§ 1823. — Corporation monies.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1823]
TITLE 12--BANKS AND BANKING
CHAPTER 16--FEDERAL DEPOSIT INSURANCE CORPORATION
Sec. 1823. Corporation monies
(a) Investment of Corporation's funds
(1) Authority
Funds held in the Bank Insurance Fund, the Savings Association
Insurance Fund, or the FSLIC Resolution Fund, that are not otherwise
employed shall be invested in obligations of the United States or in
obligations guaranteed as to principal and interest by the United
States.
(2) Limitation
The Corporation shall not sell or purchase any obligations
described in paragraph (1) for its own account, at any one time
aggregating in excess of $100,000, without the approval of the
Secretary of the Treasury. The Secretary may approve a transaction
or class of transactions subject to the provisions of this paragraph
under such conditions as the Secretary may determine.
(b) Depository accounts
The depository accounts of the Corporation shall be kept with the
Treasurer of the United States, or, with the approval of the Secretary
of the Treasury, with a Federal Reserve bank, or with a depository
institution designated as a depository or fiscal agent of the United
States: Provided, That the Secretary of the Treasury may waive the
requirements of this subsection under such conditions as he may
determine: And provided further, That this subsection shall not apply to
the establishment and maintenance in any depository institution for
temporary purposes of depository accounts not in excess of $50,000 in
any one depository institution, or to the establishment and maintenance
in any depository institution of any depository accounts to facilitate
the payment of insured deposits, or the making of loans to, or the
purchase of assets of, insured depository institutions. When designated
for that purpose by the Secretary of the Treasury, the Corporation shall
be a depositary of public moneys, except receipts from customs, under
such regulations as may be prescribed by the said Secretary, and may
also be employed as a financial agent of the Government. It shall
perform all such reasonable duties as depositary of public moneys and
financial agent of the Government as may be required of it.
(c) Assistance to insured depository institutions
(1) The Corporation is authorized, in its sole discretion and upon
such terms and conditions as the Board of Directors may prescribe, to
make loans to, to make deposits in, to purchase the assets or securities
of, to assume the liabilities of, or to make contributions to, any
insured depository institution--
(A) if such action is taken to prevent the default of such
insured depository institution;
(B) if, with respect to an insured bank in default, such action
is taken to restore such insured bank to normal operation; or
(C) if, when severe financial conditions exist which threaten
the stability of a significant number of insured depository
institutions or of insured depository institutions possessing
significant financial resources, such action is taken in order to
lessen the risk to the Corporation posed by such insured depository
institution under such threat of instability.
(2)(A) In order to facilitate a merger or consolidation of another
\1\ insured depository institution described in subparagraph (B) with
another insured depository institution or the sale of any or all of the
assets of such insured depository institution or the assumption of any
or all of such insured depository institution's liabilities by another
insured depository institution, or the acquisition of the stock of such
insured depository institution, the Corporation is authorized, in its
sole discretion and upon such terms and conditions as the Board of
Directors may prescribe--
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\1\ So in original. Probably should be ``an''.
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(i) to purchase any such assets or assume any such liabilities;
(ii) to make loans or contributions to, or deposits in, or
purchase the securities of, such other insured depository
institution or the company which controls or will acquire control of
such other insured depository institution;
(iii) to guarantee such other insured depository institution or
the company which controls or will acquire control of such other
insured depository institution against loss by reason of such
insured institution's merging or consolidating with or assuming the
liabilities and purchasing the assets of such insured depository
institution or by reason of such company acquiring control of such
insured depository institution; or
(iv) to take any combination of the actions referred to in
subparagraphs (i) through (iii).
(B) For the purpose of subparagraph (A), the insured depository
institution must be an insured depository institution--
(i) which is in default;
(ii) which, in the judgment of the Board of Directors, is in
danger of default; or
(iii) which, when severe financial conditions exist which
threaten the stability of a significant number of insured depository
institutions or of insured depository institutions possessing
significant financial resources, is determined by the Corporation,
in its sole discretion, to require assistance under subparagraph (A)
in order to lessen the risk to the Corporation posed by such insured
depository institution under such threat of instability.
(C) Any action to which the Corporation is or becomes a party by
acquiring any asset or exercising any other authority set forth in this
section shall be stayed for a period of 60 days at the request of the
Corporation.
(3) The Corporation may provide any person acquiring control of,
merging with, consolidating with or acquiring the assets of an insured
depository institution under subsection (f) or (k) of this section with
such financial assistance as it could provide an insured institution
under this subsection.
(4) Least-cost resolution required.--
(A) In general.--Notwithstanding any other provision of this
chapter, the Corporation may not exercise any authority under this
subsection or subsection (d), (f), (h), (i), or (k) of this section
with respect to any insured depository institution unless--
(i) the Corporation determines that the exercise of such
authority is necessary to meet the obligation of the Corporation
to provide insurance coverage for the insured deposits in such
institution; and
(ii) the total amount of the expenditures by the Corporation
and obligations incurred by the Corporation (including any
immediate and long-term obligation of the Corporation and any
direct or contingent liability for future payment by the
Corporation) in connection with the exercise of any such
authority with respect to such institution is the least costly
to the deposit insurance fund of all possible methods for
meeting the Corporation's obligation under this section.
(B) Determining least costly approach.--In determining how to
satisfy the Corporation's obligations to an institution's insured
depositors at the least possible cost to the deposit insurance fund,
the Corporation shall comply with the following provisions:
(i) Present-value analysis; documentation required.--The
Corporation shall--
(I) evaluate alternatives on a present-value basis,
using a realistic discount rate;
(II) document that evaluation and the assumptions on
which the evaluation is based, including any assumptions
with regard to interest rates, asset recovery rates, asset
holding costs, and payment of contingent liabilities; and
(III) retain the documentation for not less than 5
years.
(ii) Foregone tax revenues.--Federal tax revenues that the
Government would forego as the result of a proposed transaction,
to the extent reasonably ascertainable, shall be treated as if
they were revenues foregone by the deposit insurance fund.
(C) Time of determination.--
(i) General rule.--For purposes of this subsection, the
determination of the costs of providing any assistance under
paragraph (1) or (2) or any other provision of this section with
respect to any depository institution shall be made as of the
date on which the Corporation makes the determination to provide
such assistance to the institution under this section.
(ii) Rule for liquidations.--For purposes of this
subsection, the determination of the costs of liquidation of any
depository institution shall be made as of the earliest of--
(I) the date on which a conservator is appointed for
such institution;
(II) the date on which a receiver is appointed for such
institution; or
(III) the date on which the Corporation makes any
determination to provide any assistance under this section
with respect to such institution.
(D) Liquidation costs.--In determining the cost of liquidating
any depository institution for the purpose of comparing the costs
under subparagraph (A) (with respect to such institution), the
amount of such cost may not exceed the amount which is equal to the
sum of the insured deposits of such institution as of the earliest
of the dates described in subparagraph (C), minus the present value
of the total net amount the Corporation reasonably expects to
receive from the disposition of the assets of such institution in
connection with such liquidation.
(E) Deposit insurance funds available for intended purpose
only.--
(i) In general.--After December 31, 1994, or at such earlier
time as the Corporation determines to be appropriate, the
Corporation may not take any action, directly or indirectly,
with respect to any insured depository institution that would
have the effect of increasing losses to any insurance fund by
protecting--
(I) depositors for more than the insured portion of
deposits (determined without regard to whether such
institution is liquidated); or
(II) creditors other than depositors.
(ii) Deadline for regulations.--The Corporation shall
prescribe regulations to implement clause (i) not later than
January 1, 1994, and the regulations shall take effect not later
than January 1, 1995.
(iii) Purchase and assumption transactions.--No provision of
this subparagraph shall be construed as prohibiting the
Corporation from allowing any person who acquires any assets or
assumes any liabilities of any insured depository institution
for which the Corporation has been appointed conservator or
receiver to acquire uninsured deposit liabilities of such
institution so long as the insurance fund does not incur any
loss with respect to such deposit liabilities in an amount
greater than the loss which would have been incurred with
respect to such liabilities if the institution had been
liquidated.
(F) Discretionary determinations.--Any determination which the
Corporation may make under this paragraph shall be made in the sole
discretion of the Corporation.
(G) Systemic risk.--
(i) Emergency determination by secretary of the treasury.--
Notwithstanding subparagraphs (A) and (E), if, upon the written
recommendation of the Board of Directors (upon a vote of not
less than two-thirds of the members of the Board of Directors)
and the Board of Governors of the Federal Reserve System (upon a
vote of not less than two-thirds of the members of such Board),
the Secretary of the Treasury (in consultation with the
President) determines that--
(I) the Corporation's compliance with subparagraphs (A)
and (E) with respect to an insured depository institution
would have serious adverse effects on economic conditions or
financial stability; and
(II) any action or assistance under this subparagraph
would avoid or mitigate such adverse effects,
the Corporation may take other action or provide assistance
under this section as necessary to avoid or mitigate such
effects.
