regulations and orders issued thereunder have been complied with; and
the Board may make examinations of each bank holding company and each
subsidiary thereof, the cost of which shall be assessed against, and
paid by, such holding company. The Board shall, as far as possible, use
the report of examinations made by the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the appropriate State bank
supervisory authority for the purposes of this section.''
Subsec. (e)(1). Pub. L. 106-102, Sec. 116(b), in first sentence,
substituted ``Financial Institutions Supervisory Act of 1966, at the
election of the bank holding company--'' along with subpar. (A)
designation and ``order'' for ``Financial Institutions Supervisory Act
of 1966, order'' and ``shareholders of the bank holding company; or''
along with subpar. (B) for ``shareholders of the bank holding
company.'', designated second sentence as concluding provisions, and
substituted ``The distribution referred to in subparagraph (A)'' for
``Such distribution''.
Subsec. (g). Pub. L. 106-102, Sec. 112(a), added subsec. (g).
1978--Subsec. (e). Pub. L. 95-630, Sec. 105(a), added subsec. (e).
Subsec. (f). Pub. L. 95-630, Sec. 106(b), added subsec. (f).
Effective Date of 1999 Amendment
Amendment by Pub. L. 106-102 effective 120 days after Nov. 12, 1999,
see section 161 of Pub. L. 106-102, set out as a note under section 24
of this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as an
Effective Date note under section 375b of this title.
Termination of Reporting Requirements
For termination, effective May 15, 2000, of provisions of law
requiring submittal to Congress of any annual, semiannual, or other
regular periodic report listed in House Document No. 103-7 (in which a
report required under subsection (d) of this section is listed on page
171), see section 3003 of Pub. L. 104-66, as amended, set out as a note
under section 1113 of Title 31, Money and Finance.
Section Referred to in Other Sections
This section is referred to in sections 1828, 1831v, 1841, 1843,
1848a of this title; title 7 section 6f.