§ 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.)