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§ 3904. —  Reserves.



[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 12USC3904]

 
                       TITLE 12--BANKS AND BANKING
 
              CHAPTER 40--INTERNATIONAL LENDING SUPERVISION
 
Sec. 3904. Reserves


(a) Establishment and maintenance of special reserves

    (1) Each appropriate Federal banking agency shall require a banking 
institution to establish and maintain a special reserve whenever, in the 
judgment of such appropriate Federal banking agency--
        (A) the quality of such banking institution's assets has been 
    impaired by a protracted inability of public or private borrowers in 
    a foreign country to make payments on their external indebtedness as 
    indicated by such factors, among others, as--
            (i) a failure by such public or private borrowers to make 
        full interest payments on external indebtedness;
            (ii) a failure to comply with the terms of any restructured 
        indebtedness; or
            (iii) a failure by the foreign country to comply with any 
        International Monetary Fund or other suitable adjustment 
        program; or

        (B) no definite prospects exist for the orderly restoration of 
    debt service.

    (2) Such reserves shall be charged against current income and shall 
not be considered as part of capital and surplus or allowances for 
possible loan losses for regulatory, supervisory, or disclosure 
purposes.

(b) Accommodation of potential losses on foreign loans by United States 
        banks

    The appropriate Federal banking agencies shall analyze the results 
of foreign loan rescheduling negotiations, assess the loan loss risk 
reflected in rescheduling agreements, and, using the powers set forth in 
section 3907 of this title (regarding capital adequacy), ensure that the 
capital and reserve positions of United States banks are adequate to 
accommodate potential losses on their foreign loans.

(c) Regulations and orders of Federal banking agencies

    The appropriate Federal banking agencies shall promulgate 
regulations or orders necessary to implement this section within one 
hundred and twenty days after November 30, 1983.

(Pub. L. 98-181, title IX, Sec. 905, Nov. 30, 1983, 97 Stat. 1279.)



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