(ii) Repayment of loss.--The Corporation shall recover the
loss to the appropriate insurance fund arising from any action
taken or assistance provided with respect to an insured
depository institution under clause (i) expeditiously from 1 or
more emergency special assessments on the members of the
insurance fund (of which such institution is a member) equal to
the product of--
(I) an assessment rate established by the Corporation;
and
(II) the amount of each member's average total assets
during the semiannual period, minus the sum of the amount of
the member's average total tangible equity and the amount of
the member's average total subordinated debt.
(iii) Documentation required.--The Secretary of the Treasury
shall--
(I) document any determination under clause (i); and
(II) retain the documentation for review under clause
(iv).
(iv) GAO review.--The Comptroller General of the United
States shall review and report to the Congress on any
determination under clause (i), including--
(I) the basis for the determination;
(II) the purpose for which any action was taken pursuant
to such clause; and
(III) the likely effect of the determination and such
action on the incentives and conduct of insured depository
institutions and uninsured depositors.
(v) Notice.--
(I) In general.--The Secretary of the Treasury shall
provide written notice of any determination under clause (i)
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives.
(II) Description of basis of determination.--The notice
under subclause (I) shall include a description of the basis
for any determination under clause (i).
(H) Rule of construction.--No provision of law shall be
construed as permitting the Corporation to take any action
prohibited by paragraph (4) unless such provision expressly
provides, by direct reference to this paragraph, that this paragraph
shall not apply with respect to such action.
(5) The Corporation may not use its authority under this subsection
to purchase the voting or common stock of an insured depository
institution. Nothing in the preceding sentence shall be construed to
limit the ability of the Corporation to enter into and enforce covenants
and agreements that it determines to be necessary to protect its
financial interest.
(6)(A) During any period in which an insured depository institution
has received assistance under this subsection and such assistance is
still outstanding, such insured depository institution may defer the
payment of any State or local tax which is determined on the basis of
the deposits held by such insured depository institution or of the
interest or dividends paid on such deposits.
(B) When such insured depository institution no longer has any
outstanding assistance, such insured depository institution shall pay
all taxes which were deferred under subparagraph (A). Such payments
shall be made in accordance with a payment plan established by the
Corporation, after consultation with the applicable State and local
taxing authorities.
(7) The transfer of any assets or liabilities associated with any
trust business of an insured depository institution in default under
subparagraph (2)(A) shall be effective without any State or Federal
approval, assignment, or consent with respect thereto.
(8) Assistance before appointment of conservator or receiver.--
(A) In general.--Subject to the least-cost provisions of
paragraph (4), the Corporation shall consider providing direct
financial assistance under this section for depository institutions
before the appointment of a conservator or receiver for such
institution only under the following circumstances:
(i) Troubled condition criteria.--The Corporation
determines--
(I) grounds for the appointment of a conservator or
receiver exist or likely will exist in the future unless the
depository institution's capital levels are increased; and
(II) it is unlikely that the institution can meet all
currently applicable capital standards without assistance.
(ii) Other criteria.--The depository institution meets the
following criteria:
(I) The appropriate Federal banking agency and the
Corporation have determined that, during such period of time
preceding the date of such determination as the agency or
the Corporation considers to be relevant, the institution's
management has been competent and has complied with
applicable laws, rules, and supervisory directives and
orders.
(II) The institution's management did not engage in any
insider dealing, speculative practice, or other abusive
activity.
(B) Public disclosure.--Any determination under this paragraph
to provide assistance under this section shall be made in writing
and published in the Federal Register.
(9) Any assistance provided under this subsection may be in
subordination to the rights of depositors and other creditors.
(10) In its annual report to the Congress, the Corporation shall
report the total amount it has saved, or estimates it has saved, by
exercising the authority provided in this subsection.
(11) Payments made under this subsection shall be made--
(A) from the Bank Insurance Fund in the case of payments to or
on behalf of a member of such Fund; or
(B) from the Savings Association Insurance Fund or from funds
made available by the Resolution Trust Corporation in the case of
payments to or on behalf of any Savings Association Insurance Fund
member.
(d) Sale of assets to Corporation
(1) In general
Any conservator, receiver, or liquidator appointed for any
insured depository institution in default, including the Corporation
acting in such capacity, shall be entitled to offer the assets of
such depository institutions for sale to the Corporation or as
security for loans from the Corporation.
(2) Proceeds
The proceeds of every sale or loan of assets to the Corporation
shall be utilized for the same purposes and in the same manner as
other funds realized from the liquidation of the assets of such
depository institutions.
(3) Rights and powers of Corporation
(A) In general
With respect to any asset acquired or liability assumed
pursuant to this section, the Corporation shall have all of the
rights, powers, privileges, and authorities of the Corporation
as receiver under sections 1821 and 1825(b) of this title.
(B) Rule of construction
Such rights, powers, privileges, and authorities shall be in
addition to and not in derogation of any rights, powers,
privileges, and authorities otherwise applicable to the
Corporation.
(C) Fiduciary responsibility
In exercising any right, power, privilege, or authority
described in subparagraph (A), the Corporation shall continue to
be subject to the fiduciary duties and obligations of the
Corporation as receiver to claimants against the insured
depository institution in receivership.
(D) Disposition of assets
In exercising any right, power, privilege, or authority
described in subparagraph (A) regarding the sale or disposition
of assets sold to the Corporation pursuant to paragraph (1), the
Corporation shall conduct its operations in a manner which--
(i) maximizes the net present value return from the sale
or disposition of such assets;
(ii) minimizes the amount of any loss realized in the
resolution of cases;
(iii) ensures adequate competition and fair and
consistent treatment of offerors;
(iv) prohibits discrimination on the basis of race, sex,
or ethnic groups in the solicitation and consideration of
offers; and
(v) maximizes the preservation of the availability and
affordability of residential real property for low- and
moderate-income individuals.
(4) Loans
The Corporation, in its discretion, may make loans on the
security of or may purchase and liquidate or sell any part of the
assets of an insured depository institution which is now or may
hereafter be in default.
(e) Agreements against interests of Corporation
(1) In general
No agreement which tends to diminish or defeat the interest of
the Corporation in any asset acquired by it under this section or
section 1821 of this title, either as security for a loan or by
purchase or as receiver of any insured depository institution, shall
be valid against the Corporation unless such agreement--
(A) is in writing,
(B) was executed by the depository institution and any
person claiming an adverse interest thereunder, including the
obligor, contemporaneously with the acquisition of the asset by
the depository institution,
(C) was approved by the board of directors of the depository
institution or its loan committee, which approval shall be
reflected in the minutes of said board or committee, and
(D) has been, continuously, from the time of its execution,
an official record of the depository institution.
(2) Public deposits
An agreement to provide for the lawful collateralization of
deposits of a Federal, State, or local governmental entity or of any
depositor referred to in section 1821(a)(2) of this title shall not
be deemed to be invalid pursuant to paragraph (1)(B) solely because
such agreement was not executed contemporaneously with the
acquisition of the collateral or with any changes in the collateral
made in accordance with such agreement.
(f) Assisted emergency interstate acquisitions
(1) This subsection shall apply only to an acquisition of an insured
bank or a holding company by an out-of-State bank \2\ savings
association or out-of-State holding company for which the Corporation
provides assistance under subsection (c) of this section.
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\2\ So in original. Probably should be followed by ``or''.
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(2)(A) Whenever an insured bank with total assets of $500,000,000 or
more (as determined from its most recent report of condition) is in
default, the Corporation, as receiver, may, in its discretion and upon
such terms and conditions as the Corporation may determine, arrange the
sale of assets of the bank in default and the assumption of the
liabilities of the bank in default, including the sale of such assets to
and the assumption of such liabilities by an insured depository
institution located in the State where the bank in default was chartered
but established by an out-of-State bank or holding company. Where
otherwise lawfully required, a transaction under this subsection must be
approved by the primary Federal or State supervisor of all parties
thereto.
(B)(i) Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State bank
supervisor of the State in which the insured bank in default was
chartered.
(ii) The State bank supervisor shall be given a reasonable
opportunity, and in no event less than forty-eight hours, to object to
the use of the provisions of this paragraph. Such notice may be provided
by the Corporation prior to its appointment as receiver, but in
anticipation of an impending appointment.
(iii) If the State supervisor objects during such period, the
Corporation may use the authority of this paragraph only by a vote of 75
percent of the Board of Directors. The Board of Directors shall provide
to the State supervisor, as soon as practicable, a written certification
of its determination.
(3) Emergency Interstate Acquisitions of Insured Banks in Danger of
Default.--
(A) Acquisition of insured banks in danger of default.--One or
more out-of-State banks or out-of-State holding companies may
acquire and retain all or part of the shares or assets of, or
otherwise acquire and retain--
(i) an insured bank in danger of default which has total
assets of $500,000,000 or more; or
(ii) 2 or more affiliated insured banks in danger of default
which have aggregate total assets of $500,000,000 or more, if
the aggregate total assets of such banks is equal to or greater
than 33 percent of the aggregate total assets of all affiliated
insured banks.
