§ 4631. — Ceaseanddesist proceedings.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC4631]
TITLE 12--BANKS AND BANKING
CHAPTER 46--GOVERNMENT SPONSORED ENTERPRISES
SUBCHAPTER III--ENFORCEMENT PROVISIONS
Sec. 4631. Cease-and-desist proceedings
(a) Grounds for issuance against adequately capitalized enterprises
The Director may issue and serve a notice of charges under this
section upon an enterprise that is classified (for purposes of
subchapter II of this chapter) as adequately capitalized or upon any
executive officer or director of such an enterprise, if in the
determination of the Director, the enterprise, executive officer, or
director is engaging or has engaged, or the Director has reasonable
cause to believe that the enterprise, executive officer, or director is
about to engage, in--
(1) any conduct that threatens to cause a significant depletion
of the core capital of the enterprise;
(2) any conduct or violation that may result in the issuance of
an order described in subsection (d)(1) of this section; or
(3) any conduct that violates--
(A) any provision of this chapter, the Federal National
Mortgage Association Charter Act [12 U.S.C. 1716 et seq.], the
Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1451 et
seq.], or any order, rule, or regulation under any such chapter
or Act, except that the Director may not enforce compliance with
any housing goal established under subpart 2 of part B of
subchapter I of this chapter, with section 4566 or 4567 of this
title, or with subsection (m) or (n) of section 309 of the
Federal National Mortgage Association Charter Act [12 U.S.C.
1723a(m), (n)] or subsection (e) or (f) of section 307 of the
Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1456(e),
(f)]; or
(B) any written agreement entered into by the enterprise
with the Director.
(b) Grounds for issuance against undercapitalized, significantly
undercapitalized, and critically undercapitalized enterprises
The Director may issue and serve a notice of charges under this
section upon an enterprise classified (for purposes of subchapter II of
this chapter) as undercapitalized, significantly undercapitalized, or
critically undercapitalized, or any executive officer or director of any
such enterprise, if in the determination of the Director the enterprise,
executive officer, or director is engaging or has engaged, or the
Director has reasonable cause to believe that the enterprise, executive
officer, or director is about to engage, in--
(1) any conduct likely to result in a material depletion of the
core capital of the enterprise, or
(2) any conduct or violation described in paragraph (2) or (3)
of subsection (a) of this section,
except that the Director may not enforce compliance with any housing
goal established under subpart 2 of part B of subchapter I of this
chapter, with section 4566 or 4567 of this title, or with subsection (m)
or (n) of section 309 of the Federal National Mortgage Association
Charter Act [12 U.S.C. 1723a(m), (n)] or subsection (e) or (f) of
section 307 of the Federal Home Loan Mortgage Corporation Act [12 U.S.C.
1456(e), (f)].
(c) Procedure
(1) Notice of charges
Each notice of charges under this section shall contain a
statement of the facts constituting the alleged conduct or violation
and shall fix a time and place at which a hearing will be held to
determine on the record whether an order to cease and desist from
such conduct or violation should issue.
(2) Issuance of order
If the Director finds on the record made at such hearing that
any conduct or violation specified in the notice of charges has been
established (or the enterprise consents pursuant to section
4633(a)(4) of this title), the Director may issue and serve upon the
enterprise, executive officer, or director an order requiring such
party to cease and desist from any such conduct or violation and to
take affirmative action to correct or remedy the conditions
resulting from any such conduct or violation.
(d) Affirmative action to correct conditions resulting from violations
or activities
The authority under this section and section 4632 of this title to
issue any order requiring an enterprise, executive officer, or director
to take affirmative action to correct or remedy any condition resulting
from any conduct or violation with respect to which such order is issued
includes the authority--
(1) to require an executive officer or a director to make
restitution to, or provide reimbursement, indemnification, or
guarantee against loss to the enterprise to the extent that such
person--
(A) was unjustly enriched in connection with such conduct or
violation; or
(B) engaged in conduct or a violation that would subject
such person to a civil penalty pursuant to section 4636(b)(3) of
this title;
(2) to require an enterprise to seek restitution, or to obtain
reimbursement, indemnification, or guarantee against loss;
(3) to restrict the growth of the enterprise;
(4) to require the enterprise to dispose of any asset involved;
(5) to require the enterprise to rescind agreements or
contracts;
(6) to require the enterprise to employ qualified officers or
employees (who may be subject to approval by the Director at the
direction of the Director); and
(7) to require the enterprise to take such other action as the
Director determines appropriate.
(e) Authority to limit activities
The authority to issue an order under this section or section 4632
of this title includes the authority to place limitations on the
activities or functions of the enterprise or any executive officer or
director of the enterprise.
(f) Effective date
An order under this section shall become effective upon the
expiration of the 30-day period beginning on the service of the order
upon the enterprise, executive officer, or director concerned (except in
the case of an order issued upon consent, which shall become effective
at the time specified therein), and shall remain effective and
enforceable as provided in the order, except to the extent that the
order is stayed, modified, terminated, or set aside by action of the
Director or otherwise, as provided in this subchapter.
(Pub. L. 102-550, title XIII, Sec. 1371, Oct. 28, 1992, 106 Stat. 3986.)
References in Text
This chapter, referred to in subsec. (a)(3)(A), was in the original
``this title'', meaning title XIII of Pub. L. 102-550, Oct. 28, 1992,
106 Stat. 3941, which is classified principally to this chapter. For
complete classification of title XIII to the Code, see Short Title note
set out under section 4501 of this title and Tables.
The Federal Home Loan Mortgage Corporation Act, referred to in
subsec. (a)(3)(A), is title III of Pub. L. 91-351, July 24, 1970, 84
Stat. 451, as amended, which is classified generally to chapter 11A
(Sec. 1451 et seq.) of this title. For complete classification of this
Act to the Code, see Short Title and Statement of Purpose note set out
under section 1451 of this title and Tables.
Section Referred to in Other Sections
This section is referred to in sections 1422b, 4619, 4632, 4633,
4634, 4635, 4636 of this title.
