§ 3904a. — Additional reserve requirements.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC3904a]
TITLE 12--BANKS AND BANKING
CHAPTER 40--INTERNATIONAL LENDING SUPERVISION
Sec. 3904a. Additional reserve requirements
(a) In general
Each appropriate Federal banking agency shall review the exposure to
risk of United States banking institutions arising from the medium- and
long-term loans made by such institutions that are outstanding to any
highly indebted country. Each agency shall provide direction to such
institutions regarding additions to general reserves maintained by each
banking institution for potential loan losses and special reserves
required by such agency arising from such review.
(b) Determination of institutional exposure to risk
In determining the exposure of an institution to risk for purposes
of subsection (a) of this section, the appropriate Federal banking
agency--
(1) shall determine whether any country exposure that is, and
has been for at least 2 years, rated in the category ``Other
Transfer Risk Problems'' or the category ``Substandard'' by the
Interagency Country Exposure Review Committee should be reevaluated;
(2) may exempt, in full or in part, from reserve requirements
established pursuant to subsection (a) of this section, any loan--
(A) to a country that enters into a debt reduction, debt
service reduction, or financing program with its bank creditors
that is supported by the International Bank for Reconstruction
and Development or the International Monetary Fund; or
(B) secured, in whole or in part, by appropriate collateral
for payment of interest or principal;
(3) take into account any other factors which bear on such
exposure and the particular circumstances of the institution; and
(4) shall consider as indicators of risk, where appropriate, the
average reserve levels maintained by or required of banking
institutions in foreign countries and secondary market prices for
such loans.
(c) Timing and report
(1) Determined by agency
Except as provided in paragraph (3), each appropriate Federal
banking agency shall determine the timing of any addition to
reserves required by subsection (a) of this section.
(2) Report
Each appropriate Federal banking agency shall include in each
report required to be made under section 3912(d) \1\ of this title
after 1989 a report on the actions taken pursuant to this section.
---------------------------------------------------------------------------
\1\ See References in Text note below.
---------------------------------------------------------------------------
(3) Deadline
Each Federal agency required to undertake a review described in
subsection (a) of this section shall complete the review not later
than December 31, 1990.
(d) ``Highly indebted country'' defined
As used in this section, the term ``highly indebted country'' means
any country designated as a ``Highly Indebted Country'' in the annual
World Debt Tables most recently published by the International Bank for
Reconstruction and Development before December 19, 1989.
(Pub. L. 98-181, title IX, Sec. 905A, as added Pub. L. 101-240, title
IV, Sec. 402(b), Dec. 19, 1989, 103 Stat. 2501.)
References in Text
Section 3912(d) of this title, referred to in subsec. (c)(2), was
repealed by Pub. L. 104-208, div. A, title II, Sec. 2224(c), Sept. 30,
1996, 110 Stat. 3009-415.
Congressional Findings
Section 402(a) of Pub. L. 101-240 provided that: ``The Congress
finds that--
``(1) since the adoption of the International Lending
Supervision Act of 1983 [12 U.S.C. 3901 et seq.], the credit quality
of loans by United States banking institutions to highly indebted
countries has deteriorated and the prospects for full repayment of
such loans have diminished;
``(2) in general during this period, the level of country
exposure and transfer risk associated with loans by United States
banking institutions to highly indebted countries has not been
adequately reflected in the reserve levels established by many
individual United States banking institutions or the reserve
requirements imposed by Federal banking agencies pursuant to such
Act;
``(3) during the last 3 years and particularly in recent months,
United States banking institutions have increased their reserves for
possible losses from loans to highly indebted countries but such
reserves remain, in some cases, significantly lower than reserves
established by banking institutions in a number of foreign countries
and may not be adequate to deal with potential risks; and
``(4) in order to fulfill the purposes of such Act, the Federal
banking agencies should take a more active role in reviewing reserve
levels established by United States banking institutions for
potential losses from loans to highly indebted countries and in
requiring appropriate levels of both special and general reserves to
reflect the increased risk of such loans.''