(B) Acquisition of a holding company or other bank affiliate.--
If one or more out-of-State banks or out-of-State holding companies
acquire 1 or more affiliated insured banks under subparagraph (A)
the aggregate total assets of which is equal to or greater than 33
percent of the aggregate total assets of all affiliated insured
banks, any such out-of-State bank or out-of-State holding company
may also, as part of the same transaction, acquire and retain the
shares or assets of, or otherwise acquire and retain--
(i) the holding company which controls the affiliated
insured banks so acquired; or
(ii) any other affiliated insured bank.
(C) Request for assistance by corporate board of directors.--The
Corporation may assist an acquisition or merger authorized under
subparagraph (A) only if the board of directors or trustees of each
insured bank in danger of default which is being acquired has
requested in writing that the Corporation assist the acquisition or
merger.
(D) Certain acquisitions authorized after assistance is
provided.--Notwithstanding paragraph (1), if--
(i) at any time after August 10, 1987, the Corporation
provides any assistance under subsection (c) of this section to
an insured bank; and
(ii) at the time such assistance is granted, the insured
bank, the holding company which controls the insured bank (if
any), or any affiliated insured bank is eligible to be acquired
by an out-of-State bank or out-of-State holding company under
this paragraph,
the insured bank, the holding company, and such other affiliated
insured bank shall remain eligible, subject to such terms and
conditions as the Corporation (in the Corporation's discretion) may
impose, to be acquired by an out-of-State bank or out-of-State
holding company under this paragraph as long as any portion of such
assistance remains outstanding.
(E) State bank supervisor approval.--The Corporation may take no
final action in connection with any acquisition under this paragraph
unless the State bank supervisor of the State in which the bank in
danger of default is located approves the acquisition.
(F) Other requirements not affected.--This paragraph does not
affect any other requirement under Federal or State law for
regulatory approval of an acquisition under this paragraph.
(G) Acquisition may be conditioned on receipt of consideration
for corporation's assistance.--Any acquisition described in
subparagraph (D) may be conditioned on the receipt of such
consideration for the Corporation's assistance as the Board of
Directors deems appropriate.
(4)(A) Acquisitions Not Subject to Certain Other Laws.--Section
1842(d) of this title, any provision of State law, and section
1730a(e)(3) \3\ of this title shall not apply to prohibit any
acquisition under paragraph (2) or (3), except that an out-of-State bank
may make such an acquisition only if such ownership is otherwise
specifically authorized.
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\3\ See References in Text note below.
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(B) Any subsidiary created by operation of this subsection may
retain and operate any existing branch or branches of the institution
merged with or acquired under paragraph (2) or (3), but otherwise shall
be subject to the conditions upon which a national bank may establish
and operate branches in the State in which such insured institution is
located.
(C) No insured institution acquired under this subsection shall
after it is acquired move its principal office or any branch office
which it would be prohibited from moving if the institution were a
national bank.
(D) Subsequent Nonemergency Interstate Acquisitions Subject to State
Law.--
(i) In general.--Any out-of-State bank holding company which
acquires control of an insured bank in any State under paragraph (2)
or (3) may acquire any other insured bank and establish branches in
such State to the same extent as a bank holding company whose
insured bank subsidiaries' operations are principally conducted in
such State may acquire any other insured bank or establish branches.
(ii) Delayed date of applicability.--Clause (i) shall not apply
with respect to any out-of-State bank holding company referred to in
such clause before the earlier of--
(I) the end of the 2-year period beginning on the date the
acquisition referred to in such clause with respect to such
company is consummated; or
(II) the end of any period established under State law
during which such out-of-State bank holding company may not be
treated as a bank holding company whose insured bank
subsidiaries' operations are principally conducted in such State
for purposes of acquiring other insured banks or establishing
bank branches.
(iii) Determination of principally conducted.--For purposes of
this subparagraph, the State in which the operations of a holding
company's insured bank subsidiaries are principally conducted is the
State determined under section 1842(d) of this title with respect to
such holding company.
(E) Certain State Interstate Banking Laws Inapplicable.--Any holding
company which acquires control of any insured bank or holding company
under paragraph (2) or (3) or subparagraph (D) of this paragraph shall
not, by reason of such acquisition, be required under the law of any
State to divest any other insured bank or be prevented from acquiring
any other bank or holding company.
(5) In determining whether to arrange a sale of assets and
assumption of liabilities or an acquisition or a merger under the
authority of paragraph (2) or (3), the Corporation may solicit such
offers or proposals as are practicable from any prospective purchasers
or merger partners it determines, in its sole discretion, are both
qualified and capable of acquiring the assets and liabilities of the
bank in default or the bank in danger of default.
(6)(A) If, after receiving offers, the offer presenting the lowest
expense to the Corporation, that is in a form and with conditions
acceptable to the Corporation (hereinafter referred to as the ``lowest
acceptable offer''), is from an offeror that is not an existing in-State
bank of the same type as the bank that is in default or is in danger of
default (or, where the bank is an insured bank other than a mutual
savings bank, the lowest acceptable offer is not from an in-State
holding company), the Corporation shall permit the offeror which made
the initial lowest acceptable offer and each offeror who made an offer
the estimated cost of which to the Corporation was within 15 per centum
or $15,000,000, whichever is less, of the initial lowest acceptable
offer to submit a new offer.
(B) In considering authorizations under this subsection, the
Corporation shall give consideration to the need to minimize the cost of
financial assistance and to the maintenance of specialized depository
institutions. The Corporation shall authorize transactions under this
subsection considering the following priorities:
(i) First, between depository institutions of the same type
within the same State.
(ii) Second, between depository institutions of the same type--
(I) in different States which by statute specifically
authorize such acquisitions; or
(II) in the absence of such statutes, in different States
which are contiguous.
(iii) Third, between depository institutions of the same type in
different States other than the States described in clause (ii).
(iv) Fourth, between depository institutions of different types
in the same State.
(v) Fifth, between depository institutions of different types--
(I) in different States which by statute specifically
authorize such acquisitions; or
(II) in the absence of such statutes, in different States
which are contiguous.
(vi) Sixth, between depository institutions of different types
in different States other than the States described in clause (v).
(C) Minority Bank Priority.--In the case of a minority-controlled
bank, the Corporation shall seek an offer from other minority-controlled
banks before proceeding with the bidding priorities set forth in
subparagraph (B).
(D) In determining the cost of offers and reoffers, the
Corporation's calculations and estimations shall be determinative. The
Corporation may set reasonable time limits on offers and reoffers.
(7) No sale may be made under the provisions of paragraph (2) or
(3)--
(A) which would result in a monopoly, or which would be in
furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the business of banking in any part of the
United States;
(B) whose effect in any section of the country may be
substantially to lessen competition, or to tend to create a
monopoly, or which in any other manner would be in restraint of
trade, unless the Corporation finds that the anticompetitive effects
of the proposed transactions are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the
convenience and needs of the community to be served; or
(C) if in the opinion of the Corporation the acquisition
threatens the safety and soundness of the acquirer or does not
result in the future viability of the resulting depository
institution.
(8) As used in this subsection--
(A) the term ``in-State depository institution or in-State
holding company'' means an existing insured depository institution
currently operating in the State in which the bank in default or the
bank in danger of default is chartered or a company that is
operating an insured depository institution subsidiary in the State
in which the bank in default or the bank in danger of default is
chartered;
(B) the term ``acquire'' means to acquire, directly or
indirectly, ownership or control through--
(i) an acquisition of shares;
(ii) an acquisition of assets or assumption of liabilities;
(iii) a merger or consolidation; or
(iv) any similar transaction;
(C) the term ``affiliated insured bank'' means--
(i) when used in connection with a reference to a holding
company, an insured bank which is a subsidiary of such holding
company; and
(ii) when used in connection with a reference to 2 or more
insured banks, insured banks which are subsidiaries of the same
holding company; and
(D) the term ``subsidiary'' has the meaning given to such term
in section 1841(d) of this title.
(9) No Assistance Authorized for Certain Subsidiaries of Holding
Companies.--
(A) In general.--The Corporation shall not provide any
assistance to a subsidiary, other than a subsidiary that is an
insured depository institution, of a holding company in connection
with any acquisition under this subsection.
(B) Intermediate holding company permitted.--This paragraph does
not prohibit an intermediate holding company or an affiliate of an
insured depository institution from being a conduit for assistance
ultimately intended for an insured bank.
(10) Annual Report.--
(A) Required.--In its annual report to Congress the Corporation
shall include a report on the acquisitions under this subsection
during the preceding year.
(B) Contents.--The report required under subparagraph (A) shall
contain the following information:
(i) The number of acquisitions under this subsection.
(ii) A brief description of each such acquisition and the
circumstances under which such acquisition occurred.
(11) Determination of Total Assets.--For purposes of this
subsection, the total assets of any insured bank shall be determined on
the basis of the most recent report of condition of such bank which is
available at the time of such determination.
(12) Acquisition of minority bank by minority bank holding company
without regard to asset size.--
(A) In general.--For the purpose of ensuring continued minority
control of a minority-controlled bank, paragraphs (2) and (3) shall
apply with respect to the acquisition of a minority-controlled bank
by an out-of-State minority-controlled depository institution or
depository institution holding company without regard to the fact
that the total assets of such minority-controlled bank are less than
$500,000,000.
