§ 4616. — Supervisory actions applicable to significantly undercapitalized enterprises.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC4616]
TITLE 12--BANKS AND BANKING
CHAPTER 46--GOVERNMENT SPONSORED ENTERPRISES
SUBCHAPTER II--REQUIRED CAPITAL LEVELS FOR ENTERPRISES AND SPECIAL
ENFORCEMENT POWERS
Sec. 4616. Supervisory actions applicable to significantly
undercapitalized enterprises
(a) Mandatory supervisory actions
(1) Capital restoration plan
An enterprise that is classified as significantly
undercapitalized shall, within the time period under section 4622(b)
and (d) of this title, submit to the Director a capital restoration
plan that complies with section 4622 of this title and carry out the
plan after approval.
(2) Restrictions on capital distributions
(A) Prior approval
An enterprise that is classified as significantly
undercapitalized may not make any capital distribution that
would result in the enterprise being reclassified as critically
undercapitalized. An enterprise that is classified as
significantly undercapitalized enterprise \1\ may not make any
other capital distribution unless the Director approves the
distribution.
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\1\ So in original. The word ``enterprise'' probably should not
appear.
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(B) Standard for approval
The Director may approve a capital distribution by an
enterprise classified as significantly undercapitalized only if
the Director determines that the distribution (i) will enhance
the ability of the enterprise to meet the risk-based capital
level and the minimum capital level for the enterprise promptly,
(ii) will contribute to the long-term financial safety and
soundness of the enterprise, or (iii) is otherwise in the public
interest.
(b) Discretionary supervisory actions
In addition to any other actions taken by the Director (including
actions under subsection (a) of this section), the Director may, at any
time, take any of the following actions with respect to an enterprise
that is classified as significantly undercapitalized:
(1) Limitation on increase in obligations
Limit any increase in, or order the reduction of, any
obligations of the enterprise, including off-balance sheet
obligations.
(2) Limitation on growth
Limit or prohibit the growth of the assets of the enterprise or
require contraction of the assets of the enterprise.
(3) Acquisition of new capital
Require the enterprise to acquire new capital in a form and
amount determined by the Director.
(4) Restriction of activities
Require the enterprise to terminate, reduce, or modify any
activity that the Director determines creates excessive risk to the
enterprise.
(5) Reclassification from significantly to critically
undercapitalized
The Director may reclassify as critically undercapitalized an
enterprise that is classified as significantly undercapitalized (and
the enterprise shall be subject to the provisions of section 4617 of
this title) if--
(A) the enterprise does not submit a capital restoration
plan that is substantially in compliance with section 4622 of
this title within the applicable period or the Director does not
approve the capital restoration plan submitted by the
enterprise; or
(B) the Director determines that the enterprise has failed
to make, in good faith, reasonable efforts necessary to comply
with the capital restoration plan and fulfill the schedule for
the plan approved by the Director.
(6) Conservatorship
Appoint a conservator for the enterprise in accordance with the
provisions of section 4619 of this title (excluding subsection
(a)(1) and (2)), but only if the Director determines--
(A) that the amount of core capital of the enterprise is
less than the minimum capital level established for the
enterprise under section 4612 of this title; and
(B) that alternative remedies available to the Director
under this chapter are not satisfactory.
(c) Effective date
This section shall take effect upon the first classification of the
enterprises within capital classifications that occurs under section
4614 of this title.
(Pub. L. 102-550, title XIII, Sec. 1366, Oct. 28, 1992, 106 Stat. 3978.)
References in Text
This chapter, referred to in subsec. (b)(6)(B), 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.
Section Referred to in Other Sections
This section is referred to in sections 4614, 4615, 4617, 4618,
4619, 4620, 4623, 4636 of this title.