(B) Definitions.--For purposes of this paragraph:
(i) Minority bank.--The term ``minority bank'' means any
depository institution described in clause (i), (ii), or (iii)
of section 461(b)(1)(A) of this title--
(I) more than 50 percent of the ownership or control of
which is held by one or more minority individuals; and
(II) more than 50 percent of the net profit or loss of
which accrues to minority individuals.
(ii) Minority.--The term ``minority'' means any Black
American, Native American, Hispanic American, or Asian American.
(g) Payment of interest on stock subscriptions
Prior to July 1, 1951, the Corporation shall pay out of its capital
account to the Secretary of the Treasury an amount equal to 2 per centum
simple interest per annum on amounts advanced to the Corporation on
stock subscriptions by the Secretary of the Treasury and the Federal
Reserve banks, from the time of such advances until the amounts thereof
were repaid. The amount payable hereunder shall be paid in two equal
installments, the first installment to be paid prior to December 31,
1950.
(h) Reopening or aversion of closing of insured branch of foreign bank
The powers conferred on the Board of Directors and the Corporation
by this section to take action to reopen an insured depository
institution in default or to avert the default of an insured depository
institution may be used with respect to an insured branch of a foreign
bank if, in the judgment of the Board of Directors, the public interest
in avoiding the default of such branch substantially outweighs any
additional risk of loss to the Bank Insurance Fund which the exercise of
such powers would entail.
(i) Repealed. Pub. L. 97-320, title II, Sec. 206, Oct. 15, 1982, 96
Stat. 1496
(j) Loan loss amortization for certain banks
(1) Eligibility
The appropriate Federal banking agency shall permit an
agricultural bank to take the actions referred to in paragraph (2)
if it finds that--
(A) there is no evidence that fraud or criminal abuse on the
part of the bank led to the losses referred to in paragraph (2);
and
(B) the agricultural bank has a plan to restore its capital,
not later than the close of the amortization period established
under paragraph (2), to a level prescribed by the appropriate
Federal banking agency.
(2) Seven-year loss amortization
(A) Any loss on any qualified agricultural loan that an
agricultural bank would otherwise be required to show on its annual
financial statement for any year between December 31, 1983, and
January 1, 1992, may be amortized on its financial statements over a
period of not to exceed 7 years, as provided in regulations issued
by the appropriate Federal banking agency.
(B) An agricultural bank may reappraise any real estate or other
property, real or personal, that it acquired coincident to the
making of a qualified agricultural loan and that it owned on January
1, 1983, and any such additional property that it acquires prior to
January 1, 1992. Any loss that such bank would otherwise be required
to show on its annual financial statements as the result of any such
reappraisal may be amortized on its financial statements over a
period of not to exceed 7 years, as provided in regulations issued
by the appropriate Federal banking agency.
(3) Regulations
Not later than 90 days after August 10, 1987, the appropriate
Federal banking agency shall issue regulations implementing this
subsection with respect to banks that it supervises, including
regulations implementing the capital restoration requirement of
paragraph (1)(B).
(4) Definitions
As used in this subsection--
(A) the term ``agricultural bank'' means a bank--
(i) the deposits of which are insured by the Federal
Deposit Insurance Corporation;
(ii) which is located in an area the economy of which is
dependent on agriculture;
(iii) which has assets of $100,000,000 or less; and
(iv) which has--
(I) at least 25 percent of its total loans in
qualified agricultural loans; or
(II) fewer than 25 percent of its total loans in
qualified agricultural loans but which the appropriate
Federal banking agency or State bank commissioner
recommends to the Corporation for eligibility under this
section, or which the Corporation, on its motion, deems
eligible; and
(B) the term ``qualified agricultural loan'' means a loan
made to finance the production of agricultural products or
livestock in the United States, a loan secured by farmland or
farm machinery, or such other category of loans as the
appropriate Federal banking agency may deem eligible.
(5) Maintenance of portfolio
As a condition of eligibility under this subsection, the
agricultural bank must agree to maintain in its loan portfolio a
percentage of agricultural loans which is not lower than the
percentage of such loans in its loan portfolio on January 1, 1986.
(k) Emergency acquisitions
(1) In general
(A) Acquisitions authorized
(i) Transactions described
Notwithstanding any provision of State law, upon
determining that severe financial conditions threaten the
stability of a significant number of savings associations,
or of savings associations possessing significant financial
resources, the Corporation, in its discretion and if it
determines such authorization would lessen the risk to the
Corporation, may authorize--
(I) a savings association that is eligible for
assistance pursuant to subsection (c) of this section to
merge or consolidate with, or to transfer its assets and
liabilities to, any other savings association or any
insured bank,
(II) any other savings association to acquire
control of such savings association, or
(III) any company to acquire control of such savings
association or to acquire the assets or assume the
liabilities thereof.
The Corporation may not authorize any transaction under this
subsection unless the Corporation determines that the
authorization will not present a substantial risk to the
safety or soundness of the savings association to be
acquired or any acquiring entity.
(ii) Terms of transactions
Mergers, consolidations, transfers, and acquisitions
under this subsection shall be on such terms as the
Corporation shall provide.
(iii) Approval by appropriate agency
Where otherwise required by law, transactions under this
subsection must be approved by the appropriate Federal
banking agency of every party thereto.
(iv) Acquisitions by savings associations
Any Federal savings association that acquires another
savings association pursuant to clause (i) may, with the
concurrence of the Director of the Office of Thrift
Supervision, hold that savings association as a subsidiary
notwithstanding the percentage limitations of section
1464(c)(4)(B) of this title.
(v) Dual service
Dual service by a management official that would
otherwise be prohibited under the Depository Institution
Management Interlocks Act [12 U.S.C. 3201 et seq.] may, with
the approval of the Corporation, continue for up to 10
years.
(vi) Continued applicability of certain State
restrictions
Nothing in this subsection overrides or supersedes State
laws restricting or limiting the activities of a savings
association on behalf of another entity.
(B) Consultation with State official
(i) Consultation required
Before making a determination to take any action under
subparagraph (A), the Corporation shall consult the State
official having jurisdiction of the acquired institution.
(ii) Period for State response
The official shall be given a reasonable opportunity,
and in no event less than 48 hours, to object to the use of
the provisions of this paragraph. Such notice may be
provided by the Corporation prior to its appointment as
receiver, but in anticipation of an impending appointment.
(iii) Approval over objection of State official
If the official objects during such period, the
Corporation may use the authority of this paragraph only by
a vote of 75 percent or more of the voting members of the
Board of Directors. The Corporation shall provide to the
official, as soon as practicable, a written certification of
its determination.
(2) Solicitation of offers
(A) In general
In considering authorizations under this subsection, the
Corporation may solicit such offers or proposals as are
practicable from any prospective purchasers or merger partners
it determines, in its sole discretion, are both qualified and
capable of acquiring the assets and liabilities of the savings
association.
(B) Minority-controlled institutions
In the case of a minority-controlled depository institution,
the Corporation shall seek an offer from other minority-
controlled depository institutions before seeking an offer from
other persons or entities.
(3) Determination of costs
In determining the cost of offers under this subsection, the
Corporation's calculations and estimations shall be determinative.
The Corporation may set reasonable time limits on offers.
(4) Branching provisions
(A) In general
If a merger, consolidation, transfer, or acquisition under
this subsection involves a savings association eligible for
assistance and a bank or bank holding company, a savings
association may retain and operate any existing branch or
branches or any other existing facilities. If the savings
association continues to exist as a separate entity, it may
establish and operate new branches to the same extent as any
savings association that is not affiliated with a bank holding
company and the home office of which is located in the same
State.
(B) Restrictions
(i) In general
Notwithstanding subparagraph (A), if--
(I) a savings association described in such
subparagraph does not have its home office in the State
of the bank holding company bank subsidiary, and
(II) such association does not qualify as a domestic
building and loan association under section 7701(a)(19)
of title 26, or does not meet the asset composition test
imposed by subparagraph (C) of that section on
institutions seeking so to qualify,
such savings association shall be subject to the conditions
upon which a bank may retain, operate, and establish
branches in the State in which the Savings Association
Insurance Fund member is located.
(ii) Transition period
The Corporation, for good cause shown, may allow a
savings association up to 2 years to comply with the
requirements of clause (i).
(5) Assistance before appointment of conservator or receiver
(A) Assistance proposals
The Corporation shall consider proposals by Savings
Association Insurance Fund members for assistance pursuant to
subsection (c) of this section before grounds exist for
appointment of a conservator or receiver for such member under
the following circumstances:
(i) Troubled condition criteria
The Corporation determines--
(I) that grounds for appointment of a conservator or
receiver exist or likely will exist in the future unless
the member's tangible capital is increased;
(II) that it is unlikely that the member can achieve
positive tangible capital without assistance; and
(III) that providing assistance pursuant to the
member's proposal would be likely to lessen the risk to
the Corporation.
(ii) Other criteria
The member meets the following criteria:
(I) Before August 9, 1989, the member was solvent
under applicable regulatory accounting principles but
had negative tangible capital.
(II) The member's negative tangible capital position
is substantially attributable to its participation in
acquisition and merger transactions that were instituted
by the Federal Home Loan Bank Board or the Federal
Savings and Loan Insurance Corporation for supervisory
reasons.
(III) The member is a qualified thrift lender (as
defined in section 1467a(m) of this title) or would be a
qualified thrift lender if commercial real estate owned
and nonperforming commercial loans acquired in
acquisition and merger transactions that were instituted
by the Federal Home Loan Bank Board or the Federal
Savings and Loan Insurance Corporation for supervisory
reasons were excluded from the member's total assets.
(IV) The appropriate Federal banking agency has
determined that the member's management is competent and
has complied with applicable laws, rules, and
supervisory directives and orders.
(V) The member's management did not engage in
insider dealing or speculative practices or other
activities that jeopardized the member's safety and
soundness or contributed to its impaired capital
position.
(VI) The member's offices are located in an
economically depressed region.
(B) Corporation consideration of assistance proposal
If a member meets the requirements of clauses (i) and (ii)
of subparagraph (A), the Corporation shall consider providing
direct financial assistance.
(C) ``Economically depressed region'' defined
For purposes of this paragraph, the term ``economically
depressed region'' means any geographical region which the
Corporation determines by regulation to be a region within which
real estate values have suffered serious decline due to severe
economic conditions, such as a decline in energy or agricultural
values or prices.
(Sept. 21, 1950, ch. 967, Sec. 2[13], 64 Stat. 888; Pub. L. 95-369,
Sec. 6(c)(24), Sept. 17, 1978, 92 Stat. 619; Pub. L. 97-320, title I,
Secs. 111, 113(m), 116, 141(a)(1), (3), title II, Secs. 203, 206, Oct.
15, 1982, 96 Stat. 1469, 1474, 1476, 1488, 1489, 1492, 1496; Pub. L. 97-
457, Secs. 1(a), 4, 10(a), Jan. 12, 1983, 96 Stat. 2507, 2508; Pub. L.
98-29, Sec. 1(a), May 16, 1983, 97 Stat. 189; Pub. L. 100-86, title V,
Secs. 502(a)-(g), (i), 509(a), title VIII, Sec. 801, Aug. 10, 1987, 101
Stat. 623-627, 629, 635, 656; Pub. L. 101-73, title II, Secs. 201(a),
217, Aug. 9, 1989, 103 Stat. 187, 254; Pub. L. 102-242, title I,
Secs. 123(b), 141(a)(1), (e), Dec. 19, 1991, 105 Stat. 2252, 2273, 2278;
Pub. L. 103-325, title III, Sec. 317, title VI, Sec. 602(a)(34)-(42),
Sept. 23, 1994, 108 Stat. 2223, 2289, 2290; Pub. L. 104-208, div. A,
title II, Sec. 2704(d)(14)(M), Sept. 30, 1996, 110 Stat. 3009-492.)
References in Text
Section 1730a of this title, referred to in subsec. (f)(4)(A), was
repealed by Pub. L. 101-73, title IV, Sec. 407, Aug. 9, 1989, 103 Stat.
363.
The Depository Institution Management Interlocks Act, referred to in
subsec. (k)(1)(A)(v), is title II of Pub. L. 95-630, Nov. 10, 1978, 92
Stat. 3672, as amended, which is classified principally to chapter 33
(Sec. 3201 et seq.) of this title. For complete classification of this
Act to the Code, see Short Title note set out under section 3201 of this
title and Tables.
Prior Provisions
Section is derived from subsec. (n) of former section 264 of this
title. See Codification note set out under section 1811 of this title.
Amendments
1996--Subsec. (a)(1). Pub. L. 104-208, Sec. 2704(d)(14)(M)(i), which
directed substitution of ``Deposit Insurance Fund, the Special Reserve
of the Deposit Insurance Fund,'' for ``Bank Insurance Fund, the Savings
Association Insurance Fund,'', was not executed. See Effective Date of
1996 Amendment note below.
Subsec. (c)(4)(E). Pub. L. 104-208, Sec. 2704(d)(14)(M)(ii), which
directed substitution of ``fund'' for ``funds'' in heading and ``the
Deposit Insurance Fund'' for ``any insurance fund'' in cl. (i), was not
executed. See Effective Date of 1996 Amendment note below.
Subsec. (c)(4)(G)(ii). Pub. L. 104-208, Sec. 2704(d)(14)(M)(iii),
which directed substitution of ``Deposit Insurance Fund'' for
``appropriate insurance fund'', ``insured depository institutions'' for
``the members of the insurance fund (of which such institution is a
member)'', ``each insured depository institution's'' for ``each
member's'', and ``the institution's'' for ``the member's'' in two
places, was not executed. See Effective Date of 1996 Amendment note
below.
Subsec. (c)(11). Pub. L. 104-208, Sec. 2704(d)(14)(M)(iv), which
directed striking out par. (11), was not executed. See Effective Date of
1996 Amendment note below.
Subsec. (h). Pub. L. 104-208, Sec. 2704(d)(14)(M)(v), which directed
substitution of ``Deposit Insurance Fund'' for ``Bank Insurance Fund'',
was not executed. See Effective Date of 1996 Amendment note below.
Subsec. (k)(4)(B)(i). Pub. L. 104-208, Sec. 2704(d)(14)(M)(vi),
which directed substitution of ``Deposit Insurance Fund'' for ``Savings
Association Insurance Fund'', was not executed. See Effective Date of
1996 Amendment note below.
Subsec. (k)(5)(A). Pub. L. 104-208, Sec. 2704(d)(14)(M)(vii), which
directed substitution of ``Deposit Insurance Fund'' for ``Savings
Association Insurance Fund'', was not executed. See Effective Date of
1996 Amendment note below.
1994--Subsec. (c)(1)(B). Pub. L. 103-325, Sec. 602(a)(34),
substituted ``an insured bank in default'' for ``a in default insured
bank'' and ``such insured bank'' for ``such in default insured bank''.
Subsec. (c)(2)(A). Pub. L. 103-325, Sec. 602(a)(35), substituted
``with another insured depository institution'' for ``with an insured
institution'' and ``by another depository institution'' for ``by an
insured institution''.
Subsec. (e). Pub. L. 103-325, Sec. 317, designated existing
provisions as par. (1) and inserted heading, redesignated former pars.
(1) to (4) as subpars. (A) to (D) of par. (1), respectively, and added
par. (2).
Subsec. (f)(2)(B)(i). Pub. L. 103-325, Sec. 602(a)(36), substituted
``the insured bank in default'' for ``the in default insured bank''.
Subsec. (f)(2)(B)(iii). Pub. L. 103-325, Sec. 602(a)(37),
substituted ``of'' for ``of of'' after ``percent''.
Subsec. (f)(3). Pub. L. 103-325, Sec. 602(a)(38), substituted
``default'' for ``closing'' in heading.
Subsec. (f)(6)(A). Pub. L. 103-325, Sec. 602(a)(39), substituted
``bank that is in default'' for ``bank that has in default''.
Subsec. (f)(6)(B)(i). Pub. L. 103-325, Sec. 602(a)(40), inserted
period for semicolon at end.
Subsec. (f)(7)(A), (B). Pub. L. 103-325, Sec. 602(a)(41), struck out
``or'' at end of subpar. (A) and substituted ``; or'' for period at end
of subpar. (B).
Subsec. (f)(12)(A). Pub. L. 103-325, Sec. 602(a)(42), substituted
``are'' for ``is''.
1991--Subsec. (c)(4) to (10). Pub. L. 102-242, Sec. 141(a)(1), (e),
redesignated former pars. (5) to (9) as (6) to (10), respectively,
redesignated subpar. (B) of par. (4) as par. (5), amended par. (4)(A)
generally and redesignated it as par. (4), further redesignated pars.
(8) to (10) as (9) to (11), respectively, and added par. (8). Prior to
amendment, par. (4)(A) read as follows: ``No assistance shall be
provided under this subsection in an amount in excess of that amount
which the Corporation determines to be reasonably necessary to save the
cost of liquidating, including paying the insured accounts of, such
insured depository institution, except that such restriction shall not
apply in any case in which the Corporation determines that the continued
operation of such insured depository institution is essential to provide
adequate depository services in its community. In calculating the cost
of assistance, the Corporation shall include (i) the immediate and long-
term obligations of the Corporation with respect to such assistance,
including contingent liabilities, and (ii) the Federal tax revenues
foregone by the Government, to the extent reasonably ascertainable.''
Subsec. (d)(3)(D). Pub. L. 102-242, Sec. 123(b), added subpar. (D).
1989--Subsec. (a). Pub. L. 101-73, Sec. 217(1), added heading and
text of subsec. (a) and struck out former subsec. (a) which read as
follows: ``Money of the Corporation not otherwise employed shall be
invested in obligations of the United States or in obligations
guaranteed as to principal and interest by the United States: Provided,
That the Corporation shall not sell or purchase any such obligations for
its own account and in its own right and interest, at any one time
aggregating in excess of $100,000, without the approval of the Secretary
of the Treasury: And provided further, That the Secretary of the
Treasury may waive the requirement of his approval with respect to any
transaction or classes of transactions subject to the provisions of this
subsection for such period of time and under such conditions as he may
determine.''
Subsec. (b). Pub. L. 101-73, Sec. 217(2), substituted ``depository
accounts of the Corporation'', ``temporary purposes of depository
accounts'', and ``depository accounts to facilitate'' for ``banking or
checking accounts of the Corporation'', ``temporary purposes of banking
and checking accounts'', and ``banking and checking accounts to
facilitate'', respectively, and substituted ``depository institution''
for ``bank'' in four places.
Pub. L. 101-73, Sec. 201(a), substituted ``insured depository
institutions'' for ``insured banks''.
Subsec. (c)(1). Pub. L. 101-73, Sec. 201(a), substituted reference
to insured depository institution for reference to insured bank in
introductory provisions.
Subsec. (c)(1)(A). Pub. L. 101-73, Sec. 217(3)(A), substituted
``default'' for ``closing''.
Pub. L. 101-73, Sec. 201(a), substituted reference to insured
depository institution for reference to insured bank.
Subsec. (c)(1)(B). Pub. L. 101-73, Sec. 217(3)(C), which directed
the amendment of subsec. (c) by substituting ``insured depository
institution in default'' for ``in default insured depository
institution'' wherever appearing, could not be executed because phrase
``in default insured depository institution'' did not appear in text.
Pub. L. 101-73, Sec. 217(3)(B), which directed the amendment of
subsec. (c) by substituting ``a'' for ``an'' wherever appearing before
``closed insured bank'', could not be executed because ``an'' did not
appear before ``closed insured bank'' in text.
Pub. L. 101-73, Sec. 217(3)(A), substituted ``in default'' for
``closed'' in two places.
Subsec. (c)(1)(C). Pub. L. 101-73, Sec. 201(a), substituted
references to insured depository institutions for references to insured
banks wherever appearing.
Subsec. (c)(2)(A). Pub. L. 101-73, Sec. 217(3)(D)(i), substituted
``such other insured depository institution'' for ``such insured
institution'' wherever appearing in cls. (ii) and (iii) and ``another
insured depository institution'' for ``an insured depository
institution'' in introductory provisions.
Pub. L. 101-73, Sec. 217(3)(D)(ii), (iii), in introductory
provisions, substituted ``the sale of any or all of the assets'' for
``the sale of assets'' and ``or the assumption of any or all'' for ``and
the assumption''.
Pub. L. 101-73, Sec. 201(a), substituted ``insured depository
institution'' and ``insured depository institution's'' for ``insured
bank'' and ``insured bank's'' wherever appearing.
Subsec. (c)(2)(B). Pub. L. 101-73, Sec. 217(3)(A), substituted ``in
default'' for ``closed'' in cl. (i) and ``default'' for ``closing'' in
cl. (ii).
Pub. L. 101-73, Sec. 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing.
Subsec. (c)(2)(C). Pub. L. 101-73, Sec. 217(3)(E), added subpar.
(C).
Subsec. (c)(3). Pub. L. 101-73, Sec. 217(3)(F), substituted
``subsection (f) or (k) of this section'' for ``subsection (f) of this
section''.
Pub. L. 101-73, Sec. 201(a), substituted reference to insured
depository institution for reference to insured bank.
Subsec. (c)(4)(A). Pub. L. 101-73, Sec. 217(3)(G), substituted
``depository services'' for ``banking services'' and inserted sentence
at end relating to calculation of the cost of assistance.
Pub. L. 101-73, Sec. 201(a), substituted references to insured
depository institutions for references to insured banks wherever
appearing.
Subsec. (c)(4)(B). Pub. L. 101-73, Sec. 201(a), substituted
reference to insured depository institution for reference to insured
bank.
Subsec. (c)(5). Pub. L. 101-73, Sec. 201(a), substituted references
to insured depository institutions for references to insured banks
wherever appearing.
Subsec. (c)(6). Pub. L. 101-73, Sec. 217(3)(J), added par. (6).
Former par. (6) redesignated (7).
Subsec. (c)(7). Pub. L. 101-73, Sec. 217(3)(I), redesignated par.
(6) as (7). Former par. (7) redesignated (8).
Subsec. (c)(8). Pub. L. 101-73, Sec. 217(3)(H), (I), redesignated
par. (7) as (8) and struck out former par. (8) which read as follows:
``For purposes of this subsection, the term `insured institution' means
an insured bank as defined in section 1813 of this title or an insured
institution as defined in section 1724 of this title.''
Subsec. (c)(9). Pub. L. 101-73, Sec. 217(3)(K), added par. (9).
Subsec. (d). Pub. L. 101-73, Sec. 217(4), added subsec. (d) and
struck out former subsec. (d), changing the structure of the subsection
from a single unnumbered paragraph to one consisting of four numbered
paragraphs.
Subsec. (e). Pub. L. 101-73, Sec. 217(4), added subsec. (e) and
struck out former subsec. (e) which read as follows: ``No agreement
which tends to diminish or defeat the right, title or interest of the
Corporation in any asset acquired by it under this section, either as
security for a loan or by purchase, shall be valid against the
Corporation unless such agreement (1) shall be in writing, (2) shall
have been executed by the bank and the person or persons claiming an
adverse interest thereunder, including the obligor, contemporaneously
with the acquisition of the asset by the bank, (3) shall have been
approved by the board of directors of the bank or its loan committee,
which approval shall be reflected in the minutes of said board or
committee, and (4) shall have been, continuously, from the time of its
execution, an official record of the bank.''
Subsec. (f)(1). Pub. L. 101-73, Sec. 217(5)(C), inserted ``savings
association'' after ``out-of-State bank''.
Subsec. (f)(2)(A). Pub. L. 101-73, Sec. 217(5)(A), (B), substituted
``is in default'' for ``is closed'', and ``bank in default'' for
``closed bank'' in three places.
Subsec. (f)(2)(B). Pub. L. 101-73, Sec. 217(5)(A), (D), substituted
``in default insured bank'' for ``closed insured bank'' in cl. (i), and
``a vote of 75 percent of'' for ``a unanimous vote'' in cl. (iii).
Subsec. (f)(3)(A)(i), (ii), (C), (E). Pub. L. 101-73,
Sec. 217(5)(A), substituted ``danger of default'' for ``danger of
closing''.
Subsec. (f)(4)(A). Pub. L. 101-73, Sec. 217(5)(E), struck out ``the
constitution of any State,'' after ``State law,''.
Subsec. (f)(5). Pub. L. 101-73, Sec. 217(5)(A), (B), substituted
``danger of default'' for ``danger of closing'' and ``bank in default''
for ``closed bank''.
Subsec. (f)(6)(A). Pub. L. 101-73, Sec. 217(5)(A), (F), substituted
``the bank that has in default or is in danger of default'' for ``the
bank that has closed or is in danger of closing'' and ``the Corporation
shall permit the offeror which made the initial lowest acceptable offer
and'' for ``the Corporation shall permit''.
Subsec. (f)(7)(C). Pub. L. 101-73, Sec. 217(5)(G), added subpar.
(C).
Subsec. (f)(8)(A). Pub. L. 101-73, Sec. 217(5)(H), redesignated
subpar. (C) as (A) and struck out former subpar. (A) which read as
follows: ``the term `receiver' means the Corporation when it has been
appointed the receiver of a closed insured bank;''.
Pub. L. 101-73, Sec. 217(5)(A), (B), substituted ``danger of
default'' for ``danger of closing'' in two places and ``bank in
default'' for ``closed bank'' in two places.
Subsec. (f)(8)(B). Pub. L. 101-73, Sec. 217(5)(H), redesignated
subpar. (E) as (B) and struck out former subpar. (B) which read as
follows: ``the term `insured depository institution' means an insured
bank or an association or savings bank insured by the Federal Savings
and Loan Insurance Corporation;''.
Subsec. (f)(8)(C). Pub. L. 101-73, Sec. 217(5)(H), redesignated
subpar. (F) as (C). Former subpar. (C) redesignated (A).
Subsec. (f)(8)(D). Pub. L. 101-73, Sec. 217(5)(H), redesignated
subpar. (G) as (D) and struck out former subpar. (D) which read as
follows: ``the term `bank in danger of closing' means an insured bank
with respect to which the appropriate Federal or State chartering
authority certifies in writing that--
``(i)(I) the bank is not likely to be able to meet the demands
of such bank's depositors or pay the obligations of the bank in the
normal course of business, and
``(II) there is no reasonable prospect that the bank will be
able to meet such demands or pay such obligations without Federal
assistance; or
``(ii)(I) the bank has incurred or is likely to incur losses
that will deplete all or substantially all of the capital of the
bank, and
``(II) there is no reasonable prospect for the replenishment of
the bank's capital without Federal assistance;''.
Subsec. (f)(8)(E) to (G). Pub. L. 101-73, Sec. 217(5)(H),
redesignated subpars. (E) to (G) as (B) to (D), respectively.
Subsec. (f)(9). Pub. L. 101-73, Sec. 217(5)(I), substituted
``certain subsidiaries'' for ``nonbank subsidiaries'' in heading,
``subsidiary, other than a subsidiary that is an insured depository
institution,'' for ``subsidiary'' and ``holding company'' for ``holding
company which is not an insured bank'' in subpar. (A), and
``intermediate holding company or an affiliate of an insured depository
institution'' for ``intermediate holding company'' in subpar. (B).
Subsec. (f)(12). Pub. L. 101-73, Sec. 217(5)(J), added par. (12).
Subsec. (h). Pub. L. 101-73, Sec. 217(6), substituted ``an insured
depository institution in default'' for ``a closed insured depository
institution'', ``default'' for ``closing'', and ``Bank Insurance Fund''
for ``insurance fund''.
Pub. L. 101-73, Sec. 201(a), substituted ``insured depository
institution'' for ``insured bank'' wherever appearing.
Subsec. (i)(1)(A). Pub. L. 101-73, Sec. 217(7)(A), inserted
``depository'' before ``institution'' in three places.
Subsec. (i)(1)(C). Pub. L. 101-73, Sec. 217(7)(B), substituted
``Corporation'' for ``corporation'' where first appearing, ``chartered
depository institution'' for ``chartered bank'', ``State member bank, a
savings association,'' for ``State member bank'', and ``Federal Reserve
System or the Director of the Office of Thrift Supervision'' for
``Federal Reserve System''.
Subsec. (i)(1)(D). Pub. L. 101-73, Sec. 217(7)(A), inserted
``depository'' before ``institution'' in two places.
Subsec. (i)(2). Pub. L. 101-73, Sec. 217(7)(A), (C), inserted
``depository'' before ``institution'' in two places, and struck out ``or
insured or guaranteed under State law'' after ``insured under this
chapter''.
Subsec. (i)(3) to (9). Pub. L. 101-73, Sec. 217(7)(A), inserted
``depository'' before ``institution'' wherever appearing.
Subsec. (i)(10). Pub. L. 101-73, Sec. 217(7)(D), struck out par.
(10) which read as follows: ``Notwithstanding any other Federal or State
law, net worth certificates purchased by the Corporation under this
subsection shall be deemed to be net worth for statutory and regulatory
purposes.''
Subsec. (i)(11). Pub. L. 101-73, Sec. 217(7)(A), inserted
``depository'' before ``institution''.
Subsec. (i)(12). Pub. L. 101-73, Sec. 217(7)(D), struck out par.
(12) which read as follows: ``The Corporation may provide assistance to
a qualified institution which is not an insured institution only if the
State fund which insures or guarantees the deposits of such qualified
institution enters into an agreement with the Corporation which provides
that--
``(A) the State fund will indemnify the Corporation for any
losses which the Corporation may incur as a result of providing
assistance under this subsection to such qualified institution; and
``(B) during any period when such qualified institution has
outstanding capital instruments issued in accordance with this
subsection, the State insurance fund maintains a level of
assessments on its members which results in costs to its members
which are at least equivalent to the premium assessments paid to the
Corporation by insured institutions during such period.''
Subsec. (i)(13). Pub. L. 101-73, Sec. 217(7)(A), inserted
``depository'' before ``institution'' in two places.
Subsec. (k). Pub. L. 101-73, Sec. 217(8), added subsec. (k).
1987--Pub. L. 100-86, Sec. 509(a), repealed Pub. L. 97-320,
Sec. 141. See 1982 Amendment notes below.
Subsec. (f)(1). Pub. L. 100-86, Sec. 502(a), amended par. (1)
generally. Prior to amendment, par. (1) read as follows: ``Nothing
contained in paragraph (2) or (3) shall be construed to limit the
Corporation's powers in subsection (c) of this section to assist a
transaction under paragraph (2) or (3).''
Subsec. (f)(3). Pub. L. 100-86, Sec. 502(b), amended par. (3)
generally, substituting subpars. (A) to (G) relating to emergency
interstate acquisitions of insured banks in danger of closing for former
subpars. (A) to (C) which authorized merger, purchase of assets, or
assumption of liabilities of insured bank organized in mutual form with
total assets of $500,000,000 or more upon Corporation's determination it
was in danger of closing.
Subsec. (f)(4). Pub. L. 100-86, Sec. 502(c)(1), redesignated cls.
(i) to (iii) as subpars. (A) to (C), amended subpar. (A) generally, and
added subpars. (D) and (E). Prior to amendment, subpar. (A), as so
redesignated, read as follows: ``Notwithstanding section 1842(d) of this
title or any other provision of law, State or Federal, or the
constitution of any State, an institution that merges with or acquires
an insured bank under paragraph (2) or (3) is authorized to be and shall
be operated as a subsidiary of an out-of-State bank or bank holding
company, except that an out-of-State bank may operate the resulting
institution as a subsidiary only if such ownership is otherwise
specifically authorized.''
Subsec. (f)(5). Pub. L. 100-86, Sec. 502(i)(1), struck out ``to
permit'' before ``an acquisition''.
Subsec. (f)(6)(A). Pub. L. 100-86, Sec. 502(i)(2), substituted
``where the bank'' for ``where the closed bank'' and ``in-State holding
company'' for ``in-State bank holding company''.
Subsec. (f)(6)(B). Pub. L. 100-86, Sec. 502(c)(2)(A), added cls.
(ii) to (vi) and struck out former cls. (ii) to (iv) which read as
follows:
``(ii) Second, between depository institutions of the same type in
different States;
``(iii) Third, between depository institutions of different types in
the same State; and
``(iv) Fourth, between depository institutions of different types in
different States.''
Subsec. (f)(6)(C). Pub. L. 100-86, Sec. 502(c)(2)(B), amended
subpar. (C) generally. Prior to amendment, subpar. (C) read as follows:
``In considering offers from different States, the Corporation shall
give a priority to offers from adjoining States.''
Subsec. (f)(8)(D) to (G). Pub. L. 100-86, Sec. 502(d)-(g), added
subpars. (D) to (G).
Subsec. (f)(9) to (11). Pub. L. 100-86, Sec. 502(c)(3)-(5), added
pars. (9) to (11).
Subsec. (j). Pub. L. 100-86, Sec. 801, added subsec. (j).
1983--Subsec. (i)(1)(D). Pub. L. 98-29 inserted provision that
issuance of net worth certificates in accordance with this subsection
shall not constitute a default under the terms of any debt obligations
subordinated to the claims of general creditors which were outstanding
when such net worth certificates were issued.
1983--Subsec. (c)(5)(A). Pub. L. 97-457, Sec. 1(a), inserted ``or
dividends'' after ``interest''.
Subsec. (f)(1). Pub. L. 97-457, Sec. 4, substituted ``paragraph''
for ``paragraphs'' wherever appearing.
Subsec. (i)(9). Pub. L. 97-457, Sec. 10, inserted ``or dividends''
after ``interest''.
1982--Subsec. (c). Pub. L. 97-320, Sec. 111, substituted provisions
contained in numbered pars. (1) through (8) relating to the
Corporation's authority to assist insured banks for prior provisions
contained in a single undesignated paragraph authorizing the
Corporation, in order to reopen a closed insured bank or, when the
Corporation had determined that an insured bank was in danger of
closing, in order to prevent such closing, in the discretion of its
Board of Directors, to make loans to, or purchase the assets of, or make
deposits in, such insured bank, upon such terms and conditions as the
Board of Directors might prescribe, when in the opinion of the Board of
Directors the continued operation of such bank was essential to provide
adequate banking service in the community, with such loans and deposits
to be in subordination to the rights of depositors and other creditors.
Pub. L. 97-320, Sec. 141(a)(1), which directed the repeal of par.
(5) effective Oct. 13, 1986, was repealed by Pub. L. 100-86,
Sec. 509(a). See Effective and Termination Dates of 1982 Amendment note
and Extension of Emergency Acquisition and Net Worth Guarantee
Provisions of Pub. L. 97-320 note set out under section 1464 of this
title.
Subsec. (e). Pub. L. 97-320, Sec. 113(m)(2), inserted ``(e)'' before
``No agreement'' and struck out provision authorizing the Board of
Directors, for the purpose of averting loss to the Corporation and
facilitating a merger of an insured bank or facilitating the sale of an
insured bank's assets and assumption of its liabilities by another
insured bank, to make secured loans or to purchase the insured bank's
assets or to guarantee another insured bank against loss by reason of
its assuming the liabilities and purchasing the assets of an insured
bank, and authorizing national or District banks or the Corporation as
receiver thereof to contract for such sales or loans and to pledge
assets to secure such loans.
Subsecs. (f) to (h). Pub. L. 97-320, Secs. 113(m)(1), 116, added
subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h),
respectively.
Pub. L. 97-320, Sec. 141(a)(3), which directed that, effective Oct.
13, 1986, the provisions of law amended by section 116 of Pub. L. 97-320
shall be amended to read as they would without such amendment, was
repealed by Pub. L. 100-86, Sec. 509(a). See Effective and Termination
Dates of 1982 Amendment note and Extension of Emergency Acquisition and
Net Worth Guarantee Provisions of Pub. L. 97-320 note set out under
section 1464 of this title.
Subsec. (i). Pub. L. 97-320, Secs. 203, 206, added subsec. (i),
relating to net worth certificates, and provided for its prospective
repeal. See Effective Date of 1982 Amendment note below.
1978--Subsec. (g). Pub. L. 95-369 added subsec. (g).
Change of Name
Committee on Banking, Finance and Urban Affairs of House of
Representatives treated as referring to Committee on Banking and
Financial Services of House of Representatives by section 1(a) of Pub.
L. 104-14, set out as a note preceding section 21 of Title 2, The
Congress. Committee on Banking and Financial Services of House of
Representatives abolished and replaced by Committee on Financial
Services of House of Representatives, and jurisdiction over matters
relating to securities and exchanges and insurance generally transferred
from Committee on Energy and Commerce of House of Representatives by
House Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.
Effective Date of 1996 Amendment
Amendment by Pub. L. 104-208 effective Jan. 1, 1999, if no insured
depository institution is a savings association on that date, see
section 2704(c) of Pub. L. 104-208, set out as a note under section 1821
of this title.
Effective Date of 1983 Amendments
Section 1(b) of Pub. L. 98-29 provided that: ``The amendment made by
subsection (a) [amending this section] shall be deemed to have taken
effect on the date of enactment of the Garn-St Germain Depository
Institutions Act of 1982 [Oct. 15, 1982].''
Section 1(b) of Pub. L. 97-457 provided that: ``The amendment made
by subsection (a) [amending this section] shall be deemed to have taken
effect upon the enactment of Public Law 97-320 [Oct. 15, 1982].''
Section 10(b) of Pub. L. 97-457 provided that: ``The amendment made
by subsection (a) [amending this section] shall be deemed to have taken
effect upon the enactment of Public Law 97-320 [Oct. 15, 1982].''
Effective Date of 1982 Amendment
Section 206 of Pub. L. 97-320, as amended by Pub. L. 97-457,
Sec. 11, Jan. 12, 1983, 96 Stat. 2508; Pub. L. 99-120, Sec. 6(b), Oct.
8, 1985, 99 Stat. 504; Pub. L. 99-278, Sec. 1(b), Apr. 24, 1986, 100
Stat. 397; Pub. L. 99-400, Sec. 1(b), Aug. 27, 1986, 100 Stat. 902; Pub.
L. 99-452, Sec. 1(b), Oct. 8, 1986, 100 Stat. 1140; Pub. L. 100-86,
title V, Sec. 509(b), Aug. 10, 1987, 101 Stat. 635, provided that:
``(a) On October 13, 1991, section 406(f)(5) of the National Housing
Act [12 U.S.C. 1729(f)(5)] and section 13(i) of the Federal Deposit
Insurance Act [12 U.S.C. 1823(i)] are repealed.
``(b) The repeal by subsection (a) shall have no effect on any
action taken or authorized pursuant to the amendments made by this title
[see Short Title of 1982 Amendments note set out under section 1811 of
this title] by or for a qualified institution while such amendments were
in effect and while net worth certificates issued pursuant to these
amendments are outstanding.''
GAO Compliance Audit
Section 141(a)(2) of Pub. L. 102-242, as amended by Pub. L. 104-316,
title I, Sec. 106(b), Oct. 19, 1996, 110 Stat. 3830, provided that:
``The Comptroller General of the United States shall audit, under such
conditions as the Comptroller General determines to be appropriate, the
Federal Deposit Insurance Corporation and the Resolution Trust
Corporation to determine the extent to which such corporations are
complying with section 13(c)(4) of the Federal Deposit Insurance Act [12
U.S.C. 1823(c)(4)].''
Early Resolution of Troubled Insured Depository Institutions
Section 143 of Pub. L. 102-242 provided that:
``(a) In General.--It is the sense of the Congress that the Federal
banking agencies should facilitate early resolution of troubled insured
depository institutions whenever feasible if early resolution would have
the least possible long-term cost to the deposit insurance fund,
consistent with the least-cost and prompt corrective action provisions
of the Federal Deposit Insurance Act [12 U.S.C. 1811 et seq.].
``(b) General Principles.--In encouraging the Federal banking
agencies to pursue early resolution strategies, the Congress
contemplates that any resolution transaction under section 13(c) of that
Act [12 U.S.C. 1823(c)] would observe the following general principles:
``(1) Competitive negotiation.--The transaction should be
negotiated competitively, taking into account the value of
expediting the process.
``(2) Resulting institution adequately capitalized.--Any insured
depository institution created or assisted in the transaction
(hereafter the `resulting institution') and any institution
acquiring the troubled institution should meet all applicable
minimum capital standards.
``(3) Substantial private investment.--The transaction should
involve substantial private investment.
``(4) Concessions.--Preexisting owners and debtholders of any
troubled institution or its holding company should make substantial
concessions.
``(5) Qualified management.--Directors and senior management of
the resulting institution should be qualified to perform their
duties, and should not include individuals substantially responsible
for the troubled institution's problems.
``(6) FDIC's participation.--The transaction should give the
Federal Deposit Insurance Corporation an opportunity to participate
in the success of the resulting institution.
``(7) Structure of transaction.--The transaction should, insofar
as practical, be structured so that--
``(A) the Federal Deposit Insurance Corporation--
``(i) does not acquire a significant proportion of the
troubled institution's problem assets;
``(ii) succeeds to the interests of the troubled
institution's preexisting owners and debtholders in
proportion to the assistance the Corporation provides; and
``(iii) limits the Corporation's assistance in term and
amount; and
``(B) new investors share risk with the Corporation.
``(c) Report.--Two years after the date of enactment of this Act
[Dec. 19, 1991], the Federal Deposit Insurance Corporation shall submit
a report to Congress analyzing the effect of early resolution on the
deposit insurance funds.''
Extension of Emergency Acquisition and Net Worth Guarantee Provisions of
Pub. L. 97-320
No amendment made by section 141(a) of Pub. L. 97-320, set out as a
note under section 1464 of this title, or section 206(a) of Pub. L. 97-
320, set out as a note above, as in effect before Aug. 10, 1987, to any
other provision of law to be deemed to have taken effect before such
date and any such provision of law to be in effect as if no such
amendment had been made before such date, see section 509(c) of Pub. L.
100-86, set out as a note under section 1464 of this title.
No amendment made by section 141(a) or section 206(a) of Pub. L. 97-
320, set out as notes under sections 1464 and 1729 of this title,
respectively, as in effect on the day before Oct. 8, 1986, to any other
provision of law to be deemed to have taken effect before such date and
any such provision of law to be in effect as if no such amendment had
taken effect before such date, see section 1(c) of Pub. L. 99-452, set
out as a note under section 1464 of this title.
Sections 141(a) and 206(a) of Pub. L. 97-320, which are set out as
notes under sections 1464 and 1729 of this title, as such sections were
in effect on the day after Aug. 27, 1986, applicable as if such sections
had been included in Pub. L. 97-320 on Oct. 15, 1982, with no amendment
made by any such section to any other provision of law to be deemed to
have taken effect before Aug. 27, 1986, and any such provision of law to
be in effect as if no such amendment had taken effect before Aug. 27,
1986, see section 1(c) of Pub. L. 99-400, set out as a note under
section 1464 of this title.
Annual Reports to Congress by Federal Home Loan Bank Board and Federal
Deposit Insurance Corporation on Purchases of Net Worth Certificates
Section 204 of Pub. L. 97-320 provided that: ``The Federal Home Loan
Bank Board and the Board of Directors of the Federal Deposit Insurance
Corporation shall each transmit an annual report to each House of the
Congress specifying the types and amounts of net worth certificates
purchased from each depository institution and the conditions imposed on
each such depository institution.''
[For termination, effective May 15, 2000, of reporting provisions
relating to the Federal Deposit Insurance Corporation in section 204 of
Pub. L. 97-320, set out above, see section 3003 of Pub. L. 104-66, as
amended, set out as a note under section 1113 of Title 31, Money and
Finance, and page 167 of House Document No. 103-7.]
Semiannual Audit by Comptroller General of Net Worth Certificate
Programs of Federal Deposit Insurance Corporation and Federal Home Loan
Bank Board
Section 205 of Pub. L. 97-320 provided that: ``The Comptroller
General of the United States shall conduct on a semiannual basis an
audit of the net worth certificate programs of the Federal Deposit
Insurance Corporation and the Federal Home Loan Bank Board. A report on
each such audit shall be transmitted to each House of the Congress.''
[For termination, effective May 15, 2000, of reporting provisions in
section 205 of Pub. L. 97-320, set out above, see section 3003 of Pub.
L. 104-66, as amended, set out as a note under section 1113 of Title 31,
Money and Finance, and page 3 of House Document No. 103-7.]
Section Referred to in Other Sections
This section is referred to in sections 36, 43, 1441a, 1464, 1467a,
1817, 1820, 1821, 1828, 1831o, 1831r, 1831r-1, 1831u, 1842, 1843, 1849,
2605 of this title; title 18 section 1032; title 26 section 597.
